Fidelity Global Equity Investment Trust

Transcription

1 Fidelity Global Equity Investment Trust Annual Management Report of Fund Performance June 30, 2017

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 Annual Management Report of Fund Performance as at June 30, 2017 Fidelity Global Equity Investment Trust This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements for the investment fund. You can get a copy of the 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 Securityholders 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 Investment Objective and Strategies Investment Objective: Fidelity Global Equity Investment Trust (Fund) aims to seek long-term capital appreciation by investing primarily in equity securities of companies located anywhere in the world. Strategies: The Fund employs an approach that combines fundamental stock selection with quantitative risk control. The Fund aims to invest in the regions and sectors of the MSCI World Index in approximately the same proportion as those regions and sectors that are represented in the Index. The portfolio manager chooses investments based on input from a team of analysts who thoroughly review each company s management, financial condition and potential for earnings growth over the long term. The specific investments made by the Fund may or may not be included in the MSCI World Index. Risk The risks associated with investing in the Fund remain as discussed in the prospectus. Any changes to the Fund over the period have not affected the overall level of risk of the Fund. The Fund is suitable for long-term investors who wish to add global equity exposure to their portfolios and are willing to accept a medium level of risk. The suitability of the investment has not changed from what has been disclosed in the prospectus. Results of Operations Securities 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, Series O, returned 17.0% for the one-year period ended June 30, Global equities, as measured by the MSCI World Index, returned 18.2% (in Canadian dollar terms) for the review period. Market Overview: European markets surged, with the MSCI Europe Index returning 21.1% as strong economic data boosted investor sentiment. U.S. markets, as represented by the S&P 500 Index, gained 17.9%, driven by positive economic data and optimism regarding the proposed policies of the new U.S. administration. Canadian markets lagged global markets, with the S&P TSX Composite Index registering an 11.0% growth; investors concerns about depressed oil prices, rising household debt and risks of a correction in the housing market weighed on Canadian equities. During the review period, the Canadian dollar depreciated by 0.3% against the U.S. dollar (all returns in Canadian dollars). Factors affecting performance: The Fund underperformed its benchmark, primarily due to Fund s exposure to select stocks in the health care sector. In the sector, an investment in U.S.-based microbiome therapeutics platform company Seres Therapeutics and a lower-than-benchmark exposure to U.S.-based medical devices, pharmaceutical and consumer packaged goods manufacturing company Johnson & Johnson detracted from relative performance. At the end of the review period, the Fund had no exposure to Seres Therapeutics or Johnson & Johnson. Investments in select stocks in the financials sector also detracted from relative performance. In the sector, a lower-than-benchmark exposure to U.S.-based bank JPMorgan Chase and a lack of exposure to Spain-based bank Banco Santander detracted from relative performance. Among other sectors, an investment in U.S.- based toy manufacturing company Mattel and investments in U.S.-based energy companies such as Hess and Anadarko Petroleum detracted from relative performance. In contrast, exposure to select stocks in the telecommunication services sector contributed to relative performance. In the sector, a lower-thanbenchmark exposure to U.S.-based telecommunications companies such as Verizon Communications and AT&T contributed to relative performance. At the end of the review period, the Fund had no exposure to AT&T. In addition, exposure to select stocks in the information technology sector contributed to relative performance. In the sector, investments in U.S.-based electronic gaming software firm Activision Blizzard, U.S.- based technology hardware and equipment company HP and U.S.-based semiconductors and semiconductor equipment firm Broadcom contributed to relative performance. Among other sectors, a lack of exposure to U.S.-based oil and gas company Exxon Mobil and an investment in U.S.-based financial services company Comerica contributed to relative performance. At the end of the review period, the Fund had no exposure to HP or Comerica. 1

4 Fidelity Global Equity Investment Trust Management Discussion of Fund Performance continued 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, the 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 software and services was increased as the portfolio manager initiated a position in U.S.-based electronic payments company PayPal Holdings and increased the allocation to U.S.-based technology company Microsoft. In contrast, exposures to the pharmaceuticals, biotechnology and life sciences and the food, beverage and tobacco industries declined during the review period; the portfolio manager found more attractive investment opportunities elsewhere. The 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. Derivative Disclosure: 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 sought other investment opportunities. Recent Developments Portfolio manager César Hernández believes valuations remain generally attractive compared with historical levels. However, in the view of the portfolio manager, 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 the new U.S. administration and the long-term impact of Brexit, may continue to influence the markets. 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 June 30, 2017, the Fund deviated the most from its benchmark by having a higher exposure to the software and services industry and a lower exposure to the transportation industry. The Fund had its largest absolute exposure to the software and services industry, followed by the banking industry. In terms of country allocation, the U.S. accounted for the Fund s largest absolute exposure, followed by Japan. Independent Review Committee Effective February 28, 2017, Helen M. Meyer retired from the Independent Review Committee and was replaced by James E. Cook as Chair. Also effective on that date, Frances Horodelski of Toronto, Ontario, became a member of the Independent Review Committee. 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 and it provides investment advisory services to the Fund. Fidelity has entered into sub-advisory agreements with a number of entities including FIAM LLC, to provide investment advice with respect to all or a portion of the investments of the Fund. The sub-advisors arrange for acquisition and disposition of portfolio investments, including all necessary brokerage arrangements. The Fund is only offered in Series O securities and is not available for public purchase. The Fund was created as an underlying fund 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. 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 June 30, 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 Periods ended June 30, The Series per Security A Net assets, beginning of period B $ $ $ $ $ Increase (decrease) from operations: Total revenue Total expenses (excluding distributions) (.06) (.07) (.06) Realized gains (losses) Unrealized gains (losses) 1.42 (1.11) Total increase (decrease) from operations B 3.03 (.41) Distributions: From net investment income (excluding dividends) (.51) (.26) (.37) From dividends (.02) (.01) (.01) (.25) (.34) From capital gains (.66) (.78) (.90) (.12) Return of capital Total distributions B,C (.53) (.93) (1.16) (1.15) (.45) Net assets, end of period B $ $ $ $ $ Ratios and Supplemental Data Net asset value (000s) D $ 121,780 $ 116,680 $ 87,579 $ 55,366 $ 30,532 Securities outstanding D 5,915,533 6,448,542 4,562,692 3,303,758 2,158,285 Management expense ratio % % % % % Management expense ratio before waivers or absorptions % % % % % Trading expense ratio E.09%.10%.09%.11%.11% Portfolio turnover rate F 56.17% 44.99% 59.21% 62.83% 70.56% 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 securityholders 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. For reporting periods ending after January 1, 2017 per security comparative figures (except for net asset value per security, end of period) have been conformed to the current rounding presentation of two decimal places. As a result, reporting periods ending prior to January 1, 2017 may not foot due to this rounding change. B C D E F 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. Distributions were paid in cash or reinvested in additional securities of the Fund, or both, and excludes any applicable distributions of management fee reduction to securityholders. Distributions are presented based on management s best estimate of the tax character. This information is provided as at period end of the year shown. 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. 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. Series O Fiscal Years (%) Commencement of Operations is November 24, 2008 Annual Compound Returns This table shows the Funds historical annual compound total returns for the periods indicated, compared with the Fund s benchmark, the MSCI World Index, as described below. Past 1 year Past 3 years Past 5 years Since Inception Average Annual Total Returns Fidelity Global Equity Investment Trust Series O 17.0% 12.2% 17.2% 12.7% MSCI World Index 18.2% 12.4% 16.9% 13.0% A discussion of the performance of the Fund can be found in the Results of Operation section of this report. The MSCI World Index is a market capitalization weighted index composed of companies representative of the market structure of Developed Market countries in North America, Europe and the Asia/Pacific Region. 5

8 Fidelity Global Equity Investment Trust Summary of Investment Portfolio as at June 30, 2017 Sector Mix % of Fund s as at 6/30/17 % of Fund s as at 6/30/16 Financials Information Technology Health Care Consumer Discretionary Industrials Consumer Staples Energy Materials Telecommunication Services Real Estate Utilities Cash and Cash Equivalents Net Other Assets (Liabilities) 0.4 (0.3) Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. Derivative Exposure % of Fund s as at 6/30/17 % of Fund s as at 6/30/16 Futures Contracts Futures Contracts percentage is calculated by dividing the sum of the underlying face amount at value by total net assets. Geographic Mix % of Fund s as at 6/30/17 % of Fund s as at 6/30/16 United States of America Japan United Kingdom France Switzerland Canada Germany Ireland Australia Netherlands Spain Sweden Hong Kong Others (Individually Less Than 1%) Cash and Cash Equivalents Net Other Assets (Liabilities) 0.4 (0.3) Top 25 Issuers % of Fund s 1. Cash and Cash Equivalents Apple, Inc Alphabet, Inc Microsoft Corp Facebook, Inc Amazon.com, Inc Philip Morris International, Inc Berkshire Hathaway, Inc Amgen, Inc Wells Fargo & Co Medtronic PLC Activision Blizzard, Inc Home Depot, Inc Citigroup, Inc Allergan PLC Nestle SA Boston Scientific Corp Bank of America Corp Royal Dutch Shell PLC UnitedHealth Group, Inc JPMorgan Chase & Co Visa, Inc Caterpillar, Inc Chubb Ltd American Tower Corp. 0.7 Total Fund $121,663,

9 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 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

10

11

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 Fidelity Investments Canada ULC E FICL-GET-MRFPA-0917