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Other Income-Generating Products

Fixed income generally refers to investments that promise to pay interest or a return on your initial investment. However, other investment products may also provide income.

Types of other income-generating products

Dividend-yielding stocks

Some companies pay out a dividend, or a portion of their profits, to stockholders. Dividends are not fixed and can be increased, decreased, or eliminated without much notice. Similarly, the dividend yield can vary because of increases or decreases in the share price.

Search for dividend-yielding stocks.
Preferred stocks

Preferred stock is distinct from common stock and is not offered by all companies. Preferred stocks offer dividends that aren’t guaranteed but must be paid before dividends are paid on common stock. As with bonds, preferred stocks have various terms and features that vary from one preferred to another and can impact the expected future income.

Search for preferred stocks.
Fixed-rate capital securities (FRCS)

These hybrid securities combine the features of corporate bonds and preferred stock. FRCS carry the creditworthiness of the issuer and generally have a stated maturity. A commonly seen risk to their income-generating promises is their ability to defer or suspend interest payments in the event the issuer experiences financial difficulties.

Learn more about fixed-rate capital securities.
Equity income funds

These funds invest primarily in shares of companies that pay a dividend and can offer an attractive yield, while also providing the potential for conservative capital appreciation. Companies that pay dividends tend to be higher quality, mature businesses, with stable cash flows.

Learn more about equity income funds.
Asset allocation funds

These funds offer diversification across multiple asset classes, including domestic and international stocks across varying styles and market capitalization ranges, investment grade and high yield fixed income, and short-term investments. Fidelity also offers seven Fidelity Asset Manager® funds, with equity exposure ranging from conservative (20%) to aggressive growth (85%).

Learn more about asset allocation funds.
Income replacement funds

Fidelity Income Replacement FundsSM combine the power of professional asset management with professionally managed withdrawals to help turn part of your savings into regular monthly payments.

Learn more about Fidelity Income Replacement FundsSM.
Strategic funds

Fidelity Strategic Funds are multi-asset-class strategies that seek to address key income needs—bond income from global sources, non-bond income, and real return—by investing in a diversified mix of fixed income and/or equity investments chosen for their historical combined performance.

Learn more about Fidelity Strategic Funds.
Closed-end funds

These funds invest in a variety of securities, much as you would with conventional open-end mutual funds. However, unlike open-end mutual funds, CEFs trade and are priced intraday—like stocks on an exchange—at prices determined by buyers and sellers.

Search for closed-end funds.

Next steps

Research fixed income. Explore fixed income opportunities, including product offerings, market data, news, and expert analysis.

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creditworthiness

measurement of the risk of default of an individual fixed-income security or the issuer of a fixed-income security; generally measured by one of the major ratings agencies

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fixed income

a type of asset class in which the investments provide a return in two possible forms; coupon paying bonds have fixed periodic payments and a return of principal; zero coupon bonds are sold at a discount, do not pay a coupon, and have a return of principal plus all accumulated interest at maturity

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interest

the amount paid by a borrower to a creditor, or bondholder, as compensation for the use of borrowed money

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issuer

a government, corporation, municipality, or agency that has issued a security (e.g., a bond) in order to raise capital or to repay other debt; the issuer goes to an underwriter to get their securities sold in the new issue market; for certificates of deposit (CDs), this is the bank that has issued the CD; in the case of fixed income securities, the issuer of the security is the primary determinant of the security's characteristics (e.g., coupon interest rate, maturity, call features, etc.)

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maturity, maturity date(s)

the date on which the principal amount of a fixed income security is scheduled to become due and payable, typically along with any final coupon payment. It is also a list of the maturity dates on which individual bonds issued as part of a new issue municipal bond offering will mature

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yield

the percentage of return an investor receives based on the amount invested or on the current market value of holdings; it is expressed as an annual percentage rate; yield stated is the yield to worst — the yield if the worst possible bond repayment takes place, reflecting the lower of the yield to maturity or the yield to call based on the previous close

Questions?

Fidelity Learning Center

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.)  Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.
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