Fidelity Alternative Investments Beyond the Traditional
Fidelity Credit Opportunities Fund II, LP
The Fund will pursue a long-only, non-control strategy primarily focused on investing in the debt or equity of stressed, distressed, and restructured companies.
It may also strategically invest in opportunities arising from our other core investment strategies, including private/middle market loans, real estate debt, emerging markets debt, and leveraged equities.
Experienced team
As one of the largest high income managers, our deep industry knowledge is powered by a fully integrated team of portfolio managers, special situations experts, analysts, and traders.
Sourcing strength
We believe that investing in both the public and private markets allows us
to leverage Fidelity’s deep and
broad team and access to information to source attractive investment ideas.
Favorable outcomes
Our collective ability to influence workouts, large asset base, and experience means, in our experience, we are positioned as active drivers of the process, maximizing returns for our stakeholders.
50+ years of experience across the credit spectrum
Proprietary research resources and experience scale across the capital structure with expertise spanning both the liquid public markets and illiquid private markets.
Our credit capabilities
Research capabilities and workout expertise
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Limited Partnership (LP) with a drawdown structure
Fund term of 6 years from initial capital call, including an extension, plus a reasonable amount of time to wind down the Fund
Qualified purchasers make a minimum commitment of $250,000*
*The General Partner has waived or reduced the minimum from $5,000,000 to $250,000 for certain categories of investors.
Majority of focus on the publicly traded, secondary market
Flexibility across the capital structure
Ability to access dislocations across illiquid/less liquid assets
Diverse opportunity set
Disciplined, prudent capital deployment
Success with previous vintage; Vintage I Net IRR as of 9/30/24 = 21%
Past performance is no guarantee of future returns of Fund I or of future vintages. Fund I performance shown is for the period 5/5/20 –9/30/24 and is unaudited. Fund I is closed to new investors. Fund I is managed by FMR Co., Inc., a registered investment adviser; and Fund II will be managed by Fidelity Diversifying Solutions LLC (FDS) an affiliated adviser within the Fidelity GIPS Firm definition. Net IRR is calculated net the highest fee that applied to an investor in Fund I (140 bps). Net IRR based on actual fees paid was 21%. Returns of less than one year are not annualized. Shareholder performance will vary based on (among other factors) the fee applicable to their investment. Security type and industry allocation are average weights through the investment period (ending June 30, 2023); all other data as of September 30, 2024. See the Performance below for full Vintage I performance. Fund I performance was achieved during a volatile market environment that may have provided unique investment opportunities that may not be available in the future. Not intended to represent the performance of Fund II, which will have a maximum fee of 175 bps. There is no primary benchmark for Fund I. Indices may not be representative of the types of investments made by Fund I and there can be no assurance any such historical trends will continue in the future.
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Additional Performance Information for Vintage I (closed to new investors as of 02/01/21)
Performance as of 9/30/24 | |
IRR (Gross) | 22.46% |
IRR (Net) | 20.58% |
DPI (Net) | 1.42x |
RVPI (Net) | 0.30x |
TVPI (Net) | 1.72x |
$ Amount | % of Committed | % of Paid In | |
Capital Committed | $339,127,404 | - | - |
Cumulative Paid-In Capital | $249,360,217 | 74% | - |
Amount Distributed | $353,179,845 | 104% | 142% |
Current Net Market Value | $78,316,739 | 23% | 31% |
Total Value | $431,496,584 | 127% | 173% |
Performance Data
Past performance is no guarantee of future results.
Gross performance information does not reflect management fees or performance fees (i.e., carried interest) charged by Fidelity or its affiliates, or any other Fund-level expenses borne indirectly by investors in a Fund, which will reduce returns and, in the aggregate, may be substantial. Gross performance calculations are unaudited, estimated and subject to change. Gross IRR for prior investments is not indicative of future financial performance for other investments.
Net performance is aggregated for all fee-paying investors and deducts management fees and operating expenses, or any other Fund-level expenses. Net performance is based on contributions, distributions and ending unrealized value.
The IRR, which is a money-weighted return, is the implied discount rate or effective compounded rate of return that equates the present value of cash outflows with the present value of cash inflows. A gross-of-fees return is the return on investments reduced by any transaction costs incurred during the period. A net-of-fees return is the gross-of-fees return reduced by the total fund operating fees and investment management fees, which include both performance-based fees and carried interest.
IRR is a measure of the discounted cash flows (inflows and outflows) related to an investment. Gross IRR is a measure of the discounted cash flows (inflows and outflows) related to an investment before the deduction of any fees or expenses. Gross IRR equals the discount rate at which (i) the present value of all capital invested in an investment is equal to (ii) the present value of all cash flows and the terminal value of the investment (whether or not realized). Net IRR for a particular Fund reflects the cash flows of the Fund's fee-paying limited partners and is calculated based on the dates that fee-paying limited partners are required to contribute capital to the Fund and the dates that the Fund makes distributions back to its fee-paying limited partners.
Cumulative Paid-In Capital is the sum of all capital contributions made by the fee-paying limited partners to the Fund.
Net Distributions to Paid-In Capital (DPI) is a ratio of (a) the sum of all amounts distributed by the Fund to the fee-paying limited partners divided by (b) the Cumulative Paid-In Capital.
Net Residual Value to Paid-In Capital (RVPI) is a ratio of (a) the fair value of the fee-paying limited partners' capital accounts net-of-fees divided by (b) the Cumulative Paid-In Capital.
Net Total Value to Paid-In Capital (TVPI) is a ratio of (a) (i) the sum of all amounts distributed by the Fund to the fee-paying limited partners plus (ii) the fair value of the fee-paying limited partners' capital accounts net-of-fees divided by (b) the Cumulative Paid-In Capital.
Fund I is managed by FMR Co., Inc., a registered investment adviser; and Fund II will be managed by Fidelity Diversifying Solutions LLC (FDS) an affiliated adviser within the Fidelity GIPS Firm definition.
DISCLAIMERS
The information contained herein is confidential. By accepting this information, the recipient agrees that it will use, and it will cause its directors, partners, officers, employees and representatives to use, the information only to evaluate its potential interest in acting as a placement agent for a potential future vintage of the securities described herein and for no other purpose and will not divulge any such information to any other party. Any reproduction of this information, in whole or in part, is prohibited.
The private funds described in this material are not currently available for investment. Were any offer of securities made, it would be made pursuant to a Private Placement Memorandum, Limited Partnership Agreement, Subscription Agreement, and other documents of Fidelity Credit Opportunities Fund II LP and, as applicable, Fidelity Credit Opportunities Feeder Fund II LP (collectively, the "Offering Documents") prepared by or on behalf of the relevant issuer. Any decision to invest in such a securities offering should only be made after reviewing the associated Offering Documents, conducting such investigations as the investor deems necessary or appropriate and consulting the investor's own legal, accounting, tax, and other advisors in order to make an independent determination of the suitability and consequences of an investment in the securities.
The securities described herein will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Fund will not be registered under the Investment Company Act of 1940, as amended. The securities described herein will not be approved or disapproved by any federal, state or foreign securities commission or any other regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of the information contained herein. Any representation to the contrary is a criminal offense.
None of the Fund, Fidelity Diversifying Solutions LLC (“FDS”), Fidelity Funds Manager, LLC (the “General Partner”), Fidelity Distributors Company LLC (“FDC”), Fidelity Brokerage Services LLC (“FBS”) and their respective affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. The Fund, FDS LLC, FMR, the General Partner, FDC, FBS and their respective affiliates disclaim any and all liability relating to this information, including, without limitation any express or implied representation or warranty for statements contained in and omissions from this information. The information contained herein includes estimates and projections and involves significant elements of subjective judgment and analysis. No representations are made as to the accuracy of such estimates or projections or that all assumptions relating to such estimates or projections have been considered or stated or that such projections will be realized. None of the Fund, FDS, FMR, the General Partner, FDC, FBS and their respective affiliates expects, or shall have any duty, to update the information contained herein.
Like all investments, an investment in the Fund involves the risk of loss. Investment products such as the Fund are designed only for sophisticated investors who are able to sustain the loss of their investment. Accordingly, such investment products are not suitable for all investors. The Fund is not subject to the same or similar regulatory requirements as mutual funds or other more regulated collective investment vehicles.
Certain information contained in this Presentation has been obtained from third-party sources. While such information is believed to be reliable for the purposes used herein, Fidelity has not independently verified such information and Fidelity makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein. Certain economic and market conditions contained herein have been obtained from published sources and/or prepared by third parties and in certain cases have not been updated through the date hereof. All information contained herein is subject to revision and the information set forth herein does not purport to be complete.
Certain information contained in this Presentation constitutes “forward-looking statements” that can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of any Fidelity investment may differ materially from those reflected or contemplated in such forward-looking statements.
RISK FACTORS
Investors should review the offering documents, including the description of risk factors contained in the Fund’s Confidential Private Placement Memorandum (the “Memorandum”), prior to making a decision to invest in the securities described herein. An investment in the Fund involves a high degree of risk and is suitable only for those investors willing to risk losing some or all of their principal investment and who have the experience and ability to evaluate the risks and merits of an investment in the Fund. The Memorandum will include more complete descriptions of the risks described below as well as additional risks relating to, among other things, debt investments, market, credit and interest rate risk, conflicts of interest and regulatory and tax matters. Any decision to invest in the securities described herein should only be made after reviewing such Memorandum, conducting such investigations as the investor deems necessary and consulting the investor’s own legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment in the Fund. The Fund’s performance can be volatile. The Investment Manager has total trading authority over the Fund and the use of a single adviser applying generally similar trading programs could mean lack of diversification and, consequentially, higher risk. The Fund's fees and expenses may offset the Fund's trading profits. Accredited Investor and Qualified Purchaser Status. Each limited partner in the Fund must represent in writing, among other things, that such limited partner is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and a “qualified purchaser” as that term is defined in Section 2(A)(51) of the 1940 Act or a “knowledgeable employee” as that term is defined in Rule 3c-5(A)(4)(I) of Investment Company Act of 1940, as amended (the “1940 Act”). • No Operating History; Loss of Capital. The Fund has no operating history upon which prospective limited partners can evaluate performance. No guarantee or representation is made that the Fund will achieve its investment objective or that limited partners will not lose all or substantially all of their investment in the Fund. The past performance of the Investment Manager or its affiliates is no guarantee of the future performance of the Fund. There is no assurance that the Fund will be profitable. The success of the Fund will in a large part depend on its ability to identify and make profitable investments. Identifying and making profitable investments is difficult and involves a high degree of risk, competition and uncertainty, and the availability of such investments is subject to general market conditions. There is no assurance that the Fund will be able to successfully implement its investment strategy or attain profitability. The Fund’s profitability is dependent upon many factors beyond its control. • Fund Investments Generally; Risk of Partial or Total Loss of Capital. A fundamental premise of a strategy primarily focused on stressed, distressed or restructured investments is the acceptance of illiquidity and a higher degree of risk than is inherent in traditional public stock or bond investments, in expectation of higher returns. An investment in the Fund therefore involves a substantial degree of risk, and the purchase of Interests should be considered only by investors able to bear the risk of loss of all or a substantial portion of their investment. The success of the Fund depends on the identification by, and the availability of suitable investment opportunities to, the Investment Manager. Sourcing suitable investment opportunities will be subject to market conditions and other factors outside the control of the General Partner and the Investment Manager. • Investments in Distressed Securities. The Fund’s investments will involve a high degree of risk, including risks associated with investing in “below investment grade” securities and obligations of domestic and non-U.S. issuers in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, facing special competitive or product obsolescence or other problems, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Some of these securities may not be publicly traded, and it therefore may be difficult to obtain information as to the true condition of such issuers or to buy or sell these securities. Additionally, in certain periods, there may be little or no liquidity in markets for these securities. The public market prices of distressed securities may be subject to abrupt and erratic market movements and above-average price volatility, and the spread between the bid and ask prices of such securities may be greater than normally expected. • Availability of Suitable Investments. There can be no assurance that the Investment Manager will be able to locate and complete suitable investments that satisfy the Fund’s objectives and that the Investment Manager believes will provide performance commensurate with the Fund’s targets. If the Investment Manager does not locate suitable and compelling investment opportunities in which to deploy all of the Fund’s capital, the Fund may not invest fully its available capital which may result in an adverse effect on performance results. • Restricted Securities; Long-Term Investment; No Right to Withdraw; Illiquidity. The interests in the Fund are restricted securities under the Securities Act of 1933, as amended, for which no public or private market presently exists or is ever intended to exist. Transfers of the interests are subject to restrictions of U.S. federal and state securities laws and to the restrictions set forth in the Partnership Agreements and as such, it may be difficult or impossible to transfer the Interests to any transferees. Furthermore, limited partners cannot withdraw capital from the Fund. Accordingly, an investment in the Fund requires a long-term commitment, with no certainty of return, and should be made only if you can assume the risks of an illiquid investment and can maintain sufficient capital to meet future drawdowns of capital. • Use of Leverage. While the General Partner does not intend to use leverage as a primary source of capital as a means for the Fund to seek to achieve its investment objective, the General Partner may determine in its sole discretion to use leverage in connection with the Fund’s portfolio through loans from affiliated or unaffiliated lenders in anticipation of the receipt of capital contributions from the partners or any particular limited partner. In the event that the Fund utilizes leverage, fluctuations in the market value of the Fund portfolio will have a significant effect in relation to the Fund’s capital and the risk of loss and the possibility of gain will each be increased. • Other Funds and Accounts Managed by Fidelity. The Investment Manager’s personnel responsible for making investments on behalf of the Fund have substantial responsibilities in connection with the management of other investment funds, accounts, and investment vehicles.
Important Information
The information contained herein is confidential and intended for the recipient only. Do not distribute or reproduce this materials. This material contains statements that are "forward-looking statements," which are based on certain assumptions of future events. Fidelity Diversifying Solutions LLC ("FDS") does not assume any duty to update any forward-looking statement. Actual events may differ from those assumed. There can be no assurance that forward-looking statements, including any projected returns, will materialize or that actual market conditions and/or performance results will not be materially different or worse than those presented.
Certain data and other information in these materials has been supplied by outside sources and are believed to be reliable and current. Fidelity cannot verify the accuracy of information from outside sources, and potential investors should be aware that such information is subject to change without notice.
Certain statements made herein reflect the subjective views and opinions of Fidelity and its personnel. Such statements cannot be independently verified and are subject to change. Do not distribute or reproduce this document.
Past performance is no guarantee of future results. An investment may be risky and may not be suitable for an investor's goals, objectives and risk tolerance. Investors should be aware that an investment's value may be volatile and any investment involves the risk that you may lose money.
FDS is a registered investment adviser and an indirect, wholly owned subsidiary of FMR LLC.
“Fidelity Investments” and/or “Fidelity” refers collectively to FMR LLC, a U.S. company, and its subsidiaries, including but not limited to Fidelity Management & Research Company LLC (FMR), and FDS.
Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or its affiliated companies.
The Fund may be offered by Fidelity Distributors Company LLC or Fidelity Brokerage Service LLC, Member NYSE, SIPC, each a non-exclusive financial intermediary that is affiliated with FDS, under common control with FDS, and compensated for such services.
Fidelity Diversifying Solutions LLC (“FDS”) and FIAM LLC are registered investment advisers, and FDS is a commodity pool operator and commodity trading adviser. Both are indirect, wholly owned subsidiaries of FMR LLC. FDS is a registered CPO and CTA.