C Share Offer and Publication of Prospectus

7 January 2011

Fidelity China Special Situations PLC

C Share Open Offer Placing and Offer and publication of Prospectus

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION,
RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE
SAME WOULD BE UNLAWFUL OR TO U.S. PERSONS.  THE INFORMATION CONTAINED HEREIN
DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE INCLUDING IN THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR TO U.S. PERSONS.

Proposed Issue of C Shares

The Board announces that the Company intends to raise up to £162.1 million net
of expenses, by way of an Open Offer, Offer for Subscription and Placing of up
to 166,250,000 C Shares at an issue price of 100p per C Share. The background
to and the reasons for the Issue and how investors can apply for C Shares are
set out in the Prospectus published today. The C Shares are being issued at
100p per C Share and then convert into Ordinary Shares of the Company as
described below. The Board is also proposing to increase the number of Ordinary
Shares that the Board may allot at its discretion to the number representing
10% of the Ordinary Shares in issue following Conversion.

The Company has today published a prospectus and a circular to Shareholders in
relation, inter alia, to this C Share issue which is available on the Company's
website www.fidelity.co.uk/china . A copy of the Prospectus has been submitted
to the National Storage Mechanism and will shortly be available for inspection
at www.Hemscott.com/nsm.do.

The proposals require the approval of Shareholders at a General Meeting to be
held at 25 Cannon Street, London, EC4M 5TA at 3 p.m. on Friday, 11 February
2011.


Background to and reasons for the Issue

The Company was launched on 19 April 2010 with the Board having the authority
to issue shares equal to 10% of the current share capital without pre-emption.
On this date the Company issued 460,000,000 Ordinary Shares. Since Initial
Listing, the Ordinary Shares have traded on average at a premium of over 6% to
the Net Asset Value per Ordinary Share. In order to meet demand notably from
regular investors, the Company has issued a further 38,750,000 Ordinary Shares
since the Initial Listing.

The Board believes that, despite the risks, China represents a compelling
investment opportunity. The C Share issue will provide all Shareholders with
the opportunity to increase their investment exposure to China.

The Board visited China in October 2010 and met with the senior management
teams of a number of companies in which the Company has invested and were
impressed by their enthusiasm, professionalism and aspirations for the future
of China. The Board also had the opportunity to spend time with the investment
team led by Anthony Bolton who are responsible for identifying investment
opportunities and this confirmed its confidence in investing in China over the
medium to long term.

The Board is delighted that Anthony Bolton has confirmed that he intends to
continue to manage investments for the Company until at least April, 2013.

Performance

Since Initial Listing, the Company has made an encouraging start, as
demonstrated by the Interim Results published on 16 November 2010.

In the period from 19 April to 30 December 2010, the Company's Net Asset Value
per Ordinary Share increased from 99.01p to 112.55p, an increase of 13.7 per
cent. This compares with a rise in the benchmark, the MSCI China Index, of 3.75
per cent. In the same period, the market price of the Ordinary Shares rose by
18 per cent. In the six months and the three months ending on 30 December the
NAV increased by 21.3 per cent and 6.8 per cent respectively in comparison with
increases in the benchmark of 8.3 per cent and 2.3 per cent.


The Board's Proposals

The Board has concluded that now is an appropriate time to expand the Company's
share capital by means of a pre-emptive issue of C Shares which involves:

• an Open Offer, Offer for Subscription and Placing of C Shares to raise up to
£162.1 million after expenses and at the same time authorise the Board to allot
the C Shares;

• the adoption of the New Articles to provide for the rights and restrictions
attaching to the C Shares; and

• an increase in the number of Ordinary Shares that can be issued by the
Company without further Shareholder consent to 10% of the Ordinary Shares in
issue after the C Shares have converted into Ordinary Shares.

Benefits of the Issue

The Board believes that the Issue has the following principal benefits for
Shareholders:

• the Open Offer provides Shareholders with the ability to acquire Shares
without incurring stamp duty, dealing costs or paying the current market
premium for the shares as well as potentially receiving a small enhancement to
the NAV attributable to their holding;

• the issued share capital will increase, which will help meet investor demand
for Ordinary Shares and could increase the market capitalisation and liquidity
of the Ordinary Shares;

• the long term prospects for investing in China are compelling; and

• an increase in the size of the Company will spread its fixed operating
expenses over a larger issued share capital.

Details of the C Share Issue

The Company is seeking to raise up to £162.1 million after fees and expenses by
the issue of up to 166,250,000 C Shares at an issue price of 100p per C Share
pursuant to the Open Offer, the Offer for Subscription and the Placing.


The Directors recognise the importance of pre-emption rights to Shareholders
and consequently all of the C Shares are being initially offered to existing
Shareholders by way of the Open Offer. The Open Offer provides an opportunity
for Shareholders to participate in the fundraising by subscribing for their
Open Offer Entitlements. Applications under the Open Offer are not subject to
any minimum subscription requirement.

To the extent that valid applications are not received in respect of any of the
C Shares under the Open Offer, such unallocated C Shares will be made available
under the Offer for Subscription and under the Placing. Applications under the
Offer for Subscription must be for a minimum of £1,000. Applications in excess
of the minimum subscription amount must be in multiples of £1.

Cenkos Securities plc has agreed, pursuant to the Placing Agreement, to use all
reasonable endeavours to obtain subscribers on a non-pre-emptive basis for C
Shares at the Issue Price under the Placing. Applications under the Placing may
be made for any amount subject to applications being for a minimum subscription
amount of £50,000 and in multiples of £1,000.

Application has been made to the UK Listing Authority and to the London Stock
Exchange for all the C Shares of the Company which are the subject of the Issue
to be admitted to the Official List with a standard listing and to trading on
the London Stock Exchange's main market for listed securities. Application will
be made for the Ordinary Shares arising on Conversion to be admitted to the
Official List with a premium listing and to the London Stock Exchange for
trading on its main market for listed securities.

The C Shares will be admitted to the CREST system and therefore investors will
be able to hold C Shares in either certificated or uncertificated form.

It is expected that Admission will become effective and that dealings in the C
Shares will commence on 28 February 2011 and that the C Shares will be
converted on 1 March 2011. It is expected that the Ordinary Shares into which
the C Shares convert will be admitted to the Official List and to the London
Stock Exchange for trading on its main market for listed securities from 8 a.m.
on 1 March 2011.

Expected Timetable - Key Dates

Record Date                                           30 December 2010       
                                                                             
Open offer entitlements credited to Crest accounts    10 January             
                                                                             
Ex-entitlement date                                   10 January             
                                                                             
Latest time for depositing open offer entitlements    3 p.m on 10 February   
into Crest                                                                   
                                                                             
General Meeting                                       3 p.m. on 11 February  
                                                                             
Latest time and date of receipt / payment of open     11 a.m. 15 February    
offer forms                                                                  
                                                                             
Latest time for receipt of Offer for subscription     11 am 15 February      
forms                                                                        
                                                                             
Placing closes                                        4.30 pm on 16 February 
                                                                             
Results of issue announced                            18 February            
                                                                             
Admission of C shares to the Official List and start  8 a.m. 28 February     
of dealings                                                                  
                                                                             
Admission of Ordinary Shares arising on conversion    8 a.m. 1 March         
                                                                             
Definitive share certificates dispatched              w/c 7 March 2011       

Dealing Codes

ISIN number - C Shares GB00B4PY9B85

SEDOL code - C Shares B4PY9B8

Ticker - C Shares FCSC

ISIN number - Ordinary Shares GB00B62Z3C74

SEDOL code - Ordinary Shares B62Z3C7

Ticker - Ordinary Shares FCSS

ISIN number - Open Offer Entitlements GB00B67W2J33

SEDOL code - Open Offer Entitlements B67W2J3

Open Offer Entitlements


Shareholders are being offered the opportunity to subscribe at the Issue Price
for any number of C Shares on the following basis:

                  One C Share for every three Ordinary Shares                  

held and registered in their name at the close of business on the Record Date
of 30 December 2010.

Open Offer Entitlements will be rounded down to the nearest whole number and
any fractional entitlements to C Shares will not be allocated but will be
aggregated and made available under the Offer for Subscription and the Placing.
The aggregate number of C Shares available for subscription pursuant to the
Open Offer is 166,250,000 C Shares.

Shareholders may also subscribe for C Shares in excess of their Open Offer
Entitlement in the Offer for Subscription described below.

Applications under the Open Offer are not subject to any minimum subscription
requirement.

Offer for Subscription and Placing


Any C Shares that are available under the Open Offer and are not taken up by
Shareholders pursuant to their Open Offer Entitlements will be made available
under the Offer for Subscription and the Placing. If applications under the
Offer for Subscription and the Placing are for more C Shares than the C Shares
not taken up under the Open Offer, applications will be scaled back on a
pro-rata basis.

Applications under the Placing may be made for any amount subject to
applications being for a minimum subscription amount of £50,000 and in
multiples of £1,000.

C Share portfolio and method of Conversion

In the absence of force majeure circumstances as more particularly described in
the Prospectus, the Conversion Ratio for the C Shares into the Ordinary Shares
will be calculated on the date of Admission. Once the Conversion Ratio has been
calculated, the C Shares will convert into Ordinary Shares on the basis
referred to below.

The Conversion Ratio will be 97.5% of the net proceeds of the Issue per C Share
divided by the Net Asset Value per Ordinary Share. Holders of C Shares will
receive such number of new Ordinary Shares as results from applying the
relevant Conversion Ratio to their holdings of C Shares at the time of
Conversion with new Ordinary Shares arising on Conversion to be admitted to the
Official List with a premium listing and to trading on the main market of the
London Stock Exchange on the business day immediately following Conversion.
Fractions of Ordinary Shares arising on Conversion will not be issued to
holders of C Shares but will be sold for the benefit of the holders, except
that sale proceeds (net of expenses) which do not exceed £5 may be retained for
the benefit of the Company.

The Ordinary Shares arising on Conversion of the C Shares will rank pari passu
with the Ordinary Shares then in issue. No dividend will be declared from the
date of this document to the date of admission of the Ordinary Shares arising
on Conversion.


Costs and expenses

The costs and expenses incurred by the Company in connection with the Issue
will be attributed to the C Shareholders to a maximum of 2.5% of the Issue
proceeds with FIL meeting any excess. If the costs and expenses are less than
2.5% of the Issue proceeds the difference will be retained by the Company and
attributed to the Ordinary Shares in issue immediately prior to Conversion. As
a result the Net Asset Value per Ordinary Share will not be diluted by the
expenses of the Issue and may be potentially enhanced. On the afore mentioned
basis the costs incurred by the C Shareholders in connection with the issue are
estimated to be £4.16 million.

Voting Intention and intention to subscribe of the Manager

The Manager has declared its intention that FIL will vote its holding of
32,000,000 Ordinary Shares (representing approximately 6.42% of the issued
Ordinary Share capital) in favour of the Resolutions and take up its
entitlement under the Open Offer. For those Shares held for Fidelity ISA
clients and Fidelity Share Plan clients (as at 30 December 2010) 215,593,506
Ordinary Shares representing approximately 43.22% of the issued Ordinary
Shares, FIL will arrange to vote those Shares in favour of the Resolutions
where voting directions are not received subject to a maximum of 29.99% of the
votes cast on any Resolution.

Directors' intention to subscribe


The Directors and their spouses intend to take up their entitlements and
subscribe for C Shares pursuant to the Open Offer.

Christopher Pirnie, FIL Investments International, Company Secretary

For further information please contact:

For Press Enquiries, please contact Anne Read on 020 7961 4409 or 07850 549839
and for all other queries, please contact the Company's Broker, Cenkos
Securities Plc through Charlie Ricketts 020 7397 1910, Will Rogers 020 7397
1920 and Chris Lunn 020 7397 1912.

Full details of how investors can participate in this offer with Fidelity will
be made available on our website on Sat 8 January 2011. To access this
information visit www.fidelity.co.uk/china

Important Information

This Announcement has been issued by and is the sole responsibility of the
Company.

 

No representation or warranty express or implied, is or will be made as to, or
in relation to, and no responsibility or liability is or will be accepted by
Cenkos Securities Plc or by any of its affiliates or agents as to or in
relation to, the accuracy or completeness of this Announcement or any other
written or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is expressly
disclaimed.

 

This announcement is an advertisement and is not a prospectus.  Accordingly,
investors should not subscribe for securities except on the basis of
information in the Prospectus itself.

 

Neither this document nor anything contained herein shall form the basis of, or
be relied upon in connection with, any offer or commitment whatsoever in any
jurisdiction. Any offer to acquire securities pursuant to the Issue will be
made, and any investor should make his investment, solely on the basis of
information that is contained in the Prospectus.

 

This announcement and the information contained herein is not for publication,
release or distribution, directly or indirectly, in or into the United States,
Australia, Canada, Japan or South Africa or any jurisdiction in which the same
would be unlawful.  This announcement does not constitute an offer to sell or
issue or the solicitation of an offer to buy or acquire shares in the capital
of the Company in the United States, Australia, Canada, Japan or South Africa
or any jurisdiction in which such an offer or solicitation is unlawful.

 

Any offering will only be made in any jurisdiction in compliance with local
laws.

 

Neither the C Shares in the Company referred to in this Announcement (the "C
Shares") nor the new Ordinary Shares in the Company into which they will
convert (the "New Ordinary Shares) have been, or will be, registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act") or with any
securities regulatory authority of any State or other jurisdiction of the
United States, and accordingly may not be offered, sold or transferred within
the United States except pursuant to an exemption from, or in a transaction not
subject to, registration under the Securities Act. No offering of the C Shares
or the New Ordinary Shares is being made in the United States or to U.S.
persons as defined in and in accordance with Regulation S under the Securities
Act ("U.S. Persons"). The Company has not been and will not be registered under
the U.S. Investment Company Act of 1940, as amended (the "Investment Company
Act") and investors will not be entitled to the benefits of that Act.

 

Cenkos Securities Plc, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting as sponsor to the Company and is
acting for no-one else in connection with the Issue and the contents of this
announcement, and will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Cenkos Securities Plc nor for
providing advice in connection with the Issue and the contents of this
announcement or any other matter referred to herein. Cenkos Securities Plc is
not responsible for the contents of this announcement.

 

The distribution of this Announcement and the Placing in certain jurisdictions
may be restricted by law. No action has been taken by the Company or Cenkos
Securities Plc that would permit an offering of the C Shares or the New
Ordinary Shares or possession or distribution of this Announcement or any other
offering or publicity material relating to such shares in any jurisdiction
where action for that purpose is required. Persons into whose possession this
Announcement comes are required by the Company and Cenkos Securities Plc to
inform themselves about, and to observe, such restrictions.

 

This Announcement is for information purposes only and does not constitute an
invitation to subscribe for or otherwise acquire or dispose of securities in
the Company in any jurisdiction.  The information contained in this
Announcement is for background purposes only and does not purport to be full or
complete.  No reliance may be placed for any purpose on the information
contained in this Announcement or its accuracy or completeness, This
announcement does not constitute or form part of any offer to issue or sell, or
any solicitation of any offer to subscribe or purchase, any investments nor
shall it (or the fact of its distribution) form the basis of, or be relied on
in connection with, any contract therefore.

 

Certain statements in this Announcement are forward-looking statements which
are based on the Company's expectations, intentions and projections regarding
its future performance, anticipated events or trends and other matters that are
not historical facts. These statements are not guarantees of future performance
and are subject to known and unknown risks, uncertainties and other factors
that could cause actual results to differ materially from those expressed or
implied by such forward-looking statements. Given these risks and
uncertainties, prospective investors are cautioned not to place undue reliance
on forward-looking statements. Forward-looking statements speak only as of the
date of such statements and, except as required by applicable law, the Company
undertakes no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
The information contained in this Announcement is subject to change without
notice and neither the Company nor Cenkos Securities Plc assumes any
responsibility or obligation to update publicly or review any of the
forward-looking statements contained herein.