Fidelity Emerging Asia Fund Select 2018

Transcription

1 Fidelity Emerging Asia Fund Select 2018 June 2018 Dhananjay Phadnis Portfolio Manager This material is for investment professionals only, and should not be relied upon by private investors

2 Important Information The value of investments can go down as well as up and investors may not get back the amount invested. This fund invests in overseas markets and the value of investments can be affected by changes in currency exchange rates. This fund invests in emerging markets which can be more volatile than other more developed markets. This fund has, or is likely to have, high volatility owing to its portfolio composition or the portfolio management techniques. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Investors should note that the views expressed may no longer be current and may have already been acted upon. Past performance is not a reliable indicator of future returns. 1 Fidelity Emerging Asia Fund

3 Portfolio manager profile Dhananjay Phadnis Funds currently under management Based in Hong Kong Investment experience 17 years Education CFA Charterholder ACA, Institute of Chartered Accountants of India, India PGDM (Finance), IIM Bangalore, India B.Comm., BMCC, Pune University, India Fidelity Funds Asia Focus Fund Mar 2015 Present FIJ Asian Equity Fund* Apr 2014 Present FIF Emerging Asia Fund* Nov 2013 Present Previous funds under management Fidelity Asia Telecom Pilot # Dec 2006 Mar 2009 Fidelity Funds Indonesia Fund Apr 2008 Mar 2015 Fidelity Asia Pacific ex-japan Pilot # Feb 2011 Feb 2015 Experience at Fidelity Portfolio Manager, Hong Kong 2011 Present Director of Research / Country Fund Manager, Hong Kong Investment Analyst / Country Fund Manager, Hong Kong 2008 Investment Analyst, Mumbai, India / Hong Kong Previous experience Associate, Equities Research, JP Morgan India, India Asst. Audit Manager, AF Ferguson & Co., Chartered Accountants, India 1999 Audit Internship, PG Bhagwat & Co. Chartered Accountants, India # Pilots are funded entirely by Fidelity and are not available for client investment. Source: Fidelity International. * This fund is not available for distribution in Hong Kong 2 Fidelity Emerging Asia Fund

4 Ann. Return (%) Fidelity Emerging Asia Fund Consistent outperformance over tenure Investing in Asia s emerging markets, providing focused exposure to the region s fastest growing economies An outstanding long-term performance record, continued today under Dhananjay Phadnis Performance over tenure Fidelity Emerging Asia MSCI EM Asia Underpinned by a distinctive focus on high quality sustainable growth Sector Average Leveraging Fidelity s large team of >100 equity investment professionals across the region Annualised Volatility (m) % Information ratio: 1.0 Peers beaten: 95% Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, Morningstar Direct, 31 May Index is the MSCI Emerging Asia Index Basis: bid-bid, net income reinvested in GBP to 31/05/2018, net of fees. Performance and Risk: 01/11/2013 to 31/05/2018. Center of the cross represents the average risk return of IA Asia Pacific ex Japan sector. Peer group for FIF Emerging Asia: Ranking of W Accumulation Shares within Morningstar IA Asia Pacific Ex Japan. *Annualized Returns 3 Fidelity Emerging Asia Fund

5 Fidelity Emerging Asia Fund Performance under Dhananjay Phadnis 120 % Fund MSCI Emerging Markets Asia Index mths 6mths 1yr 3yrs PM tenure Peer group quartile rank 2 nd 1 st 1 st 1 st 1 st Fund -4.8% 32.6% -9.0% 41.8% 15.9% Index -6.4% 27.4% -14.1% 45.7% 14.0% Excess return 1.6% 5.2% 5.1% -3.9% 1.9% Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, Morningstar, 31 May Basis: bid-bid, income reinvested in GBP. The fund s primary share class according to the IA is shown. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only. Peer group: IA Asia Pacific ex Japan sector. PM tenure since 1 November Fidelity Emerging Asia Fund

6 Contents 1. Track record and investment framework 2. Fund positioning 3. Investment themes 4. Appendix - macroeconomic environment and investing responsibly

7 1. Track record and investment framework

8 Track record across different strategies Previously managed portfolios Current portfolios Asian Telecom / Utilities Pilot* FF Indonesia Fund Fidelity Asia Pacific ex-japan Pilot* FIF Emerging Asia (OEIC)* FIJ Asia Equity Fund* FF Asia Focus Fund (SICAV) Fund Index 1 Dec 06 to 31 Mar 09 (Cumulative Gross USD) Fund Index 1 Apr 08 to 31 Mar 15 (Cumulative Net USD) Fund Index 14 Feb 11 to 28 Feb 15 (Cumulative Gross USD) Fund Index 28 Jan 15 to 31 May 18 (Cumulative Net GBP) Fund Index 1 Apr 14 to 31 May 18 (Cumulative Net JPY) Fund Index 1 Mar 15 to 31 May 18 (Cumulative Net USD) N/A 83% Peers Beaten 93% Peers Beaten 98% Peers Beaten 97% Peers Beaten 82% Peers Beaten Annualised gross USD Annualised net USD Annualised gross USD Annualised net GBP Annualised net JPY Annualised net USD Fund: -1.9% Index : -3.8% Fund: 8.6% Index : 6.6% Fund: 8.8% Index : 4.0% Fund: 14.3% Index : 12.6% Fund: 11.8% Index: 10.9% Fund: 10.0% Index: 8.4% Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May Fid Asia Telecom Pilot: From 1 December 2006 to 31 March 2009; Index was the FTSE AP Ex Jap Telecomm until 31 Oct 2008, thereafter was the FTSE AW APxJ Util+Tel Cap. Returns are gross of fees in USD terms. FF Indonesia Fund : From 1 Apr 08 to 31 Mar 15; Index is the MSCI Indonesia IMI Cap 8%. Returns are net of fees in USD terms. Basis Nav-Nav with gross income reinvested. Fidelity Asia Pacific ex-japan Pilot : From 14 Feb 11 to 28 Feb 15; Index is the MSCI AC Asia Pacific ex Japan Index. Returns are gross of fees in USD terms. FIF Emerging Asia Fund: Share Class was launched on 28 January 2015; Index was MSCI Emerging Asia Composite (33.3% MSCI China, 33.3% MSCI India & Pakistan, 33.3% MSCI Malaysia, Indonesia, Thailand & Philippines) until 31 October 2014, thereafter was the standard MSCI Emerging Markets Asia Index. Returns are calculated bid-bid, net income reinvested in GBP terms. FIJ IT Asia Equity Fund: Since 1 April 2014; Index is the MSCI AC Asia ex Japan Index. Returns are bid-bid, net of fees in JPY terms. FF Asia Focus Fund: Since 1 March 2015; Index for performance until September 1994 was a custom MSCI Index, the Combined Pacific (F) ex Japan plus Australia and New Zealand Index. From October 1994 to 28 February 2015 it was the MSCI All Country Far East ex-japan (N) Index. Thereafter it is the MSCI All Country Asia ex-japan (N) Index. Returns basis nav-nav with net income reinvested in USD, excluding initial charge. While no fees are applied to the pilot fund, its performance has been adjusted to reflect the 195bps predicted Ongoing Charges Figure for the peer group ranking. Live fund performance may differ from this pilot performance based on the impact of actual expenses associated with live fund administration, transaction costs, shareholder inflows and outflows. Pilots are funded entirely by Fidelity and are not available for client investment. All trading for pilots is transacted via Fidelity s centralised dealing desk, in the same way as a live fund. However, in the absence of sufficient liquidity, all client orders must be completed in full before a pilot receives any allocation. Pilots may also not trade with client accounts. Past Performance is not a guide to the future. Peer group for FF Indonesia: Morningstar Offshore GIF Indonesia Equity; Fidelity Asia Pacific ex Japan Pilot: Morningstar Offshore GIF Asia Pacific ex Japan Equity; FIF Emerging Asia: Ranking of W Accumulation Shares within Morningstar IA Asia Pacific Ex Japan; FIJ IT Asia Equity Fund: Foreign Equities - Asia Pacific exclude Japan (NRI Fundmark); FF Asia Focus Fund: Morningstar GIF Asia ex Japan Equity. 7 Fidelity Emerging Asia Fund

9 Portfolios currently under management Portfolios managed previously Performance across different strategies Rolling 12-month returns (%) Fidelity Asia Pacific ex-japan Pilot (Gross)* MSCI AC Asia Pacific ex Japan Index Excess return Fidelity Funds - Indonesia Fund A-USD (Net) FF Indonesia Fund Blend Index Excess return Fidelity Funds - Asia Focus Fund A-USD (Net) South East Asia Comp Index Excess return FIJ Asia Equity Fund (Net)* MSCI AC Asia ex Japan Index Excess Returns Fidelity Emerging Asia Fund A Accumulation Shares (Net)* FIF Emerging Asia Fund Blend Index Excess return Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May * This fund is not available for distribution in Hong Kong Fid Asia Telecom Pilot: From 1 December 2006 to 31 March 2009; Index was the FTSE AP Ex Jap Telecomm until 31 Oct 2008, thereafter was the FTSE AW APxJ Util+Tel Cap. Returns are gross of fees in USD terms. The pilot fund has been closed. FF Indonesia Fund : From 1 Apr 08 to 31 Mar 15; Index is the MSCI Indonesia IMI Cap 8%. Returns are net of fees in USD terms. Basis Nav-Nav with gross income reinvested. Fidelity Asia Pacific ex-japan Pilot : From 14 Feb 11 to 28 Feb 15; Index is the MSCI AC Asia Pacific ex Japan Index. Returns are gross of fees in USD terms. The pilot fund has been closed. FIF Emerging Asia Fund: Since 1 November 2013; Index was MSCI Emerging Asia Composite (33.3% MSCI China, 33.3% MSCI India & Pakistan, 33.3% MSCI Malaysia, Indonesia, Thailand & Philippines) until 31 October 2014, thereafter was the standard MSCI Emerging Markets Asia Index. Returns are calculated bid-bid, net income reinvested in GBP terms. FIJ IT Asia Equity Fund: Since 1 April 2014; Index is the MSCI AC Asia ex Japan Index. Returns are bid-bid, net of fees in JPY terms. FF Asia Focus Fund: Since 1 March 2015; Index for performance until September 1994 was a custom MSCI Index, the Combined Pacific (F) ex Japan plus Australia and New Zealand Index. From October 1994 to 28 February 2015 it was the MSCI All Country Far East ex-japan (N) Index. Thereafter it is the MSCI All Country Asia ex-japan (N) Index. Returns basis nav-nav with net income reinvested in USD, excluding initial charge. While no fees are applied to the pilot fund, its performance has been adjusted to reflect the 195bps predicted Ongoing Charges Figure for the peer group ranking. Live fund performance may differ from this pilot performance based on the impact of actual expenses associated with live fund administration, transaction costs, shareholder inflows and outflows. Pilots are funded entirely by Fidelity and are not available for client investment. All trading for pilots is transacted via Fidelity s centralised dealing desk, in the same way as a live fund. However, in the absence of sufficient liquidity, all client orders must be completed in full before a pilot receives any allocation. Pilots may also not trade with client accounts. Past Performance is not a guide to the future. 8 Fidelity Emerging Asia Fund

10 Investment process 1. Idea generation Internal research External research Screens 2. Investment decision 4. Monitoring Regular position monitoring: Market price vs. targets Revisit thesis Theme exposure Moat stocks Corporate governance & Management quality Valuation 5. Exit strategy Disciplined sell strategy: Target price achieved Thesis change Better opportunities 3. Position sizing Position size based on: Conviction Time horizon Liquidity stocks Source: Fidelity International 9 Fidelity Emerging Asia Fund

11 Idea generation Leveraging Fidelity s strong research capability Shanghai Equity: 1 Portfolio Managers 4 Research Professionals Dalian Equity: 14 Research Support* Tokyo*** Equity: 10 Portfolio Managers 13 Research Professionals Delhi Equity: 13 Research Support* Mumbai Equity: 1 Portfolio Manager 7 Research Professionals Singapore Equity: 10 Portfolio Managers 9 Research Professionals 2 Shorting Analyst Hong Kong** Equity: 10 Portfolio Managers 12 Research Professionals 1 Derivatives Analyst 9 Traders Taiwan Equity: 3 Portfolio Managers Sydney Equity: 4 Portfolio Managers 10 Research Professionals 1 Technical Analyst Source: Fidelity International, 31 March Data is un-audited. Research professionals include equity analysts and associates * Also referred to as Research specialist ** Hong Kong: Portfolio managers include 2 multi asset portfolio managers *** Tokyo: Portfolio managers include 1 multi asset portfolio manager and research professionals include 1 multi asset analyst 10 Fidelity Emerging Asia Fund

12 Investment decision The funnel approach What I look for in a business? Compounders / Moat stocks Corporate governance & management quality Favourable valuations Businesses with strong moats Sustainability of returns and ability to reinvest Winners from industry consolidation and focus on improving returns Cautious on stocks with high regulatory risk Clear track record Incentives aligned with minority shareholders Potential turnaround in profitability following management change Third party checks where-ever necessary Valuation disconnect a) Undervalued relative to long term potential b) Stocks trading at trough valuations with improving fundamentals Use a metric relevant to the stock/ industry: P/E, P/B, EV/EBITDA high quality companies with sustainable growth prospects and attractive valuations Source: Fidelity International 11 Fidelity Emerging Asia Fund

13 Risk management 1. Fundamental research and due diligence 2. Portfolio level risk management overlay Position sizing Liquidity Exposure monitoring Holdings vs. reference index Stock level: up to +/- 5% Sector level: up to +/- 10% Country/currency level: up to +/- 10% Over 90% of the fund should be tradable in 10 days Fund holding vs. overall Fidelity holding Theme-based exposure monitoring - automation, e-commerce, logistics, demographics, health care Macro factor exposure 3. Firm-level risk oversight processes Regular portfolio monitoring through IMPACT, daily reports Monthly Investment Risk Oversight Committee Quarterly Fund Review with CIO and Portfolio analytics Source: Fidelity International 12 Fidelity Emerging Asia Fund

14 Portfolio characteristics A focused portfolio, with higher active money and low turnover Number of holdings in range May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Turnover in 40% to 60% range Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Active money in 60% 90% range May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Tracking error remains in 2% to 5% range Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Source: Fidelity International, 31 May 2018 Past performance is not a reliable indicator of future results. 13 Fidelity Emerging Asia Fund

15 Book to Price Dividend Yield Earnings Yield Op Cash Flow Yield EBITDA to EV Earnings Grow NTM Earnings LTG (IBES) Sales Growth NTM Profit Margin Return on Equity Debt to Equity (inverted tilt) Earnings Persistence Price Change (6m) Price Change (12m) Earnings Rev FY1 Market Cap $ Beta (local index 3y) Foreign Sales (%) Composite Value Maintain quality, growth bias Focus on quality and growth 2 GROWTH QUALITY Growth tilt Composite Growth Past performance is not a reliable indicator of future results. Source: Fidelity International, 31 May Fidelity Emerging Asia Fund

16 2. Fund positioning

17 Portfolio positioning country allocation As at 31 May 2018 Country Weighting Active weight and Change Over 6 months Other countries 2.4% 0.1% Fund Index Change 0.9% 2.3% India 13.5% 11.3% Active weight 0.8% 2.2% Philippines 3.4% 1.3% -1.1% 2.1% Hong Kong 1.5% 0.0% -0.9% 1.5% Singapore 1.0% 0.0% -0.4% 1.0% Indonesia 3.6% 2.7% -0.5% 0.9% Thailand 2.8% 3.2% -2.3% -0.3% Malaysia 2.0% 3.2% -1.2% -0.2% China 40.3% 42.3% -2.0% 5.1% Taiwan 9.6% 15.5% -5.9% -1.1% Korea 14.5% 20.5% -5.9% -0.9% Source: Fidelity International, 31 May MSCI classification. Cash and other excluded from the chart above. Cash was 5.3% of TNA as of 31 May 2018 and 4.6% as of 30 November 2017 Index: MSCI Emerging Asia Index. Holdings in the fund can vary from those in the index quoted. Note, change in fund weight from November 2017 to May Fidelity Emerging Asia Fund

18 Portfolio Positioning Sector Allocation As at 31 May 2018 Sector Weighting Active weight and Change Over 6 months Financials 20.3% 26.1% Fund Index Change 2.0% 5.8% Cons. Disc. 11.6% 8.3% Active weight 0.9% 3.3% Cons. Stap. 6.9% 5.3% 0.8% 1.6% Health Care 4.6% 3.3% -0.3% 1.3% Industrials 4.7% 5.4% -1.5% -0.7% Utilities 1.0% 2.2% -1.7% -1.1% Real Estate 1.4% 2.7% -1.3% 0.6% Energy 3.6% 5.4% -0.9% -1.8% Telecoms 1.4% 3.7% -2.4% -0.4% Materials 0.6% 5.4% -4.8% -0.2% I.T. 32.7% 38.0% -5.3% 0.0% Source: Fidelity International, 31 May MSCI classification. Cash and other excluded from the chart above. Cash was 5.3% of TNA as of 31 May 2018 and 4.6% as of 30 November 2017 Index: MSCI Emerging Asia Index. Holdings in the fund can vary from those in the index quoted. Note, change in fund weight from November 2017 to May Fidelity Emerging Asia Fund

19 Top and bottom 10 active positions As at 31 May 2018 Stock Top 10 Positive Active (%) Stock Top 10 Negative Active (%) HDFC Bank 2.9 Zhejiang Supor Cookware 1.8 China Pacific Insurance Group 1.8 China Int l Travel Service Corp 1.7 China Mengniu Dairy 1.4 WuXi Biologics 1.4 Industrial & Commercial Bank of China 1.4 Bank Rakyat Indonesia 1.2 Bank Central Asia 1.2 Container Corporation of India 1.2 China Construction Bank -2.1 Baidu -1.7 China Mobile -1.4 Ping An Insurance Group -1.3 Samsung Electronics -1.2 Hon Hai Precision Industry -1.1 Bank of China -1.0 Reliance Industries -1.0 CNOOC -0.8 Tata Consultancy Services -0.6 Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities. Source: Fidelity International, 31 May 2018 Index: MSCI Emerging Asia Index. Active Bet = % of Fund TNA - % in the Index. Numbers may not total due to rounding. Holdings in the fund can vary from those in the index quoted. 18 Fidelity Emerging Asia Fund

20 3. Investment themes

21 Sales (CNY bn) RoE 1. Long-term opportunities in consumption Zhejiang Supor strong demand growth in cookware and small appliances China s leading cookware maker majority owned by France s Groupe SEB Cookware and small appliance still have long runway for growth. Both industries have favourable structures with high market concentration Long term growth compounder with #1 in cookware and #2 in small appliance, Supor is well positioned to capture the long term growth potential while generating excess return (20%+ ROE). Best in class management and global parentage brings innovation, technology and scale Foreign* benefits Key to future success will be innovation and execution. Management team matters and they have amongst the best. Secular growth in penetration of home appliances Strong earnings growth with high returns % % 20% 15% 10% % 0% No of households (mn) RHS Penetration rate (%) 0 Sales ROE (RHS) Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities. Source: Fidelity International, Factset, Statistica, March Fidelity Emerging Asia Fund

22 2. Benefits from growth in online discount retail in China VIPshop Recent partnership with Tencent and JD.com to drive revenues China s offline discount retail is underdeveloped US Offline retail penetration 24 square feet per capita Consolidated market CHINA Offline retail penetration 2 square feet per capita Fragmented market VIPshop China s leading online discount retailer for brands Strong growth opportunity for discount retail in China due to robust customer demand, constant supply of excess inventory and immature offline discount retail infrastructure Focus on flash sales and apparel, but now expanding category Foreign* With the recently forged partnership with Tencent and JD.com, traffic and new users should gradually ramp up Strong management quality Spinoff of internet finance business to unlock value Top 20 retailers 24% market share Top 20 retailers 7% market share Strong sales growth and return on equity Large off-price retailers Lack of large off-price retailers Sales RoE (RHS) 80% 60% 1533 stores 3812 stores Many large offline outlet Fewer offline outlets % 20% 0% 74 outlets 43 outlets 5 outlets 6 outlets E 2019E -20% Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities. Source: Fidelity International, Factset, Frost and Sullivan report, Company sources, VIPshop website, February Fidelity Emerging Asia Fund

23 Philippines HK India Indonesia Thailand China Singapore US Korea Malaysia UK 3. High quality franchises in financials BDO Unibank tailwinds from rising penetration of financial products Retail credit Philippines has a long runway of growth 90% 80% 70% 60% BDO Unibank largest Philippine bank by assets Structural growth due to under-penetration of retail credit in Philippines Higher exposure to the retail segment vs. peers Part of the SM Group Foreign* which gives it an advantage with retail banking Focus on top 100 corporate customers provides pricing power Strong return on equity and healthy balance sheet 50% 40% 30% 20% 10% Healthy income growth and returns % 12% 9% 0% % 3% E 2017E 2018E 0% Retail Credit/ Total Credit (2016) Total Operating Income (PHP bn) Return on Equity (RHS) Source: Factset, Swiss Re sigma report, Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities. 22 Fidelity Emerging Asia Fund

24 4. Improvements in infrastructure Container Corporation of India secular growth in logistics in India Container traffic in India vs. world 200 Container port traffic (Million TEU: 20 foot equivalent units), Container Corp dominant CTO operator in India Virtual monopoly in rail container freight (70% share) Upcoming Freight Corridor a key future growth driver; share of rail in freight traffic (28% vs. 50% globally) Benefiting from movement Foreign* towards containerisation (50% vs. 70% globally) Expanding into logistic parks to provide complete logistics solutions for foreign and domestic sectors Strong balance sheet and healthy cash flows Share of railways in total freight traffic set to rise Railway Freight Share (%) Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities. Source: World Bank, Company Annual reports, Fidelity International, January Fidelity Emerging Asia Fund

25 Key messages Asian markets have had a good run in 2017 & YTD. We need to see continued earnings upgrades to sustain future performance. A diverse universe continues to provide active investors with stock specific opportunities. I remain true to my high quality, growth style to construct a portfolio of my disciplined risk-return criteria companies that pass through The fund remains a core offering in Fidelity s Asia ex Japan franchise. It is supported by Fidelity s strong research team of 50+ analysts spread across the region. Source: Fidelity International 24 Fidelity Emerging Asia Fund

26 4. Appendix macroeconomic environment and investing responsibly

27 Economic backdrop for Asia Positive drivers US dollar weakness Challenges Rise in US 10- year bond yield Strong earnings growth in Asia Asia China slowdown Global growth remains robust Trade wars? Source: Fidelity International, May Fidelity Emerging Asia Fund

28 KRW USD THB EUR CHF AUD NZD INR PHP RUB IDR HUF MYR BRL JPY GBP NOK MXN SEK TRY E 2018E 2019E OVER- VALUED UNDER- VALUED Key positive drivers of Asia Fair Value Estimates (Implied overvaluation vs. USD) Robust earnings growth outlook USD Debt vs. Basic Balance of Payments 5 0 USD 45% 35% 40% USD Debt (% GDP) Chile % 15% 30% % -5% -15% -25% 20% 10% Turkey Argentina South Africa Mexico Indonesia Malaysia Brazil Russia % India China Korea -40 Asian currencies highlighted in Red Asia ex Japan EPS Growth 0% -4% -2% 0% 2% 4% 6% Current Account + Net FDI (% GDP) Source: Thomson Reuters Datastream, May 2018 Source: Thomson Reuters Datastream, April 2018 Source: BIS, National Sources; Haver Analytics, Fidelity International, April Fidelity Emerging Asia Fund

29 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Yield % Key challenges for Asia Rise in US bond yields Roll-back in China s economic stimulus Peak in China s stimulus % 100% % 60% 90% 80% 70% % 20% 0% -20% 60% 50% 40% 30% 20% 10% % 0% 0 US 10 year bond yield New projects value (YoY%) Newly increased TSF as % of GDP New TSF relative to GDP (RHS) This material contains general information only, and should not be construed as a recommendation to buy or sell any security. Investors should note that the views expressed may no longer be current and may have already been acted upon. Source: Thomson Reuters Datastream, May 2018 Source: NDRC, Fidelity International, August 2017 Source: Fidelity International, January Fidelity Emerging Asia Fund

30 Earnings growth (%) Asia s earnings growth is positive But wide disparities exist from country and sector perspective Positive earnings revisions Earnings revisions by Sector 12 month change (%) FY '16 FY '17E FY '18E FY '19E FY '20E Real Estate 27.5% Energy 25.0% Materials 16.9% Information Technology 14.0% Financials 10.9% Industrials 7.1% Consumer Staples -3.7% Telecommunications -7.2% Consumer Discretionary -10.3% Utilities -14.6% Health Care -17.9% Earnings revisions by Country 12 month change (%) China 16.4% Hong Kong 11.1% Korea 10.6% Singapore 7.2% Thailand 2.5% Malaysia -1.7% Taiwan -2.2% Indonesia -2.7% Philippines -3.2% India -6.0% Source: Thomson Reuters Datastream, May Fidelity Emerging Asia Fund

31 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13 Sep-13 Apr-14 Nov-14 Jun-15 Jan-16 Aug-16 Mar-17 Oct-17 May-18 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13 Sep-13 Apr-14 Nov-14 Jun-15 Jan-16 Aug-16 Mar-17 Oct-17 May-18 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Valuations beginning to look more interesting Forward PE Asia ex Japan Forward PB Asia ex Japan Forward PE Asia ex Japan vs. Developed World Forward PB Asia ex Japan vs. Developed World This material contains general information only, and should not be construed as a recommendation to buy or sell any security. These forecasts are not a reliable indicator of future performance. Source: Thomson Financials DataStream, May Fidelity Emerging Asia Fund

32 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 HKD (BN) China long term prospects are bright Inclusion of A shares in MSCI Emerging Asia index Growing Southbound trade Current EM index With initial inclusion After 100% inclusion China China A shares China B & overseas Other EM China internet companies among Global Top 10 SB 30D net purchase Abolishment of presidential term limit 12M avg Apple Google Amazon.com Facebook Tencent Alibaba Priceline.com Uber Netflix Baidu Market value (in billion U.S. dollars) 801 Presidential term: March 14, This material contains general information only, and should not be construed as a recommendation to buy or sell any security. These forecasts are not a reliable indicator of future performance. Source: MSCI, Bloomberg, Statistica, April Fidelity Emerging Asia Fund

33 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun '13 Sep '13 Dec '13 Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar '16 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec '17 Mar'18 Earnings per share India positive reforms and signs of capex recovery Earnings recovery post GST disruption Positive earnings growth outlook for 2018 and % 20% 15% 10% 5% 0% -5% -10% 7% 19% MSCI India EPS growth -5% 8% GST - 1 Jul 17 10% 2% 2% 5% 8% FY '15E FY '16E FY '17E FY '18E FY '19E Some signs of a capex recovery General elections in late 2018 / early % 16% GCF YoY % 12% 8% 4% 0% -4% This material contains general information only, and should not be construed as a recommendation to buy or sell any security. These forecasts are not a reliable indicator of future performance. Source: Thomson Reuters, Factset, May Fidelity Emerging Asia Fund

34 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 ASEAN a long term structural growth story Improving fundamentals ASEAN s attractiveness vs. North Asia 140 Thailand economy is bottoming out, elections in Indonesia consumer sentiment beginning to improve Philippines government execution needed to drive infrastructure and consumption Malaysia signs of stability, elections in Source: Fidelity International, Thomson Reuters Datastream, May 2018 Price: North Asia rel. to ASEAN This material contains general information only, and should not be construed as a recommendation to buy or sell any security. 33 Fidelity Emerging Asia Fund

35 Stock attribution 12 months to 31 May 2018 Security Sector Average Active Weight (%) Total Relative Contribution (bps) Contributors Wuxi Biologics Health Care China Int l Travel Service Corp Consumer Discretionary Kingdee Int'l Software Group Information Technology China Mengniu Dairy Consumer Staples Kweichow Moutai Consumer Staples Detractors Delfi Consumer Staples Best Pacific International Consumer Discretionary Tata Motors Consumer Discretionary Siloam International Hospital Health Care Pilipinas Shell Petroleum Energy Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities. Source: Fidelity International, 31 May Index: MSCI Emerging Asia Index. Attribution Period: 1 June 2017 to 31 May Fidelity Emerging Asia Fund

36 Sector attribution 12 months to 31 May 2018 Sector Average Active weight (%) Security Selection Contribution (bps) Sector Selection Contribution (bps) Total Relative Contribution (bps) Consumer Discretionary Information Technology Industrials Materials Telecom Services Financials Energy Others Utilities Consumer Staples Real Estate Health Care Total Primary Assets Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May Currency: USD. Covering the period from 1 June 2017 to 31 May Index: MSCI Emerging Asia Index. Attribution is actual. Cash and others detracted 166bps over the period. Note: Differences are due to rounding. 35 Fidelity Emerging Asia Fund

37 Country attribution 12 months to 31 May 2018 Country Average Active weight (%) Security Selection Contribution (bps) Country Selection Contribution (bps) Total Relative Contribution (bps) China Thailand Taiwan Malaysia Philippines Hong Kong Other countries Indonesia India Singapore Korea (South) Total Primary Assets Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May Currency: USD. Covering the period from 1 June 2017 to 31 May Index: MSCI Emerging Asia Index. Attribution is actual. Cash and others detracted 166bps over the period. Note: Differences are due to rounding. 36 Fidelity Emerging Asia Fund

38 Stock attribution Tenure 1 November 2013 to 31 May 2018 Security Sector Average Active Weight (%) Total Relative Contribution (bps) Contributors HDFC Bank Financials China Int l Travel Service Corp Consumer Discretionary Kweichow Moutai Consumer Staples Zhejiang Supor Cookware Consumer Discretionary Eicher Motors Industrials Detractors Delfi Consumer Staples Ping An Insurance Financials Cipla Health Care Samsung Electronics Information Technology Tempo Scan Pacific Health Care Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities. Source: Fidelity International, 31 May Index: MSCI All Country Asia ex-japan (N) Index Attribution Period: 1 November 2013 to 31 May Fidelity Emerging Asia Fund

39 Sector attribution Tenure 1 November 2013 to 31 May 2018 Sector Average Active weight (%) Security Selection Contribution (bps) Sector Selection Contribution (bps) Total Relative Contribution (bps) Consumer Discretionary Financials Information Technology Energy Industrials Consumer Staples Telecom Services Materials Utilities Others Real Estate Health Care Total Primary Assets Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May Currency: USD. Covering the period from 1 November 2013 to 31 May Index: MSCI All Country Asia ex-japan (N) Index. Attribution is actual. Cash and others detracted 1126bps over the period. Note: Differences are due to rounding. 38 Fidelity Emerging Asia Fund

40 Country attribution Tenure 1 November 2013 to 31 May 2018 Country Average Active weight (%) Security Selection Contribution (bps) Country Selection Contribution (bps) Total Relative Contribution (bps) China India Malaysia Indonesia Hong Kong Thailand Philippines Taiwan Korea (South) Other countries Singapore Total Primary Assets Past performance is not a reliable indicator of future results. Returns may be affected by changes in currency exchange rates. Source: Fidelity International, 31 May Currency: USD. Covering the period from 1 November 2013 to 31 May Index: MSCI All Country Asia ex-japan (N) Index. Attribution is actual. Cash and others detracted 1126bps over the period. Note: Differences are due to rounding. 39 Fidelity Emerging Asia Fund

41 Investing responsibly To protect and enhance returns to our clients Through our rigorous bottom-up research process we gain an in-depth understanding of ESG issues (Environmental, Social and Governance) at a company level before they escalate and potentially threaten the value of our clients investments Proactive, ongoing dialogue with management allows us to improve the governance of the companies in which we invest our clients money We engage with clients to design portfolios that reflect specific ESG themes or meet their company / industry restrictions A+ Rated by UNPRI 650+ Companies actively engaged 3,700+ Voted at 3,700+ shareholder meetings Source: Fidelity International as at 30 June 2017 UNPRI 2017 overall rating, having outperformed the median in four consecutive years in relation to six out of seven categories we are marked on. For details on the PRI Assessment methodology see 40 Fidelity Emerging Asia Fund

42 Investing responsibly ESG is part of our investment process Specialist ESG team Specialist ESG team at forefront of engagement, trends & issues Around 200 analysts globally Analyst in-depth research of ESG issues External research Sustainalytics rating for each company Ongoing PM monitoring Portfolio Managers analyse ESG factors Source: Fidelity International as at 30 June Fidelity Emerging Asia Fund

43 A powerful investment engine In numbers 17,000 Meetings/year Our analysts hold a meeting with a corporate executive every 10 minutes on average. Actively covering over 80% of the world s major market capitalisation and global investment grade credit universe 400 Investment Professionals Of which half are dedicated research professionals in 16 locations around the world >12 Years Our portfolio managers average tenure with Fidelity. Almost 1/5 of PMs are female A+ Rated ESG approach (Environmental, Social and Governance) Investment approach as measured against the reporting categories of the Principles for Responsible Investment ( PRI ), a U.N. backed network of international investors 90% 1/2 Buy 4/5 Sell Of all our fund holdings are covered by Fidelity proprietary research, which is unavailable to other investors Analysts take views with 3-5 year horizons, assigning 1 and 2 ratings to securities they are bullish on, and 4 and 5 to those they are bearish on Source: Fidelity International, 30 June Fidelity Emerging Asia Fund

44 Fidelity global investment resources Pan Europe and Americas 81 Portfolio Managers¹ 68 Equity Research 23 Fixed Income Research² 16 Traders 22 Multi Asset Research³ 4 Real Estate Research 2 Other Research 4 Emerging Markets Global Europe United Kingdom United States Sector and Country Japan 9 Portfolio Managers¹ 15 Equity Research 1 Multi Asset Research Asia Pacific (ex Japan) 34 Portfolio Managers¹ 11 Traders 48 Equity Research 10 Fixed Income Research² 1 Other Research Portfolio Managers 193 Research Professionals 37 Equity Research Support 27 Traders 36 Divisional Management 1 Global Economist 418 Total Investment Resources 5 Source: Fidelity International, 31 December Data is unaudited. ¹ Portfolio Managers include equity, fixed income, real estate, multi asset and derivatives teams. ²Fixed Income Research includes quantitative/credit analysts. ³Includes 1 economist. 4 Other Research includes derivatives and quantitative experts. 5 Includes Equity Research Support Resources 43 Fidelity Emerging Asia Fund

45 Disclaimer This information must not be reproduced or circulated without prior permission. Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of North America. This communication is not directed at, and must not be acted upon by persons inside 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. Unless otherwise stated all products and services are provided by Fidelity International, and all views expressed are those of Fidelity International. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited. FIL Limited assets and resources as at 31/12/ data is unaudited. Research professionals include both analysts and associates. This example uses assumed figures and is for illustrative purposes only. The Key Investor Information Document (KIID) is available in English and can be obtained from our website at or by calling The Prospectus may also be obtained from Fidelity. Fidelity Funds FF is an open-ended investment company (UCITS) established in Luxembourg with different classes of shares. The Authorised Corporate Director of Fidelity Investment Funds and Fidelity Investment Funds IV OEIC, and the Manager of Fidelity Unit Trusts is FIL Investment Services (UK) Limited. Please note Fidelity Unit Trusts are not registered for sale in Jersey or Guernsey. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only. Data Source Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Barra. Inc. s analytics and data ( were used in the preparation of this document. Copyright 2017 BARRA, INC. All rights reserved. 44 Fidelity Emerging Asia Fund