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New Portfolios, Addition of Fidelity Strategic Real Return Fund,
Structural Enhancements Kick Off 10th Anniversary Year
BOSTON, March 1, 2006 - As it approaches the 10th anniversary of the launch of what has become the largest lifecycle fund product line in the mutual-fund industry, Fidelity Investments today announced enhancements to its Fidelity, Advisor and VIP Freedom Fund portfolios designed to ensure that the funds continue to meet the evolving needs of retirement investors, as well as investment professionals and their clients. The firm will offer two new Freedom Funds, add Fidelity Strategic Real Return Fund (with Advisor share classes) as an underlying fund to the Fidelity and Advisor Freedom Fund portfolios, and make certain structural enhancements to each of its Freedom Fund product lines. The Freedom Funds have proven to be a popular one-stop retirement investment solution. Over the past three years, total assets in all of Fidelity's Freedom product lines have grown 248 percent, to $45.9 billion as of January 31, 2006.
New Freedom Funds
Fidelity has filed a registration statement with the Securities and Exchange Commission to offer Fidelity Freedom 2045, Fidelity Advisor Freedom 2045, Fidelity Freedom 2050 and Fidelity Advisor Freedom 2050 funds. The funds, which are expected to be available to investors in June, will expand the Fidelity and Advisor Freedom Fund product lines to meet the needs of younger investors with target retirement dates that are well into the future.
Like the existing Fidelity and Fidelity Advisor Freedom Funds, the new funds will be co-managed by Ren Cheng and Jonathan Shelon.
"We're delighted to be able to offer younger retirement investors access to new Freedom Funds that correspond to their target retirement dates," said Scott L. Gilmour, senior vice president, Fidelity Institutional Retirement Services Company (FIRSCo). "Since they were launched in 1996, these funds have increasingly proven to be a simple and effective investment solution for retirement plan participants, individual investors, and investment advisors and their clients who may be saving for, or already in, retirement. Lifecycle funds are a lynchpin to helping millions of Americans prepare to finance their retirement years."
Demand for Fidelity's Freedom Funds within group retirement plans has more than doubled since 2000, with 83 percent of Fidelity administered 401(k) plans holding assets in at least one Freedom Fund, up from 37 percent five years ago. More than 1,000 plans serviced by Fidelity offer Freedom Funds as a default investment option.
Addition of Strategic Real Return Fund
Fidelity also announced the addition of Fidelity Strategic Real Return Fund (with Advisor share classes) to the investment grade fixed-income portions of the Fidelity and Fidelity Advisor Freedom Fund line-ups. Strategic Real Return Fund is a multi-asset class fund designed to provide shareholders with the potential to outpace inflation while assuming reasonable investment risk. The fund is structured around four general investment categories: inflation-protected debt securities, floating-rate loans, commodity linked notes and related investments, and real estate investment trusts (REITs) and other real estate-related investments.
"The addition of Strategic Real Return Fund to the line-ups of the Fidelity and Advisor Freedom Funds will provide the portfolios with additional diversification as well as a valuable hedge against inflation," said Lynne A. Goldman, senior vice president of investment product management and development, Fidelity Investments Institutional Services Company (FIIS). "This fund is quite unique in the mutual fund industry, and it is designed to provide a level of protection from the negative effects of rising inflation. That's a key advantage for investors, and investment professionals who recommend these funds to their clients, that few, if any, competing lifecycle funds can provide."
Structural Enhancements
In addition, Fidelity announced that it is extending the "roll-down" periods of the Freedom Funds product lines by five years. Previously, each Freedom Fund was expected to "roll down" into an appropriate Freedom Income Fund between five and 10 years after the target retirement date. In order to best accommodate increasing life expectancies and higher inflation pressures due to rising health-care and other expenses, the roll-down for the Freedom Fund product lines have been lengthened by five years to approximately 10 to 15 years after the target retirement date. This change will have the effect of increasing the equity exposure of the Freedom Funds with target dates closest to retirement - currently Fidelity Freedom 2000; and Fidelity Freedom, Fidelity Advisor Freedom, VIP Freedom and VIP Investor Freedom 2005, 2010, and 2015 - by up to five percent.
Additionally, to help increase portfolio diversification by further capitalizing on investment opportunities presented by the increasingly global economy, the allocation to international equity funds in the Fidelity, Fidelity Advisor and VIP Freedom Funds will be increased by up to five percent. Exposure to domestic equity funds will be reduced by a corresponding amount. Therefore, with the exception of those portfolios affected by the roll-down extensions, total equity exposure targets will not be affected.
"Since we launched the Freedom Funds in 1996, we have been carefully evaluating and testing the original methodology we used for asset allocation and portfolio construction -- including researching both market and investor behavior -- and we've made enhancements to the portfolios from time to time based on our findings," said John Sweeney, senior vice president of mutual fund product management, Fidelity Personal Investments. "Compared to 10 years ago, individuals are now expected to live, on average, two years longer, and health-care and other expenses have grown. By extending the roll-down periods of the Fidelity, Fidelity Advisor and VIP Freedom Funds approaching retirement, we believe that we're assisting individual investors, as well as investment professionals and their clients, by reducing the possibility that Americans will outlive their hard-earned retirement savings."
The Fidelity, Fidelity Advisor and VIP Freedom Funds are lifecycle funds that are managed to specific target retirement dates. These funds of funds are automatically rebalanced and gradually adjusted through an active roll-down asset allocation process to become more conservative as their target retirement dates approach. They are offered directly to investors, through Fidelity managed group retirement plans, and through investment professionals at banks, brokerage firms and insurance companies.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.4 trillion, including managed assets of $1.2 trillion as of December 31, 2005. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 21 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.
About Fidelity Investments Institutional Services
Fidelity Investments Institutional Services Company provides investment management services through investment professionals at financial institutions nationwide, including wirehouses, regional and independent broker/dealers, banks, trust companies and insurance companies. The company offers Fidelity Advisor Funds®, Variable Insurance Product (VIP) Portfolios, systematic investment plans, institutional money market funds and a comprehensive line of retirement products and services. Fidelity Investments Institutional Services Company's total assets under management were more than $217.5 billion as of December 31, 2005. For more information, advisors can visit www.advisor.fidelity.com.
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Information contained herein relating to Freedom 2045, Advisor Freedom 2045, Freedom 2050 and Advisor Freedom 2050 is subject to completion or amendment. A registration statement relating to Freedom 2045, Advisor Freedom 2045, Freedom 2050 and Advisor Freedom 2050 has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Please carefully consider the fund's investment objectives, risks, charges and expenses before investing. For this and other information, call or write to Fidelity or visit Fidelity.com for a free prospectus. Read it carefully before you invest or send money.
The performance of the Freedom Funds depends on that of their underlying Fidelity funds. These funds are subject to the volatility of the financial markets in the U.S. and abroad and may be subject to the additional risks associated with investing in high yield, small cap and foreign securities.
Asset Allocation does not ensure a profit or guarantee against a loss.
Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.
Interest rate risks may cause the price of a debt security to decrease. In addition, there are risks unique to the investments that Strategic Real Return Fund invests in. Floating rate loans are subject to restrictions on resale, price changes, and greater risk of default. REITs are affected by changes in real estate values or economic conditions, which can have a positive or negative effect on issuers in the real estate industry. Commodity linked investments may be affected by overall commodities market movements and other factors that affect the value of a particular industry or commodity.
Fidelity Distributors Corporation, 82 Devonshire Street, Boston, MA 02109
Fidelity Investments Institutional Services Company, Inc.
82 Devonshire Street, Boston, MA 02109
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