Fidelity Asian Values Plc - Half-year Report

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Fidelity Asian Values PLC

Half-Yearly Report for the 6 months ended

Financial Highlights:

    --  The Company recorded a net asset value (“NAV”) per share total return of
        -2.8% in the six months to , while the Comparative Index,
        the MSCI AC Asia ex Japan Index, returned -4.6%

    --  The Company’s Share Price total return for the six month period was
        +3.3%. Shares have traded at a sustained premium since  and
        the company continues to issue new shares.

    --  The Company has outperformed the Comparative Index over the last six
        months and one year, as well as from the commencement of the Portfolio
        Manager’s tenure.

Contacts

For further information, please contact:

Natalia de Sousa - Company Secretary

01737 837846

Portfolio Manager’s Half-Yearly Review

PERFORMANCE REVIEW
Over the six month period ended , the net asset value (“NAV”) of Fidelity Asian Values PLC (“the Company”) fell by 2.8%, compared with a decline of 4.6% for the MSCI All Countries Asia ex Japan Index in Sterling terms (the Company’s “Comparative Index”). The Company’s share price increased by 3.3% over the review period (all figures are on a total return basis). It is pleasing to report that there have been periods where the Company’s shares have been trading at a significant premium and therefore, since and up to the date of this report, the Company has issued 1,025,000 ordinary shares.

The Company has outperformed the Comparative Index over the last 6 months and one year, as well as since I took over the management of the portfolio when the investment strategy was changed to focus more on small cap companies. However, the Company’s returns have lagged the Comparative Index over the two and three year reporting periods (see table below). I believe that while the overall economic cycle has helped, a shift in favour of large cap growth stocks versus value stocks detracted somewhat. A central pillar of my investment process is to minimise losses by investing in good businesses that have strong balance sheets and buying them at a price that leaves enough margin of safety. These kinds of companies can lag the market in big upswings in investors’ sentiment. My belief is that this is all part of the market cycle and should even out over time.


                            Fidelity Asian Values PLC Comparative Index
                                     NAV total return      total return
                                                  (%)               (%)

Tenure (since 1 April 2015)                     +53.9             +40.2

3 Years                                         +53.7             +60.3

2 Years                                          +7.6             +17.3

1 Year                                           -1.6              -7.7

6 Months                                         -2.8              -4.6

                                         ============      ============



Sources: Fidelity International and Datastream, .

KEY CONTRIBUTORS AND DETRACTORS OVER THE SIX MONTHS TO


                                    Average
                               Active Weight                  Contribution
                                             Gain/Loss         to Relative
                                         (%)                    Returns (%)
                                                   (%)

Top 5 Contributors

1 BOC Aviation                          +2.4     +36.1                 +0.9

2 Energy Development Corp               +0.7     +43.3                 +0.5

3 China Mobile                          +1.4     +18.5                 +0.4

4 Bank Rakyat Indonesia                 +1.2     +29.1                 +0.4

5 Baidu                                 -1.3     -30.4                 +0.4

                                                       --------------------

  Total                                                                +2.6

                                                               ============

Bottom 5 Detractors

1 Indiabulls Housing Finance            +1.0     -49.6                 -0.6

2 Redington India                       +1.2     -33.2                 -0.4

3 Tianneng Power International          +0.9     -29.8                 -0.3

4 Samsung Electronics                   -4.9      +1.2                 -0.3

5 Interojo                              +0.7     -33.3                 -0.2

                                                       --------------------

  Total                                                                -1.8

                                                               ============



Source: Fidelity International,

There are two primary sources of error in investing – errors of omission, that is to say stocks that we do not own which go up in value (such as Samsung Electronics in the table above), and errors of commission, or stocks we do in fact own that go down in value (such as Indiabulls Housing Finance and Redington India). As our objective is to compound absolute returns over time, my primary focus remains on minimising errors of commission over the medium term. We try hard to avoid businesses where we could lose significant amounts of money (such as those with high debt, high multiples, unsustainable earnings, poor management teams and fragile business models), but sometimes the market environment suddenly becomes unfavourable or indeed our analysis might on occasion be inaccurate. In such situations, we try our best to stay objective, and if the facts change, we are ready to change our minds and act accordingly.

In the past six months, the main losses we suffered were from Indiabulls Housing Finance, Redington India and Tianneng Power International as these stocks lagged the broader market. I regard these as temporary losses and I have therefore maintained the Company’s holdings in these companies given their attractive valuations, strong underlying businesses and high quality management teams.

INVESTMENT STRATEGY AND OUTLOOK
Since the 2008 financial crisis, we have had an extended period of economic growth and we may see a business cycle downturn in the next three years. As well as the challenging global political climate, this will most likely create headwinds for equity market returns.

Having said that, the recent pull-back in equity markets created some interesting stock-specific opportunities, and over the last six months, I have added companies to the portfolio that are market leaders and which are available at attractive valuations.

Broadly, the Company is managed from an absolute return perspective. Each security is owned for what it might contribute to returns, rather than its inclusion in an index.

As mentioned earlier, I look for companies with strong competitive advantages, good management, and try to buy them at a reasonable price. The core to my investment philosophy is the idea that if we lose less money during market downturns, we should be able to compound money at higher rates in the longer term. Given that Asia has more than 18,000 listed companies, the opportunity to find hidden gems continues to be immense and I, together with the analyst teams at Fidelity, remain vigilant for new opportunities.

NITIN BAJAJ
Portfolio Manager

Interim Management Report

MANAGEMENT FEE ARRANGEMENTS
As reported in the Annual Report for the year ended , the Company has had a new fee arrangement in place since which provides an overall reduction from the previous fee. The new fee replaced the Company’s previous tiered fee structure (0.90% of gross assets up to £200 million; and 0.85% on gross assets over £200 million) and reduced the headline base management fee of 0.90%/0.85% of gross assets to 0.70% of net assets per annum with a +/- 0.20% variation based on performance relative to the Comparative Index. The variable element of the fee was effective from . The maximum fee that the Company will pay under this revised arrangement is 0.90% of net assets. However, if the Company underperforms against the Comparative Index, then the overall fee can fall as low as 0.50% of net assets. There is no change to the investment process as a result of the new fee arrangement.

BONUS ISSUE OF SUBSCRIPTION SHARES
The Company issued 1,213,003 ordinary shares of 25 pence on following the second exercise date of the conversion rights attached to the subscription shares. The bonus issue of subscription shares on the basis of one subscription share for every five ordinary shares held by qualifying investors was approved at the Company’s Annual General Meeting on . As at the date of this Half-Yearly Report, there are 11,103,030 subscription shares remaining which can be exercised in the 25 business days preceding the last business day in which is the final exercise date. The exercise price is equal to the published NAV of 366.88 pence per ordinary share on plus a premium of 7% which equates to an exercise price of 392.75 pence per share.

SHARE ISSUES
The Company’s shares have been trading at a sustained level of premium since , therefore the Board applied for a block listing authority for 6,866,940 ordinary shares which is the maximum allowed under the Company’s current authority as approved by shareholders at the Annual General Meeting on . The block listing was effective on . Since 11 February and the date of this report, 1,025,000 shares have been issued from this block listing.

SHARE REPURCHASES AND TREASURY SHARES
Repurchases of ordinary shares and subscription 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 share or at a premium to NAV per share. Any subscription shares repurchased would be cancelled.

In the six months to , no ordinary shares were repurchased for cancellation or for holding in Treasury and no subscription shares were repurchased for cancellation. Since the end of the reporting period and as at the date of this report no shares have been repurchased.

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 that the Company faces.

The Board considers that the principal risks and uncertainties faced by the Company continue to fall in the following categories: market risk; performance risk; discount control risk; gearing risk; derivatives risk; and currency risk. Other risks facing the Company include cybercrime; tax and regulatory; and operational (service providers) risk. The Company is subject to a continuation vote every five years and there is a risk that the vote, when due, may not be approved. Information on each of these risks can be found in the Strategic Report section of the Annual Report for the year ended 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 and are equally applicable to the remaining six months of the Company’s financial year.

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.

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

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 and the above responsibility statement was signed on its behalf by Kate Bolsover, Chairman.

Twenty Largest Holdings

as at

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          %1         £’000

Long Exposures – shares unless otherwise
stated

Power Grid Corporation of India

Operator of the Indian national                  8,241         2.9         8,241
electricity grid

Cognizant Technology Solutions (shares and
written put options)

Provider of IT, digital and technology           7,098         2.5         5,855
services

Fufeng Group

Bio-fermentation products manufacturer           6,156         2.2         6,156

China Mobile (long CFD)

Provider of telecommunication services in        5,933         2.1           336
China

BOC Aviation

Global aircraft operating leasing company        5,811         2.1         5,811

LIC Housing Finance

Provider of long term finance for                5,794         2.0         5,794
construction & renovation of houses &
flats for residential purposes

Housing Development Finance Corporation

Provider of housing finance to individual        5,193         1.9         5,193
households and corporates in India

SK Hynix

Memory semiconductor supplier of dynamic         4,983         1.8         4,983
random-access memory chips and flash
memory chips

PTC India

Provider of power trading solutions in           4,480         1.6         4,480
India

Sebang Global Battery

Battery manufacturer                             4,376         1.6         4,376

WPG Holdings

Distributor of semiconductor and core            4,285         1.5         4,285
components

Cromwell European Real Estate Investment
Trust

Real estate investment company                   4,213         1.5         4,213

Xingda International Holdings

Manufacturer and trader of radial tire           4,200         1.5         4,200
cords, bead wires and other wires

LT Group

Banking, beverages, spirits, tobacco and         4,088         1.5         4,088
property development group

Taiwan Semiconductor Manufacturing Company

Developer, manufacturer and distributor of       3,975         1.4         3,975
semiconductor related products

Redington India

Distributor of information technology            3,749         1.3         3,749
products, mobile handsets and accessories

Convenience Retail Asia

Convenience store chain operator                 3,700         1.3         3,700

Cebu Air

Airline operator                                 3,593         1.3         3,593

Arwana Citramulia

Ceramics manufacturer                            3,329         1.2         3,329

First Resources

Palm oil producer                                3,257         1.2         3,257

                                           =========== ===========   ===========

Twenty largest long exposures                   96,454        34.4        89,614

                                           =========== ===========   ===========

Other long exposures                           182,935        65.2       180,857

                                           =========== ===========   ===========

Total long exposures before hedges (154        279,389        99.6       270,471
holdings)

                                           =========== ===========   ===========

Less: hedging exposures

S&P CNX Nifty Index 10800 June 2019 (put       (5,344)       (1.9)           329
option)

S&P CNX Nifty Index 10200 June 2019 (put       (1,753)       (0.7)            66
option)

Forward Currency Contracts                        (93)           –          (93)

                                           =========== ===========   ===========

Total hedging exposures                        (7,190)       (2.6)           302

                                           =========== ===========   ===========

Total long exposures after the netting of      272,199        97.0       270,773
hedges

Add: short exposures

Short CFDs (15 holdings)                        12,228         4.4           705

                                           =========== ===========   ===========

Gross Asset Exposure2                          284,427       101.4

                                           =========== ===========

Portfolio Fair Value3                                                    271,478

Net current assets (excluding derivative                                   9,104
assets and liabilities)

                                                                     ===========

Total Shareholders’ Funds/Net assets                                     280,582

                                                                     ===========



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

2   Gross Asset Exposure comprises market exposure to investments of £270,518,000 plus market exposure to derivative instruments of £13,909,000.

3   Portfolio Fair Value comprises investments of £270,518,000 plus derivative assets of £1,846,000 less derivative liabilities of £886,000 (per the Balance Sheet).

Financial Statements

Income Statement for the six months ended



                               six months ended 31 January 2019 unaudited                     six months ended 31 January 2018 unaudited                          year ended 31 July 2018 audited

                                  revenue              capital                total              revenue              capital                total              revenue              capital                total

               Notes                £’000                £’000                £’000                £’000                £’000                £’000                £’000                £’000                £’000

(Losses)/gains                          –             (10,742)             (10,742)                    –                5,213                5,213                    –                4,084                4,084
on investments

Gains/(losses)                          –                1,159                1,159                    –              (2,279)              (2,279)                    –              (1,907)              (1,907)
on derivative
instruments

Income             4                3,350                    –                3,350                3,466                    –                3,466                8,747                    –                8,747

Investment         5                (982)                 (97)              (1,079)              (1,314)                    –              (1,314)              (2,626)                    –              (2,626)
management
fees

Other expenses                      (363)                    –                (363)                (362)                    –                (362)                (696)                    –                (696)

Foreign                                 –                   51                   51                    –              (1,037)              (1,037)                    –                  568                  568
exchange
gains/(losses)
on cash and
cash
equivalents

                     -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Net return/                         2,005              (9,629)              (7,624)                1,790                1,897                3,687                5,425                2,745                8,170
(loss) on
ordinary
activities
before finance
costs and
taxation

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Finance costs                       (349)                    –                (349)                (289)                    –                (289)                (779)                    –                (779)

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Net return/                         1,656              (9,629)              (7,973)                1,501                1,897                3,398                4,646                2,745                7,391
(loss) on
ordinary
activities
before
taxation

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Taxation on        6                (272)                    –                (272)                (343)                   11                (332)                (754)                  141                (613)
return/(loss)
on ordinary
activities

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Net return/                         1,384              (9,629)              (8,245)                1,158                1,908                3,066                3,892                2,886                6,778
(loss) on
ordinary
activities
after taxation
for the period

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Basic return/      7                2.00p             (13.94p)             (11.94p)                1.71p                2.81p                4.52p                5.70p                4.23p                9.93p
(loss) per
ordinary share

                             ============         ============         ============         ============         ============         ============         ============         ============         ============

Diluted            7                1.99p             (13.84p)             (11.85p)                1.70p                2.80p                4.50p                5.67p                4.20p                9.87p
return/(loss)
per ordinary
share

                             ============         ============         ============         ============         ============         ============         ============         ============         ============



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



                                                        share              capital           other non-                                                                               total

                                   share              premium           redemption        distributable                other              capital              revenue        shareholders’

                                 capital              account              reserve              reserve              reserve              reserve              reserve                funds

              Notes                £’000                £’000                £’000                £’000                £’000                £’000                £’000                £’000

Six months
ended 31
January 2019
(unaudited)

Total                             17,167               24,316                3,197                7,367                8,613              221,309                6,005              287,974
shareholders’
funds at 31
July 2018

Net                                    –                    –                    –                    –                    –              (9,629)                1,384              (8,245)
(loss)/return
on ordinary
activities
after
taxation for
the period

Issue of         10                  303                4,327                    –                    –                    –                    –                    –                4,630
ordinary
shares on the
exercise of
rights
attached to
subscription
shares

Dividend paid     8                    –                    –                    –                    –                    –                    –              (3,777)              (3,777)
to
shareholders

                    -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Total                             17,470               28,643                3,197                7,367                8,613              211,680                3,612              280,582
shareholders’
funds at 31
January 2019

                            ============         ============         ============         ============         ============         ============         ============         ============

Six months
ended 31
January 2018
(unaudited)

Total                             16,872               20,232                3,197                7,367                8,613              218,423                5,487              280,191
shareholders’
funds at 31
July 2017

Net return on                          –                    –                    –                    –                    –                1,908                1,158                3,066
ordinary
activities
after
taxation for
the period

Issue of         10                  295                4,084                    –                    –                    –                    –                    –                4,379
ordinary
shares on the
exercise of
rights
attached to
subscription
shares

Dividend paid     8                    –                    –                    –                    –                    –                    –              (3,374)              (3,374)
to
shareholders

                    -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Total                             17,167               24,316                3,197                7,367                8,613              220,331                3,271              284,262
shareholders’
funds at 31
January 2018

                            ============         ============         ============         ============         ============         ============         ============         ============

Year ended 31
July 2018
(audited)

Total                             16,872               20,232                3,197                7,367                8,613              218,423                5,487              280,191
shareholders’
funds at 31
July 2017

Net return on                          –                    –                    –                    –                    –                2,886                3,892                6,778
ordinary
activities
after
taxation for
the year

Issue of         10                  295                4,084                    –                    –                    –                    –                    –                4,379
ordinary
shares on the
exercise of
rights
attached to
subscription
shares

Dividend paid     8                    –                    –                    –                    –                    –                    –              (3,374)              (3,374)
to
shareholders

                    -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Total                             17,167               24,316                3,197                7,367                8,613              221,309                6,005              287,974
shareholders'
funds at 31
July 2018

                            ============         ============         ============         ============         ============         ============         ============         ============



Balance Sheet as at

Company number 3183919


                                    31.01.19             31.07.18             31.01.18

                                   unaudited              audited            unaudited

                  Notes                £’000                £’000                £’000

Fixed assets

Investments           9              270,518              273,714              271,760

                        -------------------- -------------------- --------------------

Current assets

Derivative            9                1,846                1,529                2,312
instruments

Debtors                                2,427                2,307                2,097

Amounts held at                        1,944                2,363                2,645
futures clearing
houses and
brokers

Cash at bank                           5,537               11,468               11,395

                        -------------------- -------------------- --------------------

                                      11,754               17,667               18,449

                                ============         ============         ============

Creditors

Derivative            9                (886)                (960)              (2,014)
instruments

Other creditors                        (804)              (2,447)              (3,933)

                        -------------------- -------------------- --------------------

                                     (1,690)              (3,407)              (5,947)

                                ============         ============         ============

Net current                           10,064               14,260               12,502
assets

                                ============         ============         ============

Net assets                           280,582              287,974              284,262

                                ============         ============         ============

Capital and
reserves

Share capital        10               17,470               17,167               17,167

Share premium                         28,643               24,316               24,316
account

Capital                                3,197                3,197                3,197
redemption
reserve

Other                                  7,367                7,367                7,367
non-distributable
reserve

Other reserve                          8,613                8,613                8,613

Capital reserve                      211,680              221,309              220,331

Revenue reserve                        3,612                6,005                3,271

                        -------------------- -------------------- --------------------

Total                                280,582              287,974              284,262
shareholders'
funds

                                ============         ============         ============

Net asset value      11              401.51p              419.36p              413.96p
per ordinary
share

                                ============         ============         ============

Diluted net asset    11              400.31p              413.64p              409.06p
value per
ordinary share

                                ============         ============         ============



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 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 and updated in with consequential amendments. 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 .

Investment management fees and other expenses are accounted for on an accruals basis. The base management fee and other expenses are charged in full to revenue. The variable investment management fee, effective , is charged to capital as it is based on the performance of the net asset value per share relative to the Comparative Index.

4 INCOME


                            six months           six months                 year

                                 ended                ended                ended

                              31.01.19             31.01.18             31.07.18

                             unaudited            unaudited              audited

                                 £’000                £’000                £’000

Investment income

Overseas                         3,243                3,277                8,242
dividends

Overseas scrip                       –                  130                  299
dividends

                  -------------------- -------------------- --------------------

                                 3,243                3,407                8,541

                          ============         ============         ============

Derivative income

Dividends on long                   16                    –                   51
CFDs

Interest on short                   55                   38                   90
CFDs

                  -------------------- -------------------- --------------------

                                    71                   38                  141

                          ============         ============         ============

Other income

Deposit interest                    36                   21                   65

                  -------------------- -------------------- --------------------

Total income                     3,350                3,466                8,747

                          ============         ============         ============



5 INVESTMENT MANAGEMENT FEES


                            six months           six months                 year

                                 ended                ended                ended

                              31.01.19             31.01.18             31.07.18

                             unaudited            unaudited              audited

                                 £’000                £’000                £’000

Investment                         982                1,314                2,626
management fees –
base (charged to
revenue)

Investment                          97                    –                    –
management fees –
variable (charged
to capital)

                  -------------------- -------------------- --------------------

                                 1,079                1,314                2,626

                          ============         ============         ============



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

Prior to this date, FII charged portfolio management service fees at an annual rate of 0.90% on the first £200 million of gross assets and 0.85% on gross assets over £200 million. Fees were paid quarterly in arrears and calculated on the last business day of March, June, September and December.

Further details of the Management Fee Agreement are given in the Interim Management Report.

6 TAXATION ON ORDINARY ACTIVITIES


                            six months           six months                 year

                                 ended                ended                ended

                              31.01.19             31.01.18             31.07.18

                             unaudited            unaudited              audited

                                 £’000                £’000                £’000

Revenue –                          272                  343                  754
taxation on
overseas
dividends

Capital – Indian                     –                 (11)                (141)
capital gains tax
received in the
period

                  -------------------- -------------------- --------------------

Total taxation                     272                  332                  613
charge for the
period

                          ============         ============         ============



7 RETURN/(LOSS) PER ORDINARY SHARE


                            six months           six months                 year

                                 ended                ended                ended

                              31.01.19             31.01.18             31.07.18

                             unaudited            unaudited              audited

Revenue return                   2.00p                1.71p                5.70p
per ordinary
share – basic

Capital                       (13.94p)                2.81p                4.23p
(loss)/return per
ordinary share –
basic

                  -------------------- -------------------- --------------------

Total                         (11.94p)                4.52p                9.93p
(loss)/return per
ordinary share –
basic

                          ============         ============         ============

Revenue return                   1.99p                1.70p                5.67p
per ordinary
share – diluted

Capital                       (13.84p)                2.80p                4.20p
(loss)/return per
ordinary share –
diluted

                  -------------------- -------------------- --------------------

Total                         (11.85p)                4.50p                9.87p
(loss)/return per
ordinary share –
diluted

                          ============         ============         ============



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 held outside of Treasury during the period.


                                £’000                £’000                £’000

Net revenue                     1,384                1,158                3,892
return on
ordinary
activities after
taxation for the
period

Net capital                   (9,629)                1,908                2,886
(loss)/return on
ordinary
activities after
taxation for the
period

                 -------------------- -------------------- --------------------

Net total                     (8,245)                3,066                6,778
(loss)/return on
ordinary
activities after
taxation for the
period

                         ============         ============         ============

                               number               number               number

Weighted average           69,084,724           67,892,642           68,277,830
number of
ordinary shares
in issue during
the period

                         ============         ============         ============



The diluted return/(loss) per ordinary share reflect 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 are the same as those for the basic return/(loss) above. These returns/(losses) are divided by the notional weighted average number of ordinary shares in issue during the period of 69,592,203 (: 68,222,167, : 68,654,259). This number of shares reflects 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           six months                 year

                                 ended                ended                ended

                              31.01.19             31.01.18             31.07.18

                             unaudited            unaudited              audited

Dividend of 5.50                 3,777                    –                    –
pence per
ordinary share
paid for the year
ended 31 July
2018

Dividend of 5.00                     –                3,374                3,374
pence per
ordinary share
paid for the year
ended 31 July
2017

                  -------------------- -------------------- --------------------

                                 3,777                3,374                3,374

                          ============         ============         ============



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

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 2019
                                      unaudited

                         level 1              level 2              level 3                total

                           £’000                £’000                £’000                £’000

Financial
assets at
fair value
through
profit or
loss

Investments              270,063                   51                  404              270,518

Derivative                   395                1,451                    –                1,846
instrument
assets

            -------------------- -------------------- -------------------- --------------------

                         270,458                1,502                  404              272,364

                    ============         ============         ============         ============

Financial
liabilities
at fair
value
through
profit or
loss

Derivative                 (186)                (700)                    –                (886)
instrument
liabilities

                    ============         ============         ============         ============

                                     31 July 2018
                                       audited

                         level 1              level 2              level 3                Total
                                                                                          £’000

                           £’000                £’000                £’000

Investments              273,248                   59                  407              273,714

Derivative                   466                1,063                    –                1,529
instrument
assets

            -------------------- -------------------- -------------------- --------------------

                         273,714                1,122                  407              275,243

                    ============         ============         ============         ============

Financial
liabilities
at fair
value
through
profit or
loss

Derivative                     –                (960)                    –                (960)
instrument
liabilities

                    ============         ============         ============         ============

                                   31 January 2018
                                      unaudited

                         level 1              level 2              level 3                 Total
                                                                                           £’000

                           £’000                £’000                £’000

Financial
assets at
fair value
through
profit or
loss

Investments              265,905                5,855                    –               271,760

Derivative                   353                1,954                    –                 2,312
instrument
assets

            -------------------- -------------------- --------------------  --------------------

                         266,263                7,809                    -               274,072

                    ============         ============         ============          ============

Financial
liabilities
at fair
value
through
profit or
loss

Derivative                   (6)              (2,008)                    –               (2,014)
instrument
liabilities

                    ============         ============         ============          ============



10 SHARE CAPITAL



                          31 January 2019                            31 July 2018                             31 January 2018
                             unaudited                                  audited                                  unaudited

                        number of                                 number of                                 number of

                           shares                £’000               shares                £’000               shares                £’000

Issued,
allotted and
fully paid

Ordinary
shares of 25
pence each
held outside
Treasury

Beginning of           68,669,402               17,167           67,488,213               16,872           67,488,213               16,872
the period

Ordinary                1,213,003                  303            1,181,189                  295            1,181,189                  295
shares
issued

             -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

End of the             69,882,405               17,470           68,669,402               17,167           68,669,402               17,167
period

                     ============         ============         ============         ============         ============         ============

Issued,
allotted and
fully paid

Subscription
shares of
0.001 pence

Beginning of           12,316,033                    –           13,497,222                    –           13,497,222                    –
the period

Cancellation          (1,213,003)                    –          (1,181,189)                    –          (1,181,189)                    –
of
subscription
shares on
the exercise
of rights

End of the             11,103,030                    –           12,316,033                    –           12,316,033                    –
period

                     ============         ============         ============         ============         ============         ============

Total share                                     17,470                                    17,167                                    17,167
capital

                                          ============                              ============                              ============



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 . Each subscription share gives the holder the right, but not the obligation, to subscribe for one ordinary share upon payment of the subscription price. The subscription price is based on the published unaudited NAV per ordinary share at , plus a premium depending upon the year in which the right is exercised. The subscription share rights can be 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 premiuma are as follows:


                  Subscription date    Subscription price   Premium

First             30 November 2017     370.75p              1%
subscription date

Second            30 November 2018     381.75p              4%
subscription date

Final             29 November 2019     392.75p              7%
subscription date

                  ==================== ==================== ====================



After the final subscription date of , the Company will appoint a trustee who will exercise any rights remaining that have not been exercised by shareholders, providing that by doing so a profit can be realised. To realise a profit the sale proceeds from selling the resulting ordinary shares in the market would need to be in excess of the 392.75 pence per share price of exercising the rights, plus any related expenses and fees. Any resulting profit will be paid to the holders of those outstanding subscription shares, unless the amount payable to an individual holder is less than £5, in which case such sum shall be retained for the benefit of the Company.

Subscription shares carry no rights to vote, to receive a dividend or to participate in the winding up of the Company.

During the period the Company issued 1,213,003 ordinary shares (year ended and six months ended : 1,181,189 shares) on the exercise of rights attached to subscription shares. The subscription share price of 381.75 pence per ordinary share issued represented a premium of 356.75 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 £4,327,000 (year ended and six months ended : £4,084,000) 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 £280,582,000 (: £287,974,000 and : £284,262,000) and on 69,882,405 (: 68,669,402 and : 68,669,402) ordinary shares, being the number of ordinary shares of 25 pence each held outside Treasury at the end of the period.

The diluted net asset value per ordinary share reflects 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 on at the next subscription date price of 392.75 pence per share. The basis of the calculation is in accordance with the guidelines laid down by the AIC.

The net asset value per ordinary share and the diluted net asset value per ordinary share are published by the London Stock Exchange on a daily basis.

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 £1,079,000 (six months ended : £1,314,000 and year ended : £2,626,000) and secretarial and administration fees of £38,000 (six months ended : £38,000 and year ended : £75,000) were payable to FII. At the Balance Sheet date, management fees of £202,000 (: £197,000 and : £222,000) and secretarial and administration fees of £6,000 (: £6,000 and : £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 : £65,000 and year ended : £108,000). At the Balance Sheet date marketing services of £8,000 (: £32,000 and : £11,000) were accrued and included in other creditors.

As at , the Board consisted of five non-executive Directors (as shown in the Directory), 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 £34,000, the Audit Committee Chairman an annual fee of £28,000 and each other Director an annual fee of £25,000. The following members of the Board held shares in the Company: Kate Bolsover 12,919 ordinary shares and 3,050 subscription shares, Timothy Scholefield 10,000 ordinary shares and 2,000 subscription shares, Philip Smiley 2,500 ordinary shares and 500 subscription shares, Grahame Stott 20,000 ordinary shares and 11,000 subscription shares and Michael Warren, 6,000 ordinary shares and 800 subscription shares.

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.

ENDS

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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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