(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
FOCUS FUNDS
INSTITUTIONAL CLASS
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
ANNUAL REPORT
JULY 31, 1997
CONTENTS
PERFORMANCE OVERVIEW AND 4
MARKET RECAP
CONSUMER INDUSTRIES 5 PERFORMANCE AND INVESTMENT SUMMARY
6 FUND TALK: THE MANAGERS' OVERVIEW
7 INVESTMENTS
10 FINANCIAL STATEMENTS
14 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES 18 PERFORMANCE AND INVESTMENT SUMMARY
19 FUND TALK: THE MANAGER'S OVERVIEW
20 INVESTMENTS
23 FINANCIAL STATEMENTS
27 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES 32 PERFORMANCE AND INVESTMENT SUMMARY
33 FUND TALK: THE MANAGER'S OVERVIEW
34 INVESTMENTS
36 FINANCIAL STATEMENTS
40 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE 45 PERFORMANCE AND INVESTMENT SUMMARY
46 FUND TALK: THE MANAGER'S OVERVIEW
47 INVESTMENTS
49 FINANCIAL STATEMENTS
53 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES 57 PERFORMANCE AND INVESTMENT SUMMARY
58 FUND TALK: THE MANAGER'S OVERVIEW
59 INVESTMENTS
62 FINANCIAL STATEMENTS
66 NOTES TO THE FINANCIAL STATEMENTS
71 REPORT OF INDEPENDENT ACCOUNTANTS
72 PROXY VOTING RESULTS
TECHNOLOGY 73 PERFORMANCE AND INVESTMENT SUMMARY
74 FUND TALK: THE MANAGER'S OVERVIEW
75 INVESTMENTS
78 FINANCIAL STATEMENTS
82 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH 86 PERFORMANCE AND INVESTMENT SUMMARY
87 FUND TALK: THE MANAGER'S OVERVIEW
88 INVESTMENTS
90 FINANCIAL STATEMENTS
94 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS 98 THE AUDITORS' OPINION
DISTRIBUTION 99
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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES
AND EXPENSES, CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
U.S. STOCK MARKET ENVIRONMENT
Moderate economic growth and subdued inflation helped create an almost
perfect investing environment for the U.S. stock market, which posted
exceptionally strong returns for the period covered by this report.
The Standard & Poor's 500 Index - a broad measure of U.S. stock
performance - returned 48.98% from September 3, 1996, through July 31,
1997. The Russell 2000 Index - a measure of small-stock performance -
rose 26.07%. The Dow Jones Industrial Average - an index of 30
blue-chip stocks - posted a return of 49.01%, breaking through the
8000 mark for the first time in July on its way to finishing above
8200 at the end of the period.
The stock market spent much of the period breaking price and trading
volume records. Solid corporate earnings, large inflows into mutual
funds, widespread optimism and a generally favorable interest-rate
backdrop propelled share prices higher, especially among
large-capitalization stocks. Concerns in March and April over higher
interest rates and the possibility of weaker corporate earnings
provided the only significant pause in the stock market's upward
climb. Higher interest rates tend to slow economic growth and increase
borrowing costs. When the Federal Reserve Board raised a key
short-term interest rate in March, the stock market - already at
historically high valuations - sold off sharply through mid-April,
when positive news on the inflation front emerged. From that point
through the end of the period, the market soared ever higher. The
market broadened to include many small- and mid-capitalization stocks
during this latest rally.
Most industry sectors experienced positive, if not strong performance.
TECHNOLOGY proved to be one of the strongest performing sectors in the
market during the period covered by this report, paced by the
outstanding performance of Microsoft and Intel. Strong demand drove
personal computer (PC) sales, trickling down to help earnings and
stock performance of companies that manufacture and sell PCs, as well
as their components. While the Fed raised a key short-term interest
rate in March, it held off entering a protracted period of
interest-rate increases. This generally positive interest-rate
environment - coupled with solid business prospects - helped FINANCE
STOCKS turn in very solid performance. Buoyant investor sentiment and
the stock market's steady upward climb helped brokerage and investment
stocks thrive.
Stronger-than-expected oil and natural gas prices helped ENERGY stocks
until the end of January, when commodity prices fell sharply.
Elsewhere in the NATURAL RESOURCE sector, gold stocks suffered when
central banks started to sell off their reserves because inflation
posed little threat. CONSUMER NONDURABLES stocks benefited from steady
earnings growth, as well as investors' attraction to such traditional
big-name growth stocks as those in the food, beverage and tobacco
industries. Pharmaceutical companies turned in the best performance in
the HEALTH CARE sector, helped by new-product development, direct
marketing to consumers and a faster rate of new drug approvals.
UTILITY stocks lagged the general market as a result of uncertainty
over the direction and form of deregulation in the sector, especially
among telecommunications stocks. Gas utilities, like energy stocks,
rose and fell with the changing energy commodity pricing environment,
while electric utilities with nuclear power plants faced increased
operating costs as a result of pressure from the Nuclear Regulatory
Commission. Stocks in this sector also tend to track the performance
of the bond market, which trailed that of the stock market over the
period. Finally, moderate growth, low unemployment and low interest
rates proved to be a generally favorable environment for CYCLICAL
stocks - those that tend to rise and fall with the economy.
ADVISOR CONSUMER INDUSTRIES FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970822 095615 S00000000000001
FA CONSUMER IND -CL I S&P 500
00205 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10560.00 10561.42
1996/10/31 10680.00 10852.70
1996/11/30 11050.00 11673.05
1996/12/31 10860.20 11441.81
1997/01/31 11383.58 12156.70
1997/02/28 11524.49 12252.00
1997/03/31 11192.34 11748.57
1997/04/30 11383.58 12449.96
1997/05/31 12259.24 13207.91
1997/06/30 12883.27 13799.63
1997/07/31 13597.89 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970822 095616 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CONSUMER INDUSTRIES - INSTITUTIONAL CLASS 35.98%
S&P 500(REGISTERED TRADEMARK) 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Consumer Industries - Institutional Class
on September 3, 1996, when the fund started. As the chart shows, by
July 31, 1997, the value of the investment would have grown to $13,598
- - a 35.98% increase on the initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
HFS, INC. 4.3
STARBUCKS CORP. 3.9
WAL-MART STORES, INC. 2.8
MIRAGE RESORTS, INC. 2.0
TJX COMPANIES, INC. 1.9
OUTDOOR SYSTEMS, INC. 1.8
BET HOLDINGS, INC. CLASS A 1.7
VIACOM, INC. CLASS B (NON-VTG.) 1.7
PROCTER & GAMBLE CO. 1.7
ITT CORP. 1.6
TOP INDUSTRIES AS OF JULY 31, 1997
HOTELS, MOTELS &
TOURIST CENTERS 12.0%
RESTAURANTS 8.4%
GENERAL APPAREL STORES 4.3%
GENERAL MERCHANDISE STORES 4.2%
CABLE TV OPERATORS 4.1%
ALL OTHERS 67.0%
ROW: 1, COL: 1, VALUE: 67.09999999999999
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 8.4
ROW: 1, COL: 6, VALUE: 11.9
% OF FUND'S INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective August 18, 1997, after the period
ended, Doug Chase (right) became Portfolio Manager of Fidelity Advisor
Consumer Industries Fund. The following is an interview with Paul
Antico, who managed the fund during the period covered by the report,
and Doug Chase, who discusses his investment philosophy and outlook.
Q. PAUL, HOW DID THE FUND PERFORM?
P.A. Since its inception on September 3, 1996, through July 31, 1997,
the fund's Institutional Class shares had a total return of 35.98%. By
comparison, the Standard & Poor's 500 Index returned 48.98%.
Q. WHAT FACTORS ACCOUNTED FOR THE FUND'S PERFORMANCE?
P.A. The key factor helping the fund's performance was the portfolio's
weighting in large-capitalization, blue chip consumer issues, which
were exceptionally strong through much of the period. I found
excellent value in such companies as Proctor & Gamble, Coca-Cola and
Gillette, as well as large-cap entertainment stocks such as Walt
Disney.
Q. DID YOU MAKE SIGNIFICANT CHANGES IN THE FUND'S HOLDINGS DURING THE
PERIOD?
P.A. I increased the fund's weightings in outdoor advertising,
specifically such positions in the billboard industry as Outdoor
Systems and Universal Outdoor Holdings. This industry has similar
dynamics to the TV and radio industries. It's very fragmented, quite
dependent on advertising dollars and going through a period of
consolidation that should help it over time. In the cable television
industry, I reduced the fund's positions in the operators, while
increasing them in the networks. With the operators - those providing
cable service to the consumer - I was concerned about the lack of
industry standards for both cable and telephone service and how that
might increase operating costs and slow market penetration. On the
other hand, I was much more optimistic about cable networks. Their
ratings have been going up dramatically relative to the broadcast
channels, so their advertising rates have gone up. During the period,
I increased the fund's positions in such cable networks as Time Warner
and BET Holdings.
Q. YOU ALSO SEEMED TO REDUCE YOUR HOLDINGS IN CONSUMER STAPLES . . .
P.A. That's right. Later in the period I began to feel that valuations
in this sector were too high and that a contraction was starting in
this part of the market. I felt that Coca-Cola's stock, for example,
was too expensive based on an over-valuing of their bottlers. With
respect to Procter & Gamble and Gillette, I began to feel that their
valuations were high as well and didn't see the same opportunities for
appreciation going forward.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
P.A. The fund benefited from the strong performance of such
diversified companies as Nokia and General Electric. Computer Learning
Centers, which has training centers around the nation, was an
excellent stock. Starbucks also performed very well. I liked the
coffee seller's plans for expansion both domestically and
internationally, its record of terrific growth and its potential to
exploit its brand name in the supermarkets.
Q. WERE THERE ANY DISAPPOINTMENTS?
P.A. Apparel stocks have been a terribly disappointing group for the
fund. Gadzooks, for example, had to pre-announce an earnings
disappointment, which hurt its stock. Other disappointments included
Viacom, which was affected by problems experienced by its Blockbuster
Video subsidiary. Another related disappointment was Hollywood
Entertainment, the number two company in its market after Blockbuster.
Hollywood's stock was dragged down by Blockbuster's tumble.
Q. TURNING TO YOU DOUG, WHAT'S YOUR INVESTMENT PHILOSOPHY AND OUTLOOK?
D.C. Like Paul, I tend to take a bottom-up approach to stock
selection. I work with a team of analysts to use the best ideas of
individuals who have thorough knowledge of the consumer sector. Where
I differ from Paul is that I place a greater emphasis on blending a
variety of large-, mid- and small-cap companies in the fund's
portfolio. Going forward, my research team and I will continue to
follow the Fidelity tradition of identifying those companies which
have the greatest potential for appreciation before the rest of the
market has had the opportunity to do so.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than $10 million
MANAGER: Doug Chase, since August 1997;
joined Fidelity in 1993
(checkmark)
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100%
SHARES VALUE (NOTE 1)
ADVERTISING - 4.7%
ADVERTISING - 2.9%
Outdoor Systems, Inc. (a) 6,550 $ 173,575
Universal Outdoor Holdings, Inc. (a) 2,900 105,488
279,063
ADVERTISING AGENCIES - 1.8%
Omnicom Group, Inc. 1,400 97,738
WPP Group PLC ADR 2,000 82,250
179,988
TOTAL ADVERTISING 459,051
APPAREL STORES - 6.8%
FAMILY CLOTHING STORES - 0.4%
Abercrombie & Fitch Co. (a) 1,800 35,775
FOOTWEAR - WHOLESALE - 0.4%
Kenneth Cole Productions, Inc. Class A (a) 2,600 39,650
GENERAL APPAREL STORES - 4.3%
Gap, Inc. 2,200 97,763
Men's Wearhouse, Inc. (The) (a) 2,000 74,000
Ross Stores, Inc. 2,100 66,413
TJX Companies, Inc. 6,100 182,238
420,414
SHOE STORES - 1.7%
Baker (J.), Inc. 12,000 105,000
Payless ShoeSource, Inc. (a) 1,000 61,500
166,500
WOMEN'S CLOTHING STORES - 0.0%
Charming Shoppes, Inc. (a) 200 1,175
TOTAL APPAREL STORES 663,514
BEVERAGES - 0.9%
SOFT DRINKS - 0.9%
PepsiCo, Inc. 2,200 84,288
BROADCASTING - 7.3%
CABLE TV OPERATORS - 4.1%
BET Holdings, Inc. Class A (a) 4,200 168,000
TCA Cable TV, Inc. 2,400 90,600
Time Warner, Inc. 2,500 136,406
395,006
RADIO BROADCASTING - 3.2%
Clear Channel Communications, Inc. (a) 1,600 99,600
Evergreen Media Corp. Class A (a) 2,300 105,800
Jacor Communications, Inc. Class A (a) 2,500 107,188
312,588
TOTAL BROADCASTING 707,594
BUILDING MATERIALS - 0.8%
PAINT & VARNISH - 0.8%
Sherwin-Williams Co. 2,500 80,156
COMMUNICATIONS EQUIPMENT - 1.3%
TELEPHONE EQUIPMENT - 1.3%
Nokia Corp. AB sponsored ADR 1,500 128,438
COMPUTER SERVICES & SOFTWARE - 1.0%
COMPUTER & SOFTWARE STORES - 0.5%
CompUSA, Inc. (a) 2,000 53,750
SHARES VALUE (NOTE 1)
PREPACKAGED COMPUTER SOFTWARE - 0.5%
Midway Games, Inc. (a) 1,300 $ 26,488
Spectrum Holobyte, Inc. (a) 4,100 17,681
44,169
TOTAL COMPUTER SERVICES & SOFTWARE 97,919
CONSUMER ELECTRONICS - 0.7%
RADIOS, TELEVISIONS, STEREOS - 0.7%
Philips Electronics NV 800 65,450
DRUG STORES - 2.7%
CVS Corp. 2,465 140,197
Rite Aid Corp. 500 25,969
Walgreen Co. 1,700 96,050
262,216
DRUGS & PHARMACEUTICALS - 1.2%
PHARMACEUTICAL PREPARATIONS - 1.2%
NBTY, Inc. (a) 2,000 52,750
Twinlab Corp. 3,000 67,875
120,625
ELECTRICAL EQUIPMENT - 2.0%
ELECTRICAL MACHINERY - 1.4%
General Electric Co. 500 35,094
Westinghouse Electric Corp. 4,007 96,418
131,512
WIRING & LIGHTING - 0.6%
Oak Industries, Inc. (a) 2,000 60,750
TOTAL ELECTRICAL EQUIPMENT 192,262
ENTERTAINMENT - 4.5%
MOTION PICTURE DISTRIBUTION - 0.5%
All American Communications, Inc.
Class B (non-vtg.) (a) 3,300 51,563
MOTION PICTURE PRODUCTION - 2.9%
Cinar Films, Inc. Class B (sub-vtg.) (a) 1,000 33,736
King World Productions, Inc. 2,000 80,750
Viacom, Inc. Class B (non-vtg.) (a) 5,400 166,725
281,211
RECREATIONAL SERVICES - 1.1%
MGM Grand, Inc. (a) 3,000 103,500
TOTAL ENTERTAINMENT 436,274
FOODS - 2.1%
CANNED SPECIALTIES - 1.3%
Campbell Soup Co. 2,400 124,500
PACKAGED & FROZEN FOODS - 0.8%
Dreyer's Grand Ice Cream, Inc. 2,000 84,500
TOTAL FOODS 209,000
GENERAL MERCHANDISE STORES - 8.9%
DEPARTMENT STORES - 2.4%
Federated Department Stores, Inc. (a) 3,300 144,581
Shopko Stores, Inc. 2,000 57,750
Stein Mart, Inc. (a) 1,000 29,375
231,706
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - CONTINUED
GENERAL MERCHANDISE STORES - 4.2%
Dayton Hudson Corp. 1,100 $ 71,088
Dollar General Corp. 1,600 70,400
Wal-Mart Stores, Inc. 7,200 270,450
411,938
VARIETY STORES - 2.3%
Dollar Tree Stores (a) 2,000 84,156
Michaels Stores, Inc. (a) 2,000 43,250
99 Cents Only Stores (a) 3,100 100,750
228,156
TOTAL GENERAL MERCHANDISE STORES 871,800
GROCERY STORES - 1.6%
GROCERY - RETAIL - 1.6%
Hannaford Brothers Co. 1,000 34,125
Safeway, Inc. (a) 2,300 123,338
157,463
HOUSEHOLD PRODUCTS - 4.6%
COSMETICS - 2.1%
Avon Products, Inc. 1,200 87,075
Gillette Co. 1,250 123,750
210,825
MANUFACTURED PRODUCTS - 0.5%
Helen of Troy Corp. (a) 1,500 46,500
SOAPS & DETERGENTS - 2.0%
Clorox Co. 200 27,925
Procter & Gamble Co. 1,090 165,816
193,741
TOTAL HOUSEHOLD PRODUCTS 451,066
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ACCESS & MEASURING CUTTING TOOLS - 0.5%
Stanley Works 1,000 45,313
LEASING & RENTAL - 1.4%
VIDEO TAPE RENTAL - 1.4%
Hollywood Entertainment Corp. (a) 7,200 135,000
LEISURE DURABLES & TOYS - 3.4%
MOTORCYCLES - 1.1%
Harley-Davidson, Inc. 2,000 106,500
SPORTING & ATHLETIC GOODS - 1.1%
Callaway Golf Co. 1,300 45,500
K2, Inc. 1,900 60,088
105,588
TOYS & GAMES - 0.7%
Mattel, Inc. 2,000 69,500
TRAVEL TRAILERS AND CAMPERS - 0.5%
Brunswick Corp. 1,500 48,375
TOTAL LEISURE DURABLES & TOYS 329,963
LODGING & GAMING - 12.8%
HOTELS, MOTELS, & TOURIST CENTERS - 12.0%
HFS, Inc. (a) 7,200 419,400
Hilton Hotels Corp. 2,200 69,163
Host Marriott Corp. (a) 7,000 139,563
SHARES VALUE (NOTE 1)
ITT Corp. (a) 2,500 $ 159,844
Mirage Resorts, Inc. (a) 7,300 195,275
Prime Hospitality Corp. (a) 3,000 55,125
Servico, Inc. (a) 3,000 51,000
Sun International Hotels Ltd. Ord. (a) 2,100 73,763
1,163,133
LODGING PLACES, OTHER THAN HOTELS - 0.4%
Doubletree Corp. (a) 1,000 42,000
RACING & GAMING - 0.4%
Penn National Gaming, Inc. (a) 2,500 40,625
TOTAL LODGING & GAMING 1,245,758
PAPER & FOREST PRODUCTS - 1.5%
PAPER - 1.5%
Kimberly-Clark Corp. 2,800 141,925
PRINTING - 1.8%
COMMERCIAL PRINTING - 1.8%
Donnelley (R.R.) & Sons Co. 3,000 120,563
Valassis Communications, Inc. (a) 2,000 56,125
176,688
PUBLISHING - 1.6%
NEWSPAPERS - 1.0%
Times Mirror Co. Class A 500 27,313
Tribune Co. 1,400 74,113
101,426
PERIODICALS - 0.6%
Playboy Enterprises, Inc. Class B (a) 5,000 56,875
TOTAL PUBLISHING 158,301
RESTAURANTS - 8.4%
CKE Restaurants, Inc. 3,000 103,875
Landry's Seafood Restaurants, Inc. (a) 3,000 76,500
Logan's Roadhouse, Inc. (a) 4,600 125,925
Outback Steakhouse, Inc. (a) 1,500 37,406
PJ America, Inc. 2,400 41,700
ShowBiz Pizza Time, Inc. (a) 2,100 48,563
Starbucks Corp. (a) 9,300 380,052
814,021
RETAIL & WHOLESALE, MISCELLANEOUS - 7.0%
HOBBY, TOY, & GAME SHOPS - 0.9%
Toys "R" Us, Inc. (a) 2,662 90,674
JEWELRY STORES - 0.4%
Zale Corp. (a) 2,000 43,500
RETAIL STORES - 0.7%
Gadzooks, Inc. (a) 4,200 71,925
RETAIL, GENERAL - 2.4%
Bed Bath & Beyond, Inc. (a) 3,700 122,100
Officemax, Inc. (a) 4,000 56,000
Pier 1 Imports, Inc. 3,000 52,875
230,975
SEWING STORES - 0.6%
Fabri-Centers of America, Inc. Class A (a) 2,100 54,731
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 2.0%
Corporate Express, Inc. 4,000 60,000
U.S. Office Products Co. (a) 4,500 129,938
189,938
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 681,743
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 2.3%
BEAUTY SHOPS - 1.2%
Steiner Leisure Ltd. 4,000 $ 115,000
COMMERCIAL, ECONOMIC, SOCIAL &
EDUCATIONAL RESEARCH - 0.3%
Gartner Group, Inc. Class A (a) 1,000 28,375
PERSONAL SERVICES - 0.8%
Block (H&R), Inc. 2,000 76,625
TOTAL SERVICES 220,000
TELEPHONE SERVICES - 0.7%
WorldCom, Inc. (a) 2,000 69,875
TEXTILES & APPAREL - 6.4%
APPAREL - 1.5%
Intimate Brands, Inc. Class A 1,000 23,063
Liz Claiborne, Inc. 2,600 124,475
147,538
COTTON MILLS - 0.7%
Galey & Lord, Inc. (a) 4,000 67,500
FOOTWEAR - 2.7%
Reebok International Ltd. 2,300 118,738
Timberland Co. Class A (a) 2,300 148,638
267,376
KNIT OUTERWEAR MILLS - 0.2%
Tultex Corp. (a) 2,900 16,494
MEN'S & BOYS' CLOTHING - 1.3%
Tommy Hilfiger (a) 2,900 129,231
TOTAL TEXTILES & APPAREL 628,139
TOBACCO - 1.1%
TOBACCO MANUFACTURERS - 1.1%
Philip Morris Companies, Inc. 2,400 108,300
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,722,159) $ 9,742,142
LEGEND
1. Non-income producing
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $8,768,303. Net unrealized appreciation
aggregated $973,839, of which $1,174,475 related to appreciated
investment securities and $200,636 related to depreciated investment
securities.
The fund hereby designates approximately $34,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 32%, 38%, and 32% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 9,742,142
(COST $8,722,159) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 698,327
RECEIVABLE FOR FUND SHARES SOLD 38,367
DIVIDENDS RECEIVABLE 1,853
INTEREST RECEIVABLE 1,553
PREPAID EXPENSES 11,034
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 10,322
TOTAL ASSETS 10,503,598
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 37,529
PAYABLE FOR INVESTMENTS PURCHASED 227,400
PAYABLE FOR FUND SHARES REDEEMED 15,346
DISTRIBUTION FEES PAYABLE 3,466
OTHER PAYABLES AND ACCRUED EXPENSES 33,337
TOTAL LIABILITIES 317,078
NET ASSETS $ 10,186,520
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 8,312,185
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 854,352
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,019,983
NET ASSETS $ 10,186,520
</TABLE>
CALCULATION OF MAXIMUM $13.48
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($943,613 (DIVIDED BY)
70,016 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.23
(100/94.75 OF $13.48)
CLASS T: $13.45
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,313,788 (DIVIDED BY)
543,935 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.94
(100/96.50 OF $13.45)
CLASS B: $13.42
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($595,858 (DIVIDED BY) 44,405
SHARES) A
INSTITUTIONAL CLASS: $13.51
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,333,261 (DIVIDED BY) 98,678 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 37,377
DIVIDENDS
INTEREST 26,177
TOTAL INCOME 63,554
EXPENSES
MANAGEMENT FEE $ 32,305
TRANSFER AGENT FEES17,026
DISTRIBUTION FEES 20,912
ACCOUNTING FEES AND EXPENSES 55,209
NON-INTERESTED TRUSTEES' COMPENSATION 21
CUSTODIAN FEES AND EXPENSES 10,228
REGISTRATION FEES 99,611
AUDIT 20,042
LEGAL 706
MISCELLANEOUS 930
TOTAL EXPENSES BEFORE REDUCTIONS 256,990
EXPENSE REDUCTIONS(156,844) 100,146
NET INVESTMENT INCOME (LOSS) (36,592)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 919,957
FOREIGN CURRENCY TRANSACTIONS 8 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 1,019,983
NET GAIN (LOSS) 1,939,948
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,903,356
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (36,592)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,019,983
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,903,356
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN (29,021)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 8,310,212
REDEMPTION FEES 1,973
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,186,520
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 10,186,520
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.55
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.48
TOTAL RETURN B, C 35.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 944
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.50)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE
5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED
A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. I THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES (SEE
NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.09)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.51
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.06)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.45
TOTAL RETURN B, C 35.25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,314
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.83)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT
OF SALE OF CLASS T SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED
A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.46
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.04
TOTAL FROM INVESTMENT OPERATIONS 1.96
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.42
TOTAL RETURN B, C 17.10%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 596
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.46% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.60)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS
DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF CLASS B SHARES) TO
JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES
TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.59
TOTAL FROM INVESTMENT OPERATIONS 3.58
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.51
TOTAL RETURN B, C 35.98%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,333
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.13)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD
SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO JULY 31, 1997. F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR
OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I THE AMOUNTS
SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Consumer Industries Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $18,524,322 and $10,722,119, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 1,695 $ 1,695
CLASS T 17,832 17,832
CLASS B 1,385 346
$ 20,912 $ 19,873
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 25,257 $ 20,040
CLASS T 50,036 39,715
CLASS B 501 0
*
$ 75,794 $ 59,755
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 2,522 .37% *
CLASS T *** FIIOC ** 11,718 .33% *
CLASS B FIIOC ** 668 .48% *
INSTITUTIONAL CLASS FIIOC ** 2,118 .21% *
$ 17,026
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC)
AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $3,290 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 38,837
CLASS T 2.00% 64,620
CLASS B 2.50% 13,072
INSTITUTIONAL CLASS 1.50% 38,977
$ 155,506
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,338 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 14.5%
of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET REALIZED GAIN $ 4,926
TOTAL $ 4,926
CLASS T
FROM NET REALIZED GAIN $ 16,753
TOTAL $ 16,753
CLASS B
FROM NET REALIZED GAIN $ -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET REALIZED GAIN $ 7,342
TOTAL $ 7,342
$ 29,021
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 88,027 $ 950,592
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 457 4,913
SHARES REDEEMED (18,468) (227,830)
NET INCREASE (DECREASE) 70,016 $ 727,675
CLASS T 629,432 $ 7,025,043
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,492 16,036
SHARES REDEEMED (86,989) (987,625)
NET INCREASE (DECREASE) 543,935 $ 6,053,454
CLASS B 45,607 $ 545,925
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED (1,202) (13,641)
NET INCREASE (DECREASE) 44,405 $ 532,284
INSTITUTIONAL CLASS 121,713 $ 1,256,098
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 682 7,342
SHARES REDEEMED (23,717) (266,641)
NET INCREASE (DECREASE) 98,678 $ 996,799
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 30,980
CLASS T 28,176
CLASS B 12,036
INSTITUTIONAL CLASS 28,419
$ 99,611
ADVISOR CYCLICAL INDUSTRIES FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
IMAHDR PRASUN SHR__CHT 19970731 19970813 143831 S00000000000001
FA CYCLICAL IND -CL I S&P 500
00204 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10390.00 10561.42
1996/10/31 10690.00 10852.70
1996/11/30 11330.00 11673.05
1996/12/31 11260.09 11441.81
1997/01/31 11562.78 12156.70
1997/02/28 11603.14 12252.00
1997/03/31 11239.91 11748.57
1997/04/30 11441.70 12449.96
1997/05/31 12390.13 13207.91
1997/06/30 13045.96 13799.63
1997/07/31 13964.13 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970813 143833 R00000000000014
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CYCLICAL INDUSTRIES - INSTITUTIONAL CLASS 39.64%
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Cyclical Industries - Institutional Class
on September 3, 1996, when the fund started. As the chart shows, by
July 31, 1997, the value of the investment would have grown to $13,964
- - a 39.64% increase on the initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 6.2
QUANEX CORP. 3.3
DOFASCO, INC. 3.0
MCDONNELL DOUGLAS CORP. 2.7
MINNESOTA MINING & MANUFACTURING CO. 2.5
WESTINGHOUSE ELECTRIC CORP. 2.4
DU PONT (E.I.) DE NEMOURS & CO. 2.4
CSX CORP. 2.4
EMERSON ELECTRIC CO. 2.2
ALUMINUM CO. OF AMERICA 2.1
TOP INDUSTRIES AS OF JULY 31, 1997
ELECTRICAL MACHINERY 10.8%
PAPER 6.1%
IRON & STEEL BLAST
FURNACES, MILLS 5.9%
CHEMICALS 5.3%
AIRCRAFT 5.2%
ALL OTHERS 66.7% *
ROW: 1, COL: 1, VALUE: 66.7
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 5.3
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 6.1
ROW: 1, COL: 6, VALUE: 10.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Albert Ruback, Portfolio Manager of Fidelity Advisor Cyclical
Industries Fund
Q. HOW DID THE FUND PERFORM, ALBERT?
A. From inception on September 3, 1996, through the end of the period
on July 31, 1997, the fund's Institutional Class shares had a return
of 39.64%. By comparison, the Standard & Poor's 500 Index was up
48.98% during the same time frame.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. Almost without exception, the stock market was led - dominated, in
fact - by a relatively small group of the largest-capitalization
stocks, such as Gillette and Coca-Cola. Companies such as these and a
couple of dozen others have been responsible for an unusually large
portion of the S&P 500's gains over the past couple of years. While
cyclical stocks - those whose performance is closely tied to the
strength of the overall economy - did well during the period, they
could not keep pace with this small group of market leaders.
Additionally, given the fund's focus on cyclical industries, I did not
invest in such mega-cap technology companies as Microsoft and Intel,
industry-leading firms whose stocks played a key role in the S&P 500's
outstanding returns. Looking more closely at the cyclical sector, it
performed well due to a generally strong economy, one characterized by
moderate growth, low unemployment and low interest rates. All in all,
it was an excellent environment for cyclical stocks.
Q. WHAT WAS YOUR INVESTING STRATEGY DURING THE PERIOD?
A. I favored three sectors - paper and forest products, metals and
mining, and aerospace and defense. Business prospects for companies in
the paper and forest products sector continued to improve, and
valuations were still attractive even as many of the stocks
appreciated in price. Fort Howard and James River are good examples of
my investments in this sector. On the metals side, particularly
aluminum, there were low inventory levels and what I believed to be an
inflection point for commodity prices - meaning a point where I felt
commodity metal prices were going to increase. Alcoa - the Aluminum
Company of America - and Alumax helped the fund in this area. As far
as aerospace and defense, I felt we were in the early phases of a huge
backlog-building cycle where cash-flow generation would be enormous
and stocks in this area would appreciate. Boeing and Lockheed Martin
were two holdings that reflected this strategy.
Q. SEVEN OF THE FUND'S 10 LARGEST HOLDINGS AT THE END OF THE PERIOD
WERE TOP 10 HOLDINGS SIX MONTHS AGO. WHICH DID WELL? WERE THERE
DISAPPOINTMENTS?
A. Maintaining my positions in top holdings is not unusual for me, and
I wasn't a high-velocity guy with these investments. When I make an
investment I tend to hold the stock for some time. This approach
worked well for the fund, as its largest investments yielded strong
results. General Electric, the fund's largest holding during the
period, and aerospace and defense giant McDonnell Douglas, the fund's
fourth-largest position, were both up over 50%. GE generated strong
earnings and cash flow over the past nine months; it's just a very
well-run company. Quanex, an aluminum and steel producer, sold off its
low-margin businesses to re-invest in its high-margin businesses as
part of a broad reconfiguration of the company. Its stock rose over
20% during the period, while the stock of Westinghouse Electric,
another top 10 carryover from six months ago, rose over 30%. DuPont
and Emerson Electric, both long-time holdings, also made welcome
contributions to performance. While the fund's top 10 holdings
performed well, there were a few disappointments among smaller
positions such as Nucor, a steel manufacturer, Ford Motor Company, and
specialty chemical company Cytec Industries. Each of these stocks
appreciated, but not as significantly as the fund's largest holdings.
Q. WHAT SIGNIFICANT CHANGES DID YOU MAKE TO THE FUND SINCE YOUR LAST
REPORT TO SHAREHOLDERS?
A. One major new investment was Dofasco, the fund's third-largest
position at the end of July. This is a Canadian steel company that I
felt was undervalued when compared to its American steel counterparts
and had the potential for strong earnings growth. On the other hand, I
sold our holdings in General Motors, a top 10 holding six months ago.
I felt that we were getting sort of late in the auto-buying cycle,
with manufacturers' rebates growing and, therefore, company valuations
becoming less attractive.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ALBERT?
A. Generally speaking, the only two areas within cyclicals that I'm
worried about are autos and chemicals, where I think possible
over-capacity by the producers could hurt their profitability. Right
now everything seems to be holding up all right, so I'm not that
concerned. I think the key question, though, is what the Federal
Reserve Board will do with interest rates. Cyclical industries, by
definition, are tied to the performance of the economy. If the Fed
raises rates to slow down economic growth, it will most likely have a
negative effect on cyclical companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than $4 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
(checkmark)
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.2%
AIRCRAFT - 5.2%
Boeing Co. 1,300 $ 76,456
Lockheed Martin Corp. 257 27,371
McDonnell Douglas Corp. 1,500 114,750
218,577
AIRCRAFT & PARTS - 1.8%
Precision Castparts Corp. 200 12,575
Rohr Industries, Inc. (a) 200 4,750
Sundstrand Corp. 600 37,200
Textron, Inc. 200 14,013
Wyman-Gordon Co. (a) 200 5,300
73,838
AIRCRAFT ENGINES & PARTS - 1.7%
AlliedSignal, Inc. 400 36,900
United Technologies Corp. 400 33,825
70,725
AIRCRAFT EQUIPMENT - 0.2%
Aviall, Inc. (a) 500 7,469
MISSILES & SPACE VEHICLES - 0.3%
Thiokol Corp. 200 14,863
TOTAL AEROSPACE & DEFENSE 385,472
AIR TRANSPORTATION - 2.1%
AIR TRANSPORT, MAJOR NATIONAL - 2.1%
AMR Corp. (a) 500 53,781
America West Holding Corp. Class B (a) 800 11,050
Continental Airlines, Inc. Class B (a) 500 18,625
Ryanair Holdings PLC sponsored ADR 200 5,650
89,106
AUTOS, TIRES, & ACCESSORIES - 5.4%
AUTO & TRUCK PARTS - 1.8%
Borg-Warner Automotive, Inc. 200 11,150
Eaton Corp. 200 18,063
SPX Corp. 700 36,400
Wynn's International, Inc. 300 9,000
74,613
MOTOR VEHICLES & CAR BODIES - 3.6%
Chrysler Corp. 1,600 59,400
Ford Motor Co. 1,600 65,400
Honda Motor Co., Ltd. ADR 200 13,213
Lear Corp. (a) 300 14,363
152,376
TOTAL AUTOS, TIRES, & ACCESSORIES 226,989
BUILDING MATERIALS - 1.7%
AIRCONDITIONING EQUIPMENT - 0.7%
American Standard Companies, Inc. (a) 400 19,875
York International Corp. 200 9,663
29,538
PAINT & VARNISH - 0.7%
Lilly Industrial Coatings, Inc. Class A 800 17,850
Sherwin-Williams Co. 300 9,619
27,469
PLUMBING SUPPLIES - WHOLESALE - 0.3%
Masco Corp. 300 14,063
TOTAL BUILDING MATERIALS 71,070
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 9.4%
ADHESIVES & SEALANTS - 0.9%
Ferro Corp. 500 $ 18,531
Nalco Chemical Co. 500 20,406
38,937
AGRICULTURAL CHEMICALS - 0.3%
OM Group, Inc. 300 10,369
CHEMICALS - 5.3%
Cytec Industries, Inc. (a) 800 31,600
du Pont (E.I.) de Nemours & Co. 1,500 100,406
Monsanto Co. 1,600 79,700
NL Industries, Inc. 900 11,925
223,631
INDUSTRIAL GASES - 1.2%
Air Products & Chemicals, Inc. 300 26,456
Praxair, Inc. 400 22,050
48,506
PLASTICS & SYNTHETIC RESINS - 0.2%
Spartech Corp. 600 9,225
UNSUPPORTED PLASTICS FILM & SHEET - 1.5%
Sealed Air Corp. (a) 200 9,375
W.R. Grace & Co. 900 55,350
64,725
TOTAL CHEMICALS & PLASTICS 395,393
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Perceptron, Inc. (a) 300 9,863
COMPUTERS & OFFICE EQUIPMENT - 0.7%
OFFICE AUTOMATION - 0.7%
Pitney Bowes, Inc. 400 30,050
CONSTRUCTION - 0.4%
GENERAL BUILDING - 0.1%
D.R. Horton, Inc. 600 7,200
OPERATIVE BUILDERS - 0.3%
Kaufman & Broad Home Corp. 500 10,688
TOTAL CONSTRUCTION 17,888
CONSUMER DURABLES - 2.5%
MANUFACTURING INDUSTRIES - 2.5%
Minnesota Mining & Manufacturing Co. 1,100 104,225
CONSUMER ELECTRONICS - 0.5%
APPLIANCES - 0.5%
Maytag Co. 500 14,594
Whirlpool Corp. 100 5,000
19,594
DEFENSE ELECTRONICS - 1.4%
Litton Industries, Inc. (a) 400 20,775
Northrop Grumman Corp. 200 23,025
Raytheon Co. 300 16,763
60,563
ELECTRIC UTILITY - 0.2%
COGENERATION-SM POWER PRODUCER - 0.2%
Ogden Corp. 400 8,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 11.8%
ELECTRICAL MACHINERY - 10.8%
Emerson Electric Co. 1,600 $ 94,400
General Electric Co. 3,700 259,683
Westinghouse Electric Corp. 4,200 101,063
455,146
TV & RADIO COMMUNICATION EQUIPMENT - 1.0%
Gilat Satellite Networks Ltd. (a) 1,100 39,463
TOTAL ELECTRICAL EQUIPMENT 494,609
ENGINEERING - 1.7%
ARCHITECTS & ENGINEERS - 1.7%
EG & G, Inc. 400 8,200
Fluor Corp. 1,000 61,500
69,700
HOLDING COMPANIES - 1.1%
HOLDING COMPANY OFFICES - 1.1%
Norfolk Southern Corp. 400 44,300
HOUSEHOLD PRODUCTS - 0.1%
MANUFACTURED PRODUCTS - 0.1%
Memtec Ltd. sponsored ADR 200 5,500
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ACCESS & MEASUREMENT CUTTING TOOLS - 0.3%
Stanley Works 300 13,594
CONSTRUCTION EQUIPMENT - 1.3%
Caterpillar, Inc. 1,000 56,000
FARM MACHINERY & EQUIPMENT - 1.1%
Case Corp. 700 43,706
GENERAL INDUSTRIAL MACHINERY - 2.3%
Illinois Tool Works, Inc. 600 31,125
Ingersoll-Rand Co. 500 34,031
Tyco International Ltd. 400 32,400
97,556
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
JLK Direct Distribution, Inc. Class A (a) 100 2,569
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 213,425
IRON & STEEL - 11.6%
BLAST FURNACES - 1.9%
AK Steel Holding Corp. 200 9,175
Allegheny Teledyne, Inc. 1,200 37,350
Steel Dynamics, Inc. (a) 1,300 34,450
80,975
FABRICATED METAL PRODUCTS - 0.7%
Aeroquip Vickers, Inc. 200 10,963
SPS Technologies, Inc. (a) 200 16,538
27,501
IRON & STEEL BLAST FURNACES, MILLS - 5.9%
Inland Steel Industries, Inc. 1,700 38,994
Nucor Corp. 1,100 68,269
Quanex Corp. 4,500 140,063
247,326
IRON & STEEL FOUNDRIES - 3.0%
Dofasco, Inc. 6,000 127,326
SHARES VALUE (NOTE 1)
METAL FORGINGS & STAMPINGS - 0.1%
TriMas Corp. 200 $ 5,838
TOTAL IRON & STEEL 488,966
METALS & MINING - 10.1%
ALUMINUM, EXTRUDED PRODUCTS - 1.1%
Alumax, Inc. (a) 1,100 46,613
COPPER ORES - 0.2%
Freeport McMoRan Copper & Gold, Inc.
Class A 300 8,175
METAL MINING - 1.0%
Phelps Dodge Corp. 500 42,531
METAL ORES - 0.6%
Falconbridge Ltd. 700 15,032
Pechiney SA Class A 200 8,677
23,709
METALS & MINERALS - WHOLESALE - 0.3%
Elkem ASA 700 13,896
METALS SERVICE CENTERS - WHOLESALE - 0.2%
Ryerson Tull, Inc. Class A (a) 500 8,000
NON-METALLIC MINERAL MINING - 0.2%
Martin Marietta Materials, Inc. 274 9,470
NONFERROUS ROLLING & DRAWING - 1.8%
Essex International, Inc. 1,100 36,575
Special Metals Corp. 400 7,200
Superior Telecom, Inc. (a) 1,100 33,138
76,913
PRIMARY PRODUCTION OF ALUMINUM - 0.4%
Reynolds Metals Co. 200 15,600
PRIME NONFERROUS SMELTING - 4.1%
Alcan Aluminium Ltd. 1,000 39,177
Aluminum Co. of America 1,000 88,500
Inco Ltd. 1,400 43,168
170,845
SECONDARY NONFERROUS SMELTING - 0.2%
IMCO Recycling, Inc. 400 7,800
TOTAL METALS & MINING 423,552
PACKAGING & CONTAINERS - 2.6%
GLASS CONTAINERS - 1.6%
Owens-Illinois, Inc. (a) 2,000 69,000
METAL CANS & CONTAINERS - 1.0%
Silgan Holdings, Inc. 1,100 40,494
TOTAL PACKAGING & CONTAINERS 109,494
PAPER & FOREST PRODUCTS - 9.0%
CONVERTED PAPER & PAPERBOARD - 0.5%
Boise Cascade Corp. 500 18,531
LUMBER & WOOD - 0.6%
Weyerhaeuser Co. 400 24,900
PAPER - 6.1%
Champion International Corp. 400 24,800
Chesapeake Corp. 1,500 50,625
Georgia-Pacific Corp. 200 18,888
James River Corp. of Virginia 1,100 45,306
Stone Container Corp. 1,300 21,613
Temple-Inland, Inc. 400 26,925
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - CONTINUED
PAPER - CONTINUED
Union Camp Corp. 400 $ 23,425
Westvaco Corp. 700 23,406
Willamette Industries, Inc. 300 22,856
257,844
PAPER MILLS - 1.3%
Fort Howard Corp. (a) 1,000 55,750
PAPERBOARD MILLS - 0.5%
Mead Corp. 300 21,600
TOTAL PAPER & FOREST PRODUCTS 378,625
PHOTOGRAPHIC EQUIPMENT - 0.2%
Imation Corp. (a) 300 7,369
POLLUTION CONTROL - 1.7%
REFUSE SYSTEMS - 1.4%
Browning-Ferris Industries, Inc. 500 18,500
United Waste Systems, Inc. (a) 300 12,825
Waste Management, Inc. 900 28,800
60,125
SANITARY SERVICES - 0.3%
USA Waste Services, Inc. (a) 300 12,094
TOTAL POLLUTION CONTROL 72,219
PRINTING - 0.4%
COMMERCIAL PRINTING - 0.4%
Deluxe Corp. 500 16,656
RAILROADS - 4.0%
RAILROAD EQUIPMENT - 0.4%
Bombardier, Inc. Class B 700 16,099
RAILROADS - 3.6%
CSX Corp. 1,600 98,800
Wisconsin Central Transportation Corp. (a) 1,650 51,666
150,466
TOTAL RAILROADS 166,565
SHIP BUILDING & REPAIR - 1.3%
SHIP BUILDERS - 1.3%
Avondale Industries, Inc. (a) 900 20,644
General Dynamics Corp. 300 26,550
Newport News Shipbuilding, Inc. 400 8,225
55,419
TEXTILES & APPAREL - 0.6%
COTTON MILLS - 0.2%
Galey & Lord, Inc. (a) 400 6,750
TEXTILE MILL PRODUCTS - 0.4%
Unifi, Inc. 500 19,094
TOTAL TEXTILES & APPAREL 25,844
TRUCKING & FREIGHT - 1.8%
AIR COURIER SERVICES - 0.2%
CNF Transportation, Inc. 300 10,463
FREIGHT FORWARDING - 0.5%
Air Express International Corp. 300 9,281
Expeditors International of
Washington, Inc. 300 11,363
20,644
SHARES VALUE (NOTE 1)
TRUCKING, LOCAL & LONG DISTANCE - 0.4%
Werner Enterprises, Inc. 700 $ 15,050
TRUCKING, LONG DISTANCE - 0.7%
USFreightways Corp. 400 12,425
Yellow Corp. (a) 700 18,900
31,325
TOTAL TRUCKING & FREIGHT 77,482
TOTAL COMMON STOCKS
(Cost $3,318,434) 4,068,338
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b)
(Cost $134,952) 134,952 134,952
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,453,386) $ 4,203,290
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $3,459,274. Net unrealized appreciation
aggregated $744,016, of which $761,570 related to appreciated
investment securities and $17,554 related to depreciated investment
securities.
The fund hereby designates approximately $223,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 57%, 56%, and 51% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 4,203,290
(COST $3,453,386) - SEE ACCOMPANYING SCHEDULE
CASH 10,866
RECEIVABLE FOR INVESTMENTS SOLD 14,237
RECEIVABLE FOR FUND SHARES SOLD 82,604
DIVIDENDS RECEIVABLE 2,607
INTEREST RECEIVABLE 552
PREPAID EXPENSES 11,034
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 16,501
TOTAL ASSETS 4,341,691
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 16,749
DISTRIBUTION FEES PAYABLE 967
OTHER PAYABLES AND ACCRUED EXPENSES 31,287
TOTAL LIABILITIES 49,003
NET ASSETS $ 4,292,688
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,120,893
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 421,898
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 749,897
AND ASSETS AND LIABILITIES ON
FOREIGN CURRENCIES
NET ASSETS $ 4,292,688
</TABLE>
CALCULATION OF MAXIMUM $13.80
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($364,562 (DIVIDED BY)
26,410 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.56
(100/94.75 OF $13.80)
CLASS T: $13.77
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($1,919,852 (DIVIDED BY)
139,401 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.27
(100/96.50 OF $13.77)
CLASS B: $13.75
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($252,068 (DIVIDED BY) 18,329
SHARES) A
INSTITUTIONAL CLASS: $13.84
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,756,206 (DIVIDED BY) 126,880 SHARES)
B 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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 70,876
DIVIDENDS
INTEREST 13,343
TOTAL INCOME 84,219
EXPENSES
MANAGEMENT FEE $ 30,106
TRANSFER AGENT FEES 10,791
DISTRIBUTION FEES 6,016
ACCOUNTING FEES AND EXPENSES 55,106
NON-INTERESTED TRUSTEES' COMPENSATION 16
CUSTODIAN FEES AND EXPENSES 9,413
REGISTRATION FEES 97,172
AUDIT 20,849
LEGAL 712
MISCELLANEOUS 1,702
TOTAL EXPENSES BEFORE REDUCTIONS 231,883
EXPENSE REDUCTIONS (152,519) 79,364
NET INVESTMENT INCOME 4,855
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 473,728
FOREIGN CURRENCY TRANSACTIONS (13) 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 749,904
ASSETS AND LIABILITIES IN (7) 749,897
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,223,612
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,228,467
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ 4,855
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 749,897
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,228,467
DISTRIBUTIONS TO SHAREHOLDERS (10,690)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (45,982)
TOTAL DISTRIBUTIONS (56,672)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 3,118,751
REDEMPTION FEES 2,142
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,292,688
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 4,292,688
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.89
TOTAL FROM INVESTMENT OPERATIONS 3.88
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.80
TOTAL RETURN B, C 39.11%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 365
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.09)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER
SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT
OF SALE OF CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED
A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.89
TOTAL FROM INVESTMENT OPERATIONS 3.85
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.77
TOTAL RETURN B, C 38.81%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,920
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.97% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.37)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT
OF SALE OF CLASS T SHARES) TO JULY
31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.25
TOTAL FROM INVESTMENT OPERATIONS 2.19
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.75
TOTAL RETURN B, C 18.94%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 252
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.45% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.11)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE
CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF CLASS B SHARES) TO
JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .03
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.91
TOTAL FROM INVESTMENT OPERATIONS 3.94
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.10)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.84
TOTAL RETURN B, C 39.64%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,756
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE
REDUCTIONS 1.48% A,
G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .25% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND
HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE
5 OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Cyclical Industries Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $10,211,776 and $7,367,069, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the aver
age net assets of the fund. The group fee rate is the weighted average
of a series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. For the
period, the management fee was equivalent to an annualized rate of
.60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 606 $ 606
CLASS T 4,874 4,874
CLASS B 536 151
$ 6,016 $ 5,631
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,537 $ 5,375
CLASS T 8,587 6,383
CLASS B 50 0
*
$ 17,174 $ 11,758
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 1,392 .58% *
CLASS T *** FIIOC ** 3,853 .40% *
CLASS B FIIOC ** 265 .43% *
INSTITUTIONAL CLASS FIIOC ** 5,281 .14% *
$ 10,791
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $629 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 34,280
CLASS T 2.00% 42,467
CLASS B 2.50% 13,104
INSTITUTIONAL CLASS 1.50% 61,466
$ 151,317
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $429 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $391
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
INSTITUTIONAL CLASS $ 382
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 35.2%
of the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 10% of the
total outstanding shares of the fund, totalling 14.8%.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET INVESTMENT INCOME $ 210
FROM NET REALIZED GAIN 1,679
TOTAL $ 1,889
CLASS T
FROM NET INVESTMENT INCOME $ 596
FROM NET REALIZED GAIN 4,766
TOTAL $ 5,362
CLASS B
FROM NET INVESTMENT INCOME $ -
FROM NET REALIZED GAIN -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 9,884
FROM NET REALIZED GAIN 39,537
TOTAL $ 49,421
$ 56,672
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 29,864 $ 317,058
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 169 1,885
SHARES REDEEMED (3,623) (42,214)
NET INCREASE (DECREASE) 26,410 $ 276,729
CLASS T 159,328 $ 1,808,520
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 440 4,903
SHARES REDEEMED (20,367) (254,181)
NET INCREASE (DECREASE) 139,401 $ 1,559,242
CLASS B 18,329 $ 222,169
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED - -
NET INCREASE (DECREASE) 18,329 $ 222,169
INSTITUTIONAL CLASS 595,951 $ 6,237,387
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,432 49,421
SHARES REDEEMED (473,503) (5,226,197)
NET INCREASE (DECREASE) 126,880 $ 1,060,611
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 30,423
CLASS T 26,681
CLASS B 12,026
INSTITUTIONAL CLASS 28,042
$ 97,172
ADVISOR FINANCIAL SERVICES FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970814 160333 S00000000000001
FA FINANCIAL SERV -CL I S&P 500
00273 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10620.00 10561.42
1996/10/31 11190.00 10852.70
1996/11/30 12090.00 11673.05
1996/12/31 11729.57 11441.81
1997/01/31 12351.14 12156.70
1997/02/28 12501.52 12252.00
1997/03/31 11619.29 11748.57
1997/04/30 12571.69 12449.96
1997/05/31 13052.91 13207.91
1997/06/30 13734.63 13799.63
1997/07/31 15168.24 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 160335 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
FINANCIAL SERVICES - INSTITUTIONAL CLASS 51.78%
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Financial Services - Institutional Class
on September 3, 1996, when the fund started. As the chart shows, by
July 31, 1997, the value of the investment would have grown to $15,178
- - a 51.78% increase on the initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
FIRST CHICAGO NBD CORP. 4.9
BANC ONE CORP. 4.9
CITICORP 4.7
NORTHERN TRUST CORP. 4.7
AMERICAN INTERNATIONAL GROUP, INC. 4.5
ASSOCIATES FIRST CAPITAL CORP. 4.5
HOUSEHOLD INTERNATIONAL, INC. 4.4
NATIONSBANK CORP. 4.4
BANKAMERICA CORP. 4.3
MBNA CORP. 4.2
TOP INDUSTRIES AS OF JULY 31, 1997
NATIONAL COMMERCIAL
BANKS 35.7%
PERSONAL CREDIT
INSTITUTIONS 17.4%
PROPERTY-CASUALTY &
REINSURANCE 9.6%
FINANCIAL SERVICES 8.9%
STATE BANKS FEDERAL
RESERVE 8.4%
ALL OTHERS 20.0%*
ROW: 1, COL: 1, VALUE: 20.0
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 8.9
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 17.4
ROW: 1, COL: 6, VALUE: 35.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Louis Salemy, Portfolio Manager of Fidelity Advisor
Financial Services Fund
Q. HOW DID THE FUND PERFORM, LOUIS?
A. The fund did well. From its inception on September 3, 1996 through
July 31, 1997, the fund's Institutional Class shares produced a return
of 51.78%. The Standard & Poor's 500 Index, on the other hand,
returned 48.98% during the same period.
Q. CAN YOU DESCRIBE THE INVESTING CLIMATE FOR FINANCIAL STOCKS AND HOW
IT RELATED TO FUND PERFORMANCE?
A. The interest-rate situation remained relatively moderate through
the end of 1996, but this stock-friendly environment didn't last long.
Throughout the first quarter of 1997, investors expressed concern over
the direction of rates and wondered whether the economy could sustain
its steady growth pace. In March, the Federal Reserve Board announced
it was raising interest rates by a quarter of a percentage point and,
since finance stocks are especially susceptible to rate movement, we
witnessed some pretty tough sledding through the end of April. In the
spring and early summer, economic news filtered out indicating that
while the economy was still growing at a good clip, the pace had
slowed some. Additionally, the Fed indicated no desire to raise rates
again, as many had suspected. These developments had a favorable
effect on the fund's performance, as investors gradually regained
confidence in the sector. As a result, financial stocks bounced back
through the end of July.
Q. FROM AN OUTSIDER'S PERSPECTIVE, MANY FINANCIAL COMPANIES SEEM TO BE
ENGAGED IN SIMILAR BUSINESSES. WHEN YOU'RE LOOKING OVER POTENTIAL
BUYS, WHAT SETS A GOOD OPPORTUNITY APART FROM THE REST OF THE PACK?
A. I look primarily for companies that have good internal growth
prospects. Companies that are investing in themselves - that is,
devoting capital to their existing businesses - frequently exhibit
strong revenue growth. I also look for companies that distinguish
themselves through the services they offer. American Express is a good
example. With their credit cards, American Express allows consumers
the choice of accepting a full menu of services, just a few or none.
American Express then bases its fee structure according to the
services chosen. In addition, the company also offers "membership
rewards." In exchange for using the card, consumers often get "points"
that can be applied to airline miles or toward other types of
purchases. This type of creativity often sets one stock apart from
another.
Q. THE FINANCIAL INDUSTRY HAS SEEN ITS FAIR SHARE OF MERGER AND
ACQUISITION ACTIVITY AND CORPORATE RESTRUCTURINGS OVER THE PAST FEW
YEARS. HAS THIS TREND RECEDED?
A. I think it has. There was some takeover activity within the
brokerage universe, but many of the deals involved privately held
companies. In terms of restructurings, much of the activity has
already taken place. Very few companies have a big reorganization
ahead of them. If they haven't restructured by now, chances are that
someone else has done it for them in the form of an acquisition.
Q. DID YOU PLAY ANY PARTICULAR THEMES DURING THE PERIOD?
A. One that comes to mind concerns consumer credit. Personal
bankruptcies - after hitting an all-time high in 1996 and early 1997 -
appear to be shrinking and consumer credit growth has slowed
dramatically. Credit-card companies have accomplished this mainly by
securing their receivables; that is, they're requiring such solid
collateral as a home, decreasing the amount of credit available to the
consumer and being more aggressive in their debt collection efforts.
Some of the fund's top positions - including First Chicago and
Household International - have credit-card operations and benefited
from this trend.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The credit-card stocks I just mentioned performed well, as did
American Express. Disappointments included Mercury Finance, which ran
into accounting problems early in 1997, and Capital One Financial, a
credit-card issuer that experienced scaled-back earnings expectations.
Q. WHAT'S YOUR OUTLOOK?
A. I think we'll see a continuation of the benign rate environment
that existed at the end of the period, and I fully expect the consumer
credit situation to improve. Improving credit conditions would play a
big part in prolonging the sector's strong performance.
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
BANKS - 44.1%
NATIONAL COMMERCIAL BANKS - 35.7%
Banc One Corp. 60,652 $ 3,404,094
Bank of New York Co., Inc. 57,980 2,815,654
BankAmerica Corp. 40,000 3,020,000
Capital One Financial Corp. 45,000 1,656,563
Citicorp 24,365 3,307,549
First Bank System, Inc. 24,000 2,136,000
Fleet Financial Group, Inc. 9,600 651,600
National City Corp. 44,970 2,675,715
NationsBank Corp. 43,060 3,065,334
U.S. Bancorp 5,100 340,425
Wachovia Corp. 30,105 1,941,773
Zions Bancorp 1,200 42,900
25,057,607
STATE BANKS FEDERAL RESERVE - 8.4%
Barnett Banks, Inc. 45,000 2,562,188
Crestar Financial Corp. 450 21,234
Northern Trust Corp. 60,000 3,300,000
5,883,422
TOTAL BANKS 30,941,029
COMPUTER SERVICES & SOFTWARE - 0.1%
COMPUTER SERVICES - 0.1%
BancTec, Inc. (a) 2,000 48,875
CREDIT & OTHER FINANCE - 26.3%
FINANCIAL SERVICES - 8.9%
American Express Co. 32,600 2,730,250
Finova Group, Inc. 280 25,270
First Chicago NBD Corp. 45,670 3,465,211
Transamerica Corp. 400 40,350
6,261,081
PERSONAL CREDIT INSTITUTIONS - 17.4%
Associates First Capital Corp. 47,600 3,138,625
Beneficial Corp. 39,800 2,885,500
Green Tree Financial Corp. 3,035 143,024
Household International, Inc. 24,080 3,118,360
MBNA Corp. 65,000 2,925,000
12,210,509
TOTAL CREDIT & OTHER FINANCE 18,471,590
FEDERAL SPONSORED CREDIT - 6.4%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.4%
Federal Home Loan Mortgage
Corporation 30,720 1,107,840
Federal National Mortgage Association 49,635 2,348,356
Student Loan Marketing Association 7,000 1,049,563
4,505,759
INSURANCE - 12.9%
ACCIDENT & HEALTH INSURANCE - 0.4%
Aetna, Inc. 600 68,363
Provident Companies, Inc. 2,250 142,594
UICI (a) 1,600 50,000
260,957
INSURANCE CARRIERS - 1.2%
AFLAC, Inc. 2,200 122,650
AMBAC, Inc. 5,800 494,088
MGIC Investment Corp. 4,400 231,275
848,013
SHARES VALUE (NOTE 1)
LIFE INSURANCE - 1.6%
American Bankers Insurance Group, Inc. 2,600 $ 175,988
Aon Corp. 3,000 168,000
Penncorp. Financial Group, Inc. 1,425 52,636
Providian Financial Corp. 9,505 372,477
UNUM Corp. 8,400 373,800
1,142,901
MULTI-LINE INSURANCE - 0.1%
CIGNA Corp. 200 39,900
PROPERTY-CASUALTY & REINSURANCE - 9.6%
American International Group, Inc. 29,620 3,154,526
Aegon NV (Reg.) 4,129 313,288
Allstate Corp. 35,285 2,787,515
Berkley (W.R.) Corp. 2,000 115,500
Hartford Financial Services Group, Inc. 1,600 139,400
Progressive Corp. 2,200 235,950
6,746,179
TOTAL INSURANCE 9,037,950
REAL ESTATE INVESTMENT TRUSTS - 0.4%
IRT Property Co. 20,000 256,250
SECURITIES INDUSTRY - 1.2%
SECURITY & COMMODITY BROKERS - 0.3%
Legg Mason, Inc. 2,500 153,594
Merrill Lynch & Co., Inc. 760 53,533
207,127
SECURITY BROKERS & DEALERS - 0.9%
Lehman Brothers Holdings, Inc. 12,000 597,750
Morgan Stanley Dean Witter Discover
and Co. 660 34,526
632,276
TOTAL SECURITIES INDUSTRY 839,403
TOTAL COMMON STOCKS
(Cost $52,087,096) 64,100,856
CASH EQUIVALENTS - 8.6%
Taxable Central Cash Fund (b)
(Cost $6,048,731) 6,048,731 6,048,731
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $58,135,827) $ 70,149,587
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $58,195,295. Net unrealized appreciation
aggregated $11,954,292, of which $12,109,290 related to appreciated
investment securities and $154,998 related to depreciated investment
securities.
The fund hereby designates approximately $10,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100%, 100%, and 96% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 70,149,587
(COST $58,135,827) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 1,407,278
DIVIDENDS RECEIVABLE 65,603
INTEREST RECEIVABLE 29,258
PREPAID EXPENSES 11,033
TOTAL ASSETS 71,662,759
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,711,529
PAYABLE FOR FUND SHARES REDEEMED 68,646
ACCRUED MANAGEMENT FEE 26,009
DISTRIBUTION FEES PAYABLE 26,466
OTHER PAYABLES AND ACCRUED EXPENSES 57,017
TOTAL LIABILITIES 1,889,667
NET ASSETS $ 69,773,092
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 57,659,787
UNDISTRIBUTED NET INVESTMENT INCOME 86,089
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS 13,456
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 12,013,760
NET ASSETS $ 69,773,092
</TABLE>
CALCULATION OF MAXIMUM $15.11
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($6,275,026 (DIVIDED BY)
415,259 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.95
(100/94.75 OF $15.11)
CLASS T: $15.07
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($52,003,160 (DIVIDED BY)
3,451,219 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.62
(100/96.50 OF $15.07)
CLASS B: $15.04
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($7,736,849 (DIVIDED BY)
514,542 SHARES) A
INSTITUTIONAL CLASS: $15.14
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,758,057 (DIVIDED BY) 248,298 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 434,500
DIVIDENDS
INTEREST 158,722
TOTAL INCOME 593,222
EXPENSES
MANAGEMENT FEE $ 156,182
TRANSFER AGENT FEES71,040
DISTRIBUTION FEES 121,702
ACCOUNTING FEES AND EXPENSES 55,208
NON-INTERESTED TRUSTEES' COMPENSATION 80
CUSTODIAN FEES AND EXPENSES 8,064
REGISTRATION FEES 117,979
AUDIT 20,069
LEGAL 977
MISCELLANEOUS 5,216
TOTAL EXPENSES BEFORE REDUCTIONS 556,517
EXPENSE REDUCTIONS(64,069) 492,448
NET INVESTMENT INCOME 100,774
REALIZED AND UNREALIZED GAIN (LOSS) 27,297
NET REALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 12,013,760
NET GAIN (LOSS) 12,041,057
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,141,831
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ 100,774
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 27,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 12,013,760
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,141,831
DISTRIBUTIONS TO SHAREHOLDERS (14,685)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (13,841)
TOTAL DISTRIBUTIONS (28,526)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 57,645,194
REDEMPTION FEES14,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 69,773,092
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $86,089) $ 69,773,092
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .06
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.06
TOTAL FROM INVESTMENT OPERATIONS 5.12
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.11
TOTAL RETURN B, C 51.35%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,275
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .55% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE
HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE
PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATAD 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.04
TOTAL FROM INVESTMENT OPERATIONS 5.08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.07
TOTAL RETURN B, C 50.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 52,003
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.94% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.91% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .37% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE G $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31,
1997. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.50
TOTAL FROM INVESTMENT OPERATIONS 2.48
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 15.04
TOTAL RETURN B, C 19.75%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,737
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.37)% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .10
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.06
TOTAL FROM INVESTMENT OPERATIONS 5.16
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.03)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.14
TOTAL RETURN B, C 51.78%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,758
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.47% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .85% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997. F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Financial Services Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in
the following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $58,711,557 and $6,651,758, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 6,571 $ 6,571
CLASS T 100,249 100,249
CLASS B 14,882 3,410
$ 121,702 $ 110,230
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 89,581 $ 65,700
CLASS T 266,965 186,812
CLASS B 1,297 0*
$ 357,843 $ 252,512
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 7,872 .30% *
CLASS T *** FIIOC ** 55,535 .28% *
CLASS B FIIOC ** 4,283 .31% *
INSTITUTIONAL CLASS FIIOC ** 3,350 .17% *
$ 71,040
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $6,594 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 26,073
CLASS T 2.00% -
CLASS B 2.50% 9,572
INSTITUTIONAL CLASS 1.50% 22,629
$ 58,274
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $5,637 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $103
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
INSTITUTIONAL CLASS $ 55
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 10.3% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET INVESTMENT INCOME $ 1,796
FROM NET REALIZED GAIN 1,792
TOTAL $ 3,588
CLASS T
FROM NET INVESTMENT INCOME $ 11,192
FROM NET REALIZED GAIN 11,200
TOTAL $ 22,392
CLASS B
FROM NET INVESTMENT INCOME $ -
FROM NET REALIZED GAIN -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 1,697
FROM NET REALIZED GAIN 849
TOTAL $ 2,546
$ 28,526
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 442,563 $ 5,416,102
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 294 3,494
SHARES REDEEMED (27,598) (358,033)
NET INCREASE (DECREASE) 415,259 $ 5,061,563
CLASS T 3,898,064 $ 48,519,698
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,650 19,567
SHARES REDEEMED (448,495) (5,662,098)
NET INCREASE (DECREASE) 3,451,219 $ 42,877,167
CLASS B 528,089 $ 6,961,044
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED (13,547) (182,473)
NET INCREASE (DECREASE) 514,542 $ 6,778,571
INSTITUTIONAL CLASS 324,063 $ 3,934,976
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 215 2,546
SHARES REDEEMED (75,980) (1,009,629)
NET INCREASE (DECREASE) 248,298 $ 2,927,893
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 32,019
CLASS T 43,467
CLASS B 13,889
INSTITUTIONAL CLASS 28,604
$ 117,979
ADVISOR HEALTH CARE FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
IMAHDR PRASUN SHR__CHT 19970731 19970812 152758 S00000000000001
FA HEALTH CARE -CL I S&P 500
00271 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10670.00 10561.42
1996/10/31 10430.00 10852.70
1996/11/30 10960.00 11673.05
1996/12/31 11030.00 11441.81
1997/01/31 11710.00 12156.70
1997/02/28 11850.00 12252.00
1997/03/31 11210.00 11748.57
1997/04/30 11770.00 12449.96
1997/05/31 12680.00 13207.91
1997/06/30 13620.00 13799.63
1997/07/31 14120.00 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970812 152759 R00000000000014
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
HEALTH CARE - INSTITUTIONAL CLASS 41.20%
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Health Care - Institutional Class on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1997, the value of the investment would have grown to $14,120 - a
41.20% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
AMERICAN HOME PRODUCTS CORP. 8.9
SCHERING-PLOUGH CORP. 7.9
WARNER-LAMBERT CO. 7.1
BRISTOL-MYERS SQUIBB CO. 6.4
LILLY (ELI) & CO. 6.1
MERCK & CO., INC. 4.8
JOHNSON & JOHNSON 3.1
ABBOTT LABORATORIES 2.9
BAXTER INTERNATIONAL, INC. 2.5
MEDTRONIC, INC. 1.7
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
DRUGS 50.7%
MEDICAL SUPPLIES &
APPLIANCES 12.8%
MEDICAL TECHNOLOGY 5.3%
BIOTECHNOLOGY 4.8%
HOSPITALS 4.8%
ALL OTHERS 21.6% *
ROW: 1, COL: 1, VALUE: 21.6
ROW: 1, COL: 2, VALUE: 4.8
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 5.3
ROW: 1, COL: 5, VALUE: 12.8
ROW: 1, COL: 6, VALUE: 50.7
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR HEALTH CARE FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Beso Sikharulidze became Portfolio Manager of
Fidelity Advisor Health Care Fund on June 2, 1997.
Q. HOW DID THE FUND PERFORM, BESO?
A. From inception on September 3, 1996 through July 31, 1997, the
fund's Institutional Class shares returned 41.20%. By comparison, the
Standard & Poor's 500 Index returned 48.98%.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500 DURING THE PERIOD?
A. Much of the S&P 500's strong performance was driven by a narrow
group of the larger-cap stocks in the index. If you had exposure to
smaller-cap stocks, like this fund did, you underperformed the
benchmark. Also, the health care sector does not include a lot of the
technology stocks, such as Microsoft, or other big names in the index,
such as General Electric, that really drove the performance of the
index. Larger-cap health care stocks, particularly pharmaceuticals,
performed very well during the period, but the overall health care
sector wasn't strong enough to beat the S&P 500.
Q. WHAT FACTORS HELPED HEALTH CARE STOCKS DURING THE PERIOD?
A. Pharmaceutical companies have reaped the benefits of some new
trends in the industry, including acceleration of reviews by the Food
and Drug Administration (FDA) and allowances for direct-to-consumer
marketing of drugs. Considering drugs are moving through the FDA
review process more quickly, they're coming to market sooner. And
that's good news for pharmaceutical companies that are spending a lot
of money on research and development. Direct marketing also has
allowed companies to introduce new categories of drugs to consumers,
such as those that lower cholesterol. As a result, people are visiting
their doctors and saying that they'd like to try a certain
antihistamine or antidepressant, for example, rather than waiting for
the doctor to prescribe something. This trend is triggering demand for
new drugs and accelerating unit volume growth. We've also seen a
revolution in medical devices, especially cardiac devices that are
making surgery easier, more accurate and more effective.
Q. WERE THERE ANY PARTICULAR STOCKS THAT STOOD OUT DURING THE PERIOD?
A. At the end of the period, about 9% of the fund's portfolio was
invested in American Home Products, a large pharmaceutical firm that
also has an animal health business and crop protection operations. I
liked the company because its business prospects were strong and the
stock's relative valuation in the pharmaceutical sector was
attractive. The company's shares appreciated considerably during the
period. Five of the fund's top 10 holdings were pharmaceutical stocks,
including American Home Products, Schering-Plough, Warner-Lambert,
Bristol-Myers Squibb and Eli Lilly - all of which helped the fund's
performance during the period. Medtronic, a maker of cardiac devices,
also performed well, benefiting from the demand for innovative
products.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. Amgen's stock basically was flat during the period. I expected
biotechnology companies to get a boost from faster drug-approval
activity by the FDA. However, these companies did not benefit from
this development like the pharmaceutical companies did. In addition,
Columbia/HCA performed poorly as an investigation into the company's
billing practices progressed. However, the effect on the fund was
minimal since that holding accounted for only a little more than 1% of
the portfolio by the end of the period.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR?
A. I'm optimistic about health care stocks over the next six to 12
months. Pharmaceutical companies should continue to do well on the
strength of their business prospects, and I think medical device
companies will continue to benefit from product innovations. Overall,
the health care sector should be strong. Even if the economy slows
down, the sector can still be a strong performer since demand for
health services remains fairly constant in any environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$69 million
MANAGER: Beso Sikharulidze, since June 1997;
joined Fidelity in 1992
(checkmark)
ADVISOR HEALTH CARE FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.4%
CHEMICALS - 1.4%
AKZO NV sponsored ADR 8,200 $ 638,575
Hoechst AG Ord. 6,700 311,992
950,567
COMPUTER SERVICES & SOFTWARE - 0.8%
COMPUTER SERVICES - 0.8%
HBO & Co. 7,400 572,575
DRUGS & PHARMACEUTICALS - 58.6%
BIOTECHNOLOGY - 4.8%
Amgen, Inc. 12,800 752,800
COR Therapeutics, Inc. (a) 9,300 99,975
Cytyc Corp. (a) 19,300 451,138
Elf Sanofi SA 2,300 241,564
Genentech, Inc. special (a) 3,600 207,900
Gilead Sciences, Inc. (a) 9,400 265,550
Pharmacia & Upjohn, Inc. 18,000 679,500
Sangstat Medical Corp. (a) 7,000 171,500
Sepracor, Inc. (a) 20,000 502,500
3,372,427
COMMERCIAL LABORATORY RESEARCH - 0.1%
Millennium Pharmaceuticals, Inc. (a) 2,700 39,488
DRUGS - 50.7%
American Home Products Corp. 75,800 6,248,763
Barr Laboratories, Inc. (a) 16,200 729,000
Bristol-Myers Squibb Co. 57,300 4,494,469
Daiichi Pharmaceutical Co. Ltd. 40,000 714,557
Dura Pharmaceuticals, Inc. (a) 4,000 156,000
Elan Corp. PLC ADR (a) 9,200 437,000
Glaxo PLC sponsored ADR 7,500 318,750
Glaxo Holdings PLC 6,300 133,466
Lilly (Eli) & Co. 38,200 4,316,600
Merck & Co., Inc. 32,600 3,388,363
Novo-Nordisk AS Class B 1,300 136,973
Pfizer, Inc. 10,900 649,913
Rhone Poulenc sponsored ADR
representing 1/4 share 22,000 948,750
Roche Holding AG participation
certificates 53 512,818
Sankyo Co. Ltd. 14,000 499,010
Schering-Plough Corp. 101,400 5,532,638
SmithKline Beecham PLC ADR 5,700 554,325
Takeda Chemical Industries Ltd. 15,000 453,760
Warner-Lambert Co. 35,800 5,000,813
Watson Pharmaceuticals, Inc. (a) 4,100 202,950
Yamanouchi Pharmaceutical Co. Ltd. 8,000 215,715
35,644,633
PHARMACEUTICAL PREPARATIONS - 3.0%
Alpharma, Inc. Class A 4,000 71,750
Andrx Corp. 2,000 66,500
Astra AB Class A Free shares 46,933 839,505
Novartis AG (Reg.) 563 904,003
Zeneca Group PLC Ord. 7,600 251,577
2,133,335
TOTAL DRUGS & PHARMACEUTICALS 41,189,883
ELECTRONIC INSTRUMENTS - 0.9%
LAB ANALYTICAL INSTRUMENTS - 0.9%
Waters Corp. (a) 17,000 608,808
SHARES VALUE (NOTE 1)
ELECTRONICS - 0.3%
ELECTRONIC CAPACITORS - 0.3%
Maxwell Technologies, Inc. (a) 8,500 $ 197,625
HOUSEHOLD PRODUCTS - 0.9%
FABRICATED RUBBER PRODUCTS - 0.9%
Safeskin Corp. (a) 20,000 661,250
MEDICAL EQUIPMENT & SUPPLIES - 21.9%
DENTAL EQUIPMENT - 0.5%
Sybron International Corp. (a) 9,200 376,625
DRUG DISTRIBUTORS - WHOLESALE - 1.7%
Bergen Brunswig Corp. Class A 24,375 725,156
McKesson Corp. 5,400 468,113
1,193,269
MEDICAL SUPPLIES & APPLIANCES - 12.8%
Abbott Laboratories 30,800 2,015,475
Baxter International, Inc. 30,000 1,734,375
Becton, Dickinson & Co. 18,100 970,613
Boston Scientific Corp. (a) 8,900 638,575
Closure Medical Corp. 5,100 138,975
Depuy, Inc. (a) 8,600 210,163
Endovascular Technologies, Inc. (a) 48,500 521,375
Johnson & Johnson 34,900 2,174,706
Sofamor/Danek Group, Inc. (a) 12,300 552,731
8,956,988
MEDICAL TECHNOLOGY - 5.3%
Arterial Vascular Engineering, Inc. (a) 9,800 376,075
Biomet, Inc. 30,000 598,125
Medtronic, Inc. 14,000 1,221,500
St. Jude Medical, Inc. (a) 14,800 604,025
Sonus Pharmaceuticals, Inc. (a) 8,400 268,800
Stryker Corp. 14,400 561,600
U.S. Surgical Corp. 3,177 117,946
3,748,071
OPHTHALMIC GOODS - 0.0%
Cooper Companies, Inc. 900 25,200
X-RAY & RELATED APPARATUS - 0.7%
Hologic, Inc. (a) 21,600 464,400
X-RAY ELECTRO-MEDICAL APPARATUS - 0.9%
Guidant Corp. 6,800 620,500
TOTAL MEDICAL EQUIPMENT & SUPPLIES 15,385,053
MEDICAL FACILITIES MANAGEMENT - 9.5%
HOSPITALS - 4.8%
Columbia/HCA Healthcare Corp. 28,000 903,000
HEALTHSOUTH Rehabilitation Corp. (a) 15,700 416,050
Health Management Associates, Inc.
Class A (a) 9,600 306,600
Quorum Health Group, Inc. (a) 15,600 555,750
Tenet Healthcare Corp. (a) 18,900 565,819
Universal Health Services, Inc.
Class B (a) 15,000 609,375
3,356,594
HMO'S & OUTPATIENT CARE - 3.3%
Humana, Inc. (a) 20,900 509,438
Oxford Health Plans, Inc. (a) 10,900 916,281
PacifiCare Health Systems, Inc.
Class B (a) 2,000 141,500
United HealthCare Corp. 13,100 746,700
2,313,919
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
NURSING, PERSONAL CARE FACILITY - 0.8%
NovaCare, Inc. (a) 47,000 $ 608,063
SKILLED NURSING CARE FACILITIES - 0.6%
Beverly Enterprises, Inc. (a) 13,400 206,025
Vencor, Inc. (a) 5,400 217,688
423,713
TOTAL MEDICAL FACILITIES MANAGEMENT 6,702,289
TOTAL COMMON STOCKS
(Cost $56,661,665) 66,268,050
CASH EQUIVALENTS - 5.7%
Taxable Central Cash Fund (b)
(Cost $4,023,758) 4,023,758 4,023,758
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $60,685,423) $ 70,291,808
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 88.4%
Japan 2.7
Switzerland 2.0
United Kingdom 1.8
France 1.7
Sweden 1.2
Others (individually less than 1%) 2.2
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $60,742,515. Net unrealized appreciation
aggregated $9,549,293, of which $10,098,259 related to appreciated
investment securities and $548,966 related to depreciated investment
securities.
The fund hereby designates approximately $28,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 70,291,808
(COST $60,685,423) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 2,392,915
RECEIVABLE FOR FUND SHARES SOLD 887,803
DIVIDENDS RECEIVABLE 67,292
INTEREST RECEIVABLE 23,992
PREPAID EXPENSES 11,027
TOTAL ASSETS 73,674,837
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 3,880,569
PAYABLE FOR FUND SHARES REDEEMED 284,751
ACCRUED MANAGEMENT FEE 35,854
DISTRIBUTION FEES PAYABLE 24,709
OTHER PAYABLES AND ACCRUED EXPENSES 58,861
TOTAL LIABILITIES 4,284,744
NET ASSETS $ 69,390,093
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 58,557,677
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
1,226,031
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
9,606,385
NET ASSETS $ 69,390,093
</TABLE>
CALCULATION OF MAXIMUM $14.10
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($5,488,195 (DIVIDED BY)
389,336 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.88
(100/94.75 OF $14.10)
CLASS T: $14.05
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($50,868,278 (DIVIDED BY)
3,620,934 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.56
(100/96.50 OF $14.05)
CLASS B: $14.01
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($6,159,210 (DIVIDED BY)
439,612 SHARES) A
INSTITUTIONAL CLASS: $14.12
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($6,874,410 (DIVIDED BY) 486,881 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 280,357
DIVIDENDS
INTEREST 133,101
TOTAL INCOME 413,458
EXPENSES
MANAGEMENT FEE $ 158,600
TRANSFER AGENT FEES72,437
DISTRIBUTION FEES 118,360
ACCOUNTING FEES AND EXPENSES 55,207
NON-INTERESTED TRUSTEES' COMPENSATION 82
CUSTODIAN FEES AND EXPENSES 20,829
REGISTRATION FEES 118,266
AUDIT 20,071
LEGAL 966
MISCELLANEOUS 5,714
TOTAL EXPENSES BEFORE REDUCTIONS 570,532
EXPENSE REDUCTIONS(64,441) 506,091
NET INVESTMENT INCOME (LOSS) (92,633)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 1,319,004
FOREIGN CURRENCY TRANSACTIONS (340) 1,318,664
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 9,606,385
NET GAIN (LOSS) 10,925,049
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,832,416
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (92,633)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 1,318,664
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 9,606,385
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,832,416
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 58,550,028
REDEMPTION FEES 7,649
TOTAL INCREASE (DECREASE) IN NET ASSETS 69,390,093
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 69,390,093
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.12
TOTAL FROM INVESTMENT OPERATIONS 4.10
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 14.10
TOTAL RETURN B, C 41.00%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,488
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.74% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.18)% A
PORTFOLIO TURNOVER 67% A
AVERAGE COMMISSION RATE G $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE
FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALES OF CLASS A SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.09
TOTAL FROM INVESTMENT OPERATIONS 4.05
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 14.05
TOTAL RETURN B, C 40.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 50,868
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.97% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS1.96% A,
E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.39)% A
PORTFOLIO TURNOVER 67% A
AVERAGE COMMISSION RATE F $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 3,
1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.18
TOTAL FROM INVESTMENT OPERATIONS 2.13
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 14.01
TOTAL RETURN B, C 17.93%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,159
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
2.49% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.99)% A
PORTFOLIO TURNOVER 67% A
AVERAGE COMMISSION RATE G $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F
FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. H FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.11
TOTAL FROM INVESTMENT OPERATIONS 4.12
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 14.12
TOTAL RETURN B, C 41.20%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,875
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.49%
A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .08% A
PORTFOLIO TURNOVER 67% A
AVERAGE COMMISSION RATE G $ .0383
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL
STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Health Care Fund (the fund) is a fund of Fidelity
Advisor Series VII (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the
respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $73,216,646 and $17,873,985, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 6,504 $ 6,504
CLASS T 102,090 102,090
CLASS B 9,766 2,442
$ 118,360 $ 111,036
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 145,733 $ 107,863
CLASS T 289,655 209,976
CLASS B 3,867 0
*
$ 439,255 $ 317,839
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 9,249 .36% *
CLASS T *** FIIOC ** 55,560 .27% *
CLASS B FIIOC ** 3,500 .35% *
INSTITUTIONAL CLASS FIIOC ** 4,128 .17% *
$ 72,437
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $5,765 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 30,538
CLASS T 2.00% -
CLASS B 2.50% 9,502
INSTITUTIONAL CLASS 1.50% 21,470
$ 61,510
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $2,549 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $347
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
INSTITUTIONAL CLASS $ 35
6. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 450,370 $ 5,183,538
SHARES SOLD
SHARES REDEEMED (61,034) (732,928)
NET INCREASE (DECREASE) 389,336 $ 4,450,610
CLASS T 3,936,387 $ 46,440,633
SHARES SOLD
SHARES REDEEMED (315,453) (3,850,782)
NET INCREASE (DECREASE) 3,620,934 $ 42,589,851
CLASS B 445,818 $ 5,752,611
SHARES SOLD
SHARES REDEEMED (6,206) (76,107)
NET INCREASE (DECREASE) 439,612 $ 5,676,504
INSTITUTIONAL CLASS 546,050 $ 6,606,358
SHARES SOLD
SHARES REDEEMED (59,169) (773,295)
NET INCREASE (DECREASE) 486,881 $ 5,833,063
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL CLASS
ARE FOR THE PERIOD SEPTEMBER 3,1996 (COMMENCEMENT OF SALE OF SHARES)
TO JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 32,101
CLASS T 42,701
CLASS B 13,795
INSTITUTIONAL CLASS 29,669
$ 118,266
ADVISOR NATURAL RESOURCES FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
The initial offering of Institutional Class shares took place on July
3, 1995. Institutional Class shares are sold to eligible investors
without a sales load or 12b-1 fee. Returns prior to July 3, 1995 are
those of Class T, the original class of the fund, and reflect Class
T's prior 0.65% 12b-1 fee. If Fidelity had not reimbursed certain
class expenses, the past five years and life of fund total returns
would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970825 111800 S00000000000001
FA NATURAL RESOURCE -CL I S&P 500
00686 SP001
1987/12/29 10000.00 10000.00
1987/12/31 9980.00 10064.43
1988/01/31 9880.00 10488.14
1988/02/29 10630.00 10976.89
1988/03/31 10920.00 10637.70
1988/04/30 11100.00 10755.78
1988/05/31 10920.00 10849.36
1988/06/30 11640.00 11347.34
1988/07/31 11590.00 11304.22
1988/08/31 11280.00 10919.88
1988/09/30 11230.00 11385.07
1988/10/31 11470.00 11701.57
1988/11/30 11210.00 11534.24
1988/12/31 11586.91 11736.09
1989/01/31 12523.44 12595.17
1989/02/28 12338.32 12281.55
1989/03/31 12577.89 12567.71
1989/04/30 12969.93 13219.97
1989/05/31 13274.85 13755.38
1989/06/30 13231.29 13676.98
1989/07/31 14189.61 14912.01
1989/08/31 14614.32 15204.28
1989/09/30 14222.28 15141.94
1989/10/31 13721.34 14790.65
1989/11/30 14331.18 15092.38
1989/12/31 15426.57 15454.60
1990/01/31 14453.51 14417.59
1990/02/28 15129.90 14603.58
1990/03/31 15414.70 14990.58
1990/04/30 14607.77 14615.81
1990/05/31 16091.10 16040.85
1990/06/30 15889.36 15931.78
1990/07/31 16672.56 15880.79
1990/08/31 16233.50 14445.17
1990/09/30 15723.23 13741.69
1990/10/31 14595.91 13682.60
1990/11/30 14833.24 14566.50
1990/12/31 14611.74 14972.90
1991/01/31 15093.85 15625.72
1991/02/28 17269.54 16742.96
1991/03/31 16861.60 17148.14
1991/04/30 16948.13 17189.30
1991/05/31 17764.01 17931.87
1991/06/30 16737.98 17110.59
1991/07/31 17294.26 17907.95
1991/08/31 17739.29 18332.37
1991/09/30 17047.02 18026.21
1991/10/31 17442.60 18267.77
1991/11/30 16033.35 17531.58
1991/12/31 16725.88 19537.19
1992/01/31 17764.58 19173.80
1992/02/29 18164.09 19423.06
1992/03/31 17711.32 19044.31
1992/04/30 18363.84 19604.21
1992/05/31 18856.56 19700.27
1992/06/30 18243.99 19406.73
1992/07/31 18976.41 20200.47
1992/08/31 18696.76 19786.36
1992/09/30 18883.19 20019.84
1992/10/31 18483.69 20089.91
1992/11/30 18723.39 20774.97
1992/12/31 18956.24 21030.51
1993/01/31 19563.91 21207.16
1993/02/28 20112.29 21495.58
1993/03/31 21446.19 21949.14
1993/04/30 22602.24 21417.97
1993/05/31 23713.83 21991.97
1993/06/30 24039.89 22055.75
1993/07/31 23713.83 21967.52
1993/08/31 25077.37 22800.09
1993/09/30 24943.98 22624.53
1993/10/31 26070.39 23092.86
1993/11/30 25092.19 22873.48
1993/12/31 26148.04 23150.25
1994/01/31 27737.91 23937.36
1994/02/28 26873.51 23288.65
1994/03/31 25221.90 22273.27
1994/04/30 25638.66 22558.37
1994/05/31 25978.24 22928.32
1994/06/30 25515.17 22366.58
1994/07/31 26379.57 23100.20
1994/08/31 27660.73 24047.31
1994/09/30 27521.81 23458.15
1994/10/31 27105.05 23985.96
1994/11/30 25329.95 23112.39
1994/12/31 25552.05 23455.15
1995/01/31 25050.10 24063.34
1995/02/28 25787.33 25001.09
1995/03/31 27230.42 25738.87
1995/04/30 28344.11 26496.88
1995/05/31 28736.25 27555.96
1995/06/30 29551.91 28196.09
1995/07/31 30806.76 29131.07
1995/08/31 31293.02 29204.19
1995/09/30 31528.31 30436.60
1995/10/31 30226.39 30327.94
1995/11/30 31763.59 31659.34
1995/12/31 32925.99 32269.10
1996/01/31 34175.53 33367.54
1996/02/29 35019.37 33676.86
1996/03/31 36090.39 34001.17
1996/04/30 38200.00 34502.34
1996/05/31 38897.79 35392.16
1996/06/30 38654.37 35527.00
1996/07/31 36544.77 33957.42
1996/08/31 38200.00 34673.58
1996/09/30 39855.22 36625.01
1996/10/31 40845.11 37635.13
1996/11/30 42938.48 40479.97
1996/12/31 43042.28 39678.06
1997/01/31 43734.56 42157.15
1997/02/28 40878.92 42487.66
1997/03/31 39823.20 40741.84
1997/04/30 39667.44 43174.13
1997/05/31 43284.58 45802.57
1997/06/30 43163.43 47854.52
1997/07/31 45724.86 51662.31
IMATRL PRASUN SHR__CHT 19970731 19970825 111802 R00000000000119
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - INSTITUTIONAL CLASS 25.12% 140.96% 357.25%
S&P 500 52.14% 155.75% 416.62%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case one year, five years
or since the fund started on December 29, 1987. You can compare
Institutional Class' returns to the performance of the S&P 500 - a
widely recognized, unmanaged index of common stocks. This benchmark
includes reinvested dividends and capital gains, if any, and excludes
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - INSTITUTIONAL CLASS 25.12% 19.23% 17.16%
S&P 500 52.14% 20.66% 18.66%
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Institutional Class
on December 29, 1987, when the fund started. As the chart shows, by
July 31, 1997, the value of the investment would have grown to $45,725
- - a 357.25% increase on the initial investment. For comparison, look
at how the S&P 500 did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would
have grown to $51,662 - a 416.62% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
TOTAL SA SPONSORED ADR 3.5
GETCHELL GOLD CORP. 2.7
EVI, INC. 2.7
MOBIL CORP. 2.2
FORT HOWARD CORP. 2.1
TOSCO CORP. 2.0
TEXACO, INC. 2.0
TRANSOCEAN OFFSHORE, INC. 2.0
EURO-NEVADA MINING LTD. 2.0
BOISE CASCADE CORP. 1.9
TOP INDUSTRIES AS OF JULY 31, 1997
CRUDE PETROLEUM & GAS 11.8%
PETROLEUM REFINERS 11.6%
GOLD ORES 11.4%
OIL & GAS EXPLORATION 11.3%
DRILLING 5.9%
ALL OTHERS 48.0% *
ROW: 1, COL: 1, VALUE: 47.9
ROW: 1, COL: 2, VALUE: 5.9
ROW: 1, COL: 3, VALUE: 11.4
ROW: 1, COL: 4, VALUE: 11.4
ROW: 1, COL: 5, VALUE: 11.6
ROW: 1, COL: 6, VALUE: 11.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Larry Rakers, Portfolio Manager of Fidelity Advisor Natural Resources
Fund
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12 months that ended July 31, 1997, the fund's
Institutional Class shares returned 25.12%. During the same period,
the Standard & Poor's 500 Index returned 52.14%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING
THE PERIOD?
A. The fund did fairly well from July 1996 to January 1997 because oil
and gas prices increased and the fund was overweighted in energy
stocks. In January, oil peaked at about $26 a barrel and natural gas
at about $4 per thousand cubic feet. Shortly afterwards, oil and gas
prices plummeted. Since many of the fund's energy holdings were very
sensitive to the commodity prices, the fund underperformed the index
during the period.
Q. WHAT CHANGES DID YOU MAKE TO REDUCE THE FUND'S SENSITIVITY TO
COMMODITY PRICES?
A. I switched our energy holdings to companies that tend to perform
better in flat-to-declining oil price environments because their
operations are more diversified. For example, I invested in integrated
oil companies, which look for oil, process it in their refineries, and
make chemicals out of it or make gasoline and sell it to consumers at
gasoline stations. When oil prices go down, these companies still make
money by selling gasoline to consumers and from their chemical
operations.
Q. THE FUND'S WEIGHTING IN BOTH PAPER AND FOREST PRODUCTS AND METALS
AND MINING INCREASED OVER THE PAST FEW MONTHS. WHY WAS THAT?
A. I saw a good opportunity to buy paper stocks in February and March,
when the paper and forest product market bottomed. Fort Howard and
James River were particularly good performers. In addition, the fund
boosted its position in metals and mining by investing in base metals,
particularly some aluminum and zinc stocks. These investments worked
out really well.
Q. IN APRIL, YOU TALKED ABOUT ENERGY-SERVICE COMPANIES SUCH AS
SCHLUMBERGER AND HALLIBURTON BENEFITING FROM STRONG EXPLORATION
ACTIVITIES. SINCE THEN, THE FUND HAS REDUCED ITS HOLDINGS IN THESE
STOCKS. WHY? HAS THE ENVIRONMENT CHANGED?
A. Over the past five years, technology has made it possible to
explore deep-water oil and gas prospects in a cost-effective way. This
trend has gained even more steam lately, considering that most of the
shallow-water opportunities have been exhausted. Schlumberger and
Halliburton have both benefited from the exploration activity in deep
waters. In fact, these two companies have been so successful and their
share prices appreciated so much by the end of the period that I
became concerned about valuations and reduced the fund's investments
in these stocks.
Q. WERE THERE ANY BIG DISAPPOINTMENTS DURING THE PERIOD?
A. The biggest disappointment has been the price of gold. The absolute
supply and demand for gold shows that we consume more gold than we
mine. However, gauging the direction of the gold price is nearly
impossible because central banks hold so much gold, which they can
sell at any time and swing the market. We've had some big sales of
gold by central banks recently, which has led to the decline in its
price. When the dollar is strong and there is virtually no inflation-
like the environment we've seen in the last six months- there's very
little incentive for a central bank to own gold. On the other hand,
when the dollar's weak and there's a lot of inflation, central banks
want to own gold. Many market watchers see the strength of the dollar
and low inflation continuing, and the gold price reflects that
outlook. If the environment changes, there could be a good opportunity
in gold.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES MARKET?
A. In a slow-growth, no-inflation economy, the natural resource sector
tends to underperform. In general, the sector performs well when the
economy is strong enough to boost demand for the products. Each
commodity has its own supply/demand outlook, so I'm constantly
searching for an area within natural resources where supply/demand is
starting to look favorable. For example, in late fall and early
winter, gas prices often benefit from seasonal trends, as demand
strengthens due to the winter heating season. However, I expect
several large companies engaged in oil and gas exploration to increase
their production volume in the near future. While this should benefit
these companies on a short-term basis, the industry as a whole could
suffer because increased production means greater supply and weaker
prices. Overall, I am emphasizing stocks that are less sensitive to
energy prices. As far as specific industries are concerned, I remain
positive on deep-water drilling and service companies. Also, I think
the business prospects of paper and forest products companies continue
to improve.
FUND FACTS
START DATE: December 29, 1987
SIZE: as of July 31, 1997, more than
$693 million
MANAGER: Lawrence Rakers, since January
1997; joined Fidelity in 1993
(checkmark)
ADVISOR NATURAL RESOURCES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.3%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.7%
AUTO & TRUCK PARTS - 0.7%
Eaton Corp. 50,000 $ 4,515,625
CHEMICALS & PLASTICS - 4.2%
AGRICULTURAL CHEMICALS - 0.7%
Agrium, Inc. 210,000 2,391,990
IMC Global, Inc. 67,000 2,114,688
4,506,678
CHEMICALS - 2.9%
du Pont (E.I.) de Nemours & Co. 100,000 6,693,750
Monsanto Co. 210,000 10,460,625
Sasol Ltd. 255,000 3,054,472
20,208,847
UNSUPPORTED PLASTICS FILM & SHEET - 0.6%
W.R. Grace & Co. 65,500 4,028,250
TOTAL CHEMICALS & PLASTICS 28,743,775
ELECTRICAL EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.6%
Anixter International, Inc. 223,000 3,930,375
ELECTRONIC INSTRUMENTS - 0.1%
LAB ANALYTICAL INSTRUMENTS - 0.0%
Thermoquest Corp. (a) 20,000 340,000
MEASURING INSTRUMENTS - 0.1%
Thermo Electron Corp. 15,000 512,813
TOTAL ELECTRONIC INSTRUMENTS 852,813
ENERGY SERVICES - 10.3%
DRILLING - 5.9%
Atwood Oceanics, Inc. (a) 13,800 1,173,000
Diamond Offshore Drilling, Inc. 99,700 9,297,025
Maverick Tube Corp. (a) 90,000 4,331,250
Noble Drilling Corp. (a) 439,900 12,344,694
Transocean Offshore, Inc. 168,805 13,789,258
40,935,227
OIL & GAS SERVICES - 4.4%
Dresser Industries, Inc. 107,800 4,500,650
Halliburton Co. 207,940 9,565,240
McDermott International, Inc. 10,000 305,625
Schlumberger Ltd. 83,200 6,354,400
Weatherford Enterra, Inc. (a) 165,000 7,177,500
Western Atlas, Inc. (a) 27,500 2,187,969
30,091,384
TOTAL ENERGY SERVICES 71,026,611
HOLDING COMPANIES - 1.7%
Norfolk Southern Corp. 105,000 11,628,750
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
SPECIAL INDUSTRIAL MACHINERY - 0.1%
Gasonics International Corp. (a) 40,000 745,000
IRON & STEEL - 0.8%
FABRICATED METAL PRODUCTS - 0.1%
Prudential Steel Ltd. 15,000 574,056
IRON & STEEL BLAST FURNITURE MILLS - 0.4%
Nucor Corp. 47,000 2,916,938
IRON & STEEL FOUNDRIES - 0.3%
Dofasco Inc. 103,300 2,192,132
TOTAL IRON & STEEL 5,683,126
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING - 0.1%
Mitcham Industries, Inc. (a) 48,800 $ 713,700
LODGING & GAMING - 0.2%
HOTELS, MOTELS, & TOURIST CENTERS - 0.2%
HFS, Inc. (a) 20,000 1,165,000
METALS & MINING - 6.4%
ALUMINUM, EXTRUDED PRODUCTS - 1.5%
Alumax, Inc. (a) 243,500 10,318,313
KAOLIN & BALL CLAY - 0.1%
English China Clay PLC 145,000 517,325
LEAD & ZINC ORES - 0.6%
Asturiana del Zinc SA (a) 180,000 3,842,241
METAL MINING - 0.5%
Arizona Star Resource Corp. (a) 135,000 719,882
JCI Ltd. 187,983 1,253,220
Pasminco Ltd. 267,100 515,598
Phelps Dodge Corp. 15,000 1,275,938
3,764,638
METAL MINING SERVICES - 0.1%
Mine Finders Corp. Ltd. (a) 200,000 428,048
METAL ORES - 1.4%
Comalco Ltd. 193,900 1,032,941
Falconbridge Ltd. 54,200 1,163,942
Pechiney SA Class A 176,000 7,635,322
9,832,205
METALS & MINERALS - WHOLESALE - 0.2%
Elkem ASA 60,000 1,191,116
MISCELLANEOUS NONMETAL MINERALS - 0.0%
Camphor Ventures, Inc. (a) 362,700 263,141
MISCELLANEOUS METAL ORES - 0.0%
Helix Resources NL (a) 650,500 365,028
PRIME NONFERROUS SMELTING - 2.0%
Alcan Aluminium Ltd. 160,000 6,268,364
Aluminum Co. of America 73,900 6,540,150
Metaleurop SA (a) 56,000 842,031
Metaleurop SA warrants 2/4/00 (a) 16,000 44,141
13,694,686
TOTAL METALS & MINING 44,216,741
OIL & GAS - 38.3%
CRUDE PETROLEUM & GAS - 11.8%
Anadarko Petroleum Corp. 88,000 6,149,000
Beau Canada Exploration Ltd. (a) 400,000 957,667
British Borneo Petroleum 47,900 975,481
British Borneo Petroleum Syndicate PLC
Rights 8/6/97 (a) 10,644 6,111
Burlington Resources, Inc. 40,200 1,899,450
Elf Aquitaine SA sponsored ADR 227,500 13,024,375
Monterey Resources, Inc. 82,877 1,263,874
Newfield Exploration Co. (a) 74,800 1,795,200
Occidental Petroleum Corp. 201,400 5,047,588
Ocean Energy, Inc. (a) 83,500 3,799,250
Petrobras PN (Pfd. Reg.) 8,000,000 2,430,399
Petsec Energy Ltd. sponsored ADR 93,200 2,085,350
Renaissance Energy Ltd. (a) 30,000 743,280
Rio Alto Exploration Ltd. (a) 187,500 1,720,807
Santa Fe Energy Resources, Inc. (a) 187,900 1,620,638
Total SA sponsored ADR 482,000 24,310,875
Tullow Oil PLC (a) 340,200 538,515
Union Pacific Resources Group, Inc. 173,520 4,283,775
United Meridian Corp. (a) 139,200 4,445,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
CRUDE PETROLEUM & GAS - CONTINUED
Vintage Petroleum, Inc. 74,400 $ 2,673,750
YPF Sociedad Anonima Class D 35,000 1,127,203
80,898,288
OIL & GAS EXPLORATION - 11.3%
Abacan Resource Corp. (a) 794,300 3,028,269
Amerada Hess Corp. 90,000 5,293,125
Exxon Corp. 137,000 8,802,250
Kerr-McGee Corp. 80,000 5,010,000
Mobil Corp. 200,000 15,300,000
Petro-Canada 150,000 2,704,320
Phillips Petroleum Co. 232,200 10,695,713
Texaco, Inc. 120,000 13,927,500
USX-Marathon Group 249,300 8,024,344
Unocal Corp. 77,669 3,106,760
Woodside Petroleum Ltd. 249,500 2,124,558
78,016,839
OIL FIELD EQUIPMENT - 3.6%
Cooper Cameron Corp. (a) 100,600 5,897,675
EVI, Inc. (a) 380,000 18,572,500
24,470,175
PETROLEUM REFINERS - 11.6%
British Petroleum PLC ADR 143,746 11,850,061
Coastal Corp. (The) 231,000 12,560,625
Eni Spa 600,000 3,533,070
Murphy Oil Corp. 79,900 4,159,794
Pennzoil Co. 125,000 9,765,625
Royal Dutch Petroleum Co. 216,000 12,082,500
Shell Transport & Trading Co. PLC ADR 84,300 3,761,888
Tosco Corp. 448,900 14,056,181
Valero Energy Corp. 186,800 8,032,400
79,802,144
TOTAL OIL & GAS 263,187,446
PACKAGING & CONTAINERS - 0.7%
GLASS CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 142,800 4,926,600
PAPER & FOREST PRODUCTS - 12.1%
CONVERTED PAPER & PAPERBOARD - 2.2%
American Pad & Paper Co. (a) 83,100 1,952,850
Boise Cascade Corp. 360,000 13,342,500
15,295,350
ENVELOPES - 1.2%
Mail-Well, Inc. (a) 243,150 7,932,769
PAPER - 4.0%
Buckeye Cellulose Corp. (a) 100,000 3,600,000
Chesapeake Corp. 198,200 6,689,250
Domtar, Inc. 75,000 674,720
James River Corp. of Virginia 135,000 5,560,313
Mercer International, Inc. (SBI) 313,100 3,052,725
Stone Container Corp. 105,000 1,745,625
Willamette Industries, Inc. 78,400 5,973,100
27,295,733
PAPER MILLS - 3.8%
Alliance Forest Products, Inc. (a) 128,500 3,318,896
Alliance Forest Products, Inc. (a)(c) 200,000 5,165,597
Bowater, Inc. 50,000 2,618,750
Fort Howard Corp. (a) 262,400 14,628,800
25,732,043
SHARES VALUE (NOTE 1)
PAPERBOARD MILLS - 0.9%
Fibermark, Inc. (a) 60,100 $ 1,333,469
Jefferson Smurfit Corp. (a) 123,700 2,319,375
Mead Corp. 25,000 1,800,000
St Laurent Paperboard, Inc. (a)(c) 57,000 1,004,897
6,457,741
TOTAL PAPER & FOREST PRODUCTS 82,713,636
PRECIOUS METALS - 15.5%
GOLD & SILVER ORES - 3.5%
Getchell Gold Corp. (a) 557,000 18,589,875
Industrias Penoles SA 1,000,000 4,472,843
Mentor Exploration & Development
Co. Ltd. (a) 125,000 1,042,914
24,105,632
GOLD ORES - 11.4%
Agnico Eagle Mines Ltd. 95,000 802,953
Bakyrchik Gold PLC (a) 169,000 133,065
Barrick Gold Corp. 330,000 7,541,626
Bema Gold Corp. (a) 142,100 871,147
Breakwater Resources Ltd. (a) 799,600 4,031,792
Buffelsfontein Gold Mines Ltd. (a) 380,000 790,894
Canyon Resources Corp. (a) 250,000 562,500
Euro-Nevada Mining Ltd. 435,400 13,646,229
Evander Gold Mines Ltd. 124,700 432,564
First Dynasty Mines Ltd. (a) 566,600 386,407
Franco-Nevada Mining Corp. 100,000 4,708,528
Francisco Gold Corp. (a) 81,000 1,163,565
Francisco Gold Corp. special
warrants 8/12/97 (a)(c) 62,500 815,132
Greenstone Resources Ltd. (a) 906,700 8,551,602
Greenstone Resources Ltd.
warrants 2/28/02 (a) 50,700 147,132
Indochina Goldfields Ltd. (a) 188,300 833,337
Indochina Goldfields Ltd. (a)(c) 170,000 752,349
Kalahari Goldridge Mng. Co. Ltd. (a) 1,200,000 468,293
Kinross Gold Corp. (a) 269,100 1,249,494
Meridian Gold, Inc. 1,190,000 5,093,772
Newmont Mining Corp. 299,900 12,370,875
Placer Dome, Inc. 250,000 4,235,136
Queenston Mining, Inc. (a) 385,400 377,473
Randgold & Exploration Co. Ltd. (a) 900,900 3,125,073
Stillwater Mining Co. (a) 120,000 2,490,000
Sudbury Contact Mines Ltd. (a) 130,000 589,473
TVI Pacific, Inc. (a) 459,200 106,609
TVI Pacific, Inc. (a)(c) 1,860,000 431,821
TVX Gold, Inc. (a) 50,000 230,348
West Rand Consolidated Mines
Ltd. (Reg.) (a) 250,000 406,504
Western Areas Gold Mining Ltd. Ord. 115,936 764,109
78,109,802
SILVER ORES - 0.6%
Compania de Minas Buenaventura SA
Class B sponsored ADR 182,400 3,306,000
Pan American Silver Corp. (a) 135,000 901,077
4,207,077
TOTAL PRECIOUS METALS 106,422,511
RAILROADS - 3.3%
Burlington Northern Santa Fe Corp. 75,000 7,242,188
CSX Corp. 124,900 7,712,575
Wisconsin Central Transportation
Corp. (a) 250,000 7,828,125
22,782,888
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TOBACCO - 0.3%
CIGARETTES - 0.3%
Schweitzer-Mauduit International, Inc. 50,000 $ 1,953,125
TRUCKING & FREIGHT - 0.9%
AIR COURIER SERVICES - 0.9%
Airborne Freight Corp. 88,300 4,332,213
CNF Transportation, Inc. 50,000 1,743,750
6,075,963
TOTAL COMMON STOCKS
(Cost $580,700,217) 661,283,685
CASH EQUIVALENTS - 3.7%
Taxable Central Cash Fund (b)
(Cost $25,569,704) 25,569,704 25,569,704
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $606,269,921) $ 686,853,389
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $8,169,796 or
1.2% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 69.2%
Canada 13.5
France 6.7
Netherlands 2.7
United Kingdom 2.5
South Africa 1.5
Others (individually less than 1%) 3.9
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $607,500,224. Net unrealized appreciation
aggregated $79,353,165, of which $114,564,746 related to appreciated
investment securities and $35,211,581 related to depreciated
investment securities.
The fund hereby designates approximately $14,337,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 17%, 20%, 20% and 19% of Class A's, Class T's, Class B's
and Institutional Class' dividend distributions during the fiscal year
qualifies for the dividend-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 686,853,389
(COST $606,269,921) - SEE ACCOMPANYING SCHEDULE
CASH 20,330
RECEIVABLE FOR INVESTMENTS SOLD 18,150,416
RECEIVABLE FOR FUND SHARES SOLD 797,076
DIVIDENDS RECEIVABLE 865,941
INTEREST RECEIVABLE 166,894
OTHER RECEIVABLES 40,535
PREPAID EXPENSES 1,677
TOTAL ASSETS 706,896,258
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 8,747,912
PAYABLE FOR FUND SHARES REDEEMED 3,725,190
ACCRUED MANAGEMENT FEE 340,285
DISTRIBUTION FEES PAYABLE 303,323
OTHER PAYABLES AND ACCRUED EXPENSES 237,428
TOTAL LIABILITIES 13,354,138
NET ASSETS $ 693,542,120
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 530,277,285
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (1,677)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
82,687,402
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
80,579,110
NET ASSETS $ 693,542,120
</TABLE>
CALCULATION OF MAXIMUM $26.16
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($6,372,188 (DIVIDED BY)
243,616 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $27.61
(100/94.75 OF $26.16)
CLASS T: $26.34
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($618,083,380 (DIVIDED BY)
23,464,532 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $27.30
(100/96.50 OF $26.34)
CLASS B: $25.99
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($59,044,451 (DIVIDED BY)
2,271,997 SHARES) A
INSTITUTIONAL CLASS: $26.42
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($10,042,101 (DIVIDED BY) 380,086 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
NINE MONTHS ENDED JULY 31, 1997
INVESTMENT INCOME $ 5,542,351
DIVIDENDS
INTEREST 1,315,949
TOTAL INCOME 6,858,300
EXPENSES
MANAGEMENT FEE $ 3,146,193
TRANSFER AGENT FEES 1,198,074
DISTRIBUTION FEES 2,756,417
ACCOUNTING FEES AND EXPENSES 346,819
NON-INTERESTED TRUSTEES' COMPENSATION 2,080
CUSTODIAN FEES AND EXPENSES 63,597
REPORTS TO SHAREHOLDERS 72,652
REGISTRATION FEES 163,019
AUDIT33,666
LEGAL36,838
MISCELLANEOUS 1,769
TOTAL EXPENSES BEFORE REDUCTIONS 7,821,124
EXPENSE REDUCTIONS (150,239) 7,670,885
NET INVESTMENT INCOME (LOSS) (812,585)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 83,726,354
FOREIGN CURRENCY TRANSACTIONS (4,906) 83,721,448
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (11,240,968)
ASSETS AND LIABILITIES IN (4,455) (11,245,423)
FOREIGN CURRENCIES
NET GAIN (LOSS) 72,476,025
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 71,663,440
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31, 1996
1997
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATIONS $ (812,585) $ (90,614)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 83,721,448 49,754,317
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (11,245,423) 74,826,728
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
71,663,440 124,490,431
DISTRIBUTIONS TO SHAREHOLDERS (376,703) -
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (156,340) -
FROM NET REALIZED GAIN (41,625,679) (10,221,079)
TOTAL DISTRIBUTIONS (42,158,722) (10,221,079)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 13,485,202 260,016,652
REDEMPTION FEES 60,962 -
TOTAL INCREASE (DECREASE) IN NET ASSETS 43,050,882 374,286,004
NET ASSETS
BEGINNING OF PERIOD 650,491,238 276,205,234
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET INVESTMENT INCOME OF $(1,677) AND $376,703, RESPECTIVELY) $
693,542,120 $ 650,491,238
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA D 1997 1996 G
<TABLE>
<CAPTION>
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.11 $ 23.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.05) .00
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.81 1.46
TOTAL FROM INVESTMENT OPERATIONS 2.76 1.46
LESS DISTRIBUTIONS (.10) -
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (.04) -
FROM NET REALIZED GAIN (1.57) -
TOTAL DISTRIBUTIONS (1.71) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL - -
NET ASSET VALUE, END OF PERIOD $ 26.16 $ 25.11
TOTAL RETURNB, C 11.45% 6.17%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,372 $ 1,609
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.71% A, E 1.66% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.68% A, F 1.58% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.28)% A (.01)% A
PORTFOLIO TURNOVER 116% A 137% A
AVERAGE COMMISSION RATE H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR
THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996. H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
NINE MONTHS YEARS ENDED OCTOBER 31,
ENDED
JULY 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA 1997 1996 1995 1994 I 1993
1992
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
$ 14.11
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02) D .00 D (.05) D (.11) D .22
(.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.83 6.56 2.00 .76 4.91
.79
TOTAL FROM INVESTMENT OPERATIONS 2.81 6.56 1.95 .65 5.13
.69
LESS DISTRIBUTIONS (.01) - - - -
-
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (.01) - - - -
-
FROM NET REALIZED GAIN (1.57) (.69) (.26) (.68) (1.42)
(.92)
TOTAL DISTRIBUTIONS (1.59) (.69) (.26) (.68) (1.42)
(.92)
REDEMPTION FEES ADDED TO PAID IN CAPITAL - - - - -
-
NET ASSET VALUE, END OF PERIOD $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59
$ 13.88
TOTAL RETURN B, C 11.62% 35.01% 11.40% 3.97% 41.05%
5.97%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 618,083 $ 602,915 $ 272,979 $ 199,361 $ 40,309
$ 7,087
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.47% A 1.59% 1.86% 2.10% 2.63%
3.27%
F E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.44% A, 1.56% 1.84% 2.07% 2.62%
3.27%
REDUCTIONS G G G G G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.12)% A .00% (.30)% (.67)% (1.18)%
(1.22)%
PORTFOLIO TURNOVER 116% A 137% 161% 125% 208%
248%
AVERAGE COMMISSION RATE H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. F FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN
HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT
OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NINE MONTHS YEARS ENDED
ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA D 1997 1996 1995 G
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.88 $ 19.23 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.12) (.15) (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.80 6.49 .39
TOTAL FROM INVESTMENT OPERATIONS 2.68 6.34 .36
LESS DISTRIBUTIONS (1.57) (.69) -
FROM NET REALIZED GAIN
REDEMPTION FEES ADDED TO PAID IN CAPITAL - - -
NET ASSET VALUE, END OF PERIOD $ 25.99 $ 24.88 $ 19.23
TOTAL RETURN B, C 11.19% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 59,044 $ 36,106 $ 2,508
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.04% A 2.28% 2.23% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
2.02% A, F 2.24% F 2.21% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.67)% A (.68)% (.67)% A
PORTFOLIO TURNOVER 116% A 137% 161% A
AVERAGE COMMISSION RATE H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL
STATEMENTS). G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO OCTOBER 31, 1995. H FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
NINE MONTHS YEARS ENDED
ENDED OCTOBER 31,
JULY 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D 1997 1996 1995 G
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.17 $ 19.27 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .04 .04 (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.85 6.55 .41
TOTAL FROM INVESTMENT OPERATIONS 2.89 6.59 .40
LESS DISTRIBUTIONS (.05) - -
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (.02) - -
FROM NET REALIZED GAIN (1.57) (.69) -
TOTAL DISTRIBUTIONS (1.64) (.69) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL - - -
NET ASSET VALUE, END OF PERIOD $ 26.42 $ 25.17 $ 19.27
TOTAL RETURN B, C 11.95% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 10,042 $ 9,860 $ 718
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.08% A 1.44% 1.68% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.06% A, F 1.39% F 1.66% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .24% A .17% (.13)% A
PORTFOLIO TURNOVER 116% A 137% 161% A
AVERAGE COMMISSION RATE H $ .0286 $ .0337
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). D NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED
TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FOR THE PERIOD JULY 3, 1995
(COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1995. H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER
1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. On December 19, 1996, the Board of
Trustees approved a change in the fiscal year-end of the fund to July
31. Accordingly, the financial statements of the fund are presented
for the nine-month period ended July 31, 1997.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, 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 its
distribution plan. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class A and shares of Class A distributions under federal and state
laws. These expenses are borne by Class A and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, passive foreign
investment companies (PFIC) and losses deferred due to wash sales. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares purchased on or after March 1, 1997 and held
in the fund less than 60 days are subject to a redemption fee equal to
1.00% of the proceeds of the redeemed shares. The fee, which is
retained by the fund, is accounted for as an addition to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to 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.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $572,087,967 and $609,163,786, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDIC PORTION
CLASS A $ 8,324 $ 8,324
CLASS T 2,378,291 2,378,291
CLASS B 369,802 92,450
$ 2,756,417 $ 2,479,065
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase (five years prior to January 2, 1997). The Class B charge
is based on declining rates which range from 5% to 1% (4% to 1% prior
to January 2, 1997) of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 136,219 $ 110,074
CLASS T 916,737 667,561
CLASS B 110,966 0
*
$ 1,163,922 $ 777,635
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 10,285 .31% *
CLASS T *** FIIOC ** 1,075,587 .23% *
CLASS B FIIOC ** 98,562 .27% *
INSTITUTIONAL CLASS FIIOC ** 13,640 .17% *
$ 1,198,074
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $216,812 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 10,423
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $133,362 under this arrangement.
In addition, FMR voluntarily agreed to reimburse certain transfer
agent, distribution and registration expenses for Class A. For the
period the reimbursement reduced these expenses by $1,398.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $4,909
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
CLASS T $ 147
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31, 1997 A
1997
CLASS A
FROM NET INVESTMENT INCOME $ 13,382 $ -
FROM NET REALIZED GAIN 150,076 -
TOTAL $ 163,458 $ -
CLASS T
FROM NET INVESTMENT INCOME $ 488,121 $ -
FROM NET REALIZED GAIN 38,300,093 10,063,536
TOTAL $ 38,788,214 $ 10,063,536
CLASS B
FROM NET REALIZED GAIN $ 2,464,412 $ 127,176
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 31,540 $ -
FROM NET REALIZED GAIN 711,098 30,367
TOTAL $ 742,638 $ 30,367
$ 42,158,722 $ 10,221,079
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
NINE MONTHS YEAR ENDED NINE MONTHS YEAR ENDED
ENDED OCTOBER 31, ENDED OCTOBER 31,
JULY 31, JULY 31,
1997 1996 A 1997 1996 A
CLASS A 209,436 68,176 $ 5,153,545 $ 1,669,719
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 6,590 - 161,464 -
SHARES REDEEMED (36,492) (4,094) (892,062) (102,601)
NET INCREASE (DECREASE) 179,534 64,082 $ 4,422,947 $ 1,567,118
CLASS T 7,500,800 16,012,851 $ 184,421,132 $ 364,247,050
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,447,428 462,106 35,664,618 9,214,395
SHARES REDEEMED (9,481,432) (6,657,398) (231,213,235) (152,716,059)
NET INCREASE (DECREASE) (533,204) 9,817,559 $ (11,127,485) $ 220,745,386
CLASS B 1,183,380 1,475,147 $ 28,872,353 $ 33,567,815
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 96,152 5,653 2,345,122 112,491
SHARES REDEEMED (458,573) (160,185) (10,907,231) (3,677,194)
NET INCREASE (DECREASE) 820,959 1,320,615 $ 20,310,244 $ 30,003,112
INSTITUTIONAL CLASS 342,819 759,537 $ 8,550,867 $ 17,292,506
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 29,515 1,464 727,819 29,239
SHARES REDEEMED (384,020) (406,499) (9,399,190) (9,620,709)
NET INCREASE (DECREASE) (11,686) 354,502 $ (120,504) $ 7,701,036
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 26,152
CLASS T 100,940
CLASS B 20,105
INSTITUTIONAL CLASS 15,822
$ 163,019
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor Natural Resources Fund:
We have audited the accompanying statements of assets and liabilities
of Fidelity Advisor Series V: Fidelity Advisor Natural Resources Fund,
including the schedule of portfolio investments, as of July 31, 1997,
and the related statement of operations for the period then ended, the
statements of changes in net assets for each of the periods indicated
therein and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1997 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Advisor Series V: Fidelity Advisor
Natural Resources Fund as of July 31, 1997, the results of its
operations for the period then ended, the changes in its net assets
for each of the periods indicated therein and the financial highlights
of Class A, Class B, Class T and Institutional Class for each of the
periods indicated therein, in conformity with generally accepted
accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 12, 1997
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on June 18,
1997. The results of votes taken among shareholders on proposals
before them are listed below.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 17,838,235.074 90.902
AGAINST 467,374.520 2.382
ABSTAIN 1,317,959.317 6.716
TOTAL 19,623,568.911 100.000
PROPOSAL 2
To amend the fund's fundamental investment limitation concerning the
concentration of its investments in a single industry.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 12,718,493.325 83.072
AGAINST 925,615.216 6.046
ABSTAIN 1,666,027.370 10.882
TOTAL 15,310,135.911 100.000
BROKER NON-VOTES 4,313,433.000
PROPOSAL 3
To eliminate the fund's fundamental investment limitation concerning
diversification and to change the fund's classification to a
non-diversified fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 12,552,771.151 81.990
AGAINST 1,001,672.363 6.542
ABSTAIN 1,755,692.397 11.468
TOTAL 15,310,135.911 100.000
BROKER NON-VOTES 4,313,433.000
PROPOSAL 4
To approve an agreement and plan of reorganization of the fund from a
separate series of one Massachusetts business trust to another.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 13,061,796.597 85.315
AGAINST 512,230.825 3.345
ABSTAIN 1,736,108.489 11.340
TOTAL 15,310,135.911 100.000
BROKER NON-VOTES 4,313,433.000
ADVISOR TECHNOLOGY FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970825 102437 S00000000000001
FA TECHNOLOGY -CL I S&P 500
00202 SP001
1996/09/03 10000.00 10000.00
1996/09/30 11120.00 10561.42
1996/10/31 11230.00 10852.70
1996/11/30 12740.00 11673.05
1996/12/31 12478.92 11441.81
1997/01/31 13888.97 12156.70
1997/02/28 12932.15 12252.00
1997/03/31 12146.56 11748.57
1997/04/30 12871.72 12449.96
1997/05/31 14332.13 13207.91
1997/06/30 14473.13 13799.63
1997/07/31 16094.69 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970825 102438 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
TECHNOLOGY - INSTITUTIONAL CLASS 60.95%
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Technology - Institutional Class on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1997, the value of the investment would have grown to $16,095 - a
60.95% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
APPLIED MATERIALS, INC. 10.1
COMPAQ COMPUTER CORP. 7.0
TERADYNE, INC. 5.0
NOKIA CORP. AB SPONSORED ADR 4.0
ADVANTEST CORP. 3.8
ASCEND COMMUNICATIONS, INC. 3.2
ASM LITHOGRAPHY HOLDING NV 2.7
MICROSOFT CORP. 2.1
ERICSSON (L.M.) TELEPHONE CO. CLASS B ADR 2.0
HELIX TECHNOLOGY CORP. 1.8
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
TELEPHONE EQUIPMENT 12.2%
ELECTRONIC EQUIPMENT 11.7%
SEMICONDUCTOR CAPITAL
EQUIPMENT 11.2%
SEMICONDUCTORS 10.9%
MINI & MACRO COMPUTERS 7.4%
ALL OTHERS 46.6% *
ROW: 1, COL: 1, VALUE: 46.6
ROW: 1, COL: 2, VALUE: 7.4
ROW: 1, COL: 3, VALUE: 10.9
ROW: 1, COL: 4, VALUE: 11.2
ROW: 1, COL: 5, VALUE: 11.7
ROW: 1, COL: 6, VALUE: 12.2
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Adam Hetnarski, Portfolio Manager of Fidelity
Advisor Technology Fund
Q. HOW DID THE FUND PERFORM, ADAM?
A. The fund has performed very well. From inception on September 3,
1996, through July 31, 1997, the fund's Institutional Class shares
returned 60.95%. During the same period, the Standard & Poor's 500
Index returned 48.98%.
Q. WHAT HELPED THE FUND OUTPERFORM THE S&P 500?
A. Being invested in the right stocks at the right time paid off for
the fund. For example, the fund was heavily overweighted in
semiconductor capital equipment companies at the beginning of the
year. These companies reported robust order and revenue growth
throughout the first half of the year, which helped the fund's
performance. Conversely, staying away from the wrong stocks at the
right time also helped performance. For instance, the fund was
underweighted in networking stocks when the companies in that sector
imploded in March and April. By that I mean pricing pressures surfaced
in the industry and many analysts cut first-quarter earnings estimates
for several large networking companies. I anticipated problems in the
industry, so the fund reduced its exposure to those stocks. Therefore,
the fund didn't underperform when the market dipped during those
months.
Q. HOW WOULD YOU DESCRIBE THE INVESTING ENVIRONMENT DURING THE PERIOD?
A. The stock market achieved unprecedented gains over the past 12
months, largely fueled by a narrow group of the larger-cap stocks in
the S&P 500 Index. Several of the best-performing stocks in the index
were technology stocks, including Microsoft, Compaq and Intel. The
technology sector was very strong during the period, with the
exception of suffering a correction from the end of January 1997
through the end of April. However, technology companies with strong
business prospects rebounded sharply from that point through the end
of July - recovering more ground than they had lost.
Q. APPLIED MATERIALS REPRESENTED 10% OF THE FUND'S HOLDINGS AT THE END
OF THE PERIOD AND COMPAQ ACCOUNTED FOR ABOUT 7%. WHAT DID YOU FIND
ATTRACTIVE ABOUT THESE STOCKS?
A. These companies are involved in different industries, but the story
for both is the same: improving business prospects. Compaq's unit
growth and margins continued to improve, along with return on assets
and return on equity. The same holds true for Applied Materials, a
semiconductor capital equipment company. Orders improved and, even in
the trough of the cycle, the company generated net margins of more
than 10%.
Q. WHAT WOULD YOU CHARACTERIZE AS THE BIGGEST DISAPPOINTMENT DURING
THE PERIOD?
A. I had the fund positioned too defensively late in the period
because I thought the technology sector might underperform the broad
market, especially after Intel missed quarterly sales expectations and
warned that revenue in the September quarter would be flat compared to
its previous quarter. Seagate Technologies and Western Digital also
reported earnings that came in lower than analysts' estimates. In
short, there was every indication that technology was going to be
weak, and I positioned the fund accordingly. However, the technology
market actually rallied dramatically in July, and the fund's
positioning didn't allow it to reap all of the rewards of that
upswing.
Q. WHAT'S YOUR OUTLOOK FOR THE TECHNOLOGY SECTOR OVER THE NEXT SIX
MONTHS?
A. It's hard to say, since so many technology stocks are trading close
to peak valuations. In addition, it's difficult to predict PC unit
growth going forward. Basically, I'm more cautious going into the next
six to 12 months. However, technology represents about 12%-14% of the
S&P 500 and it's growing faster than any other segment of the index.
Technology companies also have better operating margins, return on
equity and return on assets than most other segments. They are the
beneficiaries of government, corporate and consumer spending as
technological change becomes more of a driving force behind the
growing global economy. Therefore, I think technology can outperform
the broader market in the long run.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$73 million
MANAGER: Adam Hetnarski, since inception;
joined Fidelity in 1991
(checkmark)
ADVISOR TECHNOLOGY FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
Lycos, Inc. (a) 14,800 $ 279,350
AEROSPACE & DEFENSE - 0.8%
AIRCRAFT EQUIPMENT - 0.4%
BE Aerospace, Inc. (a) 7,800 279,825
MISSILES & SPACE VEHICLES - 0.4%
GenCorp, Inc. 12,100 352,413
TOTAL AEROSPACE & DEFENSE 632,238
BROADCASTING - 0.2%
COMMUNICATIONS SERVICES - 0.1%
Smartalk Teleservices, Inc. (a) 3,900 69,225
RADIO BROADCASTING - 0.1%
American Radio Systems Corp. Class A 1,300 56,387
TOTAL BROADCASTING 125,612
BUILDING MATERIALS - 0.9%
FLAT GLASS - 0.9%
Toshiba Ceramics Co., Ltd. 53,000 643,101
COMMUNICATIONS EQUIPMENT - 13.6%
DATACOMMUNICATIONS EQUIPMENT - 0.9%
Aspect Telecommunications Corp. (a) 10,000 211,406
Level One Communications, Inc. (a) 2,200 93,500
Network General Corp. (a) 20,500 333,125
638,031
TELEPHONE EQUIPMENT - 12.2%
Advanced Fibre Communication, Inc. 2,600 181,675
Andrew Corp. (a) 5,000 130,313
Ascend Communications, Inc. (a) 43,800 2,381,625
Boston Technology, Inc. (a) 3,500 92,969
Ciena Corp. (a) 11,000 617,375
Ericsson (L.M.) Telephone Co.
Class B ADR 33,500 1,515,875
Lucent Technologies, Inc. 9,800 832,388
Matsushita Communication Industrial
Co. Ltd. 6,000 250,769
Newbridge Networks Corp. (a) 1,000 52,125
Nokia Corp. AB sponsored ADR 35,000 2,996,875
9,051,989
TELEPHONE INTERCONNECT SYSTEMS - 0.5%
Premisys Communications, Inc. (a) 19,000 389,203
TOTAL COMMUNICATIONS EQUIPMENT 10,079,223
COMPUTER SERVICES & SOFTWARE - 9.7%
COMPUTER RELATED SERVICES - 0.3%
RWD Technologies, Inc. 9,700 203,700
COMPUTER SERVICES - 3.2%
Cerner Corp. (a) 5,300 159,000
Computer Learning Centers, Inc. (a) 7,700 368,638
Diamond Multimedia Systems, Inc. (a) 29,000 259,188
Electronic Data Systems Corp. 27,300 1,180,725
HBO & Co. 2,906 224,852
Sync Research, Inc. (a) 10,200 45,900
Viasoft, Inc. (a) 2,000 121,000
2,359,303
CAD/CAM/CAE - 0.1%
Advanced Communication Systems, Inc. 5,000 47,500
Synopsys, Inc. (a) 2,200 73,975
121,475
SHARES VALUE (NOTE 1)
DATA PROCESSING - 0.1%
Ceridian Corp. (a) 1,800 $ 78,750
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Galileo International, Inc. 200 5,275
PREPACKAGED COMPUTER SOFTWARE - 6.0%
Broderbund Software, Inc. (a) 13,700 297,119
Business Objects SA sponsored ADR (a) 6,900 46,575
Citrix Systems, Inc. (a) 3,200 151,600
Eagle Point Software Corp. (a) 27,200 92,650
Electronic Arts, Inc. (a) 16,207 542,935
GT Interactive Software, Inc. (a) 6,000 57,375
Informix Corp. (a) 16,600 187,788
Microsoft Corp. (a) 10,900 1,542,350
Midway Games, Inc. (a) 9,700 197,638
Scopus Technology, Inc. 8,000 231,000
Spectrum Holobyte, Inc. (a) 138,900 599,006
Systems & Computer Technology
Corp. (a) 12,000 390,000
Vantive Corp. (a) 3,400 106,250
4,442,286
TOTAL COMPUTER SERVICES & SOFTWARE 7,210,789
COMPUTERS & OFFICE EQUIPMENT - 11.4%
COMPUTER PERIPHERALS - 1.4%
Creative Technology Corp. Ltd. 9,500 193,563
EMC Corp. (a) 4,000 202,000
Fore Systems, Inc. (a) 27,800 446,538
Galileo Technology Ltd. 7,100 173,063
1,015,164
GRAPHICS WORKSTATIONS - 1.5%
Silicon Graphics, Inc. (a) 46,000 1,150,000
MINI & MICRO COMPUTERS - 7.4%
Compaq Computer Corp. (a) 91,450 5,224,081
Digital Equipment Corp. (a) 6,700 275,956
5,500,037
OFFICE AUTOMATION - 1.1%
Nam Tai Electronics, Inc. 23,000 621,000
Xerox Corp. 2,300 189,175
810,175
TOTAL COMPUTERS & OFFICE EQUIPMENT 8,475,376
CONSUMER DURABLES - 0.8%
GLASS, PRESSED OR BLOWN - 0.7%
Corning, Inc. 8,500 525,406
MANUFACTURING INDUSTRIES - 0.1%
Minnesota Mining & Manufacturing Co. 800 75,800
TOTAL CONSUMER DURABLES 601,206
CREDIT & OTHER FINANCE - 0.5%
FINANCIAL SERVICES - 0.1%
American Express Co. 1,200 100,500
MORTGAGE BANKERS - 0.2%
New Century Financial Corp. 8,500 155,125
PERSONAL CREDIT INSTITUTIONS - 0.2%
Associates First Capital Corp. 1,900 125,281
TOTAL CREDIT & OTHER FINANCE 380,906
DEFENSE ELECTRONICS - 1.6%
Raytheon Co. 21,800 1,218,075
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 0.7%
COMMERCIAL LABORATORY RESEARCH - 0.1%
BioReliance Corp. 100 $ 1,788
Millennium Pharmaceuticals, Inc. (a) 5,400 78,975
80,763
DRUGS - 0.5%
Barr Laboratories, Inc. (a) 7,650 344,250
PHARMACEUTICAL PREPARATIONS - 0.1%
Guilford Pharmaceuticals, Inc. (a) 5,050 112,047
TOTAL DRUGS & PHARMACEUTICALS 537,060
ELECTRICAL EQUIPMENT - 1.1%
TV & RADIO COMMUNICATION EQUIPMENT - 1.1%
Corsair Communications, Inc. 100 1,981
Spectrian Corp. (a) 18,200 828,100
830,081
ELECTRONIC INSTRUMENTS - 23.6%
ELECTRONIC EQUIPMENT - 11.7%
Advantest Corp. 30,700 2,845,587
Cohu, Inc. 4,400 184,800
Credence Systems Corp. (a) 6,700 227,800
Helix Technology Corp. 26,200 1,318,188
LTX Corp. (a) 43,400 309,225
ORBIT/FR, Inc. 9,300 108,113
Teradyne, Inc. (a) 79,600 3,721,300
8,715,013
LAB & RESEARCH EQUIPMENT - 0.7%
Newport Corp. 3,900 50,213
Tokyo Seimitsu Co. Ltd. 16,000 446,261
496,474
SEMICONDUCTOR CAPITAL EQUIPMENT - 11.2%
Applied Materials, Inc. (a) 81,900 7,524,563
KLA-Tencor Corp. (a) 7,700 466,331
Silicon Valley Group, Inc. (a) 10,100 313,100
8,303,994
TOTAL ELECTRONIC INSTRUMENTS 17,515,481
ELECTRONICS - 13.4%
ELECTRONIC PARTS - WHOLESALE - 0.3%
Audiovox Corp. Class A (a) 30,800 240,625
ELECTRONICS & ELECTRONIC COMPONENTS - 1.2%
Advanced Energy Industries, Inc. (a) 16,700 417,500
Kyocera Corp. 5,000 429,745
847,245
PRINTED CIRCUIT BOARDS - 1.0%
DII Group, Inc. (a) 14,300 732,875
SEMICONDUCTORS - 10.9%
Alliance Semiconductor Corp. (a) 8,500 123,781
CFM Technologies, Inc. (a) 3,300 85,800
Electroglas, Inc. (a) 24,000 759,000
Integrated Circuit Systems, Inc. (a) 13,100 345,513
Integrated Device Technology, Inc. (a) 11,300 153,256
Intel Corp. 1,200 110,175
Intel Corp. warrants 3/14/98 (a) 13,500 961,031
Lattice Semiconductor Corp. (a) 8,900 599,638
Micrel, Inc. (a) 1,100 72,188
OnTrak Systems, Inc. (a) 23,900 1,045,625
SHARES VALUE (NOTE 1)
PMC-Sierra, Inc. (a) 9,600 $ 314,400
Quality Semiconductor, Inc. (a) 35,000 463,750
RF Micro Devices, Inc. 12,700 214,313
Texas Instruments, Inc. 10,100 1,161,500
Tokyo Electron Ltd. 18,000 1,110,259
Vitesse Semiconductor Corp. (a) 12,200 590,175
8,110,404
TOTAL ELECTRONICS 9,931,149
ENERGY SERVICES - 1.7%
DRILLING - 1.3%
Cliffs Drilling Co. (a) 12,100 633,738
Falcon Drilling, Inc. (a) 12,200 352,275
986,013
OIL & GAS SERVICES - 0.4%
Schlumberger Ltd. 3,400 259,675
TOTAL ENERGY SERVICES 1,245,688
HOUSEHOLD PRODUCTS - 0.4%
SOAPS & DETERGENTS - 0.4%
Procter & Gamble Co. 2,100 319,463
INDUSTRIAL MACHINERY & EQUIPMENT - 4.3%
ACCESS & MEASURING CUTTING TOOLS - 0.1%
Stanley Works 1,800 81,563
FARM MACHINERY & EQUIPMENT - 0.4%
Case Corp. 4,600 287,213
GENERAL INDUSTRIAL MACHINERY - 1.0%
Tyco International Ltd. 8,894 720,414
SPECIAL INDUSTRIAL MACHINERY - 2.8%
ASM Lithography Holding NV 24,500 1,984,500
Asyst Technologies, Inc. (a) 2,500 134,375
2,118,875
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,208,065
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING - 0.1%
Alrenco, Inc. (a) 3,100 45,338
Rent-Way, Inc. (a) 3,300 49,088
94,426
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
MEDICAL SUPPLIES & APPLIANCES - 0.0%
Proteon, Inc. (a) 4,100 7,559
METALS & MINING - 1.2%
METAL MINING - 0.4%
Phelps Dodge Corp. 3,400 289,213
NONFERROUS WIRE - 0.8%
AFC Cable Systems, Inc. (a) 20,000 572,500
TOTAL METALS & MINING 861,713
OIL & GAS - 0.2%
PETROLEUM REFINERS - 0.2%
British Petroleum PLC ADR 1,600 131,900
PAPER & FOREST PRODUCTS - 0.7%
ENVELOPES - 0.2%
Mail-Well, Inc. (a) 4,250 138,656
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - CONTINUED
PAPER - 0.5%
Champion International Corp. 6,200 $ 384,400
TOTAL PAPER & FOREST PRODUCTS 523,056
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Newmont Mining Corp. 6,600 272,250
RAILROADS - 0.5%
Kansas City Southern Industries, Inc. 4,700 354,250
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 11,000 172,563
Starbucks Corp. (a) 6,200 253,813
426,376
RETAIL & WHOLESALE, MISCELLANEOUS - 2.5%
MAIL ORDER - 0.9%
Viking Office Products, Inc. (a) 32,600 654,038
STATIONERY & OFFICE SUPPLIES -
WHOLESALE - 1.6%
Corporate Express, Inc. 34,000 510,000
IKON Office Solutions, Inc. 25,100 732,606
1,242,606
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,896,644
SERVICES - 2.3%
BUSINESS CONSULTING SERVICES - 0.3%
Learning Tree International, Inc. (a) 4,600 187,450
BUSINESS SERVICES - 0.3%
Sitel Corp. (a) 1,900 28,500
Snyder Communications, Inc. (a) 5,500 170,500
199,000
MANAGEMENT CONSULTING SERVICES - 0.4%
Hagler Bailly, Inc. 15,500 311,938
MANAGEMENT SERVICES - 1.0%
Maximus, Inc. (a) 32,400 749,250
PERSONNEL SUPPLY SERVICES - 0.3%
AccuStaff, Inc. (a) 5,200 141,700
Computer Horizons Corp. (a) 2,850 114,000
255,700
TOTAL SERVICES 1,703,338
TELEPHONE SERVICES - 1.0%
Brooks Fiber Properties, Inc. (a) 8,000 301,000
Teleport Communications Group, Inc.
Class A (a) 10,400 409,500
710,500
TOBACCO - 0.9%
TOBACCO MANUFACTURERS - 0.9%
Philip Morris Companies, Inc. 14,600 658,825
TOTAL COMMON STOCKS
(Cost $61,249,892) 70,873,700
CASH EQUIVALENTS - 4.5%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $3,343,382) 3,343,382 $ 3,343,382
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $64,593,274) $ 74,217,082
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.66%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 81.6%
Japan 7.7
Finland 4.0
Netherlands 3.0
Sweden 2.0
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $64,906,755. Net unrealized appreciation
aggregated $9,310,327, of which $10,084,674 related to appreciated
investment securities and $774,347 related to depreciated investment
securities.
The fund hereby designates approximately $186,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 2%, 2%, and 1% of Class A's, Class T's and Institutional
Class' dividend distributions during the fiscal year qualifies for the
dividend-received deduction for corporate shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 74,217,082
(COST $64,593,274) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 1,219,017
RECEIVABLE FOR FUND SHARES SOLD 989,416
DIVIDENDS RECEIVABLE 20,690
INTEREST RECEIVABLE 49,108
PREPAID EXPENSES11,034
TOTAL ASSETS 76,506,347
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,607,331
PAYABLE FOR FUND SHARES REDEEMED 147,838
ACCRUED MANAGEMENT FEE 25,095
DISTRIBUTION FEES PAYABLE 26,564
OTHER PAYABLES AND ACCRUED EXPENSES 60,844
TOTAL LIABILITIES 2,867,672
NET ASSETS $ 73,638,675
NET ASSETS CONSIST OF:
PAID IN CAPITAL$ 59,642,923
ACCUMULATED NET REALIZED 4,371,982
GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,623,770
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 73,638,675
</TABLE>
CALCULATION OF MAXIMUM $15.96
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,312,548 (DIVIDED BY)
458,061 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.84
(100/94.75 OF $15.96)
CLASS T: $15.91
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($57,623,799 (DIVIDED BY)
3,622,892 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.49
(100/96.50 OF $15.91)
CLASS B: $15.88
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($5,104,587 (DIVIDED BY)
321,360 SHARES) A
INSTITUTIONAL CLASS: $15.98
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,597,741 (DIVIDED BY) 225,171 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 68,365
DIVIDENDS
INTEREST 206,358
TOTAL INCOME 274,723
EXPENSES
MANAGEMENT FEE $ 174,663
TRANSFER AGENT FEES 85,124
DISTRIBUTION FEES 134,619
ACCOUNTING FEES AND EXPENSES 55,209
NON-INTERESTED TRUSTEES' COMPENSATION 91
CUSTODIAN FEES AND EXPENSES 21,899
REGISTRATION FEES 114,626
AUDIT 20,131
LEGAL 1,001
MISCELLANEOUS 6,369
TOTAL EXPENSES BEFORE REDUCTIONS 613,732
EXPENSE REDUCTIONS (74,630) 539,102
NET INVESTMENT INCOME (LOSS) (264,379)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 4,756,467
FOREIGN CURRENCY TRANSACTIONS (327) 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 9,623,808
ASSETS AND LIABILITIES IN (38) 9,623,770
FOREIGN CURRENCIES
NET GAIN (LOSS) 14,379,910
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 14,115,531
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (264,379)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 9,623,770
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,115,531
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (119,780)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 59,627,327
REDEMPTION FEES 15,597
TOTAL INCREASE (DECREASE) IN NET ASSETS 73,638,675
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 73,638,675
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.13
TOTAL FROM INVESTMENT OPERATIONS 6.03
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.96
TOTAL RETURN B, C 60.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,313
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.70% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.79)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE
FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.09
TOTAL FROM INVESTMENT OPERATIONS 5.98
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.91
TOTAL RETURN B, C 60.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 57,624
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.92% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS1.87% A,
E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.93)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE F $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31,
1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.08
TOTAL FROM INVESTMENT OPERATIONS 3.00
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 15.88
TOTAL RETURN B, C 23.29%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,105
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
2.45% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.41)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F
FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. H FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.12
TOTAL FROM INVESTMENT OPERATIONS 6.06
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.98
TOTAL RETURN B, C 60.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,598
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.44% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.50)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR
AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL
STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Technology Fund (the fund) is a fund of Fidelity
Advisor Series VII (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the
respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $201,318,715 and $144,825,290, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,224 $ 8,224
CLASS T 117,376 117,376
CLASS B 9,019 2,257
$ 134,619 $ 127,857
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
occurring within six years of purchase. The Class B charge is based on
declining rates which range from 5% to 1% of the lesser of the cost of
shares at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital gains.
Effective August 1, 1997, Class A's maximum sales charge was increased
to 5.75%.
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 137,804 $ 104,769
CLASS T 326,277 235,448
CLASS B 1,501 0
*
$ 465,582 $ 340,217
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 10,888 .33% *
CLASS T *** FIIOC ** 67,907 .29% *
CLASS B FIIOC ** 3,476 .38% *
INSTITUTIONAL CLASS FIIOC ** 2,853 .20% *
$ 85,124
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $22,843 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 26,420
CLASS B 2.50% 10,493
CLASS T 2.00% -
INSTITUTIONAL CLASS 1.50% 24,996
$ 61,909
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $12,267 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $454 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
CLASS A 1997 A
FROM NET REALIZED GAIN $ 16,754
CLASS T
FROM NET REALIZED GAIN 94,078
INSTITUTIONAL CLASS
FROM NET REALIZED GAIN 8,948
TOTAL $ 119,780
A DISTRIBUTIONS ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF
SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 504,366 $ 6,388,175
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,197 15,029
SHARES REDEEMED (47,502) (617,865)
NET INCREASE (DECREASE) 458,061 $ 5,785,339
CLASS T 4,187,137 $ 54,310,830
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 7,154 89,642
SHARES REDEEMED (571,399) (7,714,355)
NET INCREASE (DECREASE) 3,622,892 $ 46,686,117
CLASS B 352,887 $ 4,850,934
SHARES SOLD
SHARES REDEEMED (31,527) (463,394)
NET INCREASE (DECREASE) 321,360 $ 4,387,540
INSTITUTIONAL CLASS 229,260 $ 2,822,866
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 714 8,948
SHARES REDEEMED (4,803) (63,483)
NET INCREASE (DECREASE) 225,171 $ 2,768,331
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL CLASS
ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES)
TO JULY 31, 1997.
A SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 32,274
CLASS T 40,552
CLASS B 13,256
INSTITUTIONAL CLASS 28,544
$ 114,626
ADVISOR UTILITIES GROWTH FUND - INSTITUTIONAL CLASS
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
return would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970814 164803 S00000000000001
FA UTILITIES GROWTH -CL I S&P 500
00206 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10160.00 10561.42
1996/10/31 10780.00 10852.70
1996/11/30 11360.00 11673.05
1996/12/31 11524.62 11441.81
1997/01/31 11848.98 12156.70
1997/02/28 12021.29 12252.00
1997/03/31 11413.13 11748.57
1997/04/30 11808.43 12449.96
1997/05/31 12558.50 13207.91
1997/06/30 12953.80 13799.63
1997/07/31 13268.01 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 164805 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
UTILITIES GROWTH - INSTITUTIONAL CLASS 32.68%
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on September 3, 1996. You can compare Institutional Class'
returns to the performance of the S&P 500 - a widely recognized,
unmanaged index of common stocks. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year. Average annual
total returns will appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Utilities Growth - Institutional Class on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1997, the value of the investment would have grown to $13,268 - a
32.68% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 9.6
SBC COMMUNICATIONS, INC. 7.6
SPRINT CORP. 5.6
BELLSOUTH CORP. 4.7
AIRTOUCH COMMUNICATIONS, INC. 4.6
AMERITECH CORP. 4.5
AES CORP. 4.0
NYNEX CORP. 3.9
GTE CORP. 3.6
MCI COMMUNICATIONS CORP. 3.6
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
TELEPHONE SERVICES 54.5%
ELECTRIC POWER 8.6%
GAS DISTRIBUTION 7.5%
GAS TRANSMISSION
& DISTRIBUTION 7.2%
CELLULAR & COMMUNICATION
SERVICES 5.2%
ALL OTHERS 17.0% *
ROW: 1, COL: 1, VALUE: 17.0
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 7.5
ROW: 1, COL: 5, VALUE: 8.6
ROW: 1, COL: 6, VALUE: 54.5
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: On August 18, 1997, Nick Thakore (right) became
Portfolio Manager of Fidelity Advisor Utilities Growth Fund. The
following is an interview with John Muresianu (left), who managed the
fund during the period covered by this report, with comments from Nick
Thakore on his outlook.
Q. JOHN, HOW DID THE FUND PERFORM?
J.M. From its inception on September 3, 1996, the fund's Institutional
shares returned 32.68%. During the same time period, the Standard &
Poor's 500 Index posted a return of 48.98%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
J.M. The sector underperformed the broad market because investors
continued to be concerned about how ongoing deregulation would affect
utilities companies, especially in the telephone and electric
industries. Overall, though, the fund benefited from two factors.
First, it had a solid concentration in telephone and gas utility
stocks. Over the course of the past six months, telephone utility
stocks performed the best among the three industries, with gas stocks
performing second best and electric utility stocks lagging the other
two industries. Second, the fund's stock selection within each of the
industries proved to have a positive effect on performance as well.
Q. WHAT HELPED TELEPHONE STOCKS PERFORM THE BEST AMONG THE
UTILITY SECTOR?
J.M. In general, telephone companies posted the best earnings growth -
and stock prices generally follow earnings - even though there was
some concern about future competition due to deregulation. Gas
companies, on the other hand, after performing quite well in 1995 and
1996, were hurt by weaker-than-expected natural gas prices due to
unexpectedly mild weather. Nevertheless, the price of natural gas did
not fall to levels that would have caused major problems, and the
expectation of industry consolidation helped sustain stock prices
somewhat. Stocks in the electric utility industry were stalled by
three factors. First, these stocks tend to trade in concert with
bonds; because of an uncertain interest-rate backdrop, the bond market
proved to be fairly volatile, and that affected electric utility
stocks. Second, operating costs have increased for most electric
utilities with nuclear power plants as a result of pressure from the
Nuclear Regulatory Commission. Finally, earnings suffered due to the
mild weather over the period.
Q. ELECTRIC UTILITY STOCKS LAGGED THE PHONE AND GAS UTILITIES, YET YOU
INCREASED THE FUND'S INVESTMENTS IN THE ELECTRICS. WHY WAS THAT?
J.M. In my judgment, selected electric utility stocks were oversold
and became too cheap to ignore. I took profits by selling stocks in
other areas to replace them with a higher weighting in these
attractive electric stocks.
Q. WHAT WERE SOME OF THE FUND'S STRONGER-PERFORMING STOCKS OVER THE
PERIOD? WHAT WERE THE DISAPPOINTMENTS?
J.M. WorldCom was one of the fund's top performers. It posted very
strong earnings growth as it consistently beat expectations. AirTouch
Communications also proved to be a positive contributor, turning
around its earnings more than the market expected. It was helped by
strong domestic and international subscriber additions for its
wireless communications services. Sprint also did well, as many
investors anticipated that the company would be acquired. On the minus
side, Enron was hurt by declining natural gas prices and disappointing
earnings from its pipeline, trading and international power
operations. Sonat also disappointed, as it is one of the gas companies
most sensitive to changes in natural gas prices.
Q. TURNING TO YOU, NICK, WHAT'S YOUR OUTLOOK?
N.T. Deregulation - in all of the utilities industries, but especially
in the telephones - should lead to tremendous changes in the
competitive landscape. My goal will be to find the companies that will
be the net beneficiaries of this competition and that show superior
earnings growth relative to their group. In the past, there hasn't
been much of a difference among many of the stocks in the sector, but
we're entering an era where the differences should become much more
dramatic. With the sector going through such significant changes, it
will be important to differentiate between the winners and the losers.
There are two main themes I intend to pursue. First, I'll focus on
newer companies because I believe existing companies with a large
market share will be more vulnerable to the effects of deregulation
than new entrants. Second, I'll look for those companies that are
likely to be acquired in what should be a consolidating industry.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$11 million
MANAGER: Nick Thakore, since August 1997;
joined Fidelity in 1993
(checkmark)
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
CABLE TV OPERATORS - 0.0%
TCI Satellite Entertainment, Inc.
Class A (a) 10 $ 68
TCI Group Class A 200 3,425
3,493
CELLULAR - 5.2%
CELLULAR & COMMUNICATION SERVICES - 5.2%
AirTouch Communications, Inc. (a) 16,700 550,056
Cellnet Data Systems, Inc. (a) 1,100 13,613
Telephone & Data Systems, Inc. 400 15,341
Vodafone Group PLC sponsored ADR 700 35,350
614,360
COAL - 0.3%
MAPCO, Inc. 1,000 30,938
COMMUNICATIONS EQUIPMENT - 1.7%
TELEPHONE EQUIPMENT - 1.7%
Lucent Technologies, Inc. 2,456 208,607
COMPUTER SERVICES & SOFTWARE - 0.1%
DATA PROCESSING - 0.1%
NCR Corp. (a) 487 15,614
ELECTRIC UTILITY - 11.5%
ELECTRIC & OTHER SERVICES - 2.9%
DPL, Inc. 1,500 36,938
Enova Corp. 1,300 31,525
Hidroelectrica de Cantabrico SA 100 3,934
IES Industries, Inc. 500 15,313
LG&E Energy Corp. 400 8,725
Montana Power Co. 1,400 33,163
NIPSCO Industries, Inc. 1,200 50,550
PECO Energy Co. 1,400 32,900
PacifiCorp. 2,000 44,625
Public Service Co. of New Mexico 1,500 27,750
Rochester Gas & Electric Corp. 400 9,700
Sierra Pacific Resources 200 6,388
Utilicorp United, Inc. 200 5,963
Veba AG Ord. 700 40,441
347,915
ELECTRIC POWER - 8.6%
AES Corp. (a) 6,000 474,000
American Electric Power Co., Inc. 700 31,325
Baycorp Holdings Ltd. (a) 100 800
Boston Edison Co. 500 14,063
Central & South West Corp. 1,800 36,113
Central Louisiana Electric Co., Inc. 1,700 45,688
DQE, Inc. 1,300 41,031
Duke Power Co. 5,394 273,408
Entergy Corp. 700 19,119
Kansas City Power & Light Co. 400 11,800
Pinnacle West Capital Corp. 1,100 34,719
Southern Co. 900 19,744
TECO Energy, Inc. 300 7,613
United Illuminating Co. 400 13,825
1,023,248
TOTAL ELECTRIC UTILITY 1,371,163
SHARES VALUE (NOTE 1)
GAS - 20.6%
GAS & OTHER SERVICES - 1.0%
MDU Resources Group, Inc. 2,300 $ 54,625
UGI Corp. 2,000 49,250
Western Resources, Inc. 300 10,388
114,263
GAS DISTRIBUTION - 7.5%
Eastern Enterprises Co. 3,100 111,019
Energen Corp. 1,600 58,000
K N Energy, Inc. 2,900 121,800
MCN Corp. 9,200 291,525
NUI Corp. 800 18,400
National Fuel Gas Co. 400 17,000
New Jersey Resources Corp. 400 12,650
NICOR, Inc. 800 29,300
Northwest Natural Gas Co. 200 5,200
Pacific Enterprises 6,000 200,625
Peoples Energy Corp. 400 15,350
WICOR, Inc. 500 20,063
900,932
GAS TRANSMISSION - 4.9%
Enron Corp. 4,979 188,891
ONEOK, Inc. 1,400 49,000
Sonat, Inc. 3,900 194,513
USX-Delhi Group 300 3,769
Williams Companies, Inc. 3,200 146,400
582,573
GAS TRANSMISSION & DISTRIBUTION - 7.2%
Bay State Gas Co. 600 16,275
Columbia Gas System, Inc. (The) 3,100 213,125
Consolidated Natural Gas Co. 800 46,300
ENSERCH Corp. 8,400 186,900
Equitable Resources, Inc. 800 23,850
Noram Energy Corp. 3,700 59,200
Questar Corp. 5,500 225,156
Tejas Gas Corp. (a) 1,700 75,544
Yankee Energy System, Inc. 700 16,800
863,150
TOTAL GAS 2,460,918
HOLDING COMPANIES - 0.6%
CINergy Corp. 2,000 67,250
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 300 675
OIL & GAS - 2.7%
CRUDE PETROLEUM & GAS - 0.1%
Occidental Petroleum Corp. 500 12,531
PETROLEUM REFINERS - 2.6%
Coastal Corp. (The) 5,600 304,500
TOTAL OIL & GAS 317,031
TELEPHONE SERVICES - 54.5%
AT&T Corp. 7,200 265,050
ALLTEL Corp. 300 9,863
Ameritech Corp. 7,900 532,756
BCE, Inc. 2,500 76,087
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
Bell Atlantic Corp. 5,400 $ 391,838
BellSouth Corp. 11,800 559,025
Cincinnati Bell, Inc. 2,200 66,000
GTE Corp. 9,300 432,450
MCI Communications Corp. 12,000 423,750
NYNEX Corp. 8,300 460,131
Qwest Communications International, Inc. 100 3,113
SBC Communications, Inc. 15,247 902,432
Sprint Corp. 13,500 668,250
U.S. WEST Communications Group 9,900 361,969
U.S. WEST Media Group (a) 9,100 200,769
WorldCom, Inc. (a) 32,750 1,144,203
6,497,686
TOTAL COMMON STOCKS
(Cost $10,135,582) 11,587,735
CONVERTIBLE PREFERRED STOCKS - 0.1%
ELECTRIC UTILITY - 0.1%
COMBINATION UTILITIES - 0.1%
Citizens Utilities Trust $2.50
(Cost $19,495) 400 17,375
CASH EQUIVALENTS - 2.7%
Taxable Central Cash Fund (b)
(Cost $319,350) 319,350 319,350
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,474,427) $ 11,924,460
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.66%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $10,474,427. Net unrealized appreciation
aggregated $1,450,033, of which $1,523,569 related to appreciated
investment securities and $73,536 related to depreciated investment
securities.
The fund hereby designates approximately $8,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 40%, 40%, and 37% of Class A's, Class T's and Institutional
Class' dividend distributions during the fiscal year qualifies for the
dividend-received deduction for corporate shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 11,924,460
(COST $10,474,427) - SEE ACCOMPANYING SCHEDULE
CASH 1,606
RECEIVABLE FOR INVESTMENTS SOLD 7,550
RECEIVABLE FOR FUND SHARES SOLD 7,627
DIVIDENDS RECEIVABLE 36,688
INTEREST RECEIVABLE 2,107
PREPAID EXPENSES 11,042
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 11,314
TOTAL ASSETS 12,002,394
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 4,700
PAYABLE FOR FUND SHARES REDEEMED 58,103
DISTRIBUTION FEES PAYABLE 4,377
OTHER PAYABLES AND ACCRUED EXPENSES 34,056
TOTAL LIABILITIES 101,236
NET ASSETS $ 11,901,158
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 10,326,328
UNDISTRIBUTED NET INVESTMENT INCOME 38,999
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 85,809
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,450,022
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 11,901,158
</TABLE>
CALCULATION OF MAXIMUM $13.07
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($530,974 (DIVIDED BY)
40,614 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.79
(100/94.75 OF $13.07)
CLASS T: $13.03
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,085,134 (DIVIDED BY)
543,698 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.50
(100/96.50 OF $13.03)
CLASS B: $13.01
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($2,038,758 (DIVIDED BY)
156,704 SHARES) A
INSTITUTIONAL CLASS: $13.09
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($2,246,292 (DIVIDED BY) 171,631 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 142,376
DIVIDENDS
INTEREST 16,865
TOTAL INCOME 159,241
EXPENSES
MANAGEMENT FEE $ 34,303
TRANSFER AGENT FEES 16,704
DISTRIBUTION FEES 21,382
ACCOUNTING FEES AND EXPENSES 55,003
NON-INTERESTED TRUSTEES' COMPENSATION 17
CUSTODIAN FEES AND EXPENSES 9,234
REGISTRATION FEES 99,333
AUDIT 20,040
LEGAL 704
MISCELLANEOUS 786
TOTAL EXPENSES BEFORE REDUCTIONS 257,506
EXPENSE REDUCTIONS (150,700) 106,806
NET INVESTMENT INCOME 52,435
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 129,489
FOREIGN CURRENCY TRANSACTIONS 10 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,450,033
ASSETS AND LIABILITIES IN (11) 1,450,022
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,579,521
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,631,956
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ 52,435
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,450,022
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,631,956
DISTRIBUTIONS TO SHAREHOLDERS (13,446)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (43,681)
TOTAL DISTRIBUTIONS (57,127)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 10,325,481
REDEMPTION FEES848
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,901,158
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $38,999) $ 11,901,158
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .12
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.09
TOTAL FROM INVESTMENT OPERATIONS 3.21
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.07
TOTAL RETURN B, C 32.36%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 531
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.09% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.09
TOTAL FROM INVESTMENT OPERATIONS 3.17
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.03
TOTAL RETURN B, C 31.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,085
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .79% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES ) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.76
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.23
TOTAL FROM INVESTMENT OPERATIONS 1.25
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.01
TOTAL RETURN B, C 10.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,039
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .32% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF
CLASS B SHARES ) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .14
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.10
TOTAL FROM INVESTMENT OPERATIONS 3.24
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.15)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.09
TOTAL RETURN B, C 32.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,246
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.29% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES ) TO
JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Utilities Growth Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $10,787,252 and $761,664, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 930 $ 930
CLASS T 17,084 17,084
CLASS B 3,368 842
$ 21,382 $ 18,856
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase . The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 14,745 $ 11,481
CLASS T 49,162 38,851
CLASS B * 200 0
*
$ 64,107 $ 50,332
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 1,716 .46% *
CLASS T *** FIIOC ** 10,915 .32% *
CLASS B FIIOC ** 1,012 .30% *
INSTITUTIONAL CLASS FIIOC ** 3,061 .19% *
$ 16,704
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $451 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 34,643
CLASS T 2.00% 56,435
CLASS B 2.50% 13,242
INSTITUTIONAL CLASS 1.50% 46,017
$ 150,337
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $363 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
CLASS A 1997 A
FROM NET INVESTMENT INCOME $ 816
FROM NET REALIZED GAIN 2,993
TOTAL $ 3,809
CLASS T
FROM NET INVESTMENT INCOME $ 6,500
FROM NET REALIZED GAIN 23,832
TOTAL $ 30,332
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 6,130
FROM NET REALIZED GAIN 16,856
TOTAL $ 22,986
$ 57,127
A DISTRIBUTIONS ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF
SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 50,784 $ 550,067
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 351 3,875
SHARES REDEEMED (10,521) (126,974)
NET INCREASE (DECREASE) 40,614 $ 426,968
CLASS T 599,685 $ 6,865,905
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,654 29,247
SHARES REDEEMED (58,641) (701,040)
NET INCREASE (DECREASE) 543,698 $ 6,194,112
CLASS B 159,349 $ 1,941,989
SHARES SOLD
SHARES REDEEMED (2,645) (32,964)
NET INCREASE (DECREASE) 156,704 $ 1,909,025
INSTITUTIONAL CLASS 180,368 $ 1,895,917
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,242 13,709
SHARES REDEEMED (9,979) (114,250)
NET INCREASE (DECREASE) 171,631 $ 1,795,376
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL CLASS
ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES)
TO JULY 31, 1997.
A SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 30,522
CLASS T 28,133
CLASS B 12,501
INSTITUTIONAL CLASS 28,177
$ 99,333
9. BENEFICIAL INTEREST.
At the end of the period, FMR Corp., an affiliate of FMR was record
owner of approximately 12.0% of the total outstanding shares of the
fund. In addition, 1 unaffiliated shareholder was record owner of more
than 10% of the total outstanding shares of the fund, totaling 11.9%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VII and the Shareholders of
Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical
Industries Fund, Fidelity Advisor Financial Services Fund, Fidelity
Advisor Health Care Fund, Fidelity Advisor Technology Fund and
Fidelity Advisor Utilities Growth Fund:
We have audited the accompanying statements of assets and liabilities
of Fidelity Advisor Series VII: Fidelity Advisor Consumer Industries
Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor
Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity
Advisor Technology Fund and Fidelity Advisor Utilities Growth Fund,
including the schedules of portfolio investments, as of July 31, 1997,
and the related statements of operations for the period then ended,
the statements of changes in net assets for the period then ended and
the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1997 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Advisor Series VII: Fidelity Advisor
Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund,
Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care
Fund, Fidelity Advisor Technology Fund and Fidelity Advisor Utilities
Growth Fund as of July 31, 1997, the results of their operations for
the period then ended, the changes in their net assets for the period
then ended, and the financial highlights of Class A, Class B, Class T
and Institutional Class for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 12, 1997
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay on September
8, 1997 to shareholders of record at the opening of business on
September 5, 1997, the following distributions derived from capital
gains realized from sales of portfolio securities, and dividends
derived from net investment income:
DIVIDENDS CAPITAL GAINS
Consumer Industries:
Class I $0.02 $1.17
Cyclical Industries:
Class I $0.00 $0.57
Financial Services:
Class I $0.01 $0.02
Health Care:
Class I $0.00 $0.27
Natural Resources:
Class I $0.05 $2.74
Technology:
Class I $0.00 $0.91
Utilities Growth:
Class I $0.06 $0.10
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
(dagger) CUSTODIAN FOR FIDELITY ADVISOR NATURAL RESOURCES FUND ONLY
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
Brown Brothers Harriman & Co. (dagger)
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Balanced Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Growth & Income Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Short Fixed-Income Fund
Fidelity Advisor Strategic Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
FOCUS FUNDS
CLASS A, CLASS T AND CLASS B
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
ANNUAL REPORT
JULY 31, 1997
CONTENTS
PERFORMANCE OVERVIEW AND 4
MARKET RECAP
CONSUMER INDUSTRIES 5 PERFORMANCE AND INVESTMENT SUMMARY
8 FUND TALK: THE MANAGERS' OVERVIEW
9 INVESTMENTS
12 FINANCIAL STATEMENTS
16 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES 20 PERFORMANCE AND INVESTMENT SUMMARY
23 FUND TALK: THE MANAGER'S OVERVIEW
24 INVESTMENTS
27 FINANCIAL STATEMENTS
31 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES 36 PERFORMANCE AND INVESTMENT SUMMARY
39 FUND TALK: THE MANAGER'S OVERVIEW
40 INVESTMENTS
42 FINANCIAL STATEMENTS
46 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE 51 PERFORMANCE AND INVESTMENT SUMMARY
54 FUND TALK: THE MANAGER'S OVERVIEW
55 INVESTMENTS
57 FINANCIAL STATEMENTS
61 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES 65 PERFORMANCE AND INVESTMENT SUMMARY
68 FUND TALK: THE MANAGER'S OVERVIEW
69 INVESTMENTS
72 FINANCIAL STATEMENTS
76 NOTES TO THE FINANCIAL STATEMENTS
81 REPORT OF INDEPENDENT ACCOUNTANTS
82 PROXY VOTING RESULTS
TECHNOLOGY 83 PERFORMANCE AND INVESTMENT SUMMARY
86 FUND TALK: THE MANAGER'S OVERVIEW
87 INVESTMENTS
90 FINANCIAL STATEMENTS
94 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH 98 PERFORMANCE AND INVESTMENT SUMMARY
101 FUND TALK: THE MANAGER'S OVERVIEW
102 INVESTMENTS
104 FINANCIAL STATEMENTS
108 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS 112 THE AUDITORS' OPINION
DISTRIBUTIONS 113
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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES
AND EXPENSES, CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
U.S. STOCK MARKET ENVIRONMENT
Moderate economic growth and subdued inflation helped create an almost
perfect investing environment for the U.S. stock market, which posted
exceptionally strong returns for the period covered by this report.
The Standard & Poor's 500 Index - a broad measure of U.S. stock
performance - returned 48.98% from September 3, 1996, through July 31,
1997. The Russell 2000 Index - a measure of small-stock performance -
rose 26.07%. The Dow Jones Industrial Average - an index of 30
blue-chip stocks - posted a return of 49.01%, breaking through the
8000 mark for the first time in July on its way to finishing above
8200 at the end of the period.
The stock market spent much of the period breaking price and trading
volume records. Solid corporate earnings, large inflows into mutual
funds, widespread optimism and a generally favorable interest-rate
backdrop propelled share prices higher, especially among
large-capitalization stocks. Concerns in March and April over higher
interest rates and the possibility of weaker corporate earnings
provided the only significant pause in the stock market's upward
climb. Higher interest rates tend to slow economic growth and increase
borrowing costs. When the Federal Reserve Board raised a key
short-term interest rate in March, the stock market - already at
historically high valuations - sold off sharply through mid-April,
when positive news on the inflation front emerged. From that point
through the end of the period, the market soared ever higher. The
market broadened to include many small- and mid-capitalization stocks
during this latest rally.
Most industry sectors experienced positive, if not strong performance.
TECHNOLOGY proved to be one of the strongest performing sectors in the
market during the period covered by this report, paced by the
outstanding performance of Microsoft and Intel. Strong demand drove
personal computer (PC) sales, trickling down to help earnings and
stock performance of companies that manufacture and sell PCs, as well
as their components. While the Fed raised a key short-term interest
rate in March, it held off entering a protracted period of
interest-rate increases. This generally positive interest-rate
environment - coupled with solid business prospects - helped FINANCE
STOCKS turn in very solid performance. Buoyant investor sentiment and
the stock market's steady upward climb helped brokerage and investment
stocks thrive.
Stronger-than-expected oil and natural gas prices helped ENERGY stocks
until the end of January, when commodity prices fell sharply.
Elsewhere in the NATURAL RESOURCE sector, gold stocks suffered when
central banks started to sell off their reserves because inflation
posed little threat. CONSUMER NONDURABLES stocks benefited from steady
earnings growth, as well as investors' attraction to such traditional
big-name growth stocks as those in the food, beverage and tobacco
industries. Pharmaceutical companies turned in the best performance in
the HEALTH CARE sector, helped by new-product development, direct
marketing to consumers and a faster rate of new drug approvals.
UTILITY stocks lagged the general market as a result of uncertainty
over the direction and form of deregulation in the sector, especially
among telecommunications stocks. Gas utilities, like energy stocks,
rose and fell with the changing energy commodity pricing environment,
while electric utilities with nuclear power plants faced increased
operating costs as a result of pressure from the Nuclear Regulatory
Commission. Stocks in this sector also tend to track the performance
of the bond market, which trailed that of the stock market over the
period. Finally, moderate growth, low unemployment and low interest
rates proved to be a generally favorable environment for CYCLICAL
stocks - those that tend to rise and fall with the economy.
ADVISOR CONSUMER INDUSTRIES FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
Effective August 1, 1997, the maximum 5.25% sales charge on Class A
shares was increased to 5.75%. If Fidelity had not reimbursed certain
class expenses, total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CONSUMER INDUSTRIES - CLASS A 35.68%
CONSUMER INDUSTRIES - CLASS A 27.88%
(INCL. 5.75% SALES CHARGE) 1
S&P 500(REGISTERED TRADEMARK) 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 28.55%.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970812 142817 S00000000000001
FA CONSUMER IND -CL A S&P 500
00185 SP001
1996/09/03 9425.00 10000.00
1996/09/30 9943.38 10561.42
1996/10/31 10056.48 10852.70
1996/11/30 10395.78 11673.05
1996/12/31 10216.82 11441.81
1997/01/31 10710.11 12156.70
1997/02/28 10842.92 12252.00
1997/03/31 10529.87 11748.57
1997/04/30 10700.63 12449.96
1997/05/31 11525.94 13207.91
1997/06/30 12114.10 13799.63
1997/07/31 12787.63 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970812 142819 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Consumer Industries - Class A on
September 3, 1996, when the fund started, and the current maximum
5.75% sales charge was paid. As the chart shows, by July 31, 1997, the
value of the investment would have grown to $12,788 - a 27.88%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
HFS, INC. 4.3
STARBUCKS CORP. 3.9
WAL-MART STORES, INC. 2.8
MIRAGE RESORTS, INC. 2.0
TJX COMPANIES, INC. 1.9
OUTDOOR SYSTEMS, INC. 1.8
BET HOLDINGS, INC. CLASS A 1.7
VIACOM, INC. CLASS B (NON-VTG.) 1.7
PROCTER & GAMBLE CO. 1.7
ITT CORP. 1.6
TOP INDUSTRIES AS OF JULY 31, 1997
HOTELS, MOTELS &
TOURIST CENTERS 12.0%
RESTAURANTS 8.4%
GENERAL APPAREL STORES 4.3%
GENERAL MERCHANDISE STORES 4.2%
CABLE TV OPERATORS 4.1%
ALL OTHERS 67.0%
ROW: 1, COL: 1, VALUE: 67.09999999999999
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 8.4
ROW: 1, COL: 6, VALUE: 11.9
% OF FUND'S INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
returns would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970812 142905 S00000000000001
FA CONSUMER IND -CL T S&P 500
00195 SP001
1996/09/03 9650.00 10000.00
1996/09/30 10180.75 10561.42
1996/10/31 10296.55 10852.70
1996/11/30 10643.95 11673.05
1996/12/31 10451.06 11441.81
1997/01/31 10955.66 12156.70
1997/02/28 11091.51 12252.00
1997/03/31 10761.58 11748.57
1997/04/30 10936.25 12449.96
1997/05/31 11770.78 13207.91
1997/06/30 12362.72 13799.63
1997/07/31 13051.69 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970812 142908 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CONSUMER INDUSTRIES - CLASS T 35.25%
CONSUMER INDUSTRIES - CLASS T 30.52%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and show
you what would have happened if Class T shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Consumer Industries - Class T on
September 3, 1996, when the fund started, and the current maximum
3.50% sales charge was paid. As the chart shows, by July 31, 1997, the
value of the investment would have grown to $13,052 - a 30.52%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
HFS, INC. 4.3
STARBUCKS CORP. 3.9
WAL-MART STORES, INC. 2.8
MIRAGE RESORTS, INC. 2.0
TJX COMPANIES, INC. 1.9
OUTDOOR SYSTEMS, INC. 1.8
BET HOLDINGS, INC. CLASS A 1.7
VIACOM, INC. CLASS B (NON-VTG.) 1.7
PROCTER & GAMBLE CO. 1.7
ITT CORP. 1.6
TOP INDUSTRIES AS OF JULY 31, 1997
HOTELS, MOTELS &
TOURIST CENTERS 12.0%
RESTAURANTS 8.4%
GENERAL APPAREL STORES 4.3%
GENERAL MERCHANDISE STORES 4.2%
CABLE TV OPERATORS 4.1%
ALL OTHERS 67.0%
ROW: 1, COL: 1, VALUE: 67.09999999999999
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 8.4
ROW: 1, COL: 6, VALUE: 11.9
% OF FUND'S INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gain (the profits
earned upon the sale of securities that have grown in value). The
initial offering of Class B shares took place on March 3, 1997. Class
B shares bear a 1.00% 12b-1/shareholder service fee. Returns prior to
March 3, 1997 are those of Class T which bears a .50% 12b-1 fee. Had
Class B's 12b-1 fee been reflected, returns prior to March 3, 1997
would have been lower. Class B's contingent deferred sales charge
included in life of fund total return is 5%. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CONSUMER INDUSTRIES - CLASS B 34.95%
CONSUMER INDUSTRIES - CLASS B 29.95%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970826 143013 S00000000000001
FA Consumer Ind -CL B S&P 500
00190 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10550.00 10561.42
1996/10/31 10670.00 10852.70
1996/11/30 11030.00 11673.05
1996/12/31 10830.11 11441.81
1997/01/31 11353.01 12156.70
1997/02/28 11493.80 12252.00
1997/03/31 11151.90 11748.57
1997/04/30 11322.85 12449.96
1997/05/31 12187.65 13207.91
1997/06/30 12791.00 13799.63
1997/07/31 12995.00 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970826 143014 R00000000000014
$10,000 OVER THE LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Consumer Industries - Class B on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1997, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $12,995 - a
29.95% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
HFS, INC. 4.3
STARBUCKS CORP. 3.9
WAL-MART STORES, INC. 2.8
MIRAGE RESORTS, INC. 2.0
TJX COMPANIES, INC. 1.9
OUTDOOR SYSTEMS, INC. 1.8
BET HOLDINGS, INC. CLASS A 1.7
VIACOM, INC. CLASS B (NON-VTG.) 1.7
PROCTER & GAMBLE CO. 1.7
ITT CORP. 1.6
TOP INDUSTRIES AS OF JULY 31, 1997
HOTELS, MOTELS &
TOURIST CENTERS 12.0%
RESTAURANTS 8.4%
GENERAL APPAREL STORES 4.3%
GENERAL MERCHANDISE STORES 4.2%
CABLE TV OPERATORS 4.1%
ALL OTHERS 67.0%
ROW: 1, COL: 1, VALUE: 67.09999999999999
ROW: 1, COL: 2, VALUE: 4.1
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 8.4
ROW: 1, COL: 6, VALUE: 11.9
% OF FUND'S INVESTMENT
ADVISOR CONSUMER INDUSTRIES FUND
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: Effective August 18, 1997, after the period
ended, Doug Chase (right) became Portfolio Manager of Fidelity Advisor
Consumer Industries Fund. The following is an interview with Paul
Antico, who managed the fund during the period covered by the report,
and Doug Chase, who discusses his investment philosophy and outlook.
Q. PAUL, HOW DID THE FUND PERFORM?
P.A. Since its inception on September 3, 1996, through July 31, 1997,
the fund's Class A, Class T and Class B shares had returns of 35.68%,
35.25% and 34.95%, respectively. By comparison, the Standard & Poor's
500 Index returned 48.98%.
Q. WHAT FACTORS ACCOUNTED FOR THE FUND'S PERFORMANCE?
P.A. The key factor helping the fund's performance was the portfolio's
weighting in large-capitalization, blue chip consumer issues, which
were exceptionally strong through much of the period. I found
excellent value in such companies as Proctor & Gamble, Coca-Cola and
Gillette, as well as large-cap entertainment stocks such as Walt
Disney.
Q. DID YOU MAKE SIGNIFICANT CHANGES IN THE FUND'S HOLDINGS DURING THE
PERIOD?
P.A. I increased the fund's weightings in outdoor advertising,
specifically such positions in the billboard industry as Outdoor
Systems and Universal Outdoor Holdings. This industry has similar
dynamics to the TV and radio industries. It's very fragmented, quite
dependent on advertising dollars and going through a period of
consolidation that should help it over time. In the cable television
industry, I reduced the fund's positions in the operators, while
increasing them in the networks. With the operators - those providing
cable service to the consumer - I was concerned about the lack of
industry standards for both cable and telephone service and how that
might increase operating costs and slow market penetration. On the
other hand, I was much more optimistic about cable networks. Their
ratings have been going up dramatically relative to the broadcast
channels, so their advertising rates have gone up. During the period,
I increased the fund's positions in such cable networks as Time Warner
and BET Holdings.
Q. YOU ALSO SEEMED TO REDUCE YOUR HOLDINGS IN CONSUMER STAPLES . . .
P.A. That's right. Later in the period I began to feel that valuations
in this sector were too high and that a contraction was starting in
this part of the market. I felt that Coca-Cola's stock, for example,
was too expensive based on an over-valuing of their bottlers. With
respect to Procter & Gamble and Gillette, I began to feel that their
valuations were high as well and didn't see the same opportunities for
appreciation going forward.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
P.A. The fund benefited from the strong performance of such
diversified companies as Nokia and General Electric. Computer Learning
Centers, which has training centers around the nation, was an
excellent stock. Starbucks also performed very well. I liked the
coffee seller's plans for expansion both domestically and
internationally, its record of terrific growth and its potential to
exploit its brand name in the supermarkets.
Q. WERE THERE ANY DISAPPOINTMENTS?
P.A. Apparel stocks have been a terribly disappointing group for the
fund. Gadzooks, for example, had to pre-announce an earnings
disappointment, which hurt its stock. Other disappointments included
Viacom, which was affected by problems experienced by its Blockbuster
Video subsidiary. Another related disappointment was Hollywood
Entertainment, the number two company in its market after Blockbuster.
Hollywood's stock was dragged down by Blockbuster's tumble.
Q. TURNING TO YOU DOUG, WHAT'S YOUR INVESTMENT PHILOSOPHY AND OUTLOOK?
D.C. Like Paul, I tend to take a bottom-up approach to stock
selection. I work with a team of analysts to use the best ideas of
individuals who have thorough knowledge of the consumer sector. Where
I differ from Paul is that I place a greater emphasis on blending a
variety of large-, mid- and small-cap companies in the fund's
portfolio. Going forward, my research team and I will continue to
follow the Fidelity tradition of identifying those companies which
have the greatest potential for appreciation before the rest of the
market has had the opportunity to do so.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than $10 million
MANAGER: Doug Chase, since August 1997;
joined Fidelity in 1993
(checkmark)
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100%
SHARES VALUE (NOTE 1)
ADVERTISING - 4.7%
ADVERTISING - 2.9%
Outdoor Systems, Inc. (a) 6,550 $ 173,575
Universal Outdoor Holdings, Inc. (a) 2,900 105,488
279,063
ADVERTISING AGENCIES - 1.8%
Omnicom Group, Inc. 1,400 97,738
WPP Group PLC ADR 2,000 82,250
179,988
TOTAL ADVERTISING 459,051
APPAREL STORES - 6.8%
FAMILY CLOTHING STORES - 0.4%
Abercrombie & Fitch Co. (a) 1,800 35,775
FOOTWEAR - WHOLESALE - 0.4%
Kenneth Cole Productions, Inc. Class A (a) 2,600 39,650
GENERAL APPAREL STORES - 4.3%
Gap, Inc. 2,200 97,763
Men's Wearhouse, Inc. (The) (a) 2,000 74,000
Ross Stores, Inc. 2,100 66,413
TJX Companies, Inc. 6,100 182,238
420,414
SHOE STORES - 1.7%
Baker (J.), Inc. 12,000 105,000
Payless ShoeSource, Inc. (a) 1,000 61,500
166,500
WOMEN'S CLOTHING STORES - 0.0%
Charming Shoppes, Inc. (a) 200 1,175
TOTAL APPAREL STORES 663,514
BEVERAGES - 0.9%
SOFT DRINKS - 0.9%
PepsiCo, Inc. 2,200 84,288
BROADCASTING - 7.3%
CABLE TV OPERATORS - 4.1%
BET Holdings, Inc. Class A (a) 4,200 168,000
TCA Cable TV, Inc. 2,400 90,600
Time Warner, Inc. 2,500 136,406
395,006
RADIO BROADCASTING - 3.2%
Clear Channel Communications, Inc. (a) 1,600 99,600
Evergreen Media Corp. Class A (a) 2,300 105,800
Jacor Communications, Inc. Class A (a) 2,500 107,188
312,588
TOTAL BROADCASTING 707,594
BUILDING MATERIALS - 0.8%
PAINT & VARNISH - 0.8%
Sherwin-Williams Co. 2,500 80,156
COMMUNICATIONS EQUIPMENT - 1.3%
TELEPHONE EQUIPMENT - 1.3%
Nokia Corp. AB sponsored ADR 1,500 128,438
COMPUTER SERVICES & SOFTWARE - 1.0%
COMPUTER & SOFTWARE STORES - 0.5%
CompUSA, Inc. (a) 2,000 53,750
SHARES VALUE (NOTE 1)
PREPACKAGED COMPUTER SOFTWARE - 0.5%
Midway Games, Inc. (a) 1,300 $ 26,488
Spectrum Holobyte, Inc. (a) 4,100 17,681
44,169
TOTAL COMPUTER SERVICES & SOFTWARE 97,919
CONSUMER ELECTRONICS - 0.7%
RADIOS, TELEVISIONS, STEREOS - 0.7%
Philips Electronics NV 800 65,450
DRUG STORES - 2.7%
CVS Corp. 2,465 140,197
Rite Aid Corp. 500 25,969
Walgreen Co. 1,700 96,050
262,216
DRUGS & PHARMACEUTICALS - 1.2%
PHARMACEUTICAL PREPARATIONS - 1.2%
NBTY, Inc. (a) 2,000 52,750
Twinlab Corp. 3,000 67,875
120,625
ELECTRICAL EQUIPMENT - 2.0%
ELECTRICAL MACHINERY - 1.4%
General Electric Co. 500 35,094
Westinghouse Electric Corp. 4,007 96,418
131,512
WIRING & LIGHTING - 0.6%
Oak Industries, Inc. (a) 2,000 60,750
TOTAL ELECTRICAL EQUIPMENT 192,262
ENTERTAINMENT - 4.5%
MOTION PICTURE DISTRIBUTION - 0.5%
All American Communications, Inc.
Class B (non-vtg.) (a) 3,300 51,563
MOTION PICTURE PRODUCTION - 2.9%
Cinar Films, Inc. Class B (sub-vtg.) (a) 1,000 33,736
King World Productions, Inc. 2,000 80,750
Viacom, Inc. Class B (non-vtg.) (a) 5,400 166,725
281,211
RECREATIONAL SERVICES - 1.1%
MGM Grand, Inc. (a) 3,000 103,500
TOTAL ENTERTAINMENT 436,274
FOODS - 2.1%
CANNED SPECIALTIES - 1.3%
Campbell Soup Co. 2,400 124,500
PACKAGED & FROZEN FOODS - 0.8%
Dreyer's Grand Ice Cream, Inc. 2,000 84,500
TOTAL FOODS 209,000
GENERAL MERCHANDISE STORES - 8.9%
DEPARTMENT STORES - 2.4%
Federated Department Stores, Inc. (a) 3,300 144,581
Shopko Stores, Inc. 2,000 57,750
Stein Mart, Inc. (a) 1,000 29,375
231,706
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES - CONTINUED
GENERAL MERCHANDISE STORES - 4.2%
Dayton Hudson Corp. 1,100 $ 71,088
Dollar General Corp. 1,600 70,400
Wal-Mart Stores, Inc. 7,200 270,450
411,938
VARIETY STORES - 2.3%
Dollar Tree Stores (a) 2,000 84,156
Michaels Stores, Inc. (a) 2,000 43,250
99 Cents Only Stores (a) 3,100 100,750
228,156
TOTAL GENERAL MERCHANDISE STORES 871,800
GROCERY STORES - 1.6%
GROCERY - RETAIL - 1.6%
Hannaford Brothers Co. 1,000 34,125
Safeway, Inc. (a) 2,300 123,338
157,463
HOUSEHOLD PRODUCTS - 4.6%
COSMETICS - 2.1%
Avon Products, Inc. 1,200 87,075
Gillette Co. 1,250 123,750
210,825
MANUFACTURED PRODUCTS - 0.5%
Helen of Troy Corp. (a) 1,500 46,500
SOAPS & DETERGENTS - 2.0%
Clorox Co. 200 27,925
Procter & Gamble Co. 1,090 165,816
193,741
TOTAL HOUSEHOLD PRODUCTS 451,066
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ACCESS & MEASURING CUTTING TOOLS - 0.5%
Stanley Works 1,000 45,313
LEASING & RENTAL - 1.4%
VIDEO TAPE RENTAL - 1.4%
Hollywood Entertainment Corp. (a) 7,200 135,000
LEISURE DURABLES & TOYS - 3.4%
MOTORCYCLES - 1.1%
Harley-Davidson, Inc. 2,000 106,500
SPORTING & ATHLETIC GOODS - 1.1%
Callaway Golf Co. 1,300 45,500
K2, Inc. 1,900 60,088
105,588
TOYS & GAMES - 0.7%
Mattel, Inc. 2,000 69,500
TRAVEL TRAILERS AND CAMPERS - 0.5%
Brunswick Corp. 1,500 48,375
TOTAL LEISURE DURABLES & TOYS 329,963
LODGING & GAMING - 12.8%
HOTELS, MOTELS, & TOURIST CENTERS - 12.0%
HFS, Inc. (a) 7,200 419,400
Hilton Hotels Corp. 2,200 69,163
Host Marriott Corp. (a) 7,000 139,563
SHARES VALUE (NOTE 1)
ITT Corp. (a) 2,500 $ 159,844
Mirage Resorts, Inc. (a) 7,300 195,275
Prime Hospitality Corp. (a) 3,000 55,125
Servico, Inc. (a) 3,000 51,000
Sun International Hotels Ltd. Ord. (a) 2,100 73,763
1,163,133
LODGING PLACES, OTHER THAN HOTELS - 0.4%
Doubletree Corp. (a) 1,000 42,000
RACING & GAMING - 0.4%
Penn National Gaming, Inc. (a) 2,500 40,625
TOTAL LODGING & GAMING 1,245,758
PAPER & FOREST PRODUCTS - 1.5%
PAPER - 1.5%
Kimberly-Clark Corp. 2,800 141,925
PRINTING - 1.8%
COMMERCIAL PRINTING - 1.8%
Donnelley (R.R.) & Sons Co. 3,000 120,563
Valassis Communications, Inc. (a) 2,000 56,125
176,688
PUBLISHING - 1.6%
NEWSPAPERS - 1.0%
Times Mirror Co. Class A 500 27,313
Tribune Co. 1,400 74,113
101,426
PERIODICALS - 0.6%
Playboy Enterprises, Inc. Class B (a) 5,000 56,875
TOTAL PUBLISHING 158,301
RESTAURANTS - 8.4%
CKE Restaurants, Inc. 3,000 103,875
Landry's Seafood Restaurants, Inc. (a) 3,000 76,500
Logan's Roadhouse, Inc. (a) 4,600 125,925
Outback Steakhouse, Inc. (a) 1,500 37,406
PJ America, Inc. 2,400 41,700
ShowBiz Pizza Time, Inc. (a) 2,100 48,563
Starbucks Corp. (a) 9,300 380,052
814,021
RETAIL & WHOLESALE, MISCELLANEOUS - 7.0%
HOBBY, TOY, & GAME SHOPS - 0.9%
Toys "R" Us, Inc. (a) 2,662 90,674
JEWELRY STORES - 0.4%
Zale Corp. (a) 2,000 43,500
RETAIL STORES - 0.7%
Gadzooks, Inc. (a) 4,200 71,925
RETAIL, GENERAL - 2.4%
Bed Bath & Beyond, Inc. (a) 3,700 122,100
Officemax, Inc. (a) 4,000 56,000
Pier 1 Imports, Inc. 3,000 52,875
230,975
SEWING STORES - 0.6%
Fabri-Centers of America, Inc. Class A (a) 2,100 54,731
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 2.0%
Corporate Express, Inc. 4,000 60,000
U.S. Office Products Co. (a) 4,500 129,938
189,938
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 681,743
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 2.3%
BEAUTY SHOPS - 1.2%
Steiner Leisure Ltd. 4,000 $ 115,000
COMMERCIAL, ECONOMIC, SOCIAL &
EDUCATIONAL RESEARCH - 0.3%
Gartner Group, Inc. Class A (a) 1,000 28,375
PERSONAL SERVICES - 0.8%
Block (H&R), Inc. 2,000 76,625
TOTAL SERVICES 220,000
TELEPHONE SERVICES - 0.7%
WorldCom, Inc. (a) 2,000 69,875
TEXTILES & APPAREL - 6.4%
APPAREL - 1.5%
Intimate Brands, Inc. Class A 1,000 23,063
Liz Claiborne, Inc. 2,600 124,475
147,538
COTTON MILLS - 0.7%
Galey & Lord, Inc. (a) 4,000 67,500
FOOTWEAR - 2.7%
Reebok International Ltd. 2,300 118,738
Timberland Co. Class A (a) 2,300 148,638
267,376
KNIT OUTERWEAR MILLS - 0.2%
Tultex Corp. (a) 2,900 16,494
MEN'S & BOYS' CLOTHING - 1.3%
Tommy Hilfiger (a) 2,900 129,231
TOTAL TEXTILES & APPAREL 628,139
TOBACCO - 1.1%
TOBACCO MANUFACTURERS - 1.1%
Philip Morris Companies, Inc. 2,400 108,300
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,722,159) $ 9,742,142
LEGEND
1. Non-income producing
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $8,768,303. Net unrealized appreciation
aggregated $973,839, of which $1,174,475 related to appreciated
investment securities and $200,636 related to depreciated investment
securities.
The fund hereby designates approximately $34,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 32%, 38%, and 32% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 9,742,142
(COST $8,722,159) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 698,327
RECEIVABLE FOR FUND SHARES SOLD 38,367
DIVIDENDS RECEIVABLE 1,853
INTEREST RECEIVABLE 1,553
PREPAID EXPENSES 11,034
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 10,322
TOTAL ASSETS 10,503,598
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 37,529
PAYABLE FOR INVESTMENTS PURCHASED 227,400
PAYABLE FOR FUND SHARES REDEEMED 15,346
DISTRIBUTION FEES PAYABLE 3,466
OTHER PAYABLES AND ACCRUED EXPENSES 33,337
TOTAL LIABILITIES 317,078
NET ASSETS $ 10,186,520
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 8,312,185
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 854,352
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,019,983
NET ASSETS $ 10,186,520
</TABLE>
CALCULATION OF MAXIMUM $13.48
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($943,613 (DIVIDED BY)
70,016 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.23
(100/94.75 OF $13.48)
CLASS T: $13.45
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,313,788 (DIVIDED BY)
543,935 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.94
(100/96.50 OF $13.45)
CLASS B: $13.42
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($595,858 (DIVIDED BY) 44,405
SHARES) A
INSTITUTIONAL CLASS: $13.51
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,333,261 (DIVIDED BY) 98,678 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 37,377
DIVIDENDS
INTEREST 26,177
TOTAL INCOME 63,554
EXPENSES
MANAGEMENT FEE $ 32,305
TRANSFER AGENT FEES17,026
DISTRIBUTION FEES 20,912
ACCOUNTING FEES AND EXPENSES 55,209
NON-INTERESTED TRUSTEES' COMPENSATION 21
CUSTODIAN FEES AND EXPENSES 10,228
REGISTRATION FEES 99,611
AUDIT 20,042
LEGAL 706
MISCELLANEOUS 930
TOTAL EXPENSES BEFORE REDUCTIONS 256,990
EXPENSE REDUCTIONS(156,844) 100,146
NET INVESTMENT INCOME (LOSS) (36,592)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 919,957
FOREIGN CURRENCY TRANSACTIONS 8 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 1,019,983
NET GAIN (LOSS) 1,939,948
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,903,356
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (36,592)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,019,983
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,903,356
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN (29,021)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 8,310,212
REDEMPTION FEES 1,973
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,186,520
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 10,186,520
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.55
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.48
TOTAL RETURN B, C 35.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 944
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.73% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.50)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.09)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.51
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.06)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.45
TOTAL RETURN B, C 35.25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,314
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.83)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.46
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.04
TOTAL FROM INVESTMENT OPERATIONS 1.96
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.42
TOTAL RETURN B, C 17.10%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 596
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.46% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.60)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE
CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.59
TOTAL FROM INVESTMENT OPERATIONS 3.58
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.51
TOTAL RETURN B, C 35.98%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,333
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.13)% A
PORTFOLIO TURNOVER 203% A
AVERAGE COMMISSION RATE H $ .0307
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET
INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997. F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H A
FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED
TO
BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Consumer Industries Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $18,524,322 and $10,722,119, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 1,695 $ 1,695
CLASS T 17,832 17,832
CLASS B 1,385 346
$ 20,912 $ 19,873
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 25,257 $ 20,040
CLASS T 50,036 39,715
CLASS B 501 0
*
$ 75,794 $ 59,755
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 2,522 .37% *
CLASS T *** FIIOC ** 11,718 .33% *
CLASS B FIIOC ** 668 .48% *
INSTITUTIONAL CLASS FIIOC ** 2,118 .21% *
$ 17,026
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC)
AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $3,290 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 38,837
CLASS T 2.00% 64,620
CLASS B 2.50% 13,072
INSTITUTIONAL CLASS 1.50% 38,977
$ 155,506
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,338 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 14.5%
of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET REALIZED GAIN $ 4,926
TOTAL $ 4,926
CLASS T
FROM NET REALIZED GAIN $ 16,753
TOTAL $ 16,753
CLASS B
FROM NET REALIZED GAIN $ -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET REALIZED GAIN $ 7,342
TOTAL $ 7,342
$ 29,021
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 88,027 $ 950,592
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 457 4,913
SHARES REDEEMED (18,468) (227,830)
NET INCREASE (DECREASE) 70,016 $ 727,675
CLASS T 629,432 $ 7,025,043
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,492 16,036
SHARES REDEEMED (86,989) (987,625)
NET INCREASE (DECREASE) 543,935 $ 6,053,454
CLASS B 45,607 $ 545,925
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED (1,202) (13,641)
NET INCREASE (DECREASE) 44,405 $ 532,284
INSTITUTIONAL CLASS 121,713 $ 1,256,098
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 682 7,342
SHARES REDEEMED (23,717) (266,641)
NET INCREASE (DECREASE) 98,678 $ 996,799
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 30,980
CLASS T 28,176
CLASS B 12,036
INSTITUTIONAL CLASS 28,419
$ 99,611
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
Effective August 1, 1997, the maximum 5.25% sales charge on Class A
shares was increased to 5.75%. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CYCLICAL INDUSTRIES - CLASS A 39.11%
CYCLICAL INDUSTRIES - CLASS A 31.11%
(INCL. 5.75% SALES CHARGE) 1
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 31.81%.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970813 143702 S00000000000001
FA Cyclical Ind -CL A S&P 500
00184 SP001
1996/09/03 9425.00 10000.00
1996/09/30 9783.15 10561.42
1996/10/31 10065.90 10852.70
1996/11/30 10669.10 11673.05
1996/12/31 10612.70 11441.81
1997/01/31 10888.23 12156.70
1997/02/28 10916.74 12252.00
1997/03/31 10584.20 11748.57
1997/04/30 10745.72 12449.96
1997/05/31 11638.82 13207.91
1997/06/30 12246.89 13799.63
1997/07/31 13111.49 14897.66
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Cyclical Industries - Class A on
September 3, 1996, when the fund started, and the current maximum
5.75% sales charge was paid. As the chart shows, by July 31, 1997, the
value of the investment would have grown to $13,111 - a 31.11%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 6.2
QUANEX CORP. 3.3
DOFASCO, INC. 3.0
MCDONNELL DOUGLAS CORP. 2.7
MINNESOTA MINING & MANUFACTURING CO. 2.5
WESTINGHOUSE ELECTRIC CORP. 2.4
DU PONT (E.I.) DE NEMOURS & CO. 2.4
CSX CORP. 2.4
EMERSON ELECTRIC CO. 2.2
ALUMINUM CO. OF AMERICA 2.1
TOP INDUSTRIES AS OF JULY 31, 1997
ELECTRICAL MACHINERY 10.8%
PAPER 6.1%
IRON & STEEL BLAST FURNACES,
MILLS 5.9%
CHEMICALS 5.3%
AIRCRAFT 5.2%
ALL OTHERS 66.7%
ROW: 1, COL: 1, VALUE: 66.7
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 5.3
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 6.1
ROW: 1, COL: 6, VALUE: 10.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
returns would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970813 143847 S00000000000001
FA CYCLICAL IND -CL T S&P 500
00194 SP001
1996/09/03 9650.00 10000.00
1996/09/30 10016.70 10561.42
1996/10/31 10306.20 10852.70
1996/11/30 10923.80 11673.05
1996/12/31 10846.68 11441.81
1997/01/31 11138.52 12156.70
1997/02/28 11167.70 12252.00
1997/03/31 10817.49 11748.57
1997/04/30 10982.87 12449.96
1997/05/31 11897.30 13207.91
1997/06/30 12519.89 13799.63
1997/07/31 13395.40 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970813 143848 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CYCLICAL INDUSTRIES - CLASS T 38.81%
CYCLICAL INDUSTRIES - CLASS T 33.95%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and show
you what would have happened if Class T shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Cyclical Industries - Class T on
September 3, 1996, when the fund started, and the current maximum
3.50% sales charge was paid. As the chart shows, by July 31, 1997, the
value of the investment would have grown to $13,395 - a 33.95%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 6.2
QUANEX CORP. 3.3
DOFASCO, INC. 3.0
MCDONNELL DOUGLAS CORP. 2.7
MINNESOTA MINING & MANUFACTURING CO. 2.5
WESTINGHOUSE ELECTRIC CORP. 2.4
DU PONT (E.I.) DE NEMOURS & CO. 2.4
CSX CORP. 2.4
EMERSON ELECTRIC CO. 2.2
ALUMINUM CO. OF AMERICA 2.1
TOP INDUSTRIES AS OF JULY 31, 1997
ELECTRICAL MACHINERY 10.8%
PAPER 6.1%
IRON & STEEL BLAST FURNACES,
MILLS 5.9%
CHEMICALS 5.3%
AIRCRAFT 5.2%
ALL OTHERS 66.7%
ROW: 1, COL: 1, VALUE: 66.7
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 5.3
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 6.1
ROW: 1, COL: 6, VALUE: 10.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
The initial offering of Class B shares took place on March 3, 1997.
Class B shares bear a 1.00% 12b-1/shareholder service fee. Returns
prior to March 3, 1997 are those of Class T which bears a .50% 12b-1
fee. Had Class B's 12b-1 fee been reflected, returns prior to March 3,
1997 would have been lower. Class B's contingent deferred sales charge
included in life of fund total return is 5%. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
IMAHDR PRASUN SHR__CHT 19970731 19970826 143013 S00000000000001
FA Cyclical Ind -CL B S&P 500
00234 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10380.00 10561.42
1996/10/31 10680.00 10852.70
1996/11/30 11320.00 11673.05
1996/12/31 11240.08 11441.81
1997/01/31 11542.50 12156.70
1997/02/28 11572.75 12252.00
1997/03/31 11209.84 11748.57
1997/04/30 11381.21 12449.96
1997/05/31 12318.73 13207.91
1997/06/30 12953.82 13799.63
1997/07/31 13361.00 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970826 143014 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
CYCLICAL INDUSTRIES - CLASS B 38.61%
CYCLICAL INDUSTRIES - CLASS B 33.61%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Cyclical Industries - Class B on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1997, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $13,361 - a
33.61% increase on the initial investment. For comparison, look at how
the S&P 500 did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 6.2
QUANEX CORP. 3.3
DOFASCO, INC. 3.0
MCDONNELL DOUGLAS CORP. 2.7
MINNESOTA MINING & MANUFACTURING CO. 2.5
WESTINGHOUSE ELECTRIC CORP. 2.4
DU PONT (E.I.) DE NEMOURS & CO. 2.4
CSX CORP. 2.4
EMERSON ELECTRIC CO. 2.2
ALUMINUM CO. OF AMERICA 2.1
TOP INDUSTRIES AS OF JULY 31, 1997
ELECTRICAL MACHINERY 10.8%
PAPER 6.1%
IRON & STEEL BLAST FURNACES,
MILLS 5.9%
CHEMICALS 5.3%
AIRCRAFT 5.2%
ALL OTHERS 66.7%
ROW: 1, COL: 1, VALUE: 66.7
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 5.3
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 6.1
ROW: 1, COL: 6, VALUE: 10.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Albert Ruback, Portfolio Manager of Fidelity Advisor Cyclical
Industries Fund
Q. HOW DID THE FUND PERFORM, ALBERT?
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. Almost without exception, the stock market was led - dominated, in
fact - by a relatively small group of the largest-capitalization
stocks, such as Gillette and Coca-Cola. Companies such as these and a
couple of dozen others have been responsible for an unusually large
portion of the S&P 500's gains over the past couple of years. While
cyclical stocks - those whose performance is closely tied to the
strength of the overall economy - did well during the period, they
could not keep pace with this small group of market leaders.
Additionally, given the fund's focus on cyclical industries, I did not
invest in such mega-cap technology companies as Microsoft and Intel,
industry-leading firms whose stocks played a key role in the S&P 500's
outstanding returns. Looking more closely at the cyclical sector, it
performed well due to a generally strong economy, one characterized by
moderate growth, low unemployment and low interest rates. All in all,
it was an excellent environment for cyclical stocks.
Q. WHAT WAS YOUR INVESTING STRATEGY DURING THE PERIOD?
A. I favored three sectors - paper and forest products, metals and
mining, and aerospace and defense. Business prospects for companies in
the paper and forest products sector continued to improve, and
valuations were still attractive even as many of the stocks
appreciated in price. Fort Howard and James River are good examples of
my investments in this sector. On the metals side, particularly
aluminum, there were low inventory levels and what I believed to be an
inflection point for commodity prices - meaning a point where I felt
commodity metal prices were going to increase. Alcoa - the Aluminum
Company of America - and Alumax helped the fund in this area. As far
as aerospace and defense, I felt we were in the early phases of a huge
backlog-building cycle where cash-flow generation would be enormous
and stocks in this area would appreciate. Boeing and Lockheed Martin
were two holdings that reflected this strategy.
Q. SEVEN OF THE FUND'S 10 LARGEST HOLDINGS AT THE END OF THE PERIOD
WERE TOP 10 HOLDINGS SIX MONTHS AGO. WHICH DID WELL? WERE THERE
DISAPPOINTMENTS?
A. Maintaining my positions in top holdings is not unusual for me, and
I wasn't a high-velocity guy with these investments. When I make an
investment I tend to hold the stock for some time. This approach
worked well for the fund, as its largest investments yielded strong
results. General Electric, the fund's largest holding during the
period, and aerospace and defense giant McDonnell Douglas, the fund's
fourth-largest position, were both up over 50%. GE generated strong
earnings and cash flow over the past nine months; it's just a very
well-run company. Quanex, an aluminum and steel producer, sold off its
low-margin businesses to re-invest in its high-margin businesses as
part of a broad reconfiguration of the company. Its stock rose over
20% during the period, while the stock of Westinghouse Electric,
another top 10 carryover from six months ago, rose over 30%. DuPont
and Emerson Electric, both long-time holdings, also made welcome
contributions to performance. While the fund's top 10 holdings
performed well, there were a few disappointments among smaller
positions such as Nucor, a steel manufacturer, Ford Motor Company, and
specialty chemical company Cytec Industries. Each of these stocks
appreciated, but not as significantly as the fund's largest holdings.
Q. WHAT SIGNIFICANT CHANGES DID YOU MAKE TO THE FUND SINCE YOUR LAST
REPORT TO SHAREHOLDERS?
A. One major new investment was Dofasco, the fund's third-largest
position at the end of July. This is a Canadian steel company that I
felt was undervalued when compared to its American steel counterparts
and had the potential for strong earnings growth. On the other hand, I
sold our holdings in General Motors, a top 10 holding six months ago.
I felt that we were getting sort of late in the auto-buying cycle,
with manufacturers' rebates growing and, therefore, company valuations
becoming less attractive.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ALBERT?
A. Generally speaking, the only two areas within cyclicals that I'm
worried about are autos and chemicals, where I think possible
over-capacity by the producers could hurt their profitability. Right
now everything seems to be holding up all right, so I'm not that
concerned. I think the key question, though, is what the Federal
Reserve Board will do with interest rates. Cyclical industries, by
definition, are tied to the performance of the economy. If the Fed
raises rates to slow down economic growth, it will most likely have a
negative effect on cyclical companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than $4 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
(checkmark)
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.2%
AIRCRAFT - 5.2%
Boeing Co. 1,300 $ 76,456
Lockheed Martin Corp. 257 27,371
McDonnell Douglas Corp. 1,500 114,750
218,577
AIRCRAFT & PARTS - 1.8%
Precision Castparts Corp. 200 12,575
Rohr Industries, Inc. (a) 200 4,750
Sundstrand Corp. 600 37,200
Textron, Inc. 200 14,013
Wyman-Gordon Co. (a) 200 5,300
73,838
AIRCRAFT ENGINES & PARTS - 1.7%
AlliedSignal, Inc. 400 36,900
United Technologies Corp. 400 33,825
70,725
AIRCRAFT EQUIPMENT - 0.2%
Aviall, Inc. (a) 500 7,469
MISSILES & SPACE VEHICLES - 0.3%
Thiokol Corp. 200 14,863
TOTAL AEROSPACE & DEFENSE 385,472
AIR TRANSPORTATION - 2.1%
AIR TRANSPORT, MAJOR NATIONAL - 2.1%
AMR Corp. (a) 500 53,781
America West Holding Corp. Class B (a) 800 11,050
Continental Airlines, Inc. Class B (a) 500 18,625
Ryanair Holdings PLC sponsored ADR 200 5,650
89,106
AUTOS, TIRES, & ACCESSORIES - 5.4%
AUTO & TRUCK PARTS - 1.8%
Borg-Warner Automotive, Inc. 200 11,150
Eaton Corp. 200 18,063
SPX Corp. 700 36,400
Wynn's International, Inc. 300 9,000
74,613
MOTOR VEHICLES & CAR BODIES - 3.6%
Chrysler Corp. 1,600 59,400
Ford Motor Co. 1,600 65,400
Honda Motor Co., Ltd. ADR 200 13,213
Lear Corp. (a) 300 14,363
152,376
TOTAL AUTOS, TIRES, & ACCESSORIES 226,989
BUILDING MATERIALS - 1.7%
AIRCONDITIONING EQUIPMENT - 0.7%
American Standard Companies, Inc. (a) 400 19,875
York International Corp. 200 9,663
29,538
PAINT & VARNISH - 0.7%
Lilly Industrial Coatings, Inc. Class A 800 17,850
Sherwin-Williams Co. 300 9,619
27,469
PLUMBING SUPPLIES - WHOLESALE - 0.3%
Masco Corp. 300 14,063
TOTAL BUILDING MATERIALS 71,070
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 9.4%
ADHESIVES & SEALANTS - 0.9%
Ferro Corp. 500 $ 18,531
Nalco Chemical Co. 500 20,406
38,937
AGRICULTURAL CHEMICALS - 0.3%
OM Group, Inc. 300 10,369
CHEMICALS - 5.3%
Cytec Industries, Inc. (a) 800 31,600
du Pont (E.I.) de Nemours & Co. 1,500 100,406
Monsanto Co. 1,600 79,700
NL Industries, Inc. 900 11,925
223,631
INDUSTRIAL GASES - 1.2%
Air Products & Chemicals, Inc. 300 26,456
Praxair, Inc. 400 22,050
48,506
PLASTICS & SYNTHETIC RESINS - 0.2%
Spartech Corp. 600 9,225
UNSUPPORTED PLASTICS FILM & SHEET - 1.5%
Sealed Air Corp. (a) 200 9,375
W.R. Grace & Co. 900 55,350
64,725
TOTAL CHEMICALS & PLASTICS 395,393
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Perceptron, Inc. (a) 300 9,863
COMPUTERS & OFFICE EQUIPMENT - 0.7%
OFFICE AUTOMATION - 0.7%
Pitney Bowes, Inc. 400 30,050
CONSTRUCTION - 0.4%
GENERAL BUILDING - 0.1%
D.R. Horton, Inc. 600 7,200
OPERATIVE BUILDERS - 0.3%
Kaufman & Broad Home Corp. 500 10,688
TOTAL CONSTRUCTION 17,888
CONSUMER DURABLES - 2.5%
MANUFACTURING INDUSTRIES - 2.5%
Minnesota Mining & Manufacturing Co. 1,100 104,225
CONSUMER ELECTRONICS - 0.5%
APPLIANCES - 0.5%
Maytag Co. 500 14,594
Whirlpool Corp. 100 5,000
19,594
DEFENSE ELECTRONICS - 1.4%
Litton Industries, Inc. (a) 400 20,775
Northrop Grumman Corp. 200 23,025
Raytheon Co. 300 16,763
60,563
ELECTRIC UTILITY - 0.2%
COGENERATION-SM POWER PRODUCER - 0.2%
Ogden Corp. 400 8,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 11.8%
ELECTRICAL MACHINERY - 10.8%
Emerson Electric Co. 1,600 $ 94,400
General Electric Co. 3,700 259,683
Westinghouse Electric Corp. 4,200 101,063
455,146
TV & RADIO COMMUNICATION EQUIPMENT - 1.0%
Gilat Satellite Networks Ltd. (a) 1,100 39,463
TOTAL ELECTRICAL EQUIPMENT 494,609
ENGINEERING - 1.7%
ARCHITECTS & ENGINEERS - 1.7%
EG & G, Inc. 400 8,200
Fluor Corp. 1,000 61,500
69,700
HOLDING COMPANIES - 1.1%
HOLDING COMPANY OFFICES - 1.1%
Norfolk Southern Corp. 400 44,300
HOUSEHOLD PRODUCTS - 0.1%
MANUFACTURED PRODUCTS - 0.1%
Memtec Ltd. sponsored ADR 200 5,500
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ACCESS & MEASUREMENT CUTTING TOOLS - 0.3%
Stanley Works 300 13,594
CONSTRUCTION EQUIPMENT - 1.3%
Caterpillar, Inc. 1,000 56,000
FARM MACHINERY & EQUIPMENT - 1.1%
Case Corp. 700 43,706
GENERAL INDUSTRIAL MACHINERY - 2.3%
Illinois Tool Works, Inc. 600 31,125
Ingersoll-Rand Co. 500 34,031
Tyco International Ltd. 400 32,400
97,556
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
JLK Direct Distribution, Inc. Class A (a) 100 2,569
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 213,425
IRON & STEEL - 11.6%
BLAST FURNACES - 1.9%
AK Steel Holding Corp. 200 9,175
Allegheny Teledyne, Inc. 1,200 37,350
Steel Dynamics, Inc. (a) 1,300 34,450
80,975
FABRICATED METAL PRODUCTS - 0.7%
Aeroquip Vickers, Inc. 200 10,963
SPS Technologies, Inc. (a) 200 16,538
27,501
IRON & STEEL BLAST FURNACES, MILLS - 5.9%
Inland Steel Industries, Inc. 1,700 38,994
Nucor Corp. 1,100 68,269
Quanex Corp. 4,500 140,063
247,326
IRON & STEEL FOUNDRIES - 3.0%
Dofasco, Inc. 6,000 127,326
SHARES VALUE (NOTE 1)
METAL FORGINGS & STAMPINGS - 0.1%
TriMas Corp. 200 $ 5,838
TOTAL IRON & STEEL 488,966
METALS & MINING - 10.1%
ALUMINUM, EXTRUDED PRODUCTS - 1.1%
Alumax, Inc. (a) 1,100 46,613
COPPER ORES - 0.2%
Freeport McMoRan Copper & Gold, Inc.
Class A 300 8,175
METAL MINING - 1.0%
Phelps Dodge Corp. 500 42,531
METAL ORES - 0.6%
Falconbridge Ltd. 700 15,032
Pechiney SA Class A 200 8,677
23,709
METALS & MINERALS - WHOLESALE - 0.3%
Elkem ASA 700 13,896
METALS SERVICE CENTERS - WHOLESALE - 0.2%
Ryerson Tull, Inc. Class A (a) 500 8,000
NON-METALLIC MINERAL MINING - 0.2%
Martin Marietta Materials, Inc. 274 9,470
NONFERROUS ROLLING & DRAWING - 1.8%
Essex International, Inc. 1,100 36,575
Special Metals Corp. 400 7,200
Superior Telecom, Inc. (a) 1,100 33,138
76,913
PRIMARY PRODUCTION OF ALUMINUM - 0.4%
Reynolds Metals Co. 200 15,600
PRIME NONFERROUS SMELTING - 4.1%
Alcan Aluminium Ltd. 1,000 39,177
Aluminum Co. of America 1,000 88,500
Inco Ltd. 1,400 43,168
170,845
SECONDARY NONFERROUS SMELTING - 0.2%
IMCO Recycling, Inc. 400 7,800
TOTAL METALS & MINING 423,552
PACKAGING & CONTAINERS - 2.6%
GLASS CONTAINERS - 1.6%
Owens-Illinois, Inc. (a) 2,000 69,000
METAL CANS & CONTAINERS - 1.0%
Silgan Holdings, Inc. 1,100 40,494
TOTAL PACKAGING & CONTAINERS 109,494
PAPER & FOREST PRODUCTS - 9.0%
CONVERTED PAPER & PAPERBOARD - 0.5%
Boise Cascade Corp. 500 18,531
LUMBER & WOOD - 0.6%
Weyerhaeuser Co. 400 24,900
PAPER - 6.1%
Champion International Corp. 400 24,800
Chesapeake Corp. 1,500 50,625
Georgia-Pacific Corp. 200 18,888
James River Corp. of Virginia 1,100 45,306
Stone Container Corp. 1,300 21,613
Temple-Inland, Inc. 400 26,925
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - CONTINUED
PAPER - CONTINUED
Union Camp Corp. 400 $ 23,425
Westvaco Corp. 700 23,406
Willamette Industries, Inc. 300 22,856
257,844
PAPER MILLS - 1.3%
Fort Howard Corp. (a) 1,000 55,750
PAPERBOARD MILLS - 0.5%
Mead Corp. 300 21,600
TOTAL PAPER & FOREST PRODUCTS 378,625
PHOTOGRAPHIC EQUIPMENT - 0.2%
Imation Corp. (a) 300 7,369
POLLUTION CONTROL - 1.7%
REFUSE SYSTEMS - 1.4%
Browning-Ferris Industries, Inc. 500 18,500
United Waste Systems, Inc. (a) 300 12,825
Waste Management, Inc. 900 28,800
60,125
SANITARY SERVICES - 0.3%
USA Waste Services, Inc. (a) 300 12,094
TOTAL POLLUTION CONTROL 72,219
PRINTING - 0.4%
COMMERCIAL PRINTING - 0.4%
Deluxe Corp. 500 16,656
RAILROADS - 4.0%
RAILROAD EQUIPMENT - 0.4%
Bombardier, Inc. Class B 700 16,099
RAILROADS - 3.6%
CSX Corp. 1,600 98,800
Wisconsin Central Transportation Corp. (a) 1,650 51,666
150,466
TOTAL RAILROADS 166,565
SHIP BUILDING & REPAIR - 1.3%
SHIP BUILDERS - 1.3%
Avondale Industries, Inc. (a) 900 20,644
General Dynamics Corp. 300 26,550
Newport News Shipbuilding, Inc. 400 8,225
55,419
TEXTILES & APPAREL - 0.6%
COTTON MILLS - 0.2%
Galey & Lord, Inc. (a) 400 6,750
TEXTILE MILL PRODUCTS - 0.4%
Unifi, Inc. 500 19,094
TOTAL TEXTILES & APPAREL 25,844
TRUCKING & FREIGHT - 1.8%
AIR COURIER SERVICES - 0.2%
CNF Transportation, Inc. 300 10,463
FREIGHT FORWARDING - 0.5%
Air Express International Corp. 300 9,281
Expeditors International of
Washington, Inc. 300 11,363
20,644
SHARES VALUE (NOTE 1)
TRUCKING, LOCAL & LONG DISTANCE - 0.4%
Werner Enterprises, Inc. 700 $ 15,050
TRUCKING, LONG DISTANCE - 0.7%
USFreightways Corp. 400 12,425
Yellow Corp. (a) 700 18,900
31,325
TOTAL TRUCKING & FREIGHT 77,482
TOTAL COMMON STOCKS
(Cost $3,318,434) 4,068,338
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b)
(Cost $134,952) 134,952 134,952
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,453,386) $ 4,203,290
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $3,459,274. Net unrealized appreciation
aggregated $744,016, of which $761,570 related to appreciated
investment securities and $17,554 related to depreciated investment
securities.
The fund hereby designates approximately $223,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 57%, 56%, and 51% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 4,203,290
(COST $3,453,386) - SEE ACCOMPANYING SCHEDULE
CASH 10,866
RECEIVABLE FOR INVESTMENTS SOLD 14,237
RECEIVABLE FOR FUND SHARES SOLD 82,604
DIVIDENDS RECEIVABLE 2,607
INTEREST RECEIVABLE 552
PREPAID EXPENSES 11,034
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 16,501
TOTAL ASSETS 4,341,691
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 16,749
DISTRIBUTION FEES PAYABLE 967
OTHER PAYABLES AND ACCRUED EXPENSES 31,287
TOTAL LIABILITIES 49,003
NET ASSETS $ 4,292,688
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,120,893
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 421,898
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 749,897
AND ASSETS AND LIABILITIES ON
FOREIGN CURRENCIES
NET ASSETS $ 4,292,688
</TABLE>
CALCULATION OF MAXIMUM $13.80
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($364,562 (DIVIDED BY)
26,410 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.56
(100/94.75 OF $13.80)
CLASS T: $13.77
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($1,919,852 (DIVIDED BY)
139,401 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.27
(100/96.50 OF $13.77)
CLASS B: $13.75
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($252,068 (DIVIDED BY) 18,329
SHARES) A
INSTITUTIONAL CLASS: $13.84
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,756,206 (DIVIDED BY) 126,880 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 70,876
DIVIDENDS
INTEREST 13,343
TOTAL INCOME 84,219
EXPENSES
MANAGEMENT FEE $ 30,106
TRANSFER AGENT FEES 10,791
DISTRIBUTION FEES 6,016
ACCOUNTING FEES AND EXPENSES 55,106
NON-INTERESTED TRUSTEES' COMPENSATION 16
CUSTODIAN FEES AND EXPENSES 9,413
REGISTRATION FEES 97,172
AUDIT 20,849
LEGAL 712
MISCELLANEOUS 1,702
TOTAL EXPENSES BEFORE REDUCTIONS 231,883
EXPENSE REDUCTIONS (152,519) 79,364
NET INVESTMENT INCOME 4,855
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 473,728
FOREIGN CURRENCY TRANSACTIONS (13) 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 749,904
ASSETS AND LIABILITIES IN (7) 749,897
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,223,612
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,228,467
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ 4,855
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 749,897
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,228,467
DISTRIBUTIONS TO SHAREHOLDERS (10,690)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (45,982)
TOTAL DISTRIBUTIONS (56,672)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 3,118,751
REDEMPTION FEES 2,142
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,292,688
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 4,292,688
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.89
TOTAL FROM INVESTMENT OPERATIONS 3.88
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.80
TOTAL RETURN B, C 39.11%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 365
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.73% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.09)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.89
TOTAL FROM INVESTMENT OPERATIONS 3.85
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.77
TOTAL RETURN B, C 38.81%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,920
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.97% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.37)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY
31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE
CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.25
TOTAL FROM INVESTMENT OPERATIONS 2.19
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.75
TOTAL RETURN B, C 18.94%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 252
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.45% A,
G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.11)% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE
CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .03
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.91
TOTAL FROM INVESTMENT OPERATIONS 3.94
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.08)
TOTAL DISTRIBUTIONS (.10)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.84
TOTAL RETURN B, C 39.64%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,756
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.48% A,
G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .25% A
PORTFOLIO TURNOVER 155% A
AVERAGE COMMISSION RATE H $ .0210
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD
SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997. F FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN
HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Cyclical Industries Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $10,211,776 and $7,367,069, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the aver
age net assets of the fund. The group fee rate is the weighted average
of a series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. For the
period, the management fee was equivalent to an annualized rate of
.60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 606 $ 606
CLASS T 4,874 4,874
CLASS B 536 151
$ 6,016 $ 5,631
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,537 $ 5,375
CLASS T 8,587 6,383
CLASS B 50 0
*
$ 17,174 $ 11,758
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 1,392 .58% *
CLASS T *** FIIOC ** 3,853 .40% *
CLASS B FIIOC ** 265 .43% *
INSTITUTIONAL CLASS FIIOC ** 5,281 .14% *
$ 10,791
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $629 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 34,280
CLASS T 2.00% 42,467
CLASS B 2.50% 13,104
INSTITUTIONAL CLASS 1.50% 61,466
$ 151,317
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $429 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $391
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
INSTITUTIONAL CLASS $ 382
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 35.2%
of the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 10% of the
total outstanding shares of the fund, totalling 14.8%.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET INVESTMENT INCOME $ 210
FROM NET REALIZED GAIN 1,679
TOTAL $ 1,889
CLASS T
FROM NET INVESTMENT INCOME $ 596
FROM NET REALIZED GAIN 4,766
TOTAL $ 5,362
CLASS B
FROM NET INVESTMENT INCOME $ -
FROM NET REALIZED GAIN -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 9,884
FROM NET REALIZED GAIN 39,537
TOTAL $ 49,421
$ 56,672
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 29,864 $ 317,058
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 169 1,885
SHARES REDEEMED (3,623) (42,214)
NET INCREASE (DECREASE) 26,410 $ 276,729
CLASS T 159,328 $ 1,808,520
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 440 4,903
SHARES REDEEMED (20,367) (254,181)
NET INCREASE (DECREASE) 139,401 $ 1,559,242
CLASS B 18,329 $ 222,169
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED - -
NET INCREASE (DECREASE) 18,329 $ 222,169
INSTITUTIONAL CLASS 595,951 $ 6,237,387
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,432 49,421
SHARES REDEEMED (473,503) (5,226,197)
NET INCREASE (DECREASE) 126,880 $ 1,060,611
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 30,423
CLASS T 26,681
CLASS B 12,026
INSTITUTIONAL CLASS 28,042
$ 97,172
ADVISOR FINANCIAL SERVICES FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
Effective August 1, 1997, the maximum 5.25% sales charge on Class A
shares was increased to 5.75%. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
IMAHDR PRASUN SHR__CHT 19970731 19970814 160320 S00000000000001
FA FINANCIAL SERV -CL A S&P 500
00183 SP001
1996/09/03 9425.00 10000.00
1996/09/30 10009.35 10561.42
1996/10/31 10546.58 10852.70
1996/11/30 11385.40 11673.05
1996/12/31 11045.81 11441.81
1997/01/31 11631.15 12156.70
1997/02/28 11772.76 12252.00
1997/03/31 10932.52 11748.57
1997/04/30 11829.41 12449.96
1997/05/31 12282.57 13207.91
1997/06/30 12915.11 13799.63
1997/07/31 14265.15 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 160322 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
FINANCIAL SERVICES - CLASS A 51.35%
FINANCIAL SERVICES - CLASS A 42.65%
(INCL. 5.75% SALES CHARGE) 1
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 43.41%.
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Financial Services - Class A on September
3, 1996, when the fund started, and the current maximum 5.75% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $14,265 - a 42.65% increase on the
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $14,898 - a 48.98%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% FUND'S
INVESTMENTS
FIRST CHICAGO NBD CORP. 4.9
BANC ONE CORP. 4.9
CITICORP 4.7
NORTHERN TRUST CORP. 4.7
AMERICAN INTERNATIONAL GROUP, INC. 4.5
ASSOCIATES FIRST CAPITAL CORP. 4.5
HOUSEHOLD INTERNATIONAL, INC. 4.4
NATIONSBANK CORP. 4.4
BANKAMERICA CORP. 4.3
MBNA CORP. 4.2
TOP INDUSTRIES AS OF JULY 31, 1997
NATIONAL COMMERCIAL
BANKS 35.7%
PERSONAL CREDIT
INSTITUTIONS 17.4%
PROPERTY-CASUALTY &
REINSURANCE 9.6%
FINANCIAL SERVICES 8.9%
STATE BANKS FEDERAL
RESERVE 8.4%
ALL OTHERS 20.0%*
ROW: 1, COL: 1, VALUE: 20.0
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 8.9
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 17.4
ROW: 1, COL: 6, VALUE: 35.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
IMAHDR PRASUN SHR__CHT 19970731 19970814 160522 S00000000000001
FA FINANCIAL SERV -CL T S&P 500
00193 SP001
1996/09/03 9650.00 10000.00
1996/09/30 10238.65 10561.42
1996/10/31 10788.70 10852.70
1996/11/30 11647.55 11673.05
1996/12/31 11299.87 11441.81
1997/01/31 11889.52 12156.70
1997/02/28 12024.84 12252.00
1997/03/31 11164.55 11748.57
1997/04/30 12082.84 12449.96
1997/05/31 12546.82 13207.91
1997/06/30 13184.80 13799.63
1997/07/31 14567.07 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 160524 R00000000000014
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
FINANCIAL SERVICES - CLASS T 50.95%
FINANCIAL SERVICES - CLASS T 45.67%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and show
you what would have happened if Class T shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Financial Services - Class T on September
3, 1996, when the fund started, and the current maximum 3.50% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $14,567 - a 45.67% increase on the
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $14,898 - a 48.98%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
FIRST CHICAGO NBD CORP. 4.9
BANC ONE CORP. 4.9
CITICORP 4.7
NORTHERN TRUST CORP. 4.7
AMERICAN INTERNATIONAL GROUP, INC. 4.5
ASSOCIATES FIRST CAPITAL CORP. 4.5
HOUSEHOLD INTERNATIONAL, INC. 4.4
NATIONSBANK CORP. 4.4
BANKAMERICA CORP. 4.3
MBNA CORP. 4.2
TOP INDUSTRIES AS OF JULY 31, 1997
NATIONAL COMMERCIAL
BANKS 35.7%
PERSONAL CREDIT
INSTITUTIONS 17.4%
PROPERTY-CASUALTY &
REINSURANCE 9.6%
FINANCIAL SERVICES 8.9%
STATE BANKS FEDERAL
RESERVE 8.4%
ALL OTHERS 20.0%*
ROW: 1, COL: 1, VALUE: 20.0
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 8.9
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 17.4
ROW: 1, COL: 6, VALUE: 35.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
The initial offering of Class B shares took place on March 3, 1997.
Class B shares bear a 1.00% 12b-1/shareholder service fee. Returns
prior to March 3, 1997 are those of Class T which bears a .50% 12b-1
fee. Had Class B's 12b-1 fee been reflected, returns prior to March 3,
1997 would have been lower. Class B's contingent deferred sales charge
included in life of fund total return is 5%. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
FINANCIAL SERVICES - CLASS B 50.65%
FINANCIAL SERVICES - CLASS B 45.65%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 160326 S00000000000001
FA Financial Serv -CL B S&P 500
00163 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10610.00 10561.42
1996/10/31 11180.00 10852.70
1996/11/30 12070.00 11673.05
1996/12/31 11709.71 11441.81
1997/01/31 12320.74 12156.70
1997/02/28 12460.98 12252.00
1997/03/31 11569.48 11748.57
1997/04/30 12511.06 12449.96
1997/05/31 12991.87 13207.91
1997/06/30 13642.97 13799.63
1997/07/31 14565.00 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 160329 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Financial Services - Class B on September
3, 1996, when the fund started. As the chart shows, by July 31, 1997,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $14,565 - a 45.65% increase
on the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898 -
a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
FIRST CHICAGO NBD CORP. 4.9
BANC ONE CORP. 4.9
CITICORP 4.7
NORTHERN TRUST CORP. 4.7
AMERICAN INTERNATIONAL GROUP, INC. 4.5
ASSOCIATES FIRST CAPITAL CORP. 4.5
HOUSEHOLD INTERNATIONAL, INC. 4.4
NATIONSBANK CORP. 4.4
BANKAMERICA CORP. 4.3
MBNA CORP. 4.2
TOP INDUSTRIES AS OF JULY 31, 1997
NATIONAL COMMERCIAL
BANKS 35.7%
PERSONAL CREDIT
INSTITUTIONS 17.4%
PROPERTY-CASUALTY &
REINSURANCE 9.6%
FINANCIAL SERVICES 8.9%
STATE BANKS FEDERAL
RESERVE 8.4%
ALL OTHERS 20.0%*
ROW: 1, COL: 1, VALUE: 20.0
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 8.9
ROW: 1, COL: 4, VALUE: 9.6
ROW: 1, COL: 5, VALUE: 17.4
ROW: 1, COL: 6, VALUE: 35.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Louis Salemy, Portfolio Manager of Fidelity Advisor
Financial Services Fund
Q. HOW DID THE FUND PERFORM, LOUIS?
Q. CAN YOU DESCRIBE THE INVESTING CLIMATE FOR FINANCIAL STOCKS AND HOW
IT RELATED TO FUND PERFORMANCE?
A. The interest-rate situation remained relatively moderate through
the end of 1996, but this stock-friendly environment didn't last long.
Throughout the first quarter of 1997, investors expressed concern over
the direction of rates and wondered whether the economy could sustain
its steady growth pace. In March, the Federal Reserve Board announced
it was raising interest rates by a quarter of a percentage point and,
since finance stocks are especially susceptible to rate movement, we
witnessed some pretty tough sledding through the end of April. In the
spring and early summer, economic news filtered out indicating that
while the economy was still growing at a good clip, the pace had
slowed some. Additionally, the Fed indicated no desire to raise rates
again, as many had suspected. These developments had a favorable
effect on the fund's performance, as investors gradually regained
confidence in the sector. As a result, financial stocks bounced back
through the end of July.
Q. FROM AN OUTSIDER'S PERSPECTIVE, MANY FINANCIAL COMPANIES SEEM TO BE
ENGAGED IN SIMILAR BUSINESSES. WHEN YOU'RE LOOKING OVER POTENTIAL
BUYS, WHAT SETS A GOOD OPPORTUNITY APART FROM THE REST OF THE PACK?
A. I look primarily for companies that have good internal growth
prospects. Companies that are investing in themselves - that is,
devoting capital to their existing businesses - frequently exhibit
strong revenue growth. I also look for companies that distinguish
themselves through the services they offer. American Express is a good
example. With their credit cards, American Express allows consumers
the choice of accepting a full menu of services, just a few or none.
American Express then bases its fee structure according to the
services chosen. In addition, the company also offers "membership
rewards." In exchange for using the card, consumers often get "points"
that can be applied to airline miles or toward other types of
purchases. This type of creativity often sets one stock apart from
another.
Q. THE FINANCIAL INDUSTRY HAS SEEN ITS FAIR SHARE OF MERGER AND
ACQUISITION ACTIVITY AND CORPORATE RESTRUCTURINGS OVER THE PAST FEW
YEARS. HAS THIS TREND RECEDED?
A. I think it has. There was some takeover activity within the
brokerage universe, but many of the deals involved privately held
companies. In terms of restructurings, much of the activity has
already taken place. Very few companies have a big reorganization
ahead of them. If they haven't restructured by now, chances are that
someone else has done it for them in the form of an acquisition.
Q. DID YOU PLAY ANY PARTICULAR THEMES DURING THE PERIOD?
A. One that comes to mind concerns consumer credit. Personal
bankruptcies - after hitting an all-time high in 1996 and early 1997 -
appear to be shrinking and consumer credit growth has slowed
dramatically. Credit-card companies have accomplished this mainly by
securing their receivables; that is, they're requiring such solid
collateral as a home, decreasing the amount of credit available to the
consumer and being more aggressive in their debt collection efforts.
Some of the fund's top positions - including First Chicago and
Household International - have credit-card operations and benefited
from this trend.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The credit-card stocks I just mentioned performed well, as did
American Express. Disappointments included Mercury Finance, which ran
into accounting problems early in 1997, and Capital One Financial, a
credit-card issuer that experienced scaled-back earnings expectations.
Q. WHAT'S YOUR OUTLOOK?
A. I think we'll see a continuation of the benign rate environment
that existed at the end of the period, and I fully expect the consumer
credit situation to improve. Improving credit conditions would play a
big part in prolonging the sector's strong performance.
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
BANKS - 44.1%
NATIONAL COMMERCIAL BANKS - 35.7%
Banc One Corp. 60,652 $ 3,404,094
Bank of New York Co., Inc. 57,980 2,815,654
BankAmerica Corp. 40,000 3,020,000
Capital One Financial Corp. 45,000 1,656,563
Citicorp 24,365 3,307,549
First Bank System, Inc. 24,000 2,136,000
Fleet Financial Group, Inc. 9,600 651,600
National City Corp. 44,970 2,675,715
NationsBank Corp. 43,060 3,065,334
U.S. Bancorp 5,100 340,425
Wachovia Corp. 30,105 1,941,773
Zions Bancorp 1,200 42,900
25,057,607
STATE BANKS FEDERAL RESERVE - 8.4%
Barnett Banks, Inc. 45,000 2,562,188
Crestar Financial Corp. 450 21,234
Northern Trust Corp. 60,000 3,300,000
5,883,422
TOTAL BANKS 30,941,029
COMPUTER SERVICES & SOFTWARE - 0.1%
COMPUTER SERVICES - 0.1%
BancTec, Inc. (a) 2,000 48,875
CREDIT & OTHER FINANCE - 26.3%
FINANCIAL SERVICES - 8.9%
American Express Co. 32,600 2,730,250
Finova Group, Inc. 280 25,270
First Chicago NBD Corp. 45,670 3,465,211
Transamerica Corp. 400 40,350
6,261,081
PERSONAL CREDIT INSTITUTIONS - 17.4%
Associates First Capital Corp. 47,600 3,138,625
Beneficial Corp. 39,800 2,885,500
Green Tree Financial Corp. 3,035 143,024
Household International, Inc. 24,080 3,118,360
MBNA Corp. 65,000 2,925,000
12,210,509
TOTAL CREDIT & OTHER FINANCE 18,471,590
FEDERAL SPONSORED CREDIT - 6.4%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.4%
Federal Home Loan Mortgage
Corporation 30,720 1,107,840
Federal National Mortgage Association 49,635 2,348,356
Student Loan Marketing Association 7,000 1,049,563
4,505,759
INSURANCE - 12.9%
ACCIDENT & HEALTH INSURANCE - 0.4%
Aetna, Inc. 600 68,363
Provident Companies, Inc. 2,250 142,594
UICI (a) 1,600 50,000
260,957
INSURANCE CARRIERS - 1.2%
AFLAC, Inc. 2,200 122,650
AMBAC, Inc. 5,800 494,088
MGIC Investment Corp. 4,400 231,275
848,013
SHARES VALUE (NOTE 1)
LIFE INSURANCE - 1.6%
American Bankers Insurance Group, Inc. 2,600 $ 175,988
Aon Corp. 3,000 168,000
Penncorp. Financial Group, Inc. 1,425 52,636
Providian Financial Corp. 9,505 372,477
UNUM Corp. 8,400 373,800
1,142,901
MULTI-LINE INSURANCE - 0.1%
CIGNA Corp. 200 39,900
PROPERTY-CASUALTY & REINSURANCE - 9.6%
American International Group, Inc. 29,620 3,154,526
Aegon NV (Reg.) 4,129 313,288
Allstate Corp. 35,285 2,787,515
Berkley (W.R.) Corp. 2,000 115,500
Hartford Financial Services Group, Inc. 1,600 139,400
Progressive Corp. 2,200 235,950
6,746,179
TOTAL INSURANCE 9,037,950
REAL ESTATE INVESTMENT TRUSTS - 0.4%
IRT Property Co. 20,000 256,250
SECURITIES INDUSTRY - 1.2%
SECURITY & COMMODITY BROKERS - 0.3%
Legg Mason, Inc. 2,500 153,594
Merrill Lynch & Co., Inc. 760 53,533
207,127
SECURITY BROKERS & DEALERS - 0.9%
Lehman Brothers Holdings, Inc. 12,000 597,750
Morgan Stanley Dean Witter Discover
and Co. 660 34,526
632,276
TOTAL SECURITIES INDUSTRY 839,403
TOTAL COMMON STOCKS
(Cost $52,087,096) 64,100,856
CASH EQUIVALENTS - 8.6%
Taxable Central Cash Fund (b)
(Cost $6,048,731) 6,048,731 6,048,731
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $58,135,827) $ 70,149,587
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $58,195,295. Net unrealized appreciation
aggregated $11,954,292, of which $12,109,290 related to appreciated
investment securities and $154,998 related to depreciated investment
securities.
The fund hereby designates approximately $10,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100%, 100%, and 96% of Class A's, Class T's, and
Institutional Class' dividend distributions during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 70,149,587
(COST $58,135,827) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 1,407,278
DIVIDENDS RECEIVABLE 65,603
INTEREST RECEIVABLE 29,258
PREPAID EXPENSES 11,033
TOTAL ASSETS 71,662,759
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,711,529
PAYABLE FOR FUND SHARES REDEEMED 68,646
ACCRUED MANAGEMENT FEE 26,009
DISTRIBUTION FEES PAYABLE 26,466
OTHER PAYABLES AND ACCRUED EXPENSES 57,017
TOTAL LIABILITIES 1,889,667
NET ASSETS $ 69,773,092
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 57,659,787
UNDISTRIBUTED NET INVESTMENT INCOME 86,089
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS 13,456
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 12,013,760
NET ASSETS $ 69,773,092
</TABLE>
CALCULATION OF MAXIMUM $15.11
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($6,275,026 (DIVIDED BY)
415,259 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.95
(100/94.75 OF $15.11)
CLASS T: $15.07
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($52,003,160 (DIVIDED BY)
3,451,219 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.62
(100/96.50 OF $15.07)
CLASS B: $15.04
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($7,736,849 (DIVIDED BY)
514,542 SHARES) A
INSTITUTIONAL CLASS: $15.14
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,758,057 (DIVIDED BY) 248,298 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 434,500
DIVIDENDS
INTEREST 158,722
TOTAL INCOME 593,222
EXPENSES
MANAGEMENT FEE $ 156,182
TRANSFER AGENT FEES71,040
DISTRIBUTION FEES 121,702
ACCOUNTING FEES AND EXPENSES 55,208
NON-INTERESTED TRUSTEES' COMPENSATION 80
CUSTODIAN FEES AND EXPENSES 8,064
REGISTRATION FEES 117,979
AUDIT 20,069
LEGAL 977
MISCELLANEOUS 5,216
TOTAL EXPENSES BEFORE REDUCTIONS 556,517
EXPENSE REDUCTIONS(64,069) 492,448
NET INVESTMENT INCOME 100,774
REALIZED AND UNREALIZED GAIN (LOSS) 27,297
NET REALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 12,013,760
NET GAIN (LOSS) 12,041,057
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,141,831
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ 100,774
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 27,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 12,013,760
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,141,831
DISTRIBUTIONS TO SHAREHOLDERS (14,685)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (13,841)
TOTAL DISTRIBUTIONS (28,526)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 57,645,194
REDEMPTION FEES14,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 69,773,092
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $86,089) $ 69,773,092
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S><C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .06
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.06
TOTAL FROM INVESTMENT OPERATIONS 5.12
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.11
TOTAL RETURN B, C 51.35%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,275
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .55% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31,
1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATAD 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.04
TOTAL FROM INVESTMENT OPERATIONS 5.08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.07
TOTAL RETURN B, C 50.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 52,003
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.94% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.91% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .37% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE G $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31,
1997. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.50
TOTAL FROM INVESTMENT OPERATIONS 2.48
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 15.04
TOTAL RETURN B, C 19.75%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,737
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.37)% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO JULY 31, 1997. F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 E
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .10
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.06
TOTAL FROM INVESTMENT OPERATIONS 5.16
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.01)
TOTAL DISTRIBUTIONS (.03)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.14
TOTAL RETURN B, C 51.78%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,758
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.47% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .85% A
PORTFOLIO TURNOVER 26% A
AVERAGE COMMISSION RATE H $ .0348
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997. F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Financial Services Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June, 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in
the following year.
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $58,711,557 and $6,651,758, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 6,571 $ 6,571
CLASS T 100,249 100,249
CLASS B 14,882 3,410
$ 121,702 $ 110,230
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase. The Class B charge is based on declining rates which
range from 5% to 1% of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. Effective August
1, 1997, Class A's maximum sales charge was increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 89,581 $ 65,700
CLASS T 266,965 186,812
CLASS B 1,297 0*
$ 357,843 $ 252,512
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 7,872 .30% *
CLASS T *** FIIOC ** 55,535 .28% *
CLASS B FIIOC ** 4,283 .31% *
INSTITUTIONAL CLASS FIIOC ** 3,350 .17% *
$ 71,040
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $6,594 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 26,073
CLASS T 2.00% -
CLASS B 2.50% 9,572
INSTITUTIONAL CLASS 1.50% 22,629
$ 58,274
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $5,637 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses.
During the period, the fund's custodian fees were reduced by $103
under the custodian arrangement, and each applicable class' expenses
were reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST CREDITS
INSTITUTIONAL CLASS $ 55
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 10.3% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
1997 A, B
CLASS A
FROM NET INVESTMENT INCOME $ 1,796
FROM NET REALIZED GAIN 1,792
TOTAL $ 3,588
CLASS T
FROM NET INVESTMENT INCOME $ 11,192
FROM NET REALIZED GAIN 11,200
TOTAL $ 22,392
CLASS B
FROM NET INVESTMENT INCOME $ -
FROM NET REALIZED GAIN -
TOTAL $ -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 1,697
FROM NET REALIZED GAIN 849
TOTAL $ 2,546
$ 28,526
A DISTRIBUTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO JULY
31, 1997.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 442,563 $ 5,416,102
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 294 3,494
SHARES REDEEMED (27,598) (358,033)
NET INCREASE (DECREASE) 415,259 $ 5,061,563
CLASS T 3,898,064 $ 48,519,698
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,650 19,567
SHARES REDEEMED (448,495) (5,662,098)
NET INCREASE (DECREASE) 3,451,219 $ 42,877,167
CLASS B 528,089 $ 6,961,044
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS - -
SHARES REDEEMED (13,547) (182,473)
NET INCREASE (DECREASE) 514,542 $ 6,778,571
INSTITUTIONAL CLASS 324,063 $ 3,934,976
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 215 2,546
SHARES REDEEMED (75,980) (1,009,629)
NET INCREASE (DECREASE) 248,298 $ 2,927,893
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 32,019
CLASS T 43,467
CLASS B 13,889
INSTITUTIONAL CLASS 28,604
$ 117,979
ADVISOR HEALTH CARE FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). Effective August 1, 1997, the maximum 5.25% sale
charge on Class A shares was increased to 5.75%. If Fidelity had
not reimbursed certain class expenses, the total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
HEALTH CARE - CLASS A 41.00%
HEALTH CARE - CLASS A 32.89%
(INCL. 5.75% SALES CHARGE) 1
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index
of common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and
show you what would have happened if Class A shares had performed
at a constant rate each year. Average annual total returns will
appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 33.60%.
$10,000 OVER LIFE OF FUND
Fidelity Adv Health Care - CL A Standard & Poor's 500
$14,898
$13,289
$
1996 1997
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Health Care - Class A on September
3, 1996, when the fund started, and the current maximum 5.75% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $13,289 - a 32.89% increase on
the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898
- - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
American Home Products Corp. 8.9
Schering-Plough Corp. 7.9
Warner-Lambert Co. 7.1
Bristol-Myers Squibb Co. 6.4
Lilly (Eli) & Co. 6.1
Merck & Co., Inc. 4.8
Johnson & Johnson 3.1
Abbott Laboratories 2.9
Baxter International, Inc. 2.5
Medtronic, Inc. 1.7
TOP INDUSTRIES AS OF JULY 31, 1997
Drugs 50.7%
Medical Supplies &
Appliances 12.8%
Medical Technology 5.3%
Biotechnology 4.8%
Hospitals 4.8%
All Others 21.6% *
Row: 1, Col: 1, Value: 21.6
Row: 1, Col: 2, Value: 4.8
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 12.8
Row: 1, Col: 6, Value: 50.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR HEALTH CARE FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value).
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
HEALTH CARE - CLASS T 40.50%
HEALTH CARE - CLASS T 35.58%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index
of common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and
show you what would have happened if Class T shares had performed
at a constant rate each year. Average annual total returns will
appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970812 152505 S00000000000001
FA Health Care -CL T S&P 500
00191 SP001
1996/09/03 9650.00 10000.00
1996/09/30 10286.90 10561.42
1996/10/31 10055.30 10852.70
1996/11/30 10566.75 11673.05
1996/12/31 10624.65 11441.81
1997/01/31 11271.20 12156.70
1997/02/28 11396.65 12252.00
1997/03/31 10779.05 11748.57
1997/04/30 11319.45 12449.96
1997/05/31 12178.30 13207.91
1997/06/30 13075.75 13799.63
1997/07/31 13558.25 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970812 152508 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Health Care - Class T on September
3, 1996, when the fund started, and the current maximum 3.50% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $13,558 - a 35.58% increase on
the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898
- - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
American Home Products Corp. 8.9
Schering-Plough Corp. 7.9
Warner-Lambert Co. 7.1
Bristol-Myers Squibb Co. 6.4
Lilly (Eli) & Co. 6.1
Merck & Co., Inc. 4.8
Johnson & Johnson 3.1
Abbott Laboratories 2.9
Baxter International, Inc. 2.5
Medtronic, Inc. 1.7
TOP INDUSTRIES AS OF JULY 31, 1997
Drugs 50.7%
Medical Supplies &
Appliances 12.8%
Medical Technology 5.3%
Biotechnology 4.8%
Hospitals 4.8%
All Others 21.6% *
Row: 1, Col: 1, Value: 21.6
Row: 1, Col: 2, Value: 4.8
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 12.8
Row: 1, Col: 6, Value: 50.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR HEALTH CARE FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in the value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). The initial offering of Class B shares took place
on March 3, 1997. Class B shares bear a 1.00% 12b-1/shareholder
service fee. Returns prior to March 3, 1997 are those of Class T
which bears a .50% 12b-1 fee. Had Class B's 12b-1 fee been
reflected, returns prior to March 3, 1997 would have been lower.
Class B's contingent deferred sales charge included in life of fund
total return is 5%. If Fidelity had not reimbursed certain class
expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
HEALTH CARE - CLASS B 40.10%
HEALTH CARE - CLASS B 35.10%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index
of common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and
show you what would have happened if Class B shares had performed
at a constant rate each year. Average annual total returns will
appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970812 152501 S00000000000001
FA Health Care -CL B S&P 500
00164 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10660.00 10561.42
1996/10/31 10420.00 10852.70
1996/11/30 10950.00 11673.05
1996/12/31 11010.00 11441.81
1997/01/31 11680.00 12156.70
1997/02/28 11810.00 12252.00
1997/03/31 11170.00 11748.57
1997/04/30 11720.00 12449.96
1997/05/31 12600.00 13207.91
1997/06/30 13530.00 13799.63
1997/07/31 14010.00 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970812 152505 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Health Care - Class B on September
3, 1996, when the fund started. As the chart shows, by July 31,
1997, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $13,510 - a
35.10% increase on the initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment
would have grown to $14,898 - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
American Home Products Corp. 8.9
Schering-Plough Corp. 7.9
Warner-Lambert Co. 7.1
Bristol-Myers Squibb Co. 6.4
Lilly (Eli) & Co. 6.1
Merck & Co., Inc. 4.8
Johnson & Johnson 3.1
Abbott Laboratories 2.9
Baxter International, Inc. 2.5
Medtronic, Inc. 1.7
TOP INDUSTRIES AS OF JULY 31, 1997
Drugs 50.7%
Medical Supplies &
Appliances 12.8%
Medical Technology 5.3%
Biotechnology 4.8%
Hospitals 4.8%
All Others 21.6% *
Row: 1, Col: 1, Value: 21.6
Row: 1, Col: 2, Value: 4.8
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 12.8
Row: 1, Col: 6, Value: 50.7
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR HEALTH CARE FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Beso Sikharulidze became Portfolio Manager of
Fidelity Advisor Health Care Fund on June 2, 1997.
Q. HOW DID THE FUND PERFORM, BESO?
A. From inception on September 3, 1996 through July 31, 1997, the
fund's Class A , Class T and Class B shares returned 41.00%, 40.50%
and 40.10%, respectively. By comparison, the Standard & Poor's 500
Index returned 48.98%.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500 DURING THE PERIOD?
A. Much of the S&P 500's strong performance was driven by a narrow
group of the larger-cap stocks in the index. If you had exposure to
smaller-cap stocks, like this fund did, you underperformed the
benchmark. Also, the health care sector does not include a lot of
the technology stocks, such as Microsoft, or other big names in the
index, such as General Electric, that really drove the performance
of the index. Larger-cap health care stocks, particularly
pharmaceuticals, performed very well during the period, but the
overall health care sector wasn't strong enough to beat the S&P
500.
Q. WHAT FACTORS HELPED HEALTH CARE STOCKS DURING THE PERIOD?
A. Pharmaceutical companies have reaped the benefits of some new
trends in the industry, including acceleration of reviews by the
Food and Drug Administration (FDA) and allowances for
direct-to-consumer marketing of drugs. Considering drugs are moving
through the FDA review process more quickly, they're coming to
market sooner. And that's good news for pharmaceutical companies
that are spending a lot of money on research and development.
Direct marketing also has allowed companies to introduce new
categories of drugs to consumers, such as those that lower
cholesterol. As a result, people are visiting their doctors and
saying that they'd like to try a certain antihistamine or
antidepressant, for example, rather than waiting for the doctor to
prescribe something. This trend is triggering demand for new drugs
and accelerating unit volume growth. We've also seen a revolution
in medical devices, especially cardiac devices that are making
surgery easier, more accurate and more effective.
Q. WERE THERE ANY PARTICULAR STOCKS THAT STOOD OUT DURING THE
PERIOD?
A. At the end of the period, about 9% of the fund's portfolio was
invested in American Home Products, a large pharmaceutical firm
that also has an animal health business and crop protection
operations. I liked the company because its business prospects were
strong and the stock's relative valuation in the pharmaceutical
sector was attractive. The company's shares appreciated
considerably during the period. Five of the fund's top 10 holdings
were pharmaceutical stocks, including American Home Products,
Schering-Plough, Warner-Lambert, Bristol-Myers Squibb and Eli Lilly
- - all of which helped the fund's performance during the period.
Medtronic, a maker of cardiac devices, also performed well,
benefiting from the demand for innovative products.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. Amgen's stock basically was flat during the period. I expected
biotechnology companies to get a boost from faster drug-approval
activity by the FDA. However, these companies did not benefit from
this development like the pharmaceutical companies did. In
addition, Columbia/HCA performed poorly as an investigation into
the company's billing practices progressed. However, the effect on
the fund was minimal since that holding accounted for only a little
more than 1% of the portfolio by the end of the period.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR?
A. I'm optimistic about health care stocks over the next six to 12
months. Pharmaceutical companies should continue to do well on the
strength of their business prospects, and I think medical device
companies will continue to benefit from product innovations.
Overall, the health care sector should be strong. Even if the
economy slows down, the sector can still be a strong performer
since demand for health services remains fairly constant in any
environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED
ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME
BASED ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$69 million
MANAGER: Beso Sikharulidze, since June
1997; joined Fidelity in 1992
(checkmark)
ADVISOR HEALTH CARE FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.4%
CHEMICALS - 1.4%
AKZO NV sponsored ADR 8,200 $ 638,575
Hoechst AG Ord. 6,700 311,992
950,567
COMPUTER SERVICES & SOFTWARE - 0.8%
COMPUTER SERVICES - 0.8%
HBO & Co. 7,400 572,575
DRUGS & PHARMACEUTICALS - 58.6%
BIOTECHNOLOGY - 4.8%
Amgen, Inc. 12,800 752,800
COR Therapeutics, Inc. (a) 9,300 99,975
Cytyc Corp. (a) 19,300 451,138
Elf Sanofi SA 2,300 241,564
Genentech, Inc. special (a) 3,600 207,900
Gilead Sciences, Inc. (a) 9,400 265,550
Pharmacia & Upjohn, Inc. 18,000 679,500
Sangstat Medical Corp. (a) 7,000 171,500
Sepracor, Inc. (a) 20,000 502,500
3,372,427
COMMERCIAL LABORATORY RESEARCH - 0.1%
Millennium Pharmaceuticals, Inc. (a) 2,700 39,488
DRUGS - 50.7%
American Home Products Corp. 75,800 6,248,763
Barr Laboratories, Inc. (a) 16,200 729,000
Bristol-Myers Squibb Co. 57,300 4,494,469
Daiichi Pharmaceutical Co. Ltd. 40,000 714,557
Dura Pharmaceuticals, Inc. (a) 4,000 156,000
Elan Corp. PLC ADR (a) 9,200 437,000
Glaxo PLC sponsored ADR 7,500 318,750
Glaxo Holdings PLC 6,300 133,466
Lilly (Eli) & Co. 38,200 4,316,600
Merck & Co., Inc. 32,600 3,388,363
Novo-Nordisk AS Class B 1,300 136,973
Pfizer, Inc. 10,900 649,913
Rhone Poulenc sponsored ADR
representing 1/4 share 22,000 948,750
Roche Holding AG participation
certificates 53 512,818
Sankyo Co. Ltd. 14,000 499,010
Schering-Plough Corp. 101,400 5,532,638
SmithKline Beecham PLC ADR 5,700 554,325
Takeda Chemical Industries Ltd. 15,000 453,760
Warner-Lambert Co. 35,800 5,000,813
Watson Pharmaceuticals, Inc. (a) 4,100 202,950
Yamanouchi Pharmaceutical Co. Ltd. 8,000 215,715
35,644,633
PHARMACEUTICAL PREPARATIONS - 3.0%
Alpharma, Inc. Class A 4,000 71,750
Andrx Corp. 2,000 66,500
Astra AB Class A Free shares 46,933 839,505
Novartis AG (Reg.) 563 904,003
Zeneca Group PLC Ord. 7,600 251,577
2,133,335
TOTAL DRUGS & PHARMACEUTICALS 41,189,883
ELECTRONIC INSTRUMENTS - 0.9%
LAB ANALYTICAL INSTRUMENTS - 0.9%
Waters Corp. (a) 17,000 608,808
SHARES VALUE (NOTE 1)
ELECTRONICS - 0.3%
ELECTRONIC CAPACITORS - 0.3%
Maxwell Technologies, Inc. (a) 8,500 $ 197,625
HOUSEHOLD PRODUCTS - 0.9%
FABRICATED RUBBER PRODUCTS - 0.9%
Safeskin Corp. (a) 20,000 661,250
MEDICAL EQUIPMENT & SUPPLIES - 21.9%
DENTAL EQUIPMENT - 0.5%
Sybron International Corp. (a) 9,200 376,625
DRUG DISTRIBUTORS - WHOLESALE - 1.7%
Bergen Brunswig Corp. Class A 24,375 725,156
McKesson Corp. 5,400 468,113
1,193,269
MEDICAL SUPPLIES & APPLIANCES - 12.8%
Abbott Laboratories 30,800 2,015,475
Baxter International, Inc. 30,000 1,734,375
Becton, Dickinson & Co. 18,100 970,613
Boston Scientific Corp. (a) 8,900 638,575
Closure Medical Corp. 5,100 138,975
Depuy, Inc. (a) 8,600 210,163
Endovascular Technologies, Inc. (a) 48,500 521,375
Johnson & Johnson 34,900 2,174,706
Sofamor/Danek Group, Inc. (a) 12,300 552,731
8,956,988
MEDICAL TECHNOLOGY - 5.3%
Arterial Vascular Engineering, Inc. (a) 9,800 376,075
Biomet, Inc. 30,000 598,125
Medtronic, Inc. 14,000 1,221,500
St. Jude Medical, Inc. (a) 14,800 604,025
Sonus Pharmaceuticals, Inc. (a) 8,400 268,800
Stryker Corp. 14,400 561,600
U.S. Surgical Corp. 3,177 117,946
3,748,071
OPHTHALMIC GOODS - 0.0%
Cooper Companies, Inc. 900 25,200
X-RAY & RELATED APPARATUS - 0.7%
Hologic, Inc. (a) 21,600 464,400
X-RAY ELECTRO-MEDICAL APPARATUS - 0.9%
Guidant Corp. 6,800 620,500
TOTAL MEDICAL EQUIPMENT & SUPPLIES 15,385,053
MEDICAL FACILITIES MANAGEMENT - 9.5%
HOSPITALS - 4.8%
Columbia/HCA Healthcare Corp. 28,000 903,000
HEALTHSOUTH Rehabilitation Corp. (a) 15,700 416,050
Health Management Associates, Inc.
Class A (a) 9,600 306,600
Quorum Health Group, Inc. (a) 15,600 555,750
Tenet Healthcare Corp. (a) 18,900 565,819
Universal Health Services, Inc.
Class B (a) 15,000 609,375
3,356,594
HMO'S & OUTPATIENT CARE - 3.3%
Humana, Inc. (a) 20,900 509,438
Oxford Health Plans, Inc. (a) 10,900 916,281
PacifiCare Health Systems, Inc.
Class B (a) 2,000 141,500
United HealthCare Corp. 13,100 746,700
2,313,919
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
NURSING, PERSONAL CARE FACILITY - 0.8%
NovaCare, Inc. (a) 47,000 $ 608,063
SKILLED NURSING CARE FACILITIES - 0.6%
Beverly Enterprises, Inc. (a) 13,400 206,025
Vencor, Inc. (a) 5,400 217,688
423,713
TOTAL MEDICAL FACILITIES MANAGEMENT 6,702,289
TOTAL COMMON STOCKS
(Cost $56,661,665) 66,268,050
CASH EQUIVALENTS - 5.7%
Taxable Central Cash Fund (b)
(Cost $4,023,758) 4,023,758 4,023,758
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $60,685,423) $ 70,291,808
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.66%. The yield refers to the income earned by investing
in the fund over the seven-day period, expressed as an annual
percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 88.4%
Japan 2.7
Switzerland 2.0
United Kingdom 1.8
France 1.7
Sweden 1.2
Others (individually less than 1%) 2.2
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $60,742,515. Net unrealized appreciation
aggregated $9,549,293, of which $10,098,259 related to appreciated
investment securities and $548,966 related to depreciated
investment securities.
The fund hereby designates approximately $28,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
Investment in securities, at value $ 70,291,808
(cost $60,685,423) - See accompanying schedule
Receivable for investments sold 2,392,915
Receivable for fund shares sold 887,803
Dividends receivable 67,292
Interest receivable 23,992
Prepaid expenses 11,027
TOTAL ASSETS 73,674,837
LIABILITIES
Payable for investments purchased $ 3,880,569
Payable for fund shares redeemed 284,751
Accrued management fee 35,854
Distribution fees payable 24,709
Other payables and accrued expenses 58,861
TOTAL LIABILITIES 4,284,744
NET ASSETS $ 69,390,093
Net Assets consist of:
Paid in capital $ 58,557,677
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions
1,226,031
Net unrealized appreciation (depreciation) on investments
9,606,385
NET ASSETS $ 69,390,093
</TABLE>
CALCULATION OF MAXIMUM $14.10
OFFERING PRICE
CLASS A:
NET ASSET VALUE and redemption
price per share ($5,488,195 (divided by)
389,336 shares)
Maximum offering price per share $14.88
(100/94.75 of $14.10)
CLASS T: $14.05
NET ASSET VALUE and redemption
price per share ($50,868,278 (divided by)
3,620,934 shares)
Maximum offering price per share $14.56
(100/96.50 of $14.05)
CLASS B: $14.01
NET ASSET VALUE and offering price
per share ($6,159,210 (divided by)
439,612 shares) A
INSTITUTIONAL CLASS: $14.12
NET ASSET VALUE, offering price
and redemption price per share
($6,874,410 (divided by) 486,881 shares)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 280,357
Dividends
Interest 133,101
TOTAL INCOME 413,458
EXPENSES
Management fee $ 158,600
Transfer agent fees72,437
Distribution fees 118,360
Accounting fees and expenses 55,207
Non-interested trustees' compensation 82
Custodian fees and expenses 20,829
Registration fees 118,266
Audit 20,071
Legal 966
Miscellaneous 5,714
Total expenses before reductions 570,532
Expense reductions(64,441 506,091
)
NET INVESTMENT INCOME (LOSS) (92,633
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,319,004
Foreign currency transactions (340 1,318,664
)
Change in net unrealized appreciation (depreciation) on investment securities 9,606,385
NET GAIN (LOSS) 10,925,049
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,832,416
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
Operations $ (92,633
Net investment income (loss) )
Net realized gain (loss) 1,318,664
Change in net unrealized appreciation (depreciation) 9,606,385
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,832,416
Share transactions - net increase (decrease) 58,550,028
Redemption fees 7,649
TOTAL INCREASE (DECREASE) IN NET ASSETS 69,390,093
NET ASSETS
Beginning of period -
End of period $ 69,390,093
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income (loss) (.02)
Net realized and unrealized gain (loss) 4.12
Total from investment operations 4.10
Redemption fees added to paid in capital -
Net asset value, end of period $ 14.10
TOTAL RETURN B, C 41.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,488
Ratio of expenses to average net assets 1.75% A,
E
Ratio of expenses to average net assets after expense reductions 1.74% A,
F
Ratio of net investment income (loss) to average net assets (.18)% A
Portfolio turnover 67% A
Average commission rate G $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF
THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). F FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). G A
FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER. H FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALES OF CLASS A SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income (loss) (.04)
Net realized and unrealized gain (loss) 4.09
Total from investment operations 4.05
Redemption fees added to paid in capital -
Net asset value, end of period $ 14.05
TOTAL RETURN B, C 40.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 50,868
Ratio of expenses to average net assets 1.97% A
Ratio of expenses to average net assets after expense reductions 1.96% A,
E
Ratio of net investment income (loss) to average net assets (.39)% A
Portfolio turnover 67% A
Average commission rate F $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE OF
CLASS T SHARES) TO JULY 3, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 11.88
Income from Investment Operations
Net investment income (loss) (.05)
Net realized and unrealized gain (loss) 2.18
Total from investment operations 2.13
Redemption fees added to paid in capital -
Net asset value, end of period $ 14.01
TOTAL RETURN B, C 17.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,159
Ratio of expenses to average net assets 2.50% A,
E
Ratio of expenses to average net assets after expense reductions 2.49% A,
F
Ratio of net investment income (loss) to average net assets (.99)% A
Portfolio turnover 67% A
Average commission rate G $ .0383
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE
A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). F FMR OR THE FUND
HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY
DIFFER. H FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .01
Net realized and unrealized gain (loss) 4.11
Total from investment operations 4.12
Redemption fees added to paid in capital -
Net asset value, end of period $ 14.12
TOTAL RETURN B, C 41.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,875
Ratio of expenses to average net assets1.50% A,
E
Ratio of expenses to average net assets after expense reductions 1.49% A,
F
Ratio of net investment income to average net assets .08% A
Portfolio turnover 67% A
Average commission rate G $ .0383
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY
DIFFER. H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Health Care Fund (the fund) is a fund of Fidelity
Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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
its distribution plan. The fund commenced sale of a new Class B of
shares on March 3, 1997. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and
certain fund-level expense reductions 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 of shares differs
in its respective distribution, transfer agent, registration, and
certain other class-specific fees, expenses, and expense
reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new
class commences on or about November 3, 1997. Class C shares are
subject to an annual distribution and service fee of 1.00% (of
which .75% represents a distribution fee and .25% represents a
shareholder service fee) of the class' average net assets, and a
1.00% contingent deferred sales charge levied on Class C share
redemptions made within one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund
are maintained in U.S. dollars. Investment securities and other
assets and liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at
period end. Income receipts and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the
extent that it distributes substantially all of its taxable income
for its fiscal year. The schedule of investments includes
information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund
is informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of
the securities received. Interest income is accrued as earned.
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 between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR)
bears all organizational expenses except for registering and
qualifying each class and shares of each class for distribution
under federal and state securities law. These expenses are borne by
each class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in
distribution reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments
and foreign currency transactions may include temporary book and
tax basis differences that will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed
in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are
subject to a redemption fee equal to 1% of the proceeds of the
redeemed shares. The fee, which is retained by the fund, is
accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as
of trade date. Gains and losses on securities sold are determined
on the basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign
currency contracts to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in
the value of the foreign currency or if the counterparties do not
perform under the contracts' terms. The U.S. dollar value of
foreign currency contracts is determined using contractual currency
exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances
are invested in one or more repurchase agreements for U.S. Treasury
or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal
Agency securities are transferred to an account of the fund, or to
the Joint Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to
the principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund
is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current
income by investing in U.S. Treasury securities and repurchase
agreements for these securities. Income distributions from the Cash
Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest
income in the accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term
securities, aggregated $73,216,646 and $17,873,985, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500%
to .5200% for the period. The annual individual fund fee rate is
.30%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management
fee. For the period, the management fee was equivalent to an
annualized rate of .60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans
with respect to each class of shares (collectively referred to as
"the Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a
portion of which was paid to securities dealers, banks and other
financial institutions for the distribution of each class'
applicable shares, and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 6,504 $ 6,504
CLASS T 102,090 102,090
CLASS B 9,766 2,442
$ 118,360 $ 111,036
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties
that assist in the sale of each class' shares or render shareholder
support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25%
for selling Class A shares and 3.50% for selling Class T shares of
the fund, respectively, and the proceeds of a contingent deferred
sales charge levied on Class B share redemptions occurring within
six years of purchase. The Class B charge is based on declining
rates which range from 5% to 1% of the lesser of the cost of shares
at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital
gains. Effective August 1, 1997, Class A's maximum sales charge was
increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 145,733 $ 107,863
CLASS T 289,655 209,976
CLASS B 3,867 0 *
$ 439,255 $ 317,839
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract
with respect to its shares. The Transfer Agents receive 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
all shareholder reports. For the period, the following amounts were
paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 9,249 .36% *
CLASS T *** FIIOC ** 55,560 .27% *
CLASS B FIIOC ** 3,500 .35% *
INSTITUTIONAL CLASS FIIOC ** 4,128 .17% *
$ 72,437
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY
WAS THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS
ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of
FMR, maintains the fund's accounting records. The fee is based on
the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $5,765 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of
average net assets for each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A 1.75% $ 30,538
CLASS T 2.00% -
CLASS B 2.50% 9,502
INSTITUTIONAL CLASS 1.50% 21,470
$ 61,510
FMR has also directed certain portfolio trades to brokers who paid
a portion of the fund's expenses. For the period, the fund's
expenses were reduced by $2,549 under this arrangement.
In addition, the fund has entered into arrangements with its
custodian and each class' transfer agent whereby credits realized
as a result of uninvested cash balances were used to reduce a
portion of expenses. During the period, the fund's custodian fees
were reduced by $347 under the custodian arrangement, and each
applicable class' expenses were reduced as follows under the
transfer agent arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
INSTITUTIONAL CLASS $ 35
6. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 450,370 $ 5,183,538
Shares sold
Shares redeemed (61,034) (732,928)
Net increase (decrease) 389,336 $ 4,450,610
CLASS T 3,936,387 $ 46,440,633
Shares sold
Shares redeemed (315,453) (3,850,782)
Net increase (decrease) 3,620,934 $ 42,589,851
CLASS B 445,818 $ 5,752,611
Shares sold
Shares redeemed (6,206) (76,107)
Net increase (decrease) 439,612 $ 5,676,504
INSTITUTIONAL CLASS 546,050 $ 6,606,358
Shares sold
Shares redeemed (59,169) (773,295)
Net increase (decrease) 486,881 $ 5,833,063
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL
CLASS ARE FOR THE PERIOD SEPTEMBER 3,1996 (COMMENCEMENT OF SALE OF
SHARES) TO JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. REGISTRATION FEES.
For the period, each class paid the following amounts to register
its shares for sale:
REGISTRATION
FEES
CLASS A $ 32,101
CLASS T 42,701
CLASS B 13,795
INSTITUTIONAL CLASS 29,669
$ 118,266
ADVISOR NATURAL RESOURCES FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). The initial offering of Class A shares took place
on September 3, 1996. Class A shares bear a 0.25% 12b-1 fee.
Returns prior to September 3, 1996 are those of Class T, the
original class of the fund, and reflect Class T's 0.50% 12b-1 fee
(0.65% prior to January 1, 1996). Effective August 1, 1997, the
maximum 5.25% sale charge on Class A shares was increased to 5.75%.
If Fidelity had not reimbursed certain class expenses, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS A 24.38% 139.33% 354.17%
NATURAL RESOURCES - CLASS A (INCL. 5.75% SALES CHARGE) 1 17.23% 125.57% 328.05%
S&P 500 52.14% 155.75% 416.62%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or
since the fund started on December 29, 1987. You can compare Class
A's returns to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark
includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS A 24.38% 19.07% 17.08.%
NATURAL RESOURCES - CLASS A (INCL. 5.75% SALES CHARGE) 17.23% 17.67% 16.36%
S&P 500 52.14% 20.66% 18.66%
</TABLE>
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and
show you what would have happened if Class A shares had performed
at a constant rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
AND AVERAGE ANNUAL RETURNS WOULD HAVE BEEN 17.85% AND 17.85% FOR
THE PAST ONE YEAR, 126.77% AND 17.79% FOR THE PAST FIVE YEARS, AND
330.32% AND 16.42% FOR THE LIFE OF FUND.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 164043 S00000000000001
FA Natural Resource -CL A S&P 500
00247 SP001
1987/12/29 9425.00 10000.00
1987/12/31 9406.15 10064.43
1988/01/31 9311.90 10488.14
1988/02/29 10018.78 10976.89
1988/03/31 10292.10 10637.70
1988/04/30 10461.75 10755.78
1988/05/31 10292.10 10849.36
1988/06/30 10970.70 11347.34
1988/07/31 10923.58 11304.22
1988/08/31 10631.40 10919.88
1988/09/30 10584.28 11385.07
1988/10/31 10810.48 11701.57
1988/11/30 10565.43 11534.24
1988/12/31 10920.66 11736.09
1989/01/31 11803.35 12595.17
1989/02/28 11628.86 12281.55
1989/03/31 11854.67 12567.71
1989/04/30 12224.16 13219.97
1989/05/31 12511.55 13755.38
1989/06/30 12470.49 13676.98
1989/07/31 13373.71 14912.01
1989/08/31 13773.99 15204.28
1989/09/30 13404.50 15141.94
1989/10/31 12932.36 14790.65
1989/11/30 13507.13 15092.38
1989/12/31 14539.54 15454.60
1990/01/31 13622.43 14417.59
1990/02/28 14259.93 14603.58
1990/03/31 14528.36 14990.58
1990/04/30 13767.83 14615.81
1990/05/31 15165.86 16040.85
1990/06/30 14975.73 15931.78
1990/07/31 15713.89 15880.79
1990/08/31 15300.07 14445.17
1990/09/30 14819.15 13741.69
1990/10/31 13756.64 13682.60
1990/11/30 13980.33 14566.50
1990/12/31 13771.56 14972.90
1991/01/31 14225.95 15625.72
1991/02/28 16276.54 16742.96
1991/03/31 15892.05 17148.14
1991/04/30 15973.61 17189.30
1991/05/31 16742.58 17931.87
1991/06/30 15775.54 17110.59
1991/07/31 16299.84 17907.95
1991/08/31 16719.28 18332.37
1991/09/30 16066.82 18026.21
1991/10/31 16439.65 18267.77
1991/11/30 15111.43 17531.58
1991/12/31 15764.14 19537.19
1992/01/31 16743.12 19173.80
1992/02/29 17119.65 19423.06
1992/03/31 16692.92 19044.31
1992/04/30 17307.92 19604.21
1992/05/31 17772.31 19700.27
1992/06/30 17194.96 19406.73
1992/07/31 17885.27 20200.47
1992/08/31 17621.70 19786.36
1992/09/30 17797.41 20019.84
1992/10/31 17420.88 20089.91
1992/11/30 17646.80 20774.97
1992/12/31 17866.26 21030.51
1993/01/31 18438.98 21207.16
1993/02/28 18955.83 21495.58
1993/03/31 20213.04 21949.14
1993/04/30 21302.61 21417.97
1993/05/31 22350.28 21991.97
1993/06/30 22657.60 22055.75
1993/07/31 22350.28 21967.52
1993/08/31 23635.42 22800.09
1993/09/30 23509.70 22624.53
1993/10/31 24571.34 23092.86
1993/11/30 23649.39 22873.48
1993/12/31 24644.52 23150.25
1994/01/31 26142.98 23937.36
1994/02/28 25328.29 23288.65
1994/03/31 23771.64 22273.27
1994/04/30 24164.44 22558.37
1994/05/31 24484.49 22928.32
1994/06/30 24048.05 22366.58
1994/07/31 24862.75 23100.20
1994/08/31 26070.24 24047.31
1994/09/30 25939.31 23458.15
1994/10/31 25546.51 23985.96
1994/11/30 23873.47 23112.39
1994/12/31 24082.80 23455.15
1995/01/31 23609.72 24063.34
1995/02/28 24304.56 25001.09
1995/03/31 25664.67 25738.87
1995/04/30 26714.32 26496.88
1995/05/31 27083.91 27555.96
1995/06/30 27852.67 28196.09
1995/07/31 29020.59 29131.07
1995/08/31 29464.11 29204.19
1995/09/30 29715.43 30436.60
1995/10/31 28458.81 30327.94
1995/11/30 29907.62 31659.34
1995/12/31 30988.42 32269.10
1996/01/31 32166.17 33367.54
1996/02/29 32961.53 33676.86
1996/03/31 33971.02 34001.17
1996/04/30 35944.12 34502.34
1996/05/31 36617.12 35392.16
1996/06/30 36387.69 35527.00
1996/07/31 34414.59 33957.42
1996/08/31 35959.42 34673.58
1996/09/30 37488.96 36625.01
1996/10/31 38406.68 37635.13
1996/11/30 40333.89 40479.97
1996/12/31 40400.06 39678.06
1997/01/31 41054.58 42157.15
1997/02/28 38338.34 42487.66
1997/03/31 37340.20 40741.84
1997/04/30 37160.21 43174.13
1997/05/31 40547.33 45802.57
1997/06/30 40416.43 47854.52
1997/07/31 42805.41 51662.31
IMATRL PRASUN SHR__CHT 19970731 19970814 164052 R00000000000119
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Natural Resources - Class A on
December 29, 1987, when the fund started, and the current maximum
5.75% sales charge was paid. As the chart shows, by July 31, 1997,
the value of the investment would have grown to $42,805 - a 328.05%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$51,662 - a 416.62% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
Total SA sponsored ADR 3.5
Getchell Gold Corp. 2.7
EVI, Inc. 2.7
Mobil Corp. 2.2
Fort Howard Corp. 2.1
Tosco Corp. 2.0
Texaco, Inc. 2.0
Transocean Offshore, Inc. 2.0
Euro-Nevada Mining Ltd. 2.0
Boise Cascade Corp. 1.9
TOP INDUSTRIES AS OF JULY 31, 1997
Crude Petroleum & Gas 11.8%
Petroleum Refiners 11.6%
Gold Ores 11.4%
Oil & Gas Exploration 11.3%
Drilling 5.9%
All Others 48.0% *
Row: 1, Col: 1, Value: 48.0
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 11.3
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 11.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). If Fidelity had not reimbursed certain class
expenses, the past five years and life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS T 24.62% 139.79% 355.04%
NATURAL RESOURCES - CLASS T (INCL. 3.50% SALES CHARGE) 20.26% 131.40% 339.12%
S&P 500 52.14% 155.75% 416.62%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or
since the fund started on December 29, 1987. You can compare Class
T's returns to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark
includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS T 24.62% 19.12% 17.10%
NATURAL RESOURCES - CLASS T (INCL. 3.50% SALES CHARGE) 20.26% 18.27% 16.67%
S&P 500 52.14% 20.66% 18.66%
</TABLE>
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and
show you what would have happened if Class T shares had performed
at a constant rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 164125 S00000000000001
FA Natural Resource -CL T S&P 500
00166 SP001
1987/12/29 9650.00 10000.00
1987/12/31 9630.70 10064.43
1988/01/31 9534.20 10488.14
1988/02/29 10257.95 10976.89
1988/03/31 10537.80 10637.70
1988/04/30 10711.50 10755.78
1988/05/31 10537.80 10849.36
1988/06/30 11232.60 11347.34
1988/07/31 11184.35 11304.22
1988/08/31 10885.20 10919.88
1988/09/30 10836.95 11385.07
1988/10/31 11068.55 11701.57
1988/11/30 10817.65 11534.24
1988/12/31 11181.37 11736.09
1989/01/31 12085.12 12595.17
1989/02/28 11906.47 12281.55
1989/03/31 12137.67 12567.71
1989/04/30 12515.99 13219.97
1989/05/31 12810.23 13755.38
1989/06/30 12768.20 13676.98
1989/07/31 13692.97 14912.01
1989/08/31 14102.81 15204.28
1989/09/30 13724.50 15141.94
1989/10/31 13241.09 14790.65
1989/11/30 13829.59 15092.38
1989/12/31 14886.64 15454.60
1990/01/31 13947.63 14417.59
1990/02/28 14600.36 14603.58
1990/03/31 14875.19 14990.58
1990/04/30 14096.50 14615.81
1990/05/31 15527.91 16040.85
1990/06/30 15333.24 15931.78
1990/07/31 16089.02 15880.79
1990/08/31 15665.32 14445.17
1990/09/30 15172.92 13741.69
1990/10/31 14085.05 13682.60
1990/11/30 14314.08 14566.50
1990/12/31 14100.32 14972.90
1991/01/31 14565.56 15625.72
1991/02/28 16665.10 16742.96
1991/03/31 16271.44 17148.14
1991/04/30 16354.95 17189.30
1991/05/31 17142.27 17931.87
1991/06/30 16152.15 17110.59
1991/07/31 16688.96 17907.95
1991/08/31 17118.41 18332.37
1991/09/30 16450.38 18026.21
1991/10/31 16832.11 18267.77
1991/11/30 15472.18 17531.58
1991/12/31 16140.47 19537.19
1992/01/31 17142.82 19173.80
1992/02/29 17528.34 19423.06
1992/03/31 17091.42 19044.31
1992/04/30 17721.10 19604.21
1992/05/31 18196.58 19700.27
1992/06/30 17605.45 19406.73
1992/07/31 18312.24 20200.47
1992/08/31 18042.37 19786.36
1992/09/30 18222.28 20019.84
1992/10/31 17836.76 20089.91
1992/11/30 18068.07 20774.97
1992/12/31 18292.77 21030.51
1993/01/31 18879.17 21207.16
1993/02/28 19408.36 21495.58
1993/03/31 20695.58 21949.14
1993/04/30 21811.16 21417.97
1993/05/31 22883.84 21991.97
1993/06/30 23198.50 22055.75
1993/07/31 22883.84 21967.52
1993/08/31 24199.66 22800.09
1993/09/30 24070.94 22624.53
1993/10/31 25157.92 23092.86
1993/11/30 24213.97 22873.48
1993/12/31 25232.86 23150.25
1994/01/31 26767.08 23937.36
1994/02/28 25932.94 23288.65
1994/03/31 24339.13 22273.27
1994/04/30 24741.31 22558.37
1994/05/31 25069.01 22928.32
1994/06/30 24622.14 22366.58
1994/07/31 25456.29 23100.20
1994/08/31 26692.61 24047.31
1994/09/30 26558.55 23458.15
1994/10/31 26156.37 23985.96
1994/11/30 24443.40 23112.39
1994/12/31 24657.72 23455.15
1995/01/31 24173.35 24063.34
1995/02/28 24884.78 25001.09
1995/03/31 26277.35 25738.87
1995/04/30 27352.06 26496.88
1995/05/31 27730.48 27555.96
1995/06/30 28517.59 28196.09
1995/07/31 29713.39 29131.07
1995/08/31 30167.49 29204.19
1995/09/30 30424.82 30436.60
1995/10/31 29138.19 30327.94
1995/11/30 30621.59 31659.34
1995/12/31 31728.20 32269.10
1996/01/31 32934.06 33367.54
1996/02/29 33748.41 33676.86
1996/03/31 34782.00 34001.17
1996/04/30 36802.21 34502.34
1996/05/31 37491.27 35392.16
1996/06/30 37256.36 35527.00
1996/07/31 35236.15 33957.42
1996/08/31 36817.87 34673.58
1996/09/30 38399.58 36625.01
1996/10/31 39339.21 37635.13
1996/11/30 41328.09 40479.97
1996/12/31 41410.95 39678.06
1997/01/31 42077.79 42157.15
1997/02/28 39310.39 42487.66
1997/03/31 38276.79 40741.84
1997/04/30 38126.75 43174.13
1997/05/31 41594.33 45802.57
1997/06/30 41460.96 47854.52
1997/07/31 43911.61 51662.31
IMATRL PRASUN SHR__CHT 19970731 19970814 164130 R00000000000119
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Natural Resources - Class T on
December 29, 1987, when the fund started, and the current maximum
3.50% sales charge was paid. As the chart shows, by July 31, 1997,
the value of the investment would have grown to $43,912 - a 339.12%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$51,662 - a 416.62% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
Total SA sponsored ADR 3.5
Getchell Gold Corp. 2.7
EVI, Inc. 2.7
Mobil Corp. 2.2
Fort Howard Corp. 2.1
Tosco Corp. 2.0
Texaco, Inc. 2.0
Transocean Offshore, Inc. 2.0
Euro-Nevada Mining Ltd. 2.0
Boise Cascade Corp. 1.9
TOP INDUSTRIES AS OF JULY 31, 1997
Crude Petroleum & Gas 11.8%
Petroleum Refiners 11.6%
Gold Ores 11.4%
Oil & Gas Exploration 11.3%
Drilling 5.9%
All Others 48.0% *
Row: 1, Col: 1, Value: 48.0
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 11.3
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 11.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in the value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). The initial offering of Class B shares took place
on July 3, 1995. Class B shares bear a 1.00% 12b-1/shareholder
service fee. Returns prior to July 3, 1995 are those of Class T
which bears a .50% 12b-1 fee. Had Class B's 12b-1 fee been
reflected, returns prior to July 3, 1995 would have been lower. If
Fidelity had not reimbursed certain class expenses, the past five
years and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS B 23.94% 136.59% 348.96%
NATURAL RESOURCES - CLASS B 18.94% 134.59% 348.96%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 52.14% 155.75% 416.62%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or
since the fund started on December 29, 1987. You can compare Class
B's returns to the performance of the S&P 500 - a widely
recognized, unmanaged index of common stocks. This benchmark
includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JULY 31, 1997 YEAR YEARS FUND
NATURAL RESOURCES - CLASS B 23.94% 18.80% 16.94%
NATURAL RESOURCES - CLASS B 18.94% 18.59% 16.94%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 52.14% 20.66% 18.66%
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and
show you what would have happened if Class B shares had performed
at a constant rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970819 160010 S00000000000001
FA Natural Resource -CL B S&P 500
00656 SP001
1987/12/29 10000.00 10000.00
1987/12/31 9980.00 10064.43
1988/01/31 9880.00 10488.14
1988/02/29 10630.00 10976.89
1988/03/31 10920.00 10637.70
1988/04/30 11100.00 10755.78
1988/05/31 10920.00 10849.36
1988/06/30 11640.00 11347.34
1988/07/31 11590.00 11304.22
1988/08/31 11280.00 10919.88
1988/09/30 11230.00 11385.07
1988/10/31 11470.00 11701.57
1988/11/30 11210.00 11534.24
1988/12/31 11586.91 11736.09
1989/01/31 12523.44 12595.17
1989/02/28 12338.32 12281.55
1989/03/31 12577.89 12567.71
1989/04/30 12969.93 13219.97
1989/05/31 13274.85 13755.38
1989/06/30 13231.29 13676.98
1989/07/31 14189.61 14912.01
1989/08/31 14614.32 15204.28
1989/09/30 14222.28 15141.94
1989/10/31 13721.34 14790.65
1989/11/30 14331.18 15092.38
1989/12/31 15426.57 15454.60
1990/01/31 14453.51 14417.59
1990/02/28 15129.90 14603.58
1990/03/31 15414.70 14990.58
1990/04/30 14607.77 14615.81
1990/05/31 16091.10 16040.85
1990/06/30 15889.36 15931.78
1990/07/31 16672.56 15880.79
1990/08/31 16233.50 14445.17
1990/09/30 15723.23 13741.69
1990/10/31 14595.91 13682.60
1990/11/30 14833.24 14566.50
1990/12/31 14611.74 14972.90
1991/01/31 15093.85 15625.72
1991/02/28 17269.54 16742.96
1991/03/31 16861.60 17148.14
1991/04/30 16948.13 17189.30
1991/05/31 17764.01 17931.87
1991/06/30 16737.98 17110.59
1991/07/31 17294.26 17907.95
1991/08/31 17739.29 18332.37
1991/09/30 17047.02 18026.21
1991/10/31 17442.60 18267.77
1991/11/30 16033.35 17531.58
1991/12/31 16725.88 19537.19
1992/01/31 17764.58 19173.80
1992/02/29 18164.09 19423.06
1992/03/31 17711.32 19044.31
1992/04/30 18363.84 19604.21
1992/05/31 18856.56 19700.27
1992/06/30 18243.99 19406.73
1992/07/31 18976.41 20200.47
1992/08/31 18696.76 19786.36
1992/09/30 18883.19 20019.84
1992/10/31 18483.69 20089.91
1992/11/30 18723.39 20774.97
1992/12/31 18956.24 21030.51
1993/01/31 19563.91 21207.16
1993/02/28 20112.29 21495.58
1993/03/31 21446.19 21949.14
1993/04/30 22602.24 21417.97
1993/05/31 23713.83 21991.97
1993/06/30 24039.89 22055.75
1993/07/31 23713.83 21967.52
1993/08/31 25077.37 22800.09
1993/09/30 24943.98 22624.53
1993/10/31 26070.39 23092.86
1993/11/30 25092.19 22873.48
1993/12/31 26148.04 23150.25
1994/01/31 27737.91 23937.36
1994/02/28 26873.51 23288.65
1994/03/31 25221.90 22273.27
1994/04/30 25638.66 22558.37
1994/05/31 25978.24 22928.32
1994/06/30 25515.17 22366.58
1994/07/31 26379.57 23100.20
1994/08/31 27660.73 24047.31
1994/09/30 27521.81 23458.15
1994/10/31 27105.05 23985.96
1994/11/30 25329.95 23112.39
1994/12/31 25552.05 23455.15
1995/01/31 25050.10 24063.34
1995/02/28 25787.33 25001.09
1995/03/31 27230.42 25738.87
1995/04/30 28344.11 26496.88
1995/05/31 28736.25 27555.96
1995/06/30 29551.91 28196.09
1995/07/31 30775.39 29131.07
1995/08/31 31245.96 29204.19
1995/09/30 31481.25 30436.60
1995/10/31 30163.65 30327.94
1995/11/30 31669.48 31659.34
1995/12/31 32767.57 32269.10
1996/01/31 34017.25 33367.54
1996/02/29 34828.73 33676.86
1996/03/31 35867.42 34001.17
1996/04/30 37912.35 34502.34
1996/05/31 38593.99 35392.16
1996/06/30 38318.09 35527.00
1996/07/31 36224.47 33957.42
1996/08/31 37814.97 34673.58
1996/09/30 39421.70 36625.01
1996/10/31 40379.25 37635.13
1996/11/30 42407.95 40479.97
1996/12/31 42477.53 39678.06
1997/01/31 43133.96 42157.15
1997/02/28 40283.70 42487.66
1997/03/31 39212.69 40741.84
1997/04/30 39022.67 43174.13
1997/05/31 42563.90 45802.57
1997/06/30 42408.44 47854.52
1997/07/31 44895.94 51662.31
IMATRL PRASUN SHR__CHT 19970731 19970819 160012 R00000000000119
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Natural Resources - Class B on
December 29, 1987, when the fund started. As the chart shows, by
July 31, 1997, the value of the investment, including the effect of
the contingent deferred sales charge, would have grown to $44,896 -
a 348.96% increase on the initial investment. For comparison, look
at how the S&P 500 did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment
would have grown to $51,662 - a 416.62% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
Total SA sponsored ADR 3.5
Getchell Gold Corp. 2.7
EVI, Inc. 2.7
Mobil Corp. 2.2
Fort Howard Corp. 2.1
Tosco Corp. 2.0
Texaco, Inc. 2.0
Transocean Offshore, Inc. 2.0
Euro-Nevada Mining Ltd. 2.0
Boise Cascade Corp. 1.9
TOP INDUSTRIES AS OF JULY 31, 1997
Crude Petroleum & Gas 11.8%
Petroleum Refiners 11.6%
Gold Ores 11.4%
Oil & Gas Exploration 11.3%
Drilling 5.9%
All Others 48.0% *
Row: 1, Col: 1, Value: 48.0
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 11.3
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 11.8
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Larry Rakers, Portfolio Manager of Fidelity Advisor Natural
Resources Fund
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12 months that ended July 31, 1997, the fund's Class A,
Class T and Class B shares returned 24.38%, 24.62% and 23.94%,
respectively. During the same period, the Standard & Poor's 500
Index returned 52.14%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING
THE PERIOD?
A. The fund did fairly well from July 1996 to January 1997 because
oil and gas prices increased and the fund was overweighted in
energy stocks. In January, oil peaked at about $26 a barrel and
natural gas at about $4 per thousand cubic feet. Shortly
afterwards, oil and gas prices plummeted. Since many of the fund's
energy holdings were very sensitive to the commodity prices, the
fund underperformed the index during the period.
Q. WHAT CHANGES DID YOU MAKE TO REDUCE THE FUND'S SENSITIVITY TO
COMMODITY PRICES?
A. I switched our energy holdings to companies that tend to perform
better in flat-to-declining oil price environments because their
operations are more diversified. For example, I invested in
integrated oil companies, which look for oil, process it in their
refineries, and make chemicals out of it or make gasoline and sell
it to consumers at gasoline stations. When oil prices go down,
these companies still make money by selling gasoline to consumers
and from their chemical operations.
Q. THE FUND'S WEIGHTING IN BOTH PAPER AND FOREST PRODUCTS AND
METALS AND MINING INCREASED OVER THE PAST FEW MONTHS. WHY WAS THAT?
A. I saw a good opportunity to buy paper stocks in February and
March, when the paper and forest product market bottomed. Fort
Howard and James River were particularly good performers. In
addition, the fund boosted its position in metals and mining by
investing in base metals, particularly some aluminum and zinc
stocks. These investments worked out really well.
Q. IN APRIL, YOU TALKED ABOUT ENERGY-SERVICE COMPANIES SUCH AS
SCHLUMBERGER AND HALLIBURTON BENEFITING FROM STRONG EXPLORATION
ACTIVITIES. SINCE THEN, THE FUND HAS REDUCED ITS HOLDINGS IN THESE
STOCKS. WHY? HAS THE ENVIRONMENT CHANGED?
A. Over the past five years, technology has made it possible to
explore deep-water oil and gas prospects in a cost-effective way.
This trend has gained even more steam lately, considering that most
of the shallow-water opportunities have been exhausted.
Schlumberger and Halliburton have both benefited from the
exploration activity in deep waters. In fact, these two companies
have been so successful and their share prices appreciated so much
by the end of the period that I became concerned about valuations
and reduced the fund's investments in these stocks.
Q. WERE THERE ANY BIG DISAPPOINTMENTS DURING THE PERIOD?
A. The biggest disappointment has been the price of gold. The
absolute supply and demand for gold shows that we consume more gold
than we mine. However, gauging the direction of the gold price is
nearly impossible because central banks hold so much gold, which
they can sell at any time and swing the market. We've had some big
sales of gold by central banks recently, which has led to the
decline in its price. When the dollar is strong and there is
virtually no inflation- like the environment we've seen in the last
six months- there's very little incentive for a central bank to own
gold. On the other hand, when the dollar's weak and there's a lot
of inflation, central banks want to own gold. Many market watchers
see the strength of the dollar and low inflation continuing, and
the gold price reflects that outlook. If the environment changes,
there could be a good opportunity in gold.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES MARKET?
A. In a slow-growth, no-inflation economy, the natural resource
sector tends to underperform. In general, the sector performs well
when the economy is strong enough to boost demand for the products.
Each commodity has its own supply/demand outlook, so I'm constantly
searching for an area within natural resources where supply/demand
is starting to look favorable. For example, in late fall and early
winter, gas prices often benefit from seasonal trends, as demand
strengthens due to the winter heating season. However, I expect
several large companies engaged in oil and gas exploration to
increase their production volume in the near future. While this
should benefit these companies on a short-term basis, the industry
as a whole could suffer because increased production means greater
supply and weaker prices. Overall, I am emphasizing stocks that are
less sensitive to energy prices. As far as specific industries are
concerned, I remain positive on deep-water drilling and service
companies. Also, I think the business prospects of paper and forest
products companies continue to improve.
FUND FACTS
START DATE: December 29, 1987
SIZE: as of July 31, 1997, more than
$693 million
MANAGER: Lawrence Rakers, since January
1997; joined Fidelity in 1993
(checkmark)
ADVISOR NATURAL RESOURCES FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.3%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.7%
AUTO & TRUCK PARTS - 0.7%
Eaton Corp. 50,000 $ 4,515,625
CHEMICALS & PLASTICS - 4.2%
AGRICULTURAL CHEMICALS - 0.7%
Agrium, Inc. 210,000 2,391,990
IMC Global, Inc. 67,000 2,114,688
4,506,678
CHEMICALS - 2.9%
du Pont (E.I.) de Nemours & Co. 100,000 6,693,750
Monsanto Co. 210,000 10,460,625
Sasol Ltd. 255,000 3,054,472
20,208,847
UNSUPPORTED PLASTICS FILM & SHEET - 0.6%
W.R. Grace & Co. 65,500 4,028,250
TOTAL CHEMICALS & PLASTICS 28,743,775
ELECTRICAL EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.6%
Anixter International, Inc. 223,000 3,930,375
ELECTRONIC INSTRUMENTS - 0.1%
LAB ANALYTICAL INSTRUMENTS - 0.0%
Thermoquest Corp. (a) 20,000 340,000
MEASURING INSTRUMENTS - 0.1%
Thermo Electron Corp. 15,000 512,813
TOTAL ELECTRONIC INSTRUMENTS 852,813
ENERGY SERVICES - 10.3%
DRILLING - 5.9%
Atwood Oceanics, Inc. (a) 13,800 1,173,000
Diamond Offshore Drilling, Inc. 99,700 9,297,025
Maverick Tube Corp. (a) 90,000 4,331,250
Noble Drilling Corp. (a) 439,900 12,344,694
Transocean Offshore, Inc. 168,805 13,789,258
40,935,227
OIL & GAS SERVICES - 4.4%
Dresser Industries, Inc. 107,800 4,500,650
Halliburton Co. 207,940 9,565,240
McDermott International, Inc. 10,000 305,625
Schlumberger Ltd. 83,200 6,354,400
Weatherford Enterra, Inc. (a) 165,000 7,177,500
Western Atlas, Inc. (a) 27,500 2,187,969
30,091,384
TOTAL ENERGY SERVICES 71,026,611
HOLDING COMPANIES - 1.7%
Norfolk Southern Corp. 105,000 11,628,750
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
SPECIAL INDUSTRIAL MACHINERY - 0.1%
Gasonics International Corp. (a) 40,000 745,000
IRON & STEEL - 0.8%
FABRICATED METAL PRODUCTS - 0.1%
Prudential Steel Ltd. 15,000 574,056
IRON & STEEL BLAST FURNITURE MILLS - 0.4%
Nucor Corp. 47,000 2,916,938
IRON & STEEL FOUNDRIES - 0.3%
Dofasco Inc. 103,300 2,192,132
TOTAL IRON & STEEL 5,683,126
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING - 0.1%
Mitcham Industries, Inc. (a) 48,800 $ 713,700
LODGING & GAMING - 0.2%
HOTELS, MOTELS, & TOURIST CENTERS - 0.2%
HFS, Inc. (a) 20,000 1,165,000
METALS & MINING - 6.4%
ALUMINUM, EXTRUDED PRODUCTS - 1.5%
Alumax, Inc. (a) 243,500 10,318,313
KAOLIN & BALL CLAY - 0.1%
English China Clay PLC 145,000 517,325
LEAD & ZINC ORES - 0.6%
Asturiana del Zinc SA (a) 180,000 3,842,241
METAL MINING - 0.5%
Arizona Star Resource Corp. (a) 135,000 719,882
JCI Ltd. 187,983 1,253,220
Pasminco Ltd. 267,100 515,598
Phelps Dodge Corp. 15,000 1,275,938
3,764,638
METAL MINING SERVICES - 0.1%
Mine Finders Corp. Ltd. (a) 200,000 428,048
METAL ORES - 1.4%
Comalco Ltd. 193,900 1,032,941
Falconbridge Ltd. 54,200 1,163,942
Pechiney SA Class A 176,000 7,635,322
9,832,205
METALS & MINERALS - WHOLESALE - 0.2%
Elkem ASA 60,000 1,191,116
MISCELLANEOUS NONMETAL MINERALS - 0.0%
Camphor Ventures, Inc. (a) 362,700 263,141
MISCELLANEOUS METAL ORES - 0.0%
Helix Resources NL (a) 650,500 365,028
PRIME NONFERROUS SMELTING - 2.0%
Alcan Aluminium Ltd. 160,000 6,268,364
Aluminum Co. of America 73,900 6,540,150
Metaleurop SA (a) 56,000 842,031
Metaleurop SA warrants 2/4/00 (a) 16,000 44,141
13,694,686
TOTAL METALS & MINING 44,216,741
OIL & GAS - 38.3%
CRUDE PETROLEUM & GAS - 11.8%
Anadarko Petroleum Corp. 88,000 6,149,000
Beau Canada Exploration Ltd. (a) 400,000 957,667
British Borneo Petroleum 47,900 975,481
British Borneo Petroleum Syndicate PLC
Rights 8/6/97 (a) 10,644 6,111
Burlington Resources, Inc. 40,200 1,899,450
Elf Aquitaine SA sponsored ADR 227,500 13,024,375
Monterey Resources, Inc. 82,877 1,263,874
Newfield Exploration Co. (a) 74,800 1,795,200
Occidental Petroleum Corp. 201,400 5,047,588
Ocean Energy, Inc. (a) 83,500 3,799,250
Petrobras PN (Pfd. Reg.) 8,000,000 2,430,399
Petsec Energy Ltd. sponsored ADR 93,200 2,085,350
Renaissance Energy Ltd. (a) 30,000 743,280
Rio Alto Exploration Ltd. (a) 187,500 1,720,807
Santa Fe Energy Resources, Inc. (a) 187,900 1,620,638
Total SA sponsored ADR 482,000 24,310,875
Tullow Oil PLC (a) 340,200 538,515
Union Pacific Resources Group, Inc. 173,520 4,283,775
United Meridian Corp. (a) 139,200 4,445,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
CRUDE PETROLEUM & GAS - CONTINUED
Vintage Petroleum, Inc. 74,400 $ 2,673,750
YPF Sociedad Anonima Class D 35,000 1,127,203
80,898,288
OIL & GAS EXPLORATION - 11.3%
Abacan Resource Corp. (a) 794,300 3,028,269
Amerada Hess Corp. 90,000 5,293,125
Exxon Corp. 137,000 8,802,250
Kerr-McGee Corp. 80,000 5,010,000
Mobil Corp. 200,000 15,300,000
Petro-Canada 150,000 2,704,320
Phillips Petroleum Co. 232,200 10,695,713
Texaco, Inc. 120,000 13,927,500
USX-Marathon Group 249,300 8,024,344
Unocal Corp. 77,669 3,106,760
Woodside Petroleum Ltd. 249,500 2,124,558
78,016,839
OIL FIELD EQUIPMENT - 3.6%
Cooper Cameron Corp. (a) 100,600 5,897,675
EVI, Inc. (a) 380,000 18,572,500
24,470,175
PETROLEUM REFINERS - 11.6%
British Petroleum PLC ADR 143,746 11,850,061
Coastal Corp. (The) 231,000 12,560,625
Eni Spa 600,000 3,533,070
Murphy Oil Corp. 79,900 4,159,794
Pennzoil Co. 125,000 9,765,625
Royal Dutch Petroleum Co. 216,000 12,082,500
Shell Transport & Trading Co. PLC ADR 84,300 3,761,888
Tosco Corp. 448,900 14,056,181
Valero Energy Corp. 186,800 8,032,400
79,802,144
TOTAL OIL & GAS 263,187,446
PACKAGING & CONTAINERS - 0.7%
GLASS CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 142,800 4,926,600
PAPER & FOREST PRODUCTS - 12.1%
CONVERTED PAPER & PAPERBOARD - 2.2%
American Pad & Paper Co. (a) 83,100 1,952,850
Boise Cascade Corp. 360,000 13,342,500
15,295,350
ENVELOPES - 1.2%
Mail-Well, Inc. (a) 243,150 7,932,769
PAPER - 4.0%
Buckeye Cellulose Corp. (a) 100,000 3,600,000
Chesapeake Corp. 198,200 6,689,250
Domtar, Inc. 75,000 674,720
James River Corp. of Virginia 135,000 5,560,313
Mercer International, Inc. (SBI) 313,100 3,052,725
Stone Container Corp. 105,000 1,745,625
Willamette Industries, Inc. 78,400 5,973,100
27,295,733
PAPER MILLS - 3.8%
Alliance Forest Products, Inc. (a) 128,500 3,318,896
Alliance Forest Products, Inc. (a)(c) 200,000 5,165,597
Bowater, Inc. 50,000 2,618,750
Fort Howard Corp. (a) 262,400 14,628,800
25,732,043
SHARES VALUE (NOTE 1)
PAPERBOARD MILLS - 0.9%
Fibermark, Inc. (a) 60,100 $ 1,333,469
Jefferson Smurfit Corp. (a) 123,700 2,319,375
Mead Corp. 25,000 1,800,000
St Laurent Paperboard, Inc. (a)(c) 57,000 1,004,897
6,457,741
TOTAL PAPER & FOREST PRODUCTS 82,713,636
PRECIOUS METALS - 15.5%
GOLD & SILVER ORES - 3.5%
Getchell Gold Corp. (a) 557,000 18,589,875
Industrias Penoles SA 1,000,000 4,472,843
Mentor Exploration & Development
Co. Ltd. (a) 125,000 1,042,914
24,105,632
GOLD ORES - 11.4%
Agnico Eagle Mines Ltd. 95,000 802,953
Bakyrchik Gold PLC (a) 169,000 133,065
Barrick Gold Corp. 330,000 7,541,626
Bema Gold Corp. (a) 142,100 871,147
Breakwater Resources Ltd. (a) 799,600 4,031,792
Buffelsfontein Gold Mines Ltd. (a) 380,000 790,894
Canyon Resources Corp. (a) 250,000 562,500
Euro-Nevada Mining Ltd. 435,400 13,646,229
Evander Gold Mines Ltd. 124,700 432,564
First Dynasty Mines Ltd. (a) 566,600 386,407
Franco-Nevada Mining Corp. 100,000 4,708,528
Francisco Gold Corp. (a) 81,000 1,163,565
Francisco Gold Corp. special
warrants 8/12/97 (a)(c) 62,500 815,132
Greenstone Resources Ltd. (a) 906,700 8,551,602
Greenstone Resources Ltd.
warrants 2/28/02 (a) 50,700 147,132
Indochina Goldfields Ltd. (a) 188,300 833,337
Indochina Goldfields Ltd. (a)(c) 170,000 752,349
Kalahari Goldridge Mng. Co. Ltd. (a) 1,200,000 468,293
Kinross Gold Corp. (a) 269,100 1,249,494
Meridian Gold, Inc. 1,190,000 5,093,772
Newmont Mining Corp. 299,900 12,370,875
Placer Dome, Inc. 250,000 4,235,136
Queenston Mining, Inc. (a) 385,400 377,473
Randgold & Exploration Co. Ltd. (a) 900,900 3,125,073
Stillwater Mining Co. (a) 120,000 2,490,000
Sudbury Contact Mines Ltd. (a) 130,000 589,473
TVI Pacific, Inc. (a) 459,200 106,609
TVI Pacific, Inc. (a)(c) 1,860,000 431,821
TVX Gold, Inc. (a) 50,000 230,348
West Rand Consolidated Mines
Ltd. (Reg.) (a) 250,000 406,504
Western Areas Gold Mining Ltd. Ord. 115,936 764,109
78,109,802
SILVER ORES - 0.6%
Compania de Minas Buenaventura SA
Class B sponsored ADR 182,400 3,306,000
Pan American Silver Corp. (a) 135,000 901,077
4,207,077
TOTAL PRECIOUS METALS 106,422,511
RAILROADS - 3.3%
Burlington Northern Santa Fe Corp. 75,000 7,242,188
CSX Corp. 124,900 7,712,575
Wisconsin Central Transportation
Corp. (a) 250,000 7,828,125
22,782,888
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TOBACCO - 0.3%
CIGARETTES - 0.3%
Schweitzer-Mauduit International, Inc. 50,000 $ 1,953,125
TRUCKING & FREIGHT - 0.9%
AIR COURIER SERVICES - 0.9%
Airborne Freight Corp. 88,300 4,332,213
CNF Transportation, Inc. 50,000 1,743,750
6,075,963
TOTAL COMMON STOCKS
(Cost $580,700,217) 661,283,685
CASH EQUIVALENTS - 3.7%
Taxable Central Cash Fund (b)
(Cost $25,569,704) 25,569,704 25,569,704
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $606,269,921) $ 686,853,389
LEGEND
1.Non-income producing
2.At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.66%. The yield refers to the income earned by investing
in the fund over the seven-day period, expressed as an annual
percentage.
3.Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these
securities amounted to $8,169,796 or 1.2% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 69.2%
Canada 13.5
France 6.7
Netherlands 2.7
United Kingdom 2.5
South Africa 1.5
Others (individually less than 1%) 3.9
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $607,500,224. Net unrealized appreciation
aggregated $79,353,165, of which $114,564,746 related to
appreciated investment securities and $35,211,581 related to
depreciated investment securities.
The fund hereby designates approximately $14,337,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 17%, 20%, 20% and 19% of Class A's, Class T's, Class B's
and Institutional Class' dividend distributions during the fiscal
year qualifies for the dividend-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
Investment in securities, at value $ 686,853,389
(cost $606,269,921) - See accompanying schedule
Cash 20,330
Receivable for investments sold 18,150,416
Receivable for fund shares sold 797,076
Dividends receivable 865,941
Interest receivable 166,894
Other receivables 40,535
Prepaid expenses 1,677
TOTAL ASSETS 706,896,258
LIABILITIES
Payable for investments purchased $ 8,747,912
Payable for fund shares redeemed 3,725,190
Accrued management fee 340,285
Distribution fees payable 303,323
Other payables and accrued expenses 237,428
TOTAL LIABILITIES 13,354,138
NET ASSETS $ 693,542,120
Net Assets consist of:
Paid in capital $ 530,277,285
Distributions in excess of net investment income (1,677
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions
82,687,402
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies
80,579,110
NET ASSETS $ 693,542,120
</TABLE>
CALCULATION OF MAXIMUM $26.16
OFFERING PRICE
CLASS A:
NET ASSET VALUE and redemption
price per share ($6,372,188 (divided by)
243,616 shares)
Maximum offering price per share $27.61
(100/94.75 of $26.16)
CLASS T: $26.34
NET ASSET VALUE and redemption
price per share ($618,083,380 (divided by)
23,464,532 shares)
Maximum offering price per share $27.30
(100/96.50 of $26.34)
CLASS B: $25.99
NET ASSET VALUE and offering price
per share ($59,044,451 (divided by)
2,271,997 shares) A
INSTITUTIONAL CLASS: $26.42
NET ASSET VALUE, offering price
and redemption price per share
($10,042,101 (divided by) 380,086 shares)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
NINE MONTHS ENDED JULY 31, 1997
INVESTMENT INCOME $ 5,542,351
Dividends
Interest 1,315,949
TOTAL INCOME 6,858,300
EXPENSES
Management fee $ 3,146,193
Transfer agent fees 1,198,074
Distribution fees 2,756,417
Accounting fees and expenses 346,819
Non-interested trustees' compensation 2,080
Custodian fees and expenses 63,597
Reports to shareholders 72,652
Registration fees 163,019
Audit33,666
Legal36,838
Miscellaneous 1,769
Total expenses before reductions 7,821,124
Expense reductions (150,239 7,670,885
)
NET INVESTMENT INCOME (LOSS) (812,585
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 83,726,354
Foreign currency transactions (4,906 83,721,448
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (11,240,968
)
Assets and liabilities in (4,455 (11,245,423
foreign currencies ) )
NET GAIN (LOSS) 72,476,025
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 71,663,440
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31, 1996
1997
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (812,585) $ (90,614)
Net investment income (loss)
Net realized gain (loss) 83,721,448 49,754,317
Change in net unrealized appreciation (depreciation) (11,245,423)
74,826,728
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 71,663,440
124,490,431
Distributions to shareholders (376,703) -
From net investment income
In excess of net investment income (156,340) -
From net realized gain (41,625,679) (10,221,079)
TOTAL DISTRIBUTIONS (42,158,722) (10,221,079)
Share transactions - net increase (decrease)13,485,202 260,016,652
Redemption fees 60,962 -
TOTAL INCREASE (DECREASE) IN NET ASSETS 43,050,882 374,286,004
NET ASSETS
Beginning of period 650,491,238 276,205,234
End of period (including under (over) distribution of net investment income of $(1,677) and $376,703, $ 693,542,120 $
650,491,238
respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA D 1997 1996 G
<TABLE>
<CAPTION>
<S> <C> <C>
Net asset value, beginning of period$ 25.11 $ 23.65
Income from Investment Operations
Net investment income (loss) (.05) .00
Net realized and unrealized gain (loss) 2.81 1.46
Total from investment operations 2.76 1.46
Less Distributions (.10) -
From net investment income
In excess of net investment income (.04) -
From net realized gain (1.57) -
Total distributions (1.71) -
Redemption fees added to paid in capital - -
Net asset value, end of period $ 26.16 $ 25.11
TOTAL RETURNB, C 11.45% 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,372 $ 1,609
Ratio of expenses to average net assets 1.71% A, 1.66% A
E , E
Ratio of expenses to average net assets after expense reductions 1.68% A, 1.58% A
F , F
Ratio of net investment income (loss) to average net assets (.28)% A (.01)%
A
Portfolio turnover 116% A 137% A
Average commission rate H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF
THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). F FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL
STATEMENTS). G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO OCTOBER 31, 1996. H FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
NINE MONTHS YEARS ENDED OCTOBER 31,
ENDED
JULY 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA 1997 1996 1995 1994 I 1993 1992
Net asset value, beginning of period $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88 $ 14.11
Income from Investment Operations
Net investment income (loss) (.02) D .00 D (.05) D (.11) D .22 (.10)
Net realized and unrealized gain (loss)2.83 6.56 2.00 .76 4.91 .79
Total from investment operations 2.81 6.56 1.95 .65 5.13 .69
Less Distributions (.01) - - - - -
From net investment income
In excess of net investment income (.01) - - - - -
From net realized gain (1.57) (.69) (.26) (.68) (1.42) (.92)
Total distributions (1.59) (.69) (.26) (.68) (1.42) (.92)
Redemption fees added to paid in capital- - - - - -
Net asset value, end of period $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
TOTAL RETURN B, C 11.62% 35.01% 11.40% 3.97% 41.05% 5.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)$ 618,083 $ 602,915 $ 272,979 $ 199,361 $ 40,309 $ 7,087
Ratio of expenses to average net assets 1.47% A 1.59% 1.86% 2.10% 2.63% 3.27%
F E
Ratio of expenses to average net assets after expense 1.44% A, 1.56%
1.84% 2.07% 2.62% 3.27%
reductions G G G G G
Ratio of net investment income (loss) to average net (.12)% .00%
(.30) (.67) (1.18) (1.22)
assets A % % % %
Portfolio turnover 116% A 137% 161% 125% 208% 248%
Average commission rate H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E LIMITED IN ACCORDANCE WITH A STATE
EXPENSE LIMITATION. F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER. G FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5
OF NOTES TO FINANCIAL
STATEMENTS). H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT
OF POSITION 93-2, "DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET
INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NINE MONTHS YEARS ENDED
ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA D 1997 1996 1995 G
Net asset value, beginning of period $ 24.88 $ 19.23
$ 18.87
Income from Investment Operations
Net investment income (loss) (.12) (.15) (.03)
Net realized and unrealized gain (loss) 2.80 6.49
.39
Total from investment operations 2.68 6.34 .36
Less Distributions (1.57) (.69) -
From net realized gain
Redemption fees added to paid in capital - -
-
Net asset value, end of period $ 25.99 $ 24.88 $ 19.23
TOTAL RETURN B, C 11.19% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 59,044 $ 36,106
$ 2,508
Ratio of expenses to average net assets 2.04% A 2.28%
2.23% A,
E
Ratio of expenses to average net assets after expense reductions 2.02% A, 2.24% F
2.21% A,
F F
Ratio of net investment income (loss) to average net assets (.67)% (.68)%
(.67)%
A A
Portfolio turnover 116% A 137% 161% A
Average commission rate H $ .0286 $ .0337
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE
A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G
FOR THE PERIOD JULY 3, 1995
(COMMENCEMENT OF SALE OF CLASS B SHARES) TO OCTOBER 31, 1995. H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
NINE MONTHS YEARS ENDED
ENDED OCTOBER 31,
JULY 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D 1997 1996 1995 G
Net asset value, beginning of period $ 25.17 $ 19.27 $ 18.87
Income from Investment Operations
Net investment income (loss) .04 .04 (.01)
Net realized and unrealized gain (loss) 2.85 6.55 .41
Total from investment operations 2.89 6.59 .40
Less Distributions (.05) - -
From net investment income
In excess of net investment income (.02) - -
From net realized gain (1.57) (.69) -
Total distributions (1.64) (.69) -
Redemption fees added to paid in capital - - -
Net asset value, end of period $ 26.42 $ 25.17 $ 19.27
TOTAL RETURN B, C 11.95% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 10,042 $ 9,860 $ 718
Ratio of expenses to average net assets 1.08% A 1.44% 1.68% A,
E
Ratio of expenses to average net assets after expense reductions 1.06% A, 1.39%
F 1.66% A,
F F
Ratio of net investment income (loss) to average net assets .24% A .17%
(.13)%
A
Portfolio turnover 116% A 137% 161% A
Average commission rate H $ .0286 $ .0337
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). D NET INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT
THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31,
1995. H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. On December 19, 1996, the Board of
Trustees approved a change in the fiscal year-end of the fund to
July 31. Accordingly, the financial statements of the fund are
presented for the nine-month period ended July 31, 1997.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, 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
its distribution plan. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and
certain fund-level expense reductions 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 of shares differs
in its respective distribution, transfer agent, registration, and
certain other class-specific fees, expenses, and expense
reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new
class commences on or about November 3, 1997. Class C shares are
subject to an annual distribution and service fee of 1.00% (of
which .75% represents a distribution fee and .25% represents a
shareholder service fee) of the class' average net assets, and a
1.00% contingent deferred sales charge levied on Class C share
redemptions made within one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their
fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or
less for which quotations are not readily available are valued at
amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund
are maintained in U.S. dollars. Investment securities and other
assets and liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at
period end. Income receipts and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective
dates of the transactions. Purchases and sales of securities are
translated into U.S. dollars at the contractual currency exchange
rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject
to income taxes to the extent that it distributes substantially all
of its taxable income for its fiscal year. The schedule of
investments includes information regarding income taxes under the
caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund
is informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of
the securities received. Interest income is accrued as earned.
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 between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR)
bears all organizational expenses except for registering and
qualifying Class A and shares of Class A distributions under
federal and state laws. These expenses are borne by Class A and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences, which may result
in distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, passive foreign
investment companies (PFIC) and losses deferred due to wash sales.
The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends
paid deduction for income purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares purchased on or after March 1, 1997 and
held in the fund less than 60 days are subject to a redemption fee
equal to 1.00% of the proceeds of the redeemed shares. The fee,
which is retained by the fund, is accounted for as an addition to
paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as
of trade date. Gains and losses on securities sold are determined
on the basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign
currency contracts to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in
the value of the foreign currency or if the counterparties do not
perform under the contracts' terms. The U.S. dollar value of
foreign currency contracts is determined using contractual currency
exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances
are invested in one or more repurchase agreements for U.S. Treasury
or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal
Agency securities are transferred to an account of the fund, or to
the Joint Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to
the principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund
is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current
income by investing in U.S. Treasury securities and repurchase
agreements for these securities. Income distributions from the Cash
Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest
income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to 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. At the end of the period, the fund had no
investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term
securities, aggregated $572,087,967 and $609,163,786, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500%
to .5200% for the period. The annual individual fund fee rate is
.30%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management
fee. For the period, the management fee was equivalent to an
annualized rate of .60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans
with respect to each class of shares (collectively referred to as
"the Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a
portion of which was paid to securities dealers, banks and other
financial institutions for the distribution of each class'
applicable shares, and providing shareholder support services:
PAID TO DEALERS'
FDIC PORTION
CLASS A $ 8,324 $ 8,324
CLASS T 2,378,291 2,378,291
CLASS B 369,802 92,450
$ 2,756,417 $ 2,479,065
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties
that assist in the sale of each class' shares or render shareholder
support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25%
for selling Class A shares and 3.50% for selling Class T shares of
the fund, respectively, and the proceeds of a contingent deferred
sales charge levied on Class B share redemptions occurring within
six years of purchase (five years prior to January 2, 1997). The
Class B charge is based on declining rates which range from 5% to
1% (4% to 1% prior to January 2, 1997) of the lesser of the cost of
shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital
gains. Effective August 1, 1997, Class A's maximum sales charge was
increased to 5.75%.
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 136,219 $ 110,074
CLASS T 916,737 667,561
CLASS B 110,966 0 *
$ 1,163,922 $ 777,635
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract
with respect to its shares. The Transfer Agents receive 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
all shareholder reports. For the period, the following amounts were
paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 10,285 .31% *
CLASS T *** FIIOC ** 1,075,587 .23% *
CLASS B FIIOC ** 98,562 .27% *
INSTITUTIONAL CLASS FIIOC ** 13,640 .17% *
$ 1,198,074
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY
WAS THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS
ALLOCABLE SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of
FMR, maintains the fund's accounting records. The fee is based on
the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $216,812 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of
average net assets for each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A 1.75% $ 10,423
FMR has also directed certain portfolio trades to brokers who paid
a portion of the fund's expenses. For the period, the fund's
expenses were reduced by $133,362 under this arrangement.
In addition, FMR voluntarily agreed to reimburse certain transfer
agent, distribution and registration expenses for Class A. For the
period the reimbursement reduced these expenses by $1,398.
In addition, the fund has entered into arrangements with its
custodian and each class' transfer agent whereby credits realized
as a result of uninvested cash balances were used to reduce a
portion of expenses. During the period, the fund's custodian fees
were reduced by $4,909 under the custodian arrangement, and each
applicable class' expenses were reduced as follows under the
transfer agent arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
CLASS T $ 147
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
NINE MONTHS YEAR ENDED
ENDED OCTOBER 31,
JULY 31, 1997 A
1997
CLASS A
From net investment income $ 13,382 $ -
From net realized gain 150,076 -
Total $ 163,458 $ -
CLASS T
From net investment income $ 488,121 $ -
From net realized gain 38,300,093 10,063,536
Total $ 38,788,214 $ 10,063,536
CLASS B
From net realized gain $ 2,464,412 $ 127,176
INSTITUTIONAL CLASS
From net investment income $ 31,540 $ -
From net realized gain 711,098 30,367
Total $ 742,638 $ 30,367
$ 42,158,722 $ 10,221,079
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
NINE MONTHS YEAR ENDED NINE MONTHS YEAR ENDED
ENDED OCTOBER 31, ENDED OCTOBER 31,
JULY 31, JULY 31,
1997 1996 A 1997 1996 A
CLASS A 209,436 68,176 $ 5,153,545 $ 1,669,719
Shares sold
Reinvestment of distributions 6,590 - 161,464 -
Shares redeemed (36,492) (4,094) (892,062) (102,601)
Net increase (decrease) 179,534 64,082 $ 4,422,947 $ 1,567,118
CLASS T 7,500,800 16,012,851 $ 184,421,132 $ 364,247,050
Shares sold
Reinvestment of distributions 1,447,428 462,106 35,664,618 9,214,395
Shares redeemed (9,481,432) (6,657,398) (231,213,235) (152,716,059)
Net increase (decrease) (533,204) 9,817,559 $ (11,127,485) $ 220,745,386
CLASS B 1,183,380 1,475,147 $ 28,872,353 $ 33,567,815
Shares sold
Reinvestment of distributions 96,152 5,653 2,345,122 112,491
Shares redeemed (458,573) (160,185) (10,907,231) (3,677,194)
Net increase (decrease) 820,959 1,320,615 $ 20,310,244 $ 30,003,112
INSTITUTIONAL CLASS 342,819 759,537 $ 8,550,867 $ 17,292,506
Shares sold
Reinvestment of distributions 29,515 1,464 727,819 29,239
Shares redeemed (384,020) (406,499) (9,399,190) (9,620,709)
Net increase (decrease) (11,686) 354,502 $ (120,504) $ 7,701,036
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register
its shares for sale:
REGISTRATION
FEES
CLASS A $ 26,152
CLASS T 100,940
CLASS B 20,105
INSTITUTIONAL CLASS 15,822
$ 163,019
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders
of Fidelity Advisor Natural Resources Fund:
We have audited the accompanying statements of assets and
liabilities of Fidelity Advisor Series V: Fidelity Advisor Natural
Resources Fund, including the schedule of portfolio investments, as
of July 31, 1997, and the related statement of operations for the
period then ended, the statements of changes in net assets for each
of the periods indicated therein and the financial highlights of
Class A, Class B, Class T and Institutional Class for each of the
periods indicated therein. 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 generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of July 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Advisor Series V: Fidelity Advisor
Natural Resources Fund as of July 31, 1997, the results of its
operations for the period then ended, the changes in its net assets
for each of the periods indicated therein and the financial
highlights of Class A, Class B, Class T and Institutional Class for
each of the periods indicated therein, in conformity with generally
accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 12, 1997
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on June 18,
1997. The results of votes taken among shareholders on proposals
before them are listed below.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 17,838,235.074 90.902
Against 467,374.520 2.382
Abstain 1,317,959.317 6.716
TOTAL 19,623,568.911 100.000
PROPOSAL 2
To amend the fund's fundamental investment limitation concerning
the concentration of its investments in a single industry.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 12,718,493.325 83.072
Against 925,615.216 6.046
Abstain 1,666,027.370 10.882
TOTAL 15,310,135.911 100.000
Broker Non-Votes 4,313,433.000
PROPOSAL 3
To eliminate the fund's fundamental investment limitation
concerning diversification and to change the fund's classification
to a non-diversified fund.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 12,552,771.151 81.990
Against 1,001,672.363 6.542
Abstain 1,755,692.397 11.468
TOTAL 15,310,135.911 100.000
Broker Non-Votes 4,313,433.000
PROPOSAL 4
To approve an agreement and plan of reorganization of the fund from
a separate series of one Massachusetts business trust to another.
# OF % OF
SHARES VOTED SHARES VOTED
Affirmative 13,061,796.597 85.315
Against 512,230.825 3.345
Abstain 1,736,108.489 11.340
TOTAL 15,310,135.911 100.000
Broker Non-Votes 4,313,433.000
ADVISOR TECHNOLOGY FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value). Effective August 1, 1997, the maximum 5.25% sales
charge on Class A shares was increased to 5.75%. If Fidelity had
not reimbursed certain class expenses, the total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
TECHNOLOGY - CLASS A 60.62%
TECHNOLOGY - CLASS A 51.38%
(INCL. 5.75% SALES CHARGE) 1
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index
of common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and
show you what would have happened if Class A shares had performed
at a constant rate each year. Average annual total returns will
appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 52.18%.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 113124 S00000000000001
FA Technology -CL A S&P 500
00187 SP001
1996/09/03 9425.00 10000.00
1996/09/30 10480.60 10561.42
1996/10/31 10584.28 10852.70
1996/11/30 12007.45 11673.05
1996/12/31 11770.98 11441.81
1997/01/31 13089.41 12156.70
1997/02/28 12178.84 12252.00
1997/03/31 11448.49 11748.57
1997/04/30 12121.93 12449.96
1997/05/31 13487.78 13207.91
1997/06/30 13620.57 13799.63
1997/07/31 15138.19 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 113125 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Technology - Class A on September
3, 1996, when the fund started, and the current maximum 5.75% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $15,138 - a 51.38% increase on
the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898
- - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
Applied Materials, Inc. 10.1
Compaq Computer Corp. 7.0
Teradyne, Inc. 5.0
Nokia Corp. AB sponsored ADR 4.0
Advantest Corp. 3.8
Ascend Communications, Inc. 3.2
ASM Lithography Holding NV 2.7
Microsoft Corp. 2.1
Ericsson (L.M.) Telephone Co. Class B ADR 2.0
Helix Technology Corp. 1.8
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
Telephone Equipment 12.2%
Electronic Equipment 11.7%
Semiconductor Capital
Equipment 11.2%
Semiconductors 10.9%
Mini & Macro Computers 7.4%
All Others 46.6%*
Row: 1, Col: 1, Value: 46.6
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 10.9
Row: 1, Col: 4, Value: 11.2
Row: 1, Col: 5, Value: 11.7
Row: 1, Col: 6, Value: 12.2
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of dividend income and capital
gains (the profits earned upon the sale of securities that have
grown in value).
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
TECHNOLOGY - CLASS T 60.12%
TECHNOLOGY - CLASS T 54.51%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index
of common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and
show you what would have happened if Class T shares had performed
at a constant rate each year. Average annual total returns will
appear once the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970813 145829 S00000000000001
FA Technology -CL T S&P 500
00192 SP001
1996/09/03 9650.00 10000.00
1996/09/30 10721.15 10561.42
1996/10/31 10817.65 10852.70
1996/11/30 12274.80 11673.05
1996/12/31 12022.98 11441.81
1997/01/31 13372.89 12156.70
1997/02/28 12440.58 12252.00
1997/03/31 11683.07 11748.57
1997/04/30 12372.59 12449.96
1997/05/31 13771.07 13207.91
1997/06/30 13897.32 13799.63
1997/07/31 15451.17 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970813 145830 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Technology - Class T on September
3, 1996, when the fund started, and the current maximum 3.50% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $15,451 - a 54.51% increase on
the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898
- - a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
Applied Materials, Inc. 10.1
Compaq Computer Corp. 7.0
Teradyne, Inc. 5.0
Nokia Corp. AB sponsored ADR 4.0
Advantest Corp. 3.8
Ascend Communications, Inc. 3.2
ASM Lithography Holding NV 2.7
Microsoft Corp. 2.1
Ericsson (L.M.) Telephone Co. Class B ADR 2.0
Helix Technology Corp. 1.8
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
Telephone Equipment 12.2%
Electronic Equipment 11.7%
Semiconductor Capital
Equipment 11.2%
Semiconductors 10.9%
Mini & Macro Computers 7.4%
All Others 46.6%*
Row: 1, Col: 1, Value: 46.6
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 10.9
Row: 1, Col: 4, Value: 11.2
Row: 1, Col: 5, Value: 11.7
Row: 1, Col: 6, Value: 12.2
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
The initial offering of Class B shares took place on March 3, 1997.
Class B shares bear a 1.00% 12b-1/shareholder service fee. Returns
prior to March 3, 1997 are those of Class T which bears a .50% 12b-1
fee. Had Class B's 12b-1 fee been reflected, returns prior to March 3,
1997 would have been lower. Class B's contingent deferred sales charge
included in life of fund total return is 5%. If Fidelity had not
reimbursed certain class expenses, total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
TECHNOLOGY - CLASS B 59.81%
TECHNOLOGY - CLASS B 54.81%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970813 144125 S00000000000001
FA Technology -CL B S&P 500
00197 SP001
1996/09/03 10000.00 10000.00
1996/09/30 11110.00 10561.42
1996/10/31 11210.00 10852.70
1996/11/30 12720.00 11673.05
1996/12/31 12459.04 11441.81
1997/01/31 13857.92 12156.70
1997/02/28 12891.79 12252.00
1997/03/31 12116.87 11748.57
1997/04/30 12821.34 12449.96
1997/05/31 14260.47 13207.91
1997/06/30 14391.30 13799.63
1997/07/31 15481.39 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970813 144129 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Technology - Class B on September 3,
1996, when the fund started. As the chart shows, by July 31, 1997, the
value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $15,481 - a 54.81% increase
on the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898 -
a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
APPLIED MATERIALS, INC. 10.1
COMPAQ COMPUTER CORP. 7.0
TERADYNE, INC. 5.0
NOKIA CORP. AB SPONSORED ADR 4.0
ADVANTEST CORP. 3.8
ASCEND COMMUNICATIONS, INC. 3.2
ASM LITHOGRAPHY HOLDING NV 2.7
MICROSOFT CORP. 2.1
ERICSSON (L.M.) TELEPHONE CO. CLASS B ADR 2.0
HELIX TECHNOLOGY CORP. 1.8
TOP INDUSTRIES AS OF JULY 31, 1997
% OF FUND'S INVESTMENTS
TELEPHONE EQUIPMENT 12.2%
ELECTRONIC EQUIPMENT 11.7%
SEMICONDUCTOR CAPITAL
EQUIPMENT 11.2%
SEMICONDUCTORS 10.9%
MINI & MACRO COMPUTERS 7.4%
ALL OTHERS 46.6%*
ROW: 1, COL: 1, VALUE: 46.6
ROW: 1, COL: 2, VALUE: 7.4
ROW: 1, COL: 3, VALUE: 10.9
ROW: 1, COL: 4, VALUE: 11.2
ROW: 1, COL: 5, VALUE: 11.7
ROW: 1, COL: 6, VALUE: 12.2
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Adam Hetnarski, Portfolio Manager of Fidelity
Advisor Technology Fund
Q. HOW DID THE FUND PERFORM, ADAM?
Q. WHAT HELPED THE FUND OUTPERFORM THE S&P 500?
A. Being invested in the right stocks at the right time paid off for
the fund. For example, the fund was heavily overweighted in
semiconductor capital equipment companies at the beginning of the
year. These companies reported robust order and revenue growth
throughout the first half of the year, which helped the fund's
performance. Conversely, staying away from the wrong stocks at the
right time also helped performance. For instance, the fund was
underweighted in networking stocks when the companies in that sector
imploded in March and April. By that I mean pricing pressures surfaced
in the industry and many analysts cut first-quarter earnings estimates
for several large networking companies. I anticipated problems in the
industry, so the fund reduced its exposure to those stocks. Therefore,
the fund didn't underperform when the market dipped during those
months.
Q. HOW WOULD YOU DESCRIBE THE INVESTING ENVIRONMENT DURING THE PERIOD?
A. The stock market achieved unprecedented gains over the past 12
months, largely fueled by a narrow group of the larger-cap stocks in
the S&P 500 Index. Several of the best-performing stocks in the index
were technology stocks, including Microsoft, Compaq and Intel. The
technology sector was very strong during the period, with the
exception of suffering a correction from the end of January 1997
through the end of April. However, technology companies with strong
business prospects rebounded sharply from that point through the end
of July - recovering more ground than they had lost.
Q. APPLIED MATERIALS REPRESENTED 10% OF THE FUND'S HOLDINGS AT THE END
OF THE PERIOD AND COMPAQ ACCOUNTED FOR ABOUT 7%. WHAT DID YOU FIND
ATTRACTIVE ABOUT THESE STOCKS?
A. These companies are involved in different industries, but the story
for both is the same: improving business prospects. Compaq's unit
growth and margins continued to improve, along with return on assets
and return on equity. The same holds true for Applied Materials, a
semiconductor capital equipment company. Orders improved and, even in
the trough of the cycle, the company generated net margins of more
than 10%.
Q. WHAT WOULD YOU CHARACTERIZE AS THE BIGGEST DISAPPOINTMENT DURING
THE PERIOD?
A. I had the fund positioned too defensively late in the period
because I thought the technology sector might underperform the broad
market, especially after Intel missed quarterly sales expectations and
warned that revenue in the September quarter would be flat compared to
its previous quarter. Seagate Technologies and Western Digital also
reported earnings that came in lower than analysts' estimates. In
short, there was every indication that technology was going to be
weak, and I positioned the fund accordingly. However, the technology
market actually rallied dramatically in July, and the fund's
positioning didn't allow it to reap all of the rewards of that
upswing.
Q. WHAT'S YOUR OUTLOOK FOR THE TECHNOLOGY SECTOR OVER THE NEXT SIX
MONTHS?
A. It's hard to say, since so many technology stocks are trading close
to peak valuations. In addition, it's difficult to predict PC unit
growth going forward. Basically, I'm more cautious going into the next
six to 12 months. However, technology represents about 12%-14% of the
S&P 500 and it's growing faster than any other segment of the index.
Technology companies also have better operating margins, return on
equity and return on assets than most other segments. They are the
beneficiaries of government, corporate and consumer spending as
technological change becomes more of a driving force behind the
growing global economy. Therefore, I think technology can outperform
the broader market in the long run.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$73 million
MANAGER: Adam Hetnarski, since inception;
joined Fidelity in 1991
(checkmark)
ADVISOR TECHNOLOGY FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
Lycos, Inc. (a) 14,800 $ 279,350
AEROSPACE & DEFENSE - 0.8%
AIRCRAFT EQUIPMENT - 0.4%
BE Aerospace, Inc. (a) 7,800 279,825
MISSILES & SPACE VEHICLES - 0.4%
GenCorp, Inc. 12,100 352,413
TOTAL AEROSPACE & DEFENSE 632,238
BROADCASTING - 0.2%
COMMUNICATIONS SERVICES - 0.1%
Smartalk Teleservices, Inc. (a) 3,900 69,225
RADIO BROADCASTING - 0.1%
American Radio Systems Corp. Class A 1,300 56,387
TOTAL BROADCASTING 125,612
BUILDING MATERIALS - 0.9%
FLAT GLASS - 0.9%
Toshiba Ceramics Co., Ltd. 53,000 643,101
COMMUNICATIONS EQUIPMENT - 13.6%
DATACOMMUNICATIONS EQUIPMENT - 0.9%
Aspect Telecommunications Corp. (a) 10,000 211,406
Level One Communications, Inc. (a) 2,200 93,500
Network General Corp. (a) 20,500 333,125
638,031
TELEPHONE EQUIPMENT - 12.2%
Advanced Fibre Communication, Inc. 2,600 181,675
Andrew Corp. (a) 5,000 130,313
Ascend Communications, Inc. (a) 43,800 2,381,625
Boston Technology, Inc. (a) 3,500 92,969
Ciena Corp. (a) 11,000 617,375
Ericsson (L.M.) Telephone Co.
Class B ADR 33,500 1,515,875
Lucent Technologies, Inc. 9,800 832,388
Matsushita Communication Industrial
Co. Ltd. 6,000 250,769
Newbridge Networks Corp. (a) 1,000 52,125
Nokia Corp. AB sponsored ADR 35,000 2,996,875
9,051,989
TELEPHONE INTERCONNECT SYSTEMS - 0.5%
Premisys Communications, Inc. (a) 19,000 389,203
TOTAL COMMUNICATIONS EQUIPMENT 10,079,223
COMPUTER SERVICES & SOFTWARE - 9.7%
COMPUTER RELATED SERVICES - 0.3%
RWD Technologies, Inc. 9,700 203,700
COMPUTER SERVICES - 3.2%
Cerner Corp. (a) 5,300 159,000
Computer Learning Centers, Inc. (a) 7,700 368,638
Diamond Multimedia Systems, Inc. (a) 29,000 259,188
Electronic Data Systems Corp. 27,300 1,180,725
HBO & Co. 2,906 224,852
Sync Research, Inc. (a) 10,200 45,900
Viasoft, Inc. (a) 2,000 121,000
2,359,303
CAD/CAM/CAE - 0.1%
Advanced Communication Systems, Inc. 5,000 47,500
Synopsys, Inc. (a) 2,200 73,975
121,475
SHARES VALUE (NOTE 1)
DATA PROCESSING - 0.1%
Ceridian Corp. (a) 1,800 $ 78,750
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Galileo International, Inc. 200 5,275
PREPACKAGED COMPUTER SOFTWARE - 6.0%
Broderbund Software, Inc. (a) 13,700 297,119
Business Objects SA sponsored ADR (a) 6,900 46,575
Citrix Systems, Inc. (a) 3,200 151,600
Eagle Point Software Corp. (a) 27,200 92,650
Electronic Arts, Inc. (a) 16,207 542,935
GT Interactive Software, Inc. (a) 6,000 57,375
Informix Corp. (a) 16,600 187,788
Microsoft Corp. (a) 10,900 1,542,350
Midway Games, Inc. (a) 9,700 197,638
Scopus Technology, Inc. 8,000 231,000
Spectrum Holobyte, Inc. (a) 138,900 599,006
Systems & Computer Technology
Corp. (a) 12,000 390,000
Vantive Corp. (a) 3,400 106,250
4,442,286
TOTAL COMPUTER SERVICES & SOFTWARE 7,210,789
COMPUTERS & OFFICE EQUIPMENT - 11.4%
COMPUTER PERIPHERALS - 1.4%
Creative Technology Corp. Ltd. 9,500 193,563
EMC Corp. (a) 4,000 202,000
Fore Systems, Inc. (a) 27,800 446,538
Galileo Technology Ltd. 7,100 173,063
1,015,164
GRAPHICS WORKSTATIONS - 1.5%
Silicon Graphics, Inc. (a) 46,000 1,150,000
MINI & MICRO COMPUTERS - 7.4%
Compaq Computer Corp. (a) 91,450 5,224,081
Digital Equipment Corp. (a) 6,700 275,956
5,500,037
OFFICE AUTOMATION - 1.1%
Nam Tai Electronics, Inc. 23,000 621,000
Xerox Corp. 2,300 189,175
810,175
TOTAL COMPUTERS & OFFICE EQUIPMENT 8,475,376
CONSUMER DURABLES - 0.8%
GLASS, PRESSED OR BLOWN - 0.7%
Corning, Inc. 8,500 525,406
MANUFACTURING INDUSTRIES - 0.1%
Minnesota Mining & Manufacturing Co. 800 75,800
TOTAL CONSUMER DURABLES 601,206
CREDIT & OTHER FINANCE - 0.5%
FINANCIAL SERVICES - 0.1%
American Express Co. 1,200 100,500
MORTGAGE BANKERS - 0.2%
New Century Financial Corp. 8,500 155,125
PERSONAL CREDIT INSTITUTIONS - 0.2%
Associates First Capital Corp. 1,900 125,281
TOTAL CREDIT & OTHER FINANCE 380,906
DEFENSE ELECTRONICS - 1.6%
Raytheon Co. 21,800 1,218,075
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 0.7%
COMMERCIAL LABORATORY RESEARCH - 0.1%
BioReliance Corp. 100 $ 1,788
Millennium Pharmaceuticals, Inc. (a) 5,400 78,975
80,763
DRUGS - 0.5%
Barr Laboratories, Inc. (a) 7,650 344,250
PHARMACEUTICAL PREPARATIONS - 0.1%
Guilford Pharmaceuticals, Inc. (a) 5,050 112,047
TOTAL DRUGS & PHARMACEUTICALS 537,060
ELECTRICAL EQUIPMENT - 1.1%
TV & RADIO COMMUNICATION EQUIPMENT - 1.1%
Corsair Communications, Inc. 100 1,981
Spectrian Corp. (a) 18,200 828,100
830,081
ELECTRONIC INSTRUMENTS - 23.6%
ELECTRONIC EQUIPMENT - 11.7%
Advantest Corp. 30,700 2,845,587
Cohu, Inc. 4,400 184,800
Credence Systems Corp. (a) 6,700 227,800
Helix Technology Corp. 26,200 1,318,188
LTX Corp. (a) 43,400 309,225
ORBIT/FR, Inc. 9,300 108,113
Teradyne, Inc. (a) 79,600 3,721,300
8,715,013
LAB & RESEARCH EQUIPMENT - 0.7%
Newport Corp. 3,900 50,213
Tokyo Seimitsu Co. Ltd. 16,000 446,261
496,474
SEMICONDUCTOR CAPITAL EQUIPMENT - 11.2%
Applied Materials, Inc. (a) 81,900 7,524,563
KLA-Tencor Corp. (a) 7,700 466,331
Silicon Valley Group, Inc. (a) 10,100 313,100
8,303,994
TOTAL ELECTRONIC INSTRUMENTS 17,515,481
ELECTRONICS - 13.4%
ELECTRONIC PARTS - WHOLESALE - 0.3%
Audiovox Corp. Class A (a) 30,800 240,625
ELECTRONICS & ELECTRONIC COMPONENTS - 1.2%
Advanced Energy Industries, Inc. (a) 16,700 417,500
Kyocera Corp. 5,000 429,745
847,245
PRINTED CIRCUIT BOARDS - 1.0%
DII Group, Inc. (a) 14,300 732,875
SEMICONDUCTORS - 10.9%
Alliance Semiconductor Corp. (a) 8,500 123,781
CFM Technologies, Inc. (a) 3,300 85,800
Electroglas, Inc. (a) 24,000 759,000
Integrated Circuit Systems, Inc. (a) 13,100 345,513
Integrated Device Technology, Inc. (a) 11,300 153,256
Intel Corp. 1,200 110,175
Intel Corp. warrants 3/14/98 (a) 13,500 961,031
Lattice Semiconductor Corp. (a) 8,900 599,638
Micrel, Inc. (a) 1,100 72,188
OnTrak Systems, Inc. (a) 23,900 1,045,625
SHARES VALUE (NOTE 1)
PMC-Sierra, Inc. (a) 9,600 $ 314,400
Quality Semiconductor, Inc. (a) 35,000 463,750
RF Micro Devices, Inc. 12,700 214,313
Texas Instruments, Inc. 10,100 1,161,500
Tokyo Electron Ltd. 18,000 1,110,259
Vitesse Semiconductor Corp. (a) 12,200 590,175
8,110,404
TOTAL ELECTRONICS 9,931,149
ENERGY SERVICES - 1.7%
DRILLING - 1.3%
Cliffs Drilling Co. (a) 12,100 633,738
Falcon Drilling, Inc. (a) 12,200 352,275
986,013
OIL & GAS SERVICES - 0.4%
Schlumberger Ltd. 3,400 259,675
TOTAL ENERGY SERVICES 1,245,688
HOUSEHOLD PRODUCTS - 0.4%
SOAPS & DETERGENTS - 0.4%
Procter & Gamble Co. 2,100 319,463
INDUSTRIAL MACHINERY & EQUIPMENT - 4.3%
ACCESS & MEASURING CUTTING TOOLS - 0.1%
Stanley Works 1,800 81,563
FARM MACHINERY & EQUIPMENT - 0.4%
Case Corp. 4,600 287,213
GENERAL INDUSTRIAL MACHINERY - 1.0%
Tyco International Ltd. 8,894 720,414
SPECIAL INDUSTRIAL MACHINERY - 2.8%
ASM Lithography Holding NV 24,500 1,984,500
Asyst Technologies, Inc. (a) 2,500 134,375
2,118,875
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,208,065
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING - 0.1%
Alrenco, Inc. (a) 3,100 45,338
Rent-Way, Inc. (a) 3,300 49,088
94,426
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
MEDICAL SUPPLIES & APPLIANCES - 0.0%
Proteon, Inc. (a) 4,100 7,559
METALS & MINING - 1.2%
METAL MINING - 0.4%
Phelps Dodge Corp. 3,400 289,213
NONFERROUS WIRE - 0.8%
AFC Cable Systems, Inc. (a) 20,000 572,500
TOTAL METALS & MINING 861,713
OIL & GAS - 0.2%
PETROLEUM REFINERS - 0.2%
British Petroleum PLC ADR 1,600 131,900
PAPER & FOREST PRODUCTS - 0.7%
ENVELOPES - 0.2%
Mail-Well, Inc. (a) 4,250 138,656
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - CONTINUED
PAPER - 0.5%
Champion International Corp. 6,200 $ 384,400
TOTAL PAPER & FOREST PRODUCTS 523,056
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Newmont Mining Corp. 6,600 272,250
RAILROADS - 0.5%
Kansas City Southern Industries, Inc. 4,700 354,250
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 11,000 172,563
Starbucks Corp. (a) 6,200 253,813
426,376
RETAIL & WHOLESALE, MISCELLANEOUS - 2.5%
MAIL ORDER - 0.9%
Viking Office Products, Inc. (a) 32,600 654,038
STATIONERY & OFFICE SUPPLIES -
WHOLESALE - 1.6%
Corporate Express, Inc. 34,000 510,000
IKON Office Solutions, Inc. 25,100 732,606
1,242,606
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,896,644
SERVICES - 2.3%
BUSINESS CONSULTING SERVICES - 0.3%
Learning Tree International, Inc. (a) 4,600 187,450
BUSINESS SERVICES - 0.3%
Sitel Corp. (a) 1,900 28,500
Snyder Communications, Inc. (a) 5,500 170,500
199,000
MANAGEMENT CONSULTING SERVICES - 0.4%
Hagler Bailly, Inc. 15,500 311,938
MANAGEMENT SERVICES - 1.0%
Maximus, Inc. (a) 32,400 749,250
PERSONNEL SUPPLY SERVICES - 0.3%
AccuStaff, Inc. (a) 5,200 141,700
Computer Horizons Corp. (a) 2,850 114,000
255,700
TOTAL SERVICES 1,703,338
TELEPHONE SERVICES - 1.0%
Brooks Fiber Properties, Inc. (a) 8,000 301,000
Teleport Communications Group, Inc.
Class A (a) 10,400 409,500
710,500
TOBACCO - 0.9%
TOBACCO MANUFACTURERS - 0.9%
Philip Morris Companies, Inc. 14,600 658,825
TOTAL COMMON STOCKS
(Cost $61,249,892) 70,873,700
CASH EQUIVALENTS - 4.5%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $3,343,382) 3,343,382 $ 3,343,382
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $64,593,274) $ 74,217,082
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 81.6%
Japan 7.7
Finland 4.0
Netherlands 3.0
Sweden 2.0
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $64,906,755. Net unrealized appreciation
aggregated $9,310,327, of which $10,084,674 related to appreciated
investment securities and $774,347 related to depreciated investment
securities.
The fund hereby designates approximately $186,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 2%, 2%, and 1% of Class A's, Class T's and Institutional
Class' dividend distributions during the fiscal year qualifies for the
dividend-received deduction for corporate shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 74,217,082
(COST $64,593,274) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 1,219,017
RECEIVABLE FOR FUND SHARES SOLD 989,416
DIVIDENDS RECEIVABLE 20,690
INTEREST RECEIVABLE 49,108
PREPAID EXPENSES11,034
TOTAL ASSETS 76,506,347
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,607,331
PAYABLE FOR FUND SHARES REDEEMED 147,838
ACCRUED MANAGEMENT FEE 25,095
DISTRIBUTION FEES PAYABLE 26,564
OTHER PAYABLES AND ACCRUED EXPENSES 60,844
TOTAL LIABILITIES 2,867,672
NET ASSETS $ 73,638,675
NET ASSETS CONSIST OF:
PAID IN CAPITAL$ 59,642,923
ACCUMULATED NET REALIZED 4,371,982
GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,623,770
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 73,638,675
</TABLE>
CALCULATION OF MAXIMUM $15.96
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,312,548 (DIVIDED BY)
458,061 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.84
(100/94.75 OF $15.96)
CLASS T: $15.91
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($57,623,799 (DIVIDED BY)
3,622,892 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.49
(100/96.50 OF $15.91)
CLASS B: $15.88
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($5,104,587 (DIVIDED BY)
321,360 SHARES) A
INSTITUTIONAL CLASS: $15.98
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,597,741 (DIVIDED BY) 225,171 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 68,365
DIVIDENDS
INTEREST 206,358
TOTAL INCOME 274,723
EXPENSES
MANAGEMENT FEE $ 174,663
TRANSFER AGENT FEES 85,124
DISTRIBUTION FEES 134,619
ACCOUNTING FEES AND EXPENSES 55,209
NON-INTERESTED TRUSTEES' COMPENSATION 91
CUSTODIAN FEES AND EXPENSES 21,899
REGISTRATION FEES 114,626
AUDIT 20,131
LEGAL 1,001
MISCELLANEOUS 6,369
TOTAL EXPENSES BEFORE REDUCTIONS 613,732
EXPENSE REDUCTIONS (74,630) 539,102
NET INVESTMENT INCOME (LOSS) (264,379)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 4,756,467
FOREIGN CURRENCY TRANSACTIONS (327) 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 9,623,808
ASSETS AND LIABILITIES IN (38) 9,623,770
FOREIGN CURRENCIES
NET GAIN (LOSS) 14,379,910
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 14,115,531
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ (264,379)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 9,623,770
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,115,531
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (119,780)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 59,627,327
REDEMPTION FEES 15,597
TOTAL INCREASE (DECREASE) IN NET ASSETS 73,638,675
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $ 73,638,675
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.13
TOTAL FROM INVESTMENT OPERATIONS 6.03
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.96
TOTAL RETURN B, C 60.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,313
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.70% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.79)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE
FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE
PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.09
TOTAL FROM INVESTMENT OPERATIONS 5.98
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.91
TOTAL RETURN B, C 60.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 57,624
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.92% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS1.87% A,
E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.93)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE F $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31,
1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.08
TOTAL FROM INVESTMENT OPERATIONS 3.00
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 15.88
TOTAL RETURN B, C 23.29%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,105
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
2.45% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.41)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F
FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER. H FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 H
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.12
TOTAL FROM INVESTMENT OPERATIONS 6.06
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.98
TOTAL RETURN B, C 60.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,598
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.44% A,
F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.50)% A
PORTFOLIO TURNOVER 517% A
AVERAGE COMMISSION RATE G $ .0415
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR
AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL
STATEMENTS). G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Technology Fund (the fund) is a fund of Fidelity
Advisor Series VII (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, 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 its
distribution plan. The fund commenced sale of a new Class B of shares
on March 3, 1997. Investment income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions 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 of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new class
commences on or about November 3, 1997. Class C shares are subject to
an annual distribution and service fee of 1.00% (of which .75%
represents a distribution fee and .25% represents a shareholder
service fee) of the class' average net assets, and a 1.00% contingent
deferred sales charge levied on Class C share redemptions made within
one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the
respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. 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
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying each
class and shares of each class for distribution under federal and
state securities law. These expenses are borne by each class and
amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are subject
to a redemption fee equal to 1% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $201,318,715 and $144,825,290, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .60% of average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,224 $ 8,224
CLASS T 117,376 117,376
CLASS B 9,019 2,257
$ 134,619 $ 127,857
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
occurring within six years of purchase. The Class B charge is based on
declining rates which range from 5% to 1% of the lesser of the cost of
shares at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital gains.
Effective August 1, 1997, Class A's maximum sales charge was increased
to 5.75%.
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 137,804 $ 104,769
CLASS T 326,277 235,448
CLASS B 1,501 0
*
$ 465,582 $ 340,217
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive 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 all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 10,888 .33% *
CLASS T *** FIIOC ** 67,907 .29% *
CLASS B FIIOC ** 3,476 .38% *
INSTITUTIONAL CLASS FIIOC ** 2,853 .20% *
$ 85,124
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $22,843 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 26,420
CLASS B 2.50% 10,493
CLASS T 2.00% -
INSTITUTIONAL CLASS 1.50% 24,996
$ 61,909
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $12,267 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $454 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
CLASS A 1997 A
FROM NET REALIZED GAIN $ 16,754
CLASS T
FROM NET REALIZED GAIN 94,078
INSTITUTIONAL CLASS
FROM NET REALIZED GAIN 8,948
TOTAL $ 119,780
A DISTRIBUTIONS ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF
SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 504,366 $ 6,388,175
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,197 15,029
SHARES REDEEMED (47,502) (617,865)
NET INCREASE (DECREASE) 458,061 $ 5,785,339
CLASS T 4,187,137 $ 54,310,830
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 7,154 89,642
SHARES REDEEMED (571,399) (7,714,355)
NET INCREASE (DECREASE) 3,622,892 $ 46,686,117
CLASS B 352,887 $ 4,850,934
SHARES SOLD
SHARES REDEEMED (31,527) (463,394)
NET INCREASE (DECREASE) 321,360 $ 4,387,540
INSTITUTIONAL CLASS 229,260 $ 2,822,866
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 714 8,948
SHARES REDEEMED (4,803) (63,483)
NET INCREASE (DECREASE) 225,171 $ 2,768,331
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL CLASS
ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF SHARES)
TO JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 32,274
CLASS T 40,552
CLASS B 13,256
INSTITUTIONAL CLASS 28,544
$ 114,626
ADVISOR UTILITIES GROWTH FUND - CLASS A
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
Effective August 1, 1997, the maximum 5.25% sales charge on Class A
shares was increased to 5.75%. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
UTILITIES GROWTH - CLASS A 32.36%
UTILITIES GROWTH - CLASS A 24.75%
(INCL. 5.75% SALES CHARGE) 1
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class A's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all stock
funds, the share price and return of a fund that
invests in a sector will vary. That means if you
sell your shares during a sector downturn, you
might lose money. But if you can identify a
sector that is about to experience rapid growth
you may have the potential for above-average
gains.
(checkmark)
1 HAD THE FORMER 5.25% SALES CHARGE BEEN REFLECTED, THE CUMULATIVE
LIFE OF FUND RETURN WOULD HAVE BEEN 25.41%.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 164739 S00000000000001
FA Utilities Growth -CL A S&P 500
00186 SP001
1996/09/03 9425.00 10000.00
1996/09/30 9566.38 10561.42
1996/10/31 10150.73 10852.70
1996/11/30 10697.38 11673.05
1996/12/31 10842.70 11441.81
1997/01/31 11148.13 12156.70
1997/02/28 11310.38 12252.00
1997/03/31 10737.71 11748.57
1997/04/30 11109.95 12449.96
1997/05/31 11816.25 13207.91
1997/06/30 12188.49 13799.63
1997/07/31 12474.83 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 164740 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Utilities Growth - Class A on September
3, 1996, when the fund started, and the current maximum 5.75% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $12,475 - a 24.75% increase on the
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $14,898 - a 48.98%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 9.6
SBC COMMUNICATIONS, INC. 7.6
SPRINT CORP. 5.6
BELLSOUTH CORP. 4.7
AIRTOUCH COMMUNICATIONS, INC. 4.6
AMERITECH CORP. 4.5
AES CORP. 4.0
NYNEX CORP. 3.9
GTE CORP. 3.6
MCI COMMUNICATIONS CORP. 3.6
TOP INDUSTRIES AS OF JULY 31, 1997
TELEPHONE SERVICES 54.5%
ELECTRIC POWER 8.6%
GAS DISTRIBUTION 7.5%
GAS TRANSMISSION
& DISTRIBUTION 7.2%
CELLULAR & COMMUNICATION
SERVICES 5.2%
ALL OTHERS 17.0%
ROW: 1, COL: 1, VALUE: 17.0
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 7.5
ROW: 1, COL: 5, VALUE: 8.6
ROW: 1, COL: 6, VALUE: 54.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR UTILITIES GROWTH FUND - CLASS T
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
If Fidelity had not reimbursed certain class expenses, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
UTILITIES GROWTH - CLASS T 31.96%
UTILITIES GROWTH - CLASS T 27.34%
(INCL. 3.50% SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class T's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' cumulative return and show
you what would have happened if Class T shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 164810 S00000000000001
FA Utilities Growth -CL T S&P 500
00196 SP001
1996/09/03 9650.00 10000.00
1996/09/30 9794.75 10561.42
1996/10/31 10393.05 10852.70
1996/11/30 10943.10 11673.05
1996/12/31 11101.67 11441.81
1997/01/31 11404.62 12156.70
1997/02/28 11560.98 12252.00
1997/03/31 10974.62 11748.57
1997/04/30 11345.98 12449.96
1997/05/31 12069.16 13207.91
1997/06/30 12440.51 13799.63
1997/07/31 12733.69 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 164812 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Utilities Growth - Class T on September
3, 1996, when the fund started, and the current maximum 3.50% sales
charge was paid. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $12,734 - a 27.34% increase on the
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $14,898 - a 48.98%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 9.6
SBC COMMUNICATIONS, INC. 7.6
SPRINT CORP. 5.6
BELLSOUTH CORP. 4.7
AIRTOUCH COMMUNICATIONS, INC. 4.6
AMERITECH CORP. 4.5
AES CORP. 4.0
NYNEX CORP. 3.9
GTE CORP. 3.6
MCI COMMUNICATIONS CORP. 3.6
TOP INDUSTRIES AS OF JULY 31, 1997
TELEPHONE SERVICES 54.5%
ELECTRIC POWER 8.6%
GAS DISTRIBUTION 7.5%
GAS TRANSMISSION
& DISTRIBUTION 7.2%
CELLULAR & COMMUNICATION
SERVICES 5.2%
ALL OTHERS 17.0%
ROW: 1, COL: 1, VALUE: 17.0
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 7.5
ROW: 1, COL: 5, VALUE: 8.6
ROW: 1, COL: 6, VALUE: 54.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR UTILITIES GROWTH FUND - CLASS B
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of dividend income and capital gains (the
profits earned upon the sale of securities that have grown in value).
The initial offering of Class B shares took place on March 3, 1997.
Class B shares bear a 1.00% 12b-1/shareholder service fee. Returns
prior to March 3, 1997 are those of Class T which bears a .50% 12b-1
fee. Had Class B's 12b-1 fee been reflected, returns prior to March 3,
1997 would have been lower. Class B's contingent deferred sales charge
included in life of fund total return is 5%. If Fidelity had not
reimbursed certain class expenses, total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
JULY 31, 1997 FUND
UTILITIES GROWTH - CLASS B 31.75%
UTILITIES GROWTH - CLASS B 26.75%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 48.98%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
September 3, 1996. You can compare Class B's returns to the
performance of the S&P 500 - a widely recognized, unmanaged index of
common stocks. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year. Average annual total returns will appear once
the fund is a year old.
UNDERSTANDING PERFORMANCE
HOW A FUND DID YESTERDAY IS NO GUARANTEE OF
HOW IT WILL DO TOMORROW. THE STOCK MARKET, FOR
EXAMPLE, HAS A HISTORY OF LONG-TERM GROWTH AND
SHORT-TERM VOLATILITY. UNLIKE THE BROADER MARKET,
HOWEVER, SOME SECTORS MAY NOT HAVE A HISTORY
OF GROWTH IN THE LONG RUN. AND, AS WITH ALL STOCK
FUNDS, THE SHARE PRICE AND RETURN OF A FUND THAT
INVESTS IN A SECTOR WILL VARY. THAT MEANS IF YOU
SELL YOUR SHARES DURING A SECTOR DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN IDENTIFY A
SECTOR THAT IS ABOUT TO EXPERIENCE RAPID GROWTH
YOU MAY HAVE THE POTENTIAL FOR ABOVE-AVERAGE
GAINS.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970731 19970814 164753 S00000000000001
FA Utilities Growth -CL B S&P 500
00189 SP001
1996/09/03 10000.00 10000.00
1996/09/30 10150.00 10561.42
1996/10/31 10770.00 10852.70
1996/11/30 11340.00 11673.05
1996/12/31 11504.32 11441.81
1997/01/31 11818.26 12156.70
1997/02/28 11980.29 12252.00
1997/03/31 11372.67 11748.57
1997/04/30 11747.37 12449.96
1997/05/31 12496.77 13207.91
1997/06/30 12871.47 13799.63
1997/07/31 13175.28 14897.66
IMATRL PRASUN SHR__CHT 19970731 19970814 164755 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Utilities Growth - Class B on September
3, 1996, when the fund started. As the chart shows, by July 31, 1997,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $12,675 - a 26.75% increase
on the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $14,898 -
a 48.98% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1997
% OF FUND'S
INVESTMENTS
WORLDCOM, INC. 9.6
SBC COMMUNICATIONS, INC. 7.6
SPRINT CORP. 5.6
BELLSOUTH CORP. 4.7
AIRTOUCH COMMUNICATIONS, INC. 4.6
AMERITECH CORP. 4.5
AES CORP. 4.0
NYNEX CORP. 3.9
GTE CORP. 3.6
MCI COMMUNICATIONS CORP. 3.6
TOP INDUSTRIES AS OF JULY 31, 1997
TELEPHONE SERVICES 54.5%
ELECTRIC POWER 8.6%
GAS DISTRIBUTION 7.5%
GAS TRANSMISSION
& DISTRIBUTION 7.2%
CELLULAR & COMMUNICATION
SERVICES 5.2%
ALL OTHERS 17.0%
ROW: 1, COL: 1, VALUE: 17.0
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 7.5
ROW: 1, COL: 5, VALUE: 8.6
ROW: 1, COL: 6, VALUE: 54.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: On August 18, 1997, Nick Thakore (right) became
Portfolio Manager of Fidelity Advisor Utilities Growth Fund. The
following is an interview with John Muresianu (left), who managed the
fund during the period covered by this report, with comments from Nick
Thakore on his outlook.
Q. JOHN, HOW DID THE FUND PERFORM?
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
J.M. The sector underperformed the broad market because investors
continued to be concerned about how ongoing deregulation would affect
utilities companies, especially in the telephone and electric
industries. Overall, though, the fund benefited from two factors.
First, it had a solid concentration in telephone and gas utility
stocks. Over the course of the past six months, telephone utility
stocks performed the best among the three industries, with gas stocks
performing second best and electric utility stocks lagging the other
two industries. Second, the fund's stock selection within each of the
industries proved to have a positive effect on performance as well.
Q. WHAT HELPED TELEPHONE STOCKS PERFORM THE BEST AMONG THE
UTILITY SECTOR?
J.M. In general, telephone companies posted the best earnings growth -
and stock prices generally follow earnings - even though there was
some concern about future competition due to deregulation. Gas
companies, on the other hand, after performing quite well in 1995 and
1996, were hurt by weaker-than-expected natural gas prices due to
unexpectedly mild weather. Nevertheless, the price of natural gas did
not fall to levels that would have caused major problems, and the
expectation of industry consolidation helped sustain stock prices
somewhat. Stocks in the electric utility industry were stalled by
three factors. First, these stocks tend to trade in concert with
bonds; because of an uncertain interest-rate backdrop, the bond market
proved to be fairly volatile, and that affected electric utility
stocks. Second, operating costs have increased for most electric
utilities with nuclear power plants as a result of pressure from the
Nuclear Regulatory Commission. Finally, earnings suffered due to the
mild weather over the period.
Q. ELECTRIC UTILITY STOCKS LAGGED THE PHONE AND GAS UTILITIES, YET YOU
INCREASED THE FUND'S INVESTMENTS IN THE ELECTRICS. WHY WAS THAT?
J.M. In my judgment, selected electric utility stocks were oversold
and became too cheap to ignore. I took profits by selling stocks in
other areas to replace them with a higher weighting in these
attractive electric stocks.
Q. WHAT WERE SOME OF THE FUND'S STRONGER-PERFORMING STOCKS OVER THE
PERIOD? WHAT WERE THE DISAPPOINTMENTS?
J.M. WorldCom was one of the fund's top performers. It posted very
strong earnings growth as it consistently beat expectations. AirTouch
Communications also proved to be a positive contributor, turning
around its earnings more than the market expected. It was helped by
strong domestic and international subscriber additions for its
wireless communications services. Sprint also did well, as many
investors anticipated that the company would be acquired. On the minus
side, Enron was hurt by declining natural gas prices and disappointing
earnings from its pipeline, trading and international power
operations. Sonat also disappointed, as it is one of the gas companies
most sensitive to changes in natural gas prices.
Q. TURNING TO YOU, NICK, WHAT'S YOUR OUTLOOK?
N.T. Deregulation - in all of the utilities industries, but especially
in the telephones - should lead to tremendous changes in the
competitive landscape. My goal will be to find the companies that will
be the net beneficiaries of this competition and that show superior
earnings growth relative to their group. In the past, there hasn't
been much of a difference among many of the stocks in the sector, but
we're entering an era where the differences should become much more
dramatic. With the sector going through such significant changes, it
will be important to differentiate between the winners and the losers.
There are two main themes I intend to pursue. First, I'll focus on
newer companies because I believe existing companies with a large
market share will be more vulnerable to the effects of deregulation
than new entrants. Second, I'll look for those companies that are
likely to be acquired in what should be a consolidating industry.
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1997, more than
$11 million
MANAGER: Nick Thakore, since August 1997;
joined Fidelity in 1993
(checkmark)
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JULY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
CABLE TV OPERATORS - 0.0%
TCI Satellite Entertainment, Inc.
Class A (a) 10 $ 68
TCI Group Class A 200 3,425
3,493
CELLULAR - 5.2%
CELLULAR & COMMUNICATION SERVICES - 5.2%
AirTouch Communications, Inc. (a) 16,700 550,056
Cellnet Data Systems, Inc. (a) 1,100 13,613
Telephone & Data Systems, Inc. 400 15,341
Vodafone Group PLC sponsored ADR 700 35,350
614,360
COAL - 0.3%
MAPCO, Inc. 1,000 30,938
COMMUNICATIONS EQUIPMENT - 1.7%
TELEPHONE EQUIPMENT - 1.7%
Lucent Technologies, Inc. 2,456 208,607
COMPUTER SERVICES & SOFTWARE - 0.1%
DATA PROCESSING - 0.1%
NCR Corp. (a) 487 15,614
ELECTRIC UTILITY - 11.5%
ELECTRIC & OTHER SERVICES - 2.9%
DPL, Inc. 1,500 36,938
Enova Corp. 1,300 31,525
Hidroelectrica de Cantabrico SA 100 3,934
IES Industries, Inc. 500 15,313
LG&E Energy Corp. 400 8,725
Montana Power Co. 1,400 33,163
NIPSCO Industries, Inc. 1,200 50,550
PECO Energy Co. 1,400 32,900
PacifiCorp. 2,000 44,625
Public Service Co. of New Mexico 1,500 27,750
Rochester Gas & Electric Corp. 400 9,700
Sierra Pacific Resources 200 6,388
Utilicorp United, Inc. 200 5,963
Veba AG Ord. 700 40,441
347,915
ELECTRIC POWER - 8.6%
AES Corp. (a) 6,000 474,000
American Electric Power Co., Inc. 700 31,325
Baycorp Holdings Ltd. (a) 100 800
Boston Edison Co. 500 14,063
Central & South West Corp. 1,800 36,113
Central Louisiana Electric Co., Inc. 1,700 45,688
DQE, Inc. 1,300 41,031
Duke Power Co. 5,394 273,408
Entergy Corp. 700 19,119
Kansas City Power & Light Co. 400 11,800
Pinnacle West Capital Corp. 1,100 34,719
Southern Co. 900 19,744
TECO Energy, Inc. 300 7,613
United Illuminating Co. 400 13,825
1,023,248
TOTAL ELECTRIC UTILITY 1,371,163
SHARES VALUE (NOTE 1)
GAS - 20.6%
GAS & OTHER SERVICES - 1.0%
MDU Resources Group, Inc. 2,300 $ 54,625
UGI Corp. 2,000 49,250
Western Resources, Inc. 300 10,388
114,263
GAS DISTRIBUTION - 7.5%
Eastern Enterprises Co. 3,100 111,019
Energen Corp. 1,600 58,000
K N Energy, Inc. 2,900 121,800
MCN Corp. 9,200 291,525
NUI Corp. 800 18,400
National Fuel Gas Co. 400 17,000
New Jersey Resources Corp. 400 12,650
NICOR, Inc. 800 29,300
Northwest Natural Gas Co. 200 5,200
Pacific Enterprises 6,000 200,625
Peoples Energy Corp. 400 15,350
WICOR, Inc. 500 20,063
900,932
GAS TRANSMISSION - 4.9%
Enron Corp. 4,979 188,891
ONEOK, Inc. 1,400 49,000
Sonat, Inc. 3,900 194,513
USX-Delhi Group 300 3,769
Williams Companies, Inc. 3,200 146,400
582,573
GAS TRANSMISSION & DISTRIBUTION - 7.2%
Bay State Gas Co. 600 16,275
Columbia Gas System, Inc. (The) 3,100 213,125
Consolidated Natural Gas Co. 800 46,300
ENSERCH Corp. 8,400 186,900
Equitable Resources, Inc. 800 23,850
Noram Energy Corp. 3,700 59,200
Questar Corp. 5,500 225,156
Tejas Gas Corp. (a) 1,700 75,544
Yankee Energy System, Inc. 700 16,800
863,150
TOTAL GAS 2,460,918
HOLDING COMPANIES - 0.6%
CINergy Corp. 2,000 67,250
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 300 675
OIL & GAS - 2.7%
CRUDE PETROLEUM & GAS - 0.1%
Occidental Petroleum Corp. 500 12,531
PETROLEUM REFINERS - 2.6%
Coastal Corp. (The) 5,600 304,500
TOTAL OIL & GAS 317,031
TELEPHONE SERVICES - 54.5%
AT&T Corp. 7,200 265,050
ALLTEL Corp. 300 9,863
Ameritech Corp. 7,900 532,756
BCE, Inc. 2,500 76,087
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
Bell Atlantic Corp. 5,400 $ 391,838
BellSouth Corp. 11,800 559,025
Cincinnati Bell, Inc. 2,200 66,000
GTE Corp. 9,300 432,450
MCI Communications Corp. 12,000 423,750
NYNEX Corp. 8,300 460,131
Qwest Communications International, Inc. 100 3,113
SBC Communications, Inc. 15,247 902,432
Sprint Corp. 13,500 668,250
U.S. WEST Communications Group 9,900 361,969
U.S. WEST Media Group (a) 9,100 200,769
WorldCom, Inc. (a) 32,750 1,144,203
6,497,686
TOTAL COMMON STOCKS
(Cost $10,135,582) 11,587,735
CONVERTIBLE PREFERRED STOCKS - 0.1%
ELECTRIC UTILITY - 0.1%
COMBINATION UTILITIES - 0.1%
Citizens Utilities Trust $2.50
(Cost $19,495) 400 17,375
CASH EQUIVALENTS - 2.7%
Taxable Central Cash Fund (b)
(Cost $319,350) 319,350 319,350
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,474,427) $ 11,924,460
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $10,474,427. Net unrealized appreciation
aggregated $1,450,033, of which $1,523,569 related to appreciated
investment securities and $73,536 related to depreciated investment
securities.
The fund hereby designates approximately $8,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 40%, 40%, and 37% of Class A's, Class T's and Institutional
Class' dividend distributions during the fiscal year qualifies for the
dividend-received deduction for corporate shareholders (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentages for use in preparing 1997 income tax returns.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 11,924,460
(COST $10,474,427) - SEE ACCOMPANYING SCHEDULE
CASH 1,606
RECEIVABLE FOR INVESTMENTS SOLD 7,550
RECEIVABLE FOR FUND SHARES SOLD 7,627
DIVIDENDS RECEIVABLE 36,688
INTEREST RECEIVABLE 2,107
PREPAID EXPENSES 11,042
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 11,314
TOTAL ASSETS 12,002,394
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 4,700
PAYABLE FOR FUND SHARES REDEEMED 58,103
DISTRIBUTION FEES PAYABLE 4,377
OTHER PAYABLES AND ACCRUED EXPENSES 34,056
TOTAL LIABILITIES 101,236
NET ASSETS $ 11,901,158
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 10,326,328
UNDISTRIBUTED NET INVESTMENT INCOME 38,999
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 85,809
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,450,022
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 11,901,158
</TABLE>
CALCULATION OF MAXIMUM $13.07
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($530,974 (DIVIDED BY)
40,614 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.79
(100/94.75 OF $13.07)
CLASS T: $13.03
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($7,085,134 (DIVIDED BY)
543,698 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $13.50
(100/96.50 OF $13.03)
CLASS B: $13.01
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($2,038,758 (DIVIDED BY)
156,704 SHARES) A
INSTITUTIONAL CLASS: $13.09
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($2,246,292 (DIVIDED BY) 171,631 SHARES)
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.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 3, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1997
INVESTMENT INCOME $ 142,376
DIVIDENDS
INTEREST 16,865
TOTAL INCOME 159,241
EXPENSES
MANAGEMENT FEE $ 34,303
TRANSFER AGENT FEES 16,704
DISTRIBUTION FEES 21,382
ACCOUNTING FEES AND EXPENSES 55,003
NON-INTERESTED TRUSTEES' COMPENSATION 17
CUSTODIAN FEES AND EXPENSES 9,234
REGISTRATION FEES 99,333
AUDIT 20,040
LEGAL 704
MISCELLANEOUS 786
TOTAL EXPENSES BEFORE REDUCTIONS 257,506
EXPENSE REDUCTIONS (150,700) 106,806
NET INVESTMENT INCOME 52,435
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 129,489
FOREIGN CURRENCY TRANSACTIONS 10 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,450,033
ASSETS AND LIABILITIES IN (11) 1,450,022
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,579,521
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,631,956
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ 52,435
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,450,022
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,631,956
DISTRIBUTIONS TO SHAREHOLDERS (13,446)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (43,681)
TOTAL DISTRIBUTIONS (57,127)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 10,325,481
REDEMPTION FEES848
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,901,158
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $38,999) $ 11,901,158
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .12
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.09
TOTAL FROM INVESTMENT OPERATIONS 3.21
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.07
TOTAL RETURN B, C 32.36%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 531
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.09% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.09
TOTAL FROM INVESTMENT OPERATIONS 3.17
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.03
TOTAL RETURN B, C 31.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,085
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .79% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES ) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.76
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.23
TOTAL FROM INVESTMENT OPERATIONS 1.25
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.01
TOTAL RETURN B, C 10.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,039
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .32% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE
NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF
CLASS B SHARES ) TO JULY 31, 1997.
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA D 1997 G
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .14
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.10
TOTAL FROM INVESTMENT OPERATIONS 3.24
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04)
FROM NET REALIZED GAIN (.11)
TOTAL DISTRIBUTIONS (.15)
REDEMPTION FEES ADDED TO PAID IN CAPITAL -
NET ASSET VALUE, END OF PERIOD $ 13.09
TOTAL RETURN B, C 32.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,246
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% A,
E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.29% A
PORTFOLIO TURNOVER 13% A
AVERAGE COMMISSION RATE F $ .0162
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER. G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES ) TO
JULY 31, 1997.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Utilities Growth Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue
an unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, 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
its distribution plan. The fund commenced sale of a new Class B of
shares on March 3, 1997. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and
certain fund-level expense reductions 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 of shares differs
in its respective distribution, transfer agent, registration, and
certain other class-specific fees, expenses, and expense
reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares, Class C shares. Offering of the new
class commences on or about November 3, 1997. Class C shares are
subject to an annual distribution and service fee of 1.00% (of
which .75% represents a distribution fee and .25% represents a
shareholder service fee) of the class' average net assets, and a
1.00% contingent deferred sales charge levied on Class C share
redemptions made within one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund
are maintained in U.S. dollars. Investment securities and other
assets and liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at
period end. Income receipts and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective
dates of the transactions. Purchases and sales of securities are
translated into U.S. dollars at the contractual currency exchange
rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the
extent that it distributes substantially all of its taxable income
for its fiscal year. The schedule of investments includes
information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund
is informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of
the securities received. Interest income is accrued as earned.
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 between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR)
bears all organizational expenses except for registering and
qualifying each class and shares of each class for distribution
under federal and state securities law. These expenses are borne by
each class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. 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. These differences may result in
distribution reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed
net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or
gain remaining at fiscal year end is distributed in the following
year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the fund less than 60 days are
subject to a redemption fee equal to 1% of the proceeds of the
redeemed shares. The fee, which is retained by the fund, is
accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as
of trade date. Gains and losses on securities sold are determined
on the basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign
currency contracts to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in
the value of the foreign currency or if the counterparties do not
perform under the contracts' terms. The U.S. dollar value of
foreign currency contracts is determined using contractual currency
exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances
are invested in one or more repurchase agreements for U.S. Treasury
or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal
Agency securities are transferred to an account of the fund, or to
the Joint Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to
the principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund
is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current
income by investing in U.S. Treasury securities and repurchase
agreements for these securities. Income distributions from the Cash
Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest
income in the accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term
securities, aggregated $10,787,252 and $761,664, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500%
to .5200% for the period. The annual individual fund fee rate is
.30%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management
fee. For the period, the management fee was equivalent to an
annualized rate of .60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans
with respect to each class of shares (collectively referred to as
"the Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a
portion of which was paid to securities dealers, banks and other
financial institutions for the distribution of each class'
applicable shares, and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 930 $ 930
CLASS T 17,084 17,084
CLASS B 3,368 842
$ 21,382 $ 18,856
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties
that assist in the sale of each class' shares or render shareholder
support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25%
for selling Class A shares and 3.50% for selling Class T shares of
the fund, respectively, and the proceeds of a contingent deferred
sales charge levied on Class B share redemptions occurring within
six years of purchase . The Class B charge is based on declining
rates which range from 5% to 1% of the lesser of the cost of shares
at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital
gains. Effective August 1, 1997, Class A's maximum sales charge was
increased to 5.75%.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 14,745 $ 11,481
CLASS T 49,162 38,851
CLASS B * 200 0 *
$ 64,107 $ 50,332
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract
with respect to its shares. The Transfer Agents receive 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
all shareholder reports. For the period, the following amounts were
paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC ** $ 1,716 .46% *
CLASS T *** FIIOC ** 10,915 .32% *
CLASS B FIIOC ** 1,012 .30% *
INSTITUTIONAL CLASS FIIOC ** 3,061 .19% *
$ 16,704
* ANNUALIZED
** FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
(FIIOC), AN AFFILIATE OF FMR.
*** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY
WAS THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS
ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of
FMR, maintains the fund's accounting records. The fee is based on
the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $451 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of
average net assets for each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A 1.75% $ 34,643
CLASS T 2.00% 56,435
CLASS B 2.50% 13,242
INSTITUTIONAL CLASS 1.50% 46,017
$ 150,337
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the
period, the fund's custodian fees were reduced by $363 under the
custodian arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED
JULY 31,
CLASS A 1997 A
From net investment income $ 816
From net realized gain 2,993
Total $ 3,809
CLASS T
From net investment income $ 6,500
From net realized gain 23,832
Total $ 30,332
INSTITUTIONAL CLASS
From net investment income $ 6,130
From net realized gain 16,856
Total $ 22,986
$ 57,127
A DISTRIBUTIONS ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT
OF SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 A, B 1997 A, B
CLASS A 50,784 $ 550,067
Shares sold
Reinvestment of distributions 351 3,875
Shares redeemed (10,521) (126,974)
Net increase (decrease) 40,614 $ 426,968
CLASS T 599,685 $ 6,865,905
Shares sold
Reinvestment of distributions 2,654 29,247
Shares redeemed (58,641) (701,040)
Net increase (decrease) 543,698 $ 6,194,112
CLASS B 159,349 $ 1,941,989
Shares sold
Shares redeemed (2,645) (32,964)
Net increase (decrease) 156,704 $ 1,909,025
INSTITUTIONAL CLASS 180,368 $ 1,895,917
Shares sold
Reinvestment of distributions 1,242 13,709
Shares redeemed (9,979) (114,250)
Net increase (decrease) 171,631 $ 1,795,376
A SHARE TRANSACTIONS FOR CLASS A, CLASS T AND THE INSTITUTIONAL
CLASS ARE FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
SHARES) TO JULY 31, 1997.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register
its shares for sale:
REGISTRATION
FEES
CLASS A $ 30,522
CLASS T 28,133
CLASS B 12,501
INSTITUTIONAL CLASS 28,177
$ 99,333
9. BENEFICIAL INTEREST.
At the end of the period, FMR Corp., an affiliate of FMR was record
owner of approximately 12.0% of the total outstanding shares of the
fund. In addition, 1 unaffiliated shareholder was record owner of
more than 10% of the total outstanding shares of the fund, totaling
11.9%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VII and the Shareholders
of Fidelity Advisor Consumer Industries Fund, Fidelity Advisor
Cyclical Industries Fund, Fidelity Advisor Financial Services Fund,
Fidelity Advisor Health Care Fund, Fidelity Advisor Technology Fund
and Fidelity Advisor Utilities Growth Fund:
We have audited the accompanying statements of assets and
liabilities of Fidelity Advisor Series VII: Fidelity Advisor
Consumer Industries Fund, Fidelity Advisor Cyclical Industries
Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor
Health Care Fund, Fidelity Advisor Technology Fund and Fidelity
Advisor Utilities Growth Fund, including the schedules of portfolio
investments, as of July 31, 1997, and the related statements of
operations for the period then ended, the statements of changes in
net assets for the period then ended and the financial highlights
of Class A, Class B, Class T and Institutional Class for each of
the periods indicated therein. 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 generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of July 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Advisor Series VII: Fidelity Advisor
Consumer Industries Fund, Fidelity Advisor Cyclical Industries
Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor
Health Care Fund, Fidelity Advisor Technology Fund and Fidelity
Advisor Utilities Growth Fund as of July 31, 1997, the results of
their operations for the period then ended, the changes in their
net assets for the period then ended, and the financial highlights
of Class A, Class B, Class T and Institutional Class for each of
the periods indicated therein, in conformity with generally
accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 12, 1997
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay on
September 8, 1997 to shareholders of record at the opening of
business on September 5, 1997, the following distributions derived
from capital gains realized from sales of portfolio securities, and
dividends derived from net investment income:
DIVIDENDS CAPITAL GAINS
Consumer Industries:
Class A $0.01 $1.17
Class T $0.00 $1.17
Class B $0.00 $1.17
Cyclical Industries:
Class A $0.00 $0.61
Class T $0.00 $0.61
Class B $0.00 $0.61
Financial Services:
Class A $0.02 $0.02
Class T $0.01 $0.02
Class B $0.03 $0.02
Health Care:
Class A $0.00 $0.26
Class T $0.00 $0.25
Class B $0.00 $0.27
Natural Resources:
Class A $0.00 $2.73
Class T $0.00 $2.71
Class B $0.00 $2.65
Technology:
Class A $0.00 $0.89
Class T $0.00 $0.88
Class B $0.00 $0.91
Utilities Growth:
Class A $0.04 $0.10
Class T $0.03 $0.10
Class B $0.04 $0.10
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
(dagger) CUSTODIAN FOR FIDELITY ADVISOR NATURAL RESOURCES FUND ONLY
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
Brown Brothers Harriman & Co. (dagger)
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Balanced
Fidelity Advisor Equity Income Fund
Fidelity Advisor Growth & Income Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Short Fixed-Income Fund
Fidelity Advisor Strategic Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
