QUARTERLY FUND REVIEW AS OF MARCH 31, 2018 Fidelity Diversified International K6 Fund Investment Approach Fidelity Diversified International K6 Fund is a broadly diversified international equity strategy that seeks capital growth by investing primarily in stocks from foreign developed markets. We manage the fund with a long-term view, focusing on high-quality businesses with durable or improving growth prospects that are benefiting from competitive advantages and are structured to achieve consistent profitability. We also value strong balance sheets, proven track records, high returns on capital and solid management teams whose interests are aligned with those of shareholders. We strive to uncover these companies through in-depth fundamental analysis, working in concert with Fidelity's global research team. While conscious of valuations, we may be willing to pay a slight premium for stocks we favor. Our disciplined investment process results in a style-consistent strategy that participates in the market in a risk-managed manner. PERFORMANCE SUMMARY Cumulative 3 Month YTD 1 Year Annualized 3 Year 5 Year 10 Year/ LOF 1 Fidelity Diversified International K6 Fund Gross Expense Ratio: 0.60% 2-1.75% -1.75% -- -- -- 6.71% MSCI EAFE (Net Massachusetts tax) -1.48% -1.48% 15.03% 5.75% 6.67% 8.03% Morningstar Fund Foreign Large Growth 0.20% 0.20% 20.06% 7.35% 7.62% -- % Rank in Morningstar Category (1% = Best) -- -- -- -- -- -- # of Funds in Morningstar Category -- -- 409 339 293 -- FUND INFORMATION Manager(s): Bill Bower Trading Symbol: FKIDX Start Date: May 25, 2017 Size (in millions): $1,704.93 Morningstar Category: Fund Foreign Large Growth Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 05/25/2017. 2 This expense ratio is from the most recent prospectus and generally is based on amounts incurred during the most recent fiscal year. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, institutional.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. For definitions and other important information, please see the Definitions and Important Information section of this Fund Review. Not FDIC Insured May Lose Value No Bank Guarantee
Performance Review For the quarter ending March 31, 2018, the fund returned -1.75%, behind the -1.48% result of the MSCI EAFE. Versus the index, stock picking in the consumer sectors and in energy (Canada) notably detracted; picks in financials and industrials added value. Regionally, our positioning in Japan and picks in the U.K. hurt most. Out-of-index exposure to the U.S. and emerging markets offset negative results in Canada. Asset markets started the year the same way they ended 2017 exhibiting remarkably low levels of volatility. During the first quarter, however, a number of crosscurrents catalyzed an abrupt return of asset-price volatility, particularly in foreign developed-markets (DM) equities. Emerging-markets (EM) equities stayed in the black. Against this backdrop, most EAFE regions declined this quarter. Japan (+1%) proved a notable outlier, overcoming global-trade tension and yen strength to outpace the rest of the Asia-Pacific group (-4%). U.K. equities (-3%) suffered as investors avoided the market amid ongoing political uncertainty and the country's weak economic outlook. Europe (-1%) started the period on firm footing, but worry over rising protectionism and interest rates in the U.S. led to later declines. Outside the EAFE index, Canada (-7%) fared poorly amid a February rout among its energy, materials and financials stocks, according to MSCI. Growth- outpaced value-oriented stocks in the EAFE index, and small-caps finished ahead of large-caps. Sector-wise, utilities (+1%), technology (+1%) and consumer discretionary (+1%) posted positives; telecom services (-4%), materials (-4%) and consumer staples (-3%) were hit hardest. Versus the index, the fund's biggest individual detractor overall was our overweighting in the tech sector's Micro Focus International. Shares of this provider of software designed to manage customers' maturing software infrastructure returned -59% the past three months, hampered in mid-march by a profit warning and the resignation of CEO Chris Hsu. The U.K.-based company expects revenue to decline faster than previously anticipated, partly as it struggles to integrate its acquisition of software assets from Hewlett Packard Enterprise, completed in September. Not all was bad in the sector this quarter. Shares of Mastercard, also part of the software & services group, gained 16%, as the paymentnetwork provider reported favorable financial results for the fourth quarter and 2017 overall. Revenue grew sharply and profit margins expanded, helping the firm beat Wall Street expectations for the LARGEST CONTRIBUTORS VS. BENCHMARK Ryanair s PLC sponsored ADR Nitori s Co. Ltd. MasterCard, Inc. Class A Average Contribution (basis points)* Industrials 1.02% 18 Consumer Discretionary Information Technology 0.67% 14 0.81% 12 Nestle SA (Reg. S) Consumer Staples -1.69% 12 Statoil ASA Energy 1.03% 12 * 1 basis point = 0.01%. 16th consecutive quarter. Strong economic conditions and the growth of e-commerce have helped the company, as has decreased use of cash by consumers. Mastercard raised its three-year growth projections, with CEO Ajay Banga noting that ongoing investments in digital initiatives, as well as safety and security measures, are paying off with new business and further growth. In consumer staples, our long-held non-index stake in conveniencestore operator Alimentation Couche-Tard based in Canada but operating globally hurt the fund's relative result. Shares of the Circle K owner plunged after the company reported worse-thanexpected quarterly earnings amid weak same-store sales and lower gas prices in the United States. Despite the stock's -14% return for the quarter, our thesis held steady and we held on to our stake. In consumer discretionary, a non-index position in Naspers returned about -12% this quarter. In late March, the South Africa-based print, TV and internet media group warned of lower profit margins and sold a small portion of its roughly one-third stake in fast-growing Tencent s in China for close to $10 billion. Naspers plans to use proceeds from the sale for investment in its classifiedadvertising business, among others. Naspers is one of the world's most valuable companies, due in large part to its stake in Tencent. We'd note that Naspers was the fund's top relative contributor in the prior quarter. In addition to some profit-taking, currency factors and global-trade tension may have influenced Naspers' result this quarter. We held firm in our commitment to the business. Helping offset Naspers' short-term setback, the stock of Nitori s rose 24% the past three months, as the Tokyo-based seller of furniture and related home goods beat revenue expectations, with a healthy 2.9% increase in same-store sales. The company continued to expand outside of the suburbs into urban markets and to remodel some of its traditional suburban stores. The firm's operating earnings appeared to benefit from a strengthening yen. Our No. 1 relative contribution, though, came from our timing and substantial overweighting in Dublin-based, low-cost airline Ryanair s. The stock rallied in January following reports of progress in negotiations with the firm's pilots coinciding with a substantial increase in airline traffic and an uptick in the company's load factor, a measure of planeload "fullness." Despite February bobbles amid underwhelming third-quarter earnings reports and a subsequent stall in labor negotiations, the stock maintained lift through March 31. Our holdings gained 18% versus a 9% return in the index. LARGEST DETRACTORS VS. BENCHMARK Micro Focus International PLC Alimentation Couche- Tard, Inc. Class B (sub. vtg.) Naspers Ltd. Class N Weatherford International PLC Information Technology Average Contribution (basis points)* 0.55% -39 Consumer Staples 1.05% -14 Consumer Discretionary 1.04% -12 Energy 0.14% -10 GlaxoSmithKline PLC Health Care -0.59% -7 * 1 basis point = 0.01%. 2 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
Outlook and Positioning Our investment process is driven by analysis of industry and company fundamentals, valuations and management, plus a strong partnership with Fidelity's research team. Fund positioning changes little in the short term: with our lower turnover, longer-term process, we typically are willing to "forgive" some short-term noise. Our bias for firms we think can grow faster than the EAFE average historically has led us to favor consumer staples, health care and technology. Lately, we've been positioning the fund more conservatively. Firms with less-than-stellar balance sheets have been getting trounced for earnings-estimate shortfalls. We generally tend to favor firms with better balance sheets, but we are revisiting anything that is even a bit levered to help make sure fundamentals are solid. We are also looking for any issues with working capital or accounts receivable. We prefer firms we see as not in danger of getting "squeezed," with ample resources for stock buy-backs during market bumps. We've been trimming stocks we believe may be nearing the end of a run of high growth, momentum or valuation, notably in the tech sector. It's not that we don't like tech stocks, it's just that, given recent extreme performance and valuations, we sense the sector may be ready for some level of mean reversion. Even if we've been a bit early in our positioning, we believe our process will add value. We've been finding defensive, durable-growth opportunities among industrials stocks, which have been trading at low price-earnings multiples relative to their history. Our focus is on less-cyclical stories, which we see as a good offset to some of our sales in consumer staples where we thought the margin story might be over. For example, we sold out of brewer Anheuser-Bush InBev and Seven & I s, owner of 7-Eleven stores in Japan and elsewhere, because we didn't like leverage levels or business execution. Health care is another area we like more than consumer staples. Though sector valuations appear attractive to us, we'd like to get past the U.S. election cycle and see what happens with policy and pricing in the sector. We are neutral-weighted here as of March 31. That said, we added to Roche s on its pipeline prospects. The fund carries a substantial underweighting in materials. We tend to avoid miners because we don't like the segment's cyclicality. We are positive on large and liquid Glencore, though. Given the firm is a big player in cobalt and copper commodities with more-favorable supply dynamics versus other commodities such as iron ore we view the stock as an indirect play on vehicle electrification. We took heat with some Canadian energy names Suncor Energy, for example. It's been a great stock relative to Canada, not so much versus other integrateds. Pricing disparity between light and heavy crude grades has been high. Also, it's been tough to get oil out of Canada, but in our view the difficulty should ease as pipelines open up. We believe Suncor has capacity to grow in the high single digits with a decent return on capital. As other firms exit high-cost Canada, we think efficient incumbents like Suncor and Cenovus Energy can grow. Also, our research team has a favorable view on oil. In another contrarian play, we added to our stake in Lloyds Banking Group. It feels like no one wants to be in the U.K. until Brexit clears, and fears have been baked in to what we see as a low valuation for the bank. We saw real potential once Brexit plans are announced, maybe this fall for the stock to re-rate to a multiple more in line with global peers. Meanwhile, we've been getting a nice dividend. As ever, we focus on what we consider "best of breed" quality companies with predictable secular growth, durable businesses, strong balance sheets and a high return on capital. MARKET-SEGMENT DIVERSIFICATION Change From Prior Quarter Financials 25.36% 21.09% 4.27% 3.32% Industrials 15.89% 14.59% 1.30% 1.46% Information Technology 12.54% 6.54% 6.00% -0.20% Consumer Staples 11.14% 11.08% 0.06% -2.08% Consumer Discretionary 10.78% 12.61% -1.83% -0.15% Health Care 9.92% 10.14% -0.22% -0.55% Materials 5.13% 8.01% -2.88% 1.08% Energy 4.50% 5.32% -0.82% 0.27% Telecommunication Services 0.88% 3.83% -2.95% -0.28% Utilities 0.15% 3.28% -3.13% 0.05% Real Estate 0.10% 3.52% -3.42% -0.34% Other 0.00% 0.00% 0.00% 0.00% REGIONAL DIVERSIFICATION Region Change From Prior Quarter Europe 52.06% 63.49% -11.43% -0.64% Japan 17.32% 24.45% -7.13% -0.36% United States 12.53% 0.01% 12.52% 1.37% Emerging Markets 11.05% 0.06% 10.99% 0.45% Asia-Pacific ex Japan 3.70% 11.99% -8.29% -0.46% Canada 3.35% 0.00% 3.35% -0.36% Other -0.01% 0.00% -0.01% 0.00% 3-YEAR RISK/RETURN STATISTICS Beta -- 1.00 Standard Deviation -- -- Sharpe Ratio -- -- Tracking Error -- -- Information Ratio -- -- R-Squared -- -- 3 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
LARGEST OVERWEIGHTS BY HOLDING ORIX Corp. Financials 1.41% Statoil ASA Energy 1.12% Wolseley PLC Industrials 1.06% Tsuruha s, Inc. Consumer Staples 1.05% Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR Information Technology 1.03% LARGEST UNDERWEIGHTS BY HOLDING Royal Dutch Shell PLC Class A Energy -1.78% (United Kingdom) Nestle SA (Reg. S) Consumer Staples -1.67% HSBC s PLC (United Kingdom) Financials -1.27% Novartis AG Health Care -1.22% Toyota Motor Corp. Consumer Discretionary -1.14% ASSET ALLOCATION Asset Class Change From Prior Quarter International Equities 87.54% 100.00% -12.46% -1.30% Developed Markets 76.48% 99.94% -23.46% -1.76% Emerging Markets 11.06% 0.06% 11.00% 0.46% Tax-Advantaged Domiciles 0.00% 0.00% 0.00% 0.00% Domestic Equities 8.87% 0.00% 8.87% 0.23% Bonds 0.00% 0.00% 0.00% 0.00% Cash & Net Other Assets 3.59% 0.00% 3.59% 1.07% Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number. "Tax-Advantaged Domiciles" represent countries whose tax policies may be favorable for company incorporation. 10 LARGEST HOLDINGS ORIX Corp. Prudential PLC British American Tobacco PLC sponsored ADR Keyence Corp. Statoil ASA Unilever NV (Certificaten Van Aandelen) (Bearer) Wolseley PLC AIA Group Ltd. Hoya Corp. SAP SE 10 Largest s as a % of Net Assets Financials Financials Consumer Staples Information Technology Energy Total Number of s 235 Consumer Staples Industrials Financials Health Care Information Technology 13.14% The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. s do not include money market investments. CHARACTERISTICS Valuation Price/Earnings Trailing 18.2x 15.1x Price/Earnings (IBES 1-Year Forecast) 15.9x 13.9x Price/Book 2.3x 1.6x Price/Cash Flow 11.1x 8.5x Return on Equity (5-Year Trailing) Growth Sales/Share Growth 1-Year (Trailing) 16.2% 10.9% Earnings/Share Growth 1-Year (Trailing) 41.6% 59.3% Earnings/Share Growth 1-Year (IBES Forecast) 24.7% 19.5% Earnings/Share Growth 5-Year (Trailing) 13.4% 9.2% Size ed Average Market Cap ($ Billions) 56.7 56.1 ed Median Market Cap ($ Billions) 32.7 37.1 Median Market Cap ($ Billions) 16.6 11.2 4 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
Definitions and Important Information Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, act as an impartial adviser, or to give advice in a fiduciary capacity. CHARACTERISTICS Earnings-Per-Share Growth measures the growth in reported earnings per share over the specified past time period. Median Market Cap identifies the median market capitalization of the portfolio or benchmark as determined by the underlying security market caps. Price-to-Book (P/B) Ratio is the ratio of a company's current share price to reported accumulated profits and capital. Price/Cash Flow is the ratio of a company's current share price to its trailing 12-months cash flow per share. Price-to-Earnings (P/E) Ratio (IBES 1-Year Forecast) is the ratio of a company's current share price to Wall Street analysts' estimates of earnings. Price-to-Earnings (P/E) Ratio Trailing is the ratio of a company's current share price to its trailing 12-months earnings per share. Return on Equity (ROE) 5-Year Trailing is the ratio of a company's last five years historical profitability to its shareholders' equity. Preferred stock is included as part of each company's net worth. Sales-Per-Share Growth measures the growth in reported sales over the specified past time period. RANKING INFORMATION 2018 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. % Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The topperforming fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures. RELATIVE WEIGHTS weights represents the % of fund assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The fund's benchmark is listed immediately under the fund name in the Performance Summary. ed Average Market Cap identifies the market capitalization of the average equity holding as determined by the dollars invested in the portfolio or benchmark. ed Median Market Cap identifies the market capitalization of the median equity holding as determined by the dollars invested in the portfolio or benchmark. IMPORTANT FUND INFORMATION positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance. INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted. MSCI EAFE (Net MA Tax) is a market-capitalizationweighted index that is designed to measure the investable equity market performance for global investors in developed markets, excluding the U.S. & Canada. returns are adjusted for tax withholding rates applicable to U.S. based mutual funds organized as Massachusetts business trusts. MARKET-SEGMENT WEIGHTS Market-segment weights illustrate examples of sectors or industries in which the fund may invest, and may not be representative of the fund's current or future investments. Should not be construed or used as a recommendation for any sector or industry. 5
3-YEAR RISK/RETURN STATISTICS Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index. Information Ratio measures a fund's active return (fund's average monthly return minus the benchmark's average monthly return) in relation to the volatility of its active returns. R-Squared measures how a fund's performance correlates with a benchmark index's performance and shows what portion of it can be explained by the performance of the overall market/index. R- Squared ranges from 0, meaning no correlation, to 1, meaning perfect correlation. An R-Squared value of less than 0.5 indicates that annualized alpha and beta are not reliable performance statistics. Standard Deviation is a statistical measurement of the dispersion of a fund's return over a specified time period. Fidelity calculates standard deviations by comparing a fund's monthly returns to its average monthly return over a 36-month period, and then annualizes the number. Investors may examine historical standard deviation in conjunction with historical returns to decide whether a fund's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how the fund actually performed, but merely indicates the volatility of its returns over time. Tracking Error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark, creating an unexpected profit or loss. Sharpe Ratio is a measure of historical risk-adjusted performance. It is calculated by dividing the fund's excess returns (the fund's average annual return for the period minus the 3-month "risk free" return rate) and dividing it by the standard deviation of the fund's returns. The higher the ratio, the better the fund's return per unit of risk. The three month "risk free" rate used is the 90-day Treasury Bill rate. Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Past performance is no guarantee of future results. Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice. S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. Other third-party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI 02917. Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917. 2018 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. 821750.3.0 Diversification does not ensure a profit or guarantee against a loss.