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 Emerging Europe ex Russia TOP20 Subfund (ISIN: LTIF00000443) 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 big potential for growth of financial markets and thus ensure that participants are able to obtain the maximum possible investment return. Moreover, after the Fund Merger, with the distribution of fixed-size fees across more participants, the part of the fund management expenses that they bear will be reduced.

The planned completion date of the Fund Merger is 15 January 2020.

Completion of the Fund Merger shall involve:
a. The fund terminating post-merger: INVL Emerging Europe ex Russia TOP20 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 Global Emerging Markets Bond 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 Emerging Europe ex Russia TOP20 Subfund which will terminate after the merger. Units held by participants of the INVL Emerging Europe ex Russia TOP20 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 Emerging Europe ex Russia TOP20 Subfund will become participants of the INVL Baltic Fund.

A participant of the INVL Emerging Europe ex Russia TOP20 Subfund will become a participant of the INVL Baltic Fund as of 15 January 2020.

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. Key Investor Information Document of the INVL Baltic Fund can be found here.

CHANGES FOR PARTICIPANTS

On completion of the Fund Merger, participants of the INVL Emerging Europe ex Russia TOP20 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 Emerging Europe ex Russia TOP20 Subfund will be transferred to the fund continuing post-merger – the INVL Baltic Fund.

Once the INVL Emerging Europe ex Russia TOP20 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):

  INVL Emerging Europe ex Russia TOP20 Subfund INVL Baltic Fund
Investment strategy Up to 100% of net assets are invested in shares of companies that are traded on regulated markets. 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 Restricted: up to 100% of all assets are invested in shares of companies operating in the region of Emerging Europe (excluding Russia) (the markets where the fund can invest are listed in item 2 of the Prospectus). Restricted: up to 100% of all assets are invested in shares of companies that conduct part of their operations in the Baltic countries.
Investment risk Category 5* Category 4*
Benchmark index CECE Extended EUR Index OMX Baltic Benchmark Capped Gross Index
Investment unit switching terms Investment units of the subfund may be switched within the umbrella fund. Not possible.
Exchange trading of investment units Fund units can be traded on the Nasdaq Vilnius securities exchange. Fund units can be traded on the Nasdaq Vilnius securities exchange.
Foreign distribution of investment units Units of the fund are distributed in Latvia, Sweden, Denmark, Finland, Norway and Germany. Units of the fund are distributed in Latvia, Sweden, Denmark, Finland, Norway and Germany.
Fund currency Euro Euro
Rounding precision of fund units in investment accounts Four decimal places Six 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, the remuneration to a distributor of the fund is 2% of the invested amount.)
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, as of 2016-02-17 the remuneration for distributors of the fund in Lithuania is 2% of the amount invested by the investor; for distributors abroad it is 0%-5%, depending on the distributor.)
Management Not more than 1.5% Not more than 2%
Switch Not more than 0.25% of the value of the switched fund units Not possible
Performance Not more than 15% of the fund’s value growth calculated on a high-water mark basis Not applicable
Fees to the depository No more than 0.5% No more than 0.25%
Fees to financial intermediaries Not more than 1% of the value of transactions carried out. Not more than 0.75% of the value of transactions carried out.
Legal expenses Not more than 1% Not more than 1%
Audit company remuneration Not more than 1% Not more than 0.5%
Other expenses:    
- expenses for bank services;
- fees to NASDAQ CSD;
- fees to NASDAQ Vilnius securities exchange;
- fees to market-maker;
- other
Not more than 1% Not more than 0.5%
Maximum total expenses paid from fund’s/subfund’s assets 3.00% of the average annual NAV 3.50% of the average annual NAV
Ongoing charges figure for 2018** 1.76% 2.17%
Total expense ratio (TER) for 2018 2.32% 2.17%
Portfolio turnover ratio (PTR) for 2018 41.09% -109.22%

* 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 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 for participants according to actual results is lower and belongs to risk category 4.
 
** The ongoing charges figure is based on expenses during the last year, which ended December 2018, 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 or shares of another collective investment undertaking in the name of the Subfund, sale and/or redemption fees are paid out of the Subfund’s assets. During approval of the project, audited 2018 data are provided.
 
Maximum total expenses paid from fund assets.The maximum allowed deductions from fund assets stipulated in the rules of the INVL Baltic Fund is larger and may reach 3.5% (versus 3% for the INVL Emerging Europe ex Russia TOP20 Subfund), but most of the fees in the INVL Baltic Fund (except for the management fee) are smaller than the corresponding ones in the INVL Emerging Europe ex Russia TOP20 Subfund. Although the maximum total expenses that can be covered from the fund’s assets is bigger for the INVL Baltic Fund, in 2018 the actual expenses of the INVL Baltic Fund were smaller according to the Total Expense Ratio for the year, which was 2.17%, while that of the INVL Emerging Europe ex Russia TOP20 Subfund was 2.32%.
 
Most individual fees and deductions are smaller.
  • A performance fee applies for the INVL Emerging Europe ex Russia TOP20 Subfund of not more than 15% of the Subfund’s net asset value growth. This fee will apply until 15 January 2020, the day of completion of the Fund Merger. For the INVL Baltic Fund, meanwhile, no performance fee applies.
  • The depository fee that applies for the INVL Emerging Europe ex Russia TOP20 Subfund is not more than 0.5%, the fee to financial intermediaries is not more than 1%, remuneration to the audit company is not more than 1%, and legal expenses are not more than 1%. For the INVL Baltic Fund, meanwhile, smaller fees apply: the fee to the depository is not more than 0.25%, the fee to financial intermediaries is not more than 0.75%, and remuneration to the audit company is not more than 0.5%, while the maximum size of legal expenses is the same, at not more than 1%.
  • Other expenses (for banking services and fees to the securities exchange) are the same or smaller in the INVL Baltic Fund, and in total may amount to not more than 0.5%; in the INVL Emerging Europe ex Russia TOP20 Subfund, meanwhile, the corresponding figure is not more than 1%.

The specific sizes of 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 of the maximum deduction sizes. The Management Company publishes them on the website www.invl.com.
 
Investment unit switching terms. Investors of the terminating INVL Emerging Europe ex Russia TOP20 Subfund which will cease to exist after the merger, on becoming participants of the continuing INVL Baltic Fund after the merger, will no longer be able to switch investment 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 completion date of the Fund Merger is 15 January 2020.

On the day of completion of the Fund Merger, the units of the INVL Emerging Europe ex Russia TOP20 Subfund that investors hold will be converted free of charge to units of the INVL Baltic Fund based on the number of Subfund units they have in their personal investment account.
 
Effective 15 January 2020, the INVL Emerging Europe ex Russia TOP20 Subfund will terminate, i.e., be merged into the INVL Baltic Fund and cease operations. Note that the Management Company has determined a period during which units of the INVL Emerging Europe ex Russia TOP20 Subfund being shutdown post-merger will not be issued, redeemed or converted:

8 January 2020 – 15 January 2020.
 
On the day of completion of the Fund Merger, after conversion of the investment units of the ceasing INVL Emerging Europe ex Russia TOP20 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 INVL Emerging Europe ex Russia TOP20 Subfund based on the data for 14 January 2020.

Because 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 published no later than 14:00 on that business day, technically the Fund Merger will be conducted on 15 January 2020, though the entries in the investment accounts of the Subfund’s participants will carry the date of 14 January 2020. Effective 15 January 2020, the INVL Emerging Europe ex Russia TOP20 Subfund will cease, i.e., it will be merged into the INVL 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 website www.invl.com.

ACTIONS TO REBALANCE THE FUND’S PORTFOLIO

In order to properly ensure requirements are met for diversification of the INVL Baltic Fund’s financial instruments and not deviate from the investment strategy defined in the fund’s Rules and Prospectus, the Management Company, in the period when investment units of the INVL Emerging Europe ex Russia TOP20 Subfund, which is ceasing, are no longer issued or redeemed, i.e., 8-15 January 2020, will dispose of financial instruments in the portfolio of the INVL Emerging Europe ex Russia TOP20 Subfund which do not fit the investment strategy of the INVL Baltic Fund. At the time of the Fund Merger, the portfolio of the INVL Emerging Europe ex Russia TOP20 Subfund shall or may comprise only cash (in euros or U.S. dollars) and/or equity securities suited 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 continuing INVL Baltic Fund at the SEB depository.

RIGHTS OF PARTICIPANTS WITH REGARD TO THE MERGER

From the moment they receive notification regarding the Fund Merger until 7 January 2020, all participants of the INVL Emerging Europe ex Russia TOP20 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. During this period, units of the INVL Emerging Europe ex Russia TOP20 Subfund shall be switched and/or redeemed, and settlement with participants for redeemed units shall be made on the terms and in the manner set out in the Prospectus of the INVL Umbrella Fund, to which the INVL Emerging Europe ex Russia TOP20 Subfund belongs.
 
A participant of the INVL Emerging Europe ex Russia TOP20 Subfund who does not exercise the rights set out above by 7 January 2020 will, effective 15 January 2020, become a participant of the INVL Baltic Fund.
 
Before making a decision to invest, you should individually or with the help of investment advisors assess the selected fund’s investment strategy, applicable fees and all investment-related risks, and carefully read the fund’s Rules, Prospectus and Key Investor Information Document. All important information regarding investment funds managed by INVL Asset Management UAB is made available at www.invl.com.

ADDITIONAL INFORMATION

During the entire period from receipt of this notification until the day of completion of the Fund Merger, you can, by contacting the Management Company in the ways specified below, obtain a copy of the audit report for the INVL Emerging Europe ex Russia TOP20 Subfund which will cease to exist after the Fund Merger, in which the auditor has validated the criteria for valuation of the assets and liabilities arising on the day 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 made available:
- at the INVL customer care departments in Vilnius, Kaunas and Klaipėda;
- on the website www.invl.com;
- by calling +370 700 55 959 or e-mailing info@invl.com;
- through official distributors of the INVL Emerging Europe ex Russia TOP20 Subfund.

If you have any questions, contact us by e-mail to info@invl.com or by calling us at +370 700 55 959, or visiting one of our customer care departments:
•    in Vilnius: Gynėjų St. 14 (“Vilnius Gates”);
•    in Kaunas: Jonavos St. 7, Sector B;
•    in Klaipėda: Minijos St. 19.