Quarterly Sector Update

LEADERSHIP SERIES FIRST QUARTER 2018 Quarterly Sector Update PRIMARY CONTRIBUTORS Fidelity Management & Research Company, Equity Division

SECTOR UPDATE Scorecard: Technology Continued to Lead Q4 marked another strong quarter of a stellar year for stocks. All sectors had positive returns in Q4, led by Consumer Discretionary. Technology had three positive scorecard indicators, and was the top-performing sector in 2017. Materials also screened well on the scorecard, based on fundamentals and relative strength. Energy fundamentals turned positive amid a rally in oil prices. Sector Longer Business Cycle Time Horizon View Fundamentals Relative Valuations Shorter Relative Strength Weight in S&P 500 Index Performance as of 12/31/17 Latest Quarter Year to Date Dividend Yield Consumer Discretionary 12.2% 9.9% 23. 1.3% Consumer Staples 8.2% 6.5% 13.5% 2.6% Energy + 6.1% 6. -1. 2.6% Financials + 14.8% 8.6% 22.2% 1.5% Health Care 13.8% 1.5% 22.1% 1.6% Industrials + 10.3% 6.1% 21. 1.9% Information Technology + + + 23.8% 9. 38.8% 1.2% Materials + + 2.9% 6.9% 23.8% 1.9% Real Estate + 3. 3.2% 10.8% 3.1% Telecom + 2.1% 3.6% -1.3% 4.8% Utilities + 2.9% 0.2% 12.1% 3.4% S&P 500 Returns 6.6% 21.8% 1.8% 2 Past performance is no guarantee of future results. Sectors as defined by the Global Industry Classification Standard (GICS ); see additional information in the appendix. Factors are based on historical analysis and are not a qualitative assessment by any individual investment professional. Green portions suggest outperformance; red portions suggest underperformance; unshaded portions indicate no clear pattern vs. the broader market as represented by the S&P 500. Quarterly and year-to-date returns reflect performance of S&P 500 Sector Indexes. It is not possible to invest directly in an index. All indexes are unmanaged. Percentages may not sum to 10 due to rounding. Source: FactSet, Fidelity Investments, as of Dec. 31, 2017.

Cons. Stpls. Cons. Disc. Technology Industrials Telecom Health Care Materials S&P 500 Utilities Financials Real Estate Energy Technology S&P 500 Health Care Materials Telecom Cons. Disc. Cons. Stpls. Industrials Energy Utilities Energy Utilities Technology Materials Real Estate S&P 500 Industrials Health Care Telecom Cons. Stpls. Financials Cons. Disc. Energy Technology S&P 500 Materials Industrials Cons. Disc. Utilities Cons. Stpls. Health Care Telecom SECTOR UPDATE Fundamentals: Technology, Materials, Energy Strong Technology fundamentals continued to strengthen in Q4, bolstered by solid free-cash-flow margins and EBITDA growth. The Materials and Energy sectors also scored notably well on earnings growth, while Energy s free-cashflow yield and return on equity remain challenged. EPS Growth (Last 12 Months) 2 70. 15% 1 5% -30. -5% EBITDA Growth (Last 12 Months) 40. 30. 20. 10. 0. -10. Return on Equity (Last 12 Months) 3 2 1 Free-Cash-Flow Margin (Last 12 Months) 30. 20. 10. -1 0. -10. Fundamentals: Strong and improving fundamentals historically have been an intermediate-term indicator of sector performance. Fundamental analysis gives a view of how each sector is doing in terms of growth and profitability. 3 Past performance is no guarantee of future results. EPS = earnings per share. EBITDA = earnings before interest, taxes, depreciation, and amortization. The Financials and Real Estate sectors are not represented in the EBITDA Growth or Free-Cash-Flow Margin charts. Note that the Energy sector s EPS growth (last 12 months) was 673%. See the Glossary and Methodology slide for further explanation. Source: FactSet, Fidelity Investments, as of December 31, 2017.

Cons. Disc. Cons. Stpls. Energy Financials Health Care Industrials Technology Materials Real Estate Telecom Utilities Cons. Disc. Cons. Stpls. Energy Health Care Industrials Technology Materials Telecom Utilities SECTOR UPDATE Relative Valuations: Real Estate, Utilities Appear Inexpensive Based on our framework, Real Estate, Utilities, and Telecom currently have the lowest relative valuations, based largely on their compellingly low price-to-earnings (P/E) ratios. Due to recent outperformance, Industrials and Technology are edging toward the high end of their 10-year ranges. Earnings Yield 10-Year Range (excl. top & bottom 5%) Current Historical Average Relative Forward Earnings Yield to S&P 500 Index Free-Cash-Flow Yield 10-Year Range (excl. top & bottom 5%) Current Historical Average Relative Free-Cash-Flow Yield to S&P 500 Index 20 18 16 14 12 10 8 6 4 2 30 25 20 15 10 5-5 -10 Relative Valuations: On their own, valuations are not necessarily the best indicator of sector performance, but when combined with other factors, valuations can be a useful tool in determining the risk-and-reward profile. 4 Past performance is no guarantee of future results. Forward earnings yield reflects analysts published earnings-per-share estimates for the next 12 months, divided by market price per share; it is the inverse of the price-to-earnings (P/E) ratio. Free-cash-flow yield reflects free cash flow divided by market price per share; it is the inverse of the price-to-free-cash-flow ratio. The Financials and Real Estate sectors are not represented in the Free-Cash-Flow Yield chart. Please see the Glossary and Methodology slide for further explanation. Source: FactSet, Fidelity Investments, as of Dec. 31, 2017.

SECTOR UPDATE Relative Strength: Technology, Financials, Materials on Top Technology continued to lead the pack in the fourth quarter, and finished the year as the top-performing sector. Financials also had impressive performance in Q4, sustaining its sharp rally that began in August. In contrast, the Consumer Staples, Telecom, and Real Estate sectors lagged during the second half of 2017. Sectors Exhibiting Relative Strength Technology Financials Materials Price Relative to S&P 500 Index Sectors Exhibiting Relative Weakness Cons. Stpls. Telecom Real Estate Price Relative to S&P 500 Index 130 120 130 120 6-month review 110 110 100 100 90 90 80 6-month review 70 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 80 70 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Relative Strength: This indicator compares the performance of each sector with the performance of the broad market, based on changes in the ratio of the securities respective prices over time. 5 Past performance is no guarantee of future results. Charts represent performance of specified S&P 500 Sector Indexes relative to the broader S&P 500 Index. It is not possible to invest directly in an index. All indexes are unmanaged. Source: FactSet, Fidelity Investments, as of Dec. 31, 2017.

Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 SECTOR UPDATE We May Be in the Early Stage of an Extended Profit Recovery In 2017, global markets emerged from a fairly significant decline in corporate profits. Global earnings especially in U.S. dollars have since rallied sharply. Accelerating profits tend to benefit cyclical sectors, and we may still be in the early innings given that the average U.S. profit recovery has lasted approximately four years. Signals such as ample bank credit and a recent U.S.-dollar depreciation suggest this recovery may be extended. Following a Contraction in Global Profits, We Appear to Be in the Early Stages of a Recovery Global Earnings Growth (% change YoY) 4 On Average, Corporate Profit Recoveries in the U.S. Tend to Last Approximately Four Years Length of U.S. Corporate Profit Recovery (Years) 7.0 3 6.0 6.0 2 1 5.0 4.0 4.1-1 -2 3.0 2.0 1.0 2.2 1.0 0.0 Maximum Average Minimum Current 6 Left chart: Global earnings based on the MSCI World Large Cap Index. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Length of corporate profit recovery defined as the number of years from maximum contraction to less than 5% growth, and includes eight profit recoveries from 1960 to 2017. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

SECTOR UPDATE A Sustained Profit Recovery Should Lift Wages If the profit recovery continues on its current trajectory as many indicators suggest wage growth is likely to pick up. When profit growth has accelerated and been above 1 historically, wage growth has often followed suit. Although higher wages add to corporate cost bases, wage acceleration hasn t historically hurt profit margins. Sales often accelerate in tandem with or even faster than wages, and profit margins have tended to expand as a result. Wage Growth Tends to Pick Up When Corporate Profit Growth Is Accelerating and Is Above 1 Odds of Wage Acceleration by Corporate Profit Scenario Higher Wage Growth Has Historically Coincided with Rising Corporate Profit Margins Operating margin (EBIT/Sales Ratio, % Change) 75% 7 69% 73% 2.0 1.5 1.64% 65% 6 55% 55% 56% 1.0 0.5 5 0.0 45% 4 Accelerating & > Accelerating & >5% Accelerating & >1 Corporate Profit Growth Scenario Accelerating & >15% -0.5-1.0 Wage Growth Accelerating -0.8 Wage Growth Decelerating 7 Wages measured by average hourly earnings. Left chart: Odds of wage growth accelerating over the next 12 months. Quarterly data from 1962 to 2017. Of the 223 quarters studied, corporate profits were accelerating and above 1 approximately 22% of the time. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: EBIT (earnings before interest and taxes)/sales ratio is a measure of corporate operating margins. Monthly data for the top 3,000 U.S. stocks by market capitalization. Quarterly data from 1962 to 2017. Over that period, when wage growth was accelerating, operating margins rose 64% of the time; when wage growth was decelerating, operating margins rose 43% of the time. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

SECTOR UPDATE A Flattening Yield Curve Isn t Necessarily Grim for Stocks Over the past year, the bond yield curve has been positive but flattening (short-term yields remained lower than long-term yields, but the differential has narrowed). Many investors have become concerned about what this could mean for stocks. But a positive and flattening yield curve has historically been constructive for the stock market. In contrast, an inverted yield curve (when short-term yields exceed long-term yields) has been a headwind for stocks. A Positive but Flattening Yield Curve Has Not Hurt Stock Performance, Historically Odds of Positive S&P 500 Returns by Yield-Curve Scenario In Fact, Stock Returns Have Been Quite Strong on Average amid This Yield-Curve Scenario S&P 500 Return by Yield-Curve Scenario 8 7 78% 72% 12% 1 9% 11% 6 56% 8% 5 4 43% 6% 4% 3 2% 1% 2 1-2% Inverted & Flattening Inverted & Steepening Positive & Flattening Positive & Steepening -4% -3% Inverted & Flattening Inverted & Steepening Positive & Flattening Positive & Steepening Yield-Curve Scenario Yield-Curve Scenario 8 Past performance is no guarantee of future results. Yield curve reflects the yield differential between 10-year and 1-year U.S. Treasury securities. Quarterly data from 1962 to 2017. Of the 225 quarters studied, there were the following number of instances of each scenario: Inverted and then flatter (7); inverted and then steeper (40); positive and then flatter (111); positive and then steeper (67). Left chart: Odds of positive returns over the next 12 months. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: 12-month forward returns. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

SECTOR UPDATE Sector Leadership Has Become More Sustainable Over Time Technology stocks led the market in 2017. The likelihood that a prior year s top sector will continue to outperform in the subsequent year has been mixed, historically. But sector leadership has become more sustainable over time, as economic cycles have lengthened and leadership sustainability has been tied to recession risk. Top performing sectors are also unlikely to rank in the bottom three based on performance in the subsequent year. The Sustainability of Sector Leadership Has Been Mixed, but Has Improved Over Time Odds of the Prior Year s Top Sector Outperformance in the Subsequent Year 5 45% 4 44% 43% 48% But Last Year s Top Sectors Have Been Unlikely to Rank in the Bottom 3 in the Subsequent Year Odds of the Prior Year s Top Sector in the Bottom 3 the Subsequent Year 5 45% 4 44% 41% 39% 4 35% 3 3 35% 3 25% 25% 2 2 15% 15% 1 1 5% 5% Pre-1990 Post-1990 Entire Period Post-1990 ex. ex. Recessions Recessions Pre-1990 Post-1990 Entire Period Post-1990 ex. ex. Recessions Recessions 9 Past performance is no guarantee of future results. Period studied is 1962 to 2017. There were seven recessions during that time frame; post-1990, there were two recessions. Left chart: Odds of outperformance over the next 12 months. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Odds of last year s top sector ranking in the bottom three sectors by performance in the current year. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

1976 1977 1979 1980 1982 1984 1985 1987 1988 1990 1992 1993 1995 1996 1998 1999 2001 2003 2004 2006 2007 2009 2011 2012 2014 2015 2017 Mar-76 Oct-77 May-79 Dec-80 Jul-82 Feb-84 Sep-85 Apr-87 Nov-88 Jun-90 Jan-92 Aug-93 Mar-95 Oct-96 May-98 Dec-99 Jul-01 Feb-03 Sep-04 Apr-06 Nov-07 Jun-09 Jan-11 Aug-12 Mar-14 Oct-15 May-17 SECTOR UPDATE At Elevated Valuations, Earnings Growth Important for Financials The Financials sector s relative forward P/E valuation is just above its long-term average. But elevated valuations alone have not caused the sector to underperform historically. When valuations have been near these levels in the past, whether earnings growth has been accelerating or slowing has often meant the difference between Financials out- or underperforming. Financials Valuations (Based on Earnings) Are Just Above Their Historical Averages Financials Relative Fwd. P/E Valuation At These Valuations, The Earnings Outlook Has Determined Whether Financials Outperformed Financials Avg. Outperformance (Next 12 Months) 1.60 5. 1.40 4. 3.9% 1.20 3. 1.00 2. 0.80 0.60 0.40 1. 0. -1. -2. 0.20 0.00-3. -4. Valuations at Current Levels & Earnings Growth Recovers -3. Valuations at Current Levels & Earnings Growth Worsens 10 Past performance is no guarantee of future results. Valuations (forward earnings, as measured by price-to-earnings ratio) are relative to the sector s historical valuations. Left chart: Monthly data from 1976 to 2017. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Monthly data from 1976 to 2017. Over that period, earnings growth recovered approximately one-third of the time and worsened approximately twothirds of the time. With Financials valuations near current levels and earnings growth recovering, the sector outperformed 72% of the time; with Financials valuations near current levels and earnings growth worsening, the sector outperformed 41% of the time over the period studied. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

2000 2001 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2014 2015 2016 2017 SECTOR UPDATE Constructive Signals for Loan Growth Supportive of Financials Corporate profits are often a leading indicator for loan growth an important driver of Financials earnings. Recent weakness in loan growth was due at least in part to the 2016 profit contraction. The sharp profit recovery in 2017 will likely lead to a pickup in loan growth, which should be constructive for Financials. Capital markets and banks stocks, in particular, have benefited from strong loan growth amid rising interest rates and positive stock returns. Corporate Profits (A Leading Indicator for Loan Growth) Appear Positive for Financials Earnings Corporate Profit Growth C&I Loan Growth Corporate Profit and Loan Growth (% change YoY) Amid Rising Rates and Stock Gains, Strong Loan Growth Has Benefited Capital Markets and Banks Odds of Financials Industries Outperformance When Loan Growth Accelerates, Rates Rise, and Stocks Are Positive 6 5 9 85% 84% 4 8 77% 3 2 1-1 -2 75% 7 65% 6 55% 5 45% 61% 61% 6-3 4 Capital Markets Banks Thrifts Insurance Consumer Finance 11 Past performance is no guarantee of future results. Left chart: Loan growth based on commercial and industrial (C&I) loans, the worst performing category of loans during the recent downturn. C&I Loans: Bank credit (all commercial banks, in $ billions). Corporate profits (12-month lead) are after taxes and seasonally adjusted, and include inventory valuation and capital consumption adjustments. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Odds of outperformance over the next 12 months. Monthly data from 1962 to 2017. Over that period, the scenario of accelerating loan growth, rising rates, and a positive stock market happened approximately 9% of the time. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

1961 1964 1967 1969 1972 1974 1977 1979 1982 1984 1987 1989 1992 1994 1997 1999 2002 2004 2007 2009 2012 2014 2017 621 643 671 693 721 743 771 793 821 843 871 893 921 943 971 993 021 043 071 093 121 143 171 IND CND TEC FIN REITS MAT CNS HTH ENE TEL UTL SECTOR UPDATE Sustained Strong Investment Spending May Boost Industrials Corporate investment spending is often ignited by corporate profit recoveries. A lower corporate tax rate has also tended to support investment spending growth. Moreover, comparing current trends with historical patterns, the acceleration in investment spending that began at the end of 2016 appears poised to continue, which could benefit Industrials stocks. Based on History, the Investment Spending Recovery Appears Likely to Continue Gross Private Domestic Investment Spending (% Change YoY) An Acceleration in Investment Spending Has Historically Benefited Industrials Stocks Odds of Outperformance When Investment Spending Accelerates 50.0 7 66% 40.0 6 6 59% 59% 30.0 5 53% 5 5 49% 20.0 10.0 0.0 4 3 4 36% 27% -10.0 2-20.0 1-30.0 12 Past performance is no guarantee of future results. Left chart: Real (inflation-adjusted) gross private domestic investment is seasonally adjusted. Monthly data from 1962 to 2017. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Odds of outperformance over the next 12 months, rolling. Monthly data from 1962 to 2017. Over that period, investment spending accelerated 4 of the time. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

1976 1977 1979 1980 1982 1984 1985 1987 1988 1990 1991 1993 1995 1996 1998 1999 2001 2003 2004 2006 2007 2009 2010 2012 2014 2015 2017 Feb-76 Sep-77 Apr-79 Nov-80 Jun-82 Jan-84 Aug-85 Mar-87 Oct-88 May-90 Dec-91 Jul-93 Feb-95 Sep-96 Apr-98 Nov-99 Jun-01 Jan-03 Aug-04 Mar-06 Oct-07 May-09 Dec-10 Jul-12 Feb-14 Sep-15 Apr-17 Nov-96 Oct-97 Sep-98 Aug-99 Jul-00 Jun-01 May-02 Apr-03 Mar-04 Feb-05 Jan-06 Dec-06 Nov-07 Oct-08 Sep-09 Aug-10 Jul-11 Jun-12 May-13 Apr-14 Mar-15 Feb-16 Jan-17 SECTOR UPDATE Despite Higher Valuations, Industrials Still Appear Attractive Industrials relative forward P/E ratios are at the high end of their historical range; however, this has typically not led to underperformance for the sector, largely because earnings growth tends to accelerate. Within the Industrials sector, high-dividend-yielding stocks have had consistent performance through economic cycles, highlighting potential opportunities within the aerospace and machinery and defense industries. Industrials Valuations Are Nearing Relative Highs, but That Hasn t Hurt Returns Historically Industrials Relative Forward P/E Ratio 1.20 1.10 1.00 0.90 0.80 0.70 0.60 High-Dividend-Paying Industrials Stocks Have Performed Consistently Across Economic Cycles Relative Performance of High-Dividend-Yielding Industrials Stocks 220 200 180 160 140 120 100 80 60 13 Past performance is no guarantee of future results. Left chart: Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart:. Gray shaded areas denote recessions as defined by the National Bureau of Economic Research (NBER). Relative performance shown reflects the top quartile (by dividend yield) of the S&P 500 Industrials Index relative to the equal-weighted S&P 500 Industrials Index. Source: FactSet, Haver Analytics, NBER, Fidelity Investments, as of Dec. 31, 2017.

1990 1992 1993 1995 1996 1998 1999 2000 2002 2003 2005 2006 2007 2009 2010 2012 2013 2015 2016 2017 SECTOR UPDATE Small Cap Stocks Appear Well-Positioned for Gains Tax reform has historically benefited small cap stocks because smaller companies are often more domestically focused. Small cap valuations relative to large caps also appear constructive. Small caps are generally more expensive than large caps, but when the differential between their FCF yields has been this narrow historically, small caps have outperformed. Thus, sector exposure that includes small caps may be a sensible approach. Valuations of Small Cap Stocks vs. Large Caps Are in the Top Quartile of Their Historical Range Relative FCF Yield (Small Cap vs. Large Cap) 0.0-0.5 With Relative FCF Yields at These Levels, Small Caps Have Outperformed the Majority of the Time Odds of Small Caps Outperforming Large Caps When Their Relative FCF Yield Was in the Top Quartile 10 9 93% -1.0 8 7 65% -1.5 6 5-2.0 4-2.5 3 2-3.0 1 Top Quartile All Instances 14 Past performance is no guarantee of future results. Left chart: Relative free-cash-flow (FCF) yield measured as the difference between the median small cap FCF yield and the median large cap FCF yield. Small cap: Russell 3000 Index; large cap: S&P 500 Index. Source: Haver Analytics, Fidelity Investments, as of Dec. 31, 2017. Right chart: Monthly data from 1962 to 2017. Source: FactSet, Haver Analytics, Fidelity Investments, as of Dec. 31, 2017.

Glossary and Methodology Glossary Bear Market At least a 2 correction in the stock market. Cycle Hit Rate Calculates the frequency of a sector outperforming the broader equity market over each business cycle phase since 1962. Dividend Yield Annual dividends per share divided by share price. Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) A non-gaap measure often used to compare profitability between companies and industries, because it eliminates the effects of financing and accounting decisions. Earnings per Share Growth Measures the growth in reported earnings per share over the specified past time period. Earnings Yield Earnings per share divided by share price. It is the inverse of the price-to-earnings (P/E) ratio. Free Cash Flow (FCF) The amount of cash a company has remaining after expenses, debt service, capital expenditures, and dividends. High free cash flow typically suggests stronger company value. Free-Cash-Flow Yield Free cash flow per share divided by share price. A high FCF yield often represents a good investment opportunity, because investors would be paying a reasonable price for healthy cash earnings. Full-Phase Average Performance Calculates the (geometric) average performance of a sector in a particular phase of the business cycle and subtracts the performance of the broader equity market. Median Monthly Difference Calculates the difference in the monthly performance of a sector compared with the broader equity market, and then takes the midpoint of those observations. Price-to-Book (P/B) Ratio The ratio of a company s share price to reported accumulated profits and capital. Price-to-Earnings (P/E) Ratio The ratio of a company's current share price to its reported earnings. A forward P/E ratio typically uses an average of analysts published earnings estimates for the next 12 months. Price-to-Sales (P/S) Ratio The ratio of a company s current share price to reported sales. Relative Strength The comparison of a security s performance relative to a benchmark, typically a market index. Return on Equity (ROE) The amount, expressed as a percentage, earned on a company s common stock investment for a given period. Risk Decomposition A mathematical analysis that estimates the relative contribution of various sources of volatility. Methodology Business Cycle The business cycle as used herein reflects fluctuation of activity in the U.S. economy and is based on Fidelity s analysis of historical trends. Fundamentals Sector rankings are based on equally weighting the following four fundamental factors: EBITDA growth, earnings growth, ROE, and FCF margin. However, we evaluate the Financials and Real Estate sectors only on earnings growth and ROE because of differences in their business model and accounting standards. Relative Strength Compares the strength of a sector versus the S&P 500 Index over a six-month period, with a one-month reversal on the latest month; identifying relative strength patterns can be a useful indicator for short-term sector performance. Relative Valuations Valuation metrics for each sector are relative to the S&P 500. Ratios compute the current relative valuation divided by the 10-year historical average relative valuation, eliminating the top 5% and bottom 5% values to reduce the effect of potential outliers. Sectors are then ranked by their weighted average ratios, weighted as follows: P/E: 35%; P/B: 2; P/S: 2; FCF yield: 2; and dividend yield: 5%. However, the Financials and Real Estate sectors are weighted as follows: P/E: 59%; P/B: 33%; and dividend yield: 8%. Primary Contributors Fidelity Management & Research Company, Equity Division The Equity Division within Fidelity Asset Management consists of 11 portfolio groups, as well as Select and Advisor Focus sector portfolios. Each group is responsible for portfolio management supported by in-depth fundamental research. 15

Appendix Unless otherwise disclosed to you, any investment or management recommendation in this document is not meant to be impartial investment advice or advice in a fiduciary capacity, is intended to be educational, and is not tailored to the investment needs of any specific individual. Fidelity and its representatives have a financial interest in any investment alternatives or transactions described in this document. Fidelity receives compensation from Fidelity funds and products, certain third-party funds and products, and certain investment services. The compensation that is received, either directly or indirectly, by Fidelity may vary based on such funds, products, and services, which can create a conflict of interest for Fidelity and its representatives. 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. 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 information 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. References to specific investment themes are for illustrative purposes only and should not be construed as recommendations or investment advice. Investment decisions should be based on an individual s own goals, time horizon, and tolerance for risk. This piece may contain assumptions that are forward-looking statements, which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here. Past performance is no guarantee of future results. Investing involves risk, including risk of loss. All indexes are unmanaged. You cannot invest directly in an index. Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Because of its narrow focus, sector investing tends to be more volatile than investments that diversify across many sectors and companies. Sector investing is also subject to the additional risks associated with its particular industry. Business Cycle Definition The typical business cycle depicts the general pattern of economic cycles throughout history, though each cycle is different. In general, the typical business cycle demonstrates the following: Early cycle: The economy bottoms and picks up steam until it exits recession, then begins the recovery as activity accelerates. Inflationary pressures are typically low, monetary policy is accommodative, and the yield curve is steep. Mid cycle: The economy exits recovery and enters into expansion, characterized by broader and more self-sustaining economic momentum but a more moderate pace of growth. Inflationary pressures typically begin to rise, monetary policy becomes tighter, and the yield curve experiences some flattening. Late cycle: Economic expansion matures, inflationary pressures continue to rise, and the yield curve may eventually become flat or inverted. Eventually, the economy contracts and enters recession, with monetary policy shifting from tightening to easing. Please note that there is no uniformity of time among phases, nor is the chronological progression always in this order. For example, business cycles have varied between 1 and 10 years in the U.S., and there have been examples when the economy has skipped a phase or retraced an earlier one. Market Indexes The Bloomberg Barclays U.S. Corporate High Yield Bond Index is a market valueweighted index that covers the universe of dollar-denominated, fixed-rate, noninvestment grade debt. The FTSE NAREIT All Equity REITs Index is a market capitalization-weighted index that is designed to measure the performance of tax-qualified Real Estate Investment Trusts (REITs) that are listed on the New York Stock Exchange, the NYSE MKT LLC, or the NASDAQ National Market List with more than 50 percent of total assets in qualifying real estate assets secured by real property. Mortgage REITs are excluded. The S&P 500 Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. S&P 500 is a registered service mark of Standard & Poor s Financial Services LLC. Sectors and industries are defined by the Global Industry Classification Standard (GICS). The MSCI World ex. U.S. Index is a market capitalization-weighted index designed to measure the investable equity market performance for global investors of large cap stocks in developed markets, excluding the United States. 16

Appendix The S&P 500 sector indices include the standard GICS sectors that make up the S&P 500 Index. The market capitalization of all S&P 500 sector indexes together comprises the market capitalization of the parent S&P 500 Index; each member of the S&P 500 Index is assigned to one (and only one) sector. Sectors are defined as follows: Consumer Discretionary: companies that provide goods and services that people want but don t necessarily need, such as televisions, cars, and sporting goods; these businesses tend to be the most sensitive to economic cycles. Consumer Staples: companies that provide goods and services that people use on a daily basis, like food, household products, and personal-care products; these businesses tend to be less sensitive to economic cycles. Energy: companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment, or other energy-related services and equipment, including seismic data collection; or the exploration, production, marketing, refining, and/or transportation of oil and gas products, coal, and consumable fuels. Financials: companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, and insurance and investments. Health Care: companies in two main industry groups: health care equipment suppliers and manufacturers, and providers of health care services; and companies involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. Industrials: companies whose businesses manufacture and distribute capital goods, provide commercial services and supplies, or provide transportation services. Materials: companies that are engaged in a wide range of commodity-related manufacturing. Real Estate: companies in two main industry groups real estate investment trusts (REITs), and real estate management and development companies. Technology: companies in technology software and services and technology hardware and equipment. Telecommunication Services: companies that provide communications services primarily through fixed-line, cellular, wireless, high-bandwidth, and/or fiber-optic cable networks. Utilities: companies considered to be electric, gas, or water utilities, or companies that operate as independent producers and/or distributors of power. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC. If receiving this piece through your relationship with Fidelity Institutional Asset Management (FIAM), this publication is provided by Fidelity Investments Institutional Services Company, Inc. 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 & 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. 829782.1.0 2018 FMR LLC. All rights reserved. 17