Integrum Asset Management IPAS (hereinafter – Management Company) informs that with the aim of providing wider investment opportunities for the investors and optimizing the administration process it has decided to add the mutual fund Integrum Global Corporate USD Bond Fund, the mutual fund Integrum CEEMEA USD Bond Fund and the mutual fund Integrum Emerging Markets Corporate USD Bond Fund (hereinafter together referred to as Merging funds and each individually as Merging fund) to the mutual fund’s Integrum Global Bond Fund subfund Integrum Global USD Bond Fund (hereinafter – Receiving fund). The Receiving fund and Merging funds hereinafter together referred to as Mutual funds to be merged. Merger will become effective on 28.08.2023. (Day of merger).

Merger will become effective on 28.08.2023. (Day of merger). 

As a result of the merger of the above mentioned mutual funds:

• All assets and liabilities of the Merging funds will be transferred to the Receiving fund;
• Investors of the Merging funds are going to become the investors of the Receiving fund by exchanging the investment certificates of each Merging fund to the investment certificates of the Receiving fund according to the exchange ratio determined within the process of the merger (hereinafter – the Exchange ratio of the investment certificates)
• Pievienojamie fondi izbeigs savu darbību un tiks uzskatīti par likvidētiem, neveicot likvidāciju.

Aim of the merger

The Management Company proposes merger of the mutual funds with the aim of providing wider investment opportunities for the investors and optimizing the administration process. As a result of the merger the investors will be able to benefit from more efficient management, better diversification and wider investment opportunities which is inherent for the mutual fund with a large amount of assets.

Expected effect of the merger on investors

After the merger, the investors of the Receiving fund will own the same investment certificates that they owned before, in the same quantity. At the same time, the existing investment certificates of the Merging funds will be deleted and instead of those the investors of the Merging funds will receive on their accounts newly issued investment certificates of the Receiving fund. The quantity of newly issued investment certificates of the Receiving fund received by the investor of the Merging fund may differ from the quantity of the investment certificates that the investor owned in the Merging fund, however, the total investment value will not change as a result of the merger. No fee will be charged for the new issuance of the Receiving fund’s investment certificates, and for the exchange of the Merging funds investment certificates for newly issued Receiving fund’s investment certificates. In the process of the merger, the investors of the mutual funds to be merged are not entitled to a cash payment.

Mutual funds to be merged have the same procedure for determining the fund value, same procedure for selling and redeeming investment certificates, same procedure for calculating and paying remuneration as well as the same reporting periodicity. Mutual funds to be merged have similar investment policy and strategy, similar risk profile of investment objects and similar investment restrictions. Mutual funds to be merged invest in debt securities issued in fund’s base currency (USD) and their investment portfolios are diversified between many issuers in different countries. At the same time the Receiving fund has wider geographical focus of investments as well as wider structure of investment portfolio, thereby Mutual funds to be merged have different risk profile of investment portfolio, different investment geography, different level of diversification and different expected performance: 

• investment policy of the mutual fund Integrum Global Corporate USD Bond Fund supposes to invest in the debt securities issued by the commercial companies and credit institutions;
• investment policy of the mutual fund Integrum CEEMEA USD Bond Fund supposes to invest in the debt securities issued or guaranteed by the central banks, national governments, municipalities, commercial companies and credit institutions from Central & Eastern Europe, Middle East and Central Asia countries (CEEMEA region);
• investment policy of the mutual fund Integrum Emerging Markets Corporate USD Bond Fund supposes to invest in the debt securities issued by the commercial companies and credit institutions registered in developing countries.
• investment policy of the Receiving fund supposes to invest in the debt securities issued or guaranteed by the central banks, national governments, municipalities, commercial companies and credit institutions worldwide - thus obtaining better diversification of investments and the advantages of a wider investment opportunities.

The synthetic indicator of the Receiving fund is 4, which is determined by the annual volatility of the fund’s yield in the range of 5-10% over the last 5 years. At the same time, the Merging funds have the following synthetic indicator:

• synthetic indicator of the mutual fund Integrum Global Corporate USD Bond Fund is 3, which is determined by the annual volatility of the fund’s yield in the range of 2-5% over the last 5 years;
• synthetic indicator of the mutual fund Integrum CEEMEA USD Bond Fund is 6, which is determined by the annual volatility of the fund’s yield in the range of 15-25% over the last 5 years;
• synthetic indicator of the mutual fund Integrum Emerging Markets Corporate USD Bond Fund is 4, which is determined by the annual volatility of the fund’s yield in the range of 5-10% over the last 5 years.

The Receiving fund has lower rate of the fee to the Management Company for fund management, than the Merging funds have. At the same time, the fees to the custodian bank and to the auditor, as well as the commissions for emission of investment certificates are similar for the Mutual funds to be merged. The commissions for the redemption of investment certificates are not applied in the Mutual funds to be merged. Accordingly, as a result of the merger the investors of the Merging funds will benefit from a reduction in fee for fund management and in total fund expenses.

Funds to be merged operate pursuant to legal acts of the Republic of Latvia, therefore, because of the merger, the taxes and duties applicable to investors do not change. 

Upon transferring the assets of the Merging funds within the process of the merger, holdings and money of the Merging funds will be transferred to the Receiving fund – rebalancing of the portfolios of the Mutual funds to be merged will not be performed, as the investments of the Merging funds comply with the investment policy of the Receiving fund. Consequently, it is intended that there is no risk of impairment of the Receiving fund’s investment portfolio value and of the Merging funds’ portfolios value because of the merger.

Investors’ rights in relation to the proposed merger of the funds

In respect of the proposed merger of mutual funds, investors of the Merging funds and of the Receiving fund will be entitled:

1. to request the Management Company to redeem investment certificates of the Merging funds and of the Receiving fund free of charge until 18.08.2023 at 17:00;
2. upon request to obtain a copy of the opinion provided by the auditor of the funds to be merged (AS “Nexia Audit Advice”, reģ.Nr. 40003858822), in the office of the Management Company (Elizabetes Street 23, Riga) regarding:
3. the criteria adopted for the valuation of the assets and liabilities of the Merging funds and the Receiving fund on the date of calculating the Exchange ratio of the investment certificates;
4. the amount of cash payment per one investment certificate of the Merging fund;
5. the calculation method of the Exchange ratio of the investment certificates and the actual Exchange ratio of the investment certificates;
6. to obtain additional information from the Management Company regarding the proposed merger of mutual funds.

Accrued income of the Merging fund will be added to the accrued income of the Receiving fund as well as will be considered in determining the Exchange ratio of the investment certificates, as a result of the merger. 

Material aspects of the merger of mutual funds and the effective date of the merger

The merger of the Merging funds and the Receiving fund shall become effective on the 40th calendar day from the date of notification of the decision of the Bank of Latvia to the Management Company to authorize the merger of the mutual funds, respectively, the Day of merger will be 28.08.2023.

To ensure the merger of the mutual funds the Management Company will perform the following activities on the Day of merger with respect to each Merging fund:

• calculates the Exchange ratio of the investment certificates;
• prepares a list of investors of the Merging fund, indicating therein the quantity of the Merging fund’s investment certificates owned by each investor and the quantity of the Receiving fund’s investment certificates due as a result of the merger, and sends the list, together with the Exchange ratio of the investment certificates, to the depositary of investment certificates – Nasdaq CSD SE.
• provides instructions to the depository of investment certificates Nasdaq CSD SE to write off all investment certificates of the Merging fund, and issue new investment certificates of the Receiving fund and distribute those to investors of the Merging fund in accordance with the above-mentioned list;  
• provides instructions to the custodian bank Signet Bank AS to transfer the assets of the Merging fund to the Receiving fund;

To ensure the merger of mutual funds investors will not be able to submit applications for the purchase, return and redemption of investment certificates of the Receiving fund and of the Merging funds from 19.08.2023 till 28.08.2023, i.e., transactions with investment certificates of the Mutual funds to be merged will be suspended during the specified period of time.

Prior the merger, investors will be able to purchase, sell and request to return the investment certificates of the Merging funds and of the Receiving fund until 18.08.2023 at 17:00.

Investors will be able to make transactions with their investment certificates of the Receiving fund starting from the next business day after the Day of merger.

Receiving fund’s basic information for investors

Before taking any decision related to the merger of mutual funds, investors of the Merging funds should become acquainted with the document of the Receiving fund’s basic information for investors, which is available on the website: https://signetpensijas.lv/en/fondi/.

In case there is any conflict between versions of this information written in different languages, the Latvian version shall prevail.