Notification of changes regarding the underlying fund of L12 Fidelity EMEA
25 May 2023
Following Russia’s invasion of Ukraine in February 2022, worldwide sanctions and the actions of governments and market counterparties, combined with the partial closure of the Russian Stock Exchange, resulted in an inability of market participants to trade and achieve settlement in Russian equities. These factors prevented the disposal of affected Russian assets (the “Russian Assets) held in the underlying fund of the Friends Provident International Limited (“FPIL”) Fund named above (the "Affected Mirror Fund”).
Split of the underlying fund of the Affected Mirror Fund to create a new side pocket share class for Russian Assets
The board of directors of Fidelity Funds (“Fidelity”) has decided to create a new share class of the underlying fund of the Affected Mirror Fund to hold its Russian Assets (the "New Share Class”) with effect from 5 June 2023 (the “Effective Date”). Fidelity considers this to be in the best interest of investors while maintaining fair treatment for all shareholders of the underlying fund.
The New Share Class will only exist for the purpose of holding the Russian assets and will be liquidated upon the disposal of the Russian assets, and the proceeds distributed accordingly.
On the Effective Date, the Russian Assets of the underlying fund of the Affected Mirror Fund will be transferred into the New Share Class. All shareholders of the underlying fund of the Affected Mirror Fund will receive the relevant allocation of an equivalent number of shares on a 1:1 basis in the New Share Class.
Creation of new Mirror Fund for Russian Assets
As such, a new FPIL Mirror Fund L99 Fidelity EMEA Side-Pocket (USD) (the “New Mirror Fund”) will be created, with the New Share Class as its underlying fund. The New Mirror Fund will not be marketed to the public, and will not be open to receive premium subscriptions or to be switched into. The New Mirror Fund will remain suspended in line with the New Share Class and will have a zero value until further notice.
Investors in the Affected Mirror Fund will receive an equivalent allocation of units in the New Mirror Fund, on a 1:1 basis equal to their unit holding in the Affected Mirror Fund as at the Effective Date. However, any units of the Affected Mirror Fund switched out, or redeemed, prior to the Effective Date, will not receive an equivalent allocation of those units in the New Mirror Fund.
Ongoing management of liquid assets of the underlying fund of the Affected Mirror Fund
The remaining assets (i.e. non-Russian Assets) of the underlying fund of the Affected Mirror Fund will be managed in accordance with the existing investment objective and policy; it continues to be priced and is not suspended to redemptions.
Temporary suspension of premium subscriptions into the Affected Mirror Fund
In order to implement the operational requirements of creating the New Share Class, Fidelity has suspended subscription investments into the underlying fund of the Affected Mirror Fund with effect from close of business Thursday 4 May 2023, until 5 June 2023 inclusive (the “Suspension Period”).
The Affected Mirror Fund has therefore also been suspended to new investment from 5 May 2023 until 5 June 2023 and no new investments, regular premiums, or switches in will be accepted to the Affected Mirror Fund in the Suspension Period.
As a result of the above, with effect from 5 May 2023 any premium allocation which would usually be applied to the Affected Mirror Fund have been automatically redirected to an alternative mirror fund in the range. For this purpose, we have selected J42 JPM USD Money Market VNAV (the “Default Mirror Fund”). Where a policy currently holds the maximum permissible 10 funds, the allocation has instead been diverted to the fund holding on the policy with the highest value as at 5 May 2023.
Following the end of the Suspension Period, please note that the direction of future regular premiums will not automatically revert back to the Affected Mirror Fund, and will continue to be directed into Default Mirror Fund (or highest value holding where applicable). Should policyholders wish to select an alternative fund to receive future regular premiums, they are free to do so at any time, without charge. This can be done online through the FPI Portal - simply log in at https://portal.fpinternational.com.
These changes will happen automatically within affected policies and policyholders do not need to take any action if they agree with the stated changes.
Whilst appropriate due diligence has been carried out on the Default Mirror Fund we do not accept any liability for the future performance of this, or any other FPIL funds.
Please refer to the important communication opposite for full details of the changes, including charging and ongoing management of the liquid assets.
We recommend that policyholders seek the advice of their usual independent financial adviser before making any investment decisions.
If you have any questions regarding the operation of the FPIL funds or the underlying funds, please contact our Investment Marketing team at Fundqueries.Intl@fpiom.com