Fidelity Preferred Securities & Income ETF (FPFD US) – Portfolio Construction Methodology

The investment approach informing the actively managed Fidelity Preferred Securities & Income ETF seeks high total return by investing ≥80% in preferred and other income-producing securities across par structures (listed and unlisted) and geographies, with a defined concentration in financial-sector issuers. Fidelity applies fundamental research to assess issuer earnings power, capitalization, and downside resilience, integrating security-level structure (fixed, floating, fixed-to-float, convertibles, hybrids, CoCos), call schedules, and relative value versus capital-structure peers. The portfolio typically emphasizes securities rated ≥BB or comparable quality, but may hold below-investment-grade where compensated for credit and structural risks; as a non-diversified fund it may carry larger single-issuer weights where conviction and liquidity allow. Position sizing and sector exposure target balanced rate and credit sensitivity; derivatives and ETFs may be used tactically for exposure calibration. Rebalancing is ongoing, with sells driven by deteriorating credit, adverse structural optionality, or eroded risk-adjusted yield.

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