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Fidelity International

PRI reporting framework 2017

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage (Not Completed)


SG 02. Publicly available RI policy or guidance documents (Not Completed)


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Fidelity has a documented policy for the management of conflicts of interest in its UK business which is approved annually by the Conflicts Oversight Forum.  The policy addresses the obligations of Fidelity and its subsidiaries carrying on regulated business to maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of its clients. It applies to perceived as well as actual conflicts.

Conflicts are identified through various means, including regular interviews with the business heads, awareness training and internal reviews.  There is a governance structure in place to ensure the effective implementation of the Conflicts of Interest Policy and the Conflicts Oversight Forum meets on a quarterly basis to review any issues involving material conflicts occurring the previous quarter.

All staff must adhere to the Conflicts of Interest Policy and they are made aware that clients’ interests must always come before those of Fidelity or its staff.

Examples where 'CoI' could arise - Investing, Trade Allocation, Voting (we will not vote at shareholder meetings for Fidelity funds/investment trusts unless specially instructed by a client).

https://www.fidelity.co.uk/static/pdf/common/conflicts-policy.pdf

03.3. Additional information. [Optional]

Where it is a fiduciary, Fidelity owes a duty to its clients never to put itself in a position where its own interest results in an irreconcilable conflict with its duty to its clients or where its duty to one client results in an irreconcilable conflict with its duty to another client or clients. Fidelity is also under a regulatory duty to manage conflicts of interest fairly, both between itself and its clients and between different clients. To that end, Fidelity will identify, record, manage and, where required, disclose actual or potential conflicts of interests and have in place a policy relating to conflicts of interest.

A Conflicts Register is maintained to ensure that significant conflicts have been identified, addressed and recorded. All staff must adhere to the Conflicts of Interest Policy and the Code of Conduct and Associated Policies and they are made aware that clients’ interests must always come before those of Fidelity or its staff.

Situations where conflicts of interest could arise in the context of stewardship include the following examples:-

Investing

Within Fidelity there are companies which invest as principal for investment purposes in equities and/or bonds in which Fidelity may also invest for our clients. Potential conflicts can occur during acquisition and disposal of securities, voting and the use of research. To manage these potential conflicts, decisions regarding Fidelity’s investment portfolio are made independently of the investment management process which supports our clients’ funds and accounts. Policies and procedures are in place to ensure that these principles are properly followed. It is also possible that a Fidelity fund or account will own securities issued by a client, but in all situations Fidelity’s investment decisions will be guided by what we regard as the best interests of the relevant fund or account.

Trade Allocation

When performing client transactions in securities, Fidelity will combine orders where this it is in the best interests of the clients as a whole. If there is insufficient liquidity resulting in a partial completion of the order then the securities will be allocated across all clients participating in the block and it is possible that one client may receive a more favourable allocation over another client. To manage this potential conflict, Fidelity maintains a Trading Desk Policy which ensures the consistent and fair application of trade allocations. Allocations are performed on a pro-rata basis based on the size of the order, and the system allocation algorithm is automatically applied for every trade, subject to three lines of oversight – the Trading Desk supervisor, Compliance and Internal Audit/Risk.

Voting

In instances where a fund holds an investment in more than one party to a transaction we will always act in the interests of the specific fund in question and in instances where there is a conflict with Fidelity’s own interests, we will either vote in accordance with the recommendation of our principal third party research provider or if no recommendation is available we will abstain or not vote at all. We will not vote at shareholder meetings of any Fidelity funds unless specially instructed by a client. The Head of Corporate Finance is responsible for monitoring possible conflicts of interest with respect to proxy voting.

 


SG 04. Identifying incidents occurring within portfolios (Private)


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