INFORMATION ABOUT THE INVESTMENT FUND MERGER

Please be informed that the Management Company has decided to merge by way of absorption the harmonized investment fund INVL Umbrella Fund’s INVL Global Flexible Subfund (ISIN: LTIF00000427) into the open-ended harmonized investment fund INVL Baltic Fund (ISIN: LTIF00000096) (hereinafter, the Fund Merger). In doing so, the Management Company seeks to focus its activities in those investment regions where it sees the most potential for financial market growth and where the company’s managers have accumulated the most competence and experience, and thus to ensure participants are able to get the maximum possible investment return.

The planned date for completion of the Fund Merger is 1 June 2016.

Completion of the Fund Merger shall involve:
a. The fund terminating post-merger: INVL Global Flexible Subfund;
b. The fund continuing post-merger: INVL Baltic Fund;
c. After the merger, three subfunds will remain in the harmonized investment fund INVL Umbrella Fund:
·         INVL Emerging Europe Bond Subfund,
·         INVL Emerging Europe ex Russia TOP20 Subfund,
·         INVL Russia TOP20 Subfund.

On the date of completion of the Fund Merger, the INVL Baltic Fund will assume the assets and liabilities of the INVL Global Flexible Subfund which will terminate after the merger. Units held by participants of the INVL Global Flexible Subfund will be converted free of charge into units of the INVL Baltic Fund which will continue operating after the Fund Merger, and in this way the participants of the INVL Global Flexible Subfund will become participants of the INVL Baltic Fund.

A participant of the INVL Global Flexible Subfund will become a participant of the INVL Baltic Fund as of 1 June 2016.

Together with this information, we are providing you with the Key Investor Information Document of the INVL Baltic Fund which will continue post-merger. This document contains the main information for investors regarding the INVL Baltic Fund. It is not promotional material. The law requires providing this information to make it easier for you to understand the nature and risk of investing in this fund. We recommend reading it so you that can make a well-founded decision whether to invest.

Information regarding the completion of the Fund Merger and the investment fund exchange ratio will be provided on the day of completion of the Fund Merger on the web site www.invl.com.

CHANGES FOR PARTICIPANTS

On completion of the Fund Merger, participants of the INVL Global Flexible Subfund which will terminate post-merger (hereinafter, the Subfund) will become participants of the INVL Baltic Fund, and all the assets and liabilities of the terminating INVL Global Flexible Subfund will be transferred to the fund continuing post-merger – the INVL Baltic Fund.

Once the INVL Global Flexible Subfund has been merged into the INVL Baltic Fund and the participants of the terminating Subfund have become participants of the INVL Baltic Fund, the rules of the INVL Baltic Fund shall apply to them. For that reason, the following things will change for them (in the table below we provide a comparison of the funds being merged):

 

  Before the Fund Merger
(INVL Global Flexible Subfund)
After the Fund Merger
(INVL Baltic Fund)
Investment strategy Investments are actively spread across different asset classes without restrictions on geographic regions or economic sectors. Up to 100% of net assets are invested in shares of companies, debt securities or other asset classes. Up to 100% of net assets are invested directly in shares of companies that are publicly traded on Baltic markets or actively operate in the Baltic countries.
Investment geography No restrictions. Restricted: up to 100% of all funds are invested in shares of companies that conduct a significant part of their operations in the Baltic countries.
Investment risk Category 4* Category 4*
Benchmark index 55%* MSCI World Index  +
20%* S&P GSCI Commodity Index  +
20%* Dow Jones Credit Suisse Hedge Fund Index  +
5%* Euro Cash Indices Libor Total Return 3 Months Index*
OMX Baltic Benchmark Capped Gross Index*
Investment unit switching terms Fund investment units may be switched within the Umbrella Fund. Not possible.
Exchange trade of investment units Not possible. Baltic Fund investment units can be traded on the Nasdaq Vilnius securities exchange.
Foreign distribution of investment units Not possible. Investment units of the Baltic Fund are distributed in Latvia, Sweden and Germany.
Fund currency Euro Euro
Rounding precision of fund units in an investment account Four decimal places. Four decimal places.
Rounding precision of net asset value Four decimal places. Four decimal places.
Rounding precision of the value of an investment unit Four decimal places. Four decimal places.
Depository AB SEB Bankas AB SEB Bankas
Fees:
 
Distribution
Maximum fee: 5%

(By decision of the Management Company, effective 2016-02-17 the remuneration for distributors of the fund in Lithuania is 2%. The fund is not distributed abroad.)
The maximum fee is up to 3% when the Management Company itself distributes and up to 5% for other distributors. (By decision of the Management Company, effective 2016-02-17 the remuneration for distributors of the fund in Lithuania is 2% of the amount being invested by the investor; for distributors abroad it is 0%-5%, depending on the distributor.)
Management No more than 2% No more than 2%
Switch No more than 0.25% Not possible
Performance No more than 15% of the Subfund’s net asset value growth. Not applied
Fee to the depository No more than 0.50% No more than 0.25%
Fee to financial intermediaries No more than 1% of the value of completed transactions. No more than 0.75% of the value of completed transactions.
Legal expenses No more than 1% -
Audit company remuneration No more than 1% No more than 0.50%
Fee to financial institutions No more than 0.50%
- bank service expenses;
- fees to CSDL;
- fees to NASDAQ Vilnius securities exchange;
- fees to market maker;
- other.
No more than 1%
Maximum total expenses paid from the assets of the fund/subfund 4.00% of the average annual NAV 7.00% of the average annual NAV
Ongoing charges figure for 2015* 2.57 % 2.29 %
Total expense ratio (TER) for 2015 2.85% 2.29%
Portfolio turnover ratio (PTR) for 2015 120.82% 37.37%
MORNINGSTAR***
rating
- 4 stars
Lipper Leaders***** 2/2/2/NA/1 5/2/4/NA/5

 

*OMX Baltic Benchmark Capped Gross Index:a total return index comprising the largest and most traded stocks from all industry and service sectors on the NASDAQ OMX Baltic securities exchanges.

MSCI World Index:an index of equity markets in the developed world expressed in EUR;

S&P GSCI Commodity Index:an index showing price dynamics in the commodities market. It represents the expected return on a highly diversified commodities investment portfolio. The EUR value of this index, whose original currency is the USD, is used.

MSCI Emerging Markets Index:an index of equities in emerging markets around the world.

* After the Fund Merger, the investment strategy of the INVL Baltic Fund will apply for participants of the Subfund. Up to 100% of all this fund’s assets are invested in shares of companies that conduct a significant part of their operations in the Baltic countries. Thus, after the Fund Merger the assets of the Subfund’s participants will be invested in a narrower geographic region, while the risk of these investments according to actual results for participants is in the same category – risk category 4.

** The ongoing charges figure is based on expenses during the previous year, ended December 2015, and can change each year. The figure does not include the performance fee or costs of transactions with assets of the Subfund except where, in buying or selling investment units of another collective investment undertaking, or shares, in the name of the Subfund, sale and/or redemption fees are paid out of the Subfund’s assets. During approval of the project, unaudited 2015 figures are provided.

**** MORNINGSTAR, an independent international rating agency, evaluates and rates funds operating in the market for at least three years in terms of their ratio of risk to return, and compares them with a group of several dozen funds that have a similar strategy. The overall rating is taken from MORNINGSTAR’s most recent information dated 29 February 2016: http://www.morningstar.lt/lt/funds/snapshot/snapshot.aspx?id=F00000LYK4.<

**** Lipper Leaders, a global leader in the provision of information about investment funds with analysis and commentary, gives ratings from 1 to 5. Taken from Lipper Leaders’ most recent information dated 29 February 2016: http://www.lipperleaders.com/Result.aspx#.

Maximum total expenses paid from the assets of the fund/subfund.The maximum allowable deductions from assets of the fund that are stipulated in the rules of the INVL Baltic Fund are considerably larger and may reach 7% (compared with 4% for the Global Flexible Subfund), but the separate fees that are actually applied are the same as or smaller than those of the Global Flexible Subfund. Although the maximum total amount of expenses that can be covered from fund resources is bigger for the INVL Baltic Fund, the actual expenses of the INVL Baltic Fund were smaller according to the ongoing charges figure for 2015, at 2.29% (compared with 2.57% for the Global Flexible Subfund).

Separate fees and deductions are the same or smaller.

  • According to the fund rules, the maximum distribution fee that could be applied for the Global Flexible Subfund is 5%, while for the INVL Baltic Fund it is 5% or, when the Management Company itself directly distributes the fund, 3%. But the actual distribution fee applied for the funds in Lithuania is 2%.
  • The management fee applied to the funds is the same, and not more than 2%.
  • A performance fee of no more than 15% of the Subfund’s net asset value growth applies for the Global Flexible Subfund, while no performance fee applies for the INVL Baltic Fund.
  • The depository fee that applies for the Global Flexible Subfund is no more than 0.5%, the fee to financial intermediaries is no more than 1% and legal expenses are no more than 1%. For the INVL Baltic Fund, the corresponding fees are smaller: the fee paid to the depository is not more than 0.25% and the fee to financial intermediaries is no more than 0.75%, while legal expenses cannot be deducted from the fund’s assets at all.
  • Other expenses (remuneration of the audit company and fees to financial institutions) are similar and combined may not exceed 1%.

The specific sizes of the currently applicable deductions (shown in the table) have been set by decision of board of the Management Company, which has the right to unilaterally increase or decrease them within the limits for the maximum deduction sizes. They are published on the Management Company’s web site www.invl.com.

Investment unit switching terms. Investors of the terminating Global Flexible Subfund, on becoming co-owners of the continuing INVL Baltic Fund after the merger, will no longer be able to switch investments units they hold for units of another Umbrella Fund subfund. They will, however, be able to acquire units of the Umbrella Fund’s subfunds through a purchase-sale transaction. When selling fund units for more than their acquisition value, the investment gain may be taxable under current legislation.

MERGER TIMING AND UNIT CONVERSION PROCEDURE

The planned date for completion of the Fund Merger is 1 June 2016.

On the date of completion of the Fund Merger, units held by investors of the terminating INVL Global Flexible Subfund will be converted free of charge into units of the INVL Baltic Fund based on the subfund units they have in their personal investment account.

Effective 1 June 2016, the INVL Global Flexible Subfund will be discontinued, i.e., it will be merged into the INVL Baltic Fund and cease operating. We draw your attention to the fact that the Management Company has established a period during which units of the terminating INVL Global Flexible Subfund will not be issued, redeemed or converted: 25 May 2016 - 1 June 2016

On the day of completion of the Fund Merger, after conversion of the investment units of the terminating INVL Global Flexible Subfund into investment units of the INVL Baltic Fund which is continuing post-merger, the corresponding entries shall be made in the personal investment accounts of the participants of the Global Flexible Subfund based on the data for 31 May 2016.

Because the calculations of the funds’ net assets and investment unit value are made on the next business day based on the data for the end of the previous business day and are announced no later than 12:00 on that business day, technically the Fund Merger will be conducted on 1 June 2016, though the entries in the investment accounts of the Subfund’s participants will correspondingly carry the date of 31 May 2016. Effective 1 June 2016, the INVL Global Flexible Subfund will be terminated, i.e., it will be merged into the Baltic Fund.

Information regarding the intention to halt the switching, issuing and/or redemption of investment units of the Subfund which is being closed, and regarding the completion of the Fund Merger, will be provided on the web site www.invl.com.

PARTICIPANT RIGHTS RELATED TO THE MERGER

From the moment they receive the announcement regarding the Fund Merger until 25 May 2016, all participants of the INVL Global Flexible Subfund have the right to demand that the investment units they hold be redeemed and/or switched to another subfund of the harmonized investment fund INVL Umbrella Fund without any deductions. Units of the INVL Global Flexible Subfund shall be switched and/or redeemed, and settlement with participants for redeemed units shall be made, in the manner and timeframe stipulated in the prospectus of the INVL Umbrella Fund, of which the INVL Global Flexible Subfund is part.

A participant of the INVL Global Flexible Subfund who does not exercise the rights set out above by 25 May 2016 shall become a participant of the INVL Baltic Fund effective 1 June 2016.

Before making a decision to invest, you should individually or with the help of investment consultants assess the selected fund’s investment strategy, applicable fees and all investment-related risks. You should also carefully read the fund’s Rules, Prospectus and Key Investor Information Document. All important information regarding investment funds manged by UAB INVL Asset Management is available at www.invl.com.

ACTIONS TO REBALANCE THE SUBFOND PORTFOLIO

Seeking to properly ensure the financial instrument diversification requirements for the INVL Baltic Fund and not deviate from the investment strategy described in the fund’s rules and prospectus, the Management Company, during the period when investment units of the terminating INVL Global Flexible Subfund are no longer issued or redeemed, i.e., from the 25th to the 31st of May, will dispose of the financial instruments which are in the portfolio of the INVL Global Flexible Subfund and do not correspond to the Baltic Fund’s investment strategy. At the time of the Fund Merger, the portfolio of the INVL Global Flexible Subfund shall or may comprise only cash (in euros or U.S. dollars), derivative financial instruments (for managing exchange rate risk), term deposits, and collective investment undertakings or equity securities which correspond to the investment strategy of the INVL Baltic Fund. These assets shall be transferred, on the day of completion of the Fund Merger, to a valid account of the INVL Baltic Fund, the fund continuing post-merger, at the SEB depository.

ADDITIONAL INFORMATION

During the entire period from the receipt of this announcement until the date of completion of the Fund Merger, Funds' participants can, by contacting UAB INVL Asset Management in the manners specified below, obtain a copy of the audit report for the INVL Global Flexible Subfund which will terminate after the Fund Merger, in which the auditor has validated the criteria for valuation of the assets and liabilities arising on the date of completion of the Fund Merger as well as the method for calculating the exchange ratio for the units of this subfund.

Additional information of interest to you regarding the ongoing Fund Merger will be announced and provided at all of our customer care departments in Vilnius, Kaunas and Klaipėda, as well as on the web site www.invl.com, by telephone at +370 700 55 959 or by e-mail to info@invl.com, and through the official distributors of the INVL Baltic Fund.

For any questions you might have, please feel free to contact us by sending an e-mail to info@invl.com, calling us at +370 700 55 959 or visiting one of our customer care departments:
•    in Vilnius: Gynėjų St. 14 (“Vilnius Gates”);
•    in Kaunas: Savanorių Pr. 349;
•    in Klaipėda: Naujoji Uosto St. 8-309.