Fidelity Investment Grade Securitized ETF

Fidelity Investment Grade Securitized ETF (FSEC) is an actively managed bond fund. It holds mostly mortgage-backed securities, which are bundles of home loans backed by Ginnie Mae, Fannie Mae and Freddie Mac. It pays income monthly, with a trailing yield of 4.62% as of October 27, 2026. Its 0.36% expense ratio is well above that of mortgage-bond rivals such as VMBS (0.03%). Its three-year return was slightly ahead of theirs as of late October 2026.

• Over the year to Oct 27, 2026, FSEC returned -0.7%, 5th of 8 among similar funds.
• Its 5-year annualized return was +0.2%.
• Its worst full calendar year was 2022 (-12.6%); its best was 2025 (+8.4%).
• The deepest fall in its price history was 18% (Aug 3, 2021 to Oct 24, 2022), recovered by Oct 14, 2025.

As of Aug 31, 2026, the fund held 1,140 securities; the ten largest made up 33.52% of assets, and 2.91% sat in cash and money-market holdings.

The bonds mature in 23.6 years on average (weighted by size), with an average coupon of 4%.

• Over the three months to Aug 31, 2026, investors added a net $253.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.20%, -1.19%, +0.42%.

FSEC does not track an index. Fidelity's managers aim for a high level of current income. They normally put at least 80% of assets into investment-grade securitized debt. These are interests in pools of mortgages, loans or other receivables, rated at least BBB- by one rating agency or judged to be of similar quality. The managers keep the fund's overall interest-rate risk close to that of the Bloomberg U.S. Securitized Index. They choose sectors, maturities and individual bonds based on credit quality, valuation and trading opportunities. They may also buy some junk bonds and foreign issuers.

As of August 31, 2026, the fund had 1,140 holdings, and the top ten made up 33.5% of assets. The largest positions are "to be announced" (TBA) contracts, which are agreements to buy agency mortgage pools at a later date. The three largest were Ginnie Mae II 5.5% pools for September 2056 (6.3%) and October 2056 (5.0%), and a 30-year UMBS 2% pool (4.7%). These forward trades, along with 52 derivative positions such as interest-rate swaps, pushed bond exposure to about 139% of net assets. That has a leveraging effect.

Rolling TBA contracts from month to month helps explain the 620% portfolio turnover. High turnover can raise trading costs and capital gains. The fund may also use cash for creations and redemptions, which can make it less tax-efficient than ETFs that trade fully in-kind.

• FSEC charges 0.36% a year, versus an average of 0.27% for the similar funds below (6th of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $37 in the first year and $456 over 10 years (assuming a 5% annual return).

FSEC pays monthly income from a portfolio made up mostly of mortgage bonds backed by government-sponsored enterprises and government agencies.

FSEC could add monthly income and a bond sleeve made up mostly of agency mortgage bonds. Its trailing yield was 4.62% ($1.97 per share) as of October 27, 2026. It is not a shelter from rising rates. It launched in March 2021, so it missed the 2008 and 2020 crashes. In 2022 it lost 12.57%, according to its prospectus. Its deepest drop was 18%, from August 2021 to October 2022, and it took about 36 months to recover, in October 2025. A retiree who had to sell shares during that stretch would have locked in losses. Costs are higher than for many mortgage-bond peers: 0.36% a year. In the SEC's standard $10,000 example, that comes to $37 in the first year and $456 over ten years. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

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