Sustainable, Responsible &/or ESG Policy:

The fund believes in the ownership of high-quality sustainable businesses at attractive valuations, that can offer a cross-cycle dividend based total return in excess of the global equity market, with lower drawdowns.

Corporate governance, effective management of environmental and social factors and the long-term financial performance of businesses are interdependent. Our integrated research process enables us to identify material Environmental, Social and Governance (ESG) issues to engage on with our portfolio companies. A low turnover approach allows us to engage over the long term to drive meaningful change.

The fund aims to achieve income and long-term capital growth from a portfolio made up of equity securities issued by companies throughout the world. It is part of the Fidelity’s Sustainable Family of Funds and adopts a sustainable focused strategy under which a minimum of 70% of the fund’s net assets will be invested in securities deemed to maintain sustainable characteristics / favourable ESG characteristics, as described in the prospectus.

The fund invests in listed companies worldwide with the following exclusions: adult entertainment, fossil fuel exploration and extraction, alcohol, cannabis, gambling, weapons; thermal coal-based power generation; or fossil fuel-based power generation, subject to revenue thresholds and transitional criteria. Its investment universe includes both developed and emerging markets, as reflected in its benchmark (with the exclusions mentioned above). It is not restricted to investment in stocks contained in the index. It will typically invest in companies with a free-float market capitalisation in excess of US$5 billion.

The fund’s Portfolio Manager, Aditya Shivram uses a bottom-up approach to invest in high-quality companies that offer stable and / or improving returns on capital at reasonable valuations, businesses with attractive returns, low financial leverage and predictable, stable business models. Aditya believes strong corporate governance and effective management of environmental and social factors are interdependent and positively impact the long-term financial performance of companies. Resilient, compounding dividends are an important component of total returns. A disciplined investment process ensures that the fund only invests in companies trading at attractive valuations, lowering drawdown risk.

The fund aims to have a lower carbon footprint compared to that of the MSCI ACWI Index.

Sustainability analysis is a key component of income-based equity investing, as delivering sustainable long-term dividend growth requires the management of long-term risks such as litigation, erosion of brand value, and stranded assets. As a result, sustainability assessments are integrated within each step of the fund’s investment process, allowing it to leverage Fidelity’s broad and extensive sustainability expertise. Our sustainability assessments are forward-looking and involve both quantitative and qualitative assessments, rather than simply relying on backward-looking public disclosures. This approach is intended to ensure that companies will act in the long-term interests of shareholders.

In terms of governance, we consider factors like board composition and independence, capital allocation decisions, and incentive alignment. From a social perspective, we look at areas such as training, whistle-blower and data protection policies, company culture, scope of employee ownership, and controversy records. From an environmental perspective, we also focus on the potential risks and opportunities associated with companies’ business models, as well as environmental policies and measurement frameworks.

Engagement is a key element of the fund’s strategy and portfolio turnover is typically low, which reinforces the fund’s ability to engage meaningfully with companies over extended timeframes. Engagement activity is aimed at encouraging improvements in companies’ behaviour and sustainability credentials, in order to increase our conviction in their long-term resilience and enhance value in the long term. Engagement activity can be company-specific or thematic in nature.

Process:

The investment process is well structured and repeatable, consisting of three stages:

• Idea generation
• Stock selection
• Portfolio construction and monitoring.

Idea generation

The Portfolio Manager utilises a screen of 20–25 financial metrics to filter the universe of stocks and provide him with an initial view as to the quality and valuation of a potential investment.

These metrics include current unlevered returns on capital, long term historical returns on capital, margins over a business cycle, long term growth, financial leverage, Enterprise Value (EV) based valuation metrics, dividend yield and sustainability and governance metrics such as management incentivisation and capital allocation.

In addition, the Portfolio Manager draws on the expertise of our research analysts and portfolio managers for new ideas. He is able to reference the investment recommendations of the team which highlight their best stock ideas and industry insights.

Stock selection

The ideas generated by the screens are then researched in depth by the Portfolio Manager in conjunction with the Fidelity research team. In order to form a forward-looking view of a company’s prospects, he will typically attend company meetings, read the fundamental and ESG research produced by Fidelity analysts, and read the company’s financial statements in detail.

He often also meets with local experts such as consultants, doctors, lawyers, accountants, politicians, and top regional sell-side analysts worldwide. These checks help him to establish an independent view of a company’s financial and sustainability characteristics.

Portfolio construction and monitoring

The Portfolio Manager runs a concentrated portfolio of between 35–45 stocks and maintains a high level of active money (more than 80%) in order to increase the opportunity for outperformance when compared to more benchmark-oriented disciplines. A concentrated, low turnover portfolio also allows for meaningful engagement with portfolio holdings.

• Absolute positions typically fall into the 0–5% range.
• Position sizing is based on three main parameters: the level of conviction, expected Internal Rate of Return (IRR) and downside risk.
• Core holdings are expected to have low downside risk under reasonable assumptions and sector and country weighting are a by-product of stock selection (within +/- 15% relative sector and country weights).

Positions are typically built or sold in steps over time rather than in one tranche. Typically, less than 1% positions are transitory, either entering the portfolio or on their way out. No index stocks are held for risk mitigation purposes.

The position sizing approach above ensures that the biggest positions are not necessarily the highest IRR investments but rather low downside risk investments with reasonable IRR over the holding period. This approach supports the Portfolio Manager’s focus on downside risk through the entire investment process, from idea generation and validation stages to the portfolio construction stage.

The key benefits of this IRR based approach are that it provides a robust and repeatable framework for assessing a stocks real value to the portfolio over a long-term investment horizon, based on its value today. It does not depend on correctly identifying a ‘catalyst’ unappreciated by the market which will trigger a step change in a company’s earnings or profitability.

Portfolio risk management

We consider risk at two primary levels – Individual stock specific, and portfolio construction and position sizing.

Stock specific risk: We consider this as potential for absolute capital loss. It is assessed in detail during the stock selection process. We consider stock specific risk from three angles:

• Business model risk – We look for companies with attractive and stable returns on capital, good visibility of cashflow and low variability of earnings. We analyse threats to the sustainability of future cashflows that could arise from changes in industry structure, poor capital allocation or risk management. We focus on governance and the standards of environment and social risk management as they can often significantly impact a company’s future cash flows and therefore company value.
• Financial risk – We ensure that the businesses we invest in have an appropriate level of debt given the risk of the business model. We will avoid companies with unsuitably high levels of debt or high off-balance sheet liabilities as this can lead to significant drawdowns in equity value.
• Valuation risk – Our valuation discipline ensures we do not ‘overpay’ for businesses. Given our preference for high quality, sustainable businesses, we are not aiming to buy the ‘cheapest’ stocks, but companies where the valuation provides investors with an attractive prospective return.

At a stock level, we believe the focus on mitigating business model risk, financial risk and valuation risk are the key pillars to achieve lower drawdowns for investors which is one of the outcomes we aim to deliver.

Portfolio construction and position sizing: We consider risk primarily from an absolute point of view but also monitor from a relative point of view.

The fund’s style bias and exclusion of certain stocks on sustainability criteria may result in a different return profile to the benchmark, but over a full cycle, we expect these characteristics to deliver superior risk adjusted returns and help us to meet our objective to limit drawdown. Regional and sector weightings are driven primarily by bottom-up stock selection and will be impacted by our exclusion criteria and preference for better quality businesses. Relative sector and regional relative weightings are controlled within a +/-15% range. These guidelines at a sector and regional level manage the cross-correlation at a portfolio level. We expect tracking error to be in a 3–6% range.

We typically invest in highly liquid companies, with a minimum market capitalisation of US$5 billion, which mitigates liquidity risk associated with the portfolio.

Engagement

The Portfolio Manager and broader investment team engages with holdings, with the aim of driving improvement in sustainability. Engagement topics will be determined on a case-by-case basis, highlighted by Fidelity’s proprietary ESG research and external ESG ratings. In some cases, a company will offer attractive financial characteristics but shortcomings in certain specific ESG categories. In these cases, the Portfolio Manager may choose to purchase shares in the company for the fund, while engaging to drive improvement in those areas of concern. If engagement does not yield the desired improvement within a reasonable timeframe, he will sell the fund’s holding.

Resources, Affiliations & Corporate Strategies:

As an investment manager, we have a fiduciary duty to act in the best interests of our clients. In the context of sustainable investing, we have developed an approach with three key components (integration, stewardship, and solutions) that aim to provide our clients with investment offerings that meet their financial and non-financial objectives, and to comply with rapidly evolving sustainability regulations for product labelling and disclosure.

Fidelity’s sustainable investing approach is established on the foundation of our integration tools and processes. We believe ESG factors should be integrated into different investment processes. We have designed ratings and tools to identify the relevant risks and opportunities of issuers and established other processes to ensure that ESG factors are integrated consistently in our portfolios. We will also consider research insights from third-party data providers where relevant.

Our integration tools and processes also support the prioritisation of stewardship activities and the development of solutions that meet different regulatory requirements and client objectives. While sustainability ratings and scores allow for easier comparison of company performance, sustainability analysis should be both quantitative and qualitative and its findings should be interpreted in the context of financial performance to provide a holistic picture of a company’s performance.

Proprietary ratings and tools sit at the heart of Fidelity’s sustainable investing approach. They build on Fidelity’s heritage of fundamental research, the contribution from investment analysts and the expertise of the Sustainability Team. These tools include:

ESG Ratings: an assessment of management and mitigation of ESG risks

The Fidelity ESG Ratings aim to provide a forward-looking assessment of the extent to which an issuer’s performance on material sustainability issues either supports, or is likely to impair, long-term value creation for shareholders. The ratings are differentiated in their forward-looking emphasis and their use of issuer interaction and due diligence by Fidelity’s fundamental analysts as the main input to identify and assess the material ESG risks impacting an issuer. 

Our ESG Ratings are integrated into Fidelity’s investment process and are available to all members of the investment team on our internal research platform. Our rating serves as an additional source of insight and as a tool to support investment decisions.

Our ratings comprise a combination of E, S, and G indicators that aim to address the most material issues in each sector, providing a forward-looking view of an issuer’s ESG practices. The ratings’ methodology reflects the evolution of Fidelity’s ESG integration approach, founded on the principle of ‘double materiality’, focusing on ESG both from a business risk perspective and in terms of the environmental and societal implications of the issuer’s operations.

Four key principles underpin our ESG Ratings:

• Consideration of both non-financial and financial impacts ('double materiality'). A focus on absolute impacts allows comparison across sectors and geographies.
• Providing a forward-looking perspective that is complementary to our financial forecasts, helping to inform the long-term prospects of an individual issuer. 
• Consideration of material impact across more than 100 individual subsectors for a more focused and relevant set of indicators.
• Flexible output for different use cases. Individual E, S, and G scores provide guidance for determining an overall ESG score at the issuer level and trajectory ratings.

Our ESG Ratings framework is reviewed regularly to help identify the most material ESG factors for each sector. We aim to provide training on the ratings framework as it evolves and on specific themes and sectors to help enhance understanding of the material ESG factors required for analysis, and to enhance the quality and consistency of ratings. The in-depth nature of our approach means that our coverage is not as broad as a third-party provider, therefore we also use external research and rating providers, such as MSCI and Institutional Shareholder Services (ISS), to complement our internal research process and for the construction of our funds with specific sustainability objectives. Where possible and practical, we aim to use our own ESG ratings as a preferred data source for fundamental insight and measurement of product-level characteristics.

Climate Ratings: alignment to the outcome of net zero carbon emissions by 2050

Our Climate Ratings assess an issuer’s operational alignment to the objectives of the Paris Agreement, providing a holistic view of climate-related risks and opportunities.

To facilitate our assessment of an issuer’s net zero transition, we have developed a Climate Rating that assesses an issuer’s operational alignment to the objectives of the Paris Agreement (to limit global average temperature rise this century well below 2°C and to drive efforts to limit the temperature increase even further to 1.5°C above pre-industrial levels). The Climate Rating is designed to be used in conjunction with our other ESG and climate tools to provide a more holistic view of an issuer’s exposure to climate-related risks and opportunities. 

Assessment criteria cover three key areas: 

• Carbon emissions disclosure: This assessment focuses on disclosure of Scope 1, Scope 2 and material Scope 3 (based on the definition of the Greenhouse Gas (GHG) Protocol). 
• Emissions reduction targets: This assessment concentrates on the issuer’s current emissions, net zero GHG emissions ambitions, targets and carbon reduction targets. 
• Climate governance: This assessment analyses executive remuneration plans linked to climate ambitions; governance responsibilities for climate at executive level; and board committees with responsibility for oversight of climate change policies. 

For high impact sectors, additional criteria may be included to take into account the unique requirements of certain hard-to-abate sectors in relation to achieving net zero. The Climate Rating does not rely on a single climate change model or scenario. The assessment undertaken takes into account a wide range of data sources including companies’ disclosure, inputs from the Carbon Disclosure Project (CDP), ISS Climate data (e.g., Implied Temperature Rise), and the Science Based Targets initiative (SBTi).

SDG Tool: an assessment of positive contribution to the UN Sustainable Development Goals (SDGs)

Fidelity’s SDG Tool aims to provide an assessment of an issuer’s positive contribution to environmental and social outcomes. It is intended to complement Fidelity’s ESG Ratings which provide an assessment of an entity’s management of adverse impacts arising from ESG issues. The SDG Tool also supports Fidelity’s definition of ‘sustainable investments’ under Europe’s Sustainable Finance Disclosure Regulation (SFDR). We aim to provide a separate analysis of the positive and negative issues an issuer may be exposed to, to help prevent the signal value from identifying a risk being offset by an unrelated positive contribution (e.g., poor corporate governance and a catastrophic tailing-dam failure are not mitigated by selling products that help the energy transition).

Primary use cases for the output of the model are: 

• Issuer and entity-level assessment: The model provides an assessment of the percentage of an issuer’s revenue that contributes to each SDG. This can be used as an input to help define a thematic investment universe. 
• SFDR: Under SFDR, there is a requirement to identify issuers that make a positive contribution to an environmental or social outcome and can qualify as ‘sustainable investments’. The SDG Tool is a key input in this process. 
• Reporting: The SDG Tool provides the ability to report the contribution of a fund’s investments to the SDGs to our clients on a consistent and scalable basis

Quarterly Sustainability Reviews (QSR): an internal forum to review relevant quantitative and qualitative metrics and discuss sustainability integration in specific strategies

The QSR is a component of the Quarterly Fund Reviews (QFRs) which cover performance risk, liquidity, etc. The QSR is a quantitative and qualitative exploration of a product’s sustainability profile, and may include aspects such as ESG ratings, engagement activity, climate characteristics, impact indicators and other datapoints. Attendees may include representatives from the Sustainability Team, the asset class CIO, portfolio manager(s), and risk professionals. The discussion is supported by a data pack which draws together various ESG data sources. The targeted scope of QSRs is actively managed products with a higher level of ESG integration, which may include certain EU SFDR Article 8 and Article 9 products, and UK SDR Labelled and ESG Promoted (unlabelled) products. Products disclosing under SFDR Article 6 are not subject to the QSR process. SI-related investment mandates could be covered by QSR on an optional basis or at the request of clients.

Our integration tools and processes also support the prioritisation of stewardship activities and the development of solutions that meet different regulatory requirements and client objectives. Furthermore, we promote active ownership as the stewards of our clients’ assets, supporting real world sustainability outcomes that help us to fulfil our fiduciary duty. Effective and outcomes-focused stewardship combines bottom-up corporate engagement, top-down thematic engagement, and system-wide stewardship. This approach is essential to drive change and encourages regular engagement and dialogue which we believe is more efficient than exclusions because this simply diverts the problem elsewhere. We believe that monitoring the progress of engagements is as important as initiating them to assess change over time. The outcomes (or lack of outcomes) resulting from our engagements can be reflected by investment analysts in our ESG ratings and used to inform investment decisions. Our Voting Principles and Guidelines sets out our minimum expectations for our investee companies in key areas including climate change, deforestation, and gender diversity. 

For further details, please refer to our Sustainable Investing Principles sustainable-investing-principles.pdf. 

Sustainability Team

As an active bottom-up research house, we have always looked beyond financial reporting to gauge the value of an investment. This involves maintaining ongoing dialogue with investee companies, staying vigilant to the evolving regulatory landscape, and monitoring other factors that could influence sustainable cash flows over our investment horizon, including those currently categorised as ESG. We began formally integrating ESG considerations into our investment and research processes since becoming a signatory to the Principles for Responsible Investment in October 2012. 

As a logical consequence of our focus on sustainability, we established our Sustainability Team over a decade ago. Initially a small group based in London, the team has now grown to include 30* professionals with the global presence spanning London, Singapore, Tokyo, Hong Kong, Shanghai, Sydney and Luxembourg. Members of our Sustainability Team bring a diverse skill set, including expertise in research, climate science, and governance, with many boasting over a decade of experience.

*Source: Fidelity International, as at 31 December 2025.

The team’s scope now encompasses a wide range of activities related to ESG integration, engagement, policy, product development, sales and marketing, proxy voting as well as corporate sustainability. New members have contributed additional skills in legal and thematic areas, client and distribution expertise, and governance. 

The Sustainability Team functions across Fidelity in several ways:

• Collaborates closely with the broader investment team, supporting analysts in producing ESG research and conducting company-specific engagements, driving thematic engagement outcomes with sector analysts' input, and assisting portfolio managers in integrating ESG into their investment processes through proprietary tools, training, and frameworks.
• Works in tandem with the product team to develop sustainable investing frameworks and strategies in compliance with ESG regulations and tailored to diverse investor needs.
• Assists client-facing teams and clients with sustainable investing requirements and needs, including client communications, questionnaires, reporting, and training.

The team continues to evolve based on Fidelity's sustainable investing strategy, ensuring comprehensive support for all business areas and improving the quality and outcomes of engagement across asset classes.

Industry collaboration

Fidelity recognises the importance of networks and information platforms for sharing tools and pooling resources, using investor reporting as a source of learning. Our Sustainability Team keeps its current and potential membership of investor organisations under constant review. We monitor all international treaties, supranational organisations and other sustainability memberships to ensure we are up to date with market trends and to stay involved in the debate. We are proactive in strengthening our links within the investment industry, to determine effective ESG initiatives, maintain ethical standards, and attend seminars and conferences to integrate ESG into the investment process. Additionally, our Sustainability Team speaks publicly at industry events on responsible investment practices and promotes transparency in corporate governance issues. Please refer to the following list of our memberships, affiliations and signatories, listed by category:

Social Disparities

• 30% Club Australia (2021)
• 30% Club Hong Kong (2022)
• 30% Club Investors Group (2020)
• 30% Club Japan (2019)
• 40:40 Vision (2020)
• Armed Forces Covenant (2019)
• BBBA Talent Accelerator (2020)
• Business in the Community, Race at Work Charter (2020)
• Diversity Project (2017)
• DWP Disability Confident Scheme (2022)
• Find it, Fix it, Prevent it (CCLA) (2020)
• Global Business Collaboration Leadership Pledge (2022)
• If not now, then when? Campaign on Racial Diversity (2020)
• Investor Initiative on Human Rights Data (2024)
• Investors Against Slavery and Trafficking Asia-Pacific (2020)
• Investor Alliance for Human Rights (2025)
• Lord Mayor's Appeal - We Can Be (2019)
• LGBT Great (2019)
• Luxembourg National Diversity Charter (2020)
• Mental Health First Aid Training (2017)
• Minority Supplier Development UK (2020)
• Mindforward Alliance (2022)
• OutBritain (2022)
• President’s Challenge Enabling Employment Pledge and Enabling Mark (2023)
• PRI Reference Group on Human Rights and Social Issues (2025)
• Progress Together (2022)
• Purple Space (2019)
• Social Mobility Foundation (2021)
• Social Enterprise UK (2021)
• Stonewall (2016)
• Talent-Wise Employment Charter and Inclusive Organisations Recognition Scheme (2022)
• UN LGBTI Standards of Conduct in Business (2019)
• Valuable 500 (2019)
• Veteran-owned UK (2021)
• WEConnect International (2021)
• Women in Finance Charter (2017)
• WorkWell Leaders (2023)
• #10000 Black Interns (2020)

Climate Change:

• Asia Investor Group on Climate Change (2020)
• CDP - formerly Carbon Disclosure Project (2019)
• China Climate Engagement Initiative (2023)
• Climate Action 100+ (2019)
• Climate Bonds Initiative (2019)
• Coalition for Climate Resilient Investment (2019)
• Financial Services Development Council (2022)
• Global Standard on Responsible Corporate Climate Lobbying (2022)
• Green Finance Industry Taskforce Singapore (2020)
• Glasgow Financial Alliance for Net Zero (2021)
• Institutional Investors Group on Climate Change (2020)
• Investor Group on Climate Change (2021)
• Net Zero Asset Managers Initiative (NZAMI) (2020)
• One Planet Asset Manager Initiative (2021)
• Partnership for Carbon Accounting Financials (2022)
• Point Zero Carbon Programme (2022)
• Powering Past Coal Alliance (2021)
• Singapore Sustainable Finance Association (2024)
• Transition Pathway Initiative (2021)
• UK Sustainable Investment and Finance Association (2010)

Good Governance:

• Asia Securities Industry and Financial Markets Association (2015)
• Asian Corporate Governance Association (2004)
• Assogestioni (2007)
• Corporate Governance Forum (2009)
• European Sustainable Investment Forum (2017)
• European Public Real Estate Association (2023)
• Hong Kong Green Finance Association (2020)
• Hong Kong Principles of Responsible Ownership (2017)
• International Corporate Governance Network (2005)
• Investment Association (2010)
• Investor Agenda (2021)
• Investor Forum - UK (2014)
• Japanese Stewardship Code (2014)
• Principles for Responsible Investing (2012)
• Responsible Investment Association Australasia (2020)
• Taiwan Stock Exchange’s Stewardship Principles for Institutional Investors (2016)
• Transition Finance Council (2025)
• UK Stewardship Code (2010)
• World Benchmarking Alliance (2020)

Nature Loss:

• Ceres - Valuing Water Finance Initiative (2022)
• Farm Animal Investment Risk and Return (2020)
• Finance for Biodiversity Pledge (2021)
• Green Praxis Biodiversity (2022)
• Investor Policy Dialogue on Deforestation (2024)
• Natural Capital Investment Alliance (2021)
• Nature Action 100 (2023)
• Taskforce on Nature-related Financial Disclosures Forum (2021)
• Finance Sector Deforestation Action (2021)

SDR Labelling:

Not eligible to use label (out of scope)