In a normal market environment, the prices of assets actively traded are determined with reference to the latest available market price prevailing at the valuation point. In the current environment, the market for Russian securities is very limited. In these circumstances, our Fair Value Pricing process enacts an ‘extraordinary events’ process.
This process takes into account the price moves in related securities and the degree of ‘Price Discovery’ that is available in the marketplace. The aim is to ensure equitable treatment of shareholders and ensure that prices are adjusted to reflect what is likely to be the ‘true’ value of these securities.
Over the course of the last few days, Fidelity’s Fair Value Committee has significantly marked down the prices of the Russian securities across impacted funds, as you would expect. For domestically listed securities that are not currently tradeable and for those where there is no price discovery, those prices may be adjusted to zero.
This will be reflected in the weights of those securities and the aggregate Russia exposure of impacted funds. It is worth noting that this approach has not necessarily been taken by index providers where weights of individual securities and aggregate Russia exposure may reflect the ‘screen price’ rather than a true realisable value.
Further detail on the approach and fund level exposures to Russian securities are available on request. Please visit our ‘Contact us’ page or contact your usual Fidelity representative.
