Fidelity European Trust plc (LON:FEV) has announced its Final Results for the year ended 31 December 2025
Financial Highlights:
- The Board of Fidelity European Trust PLC (the “Company”) recommends a final dividend of 6.00 pence which together with the interim dividend payment of 3.90 pence per share (totalling 9.90 pence) represents an increase of 8.8% over the total dividend of 9.10 pence paid in the prior year.
- During the year ended 31 December 2025, the Company reported a net asset value (NAV) total return of +16.2% and a share price total return of +21.1%.
- The Company’s Benchmark, the FTSE World Europe ex UK Index, rose by 27.9% over the same period.
- Positive contributors to performance included financial holdings and gearing.
- The Portfolio Managers believe equities remain attractively valued relative to US peers.
Chairman’s Statement
This is my first Annual Report for the Company, having joined the Board of Directors in November 2024 and taken over as Chairman from Vivian Bazalgette at the last AGM in May 2025. On behalf of the Board and our shareholders, I would like to place on record our thanks to Vivian, who became Chairman following the 2016 AGM, for his strong leadership and invaluable contribution to the Company’s strategy which has helped sustain its successful returns to shareholders over the long-term.
2025 proved to be another busy year, not just on the world political stage and in European financial markets, but also for your Company given the combination with Henderson European Trust plc (“HET”), which completed in late September. The considerable benefits of the combination are set out below, but first I would like to extend a very warm welcome to former HET shareholders, who I hope will remain happy shareholders of this Company for many years to come.
While European stock market performance in 2024 was muted as a result of geopolitical and macroeconomic concerns, 2025 saw strong returns despite some of the previous year’s fears – notably, higher US trade tariffs – becoming reality. In a more fractious global environment, Europe turned to self-help measures, such as the European Central Bank (ECB) interest rate cuts and wide-ranging fiscal stimulus in Germany, leading to an appreciation in the Euro and a tailwind for more cyclically sensitive stocks. As discussed below and in the Portfolio Managers’ Review that follows, the nature of the Company’s investment philosophy is to seek companies based on four key criteria: attractive valuations, disciplined use of capital; cash generation; and strong balance sheets to ensure the ability to grow dividends. This means that periods characterised by sharp, momentum-led or cyclical rallies, such as those experienced in 2025, can act as a headwind for a portfolio that prioritises sustainable cash generation and downside resilience.
Performance
For the year ended 31 December 2025, your Company delivered a net asset value (“NAV”) total return of 16.2% in sterling, which, while a good outcome in absolute terms, was significantly behind the 27.9% total return from the Benchmark Index, the FTSE World Europe ex UK Index in sterling terms. With the discount to NAV having narrowed appreciably during the year, the share price total return was higher, at 21.1%.
Sam and Marcel give a detailed picture of the contributors to and detractors from performance in their Portfolio Managers’ Review below. In brief, however, some of the factors underlying the underperformance against the Benchmark Index include holding Danish pharmaceutical firm Novo Nordisk through a period of poor news flow; being underweight in defence stocks, which they see as more than pricing in increased European defence spending; and preferring France to more highly favoured Germany, albeit with a skew towards global companies that are less exposed to the French domestic economy. However, perhaps more important than all of these has been investor enthusiasm for a narrow number of stocks that do not necessarily share the combination of attractive starting valuations and long-term capital and income growth potential that your Portfolio Managers favour.
Over the longer-term, performance remains consistent, averaging 10-13% per annum for both the NAV and share price total return over three, five and 10 years, since Sam’s appointment in 2011 and since the Company’s launch in 1991. We have also matched or outperformed the Benchmark Index return over 10 years, as well as beating the average return of the AIC Europe peer group over three, five and 10 years (and in NAV terms over one year).
Combination with Henderson European Trust plc
Following the resignation of HET’s portfolio managers in January 2025 and consultation with shareholders, the Board of HET (which itself was formed through the merger of Henderson EuroTrust plc (“HNE”) and Henderson European Focus Trust plc (“HEFT”) in 2024), undertook a comprehensive review of its options and a competitive pitch process, leading to the recommendation in June of a combination with Fidelity European Trust PLC (“FEV”). Through combining the two largest investment companies in the Association of Investment Companies’ (“AIC”) Europe sector, the proposal sought to create a market-leading European equity investment enjoying the benefits of scale and enhanced liquidity with continuity of investment style, given both trusts’ focus on quality companies at attractive valuations. HET shareholders were offered the choice of new FEV shares or a cash exit of up to 33%, and it was pleasing to note that the cash option was undersubscribed, with less than 30% electing to take the cash element. The deal completed on 29 September 2025, resulting in the issuance of 111,902,155 shares in the Company.
The proposals for the combination were covered in detail in the Half Year Report for the six months ended 30 June 2025, but now that it has taken place, it is worth revisiting some of the benefits.
• Increased scale: Your company now has net assets of more than £2bn, placing it in the top 10 by assets of all equity investment companies. While this may seem to have limited relevance for individual shareholders, consolidation in the wealth management market – historically a key source of demand for investment trust shares – means investment companies now need significant scale to make it on to centralised buy lists, given the large sums at work and the need to maintain liquidity, which can be challenging for investors who account for a significant proportion of a company’s share register. As one of the larger companies in the FTSE 250 Index, we can also enjoy greater demand from index-tracking funds.
• Lower management fees and ongoing charges: Fidelity agreed, with effect from completion of the HET deal, a reduction in its tiered annual management fee to: 0.70% on net assets up to £400m, 0.65% on net assets from £400m to £1.4bn and 0.55% on net assets in excess of £1.4bn. This revised fee has resulted in a blended annual management fee rate of 0.62% based on net assets as at 31 December 2025. The lower management fee, together with economies of scale (meaning fixed costs are spread over a larger base), is feeding into a reduced ongoing charges ratio (“OCR”). For the year under review, the OCR was 0.73% (2024: 0.76%) and reflecting the revised fee arrangement together with the economies of scale the OCR going forward is 0.68%.
• Enhanced discount management policy: The Board proposed an enhancement to the Company’s discount management policy with the aim of maintaining any share price discount to NAV in mid-single digits (previously below 10%) in normal market conditions. The steps taken to manage the discount are discussed in a separate section below.
• Governance benefits: As part of the combination, we welcomed two new Directors to the Board: Vicky Hastings, formerly chairman of HET and its predecessor HEFT, and Rutger Koopmans, who was a director of HNE before joining the HET board. As well as providing continuity for former HET (as well as HEFT and HNE) shareholders, Vicky, with her strong investment management background, and Rutger, a Dutch national with a wealth of experience as a financial professional, are strong additions to the Company’s Board.
Dividends
Sustainable and growing dividends are a key feature your Portfolio Managers seek when analysing potential holdings for your Company’s portfolio. The Board has a policy whereby it seeks to deliver a progressive dividend in normal circumstances, paid twice yearly in order to smooth dividend payments for the reporting year. We understand that dividends are also important to our shareholders, which is why your Company has increased its annual payout for the past 14 years, placing it among the AIC’s ‘next generation of dividend heroes’ (investment companies with more than 10 but fewer than 20 consecutive years of annual dividend growth).
In the year under review, the Company’s revenue return was 11.30 pence per ordinary share (2024: 10.41 pence) and an interim dividend of 3.90 pence per share was paid on 23 October 2025 (an increase of 8.3% on the 3.60 pence paid for the same period in 2024). The Board is pleased to recommend a final dividend of 6.00 pence for the year ended 31 December 2025 (2024: 5.50 pence), bringing the total dividend for the year to 9.90 pence (2024: 9.10 pence), an increase of 8.8% and a 15th consecutive annual dividend increase.
Subject to approval by shareholders at the Annual General Meeting (“AGM”) on 12 May 2026, the final dividend will be paid on 19 May 2026 to shareholders on the register at close of business on 27 March 2026 (ex-dividend date 26 March 2026). Shareholders may choose to reinvest their dividends for additional shares in the Company.
Discount Management and Treasury Shares
The success of the enhanced discount management policy (see Combination with HET above) can be seen in the narrowing of the discount to NAV during the year, from 8.0% at the beginning of the year to 4.1% as at 31 December 2025. Having previously sought to maintain the discount in single figures, the policy now is to maintain a maximum discount in the mid-single digits in normal market conditions. For the majority of 2025, even before the proposed combination with HET, the discount to NAV was in mid or low single digits, with a low of 0.2% in November, having seen a high of 9.9% at the start of the year.
During the year, a total of 9,286,723 shares were repurchased into Treasury (2024: nil), equal to 2.2% of the shares in issue at the beginning of the year.
To assist in managing the discount, the Board has shareholder approval to hold ordinary shares repurchased by the Company in Treasury, rather than cancelling them. Shares in Treasury (which numbered 17,004,110 at the year end) are then available to be reissued at NAV per ordinary share or at a premium to NAV per ordinary share, facilitating the management of and enhancing liquidity in the Company’s shares. As buying back shares at a discount to NAV is accretive, the Board is seeking shareholder approval to renew this authority at the AGM on 12 May 2026.
Gearing
The Company continues to gear mainly through the use of derivative instruments, primarily contracts for difference (CFDs). However, as part of the combination with HET, the Company acquired a small amount of fixed gearing €35m at par value in the form of two very long-term private loan notes at a particularly attractive blended interest rate of only 1.57%. Having this element of structural gearing provides the Company with a degree of diversification in its counterparty risk, as well as potentially allowing Sam and Marcel to take a longer-term view on some of their geared positions.
The Portfolio Managers have flexibility to gear within the parameters set by the Board, the rationale being that over the longer-term carefully monitored levels of gearing will enhance returns from a rising market. The ability to do this is a key advantage of the investment company structure. As at 31 December 2025, the Company’s gross gearing was 9.7% (2024: 11.3%), with net gearing also at 9.7% (2024: 11.3%). In the reporting year, gearing was maintained within the limits set by the Board and made a positive contribution to NAV performance, as can be seen from the Attribution Analysis table in the Annual Report.
The Board monitors the level of gearing and the use of derivative instruments carefully and has defined a risk control framework for this purpose which is reviewed at each Board meeting. It should be emphasised that all gearing is subject to the Portfolio Managers’ confidence in identifying attractive investment opportunities, and to their remaining attractive.
Due diligence trip to Norway
Towards the end of the reporting year, the Board had the opportunity to visit Oslo with your Portfolio Managers, and we were privileged to be invited to observe a meeting with the senior management of DNB Bank, one of Norway’s leading financial institutions. One of Fidelity’s great strengths is the depth of its analyst team, with 38 analysts devoted to the European stock market. It was fascinating to see one of the analyst team interacting with Sam, Marcel and DNB, and gave us great confidence both in the calibre of the team and the respect they command in the market.
Board of Directors
As mentioned above, I joined the Company’s Board in November 2024 and assumed the role of Chairman on the retirement of Vivian Bazalgette at the AGM in May 2025. Also new to the Board are Vicky Hastings and Rutger Koopmans, who joined as part of the combination with HET. Whilst Rutger has already served nine years, having been a director of HNE from 2016 until it merged with HEFT to become HET in 2024, the Board feels that it is important to extend his tenure to give him a full year of representing HET (and HNE) shareholders and the intention therefore is that Rutger will retire at the AGM in May 2027.
Paul Yates, Senior Independent Director, has served on your Company’s Board since 2017, and will retire at the AGM on 12 May 2026. Paul has considerable experience in investment management and investment trusts, both valuable assets during his tenure and his contribution to the Board will be greatly missed. In respect of skills that we will lose when Paul retires, Vicky’s appointment will give us continuity in this regard with her strong background in investment management.
Fleur Meijs, Chair of the Audit Committee, will have completed nine years on the Board in September 2026 and will therefore not seek re-election at the AGM in May 2027. A recruitment process to appoint her replacement will be conducted later this year.
Following the AGM at which Paul retires, the Board will reduce to six Directors and then become five following the 2027 AGM when Rutger and Fleur retire.
Annual General Meeting
The Company’s AGM will be held at 11.00 am on 12 May 2026 at 4 Cannon Street EC4M 5AB and virtually via the online Lumi AGM meeting platform.
The AGM provides a great opportunity for shareholders to hear first-hand from your Portfolio Managers and to meet the Company’s Directors, and of course, for us to meet you. We hope to see as many of you as possible on the day. Full details of the AGM are below.
Outlook
After a year of strong performance, with markets having risen significantly, many investors in Europe are looking for further progress supported by potential productivity gains, interest rate cuts, continued fiscal stimulus and a belief that ‘the worst is over’ in relation to US trade tariffs. This has led to a meaningful improvement in corporate earnings expectations from the flat outlook anticipated for 2025. While the path ahead may not be linear in these uncertain times, our team believe the portfolio is well positioned through its focus on high-quality, cash-generative businesses with strong balance sheets.
Davina Walter
Chairman
17 March 2026
ANNUAL GENERAL MEETING – TUESDAY, 12 MAY 2026 AT 11.00 AM
The AGM of the Company will be held at 11.00 am on Tuesday, 12 May 2026 at 4 Cannon Street, London EC4M 5AB (nearest tube stations are St Paul’s or Mansion House) and virtually via the online Lumi AGM meeting platform. Full details of the meeting are given in the Notice of Meeting in the Annual Report .
For those shareholders who are unable to attend in person, we will live-stream the formal business and presentations of the meeting online.
Sam Morse and Marcel Stötzel, the Portfolio Managers, will be making a presentation to shareholders highlighting the achievements and challenges of the year past and the prospects for the year to come. They and the Board will be very happy to answer any questions that shareholders may have. Copies of their presentation can be requested by email at [email protected] or in writing to the Secretary at FIL Investments International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Properly registered shareholders joining the AGM virtually will be able to vote on the proposed resolutions. See Note 9 to the Notes to the Notice of Meeting in the Annual Report for details on how to vote virtually. Investors viewing the AGM online will be able to submit live written questions to the Board and the Portfolio Managers and we will answer as many of these as possible at an appropriate juncture during the meeting.
Further information and links to the Lumi platform may be found in Note 9 to the Notes to the Notice of Meeting in the Annual Report . On the day of the AGM, in order to join electronically and ask questions via the Lumi platform, shareholders will need to connect to the website https://web.lumiagm.com .
Please note that investors on platforms, such as Fidelity Personal Investing, Hargreaves Lansdown, Interactive Investor or AJ Bell Youinvest, will need to request attendance at the AGM in accordance with the policies of your chosen platform. They may request that you submit electronic votes in advance of the meeting. If you are unable to obtain a unique IVC and PIN from your nominee or platform, we will also welcome online participation as a guest. Once you have accessed https://meetings.lumiconnect.com from your web browser on a tablet or computer, you will need to enter the Lumi Meeting ID which is 100-968-191-255 . You should then select the ‘Guest Access’ option before entering your name and who you are representing, if applicable. This will allow you to view the meeting and ask questions, but you will not be able to vote.
