FIDELITY JAPANESE VALUES PLC. Investment Review May 2012 Shinji Higaki Portfolio Manager This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. The value of investments can go down as well as up and you may get back less than you invest. Investments in overseas markets can be subject to currency fluctuations and will effect the value of your investments.
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FIDELITY JAPANESE VALUES PLC.
Investment Review
May 2012Shinji Higaki Portfolio Manager
This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. The value of investments can go down as well as up and you may get back
less than you invest. Investments in overseas markets can be subject to currency fluctuations and will effect the value of your investments.
Cumulative Returns (%) as at 30 April 2012 3 Months 6 Months 1 Year Since Launch
NAV 1.13 0.97 2.37 -31.55Share Price 0.93 -3.58 1.16 -40.15Russell/Nomura Mid Small Cap Index -2.14 1.47 0.82 1.00TOPIX -1.27 2.14 -1.43 -40.27
Annual Performance over the Past 5 Years
Returns (%) over 12 months to: 30-Apr-2012 30-Apr-2011 30-Apr-2010 30-Apr-2009 30-Apr-2008
NAV 2.37 -2.87 38.14 -23.50 -15.70Share Price 1.16 -3.39 35.58 -24.88 -23.32Russell/Nomura Mid Small Cap Index 0.83 -7.93 24.04 -5.37 -10.54TOPIX -1.43 -8.31 19.30 -12.35 -7.87
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Past performance is not a guide to what might happen in the future.Source: FIL Limited, 30 April 2012 *Launch date is 15 March 1994; Net returns in GBP terms; Benchmark: TSE Second Section Index linked with Russell/Nomura Mid Small Cap Index
Internet services and infrastructure providers in new business:– M3 – operator of medical internet portal– Kakaku.com - beneficiary of growing on-line consumer services– Bit-Isle - data storage service provider– GMO Payment Gateway – online account settlement services
Source: company data as of 31/03/2012
Continued growth in internet services and infrastructures provide investment opportunities in new business areas
Source: company data as of 31/12/2011; Japanese fiscal year (April - March)
Kakaku.com – Monthly Page Views and Usersm3.com – Number of Emails Read by Doctors
Current Stock Selection Theme: Internet Service
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Reference to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity.
Middle East AfricaSouth America Central/Easten Europe and RussiaWesturn Europe Asia/PacificNorth America
('000 units)
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Niche auto parts makers benefiting from long-term growth in emerging markets– Takata: Seat belts and airbags => Safety– JSP: Polystyrene materials for auto parts => Lightweight vehicle production– Nifco: Plastic fasteners => Lightweight vehicle production– Sekisui Chemical: Interlayer films for laminated glass => Lightweight vehicle production
Source: FOURIN, Automotive Yearbook, Mizuho SecuritiesData as of 11/01/2012
Global New Automobile Sales Forecast
Production normalised after impact of earthquake and Thai floodsNo change to the long-term growth story
Source: Toyota – company data, FIL Limited, data as of 25/04/2012
Current Stock Selection Theme: Niche Global Players
Toyota Monthly Daily Production Plan vs Actual Production
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Near-term market sentiment driven by macroeconomic newsflow, but investors’ focus should eventually revert to individual company fundamentals and earnings over the mid-term
Global investors returning to Japan. However, buying levels remain below previous peaks, suggesting further potential upside.
Corporate earnings in Japan are on a clear recovery trend; potential upward revisions to management’s earnings guidance for FY2011/12
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Japan remains a stock picker’s marketDespite macro headwinds, Corporate Japan’s earnings recovery is on track
Abundant cashflow fuelling gains in shareholder returns
Source: Company data, GS Global. Data as of 31/12/2011Note: Based on 1,490 Tokyo Stock Exchange First Section non-financials with consolidated data available since March, 2006
Despite a series of shocks in 2011, corporate Japan continued to improve shareholder returns
Asia ex. Japan 14% 15% 11.8 10.5 4.3% 1.6 1.2 6.5 14.5% -
EPS Growth PER
Global Valuation Comparison
Source: Goldman Sachs Global ResearchData as of 15/03/*12 for Europe and as of 19/03/12 for the rest.
While not quite as compelling as last year, valuations remain supportive of the Japanese market overall
Note: Japanese universe is TSE1. US universe is S&P500. European universe is GS covered firms which are part of DJ Stoxx 600 (excluding financials). EV/Sales and EV/EBITDA excludes financials. P/E for US is based on GS Global ECS Research operating EPS forecasts, and P/E for Europe is on a pre-amortization basis. Asia excluding Japan universe is MSCI US$ basis market index (local currency) and is based on FactSet and I/B/E/S estimates.
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Acronyms in the table:EPS (Earnings Per Share); PER (Price to Earnings Ratio); FCF (Free Cash Flow); PBR (Price to Book Ratio); PB (Price to Book multiple); EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization); ROE (Return on Equity); FY (Fiscal Year); E (Estimate)
Top holdings are those securities in which the latest percentage of find's total assets are invested. They do not include FX forwards and deposits. A full list of holdings, including derivatives, can be found in the fund's annual and/or semi-annual report and accounts.
Top 10 Holdings & Portfolio Concentration
TOP10 Holdings % Portfolio% Russell/Nomura
Mid Small Cap IndexM3 (CFD) 3.8 0.1Takata (CFD) 3.7 0.1Sekisui Chemical (CFD) 3.4 0.3Maruwa 3.2 0.0Kakaku.Com (CFD) 2.9 0.1GMO Payment Gateway 2.7 0.0Bit-Isle 2.5 0.0Cyber Agent 2.3 0.1Hitachi High-Technologies 2.0 0.1Hitachi Chemical 1.9 0.1Total 28.5 0.9
Compliance InformationFidelity does not give advice. If you are unsure of the suitability of an investment you should speak to a financial adviser.
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Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity.
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Past performance is not a guide to future returns. 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. Investments in small and emerging markets can be more volatile than other more developed markets.
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