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How Fidelity Manages World Allocation Funds

While both of Fidelity's world allocation funds are measured against a 60/40 equity-to-fixed-income asset allocation benchmark, Fidelity takes two very different approaches in managing these funds.

Fidelity Global Balanced Fund

The Fidelity Global Balanced Fund seeks to add value over time by taking a two-pronged approach, with the portfolio manager making asset allocation decisions based on both top-down macroeconomic analysis and bottom-up fundamental security selection, with market specialists managing each sub-portfolio. The goal of this disciplined asset allocation approach is to minimize volatility as well as downside risk.

Fidelity Global Strategies Fund

The Fidelity Global Strategies Fund uses a disciplined approach to fund management, looking at secular, cyclical, and tactical inputs. Building and maintaining the portfolio involves three key steps:

Analyze inputs
Managers start by looking at secular, long-term trends such as industrialization in emerging markets, resource scarcity, and other issues that constitute "the new normal" in today's changing investing landscape. They also examine cyclical economic patterns, including economic growth or contraction, inflation, and the liquidity environment. Finally, they seek to identify tactical opportunities including short-term trends and specific markets or industries that may benefit from changes in momentum or investor sentiment.

Apply a risk management framework
The managers employ extensive risk assessments, including tail risk analysis, to develop multi-level scenarios and assign risk probabilities to each input.

Construct the portfolio
Based on their research and risk control process the managers make asset allocation decisions, investing across a diverse set of unaffiliated exchange-traded funds and actively managed Fidelity and Fidelity Advisor funds.

Questions?

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.

Fidelity Global Balanced Fund: Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds.
Fidelity Global Strategies Fund: The fund is subject to asset allocation risk and the risks of the underlying funds in which it invests. Those risks include the volatility of the financial markets in the U.S. and abroad as well as those risks associated with debt securities or bonds. Foreign markets may be more volatile than U.S. markets due to interest-rate, currency-exchange-rate, economic, and political risks. In general, the bond market is volatile and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) The value of commodities and commodity-linked investments may be affected by the performance of the overall commodities markets as well as weather, political, tax, and other regulatory and market developments. If the fund's asset allocation strategy does not work as intended, the fund may not achieve its objective.
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