Growth Model Portfolio Another Good Year For Stocks, Track ... · High Income SPHIX 8.71 9,102.60...

Best Performing Fidelity Newsletter For The Past 30 Years www.fmandi.com

Growth Model Portfolio

Track Record Turns 30 In late 1986, I introduced the Growth Model in the first

issue of Fidelity Monitor. At that time, Eric Kobren’s

Fidelity Insight had been in publication for almost a

year with a Select Portfolio. Over time,

both of us added models.

We bought out Fidelity Insight in

late 2009, then merged the two newslet-

ters in late 2012. Monitor’s portfolio

history was retained (see page 8), as it

reflected my history of investment deci-

sions, as tracked by The Hulbert Finan-

cial Digest.

Dow Jones shut down Hulbert’s last April. Some

newsletters (including our own) expressed interest in

keeping the tracking service alive, so Mark Hulbert

formed a new firm, adopted a new business model, and

re-hired his lead analyst.

It will be a few months before we have ranking data,

but our own tracking shows there are no other Fidelity

newsletters with a better 30-year return. Over the past

three decades, our Growth Model returned 10.8% annu-

ally, versus 10.1% for the S&P 500. Over the past 28

years, our Select Model gained 13.2% per year, versus

10.1% for the S&P 500.

So what does the future hold? The stock market has

become more efficient over the last three decades, mak-

ing it harder for active managers to outperform. The

Growth and Unique Opportunities models have both

struggled with weakness in smaller and foreign stocks

over the last five years, but I’m encouraged by the re-

cent rally in small-caps. It may have room to run, setting

the stage for improved model performance in 2017.

Smaller firms are less affected by a strong dollar, and

may benefit more from reduced tax rates, regulatory and

perhaps health care relief, too. Financial reform may

give them better access to capital. And their valuations,

on a price-to-sales basis, are still relatively cheap.

Sincerely,

Jack Bowers

Another Good Year For Stocks,

Despite A Potential Correction “Far more money has been lost by investors preparing

for corrections, or trying to anticipate corrections, than

has been lost in corrections themselves.” — Peter Lynch

I start with the above quote from

Fidelity’s legendary fund manager

because some pundits are already

warning that a correction is imminent.

The S&P 500 advanced 12.0% in

2016, with about half of that gain

coming just since Trump was elected.

And, if the stock market continues on that torrid pace, no

doubt the calls for a correction will become louder.

As the title above indicates, I do see a correction as a

possibility. The sharp rise since the election has been

largely fueled by optimism that Trump’s plans for tax

cuts, regulation roll-backs, and infrastructure spending

will ignite much faster economic growth. Since the elec-

tion, investor sentiment quickly shifted from extremely

negative to strongly positive. In the American Associa-

tion of Individual Investors weekly sentiment survey

taken on November 3, only 23.6% were bullish versus

the historical average of 38.5%. Today that figure has

jumped to 44.6%! With any impact from increased infra-

structure spending years away, should Trump fail to suc-

ceed on regulation reform and tax cuts early on, we

could see those gains disappear as fast as they came.

However, I suggest you take Peter’s advice to heart

and stay with your stock fund investments as I expect

that even if we do get a correction, when all is said and

done, stocks will deliver another year of solid gains.

Earnings Growth Should Lift Stocks

Overlooked in all the attention to Trump’s plans for

boosting growth is this: After seven quarters with year

over year declines in earnings, the third quarter of 2016

turned positive. The big difference was a recovery in

energy earnings. The sector moved from a negative

contribution of 5.2% in 2015’s third quarter to a positive

0.9% this year. And, as long as the price of oil remains

around $50 or higher, we can expect this boost from

Market Outlook cont’d on page 3

John M. Boyd

2 Fidelity Monitor & Insight — January 2017

See Model Portfolios Key on p. 3

For aggressive members who have no need for income or principal for more than 10 years.

For aggressive members who have no need for income or principal for more than 10 years.

For members needing income and protection of their purchasing power against inflation.

For moderately aggressive members who want equity-dominated portfolios and have no income needs for at least 10 years.

A good choice for members retiring in 5-10 years looking for less volatility than the market.

Unique Opportunities 2016 Return: 8.2%

Stocks: 97.3% Bonds: 0.0% Cash: 2.6% Alternatives*: 0.0% Yield: 0.6%

Holdings Ticker NAV Shares Value Dec Ret

Blue Chip Growth FBGRX $67.36 1,370.43 $92,312 0.6%

Low-Priced Stock FLPSX 49.48 1,613.14 79,818 0.6

Event Driven Opps FARNX 12.95 5,702.65 73,849 2.4

Small Cap Enh Idx FCPEX 14.23 4,846.09 68,960 4.4

Growth Strategies FDEGX 33.99 1,929.12 65,571 0.9

Large Cap Value Enhcd FLVEX 12.00 5,391.92 64,703 2.5

Current Value (3/31/99 = $100,000) $445,213 1.8%

Target Risk: 1.20 (Current: 1.10) Foreign Holdings: 9.1%

Blue Chip Growth

21%

Low-Priced Stock18%

Event Driven Opps 17%

Small Cap Enh Idx 15%

Growth Strategies

15%

Large Cap Value Enhcd

14%

Select 2016 Return: 12.5%



Technology FSPTX $130.13 5,004.52 $651,238 0.8%

Consumer Discretionary FSCPX 35.34 18,366.98 649,089 -0.3

Insurance FSPCX 77.56 7,542.50 584,997 2.7

Telecommunications FSTCX 69.82 7,239.13 505,436 6.2

Industrials FCYIX 32.35 12,825.72 414,912 0.8

Construction & Housing FSHOX 58.86 6,354.40 374,020 2.0

Current Value (12/31/88 = $100,000) $3,179,691 1.9%


Technology21%

Consumer Discretionary

20%

Insurance18%

Telecomm16%

Industrials13%

Construction & Housing

12%

Growth 2016 Return: 6.7%



Contrafund FCNTX $98.46 4,614.85 $454,379 0.5%

Small Cap Enh Idx FCPEX 14.23 30,583.17 435,198 4.4


Large Cap Value Enhcd FLVEX 12.00 28,830.50 345,966 2.5

Growth Strategies FDEGX 33.99 8,740.79 297,100 0.9

Blue Chip Growth FBGRX 67.36 4,275.41 287,992 0.6

Current Value (12/31/86 = $100,000) $2,188,096 1.6%


Contrafund21%

Small Cap Enh Idx

20%

Low-Priced Stock17%

Large Cap Value Enhcd

16%

Growth Strategies

13%

Blue Chip Growth 13%

Growth & Income 2016 Return: 8.2%



Growth & Income FGRIX $32.92 4,409.82 $145,171 2.0%

Total Bond FTBFX 10.52 11,496.46 120,943 0.5

Contrafund FCNTX 98.46 1,190.93 117,259 0.5


High Income SPHIX 8.71 9,911.91 86,333 2.3

Current Value (12/31/93 = $100,000) $585,713 1.2%


Growth & Income

25%

Total Bond20%

Contrafund20%

Low-Priced Stock 20%

High Income

15%

Income 2016 Return: 6.7%



Total Bond FTBFX $10.52 9,525.89 $100,212 0.5%

Equity Dividend Income FEQTX 26.84 3,313.05 88,922 2.3

High Income SPHIX 8.71 9,102.60 79,284 2.3

Short-Term Bond FSHBX 8.59 7,251.29 62,289 0.0

Limited Term Bond FJRLX 11.45 4,297.02 49,201 0.1

Current Value (12/31/91 = $100,000) $379,908 1.2%


Total Bond26% Equity Div

Income 24%

High Income21%

Short-Term Bond 16%

Limited Term Bond 13%

Fidelity Monitor & Insight — January 2017 3

Growth: For large-cap exposure ... Blue Chip Growth and Growth

Company are aggressive options; Contrafund is a more conservative

choice. Large Cap Value Enhanced Index provides lower-risk exposure

to big-cap stocks, whereas Growth Strategies adds mid-cap exposure.

Event Driven Opportunities and Small Cap Enhanced Index are

smaller-cap choices that broaden portfolio diversification.

Growth & Income: Growth & Income and Equity Dividend Income

provide exposure to higher-yielding large-cap value stocks.

High-Yield Bond: High Income’s yield compensates for its higher r isk.

Taxable Bond: Limited Term Bond and especially Short-Term Bond limit

interest-rate risk. Investment Grade Bond limits credit risk but boosts

yield via additional interest-rate risk; Total Bond provides the greatest

bond diversification boosting its yield through well-managed credit risk.

Muni Bond: Conservative Muni Income, which is nationally diversified

and has only modest interest-rate-risk, is our preferred choice for highly

taxed investors.

Model Portfolios Key: 1Alternative investments include such areas as high-yield bonds, commodities, real estate. Portfolio trades and total returns do not take taxes into account, however, redemption and exchange fees are included. Some percentage figures may not sum to 100 due to rounding. Dividends are

reinvested. Consider the tax implications of trades before you decide to buy or sell any fund. Any trades are detailed on p. 3 and are announced on Friday evening Hotline updates via telephone, e-mail, and web (see p. 16). Annuity Model Portfolios are on p. 10.

As initially announced on our Hotline update of December 23 (and repeated on De-cember 30), on Wednesday December 28, we made trades in four model portfolios:

Unique Opportunities Model: We sold our entire position in Value Strategies. With the proceeds, we pur-chased Large Cap Value Enhanced Index [ticker: FLVEX].

Growth Model: We sold our entire position in Value Strategies. With the proceeds, we pur-chased Large Cap Value Enhanced Index [ticker: FLVEX].

Annuity Growth Model: We sold our entire position in VIP Value Strategies. With the proceeds, we purchased VIP Equity-Income, whose ticker is FLOLC.

Annuity Growth & Income Model: We are selling our entire position in VIP Value Strategies. With the pro-ceeds, we purchased VIP Equity-Income, whose ticker is FLOLC.

Trade Rationale & Notes:

Value Strategies paid a significant distribution on Tuesday December

27. While this was a taxable event for some shareholders, most of the distri-

bution was in the form of less-taxed, long-term capital gains. So we waited

until after the distribution to sell the fund.

As for the funds themselves, Value Strategies and its clone VIP Value

Strategies have not been appropriately positioned to take full ad-

vantage of the rally in mid-cap value stocks. While the funds’ new manager

is in the process of repositioning his portfolios and performance has picked

up, Large Cap Value Enhanced Index (as well as both Equity-Income

funds) already provides greater exposure to financials — especially bank

shares — that we seek. The fund is also less volatile and should perform in

line with its benchmark.

energy to continue. In 2015’s fourth

quarter, energy subtracted 10.5%

from S&P 500 earnings, whereas

the forecast for 2016’s fourth quar-

ter is a positive 2.1%. That’s a big

reason for a forecasted 32% jump in

fourth-quarter earnings. And energy

was a negative right through the

second quarter of 2016, making for

a similar (though lesser) boost to

those quarters in 2017.

As a result, as shown in the

above chart, earnings for the next

four quarters (fourth quarter of 2016

through the third quarter of 2017)

are forecasted to be quite robust,

which should provide a lift for

stocks. And importantly, those fore-

casted earnings largely do not re-

flect any boost in economic growth

from Trump’s plans.

Slow, But Steady Economy

GDP growth has remained

slow, but steady, for the past few

years at around 2.0% per year.

Absent any pick-up from tax cuts or

regulatory reform, we expect mostly

more of the same for 2017, but with

a chance for acceleration. The third

quarter of this year grew at 3.5%,

the fastest rate in two years. The

Atlanta Fed’s “GDPNow” forecast

for the fourth quarter is 2.5%,

though others have it as low as

Market Outlook cont’d from page 1

Market Outlook cont’d on page 4

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

S&P 500 Quarterly Earnings (Y/Y % Change)

2015 2016 2017

——- Actual ———

— Forecast —


1.8%. If the Atlanta Fed is closer to

the mark, it’s a nicely rising trend,

suggesting that a modest improve-

ment in economic growth could be

in the cards for 2017.

Recent economic indicators sup-

port this case. The combined sales

of new and existing homes in No-

vember were the highest since the

recovery began. Industrial produc-

tion, while still declining on a year-

over-year basis, has been moving

fairly steadily towards positive terri-

tory, rising from -2.3% in December

2015 to -0.6% in November 2016.

Moreover, chemical industry activi-

ty, which tends to lead industrial

production, hit a new all-time high

in December. And both the ISM

Manufacturing Index and the ISM

Services Index had solid gains in

November.

S&P 500 operating earnings for

the trailing 12 months through the

third quarter of 2016 (we won’t

know fourth quarter earnings until

Feb/Mar) were $101.42. With the

S&P 500 at 2168 at the end of Sep-

tember, that gives us a P/E (price/

earnings) ratio of 21.4, slightly

above the 25-year average of 19.2.

Not excessive — as seen in the

Market Outlook cont’d from page 3 chart, P/Es peaked at much higher

levels before the last two bear mar-

kets — but not cheap, either.

Since Trump was elected, inter-

est rates have been moving higher

in anticipation of faster economic

growth and higher inflation. The Fed

hiked rates a quarter point in De-

cember and suggested three more

hikes to come in 2017. But because

rates are rising from a very low

base, that should not derail stocks.

JP Morgan notes that when the

10-year Treasury yield rises from a

level below 5%, stocks have a posi-

tive correlation to the direction of

the move. Bank of America/Merrill

Lynch analyst, Stephen Suttmeier,

adds that “the current secular bull

trend best fits the 1950-1966 secular

bull market. The U.S. 10-year yield

bottomed near 1.5% in late 1945 and

the S&P 500 remained firmly within

its secular bull market until yields

moved to 5-6% in the mid 60s.”

But Will Be Tough On Bonds

Bonds are another story. Rising

rates caused losses on all of Fideli-

ty’s taxable bond funds in the fourth

quarter, with the lone exception of

Conservative Income, which is

more like a money market fund. Un-

less the economy stumbles, 2017

could be a difficult year for taxable

bond funds. Our advice is to stick

with shorter-term bonds which will

be less affected by rising rates, and

to take on some credit risk through

high-yield bonds.

High-yield bonds tend to weath-

er rising rates driven by improving

economic conditions better than

investment-grade funds. That’s be-

cause a healthier economy reduces

default risk. High-yield bonds were

mostly higher in the fourth quarter

and had double-digit returns for the

full year. As such, their yield spread

versus comparable Treasurys has

fallen from seven percentage points

a year ago, to four today — below

the historical average of 5.6 points.

So don’t expect returns like we saw

last year. More likely, high-yield

funds will earn their yields in 2017.

Still Favor U.S. Over Foreign

We have argued in favor of U.S.

stocks over foreign shares for sever-

al years and we continue to hold that

view. As usual, the emerging mar-

kets offer the best potential growth,

but the strengthening dollar, rising

U.S. interest rates, and high volatili-

ty are problems. In the developed

markets the strong dollar has been

the big problem. In local currencies,

the EAFE index has risen about 7%

in the last three months, but in U.S.

dollars it is down 1.0%! If the dollar

stops climbing (especially versus the

euro) developed markets could be

attractive, but for now we will wait.

Summing It By The Numbers

The current estimate for the next

four quarters of S&P 500 operating

earnings is $126. However, analysts

are usually too optimistic at the out-

set reducing their estimates as the

year goes along. But as I have noted

before, the rate of reductions has

been declining steadily from a 20%

haircut in 2016’s first quarter, to just

a 9% drop for the third. So let’s take

10% off the $126 figure, bringing it

down to $114. If we multiply that by

the most recent P/E of 21.4, we get a

projected level of 2435 for the S&P

500 next year — or a gain of about

9%. Of course, the P/E could de-

cline. But I believe that tax cuts and

regulatory reforms will be enacted

(though maybe not early enough to

avoid a correction), and the resulting

boost to economic growth forecasts

would make that less likely. In addi-

tion, earnings estimates might then

not fall much, if at all. If we take

$126 in earnings times the current

P/E, we would have a 19.7% gain in

the S&P 500!

I’m not predicting that. But cor-

rection or not, I expect a solid year

for U.S. stocks. So follow Lynch’s

advice and stay invested.

— John M. Boyd

21.4

25-Year Avg: 19.2 10

14

18

22

26

30

12/97 12/00 12/03 12/06 12/09 12/12 12/15

S&P 500 P/E Ratio

0%

1%

2%

3%

4%

Q3 Q4 Q1 Q2 Q3 Q4

Quarterly GDP Growth (Annualized)

2015 2016

Forecast


Fund Old Comments

Blue Chip Value B H Trailing other large-cap value offerings.

Disciplined Equity B H Prefer other large-cap blend funds.

Export & Multi B H Prefer other large-cap blend funds.

Focused Stock H S Concentrated fund struggling to beat benchmark.

Global Balanced H S Low bond yields and currency risk are negatives.

Int'l Capital Apprec B H Slow growth and currency risk are negatives.

Int'l Discovery B H Slow growth and currency risk are negatives.

Int'l Enhanced Idx H B See "Enhanced Index" article on p. 16.

Int'l Growth B H Slow growth and currency risk are negatives.

Int'l Small Cap B B Slow growth and currency risk are negatives.

Int'l Value S H Large slug in financials now boosting returns.

LC Core Enh'd Idx B B See "Enhanced Index" article on p. 16.

LC Grow Enh'd Idx H B Fund is a relatively strong performer.

LC Value Enh'd Idx B B See Model Portfolio Trades on p. 3.

Mid Cap Enh'd Idx B B See "Enhanced Index" article on p. 16.

New Millennium H B Decade-long record of market-beating returns.

Nordic H S Not diversified; huge, 50%-plus bet on Sweden.

Small Cap Stock B H Prefer other funds within the small-cap space.

Value Discovery B B Performance has turned on smart financials bet.

Value Strategies B B See Model Portfolio Trades on p. 3.

VIP Int'l Cap App B H Slow growth and currency risk are negatives.

VIP Overseas B B New manager has solid record at Overseas fund.

VIP Value Strat B B See Model Portfolio Trades on p. 3.

Factor ETFs

Core Dividend NA B Strategy has presently led to shrewd bet in energy.

Div for Rising Rates NA B Current play is on the value side of technology.

Low Volatility Factor NA H Tends to hold more richly priced shares.

Momentum Factor NA S Pharma, tech, other high-growth shares hurting.

Quality Factor NA H Leaning towards out-of-favor big-cap growth.

Value Factor NA B Fund currently positioned in market's sweet spot.

January Scorecard Rating Changes

New

Ratings

B = Buy; B = OK to Buy; H = Hold; S = OK to Sell; S = Sell, NC = No change

() Rating upgraded; () Rating downgraded.

2016 was a year of stunning surpris-

es — including the Cubs winning

their first World Series in 108 years!

But apart from that pleasant dis-

traction, Americans haven’t been

this divided since the Vietnam War.

Geopolitical events are usually

background noise to investors who

are focused on corporate earnings

and other mundane matters. But the

new uncertainties sprung by Brexit

and Donald Trump sent Wall Street

into a tizzy last year: “If a new eco-

nomic and political world order is

unfolding,” investors asked, “what

do we do with our money now?”

It remains to be seen if Britain’s

exit from the European Union and

Trump’s presidency are mere anom-

alies or are actually related. But we

will soon find out.

In April, the French will elect a

new president. And later this year,

the Germans also go to the polls.

Should France lean right and should

Angela Merkel be ousted, nothing

less than the dissolution of the EU

will be on the table at a time when

the new U.S. president is looking to

rewrite trade deals and reconsider

existing alliances.

While a listless West has been

grappling with its very own sover-

eignty, China and Russia continued

to assert themselves in this vacuum.

In light of the Brexit and the

Trump “resets,” is it any wonder that

so many on Wall Street got “it”

wrong last year? Certainly, some

Fidelity managers did — including

some of their best. Understandably,

many embraced high-quality stocks.

But when the market suddenly real-

ized that a new political order at

home might favor economic growth

above all other concerns (including

regulatory, environmental and defi-

cit spending), it immediately pivoted

towards risk-assets.

Here’s how your Fidelity funds

endured a year of political surprises.

In A Year Of Political Surprises,

Stocks Soar And Bonds Struggle Market Indexes

After repeated attempts at 20000

in the last two weeks of 2016, the

Dow Jones Industrials encountered

resistance and ultimately failed to

break past that milestone. Still, the

blue-chip indicator gained 3.4% in

December and rose a very solid

16.5% for the year. In the weeks

immediately after the Trump victo-

ry, bank stocks played an important

role in pushing the Dow higher.

As for that other large-cap in-

dex, the S&P 500, it rose 2.0% last

month and chalked up a return of

12.0% for the year.

Moving down the market-cap

scale, the Russell Mid Cap gained

1.1% in December and 13.8% for

the year, while the small-cap Russell

2000 fared even better with gains of

2.8% and 21.3%, respectively, for

the month and year.

As for the tech– and biotech-

rich Nasdaq Composite, it rose 1.2%

last month and 8.9% for the year.

Fund Commentary cont’d on p. 12


Notes : *Fi del i t y ’s U.S. Bond Index used as a proxy for the Barclays Aggregate Bond Index. 1Relative Volati li ty (Rel Vol) versus the S&P 500 over the last 36 months; 1.50 means the fund has been 50% more volatile. 2Dura-tion is a measure of interest rate sensitivity. 3Stated yield is actual distributed yield over prior 12 months. 4Also available in a Premium share class with a minimum of $10,000, but a lower expense ratio. (p) Partial year; () Rating upgraded; () Rating downgraded.

Fund Fund Sht-Term $Price Rel Vol

No. Ticker Fund Name Fee (NAV) Advice Dec 2016 3 Mo. 1 Yr 3 Yr 5 Yr 10 Yr (Risk)1

S&P 500 2238.8 2.0 12.0 3.8 12.0 8.9 14.7 6.9 1.00

Nasdaq Composite 5383.1 1.2 8.9 1.7 8.9 10.2 17.1 9.5 1.24

Dow Jones Industrials 19762.6 3.4 16.5 8.7 16.5 8.7 12.9 7.5 1.05

Russell 2000 (Small Caps) 1357.1 2.8 21.3 8.8 21.3 6.7 14.5 7.1 1.49

Barclays Aggregate Bond* 0.2 2.5 -3.1 2.5 2.9 2.1 4.0 0.30

Unique Opportunities 1.8 8.2 4.4 8.2 4.9 12.9 5.8 1.10

Select 1.9 12.5 3.5 12.5 8.1 15.6 8.3 1.07

Growth 1.6 6.7 3.1 6.7 5.9 11.8 5.0 1.02

Growth & Income 1.2 8.2 2.0 8.2 6.1 10.2 5.1 0.71

Income 1.2 6.7 1.0 6.7 4.6 5.4 4.4 0.36

Rel Vol Assets

(Risk)1 ($Mil)

LARGE CAP GROWTH 1.0 4.5 0.3 4.5 6.6 14.2 1.16

312 FBGRX Blue Chip Growth 67.36 Buy 0.6 1.6 -1.6 1.6 7.4 15.3 1.19 $13,702

307 FDCAX Capital Appreciation 31.68 OK to Sell 0.0 3.2 1.5 3.2 5.2 14.1 1.18 4,978

22 FCNTX Contrafund 98.46 Buy 0.5 3.4 -0.6 3.4 6.4 13.5 0.98 74,246

3 FFIDX Fidelity Fund 41.15 Hold 1.3 4.8 1.6 4.8 6.9 12.9 1.03 3,714

333 FTQGX Focused Stock 18.36 OK to Sell 0.5 3.3 -3.8 3.3 3.1 12.0 1.11 1,558

25 FDGRX Growth Company (Closed) 136.78 Buy 1.4 6.0 1.9 6.0 9.4 16.4 1.33 21,138

339 FDSVX Growth Discovery 25.42 OK to Buy 0.6 0.7 -1.6 0.7 6.3 13.4 1.10 974

73 FDFFX Independence 33.48 OK to Sell 0.4 -1.2 0.5 -1.2 3.4 13.2 1.35 3,265

21 FMAGX Magellan 91.36 OK to Buy 1.1 5.2 2.1 5.2 7.7 14.8 1.08 12,927

300 FMILX New Millennium 36.04 OK to Buy 1.9 14.9 3.8 14.9 6.0 13.6 1.07 3,045

93 FOCPX OTC 83.32 OK to Buy 1.7 3.1 -1.3 3.1 10.0 16.8 1.50 9,602

320 FDSSX Stock Selector All Cap 36.39 Hold 1.7 9.6 2.0 9.6 6.8 14.0 1.06 6,174

5 FTRNX Trend 84.03 OK to Buy 1.1 4.6 -0.5 4.6 7.4 14.7 1.10 1,536

LARGE CAP BLEND 1.7 11.8 4.8 11.8 7.0 14.1 1.06

315 FDEQX Disciplined Equity 33.22 Hold 1.5 6.2 2.5 6.2 6.0 13.5 0.99 1,172

330 FDGFX Dividend Growth 32.21 OK to Buy 1.9 8.1 3.3 8.1 6.3 13.4 0.96 5,747

332 FEXPX Export and Multinational 20.85 Hold 0.9 10.0 2.7 10.0 6.7 12.2 0.95 1,516

27 FGRIX Growth & Income 32.92 Buy 2.0 16.1 7.0 16.1 7.8 14.8 1.14 6,021

338 FLCSX Large Cap Stock 29.36 Buy 2.0 16.7 6.9 16.7 7.6 15.9 1.20 2,704

361 FGRTX Mega Cap Stock 17.40 Buy 1.9 13.6 6.3 13.6 7.7 14.8 1.14 3,219

LARGE CAP VALUE 2.4 14.2 6.2 14.2 7.3 13.8 1.0

1271 FBCVX Blue Chip Value 17.26 Hold 2.8 11.2 6.1 11.2 7.3 13.8 1.02 397

319 FEQTX Equity Dividend Income 26.84 Buy 2.3 15.9 6.3 15.9 8.0 13.3 0.96 5,310

23 FEQIX Equity-Income 57.31 Buy 2.1 17.4 6.3 17.4 7.2 13.0 0.97 6,604

708 FSLVX Stock Sel Large Cap Value 18.65 OK to Buy 2.3 16.0 6.4 16.0 8.2 14.3 0.98 714

832 FVDFX Value Discovery 25.85 Buy 3.0 13.2 7.3 13.2 8.0 14.9 0.97 1,828

14 FSLSX Value Strategies 38.14 OK to Buy 2.3 11.3 4.6 11.3 4.9 13.8 1.17 713

MID-CAP GROWTH 1.4 9.4 2.6 9.4 6.0 13.3 1.07

324 FDEGX Growth Strategies 33.99 Buy 0.9 2.7 -0.2 2.7 6.4 13.2 1.02 2,081

337 FMCSX Mid-Cap Stock 34.62 OK to Buy 1.7 14.9 3.3 14.9 6.1 13.8 1.05 5,381

2412 FSSMX Stock Selector Mid Cap 34.80 OK to Buy 1.5 10.6 4.6 10.6 5.6 13.1 1.15 222

MID-CAP BLEND 0.9 7.3 4.2 7.3 2.1 13.1 1.31

122 FLVCX Leveraged Company Stock 33.29 OK to Buy 0.9 7.3 4.2 7.3 2.1 13.1 1.31 2,728

MID-CAP VALUE 1.8 12.4 5.1 12.4 6.5 14.7 1.05

316 FLPSX Low-Priced Stock 49.48 Buy 0.6 8.8 3.3 8.8 5.2 13.1 0.92 28,407

762 FSMVX Mid Cap Value 24.78 OK to Buy 2.7 12.4 6.7 12.4 7.8 15.7 1.07 2,347

39 FDVLX Value 109.78 Buy 2.0 16.1 5.3 16.1 6.6 15.2 1.16 7,075

SMALL CAP GROWTH 1.3 11.0 1.8 11.0 6.8 14.8 1.35

1388 FCPGX Small Cap Growth 1.50%/90d 20.59 Buy 1.3 11.0 1.8 11.0 6.8 14.8 1.35 1,698

SMALL CAP BLEND 2.6 17.1 9.0 17.1 7.4 13.7 1.34

2624 FARNX Event Driven Opportunities 12.95 Buy 2.4 20.0 12.3 20.0 9.6 -- 1.50 193

384 FSCRX Small Cap Discovery (Closed) 1.50%/90d 31.64 OK to Buy 2.5 20.3 9.8 20.3 6.5 15.7 1.34 5,676

340 FSLCX Small Cap Stock 2.00%/90d 18.84 Hold 2.9 12.9 7.0 12.9 7.4 12.7 1.21 1,840

336 FDSCX Stock Selector Small Cap 1.50%/90d 26.18 OK to Buy 2.7 15.4 6.9 15.4 6.0 12.8 1.30 1,469

SMALL CAP VALUE 3.1 21.3 10.7 21.3 8.4 15.9 1.19

1389 FCPVX Small Cap Value (Closed) 1.50%/90d 18.81 OK to Buy 3.1 21.3 10.7 21.3 8.4 15.9 1.19 2,569

Comparative

Indexes

Model

Portfolios

Category Averages

Avg Annual (%)

Category Averages

Total Return (%)

Category Averages

Category Averages

Category Averages

Category Averages

Category Averages

Category Averages

Category Averages


Fund Fund Sht-Term $Price Rel Vol Assets

No. Ticker Fund Name Fee (NAV) Advice Dec 2016 3 Mo. 1 Year 3 Year 5 Year (Risk)1 ($Mil)

SPECIALTY

304 FBALX Balanced 22.02 OK to Buy 1.3 7.0 0.8 7.0 5.8 10.0 0.72 $20,471

308 FCVSX Convertible Securities 26.71 Hold 1.5 6.0 0.5 6.0 1.6 8.8 0.91 1,490

334 FGBLX Global Balanced 22.10 OK to Sell 0.4 0.9 -5.7 0.9 -0.1 5.2 0.71 402

2120 FFGCX Global Commodity Stock 1.00%/90d 11.29 OK to Sell 1.6 30.4 5.6 30.4 -5.4 -2.5 1.78 243

1960 FDYSX Global Strategies 8.64 Hold 1.0 5.9 -1.3 5.9 2.7 5.8 0.65 82

1368 FIREX International Real Estate 1.50%/90d 9.49 OK to Sell -0.2 -1.6 -6.8 -1.6 1.5 11.1 0.99 310

4 FPURX Puritan 20.58 OK to Buy 1.1 5.0 0.3 5.0 5.8 10.1 0.72 19,127

833 FRIFX Real Estate Income 0.75%/90d 11.79 OK to Buy 1.5 10.2 -0.9 10.2 8.1 9.3 0.50 2,568

303 FRESX Real Estate Investment 41.69 Hold 4.6 7.8 -2.8 7.8 14.1 12.2 1.41 4,725

1329 FSDIX Strategic Dividend & Income 14.61 OK to Buy 2.3 12.7 1.6 12.7 8.1 11.3 0.73 3,313

1505 FSRRX Strategic Real Return 8.77 Hold 1.3 9.1 0.7 9.1 0.7 1.6 0.48 463

311 FIUIX Telecom & Utilities 24.74 Hold 4.7 17.0 1.3 17.0 7.8 10.7 0.95 954

ASSET ALLOCATION

328 FASIX Asset Manager 20% 13.01 Hold 0.6 4.7 -0.9 4.7 2.8 4.1 0.30 4,714

1957 FTANX Asset Manager 30% 10.46 Hold 0.8 5.5 -0.9 5.5 3.3 5.3 0.39 934

1958 FFANX Asset Manager 40% 10.79 Hold 0.9 6.0 -0.5 6.0 3.6 6.3 0.48 1,087

314 FASMX Asset Manager 50% 16.72 Hold 1.1 6.4 -0.3 6.4 3.8 7.2 0.58 7,401

1959 FSANX Asset Manager 60% 11.11 Hold 1.2 6.8 -0.1 6.8 3.9 8.1 0.67 1,431

321 FASGX Asset Manager 70% 19.61 Hold 1.4 7.1 0.3 7.1 4.0 9.0 0.77 3,927

347 FAMRX Asset Manager 85% 16.50 Hold 1.6 7.4 0.7 7.4 4.2 10.4 0.91 1,442

EQUITY INDEX

650 FUSEX 500 Index4 78.34 Hold 2.0 11.9 3.8 11.9 8.8 14.6 1.00 3,873

2341 FPEMX Emerging Markets Index4 1.50%/30d 8.46 Hold -0.1 11.2 -5.2 11.2 -2.2 0.9 1.51 19

398 FSEMX Extended Market Index4 55.54 Buy 1.8 16.1 5.7 16.1 6.5 14.5 1.29 812

355 FFNOX Four-in-One Index 38.22 Hold 1.9 8.3 1.7 8.3 5.0 10.6 0.86 4,463

2345 FSGUX Global ex U.S. Index4 10.88 Hold 2.1 4.5 -2.0 4.5 -2.0 4.8 1.14 36

2010 FIENX International Enhanced Index 1.00%/60d 8.08 Buy 3.0 1.9 -0.3 1.9 -0.1 7.8 1.11 176

399 FSIIX International Index4 35.32 Hold 2.8 1.2 -1.4 1.2 -1.7 6.5 1.12 716

1827 FLCEX Lrge Cap Core Enhcd Index 12.52 Buy 1.9 10.9 4.3 10.9 7.8 14.1 0.99 496

1829 FLGEX Lrge Cap Growth Enhcd Index 15.60 Buy 1.6 8.2 2.4 8.2 8.4 14.3 1.03 698

2823 FSUIX Lrge Cap Growth Index4 10.42 Hold 1.3 4.4p 1.0 -- -- -- -- 1

1828 FLVEX Lrge Cap Value Enhcd Index 12.00 Buy 2.5 16.3 8.0 16.3 8.7 15.1 1.02 2,191

2827 FLCDX Lrge Cap Value Index4 10.95 Hold 2.5 10.0p 6.6 -- -- -- -- 1

2012 FMEIX Mid Cap Enhanced Index 14.11 Buy 1.5 13.5 5.8 13.5 7.8 15.3 1.08 1,024

2349 FSCLX Mid Cap Index4 18.15 OK to Buy 1.1 13.6 3.2 13.6 7.7 14.5 1.09 53

1282 FNCMX Nasdaq Composite Index 70.63 OK to Buy 1.2 8.8 1.6 8.8 10.0 16.9 1.24 2,708

2353 FRXIX Real Estate Index4 0.75%/30d 15.44 Hold 4.6 6.4 -2.5 6.4 13.4 11.5 1.42 30

2011 FCPEX Small Cap Enhanced Index 14.23 Buy 4.4 22.8 11.8 22.8 8.3 16.0 1.44 911

2356 FSSPX Small Cap Index4 18.34 OK to Buy 2.8 21.4 8.8 21.4 6.8 14.4 1.49 35

2831 FTIGX Total International Index4 1.00%/30d 10.00 Hold 1.9 0.4p -2.3 -- -- -- -- 3

397 FSTMX Total Market Index4 64.53 Hold 2.0 12.6 4.2 12.6 8.3 14.5 1.03 706

INTERNATIONAL 0.9 3.8 -4.7 3.8 -0.2 7.0 1.22

309 FICDX Canada 1.50%/90d 48.90 Hold 1.6 20.1 1.4 20.1 -0.2 3.5 1.27 1,228

352 FHKCX China Region 1.50%/90d 23.78 Hold -5.0 -5.2 -9.0 -5.2 -1.9 7.3 2.04 965

325 FDIVX Diversified International 33.30 OK to Buy 1.7 -3.7 -4.7 -3.7 -1.3 7.5 1.09 10,186

351 FSEAX Emerging Asia 1.50%/90d 31.05 Hold -2.6 4.7 -8.4 4.7 1.3 5.5 1.41 884

2053 FEMEX Emerg Europe, MidEast, Africa 1.50%/60d 8.41 Hold 6.7 28.8 4.9 28.8 -1.1 3.5 1.62 74

322 FEMKX Emerging Markets 1.50%/90d 22.31 Hold -0.6 3.3 -8.9 3.3 -1.9 2.3 1.31 2,807

2374 FEDDX Emerging Mkts Discovery 2.00%/90d 11.42 Hold -1.1 10.1 -6.1 10.1 -1.3 5.5 1.30 67

301 FIEUX Europe 33.62 Hold 3.0 -5.6 -6.4 -5.6 -3.0 7.7 1.28 1,014

2406 FGILX Global Equity-Income 1.00%/90d 12.17 OK to Buy 1.5 3.4 -0.7 3.4 4.0 -- 0.89 71

335 FIVFX International Cap App 15.98 Hold 0.7 -3.1 -8.6 -3.1 0.9 9.5 1.05 1,688

305 FIGRX International Discovery 36.48 Hold 1.1 -5.8 -5.5 -5.8 -2.3 7.3 1.07 6,128

1979 FIGFX International Growth 10.64 Hold 1.1 -3.3 -6.2 -3.3 -0.9 7.3 1.04 987

818 FISMX International Small Cap 2.00%/90d 23.30 OK to Buy 1.4 8.2 -3.9 8.2 2.9 11.8 1.00 910

1504 FSCOX International Small Cap Opps 2.00%/90d 14.55 OK to Buy 2.0 -1.1 -5.2 -1.1 2.5 10.7 0.95 749

1597 FIVLX International Value 1.00%/30d 7.70 Hold 2.6 -1.5 -0.8 -1.5 -2.8 6.2 1.07 305

350 FJPNX Japan 1.50%/90d 11.98 Hold -0.6 2.7 -4.5 2.7 0.7 6.7 1.15 345

360 FJSCX Japan Smaller Companies 1.50%/90d 14.65 OK to Buy 0.6 8.8 -2.6 8.8 5.0 13.8 1.01 560

349 FLATX Latin America 1.50%/90d 19.05 Hold -0.3 19.6 -7.4 19.6 -11.1 -9.6 2.23 505

342 FNORX Nordic 1.50%/90d 44.91 OK to Sell 5.4 -2.5 -5.8 -2.5 1.1 13.4 1.20 383

94 FOSFX Overseas 39.54 Buy 2.1 -1.3 -4.3 -1.3 1.0 10.3 1.08 4,415

302 FPBFX Pacific Basin 1.50%/90d 26.46 OK to Buy -1.8 2.9 -8.4 2.9 3.2 10.9 1.09 675

2369 FTEMX Total Emerging Markets 1.50%/60d 10.74 Hold 0.5 12.2 -4.4 12.2 0.5 4.3 1.11 98

1978 FTIEX Total International Equity 1.00%/60d 7.44 Hold 1.2 -0.6 -4.8 -0.6 -1.6 6.2 1.05 271

318 FWWFX Worldwide 21.81 OK to Buy 0.9 -0.6 -3.6 -0.6 1.1 10.1 1.04 1,388

Avg Annual (%)Total Return (%)

Category Averages


Fund Fund Sht-Term $Price Rel Vol Assets

No. Ticker Fund Name Fee (NAV) Advice Dec 2016 3 Mo. 1 Year 3 Year 5 Year (Risk)1 ($Mil)

SELECT PORTFOLIOS Category Averages 1.5 14.2 4.0 14.2 6.1 13.3 1.56

34 FSAIX Air Transportation 0.75%/30d 74.28 OK to Buy 1.9 20.0 16.4 20.0 12.0 20.3 1.34 $329

502 FSAVX Automotive 0.75%/30d 34.94 Hold 3.4 -5.8 2.8 -5.8 -1.0 12.4 1.67 53

507 FSRBX Banking 32.20 OK to Buy 5.8 26.8 27.2 26.8 11.2 18.6 1.73 868

42 FBIOX Biotechnology 174.05 OK to Sell -5.6 -23.7 -9.3 -23.7 5.4 21.5 2.87 9,587

68 FSLBX Brokerage & Investment 0.75%/30d 67.56 Hold 1.3 6.7 12.2 6.7 0.5 14.1 1.77 351

69 FSCHX Chemicals 147.40 Hold 0.3 18.0 7.5 18.0 5.4 14.6 1.56 1,438

518 FSDCX Communications Equipment 0.75%/30d 32.81 Hold 1.5 19.9 2.6 19.9 7.4 10.9 1.44 206

7 FDCPX Computers 0.75%/30d 74.18 Hold 1.6 15.8 0.9 15.8 4.6 11.4 1.53 418

511 FSHOX Construction & Housing 0.75%/30d 58.86 Buy 2.0 5.1 2.9 5.1 9.1 16.8 1.39 394

517 FSCPX Consumer Discretionary 35.34 Buy -0.3 4.3 0.3 4.3 6.6 15.7 1.20 790

98 FSVLX Consumer Finance 0.75%/30d 13.38 Hold 3.5 14.6 10.8 14.6 5.3 15.8 1.36 94

9 FDFAX Consumer Staples 89.87 OK to Buy 2.9 3.1 -2.6 3.1 6.5 11.1 1.09 1,619

67 FSDAX Defense & Aerospace 129.13 Buy -1.1 17.9 9.4 17.9 7.9 16.1 1.20 1,388

60 FSENX Energy 46.76 Hold -0.8 33.8 6.3 33.8 -2.4 3.8 2.10 2,542

43 FSESX Energy Service 0.75%/30d 55.80 OK to Sell 6.7 36.6 17.9 36.6 -8.6 -0.1 2.48 573

516 FSLEX Environment & Alt Energy 0.75%/30d 22.55 OK to Buy 2.2 20.7 5.8 20.7 5.5 12.6 1.26 116

66 FIDSX Financial Services 98.72 OK to Buy 4.6 18.7 17.2 18.7 8.1 16.6 1.27 878

41 FSAGX Gold 19.16 Sell 2.3 47.3 -19.9 47.3 3.4 -14.0 3.92 1,131

63 FSPHX Health Care 184.81 Hold -0.1 -10.7 -8.4 -10.7 8.1 19.1 1.57 6,382

505 FSHCX Health Care Services 0.75%/30d 82.51 Hold -1.0 2.3 2.4 2.3 10.6 15.1 1.23 728

510 FSCGX Industrial Equipment 0.75%/30d 39.12 Buy -0.0 12.7 3.6 12.7 5.1 13.2 1.27 196

515 FCYIX Industrials 32.35 Buy 0.8 15.5 8.0 15.5 6.2 14.9 1.27 888

45 FSPCX Insurance 0.75%/30d 77.56 Buy 2.7 18.2 9.8 18.2 10.4 18.3 1.23 653

353 FBSOX IT Services 41.91 OK to Buy 1.0 5.2 0.9 5.2 8.1 18.3 1.30 1,653

62 FDLSX Leisure 0.75%/30d 136.85 Hold -1.1 6.3 4.7 6.3 6.0 13.4 1.10 399

509 FSDPX Materials 76.09 Hold -0.0 12.0 4.4 12.0 0.7 8.4 1.54 801

354 FSMEX Medical Equipment 36.82 Hold 1.6 8.7 -10.4 8.7 13.8 19.2 1.34 2,701

503 FBMPX Multimedia 0.75%/30d 74.51 Hold 1.6 9.5 6.8 9.5 5.1 17.8 1.40 541

513 FSNGX Natural Gas 0.75%/30d 29.58 Hold 0.8 48.5 10.3 48.5 -6.7 0.8 2.69 500

514 FNARX Natural Resources 0.75%/30d 30.58 Hold -1.0 30.2 4.1 30.2 -3.6 1.7 2.09 981

580 FPHAX Pharmaceuticals 17.04 Hold 0.7 -16.3 -9.0 -16.3 3.9 12.6 1.38 1,110

46 FSRPX Retailing 109.72 OK to Buy 0.1 4.4 0.1 4.4 11.5 20.0 1.24 1,972

8 FSELX Semiconductors 0.75%/30d 95.52 OK to Buy 2.6 32.4 4.3 32.4 23.3 22.0 1.62 2,377

28 FSCSX Software & IT Services 128.80 Buy -0.1 10.3 -1.5 10.3 9.7 18.7 1.36 3,914

64 FSPTX Technology 130.13 Buy 0.8 11.9 -2.2 11.9 10.0 15.5 1.37 3,474

96 FSTCX Telecommunications 69.82 Buy 6.2 22.8 5.7 22.8 9.2 13.4 1.03 648

512 FSRFX Transportation 0.75%/30d 90.09 OK to Sell 1.0 25.9 13.6 25.9 11.2 17.8 1.46 520

65 FSUTX Utilities 71.28 Sell 3.9 14.0 -0.8 14.0 7.3 9.8 1.15 694

963 FWRLX Wireless 0.75%/30d 8.40 Hold 4.2 10.1 0.2 10.1 3.2 10.4 1.06 205

SECTOR ETFs

FDIS MSCI Consumer Discretionary 32.17 Buy -0.1 6.5 2.7 6.5 7.4 -- 1.22 226

FSTA MSCI Consumer Staples 31.20 OK to Buy 3.2 5.6 -1.6 5.6 9.0 -- 0.97 236

FENY MSCI Energy 21.18 Hold 1.6 27.1 7.3 27.1 -4.2 -- 1.88 492

FNCL MSCI Financials 34.58 OK to Buy 4.2 24.9 20.7 24.9 12.2 -- 1.34 438

FHLC MSCI Healthcare 32.89 Hold 0.4 -3.4 -4.2 -3.4 9.0 -- 1.27 577

FIDU MSCI Industrials 32.22 Buy 0.1 20.5 7.0 20.5 7.4 -- 1.24 232

FTEC MSCI Information Technology 36.91 Buy 1.4 13.9 1.3 13.9 12.3 -- 1.32 553

FMAT MSCI Materials 28.84 Hold -0.3 21.1 5.7 21.1 4.8 -- 1.63 149

FREL MSCI Real Estate 23.45 Hold 4.4 7.8 -3.2 7.8 -- -- -- 210

FCOM MSCI Telecomm Services 32.10 Buy 7.4 23.0 6.8 23.0 10.6 -- 1.17 114

FUTY MSCI Utilities 31.60 Sell 4.5 17.1 0.8 17.1 12.3 -- 1.28 181

FACTOR ETFs

FDVV Core Dividend 26.15 OK to Buy 1.3 5.9p 3.6 -- -- -- -- 21

FDRR Dividend for Rising Rates 26.49 OK to Buy 1.6 6.2p 4.0 -- -- -- -- 30

FDLO Low Volatility Factor 25.85 Hold 1.5 4.5p 2.8 -- -- -- -- 5

FDMO Momentum Factor 25.54 OK to Sell 1.7 2.5p 0.7 -- -- -- -- 8

FQAL Quality Factor 26.27 Hold 1.7 5.3p 3.3 -- -- -- -- 14

FVAL Value Factor 27.30 Buy 1.9 9.7p 7.7 -- -- -- -- 9

Total Return (%) Avg Annual (%)

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Regular Models

Un Opp 33.8 -20.5 1.6 -2.1 43.2 20.6 18.8 16.6 11.6 -47.6 45.8 19.3 -5.8 16.8 36.3 5.3 1.3

Select 23.4 31.3 35.3 20.4 25.9 -0.9 39.0 5.2 29.3 21.7 44.9 -14.9 -7.3 -14.7 38.4 7.4 15.0 13.6 15.6 -39.3 35.4 11.6 1.2 19.2 37.5 14.6 -2.1

Growth 26.0 30.4 -4.4 40.6 15.7 31.9 -2.1 27.2 19.2 25.5 9.9 29.0 -10.8 -6.4 -17.1 46.1 12.4 11.2 15.7 7.3 -42.7 31.8 17.7 -1.7 16.0 26.5 9.7 1.6

G&I -3.7 21.6 15.8 18.7 11.1 12.2 2.7 1.3 -6.4 33.0 11.5 8.2 13.7 6.1 -33.5 28.1 12.2 -0.3 13.4 20.3 9.3 0.8

Income 10.1 11.3 -2.1 14.8 9.0 10.5 3.5 3.0 0.3 5.6 5.4 8.4 4.2 3.6 6.9 4.0 -18.2 20.0 9.1 6.3 10.7 2.9 7.1 0.1


Yields on municipal funds are not directly comparable to yields on taxable funds. In muni funds your effective yield will be higher as your tax-bracket

increases. *12-month distributed yield

Fund Fund Sht-Term $Price SEC Dur2 Rel Vol

No. Ticker Fund Name Fee (NAV) Advice Dec 2016 3 Mo. 1 Yr 3 Yr 5 Yr %Yield (Yrs) (Risk)1

TAXABLE BOND 0.1 2.5 -3.1 2.5 2.1 1.8 1.95 5.1 0.32

2267 FCONX Conservative Income Bond 10.03 Buy 0.1 0.9 0.3 0.9 0.5 0.7 0.87 0.3 0.02

2208 FCBFX Corporate Bond 11.28 Buy 0.8 6.5 -2.6 6.5 4.3 4.2 3.22 7.0 0.41

2423 FGBFX Global Bond 8.61 OK to Sell 0.2 2.7 -6.4 2.7 -0.7 -- 1.52 6.8 0.50

15 FGMNX GNMA (Ginnie Mae) 11.43 OK to Buy -0.1 1.6 -1.6 1.6 3.0 1.9 1.97 3.0 0.20

54 FGOVX Government Income 10.17 Hold -0.2 1.0 -3.3 1.0 2.3 1.4 1.73 5.3 0.29

794 FINPX Inflation-Protected Bond3 11.93 Hold -0.1 4.4 -2.7 4.4 1.8 0.4 0.14* 5.7 0.40

2415 FSIQX Inflation-Protected Index4 9.68 Hold 0.1 4.8 -2.6 4.8 2.1 -- 0.03* 5.7 0.41

32 FTHRX Intermediate Bond 10.79 Buy 0.2 2.8 -2.0 2.8 2.2 2.2 2.28 4.0 0.21

452 FSTGX Intermediate Gov't Income 10.45 Hold -0.0 0.9 -2.1 0.9 1.4 1.0 1.44 3.8 0.21

1561 FIBIX Intermediate Treasury Index4 10.63 Hold -0.1 0.9 -4.8 0.9 2.9 1.4 2.12 6.5 0.44

2428 FINUX International Bond 8.15 OK to Sell -0.1 1.4 -8.8 1.4 -3.2 -- 2.07 7.4 0.70

26 FBNDX Investment Grade Bond 7.79 Buy 0.4 5.3 -2.5 5.3 3.1 2.8 2.23 5.5 0.30

2622 FJRLX Limited Term Bond 11.45 Buy 0.1 2.5 -0.8 2.5 1.8 2.0 1.76 2.5 0.14

662 FFXSX Limited Term Government 9.93 OK to Buy -0.1 0.6 -1.2 0.6 0.8 0.6 1.15 2.7 0.13

1562 FLBIX Long-Term Treasury Index4 12.58 Hold -0.4 1.1 -12.1 1.1 7.6 2.3 2.87 18.0 1.11

40 FMSFX Mortgage Securities 11.20 OK to Buy 0.0 1.9 -1.9 1.9 3.2 2.4 2.12 3.3 0.20

450 FSHBX Short-Term Bond 8.59 Buy 0.0 1.5 -0.4 1.5 1.0 1.2 1.31 1.7 0.07

1560 FSBIX Short-Term Treasury Index4 10.38 Hold 0.0 0.8 -1.2 0.8 0.8 0.6 1.28 2.7 0.14

820 FTBFX Total Bond 10.52 Buy 0.5 5.8 -2.1 5.8 3.6 3.3 2.92 5.2 0.29

651 FBIDX U.S. Bond Index 11.50 Hold 0.2 2.5 -3.1 2.5 2.9 2.0 2.30 5.6 0.30

HIGH-YIELD BOND 1.6 11.7 0.4 11.7 3.9 5.9 4.51 3.6 0.51

38 FAGIX Capital & Income 1.00%/90d 9.71 OK to Buy 1.7 10.7 1.5 10.7 5.2 8.3 4.17 4.1 0.57

814 FFRHX Floating Rate High Income 1.00%/60d 9.64 OK to Buy 1.0 9.9 1.9 9.9 2.9 3.9 2.89 0.3 0.29

1366 FHIFX Focused High Income 1.00%/90d 8.49 OK to Buy 1.5 10.9 1.0 10.9 3.7 5.4 4.23 3.8 0.50

2297 FGHNX Global High Income 1.00%/30d 9.27 OK to Buy 1.6 11.9 -0.5 11.9 3.6 6.5 4.84 3.7 0.56

455 SPHIX High Income 1.00%/90d 8.71 Buy 2.3 16.0 1.8 16.0 3.7 6.4 6.01 3.5 0.58

331 FNMIX New Markets Income 1.00%/90d 15.60 OK to Buy 2.3 14.7 -2.3 14.7 6.3 6.1 6.38 5.9 0.72

2580 FSAHX Short Duration High Income 1.00%/30d 9.46 OK to Buy 1.6 10.6 1.5 10.6 2.3 -- 4.00 2.3 0.46

368 FSICX Strategic Income 10.66 OK to Buy 1.1 8.8 -1.3 8.8 3.5 4.3 3.52 4.9 0.39

MUNICIPAL BOND 0.8 -0.0 -3.6 -0.0 3.6 3.0 2.15 5.7 0.30

434 FSAZX Arizona Muni Income 11.82 Hold 1.0 0.0 -4.0 -- 4.6 3.5 2.21 6.6 0.34

1534 FCSTX Calif Limited Term Tax Free 10.49 OK to Buy 0.3 -0.5 -2.1 -0.5 1.5 1.4 1.36 3.1 0.17

91 FCTFX California Muni Income 12.69 Hold 0.9 -0.2 -4.3 -0.2 4.6 4.0 2.22 6.4 0.35

407 FICNX Connecticut Muni Income 11.26 Hold 1.1 -0.4 -4.3 -0.4 3.8 2.6 2.42 6.6 0.35

2578 FCRDX Conservative Income Muni 10.00 Buy 0.1 0.2 -0.3 0.2 0.3 -- 0.88 0.8 0.03

36 FLTMX Interm Municipal Income 10.21 Hold 0.7 -0.0 -3.2 -0.0 2.9 2.4 2.06 4.9 0.26

404 FSTFX Limited Term Muni Income 10.43 OK to Buy 0.2 -0.4 -2.0 -0.4 1.0 1.0 1.42 2.8 0.15

429 SMDMX Maryland Muni Income 11.08 Hold 0.8 -0.1 -4.4 -0.1 3.9 2.7 2.22 6.6 0.33

70 FDMMX Mass Muni Income 11.98 Hold 1.1 -0.1 -4.1 -0.1 4.3 3.3 2.40 7.2 0.35

81 FMHTX Michigan Muni Income 11.94 Hold 1.1 -0.2 -3.7 -0.2 4.2 3.1 2.37 6.5 0.32

82 FIMIX Minnesota Muni Income 11.42 Hold 1.0 0.1 -3.2 0.1 3.3 2.5 2.05 5.6 0.28

37 FHIGX Municipal Income 12.86 Hold 0.9 -0.0 -4.5 -0.0 4.5 3.7 2.55 7.0 0.36

416 FNJHX New Jersey Muni Income 11.50 Hold 0.6 0.5 -4.7 0.5 3.8 2.9 2.60 6.4 0.37

71 FTFMX New York Muni Income 13.02 Hold 0.9 0.1 -4.0 0.1 4.4 3.3 2.29 6.5 0.33

88 FOHFX Ohio Muni Income 11.91 Hold 1.0 0.2 -4.2 0.2 4.8 3.6 2.40 7.3 0.37

402 FPXTX Pennsylvania Muni Income 10.97 Hold 0.7 0.3 -3.6 0.3 4.3 3.4 2.38 6.4 0.30

90 FTABX Tax-Free Bond 11.27 Hold 0.9 0.4 -4.2 0.4 4.7 3.8 2.71 6.9 0.35


Category Averages

Category Averages

Category Averages

SEC

Dec YTD %Yield

55 FDRXX Gov't Cash Reserves 0.02 0.09 0.24

458 SPAXX Government MM 0.01 0.04 0.17

631 FGMXX Retirement Gov't MM 0.01 0.06 0.20

630 FRTXX Retirement Gov't MM II 0.01 0.05 0.19

2742 FZFXX Treasury MM 0.01 0.02 0.11

415 FDLXX Treasury Only MM 0.00 0.01 0.08

454 SPRXX Money Market 0.05 0.36 0.64

10 FTEXX Municipal Money Market 0.03 0.15 0.40

275 FMOXX Tax-Exempt MM 0.02 0.15 0.33

Total Return (%) TAXABLE GOV'T MONEY MARKETS

PRIME MONEY MARKETS

NATIONAL MUNICIPAL MONEY MARKETS

SEC

Dec YTD %Yield

433 FSAXX Arizona Muni MM 0.02 0.17 0.30

97 FCFXX California Muni MM 0.02 0.11 0.29

457 FSPXX California AMT Tax-Free 0.03 0.22 0.46

418 FCMXX Connecticut Muni MM 0.02 0.08 0.29

426 FMSXX Mass AMT Tax-Free 0.03 0.24 0.46

74 FDMXX Massachusetts Muni MM 0.02 0.10 0.30

420 FMIXX Michigan Muni MM 0.02 0.16 0.26

417 FNJXX New Jersey Muni MM 0.02 0.08 0.29

423 FSJXX New Jersey AMT Tax-Free 0.03 0.19 0.47

92 FNYXX New York Muni MM 0.02 0.10 0.31

422 FSNXX New York AMT Tax-Free 0.03 0.23 0.47

419 FOMXX Ohio Muni MM 0.02 0.09 0.28

401 FPTXX Pennsylvania Muni MM 0.02 0.09 0.28

Total Return (%) STATE MUNICIPAL MONEY MARKETS


VIP Technology 27%

VIP Cons Discretionary 26

VIP Telecom 25

VIP Industrials 22

Total Return:

Dec: 1.9% 2016: 12.9%

Annuity Sector

Fund Allocation

VIP Disciplined Sm Cap 24%

VIP Contrafund 20

VIP Equity-Income 17

VIP Mid Cap 16

VIP Value 12

VIP Growth Opps 11

Dec: 2.4% 2016: 10.1%

Fund Allocation

Annuity Growth

Total Return:

VIP Investment Grade 22%

VIP Contrafund 21

VIP Equity-Income 20

VIP Growth & Income 20

VIP High Income 18

Total Return:

Dec: 1.6% 2016: 7.4%

Annuity Growth & Income

Fund Allocation

VIP Investment Grade 28%

Pimco VIT Low Duration 26

VIP Equity Income 24

VIP High Income 22

Total Return:

Dec: 1.2% 2016: 7.4%

Annuity Income

Fund Allocation

Fund Fund Sht-Term $Price Rel Vol

No. Ticker Fund Name Style Fee (NAV) Advice Dec 2016 3 Mo. 1 Year 3 Year 5 Year (Risk)1

FIDELITY PERSONAL RETIREMENT ANNUITY PORTFOLIOS

Annuity Sector Model 1.9 12.9 2.6 12.9 8.1 15.2 1.04

Annuity Growth Model 2.4 10.1 5.2 10.1 6.5 12.6 1.10

Annuity Growth & Income Model 1.6 7.4 2.3 7.4 5.6 9.6 0.71

Annuity Income Model 1.2 7.4 1.1 7.4 4.2 4.7 0.38

9067 FLRQC Fid VIP Asset Manager Allocation 17.77 Hold 1.0 2.7 -0.4 2.7 2.6 6.9 0.67

9066 FAEEC Fid VIP Asset Manager: Growth Allocation 17.91 Hold 1.4 2.1 0.2 2.1 2.4 8.6 0.88

9069 FJBAC Fid VIP Balanced Allocation 20.88 OK to Buy 1.3 6.9 0.8 6.9 5.6 10.0 0.72

9081 FVHAC Fid VIP Consumer Discretionary Sector 1.00%/60d 24.50 Buy -0.2 4.9 0.3 4.9 6.2 15.3 1.19

9171 FCSAC Fid VIP Consumer Staples Sector 1.00%/60d 23.60 OK to Buy 2.3 3.4 -4.7 3.4 9.2 12.7 1.12

9065 FPDFC Fid VIP Contrafund Large Growth 22.39 Buy 1.7 7.6 2.1 7.6 6.4 12.8 1.04

9148 FPRGC Fid VIP Disciplined Small Cap Small Blend 20.02 Buy 4.4 22.2 11.8 22.2 7.8 15.4 1.44

9074 FZAMC Fid VIP Dynamic Capital App Large Growth 23.28 OK to Sell 0.0 2.6 1.3 2.6 4.6 14.1 1.19

9198 FEMAC Fid VIP Emerging Markets Emg Mkts 7.92 Hold -0.6 2.7 -9.1 2.7 -2.3 1.9 1.31

9085 FJLLC Fid VIP Energy Sector 1.00%/60d 16.74 Hold -0.7 33.4 6.3 33.4 -2.7 3.6 2.10

9061 FLOLC Fid VIP Equity-Income Large Value 19.37 Buy 2.0 17.6 6.5 17.6 6.8 12.8 0.98

9083 FONNC Fid VIP Financial Services Sector 1.00%/60d 12.27 OK to Buy 4.5 18.2 17.0 18.2 7.9 16.4 1.26

9361 FFLCC Fid VIP Floating Rate High Income High-Yield Bond 10.78 OK to Buy 1.0 8.9 1.7 8.9 2.5 -- 0.26

9157 FMPAC Fid VIP FundsManager 20 Allocation 14.36 Hold 0.3 2.6 -1.6 2.6 2.0 3.3 0.28

9158 FMPBC Fid VIP FundsManager 50 Allocation 15.75 Hold 0.8 4.0 -1.1 4.0 2.9 6.5 0.56

9197 FMPPC Fid VIP FundsManager 60 Allocation 14.76 Hold 1.1 4.5 -0.9 4.5 3.3 7.7 0.66

9159 FMPCC Fid VIP FundsManager 70 Allocation 16.11 Hold 1.1 4.7 -0.7 4.7 3.2 8.6 0.75

9160 FMPDC Fid VIP FundsManager 85 Allocation 16.13 Hold 1.2 5.4 -0.6 5.4 3.5 9.9 0.90

9062 FMNDC Fid VIP Growth Large Growth 21.26 OK to Buy 0.7 0.5 -1.7 0.5 6.0 13.1 1.11

9070 FLFNC Fid VIP Growth & Income Large Blend 22.02 Buy 1.9 15.7 6.8 15.7 7.4 14.3 1.13

9068 FIDPC Fid VIP Growth Opportunities Large Growth 21.63 Buy 1.3 0.0 -1.0 0.0 5.6 14.0 1.29

9084 FPDRC Fid VIP Health Care Sector 1.00%/60d 31.92 Hold -0.2 -10.7 -8.3 -10.7 7.8 18.6 1.57

9060 FBBLC Fid VIP High Income High-Yield Bond 19.40 Buy 2.0 14.4 1.8 14.4 3.5 6.0 0.57

9064 FXVLT Fid VIP Index 500 Large Blend 22.32 Hold 2.0 11.6 3.8 11.6 8.5 14.3 1.00

9082 FBALC Fid VIP Industrials Sector 1.00%/60d 29.46 Buy 0.8 15.4 7.8 15.4 6.1 14.7 1.27

9076 FVJIC Fid VIP Int'l Capital App Diversified Int'l 15.37 Hold 0.7 -3.2 -8.6 -3.2 0.7 9.2 1.05

9063 FTLKC Fid VIP Investment Grade Bond Inv Grd Bond 15.76 Buy 0.4 4.5 -2.6 4.5 3.0 2.5 0.30

9172 FVMAC Fid VIP Materials Sector 1.00%/60d 18.56 Hold -0.1 11.7 4.4 11.7 0.5 8.1 1.53

9071 FNBSC Fid VIP Mid Cap Mid Growth 24.08 Buy 1.2 11.8 4.7 11.8 5.2 12.6 1.19

9059 FTNJC Fid VIP Gov't Money Market Money Mkt 11.33 -- 0.0 -0.1 0.0 -0.1 -0.2 -0.2 0.01

9088 FEMMC Fid VIP Overseas Diversified Int'l 14.03 Buy 2.0 -5.4 -5.1 -5.4 -3.6 7.0 1.17

9072 FFWKC Fid VIP Real Estate Sector 22.77 Hold 4.7 5.4 -2.7 5.4 12.2 11.1 1.40

9075 FGDQC Fid VIP Strategic Income High-Yield Bond 18.24 OK to Buy 0.9 7.9 -1.6 7.9 3.0 3.8 0.38

9086 FYENC Fid VIP Technology Sector 1.00%/60d 28.68 Buy 1.0 11.1 -1.7 11.1 9.5 14.4 1.35

9173 FVTAC Fid VIP Telecommunications Sector 1.00%/60d 16.39 Buy 6.2 22.4 5.6 22.4 8.8 13.3 1.04

9087 FXRRC Fid VIP Utilities Sector 1.00%/60d 23.14 Sell 3.9 13.7 -0.9 13.7 7.1 9.7 1.15

9079 FKMSC Fid VIP Value Large Value 20.17 Buy 2.8 11.6 5.7 11.6 7.0 14.3 1.06

9073 FRBSC Fid VIP Value Strategies Mid Value 20.39 OK to Buy 2.3 9.3 4.6 9.3 4.0 13.2 1.19

9347 FBMEC Black Rock Global Allocation Global Allocation 12.12 Hold 1.0 3.7 -0.1 3.7 1.4 5.5 0.62

9349 FTMEC Franklin Templeton Global Bond Global Bond 10.88 OK to Sell 2.8 2.6 6.0 2.6 -0.2 3.0 0.54

9348 FFMEC Franklin Templeton US Gov't Intermed Gov't 10.27 Hold -0.1 0.4 -1.9 0.4 1.3 0.6 0.15

9285 FIGXC Invesco Global Core Eqty Global Stock 11.72 Hold 1.5 6.5 -0.2 6.5 1.7 7.9 1.06

9147 FPRLC Lazard Retirement Emerging Mkts Emg Mkts 14.32 Hold 2.3 20.8 -2.8 20.8 -2.7 2.1 1.66

9143 FPRMC Morgan Stanley Emerg Mkt Debt Emg Mkt Bond 17.75 OK to Buy 1.5 10.3 -4.1 10.3 3.8 3.6 0.67

9144 FPRNC Morgan Stanley Emerg Mkt Equity Emg Mkts 11.88 Hold 0.2 6.5 -8.0 6.5 -3.3 1.3 1.33

9146 FPRPC Morgan Stanley Global Strategist Diversified Int'l 12.19 Hold 1.6 5.3 -0.7 5.3 0.1 5.6 0.71

9346 FPMEC Pimco Commodity Real Return Commodities 6.01 OK to Sell 1.9 14.7 2.4 14.7 -11.5 -9.1 1.47

9276 FPMBC Pimco VIT Low Duration Shrt-Term Bond 11.52 Buy 0.5 1.1 -0.2 1.1 0.6 1.4 0.12

9277 FPNBC Pimco VIT Real Return TIPS 12.72 Hold -0.1 5.0 -2.4 5.0 1.5 0.6 0.45

9278 FPOBC Pimco VIT Total Return Intermed Bond 12.89 Hold 0.5 2.5 -2.6 2.5 2.2 2.7 0.31


Model

Portfolios


Ex- Fund Date Dist$ NAV$



Below is a list of funds and their total

year-end distributions. These gains con-

sist of profits from sold securities, plus

any income (dividends) paid to the fund

via all its holdings.

With the S&P 500 rising over each

of the past eight years, some 2016 year-

end distributions were significant. While

Fidelity has worked to optimize their

funds’ tax efficiency, it nonetheless sug-

gests that unrealized capital gains may

be accumulating. (In the case of Lever-

aged Co. Stock and Value Strategies,

their large distributions were the result of

a new manager dramatically reposition-

ing the funds.)

As with an individual taxpayer,

funds can offset their gains with losses.

But eventually they will be distributed to

their shareholders unless, of course, a

downturn in the market provides an op-

portunity for the manager to employ

some tax strategies. While we don’t be-

lieve in putting the tax “cart” before the

investment “horse,” being strategic

about taxes will ultimately help you to

keep more of your money.

If your fund went “ex-dividend” in

December (paid you), you likely noticed

that its net asset value declined. (The

NAV$ column shows the fund ’s share

price on the day it went ex-dividend or

Ex-Date.) Because it fell by the same

amount as the distribution itself, you

were no worse off than before except,

however, for the tax hit.

500 Index 12/ 16 0.820 78.96

Air Transportation 12/ 16 0.490 75.04

Asset Manager 20% 12/ 23 0.108 12.98

Asset Manager 30% 12/ 23 0.059 10.44

Asset Manager 40% 12/ 23 0.065 10.78

Asset Manager 50% 12/ 23 0.150 16.71

Asset Manager 60% 12/ 23 0.175 11.12

Asset Manager 70% 12/ 23 0.296 19.64

Asset Manager 85% 12/ 23 0.220 16.55

Automotive 12/ 16 1.980 35.26

Balanced 12/ 9 0.213 22.17

Banking 12/ 16 0.245 32.03

Blue Chip Growth 12/ 9 1.763 68.20

Blue Chip Value 12/ 9 0.092 17.41

Brokerage & Invest 12/ 16 0.845 68.40

Canada 12/ 9 0.799 49.57

Chemicals 12/ 16 7.006 149.19

China Region 12/ 9 0.321 24.85

Comm Equip 12/ 2 0.304 31.77

Computers 12/ 16 4.752 75.07

Cons Discretionary 12/ 16 0.284 35.90

Const & Housing 12/ 16 2.122 59.16

Consumer Finance 12/ 16 0.207 13.46

Consumer Staples 12/ 16 3.481 90.13

Contrafund 12/ 9 3.115 100.08

Convertible Securities 12/ 27 0.646 26.88

CT Muni Income 12/ 27 0.135 11.22

Defense & Aero 12/ 16 5.485 129.08

Disciplined Equity 12/ 9 0.486 33.68

Diversified Int'l 12/ 9 0.452 33.24

Dividend Growth 12/ 9 0.235 32.47

EMEA 12/ 9 0.102 8.22

Emerg Mkt Index 12/ 9 0.125 8.63

Emerg Mkts Discovery 12/ 16 0.150 11.36

Emerg Mkts Discovery 12/ 27 0.005 11.24

Emerging Asia 12/ 9 0.391 32.04

Emerging Markets 12/ 9 0.140 22.63

Emerging Markets 12/ 27 0.009 22.00

Energy 12/ 16 0.196 47.50

Energy Service 12/ 2 0.225 53.38

Environment & Alt Ergy 12/ 2 0.251 22.06

Equity Dividend Inc 12/ 27 1.296 27.14

Equity-Income 12/ 9 0.935 57.82

Europe 12/ 16 0.508 32.93

Event Driven Opps 12/ 2 0.136 12.44

Export and Multi 12/ 2 0.496 20.51

Extd Mkt Index 12/ 16 2.207 55.81

Fidelity Fund 12/ 9 1.282 41.61

Financial Services 12/ 16 0.991 98.90

Focused Stock 12/ 9 0.199 18.77

Four-in-One Index 12/ 28 0.798 38.24

Glbl ex-US Index 12/ 9 0.216 10.97

Global Balanced 12/ 9 0.095 22.24

Global Bond 12/ 23 0.147 8.55

Global Commod Stk 12/ 9 0.173 11.56

Global Eqty-Inc 12/16 0.038 12.19

Global Strategies 12/28 0.209 8.62

Global Strategies 12/30 0.010 8.64

GNMA 12/2 0.013 11.46

Gold 12/16 0.450 17.25

Government Income 12/9 0.027 10.16

Grow th & Income 12/9 0.165 33.29

Grow th Company 12/27 8.162 140.14

Grow th Discovery 12/9 0.023 25.74

Grow th Strategies 12/27 0.199 34.43

Health Care 12/16 0.234 186.32

Health Care Services 12/16 3.003 83.79

Independence 12/27 2.091 33.98

Industrial Equipment 12/16 2.008 39.20

Industrials 12/16 1.399 32.42

Inflation-Protect Index 12/23 0.125 9.61

Inflation-Protected 12/23 0.178 11.85

Insurance 12/16 0.824 77.49

Interm Gov't Income 12/2 0.013 10.47

Interm Treas Index 12/2 0.075 10.67

International Grow th 12/9 0.132 10.59

International Value 12/9 0.209 7.77

Int'l Bond 12/23 0.041 8.09

Int'l Cap App 12/9 0.108 15.95

Int'l Discovery 12/9 0.661 36.48

Int'l Enhanced Indx 12/9 0.210 8.13

Int'l Index 12/16 0.987 35.19

Int'l Small Cap 12/9 0.629 23.32

Int'l Small Cap Opps 12/9 0.208 14.49

IT Services 12/16 0.133 42.04

Japan 12/9 0.146 12.24

Japan Smaller Cos 12/9 0.414 14.76

L Cap Core Enhcd 12/9 0.180 12.69

L Cap Grow th Enhcd 12/9 0.157 15.78

L Cap Value Enhcd 12/9 0.195 12.17

Large Cap Stock 12/2 0.619 28.73

Latin America 12/9 0.395 18.83

Latin America 12/29 0.080 19.20

Leisure 12/16 1.379 140.32

Leveraged Co Stock 12/2 6.591 32.74

Lg Cap Gow th Index 12/23 0.021 10.54

Lg Cap Value Index 12/23 0.047 11.06

Low -Priced Stock 12/9 0.922 50.36

Ltd Term Gov't 12/27 0.034 9.91

Magellan 12/2 1.858 89.91

Materials 12/16 0.799 77.00

Medical Equipment 12/16 1.855 37.05

Mega Cap Stock 12/9 0.218 17.56

Mid Cap Enhd Indx 12/9 0.183 14.44

Mid Cap Index 12/16 0.270 18.29

Mid Cap Index 12/30 0.008 18.15

Mid Cap Value 12/9 0.333 25.08

Mid-Cap Stock 12/9 1.004 34.91

Multimedia 12/16 3.538 74.97

Nasdaq Comp Index 12/27 0.672 71.98

Natural Gas 12/16 0.124 29.93

Natural Resources 12/16 0.100 30.93

New Markets Income 12/2 0.138 15.27

New Millennium 12/27 2.245 36.45

NJ Muni Inc 12/27 0.090 11.46

Nordic 12/9 0.770 43.44

OTC 12/9 2.700 83.23

Overseas 12/16 0.775 39.26

Pacif ic Basin 12/16 0.630 26.46

Pharmaceuticals 12/16 0.183 17.05

Puritan 12/9 0.277 20.74

Puritan 12/27 0.040 20.72

Real Estate Income 12/16 0.201 11.68

Real Estate Income 12/30 0.010 11.79

Real Estate Index 12/16 0.238 15.20

Real Estate Invest 12/16 0.801 41.02

Retailing 12/16 0.145 111.29

Semiconductors 12/2 1.106 90.50

Sht-Term Treas Index 12/2 0.005 10.39

Sm Cap Discovery 12/2 0.138 31.00

Sm Cap Enhanced Indx 12/9 0.093 14.49

Sm Cap Enhanced Indx 12/30 0.002 14.23

Small Cap Grow th 12/2 0.157 20.12

Small Cap Index 12/16 0.245 18.42

Small Cap Stock 12/2 0.317 18.22

Small Cap Value 12/2 0.191 18.32

Small Cap Value 12/27 0.036 18.96

Softw are & IT Svs 12/16 4.376 131.03

Stk Sel All Cap 12/9 0.379 36.78

Stk Sel Lge Cap Value 12/9 0.240 18.80

Stk Sel Mid Cap 12/27 0.261 35.17

Stk Sel Small Cap 12/9 0.426 26.61

Strategic Div & Inc 12/27 0.451 14.66

Strategic Real Return 12/9 0.065 8.76

Strategic Real Return 12/27 0.014 8.73

Technology 12/2 2.004 126.32

Telecom & Utilities 12/2 0.427 23.57

Telecommunications 12/16 4.348 69.10

Total Bond 12/9 0.011 10.49

Total Emerg Mkts 12/16 0.144 10.65

Total Int'l Equity 12/9 0.109 7.48

Total Int'l Index 12/16 0.035 9.95

Total Int'l Index 12/27 0.005 9.93

Total Mkt Index 12/16 1.237 65.00

Transportation 12/16 1.772 91.20

Trend 12/16 3.971 84.51

U.S. Bond Index 12/2 0.003 11.50

Utilities 12/2 1.710 68.49

Value 12/9 1.379 111.34

Value Discovery 12/9 0.160 25.98

Value Strategies 12/27 8.180 38.69

Wireless 12/2 0.552 7.97

Worldw ide 12/9 0.266 22.09


30.2%

22.8%

18.7%

15.5%

14.0%

12.0%

12.0%

11.9%

4.3%

3.1%

-10.7%

Equity-Income

Large Cap Stock

Growth & Income

Stk Sel Lge Cap Value

Equity Dividend Income

New Millennium

Mega Cap Stock

Value Discovery

S&P 500

Value Strategies

Blue Chip Value

Export & Multi

Stock Selector All Cap

Dividend Growth

Disciplined Equity

Growth Company

Magellan

Fidelity Fund

Trend

Contrafund

Focused Stock

Capital Appreciation

OTC

Blue Chip Growth

Growth Discovery

Independence

17.4%

16.7%

16.1%

16.0%

15.9%

14.9%

13.6%

13.2%

12.0%

11.3%

11.2%

10.0%

9.6%

8.1%

6.2%

6.0%

5.2%

4.8%

4.6%

3.4%

3.3%

3.2%

3.1%

1.6%

0.7%

-1.2%

Equity-Income

Large Cap Stock

Growth & Income

Stk Sel Lge Cap Value

Equity Dividend Income

New Millennium

Mega Cap Stock

Value Discovery

S&P 500

Value Strategies

Blue Chip Value

Export & Multi

Stock Selector All Cap

Dividend Growth

Disciplined Equity

Growth Company

Magellan

Fidelity Fund

Trend

Contrafund

Focused Stock

Capital Appreciation

OTC

Blue Chip Growth

Growth Discovery

Independence

Comparative Index

Natural Resources

Telecommunications

Financial Services

Industrials

Utilities

Materials

S&P 500

Technology


Consumer Staples

Health Care

Natural Resources

Telecommunications

Financial Services

Industrials

Utilities

Materials

S&P 500

Technology


Consumer Staples

Health Care

Comparative Index

Stock Funds

In the fourth quarter (post-

election outcome), small-cap stocks

ramped up their performances over-

taking large-cap stocks. For exam-

ple, during the last three months of

2016 the small-cap Russell 2000

surged 8.8% versus “just” 3.8% for

the S&P 500.

Fund-wise, Fidelity’s six active-

ly run small-cap offerings finished

the year with an average gain of

16.8%, whereas the average large-

cap fund returned just 8.6%.

Among all small-cap funds, the

top performer was Small Cap

Enhanced Index (up 22.8% ). The

laggard was Small Cap Growth (up

11.0%), hampered, at least in part,

by its health-care holdings. On a

related note, Event Driven Opportu-

nities (up 20.0% ) finally hit its

stride in its third year, handily out-

pacing its Russell 3000 benchmark

(up 12.7%).

As for mid-cap stocks, their per-

formance fell between that of small-

and large-cap shares. Likewise, on

the fund level, they were also a

mixed bag. Whereas the best of this

lot was Value (up 16.1%), the worst

was Growth Strategies (up 2.7%).

Please see the facing page for

our chart of small- and mid-cap

funds.

As for Fidelity’s most widely

held stock funds, suffice it to say,

2016 was a very challenging year.

For starters, its largest fund by

assets, Contrafund (up 3.4%), dra-

matically trailed its S&P 500 bench-

mark. Likewise, Low-Priced Stock

(up 8.8%) trailed the Russell 2000

by 12.5 percentage points. Its big-

gest problem was its 30%+ slug in

foreign stocks. (More on that later.)

Selects Funds

Energy shares gushed higher in

2016 as their multi-year slide bot-

tomed in February (oil fell to below

$30 a barrel). But with the U.S.

economy improving and OPEC cob-

Fund Commentary cont’d from p. 5

These 10 broad-based Select funds represent the major industry segments of the S&P 500.

Fund returns for 29 Select subsets and 11 sector ETFs are shown on page 8 of the Scorecard.


21.3%

21.3%

20.3%

20.0%

16.1%

15.4%

14.9%

13.8%

12.9%

12.4%

12.0%

11.0%

10.6%

8.8%

7.3%

2.7%

Russell 2000

Small Cap Value

Small Cap Discovery

Event Driven Opportunities

Value

Stock Selector Small Cap

Mid-Cap Stock

Russell Midcap

Small Cap Stock

Mid Cap Value

S&P 500

Small Cap Growth

Stock Selector Mid Cap

Low-Priced Stock

Leveraged Company Stock

Growth Strategies

Comparative Index

22.8%

21.4%

16.3%

16.1%

13.6%

13.5%

12.6%

11.9%

11.2%

10.9%

8.8%

8.3%

8.2%

6.4%

4.5%

1.9%

1.2%

Small Cap Enhcd Index

Small Cap Index

Large Cap Value Enhcd Index

Extended Mkt Index

Mid Cap Index

Mid Cap Enhcd Index

Total Market Index

500 Index

Emerging Mkts Index

Large Cap Core Enhcd Index

Nasdaq Composite Index

Four-in-One Index

Large Cap Growth Enhcd Index

Real Estate Index

Global ex-US Index

International Enhcd Index

International Index

bling together an agreement to trim

output, crude topped $53 a barrel in

December. This helped drive Natu-

ral Gas (up 48.5% ) to the top spot

among Selects; other energy–rich

funds such as Energy (up 33.8%)

fared well, too.

Elsewhere, investors flocked to

telecom shares, in part, for their

yields. This propelled Telecommu-

nications up 22.8% . But a more

important performance driver for

diversified stock funds was the late-

year rally by bank shares. Rising

interest rates hold the promise of

fatter margins on lending, and the

Trump victory further fueled that

rally with the promise of less regula-

tion. Taken together, the broad

Financial Services fund rose

18.7% in 2016, whereas the narrow-

er Banking gained 26.8%.

In the important tech sector,

Semiconductors (formerly Elec-

tronics) led the group higher with its

stellar 32.4% return last year, and

Communications Equipment (up

19.9%) was no slouch, either.

Six of Fidelity’s 10 broad Select

funds matched or outpaced the mar-

ket last year. However, about a third

of the S&P’s industry constituents

performed miserably.

Consumer Staples (up 3.1% )

eked out a gain in 2016, and Con-

sumer Discretionary was up a sim-

ilarly modest 4.3%. But even more

disappointing was Health Care

(down 10.7%), largely because Bio-

technology was down 23.7% .

Throughout the health care sec-

tor, valuations were of central con-

cern. On the delivery side, cracks

appeared owing to a fundamental

flaw in ObamaCare: not enough

healthy young people have signed

up to offset rising costs. Health Care

Services was up just 2.3% . And,

following the Trump victory, the

sector’s own health further deterio-

rated as investors tried to guess how

the new administration might refash-

ion ObamaCare.

Finally, Select Gold rose 47.3%

last year (which also helped to fuel

Natural Resources’ rise) even as

the precious metal itself gained a

rather modest 8.6%. How’s that pos-

sible? Shares of gold mining compa-

nies are highly leveraged to the price

of the raw material.

Specialty Funds

As previously discussed, gold

and oil were big winners last year,

so it followed that Global Commodi-

Fund Commentary cont’d on p. 14

Large Cap Growth

Index, Large Cap

Value Index and

Total Int’l Index not

shown due to partial

year returns.


30.4%

17.0%

12.7%

12.0%

10.2%

9.1%

7.8%

7.0%

6.0%

5.9%

5.0%

0.9%

-1.6%

Glbl Commodity Stock

Telecom & Utilities

Strategic Div & Inc

S&P 500

Real Estate Income

Strategic Real Return

Real Estate Investment

Balanced

Convertible Securities

Global Strategies

Puritan

Global Balanced

Int'l Real Estate

Glbl Commodity Stock

Telecom & Utilities

Strategic Div & Inc

S&P 500

Real Estate Income

Strategic Real Return

Real Estate Investment

Balanced

Convertible Securities

Global Strategies

Puritan

Global Balanced

Int'l Real Estate

Comparative Index

28.8%

20.1%

19.6%

12.2%

12.0%

10.1%

8.8%

8.2%

4.7%

3.4%

3.3%

2.9%

2.7%

1.0%

-0.6%

-0.6%

-1.1%

-1.3%

-1.5%

-2.5%

-3.1%

-3.3%

-3.7%

-5.2%

-5.6%

-5.8%

EMEA

Canada

Latin America

Total Emerging Markets

S&P 500 Index

Emerg Mkts Discovery

Japan Smaller Cos

Int'l Small Cap

Emerging Asia

Global Equity Income

Emerging Markets

Pacific Basin

Japan

MSCI EAFE Index

Total Int'l Equity

Worldwide

Int'l Small Cap Opps

Overseas

Int'l Value

Nordic

Int'l Cap App

Int'l Growth

Diversified Int'l

China Region

Europe

Int'l Discovery

EMEA

Canada

Latin America

Total Emerging Markets

S&P 500 Index

Emerg Mkts Discovery

Japan Smaller Cos

Int'l Small Cap

Emerging Asia

Global Equity Income

Emerging Markets

Pacific Basin

Japan

MSCI EAFE Index

Total Int'l Equity

Worldwide

Int'l Small Cap Opps

Overseas

Int'l Value

Nordic

Int'l Cap App

Int'l Growth

Diversified Int'l

China Region

Europe

Int'l Discovery

Comparative Index

ty Stock (up 30.4% ) fared espe-

cially well. While the utilities por-

tion of Telecom & Utilities (up

17.0%) held back the fund, it was

still a strong performer relative to

the rest of the market.

Conversely, outside of commod-

ities, Fidelity’s Specialty funds with

large international exposures were

laggards. Most notably, International

Real Estate (down 1.6% ) sagged

under the weight of cooling property

values in Asia and elsewhere, and

suffered a secondary blow from the

rising dollar (see below).

International Funds

What do last year’s five top-

performing international stock funds

have in common?

The answer is that they all have

large exposures to oil and other

commodities. In the case of Emerg-

ing Europe, Middle East, Africa

(EMEA), (up 28.8% ), its manager

fortuitously upped his exposures to

South Africa and Russia while trim-

ming Turkey. And even though

much of South America is a political

disaster area, Latin America (up

19.6%) was a winner.

Less fortunate were those for-

eign funds with big bets in Europe.

While some markets actually en-

joyed decent gains in local currency

terms, U.S. fund investors saw their

gains evaporate owing to the dollar’s

rise. For example, the U.K. rose

19.2% in pounds, but was flat in

dollars! Post-Trump victory, the

pound has turned higher against the

greenback, whereas the euro’s fall

has accelerated.

When all was said and done, the

EAFE Index rose 5.3% last year, in

local currency terms, but gained a

more modest 1.0% in U.S. dollars.

Taxable Bond Funds

The 10-year Treasury yield end-

ed 2016 at 2.45%, up from 2.27% at

the start of the year. However, the

damage to bond funds occurred in

Fund Commentary cont’d from p. 13


17.1%

16.0%

14.7%

11.9%

10.9%

10.7%

10.6%

9.9%

8.8%

BC High Yield Index

High Income

New Markets Income

Global High Income

Focused High Income

Capital & Income

Short Duration High Income

Floating Rate High Income

Strategic Income

Tax-Free Bond

BC Muni Bond Index

Conservative Income Muni

Intermediate Muni Inc

Municipal Inc

Limited Term Muni

Limited Term Muni Hard

6.5%

5.8%

5.3%

4.8%

4.4%

2.8%

2.7%

2.7%

2.5%

2.5%

1.9%

1.6%

1.5%

1.4%

1.1%

1.0%

0.9%

0.9%

0.9%

0.8%

0.6%

Corporate Bond

Total Bond

Investment Grade Bond

Inflation-Protected Index

Inflation-Protected Bond

Intermediate Bond

BC Aggregate Bond Index

Global Bond

Limited Term Bond

U.S. Bond Index

Mortgage Securities

Ginnie Mae

Short-Term Bond

International Bond

Long-Term Treas Index

Government Income

Conservative Income

Intermediate Gov't Income

Interm Treas Index

Short-Term Treas Index

Limited Term Government

Comparative Index

17.1%

16.0%

14.7%

11.9%

10.9%

10.7%

10.6%

9.9%

8.8%

BC High Yield Index

High Income

New Markets Income

Global High Income

Focused High Income

Capital & Income

Short Duration High Income

Floating Rate High Income

Strategic Income

0.4%

0.3%

0.2%

0.0%

0.0%

-0.4%

Comparative Index

Comparative Index

the second half. In July, the 10-year

hit a low 1.36%, and bond funds

rallied. But their returns were later

pared as yields rose considerably

(especially after the Trump victory).

Against this backdrop, U.S.

Bond Index fund (which holds a

broad array of both corporate and

government securities) returned a

modest 2.5%. Suffice it to say, with

the fund yielding 2.35% at the start

of 2016, it returned roughly just its

coupon. There was little-to-no capi-

tal appreciation.

One small, and widely anticipat-

ed quarter-point rate hike by the Fed

in December nipped at the perfor-

mance of shorter-term bonds. But

longer-term bonds were held back

by the market’s expectation of more

deficit spending and accelerating

inflation (the bane of bond inves-

tors). This weighed on “risk-free”

government debt, in particular. At

the same time, corporates fared

much better than government bonds

(especially Treasurys which were

hurt by Chinese selling to support

the yuan) as the improving economy

bodes well for their balance sheets.

For that reason, High Income

(up 16.0%) was the top performing

bond fund at Fidelity and nearly all

their high-yield funds had double-

digit gains. As for the very different

New Markets Income (up 14.7% ),

rising energy prices were a boon,

and it was little affected by the ris-

ing dollar as most of the portfolio is

in dollar-denominated securities.

As for muni funds, their long

durations (rate risk) weighed on re-

turns last year, but November did

the most damage as the specter of

lower income taxes made their tax-

free yields a bit less appealing.

Finally, the Fed’s two 0.25 per-

centage-point rate hikes over a 13-

month period pushed money market

funds yields a tad higher: Gov’t

Cash Reserves now yields 0.24% ,

up from 0.01% a year ago. And their

only “prime” money market fund,

Money Market, yields 0.64% .

— John Bonnanzio

Tax-Free Bond

BC Muni Bond Index



Municipal Inc

Limited Term Muni


Tax-Free Bond

BC Muni Bond Index



Municipal Inc

Limited Term Muni



Fidelity Monitor & Insight (ISSN 0892-2934) is published monthly for $249 per year by Independent Fidelity Investors Inc (IFI).

Executive Editor: Jack Bowers Editors: John Boyd, John Bonnanzio Production & Design: Kim Dowgos, Sherraden Marston

Webmaster: Wayne Foster . All material presented is compiled from sources believed reliable, but accuracy cannot be guaranteed. Before buying any

mutual fund, you should read its prospectus carefully. IFI does not render legal, accounting or tax advice. Copyright ©2017. Reproductions in whole or

in part are prohibited except by permission. Send address changes to Fidelity Monitor & Insight P.O. Box 19189 Reno, NV 89511.

Editorial Questions: editor [email protected] Subscription Questions: [email protected] or 800-444-6342 Hotline: 800-520-4630

Inside Fidelity Fees Reduced — As you’ll see in

our Scorecard, Fidelity eliminated

short-term redemption fees on 75

funds across various share classes

(except annuities). The change was

effective December 12.

Where fees remain, Fidelity has

determined that they are still neces-

sary for a variety of reasons, includ-

ing illiquidity that can lead to pric-

ing problems. For example, some

emerging market funds, where

shares can be difficult to sell, con-

tinue to charge as much as 2% on

early redemptions.

At the very least, momentum

investors risk disrupting a fund man-

ager’s trading strategies. At its

worst, a manager (or even a passive-

ly run index fund) may be forced to

sell securities into a declining mar-

ket, possibly hurting shareholders

who remain behind.

Apart from their redemption fees

(which are paid to fund sharehold-

ers, not to Fidelity), Fidelity can use

fair-value pricing and the monitor-

ing of shareholders’ round-trip

transactions to discourage excessive

traders. While limiting round-trip

transactions may make Fidelity’s

funds less appealing to frequent

traders, their growing suite of ETFs

should be a good “workaround” for

most individuals.

Corrections & Amplifications

In the December newsletter, we

incorrectly stated that Trend fund,

which was launched in 1958, is

Fidelity’s oldest offering. That dis-

tinction actually belongs to the

company’s flagship Fidelity fund

which was started in 1930.

Large Cap Value Enhanced Index On December 27, we bought Large Cap Value Enhanced Index fund for

both our Unique Opportunities and Growth Model Portfolios. As with all

Enhanced Index funds, Large Cap Value Enhanced Index is managed by

Fidelity affiliate Geode Capital Management (which also runs their regular

index funds). While we describe Enhanced funds below, our trades warrant

this discussion: Why did we sell the actively run Value Strategies for a

“quant” fund?

We sold Value Strategies because its former manager dramatically

underperformed his benchmark last year. Many of his sector bets were off

their mark, particularly overweights in consumer discretionary and health

care stocks. In addition individual stock selection was poor (see trade box

on p. 3). Of course, what we’re really after is total return, and we see a

greater likelihood of

achieving that right

now through Large

Cap Value Enhanced

Index. In particular,

this trade increases

the models’ expo-

sures to financials,

which should benefit

from Trump’s policies.

Large Cap Value En-

hanced has 24% in that

sector versus 18% for

Value Strategies.

It has also been

about 15% less risky

than the fund it’s re-

placing.

In addition to monthly dividends paid by bond and money market funds and Asset Mgr: 20%/30%, the following funds are scheduled for a distribution (if any) in Janu-ary 2017:

Convert Secs, CT Muni Inc, Equity

Div Inc, Growth Co, Growth Strategies,

Independence, Ltd Term Gov’t, Muni

Inc, Nasdaq Comp Index, NJ Muni Inc,

New Millennium, Stock Selector Mid

Cap, Strategic Dividend & Income.

The final year-end distribu-tions for December are shown on page 11.

Enhanced Index Funds

This month we’ve upgraded five “Enhanced

Index” funds (see p. 5). Though they hew

closely to specific benchmarks in terms of their

sector exposures and other metrics (such as

market cap and valuations), the funds’ managers

use computer algorithms to guide their selection

of individual stocks. The goal: to add alpha, or

returns in excess of the fund’s benchmark.

While Enhanced funds are unlikely to dramat-

ically outperform their bogey, their risk con-

trols, lower fee structure, and modicum of active

management have met with success — thus this

month’s upgrades of several Enhanced funds

and the purchase of a second one for two of our

model portfolios.

2017 Guide Independent Guide

Growth Model Portfolio Another Good Year For Stocks, Track ... · High Income SPHIX 8.71 9,102.60...

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