Fidelity Europe Fund Quarterly Fund Review

FIDELITY EUROPE FUND QUARTERLY FUND REVIEW

March 31, 2020

The Fund seeks to achieve long-term capital growth by investing primarily in equity securities of companies Investment objective located mainly in the United Kingdom and Continental Europe, including the European Union and the European Free Trade Association. FUND MANAGER Matt Siddle Management EDUCATION MA (Hons), Cambridge University

Fund Co-Manager Helen Powell EDUCATION M. Eng. (Materials), Oxford University

Fund inception date June 1, 1992

Fund benchmark MSCI Europe Index

Source: Fidelity Investments Canada ULC.

SINCE YTD 3 MO 1 YR 2 YR 3 YR 4 YR 5 YR 7 YR 10 YR INCEPTION

Fund Net† -20.76 -20.76 -16.74 -9.31 -3.21 -0.87 -2.15 3.24 4.31 4.17 Fund Gross† -20.30 -20.30 -14.78 -7.18 -0.94 1.46 0.17 5.71 6.81 6.67 Benchmark -16.94 -16.94 -9.97 -5.23 -0.20 2.99 1.02 6.48 5.99 6.30

Calendar year returns (%)

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Fund Net† 15.06 -8.67 16.20 -10.92 18.98 -3.97 31.26 25.08 -14.02 6.46 Fund Gross† 17.74 -6.52 18.94 -8.78 21.85 -1.62 34.47 28.12 -11.95 8.97 Benchmark 17.52 -7.20 17.26 -3.85 16.52 2.28 33.64 16.48 -8.85 -1.54

† Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Fund inception date: June 1, 1992. Benchmark: MSCI Europe Index. Please read the prospectus, which contains detailed investment information, before investing. The indicated rates of return are historical annual compounded total returns for the period indicated including changes in unit value and reinvestment distributions. The indicated rates of return do not take into account sales, redemption, distribution or option charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer and are not guaranteed or insured. Their values change frequently. Past performance may not be repeated. Source: Fidelity Investments Canada ULC.

. Global equities, as represented by the MSCI World Index, returned −13.3% (in Canadian dollar terms). . Global equities declined as concerns related to the COVID-19 pandemic and its effect on global growth, coupled with plummeting oil prices, worsened investor sentiment. Oil prices declined after Russia and Saudi Arabia failed to reach a production cut agreement amid fears of falling global demand. . In the first half of the review period, monetary policy easing and sustained global growth, along with easing U.S.-China trade relations, supported investor confidence. The global spread of COVID-19, however, and the ensuing shutdown of large parts of the global economy led to significant uncertainty, driving sharp market corrections. . Some losses were contained after the U.S. Federal Reserve (the Fed) reduced its key policy rates to lows last seen during the 2008–09 global financial crisis. In March 2020, the Fed lowered interest rates from a range of 1.50–1.75% to 0.00–0.25% in two emergency moves well ahead of the regular policy meeting. . European markets fell sharply over the first quarter. Though 2020 started on a positive note because of optimism related to the U.S.- China trade deal, these gains were more than offset by mounting concerns over the COVID-19 outbreak and an oil price collapse. The situation worsened in March as the epicentre of the pandemic moved to Europe. Markets sold off sharply as many countries introduced full or partial lockdown measures to stem the spread of the virus. . All sectors declined, with financials and energy falling the most. Large-capitalization companies outperformed their smaller peers, while growth and quality stocks outperformed value stocks.

Source: Fidelity Investments Canada ULC.

Fidelity Europe Fund (Series B) returned −20.8%, net of fees, during the quarter, underperforming its benchmark, the MSCI Europe Index, which returned −16.9%.

Key drivers

. From a country perspective, investments in Germany contributed to relative returns, while investments in the U.K. detracted. . From a sector perspective, the underweight stance in the consumer discretionary sector and certain stocks in the health care sector contributed to relative performance . In health care, strong earnings and an optimistic outlook supported gains in Swiss oncology firm Roche, Germany-based health care equipment and services provider Fresenius Medical Care, and French pharmaceuticals company Sanofi. . Other notable contributors included positions in Netherlands-based professional services company Wolters Kluwer and German software and services provider SAP. . Overweight exposure to energy and certain investments in financials detracted from relative performance. . In the energy sector, shares in John Wood Group, the U.K.-based energy services company, and holdings in British-Dutch oil and gas company Royal Dutch Shell declined following the dramatic fall in oil prices in March. The portfolio managers believe that while the former company is likely to benefit from its diversified operations, the latter is capable of strong cash flow generation even at lower oil prices. . In financials, some banks, such as the U.K.-based retail banking group Barclays and Norwegian bank DNB ASA came under selling pressure.

Source: Fidelity Investments Canada ULC.

Fidelity Europe Fund (Series B) returned -16.7%, net of fees, underperforming its benchmark, the MSCI Europe Index, which returned -10.0%.

Key drivers

. The Fund’s holdings in the consumer discretionary and industrials sectors contributed to relative performance. . In consumer discretionary, investments in French luxury goods company Kering and Netherlands-based consumer internet company Prosus contributed to relative performance. . In industrials, the holding in Wolters Kluwer as well as a lack of exposure to aerospace company Airbus contributed to relative returns. . Among other contributors, health care company Roche surged - it produces diagnostic tests for COVID-19.

. Larger-than-benchmark exposure to, and certain investments in, the energy sector detracted from relative returns. . In energy, an allocation to oil and gas equipment and services firm John Wood Group and integrated oil and gas firm Royal Dutch Shell hampered relative performance. . Other notable detractors included investment in Publicis Groupe (a French media and entertainment group) and materials and mining company ArcelorMittal.

Source: Fidelity Investments Canada ULC.

. The portfolio managers, Matthew Siddle and Helen Powell, have focused company analysis on four key points: how hard the company might be hit, how flexibly the company adapts to the new environment (particularly in costs), whether the balance sheet is strong enough to cope with a period of stress, and what might happen to the business’s competitive position once the outbreak subsides. . The managers’ aim was to differentiate two types of companies: 1) those that had balance sheets and business models strong enough to cope with a usual recessionary environment (something for which they always stress test a position) but that may struggle with this more sudden hard stop and therefore needed to be cut, and 2) those that would get hit in the short term but could adapt and return in a stronger competitive position. . The Fund retains its long-term bias to higher-quality companies (with a valuation discipline) that can survive the downturn and outperform their peers over time. While the portfolio has not traded significantly, the new risks justified selling or trimming some positions. That cash has been invested in companies that have been hit hard but are likely to be less affected than their peers or that could emerge as long-term winners. . The Fund is overweight in quality growth sectors such as consumer staples, health care and industrials, but on average, owns cheaper companies in those sectors. The managers reduced the Fund’s exposure to the energy sector by selling a position in an integrated oil and gas company because of the near-term pressure on oil prices. The portfolio managers took advantage of a general weakness in financials to add to positions in Legal & General Group and Munich Reinsurance Group

Source: Fidelity Investments Canada ULC.

Average Weight (%) Cumulative Return (%) Contribution to Relative Return (bps) Sector Security Sector Total Relative Fund Benchmark Relative Fund Benchmark Relative Selection Allocation Contribution

Consumer Discretionary 8.4 9.7 -1.3 -13.7 -25.0 11.3 26 88 114 Real Estate 0.0 1.5 -1.5 0.0 -25.1 0.0 0 10 10 Health Care 17.1 14.8 2.4 -3.1 -1.5 -1.6 26 -28 -2 Industrials 17.3 13.5 3.7 -22.9 -23.7 0.9 7 -14 -7 Information Technology 7.8 6.4 1.4 -14.4 -11.7 -2.7 -24 12 -12 Materials 1.9 7.1 -5.2 -38.6 -20.3 -18.3 -33 10 -23 Communication Services 2.3 4.3 -2.1 -31.9 -20.0 -11.9 24 -50 -25 Consumer Staples 17.7 14.4 3.3 -11.7 -7.6 -4.1 -42 2 -41 Utilities 1.9 4.9 -3.0 -26.6 -6.6 -20.0 -33 -38 -72 Financials 15.6 17.4 -1.7 -35.5 -29.1 -6.4 -116 27 -90 Energy 8.2 6.0 2.2 -39.6 -29.1 -10.5 -57 -61 -118 Total Primary Assets 98.2 100.0 -1.8 -20.7 -16.9 -3.8 -223 -41 -264 Cash 1.7 30 Currency 0.0 -2

Expenses & Other 0.0 -147 Total Fund 100.0 100.0 -20.8 -16.9 -382 Fund Return -2076 Index -1694 Value Added: -382

Average Weight (%) Cumulative Return (%) Contribution to Relative Return (bps) Sector Security Sector Total Relative Fund Benchmark Relative Fund Benchmark Relative Selection Allocation Contribution

Consumer Discretionary 8.7 9.7 -1.0 -2.2 -15.1 13.0 -25 137 112 Industrials 17.4 13.4 4.0 -9.1 -12.1 3.0 33 19 52 Real Estate 0.0 1.4 -1.4 0.0 -20.9 0.0 0 15 15 Information Technology 7.9 6.1 1.9 -4.8 1.5 -6.3 -10 -11 -21 Health Care 16.9 13.6 3.3 6.4 11.3 -4.9 32 -62 -30 Communication Services 2.4 4.6 -2.2 -41.6 -20.5 -21.0 -21 -18 -39 Materials 2.1 7.3 -5.1 -44.8 -15.5 -29.3 -57 12 -45 Financials 15.6 17.8 -2.2 -28.2 -22.7 -5.5 -105 40 -64 Utilities 1.7 4.5 -2.8 -18.9 5.1 -23.9 -34 -53 -87 Consumer Staples 16.0 14.6 1.4 -11.7 -4.1 -7.7 -75 -20 -95 Energy 9.5 7.0 2.5 -45.2 -33.6 -11.6 -62 -123 -185 Total Primary Assets 98.3 100.0 -1.7 -15.2 -10.0 -5.2 -323 -64 -387 Cash 1.6 25 Currency 0.1 -2

Expenses & Other 0.0 -312 Total Fund 100.0 100.0 -16.7 -10.0 -676 Fund Return -1674 Index -997 Value Added: -676

Source: Fidelity Investments Canada ULC. Returns are for series B, net of fees, in Canadian dollars. Past performance is not guarantee of future results. Percentages may not sum to totals due to rounding.

Fund (%)

United Kingdom 27.6

Germany 18.3

France 17.3

Netherlands 12.3

Switzerland 9.3

Sweden 3.8

Spain 3.7

Norway 3.0

Other Countries 4.8

Total 100.0

Source: Fidelity Investments Canada ULC.

SECURITY INDUSTRY

Roche Holding Pharmaceuticals

SAP Software

Sanofi Pharmaceuticals

Wolters Kluwer Professional Services

Royal Dutch Shell Oil, Gas & Consumable Fuels

Kering Textiles, Apparel & Luxury Goods

Siemens (Reg.) Industrial Conglomerates

Fresenius Medical Care Health Care Providers & Services

Prudential Insurance

British American Tobacco Tobacco

% of Top 10 Holdings 39.5

Total Holdings 64

Source: Fidelity Investments Canada ULC.

FUND BENCHMARK*

P/E (1 year historical) 15.7 16.3

P/E (1 year forecast) 11.6 13.0

Price/Book 1.6 1.6

ROE (5 year average) 9.8 9.6

Earnings Growth Rate (5 year average) 3.3 6.1

Earnings Growth Rate (1 year forecast) 0.1 -2.5

Dividend Yield 4.3 4.2

Weighted Average Market Cap (B) $97.1 $100.1

Source: Fidelity Investments Canada ULC. *Benchmark: MSCI Europe Index. Weighted average market cap in Canadian dollars.

FUND BENCHMARK

Annualized Standard Deviation 13.95% 12.10%

Sharpe Ratio -0.17 -0.13

Downside Volatility* 3.54% -

Annualized Tracking Error 4.27 -

Annualized Information Ratio -0.17 -

Beta 1.1 -

Source: Fidelity Investments Canada ULC. Benchmark: MSCI Europe Index. 1 Based on gross fund returns * Hurdle rate is zero or excess return, whichever is lower

Investment process

. Bottom-up analysis, fundamentally driven approach . Focus on top third of European companies by market cap . Employs a wide range of resources: extensive company meetings, Fidelity Research, and proprietary framework

Investment style

. Portfolio manager Matt Siddle follows a “Quality at an attractive price” investment style . Quality focus . look to invest in high return, cash generative businesses . focus on quality of business, not short-term EPS growth . Valuation discipline: Look for attractive value on a cross-cycle basis . Choose best opportunities based on quality/value matrix . Monitor momentum to size positions and avoid excessive risk

Risk management . Regular use of Barra, Factset and Style Research to analyze portfolio . Proprietary tools to further analyze exposure . Stock by stock analysis of key factor exposures . Measure risk versus fundamental exposures, not arbitrary sector or country of listing classifications . Identify and measure exposures that stock picking has driven . Ensure portfolio remains true to investment approach

Portfolio construction . Generally 60-90 holdings . Exposures monitored at the style, factor, sector and fundamental macro economic level to ensure stock selection and quality bias remain key drivers of risk and return. . Max stock positions 10% at cost and max 10% contribution to tracking error

Buy discipline . Focus on companies with high quality franchises . Identify stocks where valuation is attractive for the quality of the franchise . Assess risk profile investing in the company, and the impact on the portfolio

Sell discipline . The long-term outlook for the business deteriorates . Valuation no longer provides an attractive risk/reward payoff . Replaced by a better idea

For advisor use only. No recipient is authorized to pass this communication on to any other person whatsoever or reproduce it by any means without the prior written consent of Fidelity. Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF’s prospectus, which contains detailed investment information, before investing. The indicated rates of return are historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of distributions. The indicated rates of return do not take into account sales, redemption, distribution or option charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated. Effective November 6, 2006 Fidelity introduced a 5% T-SWP and created Series T5 (“DSC,“ “LL,” “LL2”) and S5 (“ISC”). The Series name for T-SWP 8% changed to T8 (“DSC,” “LL,” “LL2”) and S8 (“ISC”). The table shown is used to illustrate the effects of the compound growth rate and is not intended to reflect future values of the fund or returns on investment in any fund. Any reference to a company is for illustrative purposes only; it is not a recommendation to buy or sell nor is it necessarily an indication of how the portfolio of any Fidelity Fund is invested. The breakdown of fund investments is presented to illustrate the way in which a fund may invest, and may not be representative of a fund’s current or future investments. © 2020 Fidelity Investments Canada. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada. The presenter is not registered with any securities commission and therefore cannot provide advice regarding securities.