Half-yearly Report

FIDELITY EUROPEAN VALUES PLC Half-Yearly Report for the 6 months ended 30 June 2013 Further to the disclosure of the Company's Half-Yearly report for the six months ended 30 June 2013 by way of an announcement dated 30 July 2013, in accordance with the Disclosure and Transparency Rules ("the Rules") 4.2.2 and 6.3.5 this announcement contains the text of the announcement dated 30 July 2013 together with detail on the availability of the printed form of the report in compliance with the Rules. The Company's half-yearly report for the six months ended 30 June 2013 will shortly be available for inspection at the National Storage Mechanism (NSM): www.hemscott.com/nsm.do The half-yearly report will shortly be available on the Company's website at: https://www.fidelity.co.uk/static/pdf/common/investment-trusts/european/european_half_yearly_report_2013.pdf Jenny Thompson, FIL Investments International, Company Secretary - 01737 836 869 8 August 2013 Contents Investment Objective and Performance Summary Financial Summary Half-Yearly Report Directors' Responsibility Statement Twenty Largest Investments Financial Statements Investor Information Directory Glossary of Terms Warning to Shareholders - Share Fraud Warning Investment Objective and Performance Summary The investment objective of the Company is to achieve long term capital growth from the stockmarkets of continental Europe. Performance (on a total return basis) (%) Six From months launch to 5 30 November June 1991 2013 Net Asset Value ("NAV") per Share Total Return +11.9% +1,812.7% Share Price Total Return +9.7% +1,604.8% FTSE World Europe (ex UK) Index Total Return +10.9% +537.0% Standardised performance (on a total return basis) (%) 30/06/12 30/06/11 30/06/10 30/06/09 30/06/08 to to to to to 30/06/13 30/06/12 30/06/11 30/06/10 30/06/09 NAV per share +26.8% -12.0% +30.5% +14.9% -24.2% Share Price +30.5% -12.1% +37.0% +7.0% -25.8% FTSE World Europe (ex UK) +27.9% -20.0% +29.4% +15.1% -20.8% Index1 1 Data prior to the period ended 30 June 2011 is on a net of tax basis Sources: Fidelity and Datastream Past performance is not a guide to future returns The Company is a member of the Association of Investment Companies Financial Summary 30 31 June December 2013 2012 Assets Total portfolio exposure1 £710.6m £684.9m Shareholders' funds £665.2m £616.3m Total portfolio exposure in excess of shareholders' 6.8% 11.1% funds (Gearing) NAV per share (cum-income) 1,572.79p 1,428.97p NAV per share (ex-income) 1,541.69p 1,401.02p Stockmarket data FTSE World Europe (ex UK) Index2 383.47 355.63 Share price 1,385.00p 1,287.00p Discount (cum-income basis) 11.9% 9.9% Discount (ex-income basis) 10.2% 8.1% Results for the six months to 30 June - see pages 8 2013 2012 and 9 Revenue return per ordinary share 30.81p 28.25p Capital return per ordinary share 139.05p 87.26p Total return per ordinary share 169.86p 115.51p Total returns (includes reinvested income) for the 2013 2012 six months to 30 June NAV per share +11.9% +10.1% Share price +9.7% +10.4% FTSE World Europe (ex UK) Index +10.9% +2.2% 1 The total exposure of the investment portfolio, including exposure to the investments underlying the long CFDs 2 Price index Sources: Fidelity and Datastream Past performance is not a guide to future returns Half-Yearly Report PERFORMANCE During the first six months of the year the NAV total return was 11.9% compared to a total return of 10.9% for the FTSE World Europe (ex UK) Index. The share price total return was 9.7%, lagging the NAV total return as a consequence of a widening in the share price discount to NAV, from 9.9% at 31 December 2012 to 11.9% at 30 June 2013. (All figures in sterling terms). MARKET REVIEW Investors appear, in this first half of 2013, to have followed the advice of the old adage "sell in May and go away". Continental European equities, which had been rising since the beginning of the year, continuing the strong second half performance of 2012, peaked in late May. At first, equities were undermined by rising US treasury bond yields, as confidence grew in economic recovery there. Ben Bernanke then announced, in June, that the Federal Reserve was considering a reduction ("tapering") in the amount of monthly bond purchases ("quantitative easing") that the central bank would undertake in the future. This resulted in a further step-up in long bond yields and a corresponding fall in equity values such that, by the end of June, continental European equities had retreated some eight percent from their peak. Despite this correction, continental European equities still rose over the period, although, due to the depreciation of the pound, much more in sterling terms than in local currency. Rising bond yields precipitated a change in market leadership too. The strong performers of the first quarter were bond-like equities, which had demonstrated earnings resilience in a difficult environment. Sectors such as pharmaceuticals and consumer staples performed particularly well, which was surprising given the overall strength of the market. As bond yields started to rise in May, investors turned their attention towards companies that would benefit from an improvement in the global economy and a period of rising rates. Commodities and commodity sectors, including the energy sector, remained poor performers throughout the period. PORTFOLIO MANAGER'S REPORT Your Company's NAV outperformed the benchmark over the period. After a strong first quarter, the Company gave up some ground in the second quarter. At the stock level, strong performances from market-sensitive financials, such as 3i and UBS, were largely off-set by disappointing results among other holdings. Umicore warned that precious metals recycling profits would fall year-on-year, partly as a result of weakness in the price of gold and the platinum group metals. Saipem, the global oil services company, saw a sharp drop in its share price in the first quarter following a major profit warning and the announcement of a cut in the dividend. The holding, which had been reduced last year, was sold immediately. This saved the Company from further damage when Saipem delivered a second major profit warning in June. May was, in general, a difficult month for your Company as rising bond yields impacted the valuation of bond-like equities such as Nestlé and Anheuser Busch Inbev which had, to date, demonstrated earnings resilience in difficult times. The increasing weakness and unrest in emerging markets also affected these stocks as well as other holdings such as Turkiye Garanti. DISCOUNT MANAGEMENT The Board continues to adopt an active discount management policy and share buybacks have been made during the period. Whilst the primary purpose of our policy is to reduce share price volatility in relation to NAV, buying in shares at a discount also results in an enhancement to NAV per share. During the six months to 30 June 2013, 830,679 ordinary shares were repurchased for cancellation, at an average price of 1,401.38 pence per share. Since the reporting period end, a further 29,755 shares have been repurchased for cancellation at a price of 1,396.30 pence per share. The discount at 30 June 2013 was 11.9% on a cum-income NAV basis. With effect from 19 June 2013 we began releasing your Company's NAV on an ex-income as well as a cum-income basis. This was to enable an easier comparison with the peer group, who also release daily ex-income as well as cum-income NAVs. On an ex-income NAV basis, our share price discount stood at 10.2% at 30 June 2013. GEARING Your Company continues to gear through the use of long Contracts For Difference ("CFDs"). As at 30 June 2013 the level of gearing was 6.8%. The Board has set a gearing range of 5-15% and in the six month period gearing has made a positive contribution to performance. PRINCIPAL RISKS AND UNCERTAINTIES The Board, with the assistance of the Manager, has developed a risk matrix which, as part of the internal controls process, identifies the key risks that your Company faces. The Board believes that the principal risks and uncertainties faced by your Company continue to fall into the following categories: market risk (including possible impacts of the Eurozone situation); performance risk; income and dividend risk; share price risk; gearing risk; tax and regulatory risks; and operational risks. Information on each of these can be found in the Business Review section of the Annual Report for the year ended 31 December 2012. GOING CONCERN The Board receives regular reports from the Manager and the Directors have a reasonable expectation that your Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements as outlined in the Annual Report for the year ended 31 December 2012. The next continuation vote will be put to shareholders at the Annual General Meeting in 2015. EUROPEAN DIRECTIVE ON ALTERNATIVE INVESTMENT FUND MANAGERS The Alternative Investment Fund Managers Directive ("AIFMD") is a European Directive that affects many investment funds, including your Company. The Board has been advised that the Directive is unlikely to have any material effect on the Company although the regulations implementing the Directive will require the appointment of a depositary, amendments to a number of agreements under which services are provided to the Company and will involve some additional reporting, both to you, the shareholder, and to the Financial Conduct Authority. The Board has been further advised that the only consequence of note for shareholders is a potential increase in the operating costs of the Company, primarily deriving from the additional cost of appointing a depositary. At present it is too early to know the precise size of any increase, not least as the Directive is not expected to apply to your Company, under the transitional regime applicable in the UK, until 22 July 2014. Naturally, the Board will continue to seek to restrict any increase in operating costs to that necessary for compliance with the new regulatory regime. The Board has agreed to appoint FIL Investments International (the current manager) as its interim Alternative Investment Fund Manager (`AIFM') (for no additional fee), and as such the Manager is in the process of seeking to become a registered AIFM during the transitional period so that your Company will become fully compliant by July 2014. OUTLOOK There is much debate about the recent rise in bond yields. Is this an inflection point, following a very long (more than three decades) decline in bond yields? An inflection point that signals the beginning of a new era in which the global economy, led by the US, shakes off the shackles of the financial crisis and returns to a more normal rate of growth? Or will bond yields sink again when it becomes apparent that it is too soon and the economy is still too fragile for the Federal Reserve to start "tapering" quantitative easing? Any expectation of renewed growth relies on an assumption that the US economy remains paramount in shaping the direction of the global economy. There is a risk however that lower rates of growth in the BRIC countries will off-set any US recovery. China's rate of growth is slowing as the government focuses more on the quality and sustainability of growth rather than just the volume of growth. Most notably, commodity prices have been weak, reflecting a slower pace in Chinese demand and a lagged supply response. This is good news for inflation expectations but may lead to further weakness in the new BRIC (Brazil, Russia, India and China) motors of the global economy. The Eurozone sovereign debt crisis, which appears to be in remission, remains vulnerable to any slowdown in global growth. It will be a fluid environment but your Portfolio Manager's focus will continue to be on attractively–valued companies, with sound balance sheets, which can deliver consistent dividend growth. Over the last year, we have seen a dramatic re-rating of equities, given that stock markets have risen while earnings and dividends have not. Continental European equities are now fairly valued relative to historic norms so, from here, we will need to see earnings and dividend growth for them to continue to rise. Your Portfolio Manager invests on a three to five year investment horizon and remains confident that, over this time frame, the equities held by your Company will grow dividends and perform well. By order of the Board FIL Investments International 29 July 2013 Directors' Responsibility Statement The Directors confirm to the best of their knowledge that: a) the condensed set of financial statements contained within the Half-Yearly financial report has been prepared in accordance with the UK Accounting Standards Board's Statement `Half-Yearly Financial Reports'; b) the Half-Yearly Report narrative on pages 3 to 5 (constituting the interim management report) include a fair review of the information required by Rule 4.2.7R of the FCA's Disclosure and Transparency Rules and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties and going concern for the remaining six months of the financial year; and c) in accordance with Disclosure and Transparency Rule 4.2.8R there have been no related parties transactions during the six months to 30 June 2013 and therefore nothing to report on any material effect by such a transaction on the financial position or the performance of the Company during that period; and there have been no changes in this position since the last Annual Report that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year. The Half-Yearly financial report has not been audited or reviewed by the Company's Independent Auditor. The Half-Yearly financial report was approved by the Board on 29 July 2013 and the above responsibility statement was signed on its behalf by Humphrey van der Klugt, Chairman. Twenty Largest Investments as at 30 June 2013 Twenty Largest Investments, including long Exposure Fair Total CFDs £'000 value1 Exposure2 £'000 % Nestlé 47,303 47,303 6.7 Packaged food Sanofi (CFD) 37,662 11,279 5.3 Pharmaceuticals UBS 29,679 29,679 4.2 Financial services Novo-Nordisk 28,789 28,789 4.1 Healthcare services Schneider Electric (CFD) 24,681 3,742 3.5 Electricity distribution and automation management Anheuser-Busch InBev (CFD) 21,648 5,294 3.0 Brewing Royal Dutch Shell 21,506 21,506 3.0 Oil and gas SAP 21,383 21,383 3.0 Software solutions and consultancy Sampo 19,785 19,785 2.8 Property and casualty insurance Zurich Insurance Group 18,737 18,737 2.6 Financial services BNP Paribas (CFD) 18,555 1,169 2.6 Financial services Swedish Match 18,137 18,137 2.6 Smokeless tobacco products 3i Group 17,051 17,051 2.4 Speciality finance Christian Dior 17,029 17,029 2.4 Clothing and accessories Linde 15,543 15,543 2.2 Gases and engineering GAM Holding 14,865 14,865 2.1 Asset managers Schindler Holding 13,734 13,734 1.9 Escalators, elevators and moving walkways MTU Aero Engines 13,617 13,617 1.9 Machinery Volkswagen 13,504 13,504 1.9 Automobiles SES 13,342 13,342 1.8 Broadcasting and entertainment Twenty Largest Investments 426,550 345,488 60.0 Other Investments 284,053 284,053 40.0 Total Portfolio (including long CFDs) 710,603 629,541 100.0 1 Fair value represents the carrying value in the Balance Sheet on page 12 2 % of the total exposure of the investment portfolio, including exposure to the investments underlying the long CFDs Income Statement six six months year months ended ended ended 30.06.13 31.12.12 30.06.12 unaudited audited unaudited revenue capital total revenue capital total revenue capital total Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments designated at fair value through profit or loss - 57,054 57,054 - 93,403 93,403 - 31,009 31,009 Gains on derivative instruments held at fair value through profit or loss - 2,913 2,913 - 19,630 19,630 - 9,654 9,654 Income 2 17,622 - 17,622 18,518 - 18,518 15,595 - 15,595 Investment management fees (2,839) - (2,839) (4,929) - (4,929) (2,392) - (2,392) Performance fees - (502) (502) - (2,243) (2,243) - (1,495) (1,495) Other expenses (384) - (384) (629) - (629) (268) - (268) Exchange losses on other net assets (9) (98) (107) (76) (153) (229) (61) (1,123) (1,184) ------- ------- ------- ------- ------- ------- ------- ------- ------- Net return before finance costs and taxation 14,390 59,367 73,757 12,884 110,637 123,521 12,874 38,045 50,919 Finance costs (140) - (140) (326) - (326) (186) - (186) ------- ------- ------- ------- ------- ------- ------- ------- ------- Net return on ordinary activities before taxation 14,250 59,367 73,617 12,558 110,637 123,195 12,688 38,045 50,733 Taxation on return on ordinary activities 3 (1,097) - (1,097) (503) - (503) (372) - (372) ------- ------- ------- ------- ------- ------- ------- ------- ------- Net return on ordinary activities after taxation for the period 13,153 59,367 72,520 12,055 110,637 122,692 12,316 38,045 50,361 ======= ======= ======= ======= ======= ======= ======= ======= ======= Return per ordinary share 4 30.81p 139.05p 169.86p 27.78p 254.97p 282.75p 28.25p 87.26p 115.51p ======= ======= ======= ======= ======= ======= ======= ======= ======= A Statement of Total Recognised Gains and Losses has not been prepared as there are no gains and losses other than those reported in this Income Statement. The total column of the Income Statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. These financial statements have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice issued in January 2009. Reconciliation of Movements in Shareholders' Funds Notes share share capital capital revenue total capital premium redemption reserve reserve equity £'000 account reserve £'000 £'000 £'000 £'000 £'000 Opening 11,073 58,615 4,752 425,007 18,170 517,617 shareholders' funds at 1 January 2012 Repurchase of 6 (272) - 272 (11,540) - (11,540) ordinary shares Net return on - - - 38,045 12,316 50,361 ordinary activities after taxation for the period Dividend paid 5 - - - - (11,578) (11,578) to shareholders ---------- ---------- ---------- ---------- ---------- ---------- Closing 10,801 58,615 5,024 451,512 18,908 544,860 shareholders' funds at 30 June 2012 ========== ========== ========== ========== ========== ========== Opening 11,073 58,615 4,752 425,007 18,170 517,617 shareholders' funds at 1 January 2012 Repurchase of 6 (292) - 292 (12,457) - (12,457) ordinary shares Net return on - - - 110,637 12,055 122,692 ordinary activities after taxation for the year Dividend paid 5 - - - - (11,578) (11,578) to shareholders ---------- ---------- ---------- ---------- ---------- ---------- Closing 10,781 58,615 5,044 523,187 18,647 616,274 shareholders' funds at 31 December 2012 Repurchase of 6 (207) - 207 (11,641) - (11,641) ordinary shares Net return on - - - 59,367 13,153 72,520 ordinary activities after taxation for the period Dividend paid 5 - - - - (11,921) (11,921) to shareholders ---------- ---------- ---------- ---------- ---------- ---------- Closing 10,574 58,615 5,251 570,913 19,879 665,232 shareholders' funds at 30 June 2013 ========== ========== ========== ========== ========== ========== Balance Sheet Company No. 2638812 30.06.13 31.12.12 30.06.12 unaudited audited unaudited Notes £'000 £'000 £'000 Fixed assets Investments designated at fair 608,057 583,938 508,855 value through profit or loss ---------- ---------- ---------- Current assets Derivative assets held at fair 21,484 16,448 5,695 value through profit or loss Debtors 2,409 1,940 2,955 Fidelity Institutional Liquidity 32 30 30 Fund plc Cash at bank 35,346 20,450 34,631 ---------- ---------- ---------- 59,271 38,868 43,311 ---------- ---------- ---------- Creditors Derivative liabilities held at - (2,747) (2,833) fair value through profit or loss Other creditors (2,096) (3,785) (4,473) ---------- ---------- ---------- (2,096) (6,532) (7,306) ---------- ---------- ---------- Net current assets 57,175 32,336 36,005 ---------- ---------- ---------- Total net assets 665,232 616,274 544,860 ========== ========== ========== Capital and reserves Share capital 6 10,574 10,781 10,801 Share premium account 58,615 58,615 58,615 Capital redemption reserve 5,251 5,044 5,024 Capital reserve 570,913 523,187 451,512 Revenue reserve 19,879 18,647 18,908 ---------- ---------- ---------- Total equity shareholders' funds 665,232 616,274 544,860 ========== ========== ========== Net asset value per ordinary 7 1,572.79p 1,428.97p 1,261.13p share ========== ========== ========== Cash Flow Statement six year six months months ended ended ended 30.06.13 31.12.12 30.06.12 unaudited audited unaudited £'000 £'000 £'000 Operating activities Investment income received 12,037 13,165 10,968 Income received on long CFDs 2,835 1,162 1,162 Deposit interest received 19 53 26 Investment management fee paid (2,736) (4,721) (2,330) Performance fee paid (2,243) - - Directors' fees paid (72) (161) (97) Other cash payments (335) (675) (417) ---------- ---------- ---------- Net cash inflow from operating 9,505 8,823 9,312 activities ---------- ---------- ---------- Finance costs Interest paid on long CFDs (141) (335) (189) ---------- ---------- ---------- Net cash outflow from finance costs (141) (335) (189) ---------- ---------- ---------- Overseas taxation recovered 550 1,106 590 ---------- ---------- ---------- Financial investment Purchase of investments (60,500) (129,219) (52,432) Disposal of investments 94,015 144,451 80,916 ---------- ---------- ---------- Net cash inflow from financial 33,515 15,232 28,484 investment ---------- ---------- ---------- Derivative activities Net (payments)/proceeds from long (4,870) 9,038 9,902 CFD positions closed ---------- ---------- ---------- Net cash (outflow)/inflow from (4,870) 9,038 9,902 derivative activities ---------- ---------- ---------- Dividend paid to shareholders (11,921) (11,578) (11,578) ---------- ---------- ---------- Net cash inflow before use of liquid 26,638 22,286 36,521 resources and financing ---------- ---------- ---------- Cash flow from management of liquid resources Fidelity Institutional Liquidity - 1 1 Fund plc ---------- ---------- ---------- Net cash inflow from management of - 1 1 liquid resources ---------- ---------- ---------- Net cash inflow before financing 26,638 22,287 36,522 ---------- ---------- ---------- Financing Repurchase of ordinary shares (11,642) (14,055) (13,139) ---------- ---------- ---------- Net cash outflow from financing (11,642) (14,055) (13,139) ---------- ---------- ---------- Increase in cash 14,996 8,232 23,383 ---------- ---------- ---------- Notes to the Financial Statements 1 ACCOUNTING POLICIES The Half-Yearly financial statements have been prepared on the basis of the accounting policies set out in the Company's annual report and financial statements for the year ended 31 December 2012. 30.06.13 31.12.12 30.06.12 unaudited audited unaudited £'000 £'000 £'000 2 INCOME Income from investments designated at fair value through profit or loss Overseas dividends 13,834 15,301 13,137 Overseas scrip dividends 561 1,435 898 UK dividends 371 570 372 ---------- ---------- ---------- 14,766 17,306 14,407 Income from derivative instruments held at fair value through profit or loss Dividends on long CFDs 2,835 1,162 1,162 ---------- ---------- ---------- 17,601 18,468 15,569 Other income Deposit interest 21 50 26 ---------- ---------- ---------- Total income 17,622 18,518 15,595 ========== ========== ========== 30.06.13 31.12.12 30.06.12 unaudited audited unaudited £'000 £'000 £'000 3 TAXATION ON RETURN ON ORDINARY ACTIVITIES Overseas taxation suffered 2,039 2,584 2,146 Overseas taxation recovered (942) (2,081) (1,774) ---------- ---------- ---------- Current taxation charge 1,097 503 372 ========== ========== ========== 30.06.13 31.12.12 30.06.12 unaudited audited unaudited 4 RETURN PER ORDINARY SHARE Revenue return per ordinary share 30.81 27.78 28.25 - pence Capital return per ordinary share 139.05 254.97 87.26 - pence ---------- ---------- ---------- Total return per ordinary share - 169.86 282.75 115.51 pence ========== ========== ========== The return per ordinary share is based on the net return on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares in issue during the period. 30.06.13 31.12.12 30.06.12 unaudited audited unaudited Net revenue return on ordinary 13,153 12,055 12,316 activities after taxation for the period - £'000 Net capital return on ordinary 59,367 110,637 38,045 activities after taxation for the period - £'000 ---------- ---------- ---------- Net total return on ordinary 72,520 122,692 50,361 activities after taxation for the period - £'000 ========== ========== ========== Weighted average number of 42,695,559 43,391,355 43,599,364 ordinary shares in issue during the period ========== ========== ========== 30.06.13 31.12.12 30.06.12 unaudited audited unaudited £'000 £'000 £'000 5 DIVIDENDS PAID Final dividend of 27.75 pence per 11,921 - - ordinary share paid for the year ended 31 December 2012 Final dividend of 26.50 pence per - 11,578 11,578 ordinary share paid for the year ended 31 December 2011 ---------- ---------- ---------- 11,921 11,578 11,578 ========== ========== ========== No dividend has been declared in respect of the six months to 30 June 2013. 30.06.13 31.12.12 30.06.12 unaudited audited unaudited Number Number Number of shares £'000 of shares £'000 of shares £'000 6 SHARE CAPITAL Issued, allotted and fully paid Ordinary shares of 25 pence each Beginning 43,127,073 10,781 44,294,946 11,073 44,294,946 11,073 of the period Repurchase (830,679) (207) (1,167,873) (292) (1,090,853) (272) of ordinary shares ---------- ---------- ---------- ---------- ---------- ---------- End of the 42,296,394 10,574 43,127,073 10,781 43,204,093 10,801 period ========== ========== ========== ========== ========== ========== 7 NET ASSET VALUE PER ORDINARY SHARE The net asset value per ordinary share is based on net assets of £665,232,000 (31.12.12: £616,274,000 and 30.06.12: £544,860,000) and on 42,296,394 (31.12.12: 43,127,073 and 30.06.12: 43,204,093) ordinary shares, being the number of ordinary shares in issue at the period end. 8 INVESTMENT TRANSACTION COSTS Transaction costs are incurred on the acquisition and disposal of investments. These are included in the gains on investments designated at fair value through profit or loss in the capital column of the Income Statement and are summarised below: 30.06.13 31.12.12 30.06.12 unaudited audited unaudited £'000 £'000 £'000 Purchases 71 173 93 Sales 109 121 51 ---------- ---------- ---------- 180 294 144 ========== ========== ========== 9 UNAUDITED FINANCIAL STATEMENTS The results for the six months to 30 June 2013 and 30 June 2012, which are unaudited, constitute non-statutory accounts within the meaning of Section 435 of the Companies Act 2006. The figures and financial information for the year ended 31 December 2012 are extracted from the latest published financial statements. These financial statements, on which the Independent Auditor gave an unqualified report, have been delivered to the Registrar of Companies. Investor Information CONTACT INFORMATION Private investors: can call free on 0800 41 41 10 9am to 6pm, Monday to Saturday. Financial advisers: can call free on 0800 41 41 81 8am to 6pm, Monday to Friday. www.fidelity.co.uk/its Existing shareholders who have a specific query regarding their holding or need to provide updated information, for example a change of address, should contact the appropriate administrator. Holders of ordinary shares Capita Registrars, Registrars to Fidelity European Values PLC, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Telephone: 0871 664 0300 (calls cost 10p per minute plus network extras. Lines are open from 8.30am to 5.30pm, Monday to Friday). Email: ssd@capitaregistrars.com Details of individual shareholdings and other information can also be obtained from the Registrar's website: www.capitaregistrars.com Fidelity Share Plan investors Fidelity Investment Trust Share Plan, PO Box 12062, Mellon House, Ingrave Road, Brentwood, Essex CM14 9LX. Telephone: 0845 358 1107 (calls to this number are charged at 3.95p per minute from a BT landline. Other telephone service providers' costs may vary). Fidelity ISA investors Fidelity, using the freephone numbers given opposite, or by writing to: UK Customer Service, Fidelity Worldwide Investment, Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent TN11 9DZ. General enquiries should be made to Fidelity, the Investment Manager and Secretary, at the Company's registered office: FIL Investments International, Investment Trusts, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. Telephone: 01732 36 11 44 Fax: 01737 83 68 92 www.fidelity.co.uk/its Dividend Reinvestment Plan This is a convenient way to build up your shareholding by using your cash dividends to buy more shares in the Company. If you prefer to receive shares for your next dividend instead of cash please complete an application form online at www.capitashareportal.com or call Capita IRG Trustees on 0871 664 0381 (calls cost 10p per minute plus network extras) from the UK or +44 20 8639 3402 from overseas. FINANCIAL CALENDAR 30 June 2013 - Half-Yearly period end 29 July 2013 - Announcement of Half-Yearly results August 2013 - Publication of Half-Yearly report 31 December 2013 - Financial year end March 2014 - Publication of Annual Report May 2014 - Annual General Meeting Directory BOARD OF DIRECTORS Humphrey van der Klugt (Chairman) James Robinson (Chairman of the Audit Committee and Senior Independent Director) Simon Fraser Robin Niblett Marion Sears MANAGER, SECRETARY AND REGISTERED OFFICE FIL Investments International Beech Gate Millfield Lane Lower Kingswood Tadworth Surrey KT20 6RP FINANCIAL ADVISERS AND STOCKBROKERS Winterflood Investment Trusts The Atrium Building Cannon Bridge 25 Dowgate Hill London EC4R 2GA INDEPENDENT AUDITOR Grant Thornton UK LLP Chartered Accountants and Registered Auditor 30 Finsbury Square London EC2P 2YU BANKERS AND CUSTODIAN JP Morgan Chase Bank (London Branch) 125 London Wall London EC2Y 5AJ REGISTRARS Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU LAWYERS Slaughter and May One Bunhill Row London EC1Y 8YY Speechly Bircham LLP 6 New Street Square London EC4A 3LX Glossary of Terms BENCHMARK FTSE World Europe (ex UK) Index against which the performance of the Company is measured. CONTRACT FOR DIFFERENCE (CFD) A Contract For Difference is a derivative. It is a contract between the Company and an investment house at the end of which the parties exchange the difference between the opening price and the closing price of the underlying asset of the specified financial instrument. It does not involve the Company buying or selling the underlying asset, only agreeing to receive or pay the movement in its share price. A Contract For Difference allows the Company to gain access to the movement in the share price by depositing a small amount of cash known as margin. The Company may reason that the asset price will rise, by buying ("long" position) or fall, by selling ("short" position). If the Company trades long, dividends are received and interest is paid. If the Company trades short, dividends are paid and interest is received. The Company only uses long Contracts For Difference. DERIVATIVES Financial instruments (such as futures, options and Contracts For Difference) whose value is derived from the value of an underlying asset. DISCOUNT If the share price of the Company is lower than the net asset value per share, the Company's shares are said to be trading at a discount. The discount is shown as a percentage of the net asset value. The opposite of a discount is a premium. It is more common for an investment trust's shares to trade at a discount than a premium. FAIR VALUE The fair value is the best estimate of the value of the investments, including derivatives, at a point in time and this is measured as: • Listed investments valued at bid prices, or last market prices, where available, otherwise at published price quotations; • Unlisted investments valued using an appropriate valuation technique in the absence of an active market; and • Contracts For Difference are valued as the difference between the settlement price of the contract and the value of the underlying shares in the contract (unrealised gains or losses). GEARING Gearing describes the level of a Company's borrowing and is expressed as a percentage of shareholders' funds. It can be through the use of bank loans, bank overdrafts or Contracts For Difference in order to increase a Company's exposure to stocks. Gearing is permitted in order to buy or gain exposure to further investments. If assets rise in value, gearing magnifies the return to ordinary shareholders. Correspondingly, if the assets fall in value, gearing magnifies the fall. Contracts For Difference are used as a way of gaining exposure to the price movements of shares without buying the underlying shares directly. GEARING PERCENTAGE In a simple example, if a company has £100 million of net assets and a total portfolio of £108 million, with £8 million of borrowings (either via bank loans or long Contracts For Difference) then the shareholders' funds are 8% geared. Normally, the higher the gearing factor, the more sensitive an investment trust's shares will be to movements up and down in the value of the investment portfolio. NET ASSET VALUE (NAV) Net asset value is sometimes also described as "shareholders' funds", and represents the total value of the Company's assets less the total value of its liabilities. For valuation purposes it is common to express the net asset value on a per share basis. NAV PER SHARE (CUM-INCOME) The net asset value per share including the net revenue on ordinary activities after taxation for the period, as shown in the revenue column of the Income Statement. NAV PER SHARE (EX-INCOME) The net asset value per share excluding the net revenue on ordinary activities after taxation for the period, as shown in the revenue column of the Income Statement. PREMIUM If the share price of the Company is higher than the net asset value per share, the Company's shares are said to be trading at a premium. The premium is shown as a percentage of the net asset value. The opposite of a premium is a discount. RETURN The return generated in the period from the investments: • Revenue Return reflects the dividends and interest from investments and other income net of revenue expenses, finance costs and taxation; • Capital Return reflects the return on capital, excluding any revenue returns; • Total Return reflects the aggregate of capital and revenue returns in the period. SHAREHOLDERS' FUNDS Shareholders' funds are also described as "net asset value" and represent the total value of the Company's assets less the total value of its liabilities. TOTAL PORTFOLIO EXPOSURE The total of fixed asset investments at fair value plus the fair value of the underlying securities within the Contracts For Difference. TOTAL RETURN PERFORMANCE The return on the share price or net asset value per share taking into account the rise and fall of share prices and the dividends paid to shareholders. Any dividends received by the shareholder are assumed to have been reinvested in additional shares (for share price total return) or the Company's assets (for net asset value total return). Warning to Shareholders SHARE FRAUD WARNING Share fraud includes scams where investors are called out of the blue and offered shares that often turn out to be worthless or non-existent, or an inflated price for shares they own. These calls come from fraudsters operating in `boiler rooms' that are mostly based abroad. While high profits are promised, those who buy or sell shares in this way usually lose their money. The Financial Conduct Authority (FCA) has found most share fraud victims are experienced investors who lose an average of £20,000, with around £200m lost in the UK each year. PROTECT YOURSELF If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company or research reports, you should take these steps before handing over any money: 1. Get the name of the person and organisation contacting you. 2. Check the FCA Register at www.fsa.gov.uk/fsaregister to ensure they are authorised. 3. Use the details on the FCA Register to contact the firm. 4. Call the FCA Consumer Helpline on 0800 111 6768 if there are no contact details on the Register or you are told they are out of date. 5. Search the FCA list of unauthorised firms and individuals to avoid doing business with. 6. REMEMBER: if it sounds too good to be true, it probably is! If you use an unauthorised firm to buy or sell shares or other investments, you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong. REPORT A SCAM If you are approached about a share scam you should tell the FCA using the share fraud reporting form at www.fca.org.uk/scams, where you can find out about the latest investment scams. You can also call the Consumer Helpline on 0800 111 6768. If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040 FURTHER INFORMATION For application forms or more information about any of the investment options described here, please call the Fidelity Investment Trust Line on 0800 41 41 10 and talk to a Fidelity customer representative (9am to 6pm). Alternatively, you may like to visit the Fidelity London Investor Centre at 25 Cannon Street, next to St Paul's Cathedral. You can also find out more by visiting fidelity.co.uk/its or contacting your Financial Adviser. The Fidelity Individual Savings Account ("ISA") and Junior ISA is offered and managed by Financial Administration Services Limited. The Fidelity Investment Trust Share Plan is managed by FIL Investments International. Both companies are regulated by the Financial Conduct Authority. The value of savings and eligibility to invest in an ISA will depend on individual circumstances and all tax rules may change in the future. Fidelity investment trusts are managed by FIL Investments International. Fidelity only gives information about its own products and services and does not provide investment advice based on individual circumstances. Should you wish to seek advice, please contact a Financial Adviser. Please note that the value of investments and the income from them may fall as well as rise and the investor may not get back the amount originally invested. Past performance is not a guide to future returns. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of your investment. Investing in small and emerging markets can be more volatile than older developed markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and symbol are trademarks of FIL Limited. The content of websites referenced in this document does not form part of this document. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and symbol are trademarks of FIL Limited Printed on FSC® certified paper. 100% of the inks used are vegetable oil based 95% of press chemicals are recycled for further use and on average 99% of any waste associated with this production will be recycled. The FSC® logo identifies products which contain wood from well-managed forests certified in accordance with the rules of the Forest Stewardship Council®. This document is printed on Cocoon Silk; a paper made using 50% recycled fibre from genuine waste paper and 50% virgin fibre. The unavoidable carbon emissions generated during the manufacture and delivery of this document, have been reduced to net zero through a verified, carbon offsetting project.

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