November 2007 Jurrien Timmer Director of Market Research Fidelity
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Global Asset Allocation November 2007 Jurrien Timmer Director of Market Research Fidelity Investments The information presented reflects the opinions of Jurrien Timmer, Director of Market Research, for Fidelity Management & Research Company as of November 14, 2007. These opinions do not necessarily represent the views of Fidelity or any other person in the Fidelity organization and are subject to change at any time based upon market or other conditions. Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. As with all of your investments through Fidelity, you must make your own determination whether an investment in any particular security or fund is consistent with your investment objectives, risk tolerance, financial situation, and your evaluation of the investment option. Fidelity is not recommending or endorsing any particular investment option by mentioning it in this presentation or by making it available to its customers. This information is provided for educational purposes only, and you should bear in mind that laws of a particular state and your particular situation may affect this information. FOR INVESTMENT PROFESSIONALS ASSET ALLOCATION TACTICAL STRATEGIC CORE FUNDAMENTAL GLOBALIZATION STOCKS Earnings & Valuation Interest Rates & Inflation U.S. INT’L Emerging Markets EM Commodities Economic Cycle LIQUIDITY BONDS TECHNICAL Inv Grade High Yield TIPS M&A LBOs Buybacks Trend/Cycles Sentiment CLIMATE CHANGE Breadth/Momentum Alt Energy CASH & ALTs Commodities QUANT Back-testing Abs Return REITs SCARCITY Cash Energy Water Agflation Page 2 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Europe ($) Japan ($) Japan ($) Emg Mkts Emg Mkts Commodities Emg Mkts Small Value Emg Mkts Japan ($) Large Value Real Estate Large Value Large Growth Emg Mkts Commodities Real Estate Commodities Emg Mkts Real Estate Emg Mkts Europe ($) Emg Mkts +79.8 +100.3 +43.0 +40.4 +65.0 +29.1 +59.9 +29.1 +74.8 +21.8 +38.3 +35.7 +35.2 EAFE EAFE Japan ($) Commodities Bonds Small Growth Small Caps +77.2 +69.4 +24.6 +35.2 +38.3 +8.9 +51.2 +18.4 +32.6 +7.8 +37.4 +33.9 +33.4 EAFE Europe ($) Gold Small Value Large Growth Cash High Yield High Yield Europe ($) Commodities Large Growth Large Growth Small Value +56.2 +44.5 +23.8 +29.5 +35.9 +7.8 +46.2 +15.8 +29.8 +5.3 +37.2 +23.1 +31.8 Japan ($) Emg Mkts Commodities S&P 500 Large Growth Small Caps Large Value Japan ($) Cash Small Growth S&P 500 Large Growth +43.5 +28.6 +23.8 +28.3 +31.5 -0.3 +46.1 +13.8 +25.7 +3.9 +31.0 +23.1 Large Growth Large Value Emg Mkts Commodities Europe ($) Gold Small Value Real Estate Small Value Europe ($) Small Caps Large Value +32.9 +20.0 +14.8 +27.9 +29.1 -1.9 +41.7 +12.2 +23.8 +2.7 +28.4 +21.6 +24.2 Cash Small Caps Large Value Convert Large Growth Convert Small Caps Large Growth Small Value Europe ($) Small Caps -2.5 +41.2 +12.0 +18.9 +2.7 +25.8 +21.6 +22.4 S&P 500 Real Estate Emg Mkts Real Estate S&P 500 Convert Small Value Real Estate Emg Mkts EAFE EAFE EAFE +38.7 +66.4 +49.7 +15.5 +32.1 +56.3 +31.6 +34.5 +34.4 +34.8 Europe ($) Japan ($) Real Estate Small Value Gold Small Growth Emg Mkts Commodities Emg Mkts Europe ($) +28.9 +63.1 +25.9 +14.0 +26.1 +48.5 +26.0 +21.4 +32.6 +14.9 S&P 500 Small Growth Small Value Bonds Bonds Small Caps Small Value Japan ($) Real Estate EAFE +28.6 +43.1 +22.8 +8.4 +10.3 +47.3 +22.2 +25.6 +31.4 +13.6 EAFE Commodities Bonds High Yield Real Estate Small Value Small Caps Gold EAFE Large Growth +30.5 +20.0 +40.9 +11.6 +5.3 +5.2 +46.0 +18.3 +17.8 +26.9 +12.7 Europe ($) Large Value Convert Large Value Cash Cash High Yield Europe ($) EAFE Gold Gold +15.6 +36.4 +7.0 +3.8 +1.6 +35.6 +21.4 +14.0 +23.9 +12.0 Convert Large Growth Cash Small Caps High Yield EAFE Europe ($) Small Value Commodities +11.7 +33.2 +5.9 +2.5 -1.4 +35.3 +20.2 +9.9 +23.5 +12.0 EAFE Small Caps Gold Emg Mkts Europe ($) Commodities Real Estate Large Value Small Growth -3.0 +0.7 -6.0 +34.8 +9.1 +12.2 +22.2 +9.3 Gold Emg Mkts Convert Japan ($) Large Value Large Value Small Caps S&P 500 CommoS&P 500 S&P 500 dities S&P 500 Gold +32.2 +19.6 +5.5 +24.9 +25.2 Large Value Real Estate Large Growth Large Value Small Growth +31.5 +19.2 +5.3 +23.2 +20.2 -3.2 +35.7 +11.4 +18.5 +1.3 +23.0 +21.4 +18.9 +8.7 +27.0 Small Growth Small Caps Europe ($) S&P 500 Small Growth Large Value Real Estate Europe ($) Small Caps Convert Japan ($) Small Caps +20.4 +16.2 -3.4 +30.5 +7.8 +18.1 +0.8 +22.1 +16.5 +14.4 +5.1 +21.3 -5.4 -2.4 -6.2 +34.6 +16.5 +7.1 +18.4 +9.1 S&P 500 Bonds Large Value Convert S&P 500 Gold High Yield Commodities Convert Small Growth Cash S&P 500 High Yield Large Value Japan ($) Real Estate Japan ($) Large Growth S&P 500 Convert +7.7 +17.7 -1.0 +20.3 +11.6 +12.9 +4.9 +21.0 -5.9 -5.6 -9.8 +32.5 +16.2 +5.3 +15.8 Bonds High Yield Small Value High Yield High Yield High Yield High Yield Europe ($) Convert Small Value Large Value Small Growth Small Caps +31.1 S&P 500 S&P 500 Bonds EAFE +18.5 +5.2 Small Value Convert High Yield +31.0 +17.7 +5.0 +16.8 +14.5 -8.1 +26.9 Small Growth High Yield Europe ($) Europe ($) Convert High Yield Large Value +31.0 +17.4 +4.1 +16.4 +13.8 -9.6 +24.6 +7.4 +17.1 -1.5 +19.2 +11.3 +12.8 +1.9 +16.2 -6.2 -5.9 -11.4 +30.0 +14.3 +4.9 +14.5 +6.0 High Yield Large Growth Bonds Convert Small Value Emg Mkts Bonds Large Growth Convert Small Caps Bonds Small Growth Bonds Small Growth Large Value Europe ($) Small Growth Large Value Large Growth High Yield Small Value Small Growth Bonds +28.7 +15.4 +2.7 +14.2 +12.4 -10.6 +16.0 +5.0 +14.8 -1.8 +18.5 +11.3 +9.7 +1.2 +7.3 -8.1 -9.2 -15.5 +29.7 +11.1 Convert Bonds Large Value High Yield EAFE Real Estate Europe ($) Commodities Small Growth Large Value Real Estate Emg Mkts Cash +27.3 +15.3 +0.5 +12.5 +10.5 -17.3 +13.7 +4.4 +13.4 -2.0 +18.3 +6.0 Bonds Small Value Convert Real Estate Cash Small Growth EAFE +22.1 +7.4 -2.4 +11.4 +8.4 -17.4 Cash Small Value Large Growth Japan ($) Small Caps Commodities Convert S&P 500 S&P 500 EAFE +13.3 +3.9 Convert Cash +10.9 +4.6 +13.3 +3.8 High Yield Small Caps +5.3 -0.5 +4.7 -9.1 -11.9 -15.9 Small Caps High Yield EAFE Europe ($) Europe ($) Convert Convert Small Growth S&P 500 S&P 500 +27.9 +7.5 +4.2 +11.9 +3.2 Gold Cash Large Growth High Yield +28.7 Gold EAFE EAFE EAFE +12.1 +3.5 +10.0 -2.2 +11.2 +6.0 +1.8 -2.5 +2.4 -14.2 -19.6 -18.1 Japan ($) Europe ($) Emg Mkts Small Value Gold Large Growth Large Growth Small Caps Gold +9.1 -4.2 -20.4 -20.5 +22.1 Convert Cash Cash +9.8 -2.2 +5.6 +5.2 -11.6 -6.5 +0.9 -22.4 Small Growth Gold Bonds Commodities Real Estate Bonds Small Growth -2.4 +1.0 +3.6 -14.1 -18.8 -0.8 -22.4 -21.4 -22.1 Bonds Japan ($) Gold Emg Mkts Small Value Japan ($) Japan ($) Large Growth Bonds Bonds +4.1 +4.3 +10.0 +6.2 -7.1 +11.3 +1.8 -19.5 Cash Small Caps Small Caps Bonds High Yield Small Value Cash Gold Large Growth +7.7 +5.7 -8.8 +7.9 +0.8 -21.8 +5.6 -5.1 +2.9 Real Estate Small Growth Small Growth Cash Real Estate EAFE Commodities +5.9 +3.6 -10.5 +6.3 -1.8 -23.4 -6.1 -12.2 +2.9 -2.9 +0.4 -4.6 -21.7 -25.3 -1.5 -28.3 -29.5 -27.9 Gold Commodities Real Estate Gold Japan ($) Gold Japan ($) Commodities Emg Mkts Emg Mkts Japan ($) Japan ($) Commodities Real Estate Emg Mkts Commodities Small Growth Gold +4.7 Small Caps Cash S&P 500 EAFE Cash Gold +8.5 Large Value Gold Cash Bonds CommoS&P 500 dities EAFE CommoS&P 500 dities +20.7 Cash +4.6 +3.0 +9.1 +3.2 Large Growth High Yield Japan ($) Japan ($) +6.3 +2.7 +6.3 +2.1 Bonds Cash Small Value +2.4 +4.8 -2.7 Bonds Real Estate Cash Convert +5.8 +2.0 -10.7 -15.3 -2.8 -36.0 -10.3 -21.4 -12.3 -7.3 -5.2 -15.0 -24.0 -35.7 -6.5 -30.6 -31.9 -30.3 +1.0 +1.2 +2.0 +4.3 -6.6 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Index definitions listed on slide 23 Page 3 44 The Efficient Frontier 40 Compound Annual Return vs. Standard Deviation of Monthly Return. PORT: 50/30/20 model portfolio (stocks/bonds/alternatives). 5 Year Horizon (As of Sep 2007) EM 36 32 28 Annualized Returns EUR 24 EAFE 20 EQTY LV ALT PORT 16 HY 12 comm SV SPX RUT REITs SG Gold Japan LG CNV BAL 8 M/N 4 cash FI Agg infl PORT consists of 20 pct U.S. large cap, 15 pct U.S. small cap, 10 pct developed international, 5 pct emerging markets, 20 pct U.S. investment grade bonds, 10 pct U.S. high yield, 5 pct commodities, 5 pct REITs, and 10 pct in HF strategies. 0 -4 0 1 2 3 4 5 Volatility of Returns Page 4 The Efficient Frontier 35 Compound Annual Return vs. Standard Deviation of Monthly Return. 30 A noticeable shift in the efficient frontier. Average 12 Month Return 25 20 5 YEARS 15 10 YEARS 10 5 0 -5 0 1 2 3 4 5 6 7 8 Standard Deviation of Monthly Returns Page 5 Correlation of Returns (to the S&P 500) 100% 100% S&P 500 97% 99% 50/40/10 EQTY 92% Large Value 91% PORT 50/30/20 91% 98% 98% 98% 96% 98% Large Growth 67% Europe 96% 53% EAFE 95% 55% Hedge Funds 93% Small Growth 79% Small Caps 79% 91% 91% 65% Small Value 90% 27% Emerging mkts 87% 45% Hedge FoFs 83% 80% 80% converts 49% REITs 75% 48% ALT 63% 31% Japan 70% 61% 66% High Yield 27% Eqty Mkt neutral 43% EMBI 12% 12% Cash -8% Gold FI 22% -6% -24% Inflation Commodities -80% 37% -2% Cnv Arb Inv Grade Bonds 0% -6% 12mo Corelation of Annual Returns, 20yr average -5% -37% 12mo Corelation of Annual Returns, Sep 2007 22% -53% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% Page 6 Investment Climate STRATEGIC/SECULAR • Globalization. A secular boom in emerging markets and commodities. • Peak Oil. Will incremental flows be sufficient to keep up with incremental demand? • Water Scarcity. The coming boom in water utilities and infrastructure. • Global Infrastructure. Everything needs to be either built or upgraded. • Climate Change. The green movement is here to stay. • Inflation. On the rise. Global growth becomes inflationary. • Liquidity Wave. Down but not out? TACTICAL/CYCLICAL • U.S. Market Cycle. Is a new four year cycle beginning? • The Problem with Housing. Will the housing downturn lead to a recession? • Financial Crisis. When will it end? • Fed Reflation. The Fed reflated the financial system despite inflation worries. Page 7 The Global S-Curve Per Capita GDP (2005 US$) 100,000 Source: Source: CIA CIA World World Factbook, Factbook, Haver Haver Analytics. Analytics Bubbles depict per capita Bubbles oildepict consumption population (2005 as barrels of 2005.per capita per year). Norway Norway Norway USA USA USA Ireland Ireland Ireland Hong Kong Hong HongKong Kong Japan Japan Belgium Australia Australia Denmark Belgium Canada Sweden Sweden Australia Japan Denmark Denmark Belgium Canada Germany Sweden Germany Germany Italy France Singapore Spain France Italy Italy France Singapore Singapore Spain South South Korea Korea South Korea Portugal Portugal UK UK Netherlands Netherlands Netherlands Portugal Chile Chile Chile 10,000 Tunesia Tunesia Mexico Russia Mexico Mexico Brazil Brazil China China China Brazil Philipines Philipines India India India Philipines Pakistan Pakistan Zimbabwe Zimbabwe Iraq Iraq Iraq Zimbabwe Nigeria Nigeria Nigeria Mali Mali Mali Years of Economic Development 1,000 -100 -50 0 50 100 150 Magazine: Time, January 22, 2007; The Economist, February 24, 2007; The Economist, April 19, 2007 200 250 300 350 Page 8 International Stocks & The Dollar Source: Ibbotson Assoc, Haver Analytics Quarterly Data. 9.0 Non-U.S. stocks have outperformed since 2000. 8.0 7.0 World Ex-US 6.0 S&P 500 Total Return -3.0 -3.2 MSCI World ex-U.S. (rel. to S&P 500) 5.0 -3.4 -3.6 -3.8 4.0 -4.0 0.4 -4.2 -4.4 0.6 10 years 10 years -4.6 USD/Euro 0.8 10 years 1.0 5 years 1.2 5 years 1.4 1.6 '57 '59 '61 '63 '65 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 Page 9 1400 The Global Liquidity Boom 1300 Source: FMRCo, Factset, Haver Analytics. Monthly data. 1200 Stock prices are benefiting from a global liquidity boom. 1100 1000 900 12 800 700 10 600 MSCI Emerging Markets 8 500 400 6 300 4 200 Baltic Exchange Dry Index (Jan-04-85=1000) 11% 2 10% 0 9% 8% 7% Global Money Growth 6% 5% '00 '00 '00 '00 '00 '00 '00 '00 '00 '00 '00 '00 Page 10 1989: Total = $1.13 trillion Other, 4% Equity leadership has evolved over the years. United States, 23% 1999: Total = $5.21 trillion Japan, 73% Other, 12% 2007: Total = $5.65 trillion Japan, 16% United States, 72% Other, 21% United States, 38% China, 41% Concept from New York Times article (Floyd Norris) and The Leuthod Group. Source: Bloomberg Financial markets (2007data); Standard & Poor's (1989 & 1999 data); MSCI (1989 & 1999 data). Page 11 100 Oil Consumption & Globalization Quarterly Data. Concept by Barry Bannister of Stifel Nicolaus Data Source: Stifel Nicolaus, Haver Analytics. Quarterly data from 1/00 through 12/06. By 2050, there will be 3 billion more energy consumers and the world could be consuming 42% more oil than today. 10 35 Barry Bannister, Stifel Nicolaus Crude Oil 30 1 25.49 25 20 Barrels/Capita: USA 17.40 Barrels/Capita: Japan 15.35 Barrels/Capita: Hong Kong 15.09 15 Barrels/Capita: S. Korea 0 Barrels/Capita: China Barrels/Capita: India 10 5 1.95 0.84 '00 '05 '10 '15 '20 '25 '30 '35 '40 '45 '50 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 0 '15 Page 12 1000 Long Term Trends in Oil Prices Quarterly Data. Source: Haver Analytics, ASPO, Gary Shilling & Co. Oil is approaching the $100 target. $130 $100 trend $70 upper lower target 1: $70 100 $40 target 3: $130 target 2: $100 Crude Oil 60 50 40 $10 Oil Discoveries (bil B/Y) Projected Discoveries (bil B/Y) Oil Production (bil B/Y) ASPO Projected Production (bil B/Y) Oil Consumption (bil B/Y) 10 1 30 20 0 10 0 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Page 13 Water: the scarcest commodity? Meat Consumption vs. Income 140 Source: Livestock's Long Shadow (FAO 2006) Data as of 2002 Rural vs. Urban Population Trends Needs per person: 120 Spain Source: Livestock's long Shadow: FAO 2006 Hong Kong Denmark Population expressed as billions of people. 6 Water needed for drinking: 2-3 liters per day Australia 100 Austria Argentina 5 4.94 Brazil Rural Water needed for cooking, bathing, & sanitation: 50 liters per day Netherlands 80 4 Billion people Meat consumption per Capita (kg) USA 60 Urban 3.21 Switzerland 3.19 3 China Korea 2.86 Japan 2 40 1 Russia Water needed to grow our food: 3,000 liters per day 20 Source: 13D Research 0 India 0 0 1950 5,000 1960 1970 10,000 1980 1990 15,000 2000 20,000 2010 2020 25,000 2030 30,000 2040 2050 35,000 40,000 Income per Capita (US$ PPP) Page 14 The Investment Clock high inflation Non-cyclicals Pharma Utilities Bonds Fed eases Financials Consumer Technology New Bull Mkt 0 43 43 DOWN CYCLE Bull mkt ends disinflation 35 EARLY CYCLE 11 36 12 LATE CYCLE Inflation accelerates 13 MID CYCLE 15 30 Energy non-cyclicals Pharma Commodities 28 Earnings growth peaks 26 24 20 Fed starts to tighten Energy Industrials Materials Technology Commodities Page 15 7.5 A History of Financial Crises Quarterly Data. Source: Haver Analytics. 7.0 2007 will be known as the year of the subprime credit crisis. 6.5 6.0 5.5 S&P 500 Index (log) 5.0 1987 Black Monday 4.5 1984 Continental Illinois 1970 Penn Central 1994 Mexico ` 1990 S&L Crisis 1982 Latin America 4.0 2001 9/11 Tech Bubble Corp. Scandals 2007 Sub-prime 1998 LTCM Russia Asian Contagion 18.0 16.0 14.0 1974 Franklin National 12.0 10.0 8.0 6.0 4.0 10yr Tsy Yield Fed Funds Target Rate 2.0 0.0 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 Page 16 The Trouble with Housing Monthly Data. Source: FMRCo, Haver Analytics. 230 207 Housing will likely remain a problem for some time to come. 210 190 170 198 S&P/Case-Shiller Home Price Index: Composite 20 (NSA, Jan-00=100) 150 45,000 41,356 1,798 130 40,000 110 35,000 90 30,000 25,000 New Orders for Tech Equipment ($mil) Housing Units Authorized (000's) 10.0 9.0 8.0 877 20,492 20,000 8.3 15,000 66,399 7.0 Tech orders Tech orders and and inventories inventories are are from from the 1996-2003 1996-2003 cycle, cycle, overlaid overlaid against against the the the current current housing housing cycle. cycle. 6.0 5.0 4.0 4.2 3.0 2.0 Tech Equipment Inventories ($mil) 1.0 Months Supply of Homes 40,236 0.0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Page 17 Important Legal Information •Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. •The information presented reflects the opinions of Jurrien Timmer, Director of Market Research, for Fidelity Management & Research Company as of November 14, 2007. These opinions do not necessarily represent the views of Fidelity or any other person in the Fidelity organization and are subject to change at any time based upon market or other conditions. Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. •Past performance is no guarantee of future results. •As with all of your investments through Fidelity, you must make your own determination whether an investment in any particular security or fund is consistent with your investment objectives, risk tolerance, financial situation, and your evaluation of the investment option. Fidelity is not recommending or endorsing any particular investment option by mentioning it in this conference call or by making it available to its customers. This information is provided for educational purposes only, and you should bear in mind that laws of a particular state and your particular situation may affect this information. •The S&P 500® and S&P are registered trademarks of The McGraw-Hill Companies, Inc., and are licensed for use by Fidelity Distributors Corp., and its affiliates. The S&P 500 Index is an unmanaged market capitalization-weighted index of common stocks. All indexes are unmanaged and no investment may be made in any index. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. •[Fidelity, Fidelity Investments, and Fidelity Investments & Pyramid Design] is a /are registered service mark(s) of FMR Corp. •Small-cap stocks are generally more volatile than large-cap stocks. •Lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. •Foreign investments, especially those in emerging markets, involve greater risk and may offer greater potential returns than U.S. investments. This risk includes political and economic uncertainties of foreign countries, as well as the risk of currency fluctuation. •Value stocks can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time. •The Fed Funds rate is the rate of interest on overnight loans of excess reserves among commercial banks. Bonds are rated by agencies such as Standard & Poor’s and Moody’s Investor Services with ratings that measure the risk of default. Bonds rated AAA are considered to be the safest while those rated below BBB are considered to be “high yield” or below investment grade. Intermediate ratings of AA+ or BB- are often used to further differentiate bonds. Lower-quality debt securities involve greater risk of default or price changes due to the credit quality of the issuer. 30-year treasury and 10 year treasury are a fixed income securities backed by the full faith and credit of the U.S. government and are used as benchmarks for the pricing of various corporate fixed income instruments. The S&P Gold group is an index of gold stocks as defined by Standard & Poor’s. The NAREIT All Issues REITs Index is an index of real estate investment trusts as defined by the Nat’l Assoc. of Realtors. •The Periodic Table of Investment Returns shows the returns of various asset classes over time, ranked from best to worst. The chart represents data through 9/30/07. Source: FMRCo. Russell 2000: Russell 2000 Index. Small Growth: Russell 2000 Growth Index. Small Value: Russell 2000 Value Index. Large Growth: Russell 1000 Growth Index. Large Value: Russell 1000 Value Index. S&P 500: Standards & Poor’s 500 Stock Index. Bonds: Lehman Brothers Aggregate Bond Index. Cash: 3month T-Bills (Ibbotson Assoc.). Commodities: Goldman Sachs Commodities Index. Real Estate: NAREIT Equity Index. Convertibles: CSFB Convertible Securities Index. Japan: MCSI (in U.S. Dollars). Europe: MCSI (in U.S. Dollars). EAFE: MCSI (in U.S. Dollars). High Yield: Ibbotson Assoc. Domestic High Yield Index. Gold: Ibbotson Associates. Page 18 Important Legal Information •Definitions of categories and indices on slide 3: •Small Cap: Russell 2000 Index. The Russell 2000 Index is an unmanaged market cap-weighted index of 2,000 small company stocks. •Small Growth: Russell 2000 Growth Index. The Russell 2000 Growth Index is an unmanaged index of 2,000 small company stocks, determined by Russell to be growth stocks as measured by their price-to-book ratios and forecasted growth values. •Small Value: Russell 2000 Value Index. The Russell 2000 Value Index is an unmanaged market cap-weighted index of 2,000 small company stocks, determined by Russell to be value stocks as measured by their price-to book ratios and forecasted growth values. •Large Growth: Russell 1000 Growth Index. The Russell 1000 Growth Index is an unmanaged market capitalization-weighted index of large company stocks determined by Russell to be growth stocks as measured by their price-to-book ratios and forecasted growth values. •Large Value: Russell 1000 Value Index. The Russell 1000 Value Index is an unmanaged market capitalization-weighted index of large company stocks determined by Russell to be value stocks as measured by their price-to-book ratios and forecasted growth values. •S&P 500: Standard & Poor’s 500 Stock Index. The S&P 500® and S&P, are registered trademarks of The McGraw-Hill Companies, Inc., and are licensed for use by Fidelity Distributors Corp., and its affiliates. The S&P 500 Index is an unmanaged market capitalization-weighted index of common stocks. •Bonds: Lehman Brothers Aggregate Bond Index. A Benchmark index made Up of the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Backed Securities Index, including securities that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding Par value of at least $100 million. •Cash: 3month T-Bills (Ibbotson Assoc.) •Commodities: Goldman Sachs Commodities Index. The GSCI is a composite index of commodity sector returns, representing an un-leveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. •Real Estate: NAREIT Equity Index. The unmanaged National Association of Real Estate Investment Trusts (NAREIT) Equity Index is a market-value weighted index based upon the last closing price of the month for tax-qualified REITs listed on the NYSE. •Convertibles: CSFB Convertible Securities Index. CSFB's U.S. Convertible Securities Index is a market-weighted benchmark of convertible performance. •Japan: MCSI (in U.S. Dollars). The Morgan Stanley Capital International Japan Index is an unmanaged market capitalization-weighted index that is designed to represent the performance of the Japanese stock market. •Europe: MCSI (in U.S. Dollars). The MSCI AC World Ex-US Index, when including or excluding securities, takes into account any limitations that an international investor would experience when investing directly in such securities. The index contains both developed and emerging market securities. •EAFE: MCSI (in U.S. Dollars). Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE) is an unmanaged market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. The EAFE Index is registered service mark of Morgan Stanley and has been licensed for use by FMR Corp. The fund is neither sponsored by, nor affiliated with Morgan Stanley. •High Yield: Ibbotson Assoc. Domestic High Yield Index. Ibbotson Domestic High Yield Index is a broad high yield index including high yield bonds across the maturity spectrum, within the BB-B rated credit quality spectrum, included in the below-investment-grade universe. •Gold: Ibbotson Associates. The Ibbotson Gold Index is an unmanaged market cap-weighted index of gold-related stocks. Fidelity Investments Institutional Company, Inc. 473695.1.0 FOR INVESTMENT PROFESSIONALS 82 Devonshire Street, Boston, MA 02109 Page 19
