REG-Fidelity European Trust Plc: Half-year Report
04/09/2025 07:02
FIDELITY EUROPEAN TRUST PLC
Half-Yearly Results for the six months ended 30 June 2025 (unaudited)
Financial Highlights:
* The Board of Fidelity European Trust PLC (the “Company”) declares an
interim dividend of 3.90 pence per share, an increase of 8.3% on the prior
year.
* During the six months ended 30 June 2025, Fidelity European Trust PLC
reported a total share price return of +16.7%, while the Benchmark Index, the
FTSE World Europe ex UK, rose +14.3%.
* The Net Asset Value (NAV) return was +9.6% over the same timeframe.
* Banks and financials contributed positively to performance during the
period, particularly Bankinter.
* Subject to shareholder approval, the proposed combination of Fidelity
European Trust PLC and Henderson European Trust PLC will be effective on 26
September 2025.
Contacts
For further information, please contact:
Smita Amin
Company Secretary
01737 836347
Chairman’s Statement
Update on Combination with Henderson European Trust PLC
On 19 June 2025, Fidelity European Trust PLC (the “Company”) announced a
proposed Combination of assets with those of Henderson European Trust plc
(“HET”) pursuant to a scheme of reconstruction and members’ voluntary
liquidation of HET (the “Combination”).
As noted in the announcement there will be no changes to the existing
investment objective or policy with the experienced and award-winning team of
Sam Morse and Marcel Stötzel continuing as Portfolio Managers.
BENEFITS OF THE COMBINATION
The Board believes that, if implemented, the Combination will result in a
number of benefits for both the Company’s and HET’s shareholders, as well
as for future investors in the Combined Entity, including:
· Unparalleled scale and enhanced profile: The Combined Entity is
anticipated to have net assets of circa £2.1 billion. As the flagship UK
closed-ended vehicle for investment in Europe, the Combined Entity is expected
to benefit from enhanced profile and marketability.
· Lower tiered management fees: Fidelity has agreed that, with effect from
completion of the deal, the annual management fee payable by the Combined
Entity will be reduced to: 0.70 per cent of net assets up to and including
£400 million; 0.65 per cent of net assets in excess of £400 million up to
and including £1.4 billion; and 0.55 per cent of net assets in excess of
£1.4 billion (the “Revised Fee Arrangements”).1 This is currently
expected to result in a blended annual management fee rate for the Combined
Entity of 0.63 per cent of net assets on completion of the Combination.
· Lower ongoing charges ratio (“OCR”): Owing to the Revised Fee
Arrangements and the economies of scale of the Combined Entity, the
Company’s OCR will reduce significantly, allowing it to achieve an
illustrative OCR of 0.68%, representing a material improvement to the
Company’s last reported OCR of 0.76% as at 31 December 2024.
· Enhanced liquidity: The scale of the Combined Entity, as the UK’s
largest and most liquid European-focused investment trust, is also expected to
further enhance secondary market liquidity for the Company’s shareholders
(including in relation to its enhanced discount management policy as described
further below).
· Significant cost contribution from Fidelity: Fidelity has agreed to make a
material contribution towards the costs of the Proposals, equivalent to a
waiver of 12 months of management fees that would otherwise be payable in
respect of the net assets transferred to the Company from HET. This is
expected to offset fully the direct transaction costs for the Company’s
existing shareholders.
1 The Company currently pays an annual management fee of 0.85 per cent of net
assets up to and including £400 million and 0.65 per cent of net assets in
excess of £400 million.
· Enhanced discount management policy: In the light of the Proposals, the
Board has decided to enhance its discount management policy such that the
Company will seek to maintain any discount to net asset value in mid-single
digits in normal market conditions.
I am pleased to note that work to facilitate the combination is progressing
smoothly. A Circular to the Company’s shareholders, providing further
details of the proposals and notice of a general meeting to be held on 15
September 2025 to approve the Combination, and a Prospectus in respect of the
issue of new shares in connection with the acquisition of assets from HET, was
published on 21 August 2025 and is available on the Company’s website at
www.fidelity.co.uk/europe.
It is intended that, following completion of the Combination, Vicky Hastings
and Rutger Koopmans, both of whom are current HET Directors, will be appointed
as non-executive Directors of the Company. The appointment of the prospective
Directors, Vicky and Rutger, will ensure that there is representation on our
Board for both the shareholders of HET (which was formerly Henderson European
Focus Trust plc) and the former shareholders of Henderson EuroTrust plc (which
combined with HET in 2024). I look forward to welcoming Vicky and Rutger to
the Company’s Board and I am sure they will prove to be valuable additions.
The Board of the Company will therefore initially consist of seven Directors,
comprising the five current Directors of the Company and two current HET
Directors, all of whom will be non-executive and are independent of the AIFM
and the Investment Manager. Following nine years of service, Paul Yates will
retire from the Board at the next annual general meeting (“AGM”) of the
Company, which is expected to be held in May 2026, and will not stand for
re-election. Following the 2026 AGM, the number of Directors will reduce to
six Directors.
I believe that the Combination with HET is a highly positive development for
the Company with shareholders standing to benefit from lower charges, greater
liquidity in the Company’s shares, an enhanced discount management policy,
and a higher profile that will contribute towards making it the “go to
trust” for investing in Europe.
DAVINA WALTER
Chairman
3 September 2025
Portfolio Managers’ Half-Yearly Review
Performance Review
During the first six months of the year the net asset value (“NAV”) total
return was +9.6% compared to a total return of +14.3% for the FTSE World
Europe ex UK Index which is the Company’s Benchmark Index. The share price
total return was +16.7%, which is above the NAV total return because of a
narrowing of the share price discount to NAV. (All figures in UK sterling.)
Market Review
Continental European markets rose in the first half of this year, as concerns
about possible tariffs on goods exported to the US, were more than offset by
the anticipation of several positive drivers. Investors expected the European
Central Bank (ECB), and other European central banks, to continue to lower
interest rates as inflation waned. They also applauded the intention of the
new German government to accelerate its domestic fiscal stimulus via
substantial increases in defence spending and investment in infrastructure.
Some investors also hoped that peace in Ukraine, orchestrated by the US, would
take pressure off energy prices in Europe and provide a boost to the revenues
of those European companies that might help in the reconstruction of the
country.
This optimism regarding the future trajectory of European economic growth, and
some concerns regarding the direction of US fiscal policy, also reignited the
Euro which appreciated by almost 4% against UK sterling during the six month
reporting period. So, in UK sterling terms, the continental European benchmark
rose more than 14% with many of the constituent country markets hitting
all-time highs – most notably Germany, given the above. This made
continental European equities one of the better performing asset classes
during the period, even outperforming US equities for the first time in many
years.
Continental European markets have also witnessed a substantial change in
leadership in the past few quarters with the banking sector very much in the
vanguard, after many years of being in the doldrums, post the Global Financial
Crisis (GFC). Many other “value” sectors have also turned around, driven
by the factors mentioned above and a sense that a corner has been turned in
terms of long-term bond yields (and therefore discount rates). More
specifically, defence stocks have rocketed on the expectation of increased
orders as European nations show more urgency to raise spending to align with
higher NATO targets.
Portfolio Managers’ Report
The Company’s NAV total return lagged the Company’s Benchmark over the
six-month period. The gearing of the Company, given rising markets, was a
positive contributor but this was more than offset by lacklustre
stock-picking. Pleasingly, however, the discount narrowed significantly over
the period, such that the share price rose more than the Benchmark.
Novo Nordisk was the main detractor from performance during the period. Its
share price suffered a significant de-rating on lower-than-expected
prescription growth in the US due to growing competition in the obesity
indication from compounding (manufacture and sale of copycat drugs) companies
and Eli Lilly. This was exacerbated by the unexpected departure of the CEO,
who presumably paid the price for this poor execution in their main market. We
now think that this is a very cheap stock, given its prospective dividend
growth, and we expect an improved operating performance in the US obesity
market, especially as the manufacture and sale of copycat drugs is no longer
permitted.
Top Five Stock Contributors (on a relative basis) Sector Country %
Bankinter Financials Spain +0.7
ABN AMRO Bank Financials Netherlands +0.6
Deutsche Börse Group Financials Germany +0.4
Intesa Sanpaolo Financials Italy +0.3
AXA Financials France +0.3
=========
Top Five Stock Detractors (on a relative basis) Sector Country %
Novo Nordisk Healthcare Denmark -0.9
Rheinmetall (not held) Industrials Germany -0.6
Partners Group Financials Switzerland -0.6
Puma Consumer Discretionary Germany -0.5
Assa Abloy Industrials Sweden -0.5
=========
Rheinmetall was also a significant detractor relative to the Benchmark Index
as it is not held in the Company’s portfolio and, like other defence stocks,
it had a meteoric rise during the quarter as investors expect it to benefit
from the multi-year increase in defence spending in Germany. Our view is that
this boon is now fully discounted in the share price, as it is for other
defence stocks in Europe. Although we agree that these companies are likely to
see strong turnover growth in the years ahead, we expect margins to be more
restrained. The public and their governments will be keen that such companies
are not profiteering at a time when other areas of government expenditure are
under huge strain to fund increases in defence spending. The Company is very
lightly positioned in the defence sector as these are not businesses that have
traditionally met our key criteria, in terms of consistent cash generation and
dividend growth. Our only exposure has been via MTU, the German engine
component manufacturer whose main business is in civil, rather than military,
aerospace.
Beyond defence, the Company’s lower exposure to German listed stocks versus
the Benchmark was a drag on returns. The German DAX was boosted by the
announcements on the removal of the fiscal debt break and ambitious
infrastructure spending. However, the investment will take time to translate
into revenue and profit benefits for German industrial companies, and we feel
that the share price moves were overdone for the most part given the
uncertainty around which companies will emerge as the ones whose earnings
growth accelerates.
Positive contributions were dominated by financials and banks, in particular.
Banks continued to be reappraised and rerated by investors on the back of
better-than-expected earnings. It appears that the earnings they are now
making on deposits will be stickier than anticipated thanks to structural
hedges that have been constructed in recent years. Bankinter, the Company’s
best performing bank during this period, is also benefiting from market share
gains as other banks in Spain consolidate and merge with each other. The
banking sector is one of those “value” sectors which has enjoyed a
reappraisal in a more optimistic “risk-on” stock market environment. In
general, it is not an environment that suits our more cautious investment
approach, so we are not entirely surprised that the Company has lagged the
Benchmark although we are disappointed to have underperformed by such a
margin.
Outlook
We believe that the stimulation of the European economy, initiated by the
announcement of Germany’s fiscal stimulus package in March 2025, could have
a positive impact on the region, particularly as the risk of a trade war with
the US threatens to severely impact the region’s goods exports. While the
impact from tariffs will still be felt, and the full details of such tariffs
(and the outcome of any negotiations in respect thereof) remain uncertain, it
is encouraging that Europe is putting some self-help measures in place.
However, the fiscal impact will take time to impact the real economy and the
fiscal stimulus initiatives will not be implemented all at once, particularly
in the areas targeted by the German government’s spending plans.
Following the year-to-date rally in European stock markets, the valuation
multiples of European quoted companies compared to US quoted companies are no
longer at historic lows. However, generally, such European companies still
trade on a valuation discount relative to their US counterparts and there is
still some way to go before they return to historic median levels. Noting that
some well-known cyclical European businesses have traded at higher valuation
levels recently on expectations of earnings improvement, ‘hot money’
chasing this theme could become impatient if these improvements take time to
come through.
Whilst there are positive signs, we acknowledge that Europe’s economic
growth remains under pressure and therefore cautiously await a cyclical
upswing in the region. Falling inflation and lower interest rates could
additionally boost corporate capital expenditure and lift
consumer confidence.
SAM MORSE
Portfolio Manager
MARCEL STÖTZEL
Co-Portfolio Manager
3 September 2025
Twenty 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
actual value of the portfolio as reported in the Balance Sheet. Where a
contract for difference (“CFD”) is held, 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 share has moved.
Fair
Value
Asset Exposure
£’000 % 1 £’000
Long Exposures – shares unless otherwise stated
ASML
Technology Hardware and Equipment 94,588 5.6 94,588
Roche
Pharmaceuticals and Biotechnology 87,182 5.2 87,182
SAP (shares and long CFD)
Software and Computer Services 86,652 5.1 25,798
Nestlé
Food Producers 71,527 4.2 71,527
Novo Nordisk
Pharmaceuticals and Biotechnology 67,350 4.0 67,350
TotalEnergies
Oil, Gas and Coal 67,238 4.0 67,238
L’Oréal
Personal Goods 62,748 3.7 62,748
Legrand (shares and long CFD)
Electronic and Electrical Equipment 58,573 3.5 23,600
Deutsche Börse Group
Investment Banking and Brokerage Services 52,386 3.1 52,386
AXA
Non-Life Insurance 51,740 3.1 51,740
Intesa Sanpaolo
Banks 49,604 2.9 49,604
Assa Abloy
Construction and Materials 48,930 2.9 48,930
3i Group
Investment Banking and Brokerage Services 48,905 2.9 48,905
Kone
Industrial Engineering 48,672 2.9 48,672
EssilorLuxottica
Medical Equipment and Services 47,146 2.8 47,146
Sampo
Non-Life Insurance 45,772 2.7 45,772
KBC Group
Banks 45,080 2.7 45,080
Richemont
Personal Goods 42,458 2.5 42,458
Amadeus IT Group
Software and Computer Services 42,029 2.5 42,029
Linde (long CFD)
Chemicals 41,796 2.4 183
--------------- --------------- ---------------
Twenty largest long exposures 1,160,376 68.7 1,022,936
Other long exposures 647,376 38.4 615,958
--------------- --------------- ---------------
Total long exposures before long futures 2,3 1,807,752 107.1 1,638,894
========= ========= =========
Long Futures
EURO STOXX 50 Future September 2025 3 51,040 3.0 (252)
--------------- --------------- ---------------
Gross Asset Exposure 3,4 1,858,792 110.1
========= =========
Portfolio Fair Value5 1,638,642
Net current assets (excluding derivative assets and liabilities) 49,102
---------------
Shareholders’ Funds (per Balance Sheet below) 1,687,744
=========
1 Asset Exposure is expressed as a percentage of Shareholders’ Funds.
2 Total long exposures before long futures comprises investments of
£1,638,710,000 and long CFDs of £169,042,000.
3 See Note 13 below.
4 Gross Asset Exposure comprises market exposure to investments of
£1,638,710,000 plus market exposure to all derivative instruments of
£220,082,000. Derivative instruments comprise long CFDs of £169,042,000 and
long futures of £51,040,000.
5 Portfolio Fair Value comprises investments of £1,638,710,000 plus
derivative assets of £1,198,000 less derivative liabilities of £1,266,000
(per the Balance Sheet below).
Interim Management Report
Interim Dividend
As part of their investment process, the Portfolio Managers focus on companies
that are capable of growing their dividends over time. The Board does not
impose any income objective in any particular period, recognising that both
capital and income growth are components of performance, as reflected in the
investment objective of the Company. The Board does, however, have a policy
whereby it seeks to pay a progressive dividend in normal circumstances, paid
twice yearly in order to smooth dividend payments for the reporting year.
Unlike open-ended funds such as OEICs, investment trusts can hold back some of
the income they receive in good years, thereby building up revenue reserves
that can then be used to supplement dividends during challenging times.
The Company’s revenue return for the six months to 30 June 2025 was 8.84
pence per ordinary share (30 June 2024: 8.38 pence). The Board has declared an
interim dividend of 3.90 pence per ordinary share which is an increase of 8.3%
on the 3.60 pence per ordinary share paid as the interim dividend in 2024.
This will be paid on 23 October 2025 to shareholders on the register at close
of business on 12 September 2025 (ex-dividend date 11 September 2025).
Shareholders may choose to reinvest their dividends for additional shares in
the Company.
Discount Management and Treasury Shares
The Board has an active discount management policy, the primary purpose of
which is to reduce discount volatility. The Board also closely monitors the
liquidity of the Company’s shares as a potential lack of natural buyers in
the investment sector may put pressure on discount levels. The policy seeks
to maintain the discount in single digits in normal market circumstances.
Following the completion of the proposed combination with Henderson European
Trust plc, the Company’s discount management policy will also be enhanced
and the Board will seek to maintain the discount to net asset value in
mid-single digits in normal market conditions. Buying back shares at a
discount also results in an enhancement to the NAV per ordinary share.
To assist in managing the discount, the Board has shareholder approval to hold
ordinary shares repurchased by the Company in Treasury, rather than cancelling
them. Shares in Treasury are then available to be reissued at NAV per ordinary
share or at a premium to NAV per ordinary share, facilitating the management
of and enhancing liquidity in the Company’s shares.
Despite an environment of wide discounts across the investment trust industry,
the Company’s discount has remained in single digits throughout the
reporting period. In order to narrow the discount down even further, the
Company repurchased 500,000 ordinary shares into Treasury in the reporting
period. A further 3,700,000 ordinary shares have been repurchased into
Treasury since the end of the reporting period and up to the latest
practicable date of this report.
Principal and Emerging Risks
The Board, with the assistance of the Manager (FIL Investment Services (UK)
Limited), has developed a risk matrix which, as part of the risk management
and internal controls process, identifies the key existing and emerging risks
and uncertainties faced by the Company.
The Board considers that the principal risks and uncertainties faced by the
Company continue to fall into the following categories: geopolitical, economic
and market; investment performance (including the use of derivatives and
gearing); legislation, taxation and regulatory; marketplace and competition;
cybercrime and information security; business continuity; key person and
operational support; discount control; and environmental, social and
governance (ESG) risks. Information on each of these risks is given on pages
24 to 27 in the Strategic Report section of the Annual Report for the year
ended 31 December 2024, a copy of which can be found on the Company’s pages
of the Manager’s website at www.fidelity.co.uk/europe.
The principal risks and uncertainties remain the same as those at the last
year end, but the magnitude of their uncertainty continues to change. There
continues to be geopolitical tensions and economic and market events. The
fast-changing global geopolitical landscape is largely shaped by the ongoing
armed conflicts effects, deglobalisation trends, increasing tariffs and
significant supply disruption, as well as concerns around global growth and
uncertainties on effects of changes in monetary policies, recession amid
inflationary pressures and financial distress. Russia and the Middle East are
both 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. Broader geopolitical themes
include the US-China trade war, the South China sea dispute affecting shipping
routes, the implications of China-Taiwan relations and escalation of North and
South Korea tensions. The Board and the Manager remain vigilant in monitoring
such risks.
In recent months, there has been increased concerns around investment cost
disclosure and its impact on the industry. There is a risk that the FCA’s
proposed Consumer Composite Investment (CCI) regime may make investment
companies more complex for investors to understand and increase the regulatory
burden imposed on the sector if it proceeds with some of the proposals as
drafted.
The environment in which the Company operates continues to undergo change,
which may affect the Company’s ability to grow and maintain its business.
This change includes the increasing presence of alternative investment
offerings, as well as industry consolidation, which could influence the demand
for investment trusts. The Board, the Manager, and the Company’s Broker
closely monitor industry activity and the peer group and actively manage
supply and demand through its discount polices and mechanisms. In addition, an
annual strategy review is undertaken by the Board to ensure that the Company
continues to offer a relevant product to shareholders.
Climate change continues to be a key principal risk confronting asset managers
and their investors. Globally, climate change effects are already being
experienced in the form of a changing pattern of weather events. Climate
change can potentially impact the operations of investee companies, their
supply chains and their customers. Additional risks may also arise from
increased regulations, costs and net-zero programmes which can all impact
investment returns. The Board notes that the Manager has integrated ESG
considerations into the Company’s investment process. The Board will
continue to monitor how this may impact the Company as a risk on investment
valuations and potentially affect shareholder returns.
The Board and the Manager are also monitoring the emerging risks and rewards
posed by the rapid advancement of artificial intelligence (“AI”) and
technology and how this may threaten the Company’s activities and its
potential impact on the portfolio and investee companies. AI can provide
asset managers with powerful tools, such as enhancing data analysis risk
management, trading strategies, operational efficiency and client servicing,
all of which can lead to better investment outcomes and more efficient
operations. However, with these advances in computer power that will impact
society, there are risks from its increasing use and manipulation with the
potential to harm, including a heightened threat to cybersecurity.
Investors should be prepared for market fluctuations and remember that holding
shares in the Company should be considered to be a long-term investment. Risks
are mitigated by the investment trust structure of the Company which means
that the Portfolio Managers are not required to trade to meet investor
redemptions. Therefore, investments in the Company’s portfolio can be held
over a longer-time horizon.
The Manager has appropriate business continuity and operational resilience
plans in place to ensure the continued provision of services. This includes
investment team key activities, including those of portfolio managers,
analysts and trading/support functions. The Manager reviews its operational
resilience strategies on an ongoing basis and continues to take all reasonable
steps in meeting its regulatory obligations, assess its ability to continue
operating and the steps it needs to take to serve and support its clients,
including the Board.
The Company’s other third-party service providers also have similar measures
in place to ensure that business disruption is kept to a minimum.
Transactions with the Manager and Related Parties
The Manager has delegated the Company’s portfolio management and company
secretariat services to FIL Investments International. Transactions with the
Manager and related party transactions with the Directors are disclosed in
Note 14 to the Financial Statements below.
Going Concern Statement
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) and the projected income and expenditure, are satisfied that the
Company is financially sound and has adequate resources to meet all of its
liabilities and ongoing expenses and can continue in operational existence for
a period of at least twelve months from the date of this Half-Yearly Report.
This conclusion also takes into account the Board’s assessment of the
ongoing risks as outlined above.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
Continuation votes are held every two years and the next continuation vote
will be put to shareholders at the Annual General Meeting in 2027.
By Order of the Board
FIL Investments International
3 September 2025
Directors’ Responsibility Statement
The Disclosure and Transparency Rules (DTR) of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
· the condensed set of Financial Statements contained within the Half-Yearly
Report has been prepared in accordance with the Financial Reporting
Council’s Standard FRS 104: Interim Financial Reporting; and
· the Chairman’s Statement and the Portfolio Manager’s Review and the
Interim Management Report above include a fair review of the information
required by DTR 4.2.7R and 4.2.8R.
In line with previous years, the Half-Yearly Report has not been audited or
reviewed by the Company’s Independent Auditor.
The Half-Yearly Report was approved by the Board on 3 September 2025 and the
above responsibility statement was signed on its behalf by Davina Walter,
Chairman.
Financial Statements
Income Statement for the six months ended 30 June 2025
Six months ended 30 June 2025 Six months ended 30 June 2024 Year ended 31 December 2024
unaudited unaudited audited
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on investments – 86,503 86,503 – 76,095 76,095 – (47,301) (47,301)
Gains on derivative instruments – 31,371 31,371 – 21,012 21,012 – 35,423 35,423
Income 4 41,327 – 41,327 41,081 – 41,081 53,670 – 53,670
Investment management fees 5 (1,446) (4,337) (5,783) (1,437) (4,311) (5,748) (2,878) (8,634) (11,512)
Other expenses (494) – (494) (521) – (521) (1,063) – (1,063)
Foreign exchange gains/(losses) – 2,158 2,158 – (1,577) (1,577) – (2,956) (2,956)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities before finance costs and taxation 39,387 115,695 155,082 39,123 91,219 130,342 49,729 (23,468) 26,261
Finance costs 6 (956) (2,870) (3,826) (1,488) (4,463) (5,951) (2,770) (8,309) (11,079)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities before taxation 38,431 112,825 151,256 37,635 86,756 124,391 46,959 (31,777) 15,182
Taxation on return/(loss) on ordinary activities 7 (2,330) – (2,330) (3,391) – (3,391) (4,422) – (4,422)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities after taxation for the period 36,101 112,825 148,926 34,244 86,756 121,000 42,537 (31,777) 10,760
========= ========= ========= ========= ========= ========= ========= ========= =========
Return/(loss) per ordinary share 8 8.84p 27.62p 36.46p 8.38p 21.22p 29.60p 10.41p (7.78p) 2.63p
========= ========= ========= ========= ========= ========= ========= ========= =========
The Company does not have any other comprehensive income. Accordingly, the net
return/(loss) on ordinary activities after taxation for the period is also the
total comprehensive income for the period and no separate Statement of
Comprehensive Income has been presented.
The total column of this statement represents the Income Statement of the
Company. The revenue and capital columns are supplementary and presented for
information purposes as recommended by the Statement of Recommended Practice
issued by the AIC.
No operations were acquired or discontinued in the period and all items in the
above statement derive from continuing operations.
Statement of Changes in Equity for the six months ended 30 June 2025
Notes Share Share Capital Capital Revenue Total
capital premium redemption reserve reserve shareholders’
£’000 account reserve £’000 £’000 funds
£’000 £’000 £’000
Six months ended 30 June 2025 (unaudited)
Total shareholders’ funds at 31 December 2024 10,411 58,615 5,414 1,440,810 47,879 1,563,129
Repurchase of ordinary shares into Treasury 11 – – – (1,831) – (1,831)
Net return on ordinary activities after taxation for the period – – – 112,825 36,101 148,926
Dividend paid to shareholders 9 – – – – (22,480) (22,480)
--------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 30 June 2025 10,411 58,615 5,414 1,551,804 61,500 1,687,744
========= ========= ========= ========= ========= =========
Six months ended 30 June 2024 (unaudited)
Total shareholders’ funds at 31 December 2023 10,411 58,615 5,414 1,472,587 40,452 1,587,479
Net return on ordinary activities after taxation for the period – – – 86,756 34,244 121,000
Dividend paid to shareholders 9 – – – – (20,396) (20,396)
--------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 30 June 2024 10,411 58,615 5,414 1,559,343 54,300 1,688,083
========= ========= ========= ========= ========= =========
Year ended 31 December 2024 (audited)
Total shareholders’ funds at 31 December 2023 10,411 58,615 5,414 1,472,587 40,452 1,587,479
Net (loss)/return on ordinary activities after taxation for the year – – – (31,777) 42,537 10,760
Dividends paid to shareholders 9 – – – – (35,110) (35,110)
--------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 December 2024 10,411 58,615 5,414 1,440,810 47,879 1,563,129
========= ========= ========= ========= ========= =========
Balance Sheet as at 30 June 2025
Company Number 2638812
Notes 30 June 31 December 30 June
2025 2024 2024
unaudited audited unaudited
£’000 £’000 £’000
Fixed assets
Investments 10 1,638,710 1,487,772 1,626,177
--------------- --------------- ---------------
Current assets
Derivative instruments 10 1,198 – 5,348
Debtors 13,604 9,506 13,404
Amounts held at futures clearing houses and brokers 3,708 10,078 4,545
Cash and cash equivalents 33,148 63,042 42,633
--------------- --------------- ---------------
51,658 82,626 65,930
========= ========= =========
Current liabilities
Derivative instruments 10 (1,266) (5,796) (2,615)
Other creditors (1,358) (1,473) (1,409)
--------------- --------------- ---------------
(2,624) (7,269) (4,024)
========= ========= =========
Net current assets 49,034 75,357 61,906
========= ========= =========
Net assets 1,687,744 1,563,129 1,688,083
========= ========= =========
Capital and reserves
Share capital 11 10,411 10,411 10,411
Share premium account 58,615 58,615 58,615
Capital redemption reserve 5,414 5,414 5,414
Capital reserve 1,551,804 1,440,810 1,559,343
Revenue reserve 61,500 47,879 54,300
--------------- --------------- ---------------
Total shareholders’ funds 1,687,744 1,563,129 1,688,083
========= ========= =========
Net asset value per ordinary share 12 413.43p 382.44p 413.01p
========= ========= =========
Notes to the Financial Statements
1 PRINCIPAL ACTIVITY
Fidelity European Trust PLC is an Investment Company incorporated in England
and Wales that is listed on the London Stock Exchange. The Company’s
registration number is 2638812, and its registered office is Beech Gate,
Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP. The Company has
been approved by HM Revenue & Customs as an Investment Trust under Section
1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as
to continue to be approved.
2 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this Half-Yearly Report have not been audited by
the Company’s Independent Auditor and do not constitute statutory accounts
as defined in section 434 of the Companies Act 2006 (“the Act”). The
financial information for the year ended 31 December 2024 is extracted from
the latest published Financial Statements of the Company. Those Financial
Statements were delivered to the Registrar of Companies and included the
Independent Auditor’s Report which was unqualified and did not contain a
statement under either section 498(2) or 498(3) of the Act.
3 ACCOUNTING POLICIES
(i) Basis of Preparation
The Company prepares its Financial Statements on a going concern basis and in
accordance with UK Generally Accepted Accounting Practice (“UK GAAP”) and
FRS 102: The Financial Reporting Standard applicable in the UK and Republic of
Ireland, issued by the Financial Reporting Council. The Financial Statements
are also prepared in accordance with the Statement of Recommended Practice:
Financial Statements of Investment Trust Companies and Venture Capital Trusts
(“SORP”) issued by the Association of Investment Companies (“AIC”) in
July 2022. FRS 104: Interim Financial Reporting has also been applied in
preparing this condensed set of Financial Statements. The accounting policies
followed are consistent with those disclosed in the Company’s Annual Report
and Financial Statements for the year ended 31 December 2024.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for a period of at least twelve
months from the date of approval of these Financial Statements. Accordingly,
the Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements. This conclusion also takes
into account the Board’s assessment of the risks faced by the Company as
detailed in the Interim Management Report above.
4 INCOME
Six months Six months Year
ended ended ended
30.06.25 30.06.24 31.12.24
unaudited unaudited audited
£’000 £’000 £’000
Investment income
Overseas dividends 36,792 33,375 42,870
UK dividends 1,228 957 1,654
--------------- --------------- ---------------
38,020 34,332 44,524
========= ========= =========
Derivative income
Income recognised from futures contracts 1,174 1,659 2,468
Dividends received on long CFDs 1,614 3,536 3,972
Interest received on CFDs – 180 329
--------------- --------------- ---------------
2,788 5,375 6,769
========= ========= =========
Investment and derivative income 40,808 39,707 51,293
========= ========= =========
Other interest
Interest received on bank deposits, collateral and money market funds 519 1,342 2,323
Interest received on tax reclaims – 32 54
--------------- --------------- ---------------
519 1,374 2,377
========= ========= =========
Total income 41,327 41,081 53,670
========= ========= =========
Special dividends of £nil have been recognised in capital during the period
(six months ended 30 June 2024: £nil and year ended 31 December 2024:
£1,271,000).
5 INVESTMENT MANAGEMENT FEES
Revenue Capital Total
£’000 £’000 £’000
Six months ended 30 June 2025 (unaudited)
Investment management fees 1,446 4,337 5,783
--------------- --------------- ---------------
Six months ended 30 June 2024 (unaudited)
Investment management fees 1,437 4,311 5,748
--------------- --------------- ---------------
Year ended 31 December 2024 (audited)
Investment management fees 2,878 8,634 11,512
========= ========= =========
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.
FII charges investment management fees at an annual rate of 0.85% of net
assets up to £400 million and 0.65% of net assets in excess of £400 million.
Fees are payable monthly in arrears and are calculated on a daily basis.
Investment management fees have been allocated 75% to Capital reserve in
accordance with the Company’s accounting policies.
6 FINANCE COSTS
Revenue Capital Total
£’000 £’000 £’000
Six months ended 30 June 2025 (unaudited)
Interest paid on bank deposits and collateral 32 98 130
Interest paid on CFDs 664 1,993 2,657
Costs recognised from futures contracts 260 779 1,039
--------------- --------------- ---------------
956 2,870 3,826
========= ========= =========
Six months ended 30 June 2024 (unaudited)
Interest paid on bank deposits and collateral 7 22 29
Interest paid on CFDs 1,145 3,435 4,580
Costs recognised from futures contracts 336 1,006 1,342
--------------- --------------- ---------------
1,488 4,463 5,951
========= ========= =========
Year ended 31 December 2024 (audited)
Interest paid on bank deposits and collateral 15 43 58
Interest paid on CFDs 2,122 6,367 8,489
Costs recognised from futures contracts 633 1,899 2,532
--------------- --------------- ---------------
2,770 8,309 11,079
========= ========= =========
Finance costs have been allocated 75% to Capital reserve in accordance with
the Company’s accounting policies.
7 Taxation on Return/(Loss) on Ordinary Activities
Six months Six months Year
ended ended ended
30.06.25 30.06.24 31.12.24
unaudited unaudited audited
£’000 £’000 £’000
Overseas taxation 2,330 3,391 4,422
========= ========= =========
8 Return/(Loss) per Ordinary Share
Six months Six months Year
ended ended ended
30.06.25 30.06.24 31.12.24
unaudited unaudited audited
Revenue return per ordinary share 8.84p 8.38p 10.41p
Capital return/(loss) per ordinary share 27.62p 21.22p (7.78p)
--------------- --------------- ---------------
Total return per ordinary share 36.46p 29.60p 2.63p
========= ========= =========
The return/(loss) per ordinary share is based on the net return/(loss) on
ordinary activities after taxation for the period divided by the weighted
average number of ordinary shares held outside of Treasury during the period,
as shown below:
£’000 £’000 £’000
Net revenue return on ordinary activities after taxation 36,101 34,244 42,537
Net capital return/(loss) on ordinary activities after taxation 112,825 86,756 (31,777)
--------------- --------------- ---------------
Net total return on ordinary activities after taxation 148,926 121,000 10,760
========= ========= =========
Number Number Number
Weighted average number of ordinary shares held outside Treasury during the period 408,505,385 408,730,523 408,730,523
========== ========== ==========
9 Dividends Paid to Shareholders
Six months Six months Year
ended ended ended
30.06.25 30.06.24 31.12.24
unaudited unaudited audited
£’000 £’000 £’000
Final dividend of 5.50 pence per ordinary share paid for the year ended 31 December 2024 22,480 – –
Interim dividend of 3.60 pence per ordinary share paid for the year ended 31 December 2024 – – 14,714
Final dividend of 4.99 pence per ordinary share paid for the year ended 31 December 2023 – 20,396 20,396
--------------- --------------- ---------------
22,480 20,396 35,110
========= ========= =========
The Company has declared an interim dividend for the six month period to 30
June 2025 of 3.90 pence per ordinary share (2024: 3.60 pence). The interim
dividend will be paid on 23 October 2025 to shareholders on the register at
close of business on 12 September 2025 (ex-dividend date 11 September 2025).
The total cost of this interim dividend, which has not been included as a
liability in these Financial Statements, is £15,777,000 (2024: £14,714,000).
This amount is based on the number of ordinary shares held outside Treasury at
the date of this report.
10 Fair Value Hierarchy
The Company is required to disclose the fair value hierarchy that classifies
its financial instruments measured at fair value at one of three levels,
according to the relative reliability of the inputs used to estimate the fair
values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly
Level 3 Valued by reference to valuation techniques using inputs that are not based on observable market data
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset. The table below sets out the Company’s fair value hierarchy:
30 June 2025 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 1,638,710 – – 1,638,710
Derivative instrument assets – 1,198 – 1,198
--------------- --------------- --------------- ---------------
1,638,710 1,198 – 1,639,908
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (252) (1,014) – (1,266)
========= ========= ========= =========
31 December 2024 (audited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 1,487,772 – – 1,487,772
Derivative instrument assets – – – –
--------------- --------------- --------------- ---------------
1,487,772 – – 1,487,772
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (1,121) (4,675) – (5,796)
========= ========= ========= =========
30 June 2024 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 1,626,177 – – 1,626,177
Derivative instrument assets 531 4,817 – 5,348
--------------- --------------- --------------- ---------------
1,626,708 4,817 – 1,631,525
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (2,615) – (2,615)
========= ========= ========= =========
11 Share Capital
30 June 2025 31 December 2024 30 June 2024
unaudited audited unaudited
Number of Nominal Number of Nominal Number of Nominal
shares value shares Value shares value
£’000 £’000 £’000
Issued, allotted and fully paid
Ordinary shares of 2.5 pence each held outside of Treasury
Beginning of the period 408,730,523 10,218 408,730,523 10,218 408,730,523 10,218
Ordinary shares repurchased into Treasury (500,000) (13) – – – –
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
End of the period 408,230,523 10,205 408,730,523 10,218 408,730,523 10,218
========== ========== ========== ========== ========== ==========
Ordinary shares of 2.5 pence each held in Treasury 1
Beginning of the period 7,717,387 193 7,717,387 193 7,717,387 193
Ordinary shares repurchased into Treasury 500,000 13 – – – –
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
End of the period 8,217,387 206 7,717,387 193 7,717,387 193
========== ========== ========== ========== ========== ==========
Total share capital 10,411 10,411 10,411
========== ========== ==========
1 Ordinary shares held in Treasury carry no rights to vote, to receive a
dividend or to participate in a winding up of the Company.
During the period, the Company repurchased 500,000 (year ended 31 December
2024 and six months ended 30 June 2024: nil) ordinary shares into Treasury.
The cost of repurchasing these shares of £1,831,000 (year ended 31 December
2024 and six months ended 30 June 2024: £nil) was charged to the Capital
reserve.
12 Net Asset Value per Ordinary Share
The calculation of the net asset value per ordinary share is based on the
total Shareholders’ funds divided by the number of ordinary shares held
outside of Treasury.
30.06.25 31.12.24 30.06.24
unaudited audited unaudited
Total shareholders’ funds £1,687,744,000 £1,563,129,000 £1,688,083,000
Ordinary shares held outside of Treasury at the period end 408,230,523 408,730,523 408,730,523
Net asset value per ordinary share 413.43p 382.44p 413.01p
============ ============ ============
It is the Company’s policy that shares held in Treasury will only be
reissued at net asset value per ordinary share or at a premium to net asset
value per ordinary share and, therefore, shares held in Treasury have no
dilutive effect.
13 Capital Resources and Gearing
The Company does not have any externally imposed capital requirements. The
financial resources of the Company comprise its share capital and reserves, as
disclosed in the Balance Sheet above, and any gearing, which is managed by the
use of derivative instruments. Financial resources are managed in accordance
with the Company’s investment policy and in pursuit of its investment
objective.
The Company’s gross gearing and net gearing at the end of the period is
shown below:
Gross gearing Net gearing
Asset exposure Asset exposure
£’000 % 1 £’000 % 1
30 June 2025 (unaudited)
Investments 1,638,710 97.1 1,638,710 97.1
Long CFDs 169,042 10.0 169,042 10.0
Long futures 51,040 3.0 51,040 3.0
--------------- --------------- --------------- ---------------
Total long exposures 1,858,792 110.1 1,858,792 110.1
Short CFDs – – – –
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 1,858,792 110.1 1,858,792 110.1
========= ========= ========= =========
Shareholders’ funds 1,687,744 1,687,744
========= =========
Gearing 2 10.1 10.1
========= =========
31 December 2024 (audited)
Investments 1,487,772 95.2 1,487,772 95.2
Long CFDs 196,659 12.6 196,659 12.6
Long futures 54,743 3.5 54,743 3.5
--------------- --------------- --------------- ---------------
Total long exposures 1,739,174 111.3 1,739,174 111.3
Short CFDs – – – –
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 1,739,174 111.3 1,739,174 111.3
========= ========= ========= =========
Shareholders’ funds 1,563,129 1,563,129
========= =========
Gearing 2 11.3 11.3
========= =========
30 June 2024 (unaudited)
Investments 1,626,177 96.3 1,626,177 96.3
Long CFDs 179,614 10.7 179,614 10.7
Long futures 69,923 4.1 69,923 4.1
--------------- --------------- --------------- ---------------
Total long exposures 1,875,714 111.1 1,875,714 111.1
Short CFDs 12,990 0.8 (12,990) (0.8)
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 1,888,704 111.9 1,862,724 110.3
========= ========= ========= =========
Shareholders’ funds 1,688,083 1,688,083
========= =========
Gearing 2 11.9 10.3
========= =========
1 Asset exposure to the market expressed as a percentage of shareholders’
funds.
2 Gearing is the amount by which gross asset exposure/net market exposure
exceeds shareholders’ funds expressed as a percentage of shareholders’
funds.
14 Transactions with the Manager and Related Parties
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager and has delegated portfolio management and the role of company
secretary to FIL Investments International (“FII”). Both companies are
Fidelity group companies.
During the period, the Company had the following transactions payable to FII:
Six months Six months Year
ended ended ended
30.06.25 30.06.24 31.12.24
unaudited unaudited audited
£’000 £’000 £’000
Portfolio management services 5,783 5,748 11,512
Marketing services 124 116 221
========= ========= =========
At the Balance Sheet date, the following balances payable to FII were accrued
and included in other creditors:
Six months Year Six months
ended ended ended
30.06.25 31.12.24 30.06.24
unaudited audited unaudited
£’000 £’000 £’000
Portfolio management services 1,004 972 970
Marketing services 39 53 55
========= ========= =========
As at 30 June 2025, the Board consisted of five non-executive Directors (shown
in the Directory in the Half-Yearly Report), all of whom are considered to be
independent by the Board. None of the Directors have a service contract with
the Company.
The annual fee structure from 1 January 2025 is as follows:
2025
£’000
Chairman 50,000
Senior Independent Director 36,500
Chair of the Audit Committee 39,000
Director 32,500
=========
As at 30 June 2025, the Directors and their connected persons, held the
following ordinary shares in the Company:
Six months
ended
30.06.25
unaudited
Fleur Meijs 28,970
Milyae Park 12,300
Sir Ivan Rogers 8,749
Davina Walter 60,067
Paul Yates 32,000
=========
The financial information contained in this Half-Yearly Results Announcement
does not constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The financial information for the six months ended 30 June
2025 and 30 June 2024 has not been audited or reviewed by the Company’s
Independent Auditor.
The information for the year ended 31 December 2024 has been extracted from
the latest published audited financial statements, which have been filed with
the Registrar of Companies, unless otherwise stated. The report of the Auditor
on those financial statements contained no qualification or statement under
sections 498(2) or (3) of the Companies Act 2006.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
A copy of the Half-Yearly Report will shortly be submitted to the National
Storage Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at
www.fidelity.co.uk/europe where up to date information on the Company,
including daily NAV and share prices, factsheets and other information can
also be found.
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