New: enhanced Bed and ISA process

For investment professionals only. Not to be relied upon by private investors.

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Enhancements to the Bed and ISA processThe Bed and ISA process is changing to reflect your feedback and to introduce improvements. Two new features are being made available:

• Adding an ‘oversell’ amount to the amount required to invest in an ISA. This will sell an additional amount to allow for market movement and charges (see page 11)

• The ability to ‘mirror’ investments sold within the Investment Account and buy the same asset in the ISA (see page 12)

To facilitate this, the sell instruction has been moved to the first quote screen from the pre-submission screen. When Bed and ISA is selected as the source of the investment into the ISA, you can define the sell instruction and access the new functions (see page 7).

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Starting the instruction

Our Bed and ISA service allows a lump sum investment into an ISA, to be funded using cash from an existing Investment Account. Assets cannot be moved directly into an ISA because of HMRC rules, that limit ISA investments to cash deposits only. However, the lump sum investment into the ISA and the sale of investments to fund that instruction, can be submitted in one single journey.

First, find your client through client search by selecting ‘Servicing’, or if you have recently viewed their accounts, select them from ‘Recent’.

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Select ‘Quotes, Dealing and Account Management’.

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Select ‘Quote & Transact’.

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Then select either the existing ISA or a new ISA into which the investment will be made.

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Selling from the Investment Account

Add the amount of the lump sum investment into the ISA and then select ‘Bed and ISA’ as the source of the lump sum investment.

Please be aware:

• We do not offer an Adviser Initial Fee on our Bed and ISA service at present. Please use the Adviser Specified Fee option separately if required

• As the purpose of funding an ISA in this way is to remain invested and utilise the ISA allowance, we do not offer phasing as part of the Bed and ISA service.

Click the ‘Define Sell’ button to select the account from which the investment will be funded and the sell instruction for the selected Investment Account.

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Select the account from which the lump sum investment will be sourced. You can now select the sell method and complete the sell instruction. Sell methods are:

• Cash amounts (£) – allows the lump sum value to be split using cash values per investment. Enter cash values from the cash account and investments to fulfil the lump sum required

• Percentage amounts (%) – allows the lump sum value to be split across the available investments by percentage. Enter percentage amounts adding up to 100.00% from the cash account and investments to fulfil the lump sum required

• Proportional (including cash) – splits the lump sum value proportionally across the investments and cash within the account based on the current value of each holding. The system will calculate the value to sell for you

• Proportional (not including cash) – if cash is held, you can specify an amount to be taken from cash, and then the remaining amount required is taken proportionally across the remaining investment. The system will calculate the value to sell for you.

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For all sell methods we will attempt to place the deal as a monetary amount, unless the amount requested from an investment is greater than 90% of the holding in that investment. If this is the case we will calculate the number of units to sell based on the current unit price and sell that number of units. If any one of the sells for an investment exceeds the 90% tolerance level, then all sell deals instructed together will be sold on a unit basis.

Please note: the value raised may be more or less than the total amount instructed due to market movements.

Where the amount raised is less than required for the investment into the ISA, we will use available cash from the Investment Account Product Cash where this is possible. Any excess amount raised will be left in the Investment Account Product Cash.

A check box will appear on screen for you to acknowledge this.

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Example:

The customer requests to sell 100% of a single investment to fund a Bed and ISA of £1,000. As this is higher than the 90% tolerance level, the instruction will be placed by selling a specific number of units. At the current value, the customer holds 50 units at a price of £20 per unit (total £1,000). When we place the trade into the market, the price could be more, less or exactly the same as £20 per unit.

• The price is higher – £21 per unit, value = £1,050. The ISA buy is placed for £1,000 and the remaining £50 is placed in Product Cash within the Investment Account

• The price is the same – £20 per unit, value = £1,000. The ISA buy is placed for £1,000

• The price is lower – £19 per unit, value = £950. The ISA buy is placed for £950 and we use the available Product Cash in the Investment Account to invest as close to £1,000 as possible. If no cash is available, then the buy will be placed for £950 only.

Please note: exchange-traded investments’ transaction charges and fund manager charges may also reduce the amount raised to fund a Bed and ISA. Wherever there is a shortfall in the funding of a Bed and ISA, the rules above will apply.

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Overselling the Investment Account

NEW - You can ‘oversell’ to manage market movements and make it more likely that the sell instruction realises the amount required for the ISA investment.

The ‘ISA Lump Sum amount (£)’ is the target value that needs to be funded from the chosen Investment Account. You may wish to add an ‘oversell’ amount which will be added to the amount to be invested in the ISA. This could be used to:

• Fund a subsequent Adviser Specified Fee charged for the Bed and ISA activity

• Cater for market movements where a sell instruction is converted to a unit based sell

• Add extra cash to the sell to pay for dealing charges in the event of a sell from an exchange-traded investment.

By using an oversell amount, you are more likely to fulfil the total amount required to be invested in the ISA. Any amount realised over the amount required for the ISA investment will remain in the Investment Account Product Cash. A check box will appear for you to acknowledge this.

The ‘Total investments to be sold’ is the sum of the amount to be invested in the ISA and the oversell amount.

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Mirror investments sold from the Investment Account to buy in the ISA Account

NEW: You can now buy the same investments sold in the Investment Account in the ISA.

This can be achieved using the ‘Mirror Assets Sold in Investment ISA’ check box.

You will not be able to use this feature if the ISA uses a model; in this case the system will use the model portfolio to define the investment instruction.

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The system will insert the percentages in the quote page that are required to ‘mirror’ the values realised by sells in the Investment Account.

Due to rounding and market movements, the amounts reinvested in the ISA may differ slightly to those sold in the Investment Account.

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Retrieving and submitting the quote

The sell instruction can be saved along with the rest of the quote. When you reopen the quote to submit, you will be required to review the sell instruction to make sure the deal can still be placed. Some changes may need to be made, for example, if a fund no longer has the amount required to be sold, the instruction will need to be amended. You can review the sell and click ‘Done’ to complete the sell instruction.

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The rest of the quote can then be reviewed and the instruction can be submitted.

To ensure your client spends the minimum amount of time out of the market, we will process the buy into the ISA before the cash generated by the sell in the Investment Account has settled – effectively pre-funding the trade for your client.

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Important information

This presentation is for investment professionals only, and should not be relied upon by private investors. The value of investments, and the income from them, can go down as well as up and your clients may get back less than they invest.

This document may not be reproduced or circulated without prior permission. No statements or representations made in this document are legally binding on Fidelity or the recipient. Issued by Financial Administration Services Limited, authorised and regulated in the UK by the Financial Conduct Authority. FundsNetwork™ and its logo are trademarks of FIL Limited. UKM0219/23301/SSO/0819