BOSTON, July 27, 2005 - Fidelity Investments today reported an emerging trend among small- to mid-sized companies toward fully-integrated defined contribution and payroll solutions, as increasing numbers of emerging companies seek to reap the business integration benefits traditionally realized by larger employers.

A survey of more than 500 payroll decision makers at small- to mid-sized firms, with 50 to 1000 employees, revealed that more than 77 percent considered an integrated 401(k) and payroll solution to be important or very important in their selection of a payroll provider.¹ Respondents cited ease of administration, improved accuracy, streamlined processes, increased efficiency and cost savings as primary reasons for moving toward fully-integrated 401(k) and payroll solutions.

"Integrated 401(k) and payroll solutions offer significant benefits for an emerging company, including reduced administration, risk and costs, as well as improved employee services," said Edmund F. Murphy, executive vice president, Fidelity Institutional Retirement Services Company, the nation's largest provider of 401(k) plans. "For a small- to mid-sized company focused on growing its business, these benefits can be a real competitive advantage."

The trend toward fully-integrated defined contribution and payroll solutions, however, marks a significant departure for emerging companies, which rarely outsource more than one business function to a single provider.² In fact, with the exception of using a bank to provide credit, financing and checking services, small businesses have traditionally hesitated to consider bundled services, citing a preference towards using providers with specialized expertise, as well as concerns such as being too dependent upon a single provider. As a result, many small- to mid-sized companies rely on multiple providers, typically outsourcing services to at least four, and more often eight to nine, different providers.

Despite the general bias against bundled services, three-quarters (75%) of surveyed respondents with 500 to 1,000 employees, and 70 percent of respondents with 100 to 199 employees, indicated that they believed there was value in having one firm provide both their 401(k) and payroll services.

As a result, Fidelity reports that the company's integrated 401(k) and payroll offering grew approximately 66 percent through the first seven months of 2005, and is expected to nearly double by year-end, based on current demand.

According to Murphy, however, while a number of integrated defined contribution and payroll solutions are currently on the market, they vary widely in terms of the level of integration and benefits they provide.

"The degree of integration is directly linked to increased cost savings and reduced risks, with fully-integrated solutions providing the most benefits," said Murphy. "Some fully-integrated solutions, for instance, allow an employee's 401(k) contributions to be automatically funded on pay day, a process which might otherwise take as many as five days. Eliminating that five day funding gap and multiplying it by 52 pay periods has potentially significant implications, allowing an employee's 401(k) contributions to be actively invested in the market for 260 days longer than employees at companies using conventional, interfaced solutions. Because some solutions offer more benefits than others, companies should be sure to inquire about the level of integration when selecting a provider."

Fully-integrated solutions also offer additional advantages, allowing business owners to provide employees with significant self-service capabilities and around-the-clock access to employee data. With a single log-on, employees can manage both their payroll and retirement accounts, arranging for direct deposit, changing their address or tax withholding, or checking prior months of earnings statements-all of which seamlessly integrate with payroll, potentially reducing administrative time and costs for business owners. Employees can also simplify tax filing by downloading W-2 data into common tax filing software, or by using automatic investing functionality to create multiple direct deposit accounts to support 529s, IRAs, or brokerage or life insurance accounts.

Fidelity established its Emerging Corporate Market (ECM) unit in 1991 to focus specifically on the needs of small- to mid-sized businesses. Since then, ECM, which is a division of Fidelity Institutional Retirement Services Company has become a leading provider of plans to this market space, currently providing defined contribution retirement plans to more than 10,000 emerging firms with approximately 1.7 million participants and assets of $58 billion, and providing integrated defined contribution and payroll solutions to a rapidly growing number of small- to mid- sized companies.

About the Survey
An online survey was conducted for Fidelity Investments by Sigma Research Management Group among a national probability sample of more than 500 small to mid-sized businesses with between 50 and 1000 full-time employees. The sampling included both current and potential Fidelity clients. Interviews were completed between April 20 and 27, 2005. The margin of error is +/- 4%.

About Fidelity Employer Services Company
Fidelity Employer Services Company provides benefits and human resources administration, workforce effectiveness, payroll solutions and stock plan services to over 19 million employees in the U.S. as of June 30, 2005.

About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.2 trillion, including managed assets of $1.1 trillion as of June 30, 2005. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to approximately 20 million individuals and institutions as well as through 5,500 financial intermediary firms. 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

Fidelity Investments Institutional Services Company, Inc.,
82 Devonshire Street, Boston, MA 02109

¹ Payroll Product Report, conducted by Sigma Research Management Group on behalf of Fidelity Investments, May 2005.

² Small business focus groups conducted on behalf of Fidelity Investments by Neuwirth Research, Inc. A total of six focus groups were conducted in Boston, Dallas and Chicago during November of 2004. All participants were the primary or joint decision-maker for decisions related to the selection and management of third party vendors for their business.