43
Capital Markets Review Dated October 31, 2008 ► Produced by FIIS Investment Consulting Services For Investors NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Capital Markets Review
Dated October 31, 2008►
Produced by FIIS Investment Consulting Services
For Investors
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
22
Globalization and the Interdependence of Global Economies : The Virtuous Cycle
US Bond Market
US Housing Market
US Consumer
China IndiaEmerging
Asia
Commodity BasedEconomies
(e.g. Brazil, Canada, Russia)“Machine Tool” Economies
(e.g. Japan, Germany)
Low interest rates support the housing market
Houses acted as an ATM for the consumer
Consumer Goods are increasingly imported
Factories need to be built and supplied
Proceeds flow back into the US Bond market
3
Two Vicious Cycles
Falling Housing Prices
Reduced Availability of Credit
Deleveraging Balance Sheets
Loan Portfolio Losses
Reduced Consumer Spending
Reduced Revenues of Consumer Oriented
Businesses
Lay-Offs
Financials Consumer
4
Government Actions to Stem Financial and Housing Crisis
Liquidity & Crisis Aversion
Support for Homeowners & Consumers
Re-capitalization of Financial System
Fed auction facilities Tax rebate ($100 B)
Fed repo programs FHA expansion
Fed discount window access GSE expansion & assistance
Bear Stearns financing Voluntary rate freeze plan
AIG takeover Other housing provisions
Foreign Exchange Swaps
Fed rate cuts
GSE Conservatorship
Direct
Indirect
LEGEND
Troubled Asset Relief Program (TARP)
Direct Injection of Equity
Guarantee of MMarket Funds
Quantitative Easing
Source: FMRCo (MARE) as of 9/30/08.
5
World responding!
EasingNeutralCzech Republic
EasingNeutralTaiwan
EasingNeutralAustralia
EasingTighteningChina
NeutralTighteningEuro-zone
NeutralNeutralUnited States
Monetary Policy
September 2008
Monetary Policy
July 2008
EasingNeutralCzech Republic
EasingNeutralTaiwan
EasingNeutralAustralia
EasingTighteningChina
NeutralTighteningEuro-zone
NeutralNeutralUnited States
Monetary Policy
September 2008
Monetary Policy
July 2008
Source: FMRCo (MARE) as of 9/30/08.
6
Federal Reserve Balance Sheet
7
U.S Financial Landscape Changed Forever
Investment Banks
Retail Banks
Insurance
GSEs
Converted to bank holding companyGoldman Sachs
Converted to bank holding companyMorgan Stanley
Acquired by Bank of AmericaMerrill Lynch
BankruptcyLehman Brothers
Government intervened; sold*Wachovia
Bankruptcy & sold to JPMorganWashington Mutual
BankruptcyIndyMac Bank
Government seizureAmerican International Group
Government seizureFreddie Mac
Government seizureFannie Mae
Q3 EventInstitution Name
Investment Banks
Retail Banks
Insurance
GSEs
Converted to bank holding companyGoldman Sachs
Converted to bank holding companyMorgan Stanley
Acquired by Bank of AmericaMerrill Lynch
BankruptcyLehman Brothers
Government intervened; sold*Wachovia
Bankruptcy & sold to JPMorganWashington Mutual
BankruptcyIndyMac Bank
Government seizureAmerican International Group
Government seizureFreddie Mac
Government seizureFannie Mae
Q3 EventInstitution Name
*Initial announcement during Q3 was planned sale to Citigroup; subsequent to quarter-end, sold to Wells Fargo, and Citigroup contested the sale via litigation.Source: FMRCo (MARE) as of 10/3/08.
88
99
TED Spread – Proxy for Bank Risk Aversion
Source: Factset
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08-1%
0%
1%
2%
3%
4%
5%
2.00
TED Spread
3 Month LIBOR minus 3 Month T-Bill 11/7/2008Average TED Spread
10
Borrowers and Lenders - Liquidity
Source: Federal Reserve Board, Haver Analytics, FMRCo (MARE) as of 9/30/08.
1111
US Housing: The Long Road Back
'90 '92 '94 '96 '98 '00 '02 '04 '06 '0850
100
150
200
250
300
350Home Prices and Inflation (Indexed to 100)
US House Prices, S&P Case-Shiller 8/29/2008CPI 9/30/2008
Source: Factset
1212
US Housing: The Long Road Back
'00 '02 '04 '06 '083
4
5
6
7
8
9
10
11
12
Mo
nth
s S
up
ply
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-17.72
9.40
US Housing
Change in Home Prices, Year over Year (Left Axis) 8/29/2008Months Supply of Homes on the Market (Right Axis) 9/30/2008
Source: Factset
1313
The Consumer: Real Spending is Particularly Weak
Source: Factset
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08-2%
0%
2%
4%
6%
8%
10%
2008StimulusChecks
-0.39
3.78
Consumer Spending (PCE)
YOY Change in Personal Outlays 9/30/2008YOY Change in Real Personal Outlays 9/30/2008Recession Periods - United States
1414
Employment: Recession Levels
'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08-400
-200
0
200
400
600
Th
ou
san
ds
-240.00
Employment
Nonfarm Payrolls 10/31/2008Recession Periods - United States
Source: Factset
1515
Inflation: Problematic at Current LevelsFed is Banking on Economic Drag
Source: Factset
'84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08-4%
-2%
0%
2%
4%
6%
8%
10%
12%
4.94
8.68
CPI & PPI
YOY Change in Consumer Price Index - All Items 9/30/2008YOY Change in Producer Price Index 9/30/2008
16
NBER Key Recession Indicators
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07-10%
-5%
0%
5%
10%
YOY Change in Industrial Production 9/30/2008Recession Periods - United States
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07-5%
0%
5%
10%
YOY Change in Personal Income 9/30/2008Recession Periods - United States
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07-10%
-5%
0%
5%
10%
YOY Change in Manufacturing and Trade Sales 9/30/2008Recession Periods - United States
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07-2%
-1%
0%
1%
2%
3%
4%
YOY Change in Non-Farm Payrolls 10/31/2008Recession Periods - United States
Source: Factset
1717
“History doesn’t always repeat itself, but it does rhyme” Mark Twain
18
Stock Market: Worst-Performing 10-year Periods Have Preceded Vastly Better Returns
S&P 500 Average Annual 10-Year Performance(1935-2008)
-10
-5
0
5
10
15
20
25
De
c-3
5
De
c-3
9
De
c-4
3
De
c-4
7
De
c-5
1
De
c-5
5
De
c-5
9
De
c-6
3
De
c-6
7
De
c-7
1
De
c-7
5
De
c-7
9
De
c-8
3
De
c-8
7
De
c-9
1
De
c-9
5
De
c-9
9
De
c-0
3
De
c-0
7
To
tal
Re
turn
(%
)
Source: Ibbotson, FMRCo (MARE) as of 9/30/2008. Past performance is no guarantee of future results. You cannot invest directly in an index. Please refer to the appendix for important index information.
19
Fleeing to Safety Can Be Costly For Long-Term Investors
Past performance is no guarantee of future results. It is not possible to invest directly in an index. Source: Lexis Nexis, Strategic Insight, FMRCo (MARE) as of 8/31/2008.
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
Ja
n-9
8
Ju
l-9
8
Ja
n-9
9
Ju
l-9
9
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
S&
P 5
00
Ind
ex
Le
ve
l
Money Markets % of All Mutual Funds
S&P 500 Index
15%
20%
25%
30%
35%
Jan
-98
Jul-
98
Jan
-99
Jul-
99
Jan
-00
Jul-
00
Jan
-01
Jul-
01
Jan
-02
Jul-
02
Jan
-03
Jul-
03
Jan
-04
Jul-
04
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08Mo
ne
y M
ark
et
As
se
ts %
of
All
Mu
tua
l Fu
nd
As
se
ts
0
75
Peaks in money-market ownership coincided with the stock market trough
S&P 500, Money Markets Assets % of All Mutual Fund Assets (1998-2008)
2020
Market Volatility at Historic Highs
Source: Factset
'92 '94 '96 '98 '00 '02 '04 '06 '080
10
20
30
40
50
60
70
80
90
Ind
ex
Le
ve
l
56.10
VIX
CBOE Market Volatility Index 11/7/2008
2121
“I want my bubble back.”
22
Historical U.S. Stock Bear Markets (1926 - 2008)
29%Yes-20%3 10/11/19907/16/1990
-39%
-22%
-22%
-27%
-28%
-30%
-34%
-36%
-43%
-48%
-49%
-60%
-86%
Bear Market Magnitude
-
Yes
No
Yes
No
Yes
No
Yes
?
Yes
Yes
Yes
Yes
Recession During Bear?
46%22Average (excluding 07-08):
31%14 10/22/19578/2/1956
33%8 10/7/19662/9/1966
58%21 8/12/198211/28/1980
33%6 6/26/196212/11/1961
42%37 6/13/19495/29/1946
23%4 12/4/19878/25/1987
44%18 5/26/197011/29/1968
?12 10/10/200810/9/2007
38%21 10/3/19741/11/1973
34%31 10/9/20023/24/2000
59%61 4/28/19423/10/1937
124%34 7/8/19329/3/1929
1-Yr Return After Trough
Duration (Months)TroughPeak
29%Yes-20%3 10/11/19907/16/1990
-39%
-22%
-22%
-27%
-28%
-30%
-34%
-36%
-43%
-48%
-49%
-60%
-86%
Bear Market Magnitude
-
Yes
No
Yes
No
Yes
No
Yes
?
Yes
Yes
Yes
Yes
Recession During Bear?
46%22Average (excluding 07-08):
31%14 10/22/19578/2/1956
33%8 10/7/19662/9/1966
58%21 8/12/198211/28/1980
33%6 6/26/196212/11/1961
42%37 6/13/19495/29/1946
23%4 12/4/19878/25/1987
44%18 5/26/197011/29/1968
?12 10/10/200810/9/2007
38%21 10/3/19741/11/1973
34%31 10/9/20023/24/2000
59%61 4/28/19423/10/1937
124%34 7/8/19329/3/1929
1-Yr Return After Trough
Duration (Months)TroughPeak
Historical U.S. Stock Bear Markets (1926-2008)
Source: ISI, Bloomberg, National Bureau of Economic Research, Haver Analytics, FMRCo (MARE) as of 10/20/2008. Recessions are defined by the National Bureau of Economic Research. [i] – All stock returns represented by S&P 500 Index returns.Past performance is no guarantee of future results. You cannot invest directly in an index. The S&P 500®, a market capitalization-weighted index of common stocks, is a registered service mark of the McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity Distributors Corporation.
23
Best U.S. Stock Returns Have Been Born Out of Troubled Times
Most Dramatic Fed Tightening in Past 20 Years251%Dec 1994
Worst Recession in Past 25 Years267%July 1982
Great Depression367%May 1932
Coincident EventSubsequent
5-Year ReturnDate
Three Best Periods to Enter the U.S. Stock Market Since 1926
Most Dramatic Fed Tightening in Past 20 Years251%Dec 1994
Worst Recession in Past 25 Years267%July 1982
Great Depression367%May 1932
Coincident EventSubsequent
5-Year ReturnDate
Three Best Periods to Enter the U.S. Stock Market Since 1926
U.S. stock market returns represented by total return of S&P 500® Index. Past performance is no guarantee of future results. It is not possible to invest in an index.Three dates determined by best five-year market return subsequent to the month shown. Sources: Ibbotson, FMRCo (MARE) as of September 30, 2008.
24
The Benefits of Diversification
Diversification does not ensure a profit or guarantee against loss.U.S. Mid-Cap – Russell MidCap Index; U.S. Small-Cap – Russell 2000 Index; Foreign Developed Country – MSCI EAFE Index; Emerging Markets – MSCI Emerging Markets Index;Investment-Grade Bonds – Lehman Brothers Aggregate Bond Index; Diversified Total Portfolio – Hypothetical portfolio composed of 60% U.S. stock portfolio (80% S&P 500, 15% U.S. Mid-Cap, 5% U.S. Small-Cap), 15% international stocks (75% Foreign Developed Country, 25% Emerging Markets), and 25% Investment-Grade Bonds. Source: Ibbotson, FMRCo (MARE) as of 6/30/08.
176%13%Emerging Markets
35%4%Diversified Total Portfolio
68%6%Investment-Grade Bonds
39%4%Foreign Developed Country
52%5%U.S. Small-Cap
83%7%U.S. Mid-Cap
1%0%U.S. Large-Cap
Total Return Over Period
Average Annual Total Return
176%13%Emerging Markets
35%4%Diversified Total Portfolio
68%6%Investment-Grade Bonds
39%4%Foreign Developed Country
52%5%U.S. Small-Cap
83%7%U.S. Mid-Cap
1%0%U.S. Large-Cap
Total Return Over Period
Average Annual Total Return
Jan 2000 – June 2008
25
Missing Only a Few of the Stock Market’s Best Days Can Erode Long-Term Returns
The hypothetical example assumes an investment that tracks the returns of the S&P 500® Index and includes dividend reinvestment but does not reflect the impact of taxes which would lower these figures. There is volatility in the market and a sale at any point in time could result in a gain or loss. Your own investment experience will differ, including the possibility of losing money. You cannot invest directly in an index. The S&P 500®, a market capitalization-weighted index of common stocks, is a registered service mark of the McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity Distributors Corporation. Source: FMRCo (MARE) as of 10/31/08.
Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA 02109. 510459.1.0
Hypothetical Growth of $10,000 Invested in the S&P 500® from Jan 1, 1980 – Oct 31, 2008
($1000s)
$45,703
$104,648
$134,842
$202,730
$22,969
$0
$50,000
$100,000
$150,000
$200,000
$250,000
All Days Missing Best 5Days
Missing Best10 Days
Missing Best30 Days
Missing Best50 Days
Va
lue
of
Inv
es
tme
nt
at
10
/31
/20
08
26
Historical Performance During RecessionsAverage Annual Returns During a Recession (%)
-10
-8
-6
-4
-2
0
2
4
6
8
10
Staples Health Care Utilities Telecom Materials Discretionary Financials Energy Technology Industrials
Source FMRCo 9/30/2008 Sector returns represented by S&P 500 sectors. Please refer to the Appendix for important index information.
27
The Global S-CurveSource: CIA World Factbook, Haver Analytics
Netherlands
Chile
Spain Singapore
Hong Kong
Italy
Sweden
UK
USA
Brazil
India
China
Mexico
Philipines
Japan
South Korea
Iraq
Ireland Norway
Belgium
Portugal
Canada
Australia
France GermanyDenmark
Mali
Zimbabwe
Nigeria
Pakistan
Tunesia
1,000
10,000
100,000
-100 -50 0 50 100 150 200 250 300 350
Years of Economic Development
Per
Capita
GD
P (
2005 U
S$)
The Global S-CurveSource: CIA World Factbook, Haver Analytics.
Bubbles depict per capita oil consumption (2005 barrels per capita per year).
Russia
Tunesia
Pakistan
Nigeria
Zimbabwe
Mali
Denmark
Germany France Australia
Canada
Portugal
Belgium
Norway
Ireland
Iraq
South Korea
Japan
Philipines
Mexico
China
Brazil
USA
UK Sweden Italy
Hong Kong
SingaporeSpain
Chile
Netherlands
India
1,000
10,000
100,000
-100 -50 0 50 100 150 200 250 300 350
Years of Economic Development
Per
Capita
GD
P (
2005 U
S$)
The Global S-CurveSource: CIA World Factbook, Haver Analytics.
Bubbles depict population as of 2005.
Russia
Netherlands
Chile
Spain Singapore
Hong Kong
Italy
Sweden UK
USA
Brazil
India
China
Mexico
Philipines
Japan
South Korea
Iraq
Ireland Norway
Belgium
Portugal
Canada
Australia
France GermanyDenmark
Mali
Zimbabwe
Nigeria
1,000
10,000
100,000
-100 -50 0 50 100 150 200 250 300 350
Years of Economic Development
Per
Capita
GD
P (
2005 U
S$)
The Global S-Curve: Globalization to Continue
2828
Fixed Income Markets: Yield Curve has Steepened
Source: Bloomberg® and FMR Co., as of 9/30/08
Years
-300-250-200-150-100-50
050
100150
0 5 10
in b
p
9/30/08Avg. 1983 - 20079/28/07
Individual quarters since 1983 are in gray
2
Historic Yield Curve Shapes
2929
Fixed Income Markets: Spreads Reaching Extreme Levels
Source: FMR, Factset
88 91 93 96 98 01 03 06 08
0.5%
1%
1.5%
2%
2.5%
3%2.98
Credit Spreads
Yield Spread: Moody's Baa minus Moody's Aaa: 11/7/2008
3030
High Yield and Emerging Market Debt: Risk Aversion Reaching Extremes
Source: Factset
'04 '06 '080
200
400
600
800
1,000
1,200
1,400
1,600
1,800
297.18418.45
655.97
1511.41
Spread vs US 10 Year Treasury
JP Morgan EMBI Global Spread 11/7/2008(AVG) EMBIMerrill Lynch U.S. High Yield Master II Yield to Worst 11/7/2008(AVG) ML US HYM II
3131
Municipal Yield Ratios: Recent Flight to Treasuries
Past performance is not a guarantee of future results. Yield ratio is calculated as the yield to worst of Lehman Bros Municipal Bond benchmarks vs. its Treasury counterpart of the same maturity. Source: Factset
'02 '04 '06 '080.5
1
1.5
2
1.29
1.76
Municipal to Treasury Yield Ratio
Muni Yield divided by Treasury Yield (10Y) 10/31/2008(AVG) 10 Year AverageMuni Yield divided by Treasury Yield (1-2 Y) 10/31/2008(AVG) 1-2 Year Average
3232
Floating Rate at Above Average Spreads
Source: Factset
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08200
220
240
260
280
300
320
340
275.33
Spread over Treasuries
CSFB Leveraged Loan Index, Spread 10/31/2008CSFB Leveraged Loan Index, Average Spread 10/31/2008
Spread over 3 month LIBOR
33
Appendix
34
High Quality Credits – Spread over Treasuries
'06 '07 '080
100
200
300
400
500
600
215.00
255.00
350.00
500.00
Basis Point Spread over Treasuries - 10 Year Maturity
BBB RatedA Rated
AA RatedAAA Rated
Source: Factset
3535
TIPS Break Even Spreads Reflecting Eased Inflation Concerns
Source: Factset
98 02 05 080.5%
1%
1.5%
2%
2.5%
3%
0.88
TIPS Break Even Spreads
10 Yr Tips 11/7/2008
3636
Oil: A Huge Factor in the Global Economy
Source: Factset
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08$0
$20
$40
$60
$80
$100
$120
$140
$160
65
70
75
80
85
90
61.03
85.23
Oil Price and Consumption
World Oil Consumption (million bbl/day) (Right) 6/30/2008WTI Light Crude Spot (Left) 11/7/2008
3737
Commodities: Recent Correction
Source: Factset
'00 '02 '04 '06 '08$0
$25
$50
$75
$100
$125
$150
$175
61.03
Crude Oil
Spot Light Crude 11/7/2008
'00 '02 '04 '06 '08$100
$200
$300
$400
$500
$600
$700
$800
375.50
Corn
Corn Futures 11/7/2008
'00 '02 '04 '06 '080
100
200
300
400
500
300.05
Commodities
Dow Jones - AIG Commodity Spot Index 10/31/2008
'00 '02 '04 '06 '08600
800
1,000
1,200
1,400
1,600
930.99
S&P 500
S&P 500 11/7/2008
3838
Aversion to Risk has Sent Yields Lower
Source: Factset 11-7-2008
6M 2Y 3Y 5Y 10Y 30Y0%
1%
2%
3%
4%
5%
United States Government Bond Yield CurveOne Week Ago One Month Ago One Year Ago Now
3939
Leading Indicators
Source: Factset
11/1/2005 11/2/2006 11/2/2007 11/3/200890
92
94
96
98
100
102
104
106Composite Leading Indicators
Japan 9/30/2008 Euro Area 9/30/2008 UK 9/30/2008 China 8/29/2008USA 9/30/2008
4040
Questions ?Questions ?
4141
Past performance is no guarantee of future results.
Foreign investments, especially those in emerging markets, involve greater risks and may offer greater potential returns than US investments. These risks include the political and economic uncertainties of foreign countries, as well as the risk of currency fluctuations.
Sector investments may involve greater volatility than more broadly diversified investments.
The securities of smaller, less well-known companies may be more volatile than those of larger companies.Lower-quality debt securities involve greater risk of default or price changes due to the credit quality of the issuer.
All indices are unmanaged and assume the reinvestment of all distributions. It is not possible to invest directly in an index.
MSCI/S&P Global Industry Standard is a classification scheme that offers a mean of classifying industry sectors globally so that holdings can be categorized consistently across both domestic and international equity funds.
The Consumer Price Index represents changes in prices of all goods and services purchased for consumption by urban households. Core Consumer Price Index is the consumer price index excluding food and energy.
GDP is the total value of goods and services produced in the US. Real GDP is GDP adjusted for changes in prices.
Leading Economic Indicators are selected economic statistics that have proven valuable as a group in estimating the direction and magnitude of economic change.
Fed Funds rate is the rate of interest on overnight loans of excess reserves among commercial banks.
The S&P 500 Index is a registered service mark of The McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity Distributors Corporation and its affiliates. It is a unmanaged market capitalization-weighted index of common stocks. S&P Sector indices include Technology, Healthcare, Consumer Discretionary, Consumer Staples, Integrated Oils, Other Energy, Materials & Processing, Producer Durables, Autos & Transportation, Financial Services, Utilities and Other
The Russell Top 200 Index®, is an unmanaged index comprised of the largest 200 companies in the Russell 3000 index. The Russell Top 200 Value and Growth indices comprise of value and growth stocks respectively as determined by Frank Russell & Co.
The Russell 1000 Index is an unmanaged index that consists of the largest 1000 companies in the Russell 3000 Index. This index represents the universe of large capitalization stocks from which most active money managers typically select. The Russell 1000 Value and Growth indices comprise of value and growth stocks respectively as determined by Frank Russell & Co.
The Russell MidCap Index is an unmanaged market capitalization weighted index of 800 smallest companies in the Russell 1000 index which represents almost 35% of the total market capitalization. The Russell MidCap Value and Growth indices comprise of value and growth stocks respectively as determined by Frank Russell & Co.
The Russell 2000 Index is an unmanaged market capitalization-weighted index of 2,000 small company stocks. The Russell 2000 Value and Growth indices comprise of value and growth stocks respectively as determined by Frank Russell & Co.
The Russell 3000 Index is an unmanaged index which measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4.6 billion; the median market capitalization was approximately $732 million. The index had a total market capitalization range of approximately $487 billion to $147 million.
4242
Bonds are rated by agencies such as Standard & Poor’s and Moody’s Investor Services with ratings that measure the risk of default.
Bonds rated AAA are considered to be the safest while those rated below BBB are considered to be “high yield” or below investment grade. Intermediate ratings of AA+ or BB- are often used to further differentiate bonds.
JP Morgan Emerging Markets Global Bond Index is a market value weighted index of US dollar denominated Brady bonds, Eurobonds, traded loans, and local market debt instruments issued by emerging market sovereign and quasi-sovereign entities, covering 27 emerging market countries.
Lehman Bros Municipal index is an unmanaged index of all investment grade municipal securities with at least 1 year to maturity.Lehman Brothers Aggregate Bond Index is an unmanaged market value weighted performance benchmark for investment-grade fixed rate debt issues, including government, corporate, asset backed , mortgage backed securities with a maturity of at least 1 year.
Lehman Brothers Credit Index is an unmanaged index composed of all publicly issued, fixed interest rate, nonconvertible, investment grade corporate, asset backed debt with at least 1 year to maturity
The Lehman Brothers TIPS Index is an unmanaged index comprising all US Treasury Inflation Indexed Notes and Bonds having a maturity of at least 1 year.
The Lehman Brothers Treasury Index is an unmanaged index comprising all US Treasury Notes and Bonds having a maturity of at least 1 year.
The Lehman Brothers Government Index is an unmanaged index comprising of the US Treasury & Agency bonds having a maturity of at least 1 year.
The Merrill Lynch High Yield Master II Index is a market value weighted index of corporate bonds publicly issued in the U.S. domestic market that have a rating of less than BBB3 and at least one year remaining term to maturity.
Ibbotson Intermediate Government Bond Index is a market value weighted index of US Government Bonds with maturity of at least 1 year.
The Organization of Economic Development, or OECD, is a multinational agency that monitors economic conditions in developed and developing markets.
30-year treasury and 10 year treasury are a fixed income securities backed by the full faith and credit of the U.S. government and are used as benchmarks for the pricing of various corporate fixed income instruments.
MSCI EAFE® index is a unmanaged market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. As of June, 2000 the index included over 1,600 equity securities of companies domiciled in 22 countries.
The Dow Jones Industrial Average is a unmanaged price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry and are listed on the New York Stock Exchange.
NASDAQ Index® a market capitalization-weighted index that is designed to represent the performance of the National Market System which includes over 5,000 stocks traded only over-the-counter and not on an exchange.
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The S&P 500®, a market capitalization-weighted index of common stocks, is a registered service mark of the McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity Distributors Corporation.
The following is a definition of the S&P 500 sectors: Consumer Discretionary – Companies that tend to be the most sensitive to economic cycles. Consumer Staples – Companies whose businesses are less sensitive to economic cycles. Energy – Companies whose businesses are dominated by either of the following activities: The construction or provision of oil rigs, drilling equipment and other energy-related service and equipment, including seismic data collection. The exploration, production, market, refining and/or transportation of oil and gas products, coal and consumable fuels. Financials – Companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, insurance and investments, and real estate, including REITs. Health Care – Companies in two main industry groups: Health care equipment suppliers, manufacturers, and providers of health care services; and companies involved in research development, production and marketing of pharmaceuticals and biotechnology products. Industrials – Companies whose businesses manufacture and distribute capital goods, provide commercial services and supplies, provide transportation services. Information Technology – Companies in technology software & services, and technology hardware & equipment. Materials – Companies that are engaged in a wide range of commodity-related manufacturing. Telecommunication Services – Companies that provide communications services primarily through a fixed line, cellular, wireless, high bandwidth and/or fiber-optic cable network. Utilities – Companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.
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