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August 2020

Outcome-Oriented Thematic Investing

1

Chris Peixotto

VP, Investment Product

Pranay Kirpalani

Portfolio Manager

Zach Dewhirst

Portfolio Manager

Table of Contents

2

Thematic Investing at Fidelity

Infrastructure Investing

Low Volatility Investing

What is thematic investing?

Thematic investing at Fidelity allows you to invest directly in long-term trends and themes that best align with your interests

or objectives, while accessing Fidelity's differentiated investment research and portfolio management expertise.

Thematic Investing at Fidelity

3

Get exposure to long-term trends and themes with our innovative and differentiated investment strategies

Gain access to Fidelity’s research and portfolio management expertise

Put our thought leadership insights to work for you

Disruption

Emerging industries

and technologies that

are changing the

status quo

Outcome oriented

Outcomes based on

specific objectives

Differentiated

insights

Unique insights and

industry-leading

investment experience

Environmental,

social, and corporate

governance (ESG)

Return with a purpose

Megatrends

Secular trends

affecting our world

Thematic Fund LineupComprehensive suite of thematic funds comprised of distinct sub-categories

4

Disruption Megatrends Outcome oriented ESG Differentiated insights

• Fidelity Disruptive Automation

Fund (FBOTX) NEW

• Fidelity Disruptive

Communications Fund

(FNETX) NEW

• Fidelity Disruptive Finance Fund

(FNTEX) NEW

• Fidelity Disruptive Medicine

Fund (FMEDX) NEW

• Fidelity Disruptive Technology

Fund (FTEKX) NEW

• Fidelity Disruptors Fund

(FGDFX) NEW

• Fidelity Agricultural Productivity

Fund (FARMX) NEW

• Fidelity Water Sustainability

Fund (FLOWX) NEW

• Fidelity Dividend ETF for Rising

Rates (FDRR)

• Fidelity Global Commodity

Stock Fund (FFGCX)

• Fidelity Infrastructure Fund

(FNSTX) NEW

• Fidelity Low Volatility Factor

ETF (FDLO)

• Fidelity Select Natural

Resources Portfolio (FNARX)

• Fidelity Strategic Real Return

Fund (FSRRX)

• Fidelity Stocks for Inflation ETF

(FCPI) NEW

• Fidelity U.S. Low Volatility

Equity Fund (FULVX) NEW

• Fidelity International

Sustainability Index Fund

(FNIDX)

• Fidelity Select Environment &

Alternative Energy Fund

(FSLEX)

• Fidelity Sustainability Bond

Index Fund (FNDSX)

• Fidelity U.S. Sustainability Index

Fund (FITLX)

• Fidelity Women’s Leadership

Fund (FWOMX)

• Fidelity Enduring Opportunities

Fund (FEOPX) NEW

• Fidelity Founders Fund (FIFNX)

• Fidelity Leveraged Company

Stock Fund (FLVCX)

Fidelity Infrastructure Fund (FNSTX)

Pranay Kirpalani, Portfolio Manager

5

What Is Infrastructure?Diversified exposure to long-lived assets in monopoly-like businesses

6

TRADITIONAL

INFRASTRUCTURE

INDUSTRIES

NEWER

INFRASTRUCTURE-RELATED

INDUSTRIES

INFRASTRUCTURE

ASSET CLASS

Communications

Satellites

Towers

Energy

Storage & Transportation

Gathering & ProcessingTransportation

Toll Roads

Airports

Marine Ports

Railroads

Network

Infrastructure

Data Centers

Utilities

Electric & Gas Utilities

Renewable Electricity

Water

Storage Facilities

Warehouses

Distribution Centers

Logistics Facilities

Why Invest in Infrastructure?

7

INFLATION PROTECTION

Many infrastructure stocks have inflation-linked pricing in their revenue contracts, which can help them do

particularly well in periods of unexpected inflation.

SUSTAINABLE INCOME STREAM

The “local monopoly” nature of most infrastructure assets combined with long-duration contracts may create a

sustainable and reliable income stream for investors.

LOWER ECONOMIC SENSITIVITY

The inelastic nature of the demand for infrastructure services and products causes the asset class to have low

economic sensitivity, which can help provide downside protection in turbulent economic environments.

COMPETITIVE RISK-ADJUSTED RETURNS

Over time, infrastructure assets have provided investors with competitive risk-adjusted returns relative to other

asset classes.

DIVERSIFICATION

The asset class lends itself to active management due to the diversified opportunity set across regions and types of

businesses.

Diversification does not ensure a profit or guarantee against a loss.

The infrastructure industries can be significantly affected by general economic trends; fluctuations in energy and commodity prices; supply and demand of services or fuel;

interest rate changes; financing difficulties; natural resource conservation; labor relations; legislation; taxes; government regulation and spending; geopolitical

developments; import controls; worldwide competition; and liability for environmental damage, depletion of resources, and mandated expenditures

for safety and pollution control.

Infrastructure Has Offered an Attractive and Sustainable YieldInfrastructure has provided an attractive yield for investors relative to other asset classes

with lower risk than many other equity asset classes

8

Domestic Equities

Global Equities

EM Equities

Real Estate EquitiesGlobal Infrastructure

Investment Grade

1%

2%

3%

4%

5%

0% 5% 10% 15% 20% 25%

15

Y M

ed

ian

An

nu

al D

ivid

en

d Y

ield

(2

00

5-2

02

0)

15Y Annualized Standard Deviation

Source: Bloomberg, Factset, Fidelity Investments, as of 7/31/20.

Domestic Equities: S&P 500; Global Equities: MSCI All Country World; Emerging Markets: MSCI EM; Real Estate: DJ US Real

Estate; Infrastructure: S&P Global Infrastructure; Investment Grade: Barclays US Agg Bond

Infrastructure Relative Yield is Attractive Today The income yield from infrastructure is attractive today relative to the yield from traditional

bond instruments

9

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Spread Between Infrastructure Dividend Yield and Blended 10 Year Treasury*

Source: Bloomberg as of 07/31/20

*Blended 10 Year Treasury: Based on geographic allocation of the S&P Global Infrastructure Index

Infrastructure Has Historically Performed Well in Periods of

Unexpected Inflation Inflation protection in long-dated infrastructure contracts enables companies to protect their

earnings and income streams when inflation surprises to the upside

10

5.1%

3.2%

1.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

S&P Global Infrastructure MSCI AC World Barclays Global Bonds

MEDIAN ASSET RETURNS IN PERIODS OF UNEXPECTED INFLATION

Source: Bloomberg, Philadelphia Fed one-year-ahead Inflation forecasts, Fidelity Investments, as of 06/30/20.

Investment Philosophy

11

Investing in infrastructure securities that are best-of-breed and/or exposed to secular mega-

trends, which should help drive higher stability, earnings growth, and dividend growth versus the

index

Focusing on high-quality infrastructure assets may provide an attractive and sustainable

income yield backed by secure, long-duration cash flow streams

Infrastructure is a far more dynamic asset class than traditional benchmarks may portray,

and owning exposure to innovative infrastructure related sectors like renewables, towers, data

centers, and warehousing should position us to embrace the trends of tomorrow

◼

◼

◼

Source: Fidelity Investments.

Thematic Opportunities in InfrastructureRenewable Energy

12

• Renewable energy, which includes wind and solar, is forecasted to grow from

approximately 10% of energy generation today to nearly 40% in 2030

• Renewable energy generation in the U.S. has doubled since 2008 as it

becomes more accessible and as coal and nuclear plants continue to close

• Companies that can embrace energy efficiency may benefit from a secular

transition from coal and other traditional sources to renewable energy

28%

34%

19%

9%

10%

Current U.S. Energy Mix

Coal Natural Gas Nuclear Hydro Renewables

10%

29%

13%9%

39%

Projected U.S. Energy Mix in 2030

Coal Natural Gas Nuclear Hydro Renewables

Sources: eei.com, Fidelity Investments as of Nov.1 2019

Thematic Opportunities in InfrastructureData Centers

13

122

156

201

254

319

396

0

50

100

150

200

250

300

350

400

2017 2018 2019 2020 2021 2022

Exab

ytes

per

mo

nth

Global Internet Traffic Expected to Nearly Triple from 2017-2022

• Data centers are centralized locations where computing and networking equipment is concentrated in order to collect, process and

store large amounts of data

• Global internet traffic is expected to continue to grow at a 26% compounded annual growth rate and will have increased 127x from

2005-2021

• The number giant data centers built for “hyperscale” firms like Amazon is expected to increase by 50% through 2021

Exabyte: Unit of digital information storage used to denote size of data. Equivalent to 1 billion gigabytes

Source: Cisco VNI Global IP Forecast, 2017-2022

Thematic Opportunities in InfrastructureWarehouses & Logistics

14

$2.8 $3.5

$4.1 $4.9

11.9%

13.7%

15.5%

17.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$-

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2018 2019 2020 2021

Sh

are

of to

tal w

orl

dw

ide

re

tail

sa

les

Worl

dw

ide

eC

om

me

rce

re

tail

sa

les

($T

rilli

on

s)

Worldwide eCommerce retail sales Share of total worldwide retail sales

• Industrial REITs, which includes warehouses and logistics facilities, are a critical part of the global commerce and trade ecosystem

• Growth of these facilities and their importance in global economy is being driven in part by secular trends such as e-commerce

• Companies with high quality facilities in the most strategically important geographic areas may have the chance to outperform

Source: eMarketer as of 2018

15

Outlook and Opportunities

Outlook

• We believe infrastructure is an attractive

equity asset class for investors

• The asset class may provide a high and

sustainable income yield, inflation protection,

and a compelling total-return proposition

Opportunities

• Focusing on best-of-breed firms with a track

record of sustainable earnings and dividend

growth

• Portfolio is exposed to thematic mega-trends

like renewables growth, 5G, data centers,

warehousing, and logistics, making it more

dynamic than traditional infrastructure

benchmarks

Source: Fidelity Investments.

Fidelity U.S. Low Volatility Fund (FULVX)

Zach Dewhirst, Portfolio Manager

16

Equity Markets Can Provide Strong Capital AppreciationWhy is downside protection important?

0

5

10

15

20

25

30

Ma

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988

Fe

b-1

989

No

v-1

989

Aug-1

990

Ma

y-1

991

Feb

-1992

No

v-1

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Aug-1

993

Ma

y-1

994

Feb

-1995

No

v-1

995

Aug-1

996

Ma

y-1

997

Feb

-1998

No

v-1

998

Aug-1

999

Ma

y-2

000

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v-2

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Aug-2

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-2019

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v-2

019

US Equities (Russell 3000)

Since June of 1988 the US equity market is up over 2400%!

US EQUITIES OVER THE LAST 30+ YEARS

Source: eVestment as of 07/31/20

17


0

5

10

15

20

25

30

Ma

y-1

988

Feb

-1989

No

v-1

989

Aug-1

990

Ma

y-1

991

Feb

-1992

No

v-1

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Aug-1

993

Ma

y-1

994

Fe

b-1

995

No

v-1

995

Aug-1

996

Ma

y-1

997

Feb

-1998

No

v-1

998

Aug-1

999

Ma

y-2

000

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-2001

No

v-2

001

Aug-2

002

Ma

y-2

003

Feb

-2004

No

v-2

004

Aug-2

005

Ma

y-2

006

Feb

-2007

No

v-2

007

Aug-2

008

Ma

y-2

009

Feb

-2010

No

v-2

010

Aug-2

011

Ma

y-2

012

Feb

-2013

No

v-2

013

Aug-2

014

Ma

y-2

015

Feb

-2016

No

v-2

016

Aug-2

017

Ma

y-2

018

Feb

-2019

No

v-2

019

Market Declines >5% US Equities (Russell 3000)

Begin End Duration (Months) Market Return

6/30/1990 10/31/1990 4 -15.83%

5/31/1996 7/31/1996 2 -5.54%

6/30/1998 8/31/1998 2 -16.86%

6/30/1999 9/30/1999 3 -6.58%

3/31/2000 5/31/2000 2 -6.23%

8/31/2000 9/30/2002 25 -44.13%

5/31/2007 7/31/2007 2 -5.22%

10/31/2007 2/28/2009 16 -51.20%

4/30/2010 6/30/2010 2 -13.19%

4/30/2011 9/30/2011 5 -17.75%

3/31/2012 5/31/2012 2 -6.80%

5/31/2015 9/30/2015 4 -8.80%

1/31/2018 3/31/2018 2 -5.62%

9/30/2018 12/31/2018 3 -14.30%

4/30/2019 5/31/2019 1 -6.47%

2/29/2020 3/31/2020 1 -13.75%


But, stocks have lost value in 34% of

the months and the market has

declined more than 5% 16 times

A strategy that helps protect capital

during market declines may be a

good addition to any portfolio


18

0

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8

Jan

-198

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p-1

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Market Declines >5% Low Volatility (MSCI USA Min Vol) US Equities (Russell 3000)


That strategy would have generated a 2700% return over the same period (blue line). This highlights

the power of compounding and is how a low volatility equity strategy is designed to work

A strategy that simply could keep up with 75% of the market's gains, on average, but only participated

in 67% of the losses would actually deliver better returns with lower risk than the market.



19

Low-Volatility InvestingPortfolio drawdowns can have a lasting negative impact on portfolios

Drawdowns can have a more lasting

negative impact on portfolios due to the

lower amount of assets to compound

Protecting capital increases efficacy of

compounding returns over time

In low-volatility equity investing, losses

can still happen, but frequency and

magnitude are dampened relative to

other equity asset classes

11% 25% 43% 67% 100%150%

233%

400%

900%

0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

1000%

-10% -20% -30% -40% -50% -60% -70% -80% -90%

Ga

in R

eq

uir

ed

to

Bre

ak E

ve

n

Loss Drawdown

RISK-MANAGED STRATEGYImpact of Downside Protection

The S&P 500 Index lost about 50% of its

value during the global financial crisis and

took almost three years to recoup losses.

For illustrative purposes only.

20

Introduction to Low Volatility Equity InvestingWhat is it?

◼

◼

◼

Fully invested equity portfolio 100% equity, no cash/fixed income

Capitalizes on the low volatility anomaly Historically low volatility stocks outperform high volatility stocks on a return per risk basis

Portfolio of stocks constructed to exhibit low volatilityMay exhibit similar returns versus a cap-weighted portfolio with less risk and drawdowns

21

Current Asset Mix 80% Equity/20% Fixed Income 60% Equity/40% Fixed Income 40% Equity/60% Fixed Income

Return 6.17 6.08 5.88

Volatility 12.33 9.25 6.32

Sharpe Ratio 0.37 0.49 0.68

New Allocations 80% LV/20% Fixed Income 60% LV/40% Fixed Income 40% LV/60% Fixed Income

Return 7.41 6.93 6.39

Volatility 9.33 7.14 5.13

Sharpe Ratio 0.62 0.75 0.94

Change In Return 1.23 0.85 0.51

Change in Vol (3.00) (2.11) (1.19)

Change in Sharpe 0.25 0.26 0.26

Potential Different Asset Allocation Applications

BULLISH

ASSET MIX

TRADITIONAL

ASSET MIX

BEARISH

ASSET MIX


Equity allocation represented by Russell 3000, low volatility equity allocation represented by MSCI USA Minimum Volatility Index, bond allocation represented by Bloomberg

Barclays US Aggregate Bond Index. Returns reflect monthly rebalancing for the last 20 years ending 6/30/20. Index performance does not reflect the deduction of advisory fees,

transaction charges, and other expenses, which would reduce performance. Investing directly in an index is not possible. Past performance is no

guarantee of future results.

Source: Fidelity.

Equity Fixed Income Equity Fixed Income Equity Fixed Income

22

Potential Different Asset Allocation Applications

✔

✔

✔

✔

✔

✔

✔

✔

✔

Equity Fixed Income Equity Fixed Income Equity Fixed Income

BULLISH

ASSET MIX

TRADITIONAL

ASSET MIX

BEARISH

ASSET MIX


Equity allocation represented by Russell 3000, low volatility equity allocation represented by MSCI USA Minimum Volatility Index, bond allocation represented by Bloomberg

Barclays US Aggregate Bond Index. Returns reflect monthly rebalancing for the last 20 years ending 6/30/20. Index performance does not reflect the deduction of advisory fees,

transaction charges, and other expenses, which would reduce performance. Investing directly in an index is not possible. Past performance is no

guarantee of future results.

Source: Fidelity.

Current Asset Mix 80% Equity/20% Fixed Income 60% Equity/40% Fixed Income 40% Equity/60% Fixed Income

Avg Dn Mkt Ret (32.08) (23.55) (14.10)

Max Drawdown 42.58 32.69 21.40

Recovery Length (mo) 24 22 13

New Allocations 80% LV/20% Fixed Income 60% LV/40% Fixed Income 40% LV/60% Fixed Income

Avg Dn Mkt Ret (19.93) (13.61) (6.88)

Max Drawdown 33.32 24.86 15.61

Recovery Length (mo) 22 19 9

Change in Dn Mkt Ret 12.16 9.94 7.22

Change in Drawdown (9.26) (7.84) (5.79)

Change in Recovery (2) (3) (4)

23

Stock Selection Risk Management

Typical Approach• Style-based broad universe selection

• Single overarching model

• Focus on standard deviation

• Possible model errors in rare yet impactful

events that elude historical testing

Fidelity U.S. Low Volatility

Equity Fund’s Approach

• Deep industry knowledge

• Diverse investment themes from 400+

analysts

• Focus on downside risk

• Adaptive responses to rare yet impactful

events with custom analysis

Fidelity U.S. Low Volatility Equity Fund combines

the benefits of fundamental and quantitative approaches:

Fund Strategy OverviewApproach is distinguished from others in the marketplace

Fundamental,

forward-looking

risk-assessment

Statistical,

backward-looking

risk-assessment

Fidelity U.S. Low

Volatility Equity Fund+ =

24

Fidelity Infrastructure Fund (FNSTX)

Fidelity US Low Volatility Equity Fund (FULVX)

25

Q&A

Appendix

26

Portfolio Manager Profile

Pranay Kirpalani

Research Analyst/Portfolio Manager

Pranay Kirpalani is a research analyst and portfolio manager in the Equity division at Fidelity Investments. Fidelity

Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage,

benefits outsourcing, and other financial products and services to institutions, financial intermediaries, and individuals.

In this role, Mr. Kirpalani is responsible for providing research and recommendations on several stocks across Global

Infrastructure and serves as portfolio manager of the Fidelity Infrastructure Fund. He has been in the financial industry

since 2013.

Mr. Kirpalani earned his bachelor of arts degree in economics from The University of Pittsburgh.

27

Portfolio Manager Profile

Zach Dewhirst, CFAPortfolio Manager, Team Leader Quantitative Equity

Zach Dewhirst is a portfolio manager and team leader of the Quantitative Equity Research Team at Fidelity Institutional

Asset Management (FIAM), Fidelity Investments' distribution and client service organization dedicated to meeting the

needs of consultants and institutional investors, such as defined benefit and defined contribution plans, endowments,

and financial advisors.

In this role, Mr. Dewhirst manages equity portfolios including FIAM's suite of global factor strategies (Low Volatility,

Value, Yield, Quality and Momentum) as well as Quantitative Large Cap Core, U.S. Total Market Equity, and Large Cap

Value. He also manages the Fidelity U.S. Low Volatility Equity Fund.

Prior to assuming his current responsibilities, Mr. Dewhirst was a quantitative analyst responsible for conducting

research to build and enhance the quantitative stock selection models used to manage various FIAM portfolios.

Before joining Fidelity in 2007, Mr. Dewhirst served as a quantitative research manager at PanAgora Asset Management

and as a quantitative equity investment associate at Putnam Investments. He has been in the financial industry since

1999.

Mr. Dewhirst earned his bachelor of science degree in quantitative economics from Tufts University and his master of

business administration degree from the Massachusetts Institute of Technology Sloan School of Management. He is

also a CFA® charterholder.

28

Index definitionsTerm Definition

Bloomberg Barclays U.S. Aggregate

Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based, market-value-weighted benchmark that measures the performance of the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. Sectors in the index include Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM passthroughs), ABS, and CMBS.

S&P Global Infrastructure Index

The S&P Global Infrastructure Index is designed to track 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability. To create diversified exposure, the index includes three distinct infrastructure clusters: energy, transportation, and utilities.

Dow Jones US Real Estate Index

The index is designed to track the performance of real estate investment trusts (REIT) and other companies that invest directly or indirectly in real estate through development, management, or ownership, including property agencies.

ICE BofAML U.S. High Yield Constrained Index

The ICE BofAML U.S. High Yield Constrained Index tracks the performance of below-investment-grade, but not in default, U.S. dollar-denominatedcorporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P.

MSCI ACWI Index The MSCI ACWI captures large and mid cap representation across 23 Developed Markets and 26 Emerging Markets countries. With 3,047 constituents, the index covers approximately 85% of the global investable equity opportunity set

MSCI EM Index The MSCI ACWI captures large and mid cap representation across 26 Emerging Markets countries. With 1,404 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Russell 2000® Index The index is a market capitalization-weighted index designed to measure the performance of the small cap segment of the U.S. equity market. It includes approximately 2,000 of the smallest securities in the Russell 3000 Index.

S&P 500® Index The Standard & Poor's 500 Index is a market capitalization-weighted index of 500 widely held U.S. stocks and includes reinvestment of dividends.

29

GlossaryTerm Definition

Sharpe Ratio A measure that indicates the average return minus the risk-free return divided by the standard deviation of return on an investment.

Max Drawdown An indicator of the risk of a portfolio chosen based on a certain strategy. It measures the largest single drop from peak to bottom in the value of a portfolio

(before a new peak is achieved).

MSCI USA Minimum

Volatility Index

The MSCI USA Minimum Volatility (USD) Index aims to reflect the performance characteristics of a minimum variance strategy applied to the large and mid

cap USA equity universe. The index is calculated by optimizing the MSCI USA Index, its parent index, in USD for the lowest absolute risk (within a given

set of constraints). Historically, the index has shown lower beta and volatility characteristics relative to the MSCI USA Index.

Russell 3000 Index The Russell 3000 Index is a market capitalization–weighted index designed to measure the performance of the 3,000 largest companies in the US equity

market.

S&P 500 Index The Standard & Poor's 500 Index is a market capitalization-weighted index of 500 widely held U.S. stocks and includes reinvestment of dividends.

MSCI All Country World

Index

The MSCI All Country World Index is a market capitalization weighted index that is designed to measure the investable equity market performance for

global investors of developed and emerging markets.

30

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks. Although the fund’s strategy is designed to identify stocks with lower volatility than the broader market, there is no guarantee that these techniques or the fund’s low volatility strategy will be successful.

Indexes are unmanaged. It is not possible to invest directly in an index.

Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or an affiliated company.

Because of their narrow focus, sector funds tend to be more volatile than funds that diversify across many sectors and companies. Non-diversified sector funds may have additional volatility because they can invest a significant portion of assets in securities of a small number of individual issuers.

Diversification does not ensure a profit or guarantee against loss.

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular, or, if available, a summary prospectus containing this information. Read it carefully.

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