Steve EllisPortfolio ManagerFixed Income
The Emerging Market fixed income opportunity
Madrid Perspectives Event17 January 2013
This presentation is for investment professionals only and should not be relied upon by private investors.
Evolution of the EM Debt asset classToday: A strategic component of asset allocation
Emerging market restructuring
(Brady Bond Plan)
Hard currency yield curve
development
Sovereign local market issuance
Rise of the EM corporatedebt market
Domestic yield curve extension
Hard currency debt buybacks
Corporate issuance exceeds sovereign
issuance
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Why invest in emerging market bonds? EM bonds have demonstrated a resilience and passed a second stress test as the Eurozone crisis has not resulted in a
deterioration of EM fundamentals. EM countries account for almost 72% of the contribution to global growth and growing at four times that of DMs. EM fixed income asset class continues to grow with total EM debt outstanding across sovereign, corporates, and local
markets approaching $8 trillion EM is attractive to DM markets on a risk-adjusted basis with EM local yields remaining attractive to DM yields, offering
over 4% pick-up on a relative basis in nominal terms and 2.5% on a real basis to comparable government bonds Who invests in emerging market bonds? Pension funds: $1.7 trillion Insurance companies: $2.7 trillion Sovereign Wealth Funds: $4.3 trillion
1990s 2000s
EM DEBT MARKET
Source: FMR, BofA Merrill Lynch, September 2012
EM Debt and currency markets at a glance
The best-performing asset class of the last decade on an absolute and risk-adjusted basis
A beneficiary of the search for yield among investors and a diversification away from debt-laden developed markets
A way to benefit from emerging economic growth without the higher volatility levels associated with equity investment
Stable government policies have combined with well-managed economic growth to drive the performance of emerging market debt
This is an ongoing story: emerging market fundamentals are forecast to go on improving, while developed-world governments face slower growth and large deficits
Frontier markets offer the opportunity to benefit from genuine ‘emergence’ - when some of the best capital gains can be made
However, most of the return from emerging market debt comes from income/carry
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Sovereigns have recently issued predominantly in the local market Sovereigns now issue more frequently in the domestic market (87% of total sovereign issuance).
With local term structures shifting lower, governments have more incentive to issue locally (FX risk is borne by investors and not by the government).
Local pension funds’ AUM (US$ 1.7trn) and insurance companies’ AUM (US$ 2.7trn) haven risen dramatically which causes a natural bid for local currency debt.
Net issuance in local currency debt in 2012 has been low.
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GBI-EM gross issuance (US$ bn)
Source: Fidelity Worldwide Investment, Bond Radar, J.P. Morgan, official sources.
Corporates issue more frequently in hard currencies
New issue market in the external EM market has been dominated by corporate supply
Share of corporate issuance in hard currencies is almost back to 2007 peak levels
Corporate issuance is equally split across regions: Asia (41%), EMEA (29%) and LATAM (30%)
Total outstanding EM corporate debt stands at US$2.9trn of which approximately one third is in investable hard currency bonds
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Hard currency issuance (US$ bn)
Source: Fidelity Worldwide Investment, Bond Radar, J.P. Morgan, official sources, Sept 2012
If you like EM equities, you should love EM debt... EM external debt was the best-performing asset class of the last 18 years on an absolute and risk-
adjusted basis.
EM Hard Currency debt has offered better risk-adjusted returns than most DM asset classes over the last three years.
EM local markets and corporates have experienced higher volatility due to FX moves and corporate defaults, but still have impressive Sharpe Ratios.
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Sharpe RatiosCumulative performance (rebased 31.12.1993=100)
Source: Fidelity Worldwide Investment, Datastream, as at 31/07/2012. Rebased to 31.12.93 – first date of availability for JPM EMBIG data. US listed property is the FTSE/NAREIT EQUITY REITS $ Index.
Source: Fidelity Worldwide Investment, J.P. Morgan, 31/07/2012
Higher quality higher returns higher inflows
Continued strong inflows into EM dedicated funds with inflows of US$32.6bn YTD.
Hard currency funds experienced the largest inflows with ~61% of total inflows YTD.
Flows into global EM funds are >90% of total flows as compared to regional dedicated funds.
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EM Fund Flows (US$ bn)EMBI Global vs EM Hard Currency Fund Flows (US$ bn)
Source: Fidelity Worldwide Investment, J.P. Morgan, December 2012Source: Fidelity Worldwide Investment, Credit Suisse, EPFR Global, December 2012
Where do we go from here?
EM growth momentum is picking up. PMI data supportive going forward
Alpha is portable in EM. Three alpha sources: Credit, Rates and FX
FX looks like an attractive alpha source for 2013 with PMIs now ticking higher
EM FX has underperformed other EM assets due to the weak global growth backdrop and central bank currency wars
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High correlation between EMFX returns and global PMIs
EM PMIs now ticking higher
Source: Fidelity Worldwide Investment, Bloomberg, December 2012Source: Fidelity Worldwide Investment, Bloomberg, J.P. Morgan, December 2012
How much more can spreads tighten? EM spreads over treasuries are close to pre-global financial crisis levels
Appetite for yield, and the lack of spread products due to QE likely to encourage further spread tightening. Investors likely to be pushed further down the risk spectrum
Some obvious threats are: default rates rising / pick up in volatility caused by some tail risk event. But as we shall see, there are other risks
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Index spreads over UST (bps)
Source: Fidelity Worldwide Investment, Bloomberg, December 2012
Key risks in EM Debt Heavy refinancing needs in H1 2014.
Unintended consequences of QE with increasing inflation and asset bubbles.
Increase in UST yields from record lows (Great Rotation).
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Inflation projections, CPI (%)EM HY refinancing needs (US$ bn)
Source: Fidelity Worldwide Investment, ING, Oct 2012. Source: Fidelity Worldwide Investment, Credit Suisse.
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EM Debt:Three opportunity sets
USD EM Hard Currency EM Local Currency EM Corporate
Market Capitalization (billion$)
$579**JP Morgan EMBI Global
$1535**JP Morgan GBI-EM Broad Diversified
$265**JP Morgan CEMBI Broad Diversified
Investability Highly investable Wide variability: from highly investable to fully
uninvestable
Still very much a primary market but investablility
continues to grow as issuer base broadens
Foreign Exchange Risk No Yes No
# of Issuers 55 16 372
Quality BBB- A- BBB
Analytical Approach Top down & Bottom Up Top Down Bottom-Up
Fidelity fund range:Two existing fundsTwo proposed new funds
FF Emerging Market Debt FundLaunched January 2006AUM: $1178mManaged by Steve Ellis
FF Emerging Market Inflation-linked Bond FundLaunched November 2011AUM: $110mManaged by Andy Weir
FF Emerging Market Local Currency Debt FundProposed launch March 2013Managed by Steve Ellis
FF Emerging Market Corporate Debt FundProposed launch March 2013Managed by Andrei Gorodilov
Source: JP Morgan, 31/12/2012FIL Limited fund AUM as at 30/11/2012
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Appendix
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Steve EllisEM Portfolio Manager
Steve EllisFund Manager
Based in London
Investment Experience19 years
EducationBristol University, BSc (Hons) Economics
Investment Experience
Commence managing FF-Emerging Market Debt Fund November 5, 2012
Goldman Sachs Asset ManagementEmerging Markets Local Currency Debt and FX, Portfolio Manager
2006– 2012
Lehman BrothersGlobal Head of Local Market Strategy 2001-2006
ING BaringsGlobal Research, Fixed Income Strategist 1997-2001
NatWestEconomist 1993-1997
Source: FIL Limited, November 2012* Local Currency EM Bond pilot launched 3rd September 2012
Dedicated EM sovereign research analyst,trader and Asian PM
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Andressa TezineEM Research Analyst
Paul GreerEM Trader
Eric WongPortfolio Manager
• Since 2005, Andressa worked for Pinebridge Investments as the Head of Research for the Emerging markets Fixed Income
• From 1996-2005 Andressa worked for ABN AMRO in Sao Paulo (1996-2005), Brazil as a Treasury Senior Economist
• From 1995-1996 she worked at Banco Itamorati as an Economics Analyst
• She started her career in the Treasury department at Unibanco (1993-1995).
• Education:
– Universidade Sao Paulo, Economics
– Universitat Pompeu Fabre in Barcelona , MSc in Economics & Management
• Prior to joining Fidelity Paul was at Pinebridge Investments since 2006 as Head of Fixed Income and Listed Equity Trading
• Prior to that Paul worked at the Bank of Ireland Global Markets in Dublin in Wholesale FX and Money Market operations since 2001.
• He traded credit, rates and was a principal dealer
• He gained his FSA Securities and Financial Derivatives qualification in 2003.
• Education
– The Queen’s University of Belfast
– Bachelors degree with Honours
– 2.1 Electrical and Electronic Engineering
• Prior to joining Fidelity Paul was Portfolio Manager at BlackRock where he managed over $18 billion of emerging market bonds since 2002.
• He was responsible for generating alpha by country selection, curve relative value and new issues participation
• Developed and launched exchange traded funds for emerging market corporates and emerging market high yield
• Collaborated with research desk to enhance existing investment models and developed new trading strategies to provide high capacity alpha to portfolios.
• Education
– BA, Economics with minors in Computer Science & Spanish
– Stanford University
Source: FIL Limited, November 2012
EM Debt coverage across the fixed income team
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Credit & StructuredResearch
KEY: London BasedHong Kong BasedIndia BasedTokyo Based Those in bold report directly to A Wells
Andrew Wells Global CIO of Fixed Income & ISG
Trading
Juan LandazabalHead of Trading
Andrew FalcoSenior Trader
Naomi HaynesSenior Trader
Andrew MartinTrader
Robbie TaylorTrader
Olivier SzwarcbergHead of Credit & Structured Research
Kristian AtkinsonSenior Credit Analyst
Michael DolanSenior Credit Analyst
Tiago ParenteSenior Credit Analyst
Andressa TezineSovereign Analyst
Sabita PrakashHead of Asian Fixed Income
Nitesh KathuriaResearch Associate
Katsumi IshibashiSenior Credit Analyst
Marton HueblerQuantitative Analyst
Claudio FerrareseQuantitative Analyst
Paul WoodHead of Trading & Research Operations
Oliver FawcettHead of PMS
Quantitative Research
Freddy WongTrader
Dierk BrandenburgSenior Credit Analyst
John DavySenior Credit Analyst
Jonathan NeveCredit Research Associate
Tim CraigenHead of Analytics
Richard HomerAnalytics Specialist
Maria AbbonizioHead of Investment Operations
Fred KamSenior Credit Analyst
Gary WillisTrade Support
Jane O’BrienResearch Support
Investment Operations
Tae Ho RyuAssociate Trader
Simoni MittalCredit Research Associate
Martin DropkinSenior Credit Analyst
Federico WynneCredit Analyst
Liam KellyQuantitative Research Associate
Ario Emami-NejadJunior Trader
Henry MakSenior Manager, Investment Services
Quentin LafossePMS Analyst
Gita BalSenior Credit Analyst
Sifa ClarkTrading and Data Projects
Sanjeev DesaiTrade Support
Arezou PhilsouphQuantitative Developer
Rebecca MottaCredit Research Associate Change Management
Virginia GallowayBusiness Change Manager
Tara LallyChange Manager
Christopher EllingerPMS Analyst
Andy WeirPortfolio Manager
Ian SpreadburyPortfolio Manager
Ian FishwickPortfolio Manager
David SimnerPortfolio Manager
Tim FosterPortfolio Manager
Rick PatelPortfolio Manager
Peter KhanPortfolio Manager
Bryan CollinsPortfolio Manager
Portfolio Management
Andrei GorodilovPortfolio Manager
Stuart RumbleProduct Manager
Rahul Kathuria Product Specialist
Namrata NandaProduct Specialist
Dylan NgaiResearch Associate
Andy Howse Team Leader - Portfolio Managers & European Product
Paola DelgadoProduct Specialist Graduate
David LagrangeCompetitor Fund Analyst
Investment Directors
Kevin LooProduct Manager
Gregor CarleInvestment Director
Trista CheungAssociate Investment Director
Tristan CooperSovereign Analyst
Hiroki Hashimoto Investment Graduate
Patrick HallerInvestment Graduate
Lars SalmonSenior Trader
Duncan FraserSenior Trader
Stuart CollingsSenior Credit Analyst
Richard MeachinJunior Trader
Aran GordonProduct Manager
Constance de WavrinProduct Manager
Joe HanmerInvestment Graduate
Katie TutcherPMS Analyst
Jeremy ChurchAssistant Portfolio Manager
Torquil MacleodSenior Credit Analyst
Tobias BraceyProduct Specialist
Kathryn BarrowResearch Support
Camille FlorentinJunior Analytics Specialist
Sabina AwanSenior Change Analyst
Jack AdamsonBusiness Management Graduate
AsiaInvestment Operations
Business Change Management
Steve EllisPortfolio Manager
Jenny Lee (Maternity Leave)Credit Analyst
Konstantinos KorrovesisSenior Analytics Specialist
Rob MiddletonHead of FI Investment Operations
Paul GreerTrader
Fan ZhangResearch Associate
Stephen BramleyInvestment Graduate
Quan YuanInvestment Graduate
Nishan PradhanResearch Associate
Ashley-Anne BerryJunior Analytics Specialist
Farshad SafaeiApplication Developer
Jasmina KolevaCredit Research Associate
Jonathan KokFI Associate
Eric WongPortfolio Manager
David BuckleHead of Quantitative Research
Portfolio Management
Investment Director -TBH
Asia – Fixed Income
Asia-Investment Directors
Asia - Trading
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Investment professionalswith full or partial
EM debt responsibility
Source: FIL Limited, 01/01/2013
Summary:
The EM team focuses on the management of emerging market external, local and corporate bonds and currencies.
Leveraging the broader research resources available throughout Fidelity Worldwide Investment
They seek to generate alpha from solid credits with strong fundamentals.
The investment philosophy reflects the fact that alpha is portable so they construct optimal portfolios with a mix of emerging market instruments that reflects Fidelity Worldwide Investment’s view on emerging markets.
This is achieved through a combination of fundamental and quantitative modeling techniques that are the backbone of the investment process
EM DebtHow we add value
Client Guidelines
Portfolio Management
Portfolio Management
Portfolio Analytics
Quantitative Modeling
Trading
Portfolio Managers
Sovereign
Currency
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Source: FIL Limited, November 2012
Sources of potential alphaExternal, local, FX, corporates
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External debt Local rates FX Corporates
Evaluate country balance sheets
Inter-country rate levels & yield curve
FX valuation Fundamental research/corporate market
Are we being adequately compensated?Analyse-Economic growthBalance of paymentsPolitical environmentGovernment transparencyFinancial systemFiscal policyLevel of debt/compositionSecurity selection-Relative value
Identifying value in local debtCountry /risk selectionValueFX ratesFX riskSecurity’s fair valueResearch inflation breakeven vs. inflationEvaluate yield curve
Short term-Investor positioningSentimentRisk appetiteMedium term-GrowthMonetaryFiscalCurrent accountCapital accountLong term-PPPProductivityTradeDemographics
Fundamental analysis-Credit analysisCorporate governanceTechnical analysis-LiquidityYield curveSovereign analysis-Business environmentRegulatory environmentFX controls
Source: FIL Limited, November 2012
Overview of our EM Bond investment process
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The EMD team at FIL are fundamental investment managers, but use “HeatMaps” and “Scorecards” to assist in data screening and portfolio construction.Stage 1: The HeatMap ranks countries’ creditworthiness, using factors such as fiscal solvency, balance of payments and growth dynamics.Stage 2:The Scorecards then help the EMD team decide how best to express a particular view on a country: i.e. via FX, duration, or external debt (or a mixture). The scorecards are a powerful way of combining valuation metrics and trading rules to identify alpha opportunities in EM.
EMD MacroHeatMap
Local FX Scorecard Local Rates Scorecard
External Debt Scorecard
Top-down analysis to screen countries’ creditworthiness
Bottom-up analysis using quant tools to rank important drivers of alpha
Source: FIL Limited, 30/11/2012
FF Emerging Market Debt Fund Performance
Ranking in Global Emerging Bond** Universe
1 year 26 of 117 1st quartile
3 years 45 of 69 3rd quartile
5 years 14 of 60 1st quartile
Fidelity Funds Emerging Market Debt
JP Morgan EMBI Global
Active Return
2007 4.6 6.3 (1.7)
2008 -19.5 -10.9 (8.7)
2009 45.6 28.2 17.4
2010 10.8 12.0 (1.2)
2011 3.1 8.5 (5.4)
YTD 2012 16.1 15.7 0.5
1919
Annual Performance in % Performance (%) as of October 31, 2012
Source: FIL Limited as of 31/10/2012. Performance is gross and net of fees and in US Dollar terms. Calculation basis is NAV-NAV with gross income reinvested.**Source: Morningstar *Inception 1/23/2006
EM credit quality has been improving
EM have proven resilient as the Euro debt crisis has not resulted in any significant deterioration of EM fundamentals.
Average public debt-to-GDP ratio at 34%, and fiscal deficits currently average only 2.2% of GDP, broadly unchanged from 2007.
EMBI universe is predominantly Investment Grade (63%) and the average rating has stabilised at Baa2/BBB. EM sovereigns have experienced 194 upgrades (vs.154 downgrades) across 54 countries by the three rating
agencies since the start of the global financial crisis. DM sovereigns on the other hand experienced only 15 upgrades (vs.132 downgrades) during the same
period.
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% of EMBIG market capitalization by ratings bucket
Source: Fidelity Worldwide Investment, J.P. Morgan.
Risk-return trade-off is most favourable in Credit Markets
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Source: Fidelity Worldwide Investment, Credit Suisse.
Default risks in Emerging Markets
EM corporate default rate bottomed at 0.74% in September 2011 but has since increased to 4.09%.
Total EM default rates remained below 3%.
EM default cycles have been decreasing over the past decade in magnitude and length, but timing the default cycle remains important.
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Speculative grade corporate and total EM default rates (%)
In the 2001-2003 cycle, EM speculative gradedefaults peaked at 30.85% with US$41bn ofdefaults recorded over the period.
The EM corporate default ratebottomed at 0.74% in September ‘11
versus 2.08% in November ‘10. But, it has since increased to 4.09% in Oct ’12.
The more recent 2008/09 cycle witnessedUS$29bn worth of corporate defaults. Given the growth of the outstanding corporate bond marketthe default rate peaked at 13.87%.
Source: Fidelity Worldwide Investment, ING.
1YR EMBIG total return scenarios
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Base case (moderate growth upturn)EMBIG yield (as of 14 Nov) 4.68%Losses from defaults per yr ‐0.5%
Probability 70% EMBIG Spread change (%) ‐20% from 302 to 242 (DTS= 1687 )10y UST yields (bp change) 15 from 1.59 to 1.74 (IR dur= 7.1 )
Expected 1y total return % 6.5%
Bear case (fiscal cliff / EU implosion)EMBIG yield (as of 14 Nov) 4.68%Losses from defaults per yr ‐2.0%
Probability 15% EMBIG Spread change (%) 50% from 302 to 453 (DTS= 1687 )10y UST yields (bp change) ‐50 from 1.59 to 1.09 (IR dur= 7.1 )
Expected 1y total return % ‐2.2%
Bull case (QE continues / EM allocations increase)EMBIG yield (as of 14 Nov) 4.68%Losses from defaults per yr ‐0.5%
Probability 15% EMBIG Spread change (%) ‐50% from 302 to 151 (DTS= 1687 )10y UST yields (bp change) 10 from 1.59 to 1.69 (IR dur= 7.1 )
Expected 1y total return % 11.9%
1y EMBIG weighted expected total return 6.0%
Source: Fidelity Worldwide Investment.
Objectives
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Mission statement: “Quantitative screening of Emerging Market data to identify alpha opportunities in order to assist fundamental portfolio construction”
FIL’s EM Interface
All models are available at the click of a button
HeatMap and Scorecards are networked-based. Available to all in FIL.
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EM Investment ApproachHeatMaps: Quant screen to rank countries
Sovereign “HeatMaps” are utilised to determine the creditworthiness of individual countries
This is based on the analysis of specific factors and sub-factors– (e.g. growth, inflation, fiscal, balance of payments, banking and credit and the political environment)
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Source: FIL August, 2012
Summary of Investment Process
FIL’s quant models have been built with the purpose of trying to express a view on an EM country in the most optimal way.
FIL EM team start by scanning the HeatMap, and looks for countries with solid fundamentals. The team then uses the scorecards to identify the best way to express a view: FX / rates / external debt.
The quant models are used by other Portfolio Managers within FIL. There are no silos at FIL!
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FF Emerging Market Debt FundCurrent investment guidelines
At least two-thirds of portfolio in dollar denominated sovereign/quasi sovereign
Interest Rate Duration: Within +/- 20% of benchmark duration
Stand alone maximum allocations:– Corporate bonds: 20%
– Emerging Market Equity: 20%
– Local Currency Debt: 20%
– Combination of all three: not to exceed one-third of portfolio
Maximum Country overweight: 10%; large countries will typically not have zero allocation
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FF Emerging Market Debt Fund : Portfolio Characteristics
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Source: FIL Limited, 31/12/2012,
Portfolio Characteristics as 31/08/2012 Risk/Return Characteristics as 31/12/2012
Fund Index
Duration 7.08 7.16
Yield to Worst (YTW) 4.10 3.81
Ave. Maturity 13.04 12.56
Ave. Coupon 6.32 6.66
Spread Duration 7.23 7.33
OAS 273 257
DTS 1612 1602
Ave. Bond Price 116.91 118.67
Number of Holdings 224 330
Number of Issuers 111 93
Average Rating BB+ BB
3 Yr
Beta 1.11
Alpha ‐0.28
R‐Squared 0.86
Annualised Standard Deviation 7.83
Sharpe Ratio ‐ Portfolio 1.33
Sharpe Ratio‐Comparative Benchmark 1.89
Annualised Tracking Error 3.00
Information Ratio ‐0.74
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Country allocation
Source: FIL Ltd 31/12/2012
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FF Emerging Market Debt FundTop 10 active o/w holdings
Description Relative Risk Weight
(CHILE) Republic of Chile 3.73%
(PDVSA) Petroleos De Venezuela S 1.58%
(ADGB) Emirate of Abu Dhabi 1.58%
(T) United States of America 1.36%
(WIT) United States of America 1.10%
(SLOVEN) Republic of Slovenia 0.83%
(ARGBON) Argentine Republic 0.83%
(BHRAIN) Kingdom of Bahrain 0.78%
(SLOVAK) Slovak Republic 0.73%
(ALRSRU) Alrosa Finance Sa 0.67%
Source: FIL Ltd, 31/12/2012
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Important information
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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. 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. Research professionals include both analysts and associates. Fidelity/Fidelity Worldwide Investment means FIL Limited and its subsidiary companies. Unless otherwise stated, all views are those of Fidelity.Top security holdings are those securities in which the largest percentage of the fund’s total assets are invested. Holdings in different securities issued by the same company are listed separately and any exposure achieved by derivatives is not shown. This means that the data may not always represent the total exposure of the portfolio to any given company. A full list of holdings, including derivatives is available on request. 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. The research and analysis used in this documentation is gathered by Fidelity for its use as an investment manager and may have already been acted upon for its own purposes. 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. Fidelity Funds is an open-ended investment company established in Luxembourg with different classes of shares. Reference to FF before a fund name refers to Fidelity Funds. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only. This document may not be reproduced or circulated without prior permission. No statements or representations made in this document are legally binding on Fidelity or the recipient. Past performance is not a reliable indicator of future results. The value of investments 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. 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. The value of bonds is influenced by movements in interest rates and bond yields. If interest rates and so bond yields rise, bond prices tend to fall, and vice versa. The price of bonds with a longer lifetime until maturity are generally more sensitive to interest rate movements than those with a shorter lifetime to maturity. The risk of default 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. The investment policy of this fund means it can be more than 35% invested in Government and public securities. These can be issued or guaranteed by other countries and Governments. For a full list please refer to the fund's prospectus.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;For the purposes of distribution in Spain, Fidelity Funds is registered, with the CNMV Register of Foreign Collective Investment Schemes under registration number 124, where complete information is available from Fidelity Funds authorised distributors. The purchase of or subscription for shares in Fidelity Funds shall be made on the basis of the Key Investor Information Document (KIIDS) that investors shall receive in advance. The Key Investor Information Document (KIIDS) is available free of charge and for inspection at the offices of locally authorised distributors as well as at the CNMV ; 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.FIPM 383
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