Notice of Results

FIDELITY SPECIAL VALUES PLC Preliminary Announcement of Unaudited Results for the year ended 31 August 2002 CHAIRMAN'S STATEMENT The Year's Performance: NAV (diluted) 238.9p -11.8% - The past year has been one of the most difficult for those involved in stock markets anywhere in the world for many, many years, with share prices falling everywhere. In Britain the FTSE All Share Index (our benchmark) declined by 21.0% which, as it happens, was a little bit better than most of the other major world economies' markets: America -24.2%, Japan -15.5%, Germany -27.6% and France -27.3%. The reasons for the severity of the declines have been well aired in the media and include concern about the prospect of another war in the Middle East, the aftermath of the global technology boom, the corporate scandals in the United States, large scale selling of stocks and shares by insurance companies and the worry about the prospects for the US economy in an American dependent world economy. While it is never satisfactory to report a decline in our net asset value because making money for our shareholders must always be our fundamental objective, I can report that our net asset value declined by much less than our benchmark, falling by 11.8% to 238.9p per share. Again, this year I would like to pay tribute to Anthony Bolton, also to his team for this better than average performance in what has been another difficult year. While Anthony Bolton is well known to our shareholders and is an able and experienced investment manager, even he would find it difficult to do as well as he has in the last three years without the back-up of his many and skilful colleagues. The share price declined by 12.2%, a little more than the net asset value but I am pleased to report that it continued to sell at a premium to net asset value, it being 6.0% at the year end. During the year we issued 3,714,182 shares at various small premia (but always above 2%) which added a small amount, 1.6p per share, to our net asset value. Furthermore during the course of the year, the Board of Directors decided to broaden the base of those to whom we issue shares as a consequence of the consent given by shareholders at the Annual General Meeting; at an extraordinary general meeting held on 3 October 2002 shareholders approved a resolution allowing the Directors to issue a further 4,200,000 shares, providing that they are issued at a premium of at least 2% to the then net asset value. This authority ends at the forthcoming Annual General Meeting and the Directors will then seek authority to issue another 4,250,000 shares during the next 12 months. Dividend: 1.40p per share - The Board of Directors is recommending a dividend of 1.40p per share to shareholders at the forthcoming AGM. It is lower than that paid last year - 2.50p per share - because the income earned during the year is also lower; it is in line with our policy of managing the portfolio for capital growth and paying out whatever net income the portfolio happens to earn during that year. The dividend will be payable on 16 December to shareholders on the register at close of business on 8 November (ex dividend date 6 November). Annual General Meeting, 13 December 2002 - The shareholders' Annual General Meeting will take place at 12 noon on 13 December 2002 at Fidelity's offices at 25 Cannon Street, near St Paul's Cathedral. We emphasise in our report on corporate governance that 'the Annual General Meeting is the pivotal point in the relationship between the Board of Directors and shareholders and is the occasion when the Board accounts for itself in public meeting'. We do encourage as many shareholders as possible to attend - both individual and institutional - as it gives you the opportunity to air your views or ask any questions you may wish in front of the body of shareholders. Following the formal proceedings Anthony Bolton will give a review of the past year and look at the prospects for the current one. At this Annual General Meeting shareholders will be asked to re-elect three of the five members of the Board - James Laurenson, Simon Haslam and myself. While I cannot comment on myself, I can say that all of the other directors make a considerable contribution to the governance of your Company both as individuals and as a team. James Laurenson is an able director, a qualified chartered accountant and an experienced investor and all three attributes are valuable to the Board. Simon Haslam, Fidelity International's Chief Administrative Officer, is the one Fidelity person that serves as a director. As we say in our corporate governance report we believe that it is most important that there is a senior Fidelity individual on the Board and I can say that he is an excellent director bringing his experience of the financial business and his knowledge and understanding of Fidelity's operations to our deliberations; like James Laurenson he is also a qualified chartered accountant. In all three cases the Nomination Committee considered their re-elections individually and then recommended to the Board that their names be put forward for re-election as directors at the forthcoming Annual General Meeting. Outlook - In my statement last year I said that 'the outlook for the current year could not be more difficult to assess'. Well I have to say that it is even more difficult to assess future prospects now than it was a year ago. In all stock markets in the world there is a considerable lack of confidence in the future whether the concerns are of war in the Middle East, of the accuracy of the reporting of profits (particularly in the United States) and the sustainability of profits generally, of the jobs of those in the business of stock markets and of the possibility of global deflation. The stock markets have continued to decline - the UK stock market is down another 4% since our year end - so that the declines themselves are now feeding the bearish frenzy. The issues are all real enough and won't all be resolved within a short span of time. In Great Britain the outlook is rather mixed. The prospects for the private sector do not appear to be too bad and they certainly seem rather better than those of a number of other countries - notably Germany and Japan. The stock market valuations are reasonable, even if they could go lower in the shorter term - markets always go to one or other extreme. But the public sector is experiencing great difficulties with all the implications that has for economic life in Britain. The Government's solution to any of its problems seems to be more spending, more central bureaucratic control, and more rules and regulations, treating the symptoms of the problems with management of targets and excessive use of spin to cover up the problems. It is likely to cause problems for the Government's finances, which will result, I believe, in the imposition of yet higher taxes. This in turn will undermine the efficiency and productivity of all businesses and in particular will hurt the private sector of the economy. However the UK stock market has declined a very long way - it fell by nearly half from its peak in the early part of 2000 to the recent trough. There is a great deal of pessimism around, much of which has emerged in the last few months when markets around the world suddenly plunged to much lower levels, caused in part by insurance companies having to sell stocks and shares. It is a truism that everything looks worst at the bottom and best at the top. I am not suggesting that we have reached the bottom yet but at half the level it once was, it cannot be that far away in relation to its peak. At this level, there are lots of attractively valued opportunities, which could prove to be very profitable investments on, say, a three year view - even if the stock market itself does not make much progress. Finding and investing in such opportunities is what good investment managers are able to do. In Fidelity and in Anthony Bolton and his team we have such capability and I see no reason why we should not make money for our shareholders over, say, that three year time span. Alex Hammond-Chambers Chairman 25 October 2002 Enquiries: Barbara Powley - Fidelity Investments International 01737 836883 FIDELITY SPECIAL VALUES PLC STATEMENT OF TOTAL RETURN (unaudited) (incorporating the revenue account) of the Company for the year ended 31 August 2002 2002 2001 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on - (14,511) (14,511) - 12,330 12,330 investments Dividends 3,595 - 3,595 3,676 - 3,676 Interest from 31 - 31 22 - 22 securities Other income 133 - 133 227 - 227 Investment management (1,404) - (1,404) (1,313) - (1,313) fee Other expenses (388) - (388) (330) - (330) Exchange (losses)/ - (163) (163) - 19 19 gains Net return/(loss) 1,967 (14,674) (12,707) 2,282 12,349 14,631 before finance costs and taxation Interest payable (1,409) - (1,409) (1,186) - (1,186) Return/(loss) on 558 (14,674) (14,116) 1,096 12,349 13,445 ordinary activities before tax Tax on ordinary (9) - (9) - - - activities Return/(loss) on 549 (14,674) (14,125) 1,096 12,349 13,445 ordinary activities after tax attributable to equity shareholders Dividend (600) - (600) (939) - (939) Transfer (from)/to (51) (14,674) (14,725) 157 12,349 12,506 reserves Return per ordinary 1.39p (37.08p) (35.69p) share 3.04p 34.27p 37.31p Basic Fully-diluted 1.35p (36.16p) (34.81p) 2.71p 30.53p 33.24p The revenue column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. BALANCE SHEET (unaudited) as at 31 August 2002 2002 2001 £'000 £'000 Fixed assets Investments 125,652 119,769 Current assets Debtors - amounts falling due within one 446 2,230 year Cash at bank 1,917 9,416 2,363 11,646 Creditors - amounts falling due within one year Fixed rate unsecured loans - (10,000) Other creditors (2,640) (2,382) (2,640) (12,382) Net current liabilities (277) (736) Total assets less current liabilities 125,375 119,033 Creditors - amounts falling due after more than one year Fixed rate unsecured loans (20,000) (10,000) Total net assets 105,375 109,033 Capital and reserves Called up share capital 10,526 9,393 Share premium account 37,731 28,409 Capital redemption reserve 404 404 Other reserves Warrant exercise reserve 1,586 744 Warrant reserve 970 1,200 Capital reserve - realised 69,265 60,732 Capital reserve - unrealised (16,388) 6,819 Revenue reserve 1,281 1,332 Total equity shareholders' funds 105,375 109,033 Net asset value per ordinary share: Basic 250.28p 290.20p Fully-diluted 238.87p 270.76p CASH FLOW STATEMENT (unaudited) for the year ended 31 August 2002 2002 2001 £'000 £'000 Operating activities Investment income received 2,424 2,647 Underwriting commission received 15 - Deposit interest received 117 227 Investment management fee paid (1,412) (1,269) Directors' fees paid (59) (54) Other cash payments (334) (208) Net cash inflow from operating activities 751 1,343 Returns on investments and servicing of finance Interest paid (1,376) (1,191) Net cash outflow from servicing of finance (1,376) (1,191) Taxation 9 UK income tax recovered 14 Tax recovered 9 14 Financial Investment Purchase of investments (78,730) (60,503) Realised currency (losses)/gains (163) 19 Disposals of investments 61,925 57,410 Net cash outflow from financial investment (16,968) (3,074) Equity Dividend paid (950) (813) Net cash outflow before financing (18,534) (3,721) Financing Exercise of warrants 816 447 Fixed rate 5.65% unsecured loan drawn down - 4,000 Fixed rate 5.9704% unsecured loan drawn - 6,000 down Fixed rate 6.42% unsecured loan drawn down 10,000 - Repayment of fixed rate 7.095% unsecured - (3,500) loan Repayment of fixed rate 7.04094% unsecured - (2,500) loan Repayment of fixed rate 5.65% unsecured (4,000) - loan Repayment of fixed rate 5.9704% unsecured (6,000) - loan Issue of ordinary shares 10,222 5,037 Net cash inflow from financing 11,038 9,484 (Decrease)/increase in cash (7,496) 5,763 The above statements have been prepared on the basis of the accounting policies as set out in the most recently published set of annual financial statements. The figures for the year to 31.08.01 have been extracted from the accounts for the year ended 31.08.01 which have been delivered to the Registrar of Companies and on which the Auditors gave an unqualified report. The annual report and accounts will be posted to shareholders by no later than 14 November 2002. Copies will also be available from the Company's registered office at Beechgate, Millfield Lane, Tadworth, Surrey KT20 6RB.

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