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Portfolio Moves of FJPNX in 2016

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Fidelity Japan Fund overview

The Fidelity Japan Fund (FJPNX) simply “seeks long-term growth of capital,” by “normally investing at least 80% of assets in securities of Japanese issuers and other investments that are tied economically to Japan.”

The investment approach, as stated by the fund, looks at investing in those companies that can improve its return on equity. It also aims to outperform its benchmark over a complete market cycle. For selecting stocks, the fund manager looks at relative valuation as well as the benchmark. This means that although the fund manager may not necessarily replicate the benchmark, he does look at its composition and valuation while making portfolio changes.

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The fund’s assets were spread across 83 securities as of March 2016, three lower than a quarter ago. It was managing assets worth $418.5 million as of April. As of March, its equity holdings included Astellas Pharma (ALPMY), Orix (IX), Sony (SNE), Bridgestone (BRDCY), and Japan Airlines (JAPSY). The top ten holdings of the fund formed a third of its assets.

Portfolio changes in FJPNX

The top five sectors in which FJPNX invests occupy 77% of its portfolio. Consumer discretionary is the largest invested sector and commands a fifth of the fund’s total assets. Financials forms 17% of the assets, while healthcare, industrials, and information technology form ~13% each. The fund is not invested in the energy and utilities sectors.

Compared to Japan’s Topix (Tokyo Price Index), the fund is overweight in the healthcare, information technology, and telecom services sectors. It’s underweight in the industrials and materials sectors. For other sectors, its portfolio weight is broadly equal to the index.

In the one-year period until April 2016, the fund manager has sharply increased exposure to consumer staples while maintaining exposure to consumer discretionary stocks. Three stocks have been added from the staples space in the period, while one has been liquidated. Exposure to materials has also been increased in the period.

The fund manager has reduced exposure to financials and information technology stocks. Some stocks from the financials sector have been liquidated, while exposure to a few others has been reduced. Unfavorable market movement has also reduced the portfolio weight of financials.

With this composition in mind, let’s see in the next article how FJPNX has performed in the first trimester of 2016.

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