Half-year Report

FIDELITY ASIAN VALUES PLC
Half-Yearly Report for the 6 months ended 31 January 2020

PORTFOLIO MANAGER’S HALF-YEARLY REVIEW

PERFORMANCE REVIEW
Over the six-month period ended 31 January 2020, the net asset value (“NAV”) of Fidelity Asian Values PLC (the Company) fell by 13.2%, compared with a decline of 3.6% for the MSCI All Countries Asia ex Japan Index (net) total return (in Sterling terms) (the Company’s “Comparative Index”). Over the same period, the Company’s share price decreased by 15.0% (All figures are on a total return basis).

Six months is a relatively short period, and I do not consider short-term returns to be the most important measure; it is returns over the long-term that are key. That said, I am conscious that the Company’s NAV has underperformed the Comparative Index for all periods except for the time since I took over the management of the portfolio.

The foremost reason for this underperformance is that in the last three years the Company’s value style and bias towards small caps has been out of favour, as large growth stocks have strongly outperformed small cap value stocks.

As a reminder, my investment philosophy is focused on owning good quality businesses, run by competent management and buying them at a price which leaves enough margin of safety. Whenever markets get infatuated with a certain theme, it becomes harder for investors like me who focus primarily on intrinsic value. During my decade of managing money, I have been through a few cycles of under performance but this one has been more prolonged.

COMPANY AND COMPARATIVE INDEX RETURNS (AS AT 31 JANUARY 2020)

	Fidelity Asian Values  PLC NAV total return  (%)	Comparative Index  total return (%)
Tenure (since 1 April 2015)	+48.7	+47.2
3 Years	+4.0	+23.1
2 Years	-4.9	-3.0
1 Year	-3.4	+5.0
6 Months	-13.2	-3.6
	========	========

Source: Fidelity International.

KEY CONTRIBUTORS AND DETRACTORS OVER SIX MONTHS (AS AT 31 JANUARY 2020):

Order	Security	Average  Active Weight  (%)	Gain/Loss  (%)	Contribution   to Relative  Returns (%)
Top 5 Contributors
1	China Yongda Automobile Services Holdings	+1.1	+8.4	+0.3
2	Huaneng Renewables	+0.4	+38.3	+0.2
3	Zhongsheng Group	+0.6	+27.2	+0.2
4	AIA Group	-2.5	-9.6	+0.2
5	Granules India	+0.4	+25.6	+0.1
				--------------
	Total			+1.0
				========
Top 5 Detractors
1	PNB Housing Finance	+1.7	-43.6	-0.9
2	Samsung Electronics	-4.9	+16.4	-0.8
3	Taiwan Semiconductor Manufacturing Co.	-4.0	+28.7	-0.8
4	Alibaba Group	-5.5	+10.5	-0.7
5	Power Grid Corporation of India	+3.6	-20.1	-0.6
				--------------
	Total			-3.8
				========

Source: Fidelity International

Looking at the biggest five detractors, three of them are stocks we did not have a major holding in and their stock prices increased significantly (they show up as detractors because they are a large part of the index). This will always be the case with my index agnostic style. Historically, these errors of omission have been offset by stocks that we own which generate better returns. As the market has been focused on growth stocks during the last two years, it has meant that the businesses we own have continued to get cheaper.

The two stocks that I do own in the top five detractors deserve an explanation:

• PNB Housing Finance: It is the third largest housing finance company in India. I have had a significant position in non-banking finance companies in India with PNB Housing Finance being one of them. It is a well-run company trading at around 4 times price–earnings ratio as the business is facing some issues due to a slowdown in the housing market in India. I continue to believe these issues will be transient, and we own a stake in a well-run company at a very attractive price.

• Power Grid Corporation of India: Power Grid is India’s largest electricity transmission utility and earns a regulated return on equity of close to 15%. The company has grown earnings for the last 20 years, and in my opinion, it will continue to grow in the next 10 years. The market has ignored the stock as a boring utility company. I like this growth company as it trades at 7 times price-earnings ratio and it continues to be our largest position in the portfolio.

THOUGHTS ON THE CORONAVIRUS (COVID-19)
This is an unprecedented event for everyone, and investors are having to opine on a topic for which they are not trained. Even scientists and epidemiologists are not certain in terms of how things will unfold over the next few months. Having said that, undoubtedly the economic impact will be quite severe in the short-term on both demand and supply. Looking at current earnings forecasts is pointless given the fluidity of the situation. We can model scenarios but frankly the dispersion in outcomes makes them meaningless. There are a number of unknown factors. For example, as China emerges from its lockdown measures, could we have a second wave of infections? Factories cannot “work from home” so the risk of a resurgence in cases certainly exists. For the rest of the world, we do not know how long the lockdown must last and, once lockdowns are lifted, the degree of freedom of movement that will be allowed. It’s very difficult to forecast when the recovery will begin and whether it will be quick or long drawn.

My working assumptions are listed below. I would take these views with a pinch of salt as forecasting a pandemic is obviously beyond my core competence. I am by no means a trained epidemiologist.

• Short-term: The disease has now spread globally, and I would expect governments to be conservative in easing restrictions. I would expect a few waves or a continued (but controlled) flow of cases in most countries. This implies that the world economy will be on a hand brake until a medical remedy is found or nature takes a different course.

• Long-term: I think this will be contained – through natural causes or a vaccine. In two years’ time, it’s unlikely that there will be a significant impact on how the world functions. Some industries will change, some companies will fold; but on the whole the world should be able to return to normal.

• Economically, I expect earnings to get downgraded materially across most sectors. There will be disruption of both production and demand. Weak balance sheets should worsen, and we may see some bankruptcies of weak businesses.

• Unemployment rates will rise and will take time to bring back down. This will dampen the pace of recovery.

•   Falling mortgage rates and low oil prices will boost consumer spending as we recover. However, overall I expect heightened volatility until such time as things start to improve. Markets will react (maybe overreact) to every data point as forecasting disease patterns is beyond our circle of competence and every data point gets extrapolated.

The new economic reality due to COVID-19 has had an impact on our portfolio as well. Businesses we own will be impacted either due to lack of demand and/or due to lockdown of their facilities. Most businesses that we own have low levels of debt (actually most have net cash on their balance sheets) and will be able to weather the storm. They should come out in a stronger position (as weaker competitors either shut shop or are unable to invest in the business) as the economy stabilises. However, there are a few businesses which cannot endure zero revenues. As a result, I have made the following changes to the portfolio:

• Sold out businesses which, even though they had a reasonable balance sheets, will not be able to endure the fixed cost burden during a lockdown. These were a small part of the portfolio (at about 1-2% of total assets).

• Increased the average quality of businesses that we own. There are businesses which I have known and admired for a long time, but which were historically not available at attractive prices. During this sell down, they came to prices which made sense to me and I have decided to invest in them. I have funded some of these by selling some existing holdings where I felt the stock market had not reflected the damage caused by COVID-19. I am taking this opportunity to increase the quality of the portfolio without sacrificing our value discipline.

INVESTMENT STRATEGY AND OUTLOOK
 

The Company’s performance over the last nine months has been subdued and worse than the market returns. I am unable to explain market sentiment of many stocks – both in the portfolio and the market in general. There has been a dominance of growth companies, momentum strategy and stocks that fit a narrative (Technology, Bio-tech, Chinese Consumer, etc).

Stocks which are ignored or cheap, have become even more ignored. At times, the narrative of the stock market is different from the reality of business. This is true for value equities currently and cheap stocks have underperformed severely, with the valuation dispersion expanding further in the last few months. On a relative basis, the last time small cap value stocks were this cheap was in 1999!

My process of focusing on undiscovered stocks which have good underlying businesses, are well managed and available on cheap prices has been out of fashion and a headwind for performance. This is not an excuse but a reflection of how investment sentiment has worked over recent years.

Having said that, I have the utmost faith in my process. The most time-tested way of investing is to own good businesses, run by competent and honest managements and buy them at attractive prices. Avoiding bubbles and unsustainable valuations is key to long-term compounding, no matter how painful it is in the short-term.

Over time, the quality of business and valuations will matter.

The long-term value of any business will be driven by the cash flow it generates. Short-term market opinion on the value of a business should be meaningless except its impact on investor psychology (mine and yours) and unless we are forced to transact at these depressed valuations.

I am happy with the portfolio of companies we own – both the quality and price at which we own them. On average, we own vastlysuperior businesses versus the market and at significantly cheaper prices. This gives me confidence of robust returns in the future.

It has been a testing 9 months in terms of performance, but market fashions should not drive an investment philosophy. I look forward to what markets have to offer over the next three to five years and, in the meantime continue to work to find good businesses, run by good management teams and try to buy them at good prices.

INTERIM MANAGEMENT REPORT

COMPARATIVE INDEX
As mentioned in the Chairman’s Statement in the Annual Report for the year ended 31 July 2019, and effective from 1 February 2020, the Company has changed its Comparative Index from the MSCI All Countries Asia ex Japan Index (net) total return (in Sterling terms) to the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in Sterling terms). The Company is able to invest in companies of any size of capitalisation in order to achieve its objective of long-term capital growth principally from the stockmarkets of the Asian Region excluding Japan. The Portfolio Manager, Nitin Bajaj, looks to find investments in strong businesses which are run by trustworthy people and available to buy at a reasonable price. Therefore, the universe of investments available is not constrained by the size of a company or by its weighting in any comparative index. However, smaller companies are favoured by the Portfolio Manager as they provide an opportunity to find mispriced businesses, the “winners of tomorrow”, before they become well-known. Therefore, the Board considered that adopting a smaller companies Comparative Index was more appropriate. This change was approved by the shareholders at the Annual General Meeting held on 6 December 2019.

ASSOCIATION OF INVESTMENT COMPANIES (“AIC”) SECTOR CLASSIFICATION
With the change in the Comparative Index, the Company is now part of the AIC’s Asia Pacific Smaller Companies sub-sector. The Board believes that this is the most appropriate peer group for the Company against which performance is measured.

BOARD CHANGES AND SUCCESSION PLANNING
It has been agreed that Philip Smiley will retire from the Board with effect from 30 April 2020. The Board would like to thank him for his excellent contribution to the Company during his tenure and wish him well in the future. Tim Scholefield will succeed him as Senior Independent Director with effect from 1 May 2020.

MANAGEMENT FEE
The Company has had a variable management fee structure in place since 1 August 2018. It uses a Comparative Index against which the variable element of the management fee is calculated. The change to the Comparative Index from the MSCI All Countries Asia ex Japan Index (net) total return (in Sterling terms) to the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in Sterling terms) from 1 February 2020 has no impact to any fees accrued until the date of the change. However, any over or under performance will be measured against the new Comparative Index with effect from 1 February 2020 (the start of the second half of the Company’s reporting year). The performance of the portfolio is expected to correspond more closely to the new Comparative Index over time, which should lead to reduced volatility in the amount of the variable management fee.

BONUS ISSUE OF SUBSCRIPTION SHARES
The Company issued 3,081,455 ordinary shares of 25 pence on 2 December 2019 (effective date of 29 November 2019) in respect of shares arising on the exercise of the conversion rights attached to subscription shares. Following the final exercise date of 29 November 2019, the conversion rights attached to 8,021,575 subscription shares remained unexercised and as per paragraph 8(f) of Part 4 of the Prospectus published by the Company on 26 October 2016, a Final Subscription Trustee was appointed. The Final Subscription Trustee determined that the net proceeds of sale after deduction of all costs and expenses incurred by, and any fee payable to, the Final Subscription Trustee would not have exceeded the costs of exercising the outstanding 8,021,575 subscription share rights. Therefore, these outstanding subscription share rights lapsed on 13 December 2019 with nil value. The Final Subscription Trustee’s decision in this respect is final and binding on all holders of outstanding subscription shares.

SHARES ISSUED
The Company’s shares have mostly traded at a premium in the six months to 31 January 2020 and the Board authorised the issue of 265,981 ordinary shares from the Company’s existing block listing facility during the reporting period. Issuing shares increases the size of the Company, making it more liquid and allowing for costs to be spread out over a larger asset base. Since then and as at the date of this report, no additional ordinary shares have been issued.

SHARE REPURCHASES AND TREASURY SHARES
Repurchases of ordinary shares are made at the discretion of the Board and within guidelines set by it from time to time and in light of prevailing market conditions. Shares will only be repurchased when it results in an enhancement to the NAV of the ordinary shares for the remaining shareholders. In order to assist in managing the discount, the Board has shareholder approval to hold in Treasury any ordinary shares repurchased by the Company, rather than cancelling them. Any shares held in Treasury would only be re-issued at NAV per ordinary share or at a premium to NAV per ordinary share.

As the Company’s shares have mostly been trading at a premium in the six months to 31 January 2020, no ordinary shares were repurchased for cancellation or for holding in Treasury in the reporting period. However, since mid-February 2020, there has been an unprecedented level of turmoil in the world’s financial markets and the Company’s premium/discount has been extremely volatile in reaction to such market conditions. As a result, the Board took the decision to repurchase 41,294 shares into Treasury on 27 March 2020. This was the first buyback the Company has undertaken in nearly 6 years. At the time of writing, the Board is pleased to report that the discount to NAV per ordinary share has narrowed considerably and, at times, since 27 March 2020, the Company has been trading at a small premium.

PRINCIPAL RISKS AND UNCERTAINTIES
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 risks and uncertainties faced by the Company.

The Board considers that the principal risks and uncertainties faced by the Company continue to fall to the following categories: market, economic and political risk; investment performance risk; key person risk; discount control risk; gearing risk; derivatives risk; currency risk; and cybercrime risk. Other risks facing the Company include tax and regulatory risks; and operational (service providers) risks. Information on each of these risks can be found in the Strategic Report section of the Annual Report for the year ended 31 July 2019 and can be found on the Company’s pages of the Manager’s website at www.fidelityinvestmenttrusts.com.

These principal risks and uncertainties have not materially changed in the six months to 31 January 2020. However, since mid February 2020, the wide spread of the Coronavirus (COVID-19) has had a significant impact on markets and is clearly an additional uncertainty, the implications of which the Board is actively considering both for the short and longer-term.

Investors should be prepared for market fluctuations and remember that holding shares in the Company should be considered to be a long-term investment. These risks are somewhat mitigated by the investment trust structure which means no forced sales of any portfolio holdings will need to take place in order to deal with any redemptions. Therefore, investments can be held over a longer time horizon.

The Board has received confirmation from the Manager that in in light of the Coronavirus (COVID-19) outbreak, its contingency plans have so far operated effectively and remain under continual review. The Manager has, in line with Government rules, mandated work from home arrangements, implemented split team working for those whose work is deemed necessary to be carried out in the office, and imposed self-isolation arrangements on staff as appropriate. The Company’s other third-party service providers have also confirmed the implementation of similar measures to ensure business disruption is minimised to the extent possible.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company’s portfolio management and the role of Company Secretary to FIL Investments International. Transactions with the Manager and related party transactions with the Directors are disclosed in Note 12.

GOING CONCERN
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 (being mainly securities which are readily realisable) and its expenditure and cash flow projections and have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these Financial Statements. This conclusion also takes into account the Board’s assessment of the risks arising from the Coronavirus (COVID-19).

Continuation votes are held every five years and the next continuation vote will be put to shareholders at the Annual General Meeting in 2021.

BY ORDER OF THE BOARD.

FIL INVESTMENTS INTERNATIONAL

28 April 2020

DIRECTORS’ RESPONSIBILITY STATEMENT

The Disclosure and Transparency Rules (“DTR”) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

a)  the condensed set of Financial Statements contained within the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council’s Standard, FRS 104: Interim Financial Reporting; and

b)  the Interim Management Report, together with the Portfolio Manager’s Half-Yearly Review, includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

The Half-Yearly Report has not been audited or reviewed by the Company’s Independent Auditor.

The Half-Yearly Report was approved by the Board on 28 April 2020 and the above responsibility statement was signed on its behalf by Kate Bolsover, Chairman.

TWENTY LARGEST HOLDINGS AS AT 31 JANUARY 2020

The Gross Asset Exposures shown below measure exposure to market price movements as a result of owning shares and derivative instruments. The Balance Sheet Value is the actual value of the portfolio. Where a contract for difference (“CFD”) is held, the Balance Sheet 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 share has moved.

	Gross Asset Exposure		Balance  Sheet  Value  £000
	£000	%1
Long Exposures – shares unless otherwise stated
Power Grid Corporation of India
Operator of the Indian national electricity grid	10,107	3.5	10,107
	--------------	--------------	--------------
Shriram Transport Finance
Provider of hire purchase and lease finance for medium and heavy commercial vehicles	8,534	3.0	8,534
	--------------	--------------	--------------
Redington India
Distributor of information technology products, mobile handsets and accessories	7,817	2.7	7,817
	--------------	--------------	--------------
Fufeng Group (shares and long CFD)
Bio-fermentation products manufacturer	5,800	2.0	5,571
	--------------	--------------	--------------
Cromwell European Real Estate Investment Trust
Real estate investment company	5,489	1.9	5,489
	--------------	--------------	--------------
BOC Aviation (shares and long CFD)
Global aircraft operating leasing company	5,188	1.8	3,721
	--------------	--------------	--------------
Cebu Air
Airline operator	5,126	1.8	5,126
	--------------	--------------	--------------
Xingda International Holdings
Manufacturer and producer of radial tire cords, bead wires and other wires	5,111	1.8	5,111
	--------------	--------------	--------------
China Yongda Automobiles Services Holdings
Investment holding company engaged in the sale of passenger vehicles and provision of related services	5,053	1.8	5,053
	--------------	--------------	--------------
Tianneng Power International
Manufacturer of storage batteries	4,854	1.7	4,854
	--------------	--------------	--------------
Sinopec Kantons Holdings
Operator of crude oil loading and unloading, storage and transportation facilities, oil and petrochemical trading	4,816	1.7	4,816
	--------------	--------------	--------------
Shriram City Union Finance
Financial service provider specialising in retail finance	4,713	1.6	4,713
	--------------	--------------	--------------
Shinhan Financial Group
Financial holding company	4,314	1.5	4,314
	--------------	--------------	--------------
Cikarang Listrindo
Electric power distribution company	4,190	1.5	4,190
	--------------	--------------	--------------
Arwana Citramulia
Ceramics manufacturer	4,113	1.4	4,113
	--------------	--------------	--------------
Dream International
Toy designer, manufacturer and seller	3,913	1.4	3,913
	--------------	--------------	--------------
Convenience Retail Asia
Convenience store chain operator	3,852	1.3	3,852
	--------------	--------------	--------------
Cognizant Technology Solutions
Provider of information technology, digital and technology services	3,629	1.3	3,629
	--------------	--------------	--------------
PTC India
Provider of power trading solutions in India	3,549	1.2	3,549
	--------------	--------------	--------------
Daewon Pharmaceutical
Manufacturer and seller of pharmaceutical products	3,484	1.2	3,484
	--------------	--------------	--------------
Twenty largest long exposures	103,652	36.1	101,956
	========	========	========
Other long exposures	180,914	63.1	169,469
	--------------	--------------	--------------
Total long exposures before hedges (145 holdings)	284,566	99.2	271,425
	========	========	========
Add: long futures
MSCI All Countries Asia ex Japan Index Future March 2020	9,062	3.2	(512)
	--------------	--------------	--------------
Add: hedging exposures
Forward Currency Contracts	33	–	33
	--------------	--------------	--------------
Total long exposures after the netting of hedges	293,661	102.4	270,946
	========	========	========
Add: short exposures
Short CFDs (10 holdings)	9,261	3.2	1,827
Short Futures (1 holding)	1,119	0.4	1
	--------------	--------------	--------------
Gross Asset Exposure2	304,041	106.0
	========	========
Portfolio Fair Value3			272,774
Net current assets (excluding derivative assets and liabilities)			14,171
			========
Total Shareholders’ Funds/Net Assets			286,945
			========

1  Gross Asset Exposure is expressed as a percentage of Total Shareholders’ Funds.

2  Gross Asset Exposure comprises market exposure to investments of £272,307,000 plus market exposure to derivative instruments of £31,734,000.

3  Portfolio Fair Value comprises Investments of £272,307,000 plus derivative assets of £2,230,000 less derivative liabilities of £1,763,000 (per the Balance Sheet).

FINANCIAL STATEMENTS

INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2020

	Notes	Six months ended 31 January 2020 unaudited			Six months ended 31 January 2019 unaudited			Year ended 31 July 2019 audited
		Revenue  £000	Capital  £000	Total  £000	Revenue  £000	Capital  £000	Total  £000	Revenue  £000	Capital  £000	Total  £000
(Losses)/gains on investments		–	(46,281)	(46,281)	–	(10,742)	(10,742)	–	16,606	16,606
Gains/(losses) on derivative instruments		–	1,786	1,786	–	1,159	1,159	–	(573)	(573)
Income	4	4,206	–	4,206	3,350	–	3,350	11,481	–	11,481
Investment management fees	5	(1,063)	55	(1,008)	(982)	(97)	(1,079)	(2,030)	(232)	(2,262)
Other expenses		(440)	–	(440)	(363)	–	(363)	(772)	(39)	(811)
Foreign exchange (losses)/gains		–	(528)	(528)	–	51	51	–	879	879
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Net return/(loss) on ordinary activities before finance costs and taxation		2,703	(44,968)	42,265	2,005	(9,629)	(7,624)	8,679	16,641	25,320
Finance costs		(358)	–	(358)	(349)	–	(349)	(678)	–	(678)
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Net return/(loss) on ordinary activities before taxation		2,345	(44,968)	(42,623)	1,656	(9,629)	(7,973)	8,001	16,641	24,642
Taxation on return/(loss) on ordinary activities	6	(324)	8	(316)	(272)	–	(272)	(492)	4	(488)
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Net return/(loss) on ordinary activities after taxation for the period		2,021	(44,960)	(42,939)	1,384	(9,629)	(8,245)	7,509	16,645	24,154
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Basic return/(loss) per ordinary share	7	2.75p	(61.15p)	(58.40p)	2.00p	(13.94p)	(11.94p)	10.70p	23.71p	34.41p
		========	========	========	========	========	========	========	========	========
Diluted return/(loss) per ordinary share	7	–	–	–	1.99p	(13.84p)	(11.85p)	10.58p	23.46p	34.04p
		========	========	========	========	========	========	========	========	========

The Company does not have any other comprehensive income. Accordingly, the net return/(loss) on ordinary activities after taxation for the period is also the total comprehensive income for the period and no separate Statement of Comprehensive Income has been presented.

The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.

No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 JANUARY 2020

	Notes	Share  capital  £000	Share  premium  account  £000	Capital  redemption  reserve  £000	Other non-  distributable  reserve  £000	Other  reserve  £000	Capital  reserve  £000	Revenue  reserve  £000	Total  shareholders’ funds  £000
Six months ended 31 January 2020 (unaudited)
Total shareholders’ funds at 31 July 2019		18,058	38,073	3,197	7,367	8,613	237,954	9,737	322,999
Net (loss)/return on ordinary activities after taxation for the period		–	–	–	–	–	(44,960)	2,021	(42,939)
Issue of ordinary shares on the exercise of rights attached to subscription shares	10	770	11,332	–	–	–	–	–	12,102
Issue of new ordinary shares	10	67	1,096	–	–	–	–	–	1,163
Dividend paid to shareholders	8	–	–	–	–	–	–	(6,380)	(6,380)
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Total shareholders’ funds at 31 January 2020		18,895	50,501	3,197	7,367	8,613	192,994	5,378	286,945
		========	========	========	========	========	========	========	========
Six months ended 31 January 2019 (unaudited)
Total shareholders’ funds at 31 July 2018		17,167	24,316	3,197	7,367	8,613	221,309	6,005	287,974
Net (loss)/return on ordinary activities after taxation for the period		–	–	–	–	–	(9,629)	1,384	(8,245)
Issue of ordinary shares on the exercise of rights attached to subscription shares	10	303	4,327	–	–	–	–	–	4,630
Dividend paid to shareholders	8	–	–	–	–	–	–	(3,777)	(3,777)
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Total shareholders’ funds at 31 January 2019		17,470	28,643	3,197	7,367	8,613	211,680	3,612	280,582
		========	========	========	========	========	========	========	========
Year ended 31 July 2019 (audited)
Total shareholders’ funds at 31 July 2018		17,167	24,316	3,197	7,367	8,613	221,309	6,005	287,974
Net return on ordinary activities after taxation for the year		–	–	–	–	–	16,645	7,509	24,154
Issue of ordinary shares on the exercise of rights attached to subscription shares	10	303	4,327	–	–	–	–	–	4,630
Issue of new ordinary shares	10	588	9,430	–	–	–	–	–	10,018
Dividend paid to shareholders	8	–	–	–	–	–	–	(3,777)	(3,777)
		--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Total shareholders’ funds at 31 July 2019		18,058	38,073	3,197	7,367	8,613	237,954	9,737	322,999
		========	========	========	========	========	========	========	========

BALANCE SHEET AS AT 31 JANUARY 2020

Company number 3183919

	Notes	31.01.20  unaudited  £000	31.07.19  audited  £000	31.01.19  unaudited  £000
Fixed assets
Investments	9	272,307	312,681	270,518
		--------------	--------------	--------------
Current assets
Derivative instruments	9	2,230	1,537	1,846
Debtors		718	3,325	2,427
Amounts held at futures clearing houses and brokers		1,670	2,905	1,944
Cash at bank		13,286	5,796	5,537
		--------------	--------------	--------------
		17,904	13,563	11,754
		--------------	--------------	--------------
Creditors
Derivative instruments	9	(1,763)	(2,192)	(886)
Other creditors		(1,503)	(1,053)	(804)
		--------------	--------------	--------------
		(3,266)	(3,245)	(1,690)
		--------------	--------------	--------------
Net current assets		14,638	10,318	10,064
		--------------	--------------	--------------
Net assets		286,945	322,999	280,582
		--------------	--------------	--------------
Capital and reserves
Share capital	10	18,895	18,058	17,470
Share premium account		50,501	38,073	28,643
Capital redemption reserve		3,197	3,197	3,197
Other non-distributable reserve		7,367	7,367	7,367
Other reserve		8,613	8,613	8,613
Capital reserve		192,994	237,954	211,680
Revenue reserve		5,378	9,737	3,612
		--------------	--------------	--------------
Total shareholders’ funds		286,945	322,999	280,582
		--------------	--------------	--------------
Net asset value per ordinary share	11	379.65p	447.16p	401.51p
		========	========	========
Diluted net asset value per ordinary share	11	–	439.91p	400.31p
		========	========	========

NOTES TO THE FINANCIAL STATEMENTS

1 PRINCIPAL ACTIVITY
Fidelity Asian Values PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock Exchange. The Company’s registration number is 3183919, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.

2 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this half-yearly financial report have not been audited by the Company’s Independent Auditor and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 (the “Act”). The financial information for the year ended 31 July 2019 is extracted from the latest published Financial Statements of the Company. Those Financial Statements were delivered to the Registrar of Companies and included the Independent Auditor’s Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Act.

3 BASIS OF PREPARATION
The Company prepares its Financial Statements on a going concern basis and in accordance with UK Generally Accepted Accounting Practice (“UK GAAP”) and FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. The Financial Statements are also prepared in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the Association of Investment Companies (“AIC”) in October 2019. FRS 104: Interim Financial Reporting has also been applied in preparing this condensed set of Financial Statements. The accounting policies followed are consistent with those disclosed in the Company’s Annual Report and Financial Statements for the year ended 31 July 2019.

4 INCOME

	six months  ended  31.01.20  unaudited  £000	six months  ended  31.01.19  unaudited  £000	Year  ended  31.07.19  audited  £000
Investment income
Overseas dividends	3,889	3,243	10,694
Overseas scrip dividends	45	–	370
	--------------	--------------	--------------
	3,934	3,243	11,064
	--------------	--------------	--------------
Derivative income
Dividends received on long CFDs	143	16	126
Interest received on short CFDs	97	55	201
	--------------	--------------	--------------
	240	71	327
	--------------	--------------	--------------
Other interest
Deposit interest	32	36	90
	--------------	--------------	--------------
Total income	4,206	3,350	11,481
	========	========	========

No special dividends have been recognised in capital during the period (six months ended 31 January 2019 and year ended 31 July 2019: £nil).

5 INVESTMENT MANAGEMENT FEES

	six months  ended  31.01.20  unaudited  £000	six months  ended  31.01.19  unaudited  £000	Year  ended  31.07.19  audited  £000
Investment management fees – base (charged to revenue)	1,063	982	2,030
Investment management fees – variable (charged to capital)	(55)	97	232
	--------------	--------------	--------------
	1,008	1,079	2,262
	========	========	========

FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International (“FII”). Both companies are Fidelity group companies.

From the 1 August 2018, the Company adopted a new fee arrangement which reduced the base management fee from 0.90% on the first £200 million of gross assets and 0.85% on gross assets over £200 million to 0.70% of net assets per annum. In addition, with effect from 1 November 2018, there is +/- 0.20% variation fee based on the NAV per share performance relative to the Comparative Index. Fees are payable monthly in arrears and are calculated on a daily basis.

6 TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES

	six months  ended  31.01.20  unaudited  £000	six months  ended  31.01.19  unaudited  £000	Year  ended  31.07.19  audited  £000
Revenue – taxation on overseas dividends	324	272	492
Capital – Indian capital gains tax received in the period	(8)	–	(4)
	--------------	--------------	--------------
Total taxation charge for the period	316	–	488
	========	========	========

7 RETURN/(LOSS) PER ORDINARY SHARE

	six months  ended  31.01.20  unaudited	six months  ended  31.01.19  unaudited	Year  ended  31.07.19  audited
Revenue return per ordinary share – basic	2.75p	2.00p	10.70p
Capital (loss)/return per ordinary share – basic	(61.15p)	(13.94p)	23.71p
	--------------	--------------	--------------
Total (loss)/return per ordinary share – basic	(58.40p)	(11.94p)	34.41p
	========	========	========
Revenue return per ordinary share – diluted	–	1.99p	10.58p
Capital (loss)/return per ordinary share – diluted	–	(13.84p)	23.46p
	--------------	--------------	--------------
Total (loss)/return per ordinary share – diluted	–	(11.85p)	34.04p
	========	========	========

The basic return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares in issue during the period.

	£000	£000	£000
Net revenue return on ordinary activities after taxation for the period	2,021	1,384	7,509
Net capital (loss)/return on ordinary activities after taxation for the period	(44,960)	(9,629)	16,645
	--------------	--------------	--------------
Net total (loss)/return on ordinary activities after taxation for the period	(42,939)	(8,245)	24,154
	========	========	========

	number	number	number
Weighted average number of ordinary shares in issue during the period	73,529,470	69,084,724	70,193,856
	=========	=========	=========

There is no diluted return/(loss) per ordinary share for the current period as all the subscription shares were exercised or cancelled (see Note 10 for further details).

In the prior period, the diluted return/(loss) per ordinary share reflected the notional dilutive effect that would have occurred if the rights attached to subscription shares had been exercised and additional ordinary shares had been issued. The net return/(loss) on ordinary activities after taxation for the period used in the diluted calculation was the same as those for the basic return/ (loss) above. These returns/(losses) were divided by the notional weighted average number of ordinary shares in issue during the period – 31 January 2019: 69,592,203 and 31 July 2019: 70,964,574. The number of shares reflected the additional number of ordinary shares that could have been purchased at the average ordinary share price for the period with the proceeds from the excess of the subscription share rights exercise price over the average ordinary share price.

8 DIVIDENDS PAID TO SHAREHOLDERS

	six months  ended  31.01.20  unaudited  £000	six months  ended  31.01.19  unaudited  £000	Year  ended  31.07.19  audited  £000
Dividend of 8.80 pence per ordinary share paid for the year ended 31 July 2019	6,380	–	–
Dividend of 5.50 pence per ordinary share paid for the year ended 31 July 2018	–	3,777	3,777
	--------------	--------------	--------------
	6,380	3,777	3,777
	========	========	========

No dividend has been declared in respect of the six months ended 31 January 2020.

9 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 valuation techniques using observable inputs other than quoted prices included within level 1
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 table below sets out the Company’s fair value hierarchy:

31 January 2020 (unaudited)	level 1  £000	level 2  £000	level 3 £000	Total £000
Financial assets at fair value through profit or loss
Investments	270,739	1,052	516	272,307
Derivative instrument assets	–	2,230	–	2,230
	--------------	--------------	--------------	--------------
	270,739	3,282	516	274,537
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(511)	(1,252)	–	(1,763)
	========	========	========	========

31 July 2019 (audited)	level 1  £000	level 2  £000	level 3  £000	Total  £000
Financial assets at fair value through profit or loss
Investments	311,753	386	542	312,681
Derivative instrument assets	85	1,194	258	1,537
	--------------	--------------	--------------	--------------
	311,838	1,580	800	314,218
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(463)	(1,729)	–	(2,192)
	========	========	========	========

31 January 2019 (unaudited)	level 1  £000	level 2  £000	level 3  £000	Total  £000
Financial assets at fair value through profit or loss
Investments	270,063	51	404	270,518
Derivative instrument assets	395	1,451	–	1,846
	--------------	--------------	--------------	--------------
	270,458	1,502	404	272,364
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(186)	(700)	–	(886)
	========	========	========	========

10 SHARE CAPITAL

	31 January 2020 unaudited		31 July 2019 audited		31 January 2019 unaudited
	number of  shares	£000	number of  shares	£000	number of  shares	£000
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside Treasury
	--------------	--------------	--------------	--------------	--------------	--------------
Beginning of the period	72,233,453	18,058	68,669,402	17,167	68,669,402	17,167
	--------------	--------------	--------------	--------------	--------------	--------------
Ordinary shares issued on the exercise of rights	3,081,455	770	1,213,003	303	1,213,003	303
New ordinary shares issued	265,981	67	2,351,048	588	–	–
	--------------	--------------	--------------	--------------	--------------	--------------
End of the period	75,580,889	18,895	72,233,453	18,058	69,882,405	17,470
	========	========	========	========	========	========

	31 January 2020		31 July 2019		31 January 2019
	number of shares	£000	number of shares	£000	number of shares	£000
Issued, allotted and fully paid
Subscription shares of 0.001 pence
	--------------	--------------	--------------	--------------	--------------
Beginning of the period	11,103,030	–	12,316,033	–	12,316,033	–
	--------------	--------------	--------------	--------------	--------------
Cancellation of subscription shares on the exercise of rights	(3,081,455)	–	(1,213,003)	–	(1,213,003)	–
Cancellation of subscription shares	(8,021,575)	–	–	–	–	–
	--------------	--------------	--------------	--------------	--------------
End of the period	–	–	11,103,030	–	11,103,030	–
	========	========	========	========	========	========
Total share capital		18,895		18,058		17,470
	========	========	========	========	========	========

A bonus issue of subscription shares to ordinary shareholders on the basis of one subscription share for every five ordinary shares held took place on 5 December 2016. Each subscription share gave the holder the right, but not the obligation, to subscribe for one ordinary share upon payment of the subscription price. The subscription price was based on the published unaudited NAV per ordinary share at 2 December 2016, plus a premium (rounded to the nearest quarter penny) depending upon the year in which the right was exercised. The subscription share rights could have been exercised annually in the 25 business days prior to the relevant subscription date (on which the exercise would take effect). The subscription dates, subscription prices and premiums were as follows:

	Exercise date	Exercise price	Premium
First exercise date	30 November 2017	370.75p	1%
Second exercise date	30 November 2018	381.75p	4%
Final exercise date	29 November 2019	392.75p	7%

After the final exercise date of 29 November 2019, the Company appointed a trustee to exercise any rights remaining that were not exercised by shareholders, providing that by doing so a profit could be realised. To realise a profit, the sale proceeds from selling the resulting ordinary shares in the market needed to be in excess of the 392.75 pence per share price of exercising the rights, plus any related expenses and fees. On 13 December 2019, the Board announced that the Trustee had not exercised any of the unexercised subscription rights of the 8,021,575 outstanding subscription shares. The Trustee determined that the net proceeds of the sale, after deduction of all costs and expenses, would not have exceeded the costs of exercising the subscription share rights. Therefore, all subscription share rights for the outstanding subscription shares lapsed with nil value.

During the period, the Company issued 3,081,455 ordinary shares (year ended 31 July 2019 and six months ended 31 January 2019: 1,213,003 shares) on the exercise of rights attached to subscription shares. The subscription share price of 392.75 pence per ordinary share issued represented a premium of 367.75 pence per share over the 25 pence nominal value of each share. The total premium received in the period on the issue of ordinary shares of £11,332,000 (year ended 31 July 2019 and six months ended 31 January 2019: £4,327,000) was credited to the share premium account.

The Company issued 265,981 new ordinary shares during the period (year ended 31 July 2019: 2,351,048 shares and six months ended 31 January 2019: nil). The total premium received in the period on the issue of new ordinary shares of £1,096,000 (year ended 31 July 2019: £9,430,000 and six months ended 31 January 2019: £nil) was credited to the share premium account.

11 NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of £286,945,000 (31 July 2019: £322,999,000 and 31 January 2019: £280,582,000) and on 75,580,889 (31 July 2019: 72,233,453 and 31 January 2019: 69,882,405) ordinary shares, being the number of ordinary shares of 25 pence each held outside of Treasury at the end of the period.

There is no diluted net asset value per ordinary share as all the subscription shares were exercised or cancelled during the period (see Note 10 for further details).

The diluted net asset value per ordinary share at 31 January 2019 and 31 July 2019 reflect the potential dilution in the net asset value per ordinary share if the rights of the 11,103,030 subscription shares in issue had been exercised at the next exercise date price of 392.75 pence per share. The basis of the calculation is in accordance with the guidelines laid down by the AIC.

12 TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management and the role of Company Secretary to FIL Investments International (“FII”). Both companies are Fidelity group companies.

Details of the fee arrangements are given in Note 5 above. During the period, management fees of £1,008,000 (six months ended 31 January 2019: £1,079,000 and year ended 31 July 2019: £2,262,000) and secretarial and administration fees of £38,000 (six months ended 31 January 2019: £38,000 and year ended 31 July 2019: £75,000) were payable to FII. At the Balance Sheet date, management fees of £130,000 (31 January 2019: £202,000 and 31 July 2019: £217,000) and secretarial and administration fees of £6,000 (31 January 2019: £6,000 and 31 July 2019: £6,000) were accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these services during the period was £64,000 (six months ended 31 January 2019: £64,000 and year ended 31 July 2019: £146,000). At the Balance Sheet date, marketing services of £24,000 (31 January 2019: £8,000 and 31 July 2019: £20,000) were accrued and included in other creditors.

As at 31 January 2020, the Board consisted of six non-executive Directors (as shown in the Directory of the Half-Yearly Report), all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company. The Chairman receives an annual fee of £36,000, the Audit Committee Chairman an annual fee of £30,000 and each other Director an annual fee of £26,000. As at the date of this report, the following members of the Board held shares in the Company: Kate Bolsover 15,452 ordinary shares, Clare Brady 2,500 ordinary shares, Timothy Scholefield 12,000 ordinary shares, Philip Smiley 2,500 ordinary shares, Grahame Stott 25,000 ordinary shares and Michael Warren, 10,000 ordinary shares.

The financial information contained in this Half-Yearly Results Announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 January 2020 and 31 January 2019 has not been audited or reviewed by the Company’s Independent Auditor.

The information for the year ended 31 July 2019 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

A copy of the Half-Yearly Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The Half-Yearly Report will also be available on the Company's website at www.fidelity.co.uk/asianvalues where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.

Contacts

For further information, please contact:

Natalia de Sousa - Company Secretary

01737 837846