Some of Fidelity’s newest fixed income offerings are earning accolades within the industry. The Fidelity Defined Maturity Funds, a series of four municipal bond funds that primarily invest in investment-grade municipal bonds with similar maturity dates, were included in Morningstar’s list of the Best New Funds of 2011.1
Morningstar said “The funds' aim is to produce as high an income stream as possible up until the maturity date while still maintaining principal. Thus, you can dial in the right maturities for your needs. The advantages over an individual bond are that Fidelity can get better prices than you can, can do better credit research, and can build a diversified portfolio to smooth out returns. Expenses are low—around 0.40%—and management is sound.”
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.
1. The Best Funds of 2011, by Russel Kinnel, Morningstar, January 23, 2012
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. Additionally, bonds and short-term investments entail greater inflation risk, or the risk that the return of an investment will not keep up with increases in the prices of goods and services, than stocks. Lower-quality fixed-income securities generally offer higher yields but also carry more risk of default or price changes due to potential changes in the credit quality of the issuer.
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.
Defined Maturity Funds are not designed for investors seeking a stable NAV or guaranteed income.
To protect existing shareholders and to ensure orderly liquidation of the funds, the funds will close to purchases for new and existing shareholders 12 months prior to their maturity date. As the funds approach their liquidation dates, the fund's securities will mature and the funds may reinvest the proceeds in money market securities with lower yields than the securities previously held by the funds. Although money market funds seek to maintain a stable NAV of a $1.00 per share, this is not guaranteed and they may in fact lose money.
As the fund approaches its liquidation date, the fund's securities will mature and the fund may reinvest the proceeds in money market securities with lower yields than the securities previously held by the fund. In addition, the amount of the fund's income distributions will vary over time and the breakdown of returns between fund distributions and liquidation proceeds will not be predictable at the time of your investment resulting in a gain or loss for tax purposes. A portion of fund distributions may be subject to state or federal income taxes, AMT, or taxable as capital gains.
The Mutual Fund Evaluator is provided to help self-directed investors evaluate mutual funds based on their own needs and circumstances. The criteria entered is at the sole discretion of the user and any information obtained should not be considered an offer to buy or sell, a solicitation of an offer to buy, or a recommendation for any securities. You acknowledge that your requests for information are unsolicited and shall neither constitute, nor be considered as investment advice by Fidelity Brokerage Services, LLC., Fidelity Distributors Corporation, or their affiliates (collectively, "Fidelity").
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