accrued interest

the interest received from a security’s last interest payment date up to the current date or date of valuation; an investor who sells a security with accrued interest will not receive that interest until the next interest payment date after the sale; the buyer receives all interest from the last payment date, including any interest that accrued while the bond was owned by the prior investor; the buyer then pays the seller all interest that has accrued from the last payment date up to but not including the settlement date for the trade; in a bond ladder’s summary calculations, the accrued interest field refers to the sum of all accrued interest from the securities in the ladder that will need to be paid if the ladder is purchased on that day


agency bonds are issued by official U.S. government bodies (e.g., Tennessee Valley Authority (TVA); government sponsored entity (GSE) bonds are offered by lenders created by an act of Congress to assist groups of borrowers (e.g., farmers, ranchers, homeowners, mortgage lenders, etc.); the principal and interest of GSE bonds are not guaranteed by the U.S. government; Agency and GSE bonds are generally available in minimum denominations of $10,000, with subsequent investments in increments of $5,000; Fidelity makes these securities available in minimum denominations of $1,000, and subsequent investment increments of $1,000


a security distribution system in which the price is set, based on auction bids, at the lowest level that will raise the requisite funds

auction date

the date on which Treasury auction and Agency/GSE auction securities will be offered via Dutch auction

Auto Roll

a feature that provides customers with the ability to purchase certain eligible Treasury auction securities and/or new issue FDIC-insured certificates of deposit (CDs) with the proceeds of the principal of these securities at maturity automatically used to purchase a similar instrument; auto roll will continue to purchase a new security at the maturity of an older security unless the customer cancels the feature for that security, there is a material change to the Treasury auction schedule, or Fidelity is unable to find a replacement new issue CD that meets the initial size, duration and coupon frequency criteria of the maturing security

average coupon rate

the weighted-average coupon rates of all the bonds in a bond ladder

average price

the weighted-average price of the bonds in a bond ladder

average yield

the weighted-average yield to maturity for the bonds in a bond ladder; when searching Fidelity’s bond inventory, this amount represents the average yield for all securities offered by Fidelity that meet the search criteria entered for a particular ladder

average yield to worst

the lowest possible average yield of all bonds in a bond ladder if the worst possible bond repayment scenarios take place, reflecting the lower of the yield to maturity or the yield to call based on the most recent Third Party price


basis point

one one-hundredth (1/100 or 0.01) of one percent; used to express the yield


a proposal to purchase securities at a specified price; bids are infrequently available for municipal bonds and certificates of deposit (CDs) as compared to more liquid fixed income securities, such as U.S. Treasuries and corporate bonds


an interest‐bearing security for which the issuer agrees to pay the bondholder a specified sum of money, usually at specific intervals; that issuer can be the federal government (as in the case of Treasury bonds) or a local government (municipal bonds), government sponsored enterprises (like Fannie Mae), companies (corporate bonds) or even foreign governments or international corporations; the investor, or bond buyer, generally receives regular interest payments on the loan until the bond matures or is “called,” at which point the issuer repays you the principal; zero‐coupon bonds pay both the imputed interest and the principal at maturity

bond funds

bond funds are professionally managed portfolios that invest in individual fixed income securities; funds are guided by a stated objective, generally focusing on a particular sector, such as corporate or Treasury bonds; a broad category, such as investment grade or high yield securities; or a specific time horizon, such as short-, intermediate-, or long-term bonds

bond ladder

a bond ladder can help you build a portfolio of bonds that mature at staggered intervals; these intervals are the “rungs” of the ladder, which are designed to help create a consistent stream of income over time

bond type

the type of bond as delineated across the primary product sub-categories of corporates, municipals, Agencies/GSEs, Treasuries, or Certificates of Deposit; in the bond ladder tool, bond type indicates whether the ladder will invest in only municipal or taxable bonds; generally, tax-free municipal securities are considered inappropriate holdings for tax-advantaged accounts such as an IRAs and other retirement accounts; please consult your tax advisor for advice about your specific situation.

Build America Bonds (BAB)

a category of taxable municipal bonds which have no implied backing from the federal government and can be one of two types; the first type of Build America Bond provides a Federal subsidy through Federal tax credits to investors in the bonds; the second type of Build America Bond provides a Federal subsidy through a refundable tax credit paid to state or local governmental issuers by the Treasury Department and the Internal Revenue Service


call feature

a feature of a bond or other security that determines the terms under which it can be redeemed by the issuer before the scheduled maturity

call protection

provision of a bond that makes it non‐callable or not subject to a scheduled call, even though other early redemption provisions may exist as specified in the prospectus or official statement

call provision

a feature of a bond or other security that determines the terms under which it can be redeemed by the issuer before the scheduled maturity

call risk

the risk that a bond or other security may be redeemed by the issuer before the scheduled maturity, which may force the investor to reinvest at lower rates

call schedule

the list of dates on which a fixed-income security can be redeemed prior to maturity by the issuer; also includes the corresponding call prices


a bond or other security that may be redeemed by the issuer before the scheduled maturity; terms of this feature can be found in the bond’s call schedule

certificate of deposit (CD)

a debt instrument issued by commercial banks or thrifts to raise funds for business activities or to retire other debt; Fidelity offers a type of certificate of deposit called a brokered CD; CDs issued by FDIC-insured institutions and held in Fidelity accounts are generally insured up to $250,000 per account owner/per institution for non–retirement accounts and up to $250,000 per account owner/per institution aggregate limit for depository assets held in qualifying retirement accounts; additional information can be found on the FDIC website

certificate of deposit: inflation protected (CDIP)

certificate of deposit: inflation protected have their principal amount adjusted periodically to reflect changes in inflation; if prices (as measured by CPI) have risen 3%, the principal amount of the investment will also increase by 3%


the per-bond trading charge levied during a secondary market fixed-income security transactions, applied as per-bond markup or markdown to the purchase or selling price

conduit bonds

revenue bonds issued by state agencies, which are generally third-party entities that act on behalf of the actual borrowers, typically private nonprofit (501(c)(3)) entities; the third-party conduit borrower—not the issuing agency—is responsible for interest payments and principal repayments


an entity, typically the Federal Deposit Insurance Corporation, that may be appointed to take legal control over a financial institution and all of its assets

convertible bond

bonds that contains a provision allowing the holder to exchange the bond for a specified number of shares of a different security (usually common stock) issued by the same company that issued the bond; terms of conversion are disclosed at the time the bond is issued


a measure of the curvature of the relationship between bond prices and yields; it is typically used in conjunction with duration, to approximate the rate of change in a bond’s price given a change in interest rates; convexity can be used to improve the estimate of the percentage price change obtained using duration, particularly for a large change in interest rates

corporate bond

a debt security issued by a private corporation; interest is taxable and is generally paid according to a coupon rate set at the time the bond is issued; generally have a face value of $1,000 and a specific maturity date

corporate debt

a debt security issued by a private corporation; interest is taxable and is generally paid according to a coupon rate set at the time the bond is issued; generally have a face value of $1,000 and a specific maturity date

CorporateNotes ProgramSM

a program that offers fixed rate senior and subordinated, unsecured obligations from a variety of independent issuers on a weekly basis, with a range of maturities and structures available; maturities range from 9 months to 30 years for both callable and non-callable securities; CorporateNotes may be purchased in principal amounts as low as $1,000 and in additional increments of $1,000; the risks involved are similar to other corporate bond investments, including but not limited to credit risk, and interest rate risk


the interest rate a bond’s issuer promises to pay to the bondholder until maturity, or other redemption event, generally expressed as an annual percentage of the bond’s face value; for example, a bond with a 10% coupon will pay $100 per $1000 of the bond’s face value per year, subject to credit risk; when searching Fidelity’s secondary market fixed income offerings, customers can enter a minimum coupon, maximum coupon, or enter both to specify a range and refine their search; when viewing Fidelity’s fixed-income search results pages, the term “Step-Up” instead of a numeric coupon rate means the coupon will step up, or increase over time at pre-determined rates and dates in the future; clicking Step-Up will reveal the step-up schedule for that security

coupon frequency

the frequency with which a fixed-income security pays interest (e.g., quarterly, semi-annually, yearly); see also payment schedule

credit quality

a criteria used to evaluate the creditworthiness, or risk of default, of an individual fixed-income security; generally expressed through ratings provided by one of the credit ratings agencies

credit risk

the risk that the issuer of a fixed-income security may not be able to make regularly scheduled interest payments or repay the principal at maturity


an entity that extends credit to another entity by providing permission to borrow money; agreement generally includes the terms of the loan, such as interest rate, payment frequency, and date the principal the loan is due; in the context of bonds, an investor in bonds is described as a creditor of the entity that issued the bonds


measurement of the risk of default of an individual fixed-income security or the issuer of a fixed-income security; generally measured by one of the major ratings agencies


the nine-character alphanumeric identifier used to identify a U.S. or Canadian security


debt obligation/principal

an interest-bearing promise, to pay a specified sum of money (the principal amount) on a specific date; bonds are a form of debt obligation; there are many different types of bonds; a corporate bond is issued by a private corporation, generally has a face value of $1,000 and pays interest, which is taxable, according to a coupon rate; a government bond is issued by the U.S. Treasury and is explicitly guaranteed by the U.S. government; a municipal bond is issued by governmental subdivisions such as city, town or county, special district, as well as political subdivisions or agencies of states; interest from municipal bonds is generally exempt from federal income taxes and, in some cases, state and local taxes

debt refinancing

the act of retiring one debt issue and replacing it with another, usually at a lower interest rate, in order to reduce the issuer’s borrowing costs


if a bond issuer fails to make either an interest payment or principal repayment on its bonds as they come due, or fails to meet some other provision of the bond indenture, that bond is said to be in default; credit ratings agencies such as Moody’s and S&P rate bonds to indicate the issuer’s credit quality, and thus provide insight into the likelihood of default


after expressing an open indication of interest in a new issue fixed-income offering for which securities have not yet been allocated, this option allows customers to cancel that indication of interest and end participation in the offering; once an indication of interest has been deleted, that customer will not be eligible to receive an allocation of securities, even if the indication of interest had previously been confirmed; while customers can attempt to delete an indication of interest at any time before securities are allocated, deletions are performed on a best efforts basis; there is no guarantee that an indication of interest can be deleted, in whole or in part

depth of book

refers to the display of numerous bids and offers in a given security in addition to the best bid and offer price; allows market participants to assess the liquidity of a given security; enables customers to see beyond the best bid or offer price, which may be of a limited quantity; is useful for customers who wish to purchase larger quantities of a given security


the amount below the stated ‘face’ or par value when a fixed-income security (e.g. a bond) is bought or sold; for example, if a bond’s face value is $1,000 and it sells for $900, it was sold at a discount


a reduction in the rating awarded a debt or equity security; a credit agency downgrades the debt of a company, municipality, or governmental entity indicating a potential deterioration in the financial situation of the issuer and its ability to meet its obligations in full and/or on time.; a downgrade suggests investors are less certain to receive interest payments and return of capital

dummy CUSIP

temporary nine-character alphanumeric identifier used to identify a U.S. or Canadian security; for bonds, this displays for New Issue Certificates of Deposit (CDs) and New Issue Municipals; converts to a CUSIP on settlement


a quantitative measure that indicates the degree to which a bond or bond fund’s price will fluctuate in response to changes in comparable interest rates; if rates rise 1.00%, for example, a bond or fund with a 5-year duration is likely to lose about 5.00% of its value


electronic municipal market access (EMMA)

the official source for municipal disclosures and market data such as official statements, continuing disclosure documents and real-time trade price information

escrowed to maturity

bonds that are supported by escrow funds designed to make payments as outlined in the security’s original indenture; funds in the escrow account are used to pay the periodic coupon payments and the principal of the escrowed to maturity (ETM); typically the escrowed funds set aside for the ETM are invested in short-term, low-risk debt securities

estimated annual income (EAI)

estimate of annual income from a specific security position over the next rolling 12 months; calculated for U.S. government, corporate, and municipal bonds, and CDs by multiplying the coupon rate by the face value of the security; calculated for common stocks (including ADRs and REITs) and mutual funds using an Indicated Annual Dividend (IAD); calculated for fixed rate bonds (including treasury, agency, GSE, corporate, and municipal bonds), CDs, common stocks, ADRs, REITs, and mutual funds when available; not calculated for preferred stocks, ETFs, ETNs, UITs, international stocks, closed-end funds, and certain types of bonds

estimated yield (EY)

estimate of a specific security position’s annual yield for the next 12 months; calculated by dividing the estimated annual income (EAI) for the security position by the market value of that position, which may be higher or lower than the original purchase price

event risk

the risk that an event such as a natural or industrial disaster, a takeover, or a corporate restructuring could have an adverse effect on the price of a security and any associated cash flows from coupons or dividends

extraordinary redemption

a provision which allows a bond issuer the right to call its bonds before maturity if certain specified events occur (as specified in the offering statement), such as natural disasters,cancelled projects, to almost anything else


face value

the stated value of an investment at maturity; the face value of a corporate bond, for example, is typically $1,000; for bond ladders, face value is the stated aggregate value of the underlying securities at maturity; for example, if there are five rungs in the ladder with 20 bonds in each rung and each bond has a $1,000 face value, the total face value of the ladder is $100,000; also known as par value or par amount


an independent agency of the federal government, created in 1933, charged with preserving and promoting public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions up to applicable limits; by identifying, monitoring, and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails; further information on the FDIC and FDIC coverage may be found at fdic.gov

Financial Industry Regulatory Authority (FINRA)

the largest independent regulator for all securities firms doing business in the United States; FINRA’s mission is to protect America’s investors by making sure the securities industry operates fairly and honestly

fixed income

a type of asset class in which the investments provide a return in two possible forms; coupon paying bonds have fixed periodic payments and, at maturity, a return of principal; zero coupon bonds are sold at a discount and do not pay periodic coupon interest, but have a return of principal plus all accumulated compounded interest at maturity; with regard to buying and selling fixed-income securities in the secondary market or participating in new issue fixed-income offerings through Fidelity, fixed income may refer to municipal bonds, treasury bonds, treasury bills, treasury notes, treasury auctions, corporate bonds, agency/gse bonds, Fidelity CorporateNotes ProgramSM, and fixed-rate corporate securities

fixed rate capital securities

hybrid securities that combine the features of corporate bonds and preferred stock; generally have a stated maturity although some are perpetual, offer attractive yields, and usually pay monthly or quarterly interest or dividends that are fully taxable; tend to have higher yields than corporate bonds because they are subordinate in right of payment to all senior debt of the issuer; issued as shares, with one share being issued at an amount generally lower than the typical $1000 face value for corporate bonds, such as $10 or $25; generally, the minimum quantity for fixed rate capital securities is 100 shares, with additional investments available in 1‐share increments


government bond

debt obligations of the U.S. government that are issued with maturities of ten or more years; versus government bills issued at one year or less and government notes issued at one to ten years


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the quantity in which additional bonds can be purchased beyond the initial investment quantity; for example 5, meaning $5000 face value


a contract that explains the various terms, options and intricacies of a bond

indicated annual dividend (IAD)

estimate of a security’s dividend payments for the next 12 months; calculated using prior and/or declared dividends for that security; sourced from third-party vendors and derived using either a historical methodology (HM) or a projected methodology (PM), depending on available information; PM annualizes the most recent regular cash dividend; HM accumulates the regular cash dividends paid over the past twelve months; if there is less than one year of dividend history, the accumulated dividends are annualized; HM or PM figure, whichever is calculated, is then multiplied by the reported quantity of the security

indication of interest

a specific type of order, for a new issue security, submitted by a customer to let Fidelity know that they want to become eligible to receive an allocation of a new issue; information submitted includes the brokerage account from which the funds to pay for the securities will be deducted, the security’s CUSIP, and the maximum quantity of securities that the customer would be willing to purchase; by placing an indication of interest, customers are expressing their desire to participate in a new issue offering; unless the order is cancelled by the customer, they will participate in the allocation process, allocations may be made in whole, in part, or not at all; updates regarding the order are sent to the customer as an alert that is sent by email or viewable in the Service Message Center

inflation risk

the possibility that the value of assets or income will decrease as inflation shrinks the purchasing power of a currency; inflation causes money to decrease in value at some rate, and does so whether the money is invested or not


a third party (ie: Assured Guaranty Corp and Assured Guaranty Municipal Corp), other than the issuer, who guarantees the repayment of the principal and payment of coupon interest of a municipal bond in the event the issuer fails to do so, subject to the claims paying ability of the insurer; historically, the insurer’s credit rating was higher than the bond issuers; the credit crisis of recent years resulted in the downgrading of many bond insurers and the bankruptcy of others


the amount paid by a borrower to a creditor, or bondholder, as compensation for the use of borrowed money

interest income

the dollar amount of all interest earned on government and corporate debt obligations and short-term certificates of deposit, as well as interest earned from cash in a brokerage account; for bond ladders it represents the estimated annual income that will be received from the securities that make up the rung; the income is calculated by multiplying the coupon rate by the quantity of bonds (face value)

interest rate

the annual rate, expressed as a percentage of principal, payable for use of borrowed money

issue price

the price paid for fixed‐income securities purchased directly from the issuer; for example, a Treasury Auction bond purchased directly from the U.S. government would cost $1,000 at face value


a government, corporation, municipality, or agency that has issued a security (e.g., a bond) in order to raise capital or to repay other debt; the issuer goes to an underwriter to get their securities sold in the new issue market; for certificates of deposit (CDs), this is the bank that has issued the CD; in the case of fixed income securities, the issuer of the security is the primary determinant of the security’s characteristics (e.g., coupon interest rate, maturity, call features, etc.)


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market fluctuation

the rise or fall in a security’s price or portfolio’s value within a short-term period; may be slight or dramatic depending on market and other conditions

market value

the value of a security or a portfolio of securities based on the current market price; an indication of the value of all securities in a bond ladder, based on the third party evaluated price from the prior business day

material events

the disclosure of certain enumerated events affecting a municipal security; these events include the following, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves; (4) unscheduled draws on credit enhancements; (5) substitution of credit or liquidity providers; (6) adverse tax events affecting the tax-exempt status of the security; (7) modifications to rights of securities holders; (8) bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment; (11) rating changes; (12) failure to provide annual financial information as required; the MSRB, Electronic Municipal Market Access (a.k.a. EMMA) provides free access to municipal disclosures, market data and education

maturity, maturity date(s)

the date on which the principal amount of a fixed-income security is scheduled to become due and payable, typically along with any final coupon payment; it is also a list of the maturity dates on which individual bonds issued as part of a new issue municipal bond offering will mature; for example, if the issuer is offering 25 bonds and the maturity dates for the individual bonds range over a 10-year period, one might see 8/4/2002, 2003-2005, 2007, 2008, 2009, 2010; this would indicate that the securities mature on 8/4 of the years listed


the highest value that can be specified when refining a particular search for fixed-income secondary market offerings; for example, the maximum coupon or ask price


the lowest value that can be specified when refining a particular search for fixed-income secondary market offerings; for example, the minimum coupon or ask price


an independent organization that assigns credit ratings to debt instruments and securities to help investors assess credit risk

municipal bond

securities issued by local governmental subdivisions such as cities, towns, villages, counties or special districts, as well as securities issued by states and political subdivisions or agencies of states; a prime feature of these securities is that interest on them is generally exempt from federal income taxes and, in some cases, state and local taxes too

municipal general obligation bond

a type of municipal bond backed by the full faith, credit, and taxing power of the issuer, specifically its ability to collect taxes; only entities that have the right to levy and collect taxes can issue general obligation bonds; certain governmental entities are subject to legal limits on the amount of taxes that they can impose, and their issues are called limited-tax general obligation bonds; unlimited-tax bonds are issued by government entities that are not subject to those limits

municipal revenue bond

a bond that is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged; payable from identified sources of revenue and do not permit the bondholders to compel taxation or legislative appropriation of funds not pledged for payment of debt service; pledged revenues may be derived from operation of the financed project, grants and excise or other specified non-ad-valorem taxes; generally, no voter approval is required prior to issuance of such obligations


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a proposal to sell securities at a specified price

offer price

the price at which a security may be purchased; conversely, bid price is the price at which a security may be sold

open order

an order status indicating that an order has been placed and that no part of that order has been executed

Original Issue Discount (OID)

the difference between the stated redemption price at maturity (if greater than one year) and the issue price of a fixed income security attributable to the selected tax year; NOTE: Tax reporting of OID obligations is complex; if acquisition or bond premium is paid during the purchase, or if the obligation is a stripped bond or stripped coupon, the investor must compute the proper amount of OID; refer to IRS Publication 1212, List of Original Issue Discount Instruments, to calculate the correct OID



the stated value of an investment at maturity; includes bonds, life insurance policies, bank notes, currency, some stocks, and other securities; typically $1,000 for a corporate bond

par value

the stated value of an investment at maturity; includes bonds, life insurance policies, bank notes, currency, some stocks, and other securities; typically $1,000 for a corporate bond

participation rate

the extent to which an investor will participate in the potential appreciation or depreciation of an underlying index or basket of securities; generally a feature of structured products; if the participation rate of the structured product is less than 100%, the investor will realize a return that is less than the return of the linked index or customized basket; for example, if the participation rate is 80%, the investor will receive only 80% of any positive return on the index or basket, assuming no other limits on return potential; the participation rate will vary by product, and factors such as index type, maturity, and caps affect the rate

payment schedule

the frequency with which a fixed-income security pays interest (e.g., monthly, quarterly, semi-annually, yearly)

preferred stock

stocks that pay a fixed dividend; have dividend and asset preference over common stocks, but behind debt in the case of bankruptcy; generally does not come with voting rights; either perpetual (have no maturity) or maturities of 30 years or more; can be callable


the amount above the stated ‘face’ or par value when a fixed-income security (e.g., a bond) is bought or sold; for example, if a bond’s face value is $1,000 and it sells for $1,200, it was sold at a premium

pre-refunded bonds

a municipal bond that is secured by an escrow fund; the escrow fund comes from the issuer floating a second bond issue and using the proceeds from that second bond issue to purchase government obligations, typically U.S. Treasuries, proceeds from the second bond issue create an escrow fund to mature at the first call date of the first bond issue to pre-refund that issue; bond issuers will typically do this during times of lower interest rates to lower their interest costs

pricing date

for a new issue fixed-income security, the date on which the price was set

principal repayment

the payment of the face value of a bond or CD by the issuer; this can be due to the securities reaching maturity date, or because the issuer redeemed the securities prior to maturity due to a call or other form or redemption


a legal document required by the Securities and Exchange Commission (SEC) that discloses an investment’s objectives, past performance, and other information to parties considering investing in financial instruments such as stocks, bonds, mutual funds, etc.


a portion of a bond’s covenant that determines certain characteristics about the bond, such as the conditions under which it can be called or redeemed by the issuer, or the rate and price at which it can be converted into common stock (if applicable)

puttable bond

a type of bond that gives the holder with the right to require an issuer to repurchase the bond, allowing the holder to purchase a higher coupon bond with the proceeds received from exercising the put option; puts can generally be exercised on pre-determined dates; customers are encouraged to read the prospectus to understand the type of put feature and any associated limitations


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designations assigned by an organization (such as Moody’s and S&P) to give relative indications of credit quality; in the case of a municipal bond where the repayment of principal or coupon interest is not guaranteed by a third‐party, the ratings provided by Moody’s and S&P indicate each organization’s assessment of the relative credit risk of the issuer of that bond; for municipal bonds where the repayment of the principal and payment of coupon interest is guaranteed by a third‐party (insured municipal bond), the rating reflected may be that of the insurer; in the case of insured bonds, evaluating the rating of the insurer as well as the issuer provides a more complete assessment of the relative credit risk of that bond


the act of an issuer calling, or purchasing a fixed-income security from the holder, generally at face value, prior to the stated maturity date; the bond indenture can provide details on possible redemptions


the act of an issuer calling, or purchasing a fixed-income security from the holder, generally at face value, prior to the stated maturity date; the bond indenture can provide details on possible redemptions


the act of taking proceeds from an investment, such as a dividend, interest payment, principal repayment, or capital gain, and using them to repurchase additional shares or units


one of the bonds that make up a bond ladder; each bond represents a rung in the ladder


secondary market

a market where securities are bought and sold between investors, as opposed to investors purchasing securities directly from the issuers; secondary market activity generally takes place on a major exchange, such as the New York Stock Exchange, or on electronic communications networks (ECNs)


refers to the area of the economy from which a corporate bond issuer primarily derives its revenues, such as financial or industrial. Within each Sector are Industry Groups; for example, chemical and petroleum would be Industry Groups under the industrial Sector; the Sector and Industry Groupings are relatively static, although the inventory available within a given Grouping changes subject to market activity; NOTE: There may be cases when certain bonds are not classified, in which case searching by all sectors will yield the most results

sovereign debt

fixed-income securities issued by a national government in that country’s local currency; in addition to the credit risks presented by the issue and the issuing country, may also be subject to currency risk

Standard & Poor’s (S&P) Corporation

an independent company that provides investors with market intelligence in the form of credit ratings, indices, investment research and risk evaluations and solutions

standard market session

for equities: 9:30 a.m. to 4:00 p.m. ET when U.S. markets and exchanges (e.g., NASDAQ and NYSE) are generally open for trading; for bonds: 8:00 a.m. to 5:00 p.m. ET, when over-the-counter markets are open for trading (bond trading hours may vary based on marketplace participation)


this can refer to either the two-character abbreviation for the state where a driver’s license was issued, provided during Fidelity’s Electronic Funds Transfer online setup; or a way to specify the state where bonds are issued when refining a search of municipal bond offerings; for bond ladders, customers can search Fidelity’s municipal bond offerings inventory by selecting the state where the bonds are issued to refine their search

step-up rate

see coupon

structured product

an investment vehicle derived from a single security, a basket of securities, an index, a commodity, a debt issuance and/or a foreign currency; subject to the risk of default by the issuer; intended to be held until maturity; investors who need to sell a structured product prior to maturity may be subject to a significant loss; the potential return on structured products is subject to market volatility; not all structured products are FDIC insured; the issuers of structured products may choose to hedge their obligations by entering into derivatives; may be linked to one or more commodities subjecting you to risks relating to commodities; may be linked to a foreign currency or currency basket, subjecting you to foreign currency risks

survivor’s option

a feature of certain debt instruments that allow for the estate of a deceased investor to “put back” or redeem that instrument without penalty; bonds that carry a survivor’s option usually redeem for par value when the survivor’s option is exercised; in either case the benefit of the survivor’s option cannot be realized unless the original investor in the asset has died; because investor mortality risk must be taken into account when underwriting assets that carry a survivor’s option, these assets are more complex and expensive to issue; also known as a “death put”


tax-exempt income

interest from municipal bonds as well as distributions from mutual funds that qualify as exempt interest dividends; this income is generally not subject to regular federal income taxes; note that Fidelity reports this information to the IRS, and may be required to report the information to tax authorities in California among other states; the total amount or a portion of tax-exempt income (reported as specified private activity bond interest) must be taken into account when computing the federal Alternative Minimum Tax (AMT) applicable to individuals and may be subject to state and local taxes; you are required to report tax-exempt income on Form 1040, and may be required to report it on your state tax return as well


an indicator of how long a security position or lot was held; possible values are Long: held for more than 1 year; Non-Reportable: lot or position was closed as the result of a transaction other than a sale; no reportable gain/loss was reported, the holding period and resulting term are not reported; Short: held for 1 year or less; and Unknown: Fidelity does not know how long the position or lot was held; this state typically exists because the shares were transferred to Fidelity from another institution and the holding period prior to the transfer was not communicated; for fixed-income securities, this is the period of time from the security’s issue date until the maturity date; for example, for a 10-year corporate bond the term is 10 years

term to maturity

the length of time, in months or years, from the issue date to the maturity date for a bond or certificate of deposit (CD)

third-party providers

Fidelity’s fixed income inventory is composed of offerings from Fidelity Capital Markets and other third-party providers; Fidelity may source bonds directly from national and regional broker dealers or use national and regional broker dealers that are affiliated with BondDesk, Knight BondPoint, and The MuniCenter offering platforms; in all cases third-party inventory offerings are denoted with an asterisk * next to the issuer name; inventory not marked with an asterisk is Fidelity Capital Markets’ owned inventory; note that Fidelity’s combined inventory will generally not represent the universe of outstanding securities of a given bond type


Treasury Income Growth Receipts; U.S. Government-backed bonds that have been stripped of their coupons and sold at a deep discount; discontinued in 1986 when replaced by treasury STRIPS

total par value

total par or face value of all of the bond and CD holdings, which make up a bond ladder; this includes any existing positions that may be included in the ladder


debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and/or refund outstanding debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero-coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions

treasury auctions

the initial sale of U.S. debt obligations and new issues, offered and purchased directly from the U.S. government at a face value set at auction; these securities are auctioned in a single-priced, Dutch auction; auctions are held with the following frequencies: Treasury bills with one-month (30 day), three-month (90 day), and six-month (180 day) maturities are auctioned weekly; treasury notes with two- and five-year maturities are auctioned monthly; Notes with three-year maturities are auctioned in February, May, August, and November; treasury bonds with 10-year maturities are auctioned in February, May, August, and November. Treasury Inflation Protected Securities (TIPS) are issued in 5-, 10-, and 20-year maturities and are auctioned in January, April, July, and October

treasury bills

short-term debt obligations of the U.S. government issued with maturities up to one year; T-bills are sold at a discount to face value and coupon interest is accrued, but not paid, until maturity; interest income is subject to federal taxes, but exempt from state and local taxes; interest income may also be subject to the Alternative Minimum Tax (AMT)

Treasury bonds

debt obligations of the U.S. Government with maturities of 10 years or longer; coupon interest for Treasury bonds is exempt from state and local taxes, but is federally taxable; interest income may also be subject to alternative minimum tax

Treasury inflation protected securities (TIPS)

a type of Treasury note that adjusts for inflation by providing inflation compensation in addition to the coupon; the inflation component, affecting principal, is based on the Consumer Price Index (CPI), adjusting it upwards for inflation or downwards for deflation; the adjustment impacts semi-annual interest paid and the principal at maturity; since TIPS’ principal adjusts semi-annually, the coupon varies as well; at maturity, a TIPS pays the greater of the adjusted or original principal; this provision protects the investor from the loss of any principal in the event of a sustained period of deflation; investors in TIPS sacrifice some yield as a trade-off for the inflation protection; the inflation adjustment is federally taxable on an annual basis, although not paid out until maturity

Treasury inflation-protected securities (TRACE)

the Trade Reporting and Compliance Engine (TRACE) is the FINRA-developed vehicle that facilitates the mandatory reporting of over the counter secondary market transactions in eligible fixed income securities; all broker/dealers who are FINRA member firms have an obligation to report transactions in corporate bonds to TRACE under an SEC approved set of rules

treasury notes

debt obligations of the U.S. government, earning a fixed rate of interest, with maturities ranging from 1 to 10 years; interest is exempt from state and local taxes, but is subject to federal tax; interest income may also be subject to the Alternative Minimum Tax

treasury security

debt obligations of the U.S. government that are issued at various intervals and with various maturities


designates the account position status or a category of bond; account position status types are: cash, margin, short, legal, and when issued; categories of bonds are: corporate bonds include senior securities, which obligate the issuer to remit payment before repaying its other obligations, or convertible securities, which may be exchanged for a fixed number of another security (i.e. common stock) at a pre-set price; municipal bonds include revenue bonds, which fund particular public works projects and are backed by the revenues collected from those projects, and general obligation bonds, which are backed by the full faith, credit, and taxing power of the issuer; there are also US Treasury and Agency/GSE


use of proceeds

the area or activities to which the funds raised from a municipal bond issue will be directed and, in turn, the source of future bond interest payments and principal repayment; for general obligation bonds, funds raised may be for general purposes, both operating and infrastructure, and payments are secured by the general taxing power of the issuer — usually a state, town, or city; revenue bonds are categorized under terms such as “Utilities” or “Transportation”


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the percentage of return an investor receives based on the amount invested or on the current market value of holdings; it is expressed as an annual percentage rate; yield stated is the yield to worst — the yield if the worst possible bond repayment takes place, reflecting the lower of the yield to maturity or the yield to call based on the previous close

yield curves

the relationship between interest rates and time, determined by plotting the yields of all or as many bonds of similar credit quality (eg: Treasuries or AA-rated Corporates), against their maturities; yield curves typically slope upward since longer maturities normally have higher yields, although it can be flat or even inverted; the Fixed Income Search Results Scattergraph shows several smoothed yield curves for different fixed-income product types and credit qualities; these are based on bonds that Fidelity recognizes and are not equal to the entire universe of bonds, which is significantly larger than the number of bonds offered by Fidelity on any given day

yield to maturity

the rate of return an investor receives if an investment is held to the maturity date

yield to worst

the lowest potential yield that can be received on a bond without the issuer actually defaulting; calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if any in-whole mandatory redemptive provisions are exercised by the issuer; partial redemptive provisions (such as sinking funds) are not included in yield to worst calculations; the yield to worst metric is used to evaluate the worst-case scenario for yield to help investors manage risks and ensure that specific income requirements will still be met even in the worst scenarios


zero-coupon bond

a bond where no periodic interest payments are made; the investor purchases the bond at a discounted price and receives one payment at maturity that usually includes interest; they have higher price volatility than coupon bonds as a result of interest rate changes