Half-year Financial Report
Summary by AI BETAClose X
FIDELITY CHINA SPECIAL SITUATIONS PLC
Half-Yearly results for the six months ended 30 September 2025 (unaudited)
Financial Highlights:
- During the six months ended 30 September 2025, Fidelity China Special Situations PLC reported an ordinary share price total return of +28.7% and Net Asset Value (NAV) return of +29.7%.
- The Benchmark Index, the MSCI China Index, produced a total return of +18.0% over the same timeframe.
- Core holdings in the consumer and industrials sectors, many aligning with advanced manufacturing and innovation themes, were the main contributors to performance.
- China remains a fertile ground for structural growth opportunities, particularly in sectors benefiting from rapid technological innovation, such as automation, electric vehicles, AI and advanced manufacturing.
Contacts
For further information, please contact:
George Bayer
Company Secretary
FIL Investments International
0207 961 4240
PORTFOLIO MANAGER’S HALF-YEARLY REVIEW
MACRO AND MARKET BACKDROP
Chinese equities staged a strong rally over the six months to 30 September 2025. After a volatile start amid renewed US–China trade tensions, markets recovered as a temporary truce eased geopolitical concerns. Renewed interest in innovation-led sectors, supported by DeepSeek’s breakthrough artificial intelligence (AI) model earlier in the year and a rise in global biotech licensing deals from Chinese companies, reinforced optimism around the country’s technological capability and industrial competitiveness. Improved investor sentiment and increased retail participation supported record trading volumes, alongside strong southbound inflows led by domestic institutional investors seeking opportunities in Hong Kong listed financial and high-dividend stocks. Together, these dynamics supported a broad valuation re-rating ahead of the underlying earnings recovery.
External demand has remained firm, reflecting the strength in China’s global manufacturing base. The country’s production and supply chain ecosystems remain deeply integrated across a wide range of global industries – from advanced manufacturing to the electric vehicle (EV) supply chain. A strong focus on investment in research and development (R&D), along with sheer scale benefits, are driving gains in competitiveness for many companies. Many Chinese companies with meaningful overseas exposure have demonstrated global competitiveness through market share gains, even amid previous tariff hikes during US President Trump’s first term. While the portion of overseas sales is growing, over 95% of revenues for companies within the MSCI China Index (the Company’s Benchmark Index) are still derived domestically, a fact seemingly often overlooked by markets.
However, domestic conditions were more mixed. Consumer confidence remains weak amid a subdued property market recovery, and household spending has yet to regain momentum despite healthy balance sheets and high savings levels. Early signs of home price stabilisation in tier-one cities were encouraging, but recent data points have been less positive. Stabilisation here will be crucial to strengthening consumer confidence in my view.
Policy remained supportive but measured. Authorities have maintained a mix of fiscal and monetary support, prioritising controlled stabilisation through targeted, reactive policy adjustments over broad stimulus. Meanwhile, market focus has shifted towards sectors benefiting from significant innovation, AI development, and the government’s “anti-involution” campaign, which aims to reduce excessive, profit-eroding competition and industrial overcapacity. These initiatives are designed to address deflationary pressures and promote greater efficiency, contributing to market consolidation and a healthier long-term market environment.
We have noticed improved corporate governance and strong capital return trends across Chinese companies. Many firms have raised dividends, undertaken share buybacks and adopted more disciplined capital allocation practices, signalling a stronger alignment between management and investors.
PERFORMANCE AND PORTFOLIO REVIEW
The Company’s net asset value (NAV) rose by 29.7% over the six months to 30 September 2025, significantly outperforming the MSCI China Index, which gained 18.0%. The share price increased by 28.7% over the same period, with the discount to NAV widening slightly from 7.3% at the start of the period to end at 8.2%. (All performance data are on a total return basis.) Core holdings in the consumer and industrials sectors, many aligning with advanced manufacturing and innovation themes, were the main contributors to performance. The Company also benefited from limited exposure to the EV brands and e-commerce sectors, where fierce price competition has pressured profit margins and share prices.
Within the Company’s portfolio, our holding in leading automotive LiDAR supplier Hesai Group performed strongly. The company returned to profitability and delivered robust revenue growth in the second quarter of 2025, beating expectations on both volume and margin. Investor sentiment was further supported by its announcement of a planned Hong Kong listing.
Meanwhile, Pony.ai, a leading autonomous driving and robotaxi player, was also among the top contributors, despite notable post-listing volatility. Its shares advanced on continued strong development of the business, with new robotaxi operation approvals in cities like Shanghai and overseas markets such as the UAE, along with continued gains in unit economics as hardware costs decline. The company is nearing profitability on a single-vehicle basis, paving the way for further scale-driven efficiency. Fleet expansion and new international partnerships with major mobility operators, such as Uber, also strengthened its ecosystem and market position. Having first invested in Pony.ai as a private company, we retain conviction in its technology leadership, integrated ecosystem and long-term growth potential as China advances towards next-generation mobility.
In Industrials, holdings in Dongfang Electric and Morimatsu International Holdings, two leading diversified equipment and modular system makers, added value. Shares in Dongfang surged on market optimism around major hydropower projects and expectations of an earnings recovery. Morimatsu also gained, supported by robust new orders in the pharmaceutical sector, led by a capex rebound in the pharma sector globally.
Limited exposure to industries that had previously attracted strong investor enthusiasm, notably EVs and e-commerce, benefited performance. EV manufacturers BYD and Xiaomi faced challenges amid intensifying competition. Xiaomi’s debut model attracted significant investor interest, boosting sales and brand recognition. However, high valuation multiples proved difficult to sustain as margin pressure and weaker-than-expected second results weighed on sentiment. BYD also faced mounting pressure from aggressive price cuts across the industry, which continue to squeeze margins. Avoiding both names proved rewarding.
In the e-commerce and service platform space we remain cautious given intensifying competition industry wide. Against this backdrop, the lack of exposure to food delivery giant Meituan and e-commerce platform JD.com proved beneficial. Conversely, Alibaba Group Holding performed strongly, supported by renewed investor interest in AI applications, solid cloud results and signs of stabilisation in its core e-commerce business, partly helped by the synergy effect from its new food delivery business. However, our underweight position relative to the MSCI China Index limited the positive contribution.
Some long-term consumer-related positions weighed on returns, including Hisense Home Appliances Group, a major appliances and electronics manufacturer, and LexinFintech Holdings, a leading consumer finance lender. LexinFintech retreated after a period of strong gains, as investors took profits on solid earnings results. Hisense missed its second quarter revenue and profit estimates due to weakness in central air conditioning amid reduced trade-in support and a weak property market.
CURRENT PORTFOLIO POSITIONING
China remains a fertile ground for structural growth opportunities, particularly in sectors benefiting from rapid technological innovation, such as automation, electric vehicles, AI and advanced manufacturing. Meanwhile, the fruits of strong R&D in healthcare and ongoing import substitution in tech hardware and high-end industrial components further broaden the opportunity set.
The Company remains focused on domestically driven sectors such as healthcare, consumer, and select parts of industrials — areas less exposed to external shocks and closely aligned with China’s long-term strategic priorities. We continue to favour companies with scalable growth potential, sustainable competitive advantage, and strong management teams, which are better positioned to weather market volatility amid economic uncertainty.
Industrials remain the Company’s largest sector overweight exposure versus the Benchmark Index. A key holding in the sector is Full Truck Alliance (FTA), China’s dominant digital freight matching platform. By leveraging powerful network effects to match shippers with truckers more efficiently than traditional offline brokers, FTA offers durable growth potential as the logistics industry in China continues a structural shift to online.
We also invested in Ehang Holdings. The company offers early exposure to the next generation of urban air mobility as the world’s first eVTOL (electric vertical take-off and landing) manufacturer licensed to carry passengers commercially. Backed by strong policy support in China, the company holds a clear first-mover advantage, with commercialisation expected to begin gradually over the next three to five years. Its technological leadership and regulatory certification give it a strong lead versus competitors, while risk-reward remains attractive relative to its long-term growth potential in this transformative transport market.
While the consumer sector faces a more cautious earnings outlook, select franchises that can successfully tap into evolving consumer behaviour are demonstrating resilient growth, even in a challenging economic environment. Sportswear and outdoor gear remain areas of structural expansion, supported by rising participation rates and consumers’ willingness to pay premiums for functionality and health-related benefits. In addition, travel-related proxies continue to benefit from the ongoing shift toward experience-based consumption rather than spending on goods. These are among several categories that remain underpenetrated and offer attractive long-term growth potential.
We initiated a position in Xtep International, a leading domestic sportswear brand specialising in the fast-growing running segment. Benefiting from the trading-down trend in sportswear, Xtep is well positioned as a market share gainer, combining affordability with brand relevance. The strong growth of its premium Saucony brand broadens product mix and supports margin expansion. The company is trading at a compelling valuation with solid and improving dividends. In the food and beverage industry we added China Resources Beer to the portfolio. It is trading at attractive valuations relative to its solid market position and it is improving its product mix through ongoing premiumisation.
We also increased exposure to the leading online travel agency Trip.com following its share price weakness on concerns over near-term margin contraction due to increased international expansion investment and rising competition. We see this as an opportunity to add to a long-term structural winner with domestic dominance and growing global reach.
The holding in Alibaba was increased during the period, reflecting improving e-commerce fundamentals, strong growth potential the cloud business and strengthening execution. Near-term profits remain constrained by investment in local services, but this should strengthen its ecosystem and engagement. The cloud business remains a key growth driver, leveraging proprietary AI technology to extend its competitive edge, while a higher dividend and stock buyback quota strengthen its investment appeal.
In consumer durables, a position in Aux Electrics was established. The mass-market air-conditioner manufacturer stands to benefit from China’s consumption downgrade as demand shifts toward affordable products. Its strong exposure to emerging markets supports a robust overseas outlook, while low valuations and an attractive dividend yield provide downside support.
Within unlisted investments, we added HashKey Holdings, the leading Hong Kong-based crypto exchange, offering leveraged exposure to the city’s regulated crypto trading market. With a strong market position and close alignment with policymakers, the company is well placed to benefit from growth in the market and potential regulatory easing, providing meaningful long-term upside optionality.
These additions were funded by profit-taking in financials, such as long-held insurer exposure to Ping An Insurance (Group) Company of China, amid an unfavourable interest rate environment. We also exited positions in consumer finance lender LexinFintech and QFin Holding following strong gains since late 2024 and amid signs of weaker credit trends and lingering uncertainty around new loan facilitation regulations.
Beyond these large sector exposures, and compared to the Index, we remain overweight in real estate, broadly neutral in Information Technology (IT) and communication services, and underweight in financials, mainly through an underweight in banks, where we see fewer opportunities.
We have outlined our five largest holdings below.
GEARING
Our approach to managing the Company’s market exposure remains consistent. We adjust exposure in line with the opportunities we see, generally increasing it when valuations are more attractive versus fundamentals and reducing it when the outlook is less compelling, or prices appear stretched. We continue to believe that the sensible use of gearing can enhance long-term capital and income returns, allowing us to take advantage of volatility in the Chinese market. During the six months ended 30 September 2025 we continued to use contracts for difference (CFDs) as a flexible and cost-effective method to increase exposure when opportunities arose.
Over the period, the Company’s net market exposure averaged around 119%, with net gearing falling to 19.6% at the end of the period from 20.5% at the start. Overall, gearing contributed positively over the six months, adding 3.0% to relative returns.
OUTLOOK
As we move into the latter stages of the year, the backdrop for Chinese equities appears increasingly constructive. Chinese policymakers have approved the 15th Five-Year Plan proposal at the Fourth Plenum, reaffirming the country’s commitment to building a ‘moderately prosperous society.’ The plan targets steady and sustainable growth, while emphasising technological self-sufficiency and stronger domestic demand. Meanwhile, the recent meeting between Presidents Xi and Trump in Busan produced a positive outcome, with both sides agreeing to extend tariff truces, suspend selected trade levies, and re-establish regular communication channels. Together, these developments point to a more predictable policy and external environment for companies and investors alike.
Policy support remains broadly accommodative in pursuit of these goals. Authorities continue to rely on targeted fiscal easing and flexible monetary tools to sustain growth and maintain liquidity.
A key element of the current policy framework is the government’s ‘anti-involution’ campaign, which aims to address deflationary pressures arising from excessive and inefficient competition, including fast-growing sectors such as EV and solar energy, and in some traditional industries such as paper and cement. The intent is to reduce excess capacity and destructive competition, while preserving confidence among private enterprises. Early evidence suggests that, while existing capacity has not been materially reduced, the pace of new capacity expansion is likely to slow. This should allow excess supply to be absorbed over time, supporting margins and profitability if demand holds up. The potential for consolidation may still be underappreciated by the market.
A more stable property sector also remains critical to restoring consumer confidence. Recent trends have been mixed, with both new and existing home prices falling further in September as policy support waned during what is typically a strong season, although Tier 1 cities such as Beijing, Shanghai and Hangzhou continued to show modest gains. I continue to believe stabilisation in the housing market is important for a broader recovery in household sentiment, which in turn is key to reviving domestic consumption. For now, the consumer environment remains subdued, and although there is divergent performance across categories, pockets of resilience can be found. Well-positioned franchises adapting to shifting consumer preferences continue to show growth, while weak investor sentiment has created some of the most attractively valued opportunities in the market.
Despite these cyclical challenges, China’s structural strengths remain clear. The country continues to lead globally in manufacturing scale, innovation, and technological upgrading. Its export profile is shifting away from the US towards other emerging markets, while Chinese firms continue moving further up the value chain. Rapid adoption of AI, highlighted by the success of domestic champions such as DeepSeek, demonstrates the ongoing strength of China’s innovation. Combined with its leadership in areas such as electric vehicles, digital infrastructure and smart manufacturing, these trends reinforce China’s long-term competitiveness and its role as a key driver of global productivity growth.
Following a strong recovery year to date, equity valuations have somewhat normalised. The MSCI China Index now trades at around 13 times 12-month forward earnings, still more than 40% below the prospective multiple of the S&P 500. Recent performance has become increasingly concentrated in high-beta and momentum-driven segments such as technology and AI, while widening dispersion continues to create selective opportunities where fundamentals and share prices have diverged. In this environment we remain focused on companies with durable earnings visibility, exposure to structural growth themes and disciplined capital allocation. We see particular promise in advanced manufacturing, automation, and technology-enabled industrials; areas aligned with policy priorities and capable of compounding value over time. The consumer sector remains a key area of focus given low expectations and valuations, along with the potential for consumer confidence to gradually return.
DALE NICHOLLS
Portfolio Manager
8 December 2025
SPOTLIGHT ON THE TOP FIVE HOLDINGS AS AT 30 SEPTEMBER 2025
The top five holdings comprise 35.1% of the Company’s Net Assets.
Industry Communication Services
Tencent Holdings
% of Net Assets 14.3%
Tencent Holdings has a dominant position in China’s digital ecosystem with a broad portfolio across social networking, gaming, digital content, and financial technology. Its flagship platforms, WeChat and QQ, provide deep user engagement and form a highly integrated ecosystem that connects communication, entertainment, and commerce. As China’s internet user growth moderates and the internet industry focuses increasingly on monetisation, Tencent is well placed to utilise AI to deepen user engagement and enhance monetisation. Furthermore, the company continues to diversify into higher-margin businesses such as short-form video, mini-programmes, and e-commerce services, while gaming remains a key growth driver supported by a strong pipeline of domestic and international titles.
Industry Consumer Discretionary
Alibaba Group Holding
% of Net Assets 9.5%
Alibaba Group Holding is a leading technology conglomerate with a dominant position in China’s e-commerce and cloud computing markets. Its cloud division, Alibaba Cloud, is the largest in China and one of the most advanced globally, serving as a key pillar of long-term growth. The company performed well during the reporting period, supported by renewed investor interest in AI applications, solid cloud results, and signs of stabilisation in its core e-commerce business – partly helped by synergies from its new food delivery operation. Alibaba’s renewed strategic focus on operational efficiency, user experience, and disciplined capital allocation reinforces its competitive position in a maturing domestic market. It has also announced significant capital expenditure to strengthen its cloud infrastructure, enhance AI capabilities, and expand data services, positioning it to capture the structural demand for digital transformation across industries.
Industry Consumer Discretionary
PDD Holdings
% of Net Assets 4.9%
PDD Holdings is China’s third-largest e-commerce platform by Gross Merchandise Value (GMV), known for its efficiency in supply chain management and cost control. Its proprietary traffic distribution model enables it to offer low-cost products and steadily capture market share. The company’s international expansion, via its fast-growing app Temu, has extended operations to more than 50 countries. By leveraging China’s manufacturing base to meet global demand, PDD has established a scalable and cross-border commerce model.
Industry Communication Services
ByteDance (unlisted)
% of Net Assets 3.7%
ByteDance is one of the largest internet entertainment companies in China and among the few with notable success in overseas markets, primarily through TikTok. The company continues to demonstrate exceptional product innovation and development capabilities within the social media business, capturing a growing share of user time and engagement. Despite its scale, ByteDance remains under-monetised, with major platforms such as Douyin and TikTok still in the early stages of advertising monetisation. This offers meaningful upside potential as monetisation efficiency improves and ad load increases. Its ecosystem benefits from powerful content recommendation algorithms, data-led service integration and strong user engagement. Despite ongoing uncertainty surrounding TikTok’s US operations, ByteDance’s growth prospects remain robust. This resilience is underpinned by its strong financial performance, international expansion, and leadership in AI innovation.
Industry Information Technology
Pony.ai
% of Net Assets 2.7%
Pony.ai is a leading autonomous vehicle technology company in China. Strong government support for the development of homegrown autonomous driving solutions provides a favourable policy backdrop. The company’s technology leadership, demonstrated by smooth ride performance and advanced handling of extreme situations, reinforces its competitive edge. As China aims to demonstrate readiness in autonomous mobility and potentially export its technology, Pony.ai is well positioned to benefit from rising adoption and the gradual commercial rollout of robotaxi services.
Twenty Largest Holdings as at 30 September 2025
The Asset Exposures shown below measure the exposure of the Company’s portfolio to market price movements in the shares and convertible bonds owned or in the shares underlying the derivative instruments. The Fair Value is the value the portfolio could be sold for and is the value shown on the Statement of Financial Position. Where a contract for difference (“CFD”) is held, the fair value reflects the profit or loss on the contract since it was opened and is based on how much the share price of the underlying shares has moved.
|
| Asset Exposure | Fair Value | |
| £’000 | %1 | ||
| Long Exposures – shares unless otherwise stated |
|
|
|
| Tencent Holdings (shares and long CFDs) |
|
|
|
| Communication Services | 248,658 | 14.3 | 153,568 |
| Alibaba Group Holding (shares and long CFDs) |
|
|
|
| Consumer Discretionary | 165,570 | 9.5 | 70,248 |
| PDD Holdings |
|
|
|
| Consumer Discretionary | 84,945 | 4.9 | 84,945 |
| ByteDance (unlisted) |
|
|
|
| Communication Services | 64,462 | 3.7 | 64,462 |
| Pony.ai |
|
|
|
| Information Technology | 46,282 | 2.7 | 46,282 |
| Hesai Group |
|
|
|
| Consumer Discretionary | 37,284 | 2.1 | 37,284 |
| Contemporary Amperex Technology (shares and long CFDs) |
|
|
|
| Industrials | 35,143 | 2.0 | 16,685 |
| China Foods (shares and long CFD) |
|
|
|
| Consumer Staples | 34,008 | 2.0 | (2,605) |
| Trip.com Group |
|
|
|
| Consumer Discretionary | 33,808 | 1.9 | 33,808 |
| NetEase |
|
|
|
| Communication Services | 30,991 | 1.8 | 30,991 |
| Venturous Holdings (unlisted) |
|
|
|
| Financials | 30,299 | 1.7 | 30,299 |
| Full Truck Alliance (long CFD) |
|
|
|
| Industrials | 29,847 | 1.7 | (1,423) |
| Crystal International Group |
|
|
|
| Consumer Discretionary | 29,250 | 1.7 | 29,250 |
| Ping An Insurance (Group) Company of China (long CFDs) |
|
|
|
| Financials | 27,122 | 1.6 | (300) |
| Chime Biologics Convertible Bond (unlisted) |
|
|
|
| Health Care | 26,882 | 1.5 | 26,882 |
| Sinotrans (shares and long CFD) |
|
|
|
| Industrials | 26,166 | 1.5 | 13,011 |
| Tuhu Car |
|
|
|
| Industrials | 25,283 | 1.5 | 25,283 |
| H World Group |
|
|
|
| Consumer Discretionary | 24,973 | 1.4 | 24,973 |
| Hisense Home Appliances Group (long CFD) |
|
|
|
| Consumer Discretionary | 23,834 | 1.4 | (2,572) |
| Zijin Mining Group |
|
|
|
| Materials | 22,874 | 1.3 | 22,874 |
|
| --------------- | --------------- | --------------- |
| Twenty largest long exposures | 1,047,681 | 60.2 | 703,945 |
| Other long exposures | 1,300,123 | 74.6 | 968,980 |
|
| --------------- | --------------- | --------------- |
| Total long exposures before hedges (145 companies) | 2,347,804 | 134.8 | 1,672,925 |
|
| ========= | ========= | ========= |
| Less: hedging exposures |
|
|
|
| Hang Seng Index (future) | (104,773) | (6.0) | (1,118) |
| Hang Seng China Enterprises Index (future) | (93,574) | (5.4) | (708) |
|
| --------------- | --------------- | --------------- |
| Total hedging exposures | (198,347) | (11.4) | (1,826) |
|
| ========= | ========= | ========= |
| Total long exposures after the netting of hedges | 2,149,457 | 123.4 | 1,671,099 |
|
| ========= | ========= | ========= |
| Short exposures |
|
|
|
| Short CFDs (4 holdings) | 65,806 | 3.8 | (5,290) |
|
| --------------- | --------------- | --------------- |
| Gross Asset Exposure2 | 2,215,263 | 127.2 |
|
|
| ========= | ========= |
|
| Portfolio Fair Value3 |
|
| 1,665,809 |
| Net current assets (excluding derivative instruments) |
|
| 75,967 |
|
|
|
| --------------- |
| Net Assets |
|
| 1,741,776 |
|
|
|
| ========= |
1 Asset Exposure expressed as a percentage of Net Assets.
2 Gross Asset Exposure comprises market exposure to investments of £1,655,634,000 plus market exposure to derivative instruments of £559,629,000.
3 Portfolio Fair Value comprises investments of £1,655,634,000 plus derivative assets of £31,845,000 less derivative liabilities of £21,670,000.
Interim Management Report
UNLISTED INVESTMENTS
The Company can invest up to 15% of its Net Assets plus Borrowings in unlisted securities which carry on business, or have significant interests, in China. The limit is applied at the time of purchase.
The Directors believe that the ability to invest in unlisted securities is a differentiating factor for the Company and can be a source of additional investment performance. It allows the Portfolio Manager to take advantage of the growth trajectory of early-stage companies before they potentially become listed. This can offer good opportunities for patient and long-term investors.
In the reporting period, a purchase of shares was made in Hashkey Holdings in August 2025 at a cost of £22,669,000. No companies from the portfolio gained quotations on stock exchanges during the period under review.
At the period end, the Company had seven unlisted investments valued at £171,953,000 being 9.9% of its Net Assets (31 March 2025: six unlisted investments valued at £136,044,000 being 9.6% of Net Assets).
Overview of the Unlisted Investments Valuation Process
Unlisted investments in the Company’s portfolio are held at fair value, which is defined as the value that would be paid for a holding in an open-market transaction. The Manager’s Fair Value Committee (“FVC”), which is independent of the Portfolio Manager, provides recommended fair values to the Directors.
Twice yearly, ahead of the Company’s interim and year end, the Audit and Risk Committee receives a detailed presentation from the FVC, Fidelity’s unlisted investments specialist and Kroll (independent third-party valuers). This allows the Board to satisfy itself that the unlisted investments in the Company’s portfolio are carried at an appropriate value in accordance with Accounting Policies Notes 2 (e) and (l) on pages 64 to 66 of the Annual Report for the year ended 31 March 2025 which can be found on the Company’s pages of the Manager’s website at www.fidelity.co.uk/china. The external Auditor attends the unlisted valuations meeting held ahead of the Company’s year end.
Workings of the Fair Value Committee
The valuation of each unlisted investment is set by the Manager’s FVC and includes input from the analysts covering the securities, Fidelity’s unlisted investments specialist and also advised upon by independent third-party valuers, Kroll.
Kroll, as independent valuers, undertake a detailed review of each of the unlisted investments on a quarterly basis. The Board is provided with quarterly updates from the FVC, which include recommendations from the analysts’ and Fidelity’s unlisted investments specialist, enabling the Board to have oversight of and confidence in Fidelity’s process. Outside of the normal quarterly cycle, the unlisted investments are monitored daily for trigger events such as funding rounds or news affecting fundamentals which may require the FVC to adjust the valuation price as soon as the Fidelity analyst has been consulted. In addition to this, the unlisted investments are monitored on a weekly basis within a comparable movement model. If the average movement of the selected proxies is +/-15%, a revaluation of the relevant investment is considered.
GEARING
The Board continues to believe that the judicious use of gearing (a benefit of the investment trust structure) can enhance returns, although being more than 100% invested also means that the NAV and share price may be more volatile and can accentuate losses in a falling market, as well as being additive on the upside. The Company currently has no bank loans and solely uses contracts of differences (CFDs) for gearing purposes as these tend to be at lower costs than prevailing longer-dated borrowing. Net gearing at the period end was 19.6% compared to 20.9% as at 31 March 2025. The impact of gearing was positive during the reporting period, adding 3.0% to returns.
DISCOUNT MANAGEMENT
The Board believes that investors are best served when the share price trades closely to its NAV per share. It recognises that the share price is affected by the interaction of supply and demand in the market based on investor sentiment towards China, as well as the performance of the Company’s portfolio. A discount control mechanism is in place whereby the Board seeks to maintain the Company’s discount in single digits in normal market conditions. The Directors remain vigilant of changes in sentiment towards China and the impact that has on demand for the Company’s shares and, in turn, on the price at which they trade.
The Board undertook active discount management in the reporting period and authorised the repurchase of 9,033,042 shares for cancellation at a cost of £25,275,000, representing 1.58% of the issued share capital of the Company as at 30 September 2025. As well as helping to limit discount volatility, these share repurchases have benefited remaining shareholders as the NAV per share has been increased by purchasing shares at a discount. Subsequent to the period end and up to the latest practicable date of this report, the Company has repurchased 9,022,797 shares for cancellation.
ONGOING CHARGES RATIO AND MANAGEMENT FEE
The Ongoing Charges Ratio (the costs of running the Company) for the six months ended 30 September 2025 was 0.93% on an annualised basis (31 March 2025: 0.89%). The increase was due to the end of the fee holiday granted by the Manager in relation to the abrdn China Investment Company (“ACIC”) transaction on 14 March 2024. The variable element of the management fee was a charge of 0.14% (31 March 2025: credit of 0.15%). Therefore, the Ongoing Charges Ratio, including the variable element, for the reporting period was 1.07% (31 March 2025: 0.74%).
Following a reduction in the base management fee paid to the Manager for the financial year ended 31 March 2024 as a result of the combination with ACIC, there have been no further changes to the fee arrangements in the period under review.
PRINCIPAL AND EMERGING RISKS
The Board, with the assistance of the Manager (FIL Investments Services (UK) Limited), has developed a risk matrix which, as part of the risk management and internal controls process, identifies the key existing and emerging risks and uncertainties faced by the Company.
The Board considers that the principal risks and uncertainties faced by the Company continue to fall into the following risk categories: geopolitical; market and economic (including currency risk); investment performance (including gearing risk); marketplace competition and discount management; unlisted securities; key person; cybercrime and information security, including business continuity and operational risks. Information on each of these risks is given in the Strategic Report section of the Annual Report on pages 27 to 30 for the year ended 31 March 2025 which can be found on the Company’s pages of the Manager’s website at www.fidelity.co.uk/china.
The principal risks and uncertainties remain substantially the same as those at the last year end. There continue to be increased geopolitical tensions and economic and market events, including tensions such as those between China and the US over trade and tariffs, implications of China/Taiwan relations, the potential for North Korean aggression and its impact on the Asia region. Geopolitics remains a risk for Chinese equities and there is increased global economic uncertainty from tariff wars and the ongoing conflict in Ukraine. There were some positive outcomes from the meeting between US President Trump and Chinese President Xi Jinping with headline wins on both sides. The talks produced several concessions on major trade barriers including tariffs, port fees, export controls, and sanctions. The Board and the Manager remain vigilant in monitoring existing and emerging risks.
Climate change continues to be a key principal risk confronting asset managers and how this may impact the Company as a risk on investment valuations and potentially shareholder returns. It can potentially impact the operations of investee companies, their supply chains and their customers. Additional risks may also arise from increased regulations, costs and net-zero programmes which can all impact investment returns. The Board notes the Manager’s ESG considerations, including climate change, in the Company’s investment process and how it may affect investment valuations and potentially shareholder returns.
AI is an important structural theme for China’s economy. The Board and the Manager continue to monitor the emerging risks and rewards posed by the rapid advancement of artificial intelligence (AI) and technology and how this may threaten the Company’s activities and its potential impact on the portfolio and investee companies. AI can provide asset managers powerful tools, such as enhancing data analysis risk management, trading strategies, operational efficiency and client servicing, all of which can lead to better investment outcomes and more efficient operations. However, with these advances in computer power, there are risks from its increasing use and manipulation with the potential to harm, including a heightened threat to cybersecurity.
Market fluctuations will impact the values of shares in the Company and investors should remember that holding shares in the Company should be considered to be a long-term investment. Risks are mitigated by the investment trust structure of the Company which means that the Portfolio Manager is not required to trade to meet investor redemptions. Therefore, investments in the Company’s portfolio can be held over a longer time horizon.
The Manager has appropriate business continuity and operational resilience plans in place to ensure the continued provision of services. This includes investment team key activities, including those of portfolio managers, analysts and trading/support functions. The Manager reviews its operational and business continuity resilience strategies on an ongoing basis and continues to take all reasonable steps in meeting its regulatory obligations, assess its ability to continue operating and the steps it needs to take to serve and support its clients, including the Board.
The Company’s other third-party service providers also have similar measures in place to ensure that business disruption is kept to a minimum.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company’s investment management to FIL Investment Management (Hong Kong) Limited 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 15 to the Financial Statements below.
GOING CONCERN STATEMENT
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 and its expenditure and cash flow projections. The Directors, having considered the liquidity of the Company’s portfolio of investments (being mainly securities which are readily realisable) and the projected income and expenditure, are satisfied that the Company is financially sound and has adequate resources to meet all of its liabilities and ongoing expenses and can continue in operational existence for a period of at least twelve months from the date of this Half-Yearly Report.
This conclusion also takes into account the Board’s assessment of the ongoing risks as outlined above.
Accordingly, the Financial Statements of the Company have been prepared on a going concern basis.
The Company will hold its first continuation vote at the AGM in 2029 and every five years thereafter.
By Order of the Board
FIL INVESTMENTS INTERNATIONAL
8 December 2025
Directors’ Responsibility Statement
The Disclosure and Transparency Rules (“DTR”) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements contained within this Half-Yearly Report has been prepared in accordance with the International Accounting Standards 34: Interim Financial Reporting; and
b) the Portfolio Manager’s Half-Yearly Review and the Interim Management Report above include 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 8 December 2025 and the above responsibility statement was signed on its behalf by Mike Balfour, Chairman.
FINANCIAL STATEMENTS
Statement of Comprehensive Income for the six months ended 30 September 2025
|
|
| Six months ended 30 September 2025 | Six months ended 30 September 2024 | Year ended 31 March 2025 | ||||||
|
|
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total |
| Revenue |
|
|
|
|
|
|
|
|
|
|
| Investment income | 4 | 32,631 | – | 32,631 | 40,731 | – | 40,731 | 46,862 | – | 46,862 |
| Derivative income | 4 | 12,965 | – | 12,965 | 11,720 | – | 11,720 | 13,747 | – | 13,747 |
| Other income | 4 | 1,714 | – | 1,714 | 676 | – | 676 | 2,090 | – | 2,090 |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Total income |
| 47,310 | – | 47,310 | 53,127 | – | 53,127 | 62,699 | – | 62,699 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| Gains on investments at fair value through profit or loss |
| – | 274,661 | 274,661 | – | 72,009 | 72,009 | – | 249,875 | 249,875 |
| Gains on derivative instruments |
| – | 93,083 | 93,083 | – | 73,226 | 73,226 | – | 57,121 | 57,121 |
| Foreign exchange (losses)/gains |
| – | (1,359) | (1,359) | – | (3,263) | (3,263) | – | 1,769 | 1,769 |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Total income and gains |
| 47,310 | 366,385 | 413,695 | 53,127 | 141,972 | 195,099 | 62,699 | 308,765 | 371,464 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| Expenses |
|
|
|
|
|
|
|
|
|
|
| Investment management fees | 5 | (1,528) | (5,592) | (7,120) | (1,108) | (2,267) | (3,375) | (2,469) | (5,572) | (8,041) |
| Other expenses |
| (592) | (18) | (610) | (593) | (5) | (598) | (1,211) | (32) | (1,243) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Profit before finance costs and taxation |
| 45,190 | 360,775 | 405,965 | 51,426 | 139,700 | 191,126 | 59,019 | 303,161 | 362,180 |
| Finance costs | 6 | (1,874) | (5,621) | (7,495) | (2,901) | (8,703) | (11,604) | (5,774) | (17,324) | (23,098) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Profit before taxation |
| 43,316 | 355,154 | 398,470 | 48,525 | 130,997 | 179,522 | 53,245 | 285,837 | 339,082 |
| Taxation | 7 | (841) | – | (841) | (1,341) | 322 | (1,019) | (1,070) | – | (1,070) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Profit after taxation for the period |
| 42,475 | 355,154 | 397,629 | 47,184 | 131,319 | 178,503 | 52,175 | 285,837 | 338,012 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| Earnings per ordinary share | 8 | 8.64p | 72.28p | 80.92p | 9.05p | 25.20p | 34.25p | 10.18p | 55.75p | 65.93p |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= | ========= |
The Company does not have any income or expenses that are not included in the profit after taxation for the period. Accordingly, the profit after taxation for the period is also the total comprehensive income for the period.
The total column of this statement represents the Company’s Statement of Comprehensive Income.
The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.
All the profit and total comprehensive income is attributable to the equity shareholders of the Company. There are no minority interests.
No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.
Statement of Changes in Equity for the six months ended 30 September 2025
|
|
|
| Share | Capital |
|
|
|
|
| Six months ended 30 September 2025 (unaudited) |
|
|
|
|
|
|
|
|
| Total equity at 31 March 2025 |
| 5,805 | 338,107 | 1,412 | 74,052 | 922,363 | 72,063 | 1,413,802 |
| Repurchase of ordinary shares for cancellation | 13 | (91) | – | 91 | (25,275) | – | – | (25,275) |
| Profit after taxation for the period |
| – | – | – | – | 355,154 | 42,475 | 397,629 |
| Dividend paid to shareholders | 9 | – | – | – | – | – | (44,380) | (44,380) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Total equity at 30 September 2025 |
| 5,714 | 338,107 | 1,503 | 48,777 | 1,277,517 | 70,158 | 1,741,776 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| Six months ended 30 September 2024 (unaudited) |
|
|
|
|
|
|
|
|
| Total equity at 31 March 2024 |
| 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 |
| Contribution in respect of the transaction with ACIC by the Manager |
| – | 100 | – | – | – | – | 100 |
| Costs relating to the ACIC transaction and issuance of shares |
| – | (636) | – | – | – | – | (636) |
| Repurchase of ordinary shares for cancellation | 13 | (93) | – | 93 | (18,509) | – | – | (18,509) |
| Profit after taxation for the period |
| – | – | – | – | 131,319 | 47,184 | 178,503 |
| Dividend paid to shareholders | 9 | – | – | – | – | – | (33,355) | (33,355) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Total equity at 30 September 2024 |
| 6,020 | 337,631 | 1,197 | 122,352 | 767,845 | 67,072 | 1,302,117 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| Year ended 31 March 2025 (audited) |
|
|
|
|
|
|
|
|
| Total equity at 31 March 2024 |
| 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 |
| Contribution in respect of the transaction with ACIC by the Manager |
| – | 100 | – | – | – | – | 100 |
| Costs relating to the issuance of new shares in respect to the ACIC transaction |
| – | (160) | – | – | – | – | (160) |
| Repurchase of ordinary shares for cancellation | 13 | (308) | – | 308 | (66,809) | – | – | (66,809) |
| Profit after taxation for the year |
| – | – | – | – | 285,837 | 52,175 | 338,012 |
| Dividend paid to shareholders | 9 | – | – | – | – | – | (33,355) | (33,355) |
|
|
| ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- |
| Total equity at 31 March 2025 |
| 5,805 | 338,107 | 1,412 | 74,052 | 922,363 | 72,063 | 1,413,802 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
Statement of Financial Position as at 30 September 2025
Company number 7133583
|
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| Non-current assets |
|
|
|
|
| Investments at fair value through profit or loss | 10 | 1,655,634 | 1,346,238 | 1,188,207 |
|
|
| ---------------- | ---------------- | ---------------- |
| Current assets |
|
|
|
|
| Derivative instruments | 10 | 31,845 | 9,938 | 104,457 |
| Amounts held at futures clearing houses and brokers |
| 28,652 | 33,760 | 29,585 |
| Other receivables | 11 | 8,996 | 7,295 | 14,450 |
| Cash and cash equivalents |
| 67,886 | 49,691 | 8,827 |
|
|
| ---------------- | ---------------- | ---------------- |
|
|
| 137,379 | 100,684 | 157,319 |
|
|
| ========= | ========= | ========= |
| Current liabilities |
|
|
|
|
| Derivative instruments | 10 | (21,670) | (24,838) | (17,133) |
| Other payables | 12 | (29,567) | (8,282) | (4,068) |
| Bank overdraft |
| – | – | (22,208) |
|
|
| ---------------- | ---------------- | ---------------- |
|
|
| (51,237) | (33,120) | (43,409) |
|
|
| ---------------- | ---------------- | ---------------- |
| Net current assets |
| 86,142 | 67,564 | 113,910 |
|
|
| ========= | ========= | ========= |
| Net assets |
| 1,741,776 | 1,413,802 | 1,302,117 |
|
|
| ========= | ========= | ========= |
| Equity attributable to equity shareholders |
|
|
|
|
| Share capital | 13 | 5,714 | 5,805 | 6,020 |
| Share premium account |
| 338,107 | 338,107 | 337,631 |
| Capital redemption reserve |
| 1,503 | 1,412 | 1,197 |
| Other reserve |
| 48,777 | 74,052 | 122,352 |
| Capital reserve |
| 1,277,517 | 922,363 | 767,845 |
| Revenue reserve |
| 70,158 | 72,063 | 67,072 |
|
|
| ---------------- | ---------------- | ---------------- |
| Total equity |
| 1,741,776 | 1,413,802 | 1,302,117 |
|
|
| ========= | ========= | ========= |
| Net asset value per ordinary share | 14 | 358.53p | 285.71p | 252.18p |
|
|
| ========= | ========= | ========= |
Statement of Cash Flows for the six months ended 30 September 2025
|
| Six months | Six months |
|
| Operating activities |
|
|
|
| Cash inflow from investment income | 28,389 | 37,082 | 45,209 |
| Cash inflow from derivative income | 11,937 | 9,593 | 14,002 |
| Cash inflow from other income | 1,714 | 676 | 2,090 |
| Cash outflow from Directors’ fees | (126) | (107) | (249) |
| Cash outflow from other payments | (6,691) | (3,755) | (9,433) |
| Cash outflow from costs relating to the ACIC transaction and issuance of shares | – | (636) | – |
| Cash outflow from the purchase of investments | (396,515) | (308,988) | (651,563) |
| Cash outflow from the purchase of derivatives | (4,929) | (1,137) | (2,242) |
| Cash outflow from the settlement of derivatives | (191,551) | (172,503) | (436,471) |
| Cash inflow from the sale of investments | 385,545 | 349,903 | 716,551 |
| Cash inflow from the settlement of derivatives | 264,037 | 153,184 | 507,321 |
| Cash inflow/(outflow) from amounts held at futures clearing houses and brokers | 5,108 | (4,996) | (9,171) |
|
| ---------------- | ---------------- | ---------------- |
| Net cash inflow from operating activities before servicing of finance | 96,918 | 58,316 | 176,044 |
|
| ========= | ========= | ========= |
| Financing activities |
|
|
|
| Cash inflow from the Fidelity contribution in respect of the transaction with ACIC | – | 100 | – |
| Cash outflow from overdraft interest paid | (366) | (48) | (80) |
| Cash outflow from CFD interest paid | (6,929) | (11,274) | (22,478) |
| Cash outflow from short CFD dividends paid | (414) | (287) | (321) |
| Cash outflow from the repurchase of ordinary shares for cancellation | (25,275) | (18,670) | (66,988) |
| Cash outflow from dividends paid to shareholders | (44,380) | (33,355) | (33,355) |
|
| ---------------- | ---------------- | ---------------- |
| Cash outflow from financing activities | (77,364) | (63,534) | (123,222) |
|
| ========= | ========= | ========= |
| Net increase/(decrease) in cash at bank | 19,554 | (5,218) | 52,822 |
| Cash and cash equivalent at the start of the period | 49,691 | 7,858 | 7,858 |
| Bank overdraft at the start of the period | – | (12,758) | (12,758) |
| Effect of foreign exchange movements | (1,359) | (3,263) | 1,769 |
|
| ---------------- | ---------------- | ---------------- |
| Cash and cash equivalents at the end of the period | 67,886 | (13,381) | 49,691 |
|
| ========= | ========= | ========= |
| Represented by: |
|
|
|
| Cash at bank | – | 8,826 | 49,691 |
| Amount held in Fidelity Institutional Liquidity Fund | 67,886 | 1 | – |
| Bank overdraft | – | (22,208) | – |
|
| ---------------- | ---------------- | ---------------- |
|
| 67,886 | (13,381) | 49,691 |
|
| ========= | ========= | ========= |
Notes to the Financial Statements
1 Principal Activity
Fidelity China Special Situations PLC is an Investment Company incorporated in England and Wales that is listed on the London Stock Exchange. The Company’s registration number is 7133583, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.
2 Publication of Non-statutory Accounts
The Financial Statements in this Half-Yearly Report have not been audited or reviewed by the Company’s Independent Auditor and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 (the “Act”). The financial information for the year ended 31 March 2025, is extracted from the latest published Financial Statements of the Company. Those Financial Statements were delivered to the Registrar of Companies and included the Independent Auditor’s Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Act.
3 Accounting Policies
(i) Basis of Preparation
These Half-Yearly Financial Statements have been prepared in accordance with UK-adopted International Accounting Standard 34: Interim Financial Reporting and use the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 31 March 2025. Those Financial Statements were prepared in accordance with UK-adopted International Accounting Standards (“IFRS”) in conformity with the requirements of the Companies Act 2006, IFRC interpretations and, as far as it is consistent with IFRS, the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the Association of Investment Companies (“AIC”), in July 2022.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements. This conclusion also takes into account the Board’s assessment of the ongoing risks as disclosed in the Going Concern Statement above.
4 Income
|
| Six months | Six months | Year |
| Investment income |
|
|
|
| Overseas dividends | 32,143 | 40,459 | 46,590 |
| Overseas scrip dividends | 488 | 272 | 272 |
|
| ---------------- | ---------------- | ---------------- |
|
| 32,631 | 40,731 | 46,862 |
|
| ========= | ========= | ========= |
| Derivative income |
|
|
|
| Dividends received on long CFDs | 12,912 | 11,375 | 13,152 |
| Interest received on CFDs | 53 | 345 | 595 |
|
| ---------------- | ---------------- | ---------------- |
|
| 12,965 | 11,720 | 13,747 |
|
| ========= | ========= | ========= |
| Other income |
|
|
|
| Interest received on bank deposits, collateral and money market funds | 1,714 | 676 | 2,090 |
|
| ---------------- | ---------------- | ---------------- |
| Total income | 47,310 | 53,127 | 62,699 |
|
| ========= | ========= | ========= |
No special dividends have been recognised in capital during the period (six months ended 30 September 2024 and year ended 31 March 2025: £1,493,000).
5 Investment Management Fees
|
| Revenue | Capital | Total |
| Six months ended 30 September 2025 (unaudited) |
|
|
|
| Investment management fee – base | 1,528 | 4,583 | 6,111 |
| Investment management fee – variable | – | 1,009 | 1,009 |
|
| ---------------- | ---------------- | ---------------- |
|
| 1,528 | 5,592 | 7,120 |
|
| ========= | ========= | ========= |
| Six months ended 30 September 2024 (unaudited) |
|
|
|
| Investment management fee – base | 1,242 | 3,727 | 4,969 |
| Investment management fee – variable | – | (1,058) | (1,058) |
| Investment management fee – base (waived in respect of ACIC combination) | (134) | (402) | (536) |
|
| ---------------- | ---------------- | ---------------- |
|
| 1,108 | 2,267 | 3,375 |
|
| ========= | ========= | ========= |
| Year ended 31 March 2025 (audited) |
|
|
|
| Investment management fee – base | 2,648 | 7,942 | 10,590 |
| Investment management fee – variable | – | (1,834) | (1,834) |
| Investment management fee – base (waived in respect of ACIC combination) | (179) | (536) | (715) |
|
| ---------------- | ---------------- | ---------------- |
|
| 2,469 | 5,572 | 8,041 |
|
| ========= | ========= | ========= |
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager (“the Manager”) and has delegated portfolio management to FIL Investment Management (Hong Kong) Limited (“the Investment Manager”). Both companies are Fidelity group companies.
The base investment management fee is charged at an annual rate of 0.85% on the first £1.5 billion of Net Assets, reducing to 0.65% of Net Assets over £1.5 billion.
In addition, there is a +/-0.20% variable fee based on the Company’s NAV per share performance relative to the Company’s Benchmark Index measured daily over a three year rolling basis.
In the prior year, the Manager agreed to a contribution of £715,000, representing eight months of management fees, in respect of the assets transferred by ACIC to the Company (in March 2024), that would otherwise have been payable by the enlarged Company to the Manager being recognised in the year to 31 March 2025.
Fees are payable monthly in arrears and are calculated on a daily basis.
The base management fee has been allocated 75% to capital reserve in accordance with the Company’s accounting policies.
6 Finance Costs
|
| Revenue | Capital | Total |
| Six months ended 30 September 2025 (unaudited) |
|
|
|
| Interest on overdrafts | 92 | 275 | 367 |
| Interest paid on CFDs | 1,678 | 5,035 | 6,713 |
| Dividends paid on short CFDs | 104 | 311 | 415 |
|
| ---------------- | ---------------- | ---------------- |
|
| 1,874 | 5,621 | 7,495 |
|
| ========= | ========= | ========= |
| Six months ended 30 September 2024 (unaudited) |
|
|
|
| Interest on overdrafts | 12 | 36 | 48 |
| Interest paid on CFDs | 2,817 | 8,452 | 11,269 |
| Dividends paid on short CFDs | 72 | 215 | 287 |
|
| ---------------- | ---------------- | ---------------- |
|
| 2,901 | 8,703 | 11,604 |
|
| ========= | ========= | ========= |
| Year ended 31 March 2025 (audited) |
|
|
|
| Interest paid on overdrafts | 20 | 60 | 80 |
| Interest paid on CFDs | 5,674 | 17,023 | 22,697 |
| Dividends paid on short CFDs | 80 | 241 | 321 |
|
| ---------------- | ---------------- | ---------------- |
|
| 5,774 | 17,324 | 23,098 |
|
| ========= | ========= | ========= |
Finance costs have been allocated 75% to capital reserve in accordance with the Company’s accounting policies.
7 Taxation
|
| Revenue | Capital | Total |
| Six months ended 30 September 2025 (unaudited) |
|
|
|
| UK corporation tax | – | – | – |
| Overseas taxation charge | 841 | – | 841 |
|
| ---------------- | ---------------- | ---------------- |
| Taxation charge for the period | 841 | – | 841 |
|
| ========= | ========= | ========= |
| Six months ended 30 September 2024 (unaudited) |
|
|
|
| UK corporation tax | 322 | (322) | – |
| Overseas taxation charge | 1,019 | – | 1,019 |
|
| ---------------- | ---------------- | ---------------- |
| Taxation charge for the period | 1,341 | (322) | 1,019 |
|
| ========= | ========= | ========= |
| Year ended 31 March 2025 (audited) |
|
|
|
| UK corporation tax | – | – | – |
| Overseas taxation charge | 1,070 | – | 1,070 |
|
| ---------------- | ---------------- | ---------------- |
| Taxation charge for the year | 1,070 | – | 1,070 |
|
| ========= | ========= | ========= |
8 EARNINGS PER ORDINARY SHARE
|
| Six months | Six months | Year |
| Revenue earnings per ordinary share | 8.64p | 9.05p | 10.18p |
| Capital earnings per ordinary share | 72.28p | 25.20p | 55.75p |
|
| --------------- | --------------- | --------------- |
| Total earnings per ordinary share | 80.92p | 34.25p | 65.93p |
|
| ========= | ========= | ========= |
The earnings per ordinary share is based on the profit after taxation for the period divided by the weighted average number of ordinary shares held outside of Treasury during the period, as shown below:
|
| £’000 | £’000 | £’000 |
| Revenue profit after taxation for the period | 42,475 | 47,184 | 52,175 |
| Capital profit after taxation for the period | 355,154 | 131,319 | 285,837 |
|
| --------------- | --------------- | --------------- |
| Total profit after the taxation for the period | 397,629 | 178,503 | 338,012 |
|
| ========= | ========= | ========= |
|
| Number | Number | Number |
| Weighted average number of ordinary shares held outside of Treasury | 491,359,813 | 521,153,833 | 512,652,970 |
|
| ========== | ========== | ========== |
9 DIVIDEND PAID TO SHAREHOLDERS
|
| Six months | Six months | Year |
| Ordinary dividend of 8.00 pence per share paid for the year ended 31 March 2025 | 39,449 | – | – |
| Special dividend of 1.00 pence per share paid for the year ended 31 March 2025 | 4,931 | – | – |
| Ordinary dividend of 6.40 pence per share paid for the year ended 31 March 2024 | – | 33,355 | 33,355 |
|
| --------------- | --------------- | --------------- |
|
| 44,380 | 33,355 | 33,355 |
|
| ========= | ========= | ========= |
No dividend has been declared for the six months ended 30 September 2025 (six months ended 30 September 2024: £nil).
10 FAIR VALUE HIERARCHY
The Company is required to disclose the fair value hierarchy that classifies its financial instruments measured at fair value at one of three levels, according to the relative reliability of the inputs used to estimate the fair values.
| Classification | Input |
| Level 1 | Valued using quoted prices in active markets for identical assets |
| Level 2 | Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly |
| Level 3 | Valued by reference to valuation techniques using inputs that are not based on observable market data |
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. The valuation techniques used by the Company are as disclosed in the Company’s Annual Report for the year ended 31 March 2025 (Accounting Policies Notes 2 (e), (l) and (m) on pages 64 to 66). The table below sets out the Company’s fair value hierarchy:
|
| Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value through profit or loss |
|
|
|
|
| Investments | 1,483,681 | – | 171,953 | 1,655,634 |
| Derivative instrument assets | – | 31,845 | – | 31,845 |
|
| --------------- | --------------- | --------------- | --------------- |
|
| 1,483,681 | 31,845 | 171,953 | 1,687,479 |
|
| ========= | ========= | ========= | ========= |
| Financial liabilities at fair value through profit or loss |
|
|
|
|
| Derivative instrument liabilities | (1,826) | (19,844) | – | (21,670) |
|
| ========= | ========= | ========= | ========= |
|
| Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value through profit or loss |
|
|
|
|
| Investments | 1,210,194 | – | 136,044 | 1,346,238 |
| Derivative instrument assets | 2,891 | 7,047 | – | 9,938 |
|
| --------------- | --------------- | --------------- | --------------- |
|
| 1,213,085 | 7,047 | 136,044 | 1,356,176 |
|
| ========= | ========= | ========= | ========= |
| Financial liabilities at fair value through profit or loss |
|
|
|
|
| Derivative instrument liabilities | – | (24,838) | – | (24,838) |
|
| ========= | ========= | ========= | ========= |
|
| Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value through profit or loss |
|
|
|
|
| Investments | 1,045,496 | 13,806 | 128,905 | 1,188,207 |
| Derivative instrument assets | 132 | 104,325 | – | 104,457 |
|
| --------------- | --------------- | --------------- | --------------- |
|
| 1,045,628 | 118,131 | 128,905 | 1,292,664 |
|
| ========= | ========= | ========= | ========= |
| Financial liabilities at fair value through profit or loss |
|
|
|
|
| Derivative instrument liabilities | (13,635) | (3,498) | – | (17,133) |
|
| ========= | ========= | ========= | ========= |
The table below sets out the movements in level 3 investments during the period:
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| Level 3 investments at the beginning of the period | 136,044 | 157,008 | 157,008 |
| Purchases at cost | 22,669 | 20,251 | 12,414 |
| Sales proceeds | – | (14,410) | (14,410) |
| Sales gains | – | 960 | 960 |
| Transfers out of level 3 – at cost1 | – | (42,208) | (17,316) |
| Unrealised gains/(losses) recognised in the Statement of Comprehensive Income | 13,240 | 14,443 | (9,751) |
|
| --------------- | --------------- | --------------- |
| Level 3 investments at the end of the period | 171,953 | 136,044 | 128,905 |
|
| ========= | ========= | ========= |
1 Financial instruments are transferred out of level 3 when they become listed.
During the period, £73,000 income has been recognised from the unlisted investments (six months ended 30 September 2024 and year ended 31 March 2025: £nil).
Level 3 investments (unlisted and delisted investments)
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| ByteDance | 64,463 | 55,005 | 35,450 |
| Venturous Holdings | 30,299 | 30,258 | 21,303 |
| Chime Biologics | 26,882 | 26,194 | 25,627 |
| DJI International | 20,064 | 17,123 | 15,591 |
| Fujian Yangteng Innovation | 7,549 | 7,464 | – |
| Hashkey Holdings | 22,696 | - | – |
| Pony.ai | - | - | 30,934 |
|
| --------------- | --------------- | --------------- |
|
| 171,953 | 136,044 | 128,905 |
|
| ========= | ========= | ========= |
The sensitivity analysis below illustrates how the unobservable inputs used in the valuation methodologies of the unlisted assets impact the fair value as at 30 September 2025
|
| Significant unobservable inputs |
| |||
|
| Fair value |
|
|
|
|
| Market approach using comparable Traded multiples or calibration factors | 92,076 | TEV/LTM revenue multiple1 | a,b,c,d | 1.95x – 3.5x | If TEV/LTM revenue multiple moved by +/- 10%, the fair value would change by £1,725,000 and -£1,709,000 |
|
|
| TEV/LTM EBITDA multiple2 | a,b,c,d | 7.25x – 8.25x | If TEV/LTM EBITDA multiple moved by +/- 10%, the fair value would change by £1,574,000 and -£1,538,000 |
|
|
| TEV/FY+1 revenue multiple3 | a,b,c,d | 1.55x – 3.25x | If TEV/FY+1 revenue multiple moved by +/- 10%, the fair value would change by £1,106,000 and -£1,091,000 |
|
|
| TEV/FY+1 EBITDA multiple4 | a,b,c,d | 5.0x – 6.0x | If TEV/FY+1 EBITDA multiple moved by +/- 10%, the fair value would change by £1,525,000 and -£1,490,000 |
|
|
| P/E LTM multiple5 | a,b,c,d | 14.0x – 17.0x | If P/E LTM multiple moved by +/- 10%, the fair value would change by £1,042,000 and -£1,042,000 |
| Sum of the partse | 30,299 | Selection of comparable companies and relevant indices | c | (10.0%) – 10.0% | If the market factor of the comparable companies moved by +/- 5% the fair value would change by £543,000 and -£543,000 |
| Scenario analysis considering a range of exit scenariosf | 26,882 | Discount rate | c,d | 16.5% – 17.5% | If the discount rate moved by +/- 10% the fair value would change by £182,000 and -£159,000 |
| Recent transaction pricesg | 94,707 | n/a | c | n/a | n/a |
|
| ========= |
|
|
|
|
* An asset may be valued using multiple approaches therefore this column is not expected to represent the total of level 3 investments held at the end of the period.
1 Total enterprise value (TEV) divided by the last twelve months (LTM) revenue.
2 Total enterprise value (TEV) divided by the last twelve months (LTM) earnings before interest, taxes, depreciation and amortisation (EBITDA).
3 Total enterprise value (TEV) divided by the next twelve months forecasted revenue (FY+1).
4 Total enterprise value (TEV) divided by the next twelve months (FY+1) forecasted earnings before interest, taxes, depreciation and amortisation (EBITDA).
5 Price to earnings (P/E) divided by the last twelve months (LTM) revenue.
The sensitivity analysis below illustrates how the unobservable inputs used in the valuation methodologies of the unlisted assets impact the fair value as at 30 September 2024
|
| Significant unobservable inputs |
| |||
|
| Fair value |
|
|
|
|
| Market approach using comparable Traded multiples or calibration factors | 50,041 | TEV/LTM revenue multiple1 | a,b,c,d | 1.95x – 3.5x | If TEV/LTM revenue multiple moved by +/- 10%, the fair value would change by £887,000 and -£905,000 |
|
|
| TEV/LTM EBITDA multiple2 | a,b,c,d | 7.25x – 8.25x | If TEV/LTM EBITDA multiple moved by +/- 10%, the fair value would change by £431,000 and -£335,000 |
|
|
| TEV/FY+1 revenue multiple3 | a,b,c,d | 1.55x – 3.25x | If TEV/FY+1 revenue multiple moved by +/- 10%, the fair value would change by £416,000 and -£320,000 |
|
|
| TEV/FY+1 EBITDA multiple4 | a,b,c,d | 5.0x – 6.0x | If TEV/FY+1 EBITDA multiple moved by +/- 10%, the fair value would change by £425,000 and -£329,000 |
|
|
| P/E LTM multiple5 | a,b,c,d | 14.0x – 17.0x | If P/E LTM multiple moved by +/- 10%, the fair value would change by £878,000 and -£878,000 |
| Sum of the partse | 21,303 | Selection of comparable companies and relevant indices | c | (10.0%) – 10.0% | If the market factor of the comparable companies moved by +/- 5% the fair value would change by £548,000 |
| Scenario analysis considering a range of exit scenariosf | 56,561 | Discount rate | c,d | 16.5% – 17.5% | If the discount rate moved by +/- 10% the fair value would change by £507,000 and -£522,000 |
| Recent transaction pricesg | 35,450 | n/a | c | n/a | n/a |
|
| ========= |
|
|
|
|
* An asset may be valued using multiple approaches therefore this column is not expected to represent the total of level 3 investments held at the end of the period.
1 Total enterprise value (TEV) divided by the last twelve months (LTM) revenue.
2 Total enterprise value (TEV) divided by the last twelve months (LTM) earnings before interest, taxes, depreciation and amortisation (EBITDA).
3 Total enterprise value (TEV) divided by the next twelve months forecasted revenue (FY+1).
4 Total enterprise value (TEV) divided by the next twelve months (FY+1) forecasted earnings before interest, taxes, depreciation and amortisation (EBITDA).
5 Price to earnings (P/E) divided by the last twelve months (LTM) revenue.
a. Selection of comparable companies
The fair value is determined by examining the market valuations of similar publicly traded firms. This approach involves identifying peer companies with similar industry characteristics, size, growth prospects, and financial metrics. Key valuation multiples such as Price-to-Earnings (P/E), Enterprise Value-to-EBITDA (EV/EBITDA), and Price-to-Sales (P/S) are calculated for each comparable company. These multiples are then applied to the target company’s corresponding financial figures to derive an estimated value range. The selection of comparable companies is evaluated at each valuation.
b. Selection of appropriate benchmarks
A benchmark-based valuation methodology estimates the fair value of a company by comparing its financial and operational metrics to a set of relevant industry or market benchmarks. These benchmarks may include sector averages, historical performance standards, or key financial ratios such as return on equity (ROE), profit margins, or revenue growth rates. The selection of appropriate benchmarks is assessed individually for each investment and updated regularly.
c. Selection of alternative valuation methodologies
Fair value is be determined using a variety of valuation methodologies, each suited to different types of investments and contexts. Common alternative approaches include the income approach, which estimates fair value based on the present value of expected future cash flows, utilizing discounted cash flow (DCF) models and estimated weighted average cost of capital (WACC) discount rates.
d. Estimate of sustainable earnings
The approach focuses on normalized earnings, either forecasted over the next 12 months or adjusted to reflect a sustainable, long-term level that smooths out cyclical fluctuations and one-time events. Analysts typically use forward-looking metrics such as projected net income or EBITDA, derived from management guidance, analyst forecasts, or historical trends. These earnings are then multiplied by a valuation multiple (e.g., P/E or EV/EBITDA) that reflects market expectations and industry norms. The chosen multiple may be based on comparable companies or historical averages. By focusing on earnings that are expected to persist over time, the approach aims to provide a more accurate and stable estimate of intrinsic value, especially in dynamic or transitional market environments.
e. Sum of the Parts Valuation
Sum of parts valuation (SOTP) determines the overall value of a company by assessing the individual worth of its various divisions or segments, particularly effective where a company is a conglomerate and has business units across multiple industries. The fair value of each business unit or segment is derived separately in accordance with the International Private Equity and Venture Capital 2022 (“IPEV”) Valuation Guidelines determined by any number of analysis methods including discounted cash flow (DCF) valuations, asset-based valuations and multiples valuations using revenue, operating profit or profit margins.
f. Range of exit scenarios
Fair value is determined by modelling potential scenarios about how a company might be sold, or value might be realised. Analysts typically develop several plausible exit scenarios such as a strategic acquisition, initial public offering (IPO), management buyout, or liquidation each with its own assumptions about timing, valuation multiples, and transaction terms. For each scenario, the expected proceeds are estimated, often using projected financial metrics and applying relevant market-based multiples. These proceeds are then discounted back to present value using an appropriate discount rate to reflect the time value of money and risk. The final fair value is calculated as a probability-weighted average of the present values across all scenarios, incorporating both the likelihood and financial impact of each outcome.
g. Recent Transaction price
A recent transaction price itself is observable and whilst it may be the most appropriate basis for a valuation, it often only represents one input and will be used alongside other unobservable inputs to determine the fair value of an asset.
No additional disclosures have been made in respect of the unlisted investments as the underlying financial information is not publicly available.
11 OTHER RECEIVABLES
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| Securities sold for future settlement | 1,388 | 3,926 | 6,834 |
| Amounts receivable on settlement of derivatives | 1,590 | 1,280 | 1,237 |
| Accrued income | 5,723 | 1,783 | 6,212 |
| Taxation recoverable | 11 | 11 | 11 |
| Other receivables | 284 | 295 | 156 |
|
| --------------- | --------------- | --------------- |
|
| 8,996 | 7,295 | 14,450 |
|
| ========= | ========= | ========= |
12 OTHER PAYABLES
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| Securities purchased for future settlement | 23,823 | 3,084 | 2,296 |
| Amounts payable on settlement of derivatives | 2,846 | 2,986 | – |
| Investment management fees payable | 1,512 | 1,023 | 563 |
| Accrued expenses | 771 | 359 | 604 |
| Finance costs payable | 615 | 830 | 605 |
|
| --------------- | --------------- | --------------- |
|
| 29,567 | 8,282 | 4,068 |
|
| ========= | ========= | ========= |
13 SHARE CAPITAL
|
| 30 September 2025 | 30 September 2024 | 31 March 2025 | |||
|
| Number of | Nominal value | Number of | Nominal value | Number of | Nominal value |
| Issued, allotted and fully paid |
|
|
|
|
|
|
| Ordinary shares of 1 pence each held outside of Treasury |
|
|
|
|
|
|
| Beginning of the period | 494,840,250 | 4,950 | 525,681,434 | 5,258 | 525,681,434 | 5,258 |
| Ordinary shares repurchased for cancellation | (9,033,042) | (91) | (9,332,287) | (93) | (30,841,184) | (308) |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| End of the period | 485,807,208 | 4,859 | 516,349,147 | 5,165 | 494,840,250 | 4,950 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Ordinary shares of 1 pence each held in Treasury1 |
|
|
|
|
|
|
| Beginning of the period | 85,629,548 | 855 | 85,629,548 | 855 | 85,629,548 | 855 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Ordinary shares repurchased into Treasury | – | – | – | – | – | – |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| End of the period | 85,629,548 | 855 | 85,629,548 | 855 | 85,629,548 | 855 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Total share capital |
| 5,714 |
| 6,020 |
| 5,805 |
|
|
| ========= |
| ========= |
| ========= |
During the period, the Company repurchased 9,033,042 (six months ended 30 September 2024: 9,332,287 shares and year ended 31 March 2025: 30,841,184 shares) ordinary shares for cancellation. The cost of repurchasing these shares of £25,275,000 (six months ended 30 September 2024: £18,509,000 and year ended 31 March 2025: £66,809,000) was charged to the Other reserve.
No ordinary shares were repurchased into Treasury during the period (six months ended 30 September 2024 and year ended 31 March 2025: nil shares).
14 NET ASSET VALUE PER ORDINARY SHARE
The calculation of the net asset value per ordinary share is based on the net assets divided by the number of ordinary shares held outside of Treasury.
|
| 30 September 2025 | 31 March 2025 | 30 September 2024 |
| Net assets | £1,741,776,000 | £1,413,802,000 | £1,302,117,000 |
| Ordinary shares held outside of Treasury | 485,807,208 | 494,840,250 | 516,349,147 |
| Net asset value per ordinary share | 358.53p | 285.71p | 252.18p |
|
| ========== | ========== | ========== |
It is the Company’s policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share so that shares held in Treasury have no dilutive effect.
15 TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company’s Alternative Investment Fund Manager and has delegated portfolio management to FIL Investment Management (Hong Kong) Limited. Both companies are Fidelity group companies.
Details of the fee arrangements are given in Note 5 above.
During the period, the Company had the following transactions payable to Fidelity:
|
| Six months | Six months | Year |
| Investment management fees | 7,120 | 3,375 | 8,041 |
| Marketing services | 159 | 128 | 327 |
|
| ========== | ========== | ========== |
At the Statement of Financial Position date, the following balances payable to Fidelity were accrued and included in other creditors:
|
| Six months | Year | Six months |
| Investment management fees | 1,512 | 1,023 | 563 |
| Marketing services | 74 | 47 | 81 |
|
| ========== | ========== | ========== |
As at 30 September 2025, the Board consisted of six non-executive Directors (shown in the Directory in the Half-Yearly Report), all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company.
The annual fee structure with effect from 1 April 2025 is as follows:
|
| £ |
| Chairman | 55,500 |
| Chairman of the Audit & Risk Committee | 46,500 |
| Senior Independent Director | 43,500 |
| Director | 37,000 |
|
| ========== |
As at 30 September 2025, the Directors held the following ordinary shares in the Company:
|
| Six months |
| Mike Balfour | 67,063 |
| Alastair Bruce | 43,800 |
| Vanessa Donegan | 16,287 |
| Georgina Field | 2,250 |
| Gordon Orr | – |
| Edward Tse | – |
|
| ========== |
16 SUBSEQUENT EVENTS
No significant events have occurred since the end of the reporting period which would impact the financial position of the Company.
The financial information contained in this Half-Yearly Results Announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 30 September 2025 and 30 September 2024 has not been audited or reviewed by the Company’s Independent Auditor.
The information for the year ended 31 March 2025 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
A copy of the Half-Yearly Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at www.fidelity.co.uk/china where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.
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