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Closure of Jupiter Emerging European Opportunities Fund

Q&A re closure of the Jupiter Emerging European Opportunities Fund

What is the current status of the JEEOF closure?

The Jupiter Emerging European Opportunities Fund closed with effect from 4th July 2022. All investors have received a return of proceeds or had those proceeds reinvested as per the terms outlined in the Closure Notice sent to investors on 19th May 2022. The position with regard to the treatment of any further proceeds from Russian assets held by the Fund in the event that it becomes possible to value and sell these is set out below.

Why was the decision taken to close the Fund?

We had placed the Fund under review before Russia’s invasion of Ukraine because it has reduced in size year-on-year for some time, and we felt it was unlikely that the Fund would attract new investors in the future. Following the onset of the crisis, we also considered that the investment opportunity has been further significantly and negatively impacted. For these reasons, we feel it is in the best interest of our existing investors to close this fund and return the proceeds from a significant proportion of the portfolio, while preserving the potential of future value for investors in relation to certain Russian-related assets.

How long do you anticipate the winding up process will take?/When will I receive my payout?

The Fund was closed with effect from 4th July 2022. All non-Russian assets were sold and the proceeds were either returned to investors as cash on 7th July or reinvested in another Jupiter Fund based on individual client instructions or the default terms set out in the Closure Notice sent to investors on 19th May 2022. The rest of the assets are in Russian-related holdings representing approximately 16% of the Fund portfolio at the time of the Fund’s suspension (11.59am on 28th February 2022). These currently have an indeterminable value because the Russian stock markets are closed to foreign investors and there are sanctions in place preventing us from trading in these assets. We will look to sell these assets if and when it is possible and further details on how this would happen are set out below.

What Russian-related stocks are still held, and how will you determine when to dispose of them?

Due to the uncertain market conditions, we cannot make any predictions as to when this might be. In addition, it is possible that the Russian assets could continue to be valued at zero for an indeterminate period. Please be assured that we are committed to acting in our clients’ best interests and will continue to monitor the situation closely.

List of Russian-related stocks held:

MOSCOW EXCHANGE MICEX-RTS PJSC
MMC NORILSK NICKEL PJSC
MAGNITOGORSK IRON & STEEL WORKS PJSC
GAZPROM PJSC
ROSNEFT OIL CO PJSC
YANDEX NV
MOBILE TELESYSTEMS PJSC
POLYUS PJSC
POLYMETAL INTERNATIONAL PLC
MAGNIT PJSC
NOVATEK PJSC
UNITED CO RUSAL INTERNATIONAL PJSC
X5 RETAIL GROUP NV

Will I receive a further payout if trading in Russian securities begins again?

Please see the answer to the above question, noting in particular that it is possible that the Russian-related assets will continue to be valued at zero. As such, there is no guarantee that there will be any further payouts. However, if and when we are able to obtain valuations for and sell these securities any proceeds will be returned to you in cash in the same proportion as your holding in the fund at the closure effective date.

It is possible that there could be multiple payouts if and when individual securities can be sold. A determination as to whether to sell securities at the first available price, irrespective of valuation, or to wait until valuations are in line with what we consider fair value will be taken on a case-by-case basis. We are not able to give any guarantees as to the likelihood, timing or number of any such payouts at this time.

Please be assured that we remain committed to acting in our clients’ best interests and will continue to monitor the situation closely.

We will continue to monitor the situation relating to the Russian assets and any Additional Proceeds and, if appropriate, aim to conduct a formal review in relation to the Russian assets within the next year. We will write to you again (i) if it becomes possible to sell the Russian assets relating to the Additional Proceeds; (ii) if possible, to provide an indication of whether any Additional Proceeds will become payable; and (iii) every six months where required to update you on the process.

When did the fund manager sell the bulk of the Russian stocks (given the last factsheet to be produced said approximately 60% of the portfolio was in Russia-related investments)?

As of 31st January c.61% of the portfolio was in Russian stocks. Between 18th and 23rd February the fund manager disposed of as many Russian stocks as possible which reduced the holdings to c47% of the portfolio.

At the point of suspension of the fund on 28th February, the proportion of Russian stocks in the portfolio by value had reduced to approximately 16% reflecting lower asset values as a result of the invasion.

The fund was suspended on 28th February with a valuation of £47.7million.

How will I receive the payouts?

Are there any tax implications?

Update on Russian Holdings in the former Jupiter Emerging European Opportunities Fund

20 January 2023

When we closed the Jupiter Emerging European Opportunities Fund (“the Fund”) on 4th July last year there were a number of Russian assets held by the Fund that it was not possible to sell at that time and include in the closure proceeds that you received. This was due to the economic impact and sanctions arising from the conflict in Ukraine.

We said we would update you every six months with regard to these assets. Unfortunately the situation remains largely unchanged – the ultimate outcome of the conflict remains uncertain with little scope for a negotiated solution in the near term.

The Fund’s Russian equities are still being held for the benefit of the former investors. However, the Russian Central Bank continues to prohibit investors from countries such as the UK from selling stocks and repatriating funds. This means that as things stand, we remain unable to value or sell the assets and return any further proceeds.

The interim financial statements for the Fund as of 31st December 2022 will be published and available here by 28th February. These will reflect a zero valuation for the Russian assets.

We will continue to monitor the situation and if it becomes possible to sell the assets we will do so as a matter of priority and return the proceeds to you. Failing that we will provide a further update in another six months.

Notice of suspension of dealing for Jupiter Emerging European Opportunities Fund, a UK Unit Trust

We are writing to provide an update to our letter of 7th March 2022 which informed you of the suspension of the Jupiter Emerging European Opportunities Fund (the “Fund”) in which you invest.

As mentioned in our previous letter, the conflict between Russia and Ukraine has severely impacted trading conditions within the markets the Fund primarily invests in. The ongoing nature of the conflict has continued to impact trading significantly and negatively and, in particular, our ability to value certain assets within the Fund. We have continuously reviewed the fund suspension decision and, having considered the current circumstances and agreed our approach with the Fund’s Trustee, Northern Trust Investor Services Limited, we will continue with the suspension of trading in the Fund as we believe this to be in the best interests of its investors. During this ongoing period, you are unable to subscribe, redeem, or switch any shares of the Fund.

We would also like to inform you that, prior to the conflict, we had initiated a review of the Fund to consider its purpose and prospects for future growth over the medium to long term. After careful consideration of all relevant issues, and in consultation with the Trustee, we have taken the decision to apply to the FCA to close the Fund. This course of action will allow us to return a level of cash to investors earlier than we expect would otherwise be possible.

On the basis the FCA approve our closure application, which we will be making shortly, we will be able to write to you with full details of the closure process, including the timing and any actions you will need to take.

We are currently considering options for investors, including to enable ISA investors to preserve their ISA allowance and will provide further details in due course. We expect to send this letter to you by the end of May. Please note that in advance of this letter being sent, we will not be able to provide further information on the closure process; we are informing investors of our intention now in order to reduce ongoing uncertainty regarding the fund’s future.

We will continue to update our website with any further relevant information.

We would like to take this opportunity to thank you for your patience and understanding during these challenging times, and once again reiterate that our clients are our first priority.

If you have any questions, please contact us via webchat (www.jupiteram.com) or call a member of our team on 0800 561 4000.

1st March 2022

Due to the escalating conflict between Russia and Ukraine, normal trading conditions have been significantly and negatively impacted within these markets. We have been monitoring closely the situation with reference to changes in various sanctions regimes, the liquidity profile of our funds, our ability to achieve fair valuation of the underlying assets and investor flows. As a result of our ongoing analysis particularly in regard to the valuation of the Russian holdings within this investment fund, Jupiter considers the suspension of trading for the Jupiter Emerging European Opportunities in the best interests of its clients based on the information that is available to us at this time.

During the suspension period, you will be unable to subscribe, redeem or switch any shares of the fund and all subscription requests received after the dealing cut-off time of 11.59am, 28th February will be rejected.

Over the past few weeks, the fund manager has been reducing the Fund’s exposure to Russian equities as a result of the escalating crisis. This means that the fund holds a far smaller proportion of the portfolio in Russian equities than it did when the last monthly factsheet was published.

Unfortunately, we are unable to say how long the Fund will be suspended for but we continue to monitor the situation very closely, and will provide regular updates.

We would like to reassure you that the suspension of the Jupiter Emerging European Opportunities Fund has no impact on any of your other Jupiter investments.

We would like to take this opportunity to thank you for your patience and understanding during these challenging times, and once again reiterate that our clients are our first priority.

If you have any questions, please contact your adviser, your usual sales contact at Jupiter or our direct investor helpline on 0800 561 4000 from 9am to 5.30pm.

Q&A on suspension of dealing for Jupiter Emerging European Opportunities Fund

Why has Jupiter taken the decision to suspend Jupiter Emerging European Opportunities Fund?

What will happen to regular saving subscriptions in the Fund?

Do we have a set timeframe for the suspension?

Is liquidity in the Fund an issue that you have taken into account?

The decision to suspend the Fund has been largely driven by concerns with our ability to fair value the assets. Liquidity has also been a key input to these discussions and the current block on trading and settlement does introduce additional challenges in protecting the Fund’s investors. That said, the Fund is sufficiently diverse with valuations of Russian Rouble-denominated exposure comprising approximately 16% of the total value of the Fund immediately prior to suspension and liquidity concerns were not the primary driver of the difficult decision we have taken.

Can I redirect future investment into another Jupiter Fund?

What factors will influence when the fund is unsuspended?

The factors we would need to consider as part of our ongoing monitoring would include an updated assessment of the market conditions in relation to prevailing geopolitical situation, a liquidity review of the Fund and take into account any guidance from the regulator or the Depository. Any decision to un-suspend the Fund would require approval from the Depository.

Will Jupiter be reducing the fees on the suspended fund?

Jupiter is not planning to suspend the fund fees at this moment. As a regionally-focused equity product, the manager was able to sharply reduce exposure to Russia the week before Russia invaded Ukraine, and the cash was redeployed into other equity markets, that are less exposed to Russia-Ukraine risks and whose cashflows, in the manager’s view, may have more defensive characteristics than its benchmark. This means that, despite the fund being closed to new subscriptions and redemptions, the majority of the portfolio continues to be actively managed. Fund fees are charged on a % basis, assessed against the valuation of a fund. Due to the measures outlined above, the fund fees applied have reduced to zero or near-zero in relation to the fund allocations to Russian securities.

Are any other funds impacted by this decision?

Valuation of Russian, Belarussian, and Ukrainian assets

Please can you explain the process for valuing Russian, Belarussian and Ukrainian assets and how you are applying fair value in light of the uncertainty surrounding the valuation of these securities?

Following the restrictions placed on sales by foreign investors from the Russian exchange, and its prolonged subsequent closure, Jupiter has seen limitations in its ability to value Russian listed assets held. We have therefore taken the decision to value assets listed on the Moscow Exchange at zero, until such as time as the market begins to function in a way deemed appropriate and there is further clarity about the ability for foreign investors to sell these assets. This decision extends to depository receipts and similar instruments. All valuation decisions have been notified to the Depositary, with whom we maintain an active dialogue as the situation evolves and market developments arise. Jupiter does not hold any Belarussian or Ukrainian listed assets.

Is the process outlined above the same for Russian, Belarussian and Ukrainian bonds?

Since the conflict began, Jupiter has followed a standard valuation approach for bonds, marking to market using vendor prices available at the valuation point of its funds. These sources have been monitored daily to ensure that any potential anomalies or delays were identified and excluded for valuation purposes. However, Jupiter has recently found that several vendors have announced a discontinuation of the pricing of bonds denominated in Russian Roubles. Consequently, Jupiter has taken the decision to value RUB denominated bonds at zero, until such time as vendor pricing resumes. Jupiter continues to follow the standard valuation approach described above for bonds denominated in other currencies. Investors should note that these valuations have declined considerably over recent weeks.

How are you treating income accruals on Russian, Belarussian and Ukrainian assets?

In light of the restrictions preventing the transfer of income/proceeds to foreign investors, and the uncertainty around potential future defaults, Jupiter has taken the decision to write off any income accruals on assets denominated in Russian Roubles, Belarussian Roubles or Ukrainian Hryvnia. We expect to retain this view until such time that these future income receipts can be considered to have greater certainty. Any income that is received will be credited as a windfall to the receiving fund. Please note that Jupiter does not hold any assets denominated in BYR or UAH.

Please can you outline Jupiter funds’ exposure to Russian, Belarussian and Ukrainian assets?

Will clients potentially lose the value of the investments in Russian stock?

In common with many other companies and reflecting what is happening in the market in relation to Russian investments, Jupiter has valued many of its remaining Russian assets at zero, as described above, and while some assets continue to be marked to market these values have declined significantly. It is expected that Russian asset values will remain at zero or near-zero until such as time as the market begins to function in a way deemed appropriate and there is further clarity about the ability for foreign investors to sell these assets. We would like to reassure clients that any decisions made in relation to this will be taken in accordance with the terms of the relevant fund’s Prospectus/ Scheme Particulars, and applicable regulations and sanctions, and with our clients’ best interests at the forefront.

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Closure of Jupiter Emerging European Opportunities Fund

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