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Building a Portfolio for any Weather: Retirement Savings Education Series

Learn the principles of asset allocation and diversification, understand investment types, and develop an investment strategy to maximize your retirement savings.

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Building a Portfolio for any Weather: Retirement Savings Education Series

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  1. Workplace Education Series Building a Portfolio for any Weather [presenter name][date]

  2. The Retirement Savings Series • Part 1: Getting on the Right Path with Your Workplace Savings • Understand the many advantages of saving at the workplace • Find money in your paycheck to save for the future • Create a budget and manage your debt • Simplify your finances for easier account management • Set goals and develop a plan to reach them • Part 2: Building a Portfolio for any Weather • Determine how much savings you may need for retirement • Understand investment types and how to balance potential risk vs. reward • Manage your investment strategy to meet your long-term goals • Become more confident about making investment decisions A Tool to Help: Visit Fidelity’s e-Learning catalog at http://e-learning.fidelity.com.

  3. Building a portfolio for any weather • Get more out of your retirement savings • Today’s agenda: • Principles of asset allocationand diversification • Characteristics of key assetclasses • How to develop an investment strategy to help you reach your financial goals • Steps to put your plan in motion

  4. Make smarter investment decisions

  5. Make smarter investment decisions • Asset allocation + diversification = your investment mix • Combining them skillfully can help you • Reduce portfolio risk and volatility • Match your investment strategyto your time horizon, financial situation, and risk tolerance • Tap into market opportunities • Avoid the pitfalls of market timing Neither diversification nor asset allocation ensures a profit or guarantees against loss.

  6. Make smarter investment decisions • Asset allocation = combining different investment types Stocks (equities) Bonds(fixed income) Cash(short-term) Up to 91.5% of variations in returns can be attributed to asset allocation.* * Source: "Determinants of Portfolio Performance," Brinson, Hood and Beebower, Financial Analysts Journal, July-August 1986, and "Determinants of Performance II: An Update," Brinson, Singer and Beebower, Financial Analysts Journal, May-June 1991. This represents a landmark study which has not been refuted and which stands today as a valid, widely accepted theory.

  7. Make smarter investment decisions • Investment types Investment risk Inflation risk Short-term investments Bonds Stocks • Long-term growth potential • Value can go up and down • Higher risk, higher potential return • Relatively stable value • Potential to pay interest • Lower risk, lower potential return • Potential to pay interest • Moderate risk, moderate potential return

  8. Make smarter investment decisions • Diversification = spreading out investments within investment types Diversification Spread out your investments within investment types Mutual FundsInclude a variety of stocks and/or bonds Stocks (equities) Bonds (fixed income) Stock Fund Bond Fund Cash (short-term) Cash (short-term) Neither diversification nor asset allocation ensures a profit or guarantees against loss.

  9. Growth Blend Value Country/ Regional Diversified Money Market Funds U.S. Government Funds Large-cap Value Large-cap Blend Large-cap Growth Large Banks Government Mid-cap Value Mid-cap Blend Mid-cap Growth Mid Corporate Municipal Other Financial Institutions Small-cap Value Small-cap Blend Small-cap Growth Small High Yield Government Make smarter investment decisions • Diversify within asset classes to help moderate risk Domestic Stock Short-term International Fixed Income StyleMap® depictions of mutual fund characteristics produced using data and calculations provided by Morningstar, Inc. StyleMaps estimate characteristics of a fund's equity holdings over two dimensions: market capitalization and valuation. Foreign securities are subject to interest-rate, currency-exchange-rate, economic, and political risks, all of which are magnified in emerging markets. These risks are particularly significant for funds that focus on a single country or region. In general, the bond market is volatile and bonds entail interest-rate risk (As interest rates rise, bond prices usually fall, and vice versa). This effect is usually pronounced for longer-term securities. Bonds also entail the risk of issuer default, issuer credit risk, and inflation risk. Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss. An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in these funds. Unlike mutual funds, most CDs and U.S. Treasuries offer a fixed rate of return and guarantee payment of principal if held to maturity. Unlike most bank products such as CDs, money market mutual funds are not FDIC insured.

  10. Make smarter investment decisions The case for diversification Winners and losers rotate over time Bottom annual performer (all figures represent total annual returns) Top annual performer (all figures represent total annual returns) Source: Strategic Advisers, 2011. Past performance is no guarantee of future results. Large stocks as measured by S&P 500®; foreign stocks as measured by MSCI EAFE®; small stocks as measured by Russell 2000®; bonds as measured by Barclays Capital U.S. Aggregate Bond Index; high-yield bonds as measured by the Merrill Lynch High Yield Master II Index, which measures the performance of the non-investment-grade U.S. domestic bond market; short-term as measured by the U.S. 30-day T-bill.

  11. Make smarter investment decisions • Diversification rules of thumb • Invest in stock funds with varying investment strategies • Mix domestic and international stock funds • Keep less than 25% of your money in a single stock fund • Select a limited number of stock funds to keep tracking simple • Diversify among bond funds with varying maturities A Tool to Help: To help ensure your investment mix is still consistent with your unique situation, usePortfolio Review.

  12. Determine your investment approach

  13. Determine your investment approach • Finding the right mix depends on • Your tolerance for risk • Your time horizon • Your financial situation

  14. Determine your investment approach The risk of inflation  What to Do: Make sure you consider investments with the potential to outpace inflation. 1 US Dept. of Labor, Bureau of Labor Statistics, 2010. 2 Costs are based on a four-year private education: Annual Survey of Colleges, The College Board, New York, 2010.

  15. Determine your investment approach • Investment risk How $100 grew over 50 years (1961 – 2010) Stocks $10,459 Bonds $2,981 Short-term investments $1,308 1961 2010 Inflation $737 $100 1961 2010 Data Source: Ibbotson Associates, 2011 (1961–2010). Past performance is no guarantee of future results. The asset class (index) returns reflect the reinvestment of dividends and other earnings. This chart is for illustrative purposes only and does not represent actual or future performance of any investment option. It is not possible to invest directly in a market index. Stocks are represented by the Standard and Poor’s 500 Index (S&P 500® Index). The S&P 500® Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bonds are represented by the U.S. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of interest income. Short-term instruments are represented by U.S. Treasury bills, which are backed by the full faith and credit of the U.S. government. Inflation is represented by the Consumer Price Index (CPI), is a widely recognized measure of inflation, calculated by the U.S. government. Stock prices are more volatile than those of other securities. Government bonds and corporate bonds have more moderate short-termprice fluctuations than stocks but provide lower potential long-term returns. U.S. Treasury bills maintain a stable value (if held to maturity), but returns are only slightly above the inflation rate.

  16. Determine your investment approach • Time is on your side Average annual increase/return: 1961 – 2010 9.7% 7.0% 5.3% 4.1% Inflation Short-Term Bonds Domestic Stocks Investments Data Source: Ibbotson Associates 2011. This chart represents the average annual return percentage for the investment categories shown for the 50-year period of 1961–2010. Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative purposes only and does not represent actual or implied performance of any investment option. Stocks are represented by the Standard & Poor’s 500 Index (S&P 500®). The S&P 500® is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bonds are represented by the U.S. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of interest income. Short-term instruments are represented by U.S. Treasury bills, which are backed by the full faith and credit of the U.S. government. Inflation is represented by the Consumer Price Index (CPI), is a widely recognized measure of inflation, calculated by the U.S. government. Stock prices are more volatile than those of other securities. Government bonds and corporate bonds have more moderate short-term price fluctuation than stocks but provide lower potential long-term returns. U.S. Treasury bills maintain a stable value (if held to maturity), but returns are generally only slightly above the inflation rate. You cannot invest directly in an index.

  17. Determine your investment approach Retirement time frame Retirement • Older • More conservative • More bonds/cash • Younger • More aggressive • More stock funds

  18. Determine your investment approach Advantages of time Historical annual return of stocks: 1926 – 2010 Benchmark: S&P 500® 162.9% 36.1% 21.4% 18.3% 1.9% -4.9% -17.4% -67.6% 1-yearholdingperiod 5-yearholdingperiod 10-year holding period 20-year holding period This chart is for illustrative purposes only and does not represent actual or future performance of any specific investment option.Past performance is no guarantee of future results. Source: Ibbotson Associates 2011. The S&P 500® Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Indices are unmanaged and you cannot invest directly in an index.

  19. Domestic Stock Foreign Stock Bond Short-term Investments Determine your investment approach • Finding the right mix Aggressive Growth Conservative Balanced Growth 14% 15% 35% 25% 6% 49% 40% 50% 25% 60% 5% 30% 21% 15% 10% A Tool to Help: To help ensure your investment mix is still consistent with your unique situation, usePortfolio Review. Data Source: Ibbotson Associates, 2011 (1926–2010). Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative purposes only and does not represent actual or implied performance of any investment option. Stocks are represented by the Standard & Poor’s 500 Index (S&P 500®). The S&P 500® Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bonds are represented by the U.S. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of interest income. Short-term instruments are represented by U.S. Treasury bills, which are backed by the full faith and credit of the U.S. government. It is not possible to invest directly in an index. Stock prices are more volatile than those of other securities. Government bonds and corporate bonds have more moderate short-term price fluctuation than stocks but provide lower potential long-term returns. U.S. Treasury bills maintain a stable value (if held to maturity), but returns are generally only slightly above the inflation rate. Foreign Stocks are represented by the Morgan Stanley Capital International Europe, Australasia, Far East Index for the period from 1970 to the last calendar year. Foreign Stocks prior to 1970 are represented by the S&P 500®.The purpose of the target asset mixes is to show how target asset mixes may be created with different risk and return characteristics to help meet a participant’s goals. You should choose your own investments based on your particular objectives and situation. Remember that you may change how your account is invested. Be sure to review your decisions periodically to make sure they are still consistent with your goals. You should also consider any investments you may have outside the plan when making your investment choices. These target asset mixes were developed by Strategic Advisers, Inc., a registered investment adviser and Fidelity Investments company, based on the needs of a typical retirement plan participant.

  20. Reviewing your plan’s investment options

  21. Choosing your investments: hands-on or hands-off? Hands-on Hands-off Lifecycle Funds* Provide an automatic investment mix that becomes continually more conservative as time goes on. Just pick the fund with the year that’s closest to the year you plan to retire. Do it yourself Access Fidelity’s research resources, and utilize our fund selection tools to build your own portfolio. Let us guide you Use our investment guidance tool, Portfolio Review®**, to identify a target investment mix, receive a model portfolio suggestion, and easily implement your strategy. • Do you want to make your own investment decisions? • Are you comfortable building your own portfolio? • Do you have the time to actively manage your investments? *Lifecycle funds are designed for investors expecting to retire around the year indicated in each fund’s name. The investment risk of each lifecycle fund changes over time as its asset allocation changes. Lifecycle funds are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, and foreign securities. Principal invested is not guaranteed at any time, including at or after their target dates. **Portfolio Review is an educational tool. Guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions. Neither diversification nor asset allocation ensures a profit or guarantees against loss.

  22. 6% 10% 12% 15% 27% 28% 5% 37% 36% 40% 37% 42% 40% 40% 10% 40% 35% 13% 13% 15% 13% 17% 15% 18% 31% 29% 23% 23% 50% 52% 22% 22% 60% 61% 10% 62% 64% 19% 18% 24% 66% International Equity Funds Bond Funds Short-Term Funds Domestic Equity Funds Fidelity Freedom K® Funds A Family of Funds Fidelity Freedom K®2000 Fund Fidelity Freedom K®Income Fund Fidelity Freedom K®2010 Fund Fidelity Freedom K® 2005 Fund 15% 5% 40% 40% Fidelity Freedom K®2015 Fund Fidelity Freedom K®2020 Fund Fidelity Freedom K®2025 Fund Fidelity Freedom K®2030 Fund Fidelity Freedom K®2035 Fund Less than 1% 28% 19% Fidelity Freedom K®2040 Fund Fidelity Freedom K®2045 Fund Fidelity Freedom K®2055 Fund Fidelity Freedom K®2050 Fund The percentages represent anticipated target asset allocation as of March 31, 2012. Target asset allocations may appear equal due to rounding. Allocation percentages may not add up to 100% due to rounding and/or cash balances. Fidelity Freedom K® Funds are designed for investors expecting to retire around the year indicated in each fund's name. Except for the Fidelity Freedom K® Income Fund, the funds' asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. Ultimately, they are expected to merge with the Fidelity Freedom K® Income Fund. The investment risk of each Fidelity Freedom K® Fund changes over time as its asset allocation changes. They are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, commodity-linked, and foreign securities. Principal invested is not guaranteed at any time, including at or after their target dates. Strategic Advisers, Inc., a subsidiary of FMR LLC, manages the Fidelity Freedom K® Funds. 527860.7.0

  23. Investment Spectrum Investment options to right have potentially less inflation risk and more investment risk Investment options to left have potentially more inflation risk and less investment risk Money Market (or Short Term if not a reg. MM) Domestic Equities International/Global Equity CompanyStock Specialty Bond An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in these funds.> This spectrum, with the exception of the Domestic Equity category, is based on Fidelity’s analysis of the characteristics of the general investment categories and not on the actual investment options and their holdings, which can change frequently. Investment options in the Domestic Equity category are based on the options’ Morningstar categories as of 4/5/2012. Morningstar categories are based on a fund’s style as measured by its underlying portfolio holdings over the past three years and may change at any time. These style categorizations do not represent the investment options’ objectives and do not predict the investment options’ future styles. Investment options are listed in alphabetical order within each investment category. Risk associated with the investment options can vary significantly within each particular investment category, and the relative risk of categories may change under certain economic conditions. For a more complete discussion of risk associated with the mutual fund options, please read the prospectuses before making your investment decision. The spectrum does not represent actual or implied performance.

  24. Investing for the long term

  25. What to Do:myPlan® Monitor can help you check and revise your asset allocation. Investing for the long term • Make sure your portfolio stays on target Monitor and adjust your portfolio over time Stocks Bonds Cash

  26. 2% 14% 12% 72% Investing for the long term • Why rebalancing is so important How an investment mix can change over time 3% 5% 23% 25% 49% 13% 61% 21% December 1989 December 1999 December 2009 Short-term investments U.S. Stocks International Stocks Bonds Source: Fidelity Strategic Advisers, 2009. U.S. stocks are measured by S&P 500®; foreign stocks are measured by MSCI EAFE®; bonds are measured by the U.S. Intermediate Government Bond Index; short-term is measured by the U.S. 30-day T-bill. You may not invest directly in an index.

  27. Investing for the long term How rebalancing is done Static rebalancing Tactical rebalancing For illustrative purposes only.

  28. Investing for the long term • Rebalancing techniques • There are several ways to get your money back where you want it • Change the way future contributions are directed • Exchange your current accountbalances • Move small amounts of moneyat a time What to Do: Fidelity suggests you monitor your portfolio’s performance at least once a year.

  29. $300K $200K $100K $0K Years 5 10 15 20 $500 $300 $100 Investing for the long term • Regular investing is one of the most important things you can do The importance of regular investing Potential Savings $255,203 $153,122 $51,041 Monthly contributions These hypothetical examples assume a beginning plan account balance of $0; pretax contributions of $500, $300, and $100 every month for 20 years; and an effective annual rate of return of 7%. The ending values do not reflect taxes, fees, or inflation. If they did, amounts would be lower. Earnings and pretax contributions are subject to taxes when withdrawn. Distributions before age 59½ may also be subject to a 10% penalty. Contribution amounts are subject to IRS and Plan limits. This example is for illustrative purposes only and does not represent the performance of any security. Individuals may earn more or less than this example. Investing on a regular basis does not ensure a profit or guarantee against a loss in a declining market.

  30. Stay on track

  31. Stay on track • Make sure you are properly invested • Determine an appropriate investment mix • Determine your investment style • Select investment options that fit your target investment mix and investment style • Review and adjust your investment mix as needed • Simplify your finances by consolidating accounts What to Do: Visit NetBenefits® and use our online guidance tools.

  32. Stay on track • Avoid common pitfalls • Chasing “hot” performance • Trying to time the market • Emotional panic selling • Avoiding the market • Investing without sufficient research and understanding • Viewing investing as a one-time task

  33.   Stay on track We’re here to help Visit NetBenefits® www.mysavingsatwork.com/duke Call your plan’s toll-free number to speak with a representative familiar with the features of your Plan. Schedule a complimentary one-on-one guidance consultation Call800.642.7131 Clickgetguidance.fidelity.com Although consultations are one on one, guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serveas the primary or sole basis for your investment or tax-planning decisions.

  34. Important information S&P 500® Index. The S&P 500® Index is a registered mark of Standard & Poors Financial Services LLC. S&P 500 Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Dow Jones Industrial AverageSM. Dow Jones Industrial Average, published by Dow Jones & Company, is a price-weighted index that serves as a measure of the entire U.S. market. The index comprises 30 actively traded stocks, covering such diverse industries as financial services, retail, entertainment, and consumer goods. The NASDAQ Composite® Index. The NASDAQ Composite® Index is a market capitalization-weighted index that is designed to represent the performance of NASDAQ stocks. Dow Jones Wilshire 5000®. The Dow Jones Wilshire 5000® is an unmanaged market capitalization-weighted index of approximately 7,000 U.S. equity securities. MSCI EAFE Index®. The Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE) is a market capitalization-weighted index that is designed to measure the investable equity market performance for global investors in developed markets, excluding the U.S. & Canada. The EAFE Index is a registered service mark of Morgan Stanley and has been licensed for use by FMR LLC. Barclays Capital U.S.® Aggregate Bond Index. The Barclays Capital U.S. Aggregate Bond Index is a market value–weighted index of investment–grade fixed–rate debt issues, including government, corporate, asset–backed, and mortgage–backed securities, with maturities of one year or more. The BofA Merrill Lynch US High Yield Index. The BofA Merrill Lynch US High Yield Index is a market capitalization–weighted index of US dollar denominated below investment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have a below investment grade rating (based on an average of Moody’s, S&P and Fitch) and an investment grade rated country of risk. In addition, qualifying securities must have at least one year remaining to final maturity, a fixed coupon schedule and at least $100 million in outstanding face value. Defaulted securities are excluded. Citigroup Money Market 3-Month T-Bill Total Rate of Return Index. An unmanaged index that consists of the last 3-month U.S. Treasury bill issues and is calculated using monthly return equivalents of yield averages which are not marked to market.

  35. 30 Day T-Bill Index measures the annual total return of a short-term obligation that is not interest-bearing (it is purchased at a discount); can be traded on a discount basis for 91 days. The Russell 1000® Index is a market capitalization-weighted index of 1,000 large U.S. domiciled company stocks. The Russell 1000 Value Index is a market capitalization-weighted index of those stocks of the 1,000 largest U.S. domiciled companies that exhibit value–oriented characteristics. The Russell 1000 Growth Index is a market capitalization-weighted index of those stocks of the 1,000 largest U.S. domiciled companies that exhibit growth-oriented characteristics. The Russell Midcap® Index is a market capitalization-weighted index of medium-capitalization U.S. company stocks. The Russell Midcap® Value Index is a market capitalization-weighted index of the smallest 800 companies included in the Russell 1000 Index that exhibit value-oriented characteristics. The Russell 1000 Index is comprised of the 1,000 largest U.S. domiciled companies. The Russell Midcap® Growth Index is a market capitalization-weighted index of the smallest 800 companies included in the Russell 1000 Index that exhibit growth-oriented characteristics. The Russell 1000 Index is comprised of the 1,000 largest U.S. domiciled companies. The Russell 2000® Index is a market capitalization-weighted index of the stocks of the 2,000 smallest companies included in the 3,000 largest U.S. domiciled companies. The Russell 2000® Value Index is a market capitalization-weighted index of the stocks of the 2,000 smallest companies included in the Russell 3000® Value Index. The Russell 3000 Value Index comprises the 3,000 largest U.S. domiciled companies that exhibit value-oriented characteristics. The Russell 2000® Growth Index is a market capitalization-weighted index of the stocks of the 2,000 smallest companies included in the Russell 3000® Growth Index. The Russell 3000 Growth Index comprises the 3,000 largest U.S. domiciled companies that exhibit growth-oriented characteristics. Important information

  36. Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, contact Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gainor lose money. The investment options available through the plan reserve the right to modify or withdraw the exchange privilege. Important information © 2011 FMR LLC. All rights reserved. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 539819.33.0

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