The Fidelity Enhanced Index Funds were designed to follow a specific index and outperform it. This can be accomplished by maintaining expenses at an absolute minimum and keeping a watchful eye on how the index is moving.
This can be done in part with quantitative historical analysis on the many factors including the growth, profitability, and valuation of a group of stocks that are a part of the index. The key is to select only the best performing stocks or bonds of an index so the best possible overall results are obtained. This can be accomplished by taking each stock or bond’s historical characteristics and evaluating them with emphasis on the good and bad indicators. When this is done correctly, better returns on the remaining stocks or bonds should return a higher profit margin while still maintaining the same risk factors of the index.
The Fidelity Enhanced Index Funds and the index they follow along with their performance for the last year as of 1/31/10 are the Fidelity Large Cap Core Enhanced Index Fund that was at 28.91%, which follows the S&P 500 Index that had a return of 33.14%; the Fidelity Large Cap Growth Enhanced Index Fund was at 35.25% which follows the Russell 1000 Growth Index that had a return of 37.85%; the Fidelity Large Cap Value Enhanced Index Fund was at 24.89% which follows the Russell 1000 Value Index that had a return of 31.44%; Fidelity Small Cap Enhanced Index was at 31.52% which follows the Russell 2000 Index that had a return of 37.82%; The Fidelity Mid Cap Enhanced Index was at 41.05% which follows the Russell Midcap Index that had a return of 46.63%, and the Fidelity International Enhanced Index was at 35.49% which follows the MSCI EAFE Index that had a return of 39.84%.
This data is only on past performance and gives an indication of future results but there is no guarantee with these or any other mutual funds. The managers of the Fidelity Enhanced Index Funds use computer aided quantitative analysis to assist them in picking the best possible stocks for their funds.