jacques dineur fidelity investments international
DESCRIPTION
Jacques Dineur Fidelity Investments International. Mieux diversifier son portefeuille d’investissement avec l’immobilier. Fidelity Funds Global Property Fund. Jacques Dineur Sales Director Luxembourg November 2006. Important Characteristics of Fidelity International. Privately owned - PowerPoint PPT PresentationTRANSCRIPT
Jacques DineurFidelity Investments
International
Mieux diversifier son portefeuille d’investissement avec l’immobilier
Fidelity Funds Global Property Fund
Jacques Dineur
Sales Director Luxembourg
November 2006
4
Important Characteristics of Fidelity International
Privately owned
Long term focus and stable owner structure
Independent
Competitive advantage when distributing to banks and other institutions
Distinctive ‘Stock picking’ investment style
Specialist Fund Manager
Provides a focus and consistency to ensuring success
One of the world’s largest research teams
Commitment to always provide the highest levels of customer service
5
LONDON (FIL)
39 Equity Portfolio Managers
51 Equity Research Analysts
6 Fixed Income Portfolio Managers
12 Fixed Income Research Analysts
Investment professionals* across the world325 in FIL and 492 in FMR Corp
On average every fund manager has been with FIL**
817 10years
TOKYO (FIL)
18 Equity Portfolio Managers
20 Equity Research Analysts
BOSTON (FMR Corp)
89 Equity Portfolio Managers
140 Equity Research Analysts
29 Fixed Income Portfolio Managers
50 Fixed Income Research Analysts
HONG KONG (FIL)
17 Equity Portfolio Managers
24 Equity Research Analysts
2 Fixed Income Portfolio Managers
4 Fixed Income Research Analysts
Source: Fidelity / Fidelity International means Fidelity International Limited (FIL), established in Bermuda, and its subsidiary companies. In addition to these resources, we also have access to resources based in the US of our affiliated company FMR.
These figures reflect the resources of each company and their respective subsidiaries.
*As at 30.06.06. Includes Traders, Divisional Management and Other Investment.
**As at 31.12.04
Extensive global resources available to Fidelity International
6
What’s the first thing that comes to mind when someone mentions property?
Source: www.forbes.com
7
But don’t forget….
8
What is property?
Land
Land is a commodity
It generates no return until something is done to it
Value is determined by the use to which it can be put
9
What is property?
Land is a commodity
It generates no return until something is done to it
Value is determined by the use to which it can be put
Retail / IndustrialHotel / OfficeDiversified
Commercial Buildings
PrivateHome
Land
10
How do you make money in property?
Value is created all along the property cycle
Once completed, the value of the new property
should be greater than the sum of the land and the building costs
The developer or builder charges a fee for services
provided
Land has an underlying value
to the owner
In time, the property can be
sold for a greater value than it was
worth upon completion
The completed property can then be let to earn a regular
income
Capital CapitalIncomeReturns are either through capital gain or income generation
11
Making money in commercial property
A wider opportunity set
Return primarily derived from rental incomes
Relative stability created by long term lease structures
Valuations driven from discounted cash flow of those income streams
Shopping centres
Retail units
Office buildings
Factories
Warehouses
Hotels
12
Returns and diversification
15 Year Average Annualised Total
Return
Current Yield
Correlation to FTSE EPRA/NAREIT Global
Real Estate Index
FTSE EPRA/NAREIT Global Property Index
12.6% 3.4% 1.0
MSCI World Index 9.0% 2.2% 0.6
LB Global Agg Bd Unhedged Index
6.9% 4.3% 0.3
Correlation figures cover the fifteen year period to 31 August 2006Source: EPRA, Datastream, 31 August 2006
Attractive total returns Higher returns than global stocks and bonds over the last 15 years
High current income Dividend higher than global equity and competitive with global bonds
Benefits of diversification Low correlation to global stocks and bonds
13
Not all markets are the same
Rolling 36 month annualised risk/return profiles of local property markets, global bond market (as represented by the JPM Global Bond Index) and global equity market (as represented by the FTSE Global Index). In local currencies. Source: EPRA, 31 August 2006
Good diversification against equities and bonds Good diversification of existing local and regional property exposure
Risk
Ret
urn
14
Real Estate is a Local Business
Weighted average (equally weighted) of the 24 month rolling average monthly correlation of Japan, US, Europe, UK, Australia and 'the world' for each respectively. Source: UBS, February 2006
Co
rre
latio
n
Greater influence of local factors in the property market
Consistently lower correlations between regional markets than equities and bonds
Inter-regional correlations
15
Significant Growth Potential
Securitization of global property
currently only 11% of the global real estate market is listed
forecast growth of 10% annually over next five years
Greatest growth potential is in Japan, Germany and UK
REIT-like structures in place or pending in over 21 countries
Source: UBS, Fidelity December 2005
More Real Estate Being SecuritizedGlobal REIT Markets Growing
Global REIT-like market cap US$644bn at the end of December 2005
Mar
ket C
ap (
$US
bln
)
`-
100200
300400
500600
700800
900
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Jun-
05
Dec
-05E
REIT Non-REIT
0
2
4
6
810
12
14
1
18
1980
1984
1986
1990
1992
1996
1998
2000
2004
2007
F
% o
f rea
l est
ate
secu
ritiz
ed
1982
1988
1994
2002
2006
F
16
Comparison of Global REIT-like Securities
US Australia Netherlands Canada Belgium Singapore Japan France Hong Kong UK
Management Internal or External
Internal or External
Internal Internal Internal or External
External External Internal or External
Internal or External
Internal or External
Restrictions
Real Estate Investments
75%+ >50% of revenue from
rent1
100% 80%+ 100% 70%+ 75%+ Flexible 100% 75%+
Overseas Investments
OK OK OK OK Prohibited OK OK OK Prohibited OK
Development OK OK Minimal OK Minimal 20% of total assets
OK but >50% of assets must
be income producing
OK Prohibited OK
Gearing Limit No limit No limit 60% of property assets
No limit 50% of total assets
35% of total assets3
No limit No limit 35% of total assets
50% limit
Payout >90% of taxable income
(post depreciation)
100% of taxable income
(post depreciation)
100% of fiscal earnings
85% of distributable
cash (pre depreciation)
80% of taxable income and net debt pay down
100% of taxable income
(no depreciation)
>90% of taxable income
(post depreciation)
85% of taxable income from
rentals, 50% of capital gains
>90% of net income after
tax (no depreciation)
90% of rental asset income
(post allowable deductions)6
Closed Ended5 Yes Yes Yes Yes Yes Yes Yes Yes Yes Closed likely
Listed/ Unlisted5 Both Both Both Listed Listed Listed Listed Listed Listed Listed
Tax Transparency Yes Yes Yes4 Yes Yes4 Yes Yes Yes4 No2 Yes
Notes:1 this is a condition of entry into the LPT index, not a regulatory requirement2 no tax on dividends at the investor level3 with >35% with an A rating4 taxed at source on overseas income and non-exempt activities such as development (France only)5 currently Germany is the only country with a tax transparent option that is unlisted and open ended that is available to both paying and tax exempt investors6 capital gains from the tax exempt portion can be distributed in line with tax treatment of rentSource: UBS, June 2005
17
Why Invest in Global Property Securities?
Expected strong growth of the industry
Forecast 10% growth in each of the next five years
Forecast market cap growth from $700 billion to $1 trillion
Attractive returns relative to equities and bonds
Historic annual returns and yields have outstripped both equities and bonds
Good diversification against equities and bonds
Low correlations to both equities and bonds
Diversification of property exposure
Property is a local business with local drivers
Source: Fidelity, June 2006
18
Key Fund Facts
Actively managed specialist equity fund investing in the stocks of companies engaged in the real estate business around the world
Returns to investors will come from a combination of capital appreciation and dividend income
Concentrated portfolio of 50-70 stocks
Portfolio construction driven primarily by stock and by sector selection; secondary is country allocation
Benchmarked against the FTSE EPRA/NAREIT Global Real Estate Index
Managed by Steven J Buller from Boston
Experience of managing listed property security funds since 1998
Share Classes Available*
Class A Distributing Shares available in euro, US dollars and sterling
Class A Accumulating Shares available in euro and US dollars
Source: Fidelity, January 2006* Not all of the share classes listed here are registered for sale in the UK
19
Portfolio Manager
Steven J Buller, CFA
Based in Boston– Joined FMR Corp in 1992
– Group leader of the REIT Group
– October 1998 onwards: portfolio manager for various REIT accounts and funds in FMR Corp
– December 1997 – October 1998: associate portfolio manager
– March 1997 – December 1997: research analyst covering REITs
– 1995 – 1997: part of the International Fixed Income Group in London
– 1992 – 1995: research analyst in the High Yield Group in Boston
Member of the Security Analyst Societies of Boston and London
University of Wisconsin-Madison– MS - Finance
– BA in German Literature and International Relations
– BS in Finance and Management
20
Local Presence with a Global Perspective
These figures reflect the resources of Fidelity International Limited, its subsidiaries and our US affiliate FMR Corp. Research Professionals include associates and analysts, country and sector fund managers who retain research responsibility, and technical and quantitative analysts who are part of the Equity Research groups. Source: FIL and FMR Corp, 31 Julyl 2006
Hong Kong1 Analyst
covering Hong Kong Property
and Singapore Property
FMR Corp Fidelity International Limited (FIL)
Sydney 2 Analysts
covering Australian Property
London3 Analysts
covering European Property
and European HotelsBoston8 Analysts covering US and
Canadian REITS and US Hotels
and 2 Global Portfolio Managers
Japan 1 Analyst
covering Japan Property
Seeking to hire a further 3 analysts,
Mumbai 1 Analyst
covering emerging Asia Property
21
Investment Process
FUNDAMENTALS
Company Management
Earnings Growth
Quality of Assets
Property Markets
Balance Sheet
VALUATION
Price to NAV
FFO Multiple
AFFO Multiple
EBITDA Multiple
Dividend Yield
Country
Allocation
Sector
Allocation
CompanyWeightings
Country/SectorWeightings
Bottom Up Research
Top Down Perspective
Fund Portfolio
AnalystBest Ideas
LocalTrading
22
Fund Performance
Launched 5th December 2005*
Seeks a combination of income and capital appreciation through investments in global property securities
Net assets of US $237 million
Fund Benchmark
FTSE EPRA/NAREIT Global Real Estate
Index
Rank
Micropal Property Share & Real Estate
Sector
Quartile
Micropal Property Share & Real Estate
Sector
3 months
6 months
Since launch*
8.7%
8.5%
21.7%
11.4%
12.0%
25.9%
13/22
13/20
12/19
3rd
3rd
3rd
Source: Fidelity, 31 August 2006. Fund performance is net of annual fees and Luxembourg withholding tax. Index performance is gross of fees and Luxembourg withholding tax.
23
Top Ten Holdings as at 30 June 2006
Source: Fidelity, 30 June 2006. Benchmark: FTSE EPRA/NAREIT GLOBAL INDEX
Top Holdings (% of Net Assets) as of 30/06/2006
FUND BENCHMARK
MITSUBISHI ESTATE 4.9 3.0
MITSUI FUDOSAN 4.7 2.7
STARWOOD HOTELS & RESORTS WORLDWIDE 4.2 0.0
SIMON PPTY GROUP REIT 4.1 2.5
EQUITY RESIDENTIAL PROPERTIES TRUST REIT 4.1 1.8
LAND SECURITIES 3.8 2.1
GENERAL GROWTH PROPERTIES 3.7 1.5
PROLOGIS (REIT) 3.7 1.8
UNITED DOMINION REALTY TR 2.7 0.5
EQUITY OFFICE PROPERTIES TRUST 2.5 1.9
24
Geographical breakdown as at 31 August 2006
0
5
10
15
20
25
30
35
40
45
50
FUND
Benchmark
Source: Fidelity International PAS, 31 August 2006. Other: countries weighted less than 1%Relative to FTSE EPRA/NAREIT GLOBAL Index
25
Sector breakdown as at 31 August 2006
29.5
24.3
20.1
13.3
4.9 4.9
2.3
0.6
25.9
23.9
26.5
14.1
3.6
6.0
0.0 0.00
5
10
15
20
25
30
35
FUND
Benchmark
Source: Fidelity International PAS, 31 August 2006. Benchmark: FTSE EPRA/NAREIT GLOBAL INDEX
% o
f NA
V
26
Conclusion
Actively managed specialist equity fund investing in the stocks of companies engaged in the real estate business around the world
Returns to investors will come from a combination of capital appreciation and dividend income
Growing market showing good returns
Good diversification against equities and bonds
Diversification of property exposure
Global team of investment professionals covering the property market
27
Compliance informationThe research and analysis used in this presentation is gathered by Fidelity for its use as an investment manager and may have already been acted on for its own purposes. Market performance data is based on Fidelity’s own figures unless otherwise stated. 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. Fidelity only provides information on its own products and services and does not give investment advice based on individual circumstances. This document may not be reproduced or circulated without prior permission (and must not be passed to private investors).
Fidelity/Fidelity International means Fidelity International Limited (FIL), established in Bermuda, and its subsidiary companies. Assets and resources as at 31.08.2006. In addition to these resources, we also have access to resources based in the US of our affiliated company FMR. FMR Corp., established in the United States, is an affiliated company of Fidelity International Limited (FIL).
Past performance is not a guide to future returns and the value of investments and income from them may go down as well as up and an investor may not get back the amount invested.
Fidelity Funds is an open-ended Luxembourg based investment company. We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus/simplified prospectus, including the Addendum for Belgian investors, which is available along with the current annual and semi-annual reports free of charge from our distributors, from our European Service Centre in Luxembourg and Fastnet Belgium S.A., the financial service provider in Belgium.
Dividends paid by an intermediary established in Belgium are subject to a 15% withholding tax. With respect to accumulating shares of subfunds investing, directly or indirectly, more than 40% of their assets in interest bearing securities of any nature, a withholding tax of 15% shall be levied as from January 1st 2006 as well. Due to the complexity of the applicable rules and their perpetual evolution, all investors are invited to contact their own tax adviser in relation to their personal situation and to the determination of the tax consequences of an investment in Fidelity Funds.
We recommend that you obtain detailed information before taking any investment decision. The Full Prospectus and Simplified Prospectus for this fund are available from Fidelity on request.
The stock market tax is of 1.1% payable per redemption of accumulating shares from a sub-fund (up to a maximum EUR 750 per transaction).
Issued by Fidelity Investments International, authorised and regulated in the United Kingdom by the financial services Authority. This communication is not directed at, and must not be acted upon by persons inside the UK.
SSL 610043
For Investment Professionals only
Not for public distribution