news, numbers, analysis
A Newsletter from Fidelity worldwide investment, Nordic Region, #2 2012
s d n i w g Changin
embrace the Risk How to balance in an ambigous environment
FF EMEA Fund Five Year Anniversary
investment clock: where are we now?
This newsletter is for investment professionals only and should not be relied upon by private investors
Global Opportunities in Equity Income
content #2 2012
Managing the “New Normal” In this edition of Perspective, we will discuss how the global financial and sovereign crises have changed the investment landscape. The combination of debts, challenged growth prospects, low interest rates and deflationary forces could become the “new normal” in the foreseeable future. In our feature article on page 4 you can read more about how to manage this new risk environment. As bond investors are expanding their horizons by both asset and geography in the search for yields, you may want to take a closer look at our “Three Roads to Asian Credit” article on the last page. From an equity perspective, investing in high-quality dividend paying stocks continues to be an interesting option in order to achieve steady income and capital growth. However, the importance of thorough research into the sustainability of a company’s dividend and the quality of earnings is crucial in order to avoid value traps. The investment CLOCK remains in reflation due to weak growth and falling inflation. Trevor Greetham elaborates on the impact this and the most recent QE3 has on our current asset allocation positioning. Finally, I’d like to welcome a new member to the team, Stefan Hilton, who will be on the road helping build and support your business. I’m sure you will have the opportunity to work with him in the near future. •
Asgeir Thordarson, Head of Nordic Region
Update The latest news from Fidelity Worldwide Investment analysis Effects of a transformed risk environment funds in focus Three roads to Asian credit
2 4 7
update Asia Conference: opportunities in a challenging environment As clouds gather over the outlook for global economic growth, Asia still remains a bright spot supported by rising consumption and foreign direct investment. Fidelity is delighted to present an agenda and a speaker line-up that address the different themes and investment opportunities that they currently see in Asian markets. Date and time: October 19th, 8:30 – 12:30. Speaker line-up: Medha Samant, Investment Director, Gregor Carle, Investment Director, Fixed Income and Investment Solutions, Teera Chanpongsang, Fund Manager and Raymond Ma, Fund Manager. RSVP: Please register for the conference via e-mail to email@example.com
Fidelity Launches Mutual Funds in the Premium Pension System Fidelity has decided to offer its funds to investors in the premium pension saving scheme. There are now 13 funds available for the Swedish customers. – We understand that many investors in Fidelity funds have asked for the ability to be able to save in our funds in the premium pension system. We offer the pension savers an alternative to the existing range of funds and the possibility of a long-term investment. The funds we offer are carefully selected to give pension savers a good long-term growth on their capital. We also see that they fill gaps in existing offerings in the savings scheme, says Stefan Blomé, Sales Direc-
tor at Fidelity´s Nordic office in Stockholm. The premium pension system has been improved and provides an excellent opportunity for long-term savings. Individuals are invited to invest in a broad range of funds and offered a choice to actively influence their future retirement, as the premium pension is the only part of the state pension that can be influenced by active choice. Being an active and committed saver is in line with Fidelity’s investment philosophy. It also contributes to an increased understanding of their investments and creates greater potential for long-term returns. As an active fund manager it is
13 Fidelity funds now in the Premium Pension System – Fidelity Funds: l America Fund l EMEA (Emerging Europe, Middle l Asian Special Situations Fund East and Africa) Fund l China Consumer Fund l Global Strategic Bond Fund l Emerging Asia Fund l Global Opportunities Fund l European Dynamic Growth Fund l GRAS (Global Real Assets) Fund l European High Yield Fund l Global High Yield Focus Fund l Emerging Markets Fund l Latin America Fund
is a newsletter from Fidelity Worldwide Investment.
Production: Redaktörerna AB Editorial Council: Petter Edwinson (Fidelity), Petra Broman (Fidelity), Fredrik Arvidsson (Red.) Design: Mikael Mannberg (Red.)
NEW ALTERNATIVE. Now pension savers can invest in Fidelity funds.
Fidelity’s ambition to generate a better return than the market. Fidelity’s entry into the premium pension system marks an important phase of the company’s development in Sweden. With over 15 years of presence, Fidelity is a well established player in the Swedish market and is today working together with most of the leading banks, asset managers and institutions. Fidelity manages the equivalent of 40 billion SEK for Swedish investors. •
Investment Clock Update:
Rally Needs Macro Support Trevor Greetham’s Investment Clock is a way of relating the economic cycle to asset and sector rotation.
Weak growth and falling inflation put the Investment Clock in Reflation. Detailed analysis of the last few decades shows that government bonds usually do well at this stage of the business cycle as central banks cut interest rates or, latterly, make outright bond purchases as part of a quantitative easing program. For stocks, the historical record is mixed. Policy easing can drive an expansion in valuation multiples, as we have seen lately. However, a weak growth backdrop means optimism can give way to bouts of
Current Asset Allocation Positioning Underweight
Equities Property Commodities Bonds Cash
The fundamental environment is favoring bonds.
panic as earnings forecasts continue to see downgrades. It is exactly this balance that is in play today. We have reduced the size of our underweight position in risk assets over the last few months to reflect the two way risk that policy easing brings to the market. However, it could take several months before the conditions for a new recovery are in place and there are likely to be buying opportunities along the way if economic data disappoints. When it comes to asset allocation, improving US credit conditions mean we continue to like global property as an asset class. We see commodities offering similar upside to stocks if quantitative easing gains traction, therefore, we have reduced our underweight position. Other supportive factors for commodities include sentiment being less extended, positive seasonal factors and the asset class providing a hedge against geopolitical risks in the run up to the US Presidential election. •
REFLATION. The investment clock is in Reflation, reflecting weaker economic growth and falling inflation.
LEAD INDICATORS Inflation • The global inflation scorecard points downwards and headline CPI rates have rolled over. Growth • Our global growth scorecard has historically been a good six month lead indicator for the business cycle. • It turned negative in August for the first time since Q4 2011 on the back of a rolling over in the OECD’s lead indicators, declines in business confidence and economist GDP downgrades.
Fidelity expands in the Nordics Fidelity strengthens its team in Stockholm by hiring Stefan Hilton within Sales and Client Relations, Nordic Region. He began his career in the finance industry in New York in 2000 where he worked for Barclays Capital. Between 2003-2012 he worked in Frankfurt for Dresdner Bank, Commerzbank and Citigroup. •
Comparison index 12,0 11,9
The FF EMEA Fund has had a good run.
-10 -13,5 -20
Since launch (accumulated)
Source: FIL Limited, 31/11/2005 to 30/06/2012
Five years of strong outperformance The Fidelity Funds Europe, Middle East and Africa (EMEA) Fund recently celebrated its five-year anniversary. Since its launch in June 2007, the fund’s performance has been excellent. Here, Portfolio Manager Nick Price explains what lies behind the fund’s success and outlines the attractions of the EMEA region. Since its launch in June 2007, the performance of the Fidelity Funds EMEA Fund has been excellent, consistently coming first in its peer group with a cumulative return of 23.9%, far exceeding the index return of 1.4% over the same period (as per June 30, 2012).
What lies behind this performance? – Our investment approach has never changed. We always look for well managed, high quality companies that can demonstrate consistent earnings growth. However, we also want to be sure that this can be achieved without taking on too much risk. In addition, we are sensitive to valuations and want to be sure that a company’s good growth prospects have not yet been reflected in a correspondingly rich share price. The degree of certainty we have on these questions helps to establish the degree of conviction we have and whether we ultimately decide to buy, avoid or sell a particular stock. What are the attractions of the EMEA region? – One of the key attractions is its large size and inherent diver-
sity. The benefit of such a vast universe is that there is a large pool in which to fish and greater flexibility to move around Nick Price within this pool. Although the fund is primarily a bottom-up stock-picking fund, there is certainly great value that can be gained from a very good understanding of the economic drivers and positioning of countries and regions. Indeed, one of the reasons why we have done a great job of navigating the global financial crisis is due to the fund’s limited exposure to countries with the kinds of sovereign debt and banking problems seen in much of the developed world. The EMEA region is also large enough to allow us to bypass those companies and countries that have particularly strong trade links with Europe. Anything else? – While avoiding problem areas has been an important factor, the scope of the EMEA region means that we can have material exposure to better performing regions such as Africa, which also have the important added advantage of being relatively lowly correlated with Western markets. A final point that I would highlight about the EMEA region is that valuations are attractive compared to other emerging market categories such as Latin America as a whole or Asian emerging markets, which for value conscious investors like us is important. •
A Brave New World
The effects of a transformed risk environment The global financial and sovereign crises have redrawn the investment landscape, forcing investors to recast their established perceptions of risk. But this new and risky landscape also offers new opportunities. The investment environment has changed markedly in recent years. The risk environment has been transformed by the 2008 credit crisis and the ongoing sovereign debt crisis. The crisis actions taken by developed world governments and central banks have dramatically increased debt-to-GDP ratios around the world, tipping some economies, such as Greece, into an economic tailspin. In the periphery of Europe, sovereign risk has been dramatically re-priced upwards. Meanwhile, interest rates and bond yields in parts of the developed world seen as most economically and
THE New normal. The risk environment has been transformed by the 2008 credit crisis and the ongoing sovereign debt crisis. Now, sovereign risk has become an omnipresent feature within capital markets.
fiscally robust have fallen to record lows, increasing the price of safety. Indeed, major government bond yields have trended down strongly since 1982, however, the scope for this trend to continue is clearly now constrained by the present low yields. History suggests that major credit crises require multi-year workouts. Indeed, the combination of debts, challenged growth prospects, low interest rates and deflationary forces that we see today could be sustained for a prolonged period – becoming the ‘new normal’ for the foreseeable future. Secular growth drivers continue to reshape
the global balance of economic power, with many emerging markets now offering more attractive fundamentals than their developed world counterparts. As a result, bond investors are expanding their horizons by both asset and geography, increasingly considering higher yielding bonds and as emerging market issuers. “Risk-free” assets were, until recently, a key cornerstone of financial market and investing theory. They provided a starting point, or a comparative anchor, for investment decisions. The realisation that some of the largest risks in the bond universe resided in what was seen as the lowest-risk end of the spectrum has been a watershed moment for investors. In the last two years, we have witnessed a massive 70% reduction in the pool of risk-free assets. While 68% of economies carried a triple A rating at the end of 2007, that proportion had dropped to 53% by the end of 2012. The reduction in the pool of assets considered safe (combined with greater demand) has had the effect of significantly increasing the price of safety. The high price of safe assets reflects their relative scarcity, as well as investor percep-
tions of the risk associated with the European debt crisis and their concerns over the stuttering recovery in many OECD economies. Meanwhile, the Fed has now made it clear in its latest round of quantitative easing (“QE3”) that interest rates will stay low until mid-2015. The shortage of safe assets relative to demand has caused a squeeze in a narrower group of safe havens which remain negatively correlated to risk assets, such as US treasuries and German bunds. US Treasuries have become an expensive and crowded trade and there is a growing debate over whether the long-term bull market is over and a bear market is now due. The perceived position of US Treasuries as a safe haven has been relatively assured despite the country’s twin deficits and the downgrade of its sovereign credit rating. Indeed, the volatility caused by the downgrade saw further safe-haven flows into, rather than out of, treasuries. Author Jim Grant captured the mood of many investors when he remarked that traditionally riskfree Treasuries now offer a “returnfree risk”. A key issue is that the two biggest buyers of treasuries, the US Federal Reserve and China, are both relatively insensitive to value. The
10-year goverment bond yield (%) 50
Fed is explicitly trying to manipulate bond prices as part of its monetary policy framework. China is the largest foreign creditor to the United States owning around $1.2 trillion of US debt, over a quarter of the $4.5 trillion held by countries outside the US. The reason that such a significant part of China’s $3 trillion in foreign currency reserves is held in dollars is that other there are few liquid alternatives with sufficient market depth that would not introduce a higher level of currency volatility. The yields on US treasuries can stay low given these factors and their ongoing status as a genuine ‘safe haven’ in an age of uncertainty. Some commentators point to the danger of a liquidity trap for where bond yields drop towards their lower limits and remain there, following the example of Japan. Regardless, such low yields send a clear signal to value investors. With yields lower than 2% in the major economies, there is limited prospect of matching past returns in government bonds from this starting
“In the last two years, we have witnessed a massive 70% reduction in the pool of risk-free assets.” point. A reversion of yields to their long term average would result in low or negative returns. Were investors to use the last thirty years of the government bond index as a predictor of returns over the next thirty years they would be doomed to disappointment. On the other hand, achieving shelter in periods of risk-off volatility has become markedly more difficult – at these times the benefit of being invested in US treasuries is clear. Strategic fixed income managers will continue to invest tactically in such ‘safe assets’ to provide genuine, liquid diversification and negative correlation to riskier assets. Aggregate bond indices and funds benchmarked against them now entail significant concentration risks within sovereign bonds. These indices are invariably market-capitalisation weighted, which means the more debt an issuer has outstanding, the larger the weighting that issuer has in the index. Unfortunately, this
tilts indices toward indebted countries regardless of their ability to service that debt. This problem is exacerbated by the fact that debt ratings typically lag fundamentals. Accordingly, around half of the risk in the Bank of America Euro Aggregate Bond Index now comes from sovereign bonds. The same phenomenon is true of market-weighted indices in the corporate bond sector. The ITRAXX Corporates Index provided investors with a growing exposure to financials over the course of the last decade, increasing from just over 30% in 2002 to a peak of 55% in 2008. Since 2008, of course, investors have realised this was not an exposure they wanted and dissatisfaction with a system that predisposes them to concentrations of risk has grown.
Traditional market weight benchmarks no longer reflect the needs of investors. Outflows from these products and indebted sovereigns have already begun, yet much of the money appears to have flowed
0 2004 STABILITY
>>> toward a small set of safe havens, driving yields to levels which imply there is little value left. This strongly encourages the use of alternative benchmarks and strategic approaches. GDP-weighted indices offer an alternative route to investors, ostensibly allowing investments to be directed to the world’s most established economies. A significant problem is that GDP-weighted bond indices cannot reflect the world economy – China, the world’s second largest economy barely has a public debt market. Another difficulty is that some of the other largest economies are also the most indebted in the shape of the US and Japan, so the problem of being constrained is simply recast in another form. Replacing one benchmark constraint with another does not solve the underlying issue, which is allowing your portfolio manager the freedom to invest according to their conviction, with the ability to avoid unfavoured areas of the benchmark universe completely if they so wish. Strategic portfolios which allow zero weightings to countries and unconstrained portfolios can unshackle portfolio managers from the constraints that benchmarks impose. These approaches allow managers to invest in securities on the basis of their own merits and not because of their size in a benchmark index and to focus on absolute rather than relative risk. Strategic and unconstrained investing both play to the strengths of investment management companies that can generate an abundance of ideas across the full investment universe. Each position in the portfolio needs to pass either an explicit hurdle on returns or it needs to play a role in ensuring sufficient diversification. While aggregate market weight benchmarks still make up the bulk of the bond market, we should see growing consideration given to alternatively weighted, high-quality benchmarks, going forward. There will be greater interest in more flexible, ‘strategic’ bond portfolios that balance risk and return, as investors move away from products that unnecessarily tilt investments to overindebted areas. l
The global opportunity in equity income Investing in high-quality, dividend paying stocks looks particularly attractive at a time when bond markets are polarised between distressed sovereigns and expensive safe havens.
It is not surprising that the rationale for investing in high quality dividend-paying stocks is reasserting itself. The yields on key government bonds have fallen to historic lows as central banks have slashed interest rates and pumped liquidity into the system in an effort to spur economic growth. Meanwhile, equity dividend yields are well above recent (15 year) averages, nowhere more so than in Europe. This is good news for investors who require income to meet ongoing expenses but also provides a good entry point for investors with an eye on long-term capital growth. Indeed, history shows that it is the compounded effect of reinvested dividends that accounts for the bulk of total equity market returns in the long run. A key point to note when comparing yields across asset classes is that unlike conventional bonds, equities and equity income can protect investors from the negative effects of inflation. As Fidelity sees it, the attraction of a well managed, high quality equity income portfolio is that it is able to balance the bond-like characteristics of a steady income and capital preservation with the equity characteristics of long term capital growth and inflation-protection.
In Europe right now there are some very attractive yields available the Euro STOXX 50 Index (an index of 50 European blue chips) is yielding about 4.5% – but high headline yields should be handled with care. While the extra returns from dividends can provide a valuable safety cushion in volatile times, this only rings true if the dividends themselves prove sustainable in the face of a more difficult economic backdrop. It is important to avoid potential ‘value traps’ where high yields are actually an indication of stress and merely a precursor to a dividend cut. Perhaps the best example of this was in the financial crisis of 2008 when sharp declines in share prices pushed up the yields on European and US banks. Any investor tempted by this false signal would have been sorely disappointed because not only were dividends subsequently slashed but shareholders faced huge dilution as banks raised capital to shore up their balance sheets. All OF THIS underscores the importance of thorough research into the sustainability of a company’s dividend and the quality of the earnings that underpin the yield. Fidelity looks to invest in defensive businesses with
predictable, consistent cashflows on reasonable valuations. From a geographical standpoint, there are some important differences in attitudes to dividends around the globe. In Fidelity´s view, the place with the healthiest dividend culture is the UK, where companies tend to pay out a good proportion of their annual earnings in the form of dividends but also have a strong commitment to progressive dividend policies, which means that they aim to increase their dividend payments year-on-year. In the US on the other hand, there is less emphasis on dividends. US companies tend to pay out a smaller proportion of their earnings in dividends and there is an inclination to reward shareholders via share buybacks. Buybacks offer companies greater flexibility and some tax advantages but they are a less favourable signal for investors as they tend to be used tactically rather than as a permanent/ongoing commitment. All this means that the yield on the US market is a rather unexciting 2%, but this must be viewed in the context of the security / potential for growth in the underlying dividend stream. There are many companies in the US that have managed to grow their dividends consistently over several decades. In Europe meanwhile, the challenge is a different one. Political / economic woes mean that shares in many companies which are global in nature are trading at relatively depressed valuations because of their domicile. While commitment to dividends is perhaps not as strong as in the UK or the US, there are nonetheless selective opportunities to be found in quality multinationals with high yields and good prospects for dividend growth. l
Income Available Across Major Asset Classes 12 10
Yields (%) as at 29/06/12
Pre-crisis yields as at 29/06/07
8 6 4 2 0
$ C € ash C a 1m £ sh 1 th C a m G US ¥ C sh 1 th er m 10 ash mt an Y 1 h 1 G m U 0Y ove th Ja K 1 Go rnm 0 pa Y ve e r n n 1 Go nm t U 0Y ver en S G EM C o nm t v U orp ern ent C or m U o a Ja K rp te en pa C or B t n orp ate on C o B ds or ra o po te n ra B ds te on Bo ds U nd S s EM H U igh H Y U Em A K igh ield e s Hi Yi R rgi ian gh eld e ng H Yi ig e R al R ea Est Mar h Y ld e a l R al E te ket ield ea E st E l E sta ate U Bon st te E -15 d at E U O s e U -1 f EU -1 5 fic -1 5 In Re e 5 d tai Al us l l P tr or ial pe rty Eu U ro S E pe q an uit i U E es Ja K qui pa Eq tie n uit s Eq ie ui s tie s
COMPARING YIELDS. The yields on key government bonds have fallen to historic lows. At the same time, equity dividend yields are well above recent averages.
Source: DataStream, as at 29.06.12. The red line shows the yields available five years previously. Real estate yields: FIL/CBRE, IPD, end Q1 2012 and Q2 2007.
Funds in focus 7
Three Roads to Asian Credit This year, the Fidelity fixed income team celebrated its 10th anniversary of setting up in Hong Kong. While the team has experienced tremendous growth in capacity over time, its core investment process have remained consistent in delivering a range of investment propositions. Here we scratch the surface of the three Fidelity funds managed by the team in Hong Kong. FIDELITY FUNDS – ASIAN BOND FUND
Launched in 2011, the Asian Bond Fund invests primarily in corporates, governments and quasi-government bonds of higher quality, investment grade issuers that have their principal business activities in the Asian region. It offers Asian credit exposure with a focus on investment grade. The Asian bond market has traditionally attracted a higher risk premium due to the heightened political and economic uncertainties associated with developing countries. However, as the market has evolved and matured, investor perceptions have changed. While European countries have seen their sovereign debt ratings slashed, Asian countries (particularly Indonesia, China and the Philippines) have been upgraded by rating agencies, reflecting stronger fundamentals, lower leverage, increased confidence, and positively impacting the wider corporate credit universe. l
FIDELITY FUNDS – ASIAN HIGH YIELD FUND
FIDELITY FUNDS – CHINA RMB BOND FUND
Launched in 2007, the Asian High Yield Fund invests primarily in highyielding, sub investment grade securities of issuers that have their principal business activities in the Asian region. The fund will suit investors seeking high income and capital appreciation and who are prepared to accept the risks associated with a high yield investment. The Asian high yield market continued to trade towards positive territory heading into the summer and second half of 2012. China’s asymmetric interest rate cuts and coordinated global easing from ECB/BOE has improved liquidity and driven up asset prices. While further easing from central banks should be supportive for bonds, the market is expected to see continuing new supply. l
The most recent addition to Fidelity’s Asian bond range, the China RMB Bond Fund, launched in late 2011, seeks to maximize total return by investing in assets that will benefit from a rise in value of the Chinese Renminbi (RMB) over the long term. This is achieved by investing in a portfolio of investment-grade offshore RMB (‘CNH’) securities, and other investment-grade securities, hedged back to the RMB. It is targeted at investors looking to benefit from the rising value of the RMB over time, giving the potential for greater capital growth than that offered by cash holdings, while keeping the credit risk associated with their investments at a low level. l
Past performance is not a reliable indicator of future results. The value of investments [and the income from them] can go down as well as up and investors may not get back the amount invested. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of an investment. This newsletter is for Investment Professionals only and should not be relied upon by private investors. This newsletter must not be reproduced or circulated without prior permission. This communication is not directed at, and must not be acted upon by persons inside the United Kingdom or the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required. Fidelity/Fidelity Worldwide Investment means FIL Limited, and its subsidiary companies. Unless otherwise stated, all views are those of the Fidelity organisation. Fidelity only offers information on its own products and services and does not provide investment advice based on individual circumstances. Fidelity, Fidelity Worldwide Investment, and the Fidelity Worldwide Investment logo and currency F symbol are trademarks of FIL Limited. No statements or representations made in this document are legally binding on Fidelity or the recipient. Any proposal is subject to contract terms being agreed. Fidelity Funds (FF) is an open-ended investment company established in Luxembourg with different classes of shares. We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus, which is available along with the current annual and semi-annual reports free of charge from our distributors, from our European Service Centre in Luxembourg and from your financial advisor or from the branch of your bank. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only. Foreign exchange transactions may be effected on an arms length basis by or through Fidelity companies from which a benefit may be derived by such companies. Due to the greater possibility of default an investment in corporate bonds is generally less secure than an investment in Government bonds. Default risk is based on the issuer’s ability to make interest payments and to repay the loan at maturity. Default risk may therefore vary between different government issuers as well as between different corporate issuers. Issued by FIL Investments International (registered in England and Wales), authorised and regulated in the UK by the Financial Services Authority. SSL1209N09/0313
Fidelity 8 Vinjett worldwide investment Box 3488 103 69 STOCKHOLM
Where quality pays dividends In uncertain times of low economic growth and low interest rates, investments in companies with a track record of paying dividends can deliver a significant portion of total long-term return. Companies with a history of dividend payments are often more resilient and tend to be less volatile than the overall stock market. Fidelity Funds â€“ Global Dividend Fund is a global, actively managed portfolio that invests in dividendpaying companies. The discipline identifies best ideas from around the world, each selected for the quality of their earnings and their dividend growth potential. The fund aims to provide investors with a yield premium around 25% above the wider equity market. You can choose to receive dividend income on a monthly basis or reinvest it in the fund to boost long-term growth.*
Past performance is not a reliable indicator of future results. The value of investments (and the income from them) can go down as well as up and investors may not get back the amount invested. Changes in currency exchange rates may affect the value of an investment. Find out more about Fidelity Funds â€“ Global Dividend Fund at fidelityworldwideinvestment.com
So if you are looking for sustainable income or longterm growth potential, let quality pay dividends.
* Offered in different share classes. The yield will fluctuate in line with the yield available from the market over time. The yield Dividends can both increase and decrease and may in exceptional circumstances, be deducted from the capital. We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus, which is available along with the current annual and semi-annual reports free of charge from our distributors, from our European Service Centre in Luxembourg and from your financial advisor or from the branch of your bank. This communication is not directed at, and must not be acted upon by persons inside the United Kingdom or the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required. Fidelity/Fidelity Worldwide Investment means FIL Limited and its subsidiary companies. Unless otherwise stated, all views are those of the Fidelity organisation. Fidelity only offers information on its own products and services and does not provide investment advice based on individual circumstances. Fidelity, Fidelity Worldwide Investment and the currency F â€“symbol are trademarks of FIL Limited. This material is issued by FIL (Luxembourg) S.A. authorised and regulated in Luxembourg by Commission de Surveillance du Secteur Financier. CL1202902/0312