diff --git a/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py b/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
index a27d46c80..ca789886b 100644
--- a/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
+++ b/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
@@ -193,7 +193,7 @@ class ExtractedFact(BaseModel):
     occurred_start: str | None = Field(default=None, description="ISO timestamp for events")
     occurred_end: str | None = Field(default=None, description="ISO timestamp for event end")
     fact_type: Literal["world", "assistant"] = Field(
-        description="'world' = objective/external facts. 'assistant' = first-person actions, experiences, or observations by the speaker."
+        description="'world' = objective/external facts, including user preferences, rules, corrections, and constraints even when stated during a conversation. 'assistant' = actions, experiences, or observations the assistant/agent actually performed."
     )
     entities: list[Entity] | None = Field(default=None, description="People, places, concepts")
     causal_relations: list[FactCausalRelation] | None = Field(
@@ -296,7 +296,7 @@ class ExtractedFactVerbose(BaseModel):
     )
 
     fact_type: Literal["world", "assistant"] = Field(
-        description="'world' = objective/external facts about other people, events, general knowledge. 'assistant' = first-person actions, experiences, or observations by the speaker (e.g., 'I changed X', 'I discovered Y')."
+        description="'world' = objective/external facts about the user, other people, events, general knowledge, preferences, rules, corrections, or constraints. 'assistant' = actions, experiences, or observations the assistant/agent actually performed (e.g., 'I changed X', 'I discovered Y')."
     )
 
     entities: list[Entity] | None = Field(
@@ -346,7 +346,7 @@ class ExtractedFactNoCausal(BaseModel):
     occurred_start: str | None = Field(default=None, description="WHEN the event happened (ISO timestamp).")
     occurred_end: str | None = Field(default=None, description="WHEN the event ended (ISO timestamp).")
     fact_type: Literal["world", "assistant"] = Field(
-        description="'world' = about the user/others. 'assistant' = experience with assistant."
+        description="'world' = about the user/others, including user preferences, rules, corrections, and constraints. 'assistant' = actions or experiences the assistant/agent actually performed."
     )
     entities: list[Entity] | None = Field(
         default=None,
@@ -663,8 +663,8 @@ def _flush() -> None:
 - "conversation": Ongoing state, preference, trait (no dates)
 
 fact_type:
-- "world": About other people, external events, general knowledge, objective facts
-- "assistant": First-person actions, experiences, or observations by the speaker/author (e.g., "I changed X", "I discovered Y", "I debugged Z"). Also includes interactions with the user (requests, recommendations). If the narrator describes something they did, tried, learned, or decided — use "assistant".
+- "world": Objective/external facts, including the user's preferences, rules, corrections, constraints, plans, traits, or context. These stay "world" even when the user states them during an assistant interaction (e.g., "User prefers browser_navigate over web_search", "User corrected the project deadline").
+- "assistant": Actions, experiences, or observations the assistant/agent actually performed (e.g., "I changed X", "I discovered Y", "I debugged Z"). Use this for the assistant/agent doing, trying, learning, deciding, recommending, or responding — not merely for user facts mentioned in conversation.
 
 ══════════════════════════════════════════════════════════════════════════
 TEMPORAL HANDLING
@@ -766,7 +766,7 @@ def _flush() -> None:
 - Extract all entities (people, places, organizations, objects, concepts).
 - Extract temporal information (occurred_start, occurred_end, fact_kind, when).
 - Extract location (where) and people (who).
-- fact_type: use "world" unless the content is clearly an interaction with the assistant."""
+- fact_type: use "world" for user preferences, rules, corrections, constraints, traits, and other objective facts, even when stated during an assistant interaction. Use "assistant" only for actions or experiences the assistant/agent actually performed."""
 
 VERBATIM_FACT_EXTRACTION_PROMPT = _BASE_FACT_EXTRACTION_PROMPT.format(
     retain_mission_section="{retain_mission_section}",
@@ -867,8 +867,8 @@ def _flush() -> None:
 FACT TYPE
 ══════════════════════════════════════════════════════════════════════════
 
-- **world**: User's life, other people, events (would exist without this conversation)
-- **assistant**: Interactions with assistant (requests, recommendations, help)
+- **world**: User's life, preferences, rules, corrections, constraints, other people, and events (facts that would exist without this conversation)
+- **assistant**: Actions or experiences the assistant/agent actually performed while helping the user (requests, recommendations, help)
   ⚠️ CRITICAL for assistant facts: ALWAYS capture the user's request/question in the fact!
   Include: what the user asked, what problem they wanted solved, what context they provided
 
diff --git a/hindsight-api-slim/tests/test_chunking.py b/hindsight-api-slim/tests/test_chunking.py
index ea69a4656..e6e40f610 100644
--- a/hindsight-api-slim/tests/test_chunking.py
+++ b/hindsight-api-slim/tests/test_chunking.py
@@ -455,4 +455,3 @@ def test_merged_json_array_routes_to_conversation_chunking():
         assert isinstance(parsed, list), f"Chunk must be a JSON array: {chunk[:60]}"
         assert all(isinstance(e, dict) for e in parsed), f"Every element must be a dict: {chunk[:60]}"
         assert all("role" in e for e in parsed), f"Every element must have a role key: {chunk[:60]}"
-        
diff --git a/hindsight-api-slim/tests/test_fact_extraction_fact_type_prompt.py b/hindsight-api-slim/tests/test_fact_extraction_fact_type_prompt.py
new file mode 100644
index 000000000..8fe115477
--- /dev/null
+++ b/hindsight-api-slim/tests/test_fact_extraction_fact_type_prompt.py
@@ -0,0 +1,41 @@
+from unittest.mock import MagicMock
+
+from hindsight_api.engine.retain.fact_extraction import (
+    ExtractedFact,
+    ExtractedFactNoCausal,
+    ExtractedFactVerbose,
+    _build_extraction_prompt_and_schema,
+)
+
+
+def _baseline_config() -> MagicMock:
+    config = MagicMock()
+    config.entity_labels = None
+    config.entities_allow_free_form = True
+    config.retain_extraction_mode = "concise"
+    config.retain_extract_causal_links = False
+    config.retain_mission = None
+    config.retain_custom_instructions = None
+    config.llm_output_language = None
+    return config
+
+
+def test_concise_prompt_keeps_user_preferences_rules_and_corrections_world():
+    prompt, _ = _build_extraction_prompt_and_schema(_baseline_config())
+
+    assert '"world": Objective/external facts' in prompt
+    assert "user's preferences, rules, corrections, constraints" in prompt
+    assert 'These stay "world" even when the user states them during an assistant interaction' in prompt
+    assert "Use this for the assistant/agent doing" in prompt
+    assert "not merely for user facts mentioned in conversation" in prompt
+
+
+def test_fact_type_schema_descriptions_distinguish_user_facts_from_agent_actions():
+    for model in (ExtractedFact, ExtractedFactVerbose, ExtractedFactNoCausal):
+        description = model.model_fields["fact_type"].description
+
+        assert description is not None
+        assert "preferences" in description
+        assert "rules" in description
+        assert "corrections" in description
+        assert "assistant/agent actually performed" in description
diff --git a/hindsight-api-slim/tests/test_retain_append_mode.py b/hindsight-api-slim/tests/test_retain_append_mode.py
index d02b65b35..44060a2ee 100644
--- a/hindsight-api-slim/tests/test_retain_append_mode.py
+++ b/hindsight-api-slim/tests/test_retain_append_mode.py
@@ -254,10 +254,12 @@ async def test_append_mode_conversation_arrays_produce_valid_json(memory, reques
 
     try:
         # First retain - JSON conversation array
-        turn1 = json.dumps([
-            {"role": "user", "content": "Hello"},
-            {"role": "assistant", "content": "Hi there"},
-        ])
+        turn1 = json.dumps(
+            [
+                {"role": "user", "content": "Hello"},
+                {"role": "assistant", "content": "Hi there"},
+            ]
+        )
         await memory.retain_batch_async(
             bank_id=bank_id,
             contents=[
@@ -271,10 +273,12 @@ async def test_append_mode_conversation_arrays_produce_valid_json(memory, reques
         )
 
         # Second retain - append more turns
-        turn2 = json.dumps([
-            {"role": "user", "content": "How are you"},
-            {"role": "assistant", "content": "Doing well"},
-        ])
+        turn2 = json.dumps(
+            [
+                {"role": "user", "content": "How are you"},
+                {"role": "assistant", "content": "Doing well"},
+            ]
+        )
         await memory.retain_batch_async(
             bank_id=bank_id,
             contents=[
@@ -300,10 +304,12 @@ async def test_append_mode_conversation_arrays_produce_valid_json(memory, reques
         assert len(parsed) == 4, "Should contain all 4 messages from both retains"
 
         # Third retain - append again, verify no degradation
-        turn3 = json.dumps([
-            {"role": "user", "content": "What is new"},
-            {"role": "assistant", "content": "Not much"},
-        ])
+        turn3 = json.dumps(
+            [
+                {"role": "user", "content": "What is new"},
+                {"role": "assistant", "content": "Not much"},
+            ]
+        )
         await memory.retain_batch_async(
             bank_id=bank_id,
             contents=[
@@ -329,4 +335,3 @@ async def test_append_mode_conversation_arrays_produce_valid_json(memory, reques
 
     finally:
         await memory.delete_bank(bank_id, request_context=request_context)
-