REG-Fidelity Emerging Markets Limited: Half-year Financial Report
Today 07:02
Fidelity Emerging Markets Limited HALF YEAR REPORT
for the six months ended 31 December 2025 *
During the six-month period ended 31 December 2025, Fidelity Emerging
Markets Limited outperformed the benchmark
* The share price total return was +38.9%
while the Net Asset Value (NAV)
return was +35.5%,
* Over the same timeframe, the benchmark index, the
MSCI Emerging Markets Index, returned +18.1%
* The company’s extensive ‘toolkit’ contributed positively to
performance, with long and short positions adding to performance alongside
smaller-cap holdings
* Long positions in materials, commodities, and gold miners also
added notable value
Financial Highlights
31 December 2025 30 June 2025
Assets
USD
Gross Asset Exposure 1 $1,086.0m $1,235.3m
Equity Shareholders’ Funds $692.5m $771.6m
NAV per Participating Preference Share 2 $15.55 $11.99
Gross Gearing 2,3 56.8% 60.1%
Net Gearing 2,4 6.0% 5.5%
GBP
Gross Asset Exposure 1,5 £807.4m £901.4m
Equity Shareholders’ Funds 5 £514.9m £563.1m
NAV per Participating Preference Share 2,5 £11.56 £8.75
Participating Preference Share Price and Discount Data
Participating Preference Share Price at the period end £10.66 £7.83
Discount to NAV per Participating Preference Share at period end 2 7.79% 10.51%
Number of Participating Preference Shares in issue 44,522,961 64,342,245
Earning for the six months ended 31 December 2025 2024
Revenue Earnings per Participating Preference Share 6 $0.12 $0.17
Capital Earnings/(Loss) per Participating Preference Share 6 $2.79 ($0.37)
Total Earnings/(Loss) per Participating Preference Share 6 $2.91 ($0.20)
Ongoing charges ratio 2 0.83% 0.84%
1 The value of the portfolio exposed to market price
movements.
2 Alternative Performance Measures. See Glossary of
Terms.
3 Gross Asset Exposure less Equity Shareholders’ Funds
expressed as a percentage of Equity Shareholders’ Funds.
4 Net Market Exposure less Equity Shareholders’ Funds
expressed as a percentage of Equity Shareholders’ Funds.
5 The conversion from USD to GBP is based on exchange
rates prevailing at the reporting dates.
6 Calculated based on weighted average number of
Participating Preference Shares in issue during the period.
For further information please contact:
George Bayer
Company Secretary, FIL Investments International
George.bayer@fil.com or +44 20 7961 4240
Chairman’s Statement
In a year that began with the inauguration of the new US administration and
continued with the imposition of various trade tariffs – particularly on
Asian and Latin American countries – it is perhaps surprising that emerging
markets significantly outperformed their developed counterparts in 2025.
Indeed, the 24.4% 12-month sterling total return of the MSCI Emerging Markets
Total Return Index (‘the Index’) was almost double the 12.7% total return
from the US-dominated MSCI World Index. This is despite the S&P 500 Index of
leading US stocks reaching no fewer than 38 new all-time highs during the
year, as the rollout of artificial intelligence technologies continued to
drive returns for some of its largest constituents.
In their Portfolio Managers’ Report on the following pages, Nick Price and
Chris Tennant outline some of the reasons for this remarkable shift in market
leadership. These include falling US interest rates and a weaker dollar (both
of which are good for exporters to the US and countries with
dollar-denominated debt), the commanding position of Asia in the high-tech
supply chain, and a strong environment for commodities – particularly
precious metals – whose production is largely based in emerging markets. For
China, a large-scale stimulus package helped its equity market to post strong
returns for the year – well in advance of developed markets, albeit a little
behind the broader EM index.
Against such a positive backdrop, it is very pleasing to report that the
Company outperformed strongly between 1 July and 31 December 2025. The net
asset value (NAV) total return of 34.5% in sterling was almost double the
18.1% return of the Company’s benchmark index, while the share price total
return was even better at 38.9%, reflecting a narrowing in the discount to NAV
during the period. For the calendar year as a whole, a share price total
return of 56.5% placed your Company among the top 10 best-performing
investment trusts of the year – a list dominated by precious metals and
alternative asset strategies, in which we were the only mainstream equity
fund, thereby beating all other emerging (and developed) markets peers.
While all the supportive market factors outlined above fed into this very
favourable period of performance for the Company, to beat a rising market so
emphatically requires a high degree of differentiation. Your Portfolio
Managers’ extended investment toolkit helped in this regard, with the short
book having a positive impact even in a rising market.
Short positions accounted for more than 5% of the outperformance in the period
under review. Certain themes also proved key in their contribution, including
a large overweight in materials, concentrated in precious metals (a store of
value in times of higher inflation) and copper, which is a vital component in
electrification. Materials made up nearly 29% of the gross portfolio at 31
December versus just over 7% of the Index, so it is clear that holders of an
index fund would not have benefited from the performance of this theme to
anything like the same degree. In relation to other themes, particularly in
industrials and technology, stock selection also contributed substantially.
Your Board remains committed to the advantages of active investing, especially
in eras of change in market leadership, and this is an excellent example of
how active investment management can enhance returns and how your Company’s
go-anywhere process can deliver.
Furthermore, we remind investors that the Company’s Russian holdings remain
valued at zero due to Russia’s ongoing invasion of Ukraine. While any
resolution of the conflict and subsequent reinstatement of international
trading in Russian stocks could therefore result in a restoration of this
hidden value, we will continue to reassess our position as the situation
evolves, and greater clarity emerges.
Outlook
Since the end of the reporting period, the macroeconomic and geopolitical
landscape has shifted dramatically and become more volatile. This means that
the outlook for emerging markets has become more uncertain in the short-term.
Amid the volatility, opportunity emerges to acquire good quality businesses at
particularly attractive valuations. The Board is confident that the team at
Fidelity can make best use of the extended investment toolkit and, have the
necessary experience to navigate these turbulent waters and we believe that
despite undeniable short-term uncertainty the long-term case for investing in
emerging markets remains strong.
Board composition
There have been no changes to the Board of Directors in the period under
review. However, Katherine Tsang will have completed nine years’ service
(the recommended maximum under corporate governance rules) in July 2026, and
as such she intends to stand down at the 2026 Annual General Meeting (AGM). A
search is currently under way to identify a suitably qualified individual to
succeed her.
Strathclyde share repurchase
In November 2025, the Company completed the repurchase of a large shareholding
(16.4 million shares) from the Strathclyde Pension Fund, equivalent to roughly
25% of the shares in issue. These shares were bought back at an agreed 14%
discount to NAV and subsequently cancelled. Given the share price discount to
NAV at the time of the repurchase was less than 10%, the transaction led to an
immediate uplift of more than 4.5% in the NAV per share for continuing
shareholders, underlining the Company’s commitment to a fair outcome for all
its investors.
Discount management
During the period under consideration, the Company’s discount to NAV
narrowed from 10.5% to 7.8%. While investment trust discounts in general also
narrowed during the period (from 14.0% to 12.5% on average), your Board
believes the Company’s below-average discount reflects a number of factors.
These include the strong performance of the FEML portfolio, our differentiated
investment process and the clearly growing appetite for emerging markets,
Fidelity’s strong brand and clear marketing strategy and Nick and Chris’s
growing presence and strong messaging in the media and at many investor
events, as well as their regular insightful contributions online via our
website.
However, we also recognise the importance to investors of taking direct action
to limit the discount, and as such we have continued to buy back shares in the
market when the discount is sufficiently wide that taking such action would
have a positive impact on NAV, repurchasing 3,378,107 shares (excluding the
Strathclyde repurchase), or c 5.25% of the total at the start of the Half
Year, between 1 July and 31 December 2025. Since then, a further 1,866,065
shares have been bought back, and at the latest practicable date (10 March
2026), the discount to NAV stood at 7.0%.
I would also remind readers that the Company has committed to undertake a
tender offer for up to 25% of its then shares in issue (excluding any shares
held in treasury) should its NAV total return fail to exceed the benchmark
over the five years ending on 30 September 2026. As at 31 December 2025 (nine
months short of the full five-year period), the Company’s NAV total return
was 8.32% ahead of that of the benchmark.
2025 AGM and final dividend
The Company held its Annual General Meeting (AGM) on 1 December 2025. The
other directors and I thank you for your approval of all resolutions presented
at the meeting. Once again we particularly appreciate the level of shareholder
support and engagement evidenced by more than 36 million shares – a turnout
of more than 75% following the reduction in the share base resulting from the
Strathclyde repurchase – being voted. Shareholder enfranchisement remains a
key advantage of the investment trust structure, and it is gratifying to see
such a high level of engagement. At the EGM in October to consider the
Strathclyde repurchase, turnout was similarly high at 76.3%, with more than
99% of votes cast in favour of the transaction.
At the AGM, shareholders approved the final dividend of $0.26 (19.80p) per
Participating Preference Share, a 30.0% increase on the $0.20 (15.74p) paid in
respect of FY24. The dividend was paid on 9 December 2025. Shareholders should
note that the Company does not have a fixed dividend policy because income is
an output rather than an aim of the investment process. Therefore, while the
payout was substantially increased in respect of FY25 as a result of higher
dividend receipts, there should be no expectation that future dividends will
be maintained at or above this level.
The Board will review the final dividend payment for FY26 later in the year
based on dividend receipts from the companies held in the portfolio.
As I write this towards the end of the third quarter of our financial year,
while the rapidly changing geopolitical landscape may lead to volatility in
the near term, I remain optimistic about the longer-term outlook for emerging
markets. Strong underlying fundamentals, attractive valuations and supportive
structural growth drivers continue to underpin the investment case. In this
context, I believe the Company remains well placed to benefit from the
opportunities that these markets can offer over time.
Portfolio Managers’ Half Year Review
Macroeconomic Review
Emerging markets delivered exceptional performance in 2025 and continued to
rally over the last six months of the year, outperforming developed markets.
The backdrop for EM remained supportive, with several interest-rate cuts from
the Fed boosting sentiment, alongside the presence of a much more balanced US
dollar than we have seen in recent years. Performance was supported by strong
returns in several Asian markets, particularly Taiwan and Korea, which
benefited from AI-related demand and emerging signs of governance reforms in
Korea, whilst strong commodity prices provided a boost to commodity-exporting
economies like South Africa and parts of Latin America. The renewed focus on
anti-involution in China supported investor sentiment somewhat, although the
market marginally underperformed over the period as weak activity data emerged
towards the end of the year.
Please note the period for this investment review is 1 July 2025 to 31
December 2025. As a result, the performance review and positioning update
relate to this period and therefore precede the events taking place in Middle
East in early March 2026. We have, however, incorporated a forward-looking
perspective in the outlook section to reflect more recent developments, but
note that as this is a rapidly developing situation, the team’s views are
subject to change as events evolve.
Portfolio performance: Six months to 31 December 2025
It was a strong period of performance for the investment company, which
delivered net asset value (NAV) total returns of 34.5% vs. the index which
returned 18.1% (GBP, net of fees). It was pleasing to see the portfolio’s
enhanced toolkit have a positive effect on performance, with contributions
from the long and short books, the latter notable given the market performed
so well, as well as from yield enhancement. In addition to robust investment
performance, there was an uplift to the NAV per share of approximately 4.5%
following the conditional share repurchase conducted in Q4.
The drivers of this outperformance were broad based, with the strongest
contribution coming from our materials exposure, where we have a considerable
overweight. Gold miners have benefitted from the continued shift in central
bank reserves away from US Treasuries, as well as strong retail demand for the
precious metal, both of which underpinned the rally in the commodity. Here,
some of our smaller-cap positions performed particularly well, with South
Africa-focused gold miner Pan African Resources
, which also has a tailings-reprocessing operation,
the top performer following the ramp-up of its new mine
and as its growing market cap boosted liquidity, making it a more viable
alternative for gold exposure among institutional investors. West
Africa-focused gold miner Endeavour Mining
also rallied on rising free cash flow.
Stock picking in industrials was also positive, with one of our newer
additions to the portfolio, Chinese power equipment maker
Sieyuan Electric , contributing off the back of a series of
strong quarterly results, underpinned by margin expansion and a rising market
share. Korea’s SK Square , the
holding company for memory company SK Hynix, also performed well, supported by
the strong supply-demand outlook for memory, and went some way to offsetting
the detraction from the underweight positioning in Korea after investor
optimism around the value-up initiative drove a rally in the broader Korean
market. Conversely, the short position in an Asian
cathode maker weighed on returns after it rose on optimism
around rising energy storage demand and a broader sector re-rating, despite no
material improvement in underlying fundamentals and a weak balance sheet.
The portfolio enjoyed some of the tailwinds of AI-driven demand over the
period, with stock picking in IT being another contributor to returns. Here,
Taiwan’s Elite Material , a maker of
copper-clad laminate, which we added to at the nadir of the post-Liberation
Day tariff fallout, rose on continued strong demand supported by hyperscaler
investment in data centres. There were however some notable detractors within
the short book, including in an Asian memory chip
designer which rallied with other legacy memory names on
rising DRAM prices, despite having no exposure to this type of memory.
The exposure to financials was more challenging during the period with stock
picking and the overweight positioning detracting. Kazakhstan’s dominant
e-commerce and payments platform Kaspi
was among the key detractors, weighed down by the market’s high interest
rates, as well as some concerns around smartphone registering rules and the
suspension of the dividend to fund the acquisition of a Turkish business. We
see the latter two issues as largely transitory, and the inflation backdrop
has started to improve, so we continue to have conviction in the stock,
especially given its cheap valuation and dominant position in the local
consumer finance and e-commerce segments. Broader weakness in the Indian
market also dragged on some of our Indian financial positions, including SME
lender Five Star Business Finance ,
which suffered from a regulatory push to curtail non-bank lending, although
the company is still growing quickly. However, it was positive to see our
underweight positioning in the Indian market offset this somewhat.
Stock picking in consumer discretionary was another weaker area during the
period, driven in part by the overweight exposure to South African holding
company Naspers (which holds a large
stake in China’s Tencent), which underperformed as local investors rotated
into precious metal stocks given strength in this segment. Polish auto parts
distributor Auto Partner also fell
after disappointing on margins, although some of this appears to be due to
cyclical effects such as local currency strength and input deflation, and it
appears that pricing conditions are likely to improve going forward.
The overall exposure to Indonesia, including stock picking and the overweight
positioning in the market, also detracted amid concerns around the political
backdrop and as investors re-allocated exposure to EM markets like Taiwan.
However, this indiscriminate de-rating has seen many high-quality Indonesia
businesses reach trough multiples, providing some excellent valuation
opportunities.
Portfolio positioning as of 31 December 2025
The focus continues to be on holding long positions in well capitalised
businesses with under-levered balance sheets, whilst looking for short
opportunities among companies with a deteriorating fundamental outlook or with
broken balance sheets.
Over the second half of 2025 the materials
exposure increased, in part due to organic growth
from strong performance, making it the portfolio’s most significant
overweight, with exposure predominantly concentrated in copper and gold.
In copper, we are entering a decade of stronger growth, driven by EVs and
related infrastructure, grid investment to facilitate the energy transition,
and data centre demand, whilst a lack of greenfield discoveries and a
reduction in the quality of key mining assets will lead to weaker supply
growth. As at year end we held miners including Africa-focused
Ivanhoe Mines , which operates one of the last
high-grade copper mines in the world and which we added to opportunistically
after the stock underperformed following a seismic incident that impacted
production at a flagship asset.
We also like gold miners, where the market seems to have entered a new
paradigm with the traditional inverse relationship with real yields weakening
following the confiscation of Russian reserves and the deterioration of fiscal
conditions in the West. Here, many producers are trading on attractive free
cash flow yields at spot and are likely to either re-rate or get acquired
given the consolidation we are seeing. We were active in managing exposure,
trimming positions where the risk-reward became less attractive, such as South
Africa’s AngloGold Ashanti and
Pan African Resources , and reallocating to
miners that had been overlooked, including South Africa-based
Harmony Gold and South-America focused
Aris Mining . There was also exposure to platinum via
South African PGM miner Valterra Platinum
, given PGMs are in deficit and elasticity of demand is very low, meaning
there is scope for prices to move a long way.
We continue to have significant exposure to
financials , where exposure is diversified
across regions. Many smaller EM countries have oligopolistic banking
structures, meaning they generate high returns on equity but trade at very low
multiples, so it is an area where we see huge opportunity. Held in the
portfolio are numerous value plays, including in
CEE markets where several names are
extremely cheap but have little sensitivity to rate cuts, such as Hungary’s
OTP Bank , as well as several fintechs,
including Brazilian digital challenger bank Nubank
. We continued to have some exposure to structural growth stories
in the Indian market as well, although we reduced some exposure to Indian
banks such as HDFC and
ICICI over the period due to the increase in
competition in the sector. Here we are seeing state owned banks, which
previously weren’t credible competitors to their privately owned peers,
becoming more aggressive in credit origination, leading to greater market
fragmentation.
Our exposure to information technology
is focused in technology hardware with an underweight
to IT services companies, which we think are under pressure from AI-related
disruption. Our largest absolute position at year end was in Taiwanese
semiconductor foundry TSMC , where we
continue to have a very positive view, given the company is yet to flex its
pricing power despite the fact that it holds a monopoly over the market. We
expect TSMC to increase prices this year, creating significant upside. We also
like Taiwanese copper-clad laminate producer Elite
Material , an R&D focused business with high barriers to
entry that is geared to data centre trends, operating in a near monopoly with
a strong competitive moat. We focused on diversifying our technology hardware
exposure over the period, introducing a new position in Taiwan’s
Wiwynn , an ODM producer of servers focused
exclusively on hyperscale customers which sold off on concerns around a
near-term slowdown in demand, providing a good entry point into what we think
is the best-run ODM in the sector. We were also active to take profits in
stocks that had run ahead of fundamentals, exiting for example Taiwanese
testing equipment manufacturer Chroma ATE
after it rallied significantly
from April lows, leaving the risk-reward less attractive.
At year end we had an overweight exposure to the memory space, where memory
manufacturers have become far more disciplined in capital deployment with an
effective oligopoly between three players supporting a strong demand backdrop
with limited capacity additions and ongoing de-commoditisation of the sector.
Here we hold Korea’s Samsung Electronics
and SK Hynix , although over the
period we trimmed these names to take some profits and shift some exposure to
their holdcos ( Samsung C&T and
SK Square ).
At a country level, we continue to have an underweight exposure to mainland
China , although
positioning vs the index at year end was more neutral when we consider
exposure to Hong Kong and Naspers. Over the period we added exposure to
innovative technological leaders in China, particularly to R&D-intensive names
within the industrials
space, which have been a key driver of the Chinese economy over the
last year. Examples include grid equipment supplier
Sieyuan Electric , which benefits from tight global
supply-demand dynamics in high-voltage switchgear, which is prompting global
customers to switch from DM competitors to Sieyuan, and is the only private
company competing with a group of inefficient SOEs, and dominant battery maker
CATL , which is gaining market share
from Korean and European peers. We also initiated positions in
Huaming Power Equipment , a leading manufacturer of
tap changers, devices used in electrical transformers where demand is strong,
and within the healthcare sector APT Medical
, a leading domestic medical equipment supplier, where revenues should
be driven by treatment penetration and China’s ageing population, compounded
by localisation as the business gains market share from Western peers and a
nascent export business.
Looking to other parts of the market, we remained underweight Chinese banks, a
sector experiencing net interest margin compression and which at some point
will face a very negative credit cycle. We have also become more sceptical on
the outlook for Chinese consumption and believe it will be hard to drive a
sustained recovery in Chinese housing, while much of the recovery in demand
has been driven by short-term tailwinds like trade-in subsidies, which only
pull forward demand. As a result, the exposure to
consumer goods sectors was reduced. This
has included trimming exposure to the sportswear market, including
Anta Sports , where competitive rivalry is high
given a fragmented market, and white goods, where we closed the position in
Haier Smart Home , although we do still
see stock-specific opportunities in some ‘experiences’ categories such as
music streaming, where under-monetisation and a lack of competitive pressures
has created a favourable backdrop for companies such as
Tencent Music Entertainment . We do also continue to like
South African holding company Naspers
, where we see significant growth potential in its underlying asset
Tencent , given the company is under-monetised vs
peers, with capacity to increase its ad load and implement more targeted ads
with the help of AI, which should support pricing power.
Elsewhere in Asia, we continued to have a small underweight in both
Taiwan and
Korea , although exposure to
both markets increased during the period. In Taiwan we see multiple
opportunities further down the AI supply chain, including in names such as
Elite Material and
Wiwynn (discussed above). In Korea, we added some holdco
exposure in the memory space ( SK Square, Samsung C&T
) where we like the underlying operating business. We think that
signs of governance improvement in Korea are a step in the right direction,
but we remain cautious as share price moves over the period were extreme and
actual improvements at the company level have so far been muted. We also added
positions in Korea Investment Holdings
, a brokerage platform that should benefit from greater trading activity, and
Youngone , a well-run OEM for outdoor
wear, with decent category exposure, considerable potential to benefit from
the value-up initiative and a cheap valuation.
On the other hand, at year end we were overweight
Indonesia , a country with attractive
demographic tailwinds, where we added exposure to take advantage of a
de-rating in the market. Here, companies like Indofoods
, the world’s largest noodle business, and leading grocery
retailer Alfamart , should both
benefit from a rise in formal retail penetration but are trading on very cheap
multiples.
In Latin America, we were overweight Brazil
as at year end. Although the outcome of the 2026
election remains uncertain and the range of outcomes is wide, the market
continues to trade at a deep discount vs history and could rally significantly
on a favourable outcome. We believe the risk-reward looks favourable and
looked to add positions in several high-quality banks. We also had an
overweight position in commodity exporting countries like
Mexico and
Peru , where the strong outlook for
commodities like copper is supportive and should filter through to the
consumer, too.
Within the short book
, exposure is diversified and stock-specific, with an effort to avoid
crowded shorts. We typically look for two main traits: companies with
fundamentals experiencing a structural or cyclical decline, and red flags
around the balance sheet. Key positions include shorts in the
Asian battery value chain , which form a pair trade
with CATL . These companies are losing
money, have weak balance sheets and a much smaller R&D budget than CATL.
Elsewhere we hold several short materials positions, including an
Asian agrochemical company facing a patent cliff
and an EMEA agrochemicals business
where the valuation is a hangover from the 2022 bull market, despite negative
gross margins and high debt levels. Over the period, we introduced a short in
an Asian e-commerce company , where
competitive pressures are eroding profitability, and an
Asian auto parts manufacturer with unsustainable debt
levels, whose returns have been challenged by the commoditisation of its core
business.
Outlook
The outlook for EM appears constructive. The asset class continues to benefit
from a relatively strong fiscal position vs DMs, attractive valuations despite
last year’s rally, and a supportive earnings backdrop, underpinned by
commodity strength and AI-driven demand for key EM tech companies. That said,
recent concerning events in the Middle East (as at 11 March) have clearly
added complexity, increasing volatility, prompting some de-risking, and
pushing oil prices higher, with potential implications for inflation. While
near-term uncertainty has risen, many of the structural drivers that supported
EM over the past year remain in place, although clearly volatility remains
elevated, and in particular the path for inflation and interest rates has
become less certain.
Taking a step back, the fiscal backdrop in EM remains supportive. The US
continues to run an elevated deficit, with growing scrutiny around debt
sustainability. By contrast, many EM economies have shown greater fiscal
restraint in this cycle. While US policy uncertainty has weighed on appetite
for US assets, key EM markets such as China have been able to shift towards
reflation given constraints in previous periods. Much of the weak sentiment
towards EM in recent years stemmed from the drawdown in China, but it now
appears that much of what drove EM’s derating is reversing.
A weaker USD, driven in part by fiscal expansion in the US, has been
supportive for EM over the past year. Clearly, higher oil prices could lift
inflation and increase the likelihood of tighter Fed policy, potentially
strengthening the USD, particularly in a risk-off environment. However, it is
important to point out that many EM economies are now less reliant on dollar
funding than in previous cycles, reducing sensitivity to USD moves.
The backdrop remains favourable for key mined commodities, particularly for
copper and gold, supporting terms of trade and domestic demand in exporting
markets such as Peru, Chile and South Africa. While lower oil prices had
previously provided an additional boost to consumption, the outlook here is
more uncertain and depends heavily on the duration of the conflict –
persistently higher prices would clearly weigh more heavily on lower-income EM
countries and large Asian oil importers.
Technology is another tailwind for EM, and one that is likely to persist
despite geopolitical turbulence. While AI enthusiasm has driven US equity
performance in recent years, critical parts of the AI supply chain sit in EM,
particularly in Taiwan and Korea, and we continue to think that much of the
value accrual from AI and data centres will go to EM companies. We see more
attractive valuations across the hardware ecosystem in these markets, where EM
companies trade on materially lower multiples than DM peers.
EM as an asset class is not without risks, and recent developments in the
Middle East underscore the need for continued vigilance. We are closely
monitoring both the macro and geopolitical backdrop and company-specific
implications.
Nick Price
Chris Tennant
Portfolio Managers
12 March 2026
Spotlight on the Top 5 Holdings
as at 31 December 2025
The top five holdings comprise 32.1% of the Company’s Net Assets.
Taiwan Semiconductor Manufacturing
Industry: Information Technology
Country: Taiwan
% of Net Assets : 13.7%
TSMC is a pre-eminent Taiwanese semiconductor foundry with leading-edge
technology, which reinforces the company’s competitive position and ability
to generate incremental return on invested capital. The company has built a
technological moat over the past three decades and occupies an especially
dominant position at the forefront of the industry as competitors have dropped
from the race due to technical hurdles and the barrier of high required
capital expenditures. TSMC’s ability to hire the best talent while
continuously improving its know-how keeps it ahead of the competition and able
to generate cashflow to feed back into investing in R&D and capacity.
Naspers
Industry: Consumer Discretionary
Country: India
% of Net Assets : 7.7%
Naspers is a global internet and entertainment group and one of the world’s
largest technology investors. It is a South African holding company
specialising in internet investments and operates in more than 120 countries
and markets with long-term growth potential. It runs some of the world’s
leading internet, video entertainment, and media platforms. The company owns a
sizeable stake in Tencent, the Chinese multinational technology and
entertainment conglomerate. Naspers operates in various sectors, including
online classifieds, food delivery, payments, travel, education, health, and
social and internet platforms.
Pan African Resources
Industry: Materials
Country: South Africa
% of Net Assets : 4.0%
Pan African Resources is a South-Africa focussed gold miner, which also has an
established tailings reprocessing operation.
Samsung Electronics
Industry: Information Technology
Country: South Korea
% of Net Assets : 3.6%
Samsung Electronics is a diversified Korean technology company, with a
significant presence in consumer electronics and a leading position as one of
three major players in the global memory industry.
OTP Bank
Industry: Financials
Country: Hungary
% of Net Assets : 3.1%
OTP Bank is the dominant banking franchise in Hungary and a leading
independent financial services provider across Central and Eastern Europe.
Twenty Largest Investments
as at 31 December 2025
The Asset Exposures shown below measure exposure to market price movements as
a result of owning shares and derivative instruments. The Fair Value is the
realisable value of the portfolio as reported in the Statement of Financial
Position. Where the Company holds shares, the Asset Exposure and Fair Value
will be the same. For derivative instruments, Asset Exposure is the market
value of the underlying asset to which the Company is exposed, while the Fair
Value reflects the profit or loss on the contract since it was opened, and is
based on how much the share price of the underlying asset has moved.
Asset Exposure Fair value
Asset Exposures – shares unless otherwise stated $’000 % 1 $’000
Taiwan Semiconductor Manufacturing
(shares, options and long CFDs)
Information Technology 95,010 13.7 78,306
Naspers (shares, option and long CFD)
Consumer Discretionary 53,437 7.7 639
Pan African Resources
Materials 27,897 4.0 27,897
Samsung Electronics (long CFDs)
Information Technology 25,128 3.6 1,880
OTP Bank
Financials 21,466 3.1 21,466
Aura Minerals (option and long CFD)
Materials 20,686 3.0 1,443
Contemporary Amperex Technology
Industrials 20,446 3.0 20,446
Sieyuan Electric
Industrials 20,292 2.9 20,292
TBC Bank Group (long CFDs)
Financials 19,289 2.8 252
Cia de Minas Buenaventura (long CFD)
Materials 17,169 2.5 (216)
NU Holdings (option and long CFDs)
Financials 16,803 2.4 77
Endeavour Mining (option and long CFDs)
Materials 16,607 2.4 920
Torex Gold Resources (long CFD)
Materials 16,516 2.4 342
Elite Material (long CFD)
Information Technology 16,387 2.4 414
SK Hynix
Information Technology 15,588 2.3 15,588
Kaspi.KZ (option and long CFD)
Financials 14,761 2.1 235
Aris Mining (long CFD)
Materials 14,636 2.1 443
SK Square
Industrials 14,596 2.1 14,596
Wiwynn
Information Technology 13,418 1.9 13,418
Orizon Valorizacao de Residuos
Industrials 13,399 1.9 13,399
Twenty largest exposures 473,531 68.3 231,837
Other exposures 767,830 110.9 390,420
Total exposures before index hedging 1,241,361 179.2 622,257
Less: index hedging
MSCI Emerging Markets Index (future) (155,395) (22.4) (2,515)
Total exposures from index hedging (155,395) (22.4) (2,515)
Total exposures after the netting of index hedging 1,085,966 156.80 619,742
Forward currency contracts 205
Portfolio Fair Value 3 619,947
Net current assets (excluding derivative assets and liabilities) 72,558
Total Net Assets 692,505
1 Asset Exposure (as defined in the Glossary of Terms)
expressed as a percentage of Net Assets.
2 Gross Asset Exposure comprises market exposure to
investments of $611,772,000 plus market exposure to derivative instruments of
$474,194,000.
3 Portfolio Fair Value comprises investments of
$611,772,000 plus derivative assets of $19,787,000 less derivative liabilities
of $11,612,000 (per the Statement of Financial Position).
Interim Management Report Principal and Emerging
Risks and Uncertainties, Risk Management
In accordance with the AIC Code, the Board has in place a robust process for
identifying, evaluating and managing the principal risks and uncertainties
faced by the Company, including those that could threaten its business model,
future performance, solvency or liquidity. The Board, with the assistance of
the Manager, has developed a risk matrix which, as part of the risk management
and internal controls process, identifies the key existing and emerging risks
and uncertainties faced by the Company. The list of risks includes:
geopolitical risk; volatility of emerging markets and market risk; investment
performance risk; changing investor sentiment; cybercrime and information
security risk; level of discount to net asset value risk; lack of market
liquidity risk; business continuity and event management risk; gearing risk;
foreign currency exposure risk; environmental, social and governance (ESG)
risk and key person risk. Full details of these risks and how they are managed
are set out on pages 23 to 27 of the Company’s Annual Report for the year
ended 30 June 2025 which is available on the Company’s
website at www.fidelity.co.uk/emergingmarkets
. The Audit and Risk Committee continues to identify new emerging risks
and take any necessary action to mitigate their potential impact. The risks
identified are placed on the Company’s risk matrix and graded appropriately.
This process, together with the policies and procedures for the mitigation of
existing and emerging risks, is updated and reviewed regularly in the form of
comprehensive reports considered by the Audit and Risk Committee. The Board
determines the nature and extent of any risks it is willing to take in order
to achieve its strategic objectives.
The Manager also has responsibility for risk management for the Company. It
works with the Board to identify and manage the principal and emerging risks
and uncertainties and to ensure that the Board can continue to meet its
Corporate Governance obligations.
Key emerging issues that the Board has identified include; rising geopolitical
tensions including recent events in the Middle East, contagion of the Ukraine
crisis or escalation of tensions between China and Taiwan; rising inflation
and the so-called cost of living crisis impacting demand for UK -
listed shares; and climate change, which is one of the most critical
emerging issues confronting asset managers and their investors. Macro and ESG
considerations, including climate change have been included into the
Company’s investment process. The Board continues to monitor these issues.
Please note the period for this risk review is 1 July 2025 to 31 December
2025. As a result, the update relates to this period and therefore precede the
events taking place in Middle East in early March 2026. We have, however,
incorporated a forward-looking perspective in the outlook sections to reflect
more recent developments, but note that as this is a rapidly developing
situation.
The Board seeks to ensure high standards of business conduct are adhered to by
all of the Company’s service providers and that agreed service levels are
met. The Board is responsible for promoting the long-term success of the
Company for the benefit of all stakeholders and in particular its
shareholders. Although the majority of the day-to-day activities of the
Company are delegated to the Manager, the Investment Manager, and other
third-party service providers, the responsibilities of the Board are set out
in the schedule of matters reserved for the Board and the relevant terms of
reference of its committees, all of which are reviewed regularly by the Board.
Transactions with the Alternative Investment Fund Manager and Related Parties
The Alternative Investment Fund Manager (“AIFM”) has delegated the
Company’s investment management to FIL Investments International.
Transactions with the AIFM and related party transactions with the Directors
are disclosed in Note 12.
Going Concern
In accordance with provision 35 of the 2024 AIC Code of Corporate Governance,
the Directors have assessed the prospects of the Company over a longer period
than the twelve month period required by the “Going Concern” basis. The
Company is an investment fund with the objective of achieving long-term
capital growth by investing in emerging markets. The Board considers long-term
to be at least five years, and accordingly, the Directors believe that five
years is an appropriate investment horizon to assess the viability of the
Company, although the life of the Company is not intended to be limited to
this or any other period.
The Directors have considered the Company’s investment objective, risk
management policies, liquidity risk, credit risk, capital management policies
and procedures, the nature of its portfolio and its expenditure and cash flow
projections.
This conclusion also takes into account the Board’s assessment of the
ongoing risks as outlined on the previous pages. The Board continues to review
emerging risks that could have a potential impact on the operational
capability of the Investment Manager and the Company’s other key service
providers. During the period under review, the Board received updates from
Fidelity and other key service providers confirming that they continued to
service the Company in line with service level agreements and have suitable
and robust business continuity arrangements in place.
The Directors, having considered the liquidity of the Company’s portfolio of
investments (being mainly securities which are readily realisable) and the
projected income and expenditure, are satisfied that the Company is
financially sound and has adequate resources to meet all of its liabilities
and ongoing expenses and can continue in operational existence for a period of
at least twelve months from the date of this Half Year Report.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
Continuation votes are held every five years and the next continuation vote
will be put to shareholders at the AGM in 2026.
Responsibility Statement
In accordance with Chapter 4 of the Disclosure Guidance and Transparency
Rules, the Directors confirm that to the best of their knowledge:
• the condensed set of financial statements contained
within the Half Year Report has been prepared in accordance with IAS 34
‘Interim Financial Reporting’ and gives a true and fair view of the
assets, liabilities, financial position and return of the Company;
• the Half Year Report includes a fair review of the
development and performance of the Company and important events that have
occurred during the first six months of the financial year and their impact on
the condensed financial statements;
• the Half Year Report includes a description of the
principal risk and uncertainties for the remaining six months of the financial
year; and
• the Half Year Report includes a fair review of the
information concerning related party transactions.
The Half Year Report has not been audited or reviewed by the Company’s
Independent Auditor.
For and on behalf of the Board
Heather Manners
Chairman
12 March 2026
Statement of Comprehensive Income
for the six months ended 31 December 2025
Six months ended 31 December 2025 unaudited Six months ended 31 December 2024 unaudited Year ended 30 June 2025 audited
Note Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000
Revenue
Investment income 4 8,858 – 8,858 10,127 – 10,127 22,941 – 22,941
Derivative income 4 11,782 – 11,782 15,830 – 15,830 26,855 – 26,855
Other income 4 510 – 510 361 – 361 631 – 631
Total Income 21,150 – 21,150 26,318 – 26,318 50,427 – 50,427
Net gains/(losses) on investments at fair value through profit or loss – 139,521 139,521 – (9,533) (9,533) – 80,979 80,979
Net gains/(losses) on derivative instruments – 28,797 28,797 – (14,304) (14,304) – 32,226 32,226
Net foreign exchange losses – (2,272) (2,272) – (1,108) (1,108) – (1,475) (1,475)
Total income and gains/(losses) 21,150 166,046 187,196 26,318 (24,945) 1,373 50,427 111,730 162,157
Expenses
Management fees 5 (467) (1,868) (2,335) (447) (1,789) (2,236) (863) (3,451) (4,314)
Other expenses (932) – (932) (828) – (828) (1,644) – (1,644)
Profit/(loss) before finance costs and taxation 19,751 164,178 183,929 25,043 (26,734) (1,691) 47,920 108,279 156,199
Finance costs 6 (11,294) – (11,294) (11,672) – (11,672) (23,704) – (23,704)
Profit/(loss) before taxation 8,457 164,178 172,635 13,371 (26,734) (13,363) 24,216 108,279 132,495
Taxation (1,146) 79 (1,067) (1,095) 289 (806) (2,347) (3,162) (5,509)
Profit/(loss) after taxation for the period attributable to Participating Preference Shares 7,311 164,257 171,568 12,276 (26,445) (14,169) 21,869 105,117 126,986
Earnings/(loss) per Participating Preference Share (basic and diluted) 7 $0.12 $2.79 $2.91 $0.17 ($0.37) ($0.20) $0.31 $1.52 $1.83
The Company does not have any income or expenses that are not included in the
profit/(loss) after taxation for the period. Accordingly, the profit/(loss)
after taxation for the period is also the total comprehensive income for the
period and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Company’s Statement of
Comprehensive Income prepared in accordance with IFRS. The supplementary
information on the allocation between the revenue account and the capital
reserve is presented under guidance published by the AIC.
All the profit/(loss) and total comprehensive income is attributable to the
equity shareholders of the Company. There are no minority interests.
No operations were acquired or discontinued in the period and all items in the
above statement derive from continuing operations.
Statement of Changes in Equity
for the six months ended 31 December 2025
Note Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000
Six months ended 31 December 2025 (unaudited)
Total equity at 30 June 2025 6,291 706,238 59,099 771,628
Profit after taxation for the period – 164,257 7,311 171,568
Participating Preference Shares repurchased and cancelled 9 – (43,351) – (43,351)
Participating Preference Shares repurchased and cancelled for Strathclyde Pension Fund 9 – (193,927) – (193,927)
Buyback expenses – (1,075) – (1,075)
Dividend paid to shareholders 8 – – (12,338) (12,338)
Total equity at 31 December 2025 6,291 632,142 54,072 692,505
Six months ended 31 December 2024 (unaudited)
Total equity at 30 June 2024 6,291 695,822 51,333 753,446
(Loss)/profit after taxation for the period – (26,445) 12,276 (14,169)
Participating Preference Shares repurchased into Treasury 9 – (47,508) – (47,508)
Dividend paid to shareholders 8 – – (14,103) (14,103)
Total equity at 31 December 2024 6,291 621,869 49,506 677,666
Year ended 30 June 2025 (audited)
Total equity at 30 June 2024 6,291 695,822 51,333 753,446
Profit after taxation for the year – 105,117 21,869 126,986
Participating Preference Shares repurchased into Treasury 9 – (94,701) – (94,701)
Dividend paid to shareholders 8 – – (14,103) (14,103)
Total equity at 30 June 2025 6,291 706,238 59,099 771,628
Statement of Financial Position
as at 31 December 2025
Note 31 December 2025 unaudited $’000 30 June 2025 audited $’000 31 December 2024 unaudited $’000
Non-current assets
Investments at fair value through profit and loss 10 611,772 712,861 632,011
Current assets
Derivative assets 10 19,787 15,006 13,984
Amounts held at futures clearing houses and brokers 47,389 52,521 44,876
Other receivables 9,080 9,504 2,007
Cash at bank 23,966 9,551 1,751
100,222 86,582 62,618
Current liabilities
Derivative liabilities 10 11,612 15,784 13,660
Other payables 7,877 12,031 3,303
19,489 27,815 16,963
Net current assets 80,733 58,767 45,655
Net assets 692,505 771,628 677,666
Equity
Share premium account 6,291 6,291 6,291
Capital reserve 632,142 706,238 621,869
Revenue reserve 54,072 59,099 49,506
Total equity shareholders’ funds 692,505 771,628 677,666
Net asset value per Participating Preference Share 11 $15.55 $11.99 $9.77
Statement of Cash Flows
for the six months ended 31 December 2025
Six months ended 31 December 2025 unaudited $’000 Six months ended 31 December 2024 unaudited $’000 Year ended 30 June 2025 audited $’000
Operating activities
Cash inflows from dividend income from investments* 10,400 10,699 21,955
Cash inflows from interest income from cash and collateral* 510 361 633
Cash inflows from dividend income from derivatives* 6,612 10,979 14,390
Cash inflows from interest income from derivatives* 342 740 1,166
Cash outflow from taxation paid (1,171) (1,096) (4,407)
Cash outflow from the purchase of investments (430,800) (372,144) (746,980)
Cash inflow from the sale of investments 663,796 417,342 804,105
Cash inflow from net proceeds from settlement of derivatives 28,294 5,809 57,520
Cash inflow/(outflow) from amounts held at futures clearing houses and brokers 5,532 76 (7,569)
Cash outflow from operating expenses (3,105) (3,194) (6,262)
Net cash inflow from operating activities 280,410 69,572 134,551
Financing activities
Cash outflow from CFD interest paid (633) (10,675) (19,611)
Cash outflow from short CFD dividends paid (11,627) (1,280) (3,011)
Cash outflow from dividends paid to shareholders (12,338) (14,103) (14,103)
Cash outflow from repurchase of Participating Preference Shares into Treasury (1,048) (49,449) (95,594)
Cash outflow from repurchase and cancellation of Participating Preference Shares (237,002) – –
Cash outflow from repurchase and cancellation buyback expenses (1,075) – –
Net cash outflow from financing activities (263,723) (75,507) (132,319)
Net increase/(decrease) in cash at bank 16,687 (5,935) 2,232
Cash at bank at the start of the period 9,551 8,794 8,794
Effect of foreign exchange movements (2,272) (1,108) (1,475)
Cash at bank at the end of the period 23,966 1,751 9,551
* Comparatives for six months ended 31 December 2024 have been restated.
Notes to the Financial Statements
for the six months ended 31 December 2025
1. Principal Activity
Fidelity Emerging Markets Limited (the “Company”) was incorporated in
Guernsey on 7 June 1989 and commenced activities on 19 September 1989. The
Company is an Authorised Closed-Ended Investment Scheme as defined by The
Authorised Closed-Ended Investment Schemes Rules and Guidance, 2021 (and, as
such, is subject to ongoing supervision by the Guernsey Financial Services
Commission). The Company is listed on the London Stock Exchange and is a
constituent of the FTSE 250 Index.
The Company’s registered office is at Level 3, Mill Court La Charroterie, St
Peter Port, Guernsey GY1 1EJ, Channel Islands.
The Company’s investment objective is to achieve long-term capital growth
from an actively managed portfolio made up primarily of securities and
financial instruments providing exposure to emerging market companies, both
listed and unlisted.
2. Publication of Non-statutory Accounts
The Financial Statements in this Half Year Report have not been audited by the
Company’s Independent Auditor. The financial information for the year ended
30 June 2025 is extracted from the latest published annual report of the
Company which was delivered to the Guernsey Financial Services Commission.
3. Accounting Policies (i) Basis of Preparation
These Half Year Financial Statements have been prepared in accordance with
International Accounting Standard 34, ‘Interim Financial Reporting’. The
interim financial statements should be read in conjunction with the
Company’s Annual Report and Financial Statements for the year ended 30 June
2025, which have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (“IFRS”), which
comprise standards and interpretations approved by the International
Accounting Standards Board (“IASB”), the IFRS Interpretations Committee
and interpretations approved by the International Accounting Standards
Committee (“IASC”) that remain in effect and the Companies (Guernsey) Law,
2008.
The financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and financial
liabilities at fair value through profit or loss.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of approval of these Financial Statements. In making their assessment
the Directors have reviewed the income and expense projections, the liquidity
of the investment portfolio, stress testing performed and considered the
Company’s ability to meet liabilities as they fall due. Accordingly, the
Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these financial statements.
4. Income
Six months ended 31 December 2025 unaudited $’000 Six months ended 31 December 2024 unaudited $’000 Year ended 30 June 2025 audited $’000
Investment income
UK dividends 1,115 367 619
Overseas dividends 7,743 9,758 22,320
Interest on bonds – 2 2
8,858 10,127 22,941
Derivative income
Dividends received on long CFDs 4,587 9,504 14,964
Interest received on CFDs 360 740 1,166
Option income 6,835 5,586 10,725
11,782 15,830 26,855
Other income
Interest income from cash and cash equivalents and collateral 510 361 631
Total income 21,150 26,318 50,427
Special dividends of $88,000 have been recognised in capital during the period
(31 December 2024: $2,340,000 and 30
June 2025: $3,230,000).
5. Management Fees
Revenue $’000 Capital $’000 Total $’000
Six months ended 31 December 2025 (unaudited)
Management fees 467 1,868 2,335
Six months ended 31 December 2024 (unaudited)
Management fees 447 1,789 2,236
Year ended 30 June 2025 (audited)
Management fees 863 3,451 4,314
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager (the “Manager”) and has delegated investment management to
FIL Investments International (FII). Both companies are Fidelity group
companies.
FII charges a management fee of 0.60% per annum of the Net Asset Value of the
Company. Fees are payable monthly in arrears and calculated on a daily basis.
Management fees have been allocated 80% to capital reserve in accordance with
the Company’s accounting policies.
Management fees incurred by collective investment schemes or investment
companies managed or advised by the Investment Manager are reimbursed.
6. Finance Costs
Revenue $’000 Capital $’000 Total $’000
Six months ended 31 December 2025 (unaudited)
Dividends paid on short CFDs 664 – 664
Interest paid on CFDs 10,630 – 10,630
11,294 – 11,294
Six months ended 31 December 2024 (unaudited)
Dividends paid on short CFDs 975 – 975
Interest paid on CFDs 10,697 – 10,697
11,672 – 11,672
Year ended 30 June 2025 (audited)
Dividends paid on short CFDs 3,506 – 3,506
Interest paid on CFDs 20,198 – 20,198
23,704 – 23,704
7. Earnings/(Loss) per Participating Preference Share
Six months ended 31 December 2025 unaudited Six months ended 31 December 2024 unaudited Year ended 30 June 2025 audited
Revenue earnings per Participating Preference Share $0.12 $0.17 $0.31
Capital earnings/(loss) per Participating Preference Share $2.79 ($0.37) $1.52
Total earnings/(loss) per Participating Preference Share (basic and diluted) $2.91 ($0.20) $1.83
The earnings/(loss) per Participating Preference Share is based on the
profit/(loss) after taxation for the period divided by the weighted average
number of Participating Preference Shares in issue during the period, as shown
below:
Six months ended 31 December 2025 unaudited $’000 Six months ended 31 December 2024 unaudited $’000 Year ended 30 June 2025 audited $’000
Revenue profit after taxation for the period 7,311 12,276 21,869
Capital profit/(loss) after taxation for the period 164,257 (26,445) 105,117
Total profit/(loss) after taxation for the period 171,568 (14,169) 126,986
Number Number Number
Weighted average number of Participating Preference Shares held outside of Treasury 58,911,403 71,877,832 69,485,764
8. Dividend Paid to Shareholders
Six months ended 31 December 2025 unaudited $’000 Six months ended 31 December 2024 unaudited $’000 Year ended 30 June 2025 audited $’000
Dividend Paid
Dividend of 26.00 cents pence per ordinary share paid for the year ended 30 June 2025 12,338 – –
Dividend of 20.00 cents pence per ordinary share paid for the year ended 30 June 2024 – 14,103 14,103
No dividend has been declared in respect of the six months ended 31 December
2025 (six months ended 31 December 2024: none).
9. Share Capital
31 December 2025 Number of unaudited shares 31 December 2024 Number of unaudited shares 30 June 2025 Number of audited shares
Authorised
Founder shares of no par value 1,000 1,000 1,000
Issued
Participating Preference Shares held outside Treasury
Beginning of the period 64,342,245 74,646,287 74,646,287
Participating Preference Shares repurchased and cancelled (3,378,107) – –
Participating Preference Shares repurchased and cancelled for Strathclyde Pension Fund (16,441,177) – –
Participating Preference Shares repurchased into Treasury – (5,311,585) (10,304,042)
End of the period 44,522,961 69,334,702 64,342,245
Participating Preference Shares held in Treasury*
Beginning of the period 13,225,940 2,921,898 2,921,898
Participating Preference Shares repurchased into Treasury – 5,311,585 10,304,042
Cancellation of Participating Preference Shares in Treasury (4,200,000) – –
End of the period 9,025,940 8,233,483 13,225,940
Total Participating Preference Shares 53,548,901 77,568,185 77,568,185
* The Participating Preference Shares held in Treasury
carry no rights to vote, to receive a dividend or to participate in a winding
up of the Company.
The Board of Directors is mindful that the Company’s shares have traded at a
discount to NAV for some time, and frequently deliberates appropriate discount
control mechanisms to address the imbalance between the demand and supply of
the Company’s shares. The Board intends to continue using its buyback
programme to address the discount to NAV with the ambition that it may
ultimately be maintained in single digits in normal market conditions on a
sustainable basis.
The costs associated with the repurchase of the shares of $238,353,000 were
charged to the capital reserve for the six months ended 31 December 2025. (six
months ended 31 December 2024: $47,508,000 and 30 June 2025: $94,701,000).
The Company may issue an unlimited number of Shares of no par value.
Founder Shares
The Founder Shares were issued at $1 each par value, these shares are not
redeemable.
At the Extraordinary General Meeting of the Company on 30 October 2009 and in
accordance with The Companies (Guernsey) Law, 2008 it was approved that each
Founder Share be redesignated as no par value shares.
The Founder Shares confer no rights upon holders other than at general
meetings, on a poll, every holder is entitled to one vote in respect of each
Founder Share held.
10. Fair Value Hierarchy
The Company is required to disclose the fair value hierarchy that classifies
its financial instruments measured at fair value at one of three levels,
according to the relative reliability of the inputs used to estimate the fair
values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly
Level 3 Valued by reference to valuation techniques using inputs that are not based on observable market data
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset. The table below sets out the Company’s fair value hierarchy:
31 December 2025 (unaudited) Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000
Financial assets at fair value through profit or loss
Investments in equity securities 607,395 – – 607,395
Investee funds – – 4,377 4,377
Derivative instrument assets – Futures contracts 2,392 – – 2,392
Derivative instrument assets – Options 2,080 – – 2,080
Derivative instrument assets – CFDs – 15,110 – 15,110
Derivative instrument assets – forward currency contracts – 205 – 205
611,867 15,315 4,377 631,559
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – Futures contracts 2,567 – – 2,567
Derivative instrument liabilities – Options 2,736 170 – 2,906
Derivative instrument liabilities – CFDs – 6,139 – 6,139
5,303 6,309 – 11,612
30 June 2025 (audited) Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000
Financial assets at fair value through profit or loss
Investments in equity securities 708,476 – – 708,476
Investee funds – – 4,385 4,385
Derivative instrument assets – Futures contracts 342 – – 342
Derivative instrument assets – Options 3,846 98 – 3,944
Derivative instrument assets – CFDs – 10,649 – 10,649
Derivative instrument assets – forward currency contracts – 71 – 71
712,664 10,818 4,385 727,867
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – Futures contracts 4,137 – – 4,137
Derivative instrument liabilities – Options 1,802 630 – 2,432
Derivative instrument liabilities – CFDs – 9,215 – 9,215
5,939 9,845 – 15,784
31 December 2024 (unaudited) Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000
Financial assets at fair value through profit or loss
Investments in equity securities 621,157 – – 621,157
Equity linked notes – 6,377 – 6,377
Investee funds – – 4,477 4,477
Derivative instrument assets – Futures contracts 7,257 – – 7,257
Derivative instrument assets – Options 1,178 90 – 1,268
Derivative instrument assets – CFDs – 4,830 – 4,830
Derivative instrument assets – forward currency contracts – 629 – 629
629,592 11,926 4,477 645,995
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – Futures contracts 351 – – 351
Derivative instrument liabilities – Options 1,262 448 – 1,710
Derivative instrument liabilities – CFDs – 11,599 – 11,599
1,613 12,047 – 13,660
As the key input into the valuation of Level 3 investments is official
valuation statements from the Investee Fund, we do not consider it appropriate
to put forward a sensitivity analysis on the basis that insufficient value is
likely to be derived by the end users of this report.
The following table summarises the change in value associated with Level 3
financial instruments carried at fair value for the six months ended 31
December 2025, for the six months ended 31 December 2024
and year ended 30 June 2025:
31 December 2025 $’000 30 June 2025 $’000 31 December 2024 $’000
Opening balance 4,385 5,363 5,363
Sales (323) (1,138) (1,057)
Transfer to Level 1 – (1,466) –
Realised gains/(losses) 296 (7,589) (9,105)
Net change in unrealised gains 19 9,215 9,276
Closing balance 4,377 4,385 4,477
The Company’s holdings in Russian securities have been fair valued at nil as
at 31 December 2025 (year ended 30 June 2025: nil and six month ended 31
December 2024: nil ) as a result of trading being suspended on international
stock exchanges. These Russian securities have a carrying cost of $90,932,976
as at 31 December 2025 (year ended 30 June 2025: $90,932,976 and six month
ended 31 December 2024: $90,932,976,).
The Company’s policy is to recognise transfers in and transfers out at the
end of each accounting year.
11. Net Asset Value per Participating Preference Share
31 December 2025 unaudited 30 June 2025 audited 31 December 2024 unaudited
Net assets $692,505,000 $771,628,000 $677,666,000
Participating Preference Shares held outside of Treasury 44,522,961 64,342,245 69,334,702
Net asset value per Participating Preference Share $15.55 $11.99 $9.77
12. Transactions with the Manager and Related Parties
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager and has delegated portfolio management to FIL Investments
International (“FII”). Both companies are Fidelity group companies.
Details of the current fee arrangements are given in Note 5.
During the period, the Company had the following transactions payable to FII:
Six months ended 31 December 2025 unaudited $’000 Six months ended 31 December 2024 unaudited $’000 Year ended 30 June 2025 audited $’000
Investment management fees 2,335 2,236 4,314
Marketing services 170 84 334
At the Statement of Financial Position date, the following balances payable to
FII and other payables were accrued and included in other creditors:
Six months ended 31 December 2025 unaudited $’000 Year ended 30 June 2025 audited $’000 Six months ended 31 December 2024 unaudited $’000
Investment management fees 338 365 348
Marketing services 21 43 11
At the date of this report, the Board consisted of five non-executive
Directors (as shown below) all of whom are considered to be independent by the
Board. None of the Directors has a service contract with the Company.
The annual fee structure with effect from 1 July 2025 is as follows:
1 July 2025 £
Chairman 60,000
Chair of the Audit and Risk Committee 45,000
Senior Independent Director 42,000
Director 40,000
Directors’ Shareholdings:
31 December 2025 unaudited
Heather Manners 10,000
Torsten Koster 15,000
Katherine Tsang 8,000
Dr Simon Colson 4,416
Mark Little 2,850
13. Subsequent Events
Post interim, the valuation of the Company’s holding in NCH Balkan was
reassessed. The updated valuation of $8.3
million, an increase from $4.4 million, was
reflected in the NAV on the 15
January 2026.
Additional Information Board of Directors
Heather Manners (Chairman)
Torsten Koster (Senior Independent Director)
Dr Simon Colson
Mark Little
Katherine Tsang
Registered Office
Level 3, Mill Court La Charroterie
St Peter Port
Guernsey GY1 1EJ
Channel Islands
Website
www.fidelity.co.uk/emergingmarkets
The financial information contained in this Half-Yearly Results Announcement
does not constitute statutory accounts. The financial information for the six
months ended 31 December 2025 and 31 December 2024 have not been audited or
reviewed by the Company’s Independent Auditor.
The information for the year ended 30 June 2025 has been extracted from the
latest published audited financial statements, unless otherwise stated.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
A copy of the Half-Yearly Report will shortly be submitted to the National
Storage Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at
www.fidelity.co.uk/emergingmarkets
where up to date information on the Company, including daily
NAV and share prices, factsheets and other information can also be found.
END
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