Fidelity® Core Bond Strategy

A separately managed account focused on investment grade bonds in an effort to balance income with risk management

Investment strategy: Seeks to deliver income, while limiting risk to principal


Types of investments: Primarily A- or higher investment-grade2 taxable bonds at time of purchase

Investment minimum: $350,000


Gross annual advisory fee: 0.35% – 0.40%1 (varies based on total assets invested)

Focus on high-quality bonds

Graphic depicts the expected distribution of bonds in the portfolio across the credit quality spectrum. In the case of the Fidelity® Core Bond Strategy, 80%We work to balance your income goals and your desire to protect the value of the bonds you own. The Fidelity Core Bond Strategy typically maintains a portfolio of investment-grade bonds that has an average credit rating of at least A–, with 80% rated A– or better at time of purchase.


These high-quality bonds are typically issued by the U.S. Treasury, U.S. government agencies, and corporations that are established, have fairly healthy balance sheets, and possess a positive growth outlook. These bonds generally provide income and are typically less volatile than stocks and high-yield bonds, so we believe these bonds should be part of a diversified portfolio.


 

Diversify to help manage portfolio volatility

Fidelity Core Bond Strategy will invest in a diverse mix of investment-grade bonds across a range of sectors and varying maturities, which we actively manage. A decline in one sector could hopefully be offset by a gain in another, which may help smooth out portfolio volatility. In addition, investment-grade bonds are generally at a lower risk of default than non-investment-grade bonds, and therefore also tend to be less volatile.


Investment Process chart displays the 6 elements of our investment process for the Fidelity Core Bond Strategy — Investment Universe, Quantitative Analysis, Credit Analysis, Trading, Portfolio Construction, and Core Bond Portfolio. a. In reviewing the universe of potential investments, we research roughly 10,000 fixed income securities, focusing on investment grade bonds. These include government-related bonds, corporate bonds, municipal bonds, bonds backed by mortgages, asset-backed bonds, and taxable municipal bonds. b. When performing quantitative analysis, we develop and utilize proprietary tools in order to evaluate the risk of each bond in the portfolio. c. When performing credit analysis, we analyze and evaluate the strength of the issuer, seek to understand the dynamics of the dynamics of a bond’s sector, and work to eliminate unsuitable issuers that don’t meet our investment criteria. d. Our trading process involves identifying trading opportunities, capitalizing on fragmented market conditions that allow us to find and leverage these opportunities. We then focus on efficient executions in an effort to increase returns. e. In constructing portfolios, we seek to identify undervalued bonds, diversify across both sectors and issuers, and then continually monitor each account, rebalancing as needed. f. Each core bond portfolio will contain between 25 and 50 holdings.

Diversification does not ensure a profit or guarantee against loss.

Balance income vs. risk


Fidelity Core Bond Strategy is built to seek income and help limit risk to your investment over the long term. It considers both income and price appreciation as sources of return and seeks bonds with a favorable risk/reward trade-off. Using a research-based approach, the investment management team strives to avoid bonds that will not compensate for their investment risk.


To also help manage risk, the strategy targets an overall duration that is in line with the benchmark3 which typically has an average duration4 of 4-6 years. In general, portfolios with shorter durations are less sensitive to changes in interest rates than portfolios with longer durations.


The benefits of an experienced investment team

Using our powerful proprietary research, models and tools, we can analyze thousands of securities across the investment-grade bond universe. This capability allows us to build a diversified core bond strategy to help generate income and manage risk—all while helping your account stay aligned with your preferences.


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We believe investment success is a function of teamwork. Our investment team will actively manage your account, putting our knowledge, experience, and resources to work as we seek to uncover opportunities in all types of markets.


Investment Process chart displays the 6 elements of our investment process for the Fidelity Core Bond Strategy - Investment Universe, Quantitative Analysis, Credit Analysis, Trading, Portfolio Construction, and Core Bond Portfolio. a. In reviewing the universe of potential investments, we research roughly 10,000 fixed income securities, focusing on investment grade bonds. These include government-related bonds, corporate bonds, municipal bonds, bonds backed by mortgages, asset-backed bonds, and taxable municipal bonds. b. When performing quantitative analysis, we develop and utilize proprietary tools in order to evaluate the risk of each bond in the portfolio. c. When performing credit analysis, we analyze and evaluate the strength of the issuer, seek to understand the dynamics of the dynamics of a bond’s sector, and work to eliminate unsuitable issuers that don’t meet our investment criteria. d. Our trading process involves identifying trading opportunities, capitalizing on fragmented market conditions that allow us to find and leverage these opportunities. We then focus on efficient executions in an effort to increase returns. e. In constructing portfolios, we seek to identify undervalued bonds, diversify across both sectors and issuers, and then continually monitor each account, rebalancing as needed. f. Each core bond portfolio will contain between 25 and 50 holdings.

* Number of portfolio holdings dependent on overall portfolio size.