Fidelity High Income Fund

PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2024

Fidelity? High Income Fund

Key Takeaways

? For the fiscal year ending April 30, 2024, the fund's Retail Class shares

gained 8.46%, versus 8.89% for the benchmark ICE BofA? US High Yield Constrained Index.

? After 18 years at Fidelity, Michael Weaver retired from the firm on July

5, 2023. On June 8, 2023, Benjamin Harrison and Alexandre Karam assumed full portfolio management responsibilities for the fund. On January 1, 2024, Jared Beckerman assumed co-management responsibilities for the fund.

? High-yield bonds posted a strong gain the past 12 months, according

to Ben, with notable advances last summer and in the final two months of 2023. He adds that the category lost some momentum in early 2024 amid worry that rates would remain higher for longer than had been anticipated even as inflation moderated.

? Against this backdrop, Ben, Jared and Alex continued to take a

consistent, conservative approach to investing in high-yield bonds.

? By industry, security selection in energy detracted from the fund's

performance versus the benchmark for the 12 months. The biggest individual relative detractor by far was non-benchmark exposure to Mesquite Energy (-47%). Picks in health care and capital goods hurt to a much lesser extent.

? In contrast, the fund's core investment in high-yield bonds gained

9.21% and contributed to performance versus the benchmark, as did security selection in the technology & electronics, telecommunications, services, and real estate categories.

? An overweight in Communications Sales & Leasing (Uniti Group)

gained 31% and was the top individual contributor.

? As of April 30, Ben says the high-yield market's fundamental starting

point is healthy and indicative of a strong economy, but he believes it could come under pressure if the U.S. economy enters a recession.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

High-yield bonds gained 8.89% for the 12 months ending April 30, 2024, according to the ICE BofA? US High Yield Constrained Index, driven by resilient corporate profits and the Federal Reserve's likely pivot to cutting interest rates later this year. Amid this favorable backdrop for higher-risk assets, the index advanced fairly steadily for most the period, highlighted by an especially strong final two months of 2023, when the index rose 8.72%. Following the Federal Reserve's November 1 meeting, when the central bank hinted it might be done raising rates, the high-yield index reversed a two-month decline that was due to soaring yields on longer-term government bonds and mixed earnings from some big and influential firms. High yield continued to advance in 2024 but lost some of its momentum, gaining 1.51% through March, as the central bank held steady its benchmark federal funds rate and affirmed its projection to cut in 2024. The index slipped in April (-1%), when inflation remained stickier than expected. For the full 12 months, all 18 industries within the index advanced, with retail (+14%) leading, followed by financial services (+12%) and banking (+11%), which benefited from high interest rates. Energy, the largest segment in the high-yield index this period, gained 10%. Conversely, the telecommunications (+4%) group lagged most, followed by utility, capital goods and transportation (+6% each).

PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2024

Q&A

Benjamin Harrison Co-Manager

Fund Facts

Trading Symbol: Start Date: Size (in millions):

SPHIX August 29, 1990 $2,631.54

Investment Approach

? Fidelity? High Income Fund is a diversified high-yield bond strategy focused on investing primarily in the bonds of non-investment-grade companies.

? We apply a core investment approach, with the majority of the fund concentrated in securities rated B and BB, and typically below-benchmark exposure to the more opportunistic, lower-rated (CCC or below) credit tiers.

? We take a consistent, conservative approach, focusing on higher-quality, less-cyclical industries and businesses. In particular, we seek companies with strong balance sheets, high free cash flow, improving business/industry fundamentals and solid management teams. In doing so, we take a longer-term investment outlook, with a focus on the best risk-adjusted opportunities that we can find in the market.

? We strive to uncover these companies through in-depth fundamental "bottom-up" credit analysis, working closely with Fidelity's high-income and global research teams.

An interview with Co-Portfolio Manager Benjamin Harrison

Q: Ben, how did the fund perform for the fiscal year ending April 30, 2024

The fund's Retail Class shares gained 8.46% the past 12 months, versus 8.89% for the benchmark, the ICE BofA? US High Yield Constrained Index, and 8.58% for the Morningstar peer group average.

Q: What influenced the investing environment for high-yield bonds this period

High yield rallied beginning in June 2023, as continued global economic expansion, falling commodity prices and a slowing in the pace of inflation provided a favorable backdrop for risk assets.

The benchmark advanced through August, rising amid hopes for a soft landing of the economy.

But the uptrend sputtered in September (-1.18%) and continued through October (-1.25%), reflecting investors' concern that the U.S Federal Reserve would keep interest rates higher for longer than expected just months earlier.

An uncertain global economic outlook and climbing oil prices added to the choppy backdrop. Credit spreads widened as investors pulled away from riskier bonds in favor of lower-risk short-term U.S. government securities that offered rates north of 5%.

This switch in investor flows, coupled with comments from Fed officials suggesting it was too soon to tell if interest rate hikes were complete, also weighed on the category.

Reversing course again, high yield gained 4.57% in November and added 3.69% in December, primarily driven by the Fed signaling that disinflationary trends kept the central bank on course to cut interest rates.

Despite losing some momentum in early 2024, high yield still advanced 1.51% year to date through March 31. The Fed held steady its benchmark federal funds rate and continued to project interest rate cuts this year.

The benchmark returned -1.00% in April, when investors got jittery about the interest rate outlook amid new data that pointed to stubbornly high inflation, as well as comments from Fed officials suggesting the central bank could keep rates higher for longer to gain clarity on inflation.

2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2024

Q: How did you manage the fund in this dynamic environment

Consistent with Fidelity's approach to managing high-yield bond funds, Alex, Jared and I worked with our research group to evaluate companies, analyze industries and generate investment ideas. We believe in taking a consistent, conservative approach to investing in high-yield bonds.

Our investment philosophy remained grounded in our belief that higher-quality businesses in the high-yield market offer the best balance of risk and reward over time. Our investment process emphasizes a bottom-up approach, with a heavy focus on primary insights generated from our research team. We aim to have individual security selection drive fund performance over time.

I'll note that the past 12 months we increased the fund's diversification and more widely distributed risk, spreading holdings across a larger number of issuers and reducing concentration in the fund's top 10, 20, 50 and 100 positions.

Q: What notably detracted for the 12 months

Security selection in energy hurt most versus the benchmark, mostly reflecting a sizable non-benchmark position in convertible bonds issued by Mesquite Energy. The securities were hurt by bondholder-unfriendly developments related to the company's bankruptcy proceedings. This resulted in the fund receiving a materially lower percentage of Mesquite stock than we anticipated. Nonetheless, we are optimistic about the potential outcome for an ongoing appeal.

To a far lesser extent, our choices in health care and capital goods detracted. In the latter, an untimely overweight in Ardagh (-37%) stood out. The manufacturer of glass bottles and containers came under pressure throughout much of the period due to the boycott of one of its key U.S. beer-brewing customers. We reduced exposure to Ardagh, moving to an underweight on April 30, but still held a sizable position, given our view that orders for its products and stockpiled inventories will normalize in the next year.

In health care, the fund's overweight in Cano Health (-68%) crimped our relative result. The provider of value-based primary care to seniors, primarily in Florida, filed for Chapter 11 bankruptcy protection in February. In addition to owning the company's bonds, the fund provided debtor-inpossession financing to Cano to help the company continue operations through the restructuring process. We're encouraged by its efforts to right-size costs, and we believe Cano can benefit from potential strategic alternatives down the road.

contributing to relative performance. By industry, security selection helped most, led by technology & electronics. Our picks in telecommunications, services and real estate also provided a lift.

The top individual relative contributor was an overweight in Communications Sales & Leasing (Uniti Group). The fund's holdings in the telecommunications real estate investment trust gained about 31%, boosted by better-than-expected financial results and rumors that it would combine with Windstream Holdings, creating the premier fiber provider in the United States. Although we pared our stake in Uniti to lock in some of its recent strong performance, we maintained exposure, given our view that such a merger would result in cost savings, an increased dividend and simplification of lease renewals between the two entities.

The No. 2 individual contributor was an overweight in Dish Network (+23%). The fund's sizable position was concentrated in bonds tied to the value of the company's wireless spectrum portfolio, rather than the worseperforming bonds tied to the company's struggling satellite television business. I describe the fund's investments in Dish in more detail in the callout portion of this review.

In technology & electronics, an overweight in cloud-service provider Rackspace Hosting (+25%) was another key contributor, buoyed partly by payment of some of its debt following a realignment of its business last year. We reduced the fund's exposure to Rackspace, using the proceeds to invest in opportunities we felt were more attractively valued.

Q: Ben, what's your outlook for high-yield bonds as of April 30

Alex, Jared and I believe the high-yield market's fundamental starting point, as measured by leverage, credit quality, level of distress and maturity runway, is healthy and indicative of a strong U.S. economy. This helps explain why the high-yield default rate is 2.25% at the end of April, meaningfully lower than the long-term average of approximately 4.5%.

But high-yield valuations as of April 30 don't provide much margin for error and offer little downside protection if economic conditions and fundamentals deteriorate. That's why the fund continues to reflect our diversified and thoughtful risk taking, particularly in the lower credit tiers of the market.

Q: What notably contributed

The fund's core allocation to high-yield bonds gained 9.21% for the 12 months, outpacing the benchmark and therefore

3 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2024

Co-Manager Ben Harrison on investing in special situations:

"At times, our high-yield team identifies opportunities among companies or credits that may be facing financial stress or distress. We invest in these 'special situations' when we see high potential for them to contribute to the fund. Fidelity has a dedicated special situations team and a track record of investing in such opportunities through multiple credit cycles.

"The fund's investment in securities issued by Dish Networks, one of our largest holdings as of April 30, serves as a good example of the type of special situation we favor.

"The fund holds Dish Network bonds tied to the company's buildout of a U.S. wireless network. The debt securities are largely backed by the company's ownership of spectrum, the invisible radio frequencies that carry wireless signals, allowing mobile phones, televisions and other devices to communicate. I'll note that the fund is significantly underweight bonds tied to the company's satellite TV business.

"The Dish securities held by the fund were priced at distressed levels as of April 30, reflecting the market's concern that the company may default on debt maturing in 2024, 2025 and 2026, and ultimately declare bankruptcy.

"However, our due diligence and analysis suggest that the value of Dish's assets ? the spectrum ? is far greater than its debt, a factor we believe the market is significantly undervaluing.

"Even in the event of bankruptcy, we believe the company could realize significant value by selling spectrum, of which there is a finite supply, to players who want and need it.

"As part of our investment approach, we're working with involved parties to help achieve a favorable result. Looking ahead, we plan to continue working through the process as it unfolds."

LARGEST HOLDINGS BY ISSUER

Issuer

CHS/CMNTY HEALTH SYSTEMS INC

TRANSDIGM INC

CCO HLDGS LLC/CAP CORP

NEW FORTRESS ENERGY INC

TENET HEALTHCARE CORP

Five Largest Issuers as a % of Net Assets

6.46%

Total Number of Holdings

784

The five largest issuers are as of the end of the reporting period, and may not be representative of the fund's current or future investments. Holdings do not include money market investments.

10 LARGEST HOLDINGS

Holding

Market Segment

TransDigm, Inc. 5.5% 11/15/27

Capital Goods

Mesquite Energy, Inc.

Energy

Energy Transfer LP CME Term SOFR 3 Month Index + 4.280% 9.612%

Energy

Artera Services LLC 8.5% 2/15/31

Basic Industry

CHS/Community Health Systems, Inc. 5.25% 5/15/30

Healthcare

DISH Network Corp. 3.375% 8/15/26 Media

Rand Parent LLC 8.5% 2/15/30

Transportation

EG Global Finance PLC 12% 11/30/28 Retail

PG&E Corp. 5.25% 7/1/30

Utility

New Fortress Energy, Inc. 6.5% 9/30/26 Energy

10 Largest Holdings as a % of Net Assets

6.00%

Total Number of Holdings

784

The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. Holdings do not include money market investments.

4 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2024

ASSET ALLOCATION

Asset Class

Portfolio Weight Index Weight

Relative Weight

Relative Change From Six Months

Ago

Bank Debt

4.53%

0.00%

4.53%

-1.56%

Corporate Bond: Cash Pay

87.81%

99.39%

-11.58%

1.89%

Corporate Bond: Deferred Pay

0.00%

0.06%

-0.06%

-0.06%

Other Debt

1.18%

0.55%

0.63%

0.81%

Convertible Bonds

1.37%

0.00%

1.37%

0.05%

Convertible Preferred Stock

0.00%

0.00%

0.00%

0.00%

Non-Convertible Preferred Stock

0.00%

0.00%

0.00%

0.00%

Equities

1.92%

0.00%

1.92%

-0.91%

Cash & Net Other Assets

3.19%

0.00%

3.19%

-0.22%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

MARKET-SEGMENT DIVERSIFICATION

Market Segment Energy Basic Industry Health Care Services Financial Services Leisure Technology & Electronics Capital Goods Media Telecommunications Real Estate Utility Retail Consumer Goods Transportation Automotive Insurance Banking Other

Portfolio Weight 14.35% 10.19% 7.98% 7.98% 7.07% 6.17% 6.16% 5.49% 5.24% 5.14% 4.42% 3.26% 3.22% 2.80% 2.77% 1.70% 1.27% 1.06% 0.00%

Index Weight 11.96% 8.63% 7.89% 6.89% 5.77% 7.43% 5.50% 6.75% 8.71% 5.01% 4.49% 3.28% 6.12% 3.80% 1.99% 2.10% 2.34% 0.30% 0.00%

Relative Weight 2.39% 1.56% 0.09% 1.09% 1.30% -1.26% 0.66% -1.26% -3.47% 0.13% -0.07% -0.02% -2.90% -1.00% 0.78% -0.40% -1.07% 0.76% 0.00%

Relative Change From Six Months

Ago -2.33% 1.76% 0.46% 1.19% 0.10% 0.92% 0.24% -0.72% -0.28% -0.14% -1.28% -0.11% -2.30% 0.18% 0.78% 1.14% -1.07% 0.76% 0.00%

5 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

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