1. Investment-grade bonds are bonds rated BBB- or higher by S&P or Fitch, and/or Baa3 or higher by Moody's, respectively. Ratings agencies judge these bonds to have a lower risk of default. Investors may restrict their account to bonds with A– or higher credit ratings at time of purchase.
2. The advisory fee does not cover charges resulting from trades effected with or through broker-dealers other than Fidelity Investments affiliates, mark-ups or mark-downs by broker-dealers, transfer taxes, exchange fees, regulatory fees, odd-lot differentials, handling charges, electronic fund and wire transfer fees, or any other charges imposed by law or otherwise applicable to your account. You will also incur underlying expenses associated with the investment vehicles selected.
3. Duration estimates how much a bond’s price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a bond or fund with a 5-year duration is likely to lose about 5% of its value. For a bond with known cash flows, duration is computed using all cash flows until the bond's maturity. Duration monitoring entails conducting oversight to seek to ensure that portfolio duration is within an acceptable range of the index duration.
4. Moody's Investors Service, "US Municipal Bond Defaults and Recoveries, 1970-2018", August 6, 2019. Default rating cited is the average cumulative default rate over rolling 10-year periods from 1970-2018 for municipal bonds rated A or higher. By comparison, corporate bonds of the same rating had an average default rate of 2.10% or less.
5. The Bloomberg Barclays Municipal Bond Index is a market value–weighted index of investment-grade municipal bonds with maturities of one year or more.
The S&P 500® Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.
All indexes are unmanaged, and performance of the indexes includes reinvestment of dividends and interest income, unless otherwise noted. Indexes are not illustrative of any particular investment, and it is not possible to invest directly in an index. Securities indices are not subject to fees and expenses typically associated with managed accounts or investment funds.
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. Any fixed income security sold or redeemed prior to maturity may be subject to loss. The municipal market can be affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest income generated by municipal bonds is generally expected to be exempt from federal income taxes and, if the bonds are held by an investor resident in the state of issuance, state and local income taxes. Such interest income may be subject to federal and/or state alternative minimum taxes. Investing in municipal bonds for the purpose of generating tax-exempt income may not be appropriate for investors in all tax brackets. Generally, tax-exempt municipal securities are not appropriate holdings for tax advantaged accounts such as IRAs and 401(k)s.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Fidelity® Strategic Disciplines provides discretionary investment management for a fee. Fidelity® Strategic Disciplines includes the Fidelity® Equity-Income Strategy, the Fidelity® U.S. Large Cap Equity Strategy, the Fidelity® Tax-Managed U.S. Equity Index Strategy, the Fidelity® International Equity Strategy, the Fidelity® Tax-Managed International Equity Index Strategy, the Fidelity® Core Bond Strategy, the Fidelity® Intermediate Municipal Strategy, and the Breckinridge Intermediate Municipal Strategy. Advisory services offered by Fidelity Personal and Workplace Advisors LLC (FPWA), a registered investment adviser. Brokerage services provided by Fidelity Brokerage Services LLC (FBS), and custodial and related services provided by National Financial Services LLC (NFS), each a member NYSE and SIPC. FPWA, FBS, and NFS are Fidelity Investments companies.
FPWA has engaged Strategic Advisers LLC, a registered investment adviser and a Fidelity Investments company, to provide the day-to-day discretionary portfolio management of Fidelity® Equity Income Strategy, Fidelity® U.S. Large Cap Equity Strategy, Fidelity® International Equity Strategy, Fidelity® Tax-Managed International Equity Index Strategy and Fidelity® Tax-Managed U.S. Equity Index Strategy accounts, including investment selection and trade execution, subject to FPWA's oversight. Strategic Advisers LLC implements trades for Fidelity® Equity Income Strategy Fidelity® International Equity Strategy and Fidelity® U.S. Large Cap Equity Strategy accounts based on the model portfolio of investments it receives from its affiliate, Fidelity Management & Research Company LLC, but may select investments for an account that differ from Fidelity Management & Research Company LLC's model.
FPWA has engaged Breckinridge Capital Advisors, Inc. to provide the day-to-day discretionary portfolio management of Breckinridge Intermediate Municipal Strategy accounts, including investment selection and trade execution, subject to FPWA's oversight. Breckinridge is an independent registered investment adviser and is not affiliated with any Fidelity Investments company.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
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