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 |
| |
Date of reporting period: | May 31, 2009 |
Item 1. Reports to Stockholders
Fidelity ®
Institutional
Short-Intermediate
Government Fund
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | The Chairman's message to shareholders. |
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) website 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.
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 or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual 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 (December 1, 2008 to May 31, 2009).
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 Expense Ratio | Beginning
Account Value
December 1, 2008 | Ending
Account Value
May 31, 2009 | Expenses Paid
During Period*
December 1, 2008
to May 31, 2009 |
Actual | .45% | $ 1,000.00 | $ 1,022.10 | $ 2.27 |
Hypothetical (5% return per year before expenses) | | $ 1,000.00 | $ 1,022.69 | $ 2.27 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Coupon Distribution as of May 31, 2009 |
| % of fund's
investments | % of fund's investments
6 months ago |
Less than 3% | 58.5 | 42.4 |
3 - 3.99% | 14.5 | 21.2 |
4 - 4.99% | 10.0 | 17.7 |
5 - 5.99% | 6.9 | 9.2 |
6 - 6.99% | 5.9 | 7.2 |
7% and over | 0.4 | 0.3 |
Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments. |
Weighted Average Maturity as of May 31, 2009 |
| | 6 months ago |
Years | 3.1 | 3.0 |
The weighted average maturity is based on the dollar-weighted average length of time until principal payments are expected or until securities reach maturity, taking into account any maturity shortening feature such as a call, refunding or redemption provision. |
Duration as of May 31, 2009 |
| | 6 months ago |
Years | 2.6 | 2.5 |
Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-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. |
Asset Allocation (% of fund's net assets) |
As of May 31, 2009* | As of November 30, 2008** |
 | Mortgage Securities 13.3% | | | Mortgage Securities 14.2% | |
 | CMOs and Other Mortgage Related
Securities 4.4% | | | CMOs and Other Mortgage Related
Securities 5.9% | |
 | U.S. Treasury
Obligations 43.8% | | | U.S. Treasury
Obligations 50.3% | |
 | U.S. Government
Agency Obligations 38.2% | | | U.S. Government
Agency Obligations 28.3% | |
 | Short-Term
Investments and
Net Other Assets 0.3% | | | Short-Term
Investments and
Net Other Assets 1.3% | |
* Futures and Swaps | 2.4% | | ** Futures and Swaps | 6.1% | |
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 82.0% |
| Principal Amount | | Value |
Other Government Related - 10.1% |
Citibank NA: | | | | |
1.875% 5/7/12 (FDIC Guaranteed) (a) | | $ 15,000,000 | | $ 15,034,815 |
1.875% 6/4/12 (FDIC Guaranteed) (a) | | 5,000,000 | | 5,011,710 |
Citigroup Funding, Inc.: | | | | |
1.25% 6/3/11 (FDIC Guaranteed) (a) | | 7,000,000 | | 7,006,139 |
2% 3/30/12 (FDIC Guaranteed) (a) | | 5,000,000 | | 5,026,195 |
General Electric Capital Corp. 1.8% 3/11/11
(FDIC Guaranteed) (a) | | 12,000,000 | | 12,125,832 |
JPMorgan Chase & Co.: | | | | |
1.65% 2/23/11 (FDIC Guaranteed) (a) | | 2,140,000 | | 2,154,171 |
1.902% 12/26/12 (FDIC Guaranteed) (a) | | 7,000,000 | | 7,018,697 |
Morgan Stanley 3.25% 12/1/11 (FDIC Guaranteed) (a) | | 9,000,000 | | 9,351,639 |
TOTAL OTHER GOVERNMENT RELATED | | 62,729,198 |
U.S. Government Agency Obligations - 28.1% |
Fannie Mae: | | | | |
1.375% 4/28/11 | | 5,600,000 | | 5,632,822 |
1.75% 3/23/11 | | 14,305,000 | | 14,491,265 |
1.875% 4/20/12 | | 5,110,000 | | 5,147,615 |
2.5% 5/15/14 | | 5,006,000 | | 4,940,491 |
2.75% 3/13/14 | | 7,100,000 | | 7,123,473 |
2.875% 10/12/10 | | 14,271,000 | | 14,671,787 |
3% 7/12/10 | | 1,875,000 | | 1,922,599 |
3.25% 8/12/10 | | 573,000 | | 590,050 |
3.375% 5/19/11 | | 19,544,000 | | 20,423,050 |
3.625% 8/15/11 | | 12,000,000 | | 12,624,024 |
4.75% 11/19/12 | | 2,500,000 | | 2,730,585 |
5% 2/16/12 | | 2,300,000 | | 2,509,091 |
6% 5/15/11 | | 4,335,000 | | 4,747,176 |
Federal Home Loan Bank: | | | | |
2.25% 4/13/12 | | 11,080,000 | | 11,239,685 |
3.625% 10/18/13 | | 13,230,000 | | 13,735,227 |
Freddie Mac: | | | | |
1.5% 1/7/11 | | 8,230,000 | | 8,306,572 |
2.125% 3/23/12 | | 3,000,000 | | 3,037,545 |
2.5% 4/23/14 | | 2,610,000 | | 2,580,833 |
3.25% 7/16/10 | | 113,000 | | 116,216 |
4.125% 11/30/09 | | 14,100,000 | | 14,349,133 |
4.875% 11/15/13 | | 250,000 | | 273,858 |
5.25% 7/18/11 | | 6,000,000 | | 6,508,920 |
6.875% 9/15/10 | | 13,200,000 | | 14,171,731 |
U.S. Government and Government Agency Obligations - continued |
| Principal Amount | | Value |
U.S. Government Agency Obligations - continued |
Israeli State (guaranteed by U.S. Government
through Agency for International Development)
6.8% 2/15/12 | | $ 1,936,224 | | $ 2,002,739 |
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates
6.77% 11/15/13 | | 588,460 | | 629,652 |
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | | 174,506,139 |
U.S. Treasury Obligations - 43.8% |
U.S. Treasury Notes: | | | | |
0.875% 2/28/11 | | 18,174,000 | | 18,194,537 |
0.875% 3/31/11 | | 1,100,000 | | 1,101,032 |
0.875% 5/31/11 | | 30,353,000 | | 30,324,466 |
1.125% 1/15/12 | | 13,000,000 | | 12,967,500 |
1.375% 2/15/12 | | 27,286,000 | | 27,396,836 |
1.375% 4/15/12 | | 29,050,000 | | 29,081,781 |
1.375% 5/15/12 | | 26,109,000 | | 26,086,546 |
1.5% 12/31/13 | | 1,403,000 | | 1,362,554 |
1.75% 11/15/11 | | 1,789,000 | | 1,815,280 |
1.875% 2/28/14 | | 995,000 | | 977,279 |
1.875% 4/30/14 (b) | | 25,188,000 | | 24,660,563 |
2% 11/30/13 | | 4,577,000 | | 4,547,680 |
2.25% 5/31/14 | | 12,142,000 | | 12,086,025 |
2.625% 4/30/16 | | 5,245,000 | | 5,110,597 |
2.75% 2/28/13 | | 12,669,000 | | 13,139,134 |
2.75% 10/31/13 | | 25,475,000 | | 26,175,563 |
3.125% 8/31/13 | | 10,665,000 | | 11,151,591 |
3.125% 9/30/13 | | 3,970,000 | | 4,145,859 |
3.375% 6/30/13 | | 10,561,000 | | 11,175,682 |
3.375% 7/31/13 | | 900,000 | | 951,961 |
4.5% 4/30/12 | | 4,130,000 | | 4,502,666 |
4.625% 7/31/12 | | 608,000 | | 667,327 |
4.75% 5/31/12 | | 4,500,000 | | 4,947,188 |
TOTAL U.S. TREASURY OBLIGATIONS | | 272,569,647 |
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $504,444,647) | 509,804,984 |
U.S. Government Agency - Mortgage Securities - 13.3% |
| Principal Amount | | Value |
Fannie Mae - 7.2% |
3.279% 3/1/35 (c) | | $ 20,800 | | $ 21,213 |
3.316% 3/1/35 (c) | | 216,452 | | 220,165 |
3.661% 10/1/33 (c) | | 11,276 | | 11,503 |
3.891% 2/1/33 (c) | | 29,909 | | 30,462 |
3.917% 7/1/35 (c) | | 87,321 | | 88,903 |
3.942% 5/1/35 (c) | | 2,808,653 | | 2,857,030 |
4% 9/1/13 to 5/1/20 | | 1,021,283 | | 1,042,500 |
4.017% 5/1/34 (c) | | 270,944 | | 275,422 |
4.046% 3/1/35 (c) | | 5,808 | | 5,879 |
4.277% 7/1/33 (c) | | 4,919,038 | | 5,091,662 |
4.296% 8/1/35 (c) | | 540,137 | | 549,929 |
4.298% 3/1/33 (c) | | 20,039 | | 20,492 |
4.312% 7/1/35 (c) | | 735,537 | | 749,922 |
4.316% 7/1/35 (c) | | 116,980 | | 119,656 |
4.414% 3/1/37 (c) | | 2,203,143 | | 2,266,869 |
4.418% 10/1/33 (c) | | 153,428 | | 157,734 |
4.428% 7/1/36 (c) | | 108,538 | | 110,788 |
4.43% 3/1/35 (c) | | 71,573 | | 73,723 |
4.434% 4/1/33 (c) | | 282,490 | | 287,867 |
4.491% 7/1/35 (c) | | 14,011 | | 14,275 |
4.5% 3/1/18 to 11/1/19 | | 702,081 | | 727,938 |
4.512% 11/1/36 (c) | | 164,929 | | 169,700 |
4.514% 2/1/35 (c) | | 968,981 | | 993,309 |
4.531% 10/1/35 (c) | | 592,887 | | 609,483 |
4.533% 11/1/33 (c) | | 61,791 | | 64,270 |
4.548% 10/1/33 (c) | | 27,755 | | 28,397 |
4.596% 7/1/35 (c) | | 466,302 | | 481,323 |
4.626% 10/1/35 (c) | | 49,932 | | 50,692 |
4.647% 4/1/35 (c) | | 349,016 | | 356,752 |
4.667% 7/1/35 (c) | | 32,439 | | 33,482 |
4.697% 2/1/35 (c) | | 482,191 | | 495,467 |
4.702% 2/1/35 (c) | | 193,991 | | 200,987 |
4.708% 8/1/33 (c) | | 31,469 | | 32,050 |
4.715% 11/1/35 (c) | | 197,701 | | 203,820 |
4.738% 10/1/35 (c) | | 535,748 | | 549,402 |
4.765% 2/1/34 (c) | | 7,883 | | 8,128 |
4.786% 7/1/35 (c) | | 159,758 | | 165,311 |
4.797% 2/1/36 (c) | | 406,461 | | 420,332 |
4.848% 3/1/33 (c) | | 80,089 | | 82,317 |
4.863% 5/1/35 (c) | | 76,498 | | 78,125 |
4.867% 8/1/35 (c) | | 356,011 | | 370,696 |
4.895% 2/1/36 (c) | | 441,871 | | 456,876 |
U.S. Government Agency - Mortgage Securities - continued |
| Principal Amount | | Value |
Fannie Mae - continued |
4.909% 1/1/35 (c) | | $ 114,176 | | $ 117,017 |
4.967% 7/1/34 (c) | | 14,392 | | 14,663 |
4.987% 7/1/35 (c) | | 350,249 | | 360,733 |
4.989% 2/1/34 (c) | | 242,201 | | 251,378 |
4.994% 2/1/35 (c) | | 180,751 | | 185,492 |
5% 2/1/16 | | 19,479 | | 20,298 |
5.001% 12/1/32 (c) | | 219,151 | | 222,830 |
5.045% 10/1/35 (c) | | 198,124 | | 202,820 |
5.075% 4/1/35 (c) | | 351,071 | | 361,913 |
5.085% 9/1/34 (c) | | 26,638 | | 27,134 |
5.098% 10/1/35 (c) | | 142,798 | | 147,338 |
5.15% 6/1/35 (c) | | 135,828 | | 138,769 |
5.152% 8/1/34 (c) | | 217,170 | | 222,866 |
5.185% 3/1/35 (c) | | 20,284 | | 20,893 |
5.265% 7/1/35 (c) | | 972,023 | | 1,008,853 |
5.302% 12/1/32 (c) | | 71,059 | | 72,689 |
5.308% 12/1/34 (c) | | 42,414 | | 43,351 |
5.342% 2/1/37 (c) | | 106,348 | | 110,425 |
5.377% 2/1/37 (c) | | 452,770 | | 468,398 |
5.391% 4/1/36 (c) | | 176,213 | | 183,537 |
5.466% 2/1/37 (c) | | 630,447 | | 656,414 |
5.498% 6/1/47 (c) | | 79,166 | | 82,070 |
5.5% 6/1/09 | | 25 | | 25 |
5.5% 12/1/13 to 6/1/20 | | 3,765,825 | | 3,958,794 |
5.51% 4/1/36 (c) | | 4,395,169 | | 4,587,295 |
5.514% 11/1/36 (c) | | 167,489 | | 172,919 |
5.624% 4/1/36 (c) | | 460,380 | | 479,977 |
5.664% 2/1/36 (c) | | 113,726 | | 118,672 |
5.766% 3/1/36 (c) | | 883,367 | | 919,992 |
5.804% 9/1/36 (c) | | 175,289 | | 180,806 |
5.869% 5/1/36 (c) | | 106,917 | | 111,632 |
5.881% 12/1/36 (c) | | 169,767 | | 178,183 |
6% 5/1/12 to 3/1/22 | | 4,140,472 | | 4,382,123 |
6.002% 4/1/36 (c) | | 1,806,265 | | 1,885,289 |
6.131% 4/1/36 (c) | | 165,109 | | 172,310 |
6.22% 3/1/37 (c) | | 59,393 | | 62,548 |
6.248% 6/1/36 (c) | | 27,392 | | 28,243 |
6.5% 6/1/15 to 7/1/32 | | 379,770 | | 406,405 |
7% 6/1/12 to 11/1/14 | | 177,896 | | 185,001 |
7.541% 12/1/32 (c) | | 1,023,861 | | 1,070,254 |
9% 2/1/13 to 8/1/21 | | 104,233 | | 111,884 |
9.5% 2/1/10 to 11/1/21 | | 532 | | 584 |
U.S. Government Agency - Mortgage Securities - continued |
| Principal Amount | | Value |
Fannie Mae - continued |
10.5% 8/1/20 | | $ 13,286 | | $ 15,118 |
11% 11/1/10 to 9/1/14 | | 29,334 | | 30,458 |
11.5% 11/1/15 to 7/15/19 | | 72,904 | | 81,201 |
12% 4/1/15 | | 10,992 | | 12,527 |
12.5% 3/1/16 | | 1,102 | | 1,267 |
| | 44,648,239 |
Freddie Mac - 6.1% |
3.155% 2/1/34 (c) | | 37,771 | | 38,349 |
3.479% 3/1/35 (c) | | 105,777 | | 107,996 |
3.729% 6/1/33 (c) | | 134,858 | | 136,540 |
3.758% 5/1/35 (c) | | 285,624 | | 290,818 |
3.911% 4/1/34 (c) | | 485,106 | | 492,968 |
3.993% 7/1/33 (c) | | 2,935,976 | | 2,989,090 |
4% 11/1/20 | | 745,674 | | 761,700 |
4.3% 12/1/33 (c) | | 285,860 | | 292,024 |
4.305% 6/1/35 (c) | | 67,889 | | 69,860 |
4.485% 1/1/35 (c) | | 36,709 | | 37,810 |
4.486% 5/1/35 (c) | | 211,436 | | 217,914 |
4.489% 7/1/35 (c) | | 183,762 | | 187,076 |
4.535% 5/1/38 (c) | | 7,386,400 | | 7,643,019 |
4.618% 9/1/36 (c) | | 120,605 | | 123,422 |
4.682% 4/1/35 (c) | | 354,886 | | 367,895 |
4.707% 11/1/35 (c) | | 162,899 | | 167,092 |
4.774% 3/1/35 (c) | | 102,217 | | 104,400 |
4.794% 2/1/36 (c) | | 45,430 | | 47,033 |
4.834% 9/1/35 (c) | | 5,022,253 | | 5,176,949 |
4.932% 1/1/35 (c) | | 377,732 | | 387,196 |
5% 9/1/18 to 9/1/35 | | 3,580,845 | | 3,738,224 |
5.027% 7/1/35 (c) | | 648,321 | | 669,094 |
5.081% 7/1/35 (c) | | 143,471 | | 148,202 |
5.095% 10/1/35 (c) | | 188,770 | | 195,317 |
5.248% 10/1/36 (c) | | 181,263 | | 188,797 |
5.25% 2/1/36 (c) | | 18,159 | | 18,885 |
5.308% 3/1/33 (c) | | 5,451 | | 5,587 |
5.437% 4/1/37 (c) | | 62,548 | | 64,094 |
5.474% 3/1/37 (c) | | 65,296 | | 67,265 |
5.486% 1/1/36 (c) | | 171,066 | | 178,564 |
5.5% 8/1/14 to 11/1/20 | | 2,454,414 | | 2,583,634 |
5.52% 1/1/36 (c) | | 207,769 | | 216,360 |
5.594% 3/1/36 (c) | | 704,334 | | 734,895 |
5.692% 10/1/35 (c) | | 46,401 | | 48,765 |
U.S. Government Agency - Mortgage Securities - continued |
| Principal Amount | | Value |
Freddie Mac - continued |
5.737% 5/1/37 (c) | | $ 119,889 | | $ 124,660 |
5.742% 5/1/37 (c) | | 799,369 | | 832,593 |
5.769% 5/1/37 (c) | | 455,655 | | 474,593 |
5.78% 4/1/37 (c) | | 364,921 | | 378,991 |
5.787% 3/1/37 (c) | | 339,191 | | 347,893 |
5.813% 6/1/37 (c) | | 282,522 | | 294,264 |
5.846% 5/1/37 (c) | | 59,669 | | 62,091 |
5.947% 4/1/36 (c) | | 1,261,832 | | 1,311,011 |
6% 11/1/16 to 2/1/19 | | 1,247,987 | | 1,325,321 |
6.072% 6/1/36 (c) | | 227,700 | | 237,164 |
6.092% 12/1/36 (c) | | 847,288 | | 880,480 |
6.141% 2/1/37 (c) | | 132,436 | | 138,364 |
6.142% 12/1/36 (c) | | 251,015 | | 262,314 |
6.205% 8/1/36 (c) | | 1,431,406 | | 1,492,654 |
6.22% 7/1/36 (c) | | 118,260 | | 123,360 |
6.418% 6/1/37 (c) | | 34,413 | | 36,033 |
6.5% 12/1/21 | | 338,217 | | 363,774 |
6.651% 8/1/37 (c) | | 224,835 | | 235,650 |
7.347% 4/1/37 (c) | | 15,255 | | 16,054 |
7.5% 11/1/12 | | 58,512 | | 60,984 |
9% 10/1/16 to 12/1/18 | | 37,475 | | 40,482 |
9.5% 2/1/17 to 12/1/22 | | 117,492 | | 128,817 |
10% 7/1/09 to 6/1/20 | | 6,918 | | 7,678 |
10.5% 9/1/20 to 5/1/21 | | 393 | | 426 |
11% 12/1/11 | | 16 | | 16 |
11.5% 10/1/15 | | 3,503 | | 3,904 |
12% 10/1/13 to 11/1/19 | | 12,372 | | 13,768 |
12.25% 11/1/14 | | 15,126 | | 16,747 |
12.5% 8/1/10 to 6/1/19 | | 55,421 | | 61,649 |
| | 37,768,569 |
Government National Mortgage Association - 0.0% |
8% 11/15/09 to 12/15/23 | | 158,371 | | 171,392 |
8.5% 5/15/16 to 3/15/17 | | 36,078 | | 39,212 |
10.5% 1/15/16 to 1/15/18 | | 35,188 | | 39,878 |
11% 10/20/13 | | 1,261 | | 1,399 |
13.5% 7/15/11 | | 527 | | 541 |
| | 252,422 |
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $79,994,362) | 82,669,230 |
Collateralized Mortgage Obligations - 4.4% |
| Principal Amount | | Value |
U.S. Government Agency - 4.4% |
Fannie Mae: | | | | |
floater: | | | | |
Series 1994-42 Class FK, 2.46% 4/25/24 (c) | | $ 1,135,051 | | $ 939,327 |
Series 2007-95 Class A1, 0.5588% 8/27/36 (c) | | 324,535 | | 299,789 |
planned amortization class Series 2002-83 Class ME, 5% 12/25/17 | | 2,390,000 | | 2,504,660 |
sequential payer Series 1999-25 Class Z, 6% 6/25/29 | | 2,159,564 | | 2,285,370 |
Fannie Mae subordinate REMIC pass-thru certificates: | | | | |
floater: | | | | |
Series 2001-38 Class QF, 1.2888% 8/25/31 (c) | | 270,112 | | 271,483 |
Series 2002-49 Class FB, 0.935% 11/18/31 (c) | | 432,931 | | 430,046 |
Series 2002-60 Class FV, 1.3088% 4/25/32 (c) | | 96,558 | | 97,067 |
Series 2002-74 Class FV, 0.7588% 11/25/32 (c) | | 1,052,192 | | 1,044,925 |
Series 2002-75 Class FA, 1.3088% 11/25/32 (c) | | 197,798 | | 198,878 |
planned amortization class: | | | | |
Series 2002-16 Class PG, 6% 4/25/17 | | 508,594 | | 536,307 |
Series 2002-61 Class PG, 5.5% 10/25/17 | | 945,000 | | 1,003,148 |
Series 2002-9 Class PC, 6% 3/25/17 | | 754,547 | | 809,066 |
Series 2003-85 Class GD, 4.5% 9/25/18 | | 395,000 | | 408,380 |
Series 2004-81 Class KC, 4.5% 4/25/17 | | 325,000 | | 335,171 |
Series 2005-52 Class PB, 6.5% 12/25/34 | | 564,702 | | 607,962 |
sequential payer: | | | | |
Series 2002-56 Class MC, 5.5% 9/25/17 | | 120,355 | | 127,308 |
Series 2002-57 Class BD, 5.5% 9/25/17 | | 123,908 | | 131,676 |
Series 2004-95 Class AN, 5.5% 1/25/25 | | 351,752 | | 372,567 |
Freddie Mac Multi-class participation certificates guaranteed: | | | | |
floater: | | | | |
Series 2448 Class FT, 1.3444% 3/15/32 (c) | | 431,902 | | 434,334 |
Series 2526 Class FC, 0.7444% 11/15/32 (c) | | 227,551 | | 225,110 |
Series 2530 Class FE, 0.9444% 2/15/32 (c) | | 248,517 | | 247,659 |
Series 2630 Class FL, 0.8444% 6/15/18 (c) | | 24,979 | | 24,947 |
Series 2925 Class CQ, 0% 1/15/35 (c) | | 106,527 | | 93,272 |
Series 3344 Class FT, 0.6944% 7/15/34 (c) | | 6,810,976 | | 6,697,225 |
planned amortization class: | | | | |
Series 2356 Class GD, 6% 9/15/16 | | 127,379 | | 135,323 |
Series 2363 Class PF, 6% 9/15/16 | | 166,426 | | 176,676 |
Series 2376 Class JE, 5.5% 11/15/16 | | 132,134 | | 139,110 |
Series 2381 Class OG, 5.5% 11/15/16 | | 100,788 | | 106,303 |
Series 2425 Class JH, 6% 3/15/17 | | 176,357 | | 187,509 |
Series 2628 Class OE, 4.5% 6/15/18 | | 335,000 | | 343,111 |
Collateralized Mortgage Obligations - continued |
| Principal Amount | | Value |
U.S. Government Agency - continued |
Freddie Mac Multi-class participation certificates guaranteed: - continued | | | | |
Series 2695 Class DG, 4% 10/15/18 | | $ 805,000 | | $ 799,033 |
sequential payer: | | | | |
Series 1929 Class EZ, 7.5% 2/17/27 | | 870,737 | | 925,736 |
Series 2570 Class CU, 4.5% 7/15/17 | | 62,911 | | 65,162 |
Series 2572 Class HK, 4% 2/15/17 | | 83,346 | | 85,284 |
Series 2617 Class GW, 3.5% 6/15/16 | | 148,338 | | 148,001 |
Series 2672 Class HA, 4% 9/15/16 | | 668,887 | | 688,076 |
Series 2729 Class GB, 5% 1/15/19 | | 545,000 | | 577,941 |
Series 2860 Class CP, 4% 10/15/17 | | 61,365 | | 62,760 |
Series 3013 Class VJ, 5% 1/15/14 | | 793,262 | | 830,631 |
Series 2564 Class BQ, 5.5% 10/15/17 | | 1,863,657 | | 1,982,716 |
Series 2975 Class NA, 5% 7/15/23 | | 95,271 | | 96,281 |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $26,958,375) | 27,475,330 |
Cash Equivalents - 3.9% |
| Maturity Amount | | |
Investments in repurchase agreements in a joint trading account at 0.17%, dated 5/29/09 due 6/1/09 (Collateralized by U.S. Treasury Obligations) #
(Cost $24,267,000) | $ 24,267,347 | | 24,267,000 |
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $635,664,384) | | 644,216,544 |
NET OTHER ASSETS - (3.6)% | | (22,114,295) |
NET ASSETS - 100% | $ 622,102,249 |
Swap Agreements |
| Expiration Date | | Notional Amount | | Value |
Interest Rate Swaps |
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 4.28% with JPMorgan Chase, Inc. | April 2018 | | $ 2,500,000 | | $ (152,031) |
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.35% with Bank of America | March 2037 | | 850,000 | | (198,139) |
Receive semi-annually a fixed rate equal to 3.3175% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc. | June 2010 | | 9,000,000 | | 339,062 |
Receive semi-annually a fixed rate equal to 3.78% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston | Sept. 2013 | | 8,000,000 | | 459,386 |
| | $ 20,350,000 | | $ 448,278 |
Legend |
(a) Under the Temporary Liquidity Guarantee Program, the Federal Deposit Insurance Corporation guarantees principal and interest in the event of payment default or bankruptcy until the earlier of maturity date of the debt or until June 30, 2012. At the end of the period these securities amounted to $62,729,198 or 10.1% of net assets. |
(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(c) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$24,267,000 due 6/01/09 at 0.17% |
BNP Paribas Securities Corp. | $ 1,070,379 |
Bank of America, NA | 2,060,530 |
Barclays Capital, Inc. | 3,434,217 |
Credit Suisse Securities (USA) LLC | 169,590 |
Deutsche Bank Securities, Inc. | 3,795,418 |
HSBC Securities (USA), Inc. | 3,434,217 |
ING Financial Markets LLC | 1,144,739 |
J.P. Morgan Securities, Inc. | 8,013,172 |
Mizuho Securities USA, Inc. | 572,369 |
Societe Generale, New York Branch | 572,369 |
| $ 24,267,000 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at 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 Security 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 | $ 644,216,544 | $ - | $ 643,493,620 | $ 722,924 |
Other Financial Instruments* | $ 448,278 | $ - | $ 448,278 | $ - |
*Other financial instruments include Swap Agreements. |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in
Securities |
Beginning Balance | $ 692,160 |
Total Realized Gain (Loss) | 3,092 |
Total Unrealized Gain (Loss) | 17,817 |
Cost of Purchases | - |
Proceeds of Sales | (83,630) |
Amortization/Accretion | 88 |
Transfer in/out of Level 3 | 93,397 |
Ending Balance | $ 722,924 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of May 31, 2009. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure /
Derivative Type | Value |
| Asset | Liability |
Interest Rate Risk | | |
Swap Agreements (a) | $ 798,448 | $ (350,170) |
Total Value of Derivatives | $ 798,448 | $ (350,170) |
(a) Value is disclosed on the Statement of Assets and Liabilities under the Unrealized Appreciation and Unrealized Depreciation on Swap Agreements line-items. |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $4,326,490 of which $752,015 and $3,574,475 will expire on November 30, 2013 and 2014, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| May 31, 2009 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including repurchase agreements of $24,267,000) -
See accompanying schedule: Unaffiliated issuers (cost $635,664,384) | | $ 644,216,544 |
Cash | | 13,697 |
Receivable for investments sold | | 55,440,962 |
Receivable for fund shares sold | | 2,058,243 |
Interest receivable | | 2,905,445 |
Unrealized appreciation on swap agreements | | 798,448 |
Total assets | | 705,433,339 |
| | |
Liabilities | | |
Payable for investments purchased
Regular delivery | $ 67,193,011 | |
Delayed delivery | 14,465,563 | |
Payable for fund shares redeemed | 1,068,659 | |
Distributions payable | 18,899 | |
Unrealized depreciation on swap agreements | 350,170 | |
Accrued management fee | 234,579 | |
Other affiliated payables | 209 | |
Total liabilities | | 83,331,090 |
| | |
Net Assets | | $ 622,102,249 |
Net Assets consist of: | | |
Paid in capital | | $ 607,626,758 |
Undistributed net investment income | | 4,898 |
Accumulated undistributed net realized gain (loss) on investments | | 5,470,155 |
Net unrealized appreciation (depreciation) on investments | | 9,000,438 |
Net Assets, for 61,264,532 shares outstanding | | $ 622,102,249 |
Net Asset Value, offering price and redemption price per share ($622,102,249 ÷ 61,264,532 shares) | | $ 10.15 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended May 31, 2009 (Unaudited) |
| | |
Investment Income | | |
Interest | | $ 8,176,326 |
| | |
Expenses | | |
Management fee | $ 1,436,468 | |
Independent trustees' compensation | 1,131 | |
Miscellaneous | 1,887 | |
Total expenses before reductions | 1,439,486 | |
Expense reductions | (4,070) | 1,435,416 |
Net investment income | | 6,740,910 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 8,471,756 | |
Investments not meeting investment restrictions | 7,810 | |
Futures contracts | 209,422 | |
Swap agreements | 1,320,176 | |
Total net realized gain (loss) | | 10,009,164 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,181,934) | |
Swap agreements | (310,713) | |
Total change in net unrealized appreciation (depreciation) | | (2,492,647) |
Net gain (loss) | | 7,516,517 |
Net increase (decrease) in net assets resulting from operations | | $ 14,257,427 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
May 31, 2009
(Unaudited) | Year ended
November 30,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income | $ 6,740,910 | $ 14,503,625 |
Net realized gain (loss) | 10,009,164 | 9,505,975 |
Change in net unrealized appreciation (depreciation) | (2,492,647) | 5,588,111 |
Net increase (decrease) in net assets resulting
from operations | 14,257,427 | 29,597,711 |
Distributions to shareholders from net investment income | (7,018,652) | (14,814,474) |
Share transactions
Proceeds from sales of shares | 218,850,906 | 396,363,632 |
Reinvestment of distributions | 6,894,347 | 14,557,009 |
Cost of shares redeemed | (223,410,602) | (179,755,621) |
Net increase (decrease) in net assets resulting from share transactions | 2,334,651 | 231,165,020 |
Total increase (decrease) in net assets | 9,573,426 | 245,948,257 |
| | |
Net Assets | | |
Beginning of period | 612,528,823 | 366,580,566 |
End of period (including undistributed net investment income of $4,898 and undistributed net investment income of $282,640, respectively) | $ 622,102,249 | $ 612,528,823 |
Other Information Shares | | |
Sold | 21,582,667 | 40,149,047 |
Issued in reinvestment of distributions | 679,300 | 1,479,153 |
Redeemed | (22,025,434) | (18,257,450) |
Net increase (decrease) | 236,533 | 23,370,750 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
| Six months ended
May 31, | Years ended November 30, |
| 2009 | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 10.04 | $ 9.73 | $ 9.55 | $ 9.52 | $ 9.65 | $ 9.71 |
Income from Investment Operations | | | | | | |
Net investment income D | .107 | .316 | .411 | .382 | .293 | .225 |
Net realized and unrealized gain (loss) | .115 | .326 | .196 | .012 | (.160) | (.060) |
Total from investment operations | .222 | .642 | .607 | .394 | .133 | .165 |
Distributions from net investment income | (.112) | (.332) | (.427) | (.364) | (.263) | (.225) |
Net asset value, end of period | $ 10.15 | $ 10.04 | $ 9.73 | $ 9.55 | $ 9.52 | $ 9.65 |
Total Return B, C | 2.21% | 6.72% | 6.54% | 4.24% | 1.39% | 1.71% |
Ratios to Average Net Assets E | | | | | |
Expenses before reductions | .45% A | .45% | .45% | .45% | .45% | .45% |
Expenses net of fee waivers, if any | .45% A | .45% | .45% | .45% | .45% | .45% |
Expenses net of all reductions | .45% A | .44% | .44% | .44% | .44% | .45% |
Net investment income | 2.12% A | 3.22% | 4.31% | 4.03% | 3.05% | 2.31% |
Supplemental Data | | | | | | |
Net assets,
end of period
(000 omitted) | $ 622,102 | $ 612,529 | $ 366,581 | $ 343,125 | $ 428,686 | $ 485,782 |
Portfolio turnover rate | 406% A | 238% | 257% | 126% | 96% | 165% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or 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.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2009 (Unaudited)
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, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Swaps are marked-to-market daily based on valuations from independent pricing services or dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value. Actual prices received at disposition may differ.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that
Semiannual Report
2. Significant Accounting Policies - continued
Security Valuation - continued
prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, 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 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. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Interest is accrued based on the principal value, which is adjusted for inflation. 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. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.
Dividends are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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, swap agreements, prior period premium and discount on debt securities, market discount, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 9,879,182 | |
Unrealized depreciation | (1,264,471) | |
Net unrealized appreciation (depreciation) | $ 8,614,711 | |
Cost for federal income tax purposes | $ 635,601,833 | |
3. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (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 are collateralized by government or non-government securities. Upon
Semiannual Report
3. Operating Policies - continued
Repurchase Agreements - continued
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
4. Investments in Derivative Instruments.
Objectives and Strategies for Investing in Derivative Instruments. The Fund uses derivative instruments ("derivatives"), including futures contracts and swap agreements, in order to meet its investment objectives. The Fund's strategy is to use derivatives as a risk management tool and as an additional way to gain exposure to certain types of assets. 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.
In pursuit of its investment objectives, the Fund is exposed to financial risks. These risks are further explained below:
Interest Rate Risk | Interest rate risk is the risk that the value of interest-bearing financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. |
The following notes provide more detailed information about each derivative type held by the Fund:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Investments in Derivative Instruments - continued
Futures Contracts. The Fund uses futures contracts to manage its exposure to the bond markets and to fluctuations in interest rates. 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. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument. Risks of loss may exceed any futures variation margin reflected in the Fund's Statement of Assets and Liabilities and may include interest rate risk, and potential lack of liquidity in the market. Futures have minimal counterparty risk to the Fund since the exchange's clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end.
The purchaser or seller of a futures contract is not required to pay for or deliver the instrument unless the contract is held until the delivery date. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Securities deposited to meet margin requirements are identified in each applicable Fund's Schedule of Investments. Futures contracts are marked-to-market daily and subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities and changes in value are recognized as unrealized gain (loss). Realized gain (loss) is recorded upon the expiration or closing of the futures contract. The net realized gain (loss) and change in unrealized gain (loss) on futures contracts during the period is included on the Statement of Operations. The total underlying face amount of all open futures contracts at period end is indicative of the volume of this derivative type.
Swap Agreements. The Fund entered into swap agreements, which are contracts between two parties to exchange future cash flows at periodic intervals based on a notional principal amount. Payments are exchanged at specified intervals, accrued daily commencing with the effective date of the contract and recorded as realized gains or losses in the Fund's accompanying Statement of Operations. Gains or losses are realized in the event of an early termination of a swap agreement. Risks of loss may exceed amounts recognized on the Fund's Statement of Asset and Liabilities. In addition, there is the risk of failure by the counterparty to perform under the terms of the agreement and lack of liquidity in the market. Details of swap agreements open at period end are
Semiannual Report
4. Investments in Derivative Instruments - continued
Swap Agreements - continued
included in the Fund's Schedule of Investments under the caption "Swap Agreements." The total notional amount of all open swap agreements at period end is indicative of the volume of this derivative type. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian bank in accordance with the swap agreement and, if required, is identified in the Fund's Schedule of Investments. The Fund could experience delays and costs in gaining access to the collateral even though it is held in the Fund's custodian bank.
The Fund entered into interest rate swap agreements to manage its exposure to interest rate changes. Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates (e.g. fixed rate, floating rate), applied to a notional principal amount. Risks of loss may include interest rate risk and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund's maximum risk of loss from counterparty credit risk is the discounted net value of cash flows to be received from/paid to the counterparty over the contract's remaining life, to the extent that amount is positive. This risk is mitigated by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty. Changes in interest rates can have a negative effect on both the value of the Fund's bond holdings as well as the amount of interest income earned. In general, the value of bonds can fall when interest rates rise and can rise when interest rates fall.
Realized and Change in Unrealized Gain (Loss) on Derivative Instruments. A summary of the Fund's value of derivatives by primary risk exposure as of period end, if any, is included at the end of the Fund's Schedule of Investments. The table below reflects the Fund's realized gain (loss) and change in unrealized gain (loss) for derivatives during the period.
Risk Exposure / Derivative Type | Realized
Gain (Loss) | Change in Unrealized
Gain (Loss) |
Interest Rate Risk | | |
Futures Contracts | $ 209,422 | $ - |
Swap Agreements | 1,320,176 | (310,713) |
Total Interest Rate Risk | 1,529,598 | (310,713) |
Total Derivatives Realized and Change in Unrealized Gain (Loss) (a)(b) | $ 1,529,598 | $ (310,713) |
(a) Total derivatives realized gain (loss) included in the Statement of Operations is comprised of $209,422 for futures contracts, and $1,320,176 for swap agreements. |
(b) Total derivatives change in unrealized gain (loss) included in the Statement of Operations is comprised of $(310,713) for swap agreements. |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities and U.S. government securities, aggregated $64,352,685 and $2,002,760, respectively.
The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
6. 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. FMR pays all other expenses, except the compensation of the independent Trustees and certain exceptions 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.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,887 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. 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 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 fees and expenses associated with the loan, plus
Semiannual Report
8. Security Lending - continued
any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of interest income. Net income from lending portfolio securities during the period amounted to $3,083.
9. Expense Reductions.
Through arrangements with the Fund's custodian and transfer agent, 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 $4,070.
10. 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.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Institutional Short-Intermediate Government Fund
On May 21, 2009, the Board of Trustees, including the Independent Trustees (together, the Board), voted to continue the management contract and subadvisory agreements (together, the Advisory Contracts) for the fund for four months, through September 30, 2009, in connection with the reorganization of the Board's new meeting schedule. The Board considered that the contractual terms of and fees payable under the fund's Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be renewed, without modification, through September 30, 2009, with the understanding that the Board will consider their renewal in September 2009.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
Fidelity Investments Money
Management, Inc.
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
General Distributor
Fidelity Distributors Corporation
Boston, MA
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
ISIG-USAN-0709
1.786814.106
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
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 Fidelity Advisor Series IV's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Advisor Series IV's (the "Trust") 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) | Not applicable. |
(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: | July 23, 2009 |
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: | July 23, 2009 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
| |
Date: | July 23, 2009 |
