Fidelity Emerging Markets Trust Final Results 2025 – Outperforms index for three years 

Fidelity Emerging Markets Limited (LON:FEML) has announced its 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

Financial Highlights

	30 June2025	30 June2024
Assets as at 30 June
USD
Gross Asset Exposure1	$1,235.3m	$1,177.3m
Equity Shareholders’ Funds	$771.6m	$753.4m
NAV per Participating Preference Share2	$11.99	$10.09
Dividend per Participating Preference Share	$0.26	$0.20
Dividend Yield	2.4%	2.3%
Gross Gearing2,3	60.1%	56.3%
Net Gearing2,4	5.5%	4.3%
Exchange Rate (USD to GBP)	1.37	1.25
GBP
Gross Asset Exposure1,5	£901.4m	£940.7m
Equity Shareholders’ Funds5	£563.1m	£596.0m
NAV per Participating Preference Share2,5	£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 Share6	$0.31	$0.16
Capital Earnings per Participating Preference Share6	$1.52	$1.29
Total Earnings per Participating Preference Share6	$1.83	$1.45
Ongoing charges ratio2	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(%)	IndexWeight(%)	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 longCFD)
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 (126companies)	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 NetAssets%1	BenchmarkIndex%
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 NetAssets%1	BenchmarkIndex%
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, RISKMANAGEMENT

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 financial condition, returns and prospects, with a consequential adverse effect on the market value of the Shares and on returns for Shareholders.
Investment Performance & Gearing	• The Portfolio Manager may fail to outperform the Benchmark Index over the longer-term.• The Portfolio Manager may fail to use gearing adequately, resulting in a 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 Fidelity Emerging Markets Limited over a period longer than twelve months can be found in the Viability Statement above.