Fidelity: Asia: Finding durable opportunities through a consistent investment discipline

Key points

• A consistent, bottom‑up investment approach can help navigate periods of volatility through fundamental analysis and high‑quality company selection.
• Recent favourable performance has been underpinned by maintaining conviction in technology leaders that both drive and benefit from the AI-driven demand inflection, and disciplined avoidance of structurally challenged areas.
• The portfolio continues to favour high‑quality franchises that are positioned to benefit from long‑term structural growth trends across the breadth of the Asian investment universe.

Investing in structural growth opportunities amid ongoing volatility

Against a tumultuous market backdrop, the Fidelity Asia Fund maintains its long-standing investment discipline, focused on attractively valued companies with strong franchises and high-quality management teams. The fund delivered strong relative performance in the 12 months to 31 March 2026, supported by long‑term conviction positions, particularly across the technology sector, and careful risk management in more challenged areas of the market.

A consistent, bottom‑up investment philosophy

A consistent, bottom‑up investment process is at the heart of the fund’s approach, led by fundamental analysis of individual companies and supported by extensive on‑the‑ground research. The investment team focuses on identifying businesses with strong competitive positions, durable earnings profiles and high‑quality management teams, while maintaining valuation discipline. This philosophy has remained unchanged through periods of market volatility over recent years and has been central to the fund’s ability to navigate periods of market uncertainty.

The fund adopts a mosaic approach to investing, drawing together insights from company meetings, industry analysis and supply‑chain research to build a portfolio of high‑conviction ideas. Research trips and direct engagement with company management remain an important source of information and ideas, helping us assess business models, competitive moats and the long‑term strategic direction of listed companies in the region.

Technology leadership driving performance

Technology has been a key driver of performance over the past year, reflecting the fund’s long‑standing conviction in industry bellwethers, based on ongoing deep-dives into company-specific dynamics, coupled with an understanding of management mindsets. As a result, the fund has been able to tap into the structural growth opportunities created by artificial intelligence (AI), data‑centre expansion and high‑performance computing. The fund’s overweight position in the sector has been a significant contributor to returns, with selected companies benefiting from strong earnings visibility and favourable supply‑demand dynamics.

In South Korea and Taiwan, selected semiconductor‑related holdings have performed particularly strongly. Investments in memory and chip‑supply‑chain companies benefited from rising memory prices, tight supply conditions and accelerating demand for high‑bandwidth memory and AI‑related infrastructure. Our research reveals that there is indeed an inflection point in memory demand, and the potential for revenue growth is tangible. We also increased the fund’s exposures across the broader technology value chain, identifying companies positioned to benefit from specification upgrades and increased capital expenditure linked to AI adoption.

Importantly, disciplined stock selection also added value through avoidance - the decision not to hold certain areas of the market, such as electric vehicle manufacturers in China, has contributed positively. This highlights the merits of active management and the importance of selective positioning, rather than broad market exposure.

Navigating macro and geopolitical risks

The first quarter of 2026 underscored the challenges facing Asian equity markets, with geopolitical developments in the Middle East driving oil prices higher and triggering broader ‘risk‑off’ sentiment. These dynamics weighed on energy‑importing economies and added to inflationary concerns, prompting further volatility across the region.

Against this backdrop, the portfolio has been positioned with a focus on resilience. The fund maintains a significant exposure to companies with strong earnings visibility, particularly within technology and communication services, while remaining cautious on areas more vulnerable to sustained high energy prices. Exposure to Indian consumer discretionary stocks, for example, was reduced given the potential impact of elevated oil prices on consumption. At the same time, the fund continues to hold selected high‑quality banks in India and Indonesia, which are high-quality lenders with robust balance sheets, and are expected to benefit from favourable long‑term economic growth trends in both countries.

A long‑term opportunity set in Asia

Looking ahead, we expect geopolitical uncertainty to remain a feature of the investment landscape. In this environment, the fund remains anchored to its core principles: bottom‑up stock selection, fundamental research and a long‑term investment horizon.

The fund has a strong emphasis on businesses that are positioned to benefit from evolving consumption patterns and technological progress, as structural themes such as AI investment, digitalisation and rising living standards are expected to underpin growth prospects over the long term. By focusing on companies with strong franchises and high‑quality management teams, the fund aims to capture these opportunities while navigating periods of market volatility.

In a complex and uncertain global environment, the Fidelity Asia Fund continues to provide investors with access to Asia’s long‑term growth potential, underpinned by a disciplined investment process and a clear focus on quality and fundamentals. In short, we believe Asia is the place for your long‑term investment.

Important information

Marketing communication.

This material is for Investment Professionals only and should not be relied upon by private investors.

Please refer to the Prospectus and KID of the fund before making any final investment decisions. The investment which is promoted concerns the acquisition of units or shares in a fund and not in a given underlying asset owned by the fund. Complete information on risks can be found in the Prospectus.

Investment objective and policy: The fund aims to achieve capital growth over time. The fund invests at least 70% (and normally 75%) of its assets, in equities of companies that are listed, headquartered or do most of their business in Asia (excluding Japan) including emerging markets. The fund will have a mixture of investments in larger, medium and smaller sized companies. The fund will seek opportunities in special situations equities which are shares in companies that generally have attractive valuations in relation to net assets or earning potential and/or companies which are undervalued and whose recovery potential is not recognised by the market. The fund may also invest in money market instruments on an ancillary basis.

The fund is classified as Article 8 under SFDR. The fund seeks to achieve its investment objective while promoting, among other characteristics, environmental or social characteristics, or a combination of those characteristics. The fund aims to achieve an ESG score of its portfolio greater than the ESG score of the benchmark or investment universe*. The fund adheres to a principle-based exclusion policy incorporating both norms-based screening and negative screening of certain sectors, companies or practices based on specific ESG criteria as determined by the Investment Manager from time to time.

• The value of investments and the income from them can go down as well as up so you may get back less than you invest.
• Funds are subject to charges and expenses. Charges and expenses reduce the potential growth of your investment. This means you could get back less than you paid in. The costs may increase or decrease as a result of currency and exchange rate fluctuations. Please note that not all costs are presented, further information on costs can be found in the Prospectus.
• This fund invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates.
• This fund invests in emerging markets which can be more volatile than other more developed markets.
• This fund has, or is likely to have, high volatility owing to its portfolio composition or the portfolio management techniques.
• The fund does not offer any guarantee or protection with respect to return, capital preservation, stable net asset value or volatility.
• This fund uses financial derivative instruments for investment purposes, which may expose the fund to a higher degree of risk and can cause investments to experience larger than average price fluctuations.
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• Past performance is not a reliable indicator of future returns.
• Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only.
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This communication is not directed at, and must not be acted upon by persons inside the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required.  We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus and the KID (key information document) or KIID (key investor information document), as applicable. These documents, the current annual and semi-annual reports as well as information on investor rights are available in the languages and on the websites indicated below.

UK: The Key Investor Information Document (KIID) is available in English and can be obtained from our website at www.fidelityinternational.com. The Prospectus may also be obtained from Fidelity. Issued by FIL Pensions Management. Authorised and regulated by the Financial Conduct Authority.

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