Fidelity Tactical Fixed Income Fund

Transcription

1 Fidelity Tactical Fixed Income Fund Annual Management Report of Fund Performance June 3, 217

2 Caution Regarding Forward-looking Statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking statements about the Fund, including its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates and similar forward-looking expressions or negative versions thereof. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. It should be stressed that the above-mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance.

3 Annual Management Report of Fund Performance as at June 3, 217 Fidelity Tactical Fixed Income Fund This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements for the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling , by writing to us at Fidelity Investments, 483 Bay St. Suite 3, Toronto ON MG 2N7 or by visiting our website at or SEDAR at Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure relating to the investment fund. Management Discussion of Fund Performance Investment Objective and Strategies Investment Objective: Fidelity Tactical Fixed Income Fund (Fund) aims to provide a steady flow of income by investing, either directly or indirectly through underlying funds also managed by Fidelity, primarily in Canadian fixed-income securities. Strategies: The portfolio manager uses the FTSE TMX Canada Universe Bond Index as a guide to structuring the Fund. The portfolio manager allocates the Fund s assets, either directly or indirectly through underlying funds, among issuers in different market sectors such as corporate or government securities, different industry sectors such as financials and industrials, and different maturities based on the portfolio manager s view of the relative value of each sector, maturity or asset class. The portfolio manager and the portfolio managers of the underlying funds analyze each security s features, its current price compared to its estimated long-term value, the credit quality of the issuer, and any short-term trading opportunities resulting from market inefficiencies. An analysis of credit quality will consider the balance sheet strength of the issuer, company leverage ratios, stability of income, management strength and track record, and risks to the issuer that may impair its ability to meet its obligations to debt holders. Risk The risks associated with investing in this Fund remain as discussed in the prospectus. Any changes to the Fund over the period have not affected the overall level of risk of the Fund. The Fund is suitable for medium- to long-term investors seeking income. To invest in this Fund, investors should be able to accept a low level of risk. The suitability of the investment has not changed from what has been disclosed in the prospectus. Results of Operations Fidelity Tactical Fixed Income Fund invests substantially all of its assets in units of other Fidelity Funds. Fidelity Tactical Fixed Income Fund, Series B, returned.9%, after fees and expenses, for the one-year period ending June 3, 217. The net returns of the other series of this Fund are similar to those of Series B, except for differences attributable to expense structures. The FTSE TMX Canada Universe Bond Index, which broadly represents the Canadian investment-grade fixed-income market, returned.% for the period under review. Market Overview: In Canadian fixed income, corporate bonds generally outperformed government bonds; positive economic data from both the U.S. and Canada provided positive support for relatively riskier assets. Short-dated U.S. Treasuries posted losses as yields rose after the U.S. Federal Reserve (Fed) increased interest rates in June by.2%, from 1.% to 1.2%; it was the Fed s second rate increase in 217. After climbing through most of the year, yields on longer-dated U.S. Treasuries fell in the second quarter of 217 as inflation expectations have weakened. In Canada, the Bank of Canada (the BoC) kept monetary policy unchanged and maintained its cautious tone in the first half of the review period; policy makers continued to focus on the excess capacity within the economy and uncertainties regarding the new U.S. administration s trade policies and the timing of tax reform and fiscal stimulus. However, the Bank recently commented on a pickup of economic growth and improvement in the labour market, and stated that the 21 interest rate cuts had largely done their job. As a result, market participants expect that a rate hike is likely at its July meeting, this drove bond yields up significantly across all maturities. Factors Affecting Performance: The Fund outperformed the broad Canadian bond markets after fees and expenses. The Underlying Funds allocation to U.S. high-yield bonds contributed to relative performance as credit spreads continued to tighten. Sector allocation in both the Canadian government and corporate bonds sectors contributed to relative performance. In corporate bonds, larger-than-benchmark exposures to the financial, communication and real estate sectors contributed to relative performance due to spread tightening. In government bonds, a lower-than-benchmark exposure to the government sector also contributed to relative performance; performance in this sector lagged the overall bond market. However, returns were tempered somewhat by a lower-than-benchmark allocation to the infrastructure sector. Portfolio Changes: 1

4 Fidelity Tactical Fixed Income Fund Management Discussion of Fund Performance continued During the review period, the Underlying Funds portfolio managers increased exposure to certain federal government bonds as they believe valuations became attractive. The portfolio managers are constantly monitoring the corporate bond sector; they will continue to invest opportunistically in this sector as valuations become more attractive. Exposures to the industrial, infrastructure and securitization sectors were reduced, while exposure was added to the energy sector, where the portfolio managers found attractive investment opportunities. In the securitized sector, the Fund continued to have more exposure than the benchmark to asset-backed securities, and maintained an out-of-benchmark position in commercial mortgage-backed securities. Recent Developments The portfolio managers anticipate that Canadian government bond yields, while higher over the past year, will remain relatively low by historical standards. With credit spreads having narrowed significantly over the past year, and with volatility low, the portfolio managers have been reducing risk in the portfolio, preferring to wait for more attractive valuations. Larger-than-benchmark allocations to corporate bonds were maintained, given those issues fundamental outlook and attractive valuations. The team aims to keep the portfolio liquid in order to be positioned to take advantage of buying opportunities. Independent Review Committee Effective February 28, 217, Helen M. Meyer retired from the Independent Review Committee and was replaced by James E. Cook as Chair. Also effective on that date, Frances Horodelski of Toronto, Ontario, became a member of the Independent Review Committee. 2

5 Related Party Transactions Manager and Portfolio Adviser The Fund is managed by Fidelity Investments Canada ULC (Fidelity). Fidelity is part of a broader group of companies collectively known as Fidelity Investments. Fidelity provides or arranges for the provision of all general management and administrative services required by the Fund in its day to day operations, bookkeeping, record keeping and other administrative services for the Fund. Fidelity is the portfolio adviser to the Fund and it provides investment advisory services to the Fund. Fidelity has entered into sub-advisory agreements with a number of entities including Fidelity Investments Money Management, 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, based on the net asset value of each Series, calculated daily and payable monthly. The Fund paid Fidelity management and advisory fees of $2,18, for the period ended June 3, 217. Administration Fee Fidelity charges the Fund a fixed administration fee in place of certain variable expenses. Fidelity, in turn, pays all of the operating expenses of the Fund, other than certain specified fund costs (e.g. the fees and expenses of the Independent Review Committee, taxes, brokerage commissions and interest charges). The Fund pays an annual rate, which is calculated on a tiered basis, based on the net asset value of each Series, calculated daily and payable monthly. The Fund paid Fidelity administration fees of $299, for the period ended June 3,

6 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the period end of the years shown. This information is derived from the Fund s audited annual and/or unaudited semi-annual financial statements. Please see the front page for information about how you can obtain the Fund s annual or semi-annual financial statements. Fidelity Tactical Fixed Income Fund Series A Periods ended June 3, Net assets, beginning of period B $ 9.42 $ 9.3 $ 9.6 $ 9.8 $ 1. Total revenue Total expenses (excluding distributions) (.16) (.16) (.17) (.17) (.17) Realized gains (losses).4 (.4) (.12) (.16) (.3) Unrealized gains (losses) (.18) (.4) Total increase (decrease) from operations B (.22) From net investment income (excluding dividends) (.18) (.19) (.21) (.2) (.21) From dividends From capital gains Return of capital (.21) (.21) (.2) (.22) (.21) Total distributions B,C (.39) (.4) (.41) (.41) (.43) Net assets, end of period B $ 9.8 $ 9.42 $ 9.3 $ 9.6 $ 9.8 Net asset value (s) D $ 37,37 $ 6,47 $ 92,76 $ 94,96 $ 13,99 Securities outstanding D 4,127,719 6,447,999 9,682,268 9,878,78 13,78,91 Management expense ratio E,F 1.73% 1.73% 1.76% 1.78% 1.7% Management expense ratio before waivers or absorptions E,F 1.78% 1.78% 1.78% 1.78% 1.7% Trading expense ratio G % % % % % Portfolio turnover rate H 2.72% 18.9% 32.73% 18.81% 22.6% Net asset value per security, end of period $ $ $ $ $ 9.81 Fidelity Tactical Fixed Income Fund Series B Periods ended June 3, Net assets, beginning of period B $ 9. $ 9.63 $ 9.67 $ 9.62 $ 1.6 Total revenue Total expenses (excluding distributions) (.13) (.13) (.14) (.14) (.14) Realized gains (losses).4 (.4) (.12) (.17) (.4) Unrealized gains (losses) (.16) (.4) Total increase (decrease) from operations B (.2) From net investment income (excluding dividends) (.21) (.23) (.24) (.23) (.24) From dividends From capital gains Return of capital (.18) (.18) (.17) (.19) (.18) Total distributions B,C (.39) (.41) (.41) (.42) (.43) Net assets, end of period B $ 9.23 $ 9. $ 9.63 $ 9.67 $ 9.62 Net asset value (s) D $ 76,976 $ 78,78 $ 9,2 $ 77,78 $ 112,34 Securities outstanding D 8,362,98 8,186,676 9,38,84 8,61,64 11,674,131 Management expense ratio E,I 1.4% 1.41% 1.42% 1.43% 1.42% Management expense ratio before waivers or absorptions E,I 1.43% 1.43% 1.43% 1.43% 1.42% Trading expense ratio G % % % % % Portfolio turnover rate H 2.72% 18.9% 32.73% 18.81% 22.6% Net asset value per security, end of period $ $ 9.46 $ $ $

7 Fidelity Tactical Fixed Income Fund Series F Periods ended June 3, Net assets, beginning of period B $ 9.36 $ 9.49 $ 9.7 $ 9.7 $ 1. Total revenue Total expenses (excluding distributions) (.7) (.7) (.8) (.8) (.8) Realized gains (losses).4 (.1) (.11) (.17) (.4) Unrealized gains (losses) (.16) (.3) Total increase (decrease) from operations B (.26) From net investment income (excluding dividends) (.26) (.28) (.3) (.28) (.3) From dividends From capital gains Return of capital (.22) (.22) (.21) (.24) (.23) Total distributions B,C (.48) (.) (.1) (.2) (.3) Net assets, end of period B $ 9.2 $ 9.36 $ 9.49 $ 9.7 $ 9.7 Net asset value (s) D $ 7,146 $ 7,936 $ 64,43 $ 32,94 $ 4,381 Securities outstanding D 7,799,447 7,96,848 6,826,27 3,41,146 4,742,622 Management expense ratio E,F.8%.81%.82%.83%.82% Management expense ratio before waivers or absorptions E,F.82%.82%.83%.83%.82% Trading expense ratio G % % % % % Portfolio turnover rate H 2.72% 18.9% 32.73% 18.81% 22.6% Net asset value per security, end of period $ $ $ $ $ Fidelity Tactical Fixed Income Fund Series O Periods ended June 3, Net assets, beginning of period B $ 1.3 $ 1.2 $ 1.6 $ 9.8 $ 1.6 Total revenue Total expenses (excluding distributions) Realized gains (losses).4 (.2) (.13) (.19) (.3) Unrealized gains (losses) (.21) (.3) Total increase (decrease) from operations B From net investment income (excluding dividends) (.37) (.38) (.4) (.36) (.39) From dividends From capital gains Return of capital Total distributions B,C (.37) (.38) (.4) (.36) (.39) Net assets, end of period B $ 1.16 $ 1.3 $ 1.2 $ 1.6 $ 9.8 Net asset value (s) D $ 46,432 $ 4,379 $ 4,89 $ 8,8 $ 21,79 Securities outstanding D 4,7,28 3,934,487 3,949,4 8,48,78 2,73,84 Management expense ratio % % % % % Management expense ratio before waivers or absorptions % % % % % Trading expense ratio G % % % % % Portfolio turnover rate H 2.72% 18.9% 32.73% 18.81% 22.6% Net asset value per security, end of period $ 1.19 $ $ 1.19 $ 1.83 $ 9.798

8 Financial Highlights continued Fidelity Tactical Fixed Income Fund Series E1 Periods ended June 3, J Net assets, beginning of period B $ 1.23 $ 1. Total revenue Total expenses (excluding distributions) (.14) (.6) Realized gains (losses)..14 Unrealized gains (losses) (.24).2 Total increase (decrease) from operations B.4.49 From net investment income (excluding dividends) (.23) (.1) From dividends From capital gains Return of capital (.19) (.7) Total distributions B,C (.42) (.17) Net assets, end of period B $ 9.9 $ 1.23 Net asset value (s) D $ 16,471 $ 1,47 Securities outstanding D 1,666,883 1,3,19 Management expense ratio E,K 1.38% 1.38% Management expense ratio before waivers or absorptions E,K 1.4% 1.41% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $ Fidelity Tactical Fixed Income Fund Series E2 Periods ended June 3, J Net assets, beginning of period B $ 1.23 $ 1. Total revenue.37.1 Total expenses (excluding distributions) (.14) (.6) Realized gains (losses).2.1 Unrealized gains (losses) (.2).22 Total increase (decrease) from operations B..47 From net investment income (excluding dividends) (.23) (.1) From dividends From capital gains Return of capital (.19) (.7) Total distributions B,C (.42) (.17) Net assets, end of period B $ 9.9 $ 1.23 Net asset value (s) D $ 3,18 $ 1,21 Securities outstanding D 3,37 149,7 Management expense ratio E,K 1.3% 1.36% Management expense ratio before waivers or absorptions E,K 1.38% 1.38% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ 9.94 $

9 Fidelity Tactical Fixed Income Fund Series E3 Periods ended June 3, J Net assets, beginning of period B $ 1.24 $ 1. Total revenue.36.1 Total expenses (excluding distributions) (.13) (.) Realized gains (losses) (.8).17 Unrealized gains (losses).3.13 Total increase (decrease) from operations B.68.4 From net investment income (excluding dividends) (.24) (.1) From dividends From capital gains Return of capital (.18) (.6) Total distributions B,C (.42) (.17) Net assets, end of period B $ 9.92 $ 1.24 Net asset value (s) D $ 3 $ 1 Securities outstanding D 3,32 12 Management expense ratio E,K 1.32% 1.22% Management expense ratio before waivers or absorptions E,K 1.34% 1.22% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $ Fidelity Tactical Fixed Income Fund Series E4 Periods ended June 3, J Net assets, beginning of period B $ 1.24 $ 1. Total revenue.38.1 Total expenses (excluding distributions) (.13) (.) Realized gains (losses).9.17 Unrealized gains (losses) (.49).13 Total increase (decrease) from operations B (.1).4 From net investment income (excluding dividends) (.24) (.1) From dividends From capital gains Return of capital (.19) (.6) Total distributions B,C (.43) (.17) Net assets, end of period B $ 9.92 $ 1.24 Net asset value (s) D $ 3 $ 1 Securities outstanding D 3,9 12 Management expense ratio E,K 1.32% 1.22% Management expense ratio before waivers or absorptions E,K 1.34% 1.22% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $

10 Financial Highlights continued Fidelity Tactical Fixed Income Fund Series P1 Periods ended June 3, L Net assets, beginning of period B $ 1.16 $ 1. Total revenue Total expenses (excluding distributions) (.8) (.4) Realized gains (losses).4.1 Unrealized gains (losses) (.19).2 Total increase (decrease) from operations B.14.3 From net investment income (excluding dividends) (.29) (.18) From dividends From capital gains Return of capital (.24) (.1) Total distributions B,C (.3) (.33) Net assets, end of period B $ 9.79 $ 1.16 Net asset value (s) D $ 12,61 $, Securities outstanding D 1,234,1 47,91 Management expense ratio E,M.78%.79% Management expense ratio before waivers or absorptions E,M.8%.79% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $ Fidelity Tactical Fixed Income Fund Series P2 Periods ended June 3, L Net assets, beginning of period B $ 1.17 $ 1. Total revenue Total expenses (excluding distributions) (.7) (.4) Realized gains (losses).4.9 Unrealized gains (losses) (.24).33 Total increase (decrease) from operations B.9.61 From net investment income (excluding dividends) (.29) (.18) From dividends From capital gains Return of capital (.23) (.1) Total distributions B,C (.2) (.33) Net assets, end of period B $ 9.79 $ 1.17 Net asset value (s) D $ 4,11 $ 1,182 Securities outstanding D 42, ,41 Management expense ratio E,M.7%.76% Management expense ratio before waivers or absorptions E,M.77%.76% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $

11 Fidelity Tactical Fixed Income Fund Series P3 Periods ended June 3, L Net assets, beginning of period B $ 1.17 $ 1. Total revenue Total expenses (excluding distributions) (.7) (.4) Realized gains (losses).4 (.8) Unrealized gains (losses) (.4).64 Total increase (decrease) from operations B From net investment income (excluding dividends) (.29) (.18) From dividends From capital gains Return of capital (.23) (.1) Total distributions B,C (.2) (.33) Net assets, end of period B $ 9.8 $ 1.17 Net asset value (s) D $ 218 $ 1,929 Securities outstanding D 22, ,761 Management expense ratio E,M.73%.74% Management expense ratio before waivers or absorptions E,M.7%.7% Trading expense ratio G % % Portfolio turnover rate H 2.72% 18.9% Net asset value per security, end of period $ $ Fidelity Tactical Fixed Income Fund Series P4 Periods ended June 3, 217 N Net assets, beginning of period B $ 1. Total revenue.3 Total expenses (excluding distributions) (.) Realized gains (losses).1 Unrealized gains (losses) (.7) Total increase (decrease) from operations B (.22) From net investment income (excluding dividends) (.24) From dividends From capital gains Return of capital (.2) Total distributions B,C (.44) Net assets, end of period B $ 9.66 Net asset value (s) D $ 11 Securities outstanding D 1,484 Management expense ratio E,O.7% Management expense ratio before waivers or absorptions E,O.72% Trading expense ratio G % Portfolio turnover rate H 2.72% Net asset value per security, end of period $

12 Financial Highlights continued Fidelity Tactical Fixed Income Fund Series P Periods ended June 3, 217 N Net assets, beginning of period B $ 1. Total revenue.23 Total expenses (excluding distributions) (.) Realized gains (losses) (.7) Unrealized gains (losses).73 Total increase (decrease) from operations B.84 From net investment income (excluding dividends) (.26) From dividends From capital gains Return of capital (.18) Total distributions B,C (.44) Net assets, end of period B $ 9.68 Net asset value (s) D $ 1 Securities outstanding D 14 Management expense ratio E,O.67% Management expense ratio before waivers or absorptions E,O.69% Trading expense ratio G % Portfolio turnover rate H 2.72% Net asset value per security, end of period $

13 Financial Highlights Footnotes A This information is derived from the Fund s audited annual and/or unaudited interim financial statements. Periods beginning on or after January 1, 213 follow International Financial Reporting Standards (IFRS) and periods prior to January 1, 213 follow Canadian Generally Accepted Accounting Principles (Canadian GAAP). The net assets attributable to securityholders per security presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. An explanation of these differences can be found in the notes to financial statements. For reporting periods ending after January 1, 217 per security comparative figures (except for net asset value per security, end of period) have been conformed to the current rounding presentation of two decimal places. As a result, reporting periods ending prior to January 1, 217 may not foot due to this rounding change. B C D E F G H I Net assets and distributions are based on the actual number of securities outstanding at the relevant time. The increase (decrease) from operations is based on the weighted average number of securities outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per security. Distributions were paid in cash or reinvested in additional securities of the Fund, or both, and excludes any applicable distributions of management fee reduction to securityholders. Distributions are presented based on management s best estimate of the tax character. This information is provided as at period end of the year shown. Management expense ratio is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset values during the period, including the Fund s pro-rata share of estimated expenses incurred in any underlying investment fund, if applicable. Effective November 1, 214, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period, including the Fund s pro-rata share of estimated trading costs incurred in any underlying investment fund, if applicable. The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 1% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high portfolio turnover rate and the performance of the Fund. The portfolio turnover rate is calculated based on the lesser of purchases or sales of securities divided by the weighted average market value of the portfolio securities, excluding short-term securities. For periods greater than six months, but less than a full fiscal year, the portfolio turnover rate is annualized. Effective October 1, 21, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. J For the period February, 216 (commencement of sale of securities) to June 3, 216. K Effective February 9, 216, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. L For the period December 4, 21 (commencement of sale of securities) to June 3, 216. M Effective December 8, 21, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. N For the period September 16, 216 (commencement of sale of securities) to June 3, 217. O Effective September 2, 216, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. 11

14 Management and Advisory Fees Fidelity serves as manager and investment advisor of the Fund. The Fund pays Fidelity a monthly management and advisory fee for their services, based on the net asset value of each Series, calculated daily and payable monthly. Fidelity uses these management fees to pay for sales and trailing commissions to registered dealers on the distribution of the Fund securities, as well as for the general investment management expenses. Dealer compensation represents cash commissions paid by Fidelity to registered dealers during the period and includes upfront deferred sales charge and trailing commissions. This amount may, in certain circumstances, exceed 1% of the fees earned by Fidelity during the period. For new Funds or Series the amounts presented may not be indicative of longer term operating periods. Management Fees Dealer Compensation Investment management, administration and other Series A 1.3% 32.73% 67.27% Series B 1.1% 4.4% 4.% Series F.6% 1.% Series E1 1.1% 4.4% 4.% Series E2 1.7% 46.1% 3.49% Series E3 1.% 47.62% 2.38% Series E4 1.% 47.62% 2.38% Series P1.6% 1.% Series P2.7% 1.% Series P3.% 1.% Series P4.% 1.% Series P.2% 1.% 12

15 Fidelity Tactical Fixed Income Fund Past Performance The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not necessarily indicate how it will perform in the future. Year-by-Year Returns The following bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the Fund s performance was changed from year to year. In percentage terms, the bar chart shows how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year. Series A Series O Commencement of Operations is May 9, 212 Commencement of Operations is May 9, 212 Series B Series E Commencement of Operations is May 9, 212 Commencement of Operations is February, 216 Series F Series E Commencement of Operations is May 9, 212 Commencement of Operations is February,

16 Fidelity Tactical Fixed Income Fund Past Performance continued Series E3 Series P Commencement of Operations is February, 216 Commencement of Operations is December 4, 21 Series E4 Series P Commencement of Operations is February, 216 Commencement of Operations is September 16, 216 Series P1 Series P Commencement of Operations is December 4, 21 Commencement of Operations is September 16, 216 Series P Commencement of Operations is December 4, 21 14

17 Annual Compound Returns This table shows the Fund s historical annual compound total returns for the periods indicated, compared with the Fund s benchmark, the FTSE TMX Canada Universe Bond Index, as described below. Past 1 year Past 3 years Past years Since Inception Average Annual Total Returns Fidelity Tactical Fixed Income Fund Series A.6% 2.4% 2.3% 2.3% Fidelity Tactical Fixed Income Fund Series B.9% 2.7% 2.6% 2.7% Fidelity Tactical Fixed Income Fund Series F 1.% 3.4% 3.2% 3.3% Fidelity Tactical Fixed Income Fund Series O 2.3% 4.2% 4.1% 4.1% Fidelity Tactical Fixed Income Fund Series E1.9% n/a n/a 3.% Fidelity Tactical Fixed Income Fund Series E2.9% n/a n/a 3.6% Fidelity Tactical Fixed Income Fund Series E3 1.1% n/a n/a 3.7% Fidelity Tactical Fixed Income Fund Series E4 1.% n/a n/a 3.7% Fidelity Tactical Fixed Income Fund Series P1 1.% n/a n/a 4.2% Fidelity Tactical Fixed Income Fund Series P2 1.% n/a n/a 4.2% Fidelity Tactical Fixed Income Fund Series P3 1.6% n/a n/a 4.2% FTSE TMX Canada Universe Bond Index.% 3.8% 3.3% 3.% The period used for the since inception FTSE TMX Canada Universe Bond Index returns are based on Series A which has been in existence the longest compared to all Series with less than 1 years of operations. A discussion of the performance of the Fund can be found in the Results of Operation section of this report. The FTSE TMX Canada Universe Bond Index is capitalization-weighted, with more than 9 Canadian bonds, and includes the highest-quality bonds with terms to maturity of one to thirty years; it is designed to reflect the Canadian bond market. As of January 1, 214, DEX was rebranded FTSE TMX Canada as a result of a merger of fixed-income businesses between FTSE Group and TMX Group. The benchmark s methodology remains the same. Each Series will have different returns because of differences in management fees and expenses. 1

18 Fidelity Tactical Fixed Income Fund Summary of Investment Portfolio as at June 3, 217 Asset Mix % of Fund s as at 6/3/17 % of Fund s as at 6/3/16 Canadian Bonds Foreign Bonds Canadian Preferred Securities.7.9 Foreign Equities.2.3 Foreign Preferred Securities.1.2 Canadian Equities.. Cash and Cash Equivalents. 1. Net Other Assets (Liabilities) Derivative Exposure % of Fund s as at 6/3/17 % of Fund s as at 6/3/16 Forward Foreign Currency Contracts.8.3 Forward Foreign Currency Contracts percentage is calculated by dividing the net unrealized gain/loss of all contracts held by total net assets. Geographic Mix % of Fund s as at 6/3/17 % of Fund s as at 6/3/16 Canada United States of America Mexico United Kingdom Others (Individually Less Than 1%) Cash and Cash Equivalents. 1. Net Other Assets (Liabilities) Maturity Diversification Years % of Fund s as at 6/3/17 % of Fund s as at 6/3/ Over Quality Diversification % of Fund s as at 6/3/17 % of Fund s as at 6/3/16 AAA AA A BBB BB and Below Not Rated Equities.2.2 Short-Term Investments and Net Other Assets We have used ratings from Moody s Investors Service, Inc. Where Moody s ratings are not available, we have used S&P ratings. All ratings are as of the date indicated and do not reflect subsequent changes. Top Issuers % of Fund s 1. Fidelity Canadian Bond Fund Series O Canadian Government Fidelity Floating Rate High Income Investment Trust Series O Fidelity American High Yield Fund Series O 6.6. Petroleos Mexicanos Fidelity Emerging Markets Debt Investment Trust Series O.8 7. Royal Bank of Scotland Group PLC.7 8. Fidelity Global Bond Fund Series O.6 9. Dolphin Subsidiary II, Inc Petrobras Global Finance BV Chicago General Obligation. 12. Cash and Cash Equivalents. 13. Omega Healthcare Investors, Inc Cominar Real Estate Investment Trust.3 1. Noble Holding International Ltd.. Total Fund $267,667, 99.1 Where applicable, the information in the above tables includes the Fund s pro-rata share of the investment in any Fidelity Underlying Fund. The Fund uses derivatives to try to minimize the exposure to currency fluctuations between foreign currencies in developed markets and the Canadian dollar. The summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund. The most recent annual report, semi-annual report, quarterly report, fund facts document or simplified prospectus for the investment fund and/or underlying fund is available at 16

19 no cost, by calling , by writing to us at Fidelity Investments Canada ULC, 483 Bay St. Suite 3, Toronto ON MG 2N7 or by visiting our web site at or SEDAR at 17

20 Fidelity Investments Canada ULC 483 Bay Street, Suite 3 Toronto, Ontario MG 2N7 Manager, Transfer Agent and Registrar Fidelity Investments Canada ULC 483 Bay Street, Suite 3 Toronto, Ontario MG 2N7 Custodian State Street Trust Company of Canada Toronto, Ontario Portfolio Adviser Fidelity Investments Canada ULC 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-FCTLBD-MRFPA-917