Fidelity Emerging Markets Ltd - Final Results for the year ended 30 June 2025
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:
Company Secretary
0207 9614240
FIL Investments International
Financial Highlights
30 June 30 June
2025 2024
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 64,342,245 74,646,287
Treasury
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
Overview
During the 12-month period to
Readers may be surprised to learn, as mentioned above, that emerging markets have quietly been outperforming the US: over 12 months to 30
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
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
Dividend
The Board is recommending a final dividend of
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
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
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
While this report was being prepared, we were delighted to hear that your Company has been shortlisted as a finalist in the
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,
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
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
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
Chairman
Portfolio Managers’ Review
Question
How has
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
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
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
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
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
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
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.
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
Index
Portfolio Relative
As at 30 June 2025 Sector Weight
(%) (%)
(%)
Taiwan Semiconductor Information Technology 10.6 10.2 0.4
Manufacturing
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
Answer
We are constructive on
The de-rating in
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
Question
How important is in-depth company research and on-the-ground presence in addressing the complexities and evolving dynamics of
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
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,
Today we are starting to see this dynamic shift, as the fiscal backdrop and policy unpredictability weigh on appetite for US assets, while
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
The valuation backdrop is decent for many, if not all, EMs, with markets like
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
Portfolio Managers
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
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%
TBC Bank
% of Net Assets - 3.9%
TBC is the leading banking group in
HDFC Bank
% of Net Assets - 3.9%
HDFC Bank is one of the leading banks in
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
Kaspi.KZ
% of Net Assets - 3.1%
Kaspi is the dominant consumer finance, e-commerce, and payments platform in
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%
Forty Largest Holdings
as at
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 Fair value
Exposure
$’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 1,168,856 151.5 716,331
(126companies)
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 59,545
liabilities)
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
3
Portfolio Fair Value comprises investments of
Distribution of the Portfolio
as at
% of Net Benchmark
Sector Assets Index
%1 %
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.
% of Net Benchmark
Country Assets Index
%1 %
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
Ten Highest Contributors to NAV relative return % Naspers +2.7 Piraeus Financial Holdings +2.2 Lundin Gold +1.6TBC Bank +1.5 Elite Material +1.3Headhunter Group +1.3 Pan African Resources +1.1Guaranty 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 -0.7Samsonite 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:
Five Year Record
For the year ended 30 June 2025 2024 2023 2022 2021 Investment Performance Net asset value per Participating +11.8% +18.7 -2.6 -27.9 +24.8 Preference share total return (%)1 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 ($m) 771.6 753.4 796.7 796.8 1,699.1 Gross gearing (%)1 60.1 56.3 48.7 40.6 n/a Net gearing (%)1 5.5 4.3 (3.9) (7.6) n/a Net asset value per Participating 11.99 10.09 8.75 8.75 13.99 Preference Share($)1 Net asset value per Participating 8.75 7.98 6.88 7.20 10.13 Preference Share (£)1 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 0.31 0.16 0.22 0.15 0.17 Preference Share($)2 Capital earnings/(Loss) per 1.52 1.29 (0.06) (5.11) 3.81 Participating Preference Share($)2 Total earnings/(Loss) per Participating 1.83 1.45 0.16 (4.96) 3.98 Preference Share($)2 Dividend per Participating Preference$0.26 $0.20 $0.19 $0.16 $0.18 Share 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
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
• 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 Risk Mitigation
Impact
• 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 • The Company’s
globally. investments are
geographically diversified
• Emerging markets are in order to manage risks
less established, and more from adverse price
volatile, than developed fluctuations.
markets. They involve
higher risks, particularly • Russian securities
market, credit, illiquid already held at nil value.
security, legal, custody,
valuation, and currency • The exposure to any one
risks, and are more likely company is unlikely to
to experience risks that exceed 5% of the Company’s
in developed markets are net assets at the time the
associated with unusual investment is made.
market conditions.
Geopolitical Risks, • Review of material
Volatility of Emerging • The Company is exposed economic or market changes
Markets and Market Risks to several geopolitical and major market
risks. The geopolitical contingency plans for
landscape continues to extreme events.
change globally and is
largely shaped by the • China’s integration into
ongoing effects of war the global financial
conflicts, tariff wars, system and into global
deglobalisation trends and supply chains.
significant supply
disruption. The Middle • Companies that were
East and Russia are solely listed in the US
significant net exporters are listing on the HK or
of oil, natural gas and a mainland markets.
variety of soft
commodities and supply • Robust risk governance
limitations have fuelled in place supports risk
global inflation and profile assessment.
economic instability,
specifically within
Western nations.
Macro-economic uncertainty
continues to impact
Western investment
appetite.
• US imposed Executive
Orders prohibiting US
investments in certain
Chinese companies and the
passing of the Holding
Foreign Companies
Accountable Act (HFCAA).
• Rising geopolitical
tensions, including
contagion of the Ukraine
and Middle East crisis or
tensions between China and
Taiwan into the wider
region.
• Regulatory measures
impacting sectors such as
IT sector or biotech
sector and a lingering
weakness in the real
estate sector. The ongoing
trade tensions between the
United States and trading
partners and escalation of
these tensions, or the
escalation of similar
tensions between the
United States and other
countries in which
Portfolio companies
operate, could adversely
affect the performance of
the securities in which
the Company invests and
the value of the
Portfolio. In particular,
such tensions could result
in: (i) further trade
tariffs being imposed;
(ii) further reciprocal
trade tariffs being
imposed by the impacted
countries; and (iii)
escalation to a trade war
or (iv) change in foreign
policies as reciprocation
by the impacted countries.
These circumstances could
also lead to the
imposition of non-tariff
barriers to trade
including, in particular,
unexpected regulation,
economic sanctions, fines,
taxes, licence
requirements or other
measures (including
enforcement actions) in
relation to Emerging
Markets generally and
particularly China,
targeted investee
companies within the
Company’s Portfolio and/or
persons operating in the
markets. Any such measures
or escalation in trade
tensions are likely to
have an adverse effect on
the operations and supply
chains of investee
companies within the
Portfolio; the value of
the Portfolio; and the
Company’s financial
condition, returns and
prospects, with a
consequential adverse
effect on the market value
of the Shares and on
returns for Shareholders.
• An investment strategy
overseen by the Board to
• The Portfolio Manager optimise returns.
may fail to outperform the
Benchmark Index over the • A well-resourced team of
longer-term. experienced analysts
covering the market.
Investment Performance & • The Portfolio Manager
Gearing may fail to use gearing • Board scrutiny of the
adequately, resulting in a Manager and the ability in
failure to outperform in a extreme circumstances to
rising market or to change the Manager.
underperform in a falling
market. • The Board sets a limit
on gearing and provides
oversight of the Manager’s
use of gearing.
• Ongoing review by the
• Risks that external Board, Broker and Manager
pressures affect the of peer group and industry
Company’s ability to activity.
maintain and grow the
business due to the • Annual review of
Company operating within strategy by the Board, and
an increased consolidation review by the Board of the
Competition Risks, environment across the strategic direction of the
Marketplace Threats marketplace, which Company on an ongoing
Impacting Business Growth increases competition. In basis to ensure it offers
2024 marketplace threat a relevant product to
emerged related to shareholders.
activists’ strategies
targeting Investment • Regular review by the
Companies whilst the board of marketing, public
industry is consolidating relations and sales
through M&A activities. activity, and shareholder
register.
• 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 • The Board monitors tax
shareholders. There is a and regulatory changes at
risk of the Company not each Board meeting and
complying with the through active engagement
regulatory requirements of with regulators and trade
the Guernsey Financial bodies by the Manager.
Services Commission, UK
Changes in legislation, listing rules, corporate • The Manager regularly
taxation or regulation governance requirements or attends regular briefings
risks local tax requirements from key industry bodies.
that could result in loss
of status as an Authorised • Regulatory developments
Closed Ended Investment are monitored and managed
Scheme, becoming subject by Fidelity through active
to additional tax charges lobbying and negotiations
or to exclusion from as well as a robust change
trading in particular management process.
markets.
• Asset Managers are
preparing for the 2025
rollout of the CCI
(Consumer Composite
Investments) framework
which will bring
investment companies into
scope. In additions,
upcoming changes in the
updated UK Corporate
Governance code changes
and the reforms in the
public spending, which may
impact the Company.
• Business process
disruption risk from • Fidelity has Business
continued threats of Continuity and Crisis
cyberattacks, geopolitical Management Frameworks in
events, outages, fire place to deal with
events and natural business disruption and
disasters, resulting in assure operational
financial and/or resilience.
reputational impact to the
Business Continuity & Company affecting the • All third-party service
Event Management Risks functioning of the providers are subject to a
business. risk-based programme of
risk oversight and
• The Company relies on a internal audits by the
number of third-party Manager and their own
service providers, internal controls reports
principally the Registrar, are received an annual
Custodian and Depositary basis and any concerns are
who may be subject to investigated.
cybercrime.
• Fidelity’s Operational
Risk Management Framework
is designed to
pro-actively prevent,
• Financial losses or identify and manage
reputational damage from operational risks inherent
inadequate or failed in most activities.
Operational Risk internal processes, people
and systems or from • Fidelity uses robust
external parties and systems and procedures
events. dedicated to its
operational processes. Its
risk management structure
is designed according to
the FCA’s three lines of
defence model.
• Cybersecurity risk from • The risk is monitored by
cyberattacks or threats to the Board with the help of
the functioning of global the Manager’s global
markets and to the cybersecurity team and
Manager’s own business their extensive Strategic
model, including its and Cyber and Information
the Company’s outsourced Security programme and
suppliers. assurances from outsourced
suppliers.
• Risk of cybercrime such
as phishing, remote access • The Manager has
threats, extortion, and established a
denial-of-service attacks comprehensive framework of
from highly organised information security
criminal networks and policies and standards
sophisticated ransomware which provide a structured
operators, including approach to identify,
threats such as service prevent, and respond to
disruption / extortion information security
attacks (DDoS, threats. The framework
Cybercrime and Information ransomware), financial ensures consistency in our
Security Risks theft and data breaches, security measures,
Regulatory non-compliance, enhances FIL ability to
reputational damager/loss adapt to evolving/
of customer trust. The emerging threats, &
threat environment compliance with changing
continuing to evolve regulatory requirements .
rapidly, including the The Company’s other
heightened potential service providers also
threat from nation state have similar measures in
backed threat actor due to place.
geo-political tensions
from the current wars in • Key performance
Ukraine and Gaza. indicators and metrics
Ransomware continues to have been developed by the
increase globally and is Manager to monitor the
also becoming a supply overall efficacy of
chain risk. cybersecurity processes
and controls and to
• Additional risks from further enhance the
the increased use of Manager’s cybersecurity
artificial intelligence strategy and operational
(AI). resilience.
• 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.
• Due to the nature of • If the NAV total return
investment companies, the for the five years ending
price of the Company’s 30 September 2026 does not
shares and its discount to exceed the Benchmark
NAV are factors which are Index, the Company will
not completely within the make a tender offer for up
Company’s control. to 25% of the shares in
Level of Discount to Net issues (excluding shares
Asset Value (“NAV”) Risk • In considering the risk held in treasury) at that
that the discount to NAV time.
poses to shareholder value
and returns, both the • The Board and manager
absolute level of the proactively try to raise
discount and the amount the Company’s profile
relative to the Company’s through events,
peer group and the wider presentations, and
market are considered. 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.
• Succession planning for
key dependencies.
• Loss of the Portfolio
Manager or other key • Depth of the team within
Key Person Risk individuals could lead to Fidelity.
potential performance
and/or operational issues. • Experience of the
analysts covering the
Company’s investments.
• Low trading volumes on
stock exchanges of less • Restrictions on
developed markets. concentration and
diversification of the
• Lack of liquidity from assets in the Company’s
Lack of Market Liquidity temporary capital controls portfolio to protect the
Risk in certain markets. overall value of the
investments and lower
• Exaggerated fluctuations risks of lack of
in the value of liquidity.
investments from low
levels of liquidity.
Other risks facing the Company include:
Tax and Regulatory Risks
There is a risk of the Company not complying with the regulatory requirements of the
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
The Company’s performance for the five year reporting period to
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
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
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
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
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
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
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 (
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in
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
For and on behalf of the Board
Chairman
Statement of Comprehensive Income
for the year ended
Year ended 30 June 2025 Year ended 30 June 2024
Revenue Capital Total Revenue Capital Total
Note
$’000 $’000 $’000 $’000 $’000 $’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 10 – 80,979 80,979 – 81,553 81,553
profit or loss
Net gains on derivative 11 – 32,226 32,226 – 35,890 35,890
instruments
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 47,920 108,279 156,199 37,681 112,133 149,814
costs and taxation
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 21,869 105,117 126,986 14,055 112,010 126,065
for the year
Earnings per
Participating 8 $0.31 $1.52 $1.83 $0.16 $1.29 $1.45
Preference Share (basic
and diluted)
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
Share
Capital Revenue Total
premium
Note reserve reserve equity
account
$’000 $’000 $’000
$’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 14 – (94,701) – (94,701)
repurchased into Treasury
Dividend paid to shareholders 9 – – (14,103) (14,103)
Total equity at 30 June 2025 6,291 706,238 59,099 771,628
Share
Capital Revenue Total
premium
Note reserve reserve equity
account
$’000 $’000 $’000
$’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 14 – (127,125) – (127,125)
repurchased for cancellation
Participating Preference Shares 14 – (24,923) – (24,923)
repurchased into Treasury
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 30 June
Note 2025 2024
$’000 $’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
Chairman
The notes form an integral part of these financial statements
Statement of Cash Flows
for the year ended
30 June 30 June
2025 2024
$’000 $’000
Operating activities
Cash inflows from dividend income from investments 21,955 22,936
Cash inflows from interest income from investments, cash and 633 1,232
collateral balances
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 (7,569) (26,742)
and brokers
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 (95,594) (22,982)
Shares into Treasury
Cash outflow from repurchase and cancellation of – (127,125)
Participating Preference Shares
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
1. Principal Activity
The Company’s registered office is at Level 3, Mill Court La Charroterie,
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
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
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
• 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
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
3. Income
Year ended Year ended
30 June 30 June
2025 2024
$’000 $’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 Year ended 30 June
2025 2024
Revenue Capital Total Revenue Capital Total
$’000 $’000 $’000 $’000 $’000 $’000
Management fees 863 3,451 4,314 935 3,741 4,676
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 Year ended
30 June 30 June
2025 2024
$’000 $’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
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 Year ended 30 June
2025 2024
Revenue Capital Total Revenue Capital Total
$’000 $’000 $’000 $’000 $’000 $’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 Year ended 30 June
2025 2024
Revenue Capital Total Revenue Capital Total
$’000 $’000 $’000 $’000 $’000 $’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
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
8. Earnings per Participating Preference Share
Year ended Year ended
30 June 30 June
2025 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 $1.83 $1.45
and diluted)
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
$’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 69,485,764 86,936,701
held outside of Treasury
9. Dividends Paid to Shareholders
Year ended Year ended
30 June 30 June
2025 2024
$’000 $’000
Dividend paid
2024 final dividend of 20.0¢ (2023: 19.0¢) per 14,103 17,305
Participating Preference Share
Total dividend paid 14,103 17,305
Dividend proposed
2025 final dividend of 26¢ (2024: 20.0¢) per Participating 16,729 14,929
Preference Share
Total dividend proposed 16,729 14,929
The Directors have proposed the payment of a final dividend for the year ended
10. Investments at Fair Value through Profit or Loss
30 June 30 June
2025 2024
$’000 $’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 Year ended
30 June 30 June
2025 2024
$’000 $’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 investments1 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
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 Year ended
30 June 30 June
2025 2024
$’000 $’000
Purchases transaction costs 930 1,012
Sales transaction costs 1,081 1,116
2,011 2,128
11. Derivative Instruments
Year ended Year ended
30 June 30 June
2025 2024
$’000 $’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 (10,621) 11,794
instruments
Net gains on derivative instruments 32,226 35,890
30 June 30 June
2025 2024
Fair value Fair value
$’000 $’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
Asset Asset
Fair value Fair value
exposure exposure
$’000 $’000
$’000 $’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 (2,808) (160,910) (1,196) (148,757)
exposure)
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 (827) (10,949) (2,418) (15,110)
exposure)
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 30 June
2025 2024
$’000 $’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 30 June
2025 2024
$’000 $’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 2024
Number of Number of
shares 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 – (13,531,881)
cancellation
Participating Preference Shares repurchased into (10,304,042) (2,921,898)
Treasury
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 10,304,042 2,921,898
Treasury
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
The costs of the repurchase of shares held in
The Company may issue an unlimited number of Unclassified Shares of no par value.
Founder Shares
The Founder Shares were issued at
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
Participating Preference Shares
At the Extraordinary General Meeting of the Company held on
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
Capital Revenue Total
premium
reserve reserve equity
account
$’000 $’000 $’000
$’000
At 1 July 2024 6,291 695,822 51,333 753,446
Net gains on investments at fair value – 80,979 – 80,979
through profit or loss (see Note 10)
Net gains on derivative instruments – 32,226 – 32,226
(see Note 11)
Net foreign exchange losses – (1,475) – (1,475)
Management fees (see Note 4) – (3,451) – (3,451)
Capital gains tax (see Note 7) – (3,162) – (3,162)
Participating Preference Shares repurchased – (94,701) – (94,701)
into Treasury (see Note 14)
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
Capital Revenue Total
premium
reserve reserve equity
account
$’000 $’000 $’000
$’000
At 1 July 2023 6,291 735,860 54,583 796,734
Net gains on investments at fair value – 81,553 – 81,553
through profit or loss (see Note 10)
Net gains on derivative instruments – 35,890 – 35,890
(see Note 11)
Net foreign exchange losses – (1,569) – (1,569)
Management fees (see Note 4) – (3,741) – (3,741)
Capital gains tax (see Note 7) – (123) – (123)
Participating Preference Shares repurchased – (127,125) – (127,125)
for cancellation (see Note 14)
Participating Preference Shares repurchased – (24,923) – (24,923)
into Treasury (see Note 14)
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
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
30 June 30 June
2025 2024
Net assets $771,628,000 $753,446,000
Participating Preference Shares held outside of 64,342,245 74,646,287
Treasury
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 30 June
2025 2024
$’000 $’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
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
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:
Investments Asset/ Cash, cash
held at (liabilities) equivalents 2025
fair value exposure of and other Total foreign
Currency
through derivative receivables/ currency risk
profit or loss instruments1 (payables)2 $’000
$’000 $’000 $’000
Brazilian real 40,116 – 213 40,329
Canadian dollar 29,984 24,222 (22) 54,184
Chinese yuan renminbi 15,173 – – 15,173
Euro 26,672 (7,301) 80 19,451
Hong Kong dollar 15,298 104,635 752 120,685
Hungarian forint 19,303 – – 19,303
Indian rupee 108,157 (15,666) 27,173 119,664
Indonesian rupiah 33,375 – – 33,375
Japanese yen – (13,964) (197) (14,161)
Korean won 20,415 (10,485) 5,011 14,941
Mexican peso 41,652 10,191 55 51,898
Nigerian naira 12,067 – 324 12,391
Poland złoty 16,704 (14,578) 13 2,139
Romanian Leu 11,310 – (31) 11,279
Saudi riyal 4,402 – 385 4,787
Sol 8,557 – 1,024 9,581
South African rand 83,832 75,841 (52) 159,621
Sterling – 34,563 861 35,424
Swedish krona – (10,825) 108 (10,717)
Taiwan dollar 127,956 – 478 128,434
Turkish lira 9,226 – – 9,226
United Arab Emirates 19,003 – – 19,003
dirham
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.
Investments Asset/ Cash, cash
held at (liabilities) equivalents 2024
fair value exposure of and other Total foreign
Currency
through derivative receivables/ currency risk
profit or loss instruments1 (payables)2 $’000
$’000 $’000 $’000
Australian dollar 3,594 (4,012) (35) (453)
Brazilian real 44,315 – (275) 44,040
Canadian dollar 25,805 9,545 (17) 35,333
Euro 16,125 21,793 (28) 37,890
Hong Kong dollar 40,623 108,530 (1,395) 147,758
Hungarian forint 10,536 – – 10,536
Indian rupee 77,447 (17,942) 25,903 85,408
Indonesian rupiah 28,009 – – 28,009
Japanese yen – (25,855) (97) (25,952)
Korean won 20,102 (7,027) 1,325 14,400
Mexican peso 33,824 23,248 (49) 57,023
Poland złoty 13,899 (16,346) (351) (2,798)
Saudi riyal 36,888 – 385 37,273
South African rand 85,394 2,518 (9) 87,903
Sterling 4,465 16,082 (985) 19,562
Swedish krona – 8,450 (12) 8,438
Taiwan dollar 115,039 – 395 115,434
United Arab Emirates 16,671 – – 16,671
dirham
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
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
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
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 10% decrease 10% increase 10% decrease
in fair value in fair value in fair value in fair value
$’000 $’000 $’000 $’000
Statement of
Comprehensive Income –
profit
after taxation
Total profit after 71,286 (71,286) 69,644 (69,644)
taxation for the year
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 30 June
2025 2024
$’000 $’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
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
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 30 June
2025 2024
Amounts due Amounts due
within 1 year within 1 year
$’000 $’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 collateral collateral collateral
received pledged received pledged
$’000 $’000 $’000 $’000
Bank of America Merrill Lynch – 410 – –
International
Goldman Sachs International Ltd 4,890 – 6,440 –
J.P. Morgan Securities plc – 970 5,290 –
Morgan Stanley & Co. International – 640 – 530
Ltd
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
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:
Gross amount Related amounts not set
Net amount off on statement of 2025
of recognised financial position
of financial
financial
assets
Gross liabilities Margin
Financial presented on
assets amount set off on Financial account Net
the statement
$’000 the statement instruments received as amount
of financial
of financial $’000 collateral $’000
position
position $’000
$’000
$’000
CFDs 10,649 – 10,649 (8,072) (810) 1,767
Options 3,944 – 3,944 (1,900) – 2,044
Futures 342 – 342 (342) – –
contracts
Forward
currency 15,188 (15,117) 71 – – 71
contracts
30,123 (15,117) 15,006 (10,314) (810) 3,882
Gross amount Related amounts not
Net amount set 2025
of recognised off on statement of
of financial financial position
financial
liabilities
Gross assets Margin
Financial presented on
assets amount set off on Financial account Net
the statement
$’000 the statement instruments pledged as amount
of financial
of financial $’000 collateral $’000
position
position $’000
$’000
$’000
CFDs (9,215) – (9,215) 8,072 640 (503)
Options (2,432) – (2,432) 1,900 – (532)
Futures (4,137) – (4,137) 342 3,795 –
contracts
Forward
currency (15,117) 15,117 – – – –
contracts
(30,901) 15,117 (15,784) 10,314 4,435 (1,035)
Gross amount Related amounts not set
Net amount 2025
of recognised off on statement of
of financial financial position
financial
assets
Gross liabilities Margin
Financial presented on
assets amount set off on Financial account Net
the statement
$’000 the statement instruments received as amount
of financial
of financial $’000 collateral $’000
position
position $’000
$’000
$’000
CFDs 18,344 – 18,344 (6,763) (9,169) 2,412
Options 6,423 – 6,423 (1,209) – 5,214
Futures 268 – 268 (268) – –
contracts
Forward
currency 11,801 (11,437) 364 – – 364
contracts
36,836 (11,437) 25,399 (8,240) (9,169) 7,990
Gross amount Related amounts not
Net amount set 2025
of recognised off on statement of
of financial financial position
financial
liabilities
Gross assets Margin
Financial presented on
assets amount set off on Financial account Net
the statement
$’000 the statement instruments pledged as amount
of financial
of financial $’000 collateral $’000
position
position $’000
$’000
$’000
CFDs (6,763) – (6,763) 6,763 – –
Options (3,205) – (3,205) 1,209 – (1,996)
Futures (1,889) – (1,889) 268 1,621 –
contracts
Forward
currency (11,437) 11,437 – – – –
contracts
(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
Valued by reference to inputs other than quoted prices included
Level 2 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.
30 June
Financial assets at fair value through profit or Level 1 Level 2 Level 3 2025
loss
$’000 $’000 $’000 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 4,137 – – 4,137
contracts
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.
30 June
Financial assets at fair value through profit or Level 1 Level 2 Level 3 2024
loss
$’000 $’000 $’000 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 – 364 – 364
contracts
693,199 23,590 5,363 722,152
Financial liabilities at fair value through
profit or loss
Derivative instrument liabilities – futures 1,889 – – 1,889
contracts
Derivative instrument liabilities – options 1,198 2,007 – 3,205
Derivative instrument liabilities – CFDs – 6,763 – 6,763
3,087 8,770 – 11,857
30 June 30 June
Valuation basis for Level 3 investments 2025 2024
$’000 $’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:
30 June 30 June
2025 2024
Movements in level 3 investments during the year
Level 3 Level 3
$’000 $’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
During the year ended
The Company’s holdings in Russian securities have been fair valued at $nil as at
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 Exposure
%1 %1
$’000 $’000
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 1,024,911 132.8 1,024,911 132.8
hedges
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 Exposure
%1 %1
$’000 $’000
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 981,370 130.3 981,370 130.3
hedges
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
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 30 June
2025 2024
$’000 $’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 30 June
2025 2024
$’000 $’000
Portfolio management services 365 335
Marketing services 43 57
As at
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
Role 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
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
22. Subsequent events
On
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
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 30 June
2025 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
Net asset
Share
2025 value per
price
share
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%
Net asset
Share
2024 value per
price
share
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%
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