Fidelity® Intermediate Municipal Strategy

A separately managed account that seeks to generate federal 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 state preference options offered)

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)

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® Intermediate Municipal Strategy, 85%We work to balance your income goals and your desire to protect the value of the bonds you own. 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 time of purchase.

These high-quality bonds are typically issued by municipalities such as U.S. cities, counties and states, as well as non-profit and public organizations. These bonds generally provide a steady, reliable stream of income and are typically less volatile than stocks and high-yield bonds.

Diversifying to help manage portfolio volatility

Another advantage of municipal bonds is that they can help balance volatility within a diversified portfolio because they tend to move independently relative to other asset classes, such as stocks and US Treasuries. For this reason, municipal bonds can be an effective diversifier. And while diversification can't prevent a loss, it may help temper volatility in your portfolio.

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.

This chart is for illustrative purposes only. Past performance is no guarantee of future results. The chart shows the growth of a hypothetical $100,000 investment from December 31, 1999, to December 31, 2019, based on cumulative total returns for the indexes shown. Bond returns are represented by the performance of the Bloomberg Barclays Municipal Bond Index. Stock returns are represented by the performance of the S&P 500 Index. Source: Fidelity Investments. 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 indexes are not subject to fees and expenses typically associated with managed accounts or investment funds.

Diversification does not ensure a profit or guarantee against loss.

Balance income vs. risk

Municipal bonds historically have had a lower level of default risk relative to other types of bonds. By maintaining a portfolio of investment-grade municipal bonds, with at least 85% having a credit rating of A– or better at time of purchase, Fidelity Intermediate Municipal Strategy is built to seek income and help limit risk to your investment over the long term.

This table compares the relative default rates of municipal and corporate bonds over a 48-year period, between 1970 and 2018. The data shows two trends. First, the municipal bonds have defaulted at lower rates than similarly corporate bonds. Second, that a higher credit rating has, over the time period shown, been associated with a lower default rate.

*Source: Moody's Investors Service, "US Municipal Bond Defaults and Recoveries, 1970–2018," August 6, 2019.

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.

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 us to build a diversified municipal bond strategy to help generate income and manage risk—all while helping investors' accounts stay aligned with their preferences.


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 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