Fidelity Asian Values reports 7.8% share price return, raises dividend 7.3%

Fidelity Asian Values PLC (LON:FAS) has announced its Annual Report for the year ended 31 July 2026

HIGHLIGHTS

• During the twelve-month period ended 31 July 2026, Fidelity Asian Values PLC reported a share price total return of +7.8% and Net Asset Value total return of +6.1%
• The Comparative Index, the MSCI All Country Asia ex Japan Small Cap Index, produced a total return of +9.1% over the same timeframe
• The Board has announced a final dividend of 22.0p, an increase of 7.3% from 2025
• The Company celebrated 30 years since listing on the London Stock Exchange: every £1 invested at IPO would have grown to £8.36 on a share price total return basis, compared with £5.89 from the Index
• Portfolio managers see opportunities in Indonesia and China, away from concentrated artificial intelligence market

Financial Highlights

1 See Glossary of Terms in Annual Report.

2 Alternative Performance Measures. See below.

3 The variable element of the management fee is calculated over a rolling three-year period with reference to the Benchmark Index.

Chairman’s Statement

I am pleased to present the Annual Report of Fidelity Asian Values PLC (the ‘Company’) for the year ended 31 July 2026.

Given another year of heightened geopolitical volatility – including the unprecedented disruption of energy markets – it is gratifying to report another year of solid absolute returns.

In the period under review, the Company’s Share price total return was +7.8% (2025: +17.0%), assisted by a further narrowing of the Share price discount to NAV, from 6.7% at 31 July 2025 to 5.4% at the year end. The Company’s net asset value (‘NAV’) per Share total return was +6.1% (2025: +12.4%), compared with a net total return of +9.1% (2025: +7.1%) from the Comparative Index, the MSCI All Country Asia ex Japan Small Cap Index in sterling terms (‘Index’).

Several factors influenced the investment outcome on both an absolute and a relative basis. During the year, the weighting of information technology (‘IT’) stocks in the Index rose from around 19% to approximately 27%. The decision to reduce portfolio exposure to the IT sector early in the period therefore detracted from relative performance, although individual holdings such as Taiwan Semiconductor Manufacturing Company (TSMC), the portfolio’s largest position, performed extremely well. Strong general performance from Taiwanese technology stocks meant that the portfolio’s substantial underweight position in these stocks detracted relative to the Index. Overweight allocations to China and Indonesia also weighed on performance, with Indonesia’s market performance being weak in absolute terms. The greatest positive contributions to relative performance came from the portfolio’s underweight position and good stock selection in South Korea, and the underweight position in India, which the Portfolio Managers, Nitin Bajaj and Ajinkya Dhavale, continue to regard as overvalued in aggregate.

You will find detailed information on these points and the portfolio’s performance in the Portfolio Managers’ Review on the following pages. In a year dominated by narrow market leadership from momentum-driven AI-related stocks, Nitin and Ajinkya have delivered a very good absolute return from a diversified portfolio. Their strategy remains bottom-up, contrarian and value-focused. In thematically driven markets such as these, their approach can make the Company an excellent risk diversifier within a broader portfolio.

30th Anniversary and long-term performance

The Company was launched in June 1996 and recently marked its 30th anniversary with an event at the London Stock Exchange (pictured). Alongside the Board, Nitin and representatives from Fidelity and other service providers, we had the pleasure of welcoming a number of shareholders, including two who had first invested at the IPO and two younger investors who hold the Company in their Junior ISAs.

As I noted on the day, Asia’s place in the world economy has transformed over the past 30 years. China is now the world’s second largest economy and economic development has lifted around one billion people out of poverty across the region. Every £1 invested in the Company at IPO, assuming all dividends were reinvested, would have grown to £8.44 on a NAV basis and £8.36 on a Share price basis by the end of July 2026. This is particularly notable given the Asian financial crisis in 1997, during which the Share price fell to 33p at its lowest. The comparable return from the Index – which would have seen £1 grow into £5.89 – while still impressive, is substantially lower.

The strength of the long-term performance has also seen the Company feature for the fourth successive year in the Association of Investment Companies’ (“AIC”) ISA Millionaire list. This considers the outcome for investors who invested their full ISA allowance each year from 1999 and reinvested dividends. A total investment of £346,560 in the Company from 6 April 1999 to 31 January 2026 would have grown to £1,486,912 on a Share price total return basis.

Board Strategy Day

Since I became your Chairman, my fellow Directors and I have held an annual Board Strategy Day to consider all the factors that we, as non-executive Directors of an investment company, can and should be influencing. A particular focus at this year’s event was the strength and depth of the teams supporting Nitin and Ajinkya in Singapore, both in research and in portfolio construction and risk. We met with John Stavis and Sherry Tsoi, who respectively lead the research and portfolio construction and risk teams in Asia. These discussions reinforced our understanding of the depth of research provided to your Portfolio Managers by Fidelity’s exceptional team of analysts, and of the constructive challenge applied to their stock selection and trading decisions. With a value-focused investment style, there is always a risk of ‘value traps’, where stocks appear cheap not because the market has failed to recognise their inherent value, but because they face genuine difficulties that may be hard to overcome. It is therefore reassuring to know that robust checks and balances are in place to ensure that only the most compelling opportunities – on both the long and the short side – are included in the portfolio, and that holding periods are optimised for the best returns.

As in previous years, we also discussed the competitive landscape, the use of gearing, distribution, marketing and PR, as well as service provision and investment restrictions.

Discount Management and Share Repurchases

Share repurchases by the Company were higher than usual in the first half of the financial year, with 2,816,450 Shares repurchased, representing 4.2% of the Shares in issue at the beginning of the year, while the discount narrowed from 6.7% to 3.3%. Discount volatility in the wider market increased in the second half amid heightened geopolitical uncertainty. Despite this, the discount was largely contained between 3% and 6%. Repurchases were significantly lower in the second half with 1,044,674 Shares bought back, representing 1.6% of the Shares in issue at the beginning of the year.

Some shareholders may be concerned that buybacks could reduce the Company’s scale and, over time, its appeal to larger investors. While the Board recognises this trade-off, repurchases at a discount to NAV are accretive to NAV per Share and can also help limit discount volatility and provide additional liquidity when natural demand is weak. In the reporting year, share repurchases enhanced NAV per Share by 0.4% (2025: 0.7%). This should also be seen in context of the broader industry which saw £10.2 billion of shares bought back in 2025, a 36% increase on the year before. The Board therefore continues to use buybacks, balancing these benefits against the impact on the Company’s scale.

At the Annual General Meeting (‘AGM’) on 25 November 2026, the Board will seek shareholder approval to renew the annual authorities to repurchase up to 14.99% of its Shares in issue (excluding Treasury Shares) and to allot up to 10% of the Shares in issue where the Shares trade at a premium to NAV. The Board’s policy is to repurchase Shares only at prices below the prevailing NAV per Share and Treasury Shares will only be re-issued at NAV per Share or at a premium to NAV per Share.

Marketing and Promotion

Share buybacks alone are unlikely to eliminate a persistent discount to NAV; discounts are a function of supply and demand and, as such, increasing demand is at least as important as absorbing excess supply. Your Board continues to work with Fidelity and external partners to raise the profile of the Company through digital and print advertising, sponsorship, events, direct marketing and press coverage. Kepler Partners produce regular research notes on the Company, which are distributed widely and made available on the Company’s website. During the year, we also increased the use of social media marketing and promotion, extending our reach beyond traditional channels.

Dividend

The Board is pleased to recommend a final dividend of 22.0 pence per Share for the year ended 31 July 2026, which represents a 7.3% increase over the previous year, for approval by shareholders at the AGM on 25 November 2026. The dividend will be paid on 4 December 2026 to shareholders on the register at the close of business on 30 October 2026.

This year’s increase is supported by an increase of approximately 12% in net revenue return per Share. Your Portfolio Managers invest principally for the long-term capital growth of your investment, but their value-focused investment style often leads them towards companies with conservative balance sheets and strong cash generation, which also supports dividend payments to shareholders.

Gearing

As an investment trust, your Company can use borrowing and derivative instruments to increase its market exposure (“Gearing”). This can enhance shareholder returns when the return on the additional exposure exceeds the cost of financing, but it can also amplify losses. The level of gross gearing reflects the investment opportunity set available to your Portfolio Managers. When they identify more compelling opportunities on either the long or the short side, gross gearing may rise.

At the period end, gross gearing was 24.9% (2025: 16.8%) and net gearing was 10.1% (2025: 3.4%). Rather than using bank borrowing (which can be expensive depending on the prevailing interest rate environment and is often deployed across a portfolio on a pro-rata basis), the Company’s gearing is primarily achieved through contracts for difference (‘CFDs’). CFDs are derivative instruments that can be used on a security-by-security basis, allowing Nitin and Ajinkya to increase or reduce exposure selectively. Each year, your Board reviews the use of CFDs against alternative forms of gearing. We have again concluded that, in current market conditions, CFDs provide a flexible and cost-effective form of financing and allow gearing to be deployed selectively. We are fortunate that Fidelity has the infrastructure and capability to allow the use of CFDs in the portfolio; few other management groups can offer this.

Use of Short Positions

Fidelity’s expertise in derivative instruments also enables your Portfolio Managers to take short positions. Ajinkya has significant experience in this area, having spent several years as a specialist shorting analyst for Fidelity. A short position seeks to benefit from an anticipated fall in the price of a stock or the value of an index. These positions may be held for relatively long periods as it can take time for the investment thesis to play out.

The total short exposure as of 31 July 2026 was 6.9% of net assets (2025: 6.7%). Short exposure has historically been limited to a maximum of 10% of net assets. However, while relatively small in scope, this tool has generally been additive to the Company’s performance since its introduction.

Your Portfolio Managers currently see a broad range of opportunities to short stocks. Their research is identifying companies where stretched valuations are not supported by the underlying fundamentals, including weak earnings quality, fragile balance sheets or structural challenges.

Against this background, the Board proposes to amend the Investment Policy by increasing the maximum permitted short exposure from 10% to 20% of net assets, subject to approval by shareholders.

The increase would not introduce a new investment technique or change the Company’s bottom-up, value-focused investment philosophy. It would instead give the Portfolio Managers greater capacity to use an established capability when they identify compelling opportunities. The 20% limit would be a ceiling, not a target. For day-to-day management, the Board would normally set a lower working limit and keep it under regular review.

Your Board undertook extensive due diligence before deciding to recommend this change. We reviewed the historical use of shorting, risk monitoring, controls and governance. We also examined Fidelity’s broader risk and compliance framework, including daily monitoring against Board-approved limits and regular reporting to the Board. This work gives us confidence that the capability is supported by robust systems and effective oversight.

The related increase in the maximum Gross Asset Exposure from 140% to 150% of NAV would provide room for a larger short book without changing the formal Net Market Exposure limit. The Board considers this a measured extension of a successful part of the strategy. It would give the Portfolio Managers controlled additional flexibility to exploit a rich opportunity set, while maintaining disciplined risk management and Board oversight. Both changes will be put to shareholders at the AGM in November.

Investment Objective and Investment Policy

Given that shareholders are being asked to approve the changes to the Investment Policy described above, the Board and Fidelity are also taking the opportunity to simplify and clarify the wording and presentation of the Investment Objective and Investment Policy. No other material changes are proposed beyond the increase in the short exposure limit and the corresponding increase in the Gross Asset Exposure limit.

Board of Directors

We are fortunate to have an experienced and stable Board of Directors and there have been no changes in the period under review. We believe that your Board has a good mix of essential qualities and a diverse set of relevant backgrounds. We remain open to challenge and committed to listening to and doing the best job for all our shareholders. We welcome your engagement both by attending the AGM and by contacting us via the Company Secretary.

Continuation Vote

I would remind shareholders that, at the forthcoming Annual General Meeting, we will be voting on the continuation of the Company as an investment trust, as we do every five years. In the past five years, the Company has delivered NAV and Share price total returns of 42.4% and 40.3% in often challenging market conditions, and my fellow Directors and I will be voting in favour of continuation.

Outlook

In momentum-driven markets, it is easy for investors to get caught up in the enthusiasm for fear of missing out, but in the long-term, one of the best predictors of returns is not to overpay today for the value of earnings in the future. Currently, the stocks in the portfolio are, on aggregate, close to the cheapest they have been in the past 10 years relative to the Index, yet their return on equity is substantially higher – close to a 10-year high. This is a portfolio that is full of high-quality companies trading at attractive valuations, managed with an absolute return mindset and patiently positioned for long-term capital growth, whatever short-term surprises the coming year may hold in store for the market.

Clare Brady

Chairman

15 October 2026

Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.