Q4 2025 Fund Commentary

Commentary and opinions are provided by Fidelity Investments Canada ULC.

Market commentary

Global equity markets rose in the fourth quarter of 2025, with the MSCI ACWI returning 1.8% (in Canadian-dollar terms). Global investment-grade bonds, represented by the Bloomberg Global Aggregate Bond Index, fell 1.2% (in Canadian-dollar terms). International markets outpaced U.S. markets, and value-tilted segments showed strength. Corporate earnings momentum held, and monetary policy expectations continued to support markets.

In the U.S., inflation rose to 2.7% on a year-over-year basis in November, and the U.S. economy grew at an annualized rate of 4.3%, the strongest pace in two years. Growth was driven by consumer spending, rebounding exports and government spending. The U.S. unemployment rate remained elevated, rising to 4.6% in November. On trade, headlines turned incrementally supportive as the U.S. and China announced a one-year trade truce. The U.S. Federal Reserve Board cut the range of its federal funds rate, ending December at 3.50%–3.75%.

Against this backdrop, eight of the 11 MSCI ACWI sectors rose, led by the health care, materials and financials sectors. The real estate, consumer discretionary and consumer staples sectors lagged.

Performance

The Fund’s relative exposures to Dollar Tree Inc. and Samsung Electronics Co. Ltd. contributed to performance. Dollar Tree benefited from store conversions and expansions, which led to improved sales. The stock of Samsung Electronics rose because of demand related to artificial intelligence (AI).

Exposure to Alibaba Group Holding Ltd. detracted from the Fund’s performance, as did underweight exposure to Alphabet Inc. Alibaba Group Holding’s stock fell after the company released its second-quarter 2025 earnings report. Alphabet saw growth related to AI demand.

the Fund’s performance. Stock selection in the consumer discretionary sector detracted from performance. Overweight exposures to the consumer discretionary and health care sectors also detracted from the Fund’s performance.

Portfolio activity

There were no notable transactions made in the Fund during the period.

Outlook

According to the sub-advisor, over the past few years, equity markets have risen because of the notion of U.S. exceptionalism and the promise of AI. This has led to a global divergence between U.S. and international markets, with U.S. market valuations reaching all-time highs. Because of this, the sub-advisor found it difficult to find opportunities with attractive growth prospects at reasonable prices in U.S. markets. This led the sub-advisor to invest more internationally, which contributed to outperformance in 2025.

The sub-advisor has focused on a few opportunities, including the emergence of Chinese multinationals. In the sub-advisor’s opinion, this should bring more competition. Chinese multinationals should be able to compete on cost, offering comparable quality to their U.S. counterparts at a lower price. The sub-advisor also looks at companies that should benefit from a reacceleration in Europe. Some of these opportunities include companies in the construction, homebuilding and infrastructure spaces, which could see growth following a potential resolution of the conflict in Ukraine.