Prospectus - Investment Objective
|
Fund/Class
|
Class
A |
Class
M |
Class
C |
Class
I |
Class
Z |
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Fidelity®
Limited Term Municipal Income Fund/Fidelity Advisor® Limited Term
Municipal Income Fund |
FASHX
|
FTSHX
|
FCSHX
|
FISHX
|
FIWAX
|
Fund
of Fidelity Municipal Trust
STATEMENT
OF ADDITIONAL INFORMATION
March
1, 2023
This
Statement of Additional Information (SAI) is not a prospectus. Portions of the
fund's annual
report are
incorporated herein. The annual report(s) are supplied with this SAI.
To
obtain a free additional copy of a prospectus or SAI, dated March 1, 2023, or an
annual report, please call Fidelity at 1-877-208-0098 or visit Fidelity's web
site at institutional.fidelity.com.
For
more information on any Fidelity ®
fund,
including charges and expenses, call Fidelity at the number indicated above for
a free prospectus. Read it carefully before investing or sending money.
245
Summer Street, Boston, MA 02210
ASTM-ASTMI-PTB-0323
1.785076.121
TABLE OF CONTENTS
INVESTMENT
POLICIES AND LIMITATIONS
The
following policies and limitations supplement those set forth in the prospectus.
Unless otherwise noted, whenever an investment policy or limitation states a
maximum percentage of the fund's assets that may be invested in any security or
other asset, or sets forth a policy regarding quality standards, such standard
or percentage limitation will be determined immediately after and as a result of
the fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the fund's
investment policies and limitations.
The
fund's fundamental investment policies and limitations cannot be changed without
approval by a "majority of the outstanding voting securities" (as defined in the
Investment Company Act of 1940 (1940 Act)) of the fund. However, except for the
fundamental investment limitations listed below, the investment policies and
limitations described in this Statement of Additional Information (SAI) are not
fundamental and may be changed without shareholder approval.
The
following are the fund's fundamental investment limitations set forth in their
entirety.
Diversification
The
fund may not with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, or securities of other
investment companies) if, as a result, (a) more than 5% of the fund's total
assets would be invested in the securities of that issuer, or (b) the fund would
hold more than 10% of the outstanding voting securities of that issuer.
For
purposes of the fund's diversification limitation discussed above, Fidelity
Management & Research Company LLC (FMR) identifies the issuer of a security
depending on its terms and conditions. In identifying the issuer, FMR will
consider the entity or entities responsible for payment of interest and
repayment of principal and the source of such payments; the way in which assets
and revenues of an issuing political subdivision are separated from those of
other political entities; and whether a governmental body is guaranteeing the
security.
For
purposes of the fund's diversification limitation discussed above, FMR does not
consider traditional bond insurance to be a separate security or the insurer to
be a separate issuer. Therefore, the diversification limitation does not limit
the percentage of fund assets that may be invested in securities insured by a
single bond insurer.
Senior
Securities
The
fund may not issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued by the
Securities and Exchange Commission or as otherwise permitted under the
Investment Company Act of 1940.
Borrowing
The
fund may not borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with the 33 1/3% limitation.
Underwriting
The
fund may not underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities or in connection with
investments in other investment companies.
Concentration
The
fund may not purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities; securities of other investment companies; or tax-exempt
obligations issued or guaranteed by a U.S. territory or possession or a state or
local government, or a political subdivision of any of the foregoing) if, as a
result, more than 25% of the fund's total assets would be invested in securities
of companies whose principal business activities are in the same
industry.
For
purposes of the fund's concentration limitation discussed above, FMR identifies
the issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the way in
which assets and revenues of an issuing political subdivision are separated from
those of other political entities; and whether a governmental body is
guaranteeing the security.
For
purposes of the fund's concentration limitation discussed above, FMR may analyze
the characteristics of a particular issuer and security and assign an industry
or sector classification consistent with those characteristics in the event that
the third-party classification provider used by FMR does not assign a
classification.
Real
Estate
The
fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
Commodities
The
fund may not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
Loans
The
fund may not lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements, or
to acquisitions of loans, loan participations or other forms of debt
instruments.
Pooled
Funds
The
fund may, notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment objective,
policies, and limitations as the fund.
The
following investment limitations are not fundamental and may be changed without
shareholder approval.
Short
Sales
The
fund does not currently intend to sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amount to the securities
sold short, and provided that transactions in futures contracts, options, and
swaps are not deemed to constitute selling securities short.
Margin
Purchases
The
fund does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
Borrowing
The
fund may borrow money only (a) from a bank or from a registered investment
company or portfolio for which FMR or an affiliate serves as investment adviser
or (b) by engaging in reverse repurchase agreements with any party (reverse
repurchase agreements are treated as borrowings for purposes of the fundamental
borrowing investment limitation).
Illiquid
Securities
The
fund does not currently intend to purchase any security if, as a result, more
than 10% of its net assets would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual restrictions on resale
or because they cannot be sold or disposed of in the ordinary course of business
at approximately the prices at which they are valued.
For
purposes of the fund's illiquid securities limitation discussed above, if
through a change in values, net assets, or other circumstances, the fund were in
a position where more than 10% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
Loans
The
fund does not currently intend to engage in repurchase agreements or make loans,
but this limitation does not apply to purchases of debt securities.
Pooled
Funds
The
fund does not currently intend to invest all of its assets in the securities of
a single open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
In
addition to the fund's fundamental and non-fundamental investment limitations
discussed above:
In
order to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended, the fund currently intends to comply
with certain diversification limits imposed by Subchapter M.
The
following pages contain more detailed information about types of instruments in
which the fund may invest, techniques the fund's adviser (or a sub-adviser) may
employ in pursuit of the fund's investment objective, and a summary of related
risks. The fund's adviser (or a sub-adviser) may not buy all of these
instruments or use all of these techniques unless it believes that doing so will
help the fund achieve its goal. However, the fund's adviser (or a sub-adviser)
is not required to buy any particular instrument or use any particular technique
even if to do so might benefit the fund.
On
the following pages in this section titled "Investment Policies and
Limitations," and except as otherwise indicated, references to "an adviser" or
"the adviser" may relate to the fund's adviser or a sub-adviser, as
applicable.
Affiliated
Bank Transactions. A
Fidelity ®
fund
may engage in transactions with financial institutions that are, or may be
considered to be, "affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks; short-term
obligations of, and repurchase agreements with, the 50 largest U.S. banks
(measured by deposits); municipal securities; U.S. Government securities with
affiliated financial institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In accordance with
exemptive orders issued by the Securities and Exchange Commission (SEC), the
Board of Trustees has established and periodically reviews procedures applicable
to transactions involving affiliated financial institutions.
Asset-Backed
Securities represent
interests in pools of purchase contracts, financing leases, or sales agreements
entered into by municipalities. Payment of interest and repayment of principal
may be largely dependent upon the cash flows generated by the assets backing the
securities and, in certain cases, supported by letters of credit, surety bonds,
or other credit enhancements. Asset-backed security values may also be affected
by other factors including changes in interest rates, the availability of
information concerning the pool and its structure, the creditworthiness of the
servicing agent for the pool, the originator of the loans or receivables, or the
entities providing the credit enhancement. In addition, these securities may be
subject to prepayment risk.
Collateralized
Loan Obligations (CLO) are a type of asset-backed security. A CLO is a trust
typically collateralized by a pool of loans, which may include, among others,
domestic and foreign senior secured loans, senior unsecured loans, and
subordinate corporate loans, including loans that may be rated below investment
grade or equivalent unrated loans. CLOs may charge management fees and
administrative expenses. For CLOs, the cash flows from the trust are split into
two or more portions, called tranches, varying in risk and yield. The riskiest
portion is the "equity" tranche which bears the bulk of defaults from the bonds
or loans in the trust and serves to protect the other, more senior tranches from
default in all but the most severe circumstances. Since they are partially
protected from defaults, senior tranches from a CLO trust typically have higher
ratings and lower yields than their underlying securities and can be rated
investment grade. Despite the protection from the equity tranche, CLO tranches
can experience substantial losses due to actual defaults, increased sensitivity
to defaults due to collateral default and disappearance of protecting tranches,
market anticipation of defaults, as well as aversion to CLO securities as a
class. Normally, CLOs are privately offered and sold, and thus, are not
registered under the securities laws. As a result, investments in CLOs may be
characterized by a fund as illiquid securities, however an active dealer market
may exist allowing them to qualify for Rule 144A transactions.
Borrowing.
If
a fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
Cash
Management. A
fund may hold uninvested cash or may invest it in cash equivalents such as money
market securities, repurchase agreements, or shares of short-term bond or money
market funds, including (for Fidelity ®
funds
and other advisory clients only) shares of Fidelity ®
Central
funds. Generally, these securities offer less potential for gains than other
types of securities. A municipal fund's uninvested cash may earn credits that
reduce fund expenses.
Central
Funds are
special types of investment vehicles created by Fidelity for use by the
Fidelity ®
funds
and other advisory clients. Central funds are used to invest in particular
security types or investment disciplines, or for cash management. Central funds
incur certain costs related to their investment activity (such as custodial fees
and expenses), but do not pay additional management fees. The investment results
of the portions of a Fidelity ®
fund's
assets invested in the Central funds will be based upon the investment results
of those funds.
Commodity
Futures Trading Commission (CFTC) Notice of Exclusion. The
Adviser, on behalf of the Fidelity® fund to which this SAI relates, has filed
with the National Futures Association a notice claiming an exclusion from the
definition of the term "commodity pool operator" (CPO) under the Commodity
Exchange Act, as amended, and the rules of the CFTC promulgated thereunder, with
respect to the fund's operation. Accordingly, neither a fund nor its adviser is
subject to registration or regulation as a commodity pool or a CPO. As of the
date of this SAI, the adviser does not expect to register as a CPO of the fund.
However, there is no certainty that a fund or its adviser will be able to rely
on an exclusion in the future as the fund's investments change over time. A fund
may determine not to use investment strategies that trigger additional CFTC
regulation or may determine to operate subject to CFTC regulation, if
applicable. If a fund or its adviser operates subject to CFTC regulation, it may
incur additional expenses.
Disruption
to Financial Markets and Related Government Intervention. Economic
downturns can trigger various economic, legal, budgetary, tax, and regulatory
reforms across the globe. Instability in the financial markets in the wake of
events such as the 2008 economic downturn led the U.S. Government and other
governments to take a number of then-unprecedented actions designed to support
certain financial institutions and segments of the financial markets that
experienced extreme volatility, and in some cases, a lack of liquidity. Federal,
state, local, foreign, and other governments, their regulatory agencies, or
self-regulatory organizations may take actions that affect the regulation of the
instruments in which a fund invests, or the issuers of such instruments, in ways
that are unforeseeable. Reforms may also change the way in which a fund is
regulated and could limit or preclude a fund's ability to achieve its investment
objective or engage in certain strategies. Also, while reforms generally are
intended to strengthen markets, systems, and public finances, they could affect
fund expenses and the value of fund investments in unpredictable ways.
Similarly,
widespread disease including pandemics and epidemics, and natural or
environmental disasters, such as earthquakes, droughts, fires, floods,
hurricanes, tsunamis and climate-related phenomena generally, have been and can
be highly disruptive to economies and markets, adversely impacting individual
companies, sectors, industries, markets, currencies, interest and inflation
rates, credit ratings, investor sentiment, and other factors affecting the value
of a fund's investments. Economies and financial markets throughout the world
have become increasingly interconnected, which increases the likelihood that
events or conditions in one region or country will adversely affect markets or
issuers in other regions or countries, including the United States.
Additionally, market disruptions may result in increased market volatility;
regulatory trading halts; closure of domestic or foreign exchanges, markets, or
governments; or market participants operating pursuant to business continuity
plans for indeterminate periods of time. Further, market disruptions can (i)
prevent a fund from executing advantageous investment decisions in a timely
manner, (ii) negatively impact a fund's ability to achieve its investment
objective, and (iii) may exacerbate the risks discussed elsewhere in a fund's
registration statement, including political, social, and economic risks.
The
value of a fund's portfolio is also generally subject to the risk of future
local, national, or global economic or natural disturbances based on unknown
weaknesses in the markets in which a fund invests. In the event of such a
disturbance, the issuers of securities held by a fund may experience significant
declines in the value of their assets and even cease operations, or may receive
government assistance accompanied by increased restrictions on their business
operations or other government intervention. In addition, it remains uncertain
that the U.S. Government or foreign governments will intervene in response to
current or future market disturbances and the effect of any such future
intervention cannot be predicted.
Dollar-Weighted
Average Maturity is
derived by multiplying the value of each security by the time remaining to its
maturity, adding these calculations, and then dividing the total by the value of
a fund's portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
Under
certain circumstances, a fund may invest in nominally long-term securities that
have maturity-shortening features of shorter-term securities, and the maturities
of these securities may be deemed to be earlier than their ultimate maturity
dates by virtue of an existing demand feature or an adjustable interest rate.
Under other circumstances, if it is probable that the issuer of an instrument
will take advantage of a maturity-shortening device, such as a call, refunding,
or redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date. When a
municipal bond issuer has committed to call an issue of bonds and has
established an independent escrow account that is sufficient to, and is pledged
to, refund that issue, the number of days to maturity for the prerefunded bond
is considered to be the number of days to the announced call date of the
bonds.
Duration
is
a measure of a bond's price sensitivity to a change in its yield. For example,
if a bond has a 5-year duration and its yield rises 1%, the bond's value is
likely to fall about 5%. Similarly, if a bond fund has a 5-year average duration
and the yield on each of the bonds held by the fund rises 1%, the fund's value
is likely to fall about 5%. For funds with exposure to foreign markets, there
are many reasons why all of the bond holdings do not experience the same yield
changes. These reasons include: the bonds are spread off of different yield
curves around the world and these yield curves do not move in tandem; the shapes
of these yield curves change; and sector and issuer yield spreads change. Other
factors can influence a bond fund's performance and share price. Accordingly, a
bond fund's actual performance will likely differ from the example.
Funds
of Funds and Other Large Shareholders. Certain
Fidelity ®
funds
and accounts (including funds of funds) invest in other funds ("underlying
funds") and, as a result, may at times have substantial investments in one or
more underlying funds.
An
underlying fund may experience large redemptions or investments due to
transactions in its shares by funds of funds, other large shareholders, or
similarly managed accounts. While it is impossible to predict the overall effect
of these transactions over time, there could be an adverse impact on an
underlying fund's performance. In the event of such redemptions or investments,
an underlying fund could be required to sell securities or to invest cash at a
time when it may not otherwise desire to do so. Such transactions may increase
an underlying fund's brokerage and/or other transaction costs and affect the
liquidity of a fund's portfolio. In addition, when funds of funds or other
investors own a substantial portion of an underlying fund's shares, a large
redemption by such an investor could cause actual expenses to increase, or could
result in the underlying fund's current expenses being allocated over a smaller
asset base, leading to an increase in the underlying fund's expense ratio.
Redemptions of underlying fund shares could also accelerate the realization of
taxable capital gains in the fund if sales of securities result in capital
gains. The impact of these transactions is likely to be greater when a fund of
funds or other significant investor purchases, redeems, or owns a substantial
portion of the underlying fund's shares.
When
possible, Fidelity will consider how to minimize these potential adverse
effects, and may take such actions as it deems appropriate to address potential
adverse effects, including redemption of shares in-kind rather than in cash or
carrying out the transactions over a period of time, although there can be no
assurance that such actions will be successful. A high volume of redemption
requests can impact an underlying fund the same way as the transactions of a
single shareholder with substantial investments. As an additional safeguard,
Fidelity ®
fund
of funds may manage the placement of their redemption requests in a manner
designed to minimize the impact of such requests on the day-to-day operations of
the underlying funds in which they invest. This may involve, for example,
redeeming its shares of an underlying fund gradually over time.
Futures,
Options, and Swaps. The
success of any strategy involving futures, options, and swaps depends on an
adviser's analysis of many economic and mathematical factors and a fund's return
may be higher if it never invested in such instruments. Additionally, some of
the contracts discussed below are new instruments without a trading history and
there can be no assurance that a market for the instruments will continue to
exist. Government legislation or regulation could affect the use of such
instruments and could limit a fund's ability to pursue its investment
strategies. If a fund invests a significant portion of its assets in
derivatives, its investment exposure could far exceed the value of its portfolio
securities and its investment performance could be primarily dependent upon
securities it does not own.
The
requirements for qualification as a regulated investment company may limit the
extent to which a fund may enter into futures, options on futures, and forward
contracts.
Futures
Contracts. In
purchasing a futures contract, the buyer agrees to purchase a specified
underlying instrument at a specified future date. In selling a futures contract,
the seller agrees to sell a specified underlying instrument at a specified date.
Futures contracts are standardized, exchange-traded contracts and the price at
which the purchase and sale will take place is fixed when the buyer and seller
enter into the contract. Some currently available futures contracts are based on
specific securities or baskets of securities, some are based on commodities or
commodities indexes (for funds that seek commodities exposure), and some are
based on indexes of securities prices (including foreign indexes for funds that
seek foreign exposure). In addition, some currently available futures contracts
are based on Eurodollars. Positions in Eurodollar futures reflect market
expectations of forward levels of three-month London Interbank Offered Rate
(LIBOR) rates. Futures on indexes and futures not calling for physical delivery
of the underlying instrument will be settled through cash payments rather than
through delivery of the underlying instrument. Futures can be held until their
delivery dates, or can be closed out by offsetting purchases or sales of futures
contracts before then if a liquid market is available. A fund may realize a gain
or loss by closing out its futures contracts.
The
value of a futures contract tends to increase and decrease in tandem with the
value of its underlying instrument. Therefore, purchasing futures contracts will
tend to increase a fund's exposure to positive and negative price fluctuations
in the underlying instrument, much as if it had purchased the underlying
instrument directly. When a fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction contrary to the
market for the underlying instrument. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.
The
purchaser or seller of a futures contract or an option for a futures contract is
not required to deliver or pay for the underlying instrument or the final cash
settlement price, as applicable, unless the contract is held until the delivery
date. However, both the purchaser and seller are required to deposit "initial
margin" with a futures broker, known as a futures commission merchant, when the
contract is entered into. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to settle
the change in value on a daily basis. This process of "marking to market" will
be reflected in the daily calculation of open positions computed in a fund's net
asset value per share (NAV). The party that has a gain is entitled to receive
all or a portion of this amount. Initial and variation margin payments do not
constitute purchasing securities on margin for purposes of a fund's investment
limitations. Variation margin does not represent a borrowing or loan by a fund,
but is instead a settlement between a fund and the futures commission merchant
of the amount one would owe the other if the fund's contract expired. In the
event of the bankruptcy or insolvency of a futures commission merchant that
holds margin on behalf of a fund, the fund may be entitled to return of margin
owed to it only in proportion to the amount received by the futures commission
merchant's other customers, potentially resulting in losses to the fund.
There
is no assurance a liquid market will exist for any particular futures contract
at any particular time. Exchanges may establish daily price fluctuation limits
for futures contracts, and may halt trading if a contract's price moves upward
or downward more than the limit in a given day. On volatile trading days when
the price fluctuation limit is reached or a trading halt is imposed, it may be
impossible to enter into new positions or close out existing positions. The
daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.
If
the market for a contract is not liquid because of price fluctuation limits or
other market conditions, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a position
until delivery or expiration regardless of changes in its value. These risks may
be heightened for commodity futures contracts, which have historically been
subject to greater price volatility than exists for instruments such as stocks
and bonds.
Because
there are a limited number of types of exchange-traded futures contracts, it is
likely that the standardized contracts available will not match a fund's current
or anticipated investments exactly. A fund may invest in futures contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which the fund typically invests, which involves a risk that
the futures position will not track the performance of the fund's other
investments.
Futures
prices can also diverge from the prices of their underlying instruments, even if
the underlying instruments match a fund's investments well. Futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
futures markets and the securities markets, from structural differences in how
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts. A fund may purchase or sell futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility between
the contract and the securities, although this may not be successful in all
cases. If price changes in a fund's futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains or
result in losses that are not offset by gains in other investments.
In addition, the price of a commodity futures contract can reflect the
storage costs associated with the purchase of the physical commodity.
Futures
contracts on U.S. Government securities historically have reacted to an increase
or decrease in interest rates in a manner similar to the manner in which the
underlying U.S. Government securities reacted. To the extent, however, that a
fund enters into such futures contracts, the value of these futures contracts
will not vary in direct proportion to the value of the fund's holdings of U.S.
Government securities. Thus, the anticipated spread between the price of the
futures contract and the hedged security may be distorted due to differences in
the nature of the markets. The spread also may be distorted by differences in
initial and variation margin requirements, the liquidity of such markets and the
participation of speculators in such markets.
Options.
By
purchasing a put option, the purchaser obtains the right (but not the
obligation) to sell the option's underlying instrument at a fixed strike price.
In return for this right, the purchaser pays the current market price for the
option (known as the option premium). Options have various types of underlying
instruments, including specific assets or securities, baskets of assets or
securities, indexes of securities or commodities prices, and futures contracts
(including commodity futures contracts). Options may be traded on an exchange or
over-the-counter (OTC). The purchaser may terminate its position in a put option
by allowing it to expire or by exercising the option. If the option is allowed
to expire, the purchaser will lose the entire premium. If the option is
exercised, the purchaser completes the sale of the underlying instrument at the
strike price. Depending on the terms of the contract, upon exercise, an option
may require physical delivery of the underlying instrument or may be settled
through cash payments. A purchaser may also terminate a put option position by
closing it out in the secondary market at its current price, if a liquid
secondary market exists.
The
buyer of a typical put option can expect to realize a gain if the underlying
instrument's price falls substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium, plus
related transaction costs).
The
features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right (but not the
obligation) to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate in
potential price increases of the underlying instrument with risk limited to the
cost of the option if the underlying instrument's price falls. At the same time,
the buyer can expect to suffer a loss if the underlying instrument's price does
not rise sufficiently to offset the cost of the option.
The
writer of a put or call option takes the opposite side of the transaction from
the option's purchaser. In return for receipt of the premium, the writer assumes
the obligation to pay or receive the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it. The writer
may seek to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the secondary market
is not liquid for a put option, however, the writer must continue to be prepared
to pay the strike price while the option is outstanding, regardless of price
changes. When writing an option on a futures contract, a fund will be required
to make margin payments to a futures commission merchant as described above for
futures contracts.
If
the underlying instrument's price rises, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If the underlying instrument's price remains the same over time, it is
likely that the writer will also profit, because it should be able to close out
the option at a lower price. If the underlying instrument's price falls, the put
writer would expect to suffer a loss. This loss should be less than the loss
from purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the
decline.
Writing
a call option obligates the writer to sell or deliver the option's underlying
instrument or make a net cash settlement payment, as applicable, in return for
the strike price, upon exercise of the option. The characteristics of writing
call options are similar to those of writing put options, except that writing
calls generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer should mitigate the effects
of a price increase. At the same time, because a call writer must be prepared to
deliver the underlying instrument or make a net cash settlement payment, as
applicable, in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in price increases
and, if a call writer does not hold the underlying instrument, a call writer's
loss is theoretically unlimited.
Where
a put or call option on a particular security is purchased to hedge against
price movements in a related security, the price to close out the put or call
option on the secondary market may move more or less than the price of the
related security.
There
is no assurance a liquid market will exist for any particular options contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. In addition, exchanges may establish daily price fluctuation
limits for exchange-traded options contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible to enter into new positions or close out
existing positions. If the market for a contract is not liquid because of price
fluctuation limits or otherwise, it could prevent prompt liquidation of
unfavorable positions, and potentially could require a fund to continue to hold
a position until delivery or expiration regardless of changes in its
value.
Unlike
exchange-traded options, which are standardized with respect to the underlying
instrument, expiration date, contract size, and strike price, the terms of OTC
options (options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this type of
arrangement allows the purchaser or writer greater flexibility to tailor an
option to its needs, OTC options generally are less liquid and involve greater
credit risk than exchange-traded options, which are backed by the clearing
organization of the exchanges where they are traded.
Combined
positions involve purchasing and writing options in combination with each other,
or in combination with futures or forward contracts, to adjust the risk and
return characteristics of the overall position. For example, purchasing a put
option and writing a call option on the same underlying instrument would
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. Another possible combined position would involve
writing a call option at one strike price and buying a call option at a lower
price, to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
A
fund may also buy and sell options on swaps (swaptions), which are generally
options on interest rate swaps. An option on a swap gives a party the right (but
not the obligation) to enter into a new swap agreement or to extend, shorten,
cancel or modify an existing contract at a specific date in the future in
exchange for a premium. Depending on the terms of the particular option
agreement, a fund will generally incur a greater degree of risk when it writes
(sells) an option on a swap than it will incur when it purchases an option on a
swap. When a fund purchases an option on a swap, it risks losing only the amount
of the premium it has paid should it decide to let the option expire
unexercised. However, when a fund writes an option on a swap, upon exercise of
the option the fund will become obligated according to the terms of the
underlying agreement. A fund that writes an option on a swap receives the
premium and bears the risk of unfavorable changes in the preset rate on the
underlying interest rate swap. Whether a fund's use of options on swaps will be
successful in furthering its investment objective will depend on the adviser's
ability to predict correctly whether certain types of investments are likely to
produce greater returns than other investments. Options on swaps may involve
risks similar to those discussed below in "Swap Agreements."
Because
there are a limited number of types of exchange-traded options contracts, it is
likely that the standardized contracts available will not match a fund's current
or anticipated investments exactly. A fund may invest in options contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which the fund typically invests, which involves a risk that
the options position will not track the performance of the fund's other
investments.
Options
prices can also diverge from the prices of their underlying instruments, even if
the underlying instruments match a fund's investments well. Options prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts. A fund may
purchase or sell options contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price changes
in a fund's options positions are poorly correlated with its other investments,
the positions may fail to produce anticipated gains or result in losses that are
not offset by gains in other investments.
Swap
Agreements. Swap
agreements are two-party contracts entered into primarily by institutional
investors. Cleared swaps are transacted through futures commission merchants
that are members of central clearinghouses with the clearinghouse serving as a
central counterparty similar to transactions in futures contracts. In a standard
"swap" transaction, two parties agree to exchange one or more payments based,
for example, on the returns (or differentials in rates of return) earned or
realized on particular predetermined investments or instruments (such as
securities, commodities, indexes, or other financial or economic interests). The
gross payments to be exchanged between the parties are calculated with respect
to a notional amount, which is the predetermined dollar principal of the trade
representing the hypothetical underlying quantity upon which payment obligations
are computed.
Swap
agreements can take many different forms and are known by a variety of names,
including interest rate swaps (where the parties exchange a floating rate for a
fixed rate), asset swaps (e.g., where parties combine the purchase or sale of a
bond with an interest rate swap), total return swaps, and credit default swaps.
Depending on how they are used, swap agreements may increase or decrease the
overall volatility of a fund's investments and its share price and, if
applicable, its yield. Swap agreements are subject to liquidity risk, meaning
that a fund may be unable to sell a swap contract to a third party at a
favorable price. Certain standardized swap transactions are currently subject to
mandatory central clearing or may be eligible for voluntary central clearing.
Central clearing is expected to decrease counterparty risk and increase
liquidity compared to uncleared swaps because central clearing interposes the
central clearinghouse as the counterpart to each participant's swap. However,
central clearing does not eliminate counterparty risk or illiquidity risk
entirely. In addition depending on the size of a fund and other factors, the
margin required under the rules of a clearinghouse and by a clearing member
futures commission merchant may be in excess of the collateral required to be
posted by a fund to support its obligations under a similar uncleared swap.
However, regulators have adopted rules imposing certain margin requirements,
including minimums, on certain uncleared swaps which could reduce the
distinction.
A
total return swap is a contract whereby one party agrees to make a series of
payments to another party based on the change in the market value of the assets
underlying such contract (which can include a security or other instrument,
commodity, index or baskets thereof) during the specified period. In exchange,
the other party to the contract agrees to make a series of payments calculated
by reference to an interest rate and/or some other agreed-upon amount (including
the change in market value of other underlying assets). A fund may use total
return swaps to gain exposure to an asset without owning it or taking physical
custody of it. For example, a fund investing in total return commodity swaps
will receive the price appreciation of a commodity, commodity index or portion
thereof in exchange for payment of an agreed-upon fee.
In
a credit default swap, the credit default protection buyer makes periodic
payments, known as premiums, to the credit default protection seller. In return
the credit default protection seller will make a payment to the credit default
protection buyer upon the occurrence of a specified credit event. A credit
default swap can refer to a single issuer or asset, a basket of issuers or
assets or index of assets, each known as the reference entity or underlying
asset. A fund may act as either the buyer or the seller of a credit default
swap. A fund may buy or sell credit default protection on a basket of issuers or
assets, even if a number of the underlying assets referenced in the basket are
lower-quality debt securities. In an unhedged credit default swap, a fund buys
credit default protection on a single issuer or asset, a basket of issuers or
assets or index of assets without owning the underlying asset or debt issued by
the reference entity. Credit default swaps involve greater and different risks
than investing directly in the referenced asset, because, in addition to market
risk, credit default swaps include liquidity, counterparty and operational
risk.
Credit
default swaps allow a fund to acquire or reduce credit exposure to a particular
issuer, asset or basket of assets. If a swap agreement calls for payments by a
fund, the fund must be prepared to make such payments when due. If a fund is the
credit default protection seller, the fund will experience a loss if a credit
event occurs and the credit of the reference entity or underlying asset has
deteriorated. If a fund is the credit default protection buyer, the fund will be
required to pay premiums to the credit default protection seller. In the case of
a physically settled credit default swap in which a fund is the protection
seller, the fund must be prepared to pay par for and take possession of debt of
a defaulted issuer delivered to the fund by the credit default protection buyer.
Any loss would be offset by the premium payments the fund receives as the seller
of credit default protection.
If
the creditworthiness of a fund's swap counterparty declines, the risk that the
counterparty may not perform could increase, potentially resulting in a loss to
the fund. To limit the counterparty risk involved in swap agreements, a
Fidelity ®
fund
will enter into swap agreements only with counterparties that meet certain
standards of creditworthiness. This risk for cleared swaps is generally lower
than for uncleared swaps since the counterparty is a clearinghouse, but there
can be no assurance that a clearinghouse or its members will satisfy its
obligations. Although there can be no assurance that a fund will be able to do
so, a fund may be able to reduce or eliminate its exposure under a swap
agreement either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or another creditworthy party. A
fund may have limited ability to eliminate its exposure under a credit default
swap if the credit of the reference entity or underlying asset has
declined.
A
fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. A fund would generally be required to provide margin or collateral
for the benefit of that counterparty. If a counterparty to a swap transaction
becomes insolvent, the fund may be limited temporarily or permanently in
exercising its right to the return of related fund assets designated as margin
or collateral in an action against the counterparty.
Swap
agreements are subject to the risk that the market value of the instrument will
change in a way detrimental to a fund's interest. A fund bears the risk that an
adviser will not accurately forecast market trends or the values of assets,
reference rates, indexes, or other economic factors in establishing swap
positions for a fund. If an adviser attempts to use a swap as a hedge against,
or as a substitute for, a portfolio investment, a fund may be exposed to the
risk that the swap will have or will develop imperfect or no correlation with
the portfolio investment, which could cause substantial losses for a fund. While
hedging strategies involving swap instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses by offsetting
favorable price movements in other fund investments. Swaps are complex and often
valued subjectively.
Illiquid
Investments means
any investment that cannot be sold or disposed of in current market conditions
in seven calendar days or less without the sale or disposition significantly
changing the market value of the investment. Difficulty in selling or disposing
of illiquid investments may result in a loss or may be costly to a fund.
Illiquid securities may include (1) repurchase agreements maturing in more than
seven days without demand/redemption features, (2) OTC options and certain other
derivatives, (3) private placements, (4) securities traded on markets and
exchanges with structural constraints, and (5) loan participations.
Under
the supervision of the Board of Trustees, a Fidelity ®
fund's
adviser classifies the liquidity of a fund's investments and monitors the extent
of a fund's illiquid investments.
Various
market, trading and investment-specific factors may be considered in determining
the liquidity of a fund's investments including, but not limited to (1) the
existence of an active trading market, (2) the nature of the security and the
market in which it trades, (3) the number, diversity, and quality of dealers and
prospective purchasers in the marketplace, (4) the frequency, volume, and
volatility of trade and price quotations, (5) bid-ask spreads, (6) dates of
issuance and maturity, (7) demand, put or tender features, and (8) restrictions
on trading or transferring the investment.
Fidelity
classifies certain investments as illiquid based upon these criteria. Fidelity
also monitors for certain market, trading and investment-specific events that
may cause Fidelity to re-evaluate an investment's liquidity status and may lead
to an investment being classified as illiquid. In addition, Fidelity uses a
third-party to assist with the liquidity classifications of the fund's
investments, which includes calculating the time to sell and settle a specified
size position in a particular investment without the sale significantly changing
the market value of the investment.
Increasing
Government Debt. The
total public debt of the United States and other countries around the globe as a
percent of gross domestic product has grown rapidly since the beginning of the
2008 financial downturn. Although high debt levels do not necessarily indicate
or cause economic problems, they may create certain systemic risks if sound debt
management practices are not implemented.
A
high national debt level may increase market pressures to meet government
funding needs, which may drive debt cost higher and cause a country to sell
additional debt, thereby increasing refinancing risk. A high national debt also
raises concerns that a government will not be able to make principal or interest
payments when they are due. In the worst case, unsustainable debt levels can
decline the valuation of currencies, and can prevent a government from
implementing effective counter-cyclical fiscal policy in economic
downturns.
Standard
& Poor's Ratings Services has, in the past, lowered its long-term sovereign
credit rating on the United States. The market prices and yields of securities
supported by the full faith and credit of the U.S. Government may be adversely
affected by Standard & Poor's Ratings Services decisions to downgrade the
long-term sovereign credit rating of the United States.
Indexed
Securities are
instruments whose prices are indexed to the prices of other securities,
securities indexes, or other financial indicators. Indexed securities typically,
but not always, are debt securities or deposits whose values at maturity or
coupon rates are determined by reference to a specific instrument, statistic, or
measure.
Indexed
securities also include commercial paper, certificates of deposit, and other
fixed-income securities whose values at maturity or coupon interest rates are
determined by reference to the returns of particular stock indexes. Indexed
securities can be affected by stock prices as well as changes in interest rates
and the creditworthiness of their issuers and may not track the indexes as
accurately as direct investments in the indexes.
Indexed
securities may have principal payments as well as coupon payments that depend on
the performance of one or more interest rates. Their coupon rates or principal
payments may change by several percentage points for every 1% interest rate
change.
The
performance of indexed securities depends to a great extent on the performance
of the instrument or measure to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. Indexed
securities may be more volatile than the underlying instruments or measures.
Indexed securities are also subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government agencies.
Insolvency
of Issuers, Counterparties, and Intermediaries. Issuers
of fund portfolio securities or counterparties to fund transactions that become
insolvent or declare bankruptcy can pose special investment risks. In each
circumstance, risk of loss, valuation uncertainty, increased illiquidity, and
other unpredictable occurrences may negatively impact an investment. Each of
these risks may be amplified in foreign markets, where security trading,
settlement, and custodial practices can be less developed than those in the U.S.
markets, and bankruptcy laws differ from those of the U.S.
As
a general matter, if the issuer of a fund portfolio security is liquidated or
declares bankruptcy, the claims of owners of bonds and preferred stock have
priority over the claims of common stock owners. These events can negatively
impact the value of the issuer's securities and the results of related
proceedings can be unpredictable.
If
a counterparty to a fund transaction, such as a swap transaction, a short sale,
a borrowing, or other complex transaction becomes insolvent, the fund may be
limited in its ability to exercise rights to obtain the return of related fund
assets or in exercising other rights against the counterparty. Uncertainty may
also arise upon the insolvency of a securities or commodities intermediary such
as a broker-dealer or futures commission merchant with which a fund has pending
transactions. In addition, insolvency and liquidation proceedings take time to
resolve, which can limit or preclude a fund's ability to terminate a transaction
or obtain related assets or collateral in a timely fashion. If an intermediary
becomes insolvent, while securities positions and other holdings may be
protected by U.S. or foreign laws, it is sometimes difficult to determine
whether these protections are available to specific trades based on the
circumstances. Receiving the benefit of these protections can also take time to
resolve, which may result in illiquid positions.
Interfund
Borrowing and Lending Program. Pursuant
to an exemptive order issued by the SEC, a Fidelity ®
fund
may lend money to, and borrow money from, other funds advised by FMR or its
affiliates. Municipal funds currently intend to participate in this program only
as borrowers. A Fidelity ®
fund
will borrow through the program only when the costs are equal to or lower than
the costs of bank loans. Interfund borrowings normally extend overnight, but can
have a maximum duration of seven days. Loans may be called on one day's notice.
A Fidelity ®
fund
may have to borrow from a bank at a higher interest rate if an interfund loan is
called or not renewed.
Inverse
Floaters have
variable interest rates that typically move in the opposite direction from
movements in prevailing short-term interest rate levels - rising when prevailing
short-term interest rates fall, and falling when short-term interest rates rise.
The prices of inverse floaters can be considerably more volatile than the prices
of other investments with comparable maturities and/or credit quality.
Investment-Grade
Debt Securities. Investment-grade
debt securities include all types of debt instruments that are of medium and
high-quality. Investment-grade debt securities include repurchase agreements
collateralized by U.S. Government securities as well as repurchase agreements
collateralized by equity securities, non-investment-grade debt, and all other
instruments in which a fund can perfect a security interest, provided the
repurchase agreement counterparty has an investment-grade rating. Some
investment-grade debt securities may possess speculative characteristics and may
be more sensitive to economic changes and to changes in the financial conditions
of issuers. An investment-grade rating means the security or issuer is rated
investment-grade by a credit rating agency registered as a nationally recognized
statistical rating organization (NRSRO) with the SEC (for example, Moody's
Investors Service, Inc.), or is unrated but considered to be of equivalent
quality by a fund's adviser. For purposes of determining the maximum maturity of
an investment-grade debt security, an adviser may take into account normal
settlement periods.
Lower-Quality
Debt Securities. Lower-quality
debt securities include all types of debt instruments that have poor protection
with respect to the payment of interest and repayment of principal, or may be in
default. These securities are often considered to be speculative and involve
greater risk of loss or price changes due to changes in the issuer's capacity to
pay. The market prices of lower-quality debt securities may fluctuate more than
those of higher-quality debt securities and may decline significantly in periods
of general economic difficulty, which may follow periods of rising interest
rates.
The
market for lower-quality debt securities may be thinner and less active than
that for higher-quality debt securities, which can adversely affect the prices
at which the former are sold. Adverse publicity and changing investor
perceptions may affect the liquidity of lower-quality debt securities and the
ability of outside pricing services to value lower-quality debt
securities.
A
fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise to exercise its rights as a security holder to seek to
protect the interests of security holders if it determines this to be in the
best interest of the fund's shareholders.
Low
or Negative Yielding Securities. During
periods of very low or negative interest rates, a fund may be unable to maintain
positive returns. Interest rates in the U.S. and many parts of the world,
including Japan and some European countries, are at or near historically low
levels. Japan and those European countries have, from time to time, experienced
negative interest rates on certain fixed income instruments. Very low or
negative interest rates may magnify interest rate risk for the markets as a
whole and for the funds. Changing interest rates, including rates that fall
below zero, may have unpredictable effects on markets, may result in heightened
market volatility and may detract from fund performance to the extent a fund is
exposed to such interest rates.
Municipal
Insurance. A
municipal bond may be covered by insurance that guarantees the bond's scheduled
payment of interest and repayment of principal. This type of insurance may be
obtained by either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued (secondary
market insurance).
Both
primary and secondary market insurance guarantee timely and scheduled repayment
of all principal and payment of all interest on a municipal bond in the event of
default by the issuer, and cover a municipal bond to its maturity, typically
enhancing its credit quality and value.
Municipal
bond insurance does not insure against market fluctuations or fluctuations in a
fund's share price. In addition, a municipal bond insurance policy will not
cover: (i) repayment of a municipal bond before maturity (redemption), (ii)
prepayment or payment of an acceleration premium (except for a mandatory sinking
fund redemption) or any other provision of a bond indenture that advances the
maturity of the bond, or (iii) nonpayment of principal or interest caused by
negligence or bankruptcy of the paying agent. A mandatory sinking fund
redemption may be a provision of a municipal bond issue whereby part of the
municipal bond issue may be retired before maturity.
Because
a significant portion of the municipal securities issued and outstanding is
insured by a small number of insurance companies, not all of which have the
highest credit rating, an event involving one or more of these insurance
companies could have a significant adverse effect on the value of the securities
insured by that insurance company and on the municipal markets as a whole.
Ratings of insured bonds reflect the credit rating of the insurer, based on the
rating agency's assessment of the creditworthiness of the insurer and its
ability to pay claims on its insurance policies at the time of the assessment.
While the obligation of a municipal bond insurance company to pay a claim
extends over the life of an insured bond, there is no assurance that municipal
bond insurers will meet their claims. A higher-than-anticipated default rate on
municipal bonds or in connection with other insurance the insurer provides could
strain the insurer's loss reserves and adversely affect its ability to pay
claims to bondholders.
FMR
may decide to retain an insured municipal bond that is in default, or, in FMR's
view, in significant risk of default. While a fund holds a defaulted, insured
municipal bond, the fund collects interest payments from the insurer and retains
the right to collect principal from the insurer when the municipal bond matures,
or in connection with a mandatory sinking fund redemption.
Municipal
Leases and
participation interests therein may take the form of a lease, an installment
purchase, or a conditional sale contract and are issued by state and local
governments and authorities to acquire land or a wide variety of equipment and
facilities. Generally, a fund will not hold these obligations directly as a
lessor of the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation interest
gives the purchaser a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the issue.
Municipal
leases frequently have risks distinct from those associated with general
obligation or revenue bonds. State constitutions and statutes set forth
requirements that states or municipalities must meet to incur debt. These may
include voter referenda, interest rate limits, or public sale requirements.
Leases, installment purchases, or conditional sale contracts (which normally
provide for title to the leased asset to pass to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for the issuance
of debt. Many leases and contracts include "non-appropriation clauses" providing
that the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purposes by the
appropriate legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance limitations. If a
municipality stops making payments or transfers its obligations to a private
entity, the obligation could lose value or become taxable.
Municipal
Market Disruption Risk. The
value of municipal securities may be affected by uncertainties in the municipal
market related to legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event of a
bankruptcy. Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal securities are introduced before Congress from time to
time. Proposals also may be introduced before state legislatures that would
affect the state tax treatment of a municipal fund's distributions. If such
proposals were enacted, the availability of municipal securities and the value
of a municipal fund's holdings would be affected, and the Trustees would
reevaluate the fund's investment objectives and policies. Municipal bankruptcies
are relatively rare, and certain provisions of the U.S. Bankruptcy Code
governing such bankruptcies are unclear and remain untested. Further, the
application of state law to municipal issuers could produce varying results
among the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market generally,
certain specific segments of the market, or the relative credit quality of
particular securities. Any of these effects could have a significant impact on
the prices of some or all of the municipal securities held by a fund.
Municipal
securities may be susceptible to downgrade, default, and bankruptcy,
particularly during economic downturns. Factors affecting municipal securities
include the budgetary constraints of local, state, and federal governments upon
which the municipalities issuing municipal securities may be relying for
funding, as well as lower tax collections, fluctuations in interest rates, and
increasing construction costs. Municipal securities are also subject to the risk
that the perceived likelihood of difficulties in the municipal securities
markets could result in increased illiquidity, volatility, and credit risk.
Certain municipal issuers may be unable to obtain additional financing through,
or be required to pay higher interest rates on, new issues, which may reduce
revenues available for these municipal issuers to pay existing obligations. In
addition, certain municipal issuers may be unable to issue or market securities,
resulting in fewer investment opportunities for funds investing in municipal
securities.
Education.
In
general, there are two types of education-related bonds: those issued to finance
projects for public and private colleges and universities, and those
representing pooled interests in student loans. Bonds issued to supply
educational institutions with funds are subject to the risk of unanticipated
revenue decline, primarily the result of decreasing student enrollment or
decreasing state and federal funding. Among the factors that may lead to
declining or insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general economic
conditions. Student loan revenue bonds are generally offered by state (or
substate) authorities or commissions and are backed by pools of student loans.
Underlying student loans may be guaranteed by state guarantee agencies and may
be subject to reimbursement by the United States Department of Education through
its guaranteed student loan program. Others may be private, uninsured loans made
to parents or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be applied to
redemption of bonds or may be used to re-lend, depending on program latitude and
demand for loans. Cash flows supporting student loan revenue bonds are impacted
by numerous factors, including the rate of student loan defaults, seasoning of
the loan portfolio, and student repayment deferral periods of forbearance. Other
risks associated with student loan revenue bonds include potential changes in
federal legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
Electric
Utilities. The
electric utilities industry has been experiencing, and will continue to
experience, increased competitive pressures. Federal legislation in the last two
years will open transmission access to any electricity supplier, although it is
not presently known to what extent competition will evolve. Other risks include:
(a) the availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of rapidly
changing environmental, safety, and licensing requirements, and other federal,
state, and local regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
Health
Care. The
health care industry is subject to regulatory action by a number of private and
governmental agencies, including federal, state, and local governmental
agencies. A major source of revenues for the health care industry is payments
from the Medicare and Medicaid programs. As a result, the industry is sensitive
to legislative changes and reductions in governmental spending for such
programs. Numerous other factors may affect the industry, such as general and
local economic conditions; demand for services; expenses (including malpractice
insurance premiums); and competition among health care providers. In the future,
the following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program; other
state or local health care reform measures; medical and technological advances
which dramatically alter the need for health services or the way in which such
services are delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers, and
governmental agencies to reduce the costs of health insurance and health care
services.
Housing.
Housing
revenue bonds are generally issued by a state, county, city, local housing
authority, or other public agency. They generally are secured by the revenues
derived from mortgages purchased with the proceeds of the bond issue. It is
extremely difficult to predict the supply of available mortgages to be purchased
with the proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed supply,
resulting in early retirement of bonds, or that homeowner repayments will create
an irregular cash flow. Many factors may affect the financing of multi-family
housing projects, including acceptable completion of construction, proper
management, occupancy and rent levels, economic conditions, and changes to
current laws and regulations.
Transportation.
Transportation
debt may be issued to finance the construction of airports, toll roads,
highways, or other transit facilities. Airport bonds are dependent on the
general stability of the airline industry and on the stability of a specific
carrier who uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of fuel. Toll
road bonds are also affected by the cost and availability of fuel as well as
toll levels, the presence of competing roads and the general economic health of
an area. Fuel costs and availability also affect other transportation-related
securities, as do the presence of alternate forms of transportation, such as
public transportation.
Water
and Sewer. Water
and sewer revenue bonds are often considered to have relatively secure credit as
a result of their issuer's importance, monopoly status, and generally unimpeded
ability to raise rates. Despite this, lack of water supply due to insufficient
rain, run-off, or snow pack is a concern that has led to past defaults. Further,
public resistance to rate increases, costly environmental litigation, and
Federal environmental mandates are challenges faced by issuers of water and
sewer bonds.
Put
Features entitle
the holder to sell a security back to the issuer at any time or at specified
intervals. In exchange for this benefit, a fund may accept a lower interest
rate. Securities with put features are subject to the risk that the put provider
is unable to honor the put feature (purchase the security). Demand features and
standby commitments are types of put features.
Refunding
Contracts. Securities
may be purchased on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the issuer to
sell and a purchaser to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years in the
future. A purchaser generally will not be obligated to pay the full purchase
price if the issuer fails to perform under a refunding contract. Instead,
refunding contracts generally provide for payment of liquidated damages to the
issuer. A purchaser may secure its obligations under a refunding contract by
depositing collateral or a letter of credit equal to the liquidated damages
provisions of the refunding contract.
Repurchase
Agreements involve
an agreement to purchase a security and to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the purchase
price plus an agreed-upon incremental amount which is unrelated to the coupon
rate or maturity of the purchased security. As protection against the risk that
the original seller will not fulfill its obligation, the securities are held in
a separate account at a bank, marked-to-market daily, and maintained at a value
at least equal to the sale price plus the accrued incremental amount. The value
of the security purchased may be more or less than the price at which the
counterparty has agreed to purchase the security. In addition, delays or losses
could result if the other party to the agreement defaults or becomes insolvent.
A fund may be limited in its ability to exercise its right to liquidate assets
related to a repurchase agreement with an insolvent counterparty. A
Fidelity ®
fund
may engage in repurchase agreement transactions with parties whose
creditworthiness has been reviewed and found satisfactory by the fund's
adviser.
Restricted
Securities (including Private Placements) are
subject to legal restrictions on their sale. Difficulty in selling securities
may result in a loss or be costly to a fund. Restricted securities, including
private placements of private and public companies, generally can be sold in
privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933 (1933 Act), or in a registered public offering.
Where registration is required, the holder of a registered security may be
obligated to pay all or part of the registration expense and a considerable
period may elapse between the time it decides to seek registration and the time
it may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the holder might obtain a less favorable price than prevailed when it decided to
seek registration of the security.
Reverse
Repurchase Agreements. In
a reverse repurchase agreement, a fund sells a security to another party, such
as a bank or broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. A Fidelity ®
fund
may enter into reverse repurchase agreements with parties whose creditworthiness
has been reviewed and found satisfactory by the fund's adviser. Such
transactions may increase fluctuations in the market value of a fund's assets
and, if applicable, a fund's yield, and may be viewed as a form of leverage.
Under SEC requirements, a fund needs to aggregate the amount of indebtedness
associated with its reverse repurchase agreements and similar financing
transactions with the aggregate amount of any other senior securities
representing indebtedness (e.g., borrowings, if applicable) when calculating the
fund's asset coverage ratio or treat all such transactions as derivatives
transactions.
SEC
Rule 18f-4.
In
October 2020, the SEC adopted a final rule related to the use of derivatives,
short sales, reverse repurchase agreements and certain other transactions by
registered investment companies (the "rule"). Subject to certain exceptions, the
rule requires the funds to trade derivatives and certain other transactions that
create future payment or delivery obligations subject to a value-at-risk (VaR)
leverage limit and to certain derivatives risk management program, reporting and
board oversight requirements. Generally, these requirements apply to any fund
engaging in derivatives transactions unless a fund satisfies a "limited
derivatives users" exception, which requires the fund to limit its gross
notional derivatives exposure (with certain exceptions) to 10% of its net assets
and to adopt derivatives risk management procedures. Under the rule, when a fund
trades reverse repurchase agreements or similar financing transactions, it needs
to aggregate the amount of indebtedness associated with the reverse repurchase
agreements or similar financing transactions with the aggregate amount of any
other senior securities representing indebtedness (e.g., borrowings, if
applicable) when calculating the fund's asset coverage ratio or treat all such
transactions as derivatives transactions. The SEC also provided guidance in
connection with the final rule regarding the use of securities lending
collateral that may limit securities lending activities. In addition, under the
rule, a fund may invest in a security on a when-issued or forward-settling
basis, or with a non-standard settlement cycle, and the transaction will be
deemed not to involve a senior security (as defined under Section 18(g) of the
1940 Act), provided that (i) the fund intends to physically settle the
transaction and (ii) the transaction will settle within 35 days of its trade
date (the "Delayed-Settlement Securities Provision"). A fund may otherwise
engage in when-issued, forward-settling and non-standard settlement cycle
securities transactions that do not meet the conditions of the
Delayed-Settlement Securities Provision so long as the fund treats any such
transaction as a derivatives transaction for purposes of compliance with the
rule. Furthermore, under the rule, a fund will be permitted to enter into an
unfunded commitment agreement, and such unfunded commitment agreement will not
be subject to the asset coverage requirements under the 1940 Act, if the fund
reasonably believes, at the time it enters into such agreement, that it will
have sufficient cash and cash equivalents to meet its obligations with respect
to all such agreements as they come due. These requirements may limit the
ability of the funds to use derivatives, short sales, reverse repurchase
agreements and similar financing transactions, and the other relevant
transactions as part of its investment strategies. These requirements also may
increase the cost of the fund's investments and cost of doing business, which
could adversely affect investors.
Securities
of Other Investment Companies ,
including shares of closed-end investment companies (which include business
development companies (BDCs)), unit investment trusts, and open-end investment
companies, represent interests in professionally managed portfolios that may
invest in any type of instrument. Investing in other investment companies
involves substantially the same risks as investing directly in the underlying
instruments, but may involve additional expenses at the underlying investment
company-level, such as portfolio management fees and operating expenses. Fees
and expenses incurred indirectly by a fund as a result of its investment in
shares of one or more other investment companies generally are referred to as
"acquired fund fees and expenses" and may appear as a separate line item in a
fund's prospectus fee table. For certain investment companies, such as BDCs,
these expenses may be significant. Certain types of investment companies, such
as closed-end investment companies, issue a fixed number of shares that trade on
a stock exchange or over-the-counter at a premium or a discount to their NAV.
Others are continuously offered at NAV, but may also be traded in the secondary
market.
The
securities of closed-end funds may be leveraged. As a result, a fund may be
indirectly exposed to leverage through an investment in such securities. An
investment in securities of closed-end funds that use leverage may expose a fund
to higher volatility in the market value of such securities and the possibility
that the fund's long-term returns on such securities will be diminished.
A
fund's ability to invest in securities of other investment companies may be
limited by federal securities laws. To the extent a fund acquires securities
issued by unaffiliated investment companies, the Adviser's access to information
regarding such underlying fund's portfolio may be limited and subject to such
fund's policies regarding disclosure of fund holdings.
Sources
of Liquidity or Credit Support. Issuers
may employ various forms of credit and liquidity enhancements, including letters
of credit, guarantees, swaps, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial institutions.
An adviser and its affiliates may rely on their evaluation of the credit of the
issuer or the credit of the liquidity or credit enhancement provider in
determining whether to purchase or hold a security supported by such
enhancement. In evaluating the credit of a foreign bank or other foreign
entities, factors considered may include whether adequate public information
about the entity is available and whether the entity may be subject to
unfavorable political or economic developments, currency controls, or other
government restrictions that might affect its ability to honor its commitment.
Changes in the credit quality of the issuer and/or entity providing the
enhancement could affect the value of the security or a fund's share
price.
Special
Purpose Acquisition Companies ("SPACs"). A
fund may invest in stock, warrants, and other securities of SPACs or similar
special purpose entities that pool money to seek potential acquisition
opportunities. SPACs are collective investment structures formed to raise money
in an initial public offering for the purpose of merging with or acquiring one
or more operating companies (the "de-SPAC Transaction"). Until an acquisition is
completed, a SPAC generally invests its assets in US government securities,
money market securities and cash. In connection with a de-SPAC Transaction, the
SPAC may complete a PIPE (private investment in public equity) offering with
certain investors. A fund may enter into a contingent commitment with a SPAC to
purchase PIPE shares if and when the SPAC completes its de-SPAC
Transaction.
Because
SPACs do not have an operating history or ongoing business other than seeking
acquisitions, the value of their securities is particularly dependent on the
ability of the SPAC's management to identify and complete a profitable
acquisition. Some SPACs may pursue acquisitions only within certain industries
or regions, which may increase the volatility of their prices. An investment in
a SPAC is subject to a variety of risks, including that (i) an attractive
acquisition or merger target may not be identified at all and the SPAC will be
required to return any remaining monies to shareholders; (ii) an acquisition or
merger once effected may prove unsuccessful and an investment in the SPAC may
lose value; (iii) the values of investments in SPACs may be highly volatile and
may depreciate significantly over time; (iv) no or only a thinly traded market
for shares of or interests in a SPAC may develop, leaving a fund unable to sell
its interest in a SPAC or to sell its interest only at a price below what the
fund believes is the SPAC interest's intrinsic value; (v) any proposed merger or
acquisition may be unable to obtain the requisite approval, if any, of
shareholders; (vi) an investment in a SPAC may be diluted by additional later
offerings of interests in the SPAC or by other investors exercising existing
rights to purchase shares of the SPAC; (vii) the warrants or other rights with
respect to the SPAC held by a fund may expire worthless or may be repurchased or
retired by the SPAC at an unfavorable price; (viii) a fund may be delayed in
receiving any redemption or liquidation proceeds from a SPAC to which it is
entitled; and (ix) a significant portion of the monies raised by the SPAC for
the purpose of identifying and effecting an acquisition or merger may be
expended during the search for a target transaction.
Purchased
PIPE shares will be restricted from trading until the registration statement for
the shares is declared effective. Upon registration, the shares can be freely
sold, but only pursuant to an effective registration statement or other
exemption from registration. The securities issued by a SPAC, which are
typically traded either in the over-the-counter market or on an exchange, may be
considered illiquid, more difficult to value, and/or be subject to restrictions
on resale.
Standby
Commitments are
puts that entitle holders to same-day settlement at an exercise price equal to
the amortized cost of the underlying security plus accrued interest, if any, at
the time of exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily
a fund will not transfer a standby commitment to a third party, although it
could sell the underlying municipal security to a third party at any time. A
fund may purchase standby commitments separate from or in conjunction with the
purchase of securities subject to such commitments. In the latter case, the fund
would pay a higher price for the securities acquired, thus reducing their yield
to maturity.
Issuers
or financial intermediaries may obtain letters of credit or other guarantees to
support their ability to buy securities on demand. An adviser may rely upon its
evaluation of a bank's credit in determining whether to purchase an instrument
supported by a letter of credit. In evaluating a foreign bank's credit, an
adviser will consider whether adequate public information about the bank is
available and whether the bank may be subject to unfavorable political or
economic developments, currency controls, or other governmental restrictions
that might affect the bank's ability to honor its credit commitment.
Standby
commitments are subject to certain risks, including the ability of issuers of
standby commitments to pay for securities at the time the commitments are
exercised; the fact that standby commitments are not generally marketable; and
the possibility that the maturities of the underlying securities may be
different from those of the commitments.
Structured
Securities (also
called "structured notes") are derivative debt securities, the interest rate on
or principal of which is determined by an unrelated indicator. The value of the
interest rate on and/or the principal of structured securities is determined by
reference to changes in the value of a reference instrument (e.g., a security or
other financial instrument, asset, currency, interest rate, commodity, or index)
or the relative change in two or more reference instruments. A structured
security may be positively, negatively, or both positively and negatively
indexed; that is, its value or interest rate may increase or decrease if the
value of the reference instrument increases. Similarly, its value or interest
rate may increase or decrease if the value of the reference instrument
decreases. Further, the change in the principal amount payable with respect to,
or the interest rate of, a structured security may be calculated as a multiple
of the percentage change (positive or negative) in the value of the underlying
reference instrument(s); therefore, the value of such structured security may be
very volatile. Structured securities may entail a greater degree of market risk
than other types of debt securities because the investor bears the risk of the
reference instrument. Structured securities may also be more volatile, less
liquid, and more difficult to accurately price than less complex securities or
more traditional debt securities. In addition, because structured securities
generally are traded over-the-counter, structured securities are subject to the
creditworthiness of the counterparty of the structured security, and their
values may decline substantially if the counterparty's creditworthiness
deteriorates.
Temporary
Defensive Policies. Fidelity®
Limited Term Municipal Income Fund reserves the right to invest without
limitation in short-term instruments, to hold a substantial amount of uninvested
cash, or to invest more than normally permitted in federally taxable obligations
for temporary, defensive purposes.
Tender
Option Bonds are
created by depositing intermediate- or long-term, fixed-rate or variable rate,
municipal bonds into a trust and issuing two classes of trust interests (or
"certificates") with varying economic interests to investors. Holders of the
first class of trust interests, or floating rate certificates, receive
tax-exempt interest based on short-term rates and may tender the certificate to
the trust at par. As consideration for providing the tender option, the trust
sponsor (typically a bank, broker-dealer, or other financial institution)
receives periodic fees. The trust pays the holders of the floating rate
certificates from proceeds of a remarketing of the certificates or from a draw
on a liquidity facility provided by the sponsor. A fund investing in a floating
rate certificate effectively holds a demand obligation that bears interest at
the prevailing short-term tax-exempt rate. The floating rate certificate is
typically an eligible security for money market funds. Holders of the second
class of interests, sometimes called the residual income certificates, are
entitled to any tax-exempt interest received by the trust that is not payable to
floating rate certificate holders, and bear the risk that the underlying
municipal bonds decline in value. In selecting tender option bonds, FMR will
consider the creditworthiness of the issuer of the underlying bond deposited in
the trust, the experience of the custodian, and the quality of the sponsor
providing the tender option. In certain instances, the tender option may be
terminated if, for example, the issuer of the underlying bond defaults on
interest payments.
Transfer
Agent Bank Accounts. Proceeds
from shareholder purchases of a Fidelity ®
fund
may pass through a series of demand deposit bank accounts before being held at
the fund's custodian. Redemption proceeds may pass from the custodian to the
shareholder through a similar series of bank accounts.
If
a bank account is registered to the transfer agent or an affiliate, who acts as
an agent for the fund when opening, closing, and conducting business in the bank
account, the transfer agent or an affiliate may invest overnight balances in the
account in repurchase agreements. Any balances that are not invested in
repurchase agreements remain in the bank account overnight. Any risks associated
with such an account are investment risks of the fund. The fund faces the risk
of loss of these balances if the bank becomes insolvent.
Variable
and Floating Rate Securities provide
for periodic adjustments in the interest rate paid on the security. Variable
rate securities provide for a specified periodic adjustment in the interest
rate, while floating rate securities have interest rates that change whenever
there is a change in a designated benchmark rate or the issuer's credit quality,
sometimes subject to a cap or floor on such rate. Some variable or floating rate
securities are structured with put features that permit holders to demand
payment of the unpaid principal balance plus accrued interest from the issuers
or certain financial intermediaries. For purposes of determining the maximum
maturity of a variable or floating rate security, a fund's adviser may take into
account normal settlement periods.
In
addition to other interbank offered rates (IBORs), the most common benchmark
rate for floating rate securities is LIBOR, which is the rate of interest
offered on short-term interbank deposits, as determined by trading between major
international banks. After the global financial crisis, regulators globally
determined that existing interest rate benchmarks should be reformed based on
concerns that LIBOR and other IBORs were susceptible to manipulation.
Replacement rates that have been identified include the Secured Overnight
Financing Rate (SOFR, which is intended to replace U.S. dollar LIBOR and
measures the cost of U.S. dollar overnight borrowings) and the Sterling
Overnight Index Average rate (SONIA, which is intended to replace pound sterling
LIBOR and measures the overnight interest rate paid by banks in the sterling
market). At the end of 2021, certain LIBORs were discontinued, but the most
widely used LIBORs may continue to be provided on a representative basis until
mid-2023. While various regulators and industry bodies are working globally on
transitioning to alternative rates, there remains uncertainty regarding the
future utilization of the IBORs and the transition to, and the nature of,
replacement rates. As such, the effect of a transition away from the IBORs on a
fund and the financial instruments in which it invests cannot yet be determined,
and may depend on factors that include, but are not limited to: (i) existing
fallback or termination provisions in individual contracts; (ii) the effect of
new legislation relating to the discontinuation of LIBOR and the use of
replacement rates, and (iii) whether, how, and when industry participants
develop and adopt new reference rates and fallbacks for both legacy and new
products and instruments. Such transition may result in a reduction in the value
of IBOR-based instruments held by a fund, a reduction in the effectiveness of
certain hedging transactions and increased illiquidity and volatility in markets
that currently rely on an IBOR to determine interest rates, any of which could
adversely impact the fund's performance.
In
many instances bonds and participation interests have tender options or demand
features that permit the holder to tender (or put) the bonds to an institution
at periodic intervals and to receive the principal amount thereof. Variable rate
instruments structured in this fashion are considered to be essentially
equivalent to other variable rate securities. The IRS has not ruled whether the
interest on these instruments is tax-exempt. Fixed-rate bonds that are subject
to third-party puts and participation interests in such bonds held by a bank in
trust or otherwise may have similar features.
When-Issued
and Forward Purchase or Sale Transactions involve
a commitment to purchase or sell specific securities at a predetermined price or
yield in which payment and delivery take place after the customary settlement
period for that type of security. Typically, no interest accrues to the
purchaser until the security is delivered.
When
purchasing securities pursuant to one of these transactions, the purchaser
assumes the rights and risks of ownership, including the risks of price and
yield fluctuations and the risk that the security will not be issued as
anticipated. Because payment for the securities is not required until the
delivery date, these risks are in addition to the risks associated with a fund's
investments. If a fund remains substantially fully invested at a time when a
purchase is outstanding, the purchases may result in a form of leverage. When a
fund has sold a security pursuant to one of these transactions, the fund does
not participate in further gains or losses with respect to the security. If the
other party to a delayed-delivery transaction fails to deliver or pay for the
securities, a fund could miss a favorable price or yield opportunity or suffer a
loss.
A
fund may renegotiate a when-issued or forward transaction and may sell the
underlying securities before delivery, which may result in capital gains or
losses for the fund.
Zero
Coupon Bonds do
not make interest payments; instead, they are sold at a discount from their face
value and are redeemed at face value when they mature. Because zero coupon bonds
do not pay current income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a fund's
dividend, a portion of the difference between a zero coupon bond's purchase
price and its face value is considered income.
In
addition to the investment policies and limitations discussed above, a fund is
subject to the additional operational risk discussed below.
Considerations
Regarding Cybersecurity. With
the increased use of technologies such as the Internet to conduct business, a
fund's service providers are susceptible to operational, information security
and related risks. In general, cyber incidents can result from deliberate
attacks or unintentional events and may arise from external or internal sources.
Cyber attacks include, but are not limited to, gaining unauthorized access to
digital systems (e.g., through "hacking" or malicious software coding) for
purposes of misappropriating assets or sensitive information; corrupting data,
equipment or systems; or causing operational disruption. Cyber attacks may also
be carried out in a manner that does not require gaining unauthorized access,
such as causing denial-of-service attacks on websites (i.e., efforts to make
network services unavailable to intended users). Cyber incidents affecting a
fund's manager, any sub-adviser and other service providers (including, but not
limited to, fund accountants, custodians, transfer agents and financial
intermediaries) have the ability to cause disruptions and impact business
operations, potentially resulting in financial losses, interference with a
fund's ability to calculate its NAV, impediments to trading, the inability of
fund shareholders to transact business, destruction to equipment and systems,
violations of applicable privacy and other laws, regulatory fines, penalties,
reputational damage, reimbursement or other compensation costs, or additional
compliance costs. Similar adverse consequences could result from cyber incidents
affecting issuers of securities in which a fund invests, counterparties with
which a fund engages in transactions, governmental and other regulatory
authorities, exchange and other financial market operators, banks, brokers,
dealers, insurance companies and other financial institutions (including
financial intermediaries and service providers for fund shareholders) and other
parties. In addition, substantial costs may be incurred in order to prevent any
cyber incidents in the future.
While
a fund's service providers have established business continuity plans in the
event of, and risk management systems to prevent, such cyber incidents, there
are inherent limitations in such plans and systems including the possibility
that certain risks have not been identified. Furthermore, a fund cannot control
the cyber security plans and systems put in place by its service providers or
any other third parties whose operations may affect a fund or its shareholders.
A fund and its shareholders could be negatively impacted as a result.
Orders
for the purchase or sale of portfolio securities are placed on behalf of the
fund by Fidelity Management & Research Company LLC (FMR or the Adviser)
pursuant to authority contained in the management contract.
To
the extent that the Adviser grants investment management authority to a
sub-adviser (see the section entitled "Management Contract"), that sub-adviser
is authorized to provide the services described in the respective sub-advisory
agreement, and in accordance with the policies described in this section.
Furthermore, the sub-adviser's trading and associated policies, which may differ
from the Adviser's policies, may apply to that fund, subject to applicable
law.
The
Adviser or a sub-adviser may be responsible for the placement of portfolio
securities transactions for other investment companies and investment accounts
for which it has or its affiliates have investment discretion.
The
fund will not incur any commissions or sales charges when it invests in shares
of mutual funds (including any underlying Central funds), but it may incur such
costs when it invests directly in other types of securities.
Purchases
and sales of equity securities on a securities exchange or OTC are effected
through brokers who receive compensation for their services. Generally,
compensation relating to securities traded on foreign exchanges will be higher
than compensation relating to securities traded on U.S. exchanges and may not be
subject to negotiation. Compensation may also be paid in connection with
principal transactions (in both OTC securities and securities listed on an
exchange) and agency OTC transactions executed with an electronic communications
network (ECN) or an alternative trading system. Equity securities may be
purchased from underwriters at prices that include underwriting fees.
Purchases
and sales of fixed-income securities are generally made with an issuer or a
primary market-maker acting as principal. Although there is no stated brokerage
commission paid by the fund for any fixed-income security, the price paid by the
fund to an underwriter includes the disclosed underwriting fee and prices in
secondary trades usually include an undisclosed dealer commission or markup
reflecting the spread between the bid and ask prices of the fixed-income
security. New issues of equity and fixed-income securities may also be purchased
in underwritten fixed price offerings.
The
Trustees of the fund periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio securities
transactions on behalf of the fund. The Trustees also review the compensation
paid by the fund over representative periods of time to determine if it was
reasonable in relation to the benefits to the fund.
The
Selection of Securities Brokers and Dealers
The
Adviser or its affiliates generally have authority to select brokers (whether
acting as a broker or a dealer) to place or execute the fund's portfolio
securities transactions. In selecting brokers, including affiliates of the
Adviser, to execute the fund's portfolio securities transactions, the Adviser or
its affiliates consider the factors they deem relevant in the context of a
particular trade and in regard to the Adviser's or its affiliates' overall
responsibilities with respect to the fund and other investment accounts,
including any instructions from the fund's portfolio manager, which may
emphasize, for example, speed of execution over other factors. Based on the
factors considered, the Adviser or its affiliates may choose to execute an order
using ECNs, including broker-sponsored algorithms, internal crossing, or by
verbally working an order with one or more brokers. Other possibly relevant
factors include, but are not limited to, the following: price; costs; the size,
nature and type of the order; the speed of execution; financial condition and
reputation of the broker; broker specific considerations (e.g., not all brokers
are able to execute all types of trades); broker willingness to commit capital;
the nature and characteristics of the markets in which the security is traded;
the trader's assessment of whether and how closely the broker likely will follow
the trader's instructions to the broker; confidentiality and the potential for
information leakage; the nature or existence of post-trade clearing, settlement,
custody and currency convertibility mechanisms; and the provision of additional
brokerage and research products and services, if applicable and where allowed by
law.
In
seeking best execution for portfolio securities transactions, the Adviser or its
affiliates may from time to time select a broker that uses a trading method,
including algorithmic trading, for which the broker charges a higher commission
than its lowest available commission rate. The Adviser or its affiliates also
may select a broker that charges more than the lowest commission rate available
from another broker. Occasionally the Adviser or its affiliates execute an
entire securities transaction with a broker and allocate all or a portion of the
transaction and/or related commissions to a second broker where a client does
not permit trading with an affiliate of the Adviser or in other limited
situations. In those situations, the commission rate paid to the second broker
may be higher than the commission rate paid to the executing broker. For futures
transactions, the selection of a futures commission merchant is generally based
on the overall quality of execution and other services provided by the futures
commission merchant. The Adviser or its affiliates execute futures transactions
verbally and electronically.
The
Acquisition of Brokerage and Research Products and Services
Brokers
(who are not affiliates of the Adviser) that execute transactions for a fund
managed outside of the European Union may receive higher compensation from the
fund than other brokers might have charged the fund, in recognition of the value
of the brokerage or research products and services they provide to the Adviser
or its affiliates.
Research
Products and Services. These
products and services may include, when permissible under applicable law, but
are not limited to: economic, industry, company, municipal, sovereign (U.S. and
non-U.S.), legal, or political research reports; market color; company meeting
facilitation; compilation of securities prices, earnings, dividends and similar
data; quotation services, data, information and other services; analytical
computer software and services; and investment recommendations. In addition to
receiving brokerage and research products and services via written reports and
computer-delivered services, such reports may also be provided by telephone and
in video and in-person meetings with securities analysts, corporate and industry
spokespersons, economists, academicians and government representatives and
others with relevant professional expertise. The Adviser or its affiliates may
request that a broker provide a specific proprietary or third-party product or
service. Some of these brokerage and research products and services supplement
the Adviser's or its affiliates' own research activities in providing investment
advice to the fund.
Execution
Services. In
addition, when permissible under applicable law, brokerage and research products
and services include those that assist in the execution, clearing, and
settlement of securities transactions, as well as other incidental functions
(including, but not limited to, communication services related to trade
execution, order routing and algorithmic trading, post-trade matching, exchange
of messages among brokers or dealers, custodians and institutions, and the use
of electronic confirmation and affirmation of institutional trades).
Mixed-Use
Products and Services. Although
the Adviser or its affiliates do not use fund commissions to pay for products or
services that do not qualify as brokerage and research products and services or
eligible external research under MiFID II and FCA regulations (as defined
below), where allowed by applicable law, they, at times, will use commission
dollars to obtain certain products or services that are not used exclusively in
the Adviser's or its affiliates' investment decision-making process (mixed-use
products or services). In those circumstances, the Adviser or its affiliates
will make a good faith judgment to evaluate the various benefits and uses to
which they intend to put the mixed-use product or service, and will pay for that
portion of the mixed-use product or service that does not qualify as brokerage
and research products and services or eligible external research with their own
resources (referred to as "hard dollars").
Benefit
to the Adviser. The
Adviser's or its affiliates' expenses likely would be increased if they
attempted to generate these additional brokerage and research products and
services through their own efforts, or if they paid for these brokerage and
research products or services with their own resources. Therefore, an economic
incentive exists for the Adviser or its affiliates to select or recommend a
broker-dealer based on its interest in receiving the brokerage and research
products and services, rather than on the Adviser's or its affiliates' funds
interest in receiving most favorable execution. The Adviser and its affiliates
manage the receipt of brokerage and research products and services and the
potential for conflicts through its Commission Uses Program. The Commission Uses
Program effectively "unbundles" commissions paid to brokers who provide
brokerage and research products and services, i.e., commissions consist of an
execution commission, which covers the execution of the trade (including
clearance and settlement), and a research charge, which is used to cover
brokerage and research products and services. Those brokers have client
commission arrangements (each a CCA) in place with the Adviser and its
affiliates (each of those brokers referred to as CCA brokers). In selecting
brokers for executing transactions on behalf of the fund, the trading desks
through which the Adviser or its affiliates may execute trades are instructed to
execute portfolio transactions on behalf of the fund based on the quality of
execution without any consideration of brokerage and research products and
services the CCA broker provides. Commissions paid to a CCA broker include both
an execution commission and a research charge, and while the CCA broker receives
the entire commission, it retains the execution commission and either credits or
transmits the research portion (also known as "soft dollars") to a CCA pool
maintained by each CCA broker. Soft dollar credits (credits) accumulated in CCA
pools are used to pay research expenses. In some cases, the Adviser or its
affiliates may request that a broker that is not a party to any particular
transaction provide a specific proprietary or third-party product or service,
which would be paid with credits from the CCA pool. The administration of
brokerage and research products and services is managed separately from the
trading desks, and traders have no responsibility for administering the research
program, including the payment for research. The Adviser or its affiliates, at
times, use a third-party aggregator to facilitate payments to research
providers. Where an aggregator is involved, the aggregator would maintain
credits in an account that is segregated from the aggregator's proprietary
assets and the assets of its other clients and use those credits to pay research
providers as instructed by the Adviser or its affiliates. Furthermore, where
permissible under applicable law, certain of the brokerage and research products
and services that the Adviser or its affiliates receive are furnished by brokers
on their own initiative, either in connection with a particular transaction or
as part of their overall services. Some of these brokerage and research products
or services may be provided at no additional cost to the Adviser or its
affiliates or have no explicit cost associated with them. In addition, the
Adviser or its affiliates may request that a broker provide a specific
proprietary or third-party product or service, certain of which third-party
products or services may be provided by a broker that is not a party to a
particular transaction and is not connected with the transacting broker's
overall services.
The
Adviser's Decision-Making Process. In
connection with the allocation of fund brokerage, the Adviser or its affiliates
make a good faith determination that the compensation paid to brokers and
dealers is reasonable in relation to the value of the brokerage and/or research
products and services provided to the Adviser or its affiliates, viewed in terms
of the particular transaction for the fund or the Adviser's or its affiliates'
overall responsibilities to that fund or other investment companies and
investment accounts for which the Adviser or its affiliates have investment
discretion; however, each brokerage and research product or service received in
connection with the fund's brokerage does not benefit all funds and certain
funds will receive the benefit of the brokerage and research product or services
obtained with other funds' commissions. As required under applicable laws or
fund policy, commissions generated by certain funds may only be used to obtain
certain brokerage and research products and services. As a result, certain funds
will pay more proportionately of certain types of brokerage and research
products and services than others, while the overall amount of brokerage and
research products and services paid by each fund continues to be allocated
equitably. While the Adviser or its affiliates take into account the brokerage
and/or research products and services provided by a broker or dealer in
determining whether compensation paid is reasonable, neither the Adviser, its
affiliates, nor the fund incur an obligation to any broker, dealer, or third
party to pay for any brokerage and research product or service (or portion
thereof) by generating a specific amount of compensation or otherwise.
Typically, for funds managed by the Adviser or its affiliates outside of the
European Union or the United Kingdom, these brokerage and research products and
services assist the Adviser or its affiliates in terms of their overall
investment responsibilities to the fund or any other investment companies and
investment accounts for which the Adviser or its affiliates may have investment
discretion. Certain funds or investment accounts may use brokerage commissions
to acquire brokerage and research products and services that also benefit other
funds or accounts managed by the Adviser or its affiliates, and not every fund
or investment account uses the brokerage and research products and services that
may have been acquired through that fund's commissions.
Research
Contracts. The
Adviser or its affiliates have arrangements with certain third-party research
providers and brokers through whom the Adviser or its affiliates effect fund
trades, whereby the Adviser or its affiliates may pay with fund commissions or
hard dollars for all or a portion of the cost of research products and services
purchased from such research providers or brokers. If hard dollar payments are
used, the Adviser or its affiliates, at times, will cause the fund to pay more
for execution than the lowest commission rate available from the broker
providing research products and services to the Adviser or its affiliates, or
that may be available from another broker. The Adviser's or its affiliates'
determination to pay for research products and services separately is wholly
voluntary on the Adviser's or its affiliates' part and may be extended to
additional brokers or discontinued with any broker participating in this
arrangement.
Funds
Managed within the European Union. The
Adviser and its affiliates have established policies and procedures relating to
brokerage commission uses in compliance with the revised Markets in Financial
Instruments Directive in the European Union, commonly referred to as "MiFID II",
as implemented in the United Kingdom through the Conduct of Business Sourcebook
Rules of the UK Financial Conduct Authority (the FCA), where applicable.
Funds,
or portions thereof, that are managed within the United Kingdom by FMR
Investment Management (UK) Limited (FMR UK) use research payment accounts (RPAs)
to cover costs associated with equity and high income external research that is
consumed by those funds or investment accounts in accordance with MiFID II and
FCA regulations. With RPAs, funds pay for external research through a separate
research charge that is generally assessed and collected alongside the execution
commission 1
.
For funds that use an RPA, FMR UK establishes a research budget. The budget is
set by first grouping funds or investment accounts by strategy (e.g., asset
allocation, blend, growth, etc.), and then determining what external research is
consumed to support the strategies and portfolio management services provided
within the European Union or the United Kingdom. In this regard, research
budgets are set by research needs and are not otherwise linked to the volume or
value of transactions executed on behalf of the fund or investment account. For
funds where portions are managed both within and outside of the United Kingdom,
external research may be paid using both a CCA and an RPA. Determinations of
what is eligible research and how costs are allocated are made in accordance
with the Adviser's and its affiliates' policies and procedures. Costs for
research consumed by funds that use an RPA will be allocated among the funds or
investment accounts within defined strategies pro rata based on the assets under
management for each fund or investment account. While the research charge paid
on behalf of any one fund that uses an RPA varies over time, the overall
research charge determined at the fund level on an annual basis will not be
exceeded.
FMR
UK is responsible for managing the RPA and may delegate its administration to a
third-party administrator for the facilitation of the purchase of external
research and payments to research providers. RPA assets will be maintained in
accounts at a third-party depository institution, held in the name of FMR UK.
FMR UK provides on request, a summary of: (i) the providers paid from the RPA;
(ii) the total amount they were paid over a defined period; (iii) the benefits
and services received by FMR UK; and (iv) how the total amount spent from the
RPA compares to the research budget set for that period, noting any rebate or
carryover if residual funds remain in the RPA.
Impacted
funds, like those funds that participate in CCA pools, at times, will make
payments to a broker that include both an execution commission and a research
charge, but unlike CCAs (for which research charges may be retained by the CCA
broker and credited to the CCA, as described above), the broker will receive
separate payments for the execution commission and the research charge and will
promptly remit the research charge to the RPA. Assets in the RPA are used to
satisfy external research costs consumed by the funds.
If
the costs of paying for external research exceed the amount initially agreed in
relation to funds in a given strategy, the Adviser or its affiliates may
continue to charge those funds or investment accounts beyond the initially
agreed amount in accordance with MiFID II, continue to acquire external research
for the funds or investment accounts using its own resources, or cease to
purchase external research for those funds or investment accounts until the next
annual research budget. If assets for specific funds remain in the RPA at the
end of a period, they may be rolled over to the next period to offset next
year's research charges for those funds or rebated to those funds.
Funds
managed by FMR UK that trade only fixed income securities will not participate
in RPAs because fixed income securities trade based on spreads rather than
commissions, and thus unbundling the execution commission and research charge is
impractical. Therefore, FMR UK and its affiliates have established policies and
procedures to ensure that external research that is paid for through RPAs is not
made available to FMR UK portfolio managers that manage fixed income funds or
investment accounts in any manner inconsistent with MiFID II and FCA
regulations.
1
The
staff of the SEC addressed concerns that reliance on an RPA mechanism to pay for
research would be permissible under Section 28(e) of the Securities Exchange Act
of 1934 by indicating that they would not recommend enforcement against
investment advisers who used an RPA to pay for research and brokerage products
and services so long as certain conditions were met. Therefore, references to
"research charges" as part of the RPA mechanism to satisfy MiFID II requirements
can be considered "commissions" for Section 28(e) purposes.
Commission
Recapture
From
time to time, the Adviser or its affiliates engages in brokerage transactions
with brokers (who are not affiliates of the Adviser) who have entered into
arrangements with the Adviser or its affiliates under which the broker will, at
times, rebate a portion of the compensation paid by a fund (commission
recapture). Not all brokers with whom the fund trades have been asked to
participate in brokerage commission recapture.
Affiliated
Transactions
The
Adviser or its affiliates place trades with certain brokers, including National
Financial Services LLC (NFS), through its Fidelity Capital Markets (FCM)
division, and Luminex Trading & Analytics LLC (Luminex), with whom they are
under common control or otherwise affiliated, provided the Adviser or its
affiliates determine that these affiliates' trade-execution abilities and costs
are comparable to those of non-affiliated, qualified brokerage firms, and that
such transactions be executed in accordance with applicable rules under the 1940
Act and procedures adopted by the Board of Trustees of the fund and subject to
other applicable law. In addition, from time to time, the Adviser or its
affiliates place trades with brokers that use NFS or Fidelity Clearing Canada
ULC (FCC) as a clearing agent and/or use Level ATS, an alternative trading
system that is deemed to be affiliated with the Adviser, for execution
services.
In
certain circumstances, trades are executed through alternative trading systems
or national securities exchanges in which the Adviser or its affiliates have an
interest. Any decision to execute a trade through an alternative trading system
or exchange in which the Adviser or its affiliates have an interest would be
made in accordance with applicable law, including best execution obligations.
For trades placed on such a system or exchange, not limited to ones in which the
Adviser or its affiliates have an ownership interest, the Adviser or its
affiliates derive benefit in the form of increased valuation(s) of its equity
interest, where it has an ownership interest, or other remuneration, including
rebates.
The
Trustees of the fund have approved procedures whereby a fund is permitted to
purchase securities that are offered in underwritings in which an affiliate of
the adviser or certain other affiliates participate. In addition, for
underwritings where such an affiliate participates as a principal underwriter,
certain restrictions may apply that could, among other things, limit the amount
of securities that the fund could purchase in the underwritings.
Non-U.S.
Securities Transactions
To
facilitate trade settlement and related activities in non-U.S. securities
transactions, the Adviser or its affiliates effect spot foreign currency
transactions with foreign currency dealers. In certain circumstances, due to
local law and regulation, logistical or operational challenges, or the process
for settling securities transactions in certain markets (e.g., short settlement
periods), spot currency transactions are effected on behalf of funds by parties
other than the Adviser or its affiliates, including funds' custodian banks
(working through sub-custodians or agents in the relevant non-U.S. jurisdiction)
or broker-dealers that executed the related securities transaction.
Trade
Allocation
Although
the Trustees and officers of the fund are substantially the same as those of
certain other Fidelity ®
funds,
investment decisions for the fund are made independently from those of other
Fidelity ®
funds
or investment accounts (including proprietary accounts). The same security is
often held in the portfolio of more than one of these funds or investment
accounts. Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser, or an affiliate
thereof, particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When
two or more funds or investment accounts are simultaneously engaged in the
purchase or sale of the same security or instrument, the prices and amounts are
allocated in accordance with procedures believed by the Adviser to be
appropriate and equitable to each fund or investment account. In some cases this
could have a detrimental effect on the price or value of the security or
instrument as far as the fund is concerned. In other cases, however, the ability
of the fund to participate in volume transactions will produce better executions
and prices for the fund.
Commissions
Paid
A
fund may pay compensation including both commissions and spreads in connection
with the placement of portfolio transactions. The amount of brokerage
commissions paid by a fund may change from year to year because of, among other
things, changing asset levels, shareholder activity, and/or portfolio
turnover.
For
Fidelity® Limited Term Municipal Income Fund, the following table shows the
fund's portfolio turnover rate for the fiscal period(s) ended December 31, 2022
and 2021. Variations in turnover rate may be due to a fluctuating volume of
shareholder purchase and redemption orders, market conditions, and/or changes in
the Adviser's investment outlook.
|
Turnover
Rates |
2022
|
2021
|
|
Fidelity®
Limited Term Municipal Income Fund |
20%
|
20%
|
|
|
|
|
For
the fiscal year(s) ended December 31, 2022, 2021, and 2020, Fidelity® Limited
Term Municipal Income Fund paid no brokerage commissions.
During
the fiscal year ended December 31, 2022, Fidelity® Limited Term Municipal Income
Fund paid no brokerage commissions to firms for providing research or brokerage
services.
During
the twelve-month period ended September 30, 2022, Fidelity® Limited Term
Municipal Income Fund did not allocate brokerage commissions to firms for
providing research or brokerage services.
The
NAV is the value of a single share. NAV is computed by adding a class's pro rata
share of the value of a fund's investments, cash, and other assets, subtracting
the class's pro rata share of the fund's liabilities, subtracting the
liabilities allocated to the class, and dividing the result by the number of
shares of that class that are outstanding.
The
Board of Trustees has designated the fund's investment adviser as the valuation
designee responsible for the fair valuation function and performing fair value
determinations as needed. The adviser has established a Fair Value Committee
(the Committee) to carry out the day-to-day fair valuation responsibilities and
has adopted policies and procedures to govern the fair valuation process and the
activities of the Committee.
Shares
of open-end investment companies (including any underlying Central funds) held
by a fund are valued at their respective NAVs.
Generally,
other portfolio securities and assets held by a fund, as well as portfolio
securities and assets held by an underlying Central fund, are valued as
follows:
If
quotations are not available, debt securities are usually valued on the basis of
information furnished by a pricing service that uses a valuation matrix which
incorporates both dealer-supplied valuations and electronic data processing
techniques.
Futures
contracts are valued at the settlement or closing price. Options are valued at
their market quotations, if available. Swaps are valued daily using quotations
received from independent pricing services or recognized dealers.
Prices
described above are obtained from pricing services that have been approved by
the Committee. A number of pricing services are available and a fund may use
more than one of these services. A fund may also discontinue the use of any
pricing service at any time. A fund's adviser through the Committee engages
in oversight activities with respect to the fund's pricing services, which
includes, among other things, testing the prices provided by pricing services
prior to calculation of a fund's NAV, conducting periodic due diligence
meetings, and periodically reviewing the methodologies and inputs used by these
services.
Other
portfolio securities and assets for which market quotations, official closing
prices, or information furnished by a pricing service are not readily available
or, in the opinion of the Committee, are deemed unreliable will be fair valued
in good faith by the Committee in accordance with applicable fair value pricing
policies. For example, if, in the opinion of the Committee, a security's value
has been materially affected by events occurring before a fund's pricing time
but after the close of the exchange or market on which the security is
principally traded, that security will be fair valued in good faith by the
Committee in accordance with applicable fair value pricing policies. In fair
valuing a security, the Committee may consider factors including, but not
limited to, price movements in futures contracts and American Depositary
Receipts (ADRs), market and trading trends, the bid/ask quotes of brokers, and
off-exchange institutional trading. The frequency that portfolio securities or
assets are fair valued cannot be predicted and may be significant.
In
determining the fair value of a private placement security for which market
quotations are not available, the Committee generally applies one or more
valuation methods including the market approach, income approach and cost
approach. The market approach considers factors including the price of recent
investments in the same or a similar security or financial metrics of comparable
securities. The income approach considers factors including expected future cash
flows, security specific risks and corresponding discount rates. The cost
approach considers factors including the value of the security's underlying
assets and liabilities.
The
fund's adviser reports to the Board information regarding the fair valuation
process and related material matters.
BUYING,
SELLING, AND EXCHANGING INFORMATION
The
fund may make redemption payments in whole or in part in readily marketable
securities or other property pursuant to procedures approved by the Trustees if
FMR determines it is in the best interests of the fund. Such securities or other
property will be valued for this purpose as they are valued in computing the NAV
of a fund or class, as applicable. Shareholders that receive securities or other
property will realize, upon receipt, a gain or loss for tax purposes, and will
incur additional costs and be exposed to market risk prior to and upon the sale
of such securities or other property.
The
fund, in its discretion, may determine to issue its shares in kind in exchange
for securities held by the purchaser having a value, determined in accordance
with the fund's policies for valuation of portfolio securities, equal to the
purchase price of the fund shares issued. The fund will accept for in-kind
purchases only securities or other instruments that are appropriate under its
investment objective and policies. In addition, the fund generally will not
accept securities of any issuer unless they are liquid, have a readily
ascertainable market value, and are not subject to restrictions on resale. All
dividends, distributions, and subscription or other rights associated with the
securities become the property of the fund, along with the securities. Shares
purchased in exchange for securities in kind generally cannot be redeemed for
fifteen days following the exchange to allow time for the transfer to
settle.
In
addition to the exchange privileges listed in the fund's prospectus, the fund
offers the privilege of moving between certain share classes of the same fund,
as detailed below. Such transactions are subject to eligibility requirements of
the applicable class of shares of a fund, and may be subject to applicable sales
loads. An exchange between share classes of the same fund generally is a
non-taxable event.
Class
A: Shares
of Class A may be exchanged for Class Z or Class I shares of the same
fund.
Class
M: Shares
of Class M may be exchanged for Class A (on a load-waived basis), Class Z, or
Class I shares of the same fund.
Class
C: Shares
of Class C may be exchanged for Class A, Class M, Class Z, or Class I shares of
the same fund.
Class
I: Shares
of Class I may be exchanged for Class A, if you are no longer eligible for Class
I, or Class Z shares of the same fund.
Class
Z: Shares
of Class Z may be exchanged for Class A or Class I shares of the same fund if
you are no longer eligible for Class Z.
The
fund may terminate or modify its exchange privileges in the future.
Dividends.
To
the extent that the fund's income is reported in a written statement to
shareholders as federally tax-exempt interest, the dividends declared by the
fund will be federally tax-exempt, provided that the fund qualifies to pay
tax-exempt dividends. In order to qualify to pay tax-exempt dividends, at least
50% of the value of the fund's total assets (including uninvested assets) must
consist of tax-exempt municipal securities at the close of each quarter of the
fund's taxable year. Short-term capital gains are taxable at ordinary income tax
rates.
Generally,
the fund purchases municipal securities whose interest, in the opinion of bond
counsel, is free from federal income tax. Neither Fidelity Management &
Research Company LLC nor the fund guarantees that this opinion is correct, and
there is no assurance that the IRS will agree with bond counsel's opinion.
Issuers or other parties generally enter into covenants requiring continuing
compliance with federal tax requirements to preserve the tax-free status of
interest payments over the life of the security. If at any time the covenants
are not complied with, or if the IRS otherwise determines that the issuer did
not comply with relevant tax requirements, interest payments from a security
could become federally taxable, possibly retroactively to the date the security
was issued and you may need to file an amended income tax return. For certain
types of structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal tax treatment of the structure.
Interest
on certain "private activity" securities is subject to the federal Alternative
Minimum Tax (AMT) for individuals, although the interest continues to be
excludable from gross income for other tax purposes. Interest from private
activity securities is a tax preference item for the purposes of determining
whether an individual is subject to the AMT and the amount of AMT to be paid, if
any.
A
portion of the gain on municipal bonds purchased at market discount is taxable
to shareholders as ordinary income, not as capital gains.
Capital
Gain Distributions. Unless
your shares of the fund are held in a tax-advantaged retirement plan, the fund's
long-term capital gain distributions are federally taxable to shareholders
generally as capital gains.
The
following table shows the fund's aggregate capital loss carryforward as of
December 31, 2022, which is available to offset future capital gains. A fund's
ability to utilize its capital loss carryforwards in a given year or in total
may be limited.
|
Fund
|
|
Capital
Loss Carryforward (CLC) |
|
Fidelity®
Limited Term Municipal Income Fund |
$
|
12,202,461
|
Returns
of Capital. If
the fund's distributions exceed its taxable income and capital gains realized
during a taxable year, all or a portion of the distributions made in the same
taxable year may be recharacterized as a return of capital to shareholders. A
return of capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher reported
capital gain or lower reported capital loss when those shares on which the
distribution was received are sold in taxable accounts.
Foreign
Taxation. Foreign
governments may impose withholding taxes on dividends and interest earned by the
fund with respect to foreign securities held directly by the fund. Foreign
governments may also impose taxes on other payments or gains with respect to
foreign securities held directly by the fund.
Tax
Status of the Fund. The
fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code so that it will not be liable for
federal tax on income and capital gains distributed to shareholders. In order to
qualify as a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, the fund intends to distribute
substantially all of its net investment income and net realized capital gains
within each calendar year as well as on a fiscal year basis (if the fiscal year
is other than the calendar year), and intends to comply with other tax rules
applicable to regulated investment companies.
Other
Tax Information. The
information above is only a summary of some of the tax consequences generally
affecting the fund and its shareholders, and no attempt has been made to discuss
individual tax consequences. Some of the information may not apply to certain
shareholders, including tax-advantaged retirement plan shareholders. It is up to
you or your tax preparer to determine whether the sale of shares of the fund
resulted in a capital gain or loss or other tax consequence to you. In addition
to federal income taxes, shareholders may be subject to state and local taxes on
fund distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to determine whether
the fund is suitable to their particular tax situation.
The
Trustees, Members of the Advisory Board (if any), and officers of the trust and
fund, as applicable, are listed below. The Board of Trustees governs the fund
and is responsible for protecting the interests of shareholders. The Trustees
are experienced executives who meet periodically throughout the year to oversee
the fund's activities, review contractual arrangements with companies that
provide services to the fund, oversee management of the risks associated with
such activities and contractual arrangements, and review the fund's performance.
Each of the Trustees oversees 295 funds.
The
Trustees hold office without limit in time except that (a) any Trustee may
resign; (b) any Trustee may be removed by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; (c) any Trustee who
requests to be retired or who has become incapacitated by illness or injury may
be retired by written instrument signed by a majority of the other Trustees; and
(d) any Trustee may be removed at any special meeting of shareholders by a
two-thirds vote of the outstanding voting securities of the trust. Each Trustee
who is not an interested person (as defined in the 1940 Act) of the trust and
the fund is referred to herein as an Independent Trustee. Each Independent
Trustee shall retire not later than the last day of the calendar year in which
his or her 75th birthday occurs. The Independent Trustees may waive this
mandatory retirement age policy with respect to individual Trustees. Officers
and Advisory Board Members hold office without limit in time, except that any
officer or Advisory Board Member may resign or may be removed by a vote of a
majority of the Trustees at any regular meeting or any special meeting of the
Trustees. Except as indicated, each individual has held the office shown or
other offices in the same company for the past five years.
Experience,
Skills, Attributes, and Qualifications of the Trustees. The
Governance and Nominating Committee has adopted a statement of policy that
describes the experience, qualifications, attributes, and skills that are
necessary and desirable for potential Independent Trustee candidates (Statement
of Policy). The Board believes that each Trustee satisfied at the time he or she
was initially elected or appointed a Trustee, and continues to satisfy, the
standards contemplated by the Statement of Policy. The Governance and Nominating
Committee also engages professional search firms to help identify potential
Independent Trustee candidates who have the experience, qualifications,
attributes, and skills consistent with the Statement of Policy. From time to
time, additional criteria based on the composition and skills of the current
Independent Trustees, as well as experience or skills that may be appropriate in
light of future changes to board composition, business conditions, and
regulatory or other developments, have also been considered by the professional
search firms and the Governance and Nominating Committee. In addition, the Board
takes into account the Trustees' commitment and participation in Board and
committee meetings, as well as their leadership of standing and ad hoc
committees throughout their tenure.
In
determining that a particular Trustee was and continues to be qualified to serve
as a Trustee, the Board has considered a variety of criteria, none of which, in
isolation, was controlling. The Board believes that, collectively, the Trustees
have balanced and diverse experience, qualifications, attributes, and skills,
which allow the Board to operate effectively in governing the fund and
protecting the interests of shareholders. Information about the specific
experience, skills, attributes, and qualifications of each Trustee, which in
each case led to the Board's conclusion that the Trustee should serve (or
continue to serve) as a trustee of the fund, is provided below.
Board
Structure and Oversight Function. Abigail
P. Johnson is an interested person and currently serves as Chairman. The
Trustees have determined that an interested Chairman is appropriate and benefits
shareholders because an interested Chairman has a personal and professional
stake in the quality and continuity of services provided to the fund.
Independent Trustees exercise their informed business judgment to appoint an
individual of their choosing to serve as Chairman, regardless of whether the
Trustee happens to be independent or a member of management. The Independent
Trustees have determined that they can act independently and effectively without
having an Independent Trustee serve as Chairman and that a key structural
component for assuring that they are in a position to do so is for the
Independent Trustees to constitute a substantial majority for the Board. The
Independent Trustees also regularly meet in executive session. Michael E.
Kenneally serves as Chairman of the Independent Trustees and as such (i) acts as
a liaison between the Independent Trustees and management with respect to
matters important to the Independent Trustees and (ii) with management prepares
agendas for Board meetings.
Fidelity
®
funds
are overseen by different Boards of Trustees. The fund's Board oversees
Fidelity's investment-grade bond, money market, asset allocation and certain
equity funds, and other Boards oversee Fidelity's high income and other equity
funds. The asset allocation funds may invest in Fidelity ®
funds
that are overseen by such other Boards. The use of separate Boards, each with
its own committee structure, allows the Trustees of each group of
Fidelity ®
funds
to focus on the unique issues of the funds they oversee, including common
research, investment, and operational issues. On occasion, the separate Boards
establish joint committees to address issues of overlapping consequences for the
Fidelity ®
funds
overseen by each Board.
The
Trustees operate using a system of committees to facilitate the timely and
efficient consideration of all matters of importance to the Trustees, the fund,
and fund shareholders and to facilitate compliance with legal and regulatory
requirements and oversight of the fund's activities and associated risks. The
Board, acting through its committees, has charged FMR and its affiliates with
(i) identifying events or circumstances the occurrence of which could have
demonstrably adverse effects on the fund's business and/or reputation; (ii)
implementing processes and controls to lessen the possibility that such events
or circumstances occur or to mitigate the effects of such events or
circumstances if they do occur; and (iii) creating and maintaining a system
designed to evaluate continuously business and market conditions in order to
facilitate the identification and implementation processes described in (i) and
(ii) above. Because the day-to-day operations and activities of the fund are
carried out by or through FMR, its affiliates, and other service providers, the
fund's exposure to risks is mitigated but not eliminated by the processes
overseen by the Trustees. While each of the Board's committees has
responsibility for overseeing different aspects of the fund's activities,
oversight is exercised primarily through the Operations and Audit Committees. In
addition, an ad hoc Board committee of Independent Trustees has worked with FMR
to enhance the Board's oversight of investment and financial risks, legal and
regulatory risks, technology risks, and operational risks, including the
development of additional risk reporting to the Board. Appropriate personnel,
including but not limited to the fund's Chief Compliance Officer (CCO), FMR's
internal auditor, the independent accountants, the fund's Treasurer and
portfolio management personnel, make periodic reports to the Board's committees,
as appropriate, including an annual review of Fidelity's risk management program
for the Fidelity ®
funds.
The responsibilities of each standing committee, including their oversight
responsibilities, are described further under "Standing Committees of the
Trustees."
Interested
Trustees*:
Correspondence
intended for a Trustee who is an interested person may be sent to Fidelity
Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name,
Year of Birth; Principal Occupations and Other Relevant Experience+
Abigail
P. Johnson (1961)
Year
of Election or Appointment: 2009
Trustee
Chairman
of the Board of Trustees
Ms.
Johnson also serves as Trustee of other Fidelity ®
funds.
Ms. Johnson serves as Chairman (2016-present), Chief Executive Officer
(2014-present), and Director (2007-present) of FMR LLC (diversified financial
services company), President of Fidelity Financial Services (2012-present) and
President of Personal, Workplace and Institutional Services (2005-present). Ms.
Johnson is Chairman and Director of Fidelity Management & Research Company
LLC (investment adviser firm, 2011-present). Previously, Ms. Johnson served as
Chairman and Director of FMR Co., Inc. (investment adviser firm, 2011-2019),
Vice Chairman (2007-2016) and President (2013-2016) of FMR LLC, President and a
Director of Fidelity Management & Research Company (2001-2005), a Trustee of
other investment companies advised by Fidelity Management & Research
Company, Fidelity Investments Money Management, Inc. (investment adviser firm),
and FMR Co., Inc. (2001-2005), Senior Vice President of the Fidelity
®
funds
(2001-2005), and managed a number of Fidelity ®
funds.
Ms. Abigail P. Johnson and Mr. Arthur E. Johnson are not related.
Jennifer
Toolin McAuliffe (1959)
Year
of Election or Appointment: 2016
Trustee
Ms.
McAuliffe also serves as Trustee of other Fidelity ®
funds
and as Trustee of Fidelity Charitable (2020-present). Previously, Ms. McAuliffe
served as Co-Head of Fixed Income of Fidelity Investments Limited (now known as
FIL Limited (FIL)) (diversified financial services company), Director of
Research for FIL's credit and quantitative teams in London, Hong Kong and Tokyo
and Director of Research for taxable and municipal bonds at Fidelity Investments
Money Management, Inc. Ms. McAuliffe previously served as a member of the
Advisory Board of certain Fidelity ®
funds
(2016). Ms. McAuliffe was previously a lawyer at Ropes & Gray LLP and
currently serves as director or trustee of several not-for-profit
entities.
*
Determined to be an "Interested Trustee" by virtue of, among other things, his
or her affiliation with the trust or various entities under common control with
FMR.
+
The information includes the Trustee's principal occupation during the last five
years and other information relating to the experience, attributes, and skills
relevant to the Trustee's qualifications to serve as a Trustee, which led to the
conclusion that the Trustee should serve as a Trustee for the fund.
Independent
Trustees:
Correspondence
intended for an Independent Trustee may be sent to Fidelity Investments, P.O.
Box 55235, Boston, Massachusetts 02205-5235.
Name,
Year of Birth; Principal Occupations and Other Relevant Experience+
Elizabeth
S. Acton (1951)
Year
of Election or Appointment: 2013
Trustee
Ms.
Acton also serves as Trustee of other Fidelity ®
funds.
Prior to her retirement, Ms. Acton served as Executive Vice President, Finance
(2011-2012), Executive Vice President, Chief Financial Officer (2002-2011) and
Treasurer (2004-2005) of Comerica Incorporated (financial services). Prior to
joining Comerica, Ms. Acton held a variety of positions at Ford Motor Company
(1983-2002), including Vice President and Treasurer (2000-2002) and Executive
Vice President and Chief Financial Officer of Ford Motor Credit Company
(1998-2000). Ms. Acton currently serves as a member of the Board and Audit and
Finance Committees of Beazer Homes USA, Inc. (homebuilding, 2012-present). Ms.
Acton previously served as a member of the Advisory Board of certain
Fidelity ®
funds
(2013-2016).
Ann
E. Dunwoody (1953)
Year
of Election or Appointment: 2018
Trustee
General
Dunwoody also serves as Trustee of other Fidelity ®
funds.
General Dunwoody (United States Army, Retired) was the first woman in U.S.
military history to achieve the rank of four-star general and prior to her
retirement in 2012 held a variety of positions within the U.S. Army, including
Commanding General, U.S. Army Material Command (2008-2012). General Dunwoody
currently serves as President of First to Four LLC (leadership and mentoring
services, 2012-present), a member of the Board and Nomination and Corporate
Governance Committees of Kforce Inc. (professional staffing services,
2016-present) and a member of the Board of Automattic Inc. (software
engineering, 2018-present). Previously, General Dunwoody served as a member of
the Advisory Board and Nominating and Corporate Governance Committee of L3
Technologies, Inc. (communication, electronic, sensor and aerospace systems,
2013-2019) and a member of the Board and Audit and Sustainability and Corporate
Responsibility Committees of Republic Services, Inc. (waste collection, disposal
and recycling, 2013-2016). Ms. Dunwoody also serves on several boards for
non-profit organizations, including as a member of the Board, Chair of the
Nomination and Governance Committee and a member of the Audit Committee of
Logistics Management Institute (consulting non-profit, 2012-present), a member
of the Council of Trustees for the Association of the United States Army
(advocacy non-profit, 2013-present), a member of the Board of Florida Institute
of Technology (2015-present) and a member of the Board of ThanksUSA (military
family education non-profit, 2014-present). General Dunwoody previously served
as a member of the Advisory Board of certain Fidelity ®
funds
(2018).
John
Engler (1948)
Year
of Election or Appointment: 2014
Trustee
Mr.
Engler also serves as Trustee of other Fidelity ®
funds.
Previously, Mr. Engler served as Governor of Michigan (1991-2003), President of
the Business Roundtable (2011-2017) and interim President of Michigan State
University (2018-2019). Mr. Engler currently serves as a member of the Board of
Stride, Inc. (formerly K12 Inc.) (technology-based education company,
2012-present). Previously, Mr. Engler served as a member of the Board of
Universal Forest Products (manufacturer and distributor of wood and
wood-alternative products, 2003-2019) and Trustee of The Munder Funds
(2003-2014). Mr. Engler previously served as a member of the Advisory Board of
certain Fidelity ®
funds
(2014-2016).
Robert
F. Gartland (1951)
Year
of Election or Appointment: 2010
Trustee
Mr.
Gartland also serves as Trustee of other Fidelity ®
funds.
Prior to his retirement, Mr. Gartland held a variety of positions at Morgan
Stanley (financial services, 1979-2007), including Managing Director (1987-2007)
and Chase Manhattan Bank (1975-1978). Mr. Gartland previously served as Chairman
and an investor in Gartland & Mellina Group Corp. (consulting, 2009-2019),
as a member of the Board of National Securities Clearing Corporation (1993-1996)
and as Chairman of TradeWeb (2003-2004).
Arthur
E. Johnson (1947)
Year
of Election or Appointment: 2008
Trustee
Mr.
Johnson also serves as Trustee of other Fidelity ®
funds.
Prior to his retirement, Mr. Johnson served as Senior Vice President of
Corporate Strategic Development of Lockheed Martin Corporation (defense
contractor, 1999-2009). Mr. Johnson currently serves as a member of the Board of
Booz Allen Hamilton (management consulting, 2011-present). Mr. Johnson
previously served as a member of the Board of Eaton Corporation plc (diversified
power management, 2009-2019) and a member of the Board of AGL Resources, Inc.
(holding company, 2002-2016). Mr. Johnson previously served as Chairman
(2018-2021) and Vice Chairman (2015-2018) of the Independent Trustees of certain
Fidelity® funds. Mr. Arthur E. Johnson is not related to Ms. Abigail P.
Johnson.
Michael
E. Kenneally (1954)
Year
of Election or Appointment: 2009
Trustee
Chairman
of the Independent Trustees
Mr.
Kenneally also serves as Trustee of other Fidelity ®
funds
and was Vice Chairman (2018-2021) of the Independent Trustees of certain
Fidelity ®
funds.
Prior to retirement in 2005, he was Chairman and Global Chief Executive Officer
of Credit Suisse Asset Management, the worldwide fund management and
institutional investment business of Credit Suisse Group. Previously, Mr.
Kenneally was an Executive Vice President and the Chief Investment Officer for
Bank of America. In this role, he was responsible for the investment management,
strategy and products delivered to the bank's institutional, high-net-worth and
retail clients. Earlier, Mr. Kenneally directed the organization's equity and
quantitative research groups. He began his career as a research analyst and then
spent more than a dozen years as a portfolio manager for endowments, pension
plans and mutual funds. He earned the Chartered Financial Analyst (CFA)
designation in 1991.
Mark
A. Murray (1954)
Year
of Election or Appointment: 2016
Trustee
Mr.
Murray also serves as Trustee of other Fidelity ®
funds.
Previously, Mr. Murray served as Co-Chief Executive Officer (2013-2016),
President (2006-2013) and Vice Chairman (2013-2020) of Meijer, Inc. Mr. Murray
serves as a member of the Board (2009-present) and Public Policy and
Responsibility Committee (2009-present) and Chair of the Nuclear Review
Committee (2019-present) of DTE Energy Company (diversified energy company). Mr.
Murray previously served as a member of the Board of Spectrum Health
(not-for-profit health system, 2015-2019) and as a member of the Board and Audit
Committee and Chairman of the Nominating and Corporate Governance Committee of
Universal Forest Products, Inc. (manufacturer and distributor of wood and
wood-alternative products, 2004-2016). Mr. Murray also serves as a member of the
Board of many community and professional organizations. Mr. Murray previously
served as a member of the Advisory Board of certain Fidelity ®
funds
(2016).
+
The information includes the Trustee's principal occupation during the last five
years and other information relating to the experience, attributes, and skills
relevant to the Trustee's qualifications to serve as a Trustee, which led to the
conclusion that the Trustee should serve as a Trustee for the fund.
Advisory
Board Members and Officers:
Correspondence
intended for a Member of the Advisory Board (if any) may be sent to Fidelity
Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence
intended for an officer may be sent to Fidelity Investments, 245 Summer Street,
Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name,
Year of Birth; Principal Occupation
Laura
M. Bishop (1961)
Year
of Election or Appointment: 2022
Member
of the Advisory Board
Ms.
Bishop also serves as a Member of the Advisory Board of other funds. Prior to
her retirement, Ms. Bishop held a variety of positions at United Services
Automobile Association (2001-2020), including Executive Vice President and Chief
Financial Officer (2014-2020) and Senior Vice President and Deputy Chief
Financial Officer (2012-2014). Ms. Bishop currently serves as a member of the
Audit Committee and Compensation and Personnel Committee (2021-present) of the
Board of Directors of Korn Ferry (global organizational consulting).
Robert
W. Helm (1957)
Year
of Election or Appointment: 2021
Member
of the Advisory Board
Mr.
Helm also serves as a Member of the Advisory Board of other Fidelity® funds. Mr.
Helm was formerly Deputy Chairman (2003-2020), partner (1991-2020) and an
associate (1984-1991) of Dechert LLP (formerly Dechert Price & Rhoads). Mr.
Helm currently serves on boards and committees of several not-for-profit
organizations.
Craig
S. Brown (1977)
Year
of Election or Appointment: 2019
Assistant
Treasurer
Mr.
Brown also serves as an officer of other funds. Mr. Brown serves as Assistant
Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments
(2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain
Fidelity ®
funds
(2019-2022).
John
J. Burke III (1964)
Year
of Election or Appointment: 2018
Chief
Financial Officer
Mr.
Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as
Head of Investment Operations for Fidelity Fund and Investment Operations
(2018-present) and is an employee of Fidelity Investments (1998-present).
Previously Mr. Burke served as head of Asset Management Investment Operations
(2012-2018).
David
J. Carter (1973)
Year
of Election or Appointment: 2020
Assistant
Secretary
Mr.
Carter also serves as Assistant Secretary of other funds. Mr. Carter serves as
Senior Vice President, Deputy General Counsel (2022-present) and is an employee
of Fidelity Investments (2005-present).
Jonathan
Davis (1968)
Year
of Election or Appointment: 2010
Assistant
Treasurer
Mr.
Davis also serves as an officer of other funds. Mr. Davis serves as Assistant
Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD
Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds
Management LLC (2021-present); and is an employee of Fidelity Investments.
Previously, Mr. Davis served as Vice President and Associate General Counsel of
FMR LLC (diversified financial services company, 2003-2010).
Laura
M. Del Prato (1964)
Year
of Election or Appointment: 2018
President
and Treasurer
Ms.
Del Prato also serves as an officer of other funds. Ms. Del Prato serves as
Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity
Investments (2017-present). Previously, Ms. Del Prato served as President and
Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and
Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato
served as a Managing Director and Treasurer of the JPMorgan Mutual Funds
(2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund
Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm,
2004-2012).
Christopher
M. Gouveia (1973)
Year
of Election or Appointment: 2023
Chief
Compliance Officer
Mr.
Gouveia also serves as Chief Compliance Officer of other funds. Mr. Gouveia
serves as Senior Vice President of Asset Management Compliance for Fidelity
Investments and is an employee of Fidelity Investments. Previously, Mr. Gouveia
served as Chief Compliance Officer of the North Carolina Capital Management
Trust (2016-2019).
Colm
A. Hogan (1973)
Year
of Election or Appointment: 2016
Assistant
Treasurer
Mr.
Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant
Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and
is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan
served as Deputy Treasurer of certain Fidelity ®
funds
(2016-2020) and Assistant Treasurer of certain Fidelity ®
funds
(2016-2018).
Cynthia
Lo Bessette (1969)
Year
of Election or Appointment: 2019
Secretary
and Chief Legal Officer (CLO)
Ms.
Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as
CLO, Secretary, and Senior Vice President of Fidelity Management & Research
Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management
& Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and
Fidelity Management & Research (Japan) Limited (investment adviser firms,
2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC
(2021-present), FD Funds Management LLC (2021-present), and Fidelity
Diversifying Solutions LLC (investment adviser firm, 2022-present); and
Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President
and Deputy General Counsel of FMR LLC (diversified financial services company,
2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo
Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc.
(investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and
Fidelity Investments Money Management, Inc. (investment adviser firms, 2019).
Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice
President, General Counsel (2016-2019) and Senior Vice President, Deputy General
Counsel (2015-2016) of OppenheimerFunds (investment management company) and
Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment
adviser firm).
Chris
Maher (1972)
Year
of Election or Appointment: 2013
Assistant
Treasurer
Mr.
Maher also serves as an officer of other funds. Mr. Maher serves as
Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc.
(2017-present), and is an employee of Fidelity Investments (2008-present).
Previously, Mr. Maher served as Assistant Treasurer of certain funds
(2013-2020); Vice President of Asset Management Compliance (2013), Vice
President of the Program Management Group of FMR (investment adviser firm,
2010-2013), and Vice President of Valuation Oversight (2008-2010).
Jamie
Pagliocco (1964)
Year
of Election or Appointment: 2020
Vice
President
Mr.
Pagliocco also serves as Vice President of other funds. Mr. Pagliocco serves as
President of Fixed Income (2020-present), and is an employee of Fidelity
Investments (2001-present). Previously, Mr. Pagliocco served as Co-Chief
Investment Officer - Bond (2017-2020), Global Head of Bond Trading (2016-2019),
and as a portfolio manager.
Brett
Segaloff (1972)
Year
of Election or Appointment: 2021
Anti-Money
Laundering (AML) Officer
Mr.
Segaloff also serves as an AML Officer of other funds and other related
entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC
(diversified financial services company) and is an employee of Fidelity
Investments (1996-present).
Stacie
M. Smith (1974)
Year
of Election or Appointment: 2013
Assistant
Treasurer
Ms.
Smith also serves as an officer of other funds. Ms. Smith serves as Assistant
Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), is
an employee of Fidelity Investments (2009-present), and has served in other fund
officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior
Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously,
Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer
(2013-2016) of certain Fidelity ®
funds.
Jim
Wegmann (1979)
Year
of Election or Appointment: 2021
Deputy
Treasurer
Mr.
Wegmann also serves as an officer of other funds. Mr. Wegmann serves as
Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity
Investments (2011-present). Previously, Mr. Wegmann served as Assistant
Treasurer of certain Fidelity ®
funds
(2019-2021).
Standing
Committees of the Trustees. The
Board of Trustees has established various committees to support the Independent
Trustees in acting independently in pursuing the best interests of the funds and
their shareholders. Currently, the Board of Trustees has four standing
committees. The members of each committee are Independent Trustees.
The
Operations Committee is composed of all of the Independent Trustees, with Mr.
Kenneally currently serving as Chair. The committee normally meets at least six
times a year, or more frequently as called by the Chair, and serves as a forum
for consideration of issues of importance to, or calling for particular
determinations by, the Independent Trustees. The committee considers matters
involving potential conflicts of interest between the funds and FMR and its
affiliates, including matters involving potential claims of one or more funds
(e.g., for reimbursements of expenses or losses) against FMR, and reviews
proposed contracts and the proposed continuation of contracts between the funds
and FMR and its affiliates, and annually reviews and makes recommendations
regarding contracts with third parties unaffiliated with FMR, including
insurance coverage and custody agreements. The committee has oversight of
compliance issues not specifically within the scope of any other committee.
These matters include, but are not limited to, significant non-conformance with
contract requirements and other significant regulatory matters and recommending
to the Board of Trustees the designation of a person to serve as the funds' CCO.
The committee (i) serves as a primary point of contact (generally after the
Independent Trustee who serves as a liaison for the CCO) for the CCO with regard
to Board-related functions; (ii) oversees the annual performance review of the
CCO; (iii) makes recommendations concerning the CCO's compensation; and (iv)
makes recommendations as needed in respect of the removal of the CCO.
The
Audit Committee is composed of all of the Independent Trustees, with Ms. Acton
currently serving as Chair. At least one committee member will be an "audit
committee financial expert" as defined by the SEC. The committee normally meets
four times a year, or more frequently as called by the Chair or a majority of
committee members. The committee meets separately, at least annually, with the
funds' Treasurer, with the funds' Chief Financial Officer, with personnel
responsible for the internal audit function of FMR LLC, with the funds' outside
auditors, and with the funds' CCO. The committee has direct responsibility for
the appointment, compensation, and oversight of the work of the outside auditors
employed by the funds. The committee assists the Trustees in overseeing and
monitoring: (i) the systems of internal accounting and financial controls of the
funds and the funds' service providers (to the extent such controls impact the
funds' financial statements); (ii) the funds' auditors and the annual audits of
the funds' financial statements; (iii) the financial reporting processes of the
funds; (iv) whistleblower reports; and (v) the accounting policies and
disclosures of the funds. The committee considers and acts upon (i) the
provision by any outside auditor of any non-audit services for any fund, and
(ii) the provision by any outside auditor of certain non-audit services to fund
service providers and their affiliates to the extent that such approval (in the
case of this clause (ii)) is required under applicable regulations of the SEC.
It is responsible for approving all audit engagement fees and terms for the
funds and for resolving disagreements between a fund and any outside auditor
regarding any fund's financial reporting. Auditors of the funds report directly
to the committee. The committee will obtain assurance of independence and
objectivity from the outside auditors, including a formal written statement
delineating all relationships between the auditor and the funds and any service
providers consistent with the rules of the Public Company Accounting Oversight
Board. It oversees and receives reports on the funds' service providers'
internal controls and reviews the adequacy and effectiveness of the service
providers' accounting and financial controls, including: (i) any significant
deficiencies or material weaknesses in the design or operation of internal
controls over financial reporting that are reasonably likely to adversely affect
the funds' ability to record, process, summarize, and report financial data;
(ii) any change in the fund's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the fund's
internal control over financial reporting; and (iii) any fraud, whether material
or not, that involves management or other employees who have a significant role
in the funds' or service providers internal controls over financial reporting.
The committee will also review any correspondence with regulators or
governmental agencies or published reports that raise material issues regarding
the funds' financial statements or accounting policies. These matters may also
be reviewed by the Operations Committee. The committee reviews at least annually
a report from each outside auditor describing any material issues raised by the
most recent internal quality control, peer review, or Public Company Accounting
Oversight Board examination of the auditing firm and any material issues raised
by any inquiry or investigation by governmental or professional authorities of
the auditing firm and in each case any steps taken to deal with such issues. The
committee will oversee and receive reports on the funds' financial reporting
process from the funds' Treasurer and outside auditors and will oversee the
resolution of any disagreements concerning financial reporting among applicable
parties. The committee will discuss with FMR, the funds' Treasurer, outside
auditors and, if appropriate, internal audit personnel of FMR LLC their
qualitative judgments about the appropriateness and acceptability of accounting
principles and financial disclosure practices used or proposed for adoption by
the funds. The committee will review with FMR, the funds' outside auditor,
internal audit personnel of FMR LLC and legal counsel, as appropriate, matters
related to the audits of the funds' financial statements. The committee will
discuss regularly and oversee the review of the internal controls of the funds
and their service providers with respect to accounting, financial matters and
risk management programs related to the funds. The committee will review
periodically the funds' major internal controls exposures and the steps that
have been taken to monitor and control such exposures.
The
Fair Valuation Committee is composed of all of the Independent Trustees, with
Mr. Murray currently serving as Chair. The Committee normally meets quarterly,
or more frequently as called by the Chair. The Fair Valuation Committee oversees
the valuation of securities held by the funds, including the fair valuation of
securities by the funds' valuation designee. The Committee receives and reviews
related reports and information consistent with its oversight
obligations.
The
Governance and Nominating Committee is composed of Messrs. Kenneally (Chair) and
Gartland (Vice Chair), and Ms. Acton. The committee meets as called by the
Chair. With respect to fund governance and board administration matters, the
committee periodically reviews procedures of the Board of Trustees and its
committees (including committee charters) and periodically reviews compensation
of Independent Trustees. The committee monitors corporate governance matters and
makes recommendations to the Board of Trustees on the frequency and structure of
the Board of Trustee meetings and on any other aspect of Board procedures. It
acts as the administrative committee under the retirement plan for Independent
Trustees who retired prior to December 30, 1996 and under the fee deferral plan
for Independent Trustees. It monitors the performance of legal counsel employed
by both the funds and the Independent Trustees. The committee will engage and
oversee any counsel utilized by the Independent Trustees as may be necessary or
appropriate under applicable regulations or otherwise. The committee also
approves Board administrative matters applicable to Independent Trustees, such
as expense reimbursement policies and compensation for attendance at meetings,
conferences and other events. The committee oversees compliance with the
provisions of the code of ethics and any supplemental policies regarding
personal securities transactions applicable to the Independent Trustees. The
committee reviews the functioning of each Board committee and makes
recommendations for any changes, including the creation or elimination of
standing or ad hoc Board committees. The committee monitors regulatory and other
developments to determine whether to recommend modifications to the committee's
responsibilities or other Trustee policies and procedures in light of rule
changes, reports concerning "recommended practices" in corporate governance and
other developments in mutual fund governance. The committee meets with
Independent Trustees at least once a year to discuss matters relating to fund
governance. The committee recommends that the Board establish such special or ad
hoc Board committees as may be desirable or necessary from time to time in order
to address ethical, legal, or other matters that may arise. The committee also
oversees the annual self-evaluation of the Board of Trustees and establishes
procedures to allow it to exercise this oversight function. In conducting this
oversight, the committee shall address all matters that it considers relevant to
the performance of the Board of Trustees and shall report the results of its
evaluation to the Board of Trustees, including any recommended amendments to the
principles of governance, and any recommended changes to the funds' or the Board
of Trustees' policies, procedures, and structures. The committee reviews
periodically the size and composition of the Board of Trustees as a whole and
recommends, if necessary, measures to be taken so that the Board of Trustees
reflects the appropriate balance of knowledge, experience, skills, expertise,
and diversity required for the Board as a whole and contains at least the
minimum number of Independent Trustees required by law. The committee makes
nominations for the election or appointment of Independent Trustees and
non-management Members of any Advisory Board, and for membership on committees.
The committee has the authority to retain and terminate any third-party
advisers, including authority to approve fees and other retention terms. Such
advisers may include search firms to identify Independent Trustee candidates and
board compensation consultants. The committee may conduct or authorize
investigations into or studies of matters within the committee's scope of
responsibilities, and may retain, at the funds' expense, such independent
counsel or other advisers as it deems necessary. The committee will consider
nominees to the Board of Trustees recommended by shareholders based upon the
criteria applied to candidates presented to the committee by a search firm or
other source. Recommendations, along with appropriate background material
concerning the candidate that demonstrates his or her ability to serve as an
Independent Trustee of the funds, should be submitted to the Chair of the
committee at the address maintained for communications with Independent
Trustees. If the committee retains a search firm, the Chair will generally
forward all such submissions to the search firm for evaluation. With respect to
the criteria for selecting Independent Trustees, it is expected that all
candidates will possess the following minimum qualifications: (i) unquestioned
personal integrity; (ii) not an interested person of the funds within the
meaning of the 1940 Act; (iii) does not have a material relationship (e.g.,
commercial, banking, consulting, legal, or accounting) with the adviser, any
sub-adviser or their affiliates that could create an appearance of lack of
independence in respect of the funds; (iv) has the disposition to act
independently in respect of FMR and its affiliates and others in order to
protect the interests of the funds and all shareholders; (v) ability to attend
regularly scheduled Board meetings during the year; (vi) demonstrates sound
business judgment gained through broad experience in significant positions where
the candidate has dealt with management, technical, financial, or regulatory
issues; (vii) sufficient financial or accounting knowledge to add value in the
complex financial environment of the funds; (viii) experience on corporate or
other institutional oversight bodies having similar responsibilities, but which
board memberships or other relationships could not result in business or
regulatory conflicts with the funds; and (ix) capacity for the hard work and
attention to detail that is required to be an effective Independent Trustee in
light of the funds' complex regulatory, operational, and marketing setting. The
Governance and Nominating Committee may determine that a candidate who does not
have the type of previous experience or knowledge referred to above should
nevertheless be considered as a nominee if the Governance and Nominating
Committee finds that the candidate has additional qualifications such that his
or her qualifications, taken as a whole, demonstrate the same level of fitness
to serve as an Independent Trustee.
During
the fiscal year ended December 31, 2022, each committee held the number of
meetings shown in the table below:
|
COMMITTEE
|
NUMBER
OF MEETINGS HELD |
|
Operations
Committee |
8
|
|
Audit
Committee |
5
|
|
Fair
Valuation Committee |
4
|
|
Governance
and Nominating Committee |
11
|
The
following table sets forth information describing the dollar range of equity
securities beneficially owned by each Trustee in the fund and in all funds in
the aggregate within the same fund family overseen by the Trustee for the
calendar year ended December 31, 2022.
Interested
Trustees
|
DOLLAR
RANGE OF
FUND
SHARES |
Abigail
P Johnson |
Jennifer
Toolin McAuliffe |
|
|
|
Fidelity®
Limited Term Municipal Income Fund |
none
|
none
|
|
|
|
AGGREGATE
DOLLAR RANGE OF
FUND
SHARES IN ALL FUNDS
OVERSEEN
WITHIN FUND FAMILY |
over
$100,000 |
over
$100,000 |
|
|
Independent
Trustees
|
DOLLAR
RANGE OF
FUND
SHARES |
Elizabeth
S Acton |
Ann
Dunwoody |
John
Engler |
Robert
Gartland |
|
Fidelity®
Limited Term Municipal Income Fund |
over
$100,000 |
none
|
none
|
none
|
|
AGGREGATE
DOLLAR RANGE OF
FUND
SHARES IN ALL FUNDS
OVERSEEN
WITHIN FUND FAMILY |
over
$100,000 |
over
$100,000 |
over
$100,000 |
over
$100,000 |
|
DOLLAR
RANGE OF
FUND
SHARES |
Arthur
Johnson |
Michael
Kenneally |
Mark
Murray |
|
|
Fidelity®
Limited Term Municipal Income Fund |
none
|
none
|
$50,001-$100,000
|
|
|
AGGREGATE
DOLLAR RANGE OF
FUND
SHARES IN ALL FUNDS
OVERSEEN
WITHIN FUND FAMILY |
over
$100,000 |
over
$100,000 |
over
$100,000 |
|
The
following table sets forth information describing the compensation of each
Trustee and Member of the Advisory Board (if any) for his or her services for
the fiscal year ended December 31, 2022.
Compensation
Table (A)
|
AGGREGATE
COMPENSATION
FROM
A FUND |
|
Elizabeth
S Acton
|
|
Laura
Bishop (B)
|
|
Ann
Dunwoody
|
|
John
Engler
|
|
Fidelity®
Limited Term Municipal Income Fund |
$
|
940
|
$
|
295
|
$
|
839
|
$
|
828
|
|
TOTAL
COMPENSATION
FROM
THE FUND COMPLEX (C)
|
$
|
563,000
|
$
|
184,000
|
$
|
502,500
|
$
|
496,000
|
|
AGGREGATE
COMPENSATION
FROM
A FUND |
|
Robert
Gartland
|
|
Robert
Helm
|
|
Arthur
Johnson
|
|
Michael
Kenneally
|
|
Fidelity®
Limited Term Municipal Income Fund |
$
|
944
|
$
|
839
|
$
|
823
|
$
|
1,024
|
|
TOTAL
COMPENSATION
FROM
THE FUND COMPLEX (C)
|
$
|
565,000
|
$
|
502,500
|
$
|
492,500
|
$
|
612,500
|
|
AGGREGATE
COMPENSATION
FROM
A FUND |
|
Mark
Murray
|
|
|
|
|
|
|
|
Fidelity®
Limited Term Municipal Income Fund |
$
|
831
|
|
|
|
|
|
|
|
TOTAL
COMPENSATION
FROM
THE FUND COMPLEX (C)
|
$
|
497,500
|
|
|
|
|
|
|
|
(A)
Abigail P. Johnson and Jennifer Toolin McAuliffe are interested persons
and are compensated by Fidelity.
|
|
|
|
(B)
Ms. Bishop serves as a Member of the Advisory Board of Fidelity Municipal
Trust effective September 1, 2022.
|
|
|
|
(C)
Reflects compensation received for the calendar year ended December 31,
2022 for 295 funds of 31 trusts (including Fidelity Central Investment
Portfolios II LLC). Compensation figures include cash and may include
amounts elected to be deferred. Certain individuals elected voluntarily to
defer a portion of their compensation as follows: Elizabeth S. Acton,
$120,000; Laura M. Bishop, $73,674; Ann E. Dunwoody, $274,597; John
Engler, $274,597; Robert F. Gartland, $180,000; Robert W. Helm, $274,597;
and Mark A. Murray, $274,597.
|
|
|
As
of December 31, 2022, approximately 3.68% of the fund's total outstanding shares
was held by FMR and/or another entity or entities of which FMR LLC is the
ultimate parent. By virtue of her ownership interest in FMR LLC, as described in
the "Control of Investment Advisers" section, Ms. Abigail P. Johnson may be
deemed to be a beneficial owner of these shares. As of the above date, with the
exception of Ms. Johnson's deemed ownership of the fund's shares, the Trustees,
Members of the Advisory Board (if any), and officers of the fund owned, in the
aggregate, less than 1% of the class's total outstanding shares, with respect to
the fund.
As
of December 31, 2022, the following owned of record and/or beneficially 5% or
more of the outstanding shares:
|
Fund
or Class Name |
Owner
Name |
City
|
State
|
Ownership
% |
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
AMERIPRISE
FINANCIAL SERVICES INC |
MINNEAPOLIS
|
MN
|
14.62%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
LPL
FINANCIAL LLC |
SAN
DIEGO |
CA
|
14.51%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
PERSHING
LLC |
JERSEY
CITY |
NJ
|
9.40%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
ROYAL
ALLIANCE ASSOCIATES INC |
BROOKLINE
|
MA
|
5.80%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
WELLS
FARGO CLEARING SERVICES LLC |
SAINT
LOUIS |
MO
|
13.91%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
EDWARD
D JONES & CO |
MARYLAND
HEIGHTS |
MO
|
11.11%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
PERSHING
LLC |
JERSEY
CITY |
NJ
|
10.43%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
MORGAN
STANLEY SMITH BARNEY |
NEW
YORK |
NY
|
8.03%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
AMERIPRISE
FINANCIAL SERVICES INC |
MINNEAPOLIS
|
MN
|
7.79%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
LPL
FINANCIAL LLC |
SAN
DIEGO |
CA
|
5.65%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
PERSHING
LLC |
JERSEY
CITY |
NJ
|
15.21%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
AMERIPRISE
FINANCIAL SERVICES INC |
MINNEAPOLIS
|
MN
|
10.68%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
MORGAN
STANLEY SMITH BARNEY |
NEW
YORK |
NY
|
10.30%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
WELLS
FARGO CLEARING SERVICES LLC |
SAINT
LOUIS |
MO
|
9.23%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
MERRILL
LYNCH PIERCE FENNER SMITH INC |
JACKSONVILLE
|
FL
|
7.26%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
LPL
FINANCIAL LLC |
SAN
DIEGO |
CA
|
6.91%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
RAYMOND
JAMES & ASSOCIATES INC |
SAINT
PETERSBURG |
FL
|
6.61%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class I |
PERSHING
LLC |
JERSEY
CITY |
NJ
|
35.15%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class I |
AMERIPRISE
FINANCIAL SERVICES INC |
MINNEAPOLIS
|
MN
|
20.97%
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class I |
MORGAN
STANLEY SMITH BARNEY |
NEW
YORK |
NY
|
5.71%
|
|
Fidelity®
Limited Term Municipal Income Fund (A)
|
FIDELITY
RHRP GROUP |
BOSTON
|
MA
|
5.28%
|
|
(A)
The ownership information shown above is for a class of shares of the
fund.
|
CONTROL
OF INVESTMENT ADVISERS
FMR
LLC, as successor by merger to FMR Corp., is the ultimate parent company of FMR,
FMR Investment Management (UK) Limited, Fidelity Management & Research (Hong
Kong) Limited, and Fidelity Management & Research (Japan) Limited. The
voting common shares of FMR LLC are divided into two series. Series B is held
predominantly by members of the Johnson family, including Abigail P. Johnson,
directly or through trusts, and is entitled to 49% of the vote on any matter
acted upon by the voting common shares. Series A is held predominantly by
non-Johnson family member employees of FMR LLC and its affiliates and is
entitled to 51% of the vote on any such matter. The Johnson family group and all
other Series B shareholders have entered into a shareholders' voting agreement
under which all Series B shares will be voted in accordance with the majority
vote of Series B shares. Under the 1940 Act, control of a company is presumed
where one individual or group of individuals owns more than 25% of the voting
securities of that company. Therefore, through their ownership of voting common
shares and the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a controlling group
with respect to FMR LLC.
At
present, the primary business activities of FMR LLC and its subsidiaries are:
(i) the provision of investment advisory, management, shareholder, investment
information and assistance and certain fiduciary services for individual and
institutional investors; (ii) the provision of securities brokerage services;
(iii) the management and development of real estate; and (iv) the investment in
and operation of a number of emerging businesses.
FMR,
FMR Investment Management (UK) Limited, Fidelity Management & Research (Hong
Kong) Limited, Fidelity Management & Research (Japan) Limited, Fidelity
Distributors Company LLC (FDC), and the fund have adopted a
code of ethics under Rule 17j-1 of the 1940 Act that sets forth employees'
fiduciary responsibilities regarding the fund, establishes procedures for
personal investing, and restricts certain transactions. Employees subject to the
code of ethics, including Fidelity investment personnel, may invest in
securities for their own investment accounts, including securities that may be
purchased or held by the fund.
The
fund has entered into a management contract with FMR, pursuant to which FMR
furnishes investment advisory and other services.
Management
Services. Under
the terms of its management contract with the fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, has overall
responsibility for directing the investments of the fund in accordance with its
investment objective, policies and limitations. FMR also provides the fund with
all necessary office facilities and personnel for servicing the fund's
investments, compensates all officers of the fund and all Trustees who are
interested persons of the trust or of FMR, and compensates all personnel of the
fund or FMR performing services relating to research, statistical and investment
activities.
In
addition, FMR or its affiliates, subject to the supervision of the Board of
Trustees, provide the management and administrative services necessary for the
operation of the fund. These services include providing facilities for
maintaining the fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters and other persons dealing
with the fund; preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the registration of
the fund's shares under federal securities laws and making necessary filings
under state securities laws; developing management and shareholder services for
the fund; and furnishing reports, evaluations and analyses on a variety of
subjects to the Trustees.
Management-Related
Expenses. In
addition to the management fee payable to FMR and the fees payable to the
transfer agent and pricing and bookkeeping agent, the fund or each class
thereof, as applicable, pays all of its expenses that are not assumed by those
parties. The fund pays for the typesetting, printing, and mailing of its proxy
materials to shareholders, legal expenses, and the fees of the custodian,
auditor, and Independent Trustees. The fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and reports to
shareholders. Other expenses paid by the fund include interest, taxes, brokerage
commissions, fees and expenses associated with the fund's securities lending
program, if applicable, the fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares under
federal securities laws and making necessary filings under state securities
laws. The fund is also liable for such non-recurring expenses as may arise,
including costs of any litigation to which the fund may be a party, and any
obligation it may have to indemnify its officers and Trustees with respect to
litigation.
Management
Fee.
For
the services of FMR under the management contract, the fund pays FMR a monthly
management fee which has two components: a group fee rate and an individual fund
fee rate.
The
group fee rate is based on the monthly average net assets of a group of
registered investment companies with which FMR has management contracts.
|
GROUP
FEE RATE SCHEDULE |
|
|
|
EFFECTIVE
ANNUAL FEE RATES |
|
Average
Group Assets |
|
|
Annualized
Rate |
Group
Net Assets |
Effective
Annual Fee Rate |
|
0
|
-
|
$3
billion |
.3700%
|
$1
billion |
.3700%
|
|
3
|
-
|
6
|
.3400
|
50
|
.2188
|
|
6
|
-
|
9
|
.3100
|
100
|
.1869
|
|
9
|
-
|
12
|
.2800
|
150
|
.1736
|
|
12
|
-
|
15
|
.2500
|
200
|
.1652
|
|
15
|
-
|
18
|
.2200
|
250
|
.1587
|
|
18
|
-
|
21
|
.2000
|
300
|
.1536
|
|
21
|
-
|
24
|
.1900
|
350
|
.1494
|
|
24
|
-
|
30
|
.1800
|
400
|
.1459
|
|
30
|
-
|
36
|
.1750
|
450
|
.1427
|
|
36
|
-
|
42
|
.1700
|
500
|
.1399
|
|
42
|
-
|
48
|
.1650
|
550
|
.1372
|
|
48
|
-
|
66
|
.1600
|
600
|
.1349
|
|
66
|
-
|
84
|
.1550
|
650
|
.1328
|
|
84
|
-
|
120
|
.1500
|
700
|
.1309
|
|
120
|
-
|
156
|
.1450
|
750
|
.1291
|
|
156
|
-
|
192
|
.1400
|
800
|
.1275
|
|
192
|
-
|
228
|
.1350
|
850
|
.1260
|
|
228
|
-
|
264
|
.1300
|
900
|
.1246
|
|
264
|
-
|
300
|
.1275
|
950
|
.1233
|
|
300
|
-
|
336
|
.1250
|
1,000
|
.1220
|
|
336
|
-
|
372
|
.1225
|
1,050
|
.1209
|
|
372
|
-
|
408
|
.1200
|
1,100
|
.1197
|
|
408
|
-
|
444
|
.1175
|
1,150
|
.1187
|
|
444
|
-
|
480
|
.1150
|
1,200
|
.1177
|
|
480
|
-
|
516
|
.1125
|
1,250
|
.1167
|
|
516
|
-
|
587
|
.1100
|
1,300
|
.1158
|
|
587
|
-
|
646
|
.1080
|
1,350
|
.1149
|
|
646
|
-
|
711
|
.1060
|
1,400
|
.1141
|
|
711
|
-
|
782
|
.1040
|
1,450
|
.1132
|
|
782
|
-
|
860
|
.1020
|
1,500
|
.1125
|
|
860
|
-
|
946
|
.1000
|
1,550
|
.1117
|
|
946
|
-
|
1,041
|
.0980
|
1,600
|
.1110
|
|
1,041
|
-
|
1,145
|
.0960
|
1,650
|
.1103
|
|
1,145
|
-
|
1,260
|
.0940
|
1,700
|
.1096
|
|
1,260
|
-
|
1,386
|
.0920
|
1,750
|
.1089
|
|
1,386
|
-
|
1,525
|
.0900
|
1,800
|
.1083
|
|
1,525
|
-
|
1,677
|
.0880
|
1,850
|
.1077
|
|
1,677
|
-
|
1,845
|
.0860
|
1,900
|
.1070
|
|
1,845
|
-
|
2,030
|
.0840
|
1,950
|
.1065
|
|
Over
|
|
2,030
|
.0820
|
2,000
|
.1059
|
The
group fee rate is calculated on a cumulative basis pursuant to the graduated fee
rate schedule shown above on the left. The schedule above on the right shows the
effective annual group fee rate at various asset levels, which is the result of
cumulatively applying the annualized rates on the left. For example, the
effective annual fee rate at $2,945 billion of group net assets - the
approximate level for December 2022 - was 0.0982%, which is the weighted average
of the respective fee rates for each level of group net assets up to $2,945
billion.
The
individual fund fee rate for the fund is set forth in the following table. Based
on the average group net assets for December 2022, the fund's annual management
fee rate would be calculated as follows:
|
Fund
|
Group
Fee Rate |
|
Individual
Fund Fee Rate |
|
Management
Fee Rate |
|
Fidelity®
Limited Term Municipal Income Fund |
0.0982%
|
+
|
0.2500%
|
=
|
0.3482%
|
One-twelfth
of the management fee rate is applied to the fund's average net assets for the
month, giving a dollar amount which is the fee for that month.
The
following table shows the amount of management fees paid by the fund for the
fiscal year(s) ended December 31, 2022, 2021, and 2020 to its current manager
and prior affiliated manager(s), if any.
|
Fund(s)
|
Fiscal
Years
Ended
|
|
Management
Fees
Paid
to
Investment
Adviser |
|
Fidelity®
Limited Term Municipal Income Fund |
2022
|
$
|
10,799,290
|
|
|
2021
|
$
|
12,479,644
|
|
|
2020
|
$
|
10,613,464
|
FMR
may, from time to time, voluntarily reimburse all or a portion of a fund's or,
in the case of a multiple class fund, a class's operating expenses. FMR retains
the ability to be repaid for these expense reimbursements in the amount that
expenses fall below the limit prior to the end of the fiscal year.
Expense
reimbursements will increase returns and yield, and repayment of the
reimbursement will decrease returns and yield.
Sub-Advisers
- FMR Investment Management (UK) Limited, Fidelity Management &
Research (Hong Kong) Limited, and Fidelity Management & Research (Japan)
Limited.
On
behalf of the fund, FMR has entered into sub-advisory agreements with
Fidelity Management & Research (Hong Kong) Limited (FMR H.K.) and Fidelity
Management & Research (Japan) Limited (FMR Japan).
On
behalf of the fund, FMR has entered into a sub-advisory agreement with FMR
UK.
Pursuant
to the sub-advisory agreements, FMR may receive from the
sub-advisers investment research and advice on issuers outside the United
States (non-discretionary services) and FMR may grant the sub-advisers
investment management authority and the authority to buy and sell securities if
FMR believes it would be beneficial to the fund (discretionary
services).
FMR,
and not the fund, pays the sub-advisers.
Cormac
Cullen is Co-Portfolio Manager of Fidelity® Limited Term Municipal Income Fund
and receives compensation for those services. Michael Maka is Co-Portfolio
Manager of Fidelity® Limited Term Municipal Income Fund and receives
compensation for those services. Elizah McLaughlin is Co-Portfolio Manager of
Fidelity® Limited Term Municipal Income Fund and receives compensation for those
services. As of December 31, 2022, portfolio manager compensation generally
consists of a fixed base salary determined periodically (typically annually), a
bonus, and in certain cases, participation in several types of equity-based
compensation plans. A portion of each portfolio manager's compensation may be
deferred based on criteria established by FMR or at the election of the
portfolio manager.
Each
portfolio manager's base salary is determined by level of responsibility and
tenure at FMR or its affiliates. The primary components of each portfolio
manager's bonus are based on (i) the pre-tax investment performance of the
portfolio manager's fund(s) and account(s) measured against a benchmark index
and within a defined peer group, if applicable, assigned to each fund or
account, and (ii) the investment performance of other FMR municipal bond funds
and accounts. The pre-tax investment performance of each portfolio manager's
fund(s) and account(s) is weighted according to the portfolio manager's tenure
on those fund(s) and account(s) and the average asset size of those fund(s) and
account(s) over the portfolio manager's tenure. Each component is calculated
separately over the portfolio manager's tenure on those fund(s) and account(s)
over a measurement period that initially is contemporaneous with the portfolio
manager's tenure, but that eventually encompasses rolling periods of up to three
years for the comparison to a benchmark index and rolling periods of up to ten
years for the comparison to a peer group, if applicable. A smaller, subjective
component of each portfolio manager's bonus is based on the portfolio manager's
overall contribution to management of FMR. The portion of each portfolio
manager's bonus that is linked to the investment performance of Fidelity®
Limited Term Municipal Income Fund is based on the fund's pre-tax investment
performance measured against the Bloomberg 1-6 Year Municipal Bond Index and the
fund's pre-tax investment performance (based on the performance of the fund's
retail class) within the Lipper℠ Short-Intermediate Municipal Debt Funds. Each
portfolio manager also is compensated under equity-based compensation plans
linked to increases or decreases in the net asset value of the stock of FMR LLC,
FMR's parent company. FMR LLC is a diverse financial services company engaged in
various activities that include fund management, brokerage, retirement, and
employer administrative services.
A
portfolio manager's compensation plan may give rise to potential conflicts of
interest. Although investors in the fund may invest through either tax-deferred
accounts or taxable accounts, a portfolio manager's compensation is linked to
the pre-tax performance of the fund, rather than its after-tax performance. A
portfolio manager's base pay tends to increase with additional and more complex
responsibilities that include increased assets under management and a portion of
the bonus relates to marketing efforts, which together indirectly link
compensation to sales. When a portfolio manager takes over a fund or an account,
the time period over which performance is measured may be adjusted to provide a
transition period in which to assess the portfolio. The management of multiple
funds and accounts (including proprietary accounts) may give rise to potential
conflicts of interest if the funds and accounts have different objectives,
benchmarks, time horizons, and fees as a portfolio manager must allocate time
and investment ideas across multiple funds and accounts. In addition, a fund's
trade allocation policies and procedures may give rise to conflicts of interest
if the fund's orders do not get fully executed due to being aggregated with
those of other accounts managed by FMR or an affiliate. A portfolio manager may
execute transactions for another fund or account that may adversely impact the
value of securities held by a fund. Securities selected for other funds or
accounts may outperform the securities selected for the fund. Portfolio managers
may be permitted to invest in the funds they manage, even if a fund is closed to
new investors. Trading in personal accounts, which may give rise to potential
conflicts of interest, is restricted by a fund's Code of Ethics.
Portfolio
managers may receive interests in certain funds or accounts managed by FMR or
one of its affiliated advisers (collectively, "Proprietary Accounts"). A
conflict of interest situation is presented where a portfolio manager considers
investing a client account in securities of an issuer in which FMR, its
affiliates or their (or their fund clients') respective directors, officers or
employees already hold a significant position for their own account, including
positions held indirectly through Proprietary Accounts. Because the 1940 Act, as
well as other applicable laws and regulations, restricts certain transactions
between affiliated entities or between an advisor and its clients, client
accounts managed by FMR or its affiliates, including accounts sub-advised by
third parties, are, in certain circumstances, prohibited from participating in
offerings of such securities (including initial public offerings and other
offerings occurring before or after an issuer's initial public offering) or
acquiring such securities in the secondary market. For example, ownership of a
company by Proprietary Accounts has, in certain situations, resulted in
restrictions on FMR's and its affiliates' client accounts' ability to acquire
securities in the company's initial public offering and subsequent public
offerings, private offerings, and in the secondary market, and additional
restrictions could arise in the future; to the extent such client accounts
acquire the relevant securities after such restrictions are subsequently lifted,
the delay could affect the price at which the securities are acquired.
A
conflict of interest situation is presented when FMR or its affiliates acquire,
on behalf of their client accounts, securities of the same issuers whose
securities are already held in Proprietary Accounts, because such investments
could have the effect of increasing or supporting the value of the Proprietary
Accounts. A conflict of interest situation also arises when FMR investment
advisory personnel consider whether client accounts they manage should invest in
an investment opportunity that they know is also being considered by an
affiliate of FMR for a Proprietary Account, to the extent that not investing on
behalf of such client accounts improves the ability of the Proprietary Account
to take advantage of the opportunity. FMR has adopted policies and procedures
and maintains a compliance program designed to help manage such actual and
potential conflicts of interest.
The
following table provides information relating to other accounts managed by
Cormac Cullen as of December 31, 2022:
|
|
Registered
Investment Companies
*
|
|
Other
Pooled
Investment
Vehicles
|
|
Other
Accounts
|
|
Number
of Accounts Managed |
28
|
|
none
|
|
9
|
|
Number
of Accounts Managed with Performance-Based Advisory Fees |
none
|
|
none
|
|
none
|
|
Assets
Managed (in millions) |
$38,963
|
|
none
|
|
$5,664
|
|
Assets
Managed with Performance-Based Advisory Fees (in millions)
|
none
|
|
none
|
|
none
|
*
Includes Fidelity ®
Limited
Term Municipal Income Fund ($2,884 (in millions) assets managed). The amount of
assets managed of the fund reflects trades and other assets as of the close
of the business day prior to the fund's fiscal year-end.
As
of December 31, 2022, the dollar range of shares of Fidelity ®
Limited
Term Municipal Income Fund beneficially owned by Mr. Cullen was none.
The
following table provides information relating to other accounts managed by
Michael Maka as of December 31, 2022:
|
|
Registered
Investment Companies
*
|
|
Other
Pooled
Investment
Vehicles
|
|
Other
Accounts
|
|
Number
of Accounts Managed |
30
|
|
none
|
|
9
|
|
Number
of Accounts Managed with Performance-Based Advisory Fees |
none
|
|
none
|
|
none
|
|
Assets
Managed (in millions) |
$39,202
|
|
none
|
|
$5,664
|
|
Assets
Managed with Performance-Based Advisory Fees (in millions)
|
none
|
|
none
|
|
none
|
*
Includes Fidelity ®
Limited
Term Municipal Income Fund ($2,884 (in millions) assets managed). The amount of
assets managed of the fund reflects trades and other assets as of the close
of the business day prior to the fund's fiscal year-end.
As
of December 31, 2022, the dollar range of shares of Fidelity ®
Limited
Term Municipal Income Fund beneficially owned by Mr. Maka was $100,001 -
$500,000.
The
following table provides information relating to other accounts managed by
Elizah McLaughlin as of December 31, 2022:
|
|
Registered
Investment Companies
*
|
|
Other
Pooled
Investment
Vehicles
|
|
Other
Accounts
|
|
Number
of Accounts Managed |
28
|
|
none
|
|
9
|
|
Number
of Accounts Managed with Performance-Based Advisory Fees |
none
|
|
none
|
|
none
|
|
Assets
Managed (in millions) |
$38,963
|
|
none
|
|
$5,664
|
|
Assets
Managed with Performance-Based Advisory Fees (in millions)
|
none
|
|
none
|
|
none
|
*
Includes Fidelity ®
Limited
Term Municipal Income Fund ($2,884 (in millions) assets managed). The amount of
assets managed of the fund reflects trades and other assets as of the close
of the business day prior to the fund's fiscal year-end.
As
of December 31, 2022, the dollar range of shares of Fidelity ®
Limited
Term Municipal Income Fund beneficially owned by Ms. McLaughlin was none.
|
Fidelity
®
Funds'
Proxy Voting Guidelines
I.
Introduction
These
guidelines are intended to help Fidelity's customers and the companies in
which Fidelity invests understand how Fidelity votes proxies to further
the values that have sustained Fidelity for over 75 years. Our core
principles sit at the heart of our voting philosophy; putting our
customers' and fund shareholders' long-term interests first and investing
in companies that share our approach to creating value over the long-term
guides everything we do. Fidelity generally adheres to these guidelines in
voting proxies and our Stewardship Principles serve as the foundation for
these guidelines. Our evaluation of proxies reflects information from many
sources, including management or shareholders of a company presenting a
proposal and proxy voting advisory firms. Fidelity maintains the
flexibility to vote individual proxies based on our assessment of each
situation.
In
evaluating proxies, Fidelity considers factors that are financially
material to individual companies and investing funds' investment
objectives and strategies in support of maximizing long-term shareholder
value. This includes considering the company's approach to financial and
operational, human, and natural capital and the impact of that approach on
the potential future value of the business.
Fidelity
will vote on proposals not specifically addressed by these guidelines
based on an evaluation of a proposal's likelihood to enhance the long-term
economic returns or profitability of the company or to maximize long-term
shareholder value. Fidelity will not be influenced by business
relationships or outside perspectives that may conflict with the interests
of the funds and their shareholders.
II.
Board
of Directors and Corporate Governance
Directors
of public companies play a critical role in ensuring that a company and
its management team serve the interests of its shareholders. Fidelity
believes that through proxy voting, it can help ensure accountability of
management teams and boards of directors, align management and shareholder
interests, and monitor and assess the degree of transparency and
disclosure with respect to executive compensation and board actions
affecting shareholders' rights. The following general guidelines are
intended to reflect these proxy voting principles.
A.
Election of Directors
Fidelity
will generally support director nominees in elections where all directors
are unopposed (uncontested elections), except where board composition
raises concerns, and/or where a director clearly appears to have failed to
exercise reasonable judgment or otherwise failed to sufficiently protect
the interests of shareholders.
Fidelity
will evaluate board composition and generally will oppose the election of
certain or all directors if, by way of example:
1.
Inside or affiliated directors serve on boards that are not composed of a
majority of independent directors.
2.
There are no women on the board or if a board of ten or more members has
fewer than two women directors.
3.
There are no racially or ethnically diverse directors.
4.
The director is a public company CEO who sits on more than two
unaffiliated public company boards.
5.
The director, other than a CEO, sits on more than five unaffiliated public
company boards.
Fidelity
will evaluate board actions and generally will oppose the election of
certain or all directors if, by way of example:
1.
The director attended fewer than 75% of the total number of meetings of
the board and its committees on which the director served during the
company's prior fiscal year, absent extenuating circumstances.
2.
The company made a commitment to modify a proposal or practice to conform
to these guidelines, and failed to act on that commitment.
3.
For reasons described below under the sections entitled Compensation and
Anti-Takeover Provisions and Director Elections.
B.
Contested Director Elections
On
occasion, directors are forced to compete for election against outside
director nominees (contested elections). Fidelity believes that strong
management creates long-term shareholder value. As a result, Fidelity
generally will vote in support of management of companies in which the
funds' assets are invested. Fidelity will vote its proxy on a case-by-case
basis in a contested election, taking into consideration a number of
factors, amongst others:
1.
Management's track record and strategic plan for enhancing shareholder
value;
2.
The long-term performance of the company compared to its industry peers;
and
3.
The qualifications of the shareholder's and management's nominees.
Fidelity
will vote for the outcome it believes has the best prospects for
maximizing shareholder value over the long-term.
C.
Cumulative Voting Rights
Under
cumulative voting, each shareholder may exercise the number of votes equal
to the number of shares owned multiplied by the number of directors up for
election. Shareholders may cast all of their votes for a single nominee
(or multiple nominees in varying amounts). With regular (non-cumulative)
voting, by contrast, shareholders cannot allocate more than one vote per
share to any one director nominee. Fidelity believes that cumulative
voting can be detrimental to the overall strength of a board. Generally,
therefore, Fidelity will oppose the introduction of, and support the
elimination of, cumulative voting rights.
D.
Classified Boards
A
classified board is one that elects only a percentage of its members each
year (usually one-third of directors are elected to serve a three-year
term). This means that at each annual meeting only a subset of directors
is up for re-election. Fidelity believes that, in general, classified
boards are not as accountable to shareholders as declassified boards. For
this and other reasons, Fidelity generally will oppose a board's adoption
of a classified board structure and support declassification of existing
boards.
E.
Independent Chairperson
In
general, Fidelity believes that boards should have a process and criteria
for selecting the board chair, and will oppose shareholder proposals
calling for, or recommending the appointment of, a non-executive or
independent chairperson. If, however, based on particular facts and
circumstances, Fidelity believes that appointment of a non-executive or
independent chairperson appears likely to further the interests of
shareholders and promote effective oversight of management by the board of
directors, Fidelity will consider voting to support a proposal for an
independent chairperson under such circumstances.
F.
Majority Voting in Director Elections
In
general, Fidelity supports proposals calling for directors to be elected
by a majority of votes cast if the proposal permits election by a
plurality in the case of contested elections (where, for example, there
are more nominees than board seats). Fidelity may oppose a majority voting
shareholder proposal where a company's board has adopted a policy
requiring the resignation of an incumbent director who fails to receive
the support of a majority of the votes cast in an uncontested election.
G.
Proxy Access
Proxy
access proposals generally require a company to amend its by-laws to allow
a qualifying shareholder or group of shareholders to nominate directors on
a company's proxy ballot. Fidelity believes that certain safeguards as to
ownership threshold and duration of ownership are important to assure that
proxy access is not misused by those without a significant economic
interest in the company or those driven by short term goals. Fidelity will
evaluate proxy access proposals on a case-by-case basis, but generally
will support proposals that include ownership of at least 3% (5% in the
case of small-cap companies) of the company's shares outstanding for at
least three years; limit the number of directors that eligible
shareholders may nominate to 20% of the board; and limit to 20 the number
of shareholders that may form a nominating group.
H.
Indemnification of Directors and Officers
In
many instances there are sound reasons to indemnify officers and
directors, so that they may perform their duties without the distraction
of unwarranted litigation or other legal process. Fidelity generally
supports charter and by-law amendments expanding the indemnification of
officers or directors, or limiting their liability for breaches of care
unless Fidelity is dissatisfied with their performance or the proposal is
accompanied by anti-takeover provisions (see Anti-Takeover Provisions and
Shareholders Rights Plans below).
III.
Compensation
Incentive
compensation plans can be complicated and many factors are considered when
evaluating such plans. Fidelity evaluates such plans based on protecting
shareholder interests and our historical knowledge of the company and its
management.
A.
Equity Compensation Plans
Fidelity
encourages the use of reasonably designed equity compensation plans that
align the interest of management with those of shareholders by providing
officers and employees with incentives to increase long-term shareholder
value. Fidelity considers whether such plans are too dilutive to existing
shareholders because dilution reduces the voting power or economic
interest of existing shareholders as a result of an increase in shares
available for distribution to employees in lieu of cash compensation.
Fidelity will generally oppose equity compensation plans or amendments to
authorize additional shares under such plans if:
1.
The company grants stock options and equity awards in a given year at a
rate higher than a benchmark rate ("burn rate") considered appropriate by
Fidelity and there were no circumstances specific to the company or the
compensation plans that leads Fidelity to conclude that the rate of awards
is otherwise acceptable.
2.
The plan includes an evergreen provision, which is a feature that provides
for an automatic increase in the shares available for grant under an
equity compensation plan on a regular basis.
3.
The plan provides for the acceleration of vesting of equity compensation
even though an actual change in control may not occur.
As
to stock option plans, considerations include the following:
1.
Pricing: We believe that options should be priced at 100% of fair market
value on the date they are granted. We generally oppose options priced at
a discount to the market, although the price may be as low as 85% of fair
market value if the discount is expressly granted in lieu of salary or
cash bonus.
2.
Re-pricing: An "out-of-the-money" (or underwater) option has an exercise
price that is higher than the current price of the stock. We generally
oppose the re-pricing of underwater options because it is not consistent
with a policy of offering options as a form of long-term compensation.
Fidelity also generally opposes a stock option plan if the board or
compensation committee has re-priced options outstanding in the past two
years without shareholder approval.
Fidelity
generally will support a management proposal to exchange, re-price or
tender for cash, outstanding options if the proposed exchange, re-pricing,
or tender offer is consistent with the interests of shareholders, taking
into account a variety of factors such as:
1.
Whether the proposal excludes senior management and directors;
2.
Whether the exchange or re-pricing proposal is value neutral to
shareholders based upon an acceptable pricing model;
3.
The company's relative performance compared to other companies within the
relevant industry or industries;
4.
Economic and other conditions affecting the relevant industry or
industries in which the company competes; and
5.
Any other facts or circumstances relevant to determining whether an
exchange or re-pricing proposal is consistent with the interests of
shareholders.
B.
Employee Stock Purchase Plans
These
plans are designed to allow employees to purchase company stock at a
discounted price and receive favorable tax treatment when the stock is
sold. Fidelity generally will support employee stock purchase plans if the
minimum stock purchase price is equal to or greater than 85% (or at least
75% in the case of non-U.S. companies where a lower minimum stock purchase
price is equal to the prevailing "best practices" in that market) of the
stock's fair market value and the plan constitutes a reasonable effort to
encourage broad based participation in the company's stock.
IV.
Advisory
Vote on Executive Compensation (Say on Pay) and Frequency of Say on Pay
Vote
Current
law requires companies to allow shareholders to cast non-binding votes on
the compensation for named executive officers, as well as the frequency of
such votes. Fidelity generally will support proposals to ratify executive
compensation unless the compensation appears misaligned with shareholder
interests or is otherwise problematic, taking into account:
-
The actions taken by the board or compensation committee in the previous
year, including whether the company re-priced or exchanged outstanding
stock options without shareholder approval; adopted or extended a golden
parachute without shareholder approval; or adequately addressed concerns
communicated by Fidelity in the process of discussing executive
compensation;
-
The alignment of executive compensation and company performance relative
to peers; and
-
The structure of the compensation program, including factors such as
whether incentive plan metrics are appropriate, rigorous and transparent;
whether the long-term element of the compensation program is evaluated
over at least a three-year period; the sensitivity of pay to below median
performance; the amount and nature of non-performance-based compensation;
the justification and rationale behind paying discretionary bonuses; the
use of stock ownership guidelines and amount of executive stock ownership;
and how well elements of compensation are disclosed.
When
presented with a frequency of Say on Pay vote, Fidelity generally will
support holding an annual advisory vote on Say on Pay.
A.
Compensation Committee
Directors
serving on the compensation committee of the Board have a special
responsibility to ensure that management is appropriately compensated and
that compensation, among other things, fairly reflects the performance of
the company. Fidelity believes that compensation should align with company
performance as measured by key business metrics. Compensation policies
should align the interests of executives with those of shareholders.
Further, the compensation program should be disclosed in a transparent and
timely manner.
Fidelity
will oppose the election of directors on the compensation committee if:
1.The compensation appears misaligned
with shareholder interests or is otherwise problematic and results in
concerns with:
a)The alignment of executive compensation
and company performance relative to peers; and
b)The structure of the compensation
program, including factors outlined above under the section entitled
Advisory Vote on Executive Compensation (Say on Pay) and Frequency of Say
on Pay Vote.
2.
The company has not adequately addressed concerns communicated by Fidelity
in the process of discussing executive compensation.
3.
Within the last year, and without shareholder approval, a company's board
of directors or compensation committee has either:
a)
Re-priced outstanding options, exchanged outstanding options for equity,
or tendered cash for outstanding options; or
b)
Adopted or extended a golden parachute.
B.
Executive Severance Agreements
Executive
severance compensation and benefit arrangements resulting from a
termination following a change in control are known as "golden
parachutes." Fidelity generally will oppose proposals to ratify golden
parachutes where the arrangement includes an excise tax gross-up
provision; single trigger for cash incentives; or may result in a lump sum
payment of cash and acceleration of equity that may total more than three
times annual compensation (salary and bonus) in the event of a termination
following a change in control.
V.
Environmental
and Social Issues
Grounded
in our Stewardship Principles, these guidelines outline our views on
corporate governance. As part of our efforts to maximize long-term
shareholder value, we incorporate consideration of human and natural
capital issues into our evaluation of a company, particularly if we
believe an issue is material to that company and the investing fund's
investment objective and strategies.
Fidelity
generally considers management's recommendation and current practice when
voting on shareholder proposals concerning human and natural capital
issues because it generally believes that management and the board are in
the best position to determine how to address these matters. Fidelity,
however, also believes that transparency is critical to sound corporate
governance. Fidelity evaluates shareholder proposals concerning natural
and human capital topics. To engage and vote more effectively on the
growing number of submitted proposals on these topics, we developed a
four-point decision-making framework. In general, Fidelity will more
likely support proposals that:
•Address a topic that our research has
identified as financially material;
•Provide disclosure of new or additional
information to investors, improving transparency;
•Provide value to the business or
investors by improving the landscape of investment-decision relevant
information or contributing to our understanding of a company's processes
and governance of the topic in question; and
•Are realistic or practical for the
company to comply with.
VI.
Anti-Takeover
Provisions and Shareholders Rights Plans
Fidelity
generally will oppose a proposal to adopt an anti-takeover provision.
Anti-takeover
provisions include:
-
classified boards;
-
"blank check" preferred stock (whose terms and conditions may be expressly
determined by the company's board, for example, with differential voting
rights);
-
golden parachutes;
-
supermajority provisions (that require a large majority (generally between
67-90%) of shareholders to approve corporate changes as compared to a
majority provision that simply requires more than 50% of shareholders to
approve those changes);
-
poison pills;
-
restricting the right to call special meetings;
-
provisions restricting the right of shareholders to set board size; and
-
any other provision that eliminates or limits shareholder rights.
A.
Shareholders Rights Plans ("poison pills")
Poison
pills allow shareholders opposed to a takeover offer to purchase stock at
discounted prices under certain circumstances and effectively give boards
veto power over any takeover offer. While there are advantages and
disadvantages to poison pills, they can be detrimental to the creation of
shareholder value and can help entrench management by deterring
acquisition offers not favored by the board, but that may, in fact, be
beneficial to shareholders.
Fidelity
generally will support a proposal to adopt or extend a poison pill if the
proposal:
1.
Includes a condition in the charter or plan that specifies an expiration
date (sunset provision) of no greater than five years;
2.
Is integral to a business strategy that is expected to result in greater
value for the shareholders;
3.
Requires shareholder approval to be reinstated upon expiration or if
amended;
4.
Contains a mechanism to allow shareholders to consider a bona fide
takeover offer for all outstanding shares without triggering the poison
pill; and
5.
Allows the Fidelity funds to hold an aggregate position of up to 20% of a
company's total voting securities, where permissible.
Fidelity
generally also will support a proposal that is crafted only for the
purpose of protecting a specific tax benefit if it also believes the
proposal is likely to enhance long-term economic returns or maximize
long-term shareholder value.
B.
Shareholder Ability to Call a Special Meeting
Fidelity
generally will support shareholder proposals regarding shareholders' right
to call special meetings if the threshold required to call the special
meeting is no less than 25% of the outstanding stock.
C.
Shareholder Ability to Act by Written Consent
Fidelity
generally will support proposals regarding shareholders' right to act by
written consent if the proposals include appropriate mechanisms for
implementation. This means that proposals must include record date
requests from at least 25% of the outstanding stockholders and consents
must be solicited from all shareholders.
D.
Supermajority Shareholder Vote Requirement
Fidelity
generally will support proposals regarding supermajority provisions if
Fidelity believes that the provisions protect minority shareholder
interests in companies where there is a substantial or dominant
shareholder.
VII.
Anti-Takeover
Provisions and Director Elections
Fidelity
will oppose the election of all directors or directors on responsible
committees if the board adopted or extended an anti-takeover provision
without shareholder approval.
Fidelity
will consider supporting the election of directors with respect to poison
pills if:
-
All of the poison pill's features outlined under the Anti-Takeover
Provisions and Shareholders Rights section above are met when a poison
pill is adopted or extended.
-
A board is willing to consider seeking shareholder ratification of, or
adding the features outlined under the Anti-Takeover Provisions and
Shareholders Rights Plans section above to, an existing poison pill. If,
however, the company does not take appropriate action prior to the next
annual shareholder meeting, Fidelity will oppose the election of all
directors at that meeting.
-
It determines that the poison pill was narrowly tailored to protect a
specific tax benefit, and subject to an evaluation of its likelihood to
enhance long-term economic returns or maximize long-term shareholder
value.
VIII.
Capital
Structure and Incorporation
These
guidelines are designed to protect shareholders' value in the companies in
which the Fidelity funds invest. To the extent a company's management is
committed and incentivized to maximize shareholder value, Fidelity
generally votes in favor of management proposals; Fidelity may vote
contrary to management where a proposal is overly dilutive to shareholders
and/or compromises shareholder value or other interests. The guidelines
that follow are meant to protect shareholders in these respects.
A.
Increases in Common Stock
Fidelity
may support reasonable increases in authorized shares for a specific
purpose (a stock split or re-capitalization, for example). Fidelity
generally will oppose a provision to increase a company's authorized
common stock if such increase will result in a total number of authorized
shares greater than three times the current number of outstanding and
scheduled to be issued shares, including stock options.
In
the case of real estate investment trusts (REITs), however, Fidelity will
oppose a provision to increase the REIT's authorized common stock if the
increase will result in a total number of authorized shares greater than
five times the current number of outstanding and scheduled to be issued
shares.
B.
Multi-Class Share Structures
Fidelity
generally will support proposals to recapitalize multi-class share
structures into structures that provide equal voting rights for all
shareholders, and generally will oppose proposals to introduce or increase
classes of stock with differential voting rights. However, Fidelity will
evaluate all such proposals in the context of their likelihood to enhance
long-term economic returns or maximize long-term shareholder value.
C.
Incorporation or Reincorporation in another State or Country
Fidelity
generally will support management proposals calling for, or recommending
that, a company reincorporate in another state or country if, on balance,
the economic and corporate governance factors in the proposed jurisdiction
appear reasonably likely to be better aligned with shareholder interests,
taking into account the corporate laws of the current and proposed
jurisdictions and any changes to the company's current and proposed
governing documents. Fidelity will consider supporting these shareholder
proposals in limited cases if, based upon particular facts and
circumstances, remaining incorporated in the current jurisdiction appears
misaligned with shareholder interests.
IX.
Shares
of Fidelity Funds or other non-Fidelity Funds
When
a Fidelity fund invests in an underlying Fidelity fund with public
shareholders or a non-Fidelity investment company or business development
company, Fidelity will generally vote in the same proportion as all other
voting shareholders of the underlying fund (this is known as "echo
voting"). Fidelity may not vote if "echo voting" is not operationally
practical or not permitted under applicable laws and regulations. For
Fidelity fund investments in a Fidelity Series Fund, Fidelity generally
will vote in a manner consistent with the recommendation of the Fidelity
Series Fund's Board of Trustees on all proposals, except where not
permitted under applicable laws and regulations.
X.
Foreign
Markets
Many
Fidelity funds invest in voting securities issued by companies that are
domiciled outside the United States and are not listed on a U.S.
securities exchange. Corporate governance standards, legal or regulatory
requirements and disclosure practices in foreign countries can differ from
those in the United States. When voting proxies relating to non-U.S.
securities, Fidelity generally will evaluate proposals under these
guidelines and where applicable and feasible, take into consideration
differing laws, regulations and practices in the relevant foreign market
in determining how to vote shares.
In
certain non-U.S. jurisdictions, shareholders voting shares of a company
may be restricted from trading the shares for a period of time around the
shareholder meeting date. Because these trading restrictions can hinder
portfolio management and could result in a loss of liquidity for a fund,
Fidelity generally will not vote proxies in circumstances where such
restrictions apply. In addition, certain non-U.S. jurisdictions require
voting shareholders to disclose current share ownership on a fund-by-fund
basis. When such disclosure requirements apply, Fidelity generally will
not vote proxies in order to safeguard fund holdings information.
XI.
Securities
on Loan
Securities
on loan as of a record date cannot be voted. In certain circumstances,
Fidelity may recall a security on loan before record date (for example, in
a particular contested director election or a noteworthy merger or
acquisition). Generally, however, securities out on loan remain on loan
and are not voted because, for example, the income a fund derives from the
loan outweighs the benefit the fund receives from voting the security. In
addition, Fidelity may not be able to recall and vote loaned securities if
Fidelity is unaware of relevant information before record date, or is
otherwise unable to timely recall securities on loan.
XII.
Avoiding
Conflicts of Interest
Voting
of shares is conducted in a manner consistent with the best interests of
the Fidelity funds. In other words, securities of a company generally will
be voted in a manner consistent with these guidelines and without regard
to any other Fidelity companies' business relationships.
Fidelity
takes its responsibility to vote shares in the best interests of the funds
seriously and has implemented policies and procedures to address actual
and potential conflicts of interest.
XIII.
Conclusion
Since
its founding more than 75 years ago, Fidelity has been driven by two
fundamental values: 1) putting the long-term interests of our customers
and fund shareholders first; and 2) investing in companies that share our
approach to creating value over the long-term. With these fundamental
principles as guideposts, the funds are managed to provide the greatest
possible return to shareholders consistent with governing laws and the
investment guidelines and objectives of each fund.
Fidelity
believes that there is a strong correlation between sound corporate
governance and enhancing shareholder value. Fidelity, through the
implementation of these guidelines, puts this belief into action through
consistent engagement with portfolio companies on matters contained in
these guidelines, and, ultimately, through the exercise of voting rights
by the funds.
Glossary
- Burn
rate means the total number of stock option and full value equity awards
granted as compensation in a given year divided by the weighted average
common stock outstanding for that same year.
-
For a large-capitalization company, burn rate higher than 1.5%.
-
For a small-capitalization company, burn rate higher than 2.5%.
-
For a micro-capitalization company, burn rate higher than 3.5%.
- Golden
parachute means employment contracts, agreements, or policies that
include an excise tax gross-up provision; single trigger for cash
incentives; or may result in a lump sum payment of cash and acceleration
of equity that may total more than three times annual compensation
(salary and bonus) in the event of a termination following a change in
control.
- Large-capitalization
company means a company included in the Russell 1000® Index or the
Russell Global ex-U.S. Large Cap Index.
- Micro-capitalization
company means a company with market capitalization under US $300
million.
- Poison
pill refers to a strategy employed by a potential takeover / target
company to make its stock less attractive to an acquirer. Poison pills
are generally designed to dilute the acquirer's ownership and value in
the event of a takeover.
- Small-capitalization
company means a company not included in the Russell 1000® Index or the
Russell Global ex-U.S. Large Cap Index that is not a
Micro-Capitalization Company.
|
|
To
view a fund's proxy voting record for the most recent 12-month period
ended June 30, if applicable, visit www.fidelity.com/proxyvotingresults or
visit the SEC's web site at www.sec.gov. |
The
fund has entered into a distribution agreement with Fidelity Distributors
Company LLC (FDC), an affiliate of FMR. The principal business address of FDC is
900 Salem Street, Smithfield, Rhode Island 02917. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
Financial Industry Regulatory Authority, Inc.
The
fund's distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the fund,
which are continuously offered.
Promotional
and administrative expenses in connection with the offer and sale of shares are
paid by FMR.
Sales
charge revenues collected and retained by FDC for the fiscal year(s) ended
December 31, 2022, 2021, and 2020 are shown in the following table.
|
|
|
Sales
Charge Revenue |
CDSC
Revenue |
|
Fund
|
Fiscal
Year Ended
|
Amount
Paid
to
FDC
|
Amount
Retained
By
FDC
|
Amount
Paid
to
FDC
|
Amount
Retained
By
FDC
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
2022
|
$8,225
|
$4,727
|
$955
|
$955
|
|
|
2021
|
$17,735
|
$14,587
|
$146
|
$146
|
|
|
2020
|
$19,753
|
$15,725
|
$22
|
$22
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
2022
|
$935
|
$798
|
$-
|
$-
|
|
|
2021
|
$4,255
|
$1,695
|
$1
|
$1
|
|
|
2020
|
$1,386
|
$1,184
|
$111
|
$111
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
2022
|
$-
|
$-
|
$390
|
$390
|
|
|
2021
|
$-
|
$-
|
$411
|
$411
|
|
|
2020
|
$-
|
$-
|
$8,132
|
$8,132
|
The
Trustees have approved Distribution and Service Plans on
behalf of Class A, Class M, Class C, Class I, and Class Z of the fund (the
Plans) pursuant to Rule 12b-1 under the 1940 Act (the Rule).
The
Rule provides in substance that a fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan approved on behalf of the fund
under the Rule.
The
Plans, as approved by the Trustees, allow shares of the fund and/or FMR to incur
certain expenses that might be considered to constitute direct or indirect
payment by the fund of distribution expenses.
The
Plan adopted for the fund or class, as applicable, is described in the
prospectus.
The
table below shows the distribution and/or service fees paid for the fiscal year
ended December 31, 2022.
|
Fund(s)
|
|
Distribution
Fees
Paid
to
FDC
|
|
Distribution
Fees
Paid by
FDC
to
Intermediaries
|
|
Distribution
Fees
Retained
by
FDC
(A)
|
|
Service
Fees
Paid
to
FDC
|
|
Service
Fees
Paid
by
FDC
to
Intermediaries
|
|
Service
Fees
Retained
by
FDC
(A)
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class A |
|
-
|
|
-
|
|
-
|
$
|
454,364
|
$
|
401,763
|
$
|
52,601
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class M |
|
-
|
|
-
|
|
-
|
$
|
18,823
|
$
|
18,818
|
$
|
5
|
|
Fidelity
Advisor® Limited Term Municipal Income Fund - Class C |
$
|
67,929
|
$
|
58,255
|
$
|
9,674
|
$
|
22,643
|
$
|
19,418
|
$
|
3,225
|
|
(A)Amounts
retained by FDC represent fees paid to FDC but not yet reallowed to
intermediaries as of the close of the period reported and fees paid to FDC
that are not eligible to be reallowed to intermediaries. Amounts not
eligible for reallowance are retained by FDC for use in its capacity as
distributor.
|
Under
each Class I and Class Z Plan, if the payment of management fees by the fund to
FMR is deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the Plan.
Each
Class I and Class Z Plan specifically recognizes that FMR may use its management
fee revenue, as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with providing services intended to result in
the sale of Class I and Class Z shares and/or shareholder support services. In
addition, each Class I and Class Z Plan provides that FMR,
directly or through FDC, may pay significant amounts to intermediaries that
provide those services. Currently, the Board of Trustees has authorized such
payments for Class I and Class Z shares of the fund.
Under
each Class A, Class M, and Class C Plan, if the payment of management fees by
the fund to Fidelity Management & Research Company LLC is deemed to be
indirect financing by the fund of the distribution of its shares, such payment
is authorized by each Plan.
Each
Class A, Class M, and Class C Plan specifically recognizes that FMR may use its
management fee revenue, as well as its past profits or its other resources, to
pay FDC for expenses incurred in connection with providing services intended to
result in the sale of Class A, Class M, and Class C shares and/or shareholder
support services, including payments of significant amounts made to
intermediaries that provide those services. Currently, the Board of Trustees has
authorized such payments for Class A, Class M, and Class C shares.
Prior
to approving each Plan, the Trustees carefully considered all pertinent factors
relating to the implementation of the Plan, and determined that there is a
reasonable likelihood that the Plan will benefit the fund or class, as
applicable, and its shareholders.
In
particular, the Trustees noted that each Class I and Class Z Plan does not
authorize payments by Class I and Class Z shares of the fund other than those
made to FMR under its management contract with the fund.
To
the extent that each Plan gives FMR and FDC greater flexibility in connection
with the distribution of shares, additional sales of shares or stabilization of
cash flows may result.
Furthermore,
certain shareholder support services may be provided more effectively under the
Plans by local entities with whom shareholders have other relationships.
Each
Class A, Class M, and Class C Plan does not provide for specific payments by
Class A, Class M, and Class C of any of the expenses of FDC, or obligate FDC or
FMR to perform any specific type or level of distribution activities or incur
any specific level of expense in connection with distribution activities.
In
addition to the distribution and/or service fees paid by FDC to intermediaries,
shown in the table above, FDC or an affiliate may compensate intermediaries that
distribute and/or service the Advisor funds and the Advisor classes of shares,
or upon directions, make payments for certain retirement plan expenses to
intermediaries. A number of factors are considered in determining whether to pay
these additional amounts. Such factors may include, without limitation, the
level or type of services provided by the intermediary, the level or expected
level of assets or sales of shares, the placing of the fund on a preferred or
recommended fund list, access to an intermediary's personnel, and other factors.
The total amount paid to all intermediaries in the aggregate currently will not
exceed 0.05% of the total assets of the Advisor funds and the Advisor classes of
shares on an annual basis.
In
addition to such payments, FDC or an affiliate may offer other incentives such
as sponsorship of educational or client seminars relating to current products
and issues, assistance in training and educating the intermediaries' personnel,
payments or reimbursements for travel and related expenses associated with due
diligence trips that an intermediary may undertake in order to explore possible
business relationships with affiliates of FDC, and/or payments of costs and
expenses associated with attendance at seminars, including travel, lodging,
entertainment, and meals. FDC anticipates that payments will be made to over a
hundred intermediaries, including some of the largest broker-dealers and other
financial firms, and certain of the payments described above may be significant
to an intermediary. As permitted by SEC and Financial Industry Regulatory
Authority rules and other applicable laws and regulations, FDC or an affiliate
may pay or allow other incentives or payments to intermediaries.
The
fund's transfer agent or an affiliate may also make payments and reimbursements
from its own resources to certain intermediaries (who may be affiliated with the
transfer agent) for performing recordkeeping and other services. Please see
"Transfer and Service Agent Agreements" in this SAI for more information.
FDC
or an affiliate may also make payments to banks, broker-dealers and other
service-providers (who may be affiliated with FDC) for distribution-related
activities and/or shareholder services. If you have purchased shares of the fund
through an investment professional, please speak with your investment
professional to learn more about any payments his or her firm may receive from
FMR, FDC, and/or their affiliates, as well as fees and/or commissions the
investment professional charges. You should also consult disclosures made by
your investment professional at the time of purchase.
Any
of the payments described in this section may represent a premium over payments
made by other fund families. Investment professionals may have an added
incentive to sell or recommend a fund or a share class over others offered by
competing fund families, or retirement plan sponsors may take these payments
into account when deciding whether to include a fund as a plan investment
option.
TRANSFER
AND SERVICE AGENT AGREEMENTS
The
fund has entered into a transfer agent agreement with Fidelity Investments
Institutional Operations Company LLC (FIIOC), an affiliate of FMR, which is
located at 245 Summer Street, Boston, Massachusetts 02210. Under the terms of
the agreement, FIIOC (or an agent, including an affiliate) performs transfer
agency services.
For
providing transfer agency services, FIIOC receives a position fee and/or an
asset-based fee with respect to each position in the fund. For retail accounts,
these fees are based on fund type. For certain institutional accounts, these
fees are based on size of position and fund type. For institutional retirement
accounts, these fees are based on account type and fund type. For employee
benefit plan accounts, FIIOC receives an asset-based fee. The position fee is
billed monthly on a pro rata basis at one-twelfth of the applicable annual rate
as of the end of each calendar month. The asset-based fee is calculated and paid
monthly on the basis of average daily net assets of a fund or class, as
applicable.
FIIOC
may collect fees charged in connection with providing certain types of services
such as exchanges, closing out fund balances, maintaining fund positions with
low balances, checkwriting, wire transactions, and providing historical account
research, as applicable.
In
addition, FIIOC receives the pro rata portion of the transfer agency fees
applicable to shareholder accounts in a qualified tuition program (QTP), as
defined under the Small Business Job Protection Act of 1996, managed by FMR or
an affiliate and in certain funds of funds managed by FMR, according to the
percentage of the QTP's, or a fund of funds' assets that is invested in the
fund.
FIIOC
bears the expense of typesetting, printing, and mailing prospectuses, statements
of additional information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Fund
shares may be owned by intermediaries for the benefit of their customers. In
those instances, a fund may not maintain an account for shareholders, and some
or all of the recordkeeping and/or administrative services for these accounts
may be performed by intermediaries.
FIIOC
or an affiliate may make payments out of its own resources to intermediaries
(including affiliates of FIIOC) for recordkeeping services.
Retirement
plans may also hold fund shares in the name of the plan or its trustee, rather
than the plan participant. In situations where FIIOC or an affiliate does not
provide recordkeeping services, plan recordkeepers, who may have affiliated
financial intermediaries who sell shares of the fund, may, upon direction, be
paid for providing recordkeeping services to plan participants. Payments may
also be made, upon direction, for other plan expenses. FIIOC may also pay an
affiliate for providing services that otherwise would have been performed by
FIIOC.
FIIOC
or an affiliate may make networking payments out of its own resources to
intermediaries who perform transactions for the fund through the National
Securities Clearing Corporation (NSCC). NSCC, a wholly owned subsidiary of The
Depository Trust & Clearing Corporation, provides centralized clearance,
settlement, and information services for mutual funds and other financial
services companies.
The
fund has entered into a service agent agreement with Fidelity Service Company,
Inc. (FSC), an affiliate of FMR (or an agent, including an affiliate). Under the
terms of the agreement, FSC calculates the NAV and dividends for shares,
maintains the fund's portfolio and general accounting records, and administers
the fund's securities lending program.
For
providing pricing and bookkeeping services, FSC receives a monthly fee based on
the fund's average daily net assets throughout the month.
The
annual rates for pricing and bookkeeping services for the fund are 0.0259% of
the first $500 million of average net assets, 0.0156% of average net assets
between $500 million and $3.5 billion, 0.0041% of average net assets between
$3.5 billion and $25 billion, and 0.0019% of average net assets in excess of $25
billion.
Pricing
and bookkeeping fees paid by the fund to FSC for the fiscal year(s) ended
December 31, 2022, 2021, and 2020 are shown in the following table.
|
Fund
|
|
2022
|
|
2021
|
|
2020
|
|
Fidelity®
Limited Term Municipal Income Fund |
$
|
534,547
|
$
|
597,968
|
$
|
524,099
|
Trust
Organization.
Fidelity®
Limited Term Municipal Income Fund is a fund of Fidelity Municipal Trust, an
open-end management investment company created under an initial declaration of
trust dated June 22, 1984.
The
Trustees are permitted to create additional funds in the trust and to create
additional classes of a fund.
The
assets of the trust received for the issue or sale of shares of each fund and
all income, earnings, profits, and proceeds thereof, subject to the rights of
creditors, are allocated to such fund, and constitute the underlying assets of
such fund. The underlying assets of each fund in the trust shall be charged with
the liabilities and expenses attributable to such fund, except that liabilities
and expenses may be allocated to a particular class. Any general expenses of the
trust shall be allocated between or among any one or more of the funds or
classes.
Shareholder
Liability. The
trust is an entity commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust.
The
Declaration of Trust contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the trust or fund. The
Declaration of Trust provides that the trust shall not have any claim against
shareholders except for the payment of the purchase price of shares and requires
that each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees relating to the trust or to a fund shall include a
provision limiting the obligations created thereby to the trust or to one or
more funds and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any assets
belonging to any other fund.
The
Declaration of Trust provides for indemnification out of a fund's property of
any shareholder or former shareholder held personally liable for the obligations
of the fund solely by reason of his or her being or having been a shareholder
and not because of his or her acts or omissions or for some other reason. The
Declaration of Trust also provides that a fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its obligations.
Fidelity Management & Research Company LLC believes that, in view of the
above, the risk of personal liability to shareholders is remote.
Claims
asserted against one class of shares may subject holders of another class of
shares to certain liabilities.
Voting
Rights. The
fund's capital consists of shares of beneficial interest. Shareholders are
entitled to one vote for each dollar of net asset value they own. The voting
rights of shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund, and by class.
The
shares have no preemptive rights. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder Liability" above.
The
trust or a fund or a class may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company, series, or class
thereof, or upon liquidation and distribution of its assets. The Trustees may
reorganize, terminate, merge, or sell all or a portion of the assets of a trust
or a fund or a class without prior shareholder approval. In the event of the
dissolution or liquidation of a trust, shareholders of each of its funds are
entitled to receive the underlying assets of such fund available for
distribution. In the event of the dissolution or liquidation of a fund or a
class, shareholders of that fund or that class are entitled to receive the
underlying assets of the fund or class available for distribution.
Custodian.
The
Bank of New York Mellon, 1 Wall Street, New York, New York, is custodian of the
assets of the fund.
The
custodian is responsible for the safekeeping of the fund's assets and the
appointment of any subcustodian banks and clearing agencies.
From
time to time, subject to approval by a fund's Treasurer, a Fidelity® fund may
enter into escrow arrangements with other banks if necessary to participate in
certain investment offerings.
FMR,
its officers and directors, its affiliated companies, Members of the Advisory
Board (if any), and Members of the Board of Trustees may, from time to time,
conduct transactions with various banks, including banks serving as custodians
for certain funds advised by FMR or an affiliate. Transactions that have
occurred to date include mortgages and personal and general business loans. In
the judgment of the fund's adviser, the terms and conditions of those
transactions were not influenced by existing or potential custodial or other
fund relationships.
Independent
Registered Public Accounting Firm.
PricewaterhouseCoopers
LLP, 101 Seaport Boulevard, Boston, Massachusetts, independent registered public
accounting firm, audits financial statements for the fund and provides other
audit, tax, and related services.
FUND
HOLDINGS INFORMATION
The
fund views holdings information as sensitive and limits its dissemination. The
Board authorized FMR to establish and administer guidelines for the
dissemination of fund holdings information, which may be amended at any time
without prior notice. FMR's Disclosure Policy Committee (comprising executive
officers of FMR) evaluates disclosure policy with the goal of serving the fund's
best interests by striking an appropriate balance between providing information
about the fund's portfolio and protecting the fund from potentially harmful
disclosure. The Board reviews the administration and modification of these
guidelines and receives reports from the fund's chief compliance officer
periodically.
The
fund will provide a full list of holdings monthly on institutional.fidelity.com
30 days after the month-end (excluding high income security holdings, which
generally will be presented collectively monthly and included in a list of full
holdings 60 days after month-end).
Unless
otherwise indicated, this information will be available on the web site until
updated for the next applicable period.
The
fund may also from time to time provide or make available to the Board or third
parties upon request specific fund level performance attribution information and
statistics. Third parties may include fund shareholders or prospective fund
shareholders, members of the press, consultants, and ratings and ranking
organizations. Nonexclusive examples of performance attribution information and
statistics may include (i) the allocation of the fund's portfolio holdings and
other investment positions among various asset classes, sectors, industries, and
countries, (ii) the characteristics of the stock and bond components of the
fund's portfolio holdings and other investment positions, (iii) the attribution
of fund returns by asset class, sector, industry, and country and (iv) the
volatility characteristics of the fund.
FMR's
Disclosure Policy Committee may approve a request for fund level performance
attribution and statistics as long as (i) such disclosure does not enable the
receiving party to recreate the complete or partial portfolio holdings of any
Fidelity ®
fund
prior to such fund's public disclosure of its portfolio holdings and (ii)
Fidelity has made a good faith determination that the requested information is
not material given the particular facts and circumstances. Fidelity may deny any
request for performance attribution information and other statistical
information about a fund made by any person, and may do so for any reason or for
no reason.
Disclosure
of non-public portfolio holdings information for a Fidelity ®
fund's
portfolio may only be provided pursuant to the guidelines below.
The
Use of Holdings In Connection With Fund Operations. Material
non-public holdings information may be provided as part of the activities
associated with managing Fidelity ®
funds
to: entities which, by explicit agreement or by virtue of their respective
duties to the fund, are required to maintain the confidentiality of the
information disclosed; other parties if legally required; or persons FMR
believes will not misuse the disclosed information. These entities, parties, and
persons include, but are not limited to: the fund's trustees; the fund's
manager, its sub-advisers, if any, and their affiliates whose access persons are
subject to a code of ethics (including portfolio managers of affiliated funds of
funds); contractors who are subject to a confidentiality agreement; the fund's
auditors; the fund's custodians; proxy voting service providers; financial
printers; pricing service vendors; broker-dealers in connection with the
purchase or sale of securities or requests for price quotations or bids on one
or more securities; securities lending agents; counsel to the fund or its
Independent Trustees; regulatory authorities; stock exchanges and other listing
organizations; parties to litigation; third parties in connection with a
bankruptcy proceeding relating to a fund holding; and third parties who have
submitted a standing request to a money market fund for daily holdings
information. Non-public holdings information may also be provided to an issuer
regarding the number or percentage of its shares that are owned by the fund and
in connection with redemptions in kind.
Other
Uses Of Holdings Information. In
addition, the fund may provide material non-public holdings information to (i)
third parties that calculate information derived from holdings for use by FMR, a
sub-adviser, or their affiliates, (ii) ratings and rankings organizations, and
(iii) an investment adviser, trustee, or their agents to whom holdings are
disclosed for due diligence purposes or in anticipation of a merger involving
the fund. Each individual request is reviewed by the Disclosure Policy Committee
which must find, in its sole discretion that, based on the specific facts and
circumstances, the disclosure appears unlikely to be harmful to the fund.
Entities receiving this information must have in place control mechanisms to
reasonably ensure or otherwise agree that, (a) the holdings information will be
kept confidential, (b) no employee shall use the information to effect trading
or for their personal benefit, and (c) the nature and type of information that
they, in turn, may disclose to third parties is limited. FMR relies primarily on
the existence of non-disclosure agreements and/or control mechanisms when
determining that disclosure is not likely to be harmful to the fund.
At
this time, the entities receiving information described in the preceding
paragraph are: Factset Research Systems Inc. (full or partial fund holdings
daily, on the next business day); Standard & Poor's Ratings Services (full
holdings weekly (generally as of the previous Friday), generally 5 business days
thereafter); MSCI Inc. and certain affiliates (full or partial fund holdings
daily, on the next business day); and Bloomberg, L.P. (full holdings daily, on
the next business day).
FMR,
its affiliates, or the fund will not enter into any arrangements with third
parties from which they derive consideration for the disclosure of material
non-public holdings information. If, in the future, such an arrangement is
desired, prior Board approval would be sought and any such arrangements would be
disclosed in the fund's SAI.
There
can be no assurance that the fund's policies and procedures with respect to
disclosure of fund portfolio holdings will prevent the misuse of such
information by individuals and firms that receive such information.
The
fund's financial statements and financial highlights for the fiscal year ended
December 31, 2022, and report of the independent registered public accounting
firm, are included in the fund's annual
report and
are incorporated herein by reference.
Total
annual operating expenses as shown in the prospectus fee table may differ from
the ratios of expenses to average net assets in the financial highlights because
total annual operating expenses as shown in the prospectus fee table include any
acquired fund fees and expenses, whereas the ratios of expenses in the financial
highlights do not, except to the extent any acquired fund fees and expenses
relate to an entity, such as a wholly-owned subsidiary, with which a fund's
financial statements are consolidated. Acquired funds include other investment
companies (such as Central funds or other underlying funds) in which the
fund has invested, if and to the extent it is permitted to do so.
Total
annual operating expenses in the prospectus fee table and the financial
highlights do not include any expenses associated with investments in certain
structured or synthetic products that may rely on the exception from the
definition of "investment company" provided by section 3(c)(1) or 3(c)(7) of the
1940 Act.
Fidelity,
the Fidelity Investments Logo and all other Fidelity trademarks or service marks
used herein are trademarks or service marks of FMR LLC. Any third-party marks
that are used herein are trademarks or service marks of their respective owners.
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rights reserved.
