(2_FIDELITY_LOGOS)
(REGISTERED TRADEMARK)
FIDELITY ADVISOR
FOCUS FUNDS
CLASS A, CLASS T, CLASS B AND CLASS C
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
ANNUAL REPORT
FOR THE YEAR ENDING
JULY 31, 1998
AND
PROSPECTUS
DATED SEPTEMBER 28, 1998
CONTENTS
PERFORMANCE OVERVIEW A-4
CONSUMER INDUSTRIES A-5 PERFORMANCE
A-9 FUND TALK: THE MANAGER'S OVERVIEW
A-10 INVESTMENT SUMMARY
A-11 INVESTMENTS
A-15 FINANCIAL STATEMENTS
A-19 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES A-24 PERFORMANCE
A-28 FUND TALK: THE MANAGER'S OVERVIEW
A-29 INVESTMENT SUMMARY
A-30 INVESTMENTS
A-33 FINANCIAL STATEMENTS
A-37 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES A-42 PERFORMANCE
A-46 FUND TALK: THE MANAGER'S OVERVIEW
A-47 INVESTMENT SUMMARY
A-48 INVESTMENTS
A-50 FINANCIAL STATEMENTS
A-54 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE A-59 PERFORMANCE
A-63 FUND TALK: THE MANAGER'S OVERVIEW
A-64 INVESTMENT SUMMARY
A-65 INVESTMENTS
A-67 FINANCIAL STATEMENTS
A-71 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES A-75 PERFORMANCE
A-79 FUND TALK: THE MANAGER'S OVERVIEW
A-80 INVESTMENT SUMMARY
A-81 INVESTMENTS
A-83 FINANCIAL STATEMENTS
A-87 NOTES TO THE FINANCIAL STATEMENTS
TECHNOLOGY A-92 PERFORMANCE
A-96 FUND TALK: THE MANAGERS' OVERVIEW
A-97 INVESTMENT SUMMARY
A-98 INVESTMENTS
A-100 FINANCIAL STATEMENTS
A-104 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH A-109 PERFORMANCE
A-113 FUND TALK: THE MANAGER'S OVERVIEW
A-114 INVESTMENT SUMMARY
A-115 INVESTMENTS
A-117 FINANCIAL STATEMENTS
A-121 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-126
DISTRIBUTIONS A-127
FIDELITY ADVISOR FOCUS FUNDS P-1
PROSPECTUS
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.
PERFORMANCE OVERVIEW
Benign inflation, moderate economic growth and concern over the
financial crisis in Asia were the key factors behind the U.S. stock
market's performance for the 12-month period that ended July 31, 1998.
While the U.S. stock market experienced volatility and lackluster
returns in recent months, the Standard & Poor's 500 Index - a measure
of the U.S. stock market - returned 19.29% over the past year.
However, strong performance was limited to a narrow range of mostly
very large-cap stocks. In comparison to the larger-cap oriented S&P
500 index, the Russell 2000 - a general measure of
small-capitalization stock performance - returned 2.31% during the
same 12-month period. This narrow market - one where a small number of
stocks perform well, and others are flat or produce losses - was
further demonstrated by the fact that, as of the end of the period,
the average stock on the New York Stock Exchange was down more than
24% from its 52-week high - the largest decline since 1990.
Early in the period, as was the case during most of the past year,
investors preferred the safety and liquidity of large-cap stocks,
hoping these stocks would maintain steady earnings and be easier to
sell in a possible economic slowdown. In response to the unfolding
currency and market crisis in Asia during the fourth quarter of 1997,
the broad market indexes experienced some weakness. In late October,
the Dow Jones Industrial Average fell 550-plus points in one trading
session, but recouped much of its losses the next day. At the start of
1998, investors seemed to shrug off corporate earnings issues to push
the major stock market indexes higher. In the first quarter of 1998,
the S&P 500 index produced a solid 13.95% return. The S&P 500 and
other market indexes continued to rally through May, before falling
sharply in mid-June amid renewed fears that Asia's economic crisis
would inhibit the growth in earnings of American companies. While
stocks continued to reach new highs in mid-July, a week and a half of
selling pressure toward the end of the period, due to news of
declining corporate profits, sent the Dow Jones Industrial Average
down over 450 points from its record high of 9337.97, set on July 17,
to close at 8883.29 by the end of the period.
The pattern of a narrow market was also displayed in certain industry
groups. HEALTH CARE and FINANCE stocks continued to perform well.
Prices of many pharmaceutical stocks moved higher, helped by strong
pipelines of new products, the ability to bring products to market
more rapidly and relaxed regulations that permitted more aggressive
advertising. Stable economic growth, coupled with nonexistent
inflation, buoyed the financial sector. Banks and brokerage houses
sustained impressive earnings growth; other financial services firms
benefited from merger and acquisition activity, exemplified by the
recently announced megamerger of Travelers and Citicorp.
While many TECHNOLOGY stocks turned in very strong results,
particularly in early 1998, the sector experienced some mixed results
over the 12-month period, due primarily to the negative impact of the
Asian crisis and the effect of a strong dollar on foreign sales.
UTILITY stocks performed well, benefiting from a flight to safety by
concerned investors and strong revenue gains by many telephone
companies. NATURAL RESOURCES stocks experienced weak results, with the
price of most commodities declining and crude oil dipping below $12
dollars a barrel near the end of June. In addition, we experienced one
of the warmest weather patterns in recent history in the U.S., Europe
and Asia, causing lower demand for energy.
CYCLICAL INDUSTRIES - those whose performance typically moves in line
with prevailing economic conditions - produced some mixed results due
to an anticipated slowdown in exports to Asia. However, low interest
rates and strong domestic demand provided some support for these
stocks. Stocks in the CONSUMER INDUSTRIES sector posted generally
strong results. Home builders, restaurants and the hotel industry
posted strong results, supported by solid domestic consumer spending
and increased disposable income.
ADVISOR CONSUMER INDUSTRIES FUND - CLASS A
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL A 27.48% 72.96%
FIDELITY ADV CONSUMER - CL A 20.15% 63.02%
(INCL. 5.75% SALES CHARGE)
S&P 500 (REGISTERED TRADEMARK) 19.29% 76.95%
GS CONSUMER INDUSTRIES 21.45% 65.93%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to the performance of both the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Consumer Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the consumer industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL A 27.48% 33.28%
FIDELITY ADV CONSUMER - CL A 20.15% 29.21%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS CONSUMER INDUSTRIES 21.45% 30.42%
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.
$10,000 OVER LIFE OF FUND
FA CONSUMER IND -CL A S&P 500
GS CONSUMER INDUSTRIES
00185 SP001
GS002
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 9943.38 10516.69 10513.26
1996/10/31 10056.48 10806.74 10515.20
1996/11/30 10395.78 11623.62 11025.10
1996/12/31 10216.82 11393.36 10884.77
1997/01/31 10710.11 12105.21 11305.36
1997/02/28 10842.92 12200.12 11695.56
1997/03/31 10529.87 11698.81 11296.69
1997/04/30 10700.63 12397.23 11790.13
1997/05/31 11525.94 13151.98 12465.57
1997/06/30 12114.10 13741.19 12976.04
1997/07/31 12787.63 14834.57 13662.47
1997/08/31 12332.28 14003.54 12875.85
1997/09/30 13156.20 14770.51 13567.42
1997/10/31 12917.00 14277.18 13296.15
1997/11/30 13551.41 14938.07 14130.89
1997/12/31 13988.48 15194.56 14591.98
1998/01/31 13923.62 15362.61 14472.66
1998/02/28 14928.97 16470.56 15602.11
1998/03/31 15782.98 17314.02 16489.31
1998/04/30 15685.69 17488.19 16327.46
1998/05/31 15761.36 17187.57 16451.19
1998/06/30 16550.51 17885.73 17157.68
1998/07/31 16301.88 17695.25 16593.20
IMATRL PRASUN SHR__CHT 19980731 19980825 154227 R00000000000026
$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 5.75% sales
charge was paid. As the chart shows, by July 31, 1998, the value of
the investment would have grown to $16,302 - a 63.02% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Consumer Industries Index, it would have grown to $16,593 - a
65.93% increase.
(checkmark)
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.
ADVISOR CONSUMER INDUSTRIES FUND - CLASS T
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL T 26.93% 71.67%
FIDELITY ADV CONSUMER - CL T 22.49% 65.67%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS CONSUMER INDUSTRIES 21.45% 65.93%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to the performance of both the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Consumer Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the consumer industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL T 26.93% 32.76%
FIDELITY ADV CONSUMER - CL T 22.49% 30.31%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 34.89%
GS CONSUMER INDUSTRIES 21.45% 30.42%
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.
$10,000 OVER LIFE OF FUND
FA CONSUMER IND -CL T S&P 500
GS CONSUMER INDUSTRIES
00195 SP001
GS002
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 10180.75 10516.69 10513.26
1996/10/31 10296.55 10806.74 10515.20
1996/11/30 10643.95 11623.62 11025.10
1996/12/31 10451.06 11393.36 10884.77
1997/01/31 10955.66 12105.21 11305.36
1997/02/28 11091.51 12200.12 11695.56
1997/03/31 10761.58 11698.81 11296.69
1997/04/30 10936.25 12397.23 11790.13
1997/05/31 11770.78 13151.98 12465.57
1997/06/30 12362.72 13741.19 12976.04
1997/07/31 13051.69 14834.57 13662.47
1997/08/31 12585.91 14003.54 12875.85
1997/09/30 13396.56 14770.51 13567.42
1997/10/31 13152.02 14277.18 13296.15
1997/11/30 13800.59 14938.07 14130.89
1997/12/31 14236.18 15194.56 14591.98
1998/01/31 14169.91 15362.61 14472.66
1998/02/28 15185.99 16470.56 15602.11
1998/03/31 16058.50 17314.02 16489.31
1998/04/30 15948.06 17488.19 16327.46
1998/05/31 16025.37 17187.57 16451.19
1998/06/30 16820.56 17885.73 17157.68
1998/07/31 16566.54 17695.25 16593.20
IMATRL PRASUN SHR__CHT 19980731 19980825 160043 R00000000000026
$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 3.50% sales
charge was paid. As the chart shows, by July 31, 1998, the value of
the investment would have grown to $16,567 - a 65.67% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Consumer Industries Index, it would have grown to $16,593 - a
65.93% increase.
(checkmark)
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.
ADVISOR CONSUMER INDUSTRIES FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997 are
those of Class T which bears a 0.50% 12b-1 fee. Had Class B shares'
12b-1 fee been reflected, returns prior to March 3, 1997 would have
been lower. Class B shares' contingent deferred sales charge included
in the past one year and life of fund total return figures are 5% and
4%, respectively. If Fidelity had not reimbursed certain class
expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL B 26.30% 70.44%
FIDELITY ADV CONSUMER - CL B 21.30% 66.44%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS CONSUMER INDUSTRIES 21.45% 65.93%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Consumer Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the consumer industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL B 26.30% 32.26%
FIDELITY ADV CONSUMER - CL B 21.30% 30.62%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS CONSUMER INDUSTRIES 21.45% 30.42%
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.
$10,000 OVER LIFE OF FUND
FA CONSUMER IND -CL B S&P 500
GS CONSUMER INDUSTRIES
00190 SP001
GS002
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10550.00 10516.69 10513.26
1996/10/31 10670.00 10806.74 10515.20
1996/11/30 11030.00 11623.62 11025.10
1996/12/31 10830.11 11393.36 10884.77
1997/01/31 11353.01 12105.21 11305.36
1997/02/28 11493.80 12200.12 11695.56
1997/03/31 11151.90 11698.81 11296.69
1997/04/30 11322.85 12397.23 11790.13
1997/05/31 12187.65 13151.98 12465.57
1997/06/30 12791.00 13741.19 12976.04
1997/07/31 13494.90 14834.57 13662.47
1997/08/31 13012.22 14003.54 12875.85
1997/09/30 13841.35 14770.51 13567.42
1997/10/31 13576.87 14277.18 13296.15
1997/11/30 14249.10 14938.07 14130.89
1997/12/31 14689.16 15194.56 14591.98
1998/01/31 14620.57 15362.61 14472.66
1998/02/28 15649.39 16470.56 15602.11
1998/03/31 16541.02 17314.02 16489.31
1998/04/30 16426.71 17488.19 16327.46
1998/05/31 16506.73 17187.57 16451.19
1998/06/30 17318.35 17885.73 17157.68
1998/07/31 17044.00 17695.25 16593.20
IMATRL PRASUN SHR__CHT 19980731 19980825 155612 R00000000000026
$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, 1998, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $16,644 - a
66.44% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Consumer Industries Index, it would
have grown to $16,593 - a 65.93% increase.
(checkmark)
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.
ADVISOR CONSUMER INDUSTRIES FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL C 26.32% 70.47%
FIDELITY ADV CONSUMER - CL C 25.32% 70.47%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS CONSUMER INDUSTRIES 21.45% 65.93%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Consumer Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the consumer industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - CL C 26.32% 32.27%
FIDELITY ADV CONSUMER - CL C 25.32% 32.27%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS CONSUMER INDUSTRIES 21.45% 30.42%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
FA CONSUMER IND -CL C S&P 500
GS CONSUMER INDUSTRIES
00282 SP001
GS002
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10550.00 10516.69 10513.26
1996/10/31 10670.00 10806.74 10515.20
1996/11/30 11029.99 11623.62 11025.10
1996/12/31 10830.11 11393.36 10884.77
1997/01/31 11353.02 12105.21 11305.36
1997/02/28 11493.79 12200.12 11695.56
1997/03/31 11151.90 11698.81 11296.69
1997/04/30 11322.84 12397.23 11790.13
1997/05/31 12187.65 13151.98 12465.57
1997/06/30 12790.99 13741.19 12976.04
1997/07/31 13494.90 14834.57 13662.47
1997/08/31 13012.23 14003.54 12875.85
1997/09/30 13841.35 14770.51 13567.42
1997/10/31 13576.87 14277.18 13296.15
1997/11/30 14247.70 14938.07 14130.89
1997/12/31 14686.44 15194.56 14591.98
1998/01/31 14606.62 15362.61 14472.66
1998/02/28 15655.65 16470.56 15602.11
1998/03/31 16545.05 17314.02 16489.31
1998/04/30 16431.02 17488.19 16327.46
1998/05/31 16510.84 17187.57 16451.19
1998/06/30 17320.42 17885.73 17157.68
1998/07/31 17046.76 17695.25 16593.20
IMATRL PRASUN SHR__CHT 19980731 19980825 160020 R00000000000026
$10,000 OVER THE LIFE OF FUND: Let's say hypothetically that $10,000
was invested in Fidelity Advisor Consumer Industries - Class C on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1998, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $17,047 - a
70.47% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Consumer Industries Index, it would
have grown to $16,593 - a 65.93% increase.
(checkmark)
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.
ADVISOR CONSUMER INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Doug Chase)
An interview with Doug Chase, Portfolio Manager of Fidelity Advisor
Consumer Industries Fund
Q. HOW DID THE FUND PERFORM, DOUG?
A. Very well. During the 12-month period that ended July 31, 1998, the
fund's Class A, Class T, Class B and Class C shares had returns of
27.48%, 26.93%, 26.30% and 26.32%, respectively. This performance
compares very favorably with the Standard & Poor's 500 Index's return
of 19.29% during the same period. Beginning this period, the fund also
compares itself to the Goldman Sachs Consumer Industries Index - an
index of stocks designed to measure the performance of companies in
the consumer industries sector - which returned 21.45% over the same
12-month period.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PAST 12 MONTHS?
A. It was a volatile year. Last August, Asia's economic and financial
problems triggered a decline in the market. Since then, the market has
been increasingly nervous. Corporate earnings were a primary focus,
with investors growing more intolerant of declining business
fundamentals or missed earnings projections. Companies that had lower
earnings projections, or whose earnings came in less than expected,
found their stock prices hit hard.
Q. THE FUND OUTPERFORMED THE S&P 500 SIGNIFICANTLY. CAN YOU EXPLAIN
WHY?
A. During the year, I focused on increasing the number of large-cap
stocks in the fund. After last August's market decline, I analyzed
large-cap stock valuations, which led me to conclude that in an
environment of market uncertainty there could be a flight to quality
among investors. Large-cap consumer companies delivered more
predictable earnings growth, and were undervalued at the prevailing
interest rates. During the last 12 months, the best performers have
been the large-cap companies, so my strategy paid off. I also built up
the fund's retail industry holdings. Retailers have been more
insulated from the events in Asia, since their core business is in the
U.S. Their good performance during the year reflected the relative
strength of the U.S. economy.
Q. WHICH STOCKS PERFORMED WELL?
A. As I mentioned before, the large-cap stocks performed well. For
example, Wal-Mart Stores, the fund's number one holding, has been a
terrific stock. This company has been one of the best success stories
in retailing. Wal-Mart has invested in technology to track its
inventories closely and has focused on re-supplying its
fastest-selling items. The company's earnings estimates have
increased, and its same-store sales - which compares sales growth for
only those stores which have been in operation for at least 12 months
- - have been very strong. Cable companies MediaOne Group and Comcast
Corp. also have shown strong performance. These cable operators have
gained an advantage in the battle for high-speed Internet access to
the home, because cable already allows two-way access at higher speed
than phone lines or via satellite.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. There were a few. Many food companies, including Sara Lee and
Campbell Soup, were disappointments. These companies were hurt by
limited pricing and minimal volume growth. Cereal companies Quaker
Oats, Kellogg Co. and General Mills did not perform well. They lost
pricing power - meaning the ability to raise prices - and saw their
product mix shift to low-end formats like bagged cereals instead of
boxed, with lower profit margins. I've sold all of General Mills from
the portfolio. Textiles and apparel companies had a bad year. With
currency valuation making Asian imports so much cheaper than U.S.
products, it's anticipated that many of these companies will have a
tougher time competing.
Q. THE FUND'S TOP 10 HOLDINGS ARE ALL LARGE-CAP STOCKS. DOES THIS
REFLECT A SHIFT IN THE FUND'S INVESTMENT PROFILE?
A. When I began managing this fund last summer, most of the top 10
holdings were small-cap companies. Over the past year, I've built a
more diversified portfolio, buying small-caps, mid-caps and
large-caps. In the current market environment, it's a simple fact that
large-capitalization companies have had an advantage, so changing the
mix to include more large-caps has really paid off. Wal-Mart,
Coca-Cola, Gillette, Home Depot, McDonald's, Avon Products, Clorox,
and Walt Disney all performed very well during the year. That reflects
an environment in which the largest companies have had the best
earnings growth, have been taking market share and have proved to be
the most stable business models.
Q. WHAT'S YOUR OUTLOOK AND STRATEGY FOR THE COMING MONTHS, DOUG?
A. I'm always cautious. Although the U.S. economy is strong and
unemployment is low, personal indebtedness is still high. The good
news is that interest rates continue to decline. When interest rates
go down, U.S. consumers tend to refinance their homes, their other
debt costs decline, they have more disposable income and they spend
more. That's good for consumer industries and for the fund. In the
coming months, I'll maintain the fund's diversified approach. The
challenge is in finding companies whose performance is strengthening
and whose earnings are predictable, and then buying their stock at
attractive prices.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1998, more than $27 million
MANAGER: Doug Chase, since August 1997;
joined Fidelity in 1993
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
WAL-MART STORES, INC. 5.6
PHILIP MORRIS COMPANIES, INC. 4.4
GILLETTE CO. 4.3
COCA-COLA CO. (THE) 3.5
PEPSICO, INC. 3.0
HOME DEPOT, INC. 2.6
MCDONALD'S CORP. 2.4
AVON PRODUCTS, INC. 2.0
CLOROX CO. 1.9
DISNEY (WALT) CO. 1.8
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 7.3
ROW: 1, COL: 2, VALUE: 6.8
ROW: 1, COL: 3, VALUE: 6.5
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 4.5
ROW: 1, COL: 6, VALUE: 69.5
COSMETICS 7.3%
SOFT DRINKS 6.8%
GENERAL MERCHANDISE STORES 6.5%
SOAPS & DETERGENTS 5.4%
CABLE TV OPERATORS 4.5%
ALL OTHERS 69.5%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.7%
ADVERTISING - 0.2%
Outdoor Systems, Inc. (a) 2,362 $ 60,231
ADVERTISING AGENCIES - 1.5%
Interpublic Group of Companies, Inc. 2,900 174,725
Omnicom Group, Inc. 4,500 236,250
410,975
TOTAL ADVERTISING 471,206
AIR TRANSPORTATION - 0.4%
TRANSPORTATION SERVICES - 0.4%
Viad Corp. 4,400 105,875
APPAREL STORES - 2.9%
FAMILY CLOTHING STORES - 0.1%
Abercrombie & Fitch Co. Class A (a) 595 27,630
GENERAL APPAREL STORES - 2.4%
Gap, Inc. 4,175 248,934
Limited, Inc. (The) 6,200 166,238
Saks Holdings, Inc. (a) 5,700 146,419
TJX Companies, Inc. 5,100 119,850
681,441
WOMEN'S CLOTHING STORES - 0.4%
AnnTaylor Stores Corp. (a) 2,300 48,444
Wet Seal, Inc. Class A (a) 1,700 50,363
98,807
TOTAL APPAREL STORES 807,878
AUTOS, TIRES, & ACCESSORIES - 0.2%
AUTO PARTS - RETAIL - 0.2%
Pep Boys-Manny, Moe & Jack 3,500 60,375
BEVERAGES - 8.6%
DISTILLED & BLENDED LIQUOR - 0.4%
Seagram Co. Ltd. 2,900 105,596
MALT BEVERAGE - 1.3%
Anheuser-Busch Companies, Inc. 6,200 320,463
Coors (Adolph) Co. Class B 1,100 41,491
361,954
SOFT DRINKS - 6.8%
Celestial Seasonings, Inc. (a) 1,100 49,363
Coca-Cola Bottling Co. Consolidated 600 36,000
Coca-Cola Co. (The) 12,100 976,319
PepsiCo, Inc. 21,400 830,588
Whitman Corp. 1,000 21,188
1,913,458
WINE, BRANDY & BRANDY SPIRITS - 0.1%
Canadaigua Wine Co. Class A (a) 800 37,700
TOTAL BEVERAGES 2,418,708
BROADCASTING - 8.1%
CABLE TV OPERATORS - 4.5%
Comcast Corp.:
Class A 1,800 81,450
Class A special 1,800 81,731
Cox Communications, Inc. Class A (a) 4,100 200,388
MediaOne Group, Inc. (a) 6,500 314,031
TCA Cable TV, Inc. 1,600 92,100
Time Warner, Inc. 5,325 479,583
1,249,283
SHARES VALUE (NOTE 1)
RADIO BROADCASTING - 2.0%
Chancellor Media Corp. (a) 2,800 $ 135,100
Clear Channel Communications, Inc. (a) 4,300 241,606
Jacor Communications, Inc. Class A (a) 2,400 140,700
Radiomutuel, Inc. Class A (a) 4,600 49,291
566,697
TELEVISION BROADCASTING - 1.6%
CBS Corp. 11,500 390,281
Scripps E.W. Co. Class A 1,200 63,150
453,431
TOTAL BROADCASTING 2,269,411
BUILDING MATERIALS - 0.2%
HARDWARE - WHOLESALE - 0.2%
Richelieu Hardware Ltd. (a) 4,400 50,931
COMPUTER SERVICES & SOFTWARE - 0.4%
COMPUTER & SOFTWARE STORES - 0.1%
CompUSA, Inc. (a) 2,000 37,875
COMPUTER SERVICES - 0.3%
Computer Learning Centers, Inc. (a) 2,500 69,688
TOTAL COMPUTER SERVICES & SOFTWARE 107,563
CONSUMER ELECTRONICS - 0.4%
RADIOS, TELEVISIONS, STEREOS - 0.4%
Gemstar International Group Ltd. (a) 3,200 119,200
DRUG STORES - 2.8%
CVS Corp. 8,430 345,630
Rite Aid Corp. 3,700 146,150
Walgreen Co. 6,850 295,834
787,614
DRUGS & PHARMACEUTICALS - 0.3%
PHARMACEUTICAL PREPARATIONS - 0.3%
Rexall Sundown, Inc. (a) 2,900 87,544
EDUCATIONAL SERVICES - 0.3%
COLLEGES, UNIVERSITIES & PROFESSIONAL SCHOOLS - 0.3%
Apollo Group, Inc. Class A (a) 2,250 80,719
ENTERTAINMENT - 5.4%
CRUISES - 0.7%
Carnival Cruise Lines, Inc. Class A 4,700 173,606
Royal Caribbean Cruises Ltd. 500 37,156
210,762
MOTION PICTURE DISTRIBUTION - 1.0%
Viacom, Inc. Class B (non-vtg.) (a) 4,000 274,000
MOTION PICTURE PRODUCTION - 3.5%
Disney (Walt) Co. 15,000 516,563
King World Productions, Inc. (a) 11,500 322,000
Tele-Communications, Inc.
(Liberty Media Group), Series A (a) 3,550 140,003
978,566
RECREATIONAL SERVICES - 0.2%
Premier Parks, Inc. (a) 900 57,488
TOTAL ENTERTAINMENT 1,520,816
FOODS - 6.3%
BAKERY PRODUCTS - 0.1%
Flowers Industries, Inc. 1,100 20,281
Interstate Bakeries Corp. 700 20,125
40,406
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FOODS - CONTINUED
CANDY - 0.2%
Hershey Foods Corp. 900 $ 56,813
CANNED SPECIALTIES - 0.6%
Campbell Soup Co. 2,800 151,200
COOKIES & CRACKERS - 0.1%
Nabisco Holdings Corp. Class A 500 17,813
DAIRY - 0.3%
Dean Foods Co. 1,100 60,294
Groupe Danone 120 36,202
96,496
FOOD - 2.5%
Dole Food, Inc. 1,875 88,359
Heinz (H.J.) Co. 5,275 290,784
Kellogg Co. 1,300 43,063
Nestle SA ADR (Reg.) 300 31,200
Sara Lee Corp. 5,100 255,638
709,044
GRAIN MILL PRODUCTS - 1.5%
Archer-Daniels-Midland Co. 1,900 32,538
Corn Products International, Inc. (a) 1,343 39,954
Quaker Oats Co. 1,200 63,450
Ralston Purina Co. 8,300 267,156
403,098
MEAT & FISH - 0.3%
Tyson Foods, Inc. 3,700 80,013
PACKAGED & FROZEN FOODS - 0.7%
Bestfoods 3,550 197,469
TOTAL FOODS 1,752,352
GENERAL MERCHANDISE STORES - 11.0%
DEPARTMENT STORES - 3.1%
Federated Department Stores, Inc. (a) 7,700 407,619
Kohls Corp. (a) 1,200 58,800
Nordstrom, Inc. 1,400 43,706
Penney (J.C.) Co., Inc. 2,825 165,792
Proffitts, Inc. (a) 2,450 77,175
Sears, Roebuck & Co. 1,300 65,975
Stein Mart, Inc. (a) 4,200 44,363
863,430
GENERAL MERCHANDISE STORES - 6.5%
Dayton Hudson Corp. 4,700 224,719
Wal-Mart Stores, Inc. 25,050 1,581,281
1,806,000
VARIETY STORES - 1.4%
Consolidated Stores Corp. (a) 3,040 102,220
Costco Companies, Inc. (a) 2,500 141,875
Dollar Tree Stores (a) 3,550 161,081
405,176
TOTAL GENERAL MERCHANDISE STORES 3,074,606
GROCERY STORES - 3.1%
FOOD STORES - 0.2%
Whole Foods Market, Inc. (a) 1,200 65,100
GROCERY - RETAIL - 2.9%
Albertson's, Inc. 1,100 52,869
Dominick's Supermarkets, Inc. (a) 900 40,556
Hannaford Brothers Co. 1,000 43,438
SHARES VALUE (NOTE 1)
Kroger Co. (The) (a) 3,300 $ 156,131
Meyer (Fred), Inc. (a) 4,000 176,250
Safeway, Inc. (a) 7,450 330,128
799,372
TOTAL GROCERY STORES 864,472
HOLDING COMPANIES - 0.2%
HOLDING COMPANY OFFICES, NEC - 0.2%
Triarc Companies, Inc. Class A (a) 2,600 59,313
HOME FURNISHINGS - 0.1%
FURNITURE - 0.1%
Dorel Industries, Inc. Class B
(sub-vtg.) (a)(c) 600 19,784
HOUSEHOLD PRODUCTS - 13.1%
COSMETICS - 7.3%
Alberto-Culver Co. Class A 1,400 31,850
Avon Products, Inc. 6,575 568,738
Estee Lauder Companies, Inc. 1,200 77,100
Gillette Co. 22,900 1,199,388
International Flavors & Fragrances, Inc. 1,800 75,600
Revlon, Inc. Class A (a) 1,700 84,363
2,037,039
FABRICATED RUBBER PRODUCTS - 0.2%
Rubbermaid, Inc. 1,600 53,300
MANUFACTURED PRODUCTS - 0.2%
First Brands Corp. 2,800 65,625
SOAPS & DETERGENTS - 5.4%
Church & Dwight Co., Inc. 1,600 49,400
Clorox Co. 5,200 533,000
Dial Corp. 1,700 40,588
Procter & Gamble Co. 5,730 454,819
Unilever NV ADR 6,300 437,850
1,515,657
TOTAL HOUSEHOLD PRODUCTS 3,671,621
LEASING & RENTAL - 0.1%
TRUCK RENT & LEASE, NO DRIVER - 0.1%
Hertz Corp. Class A 500 23,281
LEISURE DURABLES & TOYS - 1.2%
MOTORCYCLES - 0.2%
Harley-Davidson, Inc. 1,800 71,325
TOYS & GAMES - 0.9%
Galoob (Lewis) Toys, Inc. (a) 3,800 36,100
Mattel, Inc. 5,500 211,406
247,506
TRAVEL TRAILERS AND CAMPERS - 0.1%
Brunswick Corp. 900 17,494
TOTAL LEISURE DURABLES & TOYS 336,325
LODGING & GAMING - 1.4%
HOTELS, MOTELS, & TOURIST CENTERS - 1.2%
Hilton Hotels Corp. 1,400 35,263
Promus Hotel Corp. (a) 4,400 165,550
Sun International Hotels Ltd. Ord. (a) 2,800 122,500
323,313
RACING & GAMING - 0.2%
International Speedway Corp. Class A 1,900 60,800
TOTAL LODGING & GAMING 384,113
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PHOTOGRAPHIC EQUIPMENT - 0.9%
Eastman Kodak Co. 3,000 $ 252,375
Polaroid Corp. 300 9,900
262,275
PRINTING - 0.6%
COMMERCIAL PRINTING, NEC - 0.5%
Donnelley (R.R.) & Sons Co. 1,300 55,250
Valassis Communications, Inc. (a) 2,100 79,669
134,919
MANIFOLD BUSINESS FORMS - 0.1%
Reynolds & Reynolds Co. Class A 1,500 25,219
TOTAL PRINTING 160,138
PUBLISHING - 2.4%
BOOK PUBLISHING & PRINTING - 0.7%
Harcourt General, Inc. 1,350 76,191
McGraw-Hill Companies, Inc. 1,100 90,131
Reader's Digest Association, Inc.
(The) Class A (non-vtg.) 800 22,600
188,922
GENERAL PUBLISHING - 0.3%
Applied Graphics Technologies, Inc. (a) 1,100 56,788
Thomson Corp. 1,700 45,315
102,103
GREETING CARDS - 0.2%
American Greetings Corp. Class A 1,000 46,188
NEWSPAPERS - 0.9%
Harte Hanks Communications, Inc. 4,800 115,800
Times Mirror Co. Class A 900 54,056
Tribune Co. 1,200 80,700
250,556
PERIODICALS - 0.3%
Playboy Enterprises, Inc. Class B (a) 4,100 73,288
TOTAL PUBLISHING 661,057
REAL ESTATE - 0.1%
CEMETERY SUBDIVIDERS & DEVELOPERS - 0.1%
Stewart Enterprises, Inc. Class A 1,700 38,622
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Starwood Hotels & Resorts Trust 1,200 49,275
RESTAURANTS - 3.1%
Cracker Barrel Old Country Store, Inc. 800 24,200
Foodmaker, Inc. (a) 1,700 26,775
Logan's Roadhouse, Inc. (a) 25 591
Marriott International, Inc. Class A 1,300 42,250
McDonald's Corp. 10,000 668,125
Outback Steakhouse, Inc. (a) 1,500 54,141
Papa John's International, Inc. (a) 800 27,700
Starbucks Corp. (a) 900 37,688
881,470
RETAIL & WHOLESALE, MISCELLANEOUS - 6.9%
BOOK STORES - RETAIL - 0.2%
Barnes & Noble, Inc. (a) 1,500 57,000
BUILDING MATERIALS - RETAIL - 2.6%
Home Depot, Inc. 17,200 720,250
SHARES VALUE (NOTE 1)
LUMBER & BUILDING MATERIALS - RETAIL - 0.7%
Lowe's Companies, Inc. 5,000 $ 192,500
MAIL ORDER - 0.2%
Viking Office Products, Inc. (a) 1,200 38,100
Williams-Sonoma, Inc. (a) 800 26,450
64,550
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.2%
Action Performance Companies, Inc. (a) 2,200 66,000
MUSIC, TV, & ELECTRONICS STORES - 1.8%
Best Buy Co., Inc. (a) 5,500 257,125
Circuit City Stores, Inc. -
Circuit City Group 1,500 77,625
Tandy Corp. 2,800 159,075
493,825
RETAIL, GENERAL - 1.1%
Bed Bath & Beyond, Inc. (a) 700 30,188
Office Depot, Inc. (a) 1,800 58,500
Pier 1 Imports, Inc. 3,300 51,342
Staples, Inc. (a) 5,000 164,375
304,405
STATIONARY & OFFICE SUPPLIES - WHOLESALE - 0.1%
Boise Cascade Office Products Corp. (a) 1,400 20,300
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,918,830
SERVICES - 2.1%
BUSINESS SERVICES - 0.4%
Robert Half International, Inc. (a) 1,100 58,575
Snyder Communications, Inc. (a) 1,200 53,925
112,500
CREDIT REPORTING AGENCIES - 0.1%
Dunn & Bradstreet Corp. 1,500 41,156
GENERAL SERVICES - 0.9%
Service Corp. International 6,600 249,975
MANAGEMENT SERVICES - 0.3%
ServiceMaster Co. 2,500 85,000
PERSONAL SERVICES - 0.2%
Steiner Leisure Ltd. (a) 1,775 55,025
PERSONNEL SUPPLY SERVICES - 0.2%
AccuStaff, Inc. (a) 2,200 51,975
TOTAL SERVICES 595,631
TELEPHONE SERVICES - 0.0%
U.S. WEST, Inc. 191 10,195
TEXTILES & APPAREL - 3.1%
APPAREL - 1.6%
Fruit of the Loom, Inc. Class A (a) 1,100 34,306
Kellwood Co. 2,100 66,675
Liz Claiborne, Inc. 3,800 146,775
VF Corp. 1,200 56,475
Warnaco Group, Inc. Class A 3,800 139,413
443,644
CARPETS & RUGS - 0.4%
Mohawk Industries, Inc. (a) 500 15,563
Shaw Industries, Inc. 6,000 111,000
126,563
FOOTWEAR - 0.3%
NIKE, Inc. Class B 1,600 71,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
MEN'S & BOYS' CLOTHING - 0.5%
Nautica Enterprises, Inc. (a) 2,700 $ 69,609
Pacific Sunwear of California, Inc. (a) 1,950 57,525
Tommy Hilfiger (a) 400 22,425
149,559
TEXTILE MILL PRODUCTS - 0.3%
Unifi, Inc. 1,000 27,063
Westpoint Stevens, Inc. Class A (a) 1,200 43,050
70,113
TOTAL TEXTILES & APPAREL 861,079
TOBACCO - 4.4%
TOBACCO MANUFACTURERS - 4.4%
Philip Morris Companies, Inc. 28,400 1,244,275
TOTAL COMMON STOCKS
(Cost $23,197,387) 25,756,554
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b)
(Cost $2,246,658) 2,246,658 2,246,658
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $25,444,045) $ 28,003,212
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $19,784
or 0.1% of net assets.
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $25,544,896. Net unrealized appreciation
aggregated $2,458,316, of which $3,213,154 related to appreciated
investment securities and $754,838 related to depreciated investment
securities.
The fund hereby designates approximately $37,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 4%, 5%, 6%, 13%, and 5% of Class A's, Class T's, Class B's,
Class C's and Institutional Class' dividend distributions during the
fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 28,003,212
(COST $25,444,045) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 553,569
RECEIVABLE FOR FUND SHARES SOLD 292,253
DIVIDENDS RECEIVABLE 12,409
INTEREST RECEIVABLE 10,167
PREPAID EXPENSES 3,240
TOTAL ASSETS 28,874,850
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 945,070
PAYABLE FOR FUND SHARES REDEEMED 24,808
ACCRUED MANAGEMENT FEE 23,325
DISTRIBUTION FEES PAYABLE 12,900
OTHER PAYABLES AND 36,220
ACCRUED EXPENSES
TOTAL LIABILITIES 1,042,323
NET ASSETS $ 27,832,527
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 23,569,145
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 1,704,215
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 2,559,167
NET ASSETS $ 27,832,527
CALCULATION OF MAXIMUM $15.08
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($2,219,542 (DIVIDED BY)
147,218 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.00
(100/94.25 OF $15.08)
CLASS T: $15.00
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($13,989,195 (DIVIDED BY)
932,663 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.54
(100/96.50 OF $15.00)
CLASS B: $14.91
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($5,418,551 (DIVIDED BY)
363,324 SHARES) A
CLASS C: $14.95
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($1,460,710 (DIVIDED BY)
97,700 SHARES) A
INSTITUTIONAL CLASS: $15.12
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($4,744,529 (DIVIDED BY) 313,868 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 147,877
DIVIDENDS
INTEREST 71,519
TOTAL INCOME 219,396
EXPENSES
MANAGEMENT FEE $ 101,756
TRANSFER AGENT FEES 47,366
DISTRIBUTION FEES 82,055
ACCOUNTING FEES AND EXPENSES 60,446
NON-INTERESTED TRUSTEES' COMPENSATION 55
CUSTODIAN FEES AND EXPENSES 7,015
REGISTRATION FEES 62,142
AUDIT 33,418
LEGAL 357
REPORTS TO SHAREHOLDERS 16,349
MISCELLANEOUS 376
TOTAL EXPENSES BEFORE REDUCTIONS 411,335
EXPENSE REDUCTIONS (72,814) 338,521
NET INVESTMENT INCOME (LOSS) (119,125)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,436,461
FOREIGN CURRENCY TRANSACTIONS (47) 2,436,414
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 1,539,184
NET GAIN (LOSS) 3,975,598
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,856,473
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (119,125) $ (36,592)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 2,436,414 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,539,184 1,019,983
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,856,473 1,903,356
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN (1,433,351) (29,021)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 15,183,117 8,310,212
REDEMPTION FEES 39,768 1,973
TOTAL INCREASE (DECREASE) IN NET ASSETS 17,646,007 10,186,520
NET ASSETS
BEGINNING OF PERIOD 10,186,520 -
END OF PERIOD $ 27,832,527 $ 10,186,520
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.48 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.06) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.31 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.25 3.55
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.68) I (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.08 $ 13.48
TOTAL RETURN B, C 27.48% 35.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,220 $ 944
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% F 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% G 1.73% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.47)% (.50)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.45 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.10) (.09)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.28 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.18 3.51
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.66) (.06)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.00 $ 13.45
TOTAL RETURN B, C 26.93% 35.25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 13,989 $ 7,314
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% F 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.98% G 1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.71)% (.83)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.42 $ 11.46
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.17) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.26 2.04
TOTAL FROM INVESTMENT OPERATIONS 3.09 1.96
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.64) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .04 -
NET ASSET VALUE, END OF PERIOD $ 14.91 $ 13.42
TOTAL RETURN B, C 26.30% 17.10%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,419 $ 596
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% F 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% G 2.46% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.23)% (1.60)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.66
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.13)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.87
TOTAL FROM INVESTMENT OPERATIONS 2.74
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.49)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .04
NET ASSET VALUE, END OF PERIOD $ 14.95
TOTAL RETURN B, C 22.67%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,461
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.27)% A
PORTFOLIO TURNOVER 144%
AVERAGE COMMISSION RATE H $ .0242
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES)
TO JULY 31, 1998. 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.51 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.31 3.59
TOTAL FROM INVESTMENT OPERATIONS 3.28 3.58
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.70) I (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.12 $ 13.51
TOTAL RETURN B, C 27.70% 35.98%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,745 $ 1,333
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% F 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.48% G 1.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.20)% (.13)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 net operating losses and losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as part of the dividends paid
deduction for income tax purposes.
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 which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $35,038,137 and $22,999,371, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 3,335 $ 374
CLASS T 53,154 19
CLASS B 21,608 16,452
CLASS C 3,958 3,958
$ 82,055 $ 20,803
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $1,254
CLASS T $2,350
CLASS B $647
CLASS C $690
INSTITUTIONAL CLASS $165
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
Class C, 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. In addition, purchases of
Class A and Class T shares that were subject to a finder's fee bear a
contingent deferred sales charge on assets that do not remain in the
fund for at least one year. The Class A and Class T contingent
deferred sales charge is based on 0.25% 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.
A portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 17,058 $ 5,788
CLASS T 42,495 12,506
CLASS B 3,503 3,503 *
CLASS C 38 38 *
$ 63,094 $ 21,835
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 4,105 .31
CLASS T 29,346 .28
CLASS B 7,639 .35
CLASS C 1,414 .35 *
INSTITUTIONAL CLASS 4,862 .18
$ 47,366
* ANNUALIZED.
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 $3,349 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 9,569
CLASS T 2.00% 22,315
CLASS B 2.50% 20,863
CLASS C 2.50% 9,475
INSTITUTIONAL CLASS 1.50% 7,520
$ 69,742
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 $2,905 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 $167 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 6% of
the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 13% 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,
1998 A 1997 B, C
FROM NET REALIZED GAIN
CLASS A $ 122,598 $ 4,926
CLASS T 1,001,052 16,753
CLASS B 102,510 -
CLASS C 1,954 -
INSTITUTIONAL CLASS 205,237 7,342
TOTAL $ 1,433,351 $ 29,021
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 92,013 88,027 $ 1,311,243 $ 950,592
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 9,124 457 113,019 4,913
SHARES REDEEMED (23,935) (18,468) (334,712) (227,830)
NET INCREASE (DECREASE) 77,202 70,016 $ 1,089,550 $ 727,675
CLASS T 784,694 629,432 $ 11,054,004 $ 7,025,043
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 73,835 1,492 913,447 16,036
SHARES REDEEMED (469,801) (86,989) (6,762,615) (987,625)
NET INCREASE (DECREASE) 388,728 543,935 $ 5,204,836 $ 6,053,454
CLASS B 359,596 45,607 $ 5,098,496 $ 545,925
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 7,684 - 94,935 -
SHARES REDEEMED (48,361) (1,202) (692,526) (13,641)
NET INCREASE (DECREASE) 318,919 44,405 $ 4,500,905 $ 532,284
CLASS C 101,815 - $ 1,469,653 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 43 - 542 -
SHARES REDEEMED (4,158) - (61,277) -
NET INCREASE (DECREASE) 97,700 - $ 1,408,918 $ -
INSTITUTIONAL CLASS 246,078 121,713 $ 3,450,421 $ 1,256,098
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 15,764 682 196,010 7,342
SHARES REDEEMED (46,652) (23,717) (667,523) (266,641)
NET INCREASE (DECREASE) 215,190 98,678 $ 2,978,908 $ $996,799
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,746
CLASS T 14,933
CLASS B 19,718
CLASS C 9,530
INSTITUTIONAL CLASS 9,215
$ 62,142
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS A
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL A 6.05% 47.54%
FIDELITY ADV CYCLICAL - CL A -0.04% 39.05%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 76.95%
GS CYCLICAL INDUSTRIES 2.49% 43.29%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Cyclical Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the cyclical industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL A 6.05% 22.62%
FIDELITY ADV CYCLICAL - CL A -0.04% 18.87%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS CYCLICAL INDUSTRIES 2.49% 20.76%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CYCLICAL IND -CL A S&P 500
GS CYCLICAL INDUSTRIES
00184 SP001
GS003
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 9783.15 10516.69 10449.51
1996/10/31 10065.90 10806.74 10623.81
1996/11/30 10669.10 11623.62 11299.86
1996/12/31 10612.70 11393.36 11101.84
1997/01/31 10888.23 12105.21 11459.45
1997/02/28 10916.74 12200.12 11487.29
1997/03/31 10584.20 11698.81 11120.08
1997/04/30 10745.72 12397.23 11654.84
1997/05/31 11638.82 13151.98 12461.54
1997/06/30 12246.89 13741.19 12959.26
1997/07/31 13111.49 14834.57 13980.32
1997/08/31 12826.45 14003.54 13471.60
1997/09/30 13135.80 14770.51 13938.94
1997/10/31 12290.57 14277.18 13095.58
1997/11/30 12499.40 14938.07 13453.87
1997/12/31 12592.62 15194.56 13598.24
1998/01/31 12859.24 15362.61 13598.41
1998/02/28 13874.44 16470.56 14714.19
1998/03/31 14561.50 17314.02 15518.24
1998/04/30 14756.33 17488.19 15588.62
1998/05/31 14530.73 17187.57 15359.18
1998/06/30 14592.26 17885.73 15161.59
1998/07/31 13905.20 17695.25 14328.86
IMATRL PRASUN SHR__CHT 19980731 19980825 160700 R00000000000026
$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 5.75% sales
charge was paid. As the chart shows, by July 31, 1998, the value of
the investment would have grown to $13,905 - a 39.05% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Cyclical Industries Index, it would have grown to $14,329 - a
43.29% increase.
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS T
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL T 5.91% 47.02%
FIDELITY ADV CYCLICAL - CL T 2.20% 41.87%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS CYCLICAL INDUSTRIES 2.49% 43.29%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Cyclical Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the cyclical industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL T 5.91% 22.40%
FIDELITY ADV CYCLICAL - CL T 2.20% 20.13%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 34.89%
GS CYCLICAL INDUSTRIES 2.49% 20.76%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CYCLICAL IND -CL T S&P 500
GS CYCLICAL INDUSTRIES
00194 SP001
GS003
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 10016.70 10516.69 10449.51
1996/10/31 10306.20 10806.74 10623.81
1996/11/30 10923.80 11623.62 11299.86
1996/12/31 10846.68 11393.36 11101.84
1997/01/31 11138.52 12105.21 11459.45
1997/02/28 11167.70 12200.12 11487.29
1997/03/31 10817.49 11698.81 11120.08
1997/04/30 10982.87 12397.23 11654.84
1997/05/31 11897.30 13151.98 12461.54
1997/06/30 12519.89 13741.19 12959.26
1997/07/31 13395.40 14834.57 13980.32
1997/08/31 13103.57 14003.54 13471.60
1997/09/30 13410.13 14770.51 13938.94
1997/10/31 12554.81 14277.18 13095.58
1997/11/30 12768.64 14938.07 13453.87
1997/12/31 12864.11 15194.56 13598.24
1998/01/31 13137.15 15362.61 13598.41
1998/02/28 14166.28 16470.56 14714.19
1998/03/31 14859.36 17314.02 15518.24
1998/04/30 15058.89 17488.19 15588.62
1998/05/31 14827.86 17187.57 15359.18
1998/06/30 14890.87 17885.73 15161.59
1998/07/31 14187.28 17695.25 14328.86
IMATRL PRASUN SHR__CHT 19980731 19980825 161452 R00000000000026
$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 3.50% sales
charge was paid. As the chart shows, by July 31, 1998, the value of
the investment would have grown to $14,187 - a 41.87% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Cyclical Industries Index, it would have grown to $14,329 - a
43.29% increase.
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997
are those of Class T which bears a 0.50% 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would
have been lower. Class B shares' contingent deferred sales charge
included in the past one year and life of fund total return figures
are 5% and 4%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL B 5.23% 45.86%
FIDELITY ADV CYCLICAL - CL B 0.36% 41.86%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS CYCLICAL INDUSTRIES 2.49% 43.29%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Cyclical Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the cyclical industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL B 5.23% 21.89%
FIDELITY ADV CYCLICAL - CL B 0.36% 20.12%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS CYCLICAL INDUSTRIES 2.49% 20.76%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CYCLICAL IND -CL B S&P 500
GS CYCLICAL INDUSTRIES
00234 SP001
GS003
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10380.00 10516.69 10449.51
1996/10/31 10680.00 10806.74 10623.81
1996/11/30 11320.00 11623.62 11299.86
1996/12/31 11240.08 11393.36 11101.84
1997/01/31 11542.50 12105.21 11459.45
1997/02/28 11572.75 12200.12 11487.29
1997/03/31 11209.84 11698.81 11120.08
1997/04/30 11381.21 12397.23 11654.84
1997/05/31 12318.73 13151.98 12461.54
1997/06/30 12953.82 13741.19 12959.26
1997/07/31 13861.09 14834.57 13980.32
1997/08/31 13548.58 14003.54 13471.60
1997/09/30 13866.28 14770.51 13938.94
1997/10/31 12958.74 14277.18 13095.58
1997/11/30 13169.80 14938.07 13453.87
1997/12/31 13268.76 15194.56 13598.24
1998/01/31 13540.88 15362.61 13598.41
1998/02/28 14596.72 16470.56 14714.19
1998/03/31 15304.25 17314.02 15518.24
1998/04/30 15511.06 17488.19 15588.62
1998/05/31 15260.71 17187.57 15359.18
1998/06/30 15315.13 17885.73 15161.59
1998/07/31 14186.00 17695.25 14328.86
IMATRL PRASUN SHR__CHT 19980731 19980825 160710 R00000000000026
$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, 1998, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $14,186 - a
41.86% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Cyclical Industries Index, it would
have grown to $14,329 - a 43.29% increase.
ADVISOR CYCLICAL INDUSTRIES FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL C 5.19% 45.80%
FIDELITY ADV CYCLICAL - CL C 4.19% 45.80%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS CYCLICAL INDUSTRIES 2.49% 43.29%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to the performance of both the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Cyclical Industries Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the cyclical industries sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - CL C 5.19% 21.86%
FIDELITY ADV CYCLICAL - CL C 4.19% 21.86%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS CYCLICAL INDUSTRIES 2.49% 20.76%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CYCLICAL IND -CL C S&P 500
GS CYCLICAL INDUSTRIES
00283 SP001
GS003
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10380.00 10516.69 10449.51
1996/10/31 10680.01 10806.74 10623.81
1996/11/30 11320.00 11623.62 11299.86
1996/12/31 11240.09 11393.36 11101.84
1997/01/31 11542.51 12105.21 11459.45
1997/02/28 11572.75 12200.12 11487.29
1997/03/31 11209.84 11698.81 11120.08
1997/04/30 11381.21 12397.23 11654.84
1997/05/31 12318.73 13151.98 12461.54
1997/06/30 12953.82 13741.19 12959.26
1997/07/31 13861.09 14834.57 13980.32
1997/08/31 13548.58 14003.54 13471.60
1997/09/30 13866.28 14770.51 13938.94
1997/10/31 12958.75 14277.18 13095.58
1997/11/30 13169.84 14938.07 13453.87
1997/12/31 13257.55 15194.56 13598.24
1998/01/31 13528.56 15362.61 13598.41
1998/02/28 14590.90 16470.56 14714.19
1998/03/31 15295.51 17314.02 15518.24
1998/04/30 15501.47 17488.19 15588.62
1998/05/31 15252.15 17187.57 15359.18
1998/06/30 15306.35 17885.73 15161.59
1998/07/31 14580.06 17695.25 14328.86
IMATRL PRASUN SHR__CHT 19980731 19980825 161121 R00000000000026
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Cyclical Industries - Class C on
September 3, 1996, when the fund started. As the chart shows, by July
31, 1998, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $14,580 - a
45.80% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Cyclical Industries Index, it would
have grown to $14,329 - a 43.29% increase.
ADVISOR CYCLICAL INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Albert Ruback)
An interview with
Albert Ruback, Portfolio Manager of Fidelity Advisor Cyclical
Industries Fund
Q. HOW DID THE FUND PERFORM, ALBERT?
A. During the 12-month period ending July 31, 1998, the fund's Class
A, Class T, Class B and Class C shares returned 6.05%, 5.91%, 5.23%
and 5.19%, respectively. During the same period, the Standard & Poor's
500 Index returned 19.29%. Beginning this period, the fund also
compares itself to the Goldman Sachs Cyclical Industries Index - an
index of stocks designed to measure the performance of companies in
the cyclical industries sector - which returned 2.49% over the same
12-month period.
Q. WHY DID THE FUND LAG THE S&P 500 INDEX?
A. There were a couple of key factors that affected the fund's
performance. First, given its focus on cyclical industries, the fund
could not invest in the financial, pharmaceutical, utility and
technology stocks that experienced strong rallies during the period.
Second, many of the cyclical industries in which the fund invests,
especially those with international exposure such as electrical
components, industrial equipment, autos and basic materials, turned in
mixed results due to weakened product demand, an inability to raise
prices and declining commodity prices caused by the ongoing Asian
crisis.
Q. FIVE OF THE FUND'S TOP HOLDINGS FROM THE PREVIOUS REPORT ARE NO
LONGER TOP HOLDINGS. WHY DID YOU MAKE THESE CHANGES?
A. I wanted to further reduce the fund's exposure to Asia. I reduced
the fund's holdings in Fluor because Asian projects are an important
component of its future product pipeline and are likely to be delayed
given the current economic environment. In addition, I reduced the
fund's holdings in Aluminum Co. of America and Minnesota Mining &
Manufacturing Co. due to their exposure to Asia and declining product
prices. I reduced the fund's investment in Lockheed Martin due to
concerns about the completion of its merger with Northrop Grumman,
which has since been cancelled. I added DEKALB Genetics to the top 10
holdings, and it has done very well. The company is up for sale, and I
felt there would be a competitive takeover bid. American Standard, the
fund's fifth-largest holding, is an example of a conglomerate with
little exposure to Asia. I increased the fund's holdings because I
believed the company was significantly undervalued, and its air
conditioning business unit stood to benefit from the warm summer we've
experienced. Waste Management was taken over by U.S. Waste Management,
which helped the stock's performance, and the company's management
seemed committed to improving operations.
Q. WHAT IS YOUR OUTLOOK ON THE ASIAN SITUATION, AND WHAT STRATEGIES
DID YOU USE TO MINIMIZE RISKS TO THE FUND?
A. I don't see the Asian situation changing anytime soon. As a result,
I have focused on companies that cater more to the domestic economy or
that can benefit from declining commodity prices. I have avoided
companies with a lot of exposure in Asia - those that compete with
Asia or that rely on Asia for demand growth. I'll continue to focus on
conglomerates that have done well for the fund. General Electric, for
example, has little exposure to Asia, and its focus on penetrating
markets by adding services has been very successful. Tyco
International, another conglomerate, has done well because of its
aggressive acquisition program.
Q. WHAT STOCKS DETRACTED FROM FUND PERFORMANCE?
A. Paper stocks have been a big disappointment for the fund. Fort
James and Stone Container are examples of companies that I purchased
after the announcement of the Stone Container-Jefferson Smurfit Corp.
merger. However, expected price increases for paper have not occurred,
and it really hurt the sector's performance. Railroads also did not
perform well for the fund. Even though the fundamental business
outlook for companies like Norfolk Southern and CSX are solid, their
stock prices were hurt because of acquisition costs and increased
spending to keep operations running smoothly pending their merger with
Conrail.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ALBERT?
A. I continue to be cautious about the U.S. economy. I believe we are
in a slow growth period, and I'm concerned that Asia will not hit
bottom for a while. This environment can cause continued pricing
pressures - the inability to increase prices - and reduced export
growth for U.S. corporations. Gross domestic product growth slowed
from 5.4% to 1.4% in the second quarter, and I think corporate
earnings will continue to come under some pressure in the second half
of this year and possibly into next year. Given these concerns, I will
focus on companies that have a diversity of earnings sources and can
grow during difficult times.
The views expressed in this report refect 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, 1998, more than $5 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
(checkmark)
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 8.1
TYCO INTERNATIONAL LTD. 5.9
FORD MOTOR CO. 5.2
DEKALB GENETICS CORP. CLASS B 4.6
AMERICAN STANDARD COMPANIES, INC. 2.5
WASTE MANAGEMENT, INC. 2.5
XEROX CORP. 2.3
U.S. INDUSTRIES, INC. 2.3
HONEYWELL, INC. 2.1
STONE CONTAINER CORP. 2.1
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 11.5
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 5.5
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 5.4
ROW: 1, COL: 6, VALUE: 63.8
ELECTRICAL MACHINERY 11.5%
GENERAL INDUSTRIAL MACHINERY 8.4%
MOTOR VEHICLES & CAR BODIES 5.5%
AIR TRANSPORT, MAJOR NATIONAL 5.4%
PAPER 5.4%
ALL OTHERS 63.8%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.9%
AIRCRAFT - 1.7%
Gulfstream Aerospace Corp. (a) 700 $ 32,025
Lockheed Martin Corp. 657 65,495
97,520
AIRCRAFT & PARTS - 1.4%
Sundstrand Corp. 200 10,463
Textron, Inc. 1,000 73,875
84,338
AIRCRAFT ENGINES & PARTS - 1.8%
AlliedSignal, Inc. 2,500 108,750
MISSILES & SPACE VEHICLES - 0.7%
Alliant Techsystems, Inc. (a) 400 26,025
GenCorp, Inc. 700 16,144
42,169
ORDNANCE - 0.3%
Harsco Corp. 400 17,275
TOTAL AEROSPACE & DEFENSE 350,052
AGRICULTURE - 4.6%
CROPS - 4.6%
DEKALB Genetics Corp. Class B 3,000 276,563
AIR TRANSPORTATION - 5.4%
AIR TRANSPORT, MAJOR NATIONAL - 5.4%
AMR Corp. (a) 800 57,150
Alaska Air Group, Inc. (a) 1,500 62,813
America West Holdings Corp. Class B (a) 900 21,656
Continental Airlines, Inc. Class B (a) 1,000 53,500
Southwest Airlines Co. 1,100 36,231
US Airways Group, Inc. (a) 1,200 90,000
321,350
AUTOS, TIRES, & ACCESSORIES - 7.5%
AUTO & TRUCK PARTS - 1.4%
Borg-Warner Automotive, Inc. 200 9,413
Breed Technologies, Inc. 800 11,650
Federal-Mogul Corp. 250 15,031
SPX Corp. (a) 300 17,044
TRW, Inc. 500 27,094
80,232
MOTOR VEHICLES & CAR BODIES - 5.5%
Ford Motor Co. 5,500 313,156
Lear Corp. (a) 300 15,919
329,075
TIRES & INNER TUBES - 0.6%
Goodyear Tire & Rubber Co. 600 36,563
TOTAL AUTOS, TIRES, & ACCESSORIES 445,870
BROADCASTING - 0.8%
COMMUNICATIONS SERVICES, NEC - 0.8%
PanAmSat Corp. (a) 1,000 49,313
BUILDING MATERIALS - 7.5%
AIR-CONDITIONING EQUIPMENT - 2.5%
American Standard Companies, Inc. (a) 3,200 152,400
CEMENT - 0.3%
Southdown, Inc. 300 18,769
CONCRETE, GYPSUM, PLASTER - 0.2%
USG Corp. 200 10,275
SHARES VALUE (NOTE 1)
FLOOR COVERINGS - 0.5%
Armstrong World Industries, Inc. 500 $ 30,813
GASKETS, HOSES, BELTS - 1.7%
Coltec Industries, Inc. (a) 6,000 102,375
LUMBER, PLYWOOD, MILLWORK - WHOLESALE - 0.5%
Crane Co. 600 29,700
PAVING, ROOFING & SIDING - 1.0%
Carlisle Companies, Inc. 400 17,575
Owens Corning 1,000 41,250
58,825
PLUMBING SUPPLIES - WHOLESALE - 0.8%
Masco Corp. 1,600 45,700
TOTAL BUILDING MATERIALS 448,857
CHEMICALS & PLASTICS - 5.4%
ADHESIVES & SEALANTS - 0.6%
Ferro Corp. 800 18,400
Nalco Chemical Co. 500 17,156
35,556
AGRICULTURAL CHEMICALS - 0.7%
IMC Global, Inc. 700 17,894
Potash Corp. of Saskatchewan 300 21,828
39,722
CHEMICALS - 2.4%
Cytec Industries, Inc. (a) 1,000 32,188
E. I. du Pont de Nemours and Co. 1,200 74,400
Lyondell Petrochemical Co. 500 12,250
Witco Corp. 1,100 26,538
145,376
PLASTICS & SYNTHETIC RESINS - 0.2%
Spartech Corp. 700 13,300
PLASTICS, NEC - 1.0%
Hanna (M.A.) Co. 1,000 14,813
Ivex Packaging Corp. 2,200 47,300
62,113
PLASTICS, RESINS & ELASTOMERS - 0.2%
Solutia, Inc. 360 10,688
UNSUPPORTED PLASTICS FILM & SHEET - 0.3%
Sealed Air Corp. (a) 360 14,400
TOTAL CHEMICALS & PLASTICS 321,155
COMPUTERS & OFFICE EQUIPMENT - 3.0%
OFFICE AUTOMATION - 3.0%
Pitney Bowes, Inc. 800 40,400
Xerox Corp. 1,300 137,231
177,631
CONSTRUCTION - 1.5%
GENERAL BUILDING - 0.2%
Toll Brothers, Inc. (a) 400 10,475
MOBILE HOMES - 0.2%
Oakwood Homes Corp. 700 14,175
OPERATIVE BUILDERS - 1.1%
Centex Corp. 400 16,400
Kaufman & Broad Home Corp. 500 13,969
Lennar Corp. 500 13,813
U.S. Home Corp. (a) 600 22,463
66,645
TOTAL CONSTRUCTION 91,295
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 1.9%
APPLIANCES - 1.6%
Black & Decker Corp. 600 $ 34,125
Whirlpool Corp. 1,000 60,500
94,625
RADIOS, TELEVISIONS, STEREOS - 0.3%
General Motors Corp. Class H 400 17,050
TOTAL CONSUMER ELECTRONICS 111,675
DEFENSE ELECTRONICS - 2.5%
Litton Industries, Inc. (a) 900 51,581
Northrop Grumman Corp. 500 40,531
Raytheon Co.:
Class A 281 15,227
Class B 800 44,250
151,589
ELECTRICAL EQUIPMENT - 11.8%
ELECTRICAL MACHINERY - 11.5%
Emerson Electric Co. 1,400 83,213
General Electric Co. 5,400 482,274
Honeywell, Inc. 1,500 125,719
691,206
ELECTRICAL, INDUSTRIAL APPARATUS - 0.3%
Hubbell, Inc. Class B 400 16,800
TOTAL ELECTRICAL EQUIPMENT 708,006
ELECTRONIC INSTRUMENTS - 0.5%
MEASURING INSTRUMENTS - 0.5%
Thermo Electron Corp. (a) 1,300 29,900
ENGINEERING - 1.4%
ARCHITECTS & ENGINEERS - 1.4%
EG & G, Inc. 1,400 36,138
Fluor Corp. 1,200 50,475
86,613
HOLDING COMPANIES - 2.3%
HOLDING COMPANY OFFICES, NEC - 2.3%
U.S. Industries, Inc. 7,000 134,750
HOME FURNISHINGS - 0.4%
FURNITURE - 0.4%
Leggett & Platt, Inc. 1,000 26,813
INDUSTRIAL MACHINERY & EQUIPMENT - 9.4%
CONSTRUCTION EQUIPMENT - 1.0%
Caterpillar, Inc. 1,200 58,200
GENERAL INDUSTRIAL MACHINERY - 8.4%
Cooper Industries, Inc. 1,000 52,438
Illinois Tool Works, Inc. 1,000 56,063
Ingersoll-Rand Co. 900 39,769
Tyco International Ltd. 5,700 353,044
501,314
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 559,514
IRON & STEEL - 0.7%
IRON & STEEL BLAST FURNACES, MILLS - 0.4%
Inland Steel Industries, Inc. 800 22,550
IRON & STEEL FOUNDRIES - 0.3%
Dofasco, Inc. 1,300 18,659
TOTAL IRON & STEEL 41,209
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING, NEC - 0.1%
Ryder Systems, Inc. 250 $ 7,250
METALS & MINING - 1.6%
ALUMINUM, EXTRUDED PRODUCTS - 0.6%
Alumax, Inc. 696 33,452
METAL MINING - 0.3%
Phelps Dodge Corp. 300 16,669
METAL ORES - 0.1%
Pechiney SA Class A 200 8,387
NON-METALLIC MINERAL MINING - 0.2%
Martin Marietta Materials, Inc. 274 13,563
PRIMARY PRODUCTION OF ALUMINUM - 0.4%
Reynolds Metals Co. 400 21,000
TOTAL METALS & MINING 93,071
PACKAGING & CONTAINERS - 1.2%
GLASS CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 1,000 44,125
METAL CANS & CONTAINERS - 0.5%
Silgan Holdings, Inc. (a) 1,100 29,219
TOTAL PACKAGING & CONTAINERS 73,344
PAPER & FOREST PRODUCTS - 6.7%
PAPER - 5.4%
Champion International Corp. 800 33,950
Georgia-Pacific Corp. 800 41,100
International Paper Co. 1,200 53,550
Pentair, Inc. 400 15,900
Stone Container Corp. (a) 9,400 122,788
Temple-Inland, Inc. 400 20,825
Union Camp Corp. 400 16,975
Willamette Industries, Inc. 500 14,156
319,244
PAPER MILLS - 1.3%
Bowater, Inc. 1,000 46,000
Fort James Corp. 1,000 33,750
79,750
TOTAL PAPER & FOREST PRODUCTS 398,994
POLLUTION CONTROL - 3.4%
POLLUTION EQUIPMENT & DESIGN - 0.3%
Ogden Corp. 800 20,750
REFUSE SYSTEMS - 3.1%
Eastern Environmental Services, Inc. (a) 1,000 33,813
Waste Management, Inc. 2,732 150,602
184,415
TOTAL POLLUTION CONTROL 205,165
RAILROADS - 2.7%
RAILROAD EQUIPMENT - 0.4%
Bombardier, Inc. Class B 1,600 22,013
RAILROADS - 2.3%
CSX Corp. 1,100 44,481
Canadian National Railway Co. 1,000 52,750
Norfolk Southern Corp. 1,400 41,825
139,056
TOTAL RAILROADS 161,069
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.9%
BUILDING MAINTENANCE - 0.9%
Ecolab, Inc. 1,700 $ 53,338
SHIP BUILDING & REPAIR - 1.4%
SHIP BUILDERS - 1.4%
Avondale Industries, Inc. (a) 1,000 27,875
General Dynamics Corp. 800 38,050
Newport News Shipbuilding, Inc. 800 20,150
86,075
TEXTILES & APPAREL - 0.3%
COTTON MILLS - 0.1%
Galey & Lord, Inc. (a) 400 4,950
TEXTILE MILL PRODUCTS - 0.2%
Unifi, Inc. 400 10,825
TOTAL TEXTILES & APPAREL 15,775
TRUCKING & FREIGHT - 1.2%
AIR COURIER SERVICES - 0.2%
CNF Transportation, Inc. 300 12,975
FREIGHT FORWARDING - 0.3%
Air Express International Corp. 300 6,619
Expeditors International of
Washington, Inc. 300 11,963
18,582
TRUCKING, LOCAL & LONG DISTANCE - 0.3%
Werner Enterprises, Inc. 1,000 16,125
TRUCKING, LONG DISTANCE - 0.4%
USFreightways Corp. 400 10,000
Yellow Corp. (a) 800 12,800
22,800
TOTAL TRUCKING & FREIGHT 70,482
TOTAL COMMON STOCKS
(Cost $5,105,322) 5,496,718
CONVERTIBLE PREFERRED STOCKS - 0.1%
CHEMICALS & PLASTICS - 0.1%
UNSUPPORTED PLASTICS FILM & SHEET - 0.1%
Sealed Air Corp., Series A, $2.00
(Cost $6,266) 142 6,337
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund (b)
(Cost $469,633) 469,633 469,633
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $5,581,221) $ 5,972,688
LEGEND
(a)Non-income producing
(b)At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $5,583,692. Net unrealized appreciation
aggregated $388,996, of which $820,135 related to appreciated
investment securities and $431,139 related to depreciated investment
securities.
The fund hereby designates approximately $67,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 20%, 23%, 24%, 59%, and 14% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 5,972,688
(COST $5,581,221) -
SEE ACCOMPANYING SCHEDULE
CASH 4,390
RECEIVABLE FOR FUND SHARES SOLD 2,306
DIVIDENDS RECEIVABLE 3,967
INTEREST RECEIVABLE 1,470
PREPAID EXPENSES 3,240
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 2,401
TOTAL ASSETS 5,990,462
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 7,900
DISTRIBUTION FEES PAYABLE 2,351
OTHER PAYABLES AND ACCRUED EXPENSES 27,453
TOTAL LIABILITIES 37,704
NET ASSETS $ 5,952,758
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 5,210,000
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 351,292
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 391,466
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 5,952,758
CALCULATION OF MAXIMUM $13.56
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($470,904 (DIVIDED BY)
34,726 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.39
(100/94.25 OF $13.56)
CLASS T: $13.51
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($2,972,887 (DIVIDED BY)
220,068 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.00
(100/96.50 OF $13.51)
CLASS B: $13.40
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($984,725 (DIVIDED BY) 73,487
SHARES) A
CLASS C: $13.45
NET ASSET VALUE AND OFFERING
PRICE PER SHARE ($164,648 (DIVIDED BY)
12,242 SHARES) A
INSTITUTIONAL CLASS: $13.68
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,359,594 (DIVIDED BY) 99,364 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
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STATEMENT OF OPERATIONS
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YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 61,657
DIVIDENDS
INTEREST 17,852
TOTAL INCOME 79,509
EXPENSES
MANAGEMENT FEE $ 30,832
TRANSFER AGENT FEES 16,384
DISTRIBUTION FEES 20,389
ACCOUNTING FEES AND EXPENSES 60,218
NON-INTERESTED TRUSTEES' COMPENSATION 19
CUSTODIAN FEES AND EXPENSES 5,373
REGISTRATION FEES 55,199
AUDIT 32,596
LEGAL 139
REPORTS TO SHAREHOLDERS 13,800
MISCELLANEOUS 39
TOTAL EXPENSES BEFORE REDUCTIONS 234,988
EXPENSE REDUCTIONS (136,453) 98,535
NET INVESTMENT INCOME (LOSS) (19,026)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 519,921
FOREIGN CURRENCY TRANSACTIONS (113) 519,808
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (358,437)
ASSETS AND LIABILITIES IN 6 (358,431)
FOREIGN CURRENCIES
NET GAIN (LOSS) 161,377
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 142,351
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (19,026) $ 4,855
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 519,808 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (358,431) 749,897
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 142,351 1,228,467
DISTRIBUTIONS TO SHAREHOLDERS - (10,690)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (348,447) (45,982)
TOTAL DISTRIBUTIONS (348,447) (56,672)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 1,857,245 3,118,751
REDEMPTION FEES 8,921 2,142
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,660,070 4,292,688
NET ASSETS
BEGINNING OF PERIOD 4,292,688 -
END OF PERIOD $ 5,952,758 $ 4,292,688
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
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FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.80 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) .76 3.89
TOTAL FROM INVESTMENT OPERATIONS .73 3.88
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01)
FROM NET REALIZED GAIN (.99) (.08)
TOTAL DISTRIBUTIONS (.99) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 .01
NET ASSET VALUE, END OF PERIOD $ 13.56 $ 13.80
TOTAL RETURN B, C 6.05% 39.11%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 471 $ 365
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% F 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.75% 1.73% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.22)% (.09)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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.
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FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.06) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) .77 3.89
TOTAL FROM INVESTMENT OPERATIONS .71 3.85
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01)
FROM NET REALIZED GAIN (.99) (.08)
TOTAL DISTRIBUTIONS (.99) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 .01
NET ASSET VALUE, END OF PERIOD $ 13.51 $ 13.77
TOTAL RETURN B, C 5.91% 38.81%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,973 $ 1,920
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% F 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.00% 1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.47)% (.37)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.75 $ 11.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.14) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) .76 2.25
TOTAL FROM INVESTMENT OPERATIONS .62 2.19
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.99) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 -
NET ASSET VALUE, END OF PERIOD $ 13.40 $ 13.75
TOTAL RETURN B, C 5.23% 18.94%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 985 $ 252
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% F 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.50% 2.45% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.03)% (1.11)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.54
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.39
TOTAL FROM INVESTMENT OPERATIONS 1.28
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.38)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.45
TOTAL RETURN B, C 10.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 165
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.06)% A
PORTFOLIO TURNOVER 100%
AVERAGE COMMISSION RATE G $ .0245
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 FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF CLASS C
SHARES) TO JULY 31, 1998. 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 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>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.84 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .01 I .03
NET REALIZED AND UNREALIZED GAIN (LOSS) .75 3.91
TOTAL FROM INVESTMENT OPERATIONS .76 3.94
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.02)
FROM NET REALIZED GAIN (.95) (.08)
TOTAL DISTRIBUTIONS (.95) (.10)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 13.68 $ 13.84
TOTAL RETURN B, C 6.32% 39.64%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,360 $ 1,756
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% F 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.50% 1.48% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .04% .25% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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 DURING THE PERIOD, A SIGNIFICANT
SHAREHOLDER REDEMPTION CAUSED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME
PER SHARE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $6,119,602 and $4,846,367, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,030 $ 359
CLASS T 13,326 718
CLASS B 5,430 4,385
CLASS C 603 603
$ 20,389 $ 6,065
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 466
CLASS T $ 757
CLASS B $ 163
CLASS C $ 356
INSTITUTIONAL CLASS $ 31
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
remain in the fund for at least one year. The Class A and Class T
contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,572 $ 758
CLASS T 8,776 2,902
CLASS B 328 328 *
CLASS C 61 61 *
$ 10,737 $ 4,049
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN
RESOURCES TO SECURITIES DEALERS, BANKS, AND OTHER FINANCIAL
INSTITUTIONS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 1,844 .45
CLASS T 8,977 .34
CLASS B 2,342 .44
CLASS C 554 .91*
INSTITUTIONAL CLASS 2,667 .17
$ 16,384
* ANNUALIZED.
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 $806 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 15,049
CLASS T 2.00% 53,395
CLASS B 2.50% 26,574
CLASS C 2.50% 9,948
INSTITUTIONAL CLASS 1.50% 31,306
$ 136,272
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 $181 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 27% 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,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ - $ 210
CLASS T - 596
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS - 9,884
TOTAL $ - $ 10,690
FROM NET REALIZED GAIN
CLASS A $ 27,503 $ 1,679
CLASS T 168,735 4,766
CLASS B 21,647 -
CLASS C 303 -
INSTITUTIONAL CLASS 130,259 39,537
TOTAL $ 348,447 $ 45,982
TOTAL $ 348,447 $ 56,672
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B DISTRIBUTIONS 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 10,882 29,864 $ 148,228 $ 317,058
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,142 169 27,217 1,885
SHARES REDEEMED (4,708) (3,623) (63,873) (42,214)
NET INCREASE (DECREASE) 8,316 26,410 $ 111,572 $ 276,729
CLASS T 227,185 159,328 $ 3,069,729 $ 1,808,520
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 12,558 440 158,925 4,903
SHARES REDEEMED (159,076) (20,367) (2,112,359) (254,181)
NET INCREASE (DECREASE) 80,667 139,401 $ 1,116,295 $ 1,559,242
CLASS B 60,410 18,329 $ 820,607 $ 222,169
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,702 - 21,404 -
SHARES REDEEMED (6,954) - (94,508) -
NET INCREASE (DECREASE) 55,158 18,329 $ 747,503 $ 222,169
CLASS C 13,383 - $ 179,797 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 25 - 303 -
SHARES REDEEMED (1,166) - (16,290) -
NET INCREASE (DECREASE) 12,242 - $ 163,810 $ -
INSTITUTIONAL CLASS 31,192 595,951 $ 426,137 $ 6,237,387
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 10,114 4,432 129,319 49,421
SHARES REDEEMED (68,822) (473,503) (837,391) (5,226,197)
NET INCREASE (DECREASE) (27,516) 126,880 $ (281,935) $ 1,060,611
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,105
CLASS T 11,458
CLASS B 18,124
CLASS C 8,792
INSTITUTIONAL CLASS 8,720
$ 55,199
ADVISOR FINANCIAL SERVICES FUND - CLASS A
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL A 26.32% 91.20%
FIDELITY ADV FINANCIAL - CL A 19.06% 80.20%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 76.95%
GS FINANCIAL SERVICES 24.27% 105.11%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Financial Services Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the financial services sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL A 26.32% 40.48%
FIDELITY ADV FINANCIAL - CL A 19.06% 36.18%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS FINANCIAL SERVICES 24.27% 45.75%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA FINANCIAL SERV -CL A S&P 500
GS FINANCIAL SERVICES
00183 SP001
GS004
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 10009.35 10516.69 10584.56
1996/10/31 10546.58 10806.74 11272.70
1996/11/30 11385.40 11623.62 12278.35
1996/12/31 11045.81 11393.36 12100.98
1997/01/31 11631.15 12105.21 12935.63
1997/02/28 11772.76 12200.12 13395.32
1997/03/31 10932.52 11698.81 12504.96
1997/04/30 11829.41 12397.23 13328.32
1997/05/31 12282.57 13151.98 14040.84
1997/06/30 12915.11 13741.19 14892.68
1997/07/31 14265.15 14834.57 16504.52
1997/08/31 13424.91 14003.54 15483.68
1997/09/30 14285.27 14770.51 16744.42
1997/10/31 14200.07 14277.18 16445.06
1997/11/30 14673.41 14938.07 17053.65
1997/12/31 15481.66 15194.56 17997.81
1998/01/31 15279.73 15362.61 17523.74
1998/02/28 16558.64 16470.56 19045.66
1998/03/31 17501.01 17314.02 20165.67
1998/04/30 17760.64 17488.19 20512.24
1998/05/31 17376.00 17187.57 20061.46
1998/06/30 18077.96 17885.73 20758.18
1998/07/31 18020.27 17695.25 20510.80
IMATRL PRASUN SHR__CHT 19980731 19980825 161605 R00000000000026
$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 5.75% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $18,020 - an 80.20% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Financial Services Index, it would have grown to $20,511 - a
105.11% increase.
ADVISOR FINANCIAL SERVICES FUND - CLASS T
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL T 25.96% 90.14%
FIDELITY ADV FINANCIAL - CL T 21.55% 83.48%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS FINANCIAL SERVICES 24.27% 105.11%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Financial Services Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the financial services sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL T 25.96% 40.07%
FIDELITY ADV FINANCIAL - CL T 21.55% 37.48%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 34.89%
GS FINANCIAL SERVICES 24.27% 45.75%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA FINANCIAL SERV -CL T S&P 500
GS FINANCIAL SERVICES
00193 SP001
GS004
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 10238.65 10516.69 10584.56
1996/10/31 10788.70 10806.74 11272.70
1996/11/30 11647.55 11623.62 12278.35
1996/12/31 11299.87 11393.36 12100.98
1997/01/31 11889.52 12105.21 12935.63
1997/02/28 12024.84 12200.12 13395.32
1997/03/31 11164.55 11698.81 12504.96
1997/04/30 12082.84 12397.23 13328.32
1997/05/31 12546.82 13151.98 14040.84
1997/06/30 13184.80 13741.19 14892.68
1997/07/31 14567.07 14834.57 16504.52
1997/08/31 13706.78 14003.54 15483.68
1997/09/30 14587.38 14770.51 16744.42
1997/10/31 14500.21 14277.18 16445.06
1997/11/30 14974.83 14938.07 17053.65
1997/12/31 15791.84 15194.56 17997.81
1998/01/31 15585.35 15362.61 17523.74
1998/02/28 16893.14 16470.56 19045.66
1998/03/31 17846.95 17314.02 20165.67
1998/04/30 18112.44 17488.19 20512.24
1998/05/31 17719.12 17187.57 20061.46
1998/06/30 18427.10 17885.73 20758.18
1998/07/31 18348.43 17695.25 20510.80
IMATRL PRASUN SHR__CHT 19980731 19980825 162543 R00000000000026
$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 3.50% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $18,348 - an 83.48% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Financial Services Index, it would have grown to $20,511 - a
105.11% increase.
ADVISOR FINANCIAL SERVICES FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997
are those of Class T which bears a 0.50% 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would
have been lower. Class B shares' contingent deferred sales charge
included in the past one year and life of fund total return figures
are 5% and 4%, respectively. If Fidelity had not reimbursed certain
class expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL B 25.29% 88.75%
FIDELITY ADV FINANCIAL - CL B 20.29% 84.75%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS FINANCIAL SERVICES 24.27% 105.11%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Financial Services Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the financial services sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL B 25.29% 39.53%
FIDELITY ADV FINANCIAL - CL B 20.29% 37.97%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS FINANCIAL SERVICES 24.27% 45.75%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA FINANCIAL SERV -CL B S&P 500
GS FINANCIAL SERVICES
00163 SP001
GS004
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10610.00 10516.69 10584.56
1996/10/31 11180.00 10806.74 11272.70
1996/11/30 12070.00 11623.62 12278.35
1996/12/31 11709.71 11393.36 12100.98
1997/01/31 12320.74 12105.21 12935.63
1997/02/28 12460.98 12200.12 13395.32
1997/03/31 11569.48 11698.81 12504.96
1997/04/30 12511.06 12397.23 13328.32
1997/05/31 12991.87 13151.98 14040.84
1997/06/30 13642.97 13741.19 14892.68
1997/07/31 15065.36 14834.57 16504.52
1997/08/31 14173.86 14003.54 15483.68
1997/09/30 15067.02 14770.51 16744.42
1997/10/31 14976.56 14277.18 16445.06
1997/11/30 15459.02 14938.07 17053.65
1997/12/31 16306.56 15194.56 17997.81
1998/01/31 16072.16 15362.61 17523.74
1998/02/28 17417.45 16470.56 19045.66
1998/03/31 18385.65 17314.02 20165.67
1998/04/30 18650.63 17488.19 20512.24
1998/05/31 18242.97 17187.57 20061.46
1998/06/30 18956.38 17885.73 20758.18
1998/07/31 18874.85 17695.25 20510.80
IMATRL PRASUN SHR__CHT 19980731 19980825 161944 R00000000000026
$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, 1998,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $18,475 - an 84.75%
increase on the initial investment. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $17,695 - a 76.95% increase. If $10,000 was
invested in the Goldman Sachs Financial Services Index, it would have
grown to $20,511 - a 105.11% increase.
ADVISOR FINANCIAL SERVICES FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL C 25.14% 88.52%
FIDELITY ADV FINANCIAL - CL C 24.14% 88.52%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS FINANCIAL SERVICES 24.27% 105.11%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Financial Services Index - a market capitalization-weighted
index of stocks designed to measure the performance of companies in
the financial services sector. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - CL C 25.14% 39.44%
FIDELITY ADV FINANCIAL - CL C 24.14% 39.44%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS FINANCIAL SERVICES 24.27% 45.75%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA FINANCIAL SERV -CL C S&P 500
GS FINANCIAL SERVICES
00284 SP001
GS004
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10610.00 10516.69 10584.56
1996/10/31 11179.99 10806.74 11272.70
1996/11/30 12069.99 11623.62 12278.35
1996/12/31 11709.71 11393.36 12100.98
1997/01/31 12320.74 12105.21 12935.63
1997/02/28 12460.97 12200.12 13395.32
1997/03/31 11569.47 11698.81 12504.96
1997/04/30 12511.06 12397.23 13328.32
1997/05/31 12991.87 13151.98 14040.84
1997/06/30 13642.97 13741.19 14892.68
1997/07/31 15065.35 14834.57 16504.52
1997/08/31 14173.85 14003.54 15483.68
1997/09/30 15067.01 14770.51 16744.42
1997/10/31 14976.55 14277.18 16445.06
1997/11/30 15468.24 14938.07 17053.65
1997/12/31 16292.55 15194.56 17997.81
1998/01/31 16058.93 15362.61 17523.74
1998/02/28 17399.72 16470.56 19045.66
1998/03/31 18364.68 17314.02 20165.67
1998/04/30 18628.77 17488.19 20512.24
1998/05/31 18212.31 17187.57 20061.46
1998/06/30 18933.49 17885.73 20758.18
1998/07/31 18852.23 17695.25 20510.80
IMATRL PRASUN SHR__CHT 19980731 19980825 161956 R00000000000026
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Financial Services - Class C on September
3, 1996, when the fund started. As the chart shows, by July 31, 1998,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $18,852 - an 88.52%
increase on the initial investment. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $17,695 - a 76.95% increase. If $10,000 was
invested in the Goldman Sachs Financial Services Index, it would have
grown to $20,511 - a 105.11% increase.
ADVISOR FINANCIAL SERVICES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Robert Ewing)
An interview with Robert Ewing, Portfolio Manager of Fidelity Advisor
Financial Services Fund
Q. HOW DID THE FUND PERFORM, BOB?
A. The fund performed very well. For the 12 months that ended July 31,
1998, the fund's Class A, Class T, Class B and Class C shares had
total returns of 26.32%, 25.96%, 25.29% and 25.14%, respectively. The
Standard & Poor's 500 Index had a return of 19.29% during the same
period. Beginning this period, the fund also compares itself to the
Goldman Sachs Financial Services Index - an index of stocks designed
to measure the performance of companies in the financial services
sector - which returned 24.27% over the same 12-month period.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE YEAR, AND HOW
DID THAT AFFECT FINANCIAL SERVICES STOCKS IN PARTICULAR?
A. This year has offered a great environment for financial stocks. A
variety of economic factors supported this environment. First, we were
fairly late in an economic expansion. Historically, the customers of
financial services companies are very healthy financially at such
times. Second, we had a benign interest-rate environment, with rates
moving slightly down but with very low volatility. The emerging issue
was the economic crisis in Asia. However, up until now U.S. financial
companies have had little direct exposure to Asia. If anything, their
international competitive situation was strengthened as Asian
companies and European companies tended to be more directly affected
by the problems of the Pacific Basin. We also had a very dynamic
environment for financial services stocks, primarily because of the
continued consolidation of the industry. To understand why you had
this consolidation, you actually have to go back to the Depression
era, when regulations were enacted separating different kinds of
companies within the financial services industry. Banks, for example,
were separated from brokerage and insurance companies. Now, regulation
has been easing and we have witnessed a great number of acquisitions
and consolidations, which have supported stock prices in general. To
illustrate the magnitude of this trend, you don't need to go any
further than the announced mergers of Citicorp and Travelers Group and
of NationsBank and BankAmerica, all of which the fund has investments
in.
Q. GIVEN THIS FAVORABLE ENVIRONMENT, WHAT STRATEGIES HAVE YOU
EMPLOYED?
A. Fidelity has a team of 11 domestic financial services analysts who
have been emphasizing companies that would benefit from the improving
credit health of U.S. consumers. In mid-1997, consumer credit
conditions probably were at their worst, as measured by such factors
as credit card and loan delinquencies. The situation has been
gradually improving since then. Interest rates have gone down, and
many consumers have taken advantage of declining rates to refinance
their home mortgages or to consolidate their debts in home equity
loans. I have emphasized companies that would benefit from this trend,
including banks with large credit card businesses, mortgage companies
and consumer credit companies. In addition, while banks continue to
make up the bulk of the portfolio, I have tried to increase
diversification by investing in more brokerage firms than the fund has
historically owned. I also have been very careful about investing in
companies that have an exposure to the problems in Asia.
Q. WHAT WERE SOME OF THE MAJOR CONTRIBUTORS TO PERFORMANCE?
A. In general, the consumer finance companies have been strong
contributors. Notable examples have been Beneficial Corp., Household
International and American Express. Brokers have done exceptionally
well. Lehman Brothers, for example, performed very well. Overall, bank
stocks have been good performers, and the fund has tended to own the
right banks. Outstanding examples included U.S. Bancorp and Citicorp.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, there were. The fund's investments in real estate investment
trusts (REITs) have been disappointing. As a class of stocks, these
companies have struggled during the past year as investors have become
concerned that construction of additional hotel, office and retail
space might create over-capacity. Among the REITs that have been
disappointing are Starwood, which owns hotels, and Crescent, which is
involved in office, retail and hotel sites. The other area of
disappointment is in property casualty insurance companies. These
companies, as a group, have been hurt by intense competition.
Q. WHAT IS THE OUTLOOK FOR FINANCIAL SERVICES STOCKS, BOB?
A. I think we will continue to have consolidation in the industry, but
we also will have volatility. It feels like we are at a crossroad, and
investors will be watching economic signals very carefully for signs
of any deterioration of credit conditions. If the global economy
stabilizes and starts to improve, these stocks will do fine. If things
continue to decelerate, investors will anticipate deterioration in
credit, and we could have a very bumpy road. This outlook places a
heavy burden on individual stock selection. It should be a great
environment for my team of financial services analysts to find
opportunities.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1998, more than $231 million
MANAGER: Robert Ewing, since January 1998;
joined Fidelity in 1990
ADVISOR FINANCIAL SERVICES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
NATIONSBANK CORP. 4.7
AMERICAN EXPRESS CO. 4.3
AMERICAN INTERNATIONAL GROUP, INC. 4.1
CITICORP 3.9
U.S. BANCORP 3.9
BANKAMERICA CORP. 3.8
HOUSEHOLD INTERNATIONAL, INC. 3.3
WELLS FARGO & CO. 2.8
TRAVELERS GROUP, INC. (THE) 2.6
CHASE MANHATTAN CORP. 2.4
TOP INDUSTRIES AS OF JULY 31, 1998
NATIONAL COMMERCIAL BANKS 33.7%
PROPERTY-CASUALTY &
REINSURANCE 11.5%
PERSONAL CREDIT INSTITUTIONS 6.8%
FINANCIAL SERVICES 5.8%
FEDERAL & FEDERALLY SPONSORED
CREDIT AGENCIES 4.8%
ALL OTHERS 37.4%
ROW: 1, COL: 1, VALUE: 33.7
ROW: 1, COL: 2, VALUE: 11.5
ROW: 1, COL: 3, VALUE: 6.8
ROW: 1, COL: 4, VALUE: 5.8
ROW: 1, COL: 5, VALUE: 4.8
ROW: 1, COL: 6, VALUE: 37.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
BANKS - 36.4%
INTERNATIONAL BANKS - 0.6%
Royal Bank of Canada 25,000 $ 1,355,955
NATIONAL COMMERCIAL BANKS - 33.7%
BB&T Corp. 8,000 562,000
Banc One Corp. 104,667 5,409,976
Bank of New York Co., Inc. 85,480 5,470,720
BankAmerica Corp. 97,000 8,705,750
Chase Manhattan Corp. 73,000 5,520,625
Citicorp 53,365 9,072,050
Comerica, Inc. 51,750 3,486,656
First Union Corp. 14,042 846,031
Marshall & Ilsley Corp. 17,000 955,188
Mellon Bank Corp. 3,300 222,338
National City Corp. 32,470 2,171,431
NationsBank Corp. 134,997 10,766,011
Norwest Corp. 43,000 1,545,313
Pacific Bank N.A 10,000 530,000
Providian Financial Corp. 29,705 2,333,699
Southwest Bancorporation Texas, Inc. 3,300 58,988
SunTrust Banks, Inc. 10,000 730,000
U.S. Bancorp 194,650 8,953,900
Wachovia Corp. 24,405 2,089,678
Wells Fargo & Co. 18,100 6,441,338
Westamerica Bancorporation 30,000 918,750
Zions Bancorp 15,000 735,000
77,525,442
STATE BANKS FEDERAL RESERVE - 2.1%
AmSouth Bancorporation 12,000 476,250
Compass Bancshares, Inc. 12,500 518,750
Crestar Financial Corp. 8,000 545,500
Firstar Corp. 12,000 599,250
Hanmi Bank 5,450 98,100
North Fork Bancorp., Inc. 26,250 639,844
Northern Trust Corp. 22,000 1,619,750
Sterling Bancshares, Inc. 19,500 292,500
4,789,944
TOTAL BANKS 83,671,341
CREDIT & OTHER FINANCE - 15.2%
BANK HOLDING COMPANY OFFICES - 1.7%
Fleet Financial Group, Inc. 44,800 3,850,000
FINANCIAL SERVICES - 5.8%
American Express Co. 89,800 9,911,675
First Chicago NBD Corp. 42,170 3,534,373
13,446,048
MORTGAGE BANKERS - 0.9%
Aames Financial Corp. 25,000 281,250
Headlands Mortgage Co. (a) 25,000 465,625
Life Financial Corp. (a) 25,000 359,375
Resource Bancshares Mortgage
Group, Inc. 55,000 1,069,063
2,175,313
PERSONAL CREDIT INSTITUTIONS - 6.8%
Associates First Capital Corp. Class A 57,100 4,435,956
FIRSTPLUS Financial Group, Inc. (a) 10,000 390,000
Household International, Inc. 154,657 7,694,186
MBNA Corp. 78,500 2,629,750
Takefuji Corp. (c) 7,500 394,355
15,544,247
TOTAL CREDIT & OTHER FINANCE 35,015,608
SHARES VALUE (NOTE 1)
FEDERAL SPONSORED CREDIT - 4.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 4.8%
Freddie Mac 97,220 $ 4,593,645
Fannie Mae 68,435 4,242,970
SLM Holding Corp. 49,500 2,289,375
11,125,990
INSURANCE - 19.7%
ACCIDENT & HEALTH INSURANCE - 0.1%
UICI (a) 9,000 211,500
INSURANCE BROKERS & SERVICES - 1.0%
Marsh & McLennan Companies, Inc. 36,250 2,213,516
INSURANCE CARRIERS - 3.0%
AFLAC, Inc. 88,400 3,038,750
AMBAC, Inc. 15,100 879,575
Blanch E.W. Holdings, Inc. 18,000 671,625
MBIA, Inc. 11,700 788,288
MGIC Investment Corp. 30,000 1,608,750
6,986,988
LIFE INSURANCE - 3.4%
Aon Corp. 24,600 1,672,800
Hartford Life, Inc. Class A 12,000 694,500
Nationwide Financial Services, Inc.
Class A 14,500 789,344
Reliastar Financial Corp. 10,000 496,250
SunAmerica, Inc. 20,000 1,228,750
Torchmark Corp. 50,000 2,190,625
UNUM Corp. 12,800 674,400
7,746,669
PROPERTY-CASUALTY & REINSURANCE - 11.5%
ACE Ltd. 20,000 733,750
Aegon NV (Reg.) 8,258 757,672
Allmerica Financial Corp. 7,000 468,125
Allstate Corp. 88,570 3,758,689
American International Group, Inc. 62,520 9,428,797
Capital Re Corp. 16,000 528,000
Chubb Corp. (The) 5,000 366,875
Executive Risk, Inc. 10,000 484,375
General Re Corp. 2,800 663,600
HCC Insurance Holdings, Inc. 23,000 465,750
Hartford Financial Services Group, Inc. 59,200 3,082,100
Mercury General Corp. 6,200 284,813
PMI Group, Inc. 10,500 711,375
Progressive Corp. 14,200 1,755,475
RenaissanceRe Holdings Ltd. 40,000 1,787,500
Travelers Property Casualty Corp. Class A 30,000 1,297,500
26,574,396
SURETY INSURANCE - 0.7%
Amerin Corp. (a) 60,000 1,616,250
TOTAL INSURANCE 45,349,319
REAL ESTATE INVESTMENT TRUSTS - 3.4%
AMRESCO Capital Trust, Inc. 50,000 593,750
Apartment Investment & Management Co.
Class A 7,400 281,200
Crescent Real Estate Equities, Inc. 33,000 969,375
Duke Realty Investors, Inc. 34,500 739,594
Equity Office Properties Trust 30,000 746,250
Equity Residential Properties Trust 12,500 525,000
Imperial Credit Commercial Mortgage
Investment Corp. 21,000 228,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Mack-Cali Realty Corp. 20,000 $ 621,250
Novastar Financial, Inc. 20,000 326,250
Ocwen Asset Investment Corp. 56,000 836,500
Patriot American Hospitality, Inc. 25,000 475,000
Public Storage, Inc. 22,500 596,250
Starwood Hotels & Resorts Trust 19,000 780,188
7,718,982
SAVINGS & LOANS - 3.3%
SAVINGS BANKS & SAVINGS & LOANS - 0.7%
Astoria Financial Corp. 8,000 401,000
Charter One Financial Corp. 35,000 1,139,680
1,540,680
SAVINGS BANKS, FEDERAL CHARTER - 2.6%
Ahmanson (H.F.) & Co. 24,000 1,585,500
Dime Bancorp., Inc. 38,500 1,145,375
Golden State Bancorp 51,660 1,423,879
Golden State Bancorp Litigation
Track warrants (a) 26,660 126,635
Telebanc Financial Corp. (a) 600 12,450
Washington Mutual, Inc. 46,000 1,837,125
6,130,964
TOTAL SAVINGS & LOANS 7,671,644
SECURITIES INDUSTRY - 8.2%
INVESTMENT MANAGERS - 0.6%
Investors Group, Inc. 50,000 851,606
Pioneer Group, Inc. 25,000 656,250
1,507,856
SECURITY & COMMODITY BROKERS - 2.9%
Bear Stearns Companies, Inc. 60,000 3,375,000
Merrill Lynch & Co., Inc. 22,500 2,193,750
Midland Walwyn, Inc. 32,500 740,566
Nomura Securities Co. Ltd. 35,000 408,019
6,717,335
SECURITY BROKERS & DEALERS - 4.7%
Lehman Brothers Holdings, Inc. 41,000 2,952,000
PaineWebber Group, Inc. 10,000 471,250
Travelers Group, Inc. (The) 89,500 5,996,500
Waddell & Reed Financial, Inc. Class A 60,000 1,323,750
10,743,500
TOTAL SECURITIES INDUSTRY 18,968,691
TOTAL COMMON STOCKS
(Cost $184,558,092) 209,521,575
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b)
(Cost $20,670,236) 20,670,236 20,670,236
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $205,228,328) $ 230,191,811
LEGEND
(a)Non-income producing
(b)At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
(c)Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
period end the value of these securities amounted to $394,355 or 0.2%
of net assets.
INCOME TAX INFORMATION
At July 31, 1998 the aggregate cost of investment securities for
income tax purposes was $205,298,538. Net unrealized appreciation
aggregated $24,893,273, of which $30,034,138 related to appreciated
investment securities and $5,140,865 related to depreciated investment
securities.
The fund hereby designates approximately $602,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 1.12% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
A total of 55%, 60%, 62%, 37%, and 57% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 230,191,811
(COST $205,228,328) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 647,978
RECEIVABLE FOR FUND SHARES SOLD 1,314,913
DIVIDENDS RECEIVABLE 224,772
INTEREST RECEIVABLE 93,506
PREPAID EXPENSES 3,221
TOTAL ASSETS 232,476,201
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 431,471
ACCRUED MANAGEMENT FEE 114,095
DISTRIBUTION FEES PAYABLE 125,278
OTHER PAYABLES AND 112,032
ACCRUED EXPENSES
TOTAL LIABILITIES 782,876
NET ASSETS $ 231,693,325
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 192,635,512
UNDISTRIBUTED NET INVESTMENT INCOME 262,870
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 13,831,649
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 24,963,294
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 231,693,325
CALCULATION OF MAXIMUM $18.74
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($21,906,889 (DIVIDED BY)
1,169,241 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.88
(100/94.25 OF $18.74)
CLASS T: $18.66
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($118,608,455 (DIVIDED BY)
6,354,719 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.34
(100/96.50 OF $18.66)
CLASS B: $18.52
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($65,925,538 (DIVIDED BY)
3,559,196 SHARES) A
CLASS C: $18.56
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($19,982,650 (DIVIDED BY)
1,076,680 SHARES) A
INSTITUTIONAL CLASS: $18.80
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($5,269,793 (DIVIDED BY) 280,311 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
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YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 1,869,049
DIVIDENDS
INTEREST 744,945
TOTAL INCOME 2,613,994
EXPENSES
MANAGEMENT FEE $ 797,075
TRANSFER AGENT FEES 335,220
DISTRIBUTION FEES 802,259
ACCOUNTING FEES AND EXPENSES 86,010
NON-INTERESTED TRUSTEES' COMPENSATION 433
CUSTODIAN FEES AND EXPENSES 6,211
REGISTRATION FEES 109,948
AUDIT 33,290
LEGAL 2,509
REPORTS TO SHAREHOLDERS 37,113
MISCELLANEOUS 1,049
TOTAL EXPENSES BEFORE REDUCTIONS 2,211,117
EXPENSE REDUCTIONS (17,152) 2,193,965
NET INVESTMENT INCOME 420,029
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 15,266,516
FOREIGN CURRENCY TRANSACTIONS 10,686 15,277,202
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 12,949,723
ASSETS AND LIABILITIES IN (189) 12,949,534
FOREIGN CURRENCIES
NET GAIN (LOSS) 28,226,736
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 28,646,765
</TABLE>
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ 420,029 $ 100,774
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 15,277,202 27,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 12,949,534 12,013,760
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 28,646,765 12,141,831
DISTRIBUTIONS TO SHAREHOLDERS (245,431) (14,685)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,447,197) (13,841)
TOTAL DISTRIBUTIONS (1,692,628) (28,526)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 134,897,670 57,645,194
REDEMPTION FEES 68,426 14,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 161,920,233 69,773,092
NET ASSETS
BEGINNING OF PERIOD 69,773,092 -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $262,870 AND $86,089,
RESPECTIVELY) $ 231,693,325 $ 69,773,092
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
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FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.11 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .11 .06
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.80 5.06
TOTAL FROM INVESTMENT OPERATIONS 3.91 5.12
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.06) (.01)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.29) (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.74 $ 15.11
TOTAL RETURN B, C 26.32% 51.35%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 21,907 $ 6,275
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.32% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.30% G 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .63% .55% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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. 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>
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FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.07 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .07 .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.78 5.04
TOTAL FROM INVESTMENT OPERATIONS 3.85 5.08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) (.01)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.27) (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.66 $ 15.07
TOTAL RETURN B, C 25.96% 50.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 118,608 $ 52,003
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.52% 1.94% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.50% F 1.91% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .44% .37% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE G $ .0395 $ .0348
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 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.
</TABLE>
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FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.04 $ 12.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.02) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.76 2.50
TOTAL FROM INVESTMENT OPERATIONS 3.74 2.48
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) -
FROM NET REALIZED GAIN (.23) -
TOTAL DISTRIBUTIONS (.27) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 18.52 $ 15.04
TOTAL RETURN B, C 25.29% 19.75%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 65,926 $ 7,737
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.06% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.04% G 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.14)% (.37)% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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.
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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.24
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.57
TOTAL FROM INVESTMENT OPERATIONS 3.54
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.21)
TOTAL DISTRIBUTIONS (.23)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 18.56
TOTAL RETURN B, C 23.56%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,983
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.09% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.07% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.22)% A
PORTFOLIO TURNOVER 54%
AVERAGE COMMISSION RATE G $ .0395
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
COMTINGENT 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 NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF CLASS C SHARES)
TO JULY 31, 1998. 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.
<TABLE>
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FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.14 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .14 .10
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.79 5.06
TOTAL FROM INVESTMENT OPERATIONS 3.93 5.16
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.05) (.02)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.28) (.03)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.80 $ 15.14
TOTAL RETURN B, C 26.39% 51.78%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,270 $ 3,758
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.14% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.13% G 1.47% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .81% .85% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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
EXPENSES 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 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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
investments companies (PFIC), non-taxable dividends 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $182,906,998 and $65,702,518, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 31,380 $ 10
CLASS T 412,412 549
CLASS B 297,692 223,036
CLASS C 60,775 60,775
$ 802,259 $ 284,370
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 7,789
CLASS T $ 13,765
CLASS B $ 7,433
CLASS C $ 10,797
INSTITUTIONAL CLASS $ 310
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and Class T shares that were
subject to a finder's fee bear a contingent deferred sales charge on
assets that do not remain in the fund for at least one year. The Class
A and Class T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to
FDC are paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 226,919 $ 96,375
CLASS T 375,688 137,727
CLASS B 49,800 49,800 *
CLASS C 6,588 6,588 *
$ 658,995 $ 290,490
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 32,422 .26
CLASS T 200,782 .24
CLASS B 80,021 .27
CLASS C 14,009 .23*
INSTITUTIONAL CLASS 7,986 .20
$ 335,220
* ANNUALIZED.
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 $24,154 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $16,507 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and 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 $340 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
CREDITS
CLASS A $ 305
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 10% 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,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ 32,929 $ 1,796
CLASS T 169,652 11,192
CLASS B 31,387 -
CLASS C 990 -
INSTITUTIONAL CLASS 10,473 1,697
TOTAL $ 245,431 $ 14,685
FROM NET REALIZED GAIN
CLASS A $ 134,384 $ 1,792
CLASS T 1,003,813 11,200
CLASS B 249,387 -
CLASS C 10,862 -
INSTITUTIONAL CLASS 48,751 849
TOTAL $ 1,447,197 $ 13,841
TOTAL $ 1,692,628 $ 28,526
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 934,476 442,563 $ 16,203,034 $ 5,416,102
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 9,387 294 147,404 3,494
SHARES REDEEMED (189,881) (27,598) (3,281,384) (358,033)
NET INCREASE (DECREASE) 753,982 415,259 $ 13,069,054 $ 5,061,563
CLASS T 4,223,164 3,898,064 $ 71,654,298 $ 48,519,698
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 66,953 1,650 1,051,227 19,567
SHARES REDEEMED (1,386,617) (448,495) (23,635,629) (5,662,098)
NET INCREASE (DECREASE) 2,903,500 3,451,219 $ 49,069,896 $ 42,877,167
CLASS B 3,302,648 528,089 $ 57,223,474 $ 6,961,044
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 13,682 - 213,556 -
SHARES REDEEMED (271,676) (13,547) (4,668,237) (182,473)
NET INCREASE (DECREASE) 3,044,654 514,542 $ 52,768,793 $ 6,778,571
CLASS C 1,117,558 - $ 19,997,372 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 710 - 11,224 -
SHARES REDEEMED (41,588) - (764,009) -
NET INCREASE (DECREASE) 1,076,680 - $ 19,244,587 $ -
INSTITUTIONAL CLASS 170,926 324,063 $ 2,901,545 $ 3,934,976
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3,344 215 52,667 2,546
SHARES REDEEMED (142,257) (75,980) (2,208,872) (1,009,629)
NET INCREASE (DECREASE) 32,013 248,298 $ 745,340 $ 2,927,893
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 12,800
CLASS T 43,958
CLASS B 31,722
CLASS C 13,166
INSTITUTIONAL CLASS 8,302
$ 109,948
ADVISOR HEALTH CARE FUND - CLASS A
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL A 26.47% 78.32%
FIDELITY ADV HEALTH CARE - CL A 19.20% 68.07%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 76.95%
GS HEALTH CARE 30.67% 90.66%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Health Care Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL A 26.47% 35.43%
FIDELITY ADV HEALTH CARE - CL A 19.20% 31.29%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS HEALTH CARE 30.67% 40.27%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA HEALTH CARE -CL A S&P 500
GS HEALTH CARE
00177 SP001
GS005
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 10056.48 10516.69 10812.87
1996/10/31 9830.28 10806.74 10714.59
1996/11/30 10329.80 11623.62 11456.00
1996/12/31 10395.78 11393.36 11211.23
1997/01/31 11027.25 12105.21 12140.37
1997/02/28 11159.20 12200.12 12322.91
1997/03/31 10556.00 11698.81 11479.40
1997/04/30 11093.23 12397.23 12192.08
1997/05/31 11932.05 13151.98 13124.59
1997/06/30 12818.00 13741.19 14149.23
1997/07/31 13289.25 14834.57 14590.78
1997/08/31 12469.28 14003.54 13768.10
1997/09/30 13258.30 14770.51 14522.88
1997/10/31 13133.40 14277.18 14348.05
1997/11/30 13383.20 14938.07 14887.11
1997/12/31 13606.41 15194.56 15322.92
1998/01/31 14411.52 15362.61 16033.22
1998/02/28 15196.51 16470.56 17070.43
1998/03/31 15790.28 17314.02 17844.91
1998/04/30 15961.36 17488.19 18314.30
1998/05/31 15830.53 17187.57 18020.01
1998/06/30 16685.96 17885.73 19053.99
1998/07/31 16806.73 17695.25 19066.04
IMATRL PRASUN SHR__CHT 19980731 19980825 163220 R00000000000026
$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 5.75% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $16,807 - a 68.07% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Health Care Index, it would have grown to $19,066 - a 90.66%
increase.
ADVISOR HEALTH CARE FUND - CLASS T
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL T 26.17% 77.26%
FIDELITY ADV HEALTH CARE - CL T 21.75% 71.06%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS HEALTH CARE 30.67% 90.66%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Health Care Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL T 26.17% 35.01%
FIDELITY ADV HEALTH CARE - CL T 21.75% 32.51%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 34.89%
GS HEALTH CARE 30.67% 40.27%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA HEALTH CARE -CL T S&P 500
GS HEALTH CARE
00191 SP001
GS005
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 10286.90 10516.69 10812.87
1996/10/31 10055.30 10806.74 10714.59
1996/11/30 10566.75 11623.62 11456.00
1996/12/31 10624.65 11393.36 11211.23
1997/01/31 11271.20 12105.21 12140.37
1997/02/28 11396.65 12200.12 12322.91
1997/03/31 10779.05 11698.81 11479.40
1997/04/30 11319.45 12397.23 12192.08
1997/05/31 12178.30 13151.98 13124.59
1997/06/30 13075.75 13741.19 14149.23
1997/07/31 13558.25 14834.57 14590.78
1997/08/31 12718.70 14003.54 13768.10
1997/09/30 13526.32 14770.51 14522.88
1997/10/31 13398.52 14277.18 14348.05
1997/11/30 13654.11 14938.07 14887.11
1997/12/31 13872.26 15194.56 15322.92
1998/01/31 14696.15 15362.61 16033.22
1998/02/28 15478.85 16470.56 17070.43
1998/03/31 16086.47 17314.02 17844.91
1998/04/30 16261.54 17488.19 18314.30
1998/05/31 16117.36 17187.57 18020.01
1998/06/30 16992.75 17885.73 19053.99
1998/07/31 17106.03 17695.25 19066.04
IMATRL PRASUN SHR__CHT 19980731 19980825 164156 R00000000000026
$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 3.50% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $17,106 - a 71.06% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Health Care Index, it would have grown to $19,066 - a 90.66%
increase.
ADVISOR HEALTH CARE FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997
are those of Class T which bears a 0.50% 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would
have been lower. Class B shares' contingent deferred sales charge
included in the past one year and life of fund total return figures
are 5% and 4%, respectively. If Fidelity had not reimbursed certain
class expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL B 25.40% 75.69%
FIDELITY ADV HEALTH CARE - CL B 20.40% 71.69%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS HEALTH CARE 30.67% 90.66%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Health Care Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL B 25.40% 34.38%
FIDELITY ADV HEALTH CARE - CL B 20.40% 32.77%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS HEALTH CARE 30.67% 40.27%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA HEALTH CARE -CL B S&P 500
GS HEALTH CARE
00164 SP001
GS005
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10660.00 10516.69 10812.87
1996/10/31 10420.00 10806.74 10714.59
1996/11/30 10950.00 11623.62 11456.00
1996/12/31 11010.00 11393.36 11211.23
1997/01/31 11680.00 12105.21 12140.37
1997/02/28 11810.00 12200.12 12322.91
1997/03/31 11170.00 11698.81 11479.40
1997/04/30 11720.00 12397.23 12192.08
1997/05/31 12600.00 13151.98 13124.59
1997/06/30 13530.00 13741.19 14149.23
1997/07/31 14010.00 14834.57 14590.78
1997/08/31 13140.00 14003.54 13768.10
1997/09/30 13967.29 14770.51 14522.88
1997/10/31 13824.46 14277.18 14348.05
1997/11/30 14079.52 14938.07 14887.11
1997/12/31 14304.95 15194.56 15322.92
1998/01/31 15126.34 15362.61 16033.22
1998/02/28 15937.06 16470.56 17070.43
1998/03/31 16545.10 17314.02 17844.91
1998/04/30 16726.45 17488.19 18314.30
1998/05/31 16566.44 17187.57 18020.01
1998/06/30 17462.50 17885.73 19053.99
1998/07/31 17569.17 17695.25 19066.04
IMATRL PRASUN SHR__CHT 19980731 19980825 163033 R00000000000026
$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, 1998, the
value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $17,169 - a 71.69% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase. If $10,000 was invested in the
Goldman Sachs Health Care Index, it would have grown to $19,066 - a
90.66% increase.
ADVISOR HEALTH CARE FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL C 25.18% 75.38%
FIDELITY ADV HEALTH CARE - CL C 24.18% 75.38%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS HEALTH CARE 30.67% 90.66%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Health Care Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - CL C 25.18% 34.26%
FIDELITY ADV HEALTH CARE - CL C 24.18% 34.26%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS HEALTH CARE 30.67% 40.27%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA HEALTH CARE -CL C S&P 500
GS HEALTH CARE
00285 SP001
GS005
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10660.01 10516.69 10812.87
1996/10/31 10420.01 10806.74 10714.59
1996/11/30 10950.00 11623.62 11456.00
1996/12/31 11010.00 11393.36 11211.23
1997/01/31 11680.01 12105.21 12140.37
1997/02/28 11810.01 12200.12 12322.91
1997/03/31 11170.01 11698.81 11479.40
1997/04/30 11720.00 12397.23 12192.08
1997/05/31 12600.00 13151.98 13124.59
1997/06/30 13530.00 13741.19 14149.23
1997/07/31 14010.01 14834.57 14590.78
1997/08/31 13140.01 14003.54 13768.10
1997/09/30 13967.30 14770.51 14522.88
1997/10/31 13824.46 14277.18 14348.05
1997/11/30 14079.35 14938.07 14887.11
1997/12/31 14304.85 15194.56 15322.92
1998/01/31 15134.43 15362.61 16033.22
1998/02/28 15932.10 16470.56 17070.43
1998/03/31 16538.32 17314.02 17844.91
1998/04/30 16708.49 17488.19 18314.30
1998/05/31 16548.96 17187.57 18020.01
1998/06/30 17431.71 17885.73 19053.99
1998/07/31 17538.07 17695.25 19066.04
IMATRL PRASUN SHR__CHT 19980731 19980825 163716 R00000000000026
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Health Care - Class C on September 3,
1996, when the fund started. As the chart shows, by July 31, 1998, the
value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $17,538 - a 75.38% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase. If $10,000 was invested in the
Goldman Sachs Health Care Index, it would have grown to $19,066 - a
90.66% increase.
ADVISOR HEALTH CARE FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Beso Sikharulidze)
An interview with Beso Sikharulidze, Portfolio Manager of Fidelity
Advisor Health Care Fund
Q. HOW DID THE FUND PERFORM, BESO?
A. For the 12-month period ending July 31, 1998, the fund's Class A,
Class T, Class B and Class C shares returned 26.47%, 26.17%, 25.40%
and 25.18%, respectively. By comparison, the Standard & Poor's 500
Index returned 19.29% during the same period. Beginning this period,
the fund also compares itself to the Goldman Sachs Health Care Index -
an index of stocks designed to measure the performance of companies in
the health care sector - which returned 30.67% over the same 12-month
period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST
YEAR?
A. I committed a significant percentage of fund assets to the major
pharmaceutical companies and to other companies that benefited from
the strength in demand growth of pharmaceuticals, such as drug
distributors and drug-store chains. These companies performed very
well for the fund.
Q. WHY DO PHARMACEUTICAL COMPANIES CONTINUE TO PERFORM THE BEST WITHIN
THE HEALTH CARE SECTOR?
A. Most importantly, all the key drivers for continued strong earnings
and sales growth have remained in place. The key drivers are: an aging
population with increasing demand for pharmaceuticals, an increasing
supply of innovative new drugs with superior efficiency and safety,
and corporate earnings that have produced double-digit returns, which
compare favorably to other health care companies.
Q. MOST OF THE FUND'S TOP HOLDINGS HAVE NOT CHANGED SINCE THE LAST
REPORT. WHAT IS YOUR RATIONALE BEHIND THIS STRATEGY?
A. I didn't foresee any major changes in the market's outlook toward
drug companies and my outlook remained positive. As a result, I
continued to take a long-term view on the pharmaceutical sector.
Maintaining the fund's top holdings is not an unusual strategy for me.
Whether I am looking at a drug company, medical device maker or
biotechnology company, I focus on the long-term profitability outlook
and the ability of the company to produce consistent results.
Q. WHAT INDIVIDUAL HOLDINGS CONTRIBUTED TO FUND PERFORMANCE?
A. Warner-Lambert and Schering-Plough have done very well and
contributed significantly to the fund's strong performance.
Warner-Lambert benefited from having the strongest earnings growth
within the pharmaceutical sector. Strong sales of its newly launched
drugs, such as its cholesterol lowering drug Lipitor and diabetes drug
Rezulin, resulted in upward revisions of Warner's earnings and
ultimately pushed the stock price higher. Schering-Plough's stock also
benefited from strong sales of its major product - Claritin - and
upward earnings revisions.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. HMOs continued to detract from fund performance. Unfortunately,
many HMOs continue to struggle to find product and service strategies
that will boost growth and earnings. I continued to hold HMOs like
Foundation Health Systems, United Health Care and Humana, which all
seemed to be reasonably valued considering their business
fundamentals. At the same time, these companies continue to struggle
to increase patient enrollment while maintaining profitability.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR, BESO?
A. Overall, I think the health care sector should continue to be
strong. Favorable demographics, combined with strong demand growth for
drugs, medical supplies and medical technology, should drive further
innovation. Strong management teams and a favorable regulatory
environment also have created an excellent opportunity for health care
stocks to outperform the broader market.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1998, more than
$232 million
MANAGER: Beso Sikharulidze, since June 1997;
joined Fidelity in 1992
ADVISOR HEALTH CARE FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
WARNER-LAMBERT CO. 9.7
LILLY (ELI) & CO. 8.6
MERCK & CO., INC 7.4
JOHNSON & JOHNSON 5.9
AMERICAN HOME PRODUCTS CORP. 5.1
SCHERING-PLOUGH CORP. 4.5
BRISTOL-MYERS SQUIBB CO. 4.0
ABBOTT LABORATORIES 4.0
MEDTRONIC, INC. 3.6
MONSANTO CO. 2.9
TOP INDUSTRIES AS OF JULY 31, 1998
DRUGS 42.6%
MEDICAL SUPPLIES & APPLIANCES 14.2%
BIOTECHNOLOGY 5.7%
HOSPITALS 5.5%
MEDICAL TECHNOLOGY 4.1%
ALL OTHERS 27.9%
ROW: 1, COL: 1, VALUE: 42.6
ROW: 1, COL: 2, VALUE: 14.2
ROW: 1, COL: 3, VALUE: 5.7
ROW: 1, COL: 4, VALUE: 5.5
ROW: 1, COL: 5, VALUE: 4.1
ROW: 1, COL: 6, VALUE: 27.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR HEALTH CARE FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.6%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.8%
CROPS - 0.8%
Delta & Pine Land Co. 41,600 $ 1,869,400
CHEMICALS & PLASTICS - 2.9%
CHEMICALS - 2.9%
Monsanto Co. 118,700 6,721,388
COMPUTER SERVICES & SOFTWARE - 0.4%
CAD/CAM/CAE - 0.4%
Shared Medical Systems Corp. 15,000 1,018,125
DRUG STORES - 3.3%
CVS Corp. 72,000 2,952,000
Rite Aid Corp. 25,400 1,003,300
Walgreen Co. 86,600 3,740,038
7,695,338
DRUGS & PHARMACEUTICALS - 51.1%
BIOTECHNOLOGY - 5.7%
Amgen, Inc. (a) 60,200 4,420,938
Aviron (a) 40,000 1,195,000
Biogen, Inc. (a) 56,300 3,131,688
Chiron Corp. (a) 23,600 401,200
COR Therapeutics, Inc. (a) 54,100 757,400
Genentech, Inc. special (a) 6,100 421,281
Genzyme Corp. 7,100 223,428
Medimmune, Inc. (a) 6,400 376,200
Sepracor, Inc. (a) 5,300 286,200
Shire Pharmaceuticals Group PLC
sponsored ADR (a) 83,050 1,993,200
13,206,535
COMMERCIAL LABORATORY RESEARCH - 0.4%
Quintiles Transnational Corp. (a) 21,000 956,813
DRUGS - 42.6%
Allergan, Inc. 29,500 1,541,375
ALZA Corp. Class A 15,100 587,013
American Home Products Corp. 227,400 11,711,100
Bristol-Myers Squibb Co. 80,700 9,194,756
Dura Pharmaceuticals, Inc. (a) 1,300 33,475
Elan Corp. PLC ADR (a) 9,200 662,400
Forest Laboratories, Inc. (a) 34,000 1,275,000
Lilly (Eli) & Co. 293,700 19,751,325
Merck & Co., Inc. 139,000 17,140,438
Sankyo Co. Ltd. 82,000 1,838,107
Scherer R.P. Corp. (a) 4,200 381,938
Schering-Plough Corp. 108,500 10,497,375
SmithKline Beecham PLC ADR 9,000 515,250
Takeda Chemical Industries Ltd. 15,000 385,015
Warner-Lambert Co. 296,700 22,419,382
Watson Pharmaceuticals, Inc. (a) 8,200 370,025
98,303,974
PHARMACEUTICAL PREPARATIONS - 2.4%
Andrx Corp. (a) 14,500 518,375
Immunex Corp. (a) 3,900 275,925
MacroChem Corp. (a) 105,200 736,400
Medicis Pharmaceutical Corp.
Class A (a) 25,300 904,475
Rexall Sundown, Inc. (a) 43,000 1,298,063
Twinlab Corp. (a) 41,600 1,726,400
5,459,638
TOTAL DRUGS & PHARMACEUTICALS 117,926,960
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 0.5%
ELECTRICAL MACHINERY - 0.5%
VWR Corp. (a) 42,000 $ 1,176,000
ELECTRONIC INSTRUMENTS - 0.7%
LAB ANALYTICAL INSTRUMENTS - 0.7%
Waters Corp. (a) 25,800 1,647,975
MEDICAL EQUIPMENT & SUPPLIES - 26.4%
DENTAL EQUIPMENT - 0.8%
Sybron International Corp. (a) 85,100 1,765,825
DRUG DISTRIBUTORS - WHOLESALE - 3.6%
AmeriSource Health Corp. Class A (a) 21,000 1,598,625
Bergen Brunswig Corp. Class A 24,800 1,314,400
Cardinal Health, Inc. 29,000 2,785,813
McKesson Corp. 26,900 2,168,813
Zonagen, Inc. (a) 16,200 330,075
8,197,726
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.4%
PSS World Medical, Inc. (a) 63,000 978,469
MEDICAL SUPPLIES & APPLIANCES - 14.2%
Abbott Laboratories 219,900 9,139,594
Bard (C.R.), Inc. 100 4,050
Becton, Dickinson & Co. 38,900 3,214,113
Boston Scientific Corp.(a) 49,500 3,792,938
Johnson & Johnson 175,700 13,572,825
Sofamor/Danek Group, Inc. (a) 12,300 1,047,038
Steris Corp. (a) 31,200 1,903,200
32,673,758
MEDICAL TECHNOLOGY - 4.1%
Ballard Medical Products 31,100 637,550
Medtronic, Inc. 134,500 8,330,594
St. Jude Medical, Inc. (a) 14,800 451,400
Stryker Corp. 3,000 130,313
9,549,857
OPHTHALMIC GOODS - 2.2%
Bausch & Lomb, Inc. 51,900 2,653,388
Wesley Jessen Visioncare, Inc. (a) 99,700 2,430,188
5,083,576
X-RAY ELECTRO-MEDICAL APPARATUS - 1.1%
Guidant Corp. 34,300 2,548,919
TOTAL MEDICAL EQUIPMENT & SUPPLIES 60,798,130
MEDICAL FACILITIES MANAGEMENT - 8.9%
HOSPITALS - 5.5%
Columbia/HCA Healthcare Corp. 92,500 2,636,250
HEALTHSOUTH Corp. (a) 111,100 2,791,388
Health Management Associates, Inc.
Class A (a) 101,700 2,389,950
Tenet Healthcare Corp. (a) 104,900 3,140,444
Universal Health Services, Inc. Class B (a) 35,000 1,793,750
12,751,782
HMO'S & OUTPATIENT CARE - 2.4%
Foundation Health Systems,
Inc. Class A (a) 42,000 866,250
Humana, Inc. (a) 45,800 1,245,188
PacifiCare Health Systems, Inc. Class B (a) 16,600 1,191,050
United HealthCare Corp. 32,000 1,808,000
Wellpoint Health Networks, Inc. (a) 6,300 386,269
5,496,757
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
MEDICAL LABORATORIES - 0.1%
Cambridge Heart, Inc. (a) 16,700 $ 120,031
MEDICAL SERVICES - 0.8%
Carematrix Corp. (a) 42,000 1,120,875
Lincare Holdings, Inc. (a) 16,500 655,875
1,776,750
SKILLED NURSING CARE FACILITIES - 0.1%
Beverly Enterprises, Inc. (a) 28,800 289,800
TOTAL MEDICAL FACILITIES MANAGEMENT 20,435,120
RETAIL & WHOLESALE, MISCELLANEOUS - 1.2%
MAIL ORDER - 0.7%
Henry Schein, Inc. (a) 33,700 1,621,813
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.5%
AgriBioTech, Inc. (a) 58,100 1,045,800
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,667,613
SERVICES - 0.4%
BUSINESS SERVICES - 0.0%
Professional Detailing, Inc. 100 2,300
MANAGEMENT SERVICES - 0.3%
Medpartners, Inc. (a) 133,800 685,725
SOCIAL SERVICES - 0.1%
Assisted Living Concepts, Inc. (a) 20,500 279,313
TOTAL SERVICES 967,338
TOTAL COMMON STOCKS
(Cost $193,333,911) 222,923,387
CASH EQUIVALENTS - 3.4%
Taxable Central Cash Fund (b)
(Cost $7,848,195) 7,848,195 7,848,195
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $201,182,106) $ 230,771,582
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $201,396,592. Net unrealized appreciation
aggregated $29,374,990, of which $36,105,901 related to appreciated
investment securities and $6,730,911 related to depreciated investment
securities.
The fund hereby designates approximately $488,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 10%, 10%, 11%, 8%, and 9%, of Class A's, Class T,'s Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 230,771,582
(COST $201,182,106) -
SEE ACCOMPANYING SCHEDULE
CASH 138,979
RECEIVABLE FOR FUND SHARES SOLD 2,296,243
DIVIDENDS RECEIVABLE 76,762
INTEREST RECEIVABLE 133,597
PREPAID EXPENSES 3,238
TOTAL ASSETS 233,420,401
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 594,937
PAYABLE FOR FUND SHARES REDEEMED 281,673
ACCRUED MANAGEMENT FEE 108,974
DISTRIBUTION FEES PAYABLE 114,277
OTHER PAYABLES AND ACCRUED EXPENSES 114,405
TOTAL LIABILITIES 1,214,266
NET ASSETS $ 232,206,135
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 196,834,702
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 5,782,004
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 29,589,429
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 232,206,135
CALCULATION OF MAXIMUM $16.70
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($20,902,441 (DIVIDED BY)
1,251,954 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $17.72
(100/94.25 OF $16.70)
CLASS T: $16.61
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($124,652,151 (DIVIDED BY)
7,504,761 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $17.21
(100/96.50 OF $16.61)
CLASS B: $16.47
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($57,073,781 (DIVIDED BY)
3,465,491 SHARES) A
CLASS C: $16.49
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($19,153,838 (DIVIDED BY)
1,161,257 SHARES) A
INSTITUTIONAL CLASS: $16.73
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($10,423,924 (DIVIDED BY) 622,887 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 907,528
DIVIDENDS
INTEREST 564,289
TOTAL INCOME 1,471,817
EXPENSES
MANAGEMENT FEE $ 727,332
TRANSFER AGENT FEES 320,641
DISTRIBUTION FEES 687,556
ACCOUNTING FEES AND EXPENSES 79,943
NON-INTERESTED TRUSTEES' COMPENSATION 398
CUSTODIAN FEES AND EXPENSES 9,766
REGISTRATION FEES 115,886
AUDIT 33,649
LEGAL 2,333
REPORTS TO SHAREHOLDERS 38,069
MISCELLANEOUS 1,003
TOTAL EXPENSES BEFORE REDUCTIONS 2,016,576
EXPENSE REDUCTIONS (27,292) 1,989,284
NET INVESTMENT INCOME (LOSS) (517,467)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 10,449,791
FOREIGN CURRENCY TRANSACTIONS (30,701) 10,419,090
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 19,983,091
ASSETS AND LIABILITIES IN (47) 19,983,044
FOREIGN CURRENCIES
NET GAIN (LOSS) 30,402,134
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,884,667
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (517,467) $ (92,633)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 10,419,090 1,318,664
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 19,983,044 9,606,385
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,884,667 10,832,416
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (5,317,653) -
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 138,185,326 58,550,028
REDEMPTION FEES 63,702 7,649
TOTAL INCREASE (DECREASE) IN NET ASSETS 162,816,042 69,390,093
NET ASSETS
BEGINNING OF PERIOD 69,390,093 -
END OF PERIOD $ 232,206,135 $ 69,390,093
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.50 4.12
TOTAL FROM INVESTMENT OPERATIONS 3.47 4.10
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.88) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.70 $ 14.10
TOTAL RETURN B, C 26.47% 41.00%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 20,902 $ 5,488
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.38% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.36% G 1.74% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.18)% (.18)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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.
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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.05 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.05) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.47 4.09
TOTAL FROM INVESTMENT OPERATIONS 3.42 4.05
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.87) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.61 $ 14.05
TOTAL RETURN B, C 26.17% 40.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 124,652 $ 50,868
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.54% 1.97% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.52% F 1.96% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.31)% (.39)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE G $ .0464 $ .0383
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 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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.01 $ 11.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.14) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.45 2.18
TOTAL FROM INVESTMENT OPERATIONS 3.31 2.13
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.86) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.47 $ 14.01
TOTAL RETURN B, C 25.40% 17.93%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 57,074 $ 6,159
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.13% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.12% G 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.95)% (.99)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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. 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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.85
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.12)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.39
TOTAL FROM INVESTMENT OPERATIONS 3.27
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.63)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .00
NET ASSET VALUE, END OF PERIOD $ 16.49
TOTAL RETURN B, C 24.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,154
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.18% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.17% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.06)% A
PORTFOLIO TURNOVER 85%
AVERAGE COMMISSION RATE G $ .0464
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 FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF CLASS C SHARES)
TO JULY 31, 1998. 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.
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.12 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .03 .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.47 4.11
TOTAL FROM INVESTMENT OPERATIONS 3.50 4.12
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.90) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.73 $ 14.12
TOTAL RETURN B, C 26.70% 41.20%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 10,424 $ 6,875
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.07% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.04% G 1.49% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .17% .08% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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. 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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, net operating losses 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 tax purposes.
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 which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $225,729,121 and $99,506,666, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 26,047 $ 36
CLASS T 394,779 980
CLASS B 219,552 164,680
CLASS C 47,178 47,178
$ 687,556 $ 212,874
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 9,013
CLASS T $ 13,575
CLASS B $ 6,849
CLASS C $ 6,551
INSTITUTIONAL CLASS $ 270
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
asset value of the redeemed shares, excluding any reinvested dividends
and capital gains. A portion of the sales charges paid to FDC are paid
to securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 193,119 $ 86,859
CLASS T 403,740 153,952
CLASS B 31,102 31,102
CLASS C 3,519 3,519
$ 631,480 $ 275,432
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 30,483 .29
CLASS T 198,465 .25
CLASS B 66,037 .30
CLASS C 12,414 .26 *
INSTITUTIONAL CLASS 13,242 .19
$ 320,641
* ANNUALIZED.
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 $27,427 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $25,841 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and 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 $330 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
CREDITS
CLASS T $ 1,121
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED JULY 31,
1998 A 1997
FROM NET REALIZED GAIN
CLASS A $ 420,044 $ -
CLASS T 3,806,901 -
CLASS B 709,849 -
CLASS C 21,184 -
INSTITUTIONAL CLASS 359,675 -
TOTAL $ 5,317,653 $ -
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 953,100 450,370 $ 14,712,053 $ 5,183,538
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 29,113 - 382,670 -
SHARES REDEEMED (119,595) (61,034) (1,797,313) (732,928)
NET INCREASE (DECREASE) 862,618 389,336 $ 13,297,410 $ 4,450,610
CLASS T 5,008,211 3,936,387 $ 75,539,497 $ 46,440,633
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 273,667 - 3,586,347 -
SHARES REDEEMED (1,398,051) (315,453) (21,017,135) (3,850,782)
NET INCREASE (DECREASE) 3,883,827 3,620,934 $ 58,108,709 $ 42,589,851
CLASS B 3,319,731 445,818 $ 50,883,606 $ 5,752,611
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 49,154 - 640,560 -
SHARES REDEEMED (343,006) (6,206) (5,148,858) (76,107)
NET INCREASE (DECREASE) 3,025,879 439,612 $ 46,375,308 $ 5,676,504
CLASS C 1,191,803 - $ 18,640,101 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,455 - 18,904 -
SHARES REDEEMED (32,001) - (510,296) -
NET INCREASE (DECREASE) 1,161,257 - $ 18,148,709 $ -
INSTITUTIONAL CLASS 342,040 546,050 $ 5,185,579 $ 6,606,358
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 27,158 - 357,509 -
SHARES REDEEMED (233,192) (59,169) (3,287,898) (773,295)
NET INCREASE (DECREASE) 136,006 486,881 $ 2,255,190 $ 5,833,063
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 13,346
CLASS T 46,918
CLASS B 31,737
CLASS C 13,867
INSTITUTIONAL CLASS 10,018
$ 115,886
ADVISOR NATURAL RESOURCES FUND - CLASS A
PERFORMANCE
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 shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class
expenses, the past five year and past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL A -14.61% 63.54% 234.61%
FIDELITY ADV NATURAL - CL A (INCL. 5.75% SALES CHARGE) -19.52% 54.13% 215.37%
S&P 500 19.29% 180.53% 445.15%
GS NATURAL RESOURCES -14.16% N/A N/A
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. You can compare Class A shares' returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL A -14.61% 10.34% 12.84%
FIDELITY ADV NATURAL - CL A -19.52% 9.04% 12.17%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 22.91% 18.48%
GS NATURAL RESOURCES -14.16% N/A N/A
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.
(CHECKMARK)
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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL A S&P 500
00247 SP001
1988/07/31 9425.00 10000.00
1988/08/31 9172.91 9660.00
1988/09/30 9132.25 10071.52
1988/10/31 9327.42 10351.50
1988/11/30 9115.98 10203.48
1988/12/31 9422.49 10382.04
1989/01/31 10184.08 11142.00
1989/02/28 10033.53 10864.57
1989/03/31 10228.36 11117.71
1989/04/30 10547.16 11694.72
1989/05/31 10795.12 12168.36
1989/06/30 10759.70 12099.00
1989/07/31 11539.00 13191.54
1989/08/31 11884.38 13450.09
1989/09/30 11565.57 13394.95
1989/10/31 11158.21 13084.18
1989/11/30 11654.13 13351.10
1989/12/31 12544.90 13671.53
1990/01/31 11753.61 12754.17
1990/02/28 12303.65 12918.70
1990/03/31 12535.25 13261.04
1990/04/30 11879.06 12929.52
1990/05/31 13085.30 14190.14
1990/06/30 12921.25 14093.65
1990/07/31 13558.14 14048.55
1990/08/31 13201.10 12778.56
1990/09/30 12786.15 12156.25
1990/10/31 11869.41 12103.97
1990/11/30 12062.40 12885.89
1990/12/31 11882.28 13245.41
1991/01/31 12274.33 13822.91
1991/02/28 14043.61 14811.25
1991/03/31 13711.87 15169.68
1991/04/30 13782.24 15206.08
1991/05/31 14445.71 15862.99
1991/06/30 13611.34 15136.46
1991/07/31 14063.71 15841.82
1991/08/31 14425.61 16217.27
1991/09/30 13862.66 15946.44
1991/10/31 14184.34 16160.13
1991/11/30 13038.34 15508.87
1991/12/31 13601.50 17283.09
1992/01/31 14446.18 16961.62
1992/02/29 14771.05 17182.12
1992/03/31 14402.86 16847.07
1992/04/30 14933.49 17342.38
1992/05/31 15334.17 17427.35
1992/06/30 14836.03 17167.69
1992/07/31 15431.64 17869.85
1992/08/31 15204.22 17503.51
1992/09/30 15355.83 17710.06
1992/10/31 15030.96 17772.04
1992/11/30 15225.88 18378.07
1992/12/31 15415.23 18604.12
1993/01/31 15909.39 18760.39
1993/02/28 16355.33 19015.53
1993/03/31 17440.07 19416.76
1993/04/30 18380.17 18946.88
1993/05/31 19284.11 19454.65
1993/06/30 19549.26 19511.07
1993/07/31 19284.11 19433.03
1993/08/31 20392.94 20169.54
1993/09/30 20284.47 20014.23
1993/10/31 21200.47 20428.53
1993/11/30 20405.00 20234.46
1993/12/31 21263.61 20479.29
1994/01/31 22556.50 21175.59
1994/02/28 21853.57 20601.73
1994/03/31 20510.47 19703.49
1994/04/30 20849.38 19955.70
1994/05/31 21125.53 20282.97
1994/06/30 20748.97 19786.04
1994/07/31 21451.89 20435.02
1994/08/31 22493.74 21272.86
1994/09/30 22380.77 20751.67
1994/10/31 22041.85 21218.59
1994/11/30 20598.34 20445.80
1994/12/31 20778.95 20749.02
1995/01/31 20370.77 21287.04
1995/02/28 20970.29 22116.59
1995/03/31 22143.80 22769.25
1995/04/30 23049.46 23439.81
1995/05/31 23368.35 24376.70
1995/06/30 24031.64 24942.97
1995/07/31 25039.34 25770.08
1995/08/31 25422.01 25834.76
1995/09/30 25638.85 26924.99
1995/10/31 24554.62 26828.87
1995/11/30 25804.68 28006.65
1995/12/31 26737.21 28546.06
1996/01/31 27753.38 29517.77
1996/02/29 28439.63 29791.40
1996/03/31 29310.63 30078.29
1996/04/30 31013.05 30521.64
1996/05/31 31593.72 31308.80
1996/06/30 31395.76 31428.08
1996/07/31 29693.34 30039.59
1996/08/31 31026.25 30673.13
1996/09/30 32345.95 32399.41
1996/10/31 33137.77 33292.98
1996/11/30 34800.60 35809.60
1996/12/31 34857.69 35100.21
1997/01/31 35422.42 37293.27
1997/02/28 33078.81 37585.65
1997/03/31 32217.60 36041.26
1997/04/30 32062.30 38192.92
1997/05/31 34984.75 40518.11
1997/06/30 34871.81 42333.32
1997/07/31 36933.06 45701.78
1997/08/31 37144.83 43141.57
1997/09/30 39812.22 45504.43
1997/10/31 37360.30 43984.58
1997/11/30 34248.25 46020.63
1997/12/31 34567.27 46810.80
1998/01/31 33618.17 47328.53
1998/02/28 34817.03 50741.86
1998/03/31 36332.26 53340.35
1998/04/30 37714.29 53876.96
1998/05/31 35782.78 52950.81
1998/06/30 34300.85 55101.68
1998/07/31 31536.80 54514.84
IMATRL PRASUN SHR__CHT 19980731 19980807 124026 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class A on July 31,
1988, and the current 5.75% sales charge was paid. As the chart shows,
by July 31, 1998, the value of the investment would have grown to
$31,537 - a 215.37% increase on the initial investment. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $54,515 - a 445.15%
increase. (The Goldman Sachs Natural Resources Index does not extend
as far back as the fund's start date, and therefore can not be used
for this comparison.)
ADVISOR NATURAL RESOURCES FUND - CLASS T
PERFORMANCE
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
year and 10 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL T -14.69% 63.69% 234.92%
FIDELITY ADV NATURAL - CL T -17.68% 57.96% 223.20%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 180.53% 445.15%
GS NATURAL RESOURCES -14.16% N/A N/A
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. You can compare Class T shares' returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL T -14.69% 10.36% 12.85%
FIDELITY ADV NATURAL - CL T -17.68% 9.57% 12.45%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 22.91% 18.48%
GS NATURAL RESOURCES -14.16% N/A N/A
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.
(CHECKMARK)
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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL T S&P 500
00166 SP001
1988/07/31 9650.00 10000.00
1988/08/31 9391.89 9660.00
1988/09/30 9350.26 10071.52
1988/10/31 9550.09 10351.50
1988/11/30 9333.61 10203.48
1988/12/31 9647.43 10382.04
1989/01/31 10427.20 11142.00
1989/02/28 10273.06 10864.57
1989/03/31 10472.54 11117.71
1989/04/30 10798.95 11694.72
1989/05/31 11052.83 12168.36
1989/06/30 11016.56 12099.00
1989/07/31 11814.47 13191.54
1989/08/31 12168.09 13450.09
1989/09/30 11841.67 13394.95
1989/10/31 11424.58 13084.18
1989/11/30 11932.34 13351.10
1989/12/31 12844.38 13671.53
1990/01/31 12034.20 12754.17
1990/02/28 12597.37 12918.70
1990/03/31 12834.50 13261.04
1990/04/30 12162.64 12929.52
1990/05/31 13397.68 14190.14
1990/06/30 13229.71 14093.65
1990/07/31 13881.81 14048.55
1990/08/31 13516.24 12778.56
1990/09/30 13091.39 12156.25
1990/10/31 12152.76 12103.97
1990/11/30 12350.37 12885.89
1990/12/31 12165.94 13245.41
1991/01/31 12567.35 13822.91
1991/02/28 14378.87 14811.25
1991/03/31 14039.21 15169.68
1991/04/30 14111.26 15206.08
1991/05/31 14790.57 15862.99
1991/06/30 13936.28 15136.46
1991/07/31 14399.45 15841.82
1991/08/31 14769.99 16217.27
1991/09/30 14193.60 15946.44
1991/10/31 14522.96 16160.13
1991/11/30 13349.60 15508.87
1991/12/31 13926.20 17283.09
1992/01/31 14791.05 16961.62
1992/02/29 15123.68 17182.12
1992/03/31 14746.70 16847.07
1992/04/30 15290.00 17342.38
1992/05/31 15700.24 17427.35
1992/06/30 15190.21 17167.69
1992/07/31 15800.03 17869.85
1992/08/31 15567.19 17503.51
1992/09/30 15722.42 17710.06
1992/10/31 15389.79 17772.04
1992/11/30 15589.36 18378.07
1992/12/31 15783.24 18604.12
1993/01/31 16289.19 18760.39
1993/02/28 16745.78 19015.53
1993/03/31 17856.41 19416.76
1993/04/30 18818.95 18946.88
1993/05/31 19744.47 19454.65
1993/06/30 20015.96 19511.07
1993/07/31 19744.47 19433.03
1993/08/31 20879.78 20169.54
1993/09/30 20768.72 20014.23
1993/10/31 21706.58 20428.53
1993/11/30 20892.12 20234.46
1993/12/31 21771.23 20479.29
1994/01/31 23094.98 21175.59
1994/02/28 22375.27 20601.73
1994/03/31 21000.11 19703.49
1994/04/30 21347.11 19955.70
1994/05/31 21629.86 20282.97
1994/06/30 21244.30 19786.04
1994/07/31 21964.01 20435.02
1994/08/31 23030.72 21272.86
1994/09/30 22915.05 20751.67
1994/10/31 22568.05 21218.59
1994/11/30 21090.08 20445.80
1994/12/31 21275.00 20749.02
1995/01/31 20857.07 21287.04
1995/02/28 21470.90 22116.59
1995/03/31 22672.44 22769.25
1995/04/30 23599.71 23439.81
1995/05/31 23926.21 24376.70
1995/06/30 24605.34 24942.97
1995/07/31 25637.09 25770.08
1995/08/31 26028.90 25834.76
1995/09/30 26250.92 26924.99
1995/10/31 25140.81 26828.87
1995/11/30 26420.70 28006.65
1995/12/31 27375.50 28546.06
1996/01/31 28415.93 29517.77
1996/02/29 29118.56 29791.40
1996/03/31 30010.35 30078.29
1996/04/30 31753.41 30521.64
1996/05/31 32347.94 31308.80
1996/06/30 32145.26 31428.08
1996/07/31 30402.20 30039.59
1996/08/31 31766.93 30673.13
1996/09/30 33131.65 32399.41
1996/10/31 33942.37 33292.98
1996/11/30 35658.41 35809.60
1996/12/31 35729.89 35100.21
1997/01/31 36305.25 37293.27
1997/02/28 33917.51 37585.65
1997/03/31 33025.70 36041.26
1997/04/30 32896.24 38192.92
1997/05/31 35888.12 40518.11
1997/06/30 35773.05 42333.32
1997/07/31 37887.50 45701.78
1997/08/31 38117.64 43141.57
1997/09/30 40848.06 45504.43
1997/10/31 38338.02 43984.58
1997/11/30 35124.53 46020.63
1997/12/31 35448.91 46810.80
1998/01/31 34467.98 47328.53
1998/02/28 35702.60 50741.86
1998/03/31 37258.56 53340.35
1998/04/30 38662.31 53876.96
1998/05/31 36683.53 52950.81
1998/06/30 35161.40 55101.68
1998/07/31 32320.07 54514.84
IMATRL PRASUN SHR__CHT 19980731 19980807 125024 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class T on July 31,
1988, and the current 3.50% sales charge was paid. As the chart shows,
by July 31, 1998, the value of the investment would have grown to
$32,320 - a 223.20% increase on the initial investment. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $54,515 - a 445.15%
increase. (The Goldman Sachs Natural Resources Index does not extend
as far back as the fund's start date, and therefore can not be used
for this comparison.)
ADVISOR NATURAL RESOURCES FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to July 3, 1995
are those of Class T, the original class of the fund, and reflect
Class T shares' prior 0.65% 12b-1 fee. Had Class B shares' 12b-1 fee
been reflected, returns prior to July 3, 1995 would have been lower.
Class B shares' contingent deferred sales charge included in the past
one year, past five years and 10 years total return figures are 5%, 2%
and 0%, respectively. If Fidelity had not reimbursed certain class
expenses, the past five year and 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL B -15.12% 60.70% 228.80%
FIDELITY ADV NATURAL - CL B -18.74% 58.70% 228.80%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 180.53% 445.15%
GS NATURAL RESOURCES -14.16% N/A N/A
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. You can compare Class B shares' returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL B -15.12% 9.95% 12.64%
FIDELITY ADV NATURAL - CL B -18.74% 9.68% 12.64%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 22.91% 18.48%
GS NATURAL RESOURCES -14.16% N/A N/A
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.
(CHECKMARK)
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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL B S&P 500
00656 SP001
1988/07/31 10000.00 10000.00
1988/08/31 9732.53 9660.00
1988/09/30 9689.39 10071.52
1988/10/31 9896.46 10351.50
1988/11/30 9672.13 10203.48
1988/12/31 9997.33 10382.04
1989/01/31 10805.39 11142.00
1989/02/28 10645.66 10864.57
1989/03/31 10852.37 11117.71
1989/04/30 11190.62 11694.72
1989/05/31 11453.71 12168.36
1989/06/30 11416.13 12099.00
1989/07/31 12242.97 13191.54
1989/08/31 12609.42 13450.09
1989/09/30 12271.16 13394.95
1989/10/31 11838.95 13084.18
1989/11/30 12365.12 13351.10
1989/12/31 13310.24 13671.53
1990/01/31 12470.67 12754.17
1990/02/28 13054.27 12918.70
1990/03/31 13300.00 13261.04
1990/04/30 12603.77 12929.52
1990/05/31 13883.60 14190.14
1990/06/30 13709.55 14093.65
1990/07/31 14385.30 14048.55
1990/08/31 14006.47 12778.56
1990/09/30 13566.21 12156.25
1990/10/31 12593.53 12103.97
1990/11/30 12798.31 12885.89
1990/12/31 12607.19 13245.41
1991/01/31 13023.17 13822.91
1991/02/28 14900.38 14811.25
1991/03/31 14548.40 15169.68
1991/04/30 14623.06 15206.08
1991/05/31 15327.02 15862.99
1991/06/30 14441.74 15136.46
1991/07/31 14921.71 15841.82
1991/08/31 15305.69 16217.27
1991/09/30 14708.39 15946.44
1991/10/31 15049.70 16160.13
1991/11/30 13833.78 15508.87
1991/12/31 14431.30 17283.09
1992/01/31 15327.51 16961.62
1992/02/29 15672.21 17182.12
1992/03/31 15281.55 16847.07
1992/04/30 15844.56 17342.38
1992/05/31 16269.68 17427.35
1992/06/30 15741.15 17167.69
1992/07/31 16373.09 17869.85
1992/08/31 16131.80 17503.51
1992/09/30 16292.66 17710.06
1992/10/31 15947.96 17772.04
1992/11/30 16154.78 18378.07
1992/12/31 16355.69 18604.12
1993/01/31 16879.99 18760.39
1993/02/28 17353.14 19015.53
1993/03/31 18504.05 19416.76
1993/04/30 19501.50 18946.88
1993/05/31 20460.59 19454.65
1993/06/30 20741.93 19511.07
1993/07/31 20460.59 19433.03
1993/08/31 21637.08 20169.54
1993/09/30 21521.99 20014.23
1993/10/31 22493.86 20428.53
1993/11/30 21649.86 20234.46
1993/12/31 22560.86 20479.29
1994/01/31 23932.62 21175.59
1994/02/28 23186.81 20601.73
1994/03/31 21761.77 19703.49
1994/04/30 22121.36 19955.70
1994/05/31 22414.36 20282.97
1994/06/30 22014.82 19786.04
1994/07/31 22760.63 20435.02
1994/08/31 23866.03 21272.86
1994/09/30 23746.17 20751.67
1994/10/31 23386.58 21218.59
1994/11/30 21855.00 20445.80
1994/12/31 22046.63 20749.02
1995/01/31 21613.55 21287.04
1995/02/28 22249.64 22116.59
1995/03/31 23494.75 22769.25
1995/04/30 24455.66 23439.81
1995/05/31 24794.00 24376.70
1995/06/30 25497.76 24942.97
1995/07/31 26553.40 25770.08
1995/08/31 26959.42 25834.76
1995/09/30 27162.42 26924.99
1995/10/31 26025.58 26828.87
1995/11/30 27324.83 28006.65
1995/12/31 28272.27 28546.06
1996/01/31 29350.51 29517.77
1996/02/29 30050.67 29791.40
1996/03/31 30946.87 30078.29
1996/04/30 32711.26 30521.64
1996/05/31 33299.39 31308.80
1996/06/30 33061.34 31428.08
1996/07/31 31254.94 30039.59
1996/08/31 32627.24 30673.13
1996/09/30 34013.55 32399.41
1996/10/31 34839.73 33292.98
1996/11/30 36590.12 35809.60
1996/12/31 36650.16 35100.21
1997/01/31 37216.53 37293.27
1997/02/28 34757.29 37585.65
1997/03/31 33833.21 36041.26
1997/04/30 33669.26 38192.92
1997/05/31 36724.68 40518.11
1997/06/30 36590.54 42333.32
1997/07/31 38736.79 45701.78
1997/08/31 38945.45 43141.57
1997/09/30 41723.06 45504.43
1997/10/31 39141.23 43984.58
1997/11/30 35847.74 46020.63
1997/12/31 36165.91 46810.80
1998/01/31 35152.08 47328.53
1998/02/28 36393.15 50741.86
1998/03/31 37966.34 53340.35
1998/04/30 39382.21 53876.96
1998/05/31 37354.54 52950.81
1998/06/30 35781.35 55101.68
1998/07/31 32879.69 54514.84
IMATRL PRASUN SHR__CHT 19980731 19980807 124257 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class B on July 31,
1988. As the chart shows, by July 31, 1998, the value of the
investment, including the effect of the contingent deferred sales
charge, would have grown to $32,880 - a 228.80% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$54,515 - a 445.15% increase. (The Goldman Sachs Natural Resources
Index does not extend as far back as the fund's start date, and
therefore can not be used for this comparison.)
ADVISOR NATURAL RESOURCES FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between July 3, 1995
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to July 3, 1995 are those of
Class T, the original class of the fund, and reflect Class T shares'
prior 0.65% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected,
returns prior to July 3, 1995 would have been lower. Class C shares'
contingent deferred sales charge included in the past one year, past
five year and past 10 year total return figures are 1%, 0% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEAR YEARS
FIDELITY ADV NATURAL - CL C -15.42% 60.13% 227.63%
FIDELITY ADV NATURAL - CL C -16.22% 60.13% 227.63%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 19.29% 180.53% 445.15%
GS NATURAL RESOURCES -14.16% N/A N/A
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. You can compare Class C shares' returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - CL C -15.42% 9.87% 12.60%
FIDELITY ADV NATURAL - CL C -16.22% 9.87% 12.60%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 19.29% 22.91% 18.48%
GS NATURAL RESOURCES -14.16% N/A N/A
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL C S&P 500
00528 SP001
1988/07/31 10000.00 10000.00
1988/08/31 9732.53 9660.00
1988/09/30 9689.38 10071.52
1988/10/31 9896.46 10351.50
1988/11/30 9672.12 10203.48
1988/12/31 9997.32 10382.04
1989/01/31 10805.37 11142.00
1989/02/28 10645.65 10864.57
1989/03/31 10852.36 11117.71
1989/04/30 11190.61 11694.72
1989/05/31 11453.71 12168.36
1989/06/30 11416.12 12099.00
1989/07/31 12242.97 13191.54
1989/08/31 12609.41 13450.09
1989/09/30 12271.15 13394.95
1989/10/31 11838.94 13084.18
1989/11/30 12365.12 13351.10
1989/12/31 13310.23 13671.53
1990/01/31 12470.67 12754.17
1990/02/28 13054.27 12918.70
1990/03/31 13300.00 13261.04
1990/04/30 12603.76 12929.52
1990/05/31 13883.59 14190.14
1990/06/30 13709.54 14093.65
1990/07/31 14385.28 14048.55
1990/08/31 14006.47 12778.56
1990/09/30 13566.19 12156.25
1990/10/31 12593.53 12103.97
1990/11/30 12798.31 12885.89
1990/12/31 12607.19 13245.41
1991/01/31 13023.15 13822.91
1991/02/28 14900.36 14811.25
1991/03/31 14548.38 15169.68
1991/04/30 14623.06 15206.08
1991/05/31 15327.02 15862.99
1991/06/30 14441.72 15136.46
1991/07/31 14921.70 15841.82
1991/08/31 15305.68 16217.27
1991/09/30 14708.38 15946.44
1991/10/31 15049.70 16160.13
1991/11/30 13833.77 15508.87
1991/12/31 14431.29 17283.09
1992/01/31 15327.50 16961.62
1992/02/29 15672.20 17182.12
1992/03/31 15281.55 16847.07
1992/04/30 15844.54 17342.38
1992/05/31 16269.68 17427.35
1992/06/30 15741.13 17167.69
1992/07/31 16373.07 17869.85
1992/08/31 16131.79 17503.51
1992/09/30 16292.65 17710.06
1992/10/31 15947.95 17772.04
1992/11/30 16154.77 18378.07
1992/12/31 16355.67 18604.12
1993/01/31 16879.97 18760.39
1993/02/28 17353.12 19015.53
1993/03/31 18504.04 19416.76
1993/04/30 19501.49 18946.88
1993/05/31 20460.58 19454.65
1993/06/30 20741.91 19511.07
1993/07/31 20460.58 19433.03
1993/08/31 21637.07 20169.54
1993/09/30 21521.97 20014.23
1993/10/31 22493.85 20428.53
1993/11/30 21649.85 20234.46
1993/12/31 22560.84 20479.29
1994/01/31 23932.61 21175.59
1994/02/28 23186.79 20601.73
1994/03/31 21761.75 19703.49
1994/04/30 22121.35 19955.70
1994/05/31 22414.34 20282.97
1994/06/30 22014.81 19786.04
1994/07/31 22760.61 20435.02
1994/08/31 23866.01 21272.86
1994/09/30 23746.16 20751.67
1994/10/31 23386.57 21218.59
1994/11/30 21854.99 20445.80
1994/12/31 22046.61 20749.02
1995/01/31 21613.54 21287.04
1995/02/28 22249.63 22116.59
1995/03/31 23494.73 22769.25
1995/04/30 24455.63 23439.81
1995/05/31 24793.98 24376.70
1995/06/30 25497.74 24942.97
1995/07/31 26553.38 25770.08
1995/08/31 26959.40 25834.76
1995/09/30 27162.41 26924.99
1995/10/31 26025.57 26828.87
1995/11/30 27324.81 28006.65
1995/12/31 28272.26 28546.06
1996/01/31 29350.49 29517.77
1996/02/29 30050.64 29791.40
1996/03/31 30946.84 30078.29
1996/04/30 32711.24 30521.64
1996/05/31 33299.37 31308.80
1996/06/30 33061.32 31428.08
1996/07/31 31254.92 30039.59
1996/08/31 32627.22 30673.13
1996/09/30 34013.52 32399.41
1996/10/31 34839.71 33292.98
1996/11/30 36590.10 35809.60
1996/12/31 36650.13 35100.21
1997/01/31 37216.50 37293.27
1997/02/28 34757.26 37585.65
1997/03/31 33833.18 36041.26
1997/04/30 33669.23 38192.92
1997/05/31 36724.66 40518.11
1997/06/30 36590.52 42333.32
1997/07/31 38736.76 45701.78
1997/08/31 38945.42 43141.57
1997/09/30 41723.02 45504.43
1997/10/31 39141.21 43984.58
1997/11/30 35836.15 46020.63
1997/12/31 36150.16 46810.80
1998/01/31 35147.91 47328.53
1998/02/28 36357.53 50741.86
1998/03/31 37912.74 53340.35
1998/04/30 39312.44 53876.96
1998/05/31 37273.38 52950.81
1998/06/30 35683.60 55101.68
1998/07/31 32763.25 54514.84
IMATRL PRASUN SHR__CHT 19980731 19980807 124524 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class C on July 31,
1988. As the chart shows, by July 31, 1998, the value of the
investment, including the effect of the contingent deferred sales
charge, would have grown to $32,763 - a 227.63% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$54,515 - a 445.15% increase. (The Goldman Sachs Natural Resources
Index does not extend as far back as the fund's start date, and
therefore can not be used for this comparison.)
ADVISOR NATURAL RESOURCES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograp of Larry Rakers)
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, 1998, the fund's Class A,
Class T, Class B and Class C shares returned -14.61%, -14.69%,
- -15.12%, and -15.42%, respectively. During the same period, the
Standard & Poor's 500 Index returned 19.29%. Beginning this period,
the fund also compares itself to the Goldman Sachs Natural Resources
Index - an index of stocks designed to measure the performance of
companies in the natural resources sector - which returned -14.16%
over the same 12-month period.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE DURING THE PERIOD?
A. The financial crisis in Asia has been the primary cause for
declining commodity prices. Most natural resources commodities - with
the exception of palladium, platinum and silver - are down about 20%
to 30% over the past year. Natural resources stock prices move in
close tandem with commodity prices, so it has been a difficult
environment for the sector and for the fund. Historically, Asia
represented about 40% of the annual increase in demand for most
commodities. Since demand for a typical commodity grows only 2% to 2
% each year, difficulties in Asia have resulted in a decline in
annual demand growth, causing a severe decline in commodity prices. In
addition, investor sentiment has been negative toward this sector,
causing further downward pressure on stock prices.
Q. WERE THERE ANY OTHER FACTORS THAT CAUSED THE STEEP DECLINE IN
COMMODITY AND OIL PRICES?
A. With regard to oil, OPEC raised oil production quotas in November,
just as Asia was starting to fall apart, leading to over-supply and
further pressure on prices. We also had one of the warmest weather
patterns in recent history in the U.S., Europe and Asia, causing lower
demand for oil. Reduced demand, combined with increased supply,
resulted in the price of a barrel of oil losing about 40% of its value
during the period.
Q. IN LIGHT OF THE NEGATIVE ENVIRONMENT, WERE THERE ANY SPECIFIC
STRATEGIES YOU UTILIZED TO MINIMIZE RISKS TO THE FUND?
A. I have increased the fund's holdings in energy stocks because there
is a possibility that OPEC will cut production, causing a rise in oil
prices and an appreciation in the price of energy stocks. I also have
focused on integrated oil companies such as Exxon, USX-Marathon, and
Total SA. These companies' balance sheets looked good, and they are
diversified organizations that produce oil and gas, and have refining
and chemical operations. As a result, they tend to have more stable
earnings growth and offer higher dividend yields than some of the
non-integrated energy companies. More recently, I have put about 15%
of the portfolio into energy service companies and drillers such as
Schlumberger. I believe energy services companies can outperform other
natural resources stocks if oil prices rebound.
Q. WERE THERE ANY STOCKS OR STRATEGIES THAT HELPED THE FUND'S
PERFORMANCE? WHAT WERE THE DISAPPOINTMENTS?
A. There were a couple of factors that helped the fund's performance.
First, the fund was overweighted in European integrated oil companies
such as Elf Aquitaine, Total SA and British Petroleum relative to U.S.
integrated oil companies. I believed their valuations were more
reasonable than their U.S. counterparts, and they were growing their
earnings and oil production faster in markets that were growing faster
than the U.S. integrated oil companies. On the negative side, while
the fund had limited exposure to gold, just about every gold stock in
the fund has performed poorly. The supply and demand picture for gold
indicates that we consume more than we mine, which should be good for
gold prices. However, it is difficult to predict the direction of gold
prices. The central banks of governments around the world hold huge
reserves of gold, and many have been selling recently, putting
downward pressure on prices.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES SECTOR?
A. The continued decline in commodity prices seems to be telling us
that Asia isn't getting better any time soon. Of course, no one really
knows how long it will take for Asia to rebound, so I will continue to
focus on individual stock selection and picking companies that I think
have the best business prospects and earnings outlooks. I believe the
natural resources sector is setting itself up for a great rally; the
only problem is that it is impossible to say exactly when it is going
to happen. Commodity prices have been beaten down for an extended
period and producers have responded by not adding to supply. We can
have a strong rally when demand picks up, because commodity prices
would spike upward quickly during the lag time before supply
increases. In addition, when Asia gets its financial troubles worked
out - and assuming the U.S. and Europe continue to do well - we may
see signs of inflation. This sector traditionally has been a great
tool for hedging against a period of inflation.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: December 29, 1987
SIZE: as of July 31, 1998, more than $400 million
MANAGER: Lawrence Rakers, since 1997; joined Fidelity in 1993
ADVISOR NATURAL RESOURCES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
TOTAL SA SPONSORED ADR 6.5
USX-MARATHON GROUP 6.4
ELF AQUITAINE SA SPONSORED ADR 5.5
EXXON CORP. 5.3
MOBIL CORP. 4.8
TEXACO, INC. 4.7
CHEVRON CORP. 3.9
TOSCO CORP. 3.5
BRITISH PETROLEUM CO. PLC ADR 2.8
PHILLIPS PETROLEUM CO. 2.7
TOP INDUSTRIES AS OF JULY 31, 1998
OIL & GAS EXPLORATION 31.4%
CRUDE PETROLEUM & GAS 23.8%
PETROLEUM REFINERS 12.9%
OIL & GAS SERVICES 9.2%
GOLD ORES 4.0%
ALL OTHERS 18.7%
ROW: 1, COL: 1, VALUE: 31.4
ROW: 1, COL: 2, VALUE: 23.8
ROW: 1, COL: 3, VALUE: 12.9
ROW: 1, COL: 4, VALUE: 9.199999999999999
ROW: 1, COL: 5, VALUE: 4.0
ROW: 1, COL: 6, VALUE: 18.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.6%
CHEMICALS - 1.6%
E. I. du Pont de Nemours and Co. 50,000 $ 3,100,000
MacDermid, Inc. 25,000 870,313
Quaker State Corp. 30,000 461,250
Sasol, Ltd. 344,100 2,148,869
6,580,432
ENERGY SERVICES - 11.1%
DRILLING - 1.9%
Atwood Oceanics, Inc. (a) 32,500 995,313
Helmerich & Payne, Inc. 55,000 1,127,500
Nabors Industries, Inc. (a) 40,000 682,500
Noble Drilling Corp. (a) 44,900 847,488
Transocean Offshore, Inc. 99,610 3,928,369
7,581,170
OIL & GAS SERVICES - 9.2%
BJ Services Co. (a) 115,000 2,422,188
Coflexip sponsored ADR 67,000 3,316,500
Dresser Industries, Inc. 240,000 8,475,000
McDermott International, Inc. 60,800 1,577,000
Schlumberger Ltd. 135,200 8,188,050
Smith International, Inc. (a) 65,000 1,698,125
Varco International, Inc. (a) 210,000 3,333,750
Western Atlas, Inc. 119,500 7,819,781
36,830,394
TOTAL ENERGY SERVICES 44,411,564
ENGINEERING - 0.2%
ARCHITECTS & ENGINEERS - 0.2%
Stolt Comex Seaway SA Class A
sponsored ADR (a) 25,350 339,056
Stolt Comex Seaway SA 45,700 662,650
1,001,706
GAS - 0.2%
GAS DISTRIBUTION - 0.2%
MCN Energy Group, Inc. 28,500 707,156
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
INDUSTRIAL MACHINERY - WHOLESALE - 0.0%
CE Franklin Ltd. (a) 40,000 178,589
METALS & MINING - 2.2%
METAL MINING - 0.2%
Breakwater Resources Ltd. (a) 825,300 851,584
Columbia Metals Ltd. (a) 1,479,900 146,830
998,414
METAL MINING SERVICES - 0.0%
Minefinders Corp. Ltd. (c) 150,000 133,942
MISCELLANEOUS NONMETAL MINERALS - 0.1%
Camphor Ventures, Inc. (a) 585,900 325,532
MISCELLANEOUS METAL ORES, NEC - 0.2%
Anglo American Platinum Corp. Ltd. 50,000 681,633
PRIME NONFERROUS SMELTING - 1.7%
Aluminum Co. of America 94,000 6,515,375
TOTAL METALS & MINING 8,654,896
OIL & GAS - 71.1%
CRUDE PETROLEUM & GAS - 23.8%
Anadarko Petroleum Corp. 100,000 3,431,250
Burlington Resources, Inc. 41,365 1,499,481
SHARES VALUE (NOTE 1)
EEX Corp. (a) 155,000 $ 1,085,000
Eni Spa sponsored ADR 55,300 3,573,763
Elf Aquitaine SA sponsored ADR 340,400 22,083,450
Enron Oil & Gas Co. 35,000 555,625
HS Resources, Inc. (a) 35,000 387,188
Louis Dreyfus Natural Gas Corp. (a) 55,000 742,500
Magnum Hunter Resources, Inc. (a) 180,000 888,750
Occidental Petroleum Corp. 239,800 5,335,550
Oryx Energy Co. (a) 150,000 2,765,625
Paramount Resources Ltd. (c) 167,300 1,549,228
Penn West Petroleum Ltd. (a) 33,000 371,069
Petrobras PN (Pfd. Reg.) 45,480,000 9,972,400
Plains Resources, Inc. (a) 199,600 3,567,850
Probe Exploration, Inc. (a) 50,000 133,942
Rio Alto Exploration Ltd. (a) 155,000 1,563,482
Suncor, Inc. 82,000 2,768,859
Talisman Energy, Inc. (a) 20,000 506,003
Total SA sponsored ADR 453,000 25,905,938
Ulster Petroleums Ltd. (a) 90,000 625,062
Vastar Resources, Inc. 50,000 2,137,500
Vintage Petroleum, Inc. 15,000 214,688
YPF Sociedad Anonima
sponsored ADR:
representing Class D shares 90,000 2,632,500
Class D 30,000 879,431
95,176,134
OIL & GAS EXPLORATION - 31.4%
Amerada Hess Corp. 175,000 8,870,313
Berkley Petroleum Corp. (a) 81,900 677,151
Chevron Corp. 190,000 15,698,750
Companie Generale de Geophsique
SA (a) 65,000 1,625,000
Exxon Corp. 300,000 21,037,500
Kerr-McGee Corp. 16,000 821,000
Mobil Corp. 277,300 19,341,675
Petro-Canada 195,000 2,792,440
Phillips Petroleum Co. 242,200 10,702,213
Texaco, Inc. 310,000 18,851,875
USX-Marathon Group 750,000 25,593,750
126,011,667
OIL FIELD EQUIPMENT - 3.0%
Camco International, Inc. 55,000 3,905,000
Cooper Cameron Corp. (a) 87,600 3,071,475
EVI Weatherford, Inc. (a) 190,000 4,892,500
11,868,975
PETROLEUM REFINERS - 12.9%
British Petroleum Co. PLC ADR 141,850 11,383,463
Coastal Corp. (The) 102,800 3,366,700
Frontier Oil Corp. (a) 992,400 7,380,975
Imperial Oil Ltd. 160,000 2,645,765
Royal Dutch Petroleum Co. 81,000 4,131,000
Shell Canada Ltd. Class A 47,500 820,022
Shell Transport & Trading Co. PLC
ADR 46,100 1,789,256
Sun Co., Inc. 10,000 374,375
Tesoro Petroleum Corp. (a) 129,300 2,060,719
Tosco Corp. 500,000 14,000,000
Ultramar Diamond Shamrock Corp. 64,800 1,696,950
Valero Energy Corp. 81,800 1,958,088
51,607,313
TOTAL OIL & GAS 284,664,089
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 1.0%
GLASS CONTAINERS - 1.0%
Owens-Illinois, Inc. (a) 95,400 $ 4,209,525
PRECIOUS METALS - 6.4%
GOLD & SILVER ORES - 2.3%
Getchell Gold Corp. (a) 564,500 7,620,750
Industrias Penoles SA 400,000 1,300,448
Mentor Exploration & Development
Co. Ltd. 64,800 128,584
9,049,782
GOLD ORES - 4.0%
De Beers Consolidated Mines Ltd. ADR 75,000 1,226,953
Euro-Nevada Mining Ltd. 327,000 4,012,204
First Dynasty Mines Ltd. (a) 426,700 62,092
Golden Knight Resources, Inc. (a) 25,000 12,402
Greenstone Resources Ltd. (a) 991,700 2,427,020
Greenstone Resources Ltd.
warrants 2/28/02 (a) 50,700 46,949
Greenstone Resources Ltd. (c) 148,300 362,939
Indochina Goldfields Ltd. (a) 133,800 106,201
Kalahari Goldridge Mining Co. Ltd. (a) 1,000,000 316,735
Meridian Gold, Inc. (a) 793,400 2,991,289
Mountain Province Mining, Inc. (a) 135,000 245,560
Stillwater Mining Co. (a) 125,000 3,421,867
William Resources, Inc. (a) 6,510,000 602,838
William Resources, Inc. (c) 686,000 63,525
William Resources, Inc. warrants
12/31/02 (a)(c) 1,029,000 7
TVI Pacific, Inc. (a) 459,200 16,705
TVI Pacific, Inc. (c) 1,860,000 67,665
15,982,951
SILVER ORES - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 38,500 437,938
TOTAL PRECIOUS METALS 25,470,671
SHIP BUILDING & REPAIR - 0.4%
SHIP BUILDERS - 0.4%
Halter Marine Group, Inc. (a) 100,000 1,587,500
TRUCKING & FREIGHT - 2.2%
AIR COURIER SERVICES - 1.8%
CNF Transportation, Inc. 164,000 7,093,000
FREIGHT FORWARDING - 0.4%
Expeditors International of
Washington, Inc. 40,000 1,595,000
TOTAL TRUCKING & FREIGHT 8,688,000
TOTAL COMMON STOCKS
(Cost $440,437,053) 386,154,128
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b)
(Cost $14,396,596) 14,396,596 14,396,596
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $454,833,649) $ 400,550,724
LEGEND
(a)Non-income producing
(b)At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
(c)Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $2,177,306 or
0.5% 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 67.6%
France 13.2
Canada 6.8
United Kingdom 3.3
Brazil 2.5
Netherlands Antilles 2.0
South Africa 1.1
Netherlands 1.0
Others (individually less than 1%) 2.5
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $456,193,756. Net unrealized depreciation
aggregated $55,643,032 of which $18,087,786 related to appreciated
investment securities and $73,730,818 related to depreciated
investment securities.
The fund hereby designates approximately $68,594,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12%, 11%, 12%, 27% and 9% of Class A's, Class T's, Class
B's, Class C'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 1999 of applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 400,550,724
(COST $454,833,649) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 396,065
(COST $405,952)
RECEIVABLE FOR INVESTMENTS SOLD 3,696,838
RECEIVABLE FOR FUND SHARES SOLD 272,195
DIVIDENDS RECEIVABLE 1,014,746
INTEREST RECEIVABLE 83,017
OTHER RECEIVABLES 21,003
PREPAID EXPENSES 3,531
TOTAL ASSETS 406,038,119
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 3,362,255
PAYABLE FOR FUND SHARES REDEEMED 2,009,133
ACCRUED MANAGEMENT FEE 215,043
DISTRIBUTION FEES PAYABLE 199,851
OTHER PAYABLES AND ACCRUED EXPENSES 185,373
TOTAL LIABILITIES 5,971,655
NET ASSETS $ 400,066,464
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 433,976,081
UNDISTRIBUTED NET INVESTMENT INCOME 259,207
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 20,092,932
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (54,261,756)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 400,066,464
CALCULATION OF MAXIMUM $18.94
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($6,474,198 (DIVIDED BY)
341,764 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $20.10
(100/94.25 OF $18.94)
CLASS T: $19.11
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($342,346,685 (DIVIDED BY)
17,911,164 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.80
(100/96.50 OF $19.11)
CLASS B: $18.81
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($44,351,235 (DIVIDED BY)
2,358,074 SHARES) A
CLASS C: $18.96
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($2,972,053 (DIVIDED BY)
156,714 SHARES) A
INSTITUTIONAL CLASS: $19.15
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,922,293 (DIVIDED BY) 204,836 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 7,051,972
DIVIDENDS
INTEREST 1,481,596
TOTAL INCOME 8,533,568
EXPENSES
MANAGEMENT FEE $ 3,365,961
TRANSFER AGENT FEES 1,385,449
DISTRIBUTION FEES 3,072,443
ACCOUNTING FEES AND EXPENSES 396,771
NON-INTERESTED TRUSTEES' COMPENSATION 2,910
CUSTODIAN FEES AND EXPENSES 89,430
REGISTRATION FEES 59,186
AUDIT 48,696
TOTAL EXPENSES BEFORE REDUCTIONS 8,420,846
EXPENSE REDUCTIONS (224,560) 8,196,286
NET INVESTMENT INCOME 337,282
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 54,122,882
FOREIGN CURRENCY TRANSACTIONS (126,929) 53,995,953
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (134,866,393)
ASSETS AND LIABILITIES IN 25,527 (134,840,866)
FOREIGN CURRENCIES
NET GAIN (LOSS) (80,844,913)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (80,507,631)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
1998 1997
OPERATIONS $ 337,282 $ (812,585)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 53,995,953 83,721,448
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (134,840,866) (11,245,423)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (80,507,631) 71,663,440
DISTRIBUTIONS TO SHAREHOLDERS (30,726) (376,703)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME - (156,340)
FROM NET REALIZED GAIN (102,298,827) (41,625,679)
TOTAL DISTRIBUTIONS (102,329,553) (42,158,722)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (110,795,873) 13,485,202
REDEMPTION FEES 157,401 60,962
TOTAL INCREASE (DECREASE) IN NET ASSETS (293,475,656) 43,050,882
NET ASSETS
BEGINNING OF PERIOD 693,542,120 650,491,238
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET INVESTMENT INCOME OF $259,207 AND
$(1,677), $ 400,066,464 $ 693,542,120
RESPECTIVELY)
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED NINE MONTHS YEAR ENDED
JULY 31, ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.16 $ 25.11 $ 23.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D .06 (.05) .00
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.33) 2.81 1.46
TOTAL FROM INVESTMENT OPERATIONS (3.27) 2.76 1.46
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.10) -
IN EXCESS OF NET INVESTMENT INCOME - (.04) -
FROM NET REALIZED GAIN (3.96) (1.57) -
TOTAL DISTRIBUTIONS (3.96) (1.71) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - -
NET ASSET VALUE, END OF PERIOD $ 18.94 $ 26.16 $ 25.11
TOTAL RETURN B, C (14.61)% 11.45% 6.17%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,474 $ 6,372 $ 1,609
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.34% 1.71% A, F 1.66% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.30% G 1.68% A, G 1.58% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .28% (.28)% A (.01)% A
PORTFOLIO TURNOVER 97% 116% A 137%
AVERAGE COMMISSION RATE H $ .0185 $ .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 FOR THE PERIOD
SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996. 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 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .02 D (.02) D .00 D (.05) D (.11) D .22
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.34) 2.83 6.56 2.00 .76 4.91
TOTAL FROM INVESTMENT OPERATIONS (3.32) 2.81 6.56 1.95 .65 5.13
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01) - - - -
IN EXCESS OF NET INVESTMENT INCOME - (.01) - - - -
FROM NET REALIZED GAIN (3.92) (1.57) (.69) (.26) (.68) (1.42)
TOTAL DISTRIBUTIONS (3.92) (1.59) (.69) (.26) (.68) (1.42)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - - - -
NET ASSET VALUE, END OF PERIOD $ 19.11 $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59
TOTAL RETURN B, C (14.69)% 11.62% 35.01% 11.40% 3.97% 41.05%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 342,347 $ 618,083 $ 602,915 $ 272,979 $ 199,361 $ 40,309
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.43% 1.47% A 1.59% 1.86% E 2.10% 2.63%
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE
REDUCTIONS 1.39% F 1.44% A, F 1.56% F 1.84% F 2.07% F 2.62% F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET
ASSETS .10% (.12)% A .00% (.30)% (.67)% (1.18)%
PORTFOLIO TURNOVER 97% 116% A 137% 161% 125% 208%
AVERAGE COMMISSION RATE G $ .0185 $ .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. 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 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 B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.99 $ 24.88 $ 19.23 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.09) (.12) (.15) (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.29) 2.80 6.49 .39
TOTAL FROM INVESTMENT OPERATIONS (3.38) 2.68 6.34 .36
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (3.81) (1.57) (.69) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - -
NET ASSET VALUE, END OF PERIOD $ 18.81 $ 25.99 $ 24.88 $ 19.23
TOTAL RETURN B, C (15.12)% 11.19% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 44,351 $ 59,044 $ 36,106 $ 2,508
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.98% 2.04% A 2.28% 2.23% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.94% G 2.02% A, G 2.24% G 2.21% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.41)% (.67)% A (.68)% (.67)% A
PORTFOLIO TURNOVER 97% 116% A 137% 161%
AVERAGE COMMISSION RATE H $ .0185 $ .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 FOR THE
PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO OCTOBER 31, 1995. 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.
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.39
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.07)
NET REALIZED AND UNREALIZED GAIN (LOSS) (4.15)
TOTAL FROM INVESTMENT OPERATIONS (4.22)
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.22)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 18.96
TOTAL RETURN B, C (17.72)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,972
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.44% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.48)% A
PORTFOLIO TURNOVER 97%
AVERAGE COMMISSION RATE H $ .0185
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE
OF CLASS C
SHARES) TO JULY 31, 1998. 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.42 $ 25.17 $ 19.27 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D .13 .04 .04 (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.35) 2.85 6.55 .41
TOTAL FROM INVESTMENT OPERATIONS (3.22) 2.89 6.59 .40
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.09) (.05) - -
IN EXCESS OF NET INVESTMENT INCOME - (.02) - -
FROM NET REALIZED GAIN (3.97) (1.57) (.69) -
TOTAL DISTRIBUTIONS (4.06) (1.64) (.69) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - -
NET ASSET VALUE, END OF PERIOD $ 19.15 $ 26.42 $ 25.17 $ 19.27
TOTAL RETURN B, C (14.29)% 11.95% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,922 $ 10,042 $ 9,860 $ 718
RATIO OF EXPENSES TO AVERAGE NET ASSETS .95% 1.08% A 1.44% 1.68% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS .91% G 1.06% A, G 1.39% G 1.66% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .55% .24% A .17% (.13)% A
PORTFOLIO TURNOVER 97% 116% A 137% 161%
AVERAGE COMMISSION RATE H $ .0185 $ .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 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 JULY 3, 1995 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1995. 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.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $519,407,953 and $713,793,999, 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 annual rate of .59% of average net assets.
SUB-ADVISER FEE. As the fund's investment sub-advisers, Fidelity
Management & Research (U.K.) Inc., and Fidelity Management & Research
(Far East) Inc. each a wholly owned subsidiary of FMR, receive a fee
from FMR of 110% and 105% respectively, of costs incurred in
connection with each sub-advisory agreement.
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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 17,229 $ 97
CLASS T 2,496,683 29,992
CLASS B 547,068 410,980
CLASS C 11,463 11,463
$ 3,072,443 $ 452,532
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR 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.
For the period, the following amounts were paid to third parties under
the Plans:
CLASS A $ 10,032
CLASS T $ 138,724
CLASS B $ 42,668
CLASS C $ 4,947
INSTITUTIONAL CLASS $ 952
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% 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. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 61,964 $ 20,495
CLASS T 310,088 98,963
CLASS B 220,346 220,346*
CLASS C 1,202 1,202*
$ 593,600 $ 341,006
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN
RESOURCES TO SECURITIES DEALERS, BANKS, AND OTHER FINANCIAL
INSTITUTIONS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 21,879 .32
CLASS T 1,197,878 .24
CLASS B 151,435 .28
CLASS C 3,308 .29*
INSTITUTIONAL CLASS 10,949 .18
$ 1,385,449
* ANNUALIZED.
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 $135,628 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS C 2.50% $5,032
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 $215,157 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 $4,371 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED NINE MONTHS
JULY 31, ENDED JULY 31,
1998 A 1997
FROM NET INVESTMENT INCOME
CLASS A $ - $ 9,457
CLASS T - 344,957
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS 30,726 22,289
TOTAL $ 30,726 $ 376,703
IN EXCESS OF NET INVESTMENT INCOME
CLASS A $ - $ 3,925
CLASS T - 143,164
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS - 9,251
TOTAL $ - $ 156,340
FROM NET REALIZED GAIN
CLASS A $ 1,049,623 $ 150,076
CLASS T 90,875,522 38,300,093
CLASS B 8,918,986 2,464,412
CLASS C 16,549 -
INSTITUTIONAL CLASS 1,438,147 711,098
TOTAL $ 102,298,827 $ 41,625,679
TOTAL $ 102,329,553 $ 42,158,722
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED NINE MONTHS YEAR ENDED NINE MONTHS
JULY 31, ENDED JULY 31, ENDED
JULY 31, JULY 31,
1998 A 1997 1998 A 1997
CLASS A 175,654 209,436 $ 3,950,955 $ 5,153,545
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 43,840 6,590 998,875 161,464
SHARES REDEEMED (121,346) (36,492) (2,678,917) (892,062)
NET INCREASE (DECREASE) 98,148 179,534 $ 2,270,913 $ 4,422,947
CLASS T 3,091,100 7,500,800 $ 69,934,430 $ 184,421,132
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3,685,442 1,447,428 85,183,832 35,664,618
SHARES REDEEMED (12,329,910) (9,481,432) (270,469,326) (231,213,235)
NET INCREASE (DECREASE) (5,553,368) (533,204) $ (115,351,064) $ (11,127,485)
CLASS B 678,632 1,183,380 $ 15,156,338 $ 28,872,353
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 333,587 96,152 7,598,024 2,345,122
SHARES REDEEMED (926,142) (458,573) (19,895,184) (10,907,231)
NET INCREASE (DECREASE) 86,077 820,959 $ 2,859,178 $ 20,310,244
CLASS C 168,621 - $ 3,628,673 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 787 - 16,454 -
SHARES REDEEMED (12,694) - (262,714) -
NET INCREASE (DECREASE) 156,714 - $ 3,382,413 $ -
INSTITUTIONAL CLASS 138,650 342,819 $ 3,107,221 $ 8,550,867
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 60,810 29,515 1,415,854 727,819
SHARES REDEEMED (374,710) (384,020) (8,480,388) (9,399,190)
NET INCREASE (DECREASE) (175,250) (11,686) $ (3,957,313) $ (120,504)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 5,377
CLASS T 30,791
CLASS B 6,834
CLASS C 10,706
INSTITUTIONAL CLASS 5,478
$ 59,186
ADVISOR TECHNOLOGY FUND - CLASS A
PERFORMANCE
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, and life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL A 4.20% 67.36%
FIDELITY ADV TECHNOLOGY - CL A -1.79% 57.74%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 76.95%
GS TECHNOLOGY 15.37% 93.48%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Technology Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL A 4.20% 31.00%
FIDELITY ADV TECHNOLOGY - CL A -1.79% 27.00%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS TECHNOLOGY 15.37% 41.35%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA TECHNOLOGY -CL A S&P 500
GS TECHNOLOGY
00187 SP001
GS008
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 10480.60 10516.69 11083.33
1996/10/31 10584.28 10806.74 11005.93
1996/11/30 12007.45 11623.62 12484.68
1996/12/31 11770.98 11393.36 12085.30
1997/01/31 13089.41 12105.21 13401.78
1997/02/28 12178.84 12200.12 12346.74
1997/03/31 11448.49 11698.81 11700.17
1997/04/30 12121.93 12397.23 12745.92
1997/05/31 13487.78 13151.98 14042.99
1997/06/30 13620.57 13741.19 14224.25
1997/07/31 15138.19 14834.57 16770.21
1997/08/31 15583.99 14003.54 16383.11
1997/09/30 16235.26 14770.51 16876.01
1997/10/31 13883.05 14277.18 15423.60
1997/11/30 13682.86 14938.07 15675.33
1997/12/31 12996.44 15194.56 14927.75
1998/01/31 13717.28 15362.61 15702.74
1998/02/28 15275.58 16470.56 17407.22
1998/03/31 15254.38 17314.02 17691.17
1998/04/30 15858.62 17488.19 18693.45
1998/05/31 14724.35 17187.57 17416.86
1998/06/30 15858.62 17885.73 18931.40
1998/07/31 15773.82 17695.25 19348.25
IMATRL PRASUN SHR__CHT 19980731 19980825 164213 R00000000000026
$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 5.75% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $15,774 - a 57.74% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Technology Index, it would have grown to $19,348 - a 93.48%
increase.
ADVISOR TECHNOLOGY FUND - CLASS T
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL T 3.85% 66.28%
FIDELITY ADV TECHNOLOGY - CL T 0.22% 60.46%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS TECHNOLOGY 15.37% 93.48%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Technology Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL T 3.85% 30.56%
FIDELITY ADV TECHNOLOGY - CL T 0.22% 28.14%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 34.89%
GS TECHNOLOGY 15.37% 41.35%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA TECHNOLOGY -CL T S&P 500
GS TECHNOLOGY
00192 SP001
GS008
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 10721.15 10516.69 11083.33
1996/10/31 10817.65 10806.74 11005.93
1996/11/30 12274.80 11623.62 12484.68
1996/12/31 12022.98 11393.36 12085.30
1997/01/31 13372.89 12105.21 13401.78
1997/02/28 12440.58 12200.12 12346.74
1997/03/31 11683.07 11698.81 11700.17
1997/04/30 12372.59 12397.23 12745.92
1997/05/31 13771.07 13151.98 14042.99
1997/06/30 13897.32 13741.19 14224.25
1997/07/31 15451.17 14834.57 16770.21
1997/08/31 15907.62 14003.54 16383.11
1997/09/30 16564.69 14770.51 16876.01
1997/10/31 14167.57 14277.18 15423.60
1997/11/30 13962.69 14938.07 15675.33
1997/12/31 13249.04 15194.56 14927.75
1998/01/31 13975.46 15362.61 15702.74
1998/02/28 15558.40 16470.56 17407.22
1998/03/31 15525.88 17314.02 17691.17
1998/04/30 16143.87 17488.19 18693.45
1998/05/31 14983.77 17187.57 17416.86
1998/06/30 16143.87 17885.73 18931.40
1998/07/31 16046.30 17695.25 19348.25
IMATRL PRASUN SHR__CHT 19980731 19980825 165430 R00000000000026
$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 3.50% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $16,046 - a 60.46% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Technology Index, it would have grown to $19,348 - a 93.48%
increase.
ADVISOR TECHNOLOGY FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997
are those of Class T which bears a 0.50% 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would
have been lower. Class B shares' contingent deferred sales charge
included in the past one year and life of fund total return figures
are 5% and 4%, respectively. If Fidelity had not reimbursed certain
class expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL B 3.27% 65.03%
FIDELITY ADV TECHNOLOGY - CL B -1.36% 61.03%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS TECHNOLOGY 15.37% 93.48%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Technology Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL B 3.27% 30.04%
FIDELITY ADV TECHNOLOGY - CL B -1.36% 28.38%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS TECHNOLOGY 15.37% 41.35%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA TECHNOLOGY -CL B S&P 500
GS TECHNOLOGY
00197 SP001
GS008
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 11110.00 10516.69 11083.33
1996/10/31 11210.00 10806.74 11005.93
1996/11/30 12720.00 11623.62 12484.68
1996/12/31 12459.04 11393.36 12085.30
1997/01/31 13857.92 12105.21 13401.78
1997/02/28 12891.79 12200.12 12346.74
1997/03/31 12116.87 11698.81 11700.17
1997/04/30 12821.34 12397.23 12745.92
1997/05/31 14260.47 13151.98 14042.99
1997/06/30 14391.30 13741.19 14224.25
1997/07/31 15981.39 14834.57 16770.21
1997/08/31 16454.39 14003.54 16383.11
1997/09/30 17124.90 14770.51 16876.01
1997/10/31 14635.94 14277.18 15423.60
1997/11/30 14412.57 14938.07 15675.33
1997/12/31 13670.35 15194.56 14927.75
1998/01/31 14412.33 15362.61 15702.74
1998/02/28 16042.43 16470.56 17407.22
1998/03/31 16008.70 17314.02 17691.17
1998/04/30 16627.02 17488.19 18693.45
1998/05/31 15424.12 17187.57 17416.86
1998/06/30 16604.53 17885.73 18931.40
1998/07/31 16503.35 17695.25 19348.25
IMATRL PRASUN SHR__CHT 19980731 19980825 164952 R00000000000026
$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, 1998, the
value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $16,103 - a 61.03% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase.If $10,000 was invested in the
Goldman Sachs Technology Index, it would have grown to $19,348 - a
93.48% increase.
ADVISOR TECHNOLOGY FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL C 3.12% 64.81%
FIDELITY ADV TECHNOLOGY - CL C 2.15% 64.81%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS TECHNOLOGY 15.37% 93.48%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Technology Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - CL C 3.12% 29.95%
FIDELITY ADV TECHNOLOGY - CL C 2.15% 29.95%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS TECHNOLOGY 15.37% 41.35%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA TECHNOLOGY -CL C S&P 500
GS TECHNOLOGY
00476 SP001
GS008
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 11110.00 10516.69 11083.33
1996/10/31 11210.00 10806.74 11005.93
1996/11/30 12720.00 11623.62 12484.68
1996/12/31 12459.05 11393.36 12085.30
1997/01/31 13857.92 12105.21 13401.78
1997/02/28 12891.79 12200.12 12346.74
1997/03/31 12116.88 11698.81 11700.17
1997/04/30 12821.34 12397.23 12745.92
1997/05/31 14260.47 13151.98 14042.99
1997/06/30 14391.30 13741.19 14224.25
1997/07/31 15981.39 14834.57 16770.21
1997/08/31 16454.39 14003.54 16383.11
1997/09/30 17124.90 14770.51 16876.01
1997/10/31 14635.95 14277.18 15423.60
1997/11/30 14426.16 14938.07 15675.33
1997/12/31 13677.73 15194.56 14927.75
1998/01/31 14406.46 15362.61 15702.74
1998/02/28 16043.30 16470.56 17407.22
1998/03/31 15998.46 17314.02 17691.17
1998/04/30 16615.08 17488.19 18693.45
1998/05/31 15415.47 17187.57 17416.86
1998/06/30 16592.65 17885.73 18931.40
1998/07/31 16480.54 17695.25 19348.25
IMATRL PRASUN SHR__CHT 19980731 19980825 165001 R00000000000026
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Technology - Class C on September 3,
1996, when the fund started. As the chart shows, by July 31, 1998, the
value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $16,481 - a 64.81% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase. If $10,000 was invested in the
Goldman Sachs Technology Index, it would have grown to $19,348 - a
93.48% increase.
ADVISOR TECHNOLOGY FUND
FUND TALK: THE MANAGERS' OVERVIEW
(Photograph of Michael Tempero - right)
(Photograph of Adam Hetnarski - left)
NOTE TO SHAREHOLDERS: Michael Tempero (right) became Portfolio Manager
of the fund on July 15, 1998. The following is an interview with Adam
Hetnarksi, who managed the fund during most of the period covered by
this report, and Michael Tempero, who provides his investment approach
and outlook for the future.
Q. ADAM, HOW DID THE FUND PERFORM?
A. For the 12 months that ended July 31, 1998, the fund's Class A,
Class T, Class B and Class C shares returned 4.20%, 3.85%, 3.27% and
3.12%, respectively. During that same period, the Standard & Poor's
500 Index returned 19.29%. Beginning this period, the fund also
compares itself to the Goldman Sachs Technology Index - an index of
stocks designed to measure the performance of companies in the
technology sector - which returned 15.37% over the same 12-month
period.
Q. WHY DID THE FUND TRAIL ITS TWO BENCHMARK INDEXES?
A.H. The fund and the technology sector trailed the broad market - as
measured by the S&P 500 - due to concerns that the crisis in Asia
would stifle demand from that region. In addition, many companies
suffered from an inventory reduction by personal computer (PC)
manufacturers. Further, stocks in the sector had been selling at very
high multiples - a measure of how much an investor pays for a
company's earnings. When signs of weakness appeared in this sector,
stock prices fell. The fund trailed the Goldman Sachs index due to my
emphasis on higher growth companies last October, when that segment of
the sector suffered significantly from turmoil in Asia. From that
point on, the larger-capitalization segment of the sector - including
companies that make up a significant percentage of the Goldman Sachs
index - fared well. The fund suffered from not investing in some of
these companies - IBM and Hewlett-Packard, for example - when their
stocks did well even when their earnings were not appealing. Finally,
the index's Internet stocks, an area where the fund was underweighted,
generally performed well.
Q. WHICH STOCKS PROVIDED STRONG PERFORMANCE FOR THE FUND?
A.H. Microsoft did extremely well, and proved to be one of the
best-positioned large-capitalization stocks in the entire stock
market. The company benefited from product upgrades, among many other
factors. Dell Computer boasted an operational strategy that enabled it
to bring new products to market faster than competitors. Nokia
profited from winning infrastructure contracts springing up from the
deregulation of telecommunications in Europe. The company also posted
strong numbers from sales of its new 6100 series of cellular handsets.
HBO & Co. saw its share price rise as the market came to appreciate
its dominant position in both the consulting and software sides of its
health care information services business.
Q. WHICH STOCKS WERE DISAPPOINTING?
A.H. Oracle suffered from reaching a saturation point with its
database business, and sales of its new application software products
didn't meet projections. However, in spite of these problems, the
stock remained attractive and the fund still owned it. Earnings for
3Com were poor because of bad performance in the company's modem
business, tied to slower PC sales and lower average selling prices for
its products.
Q. TURNING TO YOU, MIKE, HAVE YOU MADE ANY CHANGES TO THE FUND SINCE
TAKING OVER? WHAT'S YOUR INVESTMENT APPROACH?
M.T. I haven't made any significant changes to the fund since taking
it over, but as we move forward the fund should reflect my style and
strategy more and more. Overall, I tend to run funds so that they are
fairly well concentrated in the top holdings.
Q. WHAT'S YOUR OUTLOOK, MIKE?
M.T. I'm optimistic about the technology sector. Technology products
are attractive because they can make a big difference in the
productivity of companies. However, there is always the risk that
capital spending for technology products could diminish if the economy
slows.
The views expressed in this report refect 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, 1998, more than
$150 million
MANAGER: Michael Tempero, since July 1998;
joined Fidelity in 1993
(checkmark)
ADVISOR TECHNOLOGY FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
MICROSOFT CORP. 10.8
LUCENT TECHNOLOGIES, INC. 5.8
INTEL CORP. 4.7
COMPAQ COMPUTER CORP. 3.6
NOKIA CORP. AB SPONSORED ADR 3.5
3COM CORP. 3.3
SOLECTRON CORP. 2.9
ASCEND COMMUNICATIONS, INC. 2.8
BAY NETWORKS, INC. 2.7
HBO & CO. 2.6
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 19.3
ROW: 1, COL: 2, VALUE: 15.6
ROW: 1, COL: 3, VALUE: 9.0
ROW: 1, COL: 4, VALUE: 6.7
ROW: 1, COL: 5, VALUE: 5.5
ROW: 1, COL: 6, VALUE: 43.9
PREPACKAGED COMPUTER SOFTWARE 19.3%
TELEPHONE EQUIPMENT 15.6%
SEMI-CONDUCTORS 9.0%
DATACOMMUNICATIONS EQUIPMENT 6.7%
MINI & MICRO COMPUTERS 5.5%
ALL OTHERS 43.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR TECHNOLOGY FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
AIRCRAFT - 1.0%
Gulfstream Aerospace Corp. (a) 30,800 $ 1,409,100
APPLIANCE STORES - 0.3%
ELECTRIC APPLIANCES - WHOLESALE - 0.3%
Cellstar Corp. (a) 35,600 498,400
BROADCASTING - 0.0%
COMMUNICATIONS SERVICES - 0.0%
Broadcast.com, Inc. (a) 100 5,463
COMMUNICATIONS EQUIPMENT - 22.3%
DATACOMMUNICATIONS EQUIPMENT - 6.7%
3Com Corp. (a) 199,900 4,947,525
Cisco Systems, Inc. (a) 35,550 3,403,913
Level One Communications, Inc. (a) 24,700 549,575
Xircom, Inc. (a) 54,600 1,136,363
10,037,376
TELEPHONE EQUIPMENT - 15.6%
Advanced Fibre Communication, Inc. (a) 54,700 1,090,581
Ascend Communications, Inc. (a) 96,000 4,269,000
DSC Communications Corp. (a) 97,000 2,943,344
Lucent Technologies, Inc. 93,700 8,661,394
Newbridge Networks Corp. (a) 61,000 1,281,000
Nokia Corp. AB sponsored ADR 61,300 5,340,763
23,586,082
TOTAL COMMUNICATIONS EQUIPMENT 33,623,458
COMPUTER SERVICES & SOFTWARE - 26.0%
COMPUTER & SOFTWARE STORES - 0.2%
Inacom Corp. (a) 11,300 305,806
COMPUTER FACILITIES MANAGEMENT - 0.4%
International Telecommunications Data
Systems, Inc. 20,300 597,581
COMPUTER SERVICES - 4.4%
Computer Learning Centers, Inc. (a) 19,600 546,350
Com21, Inc. (a) 32,200 784,875
Equifax, Inc. 28,400 1,160,850
HBO & Co. 135,300 3,987,122
Technology Solutions, Inc. (a) 4,800 122,250
6,601,447
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
Saville Systems Ireland PLC
sponsored ADR (a) 35,500 896,375
CAD/CAM/CAE - 0.3%
Cambridge Technology Partners
Massachusetts, Inc. (a) 10,100 427,988
DATA PROCESSING - 0.8%
Affiliated Computer Services, Inc.
Class A (a) 12,500 453,125
First Data Corp. 25,800 746,588
1,199,713
PREPACKAGED COMPUTER SOFTWARE - 19.3%
BMC Software, Inc. 8,000 394,500
BindView Development Corp. (a) 900 12,938
Check Point Software Technologies Ltd. (a) 17,500 411,250
Citrix Systems, Inc. (a) 27,900 1,776,881
Computer Associates International, Inc. 42,600 1,413,788
Compuware Corp. (a) 23,400 1,259,213
i2 Technologies, Inc. (a) 800 19,500
Microsoft Corp. (a) 148,000 16,270,750
SHARES VALUE (NOTE 1)
MicroProse, Inc. (a) 41,700 $ 132,919
Oracle Corp. (a) 150,400 3,985,600
PeopleSoft, Inc. (a) 58,400 2,200,950
Siebel Systems, Inc. (a) 47,955 1,300,779
29,179,068
TOTAL COMPUTER SERVICES & SOFTWARE 39,207,978
COMPUTERS & OFFICE EQUIPMENT - 15.6%
COMPUTER COMMUNICATIONS EQUIPMENT - 2.7%
Bay Networks, Inc. (a) 116,200 4,001,638
COMPUTER EQUIPMENT - WHOLESALE - 0.6%
Ingram Micro, Inc. Class A 18,200 848,575
COMPUTER PERIPHERALS - 3.8%
EMC Corp. (a) 41,400 2,028,600
Fore Systems, Inc. (a) 126,200 3,005,138
SCI Systems, Inc. (a) 17,100 673,313
5,707,051
COMPUTER STORAGE DEVICES - 0.9%
Hutchinson Technology, Inc. (a) 66,000 1,427,250
COMPUTERS & OFFICE EQUIPMENT - 1.1%
International Business Machines Corp. 12,800 1,696,000
GRAPHICS WORKSTATIONS - 1.0%
Sun Microsystems, Inc. (a) 31,700 1,497,825
MINI & MICRO COMPUTERS - 5.5%
Compaq Computer Corp. 166,300 5,467,113
Dell Computer Corp. (a) 25,700 2,790,859
8,257,972
TOTAL COMPUTERS & OFFICE EQUIPMENT 23,436,311
DRUGS & PHARMACEUTICALS - 1.8%
COMMERCIAL LABORATORY RESEARCH - 0.2%
Integrated Process Equipment Corp. (a) 32,700 339,263
DRUGS - 1.6%
Barr Laboratories, Inc. (a) 27,650 893,441
Forest Laboratories, Inc. (a) 20,000 750,000
Schering-Plough Corp. 7,300 706,275
2,349,716
TOTAL DRUGS & PHARMACEUTICALS 2,688,979
ELECTRICAL EQUIPMENT - 6.9%
ELECTRICAL MACHINERY - 2.1%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 82,500 3,232,961
TV & RADIO COMMUNICATION EQUIPMENT - 4.8%
General Instrument Corp. (a) 119,000 3,227,875
Loral Space & Communications Ltd. (a) 93,100 2,577,706
Scientific-Atlanta, Inc. 56,100 1,349,906
7,155,487
TOTAL ELECTRICAL EQUIPMENT 10,388,448
ELECTRONIC INSTRUMENTS - 1.1%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 1.1%
KLA-Tencor Corp. (a) 5,600 167,300
Lam Research Corp. (a) 85,837 1,539,701
1,707,001
ELECTRONICS - 12.1%
CONNECTORS - 0.2%
AMP, Inc. 11,200 329,000
ELECTRONICS & ELECTRONIC COMPONENTS - 2.9%
Solectron Corp. (a) 91,100 4,372,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMI-CONDUCTORS - 9.0%
Analog Devices, Inc. (a) 13,800 $ 296,700
Broadcom Corp. Class A 7,100 445,525
Galileo Technology Ltd. 39,300 424,931
Intel Corp. 84,400 7,126,525
Lattice Semiconductor Corp. (a) 26,900 817,088
Linear Technology Corp. 3,200 191,400
Micron Technology, Inc. (a) 103,000 3,437,625
Vitesse Semiconductor Corp. (a) 25,400 835,025
13,574,819
TOTAL ELECTRONICS 18,276,619
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ACCESS & MEASURING CUTTING TOOLS - 0.1%
Stanley Works 1,800 78,638
GENERAL INDUSTRIAL MACHINERY - 0.7%
Manitowoc Co., Inc. 14,800 495,800
Tyco International Ltd. 8,688 538,113
1,033,913
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,112,551
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
MEDICAL TECHNOLOGY - 0.7%
Medtronic, Inc. 16,700 1,034,356
METALS & MINING - 0.5%
NONFERROUS WIRE - 0.5%
AFC Cable Systems, Inc. (a) 25,000 796,875
RETAIL & WHOLESALE, MISCELLANEOUS - 2.9%
MUSIC, TV, & ELECTRONIC STORES - 1.3%
Best Buy Co., Inc. (a) 42,800 2,000,900
RETAIL, GENERAL - 1.6%
Staples, Inc. (a) 70,700 2,324,263
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,325,163
SERVICES - 1.0%
BUSINESS SERVICES - 0.3%
Robert Half International, Inc. (a) 7,000 372,750
MANAGEMENT CONSULTING SERVICES - 0.1%
Hagler Bailly, Inc. 8,700 207,713
PERSONAL SERVICES - 0.6%
Cendant Corp. (a) 54,300 940,069
TOTAL SERVICES 1,520,532
TOTAL COMMON STOCKS
(Cost $126,302,905) 140,031,234
CASH EQUIVALENTS - 7.0%
Taxable Central Cash Fund (b)
(Cost $10,576,684) 10,576,684 10,576,684
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $136,879,589) $ 150,607,918
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $137,650,331. Net unrealized appreciation
aggregated $12,957,587, of which $20,723,819 related to appreciated
investment securities and $7,766,232 related to depreciated investment
securities.
The fund intends to elect to defer to its fiscal year ending July 31,
1999 approximately $2,903,000 of losses recognized during the period
November 1, 1997 to July 31, 1998.
A total of 1%, 1%, 1%, 1% and 1% of Class A's, Class T's, Class B's,
Class C's and the 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 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
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JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 150,607,918
(COST $136,879,589) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 23,878
RECEIVABLE FOR FUND SHARES SOLD 851,886
DIVIDENDS RECEIVABLE 22,666
INTEREST RECEIVABLE 48,600
OTHER RECEIVABLES 1,851
PREPAID EXPENSES 3,358
TOTAL ASSETS 151,560,157
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 20,200
PAYABLE FOR FUND SHARES REDEEMED 534,154
ACCRUED MANAGEMENT FEE 76,819
DISTRIBUTION FEES PAYABLE 73,080
OTHER PAYABLES AND 86,999
ACCRUED EXPENSES
TOTAL LIABILITIES 791,252
NET ASSETS $ 150,768,905
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 140,625,986
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (3,585,396)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 13,728,315
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 150,768,905
CALCULATION OF MAXIMUM $14.88
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($15,414,374 (DIVIDED BY)
1,036,055 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.79
(100/94.25 OF $14.88)
CLASS T: $14.80
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($90,499,103 (DIVIDED BY)
6,115,475 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.34
(100/96.50 OF $14.80)
CLASS B: $14.68
NET ASSET VALUE AND OFFERING
PRICE PER SHARE ($31,040,924 (DIVIDED BY)
2,114,652 SHARES) A
CLASS C: $14.70
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($6,754,376 (DIVIDED BY)
459,389 SHARES) A
INSTITUTIONAL CLASS: $14.89
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($7,060,128 (DIVIDED BY) 474,067 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
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YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 215,489
DIVIDENDS
INTEREST 650,218
TOTAL INCOME 865,707
EXPENSES
MANAGEMENT FEE $ 667,737
TRANSFER AGENT FEES 325,182
DISTRIBUTION FEES 608,228
ACCOUNTING FEES AND EXPENSES 70,851
NON-INTERESTED TRUSTEES' COMPENSATION 381
CUSTODIAN FEES AND EXPENSES 28,004
REGISTRATION FEES 102,880
AUDIT 33,647
LEGAL 2,618
REPORTS TO SHAREHOLDERS 41,275
MISCELLANEOUS 812
TOTAL EXPENSES BEFORE REDUCTIONS 1,881,615
EXPENSE REDUCTIONS (40,919) 1,840,696
NET INVESTMENT INCOME (LOSS) (974,989)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,746,925
FOREIGN CURRENCY TRANSACTIONS 1,859 2,748,784
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 4,104,521
ASSETS AND LIABILITIES IN 24 4,104,545
FOREIGN CURRENCIES
NET GAIN (LOSS) 6,853,329
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,878,340
</TABLE>
<TABLE>
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (974,989) $ (264,379)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 2,748,784 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 4,104,545 9,623,770
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,878,340 14,115,531
DISTRIBUTIONS TO SHAREHOLDERS (6,934,584) (119,780)
FROM NET REALIZED GAIN
IN EXCESS OF NET REALIZED GAIN (2,779,083) -
TOTAL DISTRIBUTIONS (9,713,667) (119,780)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 80,885,922 59,627,327
REDEMPTION FEES 79,635 15,597
TOTAL INCREASE (DECREASE) IN NET ASSETS 77,130,230 73,638,675
NET ASSETS
BEGINNING OF PERIOD 73,638,675 -
END OF PERIOD $ 150,768,905 $ 73,638,675
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.96 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.08) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) .58 6.13
TOTAL FROM INVESTMENT OPERATIONS .50 6.03
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.14) (.08)
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.59) (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.88 $ 15.96
TOTAL RETURN B, C 4.20% 60.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 15,414 $ 7,313
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.39% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.35% G 1.70% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.59)% (.79)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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. 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>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.91 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.11) (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) .56 6.09
TOTAL FROM INVESTMENT OPERATIONS .45 5.98
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.12) (.08)
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.57) (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.80 $ 15.91
TOTAL RETURN B, C 3.85% 60.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 90,499 $ 57,624
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.60% 1.92% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.56% F 1.87% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.80)% (.93)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE G $ .0418 $ .0415
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 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 FUND'S 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.
</TABLE>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.88 $ 12.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.20) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) .57 3.08
TOTAL FROM INVESTMENT OPERATIONS .37 3.00
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.13) -
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.58) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 14.68 $ 15.88
TOTAL RETURN B, C 3.27% 23.29%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 31,041 $ 5,105
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.21% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.18% G 2.45% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.40)% (1.41)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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. 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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.28
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.17)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.27
TOTAL FROM INVESTMENT OPERATIONS 1.10
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.49)
IN EXCESS OF NET REALIZED GAIN (.20)
TOTAL DISTRIBUTIONS (.69)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 14.70
TOTAL RETURN B, C 8.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,754
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.43% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.41% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.64)% A
PORTFOLIO TURNOVER 348%
AVERAGE COMMISSION RATE G $ .0418
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE
OF CLASS C SHARES)
TO JULY 31, 1998. 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
<TABLE>
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FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.98 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.04) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) .55 6.12
TOTAL FROM INVESTMENT OPERATIONS .51 6.06
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.15) (.09)
IN EXCESS OF NET REALIZED GAIN (.46) -
TOTAL DISTRIBUTIONS (1.61) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.89 $ 15.98
TOTAL RETURN B, C 4.26% 60.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,060 $ 3,598
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.07% G 1.44% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.30)% (.50)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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. 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 litigation proceeds, foreign currency transactions, and
losses deferred due to wash sales.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $418,549,014 and $355,337,246, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 29,358 $ 202
CLASS T 381,247 1,030
CLASS B 175,473 131,614
CLASS C 22,150 22,150
$ 608,228 $ 154,996
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 10,739
CLASS T $ 17,681
CLASS B $ 8,594
CLASS C $ 8,447
INSTITUTIONAL CLASS $ 310
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
deferred sales charges are based on declining rates ranging from 5% to
1% for Class B and 1% for Class C, 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. In
addition, purchases of Class A and Class T shares that were subject to
a finder's fee bear a contingent deferred sales charge on assets that
do not remain in the fund for at least one year. The Class A and Class
T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 172,036 $ 65,577
CLASS T 341,738 124,571
CLASS B 46,822 46,822*
CLASS C 3,066 3,066*
$ 563,662 $ 240,036
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 33,731 .29%
CLASS T 215,291 .28%
CLASS B 59,423 .34%
CLASS C 6,795 .30% *
INSTITUTIONAL CLASS 9,942 .19%
$ 325,182
* ANNUALIZED.
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 $46,656 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $40,474 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 $445 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED YEAR ENDED
JULY 31, 1998 A JULY 31, 1997 B, C
FROM NET REALIZED GAIN
CLASS A $ 729,180 $ 16,754
CLASS T 5,047,886 94,078
CLASS B 851,766 -
CLASS C 20,288 -
INSTITUTIONAL CLASS 285,464 8,948
TOTAL $ 6,934,584 $ 119,780
IN EXCESS OF NET REALIZED GAIN
CLASS A $ 292,224 $ -
CLASS T 2,022,976 -
CLASS B 341,351 -
CLASS C 8,130 -
INSTITUTIONAL CLASS 114,402 -
TOTAL $ 2,779,083 $ -
TOTAL $ 9,713,667 $ 119,780
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998A 1997 B, C
CLASS A 964,665 504,366 $ 13,488,171 $ 6,388,175
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 69,547 1,197 932,488 15,029
SHARES REDEEMED (456,218) (47,502) (6,419,806) (617,865)
NET INCREASE (DECREASE) 577,994 458,061 $ 8,000,853 $ 5,785,339
CLASS T 4,279,715 4,187,137 $ 62,520,538 $ 54,310,830
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 495,203 7,154 6,737,895 89,642
SHARES REDEEMED (2,282,335) (571,399) (32,522,809) (7,714,355)
NET INCREASE (DECREASE) 2,492,583 3,622,892 $ 36,735,624 $ 46,686,117
CLASS B 1,984,357 352,887 $ 28,884,876 $ 4,850,934
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 78,354 - 1,031,825 -
SHARES REDEEMED (269,419) (31,527) (3,754,232) (463,394)
NET INCREASE (DECREASE) 1,793,292 321,360 $ 26,162,469 $ 4,387,540
CLASS C 494,219 - $ 6,924,463 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,343 - 27,642 -
SHARES REDEEMED (37,173) - (520,009) -
NET INCREASE (DECREASE) 459,389 - $ 6,432,096 $ -
INSTITUTIONAL CLASS 485,097 229,260 $ 6,901,286 $ 2,822,866
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 27,259 714 379,700 8,948
SHARES REDEEMED (263,460) (4,803) (3,726,106) (63,483)
NET INCREASE (DECREASE) 248,896 225,171 $ 3,554,880 $ 2,768,331
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 11,889
CLASS T 46,432
CLASS B 25,248
CLASS C 10,277
INSTITUTIONAL CLASS 9,034
$ 102,880
ADVISOR UTILITIES GROWTH FUND - CLASS A
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL A 33.99% 77.35%
FIDELITY ADV UTILITIES - CL A 26.29% 67.16%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 76.95%
GS UTILITIES 35.49% 63.98%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class A shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Utilities Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
utilities sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL A 33.99% 35.05%
FIDELITY ADV UTILITIES - CL A 26.29% 30.92%
(INCL. 5.75% SALES CHARGE)
S&P 500 19.29% 34.89%
GS UTILITIES 35.49% 29.61%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA UTILITIES GROWTH -CL A S&P 500
GS UTILITIES
00186 SP001
GS007
1996/09/03 9425.00 10000.00 10000.00
1996/09/30 9566.38 10516.69 10176.08
1996/10/31 10150.73 10806.74 10476.83
1996/11/30 10697.38 11623.62 10911.15
1996/12/31 10842.70 11393.36 10972.81
1997/01/31 11148.13 12105.21 11198.39
1997/02/28 11310.38 12200.12 11368.11
1997/03/31 10737.71 11698.81 10703.10
1997/04/30 11109.95 12397.23 10813.53
1997/05/31 11816.25 13151.98 11421.28
1997/06/30 12188.49 13741.19 11800.54
1997/07/31 12474.83 14834.57 12102.55
1997/08/31 12169.40 14003.54 11763.95
1997/09/30 13478.33 14770.51 12662.62
1997/10/31 13266.07 14277.18 12858.05
1997/11/30 13893.20 14938.07 14071.85
1997/12/31 14103.80 15194.56 14800.43
1998/01/31 15033.60 15362.61 15075.28
1998/02/28 16412.64 16470.56 15318.83
1998/03/31 17405.13 17314.02 16771.80
1998/04/30 17290.21 17488.19 16224.12
1998/05/31 16736.51 17187.57 16023.80
1998/06/30 16590.24 17885.73 16401.68
1998/07/31 16715.61 17695.25 16397.57
IMATRL PRASUN SHR__CHT 19980731 19980825 165942 R00000000000026
$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 5.75% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $16,716 - a 67.16% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Utilities Index, it would have grown to $16,398 - a 63.98%
increase.
ADVISOR UTILITIES GROWTH FUND - CLASS T
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL T 33.72% 76.45%
FIDELITY ADV UTILITIES - CL T 29.04% 70.27%
(INCL. 3.50% SALES CHARGE)
S&P 500 19.29% 76.95%
GS UTILITIES 35.49% 63.98%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class T shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Utilities Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
utilities sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL T 33.72% 34.69%
FIDELITY ADV UTILITIES - CL T 29.04% 32.19%
(INCL. 3.50% SALES CHARGE)
STANDARD & POOR'S 500 INDEX 19.29% 34.89%
GS UTILITIES 35.49% 29.61%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA UTILITIES GROWTH -CL T S&P 500
GS UTILITIES
00196 SP001
GS007
1996/09/03 9650.00 10000.00 10000.00
1996/09/30 9794.75 10516.69 10176.08
1996/10/31 10393.05 10806.74 10476.83
1996/11/30 10943.10 11623.62 10911.15
1996/12/31 11101.67 11393.36 10972.81
1997/01/31 11404.62 12105.21 11198.39
1997/02/28 11560.98 12200.12 11368.11
1997/03/31 10974.62 11698.81 10703.10
1997/04/30 11345.98 12397.23 10813.53
1997/05/31 12069.16 13151.98 11421.28
1997/06/30 12440.51 13741.19 11800.54
1997/07/31 12733.69 14834.57 12102.55
1997/08/31 12420.97 14003.54 11763.95
1997/09/30 13750.63 14770.51 12662.62
1997/10/31 13533.46 14277.18 12858.05
1997/11/30 14175.09 14938.07 14071.85
1997/12/31 14379.75 15194.56 14800.43
1998/01/31 15329.86 15362.61 15075.28
1998/02/28 16728.34 16470.56 15318.83
1998/03/31 17731.82 17314.02 16771.80
1998/04/30 17603.72 17488.19 16224.12
1998/05/31 17048.60 17187.57 16023.80
1998/06/30 16899.14 17885.73 16401.68
1998/07/31 17027.25 17695.25 16397.57
IMATRL PRASUN SHR__CHT 19980731 19980825 171037 R00000000000026
$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 3.50% sales charge was
paid. As the chart shows, by July 31, 1998, the value of the
investment would have grown to $17,027 - a 70.27% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$17,695 - a 76.95% increase. If $10,000 was invested in the Goldman
Sachs Utilities Index, it would have grown to $16,398 - a 63.98%
increase.
ADVISOR UTILITIES GROWTH FUND - CLASS B
PERFORMANCE
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 fee. Returns prior to March 3, 1997
are those of Class T which bears a 0.50% 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would
have been lower. Class B shares' contingent deferred sales charge
included in the past one year and life of fund total return figures
are 5% and 4%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL B 32.97% 75.20%
FIDELITY ADV UTILITIES - CL B 27.97% 71.20%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS UTILITIES 35.49% 63.98%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class B shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Utilities Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
utilities sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL B 32.97% 34.18%
FIDELITY ADV UTILITIES - CL B 27.97% 32.57%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS UTILITIES 35.49% 29.61%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA UTILITIES GROWTH -CL B S&P 500
GS UTILITIES
00189 SP001
GS007
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10150.00 10516.69 10176.08
1996/10/31 10770.00 10806.74 10476.83
1996/11/30 11340.00 11623.62 10911.15
1996/12/31 11504.32 11393.36 10972.81
1997/01/31 11818.26 12105.21 11198.39
1997/02/28 11980.29 12200.12 11368.11
1997/03/31 11372.67 11698.81 10703.10
1997/04/30 11747.37 12397.23 10813.53
1997/05/31 12496.77 13151.98 11421.28
1997/06/30 12871.47 13741.19 11800.54
1997/07/31 13175.28 14834.57 12102.55
1997/08/31 12841.09 14003.54 11763.95
1997/09/30 14219.71 14770.51 12662.62
1997/10/31 13984.25 14277.18 12858.05
1997/11/30 14639.45 14938.07 14071.85
1997/12/31 14841.43 15194.56 14800.43
1998/01/31 15815.36 15362.61 15075.28
1998/02/28 17243.06 16470.56 15318.83
1998/03/31 18272.33 17314.02 16771.80
1998/04/30 18139.52 17488.19 16224.12
1998/05/31 17552.95 17187.57 16023.80
1998/06/30 17386.94 17885.73 16401.68
1998/07/31 17519.75 17695.25 16397.57
IMATRL PRASUN SHR__CHT 19980731 19980825 165958 R00000000000026
$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, 1998,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $17,120 - a 71.20% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase. If $10,000 was invested in the
Goldman Sachs Utilities Index, it would have grown to $16,398 - a
63.98% increase.
ADVISOR UTILITIES GROWTH FUND - CLASS C
PERFORMANCE
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 C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee. Returns between March 3, 1997
and November 3, 1997 are those of Class B shares and reflect Class B
shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of
Class T which bears a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee
been reflected, returns prior to March 3, 1997 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year and life of fund total return figures are 1% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL C 33.02% 75.25%
FIDELITY ADV UTILITIES - CL C 32.02% 75.25%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 76.95%
GS UTILITIES 35.49% 63.98%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, one year or since
the fund started on September 3, 1996. You can compare Class C shares'
returns to both the performance of the Standard & Poor's 500 Index - a
widely recognized, unmanaged index of common stocks - and the Goldman
Sachs Utilities Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the
utilities sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - CL C 33.02% 34.21%
FIDELITY ADV UTILITIES - CL C 32.02% 34.21%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 19.29% 34.89%
GS UTILITIES 35.49% 29.61%
AVERAGE ANNUAL RETURNS take Class C shares' cumulative return and show
you what would have happened if Class C shares had performed at a
constant rate each year.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA UTILITIES GROWTH -CL C S&P 500
GS UTILITIES
00477 SP001
GS007
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10150.00 10516.69 10176.08
1996/10/31 10770.00 10806.74 10476.83
1996/11/30 11340.01 11623.62 10911.15
1996/12/31 11504.33 11393.36 10972.81
1997/01/31 11818.26 12105.21 11198.39
1997/02/28 11980.29 12200.12 11368.11
1997/03/31 11372.67 11698.81 10703.10
1997/04/30 11747.38 12397.23 10813.53
1997/05/31 12496.77 13151.98 11421.28
1997/06/30 12871.48 13741.19 11800.54
1997/07/31 13175.29 14834.57 12102.55
1997/08/31 12841.09 14003.54 11763.95
1997/09/30 14219.71 14770.51 12662.62
1997/10/31 13984.25 14277.18 12858.05
1997/11/30 14637.79 14938.07 14071.85
1997/12/31 14849.51 15194.56 14800.43
1998/01/31 15822.53 15362.61 15075.28
1998/02/28 17259.93 16470.56 15318.83
1998/03/31 18288.23 17314.02 16771.80
1998/04/30 18144.49 17488.19 16224.12
1998/05/31 17558.47 17187.57 16023.80
1998/06/30 17392.62 17885.73 16401.68
1998/07/31 17525.30 17695.25 16397.57
IMATRL PRASUN SHR__CHT 19980731 19980825 170647 R00000000000026
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Utilities Growth - Class C on September
3, 1996, when the fund started. As the chart shows, by July 31, 1998,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $17,525 - a 75.25% increase
on the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $17,695 - a 76.95% increase. If $10,000 was invested in the
Goldman Sachs Utilities Index, it would have grown to $16,398 - a
63.98% increase.
ADVISOR UTILITIES GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Nick Thakore)
An interview with
Nick Thakore, Portfolio Manager of Fidelity Advisor Utilities Growth
Fund
Q. HOW DID THE FUND PERFORM, NICK?
A. The fund did very well. For the 12-month period that ended July 31,
1998, the fund's Class A, Class T, Class B and Class C shares returned
33.99%, 33.72%, 32.97% and 33.02%, respectively. During the same
period, the Standard & Poor's 500 Index had a total return of 19.29%.
Beginning this period, the fund also compares itself to the Goldman
Sachs Utilities Index - an index of stocks designed to measure the
performance of companies in the utilities sector - which returned
35.49% over the same 12-month period.
Q. WHAT CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. The broader index suffered because of ongoing concerns about
corporate earnings and particularly the impact of the Asian crisis on
corporate profits. As a result, utility stocks benefited from the
perceived flight to safety and the stability of their earnings.
Overall, the fund benefited from large holdings in telephone stocks,
which performed well, and less electric utility holdings, which did
not perform as well. In addition, within the telecommunications
industry the fund was invested in the right stocks. I overweighted the
fund's assets in the new market entrants, such as WorldCom, and the
regional Bell operating companies (RBOCs), such as Bell Atlantic. Both
groups performed very well.
Q. WHY HAVE TELEPHONE STOCKS CONTINUED TO PERFORM THE BEST WITHIN THE
UTILITY SECTOR?
A. The telecommunications industry has been viewed as the growth area
within the utilities sector. Telephone company stocks increased
revenues faster than those of other utilities, and they once again
managed to meet or beat analysts' earnings estimates, helped by
continued demand for additional telephone lines and data services.
Consolidation has continued in the telecommunications industry, with
the announced mergers of WorldCom and MCI, Bell Atlantic and GTE, SBC
and Ameritech, and AT&T and TCI over the past several months. To some
degree, mergers had a positive impact on the sector because the market
anticipated that this trend would drive the industry's longer-term
performance and growth prospects.
Q. HOW WOULD YOU DESCRIBE THE ENVIRONMENT FOR ELECTRIC AND GAS
UTILITIES?
A. While the declining interest-rate environment and uncertainty in
Asia were good for electric and gas utilities in the fourth quarter of
1997, as investor confidence returned to the domestic markets in the
first half of 1998, electric and gas utilities were again viewed as
slow growth sectors. As a result, the performance of electric and gas
utilities lagged telecommunications stocks, which exhibited stronger
growth prospects.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. WorldCom performed very well. It has the best assets in the
business in terms of the networks it owns, giving it superior
resources to enter new markets. I believe it has great growth
potential in the U.S., internationally and with the Internet. Global
Telesystems Group also performed well for the fund. It's another
telecommunications stock with strong assets that is building
long-distance networks in Europe; it was undervalued relative to other
telecom asset stories. Recently the stock has performed well, and the
company's valuation was starting to catch up with stocks that have
similar growth potential.
Q. WERE THERE ANY STOCKS THAT DETRACTED FROM THE FUND'S PERFORMANCE?
A. Tel-Save Holdings was a disappointment for the fund. The company
has been in merger discussions, but nothing has been worked out on
that front, causing a lot of uncertainty with investors and hurting
the stock's performance.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. The large-cap companies that long have been players in this sector,
in general, have limited growth potential and additional risks to
their ability to sustain their growth. There is a whole host of new
entrants that have strong growth potential, and I will continue to
look closely at these companies. If concerns about Asia and corporate
earnings continue, I think utility stocks will continue to benefit
from the flight to safety. Typically, however, I don't try to predict
general market, economic and political trends. I will continue to try
to identify companies that offer the best growth prospects relative to
their valuations and that can meet or exceed their earnings estimates.
The views expressed in this report refect 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, 1998, more than
$42 million
MANAGER: Nick Thakore, since August 1997;
Manager, Fidelity Select Telecommunications
Portfolio, since 1996; Fidelity Utilities Fund and
Fidelity Advisor Utilities Growth Fund, since
August 1997; joined Fidelity in 1993
(checkmark)
ADVISOR UTILITIES GROWTH FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
MCI COMMUNICATIONS CORP. 8.6
WORLDCOM, INC. 8.3
AT&T CORP. 8.0
BELL ATLANTIC CORP. 6.5
TEL-SAVE HOLDINGS, INC. 4.6
QWEST COMMUNICATIONS INTERNATIONAL, INC. 4.3
GTE CORP. 4.2
SPRINT CORP. 3.1
GLOBAL TELESYSTEMS GROUP, INC. 3.1
MEDIAONE GROUP, INC. $3.63 PIES 3.0
TOP INDUSTRIES AS OF JULY 31, 1998
TELEPHONE SERVICES 61.2%
CABLE TV OPERATORS 6.1%
ELECTRIC POWER 5.6%
ELECTRIC & OTHER SERVICES 5.4%
COMPUTER SERVICES 2.5%
ALL OTHERS 19.2%
ROW: 1, COL: 1, VALUE: 61.2
ROW: 1, COL: 2, VALUE: 6.1
ROW: 1, COL: 3, VALUE: 5.6
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 2.5
ROW: 1, COL: 6, VALUE: 19.2
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 84.8%
SHARES VALUE (NOTE 1)
BROADCASTING - 3.1%
CABLE TV OPERATORS - 3.1%
Alphanet Telecom, Inc. (a) 108,500 $ 1,184,145
Cable Michigan, Inc. (a) 325 12,025
RCN Corp. 10,200 204,000
TCI Satellite Entertainment, Inc. Class A (a) 10 52
Tele-Communications, Inc. (TCI Group),
Series A (a) 127 5,302
1,405,524
CELLULAR - 1.0%
CELLULAR & COMMUNICATION SERVICES - 1.0%
AirTouch Communications, Inc. (a) 7,400 435,213
Cellnet Data Systems, Inc. (a) 1,200 9,975
Telephone & Data Systems, Inc. 400 16,000
461,188
COMMUNICATIONS EQUIPMENT - 0.3%
TELEPHONE INTERCONNECT SYSTEMS - 0.3%
Intermedia Communications, Inc. (a) 4,000 148,000
COMPUTER SERVICES & SOFTWARE - 2.5%
COMPUTER SERVICES - 2.5%
Concentric Network Corp. 5,000 117,500
Titan Corp. (a) 180,700 1,027,731
1,145,231
PREPACKAGED COMPUTER SOFTWARE - 0.0%
DSET Corp. (a) 100 1,550
TOTAL COMPUTER SERVICES & SOFTWARE 1,146,781
ELECTRIC UTILITY - 11.2%
COMBINATION UTILITIES, NEC - 0.2%
Citizens Utilities Co. Class B 10,300 90,125
ELECTRIC & OTHER SERVICES - 5.4%
CMS Energy Corp. 11,300 476,719
Consolidated Edison, Inc. 6,000 253,875
Hidroelectrica de Cantabrico SA 100 4,501
Illinova Corp. 7,000 175,000
Montana Power Co. 20,000 701,250
PECO Energy Co. 6,000 179,625
PG&E Corp. 21,000 639,188
2,430,158
ELECTRIC POWER - 5.6%
BEC Energy 9,300 355,725
Baycorp Holdings Ltd. (a) 100 669
Duke Energy Corp. 20,494 1,170,720
Entergy Corp. 7,000 191,625
FPL Group, Inc. 3,000 182,438
GPU, Inc. 3,900 139,425
IPALCO Enterprises, Inc. 12,000 507,750
2,548,352
TOTAL ELECTRIC UTILITY 5,068,635
ELECTRICAL EQUIPMENT - 0.1%
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Loral Space & Communications Ltd. (a) 2,000 55,375
ENGINEERING - 0.4%
ELECTRICAL WORK - 0.4%
Able Telcom Holdings Corp. (a) 20,600 193,125
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 0.2%
MOTION PICTURE PRODUCTION - 0.2%
Tele-Communications, Inc.
(TCI Ventures Group), Series A (a) 5,146 $ 101,312
GAS - 2.1%
GAS & OTHER SERVICES - 0.0%
UGI Corp. 1,050 24,675
GAS DISTRIBUTION - 1.0%
Eastern Enterprises Co. 3,300 131,794
K N Energy, Inc. 1,300 64,269
MCN Energy Group, Inc. 4,000 99,250
National Fuel Gas Co. 400 16,525
NICOR, Inc. 400 15,400
Peoples Energy Corp. 500 17,500
Sempra Energy (a) 4,436 111,732
WICOR, Inc. 600 12,863
469,333
GAS TRANSMISSION - 0.7%
Williams Companies, Inc. 9,581 307,191
GAS TRANSMISSION & DISTRIBUTION - 0.4%
Columbia Gas System, Inc. (The) 2,475 131,639
Equitable Resources, Inc. 450 11,081
ONEOK, Inc. 700 23,888
166,608
TOTAL GAS 967,807
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 300 459
OIL & GAS - 2.4%
CRUDE PETROLEUM & GAS - 0.2%
EEX Corp. (a) 13,295 93,065
Occidental Petroleum Corp. 600 13,350
106,415
PETROLEUM REFINERS - 2.2%
Coastal Corp. (The) 29,750 974,313
TOTAL OIL & GAS 1,080,728
PUBLISHING - 0.3%
GENERAL PUBLISHING - 0.3%
Telepartner AS sponsored ADR (a) 50,000 125,000
TELEPHONE SERVICES - 61.2%
AT&T Corp. 59,575 3,611,734
Advanced Communications Group, Inc. 45,000 419,063
ALLTEL Corp. 400 16,775
AMNEX, Inc. (a) 190,700 190,700
BCE, Inc. 2,500 100,700
Bell Atlantic Corp. 65,000 2,949,375
BellSouth Corp. 13,800 942,713
Cincinnati Bell, Inc. 5,000 160,625
Commonwealth Telephone
Enterprises, Inc. 15,866 389,709
Equant NV 700 30,261
EXCEL Communications, Inc. (a) 1,000 21,438
France Telecom SA 632 43,099
GTE Corp. 35,200 1,914,000
Global Telesystems Group, Inc. (a) 26,000 1,391,000
ITC Deltacom, Inc. 100 4,775
MCI Communications Corp. 60,500 3,917,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
NEXTLINK Communications, Inc.
Class A (a) 3,000 $ 111,375
Qwest Communications
International, Inc. (a) 48,361 1,952,575
Sprint Corp. 20,000 1,400,000
STAR Telecommunications, Inc. (a) 70,000 1,286,250
Tel-Save Holdings, Inc. (a) 166,200 2,077,500
Telegroup, Inc. (a) 80,000 800,000
U.S. LEC Corp. Class A 4,700 96,350
Winstar Communications, Inc. (a) 4,400 145,200
WorldCom, Inc. (a) 71,575 3,784,528
27,757,120
TOTAL COMMON STOCKS
(Cost $35,829,035) 38,511,054
CONVERTIBLE PREFERRED STOCKS - 3.0%
BROADCASTING - 3.0%
CABLE TV OPERATORS - 3.0%
MediaOne Group, Inc. $3.63 PIES (a) 23,000 1,336,875
ELECTRIC UTILITY - 0.0%
COMBINATION UTILITIES, NEC - 0.0%
Citizens Utilities Trust 2.50 EPPICS 400 17,575
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $1,356,370) 1,354,450
CASH EQUIVALENTS - 12.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
7/31/98 due 8/03/98 $ 44,021 44,000
SHARES
Taxable Central Cash Fund (b) 5,476,909 5,476,909
TOTAL CASH EQUIVALENTS
(Cost $5,520,909) 5,520,909
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $42,706,314) $ 45,386,413
SECURITY TYPE ABBREVIATIONS
EPPICS - Equity Providing Preferred
Income Convertible Securities
PIES - Premium Income Equity
Securities
LEGEND
(a)Non-income producing
(b)At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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, 1998 the aggregate cost of investment securities for
income tax purposes was $42,900,878. Net unrealized appreciation
aggregated $2,485,535, of which $5,375,424 related to appreciated
investment securities and $2,889,889 related to depreciated investment
securities.
The fund hereby designates approximately $236,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 95%, 17%, 4%, 16%, and 11% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividend distributions during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
A total of .12% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE AGREEMENTS OF $44,000) (COST $42,706,314) - SEE $ 45,386,413
ACCOMPANYING SCHEDULE
CASH 911
RECEIVABLE FOR INVESTMENTS SOLD 94,210
RECEIVABLE FOR FUND SHARES SOLD 236,017
DIVIDENDS RECEIVABLE 41,732
INTEREST RECEIVABLE 17,118
PREPAID EXPENSES 2,697
TOTAL ASSETS 45,779,098
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,669,070
PAYABLE FOR FUND SHARES REDEEMED 69,906
ACCRUED MANAGEMENT FEE 35,900
DISTRIBUTION FEES PAYABLE 22,195
OTHER PAYABLES AND 40,660
ACCRUED EXPENSES
TOTAL LIABILITIES 2,837,731
NET ASSETS $ 42,941,367
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 37,237,826
UNDISTRIBUTED NET INVESTMENT INCOME 130
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 3,023,308
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 2,680,103
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 42,941,367
CALCULATION OF MAXIMUM $16.00
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($3,185,516 (DIVIDED BY)
199,055 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.98
(100/94.25 OF $16.00)
CLASS T: $15.95
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($19,918,461 (DIVIDED BY)
1,248,423 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.53
(100/96.50 OF $15.95)
CLASS B: $15.83
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($12,918,795 (DIVIDED BY)
816,223 SHARES) A
CLASS C: $15.85
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($3,489,078 (DIVIDED BY)
220,114 SHARES) A
INSTITUTIONAL CLASS: $16.02
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,429,517 (DIVIDED BY) 214,077 SHARES)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 317,533
DIVIDENDS
INTEREST 116,534
TOTAL INCOME 434,067
EXPENSES
MANAGEMENT FEE $ 154,189
TRANSFER AGENT FEES 62,946
DISTRIBUTION FEES 143,498
ACCOUNTING FEES AND EXPENSES 60,324
NON-INTERESTED TRUSTEES' COMPENSATION 85
CUSTODIAN FEES AND EXPENSES 7,633
REGISTRATION FEES 68,536
AUDIT 33,455
LEGAL 446
REPORTS TO SHAREHOLDERS 16,326
MISCELLANEOUS 554
TOTAL EXPENSES BEFORE REDUCTIONS 547,992
EXPENSE REDUCTIONS (30,022) 517,970
NET INVESTMENT INCOME (LOSS) (83,903)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 4,503,451
FOREIGN CURRENCY TRANSACTIONS 2,495 4,505,946
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,230,066
ASSETS AND LIABILITIES IN 15 1,230,081
FOREIGN CURRENCIES
NET GAIN (LOSS) 5,736,027
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,652,124
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (83,903) $ 52,435
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 4,505,946 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,230,081 1,450,022
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,652,124 1,631,956
DISTRIBUTIONS TO SHAREHOLDERS (36,379) (13,446)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,479,046) (43,681)
TOTAL DISTRIBUTIONS (1,515,425) (57,127)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 26,882,209 10,325,481
REDEMPTION FEES 21,301 848
TOTAL INCREASE (DECREASE) IN NET ASSETS 31,040,209 11,901,158
NET ASSETS
BEGINNING OF PERIOD 11,901,158 -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $130 AND $38,999,
RESPECTIVELY) $ 42,941,367 $ 11,901,158
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.07 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.02) .12
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.19 3.09
TOTAL FROM INVESTMENT OPERATIONS 4.17 3.21
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) I (.03)
FROM NET REALIZED GAIN (1.21) I (.11)
TOTAL DISTRIBUTIONS (1.25) (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.00 $ 13.07
TOTAL RETURN B, C 33.99% 32.36%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,186 $ 531
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% E 1.75% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.72% H 1.75% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.11)% 1.09% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A A NNUALIZED B THE TOTAL RETURN 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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
CLASS A SHARES) TO JULY 31, 1997. 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 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). I THE AMOUNTS SHOWN REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.03 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.04) .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.17 3.09
TOTAL FROM INVESTMENT OPERATIONS 4.13 3.17
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03) (.03)
FROM NET REALIZED GAIN (1.19) (.11)
TOTAL DISTRIBUTIONS (1.22) (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 15.95 $ 13.03
TOTAL RETURN B, C 33.72% 31.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,918 $ 7,085
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.94% 2.00% A. E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.90% H 2.00% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.23)% .79% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED B THE TOTAL RETURN 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. F FOR THE PERIOD
SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY 31, 1997. 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 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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.01 $ 11.76
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.13) .02
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.16 1.23
TOTAL FROM INVESTMENT OPERATIONS 4.03 1.25
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03) I -
FROM NET REALIZED GAIN (1.19) I -
TOTAL DISTRIBUTIONS (1.22) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 15.83 $ 13.01
TOTAL RETURN B, C 32.97% 10.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 12,919 $ 2,039
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% E 2.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.47% H 2.50% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.85)% .32% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED B THE TOTAL RETURN 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 (SEE NOTE
5 OF NOTES TO FINANCIAL STATEMENTS). F FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF
SALE OF CLASS B SHARES) TO JULY 31, 1997. 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 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). 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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.90
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.16
TOTAL FROM INVESTMENT OPERATIONS 3.06
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (1.10)
TOTAL DISTRIBUTIONS (1.12)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.85
TOTAL RETURN B, C 23.60%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,489
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% A, H
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.91)% A
PORTFOLIO TURNOVER 151%
AVERAGE COMMISSION RATE G $ .0298
A ANNUALIZED B THE TOTAL RETURN 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
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FOR THE PERIOD NOVEMBER 3,
1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO JULY 31, 1998. 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 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).
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.09 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .04 .14
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.17 3.10
TOTAL FROM INVESTMENT OPERATIONS 4.21 3.24
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.07) I (.04)
FROM NET REALIZED GAIN (1.22) I (.11)
TOTAL DISTRIBUTIONS (1.29) (.15)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.02 $ 13.09
TOTAL RETURN B, C 34.36% 32.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,430 $ 2,246
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.46% 1.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.43% H 1.50% A
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .30% 1.29% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
AANNUALIZED BTHE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). CTOTAL RETURNS FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. DNET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING
THE PERIOD. EFMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER. FFOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO JULY 31, 1997. GA 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. HFMR 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). 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of
securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 net operating losses 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $58,950,412 and $36,423,535, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 3,544 $ 364
CLASS T 69,549 50
CLASS B 58,845 44,295
CLASS C 11,560 11,560
$ 143,498 $ 56,269
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 897
CLASS T $ 2,005
CLASS B $ 929
CLASS C $ 1,874
INSTITUTIONAL CLASS $ 76
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
shares at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital gains.
In addition, purchases of Class A and Class T shares that were subject
to a finder's fee bear a contingent deferred sales charge on assets
that do not remain in the fund for at least one year. The Class A and
Class T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to
FDC are paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 43,487 $ 16,090
CLASS T 57,287 21,339
CLASS B 7,417 7,417*
CLASS C 803 803*
$ 108,994 $ 45,649
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 4,441 .31
CLASS T 35,008 .25
CLASS B 14,446 .24
CLASS C 3,074 .26*
INSTITUTIONAL CLASS 5,977 .16
$ 62,946
* ANNUALIZED.
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 $6,775 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 6,156
CLASS B 2.50% 7,922
CLASS C 2.50% 7,738
$ 21,816
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 $7,400 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 $806 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED JULY 31,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ 1,800 $ 816
CLASS T 13,527 6,500
CLASS B 4,591 -
CLASS C 250 -
INSTITUTIONAL CLASS 16,211 6,130
TOTAL $ 36,379 $ 13,446
FROM NET REALIZED GAIN
CLASS A $ 66,066 $ 2,993
CLASS T 749,717 23,832
CLASS B 267,630 -
CLASS C 16,996 -
INSTITUTIONAL CLASS 378,637 16,856
TOTAL $ 1,479,046 $ 43,681
TOTAL $ 1,515,425 $ 57,127
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 171,774 50,784 $ 2,671,006 $ 550,067
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,614 351 61,624 3,875
SHARES REDEEMED (17,947) (10,521) (275,348) (126,974)
NET INCREASE (DECREASE) 158,441 40,614 $ 2,457,282 $ 426,968
CLASS T 1,165,712 599,685 $ 17,577,615 $ 6,865,905
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 53,698 2,654 715,847 29,247
SHARES REDEEMED (514,685) (58,641) (7,904,206) (701,040)
NET INCREASE (DECREASE) 704,725 543,698 $ 10,389,256 $ 6,194,112
CLASS B 725,510 159,349 $ 11,176,610 $ 1,941,989
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 15,242 - 202,512 -
SHARES REDEEMED (81,233) (2,645) (1,222,194) (32,964)
NET INCREASE (DECREASE) 659,519 156,704 $ 10,156,928 $ 1,909,025
CLASS C 225,634 - $ 3,470,986 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,164 - 15,529 -
SHARES REDEEMED (6,684) - (107,792) -
NET INCREASE (DECREASE) 220,114 - $ 3,378,723 $ -
INSTITUTIONAL CLASS 310,409 180,368 $ 4,630,856 $ 1,895,917
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 22,979 1,242 307,065 13,709
SHARES REDEEMED (290,942) (9,979) (4,437,901) (114,250)
NET INCREASE (DECREASE) 42,446 171,631 $ 500,020 $ 1,795,376
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,713
CLASS T 17,396
CLASS B 23,267
CLASS C 10,937
INSTITUTIONAL CLASS 8,223
$ 68,536
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 Natural Resources Fund,
Fidelity Advisor Technology Fund and Fidelity Advisor Utilities Growth
Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
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 and Fidelity Advisor Utilities Growth
Fund (funds of Advisor Series VII) at July 31, 1998, the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Advisor Series VII's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at July 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 14, 1998
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
CONSUMER INDUSTRIES:
CLASS A:
PAY DATE 9/8/98
RECORD DATE 9/4/98
DIVIDENDS -
SHORT-TERM
CAPITAL GAINS $0.72
LONG-TERM
CAPITAL GAINS $0.13
CLASS T:
PAY DATE 9/8/98
RECORD DATE 9/4/98
DIVIDENDS -
SHORT-TERM
CAPITAL GAINS $0.68
LONG-TERM
CAPITAL GAINS $0.13
CLASS B:
PAY DATE 9/8/98
RECORD DATE 9/4/98
DIVIDENDS -
SHORT-TERM
CAPITAL GAINS $0.68
LONG-TERM
CAPITAL GAINS $0.13
CLASS C:
PAY DATE 9/8/98
RECORD DATE 9/4/98
DIVIDENDS -
SHORT-TERM
CAPITAL GAINS $0.70
LONG-TERM
CAPITAL GAINS $0.13
CYCLICAL INDUSTRIES:
CLASS A:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.31 $0.26
LONG-TERM
CAPITAL GAINS $0.07 $0.42
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS T:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.31 $0.24
LONG-TERM
CAPITAL GAINS $0.07 $0.42
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS B:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.31 $0.23
LONG-TERM
CAPITAL GAINS $0.07 $0.42
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS C:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.31 $0.25
LONG-TERM
CAPITAL GAINS $0.07 $0.42
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
FINANCIAL SERVICES:
CLASS A:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.04 $0.05
SHORT-TERM
CAPITAL GAINS $0.19 $0.61
LONG-TERM
CAPITAL GAINS $0.02 $0.41
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS T:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.03 $0.02
SHORT-TERM
CAPITAL GAINS $0.19 $0.61
LONG-TERM
CAPITAL GAINS $0.02 $0.41
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS B:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.01 $0.01
SHORT-TERM
CAPITAL GAINS $0.19 $0.61
LONG-TERM
CAPITAL GAINS $0.02 $0.41
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS C:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.02 $0.02
SHORT-TERM
CAPITAL GAINS $0.19 $0.61
LONG-TERM
CAPITAL GAINS $0.02 $0.41
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
HEALTH CARE:
CLASS A:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.56 $0.32
LONG-TERM
CAPITAL GAINS $0.06 $0.07
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS T:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.56 $0.30
LONG-TERM
CAPITAL GAINS $0.06 $0.07
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS B:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.53 $0.29
LONG-TERM
CAPITAL GAINS $0.06 $0.07
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS C:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.57 $0.31
LONG-TERM
CAPITAL GAINS $0.06 $0.07
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
NATURAL RESOURCES:
CLASS A:
PAY DATE 9/8/97 12/8/97 9/8/98
RECORD DATE 9/5/97 12/5/97 9/4/98
DIVIDENDS - - $0.05
SHORT-TERM
CAPITAL GAINS $0.97 $0.58 $0.06
LONG-TERM
CAPITAL GAINS $1.76 $0.65 $0.64
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 54.15% 71.98%
20% rate 45.85% 28.02%
CLASS T:
PAY DATE 9/8/97 12/8/97 9/8/98
RECORD DATE 9/5/97 12/5/97 9/4/98
DIVIDENDS - - $0.01
SHORT-TERM
CAPITAL GAINS $0.95 $0.56 $0.06
LONG-TERM
CAPITAL GAINS $1.76 $0.65 $0.64
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 54.15% 71.98%
20% rate 45.85% 28.02%
CLASS B:
PAY DATE 9/8/97 12/8/97 9/8/98
RECORD DATE 9/5/97 12/5/97 9/4/98
DIVIDENDS - - -
SHORT-TERM
CAPITAL GAINS $0.89 $0.51 $0.02
LONG-TERM
CAPITAL GAINS $1.76 $0.65 $0.64
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 54.15% 71.98%
20% rate 45.85% 28.02%
CLASS C:
PAY DATE 12/8/97 9/8/98
RECORD DATE 12/5/97 9/4/98
DIVIDENDS - $0.01
SHORT-TERM
CAPITAL GAINS $0.57 $0.06
LONG-TERM
CAPITAL GAINS $0.65 $0.64
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 71.98%
20% rate 28.02%
UTILITIES GROWTH:
CLASS A:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.01 -
SHORT-TERM
CAPITAL GAINS $0.95 $0.88
LONG-TERM
CAPITAL GAINS $0.15 $0.10
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS T:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.94 $0.86
LONG-TERM
CAPITAL GAINS $0.15 $0.10
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS B:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.93 $0.85
LONG-TERM
CAPITAL GAINS $0.15 $0.10
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
CLASS C:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.02 -
SHORT-TERM
CAPITAL GAINS $0.95 $0.87
LONG-TERM
CAPITAL GAINS $0.15 $0.10
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
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
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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 International Capital
Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant SM Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(Fidelity_Logo_Graphic)
(registered trademark)
P.O. Box 5422
Cincinnati, OH 45250-5422
(Recycle_Logo_Graphic) Printed on Recycled Paper
AFOC-ANN-0998
1.536453.101
60808
(2_FIDELITY_LOGOS)
(REGISTERED TRADEMARK)
FIDELITY ADVISOR
FOCUS FUNDS
INSTITUTIONAL CLASS
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
ANNUAL REPORT
FOR THE YEAR ENDING
JULY 31, 1998
AND
PROSPECTUS
DATED SEPTEMBER 28, 1998
CONTENTS
PERFORMANCE OVERVIEW A-4
CONSUMER INDUSTRIES A-5 PERFORMANCE
A-6 FUND TALK: THE MANAGER'S OVERVIEW
A-7 INVESTMENT SUMMARY
A-8 INVESTMENTS
A-12 FINANCIAL STATEMENTS
A-16 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES A-21 PERFORMANCE
A-22 FUND TALK: THE MANAGER'S OVERVIEW
A-23 INVESTMENT SUMMARY
A-24 INVESTMENTS
A-27 FINANCIAL STATEMENTS
A-31 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES A-36 PERFORMANCE
A-37 FUND TALK: THE MANAGER'S OVERVIEW
A-38 INVESTMENT SUMMARY
A-39 INVESTMENTS
A-41 FINANCIAL STATEMENTS
A-45 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE A-50 PERFORMANCE
A-51 FUND TALK: THE MANAGER'S OVERVIEW
A-52 INVESTMENT SUMMARY
A-53 INVESTMENTS
A-55 FINANCIAL STATEMENTS
A-59 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES A-63 PERFORMANCE
A-64 FUND TALK: THE MANAGER'S OVERVIEW
A-65 INVESTMENT SUMMARY
A-66 INVESTMENTS
A-68 FINANCIAL STATEMENTS
A-72 NOTES TO THE FINANCIAL STATEMENTS
TECHNOLOGY A-77 PERFORMANCE
A-78 FUND TALK: THE MANAGERS' OVERVIEW
A-79 INVESTMENT SUMMARY
A-80 INVESTMENTS
A-82 FINANCIAL STATEMENTS
A-86 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH A-91 PERFORMANCE
A-92 FUND TALK: THE MANAGER'S OVERVIEW
A-93 INVESTMENT SUMMARY
A-94 INVESTMENTS
A-96 FINANCIAL STATEMENTS
A-100 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-105
DISTRIBUTIONS A-106
FIDELITY ADVISOR FOCUS FUNDS P-1
PROSPECTUS
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.
PERFORMANCE OVERVIEW
Benign inflation, moderate economic growth and concern over the
financial crisis in Asia were the key factors behind the U.S. stock
market's performance for the 12-month period that ended July 31, 1998.
While the U.S. stock market experienced volatility and lackluster
returns in recent months, the Standard & Poor's 500 Index - a measure
of the U.S. stock market - returned 19.29% over the past year.
However, strong performance was limited to a narrow range of mostly
very large-cap stocks. In comparison to the larger-cap oriented S&P
500 index, the Russell 2000 - a general measure of
small-capitalization stock performance - returned 2.31% during the
same 12-month period. This narrow market - one where a small number of
stocks perform well, and others are flat or produce losses - was
further demonstrated by the fact that, as of the end of the period,
the average stock on the New York Stock Exchange was down more than
24% from its 52-week high - the largest decline since 1990.
Early in the period, as was the case during most of the past year,
investors preferred the safety and liquidity of large-cap stocks,
hoping these stocks would maintain steady earnings and be easier to
sell in a possible economic slowdown. In response to the unfolding
currency and market crisis in Asia during the fourth quarter of 1997,
the broad market indexes experienced some weakness. In late October,
the Dow Jones Industrial Average fell 550-plus points in one trading
session, but recouped much of its losses the next day. At the start of
1998, investors seemed to shrug off corporate earnings issues to push
the major stock market indexes higher. In the first quarter of 1998,
the S&P 500 index produced a solid 13.95% return. The S&P 500 and
other market indexes continued to rally through May, before falling
sharply in mid-June amid renewed fears that Asia's economic crisis
would inhibit the growth in earnings of American companies. While
stocks continued to reach new highs in mid-July, a week and a half of
selling pressure toward the end of the period, due to news of
declining corporate profits, sent the Dow Jones Industrial Average
down over 450 points from its record high of 9337.97, set on July 17,
to close at 8883.29 by the end of the period.
The pattern of a narrow market was also displayed in certain industry
groups. HEALTH CARE and FINANCE stocks continued to perform well.
Prices of many pharmaceutical stocks moved higher, helped by strong
pipelines of new products, the ability to bring products to market
more rapidly and relaxed regulations that permitted more aggressive
advertising. Stable economic growth, coupled with nonexistent
inflation, buoyed the financial sector. Banks and brokerage houses
sustained impressive earnings growth; other financial services firms
benefited from merger and acquisition activity, exemplified by the
recently announced megamerger of Travelers and Citicorp.
While many TECHNOLOGY stocks turned in very strong results,
particularly in early 1998, the sector experienced some mixed results
over the 12-month period, due primarily to the negative impact of the
Asian crisis and the effect of a strong dollar on foreign sales.
UTILITY stocks performed well, benefiting from a flight to safety by
concerned investors and strong revenue gains by many telephone
companies. NATURAL RESOURCES stocks experienced weak results, with the
price of most commodities declining and crude oil dipping below $12
dollars a barrel near the end of June. In addition, we experienced one
of the warmest weather patterns in recent history in the U.S., Europe
and Asia, causing lower demand for energy.
CYCLICAL INDUSTRIES - those whose performance typically moves in line
with prevailing economic conditions - produced some mixed results due
to an anticipated slowdown in exports to Asia. However, low interest
rates and strong domestic demand provided some support for these
stocks. Stocks in the CONSUMER INDUSTRIES sector posted generally
strong results. Home builders, restaurants and the hotel industry
posted strong results, supported by solid domestic consumer spending
and increased disposable income.
ADVISOR CONSUMER INDUSTRIES FUND - INSTITUTIONAL CLASS
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - INST CL 27.70% 73.64%
S&P 500 (REGISTERED TRADEMARK) 19.29% 76.95%
GS CONSUMER INDUSTRIES 21.45% 65.93%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Consumer Industries Index - a
market capitalization-weighted index of stocks designed to measure the
performance of companies in the consumer industries sector. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CONSUMER - INST CL 27.70% 33.56%
S&P 500 19.29% 34.89%
GS CONSUMER INDUSTRIES 21.45% 30.42%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CONSUMER IND -CL I S&P 500
GS CONSUMER INDUSTRIES
00205 SP001
GS002
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10560.00 10516.69 10513.26
1996/10/31 10680.00 10806.74 10515.20
1996/11/30 11050.00 11623.62 11025.10
1996/12/31 10860.20 11393.36 10884.77
1997/01/31 11383.58 12105.21 11305.36
1997/02/28 11524.49 12200.12 11695.56
1997/03/31 11192.34 11698.81 11296.69
1997/04/30 11383.58 12397.23 11790.13
1997/05/31 12259.24 13151.98 12465.57
1997/06/30 12883.27 13741.19 12976.04
1997/07/31 13597.89 14834.57 13662.47
1997/08/31 13124.83 14003.54 12875.85
1997/09/30 13966.13 14770.51 13567.42
1997/10/31 13723.24 14277.18 13296.15
1997/11/30 14407.74 14938.07 14130.89
1997/12/31 14871.94 15194.56 14591.98
1998/01/31 14803.03 15362.61 14472.66
1998/02/28 15871.05 16470.56 15602.11
1998/03/31 16789.78 17314.02 16489.31
1998/04/30 16686.43 17488.19 16327.46
1998/05/31 16778.30 17187.57 16451.19
1998/06/30 17628.12 17885.73 17157.68
1998/07/31 17363.99 17695.25 16593.20
IMATRL PRASUN SHR__CHT 19980731 19980825 155512 R00000000000026
$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, 1998, the value of the investment would have grown to $17,364
- - a 73.64% increase on the initial investment. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Consumer Industries Index, it would
have grown to $16,593 - a 65.93% increase.
ADVISOR CONSUMER INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Doug Chase)
An interview with Doug Chase, Portfolio Manager of Fidelity Advisor
Consumer Industries Fund
Q. HOW DID THE FUND PERFORM, DOUG?
A. Very well. During the 12-month period that ended July 31, 1998, the
fund's Institutional Class shares returned 27.70%, outperforming the
Standard & Poor's 500 Index's return of 19.29% during the same period.
Beginning this period, the fund also compares itself to the Goldman
Sachs Consumer Industries Index - an index of stocks designed to
measure the performance of companies in the consumer industries sector
- - which returned 21.45% over the same 12-month period.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PAST 12 MONTHS?
A. It was a volatile year. Last August, Asia's economic and financial
problems triggered a decline in the market. Since then, the market has
been increasingly nervous. Corporate earnings were a primary focus,
with investors growing more intolerant of declining business
fundamentals or missed earnings projections. Companies that had lower
earnings projections, or whose earnings came in less than expected,
found their stock prices hit hard.
Q. THE FUND OUTPERFORMED THE S&P 500 SIGNIFICANTLY. CAN YOU EXPLAIN
WHY?
A. During the year, I focused on increasing the number of large-cap
stocks in the fund. After last August's market decline, I analyzed
large-cap stock valuations, which led me to conclude that in an
environment of market uncertainty there could be a flight to quality
among investors. Large-cap consumer companies delivered more
predictable earnings growth, and were undervalued at the prevailing
interest rates. During the last 12 months, the best performers have
been the large-cap companies, so my strategy paid off. I also built up
the fund's retail industry holdings. Retailers have been more
insulated from the events in Asia, since their core business is in the
U.S. Their good performance during the year reflected the relative
strength of the U.S. economy.
Q. WHICH STOCKS PERFORMED WELL?
A. As I mentioned before, the large-cap stocks performed well. For
example, Wal-Mart Stores, the fund's number one holding, has been a
terrific stock. This company has been one of the best success stories
in retailing. Wal-Mart has invested in technology to track its
inventories closely and has focused on re-supplying its
fastest-selling items. The company's earnings estimates have
increased, and its same-store sales - which compares sales growth for
only those stores which have been in operation for at least 12 months
- - have been very strong. Cable companies MediaOne Group and Comcast
Corp. also have shown strong performance. These cable operators have
gained an advantage in the battle for high-speed Internet access to
the home, because cable already allows two-way access at higher speed
than phone lines or via satellite.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. There were a few. Many food companies, including Sara Lee and
Campbell Soup, were disappointments. These companies were hurt by
limited pricing and minimal volume growth. Cereal companies Quaker
Oats, Kellogg Co. and General Mills did not perform well. They lost
pricing power - meaning the ability to raise prices - and saw their
product mix shift to low-end formats like bagged cereals instead of
boxed, with lower profit margins. I've sold all of General Mills from
the portfolio. Textiles and apparel companies had a bad year. With
currency valuation making Asian imports so much cheaper than U.S.
products, it's anticipated that many of these companies will have a
tougher time competing.
Q. THE FUND'S TOP 10 HOLDINGS ARE ALL LARGE-CAP STOCKS. DOES THIS
REFLECT A SHIFT IN THE FUND'S INVESTMENT PROFILE?
A. When I began managing this fund last summer, most of the top 10
holdings were small-cap companies. Over the past year, I've built a
more diversified portfolio, buying small-caps, mid-caps and
large-caps. In the current market environment, it's a simple fact that
large-capitalization companies have had an advantage, so changing the
mix to include more large-caps has really paid off. Wal-Mart,
Coca-Cola, Gillette, Home Depot, McDonald's, Avon Products, Clorox,
and Walt Disney all performed very well during the year. That reflects
an environment in which the largest companies have had the best
earnings growth, have been taking market share and have proved to be
the most stable business models.
Q. WHAT'S YOUR OUTLOOK AND STRATEGY FOR THE COMING MONTHS, DOUG?
A. I'm always cautious. Although the U.S. economy is strong and
unemployment is low, personal indebtedness is still high. The good
news is that interest rates continue to decline. When interest rates
go down, U.S. consumers tend to refinance their homes, their other
debt costs decline, they have more disposable income and they spend
more. That's good for consumer industries and for the fund. In the
coming months, I'll maintain the fund's diversified approach. The
challenge is in finding companies whose performance is strengthening
and whose earnings are predictable, and then buying their stock at
attractive prices.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1998, more than $27 million
MANAGER: Doug Chase, since August 1997;
joined Fidelity in 1993
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
WAL-MART STORES, INC. 5.6
PHILIP MORRIS COMPANIES, INC. 4.4
GILLETTE CO. 4.3
COCA-COLA CO. (THE) 3.5
PEPSICO, INC. 3.0
HOME DEPOT, INC. 2.6
MCDONALD'S CORP. 2.4
AVON PRODUCTS, INC. 2.0
CLOROX CO. 1.9
DISNEY (WALT) CO. 1.8
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 7.3
ROW: 1, COL: 2, VALUE: 6.8
ROW: 1, COL: 3, VALUE: 6.5
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 4.5
ROW: 1, COL: 6, VALUE: 69.5
COSMETICS 7.3%
SOFT DRINKS 6.8%
GENERAL MERCHANDISE STORES 6.5%
SOAPS & DETERGENTS 5.4%
CABLE TV OPERATORS 4.5%
ALL OTHERS 69.5%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.7%
ADVERTISING - 0.2%
Outdoor Systems, Inc. (a) 2,362 $ 60,231
ADVERTISING AGENCIES - 1.5%
Interpublic Group of Companies, Inc. 2,900 174,725
Omnicom Group, Inc. 4,500 236,250
410,975
TOTAL ADVERTISING 471,206
AIR TRANSPORTATION - 0.4%
TRANSPORTATION SERVICES - 0.4%
Viad Corp. 4,400 105,875
APPAREL STORES - 2.9%
FAMILY CLOTHING STORES - 0.1%
Abercrombie & Fitch Co. Class A (a) 595 27,630
GENERAL APPAREL STORES - 2.4%
Gap, Inc. 4,175 248,934
Limited, Inc. (The) 6,200 166,238
Saks Holdings, Inc. (a) 5,700 146,419
TJX Companies, Inc. 5,100 119,850
681,441
WOMEN'S CLOTHING STORES - 0.4%
AnnTaylor Stores Corp. (a) 2,300 48,444
Wet Seal, Inc. Class A (a) 1,700 50,363
98,807
TOTAL APPAREL STORES 807,878
AUTOS, TIRES, & ACCESSORIES - 0.2%
AUTO PARTS - RETAIL - 0.2%
Pep Boys-Manny, Moe & Jack 3,500 60,375
BEVERAGES - 8.6%
DISTILLED & BLENDED LIQUOR - 0.4%
Seagram Co. Ltd. 2,900 105,596
MALT BEVERAGE - 1.3%
Anheuser-Busch Companies, Inc. 6,200 320,463
Coors (Adolph) Co. Class B 1,100 41,491
361,954
SOFT DRINKS - 6.8%
Celestial Seasonings, Inc. (a) 1,100 49,363
Coca-Cola Bottling Co. Consolidated 600 36,000
Coca-Cola Co. (The) 12,100 976,319
PepsiCo, Inc. 21,400 830,588
Whitman Corp. 1,000 21,188
1,913,458
WINE, BRANDY & BRANDY SPIRITS - 0.1%
Canadaigua Wine Co. Class A (a) 800 37,700
TOTAL BEVERAGES 2,418,708
BROADCASTING - 8.1%
CABLE TV OPERATORS - 4.5%
Comcast Corp.:
Class A 1,800 81,450
Class A special 1,800 81,731
Cox Communications, Inc. Class A (a) 4,100 200,388
MediaOne Group, Inc. (a) 6,500 314,031
TCA Cable TV, Inc. 1,600 92,100
Time Warner, Inc. 5,325 479,583
1,249,283
SHARES VALUE (NOTE 1)
RADIO BROADCASTING - 2.0%
Chancellor Media Corp. (a) 2,800 $ 135,100
Clear Channel Communications, Inc. (a) 4,300 241,606
Jacor Communications, Inc. Class A (a) 2,400 140,700
Radiomutuel, Inc. Class A (a) 4,600 49,291
566,697
TELEVISION BROADCASTING - 1.6%
CBS Corp. 11,500 390,281
Scripps E.W. Co. Class A 1,200 63,150
453,431
TOTAL BROADCASTING 2,269,411
BUILDING MATERIALS - 0.2%
HARDWARE - WHOLESALE - 0.2%
Richelieu Hardware Ltd. (a) 4,400 50,931
COMPUTER SERVICES & SOFTWARE - 0.4%
COMPUTER & SOFTWARE STORES - 0.1%
CompUSA, Inc. (a) 2,000 37,875
COMPUTER SERVICES - 0.3%
Computer Learning Centers, Inc. (a) 2,500 69,688
TOTAL COMPUTER SERVICES & SOFTWARE 107,563
CONSUMER ELECTRONICS - 0.4%
RADIOS, TELEVISIONS, STEREOS - 0.4%
Gemstar International Group Ltd. (a) 3,200 119,200
DRUG STORES - 2.8%
CVS Corp. 8,430 345,630
Rite Aid Corp. 3,700 146,150
Walgreen Co. 6,850 295,834
787,614
DRUGS & PHARMACEUTICALS - 0.3%
PHARMACEUTICAL PREPARATIONS - 0.3%
Rexall Sundown, Inc. (a) 2,900 87,544
EDUCATIONAL SERVICES - 0.3%
COLLEGES, UNIVERSITIES & PROFESSIONAL SCHOOLS - 0.3%
Apollo Group, Inc. Class A (a) 2,250 80,719
ENTERTAINMENT - 5.4%
CRUISES - 0.7%
Carnival Cruise Lines, Inc. Class A 4,700 173,606
Royal Caribbean Cruises Ltd. 500 37,156
210,762
MOTION PICTURE DISTRIBUTION - 1.0%
Viacom, Inc. Class B (non-vtg.) (a) 4,000 274,000
MOTION PICTURE PRODUCTION - 3.5%
Disney (Walt) Co. 15,000 516,563
King World Productions, Inc. (a) 11,500 322,000
Tele-Communications, Inc.
(Liberty Media Group), Series A (a) 3,550 140,003
978,566
RECREATIONAL SERVICES - 0.2%
Premier Parks, Inc. (a) 900 57,488
TOTAL ENTERTAINMENT 1,520,816
FOODS - 6.3%
BAKERY PRODUCTS - 0.1%
Flowers Industries, Inc. 1,100 20,281
Interstate Bakeries Corp. 700 20,125
40,406
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FOODS - CONTINUED
CANDY - 0.2%
Hershey Foods Corp. 900 $ 56,813
CANNED SPECIALTIES - 0.6%
Campbell Soup Co. 2,800 151,200
COOKIES & CRACKERS - 0.1%
Nabisco Holdings Corp. Class A 500 17,813
DAIRY - 0.3%
Dean Foods Co. 1,100 60,294
Groupe Danone 120 36,202
96,496
FOOD - 2.5%
Dole Food, Inc. 1,875 88,359
Heinz (H.J.) Co. 5,275 290,784
Kellogg Co. 1,300 43,063
Nestle SA ADR (Reg.) 300 31,200
Sara Lee Corp. 5,100 255,638
709,044
GRAIN MILL PRODUCTS - 1.5%
Archer-Daniels-Midland Co. 1,900 32,538
Corn Products International, Inc. (a) 1,343 39,954
Quaker Oats Co. 1,200 63,450
Ralston Purina Co. 8,300 267,156
403,098
MEAT & FISH - 0.3%
Tyson Foods, Inc. 3,700 80,013
PACKAGED & FROZEN FOODS - 0.7%
Bestfoods 3,550 197,469
TOTAL FOODS 1,752,352
GENERAL MERCHANDISE STORES - 11.0%
DEPARTMENT STORES - 3.1%
Federated Department Stores, Inc. (a) 7,700 407,619
Kohls Corp. (a) 1,200 58,800
Nordstrom, Inc. 1,400 43,706
Penney (J.C.) Co., Inc. 2,825 165,792
Proffitts, Inc. (a) 2,450 77,175
Sears, Roebuck & Co. 1,300 65,975
Stein Mart, Inc. (a) 4,200 44,363
863,430
GENERAL MERCHANDISE STORES - 6.5%
Dayton Hudson Corp. 4,700 224,719
Wal-Mart Stores, Inc. 25,050 1,581,281
1,806,000
VARIETY STORES - 1.4%
Consolidated Stores Corp. (a) 3,040 102,220
Costco Companies, Inc. (a) 2,500 141,875
Dollar Tree Stores (a) 3,550 161,081
405,176
TOTAL GENERAL MERCHANDISE STORES 3,074,606
GROCERY STORES - 3.1%
FOOD STORES - 0.2%
Whole Foods Market, Inc. (a) 1,200 65,100
GROCERY - RETAIL - 2.9%
Albertson's, Inc. 1,100 52,869
Dominick's Supermarkets, Inc. (a) 900 40,556
Hannaford Brothers Co. 1,000 43,438
SHARES VALUE (NOTE 1)
Kroger Co. (The) (a) 3,300 $ 156,131
Meyer (Fred), Inc. (a) 4,000 176,250
Safeway, Inc. (a) 7,450 330,128
799,372
TOTAL GROCERY STORES 864,472
HOLDING COMPANIES - 0.2%
HOLDING COMPANY OFFICES, NEC - 0.2%
Triarc Companies, Inc. Class A (a) 2,600 59,313
HOME FURNISHINGS - 0.1%
FURNITURE - 0.1%
Dorel Industries, Inc. Class B
(sub-vtg.) (a)(c) 600 19,784
HOUSEHOLD PRODUCTS - 13.1%
COSMETICS - 7.3%
Alberto-Culver Co. Class A 1,400 31,850
Avon Products, Inc. 6,575 568,738
Estee Lauder Companies, Inc. 1,200 77,100
Gillette Co. 22,900 1,199,388
International Flavors & Fragrances, Inc. 1,800 75,600
Revlon, Inc. Class A (a) 1,700 84,363
2,037,039
FABRICATED RUBBER PRODUCTS - 0.2%
Rubbermaid, Inc. 1,600 53,300
MANUFACTURED PRODUCTS - 0.2%
First Brands Corp. 2,800 65,625
SOAPS & DETERGENTS - 5.4%
Church & Dwight Co., Inc. 1,600 49,400
Clorox Co. 5,200 533,000
Dial Corp. 1,700 40,588
Procter & Gamble Co. 5,730 454,819
Unilever NV ADR 6,300 437,850
1,515,657
TOTAL HOUSEHOLD PRODUCTS 3,671,621
LEASING & RENTAL - 0.1%
TRUCK RENT & LEASE, NO DRIVER - 0.1%
Hertz Corp. Class A 500 23,281
LEISURE DURABLES & TOYS - 1.2%
MOTORCYCLES - 0.2%
Harley-Davidson, Inc. 1,800 71,325
TOYS & GAMES - 0.9%
Galoob (Lewis) Toys, Inc. (a) 3,800 36,100
Mattel, Inc. 5,500 211,406
247,506
TRAVEL TRAILERS AND CAMPERS - 0.1%
Brunswick Corp. 900 17,494
TOTAL LEISURE DURABLES & TOYS 336,325
LODGING & GAMING - 1.4%
HOTELS, MOTELS, & TOURIST CENTERS - 1.2%
Hilton Hotels Corp. 1,400 35,263
Promus Hotel Corp. (a) 4,400 165,550
Sun International Hotels Ltd. Ord. (a) 2,800 122,500
323,313
RACING & GAMING - 0.2%
International Speedway Corp. Class A 1,900 60,800
TOTAL LODGING & GAMING 384,113
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PHOTOGRAPHIC EQUIPMENT - 0.9%
Eastman Kodak Co. 3,000 $ 252,375
Polaroid Corp. 300 9,900
262,275
PRINTING - 0.6%
COMMERCIAL PRINTING, NEC - 0.5%
Donnelley (R.R.) & Sons Co. 1,300 55,250
Valassis Communications, Inc. (a) 2,100 79,669
134,919
MANIFOLD BUSINESS FORMS - 0.1%
Reynolds & Reynolds Co. Class A 1,500 25,219
TOTAL PRINTING 160,138
PUBLISHING - 2.4%
BOOK PUBLISHING & PRINTING - 0.7%
Harcourt General, Inc. 1,350 76,191
McGraw-Hill Companies, Inc. 1,100 90,131
Reader's Digest Association, Inc.
(The) Class A (non-vtg.) 800 22,600
188,922
GENERAL PUBLISHING - 0.3%
Applied Graphics Technologies, Inc. (a) 1,100 56,788
Thomson Corp. 1,700 45,315
102,103
GREETING CARDS - 0.2%
American Greetings Corp. Class A 1,000 46,188
NEWSPAPERS - 0.9%
Harte Hanks Communications, Inc. 4,800 115,800
Times Mirror Co. Class A 900 54,056
Tribune Co. 1,200 80,700
250,556
PERIODICALS - 0.3%
Playboy Enterprises, Inc. Class B (a) 4,100 73,288
TOTAL PUBLISHING 661,057
REAL ESTATE - 0.1%
CEMETERY SUBDIVIDERS & DEVELOPERS - 0.1%
Stewart Enterprises, Inc. Class A 1,700 38,622
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Starwood Hotels & Resorts Trust 1,200 49,275
RESTAURANTS - 3.1%
Cracker Barrel Old Country Store, Inc. 800 24,200
Foodmaker, Inc. (a) 1,700 26,775
Logan's Roadhouse, Inc. (a) 25 591
Marriott International, Inc. Class A 1,300 42,250
McDonald's Corp. 10,000 668,125
Outback Steakhouse, Inc. (a) 1,500 54,141
Papa John's International, Inc. (a) 800 27,700
Starbucks Corp. (a) 900 37,688
881,470
RETAIL & WHOLESALE, MISCELLANEOUS - 6.9%
BOOK STORES - RETAIL - 0.2%
Barnes & Noble, Inc. (a) 1,500 57,000
BUILDING MATERIALS - RETAIL - 2.6%
Home Depot, Inc. 17,200 720,250
SHARES VALUE (NOTE 1)
LUMBER & BUILDING MATERIALS - RETAIL - 0.7%
Lowe's Companies, Inc. 5,000 $ 192,500
MAIL ORDER - 0.2%
Viking Office Products, Inc. (a) 1,200 38,100
Williams-Sonoma, Inc. (a) 800 26,450
64,550
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.2%
Action Performance Companies, Inc. (a) 2,200 66,000
MUSIC, TV, & ELECTRONICS STORES - 1.8%
Best Buy Co., Inc. (a) 5,500 257,125
Circuit City Stores, Inc. -
Circuit City Group 1,500 77,625
Tandy Corp. 2,800 159,075
493,825
RETAIL, GENERAL - 1.1%
Bed Bath & Beyond, Inc. (a) 700 30,188
Office Depot, Inc. (a) 1,800 58,500
Pier 1 Imports, Inc. 3,300 51,342
Staples, Inc. (a) 5,000 164,375
304,405
STATIONARY & OFFICE SUPPLIES - WHOLESALE - 0.1%
Boise Cascade Office Products Corp. (a) 1,400 20,300
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,918,830
SERVICES - 2.1%
BUSINESS SERVICES - 0.4%
Robert Half International, Inc. (a) 1,100 58,575
Snyder Communications, Inc. (a) 1,200 53,925
112,500
CREDIT REPORTING AGENCIES - 0.1%
Dunn & Bradstreet Corp. 1,500 41,156
GENERAL SERVICES - 0.9%
Service Corp. International 6,600 249,975
MANAGEMENT SERVICES - 0.3%
ServiceMaster Co. 2,500 85,000
PERSONAL SERVICES - 0.2%
Steiner Leisure Ltd. (a) 1,775 55,025
PERSONNEL SUPPLY SERVICES - 0.2%
AccuStaff, Inc. (a) 2,200 51,975
TOTAL SERVICES 595,631
TELEPHONE SERVICES - 0.0%
U.S. WEST, Inc. 191 10,195
TEXTILES & APPAREL - 3.1%
APPAREL - 1.6%
Fruit of the Loom, Inc. Class A (a) 1,100 34,306
Kellwood Co. 2,100 66,675
Liz Claiborne, Inc. 3,800 146,775
VF Corp. 1,200 56,475
Warnaco Group, Inc. Class A 3,800 139,413
443,644
CARPETS & RUGS - 0.4%
Mohawk Industries, Inc. (a) 500 15,563
Shaw Industries, Inc. 6,000 111,000
126,563
FOOTWEAR - 0.3%
NIKE, Inc. Class B 1,600 71,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
MEN'S & BOYS' CLOTHING - 0.5%
Nautica Enterprises, Inc. (a) 2,700 $ 69,609
Pacific Sunwear of California, Inc. (a) 1,950 57,525
Tommy Hilfiger (a) 400 22,425
149,559
TEXTILE MILL PRODUCTS - 0.3%
Unifi, Inc. 1,000 27,063
Westpoint Stevens, Inc. Class A (a) 1,200 43,050
70,113
TOTAL TEXTILES & APPAREL 861,079
TOBACCO - 4.4%
TOBACCO MANUFACTURERS - 4.4%
Philip Morris Companies, Inc. 28,400 1,244,275
TOTAL COMMON STOCKS
(Cost $23,197,387) 25,756,554
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b)
(Cost $2,246,658) 2,246,658 2,246,658
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $25,444,045) $ 28,003,212
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $19,784
or 0.1% of net assets.
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $25,544,896. Net unrealized appreciation
aggregated $2,458,316, of which $3,213,154 related to appreciated
investment securities and $754,838 related to depreciated investment
securities.
The fund hereby designates approximately $37,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 4%, 5%, 6%, 13%, and 5% of Class A's, Class T's, Class B's,
Class C's and Institutional Class' dividend distributions during the
fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S>
<C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 28,003,212
(COST $25,444,045) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 553,569
RECEIVABLE FOR FUND SHARES SOLD 292,253
DIVIDENDS RECEIVABLE 12,409
INTEREST RECEIVABLE 10,167
PREPAID EXPENSES 3,240
TOTAL ASSETS 28,874,850
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 945,070
PAYABLE FOR FUND SHARES REDEEMED 24,808
ACCRUED MANAGEMENT FEE 23,325
DISTRIBUTION FEES PAYABLE 12,900
OTHER PAYABLES AND 36,220
ACCRUED EXPENSES
TOTAL LIABILITIES 1,042,323
NET ASSETS $ 27,832,527
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 23,569,145
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 1,704,215
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 2,559,167
NET ASSETS $ 27,832,527
CALCULATION OF MAXIMUM $15.08
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($2,219,542 (DIVIDED BY)
147,218 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.00
(100/94.25 OF $15.08)
CLASS T: $15.00
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($13,989,195 (DIVIDED BY)
932,663 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.54
(100/96.50 OF $15.00)
CLASS B: $14.91
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($5,418,551 (DIVIDED BY)
363,324 SHARES) A
CLASS C: $14.95
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($1,460,710 (DIVIDED BY)
97,700 SHARES) A
INSTITUTIONAL CLASS: $15.12
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($4,744,529 (DIVIDED BY) 313,868 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 147,877
DIVIDENDS
INTEREST 71,519
TOTAL INCOME 219,396
EXPENSES
MANAGEMENT FEE $ 101,756
TRANSFER AGENT FEES 47,366
DISTRIBUTION FEES 82,055
ACCOUNTING FEES AND EXPENSES 60,446
NON-INTERESTED TRUSTEES' COMPENSATION 55
CUSTODIAN FEES AND EXPENSES 7,015
REGISTRATION FEES 62,142
AUDIT 33,418
LEGAL 357
REPORTS TO SHAREHOLDERS 16,349
MISCELLANEOUS 376
TOTAL EXPENSES BEFORE REDUCTIONS 411,335
EXPENSE REDUCTIONS (72,814) 338,521
NET INVESTMENT INCOME (LOSS) (119,125)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,436,461
FOREIGN CURRENCY TRANSACTIONS (47) 2,436,414
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENT SECURITIES 1,539,184
NET GAIN (LOSS) 3,975,598
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,856,473
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (119,125) $ (36,592)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 2,436,414 919,965
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,539,184 1,019,983
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,856,473 1,903,356
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN (1,433,351) (29,021)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 15,183,117 8,310,212
REDEMPTION FEES 39,768 1,973
TOTAL INCREASE (DECREASE) IN NET ASSETS 17,646,007 10,186,520
NET ASSETS
BEGINNING OF PERIOD 10,186,520 -
END OF PERIOD $ 27,832,527 $ 10,186,520
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.48 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.06) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.31 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.25 3.55
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.68) I (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.08 $ 13.48
TOTAL RETURN B, C 27.48% 35.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,220 $ 944
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% F 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% G 1.73% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.47)% (.50)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.45 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.10) (.09)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.28 3.60
TOTAL FROM INVESTMENT OPERATIONS 3.18 3.51
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.66) (.06)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.00 $ 13.45
TOTAL RETURN B, C 26.93% 35.25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 13,989 $ 7,314
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% F 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.98% G 1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.71)% (.83)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.42 $ 11.46
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.17) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.26 2.04
TOTAL FROM INVESTMENT OPERATIONS 3.09 1.96
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.64) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .04 -
NET ASSET VALUE, END OF PERIOD $ 14.91 $ 13.42
TOTAL RETURN B, C 26.30% 17.10%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,419 $ 596
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% F 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% G 2.46% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.23)% (1.60)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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 - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.66
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.13)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.87
TOTAL FROM INVESTMENT OPERATIONS 2.74
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.49)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .04
NET ASSET VALUE, END OF PERIOD $ 14.95
TOTAL RETURN B, C 22.67%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,461
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.27)% A
PORTFOLIO TURNOVER 144%
AVERAGE COMMISSION RATE H $ .0242
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE
OF CLASS C SHARES)
TO JULY 31, 1998. 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>
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FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.51 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.31 3.59
TOTAL FROM INVESTMENT OPERATIONS 3.28 3.58
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.70) I (.07) I
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 15.12 $ 13.51
TOTAL RETURN B, C 27.70% 35.98%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,745 $ 1,333
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% F 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.48% G 1.48% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.20)% (.13)% A
PORTFOLIO TURNOVER 144% 203% A
AVERAGE COMMISSION RATE H $ .0242 $ .0307
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 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 net operating losses and losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as part of the dividends paid
deduction for income tax purposes.
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 which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $35,038,137 and $22,999,371, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 3,335 $ 374
CLASS T 53,154 19
CLASS B 21,608 16,452
CLASS C 3,958 3,958
$ 82,055 $ 20,803
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $1,254
CLASS T $2,350
CLASS B $647
CLASS C $690
INSTITUTIONAL CLASS $165
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
Class C, 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. In addition, purchases of
Class A and Class T shares that were subject to a finder's fee bear a
contingent deferred sales charge on assets that do not remain in the
fund for at least one year. The Class A and Class T contingent
deferred sales charge is based on 0.25% 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.
A portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 17,058 $ 5,788
CLASS T 42,495 12,506
CLASS B 3,503 3,503 *
CLASS C 38 38 *
$ 63,094 $ 21,835
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 4,105 .31
CLASS T 29,346 .28
CLASS B 7,639 .35
CLASS C 1,414 .35 *
INSTITUTIONAL CLASS 4,862 .18
$ 47,366
* ANNUALIZED.
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 $3,349 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 9,569
CLASS T 2.00% 22,315
CLASS B 2.50% 20,863
CLASS C 2.50% 9,475
INSTITUTIONAL CLASS 1.50% 7,520
$ 69,742
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 $2,905 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 $167 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 6% of
the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 13% 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,
1998 A 1997 B, C
FROM NET REALIZED GAIN
CLASS A $ 122,598 $ 4,926
CLASS T 1,001,052 16,753
CLASS B 102,510 -
CLASS C 1,954 -
INSTITUTIONAL CLASS 205,237 7,342
TOTAL $ 1,433,351 $ 29,021
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 92,013 88,027 $ 1,311,243 $ 950,592
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 9,124 457 113,019 4,913
SHARES REDEEMED (23,935) (18,468) (334,712) (227,830)
NET INCREASE (DECREASE) 77,202 70,016 $ 1,089,550 $ 727,675
CLASS T 784,694 629,432 $ 11,054,004 $ 7,025,043
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 73,835 1,492 913,447 16,036
SHARES REDEEMED (469,801) (86,989) (6,762,615) (987,625)
NET INCREASE (DECREASE) 388,728 543,935 $ 5,204,836 $ 6,053,454
CLASS B 359,596 45,607 $ 5,098,496 $ 545,925
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 7,684 - 94,935 -
SHARES REDEEMED (48,361) (1,202) (692,526) (13,641)
NET INCREASE (DECREASE) 318,919 44,405 $ 4,500,905 $ 532,284
CLASS C 101,815 - $ 1,469,653 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 43 - 542 -
SHARES REDEEMED (4,158) - (61,277) -
NET INCREASE (DECREASE) 97,700 - $ 1,408,918 $ -
INSTITUTIONAL CLASS 246,078 121,713 $ 3,450,421 $ 1,256,098
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 15,764 682 196,010 7,342
SHARES REDEEMED (46,652) (23,717) (667,523) (266,641)
NET INCREASE (DECREASE) 215,190 98,678 $ 2,978,908 $ $996,799
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,746
CLASS T 14,933
CLASS B 19,718
CLASS C 9,530
INSTITUTIONAL CLASS 9,215
$ 62,142
ADVISOR CYCLICAL INDUSTRIES FUND - INSTITUTIONAL CLASS
PERFORMANCE
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
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - INST CL 6.32% 48.47%
S&P 500 19.29% 76.95%
GS CYCLICAL INDUSTRIES 2.49% 43.29%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Cyclical Industries Index - a
market capitalization-weighted index of stocks designed to measure the
performance of companies in the cyclical industries sector. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV CYCLICAL - INST CL 6.32% 23.03%
S&P 500 19.29% 34.89%
GS CYCLICAL INDUSTRIES 2.49% 20.76%
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.
(CHECKMARK)
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.
$10,000 OVER LIFE OF FUND
FA CYCLICAL IND -CL I S&P 500
GS CYCLICAL INDUSTRIES
00204 SP001
GS003
1996/09/03 10000.00 10000.00 10000.00
1996/09/30 10390.00 10516.69 10449.51
1996/10/31 10690.00 10806.74 10623.81
1996/11/30 11330.00 11623.62 11299.86
1996/12/31 11260.09 11393.36 11101.84
1997/01/31 11562.78 12105.21 11459.45
1997/02/28 11603.14 12200.12 11487.29
1997/03/31 11239.91 11698.81 11120.08
1997/04/30 11441.70 12397.23 11654.84
1997/05/31 12390.13 13151.98 12461.54
1997/06/30 13045.96 13741.19 12959.26
1997/07/31 13964.13 14834.57 13980.32
1997/08/31 13661.43 14003.54 13471.60
1997/09/30 13989.10 14770.51 13938.94
1997/10/31 13094.39 14277.18 13095.58
1997/11/30 13315.44 14938.07 13453.87
1997/12/31 13424.95 15194.56 13598.24
1998/01/31 13717.97 15362.61 13598.41
1998/02/28 14803.26 16470.56 14714.19
1998/03/31 15530.40 17314.02 15518.24
1998/04/30 15747.45 17488.19 15588.62
1998/05/31 15519.54 17187.57 15359.18
1998/06/30 15584.66 17885.73 15161.59
1998/07/31 14846.67 17695.25 14328.86
IMATRL PRASUN SHR__CHT 19980731 19980825 161130 R00000000000026
$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, 1998, the value of the investment would have grown to $14,847
- - a 48.47% increase on the initial investment. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Cyclical Industries Index, it would
have grown to $14,329 - a 43.29% increase.
ADVISOR CYCLICAL INDUSTRIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Albert Ruback)
An interview with
Albert Ruback, Portfolio Manager of Fidelity Advisor Cyclical
Industries Fund
Q. HOW DID THE FUND PERFORM, ALBERT?
A. During the 12-month period ending July 31, 1998, the fund's
Institutional Class shares returned 6.32%. During the same period, the
Standard & Poor's 500 Index returned 19.29%. Beginning this period,
the fund also compares itself to the Goldman Sachs Cyclical Industries
Index - an index of stocks designed to measure the performance of
companies in the cyclical industries sector - which returned 2.49%
over the same 12-month period.
Q. WHY DID THE FUND LAG THE S&P 500 INDEX?
A. There were a couple of key factors that affected the fund's
performance. First, given its focus on cyclical industries, the fund
could not invest in the financial, pharmaceutical, utility and
technology stocks that experienced strong rallies during the period.
Second, many of the cyclical industries in which the fund invests,
especially those with international exposure such as electrical
components, industrial equipment, autos and basic materials, turned in
mixed results due to weakened product demand, an inability to raise
prices and declining commodity prices caused by the ongoing Asian
crisis.
Q. FIVE OF THE FUND'S TOP HOLDINGS FROM THE PREVIOUS REPORT ARE NO
LONGER TOP HOLDINGS. WHY DID YOU MAKE THESE CHANGES?
A. I wanted to further reduce the fund's exposure to Asia. I reduced
the fund's holdings in Fluor because Asian projects are an important
component of its future product pipeline and are likely to be delayed
given the current economic environment. In addition, I reduced the
fund's holdings in Aluminum Co. of America and Minnesota Mining &
Manufacturing Co. due to their exposure to Asia and declining product
prices. I reduced the fund's investment in Lockheed Martin due to
concerns about the completion of its merger with Northrop Grumman,
which has since been cancelled. I added DEKALB Genetics to the top 10
holdings, and it has done very well. The company is up for sale, and I
felt there would be a competitive takeover bid. American Standard, the
fund's fifth-largest holding, is an example of a conglomerate with
little exposure to Asia. I increased the fund's holdings because I
believed the company was significantly undervalued, and its air
conditioning business unit stood to benefit from the warm summer we've
experienced. Waste Management was taken over by U.S. Waste Management,
which helped the stock's performance, and the company's management
seemed committed to improving operations.
Q. WHAT IS YOUR OUTLOOK ON THE ASIAN SITUATION, AND WHAT STRATEGIES
DID YOU USE TO MINIMIZE RISKS TO THE FUND?
A. I don't see the Asian situation changing anytime soon. As a result,
I have focused on companies that cater more to the domestic economy or
that can benefit from declining commodity prices. I have avoided
companies with a lot of exposure in Asia - those that compete with
Asia or that rely on Asia for demand growth. I'll continue to focus on
conglomerates that have done well for the fund. General Electric, for
example, has little exposure to Asia, and its focus on penetrating
markets by adding services has been very successful. Tyco
International, another conglomerate, has done well because of its
aggressive acquisition program.
Q. WHAT STOCKS DETRACTED FROM FUND PERFORMANCE?
A. Paper stocks have been a big disappointment for the fund. Fort
James and Stone Container are examples of companies that I purchased
after the announcement of the Stone Container-Jefferson Smurfit Corp.
merger. However, expected price increases for paper have not occurred,
and it really hurt the sector's performance. Railroads also did not
perform well for the fund. Even though the fundamental business
outlook for companies like Norfolk Southern and CSX are solid, their
stock prices were hurt because of acquisition costs and increased
spending to keep operations running smoothly pending their merger with
Conrail.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ALBERT?
A. I continue to be cautious about the U.S. economy. I believe we are
in a slow growth period, and I'm concerned that Asia will not hit
bottom for a while. This environment can cause continued pricing
pressures - the inability to increase prices - and reduced export
growth for U.S. corporations. Gross domestic product growth slowed
from 5.4% to 1.4% in the second quarter, and I think corporate
earnings will continue to come under some pressure in the second half
of this year and possibly into next year. Given these concerns, I will
focus on companies that have a diversity of earnings sources and can
grow during difficult times.
The views expressed in this report refect 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.
(checkmark)
FUND FACTS
START DATE: September 3, 1996
SIZE: as of July 31, 1998, more than $5 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 8.1
TYCO INTERNATIONAL LTD. 5.9
FORD MOTOR CO. 5.2
DEKALB GENETICS CORP. CLASS B 4.6
AMERICAN STANDARD COMPANIES, INC. 2.5
WASTE MANAGEMENT, INC. 2.5
XEROX CORP. 2.3
U.S. INDUSTRIES, INC. 2.3
HONEYWELL, INC. 2.1
STONE CONTAINER CORP. 2.1
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 11.5
ROW: 1, COL: 2, VALUE: 8.4
ROW: 1, COL: 3, VALUE: 5.5
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 5.4
ROW: 1, COL: 6, VALUE: 63.8
ELECTRICAL MACHINERY 11.5%
GENERAL INDUSTRIAL MACHINERY 8.4%
MOTOR VEHICLES & CAR BODIES 5.5%
AIR TRANSPORT, MAJOR NATIONAL 5.4%
PAPER 5.4%
ALL OTHERS 63.8%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.9%
AIRCRAFT - 1.7%
Gulfstream Aerospace Corp. (a) 700 $ 32,025
Lockheed Martin Corp. 657 65,495
97,520
AIRCRAFT & PARTS - 1.4%
Sundstrand Corp. 200 10,463
Textron, Inc. 1,000 73,875
84,338
AIRCRAFT ENGINES & PARTS - 1.8%
AlliedSignal, Inc. 2,500 108,750
MISSILES & SPACE VEHICLES - 0.7%
Alliant Techsystems, Inc. (a) 400 26,025
GenCorp, Inc. 700 16,144
42,169
ORDNANCE - 0.3%
Harsco Corp. 400 17,275
TOTAL AEROSPACE & DEFENSE 350,052
AGRICULTURE - 4.6%
CROPS - 4.6%
DEKALB Genetics Corp. Class B 3,000 276,563
AIR TRANSPORTATION - 5.4%
AIR TRANSPORT, MAJOR NATIONAL - 5.4%
AMR Corp. (a) 800 57,150
Alaska Air Group, Inc. (a) 1,500 62,813
America West Holdings Corp. Class B (a) 900 21,656
Continental Airlines, Inc. Class B (a) 1,000 53,500
Southwest Airlines Co. 1,100 36,231
US Airways Group, Inc. (a) 1,200 90,000
321,350
AUTOS, TIRES, & ACCESSORIES - 7.5%
AUTO & TRUCK PARTS - 1.4%
Borg-Warner Automotive, Inc. 200 9,413
Breed Technologies, Inc. 800 11,650
Federal-Mogul Corp. 250 15,031
SPX Corp. (a) 300 17,044
TRW, Inc. 500 27,094
80,232
MOTOR VEHICLES & CAR BODIES - 5.5%
Ford Motor Co. 5,500 313,156
Lear Corp. (a) 300 15,919
329,075
TIRES & INNER TUBES - 0.6%
Goodyear Tire & Rubber Co. 600 36,563
TOTAL AUTOS, TIRES, & ACCESSORIES 445,870
BROADCASTING - 0.8%
COMMUNICATIONS SERVICES, NEC - 0.8%
PanAmSat Corp. (a) 1,000 49,313
BUILDING MATERIALS - 7.5%
AIR-CONDITIONING EQUIPMENT - 2.5%
American Standard Companies, Inc. (a) 3,200 152,400
CEMENT - 0.3%
Southdown, Inc. 300 18,769
CONCRETE, GYPSUM, PLASTER - 0.2%
USG Corp. 200 10,275
SHARES VALUE (NOTE 1)
FLOOR COVERINGS - 0.5%
Armstrong World Industries, Inc. 500 $ 30,813
GASKETS, HOSES, BELTS - 1.7%
Coltec Industries, Inc. (a) 6,000 102,375
LUMBER, PLYWOOD, MILLWORK - WHOLESALE - 0.5%
Crane Co. 600 29,700
PAVING, ROOFING & SIDING - 1.0%
Carlisle Companies, Inc. 400 17,575
Owens Corning 1,000 41,250
58,825
PLUMBING SUPPLIES - WHOLESALE - 0.8%
Masco Corp. 1,600 45,700
TOTAL BUILDING MATERIALS 448,857
CHEMICALS & PLASTICS - 5.4%
ADHESIVES & SEALANTS - 0.6%
Ferro Corp. 800 18,400
Nalco Chemical Co. 500 17,156
35,556
AGRICULTURAL CHEMICALS - 0.7%
IMC Global, Inc. 700 17,894
Potash Corp. of Saskatchewan 300 21,828
39,722
CHEMICALS - 2.4%
Cytec Industries, Inc. (a) 1,000 32,188
E. I. du Pont de Nemours and Co. 1,200 74,400
Lyondell Petrochemical Co. 500 12,250
Witco Corp. 1,100 26,538
145,376
PLASTICS & SYNTHETIC RESINS - 0.2%
Spartech Corp. 700 13,300
PLASTICS, NEC - 1.0%
Hanna (M.A.) Co. 1,000 14,813
Ivex Packaging Corp. 2,200 47,300
62,113
PLASTICS, RESINS & ELASTOMERS - 0.2%
Solutia, Inc. 360 10,688
UNSUPPORTED PLASTICS FILM & SHEET - 0.3%
Sealed Air Corp. (a) 360 14,400
TOTAL CHEMICALS & PLASTICS 321,155
COMPUTERS & OFFICE EQUIPMENT - 3.0%
OFFICE AUTOMATION - 3.0%
Pitney Bowes, Inc. 800 40,400
Xerox Corp. 1,300 137,231
177,631
CONSTRUCTION - 1.5%
GENERAL BUILDING - 0.2%
Toll Brothers, Inc. (a) 400 10,475
MOBILE HOMES - 0.2%
Oakwood Homes Corp. 700 14,175
OPERATIVE BUILDERS - 1.1%
Centex Corp. 400 16,400
Kaufman & Broad Home Corp. 500 13,969
Lennar Corp. 500 13,813
U.S. Home Corp. (a) 600 22,463
66,645
TOTAL CONSTRUCTION 91,295
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 1.9%
APPLIANCES - 1.6%
Black & Decker Corp. 600 $ 34,125
Whirlpool Corp. 1,000 60,500
94,625
RADIOS, TELEVISIONS, STEREOS - 0.3%
General Motors Corp. Class H 400 17,050
TOTAL CONSUMER ELECTRONICS 111,675
DEFENSE ELECTRONICS - 2.5%
Litton Industries, Inc. (a) 900 51,581
Northrop Grumman Corp. 500 40,531
Raytheon Co.:
Class A 281 15,227
Class B 800 44,250
151,589
ELECTRICAL EQUIPMENT - 11.8%
ELECTRICAL MACHINERY - 11.5%
Emerson Electric Co. 1,400 83,213
General Electric Co. 5,400 482,274
Honeywell, Inc. 1,500 125,719
691,206
ELECTRICAL, INDUSTRIAL APPARATUS - 0.3%
Hubbell, Inc. Class B 400 16,800
TOTAL ELECTRICAL EQUIPMENT 708,006
ELECTRONIC INSTRUMENTS - 0.5%
MEASURING INSTRUMENTS - 0.5%
Thermo Electron Corp. (a) 1,300 29,900
ENGINEERING - 1.4%
ARCHITECTS & ENGINEERS - 1.4%
EG & G, Inc. 1,400 36,138
Fluor Corp. 1,200 50,475
86,613
HOLDING COMPANIES - 2.3%
HOLDING COMPANY OFFICES, NEC - 2.3%
U.S. Industries, Inc. 7,000 134,750
HOME FURNISHINGS - 0.4%
FURNITURE - 0.4%
Leggett & Platt, Inc. 1,000 26,813
INDUSTRIAL MACHINERY & EQUIPMENT - 9.4%
CONSTRUCTION EQUIPMENT - 1.0%
Caterpillar, Inc. 1,200 58,200
GENERAL INDUSTRIAL MACHINERY - 8.4%
Cooper Industries, Inc. 1,000 52,438
Illinois Tool Works, Inc. 1,000 56,063
Ingersoll-Rand Co. 900 39,769
Tyco International Ltd. 5,700 353,044
501,314
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 559,514
IRON & STEEL - 0.7%
IRON & STEEL BLAST FURNACES, MILLS - 0.4%
Inland Steel Industries, Inc. 800 22,550
IRON & STEEL FOUNDRIES - 0.3%
Dofasco, Inc. 1,300 18,659
TOTAL IRON & STEEL 41,209
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.1%
EQUIPMENT RENTAL & LEASING, NEC - 0.1%
Ryder Systems, Inc. 250 $ 7,250
METALS & MINING - 1.6%
ALUMINUM, EXTRUDED PRODUCTS - 0.6%
Alumax, Inc. 696 33,452
METAL MINING - 0.3%
Phelps Dodge Corp. 300 16,669
METAL ORES - 0.1%
Pechiney SA Class A 200 8,387
NON-METALLIC MINERAL MINING - 0.2%
Martin Marietta Materials, Inc. 274 13,563
PRIMARY PRODUCTION OF ALUMINUM - 0.4%
Reynolds Metals Co. 400 21,000
TOTAL METALS & MINING 93,071
PACKAGING & CONTAINERS - 1.2%
GLASS CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 1,000 44,125
METAL CANS & CONTAINERS - 0.5%
Silgan Holdings, Inc. (a) 1,100 29,219
TOTAL PACKAGING & CONTAINERS 73,344
PAPER & FOREST PRODUCTS - 6.7%
PAPER - 5.4%
Champion International Corp. 800 33,950
Georgia-Pacific Corp. 800 41,100
International Paper Co. 1,200 53,550
Pentair, Inc. 400 15,900
Stone Container Corp. (a) 9,400 122,788
Temple-Inland, Inc. 400 20,825
Union Camp Corp. 400 16,975
Willamette Industries, Inc. 500 14,156
319,244
PAPER MILLS - 1.3%
Bowater, Inc. 1,000 46,000
Fort James Corp. 1,000 33,750
79,750
TOTAL PAPER & FOREST PRODUCTS 398,994
POLLUTION CONTROL - 3.4%
POLLUTION EQUIPMENT & DESIGN - 0.3%
Ogden Corp. 800 20,750
REFUSE SYSTEMS - 3.1%
Eastern Environmental Services, Inc. (a) 1,000 33,813
Waste Management, Inc. 2,732 150,602
184,415
TOTAL POLLUTION CONTROL 205,165
RAILROADS - 2.7%
RAILROAD EQUIPMENT - 0.4%
Bombardier, Inc. Class B 1,600 22,013
RAILROADS - 2.3%
CSX Corp. 1,100 44,481
Canadian National Railway Co. 1,000 52,750
Norfolk Southern Corp. 1,400 41,825
139,056
TOTAL RAILROADS 161,069
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.9%
BUILDING MAINTENANCE - 0.9%
Ecolab, Inc. 1,700 $ 53,338
SHIP BUILDING & REPAIR - 1.4%
SHIP BUILDERS - 1.4%
Avondale Industries, Inc. (a) 1,000 27,875
General Dynamics Corp. 800 38,050
Newport News Shipbuilding, Inc. 800 20,150
86,075
TEXTILES & APPAREL - 0.3%
COTTON MILLS - 0.1%
Galey & Lord, Inc. (a) 400 4,950
TEXTILE MILL PRODUCTS - 0.2%
Unifi, Inc. 400 10,825
TOTAL TEXTILES & APPAREL 15,775
TRUCKING & FREIGHT - 1.2%
AIR COURIER SERVICES - 0.2%
CNF Transportation, Inc. 300 12,975
FREIGHT FORWARDING - 0.3%
Air Express International Corp. 300 6,619
Expeditors International of
Washington, Inc. 300 11,963
18,582
TRUCKING, LOCAL & LONG DISTANCE - 0.3%
Werner Enterprises, Inc. 1,000 16,125
TRUCKING, LONG DISTANCE - 0.4%
USFreightways Corp. 400 10,000
Yellow Corp. (a) 800 12,800
22,800
TOTAL TRUCKING & FREIGHT 70,482
TOTAL COMMON STOCKS
(Cost $5,105,322) 5,496,718
CONVERTIBLE PREFERRED STOCKS - 0.1%
CHEMICALS & PLASTICS - 0.1%
UNSUPPORTED PLASTICS FILM & SHEET - 0.1%
Sealed Air Corp., Series A, $2.00
(Cost $6,266) 142 6,337
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund (b)
(Cost $469,633) 469,633 469,633
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $5,581,221) $ 5,972,688
LEGEND
(a)Non-income producing
(b)At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $5,583,692. Net unrealized appreciation
aggregated $388,996, of which $820,135 related to appreciated
investment securities and $431,139 related to depreciated investment
securities.
The fund hereby designates approximately $67,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 20%, 23%, 24%, 59%, and 14% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 5,972,688
(COST $5,581,221) -
SEE ACCOMPANYING SCHEDULE
CASH 4,390
RECEIVABLE FOR FUND SHARES SOLD 2,306
DIVIDENDS RECEIVABLE 3,967
INTEREST RECEIVABLE 1,470
PREPAID EXPENSES 3,240
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 2,401
TOTAL ASSETS 5,990,462
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 7,900
DISTRIBUTION FEES PAYABLE 2,351
OTHER PAYABLES AND ACCRUED EXPENSES 27,453
TOTAL LIABILITIES 37,704
NET ASSETS $ 5,952,758
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 5,210,000
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 351,292
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 391,466
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 5,952,758
CALCULATION OF MAXIMUM $13.56
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($470,904 (DIVIDED BY)
34,726 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.39
(100/94.25 OF $13.56)
CLASS T: $13.51
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($2,972,887 (DIVIDED BY)
220,068 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $14.00
(100/96.50 OF $13.51)
CLASS B: $13.40
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($984,725 (DIVIDED BY) 73,487
SHARES) A
CLASS C: $13.45
NET ASSET VALUE AND OFFERING
PRICE PER SHARE ($164,648 (DIVIDED BY)
12,242 SHARES) A
INSTITUTIONAL CLASS: $13.68
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($1,359,594 (DIVIDED BY) 99,364 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 61,657
DIVIDENDS
INTEREST 17,852
TOTAL INCOME 79,509
EXPENSES
MANAGEMENT FEE $ 30,832
TRANSFER AGENT FEES 16,384
DISTRIBUTION FEES 20,389
ACCOUNTING FEES AND EXPENSES 60,218
NON-INTERESTED TRUSTEES' COMPENSATION 19
CUSTODIAN FEES AND EXPENSES 5,373
REGISTRATION FEES 55,199
AUDIT 32,596
LEGAL 139
REPORTS TO SHAREHOLDERS 13,800
MISCELLANEOUS 39
TOTAL EXPENSES BEFORE REDUCTIONS 234,988
EXPENSE REDUCTIONS (136,453) 98,535
NET INVESTMENT INCOME (LOSS) (19,026)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 519,921
FOREIGN CURRENCY TRANSACTIONS (113) 519,808
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (358,437)
ASSETS AND LIABILITIES IN 6 (358,431)
FOREIGN CURRENCIES
NET GAIN (LOSS) 161,377
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 142,351
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (19,026) $ 4,855
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 519,808 473,715
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (358,431) 749,897
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 142,351 1,228,467
DISTRIBUTIONS TO SHAREHOLDERS - (10,690)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (348,447) (45,982)
TOTAL DISTRIBUTIONS (348,447) (56,672)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 1,857,245 3,118,751
REDEMPTION FEES 8,921 2,142
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,660,070 4,292,688
NET ASSETS
BEGINNING OF PERIOD 4,292,688 -
END OF PERIOD $ 5,952,758 $ 4,292,688
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.80 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) .76 3.89
TOTAL FROM INVESTMENT OPERATIONS .73 3.88
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01)
FROM NET REALIZED GAIN (.99) (.08)
TOTAL DISTRIBUTIONS (.99) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 .01
NET ASSET VALUE, END OF PERIOD $ 13.56 $ 13.80
TOTAL RETURN B, C 6.05% 39.11%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 471 $ 365
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% F 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.75% 1.73% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.22)% (.09)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.06) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) .77 3.89
TOTAL FROM INVESTMENT OPERATIONS .71 3.85
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01)
FROM NET REALIZED GAIN (.99) (.08)
TOTAL DISTRIBUTIONS (.99) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 .01
NET ASSET VALUE, END OF PERIOD $ 13.51 $ 13.77
TOTAL RETURN B, C 5.91% 38.81%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,973 $ 1,920
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% F 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.00% 1.97% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.47)% (.37)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.75 $ 11.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.14) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) .76 2.25
TOTAL FROM INVESTMENT OPERATIONS .62 2.19
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.99) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 -
NET ASSET VALUE, END OF PERIOD $ 13.40 $ 13.75
TOTAL RETURN B, C 5.23% 18.94%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 985 $ 252
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% F 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.50% 2.45% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.03)% (1.11)% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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 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. 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 C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.54
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.39
TOTAL FROM INVESTMENT OPERATIONS 1.28
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.38)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 13.45
TOTAL RETURN B, C 10.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 165
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.06)% A
PORTFOLIO TURNOVER 100%
AVERAGE COMMISSION RATE G $ .0245
<TABLE>
<CAPTION>
<S> <C> <C>
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 FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF CLASS C SHARES) TO JULY 31, 1998.
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 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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.84 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .01 I .03
NET REALIZED AND UNREALIZED GAIN (LOSS) .75 3.91
TOTAL FROM INVESTMENT OPERATIONS .76 3.94
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.02)
FROM NET REALIZED GAIN (.95) (.08)
TOTAL DISTRIBUTIONS (.95) (.10)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .03 -
NET ASSET VALUE, END OF PERIOD $ 13.68 $ 13.84
TOTAL RETURN B, C 6.32% 39.64%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,360 $ 1,756
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% F 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.50% 1.48% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .04% .25% A
PORTFOLIO TURNOVER 100% 155% A
AVERAGE COMMISSION RATE H $ .0245 $ .0210
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
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. 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 DURING THE PERIOD, A SIGNIFICANT
SHAREHOLDER REDEMPTION CAUSED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME
PER SHARE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $6,119,602 and $4,846,367, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,030 $ 359
CLASS T 13,326 718
CLASS B 5,430 4,385
CLASS C 603 603
$ 20,389 $ 6,065
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 466
CLASS T $ 757
CLASS B $ 163
CLASS C $ 356
INSTITUTIONAL CLASS $ 31
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
remain in the fund for at least one year. The Class A and Class T
contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,572 $ 758
CLASS T 8,776 2,902
CLASS B 328 328 *
CLASS C 61 61 *
$ 10,737 $ 4,049
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN
RESOURCES TO SECURITIES DEALERS, BANKS, AND OTHER FINANCIAL
INSTITUTIONS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 1,844 .45
CLASS T 8,977 .34
CLASS B 2,342 .44
CLASS C 554 .91*
INSTITUTIONAL CLASS 2,667 .17
$ 16,384
* ANNUALIZED.
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 $806 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 15,049
CLASS T 2.00% 53,395
CLASS B 2.50% 26,574
CLASS C 2.50% 9,948
INSTITUTIONAL CLASS 1.50% 31,306
$ 136,272
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 $181 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 27% 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,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ - $ 210
CLASS T - 596
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS - 9,884
TOTAL $ - $ 10,690
FROM NET REALIZED GAIN
CLASS A $ 27,503 $ 1,679
CLASS T 168,735 4,766
CLASS B 21,647 -
CLASS C 303 -
INSTITUTIONAL CLASS 130,259 39,537
TOTAL $ 348,447 $ 45,982
TOTAL $ 348,447 $ 56,672
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B DISTRIBUTIONS 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 10,882 29,864 $ 148,228 $ 317,058
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,142 169 27,217 1,885
SHARES REDEEMED (4,708) (3,623) (63,873) (42,214)
NET INCREASE (DECREASE) 8,316 26,410 $ 111,572 $ 276,729
CLASS T 227,185 159,328 $ 3,069,729 $ 1,808,520
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 12,558 440 158,925 4,903
SHARES REDEEMED (159,076) (20,367) (2,112,359) (254,181)
NET INCREASE (DECREASE) 80,667 139,401 $ 1,116,295 $ 1,559,242
CLASS B 60,410 18,329 $ 820,607 $ 222,169
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,702 - 21,404 -
SHARES REDEEMED (6,954) - (94,508) -
NET INCREASE (DECREASE) 55,158 18,329 $ 747,503 $ 222,169
CLASS C 13,383 - $ 179,797 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 25 - 303 -
SHARES REDEEMED (1,166) - (16,290) -
NET INCREASE (DECREASE) 12,242 - $ 163,810 $ -
INSTITUTIONAL CLASS 31,192 595,951 $ 426,137 $ 6,237,387
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 10,114 4,432 129,319 49,421
SHARES REDEEMED (68,822) (473,503) (837,391) (5,226,197)
NET INCREASE (DECREASE) (27,516) 126,880 $ (281,935) $ 1,060,611
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,105
CLASS T 11,458
CLASS B 18,124
CLASS C 8,792
INSTITUTIONAL CLASS 8,720
$ 55,199
ADVISOR FINANCIAL SERVICES FUND - INSTITUTIONAL CLASS
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - INST CL 26.39% 91.83%
S&P 500 19.29% 76.95%
GS FINANCIAL SERVICES 24.27% 105.11%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Financial Services Index - a
market capitalization-weighted index of stocks designed to measure the
performance of companies in the financial services sector. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV FINANCIAL - INST CL 26.39% 40.72%
S&P 500 19.29% 34.89%
GS FINANCIAL SERVICES 24.27% 45.75%
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.
$10,000 OVER LIFE OF FUND
FA FINANCIAL SERV -CL I S&P 500
GS FINANCIAL SERVICES
00273 SP001
GS004
1996/09/03 10000.00 10000.00
10000.00
1996/09/30 10620.00 10516.69
10584.56
1996/10/31 11190.00 10806.74
11272.70
1996/11/30 12090.00 11623.62
12278.35
1996/12/31 11729.57 11393.36
12100.98
1997/01/31 12351.14 12105.21
12935.63
1997/02/28 12501.52 12200.12
13395.32
1997/03/31 11619.29 11698.81
12504.96
1997/04/30 12571.69 12397.23
13328.32
1997/05/31 13052.91 13151.98
14040.84
1997/06/30 13734.63 13741.19
14892.68
1997/07/31 15178.26 14834.57
16504.52
1997/08/31 14275.99 14003.54
15483.68
1997/09/30 15189.28 14770.51
16744.42
1997/10/31 15098.86 14277.18
16445.06
1997/11/30 15601.15 14938.07
17053.65
1997/12/31 16458.84 15194.56
17997.81
1998/01/31 16254.76 15362.61
17523.74
1998/02/28 17622.08 16470.56
19045.66
1998/03/31 18611.86 17314.02
20165.67
1998/04/30 18907.77 17488.19
20512.24
1998/05/31 18499.62 17187.57
20061.46
1998/06/30 19244.50 17885.73
20758.18
1998/07/31 19183.28 17695.25
20510.80
IMATRL PRASUN SHR__CHT 19980731 19980825 162427 R00000000000026
$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, 1998, the value of the investment would have grown to $19,183
- - a 91.83% increase on the initial investment. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Financial Services Industries Index,
it would have grown to $20,511 - a 105.11% increase.
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.
(CHECKMARK)
ADVISOR FINANCIAL SERVICES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF ROBERT EWING)
An interview with Robert Ewing, Portfolio Manager of Fidelity Advisor
Financial Services Fund
Q. HOW DID THE FUND PERFORM, BOB?
A. The fund performed very well. For the 12 months that ended July 31,
1998, the fund's Institutional Class shares had a return of 26.39%.
The Standard & Poor's 500 Index had a return of 19.29% during the same
period. Beginning this period, the fund also compares itself to the
Goldman Sachs Financial Services Index - an index of stocks designed
to measure the performance of companies in the financial services
sector - which returned 24.27% over the same 12-month period.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE YEAR, AND HOW
DID THAT AFFECT FINANCIAL SERVICES STOCKS IN PARTICULAR?
A. This year has offered a great environment for financial stocks. A
variety of economic factors supported this environment. First, we were
fairly late in an economic expansion. Historically, the customers of
financial services companies are very healthy financially at such
times. Second, we had a benign interest-rate environment, with rates
moving slightly down but with very low volatility. The emerging issue
was the economic crisis in Asia. However, up until now U.S. financial
companies have had little direct exposure to Asia. If anything, their
international competitive situation was strengthened as Asian
companies and European companies tended to be more directly affected
by the problems of the Pacific Basin. We also had a very dynamic
environment for financial services stocks, primarily because of the
continued consolidation of the industry. To understand why you had
this consolidation, you actually have to go back to the Depression
era, when regulations were enacted separating different kinds of
companies within the financial services industry. Banks, for example,
were separated from brokerage and insurance companies. Now, regulation
has been easing and we have witnessed a great number of acquisitions
and consolidations, which have supported stock prices in general. To
illustrate the magnitude of this trend, you don't need to go any
further than the announced mergers of Citicorp and Travelers Group and
of NationsBank and BankAmerica, all of which the fund has investments
in.
Q. GIVEN THIS FAVORABLE ENVIRONMENT, WHAT STRATEGIES HAVE YOU
EMPLOYED?
A. Fidelity has a team of 11 domestic financial services analysts who
have been emphasizing companies that would benefit from the improving
credit health of U.S. consumers. In mid-1997, consumer credit
conditions probably were at their worst, as measured by such factors
as credit card and loan delinquencies. The situation has been
gradually improving since then. Interest rates have gone down, and
many consumers have taken advantage of declining rates to refinance
their home mortgages or to consolidate their debts in home equity
loans. I have emphasized companies that would benefit from this trend,
including banks with large credit card businesses, mortgage companies
and consumer credit companies. In addition, while banks continue to
make up the bulk of the portfolio, I have tried to increase
diversification by investing in more brokerage firms than the fund has
historically owned. I also have been very careful about investing in
companies that have an exposure to the problems in Asia.
Q. WHAT WERE SOME OF THE MAJOR CONTRIBUTORS TO PERFORMANCE?
A. In general, the consumer finance companies have been strong
contributors. Notable examples have been Beneficial Corp., Household
International and American Express. Brokers have done exceptionally
well. Lehman Brothers, for example, performed very well. Overall, bank
stocks have been good performers, and the fund has tended to own the
right banks. Outstanding examples included U.S. Bancorp and Citicorp.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, there were. The fund's investments in real estate investment
trusts (REITs) have been disappointing. As a class of stocks, these
companies have struggled during the past year as investors have become
concerned that construction of additional hotel, office and retail
space might create over-capacity. Among the REITs that have been
disappointing are Starwood, which owns hotels, and Crescent, which is
involved in office, retail and hotel sites. The other area of
disappointment is in property casualty insurance companies. These
companies, as a group, have been hurt by intense competition.
Q. WHAT IS THE OUTLOOK FOR FINANCIAL SERVICES STOCKS, BOB?
A. I think we will continue to have consolidation in the industry, but
we also will have volatility. It feels like we are at a crossroad, and
investors will be watching economic signals very carefully for signs
of any deterioration of credit conditions. If the global economy
stabilizes and starts to improve, these stocks will do fine. If things
continue to decelerate, investors will anticipate deterioration in
credit, and we could have a very bumpy road. This outlook places a
heavy burden on individual stock selection. It should be a great
environment for my team of financial services analysts to find
opportunities.
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, 1998, more than $231 million
MANAGER: Robert Ewing, since January 1998;
joined Fidelity in 1990
(checkmark)
ADVISOR FINANCIAL SERVICES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
NATIONSBANK CORP. 4.7
AMERICAN EXPRESS CO. 4.3
AMERICAN INTERNATIONAL GROUP, INC. 4.1
CITICORP 3.9
U.S. BANCORP 3.9
BANKAMERICA CORP. 3.8
HOUSEHOLD INTERNATIONAL, INC. 3.3
WELLS FARGO & CO. 2.8
TRAVELERS GROUP, INC. (THE) 2.6
CHASE MANHATTAN CORP. 2.4
TOP INDUSTRIES AS OF JULY 31, 1998
NATIONAL COMMERCIAL BANKS 33.7%
PROPERTY-CASUALTY &
REINSURANCE 11.5%
PERSONAL CREDIT INSTITUTIONS 6.8%
FINANCIAL SERVICES 5.8%
FEDERAL & FEDERALLY SPONSORED
CREDIT AGENCIES 4.8%
ALL OTHERS 37.4%
ROW: 1, COL: 1, VALUE: 33.7
ROW: 1, COL: 2, VALUE: 11.5
ROW: 1, COL: 3, VALUE: 6.8
ROW: 1, COL: 4, VALUE: 5.8
ROW: 1, COL: 5, VALUE: 4.8
ROW: 1, COL: 6, VALUE: 37.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
BANKS - 36.4%
INTERNATIONAL BANKS - 0.6%
Royal Bank of Canada 25,000 $ 1,355,955
NATIONAL COMMERCIAL BANKS - 33.7%
BB&T Corp. 8,000 562,000
Banc One Corp. 104,667 5,409,976
Bank of New York Co., Inc. 85,480 5,470,720
BankAmerica Corp. 97,000 8,705,750
Chase Manhattan Corp. 73,000 5,520,625
Citicorp 53,365 9,072,050
Comerica, Inc. 51,750 3,486,656
First Union Corp. 14,042 846,031
Marshall & Ilsley Corp. 17,000 955,188
Mellon Bank Corp. 3,300 222,338
National City Corp. 32,470 2,171,431
NationsBank Corp. 134,997 10,766,011
Norwest Corp. 43,000 1,545,313
Pacific Bank N.A 10,000 530,000
Providian Financial Corp. 29,705 2,333,699
Southwest Bancorporation Texas, Inc. 3,300 58,988
SunTrust Banks, Inc. 10,000 730,000
U.S. Bancorp 194,650 8,953,900
Wachovia Corp. 24,405 2,089,678
Wells Fargo & Co. 18,100 6,441,338
Westamerica Bancorporation 30,000 918,750
Zions Bancorp 15,000 735,000
77,525,442
STATE BANKS FEDERAL RESERVE - 2.1%
AmSouth Bancorporation 12,000 476,250
Compass Bancshares, Inc. 12,500 518,750
Crestar Financial Corp. 8,000 545,500
Firstar Corp. 12,000 599,250
Hanmi Bank 5,450 98,100
North Fork Bancorp., Inc. 26,250 639,844
Northern Trust Corp. 22,000 1,619,750
Sterling Bancshares, Inc. 19,500 292,500
4,789,944
TOTAL BANKS 83,671,341
CREDIT & OTHER FINANCE - 15.2%
BANK HOLDING COMPANY OFFICES - 1.7%
Fleet Financial Group, Inc. 44,800 3,850,000
FINANCIAL SERVICES - 5.8%
American Express Co. 89,800 9,911,675
First Chicago NBD Corp. 42,170 3,534,373
13,446,048
MORTGAGE BANKERS - 0.9%
Aames Financial Corp. 25,000 281,250
Headlands Mortgage Co. (a) 25,000 465,625
Life Financial Corp. (a) 25,000 359,375
Resource Bancshares Mortgage
Group, Inc. 55,000 1,069,063
2,175,313
PERSONAL CREDIT INSTITUTIONS - 6.8%
Associates First Capital Corp. Class A 57,100 4,435,956
FIRSTPLUS Financial Group, Inc. (a) 10,000 390,000
Household International, Inc. 154,657 7,694,186
MBNA Corp. 78,500 2,629,750
Takefuji Corp. (c) 7,500 394,355
15,544,247
TOTAL CREDIT & OTHER FINANCE 35,015,608
SHARES VALUE (NOTE 1)
FEDERAL SPONSORED CREDIT - 4.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 4.8%
Freddie Mac 97,220 $ 4,593,645
Fannie Mae 68,435 4,242,970
SLM Holding Corp. 49,500 2,289,375
11,125,990
INSURANCE - 19.7%
ACCIDENT & HEALTH INSURANCE - 0.1%
UICI (a) 9,000 211,500
INSURANCE BROKERS & SERVICES - 1.0%
Marsh & McLennan Companies, Inc. 36,250 2,213,516
INSURANCE CARRIERS - 3.0%
AFLAC, Inc. 88,400 3,038,750
AMBAC, Inc. 15,100 879,575
Blanch E.W. Holdings, Inc. 18,000 671,625
MBIA, Inc. 11,700 788,288
MGIC Investment Corp. 30,000 1,608,750
6,986,988
LIFE INSURANCE - 3.4%
Aon Corp. 24,600 1,672,800
Hartford Life, Inc. Class A 12,000 694,500
Nationwide Financial Services, Inc.
Class A 14,500 789,344
Reliastar Financial Corp. 10,000 496,250
SunAmerica, Inc. 20,000 1,228,750
Torchmark Corp. 50,000 2,190,625
UNUM Corp. 12,800 674,400
7,746,669
PROPERTY-CASUALTY & REINSURANCE - 11.5%
ACE Ltd. 20,000 733,750
Aegon NV (Reg.) 8,258 757,672
Allmerica Financial Corp. 7,000 468,125
Allstate Corp. 88,570 3,758,689
American International Group, Inc. 62,520 9,428,797
Capital Re Corp. 16,000 528,000
Chubb Corp. (The) 5,000 366,875
Executive Risk, Inc. 10,000 484,375
General Re Corp. 2,800 663,600
HCC Insurance Holdings, Inc. 23,000 465,750
Hartford Financial Services Group, Inc. 59,200 3,082,100
Mercury General Corp. 6,200 284,813
PMI Group, Inc. 10,500 711,375
Progressive Corp. 14,200 1,755,475
RenaissanceRe Holdings Ltd. 40,000 1,787,500
Travelers Property Casualty Corp. Class A 30,000 1,297,500
26,574,396
SURETY INSURANCE - 0.7%
Amerin Corp. (a) 60,000 1,616,250
TOTAL INSURANCE 45,349,319
REAL ESTATE INVESTMENT TRUSTS - 3.4%
AMRESCO Capital Trust, Inc. 50,000 593,750
Apartment Investment & Management Co.
Class A 7,400 281,200
Crescent Real Estate Equities, Inc. 33,000 969,375
Duke Realty Investors, Inc. 34,500 739,594
Equity Office Properties Trust 30,000 746,250
Equity Residential Properties Trust 12,500 525,000
Imperial Credit Commercial Mortgage
Investment Corp. 21,000 228,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Mack-Cali Realty Corp. 20,000 $ 621,250
Novastar Financial, Inc. 20,000 326,250
Ocwen Asset Investment Corp. 56,000 836,500
Patriot American Hospitality, Inc. 25,000 475,000
Public Storage, Inc. 22,500 596,250
Starwood Hotels & Resorts Trust 19,000 780,188
7,718,982
SAVINGS & LOANS - 3.3%
SAVINGS BANKS & SAVINGS & LOANS - 0.7%
Astoria Financial Corp. 8,000 401,000
Charter One Financial Corp. 35,000 1,139,680
1,540,680
SAVINGS BANKS, FEDERAL CHARTER - 2.6%
Ahmanson (H.F.) & Co. 24,000 1,585,500
Dime Bancorp., Inc. 38,500 1,145,375
Golden State Bancorp 51,660 1,423,879
Golden State Bancorp Litigation
Track warrants (a) 26,660 126,635
Telebanc Financial Corp. (a) 600 12,450
Washington Mutual, Inc. 46,000 1,837,125
6,130,964
TOTAL SAVINGS & LOANS 7,671,644
SECURITIES INDUSTRY - 8.2%
INVESTMENT MANAGERS - 0.6%
Investors Group, Inc. 50,000 851,606
Pioneer Group, Inc. 25,000 656,250
1,507,856
SECURITY & COMMODITY BROKERS - 2.9%
Bear Stearns Companies, Inc. 60,000 3,375,000
Merrill Lynch & Co., Inc. 22,500 2,193,750
Midland Walwyn, Inc. 32,500 740,566
Nomura Securities Co. Ltd. 35,000 408,019
6,717,335
SECURITY BROKERS & DEALERS - 4.7%
Lehman Brothers Holdings, Inc. 41,000 2,952,000
PaineWebber Group, Inc. 10,000 471,250
Travelers Group, Inc. (The) 89,500 5,996,500
Waddell & Reed Financial, Inc. Class A 60,000 1,323,750
10,743,500
TOTAL SECURITIES INDUSTRY 18,968,691
TOTAL COMMON STOCKS
(Cost $184,558,092) 209,521,575
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b)
(Cost $20,670,236) 20,670,236 20,670,236
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $205,228,328) $ 230,191,811
LEGEND
1.Non-income producing
2.At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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
period end the value of these securities amounted to $394,355 or 0.2%
of net assets.
INCOME TAX INFORMATION
At July 31, 1998 the aggregate cost of investment securities for
income tax purposes was $205,298,538. Net unrealized appreciation
aggregated $24,893,273, of which $30,034,138 related to appreciated
investment securities and $5,140,865 related to depreciated investment
securities.
The fund hereby designates approximately $602,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 1.12% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
A total of 55%, 60%, 62%, 37%, and 57% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 230,191,811
(COST $205,228,328) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 647,978
RECEIVABLE FOR FUND SHARES SOLD 1,314,913
DIVIDENDS RECEIVABLE 224,772
INTEREST RECEIVABLE 93,506
PREPAID EXPENSES 3,221
TOTAL ASSETS 232,476,201
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 431,471
ACCRUED MANAGEMENT FEE 114,095
DISTRIBUTION FEES PAYABLE 125,278
OTHER PAYABLES AND 112,032
ACCRUED EXPENSES
TOTAL LIABILITIES 782,876
NET ASSETS $ 231,693,325
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 192,635,512
UNDISTRIBUTED NET INVESTMENT INCOME 262,870
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 13,831,649
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 24,963,294
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 231,693,325
CALCULATION OF MAXIMUM $18.74
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($21,906,889 (DIVIDED BY)
1,169,241 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.88
(100/94.25 OF $18.74)
CLASS T: $18.66
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($118,608,455 (DIVIDED BY)
6,354,719 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.34
(100/96.50 OF $18.66)
CLASS B: $18.52
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($65,925,538 (DIVIDED BY)
3,559,196 SHARES) A
CLASS C: $18.56
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($19,982,650 (DIVIDED BY)
1,076,680 SHARES) A
INSTITUTIONAL CLASS: $18.80
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($5,269,793 (DIVIDED BY) 280,311 SHARES)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 1,869,049
DIVIDENDS
INTEREST 744,945
TOTAL INCOME 2,613,994
EXPENSES
MANAGEMENT FEE $ 797,075
TRANSFER AGENT FEES 335,220
DISTRIBUTION FEES 802,259
ACCOUNTING FEES AND EXPENSES 86,010
NON-INTERESTED TRUSTEES' COMPENSATION 433
CUSTODIAN FEES AND EXPENSES 6,211
REGISTRATION FEES 109,948
AUDIT 33,290
LEGAL 2,509
REPORTS TO SHAREHOLDERS 37,113
MISCELLANEOUS 1,049
TOTAL EXPENSES BEFORE REDUCTIONS 2,211,117
EXPENSE REDUCTIONS (17,152) 2,193,965
NET INVESTMENT INCOME 420,029
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 15,266,516
FOREIGN CURRENCY TRANSACTIONS 10,686 15,277,202
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 12,949,723
ASSETS AND LIABILITIES IN (189) 12,949,534
FOREIGN CURRENCIES
NET GAIN (LOSS) 28,226,736
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 28,646,765
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ 420,029 $ 100,774
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 15,277,202 27,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 12,949,534 12,013,760
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 28,646,765 12,141,831
DISTRIBUTIONS TO SHAREHOLDERS (245,431) (14,685)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,447,197) (13,841)
TOTAL DISTRIBUTIONS (1,692,628) (28,526)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 134,897,670 57,645,194
REDEMPTION FEES 68,426 14,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 161,920,233 69,773,092
NET ASSETS
BEGINNING OF PERIOD 69,773,092 -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $262,870 AND $86,089, RESPECTIVELY) $ 231,693,325 $ 69,773,092
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.11 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .11 .06
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.80 5.06
TOTAL FROM INVESTMENT OPERATIONS 3.91 5.12
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.06) (.01)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.29) (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.74 $ 15.11
TOTAL RETURN B, C 26.32% 51.35%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 21,907 $ 6,275
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.32% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.30% G 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .63% .55% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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.
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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.07 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .07 .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.78 5.04
TOTAL FROM INVESTMENT OPERATIONS 3.85 5.08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) (.01)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.27) (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.66 $ 15.07
TOTAL RETURN B, C 25.96% 50.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 118,608 $ 52,003
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.52% 1.94% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.50% F 1.91% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .44% .37% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE G $ .0395 $ .0348
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 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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.04 $ 12.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.02) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.76 2.50
TOTAL FROM INVESTMENT OPERATIONS 3.74 2.48
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) -
FROM NET REALIZED GAIN (.23) -
TOTAL DISTRIBUTIONS (.27) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 18.52 $ 15.04
TOTAL RETURN B, C 25.29% 19.75%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 65,926 $ 7,737
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.06% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.04% G 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.14)% (.37)% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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.
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>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.24
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.57
TOTAL FROM INVESTMENT OPERATIONS 3.54
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (.21)
TOTAL DISTRIBUTIONS (.23)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 18.56
TOTAL RETURN B, C 23.56%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,983
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.09% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.07% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.22)% A
PORTFOLIO TURNOVER 54%
AVERAGE COMMISSION RATE G $ .0395
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 COMTINGENT 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 NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
CLASS C SHARES) TO JULY 31, 1998.
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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.14 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .14 .10
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.79 5.06
TOTAL FROM INVESTMENT OPERATIONS 3.93 5.16
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.05) (.02)
FROM NET REALIZED GAIN (.23) (.01)
TOTAL DISTRIBUTIONS (.28) (.03)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 18.80 $ 15.14
TOTAL RETURN B, C 26.39% 51.78%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,270 $ 3,758
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.14% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.13% G 1.47% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .81% .85% A
PORTFOLIO TURNOVER 54% 26% A
AVERAGE COMMISSION RATE H $ .0395 $ .0348
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 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
EXPENSES 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 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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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
investments companies (PFIC), non-taxable dividends 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $182,906,998 and $65,702,518, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 31,380 $ 10
CLASS T 412,412 549
CLASS B 297,692 223,036
CLASS C 60,775 60,775
$ 802,259 $ 284,370
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 7,789
CLASS T $ 13,765
CLASS B $ 7,433
CLASS C $ 10,797
INSTITUTIONAL CLASS $ 310
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and Class T shares that were
subject to a finder's fee bear a contingent deferred sales charge on
assets that do not remain in the fund for at least one year. The Class
A and Class T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to
FDC are paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 226,919 $ 96,375
CLASS T 375,688 137,727
CLASS B 49,800 49,800 *
CLASS C 6,588 6,588 *
$ 658,995 $ 290,490
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 32,422 .26
CLASS T 200,782 .24
CLASS B 80,021 .27
CLASS C 14,009 .23*
INSTITUTIONAL CLASS 7,986 .20
$ 335,220
* ANNUALIZED.
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 $24,154 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $16,507 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and 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 $340 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
CREDITS
CLASS A $ 305
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 10% 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,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ 32,929 $ 1,796
CLASS T 169,652 11,192
CLASS B 31,387 -
CLASS C 990 -
INSTITUTIONAL CLASS 10,473 1,697
TOTAL $ 245,431 $ 14,685
FROM NET REALIZED GAIN
CLASS A $ 134,384 $ 1,792
CLASS T 1,003,813 11,200
CLASS B 249,387 -
CLASS C 10,862 -
INSTITUTIONAL CLASS 48,751 849
TOTAL $ 1,447,197 $ 13,841
TOTAL $ 1,692,628 $ 28,526
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 934,476 442,563 $ 16,203,034 $ 5,416,102
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 9,387 294 147,404 3,494
SHARES REDEEMED (189,881) (27,598) (3,281,384) (358,033)
NET INCREASE (DECREASE) 753,982 415,259 $ 13,069,054 $ 5,061,563
CLASS T 4,223,164 3,898,064 $ 71,654,298 $ 48,519,698
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 66,953 1,650 1,051,227 19,567
SHARES REDEEMED (1,386,617) (448,495) (23,635,629) (5,662,098)
NET INCREASE (DECREASE) 2,903,500 3,451,219 $ 49,069,896 $ 42,877,167
CLASS B 3,302,648 528,089 $ 57,223,474 $ 6,961,044
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 13,682 - 213,556 -
SHARES REDEEMED (271,676) (13,547) (4,668,237) (182,473)
NET INCREASE (DECREASE) 3,044,654 514,542 $ 52,768,793 $ 6,778,571
CLASS C 1,117,558 - $ 19,997,372 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 710 - 11,224 -
SHARES REDEEMED (41,588) - (764,009) -
NET INCREASE (DECREASE) 1,076,680 - $ 19,244,587 $ -
INSTITUTIONAL CLASS 170,926 324,063 $ 2,901,545 $ 3,934,976
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3,344 215 52,667 2,546
SHARES REDEEMED (142,257) (75,980) (2,208,872) (1,009,629)
NET INCREASE (DECREASE) 32,013 248,298 $ 745,340 $ 2,927,893
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 12,800
CLASS T 43,958
CLASS B 31,722
CLASS C 13,166
INSTITUTIONAL CLASS 8,302
$ 109,948
ADVISOR HEALTH CARE FUND - INSTITUTIONAL CLASS
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - INST CL 26.70% 78.89%
S&P 500 19.29% 76.95%
GS HEALTH CARE 30.67% 90.66%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Health Care Index - a market
capitalization-weighted index of stocks designed to measure the
performance of companies in the health care sector. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV HEALTH CARE - INST CL 26.70% 35.66%
S&P 500 19.29% 34.89%
GS HEALTH CARE 30.67% 40.27%
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.
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.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
FA HEALTH CARE -CL I S&P 500
GS HEALTH CARE
00271 SP001
GS005
1996/09/03 10000.00 10000.00
10000.00
1996/09/30 10670.00 10516.69
10812.87
1996/10/31 10430.00 10806.74
10714.59
1996/11/30 10960.00 11623.62
11456.00
1996/12/31 11030.00 11393.36
11211.23
1997/01/31 11710.00 12105.21
12140.37
1997/02/28 11850.00 12200.12
12322.91
1997/03/31 11210.00 11698.81
11479.40
1997/04/30 11770.00 12397.23
12192.08
1997/05/31 12680.00 13151.98
13124.59
1997/06/30 13620.00 13741.19
14149.23
1997/07/31 14120.00 14834.57
14590.78
1997/08/31 13250.00 14003.54
13768.10
1997/09/30 14087.43 14770.51
14522.88
1997/10/31 13965.02 14277.18
14348.05
1997/11/30 14240.45 14938.07
14887.11
1997/12/31 14467.59 15194.56
15322.92
1998/01/31 15333.72 15362.61
16033.22
1998/02/28 16167.77 16470.56
17070.43
1998/03/31 16798.66 17314.02
17844.91
1998/04/30 16991.13 17488.19
18314.30
1998/05/31 16841.43 17187.57
18020.01
1998/06/30 17761.03 17885.73
19053.99
1998/07/31 17889.34 17695.25
19066.04
IMATRL PRASUN SHR__CHT 19980731 19980825 163717 R00000000000026
$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, 1998, the value of the investment would have grown to $17,889 - a
78.89% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Health Care Index, it would have
grown to $19,066 - a 90.66% increase.
ADVISOR HEALTH CARE FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF BESO SIKHARULIDZE)
An interview with Beso Sikharulidze, Portfolio Manager of Fidelity
Advisor Health Care Fund
Q. HOW DID THE FUND PERFORM, BESO?
A. For the 12-month period ending July 31, 1998, the fund's
Institutional Class shares returned 26.70%. In comparison, the
Standard & Poor's 500 Index returned 19.29% during the same period.
Beginning this period, the fund also compares itself to the Goldman
Sachs Health Care Index - an index of stocks designed to measure the
performance of companies in the health care sector - which returned
30.67% over the same 12-month period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST
YEAR?
A. I committed a significant percentage of fund assets to the major
pharmaceutical companies and to other companies that benefited from
the strength in demand growth of pharmaceuticals, such as drug
distributors and drug-store chains. These companies performed very
well for the fund.
Q. WHY DO PHARMACEUTICAL COMPANIES CONTINUE TO PERFORM THE BEST WITHIN
THE HEALTH CARE SECTOR?
A. Most importantly, all the key drivers for continued strong earnings
and sales growth have remained in place. The key drivers are: an aging
population with increasing demand for pharmaceuticals, an increasing
supply of innovative new drugs with superior efficiency and safety,
and corporate earnings that have produced double-digit returns, which
compare favorably to other health care companies.
Q. MOST OF THE FUND'S TOP HOLDINGS HAVE NOT CHANGED SINCE THE LAST
REPORT. WHAT IS YOUR RATIONALE BEHIND THIS STRATEGY?
A. I didn't foresee any major changes in the market's outlook toward
drug companies and my outlook remained positive. As a result, I
continued to take a long-term view on the pharmaceutical sector.
Maintaining the fund's top holdings is not an unusual strategy for me.
Whether I am looking at a drug company, medical device maker or
biotechnology company, I focus on the long-term profitability outlook
and the ability of the company to produce consistent results.
Q. WHAT INDIVIDUAL HOLDINGS CONTRIBUTED TO FUND PERFORMANCE?
A. Warner-Lambert and Schering-Plough have done very well and
contributed significantly to the fund's strong performance.
Warner-Lambert benefited from having the strongest earnings growth
within the pharmaceutical sector. Strong sales of its newly launched
drugs, such as its cholesterol lowering drug Lipitor and diabetes drug
Rezulin, resulted in upward revisions of Warner's earnings and
ultimately pushed the stock price higher. Schering-Plough's stock also
benefited from strong sales of its major product - Claritin - and
upward earnings revisions.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. HMOs continued to detract from fund performance. Unfortunately,
many HMOs continue to struggle to find product and service strategies
that will boost growth and earnings. I continued to hold HMOs like
Foundation Health Systems, United Health Care and Humana, which all
seemed to be reasonably valued considering their business
fundamentals. At the same time, these companies continue to struggle
to increase patient enrollment while maintaining profitability.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR, BESO?
A. Overall, I think the health care sector should continue to be
strong. Favorable demographics, combined with strong demand growth for
drugs, medical supplies and medical technology, should drive further
innovation. Strong management teams and a favorable regulatory
environment also have created an excellent opportunity for health care
stocks to outperform the broader market.
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, 1998, more than
$232 million
MANAGER: Beso Sikharulidze, since June 1997;
joined Fidelity in 1992
(checkmark)
ADVISOR HEALTH CARE FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
WARNER-LAMBERT CO. 9.7
LILLY (ELI) & CO. 8.6
MERCK & CO., INC 7.4
JOHNSON & JOHNSON 5.9
AMERICAN HOME PRODUCTS CORP. 5.1
SCHERING-PLOUGH CORP. 4.5
BRISTOL-MYERS SQUIBB CO. 4.0
ABBOTT LABORATORIES 4.0
MEDTRONIC, INC. 3.6
MONSANTO CO. 2.9
TOP INDUSTRIES AS OF JULY 31, 1998
DRUGS 42.6%
MEDICAL SUPPLIES & APPLIANCES 14.2%
BIOTECHNOLOGY 5.7%
HOSPITALS 5.5%
MEDICAL TECHNOLOGY 4.1%
ALL OTHERS 27.9%
ROW: 1, COL: 1, VALUE: 42.6
ROW: 1, COL: 2, VALUE: 14.2
ROW: 1, COL: 3, VALUE: 5.7
ROW: 1, COL: 4, VALUE: 5.5
ROW: 1, COL: 5, VALUE: 4.1
ROW: 1, COL: 6, VALUE: 27.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR HEALTH CARE FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.6%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.8%
CROPS - 0.8%
Delta & Pine Land Co. 41,600 $ 1,869,400
CHEMICALS & PLASTICS - 2.9%
CHEMICALS - 2.9%
Monsanto Co. 118,700 6,721,388
COMPUTER SERVICES & SOFTWARE - 0.4%
CAD/CAM/CAE - 0.4%
Shared Medical Systems Corp. 15,000 1,018,125
DRUG STORES - 3.3%
CVS Corp. 72,000 2,952,000
Rite Aid Corp. 25,400 1,003,300
Walgreen Co. 86,600 3,740,038
7,695,338
DRUGS & PHARMACEUTICALS - 51.1%
BIOTECHNOLOGY - 5.7%
Amgen, Inc. (a) 60,200 4,420,938
Aviron (a) 40,000 1,195,000
Biogen, Inc. (a) 56,300 3,131,688
Chiron Corp. (a) 23,600 401,200
COR Therapeutics, Inc. (a) 54,100 757,400
Genentech, Inc. special (a) 6,100 421,281
Genzyme Corp. 7,100 223,428
Medimmune, Inc. (a) 6,400 376,200
Sepracor, Inc. (a) 5,300 286,200
Shire Pharmaceuticals Group PLC
sponsored ADR (a) 83,050 1,993,200
13,206,535
COMMERCIAL LABORATORY RESEARCH - 0.4%
Quintiles Transnational Corp. (a) 21,000 956,813
DRUGS - 42.6%
Allergan, Inc. 29,500 1,541,375
ALZA Corp. Class A 15,100 587,013
American Home Products Corp. 227,400 11,711,100
Bristol-Myers Squibb Co. 80,700 9,194,756
Dura Pharmaceuticals, Inc. (a) 1,300 33,475
Elan Corp. PLC ADR (a) 9,200 662,400
Forest Laboratories, Inc. (a) 34,000 1,275,000
Lilly (Eli) & Co. 293,700 19,751,325
Merck & Co., Inc. 139,000 17,140,438
Sankyo Co. Ltd. 82,000 1,838,107
Scherer R.P. Corp. (a) 4,200 381,938
Schering-Plough Corp. 108,500 10,497,375
SmithKline Beecham PLC ADR 9,000 515,250
Takeda Chemical Industries Ltd. 15,000 385,015
Warner-Lambert Co. 296,700 22,419,382
Watson Pharmaceuticals, Inc. (a) 8,200 370,025
98,303,974
PHARMACEUTICAL PREPARATIONS - 2.4%
Andrx Corp. (a) 14,500 518,375
Immunex Corp. (a) 3,900 275,925
MacroChem Corp. (a) 105,200 736,400
Medicis Pharmaceutical Corp.
Class A (a) 25,300 904,475
Rexall Sundown, Inc. (a) 43,000 1,298,063
Twinlab Corp. (a) 41,600 1,726,400
5,459,638
TOTAL DRUGS & PHARMACEUTICALS 117,926,960
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 0.5%
ELECTRICAL MACHINERY - 0.5%
VWR Corp. (a) 42,000 $ 1,176,000
ELECTRONIC INSTRUMENTS - 0.7%
LAB ANALYTICAL INSTRUMENTS - 0.7%
Waters Corp. (a) 25,800 1,647,975
MEDICAL EQUIPMENT & SUPPLIES - 26.4%
DENTAL EQUIPMENT - 0.8%
Sybron International Corp. (a) 85,100 1,765,825
DRUG DISTRIBUTORS - WHOLESALE - 3.6%
AmeriSource Health Corp. Class A (a) 21,000 1,598,625
Bergen Brunswig Corp. Class A 24,800 1,314,400
Cardinal Health, Inc. 29,000 2,785,813
McKesson Corp. 26,900 2,168,813
Zonagen, Inc. (a) 16,200 330,075
8,197,726
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.4%
PSS World Medical, Inc. (a) 63,000 978,469
MEDICAL SUPPLIES & APPLIANCES - 14.2%
Abbott Laboratories 219,900 9,139,594
Bard (C.R.), Inc. 100 4,050
Becton, Dickinson & Co. 38,900 3,214,113
Boston Scientific Corp.(a) 49,500 3,792,938
Johnson & Johnson 175,700 13,572,825
Sofamor/Danek Group, Inc. (a) 12,300 1,047,038
Steris Corp. (a) 31,200 1,903,200
32,673,758
MEDICAL TECHNOLOGY - 4.1%
Ballard Medical Products 31,100 637,550
Medtronic, Inc. 134,500 8,330,594
St. Jude Medical, Inc. (a) 14,800 451,400
Stryker Corp. 3,000 130,313
9,549,857
OPHTHALMIC GOODS - 2.2%
Bausch & Lomb, Inc. 51,900 2,653,388
Wesley Jessen Visioncare, Inc. (a) 99,700 2,430,188
5,083,576
X-RAY ELECTRO-MEDICAL APPARATUS - 1.1%
Guidant Corp. 34,300 2,548,919
TOTAL MEDICAL EQUIPMENT & SUPPLIES 60,798,130
MEDICAL FACILITIES MANAGEMENT - 8.9%
HOSPITALS - 5.5%
Columbia/HCA Healthcare Corp. 92,500 2,636,250
HEALTHSOUTH Corp. (a) 111,100 2,791,388
Health Management Associates, Inc.
Class A (a) 101,700 2,389,950
Tenet Healthcare Corp. (a) 104,900 3,140,444
Universal Health Services, Inc. Class B (a) 35,000 1,793,750
12,751,782
HMO'S & OUTPATIENT CARE - 2.4%
Foundation Health Systems,
Inc. Class A (a) 42,000 866,250
Humana, Inc. (a) 45,800 1,245,188
PacifiCare Health Systems, Inc. Class B (a) 16,600 1,191,050
United HealthCare Corp. 32,000 1,808,000
Wellpoint Health Networks, Inc. (a) 6,300 386,269
5,496,757
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - CONTINUED
MEDICAL LABORATORIES - 0.1%
Cambridge Heart, Inc. (a) 16,700 $ 120,031
MEDICAL SERVICES - 0.8%
Carematrix Corp. (a) 42,000 1,120,875
Lincare Holdings, Inc. (a) 16,500 655,875
1,776,750
SKILLED NURSING CARE FACILITIES - 0.1%
Beverly Enterprises, Inc. (a) 28,800 289,800
TOTAL MEDICAL FACILITIES MANAGEMENT 20,435,120
RETAIL & WHOLESALE, MISCELLANEOUS - 1.2%
MAIL ORDER - 0.7%
Henry Schein, Inc. (a) 33,700 1,621,813
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.5%
AgriBioTech, Inc. (a) 58,100 1,045,800
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,667,613
SERVICES - 0.4%
BUSINESS SERVICES - 0.0%
Professional Detailing, Inc. 100 2,300
MANAGEMENT SERVICES - 0.3%
Medpartners, Inc. (a) 133,800 685,725
SOCIAL SERVICES - 0.1%
Assisted Living Concepts, Inc. (a) 20,500 279,313
TOTAL SERVICES 967,338
TOTAL COMMON STOCKS
(Cost $193,333,911) 222,923,387
CASH EQUIVALENTS - 3.4%
Taxable Central Cash Fund (b)
(Cost $7,848,195) 7,848,195 7,848,195
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $201,182,106) $ 230,771,582
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $201,396,592. Net unrealized appreciation
aggregated $29,374,990, of which $36,105,901 related to appreciated
investment securities and $6,730,911 related to depreciated investment
securities.
The fund hereby designates approximately $488,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 10%, 10%, 11%, 8%, and 9%, of Class A's, Class T,'s Class
B's, Class C's and Institutional Class' dividends distributed during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 230,771,582
(COST $201,182,106) -
SEE ACCOMPANYING SCHEDULE
CASH 138,979
RECEIVABLE FOR FUND SHARES SOLD 2,296,243
DIVIDENDS RECEIVABLE 76,762
INTEREST RECEIVABLE 133,597
PREPAID EXPENSES 3,238
TOTAL ASSETS 233,420,401
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 594,937
PAYABLE FOR FUND SHARES REDEEMED 281,673
ACCRUED MANAGEMENT FEE 108,974
DISTRIBUTION FEES PAYABLE 114,277
OTHER PAYABLES AND ACCRUED EXPENSES 114,405
TOTAL LIABILITIES 1,214,266
NET ASSETS $ 232,206,135
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 196,834,702
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 5,782,004
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 29,589,429
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 232,206,135
</TABLE>
CALCULATION OF MAXIMUM $16.70
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($20,902,441 (DIVIDED BY)
1,251,954 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $17.72
(100/94.25 OF $16.70)
CLASS T: $16.61
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($124,652,151 (DIVIDED BY)
7,504,761 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $17.21
(100/96.50 OF $16.61)
CLASS B: $16.47
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($57,073,781 (DIVIDED BY)
3,465,491 SHARES) A
CLASS C: $16.49
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($19,153,838 (DIVIDED BY)
1,161,257 SHARES) A
INSTITUTIONAL CLASS: $16.73
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($10,423,924 (DIVIDED BY) 622,887 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 907,528
DIVIDENDS
INTEREST 564,289
TOTAL INCOME 1,471,817
EXPENSES
MANAGEMENT FEE $ 727,332
TRANSFER AGENT FEES 320,641
DISTRIBUTION FEES 687,556
ACCOUNTING FEES AND EXPENSES 79,943
NON-INTERESTED TRUSTEES' COMPENSATION 398
CUSTODIAN FEES AND EXPENSES 9,766
REGISTRATION FEES 115,886
AUDIT 33,649
LEGAL 2,333
REPORTS TO SHAREHOLDERS 38,069
MISCELLANEOUS 1,003
TOTAL EXPENSES BEFORE REDUCTIONS 2,016,576
EXPENSE REDUCTIONS (27,292) 1,989,284
NET INVESTMENT INCOME (LOSS) (517,467)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 10,449,791
FOREIGN CURRENCY TRANSACTIONS (30,701) 10,419,090
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 19,983,091
ASSETS AND LIABILITIES IN (47) 19,983,044
FOREIGN CURRENCIES
NET GAIN (LOSS) 30,402,134
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,884,667
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (517,467) $ (92,633)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 10,419,090 1,318,664
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 19,983,044 9,606,385
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,884,667 10,832,416
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS (5,317,653) -
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 138,185,326 58,550,028
REDEMPTION FEES 63,702 7,649
TOTAL INCREASE (DECREASE) IN NET ASSETS 162,816,042 69,390,093
NET ASSETS
BEGINNING OF PERIOD 69,390,093 -
</TABLE>
END OF PERIOD $ 232,206,135 $ 69,390,093
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.50 4.12
TOTAL FROM INVESTMENT OPERATIONS 3.47 4.10
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.88) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.70 $ 14.10
TOTAL RETURN B, C 26.47% 41.00%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 20,902 $ 5,488
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.38% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.36% G 1.74% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.18)% (.18)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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.
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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.05 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.05) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.47 4.09
TOTAL FROM INVESTMENT OPERATIONS 3.42 4.05
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.87) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.61 $ 14.05
TOTAL RETURN B, C 26.17% 40.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 124,652 $ 50,868
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.54% 1.97% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.52% F 1.96% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.31)% (.39)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE G $ .0464 $ .0383
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 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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.01 $ 11.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.14) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.45 2.18
TOTAL FROM INVESTMENT OPERATIONS 3.31 2.13
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.86) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.47 $ 14.01
TOTAL RETURN B, C 25.40% 17.93%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 57,074 $ 6,159
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.13% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.12% G 2.49% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.95)% (.99)% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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.
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>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.85
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.12)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.39
TOTAL FROM INVESTMENT OPERATIONS 3.27
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.63)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .00
NET ASSET VALUE, END OF PERIOD $ 16.49
TOTAL RETURN B, C 24.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,154
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.18% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.17% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.06)% A
PORTFOLIO TURNOVER 85%
AVERAGE COMMISSION RATE G $ .0464
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
CLASS C SHARES) TO JULY 31, 1998.
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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.12 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .03 .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.47 4.11
TOTAL FROM INVESTMENT OPERATIONS 3.50 4.12
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.90) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.73 $ 14.12
TOTAL RETURN B, C 26.70% 41.20%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 10,424 $ 6,875
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.07% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.04% G 1.49% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .17% .08% A
PORTFOLIO TURNOVER 85% 67% A
AVERAGE COMMISSION RATE H $ .0464 $ .0383
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 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.
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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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, net operating losses 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 tax purposes.
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 which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $225,729,121 and $99,506,666, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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% *
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 26,047 $ 36
CLASS T 394,779 980
CLASS B 219,552 164,680
CLASS C 47,178 47,178
$ 687,556 $ 212,874
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 9,013
CLASS T $ 13,575
CLASS B $ 6,849
CLASS C $ 6,551
INSTITUTIONAL CLASS $ 270
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
asset value of the redeemed shares, excluding any reinvested dividends
and capital gains. A portion of the sales charges paid to FDC are paid
to securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 193,119 $ 86,859
CLASS T 403,740 153,952
CLASS B 31,102 31,102
CLASS C 3,519 3,519
$ 631,480 $ 275,432
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 30,483 .29
CLASS T 198,465 .25
CLASS B 66,037 .30
CLASS C 12,414 .26 *
INSTITUTIONAL CLASS 13,242 .19
$ 320,641
* ANNUALIZED.
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 $27,427 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $25,841 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and 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 $330 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER
AGENT
CREDITS
CLASS T $ 1,121
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED JULY 31,
1998 A 1997
FROM NET REALIZED GAIN
CLASS A $ 420,044 $ -
CLASS T 3,806,901 -
CLASS B 709,849 -
CLASS C 21,184 -
INSTITUTIONAL CLASS 359,675 -
TOTAL $ 5,317,653 $ -
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 953,100 450,370 $ 14,712,053 $ 5,183,538
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 29,113 - 382,670 -
SHARES REDEEMED (119,595) (61,034) (1,797,313) (732,928)
NET INCREASE (DECREASE) 862,618 389,336 $ 13,297,410 $ 4,450,610
CLASS T 5,008,211 3,936,387 $ 75,539,497 $ 46,440,633
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 273,667 - 3,586,347 -
SHARES REDEEMED (1,398,051) (315,453) (21,017,135) (3,850,782)
NET INCREASE (DECREASE) 3,883,827 3,620,934 $ 58,108,709 $ 42,589,851
CLASS B 3,319,731 445,818 $ 50,883,606 $ 5,752,611
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 49,154 - 640,560 -
SHARES REDEEMED (343,006) (6,206) (5,148,858) (76,107)
NET INCREASE (DECREASE) 3,025,879 439,612 $ 46,375,308 $ 5,676,504
CLASS C 1,191,803 - $ 18,640,101 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,455 - 18,904 -
SHARES REDEEMED (32,001) - (510,296) -
NET INCREASE (DECREASE) 1,161,257 - $ 18,148,709 $ -
INSTITUTIONAL CLASS 342,040 546,050 $ 5,185,579 $ 6,606,358
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 27,158 - 357,509 -
SHARES REDEEMED (233,192) (59,169) (3,287,898) (773,295)
NET INCREASE (DECREASE) 136,006 486,881 $ 2,255,190 $ 5,833,063
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 13,346
CLASS T 46,918
CLASS B 31,737
CLASS C 13,867
INSTITUTIONAL CLASS 10,018
$ 115,886
ADVISOR NATURAL RESOURCES FUND - INSTITUTIONAL CLASS
PERFORMANCE
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
shares' prior 0.65% 12b-1 fee. If Fidelity had not reimbursed certain
class expenses, the past five year and 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - -14.29% 65.26% 238.14%
INST CL
S&P 500 19.29% 180.53% 445.15%
GS NATURAL RESOURCES -14.16% N/A N/A
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. You can compare Institutional Class' returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the natural
resources sector. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JULY 31, 1998 YEAR YEARS YEARS
FIDELITY ADV NATURAL - -14.29% 10.57% 12.96%
INST CL
S&P 500 19.29% 22.91% 18.48%
GS NATURAL RESOURCES -14.16% N/A N/A
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.
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.
(CHECKMARK)
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL I S&P 500
00686 SP001
1988/07/31 10000.00 10000.00
1988/08/31 9732.53 9660.00
1988/09/30 9689.39 10071.52
1988/10/31 9896.46 10351.50
1988/11/30 9672.13 10203.48
1988/12/31 9997.33 10382.04
1989/01/31 10805.39 11142.00
1989/02/28 10645.66 10864.57
1989/03/31 10852.37 11117.71
1989/04/30 11190.62 11694.72
1989/05/31 11453.71 12168.36
1989/06/30 11416.13 12099.00
1989/07/31 12242.97 13191.54
1989/08/31 12609.42 13450.09
1989/09/30 12271.16 13394.95
1989/10/31 11838.95 13084.18
1989/11/30 12365.12 13351.10
1989/12/31 13310.24 13671.53
1990/01/31 12470.67 12754.17
1990/02/28 13054.27 12918.70
1990/03/31 13300.00 13261.04
1990/04/30 12603.77 12929.52
1990/05/31 13883.60 14190.14
1990/06/30 13709.55 14093.65
1990/07/31 14385.30 14048.55
1990/08/31 14006.47 12778.56
1990/09/30 13566.21 12156.25
1990/10/31 12593.53 12103.97
1990/11/30 12798.31 12885.89
1990/12/31 12607.19 13245.41
1991/01/31 13023.17 13822.91
1991/02/28 14900.38 14811.25
1991/03/31 14548.40 15169.68
1991/04/30 14623.06 15206.08
1991/05/31 15327.02 15862.99
1991/06/30 14441.74 15136.46
1991/07/31 14921.71 15841.82
1991/08/31 15305.69 16217.27
1991/09/30 14708.39 15946.44
1991/10/31 15049.70 16160.13
1991/11/30 13833.78 15508.87
1991/12/31 14431.30 17283.09
1992/01/31 15327.51 16961.62
1992/02/29 15672.21 17182.12
1992/03/31 15281.55 16847.07
1992/04/30 15844.56 17342.38
1992/05/31 16269.68 17427.35
1992/06/30 15741.15 17167.69
1992/07/31 16373.09 17869.85
1992/08/31 16131.80 17503.51
1992/09/30 16292.66 17710.06
1992/10/31 15947.96 17772.04
1992/11/30 16154.78 18378.07
1992/12/31 16355.69 18604.12
1993/01/31 16879.99 18760.39
1993/02/28 17353.14 19015.53
1993/03/31 18504.05 19416.76
1993/04/30 19501.50 18946.88
1993/05/31 20460.59 19454.65
1993/06/30 20741.93 19511.07
1993/07/31 20460.59 19433.03
1993/08/31 21637.08 20169.54
1993/09/30 21521.99 20014.23
1993/10/31 22493.86 20428.53
1993/11/30 21649.86 20234.46
1993/12/31 22560.86 20479.29
1994/01/31 23932.62 21175.59
1994/02/28 23186.81 20601.73
1994/03/31 21761.77 19703.49
1994/04/30 22121.36 19955.70
1994/05/31 22414.36 20282.97
1994/06/30 22014.82 19786.04
1994/07/31 22760.63 20435.02
1994/08/31 23866.03 21272.86
1994/09/30 23746.17 20751.67
1994/10/31 23386.58 21218.59
1994/11/30 21855.00 20445.80
1994/12/31 22046.63 20749.02
1995/01/31 21613.55 21287.04
1995/02/28 22249.64 22116.59
1995/03/31 23494.75 22769.25
1995/04/30 24455.66 23439.81
1995/05/31 24794.00 24376.70
1995/06/30 25497.76 24942.97
1995/07/31 26580.47 25770.08
1995/08/31 27000.02 25834.76
1995/09/30 27203.03 26924.99
1995/10/31 26079.72 26828.87
1995/11/30 27406.03 28006.65
1995/12/31 28408.97 28546.06
1996/01/31 29487.08 29517.77
1996/02/29 30215.16 29791.40
1996/03/31 31139.25 30078.29
1996/04/30 32959.44 30521.64
1996/05/31 33561.51 31308.80
1996/06/30 33351.48 31428.08
1996/07/31 31531.29 30039.59
1996/08/31 32959.44 30673.13
1996/09/30 34387.59 32399.41
1996/10/31 35241.68 33292.98
1996/11/30 37047.87 35809.60
1996/12/31 37137.43 35100.21
1997/01/31 37734.74 37293.27
1997/02/28 35270.85 37585.65
1997/03/31 34359.96 36041.26
1997/04/30 34225.57 38192.92
1997/05/31 37346.49 40518.11
1997/06/30 37241.96 42333.32
1997/07/31 39451.99 45701.78
1997/08/31 39705.84 43141.57
1997/09/30 42579.70 45504.43
1997/10/31 39982.97 43984.58
1997/11/30 36637.18 46020.63
1997/12/31 36974.14 46810.80
1998/01/31 35985.34 47328.53
1998/02/28 37274.32 50741.86
1998/03/31 38916.43 53340.35
1998/04/30 40417.29 53876.96
1998/05/31 38351.40 52950.81
1998/06/30 36762.26 55101.68
1998/07/31 33813.51 54514.84
IMATRL PRASUN SHR__CHT 19980731 19980807 124755 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Institutional Class
on July 31, 1988. As the chart shows, by July 31, 1998, the value of
the investment would have grown to $33,814 - a 238.14% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$54,515 - a 445.15% increase. (The Goldman Sachs Natural Resources
Index does not extend as far back as the fund's start date, and
therefore can not be used for this comparison.)
ADVISOR NATURAL RESOURCES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF LARRY RAKERS)
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, 1998, the fund's
Institutional Class shares returned -14.29%. During the same period
the Standard & Poor's 500 Index returned 19.29%. Beginning this
period, the fund also compares itself to the Goldman Sachs Natural
Resources Index - an index of stocks designed to measure the
performance of companies in the natural resources sector - which
returned -14.16% over the same 12-month period.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE DURING THE PERIOD?
A. The financial crisis in Asia has been the primary cause for
declining commodity prices. Most natural resources commodities - with
the exception of palladium, platinum and silver - are down about 20%
to 30% over the past year. Natural resources stock prices move in
close tandem with commodity prices, so it has been a difficult
environment for the sector and for the fund. Historically, Asia
represented about 40% of the annual increase in demand for most
commodities. Since demand for a typical commodity grows only 2% to 2
% each year, difficulties in Asia have resulted in a decline in
annual demand growth, causing a severe decline in commodity prices. In
addition, investor sentiment has been negative toward this sector,
causing further downward pressure on stock prices.
Q. WERE THERE ANY OTHER FACTORS THAT CAUSED THE STEEP DECLINE IN
COMMODITY AND OIL PRICES?
A. With regard to oil, OPEC raised oil production quotas in November,
just as Asia was starting to fall apart, leading to over-supply and
further pressure on prices. We also had one of the warmest weather
patterns in recent history in the U.S., Europe and Asia, causing lower
demand for oil. Reduced demand, combined with increased supply,
resulted in the price of a barrel of oil losing about 40% of its value
during the period.
Q. IN LIGHT OF THE NEGATIVE ENVIRONMENT, WERE THERE ANY SPECIFIC
STRATEGIES YOU UTILIZED TO MINIMIZE RISKS TO THE FUND?
A. I have increased the fund's holdings in energy stocks because there
is a possibility that OPEC will cut production, causing a rise in oil
prices and an appreciation in the price of energy stocks. I also have
focused on integrated oil companies such as Exxon, USX-Marathon, and
Total SA. These companies' balance sheets looked good, and they are
diversified organizations that produce oil and gas, and have refining
and chemical operations. As a result, they tend to have more stable
earnings growth and offer higher dividend yields than some of the
non-integrated energy companies. More recently, I have put about 15%
of the portfolio into energy service companies and drillers such as
Schlumberger. I believe energy services companies can outperform other
natural resources stocks if oil prices rebound.
Q. WERE THERE ANY STOCKS OR STRATEGIES THAT HELPED THE FUND'S
PERFORMANCE? WHAT WERE THE DISAPPOINTMENTS?
A. There were a couple of factors that helped the fund's performance.
First, the fund was overweighted in European integrated oil companies
such as Elf Aquitaine, Total SA and British Petroleum relative to U.S.
integrated oil companies. I believed their valuations were more
reasonable than their U.S. counterparts, and they were growing their
earnings and oil production faster in markets that were growing faster
than the U.S. integrated oil companies. On the negative side, while
the fund had limited exposure to gold, just about every gold stock in
the fund has performed poorly. The supply and demand picture for gold
indicates that we consume more than we mine, which should be good for
gold prices. However, it is difficult to predict the direction of gold
prices. The central banks of governments around the world hold huge
reserves of gold, and many have been selling recently, putting
downward pressure on prices.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES SECTOR?
A. The continued decline in commodity prices seems to be telling us
that Asia isn't getting better any time soon. Of course, no one really
knows how long it will take for Asia to rebound, so I will continue to
focus on individual stock selection and picking companies that I think
have the best business prospects and earnings outlooks. I believe the
natural resources sector is setting itself up for a great rally; the
only problem is that it is impossible to say exactly when it is going
to happen. Commodity prices have been beaten down for an extended
period and producers have responded by not adding to supply. We can
have a strong rally when demand picks up, because commodity prices
would spike upward quickly during the lag time before supply
increases. In addition, when Asia gets its financial troubles worked
out - and assuming the U.S. and Europe continue to do well - we may
see signs of inflation. This sector traditionally has been a great
tool for hedging against a period of inflation.
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
GOAL:
START DATE:
SIZE:
MANAGER:
(checkmark)
ADVISOR NATURAL RESOURCES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
TOTAL SA SPONSORED ADR 6.5
USX-MARATHON GROUP 6.4
ELF AQUITAINE SA SPONSORED ADR 5.5
EXXON CORP. 5.3
MOBIL CORP. 4.8
TEXACO, INC. 4.7
CHEVRON CORP. 3.9
TOSCO CORP. 3.5
BRITISH PETROLEUM CO. PLC ADR 2.8
PHILLIPS PETROLEUM CO. 2.7
TOP INDUSTRIES AS OF JULY 31, 1998
OIL & GAS EXPLORATION 31.4%
CRUDE PETROLEUM & GAS 23.8%
PETROLEUM REFINERS 12.9%
OIL & GAS SERVICES 9.2%
GOLD ORES 4.0%
ALL OTHERS 18.7%
ROW: 1, COL: 1, VALUE: 31.4
ROW: 1, COL: 2, VALUE: 23.8
ROW: 1, COL: 3, VALUE: 12.9
ROW: 1, COL: 4, VALUE: 9.199999999999999
ROW: 1, COL: 5, VALUE: 4.0
ROW: 1, COL: 6, VALUE: 18.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR NATURAL RESOURCES FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.6%
CHEMICALS - 1.6%
E. I. du Pont de Nemours and Co. 50,000 $ 3,100,000
MacDermid, Inc. 25,000 870,313
Quaker State Corp. 30,000 461,250
Sasol, Ltd. 344,100 2,148,869
6,580,432
ENERGY SERVICES - 11.1%
DRILLING - 1.9%
Atwood Oceanics, Inc. (a) 32,500 995,313
Helmerich & Payne, Inc. 55,000 1,127,500
Nabors Industries, Inc. (a) 40,000 682,500
Noble Drilling Corp. (a) 44,900 847,488
Transocean Offshore, Inc. 99,610 3,928,369
7,581,170
OIL & GAS SERVICES - 9.2%
BJ Services Co. (a) 115,000 2,422,188
Coflexip sponsored ADR 67,000 3,316,500
Dresser Industries, Inc. 240,000 8,475,000
McDermott International, Inc. 60,800 1,577,000
Schlumberger Ltd. 135,200 8,188,050
Smith International, Inc. (a) 65,000 1,698,125
Varco International, Inc. (a) 210,000 3,333,750
Western Atlas, Inc. 119,500 7,819,781
36,830,394
TOTAL ENERGY SERVICES 44,411,564
ENGINEERING - 0.2%
ARCHITECTS & ENGINEERS - 0.2%
Stolt Comex Seaway SA Class A
sponsored ADR (a) 25,350 339,056
Stolt Comex Seaway SA 45,700 662,650
1,001,706
GAS - 0.2%
GAS DISTRIBUTION - 0.2%
MCN Energy Group, Inc. 28,500 707,156
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
INDUSTRIAL MACHINERY - WHOLESALE - 0.0%
CE Franklin Ltd. (a) 40,000 178,589
METALS & MINING - 2.2%
METAL MINING - 0.2%
Breakwater Resources Ltd. (a) 825,300 851,584
Columbia Metals Ltd. (a) 1,479,900 146,830
998,414
METAL MINING SERVICES - 0.0%
Minefinders Corp. Ltd. (c) 150,000 133,942
MISCELLANEOUS NONMETAL MINERALS - 0.1%
Camphor Ventures, Inc. (a) 585,900 325,532
MISCELLANEOUS METAL ORES, NEC - 0.2%
Anglo American Platinum Corp. Ltd. 50,000 681,633
PRIME NONFERROUS SMELTING - 1.7%
Aluminum Co. of America 94,000 6,515,375
TOTAL METALS & MINING 8,654,896
OIL & GAS - 71.1%
CRUDE PETROLEUM & GAS - 23.8%
Anadarko Petroleum Corp. 100,000 3,431,250
Burlington Resources, Inc. 41,365 1,499,481
SHARES VALUE (NOTE 1)
EEX Corp. (a) 155,000 $ 1,085,000
Eni Spa sponsored ADR 55,300 3,573,763
Elf Aquitaine SA sponsored ADR 340,400 22,083,450
Enron Oil & Gas Co. 35,000 555,625
HS Resources, Inc. (a) 35,000 387,188
Louis Dreyfus Natural Gas Corp. (a) 55,000 742,500
Magnum Hunter Resources, Inc. (a) 180,000 888,750
Occidental Petroleum Corp. 239,800 5,335,550
Oryx Energy Co. (a) 150,000 2,765,625
Paramount Resources Ltd. (c) 167,300 1,549,228
Penn West Petroleum Ltd. (a) 33,000 371,069
Petrobras PN (Pfd. Reg.) 45,480,000 9,972,400
Plains Resources, Inc. (a) 199,600 3,567,850
Probe Exploration, Inc. (a) 50,000 133,942
Rio Alto Exploration Ltd. (a) 155,000 1,563,482
Suncor, Inc. 82,000 2,768,859
Talisman Energy, Inc. (a) 20,000 506,003
Total SA sponsored ADR 453,000 25,905,938
Ulster Petroleums Ltd. (a) 90,000 625,062
Vastar Resources, Inc. 50,000 2,137,500
Vintage Petroleum, Inc. 15,000 214,688
YPF Sociedad Anonima
sponsored ADR:
representing Class D shares 90,000 2,632,500
Class D 30,000 879,431
95,176,134
OIL & GAS EXPLORATION - 31.4%
Amerada Hess Corp. 175,000 8,870,313
Berkley Petroleum Corp. (a) 81,900 677,151
Chevron Corp. 190,000 15,698,750
Companie Generale de Geophsique
SA (a) 65,000 1,625,000
Exxon Corp. 300,000 21,037,500
Kerr-McGee Corp. 16,000 821,000
Mobil Corp. 277,300 19,341,675
Petro-Canada 195,000 2,792,440
Phillips Petroleum Co. 242,200 10,702,213
Texaco, Inc. 310,000 18,851,875
USX-Marathon Group 750,000 25,593,750
126,011,667
OIL FIELD EQUIPMENT - 3.0%
Camco International, Inc. 55,000 3,905,000
Cooper Cameron Corp. (a) 87,600 3,071,475
EVI Weatherford, Inc. (a) 190,000 4,892,500
11,868,975
PETROLEUM REFINERS - 12.9%
British Petroleum Co. PLC ADR 141,850 11,383,463
Coastal Corp. (The) 102,800 3,366,700
Frontier Oil Corp. (a) 992,400 7,380,975
Imperial Oil Ltd. 160,000 2,645,765
Royal Dutch Petroleum Co. 81,000 4,131,000
Shell Canada Ltd. Class A 47,500 820,022
Shell Transport & Trading Co. PLC
ADR 46,100 1,789,256
Sun Co., Inc. 10,000 374,375
Tesoro Petroleum Corp. (a) 129,300 2,060,719
Tosco Corp. 500,000 14,000,000
Ultramar Diamond Shamrock Corp. 64,800 1,696,950
Valero Energy Corp. 81,800 1,958,088
51,607,313
TOTAL OIL & GAS 284,664,089
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 1.0%
GLASS CONTAINERS - 1.0%
Owens-Illinois, Inc. (a) 95,400 $ 4,209,525
PRECIOUS METALS - 6.4%
GOLD & SILVER ORES - 2.3%
Getchell Gold Corp. (a) 564,500 7,620,750
Industrias Penoles SA 400,000 1,300,448
Mentor Exploration & Development
Co. Ltd. 64,800 128,584
9,049,782
GOLD ORES - 4.0%
De Beers Consolidated Mines Ltd. ADR 75,000 1,226,953
Euro-Nevada Mining Ltd. 327,000 4,012,204
First Dynasty Mines Ltd. (a) 426,700 62,092
Golden Knight Resources, Inc. (a) 25,000 12,402
Greenstone Resources Ltd. (a) 991,700 2,427,020
Greenstone Resources Ltd.
warrants 2/28/02 (a) 50,700 46,949
Greenstone Resources Ltd. (c) 148,300 362,939
Indochina Goldfields Ltd. (a) 133,800 106,201
Kalahari Goldridge Mining Co. Ltd. (a) 1,000,000 316,735
Meridian Gold, Inc. (a) 793,400 2,991,289
Mountain Province Mining, Inc. (a) 135,000 245,560
Stillwater Mining Co. (a) 125,000 3,421,867
William Resources, Inc. (a) 6,510,000 602,838
William Resources, Inc. (c) 686,000 63,525
William Resources, Inc. warrants
12/31/02 (a)(c) 1,029,000 7
TVI Pacific, Inc. (a) 459,200 16,705
TVI Pacific, Inc. (c) 1,860,000 67,665
15,982,951
SILVER ORES - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 38,500 437,938
TOTAL PRECIOUS METALS 25,470,671
SHIP BUILDING & REPAIR - 0.4%
SHIP BUILDERS - 0.4%
Halter Marine Group, Inc. (a) 100,000 1,587,500
TRUCKING & FREIGHT - 2.2%
AIR COURIER SERVICES - 1.8%
CNF Transportation, Inc. 164,000 7,093,000
FREIGHT FORWARDING - 0.4%
Expeditors International of
Washington, Inc. 40,000 1,595,000
TOTAL TRUCKING & FREIGHT 8,688,000
TOTAL COMMON STOCKS
(Cost $440,437,053) 386,154,128
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b)
(Cost $14,396,596) 14,396,596 14,396,596
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $454,833,649) $ 400,550,724
LEGEND
1.Non-income producing
2.At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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 $2,177,306 or
0.5% 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 67.6%
France 13.2
Canada 6.8
United Kingdom 3.3
Brazil 2.5
Netherlands Antilles 2.0
South Africa 1.1
Netherlands 1.0
Others (individually less than 1%) 2.5
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $456,193,756. Net unrealized depreciation
aggregated $55,643,032 of which $18,087,786 related to appreciated
investment securities and $73,730,818 related to depreciated
investment securities.
The fund hereby designates approximately $68,594,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12%, 11%, 12%, 27% and 9% of Class A's, Class T's, Class
B's, Class C'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 1999 of applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 400,550,724
(COST $454,833,649) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 396,065
(COST $405,952)
RECEIVABLE FOR INVESTMENTS SOLD 3,696,838
RECEIVABLE FOR FUND SHARES SOLD 272,195
DIVIDENDS RECEIVABLE 1,014,746
INTEREST RECEIVABLE 83,017
OTHER RECEIVABLES 21,003
PREPAID EXPENSES 3,531
TOTAL ASSETS 406,038,119
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 3,362,255
PAYABLE FOR FUND SHARES REDEEMED 2,009,133
ACCRUED MANAGEMENT FEE 215,043
DISTRIBUTION FEES PAYABLE 199,851
OTHER PAYABLES AND ACCRUED EXPENSES 185,373
TOTAL LIABILITIES 5,971,655
NET ASSETS $ 400,066,464
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 433,976,081
UNDISTRIBUTED NET INVESTMENT INCOME 259,207
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 20,092,932
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (54,261,756)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 400,066,464
</TABLE>
CALCULATION OF MAXIMUM $18.94
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($6,474,198 (DIVIDED BY)
341,764 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $20.10
(100/94.25 OF $18.94)
CLASS T: $19.11
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($342,346,685 (DIVIDED BY)
17,911,164 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $19.80
(100/96.50 OF $19.11)
CLASS B: $18.81
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($44,351,235 (DIVIDED BY)
2,358,074 SHARES) A
CLASS C: $18.96
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($2,972,053 (DIVIDED BY)
156,714 SHARES) A
INSTITUTIONAL CLASS: $19.15
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,922,293 (DIVIDED BY) 204,836 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 7,051,972
DIVIDENDS
INTEREST 1,481,596
TOTAL INCOME 8,533,568
EXPENSES
MANAGEMENT FEE $ 3,365,961
TRANSFER AGENT FEES 1,385,449
DISTRIBUTION FEES 3,072,443
ACCOUNTING FEES AND EXPENSES 396,771
NON-INTERESTED TRUSTEES' COMPENSATION 2,910
CUSTODIAN FEES AND EXPENSES 89,430
REGISTRATION FEES 59,186
AUDIT 48,696
TOTAL EXPENSES BEFORE REDUCTIONS 8,420,846
EXPENSE REDUCTIONS (224,560) 8,196,286
NET INVESTMENT INCOME 337,282
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 54,122,882
FOREIGN CURRENCY TRANSACTIONS (126,929) 53,995,953
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (134,866,393)
ASSETS AND LIABILITIES IN 25,527 (134,840,866)
FOREIGN CURRENCIES
NET GAIN (LOSS) (80,844,913)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (80,507,631)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
1998 1997
OPERATIONS $ 337,282 $ (812,585)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 53,995,953 83,721,448
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (134,840,866) (11,245,423)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (80,507,631) 71,663,440
DISTRIBUTIONS TO SHAREHOLDERS (30,726) (376,703)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME - (156,340)
FROM NET REALIZED GAIN (102,298,827) (41,625,679)
TOTAL DISTRIBUTIONS (102,329,553) (42,158,722)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (110,795,873) 13,485,202
REDEMPTION FEES 157,401 60,962
TOTAL INCREASE (DECREASE) IN NET ASSETS (293,475,656) 43,050,882
NET ASSETS
BEGINNING OF PERIOD 693,542,120 650,491,238
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION
OF NET INVESTMENT INCOME OF $259,207 AND $(1,677), $ 400,066,464 $ 693,542,120
RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED NINE MONTHS YEAR ENDED
JULY 31, ENDED OCTOBER 31,
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.16 $ 25.11 $ 23.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D .06 (.05) .00
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.33) 2.81 1.46
TOTAL FROM INVESTMENT OPERATIONS (3.27) 2.76 1.46
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.10) -
IN EXCESS OF NET INVESTMENT INCOME - (.04) -
FROM NET REALIZED GAIN (3.96) (1.57) -
TOTAL DISTRIBUTIONS (3.96) (1.71) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - -
NET ASSET VALUE, END OF PERIOD $ 18.94 $ 26.16 $ 25.11
TOTAL RETURN B, C (14.61)% 11.45% 6.17%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,474 $ 6,372 $ 1,609
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.34% 1.71% A, F 1.66% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.30% G 1.68% A, G 1.58% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .28% (.28)% A (.01)% A
PORTFOLIO TURNOVER 97% 116% A 137%
AVERAGE COMMISSION RATE H $ .0185 $ .0286 $ .0337
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
CLASS A SHARES) TO OCTOBER 31, 1996.
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 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>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .02 D (.02) D .00 D (.05) D (.11) D .22
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.34) 2.83 6.56 2.00 .76 4.91
TOTAL FROM INVESTMENT OPERATIONS (3.32) 2.81 6.56 1.95 .65 5.13
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01) - - - -
IN EXCESS OF NET INVESTMENT INCOME - (.01) - - - -
FROM NET REALIZED GAIN (3.92) (1.57) (.69) (.26) (.68) (1.42)
TOTAL DISTRIBUTIONS (3.92) (1.59) (.69) (.26) (.68) (1.42)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - - - -
NET ASSET VALUE, END OF PERIOD $ 19.11 $ 26.34 $ 25.12 $ 19.25 $ 17.56 $ 17.59
TOTAL RETURN B, C (14.69)% 11.62% 35.01% 11.40% 3.97% 41.05%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 342,347 $ 618,083 $ 602,915 $ 272,979 $ 199,361 $ 40,309
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.43% 1.47% A 1.59% 1.86% E 2.10% 2.63%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.39% F 1.44% A, F 1.56% F 1.84% F 2.07% F 2.62% F
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS .10% (.12)% A .00% (.30)% (.67)% (1.18)%
PORTFOLIO TURNOVER 97% 116% A 137% 161% 125% 208%
AVERAGE COMMISSION RATE G $ .0185 $ .0286 $ .0337
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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.
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 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>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.99 $ 24.88 $ 19.23 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.09) (.12) (.15) (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.29) 2.80 6.49 .39
TOTAL FROM INVESTMENT OPERATIONS (3.38) 2.68 6.34 .36
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (3.81) (1.57) (.69) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - -
NET ASSET VALUE, END OF PERIOD $ 18.81 $ 25.99 $ 24.88 $ 19.23
TOTAL RETURN B, C (15.12)% 11.19% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 44,351 $ 59,044 $ 36,106 $ 2,508
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.98% 2.04% A 2.28% 2.23% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.94% G 2.02% A, G 2.24% G 2.21% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.41)% (.67)% A (.68)% (.67)% A
PORTFOLIO TURNOVER 97% 116% A 137% 161%
AVERAGE COMMISSION RATE H $ .0185 $ .0286 $ .0337
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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 FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS
B SHARES) TO OCTOBER 31, 1995.
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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.39
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.07)
NET REALIZED AND UNREALIZED GAIN (LOSS) (4.15)
TOTAL FROM INVESTMENT OPERATIONS (4.22)
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.22)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 18.96
TOTAL RETURN B, C (17.72)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,972
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.44% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.48)% A
PORTFOLIO TURNOVER 97%
AVERAGE COMMISSION RATE H $ .0185
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE
OF CLASS C SHARES) TO JULY 31, 1998.
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>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED NINE MONTHS YEARS ENDED OCTOBER 31,
JULY 31, ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.42 $ 25.17 $ 19.27 $ 18.87
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D .13 .04 .04 (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.35) 2.85 6.55 .41
TOTAL FROM INVESTMENT OPERATIONS (3.22) 2.89 6.59 .40
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.09) (.05) - -
IN EXCESS OF NET INVESTMENT INCOME - (.02) - -
FROM NET REALIZED GAIN (3.97) (1.57) (.69) -
TOTAL DISTRIBUTIONS (4.06) (1.64) (.69) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 - - -
NET ASSET VALUE, END OF PERIOD $ 19.15 $ 26.42 $ 25.17 $ 19.27
TOTAL RETURN B, C (14.29)% 11.95% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,922 $ 10,042 $ 9,860 $ 718
RATIO OF EXPENSES TO AVERAGE NET ASSETS .95% 1.08% A 1.44% 1.68% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS .91% G 1.06% A, G 1.39% G 1.66% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .55% .24% A .17% (.13)% A
PORTFOLIO TURNOVER 97% 116% A 137% 161%
AVERAGE COMMISSION RATE H $ .0185 $ .0286 $ .0337
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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 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 JULY 3, 1995 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1995.
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.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JULY 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of
Fidelity Advisor Series VII (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $519,407,953 and $713,793,999, 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 annual rate of .59% of average net assets.
SUB-ADVISER FEE. As the fund's investment sub-advisers, Fidelity
Management & Research (U.K.) Inc., and Fidelity Management & Research
(Far East) Inc. each a wholly owned subsidiary of FMR, receive a fee
from FMR of 110% and 105% respectively, of costs incurred in
connection with each sub-advisory agreement.
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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 17,229 $ 97
CLASS T 2,496,683 29,992
CLASS B 547,068 410,980
CLASS C 11,463 11,463
$ 3,072,443 $ 452,532
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR 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.
For the period, the following amounts were paid to third parties under
the Plans:
CLASS A $ 10,032
CLASS T $ 138,724
CLASS B $ 42,668
CLASS C $ 4,947
INSTITUTIONAL CLASS $ 952
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, 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. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% 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. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 61,964 $ 20,495
CLASS T 310,088 98,963
CLASS B 220,346 220,346*
CLASS C 1,202 1,202*
$ 593,600 $ 341,006
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN
RESOURCES TO SECURITIES DEALERS, BANKS, AND OTHER FINANCIAL
INSTITUTIONS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 21,879 .32
CLASS T 1,197,878 .24
CLASS B 151,435 .28
CLASS C 3,308 .29*
INSTITUTIONAL CLASS 10,949 .18
$ 1,385,449
* ANNUALIZED.
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 $135,628 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS C 2.50% $5,032
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 $215,157 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 $4,371 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED NINE MONTHS
JULY 31, ENDED JULY 31,
1998 A 1997
FROM NET INVESTMENT INCOME
CLASS A $ - $ 9,457
CLASS T - 344,957
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS 30,726 22,289
TOTAL $ 30,726 $ 376,703
IN EXCESS OF NET INVESTMENT INCOME
CLASS A $ - $ 3,925
CLASS T - 143,164
CLASS B - -
CLASS C - -
INSTITUTIONAL CLASS - 9,251
TOTAL $ - $ 156,340
FROM NET REALIZED GAIN
CLASS A $ 1,049,623 $ 150,076
CLASS T 90,875,522 38,300,093
CLASS B 8,918,986 2,464,412
CLASS C 16,549 -
INSTITUTIONAL CLASS 1,438,147 711,098
TOTAL $ 102,298,827 $ 41,625,679
TOTAL $ 102,329,553 $ 42,158,722
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED NINE MONTHS YEAR ENDED NINE MONTHS
JULY 31, ENDED JULY 31, ENDED
JULY 31, JULY 31,
1998 A 1997 1998 A 1997
CLASS A 175,654 209,436 $ 3,950,955 $ 5,153,545
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 43,840 6,590 998,875 161,464
SHARES REDEEMED (121,346) (36,492) (2,678,917) (892,062)
NET INCREASE (DECREASE) 98,148 179,534 $ 2,270,913 $ 4,422,947
CLASS T 3,091,100 7,500,800 $ 69,934,430 $ 184,421,132
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3,685,442 1,447,428 85,183,832 35,664,618
SHARES REDEEMED (12,329,910) (9,481,432) (270,469,326) (231,213,235)
NET INCREASE (DECREASE) (5,553,368) (533,204) $ (115,351,064) $ (11,127,485)
CLASS B 678,632 1,183,380 $ 15,156,338 $ 28,872,353
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 333,587 96,152 7,598,024 2,345,122
SHARES REDEEMED (926,142) (458,573) (19,895,184) (10,907,231)
NET INCREASE (DECREASE) 86,077 820,959 $ 2,859,178 $ 20,310,244
CLASS C 168,621 - $ 3,628,673 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 787 - 16,454 -
SHARES REDEEMED (12,694) - (262,714) -
NET INCREASE (DECREASE) 156,714 - $ 3,382,413 $ -
INSTITUTIONAL CLASS 138,650 342,819 $ 3,107,221 $ 8,550,867
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 60,810 29,515 1,415,854 727,819
SHARES REDEEMED (374,710) (384,020) (8,480,388) (9,399,190)
NET INCREASE (DECREASE) (175,250) (11,686) $ (3,957,313) $ (120,504)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 5,377
CLASS T 30,791
CLASS B 6,834
CLASS C 10,706
INSTITUTIONAL CLASS 5,478
$ 59,186
ADVISOR TECHNOLOGY FUND - INSTITUTIONAL CLASS
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - INST CL 4.26% 67.80%
S&P 500 19.29% 76.95%
GS TECHNOLOGY 15.37% 93.48%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Technology Index - a market
capitalization-weighted index of stocks designed to measure the
performance of companies in the technology sector. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV TECHNOLOGY - INST CL 4.26% 31.18%
S&P 500 19.29% 34.89%
GS TECHNOLOGY 15.37% 41.35%
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.
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.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
FA TECHNOLOGY -CL I S&P 500
GS TECHNOLOGY
00202 SP001
GS008
1996/09/03 10000.00 10000.00
10000.00
1996/09/30 11120.00 10516.69
11083.33
1996/10/31 11230.00 10806.74
11005.93
1996/11/30 12740.00 11623.62
12484.68
1996/12/31 12478.92 11393.36
12085.30
1997/01/31 13888.97 12105.21
13401.78
1997/02/28 12932.15 12200.12
12346.74
1997/03/31 12146.56 11698.81
11700.17
1997/04/30 12871.72 12397.23
12745.92
1997/05/31 14332.13 13151.98
14042.99
1997/06/30 14473.13 13741.19
14224.25
1997/07/31 16094.69 14834.57
16770.21
1997/08/31 16568.06 14003.54
16383.11
1997/09/30 17259.77 14770.51
16876.01
1997/10/31 14759.13 14277.18
15423.60
1997/11/30 14546.31 14938.07
15675.33
1997/12/31 13816.57 15194.56
14927.75
1998/01/31 14571.63 15362.61
15702.74
1998/02/28 16239.54 16470.56
17407.22
1998/03/31 16217.00 17314.02
17691.17
1998/04/30 16870.63 17488.19
18693.45
1998/05/31 15653.51 17187.57
17416.86
1998/06/30 16881.90 17885.73
18931.40
1998/07/31 16780.48 17695.25
19348.25
IMATRL PRASUN SHR__CHT 19980731 19980825 165414 R00000000000026
$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, 1998, the value of the investment would have grown to $16,780 - a
67.80% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Technology Index, it would have
grown to $19,348 - a 93.48% increase.
ADVISOR TECHNOLOGY FUND
FUND TALK: THE MANAGERS' OVERVIEW
(PHOTOGRAPH OF ADAM HETNARKSI)(PHOTOGRAPH OF MICHAEL TEMPERO)
NOTE TO SHAREHOLDERS: Michael Tempero (right) became Portfolio Manager
of the fund on July 15, 1998. The following is an interview with Adam
Hetnarksi, who managed the fund during most of the period covered by
this report, and Michael Tempero, who provides his investment approach
and outlook for the future.
Q. ADAM, HOW DID THE FUND PERFORM?
A. For the 12 months that ended July 31, 1998, the fund's
Institutional Class shares returned 4.26%. During the same period, the
Standard & Poor's 500 Index returned 19.29%. Beginning this period,
the fund also compares itself to the Goldman Sachs Technology Index -
an index of stocks designed to measure the performance of companies in
the technology sector - which returned 15.37% over the same 12-month
period.
Q. WHY DID THE FUND TRAIL ITS TWO BENCHMARK INDEXES?
A.H. The fund and the technology sector trailed the broad market - as
measured by the S&P 500 - due to concerns that the crisis in Asia
would stifle demand from that region. In addition, many companies
suffered from an inventory reduction by personal computer (PC)
manufacturers. Further, stocks in the sector had been selling at very
high multiples - a measure of how much an investor pays for a
company's earnings. When signs of weakness appeared in this sector,
stock prices fell. The fund trailed the Goldman Sachs index due to my
emphasis on higher growth companies last October, when that segment of
the sector suffered significantly from turmoil in Asia. From that
point on, the larger-capitalization segment of the sector - including
companies that make up a significant percentage of the Goldman Sachs
index - fared well. The fund suffered from not investing in some of
these companies - IBM and Hewlett-Packard, for example - when their
stocks did well even when their earnings were not appealing. Finally,
the index's Internet stocks, an area where the fund was underweighted,
generally performed well.
Q. WHICH STOCKS PROVIDED STRONG PERFORMANCE FOR THE FUND?
A.H. Microsoft did extremely well, and proved to be one of the
best-positioned large-capitalization stocks in the entire stock
market. The company benefited from product upgrades, among many other
factors. Dell Computer boasted an operational strategy that enabled it
to bring new products to market faster than competitors. Nokia
profited from winning infrastructure contracts springing up from the
deregulation of telecommunications in Europe. The company also posted
strong numbers from sales of its new 6100 series of cellular handsets.
HBO & Co. saw its share price rise as the market came to appreciate
its dominant position in both the consulting and software sides of its
health care information services business.
Q. WHICH STOCKS WERE DISAPPOINTING?
A.H. Oracle suffered from reaching a saturation point with its
database business, and sales of its new application software products
didn't meet projections. However, in spite of these problems, the
stock remained attractive and the fund still owned it. Earnings for
3Com were poor because of bad performance in the company's modem
business, tied to slower PC sales and lower average selling prices for
its products.
Q. TURNING TO YOU, MIKE, HAVE YOU MADE ANY CHANGES TO THE FUND SINCE
TAKING OVER? WHAT'S YOUR INVESTMENT APPROACH?
M.T. I haven't made any significant changes to the fund since taking
it over, but as we move forward the fund should reflect my style and
strategy more and more. Overall, I tend to run funds so that they are
fairly well concentrated in the top holdings.
Q. WHAT'S YOUR OUTLOOK, MIKE?
M.T. I'm optimistic about the technology sector. Technology products
are attractive because they can make a big difference in the
productivity of companies. However, there is always the risk that
capital spending for technology products could diminish if the economy
slows.
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, 1998, more than
$150 million
MANAGER: Michael Tempero, since July 1998;
joined Fidelity in 1993
(checkmark)
ADVISOR TECHNOLOGY FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
MICROSOFT CORP. 10.8
LUCENT TECHNOLOGIES, INC. 5.8
INTEL CORP. 4.7
COMPAQ COMPUTER CORP. 3.6
NOKIA CORP. AB SPONSORED ADR 3.5
3COM CORP. 3.3
SOLECTRON CORP. 2.9
ASCEND COMMUNICATIONS, INC. 2.8
BAY NETWORKS, INC. 2.7
HBO & CO. 2.6
TOP INDUSTRIES AS OF JULY 31, 1998
ROW: 1, COL: 1, VALUE: 19.3
ROW: 1, COL: 2, VALUE: 15.6
ROW: 1, COL: 3, VALUE: 9.0
ROW: 1, COL: 4, VALUE: 6.7
ROW: 1, COL: 5, VALUE: 5.5
ROW: 1, COL: 6, VALUE: 43.9
PREPACKAGED COMPUTER SOFTWARE 19.3%
TELEPHONE EQUIPMENT 15.6%
SEMI-CONDUCTORS 9.0%
DATACOMMUNICATIONS EQUIPMENT 6.7%
MINI & MICRO COMPUTERS 5.5%
ALL OTHERS 43.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR TECHNOLOGY FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
AIRCRAFT - 1.0%
Gulfstream Aerospace Corp. (a) 30,800 $ 1,409,100
APPLIANCE STORES - 0.3%
ELECTRIC APPLIANCES - WHOLESALE - 0.3%
Cellstar Corp. (a) 35,600 498,400
BROADCASTING - 0.0%
COMMUNICATIONS SERVICES - 0.0%
Broadcast.com, Inc. (a) 100 5,463
COMMUNICATIONS EQUIPMENT - 22.3%
DATACOMMUNICATIONS EQUIPMENT - 6.7%
3Com Corp. (a) 199,900 4,947,525
Cisco Systems, Inc. (a) 35,550 3,403,913
Level One Communications, Inc. (a) 24,700 549,575
Xircom, Inc. (a) 54,600 1,136,363
10,037,376
TELEPHONE EQUIPMENT - 15.6%
Advanced Fibre Communication, Inc. (a) 54,700 1,090,581
Ascend Communications, Inc. (a) 96,000 4,269,000
DSC Communications Corp. (a) 97,000 2,943,344
Lucent Technologies, Inc. 93,700 8,661,394
Newbridge Networks Corp. (a) 61,000 1,281,000
Nokia Corp. AB sponsored ADR 61,300 5,340,763
23,586,082
TOTAL COMMUNICATIONS EQUIPMENT 33,623,458
COMPUTER SERVICES & SOFTWARE - 26.0%
COMPUTER & SOFTWARE STORES - 0.2%
Inacom Corp. (a) 11,300 305,806
COMPUTER FACILITIES MANAGEMENT - 0.4%
International Telecommunications Data
Systems, Inc. 20,300 597,581
COMPUTER SERVICES - 4.4%
Computer Learning Centers, Inc. (a) 19,600 546,350
Com21, Inc. (a) 32,200 784,875
Equifax, Inc. 28,400 1,160,850
HBO & Co. 135,300 3,987,122
Technology Solutions, Inc. (a) 4,800 122,250
6,601,447
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
Saville Systems Ireland PLC
sponsored ADR (a) 35,500 896,375
CAD/CAM/CAE - 0.3%
Cambridge Technology Partners
Massachusetts, Inc. (a) 10,100 427,988
DATA PROCESSING - 0.8%
Affiliated Computer Services, Inc.
Class A (a) 12,500 453,125
First Data Corp. 25,800 746,588
1,199,713
PREPACKAGED COMPUTER SOFTWARE - 19.3%
BMC Software, Inc. 8,000 394,500
BindView Development Corp. (a) 900 12,938
Check Point Software Technologies Ltd. (a) 17,500 411,250
Citrix Systems, Inc. (a) 27,900 1,776,881
Computer Associates International, Inc. 42,600 1,413,788
Compuware Corp. (a) 23,400 1,259,213
i2 Technologies, Inc. (a) 800 19,500
Microsoft Corp. (a) 148,000 16,270,750
SHARES VALUE (NOTE 1)
MicroProse, Inc. (a) 41,700 $ 132,919
Oracle Corp. (a) 150,400 3,985,600
PeopleSoft, Inc. (a) 58,400 2,200,950
Siebel Systems, Inc. (a) 47,955 1,300,779
29,179,068
TOTAL COMPUTER SERVICES & SOFTWARE 39,207,978
COMPUTERS & OFFICE EQUIPMENT - 15.6%
COMPUTER COMMUNICATIONS EQUIPMENT - 2.7%
Bay Networks, Inc. (a) 116,200 4,001,638
COMPUTER EQUIPMENT - WHOLESALE - 0.6%
Ingram Micro, Inc. Class A 18,200 848,575
COMPUTER PERIPHERALS - 3.8%
EMC Corp. (a) 41,400 2,028,600
Fore Systems, Inc. (a) 126,200 3,005,138
SCI Systems, Inc. (a) 17,100 673,313
5,707,051
COMPUTER STORAGE DEVICES - 0.9%
Hutchinson Technology, Inc. (a) 66,000 1,427,250
COMPUTERS & OFFICE EQUIPMENT - 1.1%
International Business Machines Corp. 12,800 1,696,000
GRAPHICS WORKSTATIONS - 1.0%
Sun Microsystems, Inc. (a) 31,700 1,497,825
MINI & MICRO COMPUTERS - 5.5%
Compaq Computer Corp. 166,300 5,467,113
Dell Computer Corp. (a) 25,700 2,790,859
8,257,972
TOTAL COMPUTERS & OFFICE EQUIPMENT 23,436,311
DRUGS & PHARMACEUTICALS - 1.8%
COMMERCIAL LABORATORY RESEARCH - 0.2%
Integrated Process Equipment Corp. (a) 32,700 339,263
DRUGS - 1.6%
Barr Laboratories, Inc. (a) 27,650 893,441
Forest Laboratories, Inc. (a) 20,000 750,000
Schering-Plough Corp. 7,300 706,275
2,349,716
TOTAL DRUGS & PHARMACEUTICALS 2,688,979
ELECTRICAL EQUIPMENT - 6.9%
ELECTRICAL MACHINERY - 2.1%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 82,500 3,232,961
TV & RADIO COMMUNICATION EQUIPMENT - 4.8%
General Instrument Corp. (a) 119,000 3,227,875
Loral Space & Communications Ltd. (a) 93,100 2,577,706
Scientific-Atlanta, Inc. 56,100 1,349,906
7,155,487
TOTAL ELECTRICAL EQUIPMENT 10,388,448
ELECTRONIC INSTRUMENTS - 1.1%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 1.1%
KLA-Tencor Corp. (a) 5,600 167,300
Lam Research Corp. (a) 85,837 1,539,701
1,707,001
ELECTRONICS - 12.1%
CONNECTORS - 0.2%
AMP, Inc. 11,200 329,000
ELECTRONICS & ELECTRONIC COMPONENTS - 2.9%
Solectron Corp. (a) 91,100 4,372,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMI-CONDUCTORS - 9.0%
Analog Devices, Inc. (a) 13,800 $ 296,700
Broadcom Corp. Class A 7,100 445,525
Galileo Technology Ltd. 39,300 424,931
Intel Corp. 84,400 7,126,525
Lattice Semiconductor Corp. (a) 26,900 817,088
Linear Technology Corp. 3,200 191,400
Micron Technology, Inc. (a) 103,000 3,437,625
Vitesse Semiconductor Corp. (a) 25,400 835,025
13,574,819
TOTAL ELECTRONICS 18,276,619
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ACCESS & MEASURING CUTTING TOOLS - 0.1%
Stanley Works 1,800 78,638
GENERAL INDUSTRIAL MACHINERY - 0.7%
Manitowoc Co., Inc. 14,800 495,800
Tyco International Ltd. 8,688 538,113
1,033,913
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,112,551
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
MEDICAL TECHNOLOGY - 0.7%
Medtronic, Inc. 16,700 1,034,356
METALS & MINING - 0.5%
NONFERROUS WIRE - 0.5%
AFC Cable Systems, Inc. (a) 25,000 796,875
RETAIL & WHOLESALE, MISCELLANEOUS - 2.9%
MUSIC, TV, & ELECTRONIC STORES - 1.3%
Best Buy Co., Inc. (a) 42,800 2,000,900
RETAIL, GENERAL - 1.6%
Staples, Inc. (a) 70,700 2,324,263
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,325,163
SERVICES - 1.0%
BUSINESS SERVICES - 0.3%
Robert Half International, Inc. (a) 7,000 372,750
MANAGEMENT CONSULTING SERVICES - 0.1%
Hagler Bailly, Inc. 8,700 207,713
PERSONAL SERVICES - 0.6%
Cendant Corp. (a) 54,300 940,069
TOTAL SERVICES 1,520,532
TOTAL COMMON STOCKS
(Cost $126,302,905) 140,031,234
CASH EQUIVALENTS - 7.0%
Taxable Central Cash Fund (b)
(Cost $10,576,684) 10,576,684 10,576,684
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $136,879,589) $ 150,607,918
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.62%. 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, 1998, the aggregate cost of investment securities for
income tax purposes was $137,650,331. Net unrealized appreciation
aggregated $12,957,587, of which $20,723,819 related to appreciated
investment securities and $7,766,232 related to depreciated investment
securities.
The fund intends to elect to defer to its fiscal year ending July 31,
1999 approximately $2,903,000 of losses recognized during the period
November 1, 1997 to July 31, 1998.
A total of 1%, 1%, 1%, 1% and 1% of Class A's, Class T's, Class B's,
Class C's and the 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 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 150,607,918
(COST $136,879,589) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 23,878
RECEIVABLE FOR FUND SHARES SOLD 851,886
DIVIDENDS RECEIVABLE 22,666
INTEREST RECEIVABLE 48,600
OTHER RECEIVABLES 1,851
PREPAID EXPENSES 3,358
TOTAL ASSETS 151,560,157
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 20,200
PAYABLE FOR FUND SHARES REDEEMED 534,154
ACCRUED MANAGEMENT FEE 76,819
DISTRIBUTION FEES PAYABLE 73,080
OTHER PAYABLES AND 86,999
ACCRUED EXPENSES
TOTAL LIABILITIES 791,252
NET ASSETS $ 150,768,905
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 140,625,986
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (3,585,396)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 13,728,315
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 150,768,905
</TABLE>
CALCULATION OF MAXIMUM $14.88
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($15,414,374 (DIVIDED BY)
1,036,055 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.79
(100/94.25 OF $14.88)
CLASS T: $14.80
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($90,499,103 (DIVIDED BY)
6,115,475 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $15.34
(100/96.50 OF $14.80)
CLASS B: $14.68
NET ASSET VALUE AND OFFERING
PRICE PER SHARE ($31,040,924 (DIVIDED BY)
2,114,652 SHARES) A
CLASS C: $14.70
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($6,754,376 (DIVIDED BY)
459,389 SHARES) A
INSTITUTIONAL CLASS: $14.89
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($7,060,128 (DIVIDED BY) 474,067 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 215,489
DIVIDENDS
INTEREST 650,218
TOTAL INCOME 865,707
EXPENSES
MANAGEMENT FEE $ 667,737
TRANSFER AGENT FEES 325,182
DISTRIBUTION FEES 608,228
ACCOUNTING FEES AND EXPENSES 70,851
NON-INTERESTED TRUSTEES' COMPENSATION 381
CUSTODIAN FEES AND EXPENSES 28,004
REGISTRATION FEES 102,880
AUDIT 33,647
LEGAL 2,618
REPORTS TO SHAREHOLDERS 41,275
MISCELLANEOUS 812
TOTAL EXPENSES BEFORE REDUCTIONS 1,881,615
EXPENSE REDUCTIONS (40,919) 1,840,696
NET INVESTMENT INCOME (LOSS) (974,989)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,746,925
FOREIGN CURRENCY TRANSACTIONS 1,859 2,748,784
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 4,104,521
ASSETS AND LIABILITIES IN 24 4,104,545
FOREIGN CURRENCIES
NET GAIN (LOSS) 6,853,329
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,878,340
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (974,989) $ (264,379)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 2,748,784 4,756,140
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 4,104,545 9,623,770
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,878,340 14,115,531
DISTRIBUTIONS TO SHAREHOLDERS (6,934,584) (119,780)
FROM NET REALIZED GAIN
IN EXCESS OF NET REALIZED GAIN (2,779,083) -
TOTAL DISTRIBUTIONS (9,713,667) (119,780)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 80,885,922 59,627,327
REDEMPTION FEES 79,635 15,597
TOTAL INCREASE (DECREASE) IN NET ASSETS 77,130,230 73,638,675
NET ASSETS
BEGINNING OF PERIOD 73,638,675 -
END OF PERIOD $ 150,768,905 $ 73,638,675
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.96 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.08) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) .58 6.13
TOTAL FROM INVESTMENT OPERATIONS .50 6.03
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.14) (.08)
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.59) (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.88 $ 15.96
TOTAL RETURN B, C 4.20% 60.62%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 15,414 $ 7,313
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.39% 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.35% G 1.70% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.59)% (.79)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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.
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>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.91 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.11) (.11)
NET REALIZED AND UNREALIZED GAIN (LOSS) .56 6.09
TOTAL FROM INVESTMENT OPERATIONS .45 5.98
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.12) (.08)
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.57) (.08)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.80 $ 15.91
TOTAL RETURN B, C 3.85% 60.12%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 90,499 $ 57,624
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.60% 1.92% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.56% F 1.87% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.80)% (.93)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE G $ .0418 $ .0415
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 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
FUND'S 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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.88 $ 12.88
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.20) (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) .57 3.08
TOTAL FROM INVESTMENT OPERATIONS .37 3.00
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.13) -
IN EXCESS OF NET REALIZED GAIN (.45) -
TOTAL DISTRIBUTIONS (1.58) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 14.68 $ 15.88
TOTAL RETURN B, C 3.27% 23.29%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 31,041 $ 5,105
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.21% 2.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.18% G 2.45% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.40)% (1.41)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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.
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>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.28
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.17)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.27
TOTAL FROM INVESTMENT OPERATIONS 1.10
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.49)
IN EXCESS OF NET REALIZED GAIN (.20)
TOTAL DISTRIBUTIONS (.69)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 14.70
TOTAL RETURN B, C 8.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,754
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.43% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.41% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.64)% A
PORTFOLIO TURNOVER 348%
AVERAGE COMMISSION RATE G $ .0418
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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
CLASS C SHARES) TO JULY 31, 1998.
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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 E
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.98 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.04) (.06)
NET REALIZED AND UNREALIZED GAIN (LOSS) .55 6.12
TOTAL FROM INVESTMENT OPERATIONS .51 6.06
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (1.15) (.09)
IN EXCESS OF NET REALIZED GAIN (.46) -
TOTAL DISTRIBUTIONS (1.61) (.09)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01
NET ASSET VALUE, END OF PERIOD $ 14.89 $ 15.98
TOTAL RETURN B, C 4.26% 60.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,060 $ 3,598
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10% 1.50% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.07% G 1.44% A, G
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.30)% (.50)% A
PORTFOLIO TURNOVER 348% 517% A
AVERAGE COMMISSION RATE H $ .0418 $ .0415
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 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.
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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 litigation proceeds, foreign currency transactions, and
losses deferred due to wash sales.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $418,549,014 and $355,337,246, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 29,358 $ 202
CLASS T 381,247 1,030
CLASS B 175,473 131,614
CLASS C 22,150 22,150
$ 608,228 $ 154,996
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 10,739
CLASS T $ 17,681
CLASS B $ 8,594
CLASS C $ 8,447
INSTITUTIONAL CLASS $ 310
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
deferred sales charges are based on declining rates ranging from 5% to
1% for Class B and 1% for Class C, 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. In
addition, purchases of Class A and Class T shares that were subject to
a finder's fee bear a contingent deferred sales charge on assets that
do not remain in the fund for at least one year. The Class A and Class
T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 172,036 $ 65,577
CLASS T 341,738 124,571
CLASS B 46,822 46,822*
CLASS C 3,066 3,066*
$ 563,662 $ 240,036
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 33,731 .29%
CLASS T 215,291 .28%
CLASS B 59,423 .34%
CLASS C 6,795 .30% *
INSTITUTIONAL CLASS 9,942 .19%
$ 325,182
* ANNUALIZED.
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 $46,656 for the
period.
5. EXPENSE REDUCTIONS.
FMR has 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 $40,474 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 $445 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED YEAR ENDED
JULY 31, 1998 A JULY 31, 1997 B, C
FROM NET REALIZED GAIN
CLASS A $ 729,180 $ 16,754
CLASS T 5,047,886 94,078
CLASS B 851,766 -
CLASS C 20,288 -
INSTITUTIONAL CLASS 285,464 8,948
TOTAL $ 6,934,584 $ 119,780
IN EXCESS OF NET REALIZED GAIN
CLASS A $ 292,224 $ -
CLASS T 2,022,976 -
CLASS B 341,351 -
CLASS C 8,130 -
INSTITUTIONAL CLASS 114,402 -
TOTAL $ 2,779,083 $ -
TOTAL $ 9,713,667 $ 119,780
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998A 1997 B, C
CLASS A 964,665 504,366 $ 13,488,171 $ 6,388,175
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 69,547 1,197 932,488 15,029
SHARES REDEEMED (456,218) (47,502) (6,419,806) (617,865)
NET INCREASE (DECREASE) 577,994 458,061 $ 8,000,853 $ 5,785,339
CLASS T 4,279,715 4,187,137 $ 62,520,538 $ 54,310,830
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 495,203 7,154 6,737,895 89,642
SHARES REDEEMED (2,282,335) (571,399) (32,522,809) (7,714,355)
NET INCREASE (DECREASE) 2,492,583 3,622,892 $ 36,735,624 $ 46,686,117
CLASS B 1,984,357 352,887 $ 28,884,876 $ 4,850,934
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 78,354 - 1,031,825 -
SHARES REDEEMED (269,419) (31,527) (3,754,232) (463,394)
NET INCREASE (DECREASE) 1,793,292 321,360 $ 26,162,469 $ 4,387,540
CLASS C 494,219 - $ 6,924,463 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,343 - 27,642 -
SHARES REDEEMED (37,173) - (520,009) -
NET INCREASE (DECREASE) 459,389 - $ 6,432,096 $ -
INSTITUTIONAL CLASS 485,097 229,260 $ 6,901,286 $ 2,822,866
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 27,259 714 379,700 8,948
SHARES REDEEMED (263,460) (4,803) (3,726,106) (63,483)
NET INCREASE (DECREASE) 248,896 225,171 $ 3,554,880 $ 2,768,331
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 11,889
CLASS T 46,432
CLASS B 25,248
CLASS C 10,277
INSTITUTIONAL CLASS 9,034
$ 102,880
ADVISOR UTILITIES GROWTH FUND - INSTITUTIONAL CLASS
PERFORMANCE
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 life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - INST CL 34.36% 78.26%
S&P 500 19.29% 76.95%
GS UTILITIES 35.49% 63.98%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, one year or
since the fund started on September 3, 1996. You can compare
Institutional Class shares' returns to the performance of both the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of stocks designed to measure the
performance of companies in the utilities sector. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
JULY 31, 1998 YEAR FUND
FIDELITY ADV UTILITIES - INST CL 34.36% 35.41%
S&P 500 19.29% 34.89%
GS UTILITIES 35.49% 29.61%
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.
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.
(CHECKMARK)
$10,000 OVER LIFE OF FUND
FA UTILITIES GROWTH -CL I S&P 500
GS UTILITIES
00206 SP001
GS007
1996/09/03 10000.00 10000.00
10000.00
1996/09/30 10160.00 10516.69
10176.08
1996/10/31 10780.00 10806.74
10476.83
1996/11/30 11360.00 11623.62
10911.15
1996/12/31 11524.62 11393.36
10972.81
1997/01/31 11848.98 12105.21
11198.39
1997/02/28 12021.29 12200.12
11368.11
1997/03/31 11413.13 11698.81
10703.10
1997/04/30 11808.43 12397.23
10813.53
1997/05/31 12558.50 13151.98
11421.28
1997/06/30 12953.80 13741.19
11800.54
1997/07/31 13268.01 14834.57
12102.55
1997/08/31 12943.66 14003.54
11763.95
1997/09/30 14335.34 14770.51
12662.62
1997/10/31 14119.85 14277.18
12858.05
1997/11/30 14786.84 14938.07
14071.85
1997/12/31 15011.00 15194.56
14800.43
1998/01/31 16012.47 15362.61
15075.28
1998/02/28 17470.17 16470.56
15318.83
1998/03/31 18527.29 17314.02
16771.80
1998/04/30 18416.01 17488.19
16224.12
1998/05/31 17837.38 17187.57
16023.80
1998/06/30 17681.60 17885.73
16401.68
1998/07/31 17826.25 17695.25
16397.57
IMATRL PRASUN SHR__CHT 19980731 19980825 170659 R00000000000026
$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, 1998, the value of the investment would have grown to $17,826 - a
78.26% increase on the initial investment. For comparison, look at how
the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,695 - a 76.95% increase. If $10,000
was invested in the Goldman Sachs Utilities Index, it would have grown
to $16,398 - a 63.98% increase.
ADVISOR UTILITIES GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF NICK THAKORE)
An interview with
Nick Thakore, Portfolio Manager of Fidelity Advisor Utilities Growth
Fund
Q. HOW DID THE FUND PERFORM, NICK?
A. The fund did very well. For the 12-month period that ended July 31,
1998, the fund's Institutional Class shares returned 34.36%. In
comparison, the Standard & Poor's 500 Index returned 19.29%. Beginning
this period, the fund also compares itself to the Goldman Sachs
Utilities Index - an index of stocks designed to measure the
performance of companies in the utilities sector - which returned
35.49% over the same 12-month period.
Q. WHAT CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. The broader index suffered because of ongoing concerns about
corporate earnings and particularly the impact of the Asian crisis on
corporate profits. As a result, utility stocks benefited from the
perceived flight to safety and the stability of their earnings.
Overall, the fund benefited from large holdings in telephone stocks,
which performed well, and less electric utility holdings, which did
not perform as well. In addition, within the telecommunications
industry the fund was invested in the right stocks. I overweighted the
fund's assets in the new market entrants, such as WorldCom, and the
regional Bell operating companies (RBOCs), such as Bell Atlantic. Both
groups performed very well.
Q. WHY HAVE TELEPHONE STOCKS CONTINUED TO PERFORM THE BEST WITHIN THE
UTILITY SECTOR?
A. The telecommunications industry has been viewed as the growth area
within the utilities sector. Telephone company stocks increased
revenues faster than those of other utilities, and they once again
managed to meet or beat analysts' earnings estimates, helped by
continued demand for additional telephone lines and data services.
Consolidation has continued in the telecommunications industry, with
the announced mergers of WorldCom and MCI, Bell Atlantic and GTE, SBC
and Ameritech, and AT&T and TCI over the past several months. To some
degree, mergers had a positive impact on the sector because the market
anticipated that this trend would drive the industry's longer-term
performance and growth prospects.
Q. HOW WOULD YOU DESCRIBE THE ENVIRONMENT FOR ELECTRIC AND GAS
UTILITIES?
A. While the declining interest-rate environment and uncertainty in
Asia were good for electric and gas utilities in the fourth quarter of
1997, as investor confidence returned to the domestic markets in the
first half of 1998, electric and gas utilities were again viewed as
slow growth sectors. As a result, the performance of electric and gas
utilities lagged telecommunications stocks, which exhibited stronger
growth prospects.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. WorldCom performed very well. It has the best assets in the
business in terms of the networks it owns, giving it superior
resources to enter new markets. I believe it has great growth
potential in the U.S., internationally and with the Internet. Global
Telesystems Group also performed well for the fund. It's another
telecommunications stock with strong assets that is building
long-distance networks in Europe; it was undervalued relative to other
telecom asset stories. Recently the stock has performed well, and the
company's valuation was starting to catch up with stocks that have
similar growth potential.
Q. WERE THERE ANY STOCKS THAT DETRACTED FROM THE FUND'S PERFORMANCE?
A. Tel-Save Holdings was a disappointment for the fund. The company
has been in merger discussions, but nothing has been worked out on
that front, causing a lot of uncertainty with investors and hurting
the stock's performance.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. The large-cap companies that long have been players in this sector,
in general, have limited growth potential and additional risks to
their ability to sustain their growth. There is a whole host of new
entrants that have strong growth potential, and I will continue to
look closely at these companies. If concerns about Asia and corporate
earnings continue, I think utility stocks will continue to benefit
from the flight to safety. Typically, however, I don't try to predict
general market, economic and political trends. I will continue to try
to identify companies that offer the best growth prospects relative to
their valuations and that can meet or exceed their earnings estimates.
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, 1998, more than
$42 million
MANAGER: Nick Thakore, since August 1997;
Manager, Fidelity Select Telecommunications
Portfolio, since 1996; Fidelity Utilities Fund and
Fidelity Advisor Utilities Growth Fund, since
August 1997; joined Fidelity in 1993
(checkmark)
ADVISOR UTILITIES GROWTH FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S
INVESTMENTS
MCI COMMUNICATIONS CORP. 8.6
WORLDCOM, INC. 8.3
AT&T CORP. 8.0
BELL ATLANTIC CORP. 6.5
TEL-SAVE HOLDINGS, INC. 4.6
QWEST COMMUNICATIONS INTERNATIONAL, INC. 4.3
GTE CORP. 4.2
SPRINT CORP. 3.1
GLOBAL TELESYSTEMS GROUP, INC. 3.1
MEDIAONE GROUP, INC. $3.63 PIES 3.0
TOP INDUSTRIES AS OF JULY 31, 1998
TELEPHONE SERVICES 61.2%
CABLE TV OPERATORS 6.1%
ELECTRIC POWER 5.6%
ELECTRIC & OTHER SERVICES 5.4%
COMPUTER SERVICES 2.5%
ALL OTHERS 19.2%
ROW: 1, COL: 1, VALUE: 61.2
ROW: 1, COL: 2, VALUE: 6.1
ROW: 1, COL: 3, VALUE: 5.6
ROW: 1, COL: 4, VALUE: 5.4
ROW: 1, COL: 5, VALUE: 2.5
ROW: 1, COL: 6, VALUE: 19.2
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 84.8%
SHARES VALUE (NOTE 1)
BROADCASTING - 3.1%
CABLE TV OPERATORS - 3.1%
Alphanet Telecom, Inc. (a) 108,500 $ 1,184,145
Cable Michigan, Inc. (a) 325 12,025
RCN Corp. 10,200 204,000
TCI Satellite Entertainment, Inc. Class A (a) 10 52
Tele-Communications, Inc. (TCI Group),
Series A (a) 127 5,302
1,405,524
CELLULAR - 1.0%
CELLULAR & COMMUNICATION SERVICES - 1.0%
AirTouch Communications, Inc. (a) 7,400 435,213
Cellnet Data Systems, Inc. (a) 1,200 9,975
Telephone & Data Systems, Inc. 400 16,000
461,188
COMMUNICATIONS EQUIPMENT - 0.3%
TELEPHONE INTERCONNECT SYSTEMS - 0.3%
Intermedia Communications, Inc. (a) 4,000 148,000
COMPUTER SERVICES & SOFTWARE - 2.5%
COMPUTER SERVICES - 2.5%
Concentric Network Corp. 5,000 117,500
Titan Corp. (a) 180,700 1,027,731
1,145,231
PREPACKAGED COMPUTER SOFTWARE - 0.0%
DSET Corp. (a) 100 1,550
TOTAL COMPUTER SERVICES & SOFTWARE 1,146,781
ELECTRIC UTILITY - 11.2%
COMBINATION UTILITIES, NEC - 0.2%
Citizens Utilities Co. Class B 10,300 90,125
ELECTRIC & OTHER SERVICES - 5.4%
CMS Energy Corp. 11,300 476,719
Consolidated Edison, Inc. 6,000 253,875
Hidroelectrica de Cantabrico SA 100 4,501
Illinova Corp. 7,000 175,000
Montana Power Co. 20,000 701,250
PECO Energy Co. 6,000 179,625
PG&E Corp. 21,000 639,188
2,430,158
ELECTRIC POWER - 5.6%
BEC Energy 9,300 355,725
Baycorp Holdings Ltd. (a) 100 669
Duke Energy Corp. 20,494 1,170,720
Entergy Corp. 7,000 191,625
FPL Group, Inc. 3,000 182,438
GPU, Inc. 3,900 139,425
IPALCO Enterprises, Inc. 12,000 507,750
2,548,352
TOTAL ELECTRIC UTILITY 5,068,635
ELECTRICAL EQUIPMENT - 0.1%
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Loral Space & Communications Ltd. (a) 2,000 55,375
ENGINEERING - 0.4%
ELECTRICAL WORK - 0.4%
Able Telcom Holdings Corp. (a) 20,600 193,125
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 0.2%
MOTION PICTURE PRODUCTION - 0.2%
Tele-Communications, Inc.
(TCI Ventures Group), Series A (a) 5,146 $ 101,312
GAS - 2.1%
GAS & OTHER SERVICES - 0.0%
UGI Corp. 1,050 24,675
GAS DISTRIBUTION - 1.0%
Eastern Enterprises Co. 3,300 131,794
K N Energy, Inc. 1,300 64,269
MCN Energy Group, Inc. 4,000 99,250
National Fuel Gas Co. 400 16,525
NICOR, Inc. 400 15,400
Peoples Energy Corp. 500 17,500
Sempra Energy (a) 4,436 111,732
WICOR, Inc. 600 12,863
469,333
GAS TRANSMISSION - 0.7%
Williams Companies, Inc. 9,581 307,191
GAS TRANSMISSION & DISTRIBUTION - 0.4%
Columbia Gas System, Inc. (The) 2,475 131,639
Equitable Resources, Inc. 450 11,081
ONEOK, Inc. 700 23,888
166,608
TOTAL GAS 967,807
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 300 459
OIL & GAS - 2.4%
CRUDE PETROLEUM & GAS - 0.2%
EEX Corp. (a) 13,295 93,065
Occidental Petroleum Corp. 600 13,350
106,415
PETROLEUM REFINERS - 2.2%
Coastal Corp. (The) 29,750 974,313
TOTAL OIL & GAS 1,080,728
PUBLISHING - 0.3%
GENERAL PUBLISHING - 0.3%
Telepartner AS sponsored ADR (a) 50,000 125,000
TELEPHONE SERVICES - 61.2%
AT&T Corp. 59,575 3,611,734
Advanced Communications Group, Inc. 45,000 419,063
ALLTEL Corp. 400 16,775
AMNEX, Inc. (a) 190,700 190,700
BCE, Inc. 2,500 100,700
Bell Atlantic Corp. 65,000 2,949,375
BellSouth Corp. 13,800 942,713
Cincinnati Bell, Inc. 5,000 160,625
Commonwealth Telephone
Enterprises, Inc. 15,866 389,709
Equant NV 700 30,261
EXCEL Communications, Inc. (a) 1,000 21,438
France Telecom SA 632 43,099
GTE Corp. 35,200 1,914,000
Global Telesystems Group, Inc. (a) 26,000 1,391,000
ITC Deltacom, Inc. 100 4,775
MCI Communications Corp. 60,500 3,917,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
NEXTLINK Communications, Inc.
Class A (a) 3,000 $ 111,375
Qwest Communications
International, Inc. (a) 48,361 1,952,575
Sprint Corp. 20,000 1,400,000
STAR Telecommunications, Inc. (a) 70,000 1,286,250
Tel-Save Holdings, Inc. (a) 166,200 2,077,500
Telegroup, Inc. (a) 80,000 800,000
U.S. LEC Corp. Class A 4,700 96,350
Winstar Communications, Inc. (a) 4,400 145,200
WorldCom, Inc. (a) 71,575 3,784,528
27,757,120
TOTAL COMMON STOCKS
(Cost $35,829,035) 38,511,054
CONVERTIBLE PREFERRED STOCKS - 3.0%
BROADCASTING - 3.0%
CABLE TV OPERATORS - 3.0%
MediaOne Group, Inc. $3.63 PIES (a) 23,000 1,336,875
ELECTRIC UTILITY - 0.0%
COMBINATION UTILITIES, NEC - 0.0%
Citizens Utilities Trust 2.50 EPPICS 400 17,575
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $1,356,370) 1,354,450
CASH EQUIVALENTS - 12.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.62%, dated
7/31/98 due 8/03/98 $ 44,021 44,000
SHARES
Taxable Central Cash Fund (b) 5,476,909 5,476,909
TOTAL CASH EQUIVALENTS
(Cost $5,520,909) 5,520,909
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $42,706,314) $ 45,386,413
SECURITY TYPE ABBREVIATIONS
EPPICS - Equity Providing Preferred
Income Convertible Securities
PIES - Premium Income Equity
Securities
LEGEND
1.Non-income producing
2.At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.62%. 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, 1998 the aggregate cost of investment securities for
income tax purposes was $42,900,878. Net unrealized appreciation
aggregated $2,485,535, of which $5,375,424 related to appreciated
investment securities and $2,889,889 related to depreciated investment
securities.
The fund hereby designates approximately $236,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 95%, 17%, 4%, 16%, and 11% of Class A's, Class T's, Class
B's, Class C's and Institutional Class' dividend distributions during
the fiscal year qualifies for the dividends-received deductions for
corporate shareholders (unaudited).
A total of .12% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE
AGREEMENTS OF $44,000) (COST $42,706,314) - SEE $ 45,386,413
ACCOMPANYING SCHEDULE
CASH 911
RECEIVABLE FOR INVESTMENTS SOLD 94,210
RECEIVABLE FOR FUND SHARES SOLD 236,017
DIVIDENDS RECEIVABLE 41,732
INTEREST RECEIVABLE 17,118
PREPAID EXPENSES 2,697
TOTAL ASSETS 45,779,098
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,669,070
PAYABLE FOR FUND SHARES REDEEMED 69,906
ACCRUED MANAGEMENT FEE 35,900
DISTRIBUTION FEES PAYABLE 22,195
OTHER PAYABLES AND 40,660
ACCRUED EXPENSES
TOTAL LIABILITIES 2,837,731
NET ASSETS $ 42,941,367
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 37,237,826
UNDISTRIBUTED NET INVESTMENT INCOME 130
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 3,023,308
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 2,680,103
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS $ 42,941,367
CALCULATION OF MAXIMUM $16.00
OFFERING PRICE
CLASS A:
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($3,185,516 (DIVIDED BY)
199,055 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.98
(100/94.25 OF $16.00)
CLASS T: $15.95
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ($19,918,461 (DIVIDED BY)
1,248,423 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $16.53
(100/96.50 OF $15.95)
CLASS B: $15.83
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($12,918,795 (DIVIDED BY)
816,223 SHARES) A
CLASS C: $15.85
NET ASSET VALUE AND OFFERING PRICE
PER SHARE ($3,489,078 (DIVIDED BY)
220,114 SHARES) A
INSTITUTIONAL CLASS: $16.02
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
($3,429,517 (DIVIDED BY) 214,077 SHARES)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 317,533
DIVIDENDS
INTEREST 116,534
TOTAL INCOME 434,067
EXPENSES
MANAGEMENT FEE $ 154,189
TRANSFER AGENT FEES 62,946
DISTRIBUTION FEES 143,498
ACCOUNTING FEES AND EXPENSES 60,324
NON-INTERESTED TRUSTEES' COMPENSATION 85
CUSTODIAN FEES AND EXPENSES 7,633
REGISTRATION FEES 68,536
AUDIT 33,455
LEGAL 446
REPORTS TO SHAREHOLDERS 16,326
MISCELLANEOUS 554
TOTAL EXPENSES BEFORE REDUCTIONS 547,992
EXPENSE REDUCTIONS (30,022) 517,970
NET INVESTMENT INCOME (LOSS) (83,903)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 4,503,451
FOREIGN CURRENCY TRANSACTIONS 2,495 4,505,946
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,230,066
ASSETS AND LIABILITIES IN 15 1,230,081
FOREIGN CURRENCIES
NET GAIN (LOSS) 5,736,027
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,652,124
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED SEPTEMBER 3, 1996
JULY 31, (COMMENCEMENT
1998 OF OPERATIONS) TO
JULY 31,
1997
OPERATIONS $ (83,903) $ 52,435
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 4,505,946 129,499
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,230,081 1,450,022
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,652,124 1,631,956
DISTRIBUTIONS TO SHAREHOLDERS (36,379) (13,446)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,479,046) (43,681)
TOTAL DISTRIBUTIONS (1,515,425) (57,127)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 26,882,209 10,325,481
REDEMPTION FEES 21,301 848
TOTAL INCREASE (DECREASE) IN NET ASSETS 31,040,209 11,901,158
NET ASSETS
BEGINNING OF PERIOD 11,901,158 -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $130 AND $38,999, RESPECTIVELY) $ 42,941,367 $ 11,901,158
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.07 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.02) .12
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.19 3.09
TOTAL FROM INVESTMENT OPERATIONS 4.17 3.21
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) I (.03)
FROM NET REALIZED GAIN (1.21) I (.11)
TOTAL DISTRIBUTIONS (1.25) (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.00 $ 13.07
TOTAL RETURN B, C 33.99% 32.36%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,186 $ 531
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% E 1.75% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.72% H 1.75% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.11)% 1.09% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED
B THE TOTAL RETURN 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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
CLASS A SHARES) TO JULY 31, 1997.
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 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).
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.03 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.04) .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.17 3.09
TOTAL FROM INVESTMENT OPERATIONS 4.13 3.17
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03) (.03)
FROM NET REALIZED GAIN (1.19) (.11)
TOTAL DISTRIBUTIONS (1.22) (.14)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 15.95 $ 13.03
TOTAL RETURN B, C 33.72% 31.96%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 19,918 $ 7,085
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.94% 2.00% A. E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.90% H 2.00% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.23)% .79% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED
B THE TOTAL RETURN 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.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE
OF CLASS T SHARES) TO JULY 31, 1997.
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 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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.01 $ 11.76
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.13) .02
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.16 1.23
TOTAL FROM INVESTMENT OPERATIONS 4.03 1.25
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03) I -
FROM NET REALIZED GAIN (1.19) I -
TOTAL DISTRIBUTIONS (1.22) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 15.83 $ 13.01
TOTAL RETURN B, C 32.97% 10.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 12,919 $ 2,039
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% E 2.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.47% H 2.50% A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.85)% .32% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED
B THE TOTAL RETURN 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
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
F FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF
CLASS B SHARES) TO JULY 31, 1997.
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 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).
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED
TO BOOK TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.90
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.16
TOTAL FROM INVESTMENT OPERATIONS 3.06
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
FROM NET REALIZED GAIN (1.10)
TOTAL DISTRIBUTIONS (1.12)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01
NET ASSET VALUE, END OF PERIOD $ 15.85
TOTAL RETURN B, C 23.60%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,489
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.48% A, H
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.91)% A
PORTFOLIO TURNOVER 151%
AVERAGE COMMISSION RATE G $ .0298
A ANNUALIZED
B THE TOTAL RETURN 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 (SEE NOTE 5 OF NOTES
TO FINANCIAL STATEMENTS).
F FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
CLASS C SHARES) TO JULY 31, 1998.
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 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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED
JULY 31,
SELECTED PER-SHARE DATA 1998 1997 F
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.09 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .04 .14
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.17 3.10
TOTAL FROM INVESTMENT OPERATIONS 4.21 3.24
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.07) I (.04)
FROM NET REALIZED GAIN (1.22) I (.11)
TOTAL DISTRIBUTIONS (1.29) (.15)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 -
NET ASSET VALUE, END OF PERIOD $ 16.02 $ 13.09
TOTAL RETURN B, C 34.36% 32.68%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,430 $ 2,246
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.46% 1.50% A, E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.43% H 1.50% A
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .30% 1.29% A
PORTFOLIO TURNOVER 151% 13% A
AVERAGE COMMISSION RATE G $ .0298 $ .0162
A ANNUALIZED
B THE TOTAL RETURN 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 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.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO JULY 31, 1997.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AOUNT 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 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).
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, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of
securities. 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
among the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are 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 net operating losses 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 tax purposes.
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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 60 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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 earned 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 $58,950,412 and $36,423,535, 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 annual rate of .59% 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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was 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%*
CLASS C 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 retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 3,544 $ 364
CLASS T 69,549 50
CLASS B 58,845 44,295
CLASS C 11,560 11,560
$ 143,498 $ 56,269
Under the Plans, FMR 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. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 897
CLASS T $ 2,005
CLASS B $ 929
CLASS C $ 1,874
INSTITUTIONAL CLASS $ 76
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
shares at the initial date of purchase or the net asset value of the
redeemed shares, excluding any reinvested dividends and capital gains.
In addition, purchases of Class A and Class T shares that were subject
to a finder's fee bear a contingent deferred sales charge on assets
that do not remain in the fund for at least one year. The Class A and
Class T contingent deferred sales charge is based on 0.25% 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. A portion of the sales charges paid to
FDC are paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 43,487 $ 16,090
CLASS T 57,287 21,339
CLASS B 7,417 7,417*
CLASS C 803 803*
$ 108,994 $ 45,649
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 4,441 .31
CLASS T 35,008 .25
CLASS B 14,446 .24
CLASS C 3,074 .26*
INSTITUTIONAL CLASS 5,977 .16
$ 62,946
* ANNUALIZED.
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 $6,775 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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.75% $ 6,156
CLASS B 2.50% 7,922
CLASS C 2.50% 7,738
$ 21,816
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 $7,400 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 $806 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED JULY 31,
1998 A 1997 B, C
FROM NET INVESTMENT INCOME
CLASS A $ 1,800 $ 816
CLASS T 13,527 6,500
CLASS B 4,591 -
CLASS C 250 -
INSTITUTIONAL CLASS 16,211 6,130
TOTAL $ 36,379 $ 13,446
FROM NET REALIZED GAIN
CLASS A $ 66,066 $ 2,993
CLASS T 749,717 23,832
CLASS B 267,630 -
CLASS C 16,996 -
INSTITUTIONAL CLASS 378,637 16,856
TOTAL $ 1,479,046 $ 43,681
TOTAL $ 1,515,425 $ 57,127
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD MARCH 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 A 1997 B, C 1998 A 1997 B, C
CLASS A 171,774 50,784 $ 2,671,006 $ 550,067
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,614 351 61,624 3,875
SHARES REDEEMED (17,947) (10,521) (275,348) (126,974)
NET INCREASE (DECREASE) 158,441 40,614 $ 2,457,282 $ 426,968
CLASS T 1,165,712 599,685 $ 17,577,615 $ 6,865,905
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 53,698 2,654 715,847 29,247
SHARES REDEEMED (514,685) (58,641) (7,904,206) (701,040)
NET INCREASE (DECREASE) 704,725 543,698 $ 10,389,256 $ 6,194,112
CLASS B 725,510 159,349 $ 11,176,610 $ 1,941,989
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 15,242 - 202,512 -
SHARES REDEEMED (81,233) (2,645) (1,222,194) (32,964)
NET INCREASE (DECREASE) 659,519 156,704 $ 10,156,928 $ 1,909,025
CLASS C 225,634 - $ 3,470,986 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1,164 - 15,529 -
SHARES REDEEMED (6,684) - (107,792) -
NET INCREASE (DECREASE) 220,114 - $ 3,378,723 $ -
INSTITUTIONAL CLASS 310,409 180,368 $ 4,630,856 $ 1,895,917
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 22,979 1,242 307,065 13,709
SHARES REDEEMED (290,942) (9,979) (4,437,901) (114,250)
NET INCREASE (DECREASE) 42,446 171,631 $ 500,020 $ 1,795,376
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
B 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.
C 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 $ 8,713
CLASS T 17,396
CLASS B 23,267
CLASS C 10,937
INSTITUTIONAL CLASS 8,223
$ 68,536
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 Natural Resources Fund,
Fidelity Advisor Technology Fund and Fidelity Advisor Utilities Growth
Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
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 and Fidelity Advisor Utilities Growth
Fund (funds of Advisor Series VII) at July 31, 1998, the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Advisor Series VII's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at July 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 14, 1998
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
CONSUMER INDUSTRIES:
INSTITUTIONAL CLASS:
PAY DATE 9/8/98
RECORD DATE 9/4/98
DIVIDENDS -
SHORT-TERM
CAPITAL GAINS $0.72
LONG-TERM
CAPITAL GAINS $0.13
CYCLICAL INDUSTRIES:
INSTITUTIONAL CLASS:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.31 $0.28
LONG-TERM
CAPITAL GAINS $0.07 $0.42
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
FINANCIAL SERVICES:
INSTITUTIONAL CLASS:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.04 $0.07
SHORT-TERM
CAPITAL GAINS $0.19 $0.61
LONG-TERM
CAPITAL GAINS $0.02 $0.41
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
HEALTH CARE:
INSTITUTIONAL CLASS:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS - -
SHORT-TERM
CAPITAL GAINS $0.57 $0.34
LONG-TERM
CAPITAL GAINS $0.06 $0.07
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
NATURAL RESOURCES:
INSTITUTIONAL CLASS:
PAY DATE 9/8/97 12/8/97 9/8/98
RECORD DATE 9/5/97 12/5/97 9/4/98
DIVIDENDS $0.05 $0.04 $0.08
SHORT-TERM
CAPITAL GAINS $0.98 $0.58 $0.06
LONG-TERM
CAPITAL GAINS $1.76 $0.65 $0.64
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 54.15% 71.98%
20% rate 45.85% 28.02%
UTILITIES GROWTH:
INSTITUTIONAL CLASS:
PAY DATE 12/15/97 9/8/98
RECORD DATE 12/12/97 9/4/98
DIVIDENDS $0.03 -
SHORT-TERM
CAPITAL GAINS $0.95 $0.88
LONG-TERM
CAPITAL GAINS $0.15 $0.10
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 100%
20% rate -
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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
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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 International Capital
Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant Growth Fund
SM
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 5422
Cincinnati, OH 45250-5422
