Half-year Report

Fidelity China Special Situations PLC

Half-Yearly results for the six months ended 30 September 2020 (unaudited)

Financial Highlights:

• The Company’s NAV and share price rose by +51.1% and +56.2% respectively, compared with a gain of +24.4% for the MSCI China Index (Benchmark Index)
• The portfolio continues to focus on ‘New’ China, consumption-related, technology, healthcare, and insurance sectors
• Exposure to unlisted companies continues to contribute to strong returns
• China remains on track to be the only major economy to grow in 2020
• The Board has agreed a new tiered fee from 1 April 2021 of 0.90% on the first £1.5b of net assets, reducing to 0.70% on net assets over £1.5b. The variable element remains unchanged.

Contacts

For further information, please contact:

Natalia de Sousa

Company Secretary

01737 837846

FIL Investments International

PORTFOLIO MANAGER’S HALF-YEARLY REVIEW

WHAT WAS THE PERFORMANCE OVER THE SIX MONTH INTERIM PERIOD?
Over the reporting period from 1 April 2020 to 30 September 2020, the Company’s share price rose by 56.2%, while the MSCI China Index (the Company’s Benchmark Index) rose by 24.4%. The Company’s NAV rose by 51.1% (all performance data on a total return basis).

WHAT WERE THE KEY PERFORMANCE DRIVERS OVER THE REVIEW PERIOD?
Among the greatest portfolio beneficiaries in the period under review were consumer-related stocks. The Company’s sizeable position in China MeiDong Auto Holdings was well rewarded in an environment which played to luxury brands (in China MeiDong’s case, BMW, Lexus and Porsche), after-sales services and generally improving car sales’ margins. In addition, exposure to Yadea Group Holdings, the largest two-wheeler e-bike manufacturer in China with around 25% market share, also delivered strong results. Upcoming new regulation in the e-bike market is driving replacement activity and COVID-19 has led to a shift away from public transport. Industry leader Yadea Group is positioned well to benefit from industry consolidation with its innovative and expanding product line-up.

In the materials sector, SKSHU Paint Company, one of China’s largest paint manufacturers, was also amongst the top portfolio contributors. Products include exterior architectural coating, interior household paint products and waterproofing materials. The paint business is an attractive industry, with solid margins, robust returns on capital and strong cash flow. Our participation in KE Holdings’ initial public offering (“IPO”) added value, with the company benefiting from expectations of market share gains through its franchise model and its integrated online and offline resource network. This leading Chinese property brokerage platform has strong pricing power as a result of its quality standards, a healthy future return profile and strong cash flow generation.

Conversely, not owning Meituan Dianping and JD.com negatively impacted relative returns, with both companies, which are well represented in the Index, continuing to perform well over the review period. Neither name appears in the portfolio quite simply because I think there are better opportunities from a risk and reward perspective elsewhere. Among the financial holdings, China Pacific Insurance Group detracted from returns as concerns over its recovery period and the turnover impact of COVID-19 continued to impact performance negatively.

HOW IS THE PORTFOLIO POSITIONED AND WHAT IS YOUR OUTLOOK?
My focus continues to be on the underlying value of companies assessed by their growth prospects, underlying competitive strengths and the quality of management teams. This has led to a bias towards smaller companies. I continue to believe that as long as these companies can execute and deliver on their strategies and grow earnings over the mid-term, this should be reflected in their share prices. I am pleased to see this is currently being reflected in the strong performance of the Company’s NAV. That said, it must be noted that this bias was detrimental to performance earlier in the year and over the previous year. The portfolio continues to focus on ‘New’ China and the sectors we believe have attractively priced growth prospects over the mid-term, such as the consumption-related, technology and healthcare sectors.

There remains considerable opportunity in the supply of consumer goods to Chinese households, especially when viewed relative to homes in other countries and the predilection for upgrading and premiumisation among Chinese consumers which remains a growing trend. Commentary on our top five holdings below.

A fertile space for new ideas has been the materials sector in China, which is among the top performing sectors over the review period. I am less interested in the pure commodity related players, but rather on companies with growing pricing power. China’s paint industry remains highly fragmented, and COVID-19 has helped to accelerate further industry consolidation which benefits industry leaders. Among these, I am focused on the winners in this area such as paint manufacturers SKHSU Paint Company and Asia Cuanon Technology and tile manufacturer Monalisa Group. Asia Cuanon Technology is another leading paint supplier that is seeing an improving business mix and margin expansion. Monalisa Group has strong relationships with diversified high-quality developers and the consolidation across that sector has helped to increase the company’s market share.

In the financials sector, I am especially interested in the insurance sub-sector given the still low penetration in ‘protection’ type life insurance areas. I believe the insurance sector could also, over time, see renewed demand coming out of COVID-19 as people focus more on protection in areas like health insurance. I have been raising exposure to Ping An Insurance, which among its key strengths, has superior agent productivity, leading technology and capable management. Furthermore, the company has continued to build a strong interconnected platform across the group that brings strong synergies in customer acquisition, cross-selling and data access, notably across the healthcare sector.

Given the strong run in markets since March 2020 (notably in technology, healthcare and staples sectors), it has been more challenging to find compelling opportunities. However, there are pockets of value on offer, especially among small cap companies. For example, many Hong Kong small cap stocks are trading at single-digit Price-to-Earnings (PE) ratios, with well established market positions and healthy cashflows. The Company has exposure to Crystal International Group, for instance, one of the largest garment manufacturers in the world. This company is expanding into the sportswear category by signing up clients such as Nike and Adidas.

Finally, as the Chinese market has rallied over the last six months, I have reduced slightly the portfolio’s net gearing. It was around 23% at the end of March 2020 and now stands at around 22%. As markets have gone up, valuations are less compelling, so I have reduced market exposure and have also selectively added to short positions. That said, I maintain a reasonably high level of gearing, still reflecting the significant value and opportunities I see in the market.

CAN YOU PROVIDE AN UPDATE ON THE UNLISTED POSITIONS?
The Company continues to be active in the unlisted domain. At the end of the period under review, the following unlisted names were held: ByteDance, DJI International, Pony.ai, SenseTime and Xiaoju Kuaizhi (Didi). In the reporting period, the valuation of ByteDance was increased by 27.4% in May and that of SenseTime by 93.2% in August. As at 30 September 2020, unlisted investments represented 4.7% of Gross Assets. Subsequent to the period end, the valuations of SenseTime and Pony.ai (both in November) were increased. On 24 November, the Company also invested in Full Truck Alliance, another unlisted company, at a cost of £12,078,000 (representing 0.6% of Gross Assets). We continue to evaluate opportunities, while maintaining a disciplined approach towards valuation.

WHAT ARE YOUR THOUGHTS ON THE CHINESE ECONOMY?
While there are variances between regions and sectors, overall, the economy continues to recover. Successful control of the COVID-19 virus has clearly been a factor supporting the China recovery. Small localised outbreaks within the China region were handled swiftly and have not dented the improving overall economic momentum.

This is reflected in China’s Purchasing Manager’s Index (“PMI”) which has recovered much sooner than other Asian countries.

The third quarter GDP growth figure of 4.9% was supported by stronger services and external demand. Key laggards in the service sector – travel and leisure – are now gaining momentum after restrictions were loosened in mid-July 2020. Government stimulus has clearly been a factor supporting the recovery, but on the whole has been more restrained and targeted than measures seen in most Western economies. Among supportive measures, the People’s Bank of China (“PBoC”) announced cuts in its re-lending and re-discount facilities to reduce funding costs for smaller firms and rural sectors. Separately, both the end of July 2020 Politburo economic meeting and the PBoC’s second quarter Monetary Policy Implementation Report confirmed that the monetary policy has turned towards a more neutral stance since May 2020, although the rollover of fiscal stimulus will continue. China remains on track to be the only major economy to grow in 2020.

HOW DO YOU VIEW THE US-CHINA RELATIONS AND WHAT IS THE IMPACT ON THE COMPANY?
Throughout the year, we have continued to see tensions rise between the US and China. I continue to believe that these tensions will be with us for decades to come. On the positive side, I believe this has become more of a consensus view and thus more “established” in markets. I would highlight that the Company remains focused on opportunities supported by ongoing structural shifts in China within the domestic economy and only has around 3% of revenue from underlying holdings exposed to the US. Chinese growth prospects remain attractive relative to its global peers in the West, and the policy impetus continues to favour domestic consumption drivers.

WHAT IS YOUR OUTLOOK FOR CAPITAL MARKET REFORM IN CHINA?

We continue to see an acceleration in capital market reforms in China; from the loosening of short-selling restrictions, the lowering of foreign investment restrictions and the implementation of a registration-based IPO mechanism. The registration-based IPO mechanism was launched last July on STAR Board and is now being employed on ChiNext.

In these markets, listing requirements are more flexible, such as alternative criteria on market cap, profitability, and allowing variable interest entity (VIE) structured companies to list. These were restricted under previous rules, so given this flexibility we could expect more technology/new economy companies listed on the A-share market. We have already seen more IPOs of A-share and Red chip companies this year, and it is probable that we will see more to come given the US issues and the more flexible listing requirements. For example, the Hong Kong Stock Exchange raised a total of HK$ 87.3 billion in the first half of 2020 from 59 new listings, marking a total increase of 22 percent in total funds raised compared with the same period last year*, and ensuring it maintained the top position in equity raising globally. Recent changes such as the removal of the QFII quota, the widening of the investment scope and the integration of the QFII and RMB QFII schemes will likely further boost inflows. The delay in Ant Group’s IPO could be viewed as a setback, but we believe the momentum is clearly in the direction of deregulation and the opening up of markets.

*  Source:https://home.kpmg/cn/en/home/news-media/press-releases/2020/06/hk-ipo-activity-remains-resilient-in-h1-2020.html

WHAT’S YOUR VIEW ON SUSTAINABLE INVESTING AND HOW DOES FIDELITY’S SYSTEM WORK?
Sustainable investing remains a core part of our investment process. We believe that high standards of corporate responsibility not only make good business sense, but have the potential to protect and enhance investment returns. Consequently, we integrate Environmental, Social and Governance (“ESG”) issues into our research and investment decision-making process and believe that these have the potential to affect the long-term value of investments. We favour engagement over exclusion as positive influences on corporate behaviour can add real value for companies, investors and society. The priority themes that have formed part of the Company’s recent ESG engagements include supply chain sustainability and corporate sustainability reporting.

Sportswear maker Li Ning is a good example of a company with whom we have consistently engaged on these issues. In 2018, our Sustainable Investing team initiated a thematic engagement on human rights and responsible sourcing in the supply chain within the apparel retail sector. Insufficient management of ESG factors in the supply chain opens companies up to reputational, operational and regulatory risk and the apparel industry is dominated by multi-tier supplier relationships with a lack of traceability and rapid market driven changes.

When we first engaged with Li Ning in late 2018, the company confirmed that it had assessment scorecards for each of its suppliers and that human rights had a 10% weighting of this assessment. The management team runs on-site assessments on each of their suppliers and if they are in serious breach of any human rights issues, then they will sever ties with that supplier. In relation to responsible sourcing, the team has an environmental management system for material suppliers, including requirements on waste, water, hazardous materials and greenhouse gas emissions. At the time of the meeting, we requested that the company considers reporting on its management of human rights in its supply chain as well as its responsible sourcing policies.

In our discussions with the company in the second quarter of 2020, management confirmed that their supplier monitoring had been updated on the back of our 2018 requests, and now includes a more detailed model which focuses (among other topics) on equal employment, forced labour, freedom of association, child labour and young workers.

The Li Ning team has also initiated audits on its tier 2 and 3 suppliers and has increased its disclosure in its 2019 Sustainability Report. With regard to the environmental footprint of its suppliers, the company increased its focus on EHS (Environmental, Health and Safety) compliance with national and local laws and NGO (non-government organization) requirements, which includes environmental management, and management of water resources, wastewater, air emission, solid waste, chemical and energy. In addition, in its 2019 Sustainability Report the team disclosed the total number of plants that had on-site audits in the year and the approval rate of potential suppliers. It confirmed that it will gradually report on the results of their audits and a summary of actions taken in the next three to five years according to its internal sustainability strategy.

Li Ning has done a commendable job integrating ESG factors and the company is set to progress further on this front.

A perennial and universal governance topic is capital allocation. In China, its pertinence is particularly acute for some State Owned Enterprises (“SOEs”) whose senior management often face a set of incentives that does not prioritise capital markets and investors. As a result, it is not uncommon to find companies with excess cash that would be better used by returning it to shareholders than being spent on projects with low returns. Encouragingly, with the SOE reform continuing apace and clear policy direction from the government for SOEs to adopt equity-based incentive plans, we are seeing a change of attitude among SOE senior management as evidenced through our engagement experience.

One example is that of China Merchants Energy Shipping, a Chinese state-owned tanker shipping company. In February, our shipping analyst and ESG specialist met with board members including the Chairman. We put forward our case for increasing the company’s dividend pay-out ratio, pointing to the improving business outlook and the much higher pay-out level of its global peers. The directors responded positively, and two months later raised its fiscal 2019 pay-out by 12 percentage points, which represented an increase of over a third from its previous level. Although the elevated pay-out still falls short of the global average, we see it as an encouraging step towards more effective capital allocation, especially considering how quickly the company responded to our suggestion.

Fidelity employs a proprietary sustainability rating process leveraging its internal research and interactions with corporates. Analysts assign an overall A to E rating (C being understood as the sector average) for each rated name on a sector relative basis. Based on Fidelity’s own ESG proprietary ratings, the Company (as at the end of October 2020) had over three-quarters of the portfolio invested in companies rated A, B and C. While the majority of the remainder are not yet rated, I would note that this unrated portion has consistently fallen as Fidelity continues to expand the depth of its ESG research coverage. I continue to believe our work in this area can be a source of alpha generation for the Company going forward, especially for the few D-rated companies in the portfolio which have good potential for improving these scores. Other cases would include those where we reach different conclusions to the market consensus, which is not uncommon with ESG data in many of the well-known indices often out of date.

OUTLOOK
I remain positive about the value on offer in the Chinese stock market and my team and I try to ensure that we are best positioned to capitalise on these opportunities. In my view the recent closing of the discount between the share price and the NAV of the Company reflects a recognition of the positive earnings performance of the companies held in the portfolio, despite the virus and global economic and geopolitical challenges, as well as growing market confidence that they can continue to deliver on their potential. I continue to remain a shareholder in the Company in a personal capacity.

DALE NICHOLLS
PORTFOLIO MANAGER
7 November 2020

INTERIM MANAGEMENT REPORT AND DIRECTORS’ RESPONSIBILITY STATEMENT

UNLISTED COMPANIES
The Company is permitted to invest up to 10% of its Gross Assets in unlisted companies. As at 30 September 2020, the Company’s unlisted investments represented 4.7% of Gross Assets (31 March 2020: 6.0%). The number and value in US dollars of the unlisted investments remains unchanged from that at year end other than the valuation of ByteDance which was increased in May 2020 and that of SenseTime which was increased in August 2020. However, due to the increase in the valuation of the Company’s portfolio overall, the unlisted investments’ Gross Assets percentage is lower than that at the year end. Since the reporting period end, the valuations of SenseTime and Pony.ai were increased. In addition, on 24 November 2020 the Company invested in Full Truck Alliance, an unlisted company, at a cost of £12,078,000 (representing Gross Assets of 0.6%). Details are in Note 16 (Post Balance Sheet Event) below.

GEARING
The Company has a three-year unsecured fixed rate facility agreement with Scotiabank Europe PLC for US$100,000,000. The interest rate is fixed at 2.606% per annum until the facility terminates on 14 February 2023.

To achieve further gearing, the Company uses contracts for difference (“CFDs”) on a number of holdings in its portfolio.

At 30 September 2020, the Company’s gross gearing, defined as the Gross Asset Exposure in excess of Net Assets, was 26.0% (31 March 2020: 25.2%). The level of gross gearing is determined by the Manager within the limit set by the Company’s Prospectus of 30%. Net gearing which nets off short positions was 21.8% (31 March 2020: 23.2%).

DISCOUNT MANAGEMENT
The Board recognises that the Company’s share price is affected by the interaction of supply and demand in the market based on investor sentiment towards China and the performance of the NAV per share. The Board has a discount control policy in place whereby it seeks to maintain the discount in single digits in normal market conditions and will, subject to market conditions, repurchase shares with the objective of stabilising the share price discount within a single digit range.

The Company’s discount narrowed significantly from 8.6% at the start of the reporting period to 5.6% at the end of the reporting period. During this period, the Board authorised the repurchase of 23,345,560 ordinary shares into Treasury, representing 4% of the issued share capital of the Company. These share repurchases have benefited remaining shareholders as the NAV per share has been increased by purchasing shares at a discount. Since the end of the reporting period and as at the date of this report, the Company has not issued or repurchased any further ordinary shares for cancellation or into Treasury.

ONGOING CHARGES AND MANAGEMENT FEES
The Ongoing Charge (the costs of running the Company) for the six months ended 30 September 2020 was 0.98% (31 March 2020: 0.99%). The Ongoing Charge including the variable element was 0.98% (31 March 2020: 0.79%).

The Board has agreed a new fee arrangement with FIL Investment Services (UK) Limited, the Company’s Alternative Investment Fund Manager (the “Manager”), from 1 April 2021. The revised fee structure will be on a tiered basis of 0.90% on the first £1.5 billion of Net Assets reducing to 0.70% on Net Assets over £1.5 billion. The variable element from the current fee structure of +/- 0.20% will remain unchanged. In addition, the fixed annual fee of £100,000 for services other than portfolio management will be removed. Based on assets as at 30 September 2020, the revised fee would have reduced the Ongoing Charge by 0.05%.

BOARD OF DIRECTORS
Having served on the Board as a Director since the Company’s launch on 19 April 2010, Peter Pleydell-Bouverie stepped down from the Board at the conclusion of the Annual General Meeting (“AGM”) on 23 July 2020. This was in line with the Board’s succession plan. As Mr Pleydell-Bouverie’s replacement, Vanessa Donegan was appointed to the Board as a non-executive Director and also as Chairman of the Investment Committee on 1 September 2020. Mrs Donegan 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 twenty-one years and has extensive experience of marketing to retail and institutional clients across the globe. She is an independent non-executive director of Herald Investment Management Ltd., the JP Morgan Indian Investment Trust plc, the Invesco Asia Trust plc and the SSGA Luxembourg SICAV.

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 into the following categories: market, economic and geopolitical, investment performance, key person, discount control, gearing, cybercrime and pandemic risks. Other risks facing the Company include tax and regulatory and operational (third party service providers) risks. Information on each of these risks is given in the Strategic Report section of the Annual Report for the year ended 31 March 2020 which can be found on the Company’s pages of the Manager’s website at www.fidelity.co.uk/china.

These principal risks and uncertainties have not materially changed in the six months to 30 September 2020 and are equally applicable at the date hereof.

CORONAVIRUS (COVID-19)
The risks arising from COVID-19 are being kept under constant review by the Board and the Manager. 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 of the Company which means that no forced sales will need to take place to deal with any redemptions. Therefore, investments in the Company’s portfolio can be held over a longer time horizon.

The Manager has contingency plans in place to allow for the continuation of Fidelity’s operations and to look after the safety of its employees. It is keeping its business continuity plans and its operational resilience strategies under constant review and will take all reasonable steps to continue meeting its regulatory obligations and to assess operational risks, the ability to continue operating and the steps it needs to take to serve and support its clients, including the Board. For example, to enhance its resilience, the Manager has mandated work from home arrangements and implemented split team working for those whose work is deemed necessary to be carried out in the office. The Manager has also imposed self-isolation arrangements on staff in line with Government recommendations and guidance. The Company’s other third party service providers have also implemented similar measures to ensure business disruption can be kept to a minimum.

National lockdown measures started to ease in China from May 2020. While ‘in-person’ company meetings were paused, the Portfolio Manager and analysts continued to undertake a full schedule of virtual conversations with investee companies, which proved to be highly effective. Their access to corporates and industry experts remains as strong as ever. More recently, face-to-face meetings with companies have resumed where possible.

TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES
The Manager has delegated the Company’s investment management (other than investment management of unlisted securities) to FIL Investment Management (Hong Kong) Limited. It has delegated the investment management of the unlisted securities and the company secretariat function to FIL Investments International. Transactions with the Managers and related party transactions with the Directors are disclosed in Note 15 below.

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 in preparing these Financial Statements.

This conclusion also takes into account the Board’s assessment of the continuing risks arising from COVID-19.

BY ORDER OF THE BOARD.
FIL INVESTMENTS INTERNATIONAL
7 December 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 this Half-Yearly Report has been prepared in accordance with the International Accounting Standards 34: Interim Financial Reporting; and

b)  the Interim Management Report, including the Portfolio Manager’s Half-Yearly Review above, 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 7 December 2020 and the above responsibility statement was signed on its behalf by Nicholas Bull, Chairman.

TOP 5 HOLDINGS

1)  ALIBABA GROUP HOLDING (GROSS ASSET EXPOSURE: 15.6%; INDUSTRY: INFORMATION TECHNOLOGY; MSCI CHINA INDEX: 20.7%)

Alibaba is a leader in the e-commerce market in China. The company benefits from high barriers to entry along with strong pricing power, supported by a loyal merchant and consumer base.  The company has built a culture of continuous innovation and strong leadership,  enabling it to expand into new businesses and to increase its addressable market. The pandemic has accelerated the trend towards digitalisation, which was already a long- term driver of Alibaba’s e-commerce business growth. Alibaba’s cloud business is increasing as more corporates use its infrastructure to become digital ready.

2)  TENCENT HOLDINGS (GROSS ASSET EXPOSURE: 12.6%; INDUSTRY: CONSUMER DISCRETIONARY; MSCI CHINA INDEX: 14.2%)

Tencent runs the dominant social network in China, WeChat. The company has invested successfully to improve its user experience and as a consequence its user base continues to grow. Tencent has consolidated its leading position in internet gaming by mediating a merger between Chinese streaming platforms Huya and DouYu, leaders in the rapidly growing esports market. Tencent holds a controlling stake in the new company after completion of the merger.

3)  CHINA MEIDONG AUTO HOLDINGS (GROSS ASSET EXPOSURE: 5.2%; INDUSTRY: CONSUMER DISCRETIONARY; MSCI CHINA INDEX: 0.0%)

China MeiDong Auto enjoys the highest sales of luxury car brands (including BMW, Lexus and Porsche) in China. These brands continue to see strong demand, and while supply is constrained, leading dealers like China MeiDong Auto find themselves in prime position. In addition, the company is seeing growth in its growing high margin after-sales services which bode well for the company’s earnings growth.

4)  21VIANET (GROSS ASSET EXPOSURE: 3.8%; INDUSTRY: INFORMATION TECHNOLOGY; MSCI CHINA INDEX: 0.0%)

A key reason for holding 21Vianet in the portfolio is the strong demand for internet-data-centers (IDCs) in China. This trend is likely to remain in place driven by consumers’ increasing usage of the internet via mobile devices and growing demand for cloud and IT services from corporates. This accelerating trend towards digitalisation and cloud-based services will be a long-term driver of 21Vianet’s earnings growth.

5)  PING AN INSURANCE (GROSS ASSET EXPOSURE: 3.1%; INDUSTRY: FINANCIALS; MSCI CHINA INDEX: 2.6%)

Ping An stands out as a leading insurer in China, with its superior agent productivity, leading technology, and entrepreneurial management. The company has highly effective share incentive schemes to motivate management and core employees based on profit and other key performance measures. The incorporation of technology into operations facilitates cost reduction and efficiency improvement, and this has become Ping An’s core competitive edge against peers.

TWENTY LARGEST HOLDINGS AS AT 30 SEPTEMBER 2020

The Gross Asset Exposures shown below measure the exposure of the Company’s portfolio to market price movements in the shares 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 Balance Sheet. Where a contract for difference (‘CFD’) is held, the Fair Value reflects the profit or loss on the contract since it was opened and is based on how much the share price of the underlying shares has moved.

	Gross Asset Exposure		Fair  Value  £000
	£000	%1
Long Exposures – shares unless otherwise stated
Alibaba Group Holding (shares and long CFDs)
e-commerce group	281,999	15.6	233,679
Tencent Holdings (shares and long CFDs)
Internet, mobile and telecommunications service provider	228,615	12.6	166,613
China MeiDong Auto Holdings (shares and long CFD)
Automobile dealership and maintenance group	94,390	5.2	63,708
21Vianet Group
Internet and data center service provider	68,997	3.8	68,997
Ping An Insurance (long CFD)
Financial services company	56,649	3.1	(3,574)
WuXi AppTec (long CFDs)
Pharmaceutical, biopharmaceutical and medical device outsourcing provider	48,106	2.6	14,708
Hutchison China MediTech
Pharmaceutical and healthcare group	46,247	2.5	46,247
SKSHU Paint Company
Paint manufacturing company	45,345	2.5	45,345
China Pacific Insurance Group (long CFDs)
Insurance company	42,289	2.3	(13,405)
China Life Insurance Company (shares and long CFD)
Insurance company	37,068	2.0	5,244
Noah Holdings
Asset managers	35,389	2.0	35,389
Ctrip.com International
Travel services provider	30,810	1.7	30,810
Asia Cuanon Technology
Development, manufacturing and sales of decorated insulation products	30,600	1.7	30,600
Innovent Biologics (long CFDs)
Biopharmaceutical company	29,293	1.6	16,040
China Biologic Products Holdings
Blood plasma-based biopharmaceutical company	26,797	1.5	26,797
Monalisa Group
Manufacturer of ceramic products	25,638	1.4	25,638
Pony.ai (unlisted)
Developer of artificial intelligence and autonomous driving technology solutions	24,776	1.4	24,776
Zhejiang Dahua Technology
Provider of video surveillance products and services	24,539	1.4	24,539
Shenzhen Yuto Packaging Technology
High-end brand packaging solutions provider	23,920	1.3	23,920
New Oriental Education & Technology Group
Private educational services provider	23,638	1.3	23,638
	---------------	---------------	---------------
Twenty largest long exposures	1,225,105	67.5	889,709
Other long exposures	1,169,588	64.5	955,670
	=========	=========	=========
Total long exposures before hedges (138 holdings)	2,394,693	132.0	1,845,379
	=========	=========	=========
Less: hedging exposures
S&P/BNY Mellon China Select ADR Index (short CFD)	(8,803)	(0.5)	(349)
Hang Seng China Enterprises Index (future)	(84,826)	(4.6)	(726)
Hang Seng Index (future)	(23,302)	(1.3)	(389)
iShares FTSE A50 China Index ETF (put options)	(2,808)	(0.2)	218
Hang Seng China Enterprises Index (put options)	(27,994)	(1.5)	2,263
	---------------	---------------	---------------
Total hedging exposures	(147,733)	(8.1)	1,017
	=========	=========	=========
Total long exposures after the netting of hedges	2,246,960	123.9	1,846,396
	=========	=========	=========
Add: short exposures
Short CFDs (11 holdings)	37,498	2.1	946
	=========	=========
Gross Asset Exposure2	2,284,458	126.0
	=========	=========
Portfolio Fair Value3			1,847,342
Net liabilities excluding derivative investments			(34,161)
			=========
Net Assets			1,813,181
			=========

1  Gross Asset Exposure is expressed as a percentage of Net Assets.

2  Gross Asset Exposure comprises market exposure to investments of £1,721,038,000 plus market exposure to derivative instruments of £563,420,000.

3  Portfolio Fair Value comprises Investments of £1,721,038,000 plus derivative assets of £177,028,000 less derivative liabilities of £50,724,000 (per the Balance Sheet below).

FINANCIAL STATEMENTS

INCOME STATEMENT for the six months ended 30 September 2020

	Notes	six months ended 30 September 2020 unaudited			year ended 31 March 2020 audited			six months ended 30 September 2019 unaudited
		revenue  £000	capital  £000	total  £000	revenue  £000	capital  £000	total  £000	revenue  £000	capital  £000	total  £000
Revenue
Investment income	4	17,614	–	17,614	22,520	–	22,520	18,837	–	18,837
Derivative income	4	10,967	–	10,967	9,015	–	9,015	8,435	–	8,435
Other income	4	70	–	70	1,481	–	1,481	941	–	941
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Total income		28,651	–	28,651	33,016	–	33,016	28,213	–	28,213
		=======	=======	=======	=======	=======	=======	=======	=======	=======
Gains/(losses) on investments at fair value through profit or loss		–	441,177	441,177	–	(57,341)	(57,341)	–	(55,384)	(55,384)
Gains/(losses) on derivative instruments		–	166,289	166,289	–	(33,597)	(33,597)	–	(41,507)	(41,507)
Foreign exchange (losses)/gains on other net assets		–	(4,397)	(4,397)	–	3,634	3,634	–	6,195	6,195
Foreign exchange gains/(losses) on bank loans		–	2,879	2,879	–	(3,321)	(3,321)	–	(6,606)	(6,606)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Total income and gains/(losses)		28,651	605,948	634,599	33,016	(90,625)	(57,609)	28,213	(97,302)	(69,089)
		=======	=======	=======	=======	=======	=======	=======	=======	=======
Expenses
Investment management fees	5	(1,776)	(5,337)	(7,113)	(3,031)	(6,409)	(9,440)	(1,511)	(3,199)	(4,710)
Other expenses		(594)	–	(594)	(1,177)	–	(1,177)	(598)	–	(598)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Profit/(loss) before finance costs and taxation		26,281	600,611	626,892	28,808	(97,034)	(68,226)	26,104	(100,501)	(74,397)
Finance costs	6	(1,334)	(4,001)	(5,335)	(3,590)	(10,771)	(14,361)	(2,038)	(6,114)	(8,152)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Profit/(loss) before taxation		24,947	596,610	621,557	25,218	(107,805)	(82,587)	24,066	(106,615)	(82,549)
Taxation	7	(1,164)	459	(705)	(488)	–	(488)	(748)	259	(489)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Profit/(loss) after taxation for the period		23,783	597,069	620,852	24,730	(107,805)	(83,075)	23,318	(106,356)	(83,038)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Earnings/(loss) per ordinary share	8	4.55p	114.20p	118.75p	4.51p	(19.67p)	(15.16p)	4.24p	(19.36p)	(15.12p)
		=======	=======	=======	=======	=======	=======	=======	=======	=======

The Company does not have any income or expenses that are not included in the profit/(loss) after taxation for the period. Accordingly the profit/(loss) 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 and is prepared in accordance with IFRS. 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/(loss) and total comprehensive income is attributable to the equity shareholders of the Company. There are no minority interests.

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 30 SEPTEMBER 2020

	Notes	share  capital  £000	share  premium  account  £000	capital  redemption  reserve  £000	other  reserve  £000	capital  reserve  £000	revenue  reserve  £000	total  equity  £000
Six months ended 30 September 2020 (unaudited)
Total equity at 31 March 2020		5,713	211,569	914	307,049	710,565	37,237	1,273,047
Repurchase of ordinary shares	13	–	–	–	(58,558)	–	–	(58,558)
Profit after taxation for the period		–	–	–	–	597,069	23,783	620,852
Dividend paid to shareholders	9	–	–	–	–	–	(22,160)	(22,160)
		------------	------------	------------	------------	------------	------------	------------
Total equity at 30 September 2020		5,713	211,569	914	248,491	1,307,634	38,860	1,813,181
		=======	=======	=======	=======	=======	=======	=======
Year ended 31 March 2020 (audited)
Total equity at 31 March 2019		5,713	211,569	914	331,362	818,370	33,660	1,401,588
Repurchase of ordinary shares	13	–	–	–	(24,313)	–	–	(24,313)
(Loss)/profit after taxation for the year		–	–	–	–	(107,805)	24,730	(83,075)
Dividend paid to shareholders	9	–	–	–	–	–	(21,153)	(21,153)
		------------	------------	------------	------------	------------	------------	------------
Total equity at 31 March 2020		5,713	211,569	914	307,049	710,565	37,237	1,273,047
		=======	=======	=======	=======	=======	=======	=======
Six months ended 30 September 2019 (unaudited)
Total equity at 31 March 2019		5,713	211,569	914	331,362	818,370	33,660	1,401,588
Repurchase of ordinary shares	13	–	–	–	(1,006)	–	–	(1,006)
(Loss)/profit after taxation for the period		–	–	–	–	(106,356)	23,318	(83,038)
Dividend paid to shareholders	9	–	–	–	–	–	(21,153)	(21,153)
		------------	------------	------------	------------	------------	------------	------------
Total equity at 30 September 2019		5,713	211,569	914	330,356	712,014	35,825	1,296,391
		=======	=======	=======	=======	=======	=======	=======

BALANCE SHEET AS AT 30 SEPTEMBER 2020
COMPANY NUMBER 7133583

	Notes	30.09.20  unaudited  £000	31.03.20  audited  £000	30.09.19  unaudited  £000
Non-current assets
Investments at fair value through profit or loss	10	1,721,038	1,289,807	1,387,576
		--------------	--------------	--------------
Current assets
Derivative instruments	10	177,028	39,152	11,924
Amounts held at futures clearing houses and brokers		37,736	39,495	77,356
Other receivables	11	5,787	1,407	2,403
Cash at bank		6,320	38,523	29,224
		--------------	--------------	--------------
		226,871	118,577	120,907
		--------------	--------------	--------------
Current liabilities
Derivative instruments	10	(50,724)	(45,183)	(86,103)
Bank loans		–	–	(121,912)
Other payables	12	(6,584)	(9,855)	(4,077)
		--------------	--------------	--------------
		(57,308)	(55,038)	(212,092)
		--------------	--------------	--------------
Net current assets/(liabilities)		169,563	63,539	(91,185)
		========	========	========
Total assets less current liabilities		1,890,601	1,353,346	1,296,391
		========	========	========
Non–current liabilities
Bank loans		(77,420)	(80,299)	–
		--------------	--------------	--------------
Net assets		1,813,181	1,273,047	1,296,391
		========	========	========
Equity attributable to equity shareholders
Share capital	13	5,713	5,713	5,713
Share premium account		211,569	211,569	211,569
Capital redemption reserve		914	914	914
Other reserve		248,491	307,049	330,356
Capital reserve		1,307,634	710,565	712,014
Revenue reserve		38,860	37,237	35,825
		--------------	--------------	--------------
Total equity		1,813,181	1,273,047	1,296,391
		========	========	========
Net asset value per ordinary share	14	351.76p	236.27p	236.10p
		========	========	========

CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020

	six months  ended  30 September  2020  unaudited  £000	year ended  31 March  2020  audited  £000	six months  ended  30 September  2019  unaudited  £000
Operating activities
Cash inflow from investment income	14,444	21,465	17,372
Cash inflow from derivative income	11,079	9,004	8,118
Cash inflow from other income	70	1,481	941
Cash outflow from Directors' fees	(120)	(124)	(83)
Cash outflow from other payments	(6,855)	(10,377)	(5,250)
Cash outflow from the purchase of investments	(529,431)	(476,779)	(176,779)
Cash outflow from the settlement of derivatives	(27,290)	(154,858)	(50,061)
Cash inflow from the sale of investments	532,218	558,055	157,387
Cash inflow from the settlement of derivatives	62,383	57,544	11,717
Cash inflow from amounts held at futures clearing houses and brokers	1,759	41,956	4,095
	--------------	--------------	--------------
Net cash inflow/(outflow) from operating activities before servicing of finance	58,257	47,367	(32,543)
	========	========	========
Financing activities
Cash outflow from repayment of loan	–	(38,353)	–
Cash outflow from loan interest paid	(1,122)	(3,665)	(1,860)
Cash outflow from CFD interest paid	(3,758)	(10,595)	(6,445)
Cash outflow from short CFD dividends paid	(465)	(1,362)	(927)
Cash outflow from the repurchase of ordinary shares	(58,558)	(24,313)	(1,006)
Cash outflow from dividends paid to shareholders	(22,160)	(21,153)	(21,153)
	--------------	--------------	--------------
Cash outflow from financing activities	(86,063)	(99,441)	(31,391)
	--------------	--------------	--------------
Decrease in cash at bank	(27,806)	(52,074)	(63,934)
Cash at bank at the start of the period	38,523	86,963	86,963
Effect of foreign exchange movements	(4,397)	3,634	6,195
	--------------	--------------	--------------
Cash at bank at the end of the period	6,320	38,523	29,224
	========	========	========

NOTES TO THE FINANCIAL STATEMENTS

1 PRINCIPAL ACTIVITY
Fidelity China Special Situations 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 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 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this Half-Yearly Report have not been audited or reviewed 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 March 2020 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 ACCOUNTING POLICIES
(i) Basis of Preparation

These Half-Yearly Financial Statements have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting and use the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 31 March 2020. Those Financial Statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), to the extent that they have been adopted by the European Union, the Companies Acts that apply to companies reporting under IFRS, IFRC interpretations and, as far as it is consistent with IFRS, 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.

(ii) Going Concern

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors consider it appropriate 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 continuing risks arising from COVID-19.

4 INCOME

	six months  ended  30.09.20  unaudited  £000	year ended  31.03.20  audited  £000	six months  ended  30.09.19  unaudited  £000
Investment income
Overseas dividends	16,964	22,333	18,837
Overseas scrip dividends	650	187	–
	--------------	--------------	--------------
	17,614	22,520	18,837
	--------------	--------------	--------------
Derivative income
Dividends received on long CFDs	10,776	8,047	7,920
Interest received on CFDs	191	968	515
	--------------	--------------	--------------
	10,967	9,015	8,435
	--------------	--------------	--------------
Other income
Interest received on collateral and deposits	70	1,481	941
	--------------	--------------	--------------
Total income	28,651	33,016	28,213
	========	========	========

Special dividends of £nil (year ended 31 March 2020: £1,822,000 and six months ended 30 September 2019: £nil) have been recognised in capital. 

5 INVESTMENT MANAGEMENT FEES

	Revenue  £000	Capital  £000	Total  £000
Six months ended 30 September 2020 (unaudited)
Investment management fee – base	1,776	5,328	7,104
Investment management fee – variable*	–	9	9
	--------------	--------------	--------------
	1,776	5,337	7,113
	--------------	--------------	--------------
Year ended 31 March 2020 (audited)
Investment management fee – base	3,031	9,094	12,125
Investment management fee – variable*	–	(2,685)	(2,685)
	--------------	--------------	--------------
	3,031	6,409	9,440
	--------------	--------------	--------------
Six months ended 30 September 2019 (unaudited)
Investment management fee – base	1,511	4,532	6,043
Investment management fee – variable*	–	(1,333)	(1,333)
	--------------	--------------	--------------
	1,511	3,199	4,710
	========	========	========

*  For the calculation of the variable management fee element, the Company’s NAV return was compared to the Benchmark Index return for the period from 1 July 2018 to the relevant reporting dates.

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 and FIL Investments International (“the Investment Managers”). They are all Fidelity group companies.

The Company charges base investment management fees at an annual rate of 0.90% of net assets. In addition, there is a +/-0.20% variation fee based on the Company’s NAV per share performance relative to the Company’s Benchmark Index. Fees are payable monthly in arrears and are calculated on a daily basis.

6 FINANCE COSTS

	Revenue  £000	Capital  £000	Total  £000
Six months ended 30 September 2020 (unaudited)
Interest on bank loans and overdrafts	278	834	1,112
Interest paid on CFDs	940	2,818	3,758
Dividends paid on short CFDs	116	349	465
	--------------	--------------	--------------
	1,334	4,001	5,335
	--------------	--------------	--------------
Year ended 31 March 2020 (audited)
Interest on bank loans and overdrafts	876	2,628	3,504
Interest paid on CFDs	2,374	7,121	9,495
Dividends paid on short CFDs	340	1,022	1,362
	--------------	--------------	--------------
	3,590	10,771	14,361
	--------------	--------------	--------------
Six months ended 30 September 2019 (unaudited)
Interest on bank loans and overdrafts	470	1,410	1,880
Interest paid on CFDs	1,336	4,009	5,345
Dividends paid on short CFDs	232	695	927
	--------------	--------------	--------------
	2,038	6,114	8,152
	========	========	========

7 TAXATION

	Revenue  £000	Capital  £000	Total  £000
Six months ended 30 September 2020 (unaudited)
UK corporation tax	459	(459)	–
Overseas taxation	705	–	705
	--------------	--------------	--------------
Taxation charge for the period	1,164	(459)	705
	--------------	--------------	--------------
Year ended 31 March 2020 (audited)
UK corporation tax	–	–	–
Overseas taxation	488	–	488
	--------------	--------------	--------------
Taxation charge for the year	488	–	488
	--------------	--------------	--------------
Six months ended 30 September 2019 (unaudited)
UK corporation tax	259	(259)	–
Overseas taxation	489	–	489
	--------------	--------------	--------------
Taxation charge for the period	748	(259)	489
	========	========	========

8 EARNINGS/(LOSS) PER ORDINARY SHARE

	six months  ended  30.09.20  unaudited	year ended  31.03.20  audited	six months  ended  30.09.19  unaudited
Revenue earnings per ordinary share	4.55p	4.51p	4.24p
Capital earnings/(loss) per ordinary share	114.20p	(19.67p)	(19.36p)
	---------------	---------------	---------------
Total earnings/(loss) per ordinary share	118.75p	(15.16p)	(15.12p)
	=========	=========	=========
The earnings/(loss) per ordinary share is based on the profit/(loss) after taxation for the period divided by the weighted average number of ordinary shares held outside Treasury during the period, as show below:
	£000	£000	£000
Revenue profit after taxation for the period	23,783	24,730	23,318
Capital profit/(loss) after taxation for the period	597,069	(107,805)	(106,356)
	-----------------	-----------------	-----------------
Total profit/(loss) after taxation for the period	620,852	(83,075)	(83,038)
	==========	==========	==========
	number	number	number
Weighted average number of ordinary shares held outside Treasury	522,836,127	548,133,431	549,391,529
	==========	==========	==========

9 DIVIDEND PAID TO SHAREHOLDERS

	six months  ended  30.09.20  unaudited  £000	year ended  31.03.20  audited  £000	six months  ended  30.09.19  unaudited  £000
Dividend of 4.25 pence per ordinary share paid for the year ended 31 March 2020	22,160	–	–
Dividend of 3.85 pence per ordinary share paid for the year ended 31 March 2019	–	21,153	21,153
	--------------	--------------	--------------
	22,160	21,153	21,153
	========	========	========

No dividend has been declared for the six months ended 30 September 2020 (six months ended 30 September 2019: nil).

10 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 as disclosed in the Company’s Annual Report for the year ended 31 March 2020 (Accounting Policies Notes 2(l) and (m) on pages 62 and 63). The table below sets out the Company’s fair value hierarchy:

30 September 2020 (unaudited)	level 1  £000	level 2  £000	level 3  £000	total  £000
Financial assets at fair value through profit or loss
Investments – shares	1,628,744	3,518	88,776	1,721,038
Derivative instrument assets	2,482	174,546	–	177,028
	--------------	--------------	--------------	--------------
	1,631,226	178,064	88,776	1,898,066
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(1,115)	(49,609)	–	(50,724)
	--------------	--------------	--------------	--------------
Financial liabilities at fair value
Bank loan	–	(79,799)	–	(79,799)
	========	========	========	========

31 March 2020 (audited)	level 1  £000	level 2  £000	level 3  £000	total  £000
Financial assets at fair value through profit or loss
Investments – shares	1,208,661	–	81,146	1,289,807
Derivative instrument assets	4,849	34,303	–	39,152
	--------------	--------------	--------------	--------------
	1,213,510	34,303	81,146	1,328,959
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(3,173)	(42,010)	–	(45,183)
	--------------	--------------	--------------	--------------
Financial liabilities at fair value
Bank loan	–	(82,687)	–	(82,687)
	========	========	========	========

30 September 2019 (unaudited)	level 1  £000	level 2  £000	level 3  £000	total  £000
Financial assets at fair value through profit or loss
Investments – shares	1,308,222	–	79,354	1,387,576
Derivative instrument assets	2,331	9,593	–	11,924
	---------------	---------------	---------------	---------------
	1,310,553	9,593	79,354	1,399,500
	--------------	--------------	--------------	--------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(349)	(83,278)	(2,476)	(86,103)
	--------------	--------------	--------------	--------------
Financial liabilities at fair value
Bank loan	–	(122,247)	–	(122,247)
	========	========	========	========

11 OTHER RECEIVABLES

	30.09.20  unaudited  £000	31.03.20  audited  £000	30.09.19  unaudited  £000
Securities sold for future settlement	2,991	274	407
Accrued income	2,740	1,037	1,939
Other receivables	56	96	57
	--------------	--------------	--------------
	5,787	1,407	2,403
	========	========	========

12 OTHER PAYABLES

	30.09.20  unaudited  £000	31.03.20  audited  £000	30.09.19  unaudited  £000
Securities purchased for future settlement	4,397	8,350	2,545
Investment management, secretarial and administration fees	1,628	782	782
Accrued expenses	559	723	750
	--------------	--------------	--------------
	6,584	9,855	4,077
	========	========	========

13 SHARE CAPITAL

	30 September 2020 unaudited		31 March 2020 audited		30 September 2019 unaudited
	number of  shares	£000	number of  shares	£000	number of  shares	£000
Issued, allotted and fully paid
Ordinary shares of 1 penny each held outside Treasury
Beginning of the period	538,809,043	5,388	549,574,480	5,496	549,574,480	5,496
Ordinary shares repurchased into Treasury	(23,345,560)	(233)	(10,765,437)	(108)	(480,000)	(5)
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
End of the period	515,463,483	5,155	538,809,043	5,388	549,094,480	5,491
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
Ordinary shares of 1 penny each held in Treasury*
Beginning of the period	32,545,437	325	21,780,000	217	21,780,000	217
Ordinary shares repurchased into Treasury	23,345,560	233	10,765,437	108	480,000	5
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
End of the period	55,890,997	558	32,545,437	325	22,260,000	222
	-----------------	-----------------	-----------------	-----------------	-----------------	-----------------
Total share capital		5,713		5,713		5,713
		==========		==========		==========

*  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 period, the Company repurchased 23,345,560 (year ended 31 March 2020: 10,765,437 and six months ended 30 September 2019: 480,000) ordinary shares and held them in Treasury. The cost of repurchasing these shares of £58,558,000 (year ended 31 March 2020: £24,313,000 and six months ended 30 September 2019: £1,006,000) was charged to the Other Reserve.

14 NET ASSET VALUE PER ORDINARY SHARE
The calculation of the net asset value per ordinary share is based on the following:

	30.09.20  unaudited	31.03.20  audited	30.09.19  unaudited
Net assets	£1,813,181,000	£1,273,047,000	£1,296,391,000
Ordinary shares held outside Treasury	515,463,483	538,809,043	549,094,480
Net asset value per ordinary share	351.76p	236.27p	236.10p
	=============	=============	=============

It is the Company’s policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share and, therefore, shares held in Treasury have no dilutive effect.

15 TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES
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 and FIL Investments International. They are all Fidelity group companies.

Details of the current fee arrangements are given in Note 5 above. During the period, management fees of £7,113,000 (year ended 31 March 2020: £9,440,000 and six months ended 30 September 2019: £4,710,000), and accounting, administration and secretarial fees of £50,000 (year ended 31 March 2020: £100,000 and six months ended 30 September 2019: £50,000) were payable to the Managers. Fidelity also provides the Company with marketing services. The total amount payable for these services was £109,000 (year ended 31 March 2020: £175,000 and six months ended 30 September 2019: £128,000). Amounts payable to the Managers at the Balance Sheet date are included in other payables and are disclosed in Note 12 above.

At the date of this report, the Board consisted of five non-executive Directors all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company.

The Chairman receives an annual fee of £42,000, the Audit and Risk Committee Chairman receives an annual fee of £32,000, the Chairman of the Unlisted Investment Committee receives an annual fee of £31,500, the Senior Independent Director receives an annual fee of £31,500 and the other Director receives an annual fee of £26,500. The following members of the Board hold ordinary shares in the Company at the date of this report: Mike Balfour 65,000 shares, Nicholas Bull 110,804 shares, Elisabeth Scott 19,819 shares and Linda Yueh 2,318 shares.

16 POST BALANCE SHEET EVENT
Subsequent rounds of funding for SenseTime and Pony.ai, both unlisted companies, were finalised post period end. As a result, in November 2020, the valuation of SenseTime was increased by 15.8% from £17,713,000 to £20,508,000 and the valuation of Pony.ai was increased by 64.2% from £24,776,000 to £40,674,000. If both increases in value had been applied at 30 September 2020, the net assets of the Company would have increased by 1.03%.

On 24 November 2020, the Company invested in Full Truck Alliance, an unlisted company, at a cost of £12,078,000 which represented 0.6% of Gross Assets.

As at 30 November 2020, total unlisted investments represented 5.8% of Gross Assets.

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 30 September 2020 and 30 September 2019 has not been audited or reviewed by the Company’s Independent Auditor.

The information for the year ended 31 March 2020 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.fidelityinvestmenttrusts.com where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.