To Our Shareholders, Clients and Friends,

Like 2015 and 2016, 2017 was another important year for the Company. Financial results were strong as were our business accomplishments. The Company maintained its 98% annual client retention rate, generated solid new business, and continued executing on its multi-year re-investment program.

BUSINESS ACCOMPLISHMENTS

Since 2015, the Company’s multi-year re-investment program has made noticeable progress towards our longer-term distinctiveness and growth objectives. Refinement of our investment process, enhanced market awareness, more efficient operational processes and ongoing recruitment and retention of great professionals have improved our standing. However, it is important to note that many of the projects that we have undertaken require careful planning, sequencing and collaborative execution. As a result, several 2017 business accomplishments will continue into 2018 in order to yield longer-term rewards to our clients in the years to come.

While these longer-term initiatives move forward, the Company is unwavering in its daily focus on fulfilling client objectives. Measuring success for our clients on an aggregate annual basis is a challenge given that our impact and services are customized for our individual clients. This is why extending our decade-long 98% annual client retention record during 2017 is all the more meaningful. Furthermore, during the year, we added noticeable new revenue, which is additional evidence of the strength of our value proposition.

We made significant progress refining our investment process in 2016 and that initiative continued during 2017. Over the course of the year, our professionals navigated the uncharted global markets that began with interpreting the impact of the Trump presidency and finished with assessing significant tax law changes. We refined our asset allocation analyses, improved our external manager line-up and increased “ballast” within most clients’ accounts in advance of likely increased market volatility. While we will continue these efforts into 2018, we are confident that our investment philosophy and process will lead to portfolios that help our clients achieve their goals.

During 2018, we expanded our ranks with the addition of four new Investment Officers. Our ability to recruit talented individuals is a crucial aspect of meeting the needs of current and future generations of clients. The Company also is focused on ensuring seamless transitions when Officers retire, and we plan for those occasions long before they are likely to occur. The care with which we manage the transfer of clients from Officers expected to retire in the coming years to the emerging generation of Officers is an important part of our overall commitment to exceptional client services. Other initiatives that reinforce our client service commitment include automated account reviews, and our Portfolio Engineering Group, which provides operational leverage to allow our Officers more time to provide personal service to clients.

In June, Robert Jeffers joined the Company as our Chief Operating Officer. Under Rob’s leadership we have launched the first phase of middle and back office operational and technological transformations that we believe are required to enhance our competitive position in the years to come. Early actions included process mappings of key activities, additions to staff within our technology department and launching a collaborative “lean team” that by the end of 2017 had already reduced paper usage by more than 30%. Furthermore, in the fourth quarter, we launched two significant technology initiatives that will continue into 2018. The first will significantly enhance our online client experience and the second will refine our operational work flow processing.

Our client engagement and brand awareness activities continued through 2017. Over the course of the year, we held 11 client events that included regional investment gatherings, a special evening at the Peabody Essex Museum’s Ocean Liner exhibit, our third dedicated New Hampshire professionals’ gathering, and our first endowment and foundations breakfast. Through our heightened marketing activities, our media and online presences have increased significantly. Furthermore, the Company continued to gain external recognition for its work, earning 14 awards and recognitions during 2017, including “Best Wealth Manager” from Massachusetts Lawyer Weekly and “Best Independent Trust Company” from Family Wealth Report.

Other accomplishments included the launch of donor-advised funds through Fiduciary Trust Charitable, which enhances our ability to advise clients about their philanthropy and facilitate their charitable giving through an efficient and flexible structure. In the second year of our re-energized custody services, we saw significant client asset growth and continued recognition in the marketplace for a high-service custodian focused on individual trustees, family offices and registered investment advisors with less than $2 billion in assets. Finally, our New Hampshire subsidiary, in its fourth year of operations, continued to grow solidly.

FORWARD PERSPECTIVE

The past three years have crystallized for me what differentiates Fiduciary Trust from its competitors, and more importantly, from other professional callings. Service firms are traditionally evaluated by both standard metrics (e.g., size, profitability, new business) and unmeasurable quotients (e.g., brand, principles, tone). In large part, managers and shareholders focus on the tangibles because they are easy to track, evaluate and execute. However, in my mind, true distinction comes from the unmeasurable qualities. These reside in the collective beliefs of the firm’s professionals and define a culture. As we turn the corner on 2018, I want to recognize Fiduciary’s tangible strengths, but I am convinced that Fiduciary’s beliefs and values are even more meaningful to its future.

Viewed through traditional business lenses, Fiduciary stands tall. Many decades of profitability, a strong balance sheet, leading client retention, independence and operational scale are all evidence of excellence. However, what truly sets Fiduciary apart are our beliefs about the services we provide, our commitment to excellence in all aspects of our business, and ultimately, how we make decisions and act in pursuit of that excellence.
While we provide a myriad of customized investment and fiduciary services, much of what we do centers around acting as a counselor during life’s journey. We address the ambiguous and imperfect questions of individuals, families and nonprofits. For this reason, we believe Fiduciary is in the business of the human condition, which is exemplified by the questions we hear often:

• Do we have enough money to retire?
• Should we tell our children how much money we have?
• How can my portfolio grow faster, but still allow me to sleep at night?
• How do we treat all our children fairly when they have very different lifestyles and spending habits?
• How can my nonprofit fund more programs?
• Who is going to be there for my spouse when I am no longer here?

While these questions benefit greatly from expertise in investments, tax planning, fiduciary law and financial and estate planning, they are largely values-based questions unique to each individual and family. For this reason, the individuals who excel in this profession not only possess requisite investment, financial and legal training, but they also have well-formed personal values, real-world experience and derive their own energy from helping others. Our professionals’ belief that this is a career based on personal relationships stands in stark contrast to many individuals in this industry who view their jobs as either sales or “representative” positions of an impersonal corporation.

Just as Fiduciary views the purpose of its work differently, it also approaches the way it operates as a business differently. This is a people business: both in the sense of the individuals and families we serve, and in the sense that Fiduciary’s greatest strength is its collection of professionals. The positive impact we impart to our clients comes from the direct engagement between our clients and our professionals. In some ways, I think of the firm as an enduring clearing house that matches great clients with great professionals. Because of this, we operate Fiduciary as a professional service firm rather than a “bank,” per se. Unlike a big bank, we have no products to sell. Unlike a big bank, we selectively recruit the best talent and empower them to act on their clients’ behalf. Unlike a big bank, we work hard to align our interests with our clients’. And, most importantly, unlike a big bank, we do not aspire to be big. Instead, we aspire to be special. As I have written before, many wealth advisory firms over the past three decades have embraced manufacturing paradigms to pursue scale rather than excellence. We have not. While we actively embrace modern operational and technological tools, we operate the firm as a platform for distinctive professionals to practice their craft of helping others.

It is this unique combination of tangible strengths and intangible culture that has energized me over these past three years at Fiduciary and causes me to be excited about our collective future. In a world painted in uncertainty, the need for an honest partner to assist with life’s puzzles has never been more valued. When most competitors have lost their moral bearings, the attraction of a firm that empowers high quality professionals stands out. And, with interconnected demographic, technological and competitive changes underway, a firm with demonstrable advantages and a clear vision of its future differentiates itself. For these reasons, and many more, I am proud of our professionals’ accomplishments on behalf of clients in 2017 and look forward to our work in 2018 and beyond.

Best,

Austin V. Shapard

President & Chief Executive Officer