For Institutional Client Use Only
Fidelity Fund OverviewNCCMT: Cash and Term Portfolios
February 2012
Michael Morin, CFA®Director of Institutional Portfolio Management
Money Markets
© 2013 FMR LLC. All rights reserved.
Not FDIC insured. May lose value. No bank guarantee.
2
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
Agenda
I. Current Market Conditions
A. Low Rate Environment
B. European Sovereign Crisis
II. NCCMT Cash Portfolio Composition
III. NCCMT Term Portfolio Composition
IV. Outlook / Investment Strategy
V. Money Market Regulatory Reform Update
For Institutional Client Use Only
Current Market Conditions
© 2013 FMR LLC. All rights reserved.
4 For Institutional Client Use Only
Source: Federal Reserve as of 12/12/12
Fed Maintains Highly Accommodative Monetary Policy
Federal Reserve Board Rate Expectations
Appropriate Timing of Policy Firming Appropriate Pace of Policy Firming (December 2012)
© 2013 FMR LLC. All rights reserved.
Fed Shifts From Date-Based to Threshold-Based Guidance
5 For Institutional Client Use Only
Source: Bloomberg as of 12/12/12
Fed Shifts From Date-Based to Threshold-Based Guidance
© 2013 FMR LLC. All rights reserved.© 2013 FMR LLC. All rights reserved.
0.0
1.0
2.0
3.0
4.0
5.0
Aug
-08
Oct
-08
Dec
-08
Feb
-09
Ap
r-09
Jun
-09
Aug
-09
Oct
-09
Dec
-09
Feb
-10
Ap
r-10
Jun
-10
Aug
-10
Oct
-10
Dec
-10
Feb
-11
Ap
r-11
Jun
-11
Aug
-11
Oct
-11
Dec
-11
Feb
-12
Ap
r-12
Jun
-12
Aug
-12
Oct
-12
Dec
-12
Yie
ld (%
)
3 Month LIBOR 3 Month Treasury
3-MONTH LIBOR VS. 3-MONTH TREASURIES
6 For Institutional Client Use Only
Short-Term Credit Spreads Trend Lower
Past performance is no guarantee of future results. It is not possible to invest directly in an index. Index performance is not meant to represent that of any Fidelity mutual fund.Source: Bloomberg as of 12/31/12
TED Spread Low:3/16/10: 11 bps
TED Spread Current:12/31/12: 27 bps
© 2013 FMR LLC. All rights reserved.
TED Spread High:10/10/08: 464 bps
7 For Institutional Client Use Only
Credit Concerns Remain in Eurozone
Source: Bloomberg as of 12/31/12
10 YEAR BOND YIELDS OF SELECT EUROZONE COUNTRIES
© 2013 FMR LLC. All rights reserved.
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
Dec
-10
Jan
-11
Feb
-11
Mar
-11
Ap
r-11
May
-11
Jun
-11
Jul-
11
Aug
-11
Sep
-11
Oct
-11
No
v-1
1
Dec
-11
Jan
-12
Feb
-12
Mar
-12
Ap
r-12
May
-12
Jun
-12
Jul-
12
Aug
-12
Sep
-12
Oct
-12
No
v-1
2
Dec
-12
Yie
ld (%
)
Yie
ld (%
)
Greece Portugal Ireland Spain Italy France Germany
Past performance is no guarantee of future results
8
Europe - What to Watch
The Eurozone remains in recession as significant austerity measures crimp short-term growth prospects
Austerity causes social and political unrest, leading to potential leadership changes as voters seek change
Sovereigns and banks in the periphery continue to face bailouts amid credit downgrades (Spain, Cyprus)
The regulatory Impact from Basel III may hinder loan supply and as banks restructure under the new rules
While the region is better off than last year, the euro debt crisis is far from being resolved and will continue to create headline risk that leads to enhanced volatility
For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved.
9
Industry Assets Rise While Supply Declines
Sources: FMR, Federal Reserve Board, Treasury Direct, Federal Home Loan Bank, Freddie Mac, Fannie Mae and iMoneyNet as of 12/31/12
Taxable Money Market Fund Assets vs. Taxable Investible Universe
Treasury Bills
Agency Discount Notes
Total Commercial Paper
Industry MMF Assets
(In
dex
: S
ept
2010
= 1
00)
For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
NCCMT Portfolios
© 2013 FMR LLC. All rights reserved.
Portfolio diversification is presented to illustrate examples of the securities that each fundhas bought and may not be representative of a fund’s current or future investments. Each fund’s investments may change at any time. Percentages may not add up to 100 due to rounding.Source: FMR as of 12/31/12
11
Fund Composition
NCCMT CASH PORTFOLIO
December 31, 2012 December 31, 2011
For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved.
11%
19%
4%
12%
3%8%
4%
37%
2% 10%
5%
22%
2%
14%
11%
33%
2%
North American Banks
Asian/Australian Banks
Euro Zone
Nordic/Swiss Banks
UK Banks
Asset Backed CP
Other Corp/VRDN
Government
Finance Companies
Fund Characteristics
Weighted Average Maturity (WAM) 51 Days
Weighted Average Life (WAL) 80 Days
7-Day Net Yield 0.07%
1-Year Return 0.06%
Fund Characteristics
Weighted Average Maturity (WAM) 51 Days
Weighted Average Life (WAL) 56 Days
7-Day Net Yield 0.07 %
1-Year Return 0.07%
12
Foreign Bank Exposure
Source: FMR as of 12/31/12
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
FOREIGN BANK HOLDINGS: NCCMT CASH PORTFOLIO
13
Maturity Distribution
Source: FMR as of 12/31/12
NCCMT CASH PORTFOLIO FOREIGN BANK MATURITY SCHEDULE
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
*
> 7
Mon
ths
Portfolio diversification is presented to illustrate examples of the securities that each fundhas bought and may not be representative of a fund’s current or future investments. Each fund’s investments may change at any time. Percentages may not add up to 100 due to rounding.Source: FMR as of 12/31/12
14
Fund CompositionNCCMT TERM PORTFOLIO
December 31, 2012 December 31, 2011
For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved.
2%
13%
12%
29%6%
22%
4%
8%4%
North American Banks
Asian/Australian Banks
Euro Zone
Nordic/Swiss Banks
UK Banks
Asset Backed CP
Other Corp/VRDN
Government
Finance Companies
4%
11%
26%
25%
13%
17%
4%
Fund Characteristics
Weighted Average Maturity (WAM) 65 Days
1-Year Return 0.24%
Fund Characteristics
Weighted Average Maturity (WAM) 73 Days
1-Year Return 0.05%
15
Foreign Bank Exposure
Source: FMR as of 12/31/12
FOREIGN BANK HOLDINGS: NCCMT TERM PORTFOLIO
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
16
Maturity Distribution
Source: FMR as of 12/31/12
NCCMT TERM PORTFOLIO FOREIGN BANK MATURITY SCHEDULE
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
17
Fund Maturities
Source: FMR as of 12/31/12
Term P
ortfo
lio O
AD
For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved.
Dec-1
1
Jan-
12
Jan-
12
Feb-1
2
Feb-1
2
Feb-1
2
Mar
-12
Mar
-12
Apr-1
2
Apr-1
2
Apr-1
2
May
-12
May
-12
Jun-
12
Jun-
12
Jun-
12
Jul-1
2
Jul-1
2
Aug-1
2
Aug-1
2
Aug-1
2
Sep-1
2
Sep-1
2
Oct-1
2
Oct-1
2
Oct-1
2
Nov-1
2
Nov-1
2
Nov-1
2
Dec-1
2
Dec-1
230
45
60
75
90
0.10
0.13
0.16
0.19
0.22
0.25
Cash Portfolio WAM Term Portfolio OAD
Cas
h P
ort
foli
o W
AM
1st Quarter Investment Strategy and Outlook
Investment Strategy• Focus on highest quality issuers, maintaining high degree of liquidity• Maintain flexibility within portfolios amid market volatility stemming from the Eurozone and debt
ceiling negotiations– Limit eurozone exposure to national champions in core countries– Limit issuer maturity tenors and credits to reflect fundamental and macro risks
Outlook• Europe will remain a source of potential volatility
– Sovereign fiscal imbalances may lead to potential ECB actions– Potential for additional ratings actions
• US outlook improved but will continue to be tested– Federal Reserve’s open-ended bond purchases aimed to stimulate job market – Potential volatility to arise from sequester and debt ceiling negotiations
• Federal Reserve and European Central Bank are expected to maintain interest rates at extraordinarily low levels to encourage economic growth
– Supply dynamics could ease rates lower in the months ahead • Additional regulatory reform remains under consideration
– FSOC– SEC
18
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
For Institutional Client Use Only
Regulatory Reform Update
© 2013 FMR LLC. All rights reserved.
SEC Staff Recommendations Rejected, Now Revisited
Floating NAV• Which funds will be covered – Treasury / Gov't / Muni vs. General Purpose?• Could funds be allowed to use amortized cost accounting for some instruments?
Combination of Capital and Redemption Restrictions• Capital – size, structure or source not clear
– Size – expected at less than 50 bps with some asset types excluded– Structure – SEC likely to allow flexibility– Source – Shareholders, fund sponsor or outside investors
• Redemption restriction could take several forms– Holdback on all trades of 3% for 30 days– Minimum balance requirement
Combination of Capital, Liquidity Fees and Redemption Restrictions– Capital requirements– Liquidity fees– Temporary gates on redemption
20 For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved© 2013 FMR LLC. All rights reserved.
FSOC RecommendationsComment Period Extended to February 15th
Alternative 1: Floating NAV• Which funds will be covered – Treasury / Gov't / Muni vs. General Purpose?• Could funds be allowed to use amortized cost accounting for some instruments?
Alternative 2: Stable NAV with capital and redemption restrictions• Capital – NAV buffer of 1%• Minimum balance at risk ( MBR)– Requirement to holdback 3% of a shareholder' s highest
account value in excess of $ 100, 000 during the previous 30 days
Alternative 3: Stable NAV with higher capital requirement and “other measures”
– NAV buffer of 3%– Other measures – higher diversification, increased liquidity, and/or more disclosure
21 For Institutional Client Use Only
© 2013 FMR LLC. All rights reserved© 2013 FMR LLC. All rights reserved.
22
Important Information
Not FDIC insured. May lose value. No bank guarantee.
Not NCUA or NCUSIF insured. May lose value. No credit union guarantee.
Lipper Analytical Services, Inc., is a nationally recognized organization that ranks the performance of mutual funds.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such 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.
Past performance is no guarantee of future results. Investment return will fluctuate, therefore you may have a gain or loss when you sell shares.
Diversification does not ensure a profit or guarantee against a loss.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Interest rate increases can cause the price of money market securities to decrease.
Before investing, have your client consider the funds’ investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Have your client read it carefully.
For Institutional Investor Use only.
Fidelity Investments & Pyramid Design is a registered service mark of FMR LLC.
Fidelity Investments Institutional Services Company, Inc.,500 Salem Street, Smithfield, RI 02917
© 2013 FMR LLC. All rights reserved.
For Institutional Client Use Only
641015.1.0
Top Related