In the fourth quarter of 2025, the Fidelity Floating Rate High Income Fund demonstrated a robust performance. While its Retail Class shares recorded a 1.27% increase, marginally trailing the Morningstar LSTA US Performing Loans Index, its primary bank-loan holdings, constituting approximately 91% of its assets, achieved a more substantial 1.51% growth, thereby outperforming the benchmark. As the year 2026 commences, the prevailing sentiment regarding the loan market remains largely optimistic, buoyed by the resilience of the U.S. economy.
The Fidelity Floating Rate High Income Fund, a diverse strategy focused on leveraged loans, primarily invests in loans extended by banks to companies with sub-investment grade ratings. The fund adheres to a fundamental investment philosophy, with the majority of its assets strategically allocated to these types of loans. This approach is designed to navigate the complexities of the leveraged loan market while aiming to deliver consistent returns for investors.
In the final quarter of 2025, the fund's Retail Class shares experienced a gain of 1.27%. This performance was slightly below the 1.30% return of its benchmark, the Morningstar LSTA US Performing Loans Index. Despite this minor underperformance, the core of the fund's portfolioâits bank-loan holdingsâwhich averaged about 91% of total assets during the quarter, posted a more favorable gain of 1.51%. This outperformance by the core holdings positively influenced the fund's overall relative performance.
As we transition into 2026, the economic landscape appears promising. The U.S. economy continues to exhibit resilience, creating a favorable environment for the loan market. This robust economic backdrop underpins a generally positive outlook for the Fidelity Floating Rate High Income Fund, suggesting potential for continued growth and stability in the coming year.
