Proposed Cross-border Merger of the UCITS of Citad

IPAS ‘’Citadele Asset Management’’, an investment management joint-stock company established in Latvia, and UAB ‘’Citadele Investiciju Valdymas’’, a joint-stock company established in Lithuania, both of which are companies of JSC ‘’Citadele banka’’ Group, have resolved, based on the decision to suspend the provision of investment management services in Lithuania adopted by JSC ‘’Citadele Group’’ in 2012 and for purposes of protection of investor interests, to propose a cross-border merger of the ‘’Citadele Baltic Sea Countries Equity Fund’’ (ISIN LT0000950008), an open investment fund established by UAB ‘’Citadele Investiciju Valdymas’’ (hereinafter – the Merging UCITS), with the ‘’Citadele Baltic Sea Equity Fund’’ (ISIN LV0000400794), an open investment fund established by IPAS ‘’Citadele Asset Management’’ (hereinafter – the Receiving UCITS).

The merger shall have the following consequences:

• all assets and liabilities of the Merging UCITS will be transferred to the Receiving UCITS;
• the unit-holders of the Merging UCITS will become unit-holders of the Receiving UCITS;
• the Merging UCITS will cease to exist on the entry into effect of the merger.

Considering that countries where both the merging funds are established have similar regulatory framework based on Directive 2009/65/EC of the European Parliament and of the Council, and the Receiving UCITS was established for the purpose to merge it to the Merging UCITS, the cross-border merger will not materially affect unit-holders of the Merging UCITS and the Receiving UCITS. Both merging funds have similar investment policies and strategies, similar costs, periodic reporting and expected outcome. Likewise the rebalancing of the Merging and the Receiving UCITS investment portfolio is not going to be carried out before the investment funds merging.  No changes will be introduced with respect to charges or taxes applicable to unit-holders at the time of merger of both funds.

Unit-holders of the Merging and the Receiving UCITS will be entitled, in connection with the proposed merger, to:

• request management companies of the Merging and the Receiving UCITS to repurchase their units free of charge from October 10, 2013 till  November 8, 2013.

Units redemption is going to be carried out in accordance with the procedures stated in the prospectus of Merging and the Receiving USITS.

• obtain additional information from the management companies of the Merging or the Receiving UCITS about the proposed cross-border merger of the funds;
• obtain a copy of the auditor’s report concerning:

1. the criteria adopted for valuation of the assets and the liabilities on the date for calculating the exchange ratio of units;
2. cash payment per unit;
3. the calculation method of the exchange ratio.

According to requirements laid down by law in the country in which the Merging UCITS is established (Lithuania), the management companies of the Merging and the Receiving UCITS shall pass a decision on the cross-border merger on the next day following the decision of the Bank of Lithuania to allow the cross-border merger.

The repurchase of units of the Merging and the Receiving UCITS shall be suspended for the entire period of merger of the funds on November 11, 2013, and it will not be effected for another three working days after completion thereof – approximately 9 working days till November 22,  2013 including.

In order to provide merger of the funds, after the end of unit redemption period, following steps are being taken:

• an assessment shall be made of the assets of the Merging and the Receiving UCITS;
• the management company of the Merging UCITS shall give instructions to its custodian to transfer the assets to the Receiving UCITS by transferring of all assets to the custodian of the Receiving UCITS;
• the management company of the Merging UCITS shall do a calculation of the exchange ratio and send the figures to the management company of the Receiving UCITS and to the custodians of both funds for approval;
• the management company of the Merging UCITS shall draw up a list of unit-holders of units of the Merging UCITS stating in it the number of units of the Merging UCITS owned by unit-holders and the number of units of the Receiving UCITS due (transferrable) to unit-holders;
• the management company of the Merging UCITS shall cancel all units of the Merging UCITS;
• the management company of the Receiving UCITS shall give instructions to its custodian to issue new units of the Receiving UCITS according to an approved list.

The merger will be deemed completed and the Merging UCITS will be deemed to have ceased to exist on the next working day following the completion of the cross-border merger of the funds.

Unit-holders are free to use their units of the Receiving UCITS starting from the third working day of the completion of the cross-border merger of the funds.

Key investor information for unit-holders of the Receiving UCITS is available on the website of IPAS ‘’Citadele Asset Management’’: www.citadeleam.lv.

The Receiving USITS management company

IPAS ‘’Citadele Asset Management’’