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Fidelity Limited Term Bond Funds for Short Duration Investing

Fidelity's four Limited Term Bond funds—two taxable, two municipal—aim to provide a high level of income and capital preservation to investors who have an investment time frame of two to five years.

Reasons to consider Limited Term Bond funds

  • Broader parameters than other short duration bond funds-seeking to maintain a dollar-weighted average maturity between two and five years
  • Potential for smaller fluctuations in net asset value than intermediate-term and long-term bond funds
  • Potential for higher total returns than conservative income funds and shorter term bond funds
  • A way to help manage the volatility of a portfolio containing equities and/or riskier types of bonds
  • Potential for tax-exempt income from municipal bond funds

Fidelity Limited Term Bond Fund (FJRLX)

Fidelity Limited Term Bond Fund, which is benchmarked to the Barclays U.S. 1–5 Year Government/Credit Index, will normally invest at least 80% of the fund's assets in investment grade corporate debt securities. The fund will normally maintain a dollar-weighted average maturity between two and five years. It is credit-oriented, investing in sectors such as corporates, commercial mortgage-backed securities, asset backed securities, and Government agency mortgages,, which typically offer higher yields and more credit risk than Treasury and Government securities.

These higher yielding sectors can offer diversification and income advantages over longer periods of time.

Key fund facts

Minimum investment $2,500
Expense ratio 0.45%
Fund investments
  • Corporates
  • Commercial mortgage-backed securities
  • Asset-backed securities
  • Government agency mortgages

Fidelity fund manager insights

MF_Limited-Term-Bonds_VIDHear Portfolio Manager Rob Galusza discuss Fidelity's new Limited Term Bond Fund, and his investment process.

Watch the video (4:34)

Fidelity Limited Term Government Fund (FFXSX)

Fidelity Limited Term Government Bond Fund, which is benchmarked to the Barclays U.S. 1–5 Year Government Bond Index, will normally invest at least 80% of the fund's assets in U.S. government securities and repurchase agreements for those securities. The fund invests in U.S. Government securities issued by entities that are chartered or sponsored by Congress, but whose securities are neither issued by nor guaranteed by the U.S. Treasury. It invests in instruments related to U.S. Government securities with a dollar-weighted average maturity between two and five years.

Key fund facts

Minimum investment $2,500
Expense ratio 0.45%
Fund investments
  • U.S. Treasurys
  • U.S. Agencies
  • Mortgage-backed securities
  • Commercial mortgage-backed securities

Investment risks of these funds

The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities.

Furthermore, unfavorable political or economic conditions within California can affect the credit quality of issuers located in that state.

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 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. Furthermore, changes in government regulation, interest rates and economic downturns can have a significant effect on issuers in the financial services sector, including the price of their securities or their ability to meet their payment obligations.

Prepayment of principal prior to a security's maturity can cause greater price volatility if interest rates change. Also, foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, regulatory, market, or economic developments.

These funds can invest in securities that may have a leveraging effect (such as derivatives and forward-settling securities) which may increase market exposure, magnify investment risks, and cause losses to be realized more quickly.

Fidelity Limited Term Bond Fund

Questions?

From our experts

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.
Diversification does not ensure a profit or guarantee against loss.
Although bonds generally present less short‐term risk and volatility than stocks, the bond market is volatile and investing in bond funds involves interest rate risk; as interest rates rise, bond prices usually fall, and vice versa. Bond funds also entail issuer and counterparty credit risk, and the risk of default (the risk that an issuer or counterparty will be unable to make income or principal payments). Additionally, bond funds and short‐term investments generally involve greater inflation risk than stocks, since investment returns may not keep up with increases in the prices of goods and services.
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