INFORMATION ABOUT THE INVESTMENT FUND MERGER (December 8th, 2015)

Consequent to Latvian and Lithuanian Supervisory Authorities’ approval, INVL Asset Management informs about the upcoming cross-border merger of three investment funds, managed by asset management companies in Lithuania and Latvia. Two Latvia-registered open ended investment funds Finasta Obligāciju fonds and Finasta Sabalansētais fonds will be incorporated into Lithuania-registered Harmonized Open-ended Umbrella Investment Fund’s Finasta Emerging Europe Bond Subfund.

The Fund merger will take effect on January 19, 2016.

MERGING FUNDS

As a result, following to recent review of investment products, offered by the group of management companies belonging to the same companies’ group, and outcomes that Latvia-registered Finasta Obligāciju fonds and Finasta Sabalansētais fonds are less attractive for investors, the boards of two management companies have made a decision on merging the following funds: Finasta Obligāciju fonds and Finasta Sabalansētais fonds will be incorporated into Harmonized Open-ended Umbrella Investment Fund Finasta Emerging Europe Bond Subfund (ISIN: LTIF00000468) (hereinafter – Fund merger).

The decision was approved by the Boards of IPAS “INVL Asset Management” and UAB “INVL Asset Management”, were both fund management companies belong to the same financial group of AB “Invalda INVL”:

  • IPAS “INVL Asset Management” (the manager of Finasta Obligāciju fonds and Finasta Sabalansētais fonds);
  • UAB “INVL Asset Management” (the manager of Finasta Emerging Europe Bond Subfund).

The decision for Fund merger has been driven with the effort to form the basis of potentially strong, active and profitable INVL group investment funds as well as boost the inflows of the above mentioned funds. The Fund merger is expected to benefit the participants of merging funds as a result of maximum possible return on their investments and investment growth in the continuing fund.

After this merger, Finasta Obligāciju fonds and Finasta Sabalansētais fonds shall cease to exist and Finasta Emerging Europe Bond Subfund will continue to operate as before (as one of four subfunds in Finasta Umbrella fund).

Participants of Finasta Emerging Europe Bond Subfund shall not experience significant consequences, changes or any restrictions on their investor rights in relation to the effected Fund merger. They shall continuously keep their investments by the same terms as before, i.e. investment rules, investment risk, rates of remuneration fees or periodic reporting will not be affected or change in any matter. Yet one should keep in mind that by effecting the Fund merger, the assets of Finasta Emerging Europe Bond Subfund as well the number of its participants will increase. Therefore, this will positively affect Finasta Emerging Europe Bond Subfund – some of fixed deduction fees (i.e. fee to audit company, fees to NASDAQ OMX Vilnius Exchange, fees to Central Securities Depository of Lithuania) and fees applied to Finasta Emerging Europe Bond Subfund directly (i.e. expenses for banking services) will be distributed amongst larger number of participants.

PROCEDURE FOR MERGER

The Fund merger will take effect on January 19, 2016.

Finasta Obligāciju fonds and Finasta Sabalansētais fonds will be incorporated into Harmonized Open-ended Umbrella Investment Fund Finasta Emerging Europe Bond Subfund:

  • the continuing (receiving) fund will be – Finasta Emerging Europe Bond Subfund (ISIN: LTIF00000468);
  • the terminating fund – Finasta Obligāciju fonds (ISIN LV0000400257); (ISIN LV0000400257);
  • the terminating fund – Finasta Sabalansētais fonds (ISIN LV0000400265).

As net asset values of the funds are calculated on the T+1 basis and published not later that till noon 12.00pm (CET+1), technically the Fund merger will be executed on the 19th of January, 2016, although the records in fund participant’s investment account shall be entered as of date January 18, 2016. On January 18, 2016 participants of Finasta Obligāciju fonds and Finasta Sabalansētais fonds will become participants (investment fund unit holders) of Finasta Emerging Europe Bond Subfund.

After effected Fund merger, Finasta Obligāciju fonds and Finasta Sabalansētais fonds shall be terminated and all assets and liabilities will be transferred to Finasta Emerging Europe Bond Subfund.

After the effected Fund merger, the fund units of terminating funds will be replaced to its participants free of charge with the fund units of continuing fund Finasta Emerging Europe Bond Subfund. Thus, the participants of Finasta Obligāciju fonds and Finasta Sabalansētais fonds will become participants of Finasta Emerging Europe Bond Subfund.

After the effected merger, Finasta Umbrella Fund will remain consisting of four subfunds:

  • Finasta Emerging Europe Bond Subfund;
  • Finasta New Europe TOP20 Subfund;
  • Finasta Russia TOP20 Subfund;
  • Finasta Global Flexible Subfund.

Comparison of fees and charges applied to merging funds (based on the last year’s expenses ending December 2014):

Finasta Emerging Europe Bond Subfund Finasta Obligāciju fonds Finasta Sabalansētais fonds
One-off charge taken before or after investment: One-off charge taken before or after investment: One-off charge taken before or after investment:
Distribution fee 1,00 % Distribution fee 0,50 % Distribution fee 1,00 %
Redemption fee - none Redemption fee - none Redemption fee - none
Subfund switch fee - 0,25%
This is the maximum that might be taken out of investment amount. This is the maximum that might be taken out of investment amount. This is the maximum that might be taken out of investment amount.
Charges taken from the Fund over a year: Charges taken from the Fund over a year: Charges taken from the Subfund over a year:
Ongoing charges - 1,33 % Ongoing charges - 2,05 % Ongoing charges - 2,29 %
Charges taken from the Fund under certain conditions: Charges taken from the Fund under certain conditions: Charges taken from the Fund under certain conditions:
Performance fee - none Performance fee - none Performance fee - none

Information about effected Fund merger, investment fund exchange ratio will be published on-line www.invl.com on the date of completing Fund merger.

PROCEDURES FOR REBALANCING THE PORTFOLIOS OF THE TERMINATING FUNDS

Considering current investment strategies of the funds participating in Fund merger, it has been decided to rebalance portfolios of both terminating funds Finasta Obligāciju fonds and Finasta Sabalansētais fonds, as investment strategies and financial assets of Finasta Obligāciju fonds and Finasta Sabalansētais fonds do not fully meet the investment strategy of Finasta Emerging Europe Bond Subfund, that is provided in its Rules and Prospectus.

By seeking to ensure the requirements for Finasta Emerging Europe Bond Subfund’s portfolio diversification and keep with the investment strategy described in the Rules and Prospectus of the subfund, the management company of terminating funds during the Fund merger period shall re-balance some financial instruments in the portfolios of Finasta Obligāciju fonds and Finasta Sabalansētais fonds in order to comply with Finasta Emerging Europe Bond Subfund’s investment strategy. During the Fund merger period and on the date of completing Fund merger, both portfolios of the terminated funds – Finasta Obligāciju fonds and Finasta Sabalansētais fonds – will or might consist of cash (in EUR and / or USD currencies), derivatives (for purpose of currency risk hedging), term deposits, debt securities (enterprise and government bonds) or CIUs that invest in enterprise and government bonds. Herein mentioned assets will be transferred into receiving fund Finasta Emerging Europe Bond Subfund’s bank account in SEB depository on the date of effecting Fund merger.

INVESTORS RIGHTS RELATED TO FUND MERGER

During all period since the receipt of this announcement till January 11th, 2016 all participants of Finasta Emerging Europe Bond Subfund have the right to sell and / or switch their fund units with no fees applied. All units of Finasta Emerging Europe Bond Subfund will be switched and / or redeemed and settled by the terms and conditions indicated in the prospectus of Finasta Emerging Europe Bond Subfund.

If till the January 11th, 2016 the participant of Finasta Emerging Europe Bond Subfund will not exercise the above mentioned rights, the participant will continuously keep his investments in Finasta Emerging Europe Bond Subfund.

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

FURTHER INFORMATION

During all period since the receipt of this announcement till the actual Fund merger date, the participants can obtain the copy of terminating funds depository’s confirmation. For that, one should contact UAB INVL Asset Management following contact details shown below.

The latest copy of Finasta Emerging Europe Bond Subfund Key Investor Information Document is enclosed

Any additional information that might be interested and relating to herein mentioned Funds merger will be available and provided under request:

  • At any client representative offices in Vilnius, Kaunas, Klaipėda and in Riga;
  • On-line www.invl.com (in Lithuanian, English and Latvian);
  • By phone +370 700 55 959 or email info@invl.com in Lithuania;
  • By phone + 371 67092988 or email LV@invl.com in Latvia;
  • By contacting any official distributor of Finasta Emerging Europe Bond Subfund