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, 2010 |
Item 1. Reports to Stockholders
Fidelity®
Institutional
Short-Intermediate
Government Fund
Annual Report
November 30, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
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, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
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) 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.
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
Chairman's Message
(photo_of_Abigail_P_Johnson)
Dear Shareholder:
Equities have staged a rally in the second half of 2010, shaking off concerns about the European debt crisis and the possibility of a double-dip recession in the U.S. Although the short-term surge pushed major equity indexes back into positive territory for the year, several questions remain about the longer-term outlook, including lackluster economic growth and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the 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,
(The chairman's signature appears here.)
Abigail P. Johnson
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 distribution 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, 2010 | Past 1 | Past 5 | Past 10 |
Fidelity® Institutional Short-Intermediate Government Fund | 2.70% | 4.98% | 4.64% |
$100,000 Over 10 Years
Let's say hypothetically that $100,000 was invested in Fidelity® Institutional Short-Intermediate Government Fund on November 30, 2000. The chart shows how the value of your investment would have changed, and also shows how the Barclays Capital® U.S. 1-5 Year Government Bond Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: Despite a late-period sell-off, U.S. taxable investment-grade bonds generated positive results for the year ending November 30, 2010, as evidenced by the 6.02% advance of the Barclays Capital U.S. Aggregate Bond Index. Against a backdrop of ultra-low interest rates and scant inflation that bolstered nearly all types of fixed-income securities, sectors with higher yields and more credit risk registered the strongest returns. The best among them was commercial mortgage-backed securities, which gained 20.67% and benefited from a growing perception that many securities could withstand losses stemming from underlying-loan delinquencies. Corporate bonds, aided in part by improving corporate profitability, growing cash holdings and relatively broad access to low-cost borrowing, rose 8.48%. Asset-backed securities, somewhat hamstrung by the end of a Federal Reserve program that helped bolster that market in 2009, as well as accounting and regulatory changes, returned 6.82%. In contrast, bonds with less perceived credit risk generally underperformed due to comparatively slack demand and, more recently, inflation worries. For the year, U.S. Treasury and government agency securities gained 4.99% and 3.91%, respectively. Residential mortgage-backed securities also lagged, returning 4.46%, as mortgage rates fell to a generational low, prompting an increase in refinancing activity.
Comments from Franco Castagliuolo, who became Lead Portfolio Manager of Fidelity® Institutional Short-Intermediate Government Fund on June 1, 2010: For the year, the fund returned 2.70%, while the Barclays Capital U.S. 1-5 Year Government Bond Index gained 2.97%. What we lost versus the index by underweighting U.S. Treasuries was offset by out-of-benchmark holdings in mortgage securities. Treasuries outpaced the index, primarily due to their strength during periods when inflation fears receded and worries about the European sovereign debt crisis increased. Meanwhile, our mortgage holdings generally fared well, buoyed by investors' thirst for yield and our emphasis on securities with some measure of protection against prepayment. The fund's sensitivity to interest rates, as measured by its duration, was slightly longer than the index at times during the period, which cost us a bit of ground. We significantly increased the fund's stake in Treasury securities during the year, while cutting its holdings in agency debentures and making some notable changes to our positioning within the mortgage segment.
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, 2010 to November 30, 2010).
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 | Ending | Expenses Paid |
Actual | .45% | $ 1,000.00 | $ 1,019.50 | $ 2.28 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,022.81 | $ 2.28 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Coupon Distribution as of November 30, 2010 | ||
| % of fund's investments | % of fund's investments |
Less than 1% | 24.9 | 10.7 |
1 - 1.99% | 33.1 | 39.9 |
2 - 2.99% | 20.4 | 26.0 |
3 - 3.99% | 16.3 | 12.7 |
4 - 4.99% | 1.6 | 5.3 |
5% and over | 1.5 | 2.1 |
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, 2010 | ||
|
| 6 months ago |
Years | 3.3 | 2.8 |
This is a weighted average of all the maturities of the securities held in a fund. WAM can be used as a measure of sensitivity to interest rate changes and markets 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, 2010 | ||
|
| 6 months ago |
Years | 2.5 | 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 November 30, 2010 * | As of May 31, 2010 ** | ||||||
 | Mortgage Securities 9.1% |
| | Mortgage Securities 4.4% |
| ||
 | CMOs and |
| | CMOs and |
| ||
 | U.S. Treasury |
| | U.S. Treasury |
| ||
 | U.S. Government |
| | U.S. Government |
| ||
 | Short-Term |
|  | Short-Term |
| ||
* Futures and Swaps | 1.6% |
| ** Futures and Swaps | 2.0% |
| ||
† Includes FDIC Guaranteed Corporate Securities and NCUA Guaranteed Notes.
†† Short-Term Investments and Net Other Assets are not included in the pie chart.
Annual Report
Investments November 30, 2010
Showing Percentage of Net Assets
U.S. Government and Government Agency Obligations - 85.8% | ||||
| Principal Amount | Value | ||
U.S. Government Agency Obligations - 7.3% | ||||
Fannie Mae: | ||||
0.375% 12/28/12 | $ 2,780,000 | $ 2,765,608 | ||
0.75% 12/18/13 | 5,584,000 | 5,551,038 | ||
1% 9/23/13 | 2,065,000 | 2,072,397 | ||
1.25% 8/20/13 | 2,500,000 | 2,527,435 | ||
Federal Home Loan Bank: | ||||
0.875% 8/22/12 | 2,390,000 | 2,402,452 | ||
0.875% 12/27/13 | 350,000 | 349,542 | ||
1.5% 1/16/13 | 4,470,000 | 4,549,682 | ||
1.875% 6/21/13 | 10,650,000 | 10,951,363 | ||
Freddie Mac: | ||||
0.375% 11/30/12 | 3,252,000 | 3,236,182 | ||
4.5% 1/15/14 | 1,183,000 | 1,313,229 | ||
Israeli State (guaranteed by U.S. Government through Agency for International Development) 6.8% 2/15/12 | 1,016,623 | 1,030,727 | ||
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates 6.77% 11/15/13 | 392,308 | 422,313 | ||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS | 37,171,968 | |||
U.S. Treasury Inflation Protected Obligations - 2.9% | ||||
U.S. Treasury Inflation-Indexed Notes 0.5% 4/15/15 | 14,413,685 | 14,862,102 | ||
U.S. Treasury Obligations - 63.9% | ||||
U.S. Treasury Notes: | ||||
0.375% 9/30/12 | 59,177,000 | 59,105,335 | ||
0.5% 11/15/13 | 7,809,000 | 7,762,021 | ||
1% 4/30/12 | 8,848,000 | 8,928,163 | ||
1.25% 8/31/15 | 12,000,000 | 11,929,692 | ||
1.25% 9/30/15 | 11,021,000 | 10,941,781 | ||
1.25% 10/31/15 | 5,500,000 | 5,450,588 | ||
1.375% 2/15/12 | 7,286,000 | 7,377,075 | ||
1.375% 4/15/12 | 5,350,000 | 5,425,654 | ||
1.375% 2/15/13 | 19,439,000 | 19,798,933 | ||
1.375% 11/30/15 | 22,238,000 | 22,140,709 | ||
1.5% 12/31/13 | 1,403,000 | 1,435,116 | ||
1.75% 4/15/13 | 14,416,000 | 14,821,522 | ||
1.875% 4/30/14 | 17,268,000 | 17,853,489 | ||
1.875% 6/30/15 | 8,900,000 | 9,121,806 | ||
2.125% 5/31/15 | 16,188,000 | 16,776,110 | ||
2.375% 8/31/14 | 11,687,000 | 12,274,996 | ||
2.375% 9/30/14 | 11,425,000 | 12,000,717 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Treasury Obligations - continued | ||||
U.S. Treasury Notes: - continued | ||||
2.375% 10/31/14 | $ 7,948,000 | $ 8,347,880 | ||
2.625% 7/31/14 | 7,703,000 | 8,160,966 | ||
2.75% 10/31/13 | 23,725,000 | 25,135,522 | ||
3.125% 8/31/13 | 20,667,000 | 22,073,327 | ||
3.125% 9/30/13 | 3,970,000 | 4,244,176 | ||
3.375% 6/30/13 | 10,561,000 | 11,316,766 | ||
4.75% 5/31/12 (d) | 4,500,000 | 4,793,729 | ||
TOTAL U.S. TREASURY OBLIGATIONS | 327,216,073 | |||
Other Government Related - 11.7% | ||||
Bank of America Corp.: | ||||
2.1% 4/30/12 (FDIC Guaranteed) (a) | 577,000 | 589,588 | ||
3.125% 6/15/12 (FDIC Guaranteed) (a) | 161,000 | 167,401 | ||
Citibank NA: | ||||
1.75% 12/28/12 (FDIC Guaranteed) (a) | 2,000,000 | 2,046,840 | ||
1.875% 5/7/12 (FDIC Guaranteed) (a) | 12,500,000 | 12,737,688 | ||
Citigroup Funding, Inc.: | ||||
1.875% 11/15/12 (FDIC Guaranteed) (a) | 1,600,000 | 1,639,422 | ||
2% 3/30/12 (FDIC Guaranteed) (a) | 5,000,000 | 5,093,850 | ||
2.125% 7/12/12 (FDIC Guaranteed) (a) | 934,000 | 958,386 | ||
General Electric Capital Corp.: | ||||
2% 9/28/12 (FDIC Guaranteed) (a) | 4,000,000 | 4,106,628 | ||
2.625% 12/28/12 (FDIC Guaranteed) (a) | 1,702,000 | 1,772,796 | ||
3% 12/9/11 (FDIC Guaranteed) (a) | 420,000 | 431,071 | ||
GMAC, Inc. 1.75% 10/30/12 (FDIC Guaranteed) (a) | 6,000,000 | 6,132,642 | ||
Goldman Sachs Group, Inc. 3.25% 6/15/12 (FDIC Guaranteed) (a) | 162,000 | 168,775 | ||
JPMorgan Chase & Co.: | ||||
2.125% 12/26/12 (FDIC Guaranteed) (a) | 7,000,000 | 7,214,431 | ||
2.2% 6/15/12 (FDIC Guaranteed) (a) | 2,570,000 | 2,635,921 | ||
3.125% 12/1/11 (FDIC Guaranteed) (a) | 70,000 | 71,893 | ||
U.S. Government and Government Agency Obligations - continued | ||||
| Principal Amount | Value | ||
Other Government Related - continued | ||||
Morgan Stanley 3.25% 12/1/11 (FDIC Guaranteed) (a) | $ 11,696,000 | $ 12,020,786 | ||
National Credit Union Administration Guaranteed Notes Series 2010-R2 Class 1A, 0.7538% 11/6/17 (NCUA Guaranteed) (e) | 2,000,000 | 2,000,000 | ||
TOTAL OTHER GOVERNMENT RELATED | 59,788,118 | |||
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $430,959,961) | 439,038,261 | |||
U.S. Government Agency - Mortgage Securities - 9.1% | ||||
| ||||
Fannie Mae - 8.0% | ||||
1.98% 4/1/33 (e) | 203,807 | 210,243 | ||
2.103% 3/1/35 (e) | 17,719 | 18,333 | ||
2.135% 10/1/33 (e) | 19,606 | 20,278 | ||
2.202% 2/1/33 (e) | 20,414 | 21,070 | ||
2.207% 7/1/35 (e) | 8,778 | 9,012 | ||
2.225% 12/1/34 (e) | 22,585 | 23,306 | ||
2.316% 3/1/35 (e) | 3,531 | 3,663 | ||
2.484% 10/1/35 (e) | 23,881 | 24,653 | ||
2.49% 5/1/34 (e) | 171,320 | 179,009 | ||
2.51% 7/1/36 (e) | 84,743 | 88,489 | ||
2.532% 7/1/34 (e) | 11,109 | 11,505 | ||
2.577% 6/1/36 (e) | 12,250 | 12,745 | ||
2.582% 3/1/35 (e) | 10,979 | 11,410 | ||
2.592% 10/1/33 (e) | 20,214 | 21,216 | ||
2.641% 7/1/35 (e) | 104,767 | 110,157 | ||
2.677% 12/1/32 (e) | 68,172 | 71,601 | ||
2.729% 10/1/35 (e) | 378,826 | 396,573 | ||
2.73% 11/1/33 (e) | 55,692 | 58,077 | ||
2.734% 3/1/33 (e) | 51,449 | 53,921 | ||
2.735% 1/1/35 (e) | 90,474 | 94,609 | ||
2.747% 9/1/34 (e) | 144,548 | 150,156 | ||
2.788% 11/1/36 (e) | 106,228 | 111,858 | ||
2.828% 7/1/35 (e) | 321,837 | 337,739 | ||
2.829% 9/1/36 (e) | 55,200 | 57,612 | ||
2.859% 9/1/35 (e) | 137,951 | 145,122 | ||
2.957% 11/1/36 (e) | 106,838 | 112,627 | ||
2.997% 2/1/34 (e) | 5,433 | 5,708 | ||
3% 12/1/25 (b)(c) | 10,000,000 | 9,982,329 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount | Value | ||
Fannie Mae - continued | ||||
3.009% 7/1/35 (e) | $ 24,493 | $ 25,742 | ||
3.091% 4/1/36 (e) | 136,118 | 143,471 | ||
3.142% 8/1/35 (e) | 250,341 | 264,316 | ||
3.177% 10/1/37 (e) | 148,537 | 156,243 | ||
3.19% 2/1/36 (e) | 243,974 | 254,484 | ||
3.5% 12/1/25 (b)(c) | 12,000,000 | 12,266,058 | ||
3.5% 12/1/25 (b) | 13,000,000 | 13,288,230 | ||
3.527% 6/1/47 (e) | 49,832 | 51,875 | ||
3.598% 2/1/37 (e) | 190,105 | 198,068 | ||
4% 9/1/13 | 74,093 | 77,035 | ||
5% 2/1/16 | 14,814 | 15,694 | ||
5.034% 2/1/34 (e) | 142,653 | 148,190 | ||
5.569% 2/1/36 (e) | 34,862 | 36,276 | ||
5.597% 4/1/36 (e) | 210,857 | 219,120 | ||
5.766% 5/1/36 (e) | 37,482 | 38,908 | ||
6% 6/1/16 to 10/1/16 | 39,112 | 42,559 | ||
6.186% 3/1/37 (e) | 27,870 | 29,672 | ||
6.21% 12/1/32 (e) | 785,713 | 829,421 | ||
6.5% 6/1/15 to 7/1/32 | 265,030 | 291,771 | ||
7% 6/1/12 to 11/1/14 | 67,789 | 71,510 | ||
9% 2/1/13 to 8/1/21 | 68,326 | 76,026 | ||
9.5% 11/1/21 | 312 | 350 | ||
10.5% 8/1/20 | 11,881 | 14,118 | ||
11.5% 7/15/19 | 39,058 | 43,539 | ||
12% 4/1/15 | 8,701 | 9,959 | ||
12.5% 3/1/16 | 732 | 833 | ||
| 40,936,489 | |||
Freddie Mac - 1.0% | ||||
1.886% 5/1/37 (e) | 40,662 | 42,026 | ||
1.9% 3/1/37 (e) | 199,232 | 206,969 | ||
2.019% 3/1/35 (e) | 63,340 | 65,112 | ||
2.336% 7/1/35 (e) | 483,021 | 500,471 | ||
2.409% 6/1/33 (e) | 108,388 | 112,742 | ||
2.489% 5/1/37 (e) | 359,074 | 377,875 | ||
2.515% 5/1/37 (e) | 225,695 | 236,506 | ||
2.535% 6/1/37 (e) | 98,572 | 103,839 | ||
2.594% 10/1/35 (e) | 140,466 | 146,832 | ||
2.605% 4/1/34 (e) | 385,102 | 403,149 | ||
2.611% 12/1/33 (e) | 231,679 | 242,493 | ||
2.639% 7/1/35 (e) | 118,002 | 122,541 | ||
2.665% 6/1/35 (e) | 75,964 | 79,824 | ||
U.S. Government Agency - Mortgage Securities - continued | ||||
| Principal Amount | Value | ||
Freddie Mac - continued | ||||
2.824% 11/1/35 (e) | $ 123,285 | $ 128,986 | ||
3.022% 7/1/35 (e) | 92,706 | 97,314 | ||
3.1% 1/1/35 (e) | 273,134 | 287,766 | ||
3.152% 4/1/37 (e) | 38,144 | 39,777 | ||
3.404% 3/1/37 (e) | 38,536 | 39,628 | ||
3.508% 5/1/37 (e) | 28,197 | 29,342 | ||
3.509% 3/1/33 (e) | 3,275 | 3,438 | ||
3.622% 10/1/36 (e) | 136,185 | 141,435 | ||
3.949% 12/1/36 (e) | 445,488 | 463,191 | ||
4.361% 10/1/35 (e) | 16,516 | 17,496 | ||
5% 9/1/35 | 9,091 | 9,636 | ||
5.179% 2/1/36 (e) | 11,090 | 11,578 | ||
5.265% 1/1/36 (e) | 105,753 | 109,076 | ||
5.43% 3/1/36 (e) | 374,581 | 390,731 | ||
5.527% 1/1/36 (e) | 99,610 | 103,160 | ||
6.01% 6/1/37 (e) | 13,298 | 14,055 | ||
6.194% 7/1/36 (e) | 42,517 | 44,531 | ||
6.29% 8/1/37 (e) | 72,878 | 76,675 | ||
6.431% 2/1/37 (e) | 29,419 | 30,742 | ||
6.5% 12/1/21 | 207,769 | 226,227 | ||
7.22% 4/1/37 (e) | 1,684 | 1,784 | ||
7.5% 11/1/12 | 27,082 | 28,387 | ||
9% 10/1/16 to 12/1/18 | 27,992 | 31,092 | ||
9.5% 2/1/17 to 12/1/22 | 38,886 | 44,290 | ||
10% 6/1/18 to 6/1/20 | 5,394 | 6,360 | ||
10.5% 9/1/20 | 117 | 140 | ||
11.5% 10/1/15 | 2,592 | 2,881 | ||
12% 10/1/13 to 11/1/19 | 7,323 | 8,129 | ||
12.25% 11/1/14 | 5,122 | 5,638 | ||
12.5% 11/1/12 to 6/1/19 | 26,567 | 29,898 | ||
| 5,063,762 | |||
Ginnie Mae - 0.1% | ||||
4% 9/15/25 | 223,520 | 235,817 | ||
8% 12/15/23 | 116,669 | 132,886 | ||
8.5% 1/15/17 to 3/15/17 | 24,263 | 27,104 | ||
10.5% 1/15/16 to 1/15/18 | 25,062 | 28,954 | ||
11% 10/20/13 | 853 | 931 | ||
| 425,692 | |||
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $46,270,289) | 46,425,943 | |||
Collateralized Mortgage Obligations - 8.7% | ||||
| Principal Amount | Value | ||
U.S. Government Agency - 8.7% | ||||
Fannie Mae: | ||||
floater: | ||||
Series 1994-42 Class FK, 2.04% 4/25/24 (e) | $ 828,898 | $ 821,335 | ||
Series 2006-56 Class PF, 0.6034% 7/25/36 (e) | 1,563,029 | 1,561,393 | ||
Series 2010-111 Class AF, 0.6534% 10/25/40 (e) | 2,501,504 | 2,511,636 | ||
Series 2006-127 Class FD, 0.5334% 7/25/36 (e) | 1,353,352 | 1,344,178 | ||
Series 2006-44 Class FK, 0.6834% 6/25/36 (e) | 499,531 | 499,588 | ||
Fannie Mae subordinate REMIC pass-thru certificates: | ||||
floater: | ||||
Series 2001-38 Class QF, 1.2334% 8/25/31 (e) | 191,509 | 194,874 | ||
Series 2002-49 Class FB, 0.8534% 11/18/31 (e) | 285,986 | 287,507 | ||
Series 2002-60 Class FV, 1.2534% 4/25/32 (e) | 63,127 | 64,343 | ||
Series 2002-74 Class FV, 0.7034% 11/25/32 (e) | 1,219,048 | 1,225,653 | ||
Series 2002-75 Class FA, 1.2534% 11/25/32 (e) | 129,315 | 131,805 | ||
Series 2005-38 Class F, 0.5534% 5/25/35 (e) | 2,542,970 | 2,531,196 | ||
Series 2005-56 Class F, 0.5434% 7/25/35 (e) | 2,086,939 | 2,077,329 | ||
Series 2006-50 Class BF, 0.6534% 6/25/36 (e) | 1,566,215 | 1,564,171 | ||
Series 2006-79 Class PF, 0.6534% 8/25/36 (e) | 1,072,155 | 1,071,028 | ||
Series 2010-86 Class FE, 0.7034% 8/25/25 (e) | 874,762 | 878,395 | ||
planned amortization class: | ||||
Series 2002-16 Class PG, 6% 4/25/17 | 326,144 | 352,603 | ||
Series 2002-9 Class PC, 6% 3/25/17 | 471,681 | 510,738 | ||
Series 2005-52 Class PB, 6.5% 12/25/34 | 273,356 | 296,261 | ||
sequential payer: | ||||
Series 2002-56 Class MC, 5.5% 9/25/17 | 75,175 | 82,241 | ||
Series 2002-57 Class BD, 5.5% 9/25/17 | 76,028 | 83,531 | ||
Series 2004-95 Class AN, 5.5% 1/25/25 | 257,253 | 277,988 | ||
Series 2003-79 Class FC, 0.7034% 8/25/33 (e) | 1,072,612 | 1,075,623 | ||
Series 2008-76 Class EF, 0.7534% 9/25/23 (e) | 600,284 | 601,353 | ||
Freddie Mac floater Series 237 Class F16, 0.7534% 5/15/36 (e) | 1,022,057 | 1,021,835 | ||
Freddie Mac Multi-class participation certificates guaranteed: | ||||
floater: | ||||
Series 2448 Class FT, 1.2534% 3/15/32 (e) | 279,099 | 284,377 | ||
Series 2526 Class FC, 0.6534% 11/15/32 (e) | 178,817 | 179,365 | ||
Series 2530 Class FE, 0.8534% 2/15/32 (e) | 154,401 | 155,780 | ||
Series 2630 Class FL, 0.7534% 6/15/18 (e) | 24,979 | 25,323 | ||
Series 2925 Class CQ, 0% 1/15/35 (e) | 16,676 | 16,319 | ||
Series 3247 Class F, 0.6034% 8/15/36 (e) | 1,537,439 | 1,530,582 | ||
Series 3255 Class FC, 0.5534% 12/15/36 (e) | 1,685,612 | 1,674,687 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount | Value | ||
U.S. Government Agency - continued | ||||
Freddie Mac Multi-class participation certificates guaranteed: - continued | ||||
floater: | ||||
Series 3279 Class FB, 0.5734% 2/15/37 (e) | $ 466,629 | $ 466,455 | ||
Series 3301 Class FA, 0.5534% 8/15/35 (e) | 1,565,770 | 1,558,254 | ||
Series 3325 Class NF, 0.5534% 8/15/35 (e) | 1,659,751 | 1,651,781 | ||
Series 3346 Class FA, 0.4834% 2/15/19 (e) | 2,919,139 | 2,919,453 | ||
planned amortization class: | ||||
Series 2356 Class GD, 6% 9/15/16 | 78,743 | 85,183 | ||
Series 2363 Class PF, 6% 9/15/16 | 100,897 | 108,959 | ||
Series 2376 Class JE, 5.5% 11/15/16 | 81,988 | 88,000 | ||
Series 2381 Class OG, 5.5% 11/15/16 | 56,362 | 60,392 | ||
Series 2425 Class JH, 6% 3/15/17 | 104,750 | 113,185 | ||
Series 2628 Class OE, 4.5% 6/15/18 | 335,000 | 365,817 | ||
Series 2695 Class DG, 4% 10/15/18 | 805,000 | 865,789 | ||
Series 3122 Class FE, 0.5534% 3/15/36 (e) | 1,401,770 | 1,404,450 | ||
Series 3147 Class PF, 0.5534% 4/15/36 (e) | 1,183,304 | 1,184,181 | ||
sequential payer: | ||||
Series 1929 Class EZ, 7.5% 2/17/27 | 685,793 | 761,417 | ||
Series 2570 Class CU, 4.5% 7/15/17 | 28,291 | 29,236 | ||
Series 2572 Class HK, 4% 2/15/17 | 27,667 | 28,089 | ||
Series 2668 Class AZ, 4% 9/15/18 | 745,553 | 799,047 | ||
Series 2672 Class HA, 4% 9/15/16 | 290,318 | 297,694 | ||
Series 2729 Class GB, 5% 1/15/19 | 467,885 | 502,264 | ||
Series 2860 Class CP, 4% 10/15/17 | 17,384 | 17,638 | ||
Series 3013 Class VJ, 5% 1/15/14 | 557,930 | 589,772 | ||
Ginnie Mae guaranteed REMIC pass-thru securities: | ||||
floater: | ||||
Series 2010-H17 Class FA, 0.5834% 7/20/60 (e)(f) | 1,271,171 | 1,276,128 | ||
Series 2010-H18 Class AF, 0.5578% 9/1/60 (e)(f) | 1,300,280 | 1,297,030 | ||
Series 2010-H19 Class FG, 0.5534% 8/20/60 (e)(f) | 1,651,042 | 1,646,419 | ||
floater 0.5534% 1/20/31 (e) | 568,418 | 569,253 | ||
Series 2003-42 Class FH, 0.7034% 5/20/33 (e) | 298,608 | 300,973 | ||
Series 2004-59 Class FC, 0.5534% 8/16/34 (e) | 590,721 | 591,224 | ||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $44,076,801) | 44,511,120 | |||
Cash Equivalents - 2.2% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 0.25%, dated 11/30/10 due 12/1/10 (Collateralized by U.S. Government Obligations) # | $ 11,586,081 | $ 11,586,000 | |
TOTAL INVESTMENT PORTFOLIO - 105.8% (Cost $532,893,051) | 541,561,324 | ||
NET OTHER ASSETS (LIABILITIES) - (5.8)% | (29,712,679) | ||
NET ASSETS - 100% | $ 511,848,645 | ||
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/ | |||
Purchased | |||||
Treasury Contracts | |||||
37 CBOT 2 Year U.S. Treasury Notes Index Contracts | April 2011 | $ 8,116,875 | $ 2,792 | ||
|
The face value of futures purchased as a percentage of net assets is 1.6% |
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 $57,788,118 or 11.3% of net assets. |
(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(c) A portion of the security is subject to a forward commitment to sell. |
(d) 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 $53,264. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(f) 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 |
$11,586,000 due 12/01/10 at 0.25% | |
BNP Paribas Securities Corp. | $ 1,011,530 |
Barclays Capital, Inc. | 2,016,051 |
J.P. Morgan Securities, Inc. | 618,773 |
Merrill Lynch Government Securities, Inc. | 1,116,583 |
Merrill Lynch, Pierce, Fenner & Smith, Inc. | 1,240,150 |
Mizuho Securities USA, Inc. | 5,582,913 |
| $ 11,586,000 |
Other Information |
The following is a summary of the inputs used, as of November 30, 2010, 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 tables 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 | $ 439,038,261 | $ - | $ 439,038,261 | $ - |
U.S. Government Agency - Mortgage Securities | 46,425,943 | - | 46,425,943 | - |
Collateralized Mortgage Obligations | 44,511,120 | - | 44,511,120 | - |
Cash Equivalents | 11,586,000 | - | 11,586,000 | - |
Total Investments in Securities: | $ 541,561,324 | $ - | $ 541,561,324 | $ - |
Derivative Instruments: | ||||
Assets | ||||
Futures Contracts | $ 2,792 | $ 2,792 | $ - | $ - |
Other Financial Instruments: | ||||
Forward Commitments | $ 323,019 | $ - | $ 323,019 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 239,535 |
Total Realized Gain (Loss) | (23) |
Total Unrealized Gain (Loss) | 17,947 |
Cost of Purchases | - |
Proceeds of Sales | (257,459) |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at November 30, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in 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 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of November 30, 2010. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Interest Rate Risk | ||
Futures Contracts (a) | $ 2,792 | $ - |
Total Value of Derivatives | $ 2,792 | $ - |
(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, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including repurchase agreements of $11,586,000) - See accompanying schedule: Unaffiliated issuers (cost $532,893,051) |
| $ 541,561,324 |
Commitment to sell securities on a delayed delivery basis | $ (22,248,387) | |
Receivable for securities sold on a delayed delivery basis | 22,571,406 | 323,019 |
Receivable for investments sold, regular delivery | 26,822,191 | |
Cash | 103 | |
Receivable for fund shares sold | 383,293 | |
Interest receivable | 1,656,203 | |
Receivable for daily variation on futures contracts | 9,792 | |
Total assets | 570,755,925 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 22,155,406 | |
Delayed delivery | 35,908,333 | |
Payable for fund shares redeemed | 637,009 | |
Distributions payable | 12,967 | |
Accrued management fee | 193,298 | |
Other affiliated payables | 267 | |
Total liabilities | 58,907,280 | |
|
|
|
Net Assets | $ 511,848,645 | |
Net Assets consist of: |
| |
Paid in capital | $ 495,246,376 | |
Undistributed net investment income | 92,817 | |
Accumulated undistributed net realized gain (loss) on investments | 7,515,368 | |
Net unrealized appreciation (depreciation) on investments | 8,994,084 | |
Net Assets, for 49,631,761 shares outstanding | $ 511,848,645 | |
Net Asset Value, offering price and redemption price per share ($511,848,645 ÷ 49,631,761 shares) | $ 10.31 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended November 30, 2010 | |
|
|
|
Investment Income |
|
|
Interest |
| $ 9,286,317 |
|
|
|
Expenses | ||
Management fee | $ 2,350,229 | |
Independent trustees' compensation | 1,938 | |
Miscellaneous | 2,100 | |
Total expenses before reductions | 2,354,267 | |
Expense reductions | (10) | 2,354,257 |
Net investment income | 6,932,060 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 9,009,170 | |
Futures contracts | 93,607 | |
Swap agreements | (63,345) |
|
Total net realized gain (loss) |
| 9,039,432 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,672,495) | |
Futures contracts | 2,792 | |
Swap agreements | 164,068 | |
Delayed delivery commitments | 362,892 |
|
Total change in net unrealized appreciation (depreciation) |
| (2,142,743) |
Net gain (loss) | 6,896,689 | |
Net increase (decrease) in net assets resulting from operations | $ 13,828,749 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended November 30, 2010 | Year ended November 30, 2009 |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income | $ 6,932,060 | $ 12,150,598 |
Net realized gain (loss) | 9,039,432 | 16,464,261 |
Change in net unrealized appreciation (depreciation) | (2,142,743) | (356,258) |
Net increase (decrease) in net assets resulting | 13,828,749 | 28,258,601 |
Distributions to shareholders from net investment income | (6,734,782) | (12,414,165) |
Distributions to shareholders from net realized gain | (7,287,858) | - |
Total distributions | (14,022,640) | (12,414,165) |
Share transactions | 174,488,170 | 343,545,192 |
Reinvestment of distributions | 13,678,619 | 12,185,520 |
Cost of shares redeemed | (214,958,081) | (445,270,143) |
Net increase (decrease) in net assets resulting from share transactions | (26,791,292) | (89,539,431) |
Total increase (decrease) in net assets | (26,985,183) | (73,694,995) |
|
|
|
Net Assets | ||
Beginning of period | 538,833,828 | 612,528,823 |
End of period (including undistributed net investment income of $92,817 and distributions in excess of net investment income of $143,667, respectively) | $ 511,848,645 | $ 538,833,828 |
Other Information Shares | ||
Sold | 17,098,652 | 33,843,264 |
Issued in reinvestment of distributions | 1,346,869 | 1,198,312 |
Redeemed | (21,079,922) | (43,803,413) |
Net increase (decrease) | (2,634,401) | (8,761,837) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended November 30, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.31 | $ 10.04 | $ 9.73 | $ 9.55 | $ 9.52 |
Income from Investment Operations |
|
|
|
|
|
Net investment income B | .135 | .199 | .316 | .411 | .382 |
Net realized and unrealized gain (loss) | .136 | .274 | .326 | .196 | .012 |
Total from investment operations | .271 | .473 | .642 | .607 | .394 |
Distributions from net investment income | (.131) | (.203) | (.332) | (.427) | (.364) |
Distributions from net realized gain | (.140) | - | - | - | - |
Total distributions | (.271) | (.203) | (.332) | (.427) | (.364) |
Net asset value, end of period | $ 10.31 | $ 10.31 | $ 10.04 | $ 9.73 | $ 9.55 |
Total Return A | 2.70% | 4.76% | 6.72% | 6.54% | 4.24% |
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% | .44% | .44% | .44% |
Net investment income | 1.33% | 1.96% | 3.22% | 4.31% | 4.03% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 511,849 | $ 538,834 | $ 612,529 | $ 366,581 | $ 343,125 |
Portfolio turnover rate | 221% | 347% | 238% | 257% | 126% |
A Total returns would have been lower had certain expenses not been reduced during the 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, 2010
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. 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. 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 market or security 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 value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
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)
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, 2010, for the Fund's investments, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Annual Report
2. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. For collateralized mortgage obligations and U.S. government agency mortgage securities, pricing services 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 dealer supplied prices and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. 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.
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 amongst 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.
Annual Report
Notes to Financial Statements - 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, including 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. As of November 30, 2010, the Fund did not have any 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 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, swap agreements, 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 | $ 9,730,870 |
Gross unrealized depreciation | (1,036,765) |
Net unrealized appreciation (depreciation) | $ 8,694,105 |
|
|
Tax Cost | $ 532,867,219 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 5,090,605 |
Undistributed long-term capital gain | $ 2,494,825 |
Net unrealized appreciation (depreciation) | $ 9,017,124 |
Annual Report
2. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| November 30, 2010 | November 30, 2009 |
Ordinary Income | $ 8,817,027 | $ 12,414,165 |
Long-term Capital Gains | 5,205,613 | - |
Total | $ 14,022,640 | $ 12,414,165 |
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 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 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.
Annual Report
Notes to Financial Statements - continued
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund uses derivative instruments (derivatives), including futures contracts and swap agreements, in order to meet its investment objectives. The strategy is to use derivatives to increase returns, to gain exposure to certain types of assets 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 may increase or decrease 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 sell 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. Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the Fund attempts to reduce its exposure to counterparty credit risk by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of its counterparties. The ISDA Master Agreement gives each counterparty the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the Fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net payable by one party to the other. To mitigate counterparty credit risk, the Fund offsets certain payables and/or receivables with collateral. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the Fund's custodian bank in accordance with the collateral agreements entered into between the Fund, the swap counterparty and the Fund's custodian bank and, if required, is identified in the Schedule of Investments. The Fund could experience delays and costs in gaining access to the collateral even though it is held by the Fund's custodian bank. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty fees in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Risk of loss may exceed the amounts recognized in the Statement of Assets and Liabilities.
Annual Report
4. Derivative Instruments - continued
Net Realized Gain (Loss) and Change in Net Unrealized Appreciation (Depreciation) on Derivatives. The table below, which reflects the impacts of derivatives on the financial performance of the Fund, summarizes the net realized gain (loss) and change in net unrealized appreciation (depreciation) for derivatives during the period.
Risk Exposure / Derivative Type | Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) |
Interest Rate Risk |
|
|
Futures Contracts | $ 93,607 | $ 2,792 |
Swap Agreements | (63,345) | 164,068 |
Totals (a)(b)(c) | $ 30,262 | $ 166,860 |
(a) A summary of the value of derivatives by risk exposure as of period end, if any, is included at the end of the Schedule of Investments and is representative of activity for the period.
(b) Total derivatives net realized gain (loss) included in the Statement of Operations is comprised of $93,607 for futures contracts and $(63,345) for swap agreements.
(c) Total derivatives change in net unrealized appreciation (depreciation) included in the Statement of Operations is comprised of $2,792 for futures contracts and $164,068 for swap agreements.
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 uses 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 daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). Realized gain or (loss) is recorded upon the expiration or closing of a futures contract. The net realized gain (loss) and change in net unrealized appreciation (depreciation) on futures contracts during the period is included in the Statement of Operations.
The underlying face amount at value of open futures contracts at period end, if any, 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. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments. The receivable and/or payable for the variation margin are reflected in the Statement of Assets and Liabilities.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market may limit the ability to close out a futures contract prior to settlement date.
Annual Report
Notes to Financial Statements - continued
4. Derivative Instruments - continued
Swap Agreements. A swap agreement (swap) is a contract between two parties to exchange future cash flows at periodic intervals based on a notional principal amount.
Details of swaps open at period end, if any, are included in the Schedule of Investments under the caption "Swap Agreements." Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation or (depreciation) and reflected in the Statement of Assets and Liabilities. Any upfront payments made or received upon entering a swap to compensate for differences between stated terms of the agreement and prevailing market conditions (e.g. credit spreads, interest rates or other factors) are recorded as realized gain or (loss) ratably over the term of the swap. Payments are exchanged at specified intervals, accrued daily commencing with the effective date of the contract and recorded as realized gain or (loss). Realized gain or (loss) is also recorded in the event of an early termination of a swap. The net realized gain (loss) and change in net unrealized appreciation (depreciation) on swaps during the period is included in the Statement of Operations.
Risks of loss may include interest rate risk. 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.
Interest Rate Swaps. Interest rate swaps are agreements between counterparties to exchange cash flows, one based on a fixed rate, and the other on a floating rate. The Fund entered into interest rate swaps to manage its exposure to interest rate changes. Changes in interest rates can have an effect on both the value of 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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $8,461,864 and $20,189,496, respectively.
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.
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $2,100 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, 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 $964. During the period, there were no securities loaned to FCM.
9. 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 $10.
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.
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, 2010, 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, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 14, 2011
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, each of the Trustees oversees 189 funds advised by FMR or an affiliate. Mr. Curvey oversees 408 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 calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. 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
Trustees and Officers - continued
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. Kenneth L. Wolfe 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. 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
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 (48) | |
| 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 Personal, Workplace and Institutional Services (2005-present). Ms. Johnson is 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 (75) | |
| 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.
Annual Report
Trustees and Officers - continued
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+ | |
Albert R. Gamper, Jr. (68) | |
| Year of Election or Appointment: 2006 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). He also served as President and Chief Executive Officer of Tyco Capital Corporation (2001-2002). 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 Saint Barnabas Health Care System. Previously, Mr. Gamper served as Chairman of the Board of Governors, Rutgers University (2004-2007). |
Robert F. Gartland (58) | |
| Year of Election or Appointment: 2010 Mr. Gartland is a partner and investor of Vietnam Partners LLC (investments and consulting, 2008-present) and is Chairman and an investor in Gartland and Mellina Group Corp. (consulting, 2009-present). 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 (63) | |
| 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) and AGL Resources, Inc. (holding company). 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 and Ms. Abigail P. Johnson are not related. |
Michael E. Kenneally (56) | |
| 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 (70) | |
| 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 (64) | |
| Year of Election or Appointment: 2001 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 (71) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman of the Independent Trustees of the Fixed Income and Asset Allocation Funds (2008-present). 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). |
+ 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.
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 (52) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), Assistant Treasurer of other Fidelity funds (2009-present) and is an employee of Fidelity Investments. |
Boyce I. Greer (54) | |
| Year of Election or Appointment: 2005 Vice President of Fidelity's Fixed Income Funds and Asset Allocation Funds (2005). Mr. Greer is also a Trustee of other investment companies advised by FMR. Mr. Greer is President of The North Carolina Capital Management Trust: Cash and Term Portfolio (2003-present), the Asset Allocation Division (2008-present), President and a Director of Strategic Advisers, Inc. (2008-present), President of FIMM 130/30 LLC (2008-present), Director of Ballyrock Investment Advisors LLC (2006-present), and an Executive Vice President of FMR (2005-present). Previously, Mr. Greer served as Executive Vice President of FMR Co., Inc. (2005-2009), President and Director of Fidelity Investments Money Management, Inc. (2007-2009) and as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005). |
Christopher P. Sullivan (56) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Bond Funds. Mr. Sullivan also serves as President of Fidelity's Bond Division (2009-present). Mr. Sullivan is Executive Vice President of Fidelity Investments Money Management, Inc. (2009-present), and a Director of Fidelity Management & Research (U.K.) Inc. (2010-present). Previously, Mr. Sullivan served as Managing Director, Co-Head of U.S. Fixed Income at Goldman Sachs Asset Management (2001-2009). |
Christine J. Thompson (52) | |
| Year of Election or Appointment: 2010 Vice President of Fidelity's Bond Funds. Ms. Thompson also serves as Chief Investment Officer of FMR's Bond Group (2010-present) and is an employee of Fidelity Investments. Previously, Ms. Thompson served as Director of Municipal Bond Portfolio Managers (2002-2010). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
David J. Carter (37) | |
| Year of Election or Appointment: 2010 Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Carter also serves as Vice President, Associate General Counsel (2010-present) and is an employee of Fidelity Investments (2005-present). |
Holly C. Laurent (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present) and is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (52) | |
| 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 (43) | |
| 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 Portfolio (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. |
Jeffrey S. Christian (49) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Stephanie J. Dorsey (41) | |
| 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 (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Fixed Income and Asset Allocation Funds. Mr. Deberghes also serves as Deputy Treasurer of other Fidelity funds (2008-present) 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 (41) | |
| 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). |
Gary W. Ryan (52) | |
| 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 (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. 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 | Dividends | Capital Gains |
12/20/2010 | 12/17/2010 | - | 0.157 |
The fund hereby designates a capital gain with respect to the taxable year ended November 30, 2010 $2,494,825, or, if subsequently determined to be different, the net capital gain of such year.
A total of 69.24% 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 $6,025,571 of distributions paid during the period January 1, 2010 to November 30, 2010, as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 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 considers at each of its meetings 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, each composed of 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 2010 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 expenses; (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 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 to be received by Fidelity under the management contract 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, is 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, with 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 the fund's investment objective and discipline. 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 interest of the fund.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools and market and securities data that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers. In addition, the Board considered the trading resources that are an integral part of the fixed-income portfolio management investment 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 investment adviser's 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.
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, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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) dedicating additional resources to investment research and restructuring and broadening the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) launching Class F of certain funds as a lower-fee class available to Freedom K and Freedom Index Funds; (iv) lowering the initial investment minimums and ongoing balance requirements for Real Estate High Income Fund; (v) eliminating subsequent purchase minimums for all funds and adding a waiver of the investment minimum requirement for new accounts opened with the proceeds of a systematic withdrawal plan; (vi) eliminating the withdrawal minimum and maximum limits for systematic withdrawals from Advisor funds; (vii) expanding sales load waivers on Class A shares for Destiny Planholders and expanding Institutional Class eligibility for Class O Destiny Planholders; and (viii) changing certain Class A and Class T sales charge structures to further align them with industry practices.
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, 2009, 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 (bottom of box) and the 75th percentile return (top 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-year period and the second quartile for the three- and five-year periods. The Board also noted that the investment performance of the fund was lower than its benchmark for the three- and five- year periods, although the fund's one-year cumulative total return compared favorably to its benchmark. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance and factoring in the unprecedented market events in recent years, the Board concluded that the nature, extent, and quality of investment management and support services and of shareholder and administrative services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses 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 comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
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Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2% means that 98% 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. 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 realizes 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 2009.
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 Expenses. In its review of the fund's total expenses, 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 current and historical total expenses 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 expenses ranked below its competitive median for 2009.
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. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare 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 expenses and fees charged to other Fidelity clients, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 audited books and records of Fidelity. 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 believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has 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 were 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.
Annual Report
In February 2009, the Board 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.
The Board concluded, considering the findings of the Economies of Scale Committee, that any potential economies of scale 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) fund performance trends, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) Fidelity's fund profitability methodology and profitability trends for certain funds; (iii) 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; (iv) 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; (v) the compensation paid by FMR to fund sub-advisers on behalf of the Fidelity funds; (vi) Fidelity's fee structures and rationale for recommending different fees among different categories of funds and classes, as well as Fidelity's voluntary waiver of fees to maintain minimum yields for certain funds and classes; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (viii) explanations regarding the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses 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
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
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To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
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For Retirement
Accounts
Buying shares
Fidelity Investments
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100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
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To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
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Investment Adviser
Fidelity Management & Research Company
Boston, MA
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Item 2. Code of Ethics
As of the end of the period, November 30, 2010, 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 Marie L. Knowles is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles 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, 2010 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Institutional Short-Intermediate Government Fund | $53,000 | $- | $3,200 | $1,900 |
November 30, 2009 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Institutional Short-Intermediate Government Fund | $54,000 | $- | $3,200 | $1,700 |
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, 2010A | November 30, 2009A |
Audit-Related Fees | $2,605,000 | $2,755,000 |
Tax Fees | $- | $- |
All Other Fees | $510,000 | $- |
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, 2010 A | November 30, 2009 A |
PwC | $4,710,000 | $4,415,000 |
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 |
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Date: | January 27, 2011 |
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 |
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Date: | January 27, 2011 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
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Date: | January 27, 2011 |