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Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
FIDELITY
CHINA SPECIAL
SITUATIONS PLC
Annual Report for the year ended 31 March 2026
Fidelity China Special Situations PLC
|
Annual Report 2026
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The purpose of the Company is to offer investors who are building
a diversified portfolio a direct exposure to China, recognising
the size and growing importance of the country within the world
economy and its weighting within global stock market indices.
The investment objective of the Company is to achieve long-term
capital growth from an actively managed portfolio made up
primarily of securities issued by companies in China, both listed
and unlisted, as well as Chinese companies listed elsewhere.
The Company may also invest in companies with significant
interests in China.
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The Year at a Glance
Fidelity China Special Situations PLC
|
Annual Report 2026
2022
2023
2024
2025
2026
+31.5%
+10.7%
-34.9%
-16.3%
Net Asset Value per Share total return
1,2
Year ended 31 March
+2.6%
2022
2023
2024
2025
2026
Share Price total return
1,2
-39.2%
-16.4%
+9.5%
Year ended 31 March
+0.3%
+35.8%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
20262025202420232022
Dividend per Share
9.00p
Year ended 31 March
5.50p
6.25p
6.40p
8.00p
4
1.00p
4
2022
2023
2024
2025
2026
-29.3%
-18.8%
+1.6%
+37.5%
MSCI China Index total return
(in UK sterling terms)
1, 3
Year ended 31 March
+1.4%
1 Includes reinvested income.
2 Alternative Performance Measures. See pages 95 and 96.
3 The Company’s Benchmark Index.
4 Representing a final ordinary dividend of 8.00 pence per share and a special dividend of 1.00 pence per share.
As at 31 March 2026
Shareholders’ Funds
£1,412.8m
Market Capitalisation
£1,292.2m
Capital Structure
Ordinary Shares of 1 pence held outside of Treasury
461,503,322
Summary of the key aspects of the
Investment Policy
The Portfolio Manager will focus on identifying companies
which are most likely to benefit from China’s growth and
changing economy.
The Company is not restricted in terms of size or industry when
including companies in the portfolio and may invest in unlisted
securities.
The Company may also invest into other transferable securities,
collective investment schemes, money market instruments,
cash and deposits and is also able to use derivatives and
bank borrowing for gearing purposes and efficient portfolio
management.
The Company operates a variable management fee
arrangement which is calculated by referencing performance
relative to the MSCI China Index (in UK sterling terms).
In the reporting year, the Company’s Net Asset Value per Share total return was +10.7% and the Share Price
total return was +9.5%, whilst the Benchmark Index total return was +1.6%
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2026 2025
Assets as at 31 March
Gross Asset Exposure £1,775.8m £1,745.9m
Net Assets £1,412.8m £1,413.8m
Gross Gearing
1,2,5
25.7% 23.5%
Net Gearing
1,2,5
19.3% 20.9%
Net Asset Value (“NAV”) per Share
2
306.12p 285.71p
Share Price and Discount data as at 31 March
Share Price at year end 280.00p 265.00p
Share Price: year high 332.50p 288.50p
Share Price: year low 214.00p 171.40p
Discount at year end
2
8.5% 7.3%
Discount: year high
2
15.1% 15.1%
Discount: year low
2
6.3% 5.5%
Earnings for the year ended 31 March – see page •
Revenue Earnings per Share
2,3
9.22p 10.18p
Capital Earnings per Share
2,3
20.53p 55.75p
Total Earnings per Share
2,3
29.75p 65.93p
Ongoing Charges Ratio for the year to 31 March
Ongoing Charges Ratio
2,4
0.92% 0.89%
Variable Management Fee
5
0.17% (0.15%)
Ongoing Charges Ratio including Variable Management Fee
2,4
1.09% 0.74%
1 See Note 18 on page 93.
2 Alternative Performance Measures.
3 Based on the weighted average number of shares held outside of Treasury during the year.
4 Ongoing charges ratio (excluding finance costs and taxation) expressed as a percentage of average net asset values for the year (prepared in accordance with
guidance issued by the Association of Investment Companies). The ongoing charges ratio for the year ended 31 March 2025 reflects the significant reduction of the
management fees waived by the Manager in lieu of its contribution to the costs of the Company’s transaction with abrdn China Investment Company Limited (“ACIC”)
which concluded on 14 March 2024.
5 Defined in the Glossary to the Annual Report on pages 103 to 106.
Total Return Performance
1
(%)
10 years ended 31 March 20265 years ended 31 March 20263 years ended 31 March 20261 year ended 31 March 2026
+10.7
+21.7
-18.7
+123.5
+151.5
+78.7
-24.1
-18.7
+9.5
+24.3
+1.6
+13.4
NAV per Share
Share Price
MSCI China Index (in UK sterling terms)
1 Includes reinvested income.
Financial Highlights
Sources: Fidelity International and Datastream.
Past Performance is not a guide to future returns.
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01
Annual Report 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Contents
Strategy
Chairman’s Statement 2
Portfolio Manager’s Review 7
Unlisted Investments
14
Spotlight on the Top 10 Holdings 18
Forty Largest Holdings 20
Distribution of the Portfolio 23
Attribution Analysis 24
Ten Year Record
25
Strategic Report 26
Governance
Board of Directors 37
Directors’ Report 39
Corporate Governance Statement 43
Directors’ Remuneration Report 48
Statement of Directors’ Responsibilities 51
Report of the Audit and Risk Committee 52
Financial
Independent Auditors’ Report 56
Statement of Comprehensive Income 63
Statement of Changes in Equity 64
Statement of Financial Position 65
Statement of Cash Flows 66
Notes to the Financial Statements 67
Alternative Performance Measures 95
Information for Shareholders
Notice of Meeting 97
Glossary to the Annual Report 103
Shareholder Information 107
Data Protection 109
Alternative Investment Fund Manager’s Disclosure 110
Chairman’s Statement
Read more on pages 2 to 6
Ten Year Record
Read more on page 25
Portfolio Manager’s Review
Read more on pages 7 to 13
Unlisted Investments
Read more on pages 14 to 17
Spotlight on the Top 10 Holdings
Read more on pages 18 and 19
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02
Fidelity China Special Situations PLC
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Annual Report 2026
Chairman’s Statement
I have pleasure in presenting the Annual Report of Fidelity China
Special Situations PLC for the year ended 31 March 2026.
While UK investors in Chinese equities have enjoyed a year of
positive returns, it is important to note two external events – at
the start and end of the year under review – that have had an
appreciable impact on the quantum of those returns. Both events
have their origins in the US, illustrating the interconnectedness of
the modern global economy. The first was President Trump’s
‘Liberation Day’ trade tariffs, which unsettled markets and have
had wide-ranging effects on global supply chains. The second
was the war in Iran, launched by the US and Israel on
28February 2026, which caused further market volatility in the
final month of our financial year and continues to be a source of
great concern, uncertainty and volatility. As I will discuss, China’s
economy and stock market have largely held up well in the
face of these challenges, but they have not been immune to
their effects.
In the reporting year to 31 March 2026, the net asset value
(“NAV”) total return of your Company was 10.7%, while the
Benchmark Index (MSCI China Index (in UK sterling terms))
returned 1.6%, representing healthy outperformance. This was the
result of good stock picking, particularly in the IT and consumer
discretionary sectors. The share price total return was 9.5%, as the
discount to NAV widened slightly from 7.3% at the beginning of
the period to 8.5% at the end. With the corresponding returns at
the half-year (to 30 September 2025) having been +29.7% and
+28.7% respectively for the NAV and share price total returns,
and +18.0% for the Benchmark, it has clearly been a year of
two halves.
China’s economy remains resilient
Despite the global trade headwinds, the Chinese economy
performed well in 2025, meeting the government forecast of 5.0%
GDP growth. Exports were particularly strong, leading to a record
trade surplus of $1.2 trillion, albeit with a rebalancing of trade
away from the US towards the rest of the world. While the service
sector also did relatively well, consumer consumption remained
comparatively weak, as the government continued to struggle to
persuade people to dip into their significant savings. The low
level of consumer sentiment is closely connected to the ongoing
problems in the property market and is, therefore, unlikely to
improve materially until property prices bottom out, the timing of
which remains uncertain.
The principal risk to the Chinese government’s GDP growth
forecast of 4.5-5.0% in 2026 is the potential dampening of export
demand as a result of the war in Iran. However, it is worth noting
that, in its most recent World Economic Outlook (April 2026), the
International Monetary Fund (“IMF”) downgraded its 2026
forecast for China by just 0.1% (versus January 2026) to 4.4%.
Furthermore, that 4.4% figure actually represents an upgrade of
last October’s IMF forecast of 4.2%. While a prolonged war in the
Middle East would undoubtedly dampen global demand, with
knock-on effects in China, the country is in a far better position to
withstand these difficulties than would have been the case just a
few years ago. This is largely due to its impressive transition to
renewable energy generation, as well as its strategic oil reserve.
I have pleasure in presenting the
Annual Report of Fidelity China
Special Situations PLC for the
year ended 31 March 2026.
Mike Balfour, Chairman
£1,412.8m
(As at 31 March 2026)
Shareholders’ Funds
+10.7%
(Year ended 31 March 2026)
Net Asset Value per Share total return
+9.5%
(Year ended 31 March 2026)
Share Price total return
+1.6%
(Year ended 31 March 2026)
Benchmark Index total return
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03
Annual Report 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Looking ahead, the Chinese Communist Party’s 15th Five-Year
Plan, approved at the National People’s Congress in March and
covering the period 2026-2030, aims to provide a blueprint for
continued growth in the face of demographic change. Much of
the recent growth has come from exports and investment in
infrastructure, but the government is keen for consumers to pick
up the baton to create a more self-sustaining model that is less
dependent on exports, government spending and debt finance.
Structural reforms seek to reduce the effect of external inflation on
the supply chain, as well as boosting employment for young
people in a country where the population is both ageing and
declining in numbers. China has many future-facing companies
that are or could become world leading, not just in the familiar
areas of electric vehicles, solar panels and battery storage, but
increasingly in areas such as biotechnology, advanced
semiconductors, AI and quantum computing. The focus on
technology and innovation has been the driving force behind
much of the economic and stock market strength, and this is
backed up by an aspiration to grow research and development
spending by 7% a year. Alongside this, a target to further reduce
carbon emissions by 17% per unit of GDP from 2026 to 2030 will
be supported by continued subsidies to trade in older goods
for newer, more energy efficient ones, which will also boost
consumer demand.
Your portfolio in the financial year
The Q&A with Portfolio Manager Dale Nicholls on the following
pages contains a detailed review of the performance drivers and
investments in your Company’s portfolio during the year.
Dale continues to take advantage of the specific features of the
closed-end investment company structure, including gearing the
portfolio, the ability to hold short positions and to own unlisted
companies without the liquidity constraints of an open-ended
fund. After a busy year in the unquoted portfolio last year, just
one new private investment – HashKey, a cryptocurrency
exchange operator – was added during this year, although it is
now part of the quoted portfolio, having debuted on the Hong
Kong Stock Exchange in December 2025. ByteDance, the
technology company that amongst other things owns TikTok,
continues to be the largest unlisted holding, with no date yet set
for an initial public offering (“IPO”). Up to 15% of Net Assets plus
Borrowings may be invested in unquoted private companies,
allowing Dale to take advantage of the faster growth trajectory of
earlier-stage businesses before they are listed on the public
markets. More details of the unlisted holdings, which made up
11% of the total Net Assets at the year end and have added
materially to your Company’s performance over time, are on
pages 14 to 17.
The Board has confidence that the valuation process for our
unlisted holdings is robust. They are assessed regularly by
Fidelity’s dedicated Fair Value Committee (“FVC”), with advice
from a third-party valuation specialist, as well as from Fidelity’s
unlisted investment specialist in Hong Kong and the Fidelity
analysts, who undertake research on the companies. The
valuation process is set out in more detail on page 14 of this
report. The Board receives regular updates from the FVC
overseeing this process, with Alastair Bruce, our Audit and Risk
Committee Chairman, also providing expertise in this area,
having for many years been involved professionally in private
equity investing.
Gearing
Your Board continues to believe that the judicious use of gearing
can enhance returns, although being more than 100% invested
also means that the NAV and share price may be more volatile
and can accentuate losses in a falling market, as well as being
additive on the upside. Having repaid the Company’s US$100m
loan in the financial year to 31 March 2024, gearing since then
has been solely through contracts for difference (“CFDs”), which
tend to be cheaper than prevailing longer-dated borrowing.
However, your Board continues to review the position, and we
have not ruled out reintroducing an element of fixed rate gearing
in the future, should the terms become favourable.
Gearing once again remained around 20% (net asset exposure)
during the year, beginning at 20.9% and ending at 19.3%,
reflecting Dale’s view that the Chinese equity market remains
very attractively valued and offers many interesting investment
opportunities. While historically gearing has been in a range of
10-25%, the Board views a figure of around 20% as being the
upper end of the normal range. The impact of gearing using
CFDs was slightly negative during the year in review, detracting
0.8% to returns.
Dividend
The Company’s investment objective remains focused on
achieving long-term capital growth; however, it has the enviable
track record of having paid an increased dividend each year
since inception, growing from 0.25 pence per share in 2011 to
8.00 pence in 2025, which is a compound annual growth rate of
28.1%. This has been supported by the increasing focus of
Chinese companies on rewarding shareholders such as ourselves
through increased dividend payments, which we pass on to you,
our shareholders.
The year under review has been another very strong one for the
Company’s revenue return, underpinned by strong cash flows in
our underlying companies and corporate governance reforms
that are encouraging companies to pay more. As such, we are
pleased to be able to deliver further growth in the ordinary
dividend, building on last year’s 25.0% increase in the ordinary
dividend by recommending a final dividend of 9.00 pence per
share, up 12.5% year-on-year.
The dividend will be payable on 28 July 2026 to shareholders on
the register on 19 June 2026 (ex-dividend date 18 June 2026).
The revenue per share earned by the Company during the year
was 9.22 pence. Shareholders will note that this is lower than last
year’s 10.18 pence but this included one exceptional dividend
from Lufax which distorts the year-on-year comparison. This year’s
dividend is once again fully covered by revenue from earnings,
and we have been able to add back £3,329,000 to the revenue
reserve, which now stands at 6.77 pence per share.
Discount management
While it is always our ambition that the share price should closely
match the NAV, it is often the case that investment companies
trade at a discount – indeed, at the time of writing, the average
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Fidelity China Special Situations PLC
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Annual Report 2026
Chairman’s Statement continued
discount to NAV across the investment company sector was
around 11.6%. Your Board’s policy is to aim for a discount in
single figures in normal market conditions, and we pursue this
actively by buying back shares in the market when supply
exceeds demand. During the year, we repurchased 33,336,928
shares for cancellation (6.7% of the shares in issue (excluding
treasury shares) at the start of the financial year) at a cost of just
over £100 million. This was accretive to the NAV per share for
continuing shareholders.
The share price began the year under review at a 7.3% discount
to NAV and ended it at a discount of 8.5%. It is worth reiterating
that the single-digit discount target is “in normal market
conditions”, which the latter part of the review period arguably
was not. Earlier I mentioned two significant external events during
the year; each of these was accompanied by a widening of the
discount: to just over 15% in the immediate aftermath of the
Liberation Day tariff announcements, and to just over 13% in the
first week of the war in Iran. Against this backdrop it is pleasing
to note that for the vast majority of the period, the discount was
well below 10%.
Your Board adjusts the repurchase of shares throughout the year
depending on external factors and the level of the discount, and
for substantial parts of the year there was very limited buyback
activity. However, we have increased it during the Middle East
conflict in a highly volatile environment, repurchasing a further
3,121,739 shares between the end of the period and the time of
writing. While buybacks can only limit the discount to a certain
extent if external factors are hugely negative, your Board is very
mindful of the level of discount, and we aim to achieve our
objective over the medium-term.
Ongoing Charges Ratio and Management Fee
The Ongoing Charges Ratio (the costs of running the Company)
for the year was 0.92% (2025: 0.89%). The variable element of the
management fee (due to outperformance of the Benchmark
Index on a rolling three year basis) was a charge of 0.17%
(2025: a credit of 0.15%). Therefore, the Ongoing Charges Ratio
for the year, including this variable element, was 1.09% (2025:
0.74%).
Change of Auditor
In accordance with statutory requirements and FRC guidance on
audit tenders, a competitive audit tender was conducted during
the year as the Company’s previous auditor had been appointed
for 10 years. Following this process the Board appointed
PricewaterhouseCoopers LLP as the Company’s new auditor.
PricewaterhouseCoopers LLP have replaced EY as auditor
with effect from the year under review; their report begins on
page 56.
Board of Directors
In December 2025, Gordon Orr informed us that he did not intend
to stand for re-election as a non-executive Director at the
forthcoming Annual General Meeting (“AGM”). Gordon has a
wealth of professional and non-executive experience in Hong Kong
and mainland China and has been a great asset to your Company
over the past three years, giving us valuable insights into the
region through his vast network and ongoing business connections.
After an exhaustive recruitment process, a strong candidate to
replace Gordon has been found. I am pleased to welcome Bessie
Lee to the Board from 2 June 2026. Bessie is a seasoned Chief
Executive and non-executive director with over 30 years’experience
of driving strategic growth, digital transformation and innovation
with particular knowledge and expertise in Chinese businesses.
We are confident that your Company’s Board continues to have a
real diversity and balance of relevant skills and experience,
including consultancy covering Chinese businesses, accountancy,
investment management (including private equity and private
equity valuation), marketing, and the oversight of investment
companies.
In recent years, we have sought to pass on the benefit of our
accumulated skills and knowledge by taking on a Board
apprentice, a role put in place to help develop the next
generation of individuals who may not otherwise find a route to
becoming a non-executive director. Each apprentice serves a
term of one year, during which time they attend all Board and
Committee meetings as an observer. Further details are on
page 45.
Bessie Lee, having been appointed by the Board of Directors, will
be standing for election by shareholders at the AGM. In
accordance with the UK Corporate Governance Code for
Directors of FTSE 350 companies, all the other Directors, with the
exception of Gordon Orr, are subject to annual re-election at the
Annual General Meeting (“AGM”) on 21 July 2026, in order to
continue to support and oversee the Company in the best
interests of all shareholders. The Directors’ biographies can be
found on pages 37 and 38.
Articles of Association
The Board is proposing to increase the aggregate cap on
Directors’ fees to provide greater flexibility for any future changes.
The proposed new cap is £450,000 in aggregate per annum,
which it is felt is in line with market practice, replacing the
existing cap of £350,000 per annum which was put in place in
2021.
We have also taken the opportunity to make other changes of a
minor, clarificatory or technical nature to the Articles, including
clarifications in relation to hybrid general meetings to follow how
practice has developed. However, the amendments do not
provide for, and the Board has no intention to move to, fully
virtual meetings. A full tracked version of all the changes
proposed to the Articles is available at www.fidelity.co.uk/
china. The principal changes proposed to the Articles are set out
in more detail on page 42 in the Directors’ Report.
Annual General Meeting
The Company’s AGM will be at 11.00 am on 21 July 2026. The
meeting will once again be a hybrid format, with online
attendance available; however, I hope to see as many of you as
possible in person on the day. Alongside the direct email
updates that we now provide, it is one of the few opportunities in
the year to sit down together – shareholders, the Board and the
Manager – to talk about your investment. Please do join us if you
can. Details of the AGM are on page 6.
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Annual Report 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Among the business of the day will be a vote on a change in the
investment policy, which will give the Company the ability to hold
up to 20% of the portfolio in a single stock (currently the limit is
15%). At the Company’s year end, the largest holding, Tencent,
was 12.3% of net assets but 15.2% of the Benchmark; while there
is no intention of materially increasing this at present, the current
policy has the effect of prohibiting Dale from taking an
overweight position in the stock, which would limit his ability to
express a strongly positive view on Tencent or other large
Chinese companies in the future. Further information on the policy
change can be found in the Notice of AGM.
Outlook
In a world where global geopolitics dominates the news agenda,
China, by its considered, consistent behaviour, has been
improving relationships around the world, with prominent
European, Canadian and Latin American presidents and prime
ministers treading the now quite well-worn path to President Xi’s
door. While the country’s prospects are to some extent contingent
on the Middle East conflict and the oil price, China is arguably
benefiting from instability in other parts of the world through its
growing global influence, and has much to offer in areas such as
EVs, lower-cost solar power and other renewable energy
technologies such as battery storage. Furthermore, relations
between the US and China are better than many people
appreciate, given areas of mutual dependence such as in rare
earth minerals and semiconductors.
The steady-as-it-goes approach by the Chinese government to its
own economy and international relations are both positive factors
for the outlook for investments in the world’s second largest
economy. One reason exports have grown so much is the highly
competitive industrial landscape – domestic competition is
intense in certain sectors, which puts Chinese companies in a
very strong position when they turn their ambitions to global
markets. This has led to a degree of domestic deflation that the
Chinese authorities are keen to reverse, by tackling over-
production and irrational price wars. This should ultimately lead
to better capital allocation, strengthen corporate balance sheets
and drive consolidation, yet is unlikely to threaten China’s
dominance in these areas of the global supply chain.
As well as a healthy industrial base, the Chinese government
also wants an improving stock market, but not a return to boom
and bust as seen in the past. Corporate governance reforms are
encouraging companies to reward their minority shareholders
through dividends and share buybacks, policies that have proved
successful in other markets such as Japan and South Korea. While
there have been some interesting new issues (such as your
Company’s holding HashKey, mentioned above), there is not the
sort of surge in IPOs that would suggest an overheating market,
and valuations remain reasonable by international standards,
with good earnings growth projected for this year. China has
many fantastic companies that are leading-edge and will be
global leaders in the future, if they are not already, and it is the
opinion of your Board and Portfolio Manager that the long-term
opportunity set remains compelling.
Closer to home, your Board is proud of the Company’s record in
utilising the strengths of the investment company structure to take
advantage of the many opportunities in the Chinese market. The
ability to boost returns through gearing, the unlisted portfolio,
short positions, Dale’s long-term investment horizon, the strength
of our dividend record and our undertaking of buybacks to
enhance shareholder value have all added value over the
medium and longer term. It has helped your Company to
become one of the largest UK-based actively managed China
funds, with a broad and diverse shareholder base including
many individual investors. We thank you all for your continued
support.
Mike Balfour
Chairman
8 June 2026
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Fidelity China Special Situations PLC
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Annual Report 2026
Chairman’s Statement continued
Annual General Meeting – Tuesday, 21 July 2026 At 11.00 am
The AGM of the Company will be held at 11.00 am on Tuesday, 21 July 2026 at 4 Cannon Street, London EC4M 5AB (nearest
tube stations are St Paul’s or Mansion House) and virtually via the online Lumi AGM meeting platform. Full details of the meeting
are given in the Notice of Meeting on pages 97 to 102.
For those shareholders who prefer not to attend in person, we will live-stream the formal business and presentations of the
meeting online.
Dale Nicholls, the Portfolio Manager, will be making a presentation to shareholders discussing the performance of the past year
and the prospects for the year to come. Dale and the Board will be very happy to answer any questions that shareholders may
have. Following the AGM, copies of his presentation can be requested by email at investmenttrusts@fil.com or in writing to the
Secretary at FIL Investments International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Properly registered shareholders joining the AGM virtually will be able to vote on the proposed resolutions. Please see Note 9 to
the Notes to the Notice of Meeting on page 99 for details on how to vote virtually. Investors viewing the AGM online will be able to
submit live written questions to the Board and the Portfolio Manager and these will be addressed at an appropriate juncture
during the meeting.
Further information and links to the Lumi platform may be found in Note 9 in the Notes to the Notice of Meeting on page 99.
On the day of the AGM, in order to join electronically and ask questions via the Lumi platform, shareholders will need to connect
to the website https://meetings.lumiconnect.com/100-346-066-599.
Please note that investors on platforms, such as Fidelity Personal Investing, Hargreaves Lansdown, Interactive Investor or
AJ Bell Youinvest, will need to request attendance at the AGM in accordance with the policies of your chosen platform. They may
request that you submit electronic votes in advance of the meeting. If you are unable to obtain a unique IVC and PIN from
your nominee or platform, we will also welcome your online participation as a guest. Once you have accessed
https://meetings.lumiconnect.com/100-346-066-599 from your web browser on a tablet, smartphone or computer, you should
then select the ‘Guest Access’ option before entering your name and who you are representing, if applicable. This will allow you to
view the meeting and ask questions, but you will not be able to vote.
Further information on how to vote across the most common investment platforms is available at the following link:
https://www.theaic.co.uk/how-to-vote-your-shares
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Portfolio Manager’s Review
Question
How has the Company performed in the
year to 31st March 2026?
Answer
Over the year to 31 March 2026, the Company delivered a
positive return in what has been a dynamic and evolving market
environment. The Company’s net asset value (NAV) return was
10.7% over the period, significantly outperforming the MSCI China
Index in UK sterling terms (the Benchmark), which delivered 1.6%.
The share price returned 9.5% over the same period, with the
discount to NAV widening slightly from 7.3% to 8.5%. Stock
selection was the primary driver of strong performance over the
year. (All performance data are on a total return basis).
The period was characterised by a tariffs shock at the beginning
of 2025 and a tariffs truce in the later part of the year, a strong
recovery supported by strong artificial intelligence (AI) related
demand trends, followed by a more complex and volatile
geopolitical environment into early 2026. Initial gains were driven
by improving sentiment and renewed interest in innovation-led
sectors, particularly following the launch of DeepSeek’s AI
models. However, as we moved into 2026, technology-led
strength gave way to a broad risk-off correction, as escalating
geopolitical tensions in the Middle East drove oil and gas prices
higher, reignited inflation concerns and weighed on the global
growth outlook. On a positive note, China’s diversified economy
offered more resilience versus the rest of Asia in those adverse
scenarios. The country’s substantial domestic coal reserves, fast
growing energy renewables, strategic crude inventories, and
relatively low reliance on Middle East oil imports, help limit
downside risks.
At the same time, while technological breakthroughs continued to
support selected areas of the Chinese stock market and
reinforced the long-term growth narrative, the near-term outlook
for AI-related demand became more nuanced. Supply chain
constraints, including memory shortages and energy-related
disruptions, alongside margin pressure in downstream segments,
have led to a more divergent performance at the sub-sector and
company level. Investors became more selective, as greater
scrutiny on earnings sustainability and broader macro
expectations came back into focus in contrast to earlier broad-
based AI-related optimism. This divergence is particularly evident
in earnings expectations: while internet platforms and
hyperscalers continue to invest heavily with limited near-term
earnings contribution from AI, areas such as semiconductor and
power-related equipment companies have been prime
beneficiaries, with more meaningful upward revisions to earnings
growth.
Domestically, consumer confidence remained subdued amid a
gradual and uneven property market recovery. Household
spending has yet to regain sustained momentum, despite
elevated savings levels and some early signs of improving
employment trends. Policy has remained supportive but targeted,
with a clear emphasis on structural priorities such as industrial
upgrading and quality growth by addressing excess competition
across key sectors.
Dale Nicholls was appointed as Portfolio
Manager of Fidelity China Special
Situations PLC on 1 April 2014. He joined
Fidelity in 1996 as a Research Associate
in its Tokyo office. It was during his
tenure as an analyst that he first began
to take an interest in the dynamics of
the Chinese market. He regularly visited
Chinese companies to get a clear view
of the key supply and demand chains of
the industries he covered. In his current
role, Dale spends much of his time
traveling within China to meet with the
management teams and competitors of
companies in which he may, or already
does, invest, visiting well over 100
companies a year. He also manages
one other major Fidelity fund. He has
significant breadth and depth across
the Asia pacific region, with 62 equity
research and research support colleagues
based in Hong Kong, Shanghai and
Singapore, of which 40 are dedicated to
covering Greater China stocks.
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In this context stock selection remains key. The portfolio benefited
from exposure to companies aligned with structural growth
themes, particularly involving electrification, advanced
manufacturing and selective areas of consumption. As market
dispersion increased, a disciplined focus on fundamentals and
competitive positioning proved increasingly important.
Question
What positions were the biggest
contributors and detractors this year, and
what drove their performance?
Answer
Performance over the period was driven primarily by stock
picking, with notable strength from selected consumer
discretionary, industrials and information technology holdings.
Within consumer discretionary, the electric vehicle (EV) and
autonomous driving segment had a really strong year. Both Hesai
Group and Pony.ai were key contributors as profits were taken
during the year, benefiting from rising investor confidence in
next-generation mobility technologies. Hesai’s performance
reflected its leadership in LiDAR (light detection and ranging, or
laser radar), supported by strong momentum in ADAS (advanced
driver assistance systems) adoption, improved shipment visibility,
and emerging vertical opportunities in robotics. Pony.ai, a
leading autonomous driving and robotaxi platform that we have
owned at both private and public stages of its development,
gained on continued execution in robotaxi deployment, including
new operating approvals and partnerships, alongside improving
unit economics as it scales—underpinning confidence in its path
toward commercialisation and sustained growth.
The industrials sector was another key contributor. Preferred
holdings across solar modules, batteries, inverters, and power
electronics have captured the robust demand linked to AI data
centre infrastructure and benefited from market leadership within
the electrification value chain.
Ningbo Deye Technology, a leading solar inverter and energy
storage system (ESS) maker, advanced on a significantly
improved earnings trajectory, underpinned by a strong residential
energy storage upcycle. A holding in the world’s largest EV
battery maker CATL, also performed well, supported by strong EV
and energy storage demand, rising utilisation, and the outlook for
sustainable margins through scale and pricing power. Impro
Precision Industries was another key contributor. This casting and
machined components manufacturer advanced on resilient
demand in higher-margin segments like high horsepower
engines, early signs of recovery in more cyclical markets like
hydraulic & agricultural equipment, and strong operational
execution. More broadly, these positions reflect the portfolio’s
focus on companies with strong competitive advantages and
consequent pricing power, well placed to capture structural
growth across electrification, energy storage, and industrial
upgrading trends.
Relative performance also benefited from limited exposure to
parts of the technology and internet sectors where increasing
competition, margin pressure and relatively high valuations
weighed on returns. This was particularly evident in our lack of
exposure to Xiaomi, where the company’s performance was
further impacted by slowing growth in its core handset business,
reflecting intensifying competition and rising input costs,
especially for memory components. Similarly, not holding Meituan
and JD.com contributed positively, as sentiment across Chinese
internet platforms remained weak due to subdued consumption
trends, intensifying price wars in food delivery, and stricter
value-added tax (VAT) enforcement.
Elsewhere in the IT sector, Zhongji Innolight was a notable
contributor. As a leading supplier of optical interconnect solutions
used in data centres, the company benefited from strong demand
for high-speed optical modules driven by AI-related capacity
expansion. Minimax, China’s first pure LLM (large language model)
play listed globally, was also among the top contributors. We took
profit from this holding after a strong performance post IPO.
By contrast, an underweight position in energy and financials,
mainly SOE banks, detracted from relative performance.
Escalating geopolitical conflict in the Middle East and the
temporary closure of the Strait of Hormuz disrupted supply and
drove oil prices higher. As a result, a lack of exposure to
PetroChina, and other oil majors, hindered returns. Meanwhile,
Chinese banks rallied on the back of a defensive rotation into
high-yielding assets amid economic uncertainty. As such, not
holding China Construction Bank and Industrial & Commercial
Bank of China held back returns. Elsewhere within financials,
leading consumer finance lender Lexin Fintech declined following
a period of strong performance, as investors took profits against
a backdrop of softer credit trends and ongoing regulatory
overhang. We closed the position in July 2025.
Within industrials, our high-conviction positions in Full Truck
Alliance (FTA) and Tuhu Car detracted from relative performance.
FTA, China’s leading digital freight matching platform, saw a
share price pull-back driven by concerns around a potential ADR
delisting risk and developments in non-core businesses. The
company has been receptive to investor feedback and has taken
steps to refocus on its core operations. We continue to believe its
scale, network effects and market leadership create meaningful
barriers to entry, and we used the weakness to increase our
position. Tuhu Car, a leading platform in automotive maintenance,
was impacted by softer consumer sentiment and ongoing intense
competition. However, we believe the underlying business
remains resilient with strong long-term potential, and view the
current risk-reward profile as attractive.
Question
How is the Company currently positioned
across sectors, and where are you
seeing the most attractive and “special”
opportunities in China right now?
Answer
Our sector weightings are a reflection of bottom-up stock picking,
the key inputs of which include growth potential, levels of returns
generated, our evaluation of management, and valuation levels.
This tends to lead us to sectors where we see strong underlying
Portfolio Manager’s Review continued
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growth trends and improving competitive dynamics, combined
with increasing competitiveness and attractive valuations. Over
the period, we reduced exposure to financials, taking profits, and
increased the allocation to areas where risk-reward appears
more compelling, particularly within industrials and selective
consumer segments.
Cutting edge industrials continue to represent the largest area of
exposure for the Company. We believe the market
underappreciates the global competitiveness and innovation
capabilities of many Chinese industrial companies, particularly
those moving up the value chain into higher-end manufacturing,
automation and AI-related infrastructure. A key focus is the power
and energy ecosystem underpinning the AI buildout. While
attention is often centred on semiconductors and memory chips,
constraints are increasingly emerging downstream. Over the
long-term, we think rising geopolitical tensions are likely to
reinforce the case for renewable energy sources and the materials
that underpin the energy transition. China’s scale manufacturing
base and integrated supply chains position its companies well to
capture this demand. In this context, we initiated a position in Wuxi
Lead, a leading global supplier of lithium battery equipment and
key partner to major manufacturers such as CATL. The company is
well positioned to benefit from the ongoing battery capex cycle,
supported by demand from energy storage and continued
electrification. Emerging solid-state battery technology also offers a
medium-term growth opportunity, with higher equipment intensity
expected to support both cyclical recovery and structural
upgrading within the battery value chain.
We have also maintained a meaningful exposure to companies
exposed to global EV and automation trends, as Chinese
companies have achieved scale in supplying critical components
and materials in those areas. Minth Group is a good example. Its
strengths in aluminium and advanced plastics automotive parts,
combined with a vertically integrated manufacturing model,
position the company to serve both traditional and new energy
vehicles, where demand for lighter battery and chassis structures
is increasing. Its new business in robotics and AI liquid cooling is
also showing great potential. Meanwhile, we trimmed positions in
Pony.ai and Hesai Group, selling into strength to take some profit
following their strong performance over the period, though both
remain key holdings in the portfolio.
Within consumer-related sectors, positioning remains selective.
The challenges facing these industries are well known, which has
led to a sustained period of underperformance and given rise to
some attractively valued opportunities. While overall consumer
sentiment remains subdued, there are pockets of recovery from
cyclical troughs. In staples, we have selectively added exposure
to areas such as dairy and beer, where industry conditions are
beginning to bottom out and competitive landscapes are
improving after smaller players have exited the markets. We also
initiated a position in low-cost hog raiser Muyuan Foods, since
the industry, having gone through a severe downturn marked by
low hog prices and increased feed costs, is starting to see signs
of supply adjustment and market consolidation.
Aside from consumer companies showing potential for cyclical
recovery, we also hold some consumer discretionary names who
have maintained strong brands which capture consumer trends,
alongside cost efficiencies that enable them to sustain growth in
a challenging environment. We particularly see this playing out in
sportswear and travel-related segments. Sportswear benefits from
structural tailwinds, including rising participation and health
awareness, and where brand can be a key competitive
advantage. Travel expenditure also continues to grow as
consumer trends move more towards experience-led consumption
and improving mobility. Accordingly we see high-quality hotel
chains along with value for money brands being able to capture
this opportunity. Both areas remain underpenetrated versus more
developed markets, offering attractive long-term growth potential.
Elsewhere, within Financials we purchased HashKey, the largest
regulated crypto exchange in Hong Kong, investing in the private
company in August last year ahead of its subsequent listing.
The core investment case rests on its strong position in a growing,
regulated trading market where, irrespective of views on
underlying crypto assets, trading activity is becoming more
established. More importantly, we see significant optionality
from Hong Kong’s early and favourable moves on regulation,
including stablecoin licensing. With the city’s potential as a
testing ground for mainland China and HashKey closely
engaged in regulatory developments, the company is well
placed to benefit from potential regulatory easing and broader
market evolution.
Beyond the large sector exposures mentioned already, we
remain overweight versus the index in healthcare, real estate and
communication services, broadly neutral in IT and materials, and
underweight in financials, mainly through an underweight in
banks, where we see few opportunities in the large state-
owned enterprises.
We outline our five largest holdings on the following pages.
Question
How have recent signals from the
Chinese government, including the latest
Party Plenum and longer-term economic
plans, influenced where you’re finding
opportunities?
Answer
Recent policy signals, including the latest Party Plenum and the
15th Five-Year Plan (2026–2030), reinforce a broadly stable
pro-growth policy stance and continued support for structural
priorities such as innovation, industrial upgrading and quality
growth. While the external environment remains uncertain,
particularly around geopolitics and trade, the more constructive
and pro-business tone from policymakers has helped position
China as a more stable and predictable environment for both
businesses and investors.
At the macro level, the direction of travel remains one of gradual
stabilisation rather than a sharp recovery. The GDP growth target
was set at c.4.5–5%, slightly lower than in recent years, reflecting
a shift towards more sustainable growth and risk control,
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supported by targeted fiscal measures and accommodative
monetary policy. While overall consumption and economic activity
remain relatively soft, we are starting to see signs of stabilisation
in areas such as employment, wage growth and secondary
property market activity in top-tier cities.
Consumption remains central to China’s long-term growth
ambitions. In the near term, household spending continues to
reflect cautious behaviour following a general economic
slowdown and the property downturn. However, broadly
speaking the consumer balance sheet is in good shape, as
weaker spending has led to elevated savings levels and less
debt. Policy direction continues to be supportive — the recent
relaxation of homebuying restrictions in Shanghai and Shenzhen
are good examples. The significant correction in supply, in the
form of housing starts, remains the main factor likely to drive a
stabilisation in market pricing, which is important in terms of
wealth effects for the consumer. Structural growth drivers for the
mid-term consumption outlook include areas such as services,
healthcare and leisure.
Importantly, the opportunity set remains highly company specific.
Even in a more challenging macro environment, we are seeing a
growing number of businesses adapting effectively through cost
discipline, improving operational efficiency, and product
innovation. In many industries, market consolidation is
accelerating, creating clearer differentiation between winners
and laggards.
From a portfolio perspective, this reinforces our focus on bottom-
up stock selection. We continue to find opportunities in
companies with strong competitive positioning, clear growth
drivers and the ability to navigate a more measured recovery
environment.
Question
Current geopolitical tensions are high,
with conflicts in Ukraine and the Middle
East dominating headlines globally;
how are these influencing the portfolio
performance and positioning in the
reporting year?
Answer
China is relatively less exposed to direct external energy shocks
than many economies, supported by lower reliance on oil and
gas, a growing share of cleaner energy, and the presence of
significant strategic reserves. As a result, the direct impact of
recent geopolitical tensions on the portfolio has been limited
The more relevant channels to monitor are indirect, including
global supply chain disruption, inflationary pressures, and any
spillover into consumer sentiment.
Over the medium-term, sustained higher energy prices and
increased concerns over energy security could accelerate the
global transition to renewable energy sources and electrification.
With clear global leadership across EVs, batteries, energy
storage systems and renewable supply chains, many Chinese
companies stand to benefit.
Whilst the Company has no direct exposure to the energy majors,
it does have a significant holding in areas of structural growth
and competitiveness through CATL in the battery market. We also
maintain selective exposure to areas such as gold within the
materials sector, which should provide some diversification in
periods of heightened geopolitical uncertainty. Some near-term
margin pressure may emerge in areas exposed to higher energy
and transportation costs, and positioning has been adjusted
accordingly.
While the portfolio typically exhibits higher volatility than the
benchmark, periods of broad-based market declines amid
highlighted geopolitical risk can amplify short-term price
movements. Overall, while the external environment has become
more uncertain, we have not made material changes to
positioning. A significant portion of the portfolio remains focused
on companies with drivers less impacted by short-term
geopolitical developments.
Question
The Company can borrow in order to
invest; how have you used this gearing
over the year? Has it been beneficial to
performance?
Answer
Our approach to gearing remains consistent, typically increasing
net market exposure when valuations are more attractive and
moderating when risk-reward conditions become less compelling.
Over the period, the Company’s net market exposure averaged
around 120%, with net gearing declining to 19.3% at the end of
the year from 20.5% at the start. Gearing continued to be
implemented primarily through CFDs, providing a flexible and
cost-efficient way to adjust exposure as market conditions
evolved.
In terms of impact, gearing by means of CFDs slightly pared
overall gains during the 12-month period, detracting 0.8% from
relative returns. This largely reflects the more volatile market
backdrop. Nevertheless, we continue to view gearing as an
important tool for enhancing long-term performance, particularly
in markets such as China where volatility can create attractive
opportunities to deploy capital selectively.
Portfolio Manager’s Review continued
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Question
Many shareholders may have seen
ByteDance (TikTok) in the news this year,
how has this investment performed? And
what is your outlook for the Hong Kong
IPO pipeline and the Company’s unlisted
holdings more broadly?
Answer
The TikTok situation evolved because of sustained regulatory
scrutiny — beginning with US pressure under the Trump
administration in 2020 and intensifying through subsequent
legislation requiring divestment of its US business or a potential
ban — to a structured compromise. This culminated in a spin-off of
the US operations into a separately controlled entity, allowing
continued operation in the US, with ByteDance retaining a
minority economic stake (~20%) but with reduced control.
Despite the external headwinds, ByteDance remains our largest
unlisted holding. The investment has performed strongly over time
and continues to be underpinned by a highly profitable domestic
business, alongside a growing international market share. While
the US remains an important market, the broader global user
base, now exceeding two billion, represents a much larger
long-term monetisation opportunity. We are seeing encouraging
progress in areas such as international e-commerce, which, if it
follows a similar trajectory to the domestic business, could
become a very meaningful driver of value.
We first invested in ByteDance in 2018, recognising early its
strong product innovation and rare ability among Chinese
internet companies to build a genuinely global platform. Our
closed-ended structure has allowed us to take a long-term view
and, importantly, to add to the position in the secondary market
when valuations became more attractive in mid-2024 amid
uncertainty around TikTok’s US operations and regulatory risks.
The subsequent resolution of US regulatory concerns has
removed a key obstacle to progress, and we continue to view the
company as well positioned for growth, supported by strong
underlying profitability, ongoing international expansion and
increasing application of AI across its platforms. The case of
ByteDance illustrates the advantage of our investment approach
— maintaining conviction through periods of volatility and adding
exposure when sentiment is weak.
More broadly, the Hong Kong IPO market has evolved positively
in recent years, with easing regulations and a more structured
framework designed to attract Chinese companies for primary
listings and dual listings. It is increasingly seen as a stable and
well established venue for Chinese companies to access
international capital. At the same time, the quality of the IPO
pipeline has improved, with a greater proportion of companies
coming to market with robust business models, stronger operating
track records and more transparent disclosure.
This reflects a deeper structural shift rather than a short-term
trend. China continues to produce a growing number of
innovative companies across areas such as technology,
advanced manufacturing and new consumption models,
supported by sustained investment in research and development.
As a result, we expect the Hong Kong IPO pipeline to remain
active and increasingly diverse over time.
From a portfolio perspective, unlisted investments remain an
important part of the Company’s opportunity set, allowing us to
access high-quality businesses early in their growth journey. Our
approach remains selective and valuation disciplined, with a
focus on companies that demonstrate scalable growth potential,
clear paths to monetisation and the potential to create long-term
shareholder value.
Question
How do you include corporate
governance in your investment process,
and how do you engage with companies
to protect shareholder interests?
Answer
Corporate governance is central to our investment process and
something we assess at the outset of investing and on an
ongoing basis through proactive engagement with companies.
At a high level, we have seen clear progress in China’s
governance framework in recent years. Many of the core building
blocks are now in place, including updates to the Corporate
Governance Code, a revised Company Law that strengthens
shareholder participation, and higher expectations for boards
and independent directors. The direction of travel is positive, with
increasing emphasis on transparency, accountability and minority
shareholder protection.
More importantly, the focus is now shifting from rules to
implementation. We are seeing encouraging signs in areas such
as stricter oversight of controlling shareholders, greater
accountability for independent directors and improved disclosure
standards. There is also growing emphasis on shareholder
returns, including more consistent dividend policies and
increased use of buybacks.
That said, governance in China operates within a regimented
market structure. Controlling shareholders, including the State in
some cases, continue to play an important role, and engagement
tends to be more incremental in nature.
This is where our approach is important. We engage regularly
with companies on areas such as board structure, capital
allocation, potential dual-listing, related-party transactions and
executive remuneration, with a focus on improving alignment with
minority shareholders.
For example, we have actively engaged with China Mengniu
Dairy to strengthen capital allocation and shareholder returns,
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through higher dividend payouts and share buybacks. Over time,
we have witnessed a meaningful increase in its payout. A similar
shift has been observed in holdings such as Tsingtao Brewery,
where improving capital return policies have supported
shareholder returns. More broadly, rising distributions from
underlying holdings in our portfolio have contributed to the
Company’s own ordinary dividend growth of around 11% per
annum over the past five years, reflecting a steady improvement
in total shareholder returns.
In another case, we engaged with Full Truck Alliance following
concerns around a potential ADR delisting in April 2025, which
had weighed on the share price despite strong underlying
fundamentals. The company has been receptive to this feedback
and has initiated discussions with the Hong Kong Stock Exchange.
While there is no clear timetable for a potential H-share listing,
the process is underway, and the company has continued to
provide updates through regular investor meetings. This reflects
our broader approach of engaging not only on governance
structures, but also on strategic decisions that can protect and
enhance shareholder interests.
Overall, while the framework continues to evolve, we believe
governance standards in China are moving in the right direction.
Combined with increasing institutional participation and
regulatory support, this is gradually creating a more investable
and transparent market over time.
Question
How do you assess current valuations
after a strong year?
Answer
Following a strong period of performance, it is important to
consider the evolution of market sentiment. Twelve to eighteen
months ago Chinese equities were trading at deeply depressed
valuations amid concerns around the market’s “investability.” The
recovery through 2025 was driven in part by multiple expansion,
supported by a more constructive policy backdrop and increasing
recognition of Chinese companies’ competitiveness.
As we move through 2026, the dynamic is shifting. Shareholder
returns are increasingly supported by earnings rather than a further
re-rating. As a result, sector dispersion remains elevated, with a
widening gap between companies able to deliver sustainable
growth and those facing structural or cyclical pressures.
Valuations remain a supportive backdrop. Despite the rebound,
Chinese equities continue to trade at a meaningful discount to
global peers. The MSCI China Index is currently trading at around
11.4x forward earnings, broadly in line with its long-term average,
and at an approximate 43% discount to the S&P 500 on a forward
P/E basis. Further improvements in fundamentals — ultimately
coming through in more conviction around the earnings outlook
— could help bolster investor confidence.
In an environment where sentiment can shift quickly, this
reinforces the importance of a disciplined, bottom-up approach
to stock selection, with a focus on companies capable of
delivering resilient earnings and long-term value creation.
Question
Finally, looking forward, what excites
you most about Fidelity China Special
Situations, and what would you highlight
to FCSS shareholders?
Answer
Looking ahead, the most compelling opportunity remains the
ability to invest in high-quality companies operating in structurally
growing industries, with durable competitive advantages and
offering attractive valuations. Sentiment has improved from
previously depressed levels, but the broader market backdrop is
likely to remain volatile, particularly amid ongoing geopolitical
uncertainty. Additional areas of opportunity are where valuations
and sentiment remain at depressed levels, with the potential for
the outlook to stabilise and gradually improve. Such sectors
would tend to include consumer, property and some financials.
China’s ability to innovate remains a key source of long-term
growth. China continues to demonstrate depth in research and
development, and engineering talent, supporting progress across
AI, advanced manufacturing and digital infrastructure. While the
near-term trajectory of AI model development continues to evolve,
we remain constructive on the theme and assess opportunities on
a company-by-company basis. In particular, accelerating
investment and adoption are creating opportunities beyond the
models themselves, notably across cloud platforms, data
infrastructure and the power and electrification systems required
to support increasing demand. Companies like Zhongji Innolight
and Weichai Power illustrate how Chinese firms are strengthening
their position in the AI infrastructure value chain. In particular,
Weichai’s ability to extend its capabilities from traditional
heavy-duty engines into power solutions for data centres
highlights the flexibility of established industrial players to
participate in new growth areas.
We are also seeing China’s competitive position strengthen
across industrial and technology supply chains as companies
move up the value chain into higher-end manufacturing,
automation, robotics and markets driven by electrification. This
progress is underpinned by scale, cost advantages and
increasingly integrated capabilities, positioning Chinese firms well
to capture a larger share of global demand. It is particularly
evident in the energy transition arena, where rising geopolitical
tensions and energy security concerns are reinforcing investment
in renewables, energy storage and related materials.
In automation and next generation mobility, companies such as
Ubtech Robotics, Pony.ai and EHang provide exposure to
emerging technologies including robotics and autonomous
transport. While commercialisation is still at an early stage, we
believe these areas represent important long-term opportunities
as adoption gradually scales across industrial and consumer
applications.
Portfolio Manager’s Review continued
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
We are also seeing attractive opportunities in consumer facing
sectors, where leading brands such as Anta Sports continue to
gain market share through product innovation and strong
execution. At the same time, newer formats such as discount
snack retail, including Busy Ming, reflect evolving consumer
behaviour and the shift towards more experiential and value-
driven spending.
We see selective opportunities in frontier areas. For example, our
investment in HashKey reflects both a core exchange business in
a growing, regulated market in digital assets and longer-term
optionality as Hong Kong develops as a testing ground for new
regulation, including areas like stablecoins.
Overall, while macro uncertainty and market volatility are likely to
persist, they also create opportunities for profitable investment
over the medium-term. Periods of dislocation can lead to
mispricing, particularly in markets where sentiment shifts quickly.
Against this backdrop, our focus remains on identifying
companies that are mispriced relative to their long-term earnings’
prospects. We believe this disciplined approach positions the
portfolio well to deliver attractive long-term returns for our
shareholders. As a shareholder in the Company, I remain excited
about the Company’s future.
Dale Nicholls
Portfolio Manager
8 June 2026
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Annual Report 2026
The Company can invest up to 15% of its Net Assets plus
Borrowings in unlisted securities which carry on business, or have
significant interests, in China. The limit is applied at the time of
purchase.
The Directors believe that the ability to invest in unlisted securities
is a differentiating factor for the Company and can be a source
of additional investment performance. It allows the Portfolio
Manager to take advantage of the growth trajectory of early-
stage companies before they potentially become listed. This can
offer good opportunities for patient and long-term investors.
In the reporting year, the following changes were made in the
Company’s unlisted holdings.
A purchase of shares was made in Hashkey Holdings in August
2025 at a cost of £22,669,000. An additional purchase, at a cost
of £3,017,000, was made on 15 December 2025, prior to
Hashkey Holdings’ listing on the Hong Kong Stock Exchange. The
company listed on the Hong Kong Stock Exchange on 17
December 2025 at an opening price of HK$ 6.70.
At the year end, the Company held six unlisted investments in five
companies valued at £155,702,000 being 11.0% of its Net Assets
(2025: six unlisted investments valued at £136,044,000 being 9.6%
of Net Assets). See page 17 for details of the unlisted investments
as at 31 March 2026.
Overview of the Unlisted Investments Valuation Process
Unlisted investments in the Company’s portfolio are held at fair
value, which is defined as the value that would be paid for a
holding in an open-market transaction. The Manager’s Fair Value
Committee (“FVC”), which is independent of the Portfolio
Manager, provides recommended fair values to the Directors.
Twice yearly, ahead of the Company’s interim and its year end,
the Company’s Audit and Risk Committee receives a detailed
presentation from the FVC, Fidelity’s unlisted investments
specialist, and an independent third-party valuer, in order to
satisfy itself that the unlisted investments are carried at an
appropriate value in accordance with Accounting Policies Notes
2(e) and 2 (l) on pages 68 to 70 at the Company’s financial year
end. The external Auditor attends the unlisted valuations meeting
ahead of the Company’s year end.
The work completed by the Audit and Risk Committee on the
unlisted investments is set out in its report on page 54.
Workings of the Fair Value Committee
The valuation of each unlisted investment is set by the Manager’s
FVC and includes input from the analysts covering the securities,
Fidelity’s unlisted investments specialist and also advised upon
by an independent third-party valuer.
The independent valuer undertakes a detailed review of each of
the unlisted investments on a quarterly basis. The Board is
provided with quarterly updates from the FVC, which include
recommendations from the analysts’ and Fidelity’s unlisted
investments specialist, enabling the Board to have oversight of
and confidence in Fidelity’s process. Outside of the normal
quarterly cycle, the unlisted investments are monitored daily for
trigger events such as funding rounds or news affecting
fundamentals which may require the FVC to adjust the valuation
price as soon as the Fidelity analyst has been consulted. In
addition to this, the unlisted investments are monitored on a
weekly basis within a comparable movement model. If the
average movement of the selected proxies is +/-15%, a
revaluation of the relevant investment is considered.
Value of Unlisted Investments
Private companies in China are staying private for longer, with
their value increasing significantly in recent years. With the
growth of the entrepreneurial ecosystem in China, private
companies have become important contributors to the economy,
especially in sectors such as technology, consumer and
healthcare. Today, some of the largest and most influential
companies in China are unlisted. Having the flexibility to invest in
unlisted companies is a differentiator for the Company and has
allowed it to achieve excess returns and partner with some of the
best entrepreneurs in China. The Company will continue to
leverage Fidelity’s on-the-ground research resources and brand
to look for attractive risk-rewards in unlisted companies.
Historical Snapshot
Since our first investment in private companies in 2011, the
Company has deployed £266.9m of capital across sectors such
as the internet, hardware, software, healthcare and consumer
sectors. 13 investments (treating follow-ons as separate
investments) have since become public companies, with an
average holding period in the private market of 2.3 years. We
completed two management buybacks, including a partial
buyback, and continue to hold six unlisted investments across five
companies, with an average holding period of 4.7 years as at
31 March 2026.
The charts and table on pages 15 and 16 set out further
information on unlisted investments made to date.
Unlisted Investments
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
The chart below illustrates the number of transactions involving unlisted investments since the Company’s launch up to 31 March 2026,
categorised as listed, liquidated, redeemed, or still held
The chart below displays the initial purchase values and dates of all transactions and the status within the portfolio as at 31March
2026 (£’000)
70,000
60,000
50,000
40,000
30,000
10,000
0
20,000
2011 2012
2013
2014 2015 2016
2017 2018
2019
2020 2021
2022
2023
2024
2025 2026
Listed Buybacks
Liquidated Held
6 Held
2 Liquidated
1 Redeemed
13 Listed
Unlisted assets compared to net assets over time
The chart below displays the relationship between the percentage of unlisted assets (RHS) and value of the companies net assets
(LHS).
450
650
850
1050
1250
1450
1650
1850
2050
2250
2450
31/03/2011
30/09/2011
31/03/2012
30/09/2012
31/03/2013
30/09/2013
31/03/2014
30/09/2014
31/03/2015
30/09/2015
31/03/2016
30/09/2016
31/03/2017
30/09/2017
31/03/2018
30/09/2018
31/03/2019
30/09/2019
31/03/2020
30/09/2020
31/03/2021
30/09/2021
31/03/2022
30/09/2022
31/03/2023
30/09/2023
31/03/2024
30/09/2024
31/03/2025
30/09/2025
31/03/2026
%
£m
Net assets (£m)
Unlisted investments as a % of net assets
0
2
4
6
8
10
12
14
16
18
20
Source: Fidelity International as at 31 March 2026.
Listed Redeemed Liquidated Held
0
2
4
6
8
10
12
14
13
1
2
6
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Annual Report 2026
Unlisted company exposure by size
Number of investments
Equity value
At the time of investment As at 31 March 2026
Micro (<$300 million)
2 1
Small ($300 million - $2 billion)
7 2
Medium ($2 billion - $10 billion)
4 0
Large (>$10 billion)
9 3
Total
22 6
The Company has invested in private companies of a variety of sizes, with a majority of historical investments in companies that were
valued at above $2 billion at the time of investment. Fidelity does not screen or evaluate potential unlisted investments by size and will
continue to prioritise opportunities that it believes present the best risk-reward profiles.
Unlisted Investments continued
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Fujian Yangteng Innovations (0.6% of Net Assets)
(Purchased: February 2025)
Fujian Yangteng Innovations is a global leader in online aftermarket auto parts retail, digitalising the
massive yet heavily offline industry through production and channel innovations. Led by a team of
prudent operators with a strong track record of capital allocation, Yangteng has been delivering
high growth and consistent margins, with high return of equity. The investment was made at a
reasonable valuation, with investor-friendly terms protecting downside exposure.
Venturous Holdings (1.9% of Net Assets)
(Purchased: December 2020)
Venturous Holdings is a technology-focused investment and operating group specialising in
“Citytech” solutions, aimed at making cities smarter, more sustainable, and efficient. Its portfolio
spans sectors such as Smart Buildings, Smart Energy, and Smart Computing contributing to the
buildout of an All-Digital Urban Economy in China. It benefits from a robust structural growth outlook,
supported by its leadership in technologies like AI, IoT, and digital transformation.
Unlisted companies held in the Company’s portfolio as at 31 March 2026
DJI International (1.5% of Net Assets)
(Purchased: May 2018)
DJI International is the world’s largest manufacturer of drones and imaging technology. Its platforms
empower creators to capture images that were once out of reach. Its flying and camera stabilisation
systems redefine camera placement and motion through a commitment to research and
development and a focus on transforming complex technology into easy-to-use devices worldwide.
Building on the ethos of “form follows function”, DJI’s products combine advanced technology with
dynamic designs in industries such as filmmaking, agriculture, conservation, search and rescue, and
energy infrastructure. With expanding applications for aerial data and automation, DJI is well
positioned to benefit from growing global demand for drone-enabled solutions.
ByteDance (5.2% of Net Assets)
(Purchased: November 2018 and August 2024)
ByteDance is a leading internet entertainment and social media company with hundreds of millions of
users in China and globally. Supported by powerful network effects, scalable infrastructure, and
continuous product innovation, ByteDance has established itself as a key player in the global digital
media landscape and in digital advertising.
Its core applications, including TikTok, Toutiao, BuzzVideo and Vigo Video, use advanced recommendation
algorithms to deliver highly personalised user experiences at scale. Despite the spin-off of TikTok’s US
operations into a separately controlled entity, ByteDance’s overall growth prospects remain robust. The
company’s broader global user base, now exceeding two billion in over 150 markets, represents a much
larger long-term monetisation opportunity. This resilience is underpinned by its strong financial
performance, international expansion, and leadership in AI innovation.
Chime Biologics (1.8% of Net Assets)
(Purchased: March 2021)
Chime Biologics is a leading biologics Contract Development and Manufacturing Organization
(CDMO) company. The company leverages its comprehensive capabilities and internationally
recognised expertise to support its clients from early-stage biopharmaceutical development through
to late-stage clinical and commercial manufacturing, catering to the needs of the biopharmaceutical
industry.
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Spotlight on the Top 10 Holdings
as at 31 March 2026
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.
Tencent Holdings
% of Net Assets
12.3%
Tencent Holdings has a dominant position in social networking in China and benefits from a sizeable
user base. As China’s internet user growth slows down and the internet industry focuses increasingly on
monetisation, Tencent is one of the best-positioned companies because of its very sticky user base and
strong user-experience which should lead to overall margin expansion. New growth initiatives, such as
Shortform Video, Mini Program Games, and E-commerce services, are growing fast in the revenue mix and
delivering high incremental margins. Additionally, AI integration across advertising, gaming, and enterprise
services is emerging as a new monetisation lever, supporting revenue re-acceleration and margin upside. Its
increasing shareholder returns also underpin its long-term investment thesis.
Sector Communication Services
Alibaba Group Holding
% of Net Assets
7.6%
Alibaba Group Holding has a leading position in the e-commerce market. Its core e-commerce
categories, including apparel and makeup, are positioned to benefit from recovery and consumption
upgrades in China. The management team is focused on a clear strategy of investing in technology
and user experience, including logistics, product return, and customer service. Cloud revenue is
expected to accelerate significantly, driven by the increasing adoption of AI applications. Progress in AI
model development and monetisation within Alibaba Cloud are becoming key drivers of future returns.
Sector Consumer Discretionary
PDD Holdings
% of Net Assets
4.7%
PDD Holdings is one of the largest e-commerce platforms by Gross Merchandise Value (GMV) in
China, with outstanding efficiency in supply chain management and cost control. With its unique traffic
distribution method, PDD is able to offer the cheapest version of products and continuously gain market
share. The company is also expanding internationally to more than 50 countries via a new shopping
app called Temu by leveraging domestic supply chains in order to meet offshore demand. Temu’s rapid
international scaling and improving unit economics are increasingly contributing to overall growth, while
continued investment in merchant support and logistics is strengthening its competitive moat globally.
Sector Consumer Discretionary
ByteDance (unlisted)
% of Net Assets
5.2%
ByteDance is a leading internet entertainment and social media company with hundreds of millions of users
in China and globally. Supported by powerful network effects, scalable infrastructure, and continuous product
innovation, ByteDance has established itself as a key player in the global digital media landscape and in
digital advertising.
Its core applications, including are TikTok, Toutiao, BuzzVideo and Vigo Video, use advanced recommendation
algorithms to deliver highly personalised user experiences at scale. Despite the spin-off of TikTok’s US
operations into a separately controlled entity, ByteDance’s overall growth prospects remain robust. The
company’s broader global user base, now exceeding two billion in over 150 markets, represents a much
larger long-term monetisation opportunity. This resilience is underpinned by its strong financial performance,
international expansion, and leadership in AI innovation.
Sector Communication Services
Contemporary Amperex Technology (“CATL”)
% of Net Assets
2.8%
CATL is the global leader in electric vehicle (EV) batteries, with strong technological capabilities
and economies of scale. The company is well positioned to benefit from the ongoing battery
capex cycle, supported by demand from energy storage and continued electrification. Its
vertically integrated supply chain and ongoing innovation in battery chemistry (including LFP
(lithium iron phosphate) and next-generation technologies) support cost leadership and product
differentiation.
Sector Industrials
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Yadea Group Holdings
% of Net Assets
1.8%
Yadea Group is a leading manufacturer of electric two-wheelers in China, benefiting from
increasing urbanisation and demand for affordable, environmentally friendly transportation. The
company has strong brand recognition, extensive distribution networks, and ongoing investment in
battery and vehicle technology. Expansion into premium segments and overseas markets, along
with innovation in battery life and performance, are key growth drivers, supported by favourable
policies promoting green mobility.
Sector Consumer Discretionary
China Resources Land
% of Net Assets
1.8%
China Resources Land is a leading state-backed property developer in China, with a strong
presence in high-tier cities and a focus on residential and mixed-use developments. The company
benefits from its premium land bank, strong execution capabilities, and support from its state-owned
parent. It is well-positioned to gain market share as the sector consolidates, particularly as weaker
private developers exit and the market starts to stabilise. Improving policy support for the property
sector and its relatively strong balance sheet provide resilience, while recurring income from
investment properties adds stability to earnings.
Sector Real Estate
Venturous Holdings (unlisted)
% of Net Assets
1.9%
Venturous Holdings is a technology-focused investment and operating group specialising in
“Citytech” solutions, aimed at making cities smarter, more sustainable, and efficient. Its portfolio
spans sectors such as Smart Buildings, Smart Energy, and Smart Computing contributing to the
buildout of an All-Digital Urban Economy in China. It benefits from a robust structural growth
outlook, supported by its leadership in technologies like AI, IoT, and digital transformation.
Sector Financials
Chime Biologics (unlisted)
% of Net Assets
1.8%
Chime Biologics is a leading biologics Contract Development and Manufacturing Organization
(CDMO) company. The company leverages its comprehensive capabilities and internationally
recognised expertise to support its clients from early-stage biopharmaceutical development
through to late-stage clinical and commercial manufacturing, catering to the needs of the
biopharmaceutical industry.
Sector Health Care
Ping An Insurance (Group) Company of China
% of Net Assets
2.5%
Ping An Insurance (Group) Company of China is a provider of insurance, banking, asset management,
and other financial services. It has a strong presence in China, Hong Kong, and Macau, with
expanding operations overseas. It has a robust structural growth outlook, and within the broader
sector, its operations are of relatively better quality with the best distribution channels, earnings quality,
and a strong management team.
Sector Financials
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The Asset Exposures shown below measure the exposure of the Company’s portfolio to market price movements in the shares, equity
linked notes and convertible bonds owned or in the shares underlying the derivative instruments. The Fair Value is the value the portfolio
could be sold for and is the value shown on the Statement of Financial Position. Where a contract for difference (“CFD”) is held, the fair
value reflects the profit or loss on the contract since it was opened and is based on how much the share price of the underlying shares
has moved.
Asset Exposure Fair Value
£’000 %
1
£’000
Exposures – shares unless otherwise stated
Tencent Holdings (shares, long CFDs and options)
Communication Services 173,933 12.3 99,183
Alibaba Group Holding (shares and long CFDs)
Consumer Discretionary 106,902 7.6 40,784
ByteDance (unlisted)
Communication Services 73,732 5.2 73,732
PDD Holdings
Consumer Discretionary 66,324 4.7 66,324
Contemporary Amperex Technology (shares and long CFDs)
Industrials 39,025 2.8 15,082
Ping An Insurance (Group) Company of China (shares and long CFDs)
Financials 35,420 2.5 2,174
Venturous Holdings (unlisted)
Financials 27,036 1.9 27,036
Chime Biologics Convertible Bond (unlisted)
Health Care 25,479 1.8 25,479
China Resources Land (long CFDs)
Real Estate 24,982 1.8 (122)
Yadea Group Holdings (shares and long CFDs)
Consumer Discretionary 24,813 1.8 5,308
Zijin Mining Group (shares and long CFDs)
Materials 24,397 1.7 17,110
NetEase
Communication Services 22,593 1.6 22,593
Full Truck Alliance (shares and long CFDs)
Industrials 22,254 1.6 (1,128)
DJI International (unlisted)
Information Technology 21,381 1.5 21,381
Impro Precision Industries
Industrials 20,625 1.5 20,625
Hesai Group
Consumer Discretionary 20,468 1.4 20,468
ANTA Sports Products (long CFDs and options)
Consumer Discretionary 19,761 1.4 (307)
HashKey Holdings
Financials 19,742 1.4 19,742
Hisense Home Appliances Group (long CFDs)
Consumer Discretionary 19,681 1.4 (1,939)
Forty Largest Holdings
as at 31 March 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Asset Exposure Fair Value
£’000 %
1
£’000
Tuya
Information Technology 19,542 1.4 19,542
H World Group
Consumer Discretionary 18,469 1.3 18,469
Baidu
Communication Services 18,368 1.3 18,368
Noah Holdings
Financials 18,085 1.3 18,085
China Mengniu Dairy (shares and options)
Consumer Staples 17,663 1.3 8,965
ZKH Group
Industrials 17,578 1.2 17,578
Lenovo Group (long CFDs)
Information Technology 17,439 1.2 (491)
Tuhu Car
Industrials 17,344 1.2 17,344
Ten Pao Group Holdings
Industrials 16,619 1.2 16,619
Sinotrans (long CFDs)
Industrials 16,094 1.1 (1,437)
Crystal International Group
Consumer Discretionary 15,817 1.1 15,817
Zhongji Innolight (long CFDs)
Information Technology 15,055 1.1 845
China Resources Medical Holdings
Health Care 15,047 1.1 15,047
Ningbo Deye Technology (long CFDs)
Industrials 14,969 1.1 76
China State Construction Development Holdings
Industrials 14,954 1.1 14,954
Weichai Power
Industrials 14,520 1.0 14,520
Hygeia Healthcare Holdings (long CFDs)
Health Care 14,393 1.0 139
Yifeng Pharmacy Chain (long CFDs)
Consumer Staples 13,959 1.0 134
China Foods (long CFDs)
Consumer Staples 13,940 0.9 (942)
Health & Happiness (H&H) International Holdings
Consumer Staples 13,383 0.9 13,383
First Tractor
Industrials 13,299 0.9 13,299
Forty largest exposures 1,125,085 79.6 693,839
Other exposures 839,949 59.5 627,794
Total exposures before index hedging 1,965,034 139.1 1,321,633
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Asset Exposure Fair Value
£’000 %
1
£’000
Less: Index hedging
Hang Seng Index (future) (98,487) (7.0) 1,739
Hang Seng China Enterprise Index (future) (90,698) (6.4) 526
Total exposures after the netting of index hedging (189,185) (13.4) 2,265
Gross Asset Exposure
2
1,775,849 125.7
Portfolio Fair Value
3
1,323,898
Net current assets (excluding derivative instruments) 88,863
Net Assets 1,412,761
1 Asset Exposure expressed as a percentage of Net Assets.
2 Gross Asset Exposure comprises market exposure to investments of £1,348,233,000 plus market exposure to derivative instruments of £427,616,000.
3 Portfolio Fair Value comprises investments of £1,348,233,000 plus derivative assets of £9,419,000 less derivative liabilities of £33,754,000.
A full list of the Company’s holdings as at 31 March 2026 will be available on the Company’s website at www.fidelity.co.uk/china
from the day of the posting of this Annual Report.
Forty Largest Holdings continued
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Distribution of the Portfolio
as at 31 March 2026
Sector
Company
%
1
Benchmark
Index
%
Consumer Discretionary 35.9 26.6
Industrials 24.3 5.3
Communication Services 23.9 19.6
Consumer Staples 11.2 3.3
Information Technology 9.8 8.9
Health Care 7.5 5.0
Financials 7.5 19.0
Real Estate 5.1 1.4
Materials 4.9 5.6
Utilities 0.9 1.9
Energy – 3.4
Total Sector Exposure 131.0 100.0
Index Hedging (13.4) –
Other 1.7 –
Net Market Exposure 119.3 100.0
Share Type
Listed in Hong Kong 48.3 48.4
China ‘H’ Shares 15.9 28.0
Listed in US 14.4 4.0
China ‘A’ Shares 13.9 15.5
Red Chips 12.7 4.0
Unlisted 11.0 –
Listed in Germany 0.9 –
Listed in UK 0.8 –
US ADRs 0.6 –
Listed in Japan 0.5 –
Other 0.3 –
China ‘B’ Shares – 0.1
Net Market Exposure 119.3 100.0
Size of Company (By Market Cap)
Large – above £10bn 41.9 77.9
Medium – between £1bn to £10bn 37.4 18.9
Small – below £1bn 30.9 –
Total Market Cap Exposure 110.2 96.8
Index/Other 9.1 3.2
Net Market Exposure 119.3 100.0
1 Net Market Exposure expressed as a percentage of Net Assets.
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Analysis of NAV total return for the year ended 31 March 2026 %
Impact of:
MSCI China Index (in Hong Kong dollar terms) +4.7
Stock Selection (in Hong Kong dollar terms) +9.9
Gearing by use of CFDs (in Hong Kong dollar terms)
1
-0.8
Currency translation into sterling -3.3
Share Repurchases +0.6
Other Costs -1.2
Cash +0.8
NAV total return for the year ended 31 March 2026 +10.7
1 See Glossary on page 104 for definition of Gearing in Attribution Analysis.
Ten Largest Contributors to NAV total return relative to the Benchmark Index %
Xiaomi +1.8
Zhongji Innolight +1.5
Meituan +1.5
Bytedance +1.3
Impro Precision Industries +1.2
Pony.ai +1.0
Hesai Group +0.8
Dongfang Electric Corporation +0.8
Ningbo Deye Technology +0.7
JD.com +0.7
Ten Largest Detractors to NAV total return relative to the Benchmark Index %
China Construction Bank -0.8
Lexinfintech Holdings -0.8
Full Truck Alliance -0.7
HashKey Holdings -0.7
NIO -0.6
Tuhu Car -0.5
Petrochina -0.5
Hisense Home Appliances Group -0.5
Industrial & Commercial Bank of China -0.5
Ehang Holdings -0.5
Note: Derivative positions are included in the above investment positions.
Source: Fidelity International.
Attribution Analysis
as at 31 March 2026
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
For the year ended 31 March 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017
Investment Performance
Net Asset Value per Share total
return (%)
1
+10.7% +31.5 -16.3 +2.6 -34.9 +81.9 -5.9 -5.3 +22.2 +38.8
Share Price total return (%)
1
+9.5% +35.8 -16.4 +0.3 -39.2 +97.2 -6.5 -0.3 +23.6 +45.8
MSCI China Index total return
(in UK sterling terms) (%) +1.6% +37.5 -18.8 +1.4 -29.3 +29.1 -1.0 +0.9 +23.8 +37.6
Assets
Gross Asset Exposure (£m) 1,775.8 1,745.9 1,450.9 1,659.1 1,765.6 2,754.9 1,594.2 1,767.1 1,806.6 1,586.9
Net Assets (£m) 1,412.8 1,413.8 1,176.0 1,338.4 1,400.6 2,183.0 1,273.0 1,401.6 1,502.9 1,243.8
Gross Gearing (%)
1
25.7 23.5 23.4 23.9 26.1 26.2 25.2 26.1 20.2 27.6
Net Gearing (%)
1
19.3 20.9 20.8 21.1 23.5 18.4 23.2 20.9 14.2 22.4
Net Asset Value per Share (pence)
1
306.12 285.71 223.71 274.08 272.52 423.50 236.27 255.03 272.55 225.36
Share Price and Discount data
Share Price (pence) 280.00 265.00 201.00 247.50 252.00 419.00 216.00 235.00 239.00 195.70
Discount (%)
1
8.5 7.3 10.2 9.7 7.5 1.1 8.6 7.9 12.3 13.2
Earnings and Dividends paid
Revenue Earnings per Share (pence)
1
9.22 10.18 5.78 7.05 6.42 4.70 4.51 4.06 3.80 2.92
Capital Earnings/(Loss) (pence)
1
20.53 55.75 (50.18) (2.42) (152.81) 186.11 (19.67) (18.21) 45.86 60.01
Total Earnings/(Loss) per Share (pence)
1
29.75 65.93 (44.40) 4.63 (146.39) 190.81 (15.16) (14.15) 49.66 62.93
Ordinary Dividend per Share (pence) 9.00 8.00 6.40 6.25 5.50 4.68 4.25 3.85 3.50 2.50
Special Dividend per Share (pence) – 1.00 – – – – – – – –
Ongoing Charges Ratio
Ongoing Charges Ratio (excluding
variable element of the management
fee) (%)
1
0.92 0.89 0.98 0.98 0.94 0.97 0.99 1.02 1.11 1.16
Variable Management Fee (%) 0.17 (0.15) 0.15 0.20 0.20 0.12 (0.20) (0.09) 0.00 n/a
Ongoing Charges Ratio (including
variable management fee) (%)
1
1.09 0.74 1.13 1.18 1.14 1.09 0.79 0.93 1.11 1.16
1 Alternative Performance Measures.
Sources: Fidelity International and Datastream.
Past performance is not a guide to future returns.
Ten Year Record
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Fidelity China Special Situations PLC
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Annual Report 2026
Strategic Report
The Directors have pleasure in presenting the Strategic Report of
the Company. The Chairman’s Statement and Portfolio Manager’s
Review on pages 2 to 13 form part of the Strategic Report.
Business and Status
The Company carries on business as an investment company
and has been accepted as an approved investment trust by
HMRevenue & Customs under Sections 1158 and 1159 of the
Corporation Tax Act 2010, subject to the Company continuing to
meet eligibility conditions. The Directors are of the opinion that
the Company has conducted its affairs in a manner which will
satisfy the conditions for continued approval.
The Company is registered as an investment company under
Section 833 of the Companies Act 2006 and its ordinary shares
are listed and traded on the London Stock Exchange. It is not a
close company and it has no employees.
Purpose
The purpose of the Company is to offer investors who are
building a diversified portfolio a direct exposure to China,
recognising the size and growing importance of the country within
the world economy and its weighting within global stock market
indices.
Investment Objective
The Company’s investment objective is to achieve long-term
capital growth from an actively managed portfolio made up
primarily of securities issued by companies in China, both listed
and unlisted, as well as Chinese companies listed elsewhere. The
Company may also invest in companies with significant interests
in China.
Investment Policy
The Company invests in a diversified portfolio consisting primarily
of securities issued by companies in China, both listed and
unlisted, as well as Chinese companies listed elsewhere. The
Company may also obtain exposure to other listed companies
that have significant interests in China.
The Company may invest through equities, index linked, equity
linked and other debt securities, cash deposits, money market
instruments, foreign currency exchange transactions, equity
related securities, forward transactions and other interests
including derivative instruments. Forward transactions and
derivatives, including futures, options and contracts for difference,
may be used to enhance portfolio performance as well as for
efficient portfolio management and hedging. The Company’s
interest in any single investment will not, on acquisition, exceed
15% of Net Assets plus Borrowings.
The Investment Manager is not required to ensure that the
Company’s cash resources are fully invested at all times.
Accordingly, there may be times when the Company holds cash
or money market instruments pending investment.
The Company may invest in China “A” Shares both directly
through the Investment Manager’s Qualified Foreign Institutional
Investor (“QFII”) license and indirectly through third parties who
have a QFII facility.
Unlisted Investments
The Company is able to invest up to 15% of Net Assets plus
Borrowing, at the time of investment, in unlisted securities which
carry on business, or have significant interests, in China.
Borrowing and Gearing Policy
The Board considers that long-term capital growth can be
enhanced by the judicious use of borrowing. The Board is
responsible for the Company’s gearing strategy with day-to-day
decisions being made by the Investment Manager within the remit
set by the Board in line with the borrowing and gearing policy.
The Company may borrow up to 25% of Net Assets, and the
Gross Asset Exposure of the Company, whether from borrowing
or the use of derivatives, may not exceed the Net Assets of the
Company by more than 30%. The Portfolio Manager is
responsible for operating within these limits.
Changes to Investment Objective and Investment Policy
No material change will be made to the Company’s investment
objective and investment policy without the prior approval by
ordinary resolution of shareholders and the approval of the FCA.
At the Company’s Annual General Meeting to be held on 21 July
2026, the Company will seek shareholder approval to amend the
Investment Policy, and specifically, to amend the investment
restriction in respect of any single listed investment so that the
Company’s interest in any single investment will not, on
acquisition, exceed 20% of Net Assets plus Borrowings (increased
from 15%). The full text of the proposed updated Investment Policy
is set out in the Appendix to the notice of Annual General
Meeting on page 102.
Strategy
In order to achieve the investment objective, the Company
operates as an investment company which 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 the
Manager (FIL Investment Services (UK) Limited). The Manager
delegates the investment management to FIL Investment
Management (Hong Kong) Limited and the company secretariat
function to FIL Investments International. The Portfolio Manager,
Dale Nicholls, aims to achieve a total return on the Company’s
Net Assets over the long-term in excess of the equivalent return
on the MSCI China Index (the Benchmark Index), as expressed in
UK sterling. The stock selection approach adopted by the
Portfolio Manager is considered to be well suited to achieving
the objective. The Board recognises that investing in equities is a
long-term process and that the Company’s returns will vary from
year to year.
The Company’s strategy and principal activity have remained
unchanged throughout the year ended 31 March 2026.
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Annual Report 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Investment Management Philosophy, Style and Process
The Portfolio Manager makes full use of Fidelity International’s
extensive investment research presence and investment licenses
in China. He focuses on undervalued companies which have
good long-term growth prospects and which have been
underestimated by the wider market. Company visits and
management meetings comprise an important part of the
investment process. He has a bias to small and medium-sized
companies, where lower levels of research by competitors leads
to greater opportunities – but he is not constrained and may
invest in large or mega cap companies such as state-owned
enterprises as and when opportunities arise.
The Portfolio Manager may invest in companies listed in China
and Chinese companies listed elsewhere. He may also invest in
companies with significant interests in China. The Company is
also able to invest up to 15% of its Net Assets plus Borrowings in
unlisted companies with a view to their Initial Public Offering,
thereby providing investors in the Company with very wide-
ranging investment opportunities in China.
Derivative Instruments
The Company may use derivative instruments for efficient portfolio
management, gearing and hedging purposes. They may also be
used as a means of enhancing portfolio performance in order to
achieve the Company’s investment objective.
The Board has adopted a policy that the Gross Asset Exposure of
short positions held by the Company will not in aggregate
exceed 15% of Net Assets plus Borrowings.
It is the Board’s policy that total exposure to any single
counterparty from all activities, including, but not limited to, the
management of cash and the use of derivatives should not
exceed 15% of Net Assets plus Borrowings. Derivative exposures
are included after the netting off of off-setting positions and
allowing for any collateral placed by the counterparty with the
Company.
Investments in other Listed Investment Companies
The Company may invest no more than 10%, in aggregate, of its
Net Assets plus Borrowings at the time of acquisition in other
listed investment companies (including listed investment trusts),
but this restriction does not apply to investments in investment
companies or investment trusts which themselves have stated
investment policies to invest no more than 15% of their Net Assets
plus Borrowings in other listed investment companies (including
listed investment trusts).
Foreign Exchange Hedging Policy
The Company’s Financial Statements are denominated in UK
sterling, while investments are made and realised in currencies
other than UK sterling, including Chinese renminbi, Hong Kong
dollars and US dollars. 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.
Quantitative Reporting for the Year Ended 31 March 2026
Unlisted Investments As at 31 March 2026, the Company held six (2025: six) unlisted investments with a fair
value of £155,702,000 (2025: £136,044,000) representing 11.0% of Net Assets (2025: 9.6% of
Net Assets).
Borrowing and Gearing During the year, the Gross Asset Exposure of the Company did not exceed the Net Assets
of the Company by more than 30%. As at 31 March 2026, Gross Asset Exposure in excess
of Net Assets was 25.7% (2025: 23.5%).
As at 31 March 2026, the Company did not have any loan facilities.
The Board has requested that the Portfolio Manager limits net gearing to 20% of
Net Assets at the present time.
Derivative Instruments As at 31 March 2026, the Company’s exposure to short derivative instruments represented
3.2% of Net Assets (2025: 1.3% of Net Assets, excluding hedging exposures).
As at 31 March 2026, the Company’s largest exposure to any single counterparty from all
derivative activities was 0.2% of Net Assets (2025: 0.2% of Net Assets).
Investments in other Listed Investment
Companies
As at 31 March 2026, the Company held no investments in other listed investment
companies (2025: nil).
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Fidelity China Special Situations PLC
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Annual Report 2026
Performance
The Company’s performance for the year ended 31 March 2026,
including a summary of the year’s activities, and details on trends
and factors that may impact future performance, are included in
the Chairman’s Statement and the Portfolio Manager’s Review on
pages 2 to 13. The Forty Largest Holdings, the Distribution of the
Portfolio and the Attribution Analysis are on pages 20 to 24, and
the Ten Year Record is on page 25.
Results And Dividends
The Company’s results for the year ended 31 March 2026 are set
out in the Statement of Comprehensive Income on page 63. The
revenue earnings per share was 9.22 pence and the capital
earnings per share was 20.53pence, giving total earnings of
29.75pence per share.
Under Section 1159 of the Corporation Tax Act 2010, the
Company is not able to retain more than 15% of its net income in
any reporting year to qualify as an investment trust. The Directors
recommend that a final dividend of 9.00 pence per share be
paid on 28 July 2026 to shareholders who appear on the register
as at close of business on 19 June 2026 (ex-dividend date 18
June 2026). An ordinary dividend of 8.00p per share and a
special dividend of 1.00 pence per share were paid in July 2025
in respect of the year ended 31 March 2025.
Key Performance Indicators
The Board’s intention is for the NAV and share price to
outperform the Benchmark Index over the longer-term and that
the discount should be maintained in single digits in normal
market conditions. It regularly considers the costs of running the
Company with the aim of keeping the Ongoing Charges Ratio as
low as possible. The Board deems these to be the Company’s
key performance indicators (“KPIs”) and they are also
comparable to those reported by other investment companies.
The Company’s KPIs for the current and prior year are set out in
the table below.
Year ended
31 March
2026
%
Year ended
31 March
2025
%
Net Asset Value per Share total
return
1
+10.7 +31.5
Share Price total return
1
+9.5 +35.8
MSCI China Index total return +1.6 +37.5
Discount to Net Asset Value
1
8.5 7.3
Ongoing Charges Ratio
2
0.92 0.89
1 Alternative Performance Measures. See pages 95 and 96.
2 Excluding variable element of the management fee.
The Board also monitors the factors contributing to investment
results, as set out in the NAV Attribution Analysis table on
page24. Long-term performance is also monitored and is set out
in the Ten Year Record on page 25.
Principal Risks and Uncertainties and Risk Management
As required by provisions 33 and 34 of the AIC Code, the Board
has a robust ongoing process for identifying, evaluating and
managing the principal risks and uncertainties faced by the
Company, including those that could threaten its business model,
future performance, solvency or liquidity. The Board will
implement the new requirement, under provision 34 of the AIC
Code applicable for reporting periods from 1 January 2026, of a
Board declaration on the effectiveness of material risk
management and internal controls in the Company’s next
reporting year.
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 Manager also has responsibility for risk management for the
Company. It works with the Board to identify and manage the
principal and emerging risks and uncertainties and to ensure that
the Board can continue to meet its UK corporate governance
obligations.
The Board considers the risks listed below and on pages 29 to
33 as the principal risks and uncertainties faced by the Company.
Emerging Risks
The Audit and Risk 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 graded appropriately. This process,
together with the policies and procedures for the mitigation of
existing and emerging risks, is updated and reviewed regularly in
the form of comprehensive reports by the Audit and Risk
Committee. The Board determines the nature and extent of any
risks it is willing to take in order to achieve its strategic objectives.
Globally, climate change (large scale shift in the planet’s weather
patterns and average temperatures) effects are already being
experienced in the form of changing weather patterns. Extreme
weather events can potentially impact the operations of investee
and potential investee companies, their supply chains and their
customers. Climate change continues to be an emerging risk. The
Board notes that the Manager includes 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 affect
shareholder returns.
The Board, together with the Manager, is also monitoring the
emerging risks posed by the rapid advancement of artificial
intelligence (“AI”) and how it may threaten the Company’s
activities and its potential impact on the portfolio and investee
companies. AI can provide asset managers powerful tools, such
as enhancing data analysis risk management, trading strategies,
operational efficiency and client servicing, all of which can lead
to better investment outcomes and more efficient operations.
Strategic Report continued
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Annual Report 2026
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
However, with these advances in computing power that will
impact society, there are risks from its increasing use and
manipulation with the potential to harm, including a heightened
threat to cybersecurity.
Other emerging risks may continue to evolve from unforeseen
geopolitical and economic events. There are currently a number
of geopolitical factors that could mean greater stock market risks
and heightened macro economic changes such as inflation,
interest rates, currency fluctuations, energy costs and an
increased regulatory environment.
Principal Risks Risk Description and Impact Risk Mitigation Trend
1. Geopolitical
Risk
• Political, socio economic and cultural
events, trends and developments may
have an adverse effect on the value of
the Company’s investments and the
Manager’s ability to access markets
freely.
• China’s relationships with the US,
Japan and Europe continue to
generate bouts of volatility. Fragile
truce with the US holds but the
long-term trajectory remains one of
strategic competition in technology,
supply chains and security.
• Imposition of tariffs may have an
adverse impact on US/China trade.
• US legislation may disproportionately
target Chinese issuers and could, in a
material escalation scenario, lead to
forced delisting of Chinese American
Depositary Receipts, with companies
without secondary listings being the
most vulnerable. Forced delisting could
result in the Company holding
unplanned unlisted investments.
• Uncertainty from ongoing global
conflicts, most recently the conflict in
the Middle East, has elevated oil
supply concerns and price volatility.
• Regional conflict in the Pacific region
remains a possibility. The ramifications,
including potential military conflict,
could have very serious economic and
stock market implications. Additionally,
sanctions could lead to the freezing of
Chinese assets, limiting or prohibiting
the Company’s ability to transact in
Chinese denominated assets.
• The Board receives insights and
information, including research notes, from
the Manager and independent sources
on a regular basis.
• The portfolio is tilted to domestic Chinese
markets.
• Major adverse market events are
stress-tested for operational resilience and
financial impact.
• Regulatory and policy development is
monitored by Fidelity, including any
relevant executive orders or sanctions.
• Whilst rule changes barring investment
are unlikely, this risk is closely monitored.
Increased
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Annual Report 2026
Strategic Report continued
Principal Risks Risk Description and Impact Risk Mitigation Trend
• The Company has exposure to a
number of companies with all or part
of their businesses in Variable Interest
Entities (“VIEs”), which allow foreign
investors to gain exposure to industries
where direct foreign ownership is
prohibited. There are regulatory risks in
respect of VIEs arising from US first
investment policies as well as from the
China Security Regulatory Commission
(“CSCR”) requirements. Whilst rule
changes barring investment are
unlikely, such rule changes could
require significant disinvestment by
the Company.
2. Market and
Economic Risks
(including
Currency Risk)
• China’s GDP growth is moderating but
resilient, however it is weighed down
by property sector weakness and
consumer fragility.
• Whilst China’s outlook for “controlled
stabilisation” is supported by targeted
policy measures, the property sector,
although showing signs of some
stabilisation, is a source of uncertainty.
Growth in local consumption is
expected, but US tariffs may impact
economic activity.
• The currency in which the Company
reports its results is sterling and its
ordinary shares trade in sterling, whilst
the underlying investments are in
different currencies. The Company
does not hedge currencies.
• Economic or market changes are
reviewed at each Board meeting.
• The Investment Manager oversees and
governs the risk profile of the portfolio.
• The Board receives and reviews reports
from the Portfolio Manager on a regular
basis.
• It is not the Company’s policy to hedge
the underlying currencies of the holdings
in the portfolio, but rather the Investment
Manager takes into consideration
currency risk when making investments.
Stable
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Principal Risks Risk Description and Impact Risk Mitigation Trend
3. Marketplace,
Competition
and Discount
Management
Risks
• There is increased activity around
mergers and acquisitions across the
investment company marketplace and
alternative investment offerings
(including passive vehicles) which
could influence the demand for the
Company’s shares.
• There is a risk of costly shareholder
activism in the investment company
sector, pursuing goals that may not be
in the interests of most shareholders.
• Changes in investor sentiment towards
China, market volatility and poor
performance could lead to the
Company trading at a larger discount
to its underlying NAV, as due to the
nature of investment companies, the
price of the Company’s shares and its
discount to NAV are factors which are
not totally within the Company’s
control.
• The Board may fail to implement its
discount management policy effectively
to keep the level of the discount in
single digits in normal conditions and
in the face of heavy selling pressure,
may exhaust its authorised buyback
facility.
• The Board, the Company’s Broker and the
Manager closely monitor industry activity,
the peer group and the share register.
• An annual review of strategy is
undertaken by the Board to ensure that
the Company continues to offer a relevant
product to investors.
• The Company’s discount management
policy is aimed at keeping the discount in
single digits during normal market
conditions.
• Maintaining close communications with
major shareholders.
• If the authority to buy-back shares looked
as if it could be exhausted, shareholders
would be asked to approve a renewal of
the authority.
Stable
Principal Risks Risk Description and Impact Risk Mitigation Trend
4. Changes in
Legislation,
Taxation or
Regulation
• 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 concerns about
investment cost disclosures and their
impact on the industry.
• The Board and Manager closely monitor
regulatory, taxation and legislative
changes, with developments impacting
the Company summarised in the form of
regular reporting to the Board.
• The Manager monitors Section 1158
status to ensure any issues are escalated
to the Board and addressed promptly.
• The Manager participates in industry
discussions regarding regulatory changes
impacting investment companies, and
regulatory developments continue to be
monitored and managed by Fidelity
through active lobbying and negotiations
as well as a robust change management
process.
Stable
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Principal Risks Risk Description and Impact Risk Mitigation Trend
5. Cybercrime
and
Information
Security Risks,
including
Business
Continuity Risk
• 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-services attacks from highly
organised criminal networks and
sophisticated ransomware operators.
• Whilst the use of artificial intelligence
(AI) presents many opportunities, it
also presents risks, including business
process disruption risk as described
below.
• Business process disruption risk from
continued threats of cyberattacks,
geopolitical events, outages, fire events
and natural disasters, resulting in
financial and/or reputational impact to
the Company affecting the functioning
of the business.
• The Company relies on a number of
third-party service providers, principally
the Registrar, Custodian and
Depositary who may be subject to
cybercrime.
• The Manager’s technology risk
management teams have implemented a
number of initiatives and controls to
provide enhanced mitigating protection
and also to address the risks of AI.
• 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.
• Fidelity has Business Continuity and Crisis
Management Frameworks in place to
deal with business disruption and assure
operational resilience.
• Third-party service providers are subject
to a risk-based programme of risk
oversight by the Manager. Internal control
reports of the Registrar, Custodian and
Depositary are received on an annual
basis and any concerns are investigated.
Increased
6. Investment
Performance
Risk (including
Gearing Risk)
• The Portfolio Manager may fail to
outperform the Benchmark Index and
peers over the longer-term.
• High gearing levels in a falling market
accentuate share price weakness. NAV
performance can be affected by
selling stock in a falling market to keep
the gearing level within pre-agreed
limits.
• An investment strategy overseen by the
Board to optimise returns from investing in
China, as well as oversight of gearing
and relevant limits.
• Diversification of investments through
investment restrictions and guidelines
which are monitored and reported upon
by the Investment Manager.
• A well-resourced team of experienced
analysts covering the market.
• Board scrutiny of the Manager and the
ability in extreme circumstances to
change the Manager.
Stable
7. Operational
Risk
• Financial losses or reputational
damage from inadequate or failed
internal processes, people and
systems or from external parties and
events.
• Fidelity’s Operational Risk Management
Framework is designed to proactively
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.
Stable
Strategic Report continued
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Fidelity China Special Situations PLC
STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
Principal Risks Risk Description and Impact Risk Mitigation Trend
8. Key Person
Risk
• Loss of the Portfolio Manager or other
key individuals could lead to potential
performance and/or operational
issues.
• The Manager has succession plans for
key dependencies.
• The depth of the team within Fidelity,
including the experience of the analysts
covering China.
Stable
9. Unlisted
Securities
Risk
• Valuations of unlisted securities involve
a higher degree of valuation
uncertainty and liquidity risks than
quoted securities.
• Valuations of unlisted securities may be
adversely affected by market
conditions, government sanctions and
US trade tariffs.
• Initial public offering (IPO) of the
unlisted companies may face delays
leading to longer holding periods.
• Potential for less stringent standards of
governance compared with those of
listed entities.
• The Company has set a limit on the level
of investments in unlisted companies, and
the Manager has a track record of
identifying profitable opportunities.
• The Board’s Audit and Risk Committee
scrutinises the carrying value of unlisted
investments determined by the Manager,
with input from Fidelity’s analysts and
unlisted investments specialist, and an
external third-party valuer.
Stable
Continuation Vote
A continuation vote will take place every five years with the first
such vote to be held at the AGM in 2029.
Viability Statement
In accordance with provision 36 of the AIC 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. The Company is an investment trust with the
objective of achieving long-term capital growth. The Board
considers that five years is an appropriate investment horizon to
assess the viability of the Company, although the life of the
Company is not intended to be limited to this or any other period.
In making an assessment on the viability of the Company, the
Board has considered the following:
• The ongoing relevance of the investment objective in
prevailing market conditions;
• The Company’s level of gearing;
• The Company’s NAV and share price performance
compared to its Benchmark Index;
• The principal and emerging risks and uncertainties facing
the Company and their potential impact, as set out above;
• 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;
• Future income and expenditure forecasts; and
• Introduction of a continuation vote with effect from 2029 and
every five years thereafter.
The Company’s performance for the five year reporting period to
31 March 2026 was a NAV total return of -18.7% and a share
price total return of -24.1%. The Benchmark Index total return over
the same period was -18.7%. The Board regularly reviews the
investment policy and considers whether it remains appropriate.
The Board has concluded that there is a reasonable expectation
that the Company will be able to continue in operation and meet
its liabilities as they fall due over the next five years based on the
following considerations:
• The Investment Manager’s compliance with the Company’s
investment objective and policy, its investment strategy and
asset allocation;
• The portfolio comprises sufficient readily realisable securities
which can be sold to meet funding requirements if
necessary; and
• The ongoing processes for monitoring operating costs and
income which are considered to be reasonable in
comparison to the Company’s total assets.
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In preparing the Financial Statements, the Directors have
considered the impact of climate change and potential emerging
risks from the use of artificial intelligence as detailed on page 28.
The Board has also considered the impact of regulatory changes,
global trade tariffs, continuing tensions between the US and
China, and China and Taiwan, unforeseen market events,
geopolitical concerns and the ongoing global implications of the
war in Ukraine and the conflict in the Middle East and how this
may affect the Company.
In addition, the Directors’ assessment of the Company’s ability to
operate in the foreseeable future is included in the Going
Concern Statement which is included in the Directors’ Report on
page 39.
PROMOTING THE SUCCESS OF THE COMPANY
Under Section 172(1) of the Companies Act 2006, the Directors of
a company must act in a way they consider, in good faith, would
be most likely to promote the success of the Company for the
benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the likely consequences of any
decision in the long-term; the need to foster relationships with the
Company’s suppliers, customers and others; the impact of the
Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high
standards of business conduct; and the need to act fairly as
between members of the Company.
As an externally managed Investment Trust, the Company has no
employees or physical assets, and a number of the Company’s
functions are outsourced to third parties. The key outsourced
function is the provision of investment management services by
the Manager, but other professional service providers support the
Company by providing administration, custodial, banking and
audit services. The Board considers the Company’s key
stakeholders to be the existing and potential shareholders, the
externally appointed Manager (FIL Investment Services (UK)
Limited) and other third-party professional service providers. The
Board considers that the interest of these stakeholders is aligned
with the Company’s objective of delivering long-term capital
growth to investors, in line with the Company’s stated objective
and strategy, while providing the highest standards of legal,
regulatory and commercial conduct.
The Board, with the Portfolio Manager, sets the overall investment
strategy and reviews this 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 26
and 27.
The Board receives regular reports from the Company’s Broker
which covers market activity, how the Company compares with its
peers in the China sector on performance, discount and share
repurchase activity, an analysis of the Company’s share register
and market trends.
The Board places great importance on communication with
shareholders. The Annual General Meeting (“AGM”) provides the
key forum for the Board and the Portfolio Manager to present to
the shareholders on the Company’s performance and future
plans and the Board encourages all shareholders to attend 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 at the same address or by
email at investmenttrusts@fil.com.
The Portfolio Manager meets with major shareholders, potential
investors, stock market analysts, journalists and other
commentators throughout the year. These communication
opportunities help inform the Board in considering how best to
promote the success of the Company over the long-term.
The Board seeks to engage with the Manager and other service
providers and advisers in a constructive and collaborative way,
promoting a culture of strong governance, while encouraging
open and constructive debate, in order to ensure appropriate
and regular challenge and evaluation. This aims to enhance
service levels and strengthen relationships with service providers,
with a view to ensuring shareholders’ interests are best served,
by maintaining the highest standards of commercial conduct
while keeping cost levels competitive.
Whilst the Company’s direct operations are limited, the Board
recognises the importance of considering the impact of the
Company’s investment strategy on the wider community and
environment, and considers the Manager’s ESG approach in this
regard.
In addition to ensuring that the Company’s investment objective
was being pursued, key decisions and actions taken by the
Directors during the reporting year, and up to the date of this
report, have included:
• The appointment of Bessie Lee as a non-executive director of
the Company post the Company’s year end;
• Proposing the increase of the single listed investment limit in
the Investment Policy to 20% of Net Assets plus Borrowings.
This amendment will be put forward for approval by
shareholders at the Company’s Annual General Meeting;
• Authorising the repurchase of 33,336,928 shares for
cancellation in the reporting year when the Company’s
discount widened, in line with the Board’s intention that the
ordinary share price should trade at a level close to the
underlying NAV. Since the year ended 31 March 2026 and
up to the latest practicable date of this report, a further
3,121,739 shares have been repurchased;
• The decision to recommend the payment of a final dividend
of 9.00 pence per share in respect of the year ended
31 March 2026;
Strategic Report continued
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STRATEGYFINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS
• Following a competitive audit tender, and a recommendation
from the Audit and Risk Committee, appointing
PricewaterhouseCoopers LLP as the Company’s auditor;
• Meeting the Company’s key shareholders during the
reporting year; and
• The decision to once again hold a hybrid AGM this year in
order to make the AGM more accessible and improve the
shareholder experience.
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’s Listing Rules
requirements (LR 6.6.6(9), (10) and (11)) regarding the targets on
board diversity that:
• at least 40% of 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 should be from a non-white
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 CFOs, the Chairman of the Company, the
Senior Independent Director and Chairman of the Audit and Risk
Committee to be senior Board positions.
As required by the FCA 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 March 2026, 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 had been met. The target of 40% of women on the
Board was not met in the reporting year, but the target is now
being met following the appointment of Bessie Lee as a director
of the Company.
Gender Reporting as at 31 March 2026
Number
of Board
Members
Percentage of
the Board
Number of
Senior Board
Positions
1
Men 4 67% 2
Women 2 33% 1
1 Chair, Senior Independent Director and Audit and Risk Committee Chair.
Ethnic Background Reporting as at 31 March 2026
Number
of Board
Members
Percentage of
the Board
Number of
Senior Board
Positions
1
White British
or other White
(including minority
white groups) 5 83% 3
Asian/Asian British 1 17% 0
1 Chair, Senior Independent Director and Audit and Risk Committee Chair.
CORPORATE AND SOCIAL RESPONSIBILITY
Environmental, Social and Governance (“ESG”) in the
Investment Process
The Board has contracted with the Manager to provide the
Company with investment management and administrative
services. The Board believes that ESG considerations are an
important input into the assessment of the value of its
investments. The investment universe is undergoing significant
structural change and is likely to be impacted by increasing
regulation as a result of climate change and other social and
governance factors. The Board is committed to reviewing how the
Manager applies ESG factors in the investment process. The
Fidelity group of companies (including the Manager and
Investment Manager) sets out its commitment to responsible
investing and provides a copy of its detailed Responsible
Investing at www.fidelity.co.uk/sustainable/sustainability-at-
fidelity.
Socially Responsible Investment
The Manager’s primary objective is to produce superior financial
returns for the Company’s shareholders. It believes that high
standards of corporate social responsibility (CSR) make good
business sense and have the potential to protect and enhance
investment returns.
Modern Slavery Act 2015
As an externally managed investment company, the Company
has no employees and does not provide goods or services in the
normal course of business and does not have customers.
All its operational functions are outsourced to third-party service
providers. Accordingly, the Company falls outside the scope of
the Modern Slavery Act 2015. The Company’s suppliers are
predominantly professional advisers and the Company’s service
providers are considered to be low risk in this regard. In carrying
out its activities and in relationships with suppliers, the Company
aims to conduct itself responsibly, ethically and fairly.
Corporate Engagement
The Board believes that the Company should, where appropriate,
take an active interest in the affairs of the companies in which it
invests and that it should exercise its voting rights at their general
meetings. It delegates the responsibility for corporate
engagement and shareholder voting to the Investment Manager
which updates the Board on any issues and activities. These
activities are reviewed regularly by the Manager’s stewardship
team.
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Fidelity opposed management at 13% of shareholder meetings,
demonstrating its active engagement with its underlying holdings.
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 pages from the Manager’s website at
www.fidelity.co.uk/china.
FUTURE DEVELOPMENTS
Some trends likely to affect the Company in the future are
common to many investment companies together with the impact
of regulatory change and emerging risks. The factors likely to
affect its future development, performance and position are set
out in the Chairman’s Statement and the Portfolio Manager’s
Review on pages 2 to 13.
On behalf of the board
Mike Balfour
Chairman
8 June 2026
Strategic Report continued
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Board of Directors
Mike Balfour
Chairman (since 20 July 2022)
Appointed 1 October 2018
M
N
Mr Balfour is non-executive Chairman of abrdn Property Income Trust
Limited which is in wind down (all properties sold except one) and was
non-executive chairman of Smithson Investment Trust plc until February
2026. He is Chairman of TPT Investment Management Limited and sits
on the board of its parent company, TPT Retirement Solutions Limited.
He was chief executive of Thomas Miller Investment Ltd until 2016 and
was previously chief executive at Glasgow Investment Managers and
chief investment officer at Edinburgh Fund Managers Limited. His early
investment management career was focused on the nascent equity
markets of Asia. He is a qualified Chartered Accountant.
Alastair Bruce
Director
Appointed 1 July 2021
A
M
N
Mr Bruce is a non-executive Director and Chairman of the audit
committee of both ICG Enterprise Trust PLC and Barings Emerging
EMEA Opportunities PLC. He was Managing Partner of Pantheon
Ventures between 2006 and 2013, having joined the firm in 1996. At
Pantheon Ventures, he was involved in all aspects of the firm’s
business, particularly the management of Pantheon International PLC,
the expansion of Pantheon Ventures global platform and the creation
of a co-investment business. He has over 30 years of private equity,
investment management and financial experience. He is a qualified
Chartered Accountant.
Vanessa Donegan
Senior Independent Director
(since 1 January 2023)
Appointed 1 September 2020
A
M
N
Mrs Donegan is a non-executive Director and the Senior Independent
Director of JPMorgan India Growth & Income plc and Invesco Asia
Dragon Trust plc. She is also a non-executive Director of Herald
Investment Management Ltd. and was a Director of State Street Global
Advisors Luxembourg SICAV for six years until January 2026. She has
37 years of Asian fund management experience, including managing
dedicated China portfolios. She was Head of the Asia Pacific desk at
Columbia Threadneedle Investments Ltd. (formerly Threadneedle
Investments Ltd.) for 21 years and has extensive experience of
marketing funds to retail and institutional clients across the globe.
Georgina Field
Director
Appointed 1 July 2022
A
M
N
Ms Field is Senior Partner at Alpha Agency, a specialist investment
marketing agency. She has been in this global role since September
2024, when the business she set up and managed, White Marble
Consulting, was acquired by the consultancy firm, Alpha FMC. She was
previously a non-executive Director of the Perpetual Income Growth
Investment Trust plc, overseeing its merger into Murray Income Trust plc.
She has over 20 years’ experience in the investment industry, including
two senior roles leading marketing teams at asset management
companies.
Committee membership key
A
Audit and Risk
M
Management Engagement
N
Nomination and Remuneration
Committee Chair
All the Directors are non-executive Directors and all are independent.
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Board of Directors continued
Bessie Lee
Director
Appointed 2 June 2026
A
M
N
Bessie Lee is an international business leader, investor, and board
director with over 30 years of experience spanning global marketing
services, technology-enabled business transformation, and cross-border
growth between Asia and the West.
She currently serves as an Independent Non-Executive Director at
RSGroup plc, a FTSE 100 global industrial solutions company.
Bessie previously held several senior executive roles across Greater
China. She served as Chief Executive Officer of JLL Greater China,
overseeing one of the region’s largest real estate advisory platforms,
and earlier as Chief Executive Officer of WPP China and GroupM
China.
Alongside her board work, Bessie is an active investor and advisor to
technology startups focusing on martech, AI-driven platforms, and
productivity technologies.
Gordon Orr
Director
Appointed 1 January 2023
A
M
N
Mr Orr is an independent non-executive Director at Hong Kong listed
Lenovo Group Limited, Meituan and at Stockholm listed EQT AB. He is
also a non-executive director of Swire Pacific Limited and HKEX Limited.
He founded McKinsey’s consulting practice in mainland China in the
early 1990s and led it in China and Asia until 2015, since when he has
served on corporate boards.
Edward Tse
Director
Appointed 24 November 2022
A
M
N
Dr Tse is a non-executive Director of China Oriental Group and Ping An
Life Insurance Company of China as well as an Adviser of CDIB Capital
International and Our Hong Kong Foundation. He is founder and Chief
Executive Officer of Gao Feng Advisory Company, Professor of
Managerial Practice at Cheung Kong Graduate School of Business,
Advisory Board Member cum Adjunct Professor of Institute for China
Business at the University of Hong Kong and Adjunct Professor of
Marketing at the Chinese University of Hong Kong. He became one of
the pioneers in China’s management consulting industry by building
and running two leading international management consulting firms
(BCG and Booz) for 20 years. He has also advised Chinese
government organisations on strategies, state-owned enterprise reform
and Chinese companies going overseas, as well as to the World Bank
and the Asian Development Bank.
Committee membership key
A
Audit and Risk
M
Management Engagement
N
Nomination and Remuneration
Committee Chair
All the Directors are non-executive Directors and all are independent.
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Directors’ Report
The Directors have pleasure in presenting their report and the
audited Financial Statements of the Company for the year ended
31 March 2026.
The Company was incorporated in England and Wales as a
public limited company on 22 January 2010 under the registered
number 7133583 and was launched as an investment trust on the
London Stock Exchange on 19 April 2010.
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
investment management of the Company to FIL Investment
Management (Hong Kong) Limited and the role of Company
Secretary to FIL Investments International.
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, they may be terminated
without compensation if the Company is liquidated pursuant to
the procedures laid down in the Articles of Association of the
Company. The Management Agreement may also be terminated
forthwith as a result of a material breach of the Agreement or on
the insolvency of the Investment Manager or the Company. In
addition, the Company may terminate the Agreement by not less
than two months’ notice if the Investment Manager ceases to be
a subsidiary of FIL Limited.
FIL Limited has no beneficial interest in the shares of the
Company (2025: nil).
The Board reviews the Management Agreement at least annually
and details are included in the Corporate Governance Statement
on page 45.
Management Fee
The Company has a management fee arrangement which
comprises a base fee based on Net Assets and a positive or
negative variable element.
The base management fee on the first £1.5billion of Net Assets
is 0.85% and is 0.65% on Net Assets over £1.5 billion. The variable
management fee is (“VMF”) of +/-0.20%.
The VMF of +/-0.20% is based on the Company’s NAV per share
performance relative to the MSCI China Index (in UK sterling
terms) (the Company’s Benchmark Index). The VMF element is
calculated daily by referencing the performance of the
Company’s NAV to the performance of the MSCI China Index on
a three year rolling basis. The variable element of the fee
increases or decreases by 0.033% for each percentage point of
the three year NAV per share outperformance or
underperformance over the MSCI China Index to a maximum of
+0.20% or a minimum of -0.20%. In the event of outperformance,
the maximum fee that the Company would pay on Net Assets up
to £1.5 billion is 1.05%, but in the case of underperformance, it
can fall as low as 0.65%. For Net Assets over £1.5 billion, the
maximum fee payable would be 0.85% if the Company
outperforms the MSCI China Index or in the case of
underperformance, it could fall as low as 0.45%.
The variable management fee charge for the year ended
31March 2026 was a charge of 0.17% (2025: credit of 0.15%).
The total management fee for the year ended 31 March 2026
was £15,534,000 (2025: £8,041,000) as detailed in Note 4 on
page 72. This was made up of a base fee of £12,905,000 (2025:
£10,590,000) and a charge of £2,629,000 (2025: credit of
£1,834,000) on the variable element based on the performance
of the NAV against the MSCI China Index. The 2025 fee also
included a reduction of £715,000 in respect of the base fee
waived as part of the ACIC combination.
The Board
All Directors served on the Board throughout the year ended
31 March 2026 except Bessie Lee who was appointed as a
Director on 2 June 2026. A brief description of all serving
Directors as at the date of this report is shown on pages 37 and
38 and indicates their qualifications for Board membership.
All serving Directors as at the date of this report, other than
Gordon Orr, will be seeking election or re-election at the AGM on
21 July 2026.
Directors’ and Officers’ Liability Insurance
The Company maintains insurance cover for its Directors under its
own policy as permitted by the Companies Act 2006. This is in
addition to benefits under the Manager’s global Directors’ and
Officers’ liability insurance arrangements.
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), stress testing performed, 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 30 June 2027 which is at least
twelve months from the date of approval of the Financial
Statements. This conclusion also takes into account the Board’s
assessment of the ongoing risks from the war in Ukraine, the
conflict in the Middle East, China’s tensions with the US and
Taiwan and significant market and geopolitical events and
regulatory changes that could impact the Company’s
performance, prospects and operations.
Accordingly, the Financial Statements of the Company have been
prepared on a going concern basis.
The prospects of the Company over a period longer than twelve
months can be found in the Viability Statement on pages 33 and
34.
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Auditors’ Appointment
As announced on 11 November 2025, the Board appointed
PricewaterhouseCoopers LLP as the Company’s new external
Auditor following a competitive tender process and a
recommendation from the Audit & Risk Committee. The audit
tender was conducted as a result of the requirement for public
interest entities to undertake an audit tender at least every ten
years. The appointment of PricewaterhouseCoopers LLP is
effective for the year ended 31 March 2026 and their
appointment, and re-appointment as Auditor for the year ending
31 March 2027, is subject to shareholder approval at the Annual
General Meeting to be held on 21 July 2026.
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 Annual 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 43 to 47.
Registrar, Custodian and Depositary Arrangements
The Company has appointed MUFG Corporate Markets 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 as its Depositary, which is primarily responsible for
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 73.
Share Capital
The Company’s share capital comprises ordinary shares of
1pence each which are fully listed on the London Stock
Exchange. As at 31 March 2026, the issued share capital was
547,132,870 (2025: 580,469,798) of which 85,629,548 (2025:
85,629,548) shares were held in Treasury. Shares in Treasury do
not have voting rights, therefore the total number of shares with
voting rights was 461,503,322 (2025: 494,840,250). During the
year no shares were cancelled from Treasury.
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 holding in Treasury. The
Board will exercise these authorities to endeavour to keep the
discount in single digits in normal market circumstances and as
discussed in the Chairman’s Statement on pages 3 and 4.
Share Issues
No ordinary shares were issued in the year to 31 March 2026
(2025: nil). No shares have been issued since the year end and
as at the date of this report.
The authorities to issue shares and to disapply pre-emption rights
expire at the AGM on 21 July 2026 and resolutions to renew
these authorities will be put to shareholders at this AGM.
Share Repurchases
The Company repurchased 33,336,928 (2025: 30,841,184) shares
for cancellation and nil shares into Treasury (2025: nil) during the
year ended 31 March 2026. Since the year ended 31 March 2026
and as at the latest practicable date of this report, the Company
has repurchased a further 3,121,739 shares for cancellation.
The authority to repurchase shares expires at the AGM on 21 July
2026 and a resolution to renew the authority to repurchase
shares, either for cancellation or to buy into Treasury, will be put
to shareholders at this AGM.
Substantial Share Interests
As at 31 March and 30 April 2026, notification had been received
that the shareholders listed in the table below held more than 3%
of the voting share capital of the Company.
Shareholders
31 March
2026
%
30 April
2026
%
Fidelity Platform Investors 19.04 18.95
City of London Investment
Management 12.98 12.83
Hargreaves Lansdown 11.21 11.21
Allan & Gill Gray Foundation 7.91 7.94
Lazard Asset Management 7.71 7.64
Interactive Investor 6.07 6.19
Allspring Global Investments 3.43 3.31
An analysis of shareholders as at 31 March 2026 is detailed in
the table below.
Shareholders as at 31 March 2026
% of voting
share capital
Retail Investors
1
59.12
Fund of Funds 12.98
Pension Funds 8.63
Charities 7.91
Mutual Funds 7.81
Insurance Funds 2.34
Other 1.21
Total 100.00
1 Includes Fidelity Platform Investors (19.04%).
Directors’ Report continued
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Additional Information Required in the Directors’ Report
Information on proposed dividends, financial instruments,
disclosure on Streamlined Energy and Carbon Reporting (SECR)
and Task Force on Climate-Related Financial Disclosures (TCFD) is
set out in the Strategic Report on pages 26 to 36.
ANNUAL GENERAL MEETING – TUESDAY,
21JULY 2026 AT 11.00 AM
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 Tuesday,
21 July 2026 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 97 to 102.
The Notice of Meeting and related papers are sent to
shareholders at least 20 working days before the AGM.
For those shareholders who would prefer not to attend in person,
we will live stream the formal business and presentations of the
meeting online.
Dale Nicholls, the Portfolio Manager, will be making a
presentation to shareholders highlighting the achievements and
challenges of the year past and the prospects for the year to
come. He and the Board will be very happy to answer any
questions that shareholders may have.
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 99 for details on how
to vote virtually. Investors viewing the AGM online will be able to
submit live written questions to the Board and the Portfolio
Manager and these will be addressed at an appropriate juncture
during the meeting.
Further information and links to the Lumi platform may be found
on the Company’s website www.fidelity.co.uk/china. On the day
of the AGM, in order to join electronically and ask questions via
the Lumi platform, shareholders will need to connect to the
website https://meetings.lumiconnect.com/100-346-066-599.
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://meetings.lumiconnect.com/100-346-066-599 from your
web browser on a tablet, smartphone or computer, 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
A paper Proxy Form 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 July 2026, resolutions will be proposed relating
to the items of business set out in the Notice of Meeting on
pages 97 and 98, including the items of special business
summarised below and on the next page.
Authority to Amend the Investment Policy
Resolution 12 is an ordinary resolution and will, if approved,
authorise the Directors to amend the Investment Policy to change
the investment restriction in respect of any single listed investment
so that the Company’s interest in any single investment will not,
on acquisition, exceed 20% of Net Assets plus Borrowings
(increased from 15%). The rationale for the amendment to the
investment restriction is explained in the Chairman’s Statement on
pages 2 to 6 of this Annual Report.
The proposed updated Investment Policy is set out in the
Appendix to the notice of Annual General Meeting on page 102.
Authority to Allot Shares
Resolution 13 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 £544,011. If passed, this
resolution will enable the Directors to allot a maximum of
54,401,100ordinary shares which represents approximately 10%
of the issued ordinary share capital of the Company (including
Treasury Shares) at the latest practicable date of this report, 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.
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Authority to Disapply Pre-Emption Rights
Resolution 14 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 £544,011 representing approximately
10% of the issued ordinary share capital of the Company
(including Treasury Shares) at the latest practicable date of this
report and equivalent to 54,401,100 ordinary shares.
Authority to Repurchase Shares
Resolution 15 is a special resolution which renews the Company’s
authority to purchase up to 14.99% (68,711,399) of the ordinary
shares in issue (excluding Treasury shares) at the latest
practicable date of this report, or, if different, such number as
represents 14.99% of the ordinary share capital (excluding
treasury shares) at the date of the passing of the resolution,
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.
Authority to call General Meetings on 14 clear days’ notice
Resolution 16 is a special resolution to provide the Company with
authority to call general meetings (other than annual general
meetings) on 14 clear days’ notice. The Directors believe that the
flexibility provided by this resolution is beneficial to the Company
when dealing with any matters that require the prompt
consideration by shareholders.
This authority would only be used in circumstances where the
Board considers it appropriate to do so, taking into account the
circumstances of the business to be considered at the relevant
general meeting.
Proposed Changes to the Company’s Articles of Association
Resolution 17 is a special resolution regarding the adoption of
the New Articles of Association (“New Articles”) by the
Company.
Summarised below are the principal changes proposed to be
introduced through the adoption of the New Articles by the
Company. A copy of the proposed New Articles showing all the
changes as against the current Articles of Association is available
for inspection at www.fidelity.co.uk/china, together with a copy
of the current Articles of Association and a ‘clean’ copy of the
New Articles (which do not highlight the amendments), from the
date of this report until the end of the AGM (and at the AGM
itself for the duration of the meeting and for at least 15 minutes
prior to the meeting). The documents are also available for
inspection at Simmons & Simmons LLP, Citypoint, 1 Ropemaker
Street, London, EC2Y 9SS until the close of the AGM.
Directors’ fees
The Board considers it is appropriate to increase the limit on
Directors’ fees (“Fee Cap”), which was set at the Company’s
Annual General Meeting in 2021 at £350,000 per annum. The
proposed new Fee Cap is £450,000 in aggregate per annum.
The Board considers that the increase will provide sufficient head-
room to enable the Board to execute any succession plans for
the future. The Board is satisfied that this new Fee Cap is
in-keeping with current market practice.
Clarificatory, administrative and technical changes
Various changes of a minor, clarificatory or technical nature are
not commented on separately. This includes in relation to
arrangements for validity of proxies, to provide for if there are too
few directors following retirements at annual general meetings
and clarifications in relation to hybrid general meetings to follow
how practice has developed. The Board does not however have
any plans at this stage to allow general meetings to be held
purely by electronic means, and so no provision has been
include in the New Articles to provide for fully virtual meetings.
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
8 June 2026
Directors’ Report continued
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Fidelity China Special Situations PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
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.
Statement of Compliance
The Board has considered the principles and provisions of the
AIC Corporate Governance Code (the “AIC Code”) issued by the
Association of Investment Companies (the “AIC”) in August 2024.
The AIC Code addresses the principles and provisions set out in
the UK Corporate Governance Code (the “UK Code”) issued by
the Financial Reporting in January 2024, as well as setting out
additional provisions on issues that are of specific relevance to
the Company.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information
to shareholders.
The Company has complied with the principles and provisions of
the AIC Code for the year under review and up to the date of this
Annual Report.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the
principles and provisions set out in the UK Code to make them
relevant for investment companies.
The FRC has confirmed that investment companies which report
against the AIC Code will meet their obligations under the UK
Code (and associated disclosure requirements under the UK
Listing Rules). This Corporate Governance Statement, together
with the Statement of Directors’ Responsibilities on page 51, set
out how the principles in the AIC Code have been applied.
The Company does not comply with the UK Code provisions
relating to the role of the chief executive, executive directors’
remuneration or the need for an internal audit function. The
Board considers that these provisions are not relevant in the
context of the Company as it is an externally managed
investment company and has no executive directors, employees
or internal operations, and its day-to-day management and
administrative functions are delegated to the Manager.
THE BOARD
Board Composition
As at the date of this report, the Board, chaired by Mike Balfour,
consists of seven non-executive Directors. Bessie Lee was
appointed to the Board following the Company’s year end and
will stand for election by shareholders at the Company’s AGM.
Gordon Orr will not be standing for re-election at the AGM.
The Directors believe that, between them, they have good
knowledge and wide experience of business in China, the Asia
region, unlisted investments and their valuations, and of
investment companies, and that the Board has an appropriate
balance of skills, experience, independence and knowledge of
the Company and length of service to discharge its duties and
provide effective strategic leadership and proper governance of
the Company.
Vanessa Donegan is the Senior Independent Director and fulfils
the role as a sounding board for the Chairman and intermediary
for the other Directors, and to act as a channel of communication
for shareholders in the event that contact through the Chairman is
inappropriate.
Biographical details of all serving Directors are on pages 37
and 38.
Tenure Policy
Directors appointed to the Board are subject to election and
subsequent annual re-election by shareholders at Annual General
Meetings and normally serve a term of up to nine years from
election.
Board Responsibilities
The Board has overall responsibility for the Company’s affairs
and for promoting the long-term success of the Company. All
matters which are not delegated to the Company’s Investment
Manager under the Management Agreement are reserved for
the Board’s decision. Matters reserved for the Board and
considered at meetings include decisions on strategy,
management, structure, capital, share issues, share repurchases,
gearing, financial reporting, risk management, investment
performance, share price discount, corporate governance, Board
appointments, and the appointment of the Investment Manager
and Company Secretary. The Board also considers shareholder
issues including communication and investor relations.
All Directors are independent of the Manager and Investment
Manager and considered to be free from any relationship which
could materially interfere with the exercise of their independent
judgement. The Directors are required to disclose all potential
conflicts of interests as they arise. The Board is satisfied that no
conflicts have arisen in the year under review.
All Directors are able to allocate sufficient time to the Company
to discharge their responsibilities fully and effectively. Each
Director is entitled to take independent professional advice, at
the Company’s expense, in the furtherance of their duties.
Board Meetings
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.
The Portfolio Manager and key representatives of the Investment
Manager and Manager also attend these meetings. Regular
Board meetings exclude ad hoc meetings for formal approvals or
to address any key issues which may have arisen.
Between these meetings there is regular contact with the
Investment Manager and Manager and other meetings are
arranged as necessary. Additionally, Board Committees and
sub-groups meet to pursue matters referred to them by the Board
and the Chairman is in contact with the other Directors regularly
without representatives of the Investment Manager and Manager
being present.
Corporate Governance Statement
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Board’s Attendance Record for the Reporting Year
Regular
Board
Meetings
Audit and
Risk
Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination
and
Remuneration
Committee
Meetings
Mike Balfour
1
5/5 n/a 1/1 1/1
Alastair Bruce 5/5 5/5 1/1 1/1
Vanessa Donegan 5/5 5/5 1/1 1/1
Georgina Field 5/5 5/5 1/1 1/1
Gordon Orr 4/5 4/5 1/1 0/1
Edward Tse 5/5 5/5 0/1 1/1
1 As Chairman of the Board, Mr Balfour is not a Member of the Audit and Risk Committee but is invited to attend the meetings.
The Board will be undertaking a due diligence trip in July 2026 to
China in order to meet with the management of existing and
potential investee companies and also to meet with Fidelity’s
research and analysts’ teams. The previous Board due diligence
trip to China took place in November 2024.
Company Secretary
The Board has access to the advice and services of the Company
Secretary. The Company Secretary is responsible to the Board for
ensuring that Board procedures are followed and that applicable
rules and regulations are complied with.
Changes to the Board
Changes to the Board take place in accordance with the
Companies Act 2006, the Company’s Articles of Association and
the AIC Code. The Nomination and Remuneration Committee is
responsible for identifying possible candidates. However, any
proposal for the appointment of a new Director is discussed and
approved by the entire Board. External consultants who have no
connection with the Company are used to identify potential
candidates. Nurole were appointed as external consultants to
assist the Company with the recruitment process completed after
the Company’s year end, following which Bessie Lee was
appointed as a director to the Company.
Director Training
Upon appointment to the Board, each Director receives 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 annual Board
and Committees evaluation process.
Election and Re-Election of Directors
All newly appointed Directors stand for election by the
shareholders at the AGM following their appointment by the
Board. In accordance with Provision 23 of the AIC Code, all
Directors are subject to annual re-election. Gordon Orr has given
notice that he will not be standing for re-election at the AGM to
be held on 21 July 2026. Bessie Lee was appointed by the Board
on 2 June 2026 and will therefore stand for election at the AGM.
All other Directors, being eligible, are standing for re-election at
this year’s AGM, and their details are listed on pages 37 and 38.
The terms and letters of appointment of Directors are available
for inspection at the registered office of the Company.
Board Evaluation
An annual evaluation of the Board, its Directors and its Committees
is undertaken ahead of each AGM. It takes the form of written
questionnaires and discussions, except for every third year when
an external evaluation is undertaken. The 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. The tenure of individual
Directors is also considered as part of this process.
For the year under review, the performance and contribution to
the Company of each Director was considered using a written
questionnaire. The performance of the Chairman is evaluated by
the other Directors in the Chairman’s absence. It was concluded
that the Chairman and each Director have been effective and
that they continue to demonstrate commitment to their roles. The
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. The Board considers the tenure of individual Directors
during the evaluation process.
Corporate Governance Statement continued
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Annual Report 2026
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Fidelity China Special Situations PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
As a FTSE 350 Company and in accordance with provision 26 of
the AIC Code, the Board carried out an externally facilitated
evaluation in the year ended 31 March 2024. The next externally
facilitated Board performance review will be for the Company’s
year ending 31 March 2027.
Directors’ Remuneration and Share Interests
Details of the Directors’ remuneration and share interests are
disclosed in the Directors’ Remuneration Report on pages 49
and 50.
BOARD COMMITTEES
The Board has three Committees, as set out on the next page,
through which it discharges certain of its corporate governance
responsibilities. These are the Audit and Risk Committee, the
Management Engagement Committee and the Nomination and
Remuneration Committee. Terms of reference of each Committee
can be found on the Company’s pages of the Manager’s website
at www.fidelity.co.uk/china.
Audit and Risk Committee
The Audit and Risk Committee is chaired by Alastair Bruce and
consists of all of the Directors, except for Mike Balfour which is in
line with the recommendation of the AIC Code that a chairman of
a board should not be a member of an audit committee.
Mr Balfour will generally be invited to attend the Audit and Risk
Committee meetings.
Full details of the Audit and Risk Committee are disclosed in the
Report of the Audit and Risk Committee on pages 52 to 55.
Management Engagement Committee
Composition
The Management Engagement Committee (the “Committee”) is
chaired by Mike Balfour and consists of all of the Directors.
Role and Responsibilities
The Committee is charged with reviewing and monitoring the
performance of the Manager and for ensuring that the terms of
the Management Agreement remain competitive and reasonable
for shareholders. It meets at least once a year and reports to the
Board, making recommendations as appropriate.
Manager’s Reappointment
Ahead of the AGM on 21 July 2026, the Committee has reviewed
the performance of the Manager and the fee basis and
concluded that it is in the interests of shareholders that the
appointment of the Manager should continue. Details of the fee
arrangements for the reporting year are in the Directors’ Report
on page 39.
Nomination And Remuneration Committee
Composition
The Nomination and Remuneration Committee (the “Committee”)
is chaired by Vanessa Donegan and consists of all of the Directors.
Role and Responsibilities
The Committee meets at least once a year and is charged with
reviewing the composition, size and structure of the Board and
makes recommendations to the Board as appropriate. It 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, social and ethnic backgrounds. New Directors are
appointed on the basis of merit.
The Committee also considers the election and re-election of
Directors ahead of each AGM. For the forthcoming AGM, it has
considered the performance and contribution to the Company of
each Director seeking election or re-election and concluded that
each Director has been effective and continues to demonstrate
commitment to their role. Accordingly, the Committee has
recommended their continued service to the Board.
The Committee also considers the remuneration of the Directors,
and takes into account their roles, their responsibilities and the
time involved in carrying out their duties effectively. It also makes
itself aware of Directors’ fees of other comparable investment
companies. Further details can be found in The Remuneration
Policy on page 48.
The Committee, on behalf of the Board, continues to appoint
apprentices of the Board in order to give board exposure to
aspiring non-executive directors. As a result of this process, the
Board appointed a Board apprentice, Adnan Nur, who started his
apprenticeship on 1 January 2025 and will end his
apprenticeship at the conclusion of the AGM to be held on
21 July 2026. He attended all Board and Committee meetings as
an observer. The Board has appointed a new Board apprentice,
Jermaine Mensah, with effect from the conclusion of the
forthcoming AGM.
Succession Planning
The Committee is responsible for succession planning and for
Directors’ appointments.
ACCOUNTABILITY AND AUDIT
Financial Reporting
Set out on page 51 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 56 to 62.
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 and Risk
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 of 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 the risk of
failure to achieve business objectives and can only provide
reasonable, but not absolute, assurance against material
misstatement or loss.
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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 and Risk Committee and the Board.
In carrying out its review, the Audit and Risk 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 relevant to the Company’s audit. It also
includes consideration of internal controls in similar reports issued
by the other service providers.
The Board, assisted by the Manager, has undertaken a rigorous
risk and controls assessment. This 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
robust ongoing process in place in order 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 March
2026 and up to the date of this report. This process is in
accordance with the FRC’s “Risk Management, Internal Control and
Related Financial and 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 and Risk 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.
The Board will report against the new requirements under
provision 34 of the AIC Code applicable for reporting periods
beginning on or after 1 January 2026, including a declaration of
effectiveness of material controls at the Company’s financial year
end, in the Company’s next Annual Report for the year ending
31 March 2027.
Whistle-Blowing Procedure
Part of the Manager’s role in ensuring the provision of a good
service, pursuant to the Management Agreement, includes the
ability for employees of Fidelity International (“Fidelity”) to raise
concerns through a workplace concerns escalation policy (“whistle-
blowing procedure”). Fidelity has advised the Board that it is
committed to providing the highest level of service to its customers
and to applying the highest standards of quality, honesty, integrity
and probity. The aim of the policy is to encourage employees and
others working for Fidelity to assist the Company in tackling fraud,
corruption and other malpractice within the organisation and in
setting standards of ethical conduct. Accordingly, this policy has
been endorsed by the Board.
Bribery Act 2010
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 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
Board has adopted a zero tolerance policy in this regard.
Criminal Finances Act 2017
The Company is subject to the Criminal Finances Act 2017 and
follows a zero tolerance policy to tax evasion and its facilitation.
The Directors are fully committed to complying with all legislation
and appropriate guidelines which are 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.
Responsibility as an Institutional Shareholder
The Board has adopted the Manager’s Principles of Ownership
in relation to investments. These Principles include the pursuit of
an active investment policy through portfolio management
decisions, voting on resolutions at general meetings and
maintaining a continuing dialogue with the management of
investee companies. Fidelity International is a signatory to the UK
Stewardship Code which sets out the responsibilities of
institutional shareholders and agents. Further details of the
Manager’s Principles of Ownership and voting may be found at
www.fidelity.co.uk.
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 Board
Directors, are available to meet with shareholders to discuss
strategy and governance. In addition, the Portfolio Manager also
meets with major shareholders and investors in the UK. 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 its 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, the Senior Independent Director or the Board as a
whole, as appropriate.
Corporate Governance Statement continued
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
The Board encourages all shareholders to attend the Company’s
AGM on 21 July 2026, details of which can be found on page 6.
Full details of the Notice of Meeting are on pages 97 to 102.
Voting Rights in the Company’s Shares
Every person entitled to vote on a show of hands has one vote.
On a poll, every shareholder who is present in person or by
proxy or representative has one vote for every ordinary share
held. At general meetings, all proxy votes are counted and,
except where a poll is called, proxy voting is reported for each
resolution after it has been dealt with on a show of hands. The
proxy voting results are disclosed on the Company’s pages of the
Manager’s website at www.fidelity.co.uk/china after the AGM.
Articles of Association
Any changes to the Company’s Articles of Association must be
made by special resolution. A special resolution to amend the
Company’s Articles of Association is being proposed at this
year’s AGM on 21 July 2026. Further details of the proposed
changes are on page 42.
On behalf of the Board
Mike Balfour
Chairman
8 June 2026
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Chairman’s Statement
The Directors’ Remuneration Report for the year ended 31 March
2026 has been prepared under sections 420-422 of the
Companies Act and in accordance with Schedule 8 of The Large
and Medium-sized Companies and Groups (Accounts & Reports)
Regulations 2008 as amended by the Companies (Directors’
Remuneration and Audit (Amendment) Regulations 2025 (the
“Regulations”)). As the Board is comprised entirely of non-
executive Directors and has no 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 July 2026.
The Directors’ Remuneration Policy was last approved at the
AGM held on 24 July 2025 and, unless otherwise amended, will
next be put forward for approval at the AGM to be held in 2028.
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 56 to 62.
Directors’ Remuneration
The annual fee structure with effect from 1 April 2026 is as follows:
Role
1 April
2026
£
1 April
2025
£
Chairman 58,000 55,500
Chairman of the Audit & Risk
Committee 48,000 46,500
Senior Independent Director 45,000 43,500
Director 38,500 37,000
Levels of remuneration are reviewed on an annual basis to ensure
that they remain competitive and sufficient to attract and retain the
quality of Directors needed to manage the Company successfully.
The Remuneration Policy
The Company’s Articles of Association limit the aggregate fees
payable to the Directors to £350,000 per annum. Subject to this
overall limit, and based on the recommendations of the
Nomination and Remuneration Committee, 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 individual Directors fulfil. Other than fees
and reasonable travel 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. All Directors
will be entitled to claim additional remuneration in the event of
significant additional work outside of normal Company affairs. The
Directors are not entitled to exit payments and are not provided
with any compensation for loss of office.
The level of Directors’ fees is determined by the whole Board.
Directors do not vote on their own individual fees. The
Nomination and Remuneration Committee 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.
As a FTSE 350 company, and in accordance with provision 26 of
the AIC Code, the Board is required to carry out an externally
facilitated evaluation every third year of its performance and this
also includes input into the appropriate level of Directors’ fees
from an independent source.
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 Annual General Meetings
and can be obtained from the Company’s registered office.
In common with most investment trusts there is no Chief Executive
Officer and there are no employees.
The Company’s Remuneration Policy will apply to new Board
members, who will be paid at the same level of fees as current
Board members.
Proposed Amendment to Aggregate Fees Limit
The Board is proposing to increase the aggregate cap on
Directors’ fees to provide greater flexibility for any future changes.
The proposed new cap is £450,000 in aggregate per annum,
which it is felt is in line with market practice, replacing the existing
cap of £350,000 per annum which was put in place in 2021.
The above amendment is reflected in the proposed new Articles
of Association to be put forward for shareholder approval at the
AGM to be held on 21 July 2026.
Voting on the Remuneration Policy
The Remuneration Policy (the “Policy”) is subject to a binding vote
at every third AGM. It was last approved at the AGM on 24July
2025 with 99.84% of votes (representing 197,440,179 shares) cast
in favour and 0.16% of votes (representing 311,137 shares) cast
against. The votes cast are disclosed on the Company’s pages of
the Manager’s website at: www.fidelity.co.uk/china.
Voting on the Directors’ Remuneration Report
At the AGM held on 24 July 2025, 99.84% of votes (representing
197,470,018 shares) were cast in favour of the Directors’
Remuneration Report for the year ended 31 March 2025 and
0.16% of votes (representing 307,531 shares) were cast against.
The Directors’ Remuneration Report for the year ended 31 March
2026 will be put to shareholders at the AGM on 21 July 2026,
and the votes cast will be disclosed on the Company’s pages of
the Manager’s website at: www.fidelity.co.uk/china.
Directors’ Remuneration Report
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Single Total Figure of Directors’ Remuneration
The single total aggregate Directors’ remuneration for the year
ended 31 March 2026 was £264,033 (2025: £255,018). 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 below.
2027 2026 2026 2026 2025 2025 2025
Projected
Total
Fees
(Audited)
Taxable
Expenses*
(Audited)
Total
(Audited)
Fees
(Audited)
Taxable
Expenses*
(Audited)
Total
(Audited)
(£) (£) (£) (£) (£) (£) (£)
Remuneration of Directors
Mike Balfour 58,000 55,500 7,533 63,033 54,000 5,018 59,018
Alastair Bruce 48,000 46,500 – 46,500 45,500 – 45,500
Vanessa Donegan 45,000 43,500 – 43,500 42,500 – 42,500
Georgina Field 38,500 37,000 – 37,000 36,000 – 36,000
Gordon Orr
1
11,814 37,000 – 37,000 36,000 – 36,000
Edward Tse 38,500 37,000 – 37,000 36,000 – 36,000
Bessie Lee
2
31,960 – – – – – –
Total 271,774 256,500 7,533 264,033 250,000 5,018 255,018
* Expenses incurred in attending to the affairs of the Company.
1 Gordon Orr will be standing down as a director of the Company at the AGM to be held on 21 July 2026.
2 Bessie Lee was appointed as a director of the Company on 2 June 2026.
Five Year Change Comparison in Directors’ Remuneration
The table below sets out the change in Directors’ fees over the last five years.
Director 2026 2021 Change (%)
Chairman 55,500 42,000 +32.1%
Chairman of the Audit and Risk Committee 46,500 32,000 +45.3%
Senior Independent Director 43,500 31,500 +38.1%
Director 37,000 26,500 +39.6%
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 March 2026 is disclosed in the table above.
31 March
2026
£
31 March
2025
£
Expenditure on Remuneration
Aggregate of Directors’ Fees 264,033 255,018
Distribution to Shareholders
Dividend payments 44,380,000 33,355,000
Shares repurchased 100,528,000 66,809,000
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Performance
The Company’s NAV per share total return and share price total return performance are measured against the return of the MSCI
China Index (in UK sterling terms) as this is the most appropriate Benchmark in respect of its objective. The graph below shows
performance for ten years to 31 March 2026.
Total Return Performance for Ten Years to 31 March 2026
+151.5%
+78.7%
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
+123.5%
NAV per Share
Share Price
MSCI China Index
(in UK sterling terms)
Mar 16
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Mar 23
Mar 24
Mar 26
Mar 25
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 are encouraged.
The interests of the Directors in the shares of the Company are shown in the table below. All of the shareholdings are beneficial.
The Portfolio Manager, Dale Nicholls, also holds shares in the Company.
Directors’ Shareholdings (Audited)
31 March
2026
31 March
2025
Change
during year
Mike Balfour
1
67,063 65,000 2,063
Alastair Bruce 43,800 43,800 –
Vanessa Donegan
1
16,287 10,000 6,287
Georgina Field
2
6,450 2,250 4,200
Bessie Lee
3
2,500 – –
Gordon Orr – – –
Edward Tse – – –
1 Purchase of shares
2 Includes holding by closely associated person of 4,200 shares.
3 Appointed on 2 June 2026.
The above shareholdings remain unchanged as at the date of this report.
On behalf of the Board
Mike Balfour
Chairman
8 June 2026
Directors’ Remuneration Report continued
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report
and the 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-adopted International Accounting Standards (“IFRS”) in
conformity with the requirements of the Companies Act 2006 and
IFRIC interpretations. 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 net profit for the reporting period.
In preparing these Financial Statements the Directors are
required to:
• Select suitable accounting policies in accordance with IAS 8:
Accounting Policies, Changes in Accounting Estimates and
Errors, and then apply them consistently;
• Make judgements and estimates that are reasonable and
prudent;
• Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• Provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other
events and conditions on the Company’s financial position
and financial performance;
• State whether applicable IFRS and IFRIC interpretations 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 assume that the Company will
continue in business.
The Directors are responsible for ensuring that adequate
accounting records are kept which disclose with reasonable
accuracy at any time the financial position of the Company and
to enable them to ensure that 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/china. 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-adopted International Accounting Standards (“IFRS”) and
IFRIC interpretations, give a true and fair view of the assets,
liabilities, financial position and net profit of the Company;
• The Annual 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 8 June 2026 and signed on its behalf by:
Mike Balfour
Chairman
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I am pleased to present the formal report of the Audit and Risk
Committee (the “Committee”) to shareholders.
The primary responsibilities of the Committee are to ensure the
integrity of the Company’s financial reporting, the
appropriateness of the risk management and internal controls
processes (see pages 45 and 46 for further details) and the
effectiveness of the independent audit process and how this has
been assessed for the year ended 31 March 2026.
Composition of the Committee
The members of the Committee are myself as Chairman, and all
of the other Directors, except for Mike Balfour. This is in line with
the recommendation in the 2024 UK Corporate Governance
Code that the Chairman of the Board should not be a member of
the Audit and Risk Committee. He will generally be 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.
The Committee’s performance is evaluated annually as part of
the overall Board evaluation process.
Role and Responsibilities of the Audit Committee
The Committee’s authority and duties are clearly defined in its
terms of reference which are available on the Company’s pages
of the Manager’s website at www.fidelity.co.uk/china.
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) and
considering the scope and obtaining sufficient assurance of
the work undertaken by the Manager’s Internal Audit
function;
• Monitoring the integrity of the Company’s half-yearly and
annual financial statements to ensure they are fair, balanced
and understandable;
• Reviewing the existence and performance of controls
operating in the Company, including the review of internal
controls reporting of its service providers; and
• Reviewing the relationship with and the performance of
third-party service providers (such as the Registrar, Custodian
and Depositary).
Meetings and Business considered by the Committee
Since the date of the last Annual Report (9 June 2025), the Committee has met five 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;
• The Company’s revenue and expenses forecasts and its Statement of Financial Position;
• The Company’s ongoing charges ratio; and
• The management fee calculations.
Report of the Audit and Risk Committee
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INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
In addition, the following matters were considered at these meetings:
September 2025
• Detailed review of the valuations of the Company’s unlisted investments with the
Manager’s Fair Value Committee, including the Manager’s unlisted investment specialist,
and the independent valuer (see further details on the next page).
December 2025
• The Half-Yearly Report and Financial Statements and recommendation of its approval to
the Board.
• The Going Concern Statement.
March 2026
• The Auditor’s engagement letter and audit plan for the Company’s year ending 31 March
2026.
• Review of Fidelity’s Risk and Internal Control environment and mitigating controls.
• An assessment of emerging risks and their likelihood and potential impact.
• Fidelity’s Internal Audit reporting, including review of the internal audit plan.
• Cybersecurity and potential threats and attacks and the controls in place to mitigate the
risks.
• Review of the split of management fees and finance costs between revenue and capital.
• Review of ESG reporting.
• Review of the Audit & Risk Committee Terms of Reference.
• Detailed review of the valuations of the Company’s unlisted investments with the
Manager’s Fair Value Committee, including the Manager’s unlisted investment specialist,
and the independent valuer (see further details on the next page).
June 2026
• The Auditor’s findings from the audit of the Company.
• The Auditor’s performance, independence and reappointment.
• Review of Fidelity’s Investment Trusts AAF Controls Report from PricewaterhouseCoopers LLP
• 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 Statements, including the impact of China’s tensions with
the US and Taiwan, the war in Ukraine, the conflict in the Middle East, significant market and
geopolitical events and regulatory changes on the Company’s performance, prospects and
operations.
• The final dividend payment to be recommended to the Board and shareholders for
approval.
During the year ended 31 March 2026, the Audit and Risk Committee made a recommendation to the Board to appoint
PricewaterhouseCoopers LLP as the Company’s auditor. As detailed on page 55, the Board approved the appointment on the
PricewaterhouseCoopers LLP as the Company’s auditor in November 2025.
Annual Report and Financial Statements
The Annual Report and Financial Statements are the responsibility of the Board and the Statement of Directors’ Responsibilities can be
found on page 51. The Committee advises the Board on the form and content of the Annual Report and Financial Statements, any issues
which may arise in relation to these and on any specific areas which require judgement in order to ensure that the Financial Statements
are fair, balanced and understandable.
Report of the Audit and Risk Committee continued
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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 (f) on pages 68
and 69. The Manager (FIL Investment Services (UK) Limited) 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 the classification of these special dividends. The Committee
reviewed the internal audit and compliance monitoring reports received from the Manager,
including an additional agreed upon procedures report in connection with investment trusts
specific controls operated by the Manager, prepared by PricewaterhouseCoopers LLP, 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 derivative
instruments)
The valuation of investments (including derivative instruments) is in accordance with Accounting
Policies Notes 2 (l) and 2 (m) on pages 69 and 70. The Committee took comfort from the
Depositary’s regular oversight reports that investment related activities are conducted in
accordance with the Company’s investment policy. The Committee received reports from the
Manager, the Depositary and an additional agreed upon procedures report in connection with
investment trusts specific controls operated by the Manager, which concluded that the controls
around the valuation, existence and ownership of investments operate effectively. The Committee
also reviewed the reports provided by the Auditor on its work on the valuation, existence and
ownership of the Company’s investments, including the derivative investments.
Valuation of the
Unlisted Investments
The Manager as the AIFM, is authorised and responsible for performing the valuation of the
Company’s unlisted investments, the valuation of which is in accordance with Accounting Policies
Notes 2 (e) and 2 (l) on pages 68 to 70. The valuation of the unlisted investments is proposed by
the Manager’s Fair Value Committee (“FVC”) to the Audit and Risk Committee, who in turn reports
these to the Board to ensure that the Directors are satisfied that the process that the FVC adopts
in recommending the valuation is rigorous, reasonable and independent. The reporting received
from the FVC includes recommendations from the independent valuer and also includes detailed
input from the Fidelity analysts covering the unlisted companies. Fidelity’s unlisted investment
specialist provides further insight. The Committee reviews and challenges the proposed valuation
methodologies for all of the unlisted investments in order to gain comfort on the proposed
valuations.
In addition, the Auditor reviewed the valuations of the unlisted investments in the Company’s
portfolio and reported its findings at the June 2026 Audit and Risk Committee meeting.
Management fee
calculation
The Company has a variable management fee structure in place details of which are on page 39.
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.
Report of the Audit and Risk Committee continued
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Fidelity China Special Situations PLC
INFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGYGOVERNANCE
The Company confirms that it has complied with the September
2014 Competition and Markets Authority Order in relation to the
performance and appointment of the Auditor, as set out below.
Independence and Effectiveness of the Audit Process
PricewaterhouseCoopers LLP acted as the Company’s Auditor for
the year ended 31 March 2026. This is the first year of their
appointment, having been appointed by the Board following a
competitive audit tender completed in November 2025. The
appointment, and reappointment, of PricewaterhouseCoopers LLP
will be put forward for approval by shareholders at the
Company’s AGM to be held on 21 July 2026.
With regard to the independence of the Auditor, the Committee
has reviewed:
• The Auditor’s arrangements for managing any conflicts of
interest;
• The extent of non-audit services provided to the Company
during the reporting year and as at the date of this report;
and
• The statement by the Auditor that it remains independent
within the meaning of the regulations 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’s 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 March 2026; 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 was 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
Company is required to conduct an audit tender process every
ten years. Therefore, in accordance with statutory requirements
and FRC guidance on audit tenders, the Company conducted a
competitive audit tender during the year. From the shortlisted
firms who presented to a subcommittee of the Audit and Risk
Committee, a range of criteria was covered, including industry
experience and credentials; team experience and continuity;
audit approach; quality assurance; independence of the firm;
transition planning and fees and value for money. In November
2025, following a recommendation from the Audit and Risk
Committee, PricewaterhouseCoopers LLP was appointed by the
Board as the Auditor to the Company with effect from the
financial year ended 31 March 2026. A resolution to appoint, and
reappoint, PricewaterhouseCoopers LLP as Auditor to the
Company will be proposed at the AGM to be held on 21 July
2026.
The Committee has reviewed and 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.
Policy on Non-Audit Services
A policy has been adopted in relation to the provision of
non-audit services. The Auditor will only be engaged to provide
such services where the Audit and Risk Committee is satisfied that
the relevant service is permitted under applicable regulations
and that the independence and objectivity of the Auditor will not
be compromised. The provision of any non-audit services must be
approved in advance by the Audit and Risk Committee.
No non-audit services were provided by the Auditor during the
year ended 31 March 2026.
Audit Fees
Fees paid to the Auditor for the audit of the Company’s Financial
Statements are disclosed in Note 5 on page 73. The audit fee for
the reporting year was £68,500 (2025: £62,500). The fee paid in
2025 was payable to the Company’s previous auditor, Ernst &
Young LLP.
Alastair Bruce
Chairman of the Audit and Risk Committee
8 June 2026
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Independent Auditors’ Report to the Members
of Fidelity China Special Situations PLC
Report on the audit of the financial
statements
Opinion
In our opinion, Fidelity China Special Situations PLC’s financial
statements:
• give a true and fair view of the state of the company’s affairs
as at 31 March 2026 and of its profit and cash flows for the
year then ended;
• have been properly prepared in accordance with UK-
adopted international accounting standards; and
• have been prepared in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report, which comprise:
• the Statement of Financial Position as at 31 March 2026;
• the Statement of Comprehensive Income for the year then
ended;
• the Statement of Changes in Equity for the year then ended;
• the Statement of Cash Flows for the year then ended; and
• the notes to the financial statements, comprising material
accounting policy information and other explanatory
information.
Our opinion is consistent with our reporting to the Audit and Risk
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors’ 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 remained independent of the company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
We have provided no non-audit services to the company in the
period under audit.
Our audit approach
Context
The Company is a standalone Investment Trust Company and
engages FIL Investment Services (UK) Limited (the “Manager”) to
manage its assets.
Overview
Audit scope:
• We conducted our audit of the financial statements using
information from J.P. Morgan Europe Limited, (the
‘Administrator’) to whom the Manager has, with the consent
of the Directors, delegated the provision of certain
administrative functions.
• We tailored the scope of our audit taking into account the
types of investments within the Company, the involvement of
the third parties referred to above, the accounting processes
and controls, and the industry in which the Company
operates.
• We obtained an understanding of the control environment in
place at both the Manager and the Administrator, and
adopted a fully substantive testing approach using reports
obtained from the Administrator.
Key audit matters
• Valuation and existence of unlisted investments.
• Valuation and existence of listed investments.
• Income from underlying investments.
Materiality
• Overall materiality: £14.1 million based on 1% of net assets.
• Performance materiality: £10.6 million.
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the 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) identified by the auditors, including those
which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of
the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Key audit matter How our audit addressed the key audit matter
Valuation and existence of unlisted
investments
Refer to the Report of the Audit and Risk Committee, Note 2
– Accounting Policies and Note 10 – Investments at Fair Value
through Profit or Loss.
The investment portfolio at 31 March 2026 included unlisted
investments. We focused on the valuation and existence of the
unlisted investments as these investments represented a
material balance in the financial statements and the valuation
requires significant estimates and judgements to be applied
by the Directors such that changes to key assumptions within
the estimates and/or judgements made could result in a
material change to the valuation of unlisted investments.
We understood and assessed the design and implementation
of the process and controls surrounding the valuation of
unlisted investments, including the involvement of an
independent third-party valuer, and the processes, governance
and oversight of the valuations by the Manager and the
Company’s Audit Committee.
On a sample basis, we assessed the valuation methodology
applied by reference to the International Private Equity and
Venture Capital Valuation guidelines (IPEV), and tested the
techniques used by the Directors in determining the fair value
of unlisted investments.
Assessing the appropriateness of the valuation methodology
used and testing the inputs either through validation to
appropriate sources, or where relevant, assessing whether
significant estimates and judgements used are supportable.
We read the internal Manager’s Fair Value Committee
meeting minutes where the valuations of the unlisted
investments were discussed and attended relevant meetings
where the valuation of these investments were discussed. We
also utilised our own internal valuation experts both to assess
the valuation process and also to support the core audit team
in testing certain judgemental selected unlisted investments.
Our substantive testing, performed on a sample basis,
included:
• Assessing the appropriateness of the valuation
methodology used and testing the inputs either through
validation to appropriate sources, or where relevant,
assessing whether significant estimates and judgements
used are supportable; and
• Comparing valuations to recent transactions, where
relevant, including consideration of whether the recent
transaction was at arm’s length.
We also considered the potential impact of climate change on
the valuation of the unlisted investments through gaining an
understanding of how the Manager and Directors had
considered the impact of climate change throughout the
valuation process.
We tested the existence of the unlisted investment portfolio by
agreeing 100% of the holdings to independently obtained
confirmations as at 31 March 2026.
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Key audit matter How our audit addressed the key audit matter
Valuation and existence of listed
investments
Refer to the Report of the Audit and Risk Committee, Note 2
– Accounting Policies and Note 10 – Investments at Fair Value
through Profit or Loss.
The investment portfolio at 31 March 2026 comprised primarily
listed equity investments and CFDs.
We focused on the valuation and existence of listed
investments and CFDs because listed investments represent
the principal element of the net asset value of the Company.
We assessed the accounting policy for the valuation of
investments for compliance with accounting standards and
performed testing to check that investments are accounted for
in accordance with this stated accounting policy.
We tested the valuation of the listed equity and CFD
investments by agreeing the prices used in the valuation to
independent third-party sources for all investments.
We tested the existence of the investment portfolio by
agreeing investment holdings to independently obtained
confirmations.
Income from underlying investments
Refer to Note 2 – Accounting Policies, Note 3 – Income.
We focused on the accuracy, completeness and occurrence of
investment income as incomplete or inaccurate income could
have a material impact on the Company’s net asset value.
We also focused on the accounting policy for investment
income recognition and the presentation of investment income
in the Income Statement for compliance with the requirements
of The Association of Investment Companies Statement of
Recommended Practice (the “AIC SORP”), as incorrect
application could indicate a misstatement in income
recognition.
We assessed the accounting policy for income recognition for
compliance with accounting standards and the AIC SORP and
performed testing to check that income had been accounted
for in accordance with the stated accounting policy.
We tested accuracy of dividend receipts by agreeing the
dividend rates to independent market data.
We tested occurrence by testing that dividends recorded in the
year had been declared in the market by investment holdings,
and we traced a sample of dividends received to bank
statements.
To test for completeness, we tested that the appropriate
dividends had been received in the year by reference to
independent data of dividends declared for listed investments
during the year.
We also tested the allocation and presentation of income
between the revenue and capital return columns of the
Statement of Comprehensive Income in line with the
requirements set out in the AIC SORP by assessing the
treatment applied in the context of the underlying facts and
circumstances of a sample of special dividends.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, and the
industry in which it operates.
The Company is a standalone authorised, closed ended
investment trust company that has outsourced the management
and company secretarial services to FIL Investment Services (UK)
Limited (the ‘Manager’). The Company’s accounting is delegated
to J.P. Morgan Europe Limited (the ‘Administrator’) who provide
company administrative services and JPMorgan Chase Bank who
provides custodian services. We applied professional judgement to
determine the extent of testing required over each balance in the
financial statements and obtained our audit evidence, which was
substantive in nature, from the Manager and Administrator. As part
of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular, we looked at where subjective judgements are made,
for example in respect of classification of special dividends.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to
understand the extent of the potential impact of climate risk on
the company’s financial statements, and we remained alert
when performing our audit procedures for any indicators of the
impact of climate risk. Our procedures did not identify any
material impact as a result of climate risk on the company’s
financial statements.
Independent Auditors’ Report to the Members
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect
of misstatements, both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall company
materiality
£14.1 million.
How we determined it
1% of net assets
Rationale for benchmark
applied
We applied this benchmark, which is a generally accepted auditing practice for investment
trust audits and is also a key measure used by the shareholders in assessing the
performance of the entity.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account
balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75%
of overall materiality, amounting to £10.6 million for the company
financial statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit and Risk Committee that we would
report to them misstatements identified during our audit above
£706,381 as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s
ability to continue to adopt the going concern basis of accounting
included:
• Evaluating the Directors’ updated risk assessment and
considering whether it addressed the relevant threats to the
Company;
• Evaluating the Directors’ assessment of potential operational
impacts, considering their consistency with other available
information and our understanding of the business and
assessed the potential impact on the financial statements;
• Evaluating the Directors’ assessment of the company’s
financial position in the context of its ability to meet future
expected operating expenses and financing costs, their
assessment of liquidity as well as their review of the
operational resilience of the Company and oversight of key
third-party service providers; and
• Assessing the implication of significant reductions in net
asset value as a result of market performance on the
ongoing ability of the Company to operate.
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 of
at least twelve months from when the financial statements are
authorised for issue.
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.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company’s
ability to continue as a going concern.
In relation to the directors’ 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.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
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audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required
to report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Directors’ Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 March 2026 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the company and
its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and
Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements 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. Our additional responsibilities with
respect to the corporate governance statement as other
information are described in the Reporting on other information
section of this report.
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 and our knowledge obtained during the audit, and
we have nothing material to add or draw attention to in relation
to:
• The Directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
• The Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the company’s
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
• The Directors’ explanation as to their assessment of the
company’s prospects, the period this assessment covers and
why the period is appropriate; and
• The Directors’ statement as to whether they have a
reasonable expectation that the company will be able to
continue in operation and meet its liabilities as they fall due
over the period of its assessment, including any related
disclosures drawing attention to any necessary qualifications
or assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the company was substantially less in scope than an
audit and only consisted of making inquiries and considering the
directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the UK
Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our
knowledge and understanding of the company and its
environment obtained in the course of the audit.
In addition, 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 and our knowledge obtained during the
audit:
• The directors’ statement that they consider the Annual
Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
the members to assess the company’s position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the
Audit and Risk Committee.
We have nothing to report in respect of our responsibility to
report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a
departure from a relevant provision of the Code specified under
the Listing Rules for review by the auditors.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Responsibilities for the financial statements and
the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for the preparation
of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair
view. The directors are also responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
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.
Auditors’ 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 auditors’ 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to breaches of section 1158 of the
Corporation Tax Act 2010, and we considered the extent to which
non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as the
Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and
determined that the principal risks were related to posting
inappropriate journal entries to manipulate revenue or to
increase the net asset value of the Company. Audit procedures
performed by the engagement team included:
• discussions with the Manager and the Audit and Risk
Committee, including consideration of known or suspected
instances of non-compliance with laws and regulation and
fraud;
• reviewing relevant committee meeting minutes, including
those of the Board and the Audit and Risk Committee;
• assessment of the company’s compliance with the
requirements of section 1158 of the Corporation Tax Act
2010, including recalculation of numerical aspects of the
eligibility conditions;
• review of financial statement disclosures to underlying
supporting documentation;
• challenging assumptions made by the Directors in their
significant accounting estimates, in particular in relation to
the valuation of unlisted investments;
• Identifying and testing journal entries, in particular journal
entries that meet the fraud risk criteria posted during the
preparation of the financial statements; and
• designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, 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.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at: www.frc.
org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
• we have not obtained all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by
law are not made; 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.
We have no exceptions to report arising from this responsibility.
Appointment
We were first appointed by the company for the financial year
ended 31 March 2026. Our uninterrupted engagement covers
1financial year.
Lauren Cooper
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
8 June 2026
Independent Auditors’ Report to the Members
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Statement of Comprehensive Income
for the year ended 31 March 2026
The Notes on pages 94 form an integral part of these Financial Statements.
Year ended 31 March 2026 Year ended 31 March 2025
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
Investment income 3 37,913 – 37,913 46,862 – 46,862
Derivative income 3 14,509 – 14,509 13,747 – 13,747
Other income 3 2,204 – 2,204 2,090 – 2,090
Total income 54,626 – 54,626 62,699 – 62,699
Gains on investments at fair value
through profit or loss 10 – 76,763 76,763 – 249,875 249,875
Gains on derivative instruments 11 – 45,333 45,333 – 57,121 57,121
Foreign exchange gains – 918 918 – 1,769 1,769
Total income and gains 54,626 123,014 177,640 62,699 308,765 371,464
Expenses
Investment management fees 4 (3,226) (12,308) (15,534) (2,469) (5,572) (8,041)
Other expenses 5 (1,280) (47) (1,327) (1,211) (32) (1,243)
Profit before finance costs and
taxation 50,120 110,659 160,779 59,019 303,161 362,180
Finance costs 6 (3,995) (11,985) (15,980) (5,774) (17,324) (23,098)
Profit before taxation 46,125 98,674 144,799 53,245 285,837 339,082
Taxation 7 (1,542) 610 (932) (1,070) – (1,070)
Profit after taxation for the year 44,583 99,284 143,867 52,175 285,837 338,012
Basic and diluted earnings
per ordinary share 8 9.22p 20.53p 29.75p 10.18p 55.75p 65.93p
The Company does not have any income or expenses that are not included in the profit after taxation for the year. Accordingly, the
profit 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 Statement of Comprehensive Income 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.
All the profit and total comprehensive income is attributable to the equity shareholders of the Company. There are no minority
interests.
No operations were acquired or discontinued during the year and all items in the above statement derive from continuing operations.
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Statement of Changes in Equity
for the year ended 31 March 2026
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
equity
£’000
Total equity at 31 March 2025 5,805 338,107 1,412 74,052 922,363 72,063 1,413,802
Repurchase of ordinary shares for
cancellation 14 (334) – 334 (74,052) (26,476) – (100,528)
Profit after taxation for the year – – – – 99,284 44,583 143,867
Dividend paid to shareholders 9 – – – – – (44,380) (44,380)
Total equity at 31 March 2026 5,471 338,107 1,746 – 995,171 72,266 1,412,761
Total equity at 31 March 2024 6,113 338,167 1,104 140,861 636,526 53,243 1,176,014
Contribution in respect of the
transaction with ACIC by the
Manager – 100 – – – – 100
Costs relating to the issuance of
new shares in respect to the ACIC
transaction – (160) – – – – (160)
Repurchase of ordinary shares
for cancellation 14 (308) – 308 (66,809) – – (66,809)
Profit after taxation for the year – – – – 285,837 52,175 338,012
Dividend paid to shareholders 9 – – – – – (33,355) (33,355)
Total equity at 31 March 2025 5,805 338,107 1,412 74,052 922,363 72,063 1,413,802
The Notes on pages 67 to 94 form an integral part of these Financial Statements.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Notes
31 March
2026
£’000
31 March
2025
£’000
Non-current assets
Investments at fair value through profit or loss 10 1,348,233 1,346,238
Current assets
Derivative instruments 11 9,419 9,938
Amounts held at futures clearing houses and brokers 38,879 33,760
Other receivables 12 11,160 7,295
Cash and cash equivalents 48,087 49,691
107,545 100,684
Current liabilities
Derivative instruments 11 (33,754) (24,838)
Other payables 13 (9,263) (8,282)
(43,017) (33,120)
Net current assets 64,528 67,564
Net assets 1,412,761 1,413,802
Equity attributable to equity shareholders
Share capital 14 5,471 5,805
Share premium account 15 338,107 338,107
Capital redemption reserve 15 1,746 1,412
Other reserve 15 – 74,052
Capital reserve 15 995,171 922,363
Revenue reserve 15 72,266 72,063
Total equity 1,412,761 1,413,802
Net asset value per Ordinary Share 16 306.12p 285.71p
The Financial Statements on pages 63 to 94 were approved by the Board of Directors on 8 June 2026 and were signed on its behalf by:
Mike Balfour
Chairman
Statement of Financial Position
as at 31 March 2026
Company number 7133583
The Notes on pages 67 to 94 form an integral part of these Financial Statements.
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Statement of Cash Flows
for the year ended 31 March 2026
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Operating activities
Cash inflow from investment income 36,587 45,209
Cash inflow from derivative income 14,719 14,002
Cash inflow from other income 2,204 2,090
Cash outflow from Directors’ fees (247) (249)
Cash outflow from other payments (16,033) (9,433)
Cash outflow from the purchase of investments (693,472) (651,563)
Cash outflow from the purchase of derivatives (7,371) (2,242)
Cash outflow from the settlement of derivatives (379,500) (436,471)
Cash inflow from the sale of investments 763,463 716,551
Cash inflow from the settlement of derivatives 441,299 507,321
Cash outflow from amounts held at futures clearing houses and brokers (5,119) (9,171)
Net cash inflow from operating activities before servicing of finance 156,530 176,044
Financing activities
Cash outflow from overdraft interest paid (589) (80)
Cash outflow from CFD interest paid (15,188) (22,478)
Cash outflow from short CFD dividends paid (447) (321)
Cash outflow from the repurchase of ordinary shares for cancellation (98,448) (66,988)
Cash outflow from dividends paid to shareholders (44,380) (33,355)
Cash outflow from financing activities (159,052) (123,222)
Net (decrease)/increase in cash and cash equivalents (2,522) 52,822
Cash and cash equivalents at the start of the year 49,691 7,858
Bank overdraft at the start of the year – (12,758)
Effect of foreign exchange movements 918 1,769
Cash and cash equivalents at the end of the year 48,087 49,691
Represented by:
Cash at bank 4,648 4,432
Amount held in Fidelity Institutional Liquidity Fund 43,439 45,259
48,087 49,691
The Notes on pages 67 to 94 form an integral part of these Financial Statements.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Notes to the Financial Statements
1 Principal Activity
Fidelity China Special Situations PLC is an Investment Company incorporated in England and Wales that is listed on the London Stock
Exchange. The Company’s registration number is 7133583, 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’s Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards (“IFRS”),
IFRIC interpretations and as far as it is consistent with IFRS, 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 accounting policies adopted in the preparation of these Financial Statements are summarised below.
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 30 June 2027, 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, the liquidity of the investment portfolio, stress testing performed 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 39.
In preparing these Financial Statements the Directors have considered the impact of climate change risk as 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 IFRS 13, investments are valued at fair value, which for the Company are quoted
bid prices for investments in active markets at the Statement of Financial Position date. Investments which are unlisted are priced
using market-based valuation approaches. All investments therefore reflect the market participants view of climate change risk on the
investments held by the Company.
The Company’s Going Concern Statement in the Directors’ Report on page 39 takes account of all events and conditions up to
30June 2027, which is at least twelve months from the date of approval of these Financial Statements.
b) Adoption of new and revised International Accounting Standards – the accounting policies adopted are consistent with those
of the previous financial year.
At the date of authorisation of these Financial Statements, the following revised IAS were in issue but not yet effective:
i) Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (effective for
annual periods beginning on or after 1 January 2026).
The International Accounting Standards Board (IASB) issued targeted amendments to IFRS 9 and IFRS 7 to respond to recent
questions arising in practice, and to include new requirements not only for financial institutions but also for corporate entities. Among
other amendments, the IASB clarified the date of recognition and derecognition of some financial assets and liabilities, with a new
exception for some financial liabilities settled through an electronic cash transfer system.
ii) IFRS 18 Presentation and Disclosure in Financial Statements (effective for annual periods beginning on or after 1 January 2027).
The IASB issued the new standard on presentation and disclosure in financial statements, which replaces IAS 1, with a focus on
updates to the statement of comprehensive income.
The key new concepts introduced in IFRS 18 relate to:
• the structure of the statement of comprehensive income with defined subtotals;
• the requirement to determine the most useful structured summary for presenting expenses in the statement of comprehensive
income;
• required disclosures in a single note within the financial statements for certain profit or loss performance measures that are
reported outside an entity’s financial statements (that is, management-defined performance measures); and
• enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general.
The Company is currently still assessing the effect of the forthcoming standard and amendments.
No other new standards or amendments to standards are expected to have a material effect on the financial statements of the
Company.
Notes to the Financial Statements
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Notes to the Financial Statements continued
2 Accounting Policies continued
c) Segmental reporting – The Company is engaged in a single segment business and, therefore, no segmental reporting is
provided.
d) Presentation of the Statement of Comprehensive Income – 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 Statement of Comprehensive Income
between items of a revenue and capital nature has been prepared alongside the Statement of Comprehensive Income. The revenue
profit 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) Significant accounting estimates, assumptions and judgements – The preparation of the Financial Statements requires the use
of estimates, assumptions and judgements. These estimates, assumptions 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 (l)) for determining the fair value of each unlisted investment
can have a significant impact upon the valuation.
Estimates
The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments by the Manager’s
Fair Value Committee (“FVC”), with support from an independent third-party valuer and Fidelity’s unlisted investments specialist, for
detailed review and appropriate challenge by the Directors. This estimate is key as it significantly impacts the valuation of the unlisted
investments at the Statement of Financial Position date. When no recent primary or secondary transaction in the company’s shares
have taken place, the fair valuation process involves estimation using subjective inputs that are unobservable (for which market data is
unavailable). The estimates involved in the valuation process may include the following:
(i) The selection of appropriate comparable companies. Comparable companies are chosen on the basis of their business
characteristics and growth patterns;
(ii) The selection of a revenue metric (either historical or forecast);
(iii) The selection of an appropriate illiquidity discount factor to reflect the reduced liquidity of unlisted companies versus their listed
peers;
(iv) The estimation of the likelihood of a future exit of the position through an initial public offering (“IPO”) or a company sale;
(v) The selection of an appropriate industry benchmark index to assist with the valuation; and
(vi) The calculation of valuation adjustments derived from milestone analysis and future cash flows (i.e. incorporating operational
success against the plans/forecasts of the business into the valuation).
As the valuation outcomes may differ from the fair value estimates a price sensitivity analysis is provided in 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.
Assumptions
The determination of fair value by the FVC involves key assumptions dependent upon the valuation techniques used. The valuation
process recognises that the price of a recent investment may be an appropriate starting point for estimating fair value. The Multiples
approach involves subjective inputs and therefore presents a greater risk of over or under estimation, particularly in the absence of a
recent transaction.
f) Income – Income from equity investments and long contracts for difference (“CFDs”) is credited to the revenue column of the
Statement of Comprehensive Income 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. 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 as income. Any
excess in the value of the shares received over the amount of the cash dividend foregone is recognised as a gain in the capital
column of the Statement of Comprehensive Income. Special dividends are treated as a revenue receipt or a capital receipt depending
on the facts and circumstances of each particular case.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
2 Accounting Policies continued
Interest on securities, interest for CFDs, collateral and bank deposits are accounted for on an accruals basis and credited to the
revenue column of the Statement of Comprehensive Income. Interest received on CFDs represent the finance costs calculated by
reference to the notional value of the CFDs.
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 at the rates of exchange ruling at the Statement of Financial Position date. Foreign exchange gains and losses arising on
translation are recognised in the Statement of Comprehensive Income as a revenue or a capital item depending on the nature of the
underlying item to which they relate.
h) Investment management and other expenses – These are accounted for on an accruals basis and are charged as follows:
• The base investment management fee is allocated 25% to revenue and 75% to capital;
• 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.
i) Finance costs – Finance costs comprise interest on 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 allocated 25% to revenue and 75% to capital.
j) Taxation – The taxation charge represents the sum of current taxation and deferred taxation.
Taxation currently payable is based on the taxable profit for the year. Taxable profit differs from profit before taxation, as reported
in the Statement of Comprehensive Income, because it excludes items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Company’s liability for current taxation is calculated using taxation rates that
have been enacted or substantially enacted by the Statement of Financial Position date.
Deferred taxation is the taxation expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the Financial Statements and the corresponding taxation bases used in the computation of taxable profit based on tax
rates that have been enacted or substantively enacted when the taxation is expected to be payable or recoverable, and is accounted
for using the Statement of Financial Position liability method. Deferred taxation liabilities are recognised for all taxable temporary
differences and deferred taxation assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Taxation is charged or credited to the revenue column of the Statement of Comprehensive Income, except where it relates to items
of a capital nature, in which case it is charged or credited to the capital column of the Statement of Comprehensive Income. 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.
k) Dividend paid to shareholders – Dividends payable to equity shareholders are recognised when the Company’s obligation to
make payment is established.
l) Investments – The portfolio of financial assets 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.
Under IFRS 9 investments are held at fair value through profit or loss, which is initially taken to be their cost, and is subsequently
measured at bid or last traded prices, depending upon the convention of the exchange on which they are listed, where available, or
otherwise at fair value based on published price quotations.
Investments which are not quoted, or are not frequently traded, are stated at the best estimate of fair value. The Manager’s Fair Value
Committee (“FVC”), which is independent of the Portfolio Manager’s team, and with support from the independent third-party valuer
and Fidelity’s unlisted investments specialist, provides recommended fair values to the Directors. These are based on the principles
outlined in Note 2 (e). 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.
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Notes to the Financial Statements continued
2 Accounting Policies continued
The techniques applied by the FVC when valuing the unlisted investments are predominantly market-based approaches. The market
based approaches are set out below and are followed by an explanation of how they are applied to the Company’s unlisted
portfolio:
• Multiples;
• Industry Valuation Benchmarks; and
• Available Market Prices.
The nature of the unlisted investment will influence the valuation technique applied. The valuation approach recognises that the price
of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be
an appropriate starting point for estimating fair value at subsequent measurement dates. However, consideration is given to the facts
and circumstances as at the subsequent measurement date, including changes in the market or performance of the investee company.
Milestone analysis and future cash flows are used where appropriate to incorporate the operational progress of the investee company
into the valuation. Consideration is also given to the input received from the Fidelity International analyst that covers the company,
Fidelity’s unlisted investments specialist and from an independent third-party valuer. Additionally, the background to the transaction
must be considered. As a result, various multiples-based techniques are employed to assess the valuations particularly in those
companies with established revenues. An absence of relevant industry peers may preclude the application of the Industry Valuation
Benchmarks technique and an absence of observable prices may preclude the Available Market Prices approach.
The unlisted investments are valued according to a three month cycle of measurement dates. The fair value of the unlisted investments
will be reviewed before the next scheduled three monthly measurement date on the following occasions:
• At the year end and half year end of the Company; and
• Where there is an indication of a change in fair value (commonly referred to as ‘trigger’ events).
In accordance with the AIC SORP, the Company includes transaction costs, incidental to the purchase or sale of investments within
gains on investments held at fair value through profit or loss in the capital column of the Statement of Comprehensive Income and has
disclosed them in Note 10.
m) Derivative instruments – When appropriate, permitted transactions in derivative instruments are used. Derivative transactions into
which the Company may enter include CFDs, futures, options, warrants and forward currency contracts. Under IFRS 9 derivatives are
classified at fair value through profit or loss – held for trading, and are initially accounted and measured at fair value on the date the
derivative contract is entered into and subsequently measured at fair value as follows:
• CFDs – the difference between the strike price and the value of the underlying shares in the contract, calculated in accordance
with accounting policy 2 (l);
• Futures – the difference between contract price and the quoted trade price; and
• Options – the quoted trade price for the contract.
Where such transactions are used to protect or enhance income, if the circumstances support this, the income derived is included in
derivative income in the revenue column of the Statement of Comprehensive Income. Where such transactions are used to protect or
enhance capital, if the circumstances support this, the gains and losses derived are included in gains on derivative instruments held
at fair value through profit or loss in the capital column of the Statement of Comprehensive Income. Any positions on such transactions
open at the year end are reflected on the Statement of Financial Position at their fair value within current assets or current liabilities.
The Company obtains equivalent exposure to equities through the use of CFDs. All gains and losses in the fair value of the CFDs
are included in gains on derivative instruments held at fair value through profit or loss in the capital column of the Statement of
Comprehensive Income.
n) Amounts held at futures clearing houses and brokers – Cash deposits are held in segregated accounts on behalf of brokers as
collateral against open derivative contracts. These are carried at amortised cost.
o) Other receivables – Other receivables include securities sold for future settlement, amounts receivable on settlement of derivatives,
accrued income, taxation recoverable and other receivables 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. Other receivables are recognised initially at fair value and, where applicable, subsequently
measured at amortised cost using the effective interest rate method and as reduced by appropriate allowance for estimated
irrecoverable amounts.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
2 Accounting Policies continued
p) Other payables – Other payables include securities purchased for future settlement, amounts payable on settlement of derivatives,
investment management fees, amounts payable for repurchase of shares, finance costs payable and expenses accrued in the
ordinary course of business. Other payables are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business, if longer). If not, they are presented as non-current liabilities. Other payables are recognised
initially at fair value and, where applicable, subsequently measured at amortised cost using the effective interest rate method.
q) Other reserve – The full cost of ordinary shares repurchased and held in Treasury and ordinary shares repurchased for
cancellation is charged to the other reserve.
r) Capital reserve – The following are transferred to capital reserve:
• Gains and losses on the disposal of investments and derivatives instruments;
• Changes in the fair value of investments and derivative instruments, held at the year end;
• Foreign exchange gains and losses of a capital nature;
• Variable investment management fees;
• 75% of base investment management fees;
• 75% of finance costs;
• Dividends receivable which are capital in nature;
• Costs associated with the repurchase of ordinary shares;
• Taxation charged or credited relating to items which are capital in nature; and
• Other expenses which are capital in nature.
Technical guidance issued by the Institute of Chartered Accountants in England and Wales in TECH 02/17BL, guidance on the
determination of realised profits and losses in the context of distributions under the Companies Act 2006, states that changes in
the fair value of investments which are readily convertible to cash, without accepting adverse terms at the Statement of Financial
Position 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 Statement of Financial Position. At the Statement of Financial Position date, the portfolio of the
Company consisted of investments listed on a recognised stock exchange and derivative instruments contracted with counterparties
having adequate credit rating, and the portfolio was considered to be readily convertible to cash, with the exception of the level 3
investments which had unrealised investment holding gains of £44,389,000 (2025: unrealised investment holding gains of £24,731,000).
See Note 17 on pages 90 to 92 for further details on the level 3 investments.
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Notes to the Financial Statements continued
3 Income
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Investment income
Overseas dividends 37,425 46,590
Overseas scrip dividends 488 272
37,913 46,862
Derivative income
Dividends received on long CFDs 14,154 13,152
Interest received on CFDs 355 595
14,509 13,747
Other income
Interest received on collateral, bank deposits and money market funds 2,204 2,090
Total income 54,626 62,699
No special dividends have been recognised in capital during the year (2025: £1,493,000).
4 Investment Management Fees
Year ended 31 March 2026 Year ended 31 March 2025
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fee – base 3,226 9,679 12,905 2,648 7,942 10,590
Investment management fee – variable – 2,629 2,629 – (1,834) (1,834)
Investment management fee – base
(waived in respect of ACIC combination) – – – (179) (536) (715)
3,226 12,308 15,534 2,469 5,572 8,041
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager (“the Manager”) and has delegated portfolio
management to FIL Investment Management (Hong Kong) Limited (“the Investment Manager”). Both companies are Fidelity group
companies.
The base investment management fee is charged at an annual rate of 0.85% on the first £1.5 billion of Net Assets, reducing to 0.65% of
Net Assets over £1.5 billion.
In the year to 31 March 2025, the Manager agreed to a contribution of £715,000, representing eight months of management fees, in
respect of the assets transferred by ACIC to the Company (in March 2024), that would otherwise be payable by the enlarged Company
to the Manager.
In addition, there is a +/-0.20% variable fee based on the Company’s NAV per share performance relative to the Company’s Benchmark
Index measured daily over a three-year rolling basis.
Fees are payable monthly in arrears and are calculated on a daily basis. The base investment management fee has been allocated 75%
to capital reserve in accordance with the Company’s accounting policies.
Further details of the terms of the Management Agreement are given in the Directors’ Report on page 39.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
5 Other Expenses
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Allocated to revenue:
AIC fees 29 22
Custody fees 58 45
Depositary fees 46 55
Directors’ expenses 66 89
Directors’ fees
1
287 250
Legal and professional fees 114 104
Marketing expenses 345 327
Printing and publication expenses 57 52
Registrars’ fees 76 71
Other expenses 133 133
Fees payable to the Company’s Independent Auditor for the audit of the Financial Statements 69 63
1,280 1,211
Allocated to capital:
Legal and professional fees 47 32
Other expenses 1,327 1,243
1 Details of the breakdown of Directors’ fees are provided within the Directors’ Remuneration Report on page 49. Costs relating to the Directors’ national insurance and
levies are included. In the prior year these costs were included in Other expenses.
6 Finance Costs
Year ended 31 March 2026 Year ended 31 March 2025
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest paid on collateral and overdrafts 147 442 589 20 60 80
Interest paid on CFDs 3,744 11,232 14,976 5,674 17,023 22,697
Dividends paid on short CFDs 104 311 415 80 241 321
3,995 11,985 15,980 5,774 17,324 23,098
Finance costs have been allocated 75% to capital reserve in accordance with the Company’s accounting policies.
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Notes to the Financial Statements continued
7 Taxation
Year ended 31 March 2026 Year ended 31 March 2025
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
a) Analysis of the taxation charge for
the year
Prior year adjustment 209 (209) – – – –
Notional tax charge 401 (401) – – – –
Overseas taxation 932 – 932 1,070 – 1,070
Taxation charge for the year
(see Note 7b) 1,542 (610) 932 1,070 – 1,070
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% (2025:
25%). A reconciliation of the standard rate of UK corporation tax to the taxation charge for the year is shown below:
Year ended 31 March 2026 Year ended 31 March 2025
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit before taxation 46,125 98,674 144,799 53,245 285,837 339,082
Profit before taxation multiplied by the
standard rate of UK corporation tax of 25%
(2025: 25%) 11,531 24,669 36,200 13,311 71,459 84,770
Effects of:
Capital gains not taxable
1
– (30,754) (30,754) – (77,191) (77,191)
Income not taxable (9,478) – (9,478) (11,643) – (11,643)
Expenses not deductible – 2,886 2,886 – 4,316 4,316
Prior year adjustment 209 (209) – – – –
Notional tax charge 401 (401) – – – –
Excess expenses (2,053) 3,199 1,146 (1,668) 1,416 (252)
Overseas taxation 932 – 932 1,070 – 1,070
Taxation charge (Note 7a) 1,542 (610) 932 1,070 – 1,070
1 The Company is exempt from UK corporation tax on capital gains as it meets the HM Revenue & Customs criteria for an investment company set out in Section 1159 of
the Corporation Tax Act 2010.
c) Deferred taxation
A deferred tax asset of £40,409,000 (2025: £39,263,000), in respect of excess expenses of £161,636,000 (2025: £157,052,000) has not
been recognised as it is unlikely that there will be sufficient future taxable profits to utilise these expenses.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
8 Basic and diluted earnings per ordinary share
Year ended
31 March
2026
Year ended
31 March
2025
Revenue earnings per ordinary share 9.22p 10.18p
Capital earnings per ordinary share 20.53p 55.75p
Total earnings per ordinary share 29.75p 65.93p
The earnings per ordinary share is based on the profit after taxation for the year divided by the weighted average number of ordinary
shares held outside of Treasury during the year, as shown below:
£’000 £’000
Revenue profit after taxation for the year 44,583 52,175
Capital profit after taxation for the year 99,284 285,837
Total profit after taxation for the year 143,867 338,012
Number Number
Weighted average number of ordinary shares held outside of Treasury 483,522,161 512,652,970
9 Dividends Paid to Shareholders
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Dividend paid
Ordinary dividend of 8.00 pence per share paid for the year ended 31 March 2025 39,449 –
Special dividend of 1.00 pence per share paid for the year ended 31 March 2025 4,931 –
Ordinary dividend of 6.40 pence per share paid for the year ended 31 March 2024 – 33,355
44,380 33,355
Dividend proposed
Ordinary dividend proposed of 9.00 pence per share for the year ended 31 March 2026 41,254 –
Ordinary dividend proposed of 8.00 pence per share for the year ended 31 March 2025 – 39,509
Special dividend proposed of 1.00 pence per share for the year ended 31 March 2025 – 4,939
41,254 44,448
The Directors have proposed the payment of a final ordinary dividend for the year ended 31 March 2026 of 9.00 pence per share
which is subject to approval by shareholders at the Annual General Meeting on 21 July 2026 and has not been included as a liability
in these Financial Statements. The dividend will be paid on 28 July 2026 to shareholders on the register at the close of business on
19June 2026 (ex-dividend date 18 June 2026).
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Notes to the Financial Statements continued
10 Investments at Fair Value through Profit or Loss
2026
£’000
2025
£’000
Total investments
1
1,348,233 1,346,238
Opening book cost 1,354,515 1,398,894
Opening investment holding losses (8,277) (236,629)
Opening fair value of investments 1,346,238 1,162,265
Movements in the year
Purchases at cost 694,168 648,076
Costs in respect of the transaction with ACIC – 543
Sales – proceeds (768,936) (714,521)
Gains on investments 76,763 249,875
Closing fair value 1,348,233 1,346,238
Closing book cost 1,441,125 1,354,515
Closing investment holding losses (92,892) (8,277)
Closing fair value of investments 1,348,233 1,346,238
1 The fair value hierarchy of the investments is shown in Note 17.
The Company received £768,936,000 (2025: £714,521,000) from investments sold in the year. The book cost of these investments when
they were purchased was £607,558,000 (2025: £692,455,000). 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 incurred in the acquisition and disposal of investments, which are included in the gains on investments
were as follows:
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Purchases transaction costs 1,527 773
Sales transaction costs 1,102 812
2,629 1,585
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
11 Derivative Instruments
Year ended
31 March
2026
£’000
Year ended
31 March
2025
£’000
Net changes to gains on derivative instruments
Realised gains on CFDs 60,529 130,822
Realised losses on futures (6,691) (65,414)
Realised gains on options 452 1,765
Movement in investment holding losses on CFDs (8,121) (13,424)
Movement in investment holding (losses)/gains on futures (626) 3,366
Movement in investment holding (losses)/gains on options (210) 6
45,333 57,121
2026
Fair value
£’000
2025
Fair value
£’000
Fair value of derivative instruments recognised on the Statement of Financial Position
1
Derivative instrument assets 9,419 9,938
Derivative instrument liabilities (33,754) (24,838)
(24,335) (14,900)
1 The fair value hierarchy of the derivative instruments is shown in Note 17.
Fair value
£’000
2026
Asset
exposure
£’000
Fair value
£’000
2025
Asset
exposure
£’000
At the year end the Company held the following derivative
instruments
Long CFDs (30,489) 560,076 (19,358) 583,496
Short CFDs 3,215 44,684 205 18,813
Futures (hedging exposure) 2,265 (189,185) 2,891 (203,084)
Call options 944 12,066 1,761 9,442
Call options (hedging exposure) (132) (1,962) (399) (8,967)
Put options (138) 1,937 – –
(24,335) 427,616 (14,900) 399,700
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Notes to the Financial Statements continued
12 Other Receivables
2026
£’000
2025
£’000
Securities sold for future settlement 9,398 3,926
Amounts receivable on settlement of derivatives – 1,280
Accrued income 1,479 1,783
Taxation recoverable 11 11
Other receivables 272 295
11,160 7,295
13 Other Payables
2026
£’000
2025
£’000
Securities purchased for future settlement 3,293 3,084
Amounts payable on settlement of derivatives 1,367 2,986
Investment management fees 1,401 1,023
Finance costs payable 584 830
Accrued expenses 538 359
Amounts payable for repurchase of shares for cancellation 2,080 –
9,263 8,282
14 Share Capital
Number of
shares
2026
Nominal
value
£’000
Number of
shares
2025
Nominal
value
£’000
Issued, allotted and fully paid
Ordinary shares of 1 pence each held outside of Treasury
Beginning of the year 494,840,250 4,950 525,681,434 5,258
Ordinary shares repurchased for cancellation (33,336,928) (334) (30,841,184) (308)
End of the year 461,503,322 4,616 494,840,250 4,950
Ordinary shares of 1 pence each held in Treasury
1
85,629,548 855 85,629,548 855
Total share capital 5,471 5,805
1 The ordinary shares held in treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company.
During the year, the Company repurchased 33,336,928 (2025: 30,841,184) ordinary shares for cancellation. The cost of repurchasing
these shares of £100,528,000 (2025: £66,809,000) was charged to the Other reserve and the Capital reserve.
Given the number of shares held in Treasury, all shares repurchased at present are being cancelled rather than held in Treasury.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
15 Capital and Reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
equity
£’000
At 1 April 2025 5,805 338,107 1,412 74,052 922,363 72,063 1,413,802
Gains on investments (see Note 10) – – – – 76,763 – 76,763
Gains on derivative instruments (see Note 11) – – – – 45,333 – 45,333
Foreign exchange gains – – – – 918 – 918
Investment management fees (see Note 4) – – – – (12,308) – (12,308)
Other expenses (see Note 5) – – – – (47) – (47)
Finance costs (see Note 6) – – – – (11,985) – (11,985)
Notional taxation transfer – – – – 610 – 610
Revenue profit after taxation for the year – – – – – 44,583 44,583
Dividend paid to shareholders (see Note 9) – – – – – (44,380) (44,380)
Repurchase of ordinary shares for cancellation
(see Note 14) (334) – 334 (74,052) (26,476) – (100,528)
At 31 March 2026 5,471 338,107 1,746 – 995,171 72,266 1,412,761
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
equity
£’000
At 1 April 2024 6,113 338,167 1,104 140,861 636,526 53,243 1,176,014
Gains on investments (see Note 10) – – – – 249,875 – 249,875
Gains on derivative instruments (see Note 11) – – – – 57,121 – 57,121
Foreign exchange gains – – – – 1,769 – 1,769
Investment management fees (see Note 4) – – – – (5,572) – (5,572)
Other expenses (see Note 5) – – – – (32) – (32)
Finance costs (see Note 6) – – – – (17,324) – (17,324)
Revenue profit after taxation for the year – – – – – 52,175 52,175
Dividend paid to shareholders (see Note 9) – – – – – (33,355) (33,355)
Contribution in respect of the transaction with
ACIC by the Manager – 100 – – – – 100
Costs relating to the ACIC transaction (inclusive
of VAT recovered) – (160) – – – – (160)
Repurchase of ordinary shares for cancellation
(see Note 14) (308) – 308 (66,809) – – (66,809)
At 31 March 2025 5,805 338,107 1,412 74,052 922,363 72,063 1,413,802
The capital reserve balance at 31 March 2026 includes investment holding losses on investments of £92,892,000 (2025: losses of
£8,277,000) as detailed in Note 10. See Note 2 (r) for further details. In accordance with the Articles of Association, distributions by
way of dividend can be made from both the revenue reserve and capital reserves to the extent they are realised.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Notes to the Financial Statements continued
16 Net Asset Value per Ordinary Share
The calculation of the net asset value per ordinary share is based on the net assets divided by the number of ordinary shares held
outside of Treasury.
2026 2025
Net assets £1,412,761,000 £1,413,802,000
Ordinary shares held outside of Treasury at year end 461,503,322 494,840,250
Net asset value per ordinary share 306.12p 285.71p
It is the Company’s policy that shares held in Treasury will only be reissued at net asset value per share or at a premium to net asset
value per share so that shares held in Treasury have no dilutive effect.
17 Financial Instruments
Management of risk
The Company’s investing activities in pursuit of its investment objective involve certain inherent risks. The Board confirms that there is
an ongoing process for identifying, evaluating and managing the risks faced by the Company. The Board with the assistance of the
Investment Manager, has developed a risk matrix which, as part of the internal control process, identifies the risks that the Company
faces. Risks are identified and graded in this process, together with steps taken in mitigation, and are updated and reviewed on an
ongoing basis. Risks identified are shown in the Strategic Report on pages 29 to 33.
This Note is incorporated in accordance with IFRS 7: Financial Instruments: Disclosures and refers to the identification, measurement
and management of risks potentially affecting the value of financial instruments.
The Company’s financial instruments may comprise:
• Equity shares (listed and unlisted), equity linked notes, convertible bonds and rights issues;
• Derivative instruments including CFDs, warrants, futures and options written or purchased on stocks and equity indices and
forward currency contracts;
• Cash, liquid resources and short-term receivables and payables that arise from its operations; and
• Bank borrowings.
The risks identified by IFRS 7 arising from the Company’s financial instruments are market price risk (which comprises interest rate risk,
foreign currency risk and other price risk), liquidity risk, counterparty risk, credit risk and derivative instrument risk. The Board reviews
and agrees policies for managing each of these risks, which are summarised below. These policies are consistent with those followed
last year.
Market price risk
Interest rate risk
The Company finances its operations through its share capital and reserves. In addition, the Company has gearing through the use
of derivative instruments. The level of gearing is reviewed by the Board and the Portfolio Manager. The Company is exposed to a
financial risk arising as a result of any increase in interest rates associated with the funding of derivative instruments.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
Interest rate risk exposure
The values of the Company’s financial instruments that are exposed to movements in interest rates are shown below:
2026
£’000
2025
£’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 590,565 602,854
590,565 602,854
Exposure to financial instruments that earn interest
Short CFDs – exposure plus fair value 47,899 19,018
Amounts held at futures clearing houses and brokers 38,879 33,760
Cash and cash equivalents 48,087 49,691
134,865 102,469
Net exposure to financial instruments that bear interest 455,700 500,385
Foreign currency risk
The Company’s profit after taxation and its net assets can be affected by foreign exchange 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.
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, for example, between the date when an investment
is bought or sold and the date when settlement of the transaction occurs; and
• Movements in currency exchange rates affecting income received.
Currency exposure of financial assets
The Company’s financial assets comprise of investments, long positions on derivative instruments, short-term debtors and cash and
cash equivalents. The currency exposure profile of these financial assets is shown below:
Currency
Investments
held at
fair value
through
profit or loss
£’000
Asset
exposure of
long
derivative
instruments
1
£’000
Other
receivables
2
£’000
Cash
and cash
equivalents
3
£’000
2026
Total
£’000
Chinese renminbi 24,564 – – – 24,564
Euro 13,294 – – – 13,294
Hong Kong dollar 948,405 175,223 13,715 997 1,138,340
Japanese yen – 7,085 – 135 7,220
Taiwan dollar – – 11 – 11
UK sterling 11,847 – 272 22 12,141
US dollar 350,123 200,624 36,041 46,933 633,721
1,348,233 382,932 50,039 48,087 1,829,291
1 The asset exposure of long CFDs and options after the netting of hedging exposures.
2 Other receivables include amounts held at futures clearing houses and brokers.
3 Cash and cash equivalents are made up of £4,648,000 cash at bank and £43,439,000 is held in Fidelity Institutional Liquidity Fund.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Notes to the Financial Statements continued
17 Financial Instruments continued
Currency
Investments
held at
fair value
through
profit or loss
£’000
Asset
exposure of
long
derivative
instruments
1
£’000
Other
receivables
2
£’000
Cash
and cash
equivalents
3
£’000
2025
Total
£’000
Chinese renminbi 29,850 – – – 29,850
Euro 15,468 – – – 15,468
Hong Kong dollar 873,075 127,296 5,850 2,731 1,008,952
Japanese yen – 13,585 1,084 – 14,669
Taiwan dollar 5,006 – – – 5,006
UK sterling 12,725 – 295 – 13,020
US dollar 410,114 240,006 33,826 46,960 730,906
1,346,238 380,887 41,055 49,691 1,817,871
1 The asset exposure of long CFDs and options after the netting of hedging exposures.
2 Other receivables include amounts held at futures clearing houses and brokers.
3 Cash and cash equivalents are made up of £4,432,000 cash at bank and £45,259,000 is held in Fidelity Institutional Liquidity Fund.
Currency exposure of financial liabilities
The Company 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
Asset
exposure of
short
derivative
instruments
1
£’000
Other
payables
£’000
2026
Total
£’000
Hong Kong dollar 34,818 3,791 38,609
Japanese yen – 135 135
UK sterling – 4,020 4,020
US dollar 9,866 1,317 11,183
44,684 9,263 53,947
Currency
Asset
exposure of
short
derivative
instruments
1
£’000
Other
payables
£’000
2025
Total
£’000
Hong Kong dollar – 6,570 6,570
Japanese yen – 7 7
UK sterling – 1,382 1,382
US dollar 18,813 323 19,136
18,813 8,282 27,095
1 The asset exposure of short derivative instruments excluding hedging exposures.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
Other price risk
Other price risk arises mainly from uncertainty about future prices of financial instruments. It represents the potential loss the Company
might suffer through price movements in its investment positions. The Board meets quarterly to consider the asset allocation of the
portfolio and the risk associated with particular industry sectors within the parameters of the investment objective.
The Investment Manager is responsible for actively monitoring the portfolio selected in accordance with the overall asset allocation
parameters and seeks to ensure that individual stocks also meet an acceptable risk/reward profile. Other price risks arising from
derivative positions, mainly due to the underlying exposures, are assessed by the Investment Manager’s specialist derivative
instruments team.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities. The
Company’s assets mainly comprise readily realisable securities and derivative instruments which can be sold easily to meet funding
commitments if necessary. Short-term flexibility is achieved by the use of a bank overdraft, if required.
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 Investment Manager employs, this risk is minimised by only entering into transactions with
counterparties which are believed to have an adequate credit rating at the time the transaction is entered into, by ensuring that formal
legal agreements covering the terms of the contract are entered into in advance, and through adopting a counterparty risk framework
which measures, monitors and manages counterparty risk by the use of internal and external credit agency ratings and evaluates
derivative instrument credit risk exposure.
Collateral
For OTC and exchange traded derivative transactions, collateral is used to reduce the risk of both parties to the contract. Collateral is
managed on a daily basis for all relevant transactions and held in segregated collateral accounts. Collateral can be held by brokers
on behalf of the Company to reduce the credit risk exposure of the Company or held by the Company on behalf of brokers to reduce
the credit risk exposure of the brokers. All collateral received or pledged at reporting date is in cash. The value of collateral received
from brokers and pledged to brokers is shown below:
2026 2025
Collateral
received
£’000
Collateral
pledged
£’000
Collateral
received
£’000
Collateral
pledged
£’000
Goldman Sachs International Ltd – 3,791 – –
HSBC Bank plc – 6,139 – 3,037
UBS AG – 17,385 – 23,770
J.P. Morgan Securities plc – 6,688 – 6,953
Morgan Stanley & Co. International Ltd – 4,876 1,109 –
Total – 38,879 1,109 33,760
Offsetting
To mitigate counterparty risk for OTC derivative transactions, the ISDA legal documentation is in the form of a master agreement
between the Company and the broker. This allows enforceable netting arrangements in the event of a default or termination event.
Derivative instrument assets and liabilities that are subject to netting arrangements have not been offset in preparing the Statement of
Financial Position.
The Company’s derivative instrument financial assets and liabilities recognised in the Statement of Financial Position and amounts that
could be subject to netting in the event of a default or termination are shown on the next page:
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Notes to the Financial Statements continued
17 Financial Instruments continued
Financial assets
Gross
amount
£’000
Gross amount
of recognised
financial
liabilities
set off on
the SoFP
1
£’000
Net amount
of financial
assets
presented on
the SoFP
1
£’000
Related amounts not set off
on the SoFP
1
2026
Net
amount
£’000
Financial
instruments
£’000
Margin
account
received as
collateral
£’000
CFDs 6,210 – 6,210 (6,210) – –
Options 944 – 944 – – 944
Futures (exchange traded) 2,265 – 2,265 – – 2,265
9,419 – 9,419 (6,210) – 3,209
Financial liabilities
Gross
amount
£’000
Gross amount
of recognised
financial
assets
set off on
the SoFP
1
£’000
Net amount
of financial
liabilities
presented on
the SoFP
1
£’000
Related amounts not set off
on the SoFP
1
2026
Net
amount
£’000
Financial
instruments
£’000
Margin
account
pledged as
collateral
£’000
CFDs (33,484) – (33,484) 6,210 22,715 (4,559)
Options (270) – (270) – – (270)
(33,754) – (33,754) 6,210 22,715 (4,829)
Financial assets
Gross
amount
£’000
Gross amount
of recognised
financial
liabilities
set off on
the SoFP
1
£’000
Net amount
of financial
assets
presented on
the SoFP
1
£’000
Related amounts not set off
on the SoFP
1
2025
Net
amount
£’000
Financial
instruments
£’000
Margin
account
received as
collateral
£’000
CFDs 5,286 – 5,286 (4,087) (1,109) 90
Options 1,761 – 1,761 – – 1,761
Futures (exchange traded) 2,891 – 2,891 – – 2,891
9,938 – 9,938 (4,087) (1,109) 4,742
Financial liabilities
Gross
amount
£’000
Gross amount
of recognised
financial
assets
set off on
the SoFP
1
£’000
Net amount
of financial
liabilities
presented on
the SoFP
1
£’000
Related amounts not set off
on the SoFP
1
2025
Net
amount
£’000
Financial
instruments
£’000
Margin
account
pledged as
collateral
£’000
CFDs (24,439) – (24,439) 4,087 12,870 (7,482)
Options (399) – (399) – – (399)
(24,838) – (24,838) 4,087 12,870 (7,881)
1 Statement of Financial Position.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
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 Investment Manager and are settled
on a delivery versus payment basis. Limits are set on the amount that may be due from any one broker and are kept under review
by the Investment Manager. Exposure to credit risk arises on outstanding security transactions and derivative instrument contracts and
cash at bank.
Derivative instrument risk
The risks and risk management processes which result from the use of derivative instruments by the Investment Manager, are set out
in a documented Risk Management Process Document. Derivative instruments are used by the Investment Manager for the following
purposes:
• To gain exposure to equity markets, sectors or individual investments;
• To hedge equity market risk in the Company’s investments with the intention of mitigating losses in the events market falls;
• To enhance portfolio returns by writing call and put options; and
• To take short positions in equity markets, which would benefit from a fall in the relevant market price, where the Investment
Manager believes the investment is overvalued. These positions distinguish themselves from other short exposures held for
hedging purposes since they are expected to add risk to the portfolio.
The risk and investment performance of these instruments are managed by an experienced, specialist derivative team of the
Investment Manager using portfolio risk assessment tools for portfolio construction.
RISK SENSITIVITY ANALYSIS
Interest rate risk sensitivity analysis
Based on the financial instruments held and interest rates at the Statement of Financial Position date, an increase of 1.00% in interest
rates throughout the year, with all other variables held constant, would have decreased the net profit after taxation for the year and
decreased the net assets of the Company by £4,557,000 (2025: decreased the net profit after taxation and decreased the net assets
by £5,004,000). A decrease of 1.00% in interest rates throughout the year would have had an equal but opposite effect.
Foreign currency risk sensitivity analysis
Based on the financial assets and liabilities held and currency exchange rates ruling at the Statement of Financial Position date, a
strengthening of the UK sterling exchange rate by 10% against other currencies, with all other variables held constant, would have
decreased the net profit after taxation for the year and decreased the net assets of the Company (2025: decreased the net profit after
taxation and decreased the net assets) by the following amounts:
Currency
2026
£’000
2025
£’000
Chinese renminbi 2,233 2,714
Euro 1,209 1,406
Hong Kong dollar 99,976 91,125
Japanese yen 644 1,333
Taiwan dollar 1 455
US dollar 56,594 64,707
160,657 161,740
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Notes to the Financial Statements continued
17 Financial Instruments continued
Based on the financial assets and liabilities held and the exchange rates ruling at the Statement of Financial Position date, a
weakening of the UK sterling exchange rate by 10% against other currencies would have increased the net profit after taxation for the
year and increased the net assets of the Company (2025: increased the net profit after taxation and increased the net assets) by the
following amounts:
Currency
2026
£’000
2025
£’000
Chinese renminbi 2,729 3,317
Euro 1,477 1,719
Hong Kong dollar 122,192 111,376
Japanese yen 787 1,629
Taiwan dollar 1 556
US dollar 69,171 79,085
196,357 197,682
Other price risk sensitivity analysis
Changes in market prices affect the net profit after taxation for the year and the net assets of the Company. Details of how the
Board sets risk parameters and performance objectives are disclosed in the Strategic Report on pages 26 to 33.
An increase of 10% in the share prices of the listed investments held at the Statement of Financial Position date would have increased
the net profit after taxation for the year and increased the net assets of the Company by £119,253,000 (2025: increased the net profit
after taxation and increased the net assets by £121,019,000). A decrease of 10% in share prices of the investments designated at fair
value through profit or loss would have had an equal but opposite effect.
An increase of 10% in the valuation of unlisted investments held at the Statement of Financial Position date would have increased the
net profit after taxation for the year and increased the net assets of the Company by £15,570,000 (2025: increased the net profit after
taxation and increased the net assets by £13,604,000). A decrease of 10% in the valuation would have had an equal but opposite
effect.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
The sensitivity analysis below illustrates how the unobservable inputs used in the valuation methodologies of the unlisted assets impact
the fair value as at 31 March 2026:
Significant unobservable inputs
Sensitivity to changes in
significant unobservable inputsValuation approach
Fair
value
£’000*
Key
unobservable
inputs
Other
unobservable
inputs Range
Market approach using
comparable traded
multiples or calibration
factors
101,672
TEV/LTM
revenue multiple
1
a, b, c, d 1.95x - 3.5x
If TEV/LTM revenue multiple moved by
+/- 10%, the fair value would change
by £1,688,000 and -£1,668,000
TEV/LTM EBITDA
multiple
2
a, b, c, d 7.25x - 8.25x
If TEV/LTM EBITDA multiple moved by
+/- 10%, the fair value would change
by £1,478,000 and -£1,513,000
TEV/FY+1
revenue multiple
3
a, b, c, d 1.55x - 3.25x
If TEV/FY+1 revenue multiple moved by
+/- 10%, the fair value would change
by £1,016,000 and -£1,036,000
TEV/FY+1
EBITDA multiple
4
a, b, c, d 5.0x - 6.0x
If TEV/FY+1 EBITDA multiple moved by
+/- 10%, the fair value would change
by £1,570,000 and -£1,605,000
P/E LTM multiple
5
a, b, c, d 14.0x - 17.0x
If P/E LTM multiple moved by +/-10%,
the fair value would change by
£1,104,000 and -£1,059,000
Sum of the parts
e
26,636
Selection of
comparable
companies and
relevant indices
c (10.0%) - 10.0%
If the market factor of the comparable
companies moved by +/- 5% the fair
value would change by £575,000 and
-£575,000
Scenario analysis
considering a range of
exit scenariosf
25,102 Discount rate c, d 16.5% - 17.5%
If the discount rate moved by +/-10%
the fair value would change by
£717,000 and -£690,000
* An asset may be valued using multiple approaches therefore this column is not expected to represent the total of level 3 investments
1 Total enterprise value (TEV) divided by the last twelve months (LTM) revenue.
2 Total enterprise value (TEV) divided by the last twelve months (LTM) earnings before interest, taxes, depreciation and amortisation (EBITDA).
3 Total enterprise value (TEV) divided by the next twelve months forecasted revenue (FY+1).
4 Total enterprise value (TEV) divided by the next twelve months (FY+1) forecasted earnings before interest, taxes, depreciation and amortisation (EBITDA).
5 Price to earnings (P/E) divided by the last twelve months (LTM) revenue.
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Notes to the Financial Statements continued
17 Financial Instruments continued
The sensitivity analysis below illustrates how the unobservable inputs used in the valuation methodologies of the unlisted assets impact
the fair value as at 31 March 2025:
Significant unobservable inputs
Sensitivity to changes in
significant unobservable inputsValuation approach
Fair
value
£’000*
Key
unobservable
inputs
Other
unobservable
inputs Range
Market approach using
comparable traded
multiples or calibration
factors
72,128
TEV/LTM
revenue multiple
1
a, b, c, d 1.95x - 3.5x
If TEV/LTM revenue multiple moved by
+/- 10%, the fair value would change
by £1,535,000 and -£1,534,000
TEV/LTM EBITDA
multiple
2
a, b, c, d 7.25x - 8.25x
If TEV/LTM EBITDA multiple moved by
+/- 10%, the fair value would change
by £931,000 and -£954,000
TEV/FY+1
revenue multiple
3
a, b, c, d 1.55x - 3.25x
If TEV/FY+1 revenue multiple moved by
+/- 10%, the fair value would change
by £1,354,000 and -£1,377,000
TEV/FY+1
EBITDA multiple
4
a, b, c, d 5.0x - 6.0x
If TEV/FY+1 EBITDA multiple moved by
+/- 10%, the fair value would change
by £978,000 and -£1,001,000
P/E LTM multiple
5
a, b, c, d 14.0x - 17.0x
If P/E LTM multiple moved by +/-10%,
the fair value would change by
£435,000 and -£435,000
P/E FY+1 multiple
6
a, b, c, d 12.0x - 15.0x
If P/E FY+1 multiple moved by +/-10%,
the fair value would change by
£185,000 and -£185,000
Sum of the parts
e
30,258
Selection of
comparable
companies and
relevant indices
c (10.0%) - 10.0%
If the market factor of the comparable
companies moved by +/- 5% the fair
value would change by £557,000 and
-£557,000
Scenario analysis
considering a range of
exit scenarios
f
26,194 Discount rate c, d 16.5% - 17.5%
If the discount rate moved by +/-10%
the fair value would change by
£353,000 and -£353,000
Recent transaction prices
g
62,469 n/a c n/a n/a
* An asset may be valued using multiple approaches therefore this column is not expected to represent the total of level 3 investments held at the end of the period.
1 Total enterprise value (TEV) divided by the last twelve months (LTM) revenue.
2 Total enterprise value (TEV) divided by the last twelve months (LTM) earnings before interest, taxes, depreciation and amortisation (EBITDA).
3 Total enterprise value (TEV) divided by the next twelve months forecasted revenue (FY+1).
4 Total enterprise value (TEV) divided by the next twelve months (FY+1) forecasted earnings before interest, taxes, depreciation and amortisation (EBITDA).
5 Price to earnings (P/E) divided by the last twelve months (LTM) revenue.
6 Price to earnings (P/E) divided by the next twelve months forecasted revenue (FY+1).
a. Selection of comparable companies
The fair value is determined by examining the market valuations of similar publicly traded firms. This approach involves identifying
peer companies with similar industry characteristics, size, growth prospects, and financial metrics. Key valuation multiples such as
Price-to-Earnings (P/E), Enterprise Value-to-EBITDA (EV/EBITDA), and Price-to-Sales (P/S) are calculated for each comparable company.
These multiples are then applied to the target company’s corresponding financial figures to derive an estimated value range. The
selection of comparable companies is evaluated at each valuation.
b. Selection of appropriate benchmarks
A benchmark-based valuation methodology estimates the fair value of a company by comparing its financial and operational metrics
to a set of relevant industry or market benchmarks. These benchmarks may include sector averages, historical performance standards,
or key financial ratios such as return on equity (ROE), profit margins, or revenue growth rates. The selection of appropriate benchmarks
is assessed individually for each investment and updated regularly.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
c. Selection of alternative valuation methodologies
Fair value is be determined using a variety of valuation methodologies, each suited to different types of investments and contexts.
Common alternative approaches include the income approach, which estimates fair value based on the present value of expected
future cash flows, utilizing discounted cash flow (DCF) models and estimated weighted average cost of capital (WACC) discount rates.
d. Estimate of sustainable earnings
The approach focuses on normalized earnings, either forecasted over the next 12 months or adjusted to reflect a sustainable, long-
term level that smooths out cyclical fluctuations and one-time events. Analysts typically use forward-looking metrics such as projected
net income or EBITDA, derived from management guidance, analyst forecasts, or historical trends. These earnings are then multiplied
by a valuation multiple (e.g., P/E or EV/EBITDA) that reflects market expectations and industry norms. The chosen multiple may be
based on comparable companies or historical averages. By focusing on earnings that are expected to persist over time, the approach
aims to provide a more accurate and stable estimate of intrinsic value, especially in dynamic or transitional market environments.
e. Sum of the Parts Valuation
Sum of parts valuation (SOTP) determines the overall value of a company by assessing the individual worth of its various divisions or
segments, particularly effective where a company is a conglomerate and has business units across multiple industries. The fair value
of each business unit or segment is derived separately in accordance with the International Private Equity and Venture Capital 2022
(“IPEV”) Valuation Guidelines determined by any number of analysis methods including discounted cash flow (DCF) valuations, asset-
based valuations and multiples valuations using revenue, operating profit or profit margins.
f. Range of exit scenarios
Fair value is determined by modelling potential scenarios about how a company might be sold, or value might be realised. Analysts
typically develop several plausible exit scenarios such as a strategic acquisition, initial public offering (IPO), management buyout, or
liquidation each with its own assumptions about timing, valuation multiples, and transaction terms. For each scenario, the expected
proceeds are estimated, often using projected financial metrics and applying relevant market-based multiples. These proceeds are
then discounted back to present value using an appropriate discount rate to reflect the time value of money and risk. The final fair
value is calculated as a probability-weighted average of the present values across all scenarios, incorporating both the likelihood and
financial impact of each outcome.
g. Recent Transaction price
A recent transaction price itself is observable and whilst it may be the most appropriate basis for a valuation, it often only represents
one input and will be used alongside other unobservable inputs to determine the fair value of an asset.
Derivative instruments exposure sensitivity analysis
The Company invests in derivative instruments to gain or reduce exposure to the equity market. An increase of 10% in the share prices
of the investments underlying the derivative instruments at the Statement of Financial Position date would have increased the profits
after taxation for the year and increased the net assets of the Company by £33,825,000 (2025: increased the profit after taxation and
increased the net assets by £36,207,000). A decrease of 10% in share prices of the investments underlying the derivative instruments
would have had an equal but opposite effect.
Fair Value of Financial Assets and Liabilities
Financial assets and liabilities are stated in the Statement of Financial Position at values which are not materially different to their
fair values. As explained in Notes 2 (l) and (m), 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.
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Notes to the Financial Statements continued
17 Financial Instruments continued
Fair Value Hierarchy
The Company is required to disclose the fair value hierarchy that classifies its financial instruments measured at fair value at one of
three levels, according to the relative reliability of the inputs used to estimate the fair values.
Classification Input
Level 1
Valued using quoted prices in active markets for identical assets
Level 2
Valued by reference to inputs other than quoted prices included in level 1 that are observable
(i.e. developed using market data) for the asset or liability, either directly or indirectly
Level 3
Valued by reference to valuation techniques using inputs that are not based on observable
market data
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value
measurement of the relevant asset. The valuation techniques used by the Company are explained in Notes 2 (e), (l) and (m). 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
2026
Total
£’000
Investments 1,192,531 – 155,702 1,348,233
Derivative instrument assets 2,336 7,083 – 9,419
1,194,867 7,083 155,702 1,357,652
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (33,754) – (33,754)
Financial assets at fair value through profit or loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
2025
Total
£’000
Investments 1,210,194 – 136,044 1,346,238
Derivative instrument assets 2,891 7,047 – 9,938
1,213,085 7,047 136,044 1,356,176
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (24,838) – (24,838)
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
17 Financial Instruments continued
Level 3 investments (unlisted and delisted investments)
2026
£’000
2025
£’000
ByteDance 73,733 55,005
Venturous Holdings 27,036 30,258
Chime Biologics 25,480 26,194
DJI International 21,381 17,123
Fujian Yangteng Innovation 8,072 7,464
Shanghai Yiguo – –
3 listed investments whose listings are currently suspended – –
155,702 136,044
Companies whose listings are suspended
Three listed companies in the portfolio have had their listing suspended: DBA Telecommunication (Asia) Limited (suspended July 2014),
China Animal Healthcare Limited (suspended March 2015), BNN Technology Limited (suspended September 2017).
Significant holdings
Details of significant holdings are noted below in accordance with the disclosure requirements of paragraph 82 of the AIC SORP. The
Company is required to provide a list of all investments at the Statement of Financial Position date with a value greater than 5% of
its portfolio and at least the ten largest investments, including the value of each investment and for unlisted investments included in
the list, additional detail is required as shown below. This disclosure includes turnover, pre-tax profits and net assets attributable to
investors, as reported within the most recently audited financial statements of the investee companies.
Holdings
Cost
£’000
Fair
value
£’000
Income
recognised
from the
holding in
the year
£’000
Turnover for
the latest
audited
financial
year
£’000
Pre-tax profits/
losses for the
latest audited
financial
year
£’000
2026
Net assets/
(liabilities) at
the latest
audited
balance
sheet date
£’000
ByteDance 19,775 73,732 Nil Information not publicly available
Venturous Holdings 23,701 27,036 Nil Information not publicly available
Chime Biologics 25,227 25,479 Nil Information not publicly available
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Notes to the Financial Statements continued
17 Financial Instruments continued
Holdings
Cost
£’000
Fair
value
£’000
Income
recognised
from the
holding in
the year
£’000
Turnover for
the latest
audited
financial
year
£’000
Pre-tax
profits/losses
for the latest
audited
financial
year
£’000
2025
Net assets/
(liabilities) at
the latest
audited
balance
sheet date
£’000
ByteDance 19,775 55,005 Nil Information not publicly available
Venturous Holdings 23,701 30,258 Nil Information not publicly available
Movements in level 3 investments during the year
2026
Level 3
£’000
2025
Level 3
£’000
Level 3 investments at the beginning of the year 136,044 157,008
Purchases at cost 25,686 20,251
Sales proceeds – (14,410)
Sales gain – 960
Transfers out of level 3 at cost
1
(25,686) (42,208)
Unrealised gain recognised in the Statement of Comprehensive Income 19,658 14,443
Level 3 investments at the end of the year 155,702 136,044
1 Financial instruments are transferred out of level 3 when they become listed. See page 91 for more information.
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
18 Capital Resources and Gearing
The Company does not have any externally imposed capital requirements. The financial resources of the Company comprise its share
capital, reserves and gearing, which are disclosed on the Statement of Financial Position. The Company is managed in accordance
with its investment policy and in pursuit of its investment objective, both of which are detailed in the Strategic Report on page 26. The
principal risks and their management are disclosed in the Strategic Report on pages 29 to 33 and in Note 17.
The Company’s gearing at the year end is set out below:
2026
Gross gearing Net gearing
Exposure
£’000 %
1
Exposure
£'000 %
1
Investments 1,348,233 95.4 1,348,233 95.4
Long CFDs 560,076 39.6 560,076 39.6
Long options 14,003 1.0 14,003 1.0
Total long exposures before hedges 1,922,312 136.0 1,922,312 136.0
Less: Hedged Future Exposures (189,185) (13.4) (189,185) (13.4)
Less: Hedged Option Exposures (1,962) (0.1) (1,962) (0.1)
Total long exposures after the netting of hedges 1,731,165 122.5 1,731,165 122.5
Short CFDs 44,684 3.2 (44,684) (3.2)
Gross Asset Exposure/Net Market Exposure* 1,775,849 125.7 1,686,481 119.3
Net Assets 1,412,761 1,412,761
Gearing
2
25.7% 19.3%
2025
Gross gearing Net gearing
Exposure
£’000 %
1
Exposure
£'000 %
1
Investments 1,346,238 95.2 1,346,238 95.2
Long CFDs 583,496 41.3 583,496 41.3
Long options 9,442 0.7 9,442 0.7
Total long exposures before hedges 1,939,176 137.2 1,939,176 137.2
Less: Hedged Future Exposures (203,084) (14.4) (203,084) (14.4)
Less: Hedged Option Exposures (8,967) (0.6) (8,967) (0.6)
Total long exposures after the netting of hedges 1,727,125 122.2 1,727,125 122.2
Short CFDs 18,813 1.3 (18,813) (1.3)
Gross Asset Exposure/Net Market Exposure* 1,745,938 123.5 1,708,312 120.9
Net Assets 1,413,802 1,413,802
Gearing
2
23.5% 20.9%
* Defined in the Glossary of Terms on pages 104 and 105.
1 Exposure to the market expressed as a percentage of Net Assets.
2 Gearing is the amount by which Gross Asset Exposure/Net Market Exposure exceeds Net Assets expressed as a percentage of Net Assets.
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19 Transactions with the Managers and Related Parties
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management
to FIL Investment Management (Hong Kong) Limited. Both companies are Fidelity group companies.
Details of the current fee arrangements are given in the Directors’ Report on page 39. During the year, the following expenses were
payable to Fidelity:
2026
£’000
2025
£’000
Management fees 15,534 8,041
Marketing services 345 327
At the Statement of Financial Position date, the following balances payable to FII were accrued and included in other creditors:
2026
£’000
2025
£’000
Management fees 1,401 1,023
Marketing services 72 47
Disclosures of the Directors’ interests in the shares of the Company and fees and taxable expenses, relating to reasonable travel
expenses, payable to the Directors are given in the Directors’ Remuneration Report on pages 49 and 50. In addition to the fees and
taxable expenses disclosed in the Directors’ Remuneration Report, employers’ National Insurance contributions were paid by the
Company. At the Statement of Financial Position date, Directors’ fees of £67,000 (2025: £29,000) were accrued and payable.
Notes to the Financial Statements continued
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GOVERNANCEINFORMATION FOR SHAREHOLDERS FINANCIAL STRATEGY
Alternative Performance Measures
The Company uses the following as Alternative Performance Measures which are all defined in the Glossary to the Annual Report on
pages 103 to 105.
Discount/Premium
The discount/premium is the difference between the net asset value (“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 are on the Financial
Highlights page.
Gearing
See Note 18 on pages 93 and 94 for details of the Company’s gearing (both gross and net).
Net Asset Value (“NAV”) per Ordinary Share
See the Statement of Financial Position on page 65 and Note 16 on page 80 for further details.
Ongoing Charges Ratio
The ongoing charges ratio is considered to be an Alternative Performance Measure. It has been calculated in accordance with
guidance issued by the AIC as the total of management fees and other expenses expressed as a percentage of the average net
assets throughout the year.
2026 2025
Investment management fees (£’000) 12,905 9,875
Other expenses (£’000) 1,327 1,243
Ongoing charges (£’000) 14,232 11,118
Variable management fees (£’000) 2,629 (1,834)
Average net assets (£’000) 1,539,184 1,249,044
Ongoing charges ratio 0.92% 0.89%
Ongoing charges ratio including variable management fees 1.09% 0.74%
Revenue, Capital and Total Earnings per Share
See the Statement of Financial Position on page 65 and Note 8 on page 75 for further details.
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Alternative Performance Measures continued
Total Return Performance
The NAV per share total return includes reinvestment of the dividend in the NAV of the Company on the ex-dividend date. Share price
total return includes the reinvestment of the net dividend in the month that the share price goes ex-dividend.
The tables below provide information relating to the NAV per share and share prices of the Company, the impact of the dividend
reinvestments and the total returns for the years ended 31 March 2026 and 31 March 2025.
2026
Net asset
value per
share
Share
price
31 March 2025 285.71p 265.00p
31 March 2026 306.12p 280.00p
Change in the year +7.1% +5.7%
Impact of dividend reinvestment +3.6% +3.8%
Total return for the year +10.7% +9.5%
2025
Net asset
value per
share
Share
price
31 March 2024 223.71p 201.00p
31 March 2025 285.71p 265.00p
Change in the year +27.7% +31.8%
Impact of dividend reinvestment +3.8% +4.0%
Total return for the year +31.5% +35.8%
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Notice is hereby given that the Annual General Meeting of
Fidelity China Special Situations PLC will be held at 4 Cannon
Street, London EC4M 5AB and virtually via the Lumi AGM meeting
platform on Tuesday, 21 July 2026 at 11.00 am for the following
purposes:
1. To receive and adopt the Annual Report and Financial Statements
for the year ended 31 March 2026.
2. To declare that a final ordinary dividend for the year ended 31
March 2026 of 9.00 pence per share be paid to shareholders
who appear on the register as at close of business on 19 June
2026.
3. To re-elect Mr Mike Balfour as a Director.
4. To re-elect Mr Alastair Bruce as a Director.
5. To re-elect Mrs Vanessa Donegan as a Director.
6. To re-elect Mrs Georgina Field as a Director.
7. To re-elect Dr Edward Tse as a Director.
8. To elect Mrs Bessie Lee as a Director.
9. To approve the Directors’ Remuneration Report (excluding the
section headed The Remuneration Policy set out on page 48) for
the year ended 31 March 2026.
10. To appoint PricewaterhouseCoopers LLP as Auditor of the
Company (the “Auditor”) and to reappoint the Auditor to hold
office until the conclusion of the next general meeting at which
financial statements are laid before the Company.
11. To authorise the Directors to determine the remuneration of the
Company’s Auditor.
To consider and, if thought fit, to pass the following special business
resolutions of which Resolutions 12 and 13 will be proposed as
ordinary resolutions and Resolutions 14, 15, 16 and 17 as special
resolutions.
Authority to Amend the Investment Policy
Resolution 12 will, if approved, authorise the Directors to amend the
Investment Policy, and specifically, to amend the investment restriction
in respect of any single investment so that the Company’s interest in
any single listed investment will not, on acquisition, exceed 20% of Net
Assets plus Borrowings.
12. THAT the Directors be and they are hereby authorised to amend
the Investment Policy as set out in the Appendix to this notice of
Annual General Meeting.
Authority to Allot Shares and Disapply Pre-Emption Rights
Resolutions 13 and 14 will, if approved, authorise the Directors to allot
a limited number of ordinary shares (or 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 at the
latest practicable date of this document. 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 no less than 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 be to enhance NAV per ordinary share.
13. 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 £544,011 (approximately 10% of the aggregate
nominal amount of the issued share capital of the Company
(including Treasury shares) at the latest practicable date of this
document) 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.
14. THAT, subject to the passing of Resolution 13, 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 13 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 £544,011
(approximately 10% of the aggregate nominal amount of
the issued share capital of the Company (including Treasury
shares) at the latest practicable date of this document); and
b) by the condition that allotments of equity securities or sales
of Treasury shares may only be made pursuant to this
authority at a price of not less than the NAV per ordinary
share
and this power shall expire at the conclusion of the next AGM
of the Company or the date 15 months after the passing of
this resolution, whichever is the earlier, save that this authority
shall allow the Company to make offers or agreements before
the expiry of this authority, and the Directors may allot equity
securities in relation to such an offer or agreement as if the
authority conferred by this resolution had not expired.
Authority to Repurchase Shares
Resolution 15 is a special resolution which, if approved, will renew
the Company’s authority to purchase up to 14.99% of the number
of ordinary shares in issue (excluding Treasury shares) at the latest
practicable date of this document, or, if different, at the date of passing
of the resolution, either for cancellation or for retention as Treasury
Notice of Meeting
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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 Directors and within guidelines set by them from
time to time 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.
15. 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 1 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 68,711,399 or, if different, such number
as represents 14.99% of the Company’s issued ordinary
share capital (excluding shares held in treasury) at the date
of the passing of this resolution;
b) the minimum price (excluding expenses) which may be paid
for an ordinary share is 1 pence;
c) the maximum price (excluding expenses) which may be paid
for each share is the higher of:
(i) 5% above the average of the middle market quotations
for the shares as derived from the London Stock
Exchange Official List for the five business days
preceding the date of purchase; and
(ii) the higher of the price of the last independent trade
and the highest current independent 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 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.
Any shares purchased pursuant to this authority shall, as the
directors may determine, either be (i) cancelled or (ii) held in
treasury for subsequent sale, transfer or cancellation.
Authority to call General Meetings on 14 clear days’ notice
Resolution 16 is a special resolution to provide the Company with
authority to call general meetings (other than annual general
meetings) on 14 clear days’ notice. The Directors believe that the
flexibility provided by this resolution is beneficial to the Company when
dealing with any matters that require the prompt consideration by
shareholders. This authority would only be used in circumstances where
the Board considers it appropriate to do so, taking into account the
circumstances of the business to be considered at the relevant general
meeting.
16. THAT a general meeting (other than an annual general meeting)
of the Company may be called on not less than 14 clear days’
notice, provided that this authority shall expire at the conclusion of
the next annual general meeting of the Company.
Adoption of New Articles of Association
Resolution 17 is a special resolution that relates to the adoption
of new Articles of Association by the Company to make changes
in relation to Directors’ fees and other clarificatory, administrative
and technical changes, as described further in the Directors’
Report on page 42.
17. THAT with effect from the passing of this resolution, the draft
Articles of Association produced to the meeting and, for
the purpose of identification, initialled by the Chairman, be
adopted as the Articles of Association of the Company in
substitution for, and to the exclusion of, the existing Articles of
Association of the Company.
By Order of the Board
FIL Investments International
Secretary
8 June 2026
Notice of Meeting continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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 Investor Centre at
https://uk.investorcentre.mpms.mufg.com/, you will need to
log in to your Investor Centre 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. Alternatively,
shareholders can vote via the Investor Centre app, which is a free
app for smartphone and tablet provided by MUFG Corporate
Markets (the company’s Registrar). It allows you to securely
manage and monitor your shareholdings in real time, take part
in online voting, keep your details up to date, access a range of
information including payment history and much more. The app is
available to download on both the Apple App Store and Google
Play, or by scanning the relevant QR code below.
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 on Friday,
17 July 2026. Completion and return of the form of proxy will not
prevent a shareholder from subsequently attending the meeting
and voting in person or virtually 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, MUFG Corporate Markets, 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 (in each case
excluding non-business days).
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. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures
described in the CREST Manual. CREST personal members or
other CREST sponsored members, and those CREST members
who have appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a CREST Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & International Limited’s
specifications and must contain the information required for such
instruction, as described in the CREST Manual (available via
www.euroclear.com). The message, regardless of whether it
constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in order to
be valid, be transmitted so as to be received by the Company’s
registrars (ID: RA10) by the latest time(s) for receipt of proxy
appointments specified in Note 3 above. For this purpose, the time
of receipt will be taken to be the time (as determined by the time
stamp applied to the message by the CREST Application Host) from
which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time, any
change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors
or voting service providers should note that Euroclear UK &
International Limited does not make available special procedures
in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting
service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting service
providers are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system and
timings (www.euroclear.com).
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001 (as amended).
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 on Friday, 17 July 2026 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 voting,
Proxymity or any other electronic voting channel 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
Friday, 17 July 2026. Shareholders are urged to vote using the
Form of Proxy provided or electronically where permitted by your
nominee or platform.
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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 to vote and ask
questions via the platform, shareholders will need to connect to
the following site https://meetings.lumiconnect.com/100-346-
066-599. 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 tablet,
smartphone or computer.
Once you have accessed https://meetings.lumiconnect.
com/100-346-066-599 from your device, you will 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. You can also obtain this by contacting MUFG
Corporate Markets, 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 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 available on the Company’s pages of the Manager’s
website at: www.fidelity.co.uk/china.
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 MUFG Corporate Markets 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 MUFG Corporate
Markets, 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://meetings.
lumiconnect.com/100-346-066-599 from your web browser on a
tablet, smartphone or computer, 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 09:00 to 17:30 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 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
Friday, 17 July 2026. 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 the latest practicable date prior to the publication of this
document, the Company’s issued share capital consisted of
544,011,131 ordinary shares carrying one vote each. The number
of shares held by the Company in Treasury was 85,629,548.
Therefore, the total number of shares with voting rights in the
Company was 458,381,583.
14. Any corporation which is a member can appoint one or more
corporate representatives 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
Notice of Meeting continued
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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/china.
Registered office: Beech Gate, Millfield Lane, Lower Kingswood,
Tadworth, Surrey KT20 6RP.
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The updated Investment Policy for the Company, as proposed
in resolution 12 on page 97 of the Notice of Meeting, is set out
below. Changes are marked in blackline and underscored. No
amendments are being proposed to be made to the Investment
Objective, however this is also set out below for completeness.
INVESTMENT OBJECTIVE
The Company’s investment objective is to achieve long-term
capital growth from an actively managed portfolio made up
primarily of securities issued by companies in China, both listed
and unlisted, as well as Chinese companies listed elsewhere. The
Company may also invest in companies with significant interests
in China.
INVESTMENT POLICY
The Company invests in a diversified portfolio consisting primarily
of securities issued by companies in China, both listed and
unlisted, as well as Chinese companies listed elsewhere. The
Company may also obtain exposure to other listed companies
that have significant interests in China.
The Company may invest through equities, index linked, equity
linked and other debt securities, cash deposits, money market
instruments, foreign currency exchange transactions, equity
related securities, forward transactions and other interests
including derivative instruments. Forward transactions and
derivatives, including futures, options and contracts for difference,
may be used to enhance portfolio performance as well as for
efficient portfolio management and hedging. The Company’s
interest in any single listed investment will not, on acquisition,
exceed 15
20 per cent. of Net Assets plus Borrowings.
The Investment Manager is not required to ensure that the
Company’s cash resources are fully invested at all times.
Accordingly, there may be times when the Company holds cash
or money market instruments pending investment.
The Company may invest in China “A” Shares both directly
through the Investment Manager’s Qualified Foreign Institutional
Investor (“QFII”) license and indirectly through third parties who
have a QFII facility.
Unlisted Investments
The Company is able to invest up to 15 per cent. of Net Assets
plus Borrowings, at the time of investment, in unlisted securities
which carry on business, or have significant interests, in China.
Borrowing and Gearing Policy
The Board considers that long-term capital growth can be
enhanced by the judicious use of borrowing. The Board is
responsible for the Company’s gearing strategy with day-to-day
decisions being made by the Investment Manager within the
remit set by the Board in line with the borrowing and gearing
policy.
The Company may borrow up to 25 per cent. of Net Assets,
and the Gross Asset Exposure of the Company, whether from
borrowing or the use of derivatives, may not exceed the Net
Assets of the Company by more than 30 per cent. The Portfolio
Manager is responsible for operating within these limits.
CHANGES TO INVESTMENT OBJECTIVE AND INVESTMENT
POLICY
No material change will be made to the Company’s Investment
Objective and Investment Policy without the prior approval by
ordinary resolution of shareholders and the approval of the FCA.
Appendix to Notice of Meeting
INVESTMENT POLICY (UPDATED)
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FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
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”), a
European Union Directive first implemented on 22 July 2014, and
as retained and adapted under UK domestic law post Brexit.
Alternative Performance Measures
The Company uses the following Alternative Performance
Measures which are all defined in this Glossary:
• 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 or
Ordinary 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).
Auditor
The Company’s independent Auditor is PricewaterhouseCoopers
LLP.
Benchmark Index
MSCI China Index total return (in UK sterling terms) and is a
composite of China “A”, “B“, “H“, “Red Chip“ and “P Chip“ share
classes and foreign listings (e.g. ADRs).
Broker
The Company’s Broker is Jefferies International Limited.
Capital Gains Tax (CGT)
The tax that may be payable if shares are sold at a profit.
China “A” Shares
China “A” Shares are securities of companies incorporated in
mainland China that trade on either the Shanghai or Shenzhen
stock exchanges and trade in Chinese renminbi. They can only
be traded by residents of the PRC, or for foreign investors via
the Qualified Foreign Institutional Investor (QFII) programme, the
Renminbi Qualified Foreign Institutional Investor (RQFII) rules or
Stock Connect programs.
China “B” Shares
China “B” Shares are securities of companies incorporated
in mainland China that trade on either the Shanghai Stock
Exchange (in US dollars) or the Shenzhen Stock Exchange (in
Hong Kong dollars). They can be traded by international investors
and also residents of the PRC with appropriate foreign currency
dealing accounts.
China “H” Shares
China “H” Shares are securities of companies incorporated in
mainland China that trade on the Hong Kong Stock Exchange
in Hong Kong dollars. Like other securities trading on the Hong
Kong Stock Exchange, there are no restrictions to who can trade
in China “H” Shares.
Chinese Renminbi
Currency of the PRC.
Chinese Stock Exchanges
The Shanghai Stock Exchange, the Shenzhen Stock Exchange and
any other stock exchange located within the PRC from time to time.
Chinext
ChiNext is a NASDAQ-style subsidiary of the Shenzhen Stock
Exchange for innovative and fast-growing companies, especially
high-tech companies. It started trading in October 2009. The
MSCI added stocks trading on Shenzhen’s ChiNext board to its
indexes for the first time in May 2019, allowing foreign investors
to tap the tech-focused board by investing in the indexes.
Collateral
Asset provided as security for the unrealised gain or loss under a
contract for difference.
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.
Glossary to the Annual Report
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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.
Debt
Bank borrowings and long contracts for difference. The Company
does not currently have any bank loans.
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.
Discount
If the share price of the Company is lower than the net asset
value per ordinary share, the Company is said to be trading at a
discount. The discount is shown as a percentage of the net asset
value per ordinary share.
Earnings
The earnings generated in a given period from investments:
• Revenue Earnings – reflects the dividends and interest from
investments and other income, net of expenses, finance costs
and taxation;
• Capital Earnings – reflects the return on capital, excluding
any revenue earnings; and
• Total Earnings – reflects the aggregate of revenue and
capital earnings.
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 carrying value in the Statement of Financial Position which
represents the amount that would be received or paid on
disposal of the financial asset or liability.
FIL Limited
The ultimate parent company of the FIL Group of companies.
Fidelity International (Fidelity)
FIL Limited and its subsidiary group companies including
FIL Investment Services (UK) Limited and FIL Investments
International which act as AIFM and Secretary and FIL Investment
Management (Hong Kong) Limited which acts as the Investment
Manager.
Forward Contract
An agreement to buy or sell a currency, commodity or other asset
at a specified future date and at a predetermined price.
Future
An agreement to buy or sell a fixed amount of an asset at a fixed
future date and a fixed price.
Gearing in Attribution Analysis
The table on page 24 uses an overlay-based attribution, including
calculating the daily excess exposure created by CFDs/gearing,
appyling that exposure to the benchmark return and deducting
financing and transaction costs.
Gross Asset Exposure
The value of the portfolio (or, where the context requires, an
investment within 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 held by the Company but excluding forward
contracts).
Gross Gearing
The amount by which Gross Asset Exposure exceeds
Shareholders’ Funds, expressed as a percentage of Shareholders’
Funds.
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. For the purposes
of calculating Gross Asset Exposure, the exposure attributed to
the hedge positions will be deducted from the exposure of the
corresponding long positions. Short positions are added to long
positions in arriving at the Gross Asset Exposure.
Index Linked Securities
Debt instruments whose return on investment is linked to changes
in interest rates, stock exchanges, or other price indices.
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 Investment Management (Hong Kong) Limited.
Glossary to the Annual Report continued
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
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Annual Report 2026
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Fidelity China Special Situations PLC
FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Management Agreement
The agreement between FIL Investment Management (Hong
Kong) Limited and the Company regarding the management of
the Company’s investments.
Manager
FIL Investment Services (UK) Limited is the appointed
Manager under the AIFMD and has delegated the investment
management of the Company to the Investment Manager.
MSCI China Index
The Benchmark Index of the investment performance of the
Company, in UK sterling terms.
MSCI China Mid Cap Index
The MSCI China Mid Cap Index is designed to measure the
performance of the mid cap segments of the Chinese markets.
With 331 constituents, the index covers approximately 15% of the
free float-adjusted market capitalisation in China.
MSCI China Small Cap Index
The MSCI China Small Cap Index is a free-float adjusted
market capitalization weighted index designed to measure the
performance of equity securities in the bottom 14% by market
capitalisation of the Chinese equity securities markets.
NASDAQ
A global electronic marketplace for buying and selling securities.
NAV or Net Assets or Net Asset Value
The net assets attributable to the Company’s shares, calculated in
accordance with the Company’s usual accounting policies.
Net Assets plus Borrowings
The Company’s Net Asset Value plus the value of its outstanding
bank loans.
Net Asset Value per Ordinary Share
The net asset value divided by the number of ordinary shares in
issue.
Net Gearing
The amount by which Net Market Exposure exceeds
Shareholders’ Funds, expressed as a percentage 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
Total operating expenses (excluding finance costs and taxation)
incurred by the Company as a percentage of the average daily
net asset values for the reporting year.
Option
An option is a contract which gives the right but not the
obligation to buy or sell an underlying asset at an agreed price
on or before an agreed date. Options may be calls (buy) or puts
(sell) and are used to gain or reduce exposure to the underlying
asset on a conditional basis.
P Chips
Companies controlled by mainland China individuals, with the
establishment and origin of the company in mainland China.
PChips are incorporated outside of the PRC and traded on the
Stock Exchange of Hong Kong with a majority of revenues or
assets derived from mainland China.
Portfolio
The Company’s portfolio which may be made up of equities,
index linked securities, equity linked notes and other debt
securities, cash deposits, money market instruments, foreign
currency exchange transactions and other interests including
derivatives (such as futures, options and contracts for difference).
Portfolio Manager
Dale Nicholls is the appointed Portfolio Manager of the Company
and is responsible for managing the Company’s assets.
PRC
The People’s Republic of China.
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.
QFII
The Investment Manager is a QFII (a Qualified Foreign
Institutional Investor) and as such has been granted a QFII
licence by the China Securities Regulatory Commission (“CSRC”)
which permits the Company to invest in China “A” Shares through
the Investment Manager.
Red Chips
Companies incorporated outside of mainland China that trade
on the Hong Kong Stock Exchange. Red Chips derive the majority
of revenue or assets from the PRC and are substantially owned,
directly or indirectly, by mainland China state entities.
Registrar
An entity that manages the Company’s shareholder register.
The Company’s Registrar is MUFG Corporate Markets (name
changed from Link Group on 20 January 2025).
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Reserves
• Share premium account represents the amount by
which the proceeds from the issue of ordinary shares
have exceeded the cost of those ordinary shares. It is not
distributable by way of dividends and it cannot be used to
fund share repurchases.
• Capital redemption reserve represents the nominal value
of ordinary shares repurchased and cancelled. It cannot be
used to fund share repurchases and is not distributable by
way of dividends.
• Other reserve is a distributable premium reserve created
on 21 April 2010 when High Court approval was given for
the share premium account to be cancelled. As a result,
£452,232,000 was transferred from the share premium
account to the other reserve. 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 can be used to
fund share repurchases and it is distributable by way of
dividends.
• Revenue reserve represents the net revenue surpluses
recognised in the revenue column of the Income Statement
that have not been distributed as dividends to shareholders.
It is distributable by way of dividends.
Secretary
FIL Investments International.
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 Statement of Financial
Position.
Short Stock Exposure
The position of the Company when it has sold a security or
derivative that it does not own but is now committed to eventually
purchase in order to satisfy its obligation to sell. It is a strategy
used to capitalise on an expected decline in the security’s or
derivative’s price.
Size Of Company (By Market Cap)
Large – above £5bn
Medium – between £1bn – £5bn
Small – below £1bn
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).
Total Shareholder Return
Total shareholder return is the total return of shares to
shareholders, or the capital gains, plus dividends paid.
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.
Unlisted Companies
Companies not listed on a regulated stock exchange. They
are stated at best estimate of fair value, based on recognised
valuation techniques which may take account of recent arm’s
length transactions in the investments.
Variable Interest Entity (VIE)
A variable interest entity (VIE) structure is designed to facilitate
foreign investment in sectors of the Chinese domestic economy
which prohibit foreign ownership. The essential purpose of the
VIE structure is to convey the economic benefits and operational
control of ownership without direct equity ownership itself. As the
controlling interest is not based on having the majority of voting
rights, there may be a risk to an investor of being unable to
enforce their ownership rights in certain circumstances.
Variable Management Fee (VMF)
The Company has a Variable Management Fee (VMF)
structure. The base fee is on a tiered basis of 0.85% on the first
£1.5 billion of Net Assets, reducing to 0.65% on Net Assets over
£1.5 billion per annum plus a +/- 0.20% variation fee based on
performance relative to the Company’s Benchmark Index (the
MSCI China Index). The maximum fee that the Company could
pay if it outperforms is 1.05% on Net Assets up to £1.5 billion
and reducing to 0.85% on Net Assets over £1.5 billion, but if the
Company underperforms against the Benchmark Index, then the
overall fee could have been as low as 0.65% on Net Assets up to
£1.5 billion, reducing to 0.45% on Net Assets over £1.5 billion.
Warrants
A derivative security that gives the Company the right to purchase
securities (usually equity) from the issuer at a specific price and
within a certain time frame.
Glossary to the Annual Report continued
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2026
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Fidelity China Special Situations PLC
FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Investing in Fidelity China Special Situations PLC
Fidelity China Special Situations 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 a 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/china.
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 MUFG Corporate Markets, Registrar to Fidelity China
Special Situations PLC, Central Square, 29 Wellington Street,
Leeds LS1 4DL.
Email: shareholderenquiries@cm.mpms.mufg.com
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 Investor Centre at
https://uk.investorcentre.mpms.com. Shareholders are able to
manage their shareholding via the Investor Centre app. 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 Investor Centre,
contact the helpline on +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).
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: 0207 961 4240
Email: investmenttrusts@fil.com
Website: www.fidelity.co.uk/its
If you hold Fidelity China Special Situations 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.
Shareholder Information
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Fidelity China Special Situations PLC
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Annual Report 2026
Managers and Advisors
Alternative Investment Fund Manager
(AIFM/the Manager)
FIL Investment Services (UK) Limited
Beech Gate
Millfield Lane
Lower Kingswood
Tadworth
Surrey
KT20 6RP
Investment Manager
FIL Investment Management
(Hong Kong) Limited
Level 21
Two Pacific Place
88 Queensway
Admiralty
Hong Kong
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 (London Branch)
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
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Lawyer
Simmons & Simmons LLP
1 Ropemaker Street
London
EC2Y 9SS
Registrar
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds
LS1 4DL
Company Information
The Company’s initial public offering was on 19 April 2010. The
original subscription price for each share was £1. The Company
also issued “C” shares of £1 each on 1 March 2011 and these
were subsequently converted into new ordinary shares.
The Company is a member of the Association of Investment
Companies (“AIC”) from whom general information on investment
trusts can be obtained by telephoning 020 7282 5555 (email
address: enquiries@theaic.co.uk).
Price Information
The share price of the Company 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/china
Investors can also obtain current share 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
from other telephone networks may vary). The Reuters Code
for Fidelity China Special Situations PLC is FCSS, the SEDOL is
B62Z3C7 and the ISIN is GB00B62Z3C74.
Net Asset Value (“NAV”) Information
The Company’s NAV is calculated and released to the London
Stock Exchange on a daily basis.
Shareholder Information continued
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
109
Annual Report 2026
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Fidelity China Special Situations PLC
FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Data Protection
General Data Protection Regulation (“GDPR”)
What personal data is collected and how it is used
The Company is an investment trust which is a public limited company and has certain regulatory obligations such as the
requirement to send documents to its shareholders, for example, the Annual Report and other documents that relate to meetings
of the Company. The Company will therefore collect shareholders’ personal data such as names, addresses and identification
numbers or investor codes and will use this personal data to fulfil its statutory obligations.
Any personal data collected will be kept securely on computer systems and in some circumstances on paper. Personal information
is kept secure in line with Fidelity’s Information Security policies and standards. If you are unhappy with how we have used your
personal data, you can complain by contacting the UK Data Protection Officer at Fidelity International, Beech Gate, Millfield Lane,
Lower Kingswood, Tadworth, Surrey KT20 6RP.
Sharing personal data
In order to assist the Company in meeting its statutory requirements, the Company delegates certain duties around the processing
of this data to its third-party service providers, such as the Company’s Registrar and Printers. The Company has appointed
Fidelity to undertake marketing activities for the Company and their privacy statement can be found on the Company’s website at
https://investment-trusts.fidelity.co.uk/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 your personal data and other important information
Shareholders can access the information that the Company holds about them or ask for it to be corrected or deleted by contacting
Fidelity’s UK Data Protection Officer, Fidelity International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Fair treatment of investors
The legal and regulatory regime to which the Company and the Directors are subject ensures the fair treatment of investors. The
Listing Rules require that the Company treats all shareholders of the same class of shares equally. In particular, the Directors have
certain statutory duties under the Companies 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.
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2026
In compliance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Board has appointed FIL Investment
Services (UK) Limited (“FISL”) as the Company’s Alternative Investment Fund Manager (“AIFM”). FISL has delegated the investment
management to FIL Investment Management (Hong Kong) Limited (“FIMHK”) and the company secretarial function to FIL Investments
International. Details of the current Management Agreement can be found in the Directors’ Report on page 39.
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 Investment Management (Hong
Kong) Limited.
The Board remains responsible for setting the
investment strategy, investment policy and
investment guidelines and the AIFM operates
within these guidelines.
Details of the Company’s investment objective,
strategy and investment policy, including limits, are
on pages 26 and 27.
Risk
management
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,
remains responsible for the identification of
significant risks and for the ongoing review of the
Company’s risk management and internal control
processes.
The AIFM has an ongoing process for identifying,
evaluating and managing the principal risks faced
by the Company and this is regularly reviewed
by the Board. The Board remains responsible for
the Company’s system of risk management and
internal controls and for reviewing its effectiveness.
Further details can be found in the Strategic Report
on pages 28 to 33 and in Note 17 to the Financial
Statements on pages 80 to 92.
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 were subject to special arrangements arising
from their illiquid nature.
Alternative Investment Fund Manager’s
Disclosure
Job No: 105642 Proof Event: 12 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2026
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Fidelity China Special Situations PLC
FINANCIAL GOVERNANCEINFORMATION FOR SHAREHOLDERS STRATEGY
Function AIFM Role and Responsibility AIFMD Disclosure
Leverage
The Company uses leverage to increase its
exposure primarily to the stock markets of China
and currently holds long derivatives 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 of calculating leverage and 1.50 for the
Commitment Method.
At 31 March 2026, actual leverage was 1.60 for the
Gross Method and 1.46 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 83.
Remuneration
of the AIFM
The AIFM operates under the terms of Fidelity’s
Global Remuneration Policy Statement. This
ensures that the AIFM complies with the
requirements of the FCA’s Remuneration Code
(SYSC19A); the AIFM Remuneration Code
(SYSC19B) and the BIPRU Remuneration Code
(SYSC19C).
Details of Fidelity International’s Global Remuneration
Policy can be found at www.fidelityinternational.
com/global/remuneration/default.page
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, a European Union regulation which first came into force as on 12 January 2016, and as retained and adapted under
UK domestic law post Brexit.
As at 31 March 2026, 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) (3,026) (0.21%) – 3,791
HSBC Bank plc (UK) (7,159) (0.51%) – 6,139
J.P. Morgan Securities plc (UK) (8,604) (0.61%) – 6,688
Morgan Stanley & Co International (UK) (5,312) (0.38%) – 4,876
UBS AG (UK) (3,173) (0.22%) – 1,986
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 March 2026 from CFDs was a gain of £51,526,000.
Job No: 105642 Proof Event: 8 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Fidelity Project Title: FCSS Annual Report 2026 T: 0207 055 6500 F: 020 7055 6600
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Annual Report 2026