RCS - Fidelity China S.S. - Results analysis from Kepler Trust Intelligence

Fidelity China Special SituationsAnnouncement

13/01/2026 16:00

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RNS Number : 7533O  Fidelity China Special Situations  13 January 2026

Fidelity China Special Situations (FCSS)

13/01/2026

Results analysis from Kepler Trust Intelligence

Fidelity China Special Situations (FCSS) has reported half-year results to
30/09/2025 which saw a NAV total return of 29.7%, considerably ahead of its
benchmark which returned 18%, and the (unweighted) average of the peer group
of 18.1%. The main contributors included core holdings in the consumer and
industrials sectors, many of which align with manager Dale Nichols' key focus
on the advanced manufacturing and innovation themes, which have thrived this
year.

Several financial firms were sold during the period, leading to a sector
underweight. In exchange, the manager added to a range of consumer-facing
businesses. There was also a new private addition in a crypto exchange,
although this subsequently listed in December 2025.

Gearing added positively to performance, although was reduced slightly over
the period.

Whilst share price returns were also strong, the discount widened slightly. To
help manage this, the board undertook share buybacks, with the aim of keeping
the discount in single figures.

Manager Dale Nicholls' outlook noted: "Particular promise in advanced
manufacturing, automation, and technology-enabled industrials; areas aligned
with policy priorities and capable of compounding value over time," whilst
reiterating he remains, "focused on companies with durable earnings
visibility, exposure to structural growth themes and disciplined capital
allocation".

Kepler View

Manager Dale Nicholls has delivered another period of exceptional returns for
Fidelity China Special Situations (FCSS), capturing all of the recovery in
China's equity market and more over the past year, leaving it as the top
performer in the sector over almost all time periods, in both share price and
NAV total return terms.

Performance has come from a wide range of contributors which we think
demonstrates the strength of the manager's flexible approach and his ability
to identify alpha across a broad opportunity set. This includes the ability to
invest in private companies, many of which have developed in the period,
demonstrating how they can benefit the trust throughout their holding
life-cycle.

Dale has continued to evolve the portfolio, reflecting the changing
background. He has taken profits from his strong performers and rotated into
areas of better value such as those exposed to the consumer. We believe this
can be supportive to future performance should the economic recovery continue
to gain firmer footing. Moreover, the portfolio looks well exposed to the
country's strong long-term themes which are the focus of heavy research and
development spending.

This approach has helped tilt the portfolio towards the better pockets of
value which could offer considerable upside in our view. Whilst the market has
re-rated in the past couple of years, the MSCI China Index trades closer to
its own long-term averages on a 12-month forward earnings, but still well
below the equivalent multiple of the S&P 500. With Dale rotating into
areas with more subdued valuations, we believe the trust offers a compelling
value opportunity going forward.

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