UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3737
Fidelity Advisor Series IV
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | November 30 |
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Date of reporting period: | November 30, 2012 |
Item 1. Reports to Stockholders
Fidelity ®
Institutional
Short-Intermediate
Government Fund
Annual Report
November 30, 2012
(Fidelity Cover Art)
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
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Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $100,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended November 30, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Institutional Short-Intermediate Government Fund | 1.22% | 3.47% | 3.36% |
$100,000 Over 10 Years
Let's say hypothetically that $100,000 was invested in Fidelity® Institutional Short-Intermediate Government Fund on November 30, 2002. The chart shows how the value of your investment would have changed, and also shows how the Barclays® U.S. 1-5 Year Government Bond Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: For the year ending November 30, 2012, conditions generally favored U.S. investment-grade bonds, with several distinct trends bolstering the market's performance. The Federal Reserve maintained an accommodative stance, keeping U.S. interest rates anchored at an ultra-low level and undertaking a series of large-scale asset purchases dubbed quantitative easing. Meanwhile, sluggish U.S. economic growth and the ongoing sovereign debt crisis in Europe continued to steer global investors toward U.S. fixed-income assets, often viewed as among the best-available alternatives in a challenging global landscape. Against this backdrop, the entire U.S. investment-grade bond universe, as measured by the Barclays® U.S. Aggregate Bond Index, gained 5.51%. Among sectors that comprise the index, bonds with higher yields and on the riskier end of spectrum led the way, with investment-grade credit advancing 11.59%, as corporate balance sheets remained in solid shape - thanks to strong financial management and good cash flows - and the default rate remained low. Commercial mortgage-backed securities also fared quite well, rising 10.73%, while residential mortgage-backed securities saw a more modest 3.17% advance, restrained by their relatively short duration amid declining yields. U.S. Treasury and agency securities, considered by many as some of safer investments available, added 3.43% and 2.76%, respectively.
Comments from Franco Castagliuolo and William Irving, Lead Portfolio Manager and Co-Manager, respectively, of Fidelity® Institutional Short-Intermediate Government Fund: For the year, the fund returned 1.22% while the Barclays® U.S. 1-5 Year Government Bond Index gained 1.20%. Our significant underweighting in Treasuries, which lagged the index, helped. Additionally, we were successful in adding yield and incremental return by investing in alternative shorter-maturity government and government-related securities. For example, our out-of-index exposure to collateralized mortgage obligations (CMOs) was a plus, particularly floating rate securities, which provided the fund with added yield and appreciated in price. An investment in home-equity conversion trusts issued by Ginnie Mae delivered both price appreciation and excess yield over comparable-duration Treasuries. Our position in Freddie Mac K certificates provided a sizable return advantage over comparable-duration Treasuries. A small stake in bonds issued by the National Credit Union Association delivered excess yield. Among plain-vanilla mortgage pass-through securities, we benefited from owning bonds with high coupons. In contrast, not having a bigger stake in Fannie Mae and Freddie Mac debentures hampered performance, as they outpaced Treasuries.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (June 1, 2012 to November 30, 2012).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .45% | $ 1,000.00 | $ 1,006.40 | $ 2.26 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,022.75 | $ 2.28 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Coupon Distribution as of November 30, 2012 | ||
| % of fund's | % of fund's investments |
0.01 - 0.99% | 55.0 | 58.3 |
1 - 1.99% | 13.9 | 15.2 |
2 - 2.99% | 9.5 | 12.1 |
3 - 3.99% | 3.6 | 1.6 |
4 - 4.99% | 5.6 | 7.0 |
5 - 5.99% | 4.3 | 4.0 |
Greater than 6% | 4.7 | 0.9 |
Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments. |
Weighted Average Maturity as of November 30, 2012 | ||
|
| 6 months ago |
Years | 4.1 | 4.3 |
This is a weighted average of all the maturities of the securities held in a fund. Weighted Average Maturity (WAM) can be used as a measure of sensitivity to interest rate changes and market changes. Generally, the longer the maturity, the greater the sensitivity to such changes. WAM is based on the dollar-weighted average length of time until principal payments must be paid. Depending on the types of securities held in a fund, certain maturity shortening devices (e.g., demand features, interest rate resets, and call options) may be taken into account when calculating the WAM. |
Duration as of November 30, 2012 | ||
|
| 6 months ago |
Years | 2.5 | 2.5 |
Duration estimates how much a bond fund's price will change with a change in comparable interest rates. If rates rise 1%, for example, a fund with a 5-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example. Duration takes into account any call or put option embedded in the bonds. |
Asset Allocation (% of fund's net assets) | |||||||
As of November 30, 2012 * | As of May 31, 2012 ** | ||||||
 | Mortgage |
| | Mortgage |
| ||
 | CMOs and Other |
| | CMOs and Other |
| ||
 | U.S. Treasury |
| | U.S. Treasury |
| ||
 | U.S. Government |
| | U.S. Government |
| ||
 | Short-Term |
| | Short-Term |
| ||
* Futures and Swaps | 5.4% |
| ** Futures and Swaps | 7.0% |
| ||
† Includes FDIC Guaranteed Corporate Securities and/or NCUA Guaranteed Notes. |
Annual Report
Investments November 30, 2012
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 72.5% | ||||
| Principal Amount | Value | ||
U.S. Government Agency Obligations - 6.2% | ||||
Fannie Mae: | ||||
0.5% 5/27/15 | $ 716,000 | $ 718,501 | ||
0.5% 7/2/15 | 27,005,000 | 27,097,330 | ||
Federal Home Loan Bank: | ||||
0.375% 11/27/13 | 1,330,000 | 1,332,038 | ||
0.875% 12/27/13 | 350,000 | 352,408 | ||
1% 6/21/17 | 1,410,000 | 1,431,167 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 30,931,444 | |||
U.S. Treasury Obligations - 62.4% | ||||
U.S. Treasury Notes: | ||||
0.125% 7/31/14 | 5,809,000 | 5,797,202 | ||
0.25% 4/30/14 | 19,378,000 | 19,383,290 | ||
0.25% 5/31/14 | 5,302,000 | 5,302,827 | ||
0.25% 9/15/14 | 6,059,000 | 6,058,527 | ||
0.25% 9/30/14 | 1,466,000 | 1,466,000 | ||
0.25% 1/15/15 | 32,000,000 | 31,980,000 | ||
0.25% 7/15/15 | 24,026,000 | 23,992,219 | ||
0.25% 8/15/15 | 8,835,000 | 8,820,502 | ||
0.25% 9/15/15 | 6,000,000 | 5,988,750 | ||
0.25% 10/15/15 | 16,600,000 | 16,566,285 | ||
0.375% 11/15/14 | 10,000,000 | 10,022,270 | ||
0.375% 3/15/15 | 117,000 | 117,247 | ||
0.375% 11/15/15 | 10,000,000 | 10,014,840 | ||
0.5% 8/15/14 (a) | 8,193,000 | 8,227,886 | ||
0.5% 10/15/14 | 4,564,000 | 4,584,323 | ||
0.625% 7/15/14 | 6,939,000 | 6,981,557 | ||
0.625% 11/30/17 | 4,000,000 | 4,001,248 | ||
0.75% 6/15/14 | 4,786,000 | 4,823,202 | ||
0.75% 6/30/17 | 4,245,000 | 4,282,475 | ||
0.75% 10/31/17 | 9,440,000 | 9,504,900 | ||
0.875% 11/30/16 | 10,834,000 | 11,013,433 | ||
0.875% 4/30/17 | 16,586,000 | 16,836,084 | ||
1% 9/30/16 | 19,685,000 | 20,103,306 | ||
1.25% 10/31/15 | 5,500,000 | 5,646,091 | ||
1.375% 11/30/15 | 11,293,000 | 11,638,848 | ||
1.75% 7/31/15 | 7,788,000 | 8,084,310 | ||
1.875% 6/30/15 | 8,900,000 | 9,258,777 | ||
2.125% 11/30/14 | 5,648,000 | 5,856,270 | ||
2.125% 5/31/15 | 3,621,000 | 3,785,075 | ||
2.375% 8/31/14 | 1,687,000 | 1,749,077 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
2.375% 9/30/14 | $ 11,425,000 | $ 11,866,382 | ||
2.375% 10/31/14 | 7,948,000 | 8,267,160 | ||
2.625% 7/31/14 | 1,487,000 | 1,545,551 | ||
3.5% 2/15/18 | 6,313,000 | 7,223,947 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 310,789,861 | |||
Other Government Related - 3.9% | ||||
National Credit Union Administration Guaranteed Notes: | ||||
Series 2010-A1 Class A, 0.559% 12/7/20 (NCUA Guaranteed) (b) | 805,066 | 807,707 | ||
Series 2010-R2 Class 1A, 0.5885% 11/6/17 (NCUA Guaranteed) (b) | 5,004,748 | 5,014,758 | ||
Series 2011-C1 Class 1A, 0.541% 2/28/20 (NCUA Guaranteed) (b) | 1,097,443 | 1,096,719 | ||
Series 2011-R1 Class 1A, 0.6685% 1/8/20 (NCUA Guaranteed) (b) | 1,349,691 | 1,355,912 | ||
Series 2011-R4 Class 1A, 0.5985% 3/6/20 (NCUA Guaranteed) (b) | 684,037 | 685,347 | ||
National Credit Union Administration Guaranteed Notes Master Trust: | ||||
1.4% 6/12/15 (NCUA Guaranteed) | 640,000 | 654,752 | ||
2.35% 6/12/17 (NCUA Guaranteed) | 9,140,000 | 9,732,729 | ||
TOTAL OTHER GOVERNMENT RELATED | 19,347,924 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $357,588,996) | 361,069,229 | |||
U.S. Government Agency - Mortgage Securities - 11.0% | ||||
| ||||
Fannie Mae - 1.3% | ||||
2.223% 11/1/33 (b) | 39,895 | 42,462 | ||
2.26% 2/1/33 (b) | 16,292 | 17,103 | ||
2.285% 12/1/34 (b) | 15,253 | 16,048 | ||
2.285% 3/1/35 (b) | 15,276 | 16,129 | ||
2.295% 4/1/33 (b) | 166,348 | 174,937 | ||
2.304% 10/1/33 (b) | 16,746 | 17,690 | ||
2.315% 7/1/35 (b) | 7,371 | 7,769 | ||
2.332% 3/1/35 (b) | 9,510 | 10,162 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount | Value | ||
Fannie Mae - continued | ||||
2.339% 7/1/36 (b) | $ 57,191 | $ 60,532 | ||
2.384% 2/1/36 (b) | 30,871 | 33,075 | ||
2.425% 3/1/35 (b) | 2,367 | 2,453 | ||
2.427% 12/1/32 (b) | 63,573 | 67,786 | ||
2.452% 10/1/35 (b) | 10,774 | 11,267 | ||
2.524% 10/1/33 (b) | 15,690 | 16,755 | ||
2.559% 1/1/35 (b) | 70,796 | 75,433 | ||
2.559% 6/1/36 (b) | 10,125 | 10,857 | ||
2.605% 7/1/34 (b) | 9,387 | 9,972 | ||
2.63% 6/1/47 (b) | 41,375 | 44,491 | ||
2.639% 3/1/33 (b) | 34,101 | 36,403 | ||
2.664% 2/1/37 (b) | 139,630 | 150,146 | ||
2.729% 7/1/35 (b) | 17,295 | 18,401 | ||
2.751% 11/1/36 (b) | 87,517 | 94,108 | ||
2.781% 9/1/36 (b) | 31,125 | 33,469 | ||
2.877% 5/1/36 (b) | 15,648 | 16,631 | ||
2.996% 4/1/36 (b) | 109,056 | 115,862 | ||
3.215% 8/1/35 (b) | 201,575 | 216,409 | ||
3.385% 12/1/32 (b) | 668,653 | 709,163 | ||
5% 9/1/22 | 1,211,193 | 1,317,084 | ||
5.5% 10/1/20 to 4/1/21 | 1,060,047 | 1,140,611 | ||
5.984% 3/1/37 (b) | 20,876 | 22,448 | ||
6% 6/1/16 to 10/1/16 | 17,355 | 18,376 | ||
6.5% 6/1/15 to 8/1/36 | 1,473,541 | 1,690,505 | ||
7% 11/1/14 | 12,699 | 13,191 | ||
9% 5/1/15 to 2/1/20 | 33,489 | 36,746 | ||
9.5% 11/1/21 | 182 | 196 | ||
10.5% 8/1/20 | 9,492 | 11,103 | ||
11.5% 7/15/19 | 11,607 | 13,103 | ||
12% 4/1/15 | 4,865 | 5,264 | ||
12.5% 3/1/16 | 353 | 377 | ||
| 6,294,517 | |||
Freddie Mac - 1.2% | ||||
2.161% 6/1/33 (b) | 80,798 | 85,239 | ||
2.195% 3/1/35 (b) | 37,162 | 38,942 | ||
2.2% 3/1/37 (b) | 10,476 | 11,085 | ||
2.336% 11/1/35 (b) | 67,632 | 72,287 | ||
2.355% 4/1/34 (b) | 335,551 | 357,250 | ||
2.357% 5/1/37 (b) | 23,317 | 24,877 | ||
2.361% 2/1/37 (b) | 15,288 | 16,054 | ||
2.375% 5/1/37 (b) | 17,604 | 18,798 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount | Value | ||
Freddie Mac - continued | ||||
2.415% 7/1/35 (b) | $ 342,729 | $ 363,614 | ||
2.47% 8/1/37 (b) | 35,324 | 37,890 | ||
2.478% 6/1/37 (b) | 8,731 | 9,284 | ||
2.525% 2/1/36 (b) | 3,807 | 4,029 | ||
2.632% 7/1/35 (b) | 96,036 | 102,516 | ||
2.638% 4/1/37 (b) | 30,180 | 32,453 | ||
2.673% 7/1/35 (b) | 76,928 | 82,722 | ||
2.7% 10/1/35 (b) | 76,875 | 81,426 | ||
2.726% 10/1/36 (b) | 92,320 | 98,742 | ||
2.76% 5/1/37 (b) | 289,171 | 310,949 | ||
2.76% 5/1/37 (b) | 155,682 | 167,267 | ||
2.79% 6/1/37 (b) | 64,637 | 69,504 | ||
2.97% 4/1/37 (b) | 1,662 | 1,787 | ||
3.056% 7/1/36 (b) | 31,286 | 33,637 | ||
3.135% 3/1/33 (b) | 2,271 | 2,420 | ||
3.454% 10/1/35 (b) | 14,428 | 15,514 | ||
5% 9/1/35 | 3,307 | 3,561 | ||
5.5% 11/1/18 to 7/1/35 | 3,487,365 | 3,763,221 | ||
6.5% 12/1/21 | 118,814 | 131,587 | ||
9% 10/1/16 to 12/1/18 | 10,547 | 11,468 | ||
9.5% 2/1/17 to 12/1/22 | 20,014 | 21,786 | ||
10% 6/1/18 to 6/1/20 | 4,209 | 4,960 | ||
10.5% 9/1/20 | 73 | 82 | ||
11.5% 10/1/15 | 1,067 | 1,116 | ||
12% 10/1/13 to 11/1/19 | 2,596 | 2,705 | ||
12.25% 11/1/14 | 1,373 | 1,403 | ||
12.5% 1/1/13 to 6/1/19 | 7,910 | 8,601 | ||
| 5,988,776 | |||
Ginnie Mae - 8.5% | ||||
4% 9/15/25 | 171,886 | 186,122 | ||
4.3% 8/20/61 (d) | 491,327 | 553,890 | ||
4.5% 3/15/25 to 6/15/25 | 1,333,422 | 1,451,391 | ||
4.515% 3/20/62 (d) | 1,855,989 | 2,139,375 | ||
4.53% 10/20/62 (d) | 476,425 | 555,720 | ||
4.55% 5/20/62 (d) | 3,803,634 | 4,393,243 | ||
4.556% 12/20/61 (d) | 1,969,882 | 2,265,563 | ||
4.604% 3/20/62 (d) | 1,128,658 | 1,304,485 | ||
4.626% 3/20/62 (d) | 836,903 | 966,797 | ||
4.649% 2/20/62 (d) | 309,339 | 357,589 | ||
4.65% 3/20/62 (d) | 1,029,857 | 1,191,524 | ||
4.682% 2/20/62 (d) | 408,847 | 472,475 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount | Value | ||
Ginnie Mae - continued | ||||
4.684% 1/20/62 (d) | $ 2,530,724 | $ 2,920,916 | ||
4.804% 3/20/61 (d) | 1,328,888 | 1,518,293 | ||
4.834% 3/20/61 (d) | 2,363,080 | 2,704,035 | ||
5.612% 4/20/58 (d) | 891,855 | 951,399 | ||
6% 6/15/36 to 12/20/38 | 8,294,605 | 9,291,508 | ||
6.5% 8/20/38 to 9/20/38 | 8,053,433 | 9,071,778 | ||
8% 12/15/23 | 82,803 | 95,975 | ||
8.5% 1/15/17 to 3/15/17 | 16,970 | 18,371 | ||
10.5% 1/15/16 to 1/15/18 | 8,598 | 9,329 | ||
11% 10/20/13 | 188 | 191 | ||
| 42,419,969 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $53,665,378) | 54,703,262 | |||
Collateralized Mortgage Obligations - 12.9% | ||||
| ||||
U.S. Government Agency - 12.9% | ||||
Fannie Mae: | ||||
floater: | ||||
Series 1994-42 Class FK, 1.31% 4/25/24 (b) | 535,151 | 541,648 | ||
Series 2001-38 Class QF, 1.1875% 8/25/31 (b) | 122,225 | 124,137 | ||
Series 2002-49 Class FB, 0.8075% 11/18/31 (b) | 142,387 | 143,034 | ||
Series 2002-60 Class FV, 1.2075% 4/25/32 (b) | 31,036 | 31,586 | ||
Series 2002-74 Class FV, 0.6575% 11/25/32 (b) | 866,367 | 871,335 | ||
Series 2002-75 Class FA, 1.2075% 11/25/32 (b) | 63,576 | 64,705 | ||
Series 2008-76 Class EF, 0.7075% 9/25/23 (b) | 291,575 | 292,773 | ||
Series 2010-15 Class FJ, 1.1375% 6/25/36 (b) | 1,981,009 | 2,017,862 | ||
Series 2010-86 Class FE, 0.6575% 8/25/25 (b) | 319,853 | 321,772 | ||
pass-thru certificates Series 2012-127 Class DH, 4% 11/25/27 | 796,171 | 854,405 | ||
planned amortization class: | ||||
Series 2002-16 Class PG, 6% 4/25/17 | 150,483 | 161,320 | ||
Series 2002-9 Class PC, 6% 3/25/17 | 219,578 | 233,863 | ||
Series 2003-74 Class PG, 4.5% 8/25/18 | 256,206 | 273,353 | ||
Series 2005-19 Class PA, 5.5% 7/25/34 | 628,665 | 692,530 | ||
Series 2005-52 Class PB, 6.5% 12/25/34 | 92,436 | 97,662 | ||
Series 2005-64 Class PX, 5.5% 6/25/35 | 610,400 | 682,821 | ||
Series 2012-94 Class E, 3% 6/25/22 | 1,274,662 | 1,340,287 | ||
sequential payer: | ||||
Series 2002-56 Class MC, 5.5% 9/25/17 | 33,662 | 35,631 | ||
Series 2002-57 Class BD, 5.5% 9/25/17 | 35,646 | 38,379 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Government Agency - continued | ||||
Fannie Mae: - continued | ||||
sequential payer: | ||||
Series 2004-95 Class AN, 5.5% 1/25/25 | $ 131,254 | $ 136,815 | ||
Series 2005-47 Class HK, 4.5% 6/25/20 | 680,000 | 736,983 | ||
Series 2009-14 Class EB, 4.5% 3/25/24 | 690,000 | 748,855 | ||
Series 2010-139 Class NI, 4.5% 2/25/40 (c) | 888,666 | 129,484 | ||
Series 2010-39 Class FG, 1.1275% 3/25/36 (b) | 1,139,503 | 1,162,784 | ||
Series 2011-67 Class AI, 4% 7/25/26 (c) | 319,920 | 29,086 | ||
Freddie Mac: | ||||
floater: | ||||
Series 2448 Class FT, 1.208% 3/15/32 (b) | 167,066 | 169,855 | ||
Series 2526 Class FC, 0.608% 11/15/32 (b) | 140,871 | 141,382 | ||
Series 2530 Class FE, 0.808% 2/15/32 (b) | 84,618 | 85,434 | ||
Series 2630 Class FL, 0.708% 6/15/18 (b) | 11,082 | 11,145 | ||
Series 2711 Class FC, 1.108% 2/15/33 (b) | 734,009 | 745,578 | ||
Series 3835 Class FC, 0.558% 5/15/38 (b) | 2,453,944 | 2,456,400 | ||
floater planned amortization class Series 2770 Class FH, 0.608% 3/15/34 (b) | 523,672 | 525,908 | ||
planned amortization class: | ||||
Series 2356 Class GD, 6% 9/15/16 | 35,522 | 38,057 | ||
Series 2363 Class PF, 6% 9/15/16 | 44,969 | 47,728 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 36,870 | 39,064 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 22,616 | 23,868 | ||
Series 2425 Class JH, 6% 3/15/17 | 47,368 | 51,038 | ||
Series 2695 Class DG, 4% 10/15/18 | 771,025 | 808,179 | ||
Series 3415 Class PC, 5% 12/15/37 | 258,221 | 280,832 | ||
Series 3763 Class QA, 4% 4/15/34 | 473,684 | 510,019 | ||
sequential payer: | ||||
Series 2145 Class MZ, 6.5% 4/15/29 | 720,916 | 819,834 | ||
Series 1929 Class EZ, 7.5% 2/17/27 | 508,593 | 570,303 | ||
Series 2357 Class ZB, 6.5% 9/15/31 | 389,814 | 442,511 | ||
Series 2582 Class CG, 4% 11/15/17 | 624,696 | 634,416 | ||
Series 3013 Class VJ, 5% 1/15/14 | 215,461 | 220,148 | ||
Series 3578, Class B, 4.5% 9/15/24 | 700,000 | 765,236 | ||
Series 3659 Class EJ 3% 6/15/18 | 586,911 | 607,958 | ||
Series 3675 Class CA, 3% 4/15/20 | 4,580,929 | 4,718,192 | ||
Ginnie Mae guaranteed REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2008-2 Class FD, 0.6907% 1/20/38 (b) | 80,266 | 80,718 | ||
Series 2007-59 Class FC, 0.7075% 7/20/37 (b) | 297,442 | 299,567 | ||
Series 2008-73 Class FA, 1.0707% 8/20/38 (b) | 565,656 | 575,787 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Government Agency - continued | ||||
Ginnie Mae guaranteed REMIC pass-thru certificates: - continued | ||||
floater: | ||||
Series 2008-83 Class FB, 1.1107% 9/20/38 (b) | $ 562,401 | $ 572,956 | ||
Series 2009-108 Class CF, 0.814% 11/16/39 (b) | 406,981 | 411,002 | ||
Series 2009-116 Class KF, 0.744% 12/16/39 (b) | 351,581 | 354,390 | ||
Series 2010-9 Class FA, 0.734% 1/16/40 (b) | 517,882 | 521,995 | ||
Series 2010-H17 Class FA, 0.541% 7/20/60 (b)(d) | 1,377,636 | 1,361,278 | ||
Series 2010-H18 Class AF, 0.5145% 9/20/60 (b)(d) | 1,449,463 | 1,435,331 | ||
Series 2010-H19 Class FG, 0.5145% 8/20/60 (b)(d) | 1,845,181 | 1,827,515 | ||
Series 2010-H27 Series FA, 0.5945% 12/20/60 (b)(d) | 497,766 | 494,890 | ||
Series 2011-H03 Class FA, 0.7145% 1/20/61 (b)(d) | 1,458,502 | 1,459,218 | ||
Series 2011-H05 Class FA, 0.7145% 12/20/60 (b)(d) | 915,447 | 915,894 | ||
Series 2011-H07 Class FA, 0.7145% 2/20/61 (b)(d) | 1,470,555 | 1,471,276 | ||
Series 2011-H12 Class FA, 0.7045% 2/20/61 (b)(d) | 1,910,127 | 1,909,187 | ||
Series 2011-H13 Class FA, 0.7145% 4/20/61 (b)(d) | 789,140 | 789,515 | ||
Series 2011-H14: | ||||
Class FB, 0.7145% 5/20/61 (b)(d) | 853,632 | 854,089 | ||
Class FC, 0.7145% 5/20/61 (b)(d) | 855,115 | 855,545 | ||
Series 2011-H17 Class FA, 0.7445% 6/20/61 (b)(d) | 1,099,185 | 1,101,194 | ||
Series 2011-H21 Class FA, 0.8145% 10/20/61 (b)(d) | 1,163,293 | 1,169,441 | ||
Series 2012-H01 Class FA, 0.9145% 11/20/61 (b)(d) | 960,393 | 970,602 | ||
Series 2012-H03 Class FA, 0.9145% 1/20/62 (b)(d) | 637,310 | 644,193 | ||
Series 2012-H06 Class FA, 0.8445% 1/20/62 (b)(d) | 970,814 | 977,619 | ||
Series 2012-H07 Class FA, 0.8445% 3/20/62 (b)(d) | 568,833 | 573,036 | ||
floater sequential payer Series 2011-150 Class D, 3% 4/20/37 | 340,920 | 350,017 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Government Agency - continued | ||||
Ginnie Mae guaranteed REMIC pass-thru certificates: - continued | ||||
planned amortization class: | ||||
Series 2010-112 Class PM, 3.25% 9/20/33 | $ 223,315 | $ 229,670 | ||
Series 2010-99 Class PT, 3.5% 8/20/33 | 269,764 | 279,317 | ||
Series 2011-68 Class EC, 3.5% 4/20/41 | 1,015,191 | 1,094,258 | ||
Series 1999-18 Class Z, 6.25% 5/16/29 | 1,134,119 | 1,311,928 | ||
Series 2010-H13 Class JA, 5.46% 10/20/59 (d) | 4,539,400 | 4,999,881 | ||
Series 2010-H15 Class TP, 5.15% 8/20/60 (d) | 1,987,370 | 2,276,168 | ||
Series 2010-H17 Class XP, 5.3019% 7/20/60 (b)(d) | 2,649,134 | 3,030,574 | ||
Series 2010-H18 Class PL, 5.01% 9/20/60 (b)(d) | 1,939,753 | 2,209,645 | ||
Series 2012-64 Class KB, 3.1131% 5/20/41 (b) | 437,255 | 472,720 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $63,891,882) | 64,356,611 | |||
Commercial Mortgage Securities - 2.8% | ||||
| ||||
Freddie Mac: | ||||
floater Series K707 Class A2, 2.22% 12/25/18 | 2,010,000 | 2,114,826 | ||
pass thru-certificates floater Series KF01 Class A, 0.5643% 4/25/19 (b) | 1,737,450 | 1,737,037 | ||
pass-thru certificates Series K708 Class A1, 1.67% 10/25/18 | 552,402 | 569,303 | ||
pass-thru certificates sequential payer Series KP01 Class A2, 1.72% 1/25/19 | 3,250,000 | 3,332,260 | ||
sequential payer: | ||||
Series K009 Class A2, 3.808% 8/25/20 | 800,000 | 910,179 | ||
Series K710 Class A2, 1.883% 5/25/19 | 1,497,000 | 1,545,072 | ||
Series K501 Class A2, 1.655% 11/25/16 | 930,000 | 961,296 | ||
Series K706: | ||||
Class A1, 1.691% 6/25/18 | 1,940,672 | 2,000,390 | ||
Class A2, 2.323% 10/25/18 | 670,000 | 708,742 | ||
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $13,639,828) | 13,879,105 | |||
Cash Equivalents - 3.5% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 0.21%, dated 11/30/12 due 12/3/12 (Collateralized by U.S. Government Obligations) # | $ 17,203,305 | $ 17,203,000 | |
TOTAL INVESTMENT PORTFOLIO - 102.7% (Cost $505,989,084) | 511,211,207 | ||
NET OTHER ASSETS (LIABILITIES) - (2.7)% | (13,231,396) | ||
NET ASSETS - 100% | $ 497,979,811 | ||
Futures Contracts | |||||
Expiration | Underlying | Unrealized | |||
Purchased | |||||
Treasury Contracts | |||||
123 CBOT 2-Year U.S. Treasury Note Contracts | March 2013 | $ 27,115,734 | $ (251) | ||
|
The face value of futures purchased as a percentage of net assets is 5.4% |
Legend |
(a) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $70,298. |
(b) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. |
(c) Security represents right to receive monthly interest payments on an underlying pool of mortgages or assets. Principal shown is the outstanding par amount of the pool as of the end of the period. |
(d) Represents an investment in an underlying pool of reverse mortgages which typically do not require regular principal and interest payments as repayment is deferred until a maturity event. |
# Additional information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$17,203,000 due 12/03/12 at 0.21% | |
Citigroup Global Markets, Inc. | $ 3,452,345 |
Credit Suisse Securities (USA) LLC | 2,611,303 |
HSBC Securities (USA), Inc. | 4,603,127 |
Merrill Lynch, Pierce, Fenner & Smith, Inc. | 5,063,438 |
Mizuho Securities USA, Inc. | 322,005 |
UBS Securities LLC | 1,150,782 |
| $ 17,203,000 |
Other Information |
The following is a summary of the inputs used, as of November 30, 2012, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
U.S. Government and Government Agency Obligations | $ 361,069,229 | $ - | $ 361,069,229 | $ - |
U.S. Government Agency - Mortgage Securities | 54,703,262 | - | 54,703,262 | - |
Collateralized Mortgage Obligations | 64,356,611 | - | 64,356,611 | - |
Commercial Mortgage Securities | 13,879,105 | - | 13,879,105 | - |
Cash Equivalents | 17,203,000 | - | 17,203,000 | - |
Total Investments in Securities: | $ 511,211,207 | $ - | $ 511,211,207 | $ - |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $ (251) | $ (251) | $ - | $ - |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of November 30, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Primary Risk Exposure / | Value | |
| Asset | Liability |
Interest Rate Risk | ||
Futures Contracts (a) | $ - | $ (251) |
Total Value of Derivatives | $ - | $ (251) |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| November 30, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $17,203,000) - See accompanying schedule: Unaffiliated issuers (cost $505,989,084) |
| $ 511,211,207 |
Cash |
| 900 |
Receivable for investments sold | 36,460 | |
Receivable for fund shares sold | 575,934 | |
Interest receivable | 1,002,535 | |
Receivable for daily variation margin on futures contracts | 3,844 | |
Total assets | 512,830,880 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,022,243 | |
Payable for fund shares redeemed | 636,988 | |
Distributions payable | 5,067 | |
Accrued management fee | 186,472 | |
Other affiliated payables | 299 | |
Total liabilities | 14,851,069 | |
|
|
|
Net Assets | $ 497,979,811 | |
Net Assets consist of: |
| |
Paid in capital | $ 490,307,181 | |
Distributions in excess of net investment income | (5,403) | |
Accumulated undistributed net realized gain (loss) on investments | 2,456,161 | |
Net unrealized appreciation (depreciation) on investments | 5,221,872 | |
Net Assets, for 48,975,806 shares outstanding | $ 497,979,811 | |
Net Asset Value, offering price and redemption price per share ($497,979,811 ÷ 48,975,806 shares) | $ 10.17 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended November 30, 2012 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 4,629,238 |
|
|
|
Expenses | ||
Management fee | $ 2,255,687 | |
Independent trustees' compensation | 1,836 | |
Miscellaneous | 1,375 | |
Total expenses before reductions | 2,258,898 | |
Expense reductions | (171) | 2,258,727 |
Net investment income (loss) | 2,370,511 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,989,975 | |
Futures contracts | 66,998 | |
Total net realized gain (loss) |
| 3,056,973 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 691,507 | |
Futures contracts | (28,823) | |
Total change in net unrealized appreciation (depreciation) |
| 662,684 |
Net gain (loss) | 3,719,657 | |
Net increase (decrease) in net assets resulting from operations | $ 6,090,168 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,370,511 | $ 4,288,447 |
Net realized gain (loss) | 3,056,973 | 8,959,386 |
Change in net unrealized appreciation (depreciation) | 662,684 | (4,434,896) |
Net increase (decrease) in net assets resulting | 6,090,168 | 8,812,937 |
Distributions to shareholders from net investment income | (2,462,634) | (4,192,583) |
Distributions to shareholders from net realized gain | (7,924,811) | (7,627,821) |
Total distributions | (10,387,445) | (11,820,404) |
Share transactions | 195,350,049 | 153,879,013 |
Reinvestment of distributions | 10,081,022 | 11,447,931 |
Cost of shares redeemed | (175,539,569) | (201,782,536) |
Net increase (decrease) in net assets resulting from share transactions | 29,891,502 | (36,455,592) |
Total increase (decrease) in net assets | 25,594,225 | (39,463,059) |
|
|
|
Net Assets | ||
Beginning of period | 472,385,586 | 511,848,645 |
End of period (including distributions in excess of net investment income of $5,403 and undistributed net investment income of $70,299, respectively) | $ 497,979,811 | $ 472,385,586 |
Other Information Shares | ||
Sold | 19,289,157 | 15,093,735 |
Issued in reinvestment of distributions | 997,299 | 1,132,407 |
Redeemed | (17,324,063) | (19,844,490) |
Net increase (decrease) | 2,962,393 | (3,618,348) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended November 30, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.27 | $ 10.31 | $ 10.31 | $ 10.04 | $ 9.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .048 | .092 | .135 | .199 | .316 |
Net realized and unrealized gain (loss) | .075 | .115 | .136 | .274 | .326 |
Total from investment operations | .123 | .207 | .271 | .473 | .642 |
Distributions from net investment income | (.050) | (.090) | (.131) | (.203) | (.332) |
Distributions from net realized gain | (.173) | (.157) | (.140) | - | - |
Total distributions | (.223) | (.247) | (.271) | (.203) | (.332) |
Net asset value, end of period | $ 10.17 | $ 10.27 | $ 10.31 | $ 10.31 | $ 10.04 |
Total Return A | 1.22% | 2.06% | 2.70% | 4.76% | 6.72% |
Ratios to Average Net Assets C |
|
|
|
|
|
Expenses before reductions | .45% | .45% | .45% | .45% | .45% |
Expenses net of fee waivers, if any | .45% | .45% | .45% | .45% | .45% |
Expenses net of all reductions | .45% | .45% | .45% | .45% | .44% |
Net investment income (loss) | .47% | .90% | 1.33% | 1.96% | 3.22% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 497,980 | $ 472,386 | $ 511,849 | $ 538,834 | $ 612,529 |
Portfolio turnover rate | 138% | 315% | 221% | 347% | 238% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended November 30, 2012
1. Organization.
Fidelity Institutional Short-Intermediate Government Fund (the Fund) is a fund of Fidelity Advisor Series IV (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
2. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, investments will be fair valued in good faith by the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Annual Report
2. Significant Accounting Policies - continued
Investment Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. For collateralized mortgage obligations, commercial mortgage securities and U.S. government agency mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less may be valued at amortized cost, which approximates fair value, and are categorized as Level 2 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of November 30, 2012, is included at the end of the Fund's Schedule of Investments.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and net asset value (NAV) include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. The principal amount on inflation-indexed securities is periodically adjusted to the rate of inflation and interest is accrued based on the principal amount. The adjustments to principal due to inflation are reflected as increases or decreases to interest income even though principal is not received until maturity.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis
Annual Report
Notes to Financial Statements - continued
2. Significant Accounting Policies - continued
Expenses - continued
of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of November 30, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.
Dividends are declared and recorded daily and paid monthly from net investment income. Distributions from realized gains, if any, are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, prior period premium and discount on debt securities, market discount, deferred trustees compensation, financing transactions and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 5,420,685 |
Gross unrealized depreciation | (318,725) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 5,101,960 |
|
|
Tax Cost | $ 506,109,247 |
Annual Report
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,070,069 |
Undistributed long-term capital gain | $ 1,500,905 |
Net unrealized appreciation (depreciation) | $ 5,101,960 |
The tax character of distributions paid was as follows:
| November 30, 2012 | November 30, 2011 |
Ordinary Income | $ 5,027,891 | $ 9,293,992 |
Long-term Capital Gains | 5,359,554 | 2,526,412 |
Total | $ 10,387,445 | $ 11,820,404 |
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements may be collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Annual Report
Notes to Financial Statements - continued
3. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Interest Rate Risk | Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the bond market and to fluctuations in interest rates.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the
Annual Report
3. Derivative Instruments - continued
Futures Contracts - continued
daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable, if any, is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument or index at period end and is representative of activity for the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
During the period the Fund recognized net realized gain (loss) of $66,998 and a change in net unrealized appreciation (depreciation) of ($28,823) related to its investment in futures contracts. These amounts are included in the Statement of Operations.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $0 and $350,266, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee that is based on an annual rate of .45% of the Fund's average net assets. Under the management contract, FMR pays all other expenses, except the compensation of the independent Trustees and certain other expenses such as interest expense, including commitment fees. The management fee paid to FMR by the Fund is reduced by an amount equal to the fees and expenses paid by the Fund to the independent Trustees.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,375 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. 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. Any cash collateral received is maintained at the Fund's custodian and/or invested in cash equivalents. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of interest income. Total security lending income during the period amounted to $22,531.
8. Expense Reductions.
Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's management fee. During the period, these credits reduced the Fund's management fee by $171.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Advisor Series IV and the Shareholders of Fidelity Institutional Short-Intermediate Government Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Institutional Short-Intermediate Government Fund (a fund of Fidelity Advisor Series IV) at November 30, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Institutional Short-Intermediate Government Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at November 30, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 15, 2013
Annual Report
Trustees and Officers
The Trustees and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey and Elizabeth S. Acton, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Mr. Curvey oversees 454 funds advised by FMR or an affiliate. Ms. Acton oversees 200 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the month in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers hold office without limit in time, except that any officer 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 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.
Annual Report
Board Structure and Oversight Function. Abigail P. Johnson is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Albert R. Gamper, Jr. serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds and another Board oversees Fidelity's equity and high income funds. The asset allocation funds may invest in Fidelity funds that are overseen by such other 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, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations and Audit Committees. In addition, an ad hoc Board committee of Independent Trustees has worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR'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 Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Abigail P. Johnson (50) | |
| Year of Election or Appointment: 2009 Ms. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Ms. Johnson serves as President of Fidelity Financial Services (2012-present) and President of Personal, Workplace and Institutional Services (2005-present). Ms. Johnson is Chairman and Director of FMR Co., Inc. (2011-present), Chairman and Director of FMR (2011-present), and the Vice Chairman and Director (2007-present) of FMR LLC. Previously, Ms. Johnson served as President and a Director of FMR (2001-2005), a Trustee of other investment companies advised by FMR, Fidelity Investments Money Management, Inc., and FMR Co., Inc. (2001-2005), Senior Vice President of the Fidelity funds (2001-2005), and managed a number of Fidelity funds. Ms. Abigail P. Johnson and Mr. Arthur E. Johnson are not related. |
James C. Curvey (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above 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, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Elizabeth S. Acton (61) | |
| Year of Election or Appointment: 2013 Ms. Acton is Trustee of certain Trusts. Prior to her retirement in April 2012, Ms. Acton was Executive Vice President, Finance (November 2011-April 2012), Executive Vice President, Chief Financial Officer (April 2002-November 2011), and Treasurer (May 2004-May 2005) of Comerica Incorporated (financial services). Prior to joining Comerica, Ms. Acton held a variety of positions at Ford Motor Company (1983-2002), including Vice President and Treasurer (2000-2002) and Executive Vice President and Chief Financial Officer of Ford Motor Credit Company (1998-2000). Ms. Acton currently serves as a member of the Board of Directors and Audit and Finance Committees of Beazer Homes USA, Inc. (homebuilding, 2012-present). |
Albert R. Gamper, Jr. (70) | |
| Year of Election or Appointment: 2006 Mr. Gamper is Chairman of the Independent Trustees of the Fixed Income and Asset Allocation Funds (2012-present). Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (2002-2003). Mr. Gamper currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2000-present), a member of the Board of Trustees, Rutgers University (2004-present), and Chairman of the Board of Barnabas Health Care System. Previously, Mr. Gamper served as Vice Chairman of the Independent Trustees of the Fixed Income and Asset Allocation Funds (2011-2012) and as Chairman of the Board of Governors, Rutgers University (2004-2007). |
Robert F. Gartland (60) | |
| Year of Election or Appointment: 2010 Mr. Gartland is Chairman and an investor in Gartland and Mellina Group Corp. (consulting, 2009-present). Previously, Mr. Gartland served as a partner and investor of Vietnam Partners LLC (investments and consulting, 2008-2011). Prior to his retirement, Mr. Gartland held a variety of positions at Morgan Stanley (financial services, 1979-2007) including Managing Director (1987-2007). |
Arthur E. Johnson (65) | |
| Year of Election or Appointment: 2008 Mr. Johnson serves as a member of the Board of Directors of Eaton Corporation (diversified power management, 2009-present), AGL Resources, Inc. (holding company, 2002-present) and Booz Allen Hamilton (management consulting, 2011-present). Prior to his retirement, Mr. Johnson served as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor, 1999-2009). He previously served on the Board of Directors of IKON Office Solutions, Inc. (1999-2008) and Delta Airlines (2005-2007). Mr. Arthur E. Johnson is not related to Ms. Abigail P. Johnson. |
Michael E. Kenneally (58) | |
| Year of Election or Appointment: 2009 Previously, Mr. Kenneally served as a Member of the Advisory Board for certain Fidelity Fixed Income and Asset Allocation Funds (2008-2009). Prior to his retirement, Mr. Kenneally served as Chairman and Global Chief Executive Officer of Credit Suisse Asset Management (2003-2005). Mr. Kenneally was a Director of the Credit Suisse Funds (U.S. mutual funds, 2004-2008) and certain other closed-end funds (2004-2005) and was awarded the Chartered Financial Analyst (CFA) designation in 1991. |
James H. Keyes (72) | |
| Year of Election or Appointment: 2007 Mr. Keyes serves as a member of the Boards of Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, since 2002) and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, since 1998). Prior to his retirement, Mr. Keyes served as Chairman and Chief Executive Officer of Johnson Controls (automotive, building, and energy, 1998-2002) and as a member of the Board of LSI Logic Corporation (semiconductor technologies, 1984-2008). |
Marie L. Knowles (66) | |
| Year of Election or Appointment: 2001 Ms. Knowles is Vice Chairman of the Independent Trustees of the Fixed Income and Asset Allocation Funds (2012-present). Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. Ms. Knowles currently serves as a Director and Chairman of the Audit Committee of McKesson Corporation (healthcare service, since 2002). Ms. Knowles is an Honorary Trustee of the Brookings Institution and a member of the Board of the Catalina Island Conservancy and of the Santa Catalina Island Company (2009-present). She also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California and the Foundation Board of the School of Architecture at the University of Virginia (2007-present). Previously, Ms. Knowles served as a Director of Phelps Dodge Corporation (copper mining and manufacturing, 1994-2007). |
Kenneth L. Wolfe (73) | |
| Year of Election or Appointment: 2005 Prior to his retirement, Mr. Wolfe served as Chairman and a Director (2007-2009) and Chairman and Chief Executive Officer (1994-2001) of Hershey Foods Corporation. He also served as a member of the Boards of Adelphia Communications Corporation (telecommunications, 2003-2006), Bausch & Lomb, Inc. (medical/pharmaceutical, 1993-2007), and Revlon, Inc. (personal care products, 2004-2009). Mr. Wolfe previously served as Chairman of the Independent Trustees of the Fixed Income and Asset Allocation Funds (2008-2012). |
+ The information above 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, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Executive Officers:
Correspondence intended for each executive officer may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
John R. Hebble (54) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), Assistant Treasurer of other Fidelity funds (2009-present) and is an employee of Fidelity Investments. |
Charles S. Morrison (51) | |
| Year of Election or Appointment: 2012 Vice President of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Morrison also serves as President, Fixed Income and is an employee of Fidelity Investments. Previously, Mr. Morrison served as Vice President of Fidelity's Money Market Funds (2005-2009), President, Money Market Group Leader of FMR (2009), and Senior Vice President, Money Market Group of FMR (2004-2009). Mr. Morrison also served as Vice President of Fidelity's Bond Funds (2002-2005), certain Balanced Funds (2002-2005), and certain Asset Allocation Funds (2002-2007), and as Senior Vice President (2002-2005) of Fidelity's Fixed Income Division. |
Robert P. Brown (49) | |
| Year of Election or Appointment: 2012 Vice President of Fidelity's Bond Funds. Mr. Brown also serves as Executive Vice President of Fidelity Investments Money Management, Inc. (2010-present), President, Bond Group of FMR (2011-present), Director and Managing Director, Research of Fidelity Management & Research (U.K.) Inc. (2008-present) and is an employee of Fidelity Investments. Previously, Mr. Brown served as President, Money Market Group of FMR (2010-2011) and Vice President of Fidelity's Money Market Funds (2010-2012). |
Scott C. Goebel (44) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
Ramon Herrera (38) | |
| Year of Election or Appointment: 2012 Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Herrera also serves as Vice President, Associate General Counsel (2010-present) and is an employee of Fidelity Investments (2004-present). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Michael H. Whitaker (45) | |
| Year of Election or Appointment: 2008 Chief Compliance Officer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Whitaker also serves as Chief Compliance Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present). Mr. Whitaker is an employee of Fidelity Investments (2007-present). Prior to joining Fidelity Investments, Mr. Whitaker worked at MFS Investment Management where he served as Senior Vice President and Chief Compliance Officer (2004-2006), and Assistant General Counsel. |
Joseph F. Zambello (55) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Stephanie J. Dorsey (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Ms. Dorsey also serves as Assistant Treasurer of other Fidelity funds (2010-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Adrien E. Deberghes (45) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer (2011-present) and Deputy Treasurer (2008-present) of other Fidelity funds, and is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Kenneth B. Robins (43) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of the Fidelity Fixed Income and Asset Allocation Funds. Mr. Robins also serves as President and Treasurer of other Fidelity funds (2008-present; 2010-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Assistant Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Sadoski also serves as Deputy Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Gary W. Ryan (54) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Jonathan Davis (44) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Institutional Short-Intermediate Government Fund voted to pay shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
Pay Date | Record Date | Capital Gains |
12/24/2012 | 12/21/2012 | $0.055 |
The fund hereby designates a capital gain with respect to the taxable year ended November 30, 2012 $1,575,668, or, if subsequently determined to be different, the net capital gain of such year.
A total of 51.85% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund designates $2,213,147 of distributions paid during the period January 1, 2012 to November 30, 2012, as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Institutional Short-Intermediate Government Fund
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established three standing committees, Operations, Audit, and Governance and Nominating, each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its September 2012 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale exist and would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered the staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, managing, and compensating investment personnel. The Board also noted that FMR has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered the Investment Advisers' trading and risk management capabilities and resources, which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a sector neutral investment approach for certain funds and utilizing a team of portfolio managers to manage certain sector-neutral funds; (vi) rationalizing product lines and gaining increased efficiencies through combinations of several funds with other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2011, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Fidelity Institutional Short-Intermediate Government Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the fund was in the third quartile for the one- and five-year periods and the fourth quartile for the three-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the fund's three-year cumulative total return compared favorably to its benchmark. The Board discussed with FMR actions to improve the fund's disappointing performance relative to its peer group and how investment personnel evaluate potential for incremental return against the risks involved in obtaining that incremental return. The Board considered the steps that FMR has taken to strengthen and refine its risk management processes in light of recent credit events that have affected various sectors of the fixed-income markets. The Board noted that this fund had underperformed in the past and discussed with FMR its disappointment with the continued underperformance of the fund. The Board also reviewed the fund's performance since inception as well as performance in the current year. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board. Because the vast majority of competitor funds' management fees do not cover non-management expenses, for a more meaningful comparison of management fees, the fund is compared on the basis of a hypothetical "net management fee," which is derived by subtracting payments made by FMR for non-management expenses (including transfer agent fees, pricing and bookkeeping fees, and fees paid to non-affiliated custodians) from the fund's all-inclusive fee. In this regard, the Board considered that net management fees can vary from year to year because of differences in non-management expenses.
Annual Report
Fidelity Institutional Short-Intermediate Government Fund
The Board noted that the fund's hypothetical net management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2011.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of the fund's total expense ratio, the Board considered the fund's hypothetical net management fee as well as the fund's all-inclusive fee. The Board also considered other expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees, paid by FMR under the all-inclusive arrangement. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered the current and historical total expense ratios of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expense ratio ranked below its competitive median for 2011.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the fund's total expense ratio was reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was satisfied that the profitability was not excessive in the circumstances.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions. The Board also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
Annual Report
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability, the rationale for the compensation structure, and the extent to which current market conditions have affected retention and recruitment; (iv) the compensation paid to fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure, and the rationale for recommending different fees among different categories of funds and classes; (vi) Fidelity's voluntary waiver of its fees to maintain minimum yields for certain money market funds and classes as well as contractual waivers in place for certain funds; (vii) regulatory and industry developments, including those affecting money market funds and target date funds, and the potential impact to Fidelity; (viii) Fidelity's transfer agent fees, expenses, and services, and drivers for determining the transfer agent fee structure of different funds and classes; (ix) management fee rates charged by FMR or Fidelity entities to other Fidelity clients; (x) the allocation of and historical trends in Fidelity's realization of fall-out benefits; and (xi) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments Money
Management, Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York Mellon
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ISIG-UANN-0113 1.786710.109
Item 2. Code of Ethics
As of the end of the period, November 30, 2012, Fidelity Advisor Series IV (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that James H. Keyes is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Keyes is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Fidelity Institutional Short-Intermediate Government Fund (the "Fund"):
Services Billed by PwC
November 30, 2012 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Institutional Short-Intermediate Government Fund | $57,000 | $- | $3,300 | $1,700 |
November 30, 2011 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Institutional Short-Intermediate Government Fund | $52,000 | $- | $3,300 | $1,800 |
A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Fund and that are rendered on behalf of Fidelity Management & Research Company ("FMR") and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund ("Fund Service Providers"):
Services Billed by PwC
| November 30, 2012A | November 30, 2011A |
Audit-Related Fees | $5,130,000 | $3,505,000 |
Tax Fees | $- | $- |
All Other Fees | $- | $- |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Fund, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Fund are as follows:
Billed By | November 30, 2012 A | November 30, 2011 A |
PwC | $6,045,000 | $5,250,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Fund, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Fund and its related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Fund's last two fiscal years relating to services provided to (i) the Fund or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Fund.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Advisor Series IV
By: | /s/John R. Hebble |
| John R. Hebble |
| President and Treasurer |
|
|
Date: | January 25, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/John R. Hebble |
| John R. Hebble |
| President and Treasurer |
|
|
Date: | January 25, 2013 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | January 25, 2013 |