Half-year Report

FIDELITY EUROPEAN TRUST PLC

Half-Yearly Results for the six months ended 30 June 2023 (unaudited)

Financial Highlights:

• The Board of Fidelity European Trust PLC (the “Company”) declares an interim dividend of 3.26 pence per share, an increase of 5.8% on the prior year.

• The net asset value (“NAV”) of the Company increased by +11.1% for the six months ending 30 June, outperforming the FTSE World Europe (ex UK) Index, which returned +9.3%.

• The share priced matched the Benchmark Index, returning +9.3% over the reporting period.

• The Company remains the top performer in the AIC peer group over one, five and ten years*.

• The Company continues to focus on attractively valued companies with strong balance sheets and consistent dividend growth.

*Data according to the AIC as at 24/07/23

Contacts

For further information, please contact:

Smita Amin

Company Secretary

01737 836347

Portfolio Managers’ Half-Yearly Review

Performance Review
During the first six months of the year the net asset value (“NAV”) total return was +11.1% compared to a total return of +9.3% for the FTSE World Europe (ex UK) Index which is the Company’s Benchmark Index. The share price total return was +9.3%, which is below the NAV total return because of a widening of the share price discount to NAV. (All figures in UK sterling.)

Market Review
Continental European markets were unexpectedly strong in the first half of this year, as investors concerns moderated regarding global economic growth and as corporate earnings proved more resilient than feared. UK sterling appreciated by +3% against the Euro during this six month period so in Euro terms, the continental European benchmark rose +12% which is impressive, however much less than the Nasdaq which rocketed +30% in equivalent terms!

The market recovery from the lows of October 2022 accelerated in January boosted by confirmation that China would relax its strict COVID policies and “re-open”. This positive sentiment was tested by the collapse of the Silicon Valley Bank (SVB) in early March, and the subsequent demise of Credit Suisse, but the market shrugged these off and ended the first quarter at close to its highest levels for the period. First quarter corporate results were better than anticipated (despite a technical recession in Germany). There was also a flurry of excitement regarding the likely long term impact of generative Artificial Intelligence (AI) which boosted technology names (such as ASML), but overall, the market stalled in the second quarter as investors worried that central banks were still in tightening mode given the resilience of the global economy and the stickiness of inflation. Like the US stock market, the continental European markets were led higher by a narrow group of mega-cap companies, often in the technology or luxury sectors. The energy sector was the main laggard, as commodity prices fell from the elevated levels of 2022, despite China “re-opening” and the continued war in Ukraine.

Portfolio Managers’ Report
The Company’s NAV total return outperformed the Company’s Benchmark Index over the six month period by almost 2%. Much of this outperformance was due to the gearing of the Company which was maintained throughout the period at around 13%. Shareholders of the Company will remember that, as mentioned in the 2021 Annual Report, the Board endorsed an intention to maintain a relatively fixed level of gearing within a range that is approximately double the 6% average gearing from the end of the global financial crisis until the global pandemic. Gearing is, of course, one of the great advantages of an investment trust, and although it may amplify volatility in the short term, we expect it to enhance long term returns. The agreed level of gearing takes into account our cautious investment approach and allows considerable headroom before published limits are reached in the event of a sharp sell-off in the markets.

The contribution from stock-picking was also positive during this period. The stand-out performer during the half-year was 3i Group which continued to impress with positive results updates and strong current trading figures from their largest investment, the continental European discount retail group, Action. Financials, which is the Company’s largest sector overweight, was however rocked by the bankruptcy of SVB. Bankinter suffered as investors worried that it was a European equivalent of a US regional bank with a deposit base that might prove less sticky than other European banks, given its recent growth and more sophisticated customer base. Sampo, the Nordic insurance company, also performed poorly following disappointing results and conservative guidance regarding capital distributions to shareholders. Roche continued its lacklustre run, hampered by disappointing guidance for 2023 due to a drop-off in COVID-related revenues (in diagnostics and pharma) and the on-going impact of biosimilars (comparable biological medicines) on Rituxan, Herceptin and Avastin. On a more positive note, LVMH Moët Hennessy and Hèrmes International defied gravity, once again, on the growing hope that the Chinese consumers were embarking on so-called “revenge spending” that has been seen post “re-opening” in the US and Europe.

Top Five Stock Contributors (on a relative basis)	Sector	Country	%
3i Group	Financials	UK	+0.9
ASML	Information Technology	Netherlands	+0.5
Amadeus IT Group	Consumer Discretionary	Spain	+0.5
Hèrmes International	Consumer Discretionary	France	+0.5
L’Oréal	Consumer Staples	France	+0.4
Top Five Stock Detractors (on a relative basis)	Sector	Country	%
Sampo	Financials	Finland	-0.6
TotalEnergies	Energy	France	-0.6
Bankinter	Financials	Spain	-0.4
Symrise	Materials	Germany	-0.3
EQT	Financials	Sweden	-0.3

Outlook
There are plenty of reasons to be bearish. More than a year ago, the two-year treasury yields rose above the ten-year treasury yields in the US bond market (it is normally the other way around). This ‘yield curve inversion’ has, historically, been a lead indicator of recession about 80% of the time, but the lag between the date of inversion and recession can be six months to three years. It is a bit like seeing a big dark cloud on the horizon and predicting it will rain soon! To date, the global economy and corporate earnings have been resilient while stock markets have recovered quite dramatically since the lows in October, such that share prices are now back in the middle of their normal valuation ranges. It is hard to imagine that this will not be tested in the months ahead. Having said that, the pandemic and subsequent monetary and fiscal policies have made this an unusual cycle. At present, investors seem to be expecting a soft landing or no global recession at all. Earnings forecasts for 2023 are similar to earnings delivered for 2022 but analysts are still forecasting growth in 2024. The capacity of consumers (the most important contributors to GDP) to maintain spending levels has surprised many. But, in general, they still have jobs and pandemic savings to burn. The cost-of-living crisis may ease too as commodity prices lead general pricing downwards on goods and services. This disinflation may also be helped along by governments ‘encouraging’ corporates to abandon ‘greedflation’ (which might hinder company margins). So maybe the consumer will keep the global economy bumbling along. Having said that, credit conditions are tightening (post SVB) and the US Federal Reserve and government are draining liquidity via quantitative tightening and short term bond issuance, and there is a multi-year refinancing requirement ahead for consumers and corporates alike. Geopolitical risks remain elevated too with the war in Europe and continued tensions between the US and China. Whatever our views on the outlook, we will maintain the current level of gearing and will continue to focus on attractively valued companies with strong balance sheets that should be resilient and able to grow dividends, even in a more difficult economic environment.

SAM MORSE
Portfolio Manager

Marcel Stötzel
Co-Portfolio Manager
1 August 2023

Twenty Largest Holdings as at 30 June 2023

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 actual value of the portfolio as reported in the Balance Sheet. Where a contract for difference (“CFD”) is held, 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 share has moved.

	Asset  £’000	Exposure  %1	Fair  Value  £’000
Long Exposures – shares unless otherwise stated
Nestlé
Food Producers	102,451	6.8	102,451
ASML
Technology Hardware & Equipment	92,644	6.1	92,644
LVMH Moët Hennessy
Personal Goods	86,605	5.7	86,605
Novo Nordisk
Pharmaceuticals & Biotechnology	82,079	5.4	82,079
Roche
Pharmaceuticals & Biotechnology	69,925	4.6	69,925
TotalEnergies
Oil, Gas & Coal	64,304	4.3	64,304
L’Oréal
Personal Goods	63,203	4.2	63,203
EssilorLuxottica
Medical Equipment & Services	51,561	3.4	51,561
SAP (long CFD)
Software & Computer Services	51,231	3.4	(164)
Sanofi (long CFD)
Pharmaceuticals & Biotechnology	47,733	3.2	2,076
Legrand (long CFD)
Electronic & Electrical Equipment	45,085	3.0	(1,033)
Hèrmes International
Personal Goods	44,523	2.9	44,523
MTU Aero Engines
Aerospace & Defense	44,225	2.9	44,225
Partners Group Holding
Investment Banking & Brokerage Services	42,805	2.8	42,805
3i Group
Investment Banking & Brokerage Services	41,286	2.7	41,286
Assa Abloy
Construction & Materials	40,720	2.7	40,720
Deutsche Börse Group
Investment Banking & Brokerage Services	38,606	2.6	38,606
Sampo
Non-Life Insurance	36,170	2.4	36,170
Amadeus IT Group
Software & Computer Services	35,556	2.3	35,556
Linde (long CFD)
Chemicals	33,822	2.2	635
	---------------	---------------	---------------
Twenty largest long exposures	1,114,534	73.6	938,177
Other long exposures	522,642	34.5	522,642
	---------------	---------------	---------------
Total long exposures before long futures2,3	1,637,176	108.1	1,460,819
	=========	=========	=========
Long Futures
Euro Stoxx 50 Future September 20233	60,659	4.0	1,120
	---------------	---------------	---------------
Total long exposures after long futures3	1,697,835	112.1	1,461,939
	=========	=========	=========
Short Exposures
Short CFDs (2 Holdings)	18,101	1.2	(396)
	---------------	---------------	---------------
Gross Asset Exposure3,4	1,715,936	113.3
	=========	=========
Portfolio Fair Value5			1,461,543
Net current assets (excluding derivative assets and liabilities)			53,000
			---------------
Shareholders’ Funds (per the Balance Sheet below)			1,514,543
			=========

1 Asset Exposure is expressed as a percentage of Shareholders’ Funds.

2 Total long exposures before long futures comprises investments of £1,459,305,000 and long CFDs of £177,871,000.

3 See Note 13 below.

4 Gross Asset Exposure comprises market exposure to investments of £1,459,305,000 plus market exposure to all derivative instruments of £256,631,000. Derivative instruments comprise long CFDs of £177,871,000, long futures of £60,659,000 and short CFDs of £18,101,000.

5 Portfolio Fair Value comprises investments of £1,459,305,000 plus derivative assets of £3,919,000 less derivative liabilities of £1,681,000 (per the Balance Sheet below).

Interim Management Report and Directors’ Responsibility Statement

Interim Dividend
The Board does not influence the Portfolio Managers by imposing any income objective in any particular period, and the investment focus on companies capable of growing their dividends remains. The Board acknowledges that both capital and income growth are components of performance, as reflected in the investment objective of the Company. It therefore has a policy whereby it seeks to pay a progressive dividend in normal circumstances and to pay dividends twice yearly in order to smooth dividend payments for the reporting year. Unlike open-ended funds, investment trusts can hold back some of the income they receive in good years, thereby building up revenue reserves, which can then be used to supplement dividends during difficult times. The Board has over the past few years augmented revenue reserves by retaining a small proportion of earnings to be used in difficult times, as in the case of the final dividend paid in May 2021.

The Company’s revenue return for the six months to 30 June 2023 was 7.38 pence per ordinary share (30 June 2022: 7.08 pence). The Board has declared an interim dividend of 3.26 pence per ordinary share which is an increase of 5.8% on the 3.08 pence per ordinary share paid as the interim dividend in 2022. This will be paid on 27 October 2023 to shareholders on the register at close of business on 22 September 2023 (ex-dividend date 21 September 2023).

Shareholders may choose to reinvest their dividends for additional shares in the Company.

Discount Management and Treasury Shares
The Board has an active discount management policy, the primary purpose of which is to reduce discount volatility. It seeks to maintain the discount in single digits in normal market conditions. Buying shares at a discount also results in an enhancement to the NAV per ordinary share.

In order to assist in managing the discount, the Board has shareholder approval to hold ordinary shares repurchased by the Company in Treasury, rather than cancel them. Shares in Treasury are then available to be re-issued at NAV per ordinary share or at a premium to NAV per ordinary share, facilitating the management of and enhancing liquidity in the Company’s shares.

In the reporting period and up to the date of this report, the discount remained in single digits and the Company did not repurchase any ordinary shares into Treasury or for cancellation.

Principal Risks and Uncertainties
The Board, with the assistance of the Manager (FIL Investment Services (UK) Limited), 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 faced by the Company.

The Board considers that the principal risks and uncertainties faced by the Company fall into the following categories: economic and geopolitical risks; market risk; discount control risk; operational risk; cybercrime risk; investment performance risk (including the use of derivatives and gearing); environmental, social and governance (ESG) risks; key person risk; operational resilience risk; and tax and regulatory risks. Information on each of these risks is given in the Strategic Report section of the Annual Report for the year ended 31 December 2022. A copy of the Annual Report can be found on the Company’s pages of the Manager’s website at www.fidelity.co.uk/europe.

While the principal risks and uncertainties are the same as those at the previous year end, the uncertainty continues to be heightened by the ongoing Russia and Ukraine conflict dominating political risks and industry concerns. There is geopolitical and economic uncertainty, in particular concerns over global economic growth, inflation and financial distress. Earlier in the year, the collapse of Silicon Valley Bank and the buyout of Credit Suisse caused turmoil in the global banking sector and volatility in the markets. The quantum of risks continues to change, and the Board remains vigilant in monitoring such risks.

Climate change continues to be a key emerging issue, as well as a principal risk, that is confronting asset managers and their investors. The Board notes that the Manager has integrated ESG considerations, including climate change, into the Company’s investment process. The Board will continue to monitor how this may potentially impact the Company, the main risk being the impact on investment valuations and shareholder returns.

Investors should be prepared for market fluctuations and remember that holding shares in the Company should be considered to be a long term investment. Risks are mitigated by the investment trust structure of the Company which means that no forced sales need to take place to deal with any redemptions. Therefore, investments in the Company’s portfolio can be held over a longer time horizon.

The Manager has appropriate business continuity and operational plans in place to ensure the uninterrupted provision of services, including investment team key activities, including those of portfolio managers, analysts and trading/support functions. It reviews its operational resilience strategies on an ongoing basis and continues to take all reasonable steps in meeting its regulatory obligations and protecting its ability to continue operating and to serve and support its clients, including the Board.

The Company’s other third-party service providers also have similar measures to ensure that business disruption is kept to a minimum.

Transactions with the Manager and Related Parties
The Manager has delegated the Company’s portfolio management and company secretariat services to FIL Investments International. Transactions with the Manager and related party transactions with the Directors are disclosed in Note 14 to the Financial Statements below.

Going Concern Statement
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) 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 can continue in operational existence for a period of at least twelve months from the date of this Half-Yearly Report.

This conclusion also takes into account the Board’s assessment of the ongoing risks from the war in Ukraine, significant market events and regulatory changes.

Accordingly, the Financial Statements of the Company have been prepared on a going concern basis.

Continuation votes are held every two years and the next continuation vote will be put to shareholders at the Annual General Meeting in 2025.

BY ORDER OF THE BOARD
FIL INVESTMENTS INTERNATIONAL
1 August 2023

DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (“DTR”) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

a) The condensed set of Financial Statements contained within the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council’s Standard FRS 104: Interim Financial Reporting; and

b) The Portfolio Managers’ Half-Yearly Review and the Interim Management Report above, include a fair review of the information required by DTR 4.2.7R and 4.2.8R.

In line with previous years, the Half-Yearly Report has not been audited or reviewed by the Company’s Independent Auditor.

The Half-Yearly Report was approved by the Board on 1 August 2023 and the above responsibility statement was signed on its behalf by Vivian Bazalgette, Chairman.

Financial Statements

Income Statement for the six months ended 30 June 2023

		Six months ended 30 June 2023 unaudited			Six months ended 30 June 2022 unaudited			Year ended 31 December 2022 audited
	Notes	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Gains/(losses) on investments		–	94,641	94,641	–	(172,868)	(172,868)	–	(63,812)	(63,812)
Gains/(losses) on derivative instruments		–	36,841	36,841	–	(29,395)	(29,395)	–	(22,034)	(22,034)
Income	4	35,816	–	35,816	33,050	–	33,050	43,042	–	43,042
Investment management fees	5	(1,303)	(3,910)	(5,213)	(1,177)	(3,533)	(4,710)	(2,362)	(7,087)	(9,449)
Other expenses		(507)	–	(507)	(511)	–	(511)	(919)	–	(919)
Foreign exchange (losses)/gains		–	(2,599)	(2,599)	–	502	502	–	(372)	(372)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net return/(loss) on ordinary activities before finance costs and taxation		34,006	124,973	158,979	31,362	(205,294)	(173,932)	39,761	(93,305)	(53,544)
Finance costs	6	(908)	(2,724)	(3,632)	(31)	(92)	(123)	(196)	(586)	(782)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net return/(loss) on ordinary activities before taxation		33,098	122,249	155,347	31,331	(205,386)	(174,055)	39,565	(93,891)	(54,326)
Taxation on return/(loss) on ordinary activities	7	(2,916)	–	(2,916)	(2,241)	–	(2,241)	(2,641)	–	(2,641)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net return/(loss) on ordinary activities after taxation for the period		30,182	122,249	152,431	29,090	(205,386)	(176,296)	36,924	(93,891)	(56,967)
		=========	=========	=========	=========	=========	=========	=========	=========	=========
Return/(loss) per ordinary share	8	7.38p	29.91p	37.29p	7.08p	(49.97p)	(42.89p)	9.00p	(22.88p)	(13.88p)
		=========	=========	=========	=========	=========	=========	=========	=========	=========

The Company does not have any other comprehensive income. Accordingly the net return/(loss) on ordinary activities after taxation for the period is also the total comprehensive income for the period and no separate Statement of Comprehensive Income has been presented.

The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.

No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.

Statement of Changes in Equity for the six months ended 30 June 2023

	Notes	Share  capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Capital  reserve  £’000	Revenue  reserve  £’000	Total  shareholders’  funds  £’000
Six months ended 30 June 2023 (unaudited)
Total shareholders’ funds at 31 December 2022		10,411	58,615	5,414	1,271,996	34,559	1,380,995
Net return on ordinary activities after taxation for the period		–	–	–	122,249	30,182	152,431
Dividend paid to shareholders	9	–	–	–	–	(18,883)	(18,883)
		---------------	---------------	---------------	---------------	---------------	---------------
Total shareholders’ funds at 30 June 2023		10,411	58,615	5,414	1,394,245	45,858	1,514,543
		=========	=========	=========	=========	=========	=========
Six months ended 30 June 2022 (unaudited)
Total shareholders’ funds at 31 December 2021		10,411	58,615	5,414	1,372,360	27,433	1,474,233
Net (loss)/return on ordinary activities after taxation for the period		–	–	–	(205,386)	29,090	(176,296)
Dividend paid to shareholders	9	–	–	–	–	(17,180)	(17,180)
		---------------	---------------	---------------	---------------	---------------	---------------
Total shareholders’ funds at 30 June 2022		10,411	58,615	5,414	1,166,974	39,343	1,280,757
		=========	=========	=========	=========	=========	=========
Year ended 31 December 2022 (audited)
Total shareholders’ funds at 31 December 2021		10,411	58,615	5,414	1,372,360	27,433	1,474,233
Net (loss)/return on ordinary activities after taxation for the year		–	–	–	(93,891)	36,924	(56,967)
Repurchase of ordinary shares	11	–	–	–	(6,473)	–	(6,473)
Dividends paid to shareholders	9	–	–	–	–	(29,798)	(29,798)
		---------------	---------------	---------------	---------------	---------------	---------------
Total shareholders’ funds at 31 December 2022		10,411	58,615	5,414	1,271,996	34,559	1,380,995
		=========	=========	=========	=========	=========	=========

Balance Sheet as at 30 June 2023
Company Number 2638812

	Notes	30 June  2023  unaudited  £’000	31 December  2022  audited  £’000	30 June  2022  unaudited  £’000
Fixed assets
Investments	10	1,459,305	1,325,389	1,252,159
	---------------	---------------	---------------	---------------
Current assets
Derivative instruments	10	3,919	521	253
Debtors		12,141	8,128	13,706
Amounts held at futures clearing houses and brokers		5,869	12,891	3,789
Cash and cash equivalents		36,362	44,884	15,955
		---------------	---------------	---------------
		58,291	66,424	33,703
		=========	=========	=========
Current liabilities
Derivative instruments	10	(1,681)	(9,633)	(4,179)
Other creditors		(1,372)	(1,185)	(926)
		---------------	---------------	---------------
		(3,053)	(10,818)	(5,105)
		=========	=========	=========
Net current assets		55,238	55,606	28,598
		=========	=========	=========
Net assets		1,514,543	1,380,995	1,280,757
		=========	=========	=========
Capital and reserves
Share capital	11	10,411	10,411	10,411
Share premium account		58,615	58,615	58,615
Capital redemption reserve		5,414	5,414	5,414
Capital reserve		1,394,245	1,271,996	1,166,974
Revenue reserve		45,858	34,559	39,343
		---------------	---------------	---------------
Total shareholders’ funds		1,514,543	1,380,995	1,280,757
		=========	=========	=========
Net asset value per ordinary share	12	370.55p	337.87p	311.61p
		=========	=========	=========

Notes to the Financial Statements

1 Principal Activity
Fidelity European Trust PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock Exchange. The Company’s registration number is 2638812, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.

2 Publication of Non-statutory Accounts
The Financial Statements in this Half-Yearly Report have not been audited by the Company’s Independent Auditor and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 (“the Act”). The financial information for the year ended 31 December 2022 is extracted from the latest published Financial Statements of the Company. Those Financial Statements were delivered to the Registrar of Companies and included the Independent Auditor’s Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Act.

3 ACCOUNTING POLICIES
(i) Basis of Preparation
The Company prepares its Financial Statements on a going concern basis and in accordance with UK Generally Accepted Accounting Practice (“UK GAAP”) and FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. The Financial Statements are also prepared in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the Association of Investment Companies (“AIC”) in July 2022. FRS 104: Interim Financial Reporting has also been applied in preparing this condensed set of Financial Statements. The accounting policies followed are consistent with those disclosed in the Company’s Annual Report and Financial Statements for the year ended 31 December 2022.

(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements. This conclusion also takes into account the Board’s assessment of the risks faced by the Company as detailed in the Interim Management Report above.

4 Income

	Six months  ended  30.06.23  unaudited  £’000	Six months  ended  30.06.22  unaudited  £’000	Year  ended  31.12.22  audited  £’000
Investment income
Overseas dividends	28,415	26,955	35,333
Overseas scrip dividends	957	729	1,052
UK dividends	965	1,075	1,910
	---------------	---------------	---------------
	30,337	28,759	38,295
	=========	=========	=========
Derivative income
Income recognised from futures contracts	1,797	1,083	1,208
Dividends received on long CFDs	3,339	2,858	3,025
Interest received on CFDs1	61	347	422
	---------------	---------------	---------------
	5,197	4,288	4,655
	=========	=========	=========
Investment and derivative income	35,534	33,047	42,950
	=========	=========	=========
Other interest
Interest received on collateral, bank deposits and money market funds	276	3	88
Interest received on tax reclaims	6	–	4
	---------------	---------------	---------------
	282	3	92
	---------------	---------------	---------------
Total income	35,816	33,050	43,042
	=========	=========	=========

1 Due to negative interest rates in the prior periods, the Company received interest on its long CFDs.

Special dividends of £710,000 have been recognised in capital during the period (six months ended 30 June 2022 and year ended 31 December 2022: £1,115,000).

5 INVESTMENT MANAGEMENT FEES

	Revenue  £’000	Capital  £’000	Total  £’000
Six months ended 30 June 2023 (unaudited)
Investment management fees	1,303	3,910	5,213
	=========	=========	=========
Six months ended 30 June 2022 (unaudited)
Investment management fees	1,177	3,533	4,710
	=========	=========	=========
Year ended 31 December 2022 (audited)
Investment management fees	2,362	7,087	9,449
	=========	=========	=========

FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International (“FII”). Both companies are Fidelity group companies.

FII charges investment management fees at an annual rate of 0.85% of net assets up to £400 million and 0.65% of net assets in excess of £400 million. Fees are payable monthly in arrears and are calculated on a daily basis.

Investment management fees have been allocated 75% to capital reserve in accordance with the Company’s accounting policies.

6 FINANCE COSTS

	Revenue  £’000	Capital  £’000	Total  £’000
Six months ended 30 June 2023 (unaudited)
Interest paid on collateral and bank deposits	–	–	–
Interest paid on CFDs	647	1,942	2,589
Costs recognised from futures contracts	261	782	1,043
	---------------	---------------	---------------
	908	2,724	3,632
	=========	=========	=========
Six months ended 30 June 2022 (unaudited)
Interest paid on collateral and bank deposits1	16	47	63
Interest paid on CFDs	15	45	60
	---------------	---------------	---------------
	31	92	123
	=========	=========	=========
Year ended 31 December 2022 (audited)
Interest paid on collateral and bank deposits1	28	82	110
Interest paid on CFDs	168	504	672
	---------------	---------------	---------------
	196	586	782
	=========	=========	=========

1 Due to negative interest rates in the prior periods, the Company paid interest on its collateral and bank deposits.

Finance costs have been allocated 75% to capital reserve in accordance with the Company’s accounting policies.

7 TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES

	Six months  ended  30.06.23  unaudited  £’000	Six months  ended  30.06.22  unaudited  £’000	Year  ended  31.12.22  audited  £’000
Overseas taxation	2,916	2,241	2,641
	=========	=========	=========

8 RETURN/(LOSS) PER ORDINARY SHARE

	Six months  ended  30.06.23  unaudited	Six months  ended  30.06.22  unaudited	Year  ended  31.12.22  audited
Revenue return per ordinary share	7.38p	7.08p	9.00p
Capital return/(loss) per ordinary share	29.91p	(49.97p)	(22.88p)
	---------------	---------------	---------------
Total return/(loss) per ordinary share	37.29p	(42.89p)	(13.88p)
	=========	=========	=========

The return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares held outside Treasury during the period, as shown below:

	£’000	£’000	£’000
Net revenue return on ordinary activities after taxation	30,182	29,090	36,924
Net capital return/(loss) on ordinary activities after taxation	122,249	(205,386)	(93,891)
	---------------	---------------	---------------
Net total return/(loss) on ordinary activities after taxation	152,431	(176,296)	(56,967)
	=========	=========	=========

	Number	Number	Number
Weighted average number of ordinary shares held outside Treasury during the period	408,730,523	411,016,049	410,346,447
	==========	==========	==========

9 DIVIDENDS PAID TO SHAREHOLDERS

	Six months  ended  30.06.23  unaudited  £’000	Six months  ended  30.06.22  unaudited  £’000	Year  ended  31.12.22  audited  £’000
Final dividend of 4.62 pence per ordinary share paid for the year ended 31 December 2022	18,883	–	–
Interim dividend of 3.08 pence per ordinary share paid for the year ended 31 December 2022	–	–	12,618
Final dividend of 4.18 pence per ordinary share paid for the year ended 31 December 2021	–	17,180	17,180
	---------------	---------------	---------------
	18,883	17,180	29,798
	=========	=========	=========

The Company has declared an interim dividend for the six month period to 30 June 2023 of 3.26 pence per ordinary share (2022: 3.08 pence). The interim dividend will be paid on 27 October 2023 to shareholders on the register on 22 September 2023 (ex-dividend date 21 September 2023). The total cost of this interim dividend, which has not been included as a liability in these Financial Statements, is £13,325,000 (2022: £12,659,000). This amount is based on the number of ordinary shares held outside Treasury at the date of this report.

10 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.
Level 2	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.
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 table below sets out the Company’s fair value hierarchy:

30 June 2023 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Financial assets at fair value through profit or loss
Investments	1,459,305	–	–	1,459,305
Derivative instrument assets	1,120	2,799	–	3,919
	---------------	---------------	---------------	---------------
	1,460,425	2,799	–	1,463,224
	=========	=========	=========	=========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	–	(1,681)	–	(1,681)
	=========	=========	=========	=========

31 December 2022 (audited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Financial assets at fair value through profit or loss
Investments	1,325,389	–	–	1,325,389
Derivative instrument assets	–	521	–	521
	---------------	---------------	---------------	---------------
	1,325,389	521	–	1,325,910
	=========	=========	=========	=========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(2,454)	(7,179)	–	(9,633)
	=========	=========	=========	=========

30 June 2022 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Financial assets at fair value through profit or loss
Investments	1,252,159	–	–	1,252,159
Derivative instrument assets	–	253	–	253
	---------------	---------------	---------------	---------------
	1,252,159	253	–	1,252,412
	=========	=========	=========	=========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(348)	(3,831)	–	(4,179)
	=========	=========	=========	=========

11 SHARE CAPITAL

	30 June 2023 unaudited		31 December 2022 audited		30 June 2022 unaudited
	Number of  shares	£’000	Number of  shares	£’000	Number of  shares	£’000
Issued, allotted and fully paid
Ordinary shares of 2.5 pence each held outside of Treasury
Beginning of the period	408,730,523	10,218	411,016,049	10,275	411,016,049	10,275
Ordinary shares repurchased into Treasury	–	–	(2,285,526)	(57)	–	–
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
End of the period	408,730,523	10,218	408,730,523	10,218	411,016,049	10,275
	==========	==========	==========	==========	==========	==========
Ordinary shares of 2.5pence each held in Treasury1
Beginning of the period	7,717,387	193	5,431,861	136	5,431,861	136
Ordinary shares repurchased into Treasury	–	–	2,285,526	57	–	–
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
End of the period	7,717,387	193	7,717,387	193	5,431,861	136
	==========	==========	==========	==========	==========	==========
Total share capital		10,411		10,411		10,411
		==========		==========		==========

1 Ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company.

There were no ordinary shares repurchased into Treasury during the period (year ended 31 December 2022: cost of £6,473,000 and six months ended 30 June 2022: cost of £nil).

12 NET ASSET VALUE PER ORDINARY SHARE
The calculation of the net asset value per ordinary share is based on the total Shareholders’ funds divided by the number of ordinary shares held outside of Treasury.

	30.06.23  unaudited	31.12.22  audited	30.06.22  unaudited
Total shareholders’ funds	£1,514,543,000	£1,380,995,000	£1,280,757,000
Ordinary shares held outside of Treasury at the period end	408,730,523	408,730,523	411,016,049
Net asset value per ordinary share	370.55p	337.87p	311.61p
	============	============	============

It is the Company’s policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share and, therefore, shares held in Treasury have no dilutive effect.

13 CAPITAL RESOURCES AND GEARING
The Company does not have any externally imposed capital requirements. The financial resources of the Company comprise its share capital and reserves, as disclosed in the Balance Sheet above, and any gearing, which is managed by the use of derivative instruments. Financial resources are managed in accordance with the Company’s investment policy and in pursuit of its investment objective.

The Company’s gross gearing and net gearing at the end of the period is shown below:

	Gross gearing Asset exposure		Net gearing Asset exposure
	£’000	%1	£’000	%1
30 June 2023 (unaudited)
Investments	1,459,305	96.4	1,459,305	96.4
Long CFDs	177,871	11.7	177,871	11.7
Long futures	60,659	4.0	60,659	4.0
	---------------	---------------	---------------	---------------
Total long exposures	1,697,835	112.1	1,697,835	112.1
Short CFDs	18,101	1.2	(18,101)	(1.2)
	---------------	---------------	---------------	---------------
Gross asset exposure/net market exposure	1,715,936	113.3	1,679,734	110.9
	=========	=========	=========	=========
Shareholders’ funds	1,514,543		1,514,543
	=========		=========
Gearing2		13.3		10.9
		=========		=========	=========
31 December 2022 (audited)
Investments	1,325,389	96.0	1,325,389	96.0
Long CFDs	152,446	11.0	152,446	11.0
Long futures	65,056	4.7	65,056	4.7
	---------------	---------------	---------------	---------------
Total long exposures	1,542,891	111.7	1,542,891	111.7
Short CFDs	–	–	–	–
	---------------	---------------	---------------	---------------
Gross asset exposure/net market exposure	1,542,891	111.7	1,542,891	111.7
	=========	=========	=========	=========
Shareholders’ funds	1,380,995		1,380,995
	=========		=========
Gearing2		11.7		11.7
		=========		=========

1 Asset exposure to the market expressed as a percentage of shareholders’ funds.

2 Gearing is the amount by which the gross asset exposure/net market exposure exceeds shareholders’ funds expressed as a percentage of shareholders’ funds.

	Gross gearing Asset exposure		Net gearing Asset exposure
	£’000	%1	£’000	%1
30 June 2022 (unaudited)
Investments	1,252,159	97.8	1,252,159	97.8
Long CFDs	135,626	10.6	135,626	10.6
Long futures	32,215	2.5	32,215	2.5
	---------------	---------------	---------------	---------------
Total long exposures	1,420,000	110.9	1,420,000	110.9
Short CFDs	–	–	–	–
	---------------	---------------	---------------	---------------
Gross asset exposure/net market exposure	1,420,000	110.9	1,420,000	110.9
	=========	=========	=========	=========
Shareholders’ funds	1,280,757		1,280,757
	=========		=========
Gearing2		10.9		10.9
		=========		=========

1 Asset exposure to the market expressed as a percentage of shareholders’ funds.

2 Gearing is the amount by which the gross asset exposure/net market exposure exceeds shareholders’ funds expressed as a percentage of shareholders’ funds.

14 TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management and the role of company secretary to FIL Investments International (“FII”), the Investment Manager. Both companies are Fidelity group companies. Details of the fee arrangements are given in Note 5 above.

During the period, fees for portfolio management services of £5,213,000 (six months ended 30 June 2022: £4,710,000 and year ended 31 December 2022: £9,449,000) were payable to FII. At the Balance Sheet date, fees for portfolio management of £866,000 (31 December 2022: £832,000 and 30 June 2022: £754,000) were accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these services during the period was £160,000 (six months ended 30 June 2022: £147,000 and year ended 31 December 2022: £209,000). At the Balance Sheet date, no fees for marketing services were accrued and included in other creditors (31 December 2022 and 30 June 2022: £nil).

As at 30 June 2023, the Board consisted of five non-executive Directors (shown in the Directory in the Half-Yearly Report), all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company. The Chairman receives an annual fee of £44,500, the Audit Committee Chair an annual fee of £35,000, the Senior Independent Director an annual fee of £31,500 and each other Director an annual fee of £29,000. The following members of the Board hold ordinary shares in the Company: Vivian Bazalgette 30,000 shares, Fleur Meijs 28,970 shares, Milyae Park nil shares, Sir Ivan Rogers nil shares and Paul Yates 32,000 shares.

The financial information contained in this Half-Yearly Results Announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 30 June 2023 and 30 June 2022 has not been audited or reviewed by the Company’s Independent Auditor.

The information for the year ended 31 December 2022 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

A copy of the Half-Yearly Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The Half-Yearly Report will also be available on the Company's website at www.fidelity.co.uk/europe where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.

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