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Jacques Dineur Fidelity Investments International

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

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Jacques Dineur Fidelity Investments International

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  1. Jacques DineurFidelity Investments International Mieux diversifier son portefeuille d’investissement avec l’immobilier

  2. Fidelity Funds Global Property Fund Jacques Dineur Sales Director Luxembourg November 2006

  3. 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’ investmentstyle • 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

  4. Extensive global resources available to Fidelity International 817 10years On averageevery fund manager has been with FIL** Investment professionals* across the world325 in FIL and 492 in FMR Corp 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

  5. What’s the first thing that comes to mind when someone mentions property? Source: www.forbes.com

  6. But don’t forget….

  7. Land 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

  8. Land Commercial Buildings PrivateHome 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

  9. Value is created all along the property cycle How do you make money in property? The developer or builder charges a fee for services provided Once completed, the value of the new property should be greater than the sum of the land and the building costs The completed property can then be let to earn a regular income In time, the property can be sold for a greater value than it was worth upon completion Land has an underlying value to the owner Returns are either through capital gain or income generation Capital Income Capital

  10. 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

  11. Returns and diversification • 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 Correlation figures cover the fifteen year period to 31 August 2006Source: EPRA, Datastream, 31 August 2006

  12. Not all markets are the same Return Risk • Good diversification against equities and bonds • Good diversification of existing local and regional property exposure 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

  13. Real Estate is a Local Business Inter-regional correlations Correlation • Greater influence of local factors in the property market • Consistently lower correlations between regional markets than equities and bonds 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

  14. More Real Estate Being Securitized 18 900 1 800 14 700 12 600 10 500 % of real estate securitized 8 400 6 300 4 200 ` 2 100 0 - 1994 1980 1984 1986 1990 1992 1996 1998 2000 2004 1982 1988 2002 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2006F 2007F Jun-05 Dec-05E REIT Non-REIT Significant Growth Potential Global REIT Markets Growing • 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 Market Cap ($US bln) Global REIT-like market cap US$644bn at the end of December 2005 Source: UBS, Fidelity December 2005

  15. Comparison of Global REIT-like Securities 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 rent Source: UBS, June 2005

  16. 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

  17. 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

  18. 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

  19. Local Presence with a Global Perspective FMR Corp Fidelity International Limited (FIL) London 3 Analystscovering European Property and European Hotels Japan 1 Analystcovering Japan Property Boston 8 Analysts covering US and Canadian REITS and US Hotels and 2 Global Portfolio Managers Mumbai 1 Analystcovering emerging Asia Property Hong Kong 1 Analyst covering Hong Kong Propertyand Singapore Property Sydney 2 Analystscovering Australian Property Seeking to hire a further 3 analysts, 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

  20. Investment Process Bottom Up Research AnalystBest Ideas FUNDAMENTALS Company Management Earnings Growth Quality of Assets Property Markets Balance Sheet Top Down Perspective Fund Portfolio LocalTrading Country Allocation CompanyWeightings Country/SectorWeightings VALUATION Price to NAV FFO Multiple AFFO Multiple EBITDA Multiple Dividend Yield Sector Allocation

  21. 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 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.

  22. Top Ten Holdings as at 30 June 2006 Source: Fidelity, 30 June 2006. Benchmark: FTSE EPRA/NAREIT GLOBAL INDEX

  23. Geographical breakdown as at 31 August 2006 FUND Benchmark Source: Fidelity International PAS, 31 August 2006. Other: countries weighted less than 1%Relative to FTSE EPRA/NAREIT GLOBAL Index

  24. Sector breakdown as at 31 August 2006 FUND Benchmark % of NAV Source: Fidelity International PAS, 31 August 2006. Benchmark: FTSE EPRA/NAREIT GLOBAL INDEX

  25. 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

  26. Compliance information

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