Strategic Advisers Emerging Markets Fund of Funds Key Takeaways For the fiscal year ending February 28, 2018, the Fund's Retail Class shares gained 30.75%, roughly in line with the 30.97% return of the benchmark MSCI Emerging Markets (EM) Index. The positioning of underlying managers vis-à-vis information technology stocks and China had a major impact on their relative performance this period. Versus the benchmark, Goldman Sachs Emerging Markets Equity Fund was the top contributor, outpacing the MSCI EM index due to strong selection across several sectors and in China. T. Rowe Price Emerging Markets Stock Fund and Fidelity Emerging Markets Fund also helped, contributing about equally. Lazard Emerging Markets Equity Fund was the biggest relative detractor, partly due to poor selection in technology, primarily in China. In addition, Lazard's value-driven investment strategy was out of favor this period. Acadian Emerging Markets Portfolio also weighed on the Fund's relative performance. As of period end, Portfolio Manager Wilfred Chilangwa believes global growth trends and solid corporate earnings may continue to provide a positive fundamental environment for EM stocks, despite elevated valuations in certain sectors. MARKET RECAP Stocks entered 2018 reinforced by accelerating corporate earnings, synchronous global economic growth and optimism around U.S. tax reform. Volatility spiked in February, though, amid fear that interest rates could rise faster than expected. Nevertheless, the MSCI World ex USA Index gained 19.12% for the 12 months ending February 28, 2018, aided partly by a generally weak U.S. dollar. Within the index, growth- led value-oriented stocks, and small-caps bested largecaps. Certain election results in continental Europe (+24%) suggested ebbing political risk there, whereas bumpy Brexit negotiations and sterling strength hindered the U.K. (+15%). Central-bank accommodation helped Japan (+22%) overcome recent yen strength and outperform the rest of the Asia-Pacific group (+15%). Meanwhile, commodity-price volatility weighed on Canada (+7%). Sector-wise, information technology (+36%) was lifted by software, semiconductor and internetrelated names. Financials (+21%) rode rising interest rates that, at the same time, hurt real estate (+14%) and three other "bond proxy" sectors: consumer staples (+12%), utilities (+12%) and telecom services (+8%). Demand from China aided materials (+24%) and industrials (+24%). Energy (+14%) and health care (+10%) rallied from earlyperiod difficulty. Elsewhere, the MSCI Emerging Markets Index rose 30.97% for the year, notably supported by China plus Brazil, Russia and India. 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 FLILX Start Date: May 02, 2012 Size (in millions): $16.37 Investment Approach Strategic Advisers Emerging Markets Fund of Funds (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 Fidelity and non-fidelity mutual funds, 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 12 months ending February 28, 2018 The Fund's Retail Class shares gained 30.75%, performing roughly in line with the 30.97% return of the benchmark MSCI Emerging Markets Index but outpacing our peer group average. The positioning of underlying managers visà-vis information technology stocks and China had a major impact on their relative performance the past 12 months. Q: What was the investment environment like during the review period Bolstered in part by a generally weaker U.S. dollar, emerging markets (EM) spearheaded the global stock rally. EM large-cap stocks outperformed their small-cap corollaries, and the EM growth segment topped its valueoriented counterpart. Emerging Asia was the top-performing region, led by robust returns from stocks traded in Hong Kong (+60%) and China (+42%). Among larger index members, South Africa (+42%), South Korea (+29%) and Russia (+29%) also posted strong results. From a sector perspective, information technology (+48%), an area favored by growth managers, was the top performer in the MSCI Emerging Markets Index, fueled largely by strength among internet-related 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 EM index, according to MSCI. Today, tech firms make up about 27% of the index. Elsewhere, the health care (+34%) and real estate (+33%) sectors also outperformed the MSCI EM index, while energy (31%) and financials (+31%) performed roughly in line. By contrast, more-defensive, "bond-proxy" sectors lagged, hampered largely by rising interest rates. Telecommunication services (+10%), utilities (+11%) and consumer staples (+18%) generated respectable gains but trailed the index by sizable margins. 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 stay close to 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 contributed versus the benchmark Overall, the way in which managers were positioned relative to technology stocks and China had a major impact on their performance this period. Goldman Sachs Emerging Markets Equity Fund was the top contributor. This manager beat the MSCI EM index by a sizable margin, led by strong stock selection in financials, consumer staples and health care. From a country perspective, Goldman Sachs did its best work in China, while picks in India and South Korea also notably helped. Goldman Sachs Emerging Markets Equity Fund invests primarily in mid- and small-cap stocks a distinctive approach compared with other underlying managers. Because investors follow these names less closely, we think the fund's smaller-cap tilt improves the odds that management can exploit the research team's expertise. T. Rowe Price Emerging Markets Stock Fund and Fidelity Emerging Markets Fund contributed about equally versus the benchmark. T. Rowe Price employs a GARP-oriented discipline (growth at a reasonable price), while Fidelity focuses on what the manager considers "best of breed" growth stocks that are underappreciated by the market. These managers also comfortably outpaced the MSCI EM index, led by selection in China, South Africa and Taiwan. At the sector level, both managers benefited from picks in financials and from underweighting the telecom services sector. T. Rowe Price received an additional boost from favorable positioning in technology, as did Fidelity from picks in consumer discretionary. telecom services. Country-wise, positioning in China and Brazil, as well as out-of-index exposure to "frontier" market Pakistan, further dampened Lazard's results. Acadian Emerging Markets Portfolio also weighed on the Fund's relative result. This manager stumbled with picks in information technology, along with unfavorable positioning in utilities and telecommunication services. From a country perspective, it was mainly hurt by underweighting China, as well as poor selection there. Morgan Stanley Frontier Markets Portfolio was another detractor. Within EM, less-developed frontier markets underperformed this period, causing this fund to substantially trail the MSCI EM index. Q: Did you make any notable changes to the Fund this period There were no major changes, but I continued to reduce allocations to managers that we thought had substantial exposure to country-specific 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 stock-selection risk, rather than country or currency exposures. Q: What is your outlook as of period end The past year was a rare period in which an accelerating global economy was accompanied by growth stocks' substantial outperformance versus value stocks. It was somewhat reminiscent of the leadership of large-cap technology stocks in the late 1990s. Tech stocks led the way in emerging markets, and became the largest sector in the MSCI EM index. It's worth noting that the EM tech segment is now roughly four times the weight of energy and materials, two sectors more associated with value investing. Looking ahead, I think synchronous global growth and solid corporate earnings may continue to provide a positive fundamental environment for EM stocks, despite elevated valuations in certain sectors. In this environment, I plan to keep the portfolio well-diversified across investment styles while seeking to manage country and currency risk. Q: How about detractors Lazard Emerging Markets Equity Fund proved the biggest relative detractor. This manager's value-oriented approach was out of favor this period. In addition, it underperformed due to adverse selection in the technology and consumer discretionary sectors, along with an overweighting in 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 on developments in China: "I think a key question for the performance of EM stocks over the coming year will be how slower economic growth in China will affect emerging markets more generally. "Under President Xi Jinping, China's 'growth at any cost' mentality has dissipated. The government is now much more focused on the quality of growth. The government is also implementing policies to reduce the rapid expansion of debt that has occurred since the 2007 2008 financial crisis. "At the 19 th China Communist Party Congress that took place in October 2017, China's president reaffirmed that his main objective is to maintain stability. As a result, the government employed policy measures intended to curb excessive lending at the local government level and also through online consumer loan platforms. "Against this backdrop, the Fund's underlying managers remain optimistic about the fundamentals of China's economy. They are, however, concerned about stretched valuations, particularly among internet-related firms and the technology sector in general. "Another interesting development is MSCI's decision to include China A shares in its indexes beginning in June 2018. A shares are traded only on China's stock market and are not currently included in any of MSCI's indexes including the MSCI EM index. When A shares become part of the benchmark, it's likely that a substantial amount of assets will flow into them. Some of the Fund's managers have limited out-of-benchmark exposure to A shares now. Once A shares are included in the index, it will likely prompt them to increase their allocations. As a result, many managers are adding resources to research and track the A- share market." Asset Class Portfolio Weight Portfolio Weight Six Months Ago Equity Investments 99.93% 99.87% Equities 0.00% 0.00% Mutual Funds 99.93% 99.87% ETFs 0.00% 0.00% Bonds 0.00% 0.00% Cash & Net Other Assets 0.07% 0.13% 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 0.00% Top Mutual Fund Positions 99.93% Causeway Emerging Markets Fund 19.46% Acadian Emerging Markets Portf 16.29% T. Rowe Price Emerging Markets 14.95% Lazard Emerging Markets Equity 13.57% Goldman Sachs Emerging Markets 13.39% Oppenheimer Developing Markets 10.60% Fidelity Emerging Markets Fund 9.90% Morgan Stanley Institutional F 1.77% Remaining Investments 0.07% 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 February 28, 2018 6 Month Cumulative YTD 1 3 Annualized 5 10 / LOF 1 Strategic Advisers Emerging Markets Fund of Funds Gross Expense Ratio: 2.36% 2 10.02% 2.73% 30.75% 8.75% 4.82% 5.28% MSCI Emerging Markets Index (Gross) 10.70% 3.36% 30.97% 9.37% 5.39% 5.47% Morningstar Fund Diversified Emerging Mkts 9.07% 2.77% 27.40% 7.90% 4.45% -- % Rank in Morningstar Category (1% = Best) -- -- 30% 41% 44% -- # of Funds in Morningstar Category -- -- 813 665 474 -- 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 05/02/2012. 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 401K.com or 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. Initial offering of Class N and Class L shares for the fund was on 11/12/13. Returns prior to this date are those of the retail fund. Had Class N and L fees been reflected, returns would have been lower. Effective 12/18/17, the fund's redemption fee has been removed. 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 World ex USA Index is a market-capitalization-weighted index that is designed to measure the investable equity market performance for global investors of developed markets outside the United States. RANKING INFORMATION 2018 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 June 30, 2018 1 3 Annualized 5 10 / LOF 1 Strategic Advisers Emerging Markets Fund of Funds Gross Expense Ratio: 2.10% 2 6.86% 5.60% 4.41% 3.10% 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 05/02/2012. 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. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio. 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 401K.com or 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. 2018 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. 717466.7.0