Navigating Global Real Estate: A Prudent Investment Journey

Quarterly Review: Fund Performance and Market Context

During the recent quarter, the Retail Class shares of the Fidelity International Real Estate Fund experienced a gain of 2.29%. This performance lagged behind its sector index and notably fell short of the broader MSCI EAFE Index, which advanced by 4.80% over the same period. This comparison highlights the specific challenges and opportunities within the international real estate segment relative to wider global equity markets.

Investment Philosophy: Targeting Sustainable Growth in Real Estate

The fund's core philosophy centers on identifying and investing in real estate companies that exhibit robust, secular growth models, rather than those heavily influenced by cyclical or transient market conditions. This approach is particularly critical in the international real estate sector, which is often characterized by its inherent volatility and short-term fluctuations. By focusing on long-term drivers, the fund aims to build a resilient portfolio.

Strategic Selection: Emphasizing Value and Stability

A key component of the fund's strategy involves a meticulous selection process. It prioritizes companies with attractive valuation multiples, indicating that their stock prices may not fully reflect their intrinsic worth. Furthermore, a preference for businesses with lower leverage underscores a commitment to financial stability and reduced risk. Finally, the fund seeks out companies demonstrating higher long-term growth prospects, aiming to capitalize on sustained appreciation rather than speculative gains.

Fund Mandate: Capital Appreciation Through Global Real Estate

The Fidelity International Real Estate Fund is designed with a primary objective: achieving capital appreciation through strategic investments in the securities of companies predominantly operating within the real estate industry. A significant portion of its holdings comprises non-U.S. securities, allowing investors access to a diverse range of international property markets. This global scope enables the fund to pursue growth opportunities across various economic landscapes and real estate cycles, aligning with its overarching goal of enhancing shareholder value.