Fund Overview
The Fidelity MSCI Emerging Markets Index Fund is a mutual fund designed to provide investors with exposure to emerging markets equity performance. The fund seeks to replicate the investment performance of the MSCI Emerging Markets Index, a benchmark composed of large- and mid-capitalization companies across emerging market countries.
Emerging markets represent some of the world's fastest-growing economies and can provide diversification opportunities for investors looking to expand beyond developed markets. This index fund approach offers investors a cost-efficient way to participate in the potential growth of emerging economies across the globe.
The fund typically includes companies from countries such as China, India, Brazil, South Africa, Taiwan, and other emerging market economies. These markets often offer growth potential that differs from developed markets, providing valuable diversification characteristics to an investment portfolio.
Investment Objective
The fund aims to provide investment results that correspond generally to the performance of the MSCI Emerging Markets Index before fees and expenses.
Diversification Benefits
Offers exposure to a broad range of emerging market companies, reducing single-country risk and providing diversified growth opportunities.
Cost Efficiency
As an index fund, it typically operates with lower expense ratios than actively managed funds, allowing more of your investment to work for you.
Professional Management
Fidelity's experienced investment team manages the fund to ensure accurate tracking of the underlying index.
Investment Strategy
The Fidelity MSCI Emerging Markets Index Fund employs a passive investment strategy designed to track the performance of its benchmark index. The fund generally invests at least 80% of its assets in securities included in the MSCI Emerging Markets Index.
The investment approach involves purchasing a broad range of securities in approximately the same proportions as they appear in the index. This method aims to deliver similar returns to the benchmark before fees and expenses, rather than trying to outperform the market through security selection.
The fund may use derivatives to help manage risk or achieve efficient portfolio management. It primarily invests in equity securities but may also hold other types of securities to meet its investment objectives.
Regular rebalancing ensures the fund's holdings remain consistent with the index's composition. This systematic approach to investing removes much of the emotion from investment decisions and maintains consistent exposure to the emerging markets asset class.
Understanding Emerging Markets
Emerging markets are economies that are in the process of rapid industrialization and growth. These markets typically have developing financial markets, growing infrastructure, and rising standards of living. The MSCI Emerging Markets Index includes companies from 27 emerging market countries across various regions.
Emerging markets can offer higher growth potential compared to developed markets, but they also come with higher volatility and risk. These markets often experience more significant economic swings and may be more susceptible to political instability, currency fluctuations, and regulatory changes.
Major Countries in Emerging Markets
| Country | Region | Key Economic Sectors |
|---|---|---|
| China | Asia | Technology, Manufacturing, Financial Services |
| India | Asia | Technology, Services, Manufacturing |
| Brazil | Latin America | Commodities, Energy, Financial Services |
| South Africa | Africa | Mining, Financial Services, Retail |
| Taiwan | Asia | Technology, Manufacturing |
| Mexico | Latin America | Manufacturing, Energy, Automotive |
Risk Considerations
Investing in the Fidelity MSCI Emerging Markets Index Fund involves certain risks that investors should understand:
- Market Risk: The value of the fund's investments will fluctuate with market conditions. There is no guarantee that the fund will achieve its objective.
- Emerging Markets Risk: Investments in emerging markets are generally more volatile than investments in developed markets, with greater potential for price swings.
- Currency Risk: Changes in currency exchange rates can affect the value of investments when converted back to U.S. dollars.
- Political Risk: Some emerging markets may experience political instability, which could negatively affect investment performance.
- Liquidity Risk: Some securities in emerging markets may be less liquid than those in developed markets, potentially making them more difficult to sell at desired prices.
- Regulatory Risk: Changes in local or international regulations could affect the value of securities in the fund.
Important: Past performance does not guarantee future results. Emerging markets typically experience higher volatility than developed markets, meaning investment returns may fluctuate more dramatically.
Investors should carefully consider their risk tolerance and investment objectives before investing in emerging markets funds. This fund may not be suitable for all investors, particularly those with short investment horizons or conservative risk tolerance.
Fees and Expenses
Like all mutual funds, the Fidelity MSCI Emerging Markets Index Fund charges fees and expenses that affect an investor's returns. These typically include:
- Expense Ratio: An annual fee charged as a percentage of average net assets, covering the fund's operating expenses.
- Transaction Costs: Costs associated with buying and selling securities within the fund's portfolio.
- Potential Fees: Some funds may charge fees such as account maintenance fees, transaction fees for buying or selling shares, or redemption fees for short-term trading.
As an index fund, this fund typically has lower expense ratios than actively managed funds, which can potentially lead to higher returns for investors over time. The specific fee structure can be found in the fund's prospectus, which investors should review carefully before investing.
