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FIDELITY
ASIAN VALUES
PLC
Annual Report for the year ended 31 July 2023
Fidelity Asian Values PLC
|
Annual Report 2023
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The Company’s objective is to achieve capital growth principally from the
stockmarkets of the Asian Region excluding Japan.
Asia is the world’s fastest-growing economic
region, offering investors a potentially
unparalleled long-term opportunity. Fidelity
Asian Values PLC provides shareholders with a
differentiated equity exposure to Asian markets.
The Portfolio Manager, Nitin Bajaj, achieves this
differentiation by favouring undervalued small
and medium-sized companies as this allows him
to find quality businesses that are mispriced,
the “winners of tomorrow”, before they
become well known. He utilises Fidelity’s Asia-
based analyst team and believes the current
market environment offers an unprecedented
opportunity to invest in high quality Asian
smaller companies at attractive valuations.
Kate Bolsover, Chairman,
Fidelity Asian Values PLC
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Investment Objective and Overview
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Fidelity Asian Values PLC
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Annual Report 2023
At a Glance
Standardised Performance Total Return (%)
5 years ended 31 July 20233 years ended 31 July 20231 year ended 31 July 2023
+61.3
+45.4
+41.1
+11.4
+17.3
+7.5
+50.7
+67.1
+41.2
NAV per Ordinary Share
Ordinary Share Price
Comparative Index
1
Sources: Fidelity and Datastream.
Past performance is not a guide to future returns.
1
MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
Net Asset Value
(“NAV”) per
Ordinary Share
total return
1,2
+11.4%
2022: +3.9%
Ordinary Share Price
total return
1,2
+17.3%
2022: -3.4%
Dividend
per Ordinary Share
14.50p
2022: 14.00p
Comparative
Index total return
1,3
+7.5%
2022: -5.6%
1 Calculated on the basis that dividends paid to shareholders are reinvested in the Company at the ex-dividend date.
2 Alternative Performance Measures. See pages 79 and 80.
3 MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
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Summary of the key aspects of the Investment Policy
The Portfolio Manager invests in securities of companies which he considers have fundamental value that has not been recognised
by the market.
The Company is not restricted in terms of size or industry of companies included in the portfolio and may invest in unlisted
securities.
The Company may also invest into other transferable securities, collective investment schemes, money market instruments, cash and
deposits and is also able to use derivatives for efficient portfolio management and investment purposes.
The Company operates a variable management fee arrangement which is calculated by reference to its Benchmark Index.
2023 2022
Assets as at 31 July
Gross Asset Exposure
1
£440.8m £383.7m
Net Market Exposure
1
£413.7m £367.8m
Total Shareholders’ Funds £394.6m £367.6m
NAV per Ordinary Share
1,2
549.33p 507.78p
Gross Gearing
1,2
11.7% 4.4%
Net Gearing
1,2
4.9% 0.0%
Share Price and Discount data at 31 July
Ordinary Share Price at year end 520.00p 458.00p
Year high 534.00p 505.00p
Year low 423.00p 407.00p
(Discount) to NAV per Ordinary Share at year end
1,2
(5.3%) (9.8%)
Premium year high/(Discount) year low 0.8% (0.2%)
(Discount) year high (12.9%) (14.5%)
Results for the year ended 31 July
Revenue Return per Ordinary Share
1,2
15.17p 14.21p
Capital Return per Ordinary Share
1,2
39.95p 4.31p
Total Return per Ordinary Share
1,2
55.12p 18.52p
Ongoing Charges Ratio
1,2
0.96% 0.95%
Variable Management Fee
3
0.07% (0.20%)
Ongoing Charges Ratio including Variable Management Fee
2
1.03% 0.75%
1 See Glossary of Terms on pages 91 to 93.
2 Alternative Performance Measures. See pages 79 and 80.
3 The variable element of the management fee is calculated over a rolling three year period with reference to the Benchmark Index (see Glossary of Terms on page 91 for
details of the Benchmark Index).
Summary of Results
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Annual Report 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Contents
Strategy
Chairman’s Statement 02
Portfolio Manager’s Review 05
Spotlight on the Top 10 Holdings 12
Forty Largest Holdings 14
Distribution of the Portfolio 17
Ten Year Record 20
ESG in the Investment Process at Fidelity International 21
ESG Investing – Case Studies 25
Strategic Report 27
Governance
Board of Directors 36
Directors’ Report 37
Corporate Governance Statement 39
Directors’ Remuneration Report 42
Statement of Directors’ Responsibilities 45
Report of the Audit Committee 46
Financial
Independent Auditor’s Report 48
Income Statement 54
Statement of Changes in Equity 55
Balance Sheet 56
Notes to the Financial Statements 57
Alternative Performance Measures 79
Financial Calendar 81
Information for Shareholders
Annual General Meeting 82
Notice of Meeting 84
Shareholder Information 88
Data Protection 90
Glossary of Terms 91
Alternative Investment Fund Manager’s Disclosure 94
Chairman’s Statement
Read more on pages 02 to 04
Portfolio Manager’s Review
Read more on pages 05 to 11
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Fidelity Asian Values PLC
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Annual Report 2023
Chairman’s Statement
This is my last Annual Report for the Company, having served
as your Chairman for nine years this December. During that
time, your Company has gone through significant changes.
Having begun as a large-cap Asia fund, it now operates in a
very different area, primarily investing in smaller companies with
a focus on value stocks. As I prepare to retire from the Board,
I have taken the opportunity to look back at the impact of these
changes, beginning with the selection of Nitin Bajaj as your
Portfolio Manager in April 2015. From Nitin’s appointment until
31 July 2023, your Company has produced a Net Asset Value
(“NAV”) total return of 112.6% and a share price total return of
129.0%, outperforming the Comparative Index (MSCI All Countries
Asia ex Japan Small Cap Index (net) total return (in sterling
terms)) of 72.9% and also the peer group average total returns
of 87.5% (NAV) and 117.1% (share price). During this time, the
discount to NAV has narrowed from the mid-teens to low single
digits (occasionally trading at a premium, which is testament to
a very clear and well-supported investment proposition), and
we have also been able to deliver a significant increase in the
dividend, both of which have been to the long-term benefit of
shareholders.
Coming back to the year just ended, it is pleasing to report a
year of strong performance, in which your Portfolio Manager’s
strong stock selection has been complemented by a market
environment that has favoured the Company’s quality and
value-focused investment approach. In the year to 31 July 2023,
the NAV total return was 11.4%, while the Comparative Index
total return was 7.5% over the same period. After experiencing
negative performance in the last financial year, the share price
has rebounded strongly, producing a total return of 17.3% as the
discount to NAV has narrowed from 9.8% at the start of the year
to 5.3% at the end. This is particularly notable given the general
widening in investment trust discounts during the year. Nitin talks
more on the drivers for the positive performance in his Portfolio
Manager’s Review on the following pages.
Due Diligence 2023
In March 2023, your Board took an in-person due diligence
trip to Asia for the first time since 2018. We travelled first to
Singapore, where the portfolio management team is based,
and spent time with Nitin, Ajinkya Dhavale, who has now been
the Assistant Portfolio Manager of the Company for three years,
and colleagues, including Fidelity’s Head of Equities for the Asia
Pacific region. We also met with some locally based companies
to see how Fidelity’s meetings with them are run and how they
form part of the stock picking process. We then went to South
Korea for three days of company visits. What stood out to us as
a Board was the quality of the management teams we met in
Korea and the depth and calibre of the businesses; although
these companies are not the largest, their global presence was
really startling. One example was Hankook Tire, a provider of
e-vehicle tyres and a growing contributor to profits. It has recently
taken over from Michelin as the official supplier for the Formula E
motor racing competition. It was most interesting to observe Nitin
and Ajinkya as they interviewed companies, and to see during a
process of incisive questioning, the very obvious mutual respect
in which they hold both management and each other. This really
underpins our continued confidence in the team that manages
your – and our – investment in the Company.
Kate Bolsover – I am pleased to
present the Annual Report of Fidelity
Asian Values PLC (the “Company”)
for the year ended 31July 2023.
£394.6m
(As at 31 July 2023)
Total Shareholders’ Funds
+11.4%
(Year ended 31 July 2023)
Net Asset Value per Ordinary Share
total return
+17. 3%
(Year ended 31 July 2023)
Ordinary Share Price total return
+7.5%
(Year ended 31 July 2023)
Comparative Index total return
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Discount management and share repurchases
After the spike in market volatility seen in the first half of 2022
when Russia invaded Ukraine, conditions continued to be
unsettled into the first half of the Company’s financial year ended
31 July 2023. Between August and November 2022, the Board
approved the repurchase of 569,000 ordinary shares (0.8% of
the issued share capital) for holding in Treasury, at a cost of
£2,618,000. Since then and up to the date of this report, no
shares have been repurchased, given an encouraging narrowing
of the Company’s discount even as peers’ and broader
investment trust average discounts have widened.
Your Board closely monitors the Company’s share price discount
to NAV and will undertake active discount management where
necessary, the primary purpose of which is to limit discount
volatility. Repurchases of ordinary shares are made at the
discretion of the Board, within guidelines set by it and considering
prevailing market conditions. Shares will only be repurchased
in the market at prices below the prevailing NAV per ordinary
share, thereby resulting in an enhancement to the NAV per
ordinary share. In order to assist in managing the discount, the
Board has shareholder approval to hold in Treasury any ordinary
shares repurchased by the Company, rather than cancelling them.
Any shares held in Treasury would only be reissued at NAV per
ordinary share or at a premium to NAV per ordinary share.
Dividend
Your Portfolio Manager invests principally for capital growth, but
his value-oriented investment style tends to lead him towards
unleveraged, cash-generative businesses that may themselves
be able to pay rising dividends. As such, the Company’s revenue
return was 15.17 pence per ordinary share (an increase of 6.8%
from the prior year revenue return of 14.21 pence per ordinary
share). Last year your Board declared a substantially increased
dividend of 14.00 pence per share (2021: 8.80 pence). While we
noted at the time that shareholders should not assume that such
dividends would continue in the future, we are very pleased to be
able to recommend another increase in the dividend for 2023,
to 14.50 pence per share which will be paid to shareholders on
6 December 2023. The Board is again recommending that almost
all of the income earned be paid out as a dividend. We would
reiterate, however, that income is an output rather than an aim of
the investment process, and that no guarantees can be offered
as to the level of any future dividends.
Gearing
As I noted in last year’s Annual Report, the Company’s level
of gross gearing is directly proportional to the investment
opportunities that your Portfolio Manager sees. When Nitin is
optimistic about opportunities and he and his team generate
ideas in response to market conditions, then the Company will be
more geared. As such, it is notable that gearing during the year
reached the highest level we have seen during Nitin’s tenure,
ending the year with gross gearing at 11.7%, up from 4.4% as at
31 July 2022; net gearing was 4.9% (2022: nil). As Nitin notes in
his review on the following pages, gearing has been increased
largely in response to a number of particularly interesting
investment opportunities in China, which have been out of
favour with investors. The Company’s gearing is achieved using
contracts for difference (“CFDs”); we have no bank borrowings
or structural long-term debt. We regularly review the use of CFDs
and have again concluded that they remain a more efficient and
flexible form of financing than either secured or unsecured debt,
as well as enabling your Portfolio Manager 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
A few years ago, the Board approved giving your Portfolio
Manager the ability to ‘short’ stocks, and we are pleased to
report that this approach is adding value and has been a
positive contributor during the year. 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. Ajinkya has extensive experience
in shorting, and Nitin is encouraged by the availability of such
opportunities in the market today, given a real disparity between
the prospects of the smaller value stocks that he favours and
some of the large and mega-cap stocks in Asia that he thinks are
vulnerable. Short positions are limited to a maximum of 10% of
the portfolio and do not usually exceed ten stocks. While there
is no intention to increase the limit, the combination of Ajinkya’s
(and Fidelity’s) competence and the current market environment
means that Nitin may maintain and even opportunistically
increase the short exposure, within the investment limits. Total
short exposure as at 31 July 2023 was 3.4% (2022: 2.2%).
Environmental, Social & Governance (ESG)
There has been something of an ESG backlash in recent times.
Your Company is not an ‘ESG fund’, but good governance and
social behaviour and a strong regard for the environment have
always been fundamental to the way Nitin invests. Assessing ESG
in Asia can be quite different from that in developed economies.
Smaller Asian companies may not have the resources to report
on ESG as companies do in the West, so the strength and depth
of Fidelity’s large analyst team in the region is invaluable in
making properly thought-through assessments in the process,
both on a fundamental and an ESG basis.
In the Portfolio Manager’s Review, Nitin shares the example of
Shriram Finance as a position that has not only added value
to the portfolio, but is also a well-governed company doing
social good as well as mitigating environmental impact. Shriram
Finance was formed from the merger of two companies offering
affordable finance on used commercial vehicles and two-
wheelers. It serves communities and micro, small and medium
enterprises that would otherwise face high interest costs from
unregulated lending, enabling them to grow their businesses
without the unaffordable expense or the environmental impact of
scrapping old vehicles and building new ones.
Board of Directors and Board Succession
Grahame Stott, having served nine years on the Board, retired as
a non-executive Director and Chairman of the Audit Committee
at the Company’s AGM in November 2022. At the same time, we
welcomed Hussein Barma as a new non-executive Director and
Chairman of the Audit Committee. Hussein is both a qualified
lawyer and a chartered accountant and has considerable
experience in the listed company sector in the UK and long
familiarity with Asia, as well as a good eye for detail. Clare
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Fidelity Asian Values PLC
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Annual Report 2023
Chairman’s Statement continued
Brady will be stepping up as Chairman as I step down and will
continue to bring her invaluable experience and skills to the
Board. She will be replaced as Senior Independent Director by
Matthew Sutherland.
As noted in last year’s Annual Report, Michael Warren will shortly
have served nine years on the Board, but as part of the Board’s
succession plan, he has agreed to stay on until the 2024 AGM
in order to ensure a good handover of the institutional and
historical knowledge of the Company. We have already begun
the process of selecting his replacement and will make a further
announcement in due course. We will continue to maintain a
Board with a diversity of backgrounds and an appropriate mix of
skills to ensure the Company’s continued good governance.
Market outlook
The outlook for financial markets globally remains uncertain
in light of the ongoing war in Ukraine and US/China tensions.
However, while the Western world continues to struggle with
the highest levels of inflation and interest rates in nearly a
generation, in many Asian markets, the economic environment
is very different, and on a relative basis there are particularly
good opportunities compared to the West. The structural case
for investing in developing economies remains extremely
strong: attractive demographics, a burgeoning middle class
providing new markets for goods and services, and economies
that can grow more rapidly. This is the backdrop against which
your Portfolio Manager looks to buy companies, but it is not
what drives the investment process, which is fundamentally to
buy good companies, run by good people and at attractive
valuations. As we enter our new financial year, Nitin continues
to find good companies he wants to buy and I am therefore
optimistic that this, combined with a positive market backdrop
in Asia will continue to provide opportunities for investors in the
coming year.
I wish him, the team and the Board every success for the future
and would also like to thank all our shareholders for their
continued support.
Annual General Meeting
The AGM of the Company will be held at 11.00 am on
Wednesday, 29 November 2023 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 on
pages 84 to 87.
For those shareholders who are unable to attend in person, we
will live-stream the formal business and presentations of the
meeting online.
Nitin Bajaj, the Portfolio Manager, will be making a presentation
to shareholders highlighting the achievements and challenges
of the year past and the prospects for the year to come. He
and the Board will be very happy to answer any questions
that shareholders may have. Copies of his 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 on page 86 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 we will answer as many of these as possible 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://web.lumiagm.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 would welcome your online
participation as a guest. Once you have accessed https://web.
lumiagm.com from your web browser on a tablet or computer,
you will need to enter the Lumi Meeting ID which is 109-975-634.
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.
Kate Bolsover
Chairman
11 October 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Portfolio Manager’s 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
21 years’ 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 has over 15 years of
investment experience. He originally
joined Fidelity as an analyst in
2013, covering the Auto, Cement,
Telecommunications and Property
sectors. He was promoted to
Assistant Portfolio Manager of Fidelity
Asian Values PLC on 1 June 2020
and currently specialises in small and
mid-cap stocks in Korea, Taiwan and
Frontier Asia.
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Annual Report 2023
Portfolio Manager’s Review continued
Question
How has the investment Company performed in the year to 31 July 2023?
Answer
Over the year ended 31 July 2023, the Company’s net asset value (“NAV”) total return was +11.4%, outperforming the Comparative
Index, the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms) which rose by +7.5%. The share price
total return for the year was +17.3% due to a narrowing of the Company’s discount.
Performance for the reporting year can be attributed primarily to stock picking, with our country allocation being a headwind to
performance.
Our investment process is driven by owning good businesses which are run by management teams whom we trust and investing in
them only when we have ample margin of safety. This often leads us to take contrarian positions as it is easier to find undervalued
businesses in countries which are out of favour with investors. Following this philosophy, we have a significant percentage of the
Company’s portfolio in China and are underweight in Taiwan and India compared to the Index. Accordingly, while country selection
would be a headwind to performance, this was more than offset by good stock selection in line with our investment philosophy,
especially in our three key markets of China, India and Indonesia.
Over the longer-term (since 2015 when the Board changed the strategy of the Company to invest more in smaller companies), the
NAV (post fees) has risen by +112.6% versus the MSCI All Countries Asia ex Japan Small Cap Index’s (net) total return of +72.9% and
the MSCI Asia ex Japan Large Cap Index’s total return of +62.2%, both in sterling terms.
Question
China’s reopening from COVID lockdowns has had a significant impact on the
performance of global markets this year. How do you feel about China and the
economic recovery?
Answer
When China reopened, there was a lot of optimism in the market, but it turned out that the recovery has been uneven and softer
than expected in many areas. The property downcycle, geopolitics, the reining in of local government spending and increasing
centralisation of political power has resulted in China being one of the few markets where profitability has not recovered post COVID.
Consequently, there is a heightened perception of risks around Chinese companies, leading to a decline in stock prices. We agree
with some of the reasons for negative sentiment around China and understand that it is difficult to predict when the economy will turn
around.
Fidelity Asian Values PLC’s NAV performance versus MSCI Asia ex Japan Large Cap Index and MSCI Asia ex Japan Small
Cap Index
Source: Fidelity International, Refinitiv DataStream, 31 July 2023. Total returns in sterling terms.
80
100
120
140
160
180
200
220
Mar-15
May-15
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Sep-15
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Jan-22
Mar-22
May-22
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Sep-22
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Jan-23
Mar-23
May-23
Jul-23
Returns (rebased to 100)
MSCI Asia ex Japan Index MSCI Asia ex Japan Small cap Index
Fidelity Asian Values PLC’s NAV
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
However, we should also be cognisant of the strengths of the country’s economy, its people and its businesses. It is the second largest
economy in the world and consumption is expanding as a share of its GDP. It houses a significant part of the global supply chains of
most products we use in our daily lives. Hence, we feel that these negative macro factors are transitory (as they were in the US post
the housing crises of 2007-10 or in India post the policy paralysis of 2012-13). Good businesses will not only survive but are likely to
be in a stronger competitive position post this downturn and by taking market share from their weaker peers. This is probably the best
time to be investing in China as we are able to buy good businesses when both expectations and valuations are low.
Thus, there are good opportunities in China at the moment, which in turn has seen our combined exposure to China and Hong Kong
increase to about 38%.
Question
Looking beyond China, where do you see value in stocks in the Asian region and how
are you reflecting this in the Company’s portfolio?
Answer
Our investments are based on our bottom-up fundamental analysis of companies and their businesses and our exposure to countries
is primarily a result of our stock selection.
Looking at the portfolio beyond China, we are excited about the opportunities we see in Indonesia (around 14% exposure). Our holdings
there are a mix of banks and consumer-facing companies which are best-in-class operators with high Returns on Equity (“ROEs”) and
reasonable valuations. For example, we own shares in two banks - Bank Mandiri (Persero) and Bank Negara Indonesia (Persero). The
former has seen a sustained improvement in asset quality through better underwriting and risk management since 2016 under a new
management, while the latter is going through restructuring with the same team of people who turned around Bank Mandiri (Persero).
The portfolio is invested in the country’s leading ceramic tiles manufacturer Arwana Citramulia, a business with long-term growth potential
and a strong management team. Among a few other positions, we also have exposure to the country’s KFC master franchisee, Fastfood
Indonesia, which again has structural growth opportunity to expand as well as enhance operational efficiencies.
In India, while it has not been easy to find businesses with a suitable margin of safety, we are still able to identify specific stocks that
fit our criteria. Our positions in India centre around financial sector companies as they are growing more quickly, have strong balance
sheets and are available at prices which offer a good margin of safety. We have studied these businesses for over 15 years and trust
the management teams who have delivered substantial shareholder value over time.
Question
Your mandate is to look for smaller companies to invest in. Can you give some
examples of how smaller companies outperform?
Answer
We invest in a subset of these smaller companies – in what are popularly called ‘value’ stocks. Value stocks are classified as companies
that are currently trading below what they are worth and are thus expected to provide superior returns. Almost 80% of the portfolio is
invested in companies which fit this description.
Weighting in Value Stocks – Company versus Comparative Index
Source: Fidelity International, Factset, 31 July 2023. Index for attribution is MSCI All Countries Far East ex Japan Index until 31 July 2015 and MSCI All Countries Asia ex
Japan Index until 31 January 2020 and MSCI All Countries Asia ex Japan Small Cap (net) total return Index thereafter.
30%
40%
50%
60%
70%
80%
90%
100%
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Value stock to total (%)
- Value stocks as % of total Index - Value stocks as % of total
Fidelity Asian Values PLC
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Annual Report 2023
Portfolio Manager’s Review continued
As shown in the charts below, over the long-term, this has been an attractive place to invest as small value stocks have grown earnings
faster than the market and hence have delivered superior returns.
Despite this performance, the cohort of small value companies continues to trade at a significant discount to the rest of the market and
looks very attractive today.
Question
How has the Company’s portfolio’s exposure to unlisted companies changed during
the year under review?
Answer
We have not added or sold any unlisted securities in the past year. It continues to be a small part of the portfolio at less than 0.5% of
the Company’s invested assets. We believe that there are sufficient opportunities in the listed space in Asia and, therefore, would only
want to invest in an unlisted company in exceptional circumstances.
Value indices still close to their cheapest versus growth indices on Forward Price to Earnings Ratio
Source: Fidelity International, Factset, 31 July 2023.
Asia e x Japan Small C ap V alue - PE Asia ex Japan Small Cap Growth - PE Small Cap Growth / Small Cap Value (Right)
1 .0
1 .2
1 .4
1 .6
1 .8
2 .0
2 .2
5
10
15
20
25
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Valuation premium (SC Gr / SC Val)
Froward PE Ratio
In Asia ex Japan region (MSCI Indices)
Small Cap Value Stocks provide higher Earnings per Share (EPS) and have delivered superior returns
Source: Fidelity International, Refinitiv DataStream, 31 July 2023.
Large Cap Growth
Large Cap Value
Small Cap Growth
Small Cap Value
Large Cap Growth
Large Cap Value
Small Cap Growth
Small Cap Value
0
100
200
300
400
500
600
700
Jul-96
Jul-97
Jul-98
Jul-99
Jul-00
Jul-01
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Jul-12
Jul-13
Jul-14
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Jul-21
Jul-22
Jul-23
Rebased @ 100
50
100
150
200
250
300
350
400
450
500
Jul-03
Jul-04
Jul-05
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Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Rebased @ 100
MSCI Indices performance
MSCI Indices EPS growth
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Question
You have increased gearing within the Company’s portfolio in the reporting year.
What is the reason behind this?
Answer
We have always maintained that gearing is a function of the number of investment ideas we find. The level of gearing increases when
we find more ideas to invest in than we have money and it reduces (or we keep a higher cash balance) when we do not find as many
ideas.
Over the past year, gearing has increased as we have found particularly interesting investments in China given the market has fallen out
of favour. At the year end, gross gearing was 11.7% (2022: 4.4%) and net gearing was 4.9% (2022: nil). See the charts below on the
Company’s gearing history over my tenure.
Question
The rising cost of living continues to pressure consumers. How has higher inflation and
rising interest rates impacted Asian markets?
Answer
Inflation dynamics are different from country to country in Asia. China is now in deflation whilst some of the South East Asian countries
have seen a moderate rise in inflation (albeit lower than that observed in Europe or the US). This has led to higher interest rates and
weakening consumption as governments have behaved responsibly and not expanded fiscal spending (unlike the US).
We believe, therefore, that while there has been some consumer price inflation in Asia, it is not as big an issue as it is in the West.
Gross Asset Exposure and Net Market Exposure of Fidelity Asian Values PLC
Source: Fidelity International, 31 July 2023.
Gross asset exposure
Net market exposure
85
90
95
100
105
110
115
120
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
% of TNA
Gross asset exposure
85
90
95
100
105
110
115
120
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
% of TNA
Ne t m ar ket exp osure
Chart 1: China's valuation and the portfolio’s exposure to China + Hong Kong over tenure
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Annual Report 2023
Question
Can you give an example of how your active management has added value to the
Company’s portfolio this year?
Answer
As discussed earlier, our process is focused on finding misunderstood situations where we can own a good business with a margin of
safety. Shriram Finance is a good example of this. It has become the largest retail non-banking financial company (NBFC) in India caused
by the merger of Shriram Transport Finance Company, the largest financier of used commercial vehicles, and Shriram City Union Finance,
the largest financier of two-wheelers and the underserved micro, small, and medium enterprises (MSME).
We have owned Shriram Transport Finance Company since late 2016 when we bought it at an attractive valuation when Indian non-
banking financials saw short-term pressures due to tight liquidity. Over several decades, the company created its niche in a segment
where banks did not compete due to difficulty in valuing and underwriting loans for second-hand trucks. It owned a quarter of the market
share in the segment while the rest of the market was dominated by local money lenders, outside of the banking system, charging very
high interest rates. We also owned Shriram City Union Finance for its strong track record in segments that have semi-formal and irregular
sources of income and hence were credit starved.
The merger last year has created a lender with a more diversified book while also bringing benefits from synergies between the two
businesses. The stock rerated as a result.
Question
Can you explain to us how you integrate ESG considerations into the Company’s
portfolio?
Answer
The Company’s primary objective for shareholders is to achieve capital growth. In order to achieve the best possible returns, we have
always looked to invest in good businesses, managed by efficient management teams and available at reasonable valuations. Good
businesses are those that solve a problem for their consumers, and which are managed by efficient teams who are competent and which
respect laws, their employees, customers, the environment and shareholders, as well as managing their businesses responsibly. ESG
considerations have, therefore, always been at the heart of our investment thinking, and well before it became a buzz word.
Investing in smaller companies in Asia using the strength of Fidelity’s research team has always offered us the opportunity to identify
quality companies on fundamentals and ESG considerations ahead of other investors. Regulations are constantly evolving and ESG is no
exception to this. We believe this presents us with opportunities. The development of ESG ratings covered by the external rating agencies
has not yet evolved to cover many of the smaller companies in which we invest. This provides an exciting opportunity as the ESG
credentials of many of the smaller companies are best in class. They are in fact ‘double gems’: companies with good prospects, strong
management and well-priced alongside their strong ESG credentials.
Additionally, Fidelity as a firm is committed to principles that are consistent with the stage of economic development of countries. As part
of this process, we have regular engagements with companies in the portfolio.
Examples of our ESG case studies are on pages 25 and 26.
Portfolio Manager’s Review continued
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Question
What do you view as the biggest risks and opportunities for the next twelve months?
Answer
We think macro risks will eventually pass, especially if we own a diversified set of leading businesses and own them at valuations which
are below intrinsic value. However, this does not mean that these stocks cannot decline in value – to the contrary, forecasting price
movements is impossible. But we believe that the quality of our portfolio gives us holding power to go through head winds as they
emerge and come out stronger on the other side.
As can be seen from the second chart below, the ROE of our portfolio is at a premium to the market while the Price to Earnings ratio of
our holdings is at a significant discount. We own businesses which are of a better quality and at cheaper market valuations. This has
been the bedrock of our investment process for over a decade and has served us well.
Our skills lie in business analysis, finding best in class management teams and mispriced stocks. We are known to repeat the phrase
below often and it is fair to say that it has become known as something of a mantra for the Company:
Find good businesses run by good management and buy them at prices with a good margin of safety.
We continue to focus on this.
Nitin Bajaj Ajinkya Dhavale
Portfolio Manager Assistant Portfolio Manager
11 October 2023
Portfolio Valuations versus the Small Cap Index
*Company = Fidelity Asian Values PLC
Source: Fidelity International, FactSet, 31 July 2023. Index: MSCI All Countries Asia ex Japan Small Cap Index.
Lower Price to Earnings Ratio vs. Small Cap index
Higher Return on Equity vs. Small Cap index
-4 5%
-4 0%
-3 5%
-3 0%
-2 5%
-2 0%
-1 5%
-1 0%
-5%
0%
5%
10%
6 .0
7 .0
8 .0
9 .0
10. 0
11. 0
12. 0
13. 0
14. 0
15. 0
16. 0
17. 0
Jul-15
Nov-15
Mar- 16
Jul-16
Nov-16
Mar- 17
Jul-17
Nov-17
Mar- 18
Jul-18
Nov-18
Mar- 19
Jul-19
Nov-19
Mar- 20
Jul-20
Nov-20
Mar- 21
Jul-21
Nov-21
Mar- 22
Jul-22
Nov-22
Mar- 23
Jul-23
Small Ca p I ndex Company Discount (RHS)
0 .0
1 .0
2 .0
3 .0
4 .0
5 .0
6 .0
7 .0
9 .0
11. 0
13. 0
15. 0
17. 0
Jul-15
Nov-15
Mar- 16
Jul-16
Nov-16
Mar- 17
Jul-17
Nov-17
Mar- 18
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Mar- 20
Jul-20
Nov-20
Mar- 21
Jul-21
Nov-21
Mar- 22
Jul-22
Nov-22
Mar- 23
Jul-23
Small Ca p I ndex Company Premium (RHS)
*
*
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Annual Report 2023
Spotlight on the Top 10 Holdings
as at 31 July 2023
(Based on Asset Exposure expressed as a percentage of Net Assets. Asset Exposure comprises
the value of direct equity investments plus market exposure to derivative instruments.)
Axis Bank
Position size
Axis Bank is the third largest private sector bank in India and benefits from structural growth in the
penetration of banking services through financial inclusion and market share gains from less efficient
government-owned banks. It operates across the entire spectrum of financial services to customer
segments covering micro, small and mid-sized enterprises (MSMEs), agriculture and retail businesses. The
management team has continued to improve asset quality and enhance its underwriting culture. This has
led to a marked improvement on its return on equity (currently in the mid-teens). The improvement in the
quality of its loan book is expected to continue.
Sector Financials
3.1%
BOC Aviation
Position size
BOC Aviation is the fourth largest aircraft lessor in the world and has a larger exposure to the higher
growth markets in Asia compared to its peers. As it is 70% owned by Bank of China, it enjoys a strong
credit rating and lower funding costs versus competition. The company is witnessing a healthy growth in
its business driven by cyclical recovery and greater bargaining power for lessors from manufacturer of
backlogs of its original equipment.
2.5%
Sector Industrials
ICICI Bank
Position size
ICICI Bank is the second largest private sector bank in India and benefits from structural growth and
market share gains. From being a bank that suffered from a surge in non-performing loans in each down-
cycle, ICICI Bank has seen asset quality in the last few years rival HDFC Bank with an improvement in
underwriting culture, leading to an improvement in return on equity to mid-teens level.
Sector Financials
2.3%
Shriram Finance
Position size
Shriram Finance is the largest retail non-banking financial company (NBFC) in India following the merger
of Shriram Transport Finance Company, the largest financier of used commercial vehicles, and Shriram
City Union Finance, the largest financier of two-wheelers and the underserved micro, small, and medium
enterprises (MSMEs). The company has a long track record in segments that see structural growth as
customers shift out of informal money-lending channels. It faces little competition from banks given as it is
difficult to underwrite loans in these segments.
Sector Financials
2.3%
Bank Mandiri (Persero)
Position size
Bank Mandiri (Persero) is the second largest bank by assets in Indonesia and was a result of the merger
of several smaller banks post the Asian financial crisis. It benefits from secular growth due to a growing
population, favourable demographics and low credit penetration. It has one of the highest returns on equity
among emerging Asian countries due to a benign competitive landscape and a market-oriented regulator.
It has a strong customer base from employees of state-controlled enterprises as well as best-in-class payroll
lending which allows lower risk and cost reductions.
Sector Financials
2.2%
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Sinotrans
Position size
Sinotrans is the largest logistics company in China focused on freight forwarding, warehousing and land
logistics. It also runs a joint venture with DHL for parcel delivery. Even though it is a government-owned
company, it has a consistent track record of growth and cash generation.
Sector Industrials
2.1%
Granules India
Position size
Granules India is a leading global manufacturer of several off-patent drugs, including Paracetamol,
Ibuprofen, Metformin and Guaifenesin. Its key strength is that it has a limited number of products,
manufactured on a large scale, leading to low production costs and minimal good manufacturing
processes (GMP) issues. After completion of its capital expenditures, its balance sheet is expected to
provide higher returns.
Sector Health Care
2.1%
Taiwan Union Technology
Position size
Taiwan Union Technology is one of the largest manufacturers of low-loss, rigid copper-clad laminates (CCL)
used for telecommunication equipment, servers, and networking switches. CCL is expected to offer steady
growth potential over three to four years from a low base in 2022. The company has the strongest balance
sheet in the sector, and at a time when the technology hardware sector is suffering from high inventory
levels, the company has seen low levels of capacity expansion in the past three years, which helps it in this
downturn.
Sector Information Technology
2.1%
Genpact
Position size
Genpact is one of the leading business process outsourcing companies focused on customers in banking,
insurance, healthcare and industrials segments. It has a better-than-average business with recurring
revenue, retention rates in the high 90% range and has mid-teens return on invested capital. The digital
transformation of its clients has made Genpact a favourable strategic partner, with larger deal sizes and
more focus on improving business outcomes rather than just a cost saving option.
Sector Industrials
2.0%
Bank Negara Indonesia (Persero)
Position size
Bank Negara Indonesia (Persero) is the third largest bank by assets in Indonesia and benefits from
structurally high growth in the Indonesian banking sector. Bank Mandiri’s ex-senior management team took
control of Bank Negara in late 2020. Known for its conservative approach, the team shifted the focus from
market share gain to profitability improvement. Its strong execution helped improve the bank’s return on
equity profile and balance sheet strength.
Sector Financials
2.1%
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Fidelity Asian Values PLC
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Annual Report 2023
Forty Largest Holdings
as at 31 July 2023
The Asset Exposures shown below and on the next two pages measure exposure to market price movements as a result of owning
shares, corporate bonds, equity linked notes and derivative instruments. The Fair Value is the actual value of the portfolio as reported on
the Balance Sheet. Where a contract for difference (“CFD”) is held, the Fair Value reflects the profit or loss on the contract since it was
opened and is based on how much the price of the underlying share has moved.
Asset Exposure
Fair
Value
£’000 %
1
£’000
Long Exposures – shares unless otherwise stated
Axis Bank
Private sector bank 12,328 3.1 12,328
BOC Aviation (shares and long CFD)
Global aircraft operating leasing company 9,809 2.5 1,864
ICICI Bank
Private sector bank 9,172 2.3 9,172
Shriram Finance
Provider of hire purchase and lease finance for medium and heavy commercial vehicles 9,009 2.3 9,009
Bank Mandiri (Persero)
Banking institution 8,659 2.2 8,659
Bank Negara Indonesia (Persero) (shares and corporate bond)
Banking institution 8,367 2.1 8,367
Sinotrans (shares and long CFD)
Logistics, storage and terminal services provider 8,311 2.1 7,331
Granules India
Pharmaceutical manufacturing company 8,091 2.1 8,091
Taiwan Union Technology
Manufacturer of copper clad laminates (CCL) 8,081 2.1 8,081
Genpact (shares and long CFD)
Global professional services firm delivering digital transformation for businesses 7,776 2.0 3,622
Indofood CBP Sukses Makmur
Producer of packaged food products 7,761 2.0 7,761
HDFC Bank
Private sector bank 7,732 2.0 7,732
Arwana Citramulia
Ceramics manufacturer 7,581 1.9 7,581
CapitaLand India Trust (shares and long CFD)
Property trust 7,539 1.9 6,756
Chow Sang Sang Holdings International (shares and long CFD)
Jewellery retailer 7,413 1.9 6,737
Focus Media Information Technology (shares and equity linked notes)
Advertising solution provider 7,224 1.8 7,224
China Overseas Grand Oceans Group (shares and long CFD)
Real estate business 6,903 1.8 3,490
WH Group
Meat and food processing company 6,560 1.7 6,560
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Asset Exposure
Fair
Value
£’000 %
1
£’000
Gold Road Resources
Gold production and exploration company 6,496 1.7 6,496
PTC India
Provider of power trading solutions in India 6,359 1.6 6,359
Taiwan Semiconductor Manufacturing Company (long CFDs and put option)
Developer, manufacturer and distributor of semiconductor related products 6,041 1.5 (416)
Qingdao Port International (shares and long CFD)
Provider of port services 5,879 1.5 5,696
Texwinca Holdings
Production and sales of dyed yarns and knitted fabrics 5,661 1.4 5,661
China Foods
Food processing and trading company 4,899 1.2 4,899
Crystal International Group (shares and long CFD)
Manufacturer of clothing 4,897 1.2 4,677
Yixintang Pharmaceutical Group (shares, long CFD and equity linked notes)
Pharmaceutical retailer 4,840 1.2 4,681
China Yongda Automobiles Services Holdings (shares and long CFD)
Company engaged in the sale of passenger vehicles 4,838 1.2 4,090
Galaxy Entertainment Group (long CFD and put option)
Developer and operator of integrated entertainment and resort facilities 4,724 1.2 221
Dream International
Toy manufacturer 4,631 1.2 4,631
Ciputra Development
Property developer 4,421 1.1 4,421
Cikarang Listrindo
Electric power distribution company 4,365 1.1 4,365
Micron Technology (shares and put option)
Provider and manufacturer of memory and storage solutions for technology 4,024 1.0 3,622
SK Hynix (shares, long CFD and put option)
Semiconductor company that supplies memory chips 4,000 1.0 3,820
KoMiCo
Service provider for precision cleaning and special coating of semiconductor parts 3,997 1.0 3,997
SharkNinja
Producer of household cleaning and kitchen small appliances 3,980 1.0 3,980
Japfa Comfeed Indonesia
Industrial agri-food company 3,739 1.0 3,739
Brilliance China Automotive Holdings
Manufacturer and seller of automobiles 3,660 0.9 3,660
SIS
Provider of security, facility management and cash logistics solutions 3,553 0.9 3,553
ENN Energy Holdings
Gas company 3,503 0.9 3,503
Forty Largest Holdings continued
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Annual Report 2023
Asset Exposure
Fair
Value
£’000 %
1
£’000
Santos (long CFD)
Oil and gas exploration and production company 3,303 0.8 –
Top forty long exposures 250,126 63.4 216,020
Other long exposures 173,060 43.9 162,253
Total long exposures before futures (145 holdings) 423,186 107.3 378,273
Add: long futures
MSCI All Countries Asia ex Japan Index Future 15/09/2023 4,061 1.0 172
Total long exposures 427,247 108.3 378,445
Short exposures
Short CFDs (7 holdings) 10,586 2.7 (536)
Call options (3 holdings) 1,705 0.4 (175)
Short future (1 holding) 1,292 0.3 (10)
Total short exposures 13,583 3.4 (721)
Gross Asset Exposure
2
440,830 111.7
Portfolio Fair Value
3
377,724
Net current assets (excluding derivative assets and liabilities) 16,853
Total Shareholders’ Funds/Net Assets 394,577
1 Asset Exposure (as defined in the Glossary of Terms on page 91) is expressed as a percentage of Total Shareholders’ Funds.
2 Gross Asset Exposure comprises market exposure to investments of £377,631,000 (per Note 10: Investments on page 65) plus market exposure to derivative instruments of
£63,199,000 (per Note 11: Derivative instruments on page 66).
3 Portfolio Fair Value comprises investments of £377,631,000 plus derivative assets of £1,758,000 less derivative liabilities of £1,665,000 (per the Balance Sheet on page 56).
A full list of the Company’s holdings as at 31 July 2023 will be available on the Company’s pages of the Manager’s website at
www.fidelity.co.uk/asianvalues from the day of the AGM.
Forty Largest Holdings continued
as at 31 July 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Distribution of the Portfolio
as at 31 July 2023
(Asset Exposure expressed as a percentage of Total Shareholders’ Funds)
Portfolio China India Indonesia Hong Kong
South
Korea Other
2023
Total
2023
Index
1
2022
Total
Consumer Discretionary
Textiles, Apparel & Luxury Goods – – – 5.6 – 0.4 6.0 2.3 7.3
Hotels, Restaurants & Leisure – – 0.6 1.8 – – 2.4 2.1 2.0
Specialty Retail 1.9 – – – – 0.5 2.4 0.6 2.4
Automobile Components 1.2 – 0.5 – 0.5 – 2.2 2.4 2.3
Automobiles 1.1 – – – – 0.8 1.9 0.4 0.3
Diversified Consumer Services 0.7 – – – 0.5 0.7 1.9 0.5 2.2
Leisure Products – – – 1.2 – 0.3 1.5 0.4 1.1
Household Durables – – – 0.1 – 1.0 1.1 1.3 –
Broadline Retail – – – – – – – 0.8 1.3
Distributors – – – – – – – 0.1 –
4.9 – 1.1 8.7 1.0 3.7 19.4 10.9 18.9
Financials
Banks – 8.1 4.3 – – – 12.4 2.8 10.2
Consumer Finance – 3.1 0.4 – – – 3.5 1.4 4.3
Financial Services – 0.7 – – 0.5 – 1.2 1.8 0.9
Capital Markets 0.3 0.3 – – 0.5 – 1.1 2.3 0.6
Insurance – – – – 0.6 – 0.6 1.0 0.8
0.3 12.2 4.7 – 1.6 – 18.8 9.3 16.8
Industrials
Trading Companies &
Distributors 2.5 – 0.3 – – – 2.8 0.5 2.1
Professional Services 0.7 – – – – 2.0 2.7 0.6 1.5
Building Products 0.5 – 1.9 – – – 2.4 0.9 3.1
Air Freight & Logistics 2.1 – – – – – 2.1 0.5 2.0
Commercial Services & Supplies – 0.9 – – 0.8 – 1.7 0.7 0.4
Transportation Infrastructure 1.5 – – – – – 1.5 0.9 1.5
Machinery 0.7 – – 0.3 – – 1.0 4.3 1.1
Marine Transportation – – – 0.5 0.4 – 0.9 0.5 0.3
Electrical Equipment – 0.4 – – 0.4 – 0.8 3.3 1.7
Ground Transportation 0.5 – – – – – 0.5 0.3 –
Construction & Engineering – – – – 0.4 – 0.4 2.1 0.5
Passenger Airlines – – – – – 0.2 0.2 0.2 0.2
Industrial Conglomerates – – – – – – – 1.0 –
Aerospace & Defense – – – – – – – 0.3 –
8.5 1.3 2.2 0.8 2.0 2.2 17.0 16.1 14.4
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Continued on the next page.
Portfolio China India Indonesia Hong Kong
South
Korea Other
2023
Total
2023
Index
1
2022
Total
Consumer Staples
Food Products 0.1 – 3.0 1.7 – 2.0 6.8 2.7 5.7
Beverages 1.2 – – – – 0.7 1.9 0.5 1.3
Consumer Staples Distribution
& Retail 1.7 – – 0.1 – – 1.8 0.6 2.2
Household Products 0.3 – 0.4 – – – 0.7 0.1 1.0
Personal Care Products – – – – – – – 0.6 –
Tobacco – – – – – – – 0.2 –
3.3 – 3.4 1.8 – 2.7 11.2 4.7 10.2
Information Technology
Semiconductors &
Semiconductor Equipment – – – – 2.0 4.2 6.2 8.7 5.2
Electronic Equipment Instruments
& Components – 0.8 0.2 – – 2.4 3.4 5.5 3.3
Technology Hardware Storage &
Peripherals – – – – – 1.0 1.0 2.3 1.3
Information Technology Services – – – – – – – 1.5 1.1
Software – – – – – – – 1.4 –
Communications Equipment – – – – – – – 0.7 –
– 0.8 0.2 – 2.0 7.6 10.6 20.1 10.9
Materials
Metals & Mining 1.2 – – – – 3.6 4.8 2.7 4.3
Chemicals – 0.8 – – 1.0 – 1.8 9.0 2.6
Construction Materials 0.8 – – – – – 0.8 1.1 0.7
Paper & Forest Products – – – – – – – 0.6 –
Containers & Packaging – – – – – – – 0.3 –
2.0 0.8 – – 1.0 3.6 7.4 13.7 7.6
Real Estate
Real Estate Management &
Development 3.5 – 1.1 – – 2.7 7.3 4.1 4.7
Retail Real Estate Investment
Trusts (REITS) – – – – – – – 0.8 –
Office Real Estate Investment
Trusts (REITS) – – – – – – – 0.8 –
Specialized Real Estate
Investment Trusts (REITS) – – – – – – – 0.3 –
Industrial Real Estate Investment
Trusts (REITS) – – – – – – – 0.9 –
Distribution of the Portfolio continued
as at 31 July 2023
(Asset Exposure expressed as a percentage of Total Shareholders’ Funds)
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Portfolio China India Indonesia Hong Kong
South
Korea Other
2023
Total
2023
Index
1
2022
Total
Diversified Real Estate
Investment Trusts (REITS) – – – – – – – 0.5 –
Hotel & Resort Real Estate
Investment Trusts (REITS) – – – – – – – 0.3 –
Health Care Real Estate
Investment Trusts (REITS) – – – – – – – 0.1 –
3.5 – 1.1 – – 2.7 7.3 7.8 4.7
Energy
Oil, Gas & Consumable Fuels 1.1 1.3 – – – 1.3 3.7 1.3 3.2
Energy Equipment & Services 0.7 – – – – 1.5 2.2 0.1 0.2
1.8 1.3 – – – 2.8 5.9 1.4 3.4
Utilities
Independent Power &
Renewable Electricity Producers – 2.1 1.1 – – 1.1 4.3 0.7 4.7
Gas Utilities 0.9 – – – – – 0.9 0.6 –
Multi Utilities – – – – – – – 0.6 –
Electric Utilities – – – – – – – 0.3 1.4
Water Utilities – – – – – – – 0.1 –
0.9 2.1 1.1 – – 1.1 5.2 2.3 6.1
Health Care
Pharmaceuticals – 2.1 – – – – 2.1 3.6 2.4
Health Care Equipment &
Supplies 0.3 – – – 1.8 – 2.1 1.1 4.3
Life Sciences Tools & Services 0.3 – – – – – 0.3 0.4 0.1
Biotechnology – – – – – – – 2.0 –
Health Care Providers & Services – – – – – – – 1.8 0.8
Health Care Technology – – – – – – – 0.2 –
0.6 2.1 – – 1.8 – 4.5 9.1 7.6
Communications Services
Media 1.8 0.5 – 0.2 – – 2.5 0.8 2.3
Interactive Media & Services 0.6 – – – – – 0.6 0.5 0.2
Wireless Telecommunication
Services – – – – – 0.3 0.3 0.3 0.2
Entertainment – – – – – – – 1.9 –
Diversified Telecommunication
Services – – – – – – – 1.1 –
2.4 0.5 – 0.2 – 0.3 3.4 4.6 2.7
Exposure before long futures 28.2 21.1 13.8 11.5 9.4 26.7 110.7
Add: long futures – – – – – 1.0 1.0 1.1
Total Asset Exposure
– 2023 28.2 21.1 13.8 11.5 9.4 27.7 111.7
Index – 2023 9.1 28.0 2.5 5.3 18.1 37.0 100.0
Total Asset Exposure
– 2022 24.8 23.7 11.4 10.9 9.1 24.5 104.4
1
MSCI All Countries Asia ex Japan Small Cap Index (net) total return in sterling terms, the Company’s Comparative Index.
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Ten Year Record
For the year ended
31 July 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Gross Asset Exposure (£m)
1
440.8 383.7 375.2 276.6 347.4 285.2 273.7 232.0 162.9 192.3
Total Shareholders’ Funds (£m) 394.6 367.6 364.1 269.4 323.0 288.0 280.2 237.5 178.9 172.8
NAV per Ordinary Share – undiluted (p)
2
549.33 507.78 497.50 364.39 447.16 419.36 415.17 351.98 265.14 255.99
NAV per Ordinary Share – diluted (p)
2
n/a n/a n/a n/a 439.91
3
413.64
3
407.77
3
n/a n/a n/a
Ordinary Share Price (p) 520.00 458.00 483.00 335.00 455.50 412.00 386.00 313.00 236.88 224.00
Subscription Share Price (p) n/a n/a n/a n/a 53.00 23.50 29.50 n/a n/a n/a
(Discount)/Premium – undiluted (%)
2
(5.3) (9.8) (2.9) (8.1) 1.9 (1.8) (7.0) (11.1) (10.7) (12.5)
Premium/(Discount) – diluted (%)
2
n/a n/a n/a n/a 3.5
3
(0.4)
3
(5.3)
3
n/a n/a n/a
Revenue return per Ordinary Share (p)
2
15.17 14.21 9.20 8.64 10.70 5.70 6.08 5.36 2.26 1.14
Dividend per Ordinary Share (p) 14.50 14.00 8.80 8.50 8.80 5.50 5.00 4.50 2.00 1.10
Ongoing Charges (cost of running the
Company) (%)
2
0.96 0.95 0.93 0.98 0.98 1.17 1.22 1.33 1.42 1.50
Gross Gearing (%)
2,4
11.7 4.4 3.0 2.7 7.5 (1.0) (2.3) (2.3) (9.0) 11.3
NAV total return – undiluted (%)
2
+11.4 +3.9 +39.5 -16.7 +8.2 +2.2 +19.3 +33.8 +4.0 +11.7
NAV total return – diluted (%)
2
n/a n/a n/a n/a +7.9
3
+2.7
3
+17.2
3
n/a n/a n/a
Ordinary Share Price total return (%)
2
+17.3 -3.4 +47.6 -24.8 +12.3 +8.2 +24.9 +33.3 +6.2 +10.1
Comparative Index total return (%)
5
+7.5 -5.6 +39.2 -0.8 -4.6 +4.7 +15.6 +13.1 n/a n/a
Benchmark Index total return (%)
6
+7.5 -5.6 +39.2 +2.7 +3.9 +5.7 +28.2 +15.8 +0.3 +5.4
1 The value of the portfolio exposed to market price movements.
2 Alternative Performance Measures.
3 The dilution relates to the subscription shares offer that closed in December 2019.
4 Gross Asset Exposure in excess of/(less than) Total Shareholders’ Funds expressed as a percentage of Total Shareholders’ Funds.
5 MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
6 MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms) since 1 February 2020. Prior to that and since 1 August 2015, it was the MSCI All
Countries Asia ex Japan Index (net) total return (in sterling terms). The variable management fee element of the management fee is measured against the Benchmark
Index.
Sources: Fidelity and Datastream.
Past performance is not a guide to future returns.
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Fidelity International (“Fidelity”) has embedded Environmental,
Social and Governance (“ESG”) factors in its investment decision-
making for a number of years. Fidelity has been a signatory to the
United Nations Principles for Responsible Investment (UNPRI) since
2012 and submits an annual report detailing how it incorporates
ESG into its investment analysis. As a founding signatory to the Net
Zero Asset Managers Initiative, Fidelity has committed to halving the
carbon footprint of its investment portfolios by 2030, from a 2020
baseline, starting with equity and corporate bond holdings; and to
reach net zero for holdings by 2050.
ESG integration at Fidelity is carried out at the fundamental
research analyst level within its investment teams, primarily through
the implementation of the Fidelity Proprietary Sustainability Rating.
This rating was established in 2019 and is designed to generate
a forward-looking and holistic assessment of a company’s ESG
risks and opportunities, based on sector specific key performance
indicators across 127 individual and unique sub-sectors. A
breakdown of the ratings of the companies in the portfolio using
MSCI and Fidelity’s own proprietary ratings is on page 23. In
addition, Fidelity’s portfolio managers are also active in analysing
the effects of ESG factors when making investment decisions. ESG
analysis complements financial analysis to provide a complete view
of every company that is researched and monitored.
Fidelity’s approach to integrating ESG factors into its investment
analysis includes the following activities:
• In-depth research.
• Company engagement.
• Active ownership.
• Collaboration within the investment industry.
In addition to Fidelity’s Sustainability Ratings, Fidelity has developed
a proprietary Climate Rating, which is an important part of its
plans to reach net zero emissions as a management house. It
utilises its fundamental research capabilities to identify climate-
related risks, net zero investments and targets for transition
engagement within the Fidelity investment universe. It assesses
which companies are in the best position to transition to net zero or
have a positive trajectory towards transition. The Climate Rating is
designed to complement the broader Sustainability Ratings, which
score companies across a range of environmental, social and
governance criteria.
Although Fidelity’s analysts have overall responsibility for analysing
the environmental, social and governance performance of the
companies in which it invests, Fidelity has a dedicated Sustainable
Investing Team working closely with the investment teams which is
responsible for consolidating Fidelity’s approach to stewardship,
engagement, including thematic engagement, ESG integration and
the exercise of its votes at general meetings.
The Sustainable Investing Team have a key role in assisting the
investment teams with ESG integration which includes:
• Implementing Fidelity’s proxy voting guidelines.
• Engagement with investee companies on ESG issues,
utilising Fidelity’s corporate access research capabilities and
investment scale to improve corporate behaviour, including at
company meetings.
• Working closely with the investment team globally across all
asset classes in integrating ESG into analysis and decision-
making.
• Providing internal ESG reporting including analyst reports,
portfolio manager reviews and industry analysis.
• Co-ordinating and responding to specific client queries on ESG
topics.
• Publishing client reporting on ESG integration and proxy voting.
• Maintaining a thorough understanding of current ESG themes
and trends around the world.
• Attending external seminars and conferences focusing on
trending ESG issues and ESG integration.
• Providing ESG training to the investment team and across the
business.
During 2021, Fidelity introduced its sustainable investing voting
principles and guidelines. These seek to provide a clear overview of
Fidelity’s voting approach, promote improved corporate behaviours
and reduce risk, include environmental and social factors, increase
clarity of votes to issuers and clients and meet current market best
practices and stewardship expectations. Examples of the policy
include voting against companies not meeting key criteria on
climate change and against management in developed markets
with less than 30% female representation at board level.
Fidelity’s investment approach involves bottom-up research. As well
as studying financial results, the portfolio managers and analysts
carry out additional qualitative analysis of potential investments.
They examine the business, customers and suppliers and often
visit the companies in person to develop a view of every company
in which Fidelity invests and ESG factors are embedded in this
research process.
Examples of ESG factors that Fidelity’s investment teams may
consider as part of its company and industry analysis include:
• Corporate governance (e.g. Board structure, executive
remuneration).
• Shareholder rights (e.g. election of directors, capital
amendments).
• Changes to regulation (e.g. greenhouse gas emissions
restrictions, governance codes).
• Physical threats (e.g. extreme weather, climate change, water
shortages).
ESG in the Investment Process at Fidelity
International
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Fidelity Asian Values PLC
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Annual Report 2023
• Brand and reputational issues (e.g. poor health and safety
record, cyber security breaches).
• Supply chain management (e.g. increase in fatalities, lost time
injury rates, labour relations).
• Work practices (e.g. observation of health, safety and human
rights provisions and compliance with the provisions of the
Modern Slavery Act).
Fidelity operates analyst training and development programmes
which include modules on ESG themes, topics and strategies and
attendance at external seminars on the trending ESG issues in the
market globally as well as conferences to explore new ways of
integrating ESG into the investment process across all asset classes.
Fidelity uses a number of external research sources around the
world that provide ESG-themed reports and it subscribes to an
external ESG research provider and rating agency to supplement
its organic analysis. Fidelity receives reports that include company
specific and industry specific research as well as ad hoc thematic
research looking at particular topics. The ESG ratings are industry
specific and are calculated relative to industry peers and Fidelity
uses these ratings in conjunction with its wider analysis. Fidelity’s
sources of ESG research are reviewed on a regular basis.
The ESG ratings and associated company reports are included
on Fidelity’s centralised research management system. This is an
integrated desktop database, so that each analyst has a first-hand
view of how each company under their coverage is rated according
to ESG factors. In addition, ESG ratings are included in the analyst
research notes which are published internally and form part of the
investment decision. The external research vendor also provides
controversy alerts which include information on companies within
its coverage which have been identified to have been involved
in a high-risk controversy that may have a material impact on the
company’s business or its reputation.
SUSTAINABILITY
KPIs
Cybersecurity
Risk management
Business continuity
plan
Bribery/corruption
prevention
Independent
auditing
Compensation
Code of conduct
Supplier
responsibilities
Inclusive culture
Corporate citizenship
Gender pay equity
Community
engagement
Learning &
development
Employee
wellbeing
Financial
wellness
Diversity
Carbon emission
Energy management
Waste reduction
Ecological impacts
Water conservation
Biodiversity
Recycling
Supply chain
monitoring
Public advocacy
G
O
V
E
R
N
A
N
C
E
P
E
R
F
O
R
M
A
N
C
E
I
N
D
I
C
A
T
O
R
S
S
O
C
I
A
L
P
E
R
F
O
R
M
A
N
C
E
I
N
D
I
C
A
T
O
R
S
E
N
V
I
R
O
N
M
E
N
T
A
L
P
E
R
F
O
R
M
A
N
C
E
I
N
D
I
C
A
T
O
R
S
Fidelity International - Setting standards for its business
Sustainability built from the ground up
We apply the same KPIs to our own
business that we use for the
companies in which we invest.
And we expect to improve upon our
own ESG standards, just as we
would expect from others.
ESG in the Investment Process at Fidelity
International continued
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
ESG ASSESSMENT
The first two charts below show a breakdown of the underlying stocks in the Company’s portfolio using MSCI and Fidelity’s own ESG
ratings. It is encouraging that Fidelity’s ratings, which are more forward-looking in nature, show a greater proportion of the portfolio
in higher rated stocks than those rated by MSCI, which is more backward-looking and disclosure driven. Additionally, more than 84%
of the portfolio (as shown in the second chart) is covered by Fidelity compared with 35% covered by MSCI (as shown in the first chart)
with the Company’s small and mid cap exposures being given formal ESG coverage by Fidelity sooner than by MSCI.
0
20
40
60
80
100
Portfolio
Comparative Index
Improving
Stable
Deteriorating
Not
rated
Fidelity ESG Ratings Direction (%)
0
20
40
60
80
100
Portfolio
Comparative Index
A B
C
D
E
Not
rated
Fidelity Proprietary ESG Ratings (%)
0
5
10
15
20
25
30
35
40
Portfolio
Comparative Index
AAA AA
A
BBB
BB B CCC
Not
rated
MSCI ESG Ratings (%)
Source: MSCI ESG Research and Fidelity International as at 31 July 2023.
MSCI rates issuers on a AAA-CCC scale according to their exposure to industry specific ESG key issues and their ability to manage those issues relative to peers. The ESG
ratings distribution is based on Net Asset Value of holdings excluding cash, liquidity funds, derivatives and ETFs, and is rebased to 100%. Although Fidelity International’s
information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable,
none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied
warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein.
None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event
shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the
possibility of such damages.
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Annual Report 2023
Carbon Footprint
The chart below demonstrates the carbon footprint of the Company’s portfolio compared to that of the Comparative Index.
Portfolio
Index
0
100
200
300
400
500
600
700
Weighted Average Carbon Intensity
(tonnes CO2e/US$m revenue)
Portfolio Carbon Intensity
(tonnes CO2e/US$m sales)
Portfolio Carbon Emission
(tonnes CO2e/US$m invested)
Carbon Emissions: Provides a normalised snapshot of the carbon emissions of all of the investments in the Company’s portfolio
measured in tonnes CO2e per US$m invested.
Carbon Intensity: The amount of carbon by weight emitted per unit of energy consumed per tonnes CO2e per US$m sales.
Weighted Average Carbon Intensity: Measures the weighted average carbon emissions per unit of revenue in tonnes CO2e per
US$m for each investment in the Company’s portfolio.
Carbon Data Source: Data provided by ISS ESG. All rights in the information provided by Institutional Shareholder Services Inc. and
its affiliates (ISS) reside with ISS and/or its licensors. ISS makes no express or implied warranties of any kind and shall have no liability
for any errors, omissions or interruptions in or in connection with any data provided by ISS.
ESG in the Investment Process at Fidelity
International continued
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Annual Report 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
ESG Investing – Case Studies
BOC AVIATION
The Portfolio Manager and the Fidelity investment team had two ESG focused engagements with BOC Aviation, the fourth largest
aircraft lessor in the world with large exposure to high growth markets in Asia.
The company reached out to seek feedback after it published its latest ESG report. Fidelity provided suggestions on its Scope 3
greenhouse gas (GHG) emissions target, enhanced disclosure on ESG board oversight and supply chain management. Fidelity
also took the opportunity to convey its expectations on independent directors’ tenure and board committee independence.
BOC Aviation established a board-level ESG committee in December 2022. During conversations with the company, it was
noted that the company was able to overachieve its GHG emissions target in 2021-2022 due to the pandemic-driven decrease
in travel. Moving forward, the company will continue to use 2019 as its base year to compare carbon reduction targets. Fidelity
encouraged the company to provide more context wherever necessary and to demonstrate leadership in disclosing Scope 3
emissions. Fidelity also suggested establishing a Supplier Code of Conduct and providing context on what the supply chain
survey entails. It was noted that the company’s electricity usage dropped significantly last year after it moved to a new building.
Additionally, it added a target of using at least 75% latest technology aircraft in its owned fleet.
The company has a separate CEO and chairperson and on diversity, it has committed to having a minimum of two female
members on its board. The company also follows an internal policy to rotate its auditor every five years.
The company has committed to releasing a detailed ESG report. Fidelity intends to engage with the company again once the
report is available.
SHRIRAM FINANCE
Shriram Finance provides access to credit to borrowers that would be difficult to under-write by the banking system. It focuses on
maintaining long-term relationships with customers and not act as a coercive lender during difficult times, while also adequately
compensating itself from risks as a result of the difficult periods. The Shriram Group has had a long history spanning almost five
decades with little or no ethics controversies. The majority of board members are independent and the company is chaired by
an independent member. Overall, the company screens very well on the most relevant ESG parameters. In Fidelity’s engagement
with the company, one area of note was encouraging it to improve its disclosures and the Fidelity investment team will continue to
engage with the company on this aspect.
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ESG Investing – Case Studies continued
BANK MANDIRI (PERSERO)
Fidelity’s investment team, including the Portfolio Manager, had ESG engagements during 2023 with Bank Mandiri (Persero), the
second largest bank in Indonesia. It had a total of three engagements with the bank in order to gain a better understanding
of how sustainability was incorporated into its business, and to highlight Fidelity’s new deforestation framework and other
associated global policies and share observations of sustainability matters raised by a rating agency.
The management was open to Fidelity’s engagement and responded positively to the queries. Progress had been made on
topics discussed in previous engagements, such as:
• Expressing confidence in achieving net zero for operations by 2030. It mentioned it was working with consultants to build a
system to keep track of and report on greenhouse gas (GHG) emissions;
• Providing clarity on the lending process to the palm oil and coal sectors. Fidelity recognised that this was a journey and
expected the bank to take progressive steps to implement negative lists for lending in sensitive sectors;
• Committing to becoming a leader in sustainable financing with new products such as sustainability targeted linked loans;
and
• Sharing challenges and limitations in relation to the above topics.
Fidelity noted that there is a strong regulatory push that is a key driver for harmonised sustainability adoption in the Indonesian
banking sector. Although at an early stage, environmental policies are moving in the right direction with a focus on priority areas,
for example, significant progress is being made on palm oil financing, a key issue for banks in the region.
The performance on social aspects was found to be satisfactory – being a state-controlled bank enhances its focus on making
positive social impact. However, being a state-owned bank also raises governance concerns, although Fidelity noted that the
bank has been an above average performer on governance compared to other Asian state-owned peers.
BRILLIANCE CHINA AUTOMOTIVE HOLDINGS
During the year, the Fidelity’s investment team, including the Portfolio Manager, had a couple of ESG focused engagements with
Brilliance China Automotive Holdings, a leading luxury car manufacturer in China which has a joint venture with BMW. The focus
of these engagements was on board structure, governance and dividend payout.
The company is performing well on environmental and social aspects. Its plants are increasing the use of advanced digital
platforms and green installations, including real time monitoring of energy consumption and pollutant emissions. The production
of new energy vehicles continues to grow as a proportion of total. The company ensures compliance in the supply chain with
strengthened risk management processes and mechanisms, especially for Environmental, Health and Safety (EHS), social, and
financial risks.
However, the board was not sufficiently independent, and its executive directors were mostly affiliated to controlling shareholders
and its strategic decision-making was not always aligned to minority shareholder interests.
In June this year, Fidelity advised the company that it would vote against the two independent non-executive directors for the lack
of independence. It also reiterated our demand for more transparency on capital allocation decisions.
During engagements with the company, Fidelity also pushed its management to declare higher payouts to distribute its sale
proceeds from BMW Brilliance Automobile. The company agreed that there were no major investment projects and hence the
majority of the net proceeds from the sale will get distributed to shareholders. Fidelity intends to continue engaging with the
company and monitor the progress on the independence of the board of Brilliance China Automotive Holdings.
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Strategic Report
Business and Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium
segment of the main market of the London Stock Exchange. It has
been approved as an investment trust by HM Revenue & Customs
under Sections 1158 and 1159 of the Corporation Tax Act 2010
and it is intended that the Company will continue to conduct its
affairs in a manner that will enable it to retain this status.
The Company is domiciled in the UK and is an investment
company within the meaning of section 833 of the Companies
Act 2006. The Company is not a “close” company for taxation
purposes and has no employees, premises, assets or operations.
Investment Objective and Policy
The Company’s objective is to achieve capital growth principally
from the stockmarkets of the Asian Region* excluding Japan. The
Company’s performance is measured against the return of its
Comparative Index, the MSCI All Countries Asia ex Japan Small
Cap Index (net) total return (in sterling terms).
The Company seeks to meet its investment objective through
investment in a diversified portfolio of securities and instruments
issued by or related to companies listed on the stockmarkets
in the Asian Region* excluding Japan but investments may be
made in companies listed elsewhere which, in the opinion of the
Portfolio Manager, have significant interests in the Asian Region*
excluding Japan.
In order to diversify the Company’s portfolio, the Board has set
broad guidelines for the Manager, which the Board reserves the
right to amend as it sees fit, in respect of the country weightings
of the portfolio. The Company may invest directly in the shares
of companies or indirectly through equity related instruments
(such as derivative contracts, warrants or convertible bonds) and
in debt instruments. The Company may also invest in unquoted
securities and in other investment funds, subject to the investment
restrictions set out below.
No material change will be made to the investment objective
and policy without shareholder approval.
Investment Strategy
In order to achieve this objective, the Company operates as an
investment company and has an actively managed portfolio of
investments. As an investment company, it is able to gear the
portfolio and the Board takes the view that long-term returns
for shareholders can be enhanced by the use of gearing in a
carefully considered and monitored way.
As part of the strategy, the Board has delegated the
management of the portfolio and certain other services to
Fidelity. The Portfolio Manager, Nitin Bajaj, aims to achieve a
total return on the Company’s net assets over the longer-term in
excess of the equivalent return on the Company’s Comparative
Index. The stock selection approach adopted by the Portfolio
Manager is considered to be well-suited to achieving this
objective.
Investment Management Philosophy, Style and Process
The portfolio is built on a stock by stock basis following the Portfolio
Manager’s assessment of the fundamental value available in
individual securities. Geographical weightings are the result of this
stock selection process rather than macroeconomic considerations.
The portfolio’s geographical and industry sector weightings may,
therefore, vary significantly from the weightings in its Comparative
Index. Further, the Portfolio Manager’s concentration on the
identification of fundamental value in individual stocks within the
Asian Region* excluding Japan may result in investments that are
contrary to prevalent trends and local conventions.
Investment Restrictions
The Company will invest and manage its assets with an objective
of spreading risk with the following investment restrictions:
• No single or aggregate investment in any one company or
other investment entity shall represent more than 10% of its
Gross Assets, measured at the time of any investment.
• Up to 5% of its Gross Assets, at the time of investment,
in securities which are not listed on any stock exchange.
However, the Portfolio Manager will not normally make
any such investment, except where it is expected that the
securities will become listed on a stock exchange in the
foreseeable future.
• Up to 15% of its Gross Assets, at the time of investment, in
other investment funds (whether listed or unlisted) where
such funds offer the only practicable means of gaining
exposure to a particular market in the Asian Region*
excluding Japan. Within this limit, no more than 10% of Gross
Assets, at the time of investment, may be invested in funds
that do not have stated policies to invest more than 15% of
their Gross Assets in other listed closed-ended funds.
• Up to 5% of its Gross Assets, at the time of investment, in
securities which are not listed or domiciled in the Asian
Region*, provided the investments have a strong Asian
Region* rationale.
The Company is permitted to invest in Non-Voting Depositary
Receipts, American Depositary Receipts, Global Depositary
Receipts and Equity Linked Notes. Any such investment will be
included in the relevant aggregate country weighting.
* Asian Region means the continent of Asia (including Hong Kong, South Korea,
Thailand, Singapore, Malaysia, Taiwan, Indonesia, Philippines, China, India,
Pakistan and Sri Lanka, but excluding Japan, the countries comprising the former
U.S.S.R. and the Middle East), together with Australasia.
Use of Derivative Instruments
In order to meet its investment objective, the Company may
utilise derivative instruments, including index-linked notes, futures,
contracts for differences (“CFDs”), call options (including covered
calls), put options and other equity related derivative instruments.
Derivatives usage will focus on, but will not be limited to the
following investment strategies:
• As an alternative form of gearing to bank loans, the
Company can enter into long CFDs which would achieve
an equivalent effect to buying an asset financed by bank
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Annual Report 2023
borrowing but often at lower financing costs. The Company
does not currently use bank borrowings for gearing
purposes.
• To hedge equity market risks where suitable protection can
be purchased to limit the downside of a falling market at
reasonable costs.
• To enhance the investment returns by taking short exposures
on stocks that the Portfolio Manager considers to be over-
valued.
The Board has created strict policies and exposure limits and
sub-limits to manage derivatives.
Derivative use is limited in terms of the value of the total portfolio
to which the Company is exposed, whether through direct or
indirect investment. The Board adopts the policy that:
• Net Market Exposure will not exceed the NAV of the
Company by more than 30%; and
• Gross Asset Exposure will not exceed the NAV of the
Company by more than 40%.
Notwithstanding the Board’s intention in the medium to long-term
to maintain a Net Market Exposure within a range of between
90% -115%, in the short-term the Net Market Exposure may fall
outside of this range from time to time, having regard to the
Portfolio Manager’s investment style and philosophy as well as
the markets he operates in. The sum of all short exposures of the
Company from derivatives, excluding hedges, will not exceed 10%
of total net assets.
The majority of the Company’s exposure to equities will be
through direct investment and not through derivatives. In addition,
the limits on exposure to individual companies and groups
are calculated after translating all derivative exposures into
economically equivalent amounts of the underlying assets.
Key Performance Indicators
The key performance indicators (“KPIs”) used to describe the
performance of the Company and which are comparable to those
reported by the other investment companies are set out below.
Year ended
31 July
2023
%
Year ended
31 July
2022
%
NAV per Ordinary Share total
1
+11.4 +3.9
Ordinary Share Price total return
1
+17.3 -3.4
Comparative Index total return
2
+7.5 -5.6
Discount to NAV
1
5.3 9.8
Ongoing Charges Ratio
1,3
0.96 0.95
1 Alternative Performance Measures.
2 MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling
terms).
3 The Board has a policy of ensuring that the costs of running the Company are
reasonable and competitive.
Sources: Fidelity and Datastream.
In addition to the KPIs above, the Board also monitors the
Company’s performance against its peer group of investment
companies. Commentary on performance for the year ended
31 July 2023 can be found in the Chairman’s Statement and
Portfolio Manager’s Review on pages 2 to 11. Long-term
performance is also monitored and is set out in the Ten Year
Record on page 20.
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 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 in
order 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 principal risk confronting asset
managers and their investors. The Board notes that the Manager
has integrated ESG considerations, including climate change, into
the Company’s investment process. Further details are on pages
21 to 24. The Board will continue to monitor how this may impact
the Company as a risk to investment valuations and potentially to
shareholder returns.
The Manager also has responsibility for risk management for
the Company. It works with the Board to identify and manage
the principal and emerging risks and uncertainties and to ensure
that the Board can continue to meet its UK corporate governance
obligations.
Strategic Report continued
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
The Board considers the risks listed below and on pages 30 to 32 as the principal risks and uncertainties faced by the Company.
Principal Risks Description and Risk Mitigation
Economic, Political and
Market Risks
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, such as the post pandemic economic recovery and volatility from the war in Ukraine.
Inflation remains elevated across most economies driven by a combination of increased
demand following pandemic restrictions being lifted, global labour shortages in some sectors
and supply chain shortages, including energy and food security.
The Company is exposed to a number of geopolitical risks. The fast-changing global
geopolitical landscape is largely shaped by the Russia and Ukraine war effects,
deglobalisation trends and significant supply disruption, as well as fears of global recession
amid inflationary pressures and financial distress. Russia and Ukraine are both significant net
exporters of oil, natural gas and a variety of soft commodities and supply limitations fuelled
global inflation and economic instability, specifically within Western nations. Whilst the direct
impact of the war to APAC markets has been less severe than European counterparts, the
prolonged cost-of-living crisis risks continue to impact Western investment appetite. China’s
economy remains vulnerable to risks related to the global outlook and geopolitical tensions
including US-China trade war, South China sea dispute and implications of China-Taiwan relations.
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.
The Company’s portfolio is made up mainly of listed securities. The Portfolio Manager’s success
or failure to protect and increase the Company’s assets against the above background is core
to the Company’s continued success. His 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.
Risks to which the Company is exposed to in the market and currency risk category are
included in Note 17 to the Financial Statements on pages 69 to 77 together with summaries of
the policies for managing these risks.
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Principal Risks Description and Risk Mitigation
Investment Performance
Risk (including the use of
Derivatives and Gearing)
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 Comparative Index
and/or peer group companies. Continued underperformance could lead to the Company and
its objective becoming unattractive to investors. 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.
In order to manage this risk, 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.
Derivative instruments are used to protect and enhance investment returns. 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. The Board has put in place policies and limits to control the Company’s
use of derivatives and exposures. These are monitored on a daily basis 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 on pages 69 to 77.
The Company gears through the use of long CFDs which provide greater flexibility and are
generally cheaper than bank loans. The principal risk is that the Portfolio Manager fails to use
gearing effectively, resulting in a failure to outperform in a rising market or to underperform in
a falling market. The Board regularly considers the level of gearing and gearing risk and sets
limits within which the Manager must operate.
Cybercrime and
Information Security Risks
The operational risk from cybercrime is significant. Cybercrime threats evolve rapidly and
consequently the risk is regularly re-assessed and the Board receives regular updates from the
Manager in respect of the type and possible scale of cyberattacks. The Manager’s technology
team has developed a number of initiatives and controls in order to provide enhanced
mitigating protection to this ever-increasing threat. The risk is frequently re-assessed by Fidelity’s
information security teams and has resulted in the implementation of new tools and processes,
as well as improvements to existing ones. Fidelity has a dedicated cybersecurity team which
provides regular awareness updates and best practice guidance.
Risks are increased due to the Russia/Ukraine conflict and the trend to more working from
home following the pandemic. These primarily relate to phishing, remote access threats,
extortion and denial of services attacks. The Manager has dedicated detect and respond
resources specifically to monitor the cyber threats associated within the workplace and
increased cyber activity following Russia’s invasion of Ukraine. There are a number of
mitigating actions in place including, control strengthening, geo-blocking and phishing
mitigants, combined with enhanced resilience and recovery options.
The Company’s third-party service providers also have similar measures in place.
Strategic Report continued
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
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Annual Report 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Principal Risks Description and Risk Mitigation
Level of Discount to Net
Asset Value
Due to the nature of investment companies, the price of the Company’s shares and its discount
to NAV are factors which are not totally within the Company’s control. The Board has a
discount management policy in place and some short-term influence over the discount may be
exercised by the use of share repurchases at acceptable prices and within the parameters set
by the Board. In considering the risk that the discount to NAV poses to shareholder value and
returns, both the absolute level of the discount and the amount relative to the Company’s peer
group and the wider market are considered. 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.
Key Person Risk
The Portfolio Manager, Nitin Bajaj, has a differentiated style in relation to his peers. This style
is intrinsically linked with the Company’s investment philosophy and strategy and, therefore,
the Company has a key person dependency on him. The Company has an Assistant Portfolio
Manager, Ajinka 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, Catherine Yeung, as a primary spokesperson for the
Company. This helps strengthen the investment process.
There is also a risk that the Manager has inadequate succession plans for other key
operational individuals. The Manager identifies key dependencies which are then addressed
through succession plans, particularly for portfolio managers.
Environmental, Social and
Governance (“ESG”) Risks
There is a risk that the value of the assets of the Company are negatively impacted by ESG
related risks, including climate change risk. ESG risks include investor expectations and how
the Company is positioned from a marketing perspective and whether it is compliant with its
ESG disclosure requirements. Fidelity has embedded ESG factors in its investment decision-
making process. ESG integration is carried out at the fundamental research analyst level within
its investment teams, primarily through Fidelity’s Proprietary Sustainability Rating which is
designed to generate a forward-looking and holistic assessment of a company’s ESG risks and
opportunities based on sector-specific key performance indicators across 127 individual and
unique sub-sectors. The Portfolio Manager is also active in analysing the effects of ESG when
making investment decisions. The Board continues to monitor developments in this area and
reviews the positioning of the portfolio considering ESG factors.
ESG ratings and carbon emissions of the companies within the Company’s portfolio compared
to the Index are provided on pages 23 and 24. Further detail on ESG considerations in the
investment process and sustainable investing is set out on pages 21 to 24.
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
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Principal Risks Description and Risk Mitigation
Business Continuity and
Operational Risks
There continues to be increased focus from financial services regulators around the world on
the contingency plans of regulated financial firms. The top risks globally are cybersecurity
and geopolitical events. There are also ongoing risks following Russia’s invasion into Ukraine,
specifically regarding the potential loss of power and/or broadband services. Variants of
COVID continue to evolve and some risks remain.
The Manager continues to take all reasonable steps to meet its regulatory obligations, assess
its ability to continue operating and the steps it needs to take to support its clients, including
the Board and has an appropriate control environment in place. The Manager has provided
the Board with assurance that the Company has appropriate business continuity plans and the
provision of services has continued to be supplied without interruption.
Specific risks posed by the pandemic continue to ease with increasing levels of staff returning
to routine office-based working, albeit under hybrid working arrangements which allows greater
flexibility on remote working as part of the new operating model.
The Company relies on a number of third-party service providers, principally the Registrar,
Custodian and Depositary. They are all subject to a risk-based programme of internal audits by
the Manager and their own internal controls reports are received by the Manager on behalf
of the Board on an annual basis and any concerns are investigated. The third-party service
providers have also confirmed the implementation of appropriate measures to ensure no
business disruption.
Risks associated with these services are generally rated as low, but the financial consequences
could be serious, including reputational damage to the Company.
Shareholder Relationships
There is a risk that the Board has insufficient access to shareholders or that the Portfolio
Manager’s investment style is not appealing for investors. There is also a risk that continued
weak investment performance may potentially make the Company less attractive to retail and
wealth managers.
The shareholder register and shareholder activity are reviewed at each Board meeting
and regular shareholder meetings are organised by the Broker with the Board and Fidelity,
including the Portfolio Manager and Investment Director. Fidelity has an investment companies’
website which has dedicated pages for the Company and regular updates are provided for
investors.
Other risks facing the Company include:
Tax and Regulatory Risks
There is a risk of the Company not complying with tax and
regulatory requirements. A breach of Section 1158 of the
Corporation Tax Act 2010 could lead to a loss of investment trust
status resulting in the Company being subject to tax on capital
gains.
The Board monitors tax and regulatory changes at each Board
meeting and through active engagement by the Manager with
regulators and trade bodies.
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 2024 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 the war in Ukraine, China’s tensions with the US and
Taiwan and significant market events.
Accordingly, the Financial Statements of the Company have been
prepared on a going concern basis.
Strategic Report continued
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
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Annual Report 2023
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
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 long-term to be at least five
years, and accordingly, the Directors believe that five years is
an appropriate investment horizon to assess the viability of the
Company, although the life of the Company is not intended to be
limited to this or any other period.
In making an assessment on the viability of the Company, the
Board has considered the following:
• The ongoing relevance of the investment objective in
prevailing market conditions;
• The Company’s 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 on pages
28 to 32;
• 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 Company’s performance for the five year reporting period
to 31 July 2023 lagged the Comparative Index, with a NAV total
return of +45.4%, a share price total return of +41.1% compared
to the Comparative Index total return of +50.7%. The Board
regularly reviews the investment policy and considers 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, as detailed on page
28 and on page 31. The Board has also considered the impact
of regulatory changes, continuing tensions between the US and
China, tensions with Taiwan and the ongoing global implications of
the Ukraine and Russia war, and how this may affect the Company.
In addition, the Directors’ assessment of the Company’s ability
to operate in the foreseeable future is included in the Going
Concern Statement 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 Manager, 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 on pages 27
and 28.
Job No: 50427 Proof Event: 20 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
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The Board places great importance on communication with
shareholders. The Annual General Meeting (“AGM”) provides
the key forum for the Board and the Portfolio Manager 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
Manager meets 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. The Board believes that a proper consideration of
ESG issues aligns with the investment objective to deliver long-
term capital growth, and the Board’s review of the Manager
includes an assessment of their ESG approach, which is set out in
detail on pages 21 to 24.
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:
• As part of the Board’s succession plans:
– The appointment of Hussein Barma to the Board as
Chairman of the Audit Committee and non-executive
Director with effect from 24 November 2022;
– The decision to appoint Clare Brady as Chairman of the
Board when the current Chairman, Kate Bolsover, steps
down at the conclusion of the AGM on 29 November
2023; and
– The decision to appoint Matthew Sutherland as Senior
Independent Director with effect from 29 November
2023 from the change in Clare Brady’s role from Senior
Independent Director to Chairman.
• Authorising the repurchase of 569,000 ordinary shares up to
the date of this Annual Report when the Company’s discount
widened, in line with the Board’s discount management
policy;
• The decision to recommend the payment of a final dividend
of 14.50 pence per ordinary share; and
• The decision to once again hold a hybrid AGM in 2023 in
order to make it more accessible to those investors who are
unable to or prefer not to attend in person.
Board Diversity
As at the date of this Annual Report, there were three male
Directors and three female Directors on the Board. The Board
carries out any candidate search against a set of objective
criteria and on the basis of merit, with due regard for the
benefits of diversity on the Board, including gender. Although the
Company is not a FTSE 350 company, the Board’s composition
meets the target of 40% of women for FTSE 350 company boards
by the end of 2025 as set by the FTSE Women Leaders Review.
This is the third and successor phase to the Hampton-Alexander
Review which had a target of 33% of women board members.
The Board also meets the new Listing Rule and the FCA’s targets
on diversity and also that one senior position is held by a
woman. Senior positions are held by Kate Bolsover as Chairman
and Clare Brady as Senior Independent Director.
Gender Reporting
Number
of Board
Members
Percentage
of the
Board
Number of Senior
Board Positions
(Chair, Senior
Independent
Director and
Committee Chair)
Men 3 50% 2
Women 3 50% 2
Although, the Company is not a FTSE 350 company, it meets the
recommendations of the Parker Review Committee that each
FTSE 350 company should have at least one director from an
ethnic minority background by 2024 so as to improve the ethnic
and cultural diversity of UK company boards as can be seen
from the table below. The Board also meets the new Listing Rule
and the FCA’s targets that at least one Director is from an ethnic
minority background. This position is held by Hussein Barma.
Strategic Report continued
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Ethnic Background Reporting
Number
of Board
Members
Percentage
of the
Board
Number of Senior
Board Positions
(Chair, Senior
Independent Director
and Committee Chair)
White
British or
other White
(including
minority
white
groups)
5 83% 3
Asian/Asian
British
1 17% 1
CORPORATE AND SOCIAL RESPONSIBILITY
Environmental, Social, and Governance in the Investment
Process
The Board has contracted with the Manager to provide the
Company with investment management and administrative
services. The Board believes that ESG considerations are
an increasingly important input into the assessment of the
value of the Company’s investments. The investment universe
is undergoing significant structural change and is likely to
be impacted by increasing regulation as a result of climate
change and other social and governance factors. The Board is
committed to reviewing how the Manager applies ESG factors in
its investment process. The Fidelity group of companies (including
the Manager and Investment Manager) sets out its commitment
to responsible investing and provides a copy of its detailed
Responsible Investing at www.fidelity.co.uk/responsible-
investing. Further information on Fidelity International’s approach
to ESG in the investment process and sustainable investing can
be found on pages 21 to 24 and are part of this Strategic Report.
Streamlined Energy and Carbon Reporting (SECR)
As an investment company with all its activities outsourced to
third parties, the Company’s own direct environmental impact is
minimal. The Company has no premises, consumes no electricity,
gas or diesel fuel and consequently does not have a measurable
carbon footprint. The Company is categorised as a low energy
user (less than 40MWH) under the Streamlined Energy & Carbon
Reporting regulations and, therefore, is not required to disclose
any energy and carbon information in this Annual Report.
Task Force on Climate-Related Financial Disclosures (TCFD)
Product reports of Task Force on Climate-related Financial
Disclosures (TCFD) can be obtained from the Manager’s website
at https://investment-trusts.fidelity.co.uk.
Bribery Act 2010 and Criminal Finances Act 2017
The Company is committed to carrying out business fairly,
honestly and openly. The Board recognises the benefits this has
to reputation and business confidence. The Board, the Manager,
the Manager’s employees and others acting on the Company’s
behalf, are expected to demonstrate high standards of behaviour
when conducting business. The Board has adopted a zero
tolerance policy in respect to bribery and tax evasion and its
facilitation.
The Board acknowledges its responsibility for the implementation
and oversight of the Company’s procedures for preventing
bribery, and the governance framework for training,
communication, monitoring, reporting and escalation of
compliance together with enforcing action as appropriate. The
Directors are fully committed to complying with all legislation
and appropriate guidelines designed to prevent tax evasion
and the facilitation of tax evasion in the jurisdictions in which
the Company, its service providers, counterparties and business
partners operate.
By Order of the Board
FIL Investments International
Secretary
11 October 2023
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Fidelity Asian Values PLC
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Annual Report 2023
Board of Directors
Kate Bolsover
Chairman (since 9 December 2014)
Appointed 1 January 2010
M
N
Kate Bolsover is a non-executive Director of Baillie Gifford & Co. Ltd
and Bellevue Healthcare Trust plc. She is Chairman of TR Property
Investment Trust PLC. Between 1995 and 2005, she worked for
Cazenove Group plc and J.P. Morgan Cazenove as Managing
Director of the mutual fund business and latterly Director of Corporate
Communications. Prior to this, she worked in business development and
mutual funds covering countries in the Far East.
Clare Brady
Senior Independent Director
(since 22 April 2021)
Appointed 1 August 2019
A
M
N
Clare Brady is a chartered governance professional with 35 years’
experience in banking and financial services. She is a non-executive
Director of Credit Suisse AG, a UBS Group company, and Chairs their
Conduct and Financial Crime Control Committee. She is a Member of
the Audit and Risk Commission of the International Federation of Red
Cross and Red Crescent Societies and a Director of The Golden Charter
Trust Limited. In her executive career, she was most recently a Director
of the International Monetary Fund (IMF) and prior to that, the Auditor
General at the World Bank, based in Washington D.C. Previously, she
headed audit and compliance functions at the Bank of England, Barclays
Capital, HSBC and Deutsche Bank.
Sally Macdonald
Director
Appointed 1 January 2022
A
M
N
Sally Macdonald is a non-executive Director of JP Morgan Japanese
Investment Trust plc and Evelyn Partners Fund Solutions Ltd. She was
Head of Asian Equities at Marlborough Fund Managers. She has
almost 40 years’ experience of financial markets, which includes more
than 30 years as an Asian fund manager. She has previously run the
Asian desks for Sanwa, Lazard Brothers Asset Management, Canada
Life, Morley (Aviva) and City of London Investment Group.
Hussein Barma
Chairman of the Audit Committee
Appointed 24 November 2022
A
M
N
Hussein Barma is a non-executive Director and Audit Chair of Chaarat
Gold Holdings Limited and also of Atalaya Mining plc (both of which
are listed on the AIM market). He is an independent Governor of
the University of the Arts London and the Chair and Member of
the Finance Committee for the Oxford Centre for Islamic Studies.
Between 1998 to 2014, he was the UK-based Chief Financial Officer of
Antofagasta plc. His earlier career was in professional services and
academia and he held positions at the Financial Reporting Council
and Modern Art Oxford. He is a qualified Barrister and Chartered
Accountant and holds a doctorate in corporate law.
Matthew Sutherland
Director
Appointed 1 January 2022
A
M
N
Matthew Sutherland has 32 years’ experience of working in financial
markets, primarily as an equity analyst and head of research, of which
the last twenty-four were spent living in Asia covering Asian markets.
Until 2016, he worked for Fidelity International, running its highly
regarded Asian equity research team of over 70 analysts from its Hong
Kong and Tokyo offices. He was also responsible for hiring and training
analysts in India, China, Korea, Hong Kong, Singapore, Japan and
Australia which included coverage of all the Asian stock markets. Prior to
joining Fidelity, he was Country Head for HSBC Securities in Taiwan and
worked for BNP Paribas in Manila.
Michael Warren
Director
Appointed 29 September 2014
A
M
N
Michael Warren is a non-executive Director of Henderson Smaller
Companies Investment Trust plc, Carrington Investments, Rathbones
Unit Trust Management Ltd and EdenTree Investment Management.
He is also an Advisor to Gresham House Asset Management. He is
a past non-executive Director of Liontrust Panthera, Alquity Investment
Management Ltd and Vindependents. He worked for Thames River
Capital from 2007 until 2012 as Investment Director. Prior to that he
worked at HSBC Investments, where he was responsible for Institutional
and Retail distribution, and before that at Deutsche Asset Management,
where he was a main board member. Latterly, he served as Managing
Director of the UK mutual fund business, DWS.
Committee membership key
A
Audit
M
Management Engagement
N
Nomination
Committee Chair
All Directors are non-executive Directors and all are considered to be independent.
Serving Directors as at the date of this Annual Report.
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Directors’ Report
The Directors have pleasure in presenting their report and the
audited Financial Statements of the Company for the year ended
31 July 2023.
Results and Dividends
The Company’s results for the year ended 31 July 2023 are set
out in the Income Statement on page 54. The revenue return was
15.17 pence and the capital return was 39.95 pence, giving a
total return of 55.12 pence per ordinary share.
The Directors recommend that a final dividend of 14.50 pence
(2022: 14.00 pence) per ordinary share be paid on 6 December
2023 to shareholders who appear on the share register as at
the close of business on 3 November 2023 (ex-dividend date 2
November 2023).
The Board
All Directors served on the Board throughout the year ended
31 July 2023 and up to the date of this report, with the exception
of Hussein Barma who was appointed on 24 November 2022
and Grahame Stott who stepped down from the Board at the
conclusion of the AGM on 23 November 2022. A brief description
of all serving Directors as at the date of this report is shown on
page 36 and indicates their qualifications for Board membership.
In line with the Board’s succession plan, Kate Bolsover will not be
seeking re-election at the AGM on 29 November 2023.
Management Company
FIL Investment Services (UK) Limited (“FISL”) is the Company’s
appointed Alternative Investment Fund Manager (the
“AIFM”/”Manager”). FISL, as the Manager, has delegated the
portfolio management of assets and the role of the company
secretary to FIL Investments International.
The Alternative Investment Fund Management and Secretarial
Services Agreement (the “Management Agreement”) will
continue unless and until terminated by either party giving to
the other not less than six months’ notice in writing. However,
it may be terminated without compensation if the Company is
liquidated, pursuant to the procedures laid down in the Articles of
Association of the Company. It may also be terminated forthwith
as a result of a material breach of the Management Agreement
or on the insolvency of the Manager or the Company. In addition,
the Company may terminate the Management Agreement by
sixty days’ notice if the Manager ceases to be a subsidiary of FIL
Limited.
FIL Limited has no beneficial interest in the shares of the
Company (2022: nil).
The Board reviews the Management Agreement at least annually
and details are included in the Corporate Governance Statement
on page 40.
Management Fee
Since 1 August 2018, the Company has had a variable
management fee arrangement which comprises a base
management fee of 0.70% of net assets per annum and a +/-
0.20% variable fee based on the performance of the NAV per
ordinary share relative to the Company’s Benchmark Index. The
variable management fee is calculated daily by referencing the
performance of the Company’s NAV to the Benchmark Index
on a three year rolling basis. It increases or decreases 0.033%
for each percentage point of the three year NAV per ordinary
share outperformance or underperformance over the Benchmark
Index up to a maximum of +0.20% or a minimum of -0.20%. The
maximum fee that the Company will pay is 0.90% of net assets,
but if the Company underperforms against the Benchmark Index,
then the overall fee could fall as low as 0.50% of net assets. Any
increase to the NAV from the repurchase or issue of shares is
removed from the fee calculation, so that the Manager cannot
benefit from performance outside of portfolio management
activities.
In addition, the Company pays the Manager a secretarial and
administration fee of £75,000 per annum.
The total management fee for the year ended 31 July 2023
is detailed in Note 4 on page 61 and the secretarial and
administration fee is detailed in Note 5 on page 62.
Auditor’s Appointment
A resolution to reappoint Ernst & Young LLP as Auditor to the
Company will be proposed at the AGM on 29 November 2023.
Disclosure of Information to the Company’s Auditor
As required by Section 418 of the Companies Act 2006, each
Director in office as at the date of this report confirms that:
(a) so far as each Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and
(b) each Director has taken all the steps that ought to have
been taken as a Director to make himself/herself aware of
any audit information, and to establish that the Company’s
Auditor is aware of that information.
Corporate Governance
The Corporate Governance Statement forms part of this report
and can be found on pages 39 to 41.
Registrar, Custodian and Depositary Arrangements
The Company has appointed Link Group as its Registrar to
manage the Company’s share register, JPMorgan Chase Bank
as its Custodian, which is primarily responsible for safeguarding
the Company’s assets, and J.P. Morgan Europe Limited, under
a tri-partite agreement, as its Depositary, which is primarily
responsible for the oversight of the custody of investment funds
and the protection of investors’ interests. Fees paid to these
service providers are disclosed in Note 5 on page 62.
Share Capital
The Company’s share capital comprises ordinary shares of 25
pence each which are fully listed on the London Stock Exchange.
As at 31 July 2023, the issued share capital of the Company was
75,580,889 ordinary shares (2022: 75,580,889) of which 3,751,553
shares (2022: 3,182,553) are held in Treasury. Therefore, the
number of shares with voting rights was 71,829,336 (2022:
72,398,336).
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Fidelity Asian Values PLC
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Annual Report 2023
Premium/Discount Management: Enhancing Shareholder
Value
The Board recognises the importance of the relationship between
the Company’s share price and the NAV per share and monitors
this closely. It seeks authority from shareholders each year to
issue shares at a premium or to repurchase shares at a discount
to the NAV, either for cancellation or for holding in Treasury. The
Board will only exercise these authorities if deemed to be in the
best interests of shareholders at the time.
Ordinary Share Issues
No ordinary shares were issued during the year ended 31 July
2023 (2022: nil) and none have been issued since then and as at
the date of this report.
The authorities to issue ordinary shares and to disapply pre-
emption rights expire at the AGM on 29 November 2023 and
resolutions to renew these authorities will be put to shareholders
at this AGM.
Ordinary Share Repurchases
During the year ended 31 July 2023, 569,000 ordinary shares
(2022: 780,543) were repurchased for holding in Treasury. Since
then and as at the date of this report, no further ordinary shares
have been repurchased into Treasury.
The authority to repurchase ordinary shares expires at the AGM
on 29 November 2023 and a resolution to renew the authority
to repurchase shares, either for cancellation or to hold them in
Treasury, will be put to shareholders at this AGM.
Substantial Share Interests
As at 31 July 2023 and 31 August 2023, the shareholders listed in
the table below held more than 3% of the issued ordinary share
capital of the Company.
Shareholders
31 July
2023
%
31 August
2023
%
Fidelity Platform 13.93 13.94
Hargreaves Lansdown 7.71 7.64
Interactive Investor 7.70 7.65
Charles Stanley 7.68 7.68
Evelyn Partners 5.90 6.05
Brewin Dolphin 5.52 5.49
Rathbones 5.08 5.27
AJ Bell 3.16 3.17
Additional Information Required in the Directors’ Report
Information on proposed dividends, financial instruments and
disclosure on Streamlined Energy and Carbon Reporting is set
out in the Strategic Report on pages 27 to 35.
By Order of the Board
FIL Investments International
Secretary
11 October 2023
Directors’ Report continued
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Corporate Governance Statement
This Corporate Governance Statement forms part of the Directors’
Report. The Company is committed to maintaining high standards
of corporate governance. Accordingly, the Board has put in
place a framework for corporate governance which it believes is
appropriate for an investment company.
Corporate Governance Codes
The Board follows the principles and provisions of the UK
Corporate Governance Code (the “UK Code”) issued by the
Financial Reporting Council (the “FRC”) in July 2018. The Board
also follows the AIC Code of Corporate Governance (the “AIC
Code”) issued by the Association of Investment Companies
(“AIC”) in February 2019. The AIC Code addresses the principles
and provisions of the UK Code. The FRC has confirmed that
investment companies which report against the AIC Code will
meet their obligations under the UK Code and paragraph 9.8.6
of the Listing Rules. This Statement, together with the Statement of
Directors’ Responsibilities on page 45, set out how the principles
have been applied.
The AIC Code can be found on the AIC’s website at
www.theaic.co.uk and the UK Code can be found on the FRC’s
website at www.frc.org.uk.
Statement of Compliance
The Company has complied with the recommendations of the
AIC Code and the relevant provisions of the UK Code for the
year under review and up to the date of this report, except in
relation to the UK Code provisions relating to the role of the chief
executive; executive directors’ remuneration; and the need for an
internal audit function. The Board considers that these provisions
are not relevant to the position of the Company as it is an
externally managed investment company and has no executive
directors, employees or internal operations. All of its day to day
management and administrative functions are delegated to the
Manager.
THE BOARD
Board Composition
The Board, chaired by Kate Bolsover, consists of six non-
executive Directors as at the date of this Annual Report. The
Directors believe that, between them, they have good knowledge
and wide experience of business in Asia and of investment
companies and that the Board has an appropriate balance of
skills, experience, independence and knowledge of the Company
and length of service to discharge its duties and provide effective
strategic leadership and proper governance of the Company. The
Board’s succession plan is in the Chairman’s Statement on pages
3 and 4.
Clare Brady is the Senior Independent Director and fulfils the role
as a sounding board for the Chairman, intermediary for the other
Directors as necessary and acts as a channel of communication
for shareholders in the event that contact through the Chairman
is inappropriate. She will be succeeded by Matthew Sutherland
when she changes roles from Senior Independent Director to
Chairman on 29 November 2023.
Biographical details of all the Directors are on page 36.
Training, Development and Board Evaluation
On appointment, Directors receive a full, formal and tailored
induction. Directors are also regularly provided with key
information on the Company’s policies, regulatory and statutory
requirements and internal controls. Changes affecting Directors’
responsibilities are advised to the Board as they arise. Directors
also regularly participate in relevant training and industry
seminars. Training and development needs are considered
as part of the evaluation process and are agreed with the
Chairman.
An evaluation of the Board, its Committees and the Manager was
undertaken in the form of written questionnaires and discussions.
This process is considered to be constructive in terms of
identifying areas for improving the functioning and performance
of the Board and its Committees and action is taken on the
basis of the results. It was concluded that the Chairman, each
Director and the Manager had been effective and continues to
demonstrate commitment to their roles.
Directors’ and Officers’ Liability Insurance
In addition to the benefits under the Manager’s global Directors’
and Officers’ liability insurance arrangements, the Company
maintains additional insurance cover for its Directors under its
own policy as permitted by the Companies Act 2006.
Board Responsibilities and Board Meetings
The Board has overall responsibility for the Company’s affairs
and for promoting the long-term success of the Company. All
matters which are not delegated to the Company’s Manager
under the Management Agreement are reserved for the Board’s
decision. The Board also considers shareholder issues including
communication and investor relations.
The Board has approved a policy on Directors’ conflicts of
interest. Under this policy, Directors are required to disclose
all actual and potential conflicts of interest as they arise for
consideration and approval. The Board may impose restrictions
or refuse to authorise such conflicts if deemed appropriate.
All Directors are able to allocate sufficient time to the Company
to discharge their responsibilities fully and effectively. Each
Director is entitled to take independent professional advice, at
the Company’s expense, in the furtherance of their duties.
The Board considers that it meets sufficiently regularly to
discharge its duties effectively and the table on the next page
gives the attendance record for the meetings held during the
reporting year. In addition to the formal Board and Committee
meetings, the Board undertakes a due diligence trip to Asia
every other year. Details of the due diligence trip from this year
are in the Chairman’s Statement on page 2. During the trip,
the Board met with the management of existing and potential
investee companies alongside the Portfolio Manager. The Board
also met with Fidelity’s research and analyst teams. The Board
also has an annual strategy meeting.
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Fidelity Asian Values PLC
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Annual Report 2023
Board’s Attendance Record for the Reporting Year
Regular
Board
Meetings
Audit
Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination
Committee
Meetings
Kate Bolsover 5/5 n/a 1/1 1/1
Hussein Barma
1
3/3 2/2 n/a 1/1
Clare Brady 5/5 3/3 1/1 1/1
Sally Macdonald 5/5 3/3 1/1 1/1
Grahame Stott
2
2/2 1/1 1/1 n/a
Matthew Sutherland 5/5 3/3 1/1 1/1
Michael Warren 5/5 3/3 1/1 1/1
1 Appointed on 24 November 2022.
2 Retired on 23 November 2022.
Figures indicate those meetings for which each Director was eligible to attend and attended in the year. Regular Board meetings
exclude ad hoc meetings for formal approvals.
Since the end of the reporting period, the Directors have also had a Management Engagement Committee meeting at which they
reviewed the performance of the Manager and the terms of the Company’s Management Agreement.
BOARD COMMITTEES
The Board has three Committees through which it discharges
certain of its corporate governance responsibilities. These are
the Audit Committee, the Management Engagement Committee
and the Nomination Committee. Terms of reference of each
Committee can be found on the Company’s pages of the
Manager’s website www.fidelity.co.uk/asianvalues.
Audit Committee
The Audit Committee is chaired by Hussein Barma and
consists of all of the Directors, except for Kate Bolsover, which
is in line with the recommendation of the 2018 UK Corporate
Governance Code. Full details, including the Committee’s role
and responsibilities, are disclosed in the Report of the Audit
Committee on pages 46 and 47.
Management Engagement Committee
Composition
The Management Engagement Committee is chaired by Michael
Warren and consists of all of the Directors.
Role and Responsibilities
The Committee is charged with reviewing and monitoring the
performance of the Manager and ensuring that the terms of
the Company’s Management Agreement remain competitive
and reasonable for shareholders. It meets at least once a year
and reports to the Board, making recommendations where
appropriate.
Manager’s Reappointment
Ahead of the AGM, the Committee has reviewed the
performance of the Manager and the current fee structure and
also that of its peers and concluded that it is in the interests
of shareholders that the appointment of the Manager should
continue. In reaching this conclusion, the Committee took into
consideration the commitment, quality and continuity of the team
responsible for the Company. Details of the management fee
structure for the year ended 31 July 2023 are in the Directors’
Report on page 37.
Nomination Committee
Composition
The Nomination Committee is chaired by Kate Bolsover and
consists of all of the Directors. It will be chaired by Clare Brady
when Mrs Bolsover steps down from the Board at the conclusion
of the AGM on 29 November 2023.
Role and Responsibilities
The Committee is charged with nominating new Directors
for consideration by the Board, and in turn for approval by
shareholders. The search for a candidate is carried out against
a set of objective criteria, with due regard for the benefits of
diversity on the Board, including gender. New Directors are
appointed on the basis of merit and this process has led to a
diverse Board membership. External consultants may be used to
identify potential candidates and to assist the Board in recruiting
a new independent non-executive director. This was the case for
the recruitment of Hussein Barma through the services of Fletcher
Jones Ltd, which has no connection with the Company. Mr
Barma’s appointment was effective from 24 November 2022.
The Committee meets at least once a year and reviews the
composition, size and structure of the Board and makes
recommendations to the Board as appropriate. It is also
responsible for succession planning and for Directors’
appointments.
Corporate Governance Statement continued
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
The Committee makes recommendations to the Board for the
continuation or cessation of service of Directors and reviews the
tenure of Directors on a three year cycle. It also considers the
election and re-election of Directors ahead of each AGM. For
the forthcoming AGM on 29 November 2023, it has considered
the performance and contribution to the Company of each
Director and concluded that each Director seeking election and
re-election has been effective and continues to demonstrate
commitment to their role. This has been endorsed by the Board,
which recommends their appointment and reappointment by
shareholders at the AGM on 29 November 2023. Kate Bolsover
who is stepping down from the Board at the conclusion of the
AGM will not be seeking re-election.
ACCOUNTABILITY AND AUDIT
Financial Reporting
Set out on page 45 is a statement by the Directors of their
responsibilities in respect of the preparation of the Annual Report
and Financial Statements. The Auditor has set out its reporting
responsibilities within the Independent Auditor’s Report to the
Members on pages 48 to 53.
The Board has a responsibility to present fair, balanced and
understandable annual and half-yearly financial statements. All
financial statements are reviewed by the Audit Committee and
approved by the Board prior to their issue to ensure that this
responsibility is fulfilled.
Risk Management and Internal Controls
The Board is responsible for the Company’s systems of risk
management and internal controls and for reviewing their
effectiveness. The review takes place at least once a year. Such
systems are designed to manage rather than eliminate risk
of failure to achieve business objectives and can only provide
reasonable, but not absolute, assurance against material
misstatement or loss.
The Board determines the nature and extent of any risks it is
willing to take in order to achieve its strategic objectives. It is
responsible for the design, implementation and maintenance of
controls and procedures to safeguard the assets of the Company
although these tasks have been delegated on a day-to-day basis
to the Manager. The system extends to financial, operational
and compliance controls and risk management. Clear lines of
accountability have been established between the Board and
the Manager. The Manager provides regular reports on controls
and compliance issues to the Audit Committee and the Board.
In carrying out its review, the Audit Committee has regard to the
activities of the Manager, the Manager’s compliance and risk
functions and the work carried out by the Company’s Auditor and
also includes consideration of internal controls covered in similar
reports issued by the other service providers.
The Board, assisted by the Manager, has undertaken a rigorous
risk and controls assessment. The process also assists in
identifying any new emerging risks and the action necessary to
mitigate their potential impact. The Board confirms that there is
an effective ongoing process in place to identify, evaluate and
manage the Company’s principal business and operational
risks, and that it has been in place throughout the year ended
31 July 2023 and up to the date of this report. This process is in
accordance with the FRC’s “Risk Management, Internal Control
and Related Financial Business Reporting” guidance.
The Board has reviewed the need for an internal audit
function and has determined that the systems and procedures
employed by the Manager, which are subject to inspection by
the Manager’s internal and external audit processes, provide
sufficient assurance that a sound system of internal controls
is maintained to safeguard shareholders’ investments and
the Company’s assets. An internal audit function, specific to
the Company, is therefore considered unnecessary. The Audit
Committee meets the Manager’s internal audit representative
at least once a year. It receives a summary of the Manager’s
externally audited internal controls report on an annual basis.
Relations with Shareholders
Communication with shareholders is given a high priority by
the Board and it liaises with the Manager and the Company’s
broker who are in regular contact with the Company’s major
institutional investors to canvass shareholder opinion and to
communicate its views to shareholders. All Directors are made
aware of shareholders’ concerns and the Chairman, the Senior
Independent Director and, where appropriate, other Directors,
are available to meet with shareholders to discuss strategy
and governance. The Board regularly monitors the shareholder
profile of the Company and receives regular reports from the
Manager on meetings attended with shareholders and any
concerns raised in such meetings. The Board aims to provide the
maximum opportunity for dialogue between the Company and
shareholders. If any shareholder wishes to contact a member
of the Board directly, they should either email the Company
Secretary at investmenttrusts@fil.com or in writing at FIL
Investments International, Beech Gate, Millfield Lane, Lower
Kingswood, Tadworth, Surrey KT20 6RP. The Company Secretary
will attend to any enquiries promptly and ensure that they are
directed to the Chairman, Senior Independent Director or the
Board as a whole, as appropriate.
The Board encourages all shareholders to attend the Company’s
AGM on 29 November 2023, details of which can be found on
page 4. Nitin Bajaj, the Portfolio Manager, will be making a
presentation.
Annual General Meeting
The Notice of Meeting on pages 84 to 87 sets out the business
of the AGM and the special business resolutions are explained
more fully on pages 82 and 83. A separate resolution is
proposed on each substantially separate issue including the
approval of the Annual Report and Financial Statements. The
Notice of Meeting and related papers are sent to shareholders
at least 20 working days before the AGM.
On behalf of the Board
Kate Bolsover
Chairman
11 October 2023
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Annual Report 2023
Directors’ Remuneration Report
Directors’ Remuneration
The fee structure with effect from 1 August 2023 is as follows:
Chairman – £44,100 (2022: £42,000); Chairman of the Audit
Committee – £36,750 (2022: £35,000); Senior Independent
Director – £32,500 (2022: £29,000) and Directors – £30,500 (2022:
£29,000). Levels of remuneration are reviewed to ensure that they
remain competitive and sufficient to attract and retain the quality
of Directors needed to manage the Company successfully.
An ordinary resolution to approve the Directors’ Remuneration
Report will be put to shareholders at the AGM on 29 November
2023.
The Remuneration Policy
The Company’s Articles of Association limit the aggregate fees
payable to the Directors to £300,000 per annum. Subject to this
overall limit, it is the Board’s policy to determine the level of
Directors’ fees having regard to the time spent by them on the
Company’s affairs; the level of fees payable to non-executive
directors in the industry generally; the requirement to attract
and retain individuals with suitable knowledge and experience;
and the role that individual Directors fulfil. Other than fees and
reasonable out-of-pocket expenses incurred in attending to the
affairs of the Company, the Directors are not eligible for any
performance related pay or benefits, pension related benefits,
share options, long-term incentive schemes or other taxable
benefits. The Directors are not entitled to exit payments and are
not provided with any compensation for loss of office. Directors
fees are paid monthly in arrears. Directors would not serve a
notice period if their appointment were to be terminated.
The level of Directors’ fees is determined by the whole Board.
Directors do not vote on their own individual fees. The Board
reviews the Company’s Remuneration Policy and implementation
on an annual basis. Reviews are based on information provided
by the Company’s Manager and research from third parties and
it includes information on the fees of other similar investment
trusts.
No Director has a service contract with the Company. New
Directors are provided with a letter of appointment which,
amongst other things, provides that their appointment is subject
to the Companies Act 2006 and the Company’s Articles of
Association. Copies of the Directors’ letters of appointment are
available at each of the Company’s AGMs and can be obtained
from the Company’s registered office.
The Company’s Remuneration Policy will apply to new Board
members, who will be paid at the equivalent amount of fees as
current Board members.
Voting on the Remuneration Policy
The Remuneration Policy (the “Policy”), as set out above, was
approved at the AGM on 23 November 2022 with 99.34% of votes
cast in favour, 0.54% of votes cast against and 0.12% of votes
withheld. The current Policy, as set out above, has been followed
throughout the year ended 31 July 2023 and up to the date of
this report. The next vote will be put to shareholders at the AGM
in 2025, and the votes cast will be disclosed on the Company’s
website at: www.fidelity.co.uk/asianvalues.
Voting on the Directors’ Remuneration Report
At the AGM held on 23 November 2022, 98.01% of votes were
cast in favour of the Directors’ Remuneration Report for the year
ended 31 July 2022, 0.44% of votes were cast against and 1.55%
votes were withheld.
The Directors’ Remuneration Report for the year ended 31 July
2023 will be put to shareholders at the AGM on 29 November
2023, and the votes cast will be disclosed on the Company’s
website at: www.fidelity.co.uk/asianvalues.
Single Total Figure of Remuneration
The single total aggregate Directors’ remuneration for the year
ended 31 July 2023 was £195,498 (2022: £172,093). This includes
expenses incurred by Directors in attending to the affairs of the
Company and which are considered by HMRC to be a taxable
expense. Information on individual Directors’ fees and taxable
Directors’ expenses are shown in the table on the next page.
The fees for 2023 compared to 2022 are higher due to the
crossover between Directors’ retirements and appointments. This
is part of the Board’s succession planning.
Expenditure on Remuneration and Distributions to
Shareholders
The table below shows the total amount paid out in Directors’
remuneration and distributions to shareholders. The projected
Directors’ remuneration for the year ending 31 July 2024 is
disclosed in the table on the next page.
31 July 2023
£
31 July 2022
£
Expenditure on Directors’
Remuneration:
Fees and taxable expenses 195,498 172,093
Distribution to Shareholders:
Dividend payments 10,066,000 6,440,000
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Remuneration of Directors
2024 2023 2023 2023 2022 2022 2022
Projected
Total
Fees
(Audited)
Taxable
Expenses
(Audited)
Total
(Audited)
Fees
(Audited)
Taxable
Expenses
(Audited)
Total
(Audited)
(£) (£) (£) (£) (£) (£) (£)
Kate Bolsover
1
14,619 42,000 949 42,949 37,000 2,443 39,443
Hussein Barma
2
36,750 24,006 – 24,006 n/a n/a n/a
Clare Brady
3
40,265 29,000 635 29,635 26,750 1,256 28,006
Sally Macdonald
4
30,500 29,000 666 29,666 15,604 1,265 16,869
Timothy Scholefield
5
n/a n/a n/a n/a 9,225 – 9,225
Grahame Stott
6
n/a 11,039 – 11,039 31,000 1,699 32,699
Matthew Sutherland
4,7
31,839 29,000 – 29,000 15,604 1,367 16,971
Michael Warren 30,500 29,000 203 29,203 26,750 2,130 28,880
Total 184,473 193,045 2,453 195,498 161,933 10,160 172,093
1 Retiring on 29 November 2023.
2 Appointed on 24 November 2022.
3 To be appointed as Chairman on 29 November 2023.
4 Appointed on 1 January 2022.
5 Retired on 3 December 2021.
6 Retired on 23 November 2022.
7 To be appointed as Senior Independent Director on 29 November 2023.
Five year change comparison in Directors’ Remuneration
The table below sets out the change in Directors’ fees over the last five years.
2023 2018 Change (%)
Chairman 42,000 34,000 +23.5%
Senior Independent Director 29,000 25,000 +16.0%
Audit Committee Chair 35,000 28,000 +25.0%
Director 29,000 25,000 +16.0%
Performance
The Company’s objective is to achieve capital growth principally from the stockmarkets of the Asian Region excluding Japan. The
graph below shows performance over ten years to 31 July 2023 against its Benchmark Index – which is used for the purposes of
calculating the Variable Management Fee.
Total return performance for ten years to 31 July 2023
+197.1%
+175.6%
+150.1%
Prices rebased to 100.
Sources: Fidelity and Datastream.
Ordinary Share Price
MSCI All Countries Far East ex Japan Index to 31/07/15, MSCI All Countries Asia ex Japan Index to 31/01/2020,
MSCI All Countries Asia ex Japan Small Cap Index (net) thereafter.
NAV per Ordinary Share
50
75
100
125
150
175
200
225
250
275
300
325
350
July 13 July 14 July 15 July 16 July 17 July 18 July 19 July 20 July 22 July 23July 21
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Fidelity Asian Values PLC
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Annual Report 2023
Directors’ Interest in the Company’s Ordinary Shares
Although there is no requirement for the Directors to hold shares in the Company, shareholdings by Directors is encouraged. The table
below shows the interests of the Directors in the ordinary shares of the Company. All of the shareholdings are beneficial. The Portfolio
Manager also holds shares in the Company.
Directors’ Shareholdings (Audited)
31 July
2023
31 July
2022
Change
during year
Ordinary Shares
Kate Bolsover 15,452 15,452 –
Hussein Barma
1,2
2,500 n/a 2,500
Clare Brady 2,500 2,500 –
Sally Macdonald
2
2,734 2,111 623
Grahame Stott
3
n/a 30,000 –
Matthew Sutherland 27,859 27,859 –
Michael Warren 10,000 10,000 –
1 Appointed 24 November 2022.
2 Purchase of shares.
3 Retired on 23 November 2022.
On Behalf of the Board
Kate Bolsover
Chairman
11 October 2023
Directors’ Remuneration Report continued
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
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 11 October 2023 and signed on its behalf by:
Kate Bolsover
Chairman
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Annual Report 2023
Report of the Audit Committee
I am pleased to present the formal report of the Audit Committee
(the “Committee”) to shareholders.
The primary responsibilities of the Committee are to ensure the
integrity of the Company’s financial reporting, the appropriateness
of the risk management and internal controls processes (see page
41 for further details) and the effectiveness of the external audit
process and how this has been assessed for the year ended
31 July 2023.
Composition
The members of the Committee are myself as Chairman, Clare
Brady, Sally Macdonald, Matthew Sutherland and Michael Warren.
In line with the recommendation of the 2018 UK Corporate
Governance Code, Kate Bolsover, as Chairman of the Board, is not
a member of the Committee, but is invited to attend the Committee
meetings as a guest. All Committee members are independent
non-executive Directors and collectively have sufficient recent and
relevant financial experience to discharge their responsibilities fully.
Role and Responsibilities
The Committee’s authority and duties are clearly defined in its
terms of reference which are available on the Company’s pages of
the Manager’s website at www.fidelity.co.uk/asianvalues.
These duties include:
• Establishing with the Auditor the nature and scope of the
audit, reviewing the Auditor’s quality control procedures and
reporting, the effectiveness of the audit process and the
Auditor’s independence and objectivity with particular regard
to the provision of non-audit services;
• Responsibility for making recommendations on the
appointment, reappointment and removal of the Auditor;
• Reviewing the effectiveness of the Company’s risk
management and internal control systems (including financial,
operational and compliance controls), considering the
scope of work undertaken by the Manager’s internal audit
department* and reviewing the Company’s procedures for
detecting fraud;
• Monitoring the integrity of the Company’s half-yearly and
annual Financial Statements to ensure they are fair, balanced
and understandable; and
• Reviewing the existence and performance of all controls
operating in the Company, including the review of internal
controls reporting of its service providers.
Independence and Effectiveness of the Audit Process
Ernst & Young LLP acted as the Company’s Auditor for the year
ended 31 July 2023.
With regard to the independence of the Auditor, the Committee
reviewed:
• The Auditor’s arrangements for managing any conflicts of
interest;
• The fact that no non-audit services were provided to the
Company during the reporting year and up to the date of this
report; and
• The statement by the Auditor that it remains independent
within the meaning of the regulators and their professional
standards.
With regard to the effectiveness of the audit process, the
Committee reviewed:
• The fulfilment by the Auditor of the agreed audit plan,
including the audit team and approach to significant risks;
• The audit findings report issued by the Auditor on the audit
of the Annual Report and Financial Statements for the year
ended 31 July 2023; and
• Feedback from the Manager on the audit of the Company.
The Committee concluded that the Auditor continues to remain
independent and the audit process remains effective.
Auditor’s Appointment and Audit Tenure
Ernst & Young LLP was appointed as the Company’s Auditor
on 30 November 2015 following a formal audit tender process.
The Committee has reviewed the Auditor’s independence and
the effectiveness of the audit process prior to recommending its
reappointment for a further year. The Auditor is required to rotate
audit partners every five years and this is the second year that
the current Audit Partner, Ashley Coups, has been in place. The
Committee will continue to review the Auditor’s appointment each
year to ensure that the Company continues to receive an optimal
level of service. There are no contractual obligations which restrict
the Company’s choice of auditor.
Audit Fees
Fees paid to the Auditor for the audit of the Company’s Financial
Statements are disclosed in Note 5 on page 62. The audit fee for
the reporting year was £48,106 (2022: £44,750).
* The Committee, on behalf of the Board, has reviewed the work undertaken by the
Manager’s internal audit team and has sufficient reassurance that a sound system
of internal controls is maintained to safeguard shareholders’ investments and the
Company’s assets.
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Annual Report 2023
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Annual Report And Financial Statements
In the review of the Company’s Financial Statements for the year ended 31 July 2023, the Committee deliberated and considered any
significant issues, including consideration of principal and emerging risks and uncertainties on the Company’s activities and those
issues communicated by the Auditor during its reporting.
Summarised below are the most significant issues considered by the Committee in respect of these Financial Statements and how
these were addressed.
Recognition of Investment
Income
Investment income is recognised in accordance with Accounting Policy Note 2 (e) on page 58.
The Manager provided detailed revenue forecasts which the Committee reviewed and sought
explanations for any significant variances to these forecasts. The Committee also considered the
allocation of special dividends between revenue and capital and the reasons for classification of
these special dividends. The Committee reviewed the internal audit and compliance monitoring
reports received from the Manager, including an additional internal controls report (“AAF” report)
prepared by PricewaterhouseCoopers LLP (“PwC”) on behalf of the Manager, to satisfy itself
that adequate systems were in place for properly recording the Company’s investment income.
The Committee also reviewed reports provided by the Auditor on its work on the recognition of
investment income, including the allocation of special dividends.
Valuation, existence and
ownership of investments
(including derivatives
and unlisted investments)
The valuation of investments (including derivatives and unlisted investments) is in accordance
with Accounting Policy Notes 2 (k) and 2 (l) on pages 59 and 60. The Committee took comfort
from the Depositary’s regular oversight function that investment related activities are conducted
in accordance with the Company’s investment policy. The Committee received reports from
the Manager, the Depositary and an additional AAF report prepared by PwC on behalf of
the Manager which concluded that controls around the valuation, existence and ownership of
investments operate effectively. The valuation of the Company’s unlisted investments is appraised
by the Manager’s Fair Value Committee (“FVC”) in accordance with UK GAAP and International
Private Equity Valuation Guidelines and reviewed by the Audit Committee. It receives reporting
information from the FVC and reviews and challenges the proposed valuation methodologies for
all unlisted investments. The FVC’s proposals include recommendations from Kroll, an external
company that provides global financial information and services, and detailed input from the
Fidelity International analysts covering the unlisted companies, as well as Fidelity’s unlisted
investments specialist. The Committee also reviewed the reports provided by the Auditor on its
work on the valuations of the unlisted investments held in the Company’s portfolio.
Management fee
calculation
The Company has a variable management fee arrangement in place. At each Committee
meeting, the Manager reports on the accruals for the variable part of the fee that have been
included in the Company’s NAV and confirms that it has been calculated in accordance
with the Management Agreement. These variable management fee accruals are reviewed
by the Committee. It also receives reporting on the work carried out by the Auditor that the
Company’s variable management fee has been calculated in accordance with the terms of the
Management Agreement.
As a result of the work performed, the Committee has concluded that the Annual Report and Financial Statements for the
year ended 31 July 2023, 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 Committee has reported these
findings to the Board and recommended that they be approved. The Board’s conclusion in this respect is set out in the
Statement of Directors’ Responsibilities on page 45.
Hussein Barma
Chairman of the Audit Committee
11 October 2023
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Annual Report 2023
Opinion
We have audited the Financial Statements of Fidelity Asian
Values PLC (‘the Company’) for the year ended 31 July 2023
which comprise Income Statement, the Statement of Changes in
Equity, the Balance Sheet and the related Notes 1 to 20, including
a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation
is applicable law and United Kingdom Accounting Standards
including FRS 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland” (United Kingdom Generally
Accepted Accounting Practice).
In our opinion, the Financial Statements:
• give a true and fair view of the Company’s affairs as at 31
July 2023 and of its profit for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the Financial Statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the Financial
Statements in the UK, including the FRC’s Ethical Standard as
applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Company and we remain independent
of the Company in conducting the audit.
Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the Financial Statements is appropriate. Our
evaluation of the Directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of accounting
included:
• Confirming our understanding of the Company’s going
concern assessment process by engaging with the Directors
and the Company Secretary to determine if all key factors
were considered in their assessment;
• Inspecting the Directors’ assessment of going concern,
including the revenue and expense forecast, for the period to
31 October 2024 which is at least 12 months from the date of
approval of the Financial Statements. In preparing the revenue
and expense forecast, the Company has concluded that it is
able to continue to meet its ongoing costs as they fall due;
• Reviewing the factors and assumptions, including the
impact of the current economic environment and other
significant events that could give rise to market volatility, as
applied to the revenue and expense forecast. Considering
the appropriateness of the methods used to calculate the
forecast and determined, through testing of the methodology
and calculations, that the methods utilised were appropriate
to be able to make an assessment of going concern for the
Company;
• Consideration of the mitigating factors included in the
revenue and expense forecast that are within the control
of the Company, including a review of the Company’s
assessment of the liquidity of investments held and
evaluating the Company’s ability to sell investments in order
to cover the working capital requirements should its revenue
decline significantly; and
• Reviewing the Company’s going concern disclosures
included in the Annual Report in order to assess that the
disclosures were appropriate and in conformity with the
reporting standards.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period to
31 October 2024 which is at least twelve months from the date
the Financial Statements were authorised for issue.
In relation to the Company’s reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in
the Financial Statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as
to the Company’s ability to continue as a going concern.
Overview of our audit approach
Key audit matters
• Risk of incomplete or inaccurate revenue recognition, including the classification of special
dividends as revenue or capital in the Income Statement.
• Risk of incorrect valuation or ownership of the investment portfolio, including derivatives.
Materiality
• Overall materiality of £3.95m which represents 1% of the net asset value of the Company as at
31 July 2023.
Independent Auditor’s Report to the Members
of Fidelity Asian Values PLC
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for
the Company. This enables us to form an opinion on the Financial Statements. We take into account size, risk profile, the organisation
of the Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when
assessing the level of work to be performed. All audit work was performed directly by the audit engagement team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact the Company. The Company has
determined that the impact of climate change could affect the Company’s investments and their valuations and potentially
shareholder returns. These are explained on page 28 and on page 31 in the principal and emerging risks section, which form part of
the “Other information,” rather than the audited Financial Statements. Our procedures on these disclosures therefore consisted solely
of considering whether they are materially inconsistent with the Financial Statements, or our knowledge obtained in the course of the
audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the Financial Statements
as set out in Note 2(a) and the conclusion 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 and therefore reflect the market participants view of
climate change risk on the investments held by the Company. We also challenged the Directors’ considerations of climate change in
their assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial
Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
Financial Statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk Key observations
communicated to the
Audit Committee
Risk of incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or
capital in the Income Statement.
Refer to the Report of the Audit Committee
(page 47); Accounting policies (page 58); and
Note 3 of the Financial Statements (page 61).
The Company has reported revenue of £17.77m
(2022: £15.26m).
During the year, the Company received special
dividends amounting to £0.56m (2022: £0.48m),
of which £0.14m (2022: £0.38m) was classified
as revenue and £0.42m (2022: £0.10m) as
capital.
We have performed the following
procedures:
We obtained an understanding of the processes
and controls surrounding revenue recognition
and classification of special dividends by
performing walkthrough procedures to evaluate
the design and implementation of controls;
For all dividends received and accrued, we
recalculated the income by multiplying the
investment holdings at the ex-dividend date,
traced from the accounting records, by the
dividend rate as agreed to an independent
data vendor. We also agreed all exchange
rates to an external source and, for a sample of
dividends received and dividends accrued, we
agreed amounts to bank statements;
The results of
our procedures
identified no material
misstatement in
relation to the risk
of incomplete or
inaccurate revenue
recognition, including
the classification of
special dividends as
revenue or capital in
the Income Statement.
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Risk Our response to the risk Key observations
communicated to the
Audit Committee
There is a risk of incomplete or inaccurate
recognition of revenue through the failure to
recognise proper income entitlements or to
apply an appropriate accounting treatment.
In addition to the above, the Directors may be
required to exercise judgement in determining
whether income received in the form of special
dividends should be classified as ‘revenue’ or
‘capital’ in the Income Statement.
For all dividends accrued, we assessed whether
the dividend obligations arose prior to 31 July
2023 with reference to an external source;
To test completeness of recorded income, we
tested that all expected dividends for each of
the investee companies had been recorded as
income with reference to an external source; and
For all dividend income during the year, we
reviewed the type of dividends paid with
reference to an external data source to identify
those which were special dividends. For special
dividends above our testing threshold, we
assessed the appropriateness of the Company’s
classification as either revenue or capital by
reviewing the rationale for the underlying
distribution.
Risk of incorrect valuation or ownership
of the investment portfolio, including
derivatives
Refer to the Report of the Audit Committee
(page 47); Accounting policies (pages 59 and
60); and Notes 10 and 11 of the Financial
Statements (pages 65 and 66).
At 31 July 2023, the Company held investments
with a value of £377.63m (2022: £338.85m).
The Company also has net derivative assets
amounting to £0.01m (2022: net derivative liability
amounting to £0.33m).
The valuation of the assets held in the investment
portfolio, including derivatives, is the key driver
of the Company’s net asset value and total
return. Incorrect investment pricing, or a failure
to maintain proper legal title to the investments
held by the Company could have a significant
impact on the portfolio valuation and the return
generated for shareholders.
The fair value of the listed investments and
derivatives is determined using quoted market
prices at close of business on the reporting date.
We have performed the following
procedures:
We obtained an understanding of the processes
and controls surrounding investment pricing
and legal title by performing walkthrough
procedures;
For all investments in the portfolio, we compared
the market prices and exchange rates applied
to an independent pricing vendor. For all
derivatives, we compared the market prices of
the underlying instrument to an independent
pricing vendor and agreed cost price to the
Brokers’ confirmations. We recalculated the
investment and derivative valuations as at the
year-end;
We inspected the stale pricing report to identify
prices that had not changed and verified
whether the quoted price is a valid fair value;
and
We compared the Company’s investment
holdings at 31 July 2023 to the independent
confirmation received directly from the
Company’s Custodian and Depositary. We
agreed all year-end open derivative positions to
confirmations received independently from the
Company’s Brokers.
The results of
our procedures
identified no material
misstatement in
relation to the risk of
incorrect valuation
or ownership of the
investment portfolio,
including derivatives.
Independent Auditor’s Report to the Members
of Fidelity Asian Values PLC continued
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the Financial Statements.
Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Company to be £3.95m (2022:
£3.68m), which is 1% (2022: 1%) of Company’s Net Assets. We
believe that Net Assets provides us with materiality aligned to the
key measure of the Company’s performance.
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2022:
75%) of our planning materiality, namely £2.96m (2022: £2.76m).
We have set performance materiality at this percentage due to
our past experience of the audit that indicates a lower risk of
misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and
capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Income Statement
of £0.61m (2022: £0.57m) being 5% (2022: 5%) of revenue profit
before tax.
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £0.20m (2022:
£0.18m), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in
the Annual Report other than the Financial Statements and our
Auditor’s report thereon. The Directors are responsible for the
other information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other
information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the Financial Statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement
in the Financial Statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the
audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the Financial
Statements are prepared is consistent with the Financial
Statements; and
• the Strategic Report and Directors’ Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or
Directors’ Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept, or
returns adequate for our audit have not been received from
branches not visited by us; or
• the Financial Statements and the part of the Directors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance
with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
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Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the Financial
Statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 32 and 33;
• Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 33;
• Director’s statement on whether it has a reasonable
expectation that the Company will be able to continue in
operation and meets its liabilities set out on pages 32 and
33;
• Directors’ statement on fair, balanced and understandable
set out on page 45;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 28;
• The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems set out on page 41; and
• The section describing the work of the Audit Committee set
out on page 46.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement
set out on page 45, the Directors are responsible for the
preparation of the Financial Statements and for being satisfied
that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation
of Financial Statements that are free from material misstatement,
whether due to fraud or error.
In preparing the Financial Statements, the Directors are
responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about
whether the Financial Statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an Auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these Financial Statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance
of the Company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and
determined that the most significant are United Kingdom
Generally Accepted Accounting Practice, the Companies
Act 2006, the Association of Investment Companies Code
of Corporate Governance, the Association of Investment
Companies Statement of Recommended Practice, the
Listing Rules, the UK Corporate Governance Code, Section
1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying with those
frameworks through discussions with the Audit Committee
and Company Secretary and review of Board minutes and
the Company’s documented policies and procedures.
• We assessed the susceptibility of the Company’s Financial
Statements to material misstatement, including how fraud
might occur by considering the key risks impacting the
Financial Statements. We identified a fraud risk with respect
to the incomplete or inaccurate revenue recognition through
incorrect classification of special dividends as revenue or
capital items in the Income Statement. Further discussion of
our approach is set out in the section on key audit matters
above.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws
and regulations. Our procedures involved review of the
reporting to the Directors with respect to the application of
the documented policies and procedures and review of the
Financial Statements to ensure compliance with the reporting
requirements of the Company.
A further description of our responsibilities for the audit
of the Financial Statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
Auditor’s report.
Independent Auditor’s Report to the Members
of Fidelity Asian Values PLC continued
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Other matters we are required to address
• Following the recommendation from the Audit Committee,
we were appointed by the Company on 30 November 2015
to audit the Financial Statements for the year ending 31 July
2016 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and
reappointments is eight years, covering the years ending
31July 2016 to 31 July 2023.
• The audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an Auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Ashley Coups
Senior Statutory Auditor
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
11 October 2023
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Income Statement
for the year ended 31 July 2023
The Notes on pages 57 to 78 form an integral part of these Financial Statements.
Year ended 31 July 2023 Year ended 31 July 2022
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains on investments 10 – 29,025 29,025 – 2,708 2,708
Gains/(losses) on derivative instruments 11 – 1,781 1,781 – (1,815) (1,815)
Income 3 17,773 – 17,773 15,256 – 15,256
Investment management fees 4 (2,644) (281) (2,925) (2,564) 732 (1,832)
Other expenses 5 (988) – (988) (905) – (905)
Foreign exchange gains – 1,089 1,089 – 2,609 2,609
Net return on ordinary activities before finance costs
and taxation 14,141 31,614 45,755 11,787 4,234 16,021
Finance costs 6 (1,997) – (1,997) (331) – (331)
Net return on ordinary activities before taxation 12,144 31,614 43,758 11,456 4,234 15,690
Taxation on return on ordinary activities 7 (1,238) (2,882) (4,120) (1,079) (1,085) (2,164)
Net return on ordinary activities after taxation for the
year 10,906 28,732 39,638 10,377 3,149 13,526
Return per ordinary share 8 15.17p 39.95p 55.12p 14.21p 4.31p 18.52p
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.
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Statement of Changes in Equity
for the year ended 31 July 2023
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other non-
distributable
reserve
£’000
Other
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
funds
£’000
Total shareholders’ funds at 31
July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
Net return on ordinary activities
after taxation for the year – – – – – 28,732 10,906 39,638
Repurchase of ordinary shares 14 – – – – – (2,618) – (2,618)
Dividend paid to shareholders 9 – – – – – – (10,066) (10,066)
Total shareholders’ funds at 31
July 2023 18,895 50,501 3,197 7,367 – 299,562 15,055 394,577
Total shareholders’ funds at 31
July 2021 18,895 50,501 3,197 7,367 719 273,107 10,278 364,064
Net return on ordinary activities
after taxation for the year – – – – – 3,149 10,377 13,526
Repurchase of ordinary shares 14 – – – – (719) (2,808) – (3,527)
Dividend paid to shareholders 9 – – – – – – (6,440) (6,440)
Total shareholders’ funds at 31
July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
The Notes on pages 57 to 78 form an integral part of these Financial Statements.
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Annual Report 2023
Balance Sheet
as at 31 July 2023
Company number 3183919
Notes
2023
£’000
2022
£’000
Fixed assets
Investments 10 377,631 338,845
Current assets
Derivative instruments 11 1,758 972
Debtors 12 3,556 4,568
Amounts held at futures clearing houses and brokers 3,820 2,997
Cash at bank 13,029 25,368
22,163 33,905
Current liabilities
Derivative instruments 11 (1,665) (1,302)
Other creditors 13 (3,552) (3,825)
(5,217) (5,127)
Net current assets 16,946 28,778
Net assets 394,577 367,623
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
Other reserve 15 – –
Capital reserve 15 299,562 273,448
Revenue reserve 15 15,055 14,215
Total shareholders’ funds 394,577 367,623
Net asset value per ordinary share 16 549.33p 507.78p
The Financial Statements on pages 54 to 78 were approved by the Board of Directors on 11 October 2023 and were signed on its
behalf by:
Kate Bolsover
Chairman
The Notes on pages 57 to 78 form an integral part of these Financial Statements.
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Notes to the Financial Statements
1 Principal Activity
Fidelity Asian Values PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock
Exchange. The Company’s registration number is 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 2024 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 on pages 32 and 33.
In preparing these Financial Statements the Directors have considered the impact of climate change risk as a principal and an
emerging risk as set out on page 28, 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 in the Strategic Report on pages 32 and 33 takes account of all events and conditions up to
31October 2024 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) below) 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 an external valuer and Fidelity’s unlisted investments specialist, 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;
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2 Accounting Policies continued
(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 Other Price Risk Sensitivity
in Note 17 below 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, collateral and bank deposits 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:
• The base investment management fee is allocated in full to revenue;
• The variable investment management fee, is 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 are 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 collateral and finance costs paid on CFDs, which are
accounted for on an accruals basis, and dividends paid on short CFDs, which are accounted for on the date on which the obligation
to incur the cost is established, normally the ex-dividend date. Finance costs are charged in full to the revenue column of the Income
Statement.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
2 Accounting Policies continued
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 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 Manager’s team, meets quarterly to determine
the fair value of unlisted investments. These are based on the principles outlined in Note 2 (b) above.
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 below.
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.
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2 Accounting Policies continued
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 as collateral on behalf
of brokers and are carried at amortised cost.
o) Other creditors – Other creditors include securities purchased for future settlement, amounts payable on share repurchases, capital
gains tax 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.
p) 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 investment management fees;
• Dividends receivable which are capital in nature;
• Other expenses which are capital in nature; and
• Taxation charged or credited relating to items 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 losses of £899,000 (2022: losses of £188,000). See Note 17 on pages 76 and 77 for further details on the level 3
investments.
Notes to the Financial Statements continued
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
3 Income
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Investment income
Overseas dividends 14,847 13,905
Overseas scrip dividends 266 114
Interest on securities 164 –
15,277 14,019
Derivative income
Dividends received on long CFDs 1,743 1,200
Interest received on CFDs 258 20
2,001 1,220
Other interest
Interest received on collateral and bank deposits 495 17
Total income 17,773 15,256
A special dividend of £420,000 has been recognised in capital during the year (2022: £97,000).
4 Investment Management Fees
Year ended 31 July 2023 Year ended 31 July 2022
Revenue
£’000
Capital
1
£’000
Total
£’000
Revenue
£’000
Capital
1
£’000
Total
£’000
Investment management fees 2,644 281 2,925 2,564 (732) 1,832
1 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.
The Company charges base investment management fees to revenue 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.
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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5 Other Expenses
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Allocated to revenue:
AIC fees 21 20
Custody fees 85 148
Depositary fees 30 31
Directors’ expenses 35 23
Directors’ fees
1
193 162
Legal and professional fees 161 109
Marketing expenses 195 157
Printing and publication expenses 86 79
Registrars’ fees 38 37
Secretarial and administration fees payable to the Investment Manager 75 75
Sundry other expenses 21 19
Fees payable to the Company's Independent Auditor for the audit of the Financial Statements 48 45
988 905
1 Details of the breakdown of Directors’ fees are disclosed in the Directors’ Remuneration Report on page 43.
6 Finance Costs
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Interest on bank overdrafts and collateral 2 5
Interest paid on CFDs
1
1,788 255
Dividends paid on short CFDs 207 71
1,997 331
1 Increased compared to prior year due to an increase in both exposure to CFDs and interest rates.
Notes to the Financial Statements continued
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
7 Taxation on Return on Ordinary Activities
Year ended 31 July 2023 Year ended 31 July 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
a) Analysis of the taxation charge for
the year
Overseas taxation 1,238 – 1,238 1,079 – 1,079
Indian capital gains tax – 2,882 2,882 – 1,085 1,085
Taxation charge for the year
(see Note 7b) 1,238 2,882 4,120 1,079 1,085 2,164
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 25.00%
(2022: 19.00%). A reconciliation of the standard rate of UK corporation tax to the taxation charge for the year is shown below:
Year ended 31 July 2023 Year ended 31 July 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return on ordinary activities before
taxation 12,144 31,614 43,758 11,456 4,234 15,690
Net return on ordinary activities before
taxation multiplied by the blended rate
of UK corporation tax of 21.01% (2022:
19.00%) 2,551 6,642 9,193 2,177 804 2,981
Effects of:
Capital gains not taxable
1
– (6,701) (6,701) – (665) (665)
Income not taxable (3,137) – (3,137) (2,617) – (2,617)
Excess management expenses 586 59 645 441 – 441
Excess interest paid – – – – (139) (139)
Expense relief for overseas taxation – – – (1) – (1)
Overseas taxation 1,238 – 1,238 1,079 – 1,079
Indian capital gains tax – 2,882 2,882 – 1,085 1,085
Taxation charge for the year
(see Note 7a) 1,238 2,882 4,120 1,079 1,085 2,164
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.
c) Deferred taxation
A deferred tax asset of £8,626,000 (2022: £7,858,000), in respect of excess management expenses of £32,235,000 (2022: £29,162,000)
and excess interest paid of £2,271,000 (2022: £2,271,000), has not been recognised as it is unlikely that there will be sufficient future
taxable profits to utilise these expenses.
The UK corporation tax rate increased from 19.00% to 25.00% from 1 April 2023. The rate of 25.00% has been applied to calculate the
unrecognised deferred tax asset for the current year (2022: 25.00%).
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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8 Return per Ordinary Share
Year ended
31.07.23
Year ended
31.07.22
Revenue return per ordinary share 15.17p 14.21p
Capital return per ordinary share 39.95p 4.31p
Total return per ordinary share 55.12p 18.52p
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 in issue during the year, as shown below:
£’000 £’000
Net revenue return on ordinary activities after taxation 10,906 10,377
Net capital return on ordinary activities after taxation 28,732 3,149
Net total return on ordinary activities after taxation 39,638 13,526
Number Number
Weighted average number of ordinary shares held outside of Treasury 71,912,335 73,039,011
9 Dividends Paid to Shareholders
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Dividend paid
Dividend of 14.00 pence per ordinary share paid for the year ended 31 July 2022 10,066 –
Dividend of 8.80 pence per ordinary share paid for the year ended 31 July 2021 – 6,440
10,066 6,440
Dividend proposed
Dividend proposed of 14.50 pence per ordinary share for the year ended 31 July 2023 10,415 –
Dividend proposed of 14.00 pence per ordinary share for the year ended 31 July 2022 – 10,086
10,415 10,086
The Directors have proposed the payment of a dividend for the year ended 31 July 2023 of 14.50 pence per ordinary share which is
subject to approval by shareholders at the Annual General Meeting on 29 November 2023 and has not been included as a liability in
these Financial Statements. The dividend will be paid on 6 December 2023 to shareholders on the register at the close of business on
3 November 2023 (ex-dividend date 2 November 2023).
Notes to the Financial Statements continued
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
10 Investments at Fair Value through Profit or Loss
2023
£’000
2022
£’000
Listed investments 376,751 337,254
Unlisted investments 880 1,591
Investments at fair value 377,631 338,845
Opening book cost 336,727 321,813
Opening investment holding gains 2,118 28,412
Opening fair value 338,845 350,225
Movements in the year
Purchases at cost 209,419 165,463
Sales – proceeds (199,658) (179,551)
Gains on investments 29,025 2,708
Closing fair value 377,631 338,845
Closing book cost 374,514 336,727
Closing investment holding gains 3,117 2,118
Closing fair value 377,631 338,845
The Company received £199,658,000 (2022: £179,551,000) from investments sold in the year. The book cost of these investments when
they were purchased was £171,632,000 (2022: £150,549,000). 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
31.07.23
£’000
Year ended
31.07.22
£’000
Purchases transaction costs 311 245
Sales transaction costs 416 390
727 635
The portfolio turnover rate of the year was 56.6% (2022: 49.6%).
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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11 Derivative Instruments
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Gains/(losses) on derivative instruments
Realised gains/(losses) on long CFD positions closed 393 (3,796)
Realised (losses)/gains on short CFD positions closed (876) 2,584
Realised losses on futures contracts closed (109) (1,222)
Realised gains on options contracts closed 951 193
Realised gains on forward currency contracts 118 126
Movement in investment holding gains on long CFDs 1,016 464
Movement in investment holding losses on short CFDs (261) (451)
Movement in investment holding gains on futures 270 184
Movement in investment holding gains on options 233 49
Movement in investment holding gains on forward currency contracts 46 54
1,781 (1,815)
2023
Fair value
£’000
2022
Fair value
£’000
Derivative instruments recognised on the Balance Sheet
Derivative instrument assets 1,758 972
Derivative instrument liabilities (1,665) (1,302)
93 (330)
2023 2022
Fair value
£’000
Asset
exposure
£’000
Fair value
£’000
Asset
exposure
£’000
At the year end the Company held the following derivative
instruments:
Long CFDs 798 44,089 (218) 29,861
Long future 172 4,061 (88) 3,997
Put options (156) 1,466 – –
Short CFDs (536) 10,586 (275) 7,277
Short future (10) 1,292 (20) 682
Call options (175) 1,705 317 3,034
Forward currency contracts – – (46) –
93 63,199 (330) 44,851
Notes to the Financial Statements continued
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
12 Debtors
2023
£’000
2022
£’000
Securities sold for future settlement 1,366 1,848
Amounts receivable on settlement of derivatives 162 –
Accrued income 1,572 1,991
Taxation recoverable 315 640
Other debtors and prepayments 141 89
3,556 4,568
13 Other Creditors
2023
£’000
2022
£’000
Securities purchased for future settlement 598 948
Amount payable on share repurchases – 276
Indian capital gains tax payable 2,355 2,170
Creditors and accruals 599 431
3,552 3,825
14 Share Capital
2023 2022
Number of
shares £’000
Number of
shares £’000
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside of Treasury
Beginning of the year 72,398,336 18,100 73,178,879 18,295
Ordinary shares repurchased into Treasury (569,000) (142) (780,543) (195)
End of the year 71,829,336 17,958 72,398,336 18,100
Ordinary shares of 25 pence each held in Treasury
1
Beginning of the year 3,182,553 795 2,402,010 600
Ordinary shares repurchased into Treasury 569,000 142 780,543 195
End of the year 3,751,553 937 3,182,553 795
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 £2,618,000 (2022: £3,527,000).
Job No: 50427 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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15 Capital and Reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other non-
distributable
reserve
£’000
Other
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
funds
£’000
At 1 August 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
Gains on investments (see Note 10) – – – – – 29,025 – 29,025
Gains on derivative instruments (see
Note 11) – – – – – 1,781 – 1,781
Foreign exchange gains – – – – – 1,089 – 1,089
Investment management fees (see
Note 4) – – – – – (281) – (281)
Indian capital gains tax (see Note 7) – – – – – (2,882) – (2,882)
Revenue return on ordinary activities
after taxation for the year – – – – – – 10,906 10,906
Dividend paid to shareholders (see
Note 9) – – – – – – (10,066) (10,066)
Repurchase of ordinary shares (see
Note 14) – – – – – (2,618) – (2,618)
At 31 July 2023 18,895 50,501 3,197 7,367 – 299,562 15,055 394,577
At 1 August 2021 18,895 50,501 3,197 7,367 719 273,107 10,278 364,064
Gains on investments (see Note 10) – – – – – 2,708 – 2,708
Losses on derivative instruments
(see Note 11) – – – – – (1,815) – (1,815)
Foreign exchange gains – – – – – 2,609 – 2,609
Investment management fees (see
Note 4) – – – – – 732 – 732
Indian capital gains tax (see Note 7) – – – – – (1,085) – (1,085)
Revenue return on ordinary activities
after taxation for the year – – – – – – 10,377 10,377
Dividend paid to shareholders (see
Note 9) – – – – – – (6,440) (6,440)
Repurchase of ordinary shares (see
Note 14) – – – – (719) (2,808) – (3,527)
At 31 July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
The capital reserve balance at 31 July 2023 includes investment holding gains of £3,117,000 (2022: gains of £2,118,000) as detailed in
Note 10 above. See Note 2 (p) above 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.
2023 2022
Total shareholders’ funds £394,577,000 £367,623,000
Ordinary shares held outside of Treasury at the year end 71,829,336 72,398,336
Net asset value per ordinary share 549.33p 507.78p
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.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
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.
Principal risks identified are: economic, political and market; investment performance (including the use of derivatives and gearing);
cybercrime and information security; discount management; key person; environmental, social and governance (“ESG”); business
continuity and operational; and shareholder relationships. Other risks identified are tax and regulatory risks. Risks are identified and
graded in this process, together with steps taken in mitigation, and are updated and reviewed on an ongoing basis. These risks and
how they are identified, evaluated and managed are shown in the Strategic Report on pages 28 to 32.
This Note refers to the identification, measurement and management of risks potentially affecting the value of financial instruments.
The Company’s financial instruments 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 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 regularly by the Board and the Portfolio Manager. 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:
2023
£’000
2022
£’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 43,291 30,079
Exposure to financial instruments that earn interest
Cash at bank 13,029 25,368
Short CFDs – exposure plus fair value 10,050 7,002
Amounts held at futures clearing houses and brokers 3,820 2,997
26,899 35,367
Net exposure to financial instruments that (bear)/earn interest (16,392) 5,288
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17 Financial Instruments continued
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 Manager 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:
Currency
Investments
at fair value
£’000
Long
exposure to
derivative
instruments
1
£’000
Debtors
2
£’000
Cash at
bank
£’000
2023
Total
£’000
Hong Kong dollar 105,426 28,575 1,517 89 135,607
Indian rupee 82,090 – 3,260 1,351 86,701
US dollar 27,358 14,980 2,077 11,289 55,704
Indonesian rupiah 51,868 – – – 51,868
South Korean won 33,540 12 7 – 33,559
Australian dollar 19,017 3,303 – 213 22,533
Singapore dollar 12,934 2,746 – – 15,680
Taiwan dollar 14,861 – 377 – 15,238
Chinese renminbi 14,109 – – 87 14,196
Philippine peso 4,361 – – – 4,361
Malaysian ringgit 3,832 – – – 3,832
Sri Lankan rupee 3,423 – – – 3,423
Other overseas currencies 4,812 – 11 – 4,823
UK sterling – – 127 – 127
377,631 49,616 7,376 13,029 447,652
1 The exposure to the market of long CFDs, long futures and put options.
2 Debtors include amounts held at futures clearing houses and brokers.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
Currency
Investments
at fair value
£’000
Long
exposure to
derivative
instruments
1
£’000
Debtors
2
£’000
Cash at
bank
£’000
2022
Total
£’000
Hong Kong dollar 90,764 25,443 1,318 287 117,812
Indian rupee 87,206 – 3,783 620 91,609
US dollar 12,367 9,783 1,063 23,801 47,014
Indonesian rupiah 41,649 – 4 – 41,653
South Korean won 31,895 – 68 6 31,969
Taiwan dollar 19,940 – 1,059 64 21,063
Australian dollar 19,035 – – – 19,035
Chinese renminbi 13,063 – – 97 13,160
Singapore dollar 11,149 1,666 – – 12,815
Philippine peso 4,810 (46) 33 – 4,797
Sri Lankan rupee 3,109 – 148 – 3,257
Vietnamese dong 1,173 – – 493 1,666
Other overseas currencies 2,685 – – – 2,685
UK sterling – – 89 – 89
338,845 36,846 7,565 25,368 408,624
1 The exposure to the market of long CFDs, long futures and call option after the netting of the forward currency contract.
2 Debtors include amounts held at futures clearing houses and brokers.
Currency exposure of financial liabilities
The Company finances its investment activities principally through its ordinary share capital and reserves. The Company’s financial
liabilities comprise short positions on derivative instruments and other payables. The currency profile of these financial liabilities is
shown below:
Currency
Short
exposure to
derivative
instruments
1
£’000
Other
creditors
£’000
2023
Total
£’000
US dollar 12,957 233 13,190
Indian rupee – 2,355 2,355
Hong Kong dollar 626 41 667
Korean won – 326 326
Indonesian rupiah – 64 64
Singapore dollar – 1 1
UK sterling – 532 532
13,583 3,552 17,135
1 The exposure to the market of short CFDs, short futures and call options.
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17 Financial Instruments continued
Currency
Short
exposure to
derivative
instruments
1
£’000
Other
creditors
£’000
2022
Total
£’000
US dollar 5,091 7 5,098
Indian rupee 682 2,744 3,426
Hong Kong dollar 2,186 311 2,497
Philippine peso – 27 27
Malaysian ringgit – 25 25
Taiwan dollar – 18 18
UK sterling – 693 693
7,959 3,825 11,784
1 The exposure to the market of short CFDs and short futures.
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 Manager is 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 2023, the undiscounted gross cash outflows of the financial liabilities were all repayable within one year and consisted of
derivative instrument liabilities of £1,665,000 (2022: £1,302,000) and other creditors of £3,552,000 (2022: £3,825,000).
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 know 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.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
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. At 31 July 2023, £793,000 (2022: £254,000) was held by the brokers in cash
denominated in US dollars in a segregated collateral account on behalf of the Company, to reduce the credit risk exposure of the
Company. This collateral comprised: J.P. Morgan Securities plc £436,000 (2022: £213,000), Goldman Sachs International £233,000
(2022: £nil), HSBC Bank plc £124,000 (2022: £nil) and Morgan Stanley & Co International plc £nil (2022: £41,000). £3,820,000 (2022:
£2,997,000), shown as amounts held at futures clearing houses and brokers on the Balance Sheet, was held by the Company in a
segregated collateral account, on behalf of the brokers, to reduce the credit risk exposure of the brokers. This collateral is comprised
of: UBS AG £3,346,000 (2022: £2,574,000) in cash, Morgan Stanley & Co International plc £474,000 (2022: £nil) in cash and HSBC
Bank Plc £nil (2022: £423,000) in cash.
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 instruments 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 Manager 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 2023, 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 £164,000 (2022: increased the net return and increased the net assets by £53,000).
A decrease of 1.00% in interest rates throughout the year would have had an equal but opposite effect.
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17 Financial Instruments continued
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 (2022: decreased the net return and decreased
the net assets) by the following amounts:
Currency
2023
£’000
2022
£’000
Hong Kong dollar 12,267 10,483
Indian rupee 7,668 8,017
Indonesian rupiah 4,709 3,787
US dollar 3,865 3,811
South Korean won 3,021 2,906
Australian dollar 2,048 1,730
Singapore dollar 1,425 1,165
Taiwan dollar 1,385 1,913
Chinese renminbi 1,291 1,196
Philippine peso 396 434
Malaysian ringgit 348 70
Sri Lankan rupee 311 296
Other overseas currencies 438 322
39,172 36,130
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
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 (2022: increased the net return and increased the net
assets) by the following amounts:
Currency
2023
£’000
2022
£’000
Hong Kong dollar 14,993 12,813
Indian rupee 9,372 9,798
Indonesian rupiah 5,756 4,628
US dollar 4,724 4,657
South Korean won 3,693 3,552
Australian dollar 2,504 2,115
Singapore dollar 1,742 1,424
Taiwan dollar 1,693 2,338
Chinese renminbi 1,577 1,462
Philippine peso 485 530
Malaysian ringgit 426 86
Sri Lankan rupee 380 362
Other overseas currencies 535 395
47,880 44,160
Other price risk – exposure to investments sensitivity analysis
Based on the listed investments held and share prices at 31 July 2023, 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 £37,675,000 (2022: increased the net return and increased the net assets by £33,725,000). 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 2023 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 £88,000 (2022: increased the net return
and increased the net assets by £159,000). 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 2023, 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 £3,603,000 (2022: increased the net return and increased
the net assets by £2,893,000). 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) above, investments and derivative instruments are shown at fair value. In the case of cash at bank,
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.
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17 Financial Instruments continued
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) above. The
table below sets out the Company’s fair value hierarchy:
Financial assets at fair value through profit or loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
2023
Total
£’000
Investments 367,312 9,439 880 377,631
Derivative instrument assets 172 1,586 – 1,758
367,484 11,025 880 379,389
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (341) (1,324) – (1,665)
Financial assets at fair value through profit or loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
2022
Total
£’000
Investments 330,119 7,135 1,591 338,845
Derivative instrument assets 317 655 – 972
330,436 7,790 1,591 339,817
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (108) (1,194) – (1,302)
The table below sets out the movements in level 3 financial instruments during the year:
Year ended
31.07.23
£’000
Year ended
31.07.22
£’000
Beginning of the year 1,591 1,722
Movement in investment holding losses (711) (131)
End of the year 880 1,591
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
Below are details of the four investments which fall into level 3 of which the first three investments are unlisted and the last investment
is suspended from trading.
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. The valuation at 31 July 2023 is based on the company’s financial information, the macro-environment and a weighted
average following a scenario-based approach. As at 31 July 2023, its fair value was £40,000 (2022: £317,000).
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 2023 is based on the company’s financial information, the macro-environment and the
Probability-Weighted Expected Return Model (PWERM). As at 31 July 2023, its fair value was £69,000 (2022: £73,000).
Tuhu Car
Tuhu Car is an online retailer of auto spare parts and is an unlisted company. The valuation at 31 July 2023 is based on the
company’s financial information, the macro-environment and benchmarking the position to a range of comparable market data. As at
31 July 2023, its fair value was £771,000 (2022: £1,201,000).
Salt Lake Potash
Salt Lake Potash is a mineral exploration company. The company was suspended from trading on the Australian Stock Exchange on
27July 2021 and in October 2021 it announced that it would be entering voluntary administration. As at 31 July 2023, its fair value
was £nil (2022: £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 on page 56 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 on page 27. The principal risks and their management are disclosed in
the Strategic Report on pages 28 to 32 and in Note 17 above.
The Company’s gross and net gearing at the year end is set out below:
2023
Gross gearing Net gearing
Asset
exposure
£’000 %
1
Asset
exposure
£’000 %
1
Investments 377,631 95.7 377,631 95.7
Long CFDs 44,089 11.2 44,089 11.2
Long future 4,061 1.0 4,061 1.0
Put options 1,466 0.4 1,466 0.4
Total long exposures 427,247 108.3 427,247 108.3
Short CFDs 10,586 2.7 (10,586) (2.7)
Call options 1,705 0.4 (1,705) (0.4)
Short future 1,292 0.3 (1,292) (0.3)
Gross asset exposure/net market exposure 440,830 111.7 413,664 104.9
Shareholders’ funds 394,577 394,577
Gearing
2
11.7% 4.9%
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.
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18 Capital Resources and Gearing continued
2022
Gross gearing Net gearing
Asset
exposure
£’000 %
1
Asset
exposure
£’000 %
1
Investments 338,845 92.2 338,845 92.2
Long CFDs 29,861 8.1 29,861 8.1
Long future 3,997 1.1 3,997 1.1
Put options 3,034 0.8 3,034 0.8
Total long exposures 375,737 102.2 375,737 102.2
Short CFDs 7,277 2.0 (7,277) (2.0)
Short future 682 0.2 (682) (0.2)
Gross asset exposure/net market exposure 383,696 104.4 367,778 100.0
Shareholders’ funds 367,623 367,623
Gearing
2
4.4% –
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.
19 Transactions with the Manager and Related Parties
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management
and the role of company secretary to FIL Investments International (“FII”). Both companies are Fidelity group companies.
Details of the current fee arrangements are given in the Directors’ Report on page 37. During the year, management fees of
£2,925,000 (2022: £1,832,000), and secretarial and administration fees of £75,000 (2022: £75,000) were payable to FII. At the Balance
Sheet date, management fees of £292,000 (2022: £156,000), and secretarial and administration fees of £25,000 (2022: £25,000) were
accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these
services during the year was £195,000 (2022: £157,000). At the Balance Sheet date, marketing services of £nil (2022: £20,000) were
accrued and included in other creditors.
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 on pages 43 and 44. In addition
to the fees and taxable expenses disclosed in the Directors’ Remuneration Report, £20,000 (2022: £18,000) of employers’ National
Insurance contributions were paid by the Company. At the Balance Sheet date, Directors’ fees of £16,000 (2022: £15,000) were
accrued and payable.
20 Post Balance Sheet Event
On 26 September 2023 following an initial public offering, Tuhu Car, which was classified as a Level 3 investment as at 31 July 2023 as
set out in Note 17 on page 77, was listed on the Hong Kong Stock Exchange at a 2% premium to the Balance Sheet valuation.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Alternative Performance Measures
Discount/Premium
The discount/premium is considered to be an Alternative Performance Measure. It is the difference between the NAV per ordinary
share of the Company and the ordinary share price and is expressed as a percentage of the NAV per ordinary share. Details of the
Company’s discount/premium are on the Financial Highlights page and are both defined in the Glossary of Terms on page 91 and on
page 93.
Gearing
Gearing (both Gross and Net) is considered to be an Alternative Performance Measure. See Note 18 on pages 77 and 78 for details of
the Company’s gearing.
Net Asset Value (“NAV”) per Ordinary Share
The NAV per ordinary share is considered to be an Alternative Performance Measure. See the Balance Sheet on page 56 and Note 16
on page 68 for further details.
Ongoing Charges Ratio
The ongoing charges ratio is considered to be an Alternative Performance Measure. The ongoing charges ratio has been calculated in
accordance with guidance issued by the AIC as the total of management fees and other expenses expressed as a percentage of the
average net assets throughout the year.
2023
£’000
2022
£’000
Investment management fees (£’000) 2,644 2,564
Other expenses (£’000) 988 905
Ongoing charges (£’000) 3,632 3,469
Variable management fees (£’000) 281 (732)
Average net assets (£’000) 377,729 366,346
Ongoing charges ratio 0.96% 0.95%
Ongoing charges ratio including variable management fees 1.03% 0.75%
Revenue, Capital and Total Returns per Share
Revenue, capital and total returns per share are considered to be Alternative Performance Measures. See the Income Statement on
page 54 and Note 8 on page 64 for further details.
Total Return Performance
Total return performance is considered to be an Alternative Performance Measure. 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 ordinary share price goes ex-dividend.
The tables below and on the next page provide information relating to the NAV per ordinary share and the ordinary share price of the
Company and the impact of the dividend reinvestments and the total returns for the years ended 31 July 2023 and 31 July 2022.
2023
Net asset
value per
ordinary
share
Ordinary
share
price
31 July 2022 507.78p 458.00p
31 July 2023 549.33p 520.00p
Change in year +8.2% +13.5%
Impact of dividend reinvestment +3.2% +3.8%
Total return for the year +11.4% +17.3%
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Total Return Performance continued
2022
Net asset
value per
ordinary
share
Ordinary
share
price
31 July 2021 497.50p 483.00p
31 July 2022 507.78p 458.00p
Change in year +2.1% -5.2%
Impact of dividend reinvestment +1.8% +1.8%
Total return for the year +3.9% -3.4%
Alternative Performance Measures continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Financial Calendar
The key dates in the Company’s calendar are:
31 July 2023
Financial Year End
October 2023
Announcement of results for the year ended 31 July 2023
October 2023
Publication of the Annual Report
2 November 2023
Ex-Dividend Date
3 November 2023
Dividend Record Date
29 November 2023
Annual General Meeting
6 December 2023
Payment of the Dividend
31 January 2024
Half-Year End
April 2024
Announcement of the Half-Yearly results for the six months ended 31 January 2024
April 2024
Publication of the Half-Yearly Report
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THIS SECTION IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION.
If you are in any doubt as to the action you should take,
you should seek your own personal financial advice from
your stockbroker, bank manager, solicitor or other financial
adviser authorised under the Financial Services and Markets
Act 2000.
The AGM of the Company will be held at 11.00 am on
Wednesday, 29 November 2023 at 4 Cannon Street, London
EC4M 5AB and virtually via the online Lumi AGM meeting
platform. Full details of the meeting are given in the Notice of
Meeting on pages 84 to 87.
The Notice of Meeting and related papers are sent to
shareholders at least 20 working days before the AGM.
We look forward to welcoming you to the AGM in person. For
those shareholders who are unable to or would prefer not to
attend in person, we will live-stream the formal business and
presentations of the meeting online.
Nitin Bajaj, the Portfolio Manager, will be making a presentation
to shareholders highlighting the achievements and challenges
of the year past and the prospects for the year to come. He
and the Board will be very happy to answer any questions
that shareholders may have. Copies of the Portfolio Manager’s
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 on page 86 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 we will answer as many of these as possible at an
appropriate juncture during the meeting.
Further information and links to the Lumi platform may be found
on the Company’s website 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 at https://web.lumiagm.com.
We urge shareholders to vote and make use of the proxy form
provided. 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 online participation
as a guest. Once you have accessed https://web. lumiagm.com
from your web browser on a tablet or computer, you will need to
enter the Lumi Meeting ID which is 109-975-634. 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.
Fidelity Platform Investors – Voting at AGMs
If you hold your shares in the Company through the Fidelity
Platform, then Fidelity passes on to you the right to vote on the
proposed resolutions at the Company’s AGM. Fidelity Platform
Investors are advised to vote online via the Broadridge Service
(a company that specialises in investor voting facilities). Investors
can sign up to this facility via their Fidelity Investor Account.
Proxy Voting
Paper Proxy Forms will be sent to all shareholders who hold
shares on the main share register. This will assist shareholders to
vote in advance of the meeting should they decide not to attend
in person.
If you have sold, transferred or otherwise disposed of all your
shares in the Company, you should pass this document, together
with any accompanying documents, as soon as possible to the
purchaser or transferee, or to the stockbroker, bank or other
agent through whom the sale or transfer was effected, for onward
transmission to the purchaser or transferee.
At the AGM on 29 November 2023, resolutions will be proposed
relating to the items of business set out in the Notice of Meeting
on pages 84 and 85, including the items of special business
summarised below and on the next page.
Authority to Allot Shares
Resolution 11 is an ordinary resolution and provides the Directors
with a general authority to allot securities in the Company
up to an aggregate nominal value of £1,889,522. If passed,
this resolution will enable the Directors to allot a maximum of
7,558,088 ordinary shares which represents approximately 10%
of the issued ordinary share capital of the Company (including
Treasury shares) as at 11 October 2023, and to impose any
limits or restrictions and make any arrangements which they
consider necessary or appropriate to deal with Treasury shares,
fractional entitlements, record dates, legal, regulatory or practical
problems in, or under the laws of, any territory or any other
matter. The Directors would not intend to use this power unless
they considered that it was in the interests of shareholders to do
so. Any shares issued would be at NAV per ordinary share or at
a premium to NAV per ordinary share.
Authority to Disapply Pre-Emption Rights
Resolution 12 is a special resolution disapplying pre-emption
rights and granting authority to the Directors, without the need
for further specific shareholder approval, to make allotments
of equity securities or sale of Treasury shares for cash up to
an aggregate nominal value of £1,889,522 (including Treasury
shares) (approximately 10% of the issued ordinary share capital
of the Company as at 11 October 2023 and equivalent to
7,558,088 ordinary shares).
Authority to Repurchase Shares
Resolution 13 is a special resolution which renews the Company’s
authority to purchase up to 14.99% (10,767,217) of the ordinary
shares in issue (excluding Treasury shares) on 11 October 2023,
either for immediate cancellation or for retention as Treasury
shares, at the determination of the Directors. Once shares are
held in Treasury, the Directors may only dispose of them in
accordance with the relevant legislation by subsequently selling
Annual General Meeting
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
the shares for cash or by cancelling the shares. Purchases of
ordinary shares will be made at the discretion of the Directors
and within guidelines set from time to time by them in the light of
prevailing market conditions. Purchases will only be made in the
market at prices below the prevailing NAV per ordinary share.
Recommendation: The Board considers that each of
the resolutions is likely to promote the success of the
Company and is in the best interests of the Company and
its shareholders as a whole. The Directors unanimously
recommend that you vote in favour of the resolutions as they
intend to do in respect of their own beneficial holdings.
By Order of the Board
FIL Investments International
Secretary
11 October 2023
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Notice is hereby given that the Annual General Meeting
of Fidelity Asian Values PLC will be held 4 Cannon Street,
London EC4M 5AB and virtually via the online Lumi AGM
meeting platform on Wednesday, 29 November 2023 at
11.00 am for the following purposes:
1. To receive and adopt the Annual Report and Financial
Statements for the year ended 31 July 2023.
2. To declare that a final dividend for the year ended 31July
2023 of 14.50 pence per ordinary share be paid to
shareholders on the register as at close of business on
3November 2023.
3. To re-elect Clare Brady as a Director.
4. To elect Hussein Barma as a Director.
5. To re-elect Sally Macdonald as a Director.
6. To re-elect Matthew Sutherland as a Director.
7. To re-elect Michael Warren as a Director.
8. To approve the Directors’ Remuneration Report (excluding
the section headed “The Remuneration Policy” set out on
page42) for the year ended 31 July 2023.
9. To reappoint Ernst & Young LLP as Auditor of the Company to
hold office until the conclusion of the next general meeting at
which Financial Statements are laid before the Company.
10. To authorise the Directors to determine the Auditor’s
remuneration.
To consider and, if thought fit, pass the following special
business resolutions of which Resolution 11 will be proposed
as an ordinary resolution and Resolutions 12 and 13 as special
resolutions.
Authority to Allot Ordinary Shares and Disapply Pre-Emption
Rights
Resolutions 11 and 12 will, if approved, authorise the Directors to
allot a limited number of ordinary shares (or to sell any ordinary
shares which the Company elects to hold in Treasury) for cash
without first offering such shares to existing ordinary shareholders
pro rata to their existing holdings. The limit set by the Board is
10% of the number of ordinary shares of the Company (including
Treasury shares) in issue on 11 October 2023. The Directors will
only issue new ordinary shares, or dispose of ordinary shares
held in Treasury, under this authority in order to take advantage
of opportunities in the market as they arise and only if they
believe it is advantageous to the Company’s shareholders to
do so. Any ordinary shares held in Treasury would be re-issued
at net asset value (“NAV”) per ordinary share or at a premium
to NAV per ordinary share. This would ensure that the net effect
of repurchasing and then re-issuing the ordinary shares would
enhance NAV per ordinary share.
11. THAT the Directors be and they are hereby generally and
unconditionally authorised in accordance with Section 551
of the Companies Act 2006 (the “Act”) to exercise all the
powers of the Company to allot shares in the Company or
to grant rights to subscribe for or to convert any securities
into shares in the Company (“relevant securities”) up to an
aggregate nominal amount of £1,889,522 (approximately
10% of the aggregate nominal amount of the issued share
capital of the Company (including Treasury shares) as at
11 October 2023) and so that the Directors may impose any
limits or restrictions and make any arrangements which they
consider necessary or appropriate to deal with Treasury
shares, fractional entitlements, record dates, legal, regulatory
or practical problems in, or under the laws of, any territory or
any other matter, such authority to expire at the conclusion of
the next Annual General Meeting (“AGM”) of the Company
or the date 15 months after the passing of this resolution,
whichever is the earlier, but so that this authority shall allow
the Company to make offers or agreements before the
expiry of this authority which would or might require relevant
securities to be allotted after such expiry as if the authority
conferred by this resolution had not expired. All previous
unexpired authorities are revoked, but without prejudice to
any allotment of shares or grant of rights already made,
offered or agreed to be made pursuant to such authorities.
12. THAT, subject to the passing of Resolution 11, as set out
above, the Directors be and they are hereby authorised,
pursuant to Sections 570-573 of the Act, to allot equity
securities (as defined in Section 560 of the Act) for cash
pursuant to the authority given by the said Resolution 11
and/or to sell ordinary shares held by the Company as
Treasury shares for cash, as if Section 561 of the Act did not
apply to any such allotment or sale, provided that this power
shall be limited:
a) to the allotment of equity securities or sale of Treasury
shares up to an aggregate nominal amount of
£1,889,522 (approximately 10% of the aggregate
nominal amount of the issued share capital of the
Company (including Treasury shares) as at 11 October
2023); and
b) by the condition that allotments of equity securities or
sales of Treasury shares may only be made pursuant
to this authority at a price of not less than the NAV per
ordinary share,
and this power shall expire at the conclusion of the next
AGM of the Company or the date 15 months after the
passing of this resolution, whichever is the earlier, save
that this authority shall allow the Company to make offers
or agreements before the expiry of this authority, and the
Directors may allot equity securities in relation to such an
offer or agreement as if the authority conferred by this
resolution had not expired.
Authority to Repurchase Ordinary Shares
Resolution 13 is special resolution which, if approved, will renew
the Company’s authority to purchase up to 14.99% respectively
of the number of ordinary shares in issue (excluding Treasury
shares) on 11 October 2023 either for immediate cancellation
or for retention as Treasury shares, at the determination of the
Board. Once shares are held In Treasury, the Directors may
only dispose of them in accordance with the relevant legislation
by subsequently selling the shares for cash or cancelling the
Notice of Meeting
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Notice of Meeting continued
shares. Purchases of ordinary shares will be at the discretion
of the Board and within guidelines set from time to time by the
Board in the light of prevailing market conditions. Purchases will
only be made in the market at prices below the prevailing NAV
per ordinary share, thereby resulting in an increased NAV per
ordinary share.
13. THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section 701
of the Companies Act 2006 (the “Act”) to make market
purchases (within the meaning of Section 693 of the Act)
of ordinary shares of 25 pence each (the “shares”) in the
capital of the Company provided that:
a) the maximum number of shares hereby authorised to be
purchased shall be 10,767,217;
b) the minimum price which may be paid for a share is 25
pence;
c) the maximum price (excluding expenses) which may be
paid for each share is the higher of:
(i) 5% above the average of the middle market
quotations for the shares as derived from the
London Stock Exchange Official List for the five
business days preceding the date of purchase; and
(ii) the higher of the price of the last independent
trade and the highest current independent
purchase bid on the London Stock Exchange at the
time the purchase is carried out;
d) the authority hereby conferred shall expire at the
conclusion of the next AGM of the Company or the date
15 months after the passing of this resolution, whichever
is the earlier, unless such authority is renewed prior to
such time; and
e) the Company may make a contract to purchase shares
under the authority hereby conferred prior to the expiry
of such authority which will or may be executed wholly
or partly after the expiration of such authority and
may make a purchase of shares pursuant to any such
contract.
By Order of the Board
FIL Investments International
Secretary
11 October 2023
Notes to the Notice of Meeting:
1. A member of the Company entitled to attend and vote at
the Annual General Meeting may appoint a proxy or proxies
to attend and to speak and vote instead of him. A member
may appoint more than one proxy in relation to the Annual
General Meeting provided that each proxy is appointed to
exercise the rights attached to a different share or shares
held by that member. A proxy need not be a member of
the Company. To appoint a proxy via the share portal at
www.signalshares.com, you will need to log in to your
share portal account or register if you have not previously
done so. To register you will need your Investor Code which
can be found on your Form of Proxy.
2. A Form of Proxy is enclosed and must be returned to the
Registrar at the address on the form to arrive not later than
11.00 am on Monday, 27 November 2023. Completion and
return of the form of proxy will not prevent a shareholder
from subsequently attending the meeting and voting in
person if they so wish.
3. To be effective, the instrument appointing a proxy, and
any power of attorney or other authority under which it is
signed (or a copy of any such authority certified notarially
or in some other way approved by the Directors), must be
deposited with the Company’s Registrar, PXS 1, Link Group,
Central Square, 29 Wellington Street, Leeds LS1 4DL not less
than 48 hours before the time for holding the meeting or
adjourned meeting or, in the case of a poll taken more than
48 hours after it is demanded, not less than 24 hours before
the time appointed for the taking of the poll at which it is to
be used.
4. In the case of joint holders, the vote of the senior who
tenders the vote shall be accepted to the exclusion of the
votes of the other joint holders and for this purpose, seniority
shall be determined by the order in which the names stand
in the Register of Members.
5. To appoint a proxy or to give or amend an instruction to
a previously appointed proxy via the CREST system, the
CREST message must be received by the issuer’s agent
RA10 by 11.00 am on Monday, 27 November 2023. For this
purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by
the CREST Applications Host) from which the issuer’s agent
is able to retrieve the message. After this time any change
of instructions to a proxy appointed through CREST should
be communicated to the proxy by other means. CREST
Personal Members or other CREST sponsored members and
those CREST Members who have appointed voting service
provider(s) should contact their CREST sponsor or voting
service provider(s) for assistance with appointing proxies
via CREST. For further information on CREST procedures,
limitations and systems timings please refer to the CREST
Manual. We may treat as invalid a proxy appointment sent
by CREST in the circumstances set out in Regulation 35(5)
of the Uncertificated Securities Regulations 2001. In any
case your proxy form must be received by the Company’s
Registrar no later than 11.00 am on Monday, 27 November
2023.
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6. Proxymity Voting – If you are an institutional investor
you may also be able to appoint a proxy electronically
via the Proxymity platform, a process which has been
agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by no later
than 11.00 am on Monday, 27 November 2023 in order to
be considered valid. Before you can appoint a proxy via
this process, you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you
read these carefully as you will be bound by them and they
will govern the electronic appointment of your proxy. An
electronic proxy appointment via the Proxymity platform
may be revoked completely by sending an authenticated
message via the platform instructing the removal of your
proxy vote.
7. Unless otherwise indicated on the Form of Proxy, CREST,
Proximity or any other electronic voting instruction, the proxy
will vote as they think fit or, at their discretion, withhold from
voting.
8. All members are entitled to attend and vote at the AGM
and ask questions. The right to vote at the meeting will
be determined by reference to the Register of Members
as at close of business on Monday, 27 November 2023.
Shareholders are urged to vote using the proxy form
provided or electronically where permitted by your nominee
or platform.
9. The Company is pleased to be able to offer facilities for
shareholders to attend, ask questions and vote at the AGM
electronically in real time should they wish to do so. The
details are set out below.
In order to join the AGM electronically and ask questions
via the platform, shareholders will need to connect to the
following site: https://web.lumiagm.com. Lumi is available
as a mobile web client, compatible with the latest browser
versions of Chrome, Firefox, Edge and Safari and can be
accessed using any web browser, on a PC or smartphone
device.
Once you have accessed https://web.lumiagm.com from
your web browser on a tablet or computer, you will be asked
to enter the Lumi Meeting ID which is 109-975-634. You
will then be prompted to enter your unique 11 digit Investor
Code (“IVC”) including any leading zeros and ‘PIN’. Your PIN
is the last 4 digits of your IVC. This will authenticate you as a
shareholder.
Your IVC can be found on your share certificate or
as detailed on your proxy form. Signal Shares users
(www.signalshares.com) will find this under ‘Manage your
account’ when logged in to the Signal Shares portal. You can
also obtain this by contacting Link, our Registrar, by calling
+44 (0) 371 277 1020*.
Access to the AGM will be available from 30 minutes before
the meeting start time, although the voting functionality
will not be enabled until the Chairman of the meeting
declares the poll open. During the AGM, you must ensure
you are connected to the internet at all times in order to vote
when the Chairman commences polling on the Resolutions.
Therefore, it is your responsibility to ensure connectivity for
the duration of the AGM via your wi-fi. A user guide to the
Lumi platform is available on the Company’s pages of the
Manager’s website at: www.fidelity.co.uk/asianvalues.
If you wish to appoint a proxy other than the Chairman of the
meeting and for them to attend the virtual meeting on your
behalf, please submit your proxy appointment in the usual
way before contacting Link Group on +44 (0) 371 277 1020*
in order to obtain their IVC and PIN. It is suggested that you
do this as soon as possible and at least 48 hours (excluding
non-business days) before the meeting.
If your shares are held within a nominee / platform and
you wish to attend the electronic meeting, you will need to
contact your nominee as soon as possible. Your nominee will
need to present a corporate letter of representation to Link
Group, the Registrar, as soon as possible and at least 72
hours (excluding non-business days) before the meeting, in
order that they can obtain for you your unique IVC and PIN
to enable you to attend the electronic meeting.
If you are unable to obtain a unique IVC and PIN from
your nominee or platform, we will also welcome online
participation as a guest. Once you have accessed
https://web.lumiagm.com from your web browser on a
tablet or computer, you will need to enter the Lumi Meeting
ID which is 109-975-634. 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.
*
Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday,
excluding public holidays in England and Wales. Calls are charged
at the standard geographic rate and will vary by provider. Calls
outside the UK will be charged at the applicable international rate.
10. Any person to whom this notice is sent who is a person
nominated under Section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under
an agreement between him and the member by whom he
was nominated, have a right to be appointed (or to have
someone else appointed) as a proxy for the meeting. If a
Nominated Person has no such proxy appointment right
or does not wish to exercise it, he may, under any such
agreement, have a right to give instructions to the member
as to the exercise of voting rights. The statement of the rights
of members in relation to the appointment of proxies in
Note 1 above does not apply to Nominated Persons. The
right described in that paragraph can only be exercised by
members of the Company.
11. If the Chairman, as a result of any proxy appointments, is
given discretion as to how the votes which are the subject
of those proxies are cast and the voting rights in respect
of those discretionary proxies, when added to the interests
in the Company’s securities already held by the Chairman,
result in the Chairman holding such number of voting rights
that he has a notifiable obligation under the Disclosure and
Transparency Rules, the Chairman will make the necessary
Notice of Meeting continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
notifications to the Company and the Financial Conduct
Authority. As a result, any member holding 3% or more of
the voting rights in the Company who grants the Chairman a
discretionary proxy in respect of some or all of those voting
rights and so would otherwise have a notification obligation
under the Disclosure and Transparency Rules, need not make
separate notification to the Company and the Financial
Conduct Authority.
12. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that to be
entitled to attend and vote at the AGM (and for the purpose
of determining the number of votes they may cast), members
must be entered on the Register of Members by close of
business on Monday, 27 November 2023. If the meeting is
adjourned then, to be so entitled, members must be entered
on the Register of Members by close of business on the day
two days before the time fixed for the adjourned meeting,
or, if the Company gives notice of the adjourned meeting, at
any other time specified in that notice.
13. As at 11 October 2023 (the latest practicable date prior
to the publication of this document), the Company’s issued
share capital consisted of 75,580,889 ordinary shares
carrying one vote each. The number of shares held by the
Company in Treasury was 3,751,553. Therefore, the total
number of shares with voting rights in the Company was
71,829,336.
14. Any corporation which is a member can appoint one or
more corporate representative who may exercise on its
behalf all of its powers as a member provided that they do
not do so in relation to the same shares.
15. Shareholders and any proxies or representatives they
appoint understand that by attending the meeting they
are expressly agreeing that they are willing to receive any
communications, including communications relating to the
Company’s securities, made at the meeting.
16. It is possible that, pursuant to requests made by members of
the Company under Section 527 of the Companies Act 2006,
the Company may be required to publish on its website a
statement setting out any matter relating to the audit of the
Company’s accounts (including the Auditor’s report and the
conduct of the audit) that is to be laid before the AGM or
any circumstance connected with an Auditor of the Company
ceasing to hold office since the previous meeting at which
the Annual Report and Financial Statements were laid. The
Company may not require the Shareholders requesting any
such website publication to pay its expenses in complying
with such requests. Where the Company is required to
place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the
Company’s Auditor not later than the time when it makes
the statement available on the website. The business which
may be dealt with at the AGM includes any statement that
the Company has been required under Section 527 of the
Companies Act 2006 to publish on its website.
17. No Director has a service contract with the Company.
18. A copy of this notice and other information required by
Section 311A of the Companies Act 2006 is published on the
Company’s website at www.fidelity.co.uk/asianvalues.
Registered office: Beech Gate, Millfield Lane, Lower Kingswood,
Tadworth, Surrey KT20 6RP.
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Shareholder Information
Investing in Fidelity Asian Values PLC
Fidelity Asian Values PLC is a company listed on the London
Stock Exchange and you can buy its shares through a platform,
stockbroker, share shop or bank. Fidelity also offers a range of
options, so that you can invest in the way that is best for you.
Details of how to invest and the latest Key Information Document
can be found on the Company’s pages of the Manager’s website
at: www.fidelity.co.uk/asianvalues.
CONTACT INFORMATION
Shareholders and Fidelity’s Platform Investors should contact the
appropriate administrator using the contact details given below
and in the next column. Links to the websites of major platforms
can be found online at: www.fidelityco.uk/its.
Shareholders on the main share register
Contact Link Group, Registrar to Fidelity Asian Values PLC,
Central Square, 29 Wellington Street, Leeds LS1 4DL.
Email: shareholderenquiries@linkgroup.co.uk
Telephone: +44 (0) 371 664 0300 (calls are charged at the
standard geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at the applicable
international rate. Lines are open 9:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales).
Details of individual shareholdings and other information can
also be obtained online from the Registrar’s Share Portal at
www.signalshares.com. Shareholders are able to manage their
shareholding online by registering for the Share Portal, a free
and secure online access service. Facilities include:
Account Enquiry – Shareholders can access their personal
shareholding, including share transaction history, dividend
payment history and obtain an up-to-date shareholding valuation.
Amendment of Standing Data – Shareholders can change
their registered postal address and add, change or delete
dividend mandate instructions. Shareholders can also download
forms such as change of address, stock transfer and dividend
mandates as well as buy and sell shares in the Company.
Should you have any queries in respect of the Link Share Portal,
contact the helpline on +44 (0) 371 664 0391 (calls are charged
at the standard geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at the applicable
international rate. Lines are open 9:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales).
Fidelity Platform Investors
Contact Fidelity, using the freephone numbers given below, or by
writing to: UK Customer Service, Fidelity, PO Box 391, Tadworth,
Surrey KT20 9FU.
Website: www.fidelity.co.uk
Private investors: call free on 0800 41 41 10, 9:00 – 18:00,
Monday to Saturday.
Financial advisers: call free on 0800 41 41 81, 8:00 – 18:00,
Monday to Friday.
General enquiries
General enquiries should be made to the Secretary, at the
Company’s registered office: FIL Investments International,
Investment Trusts, Beech Gate, Millfield Lane, Lower Kingswood,
Tadworth, Surrey KT20 6RP.
Telephone: +44 (0) 1737 836347
Email: investmenttrusts@fil.com
Website: www.fidelityco.uk/its
If you hold Fidelity Asian Values PLC shares in an account
provided by Fidelity International, you will receive a report every
six months detailing all of your transactions and the value of your
shares.
ShareGift
You may donate your shares to charity free of charge through
ShareGift. Further details are available at www.sharegift.org.uk.
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Alternative Investment Fund Manager
(AIFM/the Manager)
FIL Investment Services (UK) Limited
Beech Gate
Millfield Lane
Lower Kingswood
Tadworth
Surrey
KT20 6RP
Investment Manager, Secretary and
Registered Office
FIL Investments International
Beech Gate
Millfield Lane
Lower Kingswood
Tadworth
Surrey
KT20 6RP
Email: investmenttrusts@fil.com
Banker and Custodian
JPMorgan Chase Bank
125 London Wall
London
EC2Y 5AJ
Depositary
J.P.Morgan Europe Limited
25 Bank Street
London
E14 5JP
Financial Adviser and Stockbroker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Independent Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Lawyer
Simmons and Simmons LLP
1 Ropemaker Street
London
EC2Y 9SS
Registrar
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Company Information
The Company was launched on 13 June 1996 with one warrant attached to every five shares. The original subscription price for
each share was £1 (the final subscription date for the warrants was December 2006). On 4 March 2010, the Company issued one
subscription share for every five ordinary shares held with a final subscription date of May 2013. A further subscription share issue was
made on 2 December 2016 on the basis of one subscription share for every five held with a final exercise date of 29 November 2019.
The Company is a member of The Association of Investment Companies (the “AIC”) from whom general information on investment
trusts can be obtained by telephoning +44 (0) 207 282 5555 (email address: enquiries@theaic.co.uk).
Price Information
The share price of Fidelity Asian Values PLC is published daily in The Financial Times under the heading “Investment Companies”. It
is also published in The Times and The Daily Telegraph. Price and performance information is also available at www.fidelity.co.uk/
asianvalues.
Investors can also obtain current price information by telephoning Fidelity for free on 0800 41 41 10 or FT Cityline on 0905 817 1690,
(voice activated service) (calls charged at 60p per minute on a per second basis from a BT landline. Charges for other telephone
networks may vary). The Reuters code for Fidelity Asian Values PLC’s ordinary shares is FAS.L, the sedol is 0332231 and the ISIN is
GB0003322319.
Net Asset Value (“NAV”) Information
The Company’s NAV is calculated and released to the London Stock Exchange on a daily basis.
Capital Gains Tax
All UK individuals under present legislation are permitted to have £6,000 of capital gains in the current tax year 2023/2024
(2022/2023: £12,300) before being liable for capital gains tax. Capital gains tax is charged at 10% and 20% dependent on the total
amount of taxable income.
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General Data Protection Regulation (“GDPR”)
What personal data is collected and how it is used
The Company is an investment trust which is a public limited company and has certain regulatory obligations such as the requirement to
send documents to its shareholders, for example, the Annual Report and other documents that relate to meetings of the Company. The
Company will, therefore, collect shareholders’ personal data such as names, addresses and identification numbers or investor codes
and will use this personal data to fulfil its statutory obligations.
Any personal data collected will be kept securely on computer systems and in some circumstances on paper. Personal information is
kept secure in line with Fidelity’s Information Security policies and standards. If you are unhappy with how we have used your personal
data, you can complain by contacting the UK Data Protection Officer at Fidelity International, Beech Gate, Millfield Lane, Lower
Kingswood, Tadworth, Surrey KT20 6RP.
Sharing personal data
In order to assist the Company in meeting its statutory requirements, the Company delegates certain duties around the processing
of this data to its third party service providers, such as the Company’s Registrar and Printers. The Company has appointed
Fidelity to undertake marketing activities for the Company and their privacy statement can be found on the Company website at
https://investment-trusts.fidelity.co.uk/security-privacy/
The Company’s agreements with the third party service providers have been updated to be compliant with GDPR requirements.
The Company confirms to its shareholders that their data will not be shared with any third party for any other purpose, such as for
marketing purposes. In some circumstances, it may be necessary to transfer shareholders’ personal data across national borders
to Fidelity Group entities operating in the European Economic Area (“EEA”). Where this does occur, the European standard of
protections will be applied to the personal data that is processed. Where personal data is transferred within the Fidelity group but
outside of the EEA, that data will subsequently receive the same degree of protection as it would in the EEA.
Retention period
Personal data will be kept for as long as is necessary for these purposes and no longer than legally permitted to do so.
Requesting access, making changes to personal data and other important information
Shareholders can access the information that the Company holds about them or ask for it to be corrected or deleted by contacting
Fidelity’s UK Data Protection Officer, Fidelity International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Data Protection
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Glossary of Terms
AAF REPORT
A report prepared in accordance with the Audit and Assurance
Faculty guidance issued by the Institute of Chartered Accountants
in England and Wales.
ADR (American Depositary Receipt)
A negotiable certificate issued by a US bank representing a
specified number of shares in a foreign stock that is traded on a
US Exchange.
AIC
The Association of Investment Companies (“AIC”). The Company
is a member of the AIC.
AIF
Alternative Investment Fund (“AIF”). The Company is an AIF.
AIFM
Alternative Investment Fund Manager (“AIFM”). The Board has
appointed FIL Investment Services (UK) Limited to act as the
Company’s AIFM (the Manager).
AIFMD
The Alternative Investment Fund Managers’ Directive (“AIFMD”) is
a European Union Directive implemented on 22 July 2014.
Alternative Performance Measures
The Company uses the following Alternative Performance
Measures which are all defined in this Glossary of Terms:
• Discount/Premium;
• Gearing;
• Net Asset Value (NAV) per Ordinary Share;
• Ongoing Charges Ratio;
• Revenue, Capital and Total Returns; and
• Total Return Performance (Net Asset Value Total Return and
Share Price Total Return).
Asset Exposure
The value of an underlying security or instrument to which
the Company is exposed, whether through direct or indirect
investment (including the economic value of the exposure in the
underlying asset of derivatives).
Benchmark Index
The MSCI All Countries Asia ex Japan Small Cap Index (net) total
return (in sterling terms). This is used to calculate the Company’s
Variable Management Fee, in accordance with the European
Benchmark Directive.
Capital Gains Tax (CGT)
The tax that may be payable if shares are sold at a profit.
Collateral
Assets provided as security for the unrealised gain or loss under
a contract for difference.
Comparative Index
The MSCI All Countries Asia ex Japan Small Cap Index (net) total
return (in sterling terms) against which the performance of the
Company is measured.
Contract for Difference (CFD)
A contract for difference is a derivative. It is a contract between
the Company and an investment house at the end of which the
parties exchange the difference between the opening price and
the closing price of an underlying asset of the specified financial
instrument. It does not involve the Company buying or selling the
underlying asset, only agreeing to receive or pay the movement
in its share price. A contract for difference allows the Company
to gain access to the movement in the share price by depositing
a small amount of cash known as collateral. The Company may
reason that the asset price will rise, by buying (“long” position)
or fall, by selling (“short” position). If the Company holds long
positions, dividends are received and interest is paid. If the
Company holds short positions, dividends are paid and interest
is received.
Corporation Tax
The tax the Company may have to pay on its profits for a year. As
an investment trust, the Company is exempt from corporation tax
on its capital gains and does not pay tax on any UK dividends.
It can also offset expenses against any taxable income and
consequently it is tax efficient for the Company.
Custodian
An entity that holds (as intermediary) the Company’s assets,
arranges the settlement of transactions and administers income,
proxy voting and corporate actions. The Company’s Custodian is
JPMorgan Chase Bank.
Depositary
An entity that oversees the custody, cash arrangements and other
AIFM responsibilities of the Company. J.P.Morgan Europe Limited
act as the Company’s Depositary.
Derivatives
Financial instruments (such as futures, options and contracts
for difference) whose value is derived from the value of an
underlying asset.
Diluted Net Asset Value per Ordinary Share
The diluted net asset value per ordinary share reflects what
the net asset value per ordinary share would have been if all
the rights attached to any outstanding subscription shares had
been exercised at a particular date. A dilution occurs when the
exercise price of the subscription share rights is less than the net
asset value per ordinary share.
Discount
If the share price of the Company is lower than the net asset
value per ordinary share, the Company’s shares are said to be
trading at a discount. It is shown as a percentage of the net
asset value per ordinary share.
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Equity Linked Notes (ELNs)
Debt instruments whose return on investment is linked to specific
equities or equity markets. The return on equity linked notes may
be determined by an equity index, a basket of equities, or a
single equity.
Fair Value
The fair value is the best estimate of the value of the investments,
including derivatives, at a point in time and this is measured as:
• Listed investments – valued at bid prices or last market
prices, where available, otherwise at published price
quotations;
• Unlisted investments – valued using an appropriate
valuation technique in the absence of an active market;
• Contracts for difference – valued as the difference
between the settlement price of the contract and the value
of the underlying shares in the contract (unrealised gains or
losses);
• Futures and options – valued at the quoted trade price for
the contract; and
• Forward currency contracts – valued at the appropriate
quoted forward foreign exchange rate ruling at the Balance
Sheet date.
Fidelity International (Fidelity)
FIL Limited and its subsidiary group companies including FIL
Investment Services (UK) Limited and FIL Investments International
which act as AIFM, Secretary and Investment Manager.
Forward Currency Contract
An agreement to buy or sell a currency at a specified future date
and at a pre-agreed price.
Future
An agreement to buy or sell a fixed amount of an asset at a fixed
future date and a fixed price.
Gearing
The economic exposure of the portfolio to its underlying assets in
excess of total net assets. It represents the additional exposure to
the market above Shareholders’ Funds. The Company uses two
measures of gearing (Gross Gearing and Net Gearing) which are
both defined in this Glossary of Terms.
Gross Assets
Net Assets plus borrowings. The Company does not have any
borrowings.
Gross Asset Exposure
The value of the portfolio to which the Company is exposed,
whether through direct or indirect investment (including the
economic value of the exposure in the underlying asset of the
derivatives but excluding forward currency contracts). It is the sum
total of all Asset Exposures.
Gross Gearing
Gross Asset Exposure in excess of Shareholders’ Funds.
Growth Stocks
Those companies which are considered to have the potential to
outperform the overall market over time because of their future
potential.
Hedging
A strategy aimed at minimising or eliminating the risk or loss
through adverse movements normally involving taking a position
in a derivative such as a future or an option.
Independent Valuer
Kroll who provide an objective and independent assessment on
the value of unlisted and hard to price assets using sophisticated
valuation methodologies.
Initial Public Offering (IPO)
An initial public offering (“IPO”) is the first sale of stock by a
private company to the public. IPOs are often issued by smaller,
younger companies seeking the capital to expand, but can also
be done by large privately owned companies looking to become
publicly traded.
Investment Manager
FIL Investments International.
Manager
FIL Investment Services (UK) Limited is the appointed Manager
under the AIFMD. It has delegated the portfolio management of
assets to the Investment Manager.
Net Assets or Net Asset Value (NAV)
Sometimes also described as “Shareholders’ Funds”, net assets
represent the total value of the Company’s assets less the total
value of its liabilities. For valuation purposes it is common to
express the net asset value on a per ordinary share basis.
Net Asset Value per Ordinary Share
The net asset value divided by the number of ordinary shares in
issue.
Net Gearing
Net Market Exposure in excess of Shareholders’ Funds.
Net Market Exposure
Net Market Exposure is the total of all long exposures, less short
exposures and less exposures hedging the portfolio.
Ongoing Charges Ratio (excluding variable management
fee)
Total operational expense (excluding finance costs and taxation)
incurred by the Company as a percentage of average net asset
values for the reporting year.
Option
An option is a contract which gives the right but not the
obligation to buy or sell an underlying asset at an agreed price
on or before an agreed date. Options may be calls (buy) or puts
(sell) and are used to gain or reduce exposure to the underlying
asset on a conditional basis.
Glossary of Terms continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Portfolio Manager
Nitin Bajaj is the appointed Portfolio Manager of the Company
and is responsible for managing the Company’s assets.
Pre-Emption Rights
Section 561 of the Companies Act 2006 provides that a company
offering a new issue of shares must first make an offer of these
shares, on the same or more favourable terms, in proportion
to the nominal value held to existing shareholders. At each
Annual General Meeting, the Board seeks shareholder approval
to disapply pre-emption rights provision, up to 10% of the
Company’s issued share capital.
Premium
If the share price of the Company is higher than the net asset
value per ordinary share, the Company’s shares are said to be
trading at a premium. The premium is shown as a percentage of
the net asset value per ordinary share.
Price to Book Ratio
The Price to Book ratio (also known as P/B ratio) is a measure of
valuing a company’s share price versus its book value.
Price to Earnings Ratio
The Price to earnings ratio (also known as P/E ratio) is a measure
of valuing a company’s share price versus its earnings.
Registrar
An entity that manages the Company’s shareholder register. The
Company’s Registrar is Link Group.
Reserves
• Share premium account represents the amount by which
the proceeds from the issue of ordinary shares or the issue
of ordinary shares on the exercise of rights attached to
subscription shares, exceeded the nominal value of those
ordinary shares. It is not distributable by way of dividend
and cannot be used to fund share repurchases.
• Capital redemption reserve maintains the equity share
capital of the Company and represents the nominal value
of shares repurchased and cancelled. It is not distributable
by way of dividend and it cannot be used to fund share
repurchases.
• Other non-distributable reserve represents amounts
transferred from the warrant reserve in prior years with High
Court approval. It is not distributable by way of dividend and
it cannot be used to fund share repurchases.
• Other reserve represents amounts transferred from the
share premium account and the capital redemption
reserve in prior years with High Court approval. It is not
distributable by way of dividend. It can be used to fund
share repurchases.
• Capital reserve represents realised gains or losses on
investments and derivatives sold, unrealised increases and
decreases in the fair value of investments and derivatives
held and other income and costs recognised in the capital
column of the Income Statement. It is distributable by way of
dividend. It can be used to fund share repurchases.
• Revenue reserve represents retained revenue surpluses
recognised through the revenue column of the Income
Statement. It is distributable by way of dividend.
Return
The return generated in a given period from investments:
• Revenue Return – reflects the dividends and interest from
investments and other income net of expenses, finance costs
and taxation;
• Capital Return – reflects the return on capital, excluding any
revenue return; and
• Total Return – reflects the aggregate of revenue and capital
returns.
Return on Equity
Return on Equity (“ROE”) is a measure of the return on a
company’s stock. The higher the percentage, the more income
the company is generating and adding to shareholder value.
Shareholders’ Funds
Shareholders’ funds are also described as “net asset value” and
represent the total value of the Company’s assets less the total
value of its liabilities as shown in the balance sheet.
Total Return Performance
The return on the share price or net asset value per ordinary
share taking into account the rise and fall of share prices and the
dividends paid to shareholders. Any dividends received by the
shareholder are assumed to have been reinvested in additional
shares (for share price total return) or the Company’s assets (for
net asset value total return).
Treasury Shares
Ordinary shares of the Company that have been repurchased
by the Company and not cancelled but held in Treasury. These
shares do not pay dividends, have no voting rights and are
excluded from the net asset value per ordinary share calculation.
Value Stocks
Usually companies that are currently trading below what they are
really worth and will thus theoretically provide a superior future
return.
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Alternative Investment Fund Manager’s
Disclosure
In compliance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Board has appointed FIL Investment Services
(UK) Limited (“FISL”) as the Company’s Alternative Investment Fund Manager (“AIFM”). FISL has delegated the portfolio management
and company secretarial function to FIL Investments International. Details of the current Management Agreement can be found in the
Directors’ Report on page 37.
The table below discloses information required by the Alternative Investment Fund Managers Regulations 2013.
Function AIFM Role and Responsibility AIFMD Disclosure
Investment
management
The AIFM provides portfolio management of
assets and investment advice in relation to the
assets of the Company. It has delegated this
function to FIL Investments International.
The Board remains responsible for setting the
investment strategy, investment policy and
investment guidelines and the AIFM operates
within these guidelines.
Details of the Company’s investment objective, its
strategy and investment policy, including limits, are
on pages 27 and 28.
Risk
management
The AIFM has a responsibility for risk
management for the Company which is in
addition to the Board’s corporate governance
responsibility for risk management.
The Company has a Risk Management
Process Document which demonstrates that
risk management is separated functionally
and hierarchically from operating units and
demonstrates independence safeguards. The
Manager maintains adequate risk management
systems in order to identify, measure and monitor
all risks at least annually under AIFMD. The
Manager is responsible for the implementation
of various risk activities such as risk systems, risk
profile, risk limits and testing.
The Board, as part of UK corporate governance,
remain responsible for the identification of
significant risks and for the ongoing review of the
Company’s risk management and internal control
processes.
The AIFM has an ongoing process for identifying,
evaluating and managing the principal risks faced
by the Company and this is regularly reviewed
by the Board. The Board remains responsible for
the Company’s system of risk management and
internal controls and for reviewing its effectiveness.
Further details can be found in the Strategic Report
on pages 28 to 32 and in Note 17 to the Financial
Statements on pages 69 to 77.
Valuation of
illiquid assets
The AIFMD requires the disclosure of the
percentage of the Alternative Investment Fund’s
assets which are subject to special arrangements
arising from their illiquid nature and any new
arrangements for managing the liquidity of the
Company.
As at the date of this report, none of the Company’s
assets are subject to special arrangements arising
from its illiquid nature.
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Function AIFM Role and Responsibility AIFMD Disclosure
Leverage
The Company uses leverage to increase its
exposure to the stockmarkets of the Asian Region
(excluding Japan) and currently holds derivative
instruments to achieve this. The AIFM has set
maximum levels of leverage that are reasonable.
It has implemented systems to calculate and
monitor compliance against these limits and has
ensured that the limits have been complied with
at all times.
There are two methods of calculating leverage
– the Gross Method which does not reduce
exposure for hedging; and the Commitment
Method which does reduce exposure for hedging.
The maximum leverage limits are 1.80 for the Gross
Method and 1.50 for the Commitment Method.
At 31 July 2023, actual leverage was 1.17 for the
Gross Method and 1.16 for the Commitment Method.
Liquidity
management
The AIFM, in consultation with the Board,
maintains a liquidity management policy which is
considered at least annually.
No new arrangements for managing the liquidity of
the Company have been made. Further details can
be found in Note 17 on page 72.
Remuneration
of the AIFM
The AIFM operates under the terms of Fidelity
International’s Global Remuneration Policy
Statement. This ensures that the AIFM complies
with the requirements of the FCA’s Remuneration
Code (SYSC19A); the AIFM Remuneration Code
(SYSC19B); and the BIPRU Remuneration Code
(SYSC19C).
Details of Fidelity International’s Global Remuneration
Policy can be found at www.fidelityinternational.
com/global/remuneration/default.page.
EU Securities Financing Transactions Regulation (“SFTR”)
The following disclosures relate to contracts for difference (“CFDs”) held by the Company which may be considered Total Return Swaps
under the SFTR which came into force on 12 January 2016.
As at 31 July 2023, all CFDs were contracted bilaterally with open maturities:
Broker
Fair Value
£’000
Percentage
of
Net Assets
Collateral
held by the
broker
£’000
Collateral
held by the
Company
£’000
Goldman Sachs International (UK) (11) 0.00% 233 –
HSBC Bank plc (UK) 200 0.05% 124 –
J.P. Morgan Securities plc (UK) 383 0.10% 436 –
Morgan Stanley & Co International plc (UK) (526) (0.13%) – 474
UBS AG (UK) 216 0.05% – –
Collateral held by the broker was denominated in US dollars and held in a segregated account on behalf of the Company with a
maturity of one day. The total return for the year ended 31 July 2023 from CFDs was a gain of £278,000.
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To find out more about Fidelity Asian Values PLC, visit our website www.fidelity.co.uk/asianvalues where you can read articles and watch
videos on the Company.
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Fidelity Asian Values PLC
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Annual Report 2023
Fidelity, Fidelity International, the Fidelity International logo and symbol are trademarks of FIL Limited
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on average 99% of any waste associated with this production will be recycled and the remaining 1% used
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