Performance attribution provides a framework for examining relative performance of a fund vs. its benchmark. Generally, the reports show the level at which security and sector selection affected fund performance vs. the index over the most recent quarter and over the most recent year. We are currently providing attribution information for Fidelity's diversified domestic equity, diversified international equity and the equity portions of balanced and asset allocation funds. For those funds for which we have attribution reports, you will find them on advisor.fidelity.com by selecting a product and then clicking on the "attribution data" link at the bottom of the left navigation bar on the product page.
Below, please find a list of frequently asked questions.
Q. Can you define what portfolio characteristics and performance attribution mean?
A. In short, both are a series of statistics that provide information about a fund and its benchmark index. Portfolio characteristics are statistics that describe the securities held by a fund and the benchmark index. Performance attribution statistics help explain the performance of a fund in both absolute terms and relative to its benchmark over different measurement periods.
Generally, it shows the extent to which the portfolio manager's security selection strategies affected the fund's performance relative to the performance of the fund's benchmark index. Similarly, it illustrates whether over or underweighting a particular market sector affected performance relative to the fund's benchmark.
Q. How do I read performance attribution data?
A. The performance attribution reports are based on Fidelity's own proprietary methodology. They are designed to provide the most accurate comparison possible of a fund's performance relative to its benchmark by sector, region, or country (depending on the type of fund - diversified domestic equity, global equity, or regional equity - and the equity portion of balanced funds).
Performance attribution information relative to a fund's benchmark is broken down into two specific categories:
In addition, the "rescaled" sections are calculations that look only at a fund's primary assets (equities and convertibles) relative to the benchmark. Since benchmarks typically do not include cash holdings or expenses, we believe this additional measure will be useful to customers for a side-by-side comparison as well.
Q.How should advisors and their clients use this information when researching a fund?
A. First, it's important to maintain perspective while evaluating these numbers. These reports cover relatively short periods while the vast majority of mutual fund investors have a long-term horizon. Therefore, while the reports can be useful in understanding the factors that contributed to a fund's performance over various, relatively short periods, fund performance should be evaluated over multiple periods, including periods longer than represented by these reports.
In addition, advisors and their clients should examine the overall context of the data contained in these reports. For example, over short periods, a manager might have chosen technology stocks that faired worse than those in the benchmark, but an over or underweight in that particular sector may have led to a net greater return for the fund's investments in that sector than the sector's return in the benchmark index. It is important to look at both security and market selection together since combined they are the measure of relative performance.
Q. Why aren't you including information on certain Selects, single country funds, fixed income, and fund of funds?
A. We have made a certain set of diversified equity funds and the equity portion of balanced funds available for performance attribution and portfolio characteristics. This type of information is not as useful for all of our funds, particularly those that are not diversified. However we continue to evaluate information that might be appropriate for less diversified and different types of funds. To the extent that we believe additional information may be useful for our customers, we'll add it.
Q. How often will this information be posted? A. On a calendar quarterly basis.
Q. Where can I find definitions of what some of the different characteristics mean and what the indices include?
A. At the back of the characteristics document, you will find a glossary of terms which includes definitions of each characteristic and each index in the report.
Q. Why don't the expenses / other line in the attribution report match expenses shown in the prospectus?
A. The Advisor funds will not match any share class because all of the share classes and expenses are rolled into one pool with all expenses combined. The expenses listed for retail funds are fairly close to the expense ratio you would see in the fund's prospectus. Generally when the expense ratio is calculated it represents estimated expenses. The expenses in the new attribution reports reflect the particular time period.
Please carefully consider the fund's investment objectives, risks, charges and expenses before investing. For this and other information, call or write to Fidelity for a free prospectus, or view one online. Read it carefully before you invest or send money.