Month ending: May 31, 2018 MAJOR NEWS: Global equity markets were mixed for the month amid renewed trade war concerns. Looking ahead: Eurozone GDP and composite PMI and U.S. factory orders. Global Markets EQUITY INDICES Close % chg Month %chg YTD REGIONAL INDICES Close % chg Month %chg YTD CAN: S&P/TSX 16062 2.9% -0.9% MSCI All Country World Index 509-0.2% -0.8% US: INDU 24416 1.0% -1.2% MSCI Europe 129-0.6% -1.7% US: SPX 2705 2.2% 1.2% Euro Stoxx 50: SX5E 3407-3.7% -2.8% Nasdaq: CCMP 7442 5.3% 7.8% MSCI Emerging Markets Index 1121-3.8% -3.3% Brazil: IBOV 76754-10.9% 0.5% MSCI Asia-Pac ex Japan 562-1.2% -1.3% Mexico: MEXBOL 44663-7.6% -9.5% MSCI EAFE 1986-2.8% -3.2% UK: FTSE 100 7678 2.2% -0.1% CURRENCIES Close % chg Month %chg YTD Germany: DAX 12605-0.1% -2.4% U.S./CAD 0.77-0.9% -2.9% France: CAC 5398-2.2% 1.6% CAD/Euro 1.51-2.2% 0.6% Netherlands: AEX 820-0.2% 0.6% U.S./BP 1.33-3.4% -1.6% Italy: FTSE MIB 21784-9.2% -0.3% JY/U.S. 108.82-0.5% -3.4% Sw itzerland: SMI 8457-4.8% -9.9% Euro/BP 1.14 0.0% 1.2% Japan: NKY 22202-1.2% -2.5% U.S./Euro 1.17-3.4% -2.8% Hong Kong: HSI 30469-1.1% 1.8% JY/BP 144.57-4.1% -5.1% Thailand: SET 1727-3.0% -1.5% BOND YIELDS Close bps chg Month bps chg YTD Malaysia: KLCI 1741-6.9% -3.1% 10 yr Canada Govt. 2.24% -0.07 0.17 Singapore: STI 3428-5.1% 0.7% 10 yr U.S. Treas 2.86% -0.08 0.45 Taiw an: TWSE 10875 2.0% 2.2% 10 yr Germany Govt. 0.34% -0.22-0.08 Korea: KOSPI 2423-3.7% -1.8% 10 yr Japan Govt. 0.04% -0.02-0.01 Ma: PCOMP 7497-4.1% -12.4% 30 yr Canada Govt. 2.26% -0.14-0.02 Australia: AS30 6124 0.9% -0.7% 30 yr U.S. Treas 3.02% -0.07 0.28 China: Shanghai 3095 0.4% -6.4% COMMODITIES Close % chg Month %chg YTD India: Sensex 35322 0.5% 3.7% Gold US$/oz. 1298.5-1.5% -0.3% BOND INDICES Close % chg Month %chg YTD Oil US$/bbl. 67.0-5.2% 11.0% CAN: FTSE/TSX Universe 130 0.6% -1.2% US: BBG US Agg 100 0.5% -2.7% GLB: BBG Global Agg 105 0.0% -1.8% * Please refer to Appendix for the above table in Canadian dollar terms. Source: Datastream. Gold and oil closing prices are from Bloomberg. Index returns are in local currency. All returns are price returns and do not include dividends. PAGE 1
CANADA 0.78% 1.61% S&P/TSX Comp. Index 1.12% -0.54% -0.09% - The S&P/TSX Composite Index advanced 2.9% for the month, after a surge in oil prices boosted energy stocks, following President Donald Trump s decision to withdraw the U.S. from a nuclear deal with Iran. Nine of the eleven GICS sectors advanced for the month, led by the health care sector, which was boosted by a rise in the stock price of Valeant Pharmaceuticals. In contrast, the utilities sector fell during the month, weighed down by a decline in the share price of Brookfield Infrastructure Partners. The Bank of Canada left its key overnight rate at 1.25% on May 30, in line with market expectations. Policy makers said core measures of inflation remain near 2%, and recent data support the Bank s outlook for growth of around 2% in the first half of 2018. The Canadian economy grew in the first quarter of 2018 by 0.3% quarter-on-quarter, following an increase of 0.4% in each of the previous two quarters. The slowest expansion since a 0.3% contraction in the second quarter of 2016, it was due to a deceleration in household spending, lower exports of non-energy products and a decline in housing investment. The annual inflation rate in Canada declined in April to 2.2%, from 2.3% in March the highest reading since October 2014 on a slower increase in gasoline prices and a fall in travel services. Canada s Markit manufacturing PMI stood at 55.5 in April 2018, little changed from the previous month s 55.7, and signalling a strong overall improvement in manufacturing sector business conditions. New orders from abroad went up at the fastest pace since March 2011, amid stronger global economic conditions, while output growth eased to a five-month low, due to manufacturing capacity constraints. PAGE 2
U.S. 2.34% Dow Jones Index 0.41% -0.47% 0.15% -1.36% - U.S. equities advanced in May, supported by rising crude oil prices and robust corporate earnings. However, stocks gave up some of their gains later in the month as trade frictions between the U.S. and China intensified. The Dow Jones Index, the S&P 500 Index and the Nasdaq rose 1.0%, 2.2% and 5.3%, respectively. The Federal Reserve (the Fed) left its target range for the Fed funds rate steady, at 1.5 1.75%, at its May 2018 meeting, in line with market expectations. Policy makers said the labour market has continued to strengthen, economic activity has been rising at a moderate rate, and both inflation and core inflation have moved close to 2%, suggesting a June rate hike is on the table. The U.S. economy grew at a slightly slower-than-expected pace in the first quarter of 2018, with GDP coming in at 2.2%, compared with the previous estimate of 2.3%. This was largely due to tepid consumer spending and lower inventories and exports, while business spending was revised higher. The U.S. unemployment rate fell to 3.8% in May, from 3.9% in the previous month, and below the market expectation of 3.9%. It was the lowest rate since April 2000, with the number of unemployed decreasing by 281,000, to 6.07 million, and employment rising by 293,000, to 155.47 million. Consumer prices in the U.S. rose in April by 2.5% year-on-year, slightly higher than an increase of 2.4% reported in the previous month, driven by an increase in gasoline, fuel and shelter prices. Industrial production in the U.S. increased in April by 0.7% month-on-month, the same pace as in March, led by advances in both manufacturing and mining production, while utilities growth slowed. The U.S. trade deficit narrowed in March to US$49 billion, from a revised deficit of US$57.7 billion reported in the previous month, with exports reaching a record high, boosted by sales of commercial aircraft and soybeans. PAGE 3
CONTINENTAL EUROPE DJ Euro Stoxx 50 0.40% 0.42% 0.23% -1.63% - -3.09% Escalating geopolitical tensions and weak economic data had a negative impact on European equities in May. The political situation in both Italy and Spain weighed on investor sentiment. U.S. President Trump s plans to reimpose steel and aluminum tariffs on Canada, Mexico and the European Union also weighed on markets. Most sectors posted flat to negative returns, with financials falling the most. The DJ Euro Stoxx 50 Index, Germany s DAX Index and France s CAC Index moved down 3.7%, 0.1% and 2.2%, respectively. Gross domestic product in the eurozone grew in the first quarter of 2018 by 0.4% quarter-on-quarter, down from an increase of 0.7% reported in the previous quarter. Among the bloc s largest economies, GDP growth slowed in Germany and France and was unchanged in Italy and Spain. The trade surplus in the eurozone narrowed in March to 26.9 billion euros, from 28.5 billion euros in the same month of the previous year; exports fell faster than imports during this period. The consumer price inflation rate in the eurozone decreased in April to 1.2% year-on-year, slightly below the 1.3% reported in the previous month, as services inflation softened. The unemployment rate in the eurozone decreased slightly in April to 8.5%, following an upwardly revised 8.6% in March. It remains the lowest jobless rate since December 2008. The lowest unemployment rates were recorded in the Czech Republic, Malta and Germany, while the highest unemployment rates were observed in Greece and Spain. Industrial production in the eurozone rose in March by 3.0% year-on-year, following a 2.6% increase in the previous month. Output grew faster in all categories, except intermediate goods, which rose at a slower pace. PAGE 4
U.K. 0.77% 2.08% FTSE 100 Index 0.70% -0.62% -0.67% - The U.K. s stock market, as measured by the FTSE 100 Index, posted gains of 2.2% for the month; a weak pound buoyed FTSE 100 companies, which generate most of their sales in foreign currencies. Growing expectations that the U.K. will continue to participate in a customs union with the E.U. even after its exit from the E.U. also supported investor sentiment. However, bouts of volatility occurred due to concerns regarding political uncertainty in Italy and Spain. The U.K. s economy advanced in the first three months of 2018 by 1.2% year-on-year, slowing from a 1.4% rise in the previous quarter. It is the lowest annual growth rate since the second quarter of 2012, amid a slowdown in household spending, business investment and exports. Annual inflation in the U.K. edged down in April to 2.4%, from 2.5% in March, mainly due to a slower increase in the costs of transport, food and clothing and footwear In the three months ending April, the Halifax House Price Index in the U.K. increased by 2.2% year-on-year, after a 2.7% gain in March, with low mortgage approvals and housing supply causing softening demand for housing. The unemployment rate in the U.K. for the three months to March was stagnant at 4.2%, compared with the previous period. The unemployment rate stood at a 42-year low, indicating robust labour markets. The U.K. s trade deficit in March widened to 3.1 billion pounds, from 1.2 billion pounds in the previous month, with a rise in imports offsetting a rise in exports. PAGE 5
JAPAN Nikkei 225 0.02% 1.27% 0.76% - -2.09% -1.11% Japanese equities, as represented by the Nikkei 225 Index, declined 1.2% for the month. Equities made a slow start to the month, marked by light trading and the Golden Week holidays. The yen s strength against the U.S. dollar, along with a wait-and-watch mood among investors ahead of earnings announcements by major Japanese companies, also led to caution. Selling gathered pace on weaker-than-expected GDP data and the yen s continued strength against the U.S. dollar: increasingly risk-averse investors sought the currency as a safe haven after U.S. President Donald Trump cancelled a planned summit with North Korea s leader. News reports that Trump s administration is considering new tariffs on imported vehicles also led to a sell-off in automobile makers. Japan s GDP contracted in the first quarter of 2018 by 0.6% year-on-year, compared with a 0.6% expansion recorded in the previous period. This is the first contraction recorded since the April fourth quarter of 2015, driven by a decline in private investment and stagnant household consumption. The jobless rate in Japan came in at 2.5% in April, the same as the previous month, indicating stable labour markets. Japan s consumer prices increased in April by 0.4% month-on-month, following a 1.1% rise in the previous month, after food inflation eased. PAGE 6
SOUTHEAST ASIA 8.00% Hang Seng - -0.24% -1.48% -0.39% -2.86% Asian markets declined in May. Concerns about ongoing trade frictions between the U.S. and China, expectations of faster-than-anticipated interest rate hikes by the US Federal Reserve (the Fed) and fears regarding the effects of political turmoil in Italy on the rest of the eurozone dampened investor sentiment. At the sector level, telecommunication services and industrials declined. Conversely, health care, information technology and consumer staples posted positive returns. Hong Kong s Hang Seng Index declined 1.1%, while China s Shanghai composite index and India s Sensex posted marginal gains of 0.4% and 0.5% respectively. Hong Kong s GDP in the three months ending March advanced to a 11-year high of 4.7% year-on-year, following a 3.4% growth in the previous period, supported by rising private consumption, government spending and exports. South Korea s economy advanced 2.8% year-over-year in the first quarter of 2018, unchanged compared with the previous period, driven by a faster pace of growth in manufacturing activity and consumption expenditure. Consumer prices in China increased in April by 1.8% year-on-year, after a 2.1% rise in the previous month, driven by a sharp slowdown in food inflation. India s consumer prices increased in April by 4.6% month-on-month, following a 4.3% rise in the previous month, with prices of housing and clothing and footwear rising at a faster pace. The annual inflation rate in Hong Kong fell to 1.9% in April, from 2.6% in March, mainly due to smaller increases in prices for package tours and fresh vegetables. Consumer prices in South Korea in April increased by 1.6% year-on-year, following a 1.3% rise in the previous month, with prices of food and non-alcoholic beverages and restaurants and hotels and transport rising at a faster pace. Hong Kong s unemployment rate in the three months to April fell to 2.8%, compared with 2.9% in the previous period, indicating an improvement in labour markets. South Korea s unemployment rate in the three months to April fell to 3.8%, compared with 4.0% in the previous period, indicating an improvement in labour markets. PAGE 7
LATIN AMERICA 2.53% Brazil IBOV - -8.00% -2.51% -3.48% -2.72% -5.04% Latin American stock markets were down for the month against the backdrop of prevalent geopolitical tensions in continental Europe and fears of a global trade war. Mexico s MEXBOL dropped 7.6%, while Brazil s Ibovespa was down 10.9%. The Brazilian economy advanced in the first quarter of 2018 by 1.2% year-on-year, compared with a 2.1% rise in the previous quarter. It was the slowest expansion since the second quarter of 2017, with fixed investment and exports growing less and government spending contracting further. Mexico s economy advanced 1.2% year-on-year for the first three months of 2018, compared with a growth of 1.5% recorded in the previous quarter, due to a contraction in the industrials sector and slower growth in the services sector. The Central Bank of Brazil kept its key Selic rate unchanged, at 6.50%, on May 16, following a 25-basis-point cut on March 21. The hold, unanimously voted, surprised markets, which expected another 25-basis-point reduction, and followed eleven consecutive cuts, keeping borrowing costs at their lowest in modern history. Mexico s central bank decided unanimously to keep its benchmark interest rate steady, at 7.5%, on May 17, as widely expected. Policy makers said the current monetary stance was appropriate to bring inflation back to the bank s 3% target. The IHS Markit Mexico manufacturing PMI declined in April to 51.6, from 52.4 in March, led by a decline in the pace of new orders and output growth. (A reading of less than 50.0 indicates contraction, while a reading of more than 50.0 indicates expansion.) The inflation rate in Brazil increased in April to 2.8% year-on-year, from 2.7% in the previous month, matching market expectations, with prices for transport, housing and personal expenses growing at a faster pace. Mexico s annual inflation rate eased in April to 4.6%, from an earlier reading of 5.0% recorded in March. It was the lowest inflation rate since December 2016, amid a slowing rise in prices for food, beverages, tobacco, fruits and vegetables. PAGE 8
Appendix Global Markets (all returns in Canadian dollar terms) EQUITY INDICES Close % chg Month %chg YTD REGIONAL INDICES Close % chg Month %chg YTD CAN: S&P/TSX 16062 2.9% -0.9% MSCI All Country World Index 660 1.0% 2.7% US: INDU 31672 2.2% 2.3% MSCI Europe 196-2.9% -1.0% US: SPX 3509 3.4% 4.8% Euro Stoxx 50: SX5E 5158-5.8% -2.1% Nasdaq: CCMP 9654 6.6% 11.6% MSCI Emerging Markets Index 1454-2.6% 0.2% Brazil: IBOV 26735-15.5% -7.4% MSCI Asia-Pac ex Japan 729 0.0% 2.2% Mexico: MEXBOL 2895-12.3% -8.4% MSCI EAFE 2576-1.7% 0.3% UK: FTSE 100 13253 0.0% 1.7% CURRENCIES Close % chg Month %chg YTD Germany: DAX 19087-2.3% -1.8% U.S./CAD 0.77-0.9% -2.9% France: CAC 8174-4.4% 2.3% CAD/Euro 1.51-2.2% 0.6% Netherlands: AEX 1242-2.4% 1.3% U.S./BP 1.33-3.4% -1.6% Italy: FTSE MIB 32986-11.2% 0.3% JY/U.S. 108.82-0.5% -3.4% Sw itzerland: SMI 11159-3.0% -7.5% Euro/BP 1.14 0.0% 1.2% Japan: NKY 265 0.7% 4.7% U.S./Euro 1.17-3.4% -2.8% Hong Kong: HSI 5039 0.1% 5.1% JY/BP 144.57-4.1% -5.1% Thailand: SET 70-3.2% 3.9% BOND YIELDS Close bps chg Week bps chg YTD Malaysia: KLCI 567-7.2% 2.0% 10 yr Canada Govt. 2.24% -0.07 0.17 Singapore: STI 3325-5.0% 4.2% 10 yr U.S. Treas 2.86% -0.08 0.45 Taiw an: TWSE 471 2.0% 5.1% 10 yr Germany Govt. 0.34% -0.22-0.08 Korea: KOSPI 3-3.4% 1.0% 10 yr Japan Govt. 0.04% -0.02-0.01 Philippines: PCOMP 185-4.4% -13.8% 30 yr Canada Govt. 2.26% -0.14-0.02 Australia: AS30 6010 2.3% -0.6% 30 yr U.S. Treas 3.02% -0.07 0.28 China: Shanghai 627 0.7% -1.4% COMMODITIES Close % chg Month %chg YTD India: Sensex 679 0.5% 1.6% Gold US$/oz. 1682.6-0.6% 2.7% BOND INDICES Close % chg Month %chg YTD Oil US$/bbl. 86.9-4.3% 14.3% CAN: FTSE/TSX Unive 130 0.6% -1.2% US: BBG US AGG 130 1.7% 0.7% GLB: BBG Global Agg 137 1.2% 1.7% Unless otherwise stated, the source of all data is Datastream. Gold and oil closing prices are from Bloomberg. All views expressed are those of Fidelity Investments. This document is not to be reproduced or circulated without prior permission. Issued by Fidelity Investments Canada ULC. Read a fund s prospectus and consult your investment professional before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Investors will pay management fees and expenses, may pay commissions or trailing commissions and may experience a gain or loss. Any mention of specific securities is for illustrative purposes only and not a recommendation to buy or sell, nor is it an indication of how the portfolio of any Fidelity Fund is invested. Fidelity Investments is a registered trademark of Fidelity Investments Canada. PAGE 9