REG-Fidelity Emerging Markets Ltd: Final Results for the year ended 30 June 2025
06/10/2025 07:05
FIDELITY EMERGING MARKETS LIMITED
Final Results for the year ended 30 June 2025
Financial Highlights: * During the twelve-month period ended 30 June 2025,
Fidelity Emerging Markets Limited reported a Net Asset Value (NAV) return of
+11.8%, ahead of the benchmark index, the MSCI Emerging Markets Index, return
of +6.3%
* Over the same timeframe, the total share price return was +14.0%
* The Company’s extensive ‘toolkit’ contributed positively to
performance, with short positions and mid-cap exposure adding notable value.
* Long positions in Naspers and select mid-caps were among the top
contributors to performance.
* The Board has announced a final dividend of $0.26
For further information, please contact:
George Bayer
Company Secretary0207 9614240FIL Investments International Financial
Highlights
30 June 2025 30 June 2024
Assets as at 30 June
USD
Gross Asset Exposure 1 $1,235.3m $1,177.3m
Equity Shareholders’ Funds $771.6m $753.4m
NAV per Participating Preference Share 2 $11.99 $10.09
Dividend per Participating Preference Share $0.26 $0.20
Dividend Yield 2.4% 2.3%
Gross Gearing 2,3 60.1% 56.3%
Net Gearing 2,4 5.5% 4.3%
Exchange Rate (USD to GBP) 1.37 1.25
GBP
Gross Asset Exposure 1,5 £901.4m £940.7m
Equity Shareholders’ Funds 5 £563.1m £596.0m
NAV per Participating Preference Share 2,5 £8.75 £7.98
Share Price and Discount as at 30 June
Participating Preference Share Price £7.83 £7.03
Discount to NAV per Participating Preference Share 10.51% 11.90%
Number of Participating Preference Shares held outside Treasury 64,342,245 74,646,287
Earnings for the year ended 30 June
Revenue Earnings per Participating Preference Share 6 $0.31 $0.16
Capital Earnings per Participating Preference Share 6 $1.52 $1.29
Total Earnings per Participating Preference Share 6 $1.83 $1.45
Ongoing charges ratio 2 0.83% 0.81%
1 The value of the portfolio exposed to market price movements.
2 Alternative Performance Measure – see below and Glossary of Terms in the
Annual Report.
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 year.
Chairman‘s Statement
I am pleased to present your Company’s 36th annual report, marking more than
three full years under Fidelity’s management and a third successive year in
which Fidelity Emerging Markets Limited (‘the Company’)’s NAV total
returns (the best measure of a fund manager’s performance) have beaten the
Company’s benchmark, the MSCI Emerging Markets Total Return Index (‘the
Index’). In spite of a fractious geopolitical backdrop, your Company has
produced two consecutive years of double-digit NAV and share price total
returns. And while investor focus has remained on the US market, which has
continued to reach record highs in recent months, both the Company’s NAV and
share price total returns (and the Index, to a lesser extent) have in fact
outperformed the S&P 500 Index in the review period, in US dollar terms. I
discuss below the factors supporting emerging market (‘EM’) performance in
general, but the fact that the Company’s NAV total return performance has
now beaten that of the Index by 5.5 percentage points for two years running is
testament both to the skill of your Portfolio Managers – Nick Price, Chris
Tennant and their team – and to the extended investment toolkit they employ.
Meanwhile, the share price total return outperformance of 7.7 percentage
points in the year under review and 9.4 percentage points in the previous year
speaks partly to your Board’s and Fidelity’s efforts to raise the profile
of the Company and narrow the discount between the share price and NAV.
Overview
During the 12-month period to 30 June 2025, the Company’s NAV increased by
11.8% in GBP terms, compared with a gain of 6.3% in the Index. The share price
total return advanced by 14.0%, with the discount to NAV narrowing from 11.9%
at the beginning of the period to 10.5% at the end, spending a significant
period in single digits in the second half of the financial year (all
performance figures stated in GBP on a total return basis). As in FY24, it was
again a year of two halves, with little progress made in the first six months
of the period (NAV, share price and Index total returns of -0.3%, +1.2% and
+1.0% respectively). It is notable that the second half saw such good gains,
given tariff induced market volatility and ongoing war in the Middle East and
Ukraine. Your Board, Portfolio Managers and I see this as further evidence
that a long period of broadly negative sentiment towards emerging markets may
have come to an end.
Readers may be surprised to learn, as mentioned above, that emerging markets
have quietly been outperforming the US: over 12 months to 30 June 2025,
measured in US dollars, the S&P 500 returned 15.2%, while the MSCI Emerging
Markets Total Return Index advanced by 15.3%. Your Company’s USD dollar
total returns were significantly higher than this, at 21.2% for the NAV and
23.5% for the share price. Yet in the 12 months to end-June 2025, outflows
from UK retail open-ended funds investing in global emerging markets slightly
outweighed inflows (a net withdrawal of £0.2m), while funds investing in
North America pulled in net new investments of almost £3bn (source: The
Investment Association, based on monthly net retail sales figures).
Furthermore, while US equity market valuations are well above long-term
averages, the EM universe is trading at a record valuation discount to the US
(based on 12-month forward price/earnings ratios), a large discount versus the
rest of the world, and well below its own long-term average valuation.
Arguably one of the principal drivers behind the US market dominance of recent
years has been momentum: money flooding into a market drives up share prices
as more investors compete to participate. It is therefore all the more
remarkable that emerging markets have managed to outperform while all the
attention has been focused in the other direction. This is also why your Board
and Fidelity are continuing to work tirelessly to raise the profile of EM in
general and your Company specifically, with new initiatives including digital
marketing as well as ongoing consumer and trade media engagement. Alongside
favourable fundamentals and attractive valuations, increased investor demand
could be a potent addition to the long-term outlook for EM.
The Portfolio Managers’ Review on the following pages contains a wealth of
detail on the contributors to absolute and relative performance in the period
under review. However, your Board is pleased to note that the extended
investment toolkit available to Nick, Chris and the team is continuing to
generate good results, both through the use of short positions in companies
that the managers see as structurally challenged, and in the exposure to
smaller and mid-cap stocks, which is made possible through the research
efforts of Fidelity’s large team of locally based emerging markets analysts.
These are among the key differentiating features of your Company versus other
emerging markets funds, along with its global diversification and the
long-term investment horizon afforded by the investment trust structure. The
mid-cap and small-cap book has added significant value this year, with the
managers taking advantage of the closed-end structure to invest with greater
flexibility further down the market cap spectrum.
Outlook
Amid a challenging global geopolitical outlook, emerging markets offer some
key benefits to investors. US tariffs on global trade may raise revenues for
the government, but are also likely to increase prices for hard-pressed US
consumers, leading to further pressure on an economy that is already groaning
under the burden of a historically high debt-to-GDP ratio, which will only be
exacerbated by spending on tax cuts for the wealthy. This is leading to a
weakening in the US dollar, a factor that in the past has tended to be very
positive for most emerging markets. A weaker dollar strengthens domestic
currencies and reduces imported inflation, boosting local purchasing power and
creating further room for cuts in interest rates, which have largely remained
higher than those in developed markets as a result of fewer Covid-era stimulus
measures. EMs also benefit from lower debt servicing costs for any
dollar-denominated debt, while the tailwind for commodity prices (which
typically display an inverse correlation to the dollar) can benefit exporting
EMs.
Meanwhile, although US tariffs remain a prominent headline issue, a rise in
intra-EM trade has lessened the importance of exports to the US for most
emerging markets. From a peak of almost 80% of EM exports flowing into
developed markets in the early 1990s, the balance is now close to 50:50
between emerging and developed markets, with the US accounting for less than
20%. In China, where a tit-for-tat tariff spat in the spring saw levies
exceeding 140% before settling back to 30% in July, the economy remains
overwhelmingly domestic, with more than 85% of listed companies’ revenues
(based on the MSCI China Index) derived at home, while only 2.9% arise from
the US (source: FactSet, Morgan Stanley Research, based on last 12 months, as
at 16 May 2025).
Away from the tariff tribulations, there are many other factors to commend
emerging markets: positive demographic trends, with (in most cases) young and
increasingly educated populations, under-penetrated markets for goods and
services, and a degree of fiscal rectitude largely lacking in the larger
developed economies. Coupled with low valuations and signs of greater investor
attention, your Board and Portfolio Managers believe the outperformance of the
past two years could potentially extend well into the future.
This is of particular note given the Company’s performance-conditional
tender offer in 2026, which would give investors the facility to redeem up to
25% of their shares at close to NAV should the NAV total return fail to exceed
the Index total return over the five years ending on 30 September 2026. At the
time of writing, the five-year NAV total return (to end August) is
approximately 8 percentage points behind the index, although the three-year
NAV total return is more than 21 percentage points ahead. It is important to
remember that the five-year period – both currently and in September 2026
– includes the period before the Russian invasion of Ukraine in February
2022, which had a starkly negative impact on the Company’s returns given its
overweight positioning in Russia at the beginning of the war. The majority of
these Russian assets are still in the portfolio but are currently valued at
zero given the inability to trade; any potential resolution to the conflict
and applicable sanctions could therefore provide a NAV uplift. Moreover,
robust performance over the last three years mean the portfolio’s return
since Fidelity took on management of the Company has moved closer to that of
the index. Even if the hurdle is not achieved, the tender offer may still be
of benefit to shareholders, as redemption at NAV could provide some uplift on
the share price, which has on average traded at an 11% discount to NAV over
the past five years.
Dividend
The Board is recommending a final dividend of $0.26 per share for the year
ended 31 July 2025 for approval by shareholders at the AGM to be held on 1
December 2025. I would highlight that the Board does not have a fixed dividend
policy, because income is an output rather than an aim of the investment
process, and therefore no guarantee can be offered as to the level of any
future dividends.
Board composition
There have been no changes in the composition of your Company’s Board in the
period under review. All directors will stand for re-election at the AGM in
December.
Discount management
As noted above, the discount to NAV began the year at 11.9% and ended at
10.5%. While this is only a slight narrowing, it masks a volatile period in
which the discount widened to more than 16% in the immediate aftermath of the
US election before narrowing to less than 9% in mid-March; in general, the
trend was one of widening in the first half of the year and narrowing in the
second, reaching a three-year narrowest point of 7.5% after the period-end in
late July.
During the year, we repurchased 10,304,042 shares in the market (13.8% of the
shares in issue at the start of the period), with an additional 391,856 shares
bought back between 1 July and 1 August 2025 (0.6% of the shares in issue at
1 July 2025). At 1 August 2025, the discount to NAV stood at 9.8%, a little
narrower than at the year-end. At the AGM in December 2025 we will seek to
renew the existing annual authority to repurchase up to 14.99% of our
Participating Preference Shares.
I would also remind readers, as outlined above in the Outlook section, 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.
While buybacks are NAV-accretive for existing shareholders, share repurchases
on their own do not narrow discounts, and as such we continue to work to
ensure that potential and existing investors fully understand the Company’s
story and the enhanced investment toolkit available to the managers, which is
now backed up by a three-year record of NAV total return outperformance versus
the Index. Investment companies are increasingly on the front foot in terms of
marketing, and our own initiatives helped to generate 39 pieces of positive
media coverage throughout the year under review, with an impressive 16 more
added in July 2025, the first month of the new financial year. The board is
grateful to portfolio managers Nick and Chris – who are quoted in the
majority these articles – for making the time to promote the company in the
press. Alongside traditional media, digital marketing activity is also
increasing the Company’s visibility through social media platforms.
While this report was being prepared, we were delighted to hear that your
Company has been shortlisted as a finalist in the Emerging Markets category of
Investment Week magazine’s prestigious Investment Company of the Year
Awards, in association with the Association of Investment Companies. These
awards recognise excellence in the closed-end fund sector, judged not just on
strong investment performance (although this is a key element of the
shortlisting process), but also using qualitative factors.
Share repurchase and Extraordinary General Meeting
In early September, after the end of the review period covered by this report,
we announced that the Company had agreed a conditional share repurchase
agreement with one of our larger shareholders, Strathclyde Pension Fund.
Subject to shareholder approval at an Extraordinary General Meeting to be
convened in the coming months, the Company will repurchase Strathclyde’s
entire shareholding of 16,441,177 Participating Preference Shares, which
represented approximately 25% of shares in issue at end-August 2025. The
acquisition price has been agreed at a 14% discount to the cum-income NAV at
the close of business two days prior to the transaction, which is expected to
take place in early November. The shares will then be cancelled. While the
repurchase will obviously have a material impact on the size of the
Company’s asset base, on a per-share basis it will be value-accretive to
continuing shareholders. Based on the end-August NAV, we estimate an uplift of
approximately 4% in the NAV per share, after costs. This transaction will not
affect the planned performance-conditional tender offer outlined above.
Articles of Incorporation
The Board is proposing to increase the aggregate cap on Directors’ fees to
provide greater flexibility for any future changes. The proposed new cap is
USD450,000 in aggregate per annum, which it is felt is in line with market
practice, replacing the existing cap of USD400,000 per annum which was put in
place in 2021.
The Board is also proposing to amend the provisions relating to the retirement
of Directors to reflect the Company’s current practice, and market practice,
of all Directors offering themselves for election or re-election each year
(other than any Director appointed by the Board after the date of the notice
for the AGM).
We have also taken the opportunity to make other changes of a minor,
clarificatory or technical nature. These include deleting a reference to the
expired time period in which the Directors had authority to issue shares,
permitting the share register to be kept in electronic form and clarifications
regarding the appointment of proxies. A full tracked version of all the
changes proposed to the Articles is available at
https://investment-trusts.fidelity.co.uk/fidelity-emerging-markets. The
principal changes proposed to the Articles are set out in more detail in the
Directors’ Report in the Annual Report.
AGM
This year’s AGM will be held on 1 December 2025 at 8 a.m. at the registered
office of the Company, Level 3, Mill Court La Charroterie, St Peter Port,
Guernsey GY1 1EJ. Notice of the AGM, containing full details of the business
to be conducted at the meeting, is set out in the Annual Report. Your
attention is also drawn to the Corporate Governance section of the Annual
Report where resolutions relating to special business are explained.
Electronic proxy voting is now available and shareholders are encouraged to
submit voting instructions using the web-based voting facility at
www.eproxyappointment.com and for institutional shareholders via the CREST
system, CREST messages must be received by the issuer’s agent (ID number
3RA50) not later than 8 a.m. on 29 November 2025. In order to use electronic
proxy voting, shareholders will require their shareholder registration number,
control number and PIN. If you do not have access to these details please
contact the Company’s Registrar, Computershare; their contact details can be
found in the Annual Report.
Heather Manners
Chairman
3 October 2025
Portfolio Managers’ Review
Question
How has Fidelity Emerging Markets Limited performed in the financial year
to 30 June 2025?
Answer
It was a period of strong performance for the investment company, which
delivered NAV returns of 11.8%, vs the index which returned 6.3%. The
investment company’s extensive ‘toolkit’ added significant value over
the year. When managing the portfolio, we draw on a broad range of
‘tools’, namely the ability to increase gross exposure, to invest in
smaller-cap companies, take out short positions, and use options. In addition
to the long book contributing to relative returns, it is pleasing to see that
many of these tools, including the small and mid-cap exposure, the short book,
and yield enhancement, have also added substantial value over the past year.
Question
What drove performance over the year?
Answer
At the sector level, stock picking in materials was the largest contributor to
performance, with a positive contribution from consumer discretionary too,
among other sectors. Stock picking in financials detracted the most, although
the overweight exposure contributed. At the country level, stock picking in
South Africa, India, and Taiwan were among some of the larger contributors to
performance. Stock picking and positioning in China/Hong Kong and Kazakhstan
detracted the most.
At the stock level, the top contributor overall was the position in Naspers,
the South African holding company with a stake in China’s Tencent. Naspers
significantly outperformed Tencent, supported by its ongoing share buyback and
indications its other investments are starting to turn a profit.
Many of the other top performers were mid-caps, including gold miner Lundin
Gold, Taiwan’s Elite Material, and Georgia’s TBC Bank. The disposal of
Russia’s Headhunter also contributed after a liquidity opportunity emerged
which allowed us to dispose of a holding previously written down to zero.
One of the main headwinds to performance was Kazakhstan’s ecommerce and
payments platform’ Kaspi, which came under pressure from a weak local
currency and high interest rates. Positioning in China also detracted, most
notably the lack of exposure to consumer electronics/EV maker Xiaomi after it
rallied on the back of a strong product cycle, as well as the position in Hong
Kong luggage maker Samsonite.
Question
What were some of the major changes you made to the portfolio during the year
and what drove those?
Answer
We actively adjusted the China exposure, with a new position in Bosideng, a
down jackets maker that has doubled its market share over the past decade and
offers a ~6% dividend yield. We also bought Tencent Music, the ‘Spotify of
China’ that operates in a more consolidated market structure than Developed
Markets and trades at a third of the multiple of Spotify. We reduced exposure
to internet companies like PDD and Meituan, where competition is intensifying.
The exposure to gold miners has also been scaled up. For years, the gold price
correlated with the TIPS yield, but this broke down after the confiscation of
Russia’s FX reserves and the explosion of fiscal largesse in the US, which
reduced the appeal of US treasuries vs gold. Mining stocks continue to offer
good value despite the recent rally, and several of our recent additions in
the space generate a ~15% free-cash flow yield at current spot prices.
We also added exposure to Taiwan, where heavy retail ownership prompted an
indiscriminate sell-off following Liberation Day, offering an opportunity to
add names we had liked for some time, but had previously been too expensive
– for example E Ink, a digital ink business with a >95% market share and a
monopoly, IP-protected position, which derated from 30x to 20x earnings in
April despite having no exposure to tariffs.
India remains expensive but we do see opportunities among financials. We added
a position in HDFC Asset Management, an operationally lean business with a
dominant market share, and reduced exposure to IT services businesses, which
face headwinds from weaker US demand and the structural threat posed by AI to
coding jobs.
Question
The Company is unique in its peer group given its ability to use both long and
short positions. How did your exploit that flexibility over the past year?
Answer
We have several short positions in indebted Korean battery makers that are
losing market share to Chinese peers such as CATL, in which we have a long
position. CATL trades at only at 16x earnings and has close to 45% share of
new vehicle launches, offering great visibility of future market share gains.
We have short exposure to the Indian paints industry, which used to be an
oligopoly, but a new entrant has resulted in huge oversupply as volume growth
is slowing. Although the economics for the incumbents are being destroyed,
many stocks still trade on ~50x earnings. This is a theme we see in many
Indian sectors as oligopolies become fragmented, pricing power breaks down,
and capital floods the market.
Question
China has been another dominant topic and it appears that sentiment is slowly
turning. Has China turned a corner and where do you see the most interesting
opportunities?
Answer
The backdrop for the Chinese consumer has been tough, and consumption as a
proportion of GDP remains very low vs developed markets. This is down to an
elevated savings rate and the fact that the ratio of house prices to incomes
remains elevated even with the decline in property prices.
While the high relative cost of housing means there will likely continue to be
a period of adjustment, overall, it seems we are through the nadir of property
prices declines, with signs of stabilisation in tier one cities, if not
outright recovery. While the government does not want to drive another bubble
in construction volumes, policy measures are aimed at putting a floor in
prices. A mix of lower interest rates and stabilising but structurally lower
house prices point to a better backdrop for the Chinese consumer.
Other parts of the market are tough. The savings rate is high, but there are
limited places to put this money to work, pushing up high-yielding stocks like
banks, which are structurally challenged. Rate cuts are negative for net
interest margins, and there is a divergence between the rise in reported
corporate losses and bank provisioning, which is the lowest in a decade. Heavy
industrials are also challenged given excess capacity in many industries.
China will likely manage its way through higher tariffs, given there is often
little alternative to Chinese product at the price point available. There is a
question over whether we will see a revaluation of the renminbi, with the
current dollar peg increasingly out of sync with the rest of the world.
We are most positive on the consumer space, where many stocks are cheap,
returning capital to shareholders, and should benefit from consumer
deleveraging and government stimulus. However, reporting quality remains poor,
and government intervention persists. There are pockets of opportunity,
though, as consumers shifts from international to domestic brands, and in
underpenetrated ‘experiences’ categories like music streaming or travel.
Top 5 Positions
As at 30 June 2025 Sector Portfolio (%) Index Weight (%) Relative (%)
Taiwan Semiconductor Manufacturing Information Technology 10.6 10.2 0.4
Naspers Consumer Discretionary 9.0 0.6 8.4
Samsung Electronics Information Technology 4.0 2.7 1.3
TBC Bank Group Financials 3.9 0.0 3.9
HDFC Bank Financials 3.9 1.5 2.4
Question
Beyond China, what opportunities are you particularly excited about – are
there any stand-out markets, sectors or themes you’d highlight?
Answer
We are constructive on Indonesia, which has excellent demographics but trades
at a fraction of the multiple of countries with similar tailwinds. We
particularly like noodle maker Indofood, which benefits from a great domestic
market structure, and has presence in the underpenetrated Middle East market.
Indofood trades at ~6x earnings, around a tenth of the multiple of peers in
India.
The de-rating in Mexico has created opportunities to buy cheap, high-quality
compounders, for example tortilla maker Gruma. Two-thirds of Gruma’s profits
come from the US and it would trade at a significant premium to its current
multiple were it listed in that market, while localised production bases also
protect it from any potential increase in tariffs.
Electrification is another area of focus. The shift in the generation mix
requires a reengineering of the grid, which along with EVs, is the largest
demand driver for copper. We hold several copper miners, for example Peru’s
Buenaventura. We also have direct exposure to the theme through Sieyuan
Electric, a Chinese electrical equipment maker that is the only private
company competing with a group of inefficient SOEs.
Question
An aspect of the Company’s broad toolkit is the ability to invest in smaller
companies and in “off-the-beaten-track” markets. Can you outline one of
the opportunities you are seeing in those areas?
Answer
One mid-cap company we are particularly excited about is Georgia’s TBC Bank.
Georgia has a population of just under 4m people and TBC is one of two
dominant banks in the country, which together have about 80% market share. TBC
Bank earns returns on equity of more than 25% but trades on only ~5x earnings,
a very cheap multiple for such a dominant, profitable bank. It has just
launched a digital bank in Uzbekistan, a market with a population 10x the size
of Georgia’s, offering huge scope for expansion. With an experienced CEO
that has an excellent track record of running fintech companies, this
expansion into Uzbekistan offers great optionality.
Question
How important is in-depth company research and on-the-ground presence in
addressing the complexities and evolving dynamics of Emerging Markets (EM)?
Answer
Fidelity’s extensive EM research team and our frequent research trips play a
vital role in helping us make sense of this diverse universe. We have about 50
analysts dedicated solely to EM, helping us develop a deep view of industry
and company dynamics. Travel is an important part of the process, and we have
visited the Gulf Corporation Council (‘GCC’),, Turkey, and Taiwan, among
other places, over the past year. Seeing dynamics play out firsthand, and
speaking to competitors and consumers directly, really helps us substantiate
and corroborate a company’s narrative.
This approach is particularly important when investing in EM, where there is
greater information asymmetry and much less comprehensive coverage by the
sell-side, especially of smaller-cap companies, an area where we see a lot of
value today. Varying corporate governance standards across EM also make it
vital to engage directly with companies to ensure the best outcomes for
minority shareholders.
Question
What are some of the reasons investors might want to consider an allocation to
EM today?
Answer
The fiscal backdrop and state of sovereign balance sheets is one of the
defining issues of today. The US has an elevated fiscal deficit that has
little chance of being reined in, and for the first time, people are
questioning the sustainability of its debt.
Against this backdrop, the relative fiscal position of EM looks very strong.
There are some exceptions to this, Brazil being a notable outlier, but broadly
we have seen much more fiscal constraint among EMs during this cycle. While
the US drew on the fiscal toolbox during Covid, we saw the opposite in most
EMs, particularly China, which tightened policy to deflate the
property bubble.
Today we are starting to see this dynamic shift, as the fiscal backdrop and
policy unpredictability weigh on appetite for US assets, while China has
shifted to reflating the economy, having achieved what it set out to do in the
property sector. Much of the weak sentiment towards EM in recent years has
been driven by the drawdown in its largest constituent, China, and it now
appears that much of what drove EM’s derating is reversing.
Today’s world of fiscal largesse is also resulting in a weaker US dollar. If
that continues to persist, it’s a very good backdrop for EM, supporting
local currencies and resulting in less imported inflation, with more money in
the pocket of consumers. A weaker dollar is also supportive for commodity
exporting economies like Brazil and South Africa.
The valuation backdrop is decent for many, if not all, EMs, with markets like
Mexico and Indonesia trading at very low multiples, and China, despite the
rerating, also looking cheap overall. Taiwan remains relatively expensive, but
some of this premium is warranted given its position as home to the AI supply
chain.
EM as an asset class is far from perfect, with continued risks around
populism, geopolitics and trade tensions, although these are also issues that
we face in the developed world. But with the tailwind of a weaker dollar, a
relatively robust fiscal position, and signs of recovery of China, we think
that EM looks well positioned today and is certainly an asset class that
deserves scrutiny at this point in time.
Nick Price
Chris Tennant
Portfolio Managers
3 October 2025
1 Fidelity investment, trading and operational teams actively monitor
developments, which can result in the identification of liquidity
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Spotlight on Top 10 holdings
as at 30 June 2025
Based on Asset Exposure expressed as a percentage of Net Assets. Asset
Exposure comprises the value of direct equity investments plus market exposure
to derivative instruments.
Taiwan Semiconductor Manufacturing (“TSMC”)
% of Net Assets - 10.6%
TSMC is a pre-eminent Taiwanese semiconductor foundry with leading-edge
technology that reinforces the company’s competitive position and ability to
generate incremental return on invested capital.
Naspers
% of Net Assets - 9.0%
Naspers is a South African holding company specialising in internet
investments, including classifieds, payments/fintech and food delivery. It has
a diverse portfolio of investments, including a significant stake in Chinese
technology major Tencent.
Samsung Electronics
% of Net Assets - 4.0%
Samsung Electronics is a diversified Korean technology company, with one of
the largest memory businesses globally, and a significant presence in mobiles,
display and consumer electronics.
TBC Bank
% of Net Assets - 3.9%
TBC is the leading banking group in Georgia. It is well-capitalised with a
high return on equity, strong loan growth and the ability to deploy capital
into fast-growing loan markets, with recent expansion into the Uzbek market
also offering scope for growth.
HDFC Bank
% of Net Assets - 3.9%
HDFC Bank is one of the leading banks in India with a focus on non-mortgage
retail lending. It has an excellent history of balancing growth and
shareholder returns, and its conservative capital management practices enable
it to continually invest across the cycle.
Nu Holdings
% of Net Assets - 3.6%
Nu Holdings is a Brazilian digital challenger bank offering services in
savings, payments, and personal loan products. The company has consistently
reported strong profitability and significant growth in its customer base,
demonstrating exceptional execution on customer acquisitions.
ICICI Bank
% of Net Assets - 3.3%
ICICI is one of the largest private sector banks in India, with a significant
presence in retail, corporate, and international banking. Its established
market position offers stability and the company’s consistently improving
asset quality bodes well for strong earnings growth going forwards.
Kaspi.KZ
% of Net Assets - 3.1%
Kaspi is the dominant consumer finance, e-commerce, and payments platform in
Kazakhstan. Its super app offers a range of services across merchant and
consumer banking, payments, and marketplace.
Piraeus Financial Holdings
% of Net Assets - 3.1%
Piraeus is a leading Greek retail and commercial bank, which has enjoyed
strong returns driven by fee and loan growth. Asset quality has also improved
in recent years, leading to more resilient financials and supporting dividend
growth going forwards.
Endeavour Mining
% of Net Assets - 3.0%
Endeavour Mining is a prominent gold producer based primarily in West Africa,
with an established presence in key gold producing regions. The company has
substantial gold reserves and resources, which support long-term production
and potential exploration upside, as well as a low-cost base and strong free
cash flow.
Forty Largest Holdings
as at 30 June 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
$’000 % 1 $’000
Long Exposures – shares unless otherwise stated
Taiwan Semiconductor Manufacturing (shares, options and long CFD)
Information Technology 81,697 10.6 73,083
Naspers (shares, options and long CFD)
Consumer Discretionary 68,511 9.0 8,222
Samsung Electronics (shares, options and long CFDs)
Information Technology 30,984 4.0 683
TBC Bank Group (long CFDs)
Financials 29,723 3.9 785
HDFC Bank (shares and long CFD)
Financials 29,644 3.9 26,636
NU Holdings (long CFDs)
Financials 27,265 3.6 2,976
ICICI Bank (long CFD)
Financials 25,805 3.3 422
Kaspi.KZ
Financials 24,075 3.1 24,075
Piraeus Financial Holdings (shares and options)
Financials 23,957 3.1 26,436
Endeavour Mining (shares and CFDs)
Materials 23,112 3.0 (1,147)
Elite Material (long CFD)
Information Technology 20,025 2.5 808
Pan African Resources
Materials 19,266 2.4 19,266
OTP Bank
Financials 18,757 2.3 18,757
Tencent Music Entertainment Group (shares, options and long CFDs)
Communication Services 17,974 2.3 5,390
Five-Star Business Finance
Financials 16,749 2.2 16,749
Auto Partner
Consumer Discretionary 16,704 2.2 16,704
ANTA Sports Products (long CFDs)
Consumer Discretionary 16,338 2.1 26
Cia de Minas Buenaventura (shares and long CFD)
Materials 15,829 2.1 725
Anglogold Ashanti (shares, option and long CFD)
Materials 15,757 2.0 11,907
Trip.com Group (long CFDs)
Consumer Discretionary 15,576 2.0 (788)
Asset Exposure Fair value
$’000 % 1 $’000
Bank Central Asia
Financials 15,303 2.0 15,303
Full Truck Alliance (long CFDs)
Industrials 15,050 2.0 (114)
Grupo Mexico (long CFDs)
Materials 14,636 1.9 470
Inter
Financials 14,209 1.8 14,209
Techtronic Industries (shares and long CFD)
Industrials 14,075 1.8 5,447
Banco BTG Pactual
Financials 13,878 1.8 13,878
Banca Transilvania
Financials 11,310 1.5 11,310
Guaranty Trust Holding
Financials 10,775 1.4 10,775
Standard Bank Group (shares and long CFDs)
Financials 10,753 1.4 397
Chroma ATE
Information Technology 10,497 1.4 10,497
Dodla Dairy
Consumer Staples 10,471 1.4 10,471
Ivanhoe Mines (shares and option)
Materials 10,270 1.3 4,886
Torex Gold Resources
Materials 10,206 1.3 10,206
Eicher Motors
Consumer Discretionary 9,693 1.3 9,693
PPC
Materials 9,624 1.2 9,624
HDFC Asset Management
Financials 9,531 1.2 9,531
OUTsurance Group
Financials 9,296 1.2 9,296
TAV Havalimanlari Holding
Industrials 9,226 1.2 9,226
Galaxy Entertainment Group (long CFD)
Consumer Discretionary 9,163 1.2 210
MakeMyTrip (long CFD and option)
Consumer Discretionary 8,981 1.2 (173)
Forty largest long exposures 764,695 99.1 406,857
Other long exposures 404,161 52.4 309,474
Total long exposures before long futures and hedges (126 companies) 1,168,856 151.5 716,331
Asset Exposure Fair value
$’000 % 1 $’000
Add: long future contracts
Hang Sang China Enterprises Index 10,381 1.3 (78)
Hang Seng Index 3,375 0.5 (3)
FTSE Taiwan Index 3,209 0.4 36
Total long future contracts 16,965 2.2 (45)
Less: hedging exposures
MSCI Emerging Markets Index (future) (160,910) (20.9) (2,808)
Total hedging exposures (160,910) (20.9) (2,808)
Total long exposures after the netting of hedges 1,024,911 132.8 713,478
Add: short exposures
Short CFDs (62 holdings) 180,705 23.4 (603)
Short futures (10 holdings) 28,958 3.8 (942)
Short options (3 holdings) 680 0.1 79
Total short exposures 210,343 27.3 (1,466)
Gross Asset Exposure 2 1,235,254 160.1
Forward currency contracts 71
Portfolio Fair Value 3 712,083
Net current assets (excluding derivative assets and liabilities) 59,545
Total Net Assets 771,628
1 Asset Exposure (as defined in the Glossary of Terms in the Annual Report)
expressed as a percentage of Net Assets.
2 Gross Asset (as defined in the Glossary of Terms in the Annual Report)
Exposure comprises market exposure to investments of $712,861,000 (per Note 10
below) plus market exposure to derivative instruments of $522,393,000. (per
Note 11 in the Annual Report).
3 Portfolio Fair Value comprises investments of $712,861,000 plus derivative
assets of $15,006,000 less derivative liabilities of $15,784,000. (per the
Statement of Financial Position below.
Distribution of the Portfolio
as at 30 June 2025
Sector % of Net Assets % 1 Benchmark Index %
Financials 48.0 24.5
Consumer Discretionary 31.0 12.8
Information Technology 29.9 24.1
Materials 26.9 5.8
Industrials 17.1 6.9
Consumer Staples 7.0 4.5
Communication Services 6.6 9.8
Energy 3.9 4.3
Real Estate 3.8 1.6
Health Care 2.1 3.2
Utilities 1.9 2.6
Investment Funds 0.6 –
Others 2.2 –
Total excluding hedging 181.0 100.0
Hedging (20.9) 0.0
Total including hedging 160.1 100.0
1 Asset Exposure expressed as a percentage of Net Assets.
Country % of Net Assets % 1 Benchmark Index %
Taiwan 25.2 18.9
China 21.1 28.4
India 21.0 18.1
South Africa 18.0 3.2
Brazil 9.8 4.4
South Korea 9.6 10.7
Mexico 7.0 2.0
United States of America 5.8 0.0
Kazakhstan 4.9 0.0
Indonesia 4.3 1.2
Hong Kong 4.1 0.0
Poland 4.1 1.1
Georgia 3.9 –
Greece 3.4 0.6
Canada 3.2 0.0
Peru 3.2 0.3
United Kingdom 3.1 0.0
Ivory Coast 3.0 0.0
Hungary 2.5 0.3
United Arab Emirates 2.5 1.6
Vietnam 2.2 0.0
Saudi Arabia 2.0 3.5
Japan 1.8 0.0
Nigeria 1.6 0.0
Thailand 1.5 1.0
Romania 1.5 0.0
Congo 1.3 –
Turkey 1.2 0.5
Macau 1.2 –
Panama 1.1 0.0
Germany 1.0 0.0
Argentina 0.6 0.0
France 0.5 0.0
Zambia 0.5 –
Cameroon 0.3 –
Finland 0.2 0.0
Czech Republic 0.2 0.2
Norway 0.1 0.0
Netherlands 0.1 0.0
Australia 0.1 0.0
Russia 0.1 0.0
Others 2.2 3.9
Total excluding hedging 181.0 100.0
Hedging (20.9) 0.0
Total including hedging 160.1 100.0
1 Asset Exposure expressed as a percentage of Net Assets.
Attribution Analysis
as at 30 June 2025
Ten Highest Contributors to NAV relative return %
Naspers +2.7
Piraeus Financial Holdings +2.2
Lundin Gold +1.6
TBC Bank +1.5
Elite Material +1.3
Headhunter Group +1.3
Pan African Resources +1.1
Guaranty Trust Holding +0.7
Chroma ATE +0.7
Taiwan Semiconductor MFG +0.7
Ten Highest Detractors from NAV relative return %
Kaspi -2.7
Xiaomi -1.1
Alkhorayef Water & PWR Tech -0.8
ASML Holding -0.8
Meren Energy -0.7
Samsonite Group -0.7
Axis Bank -0.7
Ivanhoe Mines -0.7
Short Position -0.7
Tencent Holdings -0.7
Note: Derivative positions are included in the above investment positions.
Source: Fidelity International.
Five Year Record
For the year ended 30 June 2025 2024 2023 2022 2021
Investment Performance
Net asset value per Participating Preference share total return (%) 1 +11.8% +18.7 -2.6 -27.9 +24.8
Share price total return (%)1 +14.0% +22.6 -5.2 -30.0 +30.0
MSCI Emerging Markets Index total return (%) +6.3 +13.2 -2.8 -14.9 +26.4
Assets
Gross asset exposure ($m) 1 1,235.3 1,177.3 1,185.0 1,120.1 1,679.9
Net assets ($m) 771.6 753.4 796.7 796.8 1,699.1
Gross gearing (%) 1 60.1 56.3 48.7 40.6 n/a
Net gearing (%) 1 5.5 4.3 (3.9) (7.6) n/a
Net asset value per Participating Preference Share ($) 1 11.99 10.09 8.75 8.75 13.99
Net asset value per Participating Preference Share (£) 1 8.75 7.98 6.88 7.20 10.13
Share Price data at year end
Share price (£) 7.83 7.03 5.88 6.34 9.19
Discount (%) 1 10.51 11.90 14.61 12.00 9.28
Earnings and Dividends paid
Revenue earnings per Participating Preference Share ($) 2 0.31 0.16 0.22 0.15 0.17
Capital earnings/(Loss) per Participating Preference Share ($) 2 1.52 1.29 (0.06) (5.11) 3.81
Total earnings/(Loss) per Participating Preference Share ($) 2 1.83 1.45 0.16 (4.96) 3.98
Dividend per Participating Preference Share $0.26 $0.20 $0.19 $0.16 $0.18
Ongoing Charges (%) 1 0.83 0.81 0.81 0.60 1.03
1 Alternative Performance Measures. Please see below and the Glossary of
Terms in the Annual Report for further details.
2 Calculated based on weighted average number of participating preference
shares in issue during the year.
Sources: JPMorgan and Datastream
Past performance is not a guide to future returns.
PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES, RISK MANAGEMENT
IIn accordance with the AIC Code, the Board has a robust ongoing 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 that the Company faces. The Audit and Risk Committee
continues to identify any new emerging risks and take any action feasible 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;
• Continued rising geopolitical tensions, including escalation of the
Russia-Ukraine war, Middle East and a deteriorating US-China relationship,
with Taiwan as a potential flashpoint.
• Risks posed by international trade wars and protectionism on economic
growth, the inflationary environment and monetary policies.
• Artificial Intelligence as a differentiator capability and as a
multiplier of existing risks, together with increasing cyber threats.
• The risk of the erratic nature of political decisions leading to
disorderly market behaviour and negatively impacting on investor sentiment.
Change in leadership across the globe towards far right elevates the risks of
change in the status-quo, exacerbates deglobalisation trends.
• Climate change, which remains one of the most critical emerging issues
confronting asset managers and their investors.
The Board notes that the Manager monitors these issues, and has integrated
macro and ESG considerations, including climate change, into the Company’s
investment process. The Board will continue to monitor how this may impact the
Company as a risk, the main risk being the impact on investment valuations.
The Board considers the following as the principal risks and uncertainties
faced by the Company.
Principal Risks Risk Description and Impact Risk Mitigation
Geopolitical Risks, Volatility of Emerging Markets and Market Risks • The economies, currencies and financial markets of a number of developing countries in which the Company invests may be extremely volatile. • Further risks on emerging • The Company’s investments are geographically diversified in order to manage risks from adverse price fluctuations. • Russian securities already held at nil value. • The exposure to any one company is unlikely to exceed 5% of the Company’s net assets at the time the investment is made. • Review of material economic or market changes and major market contingency plans for extreme events. • China’s integration into the global financial system and into global supply chains. • Companies that were solely listed in the US are listing on the HK or mainland markets. • Robust risk governance in place supports risk profile assessment.
markets from high inflation, and challenging financial conditions exacerbated by the war in Ukraine and Middle East. • Market volatility from worsening Chinese/Taiwanese
relations that could prompt the US to intervene amplified by ongoing uncertainty of the foreign policy changes By Trump’s Administration and reciprocal measures globally.
• Emerging markets are less established, and more volatile, than developed markets. They involve higher risks, particularly market, credit, illiquid security, legal,
custody, valuation, and currency risks, and are more likely to experience risks that in developed markets are associated with unusual market conditions. • The Company is
exposed to several geopolitical risks. The geopolitical landscape continues to change globally and is largely shaped by the ongoing effects of war conflicts, tariff wars,
deglobalisation trends and significant supply disruption. The Middle East and Russia are significant net exporters of oil, natural gas and a variety of soft commodities
and supply limitations have fuelled global inflation and economic instability, specifically within Western nations. Macro-economic uncertainty continues to impact Western
investment appetite. • US imposed Executive Orders prohibiting US investments in certain Chinese companies and the passing of the Holding Foreign Companies Accountable
Act (HFCAA). • Rising geopolitical tensions, including contagion of the Ukraine and Middle East crisis or tensions between China and Taiwan into the wider region.
• Regulatory measures impacting sectors such as IT sector or biotech sector and a lingering weakness in the real estate sector. The ongoing trade tensions between the
United States and trading partners and escalation of these tensions, or the escalation of similar tensions between the United States and other countries in which
Portfolio companies operate, could adversely affect the performance of the securities in which the Company invests and the value of the Portfolio. In particular, such
tensions could result in: (i) further trade tariffs being imposed; (ii) further reciprocal trade tariffs being imposed by the impacted countries; and (iii) escalation to
a trade war or (iv) change in foreign policies as reciprocation by the impacted countries. These circumstances could also lead to the imposition of non-tariff barriers to
trade including, in particular, unexpected regulation, economic sanctions, fines, taxes, licence requirements or other measures (including enforcement actions) in
relation to Emerging Markets generally and particularly China, targeted investee companies within the Company’s Portfolio and/or persons operating in the markets. Any
such measures or escalation in trade tensions are likely to have an adverse effect on the operations and supply chains of investee companies within the Portfolio; the
value of the Portfolio; and the Company’s financial condition, returns and prospects, with a consequential adverse effect on the market value of the Shares and on returns
for Shareholders.
Investment Performance & Gearing • The Portfolio Manager may fail to outperform the Benchmark Index over the longer-term. • The Portfolio Manager may fail to use gearing adequately, resulting in a • An investment strategy overseen by the Board to optimise returns. • A well-resourced team of experienced analysts covering the market. • Board scrutiny of the Manager and the ability in extreme circumstances to change the Manager. • The Board sets a limit on gearing and provides oversight of the Manager’s use of gearing.
failure to outperform in a rising market or to underperform in a falling market.
Competition Risks, Marketplace Threats Impacting Business Growth • Risks that external pressures affect the Company’s ability to maintain and grow the business due to the Company operating within an increased consolidation environment • Ongoing review by the Board, Broker and Manager of peer group and industry activity. • Annual review of strategy by the Board, and review by the Board of the strategic direction of the Company on an ongoing basis to ensure it offers a relevant product to shareholders. • Regular review by the board of marketing, public relations and sales activity, and shareholder register.
across the marketplace, which increases competition. In 2024 marketplace threat emerged related to activists’ strategies targeting Investment Companies whilst the
industry is consolidating through M&A activities.
Changes in legislation, taxation or regulation risks • There is increased activity around mergers and acquisitions across the investment company marketplace and alternative investment offerings (including passive vehicles) • The Board monitors tax and regulatory changes at each Board meeting and through active engagement with regulators and trade bodies by the Manager. • The Manager regularly attends regular briefings from key industry bodies. • Regulatory developments are monitored and managed by Fidelity through active lobbying and negotiations as well as a robust change management process.
which could influence the demand for the Company’s shares. • There is a risk of costly shareholder activism in the investment company sector, pursuing goals that may not
be in the interests of most shareholders. There is a risk of the Company not complying with the regulatory requirements of the Guernsey Financial Services Commission, UK
listing rules, corporate governance requirements or local tax requirements that could result in loss of status as an Authorised Closed Ended Investment Scheme, becoming
subject to additional tax charges or to exclusion from trading in particular markets. • Asset Managers are preparing for the 2025 rollout of the CCI (Consumer Composite
Investments) framework which will bring investment companies into scope. In additions, upcoming changes in the updated UK Corporate Governance code changes and the
reforms in the public spending, which may impact the Company.
Business Continuity & Event Management Risks • Business process disruption risk from continued threats of cyberattacks, geopolitical events, outages, fire events and natural disasters, resulting in financial and/or • Fidelity has Business Continuity and Crisis Management Frameworks in place to deal with business disruption and assure operational resilience. • All third-party service providers are subject to a risk-based programme of risk oversight and internal audits by the Manager and their own internal controls reports are received an annual basis and any concerns are investigated.
reputational impact to the Company affecting the functioning of the business. • The Company relies on a number of third-party service providers, principally the
Registrar, Custodian and Depositary who may be subject to cybercrime.
Operational Risk • Financial losses or reputational damage from inadequate or failed internal processes, people and systems or from external parties and events. • Fidelity’s Operational Risk Management Framework is designed to pro-actively prevent, identify and manage operational risks inherent in most activities. • Fidelity uses robust systems and procedures dedicated to its operational processes. Its risk management structure is designed according to the FCA’s three lines of defence model.
Cybercrime and Information Security Risks • Cybersecurity risk from cyberattacks or threats to the functioning of global markets and to the Manager’s own business model, including its and the Company’s outsourced • The risk is monitored by the Board with the help of the Manager’s global cybersecurity team and their extensive Strategic Cyber and Information Security programme and assurances from outsourced suppliers. • The Manager has established a comprehensive framework of information security policies and standards which provide a structured approach to identify, prevent, and respond to information security threats. The framework ensures consistency in our security measures, enhances FIL ability to adapt to evolving/ emerging threats, & compliance with changing regulatory requirements . The Company’s other service providers also have similar measures in place. • Key performance indicators and metrics have been developed by the Manager to monitor the overall efficacy of cybersecurity processes and controls and to further enhance the Manager’s cybersecurity strategy and operational resilience.
suppliers. • Risk of cybercrime such as phishing, remote access threats, extortion, and denial-of-service attacks from highly organised criminal networks and
sophisticated ransomware operators, including threats such as service disruption / extortion attacks (DDoS, ransomware), financial theft and data breaches, Regulatory non
-compliance, reputational damager/loss of customer trust. The threat environment continuing to evolve rapidly, including the heightened potential threat from nation state
backed threat actor due to geo-political tensions from the current wars in Ukraine and Gaza. Ransomware continues to increase globally and is also becoming a supply chain
risk. • Additional risks from the increased use of artificial intelligence (AI).
Level of Discount to Net Asset Value (“NAV”) Risk • Due to the nature of investment companies, the price of the Company’s shares and its discount to NAV are factors which are not completely within the Company’s control. • The Board reviews the discount on a regular basis and has the authority to repurchase shares so shares can trade at a level close to the NAV. • If the NAV total return for the five years ending 30 September 2026 does not exceed the Benchmark Index, the Company will make a tender offer for up to 25% of the shares in issues (excluding shares held in treasury) at that time. • The Board and manager proactively try to raise the Company’s profile through events, presentations, and meetings with stakeholders, combined with regular advertising and content placement on many of the UK’s leading investment websites and in key printed media to reach the broadest possible audience.
• In considering the risk that the discount to NAV poses to shareholder value and returns, both the absolute level of the discount and the amount relative to the
Company’s peer group and the wider market are considered.
Key Person Risk • Loss of the Portfolio Manager or other key individuals could lead to potential performance and/or operational issues. • Succession planning for key dependencies. • Depth of the team within Fidelity. • Experience of the analysts covering the Company’s investments.
Lack of Market Liquidity Risk • Low trading volumes on stock exchanges of less developed markets. • Lack of liquidity from temporary capital controls in certain markets. • Exaggerated fluctuations in • Restrictions on concentration and diversification of the assets in the Company’s portfolio to protect the overall value of the investments and lower risks of lack of liquidity.
the value of investments from low levels of liquidity.
Other risks facing the Company include:
Tax and Regulatory Risks
There is a risk of the Company not complying with the regulatory requirements
of the Guernsey Financial Services Commission, UK listing rules, corporate
governance requirements or local tax requirements that could result in loss of
status as an Authorised Closed Ended Investment Scheme, becoming subject to
additional tax charges or to exclusion from trading in particular markets.
The Board monitors tax and regulatory changes at each Board meeting and
through active engagement with regulators and trade bodies by the Manager.
Viability statement
In accordance with provision 35 of the 2019 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 from an actively managed portfolio made up primarily of
securities and financial instruments providing exposure to emerging market
companies, both listed and unlisted. 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. In making an assessment on the viability of the Company, the
Board has considered the following:
• The ongoing relevance of the investment objective in prevailing market
conditions;
• The Company’s NAV and share price performance;
• The principal and emerging risks and uncertainties facing the Company as
set out above and their potential impact;
• The future demand for the Company’s shares;
• The Company’s share price discount to its NAV;
• The liquidity of the Company’s portfolio;
• Consideration of the continuation vote in 2026;
• The level of income generated by the Company; and
• Future income and expenditure forecasts.
The Company has assumed for the purposes of the viability statement that the
continuation vote in 2026 would be passed. This assumption is based on the
Company’s performance to 30 June 2025 (in absolute terms and versus the
benchmark), the level of discount and informal conversations with
shareholders. Formal feedback from shareholders on the continuation vote will
be sought as part of the preparation of the 2026 financial statements. At this
early stage, the Directors have not been informed by any shareholder that they
would vote against continuation.
The Company’s performance for the five year reporting period to 30 June 2025
lagged the Benchmark Index, with a NAV total return of +16.2%, and a share
price total return of +20.6% compared to the Benchmark Index total return of
+25.9%.
The Board regularly reviews the investment policy and considers whether it
remains appropriate. The Board has concluded that there is a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the next five years based on the
following considerations:
• The Investment Manager’s compliance with the Company’s investment
objective and policy, its investment strategy and asset allocation;
• The fact that the portfolio comprises sufficient readily realisable
securities which can be sold to meet funding requirements if necessary; and
• The ongoing processes for monitoring operating costs and income which are
considered to be reasonable in comparison to the Company’s total assets.
When considering the risk of under-performance, a series of stress tests were
carried out including in particular the effects of any substantial future
falls in investment value on the ability to maintain dividend payments and
repay obligations as and when they arise.
In preparing the Financial Statements, the Board has considered the impact of
regulatory changes and significant market events and how this may affect the
Company. In addition, the Directors’ assessment of the Company’s ability
to operate in the foreseeable future is included in the Going Concern
Statement which is included below.
Promoting the Success of the Company
The Company is not required to comply with the provisions of the UK Companies
Act 2006, but it is a requirement of the AIC Code of Corporate Governance to
report upon Section 172 of this statute irrespective of domicile.
Section 172 recognises that Directors of a company must act in a way they
consider, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the likely consequences of any decision in the
long-term; the need to foster relationships with the Company’s suppliers,
customers and others; the impact of the Company’s operations on the
community and the environment; the desirability of the Company maintaining a
reputation for high standards of business conduct; and the need to act fairly
as between members of the Company.
As an externally managed Investment Company, the Company has no employees or
physical assets, and a number of the Company’s functions are outsourced to
third parties. The key outsourced function is the provision of investment
management services by the Manager, but other professional service providers
support the Company by providing administration, custodian, banking and audit
services. The Board considers the Company’s key stakeholders to be the
existing and potential shareholders, the external appointed Manager and other
third-party professional service providers. The Board considers that the
interest of these stakeholders is aligned with the Company’s objective of
delivering long-term capital growth to investors, in line with the Company’s
stated objective and strategy, while providing the highest standards of legal,
regulatory and commercial conduct.
The Board, with the Portfolio Manager, sets the overall investment strategy
and reviews this regularly. In order to ensure good governance of the Company,
the Board has set various limits on the investments in the portfolio, whether
in the maximum size of individual holdings, the use of derivatives, the level
of gearing and others. These limits and guidelines are regularly monitored and
reviewed and are set out in the Annual Report.
The Board places great importance on communication with shareholders and is
committed to listening to their views. The primary medium through which the
Company communicates with shareholders is through its Annual and Half Year
Financial Reports. Monthly factsheets are also produced. Company related
announcements are released via the Regulatory News Service (‘RNS’) to the
London Stock Exchange. All of the aforementioned information is available on
the Company’s website www.fidelity.co.uk/emergingmarkets. Shareholders may
also communicate with Board members at any time by writing to the Company
Secretary at FIL Investments International, Beech Gate, Millfield Lane,
Tadworth, Surrey KT20 6RP or by email at investmenttrusts@fil.com. The
Portfolio Managers meet with major shareholders, potential investors, stock
market analysts, journalists and other commentators throughout the year. These
communication opportunities help inform the Board in considering how best to
promote the success of the Company over the long-term.
The Board seeks to engage with the Manager and other service providers and
advisers in a constructive and collaborative way, promoting a culture of
strong governance, while encouraging open and constructive debate, in order to
ensure appropriate and regular challenge and evaluation. This aims to enhance
service levels and strengthen relationships with service providers, with a
view to ensuring shareholders’ interests are best served, by maintaining the
highest standards of commercial conduct while keeping cost levels competitive.
Whilst the Company’s direct operations are limited, the Board recognises the
importance of considering the impact of the Company’s investment strategy on
the wider community and environment. The Board believes that a proper
consideration of ESG issues aligns with the Company’s investment objective
to deliver long-term growth in both capital and income, and the Board’s
review of the Manager includes an assessment of their ESG approach.
In addition to ensuring that the Company’s investment objective was being
pursued, key decisions and actions taken by the Directors during the reporting
year, and up to the date of this report, have included:
• Marketing & PR
The Board has continued to be proactive in its efforts to promote the
success of the Company. It has worked closely with the Manager, utilising the
Manager’s extensive marketing capabilities, in combination with the
Company’s appointed stockbrokers, and public relations firm to continue to
execute a comprehensive promotional programme for the Company.
• Discount Control – Share Buybacks
The Company continued a share buyback programme to address the discount to
NAV at which the Company’s shares trade with the ambition that it may
ultimately be maintained in single digits in normal market conditions on a
sustainable basis.
• Dividend
The decision to recommend a dividend of $0.26 per Participating Preference
Share in respect of the year ended 30 June 2025 (2024: $0.20). Shareholders
approved the dividend at the 2025 AGM.
Going Concern
The Financial Statements of the Company have been prepared on a going concern
basis.
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.
The Directors, having considered the liquidity of the Company’s portfolio of
investments (being mainly securities which are readily realisable) stress
testing performed 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 continue in operational existence for the
foreseeable future. The Board has therefore concluded that the Company has
adequate resources to continue to adopt the going concern basis for the period
to 31 October 2026 which is at least twelve months from the date of approval
of the Financial Statements.
The Company, in accordance with the provisions of its Articles of
Incorporation, is subject to a continuation vote by shareholders at the Annual
General Meeting to be held in December 2026. At this stage, the Directors
believe that it is likely shareholders will vote in favour of continuation. As
highlighted in the Chairman’s statement, this conclusion is based on the
Company’s NAV total return performance beating the Index by 5.5 percentage
points for two years running and the share price total return outperformance
of 7.7 percentage points in the year under review and 9.4 percentage points in
the previous year. The Board is encouraged by the growing interest in emerging
markets as an asset class, the relative level of the Company’s discount
versus peers remains good, and the excellent performance of the Fidelity
emerging market open ended fund which replicates the closed end fund, and has
a longer track record, with the same portfolio management team is strong.
Given we are 15 months away from the continuation vote, there is not yet
indications from shareholders on their voting intentions in relation to the
Continuation Vote. The voting intentions of larger shareholders are expected
to be available in the second half of 2026. The Directors have concluded that
despite the continuation vote the preparation of the Financial Statements on a
going concern basis remains appropriate.
The prospects of the Company over a period longer than twelve months can be
found in the Viability Statement above.
Statement of Directors‘ Responsibilities
The Directors are responsible for preparing the Annual Financial Report in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union to meet the requirements of
applicable law and regulations.
Under company law the Directors must not approve the financial statements
unless they are satisfied that taken as a whole, they give a true and fair
view of the state of affairs of the Company and of its profit or loss for that
period. In preparing these financial statements, the Directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
• assess the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Companies
(Guernsey) Law, 2008. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions. The
work carried out by the auditor does not include consideration of the
maintenance and integrity of the website and, accordingly, the auditor accepts
no responsibility for any changes that have occurred to the accounts when they
are presented on the website.
The Directors who hold office at the date of approval of this Directors’
Report confirm that so far as they are aware, there is no relevant audit
information of which the Company’s auditor is unaware, and that each
Director has taken all the steps he/she ought to have taken as a Director to
make himself or herself aware of any relevant audit information and to
establish that the Company’s auditor is aware of that information.
Responsibility statement of the Directors in respect of the Annual Report
The Directors confirm that to the best of their knowledge:
• the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
• the Chairman’s statement, Strategic Report and Portfolio Managers’
Review includes a fair review of the development and performance of the
business and the position of the Company, together with a description of the
principal and emerging risks and uncertainties that the Company faces.
The Directors consider the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Company’s performance, business model and strategy.
There were no instances where the Company is required to make disclosures in
respect of UK Listing Rule 6.6.1 during the financial period under review.
For and on behalf of the Board
Heather Manners
Chairman
3 October 2025
Statement of Comprehensive Income
for the year ended 30 June 2025
Year ended 30 June 2025 Year ended 30 June 2024
Note Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000
Revenue
Investment income 3 22,941 – 22,941 19,284 – 19,284
Derivative income 3 26,855 – 26,855 19,711 – 19,711
Other income 3 631 – 631 1,252 – 1,252
Total income 50,427 – 50,427 40,247 – 40,247
Gains on investments at fair value through profit or loss 10 – 80,979 80,979 – 81,553 81,553
Net gains on derivative instruments 11 – 32,226 32,226 – 35,890 35,890
Foreign exchange losses – (1,475) (1,475) – (1,569) (1,569)
Total income and gains 50,427 111,730 162,157 40,247 115,874 156,121
Expenses
Management fees 4 (863) (3,451) (4,314) (935) (3,741) (4,676)
Other expenses 5 (1,644) – (1,644) (1,631) – (1,631)
Profit before finance costs and taxation 47,920 108,279 156,199 37,681 112,133 149,814
Finance costs 6 (23,704) – (23,704) (21,566) – (21,566)
Profit before taxation 24,216 108,279 132,495 16,115 112,133 128,248
Taxation 7 (2,347) (3,162) (5,509) (2,060) (123) (2,183)
Profit after taxation for the year 21,869 105,117 126,986 14,055 112,010 126,065
Earnings per Participating Preference Share (basic and diluted) 8 $0.31 $1.52 $1.83 $0.16 $1.29 $1.45
The Company does not have any income or expenses that are not included in the
profit after taxation for the year. Accordingly the profit after taxation for
the year is also the total comprehensive income for the year 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 year and all items in the
above statement derive from continuing operations.
The notes form an integral part of these financial statements
Statement of Changes in Equity
for the year ended 30 June 2025
Note Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000
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 14 – (94,701) – (94,701)
Dividend paid to shareholders 9 – – (14,103) (14,103)
Total equity at 30 June 2025 6,291 706,238 59,099 771,628
Note Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000
Total equity at 30 June 2023 6,291 735,860 54,583 796,734
Profit after taxation for the year – 112,010 14,055 126,065
Participating Preference Shares repurchased for cancellation 14 – (127,125) – (127,125)
Participating Preference Shares repurchased into Treasury 14 – (24,923) – (24,923)
Dividend paid to shareholders 9 – – (17,305) (17,305)
Total equity at 30 June 2024 6,291 695,822 51,333 753,446
The notes form an integral part of these financial statements
Statement of Financial Position
as at 30 June 2025
Note 30 June 2025 $’000 30 June 2024 $’000
Non-current assets
Investments at fair value through profit or loss 10 712,861 696,753
Current assets
Derivative assets 11 15,006 25,399
Amounts held at futures clearing houses and brokers 52,521 44,952
Other receivables 12 9,504 8,083
Cash and cash equivalents 9,551 8,794
86,582 87,228
Current liabilities
Derivative liabilities 11 15,784 11,857
Other payables 13 12,031 18,678
27,815 30,535
Net current assets 58,767 56,693
Net assets 771,628 753,446
Equity
Share premium account 15 6,291 6,291
Capital reserve 15 706,238 695,822
Revenue reserve 15 59,099 51,333
Total equity shareholders’ funds 771,628 753,446
Net asset value per Participating Preference Share 16 $11.99 $10.09
The Financial Statements were approved by the Board of Directors of the
Company on 3 October 2025 and signed on its behalf by:
Heather Manners
Chairman
The notes form an integral part of these financial statements
Statement of Cash Flows
for the year ended 30 June 2025
30 June 2025 $’000 30 June 2024 $’000
Operating activities
Cash inflows from dividend income from investments 21,955 22,936
Cash inflows from interest income from investments, cash and collateral balances 633 1,232
Cash inflows from dividend income from derivatives 14,390 7,655
Cash inflows from interest income from derivatives 1,166 2,114
Cash inflow from other income – 20
Cash outflow from taxation paid (4,407) (2,060)
Cash outflow from the purchase of investments (746,980) (695,450)
Cash inflow from the sale of investments 804,105 854,047
Cash inflow from net proceeds from settlement of derivatives 57,520 23,436
Cash outflow from amounts held at futures clearing houses and brokers (7,569) (26,742)
Cash outflow from operating expenses (6,262) (6,217)
Net cash inflow from operating activities 134,551 180,971
Financing activities
Cash outflow from CFD interest paid (19,611) (18,527)
Cash outflow from short CFD dividends paid (3,011) (2,726)
Cash outflow from dividends paid to shareholders (14,103) (17,305)
Cash outflow from repurchase of Participating Preference Shares into Treasury (95,594) (22,982)
Cash outflow from repurchase and cancellation of Participating Preference Shares – (127,125)
Net cash outflow from financing activities (132,319) (188,665)
Net increase/(decrease) in cash at bank 2,232 (7,694)
Cash at bank at the start of the year 8,794 18,057
Effect of foreign exchange movements (1,475) (1,569)
Cash at bank at the end of the year 9,551 8,794
The notes form an integral part of these financial statements
Notes to the Financial Statements
for the year ended 30 June 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.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 3 October 2025.
2. Summary of Material Accounting Policies(a) Basis of preparation
The principal accounting policies applied in the preparation of these
Financial Statements on a going concern basis are set out below. These
policies have been consistently applied to all years presented, unless
otherwise stated. The Company’s Financial Statements, which give a true and
fair view of the assets, liabilities, financial position and profit and loss
of the Company, 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.
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. The Directors have
considered the forthcoming continuation vote, set to take place at the Annual
General Meeting in 2026. This vote will decide whether the Company will
continue its operations beyond that date. Accordingly, the Directors consider
it appropriate to adopt the going concern basis of accounting in preparing
these Financial Statements.
Significant accounting estimates, assumptions and judgements
The preparation of Financial Statements in conformity with IFRS may require
management to make critical accounting judgements, estimates and assumptions
that affect the application of policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from the estimates.
Valuations use observable data to the extent practicable. Changes in any
assumptions could affect the reported fair value of the financial instruments.
The determination of what constitutes observable requires significant
judgement by the Company. The Company considers observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
Determination of fair value of unlisted investments
The key estimate in the Financial Statements is the determination of the fair
value of unlisted investments. This process is overseen by the Manager’s
Fair Value Committee (“FVC”), supported by an external valuer and
Fidelity’s unlisted investments specialist, and is subject to detailed
review and appropriate challenge by the Directors. The valuation of unlisted
investments significantly impacts the financial statements at the Balance
Sheet date. The valuation approach for the fund’s unlisted investments is as
follows:
• Investee Funds: These investments are primarily valued based on the
official valuation statements from the Investee Funds.
• Russian securities: Due to the current market conditions and
restrictions, these securities are valued at nil, reflecting their impaired
status and lack of marketability.
For other potential unlisted securities, when no recent primary or secondary
transaction in the company’s shares has taken place, the fair valuation
process involves estimation using subjective inputs that are unobservable (for
which market data is unavailable). This generic valuation methodology may
include the following estimates:
(i) Selection of Appropriate Comparable Companies: Comparable companies are
chosen based on their business characteristics and growth patterns.
(ii) Selection of a Revenue Metric: Either historical or forecast revenue
metrics may be used.
(iii) Selection of an Illiquidity Discount Factor: This reflects the reduced
liquidity of unlisted companies compared to their listed peers.
(iv) Estimation of Future Exit Likelihood: This involves assessing the
potential for an initial public offering (“IPO”) or a company sale.
(v) Selection of an Industry Benchmark Index: An appropriate index may be
used to assist with the valuation.
(vi) Valuation Adjustments from Milestone Analysis and Future Cash Flows:
This involves incorporating operational success against the business’s
plans/forecasts into the valuation.:
As the valuation outcomes may differ from the fair value estimates a price
sensitivity analysis is provided in Other Price Risk Sensitivity in Note 17 to
illustrate the effect on the Financial Statements of an over or under
estimation of fair value.
The risk of an over or under estimation of fair value is greater when
methodologies are applied using more subjective inputs.
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies
for annual reporting periods beginning on or after 1 January 2027. The new
accounting standard introduces the following key new requirements.
• Entities are required to classify all income and expenses into five
categories in the statement of comprehensive income, namely the operating,
investing, financing, discontinued operations and income tax categories.
Entities are also required to present a newly-defined operating profit
subtotal. Entities’ net profit will not change as a result of applying IFRS
18.
• Management-defined performance measures (MPMs) are disclosed in a single
note in the financial statements.
• Enhanced guidance is provided on how to group information in the
financial statements.
• In addition, all entities are required to use the operating profit
subtotal as the starting point for the statement of cash flows when presenting
operating cash flows under the indirect method.
The Company is still in the process of assessing the impact of the new
accounting standard, particularly with respect to the structure of the
Company’s Statement of Comprehensive Income, the Statement of Cash Flows and
the additional disclosures required for management-defined performance
measures.
(b) Financial instrumentsClassification(i) Assets
The Company classifies its investments based on both the Company’s business
model for managing those financial assets and the contractual cash flow
characteristics of the financial assets. The portfolio of financial assets is
managed and performance is evaluated on a fair value basis. The Company is
primarily focused on fair value information and uses that information to
assess the assets’ performance and to make decisions. The Company has not
taken the option to irrevocably designate any equity securities as fair value
through other comprehensive income. All investments are measured at fair value
through profit or loss. The Company’s investments are included in the
financial assets at fair value through profit and loss line in the Statement
of Financial Position.
(ii) Liabilities
Derivative contracts that have a negative fair value are presented as
derivative financial liabilities at fair value through profit or loss. As
such, the Company classifies all of its investment portfolio as financial
assets or liabilities at fair value through profit or loss. The Company’s
policy requires the Manager and the Board of Directors to evaluate the
information about these financial assets and liabilities on a fair value basis
together with other related financial information.
Recognition/derecognition
The Company recognises a financial asset or a financial liability when, and
only when, it becomes a party to the contractual provisions of the instrument.
Purchases and sales of investments are recognised on their trade date, the
date on which the Company commits to purchase or sell the investment.
Investments are derecognised when the rights to cash flows from the
investments have expired or the Company has transferred substantially all
risks and rewards of ownership. The Company derecognises a financial liability
when the obligation under the liability is discharged, cancelled or expires.
Measurement
Financial assets at fair value through profit and loss are measured initially
at fair value being the transaction price. Transaction costs incurred to
acquire financial assets at fair value through profit or loss are expensed in
the Statement of Comprehensive Income. Transaction costs include fees and
commissions paid to agents, advisers, brokers and dealers. Subsequent to
initial recognition, all financial assets at fair value through profit or
loss are measured at fair value. Gains and losses arising from changes in the
fair value of the ‘financial assets at fair value through profit or loss’
category are presented in the Statement of Comprehensive Income in the year in
which they arise.
The Company includes transaction costs, incidental to the purchase or sale of
investments within Net gains/(losses) on financial assets at fair value
through profit or loss in the capital column of the Statement of Comprehensive
Income and has disclosed them in Note 10.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Securities listed on active markets are valued based on their last bid price
for valuation and financial statement purposes.
Equity linked notes are valued based on the available price of the underlying
asset as at reporting date.
In the normal course of business, the Company may utilise Participatory notes
(‘P Notes’) to gain access to markets that otherwise would not be
allowable as a foreign investor. P Notes are issued by banks or broker-dealers
and allow the Company to gain exposure to local shares in foreign markets.
They are valued based on the last price of the underlying equity at the
valuation date.
The Company’s investment in other funds (‘Investee Funds’) are subject
to the terms and conditions of the respective Investee Fund’s offering
documentation. The investments in Investee Funds are primarily valued based on
the latest available redemption price for such units in each Investee Fund, as
determined by the Investee Funds’ administrators. The Company reviews the
details of the reported information obtained for the Investee Funds and
considers the liquidity of the Investee Fund or its underlying investments,
the value date of the net asset value provided, any restrictions on
redemptions and the basis of the Investee Funds’ accounting. If necessary,
the Company makes adjustments to the net asset value of the Investee Funds to
obtain the best estimate of fair value. The Company may make adjustments to
the value of a security if it has been materially affected by events occurring
before the Company’s NAV calculation but after the close of the primary
markets on which the security is traded. The Company may also make adjustment
to the value of its investments if reliable market quotations are unavailable
due to infrequent trading or if trading in a particular security was halted
during the day and did not resume prior to the Company’s NAV calculation.
In preparing these Financial Statements the Directors have considered the
impact of climate change risk as a principal and as an emerging risk as set
out above, and have concluded that there was no further impact of climate
change to be taken into account as the investments are valued based on market
pricing. In line with IFRS 13 – ”Fair Value Measurement” investments are
valued at fair value, which for the Company are quoted bid prices for
investments in active markets at the Statement of Financial Position date.
Investments which are unlisted are priced using market-based valuation
approaches. All investments therefore reflect the market participants view of
climate change risk on the investments held by the Company.
Derivative instruments
When appropriate, permitted transactions in derivative instruments are used.
Derivative transactions into which the Company may enter include long and
short contracts for difference (“CFDs”), futures contracts and options.
Under IFRS 9 derivatives are classified at fair value through profit or loss
– held for trading, and are initially accounted and measured at fair value
on the date the derivative contract is entered into and subsequently measured
at fair value as follows:
• Long and short CFDs – the difference between the strike price and the
value of the underlying shares in the contract based on exchange traded prices
in an active market;
• Futures contracts – the difference between the contract price and the
quoted traded price in an active market;
• Exchange traded options – valued based on similar instruments or the
quoted traded price in an active market for the contract; and
• Forward currency contracts – valued at the appropriate quoted forward
foreign exchange rate ruling at the Statement of Financial Position date;
• Over the counter options – valued based on indicative quotes received
from independent third party vendors.
Where transactions are used to protect or enhance income, if the circumstances
support this, the income and expenses derived are included in derivative
income in the revenue column of the Statement of Comprehensive Income. Where
such transactions are used to protect or enhance capital, if the circumstances
support this, the income and expenses derived are included in gains/(losses)
on derivative instruments in the capital column of the Statement of
Comprehensive Income. Any positions on such transactions open at the reporting
date are reflected on the Statement of Financial Position at their fair value
within current assets or current liabilities.
Amortised cost measurement
Cash at bank, amounts held at futures clearing houses and brokers and other
receivables are carried at amortised cost using the effective interest method
less any allowance for impairment. Gains and losses are recognised in profit
or loss when the receivables are derecognised or impaired, as well as through
the amortisation process.
Capital gains tax payable and other payables are measured at amortised cost
using the effective interest method. Gains and losses are recognised in profit
or loss when the liabilities are derecognised, as well as through the
amortisation of these liabilities.
(c) Foreign currency translationFunctional and Presentation Currency
The Company maintains its books and records in the currency of its primary
economic environment, known as its functional currency. The Directors have
carefully assessed this environment by considering several factors, including
the currency in which the original capital was raised, the currency used for
past distributions, and the currency in which capital would be returned in the
event of a breakup. The Directors have considered the exposure of underlying
investments to different currencies. These considerations ensure the Financial
Statements accurately reflect the Company’s economic circumstances and
investment exposure.
The Directors believe that US dollars best represent the functional currency
of the Company. The Financial Statements, results and the Statement of
Financial Position of the Company are also expressed in US dollars which is
the presentation currency of the Company and have been rounded to the nearest
thousand unless otherwise stated.
Transactions and balances
Transactions in currencies other than US dollars are recorded at the rates of
exchange prevailing on the date of the transaction. At the end of each
reporting period, monetary items and non-monetary assets and liabilities that
are fair valued and are denominated in foreign currencies are retranslated at
rates prevailing at the end of the reporting period. Gains and losses arising
on translation are included in the Statement of Comprehensive Income for the
year. Foreign exchange gains and losses relating to cash and cash equivalents
are presented in the Statement of Comprehensive Income within ‘Net foreign
exchange gains or losses’. Foreign exchange gains and losses relating to
financial assets at fair value through profit or loss and derivatives are
presented in the Statement of Comprehensive Income within ‘Net gains or
losses on investments’ and ‘Net gains on derivative instruments’
respectively.
(d) Recognition of dividend and interest income
Dividends arising on the Company’s investments are accounted for on an
ex-dividend basis, gross of applicable withholding taxes. Interest on cash at
bank and collateral is accrued on a day-to-day basis using the effective
interest method. Dividends and interest income are recognised in the Statement
of Comprehensive Income.
(e) Income from derivatives
Derivative instrument income received from dividends on long (or payable from
short) CFDs are accounted for on the date on which the right to receive the
payment is established, normally the ex-dividend date. The amount net of
withholding tax is credited (or charged) to the revenue column of the
Statement of Comprehensive Income.
Interest received on CFDs is accounted for on an accruals basis and credited
to the revenue column of the Statement of Comprehensive Income. Interest
received on CFDs represent the finance costs calculated by reference to the
notional value of the CFDs.
(f) Finance costs
Finance costs comprise bank charges and finance costs paid on CFDs, which are
accounted for on an accruals basis, and dividends paid on short CFDs, which
are accounted for on the date on which the obligation to incur the cost is
established, normally the exdividend date. Finance costs are charged in full
to the revenue column of the Statement of Comprehensive Income.
(g) Dividend distribution
Dividend distributions are at the discretion of the Board of Directors. A
dividend is recognised as a liability in the period in which it is approved at
the Annual General Meeting of the shareholders and is recognised in the
Statement of Changes in Equity.
(h) Cash and cash equivalents
Cash comprises current deposits with banks. Cash equivalents are short-term
highly liquid investments that are readily convertible to known amounts of
cash, are subject to an insignificant risk of changes in value, and are held
for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
Bank overdrafts are accounted for as short term liabilities on the Statement
of Financial Position and the interest expense is recorded using the effective
interest rate method. Bank overdrafts are classified as other financial
liabilities
(i) Amounts held at/due to futures clearing houses and brokers
Cash deposits are held in segregated accounts on behalf of brokers as
collateral against open derivative contracts. These are carried at amortised
cost.
(j) Other receivables
Other receivables include amounts receivable on settlement of derivatives,
securities sold pending settlement, accrued income, taxation recoverable and
other debtors and prepayments incurred in the ordinary course of business. If
collection is expected in one year or less they are classified as current
assets. If not, they are presented as non-current assets. Other receivables
are recognised initially at fair value and, where applicable, subsequently
measured at amortised cost using the effective interest rate method and as
reduced by appropriate allowance for estimated irrecoverable amounts.
(k) Other payables
Other payables include amounts payable on settlement of derivatives,
securities purchased pending settlement, investment management fees, amounts
payable for repurchase of shares, finance costs payable and expenses accrued
in the ordinary course of business. Other payables are classified as current
liabilities if payment is due within one year or less. If not, they are
presented as non-current liabilities. Other payables are recognised initially
at fair value and, where applicable, subsequently measured at amortised cost
using the effective interest rate method.
(l) Segment reporting
Operating Segments are reported in a manner consistent with the internal
reporting used by the chief operating decision make (‘CODM’). The CODM,
who is responsible for allocation of resources and assisting performance of
the operating segments, has been identified as the Directors of the Company,
as the Directors are ultimately responsible for investment decisions.
The Company is engaged in a single segment business and, therefore, no
segmental reporting is provided.
(m) Management fees and other expenses
All expenses are accounted for on an accruals basis and are charged to the
Statement of Comprehensive Income.
Expenses are allocated wholly to revenue with the following exceptions:
• Management fees are allocated 20% to revenue and 80% to the capital, in
line with the Board’s expected long-term split of revenue and capital return
from the Company’s investment portfolio; and
• Expenses which are incidental to capital events are charged to capital.
(n) Taxation
The Company currently incurs withholding taxes imposed by certain countries on
investment income and capital gains taxes upon realisation of its investments.
Such income or gains are recorded gross of withholding taxes and capital gains
taxes in the Statement of Comprehensive Income. Withholding taxes and capital
gains taxes are shown as separate items in the Statement of
Comprehensive Income.
In accordance with IAS 12, ‘Income taxes’, the Company is required to
recognise a tax liability when it is probable that the tax laws of foreign
countries require a tax liability to be assessed on the Company’s capital
gains sourced from such foreign country, assuming the relevant taxing
authorities have full knowledge of all the facts and circumstances. The tax
liability is then measured at the amount expected to be paid to the relevant
taxation authorities, using the tax laws and rates that have been enacted or
substantively enacted by the end of the reporting period. There is sometimes
uncertainty about the way enacted tax law is applied to offshore investment
funds. This creates uncertainty about whether or not a tax liability will
ultimately be paid by the Company. Therefore, when measuring any uncertain tax
liabilities, management considers all of the relevant facts and circumstances
available at the time that could influence the likelihood of payment,
including any formal or informal practices of the relevant tax authorities.
(o) Share capital
Participating Preference Shares are not redeemable and there is no obligation
to pay cash or another financial asset to the holder but are entitled to
receive dividends. They are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds net of tax.
(p) Purchase of own shares
The cost of purchases of the Company’s own shares is shown as a reduction in
Shareholders’ Funds. The Company’s net asset value and return per
Participating Preference Share are calculated using the number of shares
outstanding after adjusting for purchases.
(q) Critical accounting estimates and assumptions
As stated in Note 2(a) Basis of Preparation, the preparation of financial
statements, in conformity with IFRS, requires the use of certain critical
accounting estimates. It also requires the Board of Directors to exercise its
judgment in the process of applying the Company’s accounting policies. For
example, the Company may, from time to time, hold financial instruments that
are not quoted in active markets, such as minority holdings in investment and
private equity companies. Fair values of such instruments are determined using
different valuation techniques validated and periodically reviewed by the
Board of Directors.
(r) Capital reserve
The following are transferred to the capital reserve:
• Gains and losses on the disposal of financial assets at fair value
through profit and loss and derivatives instruments;
• Changes in the fair value of financial assets at fair value through
profit and loss and derivative instruments, held at the year end;
• Foreign exchange gains and losses of a capital nature;
• 80% of management fees;
• Dividends receivable which are capital in nature;
• Taxation charged or credited relating to items which are capital in
nature; and
• Other expenses which are capital in nature.
The Company holds 13,225,940 Participating Preference Shares in Treasury which
have been excluded from the net asset value and earnings per participating
preference share calculations from the date of repurchase into treasury.
3. Income
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Investment income
UK dividends 619 362
Overseas dividends 22,320 18,900
UK and overseas scrip dividends – 15
Interest on securities 2 7
22,941 19,284
Derivative income
Dividends received on long CFDs 14,964 8,489
Interest received on CFDs 1,166 2,114
Option income 10,725 9,108
26,855 19,711
Other income
Interest received on cash and collateral 631 1,232
Fee rebate – 20
631 1,252
Total income 50,427 40,247
4. Management Fees
Year ended 30 June 2025 Year ended 30 June 2024
Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000
Management fees 863 3,451 4,314 935 3,741 4,676
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.
Please see information on ongoing charges ratio as presented below.
5. Other expenses
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Allocated to revenue:
Custodian fees 251 415
Directors’ fees 264 263
Directors’ expenses 30 24
Administration fees 216 193
Audit fees 116 106
Legal and professional fees 83 120
Sundry expenses 684 510
1,644 1,631
Administration fees
The Administrator is entitled to receive a fee, payable monthly, based on the
Net Asset Value of the Company and time incurred.
Custodian fee
Under the Custodian Agreement, the Custodian to the Company is entitled to
receive a fee payable monthly, based on the Net Asset Value of the Company.
All custody services are performed by JP Morgan Chase Bank.
The Company also incurs charges and expenses of other organisations with whom
securities are held. The total of all Custodian fees for the year represented
approximately 0.04% (2024: 0.06%) per annum of the average Net Asset Value of
the Company.
6. Finance costs
Year ended 30 June 2025 Year ended 30 June 2024
Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000
Dividends paid on short CFDs 3,506 – 3,506 3,081 – 3,081
Interest paid on CFDs 20,198 – 20,198 18,485 – 18,485
23,704 – 23,704 21,566 – 21,566
7. Taxation
Year ended 30 June 2025 Year ended 30 June 2024
Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000
Capital gains tax – 3,162 3,162 – 123 123
Overseas taxation 2,347 – 2,347 2,060 – 2,060
2,347 3,162 5,509 2,060 123 2,183
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2012. As such, the Company is
only liable to pay a fixed annual fee, currently £1,600 (2024: £1,200).
Income due to the Company is subject to withholding taxes. The Manager
undertakes regular reviews of the tax situation of the Company and believes
that withholding taxes on dividend income and capital gains taxes on capital
gains are currently the material transactions that generate the amounts of tax
payable.
In accordance with IAS 12, ‘Income taxes’, where necessary the Company
provides for deferred taxes on any capital gains/losses on the revaluation of
securities in such jurisdictions where capital gains tax is levied.
The capital gains charge has been calculated on the basis of the tax laws
enacted or substantially enacted at the reporting date in the countries where
the Company’s investments generate taxable income on realisation. The
Manager, on behalf of the Board, periodically evaluates which applicable tax
regulations are subject to interpretation and establishes provisions when
appropriate.
As at 30 June 2025, $2,140,000 capital gains tax provision was recognised in
the Statement of Financial Position (2024: $1,038,000).
8. Earnings per Participating Preference Share
Year ended 30 June 2025 Year ended 30 June 2024
Revenue earnings per Participating Preference Share $0.31 $0.16
Capital earnings per Participating Preference Share $1.52 $1.29
Total earnings per Participating Preference Share (basic and diluted) $1.83 $1.45
The earnings per Participating Preference Share is based on the profit after
taxation for the year divided by the weighted average number of Participating
Preference Shares held outside of Treasury during the year, as shown below:
$’000 $’000
Revenue profit after taxation for the year 21,869 14,055
Capital profit after taxation for the year 105,117 112,010
Total profit after taxation for the year 126,986 126,065
Number Number
Weighted average number of Participating Preference Shares held outside of Treasury 69,485,764 86,936,701
9. Dividends Paid to Shareholders
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Dividend paid
2024 final dividend of 20.0¢ (2023: 19.0¢) per Participating Preference Share 14,103 17,305
Total dividend paid 14,103 17,305
Dividend proposed
2025 final dividend of 26¢ (2024: 20.0¢) per Participating Preference Share 16,729 14,929
Total dividend proposed 16,729 14,929
The Directors have proposed the payment of a final dividend for the year ended
30 June 2025 of 26¢ per Participating Preference Share which is subject to
approval by shareholders at the Annual General Meeting on 1 December 2025 and
has not been included as a liability in these financial statements. The
dividend will be paid on 9 December 2025 to shareholders on the register at
the close of business on 14 November 2025 (ex-dividend date 13 November 2025).
10. Investments at Fair Value through Profit or Loss
30 June 2025 $’000 30 June 2024 $’000
Investments
Equity securities 708,476 687,025
Equity linked notes – 4,555
Debt instruments – 316
Investee funds 4,385 4,857
Total investments 712,861 696,753
Opening book cost 695,828 884,753
Opening unrealised gains/(losses) 925 (106,145)
Opening fair value of investments 696,753 778,608
Movements in the year
Purchases at cost 740,453 692,013
Sales – proceeds (805,324) (855,428)
Gains on investments 80,979 81,553
Amortisation adjustment – 7
Closing fair value 712,861 696,753
Closing book cost 654,401 695,828
Closing unrealised gains 58,460 925
Closing fair value of investments 712,861 696,753
Gains/(losses) on Investments at fair value through profit or loss
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Realised gains/(losses) on investments
Realised gains 103,003 81,933
Realised losses (79,559) (107,443)
Net realised gains/(losses) on investments 23,444 (25,510)
Change in unrealised gains/(losses) on investments
Change in unrealised gains on investments 1 31,166 39,223
Change in unrealised losses on investments 26,369 67,840
Net change in unrealised gains/(losses) on investments 57,535 107,063
Net gains on investments 80,979 81,553
1. The change in unrealised gains/(losses) on investments is calculated as
the difference between the total unrealised investments gains/(losses)
recognised in the Statement of Financial Position at reporting date and the
total unrealised investments gains/(losses) position recognised at the
comparative date.
The Company received $805,324,000 (2024: $855,428,000) from investments at
fair value sold in the year. The book cost of these investments at fair value
when they were purchased was $781,880,000 (2024: $880,938,000). These
investments have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of the investments at
fair value through profit or loss.
Investment transaction costs incurred in the acquisition and disposal of
investments, which are included in the gains on investments at fair value
through profit and loss were as follows:
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Purchases transaction costs 930 1,012
Sales transaction costs 1,081 1,116
2,011 2,128
11. Derivative Instruments
Year ended 30 June 2025 $’000 Year ended 30 June 2024 $’000
Realised gains/(losses) on derivative instruments
Gains on CFDs 194,933 177,604
Gains on futures contracts 30,630 16,178
Gains on options 17,153 18,681
Gains on forward currency contracts 1,881 –
Losses on CFDs (146,864) (141,402)
Losses on futures contracts (31,875) (23,062)
Losses on options (20,472) (23,903)
Losses on forward currency contracts (2,539) –
Net realised gains on derivative instruments 42,847 24,096
Change in unrealised gains/(losses) on derivative instruments 1
Change in unrealised gains on CFDs (7,695) 9,979
Change in unrealised gains on futures contracts 74 (581)
Change in unrealised gains on options (1,835) 4,746
Change in unrealised gains on forward currency contracts (293) 364
Change in unrealised losses on CFDs (2,452) 4,143
Change in unrealised losses on futures contracts (2,248) (1,889)
Change in unrealised losses on options 3,828 (4,968)
Net change in unrealised (losses)/gains on derivative instruments (10,621) 11,794
Net gains on derivative instruments 32,226 35,890
30 June 2025 Fair value $’000 30 June 2024 Fair value $’000
Fair value of derivative instruments recognised on the Statement of Financial Position 2
Derivative instrument assets 15,006 25,399
Derivative instrument liabilities (15,784) (11,857)
(778) 13,542
1. The change in unrealised gains/(losses) on each type of derivative
contract is calculated as the difference between the total unrealised
gains/(losses) on the relevant derivative positions recognised in the
Statement of Financial Position at reporting date and the total unrealised
gains/(losses) on the relevant derivative positions recognised at the
comparative date.
2. The fair value hierarchy of the derivative instruments is shown in Note
17.
30 June 2025 30 June 2024
Fair value $’000 Asset exposure $’000 Fair value $’000 Asset exposure $’000
At the year end the Company held the following derivative instruments
Long CFDs 2,037 433,157 4,751 366,358
Short CFDs (603) 180,705 6,830 170,814
Long futures contracts (45) 16,965 (399) 22,348
Short futures contracts (942) 28,958 (26) 22,831
Short futures contracts (hedging exposure) (2,808) (160,910) (1,196) (148,757)
Long call option contracts 3,865 21,474 5,508 49,080
Short put option contracts 79 680 915 2,269
Short call option contracts – – (1) 37
Short call option contracts (hedging exposure) (827) (10,949) (2,418) (15,110)
Long put option contracts (1,605) 12,313 (786) 10,698
Forward currency contracts 71 – 364 –
(778) 522,393 13,542 480,568
12. Other Receivables
30 June 2025 $’000 30 June 2024 $’000
CFD dividends receivable 2,235 1,661
Securities sold for future settlement 3,389 2,170
Amounts receivable on settlement of derivatives 1,632 3,054
Accrued income 2,166 1,182
Other receivables 82 16
9,504 8,083
13. Other Payables
30 June 2025 $’000 30 June 2024 $’000
CFD interest payable 1,018 431
CFD dividends payable 1,111 616
Securities purchased for future settlement 6,086 12,613
Amounts payable on settlement of derivatives 9 1,182
Management fees 365 335
Custodian fees 45 102
Directors’ fees 66 65
Amounts payable for repurchase of shares held in Treasury 1,048 1,941
Capital gains tax payable 2,140 1,038
Accrued expenses 143 355
12,031 18,678
14. Share Capital
2025 Number of shares 2024 Number of shares
Authorised
Founder shares of no par value 1,000 1,000
Issued
Participating Preference Shares held outside of Treasury
Beginning of the year 74,646,287 91,100,066
Participating Preference Shares repurchased for cancellation – (13,531,881)
Participating Preference Shares repurchased into Treasury (10,304,042) (2,921,898)
End of the year 64,342,245 74,646,287
Participating Preference Shares held in Treasury 1
Beginning of the year 2,921,898 –
Participating Preference Shares repurchased into Treasury 10,304,042 2,921,898
End of the year 13,225,940 2,921,898
Total Participating Preference Shares 77,568,185 77,568,185
1 The ordinary shares held in Treasury carry no rights to vote, to receive a
dividend or to participate in a winding up of the Company.
The costs of the repurchase of shares held in Treasury of $94,701,000 (2024:
$24,923,000) was charged to the capital reserve. There were no shares
repurchased for cancellation during the year (2024: $127,125,000).
The Company may issue an unlimited number of Unclassified 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.
Treasury Shares
As at 30 June 2025, the Company held 13,225,940 shares in Treasury (2024:
2,921,898).
Participating Preference Shares
At the Extraordinary General Meeting of the Company held on 30 October 2009 it
was approved that each Participating Preference Share be divided into ten
Participating Preference Shares. Under The Companies (Guernsey) Law, 2008 (as
amended), the nominal values of the shares were also converted into sterling
and redesignated as no par value shares.
The holders of Participating Preference Shares rank ahead of holders of any
other class of share in issue in a winding up. They have the right to receive
any surplus assets available for distribution. The Participating Preference
Shares confer the right to discretionary dividends declared, and at general
meetings, on a poll, confer the right to one vote in respect of each
Participating Preference Share held. Participating Preference Shares are
classed as equity as they have a residual interest in the assets of the
Company.
All of the above classes of shares are considered as Equity under the
definitions set out in IAS 32, ‘Financial instruments: Disclosure and
presentation’, because the shares are not redeemable and there is no
obligation to pay cash or another financial asset to the holder.
15. Capital and Reserves
Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000
At 1 July 2024 6,291 695,822 51,333 753,446
Net gains on investments at fair value through profit or loss (see Note 10) – 80,979 – 80,979
Net gains on derivative instruments – 32,226 – 32,226
(see Note 11)
Net foreign exchange losses – (1,475) – (1,475)
Management fees (see Note 4) – (3,451) – (3,451)
Capital gains tax (see Note 7) – (3,162) – (3,162)
Participating Preference Shares repurchased into Treasury (see Note 14) – (94,701) – (94,701)
Revenue profit after taxation for the year – – 21,869 21,869
Dividend paid to shareholders (see Note 9) – – (14,103) (14,103)
At 30 June 2025 6,291 706,238 59,099 771,628
Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000
At 1 July 2023 6,291 735,860 54,583 796,734
Net gains on investments at fair value through profit or loss (see Note 10) – 81,553 – 81,553
Net gains on derivative instruments – 35,890 – 35,890
(see Note 11)
Net foreign exchange losses – (1,569) – (1,569)
Management fees (see Note 4) – (3,741) – (3,741)
Capital gains tax (see Note 7) – (123) – (123)
Participating Preference Shares repurchased for cancellation (see Note 14) – (127,125) – (127,125)
Participating Preference Shares repurchased into Treasury (see Note 14) – (24,923) – (24,923)
Revenue profit after taxation for the year – – 14,055 14,055
Dividend paid to shareholders (see Note 9) – – (17,305) (17,305)
At 30 June 2024 6,291 695,822 51,333 753,446
Share Premium
Share Premium is the amount by which the value of shares subscribed for
exceeded their nominal value at the date of issue.
The capital reserve balance at 30 June 2025 includes investment holding gains
of $58,460,000 (2024: gains of $925,000) as detailed in Note 10.
16. Net Asset Value per Participating Preference Share
The calculation of the net asset value per Participating Preference Share is
based on the net assets divided by the number of Participating Preference
Shares held outside of Treasury:
30 June 2025 30 June 2024
Net assets $771,628,000 $753,446,000
Participating Preference Shares held outside of Treasury 64,342,245 74,646,287
Net asset value per Participating Preference Share $11.99 $10.09
17. Financial InstrumentsManagement of risk
The Company’s investing activities in pursuit of its investment objective
involve certain inherent risks. The Board confirms that there is an ongoing
process for identifying, evaluating and managing the risks faced by the
Company. The Board, with the assistance of the Investment Manager, has
developed a risk matrix which, as part of the internal control process,
identifies the risks that the Company faces. Risks are identified and graded
in this process, together with steps taken in mitigation, and are updated and
reviewed on an ongoing basis. Risks identified are shown above.
This Note is incorporated in accordance with IFRS 7: Financial Instruments:
Disclosures and refers to the identification, measurement and management of
risks potentially affecting the value of financial instruments.
The Company’s financial instruments may comprise:
• Equity shares (listed and unlisted), preference shares, equity linked
notes, convertible bonds, rights issues, holdings in investment companies and
private placements;
• Derivative instruments including CFDs, warrants, futures and options
written or purchased on stocks and equity indices and forward currency
contracts; and
• Cash, liquid resources and short-term receivables and payables that arise
from its operation.
The risks identified by IFRS 7 arising from the Company’s financial
instruments are market price risk (which comprises interest rate risk, foreign
currency risk and other price risk), liquidity risk, credit and counterparty
risk and derivative instrument risk. The Board reviews and agrees policies for
managing each of these risks, which are summarised below.
Interest rate risk
The Company has the ability to borrow up to 10% of the Company’s NAV in
order to increase the amount of capital available for investment. The Company
aims to keep its use of an overdraft facility for trading purposes to a
minimum only using a facility to enable settlements. It may also hold interest
bearing securities and cash.
The Company finances its operations through its capital and reserves. In
addition, the Company has gearing through the use of derivative instruments.
The Board imposes limits to ensure gearing levels are appropriate. The Company
is exposed to a financial risk arising as a result of any increases in
interest rates associated with the funding of the derivative instruments.
Interest rate risk exposure
The values of the Company’s financial instruments that are exposed to
movements in interest rates are shown below:
30 June 2025 $’000 30 June 2024 $’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 431,120 361,607
Exposure to financial instruments that earn interest
Short CFDs – exposure plus fair value 180,102 177,644
Debt instrument – 316
Amounts held at futures clearing houses and brokers 52,521 44,952
Cash at bank 9,551 8,794
242,174 231,706
Net exposure to financial instruments that bear interest (188,946) (129,901)
Interest rate risk sensitivity analysis
Based on the financial instruments held and interest rates at the statement of
financial position date, an increase of 1% in interest rates throughout the
year, with all other variables held constant, would have decreased the profit
after taxation for the year and decreased the net assets of the Company by
$1,889,000 (2024: decreased the profit after taxation for the year and
decreased the net assets of the Company by $1,299,000). A decrease of 1% in
interest rates throughout the year would have had an equal but
opposite effect.
Foreign currency risk
The Company invests in financial instruments and enters into transactions
denominated in currencies other than its functional currency. Consequently,
the Company is exposed to risks that the exchange rate of its functional
currency relative to other foreign currencies may change in a manner that has
an adverse effect on the value of that portion of the Company’s assets or
liabilities denominated in currencies other than US dollars (functional
currency) or UK Sterling (the currency in which shares are traded on the
London Stock Exchange).
Three principal areas have been identified where foreign currency risk could
impact the Company:
• Movements in currency exchange rates affecting the value of investments
and derivatives exposures;
• Movements in currency exchange rates affecting short-term timing
differences, for example, between the date when an investment is bought or
sold and the date when settlement of the transaction occurs; and
• Movements in currency exchange rates affecting income received.
Currency exposure of financial assets
The Company’s financial assets comprise of investments, positions on
derivative instruments, short-term debtors and cash equivalents.
Currency exposure of financial liabilities
The Company finances its investment activities through its ordinary share
capital and reserves. The Company’s financial liabilities comprise positions
on derivative instruments and other payables.
The net currency exposure profile of these financial assets/(liabilities) is
shown below:
Currency Investments held at fair value through profit or loss $’000 Asset/ (liabilities) exposure of derivative instruments 1 $’000 Cash, cash equivalents and other receivables/ (payables) 2 $’000 2025 Total foreign currency risk $’000
Brazilian real 40,116 – 213 40,329
Canadian dollar 29,984 24,222 (22) 54,184
Chinese yuan renminbi 15,173 – – 15,173
Euro 26,672 (7,301) 80 19,451
Hong Kong dollar 15,298 104,635 752 120,685
Hungarian forint 19,303 – – 19,303
Indian rupee 108,157 (15,666) 27,173 119,664
Indonesian rupiah 33,375 – – 33,375
Japanese yen – (13,964) (197) (14,161)
Korean won 20,415 (10,485) 5,011 14,941
Mexican peso 41,652 10,191 55 51,898
Nigerian naira 12,067 – 324 12,391
Poland złoty 16,704 (14,578) 13 2,139
Romanian Leu 11,310 – (31) 11,279
Saudi riyal 4,402 – 385 4,787
Sol 8,557 – 1,024 9,581
South African rand 83,832 75,841 (52) 159,621
Sterling – 34,563 861 35,424
Swedish krona – (10,825) 108 (10,717)
Taiwan dollar 127,956 – 478 128,434
Turkish lira 9,226 – – 9,226
United Arab Emirates dirham 19,003 – – 19,003
United States dollar 52,796 (73,794) 22,061 1,063
Vietnamese dong 16,863 – 1,304 18,167
Other currencies – (2,099) 5 (2,094)
712,861 100,740 59,545 873,146
1 The asset exposure of long and short derivative positions is after the
netting of hedging exposures;
2 Other receivables/(payables) include amounts held at futures clearing houses
and brokers.
Currency Investments held at fair value through profit or loss $’000 Asset/ (liabilities) exposure of derivative instruments 1 $’000 Cash, cash equivalents and other receivables/ (payables) 2 $’000 2024 Total foreign currency risk $’000
Australian dollar 3,594 (4,012) (35) (453)
Brazilian real 44,315 – (275) 44,040
Canadian dollar 25,805 9,545 (17) 35,333
Euro 16,125 21,793 (28) 37,890
Hong Kong dollar 40,623 108,530 (1,395) 147,758
Hungarian forint 10,536 – – 10,536
Indian rupee 77,447 (17,942) 25,903 85,408
Indonesian rupiah 28,009 – – 28,009
Japanese yen – (25,855) (97) (25,952)
Korean won 20,102 (7,027) 1,325 14,400
Mexican peso 33,824 23,248 (49) 57,023
Poland złoty 13,899 (16,346) (351) (2,798)
Saudi riyal 36,888 – 385 37,273
South African rand 85,394 2,518 (9) 87,903
Sterling 4,465 16,082 (985) 19,562
Swedish krona – 8,450 (12) 8,438
Taiwan dollar 115,039 – 395 115,434
United Arab Emirates dirham 16,671 – – 16,671
United States dollar 65,389 (29,581) 18,432 54,240
Vietnamese dong 20,480 – – 20,480
Other currencies 38,148 (374) (36) 37,738
696,753 89,029 43,151 828,933
1 The asset exposure of long and short derivative positions is after the
netting of hedging exposures;
2 Cash at bank and other receivables/(payables) include amounts held at
futures clearing houses and brokers.
Foreign currency risk management
The degree of sensitivity of the Company’s assets to foreign currency risk
depends on the net exposure of the Company to each specific currency and the
volatility of that specific currency in the year. At 30 June 2025, had the
average exchange rate of the US dollar weakened by a reasonable possible
movement of 5% (2024: 5%) in relation to the basket of currencies in which the
Company’s net assets are denominated, weighted by the Company’s exposure
to each currency with all other variables held constant, the Company estimates
the profit after taxation for the year would have increased and net assets
would have increased by $43,492,000 (2024: increased the profit after taxation
for the year and increased the net assets of the Company by $38,735,000).
A strengthening of the US dollar by 5% in relation to the basket of currencies
in which the Company’s net assets are denominated would have resulted in a
decline in net assets by the same amount, under the assumption that all other
factors remain constant.
The Investment Manager does not consider it realistic or useful to examine
foreign currency risk in isolation. The Investment Manager considers the
standard deviation of the Net Asset Value (which is struck in US dollars) as
the appropriate risk measurement for the portfolio as a whole as it reflects
market price risk generally. Please also see Market Price Risk section.
Market price risk
Market price risk is the risk that value of the instrument will experience
unanticipated fluctuations as a result of changes in market prices (other than
those arising from foreign currency risk and interest rate risk), whether
caused by factors specific to an individual investment, its issuer, or all
factors influencing all instruments traded in the market.
Market price risk management
Market price risk can be moderated in a number of ways by the Investment
Manager through:
(i) a disciplined stock selection and investment process; and
(ii) limitation of exposure to a single investment through diversification
and through amongst others, the implementation of investment restrictions.
The Board reviews the prices of the portfolio’s holdings and investment
performance at their meetings. Country and Sector Exposure of the Portfolio
and Forty Largest Holdings illustrate the Company’s portfolio at the end of
reporting period reflects the diversified strategy.
The Investment Manager has identified the MSCI Emerging Markets Index as a
relevant reference point for the markets in which it operates. However, the
Investment Manager does not manage the Company’s investment strategy to
track the MSCI Emerging Markets Index or any other index or benchmark. The
short-term performance of the Company and its correlation to the MSCI Emerging
Markets Index is shown in the Financial Highlights section and is expected to
change over time.
Market price risk – Investee Funds
The Company’s investments in Investee Funds are subject to the terms and
conditions of the respective Investee Fund’s offering documentation and are
susceptible to market price risk arising from uncertainties about future
values of those Investee Funds. The Investment Manager makes investment
decisions after extensive due diligence of the underlying fund, its strategy
and the overall quality of the underlying fund’s manager. All of the
Investee Funds in the investment portfolio are managed by portfolio managers
who are compensated by the respective Investee Funds for their services. Such
compensation generally consists of an asset based fee and a performance based
incentive fee and is reflected in the valuation of the Company’s investment
in each of the Investee Funds.
The exposure to investments in Investee Funds at fair value is disclosed as
part of Note below. These investments are included in ‘Investments at fair
value through profit or loss’ in the Statement of Financial Position. The
Company’s maximum exposure to loss from its interests in Investee Funds is
equal to the total fair value of its investments in Investee Funds.
Total purchases in Investee Funds amounted $nil (2024: $nil). Total sales
amounted to $1,138,000 (2024: $1,310,000). As at 30 June 2025 and 2024 there
were no capital commitment obligations and no amounts due to Investee Funds
for unsettled purchases.
Other price risk
Other price risk arises mainly from uncertainty about future prices of
financial instruments. It represents the potential loss the Company might
suffer through price movements in its investment positions. The Board meets
quarterly to consider the asset allocation of the portfolio and the risk
associated with particular industry sectors within the parameters of the
investment objective.
The Investment Manager is responsible for actively monitoring the portfolio
selected in accordance with the overall asset allocation parameters and seeks
to ensure that individual stocks also meet an acceptable risk/reward profile.
Other price risks arising from derivative positions, mainly due to the
underlying exposures, are assessed by the Investment Manager’s specialist
derivative instruments team.
Other price risk sensitivity
The following table illustrates the sensitivity of loss after taxation for the
year and net assets to an increase or decrease of 10% (2024: 10%) in the fair
value of investments. This level of change is considered to be a reasonable
illustration based on observation of current market conditions. The
sensitivity analysis is based on investments with all other variables
held constant.
The other price sensitivity analysis is based on the valuation of investments
directly held by the Company. For underlying investment funds this is based on
the net assets of such underlying funds as included in the Company’s
portfolio of investments at reporting date.
The value of certain investments, in particular positions held in underlying
funds may vary due to currency, interest rate and credit risks and such risks
are not directly considered in the other price risk sensitivity analysis.
Effect of a 10% increase/(decrease) in fair value:
2025 2024
10% increase in fair value $’000 10% decrease in fair value $’000 10% increase in fair value $’000 10% decrease in fair value $’000
Statement of Comprehensive Income – profit
after taxation
Total profit after taxation for the year 71,286 (71,286) 69,644 (69,644)
Net assets 71,286 (71,286) 69,644 (69,644)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in
meeting obligations associated with financial liabilities. The Company’s
assets mainly comprise readily realisable securities and derivative
instruments which can be sold easily to meet funding commitments if necessary.
Short-term flexibility is achieved by the use of a bank overdraft, if
required.
The liquidity risk profile of the Company was as follows:
30 June 2025 $’000 30 June 2024 $’000
Amounts due within one month
Securities purchased for future settlement 6,086 12,613
Amounts payable for repurchase of shares held in Treasury 1,048 1,941
Amounts payable on settlement of derivatives 9 1,182
Derivative liabilities 10,773 8,377
CFD interest payable 1,018 431
CFD dividends payable 1,111 616
Custodian fees 45 102
Management fees 365 335
Directors’ fees 66 65
Accrued expenses 143 355
Amounts due within one year
Derivative liabilities 5,011 3,480
Capital gains tax payable 2,140 1,038
Total liabilities 27,815 30,535
Liquidity risk management
The restrictions on concentration and the diversification requirements
detailed above (see market price risk) also serve normally to protect the
overall value of the Company from the risks created by the lower level of
liquidity in the markets in which the Company operates.
The Company has no payables past their due dates as at 30 June 2025 (2024:
nil).
Credit and counterparty risk
Credit risk is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment it has entered into with the
Company. Financial instruments may be adversely affected if any of the
institutions with which money is deposited suffer insolvency or other
financial difficulties. All transactions are carried out with brokers that
have been approved by the Investment Manager and are settled on a delivery
versus payment basis. Limits are set on the amount that may be due from any
one broker and are kept under review by the Investment Manager. Exposure to
credit risk arises on outstanding security transactions and derivative
instrument contracts and cash at bank. The Company only engages with approved
counterparties that are rated investment grade or above.
The Company has no receivables past their due dates as at 30 June 2025 (2024:
nil).
Credit risk management
Certain derivative instruments in which the Company may invest are not traded
on an exchange but instead will be traded between counterparties based on
contractual relationships, under the terms outlined in the International Swaps
and Derivatives Association’s (“ISDA”) market standard derivative legal
documentation. These are known as Over The Counter (“OTC”) trades. As a
result, the Company is subject to the risk that a counterparty may not perform
its obligations under the related contract. In accordance with the risk
management process which the Investment Manager employs, this risk is
minimised by only entering into transactions with counterparties which are
believed to have an adequate credit rating at the time the transaction is
entered into, by ensuring that formal legal agreements covering the terms of
the contract are entered into in advance, and through adopting a counterparty
risk framework which measures, monitors and manages counterparty risk by the
use of internal and external credit agency ratings and evaluates derivative
instrument credit risk exposure.
The maximum exposure to credit risk as at 30 June is the carrying amount of
the financial assets as set out below.
30 June 2025 Amounts due within 1 year $’000 30 June 2024 Amounts due within 1 year $’000
Derivative assets 15,006 25,399
Debt instruments – 316
Securities sold for future settlement 3,389 2,170
Amounts receivable on settlement of derivatives 1,632 3,054
Amounts held at futures clearing houses and brokers 52,521 44,952
Cash and cash equivalents 9,551 8,794
CFD dividends receivable 2,235 1,661
Accrued income 2,166 1,182
Other receivables 82 16
86,582 87,544
None of these assets are impaired nor past due but not impaired.
The Company primarily engages with counterparties that have strong credit
ratings and a proven track record of financial stability, thereby minimising
the risk of default. The creditworthiness of its counterparties and investment
positions are reviewed on a regular basis. On this basis the Company has
assessed the credit risk associated with its financial assets and concluded
that the likelihood of credit losses is minimal, and therefore, no provisions
for expected credit losses have been made.
For OTC and exchange traded derivative transactions, collateral is used to
reduce the risk of both parties to the contract. Collateral is managed on a
daily basis for all relevant transactions and held in segregated collateral
accounts. Collateral can be held by brokers on behalf of the Company to reduce
the credit risk exposure of the Company or held by the Company on behalf of
brokers to reduce the credit risk exposure of the brokers. All collateral
received or pledged at reporting date is in form of cash. The value of
collateral received from brokers and pledged to brokers is shown below:
30 June 2025 30 June 2024
collateral received $’000 collateral pledged $’000 collateral received $’000 collateral pledged $’000
Bank of America Merrill Lynch International – 410 – –
Goldman Sachs International Ltd 4,890 – 6,440 –
J.P. Morgan Securities plc – 970 5,290 –
Morgan Stanley & Co. International Ltd – 640 – 530
HSBC Bank plc 380 – 790 –
UBS AG 430 50,501 2,300 44,422
5,700 52,521 14,820 44,952
Derivative instrument risk
The risks and risk management processes which result from the use of
derivative instruments, are set out in the Risk Management Process document.
This document was approved by the Board and allows the use of derivative
instruments for the following purposes:
• to gain exposure to equity markets, sectors or individual investments;
• to hedge equity market risk in the Company’s investments with the
intention of mitigating losses in the events market falls;
• to enhance portfolio returns by writing call and put options; and
• to take short positions in equity markets, sectors or individual
investments which would benefit from a fall in the relevant market price,
where the Investment Manager believes the investment is overvalued. These
positions distinguish themselves from other short exposures held for hedging
purposes since they are expected to add risk to the portfolio.
The risk and investment performance of these instruments are managed by an
experienced, specialist derivative team of the Investment Manager using
portfolio risk assessment tools for portfolio construction.
Derivative instruments exposure sensitivity analysis
The Company invests in derivative instruments to gain or reduce exposure to
the equity market. An increase of 10% in the share prices of the investments
underlying the derivative instruments at the reporting date would have
increased the profit after taxation for the year and increased the net assets
of the Company by $10,074,000 (2024: increased the profit after taxation for
the year and increased the net assets of the Company by by $8,903,000). A
decrease of 10% in share prices of the investments underlying the derivative
instruments would have had an equal but opposite effect.
Offsetting
To mitigate counterparty risk for OTC derivative transactions, the ISDA legal
documentation is in the form of a master agreement between the Company and the
brokers. This allows enforceable netting arrangements in the event of a
default or termination event. Derivative instrument assets and liabilities
that are subject to netting arrangements have not been offset in preparing the
Statement of Financial Position.
The Company’s derivative instrument financial assets and liabilities
recognised in the Statement of Financial Position and amounts that could be
subject to netting in the event of a default or termination are shown below:
Financial assets Gross amount $’000 Gross amount of recognised financial liabilities set off on the statement of financial position $’000 Net amount of financial assets presented on the statement of financial position $’000 Related amounts not set 2025
off on statement of
financial position
Financial instruments $’000 Margin account received as collateral $’000 Net amount $’000
CFDs 10,649 – 10,649 (8,072) (810) 1,767
Options 3,944 – 3,944 (1,900) – 2,044
Futures contracts 342 – 342 (342) – –
Forward currency contracts 15,188 (15,117) 71 – – 71
30,123 (15,117) 15,006 (10,314) (810) 3,882
Financial assets Gross amount $’000 Gross amount of recognised financial assets set off on the statement of financial position $’000 Net amount of financial liabilities presented on the statement of financial position $’000 Related amounts not set 2025
off on statement of
financial position
Financial instruments $’000 Margin account pledged as collateral $’000 Net amount $’000
CFDs (9,215) – (9,215) 8,072 640 (503)
Options (2,432) – (2,432) 1,900 – (532)
Futures contracts (4,137) – (4,137) 342 3,795 –
Forward currency contracts (15,117) 15,117 – – – –
(30,901) 15,117 (15,784) 10,314 4,435 (1,035)
Financial assets Gross amount $’000 Gross amount of recognised financial liabilities set off on the statement of financial position $’000 Net amount of financial assets presented on the statement of financial position $’000 Related amounts not set 2025
off on statement of
financial position
Financial instruments $’000 Margin account received as collateral $’000 Net amount $’000
CFDs 18,344 – 18,344 (6,763) (9,169) 2,412
Options 6,423 – 6,423 (1,209) – 5,214
Futures contracts 268 – 268 (268) – –
Forward currency contracts 11,801 (11,437) 364 – – 364
36,836 (11,437) 25,399 (8,240) (9,169) 7,990
Financial assets Gross amount $’000 Gross amount of recognised financial assets set off on the statement of financial position $’000 Net amount of financial liabilities presented on the statement of financial position $’000 Related amounts not set 2025
off on statement of
financial position
Financial instruments $’000 Margin account pledged as collateral $’000 Net amount $’000
CFDs (6,763) – (6,763) 6,763 – –
Options (3,205) – (3,205) 1,209 – (1,996)
Futures contracts (1,889) – (1,889) 268 1,621 –
Forward currency contracts (11,437) 11,437 – – – –
(23,294) 11,437 (11,857) 8,240 1,621 (1,996)
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 valuation techniques used by the Company are explained in
Note 2(b). The table below sets out the Company’s fair value hierarchy.
Financial assets at fair value through profit or loss Level 1 $’000 Level 2 $’000 Level 3 $’000 30 June 2025 Total $’000
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 – Forwards – 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
Financial instruments classified under Level 2 are 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. The Level 2 instruments include equity linked notes, futures
contracts, over the counter options and contracts for difference.
Financial assets at fair value through profit or loss Level 1 $’000 Level 2 $’000 Level 3 $’000 30 June 2024 Total $’000
Investments in equity securities 686,519 – 506 687,025
Equity linked notes – 4,555 – 4,555
Debt instruments – 316 – 316
Investee funds – – 4,857 4,857
Derivative instrument assets – futures contracts 268 – – 268
Derivative instrument assets – options 6,412 11 – 6,423
Derivative instrument assets – CFDs – 18,344 – 18,344
Derivative instrument assets – forward currency contracts – 364 – 364
693,199 23,590 5,363 722,152
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – futures contracts 1,889 – – 1,889
Derivative instrument liabilities – options 1,198 2,007 – 3,205
Derivative instrument liabilities – CFDs – 6,763 – 6,763
3,087 8,770 – 11,857
Valuation basis for Level 3 investments 30 June 2025 $’000 30 June 2024 $’000
Net asset value 4,385 4,857
Most recently available published price adjusted – 506
4,385 5,363
As the key input into the valuation of Level 3 investments is official
valuation statements from the investee funds and the adjusted most recently
available published price, 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.
The following table summarises the change in value associated with Level 3
financial instruments carried at fair value during the year:
Movements in level 3 investments during the year 30 June 2025 Level 3 $’000 30 June 2024 Level 3 $’000
Opening balance 5,363 6,115
Sales (1,138) (8,384)
Transfers to Level 1 (1,466) –
Realised gains (7,589) (19,431)
Net change in unrealised gains 9,215 27,063
Closing balance 4,385 5,363
During the year ended 30 June 2024, the Company participated in a tender offer
which was being undertaken in Detsky Mir’s restructuring from being a public
listed company to a private company. The Company’s application was
successful and it received proceeds of RUB 300.5 million, (approx. $3.1
million based on exchange rates at that time).
During the year ended 30 June 2024, the Company sold its position in TCS Group
Holding Plc by means of a secondary market transaction. The Manager granted
the attestations required to ensure the proceeds from the sale were available
to the Company and it received proceeds of $4 million.
The Company’s holdings in Russian securities have been fair valued at $nil
as at 30 June 2025 (2024: $nil) as a result of trading being suspended on
international stock exchanges. These Russian securities have an acquisition
cost of $90,932,976 as at 30 June 2025 (2024: $90,932,976).
The Company’s policy is to recognise transfers in and transfers out of the
fair value hierarchy level at the end of each accounting period. Financial
assets or liabilities measured at fair value are reclassified between levels
of the fair value hierarchy when changes in the valuation methodology justify
a different classification.
Capital Risk Management
The capital of the Company is represented by the equity attributable to
holders of Participating Preference Shares. The amount of equity attributable
to holders of Participating Preference Shares is subject to change, at most,
twice monthly as the Company is a closed-ended fund with the ability to issue
additional shares only if certain conditions are met as set out in the
Company’s scheme particulars. The Company’s objective when managing
capital is to safeguard the Company’s ability to continue as a going concern
in order to provide returns for shareholders and to maintain a strong capital
base to support the development of the investment activities of the Company.
18. Capital Resources and Gearing
The Company does not have any externally imposed capital requirements. The
financial resources of the Company comprise its share capital, reserves and
gearing, which are disclosed on the Statement of Financial Position. The
Company is managed in accordance with its investment policy and in pursuit of
its investment objective, both of which are detailed in the Strategic Report.
The principal risks and their management are disclosed above.
The Company’s gearing at the year end is set out below:
30 June 2025
Gross gearing Net gearing
Exposure $’000 % 1 Exposure $’000 % 1
Investments 712,861 92.4 712,861 92.4
Long CFDs 433,157 56.1 433,157 56.1
Long futures contract 16,965 2.2 16,965 2.2
Long call options 21,474 2.8 21,474 2.8
Long put options 12,313 1.6 12,313 1.6
Total long exposures before hedges 3 1,196,770 155.1 1,196,770 155.1
Less: Hedged futures contract exposures (160,910) (20.9) (160,910) (20.9)
Less: Hedged option exposures (10,949) (1.4) (10,949) (1.4)
Total long exposures after the netting of hedges 1,024,911 132.8 1,024,911 132.8
Short CFDs 180,705 23.4 (180,705) (23.4)
Short futures contract 28,958 3.8 (28,958) (3.8)
Short put options 680 0.1 (680) (0.1)
Gross Asset Exposure/net exposure 1,235,254 160.1 814,568 105.5
Net Assets 771,628 771,628
Gearing 2 60.1% 5.5%
1 Exposure to the market expressed as a percentage of Net Assets per the
Statement of Financial Position.
2 Gearing is the amount by which Gross Asset Exposure/net exposure exceeds Net
Assets expressed as a percentage of Net Assets.
3 Hedges as defined within the Glossary in the Annual Report.
30 June 2024
Gross gearing Net gearing
Exposure $’000 % 1 Exposure $’000 % 1
Investments 696,753 92.5 696,753 92.5
Long CFDs 366,358 48.6 366,358 48.6
Long futures contract 22,348 3.0 22,348 3.0
Long put options 10,698 1.4 10,698 1.4
Long call options 49,080 6.5 49,080 6.5
Total long exposures before hedges 1,145,237 152.0 1,145,237 152.0
Less: Hedged futures contract exposures (148,757) (19.7) (148,757) (19.7)
Less: Hedged option exposures (15,110) (2.0) (15,110) (2.0)
Total long exposures after the netting of hedges 981,370 130.3 981,370 130.3
Short CFDs 170,814 22.7 (170,814) (22.7)
Short futures contract 22,831 3.0 (22,831) (3.0)
Short put options 2,269 0.3 (2,269) (0.3)
Short call options 37 – (37) –
Gross Asset Exposure/net exposure 1,177,321 156.3 785,419 104.3
Net Assets 753,446 753,446
Gearing 2 56.3% 4.3%
1 Exposure to the market expressed as a percentage of Net Assets per the
Statement of Financial Position.
2 Gearing is the amount by which Gross Asset Exposure/net exposure exceeds Net
Assets expressed as a percentage of Net Assets.
19. Transactions with the Managers 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 4. During the year,
the Company had the following transactions payable to FII:
30 June 2025 $’000 30 June 2024 $’000
Portfolio management services 4,314 4,676
Marketing services 334 269
At the year end, the following balances were accrued and outstanding to FII.
These balances are included within the other payables figure in Note 13.
30 June 2025 $’000 30 June 2024 $’000
Portfolio management services 365 335
Marketing services 43 57
As at 30 June 2025, the Board consisted of five non-executive Directors all of
whom are considered to be independent by the Board. None of the Directors has
a service contract with the Company.
At the date of this report, the Board consisted of five non-executive
Directors 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 from 1 July 2024 is as follows:
Role 1 July 2024 £
Chairman 52,000
Senior Independent Director 39,500
Chair of the Audit Committee 39,500
Director 37,500
Directors’ Shareholdings:
30 June 2025
Heather Manners 10,000
Torsten Koster 15,000
Dr Simon Colson 4,416
Katherine Tsang 8,000
Mark Little 2,850
The Directors received for the financial year fees totalling $263,694, (2024:
$262,641). The breakdown of the fees and related party interests is shown in
the Directors’ Remuneration Report in the Annual Report. Directors’
expenses for the year, as stated in Note 5, include travelling, hotel and
other expenses which the Directors are entitled to when properly incurred by
them in travelling to, attending and returning from meetings and while on
other business of the Company.
20. Ultimate Controlling Party
In the opinion of the Directors on the basis of the shareholdings advised to
them, the Company has no immediate or ultimate controlling party.
21. Segment Information
The Directors, after having considered the way in which internal reporting is
provided to them, are of the opinion that the Company continues to be engaged
in a single segment of business, being the provision of a diversified
portfolio of investments in emerging markets.
All of the Company’s activities are interrelated, and each activity is
dependant on the others. Accordingly, all significant operating decisions are
based upon analysis of the Company operating in one segment.
The financial positions and results from this segment are equivalent to those
per the financial statements of the Company as a whole, as internal reports
are prepared on a consistent basis in accordance with the measurement and
recognition principles of IFRS.
A breakdown of the Company’s financial assets at fair value through profit
and loss is shown in the Country exposure of the Company’s portfolio shown
above.
The Company is domiciled in Guernsey. All of the Company’s income from
investment is from entities in countries or jurisdictions other than Guernsey.
22. Subsequent events
On 2 September 2025, the Company announced a conditional share repurchase
agreement with Strathclyde Pension Fund, subject to shareholder approval. The
agreement involves the purchase of Strathclyde’s entire holding of
16,441,177 Participating Preference Shares, representing 25.7% of the
Company’s voting share capital. The completion of this repurchase is
expected in early November 2025, contingent upon approval at an Extraordinary
General Meeting. Major shareholders have indicated their support for this
transaction, which the Board believes will benefit ongoing shareholders.
No other significant events have occurred since the end of the reporting date
which would impact on the financial position of the Company disclosed in the
Statement of Financial Position as at 30 June 2025 or on the financial
performance and cash flows of the Company for the year ended on that date.
Alternative Performance MeasuresActive Share
Active Share is a measure of the percentage which stock holdings in the
Company differ from the constituents of the benchmark, the MSCI Emerging
Markets Index. Active share is calculated by taking the sum of the absolute
difference between the weights of the holdings in the Company and those in the
MSCI Emerging Markets Index and dividing the result by two. See The Year at a
Glance inside the front cover of this report for further details.
Discount/Premium
The discount/premium is considered to be an Alternative Performance Measure.
It is the difference between the NAV of the Company and the share price and is
expressed as a percentage of the NAV. Details of the Company’s discount are
on the Financial Highlights above.
Gearing
Gearing is considered to be an Alternative Performance Measure. See Note 18
above for details of the Company’s gearing.
Net Asset Value (“NAV”) per Participating Preference Share
The NAV per Participating Preference Share is considered to be an Alternative
Performance Measure. See the Statement of Financial Position and Note 16 above
for further details.
Ongoing charges ratio
Ongoing charges ratio is considered to be an Alternative Performance Measure.
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of management fees and other expenses expressed
as a percentage of the average net assets throughout the year.
30 June 2025 30 June 2024
Management fees ($’000) 4,314 4,676
Other expenses ($’000) 1,644 1,631
Ongoing charges ($’000) 5,958 6,307
Average net assets ($’000) 715,976 782,365
Ongoing charges ratio 0.83% 0.81%
Total Return Performance
Total return performance is considered to be an Alternative Performance
Measure (as defined in the Glossary to the Annual Report). NAV per share total
return includes reinvestment of the dividend in the NAV of the Company on the
ex-dividend date. Share price total return includes the reinvestment of the
net dividend in the month that the share price goes ex-dividend.
The tables below provide information relating to the NAV per share and share
prices of the Company, the impact of the dividend reinvestments and the total
returns for the years ended 30 June 2025 and 30 June 2024.
2025 Net asset value per share Share price
30 June 2024 798.47p 703.00p
30 June 2025 875.15p 783.00p
Change in the year +9.6% +11.4%
Impact of dividend reinvestment 2.0% 2.3%
Total return for the year +11.8% +14.0%
2024 Net asset value per share Share price
30 June 2023 687.91p 587.50p
30 June 2024 798.47p 703.00p
Change in the year +16.1% +19.7%
Impact of dividend reinvestment 2.6% 2.9%
Total return for the year +18.7% +22.6%
END
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