Fidelity Emerging Markets Ltd - Final Results for the year ended 30 June 2025
PR Newswire
LONDON, United Kingdom, October 06
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 Secretary
0207 9614240
FIL 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 opportunities. Importantly, any pre-trade assessment ensures that activities do not contravene international sanctions. Prudent assessment of counterparties and all aspects of trade settlement arrangements are scrutinised and carefully managed in the best interests of clients. The decision to trade TCS was based on our assessment that a fair exit multiple was achievable.
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 Exposure2 | 1,235,254 | 160.1 |
|
Forward currency contracts | 71 | ||
Portfolio Fair Value3 |
|
| 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 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. | • 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. |
• 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 ?nancial 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 failure to outperform in a rising market or to underperform in a falling market. | • 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. |
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 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. | • 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. |
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) 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. | • 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. |
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 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. | • 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. |
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 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). | • 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. |
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. • 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. | • 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. |
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 the value of investments from low levels of liquidity. | • 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. |
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 instruments
Classification
(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 translation
Functional 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 instruments1 |
| |
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 Position2 | ||
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 Treasury1 |
| |
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 |
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 |
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 Instruments
Management 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 instruments1 $'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 zloty | 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 zloty | 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
| ||||
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 | |
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 | |
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 | |
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 | |
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 hedges3 | 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 |
|
Gearing2 |
| 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 | ||
Gearing2 | 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 Measures
Active 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
