Fidelity Tactical High Income Fund

Transcription

1 Fidelity Tactical High Income Fund Semi-Annual Report September 30, 2017 Notice to Readers The accompanying interim financial statements have not been reviewed by the external auditor of the Fund. The external auditor will be auditing the annual financial statements of the Fund in accordance with Canadian generally accepted auditing standards.

2 Fidelity Tactical High Income Fund Schedule of Investments September 30, 2017 (Unaudited) Showing Percentage of Net Assets Attributable to Securityholders (Net Assets) Equities 25.8% Shares / Units Cost Market Value Australia 1.1% MATERIALS 1.1% BHP Billiton Ltd. sponsored ADR 53,400 $ 2,866 $ 2,701 Belgium 0.9% CONSUMER STAPLES 0.9% Anheuser Busch InBev SA NV ADR 14,900 2,294 2,218 Canada 0.2% ENERGY 0.2% Suncor Energy, Inc. 9, Ireland 0.8% INDUSTRIALS 0.8% Ingersoll Rand PLC 17,550 1,927 1,953 Israel 0.0% HEALTH CARE 0.0% Teva Pharmaceutical Industries Ltd. sponsored ADR 5, Marshall Islands 0.9% ENERGY 0.9% Scorpio Tankers, Inc. 547,727 2,714 2,344 Mexico 0.5% TELECOMMUNICATION SERVICES 0.5% America Movil S.A.B. de CV Series L sponsored ADR 59,700 1,205 1,322 Netherlands 0.8% MATERIALS 0.8% LyondellBasell Industries NV Class A 16,300 1,902 2,015 Switzerland 0.6% FINANCIALS 0.6% Chubb Ltd. 7,844 1,422 1,395 United Kingdom 0.2% ENERGY 0.1% Ensco PLC Class A 32, HEALTH CARE 0.1% GlaxoSmithKline PLC 13, TOTAL UNITED KINGDOM United States of America 19.8% CONSUMER DISCRETIONARY 1.8% General Motors Co. 57,700 2,604 2,907 Shares / Units Cost Market Value Nexstar Broadcasting Group, Inc. Class A 15,400 $ 1,258 $ 1,197 Target Corp. 3, TOTAL CONSUMER DISCRETIONARY 4,169 4,368 CONSUMER STAPLES 2.6% B&G Foods, Inc. Class A 6, CVS Health Corp. 14,000 1,486 1,421 Procter & Gamble Co. 3, The Coca Cola Co. 30,800 1,777 1,730 Wal Mart Stores, Inc. 28,550 2,852 2,784 TOTAL CONSUMER STAPLES 6,751 6,540 ENERGY 1.5% ConocoPhillips Co. 55,100 3,327 3,441 The Williams Companies, Inc. 10, TOTAL ENERGY 3,700 3,823 FINANCIALS 4.6% Ares Capital Corp. 17, Bank of America Corp. 98,000 3,029 3,099 Bank of America Corp. Series L 7.25% 808 1,362 1,312 Citigroup, Inc. 38,100 3,219 3,458 Regions Financial Corp. 25, State Street Corp. 20,980 2,278 2,501 Wells Fargo & Co. 5, TOTAL FINANCIALS 10,927 11,592 HEALTH CARE 1.9% Amgen, Inc. 11,225 2,482 2,611 Johnson & Johnson 10,600 1,647 1,720 McKesson Corp. 1, TOTAL HEALTH CARE 4,421 4,657 INDUSTRIALS 0.1% United Parcel Service, Inc. Class B 2, INFORMATION TECHNOLOGY 4.2% Apple, Inc. 15,835 2,677 3,045 Cisco Systems, Inc. 33,890 1,327 1,422 First Data Corp. Class A 22, Microsoft Corp. 26,900 2,473 2,500 Paychex, Inc. 4, Qualcomm, Inc. 4, Twitter, Inc. 119,900 2,767 2,524 TOTAL INFORMATION TECHNOLOGY 10,168 10,638 MATERIALS 0.7% CF Industries Holdings, Inc. 39,300 1,507 1,724 REAL ESTATE 0.1% Public Storage TELECOMMUNICATION SERVICES 1.1% Verizon Communications, Inc. 45,010 2,758 2,779 Semi-Annual Reportport 2

3 Equities continued Shares / Units Cost Market Value United States of America continued UTILITIES 1.2% Exelon Corp. 58,800 $ 2,720 $ 2,764 Southern Co. 5, TOTAL UTILITIES 3,036 3,089 TOTAL UNITED STATES OF AMERICA 47,999 49,795 TOTAL EQUITIES 63,965 64,835 Bonds 61.7% Principal Amount Domestic Bonds 1.9% Valeant Pharmaceuticals International, Inc.: 5.375% 3/15/20 2,720 USD 3,442 3, % 5/15/23 1,215 USD 1,349 1,340 TOTAL DOMESTIC BONDS 4,791 4,730 Foreign Bonds 59.8% 21st Century Fox America, Inc. 7.75% 12/1/45 75 USD Albertson s LLC Tranche B, term loan 3 month U.S. LIBOR % 3.985% 8/25/21 (a)(b) 2,653 USD 3,190 3,189 Albertsons, Inc. 7.45% 8/1/29 1,336 USD 1,699 1,292 APX Group, Inc.: 6.375% 12/1/19 1,692 USD 2,168 2, % 9/1/ USD % 12/1/20 1,755 USD 2,404 2,258 Bass Pro Shops LLC. Tranche B, term loan 3 month U.S. LIBOR % 6.235% 12/16/23 (a)(b) 1,450 USD 1,879 1,702 BJ s Wholesale Club, Inc. Tranche B 1LN, term loan 3 month U.S. LIBOR % % 2/3/24 (a)(b) 2,058 USD 2,655 2,458 Brazilian Federative Republic: 7.125% 1/20/37 1,975 USD 2,921 2, % 1/20/34 2,300 USD 3,696 3,752 CCO Holdings LLC/CCO Holdings Capital Corp % 5/1/27 2,535 USD 3,427 3,207 Ceridian HCM Holding, Inc. Tranche B 2LN, term loan 3 month U.S. LIBOR % % 9/15/20 (a)(b) 1,803 USD 2,255 2,247 CF Industries Holdings, Inc. 5.15% 3/15/34 1,050 USD 1,274 1,307 Principal Amount Cost Market Value Charter Communications Operating LLC/Charter Communications Operating Capital Corp.: 4.464% 7/23/22 9 USD $ 11 $ % 7/23/25 25 USD % 10/23/45 12 USD Chicago Gen. Oblig. (Taxable Proj.) Series 2014 B, 6.314% 1/1/44 40 USD Chobani LLC Tranche B, term loan 3 month U.S. LIBOR % 10/7/23 (a)(b)(c) 1,275 USD 1,579 1,604 Chobani LLC/Finance Corp., Inc. 7.5% 4/15/25 1,370 USD 1,929 1,863 Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 2,915 USD 3,989 3,674 Coinmach Service Corp. Tranche B, term loan 3 month U.S. LIBOR % % 11/14/22 (a)(b) 1,740 USD 2,189 2,180 Community Health Systems, Inc % 2/1/22 1,265 USD 1,533 1,239 Constellation Brands, Inc. 4.25% 5/1/ USD Corestates Capital II 3 month U.S. LIBOR % % 1/15/27 (a)(b) 830 USD 1, Delta 2 SARL Tranche B, term loan 3 month U.S. LIBOR % 4.235% 2/1/24 (a)(b) 3,245 USD 4,392 4,072 DISH Network Corp % 3/15/24 2,690 USD 3,755 3,335 Dolphin Subsidiary II, Inc. 7.25% 10/15/ USD Dynegy, Inc % 11/1/24 1,380 USD 1,817 1,784 Ensco PLC: 5.2% 3/15/25 4 USD % 10/1/44 4 USD 5 4 Equity One, Inc. 3.75% 11/15/ USD FirstEnergy Corp % 11/15/ USD Flex Acquisition Co., Inc. Tranche B 1LN, term loan 3 month U.S. LIBOR % % 12/29/23 (a)(b) 1,215 USD 1,502 1,519 3 Semi-Annual Report

4 Fidelity Tactical High Income Fund Schedule of Investments (Unaudited) continued Bonds continued Principal Amount Cost Market Value Foreign Bonds continued Goldman Sachs Group, Inc.: 5.15% 5/22/45 50 USD $ 66 $ % 10/1/ USD Greeneden U.S. Holdings II LLC 10% 11/30/24 1,055 USD 1,504 1,488 HCA Holdings, Inc.: 3.75% 3/15/19 17 USD % 10/15/19 10 USD % 6/15/26 1,175 USD 1,615 1, % 2/15/20 35 USD ILFC E Capital Trust I 3 month U.S. LIBOR % 4.36% 12/21/65 (a)(b) 1,615 USD 1,933 1,914 Illinois Gen. Oblig.: Series 2003, 5.1% 6/1/33 75 USD Series 2011, 5.877% 3/1/19 5 USD 6 7 JPMorgan Mortgage Trust Series 2005 A3 Class 6A3, % 6/25/35 (a) 193 USD Laureate Education, Inc. Tranche B 1LN, term loan 3 month U.S. LIBOR % 5.735% 4/26/24 (a)(b) 1,047 USD 1,318 1,311 Lazard Group LLC 4.25% 11/14/20 50 USD Liberty Media Corp % 10/15/ USD 1,336 1,336 Liberty Property LP 4.75% 10/1/ USD Lineage Logistics Holdings, LLC. Tranche B, term loan 3 month U.S. LIBOR % 4.735% 4/7/21 (a)(b) 2,975 USD 3,962 3,716 Merrill Lynch Mortgage Investors Trust Series 2004 A4 Class A3, % 8/25/34 (a) 167 USD Morgan Stanley: 4.875% 11/1/ USD % 11/24/25 50 USD Neptune Finco Corp % 1/15/23 1,255 USD 1,786 1,807 NRG Yield, Inc. 3.5% 2/1/19 1,500 USD 1,922 1,898 Nuance Communications, Inc. 2.75% 11/1/31 1,450 USD 1,819 1,811 NXP BV/NXP Funding LLC 4.625% 6/15/22 1,010 USD 1,417 1,348 Principal Amount Cost Market Value Omega Healthcare Investors, Inc. 4.5% 4/1/27 91 USD $ 117 $ 113 Petroleos Mexicanos: 3.5% 7/23/20 5 USD % 1/23/26 23 USD % 6/27/44 34 USD % 1/23/46 1,092 USD 1,185 1, % 9/21/47 66 USD PetSmart, Inc. term loan 3 month U.S. LIBOR % 4.24% 3/11/22 (a)(b) 802 USD PNC Capital Trust C 3 month U.S. LIBOR % % 6/1/28 (a)(b) 1,140 USD 1,453 1,326 Prime Securities Services Borrower LLC/Prime Finance, Inc. 9.25% 5/15/23 1,935 USD 2,639 2,664 Royal Bank of Scotland Group PLC 6% 12/19/ USD Scorpio Tankers, Inc % 7/1/ USD 1,065 1,012 Southwestern Energy Co. 4.1% 3/15/22 1,485 USD 1,810 1,781 Springer Science+Business Media Deutschland GmbH Tranche B 9LN, term loan 3 month U.S. LIBOR % 4.735% 8/14/20 (a)(b) 1,371 USD 1,739 1,714 Sprint Capital Corp. 8.75% 3/15/32 1,370 USD 2,110 2,186 Sprint Communications, Inc.: 7% 3/1/ USD % 3/1/20 (Reg. S) 60 USD The Williams Companies, Inc. 5.75% 6/24/44 80 USD Time Warner Cable, Inc.: 5.875% 11/15/40 57 USD % 5/1/37 10 USD Tronox Blocked Borrower LLC Tranche B, term loan 3 month U.S. LIBOR % % 9/22/24 (a)(b) 325 USD Tronox Finance LLC Tranche B, term loan 3 month U.S. LIBOR % % 9/22/24 (a)(b) 750 USD Twitter, Inc. 1% 9/15/21 4,240 USD 5,120 4,857 U.S. Treasury Bonds: 2.25% 8/15/ USD 1,078 1,004 Semi-Annual Reportport 4

5 Bonds continued Principal Amount Cost Market Value Foreign Bonds continued U.S. Treasury Bonds: continued 2.5% 2/15/ USD $ 1,105 $ 1, % 5/15/ USD % 11/15/ USD 1,178 1,110 3% 5/15/ USD 1,326 1,220 3% 11/15/ USD 1,153 1,073 3% 2/15/ USD 1,291 1,222 3% 5/15/47 70 USD U.S. Treasury Inflation Indexed Bonds: 0.75% 2/15/ USD % 2/15/44 45 USD U.S. Treasury Inflation Indexed Notes: 0.125% 7/15/ USD % 1/15/25 50 USD % 7/15/25 1,204 USD 1,546 1, % 1/15/27 2,680 USD 3,500 3, % 7/15/27 3,351 USD 4,171 4, % 1/15/26 2,930 USD 4,076 3,817 U.S. Treasury Notes: 0.75% 12/31/ USD % 2/28/18 2,541 USD 3,163 3, % 4/15/18 1,411 USD 1,752 1, % 11/30/17 3,643 USD 4,541 4, % 1/15/18 5,481 USD 6,716 6, % 1/31/18 2,793 USD 3,433 3,482 1% 2/15/18 2,780 USD 3,432 3,466 1% 3/15/18 2,502 USD 3,096 3,119 1% 5/15/18 1,239 USD 1,500 1, % 1/15/ USD % 8/31/ USD 1,029 1, % 12/31/ USD % 6/30/ USD % 12/31/ USD % 9/30/ USD % 7/31/ USD Vector Group Ltd % 2/1/25 1,780 USD 2,398 2,299 Verizon Communications, Inc % 8/21/54 84 USD Wachovia Capital Trust II 3 month U.S. LIBOR % % 1/15/27 (a)(b) 2,706 USD 3,499 3,174 Williams Partners LP 3.35% 8/15/ USD Xerox Business Services LLC Tranche B, term loan 3 month U.S. LIBOR % 5.235% 12/7/23 (a)(b) 1,297 USD 1,580 1,623 Preferred Securities 3.5% Principal Amount Cost Market Value United States of America 3.5% FINANCIALS 0.7% JPMorgan Chase & Co. 7.9% (a)(d) 1,395 USD $ 1,925 $ 1,852 INDUSTRIALS 2.8% General Electric Co. 5% (a)(d) 5,268 USD 7,344 6,985 TOTAL UNITED STATES OF AMERICA 9,269 8,837 TOTAL PREFERRED SECURITIES 9,269 8,837 Short-Term Investments 0.0% Canada 0.0% Investments in reverse repurchase agreements in a joint trading account at 0.97%, dated 9/29/17 due 10/2/17 (Collateralized by Canadian Government Obligations) # TOTAL INVESTMENT IN SECURITIES 91.0% $232, ,708 NET OTHER ASSETS (LIABILITIES) 9.0% 22,594 NET ASSETS 100% $251,302 Currency Abbreviations USD U.S. dollar Presentation Notes Cost amount includes broker commissions and other trading expenses, if any. Principal Amount is stated in Canadian dollars unless otherwise noted. Legend (a) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. (b) Coupon is indexed to a floating interest rate which may be multiplied by a specified factor and/or subject to caps or floors. (c) The coupon rate will be determined upon settlement of the loan after period end. (d) Security is perpetual in nature with no stated maturity date. TOTAL FOREIGN BONDS 154, ,198 TOTAL BONDS 158, ,928 5 Semi-Annual Report

6 Fidelity Tactical High Income Fund Schedule of Investments (Unaudited) continued Investment Valuation The following is a summary of the inputs used, as of September 30, 2017 and March 31, 2017, 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 September 30, 2017: Description Total Level 1 Level 2 Level 3 (Amounts in thousands) Investments in Securities: Equities: Consumer Discretionary $ 4,368 $ 4,368 $ $ Consumer Staples 8,758 8,758 Energy 6,809 6,809 Financials 12,987 11,675 1,312 Health Care 5,107 4, Industrials 2,298 2,298 Information Technology 10,638 10,638 Materials 6,440 6,440 Real Estate Telecommunication Services 4,101 4,101 Utilities 3,089 3,089 Bonds 154, ,928 Preferred Securities 8,837 8,837 Short-Term Investments Total Investments in Securities: $228,708 $63,196 $165,512 $ Valuation Inputs at March 31, 2017: Description Total Level 1 Level 2 Level 3 (Amounts in thousands) Investments in Securities: Equities: Consumer Discretionary $ 23,372 $23,372 $ $ Consumer Staples 20,141 20,141 Energy 7,740 4,326 3,414 Financials 8,133 8,133 Health Care 10,694 10, Industrials Information Technology 15,486 15,486 Materials 3,121 3,121 Real Estate 1,866 1,866 Telecommunication Services 6,297 6,297 Utilities 5,334 3,118 2,216 Bonds 109, ,444 Preferred Securities 16,009 16,009 Short-Term Investments 1,603 1,603 Total Investments in Securities: $229,925 $96,910 $133,015 $ Other Information # Additional information on each counterparty to the reverse repurchase agreement is as follows: Reverse Repurchase Agreement / Counterparty Value (000 s) $108,000 due 10/02/17 at 0.97% Bank of Montreal $ 23 CIBC World Markets, Inc. 18 Royal Bank of Canada 26 Scotia Capital, Inc. 26 The Toronto-Dominion Bank 15 $ 108 Semi-Annual Reportport 6

7 Financial Statements (Unaudited) Statements of Financial Position Amounts in thousands of Canadian Dollars (except per security amounts) As at September 30, 2017 March 31, 2017 Current assets (Note 3) Investments at fair value through profit or loss $ 228,708 $ 229,925 Cash 27,600 46,082 Receivable for investments sold 5,431 6,105 Other receivables 4 1 Accrued interest and dividends receivable 1,286 1,315 Subscriptions receivable 146 3, , ,617 Current liabilities (Note 3) Payable for investments purchased 10,487 15,598 Redemptions payable 991 1,617 Distributions payable (Note 5) Management and advisory fees payable (Note 4) Other payables to affiliates (Note 4) Other payables and accrued expenses (Notes 4 and 5) ,873 17,695 Net assets attributable to securityholders (Notes 3 and 6) $ 251,302 $ 268,922 Net assets attributable to securityholders per Series and per security (Note 6) Series A: ($30,481 and $36,590, respectively) $ $ Series B: ($45,368 and $52,518, respectively) $ $ Series F: ($39,764 and $45,163, respectively) $ $ Series F5: ($2,027 and $2,522, respectively) $ $ Series F8: ($1,158 and $1,282, respectively) $ $ Series O: ($79,884 and $81,478, respectively) $ $ Series T5: ($3,041 and $3,775, respectively) $ $ Series T8: ($2,967 and $4,211, respectively) $ $ Series S5: ($1,405 and $3,263, respectively) $ $ Series S8: ($3,798 and $3,704, respectively) $ $ Series E1: ($16,775 and $14,742, respectively) $ 9.50 $ Series E1T5: ($542 and $766, respectively) $ $ Series E2: ($2,458 and $2,702, respectively) $ 9.50 $ Series E2T5: ($168 and $-, respectively) $ $ Series E3: ($557 and $1, respectively) $ 9.51 $ Series E3T5: ($232 and $-, respectively) $ $ Series E4: ($1,323 and $56, respectively) $ 9.51 $ Series E4T5: ($1,754 and $-, respectively) $ $ Series E5: ($7 and $7, respectively) $ 9.63 $ Series P1: ($11,547 and $10,894, respectively) $ 8.79 $ 9.40 Series P1T5: ($411 and $494, respectively) $ $ Series P2: ($2,811 and $2,892, respectively) $ 8.80 $ 9.41 Series P2T5: ($1,286 and $531, respectively) $ $ Series P3: ($1,153 and $1,160, respectively) $ 8.80 $ 9.41 Series P4: ($224 and $1, respectively) $ 8.79 $ 9.40 Series P5: ($161 and $170, respectively) $ 8.79 $ Semi-Annual Report

8 Financial Statements (Unaudited) continued Statements of Comprehensive Income Amounts in thousands of Canadian Dollars (except per security amounts) For the six-month periods ended September 30, (Note 1) Investment income (Note 3) Interest $ 2,985 $ 3,953 Dividends 1,228 1,941 Net gain (loss) on investments Net realized gain (loss) on investments (4,444) 6,928 Change in net unrealized appreciation (depreciation) on investments (10,506) 11,764 (14,950) 18,692 Net gain (loss) on foreign currencies Net realized gain (loss) on foreign currency transactions (2,903) (31) Change in net unrealized appreciation (depreciation) on other net assets in foreign currencies (2,582) 256 Total investment income (loss) (13,319) 24,842 Operating expenses (Note 4) Management and advisory fees 1,299 1,228 Administration fees Independent Review Committee fees Commissions and other portfolio costs Foreign taxes withheld (Note 5) Sales tax Total operating expenses 1,931 1,889 Expenses waived (Note 4) (23) (1) Net operating expenses 1,908 1,888 Net increase (decrease) in net assets attributable to securityholders from operations $ (15,227) $ 22,954 Increase (decrease) in net assets attributable to securityholders from operations per Series (Note 3) Series A $ (2,186) $ 3,383 Series B $ (3,049) $ 5,388 Series F $ (2,453) $ 3,732 Series F5 $ (129) $ 205 Series F8 $ (71) $ 157 Series O $ (4,125) $ 7,238 Series T5 $ (209) $ 289 Series T8 $ (221) $ 394 Series S5 $ (96) $ 318 Series S8 $ (245) $ 288 Series E1 $ (1,080) $ 767 Series E1T5 $ 6 $ 37 Series E2 $ (156) $ 100 Series E2T5 $ (155) $ Series E3 $ 24 $ 8 Series E3T5 $ (34) $ Series E4 $ (119) $ Series E4T5 $ 20 $ Series E5 $ $ Series P1 $ (685) $ 413 Series P1T5 $ (39) $ 22 Series P2 $ (163) $ 189 Series P2T5 $ (26) $ 10 Semi-Annual Reportport 8

9 Statements of Comprehensive Income continued Amounts in thousands of Canadian Dollars (except per security amounts) For the six-month periods ended September 30, (Note 1) Series P3 $ (28) $ Series P4 $ 1 $ 1 Series P5 $ (9) $ 15 Increase (decrease) in net assets attributable to securityholders from operations per Series per security (Notes 3 and 6) Series A $ (.70) $ 1.05 Series B $ (.69) $ 1.06 Series F $ (.64) $ 1.12 Series F5 $ (1.15) $ 2.19 Series F8 $ (1.08) $ 2.17 Series O $ (.56) $ 1.20 Series T5 $ (1.22) $ 1.96 Series T8 $ (1.11) $ 1.88 Series S5 $ (1.27) $ 2.00 Series S8 $ (1.17) $ 1.92 Series E1 $ (.63) $.92 Series E1T5 $.19 $ 1.87 Series E2 $ (.62) $.99 Series E2T5 $ (2.26) $ Series E3 $.62 $.96 Series E3T5 $ (.39) $ Series E4 $ (1.07) $ (1.20) Series E4T5 $.24 $ Series E5 $ (.61) $.86 Series P1 $ (.51) $.94 Series P1T5 $ (1.36) $ 1.88 Series P2 $ (.52) $.99 Series P2T5 $ (.58) $ 1.87 Series P3 $ (.20) $.95 Series P4 $.11 $.42 Series P5 $ (.51) $ Semi-Annual Report

10 Financial Statements (Unaudited) continued Statements of Changes in Net Assets Attributable to Securityholders Amounts in thousands of Canadian Dollars For the six-month period ended September 30, 2017 (Note 1) Total Series A Series B Series F Series F5 Series F8 Net assets attributable to securityholders, beginning of period $ 268,922 $ 36,590 $ 52,518 $ 45,163 $ 2,522 $ 1,282 Increase (decrease) in net assets attributable to securityholders from operations (15,227) (2,186) (3,049) (2,453) (129) (71) Distributions to securityholders (Note 5) From net investment income (2,414) (119) (219) (430) (23) (13) Management fee reduction (14) (4) (10) Return of capital (522) (32) (38) (2,950) (119) (223) (440) (55) (51) Security transactions (Note 6) Proceeds from sale of securities 78,683 5,058 12,895 11,842 1, Reinvestment of distributions 2, Amounts paid upon redemption of securities (80,305) (8,970) (16,973) (14,565) (2,113) (159) 557 (3,804) (3,878) (2,506) (311) (2) Net assets attributable to securityholders, end of period $ 251,302 $ 30,481 $ 45,368 $ 39,764 $ 2,027 $ 1,158 For the six-month period ended September 30, 2017 (Note 1) Series O Series T5 Series T8 Series S5 Series S8 Net assets attributable to securityholders, beginning of period $ 81,478 $ 3,775 $ 4,211 $ 3,263 $ 3,704 Increase (decrease) in net assets attributable to securityholders from operations (4,125) (209) (221) (96) (245) Distributions to securityholders (Note 5) From net investment income (1,241) (12) (13) (7) (19) Management fee reduction Return of capital (73) (137) (28) (142) (1,241) (85) (150) (35) (161) Security transactions (Note 6) Proceeds from sale of securities 16, Reinvestment of distributions 1, Amounts paid upon redemption of securities (13,905) (748) (1,155) (2,335) (116) 3,772 (440) (873) (1,727) 500 Net assets attributable to securityholders, end of period $ 79,884 $ 3,041 $ 2,967 $ 1,405 $ 3,798 For the six-month period ended September 30, 2017 (Note 1) Series E1 Series E1T5 Series E2 Series E2T5 Series E3 Net assets attributable to securityholders, beginning of period $ 14,742 $ 766 $ 2,702 $ $ 1 Increase (decrease) in net assets attributable to securityholders from operations (1,080) 6 (156) (155) 24 Distributions to securityholders (Note 5) From net investment income (84) (2) (13) (7) (3) Management fee reduction Return of capital (10) (26) (84) (12) (13) (33) (3) Security transactions (Note 6) Proceeds from sale of securities 6,476 2, ,613 2,101 Reinvestment of distributions Amounts paid upon redemption of securities (3,354) (2,380) (866) (2,258) (1,569) 3,197 (218) (75) Net assets attributable to securityholders, end of period $ 16,775 $ 542 $ 2,458 $ 168 $ 557 Semi-Annual Reportport 10

11 Statements of Changes in Net Assets Attributable to Securityholders continued For the six-month period ended September 30, 2017 (Note 1) Series E3T5 Series E4 Series E4T5 Series E5 Series P1 Net assets attributable to securityholders, beginning of period $ $ 56 $ $ 7 $ 10,894 Increase (decrease) in net assets attributable to securityholders from operations (34) (119) 20 (685) Distributions to securityholders (Note 5) From net investment income (4) (6) (2) (132) Management fee reduction Return of capital (13) (5) (17) (6) (7) (132) Security transactions (Note 6) Proceeds from sale of securities 2,259 1,386 1,741 5,960 Reinvestment of distributions 6 81 Amounts paid upon redemption of securities (1,976) (4,571) 283 1,392 1,741 1,470 Net assets attributable to securityholders, end of period $ 232 $ 1,323 $ 1,754 $ 7 $ 11,547 For the six-month period ended September 30, 2017 (Note 1) Series P1T5 Series P2 Series P2T5 Series P3 Series P4 Net assets attributable to securityholders, beginning of period $ 494 $ 2,892 $ 531 $ 1,160 $ 1 Increase (decrease) in net assets attributable to securityholders from operations (39) (163) (26) (28) 1 Distributions to securityholders (Note 5) From net investment income (5) (32) (9) (16) (1) Management fee reduction Return of capital (7) (11) (12) (32) (20) (16) (1) Security transactions (Note 6) Proceeds from sale of securities ,328 1, Reinvestment of distributions Amounts paid upon redemption of securities (343) (228) (527) (1,194) (32) Net assets attributable to securityholders, end of period $ 411 $ 2,811 $ 1,286 $ 1,153 $ 224 For the six-month period ended September 30, 2017 (Note 1) Series P5 Net assets attributable to securityholders, beginning of period $ 170 Increase (decrease) in net assets attributable to securityholders from operations (9) Distributions to securityholders (Note 5) From net investment income (2) Management fee reduction Return of capital (2) Security transactions (Note 6) Proceeds from sale of securities Reinvestment of distributions 2 Amounts paid upon redemption of securities 2 Net assets attributable to securityholders, end of period $ Semi-Annual Report

12 Financial Statements (Unaudited) continued Statements of Changes in Net Assets Attributable to Securityholders continued For the six-month period ended September 30, 2016 (Note 1) Total Series A Series B Series F Series F5 Series F8 Net assets attributable to securityholders, beginning of period $ 227,301 $ 37,318 $ 57,218 $ 37,349 $ 2,181 $ 1,015 Increase (decrease) in net assets attributable to securityholders from operations 22,954 3,383 5,388 3, Distributions to securityholders (Note 5) From net investment income (3,785) (389) (681) (663) (36) (26) Management fee reduction (15) (3) (12) Return of capital (353) (14) (33) (4,153) (389) (684) (675) (50) (59) Security transactions (Note 6) Proceeds from sale of securities 41,954 2,803 8,461 4, Reinvestment of distributions 3, Amounts paid upon redemption of securities (52,113) (6,885) (18,748) (7,699) (514) (433) (6,777) (3,734) (9,676) (2,352) (441) 299 Net assets attributable to securityholders, end of period $ 239,325 $ 36,578 $ 52,246 $ 38,054 $ 1,895 $ 1,412 For the six-month period ended September 30, 2016 (Note 1) Series O Series T5 Series T8 Series S5 Series S8 Net assets attributable to securityholders, beginning of period $ 63,870 $ 3,120 $ 3,574 $ 3,518 $ 2,684 Increase (decrease) in net assets attributable to securityholders from operations 7, Distributions to securityholders (Note 5) From net investment income (1,581) (34) (45) (42) (38) Management fee reduction Return of capital (45) (126) (43) (85) (1,581) (79) (171) (85) (123) Security transactions (Note 6) Proceeds from sale of securities 12, Reinvestment of distributions 1, Amounts paid upon redemption of securities (12,190) (259) (269) (582) (327) 1,501 (164) 704 (489) 320 Net assets attributable to securityholders, end of period $ 71,028 $ 3,166 $ 4,501 $ 3,262 $ 3,169 For the six-month period ended September 30, 2016 (Note 1) Series E1 Series E1T5 Series E2 Series E2T5 Series E3 Net assets attributable to securityholders, beginning of period $ 8,269 $ 458 $ 563 $ $ 78 Increase (decrease) in net assets attributable to securityholders from operations Distributions to securityholders (Note 5) From net investment income (108) (5) (17) (1) Management fee reduction Return of capital (5) (108) (10) (17) (1) Security transactions (Note 6) Proceeds from sale of securities 6, ,069 Reinvestment of distributions Amounts paid upon redemption of securities (2,641) (92) (353) 4,102 (3) 1,731 1 Net assets attributable to securityholders, end of period $ 13,030 $ 482 $ 2,377 $ $ 86 Semi-Annual Reportport 12

13 Statements of Changes in Net Assets Attributable to Securityholders continued For the six-month period ended September 30, 2016 (Note 1) Series E3T5 Series E4 Series E4T5 Series E5 Series P1 Net assets attributable to securityholders, beginning of period $ $ 35 $ $ $ 4,139 Increase (decrease) in net assets attributable to securityholders from operations 413 Distributions to securityholders (Note 5) From net investment income (76) Management fee reduction Return of capital (76) Security transactions (Note 6) Proceeds from sale of securities 1 5 1,481 Reinvestment of distributions 61 Amounts paid upon redemption of securities (35) (767) (34) Net assets attributable to securityholders, end of period $ $ 1 $ $ 5 $ 5,251 For the six-month period ended September 30, 2016 (Note 1) Series P1T5 Series P2 Series P2T5 Series P3 Series P4 Net assets attributable to securityholders, beginning of period $ 251 $ 1,420 $ 90 $ 1 $ 149 Increase (decrease) in net assets attributable to securityholders from operations Distributions to securityholders (Note 5) From net investment income (4) (34) (2) (1) Management fee reduction Return of capital (1) (1) (5) (34) (3) (1) Security transactions (Note 6) Proceeds from sale of securities Reinvestment of distributions 16 1 Amounts paid upon redemption of securities (70) (100) (149) (70) (148) Net assets attributable to securityholders, end of period $ 198 $ 2,206 $ 211 $ 1 $ 1 For the six-month period ended September 30, 2016 (Note 1) Series P5 Net assets attributable to securityholders, beginning of period $ 1 Increase (decrease) in net assets attributable to securityholders from operations 15 Distributions to securityholders (Note 5) From net investment income (2) Management fee reduction Return of capital (2) Security transactions (Note 6) Proceeds from sale of securities 149 Reinvestment of distributions 2 Amounts paid upon redemption of securities 151 Net assets attributable to securityholders, end of period $ Semi-Annual Report

14 Financial Statements (Unaudited) continued Statements of Cash Flows Amounts in thousands of Canadian Dollars For the six-month periods ended September 30, (Note 1) Cash flows from (used in) operating activities: Purchases of investments and derivatives $ (307,106) $ (230,209) Proceeds from sale and maturity of investments and derivatives 285, ,138 Cash receipts from dividend income 1,246 1,756 Cash receipts from interest income 2,930 4,008 Cash paid for operating expenses (1,796) (1,669) Net cash from (used in) operating activities (18,861) 46,024 Cash flows from (used in) financing activities: Distributions to securityholders net of reinvestments (787) (763) Proceeds from sales of securities 45,677 26,341 Amounts paid upon redemption of securities (44,882) (36,802) Net cash from (used in) financing activities 8 (11,224) Net change in cash (18,853) 34,800 Foreign exchange gain (loss) on cash Cash, beginning of period 46,082 1,312 Cash, end of period $ 27,600 $ 36,276 Semi-Annual Reportport 14

15 Notes to Financial Statements (Unaudited) For the period ended September 30, 2017 (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) 1. Formation of the Fund Fidelity Tactical High Income Fund (Fund) is an open end mutual fund trust formed under the laws of Ontario and governed by a Master Declaration of Trust dated May 15, 2014 (Inception Date), as amended thereafter from time to time. The Fund is authorized to issue an unlimited number of securities. Fidelity Investments Canada ULC (Fidelity), as manager and trustee of the Fund, is responsible for the day-to-day operations and provides all general management and administrative services. Fidelity, as the investment advisor, is responsible for the investment management of the Fund s portfolio. On December 31, 2015, the investment advisor changed from FIAM LLC (formerly Pyramis Global Advisors, LLC) to Fidelity. The registered office of the Fund is located at 483 Bay Street, Suite 300, Toronto, Ontario, M5G 2N7. Currently, Fidelity mutual funds are offered in the following Series: Series A, Series C, Series T5 and Series T8 securities are available to all investors in a deferred sales charge (DSC) option. Series A, Series T5 and Series T8 securities will be converted to lower management and advisory fee Series B, Series S5 and Series S8 securities, respectively, one year after completion of their redemption schedule. Series B, Series D, Series S5 and Series S8 securities are available to all investors in an initial sales charge (ISC) option. Series C and Series D securities are available to investors who have enrolled in the rebalancing service. Series F, Series F5 and Series F8 securities are usually only available to investors who have fee based accounts with dealers who have signed an eligibility agreement with Fidelity. Series E1, Series E1T5, Series E2, Series E2T5, Series E3, Series E3T5, Series E4, Series E4T5, Series E5 and Series E5T5 securities are available only to investors who initially hold Series B and/or Series S5 securities and then become eligible to hold certain Series E securities. Series P1, Series P1T5, Series P2, Series P2T5, Series P3, Series P3T5, Series P4, Series P4T5, Series P5 and Series P5T5 securities are available only to investors who initially hold Series F and/or Series F5 securities and then become eligible to hold certain Series P securities. Series O securities are only available to other funds and accounts managed or advised by Fidelity and are not available for public purchase. Series I, Series I5 and Series I8 securities are available to all investors who have entered into a Series I Agreement with Fidelity and are available to all investors in an initial sales charge (ISC) option. In addition, Series F5, Series F8, Series I5, Series I8, Series T5, Series T8, Series S5, Series S8, Series E1T5, Series E2T5, Series E3T5, Series E4T5, Series E5T5, Series P1T5, Series P2T5, Series P3T5, Series P4T5 and Series P5T5 securities distribute an amount comprised of net income and/or return of capital monthly, if available. The Fund commenced the offering of Series E2T5 securities on April 21, 2017 and commenced the offering of Series E3T5 securities on July 14, 2017 and commenced the offering of Series E4T5 securities on September 22, 2017 and commenced the Series E5 securities on May 13, The Fund meets the definition of an investment entity and its purpose is to provide investment management services to its securityholders by investing its net assets for capital growth and/or investment income and by measuring its investment performance on a fair value basis. Refer to the Financial Instruments Risk note below for the Fund s investment objective. 2. Basis of Preparation Statement of Compliance - These interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB) and as applicable to the preparation of interim financial statements, including IAS 34 Interim Financial Reporting. The accounting policies set out below have been applied consistently unless otherwise stated. The policies applied in these interim financial statements are based on IFRS issued as of November 7, 2017, which is the date on which the interim financial statements were authorized for issue by Fidelity s board of directors. Any subsequent changes to IFRS that are given effect in the Fund s annual financial statements for the period ending March 31, 2018 could result in restatement of these interim financial statements. Functional and Presentation Currency - These financial statements are presented in Canadian dollars, which is the Fund s functional currency. Comparative Figures Per security comparative figures have been conformed to the current rounding presentation of two decimal places. In addition, certain comparative figures in the Statements of Cash Flows have been revised to appropriately reflect the following non-cash items: Amounts related to Proceeds from sales of securities and Amounts paid upon redemption of securities have been revised to exclude noncash subscriptions and redemptions arising from switches between series within the Fund. There is no net impact on cash flows from financing activities. 3. Summary of Significant Accounting Policies Basis of Measurement These financial statements have been prepared on the historical cost basis except for investments which are measured at fair value in the Statements of Financial Position. 15 Semi-Annual Report

16 Notes to Financial Statements (Unaudited) continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) Use of Estimates and Judgments Under IFRS, management is required to make certain estimates and judgments at the date of the financial statements. The principal financial statement components subject to significant accounting estimates and judgments include: Fair value measurements -The Fund may invest in financial instruments that are not quoted in an active market. Where applicable, these instruments are categorized in Level 2 and Level 3 of the fair value hierarchy explained below. When current market prices or quotations are not readily available or reliable, valuation techniques will be applied in good faith and in accordance with procedures adopted by the manager. Factors used in determining fair value may include, but are not limited to, broker quotes from reputable pricing sources, market or security specific events, changes in interest rates and credit quality. Fair value models use observable data, to the extent practical; however, the manager is required from time to time to make estimates and assumptions that are based on the best information available at that particular time. Changes in these estimates could impact the fair values of the financial instruments, and the impact could be material. The aggregate fair value of investments measured by valuation techniques as at September 30, 2017 and March 31, 2017, is included at the end of the Fund s Schedule of Investments. The Fund invests a significant portion of its assets in below investment grade securities held directly or indirectly, as applicable. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions. Classification and measurement of financial instruments -The Fund has made significant judgments when determining the classification and measurement of its financial instruments under IAS 39, Financial Instruments Recognition and Measurement (IAS 39). These judgments centre upon the determination that certain investments are held-for-trading and that the fair value measurement option can be applied to those that are not due to factors including performance evaluation and management of the Fund on a fair value basis. Presentation of financial instruments -The Fund has made significant judgments when determining the classification of its redeemable securities as financial liabilities in accordance with IAS 32 Financial Instruments Presentation (IAS 32). These judgments centre upon the determination that the Fund s redeemable securities do not have identical features and their entitlements include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the securityholder). Therefore, the ongoing redemption feature is not the securities only contractual obligation. Investment and DerivativeValuation Investments, excluding derivatives, are designated at their fair value through profit or loss in accordance with IAS 39 and are carried at their fair value. Derivatives are classified as held-for-trading in accordance with IAS 39 and are carried at fair value. The Fund categorizes the inputs to valuation techniques used to fair value its investments and derivatives 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. There were no significant transfers between Level 1 and Level 2 during the periods. The aggregate value of investments by input level, as at September 30, 2017 and March 31, 2017, as well as a roll forward of Level 3 securities, where applicable, 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: Equity securities, including restricted equity securities and Exchange-traded funds (ETFs) for which market quotations are readily available, are valued at the last sales price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event that the last sales price or official closing price is not readily available, or is outside the bid-ask spread, the point within the bid ask spread that is most representative of fair value based on specific facts and circumstances will be used. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, ETFs and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted equity securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Debt securities, including restricted debt securities, are valued based on prices received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type, prepayment speed assumptions, attributes of the collateral as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy, but may be categorized as Level 3. Semi-Annual Reportport 16

17 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. Independent prices obtained from a single source or broker are evaluated by management and may be categorized as Level 3 in the hierarchy. Short-term securities 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. Cash Cash is comprised of cash on deposit and may include cash equivalents which are short-term debt instruments with terms to maturity of less than 90 days at acquisition which are held for the purpose of meeting short-term cash commitments. Foreign currencies are comprised of cash amounts denominated in currencies other than Canadian dollars, which are on deposit with the custodian to facilitate the settlement of foreign denominated security transactions. Cash is carried at amortized cost which approximates its fair value. The Fund did not hold any cash equivalents as at September 30, 2017 and March 31, Impairment of Financial Assets At each reporting date, the Fund assesses whether there is objective evidence that a financial asset carried at amortized cost is impaired. If such impairment exists, the Fund recognizes the difference between the amortized cost of the financial assets and the present value of the estimated future cash flows, discounted using the instrument s original effective interest rate as an impairment loss on the Statements of Comprehensive Income. Such impairment losses are reversed in subsequent periods in the Statements of Comprehensive Income if the conditions that lead to the initial recognition of the loss diminish or cease to exist. Other Assets and Liabilities Other assets and liabilities may include amounts due to or from the custodian, affiliates or other counterparties for accrued income, investment transactions, Fund s security transactions, accrued expenses and other unsettled transactions at period end. These amounts are classified as loans and receivables or financial liabilities and are carried at amortized cost, which approximates fair value due to their short-term nature. Classification of redeemable securities issued by the Fund In accordance with IAS 32, the Fund s redeemable securities entitlements include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the securityholder) and, therefore, the ongoing redemption feature is not the securities only contractual obligation. In addition, each series of redeemable securities are equally subordinated to each other, but have differing features as outlined in the notes below. Therefore, the Fund s redeemable securities do not meet the criteria for classification as equity and have been classified as financial liabilities on the Statements of Financial Position. The Fund s obligation for net assets attributable to securityholders is recorded at the redemption amount. As at September 30, 2017 and March 31, 2017, the Fund s net asset value per Series per security may differ by less than $0.01 from its net assets attributable to securityholders per Series per securities calculated in accordance with IFRS as a result of normal reporting period end procedures to close off the books and records. Investment Transactions, Income Recognition and Transaction Costs - Regular way purchases and sales of financial assets are recognized at their trade date. The cost of investments is determined on an average cost basis, excluding commissions and other portfolio transaction costs. Net realized gains and losses from the sale of investments (which may include proceeds received from litigation) and change in net unrealized appreciation (depreciation) on investments are calculated with reference to average cost of the related investment securities. Interest income is accrued as earned and includes coupon interest and accretion of discount and amortization of premium on debt securities using the effective interest rate. This is the rate that exactly discounts the estimated future cash receipts through the expected life of the relevant debt securities, to their net carrying amounts. The principal value on inflation-indexed securities is periodically adjusted to the rate of inflation and interest is accrued based on the principal value. The adjustments to principal due to inflation are reflected as increases or decreases to interest income even though the principal is not received until maturity. Dividend income, including income received from ETFs, is recognized on the ex-dividend date except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the ex-dividend date is known to Fidelity. Distributions received from investment trusts are recorded as income, capital gains or a return of capital based on the best information available. Due to the nature of these investments, actual allocations could vary from this information. Distributions from investment trusts treated as a return of capital reduce the average cost of the underlying investment trust. Transaction costs, such as brokerage commissions, incurred in the purchase and sale of investment securities by the Fund are recognized as Commissions and other portfolio costs in the Statements of Comprehensive Income. Foreign Currency Translation Securities and other assets and liabilities denominated in a foreign currency are translated into Canadian dollars at the period-end exchange rates. Purchases and sales of securities, income and expenses denominated in foreign currencies are translated into Canadian dollars at the exchange rate on the date of the respective transaction. The effects of exchange rate fluctuations on investments are included in the Net realized gain (loss) and change in net unrealized appreciation (depreciation) on investments and exchange rate fluctuations on other foreign currency transactions are included in the Net realized gain (loss) on foreign currency transactions and Change in net unrealized appreciation (depreciation) on other net assets in foreign currencies in the Statements of Comprehensive Income. Reverse Repurchase Agreements Uninvested cash balances may be transferred into one or more joint trading accounts where these balances are invested in reverse repurchase transactions. In reverse repurchase transactions, U.S. or Canadian Government securities are 17 Semi-Annual Report

18 Notes to Financial Statements (Unaudited) continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) purchased from a counterparty who agrees to repurchase the securities at a higher price at a specified future date. The difference in price is reported as interest income. Credit risk arises from the potential for a counterparty to default on its obligation to repurchase the security. The risk is managed by the use of counterparties acceptable to Fidelity and by the receipt of the securities as collateral. The value of the collateral must be at least 102% of the daily fair value of the cash invested. Any reverse repurchase agreements open at period end are included in the Schedule of Investments. The following tables summarize the securities pledged to the Fund as collateral: Collateral Value September 30, 2017 Collateral Description Interest Rate (%) Maturity Date % of Collateral as a % of CAD Cash Invested Canada Housing Trust /15/2019 6/15/ Canadian Treasury Bonds /1/ /1/ Canadian Treasury Bills n/a 5/3/2018 8/23/ March 31, 2017 Collateral Description Interest Rate (%) Maturity Date % of Collateral Collateral Value as a % of CAD Cash Invested Canada Housing Trust /15/2017 6/15/ Canadian Treasury Bonds /1/2018 6/1/ Valuation of Series Separate net assets attributable to securityholders is calculated for each Series of securities of the Fund. The net assets attributable to securityholders of a Series is computed by calculating the Series proportionate share of the assets and liabilities of the Fund common to all Series, adjusted for the assets and liabilities of the Fund attributable only to that Series. Expenses directly attributable to a Series are charged to that Series. Investment income and operating expenses are allocated proportionately to each Series based upon the relative net assets attributable to securityholders of each Series, except for items that can be specifically attributed to one or more Series. Per Security from Operations - The increase (decrease) in net assets attributable to securityholders resulting from operations per security in the Statements of Comprehensive Income represent the operational increase (decrease) for each Series of the Fund, divided by the relevant weighted average securities outstanding during the period. Refer to the Security Transactions Note for the Fund s weighted average securities outstanding. Statements of Cash Flows When preparing the Statements of Cash Flows, the Fund nets the rollover activity of its short-term investments, and includes only the net cash flow impact in Purchases of investments and derivatives or Proceeds from sale and maturity of investments and derivatives, as applicable. Additionally, in accordance with IFRS, the Fund s Statements of Cash Flows excludes non-cash transactions from its operating and financing activities. Recent Accounting Pronouncements The final version of IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a model for classification and measurement, a single, forward-looking expected loss impairment model and a substantially reformed approach to hedge accounting. The new single, principle based approach for determining the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, which will require more timely recognition of expected credit losses. It also includes changes in respect of an entity s own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused by the deterioration of an entity s own credit risk on such liabilities are no longer recognized in profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, however is available for early adoption. In addition, the entity s own credit risk changes can be early applied in isolation without otherwise changing the accounting for financial instruments. Fidelity is in the process of assessing the impact of IFRS 9 and does not plan to adopt the new standard early. 4. Expenses and Other Related Party Transactions Management and Advisory Fees - Fidelity serves as the manager and investment advisor of the Fund. Fidelity is part of a broader group of companies collectively known as Fidelity Investments. Fidelity has entered into sub-advisory agreements with a number of entities including Fidelity Investments Money Management, Inc. and FMR Co., Inc., to provide investment advice with respect to all or a portion of the investments of the Fund. The sub-advisors arrange for acquisition and disposition of portfolio investments, including all necessary brokerage arrangements. The Fund pays Fidelity a monthly management and advisory fee for their services and the provision of key management personnel to the Fund, based on the net asset value of each Series, calculated daily and payable monthly. Fidelity may reduce the management and advisory fee or fund expenses for certain investors by reducing the management and advisory fee it charges to the Fund or reducing the amount charged to the Fund for certain expenses and having the Fund pay out the amount of the reduction to the investors as a distribution. These distributions are disclosed as Management fee reduction in the Statements of Changes in Net Assets Attributable to Securityholders. Semi-Annual Reportport 18

19 No management and advisory fees are charged with respect to the Series O securities, but investors will be charged a negotiated management fee. The annual management and advisory fee rates for each Series were as follows: Annual Management and Advisory Fee Rate (%) Series A Series B Series F.750 Series F5.750 Series F8.750 Series T Series T Series S Series S Series E Series E1T Series E Series E2T Annual Management and Advisory Fee Rate (%) Series E Series E3T Series E Series E4T Series E Series P1.725 Series P1T5.725 Series P2.700 Series P2T5.700 Series P3.675 Series P4.650 Series P5.625 Administration Fee Fidelity charges the Fund a fixed administration fee in place of certain variable and administrative expenses, including the provision of key administrative personnel to the Fund. Fidelity, in turn, pays all of the operating expenses of the Fund, other than certain specified fund costs, including the fees and expenses of the Independent Review Committee, taxes, brokerage commissions and interest charges. The administration fee is in addition to the management and advisory fee. No administration fees are charged with respect to the Series O securities. The annual rate of the administration fee will fall under one of three tiers, depending on the net asset value of the Fund: Under $100 Million (Tier 1), $100 Million to $1 Billion (Tier 2) and Over $1 Billion (Tier 3). The administration fee is calculated as a fixed annual percentage, accrued daily and payable monthly, of the net asset value of each Series as follows: Tier 1 (%) Tier 2 (%) Tier 3 (%) Series A Series B Series F Series F Series F Series T Series T Series S Series S Series E Series E1T Series E Series E2T Tier 1 (%) Tier 2 (%) Tier 3 (%) Series E Series E3T Series E Series E4T Series E Series P Series P1T Series P Series P2T Series P Series P Series P Prior to November 1, 2016, the administration fee was calculated as a fixed annual percentage of the net asset value of each Series as follows (some or all Series administration fees may not have changed): Tier 1 (%) Tier 2 (%) Tier 3 (%) Series A Series B Series F Series F Series F Series T Series T Series S Series S Series E Series E1T Tier 1 (%) Tier 2 (%) Tier 3 (%) Series E Series E Series E Series E Series P Series P1T Series P Series P2T Series P Series P Series P Semi-Annual Report

20 Notes to Financial Statements (Unaudited) continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) Independent Review Committee Fees - The Independent Review Committee (IRC), as required under National Instrument , reviews conflict of interest matters referred to it by the manager and provides recommendations or approves actions, as appropriate, that are in the best interest of the funds. There are currently four members of the IRC who are independent of Fidelity and its affiliates. IRC members are compensated by way of an annual retainer fee and a per meeting attendance fee, as well as reimbursed for expenses associated with IRC duties. These costs are allocated among the individual funds proportionately by assets. No IRC fees are charged with respect to the Series O securities. Sales Tax - Certain provinces have harmonized their Provincial Sales Tax (PST) with the federal Goods and Services Tax (GST). The Harmonized Sales Tax (HST) combines the GST rate of 5% with the PST rate of certain provinces. The Provincial GST/HST liability or refund is calculated using the residency of securityholders and the value of their interests in the Fund as at specific times, rather than the physical location of the Fund. The effective GST/HST rate charged to each Series of the Fund is based on the securityholders proportionate investments by province, using each province s HST rate or GST rate in the case of non-participating provinces. All amounts are included in the Statements of Comprehensive Income as Sales tax. Expenses Waived - Fidelity may absorb or waive certain expenses at its sole discretion and can terminate the absorption or waiver at any time. Fidelity waived a portion of its administration fee which is disclosed as Expenses waived in the Statements of Comprehensive Income. Commissions and Other Portfolio Costs - Commissions and other portfolio costs paid for security transactions during the period were $99 (September 30, 2016: $96), of which $3 (September 30, 2016: $-) were paid to brokerage firms that are affiliates of Fidelity Investments. The Fund may execute certain portfolio trades with brokers who reimbursed a portion of their commissions to the Fund. Reimbursement estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known. Commissions reimbursed under this arrangement were $13 (September 30, 2016: $5) and are included in Commissions and other portfolio costs in the Statements of Comprehensive Income. In addition, a portion of commissions may be paid for research. The total of such payments was $- (September 30, 2016: $-). Amounts paid for research provided to the Fund by executing brokers are estimates made by Fidelity. Fidelity has established procedures to assist them in making a good faith determination that the Fund received a reasonable benefit considering the value of research goods and services and the amount of brokerage commissions paid. 5. Taxation and Distributions The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada). For tax purposes, the Fund has a December year end. In each tax year, the Fund declares and credits as due and payable sufficient net investment income and net realized capital gains to securityholders such that the Fund will not be subject to income taxes. As a result, the Fund does not record income taxes under IAS 12 Income Taxes (IAS 12) and accordingly does not recognize the deferred tax benefit associated with tax loss carry forwards and other taxable temporary differences. Foreign withholding taxes are imposed by certain countries on investment income and are estimated based on the tax rules and actual rates that exist in the foreign markets. Investment income is recorded gross of foreign taxes withheld. Foreign withholding taxes are accrued for in conjunction with the accrual for the related investment income and are included in Foreign taxes withheld on the Statements of Comprehensive Income and Other payables and accrued expenses on the Statements of Financial Position. Distributions are taxable in securityholders hands. At the end of each tax year, the character of the distributions is determined for tax purposes. Under the terms of the Declaration of Trust, the trustee may capitalize any distribution amount without any increase in the number of securities outstanding. Distributions, if any, are declared separately for each Series. Capital losses may be carried forward indefinitely to reduce future realized capital gains. As at the last taxation year-end, the Fund had no capital losses available to be carried forward. Non capital losses may be carried forward for up to 20 tax years to reduce future taxable income, but expire in December of the year noted. As at the last taxation year-end, the Fund had no non capital losses available to be carried forward. 6. Capital Risk Management Securities issued and outstanding are considered to be the capital of the Fund. The capital of each series of the Fund is divided into an unlimited number of securities of equal value, with no par value. All securities in a series of the Fund rank equally with respect to distributions. A securityholder of the Fund is entitled to one vote for each one dollar in value of securities owned. Fractional securities are proportionately entitled to these rights. The Fund generally has no restrictions or specific capital requirements on the subscriptions and redemptions of securities other than minimum subscription requirements; although, on rare occasions, Fidelity may temporarily suspend securityholders right to redeem securities and postpone paying sale proceeds. The relevant movements attributable to securityholders are shown in the Statements of Changes in Net Assets Attributable to Securityholders. In accordance with the objectives and the risk management policies outlined in the Semi-Annual Reportport 20

21 Financial Instruments Risk notes, the Fund endeavors to invest the subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Such liquidity is managed by investing the majority of assets in investments that can be readily disposed and via the Fund s ability to borrow up to 5% of its net asset value. Security Transactions - Security transactions and weighted average securities for each Series were as follows: Securities Outstanding, Beginning of Period Issued Reinvested Redeemed Securities Outstanding, End of Period Weighted Average Securities Period ended September 30, 2017 Series A 3, (815) 2,882 3,129 Series B 4,639 1, (1,531) 4,286 4,420 Series F 3,991 1, (1,320) 3,758 3,854 Series F (101) Series F (8) Series O 7,201 1, (1,254) 7,552 7,341 Series T (37) Series T (64) Series S (113) Series S (6) Series E1 1, (338) 1,765 1,723 Series E1T (119) Series E (88) Series E2T5 131 (122) 9 68 Series E3 211 (152) Series E3T5 114 (102) Series E Series E4T Series E Series P1 1, (497) 1,313 1,333 Series P1T (19) Series P (25) Series P2T (29) Series P (124) Series P Series P Period ended September 30, 2016 Series A 3, (610) 3,090 3,224 Series B 5, (1,633) 4,411 5,068 Series F 3, (678) 3,214 3,328 Series F (23) Series F (21) Series O 5,852 1, (1,087) 6,000 6,031 Series T (12) Series T (13) Series S (27) Series S (16) Series E (261) 1, Series E1T (4) Series E (33) Series E Series E4 4 (4) Series E5 Series P (84) Series P1T5 14 (4) Series P (11) Series P2T Series P3 Series P4 16 (16) 4 Series P Semi-Annual Report

22 Notes to Financial Statements (Unaudited) continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) Affiliated Ownership - As at September 30, 2017, Fidelity and its affiliates held approximately 32% of the Fund. As at March 31, 2017, Fidelity and its affiliates held approximately 30% of the Fund. 7. Financial Instruments Risk The Fund s activities expose it to a variety of financial instruments risks: credit risk, liquidity risk, other price risk, interest rate risk and currency risk. Fidelity seeks to minimize potential adverse effects of these performance risks by employing professional, experienced portfolio advisors, by daily monitoring of positions and market events, and by diversifying the investment portfolio within the constraints of the investment mandate. Derivative financial instruments may be used to moderate certain risk exposures. The Fund aims to provide income and capital growth. It invests primarily in a mix of income-producing securities which may be located anywhere in the world. Income-producing securities may include, but are not limited to, equity securities, common and preferred shares, convertible securities, investment grade fixed income securities, higher yielding, lower quality fixed income securities, floating rate debt instruments and asset-backed securities and mortgage-backed securities. The Fund can invest in these securities either directly or indirectly through investments in underlying funds. The Fund does not have a specific benchmark. Portfolio risk is monitored daily and reviewed monthly by an investment compliance group. In addition, there is a formal quarterly review of each fund. The investment compliance group, portfolio managers and the senior analysts attend a quarterly portfolio review. Portfolios within each strategy are reviewed relative to each other and to their benchmark. Active industry and security allocations are analyzed. Credit Risk - Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Fund. The Fund s own credit risk in the case of financial liabilities and a counterparty s credit risk, both indirect and direct, are considered, where applicable, in determining the fair value of financial assets and financial liabilities. In addition, as part of its cash management, the Fund limits its direct exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of investments and other assets represents the maximum credit risk exposure as at September 30, 2017 and March 31, Refer to the Quality Diversification tables in the Summary of Investment Portfolio of the Fund s Semi-Annual Management Report of Fund Performance as at September 30, 2017, which summarize the credit risk that is relevant for the Fund. Collateralized reverse repurchase agreements may result in credit exposure in the event that the counterparty to the transaction is unable to fulfill its contractual obligations. The risk is managed by the receipt of the underlying securities as collateral and use of counterparties whose credit worthiness is considered sufficient based on Fidelity s independent review. Other than outlined above, there were no significant concentrations of credit risk to counterparties as at September 30, 2017 and March 31, Concentration Risk - The Fund may be exposed to risk based on the concentration levels of its financial instruments in various sectors, geographic regions, asset weightings and market capitalization, as applicable. Fidelity analyzes and monitors these concentration risks regularly. Refer to the Geographic Mix, Sector Mix and Asset Mix tables in the Summary of Investment Portfolio of the Fund s Semi-Annual Management Report of Fund Performance as at September 30, 2017, which summarize the investment concentration risks that are relevant for the Fund. Liquidity Risk - Liquidity risk is defined as the risk that the Fund may not be able to settle or meet its obligations on time or at a reasonable price. The Fund is exposed to daily cash redemptions of its redeemable securities. Redeemable securities are redeemed on demand at the securityholder s option based on the Fund s net asset value per security (NAVPS) at the time of redemption. The Fund may be exposed to indirect liquidity risk through its investments. In accordance with securities regulations, investment funds must maintain at least 90% of assets in liquid investments; investments that are traded in an active market and can be readily disposed of. In addition, the Fund aims to retain sufficient cash and short-term investments to maintain liquidity, and has the ability to borrow up to 5% of its net asset value from the custodian for the purpose of funding redemptions. The liquidity position is monitored on a daily basis. As at September 30, 2017 and March 31, 2017, the Fund did not have financial liabilities with maturities greater than 3 months. Other Price Risk - Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk on monetary instruments), whether caused by factors specific to an individual investment, its issuer, or other factors affecting all instruments traded in a market or market segment. All financial instruments present a risk of loss of capital. This risk is moderated through a careful selection of securities and other financial instruments within the parameters of the investment strategy. The maximum risk resulting from financial instruments is equivalent to their fair value except for possible losses from options written and futures contracts which can be unlimited. Investments and derivatives, if applicable, are susceptible to other price risk arising from uncertainties about future prices of the instruments. Semi-Annual Reportport 22

23 In determining a Fund s impact from exposure to other price risk, a beta may be used when applicable. Beta, a measure of the volatility of a security or a portfolio in comparison to the market as a whole, is derived from comparing 36 months of returns between the benchmark and a Fund. As such, beta inherently includes effects reflected in interest rate and currency risks. A beta of 1 indicates the security s price will move with the market. A beta of less than 1 means the security will be less volatile than the market. A beta of greater than 1 indicates the security s price will be more volatile than the market. For example, if a stock s beta is 1.2, it s theoretically 20% more volatile than the market. Beta may not be representative of future beta. If the benchmark had increased or decreased by 5% on September 30, 2017 and March 31, 2017, with all other variables held constant, the net assets attributable to securityholders of the Fund would have increased or decreased by approximately $10,635 (March 31, 2017: $11,496). This change is estimated using the Fund s beta which is calculated based on the historical correlation between the return of the Fund as compared to the return of the benchmark. In practice, the actual trading results may differ from this sensitivity analysis and the difference could be material. Interest Rate Risk - Interest rate risk arises on interest-bearing financial instruments held directly or indirectly in the investment portfolio such as bonds. The Fund is exposed to the risk that the fair value or the future cash flows of interest-bearing financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. Any excess cash may be invested in short-term investments at market interest rates. Refer to the Maturity Diversification tables in the Summary of Investment Portfolio of the Fund s Semi-Annual Management Report of Fund Performance as at September 30, 2017, which summarize the Fund s exposure to interest-bearing financial instruments at period end categorized by the earlier of contractual interest rate reset or maturity dates. The fixed income investment strategy adheres to independent quantitative understanding of all benchmark and portfolio risk and return characteristics with an explicit understanding of all active exposures relative to the investment benchmark. Interest rate anticipation is not a significant component of the fixed income investment strategy. The Fund invests directly and/or indirectly in high yield securities, including, but not limited to, security types commonly known as: high yield bonds, floating rate debt instruments, floating rate loans, senior secured debt obligations, convertible securities, high yield commercial mortgage-backed securities (MBS) as well as some fixed income securities issued by corporations and governments in emerging market economies, which may be more or less sensitive to changes in market interest rates, depending upon the securities coupon rates, terms to maturity and other factors. However, the volatility associated with these high yield securities is not a result of interest rate risk; in fact, the interest rate risk of these securities tends to be lower than the investment grade bonds, which generally pay lower coupon rates and/or offer lower yields. High yield securities typically are issued by companies that tend to be less creditworthy than investment grade bond issuers. As such, they carry greater default risk than investment grade bonds and accordingly offer higher coupon payments to compensate investors for this additional risk. The Fund s exposure to interest-bearing financial instruments is such that a 25 basis point fluctuation in the prevailing levels of market interest rates would not subject the Fund to significant amounts of interest rate risk. Currency Risk - Currency risk arises from financial instruments that are denominated in a currency other than Canadian dollar, which is the Fund s functional currency. The Fund is exposed to the risk that the value of financial instruments will fluctuate due to changes in exchange rates. Currency risk is not considered to arise from financial instruments that are non-monetary items such as equity investments, or forward foreign exchange contracts related to such non-monetary items. Foreign exchange exposure relating to non-monetary assets and liabilities is considered to be a component of other price risk, not foreign currency risk. The tables below indicate the currencies to which the Fund s financial instruments have significant exposure as at period end. Net Exposure ($) As a % of net assets Currency As at September 30, 2017 U.S. dollar 187, Net Exposure ($) As a % of net assets Currency Other foreign currencies As at March 31, 2017 U.S. dollar 163, As at September 30, 2017 and March 31, 2017, had the Canadian dollar strengthened or weakened by 5% in relation to all currencies, with all other variables held constant, net assets attributable to securityholders would have decreased or increased by approximately $9,385 (March 31, 2017: $8,170). In practice, the actual trading results may differ from this sensitivity analysis and the difference could be material. The sensitivity analysis for March 31, 2017 has been amended to exclude non-monetary items which were originally included in error. 23 Semi-Annual Report

24 Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Manager, Transfer Agent and Registrar Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Portfolio Adviser Fidelity Investments Canada ULC Toronto, Ontario Custodian State Street Trust Company of Canada Toronto, Ontario Auditor PricewaterhouseCoopers LLP Toronto, Ontario Visit us online at or call Fidelity Client Services at Fidelity s mutual funds are sold by registered Investment Professionals. Each Fund has a simplified prospectus, which contains important information on the Fund, including its investment objective, purchase options, and applicable charges. Please obtain a copy of the prospectus, read it carefully, and consult your Investment Professional before investing. As with any investment, there are risks to investing in mutual funds. There is no assurance that any Fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. Investors may experience a gain or loss when they sell their securities in any Fidelity Fund. Fidelity Global Funds may be more volatile than other Fidelity Funds as they concentrate investments in one sector and in fewer issuers; no single Fund is intended to be a complete diversified investment program. Past performance is no assurance or indicator of future returns. There is no assurance that either Fidelity Canadian Money Market Fund or Fidelity U.S. Money Market Fund will be able to maintain its net asset value at a constant amount. The breakdown of Fund investments is presented to illustrate the way in which a Fund may invest, and may not be representative of a Fund s current or future investments. A Fund s investments may change at any time. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC E FICL-MA-SANN-1117