Fidelity® Strategic Income Fund

  • Symbol: FSICX
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Summary

Morningstar® Snapshot*

AS OF 09/30/2014; MORNINGSTAR CATEGORY: Multisector Bond
Returns 3 out of 5, Average Returns
LOWAVGHIGH
Expenses 1 out of 5, Low Fees
LOWAVGHIGH
Risk of this Category Category Risk Rating:4, where 1 is Lower and 10 is Higher
LOWERHIGHER

*Data provided by Morningstar. Please click on the indicator above to learn more about comparison groups and methodology.

Performance

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AS OF 9/30/2014
Average Annual Returns
YTD (Daily)* 1 Yr 3 Yr 5 Yr 10 Yr
YTD (Daily)* +5.05% 1 Yr +5.65% 3 Yr +6.03% 5 Yr +6.46% 10 Yr +6.78%
*AS OF 10/22/2014; Value is cumulative

Hypothetical Growth of $10,000

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AS OF 09/30/2014; MORNINGSTAR CATEGORY: Multisector Bond
Shows growth of hypothetical $10,000 investment in Fidelity® Strategic Income Fund compared to BofA ML US HY/HY Const Bl,FID Strat Inc Comp Idx,Multisector Bond over the selected time period
Fidelity® Strategic Income Fund
Multisector Bond

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The performance data featured represents past performance, which is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance data quoted.

Fund Manager(s)

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Ford O'Neil since 6/1/2012 Franco Castagliuolo since 12/1/2009 Joanna Bewick since 4/1/2008 Bill Irving since 4/1/2008 David Simner since 7/1/2007 Jonathan Kelly since 4/1/2002 Mark Notkin since 4/9/1999

Fund Overview

Objective

Seeks a high level of current income. The fund may also seek capital appreciation.

Strategy

Investing primarily in debt securities by allocating assets among four general investment categories: high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities. The fund uses a neutral mix of approximately 40% high yield, 30% U.S. Government and investment-grade, 15% emerging markets, and 15% foreign developed markets. Engaging in transactions that have a leveraging effect on the fund.

Risk

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. Leverage can increase market exposure and magnify investment risk.

Additional Disclosures

A mutual fund registered under Fidelity School Street Trust, and managed by Fidelity Management & Research Company. This description is only intended to provide a brief overview of the fund. Read the fund's prospectus for more detailed information about the fund.

Details

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Morningstar Category Multisector Bond
Fund Inception 5/1/1998
NAV
10/22/2014
$11.06
Glossary definition opens in new window.Exp Ratio (Gross)
3/1/2014
0.69%
($6.90 per $1000)
Glossary definition opens in new window.Exp Ratio (Net)
3/1/2014
0.69%
($6.90 per $1000)
Minimum to Invest 5 $2,500.00
Turnover Rate
6/30/2014
125%
Glossary definition opens in new window.Portfolio Net Assets ($M)
9/30/2014
$8,575.20
12 Month Low-High
9/30/2014
$10.84 - $11.28

Chart Fund Price (NAV)

Video

A conversation about Fidelity Strategic Income Fund with Joanna Bewick.

Watch the video (2:17)

Fixed Income Characteristics

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30-Day Yield 6
3.48%
9/30/2014

Top 10 Holdings

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AS OF 9/30/2014
Top 10 Holdings
USTN .375% 01/15/16
USTB 3.625% 02/15/44
USTN 0.5% 7/31/16
USTN 2.5% 05/15/24
ENERGY FUT TRM 1LN DIP 06/16
CANADA GOVT 1.75% 9/01/19
ITALY GOVT 1.5% 12/16
JAPAN GOVT 1.9% 9/20/30
GMAC LLC MTN 8% 11/01/31
ITALY GOVT 4.5% 03/01/24
% of Total Portfolio 10.71%
Total # of holdings: 1468 as of 9/30/2014

Quarter-End Average Annual Total Returns

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AS OF 9/30/2014; FUND INCEPTION 5/1/1998 Glossary definition opens in new window.

EXPENSE RATIO (GROSS):
0.69% AS OF 3/1/2014
1 Yr 3 Yr 5 Yr 10 Yr Life
Glossary definition opens in new window.Before Taxes
Fidelity® Strategic Income Fund 5.65% 6.03% 6.46% 6.78% 7.06%
Glossary definition opens in new window.After Taxes on Distributions
Fidelity® Strategic Income Fund 3.55% 3.96% 4.35% 4.59% 4.71%
Glossary definition opens in new window.After taxes on distributions and sale of fund shares
Fidelity® Strategic Income Fund 3.36% 3.90% 4.27% 4.50% 4.60%

Read more about after-tax returns.

The "Mutual Funds" area at the top of each page allows access to mutual fund holdings with individual and joint Fidelity non-retirement accounts. Individual stock positions, ETFs and 529 funds are not available through this view. For the full list of your holdings visit Portfolio Summary.

Mutual Funds are priced as of the previous business day's market close when the market is open. Mutual fund positions are priced as of the official market close (typically 4p.m.) and prices are generally available between 5 p.m. and 6p.m.

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2013 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for fund performance, you should check the fund's current prospectus or other product materials for the most up-to-date information concerning applicable loads, fees and expenses.

Performance & Risk

Average Annual Total Returns

 8, 3, 2 More Information
AS OF 9/30/2014; FUND INCEPTION 5/1/1998
1 Yr 3 Yr 5 Yr 10 Yr Life
Fidelity® Strategic Income Fund 5.65% 6.03% 6.46% 6.78% 7.06%
BofA ML US HY/HY Const Bl 7.23% 10.94% 10.37% 8.21% 6.92%
FID Strat Inc Comp Idx 4.91% 6.10% 6.72% 6.70% 6.71%
Multisector Bond 5.81% 6.56% 7.18% 6.05% --
Rank in Morningstar Category 50% 59% 67% 17% --
# of Funds in Morningstar Category 305 223 167 106 --

Yield

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10/21/2014 9/30/2014
30-Day Yield 6 3.56% 3.48%

Hypothetical Growth of $10,000

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AS OF 09/30/2014; MORNINGSTAR CATEGORY: Multisector Bond
Fidelity® Strategic Income Fund
Multisector Bond
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
This Fund 9.44% 3.12% 8.15% 5.44% -11.37% 31.77% 9.93% 4.64% 10.90% 0.38% 4.07%
Benchmark 10.87% 2.78% 10.76% 2.53% -26.11% 58.10% 15.07% 4.37% 15.55% 7.41% 3.61%
Benchmark-2 9.25% 2.66% 8.11% 6.52% -8.99% 25.83% 10.10% 6.59% 10.54% 0.87% 3.56%
Category 8.38% 2.12% 6.90% 4.45% -15.41% 29.22% 10.86% 3.37% 11.71% 1.87% 3.84%
+/- Benchmark -1.43% 0.34% -2.61% 2.91% 14.74% -26.33% -5.14% 0.27% -4.65% -7.03% 0.46%
+/- Benchmark-2 0.19% 0.46% 0.04% -1.08% -2.38% 5.94% -0.17% -1.95% 0.36% -0.49% 0.51%
+/- Category 1.06% 1.00% 1.25% 0.99% 4.04% 2.55% -0.93% 1.27% -0.81% -1.49% 0.23%

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The performance data featured represents past performance, which is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance data quoted.

Quarter-End Average Annual Total Returns

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AS OF 9/30/2014; FUND INCEPTION 5/1/1998 Glossary definition opens in new window.

EXPENSE RATIO (GROSS):
0.69% AS OF 3/1/2014
1 Yr 3 Yr 5 Yr 10 Yr Life
Glossary definition opens in new window.Before Taxes
Fidelity® Strategic Income Fund 5.65% 6.03% 6.46% 6.78% 7.06%
Glossary definition opens in new window.After Taxes on Distributions
Fidelity® Strategic Income Fund 3.55% 3.96% 4.35% 4.59% 4.71%
Glossary definition opens in new window.After taxes on distributions and sale of fund shares
Fidelity® Strategic Income Fund 3.36% 3.90% 4.27% 4.50% 4.60%

Read more about after-tax returns.

Cumulative Total Returns

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AS OF 9/30/2014
YTD (Daily)* YTD (Monthly) 1 Month 3 Months 6 Months
Fidelity® Strategic Income Fund 5.05% 4.07% -1.94% -1.77% 1.31%
BofA ML US HY/HY Const Bl -- 3.61% -2.10% -1.92% 0.60%
FID Strat Inc Comp Idx -- 3.56% -1.96% -1.62% 1.03%
Multisector Bond -- 3.84% -1.37% -1.02% 1.44%
*AS OF 10/22/2014

Fund Risk and Return

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AS OF 9/30/2014; MORNINGSTAR CATEGORY: Multisector Bond
Risk of this Category Category Risk Rating:4, where 1 is Lower and 10 is Higher
LOWERHIGHER

Risk

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. Leverage can increase market exposure and magnify investment risk.

Volatility Measures

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Beta 0.73
AS OF 9/30/2014

A measure of a portfolio's sensitivity to market movements (as represented by a benchmark index). The benchmark index, such as the S&P 500 or EAFE index, has a beta of 1.0. A beta of more (less) than 1.0 indicates that a fund's historical returns have fluctuated more (less) than the benchmark index. Beta is a more reliable measure of volatility when used in combination with a high R2 which indicates a high correlation between the movements in a fund's returns and movements in a benchmark index.

R2 0.85
AS OF 9/30/2014

A measurement of how closely the portfolio's performance correlates with the performance of a benchmark index, such as the S&P 500. R2 is a proportion which ranges between 0.00 and 1.00. An R2 of 1.00 indicates perfect correlation to the benchmark index, that is, all of the portfolio's fluctuations are explained by performance fluctuations of the index, while an R2 of 0.00 indicates no correlation. Therefore, the lower the R2, the more the fund's performance is affected by factors other than the market as measured by that benchmark index. An R2 value of less than 0.5 indicates that the Annualized Alpha and Beta are not reliable performance statistics.

Sharpe Ratio 1.35
AS OF 9/30/2014

The Sharpe ratio is a measure of historical adjusted performance calculated by dividing the fund's excess returns (fund's average monthly returns minus the average monthly return of the Salomon Smith Barney 3-Month T-Bill Index) by the standard deviation of those returns. The higher the ratio, the better the fund's return per unit of risk.

Standard Deviation 4.39
AS OF 9/30/2014

Statistical measure of how much a return varies over an extended period of time. The more variable the returns, the larger the standard deviation. Investors may examine historical standard deviation in conjunction with historical returns to decide whether an investment's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how an investment actually performed, but it does indicate the volatility of its returns over time. Standard deviation is annualized. The returns used for this calculation are not load-adjusted.

Volatility measures are based on the variability of historical returns of the portfolio. In the case of annuity funds, this is before the effect of annuity charges. Relative Volatility, Beta, and R2 compare a portfolio's total return to those of a relevant market, represented by the benchmark index. Standard Deviation is calculated independent of an index.

Historical Fund Performance

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Current year's data as of: 9/30/2014
Year Total Returns Capital Gains Dividends Glossary definition opens in new window.Share Class Net Assets ($M)
2014 4.07% -- $0.311129379 $8,575.20
2013 0.38% $0.144 $0.416387545 $8,406.54
2012 10.90% $0.167 $0.430294016 $10,493.22
2011 4.64% $0.248 $0.537693363 $8,723.82
2010 9.93% $0.22 $0.547831886 $7,962.53
2009 31.77% $0.08 $0.53000937 $7,186.22
2008 -11.37% $0.06 $0.557391765 $4,160.24
2007 5.44% $0.138 $0.58379129 $5,230.10
2006 8.15% $0.06 $0.55645389 $4,220.22
2005 3.12% $0.12 $0.54411175 $3,444.34

The "Mutual Funds" area at the top of each page allows access to mutual fund holdings with individual and joint Fidelity non-retirement accounts. Individual stock positions, ETFs and 529 funds are not available through this view. For the full list of your holdings visit Portfolio Summary.

Mutual Funds are priced as of the previous business day's market close when the market is open. Mutual fund positions are priced as of the official market close (typically 4p.m.) and prices are generally available between 5 p.m. and 6p.m.

The performance data featured represents past performance, which is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance data quoted.

Fund Characteristics and Attribution

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2013 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for fund performance, you should check the fund's current prospectus or other product materials for the most up-to-date information concerning applicable loads, fees and expenses.

Ratings

Morningstar Ratings

AS OF 09/30/2014; MORNINGSTAR CATEGORY: Multisector Bond
Overall
4 out of 5 stars
Out of 223 funds
3 Yr
3 out of 5 stars
Out of 223 funds
5 Yr
3 out of 5 stars
Out of 167 funds
10 Yr
4 out of 5 stars
Out of 106 funds

An overall rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Metrics as of the date stated. The number of funds in the Multisector Bond category tracked by Morningstar was 223 for the 3 year period and Overall Ranking; 167 for the 5 year period; and 106 for the 10 year period. Please click on the question mark above for additional Morningstar information.

Past performance is no guarantee of future results.

Lipper Ranking

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AS OF 9/30/2014; LIPPER PEER GROUP: Multi-Sector Inc
1 Yr
#113 out of 238 funds
5 Yr
#82 out of 135 funds
10 Yr
#13 out of 93 funds

The fund is ranked based on total return. Each fund is ranked within a universe of funds with similar investment objectives. Rankings include the reinvestment of dividends and capital gains but exclude the effect of a fund's sales load, if applicable. Lipper Inc. is a nationally recognized organization that ranks the performance of mutual funds.

Past performance is no guarantee of future results.

Watch a brief video to learn about using the new mutual fund library to evaluate funds

The "Mutual Funds" area at the top of each page allows access to mutual fund holdings with individual and joint Fidelity non-retirement accounts. Individual stock positions, ETFs and 529 funds are not available through this view. For the full list of your holdings visit Portfolio Summary.

Mutual Funds are priced as of the previous business day's market close when the market is open. Mutual fund positions are priced as of the official market close (typically 4p.m.) and prices are generally available between 5 p.m. and 6p.m.

2013 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for fund performance, you should check the fund's current prospectus or other product materials for the most up-to-date information concerning applicable loads, fees and expenses.

Composition

Portfolio Diversification (Bonds)

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AS OF 9/30/2014
Portfolio Weight
High Yield Investments 40.15%
Developed Market Debt 14.03%
U.S. Government 27.32%
Emerging Market Investments 15.73%
Cash & Other 0.58%
Futures, Options & Swaps 2.19%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the Portfolio Composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

The percent of net assets invested in both domestic and foreign Equities (common stocks, preferred stocks, rights and warrants, convertible preferred stocks and stock index futures and options), Bond (all debt instruments, including investment grade, non-investment grade, non-rated securities and convertible bonds), and Cash & Net Other Assets (cash, repurchase agreements, receivables and payables).

Top 10 Holdings

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AS OF 9/30/2014
USTN .375% 01/15/16
USTB 3.625% 02/15/44
USTN 0.5% 7/31/16
USTN 2.5% 05/15/24
ENERGY FUT TRM 1LN DIP 06/16
CANADA GOVT 1.75% 9/01/19
ITALY GOVT 1.5% 12/16
JAPAN GOVT 1.9% 9/20/30
GMAC LLC MTN 8% 11/01/31
ITALY GOVT 4.5% 03/01/24
% of Total Portfolio 10.71%
Total # of holdings: 1468 as of 9/30/2014

Credit Quality

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AS OF 9/30/2014
U.S. Government 28.44%
AAA 3.16%
AA 4.96%
A 1.99%
BBB 10.92%
BB 17.60%
B 17.44%
CCC & Below 8.03%
Short-Term Rated 0.00%
Not Rated/Not Available 5.18%
Cash & Net Other Assets 2.28%

Historical Fund Information

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Merger: Fidelity International Bond (00451) merged into Strategic Income 1/17/2002

Fixed Income Characteristics

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30-Day Yield 6
3.48%
9/30/2014

Duration Distribution

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AS OF 9/30/2014
<= 1 year
13.41%
1 <= 2 years
10.54%
2 <= 3 years
10.60%
3 <= 4 years
8.98%
4 <= 5 years
17.26%
5 <= 6 years
9.21%
6 <= 8 years
12.22%
8 <= 10 years
6.43%
10+ years
11.34%
Not Available
0.01%

Fixed Income StyleMap®*

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AS OF 8/31/2014
Credit Quality
High
Med
Low current
Ltd Mod Ext
Interest Rate Sensitivity
Current
Historical

Low Quality Extensive Sensitivity

Hold securities with a low asset-weighted average credit rating and a high sensitivity to interest rate changes as defined by the fund's effective duration, both according to Morningstar's rating system.

*89.92%  Fund Assets Covered

Regional Diversification

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AS OF 9/30/2014
U.S.
65.62%
Foreign
34.38%

Country Diversification

 7 More Information
AS OF 9/30/2014
USA
65.65%
Italy
3.68%
Canada
3.07%
United Kingdom
2.69%
Japan
1.98%
Venezuela
1.87%
Mexico
1.52%
France
1.47%
Jamaica
1.34%
Argentina
1.21%
Russia
1.15%
Indonesia
1.12%
Netherlands
1.10%
Turkey
1.04%

Currency Diversification

 7 More Information
AS OF 9/30/2014
US Dollar
87.42%
European Monetary Unit (Euro)
6.08%
Canadian Dollar
2.14%
UK Pound
2.02%
Japanese Yen
1.98%
Russian Ruble
0.08%
Indian Rupee
0.08%
Brazilian Real
0.07%
Mexican Peso
0.05%
Nigerian Naira
0.05%
Indonesian Rupiah
0.03%

Fund Facts

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Fiscal Year End
December
Fund Inception
5/1/1998
Fund Number
368
Fund Symbol
FSICX
Order Cutoff Time
04:00 PM EST

The "Mutual Funds" area at the top of each page allows access to mutual fund holdings with individual and joint Fidelity non-retirement accounts. Individual stock positions, ETFs and 529 funds are not available through this view. For the full list of your holdings visit Portfolio Summary.

Mutual Funds are priced as of the previous business day's market close when the market is open. Mutual fund positions are priced as of the official market close (typically 4p.m.) and prices are generally available between 5 p.m. and 6p.m.

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2013 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for fund performance, you should check the fund's current prospectus or other product materials for the most up-to-date information concerning applicable loads, fees and expenses.

Fees and Distributions

Expenses & Fees

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Distribution and/or service fee(12b-1) Fees
0.00%
Small Balance Fee 10

You can receive a prospectus from Fidelity by mail

See prospectus for more information on Fees, Expenses & Loads.

Minimums

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Initial Investment
$2,500.00
Additional Investment
$0.00
Initial IRA Investment
$2,500.00
Additional IRA Investment
$0.00
Initial Group Retirement Investment 5
$500.00
Additional Group Retirement Investment
$0.00
Required Balance
$2,000.00

Features

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Retirement Accounts
yes
Check Writing
no
Direct Deposit
yes
Automatic Account Builder
yes
Max Exchange Redemptions in a Year
yes
Simple IRA
yes

Distribution

Dividend History

Date Per Share Amount Reinvestment Price
9/30/14 $0.032189203 $10.98
8/31/14 $0.034428997 $11.23
7/31/14 $0.03480604 $11.16
6/30/14 $0.034196383 $11.28

Capital Gains History

Date Per Share Amount Reinvestment Price
12/13/13 $0.138 $10.87
2/15/13 $0.006 $11.29
12/14/12 $0.155 $11.38
2/10/12 $0.012 $11.02

Pricing

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AS OF 9/30/2014
NAV
$11.06
10/22/2014
12 Month Low-High
$10.84 - $11.28
Monthly Low-High
$10.98 - $11.20
On 9/30/2014
$10.98

Price History By Month

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Actual Values: Sep. 2014 to Sep. 2013

Close Low High
Sep $10.98 $10.98 $11.20
Aug $11.23 $11.13 $11.24
Jul $11.16 $11.16 $11.28
Jun $11.28 $11.19 $11.28
May $11.22 $11.12 $11.22
Apr $11.11 $11.03 $11.11
Mar $11.04 $10.97 $11.04
Feb $11.04 $10.88 $11.04
Jan $10.87 $10.85 $10.92
Dec $10.85 $10.84 $11.03
Nov $11.03 $10.97 $11.07
Oct $11.10 $10.94 $11.11
Sep $10.93 $10.76 $10.97

The "Mutual Funds" area at the top of each page allows access to mutual fund holdings with individual and joint Fidelity non-retirement accounts. Individual stock positions, ETFs and 529 funds are not available through this view. For the full list of your holdings visit Portfolio Summary.

Mutual Funds are priced as of the previous business day's market close when the market is open. Mutual fund positions are priced as of the official market close (typically 4p.m.) and prices are generally available between 5 p.m. and 6p.m.

Commentary

Third Quarter 2014 Summary

 

Overview

  • Fidelity® Strategic Income Fund targets a neutral strategic allocation of 40% high-yield debt, 30% U.S. government and investment-grade debt, 15% non-U.S. developed-markets debt and 15% emerging-markets debt.
  • The lead portfolio manager is responsible for asset allocation, as well as for cash management and risk monitoring, while specialized subportfolio managers are responsible for security selection in their respective areas of expertise.
  • The primary driver of returns is intended to be the strategic allocation among the four asset classes; the secondary driver is the security selection by the subportfolio managers; the tertiary driver of returns is the controlled opportunistic allocation changes to the neutral allocation.
  • For the quarter ending September 30, 2014, Fidelity Strategic Income Fund recorded a return of -1.77%, modestly underperforming the -1.62% result of the Fidelity Strategic Income Composite IndexSM.

Drivers of Fund Performance

  • During the quarter, security selection and asset allocation each had only minimal impact on the fund's performance versus its Composite index.
  • The high-yield bond market returned -1.92% during the quarter, as measured by The BofA Merrill LynchSM US High Yield Constrained Index. Investors sold high yield at a record pace amid rising geopolitical tension, unfavorable supply/demand dynamics and concern that economic growth would prompt the U.S. Federal Reserve to tighten monetary policy sooner than anticipated. Security selection within the high-yield subportfolio was the biggest contributor to relative performance, primarily due to security selection in the utilities sector. From a credit-quality standpoint, positioning among CCC-rated securities helped the most.
  • U.S. government bonds gained 0.32% during the quarter, as measured by the Barclays® U.S. Government Bond Index. The more defensive government bond segment was more attractive compared with higher-yielding categories, as investors remained cautious. Security selection within the subportfolio had a nominally positive effect on relative results; however, the U.S. government and investment-grade debt subportfolio represented the fund's largest underweighting and thus hurt comparative results.
  • The Citigroup® Non-U.S. G-7 Index, a measure of foreign major-markets government-issued debt, returned -4.66% for the period, as an appreciating U.S. dollar combined with weak global growth hampered the asset class. The fund's underweighting here lifted performance during the quarter, as did security selection within the subportfolio, particularly within Europe.
  • Emerging-markets bonds also posted a negative result, returning -1.65% as measured by the J.P. Morgan Emerging Markets Bond Index Global. Security selection within the subportfolio hurt the fund's relative results the most, mainly due to an overweighting in poor-performing Venezuela.

End-of-Quarter Positioning: 

  • The fund is tilted modestly toward riskier assets based on the portfolio managers' assessment of the global business cycle.
  • The fund also maintained overweighted positions in high-yield and emerging-markets debt, although we modestly decreased our stake in emerging-markets debt during the quarter.
  • We modestly increased U.S. government and investment-grade debt holdings during the quarter, although we remained underweighted in the asset class at quarter end.

Finally, we remain committed to a disciplined investment process in pursuit of strong long-term results for our shareholders.

Fund Manager(s)

More Information
Ford O'Neil since 6/1/2012 Franco Castagliuolo since 12/1/2009 Joanna Bewick since 4/1/2008 Bill Irving since 4/1/2008 David Simner since 7/1/2007 Jonathan Kelly since 4/1/2002 Mark Notkin since 4/9/1999

Strategy & Objective

Objective

Seeks a high level of current income. The fund may also seek capital appreciation.

Strategy

Investing primarily in debt securities by allocating assets among four general investment categories: high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities. The fund uses a neutral mix of approximately 40% high yield, 30% U.S. Government and investment-grade, 15% emerging markets, and 15% foreign developed markets. Engaging in transactions that have a leveraging effect on the fund.

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1. No Transaction Fee Fidelity funds are available without paying a trading fee to Fidelity or a sales load to the fund. However, the fund may charge a short-term trading or redemption fee to protect the interests of long-term shareholders of the fund. Shares are subject to the fund's management and operating expenses. See Expenses & Fees for more information.

2. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Life of fund figures are reported as of the commencement date to the period indicated and are cumulative if the fund is less than one year old. Total returns do not reflect the fund's [%] sales charge. If sales charges were included, total returns would have been lower.

3. The Morningstar Category Average is the average return for the peer group based on the returns of each individual fund within the group, for the period shown. This average assumes reinvestment of dividends.

4. This chart illustrates the performance of a hypothetical $10,000 investment made in this investment product (and a benchmark or category average, if shown) from the beginning date shown or on the inception date of the product (whichever is later). The inception date used for products with underlying funds, or multiple shares classes, or are offered as a separate account, strategy or sub account, may be the inception date of the underlying fund, the earliest share class of the product, or the date composite performance for the product was first made available. The product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Benchmark returns include reinvestment of capital gains and dividends, if any, but do not reflect any fees or expenses. It is not possible to invest in an index. Past performance is no guarantee of future results. This chart is not intended to imply any future performance of the investment product.

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6. A standard yield calculation developed by the Securities and Exchange Commission for bond funds. The yield is calculated by dividing the net investment income per share earned during the 30-day period by the maximum offering price per share on the last day of the period. The yield figure reflects the dividends and interest earned during the 30-day period, after the deduction of the fund's expenses. It is sometimes referred to as "SEC 30-Day Yield" or "standardized yield".

7. Any holdings, asset allocation, diversification breakdowns or other composition data shown are as of the date indicated and are subject to change at any time. They may not be representative of the fund's current or future investments. The Top Ten holdings do not include money market instruments or futures contracts, if any. Depository receipts are normally combined with the underlying security. Some breakdowns may be intentionally limited to a particular asset class or other subset of the fund's entire portfolio, particularly in multi-asset class funds where the attributes of the equity and fixed income portions are different.

Under the asset allocation section, international (or foreign) assets may be reported differently depending on how an investment option reports its holdings. Some do not report international (or foreign) holdings here, but instead report them in a "Regional Diversification" section. Some report them in this section in addition to the equity, bond and other allocation shown. Others report international (or foreign) holding as a subset of the equity and bond allocations shown. If the allocation without the foreign component equals (or rounds to) 100%, then international (or foreign) is a subset of the equity and bond percentage shown.

8. Percent Rank in Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. % Rank in Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges.

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