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Fidelity's International Growth Fund, emphasizing substantial global companies, observed a moderate return in the final quarter of 2025, falling short of its comparative index. This period was marked by a global economy exhibiting growth despite varying influences, with the fund concentrating on enterprises demonstrating consistent expansion, strong market positions, and favorable valuations. This discussion explores the fund's strategy, performance drivers, and market outlook, offering insight into its approach to identifying promising international investment opportunities.

Fund Performance and Market Dynamics in Q4 2025

In the fourth quarter of 2025, the Fidelity International Growth Fund's Retail Class shares recorded a gain of 0.29%. This performance lagged behind its benchmark, the MSCI EAFE Growth Index (Net MA), which advanced by 1.88% during the same period. The underperformance was primarily attributed to fair-value pricing adjustments and specific weaknesses within the UK market and the industrials sector. Despite the global economy maintaining a solid, albeit inconsistent, expansion, various policy crosscurrents created a challenging environment for the fund. The fund's strategy, which focuses on diversified international equities with a large-cap growth orientation, aims to identify companies with multiyear structural growth prospects, robust barriers to entry, and appealing valuations.

The global market in late 2025 was navigating a complex interplay of economic forces. While overall expansion was evident, its uneven nature meant that certain regions and sectors performed better than others. The fund’s exposure to the UK and industrials, sectors that faced headwinds during the quarter, directly impacted its returns relative to the benchmark. Fair-value pricing adjustments also played a role in the reported figures, reflecting how the market valued the fund's holdings. This quarter’s results underscore the importance of discerning market trends and company-specific dynamics within a growth-oriented international equity framework, especially when confronted with a mixed economic landscape and shifting policy directions.

Investment Strategy and Future Outlook

The Fidelity International Growth Fund employs a comprehensive investment approach centered on identifying global companies with enduring structural growth trajectories. This involves rigorous analysis to pinpoint businesses that not only exhibit long-term growth potential but also possess strong competitive advantages, such as high barriers to entry, protecting their market share and profitability. Furthermore, a crucial element of the strategy is evaluating these companies based on attractive valuations, ensuring that investments are made at prices that offer significant upside potential relative to their intrinsic worth. This disciplined methodology underpins the fund's efforts to achieve superior risk-adjusted returns over the long term.

Looking ahead, the fund’s positioning is informed by a forward-looking assessment of valuation and macroeconomic factors. International equities are currently seen as offering compelling value, with lower forward price-to-earnings (P/E) ratios compared to their U.S. counterparts. Additionally, several international currencies are trading at undervalued levels against the U.S. dollar, which could provide a favorable tailwind for the fund's foreign investments. This combination of attractive relative valuations and potential currency appreciation suggests a positive outlook for the Fidelity International Growth Fund. The focus remains on leveraging these macro trends while continuing to select high-quality growth companies globally, aiming to capitalize on both fundamental strengths and broader market opportunities.