Fidelity Special Values cuts fees after good year – Fidelity Special Values has published its results for the year ended 31 August 2018. Its NAV increased by 8.7% over the year and the share price by 14.0%, both well above the 4.7% return of the benchmark index (all on a total return basis). As a result of the share price performance, the discount narrowed from 3.2% at the start of the reporting year into a premium of 1.5% at the end. The revenue return for the year was 5.70 pence per share. The interim and final dividends total 5.0 pence and this represents a total increase of 8.7% over the 4.6p paid for the year ended 31 August 2017.
Fee cut
Following a review of the management fees payable to Fidelity, the board has agreed a new revised tiered fee structure with effect from 1 September 2018. The current fee of 0.875% of net assets will be reduced to a new rate of 0.85% on the first £700m of net assets, and a further reduction to 0.75% of net assets in excess of this figure.
In addition, the fixed annual fee of £600,000 for services other than portfolio management (to include company secretarial, fund accounting, taxation, promotional and corporate advisory services) will reduce by £500,000 to £100,000 per annum. Based on net assets as at 31 August 2018, the new fee arrangement represents an estimated saving of 10% per annum.
Drivers of performance – extract from Alex Wright’s manager’s report
“We benefitted from holding Ladbrokes, which was acquired by GVC Holdings. Ladbrokes is a stock I have used as an example of a deeply unloved UK domestic consumer stock which the market fundamentally misunderstood but where due diligence and scenario analysis by our analyst uncovered significant value and limited downside. This value was ultimately recognised by a corporate buyer. We also received a bid for Shire, from Japanese group Takeda, following a protracted period of underperformance for the pharmaceutical company. Our position in Royal Dutch Shell performed well over the period, which benefitted from rising oil prices as well as improved cash generation. The valuation continues to look attractive and we remain invested. We have also increased our position in Pearson, which has performed well over the year, but remains deeply
unloved, despite what we see as an exciting future for the company.
We suffered negative contribution from owning BT and Leonardo. We have now sold out of both companies.”
FSV : Fidelity Special Values cuts fees after good year