COMMENTS RECEIVED ON DECEMBER 12, 2014
FROM EDWARD BARTZ
FIDELITY CENTRAL INVESTMENT PORTFOLIOS LLC (File No. 811-21667)
Fidelity Real Estate Equity Central Fund
AMENDMENT NO. 36
FIDELITY CENTRAL INVESTMENT PORTFOLIOS LLC (File No. 811-21667)
Fidelity High Income Central Fund 2
Fidelity Specialized High Income Central Fund
AMENDMENT NO. 37
FIDELITY CENTRAL INVESTMENT PORTFOLIOS II LLC (File No. 811-22083)
Fidelity Mortgage Backed Securities Central Fund
AMENDMENT NO. 21
1. Fidelity Real Estate Equity Central Fund
"Investment Details" (Part A of the Registration Statement)
"Principal Investment Strategies"
"The Adviser normally invests at least 80% of the fund's assets in equity securities of companies principally engaged in the real estate industryand other real estate related investments. Companies in the real estate industry and real estate related investments may include, for example, real estate investment trusts (REITs) that either own properties or make construction or mortgage loans, real estate developers, companies with substantial real estate holdings, and other companies whose products and services are related to the real estate industry, such as building supply manufacturers, mortgage lenders, or mortgage servicing companies."
C: The Staff requests that "other real estate related investments" be identified.
R: As disclosed under the sub-heading "Principal Investment Strategies" in the "Investment Details" section, "[c]ompanies in the real estate industry and real estate related investments may include, for example, real estate investment trusts (REITs) that either own properties or make construction or mortgage loans, real estate developers, companies with substantial real estate holdings,and other companies whose products and services are related to the real estate industry, such as building supply manufacturers, mortgage lenders, or mortgage servicing companies" (emphasis added).
2. Fidelity Real Estate Equity Central Fund and Fidelity Mortgage Backed Securities Central Fund
"Investment Details" (Part A of the Registration Statements)
"Principal Investment Strategies"
C: The Staff questions whether the funds will use derivatives to meet the 80% test.
R: Though we understand that in appropriate circumstances derivatives may qualify for a fund's name test, at this time the funds do not intend to count derivatives for purposes of their respective 80% policies.
Fidelity Central Investment Portfolios LLC (File No. 811-21167), Amendment Nos. 36 & 37, Fidelity Central Investment Portfolios II LLC (File No. 811-22083), Amendment No. 21
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3. All funds
"Investment Details" (Part A of the Registration Statements)
"Principal Investment Strategies"
C: The Staff requests that we disclose the market capitalization policy for each fund.
R: The funds do not have a principal investment strategy of investing in securities of companies with a particular market capitalization. Accordingly, we have not modified disclosure.
4. Fidelity Real Estate Equity Central Fund
"Investment Details" (Part A of the Registration Statement)
"Principal Investment Strategies"
"The Adviser normally invests at least 80% of the fund's assets in equity securities of companies principally engaged in the real estate industry and other real estate related investments. Companies in the real estate industry and real estate related investments may include, for example, real estate investment trusts (REITs) that either own properties or make construction or mortgage loans, real estate developers, companies with substantial real estate holdings,and other companies whose products and services are related to the real estate industry, such as building supply manufacturers, mortgage lenders, or mortgage servicing companies."
C: The Staff believes the disclosure is too broad for the 80% test and that disclosure should be added to reflect that the fund derives 50% of its revenues or profits from real estate or have 50% of its assets committed to the real estate industry.
R: The disclosure on which the Staff has commented is intended to assist investors in understanding, in plain English, the types of companies and investments that may be considered "companies in the real estate industry and other real estate related investments." It is not intended to provide a definitive or all-inclusive list. As disclosed in the fund's SAI, for purposes of the fund's policy to normally invest at least 80% of assets in companies principally engaged in the real estate industry and other real estate related investments, FMR considers whether a company has "at least a plurality of its assets (marked to market), gross income, or net profits are attributable to ownership, construction, management, or sale of residential, commercial, or industrial real estate" or whether "a third party has given the company an industry or sector classification consistent with real estate."
5. All funds
"Investment Policies and Limitations" (Part B of the Registration Statements)
C: The Staff requests that we disclose later in the registration statement that if a fund is a protection seller under a credit default swap, it will segregate assets equal to the full notional amount of the swap agreement. In addition, the Staff requests that we disclose that when the fund is a protection buyer in a default credit swap, it will segregate assets equal to the total amount of required premium payments plus prepayment penalties.
R: We confirm that, if a fund holds any credit default swaps in its portfolio, it would expect at this time to segregate assets equal to the full notional amount of each transaction. In addition, we confirm that, if the fund is a protection buyer in a credit default swap, it would expect at this time to segregate assets at least equal to the total amount of required premium payments, plus any prepayment penalties. We are aware that the SEC has been analyzing the segregation requirements for mutual funds using derivatives and that rulemaking on the subject may be forthcoming. In the absence of staff guidance or rulemaking on the subject, we do not believe it is prudent to include our internal segregation policies in our disclosure. Accordingly, we respectfully decline to modify the disclosure as suggested.
Fidelity Central Investment Portfolios LLC (File No. 811-21167), Amendment Nos. 36 & 37, Fidelity Central Investment Portfolios II LLC (File No. 811-22083), Amendment No. 21
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6. All funds
"Directors and Officers (Trustees and Officers)" (Part B of the Registration Statements)
"Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below."
C: The Staff asserts that the current disclosure in the "Trustees and Officers" section does not adequately describe the reasoning behind each Trustee's appointment to the Board. The Staff also requests that additional information be added describing why a particular Trustee's skills or background are conducive to their position on the Board.
R: Current disclosure in the "Trustees and Officers" section includes a brief discussion of the experience, qualifications, attributes, or skills that led to the conclusion that each Trustee should serve as a Trustee for each fund. In addition to the disclosure cited by the Staff, we call the Staff's attention to the disclosure under "Standing Committees of the Funds Trustees" that describes certain minimum qualifications for Independent Trustees, and to each Trustee's biographical information, which includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, and which led to the conclusion that each Trustee should serve as a Trustee for each fund.
7. Fidelity Mortgage Backed Securities Central Fund
"Fund Summary" (Part A of the Registration Statement)
"Portfolio Manager(s)"
C: The Staff requests confirmation that all of the portfolio managers are jointly and primarily responsible for the day to day operations of the fund.
R: We believe this disclosure appropriately identifies each portfolio manager as required by Form N-1A, Item 5(a), Instruction 2.
Fidelity Central Investment Portfolios LLC (File No. 811-21167), Amendment Nos. 36 & 37, Fidelity Central Investment Portfolios II LLC (File No. 811-22083), Amendment No. 21
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8. Fidelity Mortgage Backed Securities Central Fund
"Investment Details" (Part A of the Registration Statement)
"Principal Investment Strategies"
"The Adviser normally invests at least 80% of the fund's assets in investment-grademortgage-related securities issued by the U.S. Government or its instrumentalities and repurchase agreements for those securities. Certain issuers of U.S. Government securities are sponsored or chartered by Congress but their securities are neither issued nor guaranteed by the U.S. Treasury."
C: The Staff believes that the disclosure should read "mortgage-backed" instead of "mortgage-related" due to the Name Test Rule.
R: We believe that the fund's name and 80% policy are consistent with Rule 35d-1 and have not revised the disclosure.
9. Fidelity Mortgage Backed Securities Central Fund, Fidelity High Income Central Fund 2, and Fidelity Specialized High Income Central Fund
"Investment Details" (Part A of the Registration Statements)
"Principal Investment Strategies"
C: The Staff requests that we disclose the maturity policy.
R: Each fund does not have a principal investment strategy of investing in securities of companies with a particular maturity. Accordingly, we have not modified disclosure.
10. Fidelity High Income Central Fund 2 and Fidelity Specialized High Income Central Fund
"Principle Investment Strategies" (Part A of the Registration Statement)
(Example from Fidelity Specialized High Income Central Fund)
"The Adviser normally invests the fund's assets primarily in income-producing debt securities, with an emphasis on lower-quality debt securities. Many lower-quality debt securities are subject to legal or contractual restrictions limiting the Adviser's ability to resell the securities to the general public. The Adviser may invest in companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations, or financial restructurings."
C: The Staff requests that lower-quality debt securities be referred to as "junk bonds" in the "Principal Investment Strategies" section.
R: We will modify the section as follows:
"The Adviser normally invests the fund's assets primarily in income-producing debt securities, with an emphasis on lower-quality debt securities (those of less than investment-grade quality, also referred to as high yield debt securities or junk bonds). Many lower-quality debt securities are subject to legal or contractual restrictions limiting the Adviser's ability to resell the securities to the general public. The Adviser may invest in companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations, or financial restructurings."
Fidelity Central Investment Portfolios LLC (File No. 811-21167), Amendment Nos. 36 & 37, Fidelity Central Investment Portfolios II LLC (File No. 811-22083), Amendment No. 21
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11. Fidelity High Income Central Fund 2 and Fidelity Specialized High Income Central Fund
"Investment Details" (Part A of the Registration Statements)
"Principal Investment Risks"
"Foreign Exposure. Foreign securities, foreign currencies, and securities issued by U.S. entities with substantial foreign operations can involve additional risks relating to political, economic, or regulatory conditions in foreign countries. These risks include fluctuations in foreign exchange rates; withholding or other taxes; trading, settlement, custodial, and other operational risks; and the less stringent investor protection and disclosure standards of some foreign markets. All of these factors can make foreign investments,especially those in emerging markets, more volatile and potentially less liquid than U.S. investments. In addition, foreign markets can perform differently from the U.S. market."
C: The Staff requests that a corresponding emerging markets strategy be added to "Principal Investment Strategies" in the "Fund Summary" section.
R: The funds do not have a principal investment strategy to invest in emerging markets. We have included a reference to emerging markets under "Foreign Exposure" to the extent that the funds or any underlying funds in which the funds may invest may have exposure to certain markets that may be designated emerging markets. Accordingly, we have not modified disclosure.
12. All funds
Tandy Representations (Part A and Part B of the Registration Statements)
C: The Staff would like us to affirm the following three statements:
1) The funds are responsible for the adequacy and accuracy of the disclosure in the filings.
2) Staff comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing.
3) The funds may not assert Staff comments as a defense in any proceeding initiated by the Commission or any other person under the Federal Securities Laws.
R: We affirm the aforementioned statements.