Prospectus - Investment Objective
Fund/Class |
Class A |
Class M |
Class C |
Class I |
Class Z |
Fidelity
Advisor® Floating Rate High Income Fund |
FFRAX |
FFRTX |
FFRCX |
FFRIX |
FIQSX |
Fidelity
Advisor® High Income Advantage Fund |
FAHDX |
FAHYX |
FAHEX |
FAHCX |
FIQTX |
Fidelity
Advisor® Value Fund |
FAVFX |
FTVFX |
FCVFX |
FVIFX |
FVLZX |
Funds of Fidelity Advisor Series I
STATEMENT OF ADDITIONAL INFORMATION
December 30, 2023
This
Statement of Additional Information (SAI) is not a prospectus. Portions of each
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 December 30, 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
ACOM10-PTB-1223
1.730173.127
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 a 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.
A
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 each fund's fundamental investment limitations set forth in their
entirety.
Diversification
For
each fund:
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.
Senior
Securities
For
each fund:
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
For
each fund:
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
For
each fund:
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
For
each fund (other than Fidelity Advisor® Floating Rate High Income Fund):
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) if, as a result, more than 25% of the fund's total assets
would be invested in the securities of companies whose principal business
activities are in the same industry.
For
purposes of each of Fidelity Advisor® High Income Advantage Fund's and
Fidelity Advisor® Value Fund's concentration limitation discussed above, with
respect to any investment in repurchase agreements collateralized by U.S.
Government securities, Fidelity Management & Research Company LLC (FMR)
looks through to the U.S. Government securities.
For
purposes of each of Fidelity Advisor® High Income Advantage Fund's and Fidelity
Advisor® Value Fund's concentration limitation discussed above, with respect to
any investment in Fidelity® Money Market Central Fund and/or any non-money
market Central fund, FMR looks through to the holdings of the Central
fund.
For
purposes of each of Fidelity Advisor® High Income Advantage Fund's and Fidelity
Advisor® Value 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.
For
Fidelity Advisor® Floating Rate High Income Fund:
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, or securities of other investment companies) if, as a result,
more than 25% of the fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry.
For
purposes of the fund's concentration limitation discussed above, with respect to
any investment in repurchase agreements collateralized by U.S. Government
securities, FMR looks through to the U.S. Government securities.
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
For
each fund:
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
For
each fund:
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
For
each fund:
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
For
Fidelity Advisor® High Income Advantage Fund:
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
For
each fund:
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 and options are
not deemed to constitute selling securities short.
Margin
Purchases
For
each fund:
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
For
each fund:
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
For
Fidelity Advisor® High Income Advantage Fund:
The
fund does not currently intend to purchase any security if, as a result, more
than 15% 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 15% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
For
Fidelity Advisor® Floating Rate High Income Fund:
The
fund does not currently intend to purchase any security if, as a result, more
than 15% of its net assets would be invested in securities that are deemed to be
illiquid 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 15% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
For
Fidelity Advisor® Value Fund:
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
For
each fund (other than Fidelity Advisor® Value Fund):
The
fund does not currently intend to lend assets other than securities to other
parties, except by (a) originating and/or making direct loans (b) lending money
(up to 15% of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser or (c)
assuming any unfunded commitments in connection with the acquisition of loans,
loan participations, or other forms of debt instruments. (This limitation does
not apply to purchases of debt securities, to repurchase agreements, or to
acquisitions of loans, loan participations or other forms of debt
instruments.)
For
Fidelity Advisor® Value Fund:
The
fund does not currently intend to lend assets other than securities to other
parties, except by (a) lending money (up to 15% of the fund's net assets) to a
registered investment company or portfolio for which FMR or an affiliate serves
as investment adviser or (b) assuming any unfunded commitments in connection
with the acquisition of loans, loan participations, or other forms of debt
instruments. (This limitation does not apply to purchases of debt securities, to
repurchase agreements, or to acquisitions of loans, loan participations or other
forms of debt instruments.)
Pooled
Funds
For
Fidelity Advisor® High Income Advantage Fund:
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 each 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, each fund currently intends to comply
with certain diversification limits imposed by Subchapter M.
For
a fund's policies and limitations on futures and options transactions, as
applicable, see "Investment Policies and Limitations - Futures, Options, and
Swaps."
The
following pages contain more detailed information about types of instruments in
which a fund may invest, techniques a fund's adviser (or a sub-adviser) may
employ in pursuit of the fund's investment objective, and a summary of related
risks. A 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, a 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 a 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 mortgages, loans, receivables, or
other assets. 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.
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 generally 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® funds 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 each
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 funds. 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.
Common
Stock represents an equity or ownership interest in an issuer. In the event an
issuer is liquidated or declares bankruptcy, the claims of owners of bonds and
preferred stock take precedence over the claims of those who own common stock,
although related proceedings can take time to resolve and results can be
unpredictable. For purposes of a Fidelity® fund's policies related to investment
in common stock Fidelity considers depositary receipts evidencing ownership of
common stock to be common stock.
Convertible
Securities are bonds, debentures, notes, or other securities that may be
converted or exchanged (by the holder or by the issuer) into shares of the
underlying common stock (or cash or securities of equivalent value) at a stated
exchange ratio. A convertible security may also be called for redemption or
conversion by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible security
held by a fund is called for redemption or conversion, the fund could be
required to tender it for redemption, convert it into the underlying common
stock, or sell it to a third party.
Convertible
securities generally have less potential for gain or loss than common stocks.
Convertible securities generally provide yields higher than the underlying
common stocks, but generally lower than comparable non-convertible securities.
Because of this higher yield, convertible securities generally sell at prices
above their "conversion value," which is the current market value of the stock
to be received upon conversion. The difference between this conversion value and
the price of convertible securities will vary over time depending on changes in
the value of the underlying common stocks and interest rates. When the
underlying common stocks decline in value, convertible securities will tend not
to decline to the same extent because of the interest or dividend payments and
the repayment of principal at maturity for certain types of convertible
securities. However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same extent as
securities convertible at the option of the holder. When the underlying common
stocks rise in value, the value of convertible securities may also be expected
to increase. At the same time, however, the difference between the market value
of convertible securities and their conversion value will narrow, which means
that the value of convertible securities will generally not increase to the same
extent as the value of the underlying common stocks. Because convertible
securities may also be interest-rate sensitive, their value may increase as
interest rates fall and decrease as interest rates rise. Convertible securities
are also subject to credit risk, and are often lower-quality securities.
Debt
Securities are used by issuers to borrow money. The issuer usually pays a fixed,
variable, or floating rate of interest, and must repay the amount borrowed,
usually at the maturity of the security. Some debt securities, such as zero
coupon bonds, do not pay interest but are sold at a deep discount from their
face values. Debt securities include corporate bonds, government securities,
repurchase agreements, and mortgage and other asset-backed securities.
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. The
maturities of mortgage securities, including collateralized mortgage
obligations, and some asset-backed securities are determined on a weighted
average life basis, which is the average time for principal to be repaid. For a
mortgage security, this average time is calculated by estimating the timing of
principal payments, including unscheduled prepayments, during the life of the
mortgage. The weighted average life of these securities is likely to be
substantially shorter than their stated final maturity.
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.
Exchange
Traded Funds (ETFs) are shares of other investment companies, commodity pools,
or other entities that are traded on an exchange. Assets underlying the ETF
shares may consist of stocks, bonds, commodities, or other instruments,
depending on an ETF's investment objective and strategies. An ETF may seek to
replicate the performance of a specific index or may be actively managed.
Typically,
shares of an ETF that tracks an index are expected to increase in value as the
value of the underlying benchmark increases. However, in the case of inverse
ETFs (also called "short ETFs" or "bear ETFs"), ETF shares are expected to
increase in value as the value of the underlying benchmark decreases. Inverse
ETFs seek to deliver the opposite of the performance of the benchmark they track
and are often marketed as a way for investors to profit from, or at least hedge
their exposure to, downward moving markets. Investments in inverse ETFs are
similar to holding short positions in the underlying benchmark.
ETF
shares are redeemable only in large blocks of shares often called "creation
units" by persons other than a fund, and are redeemed principally in-kind at
each day's next calculated net asset value per share (NAV). ETFs typically incur
fees that are separate from those fees incurred directly by a fund. A fund's
purchase of ETFs results in the layering of expenses, such that the fund would
indirectly bear a proportionate share of any ETF's operating expenses. Further,
while traditional investment companies are continuously offered at NAV, ETFs are
traded in the secondary market (e.g., on a stock exchange) on an intra-day basis
at prices that may be above or below the value of their underlying
portfolios.
Some
of the risks of investing in an ETF that tracks an index are similar to those of
investing in an indexed mutual fund, including tracking error risk (the risk of
errors in matching the ETF's underlying assets to the index or other benchmark);
and the risk that because an ETF that tracks an index is not actively managed,
it cannot sell stocks or other assets as long as they are represented in the
index or other benchmark. Other ETF risks include the risk that ETFs may trade
in the secondary market at a discount from their NAV and the risk that the ETFs
may not be liquid. ETFs also may be leveraged. Leveraged ETFs seek to deliver
multiples of the performance of the index or other benchmark they track and use
derivatives in an effort to amplify the returns (or decline, in the case of
inverse ETFs) of the underlying index or benchmark. While leveraged ETFs may
offer the potential for greater return, the potential for loss and the speed at
which losses can be realized also are greater. Most leveraged and inverse ETFs
"reset" daily, meaning they are designed to achieve their stated objectives on a
daily basis. Leveraged and inverse ETFs can deviate substantially from the
performance of their underlying benchmark over longer periods of time,
particularly in volatile periods.
Exchange
Traded Notes (ETNs) are a type of senior, unsecured, unsubordinated debt
security issued by financial institutions that combines aspects of both bonds
and ETFs. An ETN's returns are based on the performance of a market index or
other reference asset minus fees and expenses. Similar to ETFs, ETNs are listed
on an exchange and traded in the secondary market. However, unlike an ETF, an
ETN can be held until the ETN's maturity, at which time the issuer will pay a
return linked to the performance of the market index or other reference asset to
which the ETN is linked minus certain fees. Unlike regular bonds, ETNs typically
do not make periodic interest payments and principal typically is not
protected.
ETNs
also incur certain expenses not incurred by their applicable index. The market
value of an ETN is determined by supply and demand, the current performance of
the index or other reference asset, and the credit rating of the ETN issuer. The
market value of ETN shares may differ from their intraday indicative value. The
value of an ETN may also change due to a change in the issuer's credit rating.
As a result, there may be times when an ETN's share trades at a premium or
discount to its NAV. Some ETNs that use leverage in an effort to amplify the
returns of an underlying index or other reference asset can, at times, be
relatively illiquid and, thus, they may be difficult to purchase or sell at a
fair price. Leveraged ETNs may offer the potential for greater return, but the
potential for loss and speed at which losses can be realized also are
greater.
Exposure
to Foreign and Emerging Markets. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S.
investments.
Foreign
investments involve risks relating to local political, economic, regulatory, or
social instability, military action or unrest, or adverse diplomatic
developments, and may be affected by actions of foreign governments adverse to
the interests of U.S. investors. Such actions may include expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. From time to time, a fund's adviser
and/or its affiliates may determine that, as a result of regulatory requirements
that may apply to the adviser and/or its affiliates due to investments in a
particular country, investments in the securities of issuers domiciled or listed
on trading markets in that country above certain thresholds (which may apply at
the account level or in the aggregate across all accounts managed by the adviser
and its affiliates) may be impractical or undesirable. In such instances, the
adviser may limit or exclude investment in a particular issuer, and investment
flexibility may be restricted. Additionally, governmental issuers of foreign
debt securities may be unwilling to pay interest and repay principal when due
and may require that the conditions for payment be renegotiated. There is no
assurance that a fund's adviser will be able to anticipate these potential
events or counter their effects. In addition, the value of securities
denominated in foreign currencies and of dividends and interest paid with
respect to such securities will fluctuate based on the relative strength of the
U.S. dollar.
It
is anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter (OTC) markets located
outside of the United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement where fund
assets may be released prior to receipt of payment) are often less developed
than those in U.S. markets, and may result in increased investment or valuation
risk or substantial delays in the event of a failed trade or the insolvency of,
or breach of duty by, a foreign broker-dealer, securities depository, or foreign
subcustodian. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions, and custodial costs, are
generally higher than with U.S. investments.
Foreign
markets may offer less protection to investors than U.S. markets. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to U.S. issuers. Adequate public information on foreign issuers may not be
available, and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. OTC markets tend to be less
regulated than stock exchange markets and, in certain countries, may be totally
unregulated. Regulatory enforcement may be influenced by economic or political
concerns, and investors may have difficulty enforcing their legal rights in
foreign countries.
Some
foreign securities impose restrictions on transfer within the United States or
to U.S. persons. Although securities subject to such transfer restrictions may
be marketable abroad, they may be less liquid than foreign securities of the
same class that are not subject to such restrictions.
American
Depositary Receipts (ADRs) as well as other "hybrid" forms of ADRs, including
European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs), are
certificates evidencing ownership of shares of a foreign issuer. These
certificates are issued by depository banks and generally trade on an
established market in the United States or elsewhere. The underlying shares are
held in trust by a custodian bank or similar financial institution in the
issuer's home country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying foreign securities in their
national markets and currencies. However, ADRs continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks of the
underlying issuer's country.
The
risks of foreign investing may be magnified for investments in emerging markets.
Security prices in emerging markets can be significantly more volatile than
those in more developed markets, reflecting the greater uncertainties of
investing in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, may present the
risks of nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries with
emerging markets may be based on only a few industries, may be highly vulnerable
to changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. Local securities markets may trade a
small number of securities and may be unable to respond effectively to increases
in trading volume, potentially making prompt liquidation of holdings difficult
or impossible at times.
Floating
Rate Loans and Other Debt Securities. Floating rate loans consist generally of
obligations of companies or other entities (collectively, "borrowers") incurred
for the purpose of reorganizing the assets and liabilities of a borrower
(recapitalization); acquiring another company (acquisition); taking over control
of a company (leveraged buyout); temporary financing (bridge loan); or
refinancings, internal growth, or other general business purposes. Floating rate
loans are often obligations of borrowers who are highly leveraged.
Floating
rate loans may be structured to include both term loans, which are generally
fully funded at the time of the making of the loan, and revolving credit
facilities, which would require additional investments upon the borrower's
demand. A revolving credit facility may require a purchaser to increase its
investment in a floating rate loan at a time when it would not otherwise have
done so, even if the borrower's condition makes it unlikely that the amount will
ever be repaid.
Floating
rate loans may be acquired by direct investment as a lender, as a participation
interest (which represents a fractional interest in a floating rate loan) issued
by a lender or other financial institution, or as an assignment of the portion
of a floating rate loan previously attributable to a different lender.
A
floating rate loan offered as part of the original lending syndicate typically
is purchased at par value. As part of the original lending syndicate, a
purchaser generally earns a yield equal to the stated interest rate. In
addition, members of the original syndicate typically are paid a commitment fee.
In secondary market trading, floating rate loans may be purchased or sold above,
at, or below par, which can result in a yield that is below, equal to, or above
the stated interest rate, respectively. At certain times when reduced
opportunities exist for investing in new syndicated floating rate loans,
floating rate loans may be available only through the secondary market. There
can be no assurance that an adequate supply of floating rate loans will be
available for purchase.
Historically,
floating rate loans have not been registered with the SEC or any state
securities commission or listed on any securities exchange. As a result, the
amount of public information available about a specific floating rate loan
historically has been less extensive than if the floating rate loan were
registered or exchange-traded.
Purchasers
of floating rate loans and other forms of debt securities depend primarily upon
the creditworthiness of the borrower for payment of interest and repayment of
principal. If scheduled interest or principal payments are not made, the value
of the security may be adversely affected. Floating rate loans and other debt
securities that are fully secured provide more protections than unsecured
securities in the event of failure to make scheduled interest or principal
payments. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks and may be highly speculative. Borrowers that are in
bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Some floating rate loans and other
debt securities are not rated by any nationally recognized statistical rating
organization. In connection with the restructuring of a floating rate loan or
other debt security outside of bankruptcy court in a negotiated work-out or in
the context of bankruptcy proceedings, equity securities or junior debt
securities may be received in exchange for all or a portion of an interest in
the security.
From
time to time FMR and its affiliates may borrow money from various banks in
connection with their business activities. These banks also may sell floating
rate loans to a Fidelity® fund or acquire floating rate loans from a Fidelity®
fund, or may be intermediate participants with respect to floating rate loans
owned by a Fidelity® fund. These banks also may act as agents for floating rate
loans that a Fidelity® fund owns.
The
following paragraphs pertain to floating rate loans: Agents, Participation
Interests, Collateral, Floating Interest Rates, Maturity, Floating Rate Loan
Trading, Supply of Floating Rate Loans, Restrictive Covenants, Fees, and Other
Types of Floating Rate Debt Securities.
Agents.
Floating rate loans typically are originated, negotiated, and structured by a
bank, insurance company, finance company, or other financial institution (the
"agent") for a lending syndicate of financial institutions. The borrower and the
lender or lending syndicate enter into a loan agreement. In addition, an
institution (typically, but not always, the agent) holds any collateral on
behalf of the lenders.
In
a typical floating rate loan, the agent administers the terms of the loan
agreement and is responsible for the collection of principal and interest and
fee payments from the borrower and the apportionment of these payments to all
lenders that are parties to the loan agreement. Purchasers will rely on the
agent to use appropriate creditor remedies against the borrower. Typically,
under loan agreements, the agent is given broad discretion in monitoring the
borrower's performance and is obligated to use the same care it would use in the
management of its own property. Upon an event of default, the agent typically
will enforce the loan agreement after instruction from the lenders. The borrower
compensates the agent for these services. This compensation may include special
fees paid on structuring and funding the floating rate loan and other fees paid
on a continuing basis. The typical practice of an agent or a lender in relying
exclusively or primarily on reports from the borrower may involve a risk of
fraud by the borrower.
If
an agent becomes insolvent, or has a receiver, conservator, or similar official
appointed for it by the appropriate bank or other regulatory authority, or
becomes a debtor in a bankruptcy proceeding, the agent's appointment may be
terminated, and a successor agent would be appointed. If an appropriate
regulator or court determines that assets held by the agent for the benefit of
the purchasers of floating rate loans are subject to the claims of the agent's
general or secured creditors, the purchasers might incur certain costs and
delays in realizing payment on a floating rate loan or suffer a loss of
principal and/or interest. Furthermore, in the event of the borrower's
bankruptcy or insolvency, the borrower's obligation to repay a floating rate
loan may be subject to certain defenses that the borrower can assert as a result
of improper conduct by the agent.
Participation
Interests. Purchasers of participation interests do not have any direct
contractual relationship with the borrower. Purchasers rely on the lender who
sold the participation interest not only for the enforcement of the purchaser's
rights against the borrower but also for the receipt and processing of payments
due under the floating rate loan.
Purchasers
of participation interests may be subject to delays, expenses, and risks that
are greater than those that would be involved if the purchaser could enforce its
rights directly against the borrower. In addition, under the terms of a
participation interest, the purchaser may be regarded as a creditor of the
intermediate participant (rather than of the borrower), so that the purchaser
also may be subject to the risk that the intermediate participant could become
insolvent. The agreement between the purchaser and lender who sold the
participation interest may also limit the rights of the purchaser to vote on
changes that may be made to the loan agreement, such as waiving a breach of a
covenant.
For
a Fidelity® fund that limits the amount of total assets that it will invest in
any one issuer or in issuers within the same industry, the fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the case
of participation interests where a bank or other lending institution serves as
intermediate participant between a fund and the borrower, if the participation
interest does not shift to the fund the direct debtor-creditor relationship with
the borrower, SEC interpretations require a fund, in appropriate circumstances,
to treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating an intermediate participant as an issuer
of indebtedness may restrict a fund's ability to invest in indebtedness related
to a single intermediate participant, or a group of intermediate participants
engaged in the same industry, even if the underlying borrowers represent many
different companies and industries.
Collateral.
Most floating rate loans are secured by specific collateral of the borrower and
are senior to most other securities of the borrower. The collateral typically
has a market value, at the time the floating rate loan is made, that equals or
exceeds the principal amount of the floating rate loan. The value of the
collateral may decline, be insufficient to meet the obligations of the borrower,
or be difficult to liquidate. As a result, a floating rate loan may not be fully
collateralized and can decline significantly in value.
Floating
rate loan collateral may consist of various types of assets or interests.
Collateral may include working capital assets, such as accounts receivable or
inventory; tangible or intangible assets; or assets or other types of guarantees
of affiliates of the borrower. Inventory is the goods a company has in stock,
including finished goods, goods in the process of being manufactured, and the
supplies used in the process of manufacturing. Accounts receivable are the
monies due to a company for merchandise or securities that it has sold, or for
the services it has provided. Tangible fixed assets include real property,
buildings, and equipment. Intangible assets include trademarks, copyrights and
patent rights, and securities of subsidiaries or affiliates.
Generally,
floating rate loans are secured unless (i) the purchaser's security interest in
the collateral is invalidated for any reason by a court, or (ii) the collateral
is fully released with the consent of the agent bank and lenders or under the
terms of a loan agreement as the creditworthiness of the borrower improves.
Collateral impairment is the risk that the value of the collateral for a
floating rate loan will be insufficient in the event that a borrower defaults.
Although the terms of a floating rate loan generally require that the collateral
at issuance have a value at least equal to 100% of the amount of such floating
rate loan, the value of the collateral may decline subsequent to the purchase of
a floating rate loan. In most loan agreements there is no formal requirement to
pledge additional collateral. There is no guarantee that the sale of collateral
would allow a borrower to meet its obligations should the borrower be unable to
repay principal or pay interest or that the collateral could be sold quickly or
easily.
In
addition, most borrowers pay their debts from the cash flow they generate. If
the borrower's cash flow is insufficient to pay its debts as they come due, the
borrower may seek to restructure its debts rather than sell collateral.
Borrowers may try to restructure their debts by filing for protection under the
federal bankruptcy laws or negotiating a work-out. If a borrower becomes
involved in bankruptcy proceedings, access to the collateral may be limited by
bankruptcy and other laws. In the event that a court decides that access to the
collateral is limited or void, it is unlikely that purchasers could recover the
full amount of the principal and interest due.
There
may be temporary periods when the principal asset held by a borrower is the
stock of a related company, which may not legally be pledged to secure a
floating rate loan. On occasions when such stock cannot be pledged, the floating
rate loan will be temporarily unsecured until the stock can be pledged or is
exchanged for, or replaced by, other assets.
Some
floating rate loans are unsecured. If the borrower defaults on an unsecured
floating rate loan, there is no specific collateral on which the purchaser can
foreclose.
Floating
Interest Rates. The rate of interest payable on floating rate loans is the sum
of a base lending rate plus a specified spread. Base lending rates are generally
the Secured Overnight Financing Rate (SOFR), London Interbank Offered Rate
(LIBOR), the Certificate of Deposit (CD) Rate of a designated U.S. bank, the
Prime Rate of a designated U.S. bank, the Federal Funds Rate, or another base
lending rate used by commercial lenders. A borrower usually has the right to
select the base lending rate and to change the base lending rate at specified
intervals. The applicable spread may be fixed at time of issuance or may adjust
upward or downward to reflect changes in credit quality of the borrower. The
interest rate payable on some floating rate loans may be subject to an upper
limit ("cap") or lower ("floor").
The
interest rate on SOFR- and LIBOR-based and CD Rate-based floating rate loans is
reset periodically at intervals ranging from 30 to 180 days, while the interest
rate on Prime Rate- or Federal Funds Rate-based floating rate loans floats daily
as those rates change. Investment in floating rate loans with longer interest
rate reset periods can increase fluctuations in the floating rate loans' values
when interest rates change.
The
yield on a floating rate loan will primarily depend on the terms of the
underlying floating rate loan and the base lending rate chosen by the borrower.
The relationship between SOFR, LIBOR, the CD Rate, the Prime Rate, and the
Federal Funds Rate will vary as market conditions change.
Maturity.
Floating rate loans typically will have a stated term of five to nine years.
However, because floating rate loans are frequently prepaid, their average
maturity is expected to be two to three years. The degree to which borrowers
prepay floating rate loans, whether as a contractual requirement or at their
election, may be affected by general business conditions, the borrower's
financial condition, and competitive conditions among lenders. Prepayments
cannot be predicted with accuracy. Prepayments of principal to the purchaser of
a floating rate loan may result in the principal's being reinvested in floating
rate loans with lower yields.
Floating
Rate Loan Trading. Floating rate loans are generally subject to legal or
contractual restrictions on resale. Floating rate loans are not currently listed
on any securities exchange or automatic quotation system. As a result, no active
market may exist for some floating rate loans, and to the extent a secondary
market exists for other floating rate loans, such market may be subject to
irregular trading activity, wide bid/ask spreads, and extended trade settlement
periods.
Supply
of Floating Rate Loans. The supply of floating rate loans may be limited from
time to time due to a lack of sellers in the market for existing floating rate
loans or the number of new floating rate loans currently being issued. As a
result, the floating rate loans available for purchase may be lower quality or
higher priced.
Restrictive
Covenants. A borrower must comply with various restrictive covenants contained
in the loan agreement. In addition to requiring the scheduled payment of
interest and principal, these covenants may include restrictions on dividend
payments and other distributions to stockholders, provisions requiring the
borrower to maintain specific financial ratios, and limits on total debt. The
loan agreement may also contain a covenant requiring the borrower to prepay the
floating rate loan with any free cash flow. A breach of a covenant that is not
waived by the agent (or by the lenders directly) is normally an event of
default, which provides the agent or the lenders the right to call the
outstanding floating rate loan.
Fees.
Purchasers of floating rate loans may receive and/or pay certain fees. These
fees are in addition to interest payments received and may include facility
fees, commitment fees, commissions, and prepayment penalty fees. When a
purchaser buys a floating rate loan, it may receive a facility fee; and when it
sells a floating rate loan, it may pay a facility fee. A purchaser may receive a
commitment fee based on the undrawn portion of the underlying line of credit
portion of a floating rate loan or a prepayment penalty fee on the prepayment of
a floating rate loan. A purchaser may also receive other fees, including
covenant waiver fees and covenant modification fees.
Other
Types of Floating Rate Debt Securities. Floating rate debt securities include
other forms of indebtedness of borrowers such as notes and bonds, securities
with fixed rate interest payments in conjunction with a right to receive
floating rate interest payments, and shares of other investment companies. These
instruments are generally subject to the same risks as floating rate loans but
are often more widely issued and traded.
Foreign
Currency Transactions. A fund may conduct foreign currency transactions on a
spot (i.e., cash) or forward basis (i.e., by entering into forward contracts to
purchase or sell foreign currencies). Although foreign exchange dealers
generally do not charge a fee for such conversions, they do realize a profit
based on the difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency at one
rate, while offering a lesser rate of exchange should the counterparty desire to
resell that currency to the dealer. Forward contracts are customized
transactions that require a specific amount of a currency to be delivered at a
specific exchange rate on a specific date or range of dates in the future.
Forward contracts are generally traded in an interbank market directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.
The
following discussion summarizes the principal currency management strategies
involving forward contracts that could be used by a fund. A fund may also use
swap agreements, indexed securities, and options and futures contracts relating
to foreign currencies for the same purposes. Forward contracts not calling for
physical delivery of the underlying instrument will be settled through cash
payments rather than through delivery of the underlying currency. All of these
instruments and transactions are subject to the risk that the counterparty will
default.
A
"settlement hedge" or "transaction hedge" is designed to protect a fund against
an adverse change in foreign currency values between the date a security
denominated in a foreign currency is purchased or sold and the date on which
payment is made or received. Entering into a forward contract for the purchase
or sale of the amount of foreign currency involved in an underlying security
transaction for a fixed amount of U.S. dollars "locks in" the U.S. dollar price
of the security. Forward contracts to purchase or sell a foreign currency may
also be used to protect a fund in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected.
A
fund may also use forward contracts to hedge against a decline in the value of
existing investments denominated in a foreign currency. For example, if a fund
owned securities denominated in pounds sterling, it could enter into a forward
contract to sell pounds sterling in return for U.S. dollars to hedge against
possible declines in the pound's value. Such a hedge, sometimes referred to as a
"position hedge," would tend to offset both positive and negative currency
fluctuations, but would not offset changes in security values caused by other
factors. A fund could also attempt to hedge the position by selling another
currency expected to perform similarly to the pound sterling. This type of
hedge, sometimes referred to as a "proxy hedge," could offer advantages in terms
of cost, yield, or efficiency, but generally would not hedge currency exposure
as effectively as a direct hedge into U.S. dollars. Proxy hedges may result in
losses if the currency used to hedge does not perform similarly to the currency
in which the hedged securities are denominated.
A
fund may enter into forward contracts to shift its investment exposure from one
currency into another. This may include shifting exposure from U.S. dollars to a
foreign currency, or from one foreign currency to another foreign currency. This
type of strategy, sometimes known as a "cross-hedge," will tend to reduce or
eliminate exposure to the currency that is sold, and increase exposure to the
currency that is purchased, much as if a fund had sold a security denominated in
one currency and purchased an equivalent security denominated in another. A fund
may cross-hedge its U.S. dollar exposure in order to achieve a representative
weighted mix of the major currencies in its benchmark index and/or to cover an
underweight country or region exposure in its portfolio. Cross-hedges protect
against losses resulting from a decline in the hedged currency, but will cause a
fund to assume the risk of fluctuations in the value of the currency it
purchases.
Successful
use of currency management strategies will depend on an adviser's skill in
analyzing currency values. Currency management strategies may substantially
change a fund's investment exposure to changes in currency exchange rates and
could result in losses to a fund if currencies do not perform as an adviser
anticipates. For example, if a currency's value rose at a time when a fund had
hedged its position by selling that currency in exchange for dollars, the fund
would not participate in the currency's appreciation. If a fund hedges currency
exposure through proxy hedges, the fund could realize currency losses from both
the hedge and the security position if the two currencies do not move in tandem.
Similarly, if a fund increases its exposure to a foreign currency and that
currency's value declines, the fund will realize a loss. Foreign currency
transactions involve the risk that anticipated currency movements will not be
accurately predicted and that a fund's hedging strategies will be ineffective.
Moreover, it is impossible to precisely forecast the market value of portfolio
securities at the expiration of a foreign currency forward contract.
Accordingly, a fund may be required to buy or sell additional currency on the
spot market (and bear the expenses of such transaction), if an adviser's
predictions regarding the movement of foreign currency or securities markets
prove inaccurate.
A
fund may be required to limit its hedging transactions in foreign currency
forwards, futures, and options in order to maintain its classification as a
"regulated investment company" under the Internal Revenue Code (Code). Hedging
transactions could result in the application of the mark-to-market provisions of
the Code, which may cause an increase (or decrease) in the amount of taxable
dividends paid by a fund and could affect whether dividends paid by a fund are
classified as capital gains or ordinary income. There is no assurance that an
adviser's use of currency management strategies will be advantageous to a fund
or that it will employ currency management strategies at appropriate
times.
Options
and Futures Relating to Foreign Currencies. Currency futures contracts are
similar to forward currency exchange contracts, except that they are traded on
exchanges (and have margin requirements) and are standardized as to contract
size and delivery date. Most currency futures contracts call for payment or
delivery in U.S. dollars. The underlying instrument of a currency option may be
a foreign currency, which generally is purchased or delivered in exchange for
U.S. dollars, or may be a futures contract. The purchaser of a currency call
obtains the right to purchase the underlying currency, and the purchaser of a
currency put obtains the right to sell the underlying currency.
The
uses and risks of currency options and futures are similar to options and
futures relating to securities or indexes, as discussed below. A fund may
purchase and sell currency futures and may purchase and write currency options
to increase or decrease its exposure to different foreign currencies. Currency
options may also be purchased or written in conjunction with each other or with
currency futures or forward contracts. Currency futures and options values can
be expected to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for example,
should protect a Yen-denominated security from a decline in the Yen, but will
not protect a fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates, it
may not be possible to match the amount of currency options and futures to the
value of the fund's investments exactly over time.
Currency
options traded on U.S. or other exchanges may be subject to position limits
which may limit the ability of the fund to reduce foreign currency risk using
such options.
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.
Funds'
Rights as Investors. Fidelity® funds do not intend to direct or administer the
day-to-day operations of any company. A fund may, however, exercise its rights
as a shareholder or lender and may communicate its views on important matters of
policy to a company's management, board of directors, and shareholders, and
holders of a company's other securities when such matters could have a
significant effect on the value of the fund's investment in the company. The
activities in which a fund may engage, either individually or in conjunction
with others, may include, among others, supporting or opposing proposed changes
in a company's corporate structure or business activities; seeking changes in a
company's directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a portion of its
assets; supporting or opposing third-party takeover efforts; supporting the
filing of a bankruptcy petition; or foreclosing on collateral securing a
security. This area of corporate activity is increasingly prone to litigation
and it is possible that a fund could be involved in lawsuits related to such
activities. Such activities will be monitored with a view to mitigating, to the
extent possible, the risk of litigation against a fund and the risk of actual
liability if a fund is involved in litigation. No guarantee can be made,
however, that litigation against a fund will not be undertaken or liabilities
incurred. A fund's proxy voting guidelines are included in its SAI.
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.
Each
of Fidelity Advisor® Floating Rate High Income Fund, Fidelity Advisor® High
Income Advantage Fund, and Fidelity Advisor® Value Fund will not: (a) sell
futures contracts, purchase put options, or write call options if, as a result,
more than 25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write put
options if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would exceed 25%
of its total assets under normal conditions; or (c) purchase call options if, as
a result, the current value of option premiums for call options purchased by the
fund would exceed 5% of the fund's total assets. These limitations do not apply
to options attached to or acquired or traded together with their underlying
securities, and do not apply to structured notes.
The
policies and limitations regarding the funds' investments in futures contracts,
options, and swaps may be changed as regulatory agencies permit.
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). 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
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.
Although
futures exchanges generally operate similarly in the United States and abroad,
foreign futures exchanges may follow trading, settlement, and margin procedures
that are different from those for U.S. exchanges. Futures contracts traded
outside the United States may not involve a clearing mechanism or related
guarantees and may involve greater risk of loss than U.S.-traded contracts,
including potentially greater risk of losses due to insolvency of a futures
broker, exchange member, or other party that may owe initial or variation margin
to a fund. Because initial and variation margin payments may be measured in
foreign currency, a futures contract traded outside the United States may also
involve the risk of foreign currency fluctuation.
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
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.
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.
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.
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.
Hybrid
and Preferred Securities. A hybrid security may be a debt security, warrant,
convertible security, certificate of deposit or other evidence of indebtedness
on which the value of the interest on or principal of which is determined by
reference to changes in the value of a reference instrument or financial
strength of a reference entity (e.g., a security or other financial instrument,
asset, currency, interest rate, commodity, index, or business entity such as a
financial institution). Another example is contingent convertible securities,
which are fixed income securities that, under certain circumstances, either
convert into common stock of the issuer or undergo a principal write-down by a
predetermined percentage if the issuer's capital ratio falls below a
predetermined trigger level. The liquidation value of such a security may be
reduced upon a regulatory action and without the need for a bankruptcy
proceeding. Preferred securities may take the form of preferred stock and
represent an equity or ownership interest in an issuer that pays dividends at a
specified rate and that has precedence over common stock in the payment of
dividends. In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds generally take precedence over the claims of those who
own preferred and common stock.
The
risks of investing in hybrid and preferred securities reflect a combination of
the risks of investing in securities, options, futures and currencies. An
investment in a hybrid or preferred security may entail significant risks that
are not associated with a similar investment in a traditional debt or equity
security. The risks of a particular hybrid or preferred security will depend
upon the terms of the instrument, but may include the possibility of significant
changes in the value of any applicable reference instrument. Such risks may
depend upon factors unrelated to the operations or credit quality of the issuer
of the hybrid or preferred security. Hybrid and preferred securities are
potentially more volatile and carry greater market and liquidity risks than
traditional debt or equity securities. Also, the price of the hybrid or
preferred security and any applicable reference instrument may not move in the
same direction or at the same time. In addition, because hybrid and preferred
securities may be traded over-the-counter or in bilateral transactions with the
issuer of the security, hybrid and preferred securities may be subject to the
creditworthiness of the counterparty of the security and their values may
decline substantially if the counterparty's creditworthiness deteriorates. In
addition, uncertainty regarding the tax and regulatory treatment of hybrid and
preferred securities may reduce demand for such securities and tax and
regulatory considerations may limit the extent of a fund's investments in
certain hybrid and preferred securities.
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, at times, grown
rapidly. 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.
Rating
services have, in the past, lowered their 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 rating
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.
Mortgage-indexed
securities, for example, could be structured to replicate the performance of
mortgage securities and the characteristics of direct ownership.
Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values of a
number of different foreign currencies relative to each other.
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. A Fidelity® fund will borrow through the program only
when the costs are equal to or lower than the costs of bank loans. A Fidelity®
fund will lend through the program only when the returns are higher than those
available from an investment in repurchase agreements. Interfund loans and
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. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
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.
Loans
and Other Direct Debt Instruments. Direct debt instruments are interests in
amounts owed by a corporate, governmental, or other borrower to lenders or
lending syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other parties. Direct debt
instruments involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the event of
fraud or misrepresentation, or there may be a requirement that a fund supply
additional cash to a borrower on demand. A fund may acquire loans by buying an
assignment of all or a portion of the loan from a lender or by purchasing a loan
participation from a lender or other purchaser of a participation. If permitted
by its investment policies, a fund also may originate or otherwise acquire loans
directly at the time of the loan's closing.
Lenders
and purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower and/or any collateral for payment of
interest and repayment of principal. If scheduled interest or principal payments
are not made, the value of the instrument may be adversely affected. Loans that
are fully secured provide more protections than an unsecured loan in the event
of failure to make scheduled interest or principal payments. However, there is
no assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be liquidated.
Indebtedness of borrowers whose creditworthiness is poor involves substantially
greater risks and may be highly speculative. Different types of assets may be
used as collateral for a fund's loans and there can be no assurance that a fund
will correctly evaluate the value of the assets collateralizing the fund's
loans. Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. In any
restructuring or bankruptcy proceedings relating to a borrower funded by a fund,
a fund may be required to accept collateral with less value than the amount of
the loan made by the fund to the borrower. Direct indebtedness of foreign
countries also involves a risk that the governmental entities responsible for
the repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Loans
and other types of direct indebtedness (which a fund may originate, acquire or
otherwise gain exposure to) may not be readily marketable and may be subject to
restrictions on resale. Some indebtedness may be difficult to dispose of readily
at what the Adviser believes to be a fair price. In addition, valuation of
illiquid indebtedness involves a greater degree of judgment in determining a
fund's net asset value than if that value were based on readily available market
quotations, and could result in significant variations in a fund's daily share
price. Some loan interests are traded among certain financial institutions and
accordingly may be deemed liquid. As the market for different types of
indebtedness develops, the liquidity of these instruments is expected to
improve.
Direct
lending and investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks. For
example, if a loan is foreclosed, the lender/purchaser could become part owner
of any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In the event of a default by the
borrower, a fund may have difficulty disposing of the assets used as collateral
for a loan. In addition, a purchaser could be held liable as a co-lender. Direct
debt instruments may also involve a risk of insolvency of the lending bank or
other intermediary.
A
loan is often administered by a bank or other financial institution that acts as
agent for all holders. The agent administers the terms of the loan, as specified
in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the purchaser has direct recourse against the borrower, the
purchaser may have to rely on the agent to apply appropriate credit remedies
against a borrower. If assets held by the agent for the benefit of a purchaser
were determined to be subject to the claims of the agent's general creditors,
the purchaser might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or interest.
Direct loans are typically not administered by an underwriter or agent bank. The
terms of direct loans are negotiated with borrowers in private transactions.
Direct loans are not publicly traded and may not have a secondary market.
A
fund may seek to dispose of loans in certain cases, to the extent possible,
through selling participations in the loan. In that case, a fund would remain
subject to certain obligations, which may result in expenses for a fund and
certain additional risks.
Direct
indebtedness may include letters of credit, revolving credit facilities, or
other standby financing commitments that obligate lenders/purchasers, including
a fund, to make additional cash payments on demand. These commitments may have
the effect of requiring a lender/purchaser to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be
repaid.
In
the process of originating, buying, selling and holding loans, a fund may
receive and/or pay certain fees. These fees are in addition to the interest
payments received and may include facility, closing or upfront fees, commitment
fees and commissions. A fund may receive or pay a facility, closing or upfront
fee when it buys or sells a loan. A fund may receive a commitment fee throughout
the life of the loan or as long as the fund remains invested in the loan (in
addition to interest payments) for any unused portion of a committed line of
credit. Other fees received by the fund may include prepayment fees, covenant
waiver fees, ticking fees and/or modification fees. Legal fees related to the
originating, buying, selling and holding loans may also be borne by the fund
(including legal fees to assess conformity of a loan investment with 1940 Act
provisions).
When
engaging in direct lending, if permitted by its investment policies, a fund's
performance may depend, in part, on the ability of the fund to originate loans
on advantageous terms. A fund may compete with other lenders in originating and
purchasing loans. Increased competition for, or a diminished available supply
of, qualifying loans could result in lower yields on and/or less advantageous
terms for such loans, which could reduce fund performance.
For
a Fidelity® fund that limits the amount of total assets that it will invest in
any one issuer or in issuers within the same industry, the fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the case
of loan participations where a bank or other lending institution serves as
financial intermediary between a fund and the borrower, if the participation
does not shift to the fund the direct debtor-creditor relationship with the
borrower, SEC interpretations require a fund, in appropriate circumstances, to
treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an issuer of
indebtedness may restrict a fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.
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.
If
permitted by its investment policies, a fund may also obtain exposure to the
lending activities described above indirectly through its investments in
underlying Fidelity® funds or other vehicles that may engage in such activities
directly.
Covenant-Lite
Obligations. A fund can invest in or be exposed to loans and other similar debt
obligations that are sometimes referred to as "covenant-lite" loans or
obligations (covenant-lite obligations), which are loans or other similar debt
obligations that lack financial maintenance covenants or possess fewer or
contingent financial maintenance covenants and other financial protections for
lenders and investors. In current market conditions, many new, restructured or
reissued loans and similar debt obligations do not feature traditional financial
maintenance covenants, which are intended to protect lenders and investors by
imposing certain restrictions and other limitations on a borrower's operations
or assets and by providing certain information and consent rights to lenders.
Covenant-lite obligations allow borrowers to exercise more flexibility with
respect to certain activities that may otherwise be limited or prohibited under
similar loan obligations that are not covenant-lite. In an investment with a
traditional financial maintenance covenant, the borrower is required to meet
certain regular, specific financial tests over the term of the investment;
however, in a covenant-lite obligation, the borrower would only be required to
satisfy certain financial tests at the time it proposes to take a specific
action or engage in a specific transaction (e.g., issuing additional debt,
paying a dividend, or making an acquisition) or at a time when another financial
criteria has been met (e.g., reduced availability under a revolving credit
facility, or asset value falling below a certain percentage of outstanding debt
obligations). In addition, in a traditional investment, the borrower is required
to provide certain periodic financial reporting that typically includes a
detailed calculation of various financial metrics; however, in a covenant-lite
obligation, certain detailed financial information is only required to be
provided when a financial metric is required to be calculated, which may result
in (i) more limited access to financial information, (ii) difficulty evaluating
the borrower's financial performance over time and/or (iii) delays in exercising
rights and remedies in the event of a significant financial decline. In
addition, in the event of default, covenant-lite obligations may exhibit
diminished recovery values as the lender may not have the opportunity to
negotiate with the borrower or take other measures intended to mitigate losses
prior to default. Accordingly, a fund may have fewer rights with respect to
covenant-lite obligations, including fewer protections against the possibility
of default and fewer remedies, and may experience losses or delays in enforcing
its rights on covenant-lite obligations. As a result, investments in or exposure
to covenant-lite obligations are generally subject to more risk than investments
that contain traditional financial maintenance covenants and financial reporting
requirements.
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.
Because
the risk of default is higher for lower-quality debt securities, research and
credit analysis are an especially important part of managing securities of this
type. Such analysis may focus on relative values based on factors such as
interest or dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer, in an attempt to identify
those issuers of high-yielding securities whose financial condition is adequate
to meet future obligations, has improved, or is expected to improve in the
future.
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.
Mortgage
Securities are issued by government and non-government entities such as banks,
mortgage lenders, or other institutions. A mortgage security is an obligation of
the issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Some mortgage securities, such as collateralized
mortgage obligations (or "CMOs"), make payments of both principal and interest
at a range of specified intervals; others make semi-annual interest payments at
a predetermined rate and repay principal at maturity (like a typical bond).
Mortgage securities are based on different types of mortgages, including those
on commercial real estate or residential properties. Stripped mortgage
securities are created when the interest and principal components of a mortgage
security are separated and sold as individual securities. In the case of a
stripped mortgage security, the holder of the "principal-only" security (PO)
receives the principal payments made by the underlying mortgage, while the
holder of the "interest-only" security (IO) receives interest payments from the
same underlying mortgage.
Fannie
Maes and Freddie Macs are pass-through securities issued by Fannie Mae and
Freddie Mac, respectively. Fannie Mae and Freddie Mac, which guarantee payment
of interest and repayment of principal on Fannie Maes and Freddie Macs,
respectively, are federally chartered corporations supervised by the U.S.
Government that act as governmental instrumentalities under authority granted by
Congress. Fannie Mae and Freddie Mac are authorized to borrow from the U.S.
Treasury to meet their obligations. Fannie Maes and Freddie Macs are not backed
by the full faith and credit of the U.S. Government.
The
value of mortgage securities may change due to shifts in the market's perception
of issuers and changes in interest rates. In addition, regulatory or tax changes
may adversely affect the mortgage securities market as a whole. Non-government
mortgage securities may offer higher yields than those issued by government
entities, but also may be subject to greater price changes than government
issues. Mortgage securities are subject to prepayment risk, which is the risk
that early principal payments made on the underlying mortgages, usually in
response to a reduction in interest rates, will result in the return of
principal to the investor, causing it to be invested subsequently at a lower
current interest rate. Alternatively, in a rising interest rate environment,
mortgage security values may be adversely affected when prepayments on
underlying mortgages do not occur as anticipated, resulting in the extension of
the security's effective maturity and the related increase in interest rate
sensitivity of a longer-term instrument. The prices of stripped mortgage
securities tend to be more volatile in response to changes in interest rates
than those of non-stripped mortgage securities.
A
fund may seek to earn additional income by using a trading strategy (commonly
known as "mortgage dollar rolls" or "reverse mortgage dollar rolls") that
involves selling (or buying) mortgage securities, realizing a gain or loss, and
simultaneously agreeing to purchase (or sell) mortgage securities on a later
date at a set price. During the period between the sale and repurchase in a
mortgage dollar roll transaction, a fund will not be entitled to receive
interest and principal payments on the securities sold but will invest the
proceeds of the sale in other securities that are permissible investments for
the fund. During the period between the purchase and subsequent sale in a
reverse mortgage dollar roll transaction, a fund is entitled to interest and
principal payments on the securities purchased. Losses may arise due to changes
in the value of the securities or if the counterparty does not perform under the
terms of the agreement. If the counterparty files for bankruptcy or becomes
insolvent, a fund's right to repurchase or sell securities may be limited. This
trading strategy may increase interest rate exposure and result in an increased
portfolio turnover rate which increases costs and may increase taxable
gains.
Real
Estate Investment Trusts (REITs). Equity REITs own real estate properties, while
mortgage REITs make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying property
of the trusts, the creditworthiness of the issuer, property taxes, interest
rates, and tax and regulatory requirements, such as those relating to the
environment. Both types of trusts are dependent upon management skill, are not
diversified, and are subject to heavy cash flow dependency, defaults by
borrowers, self-liquidation, and the possibility of failing to qualify for
tax-free status of income under the Internal Revenue Code and failing to
maintain exemption from the 1940 Act.
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
Lending. A Fidelity® fund may lend securities to parties such as broker-dealers
or other institutions, including an affiliate, National Financial Services LLC
(NFS). Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, earn additional income. The borrower provides the
fund with collateral in an amount at least equal to the value of the securities
loaned. The fund seeks to maintain the ability to obtain the right to vote or
consent on proxy proposals involving material events affecting securities
loaned. If the borrower defaults on its obligation to return the securities
loaned because of insolvency or other reasons, a fund could experience delays
and costs in recovering the securities loaned or in gaining access to the
collateral. These delays and costs could be greater for foreign securities. If a
fund is not able to recover the securities loaned, the fund may sell the
collateral and purchase a replacement investment in the market. The value of the
collateral could decrease below the value of the replacement investment by the
time the replacement investment is purchased. For a Fidelity® fund, loans will
be made only to parties deemed by the fund's adviser to be in good standing and
when, in the adviser's judgment, the income earned would justify the
risks.
The
Fidelity® funds have retained agents, including NFS, an affiliate of the funds,
to act as securities lending agent. If NFS acts as securities lending agent for
a fund, it is subject to the overall supervision of the fund's adviser, and NFS
will administer the lending program in accordance with guidelines approved by
the fund's Trustees.
Cash
received as collateral through loan transactions may be invested in other
eligible securities, including shares of a money market fund. Investing this
cash subjects that investment, as well as the securities loaned, to market
appreciation or depreciation.
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 such as mutual funds and ETFs,
represent interests in professionally managed portfolios that may invest in any
type of instrument. Investing in other investment companies (including
investment companies managed by the Adviser and its affiliates) 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, unless
such fees have been waived by the Adviser. 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.
Similarly, ETFs trade on a securities exchange and may trade at a premium or a
discount to their NAV.
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.
A
fund that seeks to track the performance of a particular index could invest in
investment companies that seek to track the performance of indexes other than
the index that the fund seeks to track.
Short
Sales "Against the Box" are short sales of securities that a fund owns or has
the right to obtain (equivalent in kind or amount to the securities sold short).
If a fund enters into a short sale against the box, it will be required to set
aside securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold such securities while the short sale is outstanding. A fund
will incur transaction costs, including interest expenses, in connection with
opening, maintaining, and closing short sales against the box.
Short
Sales. Stocks underlying a fund's convertible security holdings can be sold
short. For example, if a fund's adviser anticipates a decline in the price of
the stock underlying a convertible security held by the fund, it may sell the
stock short. If the stock price subsequently declines, the proceeds of the short
sale could be expected to offset all or a portion of the effect of the stock's
decline on the value of the convertible security. Fidelity® funds that employ
this strategy generally intend to hedge no more than 15% of total assets with
short sales on equity securities underlying convertible security holdings under
normal circumstances. A fund will incur transaction costs, including
interest expenses, in connection with opening, maintaining, and closing short
sales.
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.
Stripped
Securities are the separate income or principal components of a debt security.
The risks associated with stripped securities are similar to those of other debt
securities, although stripped securities may be more volatile, and the value of
certain types of stripped securities may move in the same direction as interest
rates. U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
Privately
stripped government securities are created when a dealer deposits a U.S.
Treasury security or other U.S. Government security with a custodian for
safekeeping. The custodian issues separate receipts for the coupon payments and
the principal payment, which the dealer then sells.
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 Advisor® Floating Rate High Income Fund reserves
the right to invest without limitation in investment-grade, money market, or
short-term debt instruments for temporary, defensive purposes.
Fidelity
Advisor® High Income Advantage Fund reserves the right to invest without
limitation in investment-grade securities for temporary, defensive
purposes.
Fidelity
Advisor® Value Fund reserves the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary, defensive
purposes.
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 funds 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 or money market funds. Any balances that
are not invested in repurchase agreements or money market funds remain in the
bank account overnight. Any risks associated with such an account are investment
risks of the funds. A 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
at least mid-2023. In addition, the United Kingdom Financial Conduct Authority
(FCA) has announced that it will require the publication of synthetic LIBOR for
the one-month, three-month and six-month U.S. Dollar LIBOR settings after June
30, 2023 through at least September 30, 2024. Although the transition process
away from IBORs has become increasingly well-defined, any potential effects of a
transition away from the IBORs on a fund and the financial instruments in which
it invests can be difficult to ascertain, 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. Moreover, certain
aspects of the transition from IBORs will rely on the actions of third-party
market participants, such as clearing houses, trustees, administrative agents,
asset servicers and certain service providers; the Adviser cannot guarantee the
performance of such market participants and any failure on the part of such
market participants to manage their part of the IBOR transition could impact a
fund. 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.
Warrants.
Warrants are instruments which entitle the holder to buy an equity security at a
specific price for a specific period of time. Changes in the value of a warrant
do not necessarily correspond to changes in the value of its underlying
security. The price of a warrant may be more volatile than the price of its
underlying security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants
do not entitle a holder to dividends or voting rights with respect to the
underlying security and do not represent any rights in the assets of the issuing
company. A warrant ceases to have value if it is not exercised prior to its
expiration date. These factors can make warrants more speculative than other
types of investments.
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 a 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 Contracts"), 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.
A
fund will not incur any commissions or sales charges when it invests in shares
of certain pooled investment vehicles (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 a fund for any fixed-income security, the price paid by a
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 each fund periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio securities
transactions on behalf of each fund. The Trustees also review the compensation
paid by each 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 a fund's portfolio
securities transactions. In selecting brokers, including affiliates of the
Adviser, to execute a 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
funds.
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 and/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 funds 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 and/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 uses 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 and/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 and/or its affiliates, viewed in terms of the particular transaction for
a 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 a 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 for 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 and 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 funds 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 a 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 and/or its affiliates have arrangements with certain
third-party research providers and brokers through whom the Adviser and/or its
affiliates effect fund trades, whereby the Adviser and/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 and/or its affiliates, at
times, will cause a fund to pay more for execution than the lowest commission
rate available from the broker providing research products and services to the
Adviser and/or its affiliates, or that may be available from another broker. The
Adviser's and/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
commission1. 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.
1The
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 a fund trades have been asked to
participate in brokerage commission recapture.
Affiliated
Transactions
The
Adviser or its affiliates place trades with certain brokers, including NFS,
through its Fidelity Capital Markets (FCM) division, and Kezar Trading LLC
(formerly Luminex Trading & Analytics LLC) (Kezar Trading), 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 funds 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 each 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 funds 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 each fund are substantially the same as those of
certain other Fidelity® funds, investment decisions for each 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 a fund is concerned. In other cases, however, the ability
of the funds to participate in volume transactions will produce better
executions and prices for the funds.
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
each of Fidelity Advisor® Floating Rate High Income Fund, Fidelity Advisor® High
Income Advantage Fund, and Fidelity Advisor® Value Fund, the following table
shows the fund's portfolio turnover rate for the fiscal period(s) ended October
31, 2023 and 2022. 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 |
2023 |
2022 |
Fidelity Advisor® Floating Rate High Income
Fund |
35% |
27% |
Fidelity Advisor® High Income Advantage
Fund |
29% |
29% |
Fidelity Advisor® Value Fund |
75% |
67% |
|
|
|
During
the fiscal year ended October 31, 2023, the following fund(s) held
securities issued by one or more of its regular brokers or dealers or a parent
company of its regular brokers or dealers. The following table shows the
aggregate value of the securities of the regular broker or dealer or parent
company held by a fund as of the fiscal year ended October 31, 2023.
Fund |
Regular
Broker or Dealer |
|
Aggregate Value of
Securities Held |
Fidelity Advisor® Floating Rate High Income
Fund |
Bank of America Corp. |
$ |
31,163,000 |
|
JPMorgan Chase & Co. |
$ |
27,212,000 |
Fidelity Advisor® High Income Advantage
Fund |
Bank of America Corp. |
$ |
26,852,000 |
|
Citigroup, Inc. |
$ |
31,833,000 |
|
JPMorgan Chase & Co. |
$ |
39,892,000 |
|
Goldman Sachs Group, Inc. |
$ |
15,595,000 |
Fidelity Advisor® Value Fund |
Goldman Sachs Group, Inc. |
$ |
547,878 |
|
UBS AG |
$ |
841,662 |
The
following table shows the total amount of brokerage commissions paid by the
following fund(s), comprising commissions paid on securities and/or futures
transactions, as applicable, for the fiscal year(s) ended October 31, 2023,
2022, and 2021. The total amount of brokerage commissions paid is stated as a
dollar amount and a percentage of the fund's average net assets.
Fund |
Fiscal Year
Ended |
|
Dollar
Amount |
Percentage
of
Average
Net Assets |
Fidelity
Advisor® Floating Rate High Income Fund |
2023 |
$ |
3,282 |
0.00% |
|
2022 |
$ |
2,271 |
0.00% |
|
2021 |
$ |
27,073 |
0.00% |
Fidelity
Advisor® High Income Advantage Fund |
2023 |
$ |
48,577 |
0.00% |
|
2022 |
$ |
85,342 |
0.00% |
|
2021 |
$ |
64,020 |
0.00% |
Fidelity
Advisor® Value Fund |
2023 |
$ |
240,949 |
0.07% |
|
2022 |
$ |
234,615 |
0.06% |
|
2021 |
$ |
134,465 |
0.07% |
The
table below shows the total amount of brokerage commissions paid by the
following fund(s) to an affiliated broker for the fiscal year(s) ended October
31, 2023, 2022, and 2021. The table also shows the approximate amount of
aggregate brokerage commissions paid by a fund to an affiliated broker as a
percentage of the approximate aggregate dollar amount of transactions for which
the fund paid brokerage commissions as well as the percentage of transactions
effected by a fund through an affiliated broker, in each case for the fiscal
year ended October 31, 2023. Affiliated brokers are paid on a commission
basis.
Fund(s) |
Fiscal Year Ended |
Broker |
Affiliated With |
C |
ommissions |
Percentage
of
Aggregate
Brokerage
Commissions |
Percentage
of
Aggregate
Dollar
Amount
of
Brokerage
Transactions |
Fidelity Advisor® Floating Rate High Income
Fund |
2023 |
FCM |
FMR LLC |
$ |
4 |
0.12% |
0.28% |
|
2023 |
Kezar Trading |
FMR LLC |
$ |
0 |
0.00% |
0.00% |
|
2022 |
FCM |
FMR LLC |
$ |
124 |
|
|
|
2022 |
Kezar Trading |
FMR LLC |
$ |
0 |
|
|
|
2021 |
FCM |
FMR LLC |
$ |
1,186 |
|
|
|
2021 |
Kezar Trading |
FMR LLC |
$ |
685 |
|
|
Fidelity Advisor® High Income Advantage
Fund |
2023 |
FCM(A) |
FMR LLC |
$ |
1,244 |
2.56% |
11.71% |
|
2023 |
Kezar Trading |
FMR LLC |
$ |
188 |
0.39% |
1.73% |
|
2022 |
FCM |
FMR LLC |
$ |
1,678 |
|
|
|
2022 |
Kezar Trading |
FMR LLC |
$ |
160 |
|
|
|
2021 |
FCM |
FMR LLC |
$ |
1,237 |
|
|
|
2021 |
Kezar Trading |
FMR LLC |
$ |
281 |
|
|
Fidelity Advisor® Value Fund |
2023 |
FCM(A) |
FMR LLC |
$ |
8,733 |
3.62% |
6.32% |
|
2023 |
Kezar Trading |
FMR LLC |
$ |
1,594 |
0.66% |
1.51% |
|
2022 |
FCM |
FMR LLC |
$ |
8,449 |
|
|
|
2022 |
Kezar Trading |
FMR LLC |
$ |
1,268 |
|
|
|
2021 |
FCM |
FMR LLC |
$ |
4,492 |
|
|
|
2021 |
Kezar Trading |
FMR LLC |
$ |
479 |
|
|
(A)The difference
between the percentage of aggregate brokerage commissions paid to, and the
percentage of the aggregate dollar amount of transactions effected through, an
affiliated broker is a result of the low commission rates charged by an
affiliated broker.
The following table shows the
dollar amount of brokerage commissions paid to firms that may have provided
research or brokerage services and the approximate dollar amount of the
transactions involved for the fiscal year ended October 31, 2023.
Fund |
Fiscal Year
Ended |
|
$ Amount of
Commissions
Paid to Firms
for Providing
Research or
Brokerage
Services |
|
$ Amount of
Brokerage
Transactions
Involved |
Fidelity Advisor® Floating Rate High Income
Fund |
2023 |
$ |
3,156 |
$ |
12,125,327 |
Fidelity Advisor® High Income Advantage
Fund |
2023 |
$ |
39,358 |
$ |
189,425,322 |
Fidelity Advisor® Value Fund |
2023 |
$ |
184,391 |
$ |
430,086,119 |
The
following table shows the brokerage commissions that were allocated for research
or brokerage services for the twelve-month period ended September 30,
2023.
Fund |
Twelve Month
Period Ended |
|
$ Amount of
Commissions
Allocated
for Research
or
Brokerage
Services(A) |
Fidelity
Advisor® Floating Rate High Income Fund |
September 30, 2023 |
$ |
494 |
Fidelity
Advisor® High Income Advantage Fund |
September 30, 2023 |
$ |
7,808 |
Fidelity
Advisor® Value Fund |
September 30, 2023 |
$ |
40,541 |
(A)
The staff of the SEC addressed concerns that reliance on an RPA mechanism
to pay for research would not be deemed a "commission" for purposes of
Section 28(e) by indicating that they would not recommend enforcement
against investment advisers who used an RPA to pay for research and
brokerage 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.
|
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 each 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. If an underlying fund's NAV is
unavailable, shares of that underlying fund will be fair valued in good faith by
the Committee in accordance with applicable fair value pricing policies.
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:
Most
equity securities are valued at the official closing price or the last reported
sale price or, if no sale has occurred, at the last quoted bid price on the
primary market or exchange on which they are traded.
Debt
securities and other assets for which market quotations are readily available
may be valued at market values in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or assets. Or,
debt securities and convertible securities may be 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.
Short-term
securities with remaining maturities of sixty days or less for which market
quotations and information furnished by a pricing service are not readily
available may be valued at amortized cost, which approximates current
value.
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.
Foreign
securities and instruments are valued in their local currency following the
methodologies described above. Foreign securities, instruments and currencies
are translated to U.S. dollars, based on foreign currency exchange rate
quotations supplied by a pricing service as of the close of the New York Stock
Exchange (NYSE), which uses a proprietary model to determine the exchange rate.
Forward foreign currency exchange contracts are valued at an interpolated rate
based on days to maturity between the closest preceding and subsequent
settlement period reported by the third party pricing service.
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 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.
Each
fund's adviser reports to the Board information regarding the fair valuation
process and related material matters.
BUYING, SELLING, AND EXCHANGING
INFORMATION
A
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
Fidelity Management & Research Company LLC 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.
Each
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. A fund will accept for in-kind
purchases only securities or other instruments that are appropriate under its
investment objective and policies. In addition, a 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.
A
fund may also effect redemptions in-kind in an effort to manage cash positions
and/or to offset certain costs that arise from significant redemption activity
or from portfolio turnover in connection with any type of selling activity,
including portfolio repositioning and cash raises (e.g., for distributions or
redemptions). This practice may benefit a fund and its shareholders by reducing
the need for a fund to maintain significant cash reserves and/or to sell
securities held in the fund to meet redemption requests or for other selling
activities and, in so doing, avoid or reduce cash drag, transaction costs and
capital gain realization that could otherwise arise from reserves maintained or
securities sold. There is a risk that this activity could negatively impact the
market value of the securities redeemed in-kind and, in turn, the NAV of the
fund.
With
respect to these redemptions in-kind, shareholders will receive either a pro
rata basket or a custom basket of securities valued as they are for purposes of
computing a fund's NAV. The custom basket includes only securities that have
been disclosed in the fund's most recent public holdings disclosure.
In
addition to the exchange privileges listed in each fund's prospectus, each 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.
Each
fund may terminate or modify its exchange privileges in the future.
Dividends.
A portion of each fund's income may qualify for the dividends-received deduction
available to corporate shareholders. A portion of each fund's dividends, when
distributed to individual shareholders, may qualify for taxation at long-term
capital gains rates (provided certain holding period requirements are met).
Dividends from each bond fund generally will not qualify for the long-term
capital gains tax rates available to individuals. Short-term capital gains are
taxable at ordinary income tax rates. Distributions by a fund to tax-advantaged
retirement plan accounts are not taxable currently (but you may be taxed later,
upon withdrawal of your investment from such account).
Capital
Gain Distributions. Unless your shares of a fund are held in a tax-advantaged
retirement plan, each fund's long-term capital gain distributions are federally
taxable to shareholders generally as capital gains.
The
following table shows a fund's aggregate capital loss carryforward as of October
31, 2023, 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
Advisor® Floating Rate High Income Fund |
$ |
1,118,660,032 |
Fidelity
Advisor® High Income Advantage Fund |
$ |
37,333,419 |
Fidelity
Advisor® Value Fund |
$ |
10,226,721 |
Returns
of Capital. If a 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
Tax Credit or Deduction. Foreign governments may impose withholding taxes on
dividends and interest earned by a fund with respect to foreign securities held
directly by a fund. Foreign governments may also impose taxes on other payments
or gains with respect to foreign securities held directly by a fund. Because
each fund does not currently anticipate that securities of foreign issuers or
underlying regulated investment companies will constitute more than 50% of its
total assets at the end of its fiscal year, or fiscal quarter, respectively,
shareholders should not expect to be eligible to claim a foreign tax credit or
deduction on their federal income tax returns with respect to foreign taxes
withheld.
Tax
Status of the Funds. Each 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, each 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 each 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 a 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 a fund is suitable to their particular tax situation.
The
Trustees, Members of the Advisory Board (if any), and officers of the trust and
funds, as applicable, are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The Trustees
are experienced executives who meet periodically throughout the year to oversee
each fund's activities, review contractual arrangements with companies that
provide services to each fund, oversee management of the risks associated with
such activities and contractual arrangements, and review each fund's
performance. Except for Vijay Advani, each of the Trustees oversees 322 funds.
Mr. Advani oversees 215 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 funds 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 each 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 funds, is provided below.
Board
Structure and Oversight Function. Robert A. Lawrence is an interested person and
currently serves as Chair. The Trustees have determined that an interested Chair
is appropriate and benefits shareholders because an interested Chair has a
personal and professional stake in the quality and continuity of services
provided to the funds. Independent Trustees exercise their informed business
judgment to appoint an individual of their choosing to serve as Chair,
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
Chair 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. David M. Thomas serves as Lead Independent Trustee 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 funds' Board oversees
Fidelity's high income and certain equity funds, and other Boards oversee
Fidelity's alternative investment, investment-grade bond, money market, asset
allocation, and other equity funds. The asset allocation funds may invest in
Fidelity® funds overseen by the funds' Board. 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, each fund,
and fund shareholders and to facilitate compliance with legal and regulatory
requirements and oversight of the funds' 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 funds' 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 funds are
carried out by or through FMR, its affiliates, and other service providers, the
funds' 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 funds' activities,
oversight is exercised primarily through the Operations, Audit, and Compliance
Committees. Appropriate personnel, including but not limited to the funds' Chief
Compliance Officer (CCO), FMR's internal auditor, the independent accountants,
the funds' 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+
Bettina
Doulton (1964)
Year of Election or
Appointment: 2020
Trustee
Ms. Doulton also serves
as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served
in a variety of positions at Fidelity Investments, including as a managing
director of research (2006-2007), portfolio manager to certain Fidelity® funds
(1993-2005), equity analyst and portfolio assistant (1990-1993), and research
assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders +
Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of
the Board of Brown Capital Management, LLC (2014-2018).
Robert
A. Lawrence (1952)
Year of Election or
Appointment: 2020
Trustee
Chair of the Board of
Trustees
Mr. Lawrence also serves
as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee
and Member of the Advisory Board of certain funds. Prior to his retirement
in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds
(2006-2008), Senior Vice President, Head of High Income Division of Fidelity
Management & Research Company (investment adviser firm, 2006-2008), and
President of Fidelity Strategic Investments (investment adviser firm,
2002-2005).
*
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 each 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+
Vijay C.
Advani (1960)
Year of Election or
Appointment: 2023
Trustee
Mr. Advani also serves
as Trustee or Member of the Advisory Board of other funds. Previously, Mr.
Advani served as Executive Chairman (2020-2022), Chief Executive Officer
(2017-2020) and Chief Operating Officer (2016-2017) of Nuveen (global investment
manager). He also served in various capacities at Franklin Resources (global
investment manager), including Co-President (2015-2016), Executive Vice
President, Global Advisory Services (2008-2015), Head of Global Retail
Distribution (2005-2008), Executive Managing Director, International Retail
Development (2002-2005), Managing Director, Product Developments, Sales &
Marketing, Asia, Eastern Europe and Africa (2000-2002) and President, Templeton
Asset Management India (1995-2000). Mr. Advani also served as Senior Investment
Officer of International Finance Corporation (private equity and venture capital
arm of The World Bank, 1984-1995). Mr. Advani is Chairman Emeritus of the U.S.
India Business Council (2018-present), a Director of The Global Impact Investing
Network (2019-present), a Director of LOK Capital (Mauritius) (2022-present), a
member of the Advisory Council of LOK Capital (2022-present), a Senior Advisor
of Neuberger Berman (2021-present), a Senior Advisor of Seviora Holdings Pte.
Ltd (Temasek-Singapore) (2021-present), a Director of Seviora Capital
(Singapore) (2021-present) and an Advisor of EQUIAM (2021-present). Mr. Advani
formerly served as a member of the Board of BowX Acquisition Corp. (special
purpose acquisition company, 2020-2021), a member of the Board of Intellecap
(advisory arm of The Aavishkaar Group, 2018-2020), a member of the Board of
Nuveen Investments, Inc. (2017-2020) and a member of the Board of Docusign
(software, 2016-2019).
Thomas
P. Bostick (1956)
Year of Election or
Appointment: 2021
Trustee
Lieutenant General
Bostick also serves as Trustee of other Fidelity® funds. Prior to his
retirement, General Bostick (United States Army, Retired) held a variety of
positions within the U.S. Army, including Commanding General and Chief of
Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff
and Director of Human Resources, U.S. Army (2009-2012). General Bostick
currently serves as a member of the Board and Finance and Governance &
Sustainability Committees of CSX Corporation (transportation, 2020-present) and
a member of the Board and Corporate Governance and Nominating Committee of
Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present).
General Bostick serves as Chief Executive Officer of Bostick Global Strategies,
LLC (consulting, 2016-present), as a member of the Board of HireVue, Inc. (video
interview and assessment, 2020-present), as a member of the Board of Allonnia
(biotechnology and engineering solutions, 2022-present) and on the Advisory
Board of Solugen, Inc. (specialty bio-based chemicals manufacturer,
2022-present). Previously, General Bostick served as a Member of the Advisory
Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering
(2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of
the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical
company).
Dennis
J. Dirks (1948)
Year of Election or
Appointment: 2005
Trustee
Mr. Dirks also serves as
Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks
served as Chief Operating Officer and as a member of the Board of The Depository
Trust & Clearing Corporation (financial markets infrastructure), President,
Chief Operating Officer and a member of the Board of The Depository Trust
Company (DTC), President and a member of the Board of the National Securities
Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board
of the Government Securities Clearing Corporation and Chief Executive Officer
and a member of the Board of the Mortgage-Backed Securities Clearing
Corporation. Mr. Dirks currently serves as a member of the Finance Committee
(2016-present) and Board (2017-present) and is Treasurer (2018-present) of the
Asolo Repertory Theatre.
Donald
F. Donahue (1950)
Year of Election or
Appointment: 2018
Trustee
Mr. Donahue also serves
as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief
Executive Officer of Miranda Partners, LLC (risk consulting for the financial
services industry, 2012-present). Previously, Mr. Donahue served as Chief
Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing
Director, Customer Marketing and Development (1999-2003) of The Depository Trust
& Clearing Corporation (financial markets infrastructure). Mr. Donahue
currently serves as a member (2007-present) and Co-Chairman (2016-present) of
the Board of United Way of New York. Mr. Donahue previously served as a member
of the Advisory Board of certain Fidelity® funds (2015-2018) and as a member of
the Board of The Leadership Academy (previously NYC Leadership Academy)
(2012-2022).
Vicki L.
Fuller (1957)
Year of Election or
Appointment: 2020
Trustee
Ms. Fuller also serves
as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member
of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment
Officer of the New York State Common Retirement Fund (2012-2018) and held a
variety of positions at AllianceBernstein L.P. (global asset management,
1985-2012), including Managing Director (2006-2012) and Senior Vice President
and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a
member of the Board, Audit Committee and Nominating and Governance Committee of
two Blackstone business development companies (2020-present), as a member of the
Board of Treliant, LLC (consulting, 2019-present), as a member of the Board of
Ariel Alternatives, LLC (private equity, 2022-present) and as a member of the
Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present).
In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt
University (2019-present) and as a member of the Executive Board of New York
University's Stern School of Business. Ms. Fuller previously served as a member
of the Board, Audit Committee and Nominating and Governance Committee of The
Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia
L. Kampling (1959)
Year of Election or
Appointment: 2020
Trustee
Ms. Kampling also serves
as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling
served as Chairman of the Board and Chief Executive Officer (2012-2019),
President and Chief Operating Officer (2011-2012) and Executive Vice President
and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms.
Kampling currently serves as a member of the Board, Finance Committee and
Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities
company, 2020-present) and as a member of the Board, Audit, Finance and Risk
Committee and Safety, Environmental, Technology and Operations Committee and
Chair of the Executive Development and Compensation Committee of American Water
Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling
currently serves as a member of the Board of the Nature Conservancy, Wisconsin
Chapter (2019-present). Previously, Ms. Kampling served as a Member of the
Advisory Board of certain Fidelity® funds (2020), a member of the Board,
Compensation Committee and Executive Committee and Chair of the Audit Committee
of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the
Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and
Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and
as a member of the Board and Workforce Development Committee of the Business
Roundtable (2018-2019).
Thomas
A. Kennedy (1955)
Year of Election or
Appointment: 2021
Trustee
Mr. Kennedy also
serves as Trustee of other Fidelity® funds. Previously,
Mr. Kennedy served as a Member of the Advisory Board of certain
Fidelity® funds (2020) and held a variety of positions at Raytheon Company
(aerospace and defense, 1983-2020), including Chairman and Chief Executive
Officer (2014-2020) and Executive Vice President and Chief Operating Officer
(2013-2014). Mr. Kennedy served as Executive Chairman of the Board of
Directors of Raytheon Technologies Corporation (aerospace and defense,
2020-2021). Mr. Kennedy serves as a Director of the Board of Directors of
Textron Inc. (aerospace and defense, 2023-present).
Oscar
Munoz (1959)
Year of Election or
Appointment: 2021
Trustee
Mr. Munoz also serves as
Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as
Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President
(2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings,
Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc.
(commercial real estate, 2020-present), a member of the Board of Univision
Communications, Inc. (Hispanic media, 2020-present), a member of the Board of
Archer Aviation Inc. (2021-present), a member of the Defense Business Board of
the United States Department of Defense (2021-present) and a member of the Board
of Salesforce.com, Inc. (cloud-based software, 2022-present). Previously, Mr.
Munoz served as a Member of the Advisory Board of certain Fidelity® funds
(2021).
David M.
Thomas (1949)
Year of Election or
Appointment: 2008
Trustee
Lead Independent
Trustee
Mr. Thomas also serves
as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive
Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS
Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas
currently serves as a member of the Board of Fortune Brands Home and Security
(home and security products, 2004-present) and as Director (2013-present) and
Non-Executive Chairman of the Board (2022-present) of Interpublic Group of
Companies, Inc. (marketing communication).
Susan
Tomasky (1953)
Year of Election or
Appointment: 2020
Trustee
Ms. Tomasky also serves
as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served
in various executive officer positions at American Electric Power Company, Inc.
(1998-2011), including most recently as President of AEP Transmission
(2007-2011). Ms. Tomasky currently serves as a member of the Board and
Sustainability Committee and as Chair of the Audit Committee of Marathon
Petroleum Corporation (2018-present) and as a member of the Board, Executive
Committee, Corporate Governance Committee and Organization and Compensation
Committee and as Lead Director of the Board of Public Service Enterprise Group,
Inc. (utilities company, 2012-present) and as a member of the Board of its
subsidiary company, Public Service Electric and Gas Co. (2021-present). In
addition, Ms. Tomasky currently serves as a member (2009-present) and President
(2020-present) of the Board of the Royal Shakespeare Company - America
(2009-present), as a member of the Board of the Columbus Association for the
Performing Arts (2011-present) and as a member of the Board and Kenyon in the
World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served
as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member
of the Board of the Columbus Regional Airport Authority (2007-2020), as a member
of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor
Corporation (previously Tesoro Corporation) (independent oil refiner and
marketer) and as a member of the Board of Summit Midstream Partners LP (energy,
2012-2018).
Michael
E. Wiley (1950)
Year of Election or
Appointment: 2018
Trustee
Mr. Wiley also serves as
Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of
the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President
and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also
previously served as a member of the Board of Andeavor Corporation (independent
oil refiner and marketer, 2005-2018), a member of the Board of Andeavor
Logistics LP (natural resources logistics, 2015-2018) and a member of the Board
of High Point Resources (exploration and production, 2005-2020).
+
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 each 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 or Peter S. Lynch may be sent to Fidelity Investments,
245 Summer Street, Boston, Massachusetts 02210.
Name,
Year of Birth; Principal Occupation
Peter S.
Lynch (1944)
Year of Election or
Appointment: 2003
Member of the Advisory
Board
Mr. Lynch also serves as
a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice
Chairman and a Director of Fidelity Management & Research Company LLC
(investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston
College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr.
Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment
adviser firm) and on the Special Olympics International Board of Directors
(1997-2006).
Karen B.
Peetz (1955)
Year of Election or
Appointment: 2023
Member of the Advisory
Board
Ms. Peetz also serves as
a Member of the Advisory Board of other funds. Previously, Ms. Peetz served as
Chief Administration Officer (2020-2023) of Citigroup Inc. (a diversified
financial service company). She also served in various capacities at Bank of New
York Mellon Corporation, including President (2013-2016), Vice Chairman, Senior
Executive Vice President and Chief Executive Officer of Financial Markets &
Treasury Services (2010-2013), Senior Executive Vice President and Chief
Executive Officer of Global Corporate Trust (2003-2008), Senior Vice President
and Division Manager of Global Payments & Trade Services (2002-2003) and
Senior Vice President and Division Manager of Domestic Corporate Trust
(1998-2002). Ms. Peetz also served in various capacities at Chase Manhattan
Corporation (1982-1998), including Senior Vice President and Manager of
Corporate Trust International Business (1996-1998), Managing Director and
Manager of Corporate Trust Services (1994-1996) and Managing Director and Group
Manager of Financial Institution Sales (1990-1993). Ms. Peetz currently serves
as Chair of Amherst Holdings Advisory Council (2018-present), Trustee of Johns
Hopkins University (2016-present), Chair of the Carey Business School Advisory
Council, Member of the Johns Hopkins Medicine Board and Finance Committee and
Chair of the Lyme and Tick Related Disease Institute Advisory Council. Ms. Peetz
previously served as a member of the Board of Guardian Life Insurance Company of
America (2019-2023), a member of the Board of Trane Technologies (2018-2022), a
member of the Board of Wells Fargo Corp. (2017-2019), a member of the Board of
SunCoke Energy Inc. (2012-2016), a member of the Board of Private Export Funding
Corporation (2010-2016) and as a Trustee of Penn State University (2010-2014)
and the United Way of New York City (2008-2010).
Heather
Bonner (1977)
Year of Election or
Appointment: 2023
Assistant
Treasurer
Ms. Bonner also serves
as an officer of other funds. Ms. Bonner is a Senior Vice President
(2022-present) and is an employee of Fidelity Investments (2022-present). Ms.
Bonner serves as Vice President, Treasurer, or Assistant Treasurer of
certain Fidelity entities. Prior to joining Fidelity, Ms. Bonner served as
Managing Director at AQR Capital Management (2013-2022) and was the Treasurer
and Principal Financial Officer of the AQR Funds (2013-2022).
Craig S.
Brown (1977)
Year of Election or
Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as
an officer of other funds. Mr. Brown is a Vice President (2015-present) and is
an employee of Fidelity Investments. Mr. Brown serves as Assistant Treasurer of
FIMM, LLC (2021-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 is Head of Fidelity Fund and
Investment Operations (2018-present) and is an employee of Fidelity Investments.
Mr. Burke serves as President, Executive Vice President, or Director of certain
Fidelity entities. Previously Mr. Burke served as head of Asset Management
Investment Operations (2012-2018).
Margaret
Carey (1973)
Year of Election or
Appointment: 2023
Secretary and Chief
Legal Officer (CLO)
Ms. Carey also serves as
an officer of other funds and as CLO of certain Fidelity entities. Ms. Carey is
a Senior Vice President, Deputy General Counsel (2019-present) and is an
employee of Fidelity Investments.
William
C. Coffey (1969)
Year of Election or
Appointment: 2019
Assistant
Secretary
Mr. Coffey also serves
as Assistant Secretary of other funds. Mr. Coffey is a Senior Vice President,
Deputy General Counsel (2010-present) and is an employee of Fidelity
Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds
(2018-2019); CLO, Secretary, or Senior Vice President of certain Fidelity
entities and Assistant Secretary of certain funds (2009-2018).
Timothy
M. Cohen (1969)
Year of Election or
Appointment: 2018
Vice President
Mr. Cohen also serves as
Vice President of other funds. Mr. Cohen is Co-Head of Equity (2018-present) and
is an employee of Fidelity Investments. Mr. Cohen serves a Director of Fidelity
Management & Research (Japan) Limited (investment adviser firm,
2016-present). Previously, Mr. Cohen served as Executive Vice President of
Fidelity SelectCo, LLC (2019) and Head of Global Equity Research (2016-2018).
Jonathan
Davis (1968)
Year of Election or
Appointment: 2010
Assistant
Treasurer
Mr. Davis also serves as
an officer of other funds. Mr. Davis is a Vice President (2006-present) and is
an employee of Fidelity Investments. Mr. Davis serves as Assistant Treasurer of
certain Fidelity entities.
Laura M.
Del Prato (1964)
Year of Election or
Appointment: 2018
Assistant
Treasurer
Ms. Del Prato also
serves as an officer of other funds. Ms. Del Prato is a Senior Vice President
(2017-present) and is an employee of Fidelity Investments. Ms. Del Prato serves
as Vice President or Assistant Treasurer of certain Fidelity entities.
Previously, Ms. Del Prato served as President and Treasurer of The North
Carolina Capital Management Trust: Cash Portfolio and Term Portfolio
(2018-2020).
Colm A.
Hogan (1973)
Year of Election or
Appointment: 2020
Assistant
Treasurer
Mr. Hogan also serves as
an officer of other funds. Mr. Hogan is a Vice President (2016-present) and is
an employee of Fidelity Investments. Mr. Hogan serves as Assistant Treasurer of
certain Fidelity entities. Previously, Mr. Hogan served as Deputy Treasurer of
certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity®
funds (2016-2018).
Pamela
R. Holding (1964)
Year of Election or
Appointment: 2018
Vice President
Ms. Holding also serves
as Vice President of other funds. Ms. Holding is Co-Head of Equity
(2018-present) and is an employee of Fidelity Investments. Previously, Ms.
Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and
as Chief Investment Officer of Fidelity Institutional Asset Management
(2013-2018).
Chris
Maher (1972)
Year of Election or
Appointment: 2020
Deputy Treasurer
Mr. Maher also
serves as an officer of other funds. Mr. Maher is a Vice President
(2008-present) and is an employee of Fidelity Investments. Mr. Maher serves as
Assistant Treasurer of certain Fidelity entities. Previously, Mr. Maher served
as Assistant Treasurer of certain funds (2013-2020).
Jason P.
Pogorelec (1975)
Year of Election or
Appointment: 2020
Chief Compliance
Officer
Mr. Pogorelec also
serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a Senior
Vice President of Asset Management Compliance (2020-present) and is an employee
of Fidelity Investments. Mr. Pogorelec serves as Compliance Officer of Fidelity
Management & Research Company LLC (investment adviser firm, 2023-present)
and Ballyrock Investment Advisors LLC (2023-present). Previously, Mr. Pogorelec
served as a Vice President, Associate General Counsel for Fidelity Investments
(2010-2020) and Assistant Secretary of certain Fidelity® funds
(2015-2020).
Brett
Segaloff (1972)
Year of Election or
Appointment: 2021
Anti-Money Laundering
(AML) Officer
Mr. Segaloff also serves
as AML Officer of other funds. Mr. Segaloff is a Vice President (2022-present)
and is an employee of Fidelity Investments. Mr. Segaloff serves as Anti Money
Laundering Compliance Officer or Anti Money Laundering/Bank Secrecy Act
Compliance Officer of certain Fidelity entities.
Stacie
M. Smith (1974)
Year of Election or
Appointment: 2016
President and
Treasurer
Ms. Smith also serves as
an officer of other funds. Ms. Smith is a Senior Vice President (2016-present)
and is an employee of Fidelity Investments. Ms. Smith serves as Assistant
Treasurer of certain Fidelity entities and has served in other fund officer
roles.
Jim
Wegmann (1979)
Year of Election or
Appointment: 2019
Assistant
Treasurer
Mr. Wegmann also serves
as an officer of other funds. Mr. Wegmann is a Vice President (2016-present) and
is an employee of Fidelity Investments. Mr. Wegmann serves as Assistant
Treasurer of FIMM, LLC (2021-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 9 standing committees. The members of each committee are
Independent Trustees. Advisory Board members may be invited to attend meetings
of the committees.
The
Operations Committee is composed of all of the Independent Trustees, with Mr.
Thomas currently serving as Chair and Mr. Wiley serving as Vice Chair. The
committee serves as a forum for consideration of issues of importance to, or
calling for particular determinations by, the Independent Trustees. The
committee also considers matters involving potential conflicts of interest
between the funds and FMR and its affiliates and reviews proposed contracts and
the proposed continuation of contracts between the funds and FMR and its
affiliates, and reviews and makes recommendations regarding contracts with third
parties unaffiliated with FMR, including insurance coverage and custody
agreements. The committee also monitors additional issues including the nature,
levels and quality of services provided to shareholders and significant
litigation. The committee also has oversight of compliance issues not
specifically within the scope of any other committee. The committee is also
responsible for definitive action on all compliance matters involving the
potential for significant reimbursement by FMR.
The
Fair Value Oversight Committee is composed of Mses. Fuller (Chair) and Tomasky,
and Messrs. Donahue and Wiley. The Fair Value Oversight Committee oversees the
valuation of fund investments by the valuation designee, receives and reviews
related reports and information, and monitors matters of disclosure to the
extent required to fulfill its statutory responsibilities.
The
Board of Trustees has established two Fund Oversight Committees: the Equity I
Committee (composed of Ms. Tomasky (Chair) and Messrs. Bostick, Donahue,
and Thomas) and the Equity II Committee (composed of Messrs. Kennedy (Chair),
Dirks, Munoz, and Wiley, and Mses. Fuller and Kampling). Each committee develops
an understanding of and reviews the investment objectives, policies, and
practices of each fund under its oversight. Each committee also monitors
investment performance, compliance by each relevant fund with its investment
policies and restrictions and reviews appropriate benchmarks, competitive
universes, unusual or exceptional investment matters, the personnel and other
resources devoted to the management of each fund and all other matters bearing
on each fund's investment results. Each committee will review and recommend any
required action to the Board in respect of specific funds, including new funds,
changes in fundamental and non-fundamental investment policies and restrictions,
partial or full closing to new investors, fund mergers, fund name changes, and
liquidations of funds. The members of each committee may organize working groups
to make recommendations concerning issues related to funds that are within the
scope of the committee's review. These working groups report to the committee or
to the Independent Trustees, or both, as appropriate. Each working group may
request from FMR such information from FMR as may be appropriate to the working
group's deliberations.
The
Shareholder, Distribution, Brokerage and Proxy Voting Committee is composed of
Mses. Kampling (Chair) and Fuller and Messrs. Dirks and Thomas. Regarding
shareholder services, the committee considers the structure and amount of the
funds' transfer agency fees and fees, including direct fees to investors (other
than sales loads), such as bookkeeping and custodial fees, and the nature and
quality of services rendered by FMR and its affiliates or third parties (such as
custodians) in consideration of these fees. The committee also considers other
non-investment management services rendered to the funds by FMR and its
affiliates, including pricing and bookkeeping services. The committee monitors
and recommends policies concerning the securities transactions of the funds,
including brokerage. The committee periodically reviews the policies and
practices with respect to efforts to achieve best execution, commissions paid to
firms supplying research and brokerage services or paying fund expenses, and
policies and procedures designed to assure that any allocation of portfolio
transactions is not influenced by the sale of fund shares. The committee also
monitors brokerage and other similar relationships between the funds and firms
affiliated with FMR that participate in the execution of securities
transactions. Regarding the distribution of fund shares, the committee considers
issues bearing on the various distribution channels employed by the funds,
including issues regarding Rule 18f-3 plans and related consideration of classes
of shares, sales load structures (including breakpoints), load waivers, selling
concessions and service charges paid to intermediaries, Rule 12b-1 plans,
contingent deferred sales charges, and finder's fees, and other means by which
intermediaries are compensated for selling fund shares or providing shareholder
servicing, including revenue sharing. The committee also considers issues
bearing on the preparation and use of advertisements and sales literature for
the funds, policies and procedures regarding frequent purchase of fund shares,
and selective disclosure of portfolio holdings. Regarding proxy voting, the
committee reviews the fund's proxy voting policies, considers changes to the
policies, and reviews the manner in which the policies have been applied. The
committee will receive reports on the manner in which proxy votes have been cast
under the proxy voting policies and reports on consultations between the fund's
investment advisers and portfolio companies concerning matters presented to
shareholders for approval. The committee will address issues relating to the
fund's annual voting report filed with the SEC. The committee will receive
reports concerning the implementation of procedures and controls designed to
ensure that the proxy voting policies are implemented in accordance with their
terms. The committee will consider FMR's recommendations concerning certain
non-routine proposals not covered by the proxy voting policies. The committee
will receive reports with respect to steps taken by FMR to assure that proxy
voting has been done without regard to any other FMR relationships, business or
otherwise, with that portfolio company. The committee will make recommendations
to the Board concerning the casting of proxy votes in circumstances where FMR
has determined that, because of a conflict of interest, the proposal to be voted
on should be reviewed by the Board.
The
Audit Committee is composed of Messrs. Donahue (Chair), Bostick, and Kennedy,
and Ms. Tomasky. All committee members must be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement. At least one committee member will be an
"audit committee financial expert" as defined by the SEC. 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' independent auditors, and with the funds' CCO. The
committee has direct responsibility for the appointment, compensation, and
oversight of the work of the independent auditors employed by the funds. The
committee assists the Trustees in fulfilling their responsibility to oversee:
(i) the systems relating to internal control over financial reporting of the
funds and the funds' service providers; (ii) the funds' auditors and the annual
audits of the funds' financial statements; (iii) the financial reporting
processes of the funds; (iv) the handling of whistleblower reports relating to
internal accounting and/or financial control matters; (v) the accounting
policies and disclosures of the funds; and (vi) studies of fund profitability
and other comparative analyses relevant to the board's consideration of the
investment management contracts for the funds. The committee considers and acts
upon (i) the provision by any independent auditor of any non-audit services for
any fund, and (ii) the provision by any independent 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. In furtherance of the foregoing, the committee has
adopted (and may from time to time amend or supplement) and provides oversight
of policies and procedures for non-audit engagements by independent auditors of
the funds. The committee is responsible for approving all audit engagement fees
and terms for the funds and for resolving disagreements between a fund and any
independent 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 independent 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 will discuss regularly and oversee the review of
internal controls of and the management of risks by the funds and their service
providers with respect to accounting and financial matters (including financial
reporting relating to the funds), including a review of: (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control 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 control over financial reporting.
The committee will also review periodically the funds' major exposures relating
to internal control over financial reporting and the steps that have been taken
to monitor and control such exposures. In connection to such reviews the
committee will receive periodic reports on the funds' service providers'
internal control over financial reporting. It 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 Compliance
Committee or the Operations Committee. The Chair of the Audit Committee will
coordinate with the Chairs of other committees, as appropriate. The committee
reviews at least annually a report from each independent 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, will discuss with FMR, the funds'
Treasurer, independent 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' Treasurer,
independent auditor, and internal audit personnel of FMR LLC and, as
appropriate, legal counsel the results of audits of the funds' financial
statements.
The
Governance and Nominating Committee is composed of Messrs. Thomas (Chair),
Dirks, and Wiley. 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 reviews the
performance of legal counsel employed by the funds and the Independent Trustees.
On behalf of the Independent Trustees, the committee will make such findings and
determinations as to the independence of counsel for the Independent Trustees as
may be necessary or appropriate under applicable regulations or otherwise. The
committee is also responsible for Board administrative matters applicable to
Independent Trustees, such as expense reimbursement policies and compensation
for attendance at meetings, conferences and other events. The committee monitors
compliance with, acts as the administrator of, and makes determinations in
respect of, the provisions of the code of ethics and any supplemental policies
regarding personal securities transactions applicable to the Independent
Trustees. The committee monitors 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 "best practices" in corporate governance, and other
developments in mutual fund governance. The committee reports regularly to the
Independent Trustees with respect to these activities. 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 of each committee 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 shall have 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
Independent Trustee candidates 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 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.
The
Compliance Committee is composed of Messrs. Wiley (Chair) and Munoz, and Mses.
Fuller and Kampling. The committee oversees the administration and operation of
the compliance policies and procedures of the funds and their service providers
as required by Rule 38a-1 of the 1940 Act. The committee is responsible for the
review and approval of policies and procedures relating to (i) provisions of the
Code of Ethics, (ii) anti-money laundering requirements, (iii) compliance with
investment restrictions and limitations, (iv) privacy, (v) recordkeeping, and
(vi) other compliance policies and procedures which are not otherwise delegated
to another committee. The committee has responsibility for recommending to the
Board the designation of a CCO of the funds. The committee serves as the primary
point of contact between the CCO and the Board, oversees the annual performance
review and compensation of the CCO, and makes recommendations to the Board with
respect to the removal of the appointed CCO, as appropriate. The committee
receives reports of significant correspondence with regulators or governmental
agencies, employee complaints or published reports which raise concerns
regarding compliance matters, and copies of significant non-routine
correspondence with the SEC. The committee receives reports from the CCO
including the annual report concerning the funds' compliance policies as
required by Rule 38a-1, quarterly reports in respect of any breaches of
fiduciary duty or violations of federal securities laws, and reports on any
other compliance or related matters that would otherwise be subject to periodic
reporting or that may have a significant impact on the funds. The committee will
recommend to the Board, what actions, if any, should be taken with respect to
such reports.
The
Research Committee is composed of all of the Independent Trustees, with Mr.
Bostick currently serving as Chair. The Committee's purpose is to assess the
quality of the investment research available to FMR's investment professionals.
As such, the Committee reviews information pertaining to the sources of such
research, the categories of research, the manner in which the funds bear the
cost of research, and FMR's internal research capabilities, including
performance metrics, interactions between FMR portfolio managers and research
analysts, and the professional quality of analysts in research careers. Where
necessary, the Committee recommends actions with respect to various reports
providing information on FMR's research function.
During
the fiscal year ended October 31, 2023, each committee held the number of
meetings shown in the table below:
COMMITTEE |
NUMBER OF MEETINGS HELD |
Operations Committee |
10 |
Fair Value Oversight Committee |
4 |
Equity I Committee |
6 |
Equity II Committee |
6 |
Shareholder, Distribution, Brokerage, and
Proxy Voting Committee |
5 |
Audit Committee |
6 |
Governance and Nominating Committee |
10 |
Compliance Committee |
5 |
Research Committee |
7 |
The
following table sets forth information describing the dollar range of equity
securities beneficially owned by each Trustee in each 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. (The information is as of August 31, 2023
for Mr. Advani, Trustee as of August 1, 2023.)
Interested Trustees
DOLLAR RANGE OF
FUND SHARES |
Bettina Doulton |
Robert A Lawrence |
|
|
Fidelity Advisor® Floating Rate High Income
Fund |
none |
over $100,000 |
|
|
Fidelity Advisor® High Income Advantage
Fund |
none |
none |
|
|
Fidelity Advisor® Value 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 |
Vijay Advani |
Thomas P Bostick |
Dennis J Dirks |
Donald F Donahue |
Fidelity Advisor® Floating Rate High Income
Fund |
none |
none |
over $100,000 |
none |
Fidelity Advisor® High Income Advantage
Fund |
none |
none |
none |
none |
Fidelity Advisor® Value Fund |
none |
none |
none |
none |
AGGREGATE DOLLAR RANGE OF
FUND SHARES IN ALL FUNDS
OVERSEEN WITHIN FUND FAMILY |
none |
over $100,000 |
over $100,000 |
over $100,000 |
|
|
|
|
|
DOLLAR RANGE OF
FUND SHARES |
Vicki L Fuller |
Patricia L Kampling |
Thomas A Kennedy |
Oscar Munoz |
Fidelity Advisor® Floating Rate High Income
Fund |
none |
none |
none |
none |
Fidelity Advisor® High Income Advantage
Fund |
none |
none |
none |
none |
Fidelity Advisor® Value Fund |
none |
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 |
none |
|
|
|
|
|
DOLLAR RANGE OF
FUND SHARES |
David M Thomas |
Susan Tomasky |
Michael E Wiley |
|
Fidelity Advisor® Floating Rate High Income
Fund |
none |
none |
none |
|
Fidelity Advisor® High Income Advantage
Fund |
none |
none |
none |
|
Fidelity Advisor® Value Fund |
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 |
|
|
|
|
|
|
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 October 31, 2023, or calendar year ended December 31,
2022, as applicable.
Compensation Table(A)
AGGREGATE
COMPENSATION
FROM A FUND |
|
Vijay Advani(B)
|
|
Thomas P Bostick |
|
Dennis J Dirks
|
|
Donald F Donahue
|
Fidelity Advisor® Floating Rate High Income
Fund(C) |
$ |
831 |
$ |
3,635 |
$ |
3,782 |
$ |
3,903 |
Fidelity Advisor® High Income Advantage
Fund |
$ |
137 |
$ |
570 |
$ |
593 |
$ |
612 |
Fidelity Advisor® Value Fund |
$ |
25 |
$ |
117 |
$ |
122 |
$ |
126 |
TOTAL COMPENSATION
FROM THE FUND COMPLEX(D) |
$ |
0 |
$ |
470,000 |
$ |
495,000 |
$ |
500,000 |
|
|
|
|
|
|
|
|
|
AGGREGATE
COMPENSATION
FROM A FUND |
|
Vicki L Fuller
|
|
Patricia L Kampling |
|
Thomas A Kennedy
|
|
Oscar Munoz
|
Fidelity Advisor® Floating Rate High Income
Fund(C) |
$ |
3,635 |
$ |
3,635 |
$ |
3,635 |
$ |
3,578 |
Fidelity Advisor® High Income Advantage
Fund |
$ |
570 |
$ |
570 |
$ |
570 |
$ |
561 |
Fidelity Advisor® Value Fund |
$ |
117 |
$ |
117 |
$ |
117 |
$ |
116 |
TOTAL COMPENSATION
FROM THE FUND COMPLEX(D) |
$ |
470,000 |
$ |
470,000 |
$ |
470,000 |
$ |
470,000 |
|
|
|
|
|
|
|
|
|
AGGREGATE
COMPENSATION
FROM A FUND |
|
Karen Peetz(E)
|
|
David M Thomas |
|
Susan Tomasky
|
|
Michael E Wiley
|
Fidelity Advisor® Floating Rate High Income
Fund(C) |
$ |
831 |
$ |
4,279 |
$ |
3,635 |
$ |
3,839 |
Fidelity Advisor® High Income Advantage
Fund |
$ |
137 |
$ |
670 |
$ |
570 |
$ |
602 |
Fidelity Advisor® Value Fund |
$ |
25 |
$ |
138 |
$ |
117 |
$ |
124 |
TOTAL COMPENSATION
FROM THE FUND COMPLEX(D) |
$ |
0 |
$ |
570,000 |
$ |
472,083 |
$ |
495,000 |
|
|
|
|
|
|
|
|
|
(A) Bettina
Doulton, Robert A. Lawrence, and Peter S. Lynch are interested persons and
are compensated by Fidelity.
|
|
(B) Mr. Advani
serves as a Trustee of Fidelity Advisor Series I effective August 1,
2023.
|
|
(C) Compensation
figures include cash and may include amounts elected to be deferred.
Certain individuals' aggregate compensation from the fund includes accrued
voluntary deferred compensation as follows: Vijay Advani, $831; Thomas P.
Bostick, $1,428; Donald F. Donahue, $3,903; Vicki L. Fuller, $1,785;
Thomas A. Kennedy, $1,814; Karen Peetz, $831; and Susan Tomasky,
$2,142.
|
|
(D) Reflects
compensation received for the calendar year ended December 31, 2022 for
318 funds of 30 trusts (including Fidelity Central Investment Portfolios
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: Thomas P. Bostick, $120,000; Donald F.
Donahue, $294,821; Vicki L. Fuller, $150,000; Thomas A. Kennedy, $138,566;
and Susan Tomasky, $180,000.
|
|
(E) Ms. Peetz
serves as a Member of the Advisory Board of Fidelity Advisor Series I
effective August 1, 2023.
|
|
As
of October 31, 2023, the Trustees, Members of the Advisory Board (if any), and
officers of each fund owned, in the aggregate, less than 1% of each class's
total outstanding shares, with respect to each fund.
As
of October 31, 2023, 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® Floating Rate High Income
Fund - Class I |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
15.51% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
PERSHING LLC |
JERSEY CITY |
NJ |
15.14% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
12.18% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
NORTHERN LIGHTS FUND TRUST III |
COLUMBUS |
OH |
11.73% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
MERRILL LYNCH PIERCE FENNER SMITH
INC |
JACKSONVILLE |
FL |
8.51% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
UBS FINANCIAL SERVICES INC |
WEEHAWKEN |
NJ |
5.60% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
MORGAN STANLEY SMITH BARNEY |
NEW YORK |
NY |
5.54% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
5.19% |
Fidelity Advisor® Floating Rate High Income
Fund - Class I |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
5.12% |
Fidelity® Floating Rate High Income
Fund(A) |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
9.81% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
PERSHING LLC |
JERSEY CITY |
NJ |
9.86% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
MERRILL LYNCH PIERCE FENNER SMITH
INC |
JACKSONVILLE |
FL |
8.97% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
8.73% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
7.71% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
7.14% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
6.85% |
Fidelity Advisor® Floating Rate High Income
Fund - Class A |
MORGAN STANLEY SMITH BARNEY |
NEW YORK |
NY |
6.09% |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
16.10% |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
10.81% |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
PERSHING LLC |
JERSEY CITY |
NJ |
9.83% |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
5.93% |
Fidelity Advisor® Floating Rate High Income
Fund - Class M |
PERSHING LLC |
JERSEY CITY |
NJ |
9.00% |
Fidelity Advisor® Floating Rate High Income
Fund - Class M |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
8.16% |
Fidelity Advisor® Floating Rate High Income
Fund - Class Z |
STRATEGIC ADVISERS® FIDELITY® CORE INCOME
FUND |
BOSTON |
MA |
41.68% |
Fidelity Advisor® Floating Rate High Income
Fund - Class Z |
MERRILL LYNCH PIERCE FENNER SMITH
INC |
JACKSONVILLE |
FL |
7.42% |
Fidelity Advisor High Income Advantage Fund
Class M |
SECURITY BENEFIT GROUP |
TOPEKA |
KS |
7.60% |
Fidelity Advisor High Income Advantage Fund
Class M |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
6.75% |
Fidelity Advisor High Income Advantage Fund
Class M |
PRINCIPAL SECURITIES INC |
DES MOINES |
IA |
6.61% |
Fidelity Advisor High Income Advantage Fund
Class M |
PERSHING LLC |
JERSEY CITY |
NJ |
5.36% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
PERSHING LLC |
JERSEY CITY |
NJ |
8.08% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
7.24% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
6.31% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
MERRILL LYNCH PIERCE FENNER SMITH
INC |
JACKSONVILLE |
FL |
6.01% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
MORGAN STANLEY SMITH BARNEY |
NEW YORK |
NY |
5.92% |
Fidelity Advisor® High Income Advantage Fund
- Class A |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
5.60% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
RAYMOND JAMES & ASSOCIATES INC |
SAINT PETERSBURG |
FL |
11.48% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
11.32% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
PERSHING LLC |
JERSEY CITY |
NJ |
10.60% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
8.91% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
MORGAN STANLEY SMITH BARNEY |
NEW YORK |
NY |
7.94% |
Fidelity Advisor® High Income Advantage Fund
- Class C |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
5.28% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
22.79% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
9.07% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
PERSHING LLC |
JERSEY CITY |
NJ |
8.60% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
7.38% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
MERRILL LYNCH PIERCE FENNER SMITH
INC |
JACKSONVILLE |
FL |
7.09% |
Fidelity Advisor® High Income Advantage Fund
- Class I |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
6.00% |
Fidelity Advisor® High Income Advantage Fund
- Class Z |
PRINCIPAL SECURITIES INC |
DES MOINES |
IA |
22.27% |
Fidelity Advisor® High Income Advantage Fund
- Class Z |
EDWARD D JONES & CO |
MARYLAND HEIGHTS |
MO |
5.43% |
Fidelity Advisor® Value Fund - Class
A |
PERSHING LLC |
JERSEY CITY |
NJ |
10.28% |
Fidelity Advisor® Value Fund - Class
A |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
8.17% |
Fidelity Advisor® Value Fund - Class
C |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
15.33% |
Fidelity Advisor® Value Fund - Class
C |
PERSHING LLC |
JERSEY CITY |
NJ |
14.31% |
Fidelity Advisor® Value Fund - Class
C |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
10.80% |
Fidelity Advisor® Value Fund - Class
C |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
9.92% |
Fidelity Advisor® Value Fund - Class
I |
AMERIPRISE FINANCIAL SERVICES INC |
MINNEAPOLIS |
MN |
47.76% |
Fidelity Advisor® Value Fund - Class
I |
PERSHING LLC |
JERSEY CITY |
NJ |
15.00% |
Fidelity Advisor® Value Fund - Class
I |
LPL FINANCIAL LLC |
SAN DIEGO |
CA |
14.96% |
Fidelity Advisor® Value Fund - Class
I |
WELLS FARGO CLEARING SERVICES LLC |
SAINT LOUIS |
MO |
5.64% |
Fidelity Advisor® Value Fund - Class
Z |
EMPOWER ANNUITY INSURANCE COMPANY |
GREENWOOD VILLAGE |
CO |
8.88% |
Fidelity Advisor® Value Fund - Class
Z |
PRINCIPAL SECURITIES INC |
DES MOINES |
IA |
8.81% |
Fidelity Advisor® Value Fund - Class
Z |
CHARLES SCHWAB & CO INC |
SAN FRANCISCO |
CA |
7.10% |
(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 funds have adopted a code of ethics
under Rule 17j-1 of the 1940 Act that sets forth employees' fiduciary
responsibilities regarding the funds, 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 funds.
Each
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 each 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 each
fund with all necessary office facilities and personnel for servicing the fund's
investments, compensates all officers of each fund and all Trustees who are
interested persons of the trust or of FMR, and compensates all personnel of each
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 each fund. These services include providing facilities for
maintaining each fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters and other persons dealing
with each fund; preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the registration of
each fund's shares under federal securities laws and making necessary filings
under state securities laws; developing management and shareholder services for
each 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, and the costs
associated with securities lending, as applicable, a fund or each class thereof,
as applicable, pays all of its expenses that are not assumed by those parties. A
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. A 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 a 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. A 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
Fees.
For
the services of FMR under the management contract, Fidelity Advisor® Floating
Rate High Income Fund and Fidelity Advisor® High Income Advantage Fund each pays
FMR a monthly management fee which has two components: a group fee rate and an
individual fund fee rate.
For
the services of FMR under the management contract, Fidelity Advisor® Value Fund
pays FMR a monthly management fee which has two components: a basic fee, which
is the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of the fund's performance to that
of a designated index.
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.
The
following is the fee schedule for Fidelity Advisor® Floating Rate High Income
Fund and Fidelity Advisor® High Income Advantage Fund:
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 $3,360 billion of group net assets - the
approximate level for October 2023 - was 0.0962%, which is the weighted average
of the respective fee rates for each level of group net assets up to $3,360
billion.
The
following is the fee schedule for Fidelity Advisor® Value Fund:
GROUP FEE RATE SCHEDULE |
|
|
|
EFFECTIVE
ANNUAL FEE RATES |
Average Group Assets |
|
|
Annualized Rate |
Group Net Assets |
Effective Annual Fee Rate |
0 |
- |
$3
billion |
.5200% |
$1
billion |
.5200% |
3 |
- |
6 |
.4900 |
50 |
.3823 |
6 |
- |
9 |
.4600 |
100 |
.3512 |
9 |
- |
12 |
.4300 |
150 |
.3371 |
12 |
- |
15 |
.4000 |
200 |
.3284 |
15 |
- |
18 |
.3850 |
250 |
.3219 |
18 |
- |
21 |
.3700 |
300 |
.3163 |
21 |
- |
24 |
.3600 |
350 |
.3113 |
24 |
- |
30 |
.3500 |
400 |
.3067 |
30 |
- |
36 |
.3450 |
450 |
.3024 |
36 |
- |
42 |
.3400 |
500 |
.2982 |
42 |
- |
48 |
.3350 |
550 |
.2942 |
48 |
- |
66 |
.3250 |
600 |
.2904 |
66 |
- |
84 |
.3200 |
650 |
.2870 |
84 |
- |
102 |
.3150 |
700 |
.2838 |
102 |
- |
138 |
.3100 |
750 |
.2809 |
138 |
- |
174 |
.3050 |
800 |
.2782 |
174 |
- |
210 |
.3000 |
850 |
.2756 |
210 |
- |
246 |
.2950 |
900 |
.2732 |
246 |
- |
282 |
.2900 |
950 |
.2710 |
282 |
- |
318 |
.2850 |
1,000 |
.2689 |
318 |
- |
354 |
.2800 |
1,050 |
.2669 |
354 |
- |
390 |
.2750 |
1,100 |
.2649 |
390 |
- |
426 |
.2700 |
1,150 |
.2631 |
426 |
- |
462 |
.2650 |
1,200 |
.2614 |
462 |
- |
498 |
.2600 |
1,250 |
.2597 |
498 |
- |
534 |
.2550 |
1,300 |
.2581 |
534 |
- |
587 |
.2500 |
1,350 |
.2566 |
587 |
- |
646 |
.2463 |
1,400 |
.2551 |
646 |
- |
711 |
.2426 |
1,450 |
.2536 |
711 |
- |
782 |
.2389 |
1,500 |
.2523 |
782 |
- |
860 |
.2352 |
1,550 |
.2510 |
860 |
- |
946 |
.2315 |
1,600 |
.2497 |
946 |
- |
1,041 |
.2278 |
1,650 |
.2484 |
1,041 |
- |
1,145 |
.2241 |
1,700 |
.2472 |
1,145 |
- |
1,260 |
.2204 |
1,750 |
.2460 |
1,260 |
- |
1,386 |
.2167 |
1,800 |
.2449 |
1,386 |
- |
1,525 |
.2130 |
1,850 |
.2438 |
1,525 |
- |
1,677 |
.2093 |
1,900 |
.2427 |
1,677 |
- |
1,845 |
.2056 |
1,950 |
.2417 |
1,845 |
- |
2,030 |
.2019 |
2,000 |
.2407 |
Over |
|
2,030 |
.1982 |
2,050 |
.2397 |
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 $3,360 billion of group net assets - the
approximate level for October 2023 - was 0.2235%, which is the weighted average
of the respective fee rates for each level of group net assets up to $3,360
billion.
The
individual fund fee rate for each of Fidelity Advisor® Floating Rate High Income
Fund and Fidelity Advisor® High Income Advantage Fund is set forth in the
following table. Based on the average group net assets for October 2023, a
fund's annual management fee rate would be calculated as follows:
Fund |
Group Fee Rate |
|
Individual Fund Fee Rate |
|
Management Fee Rate |
Fidelity Advisor® Floating Rate High Income
Fund |
0.0962% |
+ |
0.4500% |
= |
0.5462% |
Fidelity Advisor® High Income Advantage
Fund |
0.0962% |
+ |
0.4500% |
= |
0.5462% |
The
individual fund fee rate for Fidelity Advisor® Value Fund is set forth in the
following table. Based on the average group net assets for October 2023, a
fund's annual basic fee rate would be calculated as follows:
Fund |
Group Fee Rate |
|
Individual Fund Fee Rate |
|
Basic Fee Rate |
Fidelity Advisor® Value Fund |
0.2235% |
+ |
0.3000% |
= |
0.5235% |
One-twelfth
of the basic fee rate or the management fee rate, as applicable, is applied to
the fund's average net assets for the month, giving a dollar amount which is the
fee for that month.
Computing
the Performance Adjustment. The basic fee for the following fund is subject to
upward or downward adjustment, depending upon whether, and to what extent, the
fund's investment performance for the performance period exceeds, or is exceeded
by, the record of the designated index over the same period. The performance
period consists of the most recent month plus the previous 35 months. The
performance comparison is made at the end of each month.
Fund |
Performance
Adjustment Index |
Fidelity Advisor® Value Fund |
Russell
Midcap® Value Index |
If
the Trustees determine that another index is appropriate for Fidelity Advisor®
Value Fund, they may designate a successor index to be substituted, when
permitted by applicable law.
For
the purposes of calculating the performance adjustment for Fidelity Advisor®
Value Fund, the fund's investment performance will be based on the performance
of Class I of the fund, a class of shares offered through this SAI. To the
extent that other classes of Fidelity Advisor® Value Fund have higher expenses,
this could result in those classes bearing a larger positive performance
adjustment and smaller negative performance adjustment than would be the case if
each class's own performance were considered.
For
Fidelity Advisor® Value Fund, each percentage point of difference, calculated to
the nearest 0.01% (up to a maximum difference of ±10.00), is multiplied by a
performance adjustment rate of 0.02%. The maximum annualized performance
adjustment rate is ±0.20% of a fund's average net assets over the performance
period.
One
twelfth (1/12) of this rate is then applied to the fund's average net assets
over the performance period, giving a dollar amount which will be added to (or
subtracted from) the basic fee.
The
performance of a fund or class, as applicable, is calculated based on change in
NAV. For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund or class are treated as if
reinvested in that fund's or class's shares at the NAV as of the record date for
payment.
The
record of an index is based on change in value and is adjusted for any cash
distributions from the companies whose securities compose the index. Because the
adjustment to the basic fee is based on a fund's performance compared to the
investment record of the index, the controlling factor is not whether the fund's
performance is up or down per se, but whether it is up or down more or less than
the record of the designated performance adjustment index. Moreover, the
comparative investment performance of the fund is based solely on the relevant
performance period without regard to the cumulative performance over a longer or
shorter period of time.
The
following table shows the amount of management fees paid by a fund for the
fiscal year(s) ended October 31, 2023, 2022, and 2021 to its current manager and
prior affiliated manager(s), if any, and the amount of negative or positive
performance adjustments to the management fees paid. The total management fees
paid includes the amount of any performance adjustment.
Fund(s) |
Fiscal
Years
Ended |
|
Performance
Adjustment |
|
Management
Fees
Paid to
Investment Adviser |
Fidelity Advisor® Floating Rate High Income
Fund |
2023 |
$ |
0 |
$ |
63,974,053 |
|
2022 |
$ |
0 |
$ |
68,114,438 |
|
2021 |
$ |
0 |
$ |
45,400,738 |
Fidelity Advisor® High Income Advantage
Fund |
2023 |
$ |
0 |
$ |
10,100,623 |
|
2022 |
$ |
0 |
$ |
10,600,552 |
|
2021 |
$ |
0 |
$ |
10,310,727 |
Fidelity Advisor® Value Fund |
2023 |
$ |
528,459 |
$ |
2,477,616 |
|
2022 |
$ |
324,315 |
$ |
2,278,703 |
|
2021 |
$ |
147,792 |
$ |
1,095,902 |
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 each 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 each 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.
Matt
Friedman is Lead Portfolio Manager of Fidelity Advisor® Value Fund and receives
compensation for those services. Laurie Mundt is Co-Portfolio Manager of
Fidelity Advisor® Value Fund and receives compensation for those services.
Shadman Riaz is Co-Portfolio Manager of Fidelity Advisor® Value Fund and
receives compensation for those services. As of October 31, 2023, 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 the (i) 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 assigned to each fund or account, and (ii) the
investment performance of other equity 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 five years for the
comparison to a benchmark index and rolling periods of up to three years for the
comparison to a peer group. 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 Advisor® Value Fund is based on the
pre-tax investment performance of the fund measured against the Russell Midcap®
Value Index, and the pre-tax investment performance of the fund (based on the
performance of the fund's Class I) within the Morningstar® Mid-Cap Value
Category. Another component of each portfolio manager's bonus is based on the
pre-tax investment performance of the portion of the lead account's assets the
portfolio manager manages measured against the benchmark index(es) identified
below, and the pre-tax investment performance of the portion of the lead
account's assets the portfolio manager manages within the peer group(s)
identified below. 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.
Manager
/ Benchmark Index(es) / Peer Group(s)
Matthew
Friedman / Russell Midcap® Value Index / Morningstar® Mid-Cap Value Category
Laurie
Mundt / Russell Midcap® Value Health Care Index / N/A
Shadman
Riaz / Russell Midcap® Value Energy Index and Russell Midcap® Value Materials
Index / N/A
Eric
Mollenhauer is Co-Portfolio Manager of Fidelity Advisor® Floating Rate High
Income Fund and receives compensation for those services. Kevin Nielsen is
Co-Portfolio Manager of Fidelity Advisor® Floating Rate High Income Fund and
receives compensation for those services. Chandler Perine is Co-Portfolio
Manager of Fidelity Advisor® Floating Rate High Income Fund and receives
compensation for those services. Brian Chang is Co-Portfolio Manager of Fidelity
Advisor® High Income Advantage Fund and receives compensation for those
services. Mark Notkin is Co-Portfolio Manager of Fidelity Advisor® High Income
Advantage Fund and receives compensation for those services. As of October 31,
2023, 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 or
within a defined peer group assigned to each fund or account, and (ii) the
investment performance of other high yield 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 five years for the
comparison to a benchmark index or a peer group. 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 the portfolio manager's fund is
based on the fund's pre-tax investment performance (based on the performance of
the retail class of Fidelity Advisor® Floating Rate High Income Fund and the
Class I of Fidelity Advisor® High Income Advantage Fund) within the peer group
identified below for the fund. 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.
Fund
/ Peer Group
Fidelity
Advisor® Floating Rate High Income Fund / Lipper℠ Loan Participation Funds
Fidelity
Advisor® High Income Advantage Fund / Lipper℠ High Yield Funds
A
portfolio manager's compensation plan may give rise to potential conflicts of
interest. Although investors in a 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 Eric
Mollenhauer as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
14 |
|
6 |
|
21 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$18,044 |
|
$2,707 |
|
$7,726 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity Advisor® Floating Rate High Income Fund ($12,207 (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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Floating
Rate High Income Fund beneficially owned by Mr. Mollenhauer was over
$1,000,000.
The
following table provides information relating to other accounts managed by Kevin
Nielsen as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
13 |
|
6 |
|
21 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$17,886 |
|
$2,934 |
|
$7,726 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity Advisor® Floating Rate High Income Fund ($12,207 (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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Floating
Rate High Income Fund beneficially owned by Mr. Nielsen was $100,001 -
$500,000.
The
following table provides information relating to other accounts managed by
Chandler Perine as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
12 |
|
8 |
|
20 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$17,544 |
|
$2,964 |
|
$7,485 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity Advisor® Floating Rate High Income Fund ($12,207 (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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Floating
Rate High Income Fund beneficially owned by Mr. Perine was $100,001 -
$500,000.
The
following table provides information relating to other accounts managed by Brian
Chang as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
13 |
|
none |
|
1 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$22,511 |
|
none |
|
$475 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity Advisor® High Income Advantage Fund ($1,854 (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 October 31, 2023, the dollar range of shares of Fidelity Advisor® High Income
Advantage Fund beneficially owned by Mr. Chang was $100,001 - $500,000.
The
following table provides information relating to other accounts managed by Mark
Notkin as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
6 |
|
none |
|
none |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$21,491 |
|
none |
|
none |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity Advisor® High Income Advantage Fund ($1,854 (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 October 31, 2023, the dollar range of shares of Fidelity Advisor® High Income
Advantage Fund beneficially owned by Mr. Notkin was none.
The
following table provides information relating to other accounts managed by Matt
Friedman as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
7 |
|
9 |
|
none |
Number
of Accounts Managed with Performance-Based Advisory Fees |
4 |
|
none |
|
none |
Assets
Managed (in millions) |
$19,226 |
|
$1,906 |
|
none |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
$9,070 |
|
none |
|
none |
*
Includes assets of Fidelity Advisor® Value Fund managed by Mr. Friedman ($284
(in millions) assets managed with performance-based advisory fees). 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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Value Fund
beneficially owned by Mr. Friedman was none.
The
following table provides information relating to other accounts managed by
Laurie Mundt as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
5 |
|
5 |
|
1 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
4 |
|
none |
|
none |
Assets
Managed (in millions) |
$2,524 |
|
$764 |
|
$8 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
$364 |
|
none |
|
none |
*
Includes assets of Fidelity Advisor® Value Fund managed by Ms. Mundt ($7 (in
millions) assets managed with performance-based advisory fees). 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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Value Fund
beneficially owned by Ms. Mundt was none.
The
following table provides information relating to other accounts managed by
Shadman Riaz as of October 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
5 |
|
5 |
|
2 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
4 |
|
none |
|
none |
Assets
Managed (in millions) |
$3,396 |
|
$764 |
|
$23 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
$1,494 |
|
none |
|
none |
*
Includes assets of Fidelity Advisor® Value Fund managed by Mr. Riaz ($14 (in
millions) assets managed with performance-based advisory fees). 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 October 31, 2023, the dollar range of shares of Fidelity Advisor® Value Fund
beneficially owned by Mr. Riaz 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. |
Each
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.
A
fund's distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the
funds, 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
October 31, 2023, 2022, and 2021 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® Floating Rate High Income
Fund - Class A |
2023 |
$81,459 |
$42,792 |
$2,285 |
$2,285 |
|
2022 |
$85,495 |
$43,943 |
$1,417 |
$1,417 |
|
2021 |
$40,089 |
$24,159 |
$2,083 |
$2,083 |
Fidelity Advisor® Floating Rate High Income
Fund - Class M |
2023 |
$15,507 |
$3,529 |
$58 |
$58 |
|
2022 |
$14,755 |
$4,314 |
$24 |
$24 |
|
2021 |
$9,862 |
$2,873 |
$522 |
$522 |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
2023 |
$0 |
$0 |
$3,636 |
$3,636 |
|
2022 |
$0 |
$0 |
$2,375 |
$2,375 |
|
2021 |
$0 |
$0 |
$2,842 |
$2,842 |
Fidelity Advisor® High Income Advantage Fund
- Class A |
2023 |
$114,634 |
$44,954 |
$590 |
$590 |
|
2022 |
$95,048 |
$32,183 |
$347 |
$347 |
|
2021 |
$176,366 |
$65,430 |
$397 |
$397 |
Fidelity Advisor® High Income Advantage Fund
- Class M |
2023 |
$32,861 |
$4,435 |
$25 |
$25 |
|
2022 |
$33,708 |
$4,593 |
$10 |
$10 |
|
2021 |
$45,367 |
$6,622 |
$2 |
$2 |
Fidelity Advisor® High Income Advantage Fund
- Class C |
2023 |
$0 |
$0 |
$416 |
$416 |
|
2022 |
$0 |
$0 |
$2,302 |
$2,302 |
|
2021 |
$0 |
$0 |
$8,166 |
$8,166 |
Fidelity Advisor® Value Fund - Class
A |
2023 |
$90,884 |
$36,532 |
$694 |
$694 |
|
2022 |
$105,281 |
$43,979 |
$83 |
$83 |
|
2021 |
$116,117 |
$43,571 |
$250 |
$250 |
Fidelity Advisor® Value Fund - Class
M |
2023 |
$8,755 |
$1,670 |
$16 |
$16 |
|
2022 |
$8,333 |
$1,903 |
$1 |
$1 |
|
2021 |
$6,914 |
$1,913 |
$4 |
$4 |
Fidelity Advisor® Value Fund - Class
C |
2023 |
$0 |
$0 |
$267 |
$267 |
|
2022 |
$0 |
$0 |
$359 |
$359 |
|
2021 |
$0 |
$0 |
$1,432 |
$1,432 |
The
Trustees have approved Distribution and Service Plans on behalf of Class A,
Class M, Class C, Class I, and Class Z of each 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 funds and/or FMR to
incur certain expenses that might be considered to constitute direct or indirect
payment by the funds of distribution expenses.
The
Plan adopted for each 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 October 31, 2023.
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® Floating Rate High Income
Fund - Class A |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
1,413,279 |
$ |
1,320,952 |
$ |
92,327 |
Fidelity Advisor® Floating Rate High Income
Fund - Class M |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
221,116 |
$ |
219,588 |
$ |
1,528 |
Fidelity Advisor® Floating Rate High Income
Fund - Class C |
$ |
843,044 |
$ |
684,685 |
$ |
158,359 |
$ |
281,015 |
$ |
228,229 |
$ |
52,786 |
Fidelity Advisor® High Income Advantage Fund
- Class A |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
1,178,462 |
$ |
1,154,683 |
$ |
23,779 |
Fidelity Advisor® High Income Advantage Fund
- Class M |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
587,995 |
$ |
586,456 |
$ |
1,539 |
Fidelity Advisor® High Income Advantage Fund
- Class C |
$ |
421,695 |
$ |
358,851 |
$ |
62,844 |
$ |
140,565 |
$ |
119,617 |
$ |
20,948 |
Fidelity Advisor® Value Fund - Class
A |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
255,098 |
$ |
247,231 |
$ |
7,867 |
Fidelity Advisor® Value Fund - Class
M |
$ |
58,337 |
$ |
58,103 |
$ |
234 |
$ |
58,337 |
$ |
58,103 |
$ |
234 |
Fidelity Advisor® Value Fund - Class
C |
$ |
106,639 |
$ |
87,746 |
$ |
18,893 |
$ |
35,546 |
$ |
29,249 |
$ |
6,297 |
(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 each 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 a 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 funds 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.
A
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 a 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
Each
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
each agreement, FIIOC (or an agent, including an affiliate) performs transfer
agency services.
For
providing transfer agency services, FIIOC receives an asset-based fee,
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 a
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 funds, 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 funds 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.
Each
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 each fund's portfolio and general accounting records, and administers
each fund's securities lending program.
For
providing pricing and bookkeeping services, FSC receives a monthly fee based on
each fund's average daily net assets throughout the month.
The
annual rates, as a percentage of average net assets, for pricing and bookkeeping
services for the funds are shown in the following table:
Fund |
Pricing and Bookkeeping Rate |
Fidelity
Advisor® Floating Rate High Income Fund |
0.0137% |
Fidelity
Advisor® High Income Advantage Fund |
0.0331% |
Fidelity
Advisor® Value Fund |
0.0354% |
Pricing
and bookkeeping fees paid by a fund to FSC for the fiscal year(s) ended October
31, 2023, 2022, and 2021 are shown in the following table.
Fund |
|
2023 |
|
2022 |
|
2021 |
Fidelity Advisor® Floating Rate High Income
Fund |
$ |
1,571,037 |
$ |
1,642,378 |
$ |
1,501,501 |
Fidelity Advisor® High Income Advantage
Fund |
$ |
612,871 |
$ |
639,853 |
$ |
623,854 |
Fidelity Advisor® Value Fund |
$ |
131,434 |
$ |
139,029 |
$ |
70,202 |
During
the fiscal year, the securities lending agent, or the investment adviser (where
the fund does not use a securities lending agent) monitors loan opportunities
for each fund, negotiates the terms of the loans with borrowers, monitors the
value of securities on loan and the value of the corresponding collateral,
communicates with borrowers and the fund's custodian regarding marking to market
the collateral, selects securities to be loaned and allocates those loan
opportunities among lenders, and arranges for the return of the loaned
securities upon the termination of the loan. Income and fees from securities
lending activities for the fiscal year ended October 31, 2023, are shown in the
following table:
Security Lending Activities |
|
Fund(s) |
|
|
|
|
|
|
Fidelity
Advisor® Floating Rate High Income Fund |
|
Fidelity
Advisor® High Income Advantage Fund |
|
Fidelity
Advisor® Value Fund |
Gross income from securities lending
activities |
$ |
1,625,445 |
$ |
98,185 |
$ |
526,047 |
Fees paid to securities lending agent from a
revenue split |
$ |
0 |
$ |
0 |
$ |
0 |
Administrative fees |
$ |
0 |
$ |
0 |
$ |
0 |
Rebate (paid to borrower) |
$ |
1,596,793 |
$ |
96,537 |
$ |
478,535 |
Other fees not included in the revenue split
(lending agent fees to NFS) |
$ |
2,755 |
$ |
155 |
$ |
4,561 |
Aggregate fees/compensation for securities
lending activities |
$ |
1,599,548 |
$ |
96,692 |
$ |
483,095 |
Net income from securities lending
activities |
$ |
25,897 |
$ |
1,493 |
$ |
42,952 |
|
|
|
|
|
|
|
A
fund does not pay cash collateral management fees, separate indemnification
fees, or other fees not reflected above.
Trust
Organization.
Fidelity
Advisor® Floating Rate High Income Fund is a fund of Fidelity Advisor Series I,
an open-end management investment company created under an initial declaration
of trust dated June 24, 1983.
Fidelity
Advisor® High Income Advantage Fund is a fund of Fidelity Advisor Series I, an
open-end management investment company created under an initial declaration of
trust dated June 24, 1983.
Fidelity
Advisor® Value Fund is a fund of Fidelity Advisor Series I, an open-end
management investment company created under an initial declaration of trust
dated June 24, 1983.
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. Each 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(s).
Brown
Brothers Harriman & Co., 50 Post Office Square, Boston, Massachusetts, is
custodian of the assets of Fidelity Advisor® Floating Rate High Income Fund and
Fidelity Advisor® High Income Advantage Fund.
The
Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, is custodian
of the assets of Fidelity Advisor® Value Fund.
Each
custodian is responsible for the safekeeping of a fund's assets and the
appointment of any subcustodian banks and clearing agencies.
The
Bank of New York Mellon, headquartered in New York, also may serve as special
purpose custodian of certain assets of taxable funds in connection with
repurchase agreement transactions.
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 each 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.
Deloitte
& Touche LLP, 200 Berkeley Street, Boston, Massachusetts, independent
registered public accounting firm, and its affiliates, audit the financial
statements for each fund and provide other audit, tax, and related
services.
FUND HOLDINGS INFORMATION
Each
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 a fund's
best interests by striking an appropriate balance between providing information
about a fund's portfolio and protecting a fund from potentially harmful
disclosure. The Board reviews the administration and modification of these
guidelines and receives reports from the funds' chief compliance officer
periodically.
Fidelity
Advisor® Value 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).
Fidelity
Advisor® Floating Rate High Income Fund and Fidelity Advisor® High Income
Advantage Fund will provide a full list of holdings monthly on
institutional.fidelity.com 60 days after the month-end.
Fidelity
Advisor® Value Fund will provide its top ten holdings (excluding cash and
futures) on Fidelity's web site monthly, 15 days after month-end.
Fidelity
Advisor® Floating Rate High Income Fund and Fidelity Advisor® High Income
Advantage Fund will provide its top ten holdings (excluding cash and futures) on
Fidelity's web site (i) monthly, 60 days after month-end, and (ii) quarterly, 15
or more days after the quarter-end.
Unless
otherwise indicated, this information will be available on the web site until
updated for the next applicable period.
A
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 a 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 a 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 a 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: a fund's trustees; a 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; a fund's auditors; a
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 a 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 a fund and in connection with redemptions in
kind.
Other
Uses Of Holdings Information. In addition, each 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 a 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 a 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 a 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 funds 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 funds' SAI.
There
can be no assurance that the funds' 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.
Each
fund's financial statements and financial highlights for the fiscal year ended
October 31, 2023, and report of the independent registered public accounting
firm, are included in each 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 a 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.
© 2023 FMR LLC. All rights reserved.