(PUB) Investing 2016

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5 Morningstar FundInvestor November 2016
Data through October 31, 2016 FINRA members: For internal or institutional use only.
Fidelity® Mortgage Securities Ticker
FMSFX
Yield
2.4%
SEC Yield
1.97%
Total Assets
$1,117 mil
Mstar Category
Intermediate-Term
Bond
Benchmark 1: BBgBarc US Agg Bond TR USD
Benchmark 2: BBgBarc US Agg Bond TR USD
Morningstar Analyst Rating 10-19-16
„
Morningstar Pillars
Process ∞ Positive
Performance ∞ Positive
People ∞ Positive
Parent ∞ Positive
Price ∞ Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which its
analysts believe lead to funds that are more likely to outperform over the
long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ ‰ Á
Pillar Spectrum
∞ Positive § Negative ¶ Neutral
10.0
12.0
14.0
16.0
Historical Profile
Return
Risk
Rating
Average
Low
QQQ
Neutral
1 5 2 2 5 2 5 2 Investment Style
Fixed Income
Growth of $10,000
Investment Values of
Fund
Investment Values of
Benchmark 1
& ) * ( ( * ) ( & & ) Performance Quartile
(within Category)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10-16 History
11.05 10.45 10.07 10.47 10.83 11.17 11.36 10.95 11.35 11.25 11.45 NAV
4.86 -0.42 1.29 9.57 7.26 6.52 4.23 -1.80 6.34 1.47 3.70 Total Return %
0.53 -7.38 -3.95 3.64 0.72 -1.32 0.02 0.22 0.38 0.92 -1.29 +/- Bmark 1
0.53 -7.38 -3.95 3.64 0.72 -1.32 0.02 0.22 0.38 0.92 -1.29 +/- Bmark 2
4.89 5.18 4.97 5.51 3.80 3.32 2.53 1.84 2.63 2.32 1.91 Income Return %
-0.03 -5.60 -3.68 4.06 3.45 3.19 1.71 -3.64 3.71 -0.85 1.78 Capital Return %
17 97 28 72 55 42 82 55 17 6 89 Total Rtn % Rank Cat
0.53 0.56 0.51 0.54 0.39 0.35 0.28 0.21 0.28 0.26 0.21 Income $
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 Capital Gains $
0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 Expense Ratio %
4.73 5.10 4.91 4.99 3.74 3.33 2.84 1.85 2.51 2.33 2.26 Income Ratio %
232 409 397 476 527 490 451 474 398 439 404 Turnover Rate %
1,613 1,263 936 803 793 753 1,082 761 790 886 951 Net Assets $mil
Performance 10-31-16
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2012 1.09 1.32 1.74 0.03 4.23
2013 0.08 -2.42 1.18 -0.61 -1.80
2014 1.82 2.28 0.37 1.73 6.34
2015 1.14 -0.68 1.33 -0.31 1.47
2016 1.89 1.28 0.60 — —
Trailing Total
Return%
+/- Bmark
1
+/- Bmark
2
%Rank
Cat
Growth of
$10,000
3 Mo 0.14 1.08 1.08 10 10,014
6 Mo 1.46 -0.05 -0.04 76 10,146
1 Yr 3.35 -1.02 -1.02 83 10,335
3 Yr Avg 3.39 -0.09 -0.09 39 11,051
5 Yr Avg 2.91 0.01 0.01 64 11,544
10 Yr Avg 3.84 -0.80 -0.80 78 14,572
15 Yr Avg 4.04 -0.56 -0.56 69 18,111
Tax Analysis Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated) 2.32 23 1.03 32
5 Yr (estimated) 1.93 43 0.95 20
10 Yr (estimated) 2.53 74 1.26 31
Potential Capital Gain Exposure: -5% of assets
Rating and Risk
Time
Period
Load-Adj
Return %
Morningstar
Rtn vs Cat
Morningstar
Risk vs Cat
Morningstar
Risk-Adj Rating
1 Yr 3.35
3 Yr 3.39 Avg Low QQQ
5 Yr 2.91 Avg -Avg QQQ
10 Yr 3.84 -Avg Low QQ
Incept 6.58
Other Measures Standard Index Best Fit Index
Alpha 1.1 0.1
Beta 0.65 1.02
R-Squared 78 97
Standard Deviation 1.98
Mean 3.39
Sharpe Ratio 1.64
Portfolio Analysis 09-30-16
Total Fixed Income: 469
Date of
Maturity Amount 000
Value
$000
%
Assets
Fannie Mae 4% 30 Year — 126,185 136,214 10.87
Fannie Mae 3.5% 30 Year — 120,688 127,894 10.21
GNMA 3.5% — 88,244 94,295 7.53
Freddie Mac 3.5% 30 Yea — 82,444 87,618 6.99
Fannie Mae 3% 30 Year — 80,973 84,367 6.73
FHLB 4% — 46,051 49,744 3.97
Freddie Mac 3% 30 Year — 45,663 47,564 3.80
Ginnie Mae 3% 30 Year — 39,351 41,220 3.29
GNMA 4.5% — 31,333 34,686 2.77
Fannie Mae 4.5% 30 Year — 31,245 34,361 2.74
GNMA 4% — 29,544 32,069 2.56
Fannie Mae 3.5% 15 Year — 29,912 31,826 2.54
Fannie Mae 2.5% 15 Year — 24,936 25,836 2.06
Fannie Mae 3% 15 Year — 19,141 20,146 1.61
Freddie Mac 3.5% 20 Yea — 14,241 15,185 1.21
Freddie Mac 3% 15 Year — 14,025 14,778 1.18
GNMA CMO 2.5% 08-20-64 12,709 12,877 1.03
Gahr Coml Mtg Tr 2015-N 12-15-34 12,633 12,665 1.01
FHLB 5% — 9,806 11,063 0.88
Fannie Mae 4% 20 Year — 9,641 10,454 0.83
Current Investment Style
Quality High Med Low
Duration
Ltd Mod Ext
1 figure provided by
fund
Avg Eff Duration1 2.9 Yrs
Avg Eff Maturity —
Avg Credit Quality A
Avg Wtd Coupon 3.59%
Avg Wtd Price 104.70% of par
Coupon Range % of Bonds
0% PIK 0.0
0% to 4% 81.7
4% to 6% 15.8
6% to 8% 2.3
8% to 10% 0.2
More than 10% 0.1
Credit Analysis % bonds 09-30-16
AAA 92 BB 0
AA 4 B 0
A 1 Below B 0
BBB 0 Not Rated 3
Sector Breakdown % Assets
Government 0
Government Related 13
Corporate 15
Agency MBS 57
Non-Agency Residential MBS 4
Commercial MBS 5
Covered Bond 0
Asset Backed 4
Municipal 0
Cash & Equivalents 2
Other 0
Composition - Net
Cash 2.2 Bonds 97.9
Stocks 0.0 Other 0.0
Special Securities
Restricted/Illiquid Secs 9
Emerging-Markets Secs 0
Options/Futures/Warrants 0
Morningstar's Take by Sarah Bush 10-19-16
Fidelity Mortgage Securities benefits from an
experienced team, a thoughtful, well-resourced strategy,
and low fees. It thus earns a Morningstar Analyst Rating
of Silver.
Manager Bill Irving and comanager Franco
Castagliuolo have distinguished themselves running pure
government options, including Fidelity GNMA FGMNX,
and take a similar approach here. This mortgage-focused
fund is dominated by government-backed mortgages but
has the flexibility to invest modestly in nongovernment
fare. At 10% to 15% of the portfolio, the latter's mix of
asset-backed and residential- and commercial-
mortgage-backed securities is enough to push it into the
intermediate-term bond Morningstar Category. The
managers avoid significant interest-rate bets and instead
focus on individual security selection. In recent years, for
example, they have exploited regulatory changes and
nuances in the performance of mortgage pools with
different loan/value ratios to good effect in their effort to
identify loansthatare less likelytoprepaythantheirprices
imply. The pair has also shown a willingness to venture
into less traveled and therefore higher-yielding corners of
the market, such as floating-rate securities backed by
reverse mortgages.
Although it has the flexibility to invest up to 10% in
junk-rated fare, the fund tends to maintain a high-quality
focus and therefore has held limited exposure to precrisis
nonagency mortgage originations. As a result, it has
lagged some of its more aggressive mortgage-focused
peers who invested more heavily in that market, which
has been a strong performer for most of the postcrisis
period. The fund looks better relative to other
government-mortgage-focused competitors and its
government-only Bloomberg Barclays U.S. Mortgage
Backed Securities Index. Relative to its typically wider-
ranging intermediate-term bond category, its returns are
only middling over Irving's tenure through September
2016, but its volatility-adjusted returns, as measured by
its Sharpe ratio, are impressive.
This fund makes a strong choice for those in search
of a high-quality mortgage fund with a little extra zip.
Address: Fidelity Advisor Series II Minimum Purchase: $2500 Add: — IRA: $2500
Boston, MA 02109 Min Auto Inv Plan: — Add: —
800-544-8544 Sales Fees: No-load
Web Address: Management Fee: 0.20%
Inception: 12-31-84 Actual Fees: Mgt:0.31% Dist:—
Advisor: Fidelity Management & Research Company Expense Projections: 3Yr:$144 5Yr:$252 10Yr:$567
Subadvisor: FMR Investment Management (U.K.) Limited Income Distribution: Monthly
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