Fidelity Enhanced High Yield ETF

Fidelity Enhanced High Yield ETF (FDHY) is an actively managed fund of below-investment-grade corporate bonds, often called junk bonds. It picks bonds with a computer-driven research process and uses the ICE BofA BB-B US High Yield Constrained Index as a guide. Its trailing 12-month yield was 6.61% as of October 27, 2026, paid monthly. Its 0.35% expense ratio is below the 0.45% average of similar funds but well above SPHY's 0.05%.

• Over the year to Oct 27, 2026, FDHY returned +3.4%, 2nd of 8 among similar funds.
• Its 5-year annualized return was +3.7%.
• In the 2020 COVID crash it fell 20% and regained its old high 2.4 months after the low.
• Its worst full calendar year was 2022 (-11.3%); its best was 2019 (+16.9%).
• The deepest fall in its price history was 20% (Feb 18, 2020 to Mar 23, 2020), recovered by Jun 8, 2020.

As of Aug 31, 2026, the fund held 296 securities; the ten largest made up 9.83% of assets, and 9.19% sat in cash and money-market holdings.

The bonds mature in 6 years on average (weighted by size), with an average coupon of 7.03%.

• Over the three months to Aug 31, 2026, investors added a net $85.6M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.40%, -0.13%, +1.02%.

FDHY is actively managed, not an index fund. Fidelity picks the bonds. It uses the ICE BofA BB-B US High Yield Constrained Index as a guide to credit quality and risk, and it aims to beat that index's return. At least 80% of assets normally go into high yield, or "junk," bonds. These are bonds rated below investment grade (below BBB-). Most are rated BB or B, the upper tiers of junk. The fund can also own lower-rated bonds, troubled companies and foreign issuers.

Fidelity picks bonds with a computer-driven (quantitative) process. Its research weighs factors tied to long-term returns, such as valuation, quality and momentum. It then applies its own portfolio construction and risk controls. The result is many small positions. As of August 31, 2026, the fund had 296 holdings. The largest, a 9.875% EnQuest bond due 2031, was about 1% of assets, and the top 10 totaled 9.83%. The fund may use derivatives, which are contracts whose value tracks other assets, but it held none.

Because there is no index to copy, there is no set rebalancing date. Trades follow the model and the managers' judgment. Portfolio turnover, roughly the share of holdings replaced in a year, was 55%. When large traders create or redeem shares, the fund may pay or accept cash rather than bonds. That can make it less tax-efficient than ETFs that hand over bonds instead.

• FDHY charges 0.35% a year, versus an average of 0.45% for the similar funds below (3rd of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $36 in the first year and $443 over 10 years (assuming a 5% annual return).

FDHY's main job is high monthly income from junk bonds, and it carries more credit risk than a core bond fund.

FDHY could add monthly income to a portfolio. Its trailing 12-month yield was 6.61% as of October 27, 2026, and its 0.35% expense ratio works out to about $36 in the first year on $10,000 under the SEC's standard example. The trade-off is sharp drops in sell-offs. The fund launched in 2018, so it has no 2008 record. In the 2020 COVID crash it fell 20% in about a month, then recovered by June 5, 2020. In 2022 it fell 16.4% and did not recover until March 13, 2024, a span of 17.5 months. It lost 11.58% that calendar year, its worst. A retiree drawing cash in a year like that might have to sell shares at low prices. Past results don't predict future ones, and a retirement plan works best when judged across the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).