Fidelity Funds Emerging Europe, Middle East and Africa Side Pocket Fund
Fidelity Funds has made an interim return of capital payment in relation to the suspended Fidelity Funds Emerging Europe, Middle East and Africa Side Pocket Fund (in EUR or USD currency variants).
Background
In May 2023, we contacted affected plan owners in relation to their holding in the Fidelity Funds Emerging Europe, Middle East and Africa fund (in EUR or USD currency) (the “Base Fund”), 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 net asset value price of the Base Fund.
The board of directors of Fidelity Funds (“Fidelity”) determined it was in the best interests of investors to segregate the untradeable Russian assets of the Base Fund into a newly created side pocket share class; the Side Pocket Share Class as defined above.
The Side Pocket Share Class has remained suspended with a zero price value, solely to hold the Russian Assets until such time they may be permitted to be liquidated. The Side Pocket Share Class is not open to receive premium subscriptions or to be switched into, or permitted to switch out or be redeemed.
As the Side Pocket Share Class remains priced at zero with a ‘suspended’ status, it is not visible on plans. This is because if a RL360 unit-linked plan holds a suspended fund, it ‘freezes’ functionality on the plan, such as switching or taking withdrawals, therefore the Side Pocket Share Class unit allocation has been recorded off plan on the behalf of plan owners, to enable plans to continue to operate normally.
Interim payment of capital
We have been advised by Fidelity that a Global Depositary Receipt position of the Side Pocket Share Class, 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 Side Pocket Share Class has been paid out to shareholders by Fidelity.
A disbursement of this capital, proportionate to plan owners' unit holdings in the Side Pocket Share Class, has therefore been made to affected plans by way of a unit allocation to the Base Fund with effect 23 July 2024.
Should a plan no longer hold the Base Fund, having switched or redeemed the holding, units have instead been allocated to the default replacement fund (“DRF”) detailed below, in the appropriate currency:
| Side Pocket Share Class and ISIN | Base Fund and ISIN | DRF and ISIN |
|---|---|---|
| Fidelity Funds Emerging Europe, Middle East and Africa SP A Acc EUR - LU2536453348 | Fidelity Funds Emerging Europe, Middle East and Africa A Acc EUR - LU0303816705 | abrdn Liquidity (Lux) EUR A2 Acc - LU0090865873 |
| Fidelity Funds Emerging Europe, Middle East and Africa SP A Acc USD - LU2536453777 | Fidelity Funds Emerging Europe, Middle East and Africa A Acc USD - LU0303823156 | abrdn Liquidity (Lux) USD A2 Acc - LU0049014870 |
Fidelity has confirmed that the Side Pocket Share Class 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 Side Pocket Share Class, as units are maintained only as a reference for further returns of capital, as and when they may be available.
Impacted plan owners, or their appointed investment advisers, and servicing agents have been contacted 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. A sample communication can be found opposite.
For more information regarding Fidelity Funds visit: https://fidelityinternational.com/