Fidelity Investment Managers: All-terrain investing

November 2010

Objectives of the session

Where are we in the economic cycle? What are the issues of the day? Where next? What are the implications for asset allocation?

FIDELITY INVESTMENT MANAGERS

Which asset class will outperform over the next 12 months?

A. Equity B. Fixed Income C. Other

FIDELITY INVESTMENT MANAGERS

Where are we in the economic cycle?

Inflation
Rate hikes

Growth (vs. Trend)

BONDS

Overheat
COMMODITIES STOCKS`

Stagflation
CASH

Reflation
Rate cuts

Recovery

Jan 2001
July 2008 May 2010

Mar 2003
Mar 2009

Mar 2004
Aug 2009

July 2007
...

July 2008
May 2010

Source: Fidelity as at September 2010. For illustrative purposes only. This represents the opinion of the portfolio manager.

FIDELITY INVESTMENT MANAGERS

The Investment Clock

INFLATION RISES GROWTH MOVES BELOW TREND

Source: Fidelity as at September 2010. For illustrative purposes only. This represents the opinion of the portfolio manager.

FIDELITY INVESTMENT MANAGERS

GROWTH MOVES ABOVE TREND

RECOVERY

OVERHEAT

REFLATION

STAGFLATION

INFLATION FALLS

Lead indicators are weak

Global Growth Scorecard and G7 real GDP growth Global Growth Scorecard level

4
3 2 1 0 -1 -2 -3 -4 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Growth Scorecard G7 real GDP growth YOY% (RHS)

5 4 3 2 1 0 -1 -2 -3 -4 -5 -6

GDP %

Source: Datastream, global growth scorecard to Q3 2010, G7 GDP to Q1 2010. Note: the Lead Indicator (global growth score) is a diffusion index taking into account central banks stance, OECD leading indicators, business confidence and consensus GDP forecasts. It is pushed forward 6 months on this chart. This represents the opinion of the portfolio manager.

FIDELITY INVESTMENT MANAGERS

Downswings in even numbered years

OECD Lead Indicator and Stocks vs. Bonds 160 140 Equity/Bonds Ratio 120 100 80 60 Odd years have been upswings Even years have been downswings 01 02 03 04 05 06 07 08 09 10 11 15 10 5 0 -5 -10 -15 OECD lead indicator%

50

98

99

00

-20

OECD lead indicator, 6m % change Equity/Bonds Ratio (MSCI AC World index vs. JPM Global Government Bond index)

Source: Datastream, Equity/Bonds ratio to 09/09/2010, OECD Lead Indicator to 15/06/2010. Note: This represents the opinion of the portfolio manager.

FIDELITY INVESTMENT MANAGERS

Odd numbered years have been much better!

MSCI All Country World Stock Index 300

Index (USD)

250 200 150 100 50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

All years

Even years

Odd years

Since January 1998

Global Stocks

p.a.

All years 58% 3.8%

Even years -35% -3.4%

Odd years 143% 7.4%

Source: Datastream, MSCI AC World Index (Total Return) to 31/05/2010. Note: This represents the opinion of the portfolio manager.

FIDELITY INVESTMENT MANAGERS

Why a slowdown isnt the end of the world

enormous spare capacity

no inflation threat

central banks will provide stimulus

FIDELITY INVESTMENT MANAGERS

In the next 12 months, where do you see the inflation rate heading?
A. Upwards B. Not much change C. Downwards

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FIDELITY INVESTMENT MANAGERS

Enormous spare capacity

G7 Core CPI and OECD Output Gap estimate

3% drop

5% drop

8% drop

4% drop

2% drop

15 Core CPI % 10 5 0 Output Gap % -5 3 0 output gap 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 -5 -7

Core CPI

Source: Datastream. Output Gap to Q3 2010, US Core CPI to Q2 2010. OECD: Organisation for Economic Co-operation and Development. Core CPI: Consumer Price Index ex Food and Energy.

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FIDELITY INVESTMENT MANAGERS

Is there really an inflationary threat?

6 5 4

Inflation ex VAT drops from 3.1% to just 1.3%!

6 5 4

3
2 1 0
Mar-04
Mar-03 Mar-05 Mar-06 Sep-03 Sep-04 Sep-05 Sep-06 Mar-07 Sep-02 Sep-07 Mar-08 Sep-08 Sep-00 Sep-01 Sep-09 Sep-10 Mar-01

3
2 1 0
Mar-09
Mar-02 Mar-10

UK CPI-harmonised European union basis

UK CPI-CT index: All items (at constant tax rates)

Source: Datastream, data to 15/08/2010

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FIDELITY INVESTMENT MANAGERS

Central banks will provide stimulus

13

FIDELITY INVESTMENT MANAGERS

Current asset allocation positioning

Underweight Equities Property Commodities

Neutral

Overweight

Bonds
Cash

Source: Fidelity as at end September 2010. The current allocation is referred to Fidelity Multi Asset Strategic Fund. Neutral: same weight as benchmark. Benchmark:10.0% DJ - UBS Commodity Ind TR; 15.0% FTSE All Share (NUK); 10.0% GBP 1W LIBID; 40.0% BofA ML Ster Lg Cap (NUK); 20.0% MSCI AC Wrld Ind (NUK); 5.0% EPRA/NAREIT Dev (G)

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FIDELITY INVESTMENT MANAGERS

Volatility likely to resolve to the upside

Comparing recent markets with 2003-04 110 Indexes rebased with peak to 100 100 90 80 70 S&P around 2003 110 Indexes rebased with peak to 100 100 90 80 70 S&P rebased now

60
50

60
50

40

2006

2007

2008

2009

2010

2011

2012

2013

40

Source: Datastream. S&P 500 to 09/09/2010, data rebased to have the maximum index level at 100. S&P 500 in 2003 has been graphically shifted to have its maximum at 100.

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FIDELITY INVESTMENT MANAGERS

as Reflation takes effect

INFLATION RISES GROWTH MOVES BELOW TREND

Source: Fidelity as at September 2010. For illustrative purposes only. This represents the opinion of the portfolio manager.

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FIDELITY INVESTMENT MANAGERS

GROWTH MOVES ABOVE TREND

RECOVERY

OVERHEAT

REFLATION

STAGFLATION

INFLATION FALLS

Better times to come

risks of double-dip rising but inflation is not a risk defensively positioned for now but will look for buying opportunities as additional stimulus takes effect flexible multi-asset approach ideal in a world of short, volatile economic cycles

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FIDELITY INVESTMENT MANAGERS

Fidelity Multi Asset Strategic Fund

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FIDELITY INVESTMENT MANAGERS

Dynamically adjusting between asset classes

Recovery
20 15 10 5 0 -5 -10 -15 -20 Cash

Overheat

Stagflation

Reflation

Recovery

Overheat

Reflation

Asset Class Bet Sizes

2007

2008

2009

2010

Bonds

Commodities

Real Estate

Equities

Source: Fidelity, end September 2010. Fund launch date: 22.01.07

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FIDELITY INVESTMENT MANAGERS

97% of competitors beaten since launch

Performance since launch

125 120 115 110 105 100 95 90 85 80 75 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10

Fund 22.6% Fidelity Multi Asset Strategic Fund Sector 4.5% IMA Cautious Managed Sector Average

1 year Fidelity Multi Asset Strategic Fund Quartile rank % peer group beaten 9.4% 2 69%

2 years 26.0% 1 91%

3 years 20.2 1 97%

Since launch 22.6% 1 97%

Source of performance: Morningstar from 01.02.2007 To 30.09.2010 on bid-bid basis with net income reinvested. Fund launched 22.01.2007. Peer group is IMA Cautious Managed sector.

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FIDELITY INVESTMENT MANAGERS

Outstanding risk-adjusted performance

3 year risk/return of OBSR rated funds in the IMA Cautious Managed Sector
25 20 15 Return (%) 10
JPM Cautious Ttl Rtn Fidelity Multi Asset Strategic Henderson MM Dist Jupiter Merlin Income Portfolio M&G Cautious Multi Asset Henderson MM Inc & Growth Inv. Perp Distribution Investec Cautious Mngd Threadneedle Equity and Bond Aviva Inv FoF Cautious

5 0 -5

Gartmore Cautious Managed IMA Cautious Managed Sector Average

AXA Distribution Aberdn M-Mgr Cauts Mgd Ptf

-10 -15 4 6 8 10 Ann. Volatility 12

Aberdn M-Mgr Mul Asst Dist

14

16

Source: Morningstar Workstation. Basis: bid-bid, net income reinvested at UK basic rate of tax to 30.09.10. Note, Thames River Cautious Mngd, Thames River Distribution and SWIP MM Diversity have OBSR ratings but do not appear since they do not have 3 year performance records.

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FIDELITY INVESTMENT MANAGERS

In summary

Volatility will remain, so diversification across a range of asset classes is key; but its essential to adjust the asset allocation across the economic cycle
Fidelity Multi Asset Strategic Fund has proven performance through the cycle since launch over three years ago 97% of competitors beaten

Competitively priced: AMC of 1.25%, TER of 1.71%

The right all-terrain fund to navigate todays economic environment

Morningstar RatingTM

Source of performance: Morningstar from 01.02.07 to 30.09.10 on bid-bid basis with net income reinvested. Fund launched 22.01.07. Peer group is IMA Cautious Managed sector. Copyright 2010 Morningstar, Inc. All Rights Reserved. Morningstar Rating as of 30.09.10 in the Sterling Cautious Balanced Category.

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FIDELITY INVESTMENT MANAGERS

Compliance information

This presentation is for Investment Professionals only, and should not be relied upon by private investors Annualised growth rates, total return, sector median performance and ranks Data Source - 2010 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and(3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

FIL Limited, established in Bermuda, and its subsidiaries are commonly referred to as Fidelity Investment Managers. Fidelity, Fidelity Investment Managers, and the globe logo are trademarks of FIL Limited.
Due to the greater possibility of default, an investment in corporate bonds is generally less secure than an investment in Government bonds. Default risk is based on the issuer's ability to make interest payments and to repay the loan at maturity. Default risk may therefore vary between different government issuers as well as between different corporate issuers. This document may not be reproduced or circulated without prior permission. No statements or representations made in this document are legally binding on Fidelity or the recipient. Issued by FIL Investments International, authorised and regulated in the UK by the Financial Services Authority. SSO2499/0411
23 FIDELITY INVESTMENT MANAGERS

Multi Asset offers a compelling long-term risk/return profile

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 YTD 16.2%

3 year Ann. Vol. 29.0%

42.2%

5.0%

13.8%

26.5 %

28.6 %

35.7 %

24.9 %

14.3 %

4.8 %

23.1%

2
3 4 5 6

22.8%
9.5% 7.3% 5.8% -6.0%

4.7%
-1.3% -4.3% -14.3 -17.4%

9.6%
3.8% -4.3% -7.1% -27.3%

20.3 %
11.8 % 11.5 % 4.0 % 3.5 %

8.2 %
7.5 % 6.8 % 4.3 % 1.8 %

29.0 %
23.0 % 16.6 % 8.3 % 4.6 %

5.8 %
4.6 % 4.5 % 0.7 % -10.5 %

7.7 %
5.5 % 5.3 % 3.3 % -8.5 %

4.3 %
-8.4 % -10.9 % -17.4 % -27.6 %

16.4%
11.4% 5.9% 3.7% 0.6%

10.5%
7.8% 5.6% 3.4% 0.3%

20.6%
19.2% 10.4% 6.4% 0.7%

Bonds

Cash

Global Stocks

Commodities

Property

Multi-Asset Mix

Source: Morningstar and Fidelity from 01.01.00 to 30.09.10. Data shows ranking of annual returns for each asset class and the multi-asset mix. Cash GBP 1W LIBID, Global Stocks MSCI World - TOT RETURN IND (), Property - FTSE EPRA/NAREIT DEVELOPED $ - TOT RETURN IND (~ ), Commodities - DJ UBS-Future Commodity Ind TR - RETURN IND. (OFCL)( ), Bonds - ML broad market IND TR (). Multi-Asset Mix = Fidelity MASF Benchmark (difference: bonds: ML BROAD MARKET () - TOT RETURN IND, in place of ML Sterling Lrg Cap Index).

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FIDELITY INVESTMENT MANAGERS

Multi-level diversification asset class, industry sector and geographical region

25

actively taking sector positions

Greater opportunity to enhance returns by

bonds, equities, property and commodities

Five asset classes - cash,

Under-weight Over-weight
10.0 15.0 20.0 -5.0 -20.0 -15.0 -10.0 0.0 5.0

6.2.07 16.3.07 30.3.07 18.4.07 9.5.07 22.6.07 12.7.07 22.8.07 20.9.07 22.10.07 5.11.07 9.11.07 12.12.07 10.1.08 24.1.08 19.2.08 18.3.08 11.4.08 15.5.08 22.5.08 20.6.08 14.7.08 24.7.08 7.8.08 25.9.08 3.10.08 14.10.08 14.11.08 19.12.08 31.12.08 14.1.09 17.2.09 27.3.09 30.4.09 7.5.09 4.6.09 9.7.09 18.8.09 24.9.09 16.10.09 23.11.09 15.12.09 31.01.10 05.02.10 10.03.10 27.04.10 14.05.10 28.05.10

Under-weight
-6.0 -4.0 -2.0

Returns derived from both income and growth assets

Under-weight
-8.0 -6.0 -4.0

Over-weight
0.0 2.0 4.0 6.0

Truly global remit provides even greater diversification

FIDELITY INVESTMENT MANAGERS

Growth assets

Store of value

Over-weight

Sterling Cash

UK & Global Equities

Commodities

0.0

2.0

4.0

6.0

8.0

Asset class

UK Bonds

Property

-2.0 Asset class bet sizes

8.0

5%

10%

35%

10%

40%

Equity regions bet sizes

Benchmark weight

Fidelity Multi Asset Strategic Fund: benchmark and range

Trade dates

6.2.07 16.3.07 30.3.07 18.4.07 9.5.07 22.6.07 12.7.07 22.8.07 20.9.07 22.10.07 5.11.07 9.11.07 12.12.07 10.1.08 24.1.08 19.2.08 18.3.08 11.4.08 15.5.08 22.5.08 20.6.08 14.7.08 24.7.08 7.8.08 25.9.08 3.10.08 14.10.08 14.11.08 19.12.08 31.12.08 14.1.09 17.2.09 27.3.09 30.4.09 7.5.09 4.6.09 9.7.09 18.8.09 24.9.09 16.10.09 23.11.09 15.12.09 31.01.10 05.02.10 10.03.10 27.04.10 14.05.10 28.05.10

Cash Global Bonds Commodities Real Estate Equities

6.2.07 16.3.07 30.3.07 18.4.07 9.5.07 22.6.07 12.7.07 22.8.07 20.9.07 22.10.07 5.11.07 9.11.07 12.12.07 10.1.08 24.1.08 19.2.08 18.3.08 11.4.08 15.5.08 22.5.08 20.6.08 14.7.08 24.7.08 7.8.08 25.9.08 3.10.08 14.10.08 14.11.08 19.12.08 31.12.08 14.1.09 17.2.09 27.3.09 30.4.09 7.5.09 4.6.09 9.7.09 18.8.09 24.9.09 16.10.09 23.11.09 15.12.09 31.01.10 05.02.10 10.03.10 27.04.10 14.05.10 28.05.10

Emerging sizes Sector bet Mkts PB x Jp

Trad e date s
Trade dates

Japan UK Europe x UK N. America

Utilities Telecoms Technology Financials Health Care Consumer Industrials

Guidance range

25-45%

30-50%

0-20%

0-15%

0-20%

Delivering performance at each phase of the cycle

Performance since launch

125 120 115 110 105 100 95 90 85 80 75 Feb-07 Aug-07 Feb-08 Aug-08
Phase: Stagflation Jul 07Jul 08

Fund 22.6% Fidelity Multi Asset Strategic Fund Sector 4.5% IMA Cautious Managed Sector Average

Feb-09
Phase: Reflation

Aug-09

Feb-10
Mar 09Aug 09

Aug-10
Phase: Overheat Aug 09May 10 Phase: Reflation May 10-Sep 10

Phase: Overheat Jan 07Jul 07

Phase: Recovery

Jul 08Mar 09

Fund Performance Sector average

1.1% 0.5%

-0.6% -6.2%

-6.3% -14.1%

15.5% 16.2%

9.3% 6.5%

5.0% 5.2%

Source of performance: Morningstar from 01.02.07 to 30.09.10 on bid-bid basis with net income reinvested. Fund launched 22.01.07. Peer group is IMA Cautious Managed sector. Note: This definition of the economic cycle phases represents the opinion of the portfolio manager, based on his proprietary research as at October 2010.

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FIDELITY INVESTMENT MANAGERS