Interim Results

FIDELITY EUROPEAN VALUES PLC Preliminary Announcement of Unaudited Results For the six months ended 30 June 2005 Performance During the first six months of the year, the net asset value of the portfolio rose by 13.5% to 922.89p per share, compared with a return of 5.9% for the FTSE World Europe (ex UK) Index, in sterling terms on a total return basis. (Past performance is not a guide to future returns.) Market Review The performance of European equities during the first six months of 2005 was influenced by a combination of concerns over the strength of the economic recovery and USeconomic news. The French and Dutch 'No' votes to the European Constitution referendum had little impact on European equity markets. However, the votes weighed on the euro, which weakened relative to the US dollar, the currency falling from $1.36 to $1.21 during the six months. In terms of the economy, European economic growth accelerated in the first three months of 2005 to 0.5% quarter-on-quarter. Despite this reasonable first-quarter growth, the underlying components of GDP suggest that growth in Europe, particularly consumer expenditure, remains slow. Portfolio Manager Report Over the six-month period, performance was helped by successful stock selection and sector allocation. In particular, stock selection within the oil & gas sector proved rewarding, with a particularly strong contribution from the refining-related companies; OMV, Magyar Olaj-es Gazipari Rt, ERG and Polski Koncern Naftowy. Other large holdings which performed well included European Aeronautic Defence & Space (aerospace), SAP (German software) and Verbund (Austrian utility). The general structure of the portfolio remained unchanged, with a bias to medium-sized and smaller companies combined with the manager's approach of searching for undervalued companies. However, the manager increased the weighting in larger-sized companies as their valuations are attractive. The country weightings have become much more balanced between peripheral and core countries. At sector level, the weighting in telecommunication stocks, which peaked in March 2003, was substantially reduced. The Manager believes that a number of growth-oriented sectors have attractive valuations and consequently the portfolio's exposure to pharmaceutical and software stocks was increased. Outlook After a period of relatively stable economic outlook, the European Commission has recently reduced its economic growth forecast for 2005, from 2.0% down to 1.6%. In particular, the economies of Italy, Germany, Franceand Portugalhave weakened, while Irelandand Spainare improving. The euro has fallen relative to the dollar since the start of 2005. The weakening of the single currency is a positive trend for exporters and dollar-correlated technology stocks. However, it is not clear whether this trend change will be durable. The European Central Bank (ECB) policy has been for an unchanged 2% interest rate over the last two years and the most recent data appears to increase the chances of rate reductions, although policy statements of the ECB have not supported this view. Political instability and terrorism continue to weigh on investor sentiment, however stock markets have so far shown resilience and we continue to believe that stock selection based on in depth company analysis will be the key factor in achieving good performance. GEARING On 20 June 2005the Company entered into a facility with Lloyds TSB Bank plc. The loan was for an amount of €40m at a fixed rate of 3.23% for a period of five years. The loan was drawn down in full on 22 June 2005and will be repayable on 22 June 2010. The proceeds of the loan are being invested in a manner consistent with the Company's investment objective. Loans held by the Company now total €130m. The Company's level of net gearing is now 14% and the Board will ensure that in normal circumstances net gearing is below 20%. DIVIDEND The Company is not proposing to pay an interim dividend. By order of the Board Fidelity Investments International 22 July 2005 Enquiries: Barbara Powley - Fidelity Investments International 01737 836 883 Issued by Fidelity Investments International. Authorised and regulated by the Financial Services Authority. CB23439 FIDELITY EUROPEAN VALUES PLC Statement of Total Return for the six months ended for the year ended for the six months ended 30.06.05 31.12.04 30.06.04 unaudited audited restated unaudited restated revenue capital total revenue capital total revenue capital total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 60,705 60,705 - 106,079 106,079 - 20,901 20,901 investments Costs of - (672) (672) - (1,286) (1,286) - (748) (748) investment transactions Income - 13,919 - 13,919 12,465 - 12,465 10,066 - 10,066 Dividend 61 - 61 81 - 81 38 - 38 - Interest Investment (3,631) - (3,631) (5,882) - (5,882) (2,809) - (2,809) management fee Other (448) - (448) (902) - (902) (441) - (441) expenses Exchange 66 (280) (214) (22) (294) (316) (3) (348) (351) gains/ (losses) Exchange - 2,815 2,815 - (2) (2) - 3,150 3,150 gains/ (losses) on loans Net return 9,967 62,568 72,535 5,740 104,497 110,237 6,851 22,955 29,806 before finance costs and taxation Interest (1,617) - (1,617) (3,239) - (3,239) (1,570) - (1,570) payable Return on 8,350 62,568 70,918 2,501 104,497 106,998 5,281 22,955 28,236 ordinary activities before taxation Taxation on (1,973) - (1,973) (1,254) (315) (1,569) (1,209) - (1,209) return on ordinary activities Return on 6,377 62,568 68,945 1,247 104,182 105,429 4,072 22,955 27,027 ordinary activities after taxation for the period Return per 109.60p 167.60p 42.97p ordinary share These financial statements have been prepared in accordance with the AITC Statement of Recommended Practice (SORP) issued in January 2003 and changes to the accounting policies as set out in Note 1. Dividend - No dividend has been declared in the current period (31.12.04: 1.75p; 30.06.04: nil). FIDELITY EUROPEAN VALUES PLC Balance Sheet 30.06.05 31.12.04 30.06.04 unaudited audited unaudited restated £'000 £'000 £'000 Fixed assets Investments 658,516 572,722 494,432 Current assets Debtors 8,545 1,690 5,951 Cash at bank 9,484 4,455 1,166 18,029 6,145 7,117 Creditors - amounts falling due within one year Other creditors (8,646) (2,623) (6,859) Net current assets 9,383 3,522 258 Total assets less current 667,899 576,244 494,690 liabilities Creditors - amounts falling due after more than one year Fixed rate unsecured (87,370) (63,559) (60,407) loans Total net assets 580,529 512,685 434,283 Capital and reserves Called up share capital 15,725 15,725 15,725 Share premium account 58,615 58,615 58,615 Capital redemption 100 100 100 reserve Capital reserve - 362,438 305,447 292,588 realised Capital reserve - 133,362 127,785 59,414 unrealised Revenue reserve 10,289 5,013 7,841 Total equity 580,529 512,685 434,283 shareholders' funds Net asset value per 922.89p 815.04p 690.40p ordinary share FIDELITY EUROPEAN VALUES PLC Cash Flow Statement 30.06.05 31.12.04 30.06.04 unaudited audited unaudited £'000 £'000 £'000 Operating activities Investment income received 11,062 10,873 8,384 Interest received 70 72 38 Investment management fee (3,345) (5,601) (2,703) paid Directors' fees paid (37) (52) (17) Other cash payments (864) (874) (349) Net cash inflow from 6,886 4,418 5,353 operating activities Returns on investments and servicing of finance Interest paid (807) (3,239) (1,579) Net cash outflow from (807) (3,239) (1,579) returns on investments and servicing of finance Taxation Overseas taxation 140 399 189 recovered Taxation recovered 140 399 189 Financial investment Purchase of investments (270,624) (382,807) (216,418) Disposals of investments 243,809 385,297 213,310 Net cash (outflow)/inflow (26,815) 2,490 (3,108) from financial investment Equity dividend paid (1,101) (944) (944) Net cash (outflow)/inflow (21,697) 3,124 (89) before financing Financing 3.23% fixed rate unsecured 26,625 - - loan drawn down Net cash inflow from 26,625 - - financing Increase/(decrease) in 4,928 3,124 (89) cash The results for the six months to 30 June 2005 and 30 June 2004, which are unaudited, constitute non statutory accounts within the meaning of s240 of the Companies Act 1985. The figures and financial information for the year ended 31 December 2004 are extracted from the latest published accounts and have been restated as disclosed below in Notes 4 and 5. Those accounts, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. 1. Accounting policies The interim financial statements have been prepared on the basis of the accounting policies set out in the Company's annual report and accounts dated 31 December 2004 except as stated below. UK GAAP is converging with International Financial Reporting Standards ('IFRS') and the following Financial Reporting Standards ('FRS') have been introduced: FRS26: 'Financial Instruments: Measurement' requires that quoted investments are valued at fair value which is deemed to be bid price. The Company's investments have accordingly been re-valued to bid price but no adjustments have been made to the prior periods' results as the Company has taken advantage of Paragraph 108D of the Standard and disclosed the effect of valuing the investments at bid price. FRS26 also requires that where investments are held at fair value through the profit and loss account the transactions costs should be recognised as a separate item from gains and losses on investments. FRS21: 'Events after the Balance Sheet Date' states that dividends declared and approved by the Company after the balance sheet date should not be recognised as a liability of the Company at the balance sheet date. Prior year results have accordingly been restated and this is shown below in Notes 4 and 5. 2. Statement of Total Return The total column of the Statement of Total Return is the profit and loss account of the Company. 3. Taxation on return on ordinary activities 30.06.05 31.12.04 30.06.04 unaudited audited unaudited revenue capital total revenue capital total revenue capital total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Overseas taxation suffered 1,973 - 1,973 1,566 3 1,569 1,209 - 1,209 Tax (credit)/ charge for use of revenue expenses - - - (312) 312 - - - - 1,973 - 1,973 1,254 315 1,569 1,209 - 1,209 4. Prior year adjustments and restatements 30.06.05 31.12.04 Shareholders' Shareholders' funds funds £'000 £'000 Opening balance as previously stated 511,584 407,256 Effect of prior year adjustment as a result of a change in accounting policy regarding the treatment of proposed dividends 1,101 944 Opening balance as restated 512,685 408,200 Effect of changing prices at 1 January 2005 (1,077) - Other recognised gains for the period 63,645 104,182 Revenue after taxation 6,377 1,247 Dividend (1,101) (944) 580,529 512,685 The capital net return before finance costs and taxation for the period ended 30 June 2004 has been restated from £19,802,000 to £22,952,000. This restatement has been necessary as exchange gains/(losses) have been included as part of the net return before finance costs at 31 December 2004 rather than a finance cost. This restatement has no impact on the Company's return on ordinary activities for the period ended 30 June 2004. 5. Statement of changes in equity for the 6 months ended 30 June 2005 Share Share Capital Capital Capital Revenue capital premium redemption reserve reserve reserve account reserve £ realised unrealised £'000 '000 £'000 £'000 £'000 £'000 At 1 January 2004: as previously stated 15,725 58,615 100 245,461 83,589 3,766 Effect of prior year adjustment as a result of a change in the accounting policy regarding the treatment of proposed dividends - - - - - 944 At 1 January 2004: as restated 15,725 58,615 100 245,461 83,589 4,710 Net recognised gain for the year - - - 59,986 44,196 1,247 Dividend to shareholders - - - - - (944) At 31 December 2004:as restated 15,725 58,615 100 305,447 127,785 5,013 Net recognised gain for the period - - - 56,991 5,577 6,377 Dividend to shareholders - - - - - (1,101) At 30 June 2005 15,725 58,615 100 362,438 133,362 10,289 Copies of the interim report will be posted to shareholders as soon as practicable. Copies will also be available to the public at the Company's registered office, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.

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