Fidelity Emerging Markets Limited (FEML) Ptg NPV

FIDELITY EMERGING MARKETS LIMITED Annual Report for the year ended 30 June 2024 To ﬁnd out more, visit ﬁdelity.co.uk/emergingmarkets, scantheQRcodeorspeaktoyouradviser. FIDELITY EMERGING MARKETS LIMITED Whether it’s in South African mining, Indian ﬁnancial servicesorChineseinfrastructure,weknowwhereto ﬁnd opportunities hidden within emerging markets. Fidelity Emerging Markets Limited uncovers great companies through our experienced global team, backedbywhatwebelieveareunrivalledon-the- ground research capabilities. Meaning you can make themostofourextensiveexpertise,withoutlearning a whole new language. Thevalueofinvestmentscangodownaswellasup, soyoumaygetbacklessthanyouinvest.Overseas investments are subject to currency ﬂuctuations. Investments in emerging markets can be more volatile than other more developed markets. The Company uses ﬁnancial derivative instruments for investment purposes,whichmayexposeittoahigherdegreeof risk and can cause investments to experience larger than average price ﬂuctuations. We speak the language of opportunity – wherever it emerges 籫氳 ☲全┘佭儬⚡ Ithuba Elingavinjelwe The latest annual reports, key information document (KID) and factsheets can be obtained from our website at www.ﬁdelity.co.uk/its or by calling 0800414110. The Alternative Investment Fund Manager (AIFM) of Fidelity Investment Trusts is FIL Investment Services (UK) Limited. Issued by Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0123/381013/SSO/0623 Fidelity Emerging Markets Limited | Annual Report 2024 The Year at a Glance As at 30 June 2024 Equity Shareholders’ Funds £596.0m Market Capitalisation £524.8m Capital Structure Number of Participating Preference Shares in issue excluding held in Treasury 74,646,287 Summary of the key aspects of the Investment Policy The Company aims to achieve long term growth by primarily investing in securities and ﬁnancial instruments providing exposure to emerging markets companies. The Investment Manager invests at least 80% in companies with head oﬃces, listings, assets, operations, income, or revenues predominantly in or derived from emerging markets. A diversiﬁed portfolio of at least 75 holdings in companies listed or operating in at least 15countries is maintained. The Company may also invest into other transferable securities, investment companies, money market instruments, unlisted shares, cash and deposits within the limits of the investment policy restrictions as detailed on page 20. It is able to use derivatives for eﬃcient portfolio management, to gain additional market exposure (gearing), to seek a positive return from falling asset prices, and for other investment purposes. Net Asset Value per Participating Preference Share total return 1,2 Year ended 30 June MSCI Emerging Markets Index 1,3 Year ended 30 June Active Share 2 Year ended 30 June Source: JPMorgan and Datastream. 1 Includes reinvested income. 2 Alternative Performance Measure – refer to Glossary of Terms on pages 86 to 88. 3 The Company’s Benchmark Index. In the reporting year, the Company’s Net Asset Value per Participating Preference Share increased by 18.7% and the Share Price increased by 22.6%, whilst the Benchmark Index return increased by 13.2% (allperformance data on a total return basis). 2024 2023 2022 2021 2020 +18.7% -2.6% -27.9% -0.8% +24.8% 2024 2023 2022 2021 2020 +13.2% -14.9% -0.1% -2.8% +26.4% 2024 2023 2022 2021 2020 +122.7% +110.9% +73.0% +119.4% +72.0% Share Price total return 1,2 Year ended 30 June 2024 2023 2022 2021 2020 +22.6% -5.2% +30.0% -3.3% -30.0% To ﬁnd out more, visit ﬁdelity.co.uk/emergingmarkets, scantheQRcodeorspeaktoyouradviser. FIDELITY EMERGING MARKETS LIMITED Whether it’s in South African mining, Indian ﬁnancial servicesorChineseinfrastructure,weknowwhereto ﬁnd opportunities hidden within emerging markets. Fidelity Emerging Markets Limited uncovers great companies through our experienced global team, backedbywhatwebelieveareunrivalledon-the- ground research capabilities. Meaning you can make themostofourextensiveexpertise,withoutlearning a whole new language. Thevalueofinvestmentscangodownaswellasup, soyoumaygetbacklessthanyouinvest.Overseas investments are subject to currency ﬂuctuations. Investments in emerging markets can be more volatile than other more developed markets. The Company uses ﬁnancial derivative instruments for investment purposes,whichmayexposeittoahigherdegreeof risk and can cause investments to experience larger than average price ﬂuctuations. We speak the language of opportunity – wherever it emerges 籫氳 ☲全┘佭儬⚡ Ithuba Elingavinjelwe Financial Highlights 30 June 2024 30 June 2023 Assets as at 30 June USD Gross Asset Exposure 1 $1,177.3m $1,185.0m Equity Shareholders’ Funds $753.4m $796.7m NAV per Participating Preference Share 2 $10.09 $8.75 Dividend per Participating Preference Share $0.20 $0.19 Gross Gearing 2,3 56.3% 48.7% Net Gearing 2,4 4.3% (3.9)% GBP Gross Asset Exposure 1,5 £940.7m £932.1m Equity Shareholders’ Funds 5 £596.0m £626.7m NAV per Participating Preference Share 2,5 £7.98 £6.88 Participating Preference Share Price and Discount as at 30 June Participating Preference Share Price at the year end £7.03 £5.88 Discount to NAV per Participating Preference Share at year end 2 11.90% 14.61% Number of Participating Preference Shares in issue 74,646,287 91,100,066 Earnings for the year ended 30 June Revenue Earnings per Participating Preference Share 6 $0.16 $0.22 Capital Earnings/(Loss) per Participating Preference Share 6 $1.29 $(0.06) Total Earnings per Participating Preference Share 6 $1.45 $0.16 Ongoing charges ratio 2 0.81% 0.81% 1 The value of the portfolio exposed to market price movements. 2 Alternative Performance Measure – refer to pages 77 and 78 and Glossary of Terms on pages 86 to 88. 3 Gross Asset Exposure less Equity Shareholders’ Funds expressed as a percentage of Equity Shareholders’ Funds. 4 Net Market Exposure less Equity Shareholders’ Funds expressed as a percentage of Equity Shareholders’ Funds. 5 The conversion from USD to GBP is based on exchange rates prevailing at the reporting dates. 6 Calculated based on weighted average number of participating preference shares in issue during the year. Annual Total Returns in GBP to 30 June 2024 (%) 1 year ended 30 June 2024 3 years ended 30 June 2024 5 years ended 30 June 2024 Share Price NAV (net of annual fees) MSCI Emerging Markets Index -16.7 -18.6 -6.4 +2.3 +3.1 +18.2 +13.2 +18.7 +22.6 01 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Contents Strategy Chairman‘s Statement 2 Portfolio Managers’ Review 4 ESG Ratings 9 Extended Investment Toolkit 10 Spotlight on Top 10 holdings 11 Forty Largest Holdings 13 Distribution of the Portfolio 16 Attribution Analysis 18 Five Year Record 19 Strategic Report 20 Investment strategy and policies 20 Principal and Emerging Risks and Uncertainties, Risk Management 22 Viability statement 25 Governance Board of Directors 28 Directors‘ Report 30 Corporate Governance Statement 31 Directors‘ Remuneration Report 36 Statement of Directors‘ Responsibilities 37 Report of the Audit and Risk Committee 38 Nomination Committee‘s Report 40 Financial Independent Auditor‘s Report 41 Statement of Comprehensive Income 45 Statement of Changes in Equity 46 Statement of Financial Position 47 Statement of Cash Flows 48 Notes to the Financial Statements 49 Alternative Performance Measures 77 Securities Financing Transactions Regulation (“SFTR”) 79 Information for Shareholders Notice of Annual General Meeting 80 Administration 82 Data Protection 83 Alternative Investment Fund Manager‘s Disclosure 84 Glossary to the Annual Report 86 Chairman’s Statement Read more on pages 2 to 3 Portfolio Managers’ Review Read more on pages 4 to 8 Net Asset Value per Share as at 30 June 798.47p 2024 687.91p 2023 720.16p 2022 Share Price as at 30 June 703.00p 2024 587.50p 2023 633.70p 2022 02 Fidelity Emerging Markets Limited | Annual Report 2024 Chairman‘s Statement This has been a year of strong performance with our share price advancing by 22.6% and our discount to NAV narrowing by 2.7% to 11.9%. Heather Manners, Chairman I am pleased to present your Company’s 35th annual report, covering a year in which Fidelity Emerging Markets Limited (‘the Company’) performed strongly, both in absolute terms and relative to the Company’s benchmark, the MSCI Emerging Markets Total Return Index (‘the Index’). With the Company’s portfolio now having been managed by Fidelity for approaching three years, it is particularly pleasing to observe that the extended investment toolkit available to the investment management team is having an appreciable impact, and we are beginning to show a clean pair of heels to the competition with this notably diﬀerentiated product. Overview During the 12-month period to 30 June 2024, the Company’s NAV increased by 18.7% in GBP terms, compared with a gain of 13.2% in the benchmark. The share price advanced by 22.6%, with the discount to NAV narrowing from 14.6% at the beginning of the period to 11.9% at year-end (all performance ﬁgures stated on a total return basis). Havingunderperformed the Index somewhat in NAV terms in the ﬁrst half of the ﬁnancial year (with a total return of +3.2% versus +4.4% for the Index), the full-year NAV total return outperformance of 5.5 percentage points speaks to a particularly strong outcome in the second half of theperiod. Thus, after a diﬃcult year in 2022, when the Company’s performance was negatively aﬀected by Russia’s invasion of Ukraine, and then a period of consolidation in 2023, it is encouraging to see in 2024 that the investment process – one which has delivered notably positive results since 2011 in the strategy’s open-ended vehicle, the FAST Emerging Markets Fund – is now ﬁring again on all cylinders and driving strong NAV performance. You will ﬁnd more detail on the contributors to absolute and relative performance in the Portfolio Managers’ Review on the following pages. However, your Board is pleased to note the positive impact of stock selection – which drove the majority of the outperformance – as well as the signiﬁcant value delivered by the enhanced investment toolkit. Stock selection – rather than investing by country or sector – is at the heart of your Company’s investment strategy, facilitated by Fidelity’s large and experienced team of portfolio managers and analysts, whose location in the markets they cover gives them a key advantage in terms of information and access to company managements. Their deep understanding of their investment universe is also what drives the ability to identify successful short as well as long positions. At Board level, your Directors and I continue to work hard to support the share price, both through capital management initiatives and by promoting the Company to current and potential investors. I am pleased to note the proactive eﬀorts of the investment manager in raising the Company’s proﬁle through events, presentations, and meetings with stakeholders, combined with regular advertising and content placement on many of the UK’s leading investment websites and in key printed media to reach the broadest possible audience, bothprofessional and retail. These eﬀorts continue apace and are helping build investor conviction in the investment thesis, as well as contributing towards a positive perception of the Company’s Portfolio Managers as thought leaders in emerging markets. A key attraction for fee-conscious investors remains our low ongoing charges ratio of 0.81% (FY23: 0.81%), underpinned by a very competitive management fee that your Board believes oﬀers great value for a truly actively managed emerging markets portfolio with a full set of investment tools at the managers’ disposal. Outlook Although US ﬁnancial markets have continued to suck liquidity from the rest of the world, your Portfolio Managers are positive on the outlook for emerging markets in the coming year and well beyond. +18.7% Net Asset Value per Participating Preference Share total return (Year ended 30 June 2024) +22.6% Share Price total return (Year ended 30 June 2024) +13.2% MSCI Emerging Markets Index (Year ended 30 June 2024) 03 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY Emergingmarketcentral banks have been ahead of the curve in raising interest rates, inﬂation is generally well controlled, and they have signiﬁcant policy headroom as, the US Federal Reserve continues to ease, which should be beneﬁcial for emerging market equities. Moreover, while much of the US stock market performance has been driven by multiple expansion, emerging market equities remain very attractively valued on a relative basis. With artiﬁcial intelligence (AI) stocks having dominated the investment headlines from the US, it is important to remember the role that emerging market companies, such as Taiwanese semiconductor makers and Korean memory suppliers, play in the AI value chain. Emerging markets are also among the largest producers of essential commodities such as copper and lithium, all of which are fundamental to the build-out of AI and low- carbon infrastructure. Often the best investment opportunities can be found in smaller and medium-sized companies with a longer runway for growth. However, in far-ﬂung emerging markets, these can be very hard for individual investors to identify. Your Board and I believe that one of the Company’s major advantages is having a large team with ‘boots on the ground’, employing huge amounts of time and eﬀort in ﬁnding the best mid-sized and smaller companies that can contribute to performance over many years. The permanent capital structure of the Company provides the freedom to invest for the long term in stocks that may not yet be widely known. Board composition As reported at the half-year stage, Julian Healy, Chairman of the Audit and Risk Committee, stepped down from the Board for personal reasons following the AGM in December. On 17January we announced the appointment of Mark Little. Mark – aqualiﬁed Chartered Accountant with extensive ﬁnancial services experience and a successful track record as an investment company director – has replaced Julian both as a Director and as Chairman of the Audit and Risk Committee, and will stand for election at the next AGM in December 2024. There have been no further Board changes in the period under review, and with none of the Directors yet approaching nine years’ tenure, we do not foresee any in the immediate future. We thank Julian for his service, and with Mark’s appointment we feel the board continues to have a strong diversity of background, specialist knowledge and competency. Due diligence trip In September 2023, the Board was fortunate to have the opportunity to visit Fidelity’s team in the Middle East. Wetravelled to Saudi Arabia, Abu Dhabi and Dubai, following an investment team led schedule and observing the team at work, which was very helpful to our understanding of the investment opportunities in the region. The Middle East is not currently a large part of the portfolio, but it has contributed positively to performance, notably Saudi Arabian water utility Alkhorayef Water & Power Technologies was amongst the top ten contributors to performance this year and the region has the potential to play a greater role in the future. Discount management As noted above, during the year the discount to NAV narrowed somewhat, from 14.6% to 11.9% in what was a challenging year for the broader London listed closed end fund sector. TheCompany completed a tender oﬀer in March 2024, which saw 13,531,881 shares (14.99% of the shares in issue) repurchased at a 2% discount to NAV, and we also bought back shares in the market, with an additional 2.9m shares repurchased (FY23: nil). Since year-end, we have repurchased an additional 2.8m shares (3.7% of shares in issue), and at 2 October 2024 (the latest practicable date), the discount to NAV stood at 12.2%. At the AGM in December 2024 we will seek to renew the existing annual authority to repurchase up to 14.99% of our Participating Preference Shares. I would also remind readers that the Company has committed to undertake a further tender for up to 25% of its then shares in issue (excluding any shares held in treasury) should its NAV total return fail to exceed the benchmark over the ﬁve years ending on 30September 2026. While buybacks are NAV-accretive for existing shareholders, share repurchases on their own do not narrow discounts, and as such we continue to work to ensure that potential and existing investors fully understand the Company’s story and the enhanced investment toolkit available to the managers, whose performance is beginning to speak for itself. Dividend Your Board does not task the Portfolio Managers with ﬁnding yield. However, some dividend income naturally arises, and after accounting for costs charged to the revenue account, the majority of this is paid out to our shareholders in the form of dividends. A resolution to declare a ﬁnal dividend of $0.20 per share (2023: $0.19) will be proposed at the AGM of the shareholders of the Company that will be held on 10 December 2024. Subject to shareholder approval, the ﬁnal dividend will be paid on 13December 2024 to shareholders on the Register of Members on 15 November 2024. The ex-dividend date is 14November2024. AGM This year’s AGM will be held on Tuesday, 10 December 2024 at 11.00a.m. at the registered oﬃce of the Company, Level 3, MillCourt La Charroterie, St Peter Port, Guernsey GY1 1EJ. Notice of the AGM, containing full details of the business to be conducted at the meeting, is set out on page 80of this report. Your attention is also drawn to the Corporate Governance section of the Directors’ Report on page 32 where resolutions relating to special business are explained. Electronic proxy voting is now available and shareholders are encouraged to submit voting instructions using the web based voting facility at www.eproxyappointment.com and for institutional shareholders via the CREST system, CREST messages must be received by the issuer’s agent (ID number 3RA50) not later than 11.00a.m. on 8December 2024. In order to use electronic proxy voting, shareholders will require their shareholder registration number, control number and pin. If you do not have access to these details please contact the Company’s Registrar, Computershare, their contact details can be found on page82 ofthis report. Heather Manners Chairman 8 October 2024 04 Fidelity Emerging Markets Limited | Annual Report 2024 Question How has Fidelity Emerging Markets Limited performed in the ﬁnancial year to30 June 2024? Answer The twelve months to the end of June was a period of strong performance for the Company. Markets were volatile as they reacted to developments in China and signals from the Federal Reserve about the pace of interest rate cuts. Another key driver for markets was the incredibly strong performance of AI-related stocks, notonly in the US, but across the emerging market universe, too. Against this backdrop, emerging markets rallied over the period but underperformed developed markets such as the US. Over the year, the portfolio gained on an absolute basis and the Company delivered an NAV total return of 18.7% in sterling terms, outperforming the benchmark, which returned 13.2%. Question What were the main contributors to the outperformance during the year and why? Answer The Company’s extensive ‘toolkit’ added signiﬁcant value over the year. When managing the portfolio, we draw on a broad range of ‘tools’, namely the ability to adjust the level of gross exposure via gearing, to invest in mid-cap companies, take out short positions, and use options. It is pleasing to see that many of these tools, including the mid-cap exposure and the short book, added substantial value over the past year. While yield enhancement (or the options book) detracted, this is a function of it being a hedging tool, which means it detracts when performance is strong. The short book in particular generated very positive performance. We take out short positions in businesses that are in structural or cyclical decline, and that have a number of red ﬂags around aspects like their balance sheet structure, cash conversion, orrelated party/management conﬂicts of interest. Over the year there were two short positions in the top ten contributors to relative returns, a notable achievement given that we limit the size of short positions to c.100bps. The top performer in the short book was adeclining Asian utility that is unsuccessfully pivoting into unrelated business areas, and which saw its share price halve during June, following poor earnings and after the major shareholder faced margin calls. Portfolio Managers’ Review Nick Price was appointed as Portfolio Manager of Fidelity Emerging Markets Limited on 4 October 2021. He has 25 years of investment experience. Chris Tennant was appointed as Portfolio Manager of Fidelity Emerging Markets Limited on 4 October 2021. He has 12 years of investment experience. 05 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Looking to the rest of the portfolio, several holdings in the ﬁnancials sector stand out. These included high-conviction positions like Brazilian digital challenger bank Nu Holdings, and Kazakhstan’s e-commerce and payments platform Kaspi. Another contributor was Russia’s TCS Group 1 , a provider of online ﬁnancial services, which we disposed of after identifying a liquidity opportunity. The Company’s holdings in Russian securities have been fair valued at nil since the ﬁrst quarter of 2022. Within information technology, Taiwanese semiconductor foundry business TSMC performed well given the growing tailwind from AI-related demand. The Chinese consumer names held in the portfolio were the main headwind to performance. The portfolio had a marginal underweight exposure to China and Hong Kong combined at the end of June, but the Hong Kong listed names held such as sportwear company LiNing and insurance company AIA lagged the domestic A-share market. Afeature of 2023 was the signiﬁcant underperformance of HongKong listed H-shares as foreign investors exited the market, although this started to reverse over the ﬁrst half of 2024 as sentiment began toimprove. Overall, it was a strong period for the Company, which beneﬁted from broad-based performance drivers and where the extensive toolkit added notable value. Question The Company is unique in its peer group given its ability to use both long and short positions. How did you exploit that ﬂexibility over the past year? Answer One of the additional tools the Company has at its disposal is the ability to take out short positions. This allows us to proﬁt not only from the winning businesses in each industry, but also from thelosers. An example of a now-closed short position that worked well for us is Microvast, a battery maker using antiquated, obsolete technology. We thought that Microvast also had a questionable order book and a stretched balance sheet. Thecompany’s share price fell signiﬁcantly, and we exited the position at a proﬁt earlier this year. Other high-conviction short positions include several current holdings in Chinese EV makers (disclosure rules mean we are unable to name open short positions). These companies operate in an industry that suﬀers from high competitive intensity and overcapacity, while at a fundamental level these businesses also have undiﬀerentiated products, high cash burn, and signiﬁcant debt on their balance sheets. Top 5 Positions As at 30 June 2024 Country Sector Portfolio (%) Index Weight (%) Relative (%) Taiwan Semiconductor Manufacturing Taiwan Information Technology 11.6 9.7 1.8 Naspers South Africa Consumer Discretionary 5.4 0.5 5.0 Kaspi.KZ Kazakhstan Financials 5.4 0.0 5.4 Samsung Electronics South Korea Information Technology 5.1 4.2 0.8 Nu Holdings Brazil Financials 4.6 0.0 4.6 STRATEGY 1 Fidelity investment, trading and operational teams actively monitor developments, which can result in the identiﬁcation of liquidity opportunities. Importantly, any pre-trade assessment ensures that activities do not contravene international sanctions. Prudent assessment of counterparties and all aspects of trade settlement arrangements are scrutinised and carefully managed in the best interests of clients. The decision to trade TCS was based on our assessment that a fair exit multiple was achievable. 06 Fidelity Emerging Markets Limited | Annual Report 2024 Question What were some of the major changes you made to the portfolio during the year and what drove those? Answer Over the twelve months to the end of June we focused on adjusting the portfolio’s China/Hong Kong exposure. Something we pay very close attention to is the extent of negative sentiment towards China and the potential for a rebound, which we did indeed see following the end of the review period, when China announced meaningful stimulus measures in September. While the Chinese market faces structural issues, we think it is important to hedge the portfolio’s underweight exposure. We also saw a number of very high-quality businesses that had disproportionately derated, oﬀering attractive entry points. One of the ways we looked to add exposure towards the end of the period was through the options book, initiating a long position in an out-of-the-money Hang Seng China Enterprises Index call option, which we funded by selling out-of-the-money put options. Given that implied volatility is at decade lows for emerging markets, utilising the options book is a cost-eﬀective way to take out insurance against a rally in Chinese equities (which we saw during April and May and subsequent to the end of the review period in September). We also added a number of long positions in Chinese stocks during the review period, including high-quality consumer and internet businesses that now trade on very attractive valuations, including premium sportwear company Anta Sports and leading online travel agent Trip.com. We also made changes within the portfolio’s information technology holdings. The semiconductor industry has performed extremely well and index heavyweight TSMC, the Taiwanese foundry business, now makes up about a tenth of the emerging market index. We have a very constructive outlook for TSMC, which is a vital part of the AI supply chain, and the company remains a core position in the portfolio. However, we have looked to diversify exposure to other AI supply chain beneﬁciaries, with recent additions including Elite Material, aTaiwanese manufacturer of copper clad laminate, a vital input for printed circuit boards, and another beneﬁciary of AI-drivendemand. Question What opportunities are you particularly excited about – are there any stand-out markets, sectors or themes you’d highlight? Answer We have a particularly constructive outlook for copper miners. Electriﬁcation and datacentres alone could add an incremental 4% per annum to demand over the rest of the decade, while the backdrop for supply is very muted, with few copper mines currently in operation, and little supply expected to come online given it takes around 10 years to bring a greenﬁeld copper discovery into production. This creates a buoyant environment for copper prices. The largest position we have is in Grupo Mexico, which is the holding company for Southern Copper, one of the lowest cost copper producers in the world. Given the Company’s closed- ended nature we also have positions in mid-cap copper miners, for example Minsur, a Peruvian miner of copper and tin which has good assets, and a healthy cash balance that it has signalled it intends to pay out to investors. We continue to see opportunities in the ﬁnancials sector. Whileinterest rates have likely peaked, the Company’s ﬁnancials exposure is not rate sensitive. Examples of companies we own are Indian private sector banks, companies in the ﬁntech space and banks in Eastern Europe that are beneﬁciaries of fallingrates. Indian private sector banks HDFC Bank, ICICI Bank, and Axis Bank remain core holdings. These companies all stand to beneﬁt from the underpenetration of ﬁnancial services in India, and growing demand for credit cards and mortgage products. Unlike the Indian market in aggregate, these stocks trade at reasonable valuations. We have seen in recent years a signiﬁcant shift in business towards these private banks at the expense of the state-owned banks and think that going forward they stand to beneﬁt from strong GDP and credit growth in the Indian market. High conviction holdings in ﬁntech include Brazil’s digital challenger bank Nu Holdings, which is rapidly taking market share from incumbents. Five years ago, the incumbent banks in Brazil were levying very high fees and rates on consumers, using that revenue to ﬁnance a bloated bricks-and-mortar cost base. This created a fantastic backdrop for a challenger bank like Nu to oﬀer a great value proposition with no fees and lower interest rates, all at much better unit economics. As a result, it has been able to rapidly grow its customer base to 100m customers and start to expand into other markets like Mexico. We also have exposure to beneﬁciaries of falling rates, for example, banks in countries such as Hungary, which are liability sensitive. This means that their liabilities reprice more quickly than their assets, so when rates come down, margins expand rather than contract. One of the stocks we hold is Hungary’s OTP Bank, which has a dominant position in Eastern Europe and is set to beneﬁt from net interest margin expansion as rates continue to come down. Question Another aspect of the company’s broad toolkit is the ability to invest in smaller companies and in “oﬀ-the-beaten-track” markets like Vietnam. Canyou outline some of the most excitingopportunities you are seeing inthose areas? Answer One of the key beneﬁts of the investment company structure is that we can take a longer investment horizon and move further down the market cap spectrum. This might be into smaller companies that are less well known by investors and are often poorly covered by the sell side, or companies in frontier markets such as Vietnam. Portfolio Managers’ Review continued 07 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS One mid-cap company we are particularly excited about is Brazil’s Direcional, a developer of large-scale, low-income housing projects in Brazil. Aﬀordable housing is a key priority for Brazil’s President Lula, and recent changes to the “Minha Casa, Minha Vida” social housing programme make the low-income housing market much larger and more proﬁtable than it has been historically. Despite these structural tailwinds and a benign competitive environment, the company is trading on a very cheap valuation, and is, we think, an underappreciated beneﬁciary of the growth in social housing in Brazil. We also see opportunities in frontier markets such as Vietnam. One Vietnamese company we hold is FPT, an IT services business that beneﬁts from Vietnam’s highly skilled low-cost labour and is a beneﬁciary of the diversiﬁcation of supply chains away from China. FPT owns its own university, providing access to the country’s talent base, and oﬀers unparalleled value to its customers, putting it in a good position to continue gaining market share. Question Given the scale of the emerging market opportunity set, one of Fidelity’s strengths is the depth of resources and local presence around the world combined with your frequent research trips to the countries in which the Company invests. How do you leverage that resource to the beneﬁt of the Company’s shareholders and what were some of the key takeaways from recent country visits? Answer Travel is a huge part of our process and the investment team go on a number of research trips every year. These overseas trips form a crucial part of our due diligence process, and we’ve visited Poland, Greece, and the Middle East, among other places, over the past year. Speaking to local experts on their home turf is a vital input that allows us to assess all manner of opportunities and, of course, risks. One of the more recent trips we went on was to Poland, where we wanted to assess the backdrop for companies following last year’s election, when the right-wing PiS party was replaced by Donald Tusk’s pro-EU coalition. This has resulted in management team changes at state-owned companies, leading to many companies having a much more shareholder friendly mandate than previously. We wanted to visit the country to assess this for ourselves and were heartened to see what appears to be a signiﬁcant corporate change story underway, with a huge improvement in the treatment of minority shareholders. We think it is vital to meet these management teams in person in order to really understand who the winners and losers of this corporate change story are. Question How do you actively and eﬃciently manage the portfolio, given the extensive universe of companies to choose from in emerging markets? Answer Fidelity’s extensive emerging market research team is one of the key mechanisms that lets us eﬀectively manage the portfolio. We have about 50 analysts across the globe looking only at emerging market companies, which means we can develop a deep, unrivalled view of their dynamics, and explore the opportunities among mid-cap companies. There is excellent collaboration between all our analysts across regions and sectors, with those focused on global sectors like oil and gas, metals and mining, and technology helping us analyse what is going on in emerging markets alongside changes in developed markets. Our research team really allows us to have ‘boots on the ground’ across emerging markets. This year we travelled to countries like Greece and Poland and spent time meeting with companies, their competitors, and their suppliers, seeing the assets and operations of companies ﬁrst hand. There is no substitute for this sort of on the ground presence, and Fidelity research analysts carry out around 20,000 company meetings a year. The way our global emerging markets investment team is structured also allows us to eﬀectively cover diﬀerent regions. Thebroader team manages three regional portfolios, encompassing Latin America, emerging EMEA, and emerging Asia, which all feed ideas into our global emerging markets portfolio, and within this the Company’s portfolio. This structure is an acknowledgement of the fact that the emerging market universe is vast and means we can apply multiple layers of due diligence to the stocks we invest in. STRATEGY 08 Fidelity Emerging Markets Limited | Annual Report 2024 Portfolio Managers’ Review continued Question Finally, how do you view the prospects for the broad asset class and China in particular given overall valuation levels, macroeconomic conditions and the political backdrop across the emerging world? Answer Emerging market equities have structurally derated over the past 15 years. Weakness in China and a muted backdrop for commodity prices partly explains this, as well as the environment of higher interest rates and concerns about geopolitics. We are cautiously optimistic about the year ahead. As the Fed has now started to ease policy, this should give the green light to emerging economies to continue cutting interest rates, which will be supportive of consumers and corporates, and will help drive ﬂows to equity markets. During the current rate-hiking cycle, many emerging economies were far ahead of developed economies in acting decisively to raise rates and bring inﬂation under control. This means that real interest rates in many emerging markets are still incredibly high, and there is huge scope for rates to come down further. Emerging economies also beneﬁt from an improved ﬁscal backdrop, which stands in stark contrast to developed economies like the UK or the US, where the ﬁscal environment is the worst it’s been for many years. While much of the boom in developed markets has been underpinned by QE and stimulus, we have not seen the same level of support extended in emerging economies, which makes the asset class better equipped for an environment of structurally higher interest rates. Part of the reason the ﬁscal backdrop is better for emerging markets is the more buoyant backdrop for commodity prices. For emerging economies, the past decade has been marked by a bursting of the commodity bubble as demand from the China property market slowed down. Looking ahead to the next decade we see a much tighter environment for prices, given there has been a decade of underinvestment in the commodity complex, and the fact that there are strong demand drivers from electriﬁcation and AI. We expect this will be a huge tailwind for commodity exporting emerging market economies such as Brazil, South Africa, Indonesia, and Peru. China remains key to the outlook. We are emerging from a period of signiﬁcantly negative sentiment towards China and while structural problems persist, any signs that we are past the worst could lead international investors to start reallocating capital to the market. Following the end of the review period there was a signiﬁcant rally in the Chinese market, as the government announced meaningful stimulus measures. Thebig challenge for China is consumer conﬁdence as the post-Covid spending boom seen in developed markets failed to materialise, given weakness in the property market, which has historically made up around half of household wealth. This year the government has shifted from deleveraging the property market to looking to reﬂate it, with the most signiﬁcant measures announced post the end of the review period in late September. While the recovery will likely be slow and protracted, any positive momentum in prices will support consumer conﬁdence. However, we expect excess capacity in industries like steel, cement, and solar to persist, while the potential for higher tariﬀs is also a tail risk. For that reason, it is vital to be incredibly selective when investing in China. Another driver for emerging markets is the exposure it oﬀers to the AI supply chain. While US companies are typically thought of as AI beneﬁciaries, what is often overlooked is the fact that the bulk of the AI supply chain sits in emerging markets like Taiwan. Indeed, Jensen Huang, Nvidia’s CEO, has said that Nvidia wouldn’t be the company it is today without Taiwan’s TSMC, which manufactures Nvidia’s AI chips. Given the discount that emerging markets are trading on relative to the US, the emerging market universe oﬀers exposure to the AI supply chain at much more attractive valuations. The emerging market universe is trading at multi-decade lows relative to developed markets. Part of this is down to concerns about geopolitics. 2024 is a busy election year, with developments in both emerging economies and the US requiring close scrutiny. These are the types of events we continue to monitor incredibly carefully, drawing on the inputs of external experts to help make sense of elevated unpredictability in markets, and we continue to focus on staying fully engaged and speaking to geopolitical experts with a range of diﬀerentperspectives. With an improving fundamental backdrop, we think today represents an attractive entry point for emerging market equities. Using our bottom-up, highly diﬀerentiated approach, we are focused on using the Company’s extensive toolkit to carefully manage country-level exposures, and the short book to beneﬁt from the universe’s structural losers, as well as identifying the winners for the long book. Against a backdrop that will likely remain highly uncertain, we will continue to use this ﬂexibility to closely manage risk, all the while exploiting the most exciting opportunities throughout the emerging market universe. Nick Price Chris Tennant Portfolio Managers 8 October 2024 09 Annual Report 2024 | Fidelity Emerging Markets Limited GOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY The charts below show a breakdown of the underlying stocks in the Company’s portfolio using MSCI and Fidelity’s own ESG ratings. It is encouraging that Fidelity’s ratings, which are more forward-looking in nature, show a greater proportion of the portfolio in higher rated stocks than those rated by MSCI, which is more backward-looking and disclosure driven. MSCI ESG ratings 0 5 10 15 20 25 30 35 Not yet Rated CCCBBBBBBAAAAAA Portfolio Index 9.9% 11.3% 13.4% 17.4% 8.3% 16.7% 6.6% 9.2% 0.0% 3.3% 26.1% 0.5% 26.6% 24.0% 9.1% 17.6% % TNA FIL proprietary ESG ratings 0 5 10 15 20 25 30 35 40 45 Not yet Rated EDCBA Portfolio Index 25.2% 19.2% 38.0% 34.1% 17.2% 15.6% 1.4% 4.0% 1.2% 0.3% 16.9% 26.8% % TNA Source: Fidelity International, MSCI ESG Research, Data is representative of the Fidelity Emerging Markets Limited as at 30 June 2024. LHS: The Fidelity Sustainability Ratings were launched in June 2019. As at 30 June 2024, they cover a universe of c. 4,000 issuers in equity and ﬁxed income. Fidelity have a ﬁve scale rating of A (best) to E (worst). RHS: MSCI rates issuers on a AAA-CCC scale according to their exposure to industry speciﬁc ESG key issues and their ability to manage those issues relative to peers. The ESG ratings distribution is based on the Net Asset Value of holdings excluding cash, liquidity funds and ETFs which are grouped under “Cash & Others”. The charts above show long book rebased to 100%. Short positions are excluded. Due to small rounding errors, Portfolio and Index holdings may not total 100%. Fidelity International’s proprietary sustainability ratings system leverages its internal research and interactions with issuers. The ratings are designed to generate a forward-looking and holistic assessment of ESG risks and opportunities based on sector speciﬁc performance indicators. Analysts quantify the direction of change of companies’ ESG performance (positive, neutral or negative trajectory) and rate the companies using a scale of A (best) to E (worst). ESG Ratings 10 Fidelity Emerging Markets Limited | Annual Report 2024 Extended Investment Toolkit Fidelity Emerging Markets Limited is an all-cap Global Emerging Markets strategy with enhanced investment powers which seeks to exploit a broad range of opportunities. As opposed to more traditional long-only funds, the Company adopts an active ‘extension’ investment style with the strategy beneﬁtting from an expanded toolset which allows the portfolio managers to employ long and short extensions using derivatives as and when high conviction ideas are identiﬁed: • Equities: The Company predominantly invests in equity securities that oﬀer a signiﬁcant degree of absolute upside from prevailing market prices. The portfolio managers will seek opportunities across the market cap spectrum, geographies, and consider listed companies, initial public oﬀerings and unlisted investments • Long extensions: Derivatives are used to provide additional exposure to stocks with the greatest upside potential and to oﬀset the reduction in equity exposure introduced by the Company’s short positions. Most of the long and short derivative exposure is currently achieved through Contracts for Diﬀerence (“CFDs”). • Short extensions: Derivatives are used to achieve the economic eﬀect of a short position in a security which the portfolio managers believe is overvalued. Short positions are implemented on an opportunistic basis for up to approximately 30% of total Net Assets under normal market conditions. • Other instruments: The Portfolio Managers can opportunistically access other derivative instruments such as options to enhance the Company’s returns or manage its risk proﬁle. An example of return enhancement would be the sale of call options against holdings in the fund in high volatility environments, to capture the option premium, whilst also providing an eﬃcient exit from the position at a strike price equivalent to the stock’s target price. An example of risk control would be the purchase of appropriate index put options in lower volatility environments to protect the Company against negative movements in equity markets, where such portfolio insurance can be purchased at an attractively low premium. How this ﬁts with our investment philosophy We believe that many emerging market companies can sustain high levels of economic growth for years to come, driven by attractive demographic proﬁles, immature markets, an abundance of untapped natural resources, and generally low levels of indebtedness. However, whilst these positive attributes provide a fertile environment for companies to grow their earnings, it is critical to ensure that each company we invest in can generate superior and sustainable returns on assets that permit them to fund the growth of their business, withstand competitive pressures and achieve attractive returns for minorityshareholders. With this in mind, we deﬁne high quality companies as those thatexhibit: • Quality – high quality, well capitalised companies capable of achieving superior returns on assets, and where strong free cash ﬂow generation can be used to either self-fund future growth or pay dividends to shareholders. • Consistency of returns – dominant companies that can maintain superior levels of growth and proﬁtability resulting from a sustainable competitive advantage, such as market share, technology, or cost leadership; companies which exhibit a solid track record of delivering attractive total shareholder returns over time. • Reasonable price – attractive valuations that understate the intrinsic value of a company. Target prices are determined for every stock considered for the portfolio, reﬂecting each company’s sustainable level of earnings power across the economic cycle and an appropriate valuation multiple. Conversely, it is those weaker peers who are unable to compete with the strongest franchises that are likely to fall by the wayside. Using short positions, these weaker businesses form some of the additional investment opportunities that we can take advantage of, as an additional source of performance. 11 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY Spotlight on Top 10 holdings as at 30 June 2024 Based on Asset Exposure expressed as a percentage of Net Assets. Asset Exposure comprises the value of direct equity investments plus market exposure to derivative instruments. Taiwan Semiconductor Manufacturing (“TSMC”) % of Net Assets 11.6% TSMC is a pre-eminent Taiwanese semiconductor foundry with leading-edge technology, which reinforces the company’s competitive position and ability to generate incremental return on invested capital. The company has built a technological moat over the past three decades and occupies an especially dominant position at the forefront of the industry as competitors have dropped out of the race due to technical hurdles and the barrier of high required capital expenditures. TSMC’s ability to hire the best talent while continuously improving its know-how keeps it ahead of the competition and able to generate cashﬂow to reinvest in R&D and capacity. Industry Information Technology Naspers % of Net Assets 5.4% Naspers is a South African holding company specialising in internet investments. The unwinding of its complex corporate structure last year was an important development for minority shareholders, who will beneﬁt from Naspers’ ability to buy back more of its shares and further shrink the discount between the value of Naspers and Prosus, as well as their biggest asset Tencent. Industry Consumer Discretionary Samsung Electronics % of Net Assets 5.1% Samsung Electronics is a technology powerhouse with products spanning upstream manufacturing to downstream consumer products. The company’s device experience division produces product such as mobile handsets, tablets, business networks and medical and health equipment, while its device solutions segment captures its memory and foundry business. Innovations in artiﬁcial intelligence, 5G and 6G, automotive electronics and a wide range of robotics are also core to Samsung’s strategy. Industry Information Technology Kaspi.KZ % of Net Assets 5.4% Kaspi is the dominant consumer ﬁnance, e-commerce, and payments platform in Kazakhstan. It provides interconnected technology and products and services that help people to pay, shop, and manage their ﬁnances. Its ecosystem connects consumers and merchants, enabling digital payments, e-commerce, and ﬁnancial services. The company’s gateway to its ecosystem is the mobile app, which is powered by the company’s proprietary technology and enables users to navigate between interconnected products and services. Kaspi serves customers in Kazakhstan and Azerbaijan. Industry Financials Nu Holdings % of Net Assets 4.6% Nu Holdings is an oﬀ-benchmark name which is a testament to the power of Fidelity’s research capability that extends beyond the typical investment universe. The management is focused on growing deposits, personal loans, and cross-selling ﬁnancial products on its platform. Brazil is the core market, but the company is also expanding in Mexico and Colombia. The company has consistently reported strong proﬁtability and grown its total number of customers to approximately 100m, demonstrating exceptional execution on customer acquisitions, and asset quality that has been more resilient than expected. Industry Financials 12 Fidelity Emerging Markets Limited | Annual Report 2024 HDFC Bank % of Net Assets 3.4% HDFC Bank is the best run bank in India with a focus on non-mortgage retail lending. It has an excellent history of balancing growth and shareholder returns. Its conservative capital management practices enable it to continually invest across the cycle. Its leading-edge technology reinforces its competitive position and ability to generate incremental returns on invested capital. Industry Financials Axis Bank % of Net Assets 3.8% The promising long-term growth prospects of India’s third-largest private lender Axis Bank stand out. The bank has an encouraging asset quality, well-capitalised balance sheet, low cost of funds, healthy interest margins and high provision buﬀers. Industry Financials AlKhorayef Water & Power Technologies % of Net Assets 3.6% Alkhorayef Water & Power Technologies is a Saudi Arabian water utility company which operates in a fragmented industry that has seen strong growth and has a good focus on returns and project economics, with a large pipeline of projects and a strong management team. Industry Utilities Grupo Mexico % of Net Assets 3.1% Grupo Mexico has an 89% stake in Southern Copper which accounts for 80% of group earnings. Southern Copper remains a highly attractive and cash generative business. Grupo Mexico Transportes is another driver of Grupo Mexico’s earnings and it continues to track well with broad end industry exposure and decent eﬃciency gains. Overall, Grupo Mexico has good assets, is generating strong cashﬂow and will clearly beneﬁt from any upward move in the copper price. Industry Materials MakeMyTrip % of Net Assets 3.9% Makemytrip is the largest online travel agency in India. The company has a leading share in air ticketing and dominant market share in bus ticketing. It also has a strong and growing presence in hotels. The company has a long growth runaway given low penetration of airlines and hotels in India along with improving air connectivity and infrastructure. The company is beneﬁting from rising income levels and increasing internet penetration in the country. Trip.com’s ownership and board presence are likely to give further impetus to international growth, improve strategic decision making and the competitive position of the company. Industry Consumer Discretionary Spotlight on Top 10 holdings continued 13 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY The Asset Exposures shown below measure exposure to market price movements as a result of owning shares, corporate bonds, equity linked notes and derivative instruments. The Fair Value is the realisable value of the portfolio as reported in the Balance Sheet. Where the Company holds shares, corporate bonds and equity linked notes, the Asset Exposure and Fair Value will be the same. For derivative instruments, Asset Exposure is the market value of the underlying asset to which the Company is exposed, while the Fair Value reﬂects the proﬁt or loss on the contract since it was opened, and is based on how much the share price of the underlying asset has moved. Asset Exposure Fair value $’000 % 1 $’000 Long Exposures – shares unless otherwise stated Taiwan Semiconductor Manufacturing (shares, option and long CFD) 87,016 11.6 79,736 Information Technology Naspers 40,678 5.4 40,678 Consumer Discretionary Kaspi.KZ 40,447 5.4 40,447 Financials Samsung Electronics (shares and long CFD) 38,012 5.1 9,129 Information Technology Nu Holdings (option and long CFD) 34,516 4.6 2,712 Financials MakeMyTrip (option and long CFD) 29,694 3.9 (831) Consumer Discretionary Axis Bank (shares and long CFD) 28,630 3.8 6,033 Financials AlKhorayef Water & Power Technologies 27,359 3.6 27,359 Utilities HDFC Bank (shares, option and long CFD) 25,705 3.4 23,500 Financials Grupo Mexico (shares and long CFD) 23,465 3.1 986 Materials ICICI Bank (shares and long CFD) 23,181 3.1 6,197 Financials AIA Group (shares and long CFD) 21,090 2.8 4,736 Financials Bank Central Asia 19,668 2.6 19,668 Financials Piraeus Financial Holdings 16,125 2.1 16,125 Financials MediaTek 15,838 2.1 15,838 Information Technology Samsonite International (long CFD) 14,456 1.9 (465) Consumer Discretionary Auto Partner 13,899 1.8 13,899 Consumer Discretionary TBC Bank Group (long CFD) 13,538 1.8 990 Financials Eicher Motors 13,509 1.8 13,509 Consumer Discretionary Brilliance China Automotive Holdings (shares and long CFD) 13,351 1.8 1,685 Consumer Discretionary ASML Holding (option and long CFD) 12,331 1.6 (20) Information Technology Forty Largest Holdings as at 30 June 2024 14 Fidelity Emerging Markets Limited | Annual Report 2024 Asset Exposure Fair value $’000 % 1 $’000 Banco BTG Pactual 12,026 1.6 12,026 Financials Standard Bank Group (shares and long CFD) 12,022 1.6 4,352 Financials SK Hynix (option and long CFD) 11,520 1.5 591 Information Technology FPT 11,407 1.5 11,407 Information Technology Alibaba Group Holding (shares, option and long CFD) 11,267 1.5 716 Consumer Discretionary Grupo Aeroportuario del Paciﬁco 10,949 1.5 10,949 Industrials Endeavour Mining (long CFD) 10,935 1.5 269 Materials OTP Bank 10,536 1.4 10,536 Financials Five-Star Business Finance 10,499 1.4 10,499 Financials Lundin Gold 10,321 1.4 10,321 Materials PDD Holdings (long CFD) 9,652 1.3 (626) Consumer Discretionary Pan African Resources 9,501 1.3 9,501 Materials China Resources Land (shares and option) 8,507 1.1 2,953 Real Estate Wiwynn 8,479 1.1 8,479 Information Technology Africa Oil (long CFD) 8,450 1.1 421 Energy Kuaishou Technology (shares and long CFD) 8,145 1.1 1,522 Communication Services ANTA Sports Products 7,891 1.0 7,891 Consumer Discretionary National Bank of Greece (long CFD) 7,873 1.0 (320) Financials TAV Havalimanlari Holding 7,796 1.0 7,796 Industrials Forty largest long exposures 740,284 98.2 431,194 Other long exposures 367,495 48.8 272,614 Total long exposures before long futures and hedges (136 companies) 1,107,779 147.0 703,808 Forty Largest Holdings continued 15 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Forty Largest Holdings continued STRATEGY Asset Exposure Fair value $’000 % 1 $’000 Add: long future contracts Hang Seng China Enterprises Index 22,348 3.0 (399) Total long future contracts 22,348 3.0 (399) Less: hedging exposures MSCI Emerging Markets Index (future) (148,757) (19.7) (1,196) Total hedging exposures (148,757) (19.7) (1,196) Total long exposures after the netting of hedges 981,370 130.3 702,213 Add: short exposures Short CFDs (66 holdings) 170,814 22.7 6,830 Short futures (7 holdings) 22,831 3.0 (26) Short options (2 holdings) 2,306 0.3 914 Total short exposures 195,951 26.0 7,718 Gross Asset Exposure 2 1,177,321 156.3 Forward currency contracts 364 Portfolio Fair Value 3 710,295 Net current assets (excluding derivative assets and liabilities) 43,151 Total Net Assets 753,446 1 Asset Exposure (as deﬁned in the Glossary of Terms on page 86) expressed as a percentage of Net Assets. 2 Gross Asset Exposure comprises market exposure to investments of $696,753,000 (per Note 10 on page 57) plus market exposure to derivative instruments of $480,568,000. (per Note 11 on page 60). 3 Portfolio Fair Value comprises investments of $696,753,000 plus derivative assets of $25,399,000 less derivative liabilities of $11,857,000. (per the Statement of Financial Position on page 47). 16 Fidelity Emerging Markets Limited | Annual Report 2024 Distribution of the Portfolio as at 30 June 2024 Sector % of Net Assets % 1 Benchmark Index % Financials 43.8 21.9 Consumer Discretionary 32.7 12.3 Information Technology 28.9 25.0 Materials 21.5 6.9 Industrials 12.7 6.9 Consumer Staples 8.0 5.2 Communication Services 5.3 8.9 Energy 5.0 5.2 Utilities 5.0 3.0 Real Estate 3.1 1.5 Health Care 0.7 3.2 Investment Funds 0.6 – Others 8.7 – Total excluding hedging 176.0 100.0 Hedging (19.7) – Total including hedging 156.3 100.0 1 Asset Exposure is expressed as a percentage of Net Assets. 17 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY Country % of Net Assets % 1 Benchmark Index % India 23.4 19.2 Taiwan 19.1 19.4 China 18.7 25.1 South Africa 13.1 3.0 Brazil 11.9 4.2 South Korea 10.0 12.2 Mexico 6.9 2.1 Saudi Arabia 6.4 3.9 Kazakhstan 6.2 – Canada 5.6 – Greece 4.2 0.5 Indonesia 4.1 1.6 Poland 4.0 1.0 United States of America 3.9 – Hong Kong 3.7 – Vietnam 2.7 – United Arab Emirates 2.2 1.1 Japan 1.9 – Georgia 1.8 – Netherlands 1.6 – Peru 1.6 0.3 Burkina Faso 1.5 – Hungary 1.4 0.2 Thailand 1.1 1.3 Turkey 1.0 0.8 France 1.0 – Romania 0.8 – Chile 0.7 0.4 Philippines 0.7 0.5 Kuwait 0.7 0.7 Nigeria 0.7 – Panama 0.6 – Cayman Islands 0.6 – Germany 0.6 – Zambia 0.6 – United Kingdom 0.6 – New Zealand 0.5 – Australia 0.5 – Uruguay 0.4 – Finland 0.2 – Cyprus 0.1 – Others 8.7 2.5 Total excluding hedging 176.0 100.0 Hedging (19.7) – Total including hedging 156.3 100.0 1 Asset Exposure is expressed as a percentage of Net Assets. Distribution of the Portfolio continued 18 Fidelity Emerging Markets Limited | Annual Report 2024 Ten Highest Contributors to NAV relative return % MakeMyTrip +2.8 Kaspi KZ +2.7 TCS Group +2.4 Nu Holdings +1.7 Brilliance China Auto +1.4 Alkhorayef Water & Power Technologies +1.3 Short Position +1.2 Taiwan Semiconductor Manufacturing +1.2 Short Position +0.8 FPT Corporation +0.8 Ten Highest Detractors from NAV relative return % China Mengniu Dairy Company -2.2 AIA Group Limited -2.0 Li Ning -1.9 HDFC Bank -0.9 Armac Locacao Logistica E Servicos -0.9 Short Position -0.8 Zhongsheng Group -0.8 Localiza Rent A Car -0.7 First Quantum Minerals -0.7 PDD Holdings -0.7 Note: Derivative positions are included in the above investment positions. Source: Fidelity International. Attribution Analysis as at 30 June 2024 19 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY Five Year Record For the year ended 30 June 2024 2023 2022 2021 2020 Investment Performance Net Asset Value per Participating Preference Share total return (%) 1 +18.7 -2.6 -27.9 +24.8 -0.8 Share Price total return (%) 1 +22.6 -5.2 -30.0 +30.0 -3.3 MSCI Emerging Markets Index total return (%) +13.2 -2.8 -14.9 +26.4 -0.1 Assets Gross Asset Exposure ($m) 1 1,177.3 1,185.0 1,120.1 1,679.9 1,205.3 Net Assets ($m) 753.4 796.7 796.8 1,699.1 1,235.8 Gross Gearing (%) 1 56.3 48.7 40.6 n/a n/a Net Gearing (%) 1 4.3 (3.9) (7.6) n/a n/a Net Asset Value per Participating Preference Share ($) 1 10.09 8.75 8.75 13.99 10.17 Net Asset Value per Participating Preference Share (£) 1 7.98 6.88 7.20 10.13 8.23 Share Price data at year end Share Price (£) 7.03 5.88 6.34 9.19 7.18 Discount (%) 1 11.90 14.61 12.00 9.28 12.80 Earnings and Dividends paid Revenue Earnings per Participating Preference Share ($) 2 0.16 0.22 0.15 0.17 0.15 Capital Earnings/(Loss) per Participating Preference Share ($) 2 1.29 (0.06) (5.11) 3.81 (0.53) Total Earnings/(Loss) per Participating Preference Share ($) 2 1.45 0.16 (4.96) 3.98 (0.38) Dividend per Participating Preference Share $0.20 $0.19 $0.16 $0.18 $0.17 Ongoing Charges (%) 1 0.81 0.81 0.60 1.03 1.07 1 Alternative Performance Measures. Please see pages 77 and 78 and the Glossary of Terms on pages 86 to 88 for further details. 2 Calculated based on weighted average number of participating preference shares in issue during the year. Sources: JPMorgan and Datastream Past performance is not a guide to future returns. 20 Fidelity Emerging Markets Limited | Annual Report 2024 The Directors have pleasure in presenting the Strategic Report of the Company. The Chairman’s Statement and Portfolio Managers’ Review on pages 2 to 8 form part of the Strategic Report. INVESTMENT STRATEGY AND POLICIES Business and Status The Company is a closed-ended investment scheme authorised by the Guernsey Financial Services Commission and is listed on the London Stock Exchange. The Company was incorporated in Guernsey on 7 June 1989 and commenced business as an investment company on 19September 1989. Manager and Investment Manager The Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/ the “Manager”) has delegated the role of Investment Manager to FIL Investments International (‘Fidelity International’, the ‘Investment Manager’). Both the Manager and Investment Manager are part of the FIL Group of companies, collectively‘Fidelity’. Investment Objective The Company’s investment objective is to achieve long- term capital growth from an actively managed portfolio made up primarily of securities and ﬁnancial instruments providing exposure to emerging market companies, both listed andunlisted. The objective was last updated on 1 October 2021. Investment Policy The Company seeks to meet its investment objective through investment in a diversiﬁed portfolio of equity or equity-linked securities and derivative instruments providing exposure to emerging market companies. The Manager integrates sustainability analysis into its investment process and promotes environmental and social characteristics in respect of the companies in which it invests. Modiﬁcation of Investment Objective or Investment Policy In accordance with the Listing Rules of the Financial Conduct Authority, any material change to the Company’s published Investment Objective or Investment Policy will require the prior approval of both the Financial Conduct Authority and the shareholders of the Company (by way of an ordinary resolution). Investment minimum constraints At least 80% of the Company’s total assets (measured at the time of investment) will be exposed to companies that have their head oﬃce in, are listed in or with assets, operations, income or revenues that are predominantly in or derived from emergingmarkets. The Company is not subject to any geographical or sector limits, although the Manager will maintain a diversiﬁed portfolio of a minimum of 75 holdings (comprised of a mixture of long and short exposures) in companies listed in or operating across at least 15 countries. Fidelity is not required to seek to ensure that the Company’s cash resources are fully invested at all times. Accordingly, there may be times when the Company holds cash or money market instruments pending investment. The Company’s net market exposure will not fall below 90% of the Company’s net assets save to the extent that the Manager is required to realise cash to fund a tender oﬀer or other return of capital. Permitted instruments The Company may invest through equities, index linked securities, contracts for diﬀerence (“CFDs”), equity linked and other debt securities, cash deposits, money market instruments, equity related securities, foreign currency exchange forward transactions and other interests including derivative instruments. The Company may invest directly in China A and B Shares and invest in Non- Voting Depository Receipts, American Depositary Receipts, Global Depositary Receipts and Equity Linked Notes. References to “companies” in this investment policy may include operating businesses that are not in corporate form. Forward transactions and derivatives, including futures, options, swaps and contracts for diﬀerence, may be used to enhance portfolio performance as well as for eﬃcient portfolio management and hedging. The Company may invest in unlisted securities and in other investment funds, subject to the investment restrictions set outbelow. Investment Restrictions The Company will invest and manage its assets with an objective of spreading risk with the following investment restrictions: • no single or aggregate interest in any one company shall represent more than 15% of total assets (measured at the time of investment); • no more than 15% of total assets (measured at the time of investment) may be invested in unlisted securities; • up to 15% of total assets (measured at the time of investment) may be invested in other listed or unlisted investment funds where such funds oﬀer the only practicable means of gaining exposure to a particular emerging market, including other funds managed or advised by the Manager or its associates; • up to 20% of total assets (measured at the time of investment) may be invested in securities and instruments which provide exposure to companies which do not have their head oﬃce in, are not listed in or whose assets or operations are not predominantly in emerging markets, provided that a material proportion of the income or revenues of each such company derives from emerging markets. Although the Company has no present intention to make any such investments, for so long as required by the Listing Rules, no more than 10% of the Company’s total assets (measured at the time of investment) may be invested in other London-listed closed ended Strategic Report 21 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS STRATEGY funds that do not have stated policies to invest no more than 15% of their total assets in other London-listed closed endedfunds. Leverage and derivatives The Company may be geared through (i) borrowing of up to 10% of its net asset value and/or (ii) by entering into derivative positions (both long and short) which have the eﬀect of gearing the Company’s portfolio, to enhance performance. Derivatives usage will focus on, but will not be limited to the following investment strategies: • as an alternative form of gearing to bank loans, for instance by the use of long CFDs; • to enhance the investment returns by taking short positions in stocks or markets that the Manager considers to be over- valued or impaired; • to enhance positions, manage position sizes and control risk through the use of options; • to hedge equity market risks where suitable protection can be purchased to limit the downside of a falling market at a reasonable cost; and • to gain or hedge currency exposure, both long and short, using foreign currency exchange forward transactions. The Company is subject to the following limits in respect of its use of derivatives: • Net Market Exposure will not exceed 120% of the net asset value of the Company. • Gross Asset Exposure will not exceed 165% of the net asset value of the Company. • In normal market circumstances, the Company expects that the Manager will maintain a Net Market Exposure in the range of 100% to 110%. Exposure Deﬁnitions • Long Exposure is the value of the Company’s direct and indirect investments in long positions (including the economic value of the exposure to the reference asset of any derivative instrument). • Short Exposure is the value of the Company’s direct and indirect investments in short positions (including the economic value of the exposure to the reference asset of any derivative instrument), excluding Hedges. • Hedges are short positions that demonstrate risk-reduction qualities by oﬀsetting long positions held by the Company which have regional congruence and a correlation of at least 80% to the Long Exposure of the Company. • Net Market Exposure is the net positive market exposure of the Company’s portfolio, whether through direct or indirect investment, with short and hedge positions subtracted from long positions. It is calculated as (Long Exposure – Hedges) – Short Exposure. • Gross Asset Exposure is the total market exposure of the Company’s portfolio, whether through direct or indirect investment. It is calculated as: (Long Exposure + Short Exposure) – Hedges. Benchmark Index The Company’s benchmark is the MSCI Emerging Markets (Total Return) Index. Life of the Company The Company has committed to hold a continuation vote in 2026 and every ﬁve years thereafter. The Company will propose the continuation vote at its annual general meeting in the relevant year and, if the continuation vote is not passed, will thereafter present proposals to shareholders in respect of the future of theCompany. Management The Company has no employees or premises and the Board is comprised of non-executive Directors. During the year under review, the majority of day-to-day operations and functions of the Company were delegated to Fidelity, and to third party service providers who are subject to the oversight of the Board. There are therefore no disclosures to be made in respect of employees. During the year under review Fidelity, provided investment and risk management services, JP Morgan Chase Bank was the Custodian and JP Morgan Administration Services (Guernsey) Limited was the Administrator. Company Secretarial services are provided by FIL Investments International. The Board regularly reviews the performance and risks of its primary service providers and checks that they have appropriate frameworks in place for the oversight of their internal controls, monitoring andreporting. Strategic Report continued 22 Fidelity Emerging Markets Limited | Annual Report 2024 Strategic Report continued PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES, RISK MANAGEMENT In accordance with the AIC Code, the Board has a robust ongoing process for identifying, evaluating and managing the principal risks and uncertainties faced by the Company, including those that could threaten its business model, future performance, solvency or liquidity. The Board, with the assistance of the Manager, has developed a risk matrix which, as part of the risk management and internal controls process, identiﬁes the key existing and emerging risks and uncertainties that the Company faces. The Audit and Risk Committee continues to identify any new emerging risks and take any action feasible to mitigate their potential impact. The risks identiﬁed are placed on the Company’s risk matrix and graded appropriately. This process, together with the policies and procedures for the mitigation of existing and emerging risks, is updated and reviewed regularly in the form of comprehensive reports considered by the Audit and Risk Committee. The Board determines the nature and extent of any risks it is willing to take in order to achieve its strategic objectives. The Manager also has responsibility for risk management for the Company. It works with the Board to identify and manage the principal and emerging risks and uncertainties and to ensure that the Board can continue to meet its corporate governance obligations. Key emerging issues that the Board has identiﬁed include; rising geopolitical tensions, including contagion of the Ukraine crisis and escalation of Middle East tensions or tensions between China and Taiwan into the wider region or an increase in tensions in the South China Sea; continuous ”high levels of so-called cost of living crisis impacting demand for UK-listed shares; Artiﬁcial Intelligence hype. AIas a diﬀerentiator capability and as a multiplier of existing risks and climate change, which is one of the most critical emerging issues confronting asset managers and their investors. The Board notes that the Manager monitors these issues, and has integrated macro and ESG considerations, including climate change, into the Company’s investment process. The Board will continue to monitor how this may impact the Company as a risk, the main risk being the impact on investment valuations. The Board considers the following as the principal risks and uncertainties faced by the Company. Principal Risks Risk Description and Impact Risk Mitigation Trend Volatility of Emerging Markets and Market Risks • The economies, currencies and ﬁnancial markets of a number of developing countries in which the Company invests may be extremely volatile. • Further risks on emerging markets from high inﬂation, and challenging ﬁnancial conditions exacerbated by the war in Ukraine and Middle East. • Market volatility from worsening Chinese/ Taiwanese relations that could prompt the US to intervene ampliﬁed by uncertainty of the foreign policy changes following USelections. • US imposed Executive Orders prohibiting US investments in certain Chinese companies and the passing of the Holding Foreign Companies Accountable Act(HFCAA). • Rising geopolitical tensions, including contagion of the Ukraine and Middle East crisis or tensions between China and Taiwan into the widerregion. • Regulatory measures impacting sectors such as IT sector or biotech sector and a lingering weakness in the real estatesector. • The Company’s investments are geographically diversiﬁed in order to manage risks from adverse price ﬂuctuations. • Russian securities already held at nilvalue. • The exposure to any one company is unlikely to exceed 5% of the Company’s net assets at the time the investment is made. • Review of material economic or market changes and major market contingency plans for extreme events. • China’s integration into the global ﬁnancial system and into global supply chains. • Companies that were solely listed in the US are listing on the HK or mainland markets. • Robust risk governance in place supports risk proﬁle assessment. Stable 23 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Strategic Report continued STRATEGY Principal Risks Risk Description and Impact Risk Mitigation Trend Investment Performance Risk • The Portfolio Manager may fail to outperform the Benchmark Index over thelonger-term. • An investment strategy overseen by the Board to optimise returns. • A well-resourced team of experienced analysts covering the market. • Board scrutiny of the Manager and the ability in extreme circumstances to change the Manager. Stable Changing Investor Sentiment • As a Company investing in emerging markets, changes in investor sentiment may lead to the Company becoming unattractive to investors and reduced demand for its shares, causing the discount to widen. • The Company has an active investorrelations programme. • The Board is updated regularly by theInvestment Manager on developments in emerging markets and on theportfolio. • The Chairman communicates regularly with major shareholders. • The Company pays a regular dividend and considers regularly when and how to use share buybacks. Stable Cybercrime and Information Security Risks • Cybersecurity risk to the functioning of global markets and to national infrastructure, as a targeted attack or overspilling from the Russia/Ukraine war, Middle East crisis and geopolitical events. • Cybersecurity risk from Covid or successor pandemics aﬀecting the functioning of businesses and globalmarkets. • External cybercrime threats such as spam attacks, ransomware, DDoS (Distributed Denial of Service) attacks, ﬁnancial theft and reputational risk arising from accidental data leakage. Ransomware continues to increase globally and is also becoming a supply chain risk. • The risk is monitored by the Board with the help of the extensive Fidelity global cybersecurity team and assurances from outsourced suppliers. • Development of systems and procedures by the AIFM resulting from the experience of the Covid pandemic and cyber activity following the Russian invasion of Ukraine. Increased Level of Discount to Net Asset Value (“NAV”) Risk • The share price performance lags NAV performance. • The Board may fail to implement its discount management policy. • Elevated energy costs and cost of living crisis impact on retail demand for shares. • The Board reviews the discount on a regular basis and has the authority to repurchase shares so shares can trade at a level close to the NAV. • If the NAV total return for the ﬁve years ending 30September 2026 does not exceed the Benchmark Index, the Company will make a tender oﬀer for up to 25% of the shares in issues (excluding shares held in treasury) atthattime. • The Board and manager proactively try to raise the Company’s proﬁle through events, presentations, and meetings with stakeholders, combined with regular advertising and content placement on many of the UK’s leading investment websites and in key printed media to reach the broadest possible audience. Increased 24 Fidelity Emerging Markets Limited | Annual Report 2024 Strategic Report continued Principal Risks Risk Description and Impact Risk Mitigation Trend Lack of Market Liquidity Risk • Low trading volumes on stock exchanges of less developed markets. • Lack of liquidity from temporary capital controls in certain markets. • Exaggerated ﬂuctuations in the value of investments from low levels of liquidity. • Restrictions on concentration and diversiﬁcation of the assets in the Company’s portfolio to protect the overall value of the investments and lower risks of lack of liquidity. Stable Business Continuity & Event Management Risks • The wars in Ukraine and Middle East conﬂict has increased the risk for working from home or in oﬃces, speciﬁcally concerning the potential loss of network outages. • Business process disruption risk globally considers Cyber, Geopolitical, and Earthquake as the top risks, which if were to materialise to a business disruption event, the impact could be reputational in the near term and broader over time (ﬁnancial, client, industry) depending on the duration/severity of the events. • Business Continuity and Crisis Management Frameworks in place. Business Continuity Oversight Group (BCOG) is established which provides support to drive business continuity through the organisation that ranges from strategic input to operationalprocesses. • Digital teams continue to maintain solutions to allow business continuity and operational. • Annual requirement to perform recovery site test, remote working test, work transfer test and notiﬁcation test. Stable Gearing Risk • The Portfolio Manager may fail to use gearing adequately, resulting in a failure to outperform in a rising market or to underperform in a falling market. • The Board sets a limit on gearing and provides oversight of the Manager’s use of gearing. Stable Foreign Currency Exposure Risk • The functional currency in which the Company reports its results is US dollars, whilst the underlying investments are in diﬀerent currencies. The value of assets is subject to ﬂuctuations in currency rates and exchange control regulations. • The Portfolio Manager does not hedge the underlying currencies of the holdings in the portfolio but will take currency risk into consideration when making investment decisions. Stable Environmental, Social and Governance (ESG) Risk • The adoption of international standards may adversely impact the proﬁtability of companies in the portfolio. • The Manager may fail to meet its regulatory requirements on ESG, including climate risk, in relation to the Company. • Higher degree of valuation and performance uncertainties and liquidityrisks. • Fidelity has adopted a sophisticated and comprehensive system for analysing ESG risks, including climate risk, in investee companies. • The Portfolio Manager is active in analysing the eﬀects of ESG when making investment decisions. • The Company is not labeled as an ESG product. Stable Key Person Risk • Loss of the Portfolio Manager or other key individuals could lead to potential performance and/or operational issues. • Succession planning for key dependencies. • Depth of the team within Fidelity. • Experience of the analysts covering the Company’s investments. Stable Other risks facing the Company include: Tax and Regulatory Risks There is a risk of the Company not complying with the regulatory requirements of the Guernsey Financial Services Commission, UK listing rules, corporate governance requirements or local tax requirements that could result in loss of status as an Authorised Closed Ended Investment Scheme, becoming subject to additional tax charges or to exclusion from trading in particular markets. The Board monitors tax and regulatory changes at each Board meeting and through active engagement with regulators and trade bodies by the Manager. 25 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Strategic Report continued STRATEGY Operational Risks The Company relies on a number of third-party service providers, principally the Manager, Registrar and Custodian. It is dependent on the eﬀective operation of the Manager’s control systems and those of its service providers with regard to the security of the Company’s assets, dealing procedures, accounting records and the maintenance of regulatory and legal requirements. The Registrar and Custodian are all subject to a risk-based programme of internal audits by the Manager. In addition, service providers’ own internal control reports are received by the Board on an annual basis and any concerns are investigated. Risks associated with these service providers is rated as low, but the ﬁnancial consequences could be serious, including reputational damage to the Company. Professional negligence liability risks The requirement to cover potential liability risks arising from professional negligence is covered by the Manager’s own funds. Suﬃcient capital above the regulatory limit is held which is monitored by the board of the Manager. VIABILITY STATEMENT In accordance with provision 35 of the 2019 AIC Code of Corporate Governance the Directors have assessed the prospects of the Company over a longer period than the twelve month period required by the “Going Concern” basis. The Company is an investment fund with the objective of achieving long-term capital growth from an actively managed portfolio made up primarily of securities and ﬁnancial instruments providing exposure to emerging market companies, both listed and unlisted. The Board considers long-term to be at least ﬁve years, and accordingly, the Directors believe that ﬁve years is an appropriate investment horizon to assess the viability of the Company, although the life of the Company is not intended to be limited to this or any other period. In making an assessment on the viability of the Company, the Board has considered the following: • The ongoing relevance of the investment objective in prevailing market conditions; • The Company’s NAV and share price performance; • The principal and emerging risks and uncertainties facing the Company as set out above and their potential impact; • The future demand for the Company’s shares; • The Company’s share price discount to its NAV; • The liquidity of the Company’s portfolio; • Consideration of the continuation vote in 2026; • The level of income generated by the Company; and • Future income and expenditure forecasts. The Company has assumed for the purposes of the viability statement that the continuation vote in 2026 would be passed. The Company’s performance for the ﬁve year reporting period to 30 June 2024 lagged the Benchmark Index, with a NAV total return of +3.1%, and a share price total return of +2.3% compared to the Benchmark Index total return of +18.2%. The Board regularly reviews the investment policy and considers whether it remains appropriate. The Board has concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next ﬁve years based on the following considerations: • The Investment Manager’s compliance with the Company’s investment objective and policy, its investment strategy and asset allocation; • The fact that the portfolio comprises suﬃcient readily realisable securities which can be sold to meet funding requirements if necessary; and • The ongoing processes for monitoring operating costs and income which are considered to be reasonable in comparison to the Company’s total assets. When considering the risk of under-performance, a series of stress tests were carried out including in particular the eﬀects of any substantial future falls in investment value on the ability to maintain dividend payments and repay obligations as and when they arise. In preparing the Financial Statements, the Directors have considered the impact of climate change, particularly in the context of the climate change risk identiﬁed within the ESG Risk on page 24. The Board has also considered the impact of regulatory changes and signiﬁcant market events and how this may aﬀect the Company. In addition, the Directors’ assessment of the Company’s ability to operate in the foreseeable future is included in the Going Concern Statement which is included in the Directors’ Report on page35. Promoting the Success of the Company The Company is not required to comply with the provisions of the UK Companies Act 2006, but it is a requirement of the AIC Code of Corporate Governance to report upon Section 172 of this statute irrespective of domicile. Section 172 recognises that Directors of a company must act in a way they consider, in good faith, would be most likely to promote the success of the Company for the beneﬁt of its members as a whole, and in doing so have regard (amongst other matters) to the likely consequences of any decision in the long-term; the need to foster relationships with the Company’s suppliers, customers and others; the impact of the Company’s operations on the community and the environment; the desirability of the Company maintaining a reputation for high standards of business conduct; and the need to act fairly as between members of the Company. 26 Fidelity Emerging Markets Limited | Annual Report 2024 Strategic Report continued As an externally managed Investment Company, the Company has no employees or physical assets, and a number of the Company’s functions are outsourced to third parties. The key outsourced function is the provision of investment management services by the Manager, but other professional service providers support the Company by providing administration, custodian, banking and audit services. The Board considers the Company’s key stakeholders to be the existing and potential shareholders, the external appointed Manager and other third- party professional service providers. The Board considers that the interest of these stakeholders is aligned with the Company’s objective of delivering long-term capital growth to investors, in line with the Company’s stated objective and strategy, while providing the highest standards of legal, regulatory and commercial conduct. The Board, with the Portfolio Manager, sets the overall investment strategy and reviews this regularly. In order to ensure good governance of the Company, the Board has set various limits on the investments in the portfolio, whether in the maximum size of individual holdings, the use of derivatives, the level of gearing and others. These limits and guidelines are regularly monitored and reviewed and are set out on pages 20 and 21. The Board places great importance on communication with shareholders and is committed to listening to their views. The primary medium through which the Company communicates with shareholders is through its Annual and Half Year Financial Reports. Monthly factsheets are also produced. Company related announcements are released via the Regulatory News Service (‘RNS’) to the London Stock Exchange. All of the aforementioned information is available on the Company’s website www.ﬁdelity. co.uk/emergingmarkets. Shareholders may also communicate with Board members at any time by writing to the Company Secretary at FIL Investments International, Beech Gate, Millﬁeld Lane, Tadworth, Surrey KT20 6RP or by email at investmenttrusts@ﬁl.com. The Portfolio Managers meet with major shareholders, potential investors, stock market analysts, journalists and other commentators throughout the year. These communication opportunities help inform the Board in considering how best to promote the success of the Company over the long-term. The Board seeks to engage with the Manager and other service providers and advisers in a constructive and collaborative way, promoting a culture of strong governance, while encouraging open and constructive debate, in order to ensure appropriate and regular challenge and evaluation. This aims to enhance service levels and strengthen relationships with service providers, with a view to ensuring shareholders’ interests are best served, by maintaining the highest standards of commercial conduct while keeping cost levels competitive. Whilst the Company’s direct operations are limited, the Board recognises the importance of considering the impact of the Company’s investment strategy on the wider community and environment. The Board believes that a proper consideration of ESG issues aligns with the Company’s investment objective to deliver long-term growth in both capital and income, and the Board’s review of the Manager includes an assessment of their ESG approach. In addition to ensuring that the Company’s investment objective was being pursued, key decisions and actions taken by the Directors during the reporting year, and up to the date of this report, have included: • Marketing & PR The Board has been proactive in its eﬀorts to promote the success of the Company. It has worked closely with the Manager, utilising the Manager’s extensive marketing capabilities, in combination with the Company’s appointed stockbrokers, and public relations ﬁrm to execute a comprehensive promotional programme for the Company. • Discount Control – Share Buybacks In November 2023 the Company announced a share buyback programme to address the discount to NAV at which the Company’s shares trade with the ambition that it may ultimately be maintained in single digits in normal market conditions on a sustainable basis. • Discount Control – Tender Oﬀer In recognition of the imbalance between demand and supply of its shares the Company undertook atender oﬀer for 14.99% of its issued share capital in March2024. The tender was priced at a 2% discount to the Net Asset Value per Share as at 6.00 p.m. on 22 March 2024 and resulted in 13,531,881 participating preference shares being repurchased by the Company andcancelled. • Dividend The decision to recommend a dividend of $0.19 per Participating Preference Share in respect of the year ended 30 June 2023 (2022: $0.16). Shareholders approved the dividend at the 2023 AGM. Board Diversity The Board’s overriding intention is to ensure that it is made up of the best combination of people in order to achieve long-term capital growth for the Company’s shareholders from an actively managed portfolio of investments. To this eﬀect, the Board, as part of its succession plan, will continue to appoint individuals who, together as a Board, will aim to ensure the continued optimal promotion of the Company in the marketplace. 27 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Strategic Report continued STRATEGY The table below reports the gender diversity of the Board as at 30 June 2024. Gender Reporting Number of Board Members Percentage of the Board Number of Senior Board Positions (Senior Independent Director and Committee Chair) Men 3 60% 2 Women 2 40% 1 The Board’s composition has met the target of 40% of women on FTSE 350 company boards ahead of the 2025 deadline as set by the FTSE Women Leaders Review. The Board also meets the FCA target that one of the senior Board positions is held by a woman. This senior position is held by Heather Manners as the Chairman of the Board and the Nomination Committee. The Board meets the recommendations of the Parker Review Committee that each FTSE 250 company should have at least one director from an ethnic minority background by 2024 so as to improve the ethnic and cultural diversity of UK company boards as can be seen from the table below. The Board also meets the FCA targets that at least one Director is from an ethnic minoritybackground. Ethnic Background Reporting Number of Board Members Percentage of the Board Number of Senior Board Positions (Senior Independent Director and Committee Chair) White British or other White (including minority white groups) 4 80% 3 Asian/Asian British 1 20% 0 CORPORATE AND SOCIAL RESPONSIBILITY Environmental, Social and Governance (“ESG”) in the Investment Process The Board has contracted with the Manager to provide the Company with investment management services. The Board believes that ESG considerations are an important input into the assessment of the value of its investments. The investment universe is undergoing signiﬁcant structural change and is likely to be impacted by increasing regulation as a result of climate change and other social and governance factors. The Board is committed to reviewing how the Manager applies ESG factors in the investment process. The Fidelity group of companies (including the Manager and Investment Manager) sets out its commitment to responsible investing and provides a copy of its detailed Responsible Investing at www.ﬁdelity.co.uk/ responsible-investing. Socially Responsible Investment The Manager’s primary objective is to produce superior ﬁnancial returns for the Company’s shareholders. It believes that high standards of corporate social responsibility (CSR) make good business sense and have the potential to protect and enhance investment returns. Corporate Engagement The Board believes that the Company should, where appropriate, take an active interest in the aﬀairs of the companies in which it invests and that it should exercise its voting rights at their general meetings. It delegates the responsibility for corporate engagement and shareholder voting to the Investment Manager who updates the Board on any issues and activities. These activities are reviewed regularly by the Manager’s corporate governance team. Streamlined Energy and Carbon Reporting (SECR) As an investment company with all its activities outsourced to third parties, the Company’s own direct environmental impact is minimal. The Company has no premises, consumes no electricity, gas or diesel fuel and consequently does not have a measurable carbon footprint. The Company is categorised as a low energy user (less than 40MWH) under the Streamlined Energy & Carbon Reporting regulations and therefore is not required to disclose any energy and carbon information in this Annual Report. Task Force on Climate-Related Financial Disclosures (TCFD) Product reports of Task Force on Climate-related Financial Disclosures (TCFD) can be obtained via the Additional Information section on the Company’s website at www.ﬁdelity.co.uk/emergingmarkets. Future Developments Some trends likely to aﬀect the Company in the future are common to many investment companies together with the impact of regulatory change and emerging risks. The factors likely to aﬀect its future development, performance and position are set out in the Chairman’s Statement and the Portfolio Manager’s Review on pages 2 to 8. By Order of the Board FIL Investments International Secretary 8 October 2024 28 Fidelity Emerging Markets Limited | Annual Report 2024 Heather Manners Chairman of the Board and Nomination Committee Appointed 5 May 2022 Appointed Chairman of the Board on8December 2022. N Heather Manners (British) is an award-winning market professional with some 34 years’ experience of investment in Asia, mostly recently, and for the past 15 years as the co-founder, CEO and CIO of Prusik Investment Management. Heather is also a non-executive director of Montanaro Asset Management and Collidr Asset Management respectively and previously was a non-Executive Director of Aberdeen New Dawn. Heather began her career at Henderson Global Investors Limited where, latterly, she was Head of Asia and Emerging Markets. Ms Manners resides in the UK. Torsten Koster Senior Independent Director Appointed 1 July 2020 A N Torsten Koster (Swiss) has over 30 years’ experience working for large multi-national companies. He spent two periods at Nestle SA (1991-1997 and 2003-2016). During his second term Torsten held the positions of Chief Financial Oﬃcer Nestle Russia & Eurasia between 2007-2011 and Chief Financial Oﬃcer Nestle Nespresso SA from 2011-2016. He also held the positions of Chief Financial Oﬃcer at Lukoil SA for three years from 1998-2000 and subsequently at Elca Informatique SA between 2000-2003. In 2016 Torsten founded his own consultancy business, Baussan Concept SA which specialized in providing due diligence and portfolio services to European and US based private equity ﬁrms. Torsten has held a number of Board member roles. Director of SodaStream International from 2016-2018 (NASDAQ:SODA), ViceChairman of Natra SA, Spain from 2019-2022. He is Chairman of the Board of Banque Heritage SA and and Director of ECOM Agroindustrial SA (both of which are unlisted entities). Heholds a Masters degree from HEC Lausanne. Mr Koster resides inSwitzerland. Mark Little Audit and Risk Committee Chairman Appointed 17 January 2024 Appointed Chairman of Audit and Risk Committee 17 January 2024 A N Mark Little (British) is a Chartered Accountant with extensive ﬁnancial services experience in fund management, research, and private banking, and has a strong understanding of compliance and regulation in the modern ﬁnancial services world. He is a non-executive Director and Chairman of the audit committees of BlackRock Smaller Companies Trust plc, Majedie Investments Plc and Abrdn Equity Income Trust plc. Previously Mr Little was a non-executive Director and Chair of the Audit and Risk Committee of STS Global Income & Growth Trust plc, Managing Director, Scotland & Northern Ireland at Barclays Wealth (formerly Gerrard) and Global Head of Automotive Research at Deutsche Bank. Mr Little has a wealth of experience in the ﬁnancial services sector and began his career as a fund manager with Scottish Widows Investment Management after qualifying as a chartered accountant with Price Waterhouse in 1991. He subsequently worked as Global Head of Automotive Research for Deutsche Bank and joined Barclays Wealth in 2005, where he became Managing Director of Barclays Wealth (Scotland and Northern Ireland). Mr Little is an Accountancy and Economics graduate from Aberdeen University. Katherine Tsang Director Appointed 19 July 2017 A N Katherine Tsang (Canadian) spent 22 years with Standard Chartered Bank, latterly in the role of Chairperson of Greater China, before retiring in 2014. Following her retirement, Ms Tsang founded Max Giant that trades in diﬀerent markets as well as making direct investments in Asia. Currently, Ms Tsang is the Chief Executive Oﬃcer of HK Acquisition Corporation, she is also an Independent Non-Executive Director at China CITIC Bank International Limited, Fosun International Limited and Budweiser Brewing Company APAC Limited. She also serves as a member of the Advisory Council for China of the City of London, and is an honorary Board member of Shanghai Jiao Tong University. Previous Directorship has included serving as an independent Non-Executive Director of Gap Inc., and Baoshan Iron & Steel Co. Limited, a member of the World Economic Forum’s Global Agenda Council on China, and a member of Sotheby’s Advisory Board. Ms Tsang resides in Hong Kong. Board of Directors Committee membership key A Audit and Risk N Nomination A Committee Chair 29 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE Board of Directors continued Dr Simon Colson Director Appointed 1 July 2019 A N Dr Simon Colson (British) has over 30 years’ experience in ﬁnancial markets, working in investment banking, investment management and ﬁnancial consulting. From 1995-2001 he was Managing Director, Deutsche Bank AG London, in charge of closed-end fund origination and distribution, and in previous roles was responsible for the launch, restructuring and repurposing of a signiﬁcant number of investment companies. From 2002-2005 he was a non-executive director of The Association of Investment Companies. In 2002 he founded his own FCA regulated consulting and distribution business which raised assets for emerging managers across a range of traditional and alternative asset classes (including closed-end funds). In 2017 he relinquished his FCA license to concentrate on unregulated advisory and non- executive work. He is a qualiﬁed Medical Doctor and holds an MBA in Finance & Investment from Bayes Business School (University of London). DrColson resides in theUK. Committee membership key A Audit and Risk N Nomination A Committee Chair 30 Fidelity Emerging Markets Limited | Annual Report 2024 Directors‘ Report The Directors present their thirty-ﬁfth Annual Financial Report of the Company, covering the year ended 30June 2024. FINANCIAL PERFORMANCE The results and reserve movements for the year are set out in the Statement of Comprehensive Income and Statement of Financial Position Income on pages 45 and 47 and the Notes to the Financial Statements on pages 49 to 76. Results and Dividends The proﬁt for the year for the Company amounted to $126,065,000, this compared to a proﬁt of $14,549,000 in the previous year. Refer to the Portfolio Manager’s Review on pages 4 to 8 for an explanation of the Company’sperformance. Corporate Governance The Corporate Governance Statement forms part of this report and can be found on pages 31 to 35. The Directors propose a dividend of $0.20 per Participating Preference Share in respect of the year ended 30 June 2024 (2023: $0.19). If approved by shareholders at the AGM on 10December 2024, the dividend will be payable on 13December 2024 to shareholders on the register at close of business on 15November 2024. The ex-dividend date is 14November 2024. Capital Values At 30 June 2024, the value of Equity Shareholders’ Funds was $753,446,000 (2023: $796,734,000) a decrease of $43,288,000. The Net Asset Value per Participating Preference Share was $10.09 (2023:$8.75). Key Performance Indicators The Financial Highlights and Performance section pages inside the front cover show the Company’s Key Performance Indicators including its performance and discount to its NAV over the last ﬁve years. SHAREHOLDERS Notiﬁable Interests in the Company’s Voting Right During the ﬁnancial year, the following shareholders declared a notiﬁable interest in the Company’s voting rights: Shareholders Participating Preference Shares Held % Shares held in Issue Date of Notiﬁcation Saba Capital Management, L.P. 4,354,517 5.67 03 April 2024 City of London Investment Management Company Limited 21,352,362 27.98 16 May 2024 The following updates to notiﬁable interests in the Company’s voting rights have been declared post the ﬁnancial year-end: Shareholders Participating Preference Shares Held % Shares held in Issue Date of Notiﬁcation City of London Investment Management Company Limited 20,917,518 28.02 02 July 2024 City of London Investment Management Company Limited 20,840,922 27.96 03 July 2024 City of London Investment Management Company Limited 20,327,509 28.01 13 September 2024 City of London Investment Management Company Limited 20,245,652 27.96 18 September 2024 City of London Investment Management Company Limited 20,295,925 28.03 19 September 2024 As at 31 August 2024, the Board is aware of the following signiﬁcant holdings in the Company Shareholder Participating Preference Shares Held % Shares in Issue City of London Investment Management Company Limited 20,064,023 27.52 Strathclyde PF 16,139,666 22.13 Allspring Global Investments 8,865,271 12.16 Lazard Asset Management 6,821,358 9.35 Note: All of the above % Shares in Issue are calculated based on the number of shares in issue with voting rights as at 31 August 2024, being 72,916,888 Participating Preference Shares. 31 Annual Report 2024 | Fidelity Emerging Markets Limited FINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE STRATEGY This Corporate Governance Statement forms part of the Directors’ Report. The Company is committed to maintaining high standards of corporate governance. Accordingly, the Board has put in place a framework for corporate governance which it believes is appropriate for an investment company. The Board is accountable to shareholders for the governance of the Company’s aﬀairs. The Directors use this Report to detail the Company’s corporate governance statement. The Company is a member of the Association of Investment Companies (‘AIC’) and the Board has considered the Principles and Provisions of the 2019 AIC Code of Corporate Governance (‘AIC Code’). The AIC Code addresses the Principles and Provisions set out in the 2018 UK Corporate Governance Code (‘UK Code’), as well as setting out additional Provisions on issues that are of speciﬁc relevance to the Company. The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council and the Guernsey Financial Services Commission provides more relevant information to shareholders. The Company is an Authorised Closed Ended Investment Scheme regulated by the Guernsey Financial Services Commission (‘GFSC’). The GFSC requires compliance with the principles set out in the Finance Sector Code of Corporate Governance (‘Guernsey Code’), or alternative codes accepted by the GFSC, in the context of the nature, scale and complexity of the business. As a Guernsey incorporated company with a premium listing on the London Stock Exchange within the FTSE 250, the Company is required to comply with Listing Rule 9.8.7 (for overseas incorporated companies). This requires the Company to state how it has applied the main principles set out in the UK Code and whether it has complied with these provisions throughout the accounting period. The AIC Code can be found on the AIC’s website at www.theaic.co.uk and the UK Code on the FRC’s website at www.frc.org.uk. Statement of Compliance The Board conﬁrms that during the year under review, the Company has complied with the provisions of the AIC Code and therefore, insofar as they apply to the Company, with the provisions of the 2018 UK Code and Guernsey Code except as noted below. • The role of Chief Executive Since all Directors are non-executive and day-to-day management responsibilities were delegated to the Manager, Investment Manager, and other third party service providers, the Company does not have a Chief Executive. • Executive Directors’ remuneration As the Board has no executive Directors, it is not required to comply with the principles of the UK Code in respect of executive Directors’ remuneration and does not have aRemuneration Committee. • Nomination Committee All Directors are members of the Nomination Committee. Given the size of the Board, the Board believes that it is important that all Directors are involved in the evaluation and appointment of new Directors from an early stage. • Internal audit function As the Company has no employees and delegates its day-to-day operations to the Manager, Investment Manager, and other third party service providers, the Board has determined that there is no requirement for an internal audit function. The Directors annually review whether a function equivalent to internal audit is needed and will continue to monitor the Company’s systems of internal controls in order to provide assurance that they operate as intended. • Workforce policies and practices As the Company has no employees and delegates its day-to-day operations to the Manager, Investment Manager, and other third party service providers, it is not required to comply with this provision. The Board is committed to the continuing compliance with the AIC Code. REGULATORY DISCLOSURES The Alternative Investment Fund Managers Directive(‘AIFMD’) FIL Investment Services (UK) Limited is organised under the laws of England and Wales and qualiﬁes as an EU alternative investment fund manager (‘AIFM’). Article 22 of AIFMD requires certain qualitative and quantitative disclosures on remuneration to assist the understanding of the risk proﬁle of the Company. Details of Fidelity International’s Remuneration Policy during the year under review and amounts attributable to the Company are available on page 85. UK Listing Authority Listing Rules (‘LR’) – compliance with rule9.8.4 None of the disclosures required under LR 9.8.4 are applicable tothe Company. Corporate Governance Statement 32 Fidelity Emerging Markets Limited | Annual Report 2024 ANNUAL GENERAL MEETING This year’s AGM will be held on Tuesday, 10 December 2024 at 11a.m. at the registered oﬃce of the Company, Level 3, MillCourt La Charroterie, St Peter Port, Guernsey GY1 1EJ. In addition to the ordinary business to be conducted at the meeting, the following special business will be proposed: Authority to purchase own shares Special Resolutions – requiring 75% of votes in favour Resolution 12 The Directors are seeking to renew the authority to purchase shares in the market of up to 10,755,137 Participating Preference Shares (respectively equivalent to 14.99 per cent. of the shares of the issued number of Participating Preference Shares at the date of this document or, if lower, such number as is equal to 14.99% of the issued number of Participating Preference Shares at the date of passing the resolution). The maximum price which may be paid for a Participating Preference Share is an amount equal to 105% of the average of the middle market quotations for a Participating Preference Share taken from the London Stock Exchange Daily Oﬃcial List for the ﬁve business days immediately preceding the day on which the Participating Preference Share is purchased. The authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2024 unless such authority is renewed prior to such time. The Company may make a contract to purchase Participating Preference Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Participating Preference Shares pursuant to any such contract. Resolution 13 Resolution 13 disapplies the pre-emption rights contained in the Articles so that the Board has authority to allot and issue (or sell from treasury) shares for cash on a non-pre-emptive basis in respect of 7,188,217 Participating Preference Shares (equivalent to 10 per cent. of the Participating Preference Shares in issue as at the latest practicable date prior to the date of publication of this document (excluding in each case shares held in treasury)). The disapplication expires on the date falling ﬁfteen months after the date of passing of Resolution 13 or the conclusion of the next annual general meeting of the Company, whichever is the earlier and permits the Board to allot and issue shares (or sell shares from treasury) after expiry of the disapplication if it has agreed to do so beforehand. Shares issued (or sold from treasury) pursuant to the disapplication would not be issued at a price that is less than the prevailing net asset value per share of the relevant class. The resolution to approve disapplication of pre-emption rights in respect of issues of shares for cash is set at 10 per cent. of the Participating Preference Shares in issue (excluding shares held in treasury). As the issue of such shares (or sale from treasury) by the Company on a non-pre-emptive basis is subject to the additional qualiﬁcation that the relevant shares must be issued for a price at least equal to the prevailing net asset value for the relevant class of shares, the Board believes that the existing authority to issue new shares for cash equal to 10 per cent. of the Participating Preference Shares in issue (excluding shares held in treasury) is appropriate. The Directors have no present intention to exercise the authority conferred by Resolution 13. Recommendation The Board considers that the passing of all resolutions being put to the Company’s AGM would be in the best interest of the Company and its shareholders as a whole. It therefore recommends that shareholders vote in favour of resolutions1 to13, as set out in the Notice of Annual General Meeting. Corporate Governance Statement continued 33 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE Corporate Governance Statement continued THE BOARD Board Composition As at the date of this report, the Board, chaired by Heather Manners, consists of ﬁve non-executive Directors. Julian Healy, Director and Chairman of the Audit and Risk Committee retired from the Board on 17 January 2024 due to personal reasons and was succeeded by Mark Little on the same date. The Directors believe that, between them, they have good knowledge and wide experience of business in the emerging markets region, unlisted investments and their valuations, and of investment companies, and that the Board has an appropriate balance of skills, experience, independence and knowledge of the Company and length of service to discharge its duties and provide eﬀective strategic leadership and proper governance of the Company. Torsten Koster is the Senior Independent Director and fulﬁls the role as a sounding board for the Chairman, intermediary for the other Directors as necessary and acts as a channel of communication for shareholders in the event that contact through the Chairman is inappropriate. Biographical details of all Directors are on pages 28 and 29. Training, Development and Board Evaluation On appointment, Directors receive a full, formal and tailored induction. Directors are also regularly provided with key information on the Company’s policies, regulatory and statutory requirements and internal controls. Changes aﬀecting Directors’ responsibilities are advised to the Board as they arise. Directors also regularly participate in relevant training and industry seminars. Training and development needs are considered as part of the evaluation process and are agreed with the Chairman. The Board evaluates its performance on an annual basis and considers the balance of skills, experience, length of service and the promotion of diversity and inclusion as part of this process. Anevaluation of the Board, its Committees and the Manager was undertaken in the form of written questionnaires and discussions. This process is considered to be constructive in terms of identifying areas for improving the functioning and performance of the Board and its Committees and action is taken on the basis of the results. Itwas concluded that the Chairman, each Director and the Manager had been eﬀective and continues to demonstrate commitment to their roles. In accordance with the AIC Code, consideration is given to the engagement of an external evaluator on a regular basis. An independent evaluation of the Board’s performance was last conducted in June 2023 by Stephenson & Co. The next independent Board evaluation is due to be conducted in 2025. The Directors consider that since they do not have executive roles, it is not necessary to establish a separate Remuneration Committee. There is also no separate Management Engagement Committee as the Board, as a whole, regularly meets with the Manager, the Administrator and the Company Secretary to discuss theirperformance. The Board regularly reviews both the performance of, and the contractual arrangements with FIL Investments International as Investment Manager. The Management Agreement sets out matters over which Fidelity International has authority and includes management of the Company’s assets and the provision of administrative duties. The Board reviews the performance of, and the contractual arrangements with the Administrator and the Custodian. The Board is satisﬁed that the continuing appointment of the Administrator and the Custodian is in the best interests of shareholders. The Board meets at least four times during the year and between these meetings there is regular contact with the Company Secretary, FIL Investments International, who provides the Board with appropriate and timely information. Attendance at those meetings is shown on on page 34. 34 Fidelity Emerging Markets Limited | Annual Report 2024 Board’s Attendance Record for the Reporting Year Regular Board Meetings Audit and Risk Committee Meetings Nomination Committee Meetings Heather Manners 4/4 3/3 (1) 1/1 Dr Simon Colson 4/4 3/3 1/1 Julian Healy 2/2 (2) 1/1 (2) 1/1 Torsten Koster 4/4 3/3 1/1 Mark Little 2/2 (3) 2/2 (3) 1/1 Katherine Tsang 4/4 3/3 1/1 (1) Attended the Audit and Risk Committee by invitation but is not a Committee member. (2) Retired on 17 January 2024. (3) Appointed 17 January 2024. Board Responsibilities The Board has overall responsibility for the Company’s aﬀairs and for promoting the long-term success of the Company. All matters which are not delegated to the Company’s Investment Manager under the Management Agreement are reserved for the Board’s decision. Matters reserved for the Board and considered at meetings include decisions on strategy, management, structure, capital, share issues, share repurchases, gearing, ﬁnancial reporting, risk management, investment performance, share price discount, corporate governance, Board appointments, and the appointment of the Investment Manager and Company Secretary. The Board also considers shareholder issues including communication and investor relations. All Directors are independent of the Investment Manager and considered to be free from any relationship which could materially interfere with the exercise of their independent judgement. The Board follows a procedure of notiﬁcation of other interests that may arise as part of considering any potential conﬂicts and is satisﬁed that none has arisen in the year under review. All Directors are able to allocate suﬃcient time to the Company to discharge their responsibilities fully and eﬀectively. Each Director is entitled to take independent professional advice, at the Company’s expense, in the furtherance of their duties. Directors’ Insurance and Indemniﬁcation Directors’ and Oﬃcers’ liability insurance cover is held by the Company to cover Directors against certain liabilities that may arise in the course of their duties. Tenure Policy Directors appointed to the Board are subject to election and subsequent annual re-election by shareholders at Annual General Meetings and normally serve a term of up to nine years fromelection. Company Secretary and Administrator FIL Investments International is appointed as Company Secretary and JP Morgan Administration Services (Guernsey) Limited is the Company’s Administrator. Both have been in oﬃce for the whole year under review. Board Meetings The Board considers that it meets suﬃciently regularly to discharge its duties eﬀectively and the table below gives the attendance record for the meetings held during the reporting year. The Portfolio Manager and key representatives of the Investment Manager are in attendance at these meetings. OTHER MATTERS Voting Policy The Board has authorised Fidelity to exercise the Company’svoting rights in respect of resolutions proposedbyinvesteecompanies. Details of Fidelity’s voting policy can be found at www.ﬁdelity.co.uk/responsible-investing. Borrowing Facilities The Articles of Incorporation permit the Company to borrow up to 10% of the value of its Net Assets. No borrowing facility was used in either 2023 or 2024. Discount/Premium to Net Asset Value The Board reviews the level of the discount or premium between the middle market price of the Company’s Participating Preference Shares and their net asset value on a regular basis. European Union The Company is a Guernsey based authorised closed-ended investment company listed in the UK and traded on the London Stock Exchange. The European Securities and Markets Authority (‘ESMA’) has approved the co-operation arrangements between the FCA andGFSC. Corporate Governance Statement continued 35 Annual Report 2024 | Fidelity Emerging Markets Limited Going Concern The Financial Statements of the Company have been prepared on a going concern basis. The Directors have considered the Company’s investment objective, risk management policies, liquidity risk, credit risk, capital management policies and procedures, the nature of its portfolio and its expenditure and cash ﬂow projections. The Directors, having considered the liquidity of the Company’s portfolio of investments (being mainly securities which are readily realisable) stress testing performed and the projected income and expenditure, are satisﬁed that the Company is ﬁnancially sound and has adequate resources to meet all of its liabilities and ongoing expenses and continue in operational existence for the foreseeable future. The Board has therefore concluded that the Company has adequate resources to continue to adopt the going concern basis for the period to 31 October 2025 which is at least twelve months from the date of approval of the Financial Statements. The prospects of the Company over a period longer than twelve months can be found in the Viability Statement on page 25. Signed on behalf of the Board Heather Manners Chairman 8 October 2024 Corporate Governance Statement continued STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE 36 Fidelity Emerging Markets Limited | Annual Report 2024 The Directors of the Company are non-executive and by way of remuneration are entitled to receive fees for their services which shall not exceed $400,000, exclusive of relevant expenses, in aggregate per annum. This was approved by shareholders at the AGM on 8 December 2022 and can only be amended by shareholder approval at a general meeting. Directors’ Remuneration The annual fee structure with eﬀect from 1 July 2024 is as follows: Chairman – £52,000 (2023: £50,000); Senior Independent Director – £39,500 (2023: £38,000); Chairman of the Audit and Risk Committee – £39,500 (2023: £38,000); and Director – £37,500 (2023: £36,000). Directors’ remuneration is reviewed on an annual basis to ensure that it remains competitive and suﬃcient to attract and retain the quality of Directors needed to manage the Company successfully. Other than fees and reasonable out-of-pocket expenses incurred in attending to the aﬀairs of the Company, the Directors are not eligible for any performance related pay or beneﬁts, pension related beneﬁts, share options, long-term incentive schemes or other taxable beneﬁts. The Directors are not entitled to exit payments and are not provided with any compensation for loss of oﬃce. Directors fees are paid quarterly in arrears. Directors would not serve a notice period if their appointment were to be terminated. An ordinary resolution to approve the Directors’ Remuneration Report will be put to shareholders at the AGM on 10 December 2024. Directors’ Service Contracts No Director has a contract of service with the Company. Accordingly, the Directors are not entitled to any compensation in the event of termination of their appointment or loss of oﬃce, other than the payment of any outstanding fees. The Board does not consider it appropriate that Directors should be appointed for a speciﬁc term. All Directors are subject to re-election by shareholders annually A new Director appointed would be subject to election by shareholders at the next AGM following their appointment. Directors’ Emoluments for the Year The fees paid to each Director for the years ended 30 June 2024 and 2023 are shown in the table below with any year-on-year diﬀerences being explained: 30 June 2024 30 June 2023 Heather Manners (1) £50,000 £38,438 Julian Healy (2) £28,500 £19,442 Torsten Koster £38,000 £35,390 Dr Simon Colson £36,000 £31,667 Katherine Tsang £36,000 £31,667 Mark Little (3) £17,329 – £205,829 £156,604 (1) Appointed as a Director on 5 May 2022 and Chairman on 8 December 2022 (2) Appointed as a Director on 12 December 2022 and Audit and Risk Committee Chairman on 4 May 2023, retired as Director and Audit and Risk Committee Chairman on 17 January 2024 due to personal reasons. (3) Appointed as Director and Audit and Risk Committee Chairman on 17 January 2024. No additional fees or expenses were paid to Directors in respect of the ﬁnancial year ended 30 June 2024. Directors’ Interests The following Directors had a beneﬁcial interest (including family interests) in the share capital of the Company. The table shows the number of Participating Preference Shares held by each Director as at 30 June 2024 and 2023: Director 30 June 2024 30 June 2023 Heather Manners 10,000 10,000 Torsten Koster 15,000 15,000 Dr Simon Colson 4,416 4,416 Julian Healy (1) – 10,000 Katherine Tsang 0 0 Mark Little (2) 0 – (1) Appointed 12 December 2022, retired as Director and Audit and Risk Committee Chairman on 17 January 2024 due to personal reasons. (2) Appointed as Director and Audit and Risk Committee Chairman on 17 January 2024. AGM Resolution An ordinary resolution to approve this Remuneration Report will be put to shareholders at the forthcoming AGM. Statement of voting at the last AGM The following table sets out the votes received at the AGM of the shareholders of the Company, held on 8 December 2023 in respect of the approval of the Directors’ Remuneration Report. Votes cast for Votes cast against Total votes cast Number of votes withheldNumber % Number % 55,939,687 99.9 3,531 0.0 55,943,420 202 For and on behalf of the Board Heather Manners Chairman 8 October 2024 Directors‘ Remuneration Report 37 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE Statement of Directors‘ Responsibilities The Directors are responsible for preparing the Annual Financial Report in accordance with applicable law and regulations. Company law requires the Directors to prepare ﬁnancial statements for each ﬁnancial year. Under that law the Directors have elected to prepare the ﬁnancial statements in accordance with International Financial Reporting Standards as adopted by the European Union to meet the requirements of applicable law and regulations. Under company law the Directors must not approve the ﬁnancial statements unless they are satisﬁed that taken as a whole, they give a true and fair view of the state of aﬀairs of the Company and of its proﬁt or loss for that period. In preparing these ﬁnancial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the ﬁnancial statements; • assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and • use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. The Directors are responsible for keeping proper accounting records that are suﬃcient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Company and enable them to ensure that its ﬁnancial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the Company’s website. Legislation in Guernsey governing the preparation and dissemination of ﬁnancial statements may diﬀer from legislation in other jurisdictions. The work carried out by the auditor does not include consideration of the maintenance and integrity of the website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts when they are presented on the website. The Directors who hold oﬃce at the date of approval of this Directors’ Report conﬁrm that so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware, and that each Director has taken all the steps he/ she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. Responsibility statement of the Directors in respect of the Annual Report The Directors conﬁrm that to the best of their knowledge: • the ﬁnancial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt or loss of the Company; and • the Chairman’s statement, Strategic Report and Portfolio Managers’ Review includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal and emerging risks and uncertainties that the Company faces. The Directors consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. There were no instances where the Company is required to make disclosures in respect of UK Listing Rule 6.6.1 during the ﬁnancial period under review. For and on behalf of the Board Heather Manners Chairman 8 October 2024 38 Fidelity Emerging Markets Limited | Annual Report 2024 I am pleased to present the formal report of the Audit and Risk Committee (the “Committee”) to shareholders. The primary responsibilities of the Committee are to ensure the integrity of the Company’s ﬁnancial reporting, the appropriateness of the risk management and internal controls processes and the eﬀectiveness of the independent audit process and how this has been assessed for the year ended 30 June 2024. The Board established the Committee which consists of all Directors, with the exception of the Chairman, Heather Manners. The Committee is chaired by Mark Little. The Committee has formally delegated duties and responsibilities with written Terms of Reference, which are available on the Company’s website. Role and Responsibilities of the Committee The Committee’s authority and duties are clearly deﬁned in its terms of reference which are available on the Company’s pages of the Manager’s website at www.ﬁdelity.co.uk/emergingmarkets. These duties include: • To monitor the integrity of the ﬁnancial statements of the Company, including its annual and half-yearly reports andany other formal announcement relating to its ﬁnancialperformance; • To review the Company’s accounting policies and any signiﬁcant ﬁnancial reporting judgements; • To monitor and review the adequacy and eﬀectiveness of the internal ﬁnancial control and risk management systems on which the Company is reliant; • To review and approve statements to be included in the Annual Financial Report concerning controls and risk management; • To report to the Board that they have carried out a robust assessment of the principal and emerging risks facing theCompany; • To provide advice to the Board on whether they consider the Annual Financial Report, taken as a whole, is fair, balanced and understandable; • To make recommendations to the Board in relation to the appointment, re-appointment and removal of external auditors; • To monitor the independence and objectivity of external auditors; and • To review the audit fees, terms of engagement and provision of non-audit services by the external auditor. The Committee usually meets three times a year to review the Annual and Half Year Financial Reports, audit timetable and other risk management and governance matters. Itmay meet more often if deemed necessary, or if required by the Company’s auditors. Signiﬁcant accounting matters During the review of the Company’s ﬁnancial statements for the year ended 30 June 2024, the Audit and Risk Committee considered the following matters to be signiﬁcant issues, both of which were satisfactorily addressed: Issue considered How the issue was addressed Valuation, existence and ownership of investments (including derivatives and unlisted investments) The valuation of investments (including derivatives and unlisted investments) is in accordance with Accounting Policy Note2(b) on pages 50 and 51. The Committee took comfort from the Custodian’s reports that investment related activities are conducted in accordance with the Company’s investment policy. The Committee received reports from the Manager and the Administrator which concluded that controls around the valuation, existence and ownership of investments operate eﬀectively. The valuation of the Company’s unlisted, suspended, and illiquid investments which are subject to fair value oversight by the Manager’s Fair Value Committee (“FVC”) were reviewed by the Committee. It receives reporting from the FVC and reviews the proposed valuation methodology to be adopted. Speciﬁcally, there are a number of current factors impacting the Company’s Russian investments, such as markets being closed or with restrictions on trading in certain instruments or with certain counterparties due to the imposition of sanctions: at the period-end appropriate fair value adjustments to these Russian investments have been made as proposed by the FVC. Report of the Audit and Risk Committee 39 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE Report of the Audit and Risk Committee continued Auditor independence and assessment The Committee monitors the European and U.K. legislation regarding mandatory audit ﬁrm rotation and tendering to ensure compliance and an external tender was conducted in2023. As part of its review of the continuing appointment of the Auditor, the Committee considered the independence of the Auditor along with the eﬀectiveness of the audit. The Auditor was asked to attest that KPMG and the audit team members were independent of the Company. KPMG also conﬁrmed that they had not been engaged in the provision of any non-audit services to the Company during the year. Audit eﬀectiveness was assessed by means of the Auditors’ direct engagement with the Board at Committee meetings and also by reference to feedback from the Manager and Administrator. The Committee reviewed the Auditor’s risk assessment and audit approach at the planning stage and were briefed on the fulﬁlment of that plan at the completion stage. The Board conﬁrmed, the recommendation of the Committee, that the Auditors continued to be independent of the Company. Auditors Appointment and Tenure KPMG Channel Islands Limited (“KPMG”) was re-appointed as the Company’s Auditor (“the Auditor”) on 8 December 2023 following a formal audit tender process in 2023. The Committee has reviewed the Auditor’s independence and the eﬀectiveness of the audit process prior to recommending its reappointment for a further year. The Auditor is required to rotate audit partners every ﬁve years and this is the second year that the Audit Partner, Rachid Frihmat, has been in place. The Committee will continue to review the Auditor’s appointment each year to ensure that the Company is receiving an optimal level of service. There are no contractual obligations that restrict the Company’s choice ofauditor. Audit Fees The fees paid to KPMG in respect of audit services for the year ended 30 June 2024 were $73,500 (2023: $73,000). KPMG did not provide any non-audit services during the year (2023: None). Internal Controls The Board is responsible for the Company’s system of internal control and for reviewing its eﬀectiveness. As there is delegation of daily operational activity, described below, there is no requirement for a direct internal audit function. The internal control systems are designed to meet the Company’s particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss. The services provided to the Company by the Administrator, such as administration services, and accounting services reﬂect the system of ﬁnancial and operating controls operating at the Administrator. The control regime for other services, such as the Manager, Investment Manager, Custodian and Registrar, reﬂect the internal controls operated by these respective service providers. The Administrator provides semi-annual and annual ﬁnancial statements based on the requirements of the Company. The ﬁnancial statements are based on data from the Administrator’s accounting system including the trial balance, net asset valuation, purchase and sales report and other investment schedules. All statements are reconciled and reviewed by the Administrator using pre-deﬁned checklists and reviewed by the Manager prior to distribution. In order for the Directors to review their eﬀectiveness for the Company’s business, an annual review of all outsourced functions has taken place. Their performance was monitored against obligations speciﬁed in the relevant contracts and was found to be in order. Service providers report annually on the design and eﬀectiveness of internal controls operating over the functions provided. Reports are reviewed by the Committee and any material ﬁndings are considered by the Board. The Committee has carried out its annual assessment of the internal controls of the Company’s service providers for the year ended 30 June 2024 and considered the internal control procedures to be adequate based on the ﬁndings of their respective ISAE 3402 SOC 1 Reports or AAF Reports. For and on behalf of the Committee Mark Little Chairman of the Audit and Risk Committee 8 October 2024 40 Fidelity Emerging Markets Limited | Annual Report 2024 Report of the Audit and Risk Committee continued The Board has an established Nomination Committee which consists of all Directors, chaired by Heather Manners. The Nomination Committee has formally delegated duties and responsibilities with written Terms of Reference, which are available on the Company’s website www.ﬁdelity.co.uk/ emergingmarkets. The responsibilities of the Nomination Committee are inter alia: • To regularly review the structure, size and composition (including the length of service of the Board members, skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes. • To give full consideration to succession planning for Directors, taking into account the challenges and opportunities facing the Company, the skills and expertise needed on the Board in the future and the promotion of diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. • To be responsible for identifying and nominating, for the approval of the Board, candidates to ﬁll Board vacancies as and when they arise and for overseeing the development of a diverse pipeline for succession. Diversity It is seen as a prerequisite that each member of the Board must have the skills, experience and character that will enable them to contribute to the eﬀectiveness of the Board and the success of the Company. Subject to that overriding principle, diversity of experience and approach, including gender diversity, amongst Board members is of great value, and it is the Board’s policy to give careful consideration to overall Board balance and diversity in making new appointments to the Board. Composition and independence As at 30 June 2024 the Board comprised of three male and two female Directors. All Directors are non-executive and independent of both the Company and the Investment Manager. Each Director is required to disclose any potential conﬂicts of interest at each Boardmeeting. Tenure and Succession Planning The policy on Board refreshment is to ensure continuity and stability with no more than one Board member retiring and one successor recruited in each calendar year. In line with the AIC Code guidelines for independent Directors, individuals will generally serve on the Board for no more than nine years, although the Chairman’s term of oﬃce may be extended by a maximum of three additional years to a total of twelve years. Inrecruiting new Directors, the aim will always be to preserve or enhance the skill sets on the Board, taking account of the need to ensure age, gender and ethnic diversity. Board re-election and appointments The Nomination Committee makes recommendations to the Board for the continuation or cessation of service of Directors and reviews the tenure of Directors on a three year cycle. It also considers the election and re-election of Directors ahead of each AGM. When appointing a new Director, the Board takes care to ensure that the new Director enhances the balance of skills, diversity and experience appropriate to the requirements of the Company and that a new Director has enough time available to properly fulﬁl their duties. All new Directors undertake a formal induction and onboarding process. The Directors also have access, where necessary in the furtherance of their duties, to independent professional advice at the Company’s expense. Directors are initially appointed until the following Annual General Meeting when, under the Company’s Articles of Incorporation, it is required that they be elected by shareholders. During the year the Board engaged external recruitment consultant, Stephenson & Co, which has no connection with the Company, to facilitate the search for a new independent non-executive Director to join the Board following Julian Healy’s retirement from the Board due to personal reasons. As a result of this process, Mark Little was appointed to the Board on 17 January 2024 as a non-executive Director and a member of the Audit and Risk Committee, and the Nomination Committee. Mr Little will stand for election by shareholders at the forthcoming AGM on 10 December 2024. All the Directors are retiring in accordance with the AIC Code and will oﬀer themselves for election or re-election. As each Director has maintained their eﬀectiveness and commitment to the Company, the Board endorses them and recommends their re-election to theshareholders. Heather Manners Chairman of the Nomination Committee 8 October 2024 Nomination Committee’s Report 41 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL GOVERNANCE Independent Auditor‘s Report to the Members of Fidelity Emerging Markets Limited Our opinion is unmodiﬁed We have audited the ﬁnancial statements of Fidelity Emerging Markets Limited (the “Company”), which comprise the statement of ﬁnancial position as at 30 June 2024, the statements of comprehensive income, changes in equity and cash ﬂows for the year then ended, and notes, comprising material accounting policies and other explanatory information. In our opinion, the accompanying ﬁnancial statements: • give a true and fair view of the ﬁnancial position of the Company as at 30 June 2024, and of the Company’s ﬁnancial performance and cash ﬂows for the year then ended; • are prepared in accordance with International Financial Reporting Standards as adopted by the EU; and • comply with the Companies (Guernsey) Law, 2008. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Ourresponsibilities are described below. We have fulﬁlled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown Dependencies’ Audit Rules and Guidance. We believe that theaudit evidence we have obtained is a suﬃcient and appropriate basis for our opinion. Key audit matters: our assessment of the risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in the audit of the ﬁnancial statements and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) identiﬁed byus, including those which had the greatest eﬀect on: theoverall audit strategy; the allocation of resources in the audit; and directing the eﬀorts of the engagement team. These matters were addressed in the context of our audit of the ﬁnancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Inarriving at our audit opinion above, the key audit matter was as follows (unchanged from 2023): Valuation of ﬁnancial assets at fair value through proﬁt or loss, and derivatives assets and liabilities The risk Our response Financial assets at fair value through proﬁt or loss: $696,753,000; (2023:$778,608,000) Derivative assets: $25,399,000; (2023:$9,468,000) Derivative liabilities: $11,857,000; (2023:$12,847,000) Refer to the report of the Audit and Risk Committee on page 38, accounting policy note 2(b) and 2(q), and notes 10, 11 and 17. Basis: The Company’s investments consist primarily of listed equity securities from emerging markets and derivative instrument assets and liabilities (“Investments”). As at 30 June 2024, the Company had invested the equivalent of $686,519,000 (2023: $751,117,000) in listed equity securities, as well as $25,399,000 (2023:$9,468,000) in derivative assets and $11,857,000 (2023:$12,847,000) in derivative liabilities. These Investments, carried at fair value, are valued by the Company based on prices obtained from third party pricing providers. Risk: The valuation of the Company’s Investments, given that it represents the majority of the Company’s net assets, isconsidered to be the area which has the greatest eﬀect on our overall audit strategy and allocation of resources in planning and completing our audit.. Our audit procedures included: Internal Controls: We evaluated the design and implementation of key controls over the valuation of quoted investments. Use of KPMG Valuation Specialists: We engaged our KPMG valuation specialist to independently price the investments to third party pricing sources. Assessing disclosures: We also considered the Company’s valuation policies adopted in note 2(b) and the Company’s disclosures (see note 2(q)) in relation to the use of estimates and judgements regarding the valuation of Investments and derivative instruments and in addition the fair value disclosures in note 17 for compliance withIFRS as adopted by the EU. Our application of materiality and an overview of the scope of our audit Materiality for the ﬁnancial statements as a whole was set at $16m (2023: $15.9m), determined with reference to a benchmark of net assets of $753.4m, of which it represents approximately 2% (2023:2%). In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the ﬁnancial statements as a whole. Performance materiality for the Company was set at 75% (2023: 75%) of materiality for the ﬁnancial statements as a whole, which equates to $12m (2023:$11.9m). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. 42 Fidelity Emerging Markets Limited | Annual Report 2024 We reported to the Audit Committee any corrected or uncorrected identiﬁed misstatements exceeding $800k (2023:$795k), inaddition to other identiﬁed misstatements that warranted reporting on qualitative grounds. Our audit of the Company was undertaken to the materiality level speciﬁed above, which has informed our identiﬁcation of signiﬁcant risks of material misstatement and the associated audit procedures performed in those areas as detailed above. Going concern The directors have prepared the ﬁnancial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company’s ﬁnancial position means that this is realistic. Theyhave also concluded that there are no material uncertainties that could have cast signiﬁcant doubt over its ability to continue as a going concern for at least a year from the date of approval of the ﬁnancial statements (the “going concern period”). In our evaluation of the directors’ conclusions, we considered the inherent risks to the Company’s business model and analysed how those risks might aﬀect the Company’s ﬁnancial resources or ability to continue operations over the going concern period. The risks that we considered most likely to aﬀect the Company’s ﬁnancial resources or ability to continue operations over this period was the availability of capital to meet operating costs and other ﬁnancial commitments. We considered whether this risk could plausibly aﬀect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of available ﬁnancial resources indicated by the Company’s ﬁnancial forecasts. We considered whether the going concern disclosure in note 2(a) to the ﬁnancial statements gives a full and accurate description of the directors’ assessment of going concern. Our conclusions based on this work: • we consider that the directors’ use of the going concern basis of accounting in the preparation of the ﬁnancial statements isappropriate; • we have not identiﬁed, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast signiﬁcant doubt on the the Company’s ability to continue as a going concern for the going concern period; and • we have nothing material to add or draw attention to in relation to the directors’ statement in the notes to the ﬁnancial statements on the use of the going concern basis of accounting with no material uncertainties that may cast signiﬁcant doubt over the Company’s use of that basis for thegoing concern period. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation. FRAUD AND BREACHES OF LAWS AND REGULATIONS – ABILITY TO DETECT Identifying and responding to risks of material misstatement due to fraud To identify risks of material misstatement due to fraud (“fraudrisks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment proceduresincluded: • enquiring of management as to the Company’s policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud; • reading minutes of meetings of those charged with governance; and • using analytical procedures to identify any unusual or unexpected relationships As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Company’s revenue streams are simple in nature with respect to accounting policy choice, and are easily veriﬁable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks. We performed procedures including • Identifying journal entries and other adjustments to test based on risk criteria and comparing any identiﬁed entries tosupporting documentation; and • incorporating an element of unpredictability in our auditprocedures. Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations We identiﬁed areas of laws and regulations that could reasonably be expected to have a material eﬀect on the ﬁnancial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Company’s regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatoryrequirements. Independent Auditor‘s Report to the Members of Fidelity Emerging Markets Limited continued 43 Annual Report 2024 | Fidelity Emerging Markets Limited GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE The Company is subject to laws and regulations that directly aﬀect the ﬁnancial statements including ﬁnancial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related ﬁnancial statement items. The Company is subject to other laws and regulations where the consequences of non-compliance could have a material eﬀect on amounts or disclosures in the ﬁnancial statements, forinstance through the imposition of ﬁnes or litigation or impacts on the Company’s ability to operate. We identiﬁed ﬁnancial services regulation as being the area most likely to have such an eﬀect, recognising the regulated nature of the Company’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach Context of the ability of the audit to detect fraud or breaches of law or regulation Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the ﬁnancial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reﬂected in the ﬁnancial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the ﬁnancial statements and our auditor’s report thereon. Our opinion on the ﬁnancial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Disclosures of emerging and principal risks and longer termviability We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in respect of emerging and principal risks and the viability statement, and the ﬁnancial statements and our audit knowledge. We have nothing material to add or draw attention to in relation to: • the directors’ conﬁrmation within the Viability Statement (page 25) that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity; • the emerging and principal risks disclosures describing these risks and explaining how they are being managed ormitigated; • the directors’ explanation in the Viability Statement (page25) as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualiﬁcations or assumptions. We are also required to review the Viability Statement, set out on page25 under the Listing Rules. Based on the above procedures, we have concluded that the above disclosures are materially consistent with the ﬁnancial statements and our audit knowledge. Corporate governance disclosures We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate governance disclosures and the ﬁnancial statements and our audit knowledge. Based on those procedures, we have concluded that each of the following is materially consistent with the ﬁnancial statements and our audit knowledge: • the directors’ statement that they consider that theannual report and ﬁnancial statements taken as a whole is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; • the section of the annual report describing the work of the Audit Committee, including the signiﬁcant issues that the audit committee considered in relation to the ﬁnancial statements, and how these issues were addressed; and • the section of the annual report that describes the review of the eﬀectiveness of the Company’s risk management and internal control systems. 44 Fidelity Emerging Markets Limited | Annual Report 2024 We are required to review the part of Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code speciﬁed by the Listing Rules for our review. We have nothing to report in thisrespect. We have nothing to report on other matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion: • the Company has not kept proper accounting records; or • the ﬁnancial statements are not in agreement with the accounting records; or • we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit. RESPECTIVE RESPONSIBILITIES Directors’ responsibilities As explained more fully in their statement set out on page37, the directors are responsible for: the preparation of the ﬁnancial statements including being satisﬁed that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of the ﬁnancialstatements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. The purpose of this report and restrictions on its use by persons other than the Company’s members as a body This report is made solely to the Company’s members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Rachid Frihmat For and on behalf of KPMG Channel Islands Limited Chartered Accountants and Recognised Auditors, Guernsey 8October 2024 Independent Auditor‘s Report to the Members of Fidelity Emerging Markets Limited continued 45 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS GOVERNANCE The notes on pages 49 to 76 form an integral part of these ﬁnancial statements Year ended 30 June 2024 Year ended 30 June 2023 Note Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000 Revenue Investment income 3 19,284 – 19,284 22,272 – 22,272 Derivative income 3 19,711 – 19,711 17,709 – 17,709 Other income 3 1,252 – 1,252 620 – 620 Total Income 40,247 – 40,247 40,601 – 40,601 Net gains on investments at fair value through proﬁt or loss 10 – 81,553 81,553 – 36,553 36,553 Net gains/(loss) on derivative instruments 11 – 35,890 35,890 – (37,809) (37,809) Net foreign exchange losses – (1,569) (1,569) – (933) (933) Total income and gains/(losses) 40,247 115,874 156,121 40,601 (2,189) 38,412 Expenses Management fees 4 (935) (3,741) (4,676) (923) (3,690) (4,613) Other expenses 5 (1,631) – (1,631) (1,619) – (1,619) Proﬁt/(loss) before ﬁnance costs and taxation 37,681 112,133 149,814 38,059 (5,879) 32,180 Finance costs 6 (21,566) – (21,566) (15,653) – (15,653) Proﬁt/(loss) before taxation 16,115 112,133 128,248 22,406 (5,879) 16,527 Taxation 7 (2,060) (123) (2,183) (2,622) 644 (1,978) Proﬁt/(loss) after taxation for the year attributable to Participating Preference Shares 14,055 112,010 126,065 19,784 (5,235) 14,549 Earnings/(loss) per Participating Preference Share (basic and diluted) 8 $0.16 $1.29 $1.45 $0.22 $(0.06) $0.16 The Company does not have any income or expenses that are not included in the proﬁt/(loss) after taxation for the year. Accordingly the proﬁt/(loss) after taxation for the year is also the total comprehensive income for the year and no separate Statement of Comprehensive Income has been presented. The total column of this statement represents the Company’s Statement of Comprehensive Income prepared in accordance with IFRS. The supplementary information on the allocation between the revenue account and the capital reserve is presented under guidance published by the AIC. All the proﬁt/(loss) and total comprehensive income is attributable to the equity shareholders of the Company. There are no minorityinterests. No operations were acquired or discontinued in the year and all items in the above statement derive from continuing operations. Statement of Comprehensive Income for the year ended 30 June 2024 46 Fidelity Emerging Markets Limited | Annual Report 2024 The notes on pages 49 to 76 form an integral part of these ﬁnancial statements Note Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000 Total equity at 30 June 2023 6,291 735,860 54,583 796,734 Proﬁt after taxation for the year – 112,010 14,055 126,065 Repurchase and cancellation of the Company’s own shares 14 – (127,125) – (127,125) Participating Preference Shares repurchased into Treasury 14 – (24,923) – (24,923) Dividend paid to shareholders 9 – – (17,305) (17,305) Total equity at 30 June 2024 6,291 695,822 51,333 753,446 Note Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000 Total equity at 30 June 2022 6,291 741,095 49,375 796,761 (Loss)/proﬁt after taxation for the year – (5,235) 19,784 14,549 Dividend paid to shareholders 9 – – (14,576) (14,576) Total equity at 30 June 2023 6,291 735,860 54,583 796,734 Statement of Changes in Equity for the year ended 30 June 2024 47 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL Note 30 June 2024 $’000 30 June 2023 $’000 Non-current assets Investments at fair value through proﬁt or loss 10 696,753 778,608 Current assets Derivative assets 11 25,399 9,468 Amounts held at futures clearing houses and brokers 44,952 18,210 Other receivables 12 8,083 6,480 Cash at bank 8,794 18,057 87,228 52,215 Current liabilities Derivative liabilities 11 11,857 12,847 Other payables 13 18,678 21,242 30,535 34,089 Net current assets 56,693 18,126 Net assets 753,446 796,734 Equity Share premium account 15 6,291 6,291 Capital reserve 15 695,822 735,860 Revenue reserve 15 51,333 54,583 Total Equity Shareholders’ Funds 753,446 796,734 Net asset value per Participating Preference Share 16 $10.09 $8.75 The Financial Statements on pages 45 to 76 were approved by the Board of Directors of the Company on 8 October 2024 and signed on its behalf by: Heather Manners Chairman Statement of Financial Position as at 30 June 2024 The notes on pages 49 to 76 form an integral part of these ﬁnancial statements 48 Fidelity Emerging Markets Limited | Annual Report 2024 The notes on pages 49 to 76 form an integral part of these ﬁnancial statements 30 June 2024 $’000 30 June 2023 $’000 Operating activities Cash inﬂow from investment income 24,168 24,214 Cash inﬂow from derivative income 9,769 6,184 Cash inﬂow from other income 20 33 Cash outﬂow from taxation paid (2,060) (1,063) Cash outﬂow from the purchase of investments (695,450) (928,894) Cash inﬂow from the sale of investments 854,047 930,627 Cash inﬂow/(outﬂow) from net proceeds from settlement of derivatives 23,436 (4,819) Cash outﬂow from amounts held at futures clearing houses and brokers (26,742) (6,309) Cash outﬂow from operating expenses (6,217) (5,150) Net cash inﬂow from operating activities 180,971 14,823 Financing activities Cash outﬂow from CFD interest paid (18,527) (10,111) Cash outﬂow from short CFD dividends paid (2,726) (5,564) Cash outﬂow from dividends paid to shareholders (17,305) (14,576) Cash outﬂow from repurchase of participating preference shares into treasury (22,982) – Cash outﬂow from repurchase and cancellation of Participating Preference Shares (127,125) – Net cash outﬂow from ﬁnancing activities (188,665) (30,251) Net decrease in cash at bank (7,694) (15,428) Cash at bank at the start of the year 18,057 34,418 Eﬀect of foreign exchange movements (1,569) (933) Cash at bank at the end of the year 8,794 18,057 Statement of Cash Flows for the year ended 30 June 2024 49 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL 1. Principal Activity Fidelity Emerging Markets Limited (the ‘Company’) was incorporated in Guernsey on 7 June 1989 and commenced activities on 19September 1989. The Company is an Authorised Closed-Ended Investment Scheme as deﬁned by The Authorised Closed-Ended Investment Schemes Rules and Guidance, 2021 (and, as such, is subject to ongoing supervision by the Guernsey Financial Services Commission). The Company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The Company’s registered oﬃce is at Level 3, Mill Court La Charroterie, St Peter Port, Guernsey GY1 1EJ, Channel Islands. The Company’s investment objective is to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and ﬁnancial instruments providing exposure to emerging market companies, both listed and unlisted. These ﬁnancial statements were approved by the Board of Directors and authorised for issue on 8 October 2024. 2. Summary of Material Accounting Policies (a) Basis of preparation The principal accounting policies applied in the preparation of these ﬁnancial statements on a going concern basis are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The Company’s ﬁnancial statements, which give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt and loss of the Company, have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS’), which comprise standards and interpretations approved by the International Accounting Standards Board (‘IASB’), the IFRS Interpretations Committee and interpretations approved by the International Accounting Standards Committee (‘IASC’) that remain in eﬀect and the Companies (Guernsey) Law, 2008. The ﬁnancial statements have been prepared under the historical cost convention, as modiﬁed by the revaluation of ﬁnancial assets and ﬁnancial liabilities at fair value through proﬁt or loss. Going concern The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of these ﬁnancial statements. In making their assessment the Directors have reviewed the income and expense projections, the liquidity of the investment portfolio, stress testing performed and considered the Company’s ability to meet liabilities as they fall due. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these ﬁnancial statements. Signiﬁcant accounting estimates, assumptions and judgements The preparation of ﬁnancial statements in conformity with IFRS may require management to make critical accounting judgements, estimates and assumptions that aﬀect the application of policies and the reported amounts of assets and liabilities, income and expense. Actual results may diﬀer from the estimates. Valuations use observable data to the extent practicable. Changes in any assumptions could aﬀect the reported fair value of the ﬁnancial instruments. The determination of what constitutes observable requires signiﬁcant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and veriﬁable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Adoption of new and revised International Financial Reporting Standards The accounting policies adopted are consistent with those of the previous ﬁnancial year as amended to reﬂect the adoption of new standards, amendments and interpretations which became eﬀective in the year as shown below. At the date of authorisation of these ﬁnancial statements, the following revised International Accounting Standards (IAS) were in issue but not yet eﬀective: • Amendments to the Classiﬁcation and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 • Lack of Exchangeability – Amendments to IAS 21 • Presentation and Disclosure in Financial Statements – IFRS 18 • Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7 • Subsidiaries without Public Accountability – IFRS 19 The adoption of these new and amended standards, together with any other IFRSs or IFRIC interpretations that are not yet eﬀective, are not expected to have a material impact on the ﬁnancial statements of the Company other than IFRS18 (Presentation and Disclosure in Financial Statements) that the Company is in the process of assessing. Notes to the Financial Statements for the year ended 30 June 2024 50 Fidelity Emerging Markets Limited | Annual Report 2024 2. Summary of Material Accounting Policies continued (b) Financial Instruments Classiﬁcation (i) Assets The Company classiﬁes its investments based on both the Company’s business model for managing those ﬁnancial assets and the contractual cash ﬂow characteristics of the ﬁnancial assets. The portfolio of ﬁnancial assets is managed and performance is evaluated on a fair value basis. The Company is primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Company has not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. All investments are measured at fair value through proﬁt or loss. The Company’s investments are included in the Financial assets at fair value through proﬁt and loss line in the Statement of Financial Position. (ii) Liabilities Derivative contracts that have a negative fair value are presented as derivative ﬁnancial liabilities at fair value through proﬁt or loss. As such, the Company classiﬁes all of its investment portfolio as ﬁnancial assets or liabilities at fair value through proﬁt or loss. The Company’s policy requires the Manager and the Board of Directors to evaluate the information about these ﬁnancial assets and liabilities on a fair value basis together with other related ﬁnancial information. Recognition/derecognition The Company recognises a ﬁnancial asset or a ﬁnancial liability when, and only when, it becomes a party to the contractual provisions of the instrument. Regular-way purchases and sales of investments are recognised on their trade date, the date on which the Company commits to purchase or sell the investment. Investments are derecognised when the rights to cash ﬂows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership. The Company derecognises a ﬁnancial liability when the obligation under the liability is discharged, cancelled or expires. Measurement Financial assets at fair value through proﬁt and loss are measured initially at fair value being the transaction price. Transaction costs incurred to acquire ﬁnancial assets at fair value through proﬁt or loss are expensed in the Statement of Comprehensive Income. Transaction costs include fees and commissions paid to agents, advisers, brokers and dealers. Subsequent to initial recognition, all ﬁnancial assets at fair value through proﬁt or loss are measured at fair value. Gains and losses arising from changes in the fair value of the ‘ﬁnancial assets at fair value through proﬁt or loss’ category are presented in the Statement of Comprehensive Income in the year in which they arise. The Company includes transaction costs, incidental to the purchase or sale of investments within Net gains/(losses) on ﬁnancial assets at fair value through proﬁt or loss in the capital column of the Statement of Comprehensive Income and has disclosed them in Note10below. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities listed on active markets are valued based on their last bid price for valuation and ﬁnancial statement purposes. Equity Linked Notes are valued based on the available price of the underlying asset as at reporting date. In the normal course of business, the Company may utilise Participatory notes (‘P Notes’) to gain access to markets that otherwise would not be allowable as a foreign investor. P Notes are issued by banks or broker-dealers and allow the Company to gain exposure to local shares in foreign markets. They are valued based on the last price of the underlying equity at the valuation date. The Company’s investment in other funds (‘Investee Funds’) are subject to the terms and conditions of the respective Investee Fund’s oﬀering documentation. The investments in Investee Funds are primarily valued based on the latest available redemption price for such units in each Investee Fund, as determined by the Investee Funds’ administrators. The Company reviews the details of the reported information obtained for the Investee Funds and considers the liquidity of the Investee Fund or its underlying investments, the value date of the net asset value provided, any restrictions on redemptions and the basis of the Investee Funds’ accounting. If necessary, the Company makes adjustments to the net asset value of the Investee Funds to obtain the best estimate of fair value. The Company may make adjustments to the value of a security if it has been materially aﬀected by events occurring before the Company’s NAV calculation but after the close of the primary markets on which the security is traded. The Company may also make adjustment to the value of its investments if reliable market quotations are unavailable due to infrequent trading or if trading in a particular security was halted during the day and did not resume prior to the Company’s NAV calculation. Notes to the Financial Statements continued 51 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL Notes to the Financial Statements continued 2. Summary of Material Accounting Policies continued In preparing these ﬁnancial statements the Directors have considered the impact of climate change risk as a principal and as an emerging risk as set out on pages 22 to 24, and have concluded that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing. In line with IFRS 13 – ”Fair Value Measurement” investments are valued at fair value, which for the Company are quoted bid prices for investments in active markets at the statement of ﬁnancial position date. Investments which are unlisted are priced using market-based valuation approaches. All investments therefore reﬂect the market participants view of climate change risk on the investments held by the Company. Derivative Instruments When appropriate, permitted transactions in derivative instruments are used. Derivative transactions into which the Company may enter include long and short contracts for diﬀerence (“CFDs”), futures and options. Under IFRS 9 derivatives are classiﬁed at fair value through proﬁt or loss – held for trading, and are initially accounted and measured at fair value on the date the derivative contract is entered into and subsequently measured at fair value as follows: • Long and short CFDs – the diﬀerence between the strike price and the value of the underlying shares in the contract; • Futures – the diﬀerence between the contract price and the quoted trade price; • Forward currency contracts – valued at the appropriate quoted forward foreign exchange rate ruling at the Statement of Financial Position date; • Exchange traded options – valued based on similar instruments or the quoted trade price for the contract; and • Over the counter options – valued based on broker statements. Where transactions are used to protect or enhance income, if the circumstances support this, the income and expenses derived are included in derivative income in the revenue column of the Statement of Comprehensive Income. Where such transactions are used to protect or enhance capital, if the circumstances support this, the income and expenses derived are included in net gains on derivative instruments in the capital column of the Statement of Comprehensive Income. Any positions on such transactions open at the reporting date are reﬂected on the Statement of Financial Position at their fair value within current assets or current liabilities. Amortised cost measurement Cash at bank, amounts held at futures clearing houses and brokers and other receivables are carried at amortised cost using the eﬀective interest method less any allowance for impairment. Gains and losses are recognised in proﬁt or loss when the receivables are derecognised or impaired, as well as through the amortisation process. Capital gains tax payable and other payables are measured at amortised cost using the eﬀective interest method. Gains and losses are recognised in proﬁt or loss when the liabilities are derecognised, as well as through the amortisation of these liabilities. (c) Foreign Currency Translation Functional and Presentation Currency The books and records of the Company are maintained in the currency of the primary economic environment in which it operates (itsfunctional currency). The Directors have considered the primary economic environment of the Company and considered the currency in which the original capital was raised, past distributions have been made and ultimately the currency in which capital would be returned on a break up basis. The Directors have also considered the currency to which underlying investments are exposed. On balance, the Directors believe that US dollars best represent the functional currency of the Company. The ﬁnancial statements, results and ﬁnancial position of the Company are also expressed in US dollars which is the presentation currency of the Company and have been rounded to the nearest thousand unless otherwise stated. Transactions and Balances Transactions in currencies other than US dollars are recorded at the rates of exchange prevailing on the date of the transaction. Atthe end of each reporting year, monetary items and non-monetary assets and liabilities that are fair valued and are denominated in foreign currencies are retranslated at rates prevailing at the end of the reporting year. Gains and losses arising on translation are included in the Statement of Comprehensive Income for the year. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of Comprehensive Income within ‘Net foreign exchange gains or losses’. Foreign exchange gains and losses relating to ﬁnancial assets at fair value through proﬁt or loss and derivatives are presented in the Statement of Comprehensive Income within ‘Net gains or losses on investments’ and ‘Net gains on derivative instruments’ respectively. 52 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 2. Summary of Material Accounting Policies continued (d) Recognition of Dividend and Interest Income Dividends arising on the Company’s investments are accounted for on an ex-dividend basis, gross of applicable withholding taxes. Interest on cash at bank and collateral is accrued on a day-to-day basis using the eﬀective interest method. Dividends and interest income are recognised in the Statement of Comprehensive Income. (e) Income from Derivatives Derivative instrument income received from dividends on long (or payable from short) CFDs are accounted for on the date on which the right to receive the payment is established, normally the ex-dividend date. The amount net of tax is credited (or charged) to the revenue column of the Statement of Comprehensive Income. Interest received on CFDs is accounted for on an accruals basis and credited to the revenue column of the Statement of Comprehensive Income. Interest received on CFDs represent the ﬁnance costs calculated by reference to the notional value of the CFDs. (f) Finance Costs Finance costs comprise bank charges and ﬁnance costs paid on CFDs, which are accounted for on an accruals basis, and dividends paid on short CFDs, which are accounted for on the date on which the obligation to incur the cost is established, normally the ex-dividend date. Finance costs are charged in full to the revenue column of the Statement of Comprehensive Income. (g) Dividend Distribution Dividend distributions are at the discretion of the Board of Directors. A dividend is recognised as a liability in the period in which it is approved at the Annual General Meeting of the shareholders and is recognised in the Statement of Changes in Equity. (h) Cash and Cash Equivalents Cash comprises current deposits with banks. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insigniﬁcant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Bank overdrafts are accounted for as short term liabilities on the Statement of Financial Position and the interest expense is recorded using the eﬀective interest rate method. Bank overdrafts are classiﬁed as other ﬁnancial liabilities. (i) Amounts held at/due to futures clearing houses and brokers Cash deposits are held in segregated accounts on behalf of brokers as collateral against open derivative contracts. These are carried at amortised cost. (j) Other receivables Other receivables include amounts receivable on settlement of derivatives, securities sold pending settlement, accrued income, taxation recoverable and other debtors and prepayments incurred in the ordinary course of business. If collection is expected in one year or less they are classiﬁed as current assets. If not, they are presented as non-current assets. Other receivables are recognised initially at fair value and, where applicable, subsequently measured at amortised cost using the eﬀective interest rate method and as reduced by appropriate allowance for estimated irrecoverable amounts. (k) Other payables Other payables include amounts payable on settlement of derivatives, securities purchased pending settlement, investment management fees, amounts payable for repurchase of shares, ﬁnance costs payable and expenses accrued in the ordinary course of business. Other payables are classiﬁed as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Other payables are recognised initially at fair value and, where applicable, subsequently measured at amortised cost using the eﬀective interest rate method. (l) Segment Reporting Operating Segments are reported in a manner consistent with the internal reporting used by the chief operating decision maker (‘CODM’). The CODM, who is responsible for allocation of resources and assisting performance of the operating segments, has been identiﬁed as the Directors of the Company, as the Directors are ultimately responsible for investment decisions. The Company is engaged in a single segment business and, therefore, no segmental reporting is provided. 53 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL Notes to the Financial Statements continued 2. Summary of Material Accounting Policies continued (m) Expenses All expenses are accounted for on an accruals basis and are charged to the Statement of Comprehensive Income. Expenses are allocated wholly to revenue with the following exceptions: • Management fees are allocated 20% to revenue and 80% to the capital, in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio; and • Expenses which are incidental to capital events are charged to capital. (n) Taxation The Company currently incurs withholding taxes imposed by certain countries on investment income and capital gains taxes upon realisation of its investments. Such income or gains are recorded gross of withholding taxes and capital gains taxes in the Statement of Comprehensive Income. Withholding taxes and capital gains taxes are shown as separate items in the Statement of ComprehensiveIncome. In accordance with IAS 12, ‘Income taxes’, the Company is required to recognise a tax liability when it is probable that the tax laws of foreign countries require a tax liability to be assessed on the Company’s capital gains sourced from such foreign country, assuming the relevant taxing authorities have full knowledge of all the facts and circumstances. The tax liability is then measured at the amount expected to be paid to the relevant taxation authorities, using the tax laws and rates that have been enacted or substantively enacted by the end of the reporting year. There is sometimes uncertainty about the way enacted tax law is applied to oﬀshore investment funds. This creates uncertainty about whether or not a tax liability will ultimately be paid by the Company. Therefore, when measuring any uncertain tax liabilities, management considers all of the relevant facts and circumstances available at the time that could inﬂuence the likelihood of payment, including any formal or informal practices of the relevant tax authorities. (o) Share Capital Participating Preference Shares are not redeemable and there is no obligation to pay cash or another ﬁnancial asset to the holder but are entitled to receive dividends. They are classiﬁed as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds net of tax. (p) Purchase of Own Shares The cost of purchases of the Company’s own shares is shown as a reduction in Shareholders’ Funds. The Company’s net asset value and return per Participating Preference Share are calculated using the number of shares outstanding after adjusting for purchases. (q) Critical Accounting Estimates and Assumptions As stated in Note 2(a) Basis of Preparation, the preparation of ﬁnancial statements, in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgment in the process of applying the Company’s accounting policies. For example, the Company may, from time to time, hold ﬁnancial instruments that are not quoted in active markets, such as minority holdings in investment and private equity companies. Fair values of such instruments are determined using diﬀerent valuation techniques validated and periodically reviewed by the Board of Directors. (r) Capital reserve The following are attributable to capital reserve: • Gains and losses on the disposal of ﬁnancial assets at fair value through proﬁt and loss and derivatives instruments; • Changes in the fair value of ﬁnancial assets at fair value through proﬁt and loss and derivative instruments, held at the year end; • Foreign exchange gains and losses of a capital nature; • 80% of management fees; • Dividends receivable which are capital in nature; • Taxation charged or credited relating to items which are capital in nature; and • Other expenses which are capital in nature. The Company holds 2,921,898 participating preference shares in treasury which have been excluded from the net asset value and earnings per participating preference share calculations from the date of repurchase into treasury. 54 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 3. Income Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Investment income UK dividends 362 798 Overseas dividends 18,900 21,474 UK and overseas scrip dividends 15 – Interest on bonds 7 – 19,284 22,272 Derivative income Dividends earned on long CFDs 8,489 5,220 Interest earned on CFDs 2,114 1,414 Option income 9,108 11,075 19,711 17,709 Other income Interest income from cash and collateral 1,232 587 Fee rebate 20 33 1,252 620 Total income 40,247 40,601 4. Management Fees Year ended 30 June 2024 Year ended 30 June 2023 Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000 Management fees 935 3,741 4,676 923 3,690 4,613 Under the Investment Management Agreement (‘the IMA’), Fidelity International is entitled to receive a Management Fee of 0.60% per annum of the Net Asset Value of the Company. Fees are payable monthly in arrears and calculated on a daily basis. Management fees incurred by collective investment schemes or investment companies managed or advised by the Investment Manager are reimbursed. Please see information on ongoing charges ratio as presented on page 19. 55 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL Notes to the Financial Statements continued 5. Other expenses Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Allocated to revenue: Custodian fees 415 362 Directors’ fees 263 279 Directors’ expenses 24 74 Administration fees 193 192 Audit fees 106 73 Legal and professional fees 120 117 Sundry expenses 510 522 Other expenses 1,631 1,619 Administration fees The Administrator is entitled to receive a fee, payable monthly, based on the Net Asset Value of the Company and time incurred. Custodian fee Under the Custodian Agreement, the Custodian to the Company is entitled to receive a fee payable monthly, based on the Net Asset Value of the Company. All custody services are performed by JP Morgan Chase Bank. The Company also incurs charges and expenses of other organisations with whom securities are held. The total of all Custodian fees for the year represented approximately 0.06% (2023: 0.05%) per annum of the average Net Assets of the Company. 6. Finance costs Year ended 30 June 2024 Year ended 30 June 2023 Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000 Dividends expenses on short CFDs 3,081 – 3,081 5,270 – 5,270 Interest expenses on CFDs 18,485 – 18,485 10,383 – 10,383 21,566 – 21,566 15,653 – 15,653 56 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 7. Taxation Year ended 30 June 2024 Year ended 30 June 2023 Revenue $’000 Capital $’000 Total $’000 Revenue $’000 Capital $’000 Total $’000 Capital gains tax – 123 123 – (644) (644) Withholding taxes 2,060 – 2,060 2,622 – 2,622 2,060 123 2,183 2,622 (644) 1,978 The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2012. As such, the Company is only liable to pay a ﬁxed annual fee, currently £1,200 (2023: £1,200). Income due to the Company is subject to withholding taxes. The Manager undertakes regular reviews of the tax situation of the Company and believes that withholding taxes on dividend income and capital gains taxes on capital gains are currently the material transactions that generate the amounts of tax payable. In accordance with IAS 12, ‘Income taxes’, where necessary the Company provides for deferred taxes on any capital gains/losses on the revaluation of securities in such jurisdictions where capital gains tax is levied. The capital gains charge has been calculated on the basis of the tax laws enacted or substantially enacted at the reporting date in the countries where the Company’s investments generate taxable income on realisation. The Manager, on behalf of the Board, periodically evaluates which applicable tax regulations are subject to interpretation and establishes provisions when appropriate. As at 30 June 2024, $1,038,000 capital gains tax provision was recognised in the Statement of Financial Position (2023: $915,000). 8. Earnings/(loss) per Participating Preference Share Year ended 30 June 2024 Year ended 30 June 2023 Revenue earnings per Participating Preference Share $0.16 $0.22 Capital earnings/(loss) per Participating Preference Share $1.29 $(0.06) Total earnings per Participating Preference Share – basic and diluted $1.45 $0.16 The earnings/(loss) per Participating Preference Share is based on the proﬁt/(loss) after taxation for the year divided by the weighted average number of Participating Preference Shares in issue during the year, as shown below: $’000 $’000 Revenue proﬁt after taxation for the year 14,055 19,784 Capital proﬁt/(loss) after taxation for the year 112,010 (5,235) Total proﬁt after taxation for the year attributable to Participating Preference Shares 126,065 14,549 Number Number Weighted average number of Participating Preference Shares in issue 86,936,701 91,100,066 57 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 9. Dividends Paid to Shareholders Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Dividend paid 2023 ﬁnal dividend of 19.0¢ (2022: 16.0¢) per Participating Preference Share 17,305 14,576 Total dividend paid 17,305 14,576 Dividend proposed 2024 ﬁnal dividend of 20.0¢ (2023: 19.0¢) per Participating Preference Share 14,929 17,309 Total dividend proposed 14,929 17,309 The Directors have proposed the payment of a dividend for the year ended 30 June 2024 of 20.0¢ per Participating Preference Share which is subject to approval by shareholders at the Annual General Meeting on 10December 2024 and has not been included as a liability in these ﬁnancial statements. The dividend will be paid on 13December 2024 to shareholders on the register at the close of business on 15November 2024 (ex-dividend date 14November 2024). 10. Investments at Fair Value through Proﬁt or Loss 30 June 2024 $’000 30 June 2023 $’000 Financial Assets: Equity securities 687,025 752,126 Equity linked notes 4,555 17,433 Debt instruments 316 – Investee funds 4,857 9,049 Total Investments at fair value through proﬁt or loss 696,753 778,608 Opening book cost 884,753 907,801 Opening unrealised losses on Investments at fair value through proﬁt or loss (106,145) (180,459) Opening fair value of Investments at fair value through proﬁt or loss 778,608 727,342 Movements in the year Purchases at cost 692,013 932,911 Sales – proceeds (855,428) (918,198) Gains on Investments at fair value through proﬁt or loss 81,553 36,553 Amortisation adjustment 7 – Closing fair value 696,753 778,608 Closing book cost 695,828 884,753 Closing unrealised gains/(losses) on Investments at fair value through proﬁt or loss 925 (106,145) Closing fair value of Investments at fair value through proﬁt or loss 696,753 778,608 58 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 10. Investments at Fair Value through Proﬁt or Loss continued Gains/(losses) on Investments at fair value through proﬁt or loss Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Realised gains/(losses) on Investments at fair value through proﬁt or loss Realised gains 81,933 75,936 Realised losses (107,443) (113,697) Net realised losses on Investments at fair value through proﬁt or loss (25,510) (37,761) Change in unrealised gains/(losses) on Investments at fair value through proﬁt or loss Change in unrealised gains on Investments at fair value through proﬁt or loss 39,223 20,750 Change in unrealised losses on Investments at fair value through proﬁt or loss 67,840 53,564 Net change in unrealised gains on Investments at fair value through proﬁt or loss 107,063 74,314 Net gains on Investments at fair value through proﬁt or loss 81,553 36,553 The Company received $855,428,000 (2023: $918,198,000) from ﬁnancial investments at fair value through proﬁt or loss sold in the year. The book cost of these Investments at fair value through proﬁt or loss when they were purchased was $880,938,000 (2023:$955,959,000). These ﬁnancial investments at fair value through proﬁt or loss have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the ﬁnancial investments at fair value through proﬁt or loss. Transaction costs incurred during the year in the acquisition and disposal of Investments at fair value through proﬁt or loss, which are included in the Net gains/(losses) on ﬁnancial investments at fair value through proﬁt or loss were as follows: Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Purchases transaction costs 1,012 1,403 Sales transaction costs 1,116 1,123 2,128 2,526 59 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 11. Derivative Instruments Year ended 30 June 2024 $’000 Year ended 30 June 2023 $’000 Realised gains/(losses) on derivative instruments Gains on CFDs 177,604 163,817 Gains on future contracts 16,178 19,508 Gains on option contracts 18,681 10,947 Losses on CFDs (141,402) (187,154) Losses on future contracts (23,062) (21,287) Losses on option contracts (23,903) (13,600) Net realised gains/(losses) on derivative instruments 24,096 (27,769) Change in unrealised gains/(losses) on derivative instruments Change in unrealised gains on CFDs 9,979 (11,177) Change in unrealised gains on future contracts (581) 849 Change in unrealised gains on option contracts 4,746 138 Change in unrealised gains on forward currency contracts 364 – Change in unrealised losses on CFDs 4,143 (15) Change in unrealised losses on future contracts (1,889) 277 Change in unrealised losses on option contracts (4,968) (112) Net change in unrealised gains/(losses) on derivative instruments 11,794 (10,040) Net gains/(losses) on derivative instruments 35,890 (37,809) 30 June 2024 Fair value $’000 30 June 2023 Fair value $’000 Fair value of derivative instruments recognised on the Statement of Financial Position Derivative instrument assets 25,399 9,468 Derivative instrument liabilities (11,857) (12,847) 13,542 (3,379) 60 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 11. Derivative Instruments continued 30 June 2024 30 June 2023 Fair value $’000 Asset exposure $’000 Fair value $’000 Asset exposure $’000 At the year end the Company held the following derivative instruments Long CFDs 4,751 366,358 (4,598) 312,737 Short CFDs 6,830 170,814 2,057 203,746 Long future contracts (399) 22,348 – – Short future contracts (26) 22,831 – – Short futures (hedging exposure) (1,196) (148,757) 849 (130,176) Long call option contracts 5,508 49,080 254 2,879 Short put option contracts 915 2,269 (1,557) 10,789 Short call option contracts (1) 37 (384) 6,406 Short call option contracts (hedging exposure) (2,418) (15,110) – – Long put option contracts (786) 10,698 – – Forward currency contracts 364 – – – 13,542 480,568 (3,379) 406,381 12. Other Receivables 30 June 2024 $’000 30 June 2023 $’000 CFD dividend receivable 1,661 827 Securities sold pending settlement 2,170 789 Amounts receivable on settlement of derivatives 3,054 – Accrued income 1,182 4,834 Other receivables 16 30 8,083 6,480 13. Other Payables 30 June 2024 $’000 30 June 2023 $’000 CFD interest payable 431 473 CFD dividend payable 616 261 Securities purchased pending settlement 12,613 16,050 Amounts payable on settlement of derivatives 1,182 2,762 Management fees 335 391 Custodian fees 102 89 Directors’ fees 65 45 Repurchases of the Company’s own shares awaiting settlement 1,941 – Capital gains tax payable 1,038 915 Accrued expenses 355 256 18,678 21,242 61 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 14. Share Capital 2024 Number of shares 2023 Number of shares Authorised Founder shares of no par value 1,000 1,000 Issued Participating Preference Shares held outside Treasury Beginning of the year 91,100,066 91,100,066 Repurchase and cancellation of the Company’s own Participating Preference Shares (13,531,881) Participating Preference Shares repurchased into Treasury (2,921,898) – End of the year 74,646,287 91,100,066 Participating Preference Shares held in Treasury Beginning of the year – – Participating Preference Shares repurchased into Treasury 2,921,898 – End of the year 2,921,898 – Total Participating Preference Shares including held in Treasury 77,568,185 91,100,066 * The ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company. The Board of Directors is mindful that the Company’s shares have traded at a discount to NAV for some time, and frequently deliberates appropriate discount control mechanisms to address the imbalance between the demand and supply of the Company’s shares. In recognition of this, on 13 November 2023, the Company implemented a share buyback programme to repurchase up to 14.99% of issued share capital, which was renewed at the Annual General Meeting on 7 December 2023. The Board intends to continue using its buyback programme to address the discount to NAV with the ambition that it may ultimately be maintained in single digits in normal market conditions on a sustainable basis. The costs associated with the repurchase and cancellation of shares as well as repurchase of shares held in treasury of $127,125,000 and $24,923,000 respectively were charged to the capital reserve for the year ended 30 June 2024. The Company may issue an unlimited number of Unclassiﬁed Shares of no par value. Founder Shares All of the Founder Shares were issued on 6 June 1989 to GIML or its nominees. The Founder Shares were issued at $1 each par value. The Founder Shares are not redeemable. At the Extraordinary General Meeting of the Company on 30 October 2009 and in accordance with The Companies (Guernsey) Law, 2008 it was approved that each Founder Share be redesignated as no par valueshares. The Founder Shares confer no rights upon holders other than at general meetings, on a poll, every holder is entitled to one vote in respect of each Founder Share held. On 7 October 2021, all of the Founder shares were transferred from Genesis Investment Management LLP to FIL Investment Services (UK) Limited. Treasury Shares As at year ending 30 June 2024, the Company holds 2,921,898 shares in treasury (2023: nil). 62 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 14. Share Capital continued Participating Preference Shares At the Extraordinary General Meeting of the Company held on 30 October 2009 it was approved that each Participating Preference Share be divided into ten Participating Preference Shares. Under The Companies (Guernsey) Law, 2008 (as amended), the nominal values of the shares were also converted into sterling and redesignated as no par value shares. The holders of Participating Preference Shares rank ahead of holders of any other class of share in issue in a winding up. They have the right to receive any surplus assets available for distribution. The Participating Preference Shares confer the right to dividends declared, and at general meetings, on a poll, confer the right to one vote in respect of each Participating Preference Share held. Participating Preference Shares are classed as equity as they have a residual interest in the assets of the Company. All of the above classes of shares are considered as Equity under the deﬁnitions set out in IAS 32, ‘Financial instruments: Disclosure and presentation’, because the shares are not redeemable and there is no obligation to pay cash or another ﬁnancial asset to theholder. 15. Capital and Reserves Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000 At 1 July 2023 6,291 735,860 54,583 796,734 Net gains on investments at fair value through proﬁt or loss (see Note 10) – 81,553 – 81,553 Net gains on derivative instruments (see Note 11) – 35,890 – 35,890 Net foreign exchange losses – (1,569) – (1,569) Management fees (see Note 4) – (3,741) – (3,741) Tax charged to capital (see Note 7) – (123) – (123) Repurchase and cancellation of the Company’s own shares (see Note 14) – (127,125) – (127,125) Participating Preference Shares repurchased into Treasury (see Note 14) – (24,923) – (24,923) Revenue proﬁt after taxation for the year – – 14,055 14,055 Dividends paid to shareholders (see Note 9) – – (17,305) (17,305) At 30 June 2024 6,291 695,822 51,333 753,446 63 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 15. Capital and Reserves continued Share premium account $’000 Capital reserve $’000 Revenue reserve $’000 Total equity $’000 At 1 July 2022 6,291 741,095 49,375 796,761 Net gains on investments at fair value through proﬁt or loss (see Note 10) – 36,553 – 36,553 Net losses on derivative instruments (see Note 11) – (37,809) – (37,809) Net foreign exchange losses – (933) – (933) Management fees (see Note 4) – (3,690) – (3,690) Tax charged to capital (see Note 7) – 644 – 644 Revenue proﬁt after taxation for the year – – 19,784 19,784 Dividends paid to shareholders (see Note 9) – – (14,576) (14,576) At 30 June 2023 6,291 735,860 54,583 796,734 Share Premium Share Premium is the amount by which the value of shares subscribed for exceeded their nominal value at the date of issue. The capital reserve balance at 30 June 2024 includes investment holding gains of $925,000 (2023: losses of $106,145,000) as detailed in Note 10. 16. Net Asset Value per Participating Preference Share The calculation of the net asset value per Participating Preference Share is based on the following: 30 June 2024 30 June 2023 Net assets $753,446,000 $796,734,000 Participating Preference Shares in issue 74,646,287 91,100,066 Net Asset Value per Participating Preference Share $10.09 $8.75 17. Financial Instruments Management of risk The Company’s investing activities in pursuit of its investment objective involve certain inherent risks. The Board conﬁrms that there is an ongoing process for identifying, evaluating and managing the risks faced by the Company. The Board with the assistance of the Investment Manager, has developed a risk matrix which, as part of the internal control process, identiﬁes the risks that the Company faces. Principal risks identiﬁed are investment performance, cybercrime and information security, business continuity & event management, gearing, discount to NAV, unlisted securities, foreign currency exposure, lack of market liquidity, environmental, social and governance (ESG) and key person risks. Other risks identiﬁed are tax and regulatory and operational risks, including those relating to third party service providers covering investment management, marketing and business development, company secretarial, fund administration and operations and support functions. Risks are identiﬁed and graded in this process, together with steps taken in mitigation, and are updated and reviewed on an ongoing basis. Risks identiﬁed are shown in the Strategic Report. This note is incorporated in accordance with IFRS 7: Financial Instruments: Disclosures and refers to the identiﬁcation, measurement and management of risks potentially aﬀecting the value of ﬁnancial instruments. 64 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued The Company’s ﬁnancial instruments may comprise: • Equity shares (listed and unlisted), preference shares, equity linked notes, convertible bonds, rights issues, holdings in investment companies and private placements; • Derivative instruments including CFDs, warrants, futures and options written or purchased on stocks and equity indices and forward currency contracts; and • Cash, liquid resources and short-term receivables and payables that arise from its operations. The risks identiﬁed by IFRS 7 arising from the Company’s ﬁnancial instruments are market price risk (which comprises interest rate risk, foreign currency risk and other price risk), liquidity risk, credit and counterparty risk and derivative instrument risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below. Interest rate risk The Company has the ability to borrow up to 10% of the Company’s NAV in order to increase the amount of capital available for investment. The Company aims to keep its use of an overdraft facility for trading purposes to a minimum only using a facility to enable settlements. It may also hold interest bearing securities and cash. The Company ﬁnances its operations through its share capital and reserves. In addition, the Company has gearing through the use of derivative instruments. The Board imposes limits to ensure gearing levels are appropriate. The Company is exposed to a ﬁnancial risk arising as a result of any increases in interest rates associated with the funding of the derivative instruments. Interest rate risk exposure The values of the Company’s ﬁnancial instruments that are exposed to movements in interest rates are shown below: 30 June 2024 $’000 30 June 2023 $’000 Exposure to ﬁnancial instruments that bear interest Long CFDs – exposure less fair value 361,607 317,335 361,607 317,335 Exposure to ﬁnancial instruments that earn interest Short CFDs – exposure plus fair value 177,644 205,804 Debt Instrument 316 – Amounts held at futures clearing houses and brokers 44,952 18,210 Cash and cash equivalents 8,794 18,057 231,706 242,071 Net exposure to ﬁnancial instruments that bear interest (129,901) (75,264) Interest rate risk sensitivity analysis Based on the ﬁnancial instruments held and interest rates at the statement of ﬁnancial position date, an increase of 1% in interest rates throughout the year, with all other variables held constant, would have decreased the proﬁt after taxation for the year and decreased the net assets of the Company by $1,299,000 (2023: increased the loss after taxation for the year and decreased the net assets of the Company by $753,000). A decrease of 1% in interest rates throughout the year would have had an equal but oppositeeﬀect. Foreign currency risk The Company invests in ﬁnancial instruments and enters into transactions denominated in currencies other than its functional currency. Consequently, the Company is exposed to risks that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse eﬀect on the value of that portion of the Company’s assets or liabilities denominated in currencies other than US dollars (functional currency) or UK Sterling (the currency in which shares are traded on the London StockExchange). 65 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 17. Financial Instruments continued Three principal areas have been identiﬁed where foreign currency risk could impact the Company: • movements in currency exchange rates aﬀecting the value of investments and derivatives exposures; • movements in currency exchange rates aﬀecting short-term timing diﬀerences, for example, between the date when an investment is bought or sold and the date when settlement of the transaction occurs; and • movements in currency exchange rates aﬀecting income received. Currency exposure of ﬁnancial assets The Company’s ﬁnancial assets comprise of investments, positions on derivative instruments, short-term debtors and cash and cashequivalents. Currency exposure of ﬁnancial liabilities The Company ﬁnances its investment activities through its ordinary share capital and reserves. The Company’s ﬁnancial liabilities comprise positions on derivative instruments and other payables. The net currency exposure proﬁle of these ﬁnancial assets/(liabilities) is shown below: Currency Investments held at fair value through proﬁt or loss $’000 Asset/ (liabilities) exposure of derivative instruments 1 $’000 Cash, cash equivalents and other receivables/ (payables) 2 $’000 2024 Total foreign currency risk $’000 Australian dollar 3,594 (4,012) (35) (453) Brazilian real 44,315 – (275) 44,040 Canadian dollar 25,805 9,545 (17) 35,333 Euro 16,125 21,793 (28) 37,890 Hong Kong dollar 40,623 108,530 (1,395) 147,758 Hungarian Forint 10,536 – – 10,536 Indian rupee 77,447 (17,942) 25,903 85,408 Indonesian rupiah 28,009 – – 28,009 Japanese Yen – (25,855) (97) (25,952) Korean won 20,102 (7,027) 1,325 14,400 Mexican peso 33,824 23,248 (49) 57,023 Other currencies 38,148 (374) (36) 37,738 Poland złoty 13,899 (16,346) (351) (2,798) Saudi riyal 36,888 – 385 37,273 South African Rand 85,394 2,518 (9) 87,903 Sterling 4,465 16,082 (985) 19,562 Swedish Krona – 8,450 (12) 8,438 Taiwan dollar 115,039 – 395 115,434 United Arab Emirates Dirham 16,671 – – 16,671 United States dollar 65,389 (29,581) 18,432 54,240 Vietnamese dong 20,480 – – 20,480 696,753 89,029 43,151 828,933 1 The asset exposure of long and short derivative positions is after the netting of hedging exposures; 2 Other receivables/(payables) include amounts held at futures clearing houses and brokers. 66 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued Currency Investments held at fair value through proﬁt or loss $’000 Asset/ (liabilities) exposure of derivative instruments 1 $’000 Cash, cash equivalents and other receivables/ (payables) 2 $’000 2023 Total foreign currency risk $’000 Brazilian real 70,992 263 (74) 71,181 Canadian dollar 23,451 19,717 15 43,183 Chinese yuan renminbi 6,364 – 30 6,394 Euro 35,411 3,570 5 38,986 Hong Kong dollar 77,538 53,348 1,265 132,151 Indian rupee 93,561 – 136 93,697 Indonesian rupiah 36,602 – – 36,602 Korean won 9,563 (604) 36 8,995 Mexican peso 34,214 18,890 (65) 53,039 Nigerian naira 9,356 – 1,319 10,675 Poland zloty 12,087 (7,503) 21 4,605 South African rand 80,608 (4,512) (237) 75,859 UK Sterling 20,784 9,044 (27) 29,801 Swedish Krona 10,837 – – 10,837 Taiwan dollar 107,225 – 1,835 109,060 United Arab Emirates dirham 4,124 – – 4,124 United States dollar 92,384 (90,177) 17,175 19,382 Vietnamese dong 15,131 – 68 15,199 Other currencies 38,376 (15,959) 3 22,420 778,608 (13,923) 21,505 786,190 1 The asset exposure of long and short derivative positions is after the netting of hedging exposures; 2 Other receivables/(payables) include amounts held at futures clearing houses and brokers. Foreign currency risk management The degree of sensitivity of the Company’s assets to foreign currency risk depends on the net exposure of the Company to each speciﬁc currency and the volatility of that speciﬁc currency in the year. At 30 June 2024, had the average exchange rate of the US dollar weakened by a reasonable possible movement of 5% (2023: 5%) in relation to the basket of currencies in which the Company’s net assets are denominated, weighted by the Company’s exposure to each currency with all other variables held constant, the Company estimates the proﬁt after taxation for the year would have increased and net assets would have increased by $38,735,000 (2023: increased the proﬁt after taxation for the year and increased the net assets of the Company by $38,340,000). An increase in the US dollar by 5% in relation to the basket of currencies in which the Company’s net assets are denominated would have resulted in a decline in net assets by the same amount, under the assumption that all other factors remain constant. The Investment Manager does not consider it realistic or useful to examine foreign currency risk in isolation. The Investment Manager considers the standard deviation of the NAV (which is struck in US dollars) as the appropriate risk measurement for the portfolio as a whole as it reﬂects market price risk generally. Please see Market Price Risk section. Market price risk Market price risk is the risk that value of the instrument will experience unanticipated ﬂuctuations as a result of changes in market prices (other than those arising from foreign currency risk and interest rate risk), whether caused by factors speciﬁc to an individual investment, its issuer, or all factors inﬂuencing all instruments traded in the market. 67 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 17. Financial Instruments continued Market price risk management Market price risk can be moderated in a number of ways by the Investment Manager through: (i) a disciplined stock selection and investment process; and (ii) limitation of exposure to a single investment through diversiﬁcation and through amongst others, the implementation of investmentrestrictions. The Board reviews the prices of the portfolio’s holdings and investment performance at their meetings. Country and Sector Exposure of the Portfolio and Forty Largest Holdings illustrate the Company’s portfolio at the end of reporting year reﬂects the diversiﬁedstrategy The Investment Manager has identiﬁed the MSCI Emerging Markets Index as a relevant reference point for the markets in which it operates. However, the Investment Manager does not manage the Company’s investment strategy to track the MSCI Emerging Markets Index or any other index or benchmark. The short-term performance of the Company and its correlation to the MSCI Emerging Markets Index is shown in the Financial Highlights section and is expected to change over time. Market price risk – Investee Funds The Company’s investments in Investee Funds are subject to the terms and conditions of the respective Investee Fund’s oﬀering documentation and are susceptible to market price risk arising from uncertainties about future values of those Investee Funds. The Investment Manager makes investment decisions after extensive due diligence of the underlying fund, its strategy and the overall quality of the underlying fund’s manager. All of the Investee Funds in the investment portfolio are managed by portfolio managers who are compensated by the respective Investee Funds for their services. Such compensation generally consists of an asset based fee and a performance based incentive fee and is reﬂected in the valuation of the Company’s investment in each of the Investee Funds. The exposure to investments in Investee Funds at fair value is disclosed as part of Note below. These investments are included in ‘Financial assets at fair value through proﬁt or loss’ in the Statement of Financial Position. The Company’s maximum exposure to loss from its interests in Investee Funds is equal to the total fair value of its investments in Investee Funds. There were no purchases of Investee Funds during the year ended 30 June 2024 (2023: $3,846,000). Total sales amounted to $1,310,000 (2023: $4,045,000). As at 30 June 2024 and 2023 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Other price risk Other price risk arises mainly from uncertainty about future prices of ﬁnancial instruments. It represents the potential loss the Company might suﬀer through price movements in its investment positions. The Board meets quarterly to consider the asset allocation of the portfolio and the risk associated with particular industry sectors within the parameters of the investment objective. The Investment Manager is responsible for actively monitoring the portfolio selected in accordance with the overall asset allocation parameters and seeks to ensure that individual stocks also meet an acceptable risk/reward proﬁle. Other price risks arising from derivative positions, mainly due to the underlying exposures, are assessed by the Investment Manager’s specialist derivative instruments team. Other price risk sensitivity The following table illustrates the sensitivity of loss after taxation for the year and net assets to an increase or decrease of 10% (year ended 30 June 2023: 10%) in the fair value of investments. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on investments with all other variables held constant. The other price sensitivity analysis is based on the valuation of investments directly held by the Company. For underlying investment funds this is based on the net assets of such underlying funds as included in the Company’s portfolio of investments at reporting date. The value of certain investments, in particular positions held in underlying funds may vary due to currency, interest rate and credit risks and such risks are not directly considered in the other price risk sensitivity analysis. 68 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued Eﬀect of a 10% increase/(decrease) in fair value: 2024 2023 10% increase in fair value $’000 10% decrease in fair value $’000 10% increase in fair value $’000 10% decrease in fair value $’000 Statement of Comprehensive Income – proﬁt/(loss) after taxation Total proﬁt/(loss) after taxation for the year 69,644 (69,644) 77,861 (77,861) Net assets 69,644 (69,644) 77,861 (77,861) Liquidity risk Liquidity risk is the risk that the Company will encounter diﬃculties in meeting obligations associated with ﬁnancial liabilities. The Company’s assets mainly comprise readily realisable securities and derivative instruments which can be sold easily to meet funding commitments if necessary. Short-term ﬂexibility is achieved by the use of a bank overdraft, if required. The liquidity risk proﬁle of the Company was as follows: 30 June 2024 $’000 30 June 2023 $’000 Amounts due within one month Securities purchased pending settlement 12,613 16,050 Repurchases of the Company’s own shares awaiting settlement 1,941 – Amounts payable on settlement of derivatives 1,182 2,762 Derivative liabilities 8,377 12,847 CFD interest payable 431 473 CFD dividend payable 616 261 Custodian fees 102 89 Management fees 335 391 Directors’ fees 65 45 Accrued expenses 355 256 Amounts due within one year Derivative liabilities 3,480 – Capital gains tax payable 1,038 915 Total liabilities 30,535 34,089 Liquidity risk management The restrictions on concentration and the diversiﬁcation requirements detailed above (see market price risk) also serve normally to protect the overall value of the Company from the risks created by the lower level of liquidity in the markets in which the Companyoperates. The Company has no payables past their due dates as at 30 June 2024 (2023: nil). Credit and counterparty risk Credit risk is the risk that a counterparty to a ﬁnancial instrument will fail to discharge an obligation or commitment it has entered into with the Company. Financial instruments may be adversely aﬀected if any of the institutions with which money is deposited suﬀer insolvency or other ﬁnancial diﬃculties. All transactions are carried out with brokers that have been approved by the Investment Manager and are settled on a delivery versus payment basis. Limits are set on the amount that may be due from any one broker and are kept under review by the Investment Manager. Exposure to credit risk arises on outstanding security transactions and derivative instrument contracts and cash at bank. The Company only engages with approved counterparties that are rated investment grade orabove. The Company has no receivables past their due dates as at 30 June 2024 (2023: nil). 69 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 17. Financial Instruments continued Credit risk management Certain derivative instruments in which the Company may invest are not traded on an exchange but instead will be traded between counterparties based on contractual relationships, under the terms outlined in the International Swaps and Derivatives Association’s (“ISDA”) market standard derivative legal documentation. These are known as Over The Counter (“OTC”) trades. As a result, the Company is subject to the risk that a counterparty may not perform its obligations under the related contract. In accordance with the risk management process which the Investment Manager employs, this risk is minimised by only entering into transactions with counterparties which are believed to have an adequate credit rating at the time the transaction is entered into, by ensuring that formal legal agreements covering the terms of the contract are entered into in advance, and through adopting a counterparty risk framework which measures, monitors and manages counterparty risk by the use of internal and external credit agency ratings and evaluates derivative instrument credit risk exposure. The maximum exposure to credit risk at 30 June is the carrying amount of the ﬁnancial assets as set out below. 30 June 2024 Amounts due within 1 year $’000 30 June 2023 Amounts due within 1 year $’000 Derivative assets 25,399 9,468 Debt instruments 316 – Securities sold pending settlement 2,170 789 Amounts receivable on settlement of derivatives 3,054 – Amounts held at futures clearing houses and brokers 44,952 18,210 Cash and cash equivalents 8,794 18,057 CFD dividend receivable 1,661 827 Accrued income 1,182 4,834 Other receivables 16 30 87,544 52,215 None of these assets are impaired nor past due but not impaired. For OTC and exchange traded derivative transactions, collateral is used to reduce the risk of both parties to the contract. Collateral is managed on a daily basis for all relevant transactions and held in segregated collateral accounts. Collateral can be held by brokers on behalf of the Company to reduce the credit risk exposure of the Company or held by the Company on behalf of brokers to reduce the credit risk exposure of the brokers. All collateral received or pledged at reporting date is in form of cash. The value of collateral received from brokers and pledged to brokers is shown below: 30 June 2024 30 June 2023 collateral received $’000 collateral pledged $’000 collateral received $’000 collateral pledged $’000 Bank of America Merrill Lynch International – – – 250 Goldman Sachs International Ltd 6,440 – – 3,430 J.P. Morgan Securities plc 5,290 – 1,180 – Morgan Stanley & Co. International Ltd – 530 110 – HSBC Bank plc 790 – – 1,800 UBS AG 2,300 44,422 – 12,730 70 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued Derivative instrument risk The risks and risk management processes which result from the use of derivative instruments, are set out in the Risk Management Process document. This document was approved by the Board and allows the use of derivative instruments for the following purposes: • to gain exposure to equity markets, sectors or individual investments; • to hedge equity market risk in the Company’s investments with the intention of mitigating losses in the events market falls; • to enhance portfolio returns by writing call and put options; and • to take short positions in equity markets, sectors or individual investments which would beneﬁt from a fall in the relevant market price, where the Investment Manager believes the investment is overvalued. These positions distinguish themselves from other short exposures held for hedging purposes since they are expected to add risk to the portfolio. The risk and investment performance of these instruments are managed by an experienced, specialist derivative team of the Investment Manager using portfolio risk assessment tools for portfolio construction. Derivative instruments exposure sensitivity analysis The Company invests in derivative instruments to gain or reduce exposure to the equity market. An increase of 10% in the share prices of the investments underlying the derivative instruments at the reporting date would have increased the proﬁt after taxation for the year and increased the net assets of the Company by $8,903,000 (2023: increased the proﬁt after taxation for the year and increased the net assets of the Company by $1,392,000). A decrease of 10% in share prices of the investments underlying the derivative instruments would have had an equal but opposite eﬀect. Oﬀsetting To mitigate counterparty risk for OTC derivative transactions, the ISDA legal documentation is in the form of a master agreement between the Company and the brokers. This allows enforceable netting arrangements in the event of a default or termination event. Derivative instrument assets and liabilities that are subject to netting arrangements have not been oﬀset in preparing the Statement of Financial Position. The Company’s derivative instrument ﬁnancial assets and liabilities recognised in the Statement of Financial Position and amounts that could be subject to netting in the event of a default or termination are shown below: Financial assets Gross amount $’000 Gross amount of recognised ﬁnancial liabilities set oﬀ on the statement of ﬁnancial position $’000 Net amount of ﬁnancial assets presented on the statement of ﬁnancial position $’000 Related amounts not set oﬀ on statement of ﬁnancial position 2024 Financial instruments $’000 Margin account received as collateral $’000 Net amount $’000 CFDs 18,344 – 18,344 (6,763) (9,169) 2,412 Options 6,423 – 6,423 (1,209) – 5,214 Futures 268 – 268 (268) – – Forward currency contracts 11,801 (11,437) 364 – – 364 36,836 (11,437) 25,399 (8,240) (9,169) 7,990 71 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS Notes to the Financial Statements continued FINANCIAL 17. Financial Instruments continued Financial liabilities Gross amount $’000 Gross amount of recognised ﬁnancial assets set oﬀ on the statement of ﬁnancial position $’000 Net amount of ﬁnancial liabilities presented on the statement of ﬁnancial position $’000 Related amounts not set oﬀ on statement of ﬁnancial position 2024 Financial instruments $’000 Margin account pledged as collateral $’000 Net amount $’000 CFDs (6,763) – (6,763) 6,763 – – Options (3,205) – (3,205) 1,209 – (1,996) Futures (1,889) – (1,889) 268 1,621 – Forward currency contracts (11,437) 11,437 – – – – (23,294) 11,437 (11,857) 8,240 1,621 (1,996) Financial assets Gross amount $’000 Gross amount of recognised ﬁnancial liabilities set oﬀ on the statement of ﬁnancial position $’000 Net amount of ﬁnancial assets presented on the statement of ﬁnancial position $’000 Related amounts not set oﬀ on statement of ﬁnancial position 2023 Financial instruments $’000 Margin account received as collateral $’000 Net amount $’000 CFDs 8,365 – 8,365 (6,055) (1,290) 1,020 Options 254 – 254 (254) – – Futures 849 – 849 – – 849 9,468 – 9,468 (6,309) (1,290) 1,869 Financial liabilities Gross amount $’000 Gross amount of recognised ﬁnancial assets set oﬀ on the statement of ﬁnancial position $’000 Net amount of ﬁnancial liabilities presented on the statement of ﬁnancial position $’000 Related amounts not set oﬀ on statement of ﬁnancial position 2023 Financial instruments $’000 Margin account pledged as collateral $’000 Net amount $’000 CFDs (10,906) – (10,906) 6,055 4,235 (616) Options (1,941) – (1,941) 254 1,687 – (12,847) – (12,847) 6,309 5,922 (616) 72 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued 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 valuation techniques used by the Company are explained in Note 2(b). The table below sets out the Company’s fair value hierarchy Financial assets at fair value through proﬁt or loss Level 1 $’000 Level 2 $’000 Level 3 $’000 30 June 2024 Total $’000 Investments in equity securities 686,519 – 506 687,025 Equity linked notes – 4,555 – 4,555 Debt instruments – 316 – 316 Investee funds – – 4,857 4,857 Derivative instrument assets – futures contracts 268 – – 268 Derivative instrument assets – options 6,412 11 – 6,423 Derivative instrument assets – CFDs – 18,344 – 18,344 Derivative instrument assets – forward currency contracts – 364 – 364 693,199 23,590 5,363 722,152 Financial liabilities at fair value through proﬁt or loss Derivative instrument liabilities – futures contracts 1,889 – – 1,889 Derivative instrument liabilities – options 1,198 2,007 – 3,205 Derivative instrument liabilities – CFDs – 6,763 – 6,763 3,087 8,770 – 11,857 73 Annual Report 2024 | Fidelity Emerging Markets Limited Notes to the Financial Statements continued STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL 17. Financial Instruments continued Financial instruments classiﬁed under Level 2 are valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. The Level 2 instruments include underlying investment funds, equity linked notes, over the counter option contracts and contracts for diﬀerence. Financial assets at fair value through proﬁt or loss Level 1 $’000 Level 2 $’000 Level 3 $’000 30 June 2023 Total $’000 Investments in equity securities 751,117 – 1,009 752,126 Equity linked notes – 17,433 – 17,433 Investee funds – 3,943 5,106 9,049 Derivative instrument assets – futures contracts 849 – – 849 Derivative instrument assets – options 13 241 – 254 Derivative instrument assets – CFDs – 8,365 – 8,365 751,979 29,982 6,115 788,076 Financial liabilities at fair value through proﬁt or loss Derivative instrument liabilities – options 1,516 425 – 1,941 Derivative instrument liabilities – CFDs – 10,906 – 10,906 1,516 11,331 – 12,847 Valuation basis for Level 3 investments 30 June 2024 $’000 30 June 2023 $’000 Net asset value 4,857 5,106 Most recently available published price adjusted 506 1,009 5,363 6,115 As the key input into the valuation of Level 3 investments is oﬃcial valuation statements from the investee funds and the adjusted most recently available published price, we do not consider it appropriate to put forward a sensitivity analysis on the basis that insuﬃcient value is likely to be derived by the end users. The following table summarises the change in value associated with Level 3 ﬁnancial instruments carried at fair value during the year: Movements in level 3 investments during the year 30 June 2024 Level 3 $’000 30 June 2023 Level 3 $’000 Opening balance 6,115 5,809 Sales (8,384) (4,045) Transfers into level 3 – 1,009 Realised (losses)/gains (19,431) 3,112 Net change in unrealised gains/(losses) 27,063 230 Closing balance 5,363 6,115 During the year the Company participated in a tender oﬀer which was being undertaken in Detsky Mir’s restructuring from being a public listed company to a private company. The Company’s application was successful and it received proceeds of RUB 300.5 million, (approx. $3.1 million based on exchange rates at that time). During the year, the Company sold its position in TCS Group Holding Plc by means of a secondary market transaction. The Manager granted the attestations required to ensure the proceeds from the sale were available to the Company and it received proceeds of $4 million. 74 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 17. Financial Instruments continued The Company’s holdings in Russian securities have been fair valued at nil as at 30 June 2024 (2023 : nil) as a result of trading being suspended on international stock exchanges. These Russian securities have a carrying cost of $90,932,976 as at 30June 2024 (2023:$99,959,944). The Company’s policy is to recognise transfers in and transfers out at the end of each accounting year. Capital Risk Management The capital of the Company is represented by the equity attributable to holders of Participating Preference Shares. The amount of equity attributable to holders of Participating Preference Shares is subject to change, at most, twice monthly as the Company is a closed-ended fund with the ability to issue additional shares only if certain conditions are met as set out in the Company’s scheme particulars. The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain a strong capital base to support the development of the investment activities of the Company. 18. Capital Resources and Gearing The Company does not have any externally imposed capital requirements. The ﬁnancial resources of the Company comprise its share capital, reserves and gearing, which are disclosed on the Statement of Financial Position. The Company is managed in accordance with its investment policy and in pursuit of its investment objective, both of which are detailed in the Strategic Report. The principal risks and their management are disclosed in the Strategic Report and in Note 17. The Company’s gearing at the year end is set out below: 30 June 2024 Gross gearing Net gearing Exposure $’000 % 1 Exposure $’000 % 1 Investments 696,753 92.5 696,753 92.5 Long CFDs 366,358 48.6 366,358 48.6 Long futures 22,348 3.0 22,348 3.0 Long put options 10,698 1.4 10,698 1.4 Long call options 49,080 6.5 49,080 6.5 Total long exposures before hedges 1,145,237 152.0 1,145,237 152.0 Less: short derivative instruments hedging the above (148,757) (19.7) (148,757) (19.7) Less: short call covered options for hedging purposes (15,110) (2.0) (15,110) (2.0) Total long exposures after the netting of hedges 981,370 130.3 981,370 130.3 Short CFDs 170,814 22.7 (170,814) (22.7) Short futures 22,831 3.0 (22,831) (3.0) Short put options 2,269 0.3 (2,269) (0.3) Short call options 37 – (37) – Gross Asset Exposure/net exposure 1,177,321 156.3 785,419 104.3 Net Assets 753,446 753,446 Gearing 2 56.3% 4.3% 75 Annual Report 2024 | Fidelity Emerging Markets Limited Notes to the Financial Statements continued STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL 18. Capital Resources and Gearing continued 30 June 2023 Gross gearing Net gearing Exposure $’000 % 1 Exposure $’000 % 1 Investments 778,608 97.7 778,608 97.7 Long CFDs 312,737 39.2 312,737 39.2 Short put options 10,789 1.4 10,789 1.4 Long call options 2,879 0.4 2,879 0.4 Total long exposures before hedges 1,105,013 138.7 1,105,013 138.7 Less: short derivative instruments hedging the above (130,176) (16.3) (130,176) (16.3) Total long exposures after the netting of hedges 974,837 122.4 974,837 122.4 Short CFDs 203,746 25.5 (203,746) (25.5) Short call options 6,406 0.8 (6,406) (0.8) Gross Asset Exposure/net exposure 1,184,989 148.7 764,685 96.1 Net Assets 796,734 796,734 Gearing 2 48.7% (3.90)% 1 Exposure to the market expressed as a percentage of Net Assets. 2 Gearing is the amount by which Gross Asset Exposure/net exposure exceeds Net Assets expressed as a percentage of Net Assets. 19. Transactions with the Managers and Related Parties FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International. Both companies are Fidelity group companies. Details of the current fee arrangements are given in Note 4. During the year, management fees of $4,676,000 (2023:$4,613,000) were payable to the Manager. During the year, marketing fees of $269,000 (2023: $176,000) were payable to the Manager. At the year-end date the Company had a balance of management fees outstanding, full details are disclosed in Note 13. Additionally, the Company had a balance of marketing fees outstanding of $57,000 (2023: $39,000). This balance forms part of the other payables ﬁgure in Note13. At the date of this report, the Board consisted of ﬁve non-executive Directors (as shown on pages 28 and 29) all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company The Directors received for the ﬁnancial year fees totalling £205,829, (2023: £156,604), the breakdown of the fees is shown in the Directors’ Remuneration Report on page36. From 1 July 2024, the Chairman receives an annual fee of £52,000 (2023: £50,000), the Chairman of the Audit Committee and Senior Independent Director receive £39,500 (2023: £38,000) and the other Directors receive an annual fee of £37,500 (2023: £36,000). The following members of the Board hold Participating Preference Shares in the Company at the date of this report: Heather Manners 10,000 shares, Torsten Koster 15,000 shares, Dr Simon Colson 4,416 shares, Katherine Tsang nil shares and Mark Little nil shares. Directors’ expenses for the year include travelling, hotel and other expenses which the Directors are entitled to when properly incurred by them in travelling to, attending and returning from meetings and while on other business of the Company. Directors’ related party interests are stated on page 36 as part of the Directors’ Remuneration Report. *Appointed 17 January 2024 76 Fidelity Emerging Markets Limited | Annual Report 2024 Notes to the Financial Statements continued 20. Ultimate Controlling Party In the opinion of the Directors on the basis of the shareholdings advised to them, the Company has no immediate or ultimate controlling party. 21. Segment Information The Directors, after having considered the way in which internal reporting is provided to them, are of the opinion that the Company continues to be engaged in a single segment of business, being the provision of a diversiﬁed portfolio of investments in emerging markets. All of the Company’s activities are interrelated, and each activity is dependant on the others. Accordingly, all signiﬁcant operating decisions are based upon analysis of the Company operating in one segment. The ﬁnancial positions and results from this segment are equivalent to those per the ﬁnancial statements of the Company as a whole, as internal reports are prepared on a consistent basis in accordance with the measurement and recognition principles of IFRS. A breakdown of the Company’s ﬁnancial assets at fair value through proﬁt and loss is shown in the Country exposure of the Company’s portfolio on pages 16 to 18. The Company is domiciled in Guernsey. All of the Company’s income from investment is from entities in countries or jurisdictions other than Guernsey. 22. Subsequent events No signiﬁcant events have occurred since the end of the reporting date which would impact on the ﬁnancial position of the Company disclosed in the Statement of Financial Position as at 30 June 2024 or on the ﬁnancial performance and cash ﬂows of the Company for the year ended on that date. 77 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL Active Share Active Share is a measure of the percentage which stock holdings in the Company diﬀer from the constituents of the benchmark, the MSCI Emerging Markets Index. Active share is calculated by taking the sum of the absolute diﬀerence between the weights of the holdings in the Company and those in the MSCI Emerging Markets Index and dividing the result by two. See The Year at a Glance inside the front cover of this report for further details. Discount/Premium The discount/premium is considered to be an Alternative Performance Measure. It is the diﬀerence between the NAV of the Company and the share price and is expressed as a percentage of the NAV. Details of the Company’s discount are on the Financial Highlightspage. Gearing Gearing is considered to be an Alternative Performance Measure. See Note 18 on page 74 for details of the Company’sgearing. Net Asset Value (“NAV”) per Participating Preference Share The NAV per Participating Preference Share is considered to be an Alternative Performance Measure. See the Statement of Financial Position on page 47 and Note 16 on page 63 for further details. Ongoing charges ratio Ongoing charges ratio is considered to be an Alternative Performance Measure. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of management fees and other expenses expressed as a percentage of the average net assets throughout the year. 30 June 2024 30 June 2023 Management fees ($’000) 4,676 4,613 Other expenses ($’000) 1 1,631 1,619 Ongoing charges ($’000) 6,307 6,232 Average net assets ($’000) 782,365 768,785 Ongoing charges ratio 0.81% 0.81% Alternative Performance Measures 78 Fidelity Emerging Markets Limited | Annual Report 2024 Alternative Performance Measures continued Total Return Performance Total return performance is considered to be an Alternative Performance Measure (as deﬁned in the Glossary to the Annual Report on pages 86 to 88). NAV per share total return includes reinvestment of the dividend in the NAV of the Company on the ex-dividend date. Share price total return includes the reinvestment of the net dividend in the month that the share price goes ex-dividend. The tables below provide information relating to the NAV per share and share prices of the Company, the impact of the dividend reinvestments and the total returns for the years ended 30 June 2024 and 30 June 2023. 2024 Net asset value per share Share price 30 June 2023 687.91p 587.50p 30 June 2024 798.47p 703.00p Change in the year +16.1% +19.7% Impact of dividend reinvestment +2.6% +2.9% Total return for the year +18.7% +22.6% 2023 Net asset value per share Share price 30 June 2022 720.13p 633.70p 30 June 2023 687.91p 587.50p Change in the year -4.5% -7.3% Impact of dividend reinvestment +1.9% +2.1% Total return for the year -2.6% -5.2% 79 Annual Report 2024 | Fidelity Emerging Markets Limited Securities Financing Transactions Regulation (“SFTR”) Securities Financing Transactions (Unaudited) The Company engages in Securities Financing Transactions (SFT) (as deﬁned in Article 3 of Regulation (EU) 2015/2365, securities ﬁnancing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buysell back transactions or sell-buy back transactions and margin lending transactions). In accordance with Article 13 of the Regulation, the Company’s involvement in and exposures related to SFT for the accounting year ended 30 June 2024 are detailed below. Global Data Amount of securities on loan During the year ended 30 June 2024, the Company was not engaged in securities lending. The total value of securities on loan as a proportion of the Company’s total lendable assets, as at the statement of ﬁnancial position date, is nil. Amount of assets engaged in CFDs The following disclosures relate to CFDs held by the Company which may be considered Total Return Swaps under the SFTR. As at 30 June 2024, all CFDs were contracted bilaterally with open maturities: Broker Fair Value $’000 Percentage of Net Assets Collateral held by the broker $’000 Collateral held by the Company $’000 Goldman Sachs International (UK) 1,420 0.19% 6,440 – HSBC Bank plc (UK) 1,154 0.15% 790 – J.P. Morgan Securities plc (UK) 6,768 0.90% 5,290 – Morgan Stanley & Co International (UK) 570 0.08% – 530 UBS AG (UK) 1,669 0.22% 2,300 – Collateral held by the broker was denominated in US dollars and held in a segregated account on behalf of the Company with a maturity of one day. Settlement and clearing OTC derivative transactions are entered into by the Fund under an International Swaps and Derivatives Associations, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement. An ISDA Master Agreement is a bilateral agreement between the Company and a counterparty that governs OTC derivative transactions (including CFDs) entered into by the parties. All OTC derivative transactions entered under an ISDA Master agreement are netted together for collateral purposes. Share of collateral received that is reused and reinvestment return Collateral received for CFD positions is kept in segregated accounts with the brokers and is not reinvested by the Company. There are no returns from reinvestment of collateral received. Return and cost All returns from CFDs are earned by the Company. Information about returns and costs related to CFDs is disclosed in Note 3 Income, Note 6 Finance Costs and Note 11 Derivative Instruments. STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL 80 Fidelity Emerging Markets Limited | Annual Report 2024 Notice of Annual General Meeting NOTICE is hereby given that the thirty-fourth Annual General Meeting of Fidelity Emerging Markets Limited (the “Company”) will be held at the registered oﬃce of the Company, Level 3, Mill Court La Charroterie, St Peter Port, Guernsey GY1 1EJ, on Tuesday, 10December 2024 at 11 a.m. to consider and if thought ﬁt, to pass the following resolutions which will be proposed as ordinary resolutions and special resolutions as set out below: ORDINARY RESOLUTIONS To be proposed as ordinary resolutions: 1. To receive the Report of the Directors and audited Financial Statements for the year ended 30 June 2024. 2. To approve the Directors’ Remuneration Report for the year ended 30 June 2024. 3. To re-appoint KPMG Channel Islands Limited as Independent Auditor to the Company. 4. To authorise the Directors to agree the remuneration of the Independent Auditor. 5. To declare a ﬁnal dividend of $0.20 per share designated as a Participating Redeemable Preference Share (the “Participating Preference Shares”) to be paid in respect of the ﬁnancial year ended 30 June 2024. 6. To re-elect Ms Heather Manners as a Director of the Company. 7. To re-elect Dr Simon Colson as a Director of the Company. 8. To re-elect Mr Torsten Koster as a Director of the Company. 9. To elect Mr Mark Little as a Director of the Company. 10. To re-elect Ms Katherine Tsang as a Director of the Company. 11. THAT the Directors be generally and unconditionally authorised to allot and issue, grant rights to subscribe for, or to convert securities into, up to 23,958,326 Participating Preference Shares (being 33.33 per cent. of the Company’s shares of each class in issue as at the latest practicable date prior to the date of publication of this document (excluding shares held in treasury)) for the period expiring on the date falling ﬁfteen months after the date of passing of this Resolution 13 or the conclusion of the next annual general meeting of the Company, whichever is the earlier, save that the Company may before such expiry make an oﬀer or agreement which would or might require shares to be allotted and issued after such expiry and the Directors may allot and issue shares in pursuance of such an oﬀer or agreement as if the authority had not expired. SPECIAL RESOLUTIONS To be proposed as special resolutions: 12. THAT, In substitution for the Company’s existing authority to make market purchases of Participating Preference Shares, the Company is authorised to make market purchases of Participating Preference Shares, PROVIDED THAT: (a) the maximum number of Participating Preference Shares that may be purchased shall be 10,755,137 being 14.99% of the issued number of Participating Preference Shares at the date of this document or, if lower, such number as is equal to 14.99% of the issued number of Participating Preference Shares at the date of passing the resolution; (b) the maximum price which may be paid for a Participating Preference Share is an amount equal to 105% of the average of the middle market quotations for a Participating Preference Share taken from the London Stock Exchange Daily Oﬃcial List for the ﬁve business days immediately preceding the day on which the Participating Preference Share is purchased; (c) the authority hereby conferred shall expire at the conclusion of the last Annual General Meeting of the Company unless such authority is renewed prior to such time; and (d) the Company may make a contract to purchase Participating Preference Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Participating Preference Shares pursuant to any suchcontract. 13. THAT, in accordance with Article 9(4) of the articles of incorporation of the Company (the “Articles”), the Directors be empowered to allot and issue (or sell from treasury) 7,188,217Participating Preference Shares (being 10 per cent. of the such Shares in issue of each class as at the latest practicable date prior to the date of this notice (excluding shares held in treasury)) for cash as if Article 9.4 of the Articles did not apply to the allotment and issue (or sale from treasury) for the period expiring on the date falling ﬁfteen months after the date of passing of this Resolution 13 or the conclusion of the next annual general meeting of the Company, whichever is the earlier, save that the Company may before such expiry make oﬀers or agreements which would or might require shares to be allotted and issued (or sold) after such expiry and the Directors may allot and issue (or sell) shares in pursuance of any such oﬀer or agreement notwithstanding that the power conferred by this Resolution 13 has expired. 81 Annual Report 2024 | Fidelity Emerging Markets Limited Notes to the Notice of Meeting 1. A member of the Company who is entitled to attend the AGM is entitled to appoint one or more proxies to attend speak and vote in his or her place. A proxy does not need to be a member of the Company but must attend the meeting to represent you. Details of how to appoint the Chairman of the meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. A member may appoint more than one proxy to attend the meeting provided that each proxy is appointed to exercise rights attached to diﬀerent shares. 2. To allow eﬀective constitution of the AGM, if it is apparent to the Chairman that no members of the Company will be present in person or by proxy, other than by proxy in the Chairman’s favour, the Chairman may appoint a substitute to act as proxy in his stead for any member, provided that such substitute proxy shall vote on the same basis as the Chairman. 3. A form of proxy is enclosed which should be completed in accordance with the instructions. To be valid, the form of proxy (together with the power of attorney or other authority (if any) under which it is signed or a notarially certiﬁed copy of such authority) must be deposited with the Company’s Registrar Computershare Investor Services (Guernsey) Limited, c/o the Pavilions, Bridgwater Road, Bristol BS99 6ZY by not less than 48 hours before the time for holding the meeting or any adjournment thereof at which the person named in the instrument proposes to vote. Completion of the form of proxy will not preclude a member from attending and voting in person, your proxy appointment will automatically beterminated. 4. To change your proxy instructions simply submit a new proxy form using the methods set out above and in the notes to the proxy form. Note that the cut-oﬀ date and time for receipt of a proxy form (see above) also apply in relation to amended instructions; any amended proxy form received after the relevant cut-oﬀ date and time will be disregarded. If you submit more than one valid proxy form, the form received last before the latest time for the receipt of proxies will take precedence. 5. In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to the Company’s Registrar. In the case of a member which is an individual the revocation notice must be under the hand of the appointer or of his attorney duly authorised in writing or in the case of a member which is a company, the revocation notice must be executed under its common seal or under the hand of an oﬃcer of the company or an attorney duly authorised. Any power of attorney or any other authority under which the revocation notice is signed (or a notarially certiﬁed copy of such power or authority) must be included with the revocation notice. 6. The revocation notice must be received by 8:30 a.m. on 6 December 2024. If you attempt to revoke your proxy appointment but the revocation is received after the time speciﬁed then, subject to the paragraph directly below, your proxy appointment will remain valid. 7. The Company gives notice that those Shareholders entered on the register of members of the Company at 8:30 a.m. on 6 December 2024 (or their duly appointed proxies) will be entitled to attend and vote at the aforesaid meeting in respect of the number of shares registered in their name at that time. Changes to the entries on the register after that time will be disregarded in determining the rights of any person to attend or vote at the AGM. Notice of Annual General Meeting continued STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL 82 Fidelity Emerging Markets Limited | Annual Report 2024 Administration Registered Oﬃce Level 3, Mill Court La Charroterie St Peter Port Guernsey GY1 1EJ Website www.ﬁdelity.co.uk/emergingmarkets Alternative Investment Fund Manager (from 4 October 2021) FIL Investment Services (UK) Limited Beech Gate Millﬁeld Lane Lower Kingswood Tadworth Surrey KT20 6RP Investment Manager and Company Secretary FIL Investments International Beech Gate Millﬁeld Lane Lower Kingswood Tadworth Surrey KT20 6RP Custodian JP Morgan Chase Bank 25 Bank Street Canary Wharf London E14 5JP United Kingdom (Authorised and regulated by the United Kingdom’s Financial Conduct Authority) Administrator J.P. Morgan Administration Services (Guernsey) Limited Level 3, Mill Court La Charroterie St Peter Port Guernsey GY1 1EJ (Authorised and regulated by the Guernsey Financial Service Commission) Registrar Computershare Investor Services (Guernsey) Limited C/o 13 Castle Street St. Helier Jersey JE1 1ES Channel Islands Telephone: +44 (0) 370 707 4040 www.investorcentre.co.uk/je Stockbrokers JP Morgan Cazenove 25 Bank Street Canary Wharf London E14 5JP United Kingdom Jeﬀeries International Limited 100 Bishopsgate London EC2N 4JL United Kingdom Independent Auditor KPMG Channel Islands Limited Glategny Court Glategny Esplanade St. Peter Port Guernsey GY1 1WR 83 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL General Data Protection Regulation (“GDPR”) What personal data is collected and how it is used The Company is an investment trust which is a public limited company and has certain regulatory obligations such as the requirement to send documents to its shareholders, for example, the Annual Report and other documents that relate to meetings of the Company. The Company will therefore collect shareholders’ personal data such as names, addresses and identiﬁcation numbers or investor codes and will use this personal data to fulﬁl its statutory obligations. Any personal data collected will be kept securely on computer systems and in some circumstances on paper. Personal information is kept secure in line with Fidelity’s Information Security policies and standards. If you are unhappy with how we have used your personal data, you can complain by contacting the UK Data Protection Oﬃcer at Fidelity International, Beech Gate, Millﬁeld Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. Sharing personal data In order to assist the Company in meeting its statutory requirements, the Company delegates certain duties around the processing of this data to its third party service providers, such as the Company’s Registrar and Printers. The Company has appointed Fidelity to undertake marketing activities for the Company and their privacy statement can be found on the Company’s website at https://investment-trusts.ﬁdelity.co.uk/privacy-policy/ The Company’s agreements with the third party service providers have been updated to be compliant with GDPR requirements. The Company conﬁrms to its shareholders that their data will not be shared with any third party for any other purpose, such as for marketing purposes. In some circumstances, it may be necessary to transfer shareholders’ personal data across national borders to Fidelity Group entities operating in the European Economic Area (“EEA”). Where this does occur, the European standard of protections will be applied to the personal data that is processed. Where personal data is transferred within the Fidelity Group, but outside of the EEA, that data will subsequently receive the same degree of protection as it would in the EEA. Retention Period We will keep the personal data for as long as is necessary for these purposes and no longer than we are legally permitted to doso. Requesting access, making changes to your personal data and other important information Shareholders can access the information that the Company holds about them or ask for it to be corrected or deleted by contacting Fidelity’s UK Data Protection Oﬃcer, Fidelity International, Beech Gate, Millﬁeld Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. Fair treatment of investors The legal and regulatory regime to which the Company and the Directors are subject ensures the fair treatment of investors. The Listing Rules require that the Company treats all Shareholders of the same class of shares equally. In particular, the Directors have certain statutory duties under the Companies (Guernsey) Law, 2008 with which they must comply. These include a duty upon each Director to act in the way she or he considers, in good faith, would be most likely to promote the success of the Company for the beneﬁt of its members as a whole. 84 Fidelity Emerging Markets Limited | Annual Report 2024 In compliance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Board has appointed FIL Investment Services (UK) Limited (“FISL”) as the Company’s Alternative Investment Fund Manager (“AIFM”). FISL has delegated the investment management to FILInvestments International (“FII”) and the company secretarial function. Details of the current Management Agreement can be found in the Strategic Report on pages 20 to 27. The table below discloses information required by the Alternative Investment Fund Managers’ Regulations 2013. Function AIFM Role and Responsibility AIFMD Disclosure Investment management The AIFM provides portfolio management of assets and investment advice in relation to the assets of the Company. It has delegated this function to FILInvestments International (“FII”). The Board remains responsible for setting the investment strategy, investment policy and investment guidelines and the AIFM operates within these guidelines. Details of the Company’s investment objective, strategy and investment policy, including limits, areon pages 20 and 21. Risk management The AIFM has a responsibility for risk management for the Company which is in addition to the Board’s corporate governance responsibility for risk management. The Company has a Risk Management Process Document which is agreed with the Board and demonstrates that risk management is separated functionally and hierarchically from operating units and demonstrates independence safeguards. The Manager maintains adequate risk management systems in order to identify, measure and monitor allrisks at least annually under AIFMD. The Manager is responsible for the implementation of various risk activities such as risk systems, riskproﬁle, risk limits and testing. The Board, as part of UK corporate governance, remains responsible for the identiﬁcation of signiﬁcant risks and for the ongoing review of the Company’s risk management and internal controlprocesses. The AIFM has an ongoing process for identifying, evaluating and managing the principal risks faced by the Company and this is regularly reviewed by the Board. The Board remains responsible for the Company’s system of risk management and internal controls and for reviewing its eﬀectiveness. Further details can be found in the Strategic Report on pages 20 to 27 and in Note 17 to the Financial Statements on pages 63 to 74. Valuation of illiquid assets AIFMD requires the disclosure of the percentage of the Alternative Investment Fund’s assets which are subject to special arrangements arising from their illiquid nature and any new arrangements for managing the liquidity of the Company. As at the date of this report, none of the Company’s assets is subject to special arrangements arising from its illiquid nature. Alternative Investment Fund Manager’s Disclosure (unaudited) 85 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERS FINANCIAL Function AIFM Role and Responsibility AIFMD Disclosure Leverage The Company may be geared through (i) borrowing of up to 10% of its net asset value and/or (ii) by entering into derivative positions (both long and short) which have the eﬀect of gearing the Company’s portfolio, to enhance performance. The AIFM has set maximum levels of leverage that are reasonable. It has implemented systems to calculate and monitor compliance against these limits and has ensured that the limits have been complied with at all times. There are two methods of calculating leverage – theGross Method which does not reduce exposure for hedging; and the Commitment Method which does reduce exposure for hedging. The maximum leverage limits are 2.50 for the Gross Method of calculating leverage and 2.00 for the Commitment Method. At 30 June 2024, actual leverage was 2.04 for the Gross Method and 1.87 for the Commitment Method. Liquidity management The AIFM, in consultation with the Board, maintains a liquidity management policy which is considered at least annually. The Company’s assets mainly comprise readily realisable securities and derivative instruments which can be sold easily to meet funding commitments if necessary. Further details can be found in Note 17 on page66. Remuneration of the AIFM The AIFM operates under the terms of Fidelity’s Global Remuneration Policy Statement. This ensures that the AIFM complies with the requirements of the FCA’s Remuneration Code (SYSC19A); the AIFM Remuneration Code (SYSC19B) and the BIPRU Remuneration Code (SYSC19C). Details of Fidelity International’s Global Remuneration Policy can be found at www.ﬁdelityinternational.com/global/ remuneration/default.page Alternative Investment Fund Manager’s Disclosure (unaudited) continued 86 Fidelity Emerging Markets Limited | Annual Report 2024 Glossary to the Annual Report ACTIVE SHARE Active Share is a measure of the percentage by which stock holdings in the Company diﬀer from the constituents of the benchmark, the MSCI Emerging Markets Index. Active share is calculated by taking the sum of the absolute diﬀerence between the weights of the holdings in the Company and those in the MSCI Emerging Markets Index and dividing the result by two. ADR (AMERICAN DEPOSITARY RECEIPT) A negotiable certiﬁcate issued by a US bank representing a speciﬁed number of shares in a foreign stock that is traded on aUS Exchange. AIC The Association of Investment Companies (“AIC”). The Company is a member of the AIC. AIF Alternative Investment Fund (“AIF”). The Company is an AIF. AIFM Alternative Investment Fund Manager (“AIFM”). The Board has appointed FIL Investment Services (UK) Limited to act as the Company’s AIFM. AIFMD The Alternative Investment Fund Managers Directive (“AIFMD”) isa European Union Directive implemented on 22 July 2014. ALTERNATIVE PERFORMANCE MEASURES The Company uses the following Alternative Performance Measures which are all deﬁned in this Glossary: • Active Share • Discount/Premium; • Gearing (Gross and Net); • Net Asset Value (NAV) per Participating Preference Share; • Ongoing Charges ratio; • Total Return Performance (Net Asset Value Total Return or Share Price Total Return) ASSET EXPOSURE The value of an underlying security or instrument to which the Company is exposed, whether through direct or indirect investment (including the economic value of the exposure in the underlying asset of derivative). AUDITOR KPMG Channel Islands Limited, or such other auditor, as the Company may appoint from time to time. BENCHMARK INDEX (THE INDEX) The Company’s benchmark index, the MSCI Emerging MarketsIndex. COLLATERAL Assets provided as security. CONTRACT FOR DIFFERENCE (CFD) A contract for diﬀerence is a derivative. It is a contract between the Company and an investment bank 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 holds long positions, dividends are received and interest is paid. If the Company holds short positions, dividends are paid and interest is received. CUSTODIAN An entity that holds (as intermediary) the Company’s assets, arranges the settlement of transactions and administers income, proxy voting and corporate actions. The Company’s Custodian isJPMorgan Chase Bank. DERIVATIVES Financial instruments whose value is derived from the value of an underlying asset or other ﬁnancial instruments. The main categories of derivatives are contracts for diﬀerence, warrants, futures and options. DISCOUNT If the share price of the Company is lower than the Net Asset Value per Participating Preference Share, the Company’s shares are said to be trading at a discount. It is shown as a percentage of the Net Asset Value per Participating Preference Share. EARNINGS The earnings generated in a given period from investments: • Revenue Earnings – reﬂects the dividends and interest from investments and other income, net of expenses, ﬁnance costs and taxation; • Capital Earnings – reﬂects the return on capital, excluding any revenue earnings; and • Total Earnings – reﬂects the aggregate of revenue and capital earnings. 87 Annual Report 2024 | Fidelity Emerging Markets Limited STRATEGYGOVERNANCEFINANCIALINFORMATION FOR SHAREHOLDERSINFORMATION FOR SHAREHOLDERS EQUITY LINKED NOTES (ELNS) Debt instruments whose return on investment is linked to speciﬁc equities or equity markets. The return on equity linked notes may be determined by an equity index, a basket of equities, or a single equity. EQUITY SHAREHOLDERS’ FUNDS Also described as Net Asset Value, Shareholders’ Funds represent the total value of the Company’s assets less the total value of its liabilities as shown in the Statement of Financial Position. 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; • Contracts for diﬀerence – 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); • Futures and options – valued at the quoted trade price for the contract; and • Forward currency contracts – valued at the appropriate quoted forward foreign exchange rate ruling at the Statement of Financial Position date. FIDELITY FIL Investments International. FIL LIMITED The ultimate parent company of the FIL Group of companies. Incorporated in Bermuda. FIL FIL Limited and each of its subsidiaries. FORWARD CURRENCY CONTRACT Agreement to buy or sell a currency at a speciﬁed future date and at a pre-agreed price. FUTURE OR FUTURE CONTRACT An agreement to buy or sell a stated amount of a security, currency or commodity at a speciﬁc future date and at a preagreed price. GROSS ASSET EXPOSURE The value of the portfolio to which the Company is exposed, whether through direct or indirect investment (including the economic value of the exposure in the underlying asset of the derivatives, but excluding forward currency contracts). GEARING The economic exposure of the portfolio to its underlying assets in excess of total net assets. It represents the additional exposure to the market above Equity Shareholders’ Funds. The Company uses two measures of gearing: • Gross gearing which is the amount by which Gross Asset Exposure exceeds Equity Shareholders’ Funds expressed as apercentage of Equity Shareholders’ Funds. • Net gearing which is the amount by which Net Asset Exposure exceeds Equity Shareholders’ Funds expressed as apercentage of Equity Shareholders’ Funds. HEDGES Short positions that demonstrate risk-reduction qualities by oﬀsetting long positions held by the Company which have regional congruence and a correlation of at least 80% to the Long Exposure of the Company. INVESTMENT MANAGER FIL Investments International LONG EXPOSURE The value of the Company’s direct and indirect investments in long positions (including the economic value of the exposure to the reference asset of any derivative instrument). MANAGER FIL Investment Services (UK) Limited is the appointed Manager under the Alternative Investment Fund Managers’ Directive (“AIFMD”) and has delegated the investment management of the Company to the Investment Manager. MSCI EMERGING MARKETS INDEX The Benchmark Index of the investment performance of the Company, in UK sterling terms. NET ASSET VALUE PER PARTICIPATING PREFERENCE SHARE TOTAL RETURN NAV per Participating Preference Share Total Return is a measure showing how the NAV per Participating Preference Share has performed over a period of time, taking into account dividends paid to shareholders. Total Return measures allow shareholders to compare performance between investment funds where the dividend paid may diﬀer. To calculate Total Return, it is assumed that dividends are reinvested into the assets of the Company at the prevailing NAV on the last day of the month that the shares ﬁrst trade ex-dividend. NET ASSET VALUE PER PARTICIPATING PREFERENCE SHARE Net Assets are the value of the Company’s assets less its liabilities. Net Asset Value (‘NAV’) per Participating Preference Share is the Net Assets divided by the number of Participating Preference Shares in issue. NET ASSETS The value of the Company’s assets minus its liabilities. Glossary to the Annual Report continued Glossary to the Annual Report continued NET MARKET EXPOSURE Net positive market exposure of the Company’s portfolio, whether through direct or indirect investment, with short and hedge positions subtracted from long positions. It is calculated as (LongExposure – Hedges) – Short Exposure. ONGOING CHARGES RATIO The ongoing charges ratio is a measure used to estimate the expenses likely to occur in the foreseeable future. It is calculated by dividing the annualised ongoing charges (total operating expenses excluding transaction costs and one-oﬀ charges) by the average month end net asset values of the Company for the year under review and has been prepared in accordance with the AIC’s recommended methodology. OPTIONS An option is a contract which gives the right but not the obligation to buy or sell an underlying asset at an agreed price on or before an agreed date. Options may be call or put and are used to gain or reduce exposure to the underlying asset on aconditional basis. PORTFOLIO The Company’s portfolio which may be made up of equities, index linked securities, equity linked notes and other debt securities, cash deposits, money market instruments, foreign currency exchange transactions and other interests including derivatives (such as futures, options and contracts for diﬀerence). PREMIUM If the share price of the Company is higher than the net asset value per ordinary 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 per ordinary share. REGISTRAR The entity that manages the Company’s shareholder register. The Company’s Registrar is Computershare Investor Services (Guernsey) Limited. RESERVES • Share premium account represents the amount by which the proceeds from the issue of ordinary shares has exceeded the cost of those ordinary shares. It is not distributable by way of dividend and cannot be used to fund share repurchases. • Capital reserve represents realised gains or losses on investments and derivatives sold, unrealised increases and decreases in the fair value of investments and derivatives held and other income and costs recognised in the capital column of the Statement of Comprehensive Income. It can be used to fund share repurchases and it is distributable by way of dividend. • Revenue reserve represents retained revenue surpluses recognised through the revenue column of the Statement of Comprehensive Income. It is distributable by way of dividend. SECRETARY FIL Investments International. SHARE PRICE TOTAL RETURN Share Price Total Return is a measure showing how the Share Price has performed over a period of time, taking into account dividends paid to shareholders. Total Return measures allow shareholders to compare performance between investment funds where the dividend paid may diﬀer. To calculate Total Return, itis assumed that dividends are reinvested into the shares of the Company at the prevailing Share Price on the last day of the month that the shares ﬁrst trade ex-dividend. SHARE PRICE The Share Price taken is the closing price. This is the price at which the Company’s shares trade on the London Stock Exchange at the end of trading on a business day. SHORT EXPOSURE The position of the Company when it has sold a security or derivative that it does not own but is now committed to eventually purchase in order to satisfy its obligation to sell. It is a strategy used to capitalise on an expected decline in the security’s or derivative’s price. SIZE OF COMPANY (MARKET CAP) • Large – above $50bn; • Medium – between $10bn – $50bn; • Small – below $10bn TOTAL ASSETS Net Assets plus borrowings. The Company does not have any borrowings. UNLISTED COMPANIES Companies not listed on a regulated stock exchange. Theyare stated at best estimate of fair value, based on recognised valuation techniques which may take account of recent arm’s length transactions in the investments. 88 Fidelity Emerging Markets Limited | Annual Report 2024 To ﬁnd out more about Fidelity Emerging Markets Limited, visit our website at www.ﬁdelity.co.uk/emergingmarkets where you can read articles and watch videos on the Company. Fidelity, Fidelity International, the Fidelity International 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. www.ﬁdelityinvestmenttrusts.com

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