Morningstar Advisor - August/September 2010 - 23

straints, Fidelity managers have wide latitude to implement their own investment strategies. Many talented investors, such as Peter Lynch, Will Danoff, and Joel Tillinghast, have emerged from this culture, which affords them the freedom to think and invest differently. Our favorite Fidelity Advisor funds are led by managers who have put this freedom to good use. Fidelity’s talent isn’t distributed broadly enough for investors to rely on its Advisor lineup alone, however. While much of the lineup might appeal to investors with limited choices, only a handful is compelling enough to choose over better, non-Fidelity alternatives. Others, especially many of its core offerings in the large-blend arena, are just too bland to choose at all. In fact, our least-favorite Fidelity Advisor funds are not offerings where the managers use their freedom unwisely, but ones where we’re not convinced that they have enough freedom to stand out. Here are our favorite Fidelity Advisor funds and ones that advisors should best avoid.

Fidelity Advisor Funds at a Glance
The Standouts
Fund Category Morningstar Rating Expense Ratio 3-Yr Anl TR (%) 3-Yr Anl TR % Rank Cat

New Insights FNIAX Equity Growth FAEGX Growth Opportunities FAGOX Dividend Growth FDGTX Mid Cap II FIIAX Small Cap Value FCVAX Municipal Income FAMUX

Large Growth Large Growth Large Growth Large Blend Mid Growth Small Value Muni Natl Long

{{{{ {{ { {{ {{{{ {{{{ {{{

1.18 1.39 1.02 1.3 1.17 1.4 0.79

–5.79 –10.41 –12.23 –9.35 –4.78 –4.75 4.54

21 80 94 38 24 13 28

Lost in the Crowd
Growth & Income FGITX Balanced FAIGX Dynamic Capital Appreciation FARAX Equity Income FEIRX Diversified International FDVAX Freedom Funds Large Growth Moderate Allocation Large Growth Large Value Foreign Large Blend Target Date {{ {{ {{ {{ {{{ Average* 1.34 1.29 1.08 1.07 1.31 NA –11.35 –5.40 –9.53 –13.04 –14.94 NA 87 64 71 71 72 NA

*Rating as of March 31, 2010. Data as of June 30, 2010.

Fidelity Advisor Equity Growth FAEGX

Best of the Bunch
Fidelity Advisor New Insights FNIAX

Simply put, manager Will Danoff is among the best investors in the business. In his two decades at Fidelity Contrafund, which he runs in the same strategy as this fund, Danoff has smoked most large-growth funds, not to mention the broad market indexes. He has succeeded by investing anywhere company fundamentals are improving, allowing him to cast a wide net: His top holdings include both Google GOOG and Berkshire Hathaway BRK.A. Danoff manages too much money to trade based on short-term factors. (Between this fund and Fidelity Contrafund, he oversees more than $70 billion.) But focusing on the long term means he can sniff out opportunities that his shortsighted competitors miss. For a growth-leaning core holding, this fund is an outstanding choice.

Manager Jason Weiner counts Danoff as one of his mentors, and it shows. His style is eclectic, and he’s unencumbered by traditional notions of what constitutes a growth stock. Unlike Danoff, however, Weiner isn’t constrained by asset size, freeing him to employ his fast-trading, sector-betting strategy. His approach can backfire; after rightly trimming his once-outsized technology stake in early 2008, for example, he wrongly loaded up on fast-growing industrials, leading to bruising losses for the year. Weiner, though, has usually gotten it right. This fund is too volatile and unpredictable to be a core holding, but it’s a great complement to one.
Fidelity Advisor Growth Opportunities FAGOX

with a helping of turnaround plays and steady-Eddies like Wal-Mart WMT. While many more-aggressive managers burn out quickly, Wymer has 20 years of experience under his belt, which has included top-rate returns during his 13 years at Fidelity Growth Company FDGRX. As a foil for a deep-value fund elsewhere in a portfolio, this offering is a great option.
Fidelity Advisor Dividend Growth FDGTX

Manager Steve Wymer is a classic growth investor. Valuation typically plays second fiddle to earnings growth in his analysis, while traditional growth areas like technology and health care are his stomping grounds. But Wymer’s strategy is more nuanced than it may appear at first blush. He balances fast growers

Since coming aboard in October 2008, manager Larry Rakers has turned around this one-time laggard by using the same highly successful strategy he employed at prior charge Fidelity Advisor Balanced FAIGX. Although Rakers avoids making big sector bets versus his S&P 500 benchmark, his portfolio is far from an index clone. Indeed, nearly half of the fund’s holdings aren’t in the index. Rakers draws upon research from Fidelity’s vast analyst ranks to invest in every corner of the style box. The fund’s all-cap complexion will likely make it more volatile than the large-blend competition, though it could provide just about all the U.S. equity exposure an investor needs.

MorningstarAdvisor.com 23


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Morningstar Advisor - August/September 2010

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2010

Morningstar Advisor - August/September 2010
Contents
New on MorningstarAdvisor.com
Contributors
Letter From the Editor
What Aspects of Health-Care Reform Will Most Affect Your Clients?
Bonds, Chicago Style
Investment Briefs
Which Risk Are You Managing?
Eye on the Prize
Advisors Can’t Rely on Fidelity Alone
Health Care Gets Back to Business
An Opportune Time to Bet the Pharm
Reform’s Impact on Other Health-Care Industries
Top Takeover Targets in Biotech
After Reform, Narrow-Moat Firms Have Strong Prospects in Diagnostics
Health-Care Investing Alive and Well
Quest for Knowledge
Four Picks for the Present
How to Make Your Bond Portfolio Inflation-Resistant
Weeding Through the Energy Patch
Uncertainty and Value in Basic Materials
Stock Market Doom-Busters
Hunting Down European Debt-Dodgers
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks With Wide Moats
VA Sales Slip a Bit in First Quarter
New at Morningstar
Star Wars, the Sequel
Morningstar Advisor - August/September 2010 - Morningstar Advisor - August/September 2010
Morningstar Advisor - August/September 2010 - Cover2
Morningstar Advisor - August/September 2010 - 1
Morningstar Advisor - August/September 2010 - 2
Morningstar Advisor - August/September 2010 - Contents
Morningstar Advisor - August/September 2010 - 4
Morningstar Advisor - August/September 2010 - 5
Morningstar Advisor - August/September 2010 - New on MorningstarAdvisor.com
Morningstar Advisor - August/September 2010 - 7
Morningstar Advisor - August/September 2010 - Contributors
Morningstar Advisor - August/September 2010 - Letter From the Editor
Morningstar Advisor - August/September 2010 - What Aspects of Health-Care Reform Will Most Affect Your Clients?
Morningstar Advisor - August/September 2010 - 11
Morningstar Advisor - August/September 2010 - Bonds, Chicago Style
Morningstar Advisor - August/September 2010 - 13
Morningstar Advisor - August/September 2010 - Investment Briefs
Morningstar Advisor - August/September 2010 - 15
Morningstar Advisor - August/September 2010 - Which Risk Are You Managing?
Morningstar Advisor - August/September 2010 - 17
Morningstar Advisor - August/September 2010 - 18
Morningstar Advisor - August/September 2010 - Eye on the Prize
Morningstar Advisor - August/September 2010 - 20
Morningstar Advisor - August/September 2010 - 21
Morningstar Advisor - August/September 2010 - Advisors Can’t Rely on Fidelity Alone
Morningstar Advisor - August/September 2010 - 23
Morningstar Advisor - August/September 2010 - 24
Morningstar Advisor - August/September 2010 - 25
Morningstar Advisor - August/September 2010 - 26
Morningstar Advisor - August/September 2010 - Health Care Gets Back to Business
Morningstar Advisor - August/September 2010 - An Opportune Time to Bet the Pharm
Morningstar Advisor - August/September 2010 - 29
Morningstar Advisor - August/September 2010 - Reform’s Impact on Other Health-Care Industries
Morningstar Advisor - August/September 2010 - 31
Morningstar Advisor - August/September 2010 - 32
Morningstar Advisor - August/September 2010 - Top Takeover Targets in Biotech
Morningstar Advisor - August/September 2010 - 34
Morningstar Advisor - August/September 2010 - 35
Morningstar Advisor - August/September 2010 - After Reform, Narrow-Moat Firms Have Strong Prospects in Diagnostics
Morningstar Advisor - August/September 2010 - 37
Morningstar Advisor - August/September 2010 - 38
Morningstar Advisor - August/September 2010 - 39
Morningstar Advisor - August/September 2010 - 40
Morningstar Advisor - August/September 2010 - Health-Care Investing Alive and Well
Morningstar Advisor - August/September 2010 - 42
Morningstar Advisor - August/September 2010 - 43
Morningstar Advisor - August/September 2010 - 44
Morningstar Advisor - August/September 2010 - 45
Morningstar Advisor - August/September 2010 - 46
Morningstar Advisor - August/September 2010 - 47
Morningstar Advisor - August/September 2010 - 48
Morningstar Advisor - August/September 2010 - Quest for Knowledge
Morningstar Advisor - August/September 2010 - 50
Morningstar Advisor - August/September 2010 - 51
Morningstar Advisor - August/September 2010 - Four Picks for the Present
Morningstar Advisor - August/September 2010 - 53
Morningstar Advisor - August/September 2010 - How to Make Your Bond Portfolio Inflation-Resistant
Morningstar Advisor - August/September 2010 - 55
Morningstar Advisor - August/September 2010 - 56
Morningstar Advisor - August/September 2010 - 57
Morningstar Advisor - August/September 2010 - Weeding Through the Energy Patch
Morningstar Advisor - August/September 2010 - 59
Morningstar Advisor - August/September 2010 - 60
Morningstar Advisor - August/September 2010 - Uncertainty and Value in Basic Materials
Morningstar Advisor - August/September 2010 - 62
Morningstar Advisor - August/September 2010 - 63
Morningstar Advisor - August/September 2010 - Stock Market Doom-Busters
Morningstar Advisor - August/September 2010 - 65
Morningstar Advisor - August/September 2010 - Hunting Down European Debt-Dodgers
Morningstar Advisor - August/September 2010 - 67
Morningstar Advisor - August/September 2010 - Mutual Fund Analyst Picks
Morningstar Advisor - August/September 2010 - 69
Morningstar Advisor - August/September 2010 - 70
Morningstar Advisor - August/September 2010 - 71
Morningstar Advisor - August/September 2010 - 50 Most Popular Equity ETFs
Morningstar Advisor - August/September 2010 - 73
Morningstar Advisor - August/September 2010 - Undervalued Stocks With Wide Moats
Morningstar Advisor - August/September 2010 - 75
Morningstar Advisor - August/September 2010 - VA Sales Slip a Bit in First Quarter
Morningstar Advisor - August/September 2010 - 77
Morningstar Advisor - August/September 2010 - 78
Morningstar Advisor - August/September 2010 - New at Morningstar
Morningstar Advisor - August/September 2010 - Star Wars, the Sequel
Morningstar Advisor - August/September 2010 - Cover3
Morningstar Advisor - August/September 2010 - Cover4
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