Fidelity Short Term Treasury Bond Index - Help me Understand

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Topic Author
Denver_Inv
Posts: 30
Joined: Sat Aug 08, 2020 11:32 pm

Fidelity Short Term Treasury Bond Index - Help me Understand

Post by Denver_Inv »

I invested 6K in Fidelity Short Term Treasury Bond Index on Aug 01-2020. Now at the end of the month of Aug I see that the value has dropped to 5989 USD a drop of about 11 USD.

Please help me understand :

1. Why this drop ?
2. I have not got any interest credit . Was expecting SEC yield of 0.15 % ?

I am new to Bonds and am trying to understand how these work . Is it even worth doing this instead of having my money in Bank CD @ about 1 % ? I have about 100 K which is going to be available from CD and want to have a good understanding of how Bond fund works.

Thank you all for educating me with the basics. Pls see the enclosed screen shot.

Image
jimkinny
Posts: 1435
Joined: Sun Mar 14, 2010 1:51 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by jimkinny »

this article about bonds is from the boglehead wiki should answer your question plus give you additional info

https://www.bogleheads.org/wiki/Bonds:_advanced_topics
Topic Author
Denver_Inv
Posts: 30
Joined: Sat Aug 08, 2020 11:32 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by Denver_Inv »

How can I add an attachment image to my post to show the transactions in my account ?
muffins14
Posts: 354
Joined: Wed Oct 26, 2016 4:14 am

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by muffins14 »

Are sure you received no payment? Fidelity shows it paid $0.0103 per share on 8/31, which should have been about 56 cents for you. Maybe it hasn’t settled for you yet.

Keep in mind that bonds / bond funds/ bond ETFs are marketable securities, so the price can fluctuate, which is why you saw the small price change .
MrJedi
Posts: 343
Joined: Wed May 06, 2020 11:42 am

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by MrJedi »

If you look here you'll see that treasury rates have gone up slightly since August 1.

https://www.treasury.gov/resource-cente ... data=yield

So the treasuries you held have devalued to compensate for the lower interest they pay compared to current treasuries.
Topic Author
Denver_Inv
Posts: 30
Joined: Sat Aug 08, 2020 11:32 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by Denver_Inv »

muffins14 wrote: Tue Sep 01, 2020 9:59 am Are sure you received no payment? Fidelity shows it paid $0.0103 per share on 8/31, which should have been about 56 cents for you.

.
Where did you find the above information ?
tibbitts
Posts: 11852
Joined: Tue Feb 27, 2007 6:50 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by tibbitts »

muffins14 wrote: Tue Sep 01, 2020 9:59 am Maybe it hasn’t settled for you yet.
I have to say the whole "settlement" concept is difficult for me to understand. I don't understand why "settlement" should ever take more than milliseconds. But then I also don't understand why when I buy gas the charge isn't already on my credit card bill, ready for me to pay when I get home.
muffins14
Posts: 354
Joined: Wed Oct 26, 2016 4:14 am

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by muffins14 »

Denver_Inv wrote: Tue Sep 01, 2020 10:03 am
muffins14 wrote: Tue Sep 01, 2020 9:59 am Are sure you received no payment? Fidelity shows it paid $0.0103 per share on 8/31, which should have been about 56 cents for you.

.
Where did you find the above information ?
For me, I can open the fideity app and search for the fund, click something like “get quote” and you can scroll down to see distributions, or I’m sure you can see it on their site too.

https://fundresearch.fidelity.com/mutua ... /31635V216
dbr
Posts: 33842
Joined: Sun Mar 04, 2007 9:50 am

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by dbr »

Transactions in brokerage accounts are not instantaneous.
Topic Author
Denver_Inv
Posts: 30
Joined: Sat Aug 08, 2020 11:32 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by Denver_Inv »

I see that I have rcvd dividend of 4.95 as credit and than the same has been withdrawn as dividend reinvestment . Why is that ?
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AlabamaPaul
Posts: 106
Joined: Sat Jul 18, 2020 2:45 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by AlabamaPaul »

Denver_Inv wrote: Tue Sep 01, 2020 12:48 pm I see that I have rcvd dividend of 4.95 as credit and than the same has been withdrawn as dividend reinvestment . Why is that ?
The dividend was received and immediately reinvested into the fund. Reinvestment is likely standard, and you would need to change that manually inside your account if you didn't want that...
the way
Posts: 341
Joined: Sat Oct 26, 2019 6:00 pm

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by the way »

muffins14 wrote: Tue Sep 01, 2020 10:45 am
Denver_Inv wrote: Tue Sep 01, 2020 10:03 am
muffins14 wrote: Tue Sep 01, 2020 9:59 am Are sure you received no payment? Fidelity shows it paid $0.0103 per share on 8/31, which should have been about 56 cents for you.

.
Where did you find the above information ?
For me, I can open the fideity app and search for the fund, click something like “get quote” and you can scroll down to see distributions, or I’m sure you can see it on their site too.

https://fundresearch.fidelity.com/mutua ... /31635V216
Interesting that the distribution yield is almost 10x the SEC yield. That probably accounts for 1 cent of the drop in fund price.
MikeG62
Posts: 3078
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Location: New Jersey

Re: Fidelity Short Term Treasury Bond Index - Help me Understand

Post by MikeG62 »

the way wrote: Tue Sep 08, 2020 7:23 pm
muffins14 wrote: Tue Sep 01, 2020 10:45 am
Denver_Inv wrote: Tue Sep 01, 2020 10:03 am
muffins14 wrote: Tue Sep 01, 2020 9:59 am Are sure you received no payment? Fidelity shows it paid $0.0103 per share on 8/31, which should have been about 56 cents for you.

.
Where did you find the above information ?
For me, I can open the fideity app and search for the fund, click something like “get quote” and you can scroll down to see distributions, or I’m sure you can see it on their site too.

https://fundresearch.fidelity.com/mutua ... /31635V216
Interesting that the distribution yield is almost 10x the SEC yield. That probably accounts for 1 cent of the drop in fund price.
That is a big spread and made to look even worse because of the anemic SEC yield. This is why I keep repeating on these forums that people should put very little weight on distribution yield when looking at performance as it contains a healthy dose of return of principal.

Separately, IMHO short-term Treasuries are an awful investment at this time. Much better off in an online savings account or no penalty CD (or even shorter-term traditional CD) unless you are dealing with such large amounts that a portion of your investment is exposed beyond FDIC/NCUA insurance limits.
Real Knowledge Comes Only From Experience
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