Fund merger: what action do I need to take?

TrustyOven · 24 September 2017 at 10:47AM

Hi,

I received an email from Charles Stanley Direct, informing me that one of my holdings is going to have a fund merger.

They've set out some dates for the process, but I'm not sure if I need to do anything or if the conversion will be automatic.

Here's what they wrote:

Fidelity Index World W Fund Inc (BP8RYC7)
Fund Merger

Please be advised that the above fund is to merge into Fidelity Index World P Fund Inc (BP8RYB6)with effect from 5 October 2017. The P class is a cheaper class of the fund, which has an OCF of 0.13% compared to the current rate of 0.15%.

The existing W class fund will be soft closed on 25 September 2017. As a result, the deadline for accepting any deals in to the existing fund is 11am on Friday 22 September. The deadline for selling the existing W class will be 11am on Thursday 5 October.

The new P class will be available to purchase from Monday 25 September 2017. Please note however that the merger is not expected to be processed until 9 October 2017. It will then take a few days for the merger to complete following which point your account will be updated accordingly. Once your account has been updated, you will then be able to sell newly merged P units.

So do I need to:
a1) manually sell my W class fund holdings before 5th Oct?
a2) the sale is done automatically for me?
b) What's all this stuff about 9th Oct? Does that mean it's "sorta" merged before 9th but not quite, therefore I can't buy the P class fund before 9th?

Anyone able to instill some clarity please, before I go pester CSD?

Linton · 24 September 2017 at 12:23PM

Everything should happen automatically without charge - if you sell and buy normal charges will apply. If you look at your holdings on the10th October you should see a different number of P units to the W units you currently hold.

The note you quote says that you can buy the P units from the 25th September.

PS the only difference is the price and charges of the fund. The underlying investment is exactly the same.

EdSwippet · 24 September 2017 at 12:38PM

Linton wrote: »

Everything should happen automatically without charge - if you sell and buy normal charges will apply.

That.

Also worth noting that if this is outside a SIPP or ISA then if you were to sell and buy for yourself, you might also face capital gains tax issues. If the broker or platform does the fund units conversion then the cost of the original units carries over so that there are no capital gains or losses.

It looks like if you needed to sell W units of this fund between 5 Oct and some time shortly after 9 Oct you might be unable to while the merger is happening. Otherwise, it seems you can just let things take their course.

dunstonh · 24 September 2017 at 12:39PM

Sometimes corporate actions require you to give an instruction. However, mergers usually require no action from you.

When funds are bought and sold there is a settlement period involved. This adds 2-4 days to the transaction date.

TrustyOven · 25 September 2017 at 9:01PM

Thanks for your replies.

This is indeed inside an ISA.

I assumed if the process would be automatic, they would have indicated that: "You do not have to do anything, we will convert your units automatically."

But since the are also giving deadlines for selling the existing fund class, it seemed they were urging action before the deadline. Hmm.

coyrls · 25 September 2017 at 10:45PM

TrustyOven wrote: »

Thanks for your replies.

This is indeed inside an ISA.

I assumed if the process would be automatic, they would have indicated that: "You do not have to do anything, we will convert your units automatically."

But since the are also giving deadlines for selling the existing fund class, it seemed they were urging action before the deadline. Hmm.

They said:

It will then take a few days for the merger to complete following which point your account will be updated accordingly. Once your account has been updated, you will then be able to sell newly merged P units.

For "your account will be updated accordingly", read "we will convert your units automatically".

greatkingrat · 26 September 2017 at 12:04AM

TrustyOven wrote: »

But since the are also giving deadlines for selling the existing fund class, it seemed they were urging action before the deadline. Hmm.

I think that is just giving advance warning so no-one can complain that they wanted to sell some units on the 6th October and weren't able to.

Fund merger: what action do I need to take?

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