best performing fidelity newsletter for the past 30 years ...reinvested. consider the tax...

Best Performing Fidelity Newsletter For The Past 30 Years www.fmandi.com

Don’t Fear A Trade War

As work begins on a new corporate tax system to boost

jobs, there are two ideas in play.

The plan favored by Trump would cut the top corpo-

rate tax rate from 35% to 15% and impose a 35% tariff

on imported goods. Downsides could

include a jump in the price of commodi-

ties and consumer goods, as well as a

bigger Federal budget deficit.

The plan favored by Senate Republi-

cans would avoid tariffs but include a

border tax adjustment (exclude the reve-

nue from exports while disallowing any

deduction for the cost of imports). The top rate would

drop to 20%, but exports would have a tax rate of zero.

The concern here is that the dollar could surge as much

as 25%, forcing exporters to pass on most of their tax

savings by lowering prices. Importers would see sharply

higher tax bills, but the strong dollar might cut their costs

even more.

Trump’s tariff idea may not get very far as most Re-

publicans (and much of his cabinet) are pro-trade. At the

same time, Trump’s argument that the border tax adjust-

ment is “too complicated” may be spot on (it may also be

easy to game). As such, a simple reduction in the tax rate

may ultimately be seen as the best way to boost jobs.

The economic risk of a trade war is lower today than

when Smoot-Hawley became law during the Great De-

pression. Back then, the U.S. ran a trade surplus with the

rest of the world, and foreign production was impracti-

cal, meaning U.S. firms had no easy way to avoid retalia-

tory tariffs. Trade today has changed dramatically. Our

fastest growing export category is intellectual property

rights — payments for software, industrial processes,

music, movies, and anything else protected by a copy-

right or patent. If our trading partners try to retaliate

there, they will hurt their own economies more than ours.

So, don’t fret that a trade war will take a toll on your

portfolio. The potential benefit of a lower corporate tax

rate largely outweighs the risk that something unfavora-

ble might come with it.

Sincerely,

Jack Bowers

Stocks Should Be Fine — With

Or Without Trump’s Plans The stock market staged a strong rally after Trump’s

election as president. The S&P 500 is up 8% since last

November, and most of that gain has been attributed

merely to optimism that President

Trump’s pro-business agenda will

accelerate economic growth.

But that move higher has been

driven by more than just hope. The

fact is that economic growth is likely

to improve even without any help

from President Trump’s programs.

The Chicago Fed’s National Activity Index, which is

a weighted average of 85 monthly indicators of national

economic activity, rose to 0.14 in December. (Negative

values indicate below-average economic growth and

positive values mean above-average growth). Since the

data can be volatile, the three-month moving average of

the index is best used for discerning trends and it ad-

vanced to -0.07, the highest reading in 16 months. As

shown in the chart below, this continues a mostly up-

ward rising trend since early last year.

Improvement can be seen in many key individual

indicators. Industrial production, which has been notably

weak, rose 0.83% in December, the biggest jump in 25

months. New orders for non-defense capital goods ex-

cluding aircraft (a proxy for business investment), were

up 2.8% from a year ago. That’s the biggest increase in

over two years. Retail sales for December were 4.1%

higher than last year. And the Conference Board’s Lead-

ing Economic Index grew 0.5% in December, marking

the fourth straight month of gains.

Market Outlook cont’d on page 3

John M. Boyd

-0.80

-0.60

-0.40

-0.20

0.00

0.20

Mar-16 Jun-16 Sep-16 Dec-16

Chicago Fed National Activity Index

3 month moving average

2 Fidelity Monitor & Insight — February 2017

See Model Portfolios Key on p. 3

For aggressive members who have no need for income or principal for more than 10 years.

For aggressive members who have no need for income or principal for more than 10 years.

For members needing income and protection of their purchasing power against inflation.

For moderately aggressive members who want equity-dominated portfolios and have no income needs for at least 10 years.

A good choice for members retiring in 5-10 years looking for less volatility than the market.

Unique Opportunities YTD Return: 2.5%

Stocks: 98.1% Bonds: 0.0% Cash: 1.9% Alternatives*: 0.0% Yield: 0.6%

Holdings Ticker NAV Shares Value Jan Ret

Growth Strategies FDEGX $35.22 3,073.70 $108,256 3.6%

Blue Chip Growth FBGRX 70.62 1,370.43 96,780 4.8

Event Driven Opps FARNX 13.58 5,702.65 77,442 4.9

Small Cap Enh Idx FCPEX 14.17 4,846.09 68,669 -0.4

Large Cap Value Enhcd FLVEX 12.03 5,391.92 64,865 0.3

Low-Priced Stock FLPSX 50.06 806.57 40,377 1.2

Current Value (3/31/99 = $100,000) $456,388 2.5%

Target Risk: 1.20 (Current: 1.12) Foreign Holdings: 6.5%

Growth Strategies

24%Blue Chip

Growth21%

Event Driven Opps 17%

Small Cap Enh Idx 15%

Large Cap Value Enhcd

14%

Low-Priced Stock 9%

Select YTD Return: 2.9%



Technology FSPTX $139.47 5,004.52 $697,980 7.2%

Consumer Discretionary FSCPX 36.55 18,366.98 671,313 3.4

Insurance FSPCX 77.70 7,542.50 586,052 0.2

Telecommunications FSTCX 71.13 7,239.13 514,920 1.9

Industrials FCYIX 32.94 12,825.72 422,479 1.8

Construction & Housing FSHOX 59.72 6,354.40 379,484 1.5

Current Value (12/31/88 = $100,000) $3,272,229 2.9%


Technology21%

Consumer Discretionary

20%

Insurance18%

Telecomm16%

Industrials13%

Construction & Housing

12%

Growth YTD Return: 2.2%



Growth Strategies FDEGX $35.22 14,010.10 $493,436 3.6%

Contrafund FCNTX 102.76 4,614.85 474,222 4.4

Small Cap Enh Idx FCPEX 14.17 30,583.17 433,363 -0.4

Large Cap Value Enhcd FLVEX 12.03 28,830.50 346,831 0.3

Blue Chip Growth FBGRX 70.62 4,275.41 301,930 4.8

Low-Priced Stock FLPSX 50.06 3,713.24 185,885 1.2

Current Value (12/31/86 = $100,000) $2,235,667 2.2%


Growth Strategies

22%

Contrafund21%

Small Cap Enh Idx

19%

Large Cap Value Enhcd

16%

Blue Chip Growth 14%

Low-Priced Stock 8%

Growth & Income YTD Return: 1.6%



Contrafund FCNTX $102.76 1,758.79 $180,733 4.4%

Growth & Income FGRIX 33.24 4,409.82 146,582 1.0

Total Bond FTBFX 10.55 11,524.72 121,586 0.5

High Income SPHIX 8.80 9,956.16 87,614 1.5

Low-Priced Stock FLPSX 50.06 1,172.26 58,683 1.2

Current Value (12/31/93 = $100,000) $595,199 1.6%


Contrafund30% Growth &

Income25%

Total Bond20%

High Income15%

Low-Priced Stock 10%

Income YTD Return: 0.5%



Total Bond FTBFX $10.55 9,549.30 $100,745 0.5%

Equity Dividend Income FEQTX 26.85 3,313.05 88,955 0.0

High Income SPHIX 8.80 9,143.24 80,460 1.5

Short-Term Bond FSHBX 8.59 7,259.40 62,358 0.1

Limited Term Bond FJRLX 11.46 4,302.95 49,312 0.2

Current Value (12/31/91 = $100,000) $381,831 0.5%


Total Bond27% Equity Div

Income 23%

High Income21%

Short-Term Bond 16%

Limited Term Bond 13%

Fidelity Monitor & Insight — February 2017 3

GDP Not As Weak As It Looks

While the fourth-quarter’s GDP

growth of 1.9% (down from 3.5% in

the third quarter) looks disappoint-

ing at first, a deeper dig into the

components of the report suggests

continued strength in the economy.

The big drag on the headline num-

ber was an increase in the trade defi-

cit. If the trade deficit had remained

the same, we would have seen 3.6%

growth! Final domestic sales, which

excludes both trade and inventories,

gives the clearest signal of the un-

derlying strength of the economy

and it rose 2.5% in the fourth quar-

ter, up from 2.1% in the third.

Ignore The Noise

Short-term fluctuations in the

market are mostly “noise,” and in

this age of the “tweeting president”

even more so. A negative tweet

from Trump can send a stock (or

even the whole market) down sharp-

ly overnight. Expect a lot of atten-

tion in the press to the progress on

President Trump’s economic agenda

— and the stock market may wax

and wane on those prospects.

However, even without any

additional stimulus from tax-cuts or

reduced regulations, we expect

economic growth to improve this

year. And we expect earnings to

grow solidly, as well. If Trump’s

plans come to fruition, that may pro-

vide a further boost. If they fail to

materialize, we could well see a

short-term sell-off, but we still ex-

pect stocks to deliver solid returns.

Not that there aren’t risks — the

biggest perhaps being that Trump

ignites a trade war. But in his Mes-

sage on page 1, Jack details why we

don’t think that will happen.

So ignore the daily noise and

stay invested. — John M. Boyd

Market Outlook cont’d from page 1

Growth: For large-cap exposure, Blue Chip Growth and Growth

Company are aggressive options. Contrafund is more conservative.

Large Cap Value Enhanced provides financial exposure; Growth

Strategies adds mid-cap exposure. Event Driven Opportunities

and Small Cap Enhanced Index are smaller-cap choices that broaden

portfolio diversification.

Growth & Income: Growth & Income and Equity Dividend Income

provide exposure to higher-yielding large-cap value stocks.

High-Yield Bond: High Income’s yield compensates for its higher r isk.

Taxable Bond: Limited Term Bond and especially Short-Term Bond limit

interest-rate risk. Investment Grade Bond limits credit risk but boosts

yield via additional interest-rate risk; Total Bond provides the greatest

bond diversification boosting its yield through well-managed credit risk.

Muni Bond: More highly taxed investors should consider muni funds. We

prefer the short-maturity Conservative Income Muni (see p. 12).

Model Portfolios Key: 1Alternative investments include such areas as high-yield bonds, commodities, real estate. Portfolio trades and total returns do not take taxes into account, however, redemption and exchange fees are included. Some percentage figures may not sum to 100 due to rounding. Dividends are

reinvested. Consider the tax implications of trades before you decide to buy or sell any fund. Any trades are detailed on p. 3 and are announced on Friday evening Hotline updates via telephone, e-mail, and web (see p. 12). Annuity Model Portfolios are on p. 10.

As announced on our Hotline update of January 27, on Monday, January 30, we made trades in three model portfolios:

Unique Opportunities Model: We sold 1/2 of our position in Low-Priced Stock [FLPSX] bringing it down to about 9% of the model. With the proceeds, we added to our stake in Growth Strate-gies [FDEGX] bringing it up to about 24% of the model. Growth Model: We sold 1/2 of our position in Low-Priced Stock [FLPSX] bringing it down to about 8% of the model. With the proceeds, we added to our stake in Growth Strate-gies [FDEGX] bringing it up to about 22% of the model. Growth & Income Model: We sold 1/2 of our position in Low-Priced Stock [FLPSX] bringing it down to about 10% of the model. With the proceeds, we added to our stake in Contrafund [FCNTX] bringing it up to about 30% of the model.

Trade Rationale & Notes:

While we like the way Joel Tillinghast manages his fund, because of its large asset

size ($28 billion), he must look outside the U.S. to find enough low-priced stocks

(under $35) to buy. Currently about a third of its assets are overseas. Given the po-

tential for the dollar to continue to strengthen, this presents a headwind for the fund

(and the models) so we are trimming our exposure.

The proceeds are going to two funds that struggled mightily last year, but whose

managers we respect a great deal and who stuck to their discipline. With a renewed

focus on growth stocks this year, we expect them to deliver better returns.

(See “Portfolio Strategies” on p. 11.)

NOTE: As indicated on our Hotline, Contrafund may have a distribution on Feb

10. We don’t expect it to be large. But if you are concerned about the potential tax

implications, you may wish to wait until after that date to purchase shares of Contra-

fund.


Exp. Exp. Fid. Exp.

Ratio (%) Ratio (%) Advantage

Domestic Stoc k (ticker )

500 Index

Investor Class (FUSEX) 0.090 Investor 0.16 0.070

Premium Class (FUSVX) 0.045 Admiral 0.05 0.005

Extended Market Index

Investor Class (FSEMX) 0.100 Investor 0.22 0.120

Premium Class (FSEVX) 0.070 Admiral 0.09 0.020

Mid Cap Index

Investor Class (FSCLX) 0.190 Investor 0.20 0.010

Premium Class (FSCKX) 0.070 Admiral 0.08 0.010

Small Cap Index

Investor Class (FSSPX) 0.190 Investor 0.20 0.010

Premium Class (FSSVX) 0.070 Admiral 0.08 0.010

Total Market Index

Investor Class (FSTMX) 0.090 Investor 0.16 0.070

Premium Class (FSTVX) 0.045 Admiral 0.05 0.005

Nasdaq Comp Index (FNCMX) 0.290 NA NA NA

Large Cap Growth Index

Investor Class (FSUIX) 0.210 Investor 0.22 0.010

Premium Class (FSUPX) 0.070 Admiral 0.08 0.010

Large Cap Value Index

Investor Class (FLCDX) 0.210 Investor 0.22 0.010

Premium Class (FLCHX) 0.070 Admiral 0.08 0.010

International Stoc k

International Index

Investor Class (FSIIX) 0.190 Investor 0.20 0.010

Premium Class (FSIVX) 0.080 Admiral 0.09 0.010

Global ex US Index

Investor Class (FSGUX) 0.180 Investor 0.26 0.080

Premium Class (FSGDX) 0.110 Admiral 0.13 0.020

Emerging Markets Index

Investor Class (FPEMX) 0.300 Investor 0.33 0.030

Premium Class (FPMAX) 0.140 Admiral 0.15 0.010

Total International Index

Investor Class (FTIGX) 0.180 Investor 0.19 0.010

Premium Class (FTIPX) 0.110 Admiral 0.12 0.010

Spec ialty

Real Estate Index

Investor Class (FRXIX) 0.230 Investor 0.26 0.030

Premium Class (FSRVX) 0.090 Admiral 0.12 0.030

Four-in-One Index (FFNOX) 0.080 NA NA NA

Bond

U.S. Bond Index

Investor Class (FBIDX) 0.150 Investor 0.16 0.010

Premium Class (FSITX) 0.050 Admiral 0.06 0.010

Short-Term Treasury Bond Index

Investor Class (FSBIX) 0.190 Investor NA NA

Premium Class (FSBAX) 0.090 Admiral 0.1 0.010

Intermediate Treasury Bond

Investor Class (FIBIX) 0.190 Investor NA NA

Premium Class (FIBAX) 0.090 Admiral 0.10 0.010

Long-Term Treasury Bond Index

Investor Class (FLBIX) 0.190 Investor NA NA

Premium Class (FLBAX) 0.090 Admiral 0.10 0.010

Inflation-Protected Bond Index

Investor Class (FSIQX) 0.190 Investor 0.20 0.010

Premium Class (FSIYX) 0.090 Admiral 0.10 0.010

Fidelity Funds Vanguard Funds

Fidelity Edges Rival

Vanguard On Expenses If Fidelity is synonymous with active

fund management, then Vanguard is

certainly synonymous with passive

index investing. Of course, in the world

of mutual fund investing, nothing is

quite that simple.

While Vanguard offers many more

index funds than Fidelity’s 19 retail

offerings, thanks to recent fee cuts,

Fidelity is now actually the lower-cost

provider where they compete. (Fidelity

also offers six “Enhanced Index” funds

that are hybrids between passive and

active, plus several index-linked ETFs

whose fees have also been cut.)

The facing table tells that story.

Fidelity’s leg up on Vanguard is rela-

tively new. In fact, it was just last year

when Fidelity made another round of fee

reductions that it wound up as the lower-

cost index fund provider. Reductions

ranged from five basis points (0.05%) to

as much as 50 basis points.

These cuts aren’t a case of corporate

altruism, but rather good-ol’-fashion

competition for shareholders’ assets and,

ultimately, their long-term allegiance.

That has also meant offering more funds

that allow an investor to build a diversi-

fied portfolio of index funds. So, last

year, Fidelity took the additional steps

of introducing three more index funds:

Large Cap Growth, Large Cap Value

and

Fidelity now offers its retail investors

27 index funds and ETFs, including.

U.S. and foreign funds, bond and sector

funds, and even six new Factor ETFs.

In building their product lineup, they

now have over $200 billion in passively

run assets, and have quietly become the

country’s second-biggest (and now least

expensive!) manager of index funds.

cost index funds are a good way to com-

plement your portfolio of actively man-

aged funds (we hold two Enhanced

funds in our models), though active

funds remain the best way to add alpha

(excess returns) beyond an index.

— John Bonnanzio

Fidelity’s and Vanguard’s “Investor” share classes have investment minimums of $2,500

and $3,000, respectively (less for retirement accounts). Fidelity’s “Premium” shares and

Vanguard’s “Admiral” share classes both have $10,000 minimums; their respective fees

are generally 50% less than higher-minimum shares. (Both fund families also offer institu-

tional share classes that have much larger minimums — often above $5 million — and

even lower fund expenses.) Apart from regular fund expenses, investors should be mindful


Fund Old Comments

Sel. Energy Service S H With oil above $50, drilling activity is picking up.

Sel. Gold S S Commodity more attractive when real yields rise.

February Scorecard Rating Changes

New

Ratings

B = Buy; B = OK to Buy; H = Hold; S = OK to Sell; S = Sell, NC = No change

() Rating upgraded; () Rating downgraded.

Stocks Hit Late Wall;

Bonds Gain Ground On January 25, the Dow Industrials

breached the 20,000 level for the

first time. But just three trading days

later the widely

watched index

slipped back below

that marker.

A combination

of otherwise un-

spectacular fourth-

quarter earnings

reports, President Trump’s promise

of new trade barriers, and misgiv-

ings about his recent immigration

orders, started to undermine investor

confidence in the last two weeks of

the month. Roughly speaking, U.S.

share prices are essentially un-

changed since the president’s Janu-

ary 20 inauguration.

This is not to suggest that this

January was anything like January

2016. A year ago, large-cap stocks

fell about 5% and small caps nearly

9% as investors fretted over slowing

growth in China and falling oil pric-

es — turns out that was an excellent

time to buy!

This time around, large caps, as

measured by the S&P 500, gained

1.9% for the month, whereas the

small-cap Russell 2000 inched up

0.4%. (The Dow gained a slender

0.6%.) As for the Nasdaq Compo-

site, that gauge surged 4.4% for the

month. That was despite a number

of obstacles, not the least of which

being trade concerns and the presi-

dent personally taking aim at drug

prices.

Stock Funds

Thanks to surging tech shares

generally, and software/IT service

companies in particular, large-cap

growth funds rebounded a bit from

last year’s disastrous showings.

Among January’s biggest gainers

were OTC (up 5.7%), Growth Dis-

covery (up 5.5% ) and Growth

Company (up 4.3%). Even the less-

John Bonnanzio

venturesome Contrafund (up 4.4%)

got in on the act (see p. 11).

As already noted, small caps

struggled last month, having en-

joyed super-sized gains in the last

seven weeks of 2016: Small Cap

Enhanced Index fared the worst

(down 0.4%), whereas Small Cap

Value (up 0.2% ) and Small Cap

Index (up 0.4% ) rose slightly.

Other laggards for the month

were more dividend-oriented value

funds. Holding their returns back

was a combination of profit-taking

within financials and weakness in

the energy sector. (Oil prices fell

almost 2% for the month.) Notably,

last year’s top-performing large-cap

Cap Value Enhanced Index, post-

ed only modest gains of 0.8% and

0.3%, respectively, for the month.

Select Funds

With an ounce of gold rising

over 5% last month, Select Gold

(up 13.3%) essentially leveraged

that uptick into a double-digit re-

turn. Other Selects didn’t fare near-

ly as well, though their average

gain for the month was 2.7%. Apart

from energy funds, Pharmaceuticals

(down 0.8%) and Communications

Equipment (down 2.4% ) were

especially poor performers.

International Funds

As President Trump started to

back up his campaign rhetoric on

protectionist trade policies with

action, the collective calculus by

investors went something like this:

Less trade with the U.S. equals less

demand for dollars.

While European shares were

flat-to-slightly lower last month, the

dollar’s retreat actually provided

some price support to Fidelity’s

unhedged funds. Notably, Europe

managed to gain 2.5% in January.

And the more geographically diver-

sified Int’l Enhanced Index gained

3.7% as its Japan component was

especially helpful. Likewise, Cana-

da (up 3.3% ) got a lift from the

comparative strength of the

“loonie,” even as weaker oil prices

weighed on that important sector.

Elsewhere, even though China

is in President Trump’s crosshairs

trade-wise, China Region surged

6.8%; other emerging market offer-

ings fared about as well.

Bond Funds

With no particular economic

worries to fret over, bond yields

were largely unchanged. In fact, a

disappointing fourth-quarter GDP

report proved helpful in that it sug-

gested a lack of inflation (which

bond investors like).

Against that benign backdrop,

Corporate Bond (up 0.4% ) fared

a bit better than Limited Term

Gov’t (up 0.2% ). However , the

strongest-performing bond funds

were those that, like foreign stock

funds, benefited from the weaker

dollar: Int’l Bond and Global Bond

gained 2.3% and 1.6%, respectively.

High Income

Lower-credit (junk) bonds,

which are more economically sensi-

tive than they are interest-rate-

sensitive, fared well in January.

Capital & Income surged 2.4%

(it got an added lift from its stocks)

and High Income rose 1.5%. Over-

seas, New Markets Income (up

1.9%) rose in concert with emerging

market stocks.

— John Bonnanzio


Fund Fund Sht-Term $Price Rel Vol

No. Ticker Fund Name Fee (NAV) Advice Jan YTD 3 Mo. 1 Yr 3 Yr 5 Yr 10 Yr (Risk)1

S&P 500 2278.9 1.9 1.9 7.8 20.0 10.8 14.1 7.0 1.00

Nasdaq Composite 5614.8 4.4 4.4 8.6 23.2 12.4 16.3 9.8 1.28

Dow Jones Industrials 19864.1 0.6 0.6 10.2 23.9 10.9 12.3 7.4 1.03

Russell 2000 (Small Caps) 1361.8 0.4 0.4 14.7 33.5 7.9 13.0 6.9 1.52

Barclays Aggregate Bond* 0.2 0.2 -2.1 1.2 2.4 1.9 4.0 0.29

Unique Opportunities 2.5 2.5 10.4 18.9 6.5 12.0 6.1 1.12

Select 2.9 2.9 8.8 22.8 10.4 14.8 8.3 1.08

Growth 2.2 2.2 8.3 17.2 7.7 11.1 5.1 1.05

Growth & Income 1.6 1.6 4.8 14.6 7.3 9.7 5.1 0.73

Income 0.5 0.5 1.9 8.7 4.8 5.0 4.4 0.37

Rel Vol Assets

(Risk)1 ($Mil)

LARGE CAP GROWTH 3.7 3.7 6.8 17.5 8.2 13.6 1.20

312 FBGRX Blue Chip Growth 70.62 Buy 4.8 4.8 6.1 16.1 9.6 14.9 1.24 $14,127

307 FDCAX Capital Appreciation 32.69 OK to Sell 3.2 3.2 8.6 15.9 6.6 13.1 1.21 4,938

22 FCNTX Contrafund 102.76 Buy 4.4 4.4 5.6 14.4 8.8 13.3 1.01 74,835

3 FFIDX Fidelity Fund 42.24 Hold 2.7 2.7 5.9 13.6 8.8 12.5 1.05 3,778

333 FTQGX Focused Stock 18.98 OK to Sell 3.4 3.4 3.0 13.1 4.0 11.9 1.16 1,540

25 FDGRX Growth Company (Closed) 142.66 Buy 4.3 4.3 9.8 23.7 10.9 15.4 1.38 21,136

339 FDSVX Growth Discovery 26.82 OK to Buy 5.5 5.5 6.3 13.8 8.1 13.4 1.16 997

73 FDFFX Independence 34.38 OK to Sell 2.7 2.7 6.8 15.0 3.8 11.7 1.39 3,245

21 FMAGX Magellan 93.56 OK to Buy 2.4 2.4 6.6 15.2 9.3 14.0 1.11 13,136

300 FMILX New Millennium 36.54 OK to Buy 1.4 1.4 7.1 23.6 6.8 12.9 1.10 3,124

93 FOCPX OTC 88.07 OK to Buy 5.7 5.7 8.1 24.9 11.6 16.4 1.57 10,067

320 FDSSX Stock Selector All Cap 37.60 Hold 3.3 3.3 8.3 21.3 8.7 13.3 1.09 6,381

5 FTRNX Trend 87.60 OK to Buy 4.3 4.3 6.5 16.6 9.4 14.1 1.14 1,555

LARGE CAP BLEND 1.5 1.5 7.7 20.5 8.8 13.3 1.07

315 FDEQX Disciplined Equity 33.96 Hold 2.2 2.2 6.8 15.5 7.8 13.1 1.00 1,183

330 FDGFX Dividend Growth 32.52 OK to Buy 1.0 1.0 5.6 14.9 7.8 11.9 0.96 5,788

332 FEXPX Export and Multinational 21.39 Hold 2.6 2.6 7.6 17.4 8.9 11.8 0.95 1,514

27 FGRIX Growth & Income 33.24 Buy 1.0 1.0 8.7 25.5 9.7 14.0 1.13 6,173

338 FLCSX Large Cap Stock 29.78 Buy 1.4 1.4 9.7 28.2 9.0 15.0 1.22 2,932

361 FGRTX Mega Cap Stock 17.53 Buy 0.8 0.8 7.7 21.8 9.6 13.9 1.13 3,339

LARGE CAP VALUE 1.5 1.5 9.4 22.1 9.1 13.1 1.0

1271 FBCVX Blue Chip Value 17.78 Hold 3.0 3.0 11.8 20.0 9.9 13.5 1.02 414

319 FEQTX Equity Dividend Income 26.85 Buy 0.0 0.0 7.4 21.0 9.6 12.6 0.95 5,423

23 FEQIX Equity-Income 57.76 Buy 0.8 0.8 8.2 24.4 8.7 12.4 0.97 6,686

708 FSLVX Stock Sel Large Cap Value 18.76 OK to Buy 0.6 0.6 8.5 22.8 9.5 13.4 0.99 707

832 FVDFX Value Discovery 26.32 Buy 1.8 1.8 10.7 20.6 9.9 14.1 0.97 2,077

14 FSLSX Value Strategies 39.20 OK to Buy 2.8 2.8 10.0 23.7 7.1 12.5 1.19 474

MID-CAP GROWTH 2.7 2.7 8.2 20.2 7.7 12.4 1.10

324 FDEGX Growth Strategies 35.22 Buy 3.6 3.6 6.2 13.5 8.8 12.1 1.04 2,164

337 FMCSX Mid-Cap Stock 35.18 OK to Buy 1.6 1.6 7.1 24.5 7.1 12.8 1.07 5,514

2412 FSSMX Stock Selector Mid Cap 35.75 OK to Buy 2.7 2.7 11.3 22.4 7.1 12.2 1.18 232

MID-CAP BLEND 4.1 4.1 10.9 23.7 4.5 11.7 1.35

122 FLVCX Leveraged Company Stock 34.65 OK to Buy 4.1 4.1 10.9 23.7 4.5 11.7 1.35 2,678

MID-CAP VALUE 1.6 1.6 9.1 22.0 8.1 13.7 1.06

316 FLPSX Low-Priced Stock 50.06 Buy 1.2 1.2 7.3 16.3 6.8 12.1 0.91 27,998

762 FSMVX Mid Cap Value 25.24 OK to Buy 1.9 1.9 10.2 23.2 9.5 14.9 1.09 2,428

39 FDVLX Value 111.83 Buy 1.9 1.9 9.9 26.5 7.9 14.1 1.18 7,260

SMALL CAP GROWTH 3.5 3.5 10.6 27.1 8.3 14.3 1.39

1388 FCPGX Small Cap Growth 1.50%/90d 21.31 Buy 3.5 3.5 10.6 27.1 8.3 14.3 1.39 1,946

SMALL CAP BLEND 1.8 1.8 15.3 27.1 9.2 12.5 1.36

2624 FARNX Event Driven Opportunities 13.58 Buy 4.9 4.9 21.7 32.3 12.4 -- 1.54 280

384 FSCRX Small Cap Discovery (Closed) 1.50%/90d 31.81 OK to Buy 0.5 0.5 15.4 29.1 8.5 14.4 1.34 5,806

340 FSLCX Small Cap Stock 2.00%/90d 19.06 Hold 1.2 1.2 12.0 21.5 9.2 11.3 1.21 1,815

336 FDSCX Stock Selector Small Cap 1.50%/90d 26.35 OK to Buy 0.6 0.6 12.0 25.5 6.9 11.7 1.33 1,492

SMALL CAP VALUE 0.2 0.2 12.9 26.8 10.3 14.7 1.18

1389 FCPVX Small Cap Value (Closed) 1.50%/90d 18.85 OK to Buy 0.2 0.2 12.9 26.8 10.3 14.7 1.18 2,751

Category Averages

Category Averages

Category Averages

Category Averages

Category Averages

Category Averages

Total Return (%)

Category Averages

Category Averages

Comparative

Indexes

Model

Portfolios

Category Averages

Avg Annual (%)

Notes : *Fi del i t y ’s U.S. Bond Index used as a proxy for the Barclays Aggregate Bond Index. 1Relative Volati li ty (Rel Vol) versus the S&P 500 over the last 36 months; 1.50 means the fund has been 50% more volati le. 2 Duration is a measure of interest rate sensitivity. 3Stated yield is actual distributed yield over prior 12 months. 4Also available in a Premium share class with a minimum of $10,000, but a lower expense ratio. (p) Partial year; () Rating upgraded; () Rating downgraded.


Fund Fund Sht-Term $Price Rel Vol Assets

No. Ticker Fund Name Fee (NAV) Advice Jan YTD 3 Mo. 1 Year 3 Year 5 Year (Risk)1 ($Mil)

SPECIALTY

304 FBALX Balanced 22.46 OK to Buy 2.0 2.0 4.5 14.0 7.1 9.7 0.74 $21,023

308 FCVSX Convertible Securities 27.15 Hold 1.6 1.6 3.7 17.5 2.1 7.4 0.94 1,503

334 FGBLX Global Balanced 22.60 OK to Sell 2.3 2.3 -0.1 7.4 0.8 4.9 0.74 373

2120 FFGCX Global Commodity Stock 1.00%/90d 11.87 OK to Sell 5.1 5.1 11.9 47.5 -2.2 -3.3 1.83 280

1960 FDYSX Global Strategies 8.88 Hold 2.8 2.8 3.5 11.9 4.4 5.4 0.67 80

1368 FIREX International Real Estate 1.50%/90d 9.69 OK to Sell 2.1 2.1 -1.0 6.7 3.1 9.6 1.01 288

4 FPURX Puritan 21.06 OK to Buy 2.3 2.3 4.0 11.9 6.9 9.8 0.74 19,440

833 FRIFX Real Estate Income 0.75%/90d 11.87 OK to Buy 0.7 0.7 0.8 13.0 7.5 8.7 0.51 2,584

303 FRESX Real Estate Investment 41.09 Hold -1.4 -1.4 1.2 9.8 12.3 10.5 1.45 4,626

1329 FSDIX Strategic Dividend & Income 14.71 OK to Buy 0.7 0.7 4.1 16.5 8.9 10.7 0.74 3,476

1505 FSRRX Strategic Real Return 8.82 Hold 0.6 0.6 1.8 10.8 0.4 1.1 0.49 492

311 FIUIX Telecom & Utilities 25.33 Hold 2.4 2.4 5.0 17.5 8.3 12.1 0.98 993

ASSET ALLOCATION

328 FASIX Asset Manager 20% 13.13 Hold 0.9 0.9 0.7 6.6 3.1 3.8 0.31 4,752

1957 FTANX Asset Manager 30% 10.60 Hold 1.3 1.3 1.4 8.5 3.8 5.0 0.40 973

1958 FFANX Asset Manager 40% 10.96 Hold 1.6 1.6 2.1 10.0 4.3 6.0 0.50 1,151

314 FASMX Asset Manager 50% 17.04 Hold 1.9 1.9 2.9 11.6 4.8 6.9 0.59 7,661

1959 FSANX Asset Manager 60% 11.36 Hold 2.3 2.3 3.8 13.1 5.2 7.7 0.69 1,574

321 FASGX Asset Manager 70% 20.10 Hold 2.5 2.5 4.6 14.6 5.5 8.6 0.79 4,174

347 FAMRX Asset Manager 85% 16.99 Hold 3.0 3.0 5.8 16.7 6.1 9.8 0.93 1,581

EQUITY INDEX

650 FUSEX 500 Index4 79.82 Hold 1.9 1.9 7.8 20.0 10.8 14.0 1.00 3,846

2341 FPEMX Emerging Markets Index4 1.50%/30d 8.97 Hold 6.0 6.0 0.9 25.0 2.2 -0.1 1.54 23

398 FSEMX Extended Market Index4 56.72 Buy 2.1 2.1 12.2 30.0 7.9 13.3 1.32 791

355 FFNOX Four-in-One Index 38.98 Hold 2.0 2.0 5.9 15.9 6.7 10.1 0.87 4,661

2345 FSGUX Global ex U.S. Index4 11.30 Hold 3.9 3.9 3.6 15.0 1.0 4.2 1.16 35

2010 FIENX International Enhanced Index 1.00%/60d 8.38 Buy 3.7 3.7 5.2 12.1 2.3 7.4 1.13 251

399 FSIIX International Index4 36.45 Hold 3.2 3.2 4.1 10.9 0.8 6.0 1.14 734

1827 FLCEX Lrge Cap Core Enhcd Index 12.69 Buy 1.4 1.4 7.7 18.9 9.5 13.5 0.99 507

1829 FLGEX Lrge Cap Growth Enhcd Index 15.98 Buy 2.4 2.4 7.3 17.4 10.4 13.6 1.04 760

2823 FSUIX Lrge Cap Growth Index4 10.77 Hold 3.4 3.4 6.9 -- -- -- -- 5

1828 FLVEX Lrge Cap Value Enhcd Index 12.03 Buy 0.3 0.3 9.7 23.8 10.1 14.3 1.02 2,710

2827 FLCDX Lrge Cap Value Index4 11.03 Hold 0.7 0.7 9.1 -- -- -- -- 2

2012 FMEIX Mid Cap Enhanced Index 14.35 Buy 1.7 1.7 10.1 24.1 9.5 14.3 1.09 1,120

2349 FSCLX Mid Cap Index4 18.58 OK to Buy 2.4 2.4 9.1 24.5 9.3 13.7 1.11 64

1282 FNCMX Nasdaq Composite Index 73.68 OK to Buy 4.3 4.3 8.5 23.1 12.2 16.1 1.27 3,195

2353 FRXIX Real Estate Index4 0.75%/30d 15.30 Hold -0.9 -0.9 2.3 9.9 11.6 9.9 1.45 32

2011 FCPEX Small Cap Enhanced Index 14.17 Buy -0.4 -0.4 16.9 32.2 9.4 14.3 1.46 1,180

2356 FSSPX Small Cap Index4 18.41 OK to Buy 0.4 0.4 14.7 33.6 8.0 13.0 1.51 42

2831 FTIGX Total International Index4 1.00%/30d 10.38 Hold 3.8 3.8 3.4 -- -- -- -- 5

397 FSTMX Total Market Index4 65.78 Hold 1.9 1.9 8.6 21.7 10.2 13.8 1.03 734

INTERNATIONAL 4.0 4.0 1.3 14.7 2.7 6.5 1.24

309 FICDX Canada 1.50%/90d 50.51 Hold 3.3 3.3 6.2 27.5 2.1 3.2 1.30 1,273

352 FHKCX China Region 1.50%/90d 25.40 Hold 6.8 6.8 -0.2 17.8 1.5 6.8 2.12 917

325 FDIVX Diversified International 34.30 OK to Buy 3.0 3.0 1.4 5.8 1.2 6.8 1.10 10,107

351 FSEAX Emerging Asia 1.50%/90d 32.90 Hold 6.0 6.0 -0.2 18.9 5.1 4.7 1.45 869

2053 FEMEX Emerg Europe, MidEast, Africa 1.50%/60d 8.62 Hold 2.5 2.5 7.2 36.8 1.9 2.3 1.64 89

322 FEMKX Emerging Markets 1.50%/90d 23.65 Hold 6.0 6.0 -1.8 16.0 2.4 1.8 1.33 2,962

2374 FEDDX Emerging Mkts Discovery 2.00%/90d 12.13 Hold 6.2 6.2 -0.3 25.3 3.4 4.9 1.31 76

301 FIEUX Europe 34.45 Hold 2.5 2.5 2.1 5.4 -0.9 7.0 1.31 1,046

2406 FGILX Global Equity-Income 1.00%/90d 12.34 OK to Buy 1.4 1.4 2.6 9.5 5.7 -- 0.88 73

335 FIVFX International Cap App 16.61 Hold 3.9 3.9 -0.5 6.2 3.8 8.6 1.07 1,704

305 FIGRX International Discovery 37.76 Hold 3.5 3.5 1.4 4.7 0.5 6.9 1.08 6,236

1979 FIGFX International Growth 11.10 Hold 4.3 4.3 2.5 6.8 2.5 7.0 1.04 1,011

818 FISMX International Small Cap 2.00%/90d 24.21 OK to Buy 3.9 3.9 2.6 19.6 5.2 11.3 1.03 1,008

1504 FSCOX International Small Cap Opps 2.00%/90d 15.17 OK to Buy 4.3 4.3 2.6 9.4 4.3 10.1 1.00 745

1597 FIVLX International Value 1.00%/30d 7.87 Hold 2.2 2.2 3.7 6.3 -0.3 5.9 1.07 309

350 FJPNX Japan 1.50%/90d 12.55 Hold 4.8 4.8 0.5 13.5 3.8 6.8 1.18 364

360 FJSCX Japan Smaller Companies 1.50%/90d 15.19 OK to Buy 3.7 3.7 -0.3 16.3 7.7 14.4 1.02 588

349 FLATX Latin America 1.50%/90d 20.41 Hold 7.1 7.1 -6.6 37.8 -5.8 -10.0 2.26 512

342 FNORX Nordic 1.50%/90d 46.02 OK to Sell 2.5 2.5 3.4 5.9 3.4 12.7 1.21 370

94 FOSFX Overseas 40.65 Buy 2.8 2.8 1.8 8.4 3.2 9.3 1.10 4,637

302 FPBFX Pacific Basin 1.50%/90d 27.56 OK to Buy 4.2 4.2 -2.1 12.8 6.2 10.2 1.11 699

2369 FTEMX Total Emerging Markets 1.50%/60d 11.24 Hold 4.7 4.7 0.5 22.9 4.1 3.6 1.11 129

1978 FTIEX Total International Equity 1.00%/60d 7.72 Hold 3.8 3.8 1.7 9.1 1.6 5.8 1.04 303

318 FWWFX Worldwide 22.53 OK to Buy 3.3 3.3 3.2 10.0 2.8 9.8 1.07 1,400

Avg Annual (%)Total Return (%)

Category Averages


Fund Fund Sht-Term $Price Rel Vol Assets

No. Ticker Fund Name Fee (NAV) Advice Jan YTD 3 Mo. 1 Year 3 Year 5 Year (Risk)1 ($Mil)

SELECT PORTFOLIOS Category Averages 2.7 2.7 9.5 26.2 7.7 12.3 1.59

34 FSAIX Air Transportation 0.75%/30d 73.67 OK to Buy -0.8 -0.8 12.0 30.4 11.6 17.9 1.38 $382

502 FSAVX Automotive 0.75%/30d 36.83 Hold 5.4 5.4 11.1 17.9 2.3 10.8 1.72 56

507 FSRBX Banking 32.42 OK to Buy 0.7 0.7 24.0 43.7 12.6 17.3 1.76 1,178

42 FBIOX Biotechnology 185.01 OK to Sell 6.3 6.3 10.4 11.8 3.2 20.1 2.88 8,881

68 FSLBX Brokerage & Investment 0.75%/30d 68.78 Hold 1.8 1.8 17.2 25.0 2.8 11.9 1.79 385

69 FSCHX Chemicals 155.63 Hold 5.6 5.6 15.2 38.1 9.2 12.9 1.59 1,524

518 FSDCX Communications Equipment 0.75%/30d 32.02 Hold -2.4 -2.4 3.3 28.7 6.0 9.1 1.49 194

7 FDCPX Computers 0.75%/30d 77.41 Hold 4.3 4.3 7.7 33.7 7.0 9.9 1.58 431

511 FSHOX Construction & Housing 0.75%/30d 59.72 Buy 1.5 1.5 9.3 16.4 10.4 15.4 1.42 394

517 FSCPX Consumer Discretionary 36.55 Buy 3.4 3.4 7.1 13.6 10.1 14.9 1.19 846

98 FSVLX Consumer Finance 0.75%/30d 13.43 Hold 0.4 0.4 11.6 29.6 7.0 14.4 1.36 100

9 FDFAX Consumer Staples 92.65 OK to Buy 3.1 3.1 1.7 7.2 10.4 12.0 1.02 1,601

67 FSDAX Defense & Aerospace 129.63 Buy 0.4 0.4 8.3 28.2 8.8 15.0 1.22 1,459

60 FSENX Energy 46.05 Hold -1.5 -1.5 10.4 34.9 -1.1 2.4 2.13 2,467

43 FSESX Energy Service 0.75%/30d 56.72 Hold 1.6 1.6 23.0 46.6 -6.3 -1.0 2.53 791

516 FSLEX Environment & Alt Energy 0.75%/30d 23.14 OK to Buy 2.6 2.6 11.2 32.1 7.6 11.9 1.28 129

66 FIDSX Financial Services 99.08 OK to Buy 0.4 0.4 15.9 30.4 9.7 14.1 1.27 962

41 FSAGX Gold 21.71 OK to Sell 13.3 13.3 -2.1 61.0 3.9 -13.6 4.03 1,291

63 FSPHX Health Care 194.88 Hold 5.4 5.4 6.1 6.0 7.6 19.0 1.59 6,217

505 FSHCX Health Care Services 0.75%/30d 85.45 Hold 3.6 3.6 12.8 14.4 11.4 14.5 1.27 729

510 FSCGX Industrial Equipment 0.75%/30d 39.63 Buy 1.3 1.3 9.9 21.4 6.8 11.1 1.29 189

515 FCYIX Industrials 32.94 Buy 1.8 1.8 13.0 26.4 8.1 13.4 1.29 952

45 FSPCX Insurance 0.75%/30d 77.70 Buy 0.2 0.2 9.8 25.6 13.1 17.3 1.18 650

353 FBSOX IT Services 42.44 OK to Buy 1.3 1.3 4.0 13.1 10.2 17.1 1.30 1,605

62 FDLSX Leisure 0.75%/30d 138.75 Hold 1.4 1.4 8.1 11.5 8.1 12.5 1.09 400

509 FSDPX Materials 80.14 Hold 5.3 5.3 12.6 33.9 3.9 7.2 1.58 853

354 FSMEX Medical Equipment 39.41 Hold 7.0 7.0 3.8 24.8 15.3 18.9 1.41 2,872

503 FBMPX Multimedia 0.75%/30d 80.44 Hold 8.0 8.0 16.0 25.5 9.4 18.2 1.46 658

513 FSNGX Natural Gas 0.75%/30d 29.25 Hold -1.1 -1.1 13.6 53.7 -6.2 -0.1 2.76 563

514 FNARX Natural Resources 0.75%/30d 30.37 Hold -0.7 -0.7 9.1 33.8 -2.7 0.0 2.13 962

580 FPHAX Pharmaceuticals 16.91 Hold -0.8 -0.8 -1.4 -10.6 3.1 12.2 1.41 967

46 FSRPX Retailing 112.47 OK to Buy 2.5 2.5 5.1 13.2 14.8 19.2 1.21 1,903

8 FSELX Semiconductors 0.75%/30d 97.81 OK to Buy 2.4 2.4 9.8 50.2 24.0 19.2 1.66 2,847

28 FSCSX Software & IT Services 136.65 Buy 6.1 6.1 3.5 24.5 11.9 18.3 1.42 4,101

64 FSPTX Technology 139.47 Buy 7.2 7.2 6.2 30.6 12.4 15.2 1.44 3,737

96 FSTCX Telecommunications 71.13 Buy 1.9 1.9 10.0 25.0 10.6 13.9 1.05 740

512 FSRFX Transportation 0.75%/30d 91.20 OK to Sell 1.2 1.2 15.5 37.2 11.4 16.2 1.50 650

65 FSUTX Utilities 73.09 Sell 2.5 2.5 1.1 13.6 7.2 11.2 1.17 679

963 FWRLX Wireless 0.75%/30d 8.68 Hold 3.3 3.3 4.4 18.8 5.1 10.6 1.09 216

SECTOR ETFs

FDIS MSCI Consumer Discretionary 33.42 Buy 3.9 3.9 9.6 17.5 11.0 -- 1.21 235

FSTA MSCI Consumer Staples 31.63 OK to Buy 1.4 1.4 0.6 7.0 11.5 -- 0.94 233

FENY MSCI Energy 20.48 Hold -3.3 -3.3 7.7 27.5 -3.1 -- 1.91 519

FNCL MSCI Financials 34.64 OK to Buy 0.2 0.2 18.8 36.6 13.5 -- 1.35 587

FHLC MSCI Health Care 33.77 Hold 2.7 2.7 5.8 9.4 9.4 -- 1.31 579

FIDU MSCI Industrials 32.76 Buy 1.7 1.7 11.7 30.7 9.6 -- 1.24 268

FTEC MSCI Information Technology 38.45 Buy 4.2 4.2 6.3 26.1 14.7 -- 1.36 580

FMAT MSCI Materials 30.21 Hold 4.8 4.8 13.5 41.4 8.1 -- 1.66 167

FREL MSCI Real Estate 23.44 Hold -0.0 -0.0 2.2 12.3 -- -- -- 233

FCOM MSCI Telecomm Services 32.20 Buy 0.3 0.3 11.7 21.7 11.5 -- 1.18 132

FUTY MSCI Utilities 32.00 Sell 1.3 1.3 1.3 13.5 11.8 -- 1.31 182

FACTOR ETFs

FDVV Core Dividend 26.34 OK to Buy 0.7 0.7 7.3 -- -- -- -- 29

FDRR Dividend for Rising Rates 26.87 OK to Buy 1.4 1.4 8.0 -- -- -- -- 52

FDLO Low Volatility Factor 26.06 Hold 0.8 0.8 5.9 -- -- -- -- 12

FDMO Momentum Factor 26.18 OK to Sell 2.5 2.5 5.8 -- -- -- -- 10

FQAL Quality Factor 26.85 Hold 2.2 2.2 7.4 -- -- -- -- 18

FVAL Value Factor 27.82 Buy 1.9 1.9 10.5 -- -- -- -- 14

Total Return (%) Avg Annual (%)

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Annuity (VIP) Models

Sector 57.5 6.3 14.0 17.7 11.2 -41.4 50.2 15.0 -5.0 18.1 36.2 10.0 1.6 12.9

Growth 20.6 4.6 36.1 16.1 23.5 22.6 22.1 -10.3 -14.0 -21.7 30.0 7.0 10.1 14.5 9.3 -45.5 25.1 17.7 -2.2 17.8 27.2 9.3 0.2 10.1

G&I 26.4 12.8 21.4 15.1 6.1 -4.9 3.1 -9.4 20.8 6.3 4.5 11.6 7.7 -31.0 27.1 12.0 -1.0 13.9 17.8 9.1 0.4 7.4

Income 12.3 -3.8 16.9 6.9 10.9 0.4 0.8 -2.4 -3.4 7.3 9.9 5.1 1.8 6.1 6.2 -18.3 22.9 7.3 7.4 10.0 1.2 5.7 -0.2 7.4


Yields on municipal funds are not directly comparable to yields on taxable funds. In muni funds your effective yield will be higher as your tax-bracket

increases. *12 month distributed yield.

Fund Fund Sht-Term $Price SEC Dur2 Rel Vol

No. Ticker Fund Name Fee (NAV) Advice Jan YTD 3 Mo. 1 Yr 3 Yr 5 Yr %Yield (Yrs) (Risk)1

TAXABLE BOND 0.5 0.5 -1.8 1.8 1.7 1.7 1.85 5.3 0.32

2267 FCONX Conservative Income Bond 10.03 Buy 0.1 0.1 0.2 1.1 0.5 0.7 0.89 0.2 0.02

2208 FCBFX Corporate Bond 11.30 Buy 0.4 0.4 -1.5 7.2 3.7 3.8 3.15 6.9 0.40

2423 FGBFX Global Bond 8.75 OK to Sell 1.6 1.6 -2.5 4.0 -0.4 -- 1.36 7.0 0.52

15 FGMNX GNMA (Ginnie Mae) 11.41 OK to Buy -0.0 -0.0 -1.6 0.6 2.3 1.9 2.09 4.2 0.17

54 FGOVX Government Income 10.18 Hold 0.3 0.3 -2.3 -0.5 1.9 1.3 1.70 5.5 0.28

794 FINPX Inflation-Protected Bond3 12.03 Hold 0.9 0.9 -1.3 3.5 1.4 0.2 0.13* 5.6 0.40

2415 FSIQX Inflation-Protected Index4 9.76 Hold 0.8 0.8 -1.2 3.9 1.7 -- 0.03* 5.6 0.41

32 FTHRX Intermediate Bond 10.81 Buy 0.4 0.4 -1.3 2.3 2.0 2.0 2.25 4.0 0.21

452 FSTGX Intermediate Gov't Income 10.46 Hold 0.2 0.2 -1.5 -0.3 1.2 0.9 1.41 3.8 0.21

1561 FIBIX Intermediate Treasury Index4 10.65 Hold 0.3 0.3 -3.3 -1.7 2.2 1.3 2.06 6.6 0.44

2428 FINUX International Bond 8.34 OK to Sell 2.3 2.3 -3.2 4.1 -2.4 -- 1.85 7.5 0.73

26 FBNDX Investment Grade Bond 7.81 Buy 0.5 0.5 -1.4 5.2 2.8 2.6 1.70 5.9 0.31

2622 FJRLX Limited Term Bond 11.46 Buy 0.2 0.2 -0.6 2.3 1.6 1.8 1.74 2.5 0.14

662 FFXSX Limited Term Government 9.94 OK to Buy 0.2 0.2 -0.8 -0.2 0.7 0.6 1.08 2.7 0.14

1562 FLBIX Long-Term Treasury Index4 12.63 Hold 0.6 0.6 -7.6 -3.4 5.7 2.4 2.81 17.5 1.10

40 FMSFX Mortgage Securities 11.17 OK to Buy -0.0 -0.0 -1.8 0.5 2.6 2.2 1.93 4.6 0.19

450 FSHBX Short-Term Bond 8.59 Buy 0.1 0.1 -0.2 1.1 0.9 1.1 1.20 1.6 0.07

1560 FSBIX Short-Term Treasury Index4 10.39 Hold 0.2 0.2 -0.9 -0.1 0.8 0.6 1.26 2.7 0.14

820 FTBFX Total Bond 10.55 Buy 0.5 0.5 -1.1 5.8 3.3 3.1 2.54 5.7 0.30

651 FBIDX U.S. Bond Index 11.50 Hold 0.2 0.2 -2.1 1.2 2.4 1.9 2.34 5.8 0.29

HIGH-YIELD BOND 1.4 1.4 2.1 15.2 4.4 5.6 4.34 3.4 0.53

38 FAGIX Capital & Income 1.00%/90d 9.91 OK to Buy 2.4 2.4 4.5 17.2 6.0 7.9 4.05 3.7 0.60

814 FFRHX Floating Rate High Income 1.00%/60d 9.65 OK to Buy 0.4 0.4 1.8 11.5 2.9 3.6 3.28 0.3 0.30

1366 FHIFX Focused High Income 1.00%/90d 8.56 OK to Buy 1.2 1.2 1.8 14.1 4.0 5.1 4.05 3.9 0.51

2297 FGHNX Global High Income 1.00%/30d 9.40 OK to Buy 1.8 1.8 2.0 16.0 4.2 6.3 4.48 3.4 0.58

455 SPHIX High Income 1.00%/90d 8.80 Buy 1.5 1.5 3.5 19.5 4.0 6.0 5.67 3.5 0.60

331 FNMIX New Markets Income 1.00%/90d 15.82 OK to Buy 1.9 1.9 0.5 18.4 7.5 6.1 6.19 5.9 0.74

2580 FSAHX Short Duration High Income 1.00%/30d 9.50 OK to Buy 0.8 0.8 2.1 13.8 2.4 -- 3.59 2.1 0.47

368 FSICX Strategic Income 10.77 OK to Buy 1.3 1.3 0.8 11.3 3.8 4.2 3.43 4.6 0.41

MUNICIPAL BOND 0.4 0.4 -2.3 -0.6 3.1 2.6 2.02 5.9 0.29

434 FSAZX Arizona Muni Income 11.87 Hold 0.6 0.6 -2.4 -0.7 4.1 3.2 2.06 7.0 0.34

1534 FCSTX Calif Limited Term Tax Free 10.54 OK to Buy 0.6 0.6 -1.2 -0.6 1.4 1.4 1.24 3.0 0.17

91 FCTFX California Muni Income 12.72 Hold 0.5 0.5 -2.8 -0.9 4.0 3.6 2.09 6.6 0.35

407 FICNX Connecticut Muni Income 11.27 Hold 0.3 0.3 -3.0 -1.5 3.3 2.3 2.28 6.9 0.35

2578 FCRDX Conservative Income Muni 10.02 Buy 0.3 0.3 0.0 0.3 0.3 -- 0.84 0.7 0.03

36 FLTMX Interm Municipal Income 10.23 Hold 0.4 0.4 -2.0 -0.5 2.6 2.2 1.95 4.9 0.26

404 FSTFX Limited Term Muni Income 10.48 OK to Buy 0.6 0.6 -1.1 -0.5 0.9 1.0 1.33 2.7 0.16

429 SMDMX Maryland Muni Income 11.12 Hold 0.6 0.6 -2.7 -0.7 3.5 2.5 1.99 6.7 0.33

70 FDMMX Mass Muni Income 11.99 Hold 0.3 0.3 -2.7 -0.9 3.8 2.8 2.20 7.4 0.35

81 FMHTX Michigan Muni Income 11.94 Hold 0.3 0.3 -2.5 -1.1 3.7 2.8 2.27 6.8 0.32

82 FIMIX Minnesota Muni Income 11.45 Hold 0.5 0.5 -2.0 -0.5 2.9 2.3 1.87 5.9 0.28

37 FHIGX Municipal Income 12.88 Hold 0.4 0.4 -3.0 -0.6 4.0 3.3 2.43 7.1 0.36

416 FNJHX New Jersey Muni Income 11.48 Hold 0.1 0.1 -3.6 -0.8 3.0 2.4 2.49 6.6 0.37

71 FTFMX New York Muni Income 13.07 Hold 0.6 0.6 -2.4 -0.5 4.0 3.0 2.12 6.9 0.33

88 FOHFX Ohio Muni Income 11.93 Hold 0.4 0.4 -2.7 -0.8 4.2 3.3 2.30 7.5 0.36

402 FPXTX Pennsylvania Muni Income 10.99 Hold 0.4 0.4 -2.4 -0.3 3.8 3.0 2.28 6.6 0.30

90 FTABX Tax-Free Bond 11.30 Hold 0.5 0.5 -2.7 -0.3 4.1 3.4 2.58 7.2 0.35

Category Averages


Category Averages

Category Averages

SEC

Jan YTD %Yield

55 FDRXX Gov't Cash Reserves 0.02 0.02 0.27

458 SPAXX Government MM 0.02 0.02 0.20

631 FGMXX Retirement Gov't MM 0.02 0.02 0.25

630 FRTXX Retirement Gov't MM II 0.02 0.02 0.24

2742 FZFXX Treasury MM 0.01 0.01 0.15

415 FDLXX Treasury Only MM 0.01 0.01 0.13

454 SPRXX Money Market 0.06 0.06 0.69

10 FTEXX Municipal Money Market 0.03 0.03 0.37

275 FMOXX Tax-Exempt MM 0.02 0.02 0.29

PRIME MONEY MARKETS

NATIONAL MUNICIPAL MONEY MARKETS

Total Return (%) TAXABLE GOV'T MONEY MARKETS

SEC

Jan YTD %Yield

433 FSAXX Arizona Muni MM 0.02 0.02 0.27

97 FCFXX California Muni MM 0.02 0.02 0.26

457 FSPXX California AMT Tax-Free 0.04 0.04 0.41

418 FCMXX Connecticut Muni MM 0.02 0.02 0.25

426 FMSXX Mass AMT Tax-Free 0.03 0.03 0.40

74 FDMXX Massachusetts Muni MM 0.02 0.02 0.26

420 FMIXX Michigan Muni MM 0.02 0.02 0.22

417 FNJXX New Jersey Muni MM 0.02 0.02 0.25

423 FSJXX New Jersey AMT Tax-Free 0.04 0.04 0.43

92 FNYXX New York Muni MM 0.02 0.02 0.27

422 FSNXX New York AMT Tax-Free 0.04 0.04 0.43

419 FOMXX Ohio Muni MM 0.02 0.02 0.27

401 FPTXX Pennsylvania Muni MM 0.02 0.02 0.23

Total Return (%) STATE MUNICIPAL MONEY MARKETS


VIP Technology 28%

VIP Cons Discretionary 26

VIP Telecom 25

VIP Industrials 21

Total Return:

Jan: 3.7% YTD: 3.7%

Annuity Sector

Fund Allocation

VIP Disciplined Sm Cap 24%

VIP Contrafund 20

VIP Equity-Income 17

VIP Mid Cap 16

VIP Value 12

VIP Growth Opps 11

Jan: 1.6% YTD: 1.6%

Fund Allocation

Annuity Growth

Total Return:

VIP Investment Grade 22%

VIP Contrafund 21

VIP Equity-Income 20

VIP Growth & Income 20

VIP High Income 17

Total Return:

Jan: 1.2% YTD: 1.2%

Annuity Growth & Income

Fund Allocation

VIP Investment Grade 28%

Pimco VIT Low Duration 26

VIP Equity Income 24

VIP High Income 22

Total Return:

Jan: 0.6% YTD: 0.6%

Annuity Income

Fund Allocation

Fund Fund Sht-Term $Price Rel Vol

No. Ticker Fund Name Style Fee (NAV) Advice Jan YTD 3 Mo. 1 Year 3 Year 5 Year (Risk)1

FIDELITY PERSONAL RETIREMENT ANNUITY PORTFOLIOS

Annuity Sector Model 3.7 3.7 8.9 23.3 10.0 14.3 1.08

Annuity Growth Model 1.6 1.6 10.2 21.7 7.8 11.5 1.13

Annuity Growth & Income Model 1.2 1.2 4.8 15.1 6.3 8.9 0.73

Annuity Income Model 0.6 0.6 2.0 9.6 4.3 4.3 0.40

9067 FLRQC Fid VIP Asset Manager Allocation 18.11 Hold 1.9 1.9 2.8 9.8 3.2 6.4 0.69

9066 FAEEC Fid VIP Asset Manager: Growth Allocation 18.36 Hold 2.5 2.5 4.5 12.1 3.4 7.8 0.91

9069 FJBAC Fid VIP Balanced Allocation 21.29 OK to Buy 2.0 2.0 4.5 14.0 6.9 9.2 0.74

9081 FVHAC Fid VIP Consumer Discretionary Sector 1.00%/60d 25.35 Buy 3.5 3.5 7.2 13.8 9.6 14.6 1.17

9171 FCSAC Fid VIP Consumer Staples Sector 1.00%/60d 24.24 OK to Buy 2.7 2.7 -0.9 7.3 13.1 13.5 1.05

9065 FPDFC Fid VIP Contrafund Large Growth 23.01 Buy 2.8 2.8 7.5 18.7 8.3 12.3 1.06

9148 FPRGC Fid VIP Disciplined Small Cap Small Blend 19.92 Buy -0.5 -0.5 16.8 31.6 8.9 13.7 1.46

9074 FZAMC Fid VIP Dynamic Capital App Large Growth 24.01 OK to Sell 3.1 3.1 8.5 15.3 6.1 13.1 1.23

9198 FEMAC Fid VIP Emerging Markets Emg Mkts 8.40 Hold 6.1 6.1 -1.8 15.5 2.0 1.4 1.33

9085 FJLLC Fid VIP Energy Sector 1.00%/60d 16.49 Hold -1.5 -1.5 10.4 34.5 -1.4 2.2 2.13

9061 FLOLC Fid VIP Equity-Income Large Value 19.51 Buy 0.7 0.7 8.3 24.4 8.4 12.1 0.97

9083 FONNC Fid VIP Financial Services Sector 1.00%/60d 12.31 OK to Buy 0.3 0.3 15.6 29.7 9.4 13.9 1.27

9361 FFLCC Fid VIP Floating Rate High Income High-Yield Bond 10.81 OK to Buy 0.3 0.3 1.5 10.1 2.6 -- 0.27

9157 FMPAC Fid VIP FundsManager 20 Allocation 14.49 Hold 0.9 0.9 0.3 4.4 2.4 3.1 0.29

9158 FMPBC Fid VIP FundsManager 50 Allocation 16.04 Hold 1.8 1.8 2.4 9.2 3.9 6.2 0.57

9197 FMPPC Fid VIP FundsManager 60 Allocation 15.07 Hold 2.1 2.1 3.1 10.9 4.5 7.3 0.68

9159 FMPCC Fid VIP FundsManager 70 Allocation 16.50 Hold 2.4 2.4 3.9 12.2 4.8 8.1 0.77

9160 FMPDC Fid VIP FundsManager 85 Allocation 16.61 Hold 3.0 3.0 5.1 14.9 5.4 9.5 0.93

9062 FMNDC Fid VIP Growth Large Growth 22.41 OK to Buy 5.4 5.4 6.2 13.5 7.7 13.1 1.17

9070 FLFNC Fid VIP Growth & Income Large Blend 22.23 Buy 1.0 1.0 8.6 25.0 9.4 13.6 1.13

9068 FIDPC Fid VIP Growth Opportunities Large Growth 22.57 Buy 4.3 4.3 6.7 15.0 7.0 13.0 1.34

9084 FPDRC Fid VIP Health Care Sector 1.00%/60d 33.71 Hold 5.6 5.6 6.4 6.0 7.3 18.5 1.60

9060 FBBLC Fid VIP High Income High-Yield Bond 19.61 Buy 1.1 1.1 2.7 17.5 3.7 5.5 0.59

9064 FXVLT Fid VIP Index 500 Large Blend 22.73 Hold 1.8 1.8 7.6 19.6 10.5 13.7 1.00

9082 FBALC Fid VIP Industrials Sector 1.00%/60d 29.99 Buy 1.8 1.8 12.7 26.1 8.0 13.2 1.28

9076 FVJIC Fid VIP Int'l Capital App Diversified Int'l 15.97 Hold 3.9 3.9 -0.6 6.0 3.6 8.3 1.07

9063 FTLKC Fid VIP Investment Grade Bond Inv Grd Bond 15.84 Buy 0.5 0.5 -1.6 4.3 2.6 2.3 0.30

9172 FVMAC Fid VIP Materials Sector 1.00%/60d 19.53 Hold 5.2 5.2 12.4 33.5 3.6 6.9 1.58

9071 FNBSC Fid VIP Mid Cap Mid Growth 24.73 Buy 2.7 2.7 10.7 24.2 7.3 11.8 1.21

9059 FTNJC Fid VIP Gov't Money Market Money Mkt 11.33 -- 0.0 0.0 0.0 -0.1 -0.2 -0.2 0.01

9088 FEMMC Fid VIP Overseas Diversified Int'l 14.43 Buy 2.9 2.9 1.4 5.0 -1.0 6.1 1.18

9072 FFWKC Fid VIP Real Estate Sector 22.54 Hold -1.0 -1.0 2.0 8.9 10.4 9.6 1.43

9075 FGDQC Fid VIP Strategic Income High-Yield Bond 18.48 OK to Buy 1.3 1.3 0.6 10.4 3.3 3.6 0.40

9086 FYENC Fid VIP Technology Sector 1.00%/60d 30.80 Buy 7.4 7.4 6.9 30.0 11.7 14.2 1.44

9173 FVTAC Fid VIP Telecommunications Sector 1.00%/60d 16.69 Buy 1.8 1.8 9.9 24.6 10.3 13.8 1.05

9087 FXRRC Fid VIP Utilities Sector 1.00%/60d 23.72 Sell 2.5 2.5 0.9 13.3 6.9 11.1 1.18

9079 FKMSC Fid VIP Value Large Value 20.40 Buy 1.1 1.1 8.9 20.4 8.6 13.5 1.07

9073 FRBSC Fid VIP Value Strategies Mid Value 20.95 OK to Buy 2.7 2.7 9.9 22.5 6.2 11.8 1.20

9347 FBMEC Black Rock Global Allocation Global Allocation 12.33 Hold 1.7 1.7 2.9 9.3 2.7 4.9 0.64

9349 FTMEC Franklin Templeton Global Bond Global Bond 10.86 OK to Sell -0.2 -0.2 2.5 3.3 0.7 2.0 0.53

9348 FFMEC Franklin Templeton US Gov't Intermed Gov't 10.27 Hold 0.0 0.0 -1.6 -0.6 0.9 0.5 0.15

9285 FIGXC Invesco Global Core Eqty Global Stock 12.08 Hold 3.1 3.1 6.2 17.3 4.3 7.5 1.07

9147 FPRLC Lazard Retirement Emerging Mkts Emg Mkts 15.05 Hold 5.1 5.1 1.6 30.5 1.7 0.9 1.67

9143 FPRMC Morgan Stanley Emerg Mkt Debt Emg Mkt Bond 17.95 OK to Buy 1.1 1.1 -1.7 12.8 4.6 3.4 0.68

9144 FPRNC Morgan Stanley Emerg Mkt Equity Emg Mkts 12.52 Hold 5.4 5.4 -2.3 19.2 0.4 0.7 1.36

9146 FPRPC Morgan Stanley Global Strategist Diversified Int'l 12.39 Hold 1.6 1.6 3.0 10.5 1.2 5.1 0.73

9346 FPMEC Pimco Commodity Real Return Commodities 6.05 OK to Sell 0.7 0.7 3.6 17.5 -11.6 -9.8 1.51

9276 FPMBC Pimco VIT Low Duration Shrt-Term Bond 11.53 Buy 0.1 0.1 -0.1 1.1 0.5 1.1 0.12

9277 FPNBC Pimco VIT Real Return TIPS 12.86 Hold 1.1 1.1 -0.8 4.8 1.2 0.3 0.45

9278 FPOBC Pimco VIT Total Return Intermed Bond 12.97 Hold 0.6 0.6 -1.4 2.0 2.0 2.4 0.31


Model

Portfolios


Growth Company: 20 Years Later,

Still Flourishing Under Steve Wymer Is Steve Wymer the Tom Brady of

mutual fund investing?

Granted, we’re showing a bit of

our Patriot’s foot-

ball bias here ahead

of Sunday’s Super

Bowl. But we can’t

help but make some

comparisons be-

tween New Eng-

land’s “Tom Terrif-

ic” and Growth Company’s leader .

After all, Wymer just marked his

20th anniversary as the fund’s

“quarterback.” And for those inves-

tors who have stuck by him (and

they number in the thousands),

Steve’s also been pretty terrific.

Not only does Steve have one of

the “winningest” records in his sport

(large-cap growth investing), but his

endurance on this particular field of

play is fairly rare.

That said, his teammates, Joel

Tillinghast of Low-Priced Stock

and Will Danoff of Contrafund,

have longer records. They arrived at

their funds in 1989 and 1990,

respectively. By those measures,

Steve is a relative newcomer at

Growth Co. having “only” taken

control of the fund in 1997.

As for Steve’s 20-year record,

it’s a bit misleading to compare

each year of Growth Co’s returns

to a season of football. But in the

spirit of Super Bowl Sunday, let’s

compare them anyway!

Brady’s New England Patriots

have not had a single losing season

since he became the team’s quarter-

back in 2001. Steve, however, has

had plenty of losing seasons.

Brady’s regular-season record

is an astonishing 183 wins but only

54 losses — or 77% wins!

As for Steve’s Growth Co., it

has “only” outpaced its Russell

3000 Growth benchmark in 13 of

the past 20 years (65%). And, it

has only beaten the S&P Index on

11 occasions (55%).

So what’s so wonderful about

Wymer?

Over the past two decades,

(ended 12/31/16) Growth Co’s aver-

age annual return is 9.8%. His Rus-

sell benchmark has returned only

6.8%, while the S&P 500 clocks in

with its 7.7% return.

While these differences seem

small, here’s a lesson on the power

of compounding: Growth Co’s total

return under Steve is 548% versus

273% for its Russell benchmark,

and 339% for the S&P 500.

Detailing Wymer’s and Brady’s

longtime records would fill this

newsletter. So, for now, let’s just

agree to allow their records to speak

for themselves. But here’s an im-

portant point: While Steve didn’t

beat his benchmark in 2016 (up

6.0%, he “missed” by less than two

percentage points), many of his

most successful “seasons” have fol-

lowed difficult ones.

Likewise, Tom Terrific came up

short last year — the Patriots didn’t

reach the Super Bowl. But just as no

one is counting out Brady this year,

neither should you count out Steve

to most new investors, we continue

to rate the fund a Buy.

Steven Wymer

Last Year’s Laggards

Should Rebound

Human nature being what it is, the

temptation is always great to buy

last year’s “winning” funds and to

sell your losers. But as with other

things in life, bowing to temptation

can lead to a bad outcome!

In that spirit, this month’s model

portfolio trades (see p. 3) have us

adding to two funds that struggled

mightily in 2016. In fact, Growth

Strategies (+2.7% ) and Contra-

fund (+3.4% ) trailed their respec-

tive benchmarks by 4.6 and 9.6 per-

centage points apiece. This begs the

question: Why buy more of each?

Let’s look at each fund.

Growth Strategies: Manager

Jean Park holds quality companies,

but does not over-pay to own them;

she’s sensitive to valuations and to

risk. Her investment process screens

for stocks with high free-cash-flow

yields, and lower-than-market price-

to-earnings ratios. But, they do

Since arriving to the fund in

August 2013, this approach has

served her shareholders well: Jean’s

mid-cap growth fund steadily

ground out index-beating returns.

But that suddenly changed in the

last quarter with the Trump victory.

Quality was out and investors’ appe-

tite for riskier fare quickly took

hold. A stark example of that turn is

this: The fund lost ground to its

benchmark in nine of the market’s

11 sectors (consumer staples and

health care accounted for the lion’s

share of its underperformance).

Looking ahead, we certainly

don’t expect Jean’s investment pro-

cess to change, but we do think that

the market’s appetite for lower-

quality stocks may peter out.

Contrafund: This is another

case of a manager who found his

“best of breed” stocks out of favor

for much of 2016, only to see inves-

tor disinterest in them accelerate in

the last seven weeks of the year.

(Again, post-Trump victory.)

But as we consider Manager Will

Danoff’s long-employed and highly

successful strategy of owning

shares of “durable” above-average

earners (including Facebook, Alpha-

bet and Amazon), what’s not for us

to like over the longer term?

Indeed, we share Will’s confidence

that “well-positioned firms with de-

fensible and cash-generative busi-

ness models will appreciate over

time.” Bottom line:


Fidelity Monitor & Insight (ISSN 0892-2934) is published monthly for $249 per year by Independent Fidelity Investors Inc (IFI).

Executive Editor: Jack Bowers Editors: John Boyd, John Bonnanzio Production & Design: Kim Dowgos, Sher raden Marston Webmaster:

Wayne Foster. All material presented is compiled from sources believed reliable, but accuracy cannot be guaranteed. Before buying any mutual fund,

you should read its prospectus carefully. IFI does not render legal, accounting or tax advice. Copyright ©2017. Reproductions in whole or in part are

prohibited except by permission. Send address changes to Fidelity Monitor & Insight P.O. Box 19189 Reno, NV 89511.

Editorial Questions: editor [email protected] Subscription Questions: [email protected] or 800-444-6342 Hotline: 800-520-4630

Inside Fidelity Proxy Vote — Shareholders in all

six of Fidelity’s Enhanced Index

offerings Large

Cap Core, Large Cap Growth,

Large Cap Value, Mid Cap En-

hanced and Small Cap ) are being

asked by the funds’ Board of Trus-

tees to support several measures.

Importantly, this includes the ap-

proval to reduce fund expenses by 1

to 6 basis points (0.01% to 0.06%)

per year. (See “Fidelity Edges Rival

Vanguard On Expenses” on p. 4.)

We recommend shareholders

vote “For” all three proxy measures,

which will occur on March 8, 2017.

New Fund — Fidelity Canada

has launched a new fund called

Insights Class; it’s a close cousin to

a U.S. advisor-sold fund called New

Insights, which is run by Contra-

fund’s Will Danoff (see p. 11).

While we don’t typically share

our thoughts on funds that are sold

outside the U.S., this offering caught

our attention because of its manager.

That Will has agreed to run what is

essentially little more than a new

share class of an existing fund isn’t

especially important. But, it does

signal that Will plans to manage

money at Fidelity for the

2017 Guide Independent Guide

Special Hotline Updates

Taxes — Fidelity is offering mod-

estly discounted prices for popular

versions of 2016 TurboTax software

through their website. But the real

deal may actually be the added ease

of use: Most Fidelity customers

(though not 401(k) clients) can

automatically import their tax infor-

mation (including cost basis) direct-

ly into the software.

Muni Bond Funds

Lose Some Appeal Q: Last month, you downgraded 15

municipal bond funds. But if Presi-

dent Trump makes good on his

pledge to increase spending on the

country’s infrastructure, a lot more

federal money will flow to states,

municipalities and agencies that run

airports and the like. Wouldn’t this

be good for muni bond funds? A: Our modest downgrade to

Hold on almost all muni bond funds

has had little to do with the potential

for the better part of a trillion dollars

eventually flowing into infrastruc-

ture projects over the next several

years. That said, assuming there is

demand for the forthcoming flood of

new bond issuance, the existing sup-

ply that is traded in the so-called

secondary market should be unaf-

fected by new supply.

On the other hand, the potential

downward pressure (increased risk)

to munis also comes from an entire-

ly different set of presidential priori-

ties: lower personal income taxes.

Unlike any other asset class,

muni bonds are unique in that the

vast majority of the roughly $4 tril-

lion market is held by individuals

directly and through their mutual

funds. Moreover, they are owned

predominantly by more highly taxed

individuals who appreciate that their

coupons (income) are free of federal

and often state and local taxes. This

makes their tax-equivalent yields

more attractive. But if federal taxes

are lowered, munis become less at-

tractive relative to today’s higher

yields, thereby reducing their value.

For now, our preferred choice is

for its

limited interest-rate risk.

Other than monthly dividends on bond and money market funds, and Asset Mgr: 20%/30%, the following funds are scheduled for a distribution (if any) in February: Contrafund, Global Bond, Global

Strategies, Int’l Bond, Intermed Muni,

Limited Term Muni, MI, MN, OH, and

PA Muni Income, New Markets Inc,

Sptn Inflation-Protected , Strategic Inc,

Trend There were no funds with distribu-tions in January.

best performing fidelity newsletter for the past 30 years ...reinvested. consider the tax...

Documents