Strategic Advisers Emerging Markets Fund Key Takeaways For the semiannual reporting period ending August 31, 2017, the Fund gained 18.60%, slightly outpacing the 18.31% return of the benchmark MSCI Emerging Markets Index. Versus the benchmark, underlying managers with a growth emphasis in their strategies aided the Fund's performance, as growth-oriented stocks topped value stocks this period. The top relative contributors were the Select Emerging Markets Equity Strategy from sub-adviser FIAM and Fidelity Emerging Markets Fund. A position in the ishares MSCI China ETF (exchange-traded fund) also notably contributed. Primary relative detractors were sub-adviser M&G Investments and value-oriented Lazard Emerging Markets Equity Fund. In March, the Fund hired T. Rowe Price Associates, Inc. as a sub-adviser. Portfolio Manager Wilfred Chilangwa has a generally positive outlook for the global economy, and he plans to continue increasing the Fund's exposure to sub-advisers. MARKET RECAP For the six months ending August 31, 2017, synchronized global economic expansion lent support to equities, while mostly flagging commodity prices helped mitigate concern about potential overheating. Aided by a generally weaker U.S. dollar, international equities spearhead the global market rally. In this environment, the MSCI ACWI (All Country World Index) ex USA Index returned 13.19% for the sixmonth period, well ahead of U.S. counterparts. Favorable election results in France and elsewhere suggested ebbing political uncertainty and nearterm risk in the eurozone, and Europe (+18%) far outpaced the U.K. (+8%), which faced more-mixed conditions ahead of its anticipated exit from the European Union. Among other factors, "saber rattling" from North Korea bolstered the "safe haven" yen, and export-heavy Japan (+7%) lagged the rest of the Asia Pacific group (+12%). Commodity-price sluggishness slowed resource-rich Canada (+6%), but the emerging-markets group (+17%) sped ahead. Among sectors, information technology (+27%) fared best, led by major Chinese internet names; utilities (+17%) was a distant second. Bottomperformer energy (+5%) at least got its head back above water, with health care (+8%) and telecommunication services (+11%) the next-closest laggards. The remaining sectors were clustered closer to the index return. Shares are offered only to certain clients of Strategic Advisers, Inc. not available for sale to the general public Not FDIC Insured May Lose Value No Bank Guarantee
Q&A An interview with Portfolio Manager Wilfred Chilangwa Fund Facts Trading Symbol: Wilfred Chilangwa Portfolio Manager FSAMX Start Date: September 30, 2010 Size (in millions): $4,965.05 Investment Approach Strategic Advisers Emerging Markets Fund (the Fund) is a multi-manager investment strategy that seeks capital appreciation by investing primarily in a broadly diversified portfolio of emerging-markets equity securities. The Fund provides diversified exposure to multiple investment vehicles including mutual funds, subadvised strategies and, at times, exchange-traded funds (ETFs) selected from what we believe are the best ideas of Strategic Advisers' research department. We evaluate the tradeoff between cost, liquidity and investment flexibility to determine the optimal investment mix. Our investment process emphasizes prudent manager selection based on the view that different investment approaches may outperform at different times over a full market cycle, and that combining these investment disciplines may result in a more consistent performance profile. We believe the ability to utilize the distinctive skills of a variety of managers helps provide investment diversification and also may provide the portfolio manager(s) more flexibility to invest more adeptly throughout the market cycle, and potentially allow for better risk management. Q: Wilfred, how did the Fund perform for the six months ending August 31, 2017 The Fund gained 18.60%, slightly outpacing the 18.31% return of the benchmark MSCI Emerging Markets Index. We also outperformed our peer group average. Underlying managers with a growth emphasis in their investment strategies aided the Fund's relative result, as growthoriented stocks topped value stocks for the period. Looking back a full 12 months, the Fund performed about in line with the benchmark but once again topped the peer average. Q: What was the investment environment like during the review period Bolstered by a generally weaker dollar in 2017, emerging markets (EM) spearheaded the global stock rally. EM largecap stocks outperformed the group's small-caps, and the EM growth segment topped its value-oriented counterpart. Emerging Asia (+20%) was the top-performing region, led by robust returns from stocks traded in Hong Kong (+33%) and China (+26%). Emerging Europe (+17%) also posted a strong overall result, but was pulled down by disappointing performance in Russia (+4%), with oil prices weighing on the market there. The Middle East (-5%) finished far behind, the only region to register a negative return. From a sector perspective, information technology (+32%), an area favored by growth managers, was the top performer in the MSCI Emerging Markets Index, fueled largely by strength among internet firms based in China. The rise of technology companies represents a major reversal from earlier years, when banks, utilities and commodity producers dominated stock trading in the developing world. Interestingly, in 1995, when global investing in EM stocks started to accelerate, tech shares accounted for only 1.5% of the index, according to MSCI. These days tech firms make up about 27% of the index. Elsewhere, real estate (+28%) was the only other sector to outperform the index, although consumer discretionary (+18%) was close. By contrast, health care (+4%), utilities (+7%) and energy (+8%) were the weakest performers. 2 For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
Q: How did your investment strategy fare in this environment I think the Fund's diversification across different investment styles, which includes substantial exposure to growthoriented managers, helped it outperform the benchmark. Manager selection and style diversification are key ways in which I seek to add value. I work closely with our fund analysts to identify managers I want to invest with then allocate assets based on my conviction in each manager's strategy, with an eye toward its risk-management role within the portfolio. Q: Which managers aided performance versus the benchmark Sub-adviser FIAM was the top contributor. This manager's Select Emerging Markets Equity Strategy is a risk-managed GARP (growth at a reasonable price) approach that combines bottom-up stock selection with a quantitative portfolio-construction process. For the period, it beat the MSCI EM index by a sizable margin, led by strong stock selection in consumer discretionary, financials and technology. From a country perspective, this strategy performed best in China, India and South Africa. Growth-oriented Fidelity Emerging Markets Fund and a position in the ishares MSCI China Index Fund contributed about equally to relative performance. Fidelity Emerging Markets focuses on what the manager considers "best of breed" growth stocks that are underappreciated by the market. This period, its strong relative results were driven by picks in consumer discretionary, health care and industrials. Country-wise, security selection in China, India and Brazil added the most value. As for the ishares MSCI China ETF, our position advanced by about 28% for the period, handily outperforming the MSCI EM Index. I held this ETF for risk-management purposes, seeking to partially offset the aggregate underweighting in China the largest single-country component in the index by our active managers. I'll also mention sub-adviser T. Rowe Price Associates, Inc., whose GARP-oriented discipline yielded solid choices in financials, along with an overweighting in technology. Q: How about detractors The primary relative detractor was sub-adviser M&G Investments. M&G pursues an opportunistic, all-cap strategy that looks for investments that fall into one of four categories: deep cyclicals; companies that it believes have structural tailwinds; "compounders;" and quality. Unfortunately, this period it stumbled with picks in technology, energy and consumer discretionary. At the country level, it struggled most in China, but also was hurt by out-of-index exposure to the U.K. and Singapore. Lazard Emerging Markets Equity Fund also worked against our relative result. This manager's value-oriented approach was out of favor this period. Furthermore, it underperformed due to adverse selections in technology, financials and consumer discretionary, along with unfavorable overall positioning in China. Brandes Emerging Markets Value Fund was another detractor. As this fund's name indicates, it pursues a valuedriven strategy, which did not work particularly well this period. The main factors hampering this manager were a sizable underweighting in technology, poor security selection in that sector, and adverse positioning in China. Q: Did you make any notable changes to the Fund this period In March, we transitioned the assets from T. Rowe Price Emerging Markets Stock Fund to initiate a sub-advisory relationship with the firm, running the same strategy. This shift was consistent with my larger goal of increasing the portion of the portfolio that is managed by sub-advisers, which, as of period end, stood at about 48%. Elsewhere, I continued to reduce allocations to managers that we thought had substantial exposure to countryspecific risk. Our goal in this regard is to position the portfolio so that it is more influenced by managers whose excess return versus their benchmarks comes from stockselection risk, rather country or currency exposures. Q: What is your outlook as of period end Over the past few years, investors pulled money out of emerging markets, forcing economies to adjust by closing current-account deficits. The aggregate current-account surplus that has been built up as a result might start to erode but for good reason: renewed capital inflows should help support economies, in my view, making domestic demand more robust and thus growth more sustainable. EM economic growth has broadened. While China's economy remained broadly steady, recovering commodity prices appear to be helping Brazil, Argentina and Russia emerge from recession. EM corporate earnings growth has strengthened. In China, for example, the profits of industrial firms rose sharply in August as a result of the summer rally in metals prices. Government stimulus had accelerated China's construction boom and was part of the reason for the surge in prices. 3 For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
ASSET ALLOCATION Wilfred Chilangwa expands on his outlook: "I think international stocks look more compelling today than they have in years. This may be difficult for many U.S. investors to believe, given various negative news stories over the past year related to the Brexit vote, elections in Europe, recession in Brazil, and other developments. Part of my job as portfolio manager is to look past the headlines and focus on the data. From that perspective, I think the outlook for foreign markets both developed and emerging appears favorable. "For one thing, global economic growth seems to be improving. We trace the roots of the current recovery to about 18 months ago, when the Chinese government implemented policies intended to pull that country out of its 'growth recession.' As the world's second-largest economy, China purchases massive amounts of goods and services from around the globe. A growing China is therefore good for business, and as growth in that country has stabilized, it has provided a boost to many other economies. What's more, China's recovery has led to renewed demand for a variety of raw materials, helping to support growth in countries heavily dependent on producing and exporting commodities, such as Brazil and Russia. "While it is true that U.S.-dollar weakness has aided EM stocks and bonds, I think there's more than that supporting the rally. EM corporate earnings are accelerating and valuations of EM stocks are below those of their U.S. counterparts the result of years of underperformance. "Many developing economies have moved beyond the first stage of growth: industrializing and building roads and other infrastructure. Now, EM companies are benefiting from a growing cohort of middle-class consumers with rising incomes. From a market perspective, this has boosted the stocks of many companies in the technology, consumer staples and health care sectors." Asset Class Portfolio Weight Portfolio Weight Six Months Ago Equity Investments 98.96% 99.48% Equities 48.99% 37.09% Mutual Funds 40.27% 53.90% ETFs 9.70% 8.49% Bonds 0.00% 0.00% Cash & Net Other Assets 1.04% 0.52% Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number. MANAGER ALLOCATION Manager Portfolio Weight Sub-Adviser Total 47.73% FIAM LLC 13.15% ACADIAN ASSET MANAGEMENT LLC 12.33% T ROWE PRICE 8.28% SOMERSET CAPT MGT 7.34% M&G INVESTMENTS 6.63% Top Mutual Fund Positions 43.65% Causeway Emerging Markets Fund 7.99% Fidelity Emerging Markets Fund 7.45% ishares Trust 5.23% Lazard Emerging Markets Equity 3.94% Aberdeen Emerging Markets Fund 3.79% Oppenheimer Developing Markets 3.78% GMO Emerging Markets Fund Clas 3.29% Parametric Emerging Markets Fu 3.22% Brandes Emerging Markets Value 2.63% SPDR S&P China ETF 2.33% Remaining Investments 8.62% Manager allocations are as of the end of the reporting period and may not be representative of the fund's current or future investments. Excludes money market investments. 4 For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
FISCAL PERFORMANCE SUMMARY: Periods ending August 31, 2017 6 Month Cumulative YTD 1 3 Annualized 5 10 / LOF 1 Strategic Advisers Emerging Markets Fund Gross Expense Ratio: 1.32% 2 18.60% 29.20% 24.98% 2.44% 5.28% 2.80% MSCI Emerging Markets Index (Gross) 18.31% 28.62% 24.99% 2.75% 5.67% 2.99% Morningstar Fund Diversified Emerging Mkts 16.68% 26.28% 21.69% 1.68% 5.12% -- % Rank in Morningstar Category (1% = Best) -- -- 31% 42% 49% -- # of Funds in Morningstar Category -- -- 797 631 439 -- 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 09/30/2010. 2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Please see the last page(s) of this Q&A document for most-recent calendar-quarter performance. 5 For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
Definitions and Important Information Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, act as an impartial adviser, or to give advice in a fiduciary capacity. FUND RISKS Foreign securities are subject to interest-rate, currency-exchangerate, economic, and political risks, all of which may be magnified in emerging markets. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, economic or other developments. These risks may be magnified in foreign markets. The fund can invest in ETFs which may trade at a discount to their NAV. Fund of funds bear the risks of the investment strategies of their underlying funds. IMPORTANT FUND INFORMATION Relative positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance. INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted. MSCI Emerging Markets Index (Gross) is a market-capitalizationweighted index that is designed to measure the investable equity market performance for global investors of emerging markets. MSCI ACWI (All Country World Index) ex USA Index is a marketcapitalization-weighted index designed to measure the investable equity market performance for global investors of large and mid-cap stocks in developed and emerging markets, excluding the United States. RANKING INFORMATION 2017 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. % Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures. 6
Manager Facts Wilfred Chilangwa is a portfolio manager at Strategic Advisers, Inc. (SAI), a registered investment adviser and a Fidelity Investments company. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and other financial products and services to more than 20 million individuals, institutions and financial intermediaries. In this role, Mr. Chilangwa is responsible for managing Strategic Advisers International Fund, Strategic Advisers International II Fund, Strategic Advisers Emerging Markets Fund, Strategic Advisers International Multi-Manager Fund, Strategic Advisers Emerging Markets Fund of Funds, and the international subportfolio for Fidelity Portfolio Advisory Service model portfolios. He also leads the Fidelity Charitable Gift Fund (CGF) investment efforts within SAI, where he is responsible for the oversight of all CGF investment pools. Prior to assuming his current position in 2006, Mr. Chilangwa held various positions of increasing stature in SAI from 1997 to 2006. Previously, he was a senior fund analyst/international strategist from 2001 to 2006, and a senior fund analyst from 1997 to 2001. Before joining Fidelity in 1997, Mr. Chilangwa worked as a senior research analyst and assistant vice president in new product development for global investment and asset administration at State Street Corporation from 1992 to 1997. He has been in the investments industry since 1992. Mr. Chilangwa earned his bachelor of arts degree in physics and economics from Brandeis University and his master of arts degree in international economics and finance from Brandeis International Business School. He is also a Chartered Financial Analyst (CFA) charterholder. 7 For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
PERFORMANCE SUMMARY: Quarter ending September 30, 2017 1 3 Annualized 5 10 / LOF 1 Strategic Advisers Emerging Markets Fund Gross Expense Ratio: 1.32% 2 22.86% 4.99% 4.23% 2.78% 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 09/30/2010. 2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Past performance is no guarantee of future results. Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice. Diversification does not ensure a profit or guarantee against a loss. Information included on this page is as of the most recent calendar quarter. S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. Other third-party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI 02917. Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917. 2017 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. 718936.6.0