Notification regarding the underlying fund of L99 Fidelity EMEA Side-Pocket (USD)
25 Jul 2024
Background
In May 2023, we contacted affected policyholders in relation to their unit holding in the FPIL mirror fund L12 Fidelity EMEA, the underlying fund of which, at that time, held a proportion of Russian assets. The Russian assets were untradeable due to international sanctions imposed following Russia’s invasion of Ukraine in February 2022, and were valued at zero within the underlying fund.
The board of directors of Fidelity Funds (the “Company”) determined it was in the best interests of investors to segregate the untradeable Russian assets of the underlying fund of L12 Fidelity EMEA, into a newly created side-pocket share class; the underlying fund of L99 Fidelity EMEA Side-Pocket (USD) (the "Affected Mirror Fund")
The Affected Mirror Fund and its underlying fund has remained suspended with a zero price value, as the underlying fund is only for the purpose of holding the Russian Assets as a liquidating fund. The Affected Mirror Fund is not open to receive premium subscriptions or to be switched into, or permitted to switch out or be redeemed.
Interim payment of capital
We have been advised by the Company that a Global Depositary Receipt position of the underlying fund of the Affected Mirror Fund, which was not subject to sanctions but contained an underlying Russian security, has been sold. As a result of the sale, an interim return of capital of the underlying fund of the Affected Mirror Fund has been paid out to shareholders by the Company.
A disbursement of this capital, proportionate to affected policyholders' unit holdings in the Affected Mirror Fund, has therefore been made to policies by way of a unit allocation with effect 23 July 2024, as follows:
- Where a policyholder still holds L12 Fidelity EMEA in their policy, the unit allocation will be made to that fund
- Where a policyholder no longer holds L12 Fidelity EMEA in their policy, the units will be allocated to J42 JPM USD Money Market VNAV fund, as long as the policyholder holds this fund in their policy. If they do not, the allocation will instead be made to the fund they hold with the highest value.
We have contacted affected policyholders regarding this allocation with details of the fund to which it has been applied. Sample policyholder communications can be found opposite for reference.
The Company has confirmed that the underlying fund of the Affected Mirror Fund remains suspended until such time as all underlying assets are in a position to be sold. The payment is not in relation to a sale of units of the underlying fund, as units are maintained only as a reference for further returns of capital, as and when they may be available.
These changes have happened automatically and policyholders do not need to take any action.
We have contacted impacted policyholders and their financial advisers; primarily by e-shot, with letters sent by post where we do not hold a valid email, and to those who prefer to receive letters by post.
Should you have any questions regarding this notification, please contact the Investment Marketing Team.
