Columbine Capital Services

To complement the wide range of information resources it offers retail investors, Fidelity makes available professional-grade stock recommendations from Columbine Capital Services, an independent research provider with nearly thirty years experience. Some of the world's largest institutions make Columbine's research part of their stock selection process, but its work was not previously available to individuals.

Columbine's recommendations are the product of a disciplined, consistent company evaluation methodology developed through the firm's own intensive studies of the fundamental sources of stock performance in each economic sector. This hard-earned knowledge provides the foundation for a step-by-step analytical process that allows direct comparisons between one company and another.

Founded by John S. Brush, Ph.D. in 1976, Colorado-based Columbine is wholly owned by its professionals. The firm does not engage in investment banking or brokerage services. Columbine is one of the founding members of the Best Independent Research consortium.

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Columbine's recommendation is expressed in a three-class Buy-Hold-Sell system based on the firm's forecast of a company's return relative to the market over the next twelve months:

Buy - Expected to outperform the S&P 500 producing above-average returns.

Hold - Expected to perform in line with the S&P 500 with average returns.

Sell - Expected to underperform the S&P 500 producing below-average returns.

This is a consolidated version of the firm's five-class rating system that compares a given stock's prospects to that of its peers: Buys are stocks rated most favorable or favorable; Holds are stocks rated neutral, and Sells are comprised of stocks in the rating categories unfavorable or most unfavorable.

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Columbine provides Fidelity's customers with research on approximately 3,000 domestic and international stocks and ADR's that trade on US exchanges.

The firm delivers its investment advice using an efficient research report format designed and maintained by Best Independent Research. This report building environment enables Columbine to document the logic supporting its recommendations with understandable explanations of the decisions made at each step of its analytical process.

PAGE ONE: Designed to communicate a clear BUY, SELL, or HOLD recommendation, Columbine Capital's Investment Conclusion is followed by an evaluation of the subject company's current status on the individual analytical measures that represent the building blocks of Columbine's rating. The particular measures reported are those that Columbine's historical studies show to have the greatest impact on the company's future market performance. (Additional measures included in Columbine's analysis may be omitted for reasons of space.)

PAGE TWO: Presents a review of the company's financial progress and the strategy its management is using to deal with its business opportunities and challenges. The analysis includes the consensus outlook for earnings and revenues growth over the next several years.

PAGE THREE: Many investors find it useful to view companies within the context of their sector and industry. This page provides a fundamental analysis of the stock's industry and provides a series of tables comparing its valuation and projected earnings to the other companies in its peer group.

PAGE FOUR: This page is devoted to making the reader more familiar with Columbine Capital and its research approach. The report's distinctive terminology is explained in the Glossary section. The Disclosures section reviews the firm's recommendation language and its code of ethics, including Columbine's total ban on individual equity trading by the firm's employees and officers. The Disclaimer section discusses other areas that are important.

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Winning investment strategies are based on facts. Theories about the stock market are commonplace; Columbine Capital believes that reality provides a better guide to investing. The Columbine methodology is guided by hard-earned knowledge of what has actually driven stock performance in the past.

A disciplined analytical methodology offers the most consistent path to long-term investment success. Columbine's recommendations are the product of a careful evaluation process designed to subject every company to exactly the same analytical steps, every time. This consistency across companies and across time allows direct comparisons between one company and another-the key to generating superior long-term investment performance.

No single strategy is appropriate for all economic sectors. Columbine's professionals recognize that accurate stock recommendations for companies in different economic sectors require the use of very different valuation techniques from one sector to another.

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Step One: Identify the fundamentals that explain a company's past market performance. Knowledge is the foundation of Columbine's research process; the firm's professionals have been conducting original studies into the historical sources of stock return since the 1970s. As a result, they are able to identify the particular company characteristics that have the greatest impact on companies' future market performance, and to assess how that impact differs from company to company and sector to sector.

Step Two: Evaluate each company's current status on those fundamentals. Each firm is analyzed on multiple individual fundamental criteria. These are proven measures of a company's business value, its long-term growth characteristics, and the behavior profile of its investors.

Step Three: Apply the appropriate analytical framework for the company's economic sector. This framework, the product of an in-depth historical analysis of each sector by Columbine's research team, specifies how much importance to attach to a particular company's current status on each of the individual fundamental criteria. When all of these measures are positive, a company clearly will receive a high rating. But because Columbine's approach combines these measures in complex ways, a stock's attractiveness in some areas may outweigh neutral or negative ratings in others.

Step Four: Evaluate the company's return potential against its peers. Following the principles of the analytical framework for that particular economic sector, Columbine synthesizes each company's individual measures of valuation into an overall forecast of the company's market return potential over the next twelve months. Each stock is ranked relative to its peers on this forecast and the result forms the basis for Columbine's Recommendation.

Step Five: Ongoing research to adjust the process. Markets evolve over time-gradually changing their pattern of rewarding some company characteristics and punishing others. Columbine continuously updates its historical studies and adjusts the firm's evaluation process appropriately to maintain the firm's research edge.

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Columbine is a member of Best Independent Research (BIR), a consortium owned by six research organizations. It was created in 2002 to offer individual investors exposure to the work of some of the top independent firms whose research was previously available only to institutions. BIR's member firms were selected because of their strong past performance at stock picking, a record members must continue to remain a part of BIR.

None of the BIR firms offer brokerage or investment banking services. As opposed to a conflict of interest, these firms have the same interest in the success of their recommendations as the investor does. Providers are all veteran firms who adhere to professional standards similar to those that exist in the field of money management. Each must abide by a code of ethics that puts the interests of their clients ahead of their own.

The research reports from BIR members reflect a uniform report format designed for the investor who is interested in independent, performance-oriented research boutiques. Brief four-page reports de-emphasize a review of the general news and history of the company that is widely available elsewhere. Instead they focus on subjects and information that explain and support the firm's recommendation.

In addition to describing the firm's investment strategy, the reports encourage the investor to understand the conclusions at each step of the process that led to the recommendation decision. The reports also supply information about the firms themselves so investors can investigate their qualifications and the performance of their past advice. The providers' performance records are publicly available on this Fidelity site and at www.investars.com, an independent monitor of the performance of over 140 research providers.

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