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The Post Financial Crisis World

The Post Financial Crisis World. November 2013. Neil Kerry Associate Director, Strategic Relationships. For investment professional use only and should not be relied upon by private investors. Big Picture Themes Beyond Risk On/Risk Off. Global Debt Crisis

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The Post Financial Crisis World

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  1. The Post Financial Crisis World November 2013 Neil Kerry Associate Director, Strategic Relationships For investment professional use only and should not be relied upon by private investors

  2. Big Picture ThemesBeyond Risk On/Risk Off Global Debt Crisis Lessons from the 1930s say countries able to foster recovery with easy fiscal and monetary policy stand the best chance growing or inflating their way out of debt. The US is reaching escape velocity first. Japan is following suit. The Return of Monetary Divergence Monetary policy is diverging with higher US rates in prospect. A prolonged trend of dollar strength will be negative for bonds, commodities and the emerging markets but positive for Japan. Bernanke’s failure to taper creates a tactical back step. Euro Crisis Here to Stay Further deleveraging is required but there is a contradiction between the need to inflate away debt and pressure to restore competitiveness with Germany. Only political union will ensure the euro survives. We prefer the UK. Source: FIL Limited, September 2013. This represents the opinion of the Portfolio Manager.

  3. A Welcome Return of Longer Business CyclesGlobal growth re-accelerating Global growth scorecard, forward 6 months 4 6 3 4 2 2 1 0 0 % G7 GDP Growth Scorecard Index -1 -2 -2 -4 -3 -4 -6 90 92 94 96 98 00 02 04 06 08 10 12 G7 real GDP growth yoy%(R.H.SCALE) Growth score (forward 6 months) Source: Datastream. GDP % to Q1 2013 (ISG calculations). Note: the Lead Indicator (global growth score) is a diffusion index which level varies between +4 and -4. It is pushed forward 6 months on this chart.

  4. Inflation Pressures Still MutedLooks more like the 1990s – EM take note Global inflation scorecard, forward 6 months 4 6 3 5 2 4 1 3 0 2 Inflation Scorecard Index % G7 CPI -1 1 -2 0 -3 -1 -4 -2 90 92 94 96 98 00 02 04 06 08 10 12 G7 headline CPI yoy%(R.H.SCALE) Global CPI scorecard Source: Thomson Reuters Datastream Source: Datastream. CPI% to August 2013 (ISG calculations). Note: the Lead Indicator (global growth score) is a diffusion index which level varies between +4 and -4. It is pushed forward 6 months on this chart.

  5. Fed QE to raise asset prices, offset fiscal riskQE3 is different… The market smells the exit Source: Datastream. This represents the opinion of the Portfolio Manager.

  6. Investment Clock Video

  7. Multi Asset: Overweight Stocks vs BondsMarginal trades into commodities out of property, Source: FIL Limited, this represents the opinion of the Investment Solutions Group. Positions for principal multi asset institutional and retail funds are as of October 2013. Individual fund positions may vary.

  8. Global Equity: Favouring USA & Japan Source: FIL Limited, this represents the opinion of the Investment Solutions Group. Positions for principal multi asset institutional and retail funds are as of October 2013. Individual fund positions may vary

  9. Summary • Overweight equities, good opportunities • Longer economic cycles • North America to escape first • Dollar to strengthen • Japan offers good value • Europe still needs to get rid of the debt • Taper...the market smells the exit • Underweight bonds

  10. Not all managed funds are the same A fund labelled as ‘balanced’ may not be suitable for acustomer assessed as having a ‘balanced’ attitude to risk FSA FG11 05 Source: Morningstar Direct: Basis: bid-bid, net income reinvested at UK basic rate of tax to 31/10/2013 16

  11. The Navigator Proposition 1. Choose from 5 risk levels Defensive Strategic Growth Adventurous World Store of Value Assets Bonds Cash Growth Assets Equities Commodities Real Estate 2. Choose from 3 types of architecture Multi Asset Allocator Index-Tracking Multi Asset Best of Fidelity (Internal Architecture) Multi Asset Open Best of the Market (Open Architecture) Source: FIL Limited. For illustrative purposes only. 18

  12. Fidelity Multi Asset Strategic Fund performance in major up/down equity markets Source: Morningstar Direct. Basis: bid-bid, net income reinvested at UK Basic rate of tax to 31/10/2013. FTSE All Share is not the index of the Fidelity Multi Asset Strategic Fund but is intended to define major up and down periods in equity markets since the fund was launched (22/01/2007)

  13. Keeping you and your clients informed Annual review pack to check ongoing suitability Adviser toolkit and suitability letters Regular live webcasts Client-ready quarterly reports, personalised from adviser and sent electronically to your document area on FundsNetwork for your exclusive use Monthly PDF and video updates for you and your clients available on fundsnetwork.co.uk/navigator 20

  14. What makes us different? 1 Fidelity’s Investment Solutions Group has 295 years’ combined experience in multi asset investing and manages over £28bn* 2 All of our multi asset funds are actively managed using models developed over 20 years and enhanced by in-house global research Proprietary strategic and tactical asset allocations 3 4 We understand that your clients want to achieve their investment goals without being exposed to undue risk or short-term performance fluctuations 5 Proven experience in most market conditions * Source: Assets and resources as at 30/9/13 are those of FIL Limited except combined experience which is at 29/7/13 21

  15. Important information This presentation is for Investment Professionals only and should not be relied upon by private investors. It may not be reproduced or circulated without prior permission. No statements or representations made in this presentation are legally binding on Fidelity or the recipient. The value of investments and the income from them can go down as well as up and clients may get back less than they invest. Past performance is not a guide to the future. The price of bonds is influenced by movements in interest rates, changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates rise the price of a bond will fall (and vice versa). Bonds with a longer time to maturity are generally affected to a greater degree. 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. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual reports free of charge on request by 0800 368 1732.Issued by FIL Investments International, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. RM1113/2427/SSO/0214

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