ClockWise - fidelity.com.cn · ClockWise Asset allocation perspectives from Fidelity Solutions 1 Policy Divergence Opportunities June 2014 Fidelity Solutions manages $47.7 billion

ClockWise Asset allocation perspectives from Fidelity Solutions

1

Policy Divergence Opportunities

June 2014

Fidelity Solutions manages

$47.7 billion of assets* in a

wide range of multi asset and

multi manager funds for retail

and institutional clients.

This month’s contributor:

Trevor Greetham

Head of Tactical Asset

Allocation and Portfolio

Manager

Eugene Philalithis Portfolio

Manager in Fidelity

Solutions

A dovish Fed press conference saw

VIX volatility close at 10.7, the

lowest level since February 2007

just prior to the subprime crisis and

not far off half the June average

since 1990. Low volatility isn't in

itself a sell signal for equities and a

continued melt up in prices is

possible. However, volatility usually

rises from its seasonal lows

between now and October and

possible triggers include deeper

unrest in the middle east or slower

US growth going into Q3. We would

most likely buy a dip given our

constructive longer term views.

*As of 31 May 2014

Our global growth scorecard has been positive for eighteen months. We are in a disinflationary

and desynchronised global recovery with steady expansion in the US driving above trend

global growth while the slowdown in China keeps commodity prices and inflation under

control. This backdrop allows G7 central banks to keep policy loose but with different

economies at different points in the business cycle monetary policy divergences will create

opportunities. We are overweight sterling versus the euro and swiss franc. In this month’s Time

Out, we look at infrastructure as an asset class suited to income strategies.

Investment Clock Neutral

Our big picture view of the world is one in which growth stays strong but inflation remains muted, like it

was in the 1990’s. This backdrop is good for developed market equities as it allows G7 central banks

to keep policy loose even when growth is improving, as the ECB’s recent move illustrates. However, at

present growth indicators are mixed and inflation pressures have risen on the back of a higher oil

price. The Investment Clock model that guides our asset allocation is the closest to neutral that we can

remember. We took some profit in equities earlier in the year as growth indicators weakened. We are

hopeful the growth picture will resolve in a positive way after the summer. A seasonal rise in volatility

may provide the opportunity to rebuild a larger overweight in equities.

Monetary Policy Diverges Create FX Opportunities

A strong, housing-led UK recovery is leading the Bank of England to warn of possible base rate rises

later this year. Meanwhile, the ECB has embarked on a new phase of easing to head off deflationary

forces. The prospect of further liquidity injections is helping sovereign bond spreads over Germany to

tighten further but the best of this trade is behind us. The best way to play divergent ECB policy is in

the currency markets. A widening spread between UK and German rates suggests a new and long-

lasting trend of euro weakness. We are overweight sterling versus the euro and swiss franc.

Time Out: Investing in Infrastructure in a Multi-Asset Income Strategy

Infrastructure is a key part of the allocation to growth assets within our multi-asset income strategies.

Infrastructure provides an attractive source of yield and the asset class can offer diversification

benefits and favourable risk-adjusted returns. Infrastructure can also be a hedge against unanticipated

inflation.

The Clockwise Blog

For up to date asset allocation thoughts from Fidelity Solutions please visit the Clockwise Blog where

you can click ‘Subscribe’ for live updates. See page 6 for a list of recent posts.

Focus Chart: The Seasonality of Equity Market Volatility – VIX Averages by Calendar Month

18

19

20

21

22

23

24

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Datastream, Seasonality of VIX volatility index, Feb 1990 to June 2014.

ClockWise: Fund Positioning

2

Overweight Equities & Strong Dollar Plays

+ + + = - - -

Multi Asset

Equities

High Yield Bonds

Cash

Inv Grade Bonds

Property

Commodities

Government

Bonds

Equity Regions USA Japan

Europe ex UK

UK

Emerging Markets

Asia Pacific

Equity Sectors Healthcare

Tech

Industrials

Discretionary Financials

Utilities

Energy

Staples

Materials

Currencies US dollar

Pound Sterling

Euro

Canadian dollar

Japanese yen

Australian dollar Swiss franc

Source: Fidelity, this represents the opinion of Fidelity Solutions. Positions for principal multi asset institutional and retail funds are as of June 2014. Individual fund positions may vary.

Multi Asset: Small Overweight in Equities

We have been overweight equities since 2012 on the back of recovery with loose policy and muted inflation. We took profits on a softening in growth lead indicators. Summer volatility may present an opportunity to rebuild positions.

We remain underweight commodities. Excess capacity, dollar strength and slower growth in China are headwinds.

We are underweight government bonds. Yields should gradually move higher as central banks normalise policy. We prefer Investment Grade and especially High Yield.

Property fundamentals are positive but higher rates could put pressure on REIT valuations, leaving us neutral.

Equity Regions: Overweight USA

We have been overweight US equities since early 2011 on the back of pro-growth policy and structural improvements. Earnings revisions are improving relative to other regions.

We traded out of our overweight in Japan in the spring time on concerns April’s sales tax rise will hurt the recovery. However, Japan is the best play on a US-led global upturn.

Asia Pacific ex Japan and the Emerging Markets are our main underweight areas. Commodity price weakness and a return of capital to the US will weigh on these markets.

We are broadly neutral in Europe where we see muted recovery and latent political risk should growth slow. We are underweight the UK where a housing-led recovery is best played through mid cap exposure and sterling.

Equity Sectors (US): Overweight Healthcare, Technology & Consumer Discretionary

Healthcare is our largest sector overweight. We expect the strong product pipeline of the pharmaceutical majors to lead to a gradual upward re-rating.

We also like the Technology and Consumer Discretionary, sectors given their exposure to the on-going US recovery.

We are underweight the interest rate sensitive Utilities and Consumer Staples sectors, consistent with our cautious view on bonds.

We are also underweight the commodity sensitive Materials and Energy sectors.

Currencies: Overweight US Dollar & Pound

We are overweight the US dollar. Sustained recovery is inconsistent with a zero Fed Funds rate. The markets will focus on the risk of rate hikes as QE comes to an end.

We are overweight sterling on similar grounds. Strong data will drive expectations for higher interest rates, even though macro-prudential measures to cool housing will be tried first.

We are underweight the Japanese yen and particularly the Swiss franc. The central banks stand ready to print money to avoid unwelcome currency strength in both cases.

We are modestly underweight the commodity-sensitive Canadian and Australian dollar with the latter at risk of a correction if volatility rises and carry trades are taken off.

ClockWise: Tactical Views

3

Growth Pick Up or Seasonal Bounce Back?

Our global growth scorecard has been positive for the last eighteen months making this the longest upswing in economic activity since

the two year expansion of 1996-7. As in that period, the US economy is driving above trend global growth while a slowdown in

emerging economies is putting downward pressure on commodity prices and inflation. This backdrop allows G7 central banks to keep

policy loose, easing whenever they deem it necessary to sustain growth as the ECB’s latest move illustrates. This is an equity-friendly

backdrop, though we took some profits in recent months as growth indicators weakened.

Chart 1: Global Growth Scorecard Turning Up?

Chart 2: Global Inflation Scorecard Slightly Positive

Source: Datastream. GDP % to Q1.2014, scorecard pushed forwards six months. Source: Datastream. CPI% to Apr 2014, scorecard pushed forward six months.

Our growth scorecard has risen recently though this is largely due to the bounce back in economic data in the US after bad weather in

Q1 and we are not yet convinced this mini cycle has troughed. Elsewhere in the world the outlook is mixed. The Chinese residential

construction sector remains weak but other economic data has stabilised. Japan’s sales tax rise is triggering a temporary recession

and a decline in aggregate real incomes could limit the strength of a bounce back. The UK economy is strong but activity is cooling off

somewhat in Germany according to the ZEW survey. In short, the world economy is increasingly desynchronised and we would need to

see more evidence of improvement before positioning for a sustained reacceleration in global growth.

Chart 3: Clock Indicator Trail Spot On Neutral Chart 4: The Investment Clock Diagram

0%

50%

100%

0% 50% 100%

Rolling 12 months Latest

REFLATION STAGFLATION

OVERHEATRECOVERY

INFLATION MOMENTUM RISING

GR

OW

TH

MO

ME

NT

UM

RIS

ING

Inflation Rises

Inflation Falls

Gro

wth

Mo

ve

s A

bo

ve

Tre

nd

Gro

wth

Mo

ve

s B

elo

w T

ren

d

Overheat

StagflationReflation

Recovery

INDUSTRIAL METALS

PRECIOUS METALS

ENERGYSOFTS

GOVERNMENT

BONDS

CORPORATE

BONDSHIGH YIELD

BONDS

INFLATION-

LINKED

BONDS

Chart 3 plots the Investment Clock model probability that we are moving into an environment of rising global inflation against the probability that global growth is moving above trend.

Source: Fidelity, this represents the opinion of Fidelity Solutions. For illustrative purposes only.

Ample spare capacity should keep inflation low but commodity prices are up year to date. Mixed growth and inflation indicators mean

the Investment Clock model that guides our asset allocation is the closest to neutral that we can remember. We are hopeful the growth

picture will resolve in a positive way and we do not expect commodity price strength to persist, however. With the Clock likely to move

back towards the Recovery phase summer volatility may provide an opportunity to rebuild a larger overweight in equities.

ClockWise: Tactical Views

4

Hawkish Bank of England is Bullish Sterling

Chart 5: UK RICS House Price Survey and GDP Growth

The world economy is desynchronised and policy

divergences could create investment opportunities.

The UK is experiencing a strong, housing-led

recovery with the RICS house price survey at a

level consistent with 4% GDP growth. Bank of

England governor Mark Carney used a recent

speech to bring forward rate hike expectations but

it is clear that he intends to apply Canada-style

macroprudential measures targeting the housing

sector in the first instance.

Source: Datastream, June 2014.

Chart 6: Sterling dollar and Relative GDP Growth of UK vs the US

We are sceptical that restrictions on mortgage

supply will slow the housing market or the

economy in the near term. The longer base rate

rises are put off, the higher rates will probably

have to go. In the meantime, a continued period of

strong UK growth is positive for sterling.

Source: Datastream, June 2014.

Chart 7: UK Equities vs. the World and $/£ exchange rate (inverted)

Sterling strength is bad news for the globally

exposed UK stock market, however, and it has

underperformed the world by about 15% in local

terms since the exchange rate troughed a year

ago. There is a clear inverse relationship at work.

We have been underweight UK equities but

overweight sterling in our asset allocation and we

expect current trends to continue.

Source: Datastream, June 2014. Note: left hand scale rebased to 100, right hand scale inverted..

ClockWise: Tactical Views

5

ECB Easing Phase is Bearish Euro, Swiss

Chart 8: Germany, Spain, Italy and Greece CPI

Things are very different across the English

Channel where the ECB has embarked on a new

phase of monetary easing in an attempt to head off

deflationary forces. A broad range of non-standard

measures are coming into play with the negative

deposit rate the most headline-grabbing element.

ECB action is intended to increase the

effectiveness of monetary policy in the periphery in

particular where deflationary forces are strongest.

Source: Datastream, May 2014.

Chart 9: Euro Area sovereign bond spreads over Germany

Those who missed the late 1990s convergence

trade would never have believed it would happen

all over again seventeen years later. We think

sovereign bond spreads over Germany have

further to come in but we are not going to see a

return to the complacent stability of the ten years

from 1998 and the best of this trade is clearly

behind us.

Source: Datastream, June 2014.

Chart 10: Euro dollar and 10 year bond yield differential US vs. Germany

The best way to play the divergence in ECB policy

relative to the Fed and Bank of England is in the

currency markets. Euro strength over 2012-14

reflected a drop in the risk of a euro breakup but in

normal circumstances the exchange rate tends to

follow bond yield differentials. The prospect of

rising US and UK rates relative to Germany

suggest a new and long-lasting trend of euro

weakness. We are long sterling and the dollar but

we prefer to short the overvalued swiss franc

where there is the potential for substantial

weakness over time but where the upside versus

the euro is limited by the SNB’s 1.20 exchange

rate cap.

Source: Datastream, June2014.

ClockWise: The Blog

6

Asset allocation perspectives from Fidelity Solutions

For up to date asset allocation thoughts from Fidelity Solutions please visit the

Clockwise Blog where you can click ‘Subscribe’ for live updates.

https://www.fidelity.co.uk/professional/perspectives/blogs/clockwise/default.page

See below for a list of the most recent posts. Click on the heading to go straight to the

article in question.

Subscribe to receive the latest

Clockwise blog posts as they

are published.

Could the BoE raise rates sooner?

Trevor Greetham 13 June 2014

Bank of England Governor Mark Carney struck a hawkish tone in his Mansion House speech, raising the prospect of a base rate rise later this year and promising macroprudential measures to target housing.

Consequence of unrest in Iraq

Trevor Greetham 13 June 2014

The conflict in Iraq has the power to force oil and gold prices higher and it could lead to a more pronounced sell off in overly-exuberant global stock markets. It may be an opportunity for long term investors to get out of gold and to buy stocks at more attractive valuations.

ECB ease underpins positive backdrop for stocks

Trevor Greetham 06 June 2014

The ECB has fired its last shot on interest rates, while also unveiling a wide range of non-standard measures aimed at sustaining the recovery and raiding inflation. Trevor Greetham sees these latest easing moves as part of the positive growth and liquidity backdrop which should continue to support developed equities.

Time to buy China? Ayesha Akbar 03 June 2014

China has been left behind during the recent emerging market rally. With valuations looking cheap compared to history and other countries, could you be at risk of missing the boat if you don’t buy in now?

Interview with Bloomberg TV

Trevor Greetham 03 June 2014

In this interview with Bloomberg TV I discuss the disinflationary backdrop and why this means we think equity valuations should go higher.

Fading US demand for Europe?

Nick Peters 28 May 2014

US investors have provided strong support for European equities, but buying activity is slowing. With valuations stretched and growth subdued, Nick Peters sees limited scope for further outperformance. So which markets offer the best prospects from here?

Clockwise: A summer lull

Trevor Greetham 03 June 2014

Although recent weak data suggests that equity markets could lose some steam over the summer, the team at Fidelity Solutions are confident that a soft patch will not become a sustained slowdown. Find out why they believe equities will win out long-term.

ClockWise: Time Out

7

Investing in Infrastructure Assets in a Multi-

Asset Income Strategy

Infrastructure investments can offer the prospect of attractive,

diversifying sources of return within a multi-asset income

strategy. Fidelity Solutions has been investing in infrastructure

for several years. In this paper we delve into how infrastructure

can be used as part of a multi-asset income approach.

Introduction

The search for income has become more complex as investors

navigate the trade-off between yield and volatility of capital. Given

the range of asset-specific risks, investing in a single asset class

is an approach that is prone to uncertainty. The diversification

benefit from investing across a spread of different assets can

help to achieve a stable and sustainable income. This has the

potential to exceed the returns on some single-source income

investments for only a modest increase in risk (versus investment

in corporate bonds).

At Fidelity, investing in infrastructure forms a key part of our multi-

asset income strategy, which seeks to provide investors with an

attractive and stable yield within a low-volatility framework

through diversified sources of income. The flexibility to tactically

adjust allocations helps to manage the stability of the yield and to

protect capital over time. We are currently in the ‘Recovery’

phase of the economic cycle; this means increased emphasis on

investing in growth assets like equities, real estate and

infrastructure. Infrastructure investments have accounted for

around 9%-12% of the global multi-asset income portfolio (see

Chart 1 overleaf for further details). This could be increased to as

much as 20% with more diversification across infrastructure funds

How we Manage Liquidity

Although direct and unlisted strategies in infrastructure investing

are relatively illiquid, investing in listed infrastructure funds helps

us to effectively manage liquidity. Listed infrastructure

investments offer daily liquidity, which is generally comparable to

the liquidity of investing in mid-to-large-cap global equity

strategies. The infrastructure funds we invest in are managed by

well-established and highly regarded infrastructure investment

managers that are listed on the London Stock Exchange.

We assess a number of factors to help us manage liquidity:

We cap the weight of our total infrastructure holdings in the

fund as a way to manage liquidity risk.

We cap the weight we would own in any one infrastructure

vehicle – again to manage liquidity risk.

We stress-test the total income portfolio using scenarios

such as what would happen if 50% of the assets were

withdrawn – in order to assess the optimal weights/limits on

the less-liquid asset classes.

Why Income Suits a Multi Asset Income Strategy

We invest in Infrastructure with the objective of adding

diversification, income and capital growth. Specifically, we seek a

relatively high and stable income with attractive risk-adjusted

returns over the long term. This core objective is backed by some

key benefits of investing in infrastructure:

Infrastructure offers attractively predictable and stable

dividend yields. Infrastructure assets tend to be backed by

government contracts and long-term concession or

partnership agreements; some infrastructure companies

operate as regulated monopolies.

Flexible allocation limits allow us to back positions with

conviction over the medium-to-long term – this helps us to

benefit from significant flexibility to manage risk-return

objectives. In addition, as projects held by the underlying

investee funds become operational and income-generating,

we could increase our NAV in these holdings.

Infrastructure typically hedges against inflation as the nature

of business models allows companies to produce long-term,

inflation-linked project revenues.

The asset class displays earnings resilience across

economic cycles given the underlying defensiveness of

infrastructure assets, helping to generate stable cash flows

We invest in infrastructure through dedicated investment vehicles

managed by highly experienced infrastructure sector managers.

This delivers a number of key benefits:

Infrastructure is an opportunistic asset class that can

provide additional sources of attractive, diversifying returns.

Infrastructure investments have low correlations to

traditional assets, which gives greater scope to generate

more consistent returns with lower volatility.

Infrastructure investing permits a flexible allocation to core

income-providing assets, helping to manage risk and return

objectives.

The medium-term outlook for investing in infrastructure is

favourable.

ClockWise: Time Out

8

The multi-asset income strategy currently has a bias towards

growth assets versus the core asset mix

Chart 1. Source: FIL Limited May 2014.

Infrastructure investments in focus

As the infrastructure managers we invest in are focused on

delivering stable and predictable dividends, this supports the

objectives of our income-focused strategy.

Presently, we favour investing in developed market social

infrastructure primarily through specialist infrastructure funds that

invest in projects funded by public-private partnership (PPP) and

Private Finance Initiative (PFI) structures. We also find certain

economic infrastructure to be appealing, such as transport assets

backed by long-term asset leases and projects supported by

concession agreements.

While there are various routes to access underlying infrastructure

assets, we favour the liquidity and regular dividends paid by UK-

listed infrastructure vehicles; they also offer robust levels of

governance and investor communication. Investing in unlisted

funds can entail a lack of investor reporting transparency and

information time lags. This is avoided by the regulatory-reporting

requirements of listed entities.

Infrastructure comprises sub-categories with diverse

risk/return characteristics

Chart 2. Source: FIL Limited and Credit Suisse research, 31 July 2013.

The four case studies (which we highlight in a separate At a

Glance: Investing in infrastructure assets in a multi-asset income

strategy paper) are UK-listed infrastructure funds. The UK market

originated the first PFI deals in the early 1990s and then

developed the structure further to PPPs, which have been

adopted worldwide. The UK is also a leading player when it

comes to asset leasing, not least because the privatisation of the

UK rail industry (then called British Rail) was brought about by

the Railways Act 1993, which created the need for rail leasing

companies.

How to choose the right infrastructure manager

The heritage in the UK’s PFI/PPP industry and the development

of private sector rolling stock leasing over the past 20 years have

created a rich pedigree of infrastructure investment professionals.

While infrastructure is a global industry, the UK has become a

centre of excellence and the London Stock Exchange is one of

the preferred listing routes.

Our strategy takes a diversified fund of funds approach to

investing in infrastructure, and our size as an organisation allows

us to dedicate considerable resources to manager selection. We

examine an investment management team’s track record in

considerable detail; this helps to reveal how past performance

can feed into future sustainable returns.

We look for a team’s depth and breadth of infrastructure investing

experience and those managers that manage concurrent projects

with various maturity profiles. The asset class is still relatively

young, but associated industry experience, such as in the aircraft

finance & leasing industry, can help to inform our choices.

Above all, we place considerable value on a manager’s in-house

abilities to research sectors and projects in detail, so that they

can ensure a full project pipeline. A fund of funds manager’s

interests are typically closely aligned with those of its investors

through a dividend structure, so choosing managers who can

deliver and grow their dividends will always be a key

consideration for an income investor.

Outlook

Investing in high-quality infrastructure assets managed by leading

managers can deliver a diversified long-term stable dividend

stream. This supports our multi-asset income strategy that seeks

diversification and sustainable income. Our allocation to

infrastructure can be flexed upwards over the medium-to-long

term according to our convictions about the asset class. We could

increase NAV in our existing investee funds when more of their

assets become fully income-generating. This could strengthen

our view of a manager’s ability to pay a sustainable dividend over

time, which supports the core objective of our income-paying

strategy.

If we move into a more inflationary phase of the economic cycle,

infrastructure can act as a natural hedge as the listed vehicles

generate long-term, inflation-linked revenues backed by

government contracts or long-term stable partnership or

concession agreements. The outlook is positive as there is a

strong pipeline of good-quality infrastructure projects supporting

the continuing evolution and growth of the asset class.

This month’s Time Out was written by Eugene Philalithis,

Portfolio Manager in Fidelity Solutions.

ClockWise: Market Returns

9

Stocks Up, Commodities Flat

Global stocks are close to their highs. Government bonds have underperformed stocks year to date but yields have been declining over

the period. Greece and Russia were the best performing markets over the month while Australia, Chile and Korea the laggards.

Commodity returns were flat as a rise in Energy on the back of geopolitical tensions was offset by the fading of fading of the supply

driven shock to Agriculture.

18 Jun 2014

% % End bps bps End bps bps

$bn % -1M 2014 -1M 2014 -1M 2014 -1M 2014 -1M 2014 yield -1M 2014 rate -1M 2014

World 38,041 100.0% 3 6 4 6 0 4 - - - - 1.92 3 -29 0.30 -3 -3

North America 19,724 51.8% 4 7 4 7 - - - - - - - - - - - -

US 18,430 48.4% 4 7 4 7 0 3 0 3 0 0 2.61 10 -39 0.25 0 0

Canada 1,294 3.4% 4 9 4 11 0 1 0 4 0 -2 2.27 1 -50 1.25 0 0

Europe 9,294 24.4% 1 6 2 7 0 5 - - - - - - - - - -

Eurozone 4,295 11.3% 3 6 4 8 0 5 1 6 -1 -2 1.38 4 -57 0.15 -10 -10

Germany 1,273 3.3% 2 2 3 4 -1 3 0 4 - - - - - - - -

France 1,342 3.5% 2 7 3 9 -1 4 0 5 - - - - - - - -

Netherlands 398 1.0% 3 2 4 3 -1 3 0 5 - - - - - - - -

Italy 364 1.0% 8 17 9 19 0 7 1 8 - - - - - - - -

Spain 512 1.3% 5 13 6 15 0 7 1 9 - - - - - - - -

Greece 19 0.0% 21 7 23 9 - - - - - - - - - - - -

UK 2,988 7.9% 0 5 -1 2 0 5 -1 3 1 2 2.74 18 -29 0.50 0 0

Switzerland 1,258 3.3% -1 8 0 9 -2 5 -1 6 -1 -1 0.75 0 -35 0.25 0 0

Sweden 420 1.1% -2 3 0 7 -1 1 0 5 -1 -3 1.84 0 -68 0.75 0 0

Asia 5,443 14.3% 3 2 4 -1 - - - - - - - - - - - -

Japan 3,015 7.9% 7 -1 8 -3 0 4 0 1 0 3 0.60 1 -14 0.30 0 0

Australia 1,098 2.9% -2 7 -2 3 0 8 0 4 0 5 3.74 1 -52 2.50 0 0

Hong Kong 480 1.3% 1 3 1 3 - - - - 0 0 - - - 0.25 0 0

Singapore 206 0.5% 1 5 1 4 - - - - 0 1 - - - 0.21 0 0

Emerging Markets 3,491 9.2% 2 7 3 6 1 8 - - - - - - - - - -

Latin America 778 2.0% 0 8 2 5 2 10 - - - - - - - - - -

Mexico 199 0.5% 1 0 2 0 0 8 1 8 -1 0 - - - 2.95 -31 -21

Brazil 473 1.2% 0 12 2 7 0 7 1 1 -1 6 - - - 10.90 0 100

Chile 57 0.1% -4 -1 -2 6 0 8 2 15 -2 -6 - - - 0.43 0 0

Emg. Europe / M.E. 354 0.9% 6 0 7 0 - - - - - - - - - - - -

Israel 89 0.2% 3 17 3 16 - - - - 0 0 - - - 2.25 0 -25

Turkey 66 0.2% 3 19 5 18 0 13 1 11 -1 1 - - - 4.40 0 0

Russia 207 0.5% 8 -6 9 0 3 2 3 8 0 -6 - - - 8.25 0 0

Poland 62 0.2% 4 5 4 7 1 5 0 6 1 -1 - - - 2.55 3 11

Hungary 10 0.0% 1 -3 3 2 2 10 - - -1 -4 - - - 3.40 -10 -60

Emerging Asia 1,990 5.2% 3 7 4 7 - - - - - - - - - - - -

Korea 615 1.6% -1 2 -2 -1 - - - - 0 3 - - - 2.48 -1 -4

Taiwan 483 1.3% 5 9 4 10 - - - - 1 -1 - - - 0.39 0 0

India 368 1.0% 4 24 6 21 - - - - -3 3 - - - 7.23 0 0

Malaysia 173 0.5% 0 2 0 1 0 5 0 4 0 1 - - - 6.60 0 0

China 719 1.9% 6 -2 6 -2 0 6 0 9 0 -3 - - - 6.00 0 0

South Africa 328 0.9% -1 9 3 11 -1 6 2 9 -4 -2 8.44 30 36 5.50 0 50

Global Sectors

Energy 3,817 10.0% 5 12 5 13

Materials 2,259 5.9% 1 4 2 4

Industrials 4,023 10.6% 3 4 3 3

Consumer Discretionary 4,319 11.4% 4 1 4 1

Consumer Staples 3,611 9.5% 1 6 1 6

Health Care 3,949 10.4% 3 10 3 10

Financials 8,084 21.3% 3 4 4 4

Information Technology 4,807 12.6% 6 8 6 8

Telecommunication 1,453 3.8% 1 2 1 2

Utilities 1,253 3.3% 4 14 4 14

Property (REITS) 1 11 - -

Commodities 0 7

Energy 5 11

Agricultural -6 8

Industrial Metals 1 1

Precious Metals -1 5

Source: FTSE International; JP Morgan; Datastream, Dow Jones UBS total returns and MSCI AC World for Global Sectors

Bond yields Interest Rates

Mkt Cap

Gov Bond Returns

USD % Local %USD % Local %

Equity Returns FX Rates (x/$)

This information is for Investment Professionals only and should not be relied upon by private investors. It must not be reproduced or circulated without prior permission. Data is unaudited. Unless otherwise stated, all views are those of Fidelity. Fidelity only offers information on its own products and

services and does not provide investment advice based on individual circumstances. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. Issued by FIL Investments International (FSA registered number 122170) a firm authorised and regulated by the Financial Services Authority. FIL Investments International is a member of the Fidelity Worldwide Investment group of companies and is registered in England and Wales under the company number 1448245. The registered office of the company is Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent TN11 9DZ, United Kingdom. Fidelity Worldwide Investment’s VAT identification number is 395 3090 35. Past performance is not a reliable indicator of future results. Please note that the price of units or shares and the income from them can fall as well as rise and you may not get back the amount originally invested

ClockWise: Market Returns

10

Important Information

This document is provided for information purposes only.

Fidelity only gives information about its products and services. Investment involves risks. Any person considering an investment should seek independent advice on the suitability or otherwise of a particular investment. Fidelity is not authorised to raise, distribute or manage mutual funds or the relevant products in, or to provide securities investment management or advisory services to persons resident in, the mainland China.

FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited.

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