leadership series INVESTMENT INSIGHTS Glide Path Caution! A Steep Slope Could Curb Retirement Wealth February 2015 Introduction Glide path slope the rate of change in equity exposure over time is often overlooked when evaluating the potential for a target date portfolio 1 to achieve its retirement income objectives. During the past year, a number of target date fund providers increased the equity exposure of their glide paths. 2 In some cases, this asset allocation shift resulted in a steepening of glide path slope, leading to increased slope risk the risk of either failing to recover retirement savings after a cyclical equity market decline or forgoing the benefit of an equity market expansion. For retirement investors, too much slope risk could result in lower wealth at retirement or a delayed retirement. In this article, we examine how glide path slope can influence retirement wealth accumulation and preservation. What is slope? Glide path slope refers to the rate of change in equity exposure over time. As the target retirement date nears, and the investment horizon shortens, the equity exposure of a target date fund is reduced in favor of more conservative fixed income and cash allocations. The pace of this de-risking, or slope, is determined by the investment manager, and it seeks to balance market risk and longevity risk. Understanding slope risk The glide path the strategic foundation of a target date strategy is designed to balance risk and return throughout the working and retirement years. Market risk the risk of wealth destruction due to a significant market decline must be balanced with the need for return to help offset longevity risk the risk of running out of money in retirement. Over a long time period typically nearly 40 working years and 20 to 30 retirement years for many retirement savers a higher allocation to equities generally helps mitigate longevity risk, but increases market risk. Alternatively, a lower allocation to equities can help to mitigate market risk but increases longevity risk. In addition to balancing market and longevity risk, a third dimension of risk slope risk is relevant when assessing a glide path s appropriateness. Slope risk refers to the impact a change in equity market risk can have on retirement wealth over time. Evaluating slope risk and its impact on retirement wealth Differences in glide path slope among To and Through providers Glide path constructs are largely classified as either To or Through strategies (see Leadership Series article Achieving Retirement Success: Do To or Through Glide Paths Lead to Higher Wealth? May 2014). Generally, To glide paths reach their most conservative asset allocation mix at the target retirement date, often by reducing the equity allocation aggressively as the retirement date nears. Conversely, Through strategies tend to have higher equity exposure during the savings years, at the target retirement date, and for several years into retirement. This difference typically results in To glide paths having a steeper slope relative to Through glide paths (see Exhibit 1, page 2). For plan sponsor and institutional investor use only Emil Iantchev, PhD Senior Research Analyst Mathew Jensen, CFA Director, Target Date Strategies Sarah O Toole, CFA Institutional Portfolio Manager KEY TAKEAWAYS When selecting a target date portfolio, evaluating the glide path is important, as it typically involves trade-offs between market risk and longevity risk, and a third dimension of risk slope risk. The slope of a target date portfolio s glide path the rate of change in equity exposure over time helps determine the potential for the portfolio to achieve its retirement income goals. The probability of recovering from a major cyclical equity market decline during the preretirement years is likely higher for more gradually sloped glide paths which typically hold higher equity exposure than for more steeply sloped glide paths. In a glide path comparison of steeper To and more gradual Through slopes during the five-year period before retirement, our analysis showed a hypothetical investor s wealth being greater in a more gradually sloped Through glide path in a significant majority of simulated market environments.
The cost of a steep slope To target date providers typically adhere to the notion that reaching the most conservative equity allocation at the target retirement date is a lower-risk, and thus more optimal, target date solution for investors. Achieving this conservative allocation typically involves a steep slope and a lower allocation to equities to help limit losses (market risk) if a significant equity market decline were to occur during the years immediately preceding retirement. To compare the potential impact of a steeper To slope 3 with that of a more gradual Through slope, 4 we analyzed the effect of various simulated U.S. macroeconomic environments on the hypothetical retirement wealth for both glide paths during the five-year period before retirement at age 65 (see Exhibit 2, below right). The five-year period preceding retirement is often cited by many To providers and industry consultants as a critical period in which to preserve wealth and limit losses (market risk). To isolate the influence of slope on retirement wealth for both glide paths, our comparison of this five-year period was based on an identical starting wealth level at age 60, and an assumed final preretirement salary of $50,000 for an investor in each type of glide path, with ongoing saving contributions that increasingly EXHIBIT 1: The slope of target date funds can vary significantly, particularly during the years preceding retirement. To glide paths tend to have a steeper slope than more gradually-sloped Through glide paths around a typical retirement age of 65. Equity Allocation COMPARISON OF TO AND THROUGH GLIDE PATHS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% To Industry Composite Glide Path Through Glide Path 0% 25 35 45 55 65 75 85 Age Assumes retirement at age 65. To composite (blue line) is an asset-weighted average of glide paths from ACO, BlackRock, ING, JPMorgan, Manning & Napier, MFS, PIMCO, Russell, State Farm, and Wells Fargo. Through glide path (green line) is the actual glide path for Fidelity s target date strategies, as of Feb. 13, 2015. Source of To glide paths and total assets: Morningstar, Inc., Jun. 30, 2013. Note: Results may not account for glide path asset allocation shifts that have been announced, but not implemented, since Jun. 30, 2013. adjust each year between 12.4% and 13% of salary. 5 In Exhibit 2, we have applied the To industry composite glide path to the same starting point (i.e. equity allocation) as the Through glide path (age 60). The resulting Modified To-Sloped Glide Path thus isolates the impact of slope on wealth going forward to age 65. We then used simulation analysis 6 to evaluate the change in retirement savings over those five years across many different market scenarios. Our analysis showed that the hypothetical wealth of an investor in a more steeply sloped To glide path would have been lower than a more gradually sloped Through glide path in a significant majority of simulated market scenarios during the five-year period before retirement. For someone with a final preretirement salary of $50,000, the lower wealth in a typical market scenario 7 due to the steeper To slope alone was $4,500 or roughly two extra months of retirement income (Exhibit 2). Importantly, in 91% of simulated market scenarios, investing in a To-sloped target date portfolio during the last five years before retirement would have yielded lower wealth compared with the Through slope. EXHIBIT 2: In a typical market environment, the slope of a To glide path would have resulted in lower wealth over a fiveyear period ending at age 65 than a Through glide path. Equity Allocation WEALTH COMPARISON OF TO AND THROUGH GLIDE PATHS IN A TYPICAL MARKET ENVIRONMENT 80% Through Glide Path 70% 60% 50% 40% 30% Modified To -Sloped Glide Path Starting at Identical Through Wealth Level (Age 60) To slope: $4,500 in Lower Wealth Typical Simulated Market Scenario To Industry Composite Glide Path (parallel slope) 55 60 65 70 75 Age Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent actual or future performance of any investment option. Assumptions: retirement at age 65; $50,000 final preretirement salary. See endnote #5 and #6 or more details. To composite (blue line) is an asset-weighted average of glide paths from ACO, BlackRock, ING, JPMorgan, Manning & Napier, MFS, PIMCO, Russell, State Farm, and Wells Fargo. Through glide path (green line) is the actual glide path for Fidelity s target date strategies, as of Feb. 13, 2015. Dotted black line represents Modified To -Sloped Glide Path Starting at Identical Through Wealth Level (Age 60). Source of To glide paths and total assets: Morningstar, Inc., Jun. 30, 2013. Note: Results may not account for glide path asset allocation shifts that have been announced, but not implemented, since Jun. 30, 2013. 2
It should be noted that the 9% of simulated market scenarios in which the To slope resulted in greater wealth (see green-shaded portion of Exhibit 3, below) feature highly adverse conditions. Consider that, as challenging as the market environment was during the five-year period beginning with the recent global financial crisis (2007 2012), this period is not one of the 9% worst simulated market scenarios. Exposing retirement savers to the To slope over this recent crisis period would have resulted in net retirement wealth that was $2,000 lower than a Through slope. Focusing on the 20 largest U.S. equity market declines, 8 the To slope glide path would have had $1,350 higher wealth, on average, than the Through glide path during eight of these downturns (including the Great Depression period from Sep. 30, 1929, to Sep. 30, 1934). Amid the other 12 major U.S. equity market declines, the To -sloped glide path would have resulted in $3,740 lower wealth, on average. Conversely, during the top 25% of favorable simulated macroeconomic environments (such as in the 1990s), the To slope would have resulted in $11,000 or more in lower EXHIBIT 3: In a large majority of simulated market environments, a retirement investor would have had higher wealth in a target date portfolio s more gradually sloped Through glide path than a steeper To glide path during the five-year period preceding retirement. RETIREMENT SAVINGS WEALTH GAINED/LOST IN VARIOUS MACROECONOMIC ENVIRONMENTS USING TO SLOPE VS. THROUGH SLOPE FIVE YEARS BEFORE RETIREMENT $10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 (AGE 60 TO 65) To slope: $4,500 in Lower Wealth Typical/Median (50%) Market Environment To Slope = Higher Wealth To Slope = Lower Wealth $70,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% WORST Macroeconomic Environment BEST Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent actual or future performance of any investment option. Assumptions: retirement at age 65. Wealth level shown reflects results of bootstrap simulations incorporating actual historical market scenarios. Demographic assumptions are the same as identified earlier in this article, unless otherwise noted. Only two asset classes, U.S. equity and U.S. investment-grade bonds, were used for the analysis. See endnotes for index definitions. Source: Fidelity Investments. Comparing the impact of slope over longer time periods Over a long horizon, differences in slope translate into differences in the equity allocation. Starting from the same equity allocation, a glide path with a flatter slope will have a higher equity exposure over time than a steep glide path. Consequently, during a longer savings accumulation period, an investor in a Through glide path (with a higher equity exposure) typically would have accumulated a higher level of wealth than a more conservative To glide path during the years leading up to retirement, providing a relatively bigger cushion to withstand a potential equity market decline. More specifically, our analysis showed the wealth of a hypothetical investor who began to invest in a target date strategy at age 25 and continued to do so until retirement at age 65, would have been higher in a Through glide path (relative to a To glide path) amid the worst U.S. equity bear market in history (1969 to 1978) and the average of the 20 worst U.S. equity market declines in history, if these events occurred at age 55 or 60. 9 Moreover, the Through glide path provided a higher level of wealth, and sufficient protection amid all 20 of the worst equity market declines, except a major one that took place during the 1930s Great Depression (see Leadership Series article, Achieving Retirement Success: Do To or Through Glide Paths Lead to Higher Wealth? May 2014). 10 wealth during the five-year period (see Comparing the impact of slope over longer time periods, above). Investment implication: A steeper slope may lack the power of higher equity exposure when the market recovers Our analysis shows glide paths with steeper slopes generally sell equities (reducing their asset base) more aggressively into a falling equity market, and then are not likely to recover losses as rapidly as more gradually sloped glide paths when the market rebounds (as it did in most historical five-year periods). The higher slope risk of a To glide path would have contributed to a lower retirement income level (i.e., lower wealth) than an investor in a Through glide path in a significant majority of simulated market scenarios. Target date investors should also keep in mind that the analysis of slope in this paper focuses solely on the five-year period preceding retirement, and assumes an identical starting wealth level for both the To and Through glide paths. When looking at more extended savings periods with the same analytical approach, we found that the wealth accumulated by the time a hypothetical investor approaches retirement was greater in a Through glide path than the wealth for a To glide path in 90% of simulated macroeconomic scenarios. 11 The favorable results for the Through glide path are due to the fact that during an 3
extended savings period, an investor in a Through glide path (with a higher equity exposure) is likely to amass a higher level of wealth that can better cushion the impact of a severe equity market decline. In essence, because of the shorter time horizon in which To glide paths are constructed, there is less flexibility to try to achieve the balance of the risk trade-offs noted earlier market, longevity, and slope. Due to their static asset allocation throughout the entire retirement period, To glide paths must compromise in steering among these risks in an attempt to achieve the overall income-replacement objective. If the equity allocation of the To glide path is reduced from an initially higher level very gradually, the glide path may have too much equity in late retirement, exposing investors with short time horizons to undesirably high levels of (market) risk. Yet, if investors seek a level of protection in late retirement, the static asset allocation in retirement requires To glide paths to have steep slopes during the working phase of the life cycle, exposing investors to the risk of locking in potential losses during the late working phase (slope risk). Understanding the slope of a target date fund s glide path can help an investor choose a portfolio that is most suitable to his or her risk tolerance, investment horizon, and retirement income goal. The slope of some target date funds got steeper During the past year, some target date providers announced increases to the equity allocation of their To glide paths, recognizing that investors need, and have the risk capacity for, greater equity exposure during their working years (see Exhibit A, below). 12 At the same time, these providers maintained their lower allocation to equities at retirement age in an attempt to limit market risk at retirement. In effect, the providers increased the slope and slope risk of their glide paths. As this article illustrates, this can potentially degrade and even offset the potential benefits of lower market risk during periods of major equity market declines and subsequent market recovery. EXHIBIT A: Some To target date providers increased the slope of their glide paths during the working phase of the lifecycle in 2014. Equity Allocation (%) 100 80 60 40 20 0 2055 SLOPE ADJUSTMENTS OF VARIOUS TO TARGET DATE PROVIDERS Target Date Provider #1 New Old 2050 2045 2040 2035 2030 2025 Target Date Provider #2 New Old 2020 2015 2010 2005 2000 Income Source: Morningstar, Inc., as of Sep. 30, 2014. See endnote #2. Authors Emil Iantchev, PhD Senior Research Analyst Emil Iantchev is a research analyst for Fidelity Investments. He currently focuses on research projects within the Asset Allocation Research Team, a unit of the Global Asset Allocation division. He joined Fidelity in 2013. Sarah O Toole, CFA Institutional Portfolio Manager Sarah O Toole is an institutional portfolio manager in the Global Asset Allocation (GAA) division of Fidelity Investments. She is responsible for aligning the target date funds investment objectives and process to that of the institutional investment marketplace. Mathew R. Jensen, CFA Director, Target Date Strategies Mathew Jensen is the director of target date strategies in the Global Asset Allocation (GAA) division of Fidelity Investments. Mr. Jensen leads investment strategy execution and product design and innovation across the company s target date offerings, and directs target date investment research and thought leadership. Fidelity Thought Leadership Vice President Kevin Lavelle provided editorial direction. 4
Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with any investment or transaction described herein. Fiduciaries are solely responsible for exercising independent judgment in evaluating any transaction(s) and are assumed to be capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies. Fidelity has a financial interest in any transaction(s) that fiduciaries, and if applicable, their clients, may enter into involving Fidelity s products or services. Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully. Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the informa tion available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information. Investment decisions should be based on an individual s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice and you are encouraged to consult your own lawyer, accountant, or other advisor before making any financial decision. Past performance is no guarantee of future results. Neither asset allocation nor diversification ensures a profit or guarantees against a loss. Target date portfolios are designed for investors expecting to retire around the year indicated in each portfolio s name. Each portfolio is managed to gradually become more conservative over time as it approaches its target date. The investment risk of each target date portfolio changes over time as the portfolio s asset allocation changes. The portfolios are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in highyield, small-cap, commodity-linked, and foreign securities. Principal invested is not guaranteed at any time, including at or after the portfolios target dates. Target date portfolios are designed to help achieve the retirement objectives of a large percentage of individuals, but the stated objectives may not be entirely applicable to all investors due to varying individual circumstances, including retirement savings plan contribution limitations. It is not possible to invest directly in an index. Endnotes 1 Target date strategies, target date portfolios, target date funds: An allin-one investment that includes a diversified exposure to multiple asset classes and that is based on an investor s anticipated retirement date. 2 Source: businessweek.com - http://www.bloomberg.com/ bw/articles/2014-09-19/for-people-close-to-retirement-targetdate-funds-add-stocks-again; reuters.com - http://www. reuters.com/article/2014/10/10/us-funds-target-stocks-insightiduskcn0hz09q20141010. 3 To composite benchmark is an asset-weighted composite using the following To glide paths: ACO, BlackRock, ING, JPMorgan, Manning & Napier, MFA, PIMCO, Russell, State Farm, and Wells Fargo. Source: Morningstar, Inc., Jun. 30, 2013. 4 Our analysis used the equity allocation in the glide path for Fidelity s target date strategies as representative of a Through approach. Fidelity s Through glide path may differ from those of other target date strategies, which could influence the results of this analysis. Investors should allocate assets based on individual risk tolerance, investment time horizon, and personal financial situation. A particular asset allocation may be achieved by using different allocations in different accounts or by using the same allocation across multiple accounts. The glide path is not intended as a benchmark for individual investors; rather, it is a range of equity, bond, and short-term debt allocations that may be appropriate for many investors saving for retirement, based on an assumed retirement age of 65, as well as a range of expected retirement ages at or near 65. Investors should consider whether they anticipate retiring significantly earlier or later than age 65, and should select an allocation that best meets their individual circumstances and investment goals. Individual target date strategies, including Fidelity s, may incorporate additional allocations including, but not limited to, small-cap, high yield, commodity-linked, and foreign securities. These additional allocations could provide different results than the results provided within this paper. 5 Our analysis of the five-year period before retirement includes the following assumptions: retirement at age 65; monthly savings rate that adjusts linearly each year between age 60 to 65 (12.4% and 13%) and that rate includes matching funds (no loans or withdrawals); annual salary increase (merit rate) of 1.5%, which reflects a real (inflation-adjusted) growth rate; starting wealth level at age 60 is $386,000 (median macroeconomic scenario). Assumptions are informed by analysis of participant behavior in defined contribution retirement plans affiliated with Fidelity Investments, as well as other data sources. 6 Our simulation analysis used bootstrapping, a procedure designed to provide a large number of possible market scenarios using actual market performance, while avoiding overlap of potentially similar market periods. It helps provide historical context of how an investment strategy performed during various hypothetical market scenarios. Although based on past market performance, it does not represent current or future performance and should not be construed as any indication of how a particular investment or strategy may perform in the future. In this analysis, we used bootstrapping to simulate 100,000 wealth paths during the five-year period prior to a retirement age of 65. More specifically, bootstrapping is a statistical method for creating a very large number of possible scenarios from a finite sample set of observations while preserving the statistical properties of the underlying empirical distribution. We classified each year from 1900 to 2013 into one of four macroeconomic states, depending on how current real GDP growth and inflation compare with their secular trends (e.g., high/low growth and high/ low inflation). We used this history of macroeconomic states to estimate a transition matrix that at each point in time provides the probability of transitioning to each of the four states over the next year, given the macroeconomic state in the current year. We then used the transition matrix to simulate 100,000 asset return time series of 40 years in length. For a given time series, the asset returns over a year associated with a macroeconomic state are randomly drawn with replacement from the historical asset return distribution for that macroeconomic state. Within a time series, the state of the economy transitions from year to year according to the empirical transition matrix. In this way, the simulation uses the underlying structure of the U.S. economy to generate a large number of non-overlapping 40-year periods that have historically plausible asset return distributions. For each target date strategy, we then look at the distribution of wealth across these 100,000 wealth paths at a given age (e.g., age 60. The 50th percentile of this wealth distribution is the median wealth associated with the particular glide path (i.e., the hypothetical median wealth that occurred under a typical macroeconomic environment in which the occurrence of high and low inflation and growth states over time was balanced). In our analysis, we used $50,000 as an assumed final preretirement salary. For consistency 5
and ease of comparison, we used two asset classes U.S. equity and U.S. investment-grade bonds to evaluate the potential wealth accumulation of To and Through glide paths. We used a quantitative simulation method informed by the historical returns for U.S. equity and U.S. bonds in all of the following hypothetical scenarios, as well as the actual history of asset returns during and after each of the 20 largest U.S. equity market declines since 1900. All U.S. equity data and references used for analysis in this article based on the following: For the period 1900-1926, the total return series calculated by Global Financial Data, for the U.S. Common Stock Indexes published by the Cowles Commission (http://cowles.econ.yale.edu/p/cm/m03/m03- intro.pdf); after 1926, U.S. equity data is based on the value-weighted total return, obtained from CRSP, for all U.S. firms listed on the NYSE, AMEX, or NASDAQ. CRSP: Calculated (or Derived) based on data from the 1925 U.S. Stock Database 2015 Center for Research in Security Prices (CRSP ), The University of Chicago Booth School of Business. All U.S. investment-grade bonds data represented by Bloomberg Barclays U.S. Aggregate Bond Index since 1976 and the 10-year U.S. Treasury Bond prior to that date, unless otherwise noted. [Note: In conducting our analysis, we used historical index performance to represent both U.S. equity and U.S. investment-grade bond returns. While indexes can provide insight into how asset classes have performed during historical market cycles, they do not take into account key factors such as fund expenses or portfolio manager investment decisions, and should not be considered representative of how a fund has, or will, perform.] 7 Typical market scenario refers to the median results of our bootstrap simulation analysis. 8 The 20 worst U.S. equity market declines referenced in the article are based on monthly data for the U.S. Common Stock Indexes published by the Cowles Commission with Global Financial Data (GFD) extension until 1927; after 1926, U.S. equity data is based on the value-weighted total return, obtained from CRSP, for all U.S. firms listed on the NYSE, AMEX, or NASDAQ. The 20 worst declines are represented by the following dates, starting with the first month of downturn period: Oct. 1902, Oct. 1906, Nov. 1912, Dec. 1916, Sep. 1929, Sep. 1932, Mar. 1937, Oct. 1939, Jun. 1946, Aug. 1956, Jan. 1962, Feb. 1966, Dec. 1968, Jan. 1973, Jan. 1977, Dec. 1980, Sep. 1987, Jun. 1990, Sep. 2000, Nov. 2007. The start and end dates for the 20 worst U.S. equity declines are defined by checking the maximum real decline within each 60-month moving window from 1900 to 2014, and selecting the 20 periods with the biggest declines. The equity and bond returns corresponding to the average of the 20 worst U.S. equity market declines reflect the simple average of those returns at each point in time. 9 In this analysis, we invested identical amounts in the Through and the To glide paths starting at age 25. We followed the accumulation of real wealth under the typical (median) simulated macroeconomic environment and observed the impact of the 20 most severe U.S. equity market declines occurring at ages 55 and 60. Once the decline starts, we follow the evolution of wealth implied by the actual asset class returns over the next decade. Other assumptions in this analysis: contribution rate (monthly) - 8% increasing linearly to 13% (indicates that the deferral rate grows from 8% to 13% over the accumulation period, and includes company matching funds); retirement age - 65; annual salary increase (merit rate) - 1.5% (reflects a real, inflation-adjusted, growth rate). For more detail on the 20 worst U.S. equity market declines, see endnote #8. 10 See endnote #9. 11 See endnote #9. 12 See endnote #2. Important Information Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC. The U.S. Common Stock Indexes published by the Cowles Commission are value-weighted indexes of all stocks quoted on the NYSE starting in 1871 (http://cowles.econ.yale.edu/p/cm/m03/m03-intro.pdf). The CRSP U.S. Stock databases contain daily and monthly market and corporate action data for securities with primary listings on the NYSE, AMEX, NASDAQ, or ARCA. CRSP refers to the Center for Research in Security Prices, located at the University of Chicago. The CRSP data is calculated based on data from its U.S. Stock database 2013 Center for Research in Security Prices (CRSP ), The University of Chicago Booth School of Business. Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged, market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. If receiving this piece through your relationship with Fidelity Institutional Asset Management (FIAM), this publication may be provided by Fidelity Investments Institutional Services Company, Inc., Fidelity Institutional Asset Management Trust Company, or FIAM LLC, depending on your relationship. If receiving this piece through your relationship with Fidelity Personal & Workplace Investing (PWI) or Fidelity Family Office Services (FFOS) this publication is provided through Fidelity Brokerage Services LLC, Member NYSE, SIPC. If receiving this piece through your relationship with Fidelity Clearing and Custody Solutions or Fidelity Capital Markets, this publication is for institutional investor or investment professional use only. Clearing, custody or other brokerage services are provided through National Financial Services LLC or Fidelity Brokerage Services LLC, Member NYSE, SIPC. 711152.5.0 2015 FMR LLC. All rights reserved. 6 For plan sponsor and institutional investor use only