Fund updates

Fees and charges

The new side pocket won’t be charged all the normal charges, such as an annual distribution charge, annual management charge or charges from the Company’s depositary, custodian and fund administrator. There may be specific charges, such as legal fees, the Luxembourg taxe d’abonnement and audit services, which are requirements set out in the Company’s original prospectus. A copy of the prospectus can be found by searching for the fund on the Fidelity website.

Once the new side pocket is launched, Schroders will set aside €75,000 from the fund (about 0.4% of the total cash in the fund, and 0.03% of its total net asset value) to cover any charges relating to the creation of the side pocket. If €75,000 isn’t enough to cover future costs, Schroders will make up the shortfall should the Russian assets not recover sufficient value.

The existing share class (Schroder ISF Emerging Europe) will be subject to the same fees and charges as they are now.

Investment objectives and policy

The fund’s investment objective and policy, pricing and dealing processes remain unchanged. Schroders will monitor the valuation based on how the markets react to the current situation. Should the Russian markets start to trade more normally, and a value begin to return, the fund will sell the side pocket at a time which will offer the best possible outcome for investors such as yourself.

No individual investors will be able to affect the timing of the sale of the side pocket. Any value in the side pocket may be returned in tranches as and when cash from the sale is available. As and when the time is right, the side pocket will be sold at the fund level, meaning that it will be sold separately from the fund. This will make sure that investors who were allocated shares in the side pocket are treated fairly and equally.

Although this is the plan from the authorised fund manager (AFM), there’s no certainty that any affected investment will ever recover its value to a significant extent, or at all, and that the AFM may be unable to realise any material value for investors in respect of units held in the side pocket class.

Which currency will the side pocket be valued in

Given the current uncertainty over the side pocket’s future, for simplicity the fund manager has only created a Euro-denominated share class. However, Fidelity will show the holding in GBP within your account. If the fund can distribute any value in the Russian assets, investors will receive any distribution in GBP.

How this impacts your investment

You don’t need to do anything - the new side pocket for this fund has been created by the AFM. A confirmation of these units can be found on the letter sent to all impacted customers. You can also view the side pocket holding online.

We’ll write to customers with any further information regarding the side pocket when we receive any updates. Any updates will also be added to the ‘Fund updates’ page on the Fidelity website.

Reopening of Schroder ISF Emerging Europe GBP

The Schroder ISF Emerging Europe GBP reopened on 18th July 2022. This means the fund is available to trade as normal.

Source fund: Schroder ISF Emerging Europe GBP LU0242609179

Side pocket fund: Schroder ISF - Emerging Europe Y9-Acc Side Pocket LU2473381015

Shareholder Notice

Investment objectives and policy

Objectives

To provide capital growth over the long-term (5-10 years) by investing at least 80% of the fund’s assets in equity securities of companies in European emerging markets countries (“Emerging European Countries”). 

Investment process

• Uses a fundamental, bottom-up stock selection process. 
• Uses a high conviction approach to finding the best investment ideas. 

Investment policy

At least 80% of assets invested in equities of companies that are domiciled or carrying out the main part of their economic activity, in an emerging European country. The fund will have exposure to small capitalisation companies and may have significant positions in specific sectors or markets from time to time.

Benchmark

MSCI Emerging Markets Europe 10/40 Index (Total Return Net). The fund is actively managed. The benchmark is a performance comparator and the fund may bear little resemblance to its benchmark. The benchmark has been chosen as it reflects the main investment universe and strategy for the fund.

Risks

The fund is subject to investment risks and other associated risks from the techniques and securities it uses to seek to achieve its objective. The table below explains how these risks relate to each other and the outcomes to the shareholder that could affect an investment in the fund.

Other associated risks the fund is exposed to from its use of the techniques and securities above

Outcomes to the shareholder potential impact of the risks above

Fees and charges

Management and distribution fees are currently waived and will continue to be waived pre and post transfer of the liquid assets during the suspension period.

The transaction costs of the transfer are estimated to be no more than 5bps (0.05%) and will be covered by the impacted fund. All costs and expenses associated with bringing this proposal to shareholders’ attention will be covered by JPMorgan. 

JPMorgan won’t be entitled to make any initial charge in respect of the new shares in the receiving fund created and issued under this scheme.

Please note that the costs and charges for operating the suspended share class may significantly erode the returns from any realisable value from the affected investments over time.

How this impacts your investment

JPMorgan has decided to segregate the illiquid assets by transferring the liquid assets to a newly created fund (the receiving fund). The transfer will provide you with access to the liquid portion of your assets which are currently suspended from trading in the impacted fund, and the assets will be hosted and invested within the receiving fund without exposure to Russian or Belarussian securities.

We’ll create your units when the receiving fund is created and keep it in the same account as the original investment. The separation of these assets will ensure you don’t lose the tax advantages of your ISA or SIPP, though you should remember that the amount of tax you save will depend on your particular circumstances, and tax rules may change. We’d recommend that you seek independent advice from a tax specialist if you have any questions relating to your tax status. 

Please also note that there is no certainty that any affected investment will ever recover its value to a significant extent, or at all, and that the authorised fund manager may be unable to realise any material value for unitholders in respect of units held in the suspended share class.

Opening of JPM Emerging Europe Equity Fund

The new receiving fund opened on 12 December 2022. This means the fund is available to trade as normal.

Receiving fund:

JPM Emerging Europe Equity II C Acc GB00BNTD9T28
JPM Emerging Europe Equity II C Inc GB00BNTD9V40

Source fund (suspended):

JPM Emerging Europe Equity C Net Acc GB00B8DLLD51
JPM Emerging Europe Equity C Net Income GB00B5NK2V63

Update as of 26th April 2024

Interim distribution to be paid to Investors from 21st May 2024

Fidelity have advised they will be making an interim distribution to investors of the closed Fidelity Emerging Europe, Middle East & Africa (‘the EMEA’ fund), which is in wind down, on or around the 21st May 2024.

The fund recently sold Depositary Receipt positions which had underlying Russian securities, but were not directly subject to sanction restrictions. Consequently, Fidelity will be making an interim distribution, together with other receivables to investors on or around 21st May 2024. The payment will either be paid directly into cash within your account, into your bank account, or paid to you by cheque, depending on how you hold the Fund.

Once the payment has been made, you will be able to see the amount paid by logging in and viewing your transactions history and also in your next Quarterly Statement and Valuation.

The remaining holdings in the EMEA Fund remain illiquid and/or subject to sanctions. Fidelity will continue reviewing opportunities to sell with the aim of returning value to investors. We will continue to publish updates online.

Update as at September 2023

As per previous correspondence with investors, no investor is able to buy or sell shares in the EMEA Fund as we have taken the necessary steps to close the Fund. When possible, the Russian assets will be sold with the aim of returning value to shareholders. In the current environment, it is not possible to estimate how long this process might take to complete or what the eventual value might be.

Please note that the EMEA Fund is not being charged any annual management charges. Fidelity may adjust this approach in the future and Shareholders will be notified in advance. The EMEA Fund may though be charged specific charges relating to, for example, depositary, custodian and legal services, but these costs will be funded by Fidelity. As the potential timeframe for disposal of assets is unknown and may extend to many years, Fidelity may adjust this approach to specific charges in the future so as to recover some, or all of these specific charges from the value of the EMEA Fund.

Effective date: 24 March 2023

On 24 March the assets of the EMEA Fund were split. Only Russian holdings remain in EMEA with investors receiving an equal number of shares in the newly created Fidelity Sustainable Emerging Markets Equity Fund (the “SEME Fund”).

Following the Effective Date, no investor will be able to buy or sell shares in the EMEA Fund as we will take the necessary steps to close the Fund. When possible, the Russian assets will be sold with the aim of returning value to shareholders. In the current environment it is not possible to estimate how long this process might take to complete, or what the eventual value might be.

Please note that the EMEA Fund will not be charged any annual management charges. Fidelity may adjust this approach in the future and Shareholders will be notified in advance. The EMEA Fund may though be charged specific charges relating to, for example, depositary, custodian and legal services, but these costs will be funded by Fidelity. As the potential timeframe for disposal of assets is unknown and may extend to many years, Fidelity may adjust this approach to specific charges in the future so as to recover some or all of these specific charges from the value of the EMEA Fund.

Source fund (in wind up):

• EMEA Fund A-ACC-GBP GB00B29TR993
• EMEA Fund W-ACC-GBP GB00B87Z7808

Receiving fund:

• Sustainable Emerging Markets Equity Fund A-ACC-GBP GB00BQBG6F54
• Sustainable Emerging Markets Equity Fund W-ACC-GBP GB00BQBG6R76

Effective date: 24 July 2023

Receiving fund (suspended):

• Barings Eastern Europe (SP) Fund IE000TZ9X6S9

Source fund:

• Barings Eastern Europe Fund Class I GBP Acc IE00B4V4RZ28

Following the Effective Date, no investor will be able to buy or sell shares in the Barings Eastern Europe (SP) Fund as we will take the necessary steps to close the Fund. When possible, the Russian assets will be sold with the aim of returning value to shareholders. In the current environment it is not possible to estimate how long this process might take to complete, or what the eventual value might be.

With effect from the date of the side pocket creation, the Total Annual Charges and Expenses payable by the Barings Eastern Europe (SP) Fund will be waived by the Manager.