In the fourth quarter of 2025, the Fidelity Diversified International Fund posted a respectable 4.49% return, narrowly lagging behind its benchmark, the MSCI EAFE Index, which advanced by 4.89%. This performance highlights the complexities of navigating global markets, particularly as different investment styles and market capitalizations experienced varied fortunes during the period.
A notable trend within the MSCI EAFE index during the quarter was the pronounced outperformance of value stocks, which surged by 7.86%, significantly overshadowing growth stocks' more modest 1.88% increase. This marked the second consecutive quarter where value-oriented investments demonstrated superior returns. Conversely, international small-cap shares trailed the broader index with a 2.71% gain, indicating a shift in investor preference towards larger, value-driven entities within the international developed markets.
The management of the Fidelity Diversified International Fund is rooted in a disciplined, long-term analytical framework. Our investment team meticulously examines companies and their underlying fundamentals with a three-to-five-year outlook. This strategic horizon allows for a comprehensive evaluation of intrinsic value, aiming to identify enterprises with sustainable growth prospects that may not be immediately reflected in current market valuations.
The fund's core objective is to achieve capital growth through a broadly diversified international equity strategy. This involves primarily investing in a curated selection of stocks from developed foreign markets, seeking to capture growth opportunities across various geographies and industries while maintaining a diversified risk profile. The emphasis on developed markets stems from their relative stability and established regulatory environments, which are conducive to long-term investment. This quarter's results, while slightly below the benchmark, are viewed within this broader, long-term context of fundamental analysis and strategic diversification.
