Notification regarding the underlying fund of R185 Barings Eastern Europe Side-Pocket (USD)
12 Mar 2026
R185 Barings Eastern Europe Side-Pocket (USD) (the “Affected ILP sub-fund”)
We have received notification from the board of directors (the “Directors”) of Baring International Fund Managers (Ireland) Limited (the “Underlying Fund Manager”) regarding a distribution from the underlying fund of the Affected ILP sub-fund (the “Underlying Fund”).
Background
The Underlying Fund has been suspended since 1 March 2022, following Russia’s invasion of Ukraine and the subsequent imposition of international sanctions on Russian companies and individuals. As we advised in our notification of 2 March 2022, units in the Affected ILP sub-fund were therefore also suspended.
Our further communication in June 2023 advised that with effect from 21 July 2023, the Underlying Fund undertook a side-pocket transaction (the “Transaction”) whereby the liquid assets held at that time were transferred into a new fund, Barings Eastern Europe Fund (the “New Underlying Fund”). In addition, the Underlying Fund was renamed as Barings Eastern Europe Side-Pocket Fund retaining only the illiquid assets (the “Impacted Assets”); namely assets that are directly and/or indirectly impacted by the Russian invasion into Ukraine and/or impacted by sanctions that have been imposed as a result of Russia’s invasion of Ukraine and have become illiquid or untradeable and/or are difficult to value accurately.
In line with the Transaction, the Affected ILP sub-fund was renamed to its present name, R185 Barings Eastern Europe Side-Pocket (USD), and a new FPIL investment-linked policy sub-fund, R247 Barings Eastern Europe (USD) (the “New ILP sub-fund”), was created, linked to the New Underlying Fund. Policyholders received an allocation of units in the New ILP sub-fund, equivalent to their holding in the Affected ILP sub-fund as of 21 July 2023, on a 1:1 basis. The New ILP sub-fund was open to subscriptions, switching in, switching out and surrender from 24 July 2023.
The Underlying Fund ceased operations on the first business day after the Transaction, subject to the remaining Impacted Assets being realised when possible, with any surplus assets remaining after the discharge of outstanding liabilities being distributed to unitholders of the Underlying Fund.
Distribution from the Underlying Fund to policyholders of the Affected ILP sub-fund
The investment manager of the Underlying Fund, Baring Asset Management Limited (the “Underlying Fund Investment Manager”), determined that certain assets of the Underlying Fund became capable of being valued and realised, taking into account the best interests of the unitholders, and these assets have been sold.
The proceeds of this sale, net of the transaction costs incurred by the Underlying Fund, have been made as a distribution payment of capital from the Underlying Fund (the “Distribution”).
Following receipt by FPIL of the Distribution, we have calculated the amount to be allocated to affected in force policies on a pro-rata basis, proportionate to the unit holding in the Affected ILP sub-fund. This allocation has been applied to affected in force policies by way of a unit allocation with effect 25 February 2026 (the “ILP sub-fund Distribution Date”).
Because the Underlying Fund remains suspended to redemption and switch-out requests, the Affected ILP sub-fund also continues to be suspended and zero priced. The unit allocation has therefore been applied to R247 Barings Eastern Europe (USD) where this is still held on a policy; otherwise the allocation has been applied to R175 JPM USD Money Market VNAV. Please refer to the relevant sample client communications opposite for full details.
Where a policy already holds the maximum permissible 10 investment-linked funds, the units have instead been allocated to the ILP sub-fund held on the policy with the highest value as of the ILP sub-fund Distribution Date.
Future of the Underlying Fund and impact on the Affected ILP sub-fund
Due to the ongoing Ukraine conflict and the sanctions remaining in place, a number of Impacted Assets remain within the Underlying Fund. These will continue to be held until such time as the sanctions are lifted and/or the Underlying Fund Investment Manager determines it is possible to value and dispose of the assets, taking into account the best interests of unitholders.
The Underlying Fund Investment Manager will seek to dispose of these assets at the next suitable opportunity, following which the Underlying Fund Manager intends to return the net proceeds to unitholders, whether by further interim distributions or otherwise, until such time as all remaining assets have been sold. FPIL will contact affected policyholders with further information as and when the Underlying Fund Manager provides such updates.
The notional units of the Affected ILP sub-fund held by policyholders will remain unchanged and are expected to remain unchanged until further notice. The Affected ILP sub-fund will continue to be valued at zero and suspended to redemption and switch-out requests.
The allocation has happened automatically within affected in force policies and policyholders do not need to take any action. We recommend that policyholders seek the advice of their usual financial adviser before making any investment decisions.
We have contacted impacted policyholders and their financial advisers to notify them of the change; 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.
Should you have any questions regarding these changes, please contact the Investment Marketing Team.
