Derivatives are commonly used by Canadian mutual funds and the prudent use of them can provide diversification benefits and potentially reduce risk within a mutual fund. A derivative is a contract whose value is “derived” from the price of something else, generally a stock, bond, currency, commodity, interest rate or market index. The four types of derivative instruments Fidelity Funds primarily use are called forward contracts, futures contracts, option contracts, and swap agreements.
Derivatives can be very useful and effective when used properly. The use of derivatives by Canadian mutual funds are strictly regulated, and Fidelity has adopted policies and procedures to seek to ensure that the use of derivatives in Fidelity’s mutual funds comply with applicable regulatory requirements and address the risks associated with derivative instruments.
For more information on these derivatives, please click on the headings below. Also, you can find more information about the use of derivatives and the risks of investing in them in the simplified prospectus and annual information form for the Fidelity Funds.