Important information relating to the closure of the M&G Pan European Dividend Fund Q&A

Transcription

1 Important information relating to the closure of the M&G Pan European Dividend Fund Q&A

2 Key Information Cut off point for receiving any switch or redemption instructions Thursday 6 December 2018 M&G Pan European Dividend Fund closes Friday 7 December 2018 Why is M&G closing the M&G Pan European Dividend Fund (the Fund )? On 29 March 2017, the UK Government gave the European Union formal notice of its intention to leave the EU, following the UK referendum on EU membership in June Under the terms of the relevant EU Treaty, the earliest date at which the UK can leave the EU will be March Until that time, existing EU laws and regulations will continue to apply to trade between the UK and the EU, including the ability to passport financial services. This means that investment funds, including UK-domiciled funds like the M&G Pan European Dividend Fund, can be easily distributed across borders within the EU until at least March There is, however, uncertainty about the shape and detail of the future trading relationship between the UK and the EU after March 2019 while negotiations continue, and whether European investors will still be able to invest in M&G s UKdomiciled Funds. Given that uncertainty, we considered what action to take in the best interests of all shareholders. After careful consideration of available options, given that the vast majority of investors in the M&G Pan European Dividend Fund are in non-sterling share classes, we believed that merging the non-sterling share classes of the Fund into a new, Luxembourg-domiciled fund would provide the best outcome for those investors. We therefore wrote to our investors in Europe, asking them to vote on our proposal to merge their holdings into a Luxembourg-domiciled fund. As at least 75% of the vote was in favour, this merger will now go ahead. When this happens, given the current mix of investors in the Fund, we regret that the remaining UK-domiciled Fund will no longer be cost effective to run, and the Fund s small size will mean that the fixed costs associated with running it will have a disproportionate and detrimental impact on its performance, so the Fund will close What are the options for Shareholders? The different options for Shareholders are outlined in the following pages. Please read the information carefully and send us your instructions using the Option Form provided or by contacting our Customer Relations team on *. Please note that we need to receive your instructions no later than 12 noon on Thursday 6 December 2018 in order to process your request. *If you instruct us by phone, your holding will be sold at the next valuation point. If you do not send us any instructions, what will happen to your investment will depend on whether you hold your shares inside or outside The M&G ISA or The M&G Junior ISA. We have highlighted differences for ISA and Junior ISA Shareholders where applicable. Important information Please note that the Fund will remain open to movements in financial markets at all times up to closure and, hence, the share price at closure could be higher or lower than that at any intermediate point. Please consider this information carefully when responding to us. All stated tax implications are based on our current understanding of UK tax legislation and will depend on your personal tax status. If you are in any doubt as to your own position in regards to this issue, you should consult a tax adviser or financial adviser. 2

3 Your Options Shares held outside of The M&G ISA or The M&G Junior ISA Option A: switch to an alternative M&G fund You can choose to switch your investment to another M&G fund or funds. You may do this at any time before the closure of the Fund. For information on our full range of funds visit or contact our Customer Relations team. Once you have found the right fund(s) for you and read the relevant Key Investor Information Document(s) (KIIDs), along with the Important Information for Investors document, you can instruct us by completing the enclosed Option Form or by calling our Customer Relations team. We are not permitted to provide investment advice, but we are happy to talk you through the various options. Alternatively, please contact a financial adviser. Once the switch has taken place, we will send you confirmation of your new holding(s) in your chosen fund(s). Option B: redeem your holding Before the closure You can redeem your holding at any time up to the closure of the Fund: please complete and sign the enclosed Option Form and return it to us by 12 noon on Thursday 6 December You will be sent your proceeds within four business days of us receiving the completed Form. Alternatively, you can instruct us by phone to sell at the next valuation point. When the Fund closes (the default option): If you wish to redeem your holding when the Fund closes, you do not need to do anything. If we have not received instructions from you by 12 noon on Thursday 6 December 2018, your holding will be redeemed when the Fund closes on Friday 7 December 2018 and you will be sent the proceeds on Wednesday 12 December Tax Consequences Please be aware all of the options set out above will be deemed a disposal of your shares in the Fund for capital gains tax (CGT) purposes and may give rise to a CGT liability. This will depend upon your individual circumstances. If you are in any doubt as to the taxation consequences of your action you should contact a tax adviser or financial adviser. 3

4 Your Options Shares held within The M&G ISA or The M&G Junior ISA Please note: option D ( take cash ) is not available to investors in The M&G Junior ISA; all other information regarding holdings in The M&G ISA, including the other options available to Shareholders, fund availability and transfers to another manager will also apply to those held in The M&G Junior ISA. A redemption and cash payment from The M&G ISA would result in the loss of the tax-efficient ISA status associated with your holding. However, switching your investment to another M&G fund within The M&G ISA or The M&G Junior ISA, or transferring your holding to another ISA or Junior ISA manager would maintain its tax-efficient status. To maintain your tax-efficient status, you should choose from options A, B or C below. Option A: switch to the M&G Pan European Select Fund (the default option) We have selected the M&G Pan European Select Fund as the default fund as it provides the nearest match to your current fund objective from the other funds in the M&G range. The M&G Pan European Select Fund aims to provide a total return (the combination of income and growth of capital) by investing in the shares of European companies. You will receive the equivalent share class and same share type (income or accumulation shares). Charges for the M&G Pan European Select Fund are the same as for the M&G Pan European Dividend Fund. For more information on the M&G Pan European Select Fund please refer to the enclosed Key Investor Information Document(s) (KIIDs). If you wish to transfer your holding before the closure, select option A on the Option Form, alternatively if you want the transfer to take place at closure you do not need to do anything. Your investment will retain its tax advantages and the transaction will not incur any charges. Option B: switch to an alternative M&G fund(s) within The M&G ISA and The M&G Junior ISA If you wish to switch to a different M&G fund or funds within The M&G ISA and The M&G Junior ISA, you can find out about our full range of funds by visiting or contacting our Customer Relations team on You will need to read the KIID(s) for the fund(s) you have chosen prior to investing and the Important Information for Investors document, which will provide you with details of share classes that are available for investment, and minimum investment limits associated with those share classes. We are not permitted to provide investment advice, but we are happy to talk you through the various options. If you wish to transfer your holding to alternative funds within the M&G range, select option B on the Option Form and list the fund(s) you wish to invest in. Switching to other funds within The M&G ISA or The M&G Junior ISA range will mean your investment will retain its tax advantages and the transaction will not incur any charges. If you need investment advice before making a decision, please contact a financial adviser. Option C: transfer of your ISA or Junior ISA investment to another manager You may transfer your investment to another manager this would also ensure the continuity of its tax-efficient status. Such a transfer must be initiated by you through your new chosen manager and they must in turn instruct us before 12 noon on Thursday 6 December If the documentation from your new manager is not received by M&G by that date, your investment will automatically be switched into the M&G Pan European Select Fund. If you transfer your holding to a new manager, you will not be charged for the transfer by M&G, but your new manager may levy a charge. Please note that whilst your investment is being transferred it will be out of the market for a short period of time and will not lose or gain value. 4

5 Option D: redeem your holding (not available to investors in The M&G Junior ISA) If the shares are held inside The M&G ISA and you would like to redeem your investment and receive a cash payment, you will need to complete and return the enclosed Option Form for it to reach us before 12 noon on Thursday 6 December You will be sent your proceeds within four business days of us receiving the completed Form. Alternatively, you can instruct us by phone by contacting our Customer Relations team to sell at the next valuation point. The default option on Fund Closure If we have not received instructions from you by 12 noon on Thursday 6 December 2018 we will automatically use your share of the closure proceeds of the Fund to buy shares in the M&G Pan European Select Fund on Friday 7 December Your investment will retain its tax advantages and the transaction will not incur any charges. 5

6 Your Questions Answered We realise that you may have some questions on the closure of the Fund and what your options are. With this in mind we have set out to answer the questions most commonly asked. If you have any further questions, please do not hesitate to contact our Customer Relations team using the contact details on the back cover. Please be aware that we are not in a position to give you investment advice, so if you are uncertain as to how to proceed, you should consult a financial adviser. Giving your instructions: Q. How can I give my instructions? You may give your instructions by: using the Option Form provided; If you are instructing us to switch your investment to an alternative M&G fund, please ensure that you have read the KIIDs for the fund(s) you have chosen. For free up-to-date copies of the KIIDs please visit or call our Customer Relations team; or calling our Customer Relations team on (you will need to have your M&G client reference). Please note that if you choose to instruct us over the phone, your instructions will be carried out at the Fund s next valuation point. Q. Can I switch or sell my holding before the closure of the Fund? When will my instructions be actioned? You may return your Option Form at any time up to 12 noon (the Fund s valuation point) on Thursday 6 December Any such instructions received before that date will be processed as per our usual terms and conditions of business: instructions received before 12 noon will be dealt at that day s valuation point; instructions received after 12 noon will be dealt at the next business day s valuation point. If you are switching to another M&G fund: Q. Do I have to switch to the M&G Pan European Select Fund? No. We have provided information about this fund as it is the default fund which we have selected for ISA and Junior ISA Shareholders who do not send us any instructions before 12 noon on Thursday 6 December However you are welcome to select any other fund(s). For further information on our full range of funds, please visit funds or call our Customer Relations team on We are not permitted to provide investment advice, but we are happy to talk you through the various options. Alternatively, please contact a financial adviser. Q. Will I hold the same number and type of shares? When switching to another fund, it is unlikely that you will receive the same number of individual shares, but you will hold shares to the same value as you did in the Fund on the date of the switch. You will receive the equivalent share class and same share type (income or accumulation shares as appropriate). ISA and Junior ISA Shareholders: If you do not respond by 12 noon on Thursday 6 December 2018, you will automatically receive M&G Pan European Select Fund Shares of the equivalent class and type as you currently hold in the M&G Pan European Dividend Fund. 6

7 Q. Will the investment retain its tax advantages? If you hold shares in the Fund through The M&G ISA or The M&G Junior ISA and choose options A, B or C the investment will retain its tax efficiency. My investment: Q. Will there be a final income distribution? There will be a final income distribution relating to the closure of the Fund. Shareholders in the M&G Pan European Dividend Fund on the day of the Fund s closure (Friday 7 December 2018) will receive this distribution payment, which will be paid on or before Thursday 7 February If you switch or redeem your holding prior to the Fund s closure, the amount of income accrued up to the day of your switch or redemption will be reflected in the value of your shares on that day. Q. I invest by Direct Debit. What will happen to that? The last dates when we will take a Direct Debit payment for the Fund will be 10 November 2018, 22 November 2018 and 1 December 2018 (depending on which day of the month your payments are currently being made). If you currently invest on the 10th of the month via The M&G Savings Plan, your Direct Debit due on 10 December 2018 will be cancelled unless we receive alternative instructions by Friday 23 November ISA and Junior ISA Shareholders: If you currently invest on the 10th of the month, your Direct Debit due on 10 December 2018 will be invested into the M&G Pan European Select Fund unless we receive alternative instructions by Friday 23 November If you switch your investment into another M&G fund, we will redirect your monthly payments to your new fund with effect from the next contribution date following receipt of your instruction. You do not need to complete a new Direct Debit Instruction as your existing instructions will automatically transfer to the new fund when you switch. However, if you already happen to be making a regular contribution to the fund you are switching into, the amounts of your two Direct Debits will be combined with effect from the next contribution date after we receive your instruction. In all other respects, your instructions for the fund you are switching into will take precedence. Costs of the closure: Q. Will I be charged for the fund closure? No. Any legal, administrative or publishing charges incurred in the closure of the Fund will be borne by M&G. None of the options carry any associated charge from M&G. ISA and Junior ISA Shareholders: If you transfer the holding to a new ISA/Junior ISA Manager, you will not be charged for the transfer by M&G, but your new ISA/Junior ISA Manager may levy a charge. Q. Will I pay more charges if the Fund reduces in size prior to closure? It is common for a fund to experience significant redemptions after the announcement of its closure. This can result in investors who remain invested until closure having to pay an increased share of any fixed costs associated with running the fund. In the case of the Fund, audit fees are the only fixed costs which directly impact investor charges. We will be monitoring the Fund until its closure and should its size reach a point where the impact of charges becomes disproportionate for Shareholders, M&G will cover the Fund s audit fees in order to minimise any negative impact on investors. 7

8 Q. Will I have to pay capital gains tax (CGT)? You may be liable for CGT, no matter which option you choose. This depends on your personal tax circumstances; please speak to a financial adviser or tax adviser if you are in any doubt. ISA and Junior ISA Shareholders: Shares in an ISA or Junior ISA are not liable for CGT as a result of a switch or redemption. Other: Q. What will happen to any money left over after the Fund finally closes? When we commence the closure of a fund it is necessary for us to retain a small amount of the fund s assets in order to ensure that all its liabilities are met. Normally a fund s liabilities can be accurately predicted and so we only retain assets to cover exactly what we need. However, sometimes a fund s liabilities prove more difficult to accurately predict and we may retain more assets than are needed. Whilst unusual, should this prove to be the case, at the point at which we are finally ready to terminate the Fund we may need to make a further distribution to those shareholders who held shares in the Fund when it began its termination (effective date). Where applicable, this final payment would be paid by cheque, regardless of any income instructions in force (ie reinvestment or BACS transfer). Q. Will you publish an annual report and accounts for the Fund? Although the Fund will close on Friday 7 December 2018 we will still publish an annual long report and financial statements as at its year end of 31 January This will be available on the website by 31 May Additionally, when the termination is complete we will publish a summary report which will also be available on the website. If you would like to receive a paper copy of either report these are available on request by calling Customer Relations team free on We are open from 8.00am to 6.00pm Monday to Friday, and from 9.00am to 1.00pm on Saturday. If you are calling from outside the UK, please call Further information If you have any further questions about the closure of the M&G Pan European Dividend Fund, please call our Customer Relations team free on We are open from 8.00am to 6.00pm Monday to Friday, and from 9.00am to 1.00pm on Saturday. If you are calling from outside the UK, please call You will need to provide your M&G client reference. Failure to provide this will affect your ability to transact with us. For security purposes and to improve the quality of our service, we may record and monitor telephone calls. Please be aware that we are not in a position to give you investment advice, so if you are uncertain as to how to proceed, you should consult a financial adviser. This financial promotion is issued by M&G Securities Limited which is authorised and regulated by the Financial Conduct Authority in the UK and provides ISAs and other investment products. The company s registered office is Laurence Pountney Hill, London EC4R 0HH. Registered in England No JUL 18 /