Number of Employees Serviced By Fidelity Defined Benefit, Health and Welfare, Stock Plans and HR Services Grew 49 Percent

BOSTON, February 10, 2004 -- Fidelity Investments today announced solid growth in its human resources and benefits outsourcing services, where it added 1,175 new clients and 2.6 million new employees in the corporate and tax-exempt marketplaces in 2003.

Fidelity is providing services to more than 16.6 million employees for benefits and human resources administration, workforce effectiveness, payroll and stock plan services in the U.S. Additionally, through its HR Access acquisition, Fidelity provides HR and payroll applications for about 540 companies and their 12 million employees in Europe.

In its retirement business, Fidelity set record levels of assets managed and administered in employer-sponsored plans. At the end of 2003, FESCo administered $635.4 billion in assets, up 24 percent from 2002, and managed $423.7 billion in assets, up 27 percent from the prior year.

Additionally, the favorable stock markets and contribution levels helped the average 401(k) account balance at the end of 2003 increase to $55,100, from $44,000 at the end of 2002.

"Our fastest growth is coming from benefits and human resources outsourcing, where the number of employees serviced through Fidelity's pension, health and welfare, human resources, payroll and stock plans solutions grew 49 percent last year, compared with 2002," said Peter J. Smail, president, Fidelity Employer Services Company. "Companies continue to make strategic decisions to consolidate benefits administration and now more and more are outsourcing a full range of HR services such as workforce training and development, performance management, and staffing.

"Overall, interest in our newer outsourcing services continues to rise with 67 percent of all requests for proposals last year asking for services beyond defined contribution plans," Smail said. "Nearly one-third of our largest clients today outsource multiple programs to Fidelity, compared to 14 percent five years ago."

Companies selecting Fidelity as an outsourcing provider in the past year include GM and Novartis. Inova Health System was the first tax-exempt organization to hire Fidelity to service its defined contribution, pension, and health and welfare plans.

"Many organizations are realizing that human resources and benefits administration is not a core business for them," Smail said. "They are choosing a full-service provider because they cannot continue to invest in systems and technology in order to offer their employees the latest tools and services."

Total Retirement Outsourcing

Fidelity worked with an increasing number of organizations to bring their defined contribution and pension programs together to help their employees more effectively plan for retirement. The trend toward retirement consolidation contributed to the growth of Fidelity's defined benefit services, which increased the number of employees and retirees serviced by more than 45 percent in 2003, compared with 2002.

"In addition to delivering excellent plan administration, we are bringing together sophisticated tools and education through one comprehensive Website to help employees succeed in planning for and living in retirement," Smail said.

Drivers In Health & Welfare Administration

Clients seeking to improve their efficiencies and transition to one service platform for all of their benefits helped drive growth in the number of employees in health and welfare plans, which more than doubled in 2003, compared with 2002.

"We continued to invest in the Web, adding new functionality and enhancing online decision support tools that streamlined annual enrollment," Smail said. "As a result, 87 percent of employees enrolled in benefit plans online this year, up from 24 percent five years ago."

HR Services Expand

As HR outsourcing continued to attract significant market interest, Fidelity also broadened its human resources servicing with training, learning and enhanced performance management solutions. Fidelity acquired HR Access's application platform in 2003 to enhance its human resource and payroll offerings. With this acquisition, Fidelity gained a European base for expanding its global capabilities for U.S.-based clients based with worldwide operations.

"Servicing our clients' core employee data and systems for their HR, personnel and payroll administration enhances our ability to provide integrated servicing across the HR and benefits spectrum for our clients and their employees," Smail said. "Looking ahead, we expect the outsourcing trend to continue its momentum as organizations continue to realize the cost advantages, efficiencies and service improvements gained by streamlining their human resources and benefits activities."

Preparing Employees for Retirement

Last year, Fidelity expanded its full suite of 401(k), 403(b) and 457 plan services, added a series of investment products and retirement planning tools, and maintained its position as the leading provider of workplace retirement savings plans.

In 2003, Fidelity introduced the Retirement Plan Manager discretionary management service, expanded its Freedom Fund line with four new funds in five-year increments, and rolled out the first|PERSON employee education program. It also introduced a new version of Plan Sponsor WebStation for plan administrators.

This year, Fidelity will roll out a major income planning initiative that will provide retirement savers with products and tools to better plan their years in retirement.

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $1.8 trillion, including managed assets of $988.3 billion as of December 31, 2003. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 18 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.Fidelity.com .

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Fidelity Employer Services Company LLC,
82 Devonshire Street, Boston, MA 02109