Fidelity® Intermediate Municipal Strategy

A separately managed account that seeks to generate federally tax-exempt interest income while limiting risk to principal.

Investment strategy: Seeks to generate federally tax-exempt interest income, while working to limit risk to principal. Both national and select state-preference options offered (state-preference seeks 100% exposure within that state)

Types of investments: Primarily A− or higher investment-grade1 municipal bonds at time of purchase

Investment minimum: $350,000

Gross annual advisory fee: 0.35% – 0.40%2 (varies based on total assets invested)

Fidelity Intermediate Municipal Strategy provides you with an actively managed portfolio of investment grade municipal bonds. Unlike government or corporate bonds, the income from the municipal bonds is generally exempt from federal income tax. Depending upon your tax bracket, this key feature may make municipal bonds of particular interest to a tax-sensitive investor.

Seeks income from high-quality municipal bonds

Graphic depicts the expected distribution of bonds in the portfolio across the credit quality spectrum. In the case of the Fidelity® Intermediate Municipal Strategy, 85%The Fidelity Intermediate Municipal Strategy typically maintains a portfolio of investment-grade bonds that has an average credit rating of at least A–, with 85% rated A– or better at the time of purchase. These high-quality bonds have historically had low default rates, with a 10-year average cumulative rate of less than 0.15%.4

The Strategy invests in a diverse mix of bonds issued by municipalities such as U.S. cities, counties and states as well as non-profit and public organizations. The mix includes a range of sectors and varying maturities. A decline in one sector could hopefully be offset by a gain in another, which may help smooth out portfolio volatility.

Chart depicts how municipal bond, represented by the Barclays Municipal Bond Index, and US Stocks, represented by the S&P 500 Index, performed differently over a 25-year period between 1999 and 2019. Represented by a hypothetical $100,000 initial investment, the chart shows that will U.S. stocks outperformed municipal bonds over time, in periods of volatility in the stock market bonds tended to fluctuate less. Note that all performance numbers shown assume that all dividends and interest were reinvested.

Keep in mind that diversification does not ensure a profit or guarantee against a loss.

Strives to balance income vs. risk

Fidelity Intermediate Municipal Strategy considers both income and price appreciation as potential 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 bond holders for their investment risk.

To also help manage risk, the strategy targets an overall duration that is in line with the benchmark5 which typically has an average duration3 of 4-6 years. In general, portfolios with shorter durations are less sensitive to changes in interest rates than portfolios with longer durations.

Investment Process chart displays the 6 elements of our investment process for the Fidelity Intermediate Municipal 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 municipal bonds issued by states, cities and counties, non-profits, and public organizations. 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.

Tapping Fidelity's Fixed Income expertise

Fidelity Management & Research Company LLC (FMR) brings investors a rich history of managing fixed income investments for over 50 years. Using proprietary research, models and tools, FMR can analyze tens of thousands of securities across the municipal bond universe. This capability allows them to build a diversified municipal bond strategy to help generate income and manage risk—all while helping your account stay aligned with your preferences.


Fidelity Investments, as of 3/31/20. Data is unaudited. Research professionals include both analysts and associates. Other includes division management and other investment professionals.

Fidelity's Fixed Income division believes investment success is a function of teamwork—involving portfolio managers, quantitative analysts, credit analysts and traders. Their investment team will actively manage your account, putting their knowledge, experience, and resources to work as they seek to uncover opportunities in all types of markets.

Investment Process chart displays the 6 elements of our investment process for the Fidelity Intermediate Municipal Strategy — Investment Universe, Quantitative Analysis, Credit Analysis, Trading, Portfolio Construction, and Intermediate Municipal Portfolio.

* Number of portfolio holdings dependent on overall portfolio size