Fidelity Special Values PLC — Interim / Quarterly Report 2019

Feb 28, 2019

FIDELITY SPECIAL VALUES PLC

Half-Yearly Report for the six months ended 28 February 2019

Investment Objective and Overview

The investment objective of Fidelity Special Values PLC is to achieve long term capital growth predominantly through investment in UK listed companies.

The Portfolio Manager, Alex Wright's, approach is very much in keeping with Fidelity Special Values PLC's heritage and history – that of an actively managed, contrarian investment trust which the Board believes will be appealing to both existing and potential investors alike. Alex focuses on buying unloved companies with the prospect of positive change, rather than those that are

merely cheap. He invests in companies of all sizes, and in doing so hopes to position the Company as the investment of choice for those seeking exposure to UK listed companies but with the benefit of investing 20% of the portfolio in listed companies on overseas exchanges.

Whilst performance in the first half of the reporting period has been more challenging, there has been a strong recovery since the half year end and long term performance remains well ahead of the Benchmark Index over 3 and 5 years. The Company's shares remain in high demand and continue to trade at a premium. In addition, we are pleased to report that the Company has won several prestigious awards as can be seen from the logos below.

Andy Irvine, Chairman

Contents

Portfolio Manager's Review Read more on page 04

Net Asset Value per Ordinary Share as at 28 February

Directors' Reports

At a Glance	02
Financial Highlights	03
Portfolio Manager's Half-Yearly Review	04
Interim Management Report	07
Directors' Responsibility Statement	09
Twenty Largest Investments	10

Financial Statements

Income Statement	14
Statement of Changes in Equity	16
Balance Sheet	18
Notes to the Financial Statements	19

Information for Shareholders

Shareholder Information	27
Directory	29
Glossary of Terms	31

At a Glance

Six months ended 28 February 2019

Net Asset Value per Ordinary Share total return*

-6.1%

(28 February 2018: +2.8%)

FTSE All-Share Index (Benchmark Index) total return*

-3.7%

(28 February 2018: -0.9%)

* Includes reinvested income

As at 28 February 2019

Shareholders' Funds

£686.1m

Market Capitalisation

£692.1m

Capital Structure Ordinary Shares of 5 pence each

272,494,480

Summary of the key aspects of the Investment Policy

Ordinary Share Price total return*

-6.7%

(28 February 2018: +4.6%)

Interim Dividend per Ordinary Share

2.10p

(28 February 2018: 1.85p)

The investment approach is flexible, with positions in large, medium and smaller sized companies, across all industries. The Company may make limited investments in companies outside of the UK.

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 is able to gear the portfolio and the Board takes the view that long term returns for Shareholders can be enhanced by the use of gearing in a carefully considered and monitored way.

Financial Highlights

	28 February 2019	31 August 2018
Assets
Shareholders' funds	£686.1m	£725.0m
Net Asset Value ("NAV") per ordinary share	251.80p	271.98p
Share price and discount data
Share price at period end	254.00p	276.00p
Share price period high*	277.00p	280.00p
Share price period low*	220.00p	236.75p
Premium at period end	0.9%	1.5%
Premium period high*	4.9%	3.6%
Premium period low/(discount) period high*	0.5%	(6.3%)

* For the six month period to 28 February 2019 and for the year to 31 August 2018

Sources: Fidelity and Datastream Past performance is not a guide to future returns

Portfolio Manager's Half-Yearly Review

Performance

In the six month period to 28 February 2019, the Company's net asset value ("NAV") per ordinary share returned -6.1% and the share price returned -6.7%, whilst the FTSE All-Share Index (the Company's Benchmark Index) returned -3.7% (all returns on a total basis). Despite this short term performance, the Company's NAV and share price total returns over three and five years remain well ahead of the Benchmark Index. Over three years, the NAV returned +37.2% and the share price returned +43.4% compared to a Benchmark return of +30.4%. For the five year period, the NAV returned +38.4% and the share price +45.0% against a Benchmark return of +27.6%.

The attribution analysis table below shows the factors that contributed to the Company's NAV per share total return for the six months to 28 February 2019.

Analysis of the change in NAV total return for the period	(%)
Impact of:
Index	-3.7
Stock selection	-1.7
Gearing	-0.4
Operational Costs	-0.5
Cash	+0.2
Total return for the six months to
28 February 2019	-6.1

Stock Market and Portfolio Review

The UK stock market saw mixed trends over the review period, falling sharply in the first half of the period before staging a recovery in 2019 to recoup some of the losses of the previous year. The Benchmark Index decline over the period of 3.7% was dominated by increasingly complex Brexit negotiations between the UK government

and opposition parties, and concerns over global economic growth against a backdrop of the ongoing US-China trade frictions. After two years of double digit returns, the Benchmark Index fell by 9.5% on a total return basis in the 2018 calendar year; its worst annual performance since the financial crisis. However, hopes of an improvement in trade negotiations between the US and China led a rally in equities in 2019, with the Index returning 6.6% in the two months to the end of February 2019.

Overall, the global economy has continued to slow over recent months, with a broadbased softening across all regions. This has come about as a result of the tightening in global financial conditions, a weaker global demand environment, as well as the impact of trade tensions on business sentiment. The deceleration in global growth is expected to weigh on UK net trade, although markets expect more accommodative monetary policies in all major economies, which should support the economic outlook. UK economic growth slowed in late 2018 and appears to have weakened further in early 2019. There is now considerable uncertainty over the medium term outlook, although this could ease once greater clarity emerges on the US-China trade negotiations and the future path of Brexit.

The deeply unloved status of the UK market has created an exceptionally fertile period for contrarian stock picking. One thing I have learnt from investing in unloved companies is that you should not necessarily wait for good news to become obvious before investing. By investing when all the bad news is 'in the price' and no good news is expected at all, you put the odds in your favour. I believe this is the situation we are in currently in the UK.

In terms of performance, the Company's NAV underperformed the Benchmark Index in the reporting period. At a stock level, online gaming group GVC Holdings was the leading detractor weighed down by negative regulatory news. The Company's investment in Citigroup fell amid concerns over its earnings in a worsening global economic scenario and falling bond yields. However, the bank's recently announced fourth-quarter results showed profit growth that beat analysts' expectations on better than anticipated expense declines and loan losses. It also has substantial excess capital and the business remains fundamentally strong. The negative sentiment in the sector also weighed down the holding in Bank of Ireland. Defence contractor Ultra Electronics was another notable detractor owing to a combination of worries surrounding Brexit, as well as Saudi Arabian and US military spending cuts. The company also has its own accounting concerns but it looks attractively valued, and its shares have risen considerably during March 2019. Shares in Royal Mail fell after the courier company warned that its full year earnings were expected to fall sharply as it had failed to meet its cost saving targets.

Despite the difficult environment, several of our key holdings across sectors made significant contributions, with stock selection in the healthcare and technology sectors being particularly successful. Notable contributors included infrastructure group John Laing, whose assets have increased strongly as its diversified portfolio of projects proved resilient. Outsourcing group Serco was another notable contributor after the company raised its 2019 profit and revenue forecasts, buoyed by a run of recent contract wins, and a good environment for pricing. The exposure to Swiss pharmaceuticals group Roche Holdings also added value after it was boosted by strong results from two drug trials, including one

that showed potential as a first line cancer treatment. Not holding underperforming tobacco company British American Tobacco also enhanced relative performance. The allocation to software group Micro Focus International added value as a trading update for the last fiscal year suggested that revenue declines are moderating following a period of significant merger and acquisition execution issues which led to turbulent sales growth.

I continue to look for opportunities that can be found across the market, among international as well as domestic businesses. Following the further deterioration in sentiment towards the UK in the last quarter of 2018, I increased exposure to domestic UK stocks, recycling capital primarily from US-facing businesses. I do not have a differentiated view on the UK political or macroeconomic outlook. I acknowledge the risks here, but am interested in investing in domestic businesses if they can satisfy these criteria; a low valuation which reflects a worst case outlook, a strong balance sheet that can support the business through a period of earnings volatility, structurally sound markets, and a self help story independent of the UK macro environment. A permanent feature of my investment process is to look for companies that can 'help themselves' without relying on a rising macroeconomic tide. I will typically avoid companies where margins are at historic highs.

Use of Derivatives

During the review period, the Company continued to use contracts for difference ("CFDs") to gear portfolio long exposure and to contract short positions. The previously opened hedge position on the FTSE 250 Index Future was again maintained.

Portfolio Manager's Half-Yearly Review continued

As the Company had some gearing and the market fell in the review period, the use of derivatives was a detractor in the portfolio. Overall, gross gearing was at 6.9% at the end of February 2019, down from 10.4% at the start of the review period.

Outlook

A selective approach remains important. Not all UK stocks are equally attractive, and although many domestic businesses are being unfairly ignored, others are structurally compromised or financially unsound and therefore best avoided. I am happy buying unloved domestic stocks if I can see a balance sheet that can withstand a period of economic weakness, and a valuation that gives me some margin of safety. Attractive valuations can be found across the market, in large and small companies, both international and domesticfacing. My process rests on identifying unloved companies with the potential for positive change. The number of unloved companies available to choose makes me believe that 2019 could turn into a surprisingly positive year for investors brave enough to buy UK equities before the good news happens.

As ever, I will be spending my time researching and meeting with the management of companies, looking for those that offer some degree of downside protection but also potential for a positive change to show them in a new light. In my experience, this is the best way to deliver capital growth over the long term.

Alex Wright

Portfolio Manager 30 April 2019

Interim Management Report

Management Fee

As reported in the Annual Report for the year ended 31 August 2018, the Company has a new fee arrangement in place, with effect from 1 September 2018, which provides a reduction from the previous fee structure. The previous fee of 0.875% of net assets has been replaced by a tiered fee basis which is 0.85% on the first £700 million of net assets and reduces to 0.75% on net assets over £700 million. In addition, the fixed annual fee of £600,000 for services other than portfolio management reduced to £100,000 per annum. There is no change in the investment process as a result of the new fee arrangement.

Discount/Premium and Share Repurchases/ Issues

Under the Company's discount management policy, the Board seeks to maintain the discount in single digits in normal market conditions and will repurchase shares to help stabilise the share price discount. As the Company's shares have been trading at a premium, the Company has not carried out any share repurchases in the reporting period and up to the date of this report.

Issuing shares increases the size of the Company, making it more liquid and allowing costs to be spread out over larger assets. The Board will approve share issues from Treasury if the Company's shares are generally trading at a sufficient premium to ensure that the issue of shares is not dilutive and the Company's Broker believes that the Company should be issuing shares from Treasury.

In the six months to 28 February 2019, the Company's shares traded at a premium which was within a range of 0.5% and 4.9%. As the Company's shares had traded at a level of premium to ensure that the issue of shares from Treasury was not dilutive, the Board authorised

the issue of 4,095,000 shares which were all the shares that the Company held in Treasury. In addition, the Company issued the final 480,000 shares from a previous block listing authority. Therefore, the Company acquired a new block listing authority from the UK Listing Authority to issue up to 23,889,440 ordinary shares, effective from 15 January 2019. As at 28 February 2019, the Company had issued 1,370,000 shares from this new block listing authority.

In total, the Company issued 5,945,000 shares in the six month reporting period. Since then and as at the date of this report, the Company has issued a further 2,175,000 shares in order to meet demand.

Interim Dividend

The Board's dividend policy is to pay dividends twice yearly in order to smooth the dividend payment for the reporting year. The Company's revenue return for the six months to 28 February 2019 was 1.78 pence per share. The Board has declared an interim dividend of 2.10 pence per share which is 13.5% higher than the 1.85 pence per share paid as the prior interim dividend and provides a good balance between the interim and final dividend payments. This will be paid on 26 June 2019 to Shareholders on the register on 17 May 2019 (ex-dividend date 16 May 2019).

Shareholders may choose to reinvest their dividends for additional shares in the Company. Details of the Dividend Reinvestment Plan are set out on page 28.

Principal Risks and Uncertainties

The Board, with the assistance of the Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/the "Manager"), has developed a risk matrix which, as part of the risk management and internal controls process, identifies the key risks and uncertainties faced by the Company.

Interim Management Report continued

The Board categorises the principal risks and uncertainties faced by the Company into two broad categories of external and internal risks. External risks comprise of market risk, share price risk, discount control risk, regulatory risk and cybercrime risk. Internal risks comprise of investment management risk and operational risks (such as service providers). Information on each of these risks is given in the Strategic Report section of the Annual Report for the year ended 31 August 2018. A copy of the Annual Report can be found on the Company's pages of the Manager's website at www.fidelity.co.uk/specialvalues.

These risks and uncertainties have not materially changed in the six months to 28 February 2019 and are equally applicable to the remaining six months of the Company's financial year.

Transactions with the Manager and Related Parties

The Manager has delegated the Company's portfolio management 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 13 to the Financial Statements on page 26.

Going Concern

The Directors have considered the Company's investment objective, policy, strategy, the Company's projected income and expenditure and noted that the portfolio of investments is considered to be mainly readily realisable securities. Therefore, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these Financial Statements.

Continuation votes are held every three years and the next continuation vote will be put to Shareholders at the Annual General Meeting to be held in December 2019.

By order of the Board FIL Investments International 30 April 2019

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 the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council's Standard: FRS 104: Interim Financial Reporting; and
• b) the Interim Management Report, together with the Portfolio Manager's Half-Yearly Review on pages 4 to 8, includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

In line with previous years, the Half-Yearly Report has not been audited by the Company's Independent Auditor.

The Half-Yearly Report was approved by the Board on 30 April 2019 and the above responsibility statement was signed on its behalf by Andy Irvine, Chairman.

Twenty Largest Investments

as at 28 February 2019

The Gross Asset Exposures shown below measure exposure to market price movements as a result of owning shares and derivative instruments. The Balance Sheet Value is the actual value of the portfolio. Where a contract for difference ("CFD") is held, the Balance Sheet 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 share has moved.

			Balance Sheet
	Gross Asset Exposure		Value
Long Exposures – shares unless otherwise stated	£'000	%1	£'000
CRH (long CFD)
Construction & Materials	34,003	4.9	1,781
Royal Dutch Shell (shares and long CFD)
Oil & Gas Producers	33,200	4.8	16,577
Roche Holdings
Pharmaceuticals & Biotechnology	32,597	4.8	32,597
John Laing Group
Financial Services	30,621	4.5	30,621
BP
Oil & Gas Producers	30,494	4.4	30,494
Pearson
Media	29,732	4.3	29,732
Phoenix Group Holdings
Life Insurance	28,797	4.2	28,797
Citigroup
Banks	28,569	4.2	28,569
RBS Group
Banks	25,414	3.7	25,414
Meggitt
Aerospace & Defense	21,437	3.1	21,437
Serco Group
Support Services	19,290	2.8	19,290
Aviva (long CFD)
Life Insurance	17,238	2.5	(1,739)
AIB Group (long CFD)
Banks	16,347	2.4	(1,692)

			Balance
	Gross Asset Exposure		Sheet Value
Long Exposures – shares unless otherwise stated	£'000	%1	£'000
C&C Group
Beverages	14,910	2.2	14,910
Lloyds Banking Group
Banks	14,777	2.2	14,777
CLS Holdings
Real Estate Investment & Services	14,535	2.1	14,535
Legal & General Group
Life Insurance	14,393	2.1	14,393
International Personal Finance (shares and fixed interest bond)
Financial Services	13,003	1.9	13,003
Micro Focus International
Software & Computer Services	12,009	1.8	12,009
Bank of Ireland Group (long CFD)
Banks	11,985	1.7	(3,721)
Twenty largest long exposures	443,351	64.6	341,784
Other long exposures	319,615	46.6	261,569
Total long exposures before hedges (97 holdings)	762,966	111.2	603,353

Total long exposures after the netting of hedges	728,828	106.2	601,315
FTSE 250 Index Future March 2019	(34,138)	(5.0)	(2,038)

Twenty Largest Investments continued

	Gross Asset Exposure		Balance Sheet Value
	£'000	%1	£'000
Add: short exposures
Short CFDs (2 holdings)	4,394	0.7	(191)
Gross Asset Exposure2	733,222	106.9

Portfolio Fair Value3	601,124
Net current assets (excluding derivative assets and liabilities)	85,022
Shareholders' Funds	686,146

1 Gross Asset Exposure is expressed as a percentage of Shareholders' Funds.

2 Gross Asset Exposure comprises market exposure to investments of £611,412,000 plus market exposure to derivative instruments of £121,810,000.

3 Portfolio Fair Value comprises investments of £611,412,000 plus derivative assets of £2,373,000 less derivative liabilities of £12,661,000 (per the Balance Sheet on page 18).

Customer: Fidelity Project Title: Special Values Half Year Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 DIRECTORS' REPORTSFINANCIAL STATEMENTS This page has been intentionally left blank.

Income Statement

for the six months ended 28 February 2019

			six months ended 28 February 2019 unaudited
	Notes	revenue £'000	capital £'000	total £'000
(Losses)/gains on investments		–	(40,506)	(40,506)
(Losses)/gains on long CFDs		–	(11,464)	(11,464)
Gains/(losses) on short CFDs, futures and options		–	2,794	2,794
Investment and derivative income*	4	8,372	–	8,372
Other interest	4	141	–	141
Derivative expenses*	5	(48)	–	(48)
Investment management fees	6	(2,845)	–	(2,845)
Other expenses		(342)	(88)	(430)
Foreign exchange (losses)/gains		–	(357)	(357)
Net return/(loss) on ordinary activities before finance costs and taxation		5,278	(49,621)	(44,343)
Finance costs		(389)	–	(389)
Net return/(loss) on ordinary activities before taxation		4,889	(49,621)	(44,732)
Taxation on return on ordinary activities	7	(113)	–	(113)
Net return/(loss) on ordinary activities after taxation for the period		4,776	(49,621)	(44,845)
Return/(loss) per ordinary share	8	1.78p	(18.48p)	(16.70p)

* Derivative expenses in the prior periods have been reallocated from investment and derivative income. There is no effect on the net return/(loss) on ordinary activities after taxation for the period.

The Company does not have any other comprehensive income. Accordingly the net return/(loss) on ordinary activities after taxation for the period is also the total comprehensive income for the period and no separate Statement of Comprehensive Income has been presented.

The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.

No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.

revenue £'000 – – – 23,468	audited capital £'000 48,288 (3,022) (2,718)	total £'000 48,288 (3,022)	revenue £'000 – –	unaudited capital £'000 13,627 1,459	total £'000 13,627
					1,459
		(2,718)	–	1,417	1,417
	–	23,468	6,927	–	6,927
366	–	366	116	–	116
(860)	–	(860)	(417)	–	(417)
					(3,294)
(640)	–	(640)	(322)	–	(322)
–	618	618	–	(781)	(781)
15,627	43,166	58,793	3,010	15,722	18,732
(342)	–	(342)	(131)	–	(131)
					18,601
					(40)
					18,561
5.70p	16.29p	21.99p	1.07p	5.94p	7.01p
	(6,707) 15,285 (177) 15,108	– 43,166 – 43,166	(6,707) 58,451 (177) 58,274	(3,294) 2,879 (40) 2,839	– 15,722 – 15,722

Statement of Changes in Equity

for the six months ended 28 February 2019

	share
	capital
Notes	£'000
Six months ended 28 February 2019 (unaudited)
Total Shareholders' funds at 31 August 2018	13,532
Issue of ordinary shares from Treasury 11	–
New ordinary shares issued 11	93
Net (loss)/return on ordinary activities after taxation for the period	–
Dividend paid to Shareholders 9	–
Total Shareholders' funds at 28 February 2019	13,625
Year ended 31 August 2018 (audited)
Total Shareholders' funds at 31 August 2017	13,532
Issue of ordinary shares from Treasury 11	–
Net return on ordinary activities after taxation for the year	–
Dividend paid to Shareholders 9	–
Total Shareholders' funds at 31 August 2018	13,532
Six months ended 28 February 2018 (unaudited)
Total Shareholders' funds at 31 August 2017	13,532
Net return on ordinary activities after taxation for the period	–
Dividend paid to Shareholders 9	–
Total Shareholders' funds at 28 February 2018	13,532

ORTS DIRECTORS' REPORTS
	total			other non	capital	share
	Shareholders'	revenue	capital	distributable	redemption	premium
	funds	reserve	reserve	reserve	reserve	account
DIRECTORS' REP	£'000	£'000	£'000	£'000	£'000	£'000
	724,970	15,248	591,842	5,152	3,256	95,940
	9,886	–	9,821	–	–	65
	4,568	–	–	–	–	4,475
	(44,845)	4,776	(49,621)	–	–	–
	(8,433)	(8,433)	–	–	–	–
	686,146	11,591	552,042	5,152	3,256	100,480
MENTS MENTS	673,502	12,448	543,218	5,152	3,256	95,896
	5,502	–	5,458	–	–	44
	58,274	15,108	43,166	–	–	–
FINANCIAL STATE FINANCIAL STATE	(12,308)	(12,308)	–	–	–	–
	724,970	15,248	591,842	5,152	3,256	95,940
	673,502	12,448	543,218	5,152	3,256	95,896
	18,561	2,839	15,722	–	–	–
	(7,406)	(7,406)	–	–	–	–
	684,657	7,881	558,940	5,152	3,256	95,896

Balance Sheet

as at 28 February 2019 Company number 2972628

		28.02.19	31.08.18	28.02.18
		unaudited	audited	unaudited
	Notes	£'000	£'000	£'000
Fixed assets
Investments	10	611,412	704,997	657,239
Current assets
Derivative instruments	10	2,373	4,939	10,205
Debtors		2,525	4,043	1,314
Amounts held at futures clearing houses and
brokers		13,585	2,235	1,858
Fidelity Institutional Liquidity Fund		61,450	14,588	16,306
Cash at bank		8,417	2,303	2,559
		88,350	28,108	32,242
Creditors
Derivative instruments	10	(12,661)	(5,371)	(1,695)
Other creditors		(955)	(2,764)	(3,129)
		(13,616)	(8,135)	(4,824)
Net current assets		74,734	19,973	27,418
Net assets		686,146	724,970	684,657
Capital and reserves
Share capital	11	13,625	13,532	13,532
Share premium account		100,480	95,940	95,896
Capital redemption reserve		3,256	3,256	3,256
Other non-distributable reserve		5,152	5,152	5,152
Capital reserve		552,042	591,842	558,940
Revenue reserve		11,591	15,248	7,881
Total Shareholders' funds		686,146	724,970	684,657
Net asset value per ordinary share	12	251.80p	271.98p	258.85p

1 Principal Activity

Fidelity Special Values PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock Exchange. The Company's registration number is 2972628, 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 financial report have not been audited 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 August 2018 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 Basis of Preparation

Customer: Fidelity Project Title: Special Values Half Year Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 DIRECTORS' REPORTSFINANCIAL STATEMENTS Notes to the Financial Statements The Company prepares its Financial Statements on a going concern basis and in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. The Financial Statements are also prepared in accordance with 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 November 2014 and updated in February 2018 with consequential amendments. FRS 104: Interim Financial Reporting has also been applied in preparing this condensed set of Financial Statements. The accounting policies followed are consistent with those disclosed in the Company's Annual Report and Financial Statements for the year ended 31 August 2018.

Notes to the Financial Statements continued

4 Income

Total investment and derivative income and	141	366	116
market funds	125	287	70
Interest received on deposits and money
Interest received on CFDs	16	79	46
Other interest
Investment and derivative income	8,372	23,468	6,927
Dividends received on long CFDs	1,311	4,221	986
Derivative income
	7,061	19,247	5,941
Debt security interest	108	299	160
Overseas scrip dividends	236	990	700
Overseas dividends	2,344	4,282	1,607
UK scrip dividends	405	403	41
UK dividends	3,968	13,273	3,433
Investment income
	£'000	£'000	£'000
	unaudited	audited	unaudited
	ended 28.02.19	year ended 31.08.18	ended 28.02.18
	six months		six months

* Derivative expenses have been reallocated to Note 5.

Special dividends of £3,779,000 (year ended 31 August 2018: £7,023,000 and six months ended 28 February 2018: £6,152,000) have been recognised in capital.

	six months		six months
	ended	year ended	ended
	28.02.19	31.08.18	28.02.18
	unaudited	audited	unaudited
	£'000	£'000	£'000
Dividends paid on short CFDs	(6)	(695)	(285)
Interest paid on short CFDs	(42)	(165)	(132)
Total derivative expenses	(48)	(860)	(417)
6 Investment Management Fees
	six months		six months
	ended	year ended	ended
	28.02.19	31.08.18	28.02.18
	unaudited	audited	unaudited
	£'000	£'000	£'000
Portfolio management services	2,795	6,107	2,994
Non-portfolio management services*	50	600	300
Investment management fees	2,845	6,707	3,294
* Includes company secretarial, fund accounting, taxation, promotional and corporate advisory services FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International ("FII"). Both companies are Fidelity group companies.
From 1 September 2018, the Company adopted a new fee arrangement which reduced the previous fee of 0.875% of net assets to a new tiered fee basis of 0.85% on the first £700 million of net assets and 0.75% of net assets in excess of £700 million. In addition, the fixed annual fee for services other than portfolio management was reduced from

6 Investment Management Fees

	six months		six months
	ended	year ended	ended
	28.02.19	31.08.18	28.02.18
	unaudited	audited	unaudited
	£'000	£'000	£'000
Portfolio management services	2,795	6,107	2,994
Non-portfolio management services*	50	600	300
Investment management fees	2,845	6,707	3,294

Notes to the Financial Statements continued

7 Taxation on Return on Ordinary Activities

	six months		six months
	ended	year ended	ended
	28.02.19	31.08.18	28.02.18
	unaudited	audited	unaudited
	£'000	£'000	£'000
Overseas taxation	113	177	40
Total taxation charge for the period	113	177	40

8 Return/(loss) per Ordinary Share

	six months		six months
	ended	year ended	ended
	28.02.19	31.08.18	28.02.18
	unaudited	audited	unaudited
Revenue return per ordinary share	1.78p	5.70p	1.07p
Capital (loss)/return per ordinary share	(18.48p)	16.29p	5.94p
Total (loss)/return per ordinary share	(16.70p)	21.99p	7.01p

The return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares held during the period, as shown below:

	£'000	£'000	£'000
Net revenue return on ordinary activities after taxation	4,776	15,108	2,839
Net capital (loss)/return on ordinary activities after taxation	(49,621)	43,166	15,722
Net total (loss)/return on ordinary activates after taxation	(44,845)	58,274	18,561
	number	number	number
Weighted average number of ordinary shares held	268,482,436	265,040,439	264,499,480

		six months		six months
		ended	year ended	ended
		28.02.19	31.08.18	28.02.18
		unaudited	audited	unaudited
		£'000	£'000	£'000
	Final dividend of 3.15 pence per ordinary share
	paid for the year ended 31 August 2018	8,433	–	–
	Interim dividend of 1.85 pence per ordinary share
	paid for the year ended 31 August 2018	–	4,902	–
	Final dividend of 2.80 pence per ordinary share
	paid for the year ended 31 August 2017	–	7,406	7,406
Total dividends paid		8,433	12,308	7,406
10 Fair Value Hierarchy	shares in issue held at the date of this report.
to estimate the fair values.	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
Classification	Input
Level 1	Valued using quoted prices in active markets for identical assets
Level 2	Valued by reference to valuation techniques using observable inputs other than quoted prices included within level 1
	Valued by reference to valuation techniques using inputs that are not based

10 Fair Value Hierarchy

Classification	Input
Level 1	Valued using quoted prices in active markets for identical assets
Level 2	Valued by reference to valuation techniques using observable inputs other than quoted prices included within level 1
Level 3	Valued by reference to valuation techniques using inputs that are not based on observable market data

Notes to the Financial Statements continued

10 Fair Value Hierarchy continued

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 table below sets out the Company's fair value hierarchy:

28 February 2019 (unaudited)	level 1 £'000	level 2 £'000	level 3 £'000	total £'000
Financial assets at fair value through
profit or loss
Investments	605,985	3,494	1,933	611,412
Derivative instrument assets	–	2,373	–	2,373
	605,985	5,867	1,933	613,785
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	(2,038)	(10,623)	–	(12,661)
	level 1	level 2	level 3	total
31 August 2018 (audited)	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
Investments	699,052	4,489	1,456	704,997
Derivative instrument assets	1,058	2,845	1,036	4,939
	700,110	7,334	2,492	709,936
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	–	(5,371)	–	(5,371)
	level 1	level 2	level 3	total
28 February 2018 (unaudited)	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
Investments	641,088	4,477	11,674	657,239
Derivative instrument assets	–	10,205	–	10,205
	641,088	14,682	11,674	667,444
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities	–	(1,695)	–	(1,695)

unaudited audited unaudited number of number of number of shares £'000 shares £'000 shares £'000 Issued, allotted and fully paid ordinary shares of 5 pence each Held outside Treasury Beginning of the period 266,549,480 13,328 264,499,480 13,225 264,499,480 Ordinary Shares issued out of Treasury 4,095,000 204 2,050,000 103 – New Ordinary Shares issued 1,850,000 93 – – – End of the period 272,494,480 13,625 266,549,480 13,328 264,499,480 Held in Treasury Beginning of the period 4,095,000 204 6,145,000 307 6,145,000 Ordinary Shares issued out of Treasury (4,095,000) (204) (2,050,000) (103) – End of the period – – 4,095,000 204 6,145,000 Total share capital 272,494,480 13,625 270,644,480 13,532 270,644,480 Ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company. During the period a total of 5,945,000 ordinary shares (year ended 31 August 2018: 2,050,000 shares and six months to 28 February 2018: nil) were issued. The proceeds from the issue of ordinary shares out of Treasury of £9,821,000 (year ended 31 August 2018: £5,458,000 and six month period to 28 February 2018: nil) was credited to capital reserve. The total premium received in the period on the issue of new ordinary shares of £4,475,000 and on the issue of ordinary shares out of Treasury of £65,000 was credited to the share premium account (year ended 31 August 2018: £44,000 and six month period to 28 February 2018: nil).		28 February 2019	31 August 2018	28 February 2018
					13,225
					13,225
					307
					307
					13,532

Notes to the Financial Statements continued

12 Net Asset Value per Ordinary Share

The net asset value per ordinary share is based on net assets of £686,146,000 (31 August 2018: £724,970,000 and 28 February 2018: £684,657,000) and on 272,494,480 (31 August 2018: 266,549,480 and 28 February 2018: 264,499,480) ordinary shares, being the number of ordinary shares of 5 pence each held at the period end.

It is the Company's policy that any shares held in Treasury will only be reissued at a premium to net asset value per share and, therefore, shares held in Treasury have no dilutive effect. As at 23 January 2019, there were no shares held in Treasury.

13 Transactions with the Manager and Related Parties

FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management and the role of company secretary to FIL Investments International ("FII"). Both companies are Fidelity group companies. Details of the fee arrangements are given in Note 6. During the period, fees for portfolio management services of £2,795,000 (year ended 31 August 2018: £6,107,000 and six months ended 28 February 2018: £2,994,000) and fees for non-portfolio management services of £50,000 (year ended 31 August 2018: £600,000 and six months ended 28 February 2018: £300,000) were payable to FII. Nonportfolio management fees include company secretarial, fund accounting, taxation, promotional and corporate advisory services. At the Balance Sheet date, fees for portfolio management services of £441,000 (31 August 2018: £1,083,000 and 28 February 2018: £967,000) and fees for non-portfolio management services of £17,000 (31 August 2018: £100,000 and 28 February 2018: £100,000) were accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these services during the period was £79,000 (year ended 31 August 2018: £139,000 and 28 February 2018: £65,000). At the Balance Sheet date, marketing services of £9,000 (31 August 2018: £7,000 and 28 February 2018: £23,000) were accrued and included in other creditors.

As at 28 February 2019, the Board consisted of five Non-Executive Directors (as shown in the Directory on page 29), all of whom are considered to be independent by the Board apart from Nicky McCabe who was employed by FIL Limited until 31 December 2017. None of the Directors have a service contract with the Company. The Chairman receives an annual fee of £41,000, the Audit Committee Chairman an annual fee of £31,750 and each other Director an annual fee of £27,000. The following members of the Board hold ordinary shares in the Company: Andy Irvine 75,000 shares, Sharon Brown 15,600 shares, Dean Buckley 30,000 shares, Nigel Foster 70,000 shares and Nicky McCabe 31,926 shares.

Investing in Fidelity Special Values PLC

Fidelity Special Values PLC is a company listed on the London Stock Exchange and you can buy its shares through a platform, stockbroker, share shop or bank. Fidelity also offers a range of options, so that you can invest in the way that is best for you. Details of how to invest can be found on the Company's pages on the Manager's website at

www.fidelity.co.uk/specialvalues

CONTACT INFORMATION

Shareholders and Fidelity's Platform Investors should contact the appropriate administrator using the contact details given below and in the next column. Links to the websites of major platforms can be found online at www.fidelityinvestmenttrusts.com

Shareholders on the main share register

Contact Link Asset Services, Registrar to Fidelity Special Values PLC, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

Telephone: 0371 664 0300 (calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 9:00 -17:30, Monday to Friday, excluding public holidays in England and Wales).

Email: enquiries@linkgroup.co.uk

Details of individual shareholdings and other information can also be obtained from the Registrar's Share Portal at www.signalshares.com. Shareholders are able to manage their shareholding online by registering for the Share Portal, a free and secure online service. Facilities include:

Account Enquiry – Shareholders can access their personal shareholding, including share transaction history, dividend payment history and obtain an up-to-date shareholding valuation.

Amendment of Standing Data – Shareholders can change their registered postal address and add, change or delete dividend mandate instructions. Shareholders can also download forms such as change of address, stock transfer and dividend mandate forms as well as buy and sell shares in the Company.

Should you have any queries in respect of the Link Share Portal, contact the helpline on 0371 664 0391 (calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 9:00-17:30, Monday to Friday excluding public holidays in England and Wales).

Link Share Dealing Service

Customer: Fidelity Project Title: Special Values Half Year Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 DIRECTORS' REPORTSINFORMATION FOR SHAREHOLDERSShareholder Information Link Asset Services offer a low cost share dealing service to buy or sell shares. Further information is available at www.linksharedeal.com, or by telephoning 0371 664 0445 (calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 8:00 -16:30, Monday to Friday excluding public holidays in England and Wales). The Link Share Dealing Service allows you to deal in the shares of other companies for which Link Asset Services acts as Registrar, provided you are already a shareholder in the relevant company, and that company offers the Share Deal facility to its shareholders.

DIRECTORS' REPORTS

Shareholder Information continued

Dividend Reinvestment Plan

Link Asset Services offers a Dividend Reinvestment Plan which is a convenient way for Shareholders to build up their shareholding by using their dividend money to purchase additional shares in the Company. The Plan is provided by Link Asset Services, a trading name of Link Market Services Trustees Limited which is authorised and regulated by the Financial Conduct Authority.

For more information and an application pack call 0371 664 0381 between 9:00- 17:30 Monday to Friday. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate. Alternatively you can email: shares@linkgroup.co.uk or log on to www.signalshares.com.

Fidelity Platform Investors

Contact Fidelity, using the freephone numbers given below, or by writing to: UK Customer Service, Fidelity International, Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent TN11 9DZ.

Private investors: call free on 0800 41 41 10, 9:00- 18:00, Monday to Saturday.

Financial advisers: call free on 0800 41 41 81, 8:00- 18:00, Monday to Friday.

General enquiries

General enquiries should be made to the Secretary, at the Company's registered office: FIL Investments International, Investment Trusts, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.

Telephone: 01732 36 11 44.

Email: investmenttrusts@fil.com

Website: www.fidelityinvestmenttrusts.com

If you hold Fidelity Special Values PLC shares in an account provided by Fidelity International, you will receive a report every six months detailing all of your transactions and the value of your shares.

		Website: www.fidelity.co.uk/fidelityits.
--	--	------------------------------------------

28 February 2019	Half-Yearly period end
April 2019	Announcement of Half-Yearly results
May 2019	Publication of Half-Yearly Report
26 June 2019	Interim dividend payment
31 August 2019	Financial year end
November 2019	Publication of Annual Report
December 2019	Annual General Meeting
January 2020	Final dividend payment

Financial Calendar 2019/2020

Customer: Fidelity Project Title: Special Values Half Year Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 DIRECTORS' REPORTSINFORMATION FOR SHAREHOLDERSDirectory Andy Irvine (Chairman) Sharon Brown (Senior Independent Director and Chairman of the Audit Committee) Dean Buckley Nigel Foster Nicky McCabe

Alternative Investment Fund Manager (AIFM/the Manager)

FIL Investment Services (UK) Limited Oakhill House 130 Tonbridge Road Hildenborough Tonbridge Kent TN11 9DZ

Portfolio Manager, Secretary and

Registered Office FIL Investments International Beech Gate Millfield Lane Lower Kingswood Tadworth Surrey KT20 6RP Email: investmenttrusts.com

Independent Auditor

Ernst & Young LLP 25 Churchill Place London E14 5EY

Lawyer

Dickson Minto W.S. Broadgate Tower 20 Primrose Street London EC2A 2EW

Banker and Custodian

JPMorgan Chase Bank (London Branch) 125 London Wall London EC2Y 5AJ

Depositary

J.P. Morgan Europe Limited 25 Bank Street London E14 5JP

Financial Adviser and Stockbrokers

Cenkos Securities plc 6,7,8 Tokenhouse Yard London EC2R 7AS

Registrar

Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

General Data Protection Regulation ("GDPR")

What personal data is collected and how it is used

The Company is an investment trust which is a public limited company and, as such, has certain regulatory obligations such as the requirement to send documents to its Shareholders such as the Annual Report and other documents that relate to meetings of the Company. The Company will therefore collect Shareholders' personal data such as names, addresses and identification numbers such as investor codes and will use this personal data to fulfil its statutory obligations.

Any personal data collected will be kept securely on computer systems and in some circumstances on paper. Personal information is kept secure in line with Fidelity's Information Security policies and standards. If you are unhappy with how we have used your personal data, you can complain by contacting the UK Data Protection Officer, Fidelity International, Beech Gate, Millfield Lane, Surrey KT20 6RP.

Sharing personal data

In order to assist the Company in meeting its statutory requirements, the Company delegates certain duties around the processing of this data to its third party service providers, such as the Company's Registrar and Printers. The Company has appointed Fidelity to undertake marketing activities for the Company and their privacy statement can be found on the Company's website at https://investment-trusts.fidelity.co.uk/privacy-policy/

The Company's agreements with the third party service providers have been updated to be compliant with GDPR requirements. The Company confirms to its Shareholders that their data will not be shared with any third party for any other purpose, such as for marketing purposes. In some circumstances, it may be necessary to transfer Shareholders' personal data across national borders to Fidelity Group entities operating in the European Economic Area ("EEA"). Where this does occur, European standard of protections will be applied to the personal data that is processed. Where personal data is transferred within the Fidelity group, but outside of the EEA, that data will subsequently receive the same degree of protection as it would in the EEA.

How long will personal data be kept for?

We will keep the personal data for as long as is necessary for these purposes and no longer than we are legally permitted to do so.

Requesting access, making changes to your personal data and other important information

Shareholders can access the information that the Company holds about them or ask for it to be corrected or deleted by contacting Fidelity's UK Data Protection Officer, Fidelity International, Beech Gate, Millfield Lane, Surrey KT20 6RP.

AIF

Alternative Investment Fund ("AIF"). The Company is an AIF.

AIFM

Alternative Investment Fund Manager ("AIFM"). The Board has appointed FIL Investment Services (UK) Limited to act as the Company's AIFM (the Manager).

AIFMD

The Alternative Investment Fund Managers Directive ("AIFMD") is a European Union Directive implemented on 22 July 2014.

Benchmark Index

FTSE All-Share Index against which the performance of the Company is measured.

Block Listing

A facility that allows the Company to issue new ordinary shares to meet demand in the market over a period of time.

Contract for Difference (CFD)

Customer: Fidelity Project Title: Special Values Half Year Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 DIRECTORS' REPORTSINFORMATION FOR SHAREHOLDERSGlossary of Terms A contract for difference is a derivative. It is a contract between the Company and an investment house at the end of which the parties exchange the difference between the opening price and the closing price of the underlying asset of the specified financial instrument. It does not involve the Company buying or selling the underlying asset, only agreeing to receive or pay the movement in its share price. A contract for difference allows the Company to gain access to the movement in the share price by depositing a small amount of cash known as margin. The Company may reason that the asset price will rise, by buying ("long" position) or fall, by selling ("short" position). If the Company trades long, dividends are received and interest is paid. If the Company trades short, dividends are paid and interest is received.

Derivatives

Financial instruments (such as futures, options and contracts for difference) whose value is derived from the value of an underlying asset.

Discount

If the share price of the Company is lower than the net asset value per share, the Company is said to be trading at a discount. The discount is shown as a percentage of the net asset value. The opposite of a discount is a premium.

Fair Value

The fair value is the best estimate of the value of the investments, including derivatives, at a point in time and this is measured as:

• Listed and AIM quoted investments valued at bid prices, or last market prices, where available otherwise at published price quotations;
• Unlisted investments valued using an appropriate valuation technique in the absence of an active market;
• Futures and options valued at the quoted trade price for the contract; and
• Contracts for difference valued as the difference between the settlement price of the contract and the value of the underlying shares in the contract (unrealised gains or losses).

Futures

An agreement to buy or sell a fixed amount of an asset at a fixed future date and at a fixed price.

Gearing

Gearing describes the level of the Company's exposure and is expressed as a percentage of Shareholders' funds. It reflects the amount of exposure the Company uses to invest in the market. It can be obtained through the use of bank loans, bank overdrafts and derivatives, in

Glossary of Terms continued

order to increase the Company's exposure to market price movements. The Company uses two key measures of gearing:

• Gross gearing is the total of: long exposures, plus short exposures and less exposures hedging the portfolio, expressed as a percentage of Shareholders' funds; and
• Net gearing is the total of: long exposures, less short exposures and less exposures hedging the portfolio, expressed as a percentage of Shareholders' funds.

Gross Asset Exposure

Gross Asset Exposure measures the exposure to market price movements as a result of owning shares, derivatives and fixed-interest securities.

Hedging

A strategy aimed at minimising or eliminating the risk or loss through adverse movements, normally involving taking a position in a derivative such as a future or an option.

Net Asset Value (NAV)

Net asset value is sometimes also described as "Shareholders' funds", and represents the total value of the Company's assets less the total value of its liabilities. For valuation purposes it is common to express the net asset value on a per share basis.

Options

An option is a contract which gives the right, but not the obligation, to buy or sell an underlying asset at an agreed price on or before an agreed date. Options may be calls (buys) or puts (sells) and are used to gain or reduce exposure to the underlying asset on a conditional basis, for example, the purchase of a call option provides exposure to the upside potential of an underlying stock, with the downside risk being limited to the premium paid.

Premium

If the share price of the Company is higher than the net asset value per share, the Company is said to be trading at a premium. The premium is shown as a percentage of the net asset value. The opposite of a premium is a discount.

Return

The return generated in a given period from the investments:

• Revenue Return reflects the dividends and interest from investments and other income net of expenses, finance costs and taxation;
• Capital Return reflects the return on capital, excluding any revenue return; and
• Total Return reflects the aggregate of revenue and capital returns.

Shareholders' Funds

Shareholders' funds are also described as "net asset value" and represent the total value of the Company's assets less the total value of its liabilities.

Total Return Performance

The return on the share price or net asset value per share taking into account the rise and fall of share prices and the dividends paid to Shareholders. Any dividends received by the Shareholder are assumed to have been reinvested for additional shares (for share price total return) or the Company's assets (for net asset value total return).

Treasury Shares

Ordinary shares of the Company that have been repurchased by the Company and not cancelled but held in Treasury. These shares do not pay dividends, have no voting rights and are excluded from the net asset value per share calculation.

To find out more about Fidelity Special Values PLC visit our website www.fidelityinvestmenttrusts.com where you can read aarticles and watch videos on the Company.

Fidelity, Fidelity International, the Fidelity International logo and symbol are trademarks of FIL Limited

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