Results analysis from Kepler Trust Intelligence

Fidelity China Special Situations (FCSS)

13/01/2026

Results analysis from Kepler Trust Intelligence

Fidelity China Special Situations (FCSS) has reported half-year results to 30/09/2025 which saw a NAV total return of 29.7%, considerably ahead of its benchmark which returned 18%, and the (unweighted) average of the peer group of 18.1%. The main contributors included core holdings in the consumer and industrials sectors, many of which align with manager Dale Nichols' key focus on the advanced manufacturing and innovation themes, which have thrived this year.

Several financial firms were sold during the period, leading to a sector underweight. In exchange, the manager added to a range of consumer-facing businesses. There was also a new private addition in a crypto exchange, although this subsequently listed in December 2025.

Gearing added positively to performance, although was reduced slightly over the period.

Whilst share price returns were also strong, the discount widened slightly. To help manage this, the board undertook share buybacks, with the aim of keeping the discount in single figures.

Manager Dale Nicholls' outlook noted: "Particular promise in advanced manufacturing, automation, and technology-enabled industrials; areas aligned with policy priorities and capable of compounding value over time," whilst reiterating he remains, "focused on companies with durable earnings visibility, exposure to structural growth themes and disciplined capital allocation".

Kepler View

Manager Dale Nicholls has delivered another period of exceptional returns for Fidelity China Special Situations (FCSS), capturing all of the recovery in China's equity market and more over the past year, leaving it as the top performer in the sector over almost all time periods, in both share price and NAV total return terms.

Performance has come from a wide range of contributors which we think demonstrates the strength of the manager's flexible approach and his ability to identify alpha across a broad opportunity set. This includes the ability to invest in private companies, many of which have developed in the period, demonstrating how they can benefit the trust throughout their holding life-cycle.

Dale has continued to evolve the portfolio, reflecting the changing background. He has taken profits from his strong performers and rotated into areas of better value such as those exposed to the consumer. We believe this can be supportive to future performance should the economic recovery continue to gain firmer footing. Moreover, the portfolio looks well exposed to the country's strong long-term themes which are the focus of heavy research and development spending.

This approach has helped tilt the portfolio towards the better pockets of value which could offer considerable upside in our view. Whilst the market has re-rated in the past couple of years, the MSCI China Index trades closer to its own long-term averages on a 12-month forward earnings, but still well below the equivalent multiple of the S&P 500. With Dale rotating into areas with more subdued valuations, we believe the trust offers a compelling value opportunity going forward. 

CLICK HERE TO READ THE FULL REPORT  Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP. The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.