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Summary and Conclusion
 Most
actively managed bond funds focus primarily on a single area of the bond market
such as corporate or government bonds, or focus on a "class" of bonds such
as investment grade bonds which encompasses both high-grade corporate bonds
as well as government bonds. While there are some bond index funds that represent
multiple areas of the bond market, Fidelity Strategic Income is part of a small class of fixed-income funds called multi-sector funds that offer investors both exposure to multiple areas of the bond market as well as actively managed asset allocation among those areas.
Fidelity Strategic Income is particularly attractive in that in one fund you get exposure to three areas that would typically occupy more of a "specialist" role in the bond portion of a portfolio, with a "neutral" weighting of 40% in U.S. High-Yield Bonds; 15% in Foreign Developed Market Bonds; and 15% in Emerging Market Bonds. With 55% allocated to areas with substantial "credit risk" (High-Yield and Emerging Market) the fund could be quite volatile, so this is balanced by a neutral weight of 30% in the most credit-worthy of all bond sectors, U.S. Treasuries.
The "strategic" part of the fund is in the very capable hands of Manager Bill Eigen, who is responsible for determining the fund's allocations to those four sectors. Bill shifts the fund's assets away from the neutral mix towards those areas his research and analysis suggests offer the more attractive risk and reward opportunities. Bill is supported by four other Fidelity managers, one for each sector, who handle the individual bond selection.
Fidelity Strategic Income is a great way to diversify a bond portfolio into some
more "specialized" areas of the bond market. Given our expectations for a falling
dollar (see Eric's latest Portfolio
Manager's Report), the fund's exposure to foreign debt is particularly
attractive.  | 
