Fidelity Advantage Portfolio Fund - Fidelity Investments

212 Pages·2016·1.75 MB·English

ORSO
Fidelity
Advantage
Portfolio Fund
Annual Report
December 2017
FIDELITY ADVANTAGE PORTFOLIO FUND
YEAR ENDED 31ST DECEMBER 2017

ANNUAL REPORT

Contents Pages

Management and Administration 1

Report of the Investment Manager 2 – 7

Report of the Trustee to the Unitholders 8

Independent Auditor’s Report 9 – 12

Statement of Net Assets 13 – 26

Statement of Comprehensive Income 27 – 40

Statement of Changes in Net Assets Attributable to Unitholders 41 – 54

Statement of Cash Flows 55 – 68

Notes to the Financial Statements 69 – 135

Schedule of Investments (Unaudited) 136 – 187

Investment Portfolio Movements (Unaudited) 188 – 201

Performance Table (Unaudited) 202 – 207
FIDELITY ADVANTAGE PORTFOLIO FUND
YEAR ENDED 31ST DECEMBER 2017

ANNUAL REPORT

Contents Pages

Management and Administration 1

Report of the Investment Manager 2 – 7

Report of the Trustee to the Unitholders 8

Independent Auditor’s Report 9 – 12

Statement of Net Assets 13 – 26

Statement of Comprehensive Income 27 – 40

Statement of Changes in Net Assets Attributable to Unitholders 41 – 54

Statement of Cash Flows 55 – 68

Notes to the Financial Statements 69 – 135

Schedule of Investments (Unaudited) 136 – 187

Investment Portfolio Movements (Unaudited) 188 – 201

Performance Table (Unaudited) 202 – 207
FIDELITY ADVANTAGE PORTFOLIO FUND 1 FIDELITY ADVANTAGE PORTFOLIO FUND 2
YEAR ENDED 31ST DECEMBER 2017 YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER
MANAGEMENT AND ADMINISTRATION
Annual Report
Investment Manager As at 31st December 2017

FIL Investment Management (Hong Kong) Limited This Annual Report does not constitute an offer of units. Units are offered on the basis of the
Level 21, Two Pacific Place, information contained in the current Explanatory Memorandum (and the documents referred
88 Queensway, to within it). Copies of the current Explanatory Memorandum and latest annual report for the
Admiralty, Hong Kong Fund are available from the registered office of the Investment Manager or from any of the
companies registered as distributors of the Fidelity Advantage Portfolio Fund.

Trustee and Registrar

HSBC Institutional Trust Services (Asia) Limited
1 Queen’s Road Central
Hong Kong

Auditor

PricewaterhouseCoopers
22nd Floor, Prince’s Building,
Central, Hong Kong

Legal Advisers

Deacons
5th Floor Alexandra House
18 Chater Road
Central
Hong Kong
FIDELITY ADVANTAGE PORTFOLIO FUND 2
YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER

Annual Report
As at 31st December 2017

This Annual Report does not constitute an offer of units. Units are offered on the basis of the
information contained in the current Explanatory Memorandum (and the documents referred
to within it). Copies of the current Explanatory Memorandum and latest annual report for the
Fund are available from the registered office of the Investment Manager or from any of the
companies registered as distributors of the Fidelity Advantage Portfolio Fund.
FIDELITY ADVANTAGE PORTFOLIO FUND 3 FIDELITY ADVANTAGE PORTFOLIO FUND 4
YEAR ENDED 31ST DECEMBER 2017 YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER REPORT OF THE INVESTMENT MANAGER

2017 Global Market Review – Consolidated Manager Report 2017 Global Market Review – Consolidated Manager Report (Continued)

United States Japan
US equities rose over the review period, supported by the successful passage of the tax reform Japanese equities rose strongly in local currency terms over the year, backed by upbeat
bill, robust economic data, strong corporate earnings and interest rate increases by the US corporate earnings results, easing political concerns and a steady flow of positive economic
Federal Reserve (Fed). Most sectors generated positive returns, with information technology data. Prime Minister Shinzo Abe’s landslide victory in the snap general election held in late
(IT), materials and consumer discretionary leading the market. During the review period, the October provided further momentum amid hopes of a continuation of Abenomics (economic
Fed increased its benchmark interest rate thrice, in March 2017, June 2017 and December policies advocated by Abe). Stocks started the year on a positive note amid robust global
2017, by a total of three-quarters of a percentage point. The interest rate now ranges between macroeconomic indicators and upbeat corporate earnings results. Expectations that the Trump
1.25% and 1.50%. This is in line with an earlier indication of three interest rate rises in 2017. administration’s reflationary policies would boost US and global growth also supported gains.
The Fed also announced that Jerome Powell will take over as the new Chairperson in February However, sentiment waned as mounting concerns about external political risks put upward
2018, when Janet Yellen’s term ends. pressure on the yen. Equities rebounded from mid-April as upbeat earnings results, easing
political concerns and a steady flow of positive economic data spurred gains. Investor
Europe confidence increased as a combination of export, domestic, defensive and commodity related
European equities posted strong positive returns over the 12-month period ending December companies contributed to a pickup in earnings growth. Meanwhile, attractive relative valuations
2017. Markets started the period on a positive note, as strong economic data from the and healthy growth momentum supported inflows from overseas investors. There were periods
eurozone and prospects of pro-growth policies by US President Donald Trump's government of diminished risk sentiment owing to North Korea’s ballistic missile launches and
boosted investor sentiment. Equities were also supported by the Dutch election results, where accompanying political rhetoric. The strong rise in Japanese markets in 2017 was also backed
voters rejected a populist candidate. The victory of centrist candidate Emmanuel Macron in the by two US-related factors; the sharp rise in US long-term rates and a stronger US dollar. In
French presidential election in May 2017 helped reduce political risk in Europe, which further terms of style, growth companies outperformed value stocks, while smaller companies
supported equities. However, there was some volatility in June as investors misinterpreted performed better than their larger peers, given their greater exposure to domestic growth and
European Central Bank (ECB) President Mario Draghi’s remarks on economic expansion and strong earnings profile. From a sector perspective, renewed growth optimism was reflected in
easing deflationary pressures as a sign that the central bank would reduce monetary stimulus. the strong performance of the more cyclical segments of the market, such as resources,
The ECB later clarified that it would retain its accommodative monetary policy stance. Markets technology and industrials. Conversely, defensive stocks, led by utilities and
were volatile at the start of the third quarter of 2017 due to rising geopolitical tensions, but telecommunications, lagged the broader market.
rebounded in September as macroeconomic data and surveys confirmed the momentum in
the economic recovery. The year ended on a positive note, driven by the ECB’s continued Pacific ex Japan
accommodative monetary policy stance, strong corporate earnings and sustained global Asia Pacific ex Japan equities gained in 2017 as well-synchronised global economic growth
economic growth. Furthermore, the passage of the US tax reform bill boosted investor boosted sentiment and outweighed geopolitical concerns. Chinese equities gained amid signs
sentiment. All sectors posted positive returns, with cyclicals outperforming defensives. IT, of economic stabilisation and progress towards structural reforms. At the 19th Congress of the
materials and industrials were the top performing sectors, while telecommunication services, Communist Party of China, which takes place twice a decade, President Xi Jinping focused on
energy and health care stocks underperformed the broader market. supply side reforms, the “Belt and Road” initiative, overcapacity cuts, broadening urbanisation
and deleveraging state-owned enterprises to stimulate economic growth. GDP growth ticked
Japan up to 6.9% year-on-year in 2017, the first annual acceleration in growth since 2010. The Indian
Japanese equities rose strongly in local currency terms over the year, backed by upbeat market rose as investors were positive about the implementation of the Goods and Services
corporate earnings results, easing political concerns and a steady flow of positive economic Tax (GST) regime. Global rating agency Moody’s upgraded India’s sovereign credit rating in
data. Prime Minister Shinzo Abe’s landslide victory in the snap general election held in late view of progress on reforms. Investor interest in IT companies supported the Taiwanese and
October provided further momentum amid hopes of a continuation of Abenomics (economic South Korean markets. In South Korea, sentiment received further support on expectations of
policies advocated by Abe). Stocks started the year on a positive note amid robust global an improvement in ties with China, and as the new president announced measures to boost
macroeconomic indicators and upbeat corporate earnings results. Expectations that the Trump growth. In Australia, gains in IT and commodity-related stocks led the market higher. Banks,
administration’s reflationary policies would boost US and global growth also supported gains. however, lagged the broader market as the introduction of a new tax on large banks worried
However, sentiment waned as mounting concerns about external political risks put upward investors. Credit rating agencies Standard & Poor’s and Moody’s also downgraded ratings for
pressure on the yen. Equities rebounded from mid-April as upbeat earnings results, easing several financial institutions, citing risks associated with the housing market. The Philippines
political concerns and a steady flow of positive economic data spurred gains. Investor and Indonesian markets gained, as their sovereign credit ratings were upgraded. Thai equities
confidence increased as a combination of export, domestic, defensive and commodity related rose amid signs of an improvement in political stability. Singaporean and Malaysian equities
companies contributed to a pickup in earnings growth. Meanwhile, attractive relative valuations also benefited from positive sentiment. All sectors in Asia Pacific ex Japan ended higher. IT
and healthy growth momentum supported inflows from overseas investors. There were periods and real estate led gains. Materials tracked metal prices higher. The energy sector benefited
of diminished risk sentiment owing to North Korea’s ballistic missile launches and from higher crude oil prices as major oil producing nations extended production curbs to
accompanying political rhetoric. The strong rise in Japanese markets in 2017 was also backed address the global supply glut.
by two US-related factors; the sharp rise in US long-term rates and a stronger US dollar. In
terms of style, growth companies outperformed value stocks, while
FIDELITY ADVANTAGE PORTFOLIO FUND 4
YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER

2017 Global Market Review – Consolidated Manager Report (Continued)

Japan
Japanese equities rose strongly in local currency terms over the year, backed by upbeat
corporate earnings results, easing political concerns and a steady flow of positive economic
data. Prime Minister Shinzo Abe’s landslide victory in the snap general election held in late
October provided further momentum amid hopes of a continuation of Abenomics (economic
policies advocated by Abe). Stocks started the year on a positive note amid robust global
macroeconomic indicators and upbeat corporate earnings results. Expectations that the Trump
administration’s reflationary policies would boost US and global growth also supported gains.
However, sentiment waned as mounting concerns about external political risks put upward
pressure on the yen. Equities rebounded from mid-April as upbeat earnings results, easing
political concerns and a steady flow of positive economic data spurred gains. Investor
confidence increased as a combination of export, domestic, defensive and commodity related
companies contributed to a pickup in earnings growth. Meanwhile, attractive relative valuations
and healthy growth momentum supported inflows from overseas investors. There were periods
of diminished risk sentiment owing to North Korea’s ballistic missile launches and
accompanying political rhetoric. The strong rise in Japanese markets in 2017 was also backed
by two US-related factors; the sharp rise in US long-term rates and a stronger US dollar. In
terms of style, growth companies outperformed value stocks, while smaller companies
performed better than their larger peers, given their greater exposure to domestic growth and
strong earnings profile. From a sector perspective, renewed growth optimism was reflected in
the strong performance of the more cyclical segments of the market, such as resources,
technology and industrials. Conversely, defensive stocks, led by utilities and
telecommunications, lagged the broader market.

Pacific ex Japan
Asia Pacific ex Japan equities gained in 2017 as well-synchronised global economic growth
boosted sentiment and outweighed geopolitical concerns. Chinese equities gained amid signs
of economic stabilisation and progress towards structural reforms. At the 19th Congress of the
Communist Party of China, which takes place twice a decade, President Xi Jinping focused on
supply side reforms, the “Belt and Road” initiative, overcapacity cuts, broadening urbanisation
and deleveraging state-owned enterprises to stimulate economic growth. GDP growth ticked
up to 6.9% year-on-year in 2017, the first annual acceleration in growth since 2010. The Indian
market rose as investors were positive about the implementation of the Goods and Services
Tax (GST) regime. Global rating agency Moody’s upgraded India’s sovereign credit rating in
view of progress on reforms. Investor interest in IT companies supported the Taiwanese and
South Korean markets. In South Korea, sentiment received further support on expectations of
an improvement in ties with China, and as the new president announced measures to boost
growth. In Australia, gains in IT and commodity-related stocks led the market higher. Banks,
however, lagged the broader market as the introduction of a new tax on large banks worried
investors. Credit rating agencies Standard & Poor’s and Moody’s also downgraded ratings for
several financial institutions, citing risks associated with the housing market. The Philippines
and Indonesian markets gained, as their sovereign credit ratings were upgraded. Thai equities
rose amid signs of an improvement in political stability. Singaporean and Malaysian equities
also benefited from positive sentiment. All sectors in Asia Pacific ex Japan ended higher. IT
and real estate led gains. Materials tracked metal prices higher. The energy sector benefited
from higher crude oil prices as major oil producing nations extended production curbs to
address the global supply glut.
FIDELITY ADVANTAGE PORTFOLIO FUND 6
YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER

Cumulative Total Returns
NAV to NAV (in %, in Fund Currency) as at 31st December 2017

Fund Name Fund Class 6 Months 1 Year Since Launch
Asia Pacific Equity Fund Ordinary 14.45 35.05 195.50
Administration 14.25 34.43 180.70
Savings 14.20 34.38 179.10
Balanced Fund Ordinary 10.77 23.38 380.20
Administration 10.49 22.81 333.90
Savings 10.49 22.78 208.30
Capital Stable Fund Ordinary 6.24 13.92 257.60
Administration 5.97 13.37 223.00
Savings 5.95 13.33 133.94
Fidelity Advantage Portfolio Fund - Ordinary 14.45 42.32 155.90
Invesco Asian Equity Fund Administration 14.17 41.73 142.50
Savings 14.16 41.66 141.10
Fidelity Advantage Portfolio Fund - Ordinary 16.90 38.69 138.00
Tracker Fund Portfolio Administration 16.60 38.09 125.50
Savings 16.59 37.97 124.20
Global Equity Fund Ordinary 9.20 20.06 199.20
Administration 8.94 19.53 180.30
Savings 8.92 19.44 178.30
Growth Fund Ordinary 13.05 28.21 430.90
Administration 12.79 27.62 379.60
Savings 12.77 27.58 242.69
HK Dollar Money Fund Ordinary 0.18 0.36 34.42
Administration 0.17 0.34 28.66
Savings 0.16 0.33 11.76
Hong Kong Bond Fund Ordinary 0.01 3.80 41.36
Administration -0.21 3.32 32.42
Savings -0.24 3.27 31.46
Hong Kong Equity Fund Ordinary 19.15 42.68 442.52
Administration 18.88 42.03 408.22
Savings 18.85 41.96 404.56
RMB Bond Fund Ordinary 4.55 9.31 5.57
Administration 4.30 8.82 4.49
Savings 4.28 8.78 4.37
Stable Growth Fund Ordinary 8.57 18.83 216.87
Administration 8.31 18.29 189.27
Savings 8.30 18.22 173.35
US Dollar Money Fund Ordinary 0.43 0.67 64.80
Administration 0.44 0.70 58.30
Savings 0.45 0.70 19.58
World Bond Fund Ordinary 3.14 8.16 64.40
Administration 2.94 7.69 54.00
Savings 2.89 7.59 53.00
FIDELITY ADVANTAGE PORTFOLIO FUND 6
YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER

Cumulative Total Returns
NAV to NAV (in %, in Fund Currency) as at 31st December 2017

Fund Name Fund Class 6 Months 1 Year Since Launch
Asia Pacific Equity Fund Ordinary 14.45 35.05 195.50
Administration 14.25 34.43 180.70
Savings 14.20 34.38 179.10
Balanced Fund Ordinary 10.77 23.38 380.20
Administration 10.49 22.81 333.90
Savings 10.49 22.78 208.30
Capital Stable Fund Ordinary 6.24 13.92 257.60
Administration 5.97 13.37 223.00
Savings 5.95 13.33 133.94
Fidelity Advantage Portfolio Fund - Ordinary 14.45 42.32 155.90
Invesco Asian Equity Fund Administration 14.17 41.73 142.50
Savings 14.16 41.66 141.10
Fidelity Advantage Portfolio Fund - Ordinary 16.90 38.69 138.00
Tracker Fund Portfolio Administration 16.60 38.09 125.50
Savings 16.59 37.97 124.20
Global Equity Fund Ordinary 9.20 20.06 199.20
Administration 8.94 19.53 180.30
Savings 8.92 19.44 178.30
Growth Fund Ordinary 13.05 28.21 430.90
Administration 12.79 27.62 379.60
Savings 12.77 27.58 242.69
HK Dollar Money Fund Ordinary 0.18 0.36 34.42
Administration 0.17 0.34 28.66
Savings 0.16 0.33 11.76
Hong Kong Bond Fund Ordinary 0.01 3.80 41.36
Administration -0.21 3.32 32.42
Savings -0.24 3.27 31.46
Hong Kong Equity Fund Ordinary 19.15 42.68 442.52
Administration 18.88 42.03 408.22
Savings 18.85 41.96 404.56
RMB Bond Fund Ordinary 4.55 9.31 5.57
Administration 4.30 8.82 4.49
Savings 4.28 8.78 4.37
Stable Growth Fund Ordinary 8.57 18.83 216.87
Administration 8.31 18.29 189.27
Savings 8.30 18.22 173.35
US Dollar Money Fund Ordinary 0.43 0.67 64.80
Administration 0.44 0.70 58.30
Savings 0.45 0.70 19.58
World Bond Fund Ordinary 3.14 8.16 64.40
Administration 2.94 7.69 54.00
Savings 2.89 7.59 53.00
FIDELITY ADVANTAGE PORTFOLIO FUND 7
YEAR ENDED 31ST DECEMBER 2017

REPORT OF THE INVESTMENT MANAGER

Asset Allocation Breakdown (in %)
As at 31st December 2017

Equity Fund Bond Fund
Money Cash
Asia
Fund Name HK Japanese Americas European HK Global Market &
Pacific
Fund(s) Others
Asia Pacific Equity Fund
100.2 (0.2)
Balanced Fund
25.7 10.1 9.8 15.4 14.0 2.3 17.7 5.2 (0.2)
Capital Stable Fund
11.6 5.2 4.8 7.5 6.1 5.5 49.3 10.2 (0.2)
Fidelity Advantage
Portfolio Fund - Invesco
Asian Equity Fund 99.8 0.2
Fidelity Advantage
Portfolio Fund - Tracker
Fund Portfolio 100.2 (0.2)
Global Equity Fund
1.7 9.6 7.3 59.3 22.3 (0.2)
Growth Fund
31.9 13.3 13.0 19.4 17.9 0.7 2.0 2.0 (0.2)
HK Dollar Money Fund
99.5 0.5
Hong Kong Bond Fund
100.2 (0.2)
Hong Kong Equity Fund
100.2 (0.2)
RMB Bond Fund
100.2 (0.2)
Stable Growth Fund
18.6 7.7 7.4 11.6 10.2 4.0 35.5 5.2 (0.2)
US Dollar Money Fund
99.7 0.3
World Bond Fund
100.2 (0.2)