FIDELITY
ASIAN VALUES
PLC
Annual Report for the year ended 31 July 2024
Fidelity Asian Values PLC
|
Annual Report 2024
The Company’s objective is to achieve long-term 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 and
Co-Portfolio Manager, Ajinkya Dhavale achieve
this differentiation by favouring undervalued
small and medium-sized companies as this
allows them to find quality businesses that
are mispriced, the “winners of tomorrow”,
before they become well known. They utilise
Fidelity’s Asia-based analyst team and believe
the current market environment offers an
unprecedented opportunity to invest in high
quality Asian smaller companies at attractive
valuations.
Clare Brady, Chairman,
Fidelity Asian Values PLC
Investment Objective and Overview
Fidelity Asian Values PLC
|
Annual Report 2024
Year at a Glance
Standardised Performance Total Return (%)
5 years ended 31 July 20243 years ended 31 July 20241 year ended 31 July 2024
+19.4
+38.7
+23.5
+3.2
-1.7
+13.7
+64.9
+11.3
+15.3
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
+3.2%
2023: +11.4%
Ordinary Share Price
total return
1,2
-1.7%
2023: +17.3%
Dividend
per Ordinary Share
14.5p
2023: 14.5p
Comparative
Index total return
1,3
+13.7%
2023: +7.5%
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 77 and 78.
3 MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
Summary of the key aspects of the Investment Policy
■■ The Company invests in securities of companies which the Portfolio Managers consider have fundamental value that has not been
recognised by the market.
■ The Company invests principally in the Asian Region excluding Japan and the Portfolio Managers favour small and medium-sized
companies. There are no restrictions in terms of size or industry of companies included in the portfolio and investments can be
made 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.
2024 2023
Assets as at 31 July
Gross Asset Exposure
1
£442.9m £440.8m
Net Market Exposure
1
£416.2m £413.7m
Total Shareholders’ Funds £392.0m £394.6m
NAV per Ordinary Share
1,2
551.66p 549.33p
Gross Gearing
1,2
13.0% 11.7%
Net Gearing
1,2
6.2% 4.9%
Share Price and Discount data at 31 July
Ordinary Share Price at year end 496.00p 520.00p
Year high 542.00p 534.00p
Year low 476.00p 423.00p
Discount to NAV per Ordinary Share at year end
1,2
(10.1%) (5.3%)
(Discount) year low/Premium (2.2%) 0.8%
(Discount) year high (11.9%) (12.9%)
Results for the year ended 31 July
Revenue Return per Ordinary Share
1,2
14.24p 15.17p
Capital Return per Ordinary Share
1,2
2.06p 39.95p
Total Return per Ordinary Share
1,2
16.30p 55.12p
Ongoing Charges for the year to 31 July
1,2
0.95% 0.96%
Variable Element of Management Fee
3
0.19% 0.07%
Ongoing Charges including Variable Element of Management Fee for the year to 31 July
2
1.14% 1.03%
1 See Glossary of Terms on pages 90 to 92.
2 Alternative Performance Measures. See pages 77 and 78.
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 90 for
details of the Benchmark Index).
Financial Highlights
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Annual Report 2024
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Contents
Strategy
Chairman’s Statement 2
Portfolio Managers’ Review 5
Spotlight on the Top 10 Holdings 13
Forty Largest Holdings 15
Distribution of the Portfolio 17
Ten Year Record 20
ESG Ratings 21
Strategic Report 22
Governance
Board of Directors 33
Directors’ Report 34
Corporate Governance Statement 38
Directors’ Remuneration Report 39
Statement of Directors’ Responsibilities 42
Report of the Audit Committee 43
Financial
Independent Auditor’s Report 46
Income Statement 52
Statement of Changes in Equity 53
Balance Sheet 54
Notes to the Financial Statements 55
Alternative Performance Measures 77
Financial Calendar 79
Information for Shareholders
Annual General Meeting 80
Notice of Meeting 82
Appendix 86
Shareholder Information 87
Data Protection 89
Glossary of Terms 90
Alternative Investment Fund Manager’s Disclosure 93
Chairman’s Statement
Read more on pages 02 to 04
Portfolio Managers’ Review
Read more on pages 05 to 12
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Fidelity Asian Values PLC
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Annual Report 2024
Chairman’s Statement
This is my first Annual Report for the Company, having taken over
as Chairman from Kate Bolsover at the last AGM in November
2023. As Kate noted in her Chairman’s Statement in last year’s
report, your Portfolio Managers Nitin Bajaj and Ajinkya Dhavale
have delivered periods of significant outperformance since Nitin’s
appointment in April 2015. However, as we all know, the value
of equity investments can go down as well as up, and there
is no avoiding the fact that the year ended 31 July 2024 has
been a relatively disappointing one for the Company and its
shareholders.
In the year under review, the Net Asset Value (“NAV”) total return
was +3.2%, while the Comparative Index (the MSCI All Countries
Asia ex Japan Small Cap Index (net) total return (in sterling
terms)) returned +13.7%. The total return to shareholders was
-1.7% owing to a widening in the share price discount to NAV,
which moved from 5.3% on 1 August 2023 to 10.1% at the period
end.
During the period, Ajinkya Dhavale was appointed as the
Company’s Co-Portfolio Manager to support and closely
work alongside the Portfolio Manager, Nitin Bajaj. Ajinkya’s
appointment helps to strengthen the investment process and
manage key person risk.
Nitin and Ajinkya’s investment style is bottom-up, contrarian and
value-focused. In simple terms this means they focus on individual
company fundamentals and seek to avoid crowded trades where
high company valuations may limit further upside. While this
style has historically delivered differentiated investment returns,
it can also lead to periods of underperformance when extreme
momentum is driven by investors focusing on a narrow range of
areas, as has been the case recently in countries, sectors and
themes such as India, technology and artificial intelligence (AI).
You will find detailed information on the portfolio and its
performance in the Portfolio Managers’ Review in the following
section. In brief, however, your Portfolio Managers feel that many
Indian companies, and technology stocks – particularly those
related to AI – are overvalued, and they have been focusing
their attention more on China, where they see attractive value
opportunities, particularly in companies serving the domestic
consumer. With China having been very out of favour among
investors in the post-Covid period, the ‘caged upside’ in these
companies has yet to be realised, and we believe that these
stocks – selected through the same rigorous, consistent and
research-intensive investment process that has delivered such
good long-term returns for the Company – should achieve their
potential in time.
As a Board, we are cognisant of the geopolitical risks around
investing in China, given potential higher US trade tariffs and the
impact of ‘de-globalisation’, and this has in part informed our
decision to limit the aggregate China and Hong Kong exposure.
The portfolio’s focus on more domestic names should limit the
influence of global factors on these companies.
Board strategy day
As incoming Chairman of what is a relatively ‘new’ Board
following a number of retirements and appointments in recent
years, I was keen that we should ‘get back to basics’ and
Clare Brady – I am pleased to
present the Annual Report of Fidelity
Asian Values PLC (the “Company”)
for the year ended 31 July 2024.
£392m
(As at 31 July 2024)
Total Shareholders’ Funds
+3.2%
(Year ended 31 July 2024)
Net Asset Value per Ordinary Share
total return
-1.7%
(Year ended 31 July 2024)
Ordinary Share Price total return
+13.7%
(Year ended 31 July 2024)
Comparative Index total return
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
explore the factors that the independent non-executive directors
of an investment company can and should be influencing. To
this end, we undertook a strategy day earlier in 2024, where
we reassessed discount management, competitor analysis,
the rationale and mechanics of the variable management fee
and its allocation to capital or revenue reserves, trading policy
and liquidity considerations, and the implementation of and
compliance with investment limits. One of the outcomes of the
strategy day was the abovementioned decision to combine China
and Hong Kong under a single investment limit, where previously
there was a limit for each market, meaning that exposure could
be significantly higher. While Nitin and Ajinkya are very much
bottom-up investors, who select stocks based on company
fundamentals and valuation rather than place of business or
country of listing, as a Board we feel that the application of such
limits is helpful in ensuring the portfolio remains diversified and
that risks are not overly concentrated in any one area.
Due diligence trip
The whole Board normally visits Asia on a due diligence trip
every other year. As incoming Chairman, I have been fortunate to
visit the investment team in Singapore in the ‘off’ year, to deepen
my understanding of how Fidelity’s large team of analysts,
portfolio managers and other professionals work together to
benefit the shareholders of the Company. With some 60 analysts
across the region, each assigned a sector or subsector, there is
an enormous volume of potential investment ideas, but the bar
for inclusion in your Company’s portfolio is high, and I observed
a healthy dynamic of rigorous challenge with plenty of lively
debate between Nitin and the broader team. Having also sat
in on meetings with investee companies, I was encouraged by
the depth of the conversations and the collaborative feel of the
interactions, with challenging questions answered well and a
warm but professional relationship in evidence.
Discount management and share repurchases
With geopolitical tensions remaining high in a year also filled
with notable global election activity, market conditions have
continued to be unsettled, leading to a degree of volatility
in the Company’s share price discount to NAV, which ranged
during the period between 2.2% at its narrowest and 11.9% at
its widest, finishing the year at 10.1%. Between 13 October 2023
and 31 July 2024, the Board approved the repurchase of 768,780
ordinary shares (1.0% of the issued share capital) for holding in
Treasury, at a cost of £3,826,000. Since then and up to the date
of this report, 687,461 shares have been repurchased as part
of the Company’s active and ongoing discount management
strategy. The primary purpose of share buybacks is to limit
discount volatility, and at the AGM in November 2024 the Board
will seek shareholder approval to renew the annual authority to
repurchase up to 14.99% or allot up to 10% of the ordinary shares
in issue.
The timing of repurchases of ordinary shares are made at the
discretion of the Broker, within guidelines set by the Board and
considering prevailing market conditions. Shares will only be
repurchased in the market at prices below the prevailing NAV per
ordinary share, thereby resulting in an accretive enhancement to
the NAV per ordinary share. The shares repurchased are currently
held in Treasury and would only be reissued at NAV per ordinary
share or at a premium to NAV per ordinary share. The Board will
consider cancelling shares when the percentage of shares held
in Treasury exceeds 10% of the total issued share capital.
Marketing and promotion
Your Board is keenly aware that share buybacks alone are
unlikely to eliminate a persistent discount to NAV; discounts are a
function of supply and demand and, as such, increasing demand
is at least as important as absorbing excess supply. As well as
appointing a new director, Lucy Costa Duarte (see page 33),
who has a strong track record in marketing and distribution,
we continue to allocate significant resources to marketing in
order to increase shareholder value. Through Fidelity’s sales
and marketing teams and internal and external PR partners,
we have been working to increase the Company’s profile
through digital and print advertising, sponsorship, events, direct
marketing and press coverage. We also work with a third-party
research provider, Kepler Partners, to produce regular notes on
the Company, which are distributed widely and made available
on the Company’s website. The focus on reaching both retail
and professional (wealth manager) audiences is evident in the
makeup of our share register, with 40% of our shares owned
by direct investors through platforms, and 49% (up 4% over five
years) by wealth managers on behalf of their clients.
Dividend
Your Portfolio Managers invest principally for long-term capital
growth, but their value-oriented investment style tends to lead
them towards unleveraged, cash-generative businesses that
may themselves be able to pay rising dividends. In the last two
years your Board has declared substantially higher dividends
(14.0 pence per share in 2022 and 14.5 pence per share in
2023), compared with less than 9.0 pence per share in the three
preceding years. We noted at the time that shareholders should
not assume that such dividends would continue in the future.
The Board is recommending a final dividend of 14.5 pence
per share for the year ended 31 July 2024 for approval by
shareholders at the AGM to be held on 21 November 2024. 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
Your Company can borrow additional money to invest on behalf
of its shareholders, known as gearing. This can enhance returns
for shareholders although, conversely, in falling markets, it can
amplify losses. The Company’s formal gearing policy allows
for maximum gross asset exposure of 140% of NAV (up to 130%
in long positions and a maximum of 10% in short positions);
however, your Board has set a goal for net market exposure to
be in a range of 90% to 115% in normal market conditions. The
level of gross gearing is directly proportional to the investment
opportunities that your Portfolio Managers see. When they
are optimistic about the outlook and there is a good supply of
compelling investment ideas, then the Company will tend to be
more geared. At the period end, gross gearing was 13.0% (2023:
11.7%) and net gearing was 6.2% (2023: 4.9%). This remains at
the historically high end of the range during Nitin’s tenure, and,
while the impact of gearing was slightly negative in the period
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Fidelity Asian Values PLC
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Annual Report 2024
Chairman’s Statement continued
under review, its level underlines the Portfolio Managers’ belief
in the prospects for the Company’s investments. While higher
than the long-term average level, gearing is not objectively
‘high’, particularly on a net basis, but instead reflects a degree
of cautious optimism. Rather than using bank borrowing (which
is often deployed across a portfolio on a pro-rata basis), the
gearing is achieved using contracts for difference (“CFDs”),
which, as a type of derivative, are implemented on a stock-by-
stock basis. Each year, your Board reviews the use of CFDs, and
we have again concluded that at the present time they remain a
more efficient and flexible form of financing than either secured
or unsecured debt, as well as enabling your Portfolio Managers
to be fleet of foot in the deployment of gearing. We are fortunate
that Fidelity has the infrastructure and capability to allow the use
of CFDs in the portfolio; few other management groups can offer
this.
Use of short positions
Fidelity’s capability in derivative instruments is also what allows
your Portfolio Managers to ‘short’ stocks, which has again had
a positive impact on returns in the year under review. A short
position is taken on the view that the price of a stock or the value
of an index will go down rather than up. Short positions are
limited to a maximum of 10% of the portfolio and do not usually
exceed 10 stocks; however, while relatively small in scope, this
additional tool has materially added to performance since its
introduction in late 2019. Total short exposure as at 31 July 2024
was 3.4% of net assets (2023: 3.4%).
Board of directors
Kate Bolsover stood down at the AGM in November 2023 after
nine years of outstanding service as Chairman. As I stepped into
the role of Chairman, Matthew Sutherland assumed my previous
position as Senior Independent Director. Sally Macdonald has
taken on the role of Chairman of the Management Engagement
Committee from Michael Warren who will retire from the Board
at the forthcoming AGM, when he will have served for 10 years.
We are grateful to Michael for having stayed on an extra year
in order to ensure a good handover of the institutional and
historical knowledge of the Company. In June 2024 we welcomed
Lucy Costa Duarte to the Board. Lucy is Investment Director for
International Biotechnology Trust plc (‘IBT’) at Schroders and has
a wealth of experience in marketing investment trusts, as well as
previously having headed the emerging markets equity capital
markets team at Citigroup. She will stand for election at the AGM
in November.
As I noted above, there has been a significant number of
retirements from and appointments to the Board in the past
few years. Following Michael Warren’s retirement, I will be
the longest-serving director, at five years, and we should now
be entering a period of board stability. Your Board has a
diversity of backgrounds and, we feel confident that we have
an appropriate mix of skills to ensure the Company’s continued
good governance.
Annual General Meeting
The AGM of the Company will be held at 11.00 am on Thursday,
21 November 2024 at 4 Cannon Street, London EC4M 5AB
(nearest tube stations are St Paul’s or Mansion House) and for
those shareholders who are unable to attend the meeting in
person, we will live-stream the formal business and presentations
of the meeting via the Lumi AGM meeting platform. Full details of
the meeting are given in the Notice of Meeting on pages 82 to 86.
Nitin Bajaj, the Portfolio Manager and Ajinkya Dhavale, the Co-
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. They and the Board will
be very happy to answer any questions that shareholders may
have.
Copies of their presentation can be requested by email at
investmenttrusts@fil.com or in writing to the Secretary at FIL
Investments International, Beech Gate, Millfield Lane, Lower
Kingswood, Tadworth, Surrey KT20 6RP.
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. 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 159-339-971. 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.
Outlook
Although the year under review has been a difficult one
performance-wise, Nitin and Ajinkya continue to see good
prospects for their portfolio of undervalued, quality businesses.
With much of the investing world continuing to be in thrall to all
things AI, your Portfolio Managers’ positioning in unloved and
overlooked areas arguably carries limited downside potential,
compared to other areas of the market, with the possibility
of significant upside, as has been seen in previous years. As
a contrarian strategy, there may be times when the portfolio
is sailing into the wind, but Nitin and Ajinkya remain very
disciplined and are sticking to their proven long-term investment
process. You can read more on their views and how they are
expressing them in the portfolio on the following pages.
Clare Brady
Chairman
10 October 2024
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Portfolio Managers’ Review
Nitin Bajaj was appointed as the
Portfolio Manager of Fidelity Asian
Values PLC on 1 April 2015. He is based
in Singapore and has over 22 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 been appointed as
the Company’s Co-Portfolio Manager
to support and closely work alongside
Nitin Bajaj. He has extensive experience
in Asian markets and companies and
shares a common investment approach
and complementary investment
experience with the Portfolio Manager.
He has over 16 years of investment
experience. He originally joined Fidelity
as an analyst in 2011, covering the
Auto, Cement, Telecommunications and
Property sectors and is Co-Portfolio
Manager of the Fidelity Asian Smaller
Companies Fund.
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Fidelity Asian Values PLC
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Annual Report 2024
Portfolio Managers’ Review continued
Question 1
How has the Company performed in the year to 31 July 2024?
Answer
During the year ended 31 July 2024, the Company’s net asset value (“NAV”) rose 3.2% as compared to the 13.7% total return from the
Comparative Index (the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms)). The total share price
return was -1.7% due to the widening of the discount to NAV.
Overall, our stock selection contributed positively to the Company’s relative performance versus the Comparative Index. However, our
market selection remained a drag against the backdrop of continued divergence in country performance.
Our investment process is driven by owning good businesses run by managements 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 our portfolio in China and Hong
Kong and Indonesia compared to the index but in all these markets small caps saw a sharp fall in share prices and underperformed
the regional small cap index. Conversely, India, where our portfolio has a large underweight due to valuation concerns, rose strongly
and outperformed the index (see Chart 2).
Chart 1: Country attribution over 12 months to 31 July 2024
Average weight (%)
Cumulative
returns Contribution to relative returns (%)
Company
(%)
Index
(%)
Relative
(%)
Index
(%)
Stock
selection
Market
selection Total
China + Hong Kong +40.6 +13.1 +27.5 -2.8 +4.6 -10.8 -6.2
India +18.6 +31.0 -12.4 +49.9 -1.0 -3.6 -4.6
Indonesia +14.6 +2.2 +12.4 -14.9 +2.4 -3.8 -1.4
Korea (South) +9.1 +15.6 -6.5 -3.4 +1.0 +1.2 +2.2
Australia +5.2 +0.0 +5.2 0.0 -0.4 0.0 -0.4
Singapore +3.3 +5.0 -1.7 0.0 +0.5 +0.2 +0.7
Taiwan +1.4 +25.8 -24.4 +18.0 +1.2 -1.0 +0.2
Other Countries +10.3 +7.4 +2.9 +0.1 -0.8 +0.7 -0.1
Total Primary Assets +103.0 +100.0 +3.0 -9.6
Cash & others -3.0 0.0 -3.0 -0.9
Total 100.0 100.0 0.0 -10.5
Note: The table above uses figures calculated as a percentage of net assets.
Source: Fidelity International, 31 July 2024. Index: MSCI All countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
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Chart 2: China versus India: Performance, Valuations and Earnings for MSCI China and MSCI India Small Cap indices
3
Fidelity International Internal Information
Fidel ity A sian Values PLC
China versus India
Source: Fidelity International, LSEG DataStream, 31 July 2024. Index: MSCI China and MSCI India Total returns in GBP terms. Past performance is not an indicator of future returns.
Market performance Earnings per ("EPS") Share and Return on Equity ("ROE")
Valuation – Forward Price to Earnings Ratio Valuation – Price to Book
0
1
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0
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China index India index Relative performance (RHS)
-5
0
5
10
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Jul-24
China EPS (LHS) India EPS (LHS)
China ROE (RHS) India ROE (RHS)
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0
50
100
150
200
250
Jul-04
Jul-05
Jul-06
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Jul-24
China index India index Relative performance (RHS)
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0
50
100
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Jul-04
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Jul-17
Jul-18
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Jul-22
Jul-23
Jul-24
China index India index Relative performance (RHS)
MSCI Small cap indices
Source: Fidelity International, LSEG DataStream, 31 July 2024. Index: MSCI China Small cap and MSCI India Small cap indices. Total returns in sterling terms.
Question 2
What stocks have been the main contributors and detractors to performance during
the period and why?
Answer
It was not surprising that our top three contributors relative to the Index during the 12-month period were from India while our largest
relative detractors were all from China and Hong Kong as it was very much in line with country performance within Asian small caps.
In India, our holdings in the country’s largest power trading company PTC India was a key contributor. It reported strong volume
growth particularly for higher margin long-term trades. Exposure to Granules India added value as the small cap pharmaceuticals
company continued to increase its leadership in high volume products such as paracetamol and new launches in higher margin drugs.
Similarly, India’s 4th largest mortgage financier LIC Housing Finance benefited from its access to low-cost funds helping it focus
mainly on prime borrowers and maintain high returns on equity and strong asset quality. We continue to like all of them but trimmed
exposure on strong performance and reduced the margin of safety.
Most of the detractors in China and Hong Kong operate in consumption and housing driven sectors where near-term weakness in
demand led to earnings downgrade as well as multiple deratings. For instance, Hong Kong-listed Galaxy Entertainment Group
which is the second largest casino operator in Macau hurt returns due to increased competition and Chinese consumption recovery
being slower than we had anticipated. However, tourism spending remains one of the most interesting areas in China given rising
incomes, changing demographics and attractive valuations for Macau based casinos. Similarly, our holding in drug retailer Yixintang
Pharmaceutical, which has a leadership in Yunnan province, fell on the back of the introduction of a price comparison system. We
continue to like its structural medium to long-term prospects as it consolidates in a fragmented sector. It provides low double-digit
Return on Equity (“ROE”) which is a measure of the prospective return against the value of the shares, and trades about 8 times its
12 month forward earnings, which is a measure of the price of the shares against the likely future profits. Meanwhile, the biggest
detractor China Overseas Grand Oceans is one of the country’s leading property developers focused on tier 3 cities that is gaining
market share as weaker players are going out of business. It trades below 0.2x its book value, which is a measure of the price of the
shares versus the value of the assets of the company. It provides about a 9% dividend yield.
While these companies have detracted from performance over the 12-month review period, their valuations reflect earnings
expectations that are at trough levels providing us a significant margin of safety and upside potential.
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Annual Report 2024
Portfolio Managers’ Review continued
Question 3
The Company’s portfolio is overweight in China. Why do you prefer investment in
China compared to other countries in the Asian region?
Answer
We do not invest in countries, we invest in businesses. Our higher exposure to China is driven by the bottom up security selection in a
range of well-financed and well-run businesses where their current valuations provide a sufficient margin of safety compared to most
other markets in the Asian region.
We understand the concerns investors have about China’s geopolitical issues, its property downcycle and weak consumption trends.
In our opinion, the housing cycle downturn has been absorbed in a large measure and its negative impact on the economy will be felt
to a lower extent next year. This is part of an economic cycle correction, but sound businesses will still be around, likely to be in better
shape and emerge stronger as the cycle recovers. Given current valuations, there is significant upside on owning these businesses
over a 3-year horizon. The cycle in China is not too dissimilar to the US cycle post the housing crisis in 2007 or the economic
downcycle in India between 2011 and 2013.
In our opinion, China has created one of the best infrastructures in the world – both human and physical. The foundations are strong
and hence our belief that the weakness we see currently is cyclical rather than structural. We believe in good businesses, run by
competent and honest people and buying them at cheap prices. We are finding quite a few of these in China today and hence the
significant overweight position in China.
Question 4
Looking beyond China, where do you currently see the best opportunities?
Answer
Beyond China, Indonesia is one place that is providing opportunities to own a good mix of growth and quality businesses at attractive
valuations as the market has lagged most of Asia over the last year. It is the third largest economy in the region after China and India
with a strong demographic profile with tailwinds for consumption shifts as well as infrastructure development. The country has been more
prudent with its public finances than other countries in the region. Our exposure to Indonesia is diversified across financials, building
materials, industrials and consumer businesses that offer fairly high and sustainable returns at sufficient margin of safety. Indonesia has
some of the strongest banking franchises with conservative underwriting culture. They have stable asset quality and benefit from structural
growth as penetration levels are increasing from low levels. The consumer companies owned in Indonesia are also high-quality franchises
with market leadership. This gives them strong pricing power and ability to generate margins that are higher than global peers over the
long term.
We have also been adding exposure to businesses in Korea. The country’s ‘value up’ programme that pushes for governance reforms
should yield positive outcomes from Korean corporates. We have selectively been adding positions in companies where there is
considerable margin of safety built into current valuations to limit the downside, but potential for gains is immense if their management
teams improve total shareholder returns through higher dividends and buybacks.
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Question 5
Small cap value stocks continue to outperform small cap growth stocks over the longer
term. What has driven this and do you expect the pattern to continue?
Answer
Small cap value stocks have performed better than small cap growth stocks over the last 25+ years. This is essentially because the
small cap value stocks have grown earnings faster than small cap growth stocks.
Chart 3: Small cap value stocks outperform over the long
term – last 20 years
4
Fidelity International Internal Information
Fidel ity A sia n Values PLC
Small cap Value versus Small cap Growth
Source: Fidelity International, LSEG DataStream, 31 July 2024. Index: MSCI All Country Asia ex Japan Indices in USD terms. MSCI China Indices in USD terms.
Long term style performance and EPS
0
100
200
300
400
500
600
700
800
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
Jul-24
Rebased @ 100
Small cap Growth Small cap Value
50
100
150
200
250
300
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
Jul-24
Rebased @ 100
Small cap Growth Small cap Value
Chart 4: Small cap value stocks provide higher growth over
the long term – last 20 years
Source: Fidelity International, LSEG DataStream, 31 July 2024. Index: MSCI All Countries Asia ex Japan Small Cap indices.
Despite the outperformance, small cap growth stocks have been trading at a premium versus small cap value stocks and this premium
is close to its historical high.
Chart 5: Valuation – Price to earnings (“PE”) ratio of small cap value and growth stocks
5
Fidelity International Internal Information
Fidel ity A sian Values PLC
Value indices at their cheapest versus growth indices on Forward PE Ratio
Source: Fidelity International, FactSet, LSEG DataStream, 31 July 2024. Index: MSCI All Country Asia ex Japan Indices in USD terms The forward P/E ratio is a current stock's price over its predicted earnings per share.
Long term valuation of Value versus Growth
1.0
1.2
1.4
1.6
1.8
2.0
2.2
0
5
10
15
20
25
Jul-0 4
Jul-0 5
Jul-0 6
Jul-0 7
Jul-0 8
Jul-0 9
Jul-1 0
Jul-1 1
Jul-1 2
Jul-1 3
Jul-1 4
Jul-1 5
Jul-1 6
Jul-1 7
Jul-1 8
Jul-1 9
Jul-2 0
Jul-2 1
Jul-2 2
Jul-2 3
Jul-2 4
Valuation premium (SC Gr / SC Val)
Froward PE Ratio
Asia ex Japan Small Ca p Value - PE
Asia ex Japan Small Cap Growth - PE
Small Cap Growth / Small Cap Value (Right)
Source: Fidelity International, LSEG DataStream, 31 July 2024. Index: MSCI All Countries Asia ex Japan Small Cap indices.
Over 80% of our portfolio remains in these value stocks as we believe they will continue to do better based on their superior earnings
growth and higher cash returns in terms of dividends.
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Question 6
How do you view macro and geopolitical events and the effects they will have on your
portfolio?
Answer
Macro and geopolitical events are not central to our decision-making but we realise we cannot ignore them entirely, as companies exist
within business cycles and they are impacted by geopolitical events. So, we try to factor both into our decision-making predominantly at
single stock level and at portfolio risk level. These give us guard rails rather than being the main driver of decision-making. Stock picking
is the mainstay of the investment process. This has been its strength, and we feel we are better placed if we ‘stick to our knitting’.
For instance, we are aware of the tensions between the USA and China and feel that this is a long-term trend but it is beyond our
expertise to predict specific events that can trigger near-term market responses. Therefore, we continue to follow our process and have
chosen to focus more on opportunities in domestic-demand led Chinese businesses rather than the businesses that derive significant
revenues from the US market.
At the same time, it is helpful to reiterate that macroeconomic factors are cyclical - they come and go – if we can construct a diversified
portfolio of good businesses run by competent and honest management teams and invest at a price that leaves sufficient margin of
safety, we should over time be able to generate returns for our investors over the medium to long term.
Question 7
How does the Company consider governance and stewardship?
Answer
The investment process centres around good businesses managed by good people available at a good price, which implies that we
actively look for a business that solves a problem for its consumers. The ‘good people’ behind a business respect law and regulation
and take care of their employees, customers, the environment, and shareholders, as well as managing their businesses responsibly.
We strongly believe that only an honest and competent management team will drive the business towards creating value over the
long term. It is unlikely that a management team that has not focused on shareholder returns over the last 15-20 years will suddenly
start putting the shareholder at the heart of what they do.
Fidelity International is a signatory of the UK Stewardship Code that sets globally recognised standards of stewardship for investors
saving money on behalf of UK savers and pensioners. We support the Code’s aim of encouraging big investors to focus on promoting
good corporate governance at the companies they invest in.
Fidelity’s stewardship activities support the responsible allocation of the Company’s assets in two main ways: by informing the
investment process at the research and investment decision-making stages, and through leveraging our ownership position in
companies with the aim of effecting positive corporate change.
Portfolio Managers’ Review continued
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Question 8
What is your approach to gearing and short positions? And what impact have they
had on returns during the year and over the longer term?
Answer
The level of gearing in the Company remains a function of the number of investment ideas we find. It increases when we see more ideas
than money and it reduces (or we keep a higher cash balance) when we do not find as many ideas.
Gearing has recently increased as we have found investments in China, a market which has been out of favour with investors. However,
valuations in many other parts are not as attractive. India remains expensive leading us to reduce exposure in this market.
Chart 6: Portfolio net gearing
6
Fidelity International Internal Information
Fid el ity Asian Valu es PLC
Portfolio structure
Source: Fidelity International, Over Nitin Bajaj’s tenure to 31 July 2024.
Net market exposure of Fidelity Asian Values plc
85
90
95
100
105
110
115
120
Jul-15
Feb-16
Sep-16
Apr-17
Nov-17
Jun-18
Jan-19
Aug-19
Mar-20
Oct-20
May-21
Dec-21
Jul-22
Feb-23
Sep-23
Apr-24
% of T NA
Net gearing
Source: Fidelity International, 31 July 2024. Data for Fidelity Asian Values PLC.
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Annual Report 2024
Question 9
What are some of the points that are important to remind the holders of the Company?
Answer
We own businesses that are better quality than the market and are currently priced at cheaper valuations than the market. This has been
the bed rock of our investment process for over a decade. The portfolio’s Return on Equity (“ROE”) remains at a premium to the market
while the Price to Earnings ratios of our holdings are at a significant discount.
Chart 7: Portfolio valuation and returns versus the comparative index
Source: Fidelity International, FactSet, 31 July 2024. Index: MSCI AC Asia ex Japan Small Cap Index (net) total return (in sterling terms).
* Company = Fidelity Asian Value PLC
The ROE metric of the portfolio is higher than that of the market implying the Company is generating superior returns for each pound
of shareholder’s equity than the market. Further the blended Price to Earnings ratio of our holdings is at a significant discount which
implies that we are paying a lower price for each potential pound of future earnings by our portfolio companies compared to the
market as a whole.
This is driven by our historically high exposure to China, Hong Kong and Indonesia where businesses are undervalued versus their
long-term returns potential, as well as due to our low exposure to India, given valuations in the Indian small cap segment are
extremely expensive.
We do not predict market movements and have come to understand that markets are seldom rational in their short-term responses.
Thus, we consistently focus on investing in good businesses, run by good management teams that are available at a suitable margin
of safety. This is the approach that has stood the test of time generating sustainable performance for the Company in the long run
and should do the same in the next few years.
Nitin Bajaj Ajinkya Dhavale
Portfolio Manager Co-Portfolio Manager
10 October 2024
7
Fidelity International Internal Information
Fidel ity A sian Values PLC
Higher quality businesses with margin of safety in valuations
*Company = Fidelity Asian Values plc
Source: Fidelity International, FactSet, 31 July 2024. Index: MSCI AC Asia ex Japan Small-Cap Index
Lower Price to Earnings Ratio vs. Small Cap index
Higher Return on Equity vs. Small Cap index
-50%
-40%
-30%
-20%
-10%
0%
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-1 5
Jan-16
Jul-1 6
Jan-17
Jul-1 7
Jan-18
Jul-1 8
Jan-19
Jul-1 9
Jan-20
Jul-2 0
Jan-21
Jul-2 1
Jan-22
Jul-2 2
Jan-23
Jul-2 3
Jan-24
Jul-2 4
Small Cap Index 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-1 5
Jan-16
Jul-1 6
Jan-17
Jul-1 7
Jan-18
Jul-1 8
Jan-19
Jul-1 9
Jan-20
Jul-2 0
Jan-21
Jul-2 1
Jan-22
Jul-2 2
Jan-23
Jul-2 3
Jan-24
Jul-2 4
Small Cap Index Company* Premium (RHS)
Portfolio Managers’ Review continued
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Spotlight on the Top 10 Holdings
as at 31 July 2024
(Based on Asset Exposure expressed as a percentage of Net Assets. Asset Exposure comprises
the value of direct equity investments plus market exposure to derivative instruments.)
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. The management team has a
conservative approach with a focus on profitability improvement. Its strong execution helped
improve the bank’s return on equity profile and balance sheet strength. The bank has one of
the highest returns on equity among emerging Asian countries due to a benign competitive
landscape and a market-oriented regulator.
Sector Financials
3.6%
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. 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.
2.8%
Sector Financials
Genpact
Position size
Genpact is one of the leading Indian business process outsourcing companies focused
on customers in banking, insurance, healthcare and industrials segments. It has a robust
business with recurring revenues and has high-teen returns on invested capital. The company’s
positioning in data, technology and AI-solutions is leading to a growth in order pipeline, which
remains at record levels.
Sector Industrials
2.7%
Indofood CBP Sukses Makmur
Position size
The company is the largest instant noodles maker with operations in Indonesia, Middle East,
Africa, and South-Eastern Europe. With its vertically integrated operations that help secure input
sourcing and a top-of-the-mind ‘Indomie’ brand, the company dominates most geographies
it operates in. It also thrives in an industry that is generally unattractive to be in given high
competitive intensity and low product differentiation. Apart from noodles, the company also
sells dairy, snack foods and seasonings.
Sector Consumer Staples
2.6%
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 the competition.
Sector Industrials
2.6%
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HDFC Bank
Position size
HDFC Bank is India’s leading private bank and continues to gain market share from less
efficient government owned banks. Last year, it merged with Housing Development Finance
Corporation, its parent and India’s largest mortgage finance company. Its strong deposit
franchise ensures the cost of funds remain low resulting in returns of equity consistently in the
mid-teens range. The management has a conservative underwriting culture allowing asset
quality which is the best in the industry across cycles.
Sector Financials
2.4%
KT
Position size
KT is an incumbent fixed line telecommunications services provider and the second largest
mobile services provider in Korea. It has a sizable real estate leasing business which the
company is selling. The company’s capital allocation is improving under Korea’s new ‘value-up’
programme through higher dividend payouts. KT’s management compensation has also been
aligned to total shareholder returns and is paid in the form of shares with a three-year lock-up.
Sector Communication Services
2.3%
Federal Bank
Position size
Federal Bank is a private sector bank based in the South Indian state of Kerala. It has one
of the strongest liability franchises amongst Indian regional banks. India is one of the largest
international remittance markets in the world with the state of Kerala a leading recipient. The
bank is a beneficiary of regular flows of money from remittances, leading to stable deposit
growth. On the asset side, it has a strong focus on small and medium enterprise segments. The
management has a conservative underwriting culture and low-double digit return on equity.
Sector Financials
2.3%
Japfa Comfeed Indonesia
Position size
Japfa Comfeed is the second largest poultry feed and farm company in Indonesia. The
company is a strong operator with scale advantage and cost efficiencies. It operates in a short-
cycle industry which has six chicken breeding cycles a year. The industry seems to be coming
out of a downcycle where feed margins and valuations are close to trough levels while chicken
prices are on a recovery.
Sector Consumer Staples
2.0%
LIC Housing Finance
Position size
LIC Housing Finance is India’s fourth largest mortgage financier. Since it is promoted by Life
Insurance Corporation, India’s largest and 100% government owned insurance company, it has
access to low-cost funds, helping it focus mainly on prime borrowers and maintain high returns
on equity and strong asset quality.
Sector Financials
2.5%
Spotlight on the Top 10 Holdings continued
as at 31 July 2024
(Based on Asset Exposure expressed as a percentage of Net Assets. Asset Exposure comprises
the value of direct equity investments plus market exposure to derivative instruments.)
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Forty Largest Holdings
as at 31 July 2024
The Asset Exposures shown below measure exposure to market price movements as a result of owning shares, corporate bonds, equity
linked notes and derivative instruments. The Fair Value is the realisable value of the portfolio as reported in the Balance Sheet. Where
the Company holds shares, corporate bonds and equity linked notes, the Asset Exposure and Fair Value will be the same. For derivative
instruments, Asset Exposure is the market value of the underlying asset to which the Company is exposed, while the Fair Value reflects the
mark-to-market on the contract since it was opened, and is based on how much the share price of the underlying asset has moved.
Asset Exposure
Fair
Value
Industry £’000 %
1
£’000
Long Exposures – shares unless otherwise stated
Bank Negara Indonesia (Persero)
(shares and corporate bond) Banks 13,962 3.6 13,962
Axis Bank Banks 10,912 2.8 10,912
Genpact Professional Services 10,627 2.7 10,627
Indofood CBP Sukses Makmur Food Products 10,350 2.6 10,350
BOC Aviation (long CFDs) Trading Companies & Distributors 10,325 2.6 521
LIC Housing Finance Financial Services 9,706 2.5 9,706
HDFC Bank Banks 9,570 2.4 9,570
KT
Diversified Telecommunication
Services 9,055 2.3 9,055
Federal Bank Banks 8,995 2.3 8,995
Japfa Comfeed Indonesia Food Products 7,657 2.0 7,657
Taiwan Semiconductor Manufacturing Company
Semiconductors & Semiconductor
Equipment 7,539 1.9 7,539
China Mengniu Dairy (long CFD) Food Products 6,194 1.6 (359)
Arwana Citramulia Building Products 6,154 1.6 6,154
Ciputra Development
Real Estate Management &
Development 5,919 1.5 5,919
Granules India Pharmaceuticals 5,649 1.4 5,649
Sinotrans Air Freight & Logistics 5,625 1.4 5,625
Focus Media Information Technology
(shares and equity linked notes) Media 5,418 1.4 5,418
Bank Mandiri (Persero) Banks 5,410 1.4 5,410
Chow Sang Sang Holdings International
(shares and long CFD) Textiles, Apparel & Luxury Goods 5,387 1.4 4,858
CapitaLand India Trust
Real Estate Management &
Development 5,036 1.3 5,036
ENN Energy Holdings Gas Utilities 4,967 1.3 4,967
Longfor Group Holdings
(shares and corporate bond)
Real Estate Management &
Development 4,940 1.3 4,940
Qingdao Port International Transportation Infrastructure 4,616 1.2 4,616
Indocement Tunggal Prakarsa Construction Materials 4,501 1.1 4,501
Crystal International Group
(shares and long CFD) Textiles, Apparel & Luxury Goods 4,500 1.1 4,500
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Asset Exposure
Fair
Value
Industry £’000 %
1
£’000
Valaris Energy Equipment & Services 4,414 1.1 4,414
Texwinca Holdings Textiles, Apparel & Luxury Goods 4,290 1.1 4,290
Samsung Electronics
Technology Hardware, Storage
& Peripherals 4,141 1.1 4,141
Shandong Weigao Group Medical Polymer
(shares and long CFD) Health Care Equipment & Supplies 3,857 1.0 3,692
China Overseas Property Holdings
(shares and long CFD)
Real Estate Management &
Development 3,847 1.0 3,541
PTC India
Independent Power & Renewable
Electricity Producers 3,825 1.0 3,825
SIS Commercial Services & Supplies 3,781 1.0 3,781
MegaStudyEdu Diversified Consumer Services 3,724 0.9 3,724
Cikarang Listrindo
Independent Power & Renewable
Electricity Producers 3,721 0.9 3,721
Hyundai Marine & Fire Insurance Insurance 3,662 0.9 3,662
Galaxy Entertainment Group (long CFD) Hotels, Restaurants & Leisure 3,619 0.9 (160)
DL E&C Construction & Engineering 3,604 0.9 3,604
Li-Ning (shares and long CFD)
Textiles, Apparel & Luxury Goods 3,556 0.9 356
China Foods Beverages 3,522 0.9 3,522
WH Group (long CFD) Food Products 3,461 0.9 (109)
Top forty long exposures 240,038 61.2 212,132
Other long exposures 189,488 48.4 165,338
Total long exposures (150 holdings) 429,526 109.6 377,470
Short exposures
Short CFDs (10 holdings) 12,995 3.3 373
Call options (1 holding) 374 0.1 (14)
Total short exposures 13,369 3.4 359
Gross Asset Exposure
2
442,895 113.0
Portfolio Fair Value
3
377,829
Net current assets (excluding derivative assets and
liabilities) 14,185
Total Shareholders’ Funds/Net Assets 392,014
1 Asset Exposure (as defined in the Glossary of Terms on page 90) is expressed as a percentage of Total Shareholders’ Funds.
2 Gross Asset Exposure comprises market exposure to investments of £378,577,000 (per Note 10: Investments on page 63) plus market exposure to derivative instruments of
£64,318,000 (per Note 11: Derivative instruments on page 64).
3 Portfolio Fair Value comprises investments of £378,577,000 plus derivative assets of £1,297,000 less derivative liabilities of £2,045,000 (per the Balance Sheet on page 54).
A full list of the Company’s holdings as at 31 July 2024 will be available on the Company’s pages of the Manager’s website at
www.fidelity.co.uk/asianvalues on, or shortly after, 31 October 2024.
Forty Largest Holdings continued
Forty Largest Holdings continued
as at 31 July 2024
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Distribution of the Portfolio
as at 31 July 2024
(Asset Exposure expressed as a percentage of Total Shareholders’ Funds)
Portfolio
China &
Hong Kong India Indonesia
South
Korea Other Total
2024
Index
1
2023
Total
Financials
Banks – 7.5 4.9 – 0.8 13.2 2.4 12.4
Financial Services – 3.1 – 0.5 – 3.6 1.7 1.2
Capital Markets 0.2 – – 0.8 – 1.0 3.0 1.1
Insurance –– – 0.9 – 0.9 1.1 0.6
Consumer Finance – 0.7 – – – 0.7 1.4 3.5
0.2 11.3 4.9 2.2 0.8 19.4 9.6 18.8
Industrials
Professional Services 0.5 – – 0.4 2.7 3.6 0.8 2.7
Trading Companies & Distributors 2.6 – 0.3 – – 2.9 0.4 2.8
Commercial Services & Supplies 0.3 1.0 – 0.9 – 2.2 1.0 1.7
Building Products 0.4 – 1.5 – – 1.9 0.9 2.4
Construction & Engineering – 0.6 – 0.9 – 1.5 3.3 0.4
Transportation Infrastructure 1.5 – – – – 1.5 0.8 1.5
Air Freight & Logistics 1.4 – – – – 1.4 0.6 2.1
Machinery 1.1 – – – – 1.1 4.8 1.0
Marine Transportation 0.5 – – – – 0.5 0.5 0.9
Ground Transportation 0.4 – – – – 0.4 0.4 0.5
Passenger Airlines –– – – 0.2 0.2 0.2 0.2
Electrical Equipment –– – 0.1 – 0.1 3.8 0.8
Industrial Conglomerates –– ––––1.2–
Aerospace & Defense –– ––––0.6–
8.7 1.6 1.8 2.3 2.9 17.3 19.3 17.0
Consumer Discretionary
Textiles, Apparel & Luxury Goods 5.4 0.2 – 0.4 0.5 6.5 2.4 6.0
Diversified Consumer Services 0.7 – – 1.0 0.4 2.1 0.4 1.9
Hotels, Restaurants & Leisure 1.2 – 0.3 – 0.5 2.0 1.8 2.4
Automobile Components 0.3 – 0.8 0.4 0.3 1.8 2.9 2.2
Specialty Retail 1.7 – – – – 1.7 0.9 2.4
Automobiles 0.5 – – – 0.7 1.2 0.5 1.9
Leisure Products 0.7 – – – – 0.7 0.5 1.5
Broadline Retail 0.4 – – – – 0.4 0.5 –
Household Durables –– – – – – 1.5 1.1
Distributors –– ––––0.1–
10.9 0.2 1.1 1.8 2.4 16.4 11.5 19.4
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Fidelity Asian Values PLC
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Continued on the next page.
Portfolio
China &
Hong Kong India Indonesia
South
Korea Other Total
2024
Index
1
2023
Total
Consumer Staples
Food Products 2.9 – 4.6 0.3 3.2 11.0 2.5 6.8
Consumer Staples Distribution & Retail 1.9 – – 0.7 – 2.6 0.7 1.8
Beverages 0.9 – – – 0.3 1.2 0.6 1.9
Tobacco –– – 0.5 – 0.5 0.2 –
Household Products – – 0.3 – – 0.3 0.1 0.7
Personal Care Products –– ––––0.9–
5.7 – 4.9 1.5 3.5 15.6 5.0 11.2
Materials
Metals & Mining 1.6 – – – 3.4 5.0 2.4 4.8
Chemicals 0.2 1.3 – 0.7 0.3 2.5 5.8 1.8
Construction Materials 0.3 – 1.1 – – 1.4 1.1 0.8
Paper & Forest Products –– ––––0.6–
Containers & Packaging –– ––––0.4–
2.1 1.3 1.1 0.7 3.7 8.9 10.3 7.4
Real Estate
Real Estate Management &
Development 4.9 – 1.5 – 2.0 8.4 4.7 7.3
Industrial Real Estate Investment Trusts
(REITS) –– ––––1.0–
Retail Real Estate Investment Trusts
(REITS) –– ––––0.8–
Office Real Estate Investment Trusts
(REITS) –– ––––0.7–
Diversified Real Estate Investment
Trusts (REITS) –– ––––0.3–
Hotel & Resort Real Estate Investment
Trusts (REITS) –– ––––0.3–
Specialized Real Estate Investment
Trusts (REITS) –– ––––0.2–
Health Care Real Estate Investment
Trusts (REITS) –– ––––0.1–
4.9 – 1.5 – 2.0 8.4 8.1 7.3
Information Technology
Semiconductors & Semiconductor
Equipment 0.5 – – 0.3 2.5 3.3 8.4 6.2
Technology Hardware Storage &
Peripherals –– – 1.1 0.6 1.7 1.5 1.0
Electronic Equipment Instruments &
Components – 0.5 – – 0.8 1.3 6.5 3.4
Information Technology Services –– ––––1.3–
Software –– ––––1.0–
Communications Equipment –– ––––0.7–
0.5 0.5 – 1.4 3.9 6.3 19.4 10.6
Distribution of the Portfolio continued
as at 31 July 2024
(Asset Exposure expressed as a percentage of Total Shareholders’ Funds)
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Portfolio
China &
Hong Kong India Indonesia
South
Korea Other Total
2024
Index
1
2023
Total
Health Care
Health Care Equipment & Supplies 1.0 – – 1.1 0.5 2.6 0.9 2.1
Pharmaceuticals 0.7 1.4 – 0.4 – 2.5 4.6 2.1
Health Care Providers & Services 0.3 – – – – 0.3 1.6 –
Biotechnology –– ––––1.5–
Life Sciences Tools & Services –– – – – – 0.4 0.3
Health Care Technology –– ––––0.1–
2.0 1.4 – 1.5 0.5 5.4 9.1 4.5
Energy
Energy Equipment & Services 0.7 – – – 3.2 3.9 0.3 2.2
Oil, Gas & Consumable Fuels 0.3 – – – 1.7 2.0 1.2 3.7
1.0 – – – 4.9 5.9 1.5 5.9
Communications Services
Diversified Telecommunication
Services –– – 2.3 – 2.3 1.0 –
Media 2.1 – – – – 2.1 0.6 2.5
Interactive Media & Services 0.2 – – – – 0.2 0.4 0.6
Wireless Telecommunication Services –– – – 0.2 0.2 0.1 0.3
Entertainment –– ––––1.6–
2.3 – – 2.3 0.2 4.8 3.7 3.4
Utilities
Independent Power & Renewable
Electricity Producers – 1.0 0.9 – 0.2 2.1 1.2 4.3
Gas Utilities 1.3 – – – – 1.3 0.8 0.9
Water Utilities 0.4 – – – – 0.4 0.2 –
Electric Utilities –– ––––0.3–
1.7 1.0 0.9 – 0.2 3.8 2.5 5.2
Exposure before call options/futures 40.0 17.3 16.2 13.7 25.0 112.2
Add: call options/futures 0.8 – – – – 0.8 1.0
Total Asset Exposure – 2024 40.8 17.3 16.2 13.7 25.0 113.0
Index – 2024 12.6 34.8 1.9 13.6 37.1 100.0
Total Asset Exposure – 2023 39.7 21.1 13.8 9.4 27.7 111.7
1
MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms), the Company’s Comparative Index.
Note: Exposures in the tables above are calculated as a percentage of net assets.
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Fidelity Asian Values PLC
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Annual Report 2024
Ten Year Record
For the year ended
31 July 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Gross Asset Exposure (£m)
1
442.9 440.8 383.7 375.2 276.6 347.4 285.2 273.7 232.0 162.9
Total Shareholders’ Funds (£m) 392.0 394.6 367.6 364.1 269.4 323.0 288.0 280.2 237.5 178.9
NAV per Ordinary Share – undiluted (p)
2
551.66 549.33 507.78 497.50 364.39 447.16 419.36 415.17 351.98 265.14
NAV per Ordinary Share – diluted (p)
2
n/a n/a n/a n/a n/a 439.91
3
413.64
3
407.77
3
n/a n/a
Ordinary Share Price (p) 496.00 520.00 458.00 483.00 335.00 455.50 412.00 386.00 313.00 236.88
Subscription Share Price (p) n/a n/a n/a n/a n/a 53.00 23.50 29.50 n/a n/a
(Discount)/Premium – undiluted (%)
2
(10.1) (5.3) (9.8) (2.9) (8.1) 1.9 (1.8) (7.0) (11.1) (10.7)
Premium/(Discount) – diluted (%)
2
n/a n/a n/a n/a n/a 3.5
3
(0.4)
3
(5.3)
3
n/a n/a
Revenue return per Ordinary Share (p)
2
14.24 15.17 14.21 9.20 8.64 10.70 5.70 6.08 5.36 2.26
Dividend per Ordinary Share (p) 14.5 14.5 14.0 8.8 8.5 8.8 5.5 5.5 4.5 2.0
Ongoing Charges (cost of running the
Company) (%)
2
0.95 0.96 0.95 0.93 0.98 0.98 1.17 1.22 1.33 1.42
Gross Gearing (%)
2,4
13.0 11.7 4.4 3.0 2.7 7.5 (1.0) (2.3) (2.3) (9.0)
NAV total return – undiluted (%)
2
+3.2 +11.4 +3.9 +39.5 -16.7 +8.2 +2.2 +19.3 +33.8 +4.0
NAV total return – diluted (%)
2
n/a n/a n/a n/a n/a +7.9
3
+2.7
3
+17.2
3
n/a n/a
Ordinary Share Price total return (%)
2
-1.7 +17.3 -3.4 +47.6 -24.8 +12.3 +8.2 +24.9 +33.3 +6.2
Comparative Index total return (%)
5
+13.7 +7.5 -5.6 +39.2 -0.8 -4.6 +4.7 +15.6 +13.1 n/a
Benchmark Index total return (%)
6
+13.7 +7.5 -5.6 +39.2 +2.7 +3.9 +5.7 +28.2 +15.8 +0.3
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 (see Note 18 on page 75).
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
ESG ASSESSMENT
The charts below show a breakdown of the underlying stocks in the Company’s portfolio using Fidelity’s own and MSCI’s ESG ratings.
Fidelity International’s proprietary sustainability ratings system leverages its internal research and interactions with issuers. The
ratings are designed to generate a forward-looking and holistic assessment of ESG risks and opportunities based on sector specific
performance indicators. Analysts quantify the direction of change of companies’ ESG performance (positive, neutral or negative
trajectory) and rate the companies using a scale of A (best) to E (worst).
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.
ESG Ratings
0
20
40
60
80
100
Portfolio
Comparative Index
1
A B
C
D
E
Not
rated
Fidelity Proprietary ESG ratings (%)
0
5
10
15
20
25
30
35
40
Portfolio
Comparative Index
1
AAA AA
A
BBB
BB B CCC
Not
rated
MSCI ESG ratings
1
MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
Source: Fidelity International and MSCI ESG Research as at 31 July 2024.
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%.
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Fidelity Asian Values PLC
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Annual Report 2024
Strategic Report
The Directors have pleasure in presenting the Strategic Report
of the Company. The Chairman’s Statement and the Portfolio
Managers’ Review on pages 2 to 12 form part of the Strategic
Report.
Business and Status
The Company carries on business as an investment trust. Its shares
are listed and traded on 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 long-term 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 Managers 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.
Modification of Investment Objective or Investment Policy
In accordance with the UK Listing Rules, any material change
to the Company’s published Investment Objective or Investment
Policy will require the prior approval of both the Financial
Conduct Authority and the shareholders of the Company (by way
of an ordinary resolution).
Investment 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
Managers, Nitin Bajaj and Ajinkya Dhavale, aim 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 Managers 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 Managers’ 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
Managers’ 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 Managers 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 no 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.
~ A resolution is proposed at the AGM to increase this investment restriction from
5% to 15% of Gross Assets.
* Asian Region means the continent of Asia (including Hong Kong, South Korea,
Thailand, Singapore, Malaysia, Taiwan, Indonesia, Philippines, China, India,
Pakistan, Vietnam and Sri Lanka, but excluding Japan, the countries comprising
the former U.S.S.R. and the Middle East), together with Australasia.
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
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 achieve an
equivalent effect to buying an asset financed by bank
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 Managers consider 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 Managers’ investment style and philosophy as well as
the markets they operate in.
The sum of all short exposures of the Company from derivatives,
excluding hedges, will not exceed 10% of total net assets.
It should be stressed that 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 other investment companies are set out below.
Year ended
31 July
2024
%
Year ended
31 July
2023
%
NAV per Ordinary Share total
1
+3.2 +11.4
Ordinary Share Price total return
1
-1.7 +17.3
Benchmark Index total return
2
+13.7 +7.5
Discount to NAV
1
10.1 5.3
Ongoing Charges Ratio
1,3
0.95 0.96
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 2024 can be found in the Chairman’s Statement and
Portfolio Managers’ Review on pages 2 to 12. Long-term
performance is also monitored and is set out in the Ten Year
Record on page 20.
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Principal Risks and Uncertainties and Risk Management
As required by provisions 28 and 29 of the 2018 UK Corporate Governance Code, the Board has a robust ongoing process for
identifying, evaluating and managing the principal risks and uncertainties faced by the Company, including those that could threaten
its business model, future performance, solvency and liquidity. The Board, with the assistance of the Alternative Investment Fund
Manager (FIL Investment Services (UK) Limited (the “Manager”)), has developed a risk matrix which, as part of the risk management
and internal controls process, identifies the key existing and emerging risks and uncertainties that the Company faces.
The Board considers the risks listed below and on pages 25 to 28 as the principal risks and uncertainties faced by the Company.
Principal Risks
1. Economic, Political and Market Risks
Trend (
from previous year
): Increased
Description and Impact Mitigation
• The Company and its assets may be affected by economic
and market risks. These are market downturns, interest rate
movements, deflation/inflation, exchange rate movements
and market shocks. Inflation and economic instability are
potentially impacting investors’ risk appetite.
• The Company is exposed to several geopolitical risks. The
fast-changing global geopolitical landscape is largely shaped
by the ongoing effects of war conflicts, deglobalisation trends
and significant supply disruption. The Middle East and Russia
are significant net exporters of oil, natural gas and a variety
of soft commodities and supply limitations have fuelled
global inflation and economic instability, specifically within
Western nations. Macro-economic uncertainty continues to
impact Western investment appetite. Conflict in the Middle
East provides another source of emerging geopolitical risk
and economic instability.
• China’s outlook for ‘controlled stabilisation’ remains intact,
supported by targeted policy measures. The expanding
strength of the global industrial cycle is benefitting China’s
exports, which are once again becoming the main driver
of growth alongside capex, while growth of consumption
remains subdued. Whilst investment from mainland China
has increased significantly, driven by favourable government
policies and the high dividends available from some Hong
Kong shares, China’s vulnerabilities remain, with risks related
to the global outlook and geopolitical tensions including the
possibility of global trade conflict, ongoing tensions between
South Korea and North Korea, South China Sea dispute and
implications of China-Taiwan relations.
• As the year progresses, political risks could increase, heading
towards the US elections during late 2024, which coupled with
ongoing geopolitical conflicts, could lead to higher volatility
for broader markets, and oil in particular, as well as risk of
changes in foreign policies across the globe.
• Most of the Company’s assets and income are denominated
in currencies other than sterling which is the Company’s
functional and presentation currency. As a result, movements
in exchange rates may affect the sterling value of its assets
and income.
• The Company’s portfolio is made up mainly of listed
securities. The Portfolio Managers’ success or failure
to protect and increase the Company’s assets against
the economic, political and market background is core
to the Company’s continued success. Their investment
philosophy of stock-picking and investing in attractively
valued companies aims to outperform the Comparative
Index over time. The Board is provided with a detailed
investment review which covers material economic, political
and market risks and legislative changes at each Board
meeting.
• The Board has oversight of the Company’s portfolio,
regularly reviews the impact of gearing and derivatives,
and has comfort that the portfolio is sufficiently diversified
by sector and number of holdings.
• Risks to which the Company is exposed to in the market
and currency risk category are included in Note 17 to
the Financial Statements on pages 67 to 75 together with
summaries of the policies for managing these risks. It is the
Company’s policy not to hedge the underlying currencies of
the holdings in the portfolio but rather to take the currency
risk into consideration when making investment decisions.
Strategic Report continued
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
2. Investment Performance Risk (including the use of Derivatives and Gearing)
Trend (
from previous year
): Unchanged
Description and Impact Mitigation
• The achievement of the Company’s investment performance
objective relative to the market requires the taking of
risk, such as investment strategy, asset allocation and
stock selection, and may lead to NAV and share price
underperformance compared to the Comparative Index and/
or peer group companies.
• Continued underperformance could lead to the Company
and its objective becoming unattractive to investors.
• The Company gears using derivatives including long CFDs
which provide greater flexibility and are generally cheaper
than bank loans. The principal risk is that the Portfolio
Managers fail to use gearing effectively, resulting in a failure
to outperform in a rising market or to underperform in a
falling market.
• Derivative instruments are used to enhance investment returns,
as well as for hedging and efficient portfolio management
purposes. There is a risk that the use of derivatives may lead
to higher volatility in the NAV and the share price than might
otherwise be the case.
• The Investment Manager is responsible for actively
monitoring the portfolio selected in accordance with the
asset allocation parameters and seeks to ensure that
individual stocks meet an acceptable risk/reward profile.
• The Board reviews Fidelity’s compliance with agreed
investment restrictions; investment performance and risk;
relative performance; the portfolio’s risk profile; and
whether appropriate strategies are employed to mitigate
any negative impact of substantial changes in the markets.
The Board also regularly canvasses major shareholders for
their views with respect to company matters.
• The Board has put in place policies and limits to control
the Company’s use of derivatives and exposures. These are
monitored daily by the Manager’s Compliance team and
regular reports are provided to the Board. Further detail
on derivative instruments risk is included in Note 17 to the
Financial Statements on pages 67 to 75.
• The Board regularly considers the level of gearing and
gearing risk. The Investment Policy sets the gearing limits
within which the Manager must operate and the Board
regularly considers the level of gearing and gearing risk.
3. Changes in Legislation, Taxation or Regulation
Trend (
from previous year
): Increased
Description and Impact Mitigation
• Changes in legislation, taxation or regulation, or other
external influence that require changes to the investment
trust structure of the Company are a significant risk for the
Company.
• A breach of Section 1158 of the Corporation Tax Act 2010
could lead to a loss of investment trust status resulting in the
Company being subject to tax on capital gains.
• There have been increased concerns about investment
cost disclosures and their impact on the industry. More
recently, however, it should be noted that the government
and regulator have announced a temporary exemption
for investment companies from the EU cost disclosure
requirements.
• The Board and Manager closely monitor regulatory,
taxation and legislative changes, with developments
impacting the Company summarised in the form of regular
reporting to the Board.
• T he Manager monitors Section 1158 status to ensure
any issues are escalated to the Board and addressed
promptly.
• The Manager participates in industry discussions regarding
regulatory changes impacting investment companies, and
regulatory developments continue to be monitored and
managed by FIL through active lobbying and negotiations
as well as a robust change management process.
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Customer: Fidelity Project Title: FAV Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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4. Cybercrime and Information Security
Trend (
from previous year
): Increased
Description and Impact Mitigation
• Cybersecurity risk from cyberattacks or threats to the
functioning of global markets and to the Manager’s own
business model, including its and the Company’s outsourced
suppliers.
• Risk of cybercrime such as phishing, remote access threats,
extortion, and denial-of-service attacks from geopolitically
motivated parties.
• The risk is monitored by the Board with the help of the
Manager’s global cybersecurity team and their extensive
Strategic Cyber and Information Security programme and
assurances from outsourced suppliers.
• The Manager has established a comprehensive framework
of information security policies and standards which
provide a structured approach to identify, prevent, and
respond to information security threats. The Company’s
other service providers also have similar measures in
place.
• Key performance indicators and metrics have been
developed by the Manager to monitor the overall efficacy
of cybersecurity processes and controls and to further
enhance the Manager’s cybersecurity strategy and
operational resilience.
5. Business Continuity and Crisis Management
Trend (
from previous year
): Increased
Description and Impact Mitigation
• There continues to be focus from financial services regulators
around the world on the contingency plans of regulated
financial firms, particularly given the prevalence of hybrid
working arrangements.
• Business process disruption risk from continued threats of
cyberattacks, geopolitical threats and natural events, such as
earthquakes, resulting in financial and/or reputational impact
to the Company, affecting the functioning of the business.
• The Manager has Business Continuity and Crisis
Management Frameworks in place to deal with business
disruption and assure operational resilience. The Board has
been assured that the Manager has appropriate business
continuity plans and the provision of services has continued
to be supplied without significant interruption.
• The Company relies on several 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. The findings are presented
to the Board and any concerns are investigated by the
Manager. The third-party service providers have also
confirmed the implementation of appropriate measures to
ensure business disruption is minimised.
Strategic Report continued
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
6. Competition Risks and Marketplace Threats Impacting Business Growth
Trend (
from previous year
): Increased
Description and Impact Mitigation
• Threats facing the Company include external pressures
affecting the Company’s ability to maintain and grow the
business, and a loss of shareholders if the demand for
investment trusts decline and the demand for passive funds
and holistic/digital finance offerings continue to increase,
particularly within the current market environment of
increased M&A activity.
• The Board, the Company’s Broker and Manager closely
monitor the peer group and industry activity, and an annual
review of strategy is undertaken by the Board, to ensure
that the Company continues to offer a relevant product to
shareholders.
7. Level of Discount to Net Asset Value
Trend (
from previous year
): Increased
Description and Impact Mitigation
• Due to the nature of investment companies, the price of the
Company’s shares and its discount to NAV are factors which
are not completely within the Company’s control.
• In considering the risk that the discount to NAV poses to
shareholder value and 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 Board reviews the investment strategy, investment
performance and the marketing approach, given the
influence of all these factors on the discount.
• The Company’s share price, NAV and discount volatility
are monitored daily by the Manager and the Company’s
Broker and considered by the Board on a regular basis.
The demand for shares can be influenced through good
performance and an active investor relations programme.
• Repurchases of ordinary shares are made at the discretion
of the Board, within guidelines set by the Board, and
considering prevailing market conditions.
8. Operational Risks
Trend (
from previous year
): Increased
Description and Impact Mitigation
• Operational risks include financial losses or reputational
damage from inadequate internal processes, people and
systems or from external parties and events.
• Fidelity’s Operational Risk Management Framework is
designed to pro-actively prevent, identify and manage
operational risks inherent in most activities.
• Fidelity uses robust systems and procedures dedicated to
its operational processes. Its risk management structure
is designed according to the FCA’s three lines of defence
model.
Job No: 52961 Proof Event: 20 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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9. Key Person Risk
Trend (
from previous year
): Decreased
Description and Impact Mitigation
• Loss of the Portfolio Manager, Co-Portfolio Manager or other
key individuals could lead to potential performance and/or
operational issues.
• The Portfolio Manager, Nitin Bajaj, has a differentiated style
in relation to his peers. This style is intrinsically linked with
the Company’s investment philosophy and strategy and,
therefore, the Company has a key person dependency on
him.
• There is also a risk that the Manager has inadequate
succession plans for other key operational individuals.
• The Company has a Co-Portfolio Manager, Ajinkya
Dhavale, who supports the Portfolio Manager, and has
extensive experience in the Asian markets and companies
and shares a common investment approach and
complementary investment experience with the Portfolio
Manager. The Portfolio Manager is also supported by
an Investment Director, Himalee Bahl, as a primary
spokesperson for the Company. This helps strengthen the
investment process.
• The Manager identifies key dependencies which are
then addressed through succession plans, particularly for
portfolio managers.
10. Environmental, Social and Governance (“ESG”) Risks
Trend (
from previous year
): Decreased
Description and Impact Mitigation
• Investor expectations and/or regulatory requirements related
to ESG factors of the underlying investee companies and the
portfolio are not perceived to be met.
• Whilst the Company is not labelled as an ESG product,
reputational damage to the Company may arise from
perception in the marketplace.
• Whilst the investment portfolio does not target or
employ any set limit on ESG investments, the Portfolio
Managers are expected to engage with companies where
sustainability issues arise.
• Fidelity carries out ESG considerations at the fundamental
research level.
• The Portfolio Managers and analysts carry out additional
quantitative and qualitative analysis of potential
investments to form a view on ESG characteristics of every
investee company.
• The Manager has developed an ESG investment risk
oversight framework to reinforce its Investment Risk Policy
to set minimum controls.
Emerging risks
The Audit Committee continues to identify any new emerging risks
and take any action necessary to mitigate their potential impact.
The risks identified are placed on the Company’s risk matrix and
appropriately graded. This process, together with the policies
and procedures for the mitigation of existing and emerging risks,
is updated and reviewed regularly in the form of comprehensive
reports by the Audit Committee. The Board determines the nature
and extent of any risks it is willing to take to achieve its strategic
objectives.
Climate change, which refers to a large scale shift in the planet’s
weather patterns and average temperatures, continues to be a
key emerging issue as well as a principal risk confronting asset
managers and their investors. Globally, climate change effects
are already being experienced in the form of changing weather
patterns. Extreme weather events can potentially impact the
operations of investee companies, their supply chains and their
customers. The Board notes that the Manager has integrated ESG
considerations, including climate change, into the Company’s
investment process. The Board will continue to monitor how this
may impact the Company as a risk to investment valuations
and potentially to shareholder returns. The Board, together
with the Manager, is also monitoring the emerging risk posted
by the rapid advancement of artificial intelligence (AI) and
technology and how it may threaten the Company’s activities
and its potential impact on the portfolio and investee companies.
Although advances in computing power mean that AI is a
powerful tool that will impact society, there are risks from its
increasing use and manipulation with the potential to harm,
including a heightened threat to cybersecurity.
Emerging risks - Manager’s role
The Manager also has responsibility for risk management for the
Company. It works with the Board to identify and manage the
principal risks and emerging risks and uncertainties to ensure
Strategic Report continued
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Annual Report 2024
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
that the Board can continue to meet its UK corporate governance
obligations.
Annual Review of Full Risk Register
The Company has a full risk register which includes less material
risks which the Board reviews at least annually.
Going Concern Statement
The Directors have considered the Company’s investment
objective, risk management policies, liquidity risk, credit risk,
capital management policies and procedures, the nature of
its portfolio and its expenditure and cash flow projections. The
Directors, having considered the liquidity of the Company’s
portfolio of investments (being mainly securities which are readily
realisable) and the projected income and expenditure, are
satisfied that the Company is financially sound and has adequate
resources to meet all of its liabilities and ongoing expenses and
continue in operational existence for the foreseeable future. The
Board has, therefore, concluded that the Company has adequate
resources to continue to adopt the going concern basis for the
period to 31 October 2025 which is at least twelve months from
the date of approval of the Financial Statements. This conclusion
also takes into account the Board’s assessment of the ongoing
risks from significant geopolitical and market events.
Accordingly, the Financial Statements of the Company have been
prepared on a going concern basis.
The prospects of the Company over a period longer than twelve
months can be found in the Viability Statement below.
Viability Statement
In accordance with provision 31 of the 2018 UK Corporate
Governance Code, the Directors have assessed the prospects of
the Company over a longer period than the twelve month period
required by the “Going Concern” basis above. The Company
is an investment trust with the objective of achieving long-term
capital growth. The Board considers 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
24 to 28;
• The Company’s continuation vote;
• The future demand for the Company’s shares;
• The Company’s share price discount to the NAV;
• The liquidity of the Company’s portfolio;
• The level of income generated by the Company; and
• Future income and expenditure forecasts.
The Board regularly reviews the investment policy and considers
that it remains appropriate, subject to a proposed change to the
non-Asian investment limit outlined on page 35.
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. The Board has also considered the impact of regulatory
changes, ongoing geopolitical tensions, and how these may
affect the Company.
In addition, the Directors’ assessment of the Company’s ability
to operate in the foreseeable future is included in the Going
Concern Statement above.
A continuation vote takes place every five years. There is a risk
that shareholders do not vote in favour of the continuation of the
Company during periods when performance of the Company’s
NAV and share price is poor. The last continuation vote was
at the Company’s AGM held on 3 December 2021. The next
continuation vote will take place at the AGM in 2026.
PROMOTING THE SUCCESS OF THE COMPANY
Under Section 172(1) of the Companies Act 2006, the Directors
of a company must act in a way they consider, in good faith,
would be most likely to promote the success of the Company
for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to the likely consequences of any
decision in the long term; the need to foster relationships with the
Company’s suppliers, customers and others; the impact of the
Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high
standards of business conduct; and the need to act fairly as
between members of the Company.
Job No: 52961 Proof Event: 20 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2024
As an externally managed investment trust, the Company has no
employees or physical assets, and a number of the Company’s
functions are outsourced to third parties. The key outsourced
function is the provision of investment management services by
the Manager, but other professional service providers support
the Company by providing administration, custodial, banking
and audit services. The Board considers the Company’s key
stakeholders to be the existing and potential shareholders, the
external appointed Manager and other third-party professional
service providers. The Board considers that the interest of
these stakeholders is aligned with the Company’s objective
of delivering long-term capital growth to investors, in line
with the Company’s stated investment objective and strategy,
while providing the highest standards of legal, regulatory and
commercial conduct.
The Board, with the Portfolio Managers, sets the overall
investment strategy and reviews this at an annual strategy day
which is separate from the regular cycle of board meetings. In
order to ensure good governance of the Company, the Board
has set various limits on the investments in the portfolio, whether
in the maximum size of individual holdings, the use of derivatives,
the level of gearing and others. These limits and guidelines are
regularly monitored and reviewed and are set out on pages 22
and 23. The Board receives regular reports from the Company’s
Broker which covers market activity, and how the Company
compares with its peers.
The Board places great importance on communication with
shareholders. The Annual General Meeting (“AGM”) provides
the key forum for the Board and the Portfolio Managers to
present to the shareholders on the Company’s performance
and future plans and the Board encourages all shareholders to
attend either in person or virtually and raise any questions or
concerns. The Chairman and other Board members are available
to meet shareholders as appropriate. Shareholders may also
communicate with Board members at any time by writing to
them at the Company’s registered office at FIL Investments
International, Beech Gate, Millfield Lane, Tadworth, Surrey
KT20 6RP or via the Company Secretary in writing at the same
address or by email at investmenttrusts@fil.com. The Portfolio
Managers meet with major shareholders, potential investors,
stock market analysts, journalists and other commentators during
the year. These communication opportunities help inform the
Board in considering how best to promote the success of the
Company over the long term.
The Board seeks to engage with the Manager and other service
providers and advisers in a constructive and collaborative way,
promoting a culture of strong governance, while encouraging
open and constructive debate, in order to ensure appropriate
and regular challenge and evaluation. This aims to enhance
service levels and strengthen relationships with service providers,
with a view to ensuring shareholders’ interests are best served,
by maintaining the highest standards of commercial conduct
while keeping cost levels competitive.
Whilst the Company’s direct operations are limited, the Board
recognises the importance of considering the impact of the
Company’s investment strategy on the wider community and
environment. 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.
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 Lucy Costa Duarte to the Board as non-executive Director
with effect from 1 June 2024;
• Authorising the repurchase of 768,780 ordinary shares up
to the date of this Annual Report in line with the Board’s
discount management policy; and
• The decision to recommend the payment of a final dividend
of 14.5 pence per ordinary share.
Board Diversity
The Board’s overriding intention is to ensure that it is made up
of the best combination of people in order to achieve long-term
capital growth for the Company’s shareholders from an actively
managed portfolio of investments. To this effect, the Board, as
part of its succession plan, will continue to appoint individuals
who, together as a Board, will aim to ensure the continued
optimal promotion of the Company in the marketplace. Due
regard will be given to the benefit of diversity on the Board,
including gender and ethnicity.
The Board has taken into consideration the FCA UK Listing Rules
requirements (UKLR 6.6.6(9), (10) and (11)) regarding the targets
on board diversity that:
• at least 40% of the individuals on the board are women;
• at least one senior board position (chairman, chief executive
officer (“CEO”), senior independent director or chief financial
officer (“CFO”)) is held by a woman; and
• at least one board member is from a minority ethnic
background, as defined by the Office of National Statistics
criteria.
The Board considers that as an externally managed investment
trust, with no CEO or CFO, the Chairman of the Company, the
Senior Independent Director and Chair of the Audit Committee
are senior positions.
As required by the FCA’s UK Listing Rules, the Company’s
reporting against these targets is set out in the tables below. The
data was collected on a self-identifying basis. As at 31 July 2024
and up to the date of this report, the target of 40% of women on
the Board, the target of at least one senior Board position held
by a woman and for at least one individual to be from a minority
ethnic background have been met.
Strategic Report continued
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Annual Report 2024
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Fidelity Asian Values PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
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.
The Board also meets the UK Listing Rule and the FCA’s targets
on diversity and also that one senior position is held by a
woman. A senior position is held by Clare Brady as Chairman.
Gender Reporting as at 31 July 2024
Number
of Board
Members
Percentage
of the
Board
Number of Senior
Board Positions
(Chair, Senior
Independent
Director and Chair
of Audit Committee)
Men 3 50% 2
Women 3 50% 1
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 following table. The Board also meets the UK Listing Rule
and the FCA’s targets that at least one Director is from an ethnic
minority background. Hussein Barma is from an ethnic minority
background.
Ethnic Background Reporting as at 31 July 2024
Number
of Board
Members
Percentage
of the
Board
Number of Senior
Board Positions
(Chair, Senior
Independent Director
and Chair of Audit
Committee)
White
British or
other White
(including
minority
white
groups)
5 83% 2
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.investment.fidelity.co.uk/
sustainable-investing/sustainability-at-fidelity.
Streamlined Energy and Carbon Reporting (SECR)
As an investment company with all its activities outsourced to
third parties, the Company’s own direct environmental impact is
minimal. The Company has no premises, consumes no electricity,
gas or diesel fuel and consequently does not have a measurable
carbon footprint. The Company is categorised as a low energy
user (less than 40MWH) under the Streamlined Energy & Carbon
Reporting regulations and, therefore, is not required to disclose
any energy and carbon information in this Annual Report.
Task Force on Climate-Related Financial Disclosures (TCFD)
Product reports of Task Force on Climate-related Financial
Disclosures (TCFD) can be obtained via the Additional
Information section on the Company’s website at
www.fidelity.co.uk/asianvalues.
Job No: 52961 Proof Event: 20 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2024
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
10 October 2024
Strategic Report continued
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Board of Directors
Clare Brady
Chairman (since 29 November 2023)
Appointed 1 August 2019
M
N
Clare Brady is a chartered governance professional with 35 years’
experience in banking and financial services. She is an independent
member of the Audit and Risk Commission of the International
Federation of Red Cross and Red Crescent Societies. She is also a non-
executive director of The Golden Charter Trust Limited, a member of its
Audit and Risk Committee and chairs its Nominations and Remuneration
Committee. Clare was a non-executive director of Credit Suisse until
its recent merger with UBS. In her executive career, she was 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, Clare
headed audit and compliance functions at the Bank of England, Barclays
Capital, HSBC and Deutsche Bank.
Matthew Sutherland
Senior Independent Director
(since 29 November 2023)
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.
Hussein Barma
Chairman of the Audit Committee
Appointed 24 November 2022
A
M
N
Hussein Barma is a non-executive Director and Chair of the Audit and
Remuneration Committees of Atalaya Mining plc (which is listed on
the Main Market of the London Stock Exchange) and a non-executive
Director and Audit Chair of Chaarat Gold Holdings Limited (which is a
privately held company). He is an independent Governor and Deputy
Chair of the Audit Committee of the University of the Arts London and
a 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.
Lucy Costa Duarte
Director
Appointed 1 June 2024
A
M
N
Lucy Costa Duarte is a non-executive director of MIGO Opportunities
Trust plc, Investment Director for International Biotechnology Trust plc
(IBT) at Schroders and an AIC Marketing Ambassador. Lucy’s expertise
is in marketing investment trusts to retail investors, private wealth
managers and institutions. In her earlier career, Lucy was a director
at Citigroup, heading the emerging markets ECM team in London.
Lucy left Citigroup in 2007 and took a career break, before starting
work with IBT at SV Health Investors in 2016 and moving with IBT to
Schroders in 2023.
Sally Macdonald
Chairman of the Management
Engagement Committee
(from 3 April 2024)
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 over
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.
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
Asset Management Ltd and EdenTree Investment Management. He is
a past non-executive Director of Liontrust Panthera, Alquity Investment
Management Ltd and Vindependents and a past adviser to Gresham
House Asset Management. 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.
Job No: 52961 Proof Event: 20 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FAV Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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Directors’ Report
The Directors have pleasure in presenting their report and
the audited Financial Statements of the Company for the year
ended 31 July 2024. The Company is a public limited company
incorporated in England and Wales on 2 April 1996 with the
registered number 03183919 and commenced business as an
investment trust on 13 January 2000.
Results and Dividends
The Company’s results for the year ended 31 July 2024 are set
out in the Income Statement on page 52. The revenue return was
14.2 pence and the capital return was 2.1 pence, giving a total
return of 16.3 pence per ordinary share.
The Directors recommend that a final dividend of 14.5 pence
(2023: 14.5 pence) per ordinary share be paid on 6 December
2024 to shareholders who appear on the share register as at
the close of business on 8 November 2024 (ex-dividend date
7 November 2024).
The Board
All Directors served on the Board throughout the year ended
31 July 2024 and up to the date of this report, with the exception
of Lucy Costa Duarte who was appointed on 1 June 2024
and Kate Bolsover who stepped down from the Board at the
conclusion of the AGM on 29 November 2023. A brief description
of all serving Directors as at the date of this report is shown on
page 33 and indicates their qualifications for Board membership.
In line with the Board’s succession plan, Michael Warren will not
be seeking re-election at the AGM on 21 November 2024.
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 (2023: nil).
The Board reviews the Management Agreement at least annually
and details are included in the Corporate Governance Statement
on page 36.
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 2024
is detailed in Note 4 on page 59 and the secretarial and
administration fee is detailed in Note 5 on page 60.
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 36 to 38.
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 60.
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 2024, the issued share capital of the Company was
75,580,889 ordinary shares (2023: 75,580,889) of which 4,520,333
shares (2023: 3,751,553) are held in Treasury. Therefore, the number
of shares with voting rights was 71,060,556 (2023: 71,829,336).
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
ANNUAL GENERAL MEETING
The Notice of Meeting on pages 82 to 86 sets out the business
of the AGM to be held on 21 November 2024. The Notice of
Meeting and related papers are sent to shareholders at least
20 working days before the AGM.
At the AGM, the following items of special business will be
considered, which are summarised below.
Auditor’s Appointment
A resolution to reappoint Ernst & Young LLP as Auditor to the
Company will be proposed at the AGM on 21 November 2024.
Change of Investment Restriction
The Board has reviewed the investment restrictions with the
Portfolio Managers. As a result of this review, the Board is
seeking authority from shareholders to amend the Investment
Policy to update one of the investment restrictions. The Board
proposes to increase, from 5% to 15%, the percentage 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 Portfolio Managers have
explained to the Board that there are an increasing number of
opportunities to acquire investments with a strong Asian Region
investment rationale that are not listed or domiciled in the Asian
Region. It is expected that giving the Portfolio Managers greater
flexibility to invest in these opportunities would be beneficial to
shareholders and aligned with the Investment Objective.
The authority to amend the Investment Policy in order to amend
this investment restriction will be put to shareholders at the AGM
on 21 November 2024.
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
2024 (2023: 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 21 November 2024 and
resolutions to renew these authorities will be put to shareholders
at this AGM.
Ordinary Share Repurchases
During the year ended 31 July 2024, 768,780 ordinary shares
(2023: 569,000) were repurchased for holding in Treasury. Since
then and as at the date of this report, 683,586 ordinary shares
have been repurchased into Treasury.
The authority to repurchase ordinary shares expires at the AGM
on 21 November 2024 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.
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.
SUBSTANTIAL SHARE INTERESTS
As at 31 July 2024 and 31 August 2024, the shareholders listed in the table below held more than 3% of the issued ordinary share
capital of the Company.
Shareholders
31 July
2024
%
30 September
2024
%
Fidelity Platform 13.67 13.63
Interactive Investor 7.47 7.31
Charles Stanley 7.33 7.53
Hargreaves Lansdown 7.31 7.18
Evelyn Partners 6.22 6.23
Rathbones 4.75 4.49
RBC Brewin Dolphin 4.22 4.29
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 22 to 32.
By Order of the Board
FIL Investments International
Secretary
10 October 2024
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Annual Report 2024
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 6.6.6
(6) of the UK Listing Rules. This Statement, together with the
Statement of Directors’ Responsibilities on page 42, 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 Clare Brady, 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
page 4.
Matthew Sutherland is the Senior Independent Director and fulfils
the role as a sounding board for the Chairman, intermediary
for the other Directors as necessary and acts as a channel of
communication for shareholders in the event that contact through
the Chairman is inappropriate.
Biographical details of all the Directors are on page 33.
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.
Professional negligence liability risks
The requirement to cover potential liability risks arising from
professional negligence is covered by the Manager’s own funds.
Sufficient capital above the regulatory limit is held which is
monitored by the board of the Manager.
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 an annual strategy meeting,
and a due diligence trip to Asia every other year. During the last
trip, held in March 2023, the Board met with the management of
existing and potential investee companies alongside the Portfolio
Managers. The Board also met with Fidelity’s research and
analyst teams. In the financial year, the Chairman undertook an
additional trip to Asia. Details of this trip are in the Chairman’s
Statement on page 3.
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Board’s Attendance Record for the Reporting Year
Regular
Board
Meetings
Audit
Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination
Committee
Meetings
Clare Brady
1,2
4/4 1/1 1/1 1/1
Hussein Barma 4/4 3/3 1/1 1/1
Kate Bolsover
3
2/2 n/a 1/1 n/a
Sally Macdonald 4/4 3/3 1/1 1/1
Lucy Costa Duarte
4
1/1 1/1 n/a 1/1
Matthew Sutherland 4/4 3/3 1/1 1/1
Michael Warren 4/4 3/3 1/1 1/1
1 Appointed as Chairman with effect from 29 November 2023.
2 Clare Brady attended one Audit Committee meeting, as a member, prior to her appointment as Chairman.
3 Retired on 29 November 2023.
4 Appointed on 1 June 2024.
Figures indicate those meetings for which each Director was eligible to attend and attended in the year. Regular Board meetings
exclude the Board Strategy Day and ad hoc meetings for other Board business.
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 Clare Brady, 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 43 to 45.
Management Engagement Committee
Composition
The Management Engagement Committee is chaired by Sally
Macdonald 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 2024 are in the Directors’
Report on page 34.
Nomination Committee
Composition
The Nomination Committee is chaired by Clare Brady and
consists of all of the Directors.
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 Lucy Costa Duarte through the services
of Cornforth Consulting Ltd, which has no connection with the
Company. Mrs Costa Duarte’s appointment was effective from
1 June 2024.
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.
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Annual Report 2024
The Committee makes recommendations to the Board for the
continuation or cessation of service of Directors and reviews the
tenure of Directors. It also considers the election and re-election
of Directors ahead of each AGM. For the forthcoming AGM on
21 November 2024, 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 21 November 2024. Michael Warren, 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 42 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 46 to 51.
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 2024 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 21 November 2024, details of which can be found on
page 4. Nitin Bajaj, the Portfolio Manager and Ajinka Dhavale,
the Co-Portfolio Manager, will be making a presentation.
Annual General Meeting
The Notice of Meeting on pages 82 to 86 sets out the business
of the AGM and the special business resolutions are explained
more fully on pages 80 and 81. 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
Clare Brady
Chairman
10 October 2024
Corporate Governance Statement continued
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Chairman’s Statement
The Directors’ Remuneration Report for the year ended 31 July
2024 has been prepared in accordance with the Large & Medium-
sized Companies & Groups (Accounts & Reports) (Amendment)
Regulations 2013 (the “Regulations”). As the Board is comprised
entirely of Non-Executive Directors and has no chief executive
officer and employees, many parts of the Regulations, in particular
those relating to chief executive officer pay and employee pay, do
not apply and are therefore not disclosed in this report.
An ordinary resolution to approve the Directors’ Remuneration
Report will be put to shareholders at the AGM on 21 November
2024. The Company’s Auditor is required to audit certain sections
of this report and where such disclosures have been audited, the
specific section has been indicated as such. The Auditor’s opinion
is included in its report on pages 46 to 51.
Directors’ Remuneration
The annual fee structure with effect from 1 August 2024 is as
follows:
Role
1 August
2024
1 August
2023
Chairman £46,000 £44,100
Chairman of the Audit Committee £38,000 £36,750
Senior Independent Director £33,500 £32,500
Directors £31,500 £30,500
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 21 November 2024.
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 2024 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 29 November 2023, 99.33% of votes were
cast in favour of the Directors’ Remuneration Report for the year
ended 31 July 2023, 0.41% of votes were cast against and 0.26%
of votes were withheld.
The Directors’ Remuneration Report for the year ended 31 July
2024 will be put to shareholders at the AGM on 21 November
2024, 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 2024 was £190,118 (2023: £195,498). 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.
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 2024
£
31 July 2023
£
Expenditure on Directors’
Remuneration:
Fees and taxable expenses 190,118 195,498
Distribution to Shareholders:
Dividend payments 10,399,000 10,066,000
Directors’ Remuneration Report
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Remuneration of Directors
2025 2024 2024 2024 2023 2023 2023
Projected
Total
Fees
(Audited)
Taxable
Expenses
(Audited)
Total
(Audited)
Fees
(Audited)
Taxable
Expenses
(Audited)
Total
(Audited)
(£) (£) (£) (£) (£) (£) (£)
Clare Brady
1
46,000 40,323 – 40,323 29,000 635 29,635
Hussein Barma
2
38,000 36,750 – 36,750 24,006 – 24,006
Kate Bolsover
3
n/a 14,417 – 14,417 42,000 949 42,949
Lucy Costa Duarte
4
31,500 5,083 – 5,083 n/a n/a n/a
Sally Macdonald 31,500 30,500 651 31,151 29,000 666 29,666
Grahame Stott
5
n/a n/a n/a n/a 11,039 – 11,039
Matthew Sutherland
6
33,500 31,849 45 31,894 29,000 – 29,000
Michael Warren
7
9,752 30,500 – 30,500 29,000 203 29,203
Total 190,252 189,422 696 190,118 193,045 2,453 195,498
1 Appointed as Chairman on 29 November 2023.
2 Appointed on 24 November 2022.
3 Retired on 29 November 2023.
4 Appointed on 1 June 2024.
5 Retired on 23 November 2022.
6 Appointed as Senior Independent Director on 29 November 2023.
7 Retiring on 21 November 2024.
.
Five year change comparison in Directors’ Remuneration
The table below sets out the change in Directors’ fees over the last five years.
2024 2019 Change (%)
Chairman 44,100 36,000 22.5%
Chairman of the Audit Committee 36,750 30,000 22.5%
Senior Independent Director 32,500 26,000 25.0%
Director 30,500 26,000 17.3%
Performance
The Company’s objective is to achieve long-term capital growth principally from the stockmarkets of the Asian Region excluding
Japan. The graph below shows performance over ten years to 31 July 2024 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 2024
+165.1%
+154.6%
+169.7%
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 14 July 15 July 16 July 17 July 18 July 19 July 20 July 21 July 23 July 24July 22
Directors’ Remuneration Report continued
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
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
2024
31 July
2023
Change
during year
Ordinary Shares
Clare Brady
1
10,589 2,500 8,089
Hussein Barma 2,500 2,500 –
Kate Bolsover
2
n/a 15,452 –
Lucy Costa Duarte
3
– n/a –
Sally Macdonald 2,734 2,734 –
Matthew Sutherland 27,859 27,859 –
Michael Warren 10,000 10,000 –
1 On 6 August 2024, Clare Brady purchased a further 2,484 shares.
2 Retired on 29 November 2023.
3 Appointed on 1 June 2024.
On Behalf of the Board
Clare Brady
Chairman
10 October 2024
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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 10 October 2024 and signed on its behalf by:
Clare Brady
Chairman
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Annual Report 2024
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
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
38 for further details) and the effectiveness of the external audit
process and how this has been assessed for the year ended
31 July 2024.
Composition of the Committee
The members of the Committee are myself as Chairman, Sally
Macdonald, Matthew Sutherland, Lucy Costa Duarte and Michael
Warren. In line with the recommendation of the 2018 UK Corporate
Governance Code, Clare Brady, 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 of the Committee
The Committee’s authority and duties are 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 and to ensure they are fair,
balanced and understandable; and
• Reviewing the existence and performance of material controls
operating in the Company, including the review of internal
controls reporting of its service providers.
Meetings and business considered by the Committee
Since the date of the last Annual Report (11 October 2023), the
Committee has met three times and the Auditor attended two of
these meetings.
The following matters were reviewed at each Committee meeting:
• The Company’s risk management and internal controls
framework;
• The Company’s compliance with its investment policy limits;
• The valuation of unlisted investments;
• The Depositary’s oversight reporting; and
• The Company’s revenue and expenses forecasts and its
Balance Sheet.
In addition, the following matters were considered at the
Committee’s meetings:
April 2024
• The Half-Yearly Report and Financial Statements and
recommendation of its approval to the Board.
• The Going Concern Statement.
June 2024
• Review of Fidelity’s Risk and Internal Control Environment.
• The Auditor’s engagement letter and audit plan for the
Company’s year ending 31 July 2024.
October 2024
• The Auditor’s findings from the audit of the Company.
• The Auditor’s performance, independence and
reappointment.
• Compliance with Corporate Governance and regulatory
requirements.
• The Annual Report and Financial Statements and
recommendation of its approval to the Board following
review and conclusion by the Committee that they are fair,
balanced and understandable.
• The Viability and Going Concern Statement.
• The final dividend payment to be recommended to the
Board and shareholders for approval.
• The Committee’s Terms of Reference.
* 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 2024
Annual Report And Financial Statements
In the review of the Company’s Financial Statements for the year ended 31 July 2024, the Committee deliberated and considered many
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 56.
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 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 57 and 58. 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 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 2024, 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 42.
Report of the Audit Committee continued
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Annual Report 2024
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Fidelity Asian Values PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Independence and Effectiveness of the Audit Process
Ernst & Young LLP acted as the Company’s Auditor for the year
ended 31 July 2024.
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 2024; 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 third 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.
The Company is required to conduct an audit tender process
every ten years and an audit tender will be completed in 2025.
This process will be led by the Audit Committee who will complete
an assessment of external auditors’ proposals. Following this
assessment, a recommendation will be made to the Board
regarding whether a change of auditor should be made.
Audit Fees
Fees paid to the Auditor for the audit of the Company’s Financial
Statements are disclosed in Note 5 on page 60. The audit fee for
the reporting year was £50,993 (2023: £48,106).
Hussein Barma
Chairman of the Audit Committee
10 October 2024
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Annual Report 2024
Opinion
We have audited the financial statements of Fidelity Asian Values
PLC (the ‘Company’) for the year ended 31 July 2024 which
comprise the Income Statement, the Statement of Changes in
Equity, the Balance Sheet and the related notes 1 to 19, 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 2024 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 2025 which is at least 12 months from the date
of approval of these 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 and the
liquidity assessment of the investments and determined,
through testing of the methodology and calculations, that the
methods, inputs and assumptions utilised are appropriate to
be able to make an assessment for the Company;
• Consideration of the mitigating factors included in the
revenue and expense forecast that are within the control
of the Company. We reviewed the Company’s assessment
of the liquidity of investments held and evaluated the
Company’s ability to sell those investments in order to
cover working capital requirements should 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 2025 which is at least twelve months from the date of
approval of these financial statements.
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.
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
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 items in the Income Statement.
• Risk of incorrect valuation or ownership of the investment portfolio, including derivatives.
Materiality
• Overall materiality of £3.92m which represents 1% of Net Asset Value of the Company as of
31 July 2024.
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
Stakeholders are increasingly interested in how climate change will impact the companies. 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 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 the impact of 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. 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. We also challenged the Directors’ considerations of climate change in their assessment of viability
and associated disclosures.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to
impact a key audit matter.
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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 items in the Income Statement.
Refer to the Report of the Audit Committee
(page 44); Accounting policies (page 56); and
Note 3 of the Financial Statements (page 59).
The Company has reported revenue of £17.61m
(2023: £17.77m).
During the year, the Company received special
dividends amounting to £2.27m (2023: £0.56m),
of which £0.44m (2023: £0.14m) was classified
as revenue and £1.83m (2023: £0.42m) was
classified as capital.
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.
We have performed the following
procedures:
We obtained an understanding of the processes
and controls surrounding the revenue recognition
and classification of special dividends by
performing our 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;
For all dividends accrued, we assessed whether
the dividend obligations arose prior to 31 July
2024 with reference to an external source;
To test completeness of recorded income, we
tested that all expected dividends for each
investee company 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 and one
which we have judgementally selected, we
assessed the appropriateness of the Company’s
classification as either revenue or capital by
reviewing the rationale for the underlying
distribution.
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
items in the Income
Statement.
Independent Auditor’s Report to the Members
of Fidelity Asian Values PLC continued
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Annual Report 2024
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Risk Our response to the risk Key observations
communicated to the
Audit Committee
Risk of incorrect valuation or ownership
of the investment portfolio, including
derivatives
Refer to the Report of the Audit Committee
(page 44); Accounting policies (pages 55 and
56); and Notes 10 and 11 of the Financial
Statements (pages 63 and 64).
At 31 July 2024, the Company held investments
with a value of £378.58m (2023: £377.63m).
The Company also has net derivative liabilities
amounting to £0.75m (2023: net derivative assets
amounting to £0.09m).
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.
Investments which are unlisted are priced using
market based valuation approaches.
We have performed the following
procedures:
We obtained an understanding of the processes
and controls surrounding investment pricing
and legal title by performing our walkthrough
procedures;
For all listed 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;
For the unlisted investments, we obtained and
assessed the valuation papers to support the
valuation of the investments as at the year end,
agreed the inputs made and challenged and
assessed the method and estimates used in
line with International Private Equity and Venture
Capital guidelines (“IPEV”); and
We compared the Company’s investment
holdings as at 31 July 2024 to the independent
confirmation received directly from the
Company’s Custodian and Depositary. We
agreed all open year-end 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.
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 £3.92m (2023:
£3.95m), which is 1% (2023: 1%) of the Company’s Net Assets.
We believe that the 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% (2023:
75%) of our planning materiality, namely £2.94m (2023: £2.96m).
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 £0.57m (2023: £0.61m) being 5% (2023: 5%) of revenue profit
before tax.
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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 (2023:
£0.20m), 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’ Reports 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 UK Listing Rules.
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 page 29;
• 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 29;
• 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 page 29;
• Directors’ statement on fair, balanced and understandable
set out on page 38;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 24;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 38; and
• The section describing the work of the Audit Committee set
out on page 43;
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
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement
set out on page 42, 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 UK
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.
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 nine years,
covering the years ending 31 July 2016 to 31 July 2024.
• 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
10 October 2024
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Income Statement
for the year ended 31 July 2024
The Notes on pages 55 to 76 form an integral part of these Financial Statements.
Year ended 31 July 2024 Year ended 31 July 2023
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains on investments 10 – 10,399 10,399 – 29,025 29,025
(Losses)/gains on derivative instruments 11 – (5,073) (5,073) – 1,781 1,781
Income 3 17,605 – 17,605 17,773 – 17,773
Investment management fees 4 (2,749) (744) (3,493) (2,644) (281) (2,925)
Other expenses 5 (992) – (992) (988) – (988)
Foreign exchange gains – 107 107 – 1,089 1,089
Net return on ordinary activities before finance costs
and taxation 13,864 4,689 18,553 14,141 31,614 45,755
Finance costs 6 (2,473) – (2,473) (1,997) – (1,997)
Net return on ordinary activities before taxation 11,391 4,689 16,080 12,144 31,614 43,758
Taxation on return on ordinary activities 7 (1,203) (3,215) (4,418) (1,238) (2,882) (4,120)
Net return on ordinary activities after taxation for the
year 10,188 1,474 11,662 10,906 28,732 39,638
Return per ordinary share 8 14.24p 2.06p 16.30p 15.17p 39.95p 55.12p
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 2024
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other non-
distributable
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
funds
£’000
Total shareholders’ funds at
31 July 2023 18,895 50,501 3,197 7,367 299,562 15,055 394,577
Net return on ordinary activities after
taxation for the year –– – – 1,474 10,188 11,662
Repurchase of ordinary shares 14 –– – – (3,826) – (3,826)
Dividend paid to shareholders 9 –– – – – (10,399) (10,399)
Total shareholders’ funds at
31 July 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
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
The Notes on pages 55 to 76 form an integral part of these Financial Statements.
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Balance Sheet
as at 31 July 2024
Company number 03183919
Notes
2024
£’000
2023
£’000
Fixed assets
Investments 10 378,577 377,631
Current assets
Derivative instruments 11 1,297 1,758
Debtors 12 4,379 3,556
Amounts held at futures clearing houses and brokers 4,413 3,820
Cash at bank 9,070 13,029
19,159 22,163
Current liabilities
Derivative instruments 11 (2,045) (1,665)
Other creditors 13 (3,242) (3,552)
Bank overdrafts (435) –
(5,722) (5,217)
Net current assets 13,437 16,946
Net assets 392,014 394,577
Capital and reserves
Share capital 14 18,895 18,895
Share premium account 15 50,501 50,501
Capital redemption reserve 15 3,197 3,197
Other non-distributable reserve 15 7,367 7,367
Capital reserve 15 297,210 299,562
Revenue reserve 15 14,844 15,055
Total shareholders’ funds 392,014 394,577
Net asset value per ordinary share 16 551.66p 549.33p
The Financial Statements on pages 52 to 76 were approved by the Board of Directors on 10 October 2024 and were signed on its
behalf by:
Clare Brady
Chairman
The Notes on pages 55 to 76 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 2025 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 page 29.
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 page 29 takes account of all events and conditions up to
31 October 2025, which is at least twelve months from the date of approval of these Financial Statements.
b) Significant accounting estimates and judgements – The preparation of the Financial Statements requires the use of estimates
and judgements. These estimates and judgements affect the reported amounts of assets and liabilities at the reporting date. While
estimates are based on best judgement using information and financial data available, the actual outcome may differ from these
estimates.
The key sources of estimation and uncertainty relate to the fair value of the unlisted investments.
Judgements
The Directors consider whether each fair value is appropriate following detailed review and challenge of the pricing methodology. The
judgement applied in the selection of the methodology used (see Note 2 (k)) for determining the fair value of each unlisted investment
can have a significant impact upon the valuation.
Estimates
The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments by the Manager’s Fair
Value Committee (“FVC”), with support from the external valuer and Fidelity’s unlisted investments specialists, for detailed review and
appropriate challenge by the Directors. This estimate is key as it significantly impacts the valuation of the unlisted investments at the
Balance Sheet date. When no recent primary or secondary transaction in the company’s shares have taken place, the fair valuation
process involves estimation using subjective inputs that are unobservable (for which market data is unavailable). The estimates
involved in the valuation process may include the following:
(i) the selection of appropriate comparable companies. Comparable companies are chosen on the basis of their business
characteristics and growth patterns;
(ii) the selection of a revenue metric (either historical or forecast);
(iii) the selection of an appropriate illiquidity discount factor to reflect the reduced liquidity of unlisted companies versus their listed
peers;
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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 the Other Price Risk
Sensitivity in Note 17, to illustrate the effect on the Financial Statements of an over or under estimation of fair value.
The risk of an over or under estimation of fair value is greater when methodologies are applied using more subjective inputs.
c) Segmental reporting – The Company is engaged in a single segment business and, therefore, no segmental reporting is
provided.
d) Presentation of the Income Statement – In order to reflect better the activities of an investment company and in accordance
with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and
capital nature has been prepared alongside the Income Statement. The net revenue return after taxation for the year is the measure
the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Section 1159 of the
Corporation Tax Act 2010.
e) Income – Income from equity investments is accounted for on the date on which the right to receive the payment is established,
normally the ex-dividend date. Overseas dividends are accounted for gross of any tax deducted at source. Amounts are credited to
the revenue column of the Income Statement. Where the Company has elected to receive its dividends in the form of additional shares
rather than cash, the amount of the cash dividend foregone is recognised in the revenue column of the Income Statement. Any excess
in the value of the shares received over the amount of the cash dividend is recognised in the capital column of the Income Statement.
Special dividends are treated as a revenue receipt or a capital receipt depending on the facts and circumstances of each particular
case.
Derivative instrument income received from dividends on long contracts for difference (“CFDs”) are accounted for on the date on which
the right to receive the payment is established, normally the ex-dividend date. The amount net of tax is credited to the revenue column
of the Income Statement.
Interest received on CFDs, 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 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 long-term capital growth. This portfolio of investments is managed and its performance evaluated on a fair value basis,
in accordance with a documented investment strategy, and information about the portfolio is provided on that basis to the Company’s
Board of Directors. Investments are measured at fair value with changes in fair value recognised in profit or loss, in accordance with
the provisions of both Section 11 and Section 12 of FRS 102. The fair value of investments is initially taken to be their cost and is
subsequently measured as follows:
• Listed investments are valued at bid prices, or last market prices, depending on the convention of the exchange on which they
are listed; and
• Unlisted investments are not quoted, or are not frequently traded, and are stated at the best estimate of fair value. The
Manager’s Fair Value Committee (“FVC”), which is independent of the Portfolio Managers’ team, meets quarterly to determine
the fair value of unlisted investments. These are based on the principles outlined in Note 2 (b).
The unlisted investments are valued at fair value following a detailed review and appropriate challenge by the Directors of the pricing
methodology proposed by the FVC.
The FVC provide a recommendation of fair values to the Directors based on recognised valuation techniques that take account of the
cost of the investment, recent arm’s length transactions in the same or similar investments and financial performance of the investment
since purchase. Consideration is given to the input received from the Fidelity International analyst that covers the company, the
external valuer and Fidelity’s unlisted investments specialist.
In accordance with the AIC SORP, the Company includes transaction costs, incidental to the purchase or sale of investments, within
gains on investments in the capital column of the Income Statement and has disclosed these costs in Note 10.
l) Derivative instruments – When appropriate, permitted transactions in derivative instruments are used. Derivative transactions into
which the Company may enter include long and short CFDs, futures, options and forward currency contracts. Derivatives are classified
as other financial instruments and are initially accounted and measured at fair value on the date the derivative contract is entered into
and subsequently measured at fair value as follows:
• Long and short CFDs - the difference between the strike price and the value of the underlying shares in the contract;
• Futures - the difference between the contract price and the quoted trade price;
• Forward currency contracts - valued at the appropriate quoted forward foreign exchange rate ruling at the Balance Sheet date;
and
• Options - the quoted trade price for the contract.
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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, Indian capital gains tax payable, short CFD
dividends payable, investment management fees, secretarial and administration fees and other creditors and expenses accrued in the
ordinary course of business. If payment is due within one year or less (or in the normal operating cycle of the business, if longer) they
are classified as current liabilities. If not, they are presented as non-current liabilities. They are recognised initially at fair value and,
where applicable, subsequently measured at amortised cost using the effective interest rate method.
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 element of management fee;
• 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 £1,088,000 (2023: losses of £899,000). See Note 17 on pages 74 and 75 for further details on the level 3
investments.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
3 Income
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
Investment income
Overseas dividends 14,009 14,847
Overseas scrip dividends 172 266
Interest on securities 584 164
14,765 15,277
Derivative income
Dividends received on long CFDs 1,797 1,743
Interest received on CFDs 462 258
2,259 2,001
Other interest
Interest received on collateral and bank deposits 581 495
Total income 17,605 17,773
Special dividends of £1,827,000 have been recognised in capital during the year (2023: £420,000).
4 Investment Management Fees
Year ended 31 July 2024 Year ended 31 July 2023
Revenue
£’000
Capital
1
£’000
Total
£’000
Revenue
£’000
Capital
1
£’000
Total
£’000
Investment management fees 2,749 744 3,493 2,644 281 2,925
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.
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5 Other Expenses
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
Allocated to revenue:
AIC fees 21 21
Custody fees 73 85
Depositary fees 31 30
Directors’ expenses 54 35
Directors’ fees
1
189 193
Legal and professional fees 189 161
Marketing expenses 172 195
Printing and publication expenses 73 86
Registrars’ fees 44 38
Secretarial and administration fees payable to the Investment Manager 75 75
Sundry other expenses 20 21
Fees payable to the Company's Independent Auditor for the audit of the Financial Statements 51 48
992 988
1 Details of the breakdown of Directors’ fees are disclosed in the Directors’ Remuneration Report on page 40.
6 Finance Costs
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
Interest on bank overdrafts 1 2
Interest paid on CFDs 2,147 1,788
Dividends paid on short CFDs 325 207
2,473 1,997
Notes to the Financial Statements continued
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Fidelity Asian Values PLC
GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
7 Taxation on Return on Ordinary Activities
Year ended 31 July 2024 Year ended 31 July 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
a) Analysis of the taxation charge for
the year
Overseas taxation 1,203 – 1,203 1,238 – 1,238
Indian capital gains tax – 3,215 3,215 – 2,882 2,882
Taxation charge for the year
(see Note 7b) 1,203 3,215 4,418 1,238 2,882 4,120
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%
(2023: 25.00%). A reconciliation of the standard rate of UK corporation tax to the taxation charge for the year is shown below:
Year ended 31 July 2024 Year ended 31 July 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return on ordinary activities before
taxation 11,391 4,689 16,080 12,144 31,614 43,758
Net return on ordinary activities before
taxation multiplied by the standard rate
of UK corporation tax of 25.00% (2023:
blended rate of 21.01%) 2,848 1,172 4,020 2,551 6,642 9,193
Effects of:
Capital gains not taxable
1
– (1,358) (1,358) – (6,701) (6,701)
Income not taxable (3,464) – (3,464) (3,137) – (3,137)
Excess management expenses 620 186 806 586 59 645
Expense relief for overseas taxation (4) – (4) – – –
Overseas taxation 1,203 – 1,203 1,238 – 1,238
Indian capital gains tax
2
– 3,215 3,215 – 2,882 2,882
Taxation charge for the year
(see Note 7a) 1,203 3,215 4,418 1,238 2,882 4,120
1 The Company is exempt from UK corporation tax on capital gains as it meets the HM Revenue & Customs criteria for an investment company set out in Section 1159 of
the Corporation Tax Act 2010.
2 The Indian capital gains tax charge is composed of £1,081,000 (2023: £527,000) paid in the period and £2,134,000 (2023: £2,355,000) deferred until such time as the
Indian investments are sold.
c) Deferred taxation
A deferred tax asset of £9,432,000 (2023: £8,626,000), in respect of excess management expenses of £35,457,000 (2023: £32,235,000)
and excess interest paid of £2,271,000 (2023: £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% to 25% from 1 April 2023. The rate of 25% has been applied to calculate the
unrecognised deferred tax asset for the current year (2023: 25.00%).
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8 Return per Ordinary Share
Year ended
31.07.24
Year ended
31.07.23
Revenue return per ordinary share 14.24p 15.17p
Capital return per ordinary share 2.06p 39.95p
Total return per ordinary share 16.30p 55.12p
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 10,188 10,906
Net capital return on ordinary activities after taxation 1,474 28,732
Net total return on ordinary activities after taxation 11,662 39,638
Number Number
Weighted average number of ordinary shares held outside of Treasury 71,551,097 71,912,335
9 Dividends Paid to Shareholders
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
Dividend paid
Dividend of 14.5 pence per ordinary share paid for the year ended 31 July 2023 10,399 –
Dividend of 14.0 pence per ordinary share paid for the year ended 31 July 2022 – 10,066
10,399 10,066
Dividend proposed
Dividend proposed of 14.5 pence per ordinary share for the year ended 31 July 2024 10,204 –
Dividend proposed of 14.5 pence per ordinary share for the year ended 31 July 2023 – 10,415
10,204 10,415
The Directors have proposed the payment of a dividend for the year ended 31 July 2024 of 14.5 pence per ordinary share which is
subject to approval by shareholders at the Annual General Meeting on 21 November 2024 and has not been included as a liability in
these Financial Statements. If approved, the dividend will be paid on 6 December 2024 to shareholders on the register at the close of
business on 8 November 2024 (ex-dividend date 7 November 2024).
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
10 Investments at Fair Value through Profit or Loss
2024
£’000
2023
£’000
Listed investments 378,517 376,751
Unlisted investments 60 880
Investments at fair value 378,577 377,631
Opening book cost 374,514 336,727
Opening investment holding gains 3,117 2,118
Opening fair value 377,631 338,845
Movements in the year
Purchases at cost 217,080 209,419
Sales – proceeds (226,533) (199,658)
Gains on investments 10,399 29,025
Closing fair value 378,577 377,631
Closing book cost 406,135 374,514
Closing investment holding (losses)/gains (27,558) 3,117
Closing fair value 378,577 377,631
The Company received £226,533,000 (2023: £199,658,000) from investments sold in the year. The book cost of these investments when
they were purchased was £185,459,000 (2023: £171,632,000). 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
31.07.24
£’000
Year ended
31.07.23
£’000
Purchases transaction costs 249 311
Sales transaction costs 410 416
659 727
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11 Derivative Instruments
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
(Losses)/gains on derivative instruments
Realised (losses)/gains on long CFD positions closed (6,842) 393
Realised gains/(losses) on short CFD positions closed 2,417 (876)
Realised losses on futures contracts closed (62) (109)
Realised gains on options contracts closed 1,136 951
Realised gains on forward currency contracts – 118
Movement in investment holding (losses)/gains on long CFDs (2,113) 1,016
Movement in investment holding gains/(losses) on short CFDs 909 (261)
Movement in investment holding (losses)/gains on futures (162) 270
Movement in investment holding (losses)/gains on options (356) 233
Movement in investment holding gains on forward currency contracts – 46
(5,073) 1,781
2024
Fair value
£’000
2023
Fair value
£’000
Derivative instruments recognised on the Balance Sheet
Derivative instrument assets 1,297 1,758
Derivative instrument liabilities (2,045) (1,665)
(748) 93
2024 2023
Fair value
£’000
Asset
exposure
£’000
Fair value
£’000
Asset
exposure
£’000
At the year end the Company held the following derivative
instruments:
Long CFDs (1,315) 48,144 798 44,089
Long future – – 172 4,061
Call options (long exposure) 208 2,805 – –
Put options – – (156) 1,466
Short CFDs 373 12,995 (536) 10,586
Short future – – (10) 1,292
Call options (short exposure) (14) 374 (175) 1,705
(748) 64,318 93 63,199
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
12 Debtors
2024
£’000
2023
£’000
Securities sold for future settlement 2,733 1,366
Amounts receivable on settlement of derivatives 66 162
Accrued income 1,162 1,572
Taxation recoverable 302 315
Other debtors and prepayments 116 141
4,379 3,556
13 Other Creditors
2024
£’000
2023
£’000
Securities purchased for future settlement 201 598
Indian capital gains tax payable 2,134 2,355
Amounts payable on short CFD dividends 214 –
Creditors and accruals 693 599
3,242 3,552
14 Share Capital
2024 2023
Number of
shares
Nominal
value
£’000
Number of
shares
Nominal
value
£’000
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside of Treasury
Beginning of the year 71,829,336 17,958 72,398,336 18,100
Ordinary shares repurchased into Treasury (768,780) (192) (569,000) (142)
End of the year 71,060,556 17,766 71,829,336 17,958
Ordinary shares of 25 pence each held in Treasury
1
Beginning of the year 3,751,553 937 3,182,553 795
Ordinary shares repurchased into Treasury 768,780 192 569,000 142
End of the year 4,520,333 1,129 3,751,553 937
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 £3,826,000 (2023: £2,618,000).
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15 Capital and Reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other non-
distributable
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
funds
£’000
At 1 August 2023 18,895 50,501 3,197 7,367 299,562 15,055 394,577
Gains on investments (see Note 10) –– – – 10,399 – 10,399
Losses on derivative instruments (see Note 11) –– – – (5,073) – (5,073)
Foreign exchange gains –– – – 107 – 107
Investment management fees (see Note 4) –– – – (744) – (744)
Indian capital gains tax (see Note 7) –– – – (3,215) – (3,215)
Revenue return on ordinary activities after
taxation for the year –– – – – 10,188 10,188
Dividend paid to shareholders (see Note 9) –– – – – (10,399) (10,399)
Repurchase of ordinary shares (see Note 14) –– – – (3,826) – (3,826)
At 31 July 2024 18,895 50,501 3,197 7,367 297,210 14,844 392,014
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
The capital reserve balance at 31 July 2024 includes investment holding losses of £27,558,000 (2023: gains of £3,117,000) as detailed
in Note 10. See Note 2 (p) 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 per ordinary share is based on the total shareholders’ funds divided by the number of ordinary shares
held outside of Treasury.
2024 2023
Total shareholders’ funds £392,014,000 £394,577,000
Ordinary shares held outside of Treasury at year end 71,060,556 71,829,336
Net asset value per ordinary share 551.66p 549.33p
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),
changes in legislation, taxation or regulation, cybercrime and information security, business continuity and crisis management,
competition and marketplace threats impacting business growth, level of discount to NAV, operational, key person and environmental,
social and governance (“ESG”). 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 22 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 may comprise:
• Equity shares (listed and unlisted), equity linked notes and corporate bonds held in accordance with the Company’s investment
objective and policies;
• Derivative instruments which comprise CFDs, forward currency contracts, futures and options on listed stocks and equity indices;
and
• Cash, liquid resources and short-term debtors and creditors that arise from its operations.
The risks identified arising from the Company’s financial instruments are market price risk (which comprises interest rate risk, foreign
currency risk and other price risk), liquidity risk, counterparty risk, credit risk and derivative instruments risk. The Board reviews and
agrees policies for managing each of these risks, which are summarised below. These policies are consistent with those followed last
year.
Market price risk
Interest rate risk
The Company principally finances its operations through its share capital and reserves. In addition, the Company has gearing through
the use of derivative instruments. The level of gearing is reviewed by the Board and the Portfolio Managers. The Company is exposed
to a financial risk arising as a result of any increases in interest rates associated with the funding of the derivative instruments.
Interest rate risk exposure
The values of the Company’s financial instruments that are exposed to movements in interest rates are shown below:
2024
£’000
2023
£’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 49,459 43,291
Bank overdrafts 435 –
49,894 43,291
Exposure to financial instruments that earn interest
Short CFDs – exposure plus fair value 13,368 10,050
Cash at bank 9,070 13,029
Amounts held at futures clearing houses and brokers 4,413 3,820
26,851 26,899
Net exposure to financial instruments that bear interest (23,043) (16,392)
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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 Managers may seek to manage exposure to currency movements by using
forward and spot foreign exchange contracts. The Company can also be subject to short-term exposure to exchange rate movements,
for example, between the date when an investment is purchased or sold and the date when settlement of the transaction occurs.
Three principal areas have been identified where foreign currency risk could impact the Company:
• Movements in currency exchange rates affecting the value of investments and derivative instruments;
• Movements in currency exchange rates affecting short-term timing differences; and
• Movements in currency exchange rates affecting income received.
Currency exposure of financial assets
The currency exposure profile of the Company’s financial assets is shown below:
Currency
Investments
at fair value
£’000
Long
exposure to
derivative
instruments
1
£’000
Debtors
2
£’000
Cash at
bank
£’000
2024
Total
£’000
Hong Kong dollar 85,219 42,392 648 – 128,259
Indian rupee 67,191 – 4,493 19 71,703
Indonesian rupiah 62,226 – – – 62,226
US dollar 41,115 3,358 2,307 8,851 55,631
South Korean won 51,091 – 14 89 51,194
Australian dollar 18,557 3,223 926 – 22,706
Singapore dollar 10,789 1,976 – – 12,765
Taiwan dollar 11,113 – 301 86 11,500
Chinese renminbi 9,900 – – – 9,900
Philippine peso 6,928 – 3 – 6,931
Thai baht 4,109 – – – 4,109
Sri Lankan rupee 3,959 – – – 3,959
Other overseas currencies 6,380 – – – 6,380
UK sterling – – 100 25 125
378,577 50,949 8,792 9,070 447,388
1 The exposure to the market of long CFDs and call options.
2 Debtors include amounts held at futures clearing houses and brokers.
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
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.
Currency exposure of financial liabilities
The Company principally finances its investment activities 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
Bank
overdrafts
£’000
2024
Total
£’000
US dollar 9,665 230 – 9,895
Hong Kong dollar 3,704 216 435 4,355
Indian rupee – 2,134 – 2,134
UK sterling – 630 – 630
Korean won – 31 – 31
Singapore dollar – 1 – 1
13,369 3,242 435 17,046
1 The exposure to the market of short CFDs and call options.
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17 Financial Instruments continued
Currency
Short
exposure to
derivative
instruments
1
£’000
Other
creditors
£’000
Bank
overdrafts
£’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.
Other price risk
Other price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It
represents the potential loss the Company might suffer through holding market positions in the face of price movements.
The Board meets quarterly to consider the asset allocation of the portfolio and the risk associated with particular industry sectors
within the parameters of the investment objective.
The Portfolio Managers are responsible for actively monitoring the existing portfolio selected in accordance with the overall asset
allocation parameters described above and seeks to ensure that individual stocks also meet an acceptable risk/reward profile. Other
price risks arising from derivative positions, mainly due to the underlying exposures, are estimated using Value at Risk and Stress Tests
as set out in the Company’s internal Risk Management Process Document.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities. The
Company’s assets mainly comprise readily realisable securities and derivative instruments which can be sold easily to meet funding
commitments if necessary. Short-term flexibility, if required, is achieved by the use of a bank overdraft.
Liquidity risk exposure
At 31 July 2024, the undiscounted gross cash outflows of the financial liabilities were all repayable within one year and consisted of
derivative instrument liabilities of £2,045,000 (2023: £1,665,000), other creditors of £3,242,000 (2023: £3,552,000) and bank overdrafts
of £435,000 (2023: £nil).
Counterparty risk
Certain derivative instruments in which the Company may invest are not traded on an exchange but instead will be traded between
counterparties based on contractual relationships, under the terms outlined in the International Swaps and Derivatives Association’s
(“ISDA”) market standard derivative legal documentation. These are known as Over the Counter (“OTC”) trades. As a result, the
Company is subject to the risk that a counterparty may not perform its obligations under the related contract. In accordance with the
risk management process which the Manager employs, the Manager will seek to minimise such risk by only entering into transactions
with counterparties which are believed to have an adequate credit rating at the time the transaction is entered into, by ensuring that
formal legal agreements covering the terms of the contract are entered into in advance, and through adopting a counterparty risk
framework which measures, monitors and manages counterparty risk by the use of internal and external credit agency ratings and by
evaluating derivative instrument credit risk exposure.
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 2024, £405,000 (2023: £793,000) 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: HSBC Bank plc
£288,000 (2023: £124,000), Goldman Sachs International £117,000 (2023: £233,000) and J.P. Morgan Securities plc £nil (2023:
£436,000).
£4,413,000 (2023: £3,820,000), 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 £3,019,000 (2023: £3,346,000) in cash, J.P. Morgan Securities plc £1,394,000 (2023: £nil) in cash and Morgan
Stanley & Co International plc £nil (2023: £474,000) 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 Risk Management
Process Document. Derivative instruments are used by the Manager for the following purposes:
• To gain unfunded long exposure to equity markets, sectors or single stocks. Unfunded exposure is exposure gained without an
initial flow of capital;
• To hedge equity market risk using derivatives with the intention of at least partially mitigating losses in the exposures of the
Company’s portfolio as a result of falls in the equity market; and
• To position short exposures in the Company’s portfolio. These uncovered exposures benefit from falls in the prices of shares which
the Portfolio Managers believes to be over valued. These positions, therefore, distinguish themselves from other short exposures
held for hedging purposes since they are expected to add risk to the portfolio.
RISK SENSITIVITY ANALYSIS
Interest rate risk sensitivity analysis
Based on the financial instruments held and interest rates at 31 July 2024, 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 £230,000 (2023: decreased the net return and decreased the net assets by £164,000). 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 (2023: decreased the net return and decreased
the net assets) by the following amounts:
Currency
2024
£’000
2023
£’000
Hong Kong dollar 11,264 12,267
Indian rupee 6,324 7,668
Indonesian rupiah 5,657 4,709
South Korean won 4,651 3,021
US dollar 4,158 3,865
Australian dollar 2,064 2,048
Singapore dollar 1,160 1,425
Taiwan dollar 1,045 1,385
Chinese renminbi 900 1,291
Philippine peso 630 396
Thai baht 374 277
Sri Lankan rupee 360 311
Other overseas currencies 580 509
39,167 39,172
Notes to the Financial Statements continued
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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 (2023: increased the net return and increased the net
assets) by the following amounts:
Currency
2024
£’000
2023
£’000
Hong Kong dollar 13,767 14,993
Indian rupee 7,730 9,372
Indonesian rupiah 6,914 5,756
South Korean won 5,685 3,693
US dollar 5,082 4,724
Australian dollar 2,523 2,504
Singapore dollar 1,418 1,742
Taiwan dollar 1,278 1,693
Chinese renminbi 1,100 1,577
Philippine peso 770 485
Thai baht 457 338
Sri Lankan rupee 440 380
Other overseas currencies 709 623
47,873 47,880
Other price risk – exposure to investments sensitivity analysis
Based on the listed investments held and share prices at 31 July 2024, 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 £37,852,000 (2023: increased the net return and increased the net assets by £37,675,000). 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 2024 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 £6,000 (2023: increased the net return
and increased the net assets by £88,000). 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 2024, 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 £3,758,000 (2023: increased the net return and increased
the net assets by £3,603,000). A decrease of 10% in share prices would have had an equal and opposite effect.
Fair Value of Financial Assets and Liabilities
Financial assets and liabilities are stated in the Balance Sheet at values which are not materially different to their fair values. As
explained in Notes 2 (k) and (l), investments and derivative instruments are shown at fair value. In the case of cash 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). 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
2024
Total
£’000
Investments 358,503 19,028 1,046 378,577
Derivative instrument assets 131 1,166 – 1,297
358,634 20,194 1,046 379,874
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (14) (2,031) – (2,045)
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)
The table below sets out the movements in level 3 financial instruments during the year:
Year ended
31.07.24
£’000
Year ended
31.07.23
£’000
Beginning of the year 880 1,591
Transfers into level 3 at cost – Interojo
1
1,404 –
Transfers out of level 3 at cost – Tuhu Car
2
(1,049) –
Movement in investment holding losses (189) (711)
End of the year 1,046 880
1 Financial instruments are transferred into level 3 on the date they are suspended or when they have not traded for thirty days.
2 Financial instruments are transferred out of level 3 when they become listed.
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 two investments are unlisted and the latter two are
suspended from trading.
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 2024 is based on the company’s financial information, the macro-environment and the
Probability-Weighted Expected Return Model (“PWERM”). As at 31 July 2024, its fair value was £60,000 (2023: £69,000).
Eden Biologics
Eden Biologics develops biosimilars and is also engaged in providing process development and contract manufacturing solutions
to the biopharmaceutical industry and is an unlisted company. On 26 February 2018, the company voluntarily delisted from the
Taipei Exchange. In September 2023, there was a potential voluntary liquidation of the company which was subsequently postponed
indefinitely. The company is attempting to restructure, and the future outcome is uncertain. Given the distressed nature of the company
a decision was made for the price to be written down to nil as of the 16 April 2024. As at 31 July 2024, its fair value was £nil (2023:
£40,000).
Interojo
Interojo is a Korean-based company that manufactures and markets contact lenses. The company was suspended from trading on
the Korean Stock Exchange on 8 April 2024, due to the auditors being unable to give an unqualified audit opinion on stock valuation
concerns. The valuation at 31 July 2024 is based on a 20% discount of the suspended price. As at 31 July 2024, its fair value was
£986,000 (2023: £1,842,000).
Salt Lake Potash
Salt Lake Potash is a mineral exploration company. The company was suspended from trading on the Australian Stock Exchange on
27 July 2021 and in October 2021 it announced that it would be entering voluntary administration. As at 31 July 2024, its fair value was
£nil (2023: £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 54 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 pages 22 and 23. The principal risks and their management are
disclosed in the Strategic Report on pages 24 to 28 and in Note 17.
The Company’s gross and net gearing at the year end is set out above:
2024
Gross gearing Net gearing
Asset
exposure
£’000 %
1
Asset
exposure
£’000 %
1
Investments 378,577 96.6 378,577 96.6
Long CFDs 48,144 12.3 48,144 12.3
Call options (long exposure) 2,805 0.7 2,805 0.7
Total long exposures 429,526 109.6 429,526 109.6
Short CFDs 12,995 3.3 (12,995) (3.3)
Call options (short exposure) 374 0.1 (374) (0.1)
Gross asset exposure/net market exposure 442,895 113.0 416,157 106.2
Shareholders’ funds 392,014 392,014
Gearing
2
13.0% 6.2%
1 Asset exposure to the market expressed as a percentage of shareholders’ funds.
2 Gearing is the amount by which gross asset exposure/net market exposure exceeds shareholders’ funds expressed as a percentage of shareholders’ funds.
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18 Capital Resources and Gearing continued
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.
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 34. During the year, management fees of
£3,493,000 (2023: £2,925,000), and secretarial and administration fees of £75,000 (2023: £75,000) were payable to FII. At the Balance
Sheet date, management fees of £277,000 (2023: £292,000), and secretarial and administration fees of £6,200 (2023: £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 £172,000 (2023: £195,000). At the Balance Sheet date, marketing services of £77,000 (2023: £nil) 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 40 and 41. In addition
to the fees and taxable expenses disclosed in the Directors’ Remuneration Report, £19,000 (2023: £20,000) of employers’ National
Insurance contributions were paid by the Company. At the Balance Sheet date, Directors’ fees of £20,000 (2023: £16,000) were
accrued and payable.
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 90 and on
page 92.
Gearing
Gearing (both Gross and Net) is considered to be an Alternative Performance Measure. See Note 18 on pages 75 and 76 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 54 and Note
16 on page 66 for further details.
Ongoing charges
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 investment management fees and other expenses expressed as a
percentage of the average net asset values throughout the year.
2024
£’000
2023
£’000
Investment management fees (£’000) 2,749 2,644
Other expenses (£’000) 992 988
Ongoing charges (£’000) 3,741 3,632
Variable element of management fee (£’000) 744 281
Average net assets (£’000) 392,271 377,729
Ongoing charges ratio 0.95% 0.96%
Ongoing charges ratio including variable element of management fee 1.14% 1.03%
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 52 and Note 8 on page 62 for further details.
Total Return Performance
Total return performance is considered to be an Alternative Performance Measure. NAV per ordinary share total return includes
reinvestment of the dividend in the NAV of the Company on the ex-dividend date. The ordinary share price total return includes the
reinvestment of the net dividend in the month that the share price goes ex-dividend.
The tables below and on the next page provide information relating to the NAV per ordinary share and ordinary share price of the
Company and the impact of the dividend reinvestments and the total returns for the years ended 31 July 2024 and 31 July 2023.
2024
Net asset
value per
ordinary
share
Ordinary
share
price
31 July 2023 549.33p 520.00p
31 July 2024 551.66p 496.00p
Change in year +0.4% -4.6%
Impact of dividend reinvestment +2.8% +2.9%
Total return for the year +3.2% -1.7%
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Total Return Performance continued
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%
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 2024
Financial Year End
October 2024
Announcement of results for the year ended 31 July 2023
October 2024
Publication of the Annual Report
7 November 2024
Ex-Dividend Date
8 November 2024
Dividend Record Date
21 November 2024
Annual General Meeting
6 December 2024
Payment of the Dividend
31 January 2025
Half-Year End
April 2025
Announcement of the Half-Yearly results for the six months ended 31 January 2025
April 2025
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 Thursday,
21 November 2024 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 82 to 86.
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 and Ajinkya Dhavale, the Co-
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. Nitin, Ajinkya and the Board will
be very happy to answer any questions that shareholders may have.
Copies of the Portfolio Managers’ 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 84 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
Managers 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 159-339-971. 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 21 November 2024, resolutions will be proposed
relating to the items of business set out in the Notice of Meeting
on pages 82 to 86, including the items of special business
summarised below and on the next page.
Authority to Amend Investment Policy
Resolution 11 is an ordinary resolution and provides the Directors
with an authority to amend the Investment Policy to change an
investment restriction. If passed, this resolution will enable the
Portfolio Managers to allocate, “Up to 15% of the Company’s
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 Directors
would not expect to see a significant change to the portfolio in
the near term as a result of this change.
* Asian Region means the continent of Asia (including Hong Kong, South Korea,
Thailand, Singapore, Malaysia, Taiwan, Indonesia, Philippines, China, India,
Pakistan, Vietnam and Sri Lanka, but excluding Japan, the countries comprising the
former U.S.S.R. and the Middle East), together with Australasia.
Authority to Allot Shares
Resolution 12 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 9 October 2024, 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.
Annual General Meeting
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Authority to Disapply Pre-Emption Rights
Resolution 13 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 9 October 2024 and equivalent to
7,558,088 ordinary shares).
Authority to Repurchase Shares
Resolution 14 is a special resolution which renews the Company’s
authority to purchase up to 14.99% (10,548,926) of the ordinary
shares in issue (excluding Treasury shares) on 9 October 2024,
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
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
10 October 2024
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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 Thursday, 21 November 2024 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 2024.
2. To declare that a final dividend for the year ended 31
July 2024 of 14.5 pence per ordinary share be paid to
shareholders on the register as at close of business on 8
November 2024.
3. To re-elect Clare Brady as a Director.
4. To re-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 elect Lucy Costa Duarte as a Director.
8. To approve the Directors’ Remuneration Report (excluding
the section headed “The Remuneration Policy” set out on
page 39) for the year ended 31 July 2024.
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 Resolutions 11 and 12 will be proposed
as ordinary resolutions and Resolutions 13 and 14 as special
resolutions.
Authority to Amend Investment Policy
Resolution 11 will, if approved, authorise the Directors to amend
the Investment Policy, and specifically, to amend the investment
restriction to allow the Portfolio Managers to invest up to 15%
of the Company’s Gross Assets, at the time of investment, in
securities which are not listed or domiciled in the Asian Region,
providing the investments have a strong Asian Region rationale.
The Directors would not expect to see a significant change to the
portfolio structure in the near term as a result of this change.
11. THAT the Directors be and they are hereby authorised to
amend the Investment Policy.
Authority to Allot Ordinary Shares and Disapply Pre-Emption
Rights
Resolutions 12 and 13 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 9 October 2024. 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.
12. 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
9October 2024) 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.
13. THAT, subject to the passing of Resolution 12, 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 12
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 9 October
2024); 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
Notice of Meeting
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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 14 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 9 October 2024 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
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.
14. 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 10,548,926;
b) the minimum price which may be paid for a share is
25pence;
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
10 October 2024
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 19 November 2024. 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 19 November 2024. 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 19 November 2024.
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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 19 November 2024 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,
Proxymity 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 19 November 2024. 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 159-339-971. 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 159-339-971. 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 am to 5.30 pm 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
notifications to the Company and the Financial Conduct
Notice of Meeting continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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 19 November 2024. 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 9 October 2024 (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 5,207,794. Therefore, the total number of shares
with voting rights in the Company was 70,373,095.
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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INVESTMENT OBJECTIVE AND INVESTMENT POLICY (UPDATED)
The proposed update to the Investment Policy for the Company,
as proposed in resolution 11 on page 82 of the Notice of
Meeting, is set out below. Changes are marked in black-line.
INVESTMENT OBJECTIVE
The Company’s objective is to achieve long-term 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).
INVESTMENT POLICY
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 Managers 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.
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 Managers 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 no more than 15%
of their Gross Assets in other listed closed-ended funds.
• Up to 15% 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, Vietnam 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 achieve an
equivalent effect to buying an asset financed by bank
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 Managers considers to be
overvalued.
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 Managers’ investment style and philosophy as well as
the markets they operate in.
The sum of all short exposures of the Company from derivatives,
excluding hedges, will not exceed 10% of total net assets.
It should be stressed that 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.
Appendix
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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.fidelity.co.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.fidelity.co.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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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 £3,000 of capital gains in the current tax year 2024/2025
(2023/2024: £6,000) before being liable for capital gains tax. Capital gains tax is charged at 10% and 20% dependent on the total
amount of taxable income.
Shareholder Information continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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.
Fair treatment of investors
The legal and regulatory regime to which the Company and the Directors are subject ensures the fair treatment of investors. The Listing
Rules require that the Company treats all Shareholders of the same class of shares equally. In particular, the Directors have certain
statutory duties under the Companies Act 2006 with which they must comply. These include a duty upon each Director to act in the
way she or he considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as
a whole.
Data Protection
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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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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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 ELEMENT
OF 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.
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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.
PORTFOLIO MANAGERS
Nitin Bajaj, Portfolio Manager and Ajinkya Dhavale, Co-Portfolio
Manager are the Portfolio Managers of the Company and are
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.
Glossary of Terms continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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 34.
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 22 and 23.
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 22 to 32 and in Note 17 to the Financial
Statements on pages 67 to 75.
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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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 2024, actual leverage was 1.17 for the
Gross Method and 1.17 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 70.
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 2024, all CFDs were contracted bilaterally with open maturities:
Broker
Fair Value
£’000
Percentage
of
Net Assets
Collateral
held by the
broker
£’000
Collateral
held by the
Company
£’000
Goldman Sachs International (UK) 52 0.01% 117 –
HSBC Bank plc (UK) 348 0.09% 288 –
J.P. Morgan Securities plc (UK) (899) (0.23%) – 1,394
Morgan Stanley & Co International plc (UK) 15 0.00% – –
UBS AG (UK) (458) (0.12%) – 327
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 2024 from CFDs was a loss of £5,842,000.
Alternative Investment Fund Manager’s
Disclosure continued
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.
Fidelity Asian Values PLC
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Annual Report 2024
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