SMITHFIELD, RI, October 21, 2008 - A new, comprehensive survey of large corporate and public defined benefit (DB) plans conducted by Pyramis Global Advisors found that plan sponsors have, for the most part, concluded their formal assessments of the merits of freezing or closing their DB plans, and are now focused on taking a long-term view of the plans' value to employees and the investment approaches that will enable them to meet their benefit obligations. Pyramis' sixth annual DB survey addressed a variety of issues with CIOs, treasurers and executive directors at nearly 250 of the largest DB plans in the United States.

"In prior years, when you had emerging regulatory pressures, accounting changes and other uncertainties, more plan sponsors were on the fence about the status of their DB plans," said Patrick J. Mc Nelis, executive vice president, Global Distribution & Client Service. "Today, we're seeing more true believers who view their DB plans as critical components of their employees' future retirement needs. Our study leads us to conclude that the plans that were inclined to freeze or close have already done so." ("Freezing" is defined as stopping accruals while "closing" is defined as not adding any new employees to a plan.)

Attitudes Toward Asset Classes, Investing Strategies

The survey, entitled "The Global Investor's Challenge: Achieving Balance in a Volatile World," found that, among survey participants, 83 percent of corporate plans and 98 percent of public plans had already made the decision whether or not to freeze their DB plans. Looking ahead, more than half of both types of plan sponsors said they were "philosophically committed" to the concept of a DB plan.

The top concern identified by corporate plans is volatility (36 percent). The type of volatility that concerns corporate plans most is market volatility (33 percent). Funding status volatility caused by pension laws and accounting rules are a close secondary concern. Volatility concerns are prompting corporate plans to seek to insulate their plans from shifts in funding status by pursuing liability-driven investing strategies, sometimes called LDI, and further diversification into alternative asset classes, as well as market neutral and long/short strategies.

Public plan sponsors are most concerned about the low-return environment (37 percent) when long-term yields are low and equity markets are difficult. Top concerns also include funding health care obligations in response to Government Accounting Standards Board (GASB) Statement 45, a new accounting regulation. Rising health-care costs are likely to cause public entities to direct new assets to fund health-care obligations - monies that otherwise could have been directed to pension plans.

"Because of post-employment health-care commitments, public plans are demanding more in terms of returns from assets in their DB plans," said Mc Nelis.

Recent Market Volatility

In light of recent financial market volatility, Pyramis designed an on-line "Quick Poll" survey of 70 large defined benefit plan sponsors in late-September. While not a comprehensive or scientific survey, it offered a brief check of how recent volatility could affect the long-term outlooks of DB plan sponsors. The Quick Poll found that, at this point, market volatility had little or no impact on the asset allocation decisions stated in the June survey.

Investment Strategy - New Balance in a Volatile World

Both corporate and public plans continued to make broad asset allocation changes noted in last year's survey. The vast majority of plans continued to reduce their reliance on U.S. equities in favor of other asset classes. Corporate plans, for example, reported they decreased their U.S. equity allocation by an average of 600 basis points (6 percent), while increasing their fixed- income allocation by 400 basis points (4 percent). Public plans also reduced their U.S. equity allocation by a similar amount, however, in contrast to corporate plans, they are shifting the proceeds of their U.S. equity overseas to non-U.S. equity investments and alternatives. Public plans surveyed expected non-U.S. equity markets to outperform the U.S. market over the next five years.

Corporate and public plans also differ in the nature of their concerns about volatility. Corporates, according to the survey, are considering the volatility of their funding status, so 36 percent have implemented a liability-driven investing (LDI) program - more than double the result of last year's survey. As such, they increased bond allocations, extended duration of existing bond mandates and made greater use of credit and interest-rate derivatives. This is a marked change from last year's survey when many corporate plans were only considering using LDI.

Both corporate and public plans are seeking out long and long-short strategies (including 130/30 and market neutral) and alternative investments (hedge funds and private equity) for diversification and uncorrelated sources of returns. Today, nearly half of public plans noted having hedge funds and hedge-fund-type strategies, such as long/short or equity market neutral. In comparison, last year's survey noted that most public plans expressed interest in these strategies, but had not actually allocated to them.

Future Trends

Plans are looking to establish strategic partnerships (22 percent currently using or considering, 24 percent of $1 billion or more) where they would hire fewer managers and give them larger mandates and more latitude.

Plans also are looking ahead to asset allocation in 10 years with corporates (40 percent) shifting to fixed income and publics shifting to global equity and fixed income (56 percent) and both corporates (18 percent) and publics (20 percent) shifting to alternatives.

About the Survey

The sixth annual DB survey - "The Global Investor's Challenge: Achieving Balance in a Volatile World" - was designed by Pyramis Global Advisors and was executed in association with Asset International, Inc., in June 2008. CIOs, treasurers and executive directors from 248 of the largest DB plans in the United States (126 corporate, 122 public) responded to an online questionnaire. A comprehensive report on the survey will be available in November by writing to Pyramis@pyramis.com.

About Pyramis Global Advisors

Pyramis Global Advisors, a unit of Fidelity Investments, is an investment management firm focused exclusively on serving institutional investors including corporate and public retirement funds, endowments, foundations, other institutions, as well as non-U.S. investors. Pyramis offers active and risk-controlled domestic equity, international equity, fixed-income, high-yield, real estate, and alternative strategies including equity market neutral and 130/30 disciplines. As of September 30, 2008, assets under management totaled approximately $148 billion.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $3.2 trillion, including managed assets of more than $1.5 trillion as of August 31, 2008. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to 24 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, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

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Pyramis Global Advisors
900 Salem Street, Smithfield, Rhode Island 02917

Pyramis Global Advisors consists of Pyramis Global Advisors, LLC (PGALLC), Pyramis Global Advisors Trust Company (PGATC), Fidelity Management Trust Company (FMTC), Pyramis Global Advisors Holdings Corp., and Fidelity Investments Canada ULC. Investment services are provided by PGALLC, a registered investment adviser, PGATC, a New Hampshire chartered trust company, and/or Fidelity Management Trust Company, a Massachusetts chartered trust company.