Fidelity Investments: Morningstar Fixed Income Manager of the Year

Morningstar's Fund Manager of the Year award for 2011 recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors.

To qualify for the award, managers' funds must not only have posted impressive returns for the year, but must also have a record of delivering outstanding long-term performance and of aligning their interests with those of shareholders.

In Morningstar's Fixed Income category, three of the five finalists for this year's award are from Fidelity. In addition to Carlson, Bill Irving, Franco Castagliulo and Fidelity's Taxable Bond Management Team were named for Fidelity GNMA Fund (FGMNX), and Jamie Pagliocco and Fidelity's Municipal Bond Management Team were named for Fidelity Tax-Free Bond Fund (FTABX).

Emerging markets are countries that have an emerging stock market as defined by the Morgan Stanley Capital International Emerging Markets Index, countries or markets with low- to middle-income economies as classified by the World Bank, and other countries or markets with similar emerging characteristics. Fidelity New Markets Income Fund (inception May 1993) normally invests at least 80% of assets in securities of issuers in emerging markets, and other investments tied economically to emerging markets. The fund seeks high current income, and as a secondary objective also seeks capital appreciation.

In recognizing John Carlson, Morningstar's Eric Jacobson stated, "Carlson has been skippering this portfolio since 1995, making him among the category's most senior and experienced leaders, with several emerging-markets crises under his belt. He's also been among the most successful. Carlson has been emphatic about sticking with his discipline over the years, and it paid off in 2011 when, contrary to most peer investors, Carlson cut the fund's non-dollar and corporate exposures and increased exposure to U.S. Treasuries."

Ronald P. O'Hanley, president of Fidelity Asset Management, said, "Not only does this award recognize John for his incredible stewardship on the fund, but, just as importantly, it recognizes the tremendous fixed income organization we have assembled, an organization that is positioned to help us meet the rapidly evolving fixed income needs of our retail and institutional clients."

Past performance is no guarantee of future results.

Diversification does not ensure a profit or guarantee against loss.

The securities of smaller, less well-known companies can be more volatile than those of larger companies.

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments, all of which are magnified in emerging markets.

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. The fund may have additional volatility because it can invest a significant portion of assets in securities of a small number of individual issuers.

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.

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. Interest rate increases can cause the price of a debt security to decrease. A portion of the dividends you receive may be subject to federal, state, or local income tax or may be subject to the federal alternative minimum tax. Leverage can increase market exposure and magnify investment risk.

The Manager of the Year award is presented each year to recognize a manger's past achievements. Morningstar fund analysts specializing in the fixed income field narrow the universe for the award to five nominees, and the winner is then selected by Morningstar's entire team of mutual fund analysts. The award is presented to fund managers who have distinguished themselves over the past calendar year and have achieved strong risk-adjusted historical performance through the careful execution of a solid investment strategy and responsible fund stewardship. Past performance is no guarantee of future results.

© 2012 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; 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. Past performance is no guarantee of future results.

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