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Update on the Portfolio Transition

Nick Price

Nick Price - Portfolio Manager, Fidelity Emerging Markets Fund

Dear Shareholders and potential investors, 
The team at Fidelity has been very busy since we last wrote to you at the start of October, and Chris Tennant (Co-Portfolio Manager) and I are keen to provide an update on the progress of the realignment of the portfolio.
Earlier today, we published the first factsheet since the Company moved to Fidelity's management, with summary information on the Company's positions as at 31st October.   At that time, the transition to the new portfolio was roughly 90% complete, and I am very pleased to report that since that time, the realignment of the portfolio has materially been completed.
This factsheet can be accessed at 
As you will see in the top ten holdings, there are several 'new entrants' including (but not limited to) Kaspi Bank, TCS Group Holding and HDFC Bank. 
The existing holdings which have been retained were also rebalanced, with an increase in weight to TSMC, and roughly doubling the Company's exposure to Samsung Electronics, Sberbank and Alibaba.
Top 10 Positions as at 31 October 2021

Security Net Exposure Index Relative
Taiwan Semiconductor Manufacturing Co 8.6% 6.6% 2.0%
Samsung Electronics Company Ltd 7.4% 4.2% 3.2%
Kaspi KZ JSC 6.8% 0.0% 6.8%
TCS Group Holding PLC 6.6% 0.2% 6.5%
HDFC Bank Ltd 5.8% 0.0% 5.8%
Sberbank Russia 5.1% 0.7% 4.4%
China Mengnui Dairy Co 5.0% 0.3% 4.7%
Alibaba Group Holding Ltd 5.0% 4.0% 0.9%
Gazprom PJSC 4.7% 0.7% 4.0%
First Quantum Minerals Ltd 3.8% 0.0% 3.8%

This realignment, and the sale of 25% of assets in settlement of the tender offer, completed during the month has required the turnover of a significant proportion of the Company's portfolio.

Although it is too short a period to judge the performance of the strategy overall, I am very pleased to report that trading costs were kept very well under control and despite the high level of trading activity, we were able to deliver 0.2% outperformance in NAV terms relative to the MSCI Emerging Markets Index during October.

It was very important to navigate this early period successfully, since our performance as managers of the Company will rightly be judged from the first day of our appointment, and I am glad therefore that we did not 'lock in' any underperformance to these reported numbers as a result of our work to adjust the portfolio.

We are aware, however, that the Company's share price performance has lagged the NAV since our appointment. This was, in my view, a likely outcome of the uncertainty surrounding the changes being made to the portfolio - where the costs and likely time to implement were very hard for investors to estimate. I hope therefore, that this letter goes some way to providing much needed certainty to investors.

Fidelity's focus continues to be on the future success of the Company, both in terms of investment returns of the portfolio (delivering strong NAV returns) and stimulating demand for shares and thus narrowing the share price discount to NAV.

To this end, we will continue to engage with shareholders and the Company will be undertaking a proactive marketing campaign throughout 2022.

Chris, the team and I remain excited about managing this Company, and its prospects for the longer term.

Nick Price - Portfolio Manager

Performance for to 31 October 2021 in GBP (Net Total Return)

  1 month 3 months 1 year 3 years 5 years
Share Price -5.0% -5.5% 6.4% 38.5% 41.3%
NAV -0.5% 1.3% 9.0% 32.2% 32.6%
Index -0.7% 1.0% 10.7% 33.4% 42.0%

Performance for 12 month periods in GBP (Net Total Return)


  Oct 2016-2017 Oct 2017-2018 Oct 2018-2019 Oct 2019-2020 Oct 2020-2021
Share Price 12.4% -9.3% 23.1% 5.7% 6.4%
NAV 11.8% -10.3% 18.3% 2.5% 9.0%
Index 16.7% -8.7% 10.9% 8.7% 10.7%

Important Information

Fidelity only offers information on products and services and does not provide investment advice based on individual circumstances, other than when specifically stipulated by an appropriately authorised firm, in a formal communication with the client. Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of North America.

Unless otherwise stated all products and services are provided by Fidelity International, and all views expressed are those of Fidelity International. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited. Research professionals include both analysts and associates. No statements or representations made in this document are legally binding on Fidelity or the recipient. Any proposal is subject to contract terms being agreed.

Before investing you should read the latest Annual Report and Key Information Document, which are available from

Issued on behalf of Fidelity Emerging Markets Limited by FIL Investment Services (UK) Limited, a firm authorised and regulated in the UK by the Financial Conduct Authority. FIL Investment Services (UK) Limited is registered in England and Wales under the company number 2016555. The registered office of the company is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP, United Kingdom.

For more information, please contact Fidelity: Alex Denny: 01737 834 530: email

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