REG-Fidelity Asian Values Plc: Annual Financial Report
Yesterday 07:02
FIDELITY ASIAN VALUES PLC
FINAL RESULTS FOR THE YEAR ENDED 31 JULY 2025
Highlights:
* The Board has announced a final dividend of 20.5 pence per share,
an increase of 41.4% from 2024.
* During the twelve-month period ended 31 July 2025, Fidelity Asian
Values PLC reported a Net Asset Value (NAV) return of +12.4% and ordinary
share price total return of +17.0%.
* The Comparative Index, the MSCI All Countries Asia ex Japan Small
Cap Index, produced a total return of +7.1% over the same timeframe.
* Taiwan Semiconductor Manufacturing Company, De Grey Mining and
Crystal International were the top three contributors to performance relative
to the Index.
Contacts
For further information, please contact:
George Bayer
Company Secretary
FIL Investments International
0207 961 4240
Financial Highlights
Assets as at 31 July 2025 2024
Gross Asset Exposure £470.2m £442.9m
Net Market Exposure £416.6m £416.2m
Total Shareholders’ Funds £402.7m £392.0m
NAV per Ordinary Share 1 604.69p 551.66p
Gross Gearing 1 16.8% 13.0%
Net Gearing 1 3.4% 6.2%
--------------- ---------------
Share Price and Discount data at 31 July
Ordinary Share Price at year end 564.00p 496.00p
Year high 566.00p 542.00p
Year low 454.00p 476.00p
Discount to NAV per Ordinary Share at year end 1 6.7% 10.1%
(Discount) year low/Premium 14.5% 11.9%
(Discount) year high 6.7% 2.2%
--------------- ---------------
Results for the year ended 31 July
Revenue Return per Ordinary Share 1 22.51p 14.24p
Capital Return per Ordinary Share 1 40.34p 2.06p
--------------- ---------------
Total Return per Ordinary Share 1 62.85p 16.30p
========= =========
Ongoing Charges for the year to 31 July 0.95% 0.95%
Variable Element of Management Fee 3 0.14% 0.19%
Ongoing Charges including Variable Element of Management Fee for the year to 31 July 1 1.09% 1.14%
========= =========
1 Alternative Performance Measures. See below
2 The variable element of the management fee is
calculated over a rolling three year period with reference to the Benchmark
Index.
Chairman’s Statement
I am delighted to report that the year ended 31 July 2025 has been a rewarding
one for our shareholders, both in absolute terms and relative to the
Comparative Index (the MSCI All Countries Asia ex Japan Small Cap Index (net)
total return (in sterling terms).
In the year under review, the Company’s net asset value (“NAV”) total
return was +12.4% (2024: +3.2%), while the Comparative Index saw a total
return of +7.1% (2024: +13.7%). The share price total return to shareholders
was +17.0% (2024: -1.7%), assisted by a narrowing in the share price discount
to NAV, which moved from 10.1% on 31 July 2024 to 6.7% at the year end.
It may seem somewhat remarkable that a year that has seen so many negative
headlines globally – from escalating military conflicts to trade wars –
could have turned out so positively for our shareholders in terms of
investment performance. The fact that your Company has been able to do so well
against a backdrop of turmoil and extreme volatility speaks to the fact that
the fund offers investors excellent risk diversification. Many of its
portfolio holdings are focused on serving their domestic markets and are
therefore not very exposed to global trade. While US trade tariffs have
sparked a decline in the dollar, your Company has relatively little US dollar
exposure, which has proved beneficial. Furthermore, Nitin Bajaj and Ajinkya
Dhavale (your Portfolio Managers) focus on finding well managed businesses
with strong competitive niches, stable balance sheets and little debt, which
has had an insulating effect. This is enhanced when investor sentiment turns
away from higher-risk, potentially higher-reward situations. The Portfolio
Managers’ strategy has served shareholders very well over the longer-term:
over five years to the end of July 2025, the Company’s cumulative NAV total
return of 87.2% has beaten the Comparative Index by 15.3%, while the share
price total return of 92.1% has done even better, outperforming the Index by
21.3%.
You will find detailed information on the Company’s portfolio and its
performance in the Portfolio Managers’ Review below. In brief, however,
their strategy remains bottom- up, contrarian and value-focused, which has led
them in recent years to focus more on well-managed Chinese companies and less
so on India, where a spike in investor interest has seen valuations rise to
levels that your Portfolio Managers see as inflated and unsustainable.
Board strategy day
Last year, as your incoming Chairman, I arranged for the Board to
undertake a strategy day where we went back to basics to explore all the
factors that independent non-executive directors of an investment company can
and should be influencing. This year – which has been a busy one in the
investment trust world in terms of both the market backdrop and the level of
corporate activity – we decided to repeat this worthwhile exercise. Among
the topics for discussion were the competitive landscape, trends towards
consolidation in the investment company market, discount management,
distribution, dividends, fees and charges. As I outline elsewhere in this
statement, several actions have been taken as a result of these discussions,
including a more proactive pace of share buybacks, and a change in cost
allocation that facilitates the payment of an increased dividend to
shareholders.
Market consolidation continues to be a theme at the forefront of many
investors’ minds, with size increasingly being seen as a key factor in
attracting the interest of professional investors, such as wealth managers, as
well as being beneficial in terms of economies of scale. We are encouraged by
the Company’s position of strength in the market, and while your Board notes
the Company’s net assets have passed the £400m level, we continue to scan
the horizon for opportunities to optimise the position of your Company.
Due diligence trip
In March 2025, the Board visited Asia on its two-yearly due
diligence trip. We began the visit in Singapore, where Nitin and Ajinkya are
based, meeting with them and members of the wider Fidelity team, including
analysts, traders, risk managers and capital markets experts, as part of our
responsibility for overseeing the Company’s investment approach and
portfolio management functions. Once again, we were impressed by the team’s
strength and depth, and by the quality of the analyst team’s ideas and the
rigour of their approach. In a focused and differentiated portfolio, new
investment ideas have to be particularly compelling in order to make the cut,
and it was most illuminating to observe the level of constructive challenge
between Nitin, Ajinkya and the wider team when discussing potential portfolio
purchases. We joined Fidelity’s locally based teams in Singapore, Shanghai,
Guangzhou and Shenzen for internal and external company meetings. Your
portfolio has a relatively large exposure to Chinese companies, so it was
important for us to scrutinise the attractions of these businesses and the
analytical rigour underpinning our investments on behalf of both our
shareholders and the Board. We met with companies from a range of sectors and
were impressed by the calibre of their management teams and governance
standards, their focus on shareholder value and long-ranging vision, their
focus on balance sheet strength, and competitive and creative mindsets even
across traditional businesses. As a result of this trip, we can confidently
confirm that we believe the Company is in the best possible hands.
Discount management and share repurchases
Global stock markets have remained unsettled during the year under
review. Consequently, share price discounts to NAV across the investment trust
universe have remained wide by historical standards, averaging 14.9% in the 12
months to 31 July 2025. Against this backdrop, your Company’s discount to
NAV has also seen a degree of volatility, ranging from 14.5% at its widest to
6.7% at its narrowest. In aggregate, however, the discount narrowed over the
year, from 10.1% at the prior year end to 6.7% on 31 July 2025. It has also
been substantially narrower on average compared with the Company’s Asia
Pacific Smaller Companies peer group, at 9.8% versus 14.8% for the peers. Over
the course of the year, the Company repurchased 4,463,497 ordinary shares
(6.3% of the issued share capital; 1.0% in 2024), at a cost of £22.5m. Since
then and up to the latest practicable date of this document, 2,362,486 shares
have been repurchased as part of the Company’s active and ongoing discount
management strategy. The primary purpose of share buybacks is to limit
discount volatility, and at the Annual General Meeting (“AGM”) on 26
November 2025 the Board will seek shareholder approval to renew the annual
authority to repurchase up to 14.99% or, in the event that the shares are
trading at a premium to the Company’s NAV, to allot up to 10% of the
ordinary shares in issue.
The timing of repurchases of ordinary shares are made at the discretion of the
Broker, within guidelines set by the Board and considering prevailing market
conditions. Shares will only be repurchased in the market at prices below the
prevailing NAV per ordinary share, there-by adding to the NAV per ordinary
share. In the reporting year, share repurchases added 0.7% to the NAV (2024:
0.1%). Until 31 July 2025, shares repurchased were held in Treasury and these
can only be reissued at NAV per ordinary share or at a premium to NAV per
ordinary share. By the year end, shares held in Treasury exceeded 10% of the
total issued share capital, and so the Board decided that with effect from 1
August 2025, all shares repurchased will be for cancellation, and this has
been the case for all share repurchases carried out since that date. In
addition, since the year end, 822,911 shares already held in Treasury have
been cancelled.
Marketing and promotion
Your Board remains keenly aware that share buybacks alone are
unlikely to eliminate a persistent discount to NAV; discounts are a function
of supply and demand and, as such, increasing demand is at least as important
as absorbing excess supply. As I mentioned last year, our newest Director,
Lucy Costa Duarte, has a strong track record in marketing and distribution.
During the review year, she undertook a ‘deep dive’ into Fidelity’s
marketing and PR strategy to understand if it represents good value for money
and is demonstrating returns. Her work gave the Board confidence that Fidelity
is doing the right things to maintain and increase your Company’s profile.
We have discussed the allocation of resources and made some small changes, but
her feedback on the overall marketing and PR picture was overwhelmingly
positive.
While some coverage comes as a direct result of the efforts of Fidelity and
external PR partners, in other cases it arises naturally as a consequence of
your Company’s strong long-term track record. We were very pleased this year
to have been included on the Association of Investment Companies’ annual
‘ISA millionaires’ list for a third consecutive time. This list looks at
the returns that investors could have achieved by investing their full ISA
allowance each year since ISAs were introduced in 1999 (and reinvesting any
dividends). A total investment of £326,560 in your Company over the period
from 6 April 1999 to 31 January 2025 would have grown to £1,128,271 – an
impressive result that illustrates the value of investing for the long-term.
While returns from equity investments are always likely to fluctuate, your
Company’s enduring presence on this list – even in a period of relatively
poor performance such as the previous year – underscores the rewards
available to patient long-term investors in differentiated strategies.
During the year, we have continued to work with Fidelity and external partners
to increase the Company’s profile through digital and print advertising,
sponsorship, events, direct marketing and press coverage. A third-party
research provider, Kepler Partners, produces regular notes on the Company,
which are distributed widely and made available on the Company’s website.
The focus on reaching both retail and professional (wealth managers) audiences
is evident in the makeup of our share register, with 39% of our shares owned
by direct investors through platforms, and 47% by wealth managers on behalf of
their clients.
Dividend
The Board is pleased to recommend a final dividend of 20.5 pence per
share for the year ended 31 July 2025, which represents a 41.4% increase over
the previous year, for approval by shareholders at the AGM to be held on 26
November 2025. The dividend will be paid on 11 December
2025.
Partly in response to shareholder feedback, during the year your Board took a
careful look at the allocation of costs between the Company’s revenue and
capital accounts. Historically, 100% of management fees and finance costs have
been charged to the revenue account. However, as the investment strategy
principally targets capital growth, we felt it was right to consider whether a
greater allocation to the capital account would be more appropriate. Having
discussed the matter at our Board strategy day (see above) and undertaken a
detailed review of our peers both among Asia Pacific Smaller Companies
investment trusts and in the wider Asia Pacific sector, we concluded that we
should change the allocation to a 75:25 split between the capital and revenue
accounts. The removal of 75% of the management fees and finance costs from the
revenue account has resulted in a step-change in the level of dividends
proposed for the year ended 31 July 2025.
We would remind shareholders that portfolio dividend income continues to be an
output rather than an aim of the investment process, and accordingly the level
of future dividends for the Company’s shareholders may vary.
Your Portfolio Managers invest principally for long-term capital growth of
your investment, but their value-oriented investment style tends to lead them
towards unleveraged and cash- generative businesses. The increase achieved in
portfolio dividend income together with the re-allocation of costs referred to
above has resulted in the dividend per share declared by the Company more than
doubling over the last four years.
Gearing
As an investment trust, your Company has the ability to deploy
additional money (through borrowing or the use of derivative instruments) to
invest on behalf of its shareholders, known as gearing. This can enhance
returns for investors when performance is positive, although, on the flipside,
it can also amplify losses in a falling market. The level of gross gearing is
directly proportional to the investment opportunities that your Portfolio
Managers see. When they are optimistic about the outlook and there is a good
supply of compelling investment ideas, then the Company will tend to be more
geared.
At the period end, gross gearing was 16.8% (2024: 13.0%) and net gearing was
3.4% (2024: 6.2%).
Rather than using bank borrowing (which can be expensive depending on the
prevailing interest rate environment and is often deployed across a portfolio
on a pro-rata basis), the Company’s gearing is achieved using contracts for
difference (“CFDs”). These are a type of derivative instrument,
implemented on a stock-by-stock basis, allowing Nitin and Ajinkya to get
additional exposure to their best ideas. Each year, your Board reviews the use
of CFDs, and we have again concluded that at the present time they remain a
more efficient and flexible form of financing over secured or unsecured debt,
as well as enabling your Portfolio Managers to be fleet of foot in the
deployment of gearing. We are fortunate that Fidelity has the infrastructure
and capability to allow the use of CFDs in the portfolio; few other management
groups can offer this.
Use of short positions
Fidelity’s capability in derivative instruments is also what
allows your Portfolio Managers to ‘short’ stocks, which has again had a
positive impact on returns in the year under review. Ajinkya, in particular,
has a strong background in this area. A short position is taken on the view
that the price of a stock or the value of an index will go down rather than
up. Short positions are limited to a maximum of 10% of the Company’s
portfolio and do not usually exceed 10 stocks. However, while relatively small
in scope, this additional tool has materially added to the Company’s
performance since its introduction in late 2019, and particularly so in the
year under review, to the tune of 0.4%. Total short exposure as at 31 July
2025 was 6.7% of net assets (2024: 3.4%).
BOARD OF DIRECTORS
Following Michael Warren’s retirement at last year’s Annual
General Meeting (“AGM”) in November 2024 and Lucy Costa Duarte’s
election at that AGM, there have been no changes to the Board in the period
under review. We can now look forward to a prolonged period of stability under
the current group of Directors, whose tenures to date range from one to six
years. While we believe that your Board has a good mix of essential qualities
and a diverse set of relevant backgrounds, it is a worthwhile discipline to
undergo external challenge and assessment to ensure that we have all the
appropriate skills necessary to ensure the good governance of your Company. As
such, and in line with best practice, we have been undergoing a third-party
board effectiveness review, the results of which will have been considered and
decided upon by the time of the 2025 AGM. We remain open to challenge and
committed to listening to and doing the best job for our shareholders,
something we hope is evident in measures such as the active management of the
Company’s discount to NAV and our careful consideration of cost allocation,
and its attendant effect on your Company’s dividend (see ‘Dividend’
section above). Part of the Board’s remit is to represent the views of the
Company’s shareholders, and we would like to encourage you to engage with
the Board either by contacting us via the Company Secretary or by attendance
at the AGM.
ARTICLES OF ASSOCIATION
The Board has undertaken its scheduled review of the Company’s
Articles of Association (the “Articles”) with assistance from our external
legal adviser. The changes proposed to the Articles are set out in the
Directors’ Report section of the Annual report. Shareholders will be asked
to approve these changes at the AGM on 26 November 2025.
INVESTMENT OBJECTIVE AND INVESTMENT POLICY
The Board has also reviewed the Company’s Investment Objective and
Investment Policy and we are proposing two minor amendments. The wording of
the restriction in relation to unlisted investments has been simplified and it
is also proposed to move the reference to the Comparative Index from the
Investment Objective to the Investment Policy. These changes are set out in
Directors’ Report section of the Annual report. Shareholders will be asked
to approve these changes at the AGM on 26 November 2025.
ANNUAL GENERAL MEETING
The AGM of the Company will be held at 11.00 am on Wednesday, 26
November 2025. The meeting will once again be a hybrid format, with online
attendance available, however I hope to see as many of you as possible in
person on the day. Full details of the meeting are below and in the Notice of
Meeting in the Annual Report. Items of special business to be proposed at the
AGM are detailed in the Directors’ Report section of the Annual Report.
OUTLOOK
Nitin and Ajinkya are fundamentally bottom-up investors, which means
their investment decisions are informed by detailed company analysis rather
than the prevailing market mood. And so, while the geopolitical backdrop is
fractious, your Portfolio Managers remain commit-ted to their proven long-term
investment approach. They continue to see good prospects for their portfolio
of undervalued, quality businesses, about which you can read more in their
review that follows. In an uncertain world, those with the courage to continue
to steer their course are surely most likely to reach their desired
destination.
CLARE BRADY
Chairman
16 October 2025
ANNUAL GENERAL MEETING – WEDNESDAY, 26 NOVEMBER 2025 AT 11:00 AM
The AGM of the Company will be held at 11.00 am
on Wednesday, 26 November 2025 at 4 Cannon Street, London
EC4M 5AB (nearest tube stations are St Paul’s or Mansion House) and
virtually via the online Lumi AGM meeting platform. Full details of the
meeting are given in the Notice of Meeting in the Annual Report.
For those shareholders unable to attend in person, we will live-stream the
formal business and presentations of the meeting online.
Nitin Bajaj and Ajinkya Dhavale, the Portfolio Managers, will be making a
presentation to shareholders discussing the performance of the past year and
the prospects for the year to come. The Portfolio Managers and the Board will
be very happy to answer any questions that shareholders may have. Copies of
their presentation can be requested by email at
investmenttrusts@fil.com
or in writing to the Secretary at FIL Investments International,
Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Properly registered shareholders joining the AGM virtually will be able to
vote on the proposed resolutions. Please see Note 9 to the Notes to the Notice
of Meeting in the Annual Report for details on how to vote virtually.
Investors viewing the AGM online will be able to submit live written questions
to the Board and the Portfolio Manager and these will be addressed at an
appropriate juncture during the meeting.
Further information and links to the Lumi platform may be found on the
Company’s website at
www.fidelity.co.uk/asianvalues . On
the day of the AGM, in order to join electronically and ask questions via the
Lumi platform, shareholders will need to connect to the website
https://meetings.lumiconnect.com
.
Please note that investors on platforms, such as Fidelity Personal Investing,
Hargreaves Lansdown, Interactive Investor or AJ Bell Youinvest, will need to
request attendance at the AGM in accordance with the policies of your chosen
platform. They may request that you submit electronic votes in advance of the
meeting. If you are unable to obtain a unique IVC and PIN from your nominee or
platform, we will also welcome your online participation as a guest. Once you
have accessed
https://meetings.lumiconnect.com
from your web browser on a tablet, smartphone or computer, you
will need to enter the Lumi Meeting ID
which is 100-596-124-635 . You should
then select the ‘Guest Access’ option before entering your name and who
you are representing, if applicable. This will allow you to view the meeting
and ask questions, but you will not be able to vote.
Further information on how to vote across the most common investment platforms
is available at the following link:
https://www.theaic.co.uk/how-to-vote-your-shares
PORTFOLIO MANAGERS’ REVIEW
Nitin Bajaj was appointed as the Portfolio Manager of Fidelity Asian Values
PLC on 1 April 2015. He is based in Singapore and has over 23 years of
investment experience. He is also the Portfolio Manager for the Fidelity Asian
Smaller Companies Fund as well as the Fidelity China Focus Fund. He first
joined Fidelity in 2003 as an Investment Analyst and then took over the
Fidelity India Special Situations Fund and subsequently started the Fidelity
India Value Fund. He managed these funds until November 2012, when Fidelity
decided to sell its India business.
Ajinkya Dhavale, the Company’s Co-Portfolio Manager, supports and works
closely with Nitin Bajaj. He has extensive experience in Asian markets and
companies and shares a common investment approach and complementary investment
experience with the Portfolio Manager. He has over 17 years of investment
experience. He originally joined Fidelity as an Investment Analyst in 2011,
covering the Auto, Cement, Telecommunications and Property sectors. He is also
Co-Portfolio Manager of the Fidelity Asian Smaller Companies Fund.
QUESTION 1
How has the Company performed in the year to 31 July
2025?
ANSWER
As mentioned in the Chairman’s statement, over the year ended 31
July 2025, the Company’s net asset value (“NAV”) total return was +12.4%
versus the Comparative Index (MSCI All Countries Asia ex Japan Small Cap Index
(net) total return (in sterling Terms)) return of +7.1%. The share price total
return for the year was +17.0% due to a narrowing of the discount to NAV.
Our investment process is centred on owning good businesses which are run by
trustworthy management teams and buying them only when we have an ample margin
of safety, meaning that we consider the market value of the company to be
lower than its intrinsic value. This strategy often leads us to adopt
contrarian positions, as undervalued businesses are more likely to be found in
sectors or geographies that are out of favour. Following this philosophy, we
currently have a significant portion of the Company’s portfolio allocated to
China and Indonesia, while exposure to India and Taiwan is substantially lower
than the Index. Geographic exposures reflect bottom up stock picking and had a
positive impact on performance as the market began to recognise the intrinsic
value of several Chinese holdings we own.
The Company has benefited from its allocation to Chinese equities over the
last year. Although the companies we own in China did well compared to the
rest of Asia, they underperformed the Chinese market, which was predominantly
driven by highly valued, more speculative areas such as technology,
biotechnology and new consumption themes. Most of our holdings in China are
concentrated in sectors such as consumer goods, real estate and industrials.
Stock selection in Indonesia proved unrewarding in the past year, as the
country remained overlooked by investors despite strong economic fundamentals,
albeit in the context of political volatility. We have largely maintained our
positioning in our preferred holdings given their favourable risk-reward
profile over the medium to long-term.
In our opinion, 12 months (whether good or bad) is a short period of time over
which to judge a portfolio’s performance. It must be put in the context of
longer-term performance, in line with our longer-term investment horizon.
Since Nitin took over the management of the Company’s assets in 2015, the
share price total return has been +163.2%, or +9.8% annualised, versus the
MSCI All Country Asia ex Japan Small Cap Index (net) total return (in sterling
terms) of +105%, +7.2% annualised.
Question 2
What stocks have been the main drivers of performance
during the 12-month review period and why?
Answer
Our list of top contributors relative to the Index during the
12-month period was well diversified across markets and sectors, with Taiwan
Semiconductor Manufacturing Company (“TSMC”), De Grey Mining, and Crystal
International making up the top three.
· TSMC , the world’s
largest semiconductor foundry, emerged as the leading contributor over the
period. Its shares advanced after the company reported record-breaking
financial results, showcasing its ability to capitalise on the AI boom.
· De Grey Mining , a
mid-sized Australia-listed gold miner, was acquired at a premium by Northern
Star Resources. We owned De Grey Mining as its assets included the world-class
Hemi Gold project under development – giving us leverage to both development
upside as well as the gold price.
· Crystal International
produces apparel at its factories mostly located in Vietnam, for renowned
brands such as UNIQLO, Levi’s and GAP. We have owned Crystal for several
years, and it has been a consistent performer as management has executed well
and our entry valuation at a P/E ratio of 6x was very reasonable.
Meanwhile, our largest relative detractors were all from India and Indonesia,
the two markets that lagged the regional Asian small cap index over the past
year.
· Axis Bank , the third
largest private sector bank in India, was the most significant detractor as
the lender saw an increase in non-performing assets. Its management has taken
steps to strengthen underwriting standards, while the bank continues to trade
at relatively low valuations compared to peers. We continue to own the
position and have increased it when its share price weakened.
· IndusInd Bank ,
India’s fifth-largest private sector bank, performed poorly because of
weaknesses in underwriting that our due diligence did not fully identify. This
is a reminder that no matter how deep our due diligence process is, there are
always things that can go wrong, which is why buying businesses whose
valuations offer a margin of safety is very important. We continue to hold the
stock as it trades at about a 20% discount to its book value.
· Bank Negara has
performed well in past years but did poorly in the last 12 months. This was
due to profit pressure from increased competition for deposits, as well as a
mild deterioration in asset quality in Indonesia. We continue to own shares in
Bank Negara given its solid franchise and a valuation that offers a healthy
margin of safety.
Question 3
How have you utilised the Company’s structure as an
investment trust this year? Has it been beneficial?
Answer
A key benefit of the structure is the ability to hold smaller, less
liquid names, without needing to manage potential outflows. We have also
continued to utilise gearing and the derivative toolset available to the
Company, which proved beneficial over the last 12 months. Our level of gearing
remains a function of the number of investment ideas we find – it increases
when we see more ideas than money, and it reduces (or we keep a higher cash
balance) when we do not find as many ideas.
In the last 12 months, the Company’s average net exposure was 103.3%. We had
+13.7% average exposure to long stock futures over the review period, which
contributed 250 basis points to the Company’s relative performance. The
short book, where we had -3.9% average exposure, contributed 38 basis points.
Meanwhile, our stock holdings (+93.6% average exposure) made a +356 basis
points positive contribution. These performance contributions are all relative
to the Company’s Comparative Index.
Question 4
US import tariffs announced in 2025 have been a
consideration this year. What impact have tariffs had or not had on the
Company’s portfolio during the review period?
Answer
So far, the impact on our portfolio has been marginal, as tariffs
have only just started taking effect. Our primary concern is that tariffs and
related uncertainties present a real risk to global growth. They are likely to
affect both the level of consumption in the US and corporate capital
investment decisions worldwide.
We continue to look for both risks and opportunities that may arise from the
change in global trading order and structures.
Question 5
The Company’s portfolio is still overweight in China.
How does the regulatory landscape in China affect how you find investment
opportunities there?
Answer
Regulatory changes take place in all markets around the world. In
the current environment, since April 2025, the rate and pace of regulatory
change has been particularly notable in the US.
Our experience in China has been that government policy aims to support public
welfare. Businesses that operate within the rules and do not exploit their
customers tend not to face much interference in the operation of their
company.
China’s industrial policy is very focused on capacity creation and provides
a platform for Chinese companies to strive for global competitiveness. This
has led to oversupply and hyper-competition in a large number of industries.
However, this is a well-advertised and slow-moving phenomenon, hence we are
able to incorporate such factors into our analytical framework when conducting
our research on companies.
Question 6
Are there any areas in China that are more attractive
today than they were last year?
Answer
Yes, in our opinion there are many companies in China that still
trade significantly below intrinsic value. Some of these are just small
traditional businesses (advertising, recruitment, event management, dairy
farms, etc.) that have tended to be overlooked by the market, while others are
in areas going through a cyclical downturn, such as property, consumer staples
and industrials.
Having said that, performance of the Chinese equity market over the last year
has been dominated by thematic exposures. Sectors that are currently in vogue,
such as AI-driven technology, biotechnology and electric vehicles, have
experienced significant gains. In contrast, sectors we consider more aligned
to the ‘real economy’, including consumer goods, real estate and
industrials, have not gained much.
Consequently, this selective rally has widened the intersectoral valuation gap
within Chinese small cap equities. The chart below illustrates how the
disparity between the sector with the highest forward Price to Book ratio and
the one with the lowest has become more pronounced, especially in the past six
months.
While the market has been enthused by these new-age sectors, we have continued
to find good businesses with a meaningful margin of safety in more traditional
sectors.
Question 7
Looking beyond China, where do you currently see the best
opportunities?
Answer
We continue to find promising investment opportunities in Indonesia.
Indonesia is the third largest economy in the region, following China and
India, with a strong demographic profile, prudent management of public
finances and very strong household balance sheets. Our exposure to Indonesia
is well diversified across sectors such as financials, building materials,
industrials and consumer businesses, all of which support sustainable returns
with a sufficient margin of safety.
Additionally, as bottom-up investors, we continue to uncover idiosyncratic
investment opportunities in other parts of the region. For instance, in
Taiwan, we have invested in Pacific Hospital Supply
Company , a manufacturer of medical consumables. Despite
being a small player, its new management is driving market share growth at a
pace faster than the c.US$80bn industry, which typically grows at a
mid-single-digit rate. The stock trades at 16x its projected 2026 earnings and
offers a 5% dividend yield.
Similarly, in Thailand, we hold a position in Mega
Lifesciences , a manufacturer of generic medicines. Most of
its revenue stems from ‘nutraceuticals’ or wellness drugs, with the
remainder from prescription drugs and over-the-counter medicines. The
company’s strong distribution network across ASEAN, together with its
product pipeline and in-house manufacturing, confers competitive advantages,
resulting in higher margins compared with peers. Its management is more agile
and flexible than multinational competitors, enhancing its effectiveness in
sales and promotions. The stock trades at 12x its projected 2026 earnings,
with a 5.5% dividend yield.
Question 8
How do you assess current valuations relative to
historical averages? Is now an interesting time for Asia?
Answer
The average valuation for the MSCI AC Asia ex Japan Small Cap Index
is now above its historical average and cannot be considered empirically
‘cheap’. However, this average level masks a wide variation between value
stocks and growth stocks, as shown in the chart below.
This dispersion in valuation can also be observed between the valuation of
stocks we own and the market average. The P/E of the fund is 10.4x while that
of the market is 17x. This reflects Fidelity’s deep research network, which
enables us to find high quality businesses that are currently being overlooked
by other investors.
Question 9
What key risks do you face in the current environment,
and how do you mitigate these in the Company’s portfolio?
Answer
Macro and geopolitical events are not central to our
decision-making, but we realise we cannot ignore them entirely, especially in
the current environment. Companies exist within business cycles, and they are
impacted by geopolitical events. Therefore, we try to factor both these into
our decision-making, predominantly at the single stock level but also at the
portfolio risk level. These give us guardrails rather than being the main
driver of decision-making. Stock picking is the mainstay of the investment
process and has always been its strength, and we feel we are better placed if
we ‘stick to our knitting’ rather than becoming distracted by world
events.
Question 10
Finally, looking forward, what are the things that excite
you the most that you would like to share with shareholders?
Answer
We are excited by the team we work with – both the regional
analyst team at Fidelity and especially the small cap team. Our performance is
in part an outcome of the hard work and insights of Fidelity’s research
team, and we are grateful for their help.
We also feel comfortable with our portfolio. We own a basket of good quality
businesses, as evidenced by their return on equity (ROE), and we own them at a
significant discount to market valuations. Think of it as owning a house that
provides you with a higher rental income at a substantially lower capital cost
than the neighbourhood. Who would not want that?
We do not have a forecast of market returns, and we do not wish to indulge in
such speculation. Instead, we continue to focus on investing in good
businesses, led by competent and honest management teams, available at a
valuation that offers a suitable margin of safety. This time-tested approach
has delivered sustainable performance for the Company over the long-term, and
we are confident that it will continue to do so well into the future.
NITIN BAJAJ AJINKYA DHAVALE
Portfolio Manager
Co-Portfolio Manager
16 October 2025
Principal Risks and Uncertainties and Risk Management
As required by provisions 28 and 29 of the 2018 UK Corporate
Governance 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 and liquidity. The Board, with the assistance of the
Alternative Investment Fund Manager (FIL Investment Services (UK) Limited (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 Board considers the risks listed below as the principal risks and
uncertainties faced by the Company.
Principal Risks
1. Economic, Political and Market Risks
Trend ( from previous year ): Increased
Description and Impact Mitigation
· The Company and its assets may be affected by economic and market risks. These are market downturns, interest rate movements, deflation/inflation, exchange rate movements and market shocks. Inflation and economic instability are potentially impacting · The Company’s portfolio is made up mainly of listed securities. The Portfolio Managers’ success or failure to protect and increase the Company’s assets against the economic, political and market background is core to the Company’s continued success. Their investment philosophy of stock-picking and investing in attractively valued companies aims to outperform the Comparative Index over time. The Board is provided with a detailed investment review which covers material economic, political and market risks and legislative changes at each Board meeting. · The Board has oversight of the Company’s portfolio, regularly reviews the impact of gearing and derivatives, and has comfort that the portfolio is sufficiently diversified by sector, country and number of holdings. · Risks to which the Company is exposed to in the market and currency risk category are included in Note 17 to the Financial Statements below together with summaries of the policies for managing these risks. It is the Company’s policy not to hedge the underlying currencies of the holdings in the portfolio but rather to take the currency risk into consideration when making investment decisions.
investors’ risk appetite. Emerging markets are less established and more volatile than developed markets. They involve higher risks, particularly market, credit, illiquid security, legal, custody, valuation, and currency risks, and are more likely to
experience risks that in developed markets are associated with unusual market conditions. · The Company is exposed to several geopolitical risks. The geopolitical landscape continues to change globally and is largely shaped by the ongoing effects of war
conflicts, tariff wars, deglobalisation trends and significant supply disruption. The Middle East and Russia are significant net exporters of oil, natural gas and a variety of soft commodities and supply limitations have fuelled global inflation and
economic instability, specifically within Western nations. Macro-economic uncertainty continues to impact Western investment appetite. · China’s outlook for ‘controlled stabilisation’ remains intact, supported by targeted policy measures. China’s growth
stabilisation is more credible post - deal (i.e. the government’s commitment to implementing strategic economic measures to achieve steady growth and economic resilience): the agreement with the U.S. reduces pressure on China to deliver new fiscal easing.
Exports and industrial activities continue to outperform despite the slower than expected recovery in domestic demand. Whilst investment from mainland China has increased significantly, driven by favourable government policies and the high dividends
available from some Hong Kong shares, China’s vulnerabilities remain, with risks related to the global outlook and geopolitical tensions including the possibility of global trade conflict, ongoing tensions between South Korea and North Korea, South China
Sea dispute and implications of China-Taiwan relations. The legal rights of investors in mainland China are uncertain, government intervention is common and unpredictable, some of the major trading and custody systems are unproven, and all types of
investments are likely to have comparatively high volatility and greater liquidity and counterparty risks. · Heightened tensions between the U.S. and global trading partners, particularly China, continue to impact the markets. The US/China relationship
is also impacted by the dynamic of the balance between national security and economic interests and could lead to higher volatility, sanctions for broader markets, technology and oil in particular, as well as risk of changes in foreign policies across the
globe. · Most of the Company’s assets and income are denominated in currencies other than sterling which is the Company’s functional and presentation currency. As a result, movements in exchange rates may affect the sterling value of its assets and
income.
2. Competition Risks and Marketplace Threats Impacting Business Growth
Trend ( from previous year ): Increased
Description and Impact Mitigation
· There is increased activity around mergers and acquisitions across the investment company marketplace and alternative investment offerings (including passive vehicles) which could influence the demand for the Company’s shares. · There is a risk of · The Board, the Company’s Broker and the Manager closely monitor industry activity, the peer group and the share register. · An annual review of strategy is undertaken by the Board to ensure that the Company continues to offer a relevant product to investors. There are also pre-emptive preparations in the event of an activist investor approach.
costly shareholder activism in the investment company sector, pursuing goals that may not be in the interests of most shareholders.
3. Changes in Legislation, Taxation or Regulation
Trend ( from previous year ): Increased
Description and Impact Mitigation
· Changes in legislation, taxation or regulation, or other external influences that require changes to the investment trust structure of the Company are a significant risk for the Company. · A breach of Section 1158 of the Corporation Tax Act 2010 could · The Board and Manager closely monitor regulatory, taxation and legislative changes, with developments impacting the Company summarised in the form of regular reporting to the Board. · The Manager monitors Section 1158 status to ensure any issues are escalated to the Board and addressed promptly. · The Manager participates in industry discussions regarding regulatory changes impacting investment companies, and regulatory developments continue to be monitored and managed by Fidelity through active lobbying and negotiations as well as a robust change management process.
lead to a loss of investment trust status resulting in the Company being subject to tax on capital gains. · There have been increased concerns about investment cost disclosures and their impact on the industry. There is a risk that the FCA’s proposed
Consumer Composite Investment (CCI) regime may make investment companies more complex for consumers and other investors to understand and increase the regulatory burden imposed on the sector if it proceeds with some of the proposals as drafted.
4. Level of Discount to Net Asset Value
Trend ( from previous year ): Increased
Description and Impact Mitigation
· Due to the nature of investment companies, the price of the Company’s shares and its discount to NAV are factors which are not completely within the Company’s control. · In considering the risk that the discount to NAV poses to shareholder value and · The Board reviews the investment strategy, investment performance and the marketing approach, given the influence of all these factors on the discount. · The Company’s share price, NAV and discount volatility are monitored daily by the Manager and the Company’s Broker and considered by the Board on a regular basis. The demand for shares can be influenced through good performance and an active investor relations programme. · Discretionary repurchases of ordinary shares are made within guidelines set by the Board, and considering prevailing market conditions.
returns, both the absolute level of the discount and the amount relative to the Company’s peer group and the wider market are considered. · While the Company’s discount has narrowed in recent months, there has been significantly increased market focus on
this issue across the wider investment trust sector over the past year.
5. Investment Performance Risk (including the use of Derivatives and Gearing)
Trend ( from previous year ): Decreased
Description and Impact Mitigation
· The achievement of the Company’s investment performance objective relative to the market requires the taking of risk, such as investment strategy, asset allocation and stock selection, and may lead to NAV and share price underperformance compared to the · The Investment Manager is responsible for actively monitoring the portfolio selected in accordance with the asset allocation parameters and seeks to ensure that individual stocks meet an acceptable risk/reward profile. The Board takes comfort from the work of the Portfolio Construction and Advisory team in reviewing and challenging the portfolio. · The Board reviews Fidelity’s compliance with agreed investment restrictions; investment performance and risk; relative performance; the portfolio’s risk profile; and whether appropriate strategies are employed to mitigate any negative impact of substantial changes in the markets. The Board also regularly canvasses major shareholders for their views with respect to company matters. · The Board has put in place policies and limits to control the Company’s use of derivatives and exposures. These are monitored daily by the Manager’s Compliance team and regular reports are provided to the Board. Further detail on derivative instruments risk is included in Note 17 to the Financial Statements below. · The Investment Policy sets the gearing limits within which the Manager must operate and the Board regularly considers the level of gearing and gearing risk. The Board regularly considers the level of gearing and gearing risk.
Comparative Index and/or peer group companies. · Continued underperformance could lead to the Company and its objective becoming unattractive to investors. · The Company gears using derivatives including CFDs which provide greater flexibility and are
generally cheaper than bank loans. The principal risk is that the Portfolio Managers fail to use gearing effectively, resulting in a failure to outperform in a rising market or to underperform in a falling market. · Derivative instruments are used to
enhance investment returns, as well as for hedging and efficient portfolio management purposes. There is a risk that the use of derivatives may lead to higher volatility in the NAV and the share price than might otherwise be the case.
6. Cybercrime and Information Security
Trend ( from previous year ): Increased
Description and Impact Mitigation
· Cybersecurity risk increased use of artificial intelligence (AI) and cyberattacks or threats to the functioning of global markets and to the Manager’s own business model, including its and the Company’s outsourced suppliers. · Risk of cybercrime such · The risk is monitored by the Board with the help of the Manager’s global cybersecurity team and their extensive Strategic Cyber and Information Security programme and assurances from outsourced suppliers. · The Manager has established a comprehensive framework of information security policies and standards which provide a structured approach to identify, prevent, and respond to information security threats. The framework ensures consistency in Fidelity’s security measures, enhances its ability to adapt to evolving/emerging threats, and compliance with changing regulatory requirements. The Company’s other service providers also have similar measures in place. · Key performance indicators and metrics have been developed by the Manager to monitor the overall efficacy of cybersecurity processes and controls and to further enhance the Manager’s cybersecurity strategy and operational resilience.
as phishing, remote access threats, extortion, and denial-of-service attacks from highly organised criminal networks and sophisticated ransomware operators, including threats such as service disruption/extortion attacks (DDoS, ransomware), financial theft
and data breaches, regulatory non-compliance, reputational damage/loss of customer trust. The threat environment continues to evolve rapidly, including the heightened potential threat from nation state backed threat actor due to geopolitical tensions from
the current wars in Ukraine and Gaza. Ransomware continues to increase globally and is also becoming a supply chain risk.
7. Business Continuity and Crisis Management
Trend ( from previous year ): Decreased
Description and Impact Mitigation
· Business process disruption risk from continued threats of cyberattacks, geopolitical events, outages, fire events and natural disasters, resulting in financial and/or reputational impact to the Company affecting the functioning of the business. · The · Fidelity has Business Continuity and Crisis Management Frameworks in place to deal with business disruption and assure operational resilience. · All third-party service providers are subject to a risk-based programme of risk oversight and internal audits by the Manager and their own internal controls reports are received an annual basis and any concerns are investigated.
Company relies on a number of third-party service providers, principally the Registrar, Custodian and Depositary who may be subject to cybercrime.
8. Operational Risks
Trend ( from previous year ): Stable
Description and Impact Mitigation
· Financial losses or reputational damage from inadequate or failed internal processes, people and systems or from external parties and events. · Fidelity’s Operational Risk Management Framework is designed to pro-actively prevent, identify and manage operational risks inherent in most activities. · Fidelity uses robust systems and procedures dedicated to its operational processes. Its risk management structure is designed according to the FCA’s three lines of defence model.
9. Key Person Risk
Trend ( from previous year ): Stable
Description and Impact Mitigation
· Loss of the Portfolio Manager, Co-Portfolio Manager or other key individuals could lead to potential performance and/or operational issues. · The Portfolio Manager, Nitin Bajaj, has a differentiated style in relation to his peers. This style is · The Company has a Co-Portfolio Manager, Ajinkya Dhavale, who supports the Portfolio Manager, and has extensive experience in the Asian markets and companies and shares a common investment approach and complementary investment experience with the Portfolio Manager. The Portfolio Manager is also supported by an Investment Director, Himalee Bahl, as a primary spokesperson for the Company. This helps strengthen the investment process. · The Manager identifies key dependencies which are then addressed through succession plans, particularly for portfolio managers.
intrinsically linked with the Company’s investment philosophy and strategy and, therefore, the Company has a key person dependency on him. · There is also a risk that the Manager has inadequate succession plans for other key operational individuals.
Emerging Risks
The Audit Committee continues to identify any new emerging risks and
take any action necessary to mitigate their potential impact. The risks
identified are placed on the Company’s risk matrix and appropriately graded.
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 by the Audit Committee. The Board determines the nature
and extent of any risks it is willing to take to achieve its strategic
objectives.
Climate change, which refers to a large scale shift in the planet’s weather
patterns and average temperatures, continues to be a key emerging issue as
well as a risk confronting asset managers and their investors. Globally,
climate change effects are already being experienced in the form of changing
weather patterns. Extreme weather events can potentially impact the operations
of investee companies, their supply chains and their customers. The Board
notes that the Manager has integrated ESG considerations, including climate
change, into the Company’s investment process. The Board will continue to
monitor how this may impact the Company as a risk to investment valuations and
potentially to shareholder returns.
The Board, together with the Manager, is also monitoring the emerging risk
posted by the rapid advancement of artificial intelligence (“AI”) and
technology and how it may threaten the Company’s activities and its
potential impact on the portfolio and investee companies. AI can provide asset
managers powerful tools, such as enhancing data analysis risk management,
trading strategies, operational efficiency and client servicing, all of which
can lead to better investment outcomes and more efficient operations. However,
with these advances in computer power that will impact society, there are
risks from its increasing use and manipulation with the potential to harm,
including a heightened threat to cybersecurity.
The Board and the Manager regularly consider other emerging risks which may
continue to evolve from unforeseen geopolitical and economic events.
Emerging Risks – Manager’s Role
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 related uncertainties to ensure that the Board can continue
to meet its UK corporate governance obligations.
Annual Review of Full Risk Register
The Company has a full risk register which includes less material
risks which the Board reviews at least annually.
GOING CONCERN STATEMENT
The Directors have considered the Company’s investment objective,
risk management policies, liquidity risk, credit risk, capital management
policies and procedures, the nature of its portfolio and its expenditure and
cash flow projections. The Directors, having considered the liquidity of the
Company’s portfolio of investments (being mainly securities which are
readily realisable) and the projected income and expenditure, are satisfied
that the Company is financially sound and has adequate resources to meet all
of its liabilities and ongoing expenses and 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 2026 which is at least twelve months from the
date of approval of the Financial Statements. This conclusion also takes into
account the Board’s assessment of the ongoing risks from significant global
geopolitical and market events and regulatory changes that could impact the
Company’s performance, prospects and operations.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
The prospects of the Company over a period longer than twelve months can be
found in the Viability Statement below.
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 UK Corporate Governance
Code, the Directors have assessed the prospects of the Company over a longer
period than the twelve month period required by the “Going Concern” basis
above. The Company is an investment trust with the objective of achieving
long-term capital growth. The Board considers 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 level of gearing;
· The Company’s NAV and share price performance versus
its Comparative Index;
· The principal and emerging risks and uncertainties
facing the Company and their potential impact as set out above;
· The Company’s continuation vote;
· The future demand for the Company’s shares;
· The Company’s share price discount to the NAV;
· The liquidity of the Company’s portfolio;
· The level of income generated by the Company; and
· Future income and expenditure forecasts.
The Board regularly reviews the investment policy and considers that 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 Company’s portfolio mainly comprises readily
realisable securities which can be sold to meet funding requirements if
necessary;
· The Board’s discount management policy; and
· The ongoing processes for monitoring operating costs
and income which are considered to be reasonable in comparison to the
Company’s total assets.
In preparing the Financial Statements, the Directors have considered the
impact of climate change and potential emerging risks from the use of
artificial intelligence, as detailed above. The Board has also considered the
impact of regulatory changes, ongoing geopolitical tensions and unforeseen
market events, and how these 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 above.
A continuation vote takes place every five years. There is a risk that
shareholders do not vote in favour of the continuation of the Company during
periods when performance of the Company’s NAV and share price is poor. The
last continuation vote was at the Company’s AGM held on 3 December 2021. The
next continuation vote will take place at the AGM in 2026.
PROMOTING THE SUCCESS OF THE COMPANY
Under Section 172(1) of the Companies Act 2006, the 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.
As an externally managed investment trust, 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, custodial, 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 investment objective and strategy, while providing the highest
standards of legal, regulatory and commercial conduct.
The Board, with the Portfolio Managers, sets the overall investment strategy
and reviews this at an annual strategy day which is separate from the regular
cycle of board meetings. In order to ensure good governance of the Company,
the Board has set various limits on the investments in the portfolio, whether
in the maximum size of individual holdings, the use of derivatives, the level
of gearing and others. These limits and guidelines are regularly monitored and
reviewed and are set out in the Annual Report.
The Board receives regular reports from the Company’s Broker which covers
market activity, and how the Company compares with its peers in its sector on
performance, discount and share repurchase activity, an analysis of the
Company’s share register and market trends.
The Board places great importance on communication with shareholders. The
Annual General Meeting (“AGM”) provides the key forum for the Board and
the Portfolio Managers to present to the shareholders on the Company’s
performance and future plans and the Board encourages all shareholders to
attend either in person or virtually and raise any questions or concerns. The
Chairman and other Board members are available to meet shareholders as
appropriate. Shareholders may also communicate with Board members at any time
by writing to them at the Company’s registered office at FIL Investments
International, Beech Gate, Millfield Lane, Tadworth, Surrey KT20 6RP or via
the Company Secretary in writing at the same address or by email at
investmenttrusts@fil.com .
The Portfolio Managers meet with major shareholders, potential investors,
stock market analysts, journalists and other commentators during 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 and considers the Manager’s 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:
· The decision to seek shareholder approval at the
forthcoming AGM to amend the Company’s Investment Objective and Investment
Policy;
· The decision to allocate 75% of the base management
fee and finance costs to capital and 25% to revenue with effect from 1 August
2024;
· The decision to seek shareholder approval at the AGM
to update the Company’s Articles of Association;
· Carrying out an audit tender as the current Auditor
will have been in place for 10 years in November this year.
· The decision to once again hold a hybrid AGM this year
in order to make it more accessible and improve the shareholder experience;
· Authorising the repurchase of 6,825,983 ordinary
shares since 1 August 2024 and up to the latest practicable date of this
document in line with the Board’s discount management policy;
· The decision to repurchase shares for cancellation
rather than into Treasury with effect from 1 August 2025. Since that date,
822,911 shares already held in Treasury have been cancelled; and
· The decision to recommend the payment of a final
dividend of 20.5 pence per ordinary share.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial period. Under that law they have elected to prepare the Financial
Statements in accordance with UK Generally Accepted Accounting Practice (UK
Accounting Standards and applicable law), including Financial Reporting
Standard FRS 102: The Financial Reporting Standard applicable in the UK and
Republic of Ireland (“FRS 102”). Under company law, the Directors must not
approve the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of the profit or
loss for the reporting period.
In preparing these Financial Statements, the Directors are required to:
· Select suitable accounting policies in accordance with
Section 10 of FRS 102 and then apply them consistently;
· Make judgements and accounting estimates that are
reasonable and prudent;
· Present information, including accounting policies, in
a manner that provides relevant, reliable, comparable and understandable
information;
· State whether applicable UK Accounting Standards,
including FRS 102, have been followed, subject to any material departures
disclosed and explained in the Financial Statements; and
· Prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate 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 to
enable them to ensure that the Company and the Financial Statements comply
with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, a Directors’ Report, a Corporate Governance
Statement and a Directors’ Remuneration Report that comply with that law and
those regulations.
The Directors have delegated to the Manager the responsibility for the
maintenance and integrity of the corporate and financial information included
on the Company’s pages of the Manager’s website at
www.fidelity.co.uk/asianvalues .
Visitors to the website need to be aware that legislation in the UK
governing the preparation and dissemination of the Financial Statements may
differ from legislation in their own jurisdictions.
The Directors confirm that to the best of their knowledge:
· The Financial Statements, prepared in accordance with
UK Generally Accepted Accounting Practice, including FRS 102, give a true and
fair view of the assets, liabilities, financial position and profit of the
Company;
· The Annual Report, including the Strategic Report,
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
risks and uncertainties it faces; and
· The Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s performance, business
model and strategy.
The Statement of Directors’ Responsibilities was approved by the Board on 16
October 2025 and signed on its behalf by:
Clare Brady
Chairman
Income Statement for the year ended 31 July 2025
Year ended 31 July 2025 Year ended 31 July 2024
Notes Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 10 – 21,141 21,141 – 10,399 10,399
Gains/(losses) on derivative instruments 11 – 12,024 12,024 – (5,073) (5,073)
Income 3 19,419 – 19,419 17,605 – 17,605
Investment management fees 4 (673) (2,577) (3,250) (2,749) (744) (3,493)
Other expenses 5 (963) (6) (969) (992) – (992)
Foreign exchange (losses)/gains – (761) (761) – 107 107
--------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before finance costs and taxation 17,783 29,821 47,604 13,864 4,689 18,553
Finance costs 6 (688) (2,065) (2,753) (2,473) – (2,473)
--------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before taxation 17,095 27,756 44,851 11,391 4,689 16,080
========= ========= ========= ========= ========= =========
Taxation on return on ordinary activities 7 (1,563) 85 (1,478) (1,203) (3,215) (4,418)
Net return on ordinary activities after taxation for the year 15,532 27,841 43,373 10,188 1,474 11,662
Return per ordinary share 8 22.51p 40.34p 62.85p 14.24p 2.06p 16.30p
========= ========= ========= ========= ========= =========
The Company does not have any other comprehensive income. Accordingly, the net
return on ordinary activities 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 Income Statement of the
Company. The revenue and capital columns are supplementary and presented for
information purposes as recommended by the Statement of Recommended Practice
issued by the AIC.
No operations were acquired or discontinued in the year and all items in the
above statement derive from continuing operations.
The Notes below form an integral part of these Financial Statements.
Statement of Changes in Equity for the year ended 31 July 2025
Notes Share Share Capital Other non– Capital Revenue Total
capital premium redemption distributable reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 funds
£’000 £’000 £’000 £’000
Total shareholders’ funds at 31 July 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
Net return on ordinary activities after taxation for the year – – – – 27,841 15,532 43,373
Repurchase of ordinary shares 14 – – – – (22,532) – (22,532)
Dividend paid to shareholders 9 – – – – – (10,147) (10,147)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 July 2025 18,895 50,501 3,197 7,367 302,519 20,229 402,708
========= ========= ========= ========= ========= ========= =========
Total shareholders’ funds at 31 July 2023 18,895 50,501 3,197 7,367 299,562 15,055 394,577
Net return on ordinary activities after taxation for the year – – – – 1,474 10,188 11,662
Repurchase of ordinary shares 14 – – – – (3,826) – (3,826)
Dividend paid to shareholders 9 – – – – – (10,399) (10,399)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 July 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
========= ========= ========= ========= ========= ========= =========
The Notes below form an integral part of these Financial Statements.
Balance Sheet as at 31 July 2025
Company number 03183919
Notes 2025 2024
£’000 £’000
Fixed assets
Investments 10 377,051 378,577
--------------- --------------- ---------------
Current assets
Derivative instruments 11 2,278 1,297
Debtors 12 1,839 4,379
Amounts held at futures clearing houses and brokers 2,674 4,413
Cash and cash equivalents 25,407 9,070
--------------- ---------------
32,198 19,159
========= =========
Current liabilities
Derivative instruments 11 (2,045) (2,045)
Other creditors 13 (4,494) (3,242)
Bank overdrafts (2) (435)
--------------- ---------------
(6,541) (5,722)
========= =========
Net current assets 25,657 13,437
--------------- ---------------
Net assets 402,708 392,014
========= =========
Capital and reserves
Share capital 14 18,895 18,895
Share premium account 15 50,501 50,501
Capital redemption reserve 15 3,197 3,197
Other non-distributable reserve 15 7,367 7,367
Capital reserve 15 302,519 297,210
Revenue reserve 15 20,229 14,844
--------------- ---------------
Total shareholders’ funds 402,708 392,014
========= =========
Net asset value per ordinary share 16 604.69p 551.66p
========= =========
The Financial Statements above and below were approved by the Board of
Directors on 16 October 2025 and were signed on its behalf by:
CLARE BRADY
Chairman
The Notes below form an integral part of these Financial Statements.
Notes to the Financial Statements
1 Principal Activity
Fidelity Asian Values PLC is an Investment Company incorporated in
England and Wales that is listed on the London Stock Exchange. The Company’s
registration number is 3183919, and its registered office is Beech Gate,
Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20
6RP. The Company has been approved by HM Revenue & Customs as an Investment
Trust under Section 1158 of the Corporation Tax Act 2010 and intends to
conduct its affairs so as to continue to be approved.
2 Accounting Policies
The Company has prepared its Financial Statements in accordance with
UK Generally Accepted Accounting Practice (“UK GAAP”), including FRS 102
“The Financial Reporting Standard applicable in the UK and Republic of
Ireland”, issued by the Financial Reporting Council (“FRC”). The
Financial Statements have also been prepared in accordance with the Statement
of Recommended Practice: Financial Statements of Investment Trust Companies
and Venture Capital Trusts (“SORP”) issued by the Association of
Investment Companies (“AIC”), in July 2022. The
Company is exempt from presenting a Cash Flow Statement as a Statement of
Changes in Equity is presented and substantially all of the Company’s
investments are highly liquid and are carried at market value.
(a) Basis of accounting – The Financial Statements have
been prepared on a going concern basis and under the historical cost
convention, except for the measurement at fair value of investments and
derivative instruments. The Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence up to 31
October 2026, which is at least twelve months from the date of approval of
these Financial Statements. In making their assessment the Directors have
reviewed income and expense projections, reviewed the liquidity of the
investment portfolio and considered the Company’s ability to meet
liabilities as they fall due. This conclusion also takes into account the
Director’s assessment of the risks faced by the Company as detailed in the
Going Concern Statement above.
In preparing these Financial Statements the Directors have considered the
impact of climate change risk as an emerging risk as set out above, and have
concluded that there was no further impact of climate change to be taken into
account as the investments are valued based on market pricing. In line with
FRS 102, investments are valued at fair value, which for the Company are
quoted bid prices for investments in active markets at the Balance Sheet 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.
The Company’s Going Concern Statement above takes account of all events and
conditions up to 31 October 2026 which is at least twelve months from the date
of approval of these Financial Statements.
b) Significant accounting estimates and judgements – The
preparation of the Financial Statements requires the use of estimates and
judgements. These estimates and judgements affect the reported amounts of
assets and liabilities at the reporting date. While estimates are based on
best judgement using information and financial data available, the actual
outcome may differ from these estimates.
The key sources of estimation and uncertainty relate to the fair value of the
unlisted investments.
JUDGEMENTS
The Directors consider whether each fair value is appropriate
following detailed review and challenge of the pricing methodology. The
judgement applied in the selection of the methodology used (see Note 2 (k))
for determining the fair value of each unlisted investment can have a
significant impact upon the valuation.
ESTIMATES
The key estimate in the Financial Statements is the determination of
the fair value of the unlisted investments by the Manager’s Fair Value
Committee (“FVC”), with support from the external valuer and Fidelity’s
unlisted investments specialists, for detailed review and appropriate
challenge by the Directors. This estimate is key as it significantly impacts
the valuation of the unlisted investments at the Balance Sheet date. When no
recent primary or secondary transaction in the company’s shares have taken
place, the fair valuation process involves estimation using subjective inputs
that are unobservable (for which market data is unavailable). The estimates
involved in the valuation process may include the following:
(i) the selection of appropriate comparable companies.
Comparable companies are chosen on the basis of their business characteristics
and growth patterns;
(ii) the selection of a revenue metric (either historical
or forecast);
(iii) the selection of an appropriate illiquidity
discount factor to reflect the reduced liquidity of unlisted companies versus
their listed peers;
(iv) the estimation of the likelihood of a future exit of
the position through an initial public offering (“IPO”) or a company sale;
(v) the selection of an appropriate industry benchmark
index to assist with the valuation; and
(vi) the calculation of valuation adjustments derived
from milestone analysis and future cash flows (i.e. incorporating operational
success against the plans/forecasts of the business into the valuation).
As the valuation outcomes may differ from the fair value estimates a price
sensitivity analysis is provided in the Other Price Risk Sensitivity in Note
17, to illustrate the effect on the Financial Statements of an over or under
estimation of fair value.
The risk of an over or under estimation of fair value is greater when
methodologies are applied using more subjective inputs.
c) Segmental reporting – The Company is engaged in a
single segment business and, therefore, no segmental reporting is provided.
d) Presentation of the Income Statement – In order to
reflect better the activities of an investment company and in accordance with
guidance issued by the AIC, supplementary information which analyses the
Income Statement between items of a revenue and capital nature has been
prepared alongside the Income Statement. The net revenue return after taxation
for the year is the measure the Directors believe appropriate in assessing the
Company’s compliance with certain requirements set out in Section 1159 of
the Corporation Tax Act 2010.
e) Income – Income from equity investments is accounted
for on the date on which the right to receive the payment is established,
normally the ex-dividend date. Overseas dividends are accounted for gross of
any tax deducted at source. Amounts are credited to the revenue column of the
Income Statement. Where the Company has elected to receive its dividends in
the form of additional shares rather than cash, the amount of the cash
dividend foregone is recognised in the revenue column of the Income Statement.
Any excess in the value of the shares received over the amount of the cash
dividend is recognised in the capital column of the Income Statement. Special
dividends are treated as a revenue receipt or a capital receipt depending on
the facts and circumstances of each particular case.
Derivative instrument income received from dividends on long contracts for
difference (“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 to the revenue column of the Income Statement.
Interest received on CFDs, bank deposits, collateral and money market funds
are accounted for on an accruals basis and credited to the revenue column of
the Income Statement. Interest received on CFDs represent the finance costs
calculated by reference to the notional value of the CFDs.
f) Investment management fees and other expenses –
Investment management fees and other expenses are accounted for on an accruals
basis and are charged as follows:
· With effect from 1 August 2024, the base investment
management fee is allocated 25% to revenue and 75% to capital in line with the
Board’s expected long-term split of revenue and capital returns from the
Company’s portfolio of investments. Prior to 1 August 2024, the base
investment management fee were allocated in full to revenue;
· The variable investment management fee continues to be
charged/credited to capital as it is based on the performance of the net asset
value per share relative to the Benchmark Index; and
· All other expenses continue to be allocated in full to
revenue with the exception of those directly attributable to share issues or
other capital events.
g) Functional currency and foreign exchange – The
functional and reporting currency of the Company is UK sterling, which is the
currency of the primary economic environment in which the Company operates.
Transactions denominated in foreign currencies are reported in UK sterling at
the rate of exchange ruling at the date of the transaction. Assets and
liabilities in foreign currencies are translated in the rates of exchange
ruling at the Balance Sheet date. Foreign exchange gains and losses arising on
the translation are recognised in the Income Statement as a revenue or a
capital item depending on the nature of the underlying item to which they
relate.
h) Finance costs – Finance costs comprise interest on
bank overdrafts 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. With effect from 1 August 2024, finance costs are
allocated 25% to revenue and 75% to capital in line with the Board’s
expected long-term split of revenue and capital returns from the Company’s
portfolio of investments. Prior to 1 August 2024, finance costs were allocated
in full to revenue.
i) Taxation – The taxation charge represents the sum of
current taxation and deferred taxation.
Current taxation is taxation suffered at source on overseas income less
amounts recoverable under taxation treaties. Taxation is charged or credited
to the revenue column of the Income Statement, except where it relates to
items of a capital nature, in which case it is charged or credited to the
capital column of the Income Statement. Where expenses are allocated between
revenue and capital any tax relief in respect of the expenses is allocated
between revenue and capital returns on the marginal basis using the
Company’s effective rate of corporation tax for the accounting period. The
Company is an approved Investment Trust under Section 1158 of the Corporation
Tax Act 2010 and is not liable for UK taxation on capital gains.
Deferred taxation is the taxation expected to be payable or recoverable on
timing differences between the treatment of certain items for accounting
purposes and their treatment for the purposes of computing taxable profits.
Deferred taxation is based on tax rates that have been enacted or
substantively enacted when the taxation is expected to be payable or
recoverable. Deferred tax assets are only recognised if it is considered more
likely than not that there will be sufficient future taxable profits to
utilise them.
j) Dividend paid – Dividends payable to equity
shareholders are recognised when the Company’s obligation to make payment is
established.
k) Investments – The Company’s business is investing
in financial instruments with a view to profiting from their total return in
the form of income and long-term capital growth. This portfolio of investments
is managed and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy, and information about the portfolio is
provided on that basis to the Company’s Board of Directors. Investments are
measured at fair value with changes in fair value recognised in profit or
loss, in accordance with the provisions of both Section 11 and Section 12 of
FRS 102. The fair value of investments is initially taken to be their cost and
is subsequently measured as follows:
· Listed investments are valued at bid prices, or last
market prices, depending on the convention of the exchange on which they are
listed, and
· Unlisted investments are not quoted, or are not
frequently traded, and are stated at the best estimate of fair value. The
Manager’s Fair Value Committee (“FVC”), which is independent of the
Portfolio Managers’ team, meets quarterly to determine the fair value of
unlisted investments. These are based on the principles outlined in Note 2
(b).
The unlisted investments are valued at fair value following a detailed review
and appropriate challenge by the Directors of the pricing methodology proposed
by the FVC.
The FVC provide a recommendation of fair values to the Directors based on
recognised valuation techniques that take account of the cost of the
investment, recent arm’s length transactions in the same or similar
investments and financial performance of the investment since purchase.
Consideration is given to the input received from the Fidelity International
analyst that covers the company, the external valuer and Fidelity’s unlisted
investments specialist.
In accordance with the AIC SORP, the Company includes transaction costs,
incidental to the purchase or sale of investments, within gains on investments
in the capital column of the Income Statement and has disclosed these costs in
Note 10.
l) Derivative instruments – When appropriate, permitted
transactions in derivative instruments are used. Derivative transactions into
which the Company may enter include long and short CFDs, futures, options and
forward currency contracts. Derivatives are classified as other financial
instruments 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 Balance Sheet
date; and
· Options – the quoted trade price for the contract.
Where transactions are used to protect or enhance income, if the circumstances
support this, the income and expenses derived are included in net income in
the revenue column of the Income Statement. Where such transactions are used
to protect or enhance capital, if the circumstances support this, the income
and expenses derived are included in gains on derivative instruments in the
capital column of the Income Statement. Any positions on such transactions
open at the year end are reflected on the Balance Sheet at their fair value
within current assets or current liabilities.
m) Debtors – Debtors include securities sold for future
settlement, amounts receivable on the settlement of derivatives, 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 (or
in the normal operating cycle of the business, if longer) they are classified
as current assets. If not, they are presented as non-current assets. They are
recognised initially at fair value and, where applicable, subsequently
measured at amortised cost using the effective interest rate method.
n) Amounts held at futures clearing houses and brokers –
These are amounts held in segregated accounts on behalf of brokers as
collateral against open derivative contracts. These are carried at amortised
cost.
o) Cash and cash equivalents – Cash and cash equivalents
may comprise cash at bank and money market funds which are short-term, highly
liquid and are readily convertible to a known amount of cash. These are
subject to an insignificant risk of changes in value.
p) Other creditors – Other creditors include securities
purchased for future settlement, amounts payable for repurchase of shares,
Indian capital gains tax payable, short CFD dividends payable, investment
management fees, secretarial and administration fees and other creditors and
expenses accrued in the ordinary course of business. If payment is due within
one year or less (or in the normal operating cycle of the business, if longer)
they are classified as current liabilities. If not, they are presented as
non-current liabilities. They are recognised initially at fair value and,
where applicable, subsequently measured at amortised cost using the effective
interest rate method.
q) Capital reserve – The following are accounted for in
the capital reserve:
· Gains and losses on the disposal of investments and
derivative instruments;
· Changes in the fair value of investments and
derivative instruments, held at the year end;
· Foreign exchange gains and losses of a capital nature;
· Variable element of management fee;
· With effect from 1 August 2024, 75% of base investment
management fees;
· With effect from 1 August 2024, 75% of finance costs;
· 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.
Technical guidance issued by the Institute of Chartered Accountants in England
and Wales in TECH 02/17BL, guidance on the determination of realised profits
and losses in the context of distributions under the Companies Act 2006,
states that changes in the fair value of investments which are readily
convertible to cash, without accepting adverse terms at the Balance Sheet
date, can be treated as realised. Capital reserves realised and unrealised are
shown in aggregate as capital reserve in the Statement of Changes in Equity
and the Balance Sheet. At the Balance Sheet date, the portfolio of the Company
consisted of investments listed on a recognised stock exchange and derivative
instruments contracted with counterparties having an adequate credit rating,
and the portfolio was considered to be readily convertible to cash, with the
exception of the level 3 investments which had unrealised investment holding
gains of £1,676,000 (2024: losses of £1,088,000). See Note 17 below for
further details on the level 3 investments.
3 Income
Year ended Year ended
31.07.25 31.07.24
£’000 £’000
Investment income
Overseas dividends 15,258 14,009
Overseas scrip dividends 40 172
Interest on securities 625 584
--------------- ---------------
15,923 14,765
========= =========
Derivative income
Dividends received on long CFDs 2,529 1,797
Interest received on CFDs 360 462
--------------- ---------------
2,889 2,259
========= =========
Other interest
Interest received on bank deposits, collateral and money market funds 607 581
--------------- ---------------
Total income 19,419 17,605
========= =========
No special dividends have been recognised in capital during the year (2024:
£1,827,000).
4 Investment Management Fees
Year ended 31 July 2025 Year ended 31 July 2024
Revenue 1 Capital 1 Total Revenue 1 Capital 1 Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fees – base 673 2,020 2,693 2,749 – 2,749
Investment management fees – variable 2 – 557 557 – 744 744
--------------- --------------- --------------- --------------- --------------- ---------------
673 2,577 3,250 2,749 744 3,493
========= ========= ========= ========= ========= =========
1 As disclosed in Note 2, base investment management fees
for the year ended 31 July 2025 are charged 25% to revenue and 75% to capital.
For the year ended 31 July 2024, base investment management fees were charged
100% to revenue.
2 For the calculation of the variable management fee, the
Company’s NAV return was compared to the Benchmark Index return on a rolling
three year basis.
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager and has delegated portfolio management to FIL Investments
International (“FII”). Both companies are Fidelity group companies.
FII charges base investment management fees at an annual rate of 0.70% of net
assets. In addition, there is +/- 0.20% variation fee based on the Company’s
NAV per ordinary share performance relative to the Company’s Benchmark Index
which is charged/credited to capital. Fees are payable monthly in arrears and
are calculated on a daily basis.
5 Other Expenses
Year ended Year ended
31.07.25 31.07.24
£’000 £’000
Allocated to revenue:
AIC fees 18 21
Custody fees 72 73
Depositary fees 31 31
Directors’ expenses 72 54
Directors’ fees 1 190 189
Legal and professional fees 120 189
Marketing expenses 181 172
Printing and publication expenses 89 73
Registrars’ fees 40 44
Secretarial and administration fees payable to the Investment Manager 75 75
Sundry other expenses 17 20
Fees payable to the Company’s Independent Auditor for the audit of the Financial Statements 2 58 51
--------------- ---------------
963 992
========= =========
Allocated to capital:
Legal and professional fees 6 –
--------------- ---------------
Other expenses 969 992
========= =========
1 Details of the breakdown of Directors’ fees are
disclosed in the Directors’ Remuneration Report in the Annual Report.
2 Included in the current year's audit fee is an amount
of £3,750 in respect of additional scope of work relating to the transition
of reporting functions to JP Morgan and has been settled by the Manager (FIL
Investment Services (UK) Limited). This amount has been offset against sundry
other expenses for 2025 in the table above.
6 Finance Costs
Year ended 31 July 2025 Year ended 31 July 2024
Revenue 1 Capital 1 Total Revenue 1 Capital 1 Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank overdrafts 7 22 29 1 – 1
Interest paid on CFDs 447 1,340 1,787 2,147 – 2,147
Dividends paid on short CFDs 234 703 937 325 – 325
--------------- --------------- --------------- --------------- --------------- ---------------
688 2,065 2,753 2,473 – 2,473
========= ========= ========= ========= ========= =========
1 As disclosed in Note 2, finance costs for the year
ended 31 July 2025 are charged 25% to revenue and 75% to capital. For the year
ended 31 July 2024, finance costs were charged 100% to revenue.
7 Taxation on Return on Ordinary Activities
Year ended 31 July 2025 Year ended 31 July 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
a) Analysis of the taxation charge for the year
Overseas taxation 1,563 – 1,563 1,203 – 1,203
Indian capital gains tax – (85) (85) – 3,215 3,215
--------------- --------------- --------------- --------------- --------------- ---------------
Taxation charge for the year (see Note 7b) 1,563 (85) 1,478 1,203 3,215 4,418
========= ========= ========= ========= ========= =========
b) Factors affecting the taxation charge for the year
The taxation charge for the year is lower than the standard rate of
UK corporation tax for an investment trust company of 25% (2024: 25%). A
reconciliation of the standard rate of UK corporation tax to the taxation
charge for the year is shown below:
Year ended 31 July 2025 Year ended 31 July 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return on ordinary activities before taxation 17,095 27,756 44,851 11,391 4,689 16,080
Net return on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 25% 4,274 6,939 11,213 2,848 1,172 4,020
(2024: rate of 25%)
Effects of:
Capital gains not taxable 1 – (8,101) (8,101) – (1,358) (1,358)
Income not taxable (3,780) – (3,780) (3,464) – (3,464)
Expenses not deductible – 511 511 – – –
Excess management expenses (494) 651 157 620 186 806
Expense relief for overseas taxation – – – (4) – (4)
Overseas taxation 1,563 – 1,563 1,203 – 1,203
Indian capital gains tax 2 – (85) (85) – 3,215 3,215
--------------- --------------- --------------- --------------- --------------- ---------------
Taxation charge for the year (see Note 7a) 1,563 (85) 1,478 1,203 3,215 4,418
========= ========= ========= ========= ========= =========
1 The Company is exempt from UK corporation tax on
capital gains as it meets the HM Revenue & Customs criteria for an investment
company set out in Section 1159 of the Corporation Tax Act 2010.
2 The Indian capital gains tax charge is composed of
£581,000 (2024: charge of £1,081,000) credited in the year and £496,000
(2024: £2,134,000) deferred until such time as the Indian investments are
sold.
c) Deferred taxation
A deferred tax asset of £9,589,000 (2024: £9,432,000), in respect
of excess management expenses of £36,087,000 (2024: £35,457,000) and excess
interest paid of £2,271,000 (2024: £2,271,000), has not been recognised as
it is unlikely that there will be sufficient future taxable profits to utilise
these expenses.
8 RETURN PER ORDINARY SHARE
Year ended Year ended
31.07.25 31.07.24
Revenue return per ordinary share 22.51p 14.24p
Capital return per ordinary share 40.34p 2.06p
--------------- ---------------
Total return per ordinary share 62.85p 16.30p
========= =========
The return per ordinary share is based on the net return on ordinary
activities after taxation for the year divided by the weighted average number
of ordinary shares held outside of Treasury during the year, as shown below:
£’000 £’000
Net revenue return on ordinary activities after taxation 15,532 10,188
Net capital return on ordinary activities after taxation 27,841 1,474
Net total return on ordinary activities after taxation 43,373 11,662
========= =========
Number Number
Weighted average number of ordinary shares held outside of Treasury 69,010,726 71,551,097
========= =========
9 Dividends Paid to Shareholders
Year ended Year ended
31.07.25 31.07.24
£’000 £’000
Dividend paid
Dividend of 14.5 pence per ordinary share paid for the year ended 31 July 2024 10,147 –
Dividend of 14.5 pence per ordinary share paid for the year ended 31 July 2023 – 10,399
--------------- ---------------
10,147 10,399
========= =========
Dividend proposed
Dividend of 20.5 pence per ordinary share proposed for the year ended 31 July 2025 13,168 –
Dividend of 14.5 pence per ordinary share proposed for the year ended 31 July 2024 – 10,204
--------------- ---------------
13,168 10,204
========= =========
The Directors have proposed the payment of a dividend for the year ended 31
July 2025 of 20.5 pence per ordinary share which is subject to approval by
shareholders at the Annual General Meeting on 26 November 2025 and has not
been included as a liability in these Financial Statements. If approved, the
dividend will be paid on 11 December 2025 to shareholders on the register at
the close of business on 14 November 2025 (ex-dividend date 13 November 2025).
10 Investments at Fair Value through Profit or Loss
2025 2024
£’000 £’000
Listed investments 371,717 378,517
Unlisted investments 5,334 60
--------------- ---------------
Investments at fair value 377,051 378,577
========= =========
Opening book cost 406,135 374,514
Opening investment holding (losses)/gains (27,558) 3,117
--------------- ---------------
Opening fair value 378,577 377,631
========= =========
Movements in the year
Purchases at cost 209,010 217,080
Sales – proceeds (231,677) (226,533)
Gains on investments 21,141 10,399
--------------- ---------------
Closing fair value 377,051 378,577
========= =========
Closing book cost 377,392 406,135
Closing investment holding losses (341) (27,558)
--------------- ---------------
Closing fair value 377,051 378,577
========= =========
The Company received £231,677,000 (2024: £226,533,000) from investments sold
in the year. The book cost of these investments when they were purchased was
£237,753,000 (2024: £185,459,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the
fair value of the investments.
INVESTMENT TRANSACTION COSTS
Transaction costs incurred in the acquisition and disposal of
investments, which are included in the gains on the investments above, were as
follows:
Year ended Year ended
31.07.25 31.07.24
£’000 £’000
Purchases transaction costs 241 249
Sales transaction costs 338 410
--------------- ---------------
579 659
========= =========
11 Derivative Instruments
Year ended Year ended
31.07.25 31.07.24
£’000 £’000
Gains/(losses) on derivative instruments
Realised gains/(losses) on long CFD positions closed 9,504 (6,842)
Realised gains on short CFD positions closed 1,245 2,417
Realised gains/(losses) on futures contracts closed 718 (62)
Realised (losses)/gains on options contracts closed (467) 1,136
Realised gains on forward currency contracts 70 –
Movement in investment holding gains/(losses) on long CFDs 1,143 (2,113)
Movement in investment holding gains on short CFDs 112 909
Movement in investment holding losses on futures (129) (162)
Movement in investment holding losses on options (172) (356)
--------------- ---------------
12,024 (5,073)
========= =========
2025 2024
Fair value Fair value
£’000 £’000
Derivative instruments recognised on the Balance Sheet
Derivative instrument assets 2,278 1,297
Derivative instrument liabilities (2,045) (2,045)
--------------- ---------------
233 (748)
========= =========
2025 2024
Fair value Asset Fair value Asset
£’000 exposure £’000 exposure
£’000 £’000
At the year end the Company held the following derivative instruments:
Long CFDs (172) 66,384 (1,315) 48,144
Call options (long exposure) – – 208 2,805
Short CFDs 485 21,913 373 12,995
Short futures (129) 2,353 – –
Put options (short exposure) 96 2,143 – –
Call options (short exposure) (47) 394 (14) 374
--------------- --------------- --------------- ---------------
233 93,187 (748) 64,318
========= ========= ========= =========
12 Debtors
2025 2024
£’000 £’000
Securities sold for future settlement 108 2,733
Amounts receivable on settlement of derivatives 699 66
Accrued income 874 1,162
Taxation recoverable 28 302
Other debtors and prepayments 130 116
--------------- ---------------
1,839 4,379
========= =========
13 Other Creditors
2025 2024
£’000 £’000
Securities purchased for future settlement 2,449 201
Amounts payable for repurchase of shares 172 –
Indian capital gains tax payable 496 2,134
Amounts payable on short CFD dividends 442 214
Finance costs payable 18 –
Creditors and accruals 917 693
--------------- ---------------
4,494 3,242
========= =========
14 Share Capital
2025 2024
Number of Nominal Number of Nominal
shares value shares value
£’000 £’000
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside of Treasury
Beginning of the year 71,060,556 17,766 71,829,336 17,958
Ordinary shares repurchased into Treasury (4,463,497) (1,116) (768,780) (192)
--------------- --------------- --------------- ---------------
End of the year 66,597,059 16,650 71,060,556 17,766
========= ========= ========= =========
Ordinary shares of 25 pence each held in Treasury 1
Beginning of the year 4,520,333 1,129 3,751,553 937
Ordinary shares repurchased into Treasury 4,463,497 1,116 768,780 192
--------------- --------------- --------------- ---------------
End of the year 8,983,830 2,245 4,520,333 1,129
========= ========= ========= =========
Total share capital 18,895 18,895
========= =========
1 Ordinary shares held in Treasury carry no rights to
vote, to receive a dividend or to participate in a winding up of the Company.
The cost of ordinary shares repurchased into Treasury during the year was
£22,532,000 (2024: £3,826,000).
15 Capital and Reserves
Share Share Capital Other non- Capital Revenue Total
capital premium redemption distributable reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 funds
£’000 £’000 £’000 £’000
At 1 August 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
Gains on investments (see Note 10) – – – – 21,141 – 21,141
Gains on derivative instruments (see Note 11) – – – – 12,024 – 12,024
Foreign exchange gains – – – – 761 – 761
Investment management fees (see Note 4) – – – – (2,577) – (2,577)
Other expenses (see Note 5) – – – – (6) – (6)
Finance cost (see Note 6) – – – – (2,065) – (2,065)
Indian capital gains tax (see Note 7) – – – – 85 – 85
Revenue return on ordinary activities after taxation for the year – – – – – 15,532 15,532
Dividend paid to shareholders (see Note 9) – – – – – (10,147) (10,147)
Repurchase of ordinary shares (see Note 14) – – – – (22,532) – (22,532)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 July 2025 18,895 50,501 3,197 7,367 302,519 20,229 402,708
========= ========= ========= ========= ========= ========= =========
At 1 August 2023 18,895 50,501 3,197 7,367 299,562 15,055 394,577
Gains on investments (see Note 10) – – – – 10,399 – 10,399
Losses on derivative instruments (see Note 11) – – – – (5,073) – (5,073)
Foreign exchange gains – – – – 107 – 107
Investment management fees (see Note 4) – – – – (744) – (744)
Indian capital gains tax (see Note 7) – – – – (3,215) – (3,215)
Revenue return on ordinary activities after taxation for the year – – – – – 10,188 10,188
Dividend paid to shareholders (see Note 9) – – – – – (10,399) (10,399)
Repurchase of ordinary shares (see Note 14) – – – – (3,826) – (3,826)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 July 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
========= ========= ========= ========= ========= ========= =========
The capital reserve balance at 31 July 2025 includes investment holding losses
of £341,000 (2024: losses of £27,558,000) as detailed in Note 10. See Note 2
(q) for further details. The revenue and capital reserves are distributable by
way of dividend.
16 Net Asset Value per Ordinary Share
The calculation of the net asset value per ordinary share is based
on the total shareholders’ funds divided by the number of ordinary shares
held outside of Treasury.
2025 2024
Total shareholders’ funds £402,708,000 £392,014,000
Ordinary shares held outside of Treasury at year end 66,597,059 71,060,556
Net asset value per ordinary share 604.69p 551.66p
========= =========
It is the Company’s policy that shares held in Treasury will only be
reissued at net asset value per ordinary share or at a premium to net asset
value per ordinary share and, therefore, shares held in Treasury have no
dilutive effect.
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 Manager, has developed a
risk matrix which, as part of the internal control process, identifies the
risks that the Company faces. Risks are identified and graded in this process,
together with steps taken in mitigation, and are updated and reviewed on an
ongoing basis. Risks identified are shown above.
This Note refers to the identification, measurement and management of risks
potentially affecting the value of financial instruments. The Company’s
financial instruments may comprise:
· Equity shares (listed and unlisted), equity linked
notes and corporate bonds held in accordance with the Company’s investment
objective and policies;
· Derivative instruments which comprise CFDs, forward
currency contracts, futures and options on listed stocks and equity indices;
and
· Cash, liquid resources and short-term debtors and
creditors that arise from its operations.
The risks identified 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, counterparty risk, credit risk and
derivative instruments risk. The Board reviews and agrees policies for
managing each of these risks, which are summarised below. These policies are
consistent with those followed last year.
MARKET PRICE RISK
INTEREST RATE RISK
The Company principally finances its operations through its share
capital and reserves. In addition, the Company has gearing through the use of
derivative instruments. The level of gearing is reviewed by the Board and the
Portfolio Managers. 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:
2025 2024
£’000 £’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 66,556 49,459
Bank overdrafts 2 435
--------------- ---------------
66,558 49,894
========= =========
Exposure to financial instruments that earn interest
Short CFDs – exposure plus fair value 22,398 13,368
Cash and cash equivalents 25,407 9,070
Amounts held at futures clearing houses and brokers 2,674 4,413
--------------- ---------------
50,479 26,851
========= =========
Net exposure to financial instruments that bear interest (16,079) (23,043)
========= =========
FOREIGN CURRENCY RISK
The Company’s net return on ordinary activities after taxation for
the year and its net assets can be affected by foreign exchange rate movements
because the Company has income, assets and liabilities which are denominated
in currencies other than the Company’s functional currency which is UK
sterling. The Portfolio Managers may seek to manage exposure to currency
movements by using forward and spot foreign exchange contracts. The Company
can also be subject to short-term exposure to exchange rate movements, for
example, between the date when an investment is purchased or sold and the date
when settlement of the transaction occurs.
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 derivative instruments;
· Movements in currency exchange rates affecting
short-term timing differences; and
· Movements in currency exchange rates affecting income
received.
CURRENCY EXPOSURE OF FINANCIAL ASSETS
The currency exposure profile of the Company’s financial assets is
shown below:
2025
Currency Investments Long Debtors 2 Cash Total
at fair value exposure to £’000 and cash £’000
£’000 derivative equivalents 3
instruments 1 £’000
£’000
Hong Kong dollar 97,377 54,327 881 615 153,200
US dollar 33,706 12,057 546 23,939 70,248
Indonesian rupiah 66,419 – 108 – 66,527
Indian rupee 48,177 – 1,892 47 50,116
South Korean won 48,834 – 706 – 49,540
Taiwan dollar 25,682 – 106 – 25,788
Australian dollar 16,507 – 84 – 16,591
Thai baht 11,614 – – – 11,614
Singapore dollar 9,626 – – – 9,626
Sri Lankan rupee 6,161 – – – 6,161
Vietnamese dong 5,456 – – – 5,456
Philippine peso 4,875 – 60 – 4,935
Other overseas currencies 1,657 – – 806 2,463
UK sterling 960 – 130 – 1,090
--------------- --------------- --------------- --------------- ---------------
377,051 66,384 4,513 25,407 473,355
========= ========= ========= ========= =========
1 The exposure to the market of long CFDs.
2 Debtors include amounts held at futures clearing houses
and brokers.
3 Cash and cash equivalents are made up of £5,689,000
cash at bank and £19,718,000 held in Fidelity Institutional Liquidity Fund.
2024
Currency Investments Long Debtors 2 Cash at Total
at fair value exposure to £’000 bank £’000
£’000 derivative £’000
instruments 1
£’000
Hong Kong dollar 85,219 42,392 648 – 128,259
Indian rupee 67,191 – 4,493 19 71,703
Indonesian rupiah 62,226 – – – 62,226
US dollar 41,115 3,358 2,307 8,851 55,631
South Korean won 51,091 – 14 89 51,194
Australian dollar 18,557 3,223 926 – 22,706
Singapore dollar 10,789 1,976 – – 12,765
Taiwan dollar 11,113 – 301 86 11,500
Chinese renminbi 9,900 – – – 9,900
Philippine peso 6,928 – 3 – 6,931
Thai baht 4,109 – – – 4,109
Sri Lankan rupee 3,959 – – – 3,959
Other overseas currencies 6,380 – – – 6,380
UK sterling – – 100 25 125
--------------- --------------- --------------- --------------- ---------------
378,577 50,949 8,792 9,070 447,388
========= ========= ========= ========= =========
1 The exposure to the market of long CFDs and call
options.
2 Debtors include amounts held at futures clearing houses
and brokers.
Currency exposure of financial liabilities
The currency profile of these financial liabilities is shown below:
2025
Currency Short Other Bank Total
exposure to creditors overdrafts £’000
derivative £’000 £’000
instruments 1
£’000
US dollar 17,697 1,496 – 19,193
South Korean won 3,366 135 – 3,501
Hong Kong dollar 2,666 18 – 2,684
Australian dollar 1,944 – – 1,944
Indian rupee 1,130 496 – 1,626
Indonesian rupiah – 916 – 916
Thai baht – 320 – 320
Vietnamese dong – 303 – 303
Singapore dollar – 99 – 99
UK sterling – 711 2 713
--------------- --------------- --------------- ---------------
26,803 4,494 2 31,299
========= ========= ========= =========
1 The exposure to the market of short CFDs, futures and
call/put options.
2024
Currency Short Other Bank Total
exposure to creditors overdrafts £’000
derivative £’000 £’000
instruments 1
£’000
US dollar 9,665 230 – 9,895
Hong Kong dollar 3,704 216 435 4,355
Indian rupee – 2,134 – 2,134
Korean won – 31 – 31
Singapore dollar – 1 – 1
UK sterling – 630 – 630
--------------- --------------- --------------- ---------------
13,369 3,242 435 17,046
========= ========= ========= =========
1 The exposure to the market of short CFDs and call
options.
OTHER PRICE RISK
Other price risk arises mainly from uncertainty about future prices
of financial instruments used in the Company’s business. It represents the
potential loss the Company might suffer through holding market positions in
the face of price movements.
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 Portfolio Managers are responsible for actively monitoring the existing
portfolio selected in accordance with the overall asset allocation parameters
described above 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 estimated using Value
at Risk and Stress Tests as set out in the Company’s internal Risk
Management Process Document.
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, if required, is achieved by the use of a
bank overdraft.
LIQUIDITY RISK EXPOSURE
At 31 July 2025, the undiscounted gross cash outflows of the
financial liabilities were all repayable within one year and consisted of
derivative instrument liabilities of £2,045,000 (2024: £2,045,000), other
creditors of £4,494,000 (2024: £3,242,000) and bank overdrafts of £2,000
(2024: £435,000).
COUNTERPARTY RISK
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 Manager employs, the
Manager will seek to minimise such risk 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 by evaluating derivative instrument credit risk exposure.
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.
COLLATERAL
2025 2024
collateral collateral collateral collateral
received pledged received pledged
£’000 £’000 £’000 £’000
HSBC Bank plc – 121 288 –
Goldman Sachs International Ltd 181 – 117 –
UBS AG – 2,553 – 3,019
J.P. Morgan Securities plc 1,073 – – 1,394
Morgan Stanley & Co. International Ltd 242 – – –
--------------- --------------- --------------- ---------------
Total 1,496 2,674 405 4,413
========= ========= ========= =========
CREDIT RISK
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 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 Manager. Exposure to credit risk arises on
unsettled security transactions and derivative instrument contracts and cash
at bank.
DERIVATIVE INSTRUMENT RISK
The risks and risk management processes which result from the use of
derivative instruments, are set out in a documented Risk Management Process
Document. Derivative instruments are used by the Manager for the following
purposes:
· To gain unfunded long exposure to equity markets,
sectors or single stocks. Unfunded exposure is exposure gained without an
initial flow of capital;
· To hedge equity market risk using derivatives with the
intention of at least partially mitigating losses in the exposures of the
Company’s portfolio as a result of falls in the equity market; and
· To position short exposures in the Company’s
portfolio. These uncovered exposures benefit from falls in the prices of
shares which the Portfolio Managers believes to be over valued. These
positions, therefore, distinguish themselves from other short exposures held
for hedging purposes since they are expected to add risk to the portfolio.
RISK SENSITIVITY ANALYSIS
INTEREST RATE RISK SENSITIVITY ANALYSIS
Based on the financial instruments held and interest rates at 31
July 2025, an increase of 1.00% in interest rates throughout the year, with
all other variables held constant, would have decreased the net return on
ordinary activities after taxation for the year and decreased the net assets
of the Company by £161,000 (2024: decreased the net return and decreased the
net assets by £230,000). A decrease of 1.00% in interest rates throughout the
year would have had an equal but opposite effect.
FOREIGN CURRENCY RISK SENSITIVITY ANALYSIS
Based on the financial instruments held and currency exchange rates
as at the Balance Sheet date, with all other variables held constant, a 10%
strengthening of the UK sterling exchange rate against other currencies would
have decreased the Company’s net return on ordinary activities after
taxation for the year and decreased the net assets (2024: decreased the net
return and decreased the net assets) by the following amounts:
Currency 2025 2024
£’000 £’000
Hong Kong dollar 13,683 11,264
Indonesian rupiah 5,965 5,657
US dollar 4,641 4,158
Indian rupee 4,408 6,324
South Korean won 4,185 4,651
Taiwan dollar 2,344 1,045
Australian dollar 1,331 2,064
Thai baht 1,027 374
Singapore dollar 866 1,160
Sri Lankan rupee 560 360
Vietnamese dong 468 279
Philippine peso 449 630
Other overseas currencies 223 1,201
--------------- ---------------
40,150 39,167
========= =========
Based on the financial instruments held and currency exchange rates as at the
Balance Sheet date, with all other variables held constant, a 10% weakening of
the UK sterling exchange rate against other currencies would have increased
the Company’s net return on ordinary activities after taxation for the year
and increased the net assets (2024: increased the net return and increased the
net assets) by the following amounts:
Currency 2025 2024
£’000 £’000
Hong Kong dollar 16,724 13,767
Indonesian rupiah 7,290 6,914
US dollar 5,673 5,082
Indian rupee 5,388 7,730
South Korean won 5,115 5,685
Taiwan dollar 2,865 1,278
Australian dollar 1,627 2,523
Thai baht 1,255 457
Singapore dollar 1,059 1,418
Sri Lankan rupee 685 440
Vietnamese dong 573 341
Philippine peso 548 770
Other overseas currencies 274 1,468
--------------- ---------------
49,076 47,873
========= =========
OTHER PRICE RISK – EXPOSURE TO INVESTMENTS SENSITIVITY ANALYSIS
Based on the listed investments held and share prices at 31 July
2025, an increase of 10% in share prices, with all other variables held
constant, would have increased the Company’s net return on ordinary
activities after taxation for the year and increased the net assets of the
Company by £37,172,000 (2024: increased the net return and increased the net
assets by £37,852,000). A decrease of 10% in share prices would have had an
equal and opposite effect.
An increase of 10% in the valuation of unlisted investments held at 31 July
2025, would have increased the Company’s net return on ordinary activities
after taxation for the year and increased the net assets of the Company by
£533,000 (2024: increased the net return and increased the net assets by
£6,000). A decrease of 10% in the valuation would have had an equal and
opposite effect.
OTHER PRICE RISK – NET EXPOSURE TO DERIVATIVE INSTRUMENTS SENSITIVITY
ANALYSIS
Based on the derivative instruments held and share prices at 31 July
2025, an increase of 10% in the share prices underlying the derivative
instruments, with all other variables held constant, would have increased the
Company’s net return on ordinary activities after taxation for the year and
increased the net assets of the Company by £3,958,000 (2024: increased the
net return and increased the net assets by £3,758,000). A decrease of 10% in
share prices would have had an equal and opposite effect.
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities are stated in the Balance Sheet at
values which are not materially different to their fair values. As explained
in Notes 2 (k) and (l), investments and derivative instruments are shown at
fair value. In the case of cash and cash equivalents, book value approximates
to fair value due to the short maturity of the instruments.
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
Notes 2 (k) and (l). The table below sets out the Company’s fair value
hierarchy:
2025
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 366,943 4,774 5,334 377,051
Derivative instrument assets 124 2,154 – 2,278
--------------- --------------- --------------- ---------------
367,067 6,928 5,334 379,329
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (157) (1,888) – (2,045)
========= ========= ========= =========
2024
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 358,503 19,028 1,046 378,577
Derivative instrument assets 131 1,166 – 1,297
--------------- --------------- --------------- ---------------
358,634 20,194 1,046 379,874
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (14) (2,031) – (2,045)
========= ========= ========= =========
The table below sets out the movements in level 3 financial instruments during
the year:
2025 2024
£’000 £’000
Beginning of the year 1,046 880
Purchase at cost – ByteDance 3,001 –
Sales proceeds – ByteDance (86) –
Sales gain – ByteDance 13 –
Transfers into level 3 at cost – Interojo 1 – 1,404
Transfers out level 3 at cost – Interojo 2 (1,404) –
Transfers out of level 3 at cost – Tuhu Car 2 – (1,049)
Movement in investment holding gain/(losses) 2,764 (189)
--------------- ---------------
End of the year 5,334 1,046
========= =========
1 Financial instruments are transferred into level 3 on
the date they are suspended or when they have not traded for thirty days.
2 Financial instruments are transferred out of level 3
when they become listed.
Below are details of the four investments which fall into level 3 of which the
first three investments are unlisted and the latter one is suspended from
trading.
BYTEDANCE
ByteDance is a technology company that develops applications for
smart phones and is an unlisted company. The valuation is based on the
company’s financial performance, the macro-environment and benchmarking the
position to a range of comparable market data. As at 31
July 2025, its fair value was £5,281,000.
CHIME BIOLOGICS
Chime Biologics is a China-based Contract Development and
Manufacturing Organization (CDMO) that provides a solution supporting
customers from early-stage biopharmaceutical development through to late-stage
clinical and commercial manufacturing and is an unlisted company. The
valuation at 31 July 2025 is based on the company’s financial information,
the macro-environment and the Probability-Weighted Expected Return Model
(“PWERM”). As at 31 July 2025, its fair value was £53,000 (2024:
£60,000).
EDEN BIOLOGICS
Eden Biologics develops biosimilars and is also engaged in providing
process development and contract manufacturing solutions to the
biopharmaceutical industry and is an unlisted company. On 26 February 2018,
the company voluntarily delisted from the Taipei Exchange. In September 2023,
there was a potential voluntary liquidation of the company which was
subsequently postponed indefinitely. The company is attempting to restructure,
and the future outcome is uncertain. Given the distressed nature of the
company a decision was made for the price to be written down to nil as of the
16 April 2024. As at 31 July 2025, its fair value was £nil (2024: £nil).
SALT LAKE POTASH
Salt Lake Potash is a mineral exploration company. The company was
suspended from trading on the Australian Stock Exchange on 27 July 2021 and in
October 2021 it announced that it would be entering voluntary administration.
As at 31 July 2025, its fair value was £nil (2024:
£nil).
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 and reserves, as disclosed in the Balance Sheet above and any gearing,
which is managed by the use of derivative instruments. Financial resources are
managed in accordance with the Company’s investment policy and in pursuit of
its investment objective, both of which are detailed in the Strategic Report
section of the Annual report. The principal risks and their management are
disclosed above.
The Company’s gross and net gearing at the year end is set out below:
2025
Gross gearing Net gearing
Asset % 1 Asset % 1
exposure exposure
£’000 £’000
Investments 377,051 93.6 377,051 93.6
Long CFDs 66,384 16.5 66,384 16.5
--------------- --------------- --------------- ---------------
Total long exposures 443,435 110.1 443,435 110.1
========= ========= ========= =========
Short CFDs 21,913 5.5 (21,913) (5.5)
Short Futures 2,353 0.6 (2,353) (0.6)
Put options (short exposure) 2,143 0.5 (2,143) (0.5)
Call options (short exposure) 394 0.1 (394) (0.1)
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 470,238 116.8 416,632 103.4
========= ========= ========= =========
Shareholders’ funds 402,708 402,708
========= =========
Gearing 2 16.8% 3.4%
========= =========
1 Asset exposure to the market expressed as a percentage
of shareholders’ funds.
2 Gearing is the amount by which gross asset exposure/net
market exposure exceeds shareholders’ funds expressed as a percentage of
shareholders’ funds.
2024
Gross gearing Net gearing
Asset % 1 Asset % 1
exposure exposure
£’000 £’000
Investments 378,577 96.6 378,577 96.6
Long CFDs 48,144 12.3 48,144 12.3
Call options (long exposure) 2,805 0.7 2,805 0.7
--------------- --------------- --------------- ---------------
Total long exposures 429,526 109.6 429,526 109.6
========= ========= ========= =========
Short CFDs 12,995 3.3 (12,995) (3.3)
Call options (short exposure) 374 0.1 (374) (0.1)
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 442,895 113.0 416,157 106.2
========= ========= ========= =========
Shareholders’ funds 392,014 392,014
========= =========
Gearing 2 13.0% 6.2%
========= =========
1 Asset exposure to the market expressed as a percentage
of shareholders’ funds.
2 Gearing is the amount by which gross asset exposure/net
market exposure exceeds shareholders’ funds expressed as a percentage of
shareholders’ funds.
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 and the role of
company secretary to FIL Investments International (“FII”). Both companies
are Fidelity group companies.
Details of the current fee arrangements are given in the Directors’ Report
in the Annual Report. During the year, the following expenses were payable to
FII:
31 July 31 July
2025 2024
£’000 £’000
Management fees 3,250 3,493
Secretarial and administration fees 75 75
Marketing services 1 181 172
========= =========
1 Marketing services includes costs paid to FII to
reimburse it for third party costs it has incurred on behalf of the Company in
providing marketing services.
At the Balance Sheet date, the following balances payable to FII were accrued
and included in other creditors:
31 July 31 July
2025 2024
£’000 £’000
Management fees 217 277
Secretarial and administration fees 44 6
Marketing services – 77
========= =========
Disclosures of the Directors’ interests in the ordinary shares of the
Company and Director’s fees and taxable expenses relating to reasonable
travel expenses payable to the Directors are given in the Directors’
Remuneration Report in the Annual Report. In addition to the fees and taxable
expenses disclosed in the Directors’ Remuneration Report, £21,000 (2024:
£19,000) of employers’ National Insurance contributions were paid by the
Company. At the Balance Sheet date, Directors’ fees of £17,000 (2024:
£20,000) were accrued and payable.
ALTERNATIVE PERFORMANCE MEASURES
The Company uses the following as Alternative Performance Measures which are
all defined in the Glossary of Terms in the Annual Report.
DISCOUNT/PREMIUM
Details of the Company’s discount are in the Financial Highlights
above.
GEARING
See Note 18 above for details of the Company’s gearing (both gross
and net).
NET ASSET VALUE (“NAV”) PER ORDINARY SHARE
See the Balance Sheet on and Note 16 above for further details.
ONGOING CHARGES RATIO
The ongoing charges ratio has been calculated in accordance with
guidance issued by the AIC as the total of investment management fees and
other expenses expressed as a percentage of the average net asset values
throughout the year.
2025 2024
Investment management fees (£’000) 2,693 2,749
Other expenses (£’000) 969 992
--------------- ---------------
Ongoing charges (£’000) 3,662 3,741
========= =========
Variable element of management fee (£’000) 557 744
Average net assets (£’000) 386,444 392,271
--------------- ---------------
Ongoing charges ratio 0.95% 0.95%
--------------- ---------------
Ongoing charges ratio including variable element of management fee 1.09% 1.14%
========= =========
REVENUE, CAPITAL AND TOTAL RETURNS PER SHARE
See the Income Statement and Note 8 above for further details.
TOTAL RETURN PERFORMANCE
The NAV per ordinary share total return includes reinvestment of the
dividend in the NAV of the Company on the ex-dividend date. The ordinary 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 ordinary share
and ordinary share price of the Company and the impact of the dividend
reinvestments and the total returns for the years ended 31 July 2025 and 31
July 2024.
2025 Net asset Ordinary
value per Share
ordinary price
share
31 July 2024 551.66p 496.00p
31 July 2025 604.69p 564.00p
Change in year +9.6% +13.7%
Impact of dividend reinvestment +2.8% +3.3%
--------------- ---------------
Total return for the year +12.4% +17.0%
========= =========
2024 Net asset Ordinary
value per share
ordinary price
share
31 July 2023 549.33p 520.00p
31 July 2024 551.66p 496.00p
Change in year +0.4% -4.6%
Impact of dividend reinvestment +2.8% +2.9%
--------------- ---------------
Total return for the year +3.2% -1.7%
========= =========
The Annual Financial Report Announcement is not the Company's statutory
accounts. The above results for the year ended 31 July 2025 are an abridged
version of the Company's full Annual Report and Financial Statements, which
have been approved and audited with an unqualified report. The 2024 and 2025
statutory accounts received unqualified reports from the Company's Auditor and
did not include any reference to matters to which the Auditor drew attention
by way of emphasis without qualifying the reports and did not contain a
statement under s.498 of the Companies Act 2006. The statutory accounts for
2024 have been delivered to the Registrar of Companies. The 2025 Financial
Statements will be filed with the Registrar of Companies in due course.
A copy of the above results announcement will be available on the Company's
website at www.fidelity.co.uk/asianvalues
within two working days.
A copy of the Annual Report will shortly be submitted to the National Storage
Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM
The Annual Report will be posted to shareholders later this month and
additional copies will be available from the registered office of the Company
and on the Company's website: www.fidelity.co.uk/asianvalues where up to date
information on the Company, including daily NAV and share prices, factsheets
and other information can also be found.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
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