Investing in Leveraged Companies

A leveraged or "high-yield" company lacks the operating history or balance-sheet strength to merit an investment-grade bond rating from the major rating agencies.

Fidelity can help you:

• decide whether an allocation to the debt or equity of these non-investment-grade companies is right for you, using Fidelity Portfolio Analysis .
• and understand Fidelity Fund choices for investments that you intend to leave in place for at least a couple of years.

Fund with Objective of High Current Income that Tracks the Direction of Interest Rates

Fidelity Floating Rate High Income Fund holds securities whose coupons tend to closely track the direction of interest rates. It's a daily-access fund holding the leveraged loans of high-yield companies, which are senior in standing to high-yield bonds, and have interest rates that reset frequently based on a money market rate such as LIBOR (London Interbank Offered Rate). These two characteristics can potentially make the fund less subject to credit risk and interest-rate risk than might be the case with a longer-duration high-yield bond fund.

Things to Keep in Mind

• Floating rate loans are often lower-quality debt securities and generally are subject to restrictions on resale.
• A floating rate loan may not be fully collateralized, which may cause the floating rate loan to decline significantly in value.
• Learn more about leveraged loans.

Funds that Help Take the Work Out of Choosing Fixed Income Investments

By allocating assets to several types of bonds that behave differently as market conditions change, these funds are well-positioned to take advantage of many potential market scenarios. Click on the fund names below for more information.

Fund	Fidelity Total Bond Fund (FTBFX)	Fidelity Strategic Income Fund (FSICX)
Investment Objective Highlights	Seeks a high level of current income.	Seeks a high level of current income and may also seek capital appreciation.
Investment Strategy Highlights	Uses the Barclays Capital U.S. Aggregate Bond Index¹ as a guide in allocating assets across the investment-grade, high yield, and emerging market asset classes, and in managing the fund's overall interest rate risk. The fund may invest up to 20% of its assets in high yield and emerging market debt securities, and may invest in domestic and foreign issuers.	Invests primarily in debt securities, including lower-quality debt securities, allocated among four general investment categories using a neutral mix of approximately: 40% high yield 30% U.S. Gov't and investment-grade debt 15% emerging markets 15% foreign markets
	Learn more about Total Bond Fund.	Learn more about Strategic Income Fund.

Things to Keep in Mind

• Although bonds generally present less short-term risk and volatility than stocks, bonds do entail interest rate risk; that is, as interest rates rise, bond prices usually fall, and vice versa. Bonds also entail the risk of default, or the risk that an issuer will be unable to make income or principal payments. The bonds of below-investment-grade companies are more sensitive than investment-grade debt to the condition of the individual issuer, and thus involve less interest rate risk but greater risk of default or price changes due to potential changes in the credit quality of the issuer.
• Additionally, bonds and short-term investments entail greater inflation risk than stocks-defined as the risk that the return of an investment will not keep up with increases in the prices of goods and services.
• Investments in foreign securities, especially those in emerging markets, involve risks in addition to those of U.S. investments, including increased political and economic risks as well as exposure to currency fluctuations.

Funds that Invest Primarily in High-Yield Bonds, with Strategies that are Focused, Broad or Flexible

Exposure to high yield bonds can help diversify an equity or investment-grade debt portfolio. Click on the fund names below for more information.

Fund	Fidelity Focused High Income Fund (FHIFX)	Fidelity High Income Fund (SPHIX)	Fidelity Capital & Income Fund (FAGIX)
Investment Objective Highlights	High level of current income. May also seek capital appreciation.	High level of current income. Capital growth may also be considered.	Combination of income and capital growth.
Investment Strategy Highlights	Normally invests primarily in securities rated BB, and uses as its benchmark the BofA Merrill Lynch BB U.S. High Yield Constrained Index.2 Fund currently intends to limit common stocks to 10% of total assets.	Managed to have similar credit quality distribution to it's index, the BofA Merrill Lynch U.S. High Yield Constrained Index.3 Fund currently intends to limit common stocks to 10% of total assets.	Fund expects to invest majority of assets in debt securities and convertible securities, with an emphasis on lower quality debt securities.
	Learn more about Focused High Income Fund.

Things to Keep in Mind

• Although bonds generally present less short-term risk and volatility than stocks, bonds do entail interest rate risk; that is, as interest rates rise, bond prices usually fall, and vice versa. Bonds also entail the risk of default, or the risk that an issuer will be unable to make income or principal payments. The bonds of below-investment-grade companies are more sensitive than investment-grade debt to the condition of the individual issuer, and thus involve less interest rate risk but greater risk of default or price changes due to potential changes in the credit quality of the issuer.
• Additionally, bonds and short-term investments entail greater inflation risk than stocks-defined as the risk that the return of an investment will not keep up with increases in the prices of goods and services.
• High-yield bond funds may also invest in securities that are in default, and securities of foreign as well as domestic issuers. Investments in foreign securities involve risks in addition to those of U.S. investments, such as increased political and economic risks as well as exposure to currency fluctuations.

Equity Fund with Objective of Capital Appreciation

Fidelity Leveraged Company Stock Fund normally invests at least 80% of assets in common stocks of leveraged companies – either 'growth' stocks, or 'value' stocks, or both. The fund may also invest in high-yield debt, and securities of foreign issuers.

Things to Keep in Mind

• Leverage can magnify the impact of adverse issuer, political, regulator, market or economic developments on a company. A decrease in the credit quality of a highly leveraged company can lead to a significant decrease in the value of the company's securities.
• In the event of bankruptcy, a company's creditors take precedence over the company's stockholders.
• Although the companies the Fund invests in may be highly leveraged, the Fund itself does not use leverage as an investment strategy.

Note that Fidelity's leveraged company mutual funds are all open-end, daily-access funds, and do not borrow or use additional leverage in the management of the funds themselves.