Fidelity Asian Values : Half-Yearly Report for the six months ended 31 January 2024

FIDELITY ASIAN VALUES PLC

Half-Yearly Report for the

six months ended 31 January 2024

Investment Objective and Overview

The Company's objective is to achieve long-term capital growth principally from the stockmarkets of the Asian Region excluding Japan.

Asia is the world's fastest-growing economic region, offering investors a potentially unparalleled long-term opportunity. Fidelity Asian Values PLC provides shareholders with a differentiated equity exposure to Asian markets. The Portfolio Managers achieve this differentiation by favouring undervalued small and medium-sized companies as this allows them to find quality businesses that are mispriced, the "winners of tomorrow", before they become well known. They utilise Fidelity's Asia-based analyst team and believe the current market environment offers an unprecedented opportunity to invest in high quality Asian smaller companies at attractive valuations.

Clare Brady, Chairman,

Fidelity Asian Values PLC

Contents

Portfolio Managers' Half-Yearly Review

Read more on pages 04 to 08

Net Asset Value per Ordinary Share as at 31 January

2024521.65p

2023544.18p

2022499.63p

01

Half-Yearly Report 2024 | Fidelity Asian Values PLC

At a Glance				02		REPORTS
Directors' Reports
							DIRECTORS'
Twenty Largest Holdings				09
Summary of Results				03
Portfolio Managers' Half-Yearly Review	04
Interim Management Report and
Directors' Responsibility Statement	12
Financial Statements
Income Statement				16
						STATEMENTSFINANCIAL
Information for Shareholders	18
Statement of Changes in Equity
Balance Sheet				20
Notes to the Financial Statements	21
Shareholder Information				29
Directory				31
Data Protection				32
Glossary of Terms				33
							SHAREHOLDERS
2024		492.00p
Ordinary Share Price as at
31 January
							FOR
2023		520.00p			INFORMATION
2022		469.00p

Front Cover: Balinese ceramic floor tiles.

02

Fidelity Asian Values PLC | Half-Yearly Report 2024

At a Glance

Six months ended 31 January 2024

Net Asset Value per ("NAV") Share total return1,2

-2.4%

(31 January 2023: +10.3%)

Ordinary Share Price

total return1,2

-2.5%

(31 January 2023: +17.3%)

Comparative Index

total return)1,3

+3.6%

(31 January 2023: +3.6%)

Standardised Performance Total Return (%)1

NAV per Ordinary Share
Ordinary Share Price	+63.6
Comparative Index
		+46.0
		+33.1
	+28.5	+27.5
		+21.9
	+7.5
-1.5	-2.5

1 year ended 31 January 2024

3 years ended 31 January 2024

5 years ended 31 January 2024

Sources: Fidelity and Datastream.

Past performance is not a guide to future returns.

1. Calculated on the basis that dividends paid to shareholders are reinvested in the Company at the ex-dividend date.
2. Alternative Performance Measures. See Glossary of Terms on page 33.
3. MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).

03

Half-Yearly Report 2024 | Fidelity Asian Values PLC

Summary of Results

Assets	31 January	31 July
2024	2023
Gross Asset Exposure1	£436.9m	£440.8m
Net Market Exposure1	£408.9m	£413.7m
Shareholdersʼ Funds1	£374.0m	£394.6m
NAV per Ordinary Share1,2	521.65p	549.33p
Gross Gearing1,2	16.8%	11.7%
Net Gearing1,2	9.4%	4.9%
Share Price and Discount Data
Ordinary Share Price at the period end	492.00p	520.00p
Share Price: period high3	530.00p	534.00p
Share Price: period low3	476.00p	423.00p
(Discount) to NAV per Ordinary Share at period end1,2	(5.7%)	(5.3%)
(Discount): period low/Premium: period high3	(2.2%)	0.8%
(Discount): period high3	(10.9%)	(12.9%)
Results for the six months ended 31 January	2024	2023
Revenue Return per Ordinary Share1,2	4.80p	5.51p
Capital (Loss)/Return per Ordinary Share1,2	(18.07p)	44.39p
Total (Loss)/Return per Ordinary Share1,2	(13.27p)	49.90p

1. See Glossary of Terms on pages 34 to 36.
2. Alternative Performance Measures. See Glossary of Terms on page 33.
3. For the six month period to 31 January 2024 and for the year ended 31 July 2023.

Summary of the key aspects of the Investment Policy

• The Portfolio Managers invest in securities of companies which they consider have fundamental value that has not been recognised by the market.
• The Company is not restricted in terms of size or industry of companies included in the portfolio and may invest in unlisted securities.
• The Company may also invest into other transferable securities, collective investment schemes, money market instruments, cash and deposits and is also able to use derivatives for efficient portfolio management and investment purposes.
• The Company operates a variable management fee arrangement which is calculated by reference to its Benchmark Index.

DIRECTORS' REPORTS

FINANCIAL STATEMENTS

INFORMATION FOR SHAREHOLDERS

04

Fidelity Asian Values PLC | Half-Yearly Report 2024

Portfolio Managers' Half-Yearly Review

Performance Review

Over the six month period ended 31 January 2024, the net asset value ("NAV") total return of Fidelity Asian Values PLC was -2.4%, underperforming the Comparative Index, the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms),

which was +3.6%. Over the same period, the Company's share price total return was -2.5%. Whilst the Company's discount was 5.7% at the reporting period end, it widened to around 10% at the end of March, however, it was trading narrower than its peer group.

Company's NAV, Share Price and Comparative Index total returns (as at 31 January 2024)

		NAV	Share Price	Comparative
		total return	total return	Index total
		(%)	(%)	return (%)
Tenure (since 1 April 2015)	+107.4	+123.2	+118.5
5	Years	+46.0	+33.1	+63.6
3	Years	+28.5	+27.5	+21.9
1	Year	-1.5	-2.5	+7.5
6	Months	-2.4	-2.5	+3.6
3	Months	+0.2	+5.4	+6.0

Source: Fidelity International, 31 January 2024. Total returns include net income reinvested. Comparative Index: MSCI All countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).

Our stock selection continued to contribute positively to the Company's relative performance versus the Comparative Index. However, our market selection was a drag against a backdrop of continued divergence in country performance (see table below on country attribution). Small cap stocks in India rose by 26.7% and those in Taiwan gained by 9.6% during the six month review period. In contrast, small cap stocks in China and Hong Kong fell by 28.2% and 18.4% respectively. Since

our investment process can lead us to take contrarian positions in undervalued businesses, our combined exposure to China and Hong Kong was close to its historical high (six month average of 40.6% versus the Index average weight of 13.0%). China and Hong Kong continue to underperform and have dragged down the Company's relative returns compared to the Index in the period under review. However, stock selection has been positive, and valuations remain attractive.

05

Half-Yearly Report 2024 | Fidelity Asian Values PLC

Country Attribution over 6 months to 31 January 2024

	Average weight (%)	Contribution to relative returns (%)
	Company	Index	Relative	Stock	Market
	(%)	(%)	(%)	selection	selection	Total
Korea (South)	+7.8	+16.1	-8.3	+1.4	+1.2	+2.6
ASEAN	+20.7	+15.1	+5.6	+1.8	-1.2	+0.6
Others	+12.2	0.0	+12.2	-0.4	0.0	-0.4
Taiwan	+1.8	+25.3	-23.5	+0.4	-1.3	-0.9
India	+20.0	+30.5	-10.5	-0.6	-2.1	-2.7
China & Hong Kong	+40.6	+13.0	+27.6	+4.5	-9.0	-4.5
Total Primary Assets	+103.1	+100.0	+3.1	+7.1	-12.4	-5.3
Cash & others	-3.1	0.0	-3.1			-0.7
Total	100.0	100.0	0.0			-6.0

Source: Fidelity International, 31 January 2024. Index: MSCI All countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).

In contrast to China and Hong Kong, small	were Indian companies and four out of five of
cap stocks in India and Taiwan continued to	our top detractors were from China as can be
perform well despite their exuberant valuations.	seen from the tables below.
As a result, four of our five top contributors

Key Contributors over six months (as at 31 January 2024)

		Average		Contribution
		Active Weight	Gain/Loss	to Portfolio
Order	Security	(%)	(%)	Returns (%)
Top 5
1	PTC India	+2.1	+113.2	+1.5
2	LIC Housing Finance	+1.1	+49.5	+0.5
3	Bank Negara Indonesia (Persero)	+2.7	+24.0	+0.5
4	Granules India	+2.1	+28.8	+0.5
5	Axis Bank	+3.7	+11.9	+0.3
	Total			+3.3

DIRECTORS' REPORTS

FINANCIAL STATEMENTS

INFORMATION FOR SHAREHOLDERS

Source: Fidelity International, 31 January 2024.

06

Fidelity Asian Values PLC | Half-Yearly Report 2024

Portfolio Managers' Half-Yearly Review continued

Key Detractors over six months (as at 31 January 2024)

		Average		Contribution
		Active Weight	Gain/Loss	to Portfolio
Order	Security	(%)	(%)	Returns (%)
Top 5
1	China Overseas Grand Oceans Group	+1.2	-53.4	-1.0
2	China Yongda Automobiles Services	+1.1	-41.2	-0.5
3	Zhongsheng Group	+0.7	-51.9	-0.5
4	Focus Media Information Technology	+1.8	-23.8	-0.5
5	Arwana Citramulia	+1.7	-22.9	-0.5
	Total			-3.0

Source: Fidelity International, 31 January 2024.

The detractors were essentially Chinese consumer-related companies (China Yongda Automobile Services, Zhongsheng Group and Focus Media Information Technology) and the real estate company China Overseas Grand Oceans Group, which fell due to weak demand and negative investor sentiment. Indonesia's largest ceramic tiles maker Arwana Citramulia also suffered weak demand due to project delays ahead of the country's elections. We believe these to be temporary losses and continue to own the businesses for their longer-term growth prospects and attractive valuations.

On the other hand, our holdings in India (PTC India, Granules India, LIC Housing Finance and Axis Bank) and Bank Negara Indonesia (Persero) contributed the most to the Company's relative performance. We continue

to have a positive outlook on most of these stocks as they still offer a sufficient margin of safety. We trimmed our exposure to PTC India and Granules India as a result of strong performance and a reduced margin of safety.

India's fourth largest mortgage financier LIC Housing Finance was the second largest contributor to returns and is one of the top 10 positions in the Company. As it is promoted by Life Insurance Corporation, India's largest and 100% government owned insurance company, it has access to low-cost funds, helping it to focus mainly on prime borrowers and maintain high returns on equity and strong asset quality. This sustainable low to mid-teen return on equity generator and book value compounder is currently trading at par with its one year forward book value and seven times its one year forward earnings.

Investment strategy

Our investment strategy is to continue to focus on investing in good businesses, run by good management teams and available at a suitable margin of safety. Our investment process leads us to high quality undervalued businesses and a consistent value tilt.

We believe our approach to investing helps to generate sustainable performance for the Company in the long-term. Although our value style has underperformed the growth style in recent years, we believe this headwind should,

07

Half-Yearly Report 2024 | Fidelity Asian Values PLC

at some point, become a tailwind. Small cap value stocks are currently trading at close to all-time high discounts relative to both their large cap and (as can be seen from the chart below) their small cap growth counterparts. Value stocks also generate superior earnings growth over time compared to growth stocks and provide better cash returns, in terms of dividends.

DIRECTORS' REPORTS

Valuation Dispersion - Asian Small Cap Value vs Asian Small Cap Growth

25

2.2

2.0

20

Val)

1.8

SC

/

FowardPE Ratio

1.4

premium(SC Gr

15

1.6

Valuation

10

1.2

5

1.0

Jan-00

Jan-06

Jan-06

Jan-09

Jan-12

Jan-15

Jan-18

Jan-21

Jan-24

Asia ex Japan Small Cap Value - PE

Asia ex Japan Small Cap Growth - PE

Small Cap Growth / Small Cap Value (Right)

Source: Refinitiv Datastream, 31 January 2024. Total returns in sterling terms

FINANCIAL STATEMENTS

SHAREHOLDERS

Macro-economic trends are difficult to forecast for anyone and building a portfolio of stocks based on such views is even more challenging. However, we do believe macro risks are more short-term in nature and owning businesses which are better quality than the market at attractive valuations has been the bedrock

of our investment process for over a decade.

It has served us well in the last ten years and should continue to reward us well for the future. As can be seen from the second chart below, the Return on Equity of our portfolio has frequently been at a premium to the market while the Price to Earnings ratio of our holdings (first chart below) is at a significant discount.

INFORMATION FOR

08

Fidelity Asian Values PLC | Half-Yearly Report 2024

Portfolio Managers' Half-Yearly Review continued

Portfolio Valuation and Returns versus the Comparative Index

Lower Price to Earnings Ratio vs. Small Cap index					Higher Return on Equity vs. Small Cap index
17.0										10%	17.0
16.0
15.0										0%	15.0
14.0
13.0										-10%
										13.0
12.0
										-20%
11.0
											11.0
10.0										-30%
9.0
8.0										-40%	9.0
7.0
6.0										-50%	7.0
Jul-15	Jan-16	Jul-16Jan-17Jul-17Jan-18Jul-18	Jan-19Jul-19	Jan-20Jul-20Jan-21	Jul-21	Jan-22Jul-22	Jan-23	Jul-23	Jan-24		Jul-15	Jan-16	Jul-16Jan-17Jul-17Jan-18Jul-18	Jan-19Jul-19	Jan-20Jul-20Jan-21	Jul-21	Jan-22	Jul-22Jan-23Jul-23Jan-24
		Small Cap Index		Company1		Discount (RHS)					Small Cap Index		Company1			Premium (RHS)

6.0

5.0

4.0

3.0

2.0

1.0

0.0

-1.0

1 Company = Fidelity Asian Values PLC.

Source: Fidelity International, Refinitiv FactSet, 31 January 2024. Index: MSCI All Countries Asia ex Japan Small Cap Index

The Price to Earnings ("P/E") Ratio measures the value of a company's share price versus its earnings. Price to Earnings based on FY1 estimates. A low P/E can indicate that a company may currently be undervalued. The Return on Equity ("RoE") measures the return on a company's stock. The higher the percentage, the more income the company is generating and adding to shareholder value.

Outlook

We are comfortable with the Company's portfolio as it stands today. We continue to have an overweight exposure to China since we are finding a significant margin of safety in owning several well-financed and well-run businesses. As the world's second largest economy, where consumption is expanding as a share of GDP, we believe that both earnings and multiples of our Chinese holdings will re-rate favourably from depressed levels. Conversely, our relative exposure to India is close to our historical low as the small cap index in India is now 40% more expensive than Asian small caps and 30% more expensive than Indian large caps. In India and Indonesia, we have focused on well-run financial companies which have attractive valuations. These are good long-term compounders as credit is

under-penetrated and the well managed banks have significant industry tail winds. Meanwhile, we continue to avoid areas that most investors find fashionable, such as AI-driven technology hardware in Taiwan and Korea. The sector has seen a capex boom post COVID due to higher- than-average demand. We are seeing earnings downgrades as new supplies come in and demand falls back, as the AI hype subsides. This strategy has served us well in the past ten years and we believe it will continue to reward us well over the future.

Nitin Bajaj	Ajinkya Dhavale
Portfolio Manager	Co-Portfolio Manager
8 April 2024	8 April 2024