FIIS Distribution Overview(Roll Over Each Bullet)

Course Purpose

FIIS Sales Process

FIIS Distribution Process

FIIS Advisor Distribution

FIIS Institutional Distribution

FIIS Product Distribution

Final Assessment

Provides course background and purpose

Explains how FIIS products are distributed to intermediaries and institutions

Outlines the two distribution groups

Explains how the Advisor Distribution Group is organized for ease of doing business

Tests the comprehension of the topics reviewed in this course

Explains how the Institutional Distribution Group is organized for ease of doing business

Provides information on products/programs offered through the Advisor Distribution Group

and the Institutional Distribution Group

Course Purpose

Welcome to FIIS Distribution Overview!

Background:

Founded in 1979, Fidelity Investments Institutional Services Company, Inc., (FIIS) distributes Fidelity products, programs, and services through a variety of financial institutions, including banks, insurance companies, broker/dealers, financial planners, and pension fund administrators.

Purpose:

This course will provide you with an understanding of the FIIS distribution groups and how the process works. You will also learn about the different financials intermediaries that distribute FIIS products and programs to investors.

Year-End 2002: Tax Fundamentals

FIIS' distribution effort is comprised of Advisor Distribution Group and Institutional Distribution Group. Each distribution group has a sales force.

The Sales Process: (click on each picture to learn about the process)

FIIS Sales Process

FIIS Sales Force

Comprised of wholesalers (Field sales and Inside sales) who work as a team to market FIIS products and services and provide sales support to investment professionals and intermediary firms.

Intermediary Firms

Represent varied financial institutions that, with a valid selling agreement, may sell the FIIS family of products to investors.

Investors

Includes individuals and institutions that work with an Investment Professional (IP) and pay a commission in exchange for investment advice.

Field Sales versus Inside Sales

Field Sales are also referred to as outside wholesalers. Wholesalers are responsible for product and program sales in specific territories.

Inside Sales partners with field sales teams by providing telephone sales support to clients and prospects.

There are characteristics which differentiate Field Sales and Inside Sales. Drag each characteristic to the applicable column.

Increase sales levels of producing investment professionals

Live in their territory Work on sales desk in Smithfield

Educate prospects and sellers about FIIS' product line and new offerings via the telephone

Face-to-face client contact averaging 5.5 client meetings daily

Partner with Inside Sales to distribute Fidelity products and programs to the intermediary marketplace

Field Sales Inside Sales

Territory Map

The Territory Map depicts how various geographical areas are divided amongst FIIS’ sales force.

Click here to link to additional territory maps:

http://fnw.fmr.com/fiisnet/distribution/sales_resources/territory_maps/index.html

FIIS Distribution Groups

FIIS has two sales distribution groups committed to acquiring, developing and retaining high quality clients. Each distribution group has different strategies and support designed to address the needs of a particular type of client.

•Advisor Distribution Group (ADG) provides sales and relationship management support to Advisor Broker/Dealer clients and prospects. Fidelity Advisor products, programs, and services are distributed through FIIS' sales force to investment professionals.

•Institutional Distribution Group (IDG) is responsible for the development and management of relationships with senior management, home office contacts, and various decision-makers at intermediary firms that sell FIIS products to their clients.

FIIS Distribution Process

Slide in Yellow Boxes (add lead in sentence)

Advisor Distribution Group Institutional Distribution Group

Fidelity Product Fidelity Product

FIIS Sales Force FIIS Sales Force

Investment Professional Client Firms Sales Force

Investment Professional

Investor (i.e. Capital Markets & Corporations)

Investor (i.e. Individuals & Institutions)

Check Point

Drag & DropAdvisor Distribution

Educate prospects and sellers about FIIS' product line and new offerings via the telephone

Inside Sales Fidelity products, programs and services are distributed through FIIS' sales force to investment professionals

Institutional Sales Live in territory and partner with Inside Sales to distribute Fidelity products, programs and services to the intermediary marketplace

Field Sales Responsible for the development and management of relationships with senior management, home office contacts, and various decision-makers at intermediary firms.

FIIS Distribution Overview

FIIS categorizes like clients into distribution groups for ease in doing business particularly for trading, marketing, and communication purposes.

Distribution groups are formed according to the following criteria:

-The infrastructure at the intermediary

-The service it provides to its own clients

-The potential types of business the intermediary can bring to Fidelity

Distribution Group Distinctions: Each financial intermediary runs differently. Use of technology, the sales culture, and a variety of other factors distinguish one distribution group from another. Differences in distribution groups and the clients within demand that FIIS manage the relationships between varied intermediaries in a customized fashion.

FIIS Sales is committed to acquiring, developing, and retaining high quality clients. The table below lists the types of intermediaries within each distribution group.

FIIS Distribution Groups

Advisor Distribution Group (ADG) Wirehouse and Regional Broker/Dealer (B/D) Financial Institutions and Planners (FIP)

o Bank Broker/Dealero Independento Insurance Agency

Institutional Distribution Group (IDG) Insurance Wholesale Bank Business Unit Cash Business Unit

o Corporate Directo Institutional Cash Services

Check Point

1. FIIS categorizes like intermediaries into ___________ for ease of doing business.A. MarketsB. BranchesC. Distribution GroupsD. Channels

2. Distribution Groups are formed according to the following criteria (select all that apply):A. Infrastructure at the intermediaryB. Service it provides to its own clientsC. Potential types of business the intermediary can bring to FidelityD. Product Sales in a specific territory

FIIS Advisor Distribution

Fidelity Advisor products may be sold by intermediaries with valid agreements on file at Fidelity. Fidelity Advisor products and programs are distributed through the intermediaries sales force of investment professionals. The investment professionals sell to the individual investor.

The Advisor Distribution Group sells to the following:

Wirehouse and Regional Financial Intermediaries & Planners (FIP)•Bank Broker/Dealer•Independent•Insurance Agency

Wirehouse and Regional

Wirehouse: A wirehouse is a national or international intermediary whose branch offices are linked by a communications system that allows rapid dissemination of prices, information, and research related to financial markets and individual securities. Today, the term “wirehouse” refers to the biggest brokerage houses (e.g. Merrill Lynch and Prudential Securities).

Regional: Although smaller regional intermediaries currently have access to similar data as a wirehouse, regional firms are considered to be the next 50 largest full service intermediaries. Some full service intermediaries are national in scope (e.g. First Union Securities and RBC Dain Rauscher).

Full service means

that FIIS offers a

high level of automat

ion to support these firms.

Wirehouse and Regional Comparison

Wirehouses can be distinguished from regional intermediaires through several major categories. (hot words = Clearing, Proprietary, NSCC, Omnibus) (Change broker to IP?)

Proprietary fund business means that a brokerage firm manages and distributes its own family of funds. The Advisor Funds are in direct competition with these proprietary funds.

Fidelity Intermediaries and Planners (FIP)

FIP Bank Broker/Dealer (Roll Over)In an effort to expand their revenue generating businesses, banks are cross-selling and changing the way they sell and deliver their products (e.g. Fleet and Well Fargo). Banks are working towards offering “one stop shopping” for clients by offering products and services beyond the traditional bank products to include things like:Mutual fundsIndividual securities like stocks and bondsRetirement plans

FIP Independent (Roll Over)The Independent market includes firms that provide securities transaction services to independent investment professionals, as known as financial advisors (e.g. Royal Alliance and American Express). Independent investment professionals are contractors of the intermediary firm, not employees to the firm.

FIP Insurance Agency (Roll Over)The Insurance Agency market uses investment professionals of insurance companies to distribute Advisor products and services to customers (e.g. Met Life and Allmerica). A registered investment professional at an insurance agency may sell mutual funds, insurance products, retirement products and securities to clients.

Fidelity Intermediaries and Planners (FIP)

Clearing firms offer the ability to execute,

settle, and maintain custody for mutual funds and provide the facilities to process dividend reinvestment, exchanges, and systematic

withdrawals.

Check Point

The Advisor Distribution Group consists of (select all that apply):A. Cash Business UnitB. Financial Intermediaries and Planners (FIP)C. Bank Business UnitD. Wirehouse and Regional

The Financial Intermediaries and Planners consists (select all that apply):

A. Insurance AgencyB. Bank Broker/DealerC. Cash Business UnitD. Independent

FIIS Institutional Distribution

The Institutional Distribution Group focuses on sales and relationship management for institutional clients.

Insurance Wholesale

Bank

Business Unit

Cash

Business Unit•Corporate Direct •Institutional Cash Services

Insurance Wholesale

The Insurance wholesale group coordinates relationship management

and sales with insurance companies.

Variable Insurance Product (VIP)

•The Fidelity Variable Insurance Product (VIP)sales process originates with the FIIS Relationship Management team, who work to encourage insurance companies to add VIP portfolios to their products.•If a VIP Portfolio is added to a product, the FIIS insurance wholesalers work with the insurance company's sales force not only to promote the sale of the insurance product but also, and more importantly, to promote the sale of the VIP funds within the insurance product to either investment

professionals from banks or broker/dealers. The underlying consumer. Investments into the VIP Funds can occur only through an insurance contract.

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Bank Business Unit

The Bank Business Unit, formerly known as Bank Trust, is responsible for the product strategy, marketing, and relationship management of Fidelity Advisor Fund sales through bank trust departments (e.g. PNC and Brown Brothers).

In addition, the Bank Business Unit supports sales of 401(k) and Advisor 529 plans.

Cash Business Unit

The Cash Business Unit, formerly known as Cash and Liquidity Management Services (CALMS), distributes money market funds to cash management professionals. The Cash Business Unit distributes directly through cash managers at corporations and through intermediaries that sell funds to cash management professionals.

Fidelity Institutional Money Market (FIMM) Funds are utilized by a variety of institutional clients including banks, insurance companies, and broker/dealers. The Cash Business Unit is organized as follows:

Cash Business Unit

Corporate Direct Institutional Cash Services

Roll Over - Client corporations purchase FIMM Funds directly without an intermediary (e.g. AT&T and Hewlett Packard)

Roll Over - ICS group distributes all share classes of the Fidelity Institutional Money Market (FIMM) Funds and

all share classes of the Fidelity Cash Management Funds to the following organizations:

• Bank Capital Markets (e.g. Fleet Capital Markets and Wachovia Capital Markets)

• Trust (Custody, Personal Trust, Institutional Trust, Cash Management, Corporate Trust, Asset Management, Investment Management) (e.g. State Street Bank and Bank of New York)

• B/D ( e.g. ABN AMRO ) and Insurance (e.g. GE)

Check Point

DRAG & DROP

Distributes money market funds to cash

management professionals, both

directly through cash managers at

corporations and through

intermediaries.

The sales process originates with the FIIS

Relationship Management team,

who work to encourage companies to add VIP

portfolios to their products.

Responsible for the product strategy, marketing, and

relationship management of

Fidelity Advisor Fund sales through bank trust departments.

Insurance

Wholesale

Bank

Business Unit

Cash

Business Unit

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Product/Program Distribution Grid

This grid provides information on the Products/Programs offered to intermediaries through Advisor Distribution and Institutional Distribution. (Make all Name Changes)

Retirement Product Distribution

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Retirement Product Distribution:The retirement sales force is the single point of contact for both

distribution groups.

Advisor Distribution Group Institutional Distribution Group

Retirement Sales works with investment professionals to help them build their retirement business with Fidelity.

Bundled products, programs and services are promoted through Wirehouse and Regional as well as Financial Intermediaries and Planners.

Retirement Sales works with banks to help them build their Premium 401(k) business with Fidelity.

The Premium 401(k) is promoted through the Bank Business Unit.

Final Assessment

Course Summary

The goal of this training program has been to provide you with an understanding of how the distribution process works and the different

financial service organizations that distribute FIIS products to investors.

Add links to Departments (FIIS NET)

Distinguishing factors, between FIIS’ Distribution Groups, are outlined below. Click on each factor to learn about the key questions raised by the sales force and why. Click on left column-have coinciding descriptions pop up.

Distribution Group Differences

Organization Size and Client Base

How much, in assets, are available for investment into FIIS products? The overall review of the firm this helps determine the extent we want to do business with them.

Sales Strategy Are the Advisor Funds on the firms short list of products to sell? Does the firm sell from a line of proprietary funds? These factors determine how FIIS can position the Advisor Funds, Financial Institutions Money Market (FIMM) Funds, Variable Insurance Product (VIP) and other products to develop a sound strategy.

Technology & Automation

Is the firm committed to technology and automation? Technology impacts the cost and ease of doing business.

Knowledge of Investment Professionals

What licenses does the IP hold? What are their sales goals? This information is part of the overall qualifying process that helps FIIS determine if we should do business with the firm.

Operational Structure

What does the organization look like? This assists in determining how FIIS does business with the firm and uncovers any resources they may need.

Trade & 12b-1 Compensation

Can the market accept compensation for trades and 12b-1 fees? Advisor Distribution accepts compensation for trades and 12b-1 fees. Institutional Distribution varies based on the specific market.

Outsourcing Clearance

Does the intermediary outsource operational support? Who does the intermediary clear through? Helps determine how FIIS does business with the intermediary and how FIIS can best support the client.

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Segmentation

FIRMA key component of FIIS’ business plan is a segmentation strategy that has been developed on the intermediary firm level. This strategy is applied to determine who the most profitable clients are and how FIIS can service them effectively.

Segmentation objectives include the following:

• Focus on fewer intermediaries• Differentiate offerings based on client need and value• Maximize growth opportunities• Retain clients with large assets

INVESTMENT PROFESSIONAL

Check Point

The firm segmentation strategy is used to determine the (select all that apply):

A. Sales territoriesB. Most profitable intermediaries and how to service themC. Compensation structureD. Level of automation of each intermediary

Factors that distinguish one group from another include (select all that apply):

A. Organizational sizeB. Proprietary product lineC. Sales strategyD. Ability to accept compensation

Check Point

The Institutional Distribution Group consists of (select all that apply):

A. Cash Business UnitB. Wirehouse and Regional C. Bank Business UnitD. Insurance