Fidelity Global Equity Investment Trust

Transcription

1 Fidelity Global Equity Investment Trust Semi-Annual Management Report of Fund Performance December 31, 2016

2 Caution Regarding Forward-looking Statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking statements about the Fund, including its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates and similar forward-looking expressions or negative versions thereof. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. It should be stressed that the above-mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance.

3 Semi-Annual Management Report of Fund Performance as at December 31, 2016 Fidelity Global Equity Investment Trust This semi-annual management report of fund performance contains financial highlights but does not contain the complete semi-annual financial statements for the investment fund. You can get a copy of the semi-annual financial statements at your request, and at no cost, by calling , by writing to us at Fidelity Investments, 483 Bay St. Suite 300, Toronto ON M5G 2N7 or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure relating to the investment fund. Management Discussion of Fund Performance Results of Operations Units of the Fund are only available for purchase by other funds and accounts managed or advised by Fidelity, and are not available for public purchase. Fidelity Global Equity Investment Trust (Fund), Series O, returned 8.5% for the six-month period ending December 31, Global equities, as measured by the MSCI World Index, returned 10.3%, in Canadian dollar terms, for the review period. Market Overview: Global equities registered positive returns during the review period, owing to the continued low-interest-rate environment around the world. The U.S. Federal Reserve s decision to adopt a more cautious tone about raising interest rates and growing optimism about U.S. economic growth also supported markets. The Japanese market rebounded as a mix of loose monetary and fiscal policies led to an improvement in risk sentiment. Canadian markets performed well amid a recovery in prices for commodities, especially metals and oil. U.S. equities also gained on positive economic data and improved corporate earnings. European markets lagged global markets, with lacklustre economic activity and the expected consequences of the U.K. s decision to leave the European Union heightening investor concerns. Factors affecting performance: The Fund underperformed its benchmark, MSCI World Index, due to its investments in certain stocks in the health care and information technology sectors. In the health care sector, U.S.-based medical device manufacturer Medtronic and biotech company Seres Therapeutics detracted from relative performance. Medtronic shares declined as the company reported second-quarter earnings and revenue that fell short of consensus estimates, driven by slowing organic revenue growth, weaker-than-expected results in its Middle East segment and the timing of new product launches. Shares of Seres Therapeutics declined sharply after the company announced disappointing clinical trial results for one of its key pipeline drugs. At the end of the review period, the Fund had no exposure to Seres Therapeutics. In the information technology sector, lower-than-benchmark exposure to software maker Microsoft detracted from relative performance. Microsoft shares rose as the company reported first-quarter earnings that beat consensus estimates, driven by strong revenue growth across several segments, including its intelligence cloud business unit. Among investments in other sectors, the Fund s lower-than-benchmark exposure to banking and financial services provider JPMorgan Chase detracted from relative performance, as the company s share price rose during the review period. Shares of JPMorgan Chase rose amid positive investor sentiment among bank stocks following Donald Trump s victory in the U.S. presidential election. In contrast, higher-than-benchmark exposures to other banking and financial services providers, including Comerica, Bank of America and Capital One Financial, contributed to relative performance. Bank stocks benefited following the U.S. election as investors shifted to the financials sector on expectations of less onerous bank regulations. The Fund s lack of exposure to Switzerland-based drug maker Roche also contributed to relative performance. The share price of Roche declined amid negative investor sentiment after the company discontinued a late-stage trial for one of its blood cancer treatments, following mixed study results. Portfolio changes: With respect to sector and regional positioning, the Fund is managed with a neutral approach, allowing stock selection to be the primary driver of returns. While the Fund is neutrally positioned at the sector level, industry group allocations modestly deviated from those of the benchmark. During the review period, portfolio manager César Hernández made positional changes in the Fund across a range of industries. Exposure to the banking industry was increased, while investments in the pharmaceuticals, biotechnology and life sciences industry declined. In the banking industry, Mr. Hernández initiated a position in banking and financial services provider JPMorgan Chase; he believes that the stock will benefit from a more favourable backdrop for banks during the President administration. Exposure to the pharmaceuticals, biotechnology and life sciences industry declined when a position in Medivation was closed, after it was announced that the company would be acquired by Pfizer. Geographic allocations are a by-product of the portfolio manager s bottom-up fundamental stock selection process, reflecting his intent to add value through stock selection, instead of macro-level calls. Derivatives exposure: 1

4 Fidelity Global Equity Investment Trust Management Discussion of Fund Performance continued During the period under review, the Fund engaged in futures contracts, in a manner consistent with its investment objective and strategies, to manage the Fund s cash balance while the portfolio manager actively searched for other investment opportunities. Recent Developments Portfolio manager César Hernández believes valuations remain generally attractive compared with historical levels. However, a number of global macro factors such as the rate of growth in Europe, Japan and the U.S., the employment environment in the U.S., the impact of U.S. election results and the long-term impact of a Brexit, may continue to influence the markets, in the portfolio manager s view. In this environment, the portfolio manager continues to focus on strong businesses with good cash-flow potential that are trading at attractive valuations. He continues to seek to take advantage of market inefficiencies through bottom-up stock selection based on fundamental company research, implemented within a framework of quantitative risk control. The Fund s sector weightings remain closely aligned with the eleven Global Industry Classification Standard (GICS) sectors of the MSCI World Index. However, stock selection may drive modestly higher or lower allocations at the industry level, compared with the benchmark. As at December 31, 2016, the Fund deviated most from its benchmark by having higher exposure to the software and services industry and lower exposure to the utilities industry. The Fund had its largest absolute exposure to the banking industry, followed by the software and services industry. In terms of country allocation, the U.S. accounted for the Fund s largest absolute exposure, followed by Japan. 2

5 Related Party Transactions Manager and Portfolio Adviser The Fund is managed by Fidelity Investments Canada ULC (Fidelity). Fidelity is part of a broader group of companies collectively known as Fidelity Investments. Fidelity provides or arranges for the provision of all general management and administrative services required by the Fund in its day to day operations, bookkeeping, record keeping and other administrative services for the Fund. Fidelity is the portfolio adviser to the Fund. The Fund is only offered in Series O securities and is not available for public purchase. The Fund was created as an underlying investment trust for other Fidelity products. The Fund does not pay management and advisory fees, or other operating expenses, other than certain specified fund costs, including taxes, brokerage commissions and interest charges. Fidelity provides investment advice to the Fund. Fidelity has entered into sub-advisory agreements with Fidelity Institutional Asset Management Trust Company and Fidelity (Canada) Asset Management ULC, affiliates of Fidelity, to provide investment advice with respect to all or a portion of the investments Fidelity provides investment advice with respect to the Fund s investment portfolio and arranges for the acquisition and disposition of portfolio investments, including all necessary brokerage arrangements. Brokerage Commissions The Fund may place a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Investments, including National Financial Services LLC, provided it determines that these affiliates trade execution abilities and costs are comparable to those of non affiliated, qualified brokerage firms, on an execution only basis. Commissions paid to brokerage firms that are affiliates of Fidelity Investments were $0 for the period ended December 31, Fidelity receives standing instructions from the IRC in respect of policies and procedures governing best execution of transactions with affiliates, which includes brokers affiliated to Fidelity Investments, at least once per year. 3

6 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the period end of the years shown. This information is derived from the Fund s audited annual and/or unaudited semi-annual financial statements. Please see the front page for information about how you can obtain the Fund s annual or semi-annual financial statements. Fidelity Global Equity Investment Trust Series O Six-months ended December 31, Periods ended June 30, The Series Net Assets per Security A Net assets, beginning of period B $ $ $ $ $ $ Increase (decrease) from operations: Total revenue Total expenses (excluding distributions) (.0252) (.0660) (.0592) (.0033) Realized gains (losses) Unrealized gains (losses).9364 (1.1088) (.4899) Total increase (decrease) from operations B (.4063) (.0766) Distributions: From net investment income (excluding dividends) (.5051) (.2603) (.3662) From dividends (.0180) (.0110) (.0148) (.2525) (.3350) (.3054) From capital gains (.6562) (.7825) (.9022) (.1185) Return of capital Total distributions B,C (.5231) (.9275) (1.1635) (1.1547) (.4535) (.3054) Net assets, end of period B $ $ $ $ $ $ Ratios and Supplemental Data Net asset value (000s) D $ 115,074 $ 116,680 $ 87,579 $ 55,366 $ 30,532 $ 22,904 Securities outstanding D 6,028,087 6,448,542 4,562,692 3,303,758 2,158,285 1,925,598 Management expense ratio E % % % % % % Management expense ratio before waivers or absorptions E % % % % % % Trading expense ratio F.08%.10%.09%.11%.11%.09% Portfolio turnover rate G 26.13% 44.99% 59.21% 62.83% 70.56% 52.81% Net asset value per security, end of period $ $ $ $ $ $ A This information is derived from the Fund s audited annual and/or unaudited interim financial statements. Periods beginning on or after January 1, 2013 follow International Financial Reporting Standards (IFRS) and periods prior to January 1, 2013 follow Canadian Generally Accepted Accounting Principles (Canadian GAAP). The net assets attributable to holders of redeemable securities per security presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. An explanation of these differences can be found in the notes to financial statements. B Net assets and distributions are based on the actual number of securities outstanding at the relevant time. The increase (decrease) from operations is based on the weighted average number of securities outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per security. C Distributions were paid in cash or reinvested in additional securities of the Fund, or both. Distributions are presented based on management s best estimate of the tax character. D This information is provided as at period end of the year shown. E No fees are charged to the Series. F The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period, including the Fund s pro-rata share of estimated trading costs incurred in any underlying investment fund, if applicable. G The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high portfolio turnover rate and the performance of the Fund. The portfolio turnover rate is calculated based on the lesser of purchases or sales of securities divided by the weighted average market value of the portfolio securities, excluding short-term securities. For periods greater than six months, but less than a full fiscal year, the portfolio turnover rate is annualized. 4

7 Fidelity Global Equity Investment Trust Past Performance The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not necessarily indicate how it will perform in the future. Year-by-Year Returns The following bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the Fund s performance was changed from year to year. In percentage terms, the bar chart shows how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year. For each Series in the Year-by-Year Returns table below, the most recent returns stated are for the current six month period. Series O Fiscal Years Percentage (%) Commencement of Operations is November 24,

8 Fidelity Global Equity Investment Trust Summary of Investment Portfolio as at December 31, 2016 Sector Mix as of December 31, 2016 % of Fund s Net Assets Financials 18.4 Information Technology 15.2 Consumer Discretionary 12.3 Health Care 12.0 Industrials 11.3 Consumer Staples 9.4 Energy 7.5 Materials 5.6 Telecommunication Services 2.9 Real Estate 2.6 Utilities 2.0 Cash and Cash Equivalents 0.5 Net Other Assets (Liabilities) 0.3 Derivative Exposure as of December 31, 2016 % of Fund s Net Assets Futures Contracts 1.2 Futures Contracts percentage is calculated by dividing the sum of the underlying face amount at value by total net assets. Geographic Mix as of December 31, 2016 % of Fund s Net Assets United States of America 53.5 Japan 8.7 United Kingdom 5.6 Canada 3.7 France 3.5 Germany 3.4 Switzerland 3.4 Ireland 2.7 Australia 2.4 Netherlands 2.0 Spain 1.5 Sweden 1.3 Singapore 1.0 Curacao 1.0 Bailiwick of Jersey 1.0 Others (Individually Less Than 1%) 4.5 Cash and Cash Equivalents 0.5 Net Other Assets (Liabilities) 0.3 Top 25 Issuers % of Fund s Net Assets 1. Apple, Inc Alphabet, Inc Amazon.com, Inc Berkshire Hathaway, Inc Bank of America Corp Facebook, Inc Microsoft Corp Schlumberger Ltd The Coca-Cola Co Comcast Corp Johnson & Johnson Qualcomm, Inc Procter & Gamble Co Royal Dutch Shell PLC Home Depot, Inc Citigroup, Inc Medtronic PLC Wells Fargo & Co HP, Inc JPMorgan Chase & Co Charter Communications, Inc Reynolds American, Inc Caterpillar, Inc Novartis AG Chubb Ltd Total Fund Net Assets $114,960,000 The summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund. The most recent annual report, semi-annual report, quarterly report, fund facts document or simplified prospectus for the investment fund and/or underlying 6

9 fund is available at no cost, by calling , by writing to us at Fidelity Investments Canada ULC, 483 Bay St. Suite 300, Toronto ON M5G 2N7 or by visiting our web site at or SEDAR at 7

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12 Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Manager, Transfer Agent and Registrar Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Custodian State Street Trust Company of Canada Toronto, Ontario Portfolio Adviser Fidelity Investments Canada ULC Toronto, Ontario Visit us online at or call Fidelity Client Services at Fidelity s mutual funds are sold by registered Investment Professionals. Each Fund has a simplified prospectus, which contains important information on the Fund, including its investment objective, purchase options, and applicable charges. Please obtain a copy of the prospectus, read it carefully, and consult your Investment Professional before investing. As with any investment, there are risks to investing in mutual funds. There is no assurance that any Fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. Investors may experience a gain or loss when they sell their securities in any Fidelity Fund. Fidelity Global Funds may be more volatile than other Fidelity Funds as they concentrate investments in one sector and in fewer issuers; no single Fund is intended to be a complete diversified investment program. Past performance is no assurance or indicator of future returns. There is no assurance that either Fidelity Canadian Money Market Fund or Fidelity U.S. Money Market Fund will be able to maintain its net asset value at a constant amount. 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. A Fund s investments may change at any time. Fidelity Investments is a registered trademark of FMR LLC E FICL-GET-MRFPS-0217