Another Good Year For Stocks, Despite A Potential Correction. Growth Model Portfolio Track Record Turns 30

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1 Best Performing Fidelity Newsletter For The Past 30 Years Growth Model Portfolio Track Record Turns 30 In late 1986, I introduced the Growth Model in the first issue of Fidelity Monitor. At that time, Eric Kobren s Fidelity Insight had been in publication for almost a year with a Select Portfolio. Over time, both of us added models. We bought out Fidelity Insight in late 2009, then merged the two newsletters in late Monitor s portfolio history was retained (see page 8), as it Jack Bowers reflected my history of investment decisions, as tracked by The Hulbert Financial Digest. Dow Jones shut down Hulbert s last April. Some newsletters (including our own) expressed interest in keeping the tracking service alive, so Mark Hulbert formed a new firm, adopted a new business model, and re-hired his lead analyst. It will be a few months before we have ranking data, but our own tracking shows there are no other Fidelity newsletters with a better 30-year return. Over the past three decades, our Growth Model returned 10.8% annually, versus 10.1% for the S&P 500. Over the past 28 years, our Select Model gained 13.2% per year, versus 10.1% for the S&P 500. So what does the future hold? The stock market has become more efficient over the last three decades, making it harder for active managers to outperform. The Growth and Unique Opportunities models have both struggled with weakness in smaller and foreign stocks over the last five years, but I m encouraged by the recent rally in small-caps. It may have room to run, setting the stage for improved model performance in Smaller firms are less affected by a strong dollar, and may benefit more from reduced tax rates, regulatory and perhaps health care relief, too. Financial reform may give them better access to capital. And their valuations, on a price-to-sales basis, are still relatively cheap. Sincerely, Another Good Year For Stocks, Despite A Potential Correction Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves. Peter Lynch I start with the above quote from Fidelity s legendary fund manager because some pundits are already warning that a correction is imminent. The S&P 500 advanced 12.0% in 2016, with about half of that gain John M. Boyd coming just since Trump was elected. And, if the stock market continues on that torrid pace, no doubt the calls for a correction will become louder. As the title above indicates, I do see a correction as a possibility. The sharp rise since the election has been largely fueled by optimism that Trump s plans for tax cuts, regulation roll-backs, and infrastructure spending will ignite much faster economic growth. Since the election, investor sentiment quickly shifted from extremely negative to strongly positive. In the American Association of Individual Investors weekly sentiment survey taken on November 3, only 23.6% were bullish versus the historical average of 38.5%. Today that figure has jumped to 44.6%! With any impact from increased infrastructure spending years away, should Trump fail to succeed on regulation reform and tax cuts early on, we could see those gains disappear as fast as they came. However, I suggest you take Peter s advice to heart and stay with your stock fund investments as I expect that even if we do get a correction, when all is said and done, stocks will deliver another year of solid gains. Earnings Growth Should Lift Stocks Overlooked in all the attention to Trump s plans for boosting growth is this: After seven quarters with year over year declines in earnings, the third quarter of 2016 turned positive. The big difference was a recovery in energy earnings. The sector moved from a negative contribution of 5.2% in 2015 s third quarter to a positive 0.9% this year. And, as long as the price of oil remains around $50 or higher, we can expect this boost from Market Outlook cont d on page 3

2 2 Fidelity Monitor & Insight January 2017 See Model Portfolios Key on p. 3 Unique Oppo rtunities Target Risk: 1.20 (Current: 1.10) Foreign Holdings: 9.1% 2016 Return: 8.2% Stocks: 97.3% Bonds: 0.0% Cash: 2.6% Alternatives*: 0.0% Yield: 0.6% Holdings Ticker NAV Shares Value Dec Ret Blue Chip Growth FBGRX $ , $92, % Low-Priced Stock FLPSX , , Event Driven Opps FARNX , , Small Cap Enh Idx FCPEX , , Growth Strategies FDEGX , , Large Cap Value Enhcd FLVEX , , Current Value (3/31/99 = $100,000) $445, % For aggressive members who have no need for income or principal for more than 10 years. Current Value (12/31/93 = $100,000) $585, % A good choice for members retiring in 5-10 years looking for less volatility than the market. For members needing income and protection of their purchasing power against inflation. Blue Chip Growth 21% Large Cap Value Enhcd 14% Growth Strategies 15% Low-Priced Stock 18% Event Driven Opps 17% Small Cap Enh Idx 15% Select Target Risk: 1.20 (Current: 1.07) Foreign Holdings: 9.3% 2016 Return: 12.5% Stocks: 96.3% Bonds: 0.3% Cash: 3.5% Alternatives*: 0.0% Yield: 0.6% Holdings Ticker NAV Shares Value Dec Ret Technology FSPTX $ , $651, % Consumer Discretionary FSCPX , , Insurance FSPCX , , Construction Telecommunications FSTCX , , & Housing Industrials FCYIX , , % Construction & Housing FSHOX , , Current Value (12/31/88 = $100,000) $3,179, % For aggressive members who have no need for income or principal for more than 10 years. Technology 21% Industrials 13% Consumer Discretionary 20% Telecomm 16% Insurance 18% Gro wth Target Risk: 1.00 (Current: 1.02) Foreign Holdings: 8.9% 2016 Return: 6.7% Stocks: 97.9% Bonds: 0.0% Cash: 2.1% Alternatives*: 0.0% Yield: 0.7% Contrafund Small Cap Holdings Ticker NAV Shares Value Dec Ret 21% Enh Idx 20% Contrafund FCNTX $ , $454, % Small Cap Enh Idx FCPEX , , Blue Chip Growth 13% Low-Priced Stock FLPSX , , Large Cap Value Enhcd FLVEX , , Growth Strategies FDEGX , , Growth Blue Chip Growth FBGRX , , Strategies Current Value (12/31/86 = $100,000) $2,188, % 13% For moderately aggressive members who want equity-dominated portfolios and have no income needs for at least 10 years. Low-Priced Stock 17% Large Cap Value Enhcd 16% Growth & Income Target Risk: 0.66 (Current: 0.71) Foreign Holdings: 15.4% 2016 Return: 8.2% Stocks: 62.2% Bonds: 16.2% Cash: 4.0% Alternatives*: 17.6% Yield: 2.0% Holdings Ticker NAV Shares Value Dec Ret Growth & Income FGRIX $ , $145, % Total Bond FTBFX , , Contrafund FCNTX , , Low-Priced Stock FLPSX , , High Income SPHIX , , Growth & Income 25% High Income 15% Low-Priced Stock 20% Total Bond 20% Contrafund 20% Inco me Target Risk: 0.33 (Current: 0.36) Foreign Holdings: 13.9% 2016 Return: 6.7% Stocks: 22.7% Bonds: 48.9% Cash: 3.7% Alternatives*: 24.7% Yield: 3.0% Holdings Ticker NAV Shares Value Dec Ret Total Bond FTBFX $ , $100, % Equity Dividend Income FEQTX , , High Income SPHIX , , Short-Term Bond FSHBX , , Limited Term Bond FJRLX , , Current Value (12/31/91 = $100,000) $379, % Total Bond 26% Equity Div Income 24% Limited Term Bond 13% Short-Term Bond 16% High Income 21%

3 Market Outlook cont d from page 1 energy to continue. In 2015 s fourth quarter, energy subtracted 10.5% from S&P 500 earnings, whereas the forecast for 2016 s fourth quarter is a positive 2.1%. That s a big reason for a forecasted 32% jump in fourth-quarter earnings. And energy was a negative right through the second quarter of 2016, making for a similar (though lesser) boost to those quarters in % S&P 500 Quarterly Earnings (Y/Y % Change) 30.0% 20.0% 10.0% 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: Conservative Muni Income, which is nationally diversified and has only modest interest-rate-risk, is our preferred choice for highly taxed investors. - Actual 0.0% Growth: For large-cap exposure... Blue Chip Growth and Growth Company ar e aggr essive options; Contrafund is a mor e conser vative choice. Large Cap Value Enhanced Index provides lower-risk exposure to big-cap stocks, whereas Growth Strategies adds mid-cap exposure. Event Driven Opportunities and Small Cap Enhanced Index ar e smaller-cap choices that broaden portfolio diversification. Forecast -10.0% -20.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q As a result, as shown in the above chart, earnings for the next four quarters (fourth quarter of 2016 through the third quarter of 2017) are forecasted to be quite robust, which should provide a lift for stocks. And importantly, those forecasted earnings largely do not reflect any boost in economic growth from Trump s plans. Slow, But Steady Economy GDP growth has remained slow, but steady, for the past few years at around 2.0% per year. Absent any pick-up from tax cuts or regulatory reform, we expect mostly more of the same for 2017, but with a chance for acceleration. The third quarter of this year grew at 3.5%, the fastest rate in two years. The Atlanta Fed s GDPNow forecast for the fourth quarter is 2.5%, though others have it as low as Market Outlook cont d on page 4 As initially announced on our Hotline update of December 23 (and repeated on December 30), on Wednesday December 28, we made trades in four model portfolios: Unique Opportunities Model: We sold our entire position in Value Strategies. With the proceeds, we purchased Large Cap Value Enhanced Index [ticker: FLVEX]. Growth Model: We sold our entire position in Value Strategies. With the proceeds, we purchased Large Cap Value Enhanced Index [ticker: FLVEX]. Annuity Growth Model: We sold our entire position in VIP Value Strategies. With the proceeds, we purchased VIP Equity-Income, whose ticker is FLOLC. Annuity Growth & Income Model: We are selling our entire position in VIP Value Strategies. With the proceeds, we purchased VIP Equity-Income, whose ticker is FLOLC. Trade Rationale & Notes: Value Strategies paid a significant distribution on Tuesd ay December 27. While this was a taxable event for some shareholders, most of the distribution was in the form of less-taxed, long-term capital gains. So we waited until after the distribution to sell the fund. As for the funds themselves, Value Strategies and its clone VIP Value Strategies have not been appropriately positioned to take full advantage of the rally in mid-cap value stocks. While the funds new manager is in the process of repositioning his portfolios and performance has picked up, Large Cap Value Enhanced Index (as well as both Equity-Income funds) already provides greater exposure to financials especially bank shares that we seek. The fund is also less volatile and should perform in line with its benchmark. Model Portfolios Key: 1 Alternative 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, , and web (see p. 16). Annuity Model Portfolios are on p. 10. Fidelity Monitor & Insight January

4 Market Outlook cont d from page 3 1.8%. If the Atlanta Fed is closer to the mark, it s a nicely rising trend, suggesting that a modest improvement in economic growth could be in the cards for % 3% 2% 1% 0% Quarterly GDP Growth (Annualized) Recent economic indicators support this case. The combined sales of new and existing homes in November were the highest since the recovery began. Industrial production, while still declining on a yearover-year basis, has been moving fairly steadily towards positive territory, rising from -2.3% in December 2015 to -0.6% in November Moreover, chemical industry activity, which tends to lead industrial production, hit a new all-time high in December. And both the ISM Manufacturing Index and the ISM Services Index had solid gains in November. S&P 500 operating earnings for the trailing 12 months through the third quarter of 2016 (we won t know fourth quarter earnings until Feb/Mar) were $ With the S&P 500 at 2168 at the end of September, that gives us a P/E (price/ earnings) ratio of 21.4, slightly S&P 500 P/E Ratio Forecast Q3 Q4 Q1 Q2 Q3 Q Year Avg: /97 12/00 12/03 12/06 12/09 12/12 12/15 above the 25-year average of Not excessive as seen in the chart, P/Es peaked at much higher levels before the last two bear markets but not cheap, either. Since Trump was elected, interest rates have been moving higher in anticipation of faster economic growth and higher inflation. The Fed hiked rates a quarter point in December and suggested three more hikes to come in But because rates are rising from a very low base, that should not derail stocks. JP Morgan notes that when the 10-year Treasury yield rises from a level below 5%, stocks have a positive correlation to the direction of the move. Bank of America/Merrill Lynch analyst, Stephen Suttmeier, adds that the current secular bull trend best fits the secular bull market. The U.S. 10-year yield bottomed near 1.5% in late 1945 and the S&P 500 remained firmly within its secular bull market until yields moved to 5-6% in the mid 60s. But Will Be Tough On Bonds Bonds are another story. Rising rates caused losses on all of Fidelity s taxable bond funds in the fourth quarter, with the lone exception of Conservative Income, which is more like a money market fund. Unless the economy stumbles, 2017 could be a difficult year for taxable bond funds. Our advice is to stick with shorter-term bonds which will be less affected by rising rates, and to take on some credit risk through high-yield bonds. High-yield bonds tend to weather rising rates driven by improving economic conditions better than investment-grade funds. That s because a healthier economy reduces default risk. High-yield bonds were mostly higher in the fourth quarter and had double-digit returns for the full year. As such, their yield spread versus comparable Treasurys has fallen from seven percentage points a year ago, to four today below the historical average of 5.6 points. So don t expect returns like we saw last year. More likely, high-yield funds will earn their yields in Still Favor U.S. Over Foreign We have argued in favor of U.S. stocks over foreign shares for several years and we continue to hold that view. As usual, the emerging markets offer the best potential growth, but the strengthening dollar, rising U.S. interest rates, and high volatility are problems. In the developed markets the strong dollar has been the big problem. In local currencies, the EAFE index has risen about 7% in the last three months, but in U.S. dollars it is down 1.0%! If the dollar stops climbing (especially versus the euro) developed markets could be attractive, but for now we will wait. Summing It By The Numbers The current estimate for the next four quarters of S&P 500 operating earnings is $126. However, analysts are usually too optimistic at the outset reducing their estimates as the year goes along. But as I have noted before, the rate of reductions has been declining steadily from a 20% haircut in 2016 s first quarter, to just a 9% drop for the third. So let s take 10% off the $126 figure, bringing it down to $114. If we multiply that by the most recent P/E of 21.4, we get a projected level of 2435 for the S&P 500 next year or a gain of about 9%. Of course, the P/E could decline. But I believe that tax cuts and regulatory reforms will be enacted (though maybe not early enough to avoid a correction), and the resulting boost to economic growth forecasts would make that less likely. In addition, earnings estimates might then not fall much, if at all. If we take $126 in earnings times the current P/E, we would have a 19.7% gain in the S&P 500! I m not predicting that. But correction or not, I expect a solid year for U.S. stocks. So follow Lynch s advice and stay invested. John M. Boyd 4 Fidelity Monitor & Insight January 2017

5 In A Year Of Political Surprises, Stocks Soar And Bonds Struggle 2016 was a year of stunning surprises including the Cubs winning their first World Series in 108 years! But apart from that pleasant distraction, Americans haven t been this divided since the Vietnam War. Geopolitical events are usually background noise to investors who are focused on corporate earnings and other mundane matters. But the new uncertainties sprung by Brexit and Donald Trump sent Wall Street into a tizzy last year: If a new economic and political world order is unfolding, investors asked, what do we do with our money now? It remains to be seen if Britain s exit from the European Union and Trump s presidency are mere anomalies or are actually related. But we will soon find out. In April, the French will elect a new president. And later this year, the Germans also go to the polls. Should France lean right and should Angela Merkel be ousted, nothing less than the dissolution of the EU will be on the table at a time when the new U.S. president is looking to rewrite trade deals and reconsider existing alliances. While a listless West has been grappling with its very own sovereignty, China and Russia continued to assert themselves in this vacuum. In light of the Brexit and the Trump resets, is it any wonder that so many on Wall Street got it wrong last year? Certainly, some Fidelity managers did including some of their best. Understandably, many embraced high-quality stocks. But when the market suddenly realized that a new political order at home might favor economic growth above all other concerns (including regulatory, environmental and deficit spending), it immediately pivoted towards risk-assets. Here s how your Fidelity funds endured a year of political surprises. Market Indexes After repeated attempts at in the last two weeks of 2016, the Dow Jones Industrials encountered resistance and ultimately failed to break past that milestone. Still, the blue-chip indicator gained 3.4% in December and rose a very solid 16.5% for the year. In the weeks immediately after the Trump victory, bank stocks played an important role in pushing the Dow higher. As for that other large-cap index, the S&P 500, it rose 2.0% last month and chalked up a return of 12.0% for the year. Moving down the market-cap scale, the Russell Mid Cap gained 1.1% in December and 13.8% for the year, while the small-cap Russell 2000 fared even better with gains of 2.8% and 21.3%, respectively, for the month and year. As for the tech and biotechrich Nasdaq Composite, it rose 1.2% last month and 8.9% for the year. January Scorecard Rating Changes Fund Commentary cont d on p. 12 Ratings Fund Old New Comments Blue Chip Value B H Trailing other large-cap value offerings. Disciplined Equity B H Prefer other large-cap blend funds. Export & Multi B H Prefer other large-cap blend funds. Focused Stock H S Concentrated fund struggling to beat benchmark. Global Balanced H S Low bond yields and currency risk are negatives. Int'l Capital Apprec B H Slow growth and currency risk are negatives. Int'l Discovery B H Slow growth and currency risk are negatives. Int'l Enhanced Idx H B See "Enhanced Index" article on p. 16. Int'l Growth B H Slow growth and currency risk are negatives. Int'l Small Cap B B Slow growth and currency risk are negatives. Int'l Value S H Large slug in financials now boosting returns. LC Core Enh'd Idx B B See "Enhanced Index" article on p. 16. LC Grow Enh'd Idx H B Fund is a relatively strong performer. LC Value Enh'd Idx B B See Model Portfolio Trades on p. 3. Mid Cap Enh'd Idx B B See "Enhanced Index" article on p. 16. New Millennium H B Decade-long record of market-beating returns. Nordic H S Not diversified; huge, 50%-plus bet on Sweden. Small Cap Stock B H Prefer other funds within the small-cap space. Value Discovery B B Performance has turned on smart financials bet. Value Strategies B B See Model Portfolio Trades on p. 3. VIP Int'l Cap App B H Slow growth and currency risk are negatives. VIP Overseas B B New manager has solid record at Overseas fund. VIP Value Strat B B See Model Portfolio Trades on p. 3. Factor ETFs Core Dividend NA B Strategy has presently led to shrewd bet in energy. Div for Rising Rates NA B Current play is on the value side of technology. Low Volatility Factor NA H Tends to hold more richly priced shares. Momentum Factor NA S Pharma, tech, other high-growth shares hurting. Quality Factor NA H Leaning towards out-of-favor big-cap growth. Value Factor NA B Fund currently positioned in market's sweet spot. B = Buy; B = OK to Buy; H = Hold; S = OK to Sell; S = Sell, NC = No change ( ) Rating upgraded; ( ) Rating downgraded. Fidelity Monitor & Insight January

6 Fund Fund Sht-Term $Price Total Return (%) Avg Annual (%) Rel Vol No. Ticker Fund Name Fee (NAV) Advice Dec Mo. 1 Yr 3 Yr 5 Yr 10 Yr (Risk) 1 S&P Nasdaq Composite Comparative Dow Jones Industrials Indexes Russell 2000 (Small Caps) Barclays Aggregate Bond* Unique Opportunities Select Model Growth Portfolios Growth & Income Income Rel Vol Assets (Risk) 1 ($Mil) LARGE CAP GROWTH Category Averages FBGRX Blue Chip Growth Buy $13, FDCAX Capital Appreciation OK to Sell , FCNTX Contrafund Buy ,246 3 FFIDX Fidelity Fund Hold , FTQGX Focused Stock OK to Sell , FDGRX Growth Company (Closed) Buy , FDSVX Growth Discovery OK to Buy FDFFX Independence OK to Sell , FMAGX Magellan OK to Buy , FMILX New Millennium OK to Buy , FOCPX OTC OK to Buy , FDSSX Stock Selector All Cap Hold ,174 5 FTRNX Trend OK to Buy ,536 LARGE CAP BLEND Category Averages FDEQX Disciplined Equity Hold , FDGFX Dividend Growth OK to Buy , FEXPX Export and Multinational Hold , FGRIX Growth & Income Buy , FLCSX Large Cap Stock Buy , FGRTX Mega Cap Stock Buy ,219 LARGE CAP VALUE Category Averages FBCVX Blue Chip Value Hold FEQTX Equity Dividend Income Buy , FEQIX Equity-Income Buy , FSLVX Stock Sel Large Cap Value OK to Buy FVDFX Value Discovery Buy , FSLSX Value Strategies OK to Buy MID-CAP GROWTH Category Averages FDEGX Growth Strategies Buy , FMCSX Mid-Cap Stock OK to Buy , FSSMX Stock Selector Mid Cap OK to Buy MID-CAP BLEND Category Averages FLVCX Leveraged Company Stock OK to Buy ,728 MID-CAP VALUE Category Averages FLPSX Low-Priced Stock Buy , FSMVX Mid Cap Value OK to Buy , FDVLX Value Buy ,075 SMALL CAP GROWTH Category Averages FCPGX Small Cap Growth 1.50%/90d Buy ,698 SMALL CAP BLEND Category Averages FARNX Event Driven Opportunities Buy FSCRX Small Cap Discovery (Closed) 1.50%/90d OK to Buy , FSLCX Small Cap Stock 2.00%/90d Hold , FDSCX Stock Selector Small Cap 1.50%/90d OK to Buy ,469 SMALL CAP VALUE Category Averages FCPVX Small Cap Value (Closed) 1.50%/90d OK to Buy ,569 Notes: *Fi deli t y s U.S. Bond Index used as a proxy for the Barclays Aggregate Bond Index. 1 Relative Volatility (Rel Vol) versus the S&P 500 over the last 36 months; 1.50 means the fund has been 50% more volatile. 2 Duration is a measure of interest rate sensitivity. 3 Stated yield is actual distributed yield over prior 12 months. 4 Also available in a Premium share class with a minimum of $10,000, but a lower expense ratio. (p) Partial year; ( ) Rating upgraded; ( ) Rating downgraded. 6 Fidelity Monitor & Insight January 2017

7 Fund Fund Sht-Term $Price Total Return (%) Avg Annual (%) Rel Vol Assets No. Ticker Fund Name Fee (NAV) Advice Dec Mo. 1 Year 3 Year 5 Year (Risk) 1 ($Mil) SPECIALTY 304 FBALX Balanced OK to Buy $20, FCVSX Convertible Securities Hold , FGBLX Global Balanced OK to Sell FFGCX Global Commodity Stock 1.00%/90d OK to Sell FDYSX Global Strategies 8.64 Hold FIREX International Real Estate 1.50%/90d 9.49 OK to Sell FPURX Puritan OK to Buy , FRIFX Real Estate Income 0.75%/90d OK to Buy , FRESX Real Estate Investment Hold , FSDIX Strategic Dividend & Income OK to Buy , FSRRX Strategic Real Return 8.77 Hold FIUIX Telecom & Utilities Hold ASSET ALLOCATION 328 FASIX Asset Manager 20% Hold , FTANX Asset Manager 30% Hold FFANX Asset Manager 40% Hold , FASMX Asset Manager 50% Hold , FSANX Asset Manager 60% Hold , FASGX Asset Manager 70% Hold , FAMRX Asset Manager 85% Hold ,442 EQUITY INDEX 650 FUSEX 500 Index Hold , FPEMX Emerging Markets Index %/30d 8.46 Hold FSEMX Extended Market Index Buy FFNOX Four-in-One Index Hold , FSGUX Global ex U.S. Index Hold FIENX International Enhanced Index 1.00%/60d 8.08 Buy FSIIX International Index Hold FLCEX Lrge Cap Core Enhcd Index Buy FLGEX Lrge Cap Growth Enhcd Index Buy FSUIX Lrge Cap Growth Index Hold p FLVEX Lrge Cap Value Enhcd Index Buy , FLCDX Lrge Cap Value Index Hold p FMEIX Mid Cap Enhanced Index Buy , FSCLX Mid Cap Index OK to Buy FNCMX Nasdaq Composite Index OK to Buy , FRXIX Real Estate Index %/30d Hold FCPEX Small Cap Enhanced Index Buy FSSPX Small Cap Index OK to Buy FTIGX Total International Index %/30d Hold p FSTMX Total Market Index Hold INTERNATIONAL Category Averages FICDX Canada 1.50%/90d Hold , FHKCX China Region 1.50%/90d Hold FDIVX Diversified International OK to Buy , FSEAX Emerging Asia 1.50%/90d Hold FEMEX Emerg Europe, MidEast, Africa 1.50%/60d 8.41 Hold FEMKX Emerging Markets 1.50%/90d Hold , FEDDX Emerging Mkts Discovery 2.00%/90d Hold FIEUX Europe Hold , FGILX Global Equity-Income 1.00%/90d OK to Buy FIVFX International Cap App Hold , FIGRX International Discovery Hold , FIGFX International Growth Hold FISMX International Small Cap 2.00%/90d OK to Buy FSCOX International Small Cap Opps 2.00%/90d OK to Buy FIVLX International Value 1.00%/30d 7.70 Hold FJPNX Japan 1.50%/90d Hold FJSCX Japan Smaller Companies 1.50%/90d OK to Buy FLATX Latin America 1.50%/90d Hold FNORX Nordic 1.50%/90d OK to Sell FOSFX Overseas Buy , FPBFX Pacific Basin 1.50%/90d OK to Buy FTEMX Total Emerging Markets 1.50%/60d Hold FTIEX Total International Equity 1.00%/60d 7.44 Hold FWWFX Worldwide OK to Buy ,388 Fidelity Monitor & Insight January

8 Fund Fund Sht-Term $Price Total Return (%) Avg Annual (%) Rel Vol Assets No. Ticker Fund Name Fee (NAV) Advice Dec Mo. 1 Year 3 Year 5 Year (Risk) 1 ($Mil) SELECT PORTFOLIOS Category Averages FSAIX Air Transportation 0.75%/30d OK to Buy $ FSAVX Automotive 0.75%/30d Hold FSRBX Banking OK to Buy FBIOX Biotechnology OK to Sell , FSLBX Brokerage & Investment 0.75%/30d Hold FSCHX Chemicals Hold , FSDCX Communications Equipment 0.75%/30d Hold FDCPX Computers 0.75%/30d Hold FSHOX Construction & Housing 0.75%/30d Buy FSCPX Consumer Discretionary Buy FSVLX Consumer Finance 0.75%/30d Hold FDFAX Consumer Staples OK to Buy , FSDAX Defense & Aerospace Buy , FSENX Energy Hold , FSESX Energy Service 0.75%/30d OK to Sell FSLEX Environment & Alt Energy 0.75%/30d OK to Buy FIDSX Financial Services OK to Buy FSAGX Gold Sell , FSPHX Health Care Hold , FSHCX Health Care Services 0.75%/30d Hold FSCGX Industrial Equipment 0.75%/30d Buy FCYIX Industrials Buy FSPCX Insurance 0.75%/30d Buy FBSOX IT Services OK to Buy , FDLSX Leisure 0.75%/30d Hold FSDPX Materials Hold FSMEX Medical Equipment Hold , FBMPX Multimedia 0.75%/30d Hold FSNGX Natural Gas 0.75%/30d Hold FNARX Natural Resources 0.75%/30d Hold FPHAX Pharmaceuticals Hold , FSRPX Retailing OK to Buy ,972 8 FSELX Semiconductors 0.75%/30d OK to Buy , FSCSX Software & IT Services Buy , FSPTX Technology Buy , FSTCX Telecommunications Buy FSRFX Transportation 0.75%/30d OK to Sell FSUTX Utilities Sell FWRLX Wireless 0.75%/30d 8.40 Hold SECTOR ETFs FDIS MSCI Consumer Discretionary Buy FSTA MSCI Consumer Staples OK to Buy FENY MSCI Energy Hold FNCL MSCI Financials OK to Buy FHLC MSCI Healthcare Hold FIDU MSCI Industrials Buy FTEC MSCI Information Technology Buy FMAT MSCI Materials Hold FREL MSCI Real Estate Hold FCOM MSCI Telecomm Services Buy FUTY MSCI Utilities Sell FACTOR ETFs FDVV Core Dividend OK to Buy p FDRR Dividend for Rising Rates OK to Buy p FDLO Low Volatility Factor Hold p FDMO Momentum Factor OK to Sell p FQAL Quality Factor Hold p FVAL Value Factor Buy p Regular Models Un Opp Select Growth G&I Income Fidelity Monitor & Insight January 2017

9 Fund Fund Sht-Term $Price Total Return (%) Avg Annual (%) SEC Dur 2 Rel Vol No. Ticker Fund Name Fee (NAV) Advice Dec Mo. 1 Yr 3 Yr 5 Yr %Yield (Yrs) (Risk) 1 TAXABLE BOND Category Averages FCONX Conservative Income Bond Buy FCBFX Corporate Bond Buy FGBFX Global Bond 8.61 OK to Sell FGMNX GNMA (Ginnie Mae) OK to Buy FGOVX Government Income Hold FINPX Inflation-Protected Bond Hold * FSIQX Inflation-Protected Index Hold * FTHRX Intermediate Bond Buy FSTGX Intermediate Gov't Income Hold FIBIX Intermediate Treasury Index Hold FINUX International Bond 8.15 OK to Sell FBNDX Investment Grade Bond 7.79 Buy FJRLX Limited Term Bond Buy FFXSX Limited Term Government 9.93 OK to Buy FLBIX Long-Term Treasury Index Hold FMSFX Mortgage Securities OK to Buy FSHBX Short-Term Bond 8.59 Buy FSBIX Short-Term Treasury Index Hold FTBFX Total Bond Buy FBIDX U.S. Bond Index Hold HIGH-YIELD BOND Category Averages FAGIX Capital & Income 1.00%/90d 9.71 OK to Buy FFRHX Floating Rate High Income 1.00%/60d 9.64 OK to Buy FHIFX Focused High Income 1.00%/90d 8.49 OK to Buy FGHNX Global High Income 1.00%/30d 9.27 OK to Buy SPHIX High Income 1.00%/90d 8.71 Buy FNMIX New Markets Income 1.00%/90d OK to Buy FSAHX Short Duration High Income 1.00%/30d 9.46 OK to Buy FSICX Strategic Income OK to Buy MUNICIPAL BOND Category Averages FSAZX Arizona Muni Income Hold FCSTX Calif Limited Term Tax Free OK to Buy FCTFX California Muni Income Hold FICNX Connecticut Muni Income Hold FCRDX Conservative Income Muni Buy FLTMX Interm Municipal Income Hold FSTFX Limited Term Muni Income OK to Buy SMDMX Maryland Muni Income Hold FDMMX Mass Muni Income Hold FMHTX Michigan Muni Income Hold FIMIX Minnesota Muni Income Hold FHIGX Municipal Income Hold FNJHX New Jersey Muni Income Hold FTFMX New York Muni Income Hold FOHFX Ohio Muni Income Hold FPXTX Pennsylvania Muni Income Hold FTABX Tax-Free Bond Hold 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 TAXABLE GOV'T MONEY MARKETS Total Return (%) SEC Dec YTD %Yield 55 FDRXX Gov't Cash Reserves SPAXX Government MM FGMXX Retirement Gov't MM FRTXX Retirement Gov't MM II FZFXX Treasury MM FDLXX Treasury Only MM PRIME MONEY MARKETS 454 SPRXX Money Market NATIONAL MUNICIPAL MONEY MARKETS 10 FTEXX Municipal Money Market FMOXX Tax-Exempt MM STATE MUNICIPAL MONEY MARKETS Total Return (%) SEC Dec YTD %Yield 433 FSAXX Arizona Muni MM FCFXX California Muni MM FSPXX California AMT Tax-Free FCMXX Connecticut Muni MM FMSXX Mass AMT Tax-Free FDMXX Massachusetts Muni MM FMIXX Michigan Muni MM FNJXX New Jersey Muni MM FSJXX New Jersey AMT Tax-Free FNYXX New York Muni MM FSNXX New York AMT Tax-Free FOMXX Ohio Muni MM FPTXX Pennsylvania Muni MM Fidelity Monitor & Insight January

10 Fund Fund Sht-Term $Price Total Return (%) Avg Annual (%) Rel Vol No. Ticker Fund Name Style Fee (NAV) Advice Dec Mo. 1 Year 3 Year 5 Year (Risk) 1 FIDELITY PERSONAL RETIREMENT ANNUITY PORTFOLIOS Annuity Sector Model Model Annuity Growth Model Portfolios Annuity Growth & Income Model Annuity Income Model FLRQC Fid VIP Asset Manager Allocation Hold FAEEC Fid VIP Asset Manager: Growth Allocation Hold FJBAC Fid VIP Balanced Allocation OK to Buy FVHAC Fid VIP Consumer Discretionary Sector 1.00%/60d Buy FCSAC Fid VIP Consumer Staples Sector 1.00%/60d OK to Buy FPDFC Fid VIP Contrafund Large Growth Buy FPRGC Fid VIP Disciplined Small Cap Small Blend Buy FZAMC Fid VIP Dynamic Capital App Large Growth OK to Sell FEMAC Fid VIP Emerging Markets Emg Mkts 7.92 Hold FJLLC Fid VIP Energy Sector 1.00%/60d Hold FLOLC Fid VIP Equity-Income Large Value Buy FONNC Fid VIP Financial Services Sector 1.00%/60d OK to Buy FFLCC Fid VIP Floating Rate High Income High-Yield Bond OK to Buy FMPAC Fid VIP FundsManager 20 Allocation Hold FMPBC Fid VIP FundsManager 50 Allocation Hold FMPPC Fid VIP FundsManager 60 Allocation Hold FMPCC Fid VIP FundsManager 70 Allocation Hold FMPDC Fid VIP FundsManager 85 Allocation Hold FMNDC Fid VIP Growth Large Growth OK to Buy FLFNC Fid VIP Growth & Income Large Blend Buy FIDPC Fid VIP Growth Opportunities Large Growth Buy FPDRC Fid VIP Health Care Sector 1.00%/60d Hold FBBLC Fid VIP High Income High-Yield Bond Buy FXVLT Fid VIP Index 500 Large Blend Hold FBALC Fid VIP Industrials Sector 1.00%/60d Buy FVJIC Fid VIP Int'l Capital App Diversified Int'l Hold FTLKC Fid VIP Investment Grade Bond Inv Grd Bond Buy FVMAC Fid VIP Materials Sector 1.00%/60d Hold FNBSC Fid VIP Mid Cap Mid Growth Buy FTNJC Fid VIP Gov't Money Market Money Mkt FEMMC Fid VIP Overseas Diversified Int'l Buy FFWKC Fid VIP Real Estate Sector Hold FGDQC Fid VIP Strategic Income High-Yield Bond OK to Buy FYENC Fid VIP Technology Sector 1.00%/60d Buy FVTAC Fid VIP Telecommunications Sector 1.00%/60d Buy FXRRC Fid VIP Utilities Sector 1.00%/60d Sell FKMSC Fid VIP Value Large Value Buy FRBSC Fid VIP Value Strategies Mid Value OK to Buy FBMEC Black Rock Global Allocation Global Allocation Hold FTMEC Franklin Templeton Global Bond Global Bond OK to Sell FFMEC Franklin Templeton US Gov't Intermed Gov't Hold FIGXC Invesco Global Core Eqty Global Stock Hold FPRLC Lazard Retirement Emerging Mkts Emg Mkts Hold FPRMC Morgan Stanley Emerg Mkt Debt Emg Mkt Bond OK to Buy FPRNC Morgan Stanley Emerg Mkt Equity Emg Mkts Hold FPRPC Morgan Stanley Global Strategist Diversified Int'l Hold FPMEC Pimco Commodity Real Return Commodities 6.01 OK to Sell FPMBC Pimco VIT Low Duration Shrt-Term Bond Buy FPNBC Pimco VIT Real Return TIPS Hold FPOBC Pimco VIT Total Return Intermed Bond Hold Annuity Sector Fund Allocation VIP Technology 27% VIP Cons Discretionary 26 VIP Telecom 25 VIP Industrials 22 Total Return: Dec: 1.9% 2016: 12.9% Annuity Growth 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 Total Return: Dec: 2.4% 2016: 10.1% Annuity Growth & Income Fund Allocation VIP Investment Grade 22% VIP Contrafund 21 VIP Equity-Income 20 VIP Growth & Income 20 VIP High Income 18 Total Return: Dec: 1.6% 2016: 7.4% Annuity Income Fund Allocation VIP Investment Grade 28% Pimco VIT Low Duration 26 VIP Equity Income 24 VIP High Income 22 Total Return: Dec: 1.2% 2016: 7.4% 10 Fidelity Monitor & Insight January 2017

11 Ex- Fund Date Dist$ NAV$ 500 Index 12/ Air Transportation 12/ Asset Manager 20% 12/ Asset Manager 30% 12/ Asset Manager 40% 12/ Asset Manager 50% 12/ Asset Manager 60% 12/ Asset Manager 70% 12/ Asset Manager 85% 12/ Automotive 12/ Balanced 12/ Banking 12/ Blue Chip Growth 12/ Blue Chip Value 12/ Brokerage & Invest 12/ Canada 12/ Chemicals 12/ China Region 12/ Comm Equip 12/ Computers 12/ Cons Discretionary 12/ Const & Housing 12/ Consumer Finance 12/ Consumer Staples 12/ Contrafund 12/ Convertible Securities 12/ CT Muni Income 12/ Defense & Aero 12/ Disciplined Equity 12/ Diversified Int'l 12/ Dividend Growth 12/ EMEA 12/ Emerg Mkt Index 12/ Emerg Mkts Discovery 12/ Emerg Mkts Discovery 12/ Emerging Asia 12/ Emerging Markets 12/ Emerging Markets 12/ Energy 12/ Energy Service 12/ Environment & Alt Ergy 12/ Equity Dividend Inc 12/ Equity-Income 12/ Europe 12/ Event Driven Opps 12/ Export and Multi 12/ Extd Mkt Index 12/ Fidelity Fund 12/ Financial Services 12/ Focused Stock 12/ Four-in-One Index 12/ Glbl ex-us Index 12/ Global Balanced 12/ Global Bond 12/ Global Commod Stk 12/ Below is a list of funds and their total year-end distributions. These gains consist of profits from sold securities, plus any income (dividends) paid to the fund via all its holdings. With the S&P 500 rising over each of the past eight years, some 2016 yearend distributions were significant. While Fidelity has worked to optimize their funds tax efficiency, it nonetheless suggests that unrealized capital gains may be accumulating. (In the case of Leveraged Co. Stock and Value Strategies, their large distributions were the result of a new manager dramatically repositioning the funds.) As with an individual taxpayer, funds can offset their gains with losses. But eventually they will be distributed to their shareholders unless, of course, a downturn in the market provides an opportunity for the manager to employ some tax strategies. While we don t believe in putting the tax cart before the Ex- Fund Date Dist$ NAV$ Global Eqty-Inc 12/ Global Strategies 12/ Global Strategies 12/ GNMA 12/ Gold 12/ Government Income 12/ Grow th & Income 12/ Grow th Company 12/ Grow th Discovery 12/ Grow th Strategies 12/ Health Care 12/ Health Care Services 12/ Independence 12/ Industrial Equipment 12/ Industrials 12/ Inflation-Protect Index 12/ Inflation-Protected 12/ Insurance 12/ Interm Gov't Income 12/ Interm Treas Index 12/ International Grow th 12/ International Value 12/ Int'l Bond 12/ Int'l Cap App 12/ Int'l Discovery 12/ Int'l Enhanced Indx 12/ Int'l Index 12/ Int'l Small Cap 12/ Int'l Small Cap Opps 12/ IT Services 12/ Japan 12/ Japan Smaller Cos 12/ L Cap Core Enhcd 12/ L Cap Grow th Enhcd 12/ L Cap Value Enhcd 12/ Large Cap Stock 12/ Latin America 12/ Latin America 12/ Leisure 12/ Leveraged Co Stock 12/ Lg Cap Gow th Index 12/ Lg Cap Value Index 12/ Low -Priced Stock 12/ Ltd Term Gov't 12/ Magellan 12/ Materials 12/ Medical Equipment 12/ Mega Cap Stock 12/ Mid Cap Enhd Indx 12/ Mid Cap Index 12/ Mid Cap Index 12/ Mid Cap Value 12/ Mid-Cap Stock 12/ Multimedia 12/ investment horse, being strategic about taxes will ultimately help you to keep more of your money. If your fund went ex-dividend in December (paid you), you likely noticed that its net asset value declined. (The NAV$ column shows the fund s share price on the day it went ex-dividend or Ex-Date.) Because it fell by the same amount as the distribution itself, you were no worse off than before except, however, for the tax hit. Ex- Fund Date Dist$ NAV$ Nasdaq Comp Index 12/ Natural Gas 12/ Natural Resources 12/ New Markets Income 12/ New Millennium 12/ NJ Muni Inc 12/ Nordic 12/ OTC 12/ Overseas 12/ Pacific Basin 12/ Pharmaceuticals 12/ Puritan 12/ Puritan 12/ Real Estate Income 12/ Real Estate Income 12/ Real Estate Index 12/ Real Estate Invest 12/ Retailing 12/ Semiconductors 12/ Sht-Term Treas Index 12/ Sm Cap Discovery 12/ Sm Cap Enhanced Indx 12/ Sm Cap Enhanced Indx 12/ Small Cap Grow th 12/ Small Cap Index 12/ Small Cap Stock 12/ Small Cap Value 12/ Small Cap Value 12/ Softw are & IT Svs 12/ Stk Sel All Cap 12/ Stk Sel Lge Cap Value 12/ Stk Sel Mid Cap 12/ Stk Sel Small Cap 12/ Strategic Div & Inc 12/ Strategic Real Return 12/ Strategic Real Return 12/ Technology 12/ Telecom & Utilities 12/ Telecommunications 12/ Total Bond 12/ Total Emerg Mkts 12/ Total Int'l Equity 12/ Total Int'l Index 12/ Total Int'l Index 12/ Total Mkt Index 12/ Transportation 12/ Trend 12/ U.S. Bond Index 12/ Utilities 12/ Value 12/ Value Discovery 12/ Value Strategies 12/ Wireless 12/ Worldw ide 12/ Fidelity Monitor & Insight January