FIDELITY ADVISOR
FOCUS FUNDSSM
CLASS A, CLASS T, CLASS B AND CLASS C
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
SEMIANNUAL REPORT
JANUARY 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PERFORMANCE OVERVIEW 4
CONSUMER INDUSTRIES 5 PERFORMANCE
9 FUND TALK: THE MANAGER'S OVERVIEW
10 INVESTMENT SUMMARY
11 INVESTMENTS
14 FINANCIAL STATEMENTS
18 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES 23 PERFORMANCE
27 FUND TALK: THE MANAGER'S OVERVIEW
28 INVESTMENT SUMMARY
29 INVESTMENTS
31 FINANCIAL STATEMENTS
35 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES 39 PERFORMANCE
43 FUND TALK: THE MANAGER'S OVERVIEW
44 INVESTMENT SUMMARY
45 INVESTMENTS
47 FINANCIAL STATEMENTS
51 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE 56 PERFORMANCE
60 FUND TALK: THE MANAGER'S OVERVIEW
61 INVESTMENT SUMMARY
62 INVESTMENTS
64 FINANCIAL STATEMENTS
68 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES 73 PERFORMANCE
77 FUND TALK: THE MANAGER'S OVERVIEW
78 INVESTMENT SUMMARY
79 INVESTMENTS
81 FINANCIAL STATEMENTS
85 NOTES TO THE FINANCIAL STATEMENTS
TECHNOLOGY 90 PERFORMANCE
94 FUND TALK: THE MANAGERS' OVERVIEW
95 INVESTMENT SUMMARY
96 INVESTMENTS
98 FINANCIAL STATEMENTS
102 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH 107 PERFORMANCE
111 FUND TALK: THE MANAGER'S OVERVIEW
112 INVESTMENT SUMMARY
113 INVESTMENTS
114 FINANCIAL STATEMENTS
118 NOTES TO THE FINANCIAL STATEMENTS
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PERFORMANCE OVERVIEW
Predictable only for its volatility, the U.S. stock market gave
investors a wild - and oftentimes profitable - ride during the
six-month period ending January 31, 1999. In that time, the Standard &
Poor's 500 Index - a popular measure of the U.S. stock market -
returned 15.02%. The Dow Jones Industrial Average - an index of 30
blue-chip stocks - had a 6.27% increase over the past six months.
Meanwhile, the technology-laden NASDAQ Index posted a whopping 33.83%
return during the same time frame.
Those numbers belie the continual tug-of-war between investors'
positive outlook for the U.S. equity market, and the international
events that threatened to undermine that confidence. As the period
opened, stocks were being slowly dragged downward from their record
high in mid-July. At the other end of the rope: the ongoing financial
crisis in Asia, which began to loosen the sure grip many investors
held on the domestic stock markets. The battle became even more
lopsided when Russia joined the fray. Its escalating economic and
political disasters culminated in a series of loan defaults and a
subsequent devaluation of the ruble. Investor reaction was swift and
extreme: They loosened their grasp on the equity market and the Dow
plunged 512.61 points on August 31 - erasing all previous gains for
the year.
Seeking the sanctity of a less volatile haven, investors found refuge
in U.S. Treasuries. There they paused to catch their collective
breath, anxious about the prospect of what looked almost assuredly
like an impending bear market. While Treasury yields dropped to their
lowest yield levels in three decades, new fears loomed on the horizon.
The specter of presidential impeachment hearings recalled memories of
the 1970s' bear market during the Watergate scandal. Also, rumors of
troubled hedge funds and their potential impact on the nation's
economy added to the maelstrom.
Faced with the possibility of global economic chaos, the U.S. Federal
Reserve Board stepped in. To address the lack of confidence in
domestic and global equity markets, the Fed instituted its first in a
series of three separate 0.25% interest-rate cuts. The first
quarter-point cut in the fed funds rate came on September 29. However,
investor reaction was less than overwhelming, as many expressed
disappointment that the cut was not deeper. Then, in a surprise move,
the Fed slashed rates another quarter-point on October 15, and the Dow
responded with its third-greatest single-day point gain ever. The
third rate cut - a so-called "insurance" cut on November 17 - was the
final brick in the foundation that the stock market needed to support
a fourth-quarter rally. Technology stocks, particularly the
high-flying Internet issues, helped drive stock market performance to
new heights. Strong holiday sales also lifted confidence heading into
the new year.
Despite all the worldwide financial and economic concerns, the S&P
500(Registered trademark) index notched a record fourth-straight year
of returns exceeding 20%. The Dow Jones Industrial Average had its
fourth consecutive year of double digit returns - also a new record.
As 1999 began, the U.S. economy continued to demonstrate its strength.
High levels of employment, low inflation, strong consumer buying
patterns and low interest rates sparked hopes of continued growth. The
stock market, meanwhile, sustained its momentum in January. Despite
some instances of profit-taking in technology issues, the S&P 500
index, Dow Jones Industrial Average and NASDAQ all reached record
highs in the first month of 1999. Even concerns over Brazil's currency
devaluation were hard pressed to put the brakes on the soaring equity
markets.
Individual sector performance was mixed during the six-month period
ending January 31, 1999. TECHNOLOGY stocks were the primary factor
behind the market's fourth-quarter rally in 1998 and solid performance
through the first month of 1999. Internet stocks were particularly
strong. The Internet became a more and more viable and sought-after
medium for advertisers, and continues to transform how individuals
source information and conduct business. Excess inventories and slow
demand from Asia hurt technology earlier in the period. By the end of
1998, however, nine out of the top 10 best-performing stocks in the
S&P 500 were technology stocks.
HEALTH CARE stocks also contributed to the market's overall success,
continuing their trend of recent strong performance. The
pharmaceutical arena, buoyed by strong pipelines of new products, the
ability to bring products to market more rapidly and the demands of an
aging population, helped boost the performance of health care stocks
overall. The health care sector in general also benefited from its
somewhat "economy-proof" nature; people need health care regardless of
whether the economy is weak or strong.
Currency devaluations in Russia and Brazil, as well as Russia's loan
defaults, were particularly detrimental to the performance of FINANCE
stocks during the six-month period ending January 31, 1999. On a more
recent note, however, stable economic growth, coupled with nonexistent
inflation, buoyed the financial sector in January of 1999.
The period's hardest-hit group of stocks proved to be NATURAL
RESOURCES. Overproduction, lack of demand, unusually warm winters and
weak global economic growth contributed to weak results nearly across
the board. Electric utilities, oil, gas, and paper and forest stocks
posted mostly flat to negative returns. Crude oil prices hit a 12-year
low, natural gas prices were at a seven-year low and the number of
rigs drilling for oil and gas was at a 49-year low.
The poor performance of electric utilities also detracted from the
overall returns of UTILITY stocks in general. In addition, many
telecommunications stocks in the utilities sector were battered during
the third quarter of 1998 as investors fled the equity markets in
search of safer, less volatile investments. With the exception of that
quarter, telephone utility stocks benefited greatly as demand for data
networking and communications increased tremendously.
CYCLICAL INDUSTRIES - those whose performance usually moves in line
with prevailing economic conditions - turned in mixed results.
Automobile stocks performed well as auto sales reached record levels.
Conversely, industrial commodities suffered from the state of the
global economy. Stocks in the CONSUMER INDUSTRIES sector also posted
mixed returns. Companies with significant business outside the U.S.
took it on the chin during the global economic turmoil, while
retailers - which typically have little international exposure -
generally performed well during the period.
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 JANUARY 31, PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
1999
FIDELITY ADV CONSUMER - CL A 12.64% 31.88% 94.83%
FIDELITY ADV CONSUMER - CL A 6.16% 24.30% 83.63%
(INCL. 5.75% SALES CHARGE)
S&P 500 (registered trademark) 15.02% 32.49% 103.54%
GS Consumer Industries 11.15% 27.43% 84.43%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector. Issues in
the index include providers of consumer services and products,
including producers of beverages - alcoholic and non-alcoholic food,
personal care, household products and tobacco companies. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR LIFE OF FUND
1999
FIDELITY ADV CONSUMER - CL A 31.88% 31.87%
FIDELITY ADV CONSUMER - CL A 24.30% 28.67%
(INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Consumer Industries 27.43% 28.90%
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
1998/08/31 14010.10 15136.87
14250.87
1998/09/30 14167.78 16106.54
14330.43
1998/10/31 15878.08 17416.64
16100.92
1998/11/30 16802.57 18472.27
17178.98
1998/12/31 18004.40 19536.64
18227.30
1999/01/29 18362.64 20353.66
18442.58
IMATRL PRASUN SHR__CHT 19990131 19990226 110853 R00000000000032
$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 January 31, 1999, the value of
the investment would have grown to $18,363 - an 83.63% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Consumer Industries Index, it would have grown to $18,443 - an
84.43% 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL T 12.56% 31.60% 93.24%
FIDELITY ADV CONSUMER - CL T 8.62% 26.99% 86.47%
(INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Consumer Industries 11.15% 27.43% 84.43%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector. Issues in
the index include providers of consumer services and products,
including producers of beverages - alcoholic and non-alcoholic food,
personal care, household products and tobacco companies. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL T 31.60% 31.42%
FIDELITY ADV CONSUMER - CL T 26.99% 29.49%
(INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Consumer Industries 27.43% 28.90%
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
1998/08/31 14236.18 15136.87
14250.87
1998/09/30 14397.48 16106.54
14330.43
1998/10/31 16128.00 17416.64
16100.92
1998/11/30 17069.78 18472.27
17178.98
1998/12/31 18282.32 19536.64
18227.30
1999/01/29 18647.26 20353.66
18442.58
IMATRL PRASUN SHR__CHT 19990131 19990226 111148 R00000000000032
$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 January 31, 1999, the value of
the investment would have grown to $18,647 - an 86.47% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Consumer Industries Index, it would have grown to $18,443 - an
84.43% 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 six months, past one year and life of fund total return
figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL B 12.28% 30.90% 91.38%
FIDELITY ADV CONSUMER - CL B 7.28% 25.90% 88.38%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Consumer Industries 11.15% 27.43% 84.43%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector. Issues in
the index include providers of consumer services and products,
including producers of beverages - alcoholic and non-alcoholic food,
personal care, household products and tobacco companies. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL B 30.90% 30.89%
FIDELITY ADV CONSUMER - CL B 25.90% 30.04%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Consumer Industries 27.43% 28.90%
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
1998/08/31 14643.44 15136.87
14250.87
1998/09/30 14798.16 16106.54
14330.43
1998/10/31 16577.85 17416.64
16100.92
1998/11/30 17528.63 18472.27
17178.98
1998/12/31 18771.97 19536.64
18227.30
1999/01/29 18838.00 20353.66
18442.58
IMATRL PRASUN SHR__CHT 19990131 19990226 111346 R00000000000032
$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
January 31, 1999, the value of the investment, including the effect of
the contingent deferred sales charge, would have grown to $18,838 - an
88.38% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Consumer Industries Index,
it would have grown to $18,443 - an 84.43% 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
six months, past one year and life of fund total return figures are
1%, 1% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL C 12.22% 30.97% 91.30%
FIDELITY ADV CONSUMER - CL C 11.22% 29.97% 91.30%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Consumer Industries 11.15% 27.43% 84.43%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector. Issues in
the index include providers of consumer services and products,
including producers of beverages - alcoholic and non-alcoholic food,
personal care, household products and tobacco companies. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CONSUMER - CL C 30.97% 30.87%
FIDELITY ADV CONSUMER - CL C 29.97% 30.87%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Consumer Industries 27.43% 28.90%
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 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 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
1998/08/31 14652.23 15136.87
14250.87
1998/09/30 14807.22 16106.54
14330.43
1998/10/31 16585.06 17416.64
16100.92
1998/11/30 17534.87 18472.27
17178.98
1998/12/31 18776.92 19536.64
18227.30
1999/01/29 19130.05 20353.66
18442.58
IMATRL PRASUN SHR__CHT 19990131 19990226 112538 R00000000000032
$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
January 31, 1999, the value of the investment, including the effect of
the contingent deferred sales charge, would have grown to $19,130 - a
91.30% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Consumer Industries Index,
it would have grown to $18,443 - an 84.43% 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. During the six-month period that ended January 31, 1999, the fund's
Class A, Class T, Class B and Class C shares had returns of 12.64%,
12.56%, 12.28% and 12.22%, respectively. During the same period, the
Standard & Poor's 500 Index returned 15.02%. The fund also compares
itself to the Goldman Sachs Consumer Industries Index - an index of
300 stocks designed to measure the performance of companies in the
consumer industries sector - which returned 11.15% over the same
six-month period. During the 12-month period ending January 31, 1999,
the fund's Class A, Class T, Class B and Class C shares returned
31.88%, 31.60%, 30.90% and 30.97%, respectively. By comparison, the
S&P 500 index and the Goldman Sachs Consumer Industries Index returned
32.49% and 27.43%, respectively, during the same 12-month period.
Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD?
A. I looked for opportunities to buy undervalued companies, as well as
companies that appeared to have the best business trends at the time.
In the beginning of August, I began to shift from retailing stocks to
multinational companies, because multinationals were cheap and
retailers were getting expensive. When the market plummeted in late
August, retailing took it on the chin, and as retail stocks got
cheaper, I added more to the portfolio. With the approach of the end
of the calendar year - the usual time for retail stock sell-offs - I
decided that conditions still looked positive after talking to the
management of many retailers, so I pared back the fund's multinational
holdings and added even more retail stocks. Within the consumer
products area, I stayed focused on household products and personal
care during the year rather than on food, beverage and tobacco. The
first two groups tend to have higher sales growth and better earnings
growth over time, because it's much easier to innovate in these areas.
Q. HOW MUCH OF AN IMPACT DID GLOBAL ECONOMIC PROBLEMS HAVE ON THE
FUND?
A. Among consumer stocks, I observed that if the majority of a
company's sales came from the U.S. and it made its earnings targets,
its stock performed well. If the majority of sales came from outside
the U.S., then its stock did poorly, whether or not the company made
its earnings targets. So, multinational companies like Coca-Cola,
Gillette and Avon were punished, regardless of the impact on their
earnings from international economic problems.
Q. WHICH STOCKS PERFORMED WELL?
A. By their nature, retailers operate primarily in the U.S., so they
generally performed well during the period. Dayton Hudson - which owns
discounter Target Stores - Lowe's hardware stores and Saks all
performed strongly. Wal-Mart, the fund's number-one holding at the end
of the period, was a stellar performer, benefiting from its steadily
increasing market share and its growing earnings. First Brands, the
maker of Glad Bag products, was acquired by Clorox, and its stock
price increased as a result. Clorox also performed well based on its
earnings and volume growth. Drug chains Walgreen's and CVS did very
well, benefiting from steady earnings growth.
Q. WHICH STOCKS DISAPPOINTED?
A. As I mentioned earlier, Gillette, one of the fund's top holdings,
recovered well in December and January, but didn't do as well as I
expected. Gillette did have lower earnings, but it also had a great
story - its launch of the new Mach 3 razor. Although the launch of the
razor was a huge success, it could not offset the impact of the global
economic crisis. Coca-Cola was another disappointment. With the
majority of its sales outside the U.S., Coca-Cola had significant
international exposure, and its stock performed poorly. Avon was an
even bigger disappointment, because in spite of meeting earnings
targets and maintaining earnings estimates, its stock was extremely
volatile, simply because the majority of its business is outside the
U.S.
Q. WHAT'S YOUR OUTLOOK, DOUG?
A. I'm always cautious. Consumer activity is very strong right now,
but the U.S. may not have absorbed the total impact of the world's
economic problems. It is possible that the U.S. economy simply cannot
strengthen much further without triggering wage inflation. Stocks have
become much more expensive without a corresponding decline in interest
rates to justify their higher price-to-earnings ratios. I'm continuing
to take a bottom-up approach, picking high-quality stocks rather than
betting on the direction of the economy. I'm also taking a long-term
view, waiting for opportunities to present themselves rather than
trying to predict the future or reacting emotionally to events in the
market. So far, that's proved to be a successful strategy for the
fund.
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.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$33 million
MANAGER: Doug Chase, since 1997;
joined Fidelity in 1993
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Wal-Mart Stores, Inc. 6.9
Philip Morris Companies, Inc. 4.9
Procter & Gamble Co. 4.5
Home Depot, Inc. 3.2
Gillette Co. 2.8
McDonald's Corp. 2.6
Clorox Co. 2.5
PepsiCo, Inc. 2.5
Time Warner, Inc. 2.2
CBS Corp. 2.2
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
General Merchandise Stores 12.9%
Household Products 12.5%
Broadcasting 10.8%
Foods 7.0%
Beverages 6.9%
All Others 49.9%*
Row: 1, Col: 1, Value: 12.9
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 10.8
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 49.9
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.7%
Interpublic Group of 3,100 $ 245,288
Companies, Inc.
Omnicom Group, Inc. 3,100 198,400
Outdoor Systems, Inc. (a) 4,562 131,158
574,846
AIR TRANSPORTATION - 0.4%
Viad Corp. 4,400 126,225
APPAREL STORES - 3.8%
Abercrombie & Fitch Co. Class 2,995 229,118
A (a)
AnnTaylor Stores Corp. (a) 2,400 93,000
Chicos Fas, Inc. (a) 2,100 64,050
Gap, Inc. 7,312 469,339
Limited, Inc. (The) 4,300 146,738
TJX Companies, Inc. 6,900 203,981
Wet Seal, Inc. Class A (a) 1,800 67,725
1,273,951
AUTOS, TIRES, & ACCESSORIES -
0.3%
Canadian Tire Corp. Ltd. 1,900 52,177
Series A
Pep Boys-Manny, Moe & Jack 3,700 58,275
110,452
BEVERAGES - 6.9%
Anheuser-Busch Companies, 5,600 395,850
Inc.
Canandaigua Brands, Inc. 800 46,900
Class A (a)
Celestial Seasonings, Inc. (a) 7,800 225,225
Coca-Cola Co. (The) 3,200 209,400
Coors (Adolph) Co. Class B 4,100 262,656
Golden State Vinters, Inc. 5,200 77,675
Class B (a)
PepsiCo, Inc. 21,400 835,938
Seagram Co. Ltd. 4,200 200,106
Whitman Corp. 2,900 56,550
2,310,300
BROADCASTING - 10.8%
Cablevision Systems Corp. 2,100 141,488
Class A (a)
CBS Corp. 21,100 717,400
Chancellor Media Corp. (a) 1,700 97,750
Clear Channel Communications, 2,200 136,125
Inc. (a)
Comcast Corp.:
Class A (special) 2,500 169,961
Class A 2,100 136,500
Cox Communications, Inc. 3,700 265,938
Class A (a)
E.W. Scripps Co. Class A 1,300 57,606
Jacor Communications, Inc. 3,500 243,688
Class A (a)
MediaOne Group, Inc. 6,400 358,800
Tele-Communications, Inc. 6,200 425,088
(TCI Group) Series A (a)
Time Warner, Inc. 11,650 728,125
USA Networks, Inc. (a) 3,000 108,000
3,586,469
BUILDING MATERIALS - 0.3%
Richelieu Hardware Ltd. (a) 7,900 91,484
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 0.8%
Gemstar International Group 1,400 $ 81,025
Ltd. (a)
Newell Co. 4,500 187,031
268,056
DRUG STORES - 2.3%
CVS Corp. 5,930 324,668
Walgreen Co. 7,150 446,875
771,543
DRUGS & PHARMACEUTICALS - 0.0%
Rexall Sundown, Inc. (a) 600 8,250
ENTERTAINMENT - 5.2%
Carnival Corp. 3,100 152,094
Disney (Walt) Co. 11,100 366,300
International Speedway Corp. 2,000 85,000
Class A
King World Productions, Inc. 5,000 136,875
(a)
Premier Parks, Inc. (a) 1,800 57,038
Royal Carribean Cruises Ltd. 1,000 39,750
Tele-Communications, Inc. 5,750 307,625
(Liberty Media Group) Series
A (a)
Viacom, Inc.:
Class A (a) 800 67,100
Class B (non-vtg.) (a) 6,300 535,500
1,747,282
FOODS - 7.0%
American Italian Pasta Co. 4,600 128,800
Class A (a)
Archer-Daniels-Midland Co. 1,995 30,174
Bestfoods 3,550 178,609
ConAgra, Inc. 5,100 165,750
Corn Products International, 2,737 72,702
Inc.
Dean Foods Co. 1,200 46,800
Earthgrains Co. 2,700 69,525
Flowers Industries, Inc. 1,200 28,875
Groupe Danone 120 33,670
Heinz (H.J.) Co. 6,675 375,886
Hershey Foods Corp. 800 45,000
Interstate Bakeries Corp. 2,500 61,406
Keebler Foods Co. (a) 4,100 148,625
Kellogg Co. 1,400 57,225
Nabisco Holdings Corp. Class A 2,900 121,981
Quaker Oats Co. 3,300 183,563
Ralston Purina Co. 2,600 71,175
Sanderson Farms, Inc. 3,000 45,750
Sara Lee Corp. 11,300 288,150
Tootsie Roll Industries, Inc. 1,500 67,594
Vlasic Foods International, 2,800 56,700
Inc. (a)
Wrigley (Wm.) Jr. Co. 700 65,538
2,343,498
GENERAL MERCHANDISE STORES -
12.9%
Consolidated Stores Corp. (a) 1,140 19,024
Costco Companies, Inc. (a) 3,600 298,350
Dayton Hudson Corp. 10,500 669,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES -
CONTINUED
Dollar Tree Stores, Inc. (a) 2,550 $ 110,128
Federated Department Stores, 10,000 418,125
Inc. (a)
Nordstrom, Inc. 2,000 83,250
Saks, Inc. (a) 11,124 409,502
Wal-Mart Stores, Inc. 26,650 2,291,886
4,299,640
GROCERY STORES - 4.5%
Albertson's, Inc. 5,900 359,900
Kroger Co. (a) 3,300 209,550
Loblaw Companies Ltd. 2,800 71,334
Meyer (Fred), Inc. (a) 7,100 443,750
Safeway, Inc. (a) 7,350 412,519
1,497,053
HOME FURNISHINGS - 0.2%
Maxim Group, Inc. (a) 2,300 52,038
HOUSEHOLD PRODUCTS - 12.5%
Alberto-Culver Co. Class A 4,700 110,450
Avon Products, Inc. 7,950 293,653
Church & Dwight Co., Inc. 1,900 74,338
Clorox Co. 6,699 838,212
Dial Corp. 1,800 49,163
Gillette Co. 15,700 922,375
Procter & Gamble Co. 16,530 1,502,164
Unilever NV (NY shares) 5,100 390,150
4,180,505
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 900 22,219
Harley-Davidson, Inc. 1,900 98,800
Hasbro, Inc. 2,200 81,813
Mattel, Inc. 5,000 113,438
316,270
LODGING & GAMING - 0.4%
Circus Circus Enterprises, 4,500 61,313
Inc. (a)
Promus Hotel Corp. (a) 1,000 29,875
Sun International Hotels Ltd. 1,300 55,494
(a)
146,682
PACKAGING & CONTAINERS - 0.7%
Corning, Inc. 2,700 131,625
Tupperware Corp. 4,200 86,363
217,988
PAPER & FOREST PRODUCTS - 0.9%
Kimberly-Clark Corp. 6,200 308,838
PRINTING - 0.3%
Quebecor Printing, Inc. (sub. 1,000 21,672
vtg.)
Reynolds & Reynolds Co. Class 2,100 42,000
A
Valassis Communications, Inc. 400 20,450
84,122
SHARES VALUE (NOTE 1)
PUBLISHING - 3.5%
American Greetings Corp. 1,000 $ 39,500
Class A
Gannet, Inc. 3,300 217,181
Harcourt General, Inc. 2,450 117,600
Harte Hanks Communications, 1,900 47,975
Inc.
McGraw-Hill Companies, Inc. 2,000 216,250
Playboy Enterprises, Inc. 9,800 221,725
Class B (a)
Reader's Digest Association, 4,500 129,375
Inc. Class A (non-vtg.)
Times Mirror Co. Class A 900 49,556
Torstar Corp. 3,800 40,359
Tribune Co. 1,300 83,119
1,162,640
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
Starwood Hotels & Resorts 1,300 32,500
Worldwide, Inc.
RESTAURANTS - 3.7%
Brinker International, Inc. 1,800 49,500
(a)
CEC Entertainment, Inc. (a) 1,000 29,875
CKE Restaurants, Inc. 2,300 54,625
Logan's Roadhouse, Inc. (a) 25 594
McDonald's Corp. 10,900 859,056
Outback Steakhouse, Inc. (a) 1,000 36,500
Papa John's International, 800 32,600
Inc. (a)
Sizzler International, Inc. 10,900 25,888
(a)
Starbucks Corp. (a) 900 46,856
Tricon Global Restaurants, 2,300 109,394
Inc. (a)
1,244,888
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.4%
Action Performance Companies, 2,300 110,400
Inc. (a)
Barnes & Noble, Inc. (a) 1,600 59,900
Borders Group, Inc. (a) 2,600 44,525
Finish Line, Inc. Class A (a) 5,200 47,775
Home Depot, Inc. 17,700 1,068,638
Lowe's Companies, Inc. 7,900 460,669
Office Depot, Inc. (a) 4,200 145,950
Staples, Inc. (a) 4,350 124,519
Tandy Corp. 900 48,600
Williams-Sonoma, Inc. (a) 800 27,750
2,138,726
SERVICES - 0.7%
ACNielsen Corp. (a) 2,300 52,613
Day Runner, Inc. (a) 1,000 13,500
Modis Professional Services, 3,000 43,688
Inc. (a)
Service Corp. International 2,300 36,513
ServiceMaster Co. 3,950 75,297
221,611
TEXTILES & APPAREL - 0.7%
Fruit of the Loom, Inc. Class 1,100 15,950
A (a)
Liz Claiborne, Inc. 1,900 72,675
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
Mohawk Industries, Inc. (a) 500 $ 19,250
Pacific Sunwear of 1,950 49,359
California, Inc. (a)
VF Corp. 1,000 42,625
WestPoint Stevens, Inc. Class 1,300 34,572
A (a)
234,431
TOBACCO - 4.9%
Philip Morris Companies, Inc. 34,600 1,626,200
TOTAL COMMON STOCKS 30,976,488
(Cost $24,697,326)
CASH EQUIVALENTS - 7.1%
Taxable Central Cash Fund (b) 2,370,141 2,370,141
(Cost $2,370,141)
TOTAL INVESTMENT IN $ 33,346,629
SECURITIES - 100%
(Cost $27,067,467)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $27,146,784. Net unrealized appreciation
aggregated $6,199,845, of which $6,859,066 related to appreciated
investment securities and $659,221 related to depreciated investment
securities.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 33,346,629
value (cost $27,067,467) -
See accompanying schedule
Cash 10,867
Receivable for investments 275,267
sold
Receivable for fund shares 82,613
sold
Dividends receivable 11,608
Interest receivable 9,525
Other receivables 11
TOTAL ASSETS 33,736,520
LIABILITIES
Payable for investments $ 197,925
purchased
Payable for fund shares 53,672
redeemed
Accrued management fee 11,408
Distribution fees payable 13,085
Other payables and accrued 29,080
expenses
TOTAL LIABILITIES 305,170
NET ASSETS $ 33,431,350
Net Assets consist of:
Paid in capital $ 27,249,627
Accumulated net investment (93,728)
loss
Accumulated undistributed net (3,712)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,279,163
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 33,431,350
CALCULATION OF MAXIMUM $15.89
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($2,696,828 (divided
by) 169,737 shares)
Maximum offering price per $16.86
share (100/94.25 of
$15.89)
CLASS T: NET ASSET VALUE $15.84
and redemption price per
share ($17,115,937 (divided
by) 1,080,856 shares)
Maximum offering price per $16.41
share (100/96.50 of
$15.84)
CLASS B: NET ASSET VALUE $15.70
and offering price per
share ($7,535,466 (divided
by) 479,979 shares) A
CLASS C: NET ASSET VALUE $15.71
and offering price per
share ($1,775,876 (divided
by) 113,011 shares) A
INSTITUTIONAL CLASS: NET $15.96
ASSET VALUE, offering price
and redemption price per
share ($4,307,243
(divided by) 269,843 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 124,972
Dividends
Interest 54,500
TOTAL INCOME 179,472
EXPENSES
Management fee $ 83,927
Transfer agent fees 41,440
Distribution fees 77,395
Accounting fees and expenses 30,029
Non-interested trustees' 52
compensation
Custodian fees and expenses 6,187
Registration fees 43,775
Audit 14,423
Legal 294
Miscellaneous 70
Total expenses before 297,592
reductions
Expense reductions (24,392) 273,200
NET INVESTMENT INCOME (LOSS) (93,728)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 100,123
Foreign currency transactions (283) 99,840
Change in net unrealized 3,719,996
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 3,819,836
NET INCREASE (DECREASE) IN $ 3,726,108
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (93,728) $ (119,125)
income (loss)
Net realized gain (loss) 99,840 2,436,414
Change in net unrealized 3,719,996 1,539,184
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,726,108 3,856,473
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,578,626) (1,433,351)
from net realized gains
Share transactions - net 3,441,880 15,183,117
increase (decrease)
Redemption fees 9,461 39,768
TOTAL INCREASE (DECREASE) 5,598,823 17,646,007
IN NET ASSETS
NET ASSETS
Beginning of period 27,832,527 10,186,520
End of period (including $ 33,431,350 $ 27,832,527
accumulated net investment
loss of $93,728)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.08 $ 13.48 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.03) (.06) (.05)
D
Net realized and unrealized 1.69 3.31 3.60
gain (loss)
Total from investment 1.66 3.25 3.55
operations
Less Distributions
From net realized gain (.85) (1.68) (.07)
Redemption fees added to paid .00 .03 -
in capital
Net asset value, end of period $ 15.89 $ 15.08 $ 13.48
TOTAL RETURN B, C 12.64% 27.48% 35.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,697 $ 2,220 $ 944
(000 omitted)
Ratio of expenses to average 1.65% A, F 1.75% F 1.75% A, F
net assets
Ratio of expenses to average 1.63% A, G 1.73% G 1.73% A, G
net assets after expense
reductions
Ratio of net investment (.37)% A (.47)% (.50)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.00 $ 13.45 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.04) (.10) (.09)
D
Net realized and unrealized 1.69 3.28 3.60
gain (loss)
Total from investment 1.65 3.18 3.51
operations
Less Distributions
From net realized gain (.81) (1.66) (.06)
Redemption fees added to paid .00 .03 -
in capital
Net asset value, end of period $ 15.84 $ 15.00 $ 13.45
TOTAL RETURN B, C 12.56% 26.93% 35.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,116 $ 13,989 $ 7,314
(000 omitted)
Ratio of expenses to average 1.90% A, F 2.00% F 2.00% A, F
net assets
Ratio of expenses to average 1.88% A, G 1.98% G 1.97% A, G
net assets after expense
reductions
Ratio of net investment (.61)% A (.71)% (.83)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.91 $ 13.42 $ 11.46
period
Income from Investment
Operations
Net investment income (loss) (.08) (.17) (.08)
D
Net realized and unrealized 1.68 3.26 2.04
gain (loss)
Total from investment 1.60 3.09 1.96
operations
Less Distributions
From net realized gain (.81) (1.64) -
Redemption fees added to paid .00 .04 -
in capital
Net asset value, end of period $ 15.70 $ 14.91 $ 13.42
TOTAL RETURN B, C 12.28% 26.30% 17.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,535 $ 5,419 $ 596
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.39% A, G 2.48% G 2.46% A, G
net assets after expense
reductions
Ratio of net investment (1.13)% A (1.23)% (1.60)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 14.95 $ 12.66
period
Income from Investment
Operations
Net investment income (loss) (.08) (.13)
D
Net realized and unrealized 1.67 2.87
gain (loss)
Total from investment 1.59 2.74
operations
Less Distributions
From net realized gain (.83) (.49)
Redemption fees added to paid .00 .04
in capital
Net asset value, end of period $ 15.71 $ 14.95
TOTAL RETURN B, C 12.22% 22.67%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,776 $ 1,461
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% A, F
net assets
Ratio of expenses to average 2.40% A, G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (1.12)% A (1.27)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144%
</TABLE>
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.12 $ 13.51 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.01) (.03) (.01)
D
Net realized and unrealized 1.69 3.31 3.59
gain (loss)
Total from investment 1.68 3.28 3.58
operations
Less Distributions
From net realized gain (.85) (1.70) (.07)
Redemption fees added to paid .01 .03 -
in capital
Net asset value, end of period $ 15.96 $ 15.12 $ 13.51
TOTAL RETURN B, C 12.81% 27.70% 35.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,307 $ 4,745 $ 1,333
(000 omitted)
Ratio of expenses to average 1.41% A, F 1.50% F 1.50% A, F
net assets
Ratio of expenses to average 1.40% A, G 1.48% G 1.48% A, G
net assets after expense
reductions
Ratio of net investment (.12)% A (.20)% (.13)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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 (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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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.
Accumulated net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $14,401,005 and $13,001,189, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 2,738 $ 94
CLASS T 36,411 0
CLASS B 30,662 22,996
CLASS C 7,584 7,249
$ 77,395 $ 30,339
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 8,396 $ 2,581
CLASS T 18,942 4,614
CLASS B 17,820 17,820 *
CLASS C 3,131 3,131 *
$ 48,289 $ 28,146
* 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 $ 3,535 .32 *
CLASS T 20,212 .28 *
CLASS B 10,370 .34 *
CLASS C 2,737 .36 *
INSTITUTIONAL CLASS 4,586 .22 *
$ 41,440
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $2,455 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.75 - 1.50% $ 1,976
CLASS T 2.00 - 1.75% 10,200
CLASS B 2.50 - 2.25% 6,124
CLASS C 2.50 - 2.25% 1,605
INSTITUTIONAL CLASS 1.50 - 1.25% 1,801
$ 21,706
Effective December 1, 1998, Class A, Class T, Class B, Class C and the
Institutional Class expense limitations were changed to 1.50%, 1.75%,
2.25%, 2.25%, and 1.25% of each class' average net assets,
respectively.
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 $2,632 under this arrangement.
In addition, the fund has entered into arrangements with its transfer
agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of expenses. During the period, each
applicable class' expenses were reduced as follows under the transfer
agent arrangements:
TRANSFER AGENT CREDITS
CLASS T $ 54
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:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 121,205 $ 122,598
Class T 772,285 1,001,052
Class B 327,913 102,510
Class C 82,949 1,954
Institutional Class 274,274 205,237
Total $ 1,578,626 $ 1,433,351
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 45,713 92,013 $ 660,330
Reinvestment of distributions 9,730 9,124 119,873
Shares redeemed (32,924) (23,935) (467,556)
Net increase (decrease) 22,519 77,202 $ 312,647
CLASS T Shares sold 322,388 784,694 $ 4,496,005
Reinvestment of distributions 59,264 73,835 728,352
Shares redeemed (233,459) (469,801) (3,249,636)
Net increase (decrease) 148,193 388,728 $ 1,974,721
CLASS B Shares sold 198,500 359,596 $ 2,737,080
Reinvestment of distributions 25,754 7,684 314,459
Shares redeemed (107,599) (48,361) (1,469,628)
Net increase (decrease) 116,655 318,919 $ 1,581,911
CLASS C Shares sold 59,997 101,815 $ 847,436
Reinvestment of distributions 6,196 43 75,711
Shares redeemed (50,882) (4,158) (725,743)
Net increase (decrease) 15,311 97,700 $ 197,404
INSTITUTIONAL CLASS Shares 109,169 246,078 $ 1,505,143
sold
Reinvestment of distributions 21,083 15,764 260,589
Shares redeemed (174,277) (46,652) (2,390,535)
Net increase (decrease) (44,025) 215,190 $ (624,803)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 1,311,243
Reinvestment of distributions 113,019
Shares redeemed (334,712)
Net increase (decrease) $ 1,089,550
CLASS T Shares sold $ 11,054,004
Reinvestment of distributions 913,447
Shares redeemed (6,762,615)
Net increase (decrease) $ 5,204,836
CLASS B Shares sold $ 5,098,496
Reinvestment of distributions 94,935
Shares redeemed (692,526)
Net increase (decrease) $ 4,500,905
CLASS C Shares sold $ 1,469,653
Reinvestment of distributions 542
Shares redeemed (61,277)
Net increase (decrease) $ 1,408,918
INSTITUTIONAL CLASS Shares $ 3,450,421
sold
Reinvestment of distributions 196,010
Shares redeemed (667,523)
Net increase (decrease) $ 2,978,908
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL A -1.03% 7.02% 46.02%
FIDELITY ADV CYCLICAL - CL A -6.72% 0.87% 37.62%
(INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Cyclical Industries -0.27% 5.09% 42.91%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Cyclical Industries Index - a market
capitalization-weighted index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector. Issues in
the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL A 7.02% 17.00%
FIDELITY ADV CYCLICAL - CL A 0.87% 14.16%
(INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Cyclical Industries 5.09% 15.96%
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 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
1998/08/31 11792.76 15136.87
12063.57
1998/09/30 11875.60 16106.54
12434.95
1998/10/31 12998.82 17416.64
13538.58
1998/11/30 13413.21 18472.27
14155.28
1998/12/31 13991.18 19536.64
14242.33
1999/01/29 13762.18 20353.66
14290.54
IMATRL PRASUN SHR__CHT 19990131 19990226 135949 R00000000000032
$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 January 31, 1999, the value of
the investment would have grown to $13,762 - a 37.62% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Cyclical Industries Index, it would have grown to $14,291 - a
42.91% 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 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL T -1.14% 6.76% 45.34%
FIDELITY ADV CYCLICAL - CL T -4.60% 3.03% 40.26%
(INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Cyclical Industries -0.27% 5.09% 42.91%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Cyclical Industries Index - a market
capitalization-weighted index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector. Issues in
the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL T 6.76% 16.78%
FIDELITY ADV CYCLICAL - CL T 3.03% 15.06%
(INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Cyclical Industries 5.09% 15.96%
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 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
1998/08/31 12024.01 15136.87
12063.57
1998/09/30 12107.88 16106.54
12434.95
1998/10/31 13267.38 17416.64
13538.58
1998/11/30 13691.05 18472.27
14155.28
1998/12/31 14270.80 19536.64
14242.33
1999/01/29 14025.52 20353.66
14290.54
IMATRL PRASUN SHR__CHT 19990131 19990226 140144 R00000000000032
$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 January 31, 1999, the value of
the investment would have grown to $14,026 - a 40.26% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Cyclical Industries Index, it would have grown to $14,291 - a
42.91% 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 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 six months, past one year and life of fund total
return figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL B -1.32% 6.30% 43.94%
FIDELITY ADV CYCLICAL - CL B -5.97% 1.30% 40.94%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Cyclical Industries -0.27% 5.09% 42.91%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Cyclical Industries Index - a market
capitalization-weighted index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector. Issues in
the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL B 6.30% 16.31%
FIDELITY ADV CYCLICAL - CL B 1.30% 15.29%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Cyclical Industries 5.09% 15.96%
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 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 14585.84 17695.25
14328.86
1998/08/31 12354.42 15136.87
12063.57
1998/09/30 12441.29 16106.54
12434.95
1998/10/31 13619.57 17416.64
13538.58
1998/11/30 14035.44 18472.27
14155.28
1998/12/31 14636.13 19536.64
14242.33
1999/01/29 14094.00 20353.66
14290.54
IMATRL PRASUN SHR__CHT 19990131 19990226 140418 R00000000000032
$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
January 31, 1999, the value of the investment, including the effect of
the contingent deferred sales charge, would have grown to $14,094 - a
40.94% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Cyclical Industries Index,
it would have grown to $14,291 - a 42.91% 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 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
six months, past one year and life of fund total return figures are
1%, 1% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL C -1.36% 6.30% 43.81%
FIDELITY ADV CYCLICAL - CL C -2.29% 5.30% 43.81%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Cyclical Industries -0.27% 5.09% 42.91%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted unmanaged index of
common stocks - and the Goldman Sachs Cyclical Industries Index - a
market capitalization-weighted index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector. Issues
in the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - CL C 6.30% 16.26%
FIDELITY ADV CYCLICAL - CL C 5.30% 16.26%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Cyclical Industries 5.09% 15.96%
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 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 10680.00 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 13169.84 14938.07
13453.87
1997/12/31 13257.55 15194.56
13598.24
1998/01/31 13528.55 15362.61
13598.41
1998/02/28 14590.89 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 15252.14 17187.57
15359.18
1998/06/30 15306.35 17885.73
15161.59
1998/07/31 14580.05 17695.25
14328.86
1998/08/31 12357.81 15136.87
12063.57
1998/09/30 12433.79 16106.54
12434.95
1998/10/31 13609.18 17416.64
13538.58
1998/11/30 14035.55 18472.27
14155.28
1998/12/31 14623.24 19536.64
14242.33
1999/01/29 14381.25 20353.66
14290.54
IMATRL PRASUN SHR__CHT 19990131 19990226 140847 R00000000000032
$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
January 31, 1999, the value of the investment, including the effect of
the contingent deferred sales charge, would have grown to $14,381 - a
43.81% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Cyclical Industries Index,
it would have grown to $14,291 - a 42.91% 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 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. For the six months that ended January 31, 1999, the fund's Class A,
Class T, Class B and Class C shares returned -1.03%, -1.14%, -1.32%
and -1.36%, respectively. In comparison, the Standard & Poor's 500
Index returned 15.02% and the Goldman Sachs Cyclical Industries Index
- - an index 277 of stocks designed to measure the performance of
companies in the cyclical industries sector - returned -0.27% during
this period. For the 12 months that ended January 31, 1999, the fund's
Class A, Class T, Class B and Class C shares returned 7.02%, 6.76%,
6.30% and 6.30%, respectively. The S&P 500 returned 32.49% during this
period, while the Goldman Sachs index returned 5.09%.
Q. WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE? WHY DID THE
FUND LAG THE GOLDMAN SACHS INDEX DURING THE
SIX-MONTH PERIOD?
A. Cyclical industries turned in mixed results during the past six
months. In the third quarter of 1998, the fund produced negative
returns as the global economic crisis took hold on the U.S. stock
market. In the fourth quarter of 1998, the fund staged a turnaround
led by strong performance from conglomerates, such as Tyco and General
Electric. Both companies managed to increase profits and earnings
during the period. However, the primary reason for the fund's
underperformance compared to the Goldman Sachs index was the
portfolio's asset underweighting relative to the index in auto stocks.
General Motors, Ford and DaimlerChrysler all surged in response to
record sales numbers. In hindsight, I underestimated the potential of
the auto stocks, given my doubts about the strength of the U.S.
economy.
Q. YOU MADE SOME CHANGES TO THE FUND'S TOP HOLDINGS DURING THE PERIOD
. . .
A. That's right. I sold off the fund's holdings in DEKALB after it was
acquired by Monsanto. The stock performed very well during the period,
so I felt it was prudent to lock in profits. Textron was added to the
fund's holdings because I felt that its stock was undervalued
considering its fundamental business outlook and its strong track
record of earnings growth. I added to the fund's stake in US Airways
because I felt airline traffic would pick up due to the cuts in
interest rates, which were favorable for consumer spending. In
addition, fuel costs were low and fares were coming down, which I
thought could stimulate demand. I also added Pentair, a smaller-cap
conglomerate, to the fund's top holdings; its stock looked inexpensive
given earnings improvements.
Q. WHAT STOCKS HELPED PERFORMANCE?
A. Tyco and General Electric were the biggest contributors to total
return. Tyco stock rallied during the period as it increased profits
by acquiring a number of companies, including its announced $11
billion purchase of electric device maker AMP. General Electric
performed solidly in response to strong earnings growth and a dividend
increase. The stock surged from a 12-month low of $72 on October 8,
1998, to $104 by the end of the period.
Q. WHAT STOCKS WERE THE MAIN DISAPPOINTMENTS?
A. While the fund's assets remained underweighted relative to the
benchmark index in such industrial commodities as chemicals and paper,
these sectors continued to lag. Stone Container detracted most
significantly from performance as the paper sector continued to
languish in a poor business environment with little ability to raise
prices and increase profit margins. Lackluster performance from
chemical companies DuPont and Monsanto also detracted from total
return.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. I think the short-term environment remains difficult for cyclical
stocks. In the absence of a catalyst such as another interest-rate cut
or strong signs of a turnaround in Asia and the global economy,
industrial commodities and cyclical stocks could continue to struggle
in 1999. This is the primary reason for my defensive strategy of
allocating a significant portion of fund assets to conglomerates.
These holdings provide predictable earnings and the ability to quickly
cut costs in a weak economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME
BASED ON MARKET AND OTHER CONDITIONS.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$5 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
General Electric Co. 10.6
Tyco International Ltd. 9.6
Textron, Inc. 6.9
du Pont (E.I.) de Nemours & Co. 5.3
Ford Motor Co. 4.5
Emerson Electric Co. 4.2
Boeing Co. 3.7
Waste Management, Inc. 2.8
US Airways Group, Inc. 2.7
Pentair, Inc. 2.2
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Electrical Equipment 16.7%
Industrial Machinery & Equipment 14.0%
Aerospace & Defense 12.8%
Chemicals & Plastics 8.4%
Paper & Forest Products 6.2%
All Others 41.9%*
Row: 1, Col: 1, Value: 16.7
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 12.8
Row: 1, Col: 4, Value: 8.4
Row: 1, Col: 5, Value: 6.2
Row: 1, Col: 6, Value: 41.9
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 12.8%
Alliant Techsystems, Inc. (a) 400 $ 35,100
Boeing Co. 6,400 221,200
Gulfstream Aerospace Corp. (a) 700 38,500
Lockheed Martin Corp. 1,314 46,319
Sundstrand Corp. 200 8,900
Textron, Inc. 5,500 409,406
759,425
AIR TRANSPORTATION - 4.7%
America West Holding Corp. 900 19,350
Class B (a)
Northwest Airlines Corp. 2,000 54,750
Class A (a)
Southwest Airlines Co. 1,650 44,344
US Airways Group, Inc. (a) 3,200 159,200
277,644
AUTOS, TIRES, & ACCESSORIES -
5.7%
Federal-Mogul Corp. 250 14,813
Ford Motor Co. 4,400 270,325
Lear Corp. (a) 300 11,813
SPX Corp. 300 21,225
TRW, Inc. 500 24,031
342,207
BROADCASTING - 0.7%
PanAmSat Corp. (a) 1,000 40,188
BUILDING MATERIALS - 2.7%
Carlisle Companies, Inc. 400 18,650
Crane Co. 900 24,469
Masco Corp. 1,600 51,700
Owens-Corning 1,000 35,750
Southdown, Inc. 300 16,669
USG Corp. 200 11,350
158,588
CHEMICALS & PLASTICS - 8.3%
du Pont (E.I.) de Nemours & 6,200 317,363
Co.
Ferro Corp. 800 17,500
IMC Global, Inc. 700 12,731
Ivex Packaging Corp. (a) 2,200 48,538
Lyondell Petrochemical Co. 500 7,469
Nalco Chemical Co. 500 13,750
Potash Corp. of Saskatchewan 300 18,164
Sealed Air Corp. (a) 360 19,103
Solutia, Inc. 360 6,885
Spartech Corp. 700 16,713
Witco Corp. 1,100 16,913
495,129
COMPUTERS & OFFICE EQUIPMENT
- - 2.2%
Pitney Bowes, Inc. 800 55,050
Xerox Corp. 600 74,400
129,450
SHARES VALUE (NOTE 1)
CONSTRUCTION - 1.0%
Centex Corp. 400 $ 17,275
Kaufman & Broad Home Corp. 500 14,094
Lennar Corp. 500 13,688
Oakwood Homes Corp. 700 13,431
58,488
CONSUMER ELECTRONICS - 0.9%
Black & Decker Corp. 600 31,800
General Motors Corp. Class H 400 19,700
(a)
51,500
DEFENSE ELECTRONICS - 2.7%
Litton Industries, Inc. (a) 900 51,244
Raytheon Co.:
Class A 381 21,241
Class B 1,600 89,500
161,985
ELECTRICAL EQUIPMENT - 16.7%
Emerson Electric Co. 4,300 250,206
General Electric Co. 6,000 629,241
Honeywell, Inc. 1,500 97,781
Hubbell, Inc. Class B 400 14,650
991,878
ENGINEERING - 1.4%
EG & G, Inc. 1,400 39,725
Fluor Corp. 1,200 45,750
85,475
HOME FURNISHINGS - 0.3%
Leggett & Platt, Inc. 1,000 20,375
INDUSTRIAL MACHINERY &
EQUIPMENT - 14.0%
Caterpillar, Inc. 1,200 51,975
Coltec Industries, Inc. (a) 6,000 109,875
Illinois Tool Works, Inc. 1,000 60,313
Ingersoll-Rand Co. 900 42,750
Tyco International Ltd. 7,400 570,263
835,176
IRON & STEEL - 0.1%
Inland Steel Industries, Inc. 296 4,477
LEASING & RENTAL - 0.1%
Ryder Systems, Inc. 250 6,094
METALS & MINING - 1.6%
Alcoa, Inc. 985 82,371
Martin Marietta Materials, 274 14,385
Inc.
96,756
PACKAGING & CONTAINERS - 1.4%
Owens-Illinois, Inc. (a) 2,000 58,500
Silgan Holdings, Inc. (a) 1,100 25,713
84,213
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - 6.2%
Bowater, Inc. 1,000 $ 39,063
Champion International Corp. 800 28,050
Fort James Corp. 1,000 35,875
Pentair, Inc. 3,500 133,875
Smurfit-Stone Container Corp. 4,356 70,241
(a)
Temple-Inland, Inc. 400 22,825
Union Camp Corp. 400 24,675
Willamette Industries, Inc. 500 17,500
372,104
POLLUTION CONTROL - 3.2%
Ogden Corp. 800 20,800
Waste Management, Inc. 3,372 168,389
189,189
RAILROADS - 2.7%
Bombardier, Inc. Class B 1,600 23,822
Burlington Northern Santa Fe 2,400 83,100
Corp.
Canadian National Railway Co. 1,000 53,004
159,926
SERVICES - 1.1%
Ecolab, Inc. 1,700 65,875
SHIP BUILDING & REPAIR - 1.3%
Avondale Industries, Inc. 1,000 31,625
General Dynamics Corp. 800 46,500
78,125
TEXTILES & APPAREL - 2.1%
Shaw Industries, Inc. 5,700 120,769
Unifi, Inc. 400 6,675
127,444
TRUCKING & FREIGHT - 0.7%
CNF Transportation, Inc. 300 13,313
Expeditors International of 300 13,763
Washington, Inc.
USFreightways Corp. 400 13,950
41,026
TOTAL COMMON STOCKS 5,632,737
(Cost $5,118,023)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.1%
Sealed Air Corp. Series A, 142 $ 7,544
$2.00 (Cost $6,266)
CASH EQUIVALENTS - 5.3%
Taxable Central Cash Fund (b) 314,906 314,906
(Cost $314,906)
TOTAL INVESTMENT IN $ 5,955,187
SECURITIES - 100%
(Cost $5,439,195)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $5,441,194. Net unrealized appreciation
aggregated $513,993, of which $938,677 related to appreciated
investment securities and $424,684 related to depreciated investment
securities.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 5,955,187
value (cost $5,439,195) -
See accompanying schedule
Receivable for investments 18,189
sold
Receivable for fund shares 23,102
sold
Dividends receivable 4,220
Interest receivable 1,628
Receivable from investment 5,771
adviser for expense
reductions
TOTAL ASSETS 6,008,097
LIABILITIES
Payable to custodian bank $ 437,516
Payable for investments 5,250
purchased
Payable for fund shares 869
redeemed
Distribution fees payable 2,192
Other payables and accrued 18,873
expenses
TOTAL LIABILITIES 464,700
NET ASSETS $ 5,543,397
Net Assets consist of:
Paid in capital $ 5,247,481
Accumulated net investment (4,220)
loss
Accumulated undistributed net (215,859)
realized gain loss on
investments and foreign
currency transactions
Net unrealized appreciation 515,995
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 5,543,397
CALCULATION OF MAXIMUM $12.62
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($550,443 (divided by)
43,600 shares)
Maximum offering price per $13.39
share (100/94.25 of
$12.62)
CLASS T: NET ASSET VALUE $12.58
and redemption price per
share ($2,540,677 (divided
by) 201,905 shares)
Maximum offering price per $13.04
share (100/96.50 of
$12.58)
CLASS B: NET ASSET VALUE $12.46
and offering price per
share ($872,799 (divided by)
70,063 shares) A
CLASS C: NET ASSET VALUE $12.48
and offering price per
share ($268,556 (divided by)
21,518 shares) A
INSTITUTIONAL CLASS: NET $12.74
ASSET VALUE, offering price
and redemption price per
share ($1,310,922
(divided by) 102,908 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 33,429
Dividends
Interest 12,357
TOTAL INCOME 45,786
EXPENSES
Management fee $ 16,110
Transfer agent fees 9,827
Distribution fees 12,530
Accounting fees and expenses 30,006
Non-interested trustees' 10
compensation
Custodian fees and expenses 2,534
Registration fees 41,374
Audit 14,405
Legal 65
Miscellaneous 17
Total expenses before 126,878
reductions
Expense reductions (76,872) 50,006
NET INVESTMENT INCOME (LOSS) (4,220)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (213,481)
Foreign currency transactions 94 (213,387)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 124,525
Assets and liabilities in 4 124,529
foreign currencies
NET GAIN (LOSS) (88,858)
NET INCREASE (DECREASE) IN $ (93,078)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (4,220) $ (19,026)
income (loss)
Net realized gain (loss) (213,387) 519,808
Change in net unrealized 124,529 (358,431)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (93,078) 142,351
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (287,985) (348,447)
from net realized gains
Share transactions - net (30,584) 1,857,245
increase (decrease)
Redemption fees 2,286 8,921
TOTAL INCREASE (DECREASE) (409,361) 1,660,070
IN NET ASSETS
NET ASSETS
Beginning of period 5,952,758 4,292,688
End of period (including $ 5,543,397 $ 5,952,758
accumulated net investment
loss of $4,220)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.56 $ 13.80 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.03) (.01)
D
Net realized and unrealized (.27) .76 3.89
gain (loss)
Total from investment (.27) .73 3.88
operations
Less Distributions
From net investment income - - (.01)
From net realized gain (.68) (.99) (.08)
Total distributions (.68) (.99) (.09)
Redemption fees added to paid .01 .02 .01
in capital
Net asset value, end of period $ 12.62 $ 13.56 $ 13.80
TOTAL RETURN B, C (1.03)% 6.05% 39.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 550 $ 471 $ 365
(000 omitted)
Ratio of expenses to average 1.66% A, F 1.75% F 1.75% A, F
net assets
Ratio of expenses to average 1.62% A, G 1.75% 1.73% A, G
net assets after expense
reductions
Ratio of net investment .07% A (.22)% (.09)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.51 $ 13.77 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.01) (.06) (.04)
D
Net realized and unrealized (.26) .77 3.89
gain (loss)
Total from investment (.27) .71 3.85
operations
Less Distributions
From net investment income - - (.01)
From net realized gain (.66) (.99) (.08)
Total distributions (.66) (.99) (.09)
Redemption fees added to paid .00 .02 .01
in capital
Net asset value, end of period $ 12.58 $ 13.51 $ 13.77
TOTAL RETURN B, C (1.14)% 5.91% 38.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,541 $ 2,973 $ 1,920
(000 omitted)
Ratio of expenses to average 1.92% A, F 2.00% F 2.00% A, F
net assets
Ratio of expenses to average 1.88% A, G 2.00% 1.97% A, G
net assets after expense
reductions
Ratio of net investment (.21)% A (.47)% (.37)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.40 $ 13.75 $ 11.56
period
Income from Investment
Operations
Net investment income (loss) (.04) (.14) (.06)
D
Net realized and unrealized (.26) .76 2.25
gain (loss)
Total from investment (.30) .62 2.19
operations
Less Distributions
From net realized gain (.65) (.99) -
Redemption fees added to paid .01 .02 -
in capital
Net asset value, end of period $ 12.46 $ 13.40 $ 13.75
TOTAL RETURN B, C (1.32)% 5.23% 18.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 873 $ 985 $ 252
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.38% A, G 2.50% 2.45% A, G
net assets after expense
reductions
Ratio of net investment (.69)% A (1.03)% (1.11)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 13.45 $ 12.54
period
Income from Investment
Operations
Net investment income (loss) (.04) (.11)
D
Net realized and unrealized (.27) 1.39
gain (loss)
Total from investment (.31) 1.28
operations
Less Distributions
From net realized gain (.67) (.38)
Redemption fees added to paid .01 .01
in capital
Net asset value, end of period $ 12.48 $ 13.45
TOTAL RETURN B, C (1.36)% 10.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 269 $ 165
(000 omitted)
Ratio of expenses to average 2.40% A, F 2.50% A, F
net assets
Ratio of expenses to average 2.36% A, G 2.50% A
net assets after expense
reductions
Ratio of net investment (.66)% A (1.06)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.68 $ 13.84 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .02 .01 H .03
D
Net realized and unrealized (.27) .75 3.91
gain (loss)
Total from investment (.25) .76 3.94
operations
Less Distributions
From net investment income - - (.02)
From net realized gain (.70) (.95) (.08)
Total distributions (.70) (.95) (.10)
Redemption fees added to paid .01 .03 -
in capital
Net asset value, end of period $ 12.74 $ 13.68 $ 13.84
TOTAL RETURN B, C (.84)% 6.32% 39.64%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,311 $ 1,360 $ 1,756
(000 omitted)
Ratio of expenses to average 1.41% A, F 1.50% F 1.50% A, F
net assets
Ratio of expenses to average 1.38% A, G 1.50% 1.48% A, G
net assets after expense
reductions
Ratio of net investment .30% A .04% .25% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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 (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 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 January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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 net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $3,119,658 and $2,893,477, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 597 $ 185
CLASS T 6,733 309
CLASS B 4,139 3,245
CLASS C 1,061 989
$ 12,530 $ 4,728
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 1,011 $ 465
CLASS T 3,270 730
CLASS B 6,044 6,044 *
CLASS C 209 209 *
$ 10,534 $ 7,448
* 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 $ 976 .41*
CLASS T 5,044 .38*
CLASS B 1,866 .45*
CLASS C 706 .67*
INSTITUTIONAL CLASS 1,235 .20*
$ 9,827
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $526 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.75 - 1.50% $ 6,750
CLASS T 2.00 - 1.75% 37,466
CLASS B 2.50 - 2.25% 11,883
CLASS C 2.50 - 2.25% 3,256
INSTITUTIONAL CLASS 1.50 - 1.25% 16,533
$ 75,888
Effective December 1, 1998, Class A, Class T, Class B, Class C and the
Institutional Class expense limitations were changed to 1.50%, 1.75%,
2.25%, 2.25%, and 1.25% of each class' average net assets,
respectively.
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 $984 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 29% of
the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 10% of the
total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 23,684 $ 27,503
Class T 144,300 168,735
Class B 41,003 21,647
Class C 9,726 303
Institutional Class 69,272 130,259
Total $ 287,985 $ 348,447
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 9,303 10,882 $ 111,661
Reinvestment of distributions 2,195 2,142 23,537
Shares redeemed (2,624) (4,708) (31,840)
Net increase (decrease) 8,874 8,316 $ 103,358
CLASS T Shares sold 40,423 227,185 $ 493,944
Reinvestment of distributions 13,134 12,558 140,529
Shares redeemed (71,720) (159,076) (866,543)
Net increase (decrease) (18,163) 80,667 $ (232,070)
CLASS B Shares sold 20,224 60,410 $ 236,721
Reinvestment of distributions 3,632 1,702 38,541
Shares redeemed (27,280) (6,954) (319,758)
Net increase (decrease) (3,424) 55,158 $ (44,496)
CLASS C Shares sold 13,233 13,383 $ 158,861
Reinvestment of distributions 915 25 9,726
Shares redeemed (4,872) (1,166) (58,039)
Net increase (decrease) 9,276 12,242 $ 110,548
INSTITUTIONAL CLASS Shares 3,234 31,192 $ 36,348
sold
Reinvestment of distributions 6,212 10,114 67,154
Shares redeemed (5,902) (68,822) (71,426)
Net increase (decrease) 3,544 (27,516) $ 32,076
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 148,228
Reinvestment of distributions 27,217
Shares redeemed (63,873)
Net increase (decrease) $ 111,572
CLASS T Shares sold $ 3,069,729
Reinvestment of distributions 158,925
Shares redeemed (2,112,359)
Net increase (decrease) $ 1,116,295
CLASS B Shares sold $ 820,607
Reinvestment of distributions 21,404
Shares redeemed (94,508)
Net increase (decrease) $ 747,503
CLASS C Shares sold $ 179,797
Reinvestment of distributions 303
Shares redeemed (16,290)
Net increase (decrease) $ 163,810
INSTITUTIONAL CLASS Shares $ 426,137
sold
Reinvestment of distributions 129,319
Shares redeemed (837,391)
Net increase (decrease) $ (281,935)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL A -2.42% 15.08% 86.57%
FIDELITY ADV FINANCIAL - CL A -8.03% 8.46% 75.84%
(INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Financial Services -3.46% 12.99% 98.01%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Financial Services Index - a market
capitalization-weighted index of 271 stocks designed to measure the
performance of companies in the financial services sector. Issues in
the index include financial institutions providing banking services,
brokerage firms and asset managers, insurance companies, and real
estate holding and development companies. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL A 15.08% 29.52%
FIDELITY ADV FINANCIAL - CL A 8.46% 26.38%
(INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Financial Services 12.99% 32.76%
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.
$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
1998/08/31 14058.50 15136.87
16002.19
1998/09/30 14534.20 16106.54
16320.87
1998/10/31 15882.84 17416.64
18092.98
1998/11/30 16816.51 18472.27
19193.75
1998/12/31 17272.97 19536.64
19625.39
1999/01/29 17584.20 20353.66
19800.64
IMATRL PRASUN SHR__CHT 19990131 19990226 141147 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $17,584 - an 75.84% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Financial Services Index, it would have grown to $19,801 - a
98.01% 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 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL T -2.48% 14.81% 85.43%
FIDELITY ADV FINANCIAL - CL T -5.89% 10.80% 78.94%
(INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Financial Services -3.46% 12.99% 98.01%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Financial Services Index - a market
capitalization-weighted index of 271 stocks designed to measure the
performance of companies in the financial services sector. Issues in
the index include financial institutions providing banking services,
brokerage firms and asset managers, insurance companies, and real
estate holding and development companies. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL T 14.81% 29.19%
FIDELITY ADV FINANCIAL - CL T 10.80% 27.30%
(INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Financial Services 12.99% 32.76%
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.
$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
1998/08/31 14316.89 15136.87
16002.19
1998/09/30 14813.03 16106.54
16320.87
1998/10/31 16168.33 17416.64
18092.98
1998/11/30 17110.69 18472.27
19193.75
1998/12/31 17576.58 19536.64
19625.39
1999/01/29 17894.23 20353.66
19800.64
IMATRL PRASUN SHR__CHT 19990131 19990226 141438 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $17,894 - an 78.94% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Financial Services Index, it would have grown to $19,801 - a
98.01% 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 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 six months, past one year and life of fund total
return figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the life of fund total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL B -2.68% 14.29% 83.69%
FIDELITY ADV FINANCIAL - CL B -7.20% 9.29% 80.69%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Financial Services -3.46% 12.99% 98.01%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Financial Services Index - a market
capitalization-weighted index of 271 stocks designed to measure the
performance of companies in the financial services sector. Issues in
the index include financial institutions providing banking services,
brokerage firms and asset managers, insurance companies, and real
estate holding and development companies. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL B 14.29% 28.69%
FIDELITY ADV FINANCIAL - CL B 9.29% 27.81%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Financial Services 12.99% 32.76%
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.
$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
1998/08/31 14716.67 15136.87
16002.19
1998/09/30 15219.88 16106.54
16320.87
1998/10/31 16624.45 17416.64
18092.98
1998/11/30 17579.13 18472.27
19193.75
1998/12/31 18050.98 19536.64
19625.39
1999/01/29 18069.00 20353.66
19800.64
IMATRL PRASUN SHR__CHT 19990131 19990226 141718 R00000000000032
$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 January 31,
1999, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $18,069 - an
80.69% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Financial Services Index, it
would have grown to $19,801 - a 98.01% 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 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
six months, past one year and life of fund total return figures are
1%, 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL C -2.72% 14.21% 83.40%
FIDELITY ADV FINANCIAL - CL C -3.62% 13.21% 83.40%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Financial Services -3.46% 12.99% 98.01%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Financial Services Index - a market
capitalization-weighted index of 271 stocks designed to measure the
performance of companies in the financial services sector. Issues in
the index include financial institutions providing banking services,
brokerage firms and asset managers, insurance companies, and real
estate holding and development companies. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - CL C 14.21% 28.60%
FIDELITY ADV FINANCIAL - CL C 13.21% 28.60%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Financial Services 12.99% 32.76%
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.
$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 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 15468.24 14938.07
17053.65
1997/12/31 16292.56 15194.56
17997.81
1998/01/31 16058.94 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 18628.78 17488.19
20512.24
1998/05/31 18212.32 17187.57
20061.46
1998/06/30 18933.50 17885.73
20758.18
1998/07/31 18852.24 17695.25
20510.80
1998/08/31 14697.84 15136.87
16002.19
1998/09/30 15199.64 16106.54
16320.87
1998/10/31 16600.33 17416.64
18092.98
1998/11/30 17552.36 18472.27
19193.75
1998/12/31 18022.90 19536.64
19625.39
1999/01/29 18340.24 20353.66
19800.64
IMATRL PRASUN SHR__CHT 19990131 19990226 142157 R00000000000032
$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 January 31,
1999, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $18,340 - an
83.40% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Financial Services Index, it
would have grown to $19,801 - a 98.01% 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 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. It performed well when compared to financial services indexes, but
it lagged the overall market during a difficult period for financial
stocks. For the six-month period that ended January 31, 1999, the
fund's Class A, Class T, Class B and Class C shares returned -2.42%,
- -2.48%, -2.68% and -2.72%, respectively. During the same period, the
Standard & Poor's 500 Index had a return of 15.02% while the Goldman
Sachs Financial Services Index - an index of 271 stocks designed to
measure the performance of companies in the financial services sector
- - had a return of -3.46%. For the 12-month period that ended January
31, 1999, the fund's Class A, Class T, Class B and Class C shares had
returns of 15.08%, 14.81%, 14.29% and 14.21%, respectively. The S&P
500 index had a return of 32.49% for the 12-month period, while the
Goldman Sachs Financial Services Index had a return of 12.99%.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT FOR FINANCIAL
STOCKS DURING THE SIX-MONTH PERIOD?
A. It was an unusual, volatile period, starting in August amidst
global financial instability that culminated with the Russian
government defaulting on some of its bonds. This was an unexpected
event and it occurred when many financial institutions were heavily
leveraged - they were using borrowed money to invest. When financial
companies use borrowed money, any change in the value of assets they
hold has a levered effect on the value of the business. In reaction to
the Russian default, investors moved away from any risky asset class,
including stocks and corporate bonds. The stocks of financial services
suffered even more than stocks in general. However, when Federal
Reserve Chairman Alan Greenspan announced on September 29 the first in
a series of three cuts in short-term interest rates, the capital
markets calmed down and the markets rebounded. Financial services
stocks, which had fallen more sharply than the overall market, at
first recovered more quickly than the market, but have since lagged it
slightly. At the end of the period, the markets showed more stability.
The Brazilian currency devaluation in January, for example, did not
have the impact of the Russian default. The Brazilian announcement was
not as much of a surprise, and there was a lot less leverage in the
financial system.
Q. DID THE VOLATILITY CAUSE ANY CHANGES IN YOUR STRATEGIES?
A. The environment actually reinforced our belief in many of the
strategies we had been implementing. Going into the summer, we were
emphasizing companies with strong consumer focus and domestic
orientations. We also were emphasizing non-lenders such as life
insurance companies.
Q. WHAT WERE SOME OF THE INVESTMENTS THAT CONTRIBUTED TO PERFORMANCE,
AND WHAT WERE SOME OF THE DISAPPOINTMENTS?
A. Providian Financial did exceptionally well. This company increased
both its credit card business and its fee income. Citigroup had its
ups and downs, but generally helped the fund as the new company,
formed by the merger of Citicorp and Travelers, took shape and
improved earnings. Another good performer was Freddie Mac, the
mortgage company. It was a great environment for mortgage companies as
lower interest rates stimulated refinancings and the earnings of
mortgage companies. A disappointment was U.S. Bancorp, which failed to
meet its earnings targets. At this point, it is not clear whether this
was because of a poor environment or because its corporate strategy,
which emphasizes efficiency, made it difficult to grow revenues.
Several regional banks were disappointing performers. Many of these
banks, after completing mergers, found it harder than planned to cut
costs and to increase revenues. Also disappointing were the real
estate investment trusts, even though they generally met earnings
expectations. I suspect the market questioned the future value of
commercial real estate.
Q. WHAT IS YOUR OUTLOOK FOR FINANCIAL STOCKS, BOB?
A. 1999 will be very interesting. The backdrop is great for financial
stocks, because they have been trading with price-to-earnings ratios
only about two-thirds as high as the overall stock market.
Effectively, they are trading at a 33% discount to the S&P 500. And
yet, there is a very good chance that financial companies will
increase their earnings faster than the overall S&P 500, perhaps 11%
to 12% in 1999. They still are increasing their assets. Loan growth is
about 5% to 6%, and the quality of loans is still acceptable. Concerns
would arise, however, if the Brazilian troubles spread to other
countries or if general global economic problems pressure U.S.
economic growth. If the U.S. economy starts to slow down, credit
losses could increase, which would be a bad development for financial
companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME
BASED ON MARKET AND OTHER CONDITIONS.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$238 million
MANAGER: Robert Ewing, since 1998; joined
Fidelity in 1990
ADVISOR FINANCIAL SERVICES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Citigroup, Inc. 5.8
American International Group, 4.9
Inc.
BankAmerica Corp. 4.7
American Express Co. 4.4
Bank One Corp. 4.2
Wells Fargo & Co. 4.0
Chase Manhattan Corp. 3.8
Providian Financial Corp. 3.7
Household International, Inc. 3.3
Freddie Mac 3.3
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Banks 29.2%
Credit & Other Finance 24.4%
Insurance 16.9%
Federal Sponsored Credit 7.7%
Securities Industry 5.0%
All Others 16.8%*
Row: 1, Col: 1, Value: 29.2
Row: 1, Col: 2, Value: 24.4
Row: 1, Col: 3, Value: 16.9
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 4.7
Row: 1, Col: 6, Value: 17.1
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.1%
SHARES VALUE (NOTE 1)
BANKS - 29.2%
AmSouth Bancorp. 59,500 $ 2,621,719
Bank of New York Co., Inc. 170,960 6,069,080
Bank One Corp. 189,182 9,908,407
BankAmerica Corp. 169,104 11,308,830
BB&T Corp. 16,000 612,000
Cathay Bancorp, Inc. 10,000 373,750
Chase Manhattan Corp. 117,000 9,001,688
Comerica, Inc. 51,750 3,231,141
First Union Corp. 14,137 743,960
Hanmi Bank (a) 5,450 79,025
M&T Bank Corp. 2,500 1,250,000
Marshall & Ilsley Corp. 19,500 1,155,375
North Fork Bancorp., Inc. 26,250 551,250
SunTrust Banks, Inc. 10,000 704,375
U.S. Bancorp 206,450 6,954,784
Wachovia Corp. 24,405 2,162,893
Wells Fargo & Co. 274,000 9,572,875
Westamerica Bancorp. 50,000 1,759,375
Zions Bancorp 30,000 1,740,000
69,800,527
CREDIT & OTHER FINANCE - 24.4%
American Express Co. 102,300 10,524,113
Associates First Capital 166,200 6,741,488
Corp. Class A
Citigroup, Inc. 248,662 13,940,605
Equitable Companies (The), 40,000 2,790,000
Inc.
Firstcity Financial Corp. (a) 35,800 523,575
FIRSTPLUS Financial Group, 10,000 24,375
Inc. (a)
Fleet Financial Group, Inc. 89,600 3,970,400
Household International, Inc. 179,657 7,893,679
MBNA Corp. 107,750 3,010,266
Providian Financial Corp. 87,607 8,831,881
58,250,382
FEDERAL SPONSORED CREDIT - 7.7%
Fannie Mae 88,435 6,444,701
Freddie Mac 127,220 7,887,640
SLM Holding Corp. 89,500 3,943,594
18,275,935
INSURANCE - 16.9%
ACE Ltd. 20,000 560,000
Aegon NV (Reg.) ADR 8,258 914,057
AFLAC, Inc. 53,400 2,289,525
Allmerica Financial Corp. 12,400 668,825
Allstate Corp. 58,570 2,200,036
Ambac Financial Group, Inc. 15,100 903,169
American Bankers Insurance 20,000 920,000
Group, Inc.
American International Group, 112,880 11,619,585
Inc.
Berkshire Hathaway, Inc.:
Class A (a) 60 3,900,000
Class B (a) 24 51,600
SHARES VALUE (NOTE 1)
Blanch E.W. Holdings, Inc. 18,000 $ 1,020,375
Capital Re Corp. 16,000 291,000
Executive Risk, Inc. 5,000 234,688
Hartford Financial Services 59,200 3,074,700
Group, Inc.
Hartford Life, Inc. Class A 12,000 676,500
HCC Insurance Holdings, Inc. 23,000 447,063
Marsh & McLennan Companies, 36,250 2,279,219
Inc.
MBIA, Inc. 11,700 767,081
Nationwide Financial 14,500 695,094
Services, Inc. Class A
PMI Group, Inc. 10,500 450,188
Progressive Corp. 9,200 1,149,425
Reliastar Financial Corp. 20,087 832,355
RenaissanceRe Holdings Ltd. 15,000 502,500
Torchmark Corp. 50,000 1,640,625
Travelers Property Casualty 30,000 864,375
Corp. Class A
UICI (a) 60,200 1,298,063
40,250,048
REAL ESTATE INVESTMENT TRUSTS
- - 4.1%
AMRESCO Capital Trust, Inc. 50,000 481,250
Apartment Investment & 37,400 1,397,825
Management Co. Class A
Crescent Real Estate Equities 48,000 1,017,000
Co.
Duke Realty Investments, Inc. 49,500 1,138,500
Equity Office Properties Trust 30,000 765,000
Equity Residential Properties 22,500 915,469
Trust (SBI)
Mack-Cali Realty Corp. 20,000 597,500
Ocwen Asset Investment Corp. 141,200 697,175
Public Storage, Inc. 42,500 1,081,094
Simon Property Group, Inc. 30,000 789,375
Starwood Hotels & Resorts 34,000 850,000
Worldwide, Inc.
9,730,188
SAVINGS & LOANS - 3.8%
Astoria Financial Corp. 8,000 366,000
Charter One Financial, Inc. 61,750 1,729,000
Dime Bancorp, Inc. 58,500 1,418,625
Golden State Bancorp, Inc. 51,660 965,396
Golden State Bancorp, Inc. 26,660 112,472
warrants 12/31/99 (a)
Washington Mutual, Inc. 104,520 4,389,840
8,981,333
SECURITIES INDUSTRY - 5.0%
Bear Stearns Companies, Inc. 50,000 2,356,250
E Trade Group, Inc. (a) 7,000 772,625
Investors Group, Inc. 50,000 823,849
Lehman Brothers Holdings, 51,000 2,789,063
Inc.
Merrill Lynch & Co., Inc. 8,300 630,800
Morgan Stanley, Dean Witter & 25,000 2,170,313
Co.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - CONTINUED
Schwab (Charles) Corp. 5,000 $ 351,563
Waddell & Reed Financial, Inc.:
Class A 87,845 1,855,726
Class B 12,245 256,380
12,006,569
TOTAL COMMON STOCKS 217,294,982
(Cost $190,832,144)
CASH EQUIVALENTS - 8.9%
Taxable Central Cash Fund (b) 21,346,950 21,346,950
(Cost $21,346,950)
TOTAL INVESTMENT IN $ 238,641,932
SECURITIES - 100%
(Cost $212,179,094)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $212,245,411. Net unrealized appreciation
aggregated $26,396,521, of which $35,374,164 related to appreciated
investment securities and $8,977,643 related to depreciated investment
securities.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 238,641,932
value (cost $212,179,094) -
See accompanying schedule
Receivable for fund shares 653,947
sold
Dividends receivable 266,051
Interest receivable 78,109
TOTAL ASSETS 239,640,039
LIABILITIES
Payable for fund shares $ 1,099,548
redeemed
Accrued management fee 113,508
Distribution fees payable 130,227
Other payables and accrued 91,634
expenses
TOTAL LIABILITIES 1,434,917
NET ASSETS $ 238,205,122
Net Assets consist of:
Paid in capital $ 219,253,206
Undistributed net investment 351,353
income
Accumulated undistributed net (7,862,299)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 26,462,862
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 238,205,122
CALCULATION OF MAXIMUM $16.95
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($22,401,702 (divided
by) 1,321,297 shares)
Maximum offering price per $17.98
share (100/94.25 of $16.95)
CLASS T: NET ASSET VALUE $16.90
and redemption price per
share ($109,347,260 (divided
by) 6,470,164 shares)
Maximum offering price per $17.51
share (100/96.50 of $16.90)
CLASS B: NET ASSET VALUE $16.74
and offering price per
share ($73,847,373 (divided
by) 4,410,994 shares) A
CLASS C: NET ASSET VALUE $16.76
and offering price per
share ($23,867,117 (divided
by) 1,423,648 shares) A
INSTITUTIONAL CLASS: NET $17.03
ASSET VALUE, offering price
and redemption price per
share ($8,741,670
(divided by) 513,401 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 1,666,881
Dividends
Interest 472,510
TOTAL INCOME 2,139,391
EXPENSES
Management fee $ 622,123
Transfer agent fees 298,613
Distribution fees 703,998
Accounting fees and expenses 60,884
Non-interested trustees' 391
compensation
Custodian fees and expenses 4,831
Registration fees 62,933
Audit 14,590
Legal 2,629
Miscellaneous 553
Total expenses before 1,771,545
reductions
Expense reductions (9,286) 1,762,259
NET INVESTMENT INCOME 377,132
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (7,702,803)
Foreign currency transactions 14,087 (7,688,716)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,499,355
Assets and liabilities in 213 1,499,568
foreign currencies
NET GAIN (LOSS) (6,189,148)
NET INCREASE (DECREASE) IN $ (5,812,016)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 377,132 $ 420,029
income
Net realized gain (loss) (7,688,716) 15,277,202
Change in net unrealized 1,499,568 12,949,534
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,812,016) 28,646,765
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (262,092) (245,431)
From net investment income
From net realized gain (12,813,576) (1,447,197)
TOTAL DISTRIBUTIONS (13,075,668) (1,692,628)
Share transactions - net 25,344,232 134,897,670
increase (decrease)
Redemption fees 55,249 68,426
TOTAL INCREASE (DECREASE) 6,511,797 161,920,233
IN NET ASSETS
NET ASSETS
Beginning of period 231,693,325 69,773,092
End of period (including $ 238,205,122 $ 231,693,325
undistributed net investment
income of $351,353 and
$262,870, respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.74 $ 15.11 $ 10.00
period
Income from Investment
Operations
Net investment income D .06 .11 .06
Net realized and unrealized (.78) 3.80 5.06
gain (loss)
Total from investment (.72) 3.91 5.12
operations
Less Distributions
From net investment income (.05) (.06) (.01)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.07) (.29) (.02)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 16.95 $ 18.74 $ 15.11
TOTAL RETURN B, C (2.42)% 26.32% 51.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 22,402 $ 21,907 $ 6,275
(000 omitted)
Ratio of expenses to average 1.24% A 1.32% 1.75% A, F
net assets
Ratio of expenses to average 1.23% A, G 1.30% G 1.73% A, G
net assets after expense
reductions
Ratio of net investment .80% A .63% .55% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.66 $ 15.07 $ 10.00
period
Income from Investment
Operations
Net investment income D .04 .07 .04
Net realized and unrealized (.76) 3.78 5.04
gain (loss)
Total from investment (.72) 3.85 5.08
operations
Less Distributions
From net investment income (.02) (.04) (.01)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.04) (.27) (.02)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 16.90 $ 18.66 $ 15.07
TOTAL RETURN B, C (2.48)% 25.96% 50.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 109,347 $ 118,608 $ 52,003
(000 omitted)
Ratio of expenses to average 1.56% A 1.52% 1.94% A
net assets
Ratio of expenses to average 1.55% A, F 1.50% F 1.91% A, F
net assets after expense
reductions
Ratio of net investment .48% A .44% .37% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.52 $ 15.04 $ 12.56
period
Income from Investment
Operations
Net investment income (loss) .00 (.02) (.02)
D
Net realized and unrealized (.75) 3.76 2.50
gain (loss)
Total from investment (.75) 3.74 2.48
operations
Less Distributions
From net investment income (.01) (.04) -
From net realized gain (1.02) (.23) -
Total distributions (1.03) (.27) -
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 16.74 $ 18.52 $ 15.04
TOTAL RETURN B, C (2.68)% 25.29% 19.75%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 73,847 $ 65,926 $ 7,737
(000 omitted)
Ratio of expenses to average 1.99% A 2.06% 2.50% A, F
net assets
Ratio of expenses to average 1.98% A, G 2.04% G 2.49% A, G
net assets after expense
reductions
Ratio of net investment .05% A (.14)% (.37)% A
income (loss) to average net
assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 18.56 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) .01 (.03)
D
Net realized and unrealized (.77) 3.57
gain (loss)
Total from investment (.76) 3.54
operations
Less Distributions
From net investment income (.02) (.02)
From net realized gain (1.02) (.21)
Total distributions (1.04) (.23)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 16.76 $ 18.56
TOTAL RETURN B, C (2.72)% 23.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 23,867 $ 19,983
(000 omitted)
Ratio of expenses to average 1.96% A 2.09% A
net assets
Ratio of expenses to average 1.95% A, F 2.07% A, F
net assets after expense
reductions
Ratio of net investment .09% A (.22)% A
income (loss) to average net
assets
Portfolio turnover 41% A 54%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.80 $ 15.14 $ 10.00
period
Income from Investment
Operations
Net investment income D .09 .14 .10
Net realized and unrealized (.77) 3.79 5.06
gain (loss)
Total from investment (.68) 3.93 5.16
operations
Less Distributions
From net investment income (.07) (.05) (.02)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.09) (.28) (.03)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 17.03 $ 18.80 $ 15.14
TOTAL RETURN B, C (2.15)% 26.39% 51.78%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,742 $ 5,270 $ 3,758
(000 omitted)
Ratio of expenses to average .94% A 1.14% 1.50% A, F
net assets
Ratio of expenses to average .93% A, G 1.13% G 1.47% A, G
net assets after expense
reductions
Ratio of net investment 1.14% A .81% .85% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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), 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
2. OPERATING POLICIES- CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $53,677,802 and $39,700,947, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 25,399 $ 31
CLASS T 253,743 268
CLASS B 324,905 243,776
CLASS C 99,952 94,200
$ 703,999 $ 338,275
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
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 76,622 $ 29,151
CLASS T 110,880 38,434
CLASS B 136,035 136,035 *
CLASS C 9,357 9,357 *
$ 332,894 $ 212,977
* 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 $ 26,319 .26 *
CLASS T 164,065 .33 *
CLASS B 81,965 .25 *
CLASS C 21,538 .22 *
INSTITUTIONAL CLASS 4,726 .20 *
$ 298,613
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $7,715 for the period.
5. EXPENSE REDUCTIONS.
FMR 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 $9,215 under this arrangement.
In addition, the fund has entered into an arrangements 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 $71 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY 31,
1999 YEAR ENDED
JULY 31,
1998 A
FROM NET INVESTMENT INCOME
Class A $ 59,899 $ 32.929
Class T 123,799 169,652
Class B 37,278 31,387
Class C 22,247 990
Institutional Class 18,869 10,473
Total $ 262,092 $ 245,431
FROM NET REALIZED GAIN
Class A $ 1,222,059 $ 134,384
Class T 6,313,742 1,003,813
Class B 3,868,227 249,387
Class C 1,134,605 10,862
Institutional Class 274,943 48,751
Total $ 12,813,576 $ 1,447,197
$ 13,075,668 $ 1,692,628
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 351,412 934,476 $ 5,596,332
Reinvestment of distributions 85,856 9,387 1,165,066
Shares redeemed (285,212) (189,881) (4,471,888)
Net increase (decrease) 152,056 753,982 $ 2,289,510
CLASS T Shares sold 1,524,704 4,223,164 $ 24,000,312
Reinvestment of distributions 443,615 66,953 6,006,543
Shares redeemed (1,852,874) (1,386,617) (28,849,755)
Net increase (decrease) 115,445 2,903,500 $ 1,157,100
CLASS B Shares sold 1,268,572 3,302,648 $ 19,713,502
Reinvestment of distributions 235,778 13,682 3,166,468
Shares redeemed (652,552) (271,676) (10,024,161)
Net increase (decrease) 851,798 3,044,654 $ 12,855,809
CLASS C Shares sold 501,089 1,117,558 $ 7,778,122
Reinvestment of distributions 57,369 710 771,613
Shares redeemed (211,490) (41,588) (3,335,563)
Net increase (decrease) 346,968 1,076,680 $ 5,214,172
INSTITUTIONAL CLASS Shares 286,145 170,926 $ 4,689,294
sold
Reinvestment of distributions 18,075 3,344 245,820
Shares redeemed (71,130) (142,257) (1,107,473)
Net increase (decrease) 233,090 32,013 $ 3,827,641
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 16,203,034
Reinvestment of distributions 147,404
Shares redeemed (3,281,384)
Net increase (decrease) $ 13,069,054
CLASS T Shares sold $ 71,654,298
Reinvestment of distributions 1,051,227
Shares redeemed (23,635,629)
Net increase (decrease) $ 49,069,896
CLASS B Shares sold $ 57,223,474
Reinvestment of distributions 213,556
Shares redeemed (4,668,237)
Net increase (decrease) $ 52,768,793
CLASS C Shares sold $ 19,997,372
Reinvestment of distributions 11,224
Shares redeemed (764,009)
Net increase (decrease) $ 19,244,587
INSTITUTIONAL CLASS Shares $ 2,901,545
sold
Reinvestment of distributions 52,667
Shares redeemed (2,208,872)
Net increase (decrease) $ 745,340
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL A 15.52% 34.72% 106.00%
FIDELITY ADV HEALTH CARE - CL 8.88% 26.98% 94.16%
A (INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Health Care 12.31% 33.56% 114.13%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common stocks -
and the Goldman Sachs Health Care Index - a market
capitalization-weighted index of 93 stocks designed to measure the
performance of companies in the health care sector. Issues in the
index include providers of health care related services including
long-term care and hospital facilities, health care management
organizations and continuing care services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL A 34.72% 34.95%
FIDELITY ADV HEALTH CARE - CL 26.98% 31.68%
A (INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Health Care 33.56% 37.14%
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 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
1998/08/31 14763.76 15136.87
16554.54
1998/09/30 16451.72 16106.54
18419.75
1998/10/31 16926.78 17416.64
19244.11
1998/11/30 17804.62 18472.27
20271.43
1998/12/31 19023.27 19536.64
21491.50
1999/01/29 19415.71 20353.66
21413.35
IMATRL PRASUN SHR__CHT 19990131 19990226 142359 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $19,416 - a 94.16% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Health Care Index, it would have grown to $21,413 - a 114.13%
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 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL T 15.39% 34.32% 104.55%
FIDELITY ADV HEALTH CARE - CL 11.35% 29.61% 97.39%
T (INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Health Care 12.31% 33.56% 114.13%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common stocks -
and the Goldman Sachs Health Care Index - a market
capitalization-weighted index of 93 stocks designed to measure the
performance of companies in the health care sector. Issues in the
index include providers of health care related services including
long-term care and hospital facilities, health care management
organizations and continuing care services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL T 34.32% 34.56%
FIDELITY ADV HEALTH CARE - CL 29.61% 32.58%
T (INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Health Care 33.56% 37.14%
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 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
1998/08/31 15025.71 15136.87
16554.54
1998/09/30 16741.42 16106.54
18419.75
1998/10/31 17216.43 17416.64
19244.11
1998/11/30 18103.12 18472.27
20271.43
1998/12/31 19338.14 19536.64
21491.50
1999/01/29 19739.26 20353.66
21413.35
IMATRL PRASUN SHR__CHT 19990131 19990226 142621 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $19,739 - a 97.39% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Health Care Index, it would have grown to $21,413 - a 114.13%
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 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 six months, past one year and life of fund total
return figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the life of fund total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL B 15.14% 33.73% 102.29%
FIDELITY ADV HEALTH CARE - CL 10.14% 28.73% 99.29%
B (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Health Care 12.31% 33.56% 114.13%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common stocks -
and the Goldman Sachs Health Care Index - a market
capitalization-weighted index of 93 stocks designed to measure the
performance of companies in the health care sector. Issues in the
index include providers of health care related services including
long-term care and hospital facilities, health care management
organizations and continuing care services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL B 33.73% 33.94%
FIDELITY ADV HEALTH CARE - CL 28.73% 33.11%
B (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Health Care 33.56% 37.14%
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 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
1998/08/31 15425.03 15136.87
16554.54
1998/09/30 17179.79 16106.54
18419.75
1998/10/31 17660.65 17416.64
19244.11
1998/11/30 18567.72 18472.27
20271.43
1998/12/31 19824.52 19536.64
21491.50
1999/01/29 19929.00 20353.66
21413.35
IMATRL PRASUN SHR__CHT 19990131 19990226 142805 R00000000000032
$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 January 31, 1999,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $19,929 - a 99.29% 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 $20,354 - a 103.54% increase. If $10,000 was invested in the
Goldman Sachs Health Care Index, it would have grown to $21,413 - a
114.13% 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 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
six months, past one year and life of fund total return figures are
1%, 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL C 15.21% 33.51% 102.06%
FIDELITY ADV HEALTH CARE - CL 14.21% 32.51% 102.06%
C (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Health Care 12.31% 33.56% 114.13%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, one
year or since the fund started on September 3, 1996. You can compare
Class C shares' returns to the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Health Care Index - a market capitalization-weighted index of 93
stocks designed to measure the performance of companies in the health
care sector. Issues in the index include providers of health care
related services including long-term care and hospital facilities,
health care management organizations and continuing care services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - CL C 33.51% 33.88%
FIDELITY ADV HEALTH CARE - CL 32.51% 33.88%
C (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Health Care 33.56% 37.14%
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 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 10660.00 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 14079.34 14938.07
14887.11
1997/12/31 14304.85 15194.56
15322.92
1998/01/31 15134.42 15362.61
16033.22
1998/02/28 15932.09 16470.56
17070.43
1998/03/31 16538.32 17314.02
17844.91
1998/04/30 16708.48 17488.19
18314.30
1998/05/31 16548.95 17187.57
18020.01
1998/06/30 17431.70 17885.73
19053.99
1998/07/31 17538.06 17695.25
19066.04
1998/08/31 15410.94 15136.87
16554.54
1998/09/30 17151.32 16106.54
18419.75
1998/10/31 17642.29 17416.64
19244.11
1998/11/30 18536.95 18472.27
20271.43
1998/12/31 19802.57 19536.64
21491.50
1999/01/29 20206.26 20353.66
21413.35
IMATRL PRASUN SHR__CHT 19990131 19990226 143424 R00000000000032
$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 January 31, 1999,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $20,206 - a 102.06%
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 $20,354 - a 103.54% increase. If $10,000 was
invested in the Goldman Sachs Health Care Index, it would have grown
to $21,413 - a 114.13% 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 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. Very well. For the six months that ended January 31, 1999, the
fund's Class A, Class T, Class B and Class C shares returned 15.52%,
15.39%, 15.14% and 15.21%, respectively. These returns outpaced the
15.02% return for the Standard & Poor's 500 Index and the Goldman
Sachs Health Care Index - an index of 93 stocks designed to measure
the performance of companies in the health care sector - which
returned 12.31% during the same period. For the 12 months that ended
January 31, 1999, the fund's Class A, Class T, Class B and Class C
shares returned 34.72%, 34.32%, 33.73% and 33.51%, respectively. The
S&P 500 index returned 32.49%, while the Goldman Sachs index returned
33.56%, over the same 12-month period.
Q. WHAT WERE THE MAIN FACTORS CONTRIBUTING TO THE FUND'S
STRONG PERFORMANCE?
A. Drug stocks posted solid gains during most of the period due to
strong product pipelines, increased merger activity and robust
domestic sales. During periods of market weakness, I took the
opportunity to increase the fund's asset weightings in
pharmaceuticals, biotechnology and medical equipment. My strategy of
overweighting the fund's assets in these sectors relative to the
Goldman Sachs index worked out well. While the fund was overweighted
in pharmaceutical stocks relative to the benchmark indexes, total
return received the biggest boost from a number of top holdings, such
as Eli Lilly, Warner-Lambert and Schering-Plough. Performance also was
helped by the fund's underweighted position relative to the Goldman
Sachs benchmark in HMOs and hospitals, which continued to struggle
during the period.
Q. WHAT WAS YOUR RATIONALE BEHIND THIS DECISION TO SIGNIFICANTLY
INCREASE THE FUND'S HOLDINGS IN PHARMACEUTICAL, BIOTECHNOLOGY AND
MEDICAL EQUIPMENT COMPANIES?
A. Similar to what I mentioned in the annual report six months ago, I
did not foresee any major changes in the market's favorable growth
outlook for these types of companies. As a result, I continued to take
a positive long-term view on these sectors. The major factors for the
bullish outlook were an aging population with increasing demand for
health care products and an increasing supply of innovative, effective
and safe new drugs. Most importantly, however, these companies
produced strong corporate earnings combined with a favorable business
outlook.
Q. YOU MENTIONED ELI LILLY, WARNER-LAMBERT AND SCHERING-PLOUGH AS
MAJOR CONTRIBUTORS TO THE FUND'S PERFORMANCE. WHAT WERE THE STORIES
HERE?
A. These stocks performed very well. But first, I would like to talk
about a stock you didn't mention - Amgen. While it was not as large of
a holding as the others you asked about, it provided a significant
boost to total return. I liked Amgen because it has some very
successful products and, at one point, it traded at a significant
discount to other health care companies. The stock soared after an
arbitration panel gave the company all rights to a new version of
Epogen, a popular anemia drug. Concerning the other stocks you
mentioned, Eli Lilly 's stock rallied as the company kept generic drug
companies at bay by developing a new version of its blockbuster
anti-depressant drug, Prozac. Warner-Lambert shares appreciated as the
company reported increased earnings driven by the continued success of
its cholesterol treatment, Lipitor. Schering-Plough's stock continued
to benefit from strong sales of its major product - Claritin - and
upward earnings estimates.
Q. WHAT STOCKS HURT TOTAL RETURN?
A. Monsanto, a diversified chemicals company, hurt fund performance
when its proposed merger with American Home Products fell apart. While
the fund was underweighted in HMOs and health care service providers,
such as Medpartners and Foundation Health Systems, this sector
continued to detract from the fund's total return as investors
remained uncertain about the group's profitability outlook and rising
medical costs. The fund no longer held positions in Monsanto or
Medpartners at the end of the period.
Q. WHAT'S YOUR OUTLOOK, BESO?
A. I still see a strong business cycle ahead for pharmaceutical
companies, especially those drug companies with dominant market
presence and a strong pipeline of profitable products. I will continue
to focus on the pharmaceutical companies because I believe they have
the best prospects for long-term sustainable market growth. As of the
end of the period, I also liked some of the companies that stand to
benefit from the strong pharmaceutical sector. For example, medical
research and development companies could benefit from the robust R&D
cycle and from the growing popularity of outsourcing drug research and
development.
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.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$426 million
MANAGER: Beso Sikharulidze, since 1997;
joined Fidelity in 1992
ADVISOR HEALTH CARE FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Lilly (Eli) & Co. 10.6
Merck & Co., Inc. 8.8
Warner-Lambert Co. 6.8
Schering-Plough Corp. 6.2
Bristol-Myers Squibb Co. 5.6
Medtronic, Inc. 5.1
Johnson & Johnson 4.5
Pfizer, Inc. 4.3
Amgen, Inc. 4.3
Baxter International, Inc. 3.8
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Drugs & Pharmaceuticals 60.4%
Medical Equipment & Supplies 24.5%
Medical Facilities Management 3.9%
Drug Stores 1.5%
Electronic Instruments 1.3%
All Others 8.4%*
Row: 1, Col: 1, Value: 60.4
Row: 1, Col: 2, Value: 24.5
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 1.3
Row: 1, Col: 6, Value: 18.4
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR HEALTH CARE FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Pioneer Hi-Bred 53,800 $ 1,523,213
International, Inc.
COMPUTER SERVICES & SOFTWARE
- - 0.8%
IMS Health, Inc. 82,200 3,010,575
Medical Manager Corp. (a) 12,000 417,000
3,427,575
DRUG STORES - 1.5%
CVS Corp. 14,300 782,925
Walgreen Co. 86,600 5,412,500
6,195,425
DRUGS & PHARMACEUTICALS - 60.4%
Allergan, Inc. 15,200 1,168,500
ALZA Corp. Class A. (a) 6,600 333,713
American Home Products Corp. 170,500 10,006,219
Amgen, Inc. (a) 137,300 17,548,656
Andrx Corp. (a) 49,800 2,819,925
Biogen, Inc. (a) 30,100 2,957,325
Biomatrix, Inc. (a) 57,800 3,489,675
Bristol-Myers Squibb Co. 178,800 22,919,925
Chiron Corp. (a) 23,600 536,900
Elan Corp. PLC ADR (a) 33,400 2,254,500
Forest Laboratories, Inc. (a) 34,000 1,570,375
Genentech, Inc. (special) (a) 10,200 830,025
Genzyme Corp.:
(General Division) 49,100 2,675,950
(Molecular Oncology) (a) 2,074 5,574
Glaxo Wellcome PLC sponsored 57,600 3,909,600
ADR
Immunex Corp. (a) 10,000 1,561,250
Lilly (Eli) & Co. 465,300 43,592,792
MacroChem Corp. (a) 105,200 789,000
Medimmune, Inc. (a) 29,200 1,445,400
Merck & Co., Inc. 246,400 36,159,200
Novartis AG (Reg.) 1,775 3,331,731
PAREXEL International Corp. 20,900 543,400
(a)
Pfizer, Inc. 136,600 17,570,175
Pharmacia & Upjohn, Inc. 29,100 1,673,250
QLT PhotoTherapeutics, Inc. 8,900 357,484
(a)
Quintiles Transnational Corp. 37,100 1,919,925
(a)
Rhone-Poulenc SA sponsored 40,000 2,067,500
ADR Class A
Roche Holding AG 194 2,535,025
participation certificates
Schering-Plough Corp. 463,700 25,271,650
Sepracor, Inc. (a) 8,300 952,425
Shire Pharmaceuticals Group 83,050 1,754,431
PLC sponsored ADR (a)
SmithKline Beecham PLC ADR 10,100 684,906
Takeda Chemical Industries 15,000 534,702
Ltd.
Warner-Lambert Co. 387,900 28,001,531
SHARES VALUE (NOTE 1)
Watson Pharmaceuticals, Inc. 28,900 $ 1,578,663
(a)
Zonagen, Inc. (a) 73,500 2,002,875
247,354,177
ELECTRONIC INSTRUMENTS - 1.3%
Perkin-Elmer Corp. 12,500 1,188,281
Waters Corp. (a) 46,700 4,249,700
5,437,981
INSURANCE - 0.7%
Aetna, Inc. 100 9,013
CIGNA Corp. 20,300 1,672,213
Healthcare Recoveries, Inc. 78,200 1,251,200
(a)
2,932,426
MEDICAL EQUIPMENT & SUPPLIES
- - 24.5%
Abbott Laboratories 170,000 7,894,375
Allegiance Corp. 41,400 1,868,175
AmeriSource Health Corp. 21,000 1,627,500
Class A (a)
Ballard Medical Products 31,100 752,231
Bard (C.R.), Inc. 100 5,063
Bausch & Lomb, Inc. 44,500 2,731,188
Baxter International, Inc. 221,600 15,719,750
Becton, Dickinson & Co. 150,400 5,376,800
Bergen Brunswig Corp. Class A 71,000 1,988,000
Biomet, Inc. 24,900 911,963
Boston Scientific Corp. (a) 35,500 867,531
Cardinal Health, Inc. 97,535 7,211,494
Guidant Corp. 149,600 8,817,050
Johnson & Johnson 216,200 18,377,000
Mallinckrodt, Inc. 700 24,456
Medtronic, Inc. 261,314 20,823,459
Omnicare, Inc. 1,000 30,625
Sybron International, Inc. (a) 36,100 974,700
VISX, Inc. (a) 33,500 2,043,500
Wesley Jessen Visioncare, 99,700 2,143,550
Inc. (a)
100,188,410
MEDICAL FACILITIES MANAGEMENT
- - 3.9%
Concentra Managed Care, Inc. 37,900 435,850
(a)
Foundation Health Systems, 105,100 965,606
Inc. Class A (a)
Health Management Associates, 163,100 2,048,944
Inc. Class A (a)
Lincare Holdings, Inc. (a) 91,300 3,195,500
Orthodontic Centers of 106,000 2,027,250
America, Inc. (a)
PacifiCare Health Systems, 1,000 70,750
Inc. Class B (a)
Total Renal Care Holdings, 68,600 1,599,238
Inc. (a)
United HealthCare Corp. 40,300 1,803,425
Universal Health Services, 35,000 1,566,250
Inc. Class B (a)
Wellpoint Health Networks, 29,800 2,229,413
Inc. (a)
15,942,226
REAL ESTATE INVESTMENT TRUSTS
- - 0.8%
Meditrust Corp. unit 200,000 3,137,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.2%
Veterinary Centers of 50,700 $ 925,275
America, Inc.
TOTAL COMMON STOCKS 387,064,208
(Cost $311,741,552)
CASH EQUIVALENTS - 5.5%
Taxable Central Cash Fund (b) 22,743,081 22,743,081
(Cost $22,743,081)
TOTAL INVESTMENT IN $ 409,807,289
SECURITIES - 100%
(Cost $334,484,633)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $334,484,746. Net unrealized appreciation
aggregated $75,322,543, of which $80,014,763 related to appreciated
investment securities and $4,692,220 related to depreciated investment
securities.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 409,807,289
value (cost $334,484,633) -
See accompanying schedule
Receivable for investments 13,268,648
sold
Receivable for fund shares 5,587,992
sold
Dividends receivable 132,836
Interest receivable 156,010
Other receivables 583
TOTAL ASSETS 428,953,358
LIABILITIES
Payable for investments $ 1,478,095
purchased
Payable for fund shares 621,994
redeemed
Accrued management fee 187,054
Distribution fees payable 211,380
Other payables and accrued 141,487
expenses
TOTAL LIABILITIES 2,640,010
NET ASSETS $ 426,313,348
Net Assets consist of:
Paid in capital $ 346,836,694
Accumulated net investment (525,341)
loss
Accumulated undistributed net 4,679,168
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 75,322,827
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 426,313,348
CALCULATION OF MAXIMUM $18.80
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($39,622,635 (divided
by) 2,107,411 shares)
Maximum offering price per $19.95
share (100/94.25 of $18.80)
CLASS T: NET ASSET VALUE $18.70
and redemption price per
share ($192,056,973 (divided
by) 10,268,786 shares)
Maximum offering price per $19.38
share (100/96.50 of $18.70)
CLASS B: NET ASSET VALUE $18.51
and offering price per
share ($126,961,758 (divided
by) 6,859,998 shares) A
CLASS C: NET ASSET VALUE $18.52
and offering price per
share ($49,703,373 (divided
by) 2,684,309 shares) A
INSTITUTIONAL CLASS: NET $18.85
ASSET VALUE, offering price
and redemption price per
share ($17,968,609
(divided by) 953,387 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 1,081,895
Dividends
Interest 746,694
TOTAL INCOME 1,828,589
EXPENSES
Management fee $ 853,642
Transfer agent fees 391,543
Distribution fees 935,765
Accounting fees and expenses 82,795
Non-interested trustees' 488
compensation
Custodian fees and expenses 7,250
Registration fees 97,098
Audit 14,562
Legal 2,786
Miscellaneous 775
Total expenses before 2,386,704
reductions
Expense reductions (32,774) 2,353,930
NET INVESTMENT INCOME (LOSS) (525,341)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,988,464
Foreign currency transactions (4,479) 4,983,985
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 45,733,180
Assets and liabilities in 218 45,733,398
foreign currencies
NET GAIN (LOSS) 50,717,383
NET INCREASE (DECREASE) IN $ 50,192,042
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (525,341) $ (517,467)
income (loss)
Net realized gain (loss) 4,983,985 10,419,090
Change in net unrealized 45,733,398 19,983,044
appreciation (depreciation)
NET INCREASE (DECREASE) IN 50,192,042 29,884,667
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,527,545) (5,317,653)
from net realized gains
Share transactions - net 149,332,552 138,185,326
increase (decrease)
Redemption fees 110,164 63,702
TOTAL INCREASE (DECREASE) 194,107,213 162,816,042
IN NET ASSETS
NET ASSETS
Beginning of period 232,206,135 69,390,093
End of period (including $ 426,313,348 $ 232,206,135
accumulated net investment
loss of $525,341 and $0,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.70 $ 14.10 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.03) (.02)
D
Net realized and unrealized 2.48 3.50 4.12
gain (loss)
Total from investment 2.48 3.47 4.10
operations
Less Distributions
From net realized gain (.39) (.88) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.80 $ 16.70 $ 14.10
TOTAL RETURN B, C 15.52% 26.47% 41.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 39,623 $ 20,902 $ 5,488
(000 omitted)
Ratio of expenses to average 1.29% A 1.38% 1.75% A, F
net assets
Ratio of expenses to average 1.26% A, G 1.36% G 1.74% A, G
net assets after expense
reductions
Ratio of net investment .00% A (.18)% (.18)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.61 $ 14.05 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.02) (.05) (.04)
D
Net realized and unrealized 2.47 3.47 4.09
gain (loss)
Total from investment 2.45 3.42 4.05
operations
Less Distributions
From net realized gain (.37) (.87) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.70 $ 16.61 $ 14.05
TOTAL RETURN B, C 15.39% 26.17% 40.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 192,057 $ 124,652 $ 50,868
(000 omitted)
Ratio of expenses to average 1.50% A 1.54% 1.97% A
net assets
Ratio of expenses to average 1.48% A, F 1.52% F 1.96% A, F
net assets after expense
reductions
Ratio of net investment (.20)% A (.31)% (.39)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.47 $ 14.01 $ 11.88
period
Income from Investment
Operations
Net investment income (loss) (.06) (.14) (.05)
D
Net realized and unrealized 2.45 3.45 2.18
gain (loss)
Total from investment 2.39 3.31 2.13
operations
Less Distributions
From net realized gain (.36) (.86) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.51 $ 16.47 $ 14.01
TOTAL RETURN B, C 15.14% 25.40% 17.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 126,962 $ 57,074 $ 6,159
(000 omitted)
Ratio of expenses to average 2.04% A 2.13% 2.50% A, F
net assets
Ratio of expenses to average 2.02% A, G 2.12% G 2.49% A, G
net assets after expense
reductions
Ratio of net investment (.75)% A (.95)% (.99)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 16.49 $ 13.85
period
Income from Investment
Operations
Net investment income (loss) (.06) (.12)
D
Net realized and unrealized 2.46 3.39
gain (loss)
Total from investment 2.40 3.27
operations
Less Distributions
From net realized gain (.38) (.63)
Redemption fees added to paid .01 -
in capital
Net asset value, end of period $ 18.52 $ 16.49
TOTAL RETURN B, C 15.21% 24.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 49,703 $ 19,154
(000 omitted)
Ratio of expenses to average 2.01% A 2.18% A
net assets
Ratio of expenses to average 1.99% A, F 2.17% A, F
net assets after expense
reductions
Ratio of net investment (.73)% A (1.06)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.73 $ 14.12 $ 10.00
period
Income from Investment
Operations
Net investment income D .03 .03 .01
Net realized and unrealized 2.49 3.47 4.11
gain (loss)
Total from investment 2.52 3.50 4.12
operations
Less Distributions
From net realized gain (.41) (.90) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.85 $ 16.73 $ 14.12
TOTAL RETURN B, C 15.77% 26.70% 41.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,969 $ 10,424 $ 6,875
(000 omitted)
Ratio of expenses to average .95% A 1.07% 1.50% A, F
net assets
Ratio of expenses to average .92% A, G 1.04% G 1.49% A, G
net assets after expense
reductions
Ratio of net investment .35% A .17% .08% A
income to average net assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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.
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 Fidelity Management & Research Company
(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 $274,359,633 and $160,940,457, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 32,028 $ 25
CLASS T 359,010 514
CLASS B 400,016 300,139
CLASS C 144,711 141,019
$ 935,765 $ 441,697
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 196,131 $ 95,082
CLASS T 286,471 110,645
CLASS B 93,501 93,501*
CLASS C 11,433 11,433*
$ 587,536 $ 310,661
* 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 $ 37,711 .30 *
CLASS T 188,906 .27 *
CLASS B 115,486 .29 *
CLASS C 36,862 .26 *
INSTITUTIONAL CLASS 12,578 .21 *
$ 391,543
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $25,114 for the
period.
5. EXPENSE REDUCTIONS.
FMR 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 $29,599 under this arrangement.
In addition, the fund has entered into an arrangements 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 $3,175 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 506,247 $ 420,044
Class T 2,852,064 3,806,901
Class B 1,389,676 709,849
Class C 513,007 21,184
Institutional Class 266,551 359,675
Total $ 5,527,545 $ 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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 1,040,918 953,100 $ 17,732,865
Reinvestment of distributions 30,314 29,113 451,369
Shares redeemed (215,775) (119,595) (3,496,978)
Net increase (decrease) 855,457 862,618 $ 14,687,256
CLASS T Shares sold 4,081,837 5,008,211 $ 68,552,574
Reinvestment of distributions 182,633 273,667 2,706,626
Shares redeemed (1,500,445) (1,398,051) (24,696,562)
Net increase (decrease) 2,764,025 3,883,827 $ 46,562,638
CLASS B Shares sold 3,775,451 3,319,731 $ 63,149,612
Reinvestment of distributions 81,571 49,154 1,199,095
Shares redeemed (462,515) (343,006) (7,616,968)
Net increase (decrease) 3,394,507 3,025,879 $ 56,731,739
CLASS C Shares sold 1,742,934 1,191,803 $ 29,396,259
Reinvestment of distributions 26,622 1,455 391,340
Shares redeemed (246,504) (32,001) (4,125,534)
Net increase (decrease) 1,523,052 1,161,257 $ 25,662,065
INSTITUTIONAL CLASS Shares 506,706 342,040 $ 8,616,583
sold
Reinvestment of distributions 16,382 27,158 244,258
Shares redeemed (192,588) (233,192) (3,171,987)
Net increase (decrease) 330,500 136,006 $ 5,688,854
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 14,712,053
Reinvestment of distributions 382,670
Shares redeemed (1,797,313)
Net increase (decrease) $ 13,297,410
CLASS T Shares sold $ 75,539,497
Reinvestment of distributions 3,586,347
Shares redeemed (21,017,135)
Net increase (decrease) $ 58,108,709
CLASS B Shares sold $ 50,883,606
Reinvestment of distributions 640,560
Shares redeemed (5,148,858)
Net increase (decrease) $ 46,375,308
CLASS C Shares sold $ 18,640,101
Reinvestment of distributions 18,904
Shares redeemed (510,296)
Net increase (decrease) $ 18,148,709
INSTITUTIONAL CLASS Shares $ 5,185,579
sold
Reinvestment of distributions 357,509
Shares redeemed (3,287,898)
Net increase (decrease) $ 2,255,190
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL A -14.22% -19.53% 19.93% 165.62%
FIDELITY ADV NATURAL - CL A -19.16% -24.16% 13.03% 150.35%
(INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 196.12% 462.78%
GS Natural Resources -9.92% -14.94% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market
capitalization-weighted index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. Issues in the index include extractive industries
including gold & precious metals mining along with other mineral
mining, energy companies providing oil & gas services, and owners and
operators of timber tracts and forestry services. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL A -19.53% 3.70% 10.26%
FIDELITY ADV NATURAL - CL A -24.16% 2.48% 9.61%
(INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 24.25% 18.86%
GS Natural Resources -14.94% 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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL A S&P 500
00247 SP001
1989/01/31 9425.00 10000.00
1989/02/28 9285.67 9751.00
1989/03/31 9465.98 9978.20
1989/04/30 9761.02 10496.07
1989/05/31 9990.50 10921.16
1989/06/30 9957.72 10858.91
1989/07/31 10678.93 11839.47
1989/08/31 10998.57 12071.52
1989/09/30 10703.52 12022.03
1989/10/31 10326.52 11743.12
1989/11/30 10785.48 11982.68
1989/12/31 11609.86 12270.26
1990/01/31 10877.54 11446.92
1990/02/28 11386.59 11594.59
1990/03/31 11600.93 11901.85
1990/04/30 10993.64 11604.30
1990/05/31 12109.97 12735.72
1990/06/30 11958.15 12649.12
1990/07/31 12547.58 12608.64
1990/08/31 12217.14 11468.82
1990/09/30 11833.12 10910.29
1990/10/31 10984.71 10863.37
1990/11/30 11163.32 11565.15
1990/12/31 10996.62 11887.81
1991/01/31 11359.46 12406.12
1991/02/28 12996.86 13293.16
1991/03/31 12689.84 13614.86
1991/04/30 12754.97 13647.53
1991/05/31 13368.99 14237.10
1991/06/30 12596.81 13585.05
1991/07/31 13015.46 14218.11
1991/08/31 13350.38 14555.08
1991/09/30 12829.39 14312.01
1991/10/31 13127.10 14503.79
1991/11/30 12066.51 13919.29
1991/12/31 12587.70 15511.65
1992/01/31 13369.42 15223.14
1992/02/29 13670.08 15421.04
1992/03/31 13329.33 15120.33
1992/04/30 13820.41 15564.86
1992/05/31 14191.23 15641.13
1992/06/30 13730.21 15408.08
1992/07/31 14281.43 16038.27
1992/08/31 14070.96 15709.48
1992/09/30 14211.27 15894.86
1992/10/31 13910.61 15950.49
1992/11/30 14091.01 16494.40
1992/12/31 14266.25 16697.28
1993/01/31 14723.57 16837.54
1993/02/28 15136.28 17066.53
1993/03/31 16140.16 17426.63
1993/04/30 17010.19 17004.91
1993/05/31 17846.75 17460.64
1993/06/30 18092.14 17511.28
1993/07/31 17846.75 17441.23
1993/08/31 18872.94 18102.25
1993/09/30 18772.55 17962.87
1993/10/31 19620.27 18334.70
1993/11/30 18884.09 18160.52
1993/12/31 19678.71 18380.26
1994/01/31 20875.23 19005.19
1994/02/28 20224.70 18490.15
1994/03/31 18981.71 17683.98
1994/04/30 19295.36 17910.33
1994/05/31 19550.93 18204.06
1994/06/30 19202.42 17758.06
1994/07/31 19852.96 18340.53
1994/08/31 20817.15 19092.49
1994/09/30 20712.60 18624.72
1994/10/31 20398.95 19043.78
1994/11/30 19063.02 18350.20
1994/12/31 19230.17 18622.34
1995/01/31 18852.42 19105.22
1995/02/28 19407.25 19849.75
1995/03/31 20493.30 20435.51
1995/04/30 21331.45 21037.34
1995/05/31 21626.57 21878.20
1995/06/30 22240.42 22386.43
1995/07/31 23173.01 23128.76
1995/08/31 23527.16 23186.82
1995/09/30 23727.84 24165.30
1995/10/31 22724.42 24079.03
1995/11/30 23881.30 25136.10
1995/12/31 24744.33 25620.22
1996/01/31 25684.76 26492.33
1996/02/29 26319.86 26737.92
1996/03/31 27125.94 26995.40
1996/04/30 28701.47 27393.32
1996/05/31 29238.86 28099.79
1996/06/30 29055.65 28206.85
1996/07/31 27480.13 26960.67
1996/08/31 28713.68 27529.27
1996/09/30 29935.02 29078.62
1996/10/31 30667.82 29880.61
1996/11/30 32206.71 32139.28
1996/12/31 32259.55 31502.60
1997/01/31 32782.18 33470.89
1997/02/28 30613.25 33733.30
1997/03/31 29816.23 32347.20
1997/04/30 29672.51 34278.32
1997/05/31 32377.14 36365.19
1997/06/30 32272.61 37994.35
1997/07/31 34180.22 41017.56
1997/08/31 34376.21 38719.76
1997/09/30 36844.78 40840.44
1997/10/31 34575.62 39476.37
1997/11/30 31695.53 41303.73
1997/12/31 31990.77 42012.91
1998/01/31 31112.41 42477.58
1998/02/28 32221.91 45541.06
1998/03/31 33624.21 47873.22
1998/04/30 34903.22 48354.82
1998/05/31 33115.68 47523.60
1998/06/30 31744.21 49454.01
1998/07/31 29186.18 48927.32
1998/08/31 23438.32 41853.41
1998/09/30 28099.84 44534.54
1998/10/31 28245.02 48156.98
1998/11/30 27148.13 51075.78
1998/12/31 26809.38 54018.76
1999/01/29 25034.99 56277.83
IMATRL PRASUN SHR__CHT 19990131 19990226 143653 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class A on January
31, 1989, and the current 5.75% sales charge was paid. As the chart
shows, by January 31, 1999, the value of the investment would have
grown to $25,035 - a 150.35% 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 $56,278 - a 462.78%
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.)
(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 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV NATURAL - CL T -14.30% -19.64% 19.93% 165.63%
FIDELITY ADV NATURAL - CL T -17.30% -22.46% 15.73% 156.33%
(INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 196.12% 462.78%
GS Natural Resources -9.92% -14.94% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market
capitalization-weighted index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. Issues in the index include extractive industries
including gold & precious metals mining along with other mineral
mining, energy companies providing oil & gas services, and owners and
operators of timber tracts and forestry services. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL T -19.64% 3.70% 10.26%
FIDELITY ADV NATURAL - CL T -22.46% 2.97% 9.87%
(INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 24.25% 18.86%
GS Natural Resources -14.94% 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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL T S&P 500
00166 SP001
1989/01/31 9650.00 10000.00
1989/02/28 9507.35 9751.00
1989/03/31 9691.96 9978.20
1989/04/30 9994.04 10496.07
1989/05/31 10229.00 10921.16
1989/06/30 10195.43 10858.91
1989/07/31 10933.87 11839.47
1989/08/31 11261.13 12071.52
1989/09/30 10959.04 12022.03
1989/10/31 10573.04 11743.12
1989/11/30 11042.96 11982.68
1989/12/31 11887.02 12270.26
1990/01/31 11137.22 11446.92
1990/02/28 11658.42 11594.59
1990/03/31 11877.87 11901.85
1990/04/30 11256.09 11604.30
1990/05/31 12399.07 12735.72
1990/06/30 12243.63 12649.12
1990/07/31 12847.12 12608.64
1990/08/31 12508.80 11468.82
1990/09/30 12115.61 10910.29
1990/10/31 11246.95 10863.37
1990/11/30 11429.82 11565.15
1990/12/31 11259.14 11887.81
1991/01/31 11630.64 12406.12
1991/02/28 13307.12 13293.16
1991/03/31 12992.78 13614.86
1991/04/30 13059.46 13647.53
1991/05/31 13688.14 14237.10
1991/06/30 12897.53 13585.05
1991/07/31 13326.18 14218.11
1991/08/31 13669.09 14555.08
1991/09/30 13135.67 14312.01
1991/10/31 13440.48 14503.79
1991/11/30 12354.57 13919.29
1991/12/31 12888.20 15511.65
1992/01/31 13688.58 15223.14
1992/02/29 13996.42 15421.04
1992/03/31 13647.54 15120.33
1992/04/30 14150.34 15564.86
1992/05/31 14530.01 15641.13
1992/06/30 14057.99 15408.08
1992/07/31 14622.36 16038.27
1992/08/31 14406.88 15709.48
1992/09/30 14550.53 15894.86
1992/10/31 14242.70 15950.49
1992/11/30 14427.40 16494.40
1992/12/31 14606.82 16697.28
1993/01/31 15075.06 16837.54
1993/02/28 15497.62 17066.53
1993/03/31 16525.46 17426.63
1993/04/30 17416.26 17004.91
1993/05/31 18272.80 17460.64
1993/06/30 18524.05 17511.28
1993/07/31 18272.80 17441.23
1993/08/31 19323.49 18102.25
1993/09/30 19220.70 17962.87
1993/10/31 20088.66 18334.70
1993/11/30 19334.91 18160.52
1993/12/31 20148.49 18380.26
1994/01/31 21373.58 19005.19
1994/02/28 20707.51 18490.15
1994/03/31 19434.85 17683.98
1994/04/30 19755.99 17910.33
1994/05/31 20017.66 18204.06
1994/06/30 19660.84 17758.06
1994/07/31 20326.90 18340.53
1994/08/31 21314.11 19092.49
1994/09/30 21207.06 18624.72
1994/10/31 20885.92 19043.78
1994/11/30 19518.11 18350.20
1994/12/31 19689.25 18622.34
1995/01/31 19302.48 19105.22
1995/02/28 19870.55 19849.75
1995/03/31 20982.53 20435.51
1995/04/30 21840.68 21037.34
1995/05/31 22142.85 21878.20
1995/06/30 22771.36 22386.43
1995/07/31 23726.21 23128.76
1995/08/31 24088.81 23186.82
1995/09/30 24294.29 24165.30
1995/10/31 23266.92 24079.03
1995/11/30 24451.41 25136.10
1995/12/31 25335.04 25620.22
1996/01/31 26297.92 26492.33
1996/02/29 26948.18 26737.92
1996/03/31 27773.51 26995.40
1996/04/30 29386.65 27393.32
1996/05/31 29936.87 28099.79
1996/06/30 29749.29 28206.85
1996/07/31 28136.15 26960.67
1996/08/31 29399.15 27529.27
1996/09/30 30662.15 29078.62
1996/10/31 31412.45 29880.61
1996/11/30 33000.58 32139.28
1996/12/31 33066.74 31502.60
1997/01/31 33599.21 33470.89
1997/02/28 31389.44 33733.30
1997/03/31 30564.10 32347.20
1997/04/30 30444.30 34278.32
1997/05/31 33213.17 36365.19
1997/06/30 33106.67 37994.35
1997/07/31 35063.52 41017.56
1997/08/31 35276.51 38719.76
1997/09/30 37803.42 40840.44
1997/10/31 35480.47 39476.37
1997/11/30 32506.50 41303.73
1997/12/31 32806.70 42012.91
1998/01/31 31898.88 42477.58
1998/02/28 33041.48 45541.06
1998/03/31 34481.47 47873.22
1998/04/30 35780.59 48354.82
1998/05/31 33949.30 47523.60
1998/06/30 32540.61 49454.01
1998/07/31 29911.07 48927.32
1998/08/31 24025.90 41853.41
1998/09/30 28786.13 44534.54
1998/10/31 28933.16 48156.98
1998/11/30 27805.90 51075.78
1998/12/31 27462.82 54018.76
1999/01/29 25633.05 56277.83
IMATRL PRASUN SHR__CHT 19990131 19990226 143913 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class T on January
31, 1989, and the current 3.50% sales charge was paid. As the chart
shows, by January 31, 1999, the value of the investment would have
grown to $25,633 - a 156.33% 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 $56,278 - a 462.78%
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.)
(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 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
six months, past one year, past five years and 10 years total return
figures are 5%, 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JANUARY 31, PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL B -14.58% -20.10% 17.35% 159.91%
FIDELITY ADV NATURAL - CL B -18.68% -23.94% 15.63% 159.91%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 196.12% 462.78%
GS Natural Resources -9.92% -14.94% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market
capitalization-weighted index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. Issues in the index include extractive industries
including gold & precious metals mining along with other mineral
mining, energy companies providing oil & gas services, and owners and
operators of timber tracts and forestry services. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL B -20.10% 3.25% 10.02%
FIDELITY ADV NATURAL - CL B -23.94% 2.95% 10.02%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 24.25% 18.86%
GS Natural Resources -14.94% 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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL B S&P 500
00656 SP001
1989/01/31 10000.00 10000.00
1989/02/28 9852.17 9751.00
1989/03/31 10043.48 9978.20
1989/04/30 10356.52 10496.07
1989/05/31 10600.00 10921.16
1989/06/30 10565.22 10858.91
1989/07/31 11330.43 11839.47
1989/08/31 11669.57 12071.52
1989/09/30 11356.52 12022.03
1989/10/31 10956.52 11743.12
1989/11/30 11443.48 11982.68
1989/12/31 12318.15 12270.26
1990/01/31 11541.16 11446.92
1990/02/28 12081.26 11594.59
1990/03/31 12308.67 11901.85
1990/04/30 11664.34 11604.30
1990/05/31 12848.78 12735.72
1990/06/30 12687.69 12649.12
1990/07/31 13313.08 12608.64
1990/08/31 12962.48 11468.82
1990/09/30 12555.04 10910.29
1990/10/31 11654.87 10863.37
1990/11/30 11844.38 11565.15
1990/12/31 11667.50 11887.81
1991/01/31 12052.47 12406.12
1991/02/28 13789.77 13293.16
1991/03/31 13464.02 13614.86
1991/04/30 13533.12 13647.53
1991/05/31 14184.61 14237.10
1991/06/30 13365.31 13585.05
1991/07/31 13809.51 14218.11
1991/08/31 14164.86 14555.08
1991/09/30 13612.09 14312.01
1991/10/31 13927.96 14503.79
1991/11/30 12802.67 13919.29
1991/12/31 13355.65 15511.65
1992/01/31 14185.06 15223.14
1992/02/29 14504.07 15421.04
1992/03/31 14142.53 15120.33
1992/04/30 14663.57 15564.86
1992/05/31 15057.01 15641.13
1992/06/30 14567.87 15408.08
1992/07/31 15152.71 16038.27
1992/08/31 14929.41 15709.48
1992/09/30 15078.27 15894.86
1992/10/31 14759.27 15950.49
1992/11/30 14950.67 16494.40
1992/12/31 15136.60 16697.28
1993/01/31 15621.83 16837.54
1993/02/28 16059.71 17066.53
1993/03/31 17124.83 17426.63
1993/04/30 18047.94 17004.91
1993/05/31 18935.55 17460.64
1993/06/30 19195.91 17511.28
1993/07/31 18935.55 17441.23
1993/08/31 20024.34 18102.25
1993/09/30 19917.83 17962.87
1993/10/31 20817.27 18334.70
1993/11/30 20036.17 18160.52
1993/12/31 20879.27 18380.26
1994/01/31 22148.79 19005.19
1994/02/28 21458.56 18490.15
1994/03/31 20139.74 17683.98
1994/04/30 20472.53 17910.33
1994/05/31 20743.69 18204.06
1994/06/30 20373.93 17758.06
1994/07/31 21064.15 18340.53
1994/08/31 22087.16 19092.49
1994/09/30 21976.23 18624.72
1994/10/31 21643.44 19043.78
1994/11/30 20226.02 18350.20
1994/12/31 20403.37 18622.34
1995/01/31 20002.57 19105.22
1995/02/28 20591.24 19849.75
1995/03/31 21743.55 20435.51
1995/04/30 22632.83 21037.34
1995/05/31 22945.96 21878.20
1995/06/30 23597.27 22386.43
1995/07/31 24574.22 23128.76
1995/08/31 24949.98 23186.82
1995/09/30 25137.85 24165.30
1995/10/31 24085.74 24079.03
1995/11/30 25288.15 25136.10
1995/12/31 26164.98 25620.22
1996/01/31 27162.85 26492.33
1996/02/29 27810.82 26737.92
1996/03/31 28640.22 26995.40
1996/04/30 30273.10 27393.32
1996/05/31 30817.39 28099.79
1996/06/30 30597.08 28206.85
1996/07/31 28925.32 26960.67
1996/08/31 30195.34 27529.27
1996/09/30 31478.32 29078.62
1996/10/31 32242.92 29880.61
1996/11/30 33862.85 32139.28
1996/12/31 33918.41 31502.60
1997/01/31 34442.56 33470.89
1997/02/28 32166.62 33733.30
1997/03/31 31311.42 32347.20
1997/04/30 31159.69 34278.32
1997/05/31 33987.38 36365.19
1997/06/30 33863.23 37994.35
1997/07/31 35849.51 41017.56
1997/08/31 36042.62 38719.76
1997/09/30 38613.20 40840.44
1997/10/31 36223.80 39476.37
1997/11/30 33175.80 41303.73
1997/12/31 33470.25 42012.91
1998/01/31 32531.99 42477.58
1998/02/28 33680.56 45541.06
1998/03/31 35136.49 47873.22
1998/04/30 36446.83 48354.82
1998/05/31 34570.29 47523.60
1998/06/30 33114.36 49454.01
1998/07/31 30428.97 48927.32
1998/08/31 24411.12 41853.41
1998/09/30 29259.31 44534.54
1998/10/31 29394.07 48156.98
1998/11/30 28231.78 51075.78
1998/12/31 27861.20 54018.76
1999/01/29 25991.43 56277.83
IMATRL PRASUN SHR__CHT 19990131 19990208 101411 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class B on January
31, 1989. As the chart shows, by January 31, 1999, the value of the
investment, including the effect of the contingent deferred sales
charge, would have grown to $25,991 - a 159.91% 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
$56,278 - a 462.78% 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.)
(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 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 six months, past
one year, past five year and past 10 year total return figures are 1%,
1%, 0% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the past one year, five year and 10 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JANUARY 31, PAST 6 MONTHS PAST 1 YEAR PAST 5 YEAR PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL C -14.53% -20.33% 17.01% 159.16%
FIDELITY ADV NATURAL - CL C -15.35% -21.09% 17.01% 159.16%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 196.12% 462.78%
GS Natural Resources -9.92% -14.94% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market
capitalization-weighted index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. Issues in the index include extractive industries
including gold & precious metals mining along with other mineral
mining, energy companies providing oil & gas services, and owners and
operators of timber tracts and forestry services. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV NATURAL - CL C -20.33% 3.19% 9.99%
FIDELITY ADV NATURAL - CL C -21.09% 3.19% 9.99%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 24.25% 18.86%
GS Natural Resources -14.94% 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.
$10,000 OVER 10 YEARS
FA NATURAL RESOURCES-CL C S&P 500
00528 SP001
1989/01/31 10000.00 10000.00
1989/02/28 9852.17 9751.00
1989/03/31 10043.48 9978.20
1989/04/30 10356.52 10496.07
1989/05/31 10600.00 10921.16
1989/06/30 10565.22 10858.91
1989/07/31 11330.43 11839.47
1989/08/31 11669.57 12071.52
1989/09/30 11356.52 12022.03
1989/10/31 10956.52 11743.12
1989/11/30 11443.48 11982.68
1989/12/31 12318.15 12270.26
1990/01/31 11541.16 11446.92
1990/02/28 12081.26 11594.59
1990/03/31 12308.67 11901.85
1990/04/30 11664.34 11604.30
1990/05/31 12848.78 12735.72
1990/06/30 12687.69 12649.12
1990/07/31 13313.08 12608.64
1990/08/31 12962.48 11468.82
1990/09/30 12555.04 10910.29
1990/10/31 11654.87 10863.37
1990/11/30 11844.38 11565.15
1990/12/31 11667.50 11887.81
1991/01/31 12052.47 12406.12
1991/02/28 13789.77 13293.16
1991/03/31 13464.02 13614.86
1991/04/30 13533.12 13647.53
1991/05/31 14184.61 14237.10
1991/06/30 13365.31 13585.05
1991/07/31 13809.51 14218.11
1991/08/31 14164.86 14555.08
1991/09/30 13612.09 14312.01
1991/10/31 13927.96 14503.79
1991/11/30 12802.67 13919.29
1991/12/31 13355.65 15511.65
1992/01/31 14185.06 15223.14
1992/02/29 14504.07 15421.04
1992/03/31 14142.53 15120.33
1992/04/30 14663.57 15564.86
1992/05/31 15057.01 15641.13
1992/06/30 14567.87 15408.08
1992/07/31 15152.71 16038.27
1992/08/31 14929.41 15709.48
1992/09/30 15078.27 15894.86
1992/10/31 14759.27 15950.49
1992/11/30 14950.67 16494.40
1992/12/31 15136.60 16697.28
1993/01/31 15621.83 16837.54
1993/02/28 16059.71 17066.53
1993/03/31 17124.83 17426.63
1993/04/30 18047.94 17004.91
1993/05/31 18935.55 17460.64
1993/06/30 19195.91 17511.28
1993/07/31 18935.55 17441.23
1993/08/31 20024.34 18102.25
1993/09/30 19917.83 17962.87
1993/10/31 20817.27 18334.70
1993/11/30 20036.17 18160.52
1993/12/31 20879.27 18380.26
1994/01/31 22148.79 19005.19
1994/02/28 21458.56 18490.15
1994/03/31 20139.74 17683.98
1994/04/30 20472.53 17910.33
1994/05/31 20743.69 18204.06
1994/06/30 20373.93 17758.06
1994/07/31 21064.15 18340.53
1994/08/31 22087.16 19092.49
1994/09/30 21976.23 18624.72
1994/10/31 21643.44 19043.78
1994/11/30 20226.02 18350.20
1994/12/31 20403.37 18622.34
1995/01/31 20002.57 19105.22
1995/02/28 20591.24 19849.75
1995/03/31 21743.55 20435.51
1995/04/30 22632.83 21037.34
1995/05/31 22945.96 21878.20
1995/06/30 23597.27 22386.43
1995/07/31 24574.22 23128.76
1995/08/31 24949.98 23186.82
1995/09/30 25137.85 24165.30
1995/10/31 24085.74 24079.03
1995/11/30 25288.15 25136.10
1995/12/31 26164.98 25620.22
1996/01/31 27162.85 26492.33
1996/02/29 27810.82 26737.92
1996/03/31 28640.22 26995.40
1996/04/30 30273.10 27393.32
1996/05/31 30817.39 28099.79
1996/06/30 30597.08 28206.85
1996/07/31 28925.32 26960.67
1996/08/31 30195.34 27529.27
1996/09/30 31478.32 29078.62
1996/10/31 32242.92 29880.61
1996/11/30 33862.85 32139.28
1996/12/31 33918.41 31502.60
1997/01/31 34442.56 33470.89
1997/02/28 32166.62 33733.30
1997/03/31 31311.42 32347.20
1997/04/30 31159.69 34278.32
1997/05/31 33987.38 36365.19
1997/06/30 33863.23 37994.35
1997/07/31 35849.51 41017.56
1997/08/31 36042.62 38719.76
1997/09/30 38613.20 40840.44
1997/10/31 36223.80 39476.37
1997/11/30 33165.10 41303.73
1997/12/31 33455.71 42012.91
1998/01/31 32528.16 42477.58
1998/02/28 33647.61 45541.06
1998/03/31 35086.91 47873.22
1998/04/30 36382.28 48354.82
1998/05/31 34495.20 47523.60
1998/06/30 33023.92 49454.01
1998/07/31 30321.23 48927.32
1998/08/31 24340.15 41853.41
1998/09/30 29171.99 44534.54
1998/10/31 29305.58 48156.98
1998/11/30 28153.39 51075.78
1998/12/31 27786.03 54018.76
1999/01/29 25915.82 56277.83
IMATRL PRASUN SHR__CHT 19990131 19990208 101517 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Class C on January
31, 1989. As the chart shows, by January 31, 1999, the value of the
investment, including the effect of the contingent deferred sales
charge, would have grown to $25,916 - a 159.16% 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
$56,278 - a 462.78% 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.)
(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 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 six months that ended January 31, 1999, the fund's Class A,
Class T, Class B and Class C shares returned -14.22%, -14.30%, -14.58%
and -14.53%, respectively. In comparison, the Goldman Sachs Natural
Resources Index - an index of 96 stocks designed to measure the
performance of companies in the natural resources sector - returned
- -9.92%, while the Standard & Poor's 500 Index returned 15.02% during
the period. For the 12 months that ended January 31, 1999, the fund's
Class A, Class T, Class B and Class C shares returned -19.53%,
- -19.64%, -20.10% and -20.33%, respectively. During the same period,
this performance lagged the Goldman Sachs and the S&P 500 returns of
- -14.94% and 32.49%, respectively.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE SIX-MONTH PERIOD?
A. The major cause for poor performance was weak global economic
growth. Many international economies continue to languish in a mire of
political, financial and currency troubles. Over the past couple of
years, the global demand for natural resources has declined from an
approximately 2% annual growth rate to zero. In this environment, even
a slight increase in the supply of natural resources is too much and,
as a result, commodity prices have tanked across the board. The fund
underperformed the Goldman Sachs index because I allocated a larger
percentage of fund assets to mid-cap integrated oil companies, energy
service companies and drillers relative to the index. These companies
are more sensitive to oil prices and underperformed the larger
integrated oil companies, such as Mobil and Exxon, in this negative
environment.
Q. WHY DID YOU OVERWEIGHT THE FUND ASSETS IN MORE AGGRESSIVE OIL
COMPANIES, RELATIVE TO THE INDEX?
A. In hindsight, I was early in my prediction that oil prices were
poised to rebound. However, I am comfortable with the fund's asset
allocation. I believe for a number of reasons - which I will discuss
in more detail in my market outlook - that we are starting to see
signs of impending strength in oil prices. As a result, if we do see
an increase in oil prices, the smaller-cap integrated oil companies
and energy service companies - which are more sensitive to oil prices
- - will perform better than the larger-cap integrated oil companies,
such as Mobil, British Petroleum and Exxon.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks such as Amoco, British Petroleum, Mobil and
Exxon managed to gain approximately 13% over the past year. All of
these stocks provided a boost to the fund's total return and rallied
in response to merger announcements. In comparison, the secondary
energy stocks - drillers, oil service and oil equipment - all posted
significant losses for the year. Gold was the star of the metals
group. The price of gold was down roughly 5% during the 12-month
period, while prices for most other commodities were down
approximately 20% to 30% for the same period.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks and a select
group of precious-metals companies, the natural resources sector
experienced negative returns across the board. With energy prices
hitting 12-year lows, significant detractors within the fund were
USX-Marathon, Tosco, Weatherford International and Schlumberger. As I
mentioned earlier, the stock prices of these companies and sectors are
even more dependent on energy prices than the larger integrated oil
companies. When the prices of oil and natural gas are below a certain
level, it no longer makes economic sense to explore for these fuels or
drill new wells. In this environment, business deteriorated for energy
services companies like Weatherford and Schlumberger, and their stock
prices suffered. On the other hand, if energy prices pick up, earnings
may rise exponentially for these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for natural resources
for the first time in a while. If we look at oil, for example, we are
starting to see a response on the supply side to price movement. For
example, the typical oil company cut capital expenditures by 30%, they
cut back on exploration, and the number of rigs drilling for oil and
gas is at a 49-year low. As a result, oil and gas production will most
likely fall in 1999. In addition, some base-metals mines have been
closing worldwide. If we get even a slight rebound in Asia or Latin
America, it will not take much for a squeeze on supply, which could
set the stage for an increase in commodity prices. This scenario would
be very good for the fund.
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.
(checkmark)FUND FACTS
START DATE: December 29, 1987
SIZE: as of January 31, 1999, more than
$271 million
MANAGER: Lawrence Rakers, since 1997;
joined Fidelity in 1993
ADVISOR NATURAL RESOURCES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Mobil Corp. 8.4
BP Amoco PLC sponsored ADR 6.2
USX-Marathon Group 6.2
Elf Aquitaine SA sponsored ADR 5.4
Exxon Corp. 5.1
Total SA sponsored ADR 4.9
Schlumberger Ltd. 4.3
Halliburton Co. 3.9
Chevron Corp. 3.8
Texaco, Inc. 3.5
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 65.2%
Energy Services 18.5%
Precious Metals 6.7%
Metals & Mining 4.4%
Autos, Tires, & Accessoreis 0.4%
All Others 4.8%*
Row: 1, Col: 1, Value: 65.2
Row: 1, Col: 2, Value: 18.5
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 0.4
Row: 1, Col: 6, Value: 4.8
* INCLUDES SHORT-TERM INVESTMENTS
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.4%
Dynegy, Inc. 100,000 $ 1,062,500
CHEMICALS & PLASTICS - 0.2%
MacDermid, Inc. 14,500 541,938
ENERGY SERVICES - 18.5%
Baker Hughes, Inc. 264,650 4,465,969
BJ Services Co. (a) 255,000 3,761,250
Carbo Ceramics, Inc. 10,000 160,000
Coflexip SA sponsored ADR 75,000 2,287,500
ENSCO International, Inc. 375,000 3,539,063
Global Marine, Inc. (a) 16,200 134,663
Halliburton Co. 360,000 10,687,500
Helmerich & Payne, Inc. 110,000 1,931,875
Input/Output, Inc. (a) 105,000 669,375
Marine Drilling Companies, 70,000 516,250
Inc. (a)
Nabors Industries, Inc. (a) 175,700 2,196,250
Noble Drilling Corp. (a) 270,000 3,611,250
Pool Energy Services Co. (a) 75,000 900,000
Santa Fe International Corp. 93,700 1,288,375
Schlumberger Ltd. 243,300 11,587,163
Smith International, Inc. 87,000 2,202,188
UTI Energy Corp. (a) 70,000 485,625
50,424,296
ENGINEERING - 0.2%
Stolt Comex Seaway SA 95,350 560,181
sponsored ADR Class A
METALS & MINING - 4.4%
Alcoa, Inc. 98,400 8,228,700
Breakwater Resources Ltd. (a) 825,300 496,971
Cameco Corp. 45,000 1,043,707
Camphor Ventures, Inc. (a) 585,900 255,885
Columbia Metals Ltd. (a) 1,479,900 195,858
Cominco Ltd. 10,000 120,434
Cyprus Amax Minerals Co. 40,000 382,500
Freeport-McMoRan Copper & 25,000 239,063
Gold, Inc.
Inco Ltd. 60,000 637,242
Minefinders Corp. Ltd. (a)(c) 47,700 33,458
Rio Algom Ltd. 40,000 411,593
Southern Peru Copper Corp. 2,400 20,250
12,065,661
OIL & GAS - 65.2%
Alberta Energy Co. Ltd. 55,000 1,164,637
Amerada Hess Corp. 185,000 8,787,500
Anadarko Petroleum Corp. 87,000 2,354,438
BP Amoco PLC sponsored ADR 208,862 16,943,930
Burlington Resources, Inc. 31,365 948,791
Canadian Natural Resources 55,000 855,281
Ltd. (a)
Chevron Corp. 140,000 10,465,000
Compagnie Generale de 70,000 673,750
Geophysique SA sponsored ADR
(a)
SHARES VALUE (NOTE 1)
Cooper Cameron Corp. (a) 11,600 $ 271,150
Crestar Energy, Inc. (a) 62,500 457,004
Elf Aquitaine SA sponsored ADR 266,400 14,552,100
Eni Spa sponsored ADR 5,000 300,000
Enron Oil & Gas Co. 55,000 948,750
Exxon Corp. 195,000 13,735,313
Frontier Oil Corp. (a) 1,034,000 5,816,250
Gulf Canada Resources Ltd. (a) 365,000 985,442
Imperial Oil Ltd. 305,000 4,631,915
Louis Dreyfus Natural Gas 90,000 1,136,250
Corp. (a)
Magnum Hunter Resources, Inc. 200,000 587,500
(a)
Mobil Corp. 259,200 22,728,593
Noble Affiliates, Inc. 40,000 787,500
Occidental Petroleum Corp. 9,800 147,613
Ocean Energy, Inc. (a) 58,000 261,000
Oryx Energy Co. (a) 270,000 3,290,625
Paramount Resources Ltd. (c) 77,300 716,120
Penn West Petroleum Ltd. (a) 33,000 345,024
Petro-Canada, Inc. 175,000 2,090,226
Phillips Petroleum Co. 12,200 471,225
Plains Resources, Inc. (a) 211,600 2,406,950
Renaissance Energy Ltd. (a) 30,000 334,502
Rio Alto Exploration Ltd. (a) 115,000 1,065,379
Royal Dutch Petroleum Co. (NY 66,000 2,644,125
Registry Gilder 1.25)
Seagull Energy Corp. (a) 130,000 625,625
Shell Transport & Trading Co. 104,100 3,175,050
PLC ADR
Snyder Oil Corp. 10,000 113,750
Suncor Energy, Inc. 105,000 2,824,411
Tesoro Petroleum Corp. (a) 69,300 753,638
Texaco, Inc. 200,000 9,475,000
Tosco Corp. 115,000 2,501,250
Total SA sponsored ADR 260,000 13,308,750
Ulster Petroleums Ltd. (a) 98,700 659,655
Ultramar Diamond Shamrock 58,400 1,284,800
Corp.
Union Pacific Resources 155,000 1,249,688
Group, Inc.
USX-Marathon Group 735,000 16,721,250
Veritas DGC, Inc. (a) 20,000 248,750
Vintage Petroleum, Inc. 45,000 326,250
Weatherford International, 60,100 1,059,263
Inc. (a)
177,231,013
PRECIOUS METALS - 6.7%
Argentina Gold Corp. (a) 175,000 612,593
First Dynasty Mines Ltd. (a) 401,700 33,227
Getchell Gold Corp. (a) 220,000 5,830,000
Greenstone Resources Ltd. (a) 3,961,395 2,097,086
Greenstone Resources Ltd. 17,700 9,370
(a)(c)
Greenstone Resources Ltd. 50,700 11,742
warrants 2/28/02 (a)
Indochina Goldfields Ltd. (a) 108,800 48,237
Kalahari Goldridge Mining Co. 500,000 148,460
Ltd. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Mentor Exploration & 64,800 $ 36,448
Development Co. Ltd.
Meridian Gold, Inc. (a) 623,400 3,403,289
Mountain Province Mining, 164,700 240,860
Inc. (a)
Pan American Silver Corp. (a) 95,000 487,196
Stillwater Mining Co. (a) 185,000 4,856,250
TVI Pacific, Inc. (a) 459,200 15,193
TVI Pacific, Inc. (a)(c) 1,860,000 61,541
William Resources, Inc. (a) 4,860,000 209,039
William Resources, Inc. 1,029,000 7
warrants 12/31/02 (a)(c)
18,100,538
TOTAL COMMON STOCKS 259,986,127
(Cost $321,447,079)
CASH EQUIVALENTS - 4.4%
Taxable Central Cash Fund (b) 11,868,252 11,868,252
(Cost $11,868,252)
TOTAL INVESTMENT IN $ 271,854,379
SECURITIES - 100%
(Cost $333,315,331)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 $820,496 or 0.3% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States 65.8%
France 11.3
Canada 9.8
United Kingdom 7.4
Netherlands Antilles 4.3
Netherlands 1.0
(Others individually less 0.4
than 1%)
100.0%
INCOME TAX INFORMATION
At January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $333,394,831. Net unrealized depreciation
aggregated $61,540,452, of which $12,500,000 related to appreciated
investment securities and $74,040,452 related to depreciated
investment securities.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 271,854,379
value (cost $333,315,331) -
See accompanying schedule
Receivable for investments 4,225,911
sold
Receivable for fund shares 383,090
sold
Dividends receivable 454,398
Interest receivable 47,737
Other receivables 30,681
TOTAL ASSETS 276,996,196
LIABILITIES
Payable for investments $ 3,291,172
purchased
Payable for fund shares 2,120,378
redeemed
Accrued management fee 145,854
Distribution fees payable 138,167
Other payables and accrued 154,888
expenses
TOTAL LIABILITIES 5,850,459
NET ASSETS $ 271,145,737
Net Assets consist of:
Paid in capital $ 377,621,177
Undistributed net investment 218,471
income
Accumulated undistributed net (45,218,347)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (61,475,564)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 271,145,737
CALCULATION OF MAXIMUM $15.52
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($4,855,522 (divided
by) 312,883 shares)
Maximum offering price per $16.47
share (100/94.25 of
$15.52)
CLASS T: NET ASSET VALUE $15.69
and redemption price per
share ($227,201,285 (divided
by) 14,481,421 shares)
Maximum offering price per $16.26
share (100/96.50 of
$15.69)
CLASS B: NET ASSET VALUE $15.43
and offering price per
share ($32,439,101 (divided
by) 2,101,884 shares) A
CLASS C: NET ASSET VALUE $15.52
and offering price per
share ($3,132,092 (divided
by) 201,751 shares) A
INSTITUTIONAL CLASS: NET $15.70
ASSET VALUE, offering price
and redemption price per
share ($3,517,737
(divided by) 224,105 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 2,389,794
Dividends
Interest 400,463
TOTAL INCOME 2,790,257
EXPENSES
Management fee $ 992,529
Transfer agent fees 515,964
Distribution fees 930,343
Accounting fees and expenses 119,411
Non-interested trustees' 752
compensation
Custodian fees and expenses 25,284
Registration fees 45,289
Audit 20,026
Legal 3,090
Miscellaneous 4,570
Total expenses before 2,657,258
reductions
Expense reductions (85,449) 2,571,809
NET INVESTMENT INCOME 218,448
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (44,654,631)
Foreign currency transactions (467,576) (45,122,207)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,178,027)
Assets and liabilities in (35,781) (7,213,808)
foreign currencies
NET GAIN (LOSS) (52,336,015)
NET INCREASE (DECREASE) IN $ (52,117,567)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 218,448 $ 337,282
income
Net realized gain (loss) (45,122,207) 53,995,953
Change in net unrealized (7,213,808) (134,840,866)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (52,117,567) (80,507,631)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (204,614) (30,726)
From net investment income
From net realized gain (13,910,158) (102,298,827)
TOTAL DISTRIBUTIONS (14,114,772) (102,329,553)
Share transactions - net (62,728,781) (110,795,873)
increase (decrease)
Redemption fees 40,393 157,401
TOTAL INCREASE (DECREASE) (128,920,727) (293,475,656)
IN NET ASSETS
NET ASSETS
Beginning of period 400,066,464 693,542,120
End of period (including $ 271,145,737 $ 400,066,464
undistributed net investment
income of $218,471 and
$259,207, respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 18.94 $ 26.16 $ 25.11
period
Income from Investment
Operations
Net investment income (loss) .03 .06 (.05)
D
Net realized and unrealized (2.70) (3.33) 2.81
gain (loss)
Total from investment (2.67) (3.27) 2.76
operations
Less Distributions
From net investment income (.05) - (.10)
In excess of net investment - - (.04)
income
From net realized gain (.70) (3.96) (1.57)
Total distributions (.75) (3.96) (1.71)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.52 $ 18.94 $ 26.16
TOTAL RETURN B, C (14.22)% (14.61)% 11.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,856 $ 6,474 $ 6,372
(000 omitted)
Ratio of expenses to average 1.36% A 1.34% 1.71% A, F
net assets
Ratio of expenses to average 1.31% A, G 1.30% G 1.68% A, G
net assets after expense
reductions
Ratio of net investment .34% A .28% (.28)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 E
Net asset value, beginning of $ 23.65
period
Income from Investment
Operations
Net investment income (loss) -
D
Net realized and unrealized 1.46
gain (loss)
Total from investment 1.46
operations
Less Distributions
From net investment income -
In excess of net investment -
income
From net realized gain -
Total distributions -
Redemption fees added to paid -
in capital
Net asset value, end of period $ 25.11
TOTAL RETURN B, C 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,609
(000 omitted)
Ratio of expenses to average 1.66% A, F
net assets
Ratio of expenses to average 1.58% A, G
net assets after expense
reductions
Ratio of net investment (.01)% A
income (loss) to average net
assets
Portfolio turnover 137% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 19.11 $ 26.34 $ 25.12
period
Income from Investment
Operations
Net investment income (loss) .02 D .02 D (.02) D
Net realized and unrealized (2.73) (3.34) 2.83
gain (loss)
Total from investment (2.71) (3.32) 2.81
operations
Less Distributions
From net investment income (.01) - (.01)
In excess of net investment - - (.01)
income
From net realized gain (.70) (3.92) (1.57)
Total distributions (.71) (3.92) (1.59)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.69 $ 19.11 $ 26.34
TOTAL RETURN B, C (14.30)% (14.69)% 11.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 227,201 $ 342,347 $ 618,083
(000 omitted)
Ratio of expenses to average 1.52% A 1.43% 1.47% A
net assets
Ratio of expenses to average 1.47% A, F 1.39% F 1.44% A, F
net assets after expense
reductions
Ratio of net investment .19% A .10% (.12)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 1993
Net asset value, beginning of $ 19.25 $ 17.56 $ 17.59 $ 13.88
period
Income from Investment
Operations
Net investment income (loss) .00 D (.05) D (.11) D .22
Net realized and unrealized 6.56 2.00 .76 4.91
gain (loss)
Total from investment 6.56 1.95 .65 5.13
operations
Less Distributions
From net investment income - - - -
In excess of net investment - - - -
income
From net realized gain (.69) (.26) (.68) (1.42)
Total distributions (.69) (.26) (.68) (1.42)
Redemption fees added to paid - - - -
in capital
Net asset value, end of period $ 25.12 $ 19.25 $ 17.56 $ 17.59
TOTAL RETURN B, C 35.01% 11.40% 3.97% 41.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 602,915 $ 272,979 $ 199,361 $ 40,309
(000 omitted)
Ratio of expenses to average 1.59% 1.86% E 2.10% 2.63%
net assets
Ratio of expenses to average 1.56% F 1.84% F 2.07% F 2.62% F
net assets after expense
reductions
Ratio of net investment .00% (.30)% (.67)% (1.18)%
income (loss) to average net
assets
Portfolio turnover 137% 161% 125% 208%
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).
</TABLE>
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 18.81 $ 25.99 $ 24.88
period
Income from Investment
Operations
Net investment income (loss) (.03) (.09) (.12)
D
Net realized and unrealized (2.69) (3.29) 2.80
gain (loss)
Total from investment (2.72) (3.38) 2.68
operations
Less Distributions
From net realized gain (.66) (3.81) (1.57)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.43 $ 18.81 $ 25.99
TOTAL RETURN B, C (14.58)% (15.12)% 11.19%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 32,439 $ 44,351 $ 59,044
(000 omitted)
Ratio of expenses to average 2.08% A 1.98% 2.04% A
net assets
Ratio of expenses to average 2.03% A, G 1.94% G 2.02% A, G
net assets after expense
reductions
Ratio of net investment (.38)% A (.41)% (.67)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 E
Net asset value, beginning of $ 19.23 $ 18.87
period
Income from Investment
Operations
Net investment income (loss) (.15) (.03)
D
Net realized and unrealized 6.49 .39
gain (loss)
Total from investment 6.34 .36
operations
Less Distributions
From net realized gain (.69) -
Redemption fees added to paid - -
in capital
Net asset value, end of period $ 24.88 $ 19.23
TOTAL RETURN B, C 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,106 $ 2,508
(000 omitted)
Ratio of expenses to average 2.28% 2.23% A, F
net assets
Ratio of expenses to average 2.24% G 2.21% A, G
net assets after expense
reductions
Ratio of net investment (.68)% (.67)% A
income (loss) to average net
assets
Portfolio turnover 137% 161%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 18.96 $ 24.39
period
Income from Investment
Operations
Net investment income (loss) (.03) (.07)
D
Net realized and unrealized (2.70) (4.15)
gain (loss)
Total from investment (2.73) (4.22)
operations
Less Distributions
From net investment income (.01) -
From net realized gain (.70) (1.22)
Total distributions (.71) (1.22)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 15.52 $ 18.96
TOTAL RETURN B, C (14.53)% (17.72)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,132 $ 2,972
(000 omitted)
Ratio of expenses to average 2.04% A 2.50% A, F
net assets
Ratio of expenses to average 1.99% A, G 2.44% A, G
net assets after expense
reductions
Ratio of net investment (.39)% A (.48)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97%
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. 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).
</TABLE>
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 19.15 $ 26.42 $ 25.17
period
Income from Investment
Operations
Net investment income (loss) .06 .13 .04
D
Net realized and unrealized (2.73) (3.35) 2.85
gain (loss)
Total from investment (2.67) (3.22) 2.89
operations
Less Distributions
From net investment income (.08) (.09) (.05)
In excess of net investment - - (.02)
income
From net realized gain (.70) (3.97) (1.57)
Total distributions (.78) (4.06) (1.64)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.70 $ 19.15 $ 26.42
TOTAL RETURN B, C (14.07)% (14.29)% 11.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,518 $ 3,922 $ 10,042
(000 omitted)
Ratio of expenses to average .93% A .95% 1.08% A
net assets
Ratio of expenses to average .87% A, G .91% G 1.06% A, G
net assets after expense
reductions
Ratio of net investment .73% A .55% .24% A
income to average net assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 E
Net asset value, beginning of $ 19.27 $ 18.87
period
Income from Investment
Operations
Net investment income (loss) .04 (.01)
D
Net realized and unrealized 6.55 .41
gain (loss)
Total from investment 6.59 .40
operations
Less Distributions
From net investment income - -
In excess of net investment - -
income
From net realized gain (.69) -
Total distributions (.69) -
Redemption fees added to paid - -
in capital
Net asset value, end of period $ 25.17 $ 19.27
TOTAL RETURN B, C 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 9,860 $ 718
(000 omitted)
Ratio of expenses to average 1.44% 1.68% A, F
net assets
Ratio of expenses to average 1.39% G 1.66% A, G
net assets after expense
reductions
Ratio of net investment .17% (.13)% A
income to average net assets
Portfolio turnover 137% 161%
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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.
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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $176,895,535 and $251,230,878, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 7,131 $ 31
CLASS T 715,894 4,205
CLASS B 192,213 144,258
CLASS C 15,105 14,291
$ 930,343 $ 162,785
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares 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 FDC RETAINED BY FDC
CLASS A $ 13,639 $ 5,115
CLASS T 66,754 23,337
CLASS B 100,866 100,866*
CLASS C 4,004 4,004*
$ 185,263 $ 133,322
* 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 $ 10,980 .39 *
CLASS T 428,673 .30 *
CLASS B 67,764 .35 *
CLASS C 4,690 .31 *
INSTITUTIONAL CLASS 3,857 .20 *
$ 515,964
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $38,546 for the
period.
5. EXPENSE REDUCTIONS.
FMR 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 $83,751 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 $363 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER AGENT CREDITS
CLASS T $ 1,335
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999 1998 A
FROM NET INVESTMENT INCOME
Class A $ 16,625 $ -
Class T 170,229 -
Class B - -
Class C 1,528 -
Institutional Class 16,232 30,726
Total $ 204,614 $ 30,726
FROM NET REALIZED GAIN
Class A $ 231,956 $ 1,049,623
Class T 11,913,212 90,875,522
Class B 1,511,499 8,918,986
Class C 111,460 16,549
Institutional Class 142,031 1,438,147
Total $ 13,910,158 $ 102,298,827
$ 14,114,772 $ 102,329,553
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 58,639 175,654 $ 990,548
Reinvestment of distributions 15,021 43,840 240,544
Shares redeemed (102,541) (121,346) (1,704,715)
Net increase (decrease) (28,881) 98,148 $ (473,623)
CLASS T Shares sold 1,296,389 3,091,100 $ 22,236,970
Reinvestment of distributions 703,215 3,685,442 11,405,496
Shares redeemed (5,429,347) (12,329,910) (92,666,288)
Net increase (decrease) (3,429,743) (5,553,368) $ (59,023,822)
CLASS B Shares sold 310,212 678,632 $ 5,205,604
Reinvestment of distributions 80,941 333,587 1,294,263
Shares redeemed (647,343) (926,142) (10,830,242)
Net increase (decrease) (256,190) 86,077 $ (4,330,375)
CLASS C Shares sold 98,557 168,621 $ 1,660,225
Reinvestment of distributions 5,837 787 93,864
Shares redeemed (59,357) (12,694) (992,982)
Net increase (decrease) 45,037 156,714 $ 761,107
INSTITUTIONAL CLASS Shares 60,955 138,650 $ 1,062,812
sold
Reinvestment of distributions 8,746 60,810 141,597
Shares redeemed (50,432) (374,710) (866,477)
Net increase (decrease) 19,269 (175,250) $ 337,932
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 3,950,955
Reinvestment of distributions 998,875
Shares redeemed (2,678,917)
Net increase (decrease) $ 2,270,913
CLASS T Shares sold $ 69,934,430
Reinvestment of distributions 85,183,832
Shares redeemed (270,469,326)
Net increase (decrease) $ (115,351,064)
CLASS B Shares sold $ 15,156,338
Reinvestment of distributions 7,598,024
Shares redeemed (19,895,184)
Net increase (decrease) $ 2,859,178
CLASS C Shares sold $ 3,628,673
Reinvestment of distributions 16,454
Shares redeemed (262,714)
Net increase (decrease) $ 3,382,413
INSTITUTIONAL CLASS Shares $ 3,107,221
sold
Reinvestment of distributions 1,415,854
Shares redeemed (8,480,388)
Net increase (decrease) $ (3,957,313)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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, the life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL A 55.91% 79.29% 160.94%
FIDELITY ADV TECHNOLOGY - CL 46.95% 68.98% 145.94%
A (INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Technology 51.47% 86.64% 193.08%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Technology Index - a market
capitalization-weighted index of 190 stocks designed to measure the
performance of companies in the technology sector. Issues in the index
include producers of sophisticated devices, services and software
related to the fields of computers, electronics, networking and
Internet services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL A 79.29% 48.86%
FIDELITY ADV TECHNOLOGY - CL 68.98% 45.24%
A (INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Technology 86.64% 56.20%
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 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
1998/08/31 13356.86 15136.87
15845.13
1998/09/30 15339.19 16106.54
18099.82
1998/10/31 16219.05 17416.64
19431.16
1998/11/30 18434.59 18472.27
21695.15
1998/12/31 21742.00 19536.64
25251.29
1999/01/29 24593.59 20353.66
29307.61
IMATRL PRASUN SHR__CHT 19990131 19990226 144421 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $24,594 - a 145.94% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Technology Index, it would have grown to $29,308 - a 193.08%
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 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL T 55.81% 78.90% 159.09%
FIDELITY ADV TECHNOLOGY - CL 50.36% 72.64% 150.02%
T (INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Technology 51.47% 86.64% 193.08%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Technology Index - a market
capitalization-weighted index of 190 stocks designed to measure the
performance of companies in the technology sector. Issues in the index
include producers of sophisticated devices, services and software
related to the fields of computers, electronics, networking and
Internet services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL T 78.90% 48.42%
FIDELITY ADV TECHNOLOGY - CL 72.64% 46.24%
T (INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Technology 86.64% 56.20%
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 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
1998/08/31 13585.14 15136.87
15845.13
1998/09/30 15590.93 16106.54
18099.82
1998/10/31 16479.98 17416.64
19431.16
1998/11/30 18735.13 18472.27
21695.15
1998/12/31 22096.18 19536.64
25251.29
1999/01/29 25001.86 20353.66
29307.61
IMATRL PRASUN SHR__CHT 19990131 19990226 144437 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $25,002 - a 150.02% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Technology Index, it would have grown to $29,308 - a 193.08%
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 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 six months, past one year and life of fund total
return figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the life of fund total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL B 55.31% 77.85% 156.32%
FIDELITY ADV TECHNOLOGY - CL 50.31% 72.85% 153.32%
B (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Technology 51.47% 86.64% 193.08%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common stocks -
and the Goldman Sachs Technology Index - a market
capitalization-weighted index of 190 stocks designed to measure the
performance of companies in the technology sector. Issues in the index
include producers of sophisticated devices, services and software
related to the fields of computers, electronics, networking and
Internet services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL B 77.85% 47.76%
FIDELITY ADV TECHNOLOGY - CL 72.85% 47.04%
B (INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Technology 86.64% 56.02%
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 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
1998/08/31 13962.65 15136.87
15845.13
1998/09/30 16019.95 16106.54
18099.82
1998/10/31 16930.55 17416.64
19431.16
1998/11/30 19235.18 18472.27
21695.15
1998/12/31 22675.25 19536.64
25251.29
1999/01/29 25332.00 20353.66
29307.61
IMATRL PRASUN SHR__CHT 19990131 19990226 144701 R00000000000032
$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 January 31, 1999,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $25,332 - a 153.32%
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 $20,354 - a 103.54% increase. If $10,000 was
invested in the Goldman Sachs Technology Index, it would have grown to
$29,308 - a 193.08% 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 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
six months, past one year and life of fund total return figures are
1%, 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL C 55.44% 77.82% 156.18%
FIDELITY ADV TECHNOLOGY - CL 54.44% 76.82% 156.18%
C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Technology 51.47% 86.64% 193.08%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Technology Index - a market
capitalization-weighted index of 190 stocks designed to measure the
performance of companies in the technology sector. Issues in the index
include producers of sophisticated devices, services and software
related to the fields of computers, electronics, networking and
Internet services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - CL C 77.82% 47.72%
FIDELITY ADV TECHNOLOGY - CL 76.82% 47.72%
C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
S&P 500 32.49% 34.28%
GS Technology 86.64% 56.20%
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 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 12459.04 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 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 16615.07 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
1998/08/31 13958.01 15136.87
15845.13
1998/09/30 16009.67 16106.54
18099.82
1998/10/31 16906.57 17416.64
19431.16
1998/11/30 19216.08 18472.27
21695.15
1998/12/31 22657.94 19536.64
25251.29
1999/01/29 25617.71 20353.66
29307.61
IMATRL PRASUN SHR__CHT 19990131 19990226 144642 R00000000000032
$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 January 31, 1999,
the value of the investment, including the effect of the contingent
deferred sales charge, would have grown to $25,618 - a 156.18%
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 $20,354 - a 103.54% increase. If $10,000 was
invested in the Goldman Sachs Technology Index, it would have grown to
$29,308 - a 193.08% 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 TECHNOLOGY FUND
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tempero)
An interview with Michael Tempero, Portfolio Manager of Fidelity
Advisor Technology Fund
Q. HOW DID THE FUND PERFORM, MIKE?
A. For the six months that ended January 31, 1999, the fund's Class A,
Class T, Class B and Class C shares returned 55.91%, 55.81%, 55.31%
and 55.44%, respectively. During the same period, the Standard &
Poor's 500 Index returned 15.02%, while the Goldman Sachs Technology
Index - an index of 190 stocks designed to measure the peformance of
companies in the technology sector - gained 51.47%. For the year that
ended January 31, 1999, the fund's Class A, Class T, Class B and Class
C shares returned 79.29%, 78.90%, 77.85% and 77.82%, respectively. The
S&P 500 returned 32.49%, while the Goldman Sachs Technology Index
gained 86.64% during the same 12-month period.
Q. WHAT FACTORS LED THE FUND TO OUTPERFORM ITS TWO BENCHMARK INDEXES
DURING THE SIX-MONTH PERIOD?
A. During the summer and early autumn, economic crises in Asia, Russia
and other emerging markets caused a broadly based stock market
decline. During this time, technology stocks suffered badly relative
to the rest of the market. However, in early October, investors
decided that stock market losses were not the result of fundamental
problems in the economy. As the market turned around, technology
stocks led the rally, with some prices doubling. The fund outperformed
the Goldman Sachs index due to a relatively small exposure to
semiconductor and semiconductor equipment stocks before the market
corrected. These stocks performed poorly through the first part of the
period because semiconductor manufacturers were hurt by excess
inventories when many personal computer manufacturers scaled back
production and reduced semiconductor orders early in 1998.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. EMC Corp. did very well. EMC is a supplier of large-scale data
storage units and a prime beneficiary of an increasingly "point and
click" society. Every e-mail or online transaction creates a piece of
electronic information that needs to be safely warehoused. EMC
dominates the storage market largely because its units are compatible
with many types of network servers and operating systems. Dell
Computer also did well. Dell is the low-cost leader in personal
computer manufacturing and sells PCs directly to the consumer instead
of through retailers or distributors, assembling PCs only as orders
are received. These strategies keep inventories lean and shorten the
lead time for introducing new products. Microsoft continued to
dominate the software category, generating strong gains on revenue
growth and earnings that exceeded expectations during the last quarter
of 1998.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE LAST SIX MONTHS?
A. Alcatel, a French manufacturer of telecommunications equipment,
significantly missed its third-quarter earnings target. Achieving the
company's business objectives became doubtful when several large
European customers scaled back spending plans. Furthermore, even
though Alcatel has entered the high-growth U.S. market, the lack of a
superior technology puts the company at a competitive disadvantage. I
limited the fund's loss by selling the stock during the period. Also,
the fund missed an opportunity by not owning Lucent Technologies until
late in the period. Lucent profited from increased demand for voice
and data networking equipment as telecommunications companies compete
for market share by upgrading their systems and services. Although I
believed the stock was overvalued, Lucent's growth prospects commanded
an even higher price premium by the time I purchased it. As a result,
the fund only participated in part of the stock's price gain.
Q. WHAT ABOUT INTERNET STOCKS?
A. The Internet demonstrates how technology is transforming the way
people communicate and do business. Investors have been eager to
participate at an early developmental stage, creating enormous demand
for Internet stocks that has driven prices up substantially. However,
since only a handful of these companies can emerge as market leaders,
valuations appear indiscriminately high. In the fund, I have been
selective in buying Internet stocks. One example is America Online
(AOL). AOL is the established market leader in Internet access with
more subscribers than the next several service providers combined. The
company has developed a branded product that enhances its marketing
ability and subscriber growth rate. Furthermore, AOL's management has
done a credible job in meeting the market's expectations, leading to
broad support from institutional investors.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. Consumer and corporate spending are critical issues for technology
companies in 1999. As long as consumer confidence remains strong and
corporate profitability is stable, spending for technology products
should continue. That said, I will be watching for trends or events
that could shift technology spending patterns or deflate technology
product prices.
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.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$372 million
MANAGER: Michael Tempero, since 1998;
joined Fidelity in 1993
ADVISOR TECHNOLOGY FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Microsoft Corp. 9.6
Dell Computer Corp. 6.7
OY Nokia AB sponsored ADR 6.2
Texas Instruments, Inc. 4.8
Cisco Systems, Inc. 4.4
Intel Corp. 4.1
International Business 3.5
Machines Corp.
America Online, Inc. 3.4
EMC Corp. 3.3
Altera Corp. 2.4
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Computer Services & Software 25.5%
Electronics 20.8%
Computers & Office Equipment 18.0%
Communications Equipment 14.4%
Electronic Instruments 5.3%
All Others 16.0%*
Row: 1, Col: 1, Value: 25.5
Row: 1, Col: 2, Value: 20.8
Row: 1, Col: 3, Value: 18.0
Row: 1, Col: 4, Value: 14.4
Row: 1, Col: 5, Value: 5.3
Row: 1, Col: 6, Value: 16.0
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.6%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
Entercom Communications Corp. 300 $ 9,300
(a)
COMMUNICATIONS EQUIPMENT -
14.4%
ADC Telecommunications, Inc. 110,400 4,395,300
(a)
Ascend Communications, Inc. 22,700 1,981,994
(a)
Cisco Systems, Inc. (a) 146,575 16,352,273
Dialogic Corp. (a) 23,700 604,350
Jabil Circuit, Inc. (a) 8,200 585,788
Lucent Technologies, Inc. 52,500 5,909,531
OY Nokia AB sponsored ADR 159,200 22,924,800
Premisys Communications, Inc. 42,700 408,319
(a)
Tut Systems, Inc. (a) 100 5,538
53,167,893
COMPUTER SERVICES & SOFTWARE
- - 25.5%
24/7 Media, Inc. (a) 100 3,763
Affiliated Computer Services, 24,500 1,182,125
Inc. Class A (a)
Allaire Corp. (a) 100 5,138
America Online, Inc. 70,400 12,368,400
Aspect Development, Inc. (a) 25,600 739,200
Automatic Data Processing, 92,600 3,941,288
Inc.
Aware, Inc. (a) 47,200 1,870,300
BMC Software, Inc. 69,500 3,244,781
Cadence Design Systems, Inc. 51,100 1,635,200
(a)
Cambridge Technology 16,400 485,850
Partners, Inc. (a)
Ceridian Corp. (a) 8,400 666,750
Citrix Systems, Inc. (a) 23,200 2,102,500
Cognos, Inc. (a) 12,900 339,316
Computer Learning Centers, 16,700 86,109
Inc. (a)
Computer Sciences Corp. 21,400 1,467,238
Compuware Corp. (a) 54,000 3,577,500
Concur Technologies, Inc. (a) 200 6,300
Documentum, Inc. (a) 40,500 944,156
DST Systems, Inc. (a) 49,700 3,078,294
Ebay, Inc. (a) 100 27,763
Electronic Arts, Inc. (a) 8,600 362,544
Entrust Technologies, Inc. (a) 300 10,575
Equifax, Inc. 51,300 2,029,556
First Data Corp. 21,300 816,056
GeoCities (a) 100 11,375
i2 Technologies, Inc. (a) 17,100 596,363
IMS Health, Inc. 51,400 1,882,525
InfoSpace.com, Inc. (a) 100 5,750
Legato Systems, Inc. (a) 17,200 1,038,450
Marketwatch.Com, Inc. (a) 200 13,900
Mentor Graphics Corp. (a) 20,500 214,609
Microsoft Corp. (a) 201,600 35,279,994
Oracle Corp. (a) 135,200 7,486,700
QRS Corp. (a) 8,600 430,000
Sabre Group Holdings, Inc. 25,700 1,134,013
Class A (a)
Siebel Systems, Inc. (a) 76,755 3,358,031
Smith-Gardner & Assocs, Inc. 200 3,200
(a)
SHARES VALUE (NOTE 1)
TSI International Software 12,800 $ 708,800
Ltd. (a)
Wang Laboratories, Inc. (a) 34,000 752,250
Xoom.com, Inc. (a) 100 5,800
93,912,462
COMPUTERS & OFFICE EQUIPMENT
- - 18.0%
Compaq Computer Corp. 146,100 6,958,013
Dell Computer Corp. (a) 248,400 24,840,000
EMC Corp. (a) 112,800 12,281,100
International Business 70,100 12,845,825
Machines Corp.
Quantum Corp. (a) 53,600 1,283,050
SCI Systems, Inc. (a) 45,900 2,524,500
Seagate Technology, Inc. (a) 106,700 4,341,356
Symbol Technologies, Inc. 12,800 806,400
Tech Data Corp. (a) 15,000 470,625
66,350,869
CONSUMER ELECTRONICS - 0.8%
Sharp Corp. 287,000 2,926,207
DEFENSE ELECTRONICS - 0.1%
Alpha Industries, Inc. (a) 7,900 316,000
ELECTRICAL EQUIPMENT - 0.2%
Allen Telecom, Inc. (a) 25,600 172,800
American Power Conversion 12,800 654,400
Corp. (a)
E Tek Dynamics, Inc. (a) 100 3,000
830,200
ELECTRONIC INSTRUMENTS - 5.3%
Advantest Corp. 11,300 918,210
Applied Materials, Inc. (a) 135,200 8,542,950
KLA-Tencor Corp. (a) 43,700 2,523,675
Smart Modular Technologies, 30,000 615,000
Inc. (a)
Teradyne, Inc. (a) 102,800 6,771,950
19,371,785
ELECTRONICS - 20.8%
Altera Corp. (a) 143,500 9,022,563
Analog Devices, Inc. (a) 92,700 2,757,825
C-Cube Microsystems, Inc. (a) 41,900 843,238
Dallas Semiconductor Corp. 5,100 187,106
Etec Systems, Inc. (a) 11,100 595,931
Intel Corp. 107,700 15,178,969
Linear Technology Corp. 56,500 5,748,875
Microchip Technology, Inc. (a) 8,600 248,325
Micron Technology, Inc. (a) 63,600 4,968,750
Motorola, Inc. 97,300 7,029,925
NVIDIA Corp. (a) 100 1,900
PMC-Sierra, Inc. (a) 8,500 631,656
Rambus, Inc. (a) 13,300 999,163
Semtech Corp. (a) 51,600 1,844,700
Taiwan Semiconductor 24,600 492,000
Manufacturing Co. Ltd. ADR
(a)
Texas Instruments, Inc. 178,500 17,649,188
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
Tokyo Electron Ltd. 18,000 $ 825,631
Vishay Intertechnology, Inc. 25,600 334,400
Vitesse Semiconductor Corp. 21,400 1,106,113
(a)
VLSI Technology, Inc. (a) 25,600 304,000
Xilinx, Inc. (a) 69,000 5,727,000
76,497,258
ENTERTAINMENT - 0.0%
Fox Entertainment Group, Inc. 4,000 111,500
(a)
Ticketmaster Online 300 18,825
CitySearch, Inc. (a)
130,325
HOME FURNISHINGS - 0.0%
Select Comfort Corp. (a) 100 2,913
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.4%
ASM Lithography Holding N V 35,000 1,627,500
(a)
INSURANCE - 0.0%
MONY Group, Inc. 200 5,600
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.0%
UBid, Inc. (a) 100 8,150
SERVICES - 0.1%
Diamond Technology Partners, 14,100 421,238
Inc. Class A (a)
TELEPHONE SERVICES - 0.0%
Covad Communications Group, 200 10,550
Inc. (a)
TOTAL COMMON STOCKS 315,588,250
(Cost $217,370,994)
CASH EQUIVALENTS - 14.4%
Taxable Central Cash Fund (b) 53,192,629 53,192,629
(Cost $53,192,629)
TOTAL INVESTMENT IN $ 368,780,879
SECURITIES - 100%
(Cost $270,563,623)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $270,753,741. Net unrealized appreciation
aggregated $98,027,138, of which $99,899,242 related to appreciated
investment securities and $1,872,104 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.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 368,780,879
value (cost $270,563,623) -
See accompanying schedule
Receivable for investments 4,111,070
sold
Receivable for fund shares 9,700,360
sold
Dividends receivable 35,163
Interest receivable 185,162
Other receivables 1,661
TOTAL ASSETS 382,814,295
LIABILITIES
Payable for investments $ 8,960,629
purchased
Payable for fund shares 529,945
redeemed
Accrued management fee 151,606
Distribution fees payable 158,943
Other payables and accrued 110,026
expenses
TOTAL LIABILITIES 9,911,149
NET ASSETS $ 372,903,146
Net Assets consist of:
Paid in capital $ 258,120,031
Accumulated net investment (945,314)
loss
Accumulated undistributed net 17,511,949
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 98,216,480
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 372,903,146
CALCULATION OF MAXIMUM $23.20
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($36,795,547 (divided
by) 1,585,755 shares)
Maximum offering price per $24.62
share (100/94.25 of $23.20)
CLASS T: NET ASSET VALUE $23.06
and redemption price per
share ($201,095,759 (divided
by) 8,722,427 shares)
Maximum offering price per $23.90
share (100/96.50 of $23.06)
CLASS B: NET ASSET VALUE $22.80
and offering price per
share ($92,887,593 (divided
by) 4,073,272 shares) A
CLASS C: NET ASSET VALUE $22.85
and offering price per
share ($27,901,952 (divided
by) 1,221,221 shares) A
INSTITUTIONAL CLASS: NET $23.26
ASSET VALUE, offering price
and redemption price per
share ($14,222,295
(divided by) 611,394 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 90,705
Dividends
Interest 554,517
TOTAL INCOME 645,222
EXPENSES
Management fee $ 580,009
Transfer agent fees 277,238
Distribution fees 588,868
Accounting fees and expenses 55,543
Non-interested trustees' 321
compensation
Custodian fees and expenses 7,254
Registration fees 81,594
Audit 14,569
Legal 1,985
Interest 1,590
Miscellaneous 640
Total expenses before 1,609,611
reductions
Expense reductions (19,075) 1,590,536
NET INVESTMENT INCOME (LOSS) (945,314)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,094,422
Foreign currency transactions 2,923 21,097,345
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 84,488,927
Assets and liabilities in (762) 84,488,165
foreign currencies
NET GAIN (LOSS) 105,585,510
NET INCREASE (DECREASE) IN $ 104,640,196
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (945,314) $ (974,989)
income (loss)
Net realized gain (loss) 21,097,345 2,748,784
Change in net unrealized 84,488,165 4,104,545
appreciation (depreciation)
NET INCREASE (DECREASE) IN 104,640,196 5,878,340
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (6,934,584)
From net realized gain
In excess of net realized - (2,779,083)
gain
TOTAL DISTRIBUTIONS - (9,713,667)
Share transactions - net 117,412,210 80,885,922
increase (decrease)
Redemption fees 81,835 79,635
TOTAL INCREASE (DECREASE) 222,134,241 77,130,230
IN NET ASSETS
NET ASSETS
Beginning of period 150,768,905 73,638,675
End of period (including $ 372,903,146 $ 150,768,905
accumulated net investment
loss of $(945,314) and $0,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.88 $ 15.96 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.05) (.08) (.10)
D
Net realized and unrealized 8.36 .58 6.13
gain (loss)
Total from investment 8.31 .50 6.03
operations
Less Distributions
From net realized gain - (1.14) (.08)
In excess of net realized - (.45) -
gain
Total distributions - (1.59) (.08)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.20 $ 14.88 $ 15.96
TOTAL RETURN B, C 55.91% 4.20% 60.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,796 $ 15,414 $ 7,313
(000 omitted)
Ratio of expenses to average 1.31% A 1.39% 1.75% A, F
net assets
Ratio of expenses to average 1.30% A, G 1.35% G 1.70% A, G
net assets after expense
reductions
Ratio of net investment (.63)% A (.59)% (.79)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.80 $ 15.91 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.07) (.11) (.11)
D
Net realized and unrealized 8.32 .56 6.09
gain (loss)
Total from investment 8.25 .45 5.98
operations
Less Distributions
From net realized gain - (1.12) (.08)
In excess of net realized - (.45) -
gain
Total distributions - (1.57) (.08)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.06 $ 14.80 $ 15.91
TOTAL RETURN B, C 55.81% 3.85% 60.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 201,096 $ 90,499 $ 57,624
(000 omitted)
Ratio of expenses to average 1.55% A 1.60% 1.92% A
net assets
Ratio of expenses to average 1.53% A, F 1.56% F 1.87% A, F
net assets after expense
reductions
Ratio of net investment (.87)% A (.80)% (.93)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.68 $ 15.88 $ 12.88
period
Income from Investment
Operations
Net investment income (loss) (.12) (.20) (.08)
D
Net realized and unrealized 8.23 .57 3.08
gain (loss)
Total from investment 8.11 .37 3.00
operations
Less Distributions
From net realized gain - (1.13) -
In excess of net realized - (.45) -
gain
Total distributions - (1.58) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 22.80 $ 14.68 $ 15.88
TOTAL RETURN B, C 55.31% 3.27% 23.29%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 92,888 $ 31,041 $ 5,105
(000 omitted)
Ratio of expenses to average 2.09% A 2.21% 2.50% A, F
net assets
Ratio of expenses to average 2.07% A, G 2.18% G 2.45% A, G
net assets after expense
reductions
Ratio of net investment (1.40)% A (1.40)% (1.41)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 14.70 $ 14.28
period
Income from Investment
Operations
Net investment income (loss) (.11) (.17)
D
Net realized and unrealized 8.25 1.27
gain (loss)
Total from investment 8.14 1.10
operations
Less Distributions
From net realized gain - (.49)
In excess of net realized - (.20)
gain
Total distributions - (.69)
Redemption fees added to paid .01 .01
in capital
Net asset value, end of period $ 22.85 $ 14.70
TOTAL RETURN B, C 55.44% 8.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 27,902 $ 6,754
(000 omitted)
Ratio of expenses to average 2.05% A 2.43% A
net assets
Ratio of expenses to average 2.03% A, F 2.41% A, F
net assets after expense
reductions
Ratio of net investment (1.35)% A (1.64)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348%
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.89 $ 15.98 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.02) (.04) (.06)
D
Net realized and unrealized 8.38 .55 6.12
gain (loss)
Total from investment 8.36 .51 6.06
operations
Less Distributions
From net realized gain - (1.15) (.09)
In excess of net realized - (.46) -
gain
Total distributions - (1.61) (.09)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.26 $ 14.89 $ 15.98
TOTAL RETURN B, C 56.21% 4.26% 60.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 14,222 $ 7,060 $ 3,598
(000 omitted)
Ratio of expenses to average .97% A 1.10% 1.50% A, F
net assets
Ratio of expenses to average .95% A, G 1.07% G 1.44% A, G
net assets after expense
reductions
Ratio of net investment (.29)% A (.30)% (.50)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B TOTAL RETURNS DO 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 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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 net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $273,204,826 and $203,231,159, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 24,361 $ 39
CLASS T 284,680 913
CLASS B 221,597 166,337
CLASS C 58,230 56,088
$ 588,868 $ 223,377
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.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 121,569 $ 65,850
CLASS T 221,211 89,952
CLASS B 63,924 63,924*
CLASS C 3,969 3,969*
$ 410,673 $ 223,695
* 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 $ 28,695 .30 *
CLASS T 155,902 .28 *
CLASS B 68,935 .32 *
CLASS C 15,522 .27 *
INSTITUTIONAL CLASS 8,184 .21 *
$ 277,238
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $24,797 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $3,584,000. The weighted average interest rate was 5.3%.
6. EXPENSE REDUCTIONS.
FMR 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 $18,671 under this arrangement.
In addition, the fund has entered into arrangements 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 $404 under the custodian arrangement.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ - $ 729,180
Class T - 5,047,886
Class B - 851,766
Class C - 20,288
Institutional Class - 285,464
Total $ - $ 6,934,584
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
$ - $ 9,713,667
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 770,276 964,665 $ 15,079,974
Reinvestment of distributions - 69,547 -
Shares redeemed (220,576) (456,218) (3,886,307)
Net increase (decrease) 549,700 577,994 $ 11,193,667
CLASS T Shares sold 3,739,962 4,279,715 $ 69,541,395
Reinvestment of distributions - 495,203 -
Shares redeemed (1,133,010) (2,282,335) (18,423,281)
Net increase (decrease) 2,606,952 2,492,583 $ 51,118,114
CLASS B Shares sold 2,363,629 1,984,357 $ 44,351,636
Reinvestment of distributions - 78,354 -
Shares redeemed (405,009) (269,419) (6,724,398)
Net increase (decrease) 1,958,620 1,793,292 $ 37,627,238
CLASS C Shares sold 849,317 494,219 $ 15,893,166
Reinvestment of distributions - 2,343 -
Shares redeemed (87,485) (37,173) (1,592,327)
Net increase (decrease) 761,832 459,389 $ 14,300,839
INSTITUTIONAL CLASS Shares 288,555 485,097 $ 5,694,989
sold
Reinvestment of distributions - 27,259 -
Shares redeemed (151,228) (263,460) (2,522,637)
Net increase (decrease) 137,327 248,896 $ 3,172,352
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 13,488,171
Reinvestment of distributions 932,488
Shares redeemed (6,419,806)
Net increase (decrease) $ 8,000,853
CLASS T Shares sold $ 62,520,538
Reinvestment of distributions 6,737,895
Shares redeemed (32,522,809)
Net increase (decrease) $ 36,735,624
CLASS B Shares sold $ 28,884,876
Reinvestment of distributions 1,031,825
Shares redeemed (3,754,232)
Net increase (decrease) $ 26,162,469
CLASS C Shares sold $ 6,924,463
Reinvestment of distributions 27,642
Shares redeemed (520,009)
Net increase (decrease) $ 6,432,096
INSTITUTIONAL CLASS Shares $ 6,901,286
sold
Reinvestment of distributions 379,700
Shares redeemed (3,726,106)
Net increase (decrease) $ 3,554,880
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3 , 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 past one
year and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL A 19.22% 32.55% 111.43%
FIDELITY ADV UTILITIES - CL A 12.36% 24.93% 99.28%
(INCL. 5.75% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Utilities 25.56% 36.57% 105.88%
CUMULATIVE TOTAL RETURNS show Class A shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of 136 stocks designed to measure the
performance of companies in the utilities sector. Issues in the index
include generators and distributors of electricity, distributors of
natural gas and water, and providers of telecommunications services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL A 32.55% 36.42%
FIDELITY ADV UTILITIES - CL A 24.93% 33.11%
(INCL. 5.75% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Utilities 36.57% 34.92%
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 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
1998/08/31 14260.51 15136.87
15244.65
1998/09/30 15680.46 16106.54
16699.19
1998/10/31 15928.10 17416.64
17462.71
1998/11/30 16626.01 18472.27
18082.46
1998/12/31 18670.65 19536.64
19876.18
1999/01/29 19927.55 20353.66
20588.34
IMATRL PRASUN SHR__CHT 19990131 19990226 145201 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $19,928 - a 99.28% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Utilities Index, it would have grown to $20,588 - a 105.88%
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 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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL T 19.02% 32.19% 110.00%
FIDELITY ADV UTILITIES - CL T 14.85% 27.57% 102.65%
(INCL. 3.50% SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Utilities 25.56% 36.57% 105.88%
CUMULATIVE TOTAL RETURNS show Class T shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of 136 stocks designed to measure the
performance of companies in the utilities sector. Issues in the index
include generators and distributors of electricity, distributors of
natural gas and water, and providers of telecommunications services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL T 32.19% 36.03%
FIDELITY ADV UTILITIES - CL T 27.57% 34.04%
(INCL. 3.50% SALES CHARGE)
S&P 500 32.49% 34.28%
GS Utilities 36.57% 34.92%
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 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
1998/08/31 14518.53 15136.87
15244.65
1998/09/30 15956.09 16106.54
16699.19
1998/10/31 16208.81 17416.64
17462.71
1998/11/30 16921.04 18472.27
18082.46
1998/12/31 18983.17 19536.64
19876.18
1999/01/29 20265.02 20353.66
20588.34
IMATRL PRASUN SHR__CHT 19990131 19990226 145219 R00000000000032
$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 January 31, 1999, the value of the
investment would have grown to $20,265 - a 102.65% 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
$20,354 - a 103.54% increase. If $10,000 was invested in the Goldman
Sachs Utilities Index, it would have grown to $20,588 - a 105.88%
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 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 six months, past one year and life of fund total
return figures are 5%, 5% and 3%, respectively. If Fidelity had not
reimbursed certain class expenses, the past one year and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL B 18.70% 31.49% 107.96%
FIDELITY ADV UTILITIES - CL B 13.70% 26.49% 104.96%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Utilities 25.56% 36.57% 105.88%
CUMULATIVE TOTAL RETURNS show Class B shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of 136 stocks designed to measure the
performance of companies in the utilities sector. Issues in the index
include generators and distributors of electricity, distributors of
natural gas and water, and providers of telecommunications services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL B 31.49% 35.48%
FIDELITY ADV UTILITIES - CL B 26.49% 34.67%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Utilities 36.57% 34.92%
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 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
1998/08/31 14929.97 15136.87
15244.65
1998/09/30 16408.14 16106.54
16699.19
1998/10/31 16658.19 17416.64
17462.71
1998/11/30 17372.63 18472.27
18082.46
1998/12/31 19493.97 19536.64
19876.18
1999/01/29 20496.00 20353.66
20588.34
IMATRL PRASUN SHR__CHT 19990131 19990226 145432 R00000000000032
$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 January 31,
1999, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $20,496 - a
104.96% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Utilities Index, it would
have grown to $20,588 - a 105.88% 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 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
six months, past one year and life of fund total return figures are
1%, 1% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the past one year and life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL C 18.66% 31.43% 107.95%
FIDELITY ADV UTILITIES - CL C 17.66% 30.43% 107.95%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 15.02% 32.49% 103.54%
GS Utilities 25.56% 36.57% 105.88%
CUMULATIVE TOTAL RETURNS show Class C shares' performance in
percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index of common
stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of 136 stocks designed to measure the
performance of companies in the utilities sector. Issues in the index
include generators and distributors of electricity, distributors of
natural gas and water, and providers of telecommunications services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - CL C 31.43% 35.48%
FIDELITY ADV UTILITIES - CL C 30.43% 35.48%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
S&P 500 32.49% 34.28%
GS Utilities 36.57% 34.92%
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 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 11340.00 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 14637.79 14938.07
14071.85
1997/12/31 14849.51 15194.56
14800.43
1998/01/31 15822.52 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 18144.48 17488.19
16224.12
1998/05/31 17558.47 17187.57
16023.80
1998/06/30 17392.61 17885.73
16401.68
1998/07/31 17525.29 17695.25
16397.57
1998/08/31 14937.96 15136.87
15244.65
1998/09/30 16405.05 16106.54
16699.19
1998/10/31 16655.24 17416.64
17462.71
1998/11/30 17381.97 18472.27
18082.46
1998/12/31 19492.40 19536.64
19876.18
1999/01/29 20795.11 20353.66
20588.34
IMATRL PRASUN SHR__CHT 19990131 19990226 145502 R00000000000032
$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 January 31,
1999, the value of the investment, including the effect of the
contingent deferred sales charge, would have grown to $20,795 - a
107.95% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Utilities Index, it would
have grown to $20,588 - a 105.88% 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 UTILITIES GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
NOTE TO SHAREHOLDERS: Peter Saperstone became Portfolio Manager of
Fidelity Advisor Utilities Growth Fund on October 30, 1998.
Q. HOW DID THE FUND PERFORM, PETER?
A. For the six months that ended January 31, 1999, the fund's Class A,
Class T, Class B and Class C shares returned 19.22%, 19.02%, 18.70%,
and 18.66%, respectively. In comparison, the Goldman Sachs Utilities
Index - an index of 136 stocks designed to measure the performance of
companies in the utilities sector - returned 25.56%. During the same
period, the Standard & Poor's 500 Index returned 15.02%. For the 12
months that ended January 31, 1999, the fund's Class A, Class T, Class
B and Class C shares returned 32.55%, 32.19%, 31.49%, and 31.43%,
respectively. The S&P 500 and Goldman Sachs indexes returned 32.49%
and 36.57%, respectively, during the same period.
Q. WHAT FACTORS CAUSED THE FUND TO LAG THE GOLDMAN SACHS INDEX?
A. The fund's performance relative to the Goldman Sachs index was hurt
primarily during the third quarter of 1998, when investors' flight to
safety drove down stock prices in the telephone utilities sector and
assets flowed into the more conservative electric utilities sector.
The fund's large position in telephone stocks and underweighting in
electric utilities relative to the index hurt performance during the
past six-month period.
Q. BUT WEREN'T TELEPHONE STOCKS AMONG THE BEST PERFORMERS FOR THE
FUND?
A. Yes, they were, but their underperformance in the third quarter
really hurt. However, with the exception of that quarter, telephone
stocks accounted for the majority of the fund's solid return.
Telephone companies continued to increase earnings and revenues faster
than other sectors in the utilities industry due to strong demand for
telecommunications equipment and data services. Consequently, these
stocks reaped the rewards of their success and positive investor
sentiment.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE FOR ELECTRIC UTILITIES?
A. It's been difficult. Many of these stocks have been out of favor
for a while and are starting to look inexpensive considering the
stable earnings growth of some electric utility companies. Lately I've
been buying some electric utilities because they are looking more
attractive on a relative basis.
Q. WHICH STOCKS WERE THE MAJOR CONTRIBUTORS TO TOTAL RETURN?
A. MCI WorldCom's stock continued to provide a significant boost to
the fund's total return. The company continues to be one of the most
compelling growth stories in the industry as a whole. MCI WorldCom is
one of the best-positioned telecommunications companies in the data
and Internet market, which could drive higher revenue growth than the
industry. Another solid performer for the fund was Qwest
Communications. This company offers a high-capacity fiber-optic
network to deliver data communications; the stock appreciated
significantly in response to the strong growth outlook for
data-networking traffic.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
A. I have sold the fund's holdings in Smartalk, but before I did, the
stock hurt total return as its price plummeted in response to
financial difficulties. Owning Tel-Save.com stock was quite a
roller-coaster ride during the period. During January the stock
dropped from a daily trading high of approximately $22 to close at
around $12.50 at the end of the period. The stock dropped primarily in
response to investors' concerns regarding management changes and when
its proposed merger with GTE fell apart.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. I don't anticipate any major changes to the fund's holdings and
asset allocation. In the short term, the fund is positioned to take
advantage of the growth potential in the telecommunications sector.
However, if the market continues to bid up the prices of telephone
utilities, I may continue to take some profits for the fund. Most
likely, any changes to the fund's holdings would be in an effort to
lower the fund's risk profile or to capitalize on any opportunities in
other sectors, such as electric utilities, which offer some compelling
stock valuations.
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.
(checkmark)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$71 million
MANAGER: Peter Saperstone, since 1998;
joined Fidelity in 1995
ADVISOR UTILITIES GROWTH FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 11.0
SBC Communications, Inc. 5.7
Bell Atlantic Corp. 5.0
Tele-Communications, Inc. 4.1
(TCI Group) Series A
MediaOne Group, Inc. 4.0
OY Nokia AB sponsored ADR 3.9
AirTouch Communications, Inc. 3.9
AT&T Corp. 3.6
McLeodUSA, Inc. Class A 3.5
Ameritech Corp. 3.5
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Telephone Services 54.9%
Broadcasting 15.5%
Electric Utility 7.6%
Cellular 6.6%
Communications Equipment 4.8%
All Others 10.6%*
Row: 1, Col: 1, Value: 54.9
Row: 1, Col: 2, Value: 15.5
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 4.8
Row: 1, Col: 6, Value: 10.6
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
BROADCASTING - 13.1%
Cablevision Systems Corp. 20,000 $ 1,347,500
Class A (a)
MediaOne Group, Inc. 50,000 2,803,125
Metromedia Fiber Network, 47,100 2,157,769
Inc. Class A (a)
Tele-Communications, Inc. 42,527 2,915,757
(TCI Group) Series A (a)
9,224,151
CELLULAR - 6.6%
AirTouch Communications, Inc. 28,300 2,732,719
(a)
Century Telephone 3,800 258,400
Enterprises, Inc.
Nextel Communications, Inc. 9,100 291,200
Class A (a)
SkyTel Communications, Inc. 19,100 503,763
(a)
Telephone & Data Systems, 10,000 532,500
Inc.
Teligent, Inc. Class A (a) 9,500 332,500
4,651,082
COMMUNICATIONS EQUIPMENT - 4.8%
Intermedia Communications, 47,267 655,830
Inc. (a)
OY Nokia AB sponsored ADR 19,100 2,750,400
3,406,230
COMPUTER SERVICES & SOFTWARE
- - 0.4%
Convergys Corp. (a) 14,300 257,400
ELECTRIC UTILITY - 7.6%
AES Corp. (a) 9,500 320,031
CMS Energy Corp. 31,700 1,357,156
Duke Energy Corp. 24,294 1,501,673
Entergy Corp. 18,100 532,819
Montana Power Co. 10,500 551,250
PG&E Corp. 34,300 1,095,456
5,358,385
ELECTRICAL EQUIPMENT - 0.9%
American Superconductor Corp. 52,500 616,875
(a)
GAS - 0.6%
Williams Companies, Inc. 11,981 395,373
OIL & GAS - 0.6%
Coastal Corp. (The) 15,050 448,678
TELEPHONE SERVICES - 54.9%
ALLTEL Corp. 33,700 2,175,756
Ameritech Corp. 38,100 2,481,263
AT&T Corp. 28,175 2,556,881
BCE, Inc. 2,500 112,163
Bell Atlantic Corp. 58,800 3,528,000
BellSouth Corp. 38,200 1,704,675
Cincinnati Bell, Inc. 14,300 290,469
Commonwealth Telephone 30,000 948,750
Enterprises, Inc. (a)
COMSAT Corp. Series 1 14,300 473,688
Covad Communications Group, 16,200 854,550
Inc. (a)
Frontier Corp. 19,800 715,275
SHARES VALUE (NOTE 1)
Global TeleSystems Group, 11,800 $ 738,975
Inc. (a)
GTE Corp. 25,900 1,748,250
ICG Communications, Inc. (a) 20,000 376,250
MCI WorldCom, Inc. (a) 96,630 7,706,241
McLeodUSA, Inc. Class A (a) 60,000 2,493,750
Qwest Communications 20,061 1,202,406
International, Inc. (a)
SBC Communications, Inc. 73,900 3,990,600
Sprint Corp. (FON Group) 13,300 1,115,538
Tel-Save.com, Inc. (a) 133,650 1,695,684
U.S. WEST, Inc. 16,100 993,169
WinStar Communications, Inc. 15,600 669,825
(a)
38,572,158
TOTAL COMMON STOCKS 62,930,332
(Cost $47,885,372)
CONVERTIBLE PREFERRED STOCKS
- - 2.4%
BROADCASTING - 2.4%
MediaOne Group, Inc. $3.63 20,500 1,686,125
PIES (Cost $1,329,938)
CASH EQUIVALENTS - 8.1%
Taxable Central Cash Fund (b) 5,689,628 5,689,628
(Cost $5,689,628)
TOTAL INVESTMENT IN $ 70,306,085
SECURITIES - 100%
(Cost $54,904,938)
SECURITY TYPE ABBREVIATIONS
PIES - Premium Income Equity Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $54,997,793. Net unrealized appreciation
aggregated $15,308,292, of which $15,757,180 related to appreciated
investment securities and $448,888 related to depreciated investment
securities.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 70,306,085
value (cost $54,904,938) -
See accompanying schedule
Receivable for investments 1,987,790
sold
Receivable for fund shares 807,396
sold
Dividends receivable 124,947
Interest receivable 17,415
TOTAL ASSETS 73,243,633
LIABILITIES
Payable for investments $ 1,279,570
purchased
Payable for fund shares 153,943
redeemed
Accrued management fee 32,225
Distribution fees payable 37,151
Other payables and accrued 42,694
expenses
TOTAL LIABILITIES 1,545,583
NET ASSETS $ 71,698,050
Net Assets consist of:
Paid in capital $ 58,610,556
Distributions in excess of (43,912)
net investment income
Accumulated undistributed net (2,269,754)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 15,401,160
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 71,698,050
CALCULATION OF MAXIMUM $17.44
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($5,916,829 (divided
by) 339,290 shares)
Maximum offering price per $18.50
share (100/94.25 of
$17.44)
CLASS T: NET ASSET VALUE $17.39
and redemption price per
share ($29,396,576 (divided
by) 1,690,635 shares)
Maximum offering price per $18.02
share (100/96.50 of
$17.39)
CLASS B: NET ASSET VALUE $17.25
and offering price per
share ($24,652,641 (divided
by) 1,429,347 shares) A
CLASS C: NET ASSET VALUE $17.24
and offering price per
share ($7,627,279 (divided
by) 442,384 shares) A
INSTITUTIONAL CLASS: NET $17.46
ASSET VALUE, offering price
and redemption price per
share ($4,104,725
(divided by) 235,098 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
INVESTMENT INCOME $ 341,101
Dividends
Interest 88,478
TOTAL INCOME 429,579
EXPENSES
Management fee $ 146,735
Transfer agent fees 66,390
Distribution fees 165,119
Accounting fees and expenses 30,157
Non-interested trustees' 87
compensation
Custodian fees and expenses 6,792
Registration fees 48,460
Audit 14,433
Legal 471
Miscellaneous 103
Total expenses before 478,747
reductions
Expense reductions (9,721) 469,026
NET INVESTMENT INCOME (LOSS) (39,447)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,356,654)
Foreign currency transactions (794) (1,357,448)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 12,721,048
Assets and liabilities in 9 12,721,057
foreign currencies
NET GAIN (LOSS) 11,363,609
NET INCREASE (DECREASE) IN $ 11,324,162
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (39,447) $ (83,903)
income (loss)
Net realized gain (loss) (1,357,448) 4,505,946
Change in net unrealized 12,721,057 1,230,081
appreciation (depreciation)
NET INCREASE (DECREASE) IN 11,324,162 5,652,124
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (36,379)
From net investment income
In excess of net investment (4,595) -
income
From net realized gain (2,519,900) (1,479,046)
In excess of net realized (912,306) -
gain
TOTAL DISTRIBUTIONS (3,436,801) (1,515,425)
Share transactions - net 20,857,391 26,882,209
increase (decrease)
Redemption fees 11,931 21,301
TOTAL INCREASE (DECREASE) 28,756,683 31,040,209
IN NET ASSETS
NET ASSETS
Beginning of period 42,941,367 11,901,158
End of period (including $ 71,698,050 $ 42,941,367
under (over) distribution of
net investment income of
$(43,912) and $130,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 16.00 $ 13.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .02 (.02) .12
D
Net realized and unrealized 2.62 4.19 3.09
gain (loss)
Total from investment 2.64 4.17 3.21
operations
Less Distributions
From net investment income - (.04) H (.03)
From net realized gain (.88) (1.21) H (.11)
In excess of net realized (.32) - -
gain
Total distributions (1.20) (1.25) (.14)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.44 $ 16.00 $ 13.07
TOTAL RETURN B, C 19.22% 33.99% 32.36%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,917 $ 3,186 $ 531
(000 omitted)
Ratio of expenses to average 1.54% A 1.75% E 1.75% A, E
net assets
Ratio of expenses to average 1.50% A, G 1.72% G 1.75% A
net assets after expense
reductions
Ratio of net investment .23% A (.11)% 1.09% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE
OF CLASS A SHARES) TO JULY
31,1997.
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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 15.95 $ 13.03 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.04) .08
D
Net realized and unrealized 2.61 4.17 3.09
gain (loss)
Total from investment 2.61 4.13 3.17
operations
Less Distributions
From net investment income - (.03) (.03)
From net realized gain (.86) (1.19) (.11)
In excess of net realized (.31) - -
gain
Total distributions (1.17) (1.22) (.14)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.39 $ 15.95 $ 13.03
TOTAL RETURN B, C 19.02% 33.72% 31.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 29,397 $ 19,918 $ 7,085
(000 omitted)
Ratio of expenses to average 1.79% A 1.94% 2.00% A, E
net assets
Ratio of expenses to average 1.75% A, G 1.90% G 2.00% A
net assets after expense
reductions
Ratio of net investment (.02)% A (.23)% .79% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE
OF CLASS T SHARES) TO JULY
31,1997.
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 15.83 $ 13.01 $ 11.76
period
Income from Investment
Operations
Net investment income (loss) (.04) (.13) .02
D
Net realized and unrealized 2.59 4.16 1.23
gain (loss)
Total from investment 2.55 4.03 1.25
operations
Less Distributions
From net investment income - (.03) H -
From net realized gain (.83) (1.19) H -
In excess of net realized (.30) - -
gain
Total distributions (1.13) (1.22) -
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.25 $ 15.83 $ 13.01
TOTAL RETURN B, C 18.70% 32.97% 10.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 24,653 $ 12,919 $ 2,039
(000 omitted)
Ratio of expenses to average 2.27% A 2.50% E 2.50% A, E
net assets
Ratio of expenses to average 2.23% A 2.47% H 2.50% A
net assets after expense
reductions
Ratio of net investment (.49)% A (.85)% .32% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE CONTINGENT
DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (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 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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 F
Net asset value, beginning of $ 15.85 $ 13.90
period
Income from Investment
Operations
Net investment income (loss) (.03) (.10)
D
Net realized and unrealized 2.57 3.16
gain (loss)
Total from investment 2.54 3.06
operations
Less Distributions - (.02)
From net investment income
From net realized gain (.84) (1.10)
In excess of net realized (.31) -
gain
Total distributions (1.15) (1.12)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 17.24 $ 15.85
TOTAL RETURN B, C 18.66% 23.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,627 $ 3,489
(000 omitted)
Ratio of expenses to average 2.27% A 2.50% A, E
net assets
Ratio of expenses to average 2.23% A, G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.48)% A (.91)% A
income (loss) to average net
assets
Portfolio turnover 152% A 151%
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE CONTINGENT
DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (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 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> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 16.02 $ 13.09 $ 10.00
period
Income from Investment
Operations
Net investment income D .04 .04 .14
Net realized and unrealized 2.62 4.17 3.10
gain (loss)
Total from investment 2.66 4.21 3.24
operations
Less Distributions - (.07) H (.04)
From net investment income
In excess of net investment (.02) - -
income
From net realized gain (.88) (1.22) H (.11)
In excess of net realized (.32) - -
gain
Total distributions (1.22) (1.29) (.15)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.46 $ 16.02 $ 13.09
TOTAL RETURN B, C 19.35% 34.36% 32.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,105 $ 3,430 $ 2,246
(000 omitted)
Ratio of expenses to average 1.18% A 1.46% 1.50% A, E
net assets
Ratio of expenses to average 1.14% A, G 1.43% G 1.50% A
net assets after expense
reductions
Ratio of net investment .58% A .30% 1.29% A
income to average net assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
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 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 INSTITUTIONAL CLASS
SHARES) TO JULY 31,1997.
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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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.
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'
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $49,412,560 and $36,026,001, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 4,674 $ 31
CLASS T 53,559 200
CLASS B 83,885 62,914
CLASS C 23,001 21,303
$ 165,119 $ 84,448
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.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 36,451 $ 16,376
CLASS T 42,659 13,924
CLASS B 8,594 8,594 *
CLASS C 3,397 3,397 *
$ 91,101 $ 42,291
* 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 $ 5,390 .29 *
CLASS T 29,669 .28 *
CLASS B 22,378 .27 *
CLASS C 6,060 .27 *
INSTITUTIONAL CLASS 2,893 .17 *
$ 66,390
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $4,582 for the period.
5. EXPENSE REDUCTIONS.
FMR 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 $6,340 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 $3,381 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY YEAR ENDED
31,1999 JULY 31, 1998 A
FROM NET INVESTMENT INCOME
Class A $ - $ 1,800
Class T - 13,527
Class B - 4,591
Class C - 250
Institutional Class - 16,211
Total $ - $ 36,379
IN EXCESS OF NET INVESTMENT
INCOME
Class A $ - $ -
Class T - -
Class B - -
Class C - -
Institutional Class 4,595 -
Total $ 4,595 $ -
FROM NET REALIZED GAIN
Class A $ 196,351 $ 66,066
Class T 1,112,834 749,717
Class B 793,632 267,630
Class C 228,948 16,996
Institutional Class 188,135 378,637
Total $ 2,519,900 $ 1,479,046
IN EXCESS OF NET REALIZED GAIN
Class A $ 71,087 $ -
Class T 402,891 -
Class B 287,327 -
Class C 82,888 -
Institutional Class 68,113 -
Total $ 912,306 $ -
$ 3,436,801 $ 1,515,425
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 183,877 171,774 $ 2,791,824
Reinvestment of distributions 17,187 4,614 223,574
Shares redeemed (60,829) (17,947) (873,296)
Net increase (decrease) 140,235 158,441 $ 2,142,102
CLASS T Shares sold 700,888 1,165,712 $ 10,366,054
Reinvestment of distributions 110,367 53,698 1,431,839
Shares redeemed (369,043) (514,685) (5,458,385)
Net increase (decrease) 442,212 704,725 $ 6,339,508
CLASS B Shares sold 687,188 725,510 $ 9,928,754
Reinvestment of distributions 65,771 15,242 845,860
Shares redeemed (139,835) (81,233) (2,038,308)
Net increase (decrease) 613,124 659,519 $ 8,736,306
CLASS C Shares sold 253,340 225,634 $ 3,885,610
Reinvestment of distributions 17,795 1,164 228,715
Shares redeemed (48,865) (6,684) (737,379)
Net increase (decrease) 222,270 220,114 $ 3,376,946
INSTITUTIONAL CLASS Shares 37,839 310,409 $ 542,433
sold
Reinvestment of distributions 18,454 22,979 240,109
Shares redeemed (35,272) (290,942) (520,013)
Net increase (decrease) 21,021 42,446 $ 262,529
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 2,671,006
Reinvestment of distributions 61,624
Shares redeemed (275,348)
Net increase (decrease) $ 2,457,282
CLASS T Shares sold $ 17,577,615
Reinvestment of distributions 715,847
Shares redeemed (7,904,206)
Net increase (decrease) $ 10,389,256
CLASS B Shares sold $ 11,176,610
Reinvestment of distributions 202,512
Shares redeemed (1,222,194)
Net increase (decrease) $ 10,156,928
CLASS C Shares sold $ 3,470,986
Reinvestment of distributions 15,529
Shares redeemed (107,792)
Net increase (decrease) $ 3,378,723
INSTITUTIONAL CLASS Shares $ 4,630,856
sold
Reinvestment of distributions 307,065
Shares redeemed (4,437,901)
Net increase (decrease) $ 500,020
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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
Matthew N. Karstetter, Deputy 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital
Appreciation Fund
Fidelity Advisor International Capital
Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuantSM Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation 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)
Fidelity Investments Institutional Services Co., Inc.
P.O. Box 505422
Cincinnati, OH 45250-5422
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
RECYCLE LOGO Printed on recycled paper
AFOC-SANN-0399 71974
1.700839.101
(2_FIDELITY_LOGOS)(registered trademark)
FIDELITY ADVISOR
FOCUS FUNDS SM
INSTITUTIONAL CLASS
Consumer Industries
Cyclical Industries
Financial Services
Health Care
Natural Resources
Technology
Utilities Growth
SEMIANNUAL REPORT
JANUARY 31, 1999
CONTENTS
PERFORMANCE OVERVIEW 4
CONSUMER INDUSTRIES 5 PERFORMANCE
6 FUND TALK: THE MANAGER'S OVERVIEW
7 INVESTMENT SUMMARY
8 INVESTMENTS
11 FINANCIAL STATEMENTS
15 NOTES TO THE FINANCIAL STATEMENTS
CYCLICAL INDUSTRIES 20 PERFORMANCE
21 FUND TALK: THE MANAGER'S OVERVIEW
22 INVESTMENT SUMMARY
23 INVESTMENTS
25 FINANCIAL STATEMENTS
29 NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SERVICES 33 PERFORMANCE
34 FUND TALK: THE MANAGER'S OVERVIEW
35 INVESTMENT SUMMARY
36 INVESTMENTS
38 FINANCIAL STATEMENTS
42 NOTES TO THE FINANCIAL STATEMENTS
HEALTH CARE 47 PERFORMANCE
48 FUND TALK: THE MANAGER'S OVERVIEW
49 INVESTMENT SUMMARY
50 INVESTMENTS
52 FINANCIAL STATEMENTS
56 NOTES TO THE FINANCIAL STATEMENTS
NATURAL RESOURCES 61 PERFORMANCE
62 FUND TALK: THE MANAGER'S OVERVIEW
63 INVESTMENT SUMMARY
64 INVESTMENTS
66 FINANCIAL STATEMENTS
70 NOTES TO THE FINANCIAL STATEMENTS
TECHNOLOGY 75 PERFORMANCE
76 FUND TALK: THE MANAGER'S OVERVIEW
77 INVESTMENT SUMMARY
78 INVESTMENTS
80 FINANCIAL STATEMENTS
84 NOTES TO THE FINANCIAL STATEMENTS
UTILITIES GROWTH 89 PERFORMANCE
90 FUND TALK: THE MANAGER'S OVERVIEW
91 INVESTMENT SUMMARY
92 INVESTMENTS
93 FINANCIAL STATEMENTS
97 NOTES TO THE FINANCIAL STATEMENTS
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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
Predictable only for its volatility, the U.S. stock market gave
investors a wild - and oftentimes profitable - ride during the
six-month period ending January 31, 1999. In that time, the Standard &
Poor's 500 Index - a popular measure of the U.S. stock market -
returned 15.02%. The Dow Jones Industrial Average - an index of 30
blue-chip stocks - had a 6.27% increase over the past six months.
Meanwhile, the technology-laden NASDAQ Index posted a whopping 33.83%
return during the same time frame.
Those numbers belie the continual tug-of-war between investors'
positive outlook for the U.S. equity market, and the international
events that threatened to undermine that confidence. As the period
opened, stocks were being slowly dragged downward from their record
high in mid-July. At the other end of the rope: the ongoing financial
crisis in Asia, which began to loosen the sure grip many investors
held on the domestic stock markets. The battle became even more
lopsided when Russia joined the fray. Its escalating economic and
political disasters culminated in a series of loan defaults and a
subsequent devaluation of the ruble. Investor reaction was swift and
extreme: They loosened their grasp on the equity market and the Dow
plunged 512.61 points on August 31 - erasing all previous gains for
the year.
Seeking the sanctity of a less volatile haven, investors found refuge
in U.S. Treasuries. There they paused to catch their collective
breath, anxious about the prospect of what looked almost assuredly
like an impending bear market. While Treasury yields dropped to their
lowest yield levels in three decades, new fears loomed on the horizon.
The specter of presidential impeachment hearings recalled memories of
the 1970s' bear market during the Watergate scandal. Also, rumors of
troubled hedge funds and their potential impact on the nation's
economy added to the maelstrom.
Faced with the possibility of global economic chaos, the U.S. Federal
Reserve Board stepped in. To address the lack of confidence in
domestic and global equity markets, the Fed instituted its first in a
series of three separate 0.25% interest-rate cuts. The first
quarter-point cut in the fed funds rate came on September 29. However,
investor reaction was less than overwhelming, as many expressed
disappointment that the cut was not deeper. Then, in a surprise move,
the Fed slashed rates another quarter-point on October 15, and the Dow
responded with its third-greatest single-day point gain ever. The
third rate cut - a so-called "insurance" cut on November 17 - was the
final brick in the foundation that the stock market needed to support
a fourth-quarter rally. Technology stocks, particularly the
high-flying Internet issues, helped drive stock market performance to
new heights. Strong holiday sales also lifted confidence heading into
the new year.
Despite all the worldwide financial and economic concerns, the S&P
500(Registered trademark) index notched a record fourth-straight year
of returns exceeding 20%. The Dow Jones Industrial Average had its
fourth consecutive year of double digit returns - also a new record.
As 1999 began, the U.S. economy continued to demonstrate its strength.
High levels of employment, low inflation, strong consumer buying
patterns and low interest rates sparked hopes of continued growth. The
stock market, meanwhile, sustained its momentum in January. Despite
some instances of profit-taking in technology issues, the S&P 500
index, Dow Jones Industrial Average and NASDAQ all reached record
highs in the first month of 1999. Even concerns over Brazil's currency
devaluation were hard pressed to put the brakes on the soaring equity
markets.
Individual sector performance was mixed during the six-month period
ending January 31, 1999. TECHNOLOGY stocks were the primary factor
behind the market's fourth-quarter rally in 1998 and solid performance
through the first month of 1999. Internet stocks were particularly
strong. The Internet became a more and more viable and sought-after
medium for advertisers, and continues to transform how individuals
source information and conduct business. Excess inventories and slow
demand from Asia hurt technology earlier in the period. By the end of
1998, however, nine out of the top 10 best-performing stocks in the
S&P 500 were technology stocks.
HEALTH CARE stocks also contributed to the market's overall success,
continuing their trend of recent strong performance. The
pharmaceutical arena, buoyed by strong pipelines of new products, the
ability to bring products to market more rapidly and the demands of an
aging population, helped boost the performance of health care stocks
overall. The health care sector in general also benefited from its
somewhat "economy-proof" nature; people need health care regardless of
whether the economy is weak or strong.
Currency devaluations in Russia and Brazil, as well as Russia's loan
defaults, were particularly detrimental to the performance of FINANCE
stocks during the six-month period ending January 31, 1999. On a more
recent note, however, stable economic growth, coupled with nonexistent
inflation, buoyed the financial sector in January of 1999.
The period's hardest-hit group of stocks proved to be NATURAL
RESOURCES. Overproduction, lack of demand, unusually warm winters and
weak global economic growth contributed to weak results nearly across
the board. Electric utilities, oil, gas, and paper and forest stocks
posted mostly flat to negative returns. Crude oil prices hit a 12-year
low, natural gas prices were at a seven-year low and the number of
rigs drilling for oil and gas was at a 49-year low.
The poor performance of electric utilities also detracted from the
overall returns of UTILITY stocks in general. In addition, many
telecommunications stocks in the utilities sector were battered during
the third quarter of 1998 as investors fled the equity markets in
search of safer, less volatile investments. With the exception of that
quarter, telephone utility stocks benefited greatly as demand for data
networking and communications increased tremendously.
CYCLICAL INDUSTRIES - those whose performance usually moves in line
with prevailing economic conditions - turned in mixed results.
Automobile stocks performed well as auto sales reached record levels.
Conversely, industrial commodities suffered from the state of the
global economy. Stocks in the CONSUMER INDUSTRIES sector also posted
mixed returns. Companies with significant business outside the U.S.
took it on the chin during the global economic turmoil, while
retailers - which typically have little international exposure -
generally performed well during the period.
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 total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
1996
FIDELITY ADV CONSUMER - INST CL 12.81% 32.33% 95.89%
S&P 500 (registered trademark) 15.02% 32.49% 103.54%
GS Consumer Industries 11.15% 27.43% 84.43%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Consumer Industries Index - a
market capitalization-weighted index of 300 stocks designed to measure
the peformance of companies in the consumer industries sector. Issues
in the index include providers of consumer services and products,
including producers of beverages - alcoholic and non-alcoholic, food,
personal care, household products, and tobacco companies. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR LIFE OF FUND
1996
FIDELITY ADV CONSUMER - INST CL 32.33% 32.17%
S&P 500 32.49% 34.28%
GS Consumer Industries 27.43% 28.90%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 14917.87 15136.87 14250.87
1998/09/30 15096.88 16106.54 14330.43
1998/10/31 16925.69 17416.64 16100.92
1998/11/30 17919.87 18472.27 17178.98
1998/12/31 19208.63 19536.64 18227.30
1999/01/29 19589.12 20353.66 18442.58
IMATRL PRASUN SHR__CHT 19990131 19990226 104404 R00000000000032
</TABLE>
$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
January 31, 1999, the value of the investment would have grown to
$19,589 - a 95.89% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Consumer Industries Index,
it would have grown to $18,443 - a 84.43% 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. During the six-month period that ended January 31, 1999, the fund's
Institutional Class shares returned 12.81%. During the same period,
the Standard & Poor's 500 Index returned 15.02%. The fund also
compares itself to the Goldman Sachs Consumer Industries Index - an
index of 300 stocks designed to measure the performance of companies
in the consumer industries sector - which returned 11.15% over the
same six-month period. During the 12-month period ending January 31,
1999, the fund's Institutional Class shares returned 32.33%. By
comparison, the S&P 500 index and the Goldman Sachs Consumer
Industries Index returned 32.49% and 27.43%, respectively, during the
same 12-month period.
Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD?
A. I looked for opportunities to buy undervalued companies, as well as
companies that appeared to have the best business trends at the time.
In the beginning of August, I began to shift from retailing stocks to
multinational companies, because multinationals were cheap and
retailers were getting expensive. When the market plummeted in late
August, retailing took it on the chin, and as retail stocks got
cheaper, I added more to the portfolio. With the approach of the end
of the calendar year - the usual time for retail stock sell-offs - I
decided that conditions still looked positive after talking to the
management of many retailers, so I pared back the fund's multinational
holdings and added even more retail stocks. Within the consumer
products area, I stayed focused on household products and personal
care during the year rather than on food, beverage and tobacco. The
first two groups tend to have higher sales growth and better earnings
growth over time, because it's much easier to innovate in these areas.
Q. HOW MUCH OF AN IMPACT DID GLOBAL ECONOMIC PROBLEMS HAVE ON THE
FUND?
A. Among consumer stocks, I observed that if the majority of a
company's sales came from the U.S. and it made its earnings targets,
its stock performed well. If the majority of sales came from outside
the U.S., then its stock did poorly, whether or not the company made
its earnings targets. So, multinational companies like Coca-Cola,
Gillette and Avon were punished, regardless of the impact on their
earnings from international economic problems.
Q. WHICH STOCKS PERFORMED WELL?
A. By their nature, retailers operate primarily in the U.S., so they
generally performed well during the period. Dayton Hudson - which owns
discounter Target Stores - Lowe's hardware stores and Saks all
performed strongly. Wal-Mart, the fund's number-one holding at the end
of the period, was a stellar performer, benefiting from its steadily
increasing market share and its growing earnings. First Brands, the
maker of Glad Bag products, was acquired by Clorox, and its stock
price increased as a result. Clorox also performed well based on its
earnings and volume growth. Drug chains Walgreen's and CVS did very
well, benefiting from steady earnings growth.
Q. WHICH STOCKS DISAPPOINTED?
A. As I mentioned earlier, Gillette, one of the fund's top holdings,
recovered well in December and January, but didn't do as well as I
expected. Gillette did have lower earnings, but it also had a great
story - its launch of the new Mach 3 razor. Although the launch of the
razor was a huge success, it could not offset the impact of the global
economic crisis. Coca-Cola was another disappointment. With the
majority of its sales outside the U.S., Coca-Cola had significant
international exposure, and its stock performed poorly. Avon was an
even bigger disappointment, because in spite of meeting earnings
targets and maintaining earnings estimates, its stock was extremely
volatile, simply because the majority of its business is outside the
U.S.
Q. WHAT'S YOUR OUTLOOK, DOUG?
A. I'm always cautious. Consumer activity is very strong right now,
but the U.S. may not have absorbed the total impact of the world's
economic problems. It is possible that the U.S. economy simply cannot
strengthen much further without triggering wage inflation. Stocks have
become much more expensive without a corresponding decline in interest
rates to justify their higher price-to-earnings ratios. I'm continuing
to take a bottom-up approach, picking high-quality stocks rather than
betting on the direction of the economy. I'm also taking a long-term
view, waiting for opportunities to present themselves rather than
trying to predict the future or reacting emotionally to events in the
market. So far, that's proved to be a successful strategy for the
fund.
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.
(CHECKMARK) FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$33 million
MANAGER: Doug Chase, since 1997;
joined Fidelity in 1993
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Wal-Mart Stores, Inc. 6.9
Philip Morris Companies, Inc. 4.9
Procter & Gamble Co. 4.5
Home Depot, Inc. 3.2
Gillette Co. 2.8
McDonald's Corp. 2.6
Clorox Co. 2.5
PepsiCo, Inc. 2.5
Time Warner, Inc. 2.2
CBS Corp. 2.2
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 12.9
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 10.8
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 49.9
General Merchandise Stores 12.9%
Household Products 12.5%
Broadcasting 10.8%
Foods 7.0%
Beverages 6.9%
All Others 49.9%*
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR CONSUMER INDUSTRIES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.7%
Interpublic Group of 3,100 $ 245,288
Companies, Inc.
Omnicom Group, Inc. 3,100 198,400
Outdoor Systems, Inc. (a) 4,562 131,158
574,846
AIR TRANSPORTATION - 0.4%
Viad Corp. 4,400 126,225
APPAREL STORES - 3.8%
Abercrombie & Fitch Co. Class 2,995 229,118
A (a)
AnnTaylor Stores Corp. (a) 2,400 93,000
Chicos Fas, Inc. (a) 2,100 64,050
Gap, Inc. 7,312 469,339
Limited, Inc. (The) 4,300 146,738
TJX Companies, Inc. 6,900 203,981
Wet Seal, Inc. Class A (a) 1,800 67,725
1,273,951
AUTOS, TIRES, & ACCESSORIES -
0.3%
Canadian Tire Corp. Ltd. 1,900 52,177
Series A
Pep Boys-Manny, Moe & Jack 3,700 58,275
110,452
BEVERAGES - 6.9%
Anheuser-Busch Companies, 5,600 395,850
Inc.
Canandaigua Brands, Inc. 800 46,900
Class A (a)
Celestial Seasonings, Inc. (a) 7,800 225,225
Coca-Cola Co. (The) 3,200 209,400
Coors (Adolph) Co. Class B 4,100 262,656
Golden State Vinters, Inc. 5,200 77,675
Class B (a)
PepsiCo, Inc. 21,400 835,938
Seagram Co. Ltd. 4,200 200,106
Whitman Corp. 2,900 56,550
2,310,300
BROADCASTING - 10.8%
Cablevision Systems Corp. 2,100 141,488
Class A (a)
CBS Corp. 21,100 717,400
Chancellor Media Corp. (a) 1,700 97,750
Clear Channel Communications, 2,200 136,125
Inc. (a)
Comcast Corp.:
Class A (special) 2,500 169,961
Class A 2,100 136,500
Cox Communications, Inc. 3,700 265,938
Class A (a)
E.W. Scripps Co. Class A 1,300 57,606
Jacor Communications, Inc. 3,500 243,688
Class A (a)
MediaOne Group, Inc. 6,400 358,800
Tele-Communications, Inc. 6,200 425,088
(TCI Group) Series A (a)
Time Warner, Inc. 11,650 728,125
USA Networks, Inc. (a) 3,000 108,000
3,586,469
BUILDING MATERIALS - 0.3%
Richelieu Hardware Ltd. (a) 7,900 91,484
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 0.8%
Gemstar International Group 1,400 $ 81,025
Ltd. (a)
Newell Co. 4,500 187,031
268,056
DRUG STORES - 2.3%
CVS Corp. 5,930 324,668
Walgreen Co. 7,150 446,875
771,543
DRUGS & PHARMACEUTICALS - 0.0%
Rexall Sundown, Inc. (a) 600 8,250
ENTERTAINMENT - 5.2%
Carnival Corp. 3,100 152,094
Disney (Walt) Co. 11,100 366,300
International Speedway Corp. 2,000 85,000
Class A
King World Productions, Inc. 5,000 136,875
(a)
Premier Parks, Inc. (a) 1,800 57,038
Royal Carribean Cruises Ltd. 1,000 39,750
Tele-Communications, Inc. 5,750 307,625
(Liberty Media Group) Series
A (a)
Viacom, Inc.:
Class A (a) 800 67,100
Class B (non-vtg.) (a) 6,300 535,500
1,747,282
FOODS - 7.0%
American Italian Pasta Co. 4,600 128,800
Class A (a)
Archer-Daniels-Midland Co. 1,995 30,174
Bestfoods 3,550 178,609
ConAgra, Inc. 5,100 165,750
Corn Products International, 2,737 72,702
Inc.
Dean Foods Co. 1,200 46,800
Earthgrains Co. 2,700 69,525
Flowers Industries, Inc. 1,200 28,875
Groupe Danone 120 33,670
Heinz (H.J.) Co. 6,675 375,886
Hershey Foods Corp. 800 45,000
Interstate Bakeries Corp. 2,500 61,406
Keebler Foods Co. (a) 4,100 148,625
Kellogg Co. 1,400 57,225
Nabisco Holdings Corp. Class A 2,900 121,981
Quaker Oats Co. 3,300 183,563
Ralston Purina Co. 2,600 71,175
Sanderson Farms, Inc. 3,000 45,750
Sara Lee Corp. 11,300 288,150
Tootsie Roll Industries, Inc. 1,500 67,594
Vlasic Foods International, 2,800 56,700
Inc. (a)
Wrigley (Wm.) Jr. Co. 700 65,538
2,343,498
GENERAL MERCHANDISE STORES -
12.9%
Consolidated Stores Corp. (a) 1,140 19,024
Costco Companies, Inc. (a) 3,600 298,350
Dayton Hudson Corp. 10,500 669,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES -
CONTINUED
Dollar Tree Stores, Inc. (a) 2,550 $ 110,128
Federated Department Stores, 10,000 418,125
Inc. (a)
Nordstrom, Inc. 2,000 83,250
Saks, Inc. (a) 11,124 409,502
Wal-Mart Stores, Inc. 26,650 2,291,886
4,299,640
GROCERY STORES - 4.5%
Albertson's, Inc. 5,900 359,900
Kroger Co. (a) 3,300 209,550
Loblaw Companies Ltd. 2,800 71,334
Meyer (Fred), Inc. (a) 7,100 443,750
Safeway, Inc. (a) 7,350 412,519
1,497,053
HOME FURNISHINGS - 0.2%
Maxim Group, Inc. (a) 2,300 52,038
HOUSEHOLD PRODUCTS - 12.5%
Alberto-Culver Co. Class A 4,700 110,450
Avon Products, Inc. 7,950 293,653
Church & Dwight Co., Inc. 1,900 74,338
Clorox Co. 6,699 838,212
Dial Corp. 1,800 49,163
Gillette Co. 15,700 922,375
Procter & Gamble Co. 16,530 1,502,164
Unilever NV (NY shares) 5,100 390,150
4,180,505
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 900 22,219
Harley-Davidson, Inc. 1,900 98,800
Hasbro, Inc. 2,200 81,813
Mattel, Inc. 5,000 113,438
316,270
LODGING & GAMING - 0.4%
Circus Circus Enterprises, 4,500 61,313
Inc. (a)
Promus Hotel Corp. (a) 1,000 29,875
Sun International Hotels Ltd. 1,300 55,494
(a)
146,682
PACKAGING & CONTAINERS - 0.7%
Corning, Inc. 2,700 131,625
Tupperware Corp. 4,200 86,363
217,988
PAPER & FOREST PRODUCTS - 0.9%
Kimberly-Clark Corp. 6,200 308,838
PRINTING - 0.3%
Quebecor Printing, Inc. (sub. 1,000 21,672
vtg.)
Reynolds & Reynolds Co. Class 2,100 42,000
A
Valassis Communications, Inc. 400 20,450
84,122
SHARES VALUE (NOTE 1)
PUBLISHING - 3.5%
American Greetings Corp. 1,000 $ 39,500
Class A
Gannet, Inc. 3,300 217,181
Harcourt General, Inc. 2,450 117,600
Harte Hanks Communications, 1,900 47,975
Inc.
McGraw-Hill Companies, Inc. 2,000 216,250
Playboy Enterprises, Inc. 9,800 221,725
Class B (a)
Reader's Digest Association, 4,500 129,375
Inc. Class A (non-vtg.)
Times Mirror Co. Class A 900 49,556
Torstar Corp. 3,800 40,359
Tribune Co. 1,300 83,119
1,162,640
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
Starwood Hotels & Resorts 1,300 32,500
Worldwide, Inc.
RESTAURANTS - 3.7%
Brinker International, Inc. 1,800 49,500
(a)
CEC Entertainment, Inc. (a) 1,000 29,875
CKE Restaurants, Inc. 2,300 54,625
Logan's Roadhouse, Inc. (a) 25 594
McDonald's Corp. 10,900 859,056
Outback Steakhouse, Inc. (a) 1,000 36,500
Papa John's International, 800 32,600
Inc. (a)
Sizzler International, Inc. 10,900 25,888
(a)
Starbucks Corp. (a) 900 46,856
Tricon Global Restaurants, 2,300 109,394
Inc. (a)
1,244,888
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.4%
Action Performance Companies, 2,300 110,400
Inc. (a)
Barnes & Noble, Inc. (a) 1,600 59,900
Borders Group, Inc. (a) 2,600 44,525
Finish Line, Inc. Class A (a) 5,200 47,775
Home Depot, Inc. 17,700 1,068,638
Lowe's Companies, Inc. 7,900 460,669
Office Depot, Inc. (a) 4,200 145,950
Staples, Inc. (a) 4,350 124,519
Tandy Corp. 900 48,600
Williams-Sonoma, Inc. (a) 800 27,750
2,138,726
SERVICES - 0.7%
ACNielsen Corp. (a) 2,300 52,613
Day Runner, Inc. (a) 1,000 13,500
Modis Professional Services, 3,000 43,688
Inc. (a)
Service Corp. International 2,300 36,513
ServiceMaster Co. 3,950 75,297
221,611
TEXTILES & APPAREL - 0.7%
Fruit of the Loom, Inc. Class 1,100 15,950
A (a)
Liz Claiborne, Inc. 1,900 72,675
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
Mohawk Industries, Inc. (a) 500 $ 19,250
Pacific Sunwear of 1,950 49,359
California, Inc. (a)
VF Corp. 1,000 42,625
WestPoint Stevens, Inc. Class 1,300 34,572
A (a)
234,431
TOBACCO - 4.9%
Philip Morris Companies, Inc. 34,600 1,626,200
TOTAL COMMON STOCKS 30,976,488
(Cost $24,697,326)
CASH EQUIVALENTS - 7.1%
Taxable Central Cash Fund (b) 2,370,141 2,370,141
(Cost $2,370,141)
TOTAL INVESTMENT IN $ 33,346,629
SECURITIES - 100%
(Cost $27,067,467)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $27,146,784. Net unrealized appreciation
aggregated $6,199,845, of which $6,859,066 related to appreciated
investment securities and $659,221 related to depreciated investment
securities.
ADVISOR CONSUMER INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 33,346,629
value (cost $27,067,467) -
See accompanying schedule
Cash 10,867
Receivable for investments 275,267
sold
Receivable for fund shares 82,613
sold
Dividends receivable 11,608
Interest receivable 9,525
Other receivables 11
TOTAL ASSETS 33,736,520
LIABILITIES
Payable for investments $ 197,925
purchased
Payable for fund shares 53,672
redeemed
Accrued management fee 11,408
Distribution fees payable 13,085
Other payables and accrued 29,080
expenses
TOTAL LIABILITIES 305,170
NET ASSETS $ 33,431,350
Net Assets consist of:
Paid in capital $ 27,249,627
Accumulated net investment (93,728)
loss
Accumulated undistributed net (3,712)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,279,163
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 33,431,350
CALCULATION OF MAXIMUM $15.89
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($2,696,828 (divided
by) 169,737 shares)
Maximum offering price per $16.86
share (100/94.25 of
$15.89)
CLASS T: NET ASSET VALUE $15.84
and redemption price per
share ($17,115,937 (divided
by) 1,080,856 shares)
Maximum offering price per $16.41
share (100/96.50 of
$15.84)
CLASS B: NET ASSET VALUE $15.70
and offering price per
share ($7,535,466 (divided
by) 479,979 shares) A
CLASS C: NET ASSET VALUE $15.71
and offering price per
share ($1,775,876 (divided
by) 113,011 shares) A
INSTITUTIONAL CLASS: NET $15.96
ASSET VALUE, offering price
and redemption price per
share ($4,307,243
(divided by) 269,843 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 124,972
Dividends
Interest 54,500
TOTAL INCOME 179,472
EXPENSES
Management fee $ 83,927
Transfer agent fees 41,440
Distribution fees 77,395
Accounting fees and expenses 30,029
Non-interested trustees' 52
compensation
Custodian fees and expenses 6,187
Registration fees 43,775
Audit 14,423
Legal 294
Miscellaneous 70
Total expenses before 297,592
reductions
Expense reductions (24,392) 273,200
NET INVESTMENT INCOME (LOSS) (93,728)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 100,123
Foreign currency transactions (283) 99,840
Change in net unrealized 3,719,996
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 3,819,836
NET INCREASE (DECREASE) IN $ 3,726,108
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (93,728) $ (119,125)
income (loss)
Net realized gain (loss) 99,840 2,436,414
Change in net unrealized 3,719,996 1,539,184
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,726,108 3,856,473
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,578,626) (1,433,351)
from net realized gains
Share transactions - net 3,441,880 15,183,117
increase (decrease)
Redemption fees 9,461 39,768
TOTAL INCREASE (DECREASE) 5,598,823 17,646,007
IN NET ASSETS
NET ASSETS
Beginning of period 27,832,527 10,186,520
End of period (including $ 33,431,350 $ 27,832,527
accumulated net investment
loss of $93,728)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.08 $ 13.48 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.03) (.06) (.05)
D
Net realized and unrealized 1.69 3.31 3.60
gain (loss)
Total from investment 1.66 3.25 3.55
operations
Less Distributions
From net realized gain (.85) (1.68) (.07)
Redemption fees added to paid .00 .03 -
in capital
Net asset value, end of period $ 15.89 $ 15.08 $ 13.48
TOTAL RETURN B, C 12.64% 27.48% 35.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,697 $ 2,220 $ 944
(000 omitted)
Ratio of expenses to average 1.65% A, F 1.75% F 1.75% A, F
net assets
Ratio of expenses to average 1.63% A, G 1.73% G 1.73% A, G
net assets after expense
reductions
Ratio of net investment (.37)% A (.47)% (.50)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.00 $ 13.45 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.04) (.10) (.09)
D
Net realized and unrealized 1.69 3.28 3.60
gain (loss)
Total from investment 1.65 3.18 3.51
operations
Less Distributions
From net realized gain (.81) (1.66) (.06)
Redemption fees added to paid .00 .03 -
in capital
Net asset value, end of period $ 15.84 $ 15.00 $ 13.45
TOTAL RETURN B, C 12.56% 26.93% 35.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,116 $ 13,989 $ 7,314
(000 omitted)
Ratio of expenses to average 1.90% A, F 2.00% F 2.00% A, F
net assets
Ratio of expenses to average 1.88% A, G 1.98% G 1.97% A, G
net assets after expense
reductions
Ratio of net investment (.61)% A (.71)% (.83)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.91 $ 13.42 $ 11.46
period
Income from Investment
Operations
Net investment income (loss) (.08) (.17) (.08)
D
Net realized and unrealized 1.68 3.26 2.04
gain (loss)
Total from investment 1.60 3.09 1.96
operations
Less Distributions
From net realized gain (.81) (1.64) -
Redemption fees added to paid .00 .04 -
in capital
Net asset value, end of period $ 15.70 $ 14.91 $ 13.42
TOTAL RETURN B, C 12.28% 26.30% 17.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,535 $ 5,419 $ 596
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.39% A, G 2.48% G 2.46% A, G
net assets after expense
reductions
Ratio of net investment (1.13)% A (1.23)% (1.60)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 14.95 $ 12.66
period
Income from Investment
Operations
Net investment income (loss) (.08) (.13)
D
Net realized and unrealized 1.67 2.87
gain (loss)
Total from investment 1.59 2.74
operations
Less Distributions
From net realized gain (.83) (.49)
Redemption fees added to paid .00 .04
in capital
Net asset value, end of period $ 15.71 $ 14.95
TOTAL RETURN B, C 12.22% 22.67%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,776 $ 1,461
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% A, F
net assets
Ratio of expenses to average 2.40% A, G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (1.12)% A (1.27)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144%
</TABLE>
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 15.12 $ 13.51 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.01) (.03) (.01)
D
Net realized and unrealized 1.69 3.31 3.59
gain (loss)
Total from investment 1.68 3.28 3.58
operations
Less Distributions
From net realized gain (.85) (1.70) (.07)
Redemption fees added to paid .01 .03 -
in capital
Net asset value, end of period $ 15.96 $ 15.12 $ 13.51
TOTAL RETURN B, C 12.81% 27.70% 35.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,307 $ 4,745 $ 1,333
(000 omitted)
Ratio of expenses to average 1.41% A, F 1.50% F 1.50% A, F
net assets
Ratio of expenses to average 1.40% A, G 1.48% G 1.48% A, G
net assets after expense
reductions
Ratio of net investment (.12)% A (.20)% (.13)% A
income (loss) to average net
assets
Portfolio turnover 98% A 144% 203% A
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 (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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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.
Accumulated net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $14,401,005 and $13,001,189, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average
of a series of rates and is based on the monthly average net assets of
all the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. For the
period, the management fee was equivalent to an annualized rate of
.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 FDC RETAINED BY FDC
CLASS A $ 2,738 $ 94
CLASS T 36,411 0
CLASS B 30,662 22,996
CLASS C 7,584 7,249
$ 77,395 $ 30,339
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 8,396 $ 2,581
CLASS T 18,942 4,614
CLASS B 17,820 17,820 *
CLASS C 3,131 3,131 *
$ 48,289 $ 28,146
* 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 $ 3,535 .32 *
CLASS T 20,212 .28 *
CLASS B 10,370 .34 *
CLASS C 2,737 .36 *
INSTITUTIONAL CLASS 4,586 .22 *
$ 41,440
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $2,455 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.75 - 1.50% $ 1,976
CLASS T 2.00 - 1.75% 10,200
CLASS B 2.50 - 2.25% 6,124
CLASS C 2.50 - 2.25% 1,605
INSTITUTIONAL CLASS 1.50 - 1.25% 1,801
$ 21,706
Effective December 1, 1998, Class A, Class T, Class B, Class C and the
Institutional Class expense limitations were changed to 1.50%, 1.75%,
2.25%, 2.25%, and 1.25% of each class' average net assets,
respectively.
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 $2,632 under this arrangement.
In addition, the fund has entered into arrangements with its transfer
agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of expenses. During the period, each
applicable class' expenses were reduced as follows under the transfer
agent arrangements:
TRANSFER AGENT CREDITS
CLASS T $ 54
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:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 121,205 $ 122,598
Class T 772,285 1,001,052
Class B 327,913 102,510
Class C 82,949 1,954
Institutional Class 274,274 205,237
Total $ 1,578,626 $ 1,433,351
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 45,713 92,013 $ 660,330
Reinvestment of distributions 9,730 9,124 119,873
Shares redeemed (32,924) (23,935) (467,556)
Net increase (decrease) 22,519 77,202 $ 312,647
CLASS T Shares sold 322,388 784,694 $ 4,496,005
Reinvestment of distributions 59,264 73,835 728,352
Shares redeemed (233,459) (469,801) (3,249,636)
Net increase (decrease) 148,193 388,728 $ 1,974,721
CLASS B Shares sold 198,500 359,596 $ 2,737,080
Reinvestment of distributions 25,754 7,684 314,459
Shares redeemed (107,599) (48,361) (1,469,628)
Net increase (decrease) 116,655 318,919 $ 1,581,911
CLASS C Shares sold 59,997 101,815 $ 847,436
Reinvestment of distributions 6,196 43 75,711
Shares redeemed (50,882) (4,158) (725,743)
Net increase (decrease) 15,311 97,700 $ 197,404
INSTITUTIONAL CLASS Shares 109,169 246,078 $ 1,505,143
sold
Reinvestment of distributions 21,083 15,764 260,589
Shares redeemed (174,277) (46,652) (2,390,535)
Net increase (decrease) (44,025) 215,190 $ (624,803)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 1,311,243
Reinvestment of distributions 113,019
Shares redeemed (334,712)
Net increase (decrease) $ 1,089,550
CLASS T Shares sold $ 11,054,004
Reinvestment of distributions 913,447
Shares redeemed (6,762,615)
Net increase (decrease) $ 5,204,836
CLASS B Shares sold $ 5,098,496
Reinvestment of distributions 94,935
Shares redeemed (692,526)
Net increase (decrease) $ 4,500,905
CLASS C Shares sold $ 1,469,653
Reinvestment of distributions 542
Shares redeemed (61,277)
Net increase (decrease) $ 1,408,918
INSTITUTIONAL CLASS Shares $ 3,450,421
sold
Reinvestment of distributions 196,010
Shares redeemed (667,523)
Net increase (decrease) $ 2,978,908
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - INST CL -0.84% 7.32% 47.22%
S&P 500 15.02% 32.49% 103.54%
GS Cyclical Industries -0.27% 5.09% 42.91%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Cyclical Industries Index - a
market capitalization-weighted index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector. Issues
in the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV CYCLICAL - INST CL 7.32% 17.40%
S&P 500 32.49% 34.28%
GS Cyclical Industries 5.09% 15.96%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 12589.28 15136.87 12063.57
1998/09/30 12688.05 16106.54 12434.95
1998/10/31 13901.39 17416.64 13538.58
1998/11/30 14340.50 18472.27 14155.28
1998/12/31 14964.50 19536.64 14242.33
1999/01/29 14721.83 20353.66 14290.54
IMATRL PRASUN SHR__CHT 19990131 19990226 104642 R00000000000032
</TABLE>
$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
January 31, 1999, the value of the investment would have grown to
$14,722 - a 47.22% 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 $20,354 - a 103.54% increase. If
$10,000 was invested in the Goldman Sachs Cyclical Industries Index,
it would have grown to $14,291 - a 42.91% 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 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. For the six months that ended January 31, 1999, the fund's
Institutional Class Shares returned -0.84%. In comparison, the
Standard & Poor's 500 Index returned 15.02%, while the Goldman Sachs
Cyclical Industries Index - an index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector -
returned -0.27% during the same period. For the 12 months that ended
January 31, 1999, the S&P 500 index returned 32.49%. During the same
period, the fund's Institutional Class shares returned 7.32%. This
performance outpaced the Goldman Sachs index, which returned 5.09%.
Q. WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE? WHY DID THE
FUND LAG THE GOLDMAN SACHS INDEX DURING THE
SIX-MONTH PERIOD?
A. Cyclical industries turned in mixed results during the past six
months. In the third quarter of 1998, the fund produced negative
returns as the global economic crisis took hold on the U.S. stock
market. In the fourth quarter of 1998, the fund staged a turnaround
led by strong performance from conglomerates, such as Tyco and General
Electric. Both companies managed to increase profits and earnings
during the period. However, the primary reason for the fund's
underperformance compared to the Goldman Sachs index was the
portfolio's asset underweighting relative to the index in auto stocks.
General Motors, Ford and DaimlerChrysler all surged in response to
record sales numbers. In hindsight, I underestimated the potential of
the auto stocks, given my doubts about the strength of the U.S.
economy.
Q. YOU MADE SOME CHANGES TO THE FUND'S TOP HOLDINGS DURING THE PERIOD
. . .
A. That's right. I sold off the fund's holdings in DEKALB after it was
acquired by Monsanto. The stock performed very well during the period,
so I felt it was prudent to lock in profits. Textron was added to the
fund's holdings because I felt that its stock was undervalued
considering its fundamental business outlook and its strong track
record of earnings growth. I added to the fund's stake in US Airways
because I felt airline traffic would pick up due to the cuts in
interest rates, which were favorable for consumer spending. In
addition, fuel costs were low and fares were coming down, which I
thought could stimulate demand. I also added Pentair, a smaller-cap
conglomerate, to the fund's top holdings; its stock looked inexpensive
given earnings improvements.
Q. WHAT STOCKS HELPED PERFORMANCE?
A. Tyco and General Electric were the biggest contributors to total
return. Tyco stock rallied during the period as it increased profits
by acquiring a number of companies, including its announced $11
billion purchase of electric device maker AMP. General Electric
performed solidly in response to strong earnings growth and a dividend
increase. The stock surged from a 12-month low of $72 on October 8,
1998, to $104 by the end of the period.
Q. WHAT STOCKS WERE THE MAIN DISAPPOINTMENTS?
A. While the fund's assets remained underweighted relative to the
benchmark index in such industrial commodities as chemicals and paper,
these sectors continued to lag. Stone Container detracted most
significantly from performance as the paper sector continued to
languish in a poor business environment with little ability to raise
prices and increase profit margins. Lackluster performance from
chemical companies DuPont and Monsanto also detracted from total
return.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. I think the short-term environment remains difficult for cyclical
stocks. In the absence of a catalyst such as another interest-rate cut
or strong signs of a turnaround in Asia and the global economy,
industrial commodities and cyclical stocks could continue to struggle
in 1999. This is the primary reason for my defensive strategy of
allocating a significant portion of fund assets to conglomerates.
These holdings provide predictable earnings and the ability to quickly
cut costs in a weak economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. tHE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
(CHECKMARK)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$5 million
MANAGER: Albert Ruback, since inception;
joined Fidelity in 1991
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
General Electric Co. 10.6
Tyco International Ltd. 9.6
Textron, Inc. 6.9
du Pont (E.I.) de Nemours & Co. 5.3
Ford Motor Co. 4.5
Emerson Electric Co. 4.2
Boeing Co. 3.7
Waste Management, Inc. 2.8
US Airways Group, Inc. 2.7
Pentair, Inc. 2.2
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 16.7
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 12.8
Row: 1, Col: 4, Value: 8.4
Row: 1, Col: 5, Value: 6.2
Row: 1, Col: 6, Value: 41.9
Electrical Equipment 16.7%
Industrial Machinery & Equipment 14.0%
Aerospace & Defense 12.8%
Chemicals & Plastics 8.4%
Paper & Forest Products 6.2%
All Others 41.9%*
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR CYCLICAL INDUSTRIES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 12.8%
Alliant Techsystems, Inc. (a) 400 $ 35,100
Boeing Co. 6,400 221,200
Gulfstream Aerospace Corp. (a) 700 38,500
Lockheed Martin Corp. 1,314 46,319
Sundstrand Corp. 200 8,900
Textron, Inc. 5,500 409,406
759,425
AIR TRANSPORTATION - 4.7%
America West Holding Corp. 900 19,350
Class B (a)
Northwest Airlines Corp. 2,000 54,750
Class A (a)
Southwest Airlines Co. 1,650 44,344
US Airways Group, Inc. (a) 3,200 159,200
277,644
AUTOS, TIRES, & ACCESSORIES -
5.7%
Federal-Mogul Corp. 250 14,813
Ford Motor Co. 4,400 270,325
Lear Corp. (a) 300 11,813
SPX Corp. 300 21,225
TRW, Inc. 500 24,031
342,207
BROADCASTING - 0.7%
PanAmSat Corp. (a) 1,000 40,188
BUILDING MATERIALS - 2.7%
Carlisle Companies, Inc. 400 18,650
Crane Co. 900 24,469
Masco Corp. 1,600 51,700
Owens-Corning 1,000 35,750
Southdown, Inc. 300 16,669
USG Corp. 200 11,350
158,588
CHEMICALS & PLASTICS - 8.3%
du Pont (E.I.) de Nemours & 6,200 317,363
Co.
Ferro Corp. 800 17,500
IMC Global, Inc. 700 12,731
Ivex Packaging Corp. (a) 2,200 48,538
Lyondell Petrochemical Co. 500 7,469
Nalco Chemical Co. 500 13,750
Potash Corp. of Saskatchewan 300 18,164
Sealed Air Corp. (a) 360 19,103
Solutia, Inc. 360 6,885
Spartech Corp. 700 16,713
Witco Corp. 1,100 16,913
495,129
COMPUTERS & OFFICE EQUIPMENT
- - 2.2%
Pitney Bowes, Inc. 800 55,050
Xerox Corp. 600 74,400
129,450
SHARES VALUE (NOTE 1)
CONSTRUCTION - 1.0%
Centex Corp. 400 $ 17,275
Kaufman & Broad Home Corp. 500 14,094
Lennar Corp. 500 13,688
Oakwood Homes Corp. 700 13,431
58,488
CONSUMER ELECTRONICS - 0.9%
Black & Decker Corp. 600 31,800
General Motors Corp. Class H 400 19,700
(a)
51,500
DEFENSE ELECTRONICS - 2.7%
Litton Industries, Inc. (a) 900 51,244
Raytheon Co.:
Class A 381 21,241
Class B 1,600 89,500
161,985
ELECTRICAL EQUIPMENT - 16.7%
Emerson Electric Co. 4,300 250,206
General Electric Co. 6,000 629,241
Honeywell, Inc. 1,500 97,781
Hubbell, Inc. Class B 400 14,650
991,878
ENGINEERING - 1.4%
EG & G, Inc. 1,400 39,725
Fluor Corp. 1,200 45,750
85,475
HOME FURNISHINGS - 0.3%
Leggett & Platt, Inc. 1,000 20,375
INDUSTRIAL MACHINERY &
EQUIPMENT - 14.0%
Caterpillar, Inc. 1,200 51,975
Coltec Industries, Inc. (a) 6,000 109,875
Illinois Tool Works, Inc. 1,000 60,313
Ingersoll-Rand Co. 900 42,750
Tyco International Ltd. 7,400 570,263
835,176
IRON & STEEL - 0.1%
Inland Steel Industries, Inc. 296 4,477
LEASING & RENTAL - 0.1%
Ryder Systems, Inc. 250 6,094
METALS & MINING - 1.6%
Alcoa, Inc. 985 82,371
Martin Marietta Materials, 274 14,385
Inc.
96,756
PACKAGING & CONTAINERS - 1.4%
Owens-Illinois, Inc. (a) 2,000 58,500
Silgan Holdings, Inc. (a) 1,100 25,713
84,213
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - 6.2%
Bowater, Inc. 1,000 $ 39,063
Champion International Corp. 800 28,050
Fort James Corp. 1,000 35,875
Pentair, Inc. 3,500 133,875
Smurfit-Stone Container Corp. 4,356 70,241
(a)
Temple-Inland, Inc. 400 22,825
Union Camp Corp. 400 24,675
Willamette Industries, Inc. 500 17,500
372,104
POLLUTION CONTROL - 3.2%
Ogden Corp. 800 20,800
Waste Management, Inc. 3,372 168,389
189,189
RAILROADS - 2.7%
Bombardier, Inc. Class B 1,600 23,822
Burlington Northern Santa Fe 2,400 83,100
Corp.
Canadian National Railway Co. 1,000 53,004
159,926
SERVICES - 1.1%
Ecolab, Inc. 1,700 65,875
SHIP BUILDING & REPAIR - 1.3%
Avondale Industries, Inc. 1,000 31,625
General Dynamics Corp. 800 46,500
78,125
TEXTILES & APPAREL - 2.1%
Shaw Industries, Inc. 5,700 120,769
Unifi, Inc. 400 6,675
127,444
TRUCKING & FREIGHT - 0.7%
CNF Transportation, Inc. 300 13,313
Expeditors International of 300 13,763
Washington, Inc.
USFreightways Corp. 400 13,950
41,026
TOTAL COMMON STOCKS 5,632,737
(Cost $5,118,023)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.1%
Sealed Air Corp. Series A, 142 $ 7,544
$2.00 (Cost $6,266)
CASH EQUIVALENTS - 5.3%
Taxable Central Cash Fund (b) 314,906 314,906
(Cost $314,906)
TOTAL INVESTMENT IN $ 5,955,187
SECURITIES - 100%
(Cost $5,439,195)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $5,441,194. Net unrealized appreciation
aggregated $513,993, of which $938,677 related to appreciated
investment securities and $424,684 related to depreciated investment
securities.
ADVISOR CYCLICAL INDUSTRIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 5,955,187
value (cost $5,439,195) -
See accompanying schedule
Receivable for investments 18,189
sold
Receivable for fund shares 23,102
sold
Dividends receivable 4,220
Interest receivable 1,628
Receivable from investment 5,771
adviser for expense
reductions
TOTAL ASSETS 6,008,097
LIABILITIES
Payable to custodian bank $ 437,516
Payable for investments 5,250
purchased
Payable for fund shares 869
redeemed
Distribution fees payable 2,192
Other payables and accrued 18,873
expenses
TOTAL LIABILITIES 464,700
NET ASSETS $ 5,543,397
Net Assets consist of:
Paid in capital $ 5,247,481
Accumulated net investment (4,220)
loss
Accumulated undistributed net (215,859)
realized gain loss on
investments and foreign
currency transactions
Net unrealized appreciation 515,995
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 5,543,397
CALCULATION OF MAXIMUM $12.62
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($550,443 (divided by)
43,600 shares)
Maximum offering price per $13.39
share (100/94.25 of
$12.62)
CLASS T: NET ASSET VALUE $12.58
and redemption price per
share ($2,540,677 (divided
by) 201,905 shares)
Maximum offering price per $13.04
share (100/96.50 of
$12.58)
CLASS B: NET ASSET VALUE $12.46
and offering price per
share ($872,799 (divided by)
70,063 shares) A
CLASS C: NET ASSET VALUE $12.48
and offering price per
share ($268,556 (divided by)
21,518 shares) A
INSTITUTIONAL CLASS: NET $12.74
ASSET VALUE, offering price
and redemption price per
share ($1,310,922
(divided by) 102,908 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 33,429
Dividends
Interest 12,357
TOTAL INCOME 45,786
EXPENSES
Management fee $ 16,110
Transfer agent fees 9,827
Distribution fees 12,530
Accounting fees and expenses 30,006
Non-interested trustees' 10
compensation
Custodian fees and expenses 2,534
Registration fees 41,374
Audit 14,405
Legal 65
Miscellaneous 17
Total expenses before 126,878
reductions
Expense reductions (76,872) 50,006
NET INVESTMENT INCOME (LOSS) (4,220)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (213,481)
Foreign currency transactions 94 (213,387)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 124,525
Assets and liabilities in 4 124,529
foreign currencies
NET GAIN (LOSS) (88,858)
NET INCREASE (DECREASE) IN $ (93,078)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (4,220) $ (19,026)
income (loss)
Net realized gain (loss) (213,387) 519,808
Change in net unrealized 124,529 (358,431)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (93,078) 142,351
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (287,985) (348,447)
from net realized gains
Share transactions - net (30,584) 1,857,245
increase (decrease)
Redemption fees 2,286 8,921
TOTAL INCREASE (DECREASE) (409,361) 1,660,070
IN NET ASSETS
NET ASSETS
Beginning of period 5,952,758 4,292,688
End of period (including $ 5,543,397 $ 5,952,758
accumulated net investment
loss of $4,220)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.56 $ 13.80 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.03) (.01)
D
Net realized and unrealized (.27) .76 3.89
gain (loss)
Total from investment (.27) .73 3.88
operations
Less Distributions
From net investment income - - (.01)
From net realized gain (.68) (.99) (.08)
Total distributions (.68) (.99) (.09)
Redemption fees added to paid .01 .02 .01
in capital
Net asset value, end of period $ 12.62 $ 13.56 $ 13.80
TOTAL RETURN B, C (1.03)% 6.05% 39.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 550 $ 471 $ 365
(000 omitted)
Ratio of expenses to average 1.66% A, F 1.75% F 1.75% A, F
net assets
Ratio of expenses to average 1.62% A, G 1.75% 1.73% A, G
net assets after expense
reductions
Ratio of net investment .07% A (.22)% (.09)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.51 $ 13.77 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.01) (.06) (.04)
D
Net realized and unrealized (.26) .77 3.89
gain (loss)
Total from investment (.27) .71 3.85
operations
Less Distributions
From net investment income - - (.01)
From net realized gain (.66) (.99) (.08)
Total distributions (.66) (.99) (.09)
Redemption fees added to paid .00 .02 .01
in capital
Net asset value, end of period $ 12.58 $ 13.51 $ 13.77
TOTAL RETURN B, C (1.14)% 5.91% 38.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,541 $ 2,973 $ 1,920
(000 omitted)
Ratio of expenses to average 1.92% A, F 2.00% F 2.00% A, F
net assets
Ratio of expenses to average 1.88% A, G 2.00% 1.97% A, G
net assets after expense
reductions
Ratio of net investment (.21)% A (.47)% (.37)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.40 $ 13.75 $ 11.56
period
Income from Investment
Operations
Net investment income (loss) (.04) (.14) (.06)
D
Net realized and unrealized (.26) .76 2.25
gain (loss)
Total from investment (.30) .62 2.19
operations
Less Distributions
From net realized gain (.65) (.99) -
Redemption fees added to paid .01 .02 -
in capital
Net asset value, end of period $ 12.46 $ 13.40 $ 13.75
TOTAL RETURN B, C (1.32)% 5.23% 18.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 873 $ 985 $ 252
(000 omitted)
Ratio of expenses to average 2.41% A, F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.38% A, G 2.50% 2.45% A, G
net assets after expense
reductions
Ratio of net investment (.69)% A (1.03)% (1.11)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 13.45 $ 12.54
period
Income from Investment
Operations
Net investment income (loss) (.04) (.11)
D
Net realized and unrealized (.27) 1.39
gain (loss)
Total from investment (.31) 1.28
operations
Less Distributions
From net realized gain (.67) (.38)
Redemption fees added to paid .01 .01
in capital
Net asset value, end of period $ 12.48 $ 13.45
TOTAL RETURN B, C (1.36)% 10.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 269 $ 165
(000 omitted)
Ratio of expenses to average 2.40% A, F 2.50% A, F
net assets
Ratio of expenses to average 2.36% A, G 2.50% A
net assets after expense
reductions
Ratio of net investment (.66)% A (1.06)% A
income (loss) to average net
assets
Portfolio turnover 111% A 100%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 13.68 $ 13.84 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .02 .01 H .03
D
Net realized and unrealized (.27) .75 3.91
gain (loss)
Total from investment (.25) .76 3.94
operations
Less Distributions
From net investment income - - (.02)
From net realized gain (.70) (.95) (.08)
Total distributions (.70) (.95) (.10)
Redemption fees added to paid .01 .03 -
in capital
Net asset value, end of period $ 12.74 $ 13.68 $ 13.84
TOTAL RETURN B, C (.84)% 6.32% 39.64%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,311 $ 1,360 $ 1,756
(000 omitted)
Ratio of expenses to average 1.41% A, F 1.50% F 1.50% A, F
net assets
Ratio of expenses to average 1.38% A, G 1.50% 1.48% A, G
net assets after expense
reductions
Ratio of net investment .30% A .04% .25% A
income (loss) to average net
assets
Portfolio turnover 111% A 100% 155% A
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 (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 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 January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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 net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $3,119,658 and $2,893,477, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 597 $ 185
CLASS T 6,733 309
CLASS B 4,139 3,245
CLASS C 1,061 989
$ 12,530 $ 4,728
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 1,011 $ 465
CLASS T 3,270 730
CLASS B 6,044 6,044 *
CLASS C 209 209 *
$ 10,534 $ 7,448
* 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 $ 976 .41*
CLASS T 5,044 .38*
CLASS B 1,866 .45*
CLASS C 706 .67*
INSTITUTIONAL CLASS 1,235 .20*
$ 9,827
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $526 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.75 - 1.50% $ 6,750
CLASS T 2.00 - 1.75% 37,466
CLASS B 2.50 - 2.25% 11,883
CLASS C 2.50 - 2.25% 3,256
INSTITUTIONAL CLASS 1.50 - 1.25% 16,533
$ 75,888
Effective December 1, 1998, Class A, Class T, Class B, Class C and the
Institutional Class expense limitations were changed to 1.50%, 1.75%,
2.25%, 2.25%, and 1.25% of each class' average net assets,
respectively.
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 $984 under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 29% of
the total outstanding shares of the fund. In addition, one
unaffiliated shareholder was record owner of more than 10% of the
total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 23,684 $ 27,503
Class T 144,300 168,735
Class B 41,003 21,647
Class C 9,726 303
Institutional Class 69,272 130,259
Total $ 287,985 $ 348,447
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 9,303 10,882 $ 111,661
Reinvestment of distributions 2,195 2,142 23,537
Shares redeemed (2,624) (4,708) (31,840)
Net increase (decrease) 8,874 8,316 $ 103,358
CLASS T Shares sold 40,423 227,185 $ 493,944
Reinvestment of distributions 13,134 12,558 140,529
Shares redeemed (71,720) (159,076) (866,543)
Net increase (decrease) (18,163) 80,667 $ (232,070)
CLASS B Shares sold 20,224 60,410 $ 236,721
Reinvestment of distributions 3,632 1,702 38,541
Shares redeemed (27,280) (6,954) (319,758)
Net increase (decrease) (3,424) 55,158 $ (44,496)
CLASS C Shares sold 13,233 13,383 $ 158,861
Reinvestment of distributions 915 25 9,726
Shares redeemed (4,872) (1,166) (58,039)
Net increase (decrease) 9,276 12,242 $ 110,548
INSTITUTIONAL CLASS Shares 3,234 31,192 $ 36,348
sold
Reinvestment of distributions 6,212 10,114 67,154
Shares redeemed (5,902) (68,822) (71,426)
Net increase (decrease) 3,544 (27,516) $ 32,076
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 148,228
Reinvestment of distributions 27,217
Shares redeemed (63,873)
Net increase (decrease) $ 111,572
CLASS T Shares sold $ 3,069,729
Reinvestment of distributions 158,925
Shares redeemed (2,112,359)
Net increase (decrease) $ 1,116,295
CLASS B Shares sold $ 820,607
Reinvestment of distributions 21,404
Shares redeemed (94,508)
Net increase (decrease) $ 747,503
CLASS C Shares sold $ 179,797
Reinvestment of distributions 303
Shares redeemed (16,290)
Net increase (decrease) $ 163,810
INSTITUTIONAL CLASS Shares $ 426,137
sold
Reinvestment of distributions 129,319
Shares redeemed (837,391)
Net increase (decrease) $ (281,935)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - INST -2.15% 15.47% 87.70%
CL
S&P 500 15.02% 32.49% 103.54%
GS Financial Services -3.46% 12.99% 98.01%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Financial Services Index - a
market capitalization-weighted index of 271 stocks designed to measure
the performance of companies in the financial services sector. Issues
in the index include financial institutions providing banking
services, brokerage firms and asset managers, insurance companies, and
real estate holding and development companies. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV FINANCIAL - INST 15.47% 29.84%
CL
S&P 500 32.49% 34.28%
GS Financial Services 12.99% 32.76%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 14969.08 15136.87 16002.19
1998/09/30 15496.48 16106.54 16320.87
1998/10/31 16940.32 17416.64 18092.98
1998/11/30 17932.27 18472.27 19193.75
1998/12/31 18428.25 19536.64 19625.39
1999/01/29 18769.92 20353.66 19800.64
IMATRL PRASUN SHR__CHT 19990131 19990226 103824 R00000000000032
</TABLE>
$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
January 31, 1999, the value of the investment would have grown to
$18,770 - an 87.70% 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 $20,354 - a 103.54%
increase. If $10,000 was invested in the Goldman Sachs Financial
Services Industries Index, it would have grown to $19,801 - a 98.01%
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 FINANCIAL SERVICES FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF ROBER EWING)
An interview with
Robert Ewing, Portfolio Manager of Fidelity Advisor Financial Services
Fund
Q. HOW DID THE FUND PERFORM, BOB?
A. It performed well when compared to financial services indexes, but
it lagged the overall market during a difficult period for financial
stocks. For the six-month period that ended January 31, 1999, the
fund's Institutional Class shares returned -2.15%. During the same
period, the Standard & Poor's 500 Index had a return of 15.02% while
the Goldman Sachs Financial Services Index - an index of 271 stocks
designed to measure the performance of companies in the financial
services sector - had a return of -3.46%. For the 12-month period that
ended January 31, 1999, the fund's Institutional Class returned
15.47%. The S&P 500 index had a return of 32.49% for the 12-month
period, while the Goldman Sachs Financial Services Index had a return
of 12.99%.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT FOR FINANCIAL
STOCKS DURING THE SIX-MONTH PERIOD?
A. It was an unusual, volatile period, starting in August amidst
global financial instability that culminated with the Russian
government defaulting on some of its bonds. This was an unexpected
event and it occurred when many financial institutions were heavily
leveraged - they were using borrowed money to invest. When financial
companies use borrowed money, any change in the value of assets they
hold has a levered effect on the value of the business. In reaction to
the Russian default, investors moved away from any risky asset class,
including stocks and corporate bonds. The stocks of financial services
suffered even more than stocks in general. However, when Federal
Reserve Chairman Alan Greenspan announced on September 29 the first in
a series of three cuts in short-term interest rates, the capital
markets calmed down and the markets rebounded. Financial services
stocks, which had fallen more sharply than the overall market, at
first recovered more quickly than the market, but have since lagged it
slightly. At the end of the period, the markets showed more stability.
The Brazilian currency devaluation in January, for example, did not
have the impact of the Russian default. The Brazilian announcement was
not as much of a surprise, and there was a lot less leverage in the
financial system.
Q. DID THE VOLATILITY CAUSE ANY CHANGES IN YOUR STRATEGIES?
A. The environment actually reinforced our belief in many of the
strategies we had been implementing. Going into the summer, we were
emphasizing companies with strong consumer focus and domestic
orientations. We also were emphasizing non-lenders such as life
insurance companies.
Q. WHAT WERE SOME OF THE INVESTMENTS THAT CONTRIBUTED TO PERFORMANCE,
AND WHAT WERE SOME OF THE DISAPPOINTMENTS?
A. Providian Financial did exceptionally well. This company increased
both its credit card business and its fee income. Citigroup had its
ups and downs, but generally helped the fund as the new company,
formed by the merger of Citicorp and Travelers, took shape and
improved earnings. Another good performer was Freddie Mac, the
mortgage company. It was a great environment for mortgage companies as
lower interest rates stimulated refinancings and the earnings of
mortgage companies. A disappointment was U.S. Bancorp, which failed to
meet its earnings targets. At this point, it is not clear whether this
was because of a poor environment or because its corporate strategy,
which emphasizes efficiency, made it difficult to grow revenues.
Several regional banks were disappointing performers. Many of these
banks, after completing mergers, found it harder than planned to cut
costs and to increase revenues. Also disappointing were the real
estate investment trusts, even though they generally met earnings
expectations. I suspect the market questioned the future value of
commercial real estate.
Q. WHAT IS YOUR OUTLOOK FOR FINANCIAL STOCKS, BOB?
A. 1999 will be very interesting. The backdrop is great for financial
stocks, because they have been trading with price-to-earnings ratios
only about two-thirds as high as the overall stock market.
Effectively, they are trading at a 33% discount to the S&P 500. And
yet, there is a very good chance that financial companies will
increase their earnings faster than the overall S&P 500, perhaps 11%
to 12% in 1999. They still are increasing their assets. Loan growth is
about 5% to 6%, and the quality of loans is still acceptable. Concerns
would arise, however, if the Brazilian troubles spread to other
countries or if general global economic problems pressure U.S.
economic growth. If the U.S. economy starts to slow down, credit
losses could increase, which would be a bad development for financial
companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. tHE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
(CHECKMARK)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$238 million
MANAGER: Robert Ewing, since 1998; joined
Fidelity in 1990
ADVISOR FINANCIAL SERVICES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Citigroup, Inc. 5.8
American International Group, 4.9
Inc.
BankAmerica Corp. 4.7
American Express Co. 4.4
Bank One Corp. 4.2
Wells Fargo & Co. 4.0
Chase Manhattan Corp. 3.8
Providian Financial Corp. 3.7
Household International, Inc. 3.3
Freddie Mac 3.3
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 29.2
Row: 1, Col: 2, Value: 24.4
Row: 1, Col: 3, Value: 16.9
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 4.7
Row: 1, Col: 6, Value: 17.1
Banks 29.2%
Credit & Other Finance 24.4%
Insurance 16.9%
Federal Sponsored Credit 7.7%
Securities Industry 5.0%
All Others 16.8%*
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR FINANCIAL SERVICES FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.1%
SHARES VALUE (NOTE 1)
BANKS - 29.2%
AmSouth Bancorp. 59,500 $ 2,621,719
Bank of New York Co., Inc. 170,960 6,069,080
Bank One Corp. 189,182 9,908,407
BankAmerica Corp. 169,104 11,308,830
BB&T Corp. 16,000 612,000
Cathay Bancorp, Inc. 10,000 373,750
Chase Manhattan Corp. 117,000 9,001,688
Comerica, Inc. 51,750 3,231,141
First Union Corp. 14,137 743,960
Hanmi Bank (a) 5,450 79,025
M&T Bank Corp. 2,500 1,250,000
Marshall & Ilsley Corp. 19,500 1,155,375
North Fork Bancorp., Inc. 26,250 551,250
SunTrust Banks, Inc. 10,000 704,375
U.S. Bancorp 206,450 6,954,784
Wachovia Corp. 24,405 2,162,893
Wells Fargo & Co. 274,000 9,572,875
Westamerica Bancorp. 50,000 1,759,375
Zions Bancorp 30,000 1,740,000
69,800,527
CREDIT & OTHER FINANCE - 24.4%
American Express Co. 102,300 10,524,113
Associates First Capital 166,200 6,741,488
Corp. Class A
Citigroup, Inc. 248,662 13,940,605
Equitable Companies (The), 40,000 2,790,000
Inc.
Firstcity Financial Corp. (a) 35,800 523,575
FIRSTPLUS Financial Group, 10,000 24,375
Inc. (a)
Fleet Financial Group, Inc. 89,600 3,970,400
Household International, Inc. 179,657 7,893,679
MBNA Corp. 107,750 3,010,266
Providian Financial Corp. 87,607 8,831,881
58,250,382
FEDERAL SPONSORED CREDIT - 7.7%
Fannie Mae 88,435 6,444,701
Freddie Mac 127,220 7,887,640
SLM Holding Corp. 89,500 3,943,594
18,275,935
INSURANCE - 16.9%
ACE Ltd. 20,000 560,000
Aegon NV (Reg.) ADR 8,258 914,057
AFLAC, Inc. 53,400 2,289,525
Allmerica Financial Corp. 12,400 668,825
Allstate Corp. 58,570 2,200,036
Ambac Financial Group, Inc. 15,100 903,169
American Bankers Insurance 20,000 920,000
Group, Inc.
American International Group, 112,880 11,619,585
Inc.
Berkshire Hathaway, Inc.:
Class A (a) 60 3,900,000
Class B (a) 24 51,600
SHARES VALUE (NOTE 1)
Blanch E.W. Holdings, Inc. 18,000 $ 1,020,375
Capital Re Corp. 16,000 291,000
Executive Risk, Inc. 5,000 234,688
Hartford Financial Services 59,200 3,074,700
Group, Inc.
Hartford Life, Inc. Class A 12,000 676,500
HCC Insurance Holdings, Inc. 23,000 447,063
Marsh & McLennan Companies, 36,250 2,279,219
Inc.
MBIA, Inc. 11,700 767,081
Nationwide Financial 14,500 695,094
Services, Inc. Class A
PMI Group, Inc. 10,500 450,188
Progressive Corp. 9,200 1,149,425
Reliastar Financial Corp. 20,087 832,355
RenaissanceRe Holdings Ltd. 15,000 502,500
Torchmark Corp. 50,000 1,640,625
Travelers Property Casualty 30,000 864,375
Corp. Class A
UICI (a) 60,200 1,298,063
40,250,048
REAL ESTATE INVESTMENT TRUSTS
- - 4.1%
AMRESCO Capital Trust, Inc. 50,000 481,250
Apartment Investment & 37,400 1,397,825
Management Co. Class A
Crescent Real Estate Equities 48,000 1,017,000
Co.
Duke Realty Investments, Inc. 49,500 1,138,500
Equity Office Properties Trust 30,000 765,000
Equity Residential Properties 22,500 915,469
Trust (SBI)
Mack-Cali Realty Corp. 20,000 597,500
Ocwen Asset Investment Corp. 141,200 697,175
Public Storage, Inc. 42,500 1,081,094
Simon Property Group, Inc. 30,000 789,375
Starwood Hotels & Resorts 34,000 850,000
Worldwide, Inc.
9,730,188
SAVINGS & LOANS - 3.8%
Astoria Financial Corp. 8,000 366,000
Charter One Financial, Inc. 61,750 1,729,000
Dime Bancorp, Inc. 58,500 1,418,625
Golden State Bancorp, Inc. 51,660 965,396
Golden State Bancorp, Inc. 26,660 112,472
warrants 12/31/99 (a)
Washington Mutual, Inc. 104,520 4,389,840
8,981,333
SECURITIES INDUSTRY - 5.0%
Bear Stearns Companies, Inc. 50,000 2,356,250
E Trade Group, Inc. (a) 7,000 772,625
Investors Group, Inc. 50,000 823,849
Lehman Brothers Holdings, 51,000 2,789,063
Inc.
Merrill Lynch & Co., Inc. 8,300 630,800
Morgan Stanley, Dean Witter & 25,000 2,170,313
Co.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - CONTINUED
Schwab (Charles) Corp. 5,000 $ 351,563
Waddell & Reed Financial, Inc.:
Class A 87,845 1,855,726
Class B 12,245 256,380
12,006,569
TOTAL COMMON STOCKS 217,294,982
(Cost $190,832,144)
CASH EQUIVALENTS - 8.9%
Taxable Central Cash Fund (b) 21,346,950 21,346,950
(Cost $21,346,950)
TOTAL INVESTMENT IN $ 238,641,932
SECURITIES - 100%
(Cost $212,179,094)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $212,245,411. Net unrealized appreciation
aggregated $26,396,521, of which $35,374,164 related to appreciated
investment securities and $8,977,643 related to depreciated investment
securities.
ADVISOR FINANCIAL SERVICES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 238,641,932
value (cost $212,179,094) -
See accompanying schedule
Receivable for fund shares 653,947
sold
Dividends receivable 266,051
Interest receivable 78,109
TOTAL ASSETS 239,640,039
LIABILITIES
Payable for fund shares $ 1,099,548
redeemed
Accrued management fee 113,508
Distribution fees payable 130,227
Other payables and accrued 91,634
expenses
TOTAL LIABILITIES 1,434,917
NET ASSETS $ 238,205,122
Net Assets consist of:
Paid in capital $ 219,253,206
Undistributed net investment 351,353
income
Accumulated undistributed net (7,862,299)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 26,462,862
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 238,205,122
CALCULATION OF MAXIMUM $16.95
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($22,401,702 (divided
by) 1,321,297 shares)
Maximum offering price per $17.98
share (100/94.25 of $16.95)
CLASS T: NET ASSET VALUE $16.90
and redemption price per
share ($109,347,260 (divided
by) 6,470,164 shares)
Maximum offering price per $17.51
share (100/96.50 of $16.90)
CLASS B: NET ASSET VALUE $16.74
and offering price per
share ($73,847,373 (divided
by) 4,410,994 shares) A
CLASS C: NET ASSET VALUE $16.76
and offering price per
share ($23,867,117 (divided
by) 1,423,648 shares) A
INSTITUTIONAL CLASS: NET $17.03
ASSET VALUE, offering price
and redemption price per
share ($8,741,670
(divided by) 513,401 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,666,881
Dividends
Interest 472,510
TOTAL INCOME 2,139,391
EXPENSES
Management fee $ 622,123
Transfer agent fees 298,613
Distribution fees 703,998
Accounting fees and expenses 60,884
Non-interested trustees' 391
compensation
Custodian fees and expenses 4,831
Registration fees 62,933
Audit 14,590
Legal 2,629
Miscellaneous 553
Total expenses before 1,771,545
reductions
Expense reductions (9,286) 1,762,259
NET INVESTMENT INCOME 377,132
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (7,702,803)
Foreign currency transactions 14,087 (7,688,716)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,499,355
Assets and liabilities in 213 1,499,568
foreign currencies
NET GAIN (LOSS) (6,189,148)
NET INCREASE (DECREASE) IN $ (5,812,016)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 377,132 $ 420,029
income
Net realized gain (loss) (7,688,716) 15,277,202
Change in net unrealized 1,499,568 12,949,534
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,812,016) 28,646,765
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (262,092) (245,431)
From net investment income
From net realized gain (12,813,576) (1,447,197)
TOTAL DISTRIBUTIONS (13,075,668) (1,692,628)
Share transactions - net 25,344,232 134,897,670
increase (decrease)
Redemption fees 55,249 68,426
TOTAL INCREASE (DECREASE) 6,511,797 161,920,233
IN NET ASSETS
NET ASSETS
Beginning of period 231,693,325 69,773,092
End of period (including $ 238,205,122 $ 231,693,325
undistributed net investment
income of $351,353 and
$262,870, respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.74 $ 15.11 $ 10.00
period
Income from Investment
Operations
Net investment income D .06 .11 .06
Net realized and unrealized (.78) 3.80 5.06
gain (loss)
Total from investment (.72) 3.91 5.12
operations
Less Distributions
From net investment income (.05) (.06) (.01)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.07) (.29) (.02)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 16.95 $ 18.74 $ 15.11
TOTAL RETURN B, C (2.42)% 26.32% 51.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 22,402 $ 21,907 $ 6,275
(000 omitted)
Ratio of expenses to average 1.24% A 1.32% 1.75% A, F
net assets
Ratio of expenses to average 1.23% A, G 1.30% G 1.73% A, G
net assets after expense
reductions
Ratio of net investment .80% A .63% .55% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.66 $ 15.07 $ 10.00
period
Income from Investment
Operations
Net investment income D .04 .07 .04
Net realized and unrealized (.76) 3.78 5.04
gain (loss)
Total from investment (.72) 3.85 5.08
operations
Less Distributions
From net investment income (.02) (.04) (.01)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.04) (.27) (.02)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 16.90 $ 18.66 $ 15.07
TOTAL RETURN B, C (2.48)% 25.96% 50.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 109,347 $ 118,608 $ 52,003
(000 omitted)
Ratio of expenses to average 1.56% A 1.52% 1.94% A
net assets
Ratio of expenses to average 1.55% A, F 1.50% F 1.91% A, F
net assets after expense
reductions
Ratio of net investment .48% A .44% .37% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.52 $ 15.04 $ 12.56
period
Income from Investment
Operations
Net investment income (loss) .00 (.02) (.02)
D
Net realized and unrealized (.75) 3.76 2.50
gain (loss)
Total from investment (.75) 3.74 2.48
operations
Less Distributions
From net investment income (.01) (.04) -
From net realized gain (1.02) (.23) -
Total distributions (1.03) (.27) -
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 16.74 $ 18.52 $ 15.04
TOTAL RETURN B, C (2.68)% 25.29% 19.75%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 73,847 $ 65,926 $ 7,737
(000 omitted)
Ratio of expenses to average 1.99% A 2.06% 2.50% A, F
net assets
Ratio of expenses to average 1.98% A, G 2.04% G 2.49% A, G
net assets after expense
reductions
Ratio of net investment .05% A (.14)% (.37)% A
income (loss) to average net
assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 18.56 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) .01 (.03)
D
Net realized and unrealized (.77) 3.57
gain (loss)
Total from investment (.76) 3.54
operations
Less Distributions
From net investment income (.02) (.02)
From net realized gain (1.02) (.21)
Total distributions (1.04) (.23)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 16.76 $ 18.56
TOTAL RETURN B, C (2.72)% 23.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 23,867 $ 19,983
(000 omitted)
Ratio of expenses to average 1.96% A 2.09% A
net assets
Ratio of expenses to average 1.95% A, F 2.07% A, F
net assets after expense
reductions
Ratio of net investment .09% A (.22)% A
income (loss) to average net
assets
Portfolio turnover 41% A 54%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 18.80 $ 15.14 $ 10.00
period
Income from Investment
Operations
Net investment income D .09 .14 .10
Net realized and unrealized (.77) 3.79 5.06
gain (loss)
Total from investment (.68) 3.93 5.16
operations
Less Distributions
From net investment income (.07) (.05) (.02)
From net realized gain (1.02) (.23) (.01)
Total distributions (1.09) (.28) (.03)
Redemption fees added to paid .00 .01 .01
in capital
Net asset value, end of period $ 17.03 $ 18.80 $ 15.14
TOTAL RETURN B, C (2.15)% 26.39% 51.78%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,742 $ 5,270 $ 3,758
(000 omitted)
Ratio of expenses to average .94% A 1.14% 1.50% A, F
net assets
Ratio of expenses to average .93% A, G 1.13% G 1.47% A, G
net assets after expense
reductions
Ratio of net investment 1.14% A .81% .85% A
income to average net assets
Portfolio turnover 41% A 54% 26% A
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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), 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
2. OPERATING POLICIES- CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $53,677,802 and $39,700,947, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 25,399 $ 31
CLASS T 253,743 268
CLASS B 324,905 243,776
CLASS C 99,952 94,200
$ 703,999 $ 338,275
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
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 76,622 $ 29,151
CLASS T 110,880 38,434
CLASS B 136,035 136,035 *
CLASS C 9,357 9,357 *
$ 332,894 $ 212,977
* 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 $ 26,319 .26 *
CLASS T 164,065 .33 *
CLASS B 81,965 .25 *
CLASS C 21,538 .22 *
INSTITUTIONAL CLASS 4,726 .20 *
$ 298,613
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $7,715 for the period.
5. EXPENSE REDUCTIONS.
FMR 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 $9,215 under this arrangement.
In addition, the fund has entered into an arrangements 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 $71 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY 31,
1999 YEAR ENDED
JULY 31,
1998 A
FROM NET INVESTMENT INCOME
Class A $ 59,899 $ 32.929
Class T 123,799 169,652
Class B 37,278 31,387
Class C 22,247 990
Institutional Class 18,869 10,473
Total $ 262,092 $ 245,431
FROM NET REALIZED GAIN
Class A $ 1,222,059 $ 134,384
Class T 6,313,742 1,003,813
Class B 3,868,227 249,387
Class C 1,134,605 10,862
Institutional Class 274,943 48,751
Total $ 12,813,576 $ 1,447,197
$ 13,075,668 $ 1,692,628
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 351,412 934,476 $ 5,596,332
Reinvestment of distributions 85,856 9,387 1,165,066
Shares redeemed (285,212) (189,881) (4,471,888)
Net increase (decrease) 152,056 753,982 $ 2,289,510
CLASS T Shares sold 1,524,704 4,223,164 $ 24,000,312
Reinvestment of distributions 443,615 66,953 6,006,543
Shares redeemed (1,852,874) (1,386,617) (28,849,755)
Net increase (decrease) 115,445 2,903,500 $ 1,157,100
CLASS B Shares sold 1,268,572 3,302,648 $ 19,713,502
Reinvestment of distributions 235,778 13,682 3,166,468
Shares redeemed (652,552) (271,676) (10,024,161)
Net increase (decrease) 851,798 3,044,654 $ 12,855,809
CLASS C Shares sold 501,089 1,117,558 $ 7,778,122
Reinvestment of distributions 57,369 710 771,613
Shares redeemed (211,490) (41,588) (3,335,563)
Net increase (decrease) 346,968 1,076,680 $ 5,214,172
INSTITUTIONAL CLASS Shares 286,145 170,926 $ 4,689,294
sold
Reinvestment of distributions 18,075 3,344 245,820
Shares redeemed (71,130) (142,257) (1,107,473)
Net increase (decrease) 233,090 32,013 $ 3,827,641
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 16,203,034
Reinvestment of distributions 147,404
Shares redeemed (3,281,384)
Net increase (decrease) $ 13,069,054
CLASS T Shares sold $ 71,654,298
Reinvestment of distributions 1,051,227
Shares redeemed (23,635,629)
Net increase (decrease) $ 49,069,896
CLASS B Shares sold $ 57,223,474
Reinvestment of distributions 213,556
Shares redeemed (4,668,237)
Net increase (decrease) $ 52,768,793
CLASS C Shares sold $ 19,997,372
Reinvestment of distributions 11,224
Shares redeemed (764,009)
Net increase (decrease) $ 19,244,587
INSTITUTIONAL CLASS Shares $ 2,901,545
sold
Reinvestment of distributions 52,667
Shares redeemed (2,208,872)
Net increase (decrease) $ 745,340
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - 15.77% 35.07% 107.11%
INST CL
S&P 500 15.02% 32.49% 103.54%
GS Health Care 12.31% 33.56% 114.13%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Health Care Index - a market
capitalization-weighted index of 93 stocks designed to measure the
performance of companies in the health care sector. Issues in the
index include providers of health care related services including
long-term care and hospital facilities, health care management
organizations and continuing care services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV HEALTH CARE - 35.07% 35.25%
INST CL
S&P 500 32.49% 34.28%
GS Health Care 33.56% 37.14%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 15729.36 15136.87 16554.54
1998/09/30 17524.28 16106.54 18419.75
1998/10/31 18040.67 17416.64 19244.11
1998/11/30 18974.57 18472.27 20271.43
1998/12/31 20282.02 19536.64 21491.50
1999/01/29 20710.52 20353.66 21413.35
IMATRL PRASUN SHR__CHT 19990131 19990226 105053 R00000000000032
</TABLE>
$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
January 31, 1999, the value of the investment would have grown to
$20,711 - a 107.11% 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 $20,354 - a 103.54%
increase. If $10,000 was invested in the Goldman Sachs Health Care
Index, it would have grown to $21,413 - a 114.13% 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 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. Very well. For the six months that ended January 31, 1999, the
fund's Institutional Class shares returned 15.77%. This return
outpaced the 15.02% return for the Standard & Poor's 500 Index and the
Goldman Sachs Health Care Index - an index of 93 stocks designed to
measure the performance of companies in the health care sector - which
returned 12.31% over the same period. For the 12 months that ended
January 31, 1999, the fund's Institutional Class shares returned
35.07%. In comparison, the S&P 500 and the Goldman Sachs index
returned 32.49% and 33.56%, respectively.
Q. WHAT WERE THE MAIN FACTORS CONTRIBUTING TO THE FUND'S
STRONG PERFORMANCE?
A. Drug stocks posted solid gains during most of the period due to
strong product pipelines, increased merger activity and robust
domestic sales. During periods of market weakness, I took the
opportunity to increase the fund's asset weightings in
pharmaceuticals, biotechnology and medical equipment. My strategy of
overweighting the fund's assets in these sectors relative to the
Goldman Sachs index worked out well. While the fund was overweighted
in pharmaceutical stocks relative to the benchmark indexes, total
return received the biggest boost from a number of top holdings, such
as Eli Lilly, Warner-Lambert and Schering-Plough. Performance also was
helped by the fund's underweighted position relative to the Goldman
Sachs benchmark in HMOs and hospitals, which continued to struggle
during the period.
Q. WHAT WAS YOUR RATIONALE BEHIND THIS DECISION TO SIGNIFICANTLY
INCREASE THE FUND'S HOLDINGS IN PHARMACEUTICAL, BIOTECHNOLOGY AND
MEDICAL EQUIPMENT COMPANIES?
A. Similar to what I mentioned in the annual report six months ago, I
did not foresee any major changes in the market's favorable growth
outlook for these types of companies. As a result, I continued to take
a positive long-term view on these sectors. The major factors for the
bullish outlook were an aging population with increasing demand for
health care products and an increasing supply of innovative, effective
and safe new drugs. Most importantly, however, these companies
produced strong corporate earnings combined with a favorable business
outlook.
Q. YOU MENTIONED ELI LILLY, WARNER-LAMBERT AND SCHERING-PLOUGH AS
MAJOR CONTRIBUTORS TO THE FUND'S PERFORMANCE. WHAT WERE THE STORIES
HERE?
A. These stocks performed very well. But first, I would like to talk
about a stock you didn't mention - Amgen. While it was not as large of
a holding as the others you asked about, it provided a significant
boost to total return. I liked Amgen because it has some very
successful products and, at one point, it traded at a significant
discount to other health care companies. The stock soared after an
arbitration panel gave the company all rights to a new version of
Epogen, a popular anemia drug. Concerning the other stocks you
mentioned, Eli Lilly 's stock rallied as the company kept generic drug
companies at bay by developing a new version of its blockbuster
anti-depressant drug, Prozac. Warner-Lambert shares appreciated as the
company reported increased earnings driven by the continued success of
its cholesterol treatment, Lipitor. Schering-Plough's stock continued
to benefit from strong sales of its major product - Claritin - and
upward earnings estimates.
Q. WHAT STOCKS HURT TOTAL RETURN?
A. Monsanto, a diversified chemicals company, hurt fund performance
when its proposed merger with American Home Products fell apart. While
the fund was underweighted in HMOs and health care service providers,
such as Medpartners and Foundation Health Systems, this sector
continued to detract from the fund's total return as investors
remained uncertain about the group's profitability outlook and rising
medical costs. The fund no longer held positions in Monsanto or
Medpartners at the end of the period.
Q. WHAT'S YOUR OUTLOOK, BESO?
A. I still see a strong business cycle ahead for pharmaceutical
companies, especially those drug companies with dominant market
presence and a strong pipeline of profitable products. I will continue
to focus on the pharmaceutical companies because I believe they have
the best prospects for long-term sustainable market growth. As of the
end of the period, I also liked some of the companies that stand to
benefit from the strong pharmaceutical sector. For example, medical
research and development companies could benefit from the robust R&D
cycle and from the growing popularity of outsourcing drug research and
development.
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.
(CHECKMARK)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$426 million
MANAGER: Beso Sikharulidze, since 1997;
joined Fidelity in 1992
ADVISOR HEALTH CARE FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Lilly (Eli) & Co. 10.6
Merck & Co., Inc. 8.8
Warner-Lambert Co. 6.8
Schering-Plough Corp. 6.2
Bristol-Myers Squibb Co. 5.6
Medtronic, Inc. 5.1
Johnson & Johnson 4.5
Pfizer, Inc. 4.3
Amgen, Inc. 4.3
Baxter International, Inc. 3.8
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 60.4
Row: 1, Col: 2, Value: 24.5
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 1.3
Row: 1, Col: 6, Value: 18.4
Drugs & Pharmaceuticals 60.4%
Medical Equipment & Supplies 24.5%
Medical Facilities Management 3.9%
Drug Stores 1.5%
Electronic Instruments 1.3%
All Others 8.4%*
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR HEALTH CARE FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Pioneer Hi-Bred 53,800 $ 1,523,213
International, Inc.
COMPUTER SERVICES & SOFTWARE
- - 0.8%
IMS Health, Inc. 82,200 3,010,575
Medical Manager Corp. (a) 12,000 417,000
3,427,575
DRUG STORES - 1.5%
CVS Corp. 14,300 782,925
Walgreen Co. 86,600 5,412,500
6,195,425
DRUGS & PHARMACEUTICALS - 60.4%
Allergan, Inc. 15,200 1,168,500
ALZA Corp. Class A. (a) 6,600 333,713
American Home Products Corp. 170,500 10,006,219
Amgen, Inc. (a) 137,300 17,548,656
Andrx Corp. (a) 49,800 2,819,925
Biogen, Inc. (a) 30,100 2,957,325
Biomatrix, Inc. (a) 57,800 3,489,675
Bristol-Myers Squibb Co. 178,800 22,919,925
Chiron Corp. (a) 23,600 536,900
Elan Corp. PLC ADR (a) 33,400 2,254,500
Forest Laboratories, Inc. (a) 34,000 1,570,375
Genentech, Inc. (special) (a) 10,200 830,025
Genzyme Corp.:
(General Division) 49,100 2,675,950
(Molecular Oncology) (a) 2,074 5,574
Glaxo Wellcome PLC sponsored 57,600 3,909,600
ADR
Immunex Corp. (a) 10,000 1,561,250
Lilly (Eli) & Co. 465,300 43,592,792
MacroChem Corp. (a) 105,200 789,000
Medimmune, Inc. (a) 29,200 1,445,400
Merck & Co., Inc. 246,400 36,159,200
Novartis AG (Reg.) 1,775 3,331,731
PAREXEL International Corp. 20,900 543,400
(a)
Pfizer, Inc. 136,600 17,570,175
Pharmacia & Upjohn, Inc. 29,100 1,673,250
QLT PhotoTherapeutics, Inc. 8,900 357,484
(a)
Quintiles Transnational Corp. 37,100 1,919,925
(a)
Rhone-Poulenc SA sponsored 40,000 2,067,500
ADR Class A
Roche Holding AG 194 2,535,025
participation certificates
Schering-Plough Corp. 463,700 25,271,650
Sepracor, Inc. (a) 8,300 952,425
Shire Pharmaceuticals Group 83,050 1,754,431
PLC sponsored ADR (a)
SmithKline Beecham PLC ADR 10,100 684,906
Takeda Chemical Industries 15,000 534,702
Ltd.
Warner-Lambert Co. 387,900 28,001,531
SHARES VALUE (NOTE 1)
Watson Pharmaceuticals, Inc. 28,900 $ 1,578,663
(a)
Zonagen, Inc. (a) 73,500 2,002,875
247,354,177
ELECTRONIC INSTRUMENTS - 1.3%
Perkin-Elmer Corp. 12,500 1,188,281
Waters Corp. (a) 46,700 4,249,700
5,437,981
INSURANCE - 0.7%
Aetna, Inc. 100 9,013
CIGNA Corp. 20,300 1,672,213
Healthcare Recoveries, Inc. 78,200 1,251,200
(a)
2,932,426
MEDICAL EQUIPMENT & SUPPLIES
- - 24.5%
Abbott Laboratories 170,000 7,894,375
Allegiance Corp. 41,400 1,868,175
AmeriSource Health Corp. 21,000 1,627,500
Class A (a)
Ballard Medical Products 31,100 752,231
Bard (C.R.), Inc. 100 5,063
Bausch & Lomb, Inc. 44,500 2,731,188
Baxter International, Inc. 221,600 15,719,750
Becton, Dickinson & Co. 150,400 5,376,800
Bergen Brunswig Corp. Class A 71,000 1,988,000
Biomet, Inc. 24,900 911,963
Boston Scientific Corp. (a) 35,500 867,531
Cardinal Health, Inc. 97,535 7,211,494
Guidant Corp. 149,600 8,817,050
Johnson & Johnson 216,200 18,377,000
Mallinckrodt, Inc. 700 24,456
Medtronic, Inc. 261,314 20,823,459
Omnicare, Inc. 1,000 30,625
Sybron International, Inc. (a) 36,100 974,700
VISX, Inc. (a) 33,500 2,043,500
Wesley Jessen Visioncare, 99,700 2,143,550
Inc. (a)
100,188,410
MEDICAL FACILITIES MANAGEMENT
- - 3.9%
Concentra Managed Care, Inc. 37,900 435,850
(a)
Foundation Health Systems, 105,100 965,606
Inc. Class A (a)
Health Management Associates, 163,100 2,048,944
Inc. Class A (a)
Lincare Holdings, Inc. (a) 91,300 3,195,500
Orthodontic Centers of 106,000 2,027,250
America, Inc. (a)
PacifiCare Health Systems, 1,000 70,750
Inc. Class B (a)
Total Renal Care Holdings, 68,600 1,599,238
Inc. (a)
United HealthCare Corp. 40,300 1,803,425
Universal Health Services, 35,000 1,566,250
Inc. Class B (a)
Wellpoint Health Networks, 29,800 2,229,413
Inc. (a)
15,942,226
REAL ESTATE INVESTMENT TRUSTS
- - 0.8%
Meditrust Corp. unit 200,000 3,137,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.2%
Veterinary Centers of 50,700 $ 925,275
America, Inc.
TOTAL COMMON STOCKS 387,064,208
(Cost $311,741,552)
CASH EQUIVALENTS - 5.5%
Taxable Central Cash Fund (b) 22,743,081 22,743,081
(Cost $22,743,081)
TOTAL INVESTMENT IN $ 409,807,289
SECURITIES - 100%
(Cost $334,484,633)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $334,484,746. Net unrealized appreciation
aggregated $75,322,543, of which $80,014,763 related to appreciated
investment securities and $4,692,220 related to depreciated investment
securities.
ADVISOR HEALTH CARE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 409,807,289
value (cost $334,484,633) -
See accompanying schedule
Receivable for investments 13,268,648
sold
Receivable for fund shares 5,587,992
sold
Dividends receivable 132,836
Interest receivable 156,010
Other receivables 583
TOTAL ASSETS 428,953,358
LIABILITIES
Payable for investments $ 1,478,095
purchased
Payable for fund shares 621,994
redeemed
Accrued management fee 187,054
Distribution fees payable 211,380
Other payables and accrued 141,487
expenses
TOTAL LIABILITIES 2,640,010
NET ASSETS $ 426,313,348
Net Assets consist of:
Paid in capital $ 346,836,694
Accumulated net investment (525,341)
loss
Accumulated undistributed net 4,679,168
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 75,322,827
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 426,313,348
CALCULATION OF MAXIMUM $18.80
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($39,622,635 (divided
by) 2,107,411 shares)
Maximum offering price per $19.95
share (100/94.25 of $18.80)
CLASS T: NET ASSET VALUE $18.70
and redemption price per
share ($192,056,973 (divided
by) 10,268,786 shares)
Maximum offering price per $19.38
share (100/96.50 of $18.70)
CLASS B: NET ASSET VALUE $18.51
and offering price per
share ($126,961,758 (divided
by) 6,859,998 shares) A
CLASS C: NET ASSET VALUE $18.52
and offering price per
share ($49,703,373 (divided
by) 2,684,309 shares) A
INSTITUTIONAL CLASS: NET $18.85
ASSET VALUE, offering price
and redemption price per
share ($17,968,609
(divided by) 953,387 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,081,895
Dividends
Interest 746,694
TOTAL INCOME 1,828,589
EXPENSES
Management fee $ 853,642
Transfer agent fees 391,543
Distribution fees 935,765
Accounting fees and expenses 82,795
Non-interested trustees' 488
compensation
Custodian fees and expenses 7,250
Registration fees 97,098
Audit 14,562
Legal 2,786
Miscellaneous 775
Total expenses before 2,386,704
reductions
Expense reductions (32,774) 2,353,930
NET INVESTMENT INCOME (LOSS) (525,341)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,988,464
Foreign currency transactions (4,479) 4,983,985
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 45,733,180
Assets and liabilities in 218 45,733,398
foreign currencies
NET GAIN (LOSS) 50,717,383
NET INCREASE (DECREASE) IN $ 50,192,042
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (525,341) $ (517,467)
income (loss)
Net realized gain (loss) 4,983,985 10,419,090
Change in net unrealized 45,733,398 19,983,044
appreciation (depreciation)
NET INCREASE (DECREASE) IN 50,192,042 29,884,667
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,527,545) (5,317,653)
from net realized gains
Share transactions - net 149,332,552 138,185,326
increase (decrease)
Redemption fees 110,164 63,702
TOTAL INCREASE (DECREASE) 194,107,213 162,816,042
IN NET ASSETS
NET ASSETS
Beginning of period 232,206,135 69,390,093
End of period (including $ 426,313,348 $ 232,206,135
accumulated net investment
loss of $525,341 and $0,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.70 $ 14.10 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.03) (.02)
D
Net realized and unrealized 2.48 3.50 4.12
gain (loss)
Total from investment 2.48 3.47 4.10
operations
Less Distributions
From net realized gain (.39) (.88) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.80 $ 16.70 $ 14.10
TOTAL RETURN B, C 15.52% 26.47% 41.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 39,623 $ 20,902 $ 5,488
(000 omitted)
Ratio of expenses to average 1.29% A 1.38% 1.75% A, F
net assets
Ratio of expenses to average 1.26% A, G 1.36% G 1.74% A, G
net assets after expense
reductions
Ratio of net investment .00% A (.18)% (.18)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.61 $ 14.05 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.02) (.05) (.04)
D
Net realized and unrealized 2.47 3.47 4.09
gain (loss)
Total from investment 2.45 3.42 4.05
operations
Less Distributions
From net realized gain (.37) (.87) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.70 $ 16.61 $ 14.05
TOTAL RETURN B, C 15.39% 26.17% 40.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 192,057 $ 124,652 $ 50,868
(000 omitted)
Ratio of expenses to average 1.50% A 1.54% 1.97% A
net assets
Ratio of expenses to average 1.48% A, F 1.52% F 1.96% A, F
net assets after expense
reductions
Ratio of net investment (.20)% A (.31)% (.39)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.47 $ 14.01 $ 11.88
period
Income from Investment
Operations
Net investment income (loss) (.06) (.14) (.05)
D
Net realized and unrealized 2.45 3.45 2.18
gain (loss)
Total from investment 2.39 3.31 2.13
operations
Less Distributions
From net realized gain (.36) (.86) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.51 $ 16.47 $ 14.01
TOTAL RETURN B, C 15.14% 25.40% 17.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 126,962 $ 57,074 $ 6,159
(000 omitted)
Ratio of expenses to average 2.04% A 2.13% 2.50% A, F
net assets
Ratio of expenses to average 2.02% A, G 2.12% G 2.49% A, G
net assets after expense
reductions
Ratio of net investment (.75)% A (.95)% (.99)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 16.49 $ 13.85
period
Income from Investment
Operations
Net investment income (loss) (.06) (.12)
D
Net realized and unrealized 2.46 3.39
gain (loss)
Total from investment 2.40 3.27
operations
Less Distributions
From net realized gain (.38) (.63)
Redemption fees added to paid .01 -
in capital
Net asset value, end of period $ 18.52 $ 16.49
TOTAL RETURN B, C 15.21% 24.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 49,703 $ 19,154
(000 omitted)
Ratio of expenses to average 2.01% A 2.18% A
net assets
Ratio of expenses to average 1.99% A, F 2.17% A, F
net assets after expense
reductions
Ratio of net investment (.73)% A (1.06)% A
income (loss) to average net
assets
Portfolio turnover 121% A 85%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 16.73 $ 14.12 $ 10.00
period
Income from Investment
Operations
Net investment income D .03 .03 .01
Net realized and unrealized 2.49 3.47 4.11
gain (loss)
Total from investment 2.52 3.50 4.12
operations
Less Distributions
From net realized gain (.41) (.90) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 18.85 $ 16.73 $ 14.12
TOTAL RETURN B, C 15.77% 26.70% 41.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,969 $ 10,424 $ 6,875
(000 omitted)
Ratio of expenses to average .95% A 1.07% 1.50% A, F
net assets
Ratio of expenses to average .92% A, G 1.04% G 1.49% A, G
net assets after expense
reductions
Ratio of net investment .35% A .17% .08% A
income to average net assets
Portfolio turnover 121% A 85% 67% A
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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.
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 Fidelity Management & Research Company
(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 $274,359,633 and $160,940,457, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 32,028 $ 25
CLASS T 359,010 514
CLASS B 400,016 300,139
CLASS C 144,711 141,019
$ 935,765 $ 441,697
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
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 196,131 $ 95,082
CLASS T 286,471 110,645
CLASS B 93,501 93,501*
CLASS C 11,433 11,433*
$ 587,536 $ 310,661
* 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 $ 37,711 .30 *
CLASS T 188,906 .27 *
CLASS B 115,486 .29 *
CLASS C 36,862 .26 *
INSTITUTIONAL CLASS 12,578 .21 *
$ 391,543
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $25,114 for the
period.
5. EXPENSE REDUCTIONS.
FMR 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 $29,599 under this arrangement.
In addition, the fund has entered into an arrangements 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 $3,175 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ 506,247 $ 420,044
Class T 2,852,064 3,806,901
Class B 1,389,676 709,849
Class C 513,007 21,184
Institutional Class 266,551 359,675
Total $ 5,527,545 $ 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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 1,040,918 953,100 $ 17,732,865
Reinvestment of distributions 30,314 29,113 451,369
Shares redeemed (215,775) (119,595) (3,496,978)
Net increase (decrease) 855,457 862,618 $ 14,687,256
CLASS T Shares sold 4,081,837 5,008,211 $ 68,552,574
Reinvestment of distributions 182,633 273,667 2,706,626
Shares redeemed (1,500,445) (1,398,051) (24,696,562)
Net increase (decrease) 2,764,025 3,883,827 $ 46,562,638
CLASS B Shares sold 3,775,451 3,319,731 $ 63,149,612
Reinvestment of distributions 81,571 49,154 1,199,095
Shares redeemed (462,515) (343,006) (7,616,968)
Net increase (decrease) 3,394,507 3,025,879 $ 56,731,739
CLASS C Shares sold 1,742,934 1,191,803 $ 29,396,259
Reinvestment of distributions 26,622 1,455 391,340
Shares redeemed (246,504) (32,001) (4,125,534)
Net increase (decrease) 1,523,052 1,161,257 $ 25,662,065
INSTITUTIONAL CLASS Shares 506,706 342,040 $ 8,616,583
sold
Reinvestment of distributions 16,382 27,158 244,258
Shares redeemed (192,588) (233,192) (3,171,987)
Net increase (decrease) 330,500 136,006 $ 5,688,854
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 14,712,053
Reinvestment of distributions 382,670
Shares redeemed (1,797,313)
Net increase (decrease) $ 13,297,410
CLASS T Shares sold $ 75,539,497
Reinvestment of distributions 3,586,347
Shares redeemed (21,017,135)
Net increase (decrease) $ 58,108,709
CLASS B Shares sold $ 50,883,606
Reinvestment of distributions 640,560
Shares redeemed (5,148,858)
Net increase (decrease) $ 46,375,308
CLASS C Shares sold $ 18,640,101
Reinvestment of distributions 18,904
Shares redeemed (510,296)
Net increase (decrease) $ 18,148,709
INSTITUTIONAL CLASS Shares $ 5,185,579
sold
Reinvestment of distributions 357,509
Shares redeemed (3,287,898)
Net increase (decrease) $ 2,255,190
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV NATURAL - INST CL -14.07% -19.25% 21.41% 168.92%
S&P 500 15.02% 32.49% 196.12% 462.78%
GS Natural Resources -9.92% -14.94% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months 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
market capitalization-weighted index of common stocks - and the
Goldman Sachs Natural Resources Index - a market
capitalization-weighted index of 96 stocks designed to measure the
performance of companies in the natural resource sector. Issues in the
index include extractive industries including gold & precious metals
mining along with other mineral mining, energy companies providing oil
& gas services, and owners and operators of timber tracts and forestry
services. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV NATURAL - INST CL -19.25% 3.96% 10.40%
S&P 500 32.49% 24.25% 18.86%
GS Natural Resources -14.94% 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.
$10,000 OVER 10 YEARS
FA Natural Resources-CL I S&P 500
00686 SP001
1989/01/31 10000.00 10000.00
1989/02/28 9852.17 9751.00
1989/03/31 10043.48 9978.20
1989/04/30 10356.52 10496.07
1989/05/31 10600.00 10921.16
1989/06/30 10565.22 10858.91
1989/07/31 11330.43 11839.47
1989/08/31 11669.57 12071.52
1989/09/30 11356.52 12022.03
1989/10/31 10956.52 11743.12
1989/11/30 11443.48 11982.68
1989/12/31 12318.15 12270.26
1990/01/31 11541.16 11446.92
1990/02/28 12081.26 11594.59
1990/03/31 12308.67 11901.85
1990/04/30 11664.34 11604.30
1990/05/31 12848.78 12735.72
1990/06/30 12687.69 12649.12
1990/07/31 13313.08 12608.64
1990/08/31 12962.48 11468.82
1990/09/30 12555.04 10910.29
1990/10/31 11654.87 10863.37
1990/11/30 11844.38 11565.15
1990/12/31 11667.50 11887.81
1991/01/31 12052.47 12406.12
1991/02/28 13789.77 13293.16
1991/03/31 13464.02 13614.86
1991/04/30 13533.12 13647.53
1991/05/31 14184.61 14237.10
1991/06/30 13365.31 13585.05
1991/07/31 13809.51 14218.11
1991/08/31 14164.86 14555.08
1991/09/30 13612.09 14312.01
1991/10/31 13927.96 14503.79
1991/11/30 12802.67 13919.29
1991/12/31 13355.65 15511.65
1992/01/31 14185.06 15223.14
1992/02/29 14504.07 15421.04
1992/03/31 14142.53 15120.33
1992/04/30 14663.57 15564.86
1992/05/31 15057.01 15641.13
1992/06/30 14567.87 15408.08
1992/07/31 15152.71 16038.27
1992/08/31 14929.41 15709.48
1992/09/30 15078.27 15894.86
1992/10/31 14759.27 15950.49
1992/11/30 14950.67 16494.40
1992/12/31 15136.60 16697.28
1993/01/31 15621.83 16837.54
1993/02/28 16059.71 17066.53
1993/03/31 17124.83 17426.63
1993/04/30 18047.94 17004.91
1993/05/31 18935.55 17460.64
1993/06/30 19195.91 17511.28
1993/07/31 18935.55 17441.23
1993/08/31 20024.34 18102.25
1993/09/30 19917.83 17962.87
1993/10/31 20817.27 18334.70
1993/11/30 20036.17 18160.52
1993/12/31 20879.27 18380.26
1994/01/31 22148.79 19005.19
1994/02/28 21458.56 18490.15
1994/03/31 20139.74 17683.98
1994/04/30 20472.53 17910.33
1994/05/31 20743.69 18204.06
1994/06/30 20373.93 17758.06
1994/07/31 21064.15 18340.53
1994/08/31 22087.16 19092.49
1994/09/30 21976.23 18624.72
1994/10/31 21643.44 19043.78
1994/11/30 20226.02 18350.20
1994/12/31 20403.37 18622.34
1995/01/31 20002.57 19105.22
1995/02/28 20591.24 19849.75
1995/03/31 21743.55 20435.51
1995/04/30 22632.83 21037.34
1995/05/31 22945.96 21878.20
1995/06/30 23597.27 22386.43
1995/07/31 24599.27 23128.76
1995/08/31 24987.55 23186.82
1995/09/30 25175.43 24165.30
1995/10/31 24135.84 24079.03
1995/11/30 25363.30 25136.10
1995/12/31 26291.48 25620.22
1996/01/31 27289.24 26492.33
1996/02/29 27963.05 26737.92
1996/03/31 28818.26 26995.40
1996/04/30 30502.79 27393.32
1996/05/31 31059.97 28099.79
1996/06/30 30865.61 28206.85
1996/07/31 29181.08 26960.67
1996/08/31 30502.79 27529.27
1996/09/30 31824.49 29078.62
1996/10/31 32614.92 29880.61
1996/11/30 34286.48 32139.28
1996/12/31 34369.36 31502.60
1997/01/31 34922.15 33470.89
1997/02/28 32641.91 33733.30
1997/03/31 31798.92 32347.20
1997/04/30 31674.54 34278.32
1997/05/31 34562.84 36365.19
1997/06/30 34466.10 37994.35
1997/07/31 36511.40 41017.56
1997/08/31 36746.34 38719.76
1997/09/30 39405.99 40840.44
1997/10/31 37002.81 39476.37
1997/11/30 33906.40 41303.73
1997/12/31 34218.25 42012.91
1998/01/31 33303.15 42477.58
1998/02/28 34496.04 45541.06
1998/03/31 36015.77 47873.22
1998/04/30 37404.76 48354.82
1998/05/31 35492.85 47523.60
1998/06/30 34022.15 49454.01
1998/07/31 31293.19 48927.32
1998/08/31 25132.60 41853.41
1998/09/30 30145.93 44534.54
1998/10/31 30317.22 48156.98
1998/11/30 29135.36 51075.78
1998/12/31 28792.79 54018.76
1999/01/29 26891.54 56277.83
IMATRL PRASUN SHR__CHT 19990131 19990226 105921 R00000000000123
(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: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources - Institutional Class
on January 31, 1989. As the chart shows, by January 31, 1999, the
value of the investment would have grown to $26,892 - a 168.92%
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 $56,278 - a 462.78% 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 six months that ended January 31, 1999, the fund's
Institutional Class shares returned -14.07%. In comparison, the
Goldman Sachs Natural Resources Index - and index of 96 stocks
designed to measure the performance of companies in the natural
resources sector - returned -9.92%, while the Standard & Poor's 500
Index returned 15.02% during the period. For the 12 months that ended
January 31, 1999, the fund's Institutional Class shares returned
- -19.25%. During the same period, this performance lagged the Goldman
Sachs and the S&P 500 returns of -14.94% and 32.49%, respectively.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE SIX-MONTH PERIOD?
A. The major cause for poor performance was weak global economic
growth. Many international economies continue to languish in a mire of
political, financial and currency troubles. Over the past couple of
years, the global demand for natural resources has declined from an
approximately 2% annual growth rate to zero. In this environment, even
a slight increase in the supply of natural resources is too much and,
as a result, commodity prices have tanked across the board. The fund
underperformed the Goldman Sachs index because I allocated a larger
percentage of fund assets to mid-cap integrated oil companies, energy
service companies and drillers relative to the index. These companies
are more sensitive to oil prices and underperformed the larger
integrated oil companies, such as Mobil and Exxon, in this negative
environment.
Q. WHY DID YOU OVERWEIGHT THE FUND ASSETS IN MORE AGGRESSIVE OIL
COMPANIES, RELATIVE TO THE INDEX?
A. In hindsight, I was early in my prediction that oil prices were
poised to rebound. However, I am comfortable with the fund's asset
allocation. I believe for a number of reasons - which I will discuss
in more detail in my market outlook - that we are starting to see
signs of impending strength in oil prices. As a result, if we do see
an increase in oil prices, the smaller-cap integrated oil companies
and energy service companies - which are more sensitive to oil prices
- - will perform better than the larger-cap integrated oil companies,
such as Mobil, British Petroleum and Exxon.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks such as Amoco, British Petroleum, Mobil and
Exxon managed to gain approximately 13% over the past year. All of
these stocks provided a boost to the fund's total return and rallied
in response to merger announcements. In comparison, the secondary
energy stocks - drillers, oil service and oil equipment - all posted
significant losses for the year. Gold was the star of the metals
group. The price of gold was down roughly 5% during the 12-month
period, while prices for most other commodities were down
approximately 20% to 30% for the same period.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks and a select
group of precious-metals companies, the natural resources sector
experienced negative returns across the board. With energy prices
hitting 12-year lows, significant detractors within the fund were
USX-Marathon, Tosco, Weatherford International and Schlumberger. As I
mentioned earlier, the stock prices of these companies and sectors are
even more dependent on energy prices than the larger integrated oil
companies. When the prices of oil and natural gas are below a certain
level, it no longer makes economic sense to explore for these fuels or
drill new wells. In this environment, business deteriorated for energy
services companies like Weatherford and Schlumberger, and their stock
prices suffered. On the other hand, if energy prices pick up, earnings
may rise exponentially for these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for natural resources
for the first time in a while. If we look at oil, for example, we are
starting to see a response on the supply side to price movement. For
example, the typical oil company cut capital expenditures by 30%, they
cut back on exploration, and the number of rigs drilling for oil and
gas is at a 49-year low. As a result, oil and gas production will most
likely fall in 1999. In addition, some base-metals mines have been
closing worldwide. If we get even a slight rebound in Asia or Latin
America, it will not take much for a squeeze on supply, which could
set the stage for an increase in commodity prices. This scenario would
be very good for the fund.
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.
(CHECKMARK) FUND FACTS
START DATE: December 29, 1987
SIZE: as of January 31, 1999, more than
$271 million
MANAGER: Lawrence Rakers, since 1997;
joined Fidelity in 1993
ADVISOR NATURAL RESOURCES FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Mobil Corp. 8.4
BP Amoco PLC sponsored ADR 6.2
USX-Marathon Group 6.2
Elf Aquitaine SA sponsored ADR 5.4
Exxon Corp. 5.1
Total SA sponsored ADR 4.9
Schlumberger Ltd. 4.3
Halliburton Co. 3.9
Chevron Corp. 3.8
Texaco, Inc. 3.5
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 64.2
Row: 1, Col: 2, Value: 18.5
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 1.4
Row: 1, Col: 6, Value: 4.8
Oil & Gas 65.2%
Energy Services 18.5%
Precious Metals 6.7%
Metals & Mining 4.4%
Autos, Tires, & Accessoreis 0.4%
All Others 4.8%*
* INCLUDES SHORT-TERM INVESTMENTS
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.4%
Dynegy, Inc. 100,000 $ 1,062,500
CHEMICALS & PLASTICS - 0.2%
MacDermid, Inc. 14,500 541,938
ENERGY SERVICES - 18.5%
Baker Hughes, Inc. 264,650 4,465,969
BJ Services Co. (a) 255,000 3,761,250
Carbo Ceramics, Inc. 10,000 160,000
Coflexip SA sponsored ADR 75,000 2,287,500
ENSCO International, Inc. 375,000 3,539,063
Global Marine, Inc. (a) 16,200 134,663
Halliburton Co. 360,000 10,687,500
Helmerich & Payne, Inc. 110,000 1,931,875
Input/Output, Inc. (a) 105,000 669,375
Marine Drilling Companies, 70,000 516,250
Inc. (a)
Nabors Industries, Inc. (a) 175,700 2,196,250
Noble Drilling Corp. (a) 270,000 3,611,250
Pool Energy Services Co. (a) 75,000 900,000
Santa Fe International Corp. 93,700 1,288,375
Schlumberger Ltd. 243,300 11,587,163
Smith International, Inc. 87,000 2,202,188
UTI Energy Corp. (a) 70,000 485,625
50,424,296
ENGINEERING - 0.2%
Stolt Comex Seaway SA 95,350 560,181
sponsored ADR Class A
METALS & MINING - 4.4%
Alcoa, Inc. 98,400 8,228,700
Breakwater Resources Ltd. (a) 825,300 496,971
Cameco Corp. 45,000 1,043,707
Camphor Ventures, Inc. (a) 585,900 255,885
Columbia Metals Ltd. (a) 1,479,900 195,858
Cominco Ltd. 10,000 120,434
Cyprus Amax Minerals Co. 40,000 382,500
Freeport-McMoRan Copper & 25,000 239,063
Gold, Inc.
Inco Ltd. 60,000 637,242
Minefinders Corp. Ltd. (a)(c) 47,700 33,458
Rio Algom Ltd. 40,000 411,593
Southern Peru Copper Corp. 2,400 20,250
12,065,661
OIL & GAS - 65.2%
Alberta Energy Co. Ltd. 55,000 1,164,637
Amerada Hess Corp. 185,000 8,787,500
Anadarko Petroleum Corp. 87,000 2,354,438
BP Amoco PLC sponsored ADR 208,862 16,943,930
Burlington Resources, Inc. 31,365 948,791
Canadian Natural Resources 55,000 855,281
Ltd. (a)
Chevron Corp. 140,000 10,465,000
Compagnie Generale de 70,000 673,750
Geophysique SA sponsored ADR
(a)
SHARES VALUE (NOTE 1)
Cooper Cameron Corp. (a) 11,600 $ 271,150
Crestar Energy, Inc. (a) 62,500 457,004
Elf Aquitaine SA sponsored ADR 266,400 14,552,100
Eni Spa sponsored ADR 5,000 300,000
Enron Oil & Gas Co. 55,000 948,750
Exxon Corp. 195,000 13,735,313
Frontier Oil Corp. (a) 1,034,000 5,816,250
Gulf Canada Resources Ltd. (a) 365,000 985,442
Imperial Oil Ltd. 305,000 4,631,915
Louis Dreyfus Natural Gas 90,000 1,136,250
Corp. (a)
Magnum Hunter Resources, Inc. 200,000 587,500
(a)
Mobil Corp. 259,200 22,728,593
Noble Affiliates, Inc. 40,000 787,500
Occidental Petroleum Corp. 9,800 147,613
Ocean Energy, Inc. (a) 58,000 261,000
Oryx Energy Co. (a) 270,000 3,290,625
Paramount Resources Ltd. (c) 77,300 716,120
Penn West Petroleum Ltd. (a) 33,000 345,024
Petro-Canada, Inc. 175,000 2,090,226
Phillips Petroleum Co. 12,200 471,225
Plains Resources, Inc. (a) 211,600 2,406,950
Renaissance Energy Ltd. (a) 30,000 334,502
Rio Alto Exploration Ltd. (a) 115,000 1,065,379
Royal Dutch Petroleum Co. (NY 66,000 2,644,125
Registry Gilder 1.25)
Seagull Energy Corp. (a) 130,000 625,625
Shell Transport & Trading Co. 104,100 3,175,050
PLC ADR
Snyder Oil Corp. 10,000 113,750
Suncor Energy, Inc. 105,000 2,824,411
Tesoro Petroleum Corp. (a) 69,300 753,638
Texaco, Inc. 200,000 9,475,000
Tosco Corp. 115,000 2,501,250
Total SA sponsored ADR 260,000 13,308,750
Ulster Petroleums Ltd. (a) 98,700 659,655
Ultramar Diamond Shamrock 58,400 1,284,800
Corp.
Union Pacific Resources 155,000 1,249,688
Group, Inc.
USX-Marathon Group 735,000 16,721,250
Veritas DGC, Inc. (a) 20,000 248,750
Vintage Petroleum, Inc. 45,000 326,250
Weatherford International, 60,100 1,059,263
Inc. (a)
177,231,013
PRECIOUS METALS - 6.7%
Argentina Gold Corp. (a) 175,000 612,593
First Dynasty Mines Ltd. (a) 401,700 33,227
Getchell Gold Corp. (a) 220,000 5,830,000
Greenstone Resources Ltd. (a) 3,961,395 2,097,086
Greenstone Resources Ltd. 17,700 9,370
(a)(c)
Greenstone Resources Ltd. 50,700 11,742
warrants 2/28/02 (a)
Indochina Goldfields Ltd. (a) 108,800 48,237
Kalahari Goldridge Mining Co. 500,000 148,460
Ltd. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Mentor Exploration & 64,800 $ 36,448
Development Co. Ltd.
Meridian Gold, Inc. (a) 623,400 3,403,289
Mountain Province Mining, 164,700 240,860
Inc. (a)
Pan American Silver Corp. (a) 95,000 487,196
Stillwater Mining Co. (a) 185,000 4,856,250
TVI Pacific, Inc. (a) 459,200 15,193
TVI Pacific, Inc. (a)(c) 1,860,000 61,541
William Resources, Inc. (a) 4,860,000 209,039
William Resources, Inc. 1,029,000 7
warrants 12/31/02 (a)(c)
18,100,538
TOTAL COMMON STOCKS 259,986,127
(Cost $321,447,079)
CASH EQUIVALENTS - 4.4%
Taxable Central Cash Fund (b) 11,868,252 11,868,252
(Cost $11,868,252)
TOTAL INVESTMENT IN $ 271,854,379
SECURITIES - 100%
(Cost $333,315,331)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 $820,496 or 0.3% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States 65.8%
France 11.3
Canada 9.8
United Kingdom 7.4
Netherlands Antilles 4.3
Netherlands 1.0
(Others individually less 0.4
than 1%)
100.0%
INCOME TAX INFORMATION
At January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $333,394,831. Net unrealized depreciation
aggregated $61,540,452, of which $12,500,000 related to appreciated
investment securities and $74,040,452 related to depreciated
investment securities.
ADVISOR NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 271,854,379
value (cost $333,315,331) -
See accompanying schedule
Receivable for investments 4,225,911
sold
Receivable for fund shares 383,090
sold
Dividends receivable 454,398
Interest receivable 47,737
Other receivables 30,681
TOTAL ASSETS 276,996,196
LIABILITIES
Payable for investments $ 3,291,172
purchased
Payable for fund shares 2,120,378
redeemed
Accrued management fee 145,854
Distribution fees payable 138,167
Other payables and accrued 154,888
expenses
TOTAL LIABILITIES 5,850,459
NET ASSETS $ 271,145,737
Net Assets consist of:
Paid in capital $ 377,621,177
Undistributed net investment 218,471
income
Accumulated undistributed net (45,218,347)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (61,475,564)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 271,145,737
CALCULATION OF MAXIMUM $15.52
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($4,855,522 (divided
by) 312,883 shares)
Maximum offering price per $16.47
share (100/94.25 of
$15.52)
CLASS T: NET ASSET VALUE $15.69
and redemption price per
share ($227,201,285 (divided
by) 14,481,421 shares)
Maximum offering price per $16.26
share (100/96.50 of
$15.69)
CLASS B: NET ASSET VALUE $15.43
and offering price per
share ($32,439,101 (divided
by) 2,101,884 shares) A
CLASS C: NET ASSET VALUE $15.52
and offering price per
share ($3,132,092 (divided
by) 201,751 shares) A
INSTITUTIONAL CLASS: NET $15.70
ASSET VALUE, offering price
and redemption price per
share ($3,517,737
(divided by) 224,105 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 2,389,794
Dividends
Interest 400,463
TOTAL INCOME 2,790,257
EXPENSES
Management fee $ 992,529
Transfer agent fees 515,964
Distribution fees 930,343
Accounting fees and expenses 119,411
Non-interested trustees' 752
compensation
Custodian fees and expenses 25,284
Registration fees 45,289
Audit 20,026
Legal 3,090
Miscellaneous 4,570
Total expenses before 2,657,258
reductions
Expense reductions (85,449) 2,571,809
NET INVESTMENT INCOME 218,448
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (44,654,631)
Foreign currency transactions (467,576) (45,122,207)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,178,027)
Assets and liabilities in (35,781) (7,213,808)
foreign currencies
NET GAIN (LOSS) (52,336,015)
NET INCREASE (DECREASE) IN $ (52,117,567)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 218,448 $ 337,282
income
Net realized gain (loss) (45,122,207) 53,995,953
Change in net unrealized (7,213,808) (134,840,866)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (52,117,567) (80,507,631)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (204,614) (30,726)
From net investment income
From net realized gain (13,910,158) (102,298,827)
TOTAL DISTRIBUTIONS (14,114,772) (102,329,553)
Share transactions - net (62,728,781) (110,795,873)
increase (decrease)
Redemption fees 40,393 157,401
TOTAL INCREASE (DECREASE) (128,920,727) (293,475,656)
IN NET ASSETS
NET ASSETS
Beginning of period 400,066,464 693,542,120
End of period (including $ 271,145,737 $ 400,066,464
undistributed net investment
income of $218,471 and
$259,207, respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 18.94 $ 26.16 $ 25.11
period
Income from Investment
Operations
Net investment income (loss) .03 .06 (.05)
D
Net realized and unrealized (2.70) (3.33) 2.81
gain (loss)
Total from investment (2.67) (3.27) 2.76
operations
Less Distributions
From net investment income (.05) - (.10)
In excess of net investment - - (.04)
income
From net realized gain (.70) (3.96) (1.57)
Total distributions (.75) (3.96) (1.71)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.52 $ 18.94 $ 26.16
TOTAL RETURN B, C (14.22)% (14.61)% 11.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,856 $ 6,474 $ 6,372
(000 omitted)
Ratio of expenses to average 1.36% A 1.34% 1.71% A, F
net assets
Ratio of expenses to average 1.31% A, G 1.30% G 1.68% A, G
net assets after expense
reductions
Ratio of net investment .34% A .28% (.28)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 E
Net asset value, beginning of $ 23.65
period
Income from Investment
Operations
Net investment income (loss) -
D
Net realized and unrealized 1.46
gain (loss)
Total from investment 1.46
operations
Less Distributions
From net investment income -
In excess of net investment -
income
From net realized gain -
Total distributions -
Redemption fees added to paid -
in capital
Net asset value, end of period $ 25.11
TOTAL RETURN B, C 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,609
(000 omitted)
Ratio of expenses to average 1.66% A, F
net assets
Ratio of expenses to average 1.58% A, G
net assets after expense
reductions
Ratio of net investment (.01)% A
income (loss) to average net
assets
Portfolio turnover 137% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 19.11 $ 26.34 $ 25.12
period
Income from Investment
Operations
Net investment income (loss) .02 D .02 D (.02) D
Net realized and unrealized (2.73) (3.34) 2.83
gain (loss)
Total from investment (2.71) (3.32) 2.81
operations
Less Distributions
From net investment income (.01) - (.01)
In excess of net investment - - (.01)
income
From net realized gain (.70) (3.92) (1.57)
Total distributions (.71) (3.92) (1.59)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.69 $ 19.11 $ 26.34
TOTAL RETURN B, C (14.30)% (14.69)% 11.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 227,201 $ 342,347 $ 618,083
(000 omitted)
Ratio of expenses to average 1.52% A 1.43% 1.47% A
net assets
Ratio of expenses to average 1.47% A, F 1.39% F 1.44% A, F
net assets after expense
reductions
Ratio of net investment .19% A .10% (.12)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 1993
Net asset value, beginning of $ 19.25 $ 17.56 $ 17.59 $ 13.88
period
Income from Investment
Operations
Net investment income (loss) .00 D (.05) D (.11) D .22
Net realized and unrealized 6.56 2.00 .76 4.91
gain (loss)
Total from investment 6.56 1.95 .65 5.13
operations
Less Distributions
From net investment income - - - -
In excess of net investment - - - -
income
From net realized gain (.69) (.26) (.68) (1.42)
Total distributions (.69) (.26) (.68) (1.42)
Redemption fees added to paid - - - -
in capital
Net asset value, end of period $ 25.12 $ 19.25 $ 17.56 $ 17.59
TOTAL RETURN B, C 35.01% 11.40% 3.97% 41.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 602,915 $ 272,979 $ 199,361 $ 40,309
(000 omitted)
Ratio of expenses to average 1.59% 1.86% E 2.10% 2.63%
net assets
Ratio of expenses to average 1.56% F 1.84% F 2.07% F 2.62% F
net assets after expense
reductions
Ratio of net investment .00% (.30)% (.67)% (1.18)%
income (loss) to average net
assets
Portfolio turnover 137% 161% 125% 208%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 18.81 $ 25.99 $ 24.88
period
Income from Investment
Operations
Net investment income (loss) (.03) (.09) (.12)
D
Net realized and unrealized (2.69) (3.29) 2.80
gain (loss)
Total from investment (2.72) (3.38) 2.68
operations
Less Distributions
From net realized gain (.66) (3.81) (1.57)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.43 $ 18.81 $ 25.99
TOTAL RETURN B, C (14.58)% (15.12)% 11.19%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 32,439 $ 44,351 $ 59,044
(000 omitted)
Ratio of expenses to average 2.08% A 1.98% 2.04% A
net assets
Ratio of expenses to average 2.03% A, G 1.94% G 2.02% A, G
net assets after expense
reductions
Ratio of net investment (.38)% A (.41)% (.67)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 E
Net asset value, beginning of $ 19.23 $ 18.87
period
Income from Investment
Operations
Net investment income (loss) (.15) (.03)
D
Net realized and unrealized 6.49 .39
gain (loss)
Total from investment 6.34 .36
operations
Less Distributions
From net realized gain (.69) -
Redemption fees added to paid - -
in capital
Net asset value, end of period $ 24.88 $ 19.23
TOTAL RETURN B, C 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,106 $ 2,508
(000 omitted)
Ratio of expenses to average 2.28% 2.23% A, F
net assets
Ratio of expenses to average 2.24% G 2.21% A, G
net assets after expense
reductions
Ratio of net investment (.68)% (.67)% A
income (loss) to average net
assets
Portfolio turnover 137% 161%
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 18.96 $ 24.39
period
Income from Investment
Operations
Net investment income (loss) (.03) (.07)
D
Net realized and unrealized (2.70) (4.15)
gain (loss)
Total from investment (2.73) (4.22)
operations
Less Distributions
From net investment income (.01) -
From net realized gain (.70) (1.22)
Total distributions (.71) (1.22)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 15.52 $ 18.96
TOTAL RETURN B, C (14.53)% (17.72)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,132 $ 2,972
(000 omitted)
Ratio of expenses to average 2.04% A 2.50% A, F
net assets
Ratio of expenses to average 1.99% A, G 2.44% A, G
net assets after expense
reductions
Ratio of net investment (.39)% A (.48)% A
income (loss) to average net
assets
Portfolio turnover 113% A 97%
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. 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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, NINE MONTHS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997
Net asset value, beginning of $ 19.15 $ 26.42 $ 25.17
period
Income from Investment
Operations
Net investment income (loss) .06 .13 .04
D
Net realized and unrealized (2.73) (3.35) 2.85
gain (loss)
Total from investment (2.67) (3.22) 2.89
operations
Less Distributions
From net investment income (.08) (.09) (.05)
In excess of net investment - - (.02)
income
From net realized gain (.70) (3.97) (1.57)
Total distributions (.78) (4.06) (1.64)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 15.70 $ 19.15 $ 26.42
TOTAL RETURN B, C (14.07)% (14.29)% 11.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,518 $ 3,922 $ 10,042
(000 omitted)
Ratio of expenses to average .93% A .95% 1.08% A
net assets
Ratio of expenses to average .87% A, G .91% G 1.06% A, G
net assets after expense
reductions
Ratio of net investment .73% A .55% .24% A
income to average net assets
Portfolio turnover 113% A 97% 116% A
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).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 E
Net asset value, beginning of $ 19.27 $ 18.87
period
Income from Investment
Operations
Net investment income (loss) .04 (.01)
D
Net realized and unrealized 6.55 .41
gain (loss)
Total from investment 6.59 .40
operations
Less Distributions
From net investment income - -
In excess of net investment - -
income
From net realized gain (.69) -
Total distributions (.69) -
Redemption fees added to paid - -
in capital
Net asset value, end of period $ 25.17 $ 19.27
TOTAL RETURN B, C 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 9,860 $ 718
(000 omitted)
Ratio of expenses to average 1.44% 1.68% A, F
net assets
Ratio of expenses to average 1.39% G 1.66% A, G
net assets after expense
reductions
Ratio of net investment .17% (.13)% A
income to average net assets
Portfolio turnover 137% 161%
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).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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, as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class 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
and settlement date 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.
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.
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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $176,895,535 and $251,230,878, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 7,131 $ 31
CLASS T 715,894 4,205
CLASS B 192,213 144,258
CLASS C 15,105 14,291
$ 930,343 $ 162,785
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares 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 FDC RETAINED BY FDC
CLASS A $ 13,639 $ 5,115
CLASS T 66,754 23,337
CLASS B 100,866 100,866*
CLASS C 4,004 4,004*
$ 185,263 $ 133,322
* 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 $ 10,980 .39 *
CLASS T 428,673 .30 *
CLASS B 67,764 .35 *
CLASS C 4,690 .31 *
INSTITUTIONAL CLASS 3,857 .20 *
$ 515,964
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $38,546 for the
period.
5. EXPENSE REDUCTIONS.
FMR 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 $83,751 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 $363 under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
TRANSFER AGENT CREDITS
CLASS T $ 1,335
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999 1998 A
FROM NET INVESTMENT INCOME
Class A $ 16,625 $ -
Class T 170,229 -
Class B - -
Class C 1,528 -
Institutional Class 16,232 30,726
Total $ 204,614 $ 30,726
FROM NET REALIZED GAIN
Class A $ 231,956 $ 1,049,623
Class T 11,913,212 90,875,522
Class B 1,511,499 8,918,986
Class C 111,460 16,549
Institutional Class 142,031 1,438,147
Total $ 13,910,158 $ 102,298,827
$ 14,114,772 $ 102,329,553
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 58,639 175,654 $ 990,548
Reinvestment of distributions 15,021 43,840 240,544
Shares redeemed (102,541) (121,346) (1,704,715)
Net increase (decrease) (28,881) 98,148 $ (473,623)
CLASS T Shares sold 1,296,389 3,091,100 $ 22,236,970
Reinvestment of distributions 703,215 3,685,442 11,405,496
Shares redeemed (5,429,347) (12,329,910) (92,666,288)
Net increase (decrease) (3,429,743) (5,553,368) $ (59,023,822)
CLASS B Shares sold 310,212 678,632 $ 5,205,604
Reinvestment of distributions 80,941 333,587 1,294,263
Shares redeemed (647,343) (926,142) (10,830,242)
Net increase (decrease) (256,190) 86,077 $ (4,330,375)
CLASS C Shares sold 98,557 168,621 $ 1,660,225
Reinvestment of distributions 5,837 787 93,864
Shares redeemed (59,357) (12,694) (992,982)
Net increase (decrease) 45,037 156,714 $ 761,107
INSTITUTIONAL CLASS Shares 60,955 138,650 $ 1,062,812
sold
Reinvestment of distributions 8,746 60,810 141,597
Shares redeemed (50,432) (374,710) (866,477)
Net increase (decrease) 19,269 (175,250) $ 337,932
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 3,950,955
Reinvestment of distributions 998,875
Shares redeemed (2,678,917)
Net increase (decrease) $ 2,270,913
CLASS T Shares sold $ 69,934,430
Reinvestment of distributions 85,183,832
Shares redeemed (270,469,326)
Net increase (decrease) $ (115,351,064)
CLASS B Shares sold $ 15,156,338
Reinvestment of distributions 7,598,024
Shares redeemed (19,895,184)
Net increase (decrease) $ 2,859,178
CLASS C Shares sold $ 3,628,673
Reinvestment of distributions 16,454
Shares redeemed (262,714)
Net increase (decrease) $ 3,382,413
INSTITUTIONAL CLASS Shares $ 3,107,221
sold
Reinvestment of distributions 1,415,854
Shares redeemed (8,480,388)
Net increase (decrease) $ (3,957,313)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - 56.21% 79.89% 162.13%
INST CL
S&P 500 15.02% 32.49% 103.54%
GS Technology 51.47% 86.64% 193.08%
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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Technology Index - a market
capitalization-weighted index of 190 stocks designed to measure the
performance of companies in the technology sector. Issues in the index
include producers of sophisticated devices, services and software
related to the fields of computers, electronics, networking and
Internet services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV TECHNOLOGY - 79.89% 49.14%
INST CL
S&P 500 32.49% 34.28%
GS Technology 86.64% 56.20%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 14222.27 15136.87 15845.13
1998/09/30 16329.69 16106.54 18099.82
1998/10/31 17265.07 17416.64 19431.16
1998/11/30 19631.69 18472.27 21695.15
1998/12/31 23170.36 19536.64 25251.29
1999/01/29 26213.16 20353.66 29307.61
IMATRL PRASUN SHR__CHT 19990131 19990226 110220 R00000000000032
</TABLE>
$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
January 31, 1999, the value of the investment would have grown to
$26,213 - a 162.13% 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 $20,354 - a 103.54%
increase. If $10,000 was invested in the Goldman Sachs Technology
Index, it would have grown to $29,308 - a 193.08% 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 TECHNOLOGY FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF MICHAEL TEMPERO)
An interview with
Michael Tempero, Portfolio Manager of Fidelity Advisor Technology Fund
Q. HOW DID THE FUND PERFORM, MIKE?
A. A. For the six months that ended January 31, 1999, the fund's
Institutional Class shares returned 56.21%. During the same period,
the Standard & Poor's 500 Index returned 15.02% while the overall
technology sector, as measured by the Goldman Sachs Technology Index -
an index of 190 stocks designed to measure the performance of
companies in the technology sector - gained 51.47%. For the year that
ended January 31, 1999, the fund's Institutional Class shares returned
79.89%, while the S&P 500 and the Goldman Sachs Index had returns of
32.49% and 86.64%, respectively.
Q. WHAT FACTORS LED THE FUND TO OUTPERFORM ITS TWO BENCHMARK INDEXES
DURING THE SIX-MONTH PERIOD?
A. During the summer and early autumn, economic crises in Asia, Russia
and other emerging markets caused a broadly based stock market
decline. During this time, technology stocks suffered badly relative
to the rest of the market. However, in early October, investors
decided that stock market losses were not the result of fundamental
problems in the economy. As the market turned around, technology
stocks led the rally, with some prices doubling. The fund outperformed
the Goldman Sachs index due to a relatively small exposure to
semiconductor and semiconductor equipment stocks before the market
corrected. These stocks performed poorly through the first part of the
period because semiconductor manufacturers were hurt by excess
inventories when many personal computer manufacturers scaled back
production and reduced semiconductor orders early in 1998.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. EMC Corp. did very well. EMC is a supplier of large-scale data
storage units and a prime beneficiary of an increasingly "point and
click" society. Every e-mail or online transaction creates a piece of
electronic information that needs to be safely warehoused. EMC
dominates the storage market largely because its units are compatible
with many types of network servers and operating systems. Dell
Computer also did well. Dell is the low-cost leader in personal
computer manufacturing and sells PCs directly to the consumer instead
of through retailers or distributors, assembling PCs only as orders
are received. These strategies keep inventories lean and shorten the
lead time for introducing new products. Microsoft continued to
dominate the software category, generating strong gains on revenue
growth and earnings that exceeded expectations during the last quarter
of 1998.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE LAST SIX MONTHS?
A. Alcatel, a French manufacturer of telecommunications equipment,
significantly missed its third-quarter earnings target. Achieving the
company's business objectives became doubtful when several large
European customers scaled back spending plans. Furthermore, even
though Alcatel has entered the high-growth U.S. market, the lack of a
superior technology puts the company at a competitive disadvantage. I
limited the fund's loss by selling the stock during the period. Also,
the fund missed an opportunity by not owning Lucent Technologies until
late in the period. Lucent profited from increased demand for voice
and data networking equipment as telecommunications companies compete
for market share by upgrading their systems and services. Although I
believed the stock was overvalued, Lucent's growth prospects commanded
an even higher price premium by the time I purchased it. As a result,
the fund only participated in part of the stock's price gain.
Q. WHAT ABOUT INTERNET STOCKS?
A. The Internet demonstrates how technology is transforming the way
people communicate and do business. Investors have been eager to
participate at an early developmental stage, creating enormous demand
for Internet stocks that has driven prices up substantially. However,
since only a handful of these companies can emerge as market leaders,
valuations appear indiscriminately high. In the fund, I have been
selective in buying Internet stocks. One example is America Online
(AOL). AOL is the established market leader in Internet access with
more subscribers than the next several service providers combined. The
company has developed a branded product that enhances its marketing
ability and subscriber growth rate. Furthermore, AOL's management has
done a credible job in meeting the market's expectations, leading to
broad support from institutional investors.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. Consumer and corporate spending are critical issues for technology
companies in 1999. As long as consumer confidence remains strong and
corporate profitability is stable, spending for technology products
should continue. That said, I will be watching for trends or events
that could shift technology spending patterns or deflate technology
product prices.
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.
(CHECKMARK)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$372 million
MANAGER: Michael Tempero, since 1998;
joined Fidelity in 1993
ADVISOR TECHNOLOGY FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Microsoft Corp. 9.6
Dell Computer Corp. 6.7
OY Nokia AB sponsored ADR 6.2
Texas Instruments, Inc. 4.8
Cisco Systems, Inc. 4.4
Intel Corp. 4.1
International Business 3.5
Machines Corp.
America Online, Inc. 3.4
EMC Corp. 3.3
Altera Corp. 2.4
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Row: 1, Col: 1, Value: 25.5
Row: 1, Col: 2, Value: 20.8
Row: 1, Col: 3, Value: 18.0
Row: 1, Col: 4, Value: 14.4
Row: 1, Col: 5, Value: 5.3
Row: 1, Col: 6, Value: 16.0
Computer Services & Software 25.5%
Electronics 20.8%
Computers & Office Equipment 18.0%
Communications Equipment 14.4%
Electronic Instruments 5.3%
All Others 16.0%*
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR TECHNOLOGY FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.6%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.0%
Entercom Communications Corp. 300 $ 9,300
(a)
COMMUNICATIONS EQUIPMENT -
14.4%
ADC Telecommunications, Inc. 110,400 4,395,300
(a)
Ascend Communications, Inc. 22,700 1,981,994
(a)
Cisco Systems, Inc. (a) 146,575 16,352,273
Dialogic Corp. (a) 23,700 604,350
Jabil Circuit, Inc. (a) 8,200 585,788
Lucent Technologies, Inc. 52,500 5,909,531
OY Nokia AB sponsored ADR 159,200 22,924,800
Premisys Communications, Inc. 42,700 408,319
(a)
Tut Systems, Inc. (a) 100 5,538
53,167,893
COMPUTER SERVICES & SOFTWARE
- - 25.5%
24/7 Media, Inc. (a) 100 3,763
Affiliated Computer Services, 24,500 1,182,125
Inc. Class A (a)
Allaire Corp. (a) 100 5,138
America Online, Inc. 70,400 12,368,400
Aspect Development, Inc. (a) 25,600 739,200
Automatic Data Processing, 92,600 3,941,288
Inc.
Aware, Inc. (a) 47,200 1,870,300
BMC Software, Inc. 69,500 3,244,781
Cadence Design Systems, Inc. 51,100 1,635,200
(a)
Cambridge Technology 16,400 485,850
Partners, Inc. (a)
Ceridian Corp. (a) 8,400 666,750
Citrix Systems, Inc. (a) 23,200 2,102,500
Cognos, Inc. (a) 12,900 339,316
Computer Learning Centers, 16,700 86,109
Inc. (a)
Computer Sciences Corp. 21,400 1,467,238
Compuware Corp. (a) 54,000 3,577,500
Concur Technologies, Inc. (a) 200 6,300
Documentum, Inc. (a) 40,500 944,156
DST Systems, Inc. (a) 49,700 3,078,294
Ebay, Inc. (a) 100 27,763
Electronic Arts, Inc. (a) 8,600 362,544
Entrust Technologies, Inc. (a) 300 10,575
Equifax, Inc. 51,300 2,029,556
First Data Corp. 21,300 816,056
GeoCities (a) 100 11,375
i2 Technologies, Inc. (a) 17,100 596,363
IMS Health, Inc. 51,400 1,882,525
InfoSpace.com, Inc. (a) 100 5,750
Legato Systems, Inc. (a) 17,200 1,038,450
Marketwatch.Com, Inc. (a) 200 13,900
Mentor Graphics Corp. (a) 20,500 214,609
Microsoft Corp. (a) 201,600 35,279,994
Oracle Corp. (a) 135,200 7,486,700
QRS Corp. (a) 8,600 430,000
Sabre Group Holdings, Inc. 25,700 1,134,013
Class A (a)
Siebel Systems, Inc. (a) 76,755 3,358,031
Smith-Gardner & Assocs, Inc. 200 3,200
(a)
SHARES VALUE (NOTE 1)
TSI International Software 12,800 $ 708,800
Ltd. (a)
Wang Laboratories, Inc. (a) 34,000 752,250
Xoom.com, Inc. (a) 100 5,800
93,912,462
COMPUTERS & OFFICE EQUIPMENT
- - 18.0%
Compaq Computer Corp. 146,100 6,958,013
Dell Computer Corp. (a) 248,400 24,840,000
EMC Corp. (a) 112,800 12,281,100
International Business 70,100 12,845,825
Machines Corp.
Quantum Corp. (a) 53,600 1,283,050
SCI Systems, Inc. (a) 45,900 2,524,500
Seagate Technology, Inc. (a) 106,700 4,341,356
Symbol Technologies, Inc. 12,800 806,400
Tech Data Corp. (a) 15,000 470,625
66,350,869
CONSUMER ELECTRONICS - 0.8%
Sharp Corp. 287,000 2,926,207
DEFENSE ELECTRONICS - 0.1%
Alpha Industries, Inc. (a) 7,900 316,000
ELECTRICAL EQUIPMENT - 0.2%
Allen Telecom, Inc. (a) 25,600 172,800
American Power Conversion 12,800 654,400
Corp. (a)
E Tek Dynamics, Inc. (a) 100 3,000
830,200
ELECTRONIC INSTRUMENTS - 5.3%
Advantest Corp. 11,300 918,210
Applied Materials, Inc. (a) 135,200 8,542,950
KLA-Tencor Corp. (a) 43,700 2,523,675
Smart Modular Technologies, 30,000 615,000
Inc. (a)
Teradyne, Inc. (a) 102,800 6,771,950
19,371,785
ELECTRONICS - 20.8%
Altera Corp. (a) 143,500 9,022,563
Analog Devices, Inc. (a) 92,700 2,757,825
C-Cube Microsystems, Inc. (a) 41,900 843,238
Dallas Semiconductor Corp. 5,100 187,106
Etec Systems, Inc. (a) 11,100 595,931
Intel Corp. 107,700 15,178,969
Linear Technology Corp. 56,500 5,748,875
Microchip Technology, Inc. (a) 8,600 248,325
Micron Technology, Inc. (a) 63,600 4,968,750
Motorola, Inc. 97,300 7,029,925
NVIDIA Corp. (a) 100 1,900
PMC-Sierra, Inc. (a) 8,500 631,656
Rambus, Inc. (a) 13,300 999,163
Semtech Corp. (a) 51,600 1,844,700
Taiwan Semiconductor 24,600 492,000
Manufacturing Co. Ltd. ADR
(a)
Texas Instruments, Inc. 178,500 17,649,188
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
Tokyo Electron Ltd. 18,000 $ 825,631
Vishay Intertechnology, Inc. 25,600 334,400
Vitesse Semiconductor Corp. 21,400 1,106,113
(a)
VLSI Technology, Inc. (a) 25,600 304,000
Xilinx, Inc. (a) 69,000 5,727,000
76,497,258
ENTERTAINMENT - 0.0%
Fox Entertainment Group, Inc. 4,000 111,500
(a)
Ticketmaster Online 300 18,825
CitySearch, Inc. (a)
130,325
HOME FURNISHINGS - 0.0%
Select Comfort Corp. (a) 100 2,913
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.4%
ASM Lithography Holding N V 35,000 1,627,500
(a)
INSURANCE - 0.0%
MONY Group, Inc. 200 5,600
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.0%
UBid, Inc. (a) 100 8,150
SERVICES - 0.1%
Diamond Technology Partners, 14,100 421,238
Inc. Class A (a)
TELEPHONE SERVICES - 0.0%
Covad Communications Group, 200 10,550
Inc. (a)
TOTAL COMMON STOCKS 315,588,250
(Cost $217,370,994)
CASH EQUIVALENTS - 14.4%
Taxable Central Cash Fund (b) 53,192,629 53,192,629
(Cost $53,192,629)
TOTAL INVESTMENT IN $ 368,780,879
SECURITIES - 100%
(Cost $270,563,623)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $270,753,741. Net unrealized appreciation
aggregated $98,027,138, of which $99,899,242 related to appreciated
investment securities and $1,872,104 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.
ADVISOR TECHNOLOGY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 368,780,879
value (cost $270,563,623) -
See accompanying schedule
Receivable for investments 4,111,070
sold
Receivable for fund shares 9,700,360
sold
Dividends receivable 35,163
Interest receivable 185,162
Other receivables 1,661
TOTAL ASSETS 382,814,295
LIABILITIES
Payable for investments $ 8,960,629
purchased
Payable for fund shares 529,945
redeemed
Accrued management fee 151,606
Distribution fees payable 158,943
Other payables and accrued 110,026
expenses
TOTAL LIABILITIES 9,911,149
NET ASSETS $ 372,903,146
Net Assets consist of:
Paid in capital $ 258,120,031
Accumulated net investment (945,314)
loss
Accumulated undistributed net 17,511,949
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 98,216,480
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 372,903,146
CALCULATION OF MAXIMUM $23.20
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($36,795,547 (divided
by) 1,585,755 shares)
Maximum offering price per $24.62
share (100/94.25 of $23.20)
CLASS T: NET ASSET VALUE $23.06
and redemption price per
share ($201,095,759 (divided
by) 8,722,427 shares)
Maximum offering price per $23.90
share (100/96.50 of $23.06)
CLASS B: NET ASSET VALUE $22.80
and offering price per
share ($92,887,593 (divided
by) 4,073,272 shares) A
CLASS C: NET ASSET VALUE $22.85
and offering price per
share ($27,901,952 (divided
by) 1,221,221 shares) A
INSTITUTIONAL CLASS: NET $23.26
ASSET VALUE, offering price
and redemption price per
share ($14,222,295
(divided by) 611,394 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 90,705
Dividends
Interest 554,517
TOTAL INCOME 645,222
EXPENSES
Management fee $ 580,009
Transfer agent fees 277,238
Distribution fees 588,868
Accounting fees and expenses 55,543
Non-interested trustees' 321
compensation
Custodian fees and expenses 7,254
Registration fees 81,594
Audit 14,569
Legal 1,985
Interest 1,590
Miscellaneous 640
Total expenses before 1,609,611
reductions
Expense reductions (19,075) 1,590,536
NET INVESTMENT INCOME (LOSS) (945,314)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,094,422
Foreign currency transactions 2,923 21,097,345
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 84,488,927
Assets and liabilities in (762) 84,488,165
foreign currencies
NET GAIN (LOSS) 105,585,510
NET INCREASE (DECREASE) IN $ 104,640,196
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (945,314) $ (974,989)
income (loss)
Net realized gain (loss) 21,097,345 2,748,784
Change in net unrealized 84,488,165 4,104,545
appreciation (depreciation)
NET INCREASE (DECREASE) IN 104,640,196 5,878,340
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (6,934,584)
From net realized gain
In excess of net realized - (2,779,083)
gain
TOTAL DISTRIBUTIONS - (9,713,667)
Share transactions - net 117,412,210 80,885,922
increase (decrease)
Redemption fees 81,835 79,635
TOTAL INCREASE (DECREASE) 222,134,241 77,130,230
IN NET ASSETS
NET ASSETS
Beginning of period 150,768,905 73,638,675
End of period (including $ 372,903,146 $ 150,768,905
accumulated net investment
loss of $(945,314) and $0,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.88 $ 15.96 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.05) (.08) (.10)
D
Net realized and unrealized 8.36 .58 6.13
gain (loss)
Total from investment 8.31 .50 6.03
operations
Less Distributions
From net realized gain - (1.14) (.08)
In excess of net realized - (.45) -
gain
Total distributions - (1.59) (.08)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.20 $ 14.88 $ 15.96
TOTAL RETURN B, C 55.91% 4.20% 60.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,796 $ 15,414 $ 7,313
(000 omitted)
Ratio of expenses to average 1.31% A 1.39% 1.75% A, F
net assets
Ratio of expenses to average 1.30% A, G 1.35% G 1.70% A, G
net assets after expense
reductions
Ratio of net investment (.63)% A (.59)% (.79)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.80 $ 15.91 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.07) (.11) (.11)
D
Net realized and unrealized 8.32 .56 6.09
gain (loss)
Total from investment 8.25 .45 5.98
operations
Less Distributions
From net realized gain - (1.12) (.08)
In excess of net realized - (.45) -
gain
Total distributions - (1.57) (.08)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.06 $ 14.80 $ 15.91
TOTAL RETURN B, C 55.81% 3.85% 60.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 201,096 $ 90,499 $ 57,624
(000 omitted)
Ratio of expenses to average 1.55% A 1.60% 1.92% A
net assets
Ratio of expenses to average 1.53% A, F 1.56% F 1.87% A, F
net assets after expense
reductions
Ratio of net investment (.87)% A (.80)% (.93)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.68 $ 15.88 $ 12.88
period
Income from Investment
Operations
Net investment income (loss) (.12) (.20) (.08)
D
Net realized and unrealized 8.23 .57 3.08
gain (loss)
Total from investment 8.11 .37 3.00
operations
Less Distributions
From net realized gain - (1.13) -
In excess of net realized - (.45) -
gain
Total distributions - (1.58) -
Redemption fees added to paid .01 .01 -
in capital
Net asset value, end of period $ 22.80 $ 14.68 $ 15.88
TOTAL RETURN B, C 55.31% 3.27% 23.29%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 92,888 $ 31,041 $ 5,105
(000 omitted)
Ratio of expenses to average 2.09% A 2.21% 2.50% A, F
net assets
Ratio of expenses to average 2.07% A, G 2.18% G 2.45% A, G
net assets after expense
reductions
Ratio of net investment (1.40)% A (1.40)% (1.41)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 E
Net asset value, beginning of $ 14.70 $ 14.28
period
Income from Investment
Operations
Net investment income (loss) (.11) (.17)
D
Net realized and unrealized 8.25 1.27
gain (loss)
Total from investment 8.14 1.10
operations
Less Distributions
From net realized gain - (.49)
In excess of net realized - (.20)
gain
Total distributions - (.69)
Redemption fees added to paid .01 .01
in capital
Net asset value, end of period $ 22.85 $ 14.70
TOTAL RETURN B, C 55.44% 8.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 27,902 $ 6,754
(000 omitted)
Ratio of expenses to average 2.05% A 2.43% A
net assets
Ratio of expenses to average 2.03% A, F 2.41% A, F
net assets after expense
reductions
Ratio of net investment (1.35)% A (1.64)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348%
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 E
Net asset value, beginning of $ 14.89 $ 15.98 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.02) (.04) (.06)
D
Net realized and unrealized 8.38 .55 6.12
gain (loss)
Total from investment 8.36 .51 6.06
operations
Less Distributions
From net realized gain - (1.15) (.09)
In excess of net realized - (.46) -
gain
Total distributions - (1.61) (.09)
Redemption fees added to paid .01 .01 .01
in capital
Net asset value, end of period $ 23.26 $ 14.89 $ 15.98
TOTAL RETURN B, C 56.21% 4.26% 60.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 14,222 $ 7,060 $ 3,598
(000 omitted)
Ratio of expenses to average .97% A 1.10% 1.50% A, F
net assets
Ratio of expenses to average .95% A, G 1.07% G 1.44% A, G
net assets after expense
reductions
Ratio of net investment (.29)% A (.30)% (.50)% A
income (loss) to average net
assets
Portfolio turnover 226% A 348% 517% A
A ANNUALIZED
B TOTAL RETURNS DO 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 6 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 6 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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 net investment loss and 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.
2. OPERATING POLICIES - CONTINUED
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 Fidelity Management & Research Company
(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 $273,204,826 and $203,231,159, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 24,361 $ 39
CLASS T 284,680 913
CLASS B 221,597 166,337
CLASS C 58,230 56,088
$ 588,868 $ 223,377
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.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 121,569 $ 65,850
CLASS T 221,211 89,952
CLASS B 63,924 63,924*
CLASS C 3,969 3,969*
$ 410,673 $ 223,695
* 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 $ 28,695 .30 *
CLASS T 155,902 .28 *
CLASS B 68,935 .32 *
CLASS C 15,522 .27 *
INSTITUTIONAL CLASS 8,184 .21 *
$ 277,238
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $24,797 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $3,584,000. The weighted average interest rate was 5.3%.
6. EXPENSE REDUCTIONS.
FMR 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 $18,671 under this arrangement.
In addition, the fund has entered into arrangements 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 $404 under the custodian arrangement.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31,
1999 1998 A
FROM NET REALIZED GAIN
Class A $ - $ 729,180
Class T - 5,047,886
Class B - 851,766
Class C - 20,288
Institutional Class - 285,464
Total $ - $ 6,934,584
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
$ - $ 9,713,667
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 770,276 964,665 $ 15,079,974
Reinvestment of distributions - 69,547 -
Shares redeemed (220,576) (456,218) (3,886,307)
Net increase (decrease) 549,700 577,994 $ 11,193,667
CLASS T Shares sold 3,739,962 4,279,715 $ 69,541,395
Reinvestment of distributions - 495,203 -
Shares redeemed (1,133,010) (2,282,335) (18,423,281)
Net increase (decrease) 2,606,952 2,492,583 $ 51,118,114
CLASS B Shares sold 2,363,629 1,984,357 $ 44,351,636
Reinvestment of distributions - 78,354 -
Shares redeemed (405,009) (269,419) (6,724,398)
Net increase (decrease) 1,958,620 1,793,292 $ 37,627,238
CLASS C Shares sold 849,317 494,219 $ 15,893,166
Reinvestment of distributions - 2,343 -
Shares redeemed (87,485) (37,173) (1,592,327)
Net increase (decrease) 761,832 459,389 $ 14,300,839
INSTITUTIONAL CLASS Shares 288,555 485,097 $ 5,694,989
sold
Reinvestment of distributions - 27,259 -
Shares redeemed (151,228) (263,460) (2,522,637)
Net increase (decrease) 137,327 248,896 $ 3,172,352
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 13,488,171
Reinvestment of distributions 932,488
Shares redeemed (6,419,806)
Net increase (decrease) $ 8,000,853
CLASS T Shares sold $ 62,520,538
Reinvestment of distributions 6,737,895
Shares redeemed (32,522,809)
Net increase (decrease) $ 36,735,624
CLASS B Shares sold $ 28,884,876
Reinvestment of distributions 1,031,825
Shares redeemed (3,754,232)
Net increase (decrease) $ 26,162,469
CLASS C Shares sold $ 6,924,463
Reinvestment of distributions 27,642
Shares redeemed (520,009)
Net increase (decrease) $ 6,432,096
INSTITUTIONAL CLASS Shares $ 6,901,286
sold
Reinvestment of distributions 379,700
Shares redeemed (3,726,106)
Net increase (decrease) $ 3,554,880
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3 , 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
9. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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 JANUARY 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - INST 19.35% 32.87% 112.75%
CL
S&P 500 15.02% 32.49% 103.54%
GS Utilities 25.56% 36.57% 105.88%
CUMULATIVE TOTAL RETURNS show Institutional Class shares' performance
in percentage terms over a set period - in this case, six months, 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 market capitalization-weighted index
of common stocks - and the Goldman Sachs Utilities Index - a market
capitalization-weighted index of 136 stocks designed to measure the
performance of companies in the utilities sector. Issues in the index
include generators and distributors of electricity, distributors of
natural gas and water, and providers of telecommunications services.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY ADV UTILITIES - INST 32.87% 36.77%
CL
S&P 500 32.49% 34.28%
GS Utilities 36.57% 34.92%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$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
1998/08/31 15211.29 15136.87 15244.65
1998/09/30 16723.52 16106.54 16699.19
1998/10/31 16987.26 17416.64 17462.71
1998/11/30 17742.52 18472.27 18082.46
1998/12/31 19922.89 19536.64 19876.18
1999/01/29 21275.46 20353.66 20588.34
IMATRL PRASUN SHR__CHT 19990131 19990226 110458 R00000000000032
</TABLE>
(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: 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
January 31, 1999, the value of the investment would have grown to
$21,275 - a 112.75% 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 $20,354 - a 103.54%
increase. If $10,000 was invested in the Goldman Sachs Utilities
Index, it would have grown to $20,588 - a 105.88% increase.
ADVISOR UTILITIES GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
(PHOTOGRAPH OF PETER SAPERSTONE)
NOTE TO SHAREHOLDERS: Peter Saperstone became Portfolio Manager of
Fidelity Advisor Utilities Growth Fund on October 30, 1998.
Q. HOW DID THE FUND PERFORM, PETER?
A. For the six months that ended January 31, 1999, the fund's
Institutional Class shares returned 19.35%. In comparison, the Goldman
Sachs Utilities Index - an index of 136 stocks designed to measure the
performance of companies in the utilities sector - returned 25.56%.
During the same period, the Standard & Poor's 500 Index returned
15.02%. During the 12 months that ended January 31, 1999, the fund's
Institutional Class shares returned 32.87%, while the S&P 500 and the
Goldman Sachs indexes returned 32.49% and 36.57%, respectively, during
the same period.
Q. WHAT FACTORS CAUSED THE FUND TO LAG THE GOLDMAN SACHS INDEX?
A. The fund's performance relative to the Goldman Sachs index was hurt
primarily during the third quarter of 1998, when investors' flight to
safety drove down stock prices in the telephone utilities sector and
assets flowed into the more conservative electric utilities sector.
The fund's large position in telephone stocks and underweighting in
electric utilities relative to the index hurt performance during the
past six-month period.
Q. BUT WEREN'T TELEPHONE STOCKS AMONG THE BEST PERFORMERS FOR THE
FUND?
A. Yes, they were, but their underperformance in the third quarter
really hurt. However, with the exception of that quarter, telephone
stocks accounted for the majority of the fund's solid return.
Telephone companies continued to increase earnings and revenues faster
than other sectors in the utilities industry due to strong demand for
telecommunications equipment and data services. Consequently, these
stocks reaped the rewards of their success and positive investor
sentiment.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE FOR ELECTRIC UTILITIES?
A. It's been difficult. Many of these stocks have been out of favor
for a while and are starting to look inexpensive considering the
stable earnings growth of some electric utility companies. Lately I've
been buying some electric utilities because they are looking more
attractive on a relative basis.
Q. WHICH STOCKS WERE THE MAJOR CONTRIBUTORS TO TOTAL RETURN?
A. MCI WorldCom's stock continued to provide a significant boost to
the fund's total return. The company continues to be one of the most
compelling growth stories in the industry as a whole. MCI WorldCom is
one of the best-positioned telecommunications companies in the data
and Internet market, which could drive higher revenue growth than the
industry. Another solid performer for the fund was Qwest
Communications. This company offers a high-capacity fiber-optic
network to deliver data communications; the stock appreciated
significantly in response to the strong growth outlook for
data-networking traffic.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
A. I have sold the fund's holdings in Smartalk, but before I did, the
stock hurt total return as its price plummeted in response to
financial difficulties. Owning Tel-Save.com stock was quite a
roller-coaster ride during the period. During January the stock
dropped from a daily trading high of approximately $22 to close at
around $12.50 at the end of the period. The stock dropped primarily in
response to investors' concerns regarding management changes and when
its proposed merger with GTE fell apart.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. I don't anticipate any major changes to the fund's holdings and
asset allocation. In the short term, the fund is positioned to take
advantage of the growth potential in the telecommunications sector.
However, if the market continues to bid up the prices of telephone
utilities, I may continue to take some profits for the fund. Most
likely, any changes to the fund's holdings would be in an effort to
lower the fund's risk profile or to capitalize on any opportunities in
other sectors, such as electric utilities, which offer some compelling
stock valuations.
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.
(CHECKMARK)FUND FACTS
START DATE: September 3, 1996
SIZE: as of January 31, 1999, more than
$71 million
MANAGER: Peter Saperstone, since 1998;
joined Fidelity in 1995
ADVISOR UTILITIES GROWTH FUND
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 11.0
SBC Communications, Inc. 5.7
Bell Atlantic Corp. 5.0
Tele-Communications, Inc. 4.1
(TCI Group) Series A
MediaOne Group, Inc. 4.0
OY Nokia AB sponsored ADR 3.9
AirTouch Communications, Inc. 3.9
AT&T Corp. 3.6
McLeodUSA, Inc. Class A 3.5
Ameritech Corp. 3.5
TOP INDUSTRIES AS OF JANUARY
31, 1999
% OF FUND'S INVESTMENTS
Telephone Services 54.9%
Broadcasting 15.5%
Electric Utility 7.6%
Cellular 6.6%
Communications Equipment 4.8%
All Others 10.6%*
Row: 1, Col: 1, Value: 54.9
Row: 1, Col: 2, Value: 15.5
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 4.8
Row: 1, Col: 6, Value: 10.6
* INCLUDES SHORT-TERM INVESTMENTS
ADVISOR UTILITIES GROWTH FUND
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
BROADCASTING - 13.1%
Cablevision Systems Corp. 20,000 $ 1,347,500
Class A (a)
MediaOne Group, Inc. 50,000 2,803,125
Metromedia Fiber Network, 47,100 2,157,769
Inc. Class A (a)
Tele-Communications, Inc. 42,527 2,915,757
(TCI Group) Series A (a)
9,224,151
CELLULAR - 6.6%
AirTouch Communications, Inc. 28,300 2,732,719
(a)
Century Telephone 3,800 258,400
Enterprises, Inc.
Nextel Communications, Inc. 9,100 291,200
Class A (a)
SkyTel Communications, Inc. 19,100 503,763
(a)
Telephone & Data Systems, 10,000 532,500
Inc.
Teligent, Inc. Class A (a) 9,500 332,500
4,651,082
COMMUNICATIONS EQUIPMENT - 4.8%
Intermedia Communications, 47,267 655,830
Inc. (a)
OY Nokia AB sponsored ADR 19,100 2,750,400
3,406,230
COMPUTER SERVICES & SOFTWARE
- - 0.4%
Convergys Corp. (a) 14,300 257,400
ELECTRIC UTILITY - 7.6%
AES Corp. (a) 9,500 320,031
CMS Energy Corp. 31,700 1,357,156
Duke Energy Corp. 24,294 1,501,673
Entergy Corp. 18,100 532,819
Montana Power Co. 10,500 551,250
PG&E Corp. 34,300 1,095,456
5,358,385
ELECTRICAL EQUIPMENT - 0.9%
American Superconductor Corp. 52,500 616,875
(a)
GAS - 0.6%
Williams Companies, Inc. 11,981 395,373
OIL & GAS - 0.6%
Coastal Corp. (The) 15,050 448,678
TELEPHONE SERVICES - 54.9%
ALLTEL Corp. 33,700 2,175,756
Ameritech Corp. 38,100 2,481,263
AT&T Corp. 28,175 2,556,881
BCE, Inc. 2,500 112,163
Bell Atlantic Corp. 58,800 3,528,000
BellSouth Corp. 38,200 1,704,675
Cincinnati Bell, Inc. 14,300 290,469
Commonwealth Telephone 30,000 948,750
Enterprises, Inc. (a)
COMSAT Corp. Series 1 14,300 473,688
Covad Communications Group, 16,200 854,550
Inc. (a)
Frontier Corp. 19,800 715,275
SHARES VALUE (NOTE 1)
Global TeleSystems Group, 11,800 $ 738,975
Inc. (a)
GTE Corp. 25,900 1,748,250
ICG Communications, Inc. (a) 20,000 376,250
MCI WorldCom, Inc. (a) 96,630 7,706,241
McLeodUSA, Inc. Class A (a) 60,000 2,493,750
Qwest Communications 20,061 1,202,406
International, Inc. (a)
SBC Communications, Inc. 73,900 3,990,600
Sprint Corp. (FON Group) 13,300 1,115,538
Tel-Save.com, Inc. (a) 133,650 1,695,684
U.S. WEST, Inc. 16,100 993,169
WinStar Communications, Inc. 15,600 669,825
(a)
38,572,158
TOTAL COMMON STOCKS 62,930,332
(Cost $47,885,372)
CONVERTIBLE PREFERRED STOCKS
- - 2.4%
BROADCASTING - 2.4%
MediaOne Group, Inc. $3.63 20,500 1,686,125
PIES (Cost $1,329,938)
CASH EQUIVALENTS - 8.1%
Taxable Central Cash Fund (b) 5,689,628 5,689,628
(Cost $5,689,628)
TOTAL INVESTMENT IN $ 70,306,085
SECURITIES - 100%
(Cost $54,904,938)
SECURITY TYPE ABBREVIATIONS
PIES - Premium Income Equity Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. 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 January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $54,997,793. Net unrealized appreciation
aggregated $15,308,292, of which $15,757,180 related to appreciated
investment securities and $448,888 related to depreciated investment
securities.
ADVISOR UTILITIES GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 70,306,085
value (cost $54,904,938) -
See accompanying schedule
Receivable for investments 1,987,790
sold
Receivable for fund shares 807,396
sold
Dividends receivable 124,947
Interest receivable 17,415
TOTAL ASSETS 73,243,633
LIABILITIES
Payable for investments $ 1,279,570
purchased
Payable for fund shares 153,943
redeemed
Accrued management fee 32,225
Distribution fees payable 37,151
Other payables and accrued 42,694
expenses
TOTAL LIABILITIES 1,545,583
NET ASSETS $ 71,698,050
Net Assets consist of:
Paid in capital $ 58,610,556
Distributions in excess of (43,912)
net investment income
Accumulated undistributed net (2,269,754)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 15,401,160
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 71,698,050
CALCULATION OF MAXIMUM $17.44
OFFERING PRICE CLASS A:
NET ASSET VALUE and
redemption price per
share ($5,916,829 (divided
by) 339,290 shares)
Maximum offering price per $18.50
share (100/94.25 of
$17.44)
CLASS T: NET ASSET VALUE $17.39
and redemption price per
share ($29,396,576 (divided
by) 1,690,635 shares)
Maximum offering price per $18.02
share (100/96.50 of
$17.39)
CLASS B: NET ASSET VALUE $17.25
and offering price per
share ($24,652,641 (divided
by) 1,429,347 shares) A
CLASS C: NET ASSET VALUE $17.24
and offering price per
share ($7,627,279 (divided
by) 442,384 shares) A
INSTITUTIONAL CLASS: NET $17.46
ASSET VALUE, offering price
and redemption price per
share ($4,104,725
(divided by) 235,098 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 341,101
Dividends
Interest 88,478
TOTAL INCOME 429,579
EXPENSES
Management fee $ 146,735
Transfer agent fees 66,390
Distribution fees 165,119
Accounting fees and expenses 30,157
Non-interested trustees' 87
compensation
Custodian fees and expenses 6,792
Registration fees 48,460
Audit 14,433
Legal 471
Miscellaneous 103
Total expenses before 478,747
reductions
Expense reductions (9,721) 469,026
NET INVESTMENT INCOME (LOSS) (39,447)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,356,654)
Foreign currency transactions (794) (1,357,448)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 12,721,048
Assets and liabilities in 9 12,721,057
foreign currencies
NET GAIN (LOSS) 11,363,609
NET INCREASE (DECREASE) IN $ 11,324,162
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (39,447) $ (83,903)
income (loss)
Net realized gain (loss) (1,357,448) 4,505,946
Change in net unrealized 12,721,057 1,230,081
appreciation (depreciation)
NET INCREASE (DECREASE) IN 11,324,162 5,652,124
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (36,379)
From net investment income
In excess of net investment (4,595) -
income
From net realized gain (2,519,900) (1,479,046)
In excess of net realized (912,306) -
gain
TOTAL DISTRIBUTIONS (3,436,801) (1,515,425)
Share transactions - net 20,857,391 26,882,209
increase (decrease)
Redemption fees 11,931 21,301
TOTAL INCREASE (DECREASE) 28,756,683 31,040,209
IN NET ASSETS
NET ASSETS
Beginning of period 42,941,367 11,901,158
End of period (including $ 71,698,050 $ 42,941,367
under (over) distribution of
net investment income of
$(43,912) and $130,
respectively)
SEE ACCOMPANYING NOTES WHICH
ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 16.00 $ 13.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .02 (.02) .12
D
Net realized and unrealized 2.62 4.19 3.09
gain (loss)
Total from investment 2.64 4.17 3.21
operations
Less Distributions
From net investment income - (.04) H (.03)
From net realized gain (.88) (1.21) H (.11)
In excess of net realized (.32) - -
gain
Total distributions (1.20) (1.25) (.14)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.44 $ 16.00 $ 13.07
TOTAL RETURN B, C 19.22% 33.99% 32.36%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,917 $ 3,186 $ 531
(000 omitted)
Ratio of expenses to average 1.54% A 1.75% E 1.75% A, E
net assets
Ratio of expenses to average 1.50% A, G 1.72% G 1.75% A
net assets after expense
reductions
Ratio of net investment .23% A (.11)% 1.09% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE
OF CLASS A SHARES) TO JULY
31,1997.
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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 15.95 $ 13.03 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) .00 (.04) .08
D
Net realized and unrealized 2.61 4.17 3.09
gain (loss)
Total from investment 2.61 4.13 3.17
operations
Less Distributions
From net investment income - (.03) (.03)
From net realized gain (.86) (1.19) (.11)
In excess of net realized (.31) - -
gain
Total distributions (1.17) (1.22) (.14)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.39 $ 15.95 $ 13.03
TOTAL RETURN B, C 19.02% 33.72% 31.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 29,397 $ 19,918 $ 7,085
(000 omitted)
Ratio of expenses to average 1.79% A 1.94% 2.00% A, E
net assets
Ratio of expenses to average 1.75% A, G 1.90% G 2.00% A
net assets after expense
reductions
Ratio of net investment (.02)% A (.23)% .79% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (SEE
NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3,
1996 (COMMENCEMENT OF SALE
OF CLASS T SHARES) TO JULY
31,1997.
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 15.83 $ 13.01 $ 11.76
period
Income from Investment
Operations
Net investment income (loss) (.04) (.13) .02
D
Net realized and unrealized 2.59 4.16 1.23
gain (loss)
Total from investment 2.55 4.03 1.25
operations
Less Distributions
From net investment income - (.03) H -
From net realized gain (.83) (1.19) H -
In excess of net realized (.30) - -
gain
Total distributions (1.13) (1.22) -
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.25 $ 15.83 $ 13.01
TOTAL RETURN B, C 18.70% 32.97% 10.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 24,653 $ 12,919 $ 2,039
(000 omitted)
Ratio of expenses to average 2.27% A 2.50% E 2.50% A, E
net assets
Ratio of expenses to average 2.23% A 2.47% H 2.50% A
net assets after expense
reductions
Ratio of net investment (.49)% A (.85)% .32% A
income (loss) to average net
assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE CONTINGENT
DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (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 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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 F
Net asset value, beginning of $ 15.85 $ 13.90
period
Income from Investment
Operations
Net investment income (loss) (.03) (.10)
D
Net realized and unrealized 2.57 3.16
gain (loss)
Total from investment 2.54 3.06
operations
Less Distributions - (.02)
From net investment income
From net realized gain (.84) (1.10)
In excess of net realized (.31) -
gain
Total distributions (1.15) (1.12)
Redemption fees added to paid .00 .01
in capital
Net asset value, end of period $ 17.24 $ 15.85
TOTAL RETURN B, C 18.66% 23.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,627 $ 3,489
(000 omitted)
Ratio of expenses to average 2.27% A 2.50% A, E
net assets
Ratio of expenses to average 2.23% A, G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.48)% A (.91)% A
income (loss) to average net
assets
Portfolio turnover 152% A 151%
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT
INCLUDE THE CONTINGENT
DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS'
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER (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 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> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1998 1997 F
Net asset value, beginning of $ 16.02 $ 13.09 $ 10.00
period
Income from Investment
Operations
Net investment income D .04 .04 .14
Net realized and unrealized 2.62 4.17 3.10
gain (loss)
Total from investment 2.66 4.21 3.24
operations
Less Distributions - (.07) H (.04)
From net investment income
In excess of net investment (.02) - -
income
From net realized gain (.88) (1.22) H (.11)
In excess of net realized (.32) - -
gain
Total distributions (1.22) (1.29) (.15)
Redemption fees added to paid .00 .01 -
in capital
Net asset value, end of period $ 17.46 $ 16.02 $ 13.09
TOTAL RETURN B, C 19.35% 34.36% 32.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,105 $ 3,430 $ 2,246
(000 omitted)
Ratio of expenses to average 1.18% A 1.46% 1.50% A, E
net assets
Ratio of expenses to average 1.14% A, G 1.43% G 1.50% A
net assets after expense
reductions
Ratio of net investment .58% A .30% 1.29% A
income to average net assets
Portfolio turnover 152% A 151% 13% A
</TABLE>
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 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 INSTITUTIONAL CLASS
SHARES) TO JULY 31,1997.
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 THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1999 (Unaudited)
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. 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
and settlement date 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.
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.
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'
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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 Fidelity Management & Research Company
(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 $49,412,560 and $36,026,001, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .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 FDC RETAINED BY FDC
CLASS A $ 4,674 $ 31
CLASS T 53,559 200
CLASS B 83,885 62,914
CLASS C 23,001 21,303
$ 165,119 $ 84,448
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.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 36,451 $ 16,376
CLASS T 42,659 13,924
CLASS B 8,594 8,594 *
CLASS C 3,397 3,397 *
$ 91,101 $ 42,291
* 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 $ 5,390 .29 *
CLASS T 29,669 .28 *
CLASS B 22,378 .27 *
CLASS C 6,060 .27 *
INSTITUTIONAL CLASS 2,893 .17 *
$ 66,390
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains the fund's accounting records. The fee is based on the
level of average net assets for the month 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 $4,582 for the period.
5. EXPENSE REDUCTIONS.
FMR 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 $6,340 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 $3,381 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JANUARY YEAR ENDED
31,1999 JULY 31, 1998 A
FROM NET INVESTMENT INCOME
Class A $ - $ 1,800
Class T - 13,527
Class B - 4,591
Class C - 250
Institutional Class - 16,211
Total $ - $ 36,379
IN EXCESS OF NET INVESTMENT
INCOME
Class A $ - $ -
Class T - -
Class B - -
Class C - -
Institutional Class 4,595 -
Total $ 4,595 $ -
FROM NET REALIZED GAIN
Class A $ 196,351 $ 66,066
Class T 1,112,834 749,717
Class B 793,632 267,630
Class C 228,948 16,996
Institutional Class 188,135 378,637
Total $ 2,519,900 $ 1,479,046
IN EXCESS OF NET REALIZED GAIN
Class A $ 71,087 $ -
Class T 402,891 -
Class B 287,327 -
Class C 82,888 -
Institutional Class 68,113 -
Total $ 912,306 $ -
$ 3,436,801 $ 1,515,425
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>
SHARES DOLLARS
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
1999 1998 A 1999
CLASS A Shares sold 183,877 171,774 $ 2,791,824
Reinvestment of distributions 17,187 4,614 223,574
Shares redeemed (60,829) (17,947) (873,296)
Net increase (decrease) 140,235 158,441 $ 2,142,102
CLASS T Shares sold 700,888 1,165,712 $ 10,366,054
Reinvestment of distributions 110,367 53,698 1,431,839
Shares redeemed (369,043) (514,685) (5,458,385)
Net increase (decrease) 442,212 704,725 $ 6,339,508
CLASS B Shares sold 687,188 725,510 $ 9,928,754
Reinvestment of distributions 65,771 15,242 845,860
Shares redeemed (139,835) (81,233) (2,038,308)
Net increase (decrease) 613,124 659,519 $ 8,736,306
CLASS C Shares sold 253,340 225,634 $ 3,885,610
Reinvestment of distributions 17,795 1,164 228,715
Shares redeemed (48,865) (6,684) (737,379)
Net increase (decrease) 222,270 220,114 $ 3,376,946
INSTITUTIONAL CLASS Shares 37,839 310,409 $ 542,433
sold
Reinvestment of distributions 18,454 22,979 240,109
Shares redeemed (35,272) (290,942) (520,013)
Net increase (decrease) 21,021 42,446 $ 262,529
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED JULY 31,
1998 A
CLASS A Shares sold $ 2,671,006
Reinvestment of distributions 61,624
Shares redeemed (275,348)
Net increase (decrease) $ 2,457,282
CLASS T Shares sold $ 17,577,615
Reinvestment of distributions 715,847
Shares redeemed (7,904,206)
Net increase (decrease) $ 10,389,256
CLASS B Shares sold $ 11,176,610
Reinvestment of distributions 202,512
Shares redeemed (1,222,194)
Net increase (decrease) $ 10,156,928
CLASS C Shares sold $ 3,470,986
Reinvestment of distributions 15,529
Shares redeemed (107,792)
Net increase (decrease) $ 3,378,723
INSTITUTIONAL CLASS Shares $ 4,630,856
sold
Reinvestment of distributions 307,065
Shares redeemed (4,437,901)
Net increase (decrease) $ 500,020
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO JULY 31, 1998.
8. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP (PwC) as the fund's independent auditor and voted to appoint
Deloitte & Touche LLP for the current fiscal year. During the two most
recent fiscal years, PwC's audit reports contained no adverse opinion
or disclaimer of opinion; nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. Further,
there were no disagreements between the fund and PwC on accounting
principles, financial statement disclosure or audit scope, which if
not resolved to the satisfaction of PwC would have caused it to make
reference to the disagreements in connection with its report.
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
Matthew N. Karstetter, Deputy 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital
Appreciation Fund
Fidelity Advisor International Capital
Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation 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)
Fidelity Investments Institutional Services Co., Inc.
P.O. Box 505422
Cincinnati, OH 45250-5422
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(RECYCLE LOGO) Printed on Recycled Paper
AFOCI-SANN-0399 71976
1.700906.101
