Investor Information in respect of the Domestic Merger of investment funds “CBL Russian Equity Fund” and “CBL US Leaders Equity Fund” proposed by CBL Asset Management IPAS

Considering that the Russian stock market has been significantly affected by geopolitical events over the last 10 years, which has negatively impacted both the share prices of Russian issuers and investor interest in the country’s market as a whole, resulting in much lower returns than global stock markets, “CBL Asset Management” IPAS (hereinafter - the Management Company) has performed an analysis of the future development prospects of the investment fund “CBL Russian Equity Fund” and examined the possibilities of optimizing the fund management and administration processes with the aim to reduce the total fund expenses. Upon evaluating criteria such as the established investor profile, investment region, investment policy, volume of the fund, structure of investors and other factors the fund managers have come forward with a proposal to merge investment fund „CBL Russian Equity Fund” into „CBL US Leaders Equity Fund” in order to optimise the results of operation of the fund.

The Management Company hereby informs that as a result of the above analysis the Management Company has decided to propose a domestic merger of its established investment funds “CBL Russian Equity Fund” (referred to hereinafter as ‘the Merging UCITS’) and “CBL US Leaders Equity Fund” (referred to hereinafter as ‘the Receiving UCITS’) by exchanging units of the investment fund “CBL Russian Equity Fund” (ISIN LV0000400190) to the units of the investment fund’s “CBL US Leaders Equity Fund” share Class R Acc USD (ISIN LV0000401032).

The Finance and Capital Market Commission (Finanšu un kapitāla tirgus komisija) of the Republic of Latvia has provided its decision to authorise the merger of the Merging UCITS and the Receiving UCITS on 1 November this year.

Please be informed that as a result of the merger of the above investment funds:

1. all assets and liabilities of the Merging UCITS will be transferred to the Receiving UCITS;
2. all investors of the Merging UCITS are going to become the investors of the Receiving UCITS share Class R Acc USD considering the exchange ratio applicable to the exchange of units of the Merging UCITS and units of the Receiving UCITS share Class R Acc USD at the time of the merger;  

(c) the Merging UCITS will cease to exist.

I.effect of the merger on investors and investor rights

Considering that both investment funds to be merged operate pursuant to the Investment Management Companies Act (Ieguldījumu pārvaldes sabiedrību likums) and other legal enactments of the Republic of Latvia, the merger will not have essential material effect on the unit-holders of the Merging UCITS and of the Receiving UCITS. Both these Merging UCITS have a similar investment policy and strategy, reporting periods and expected operating results, in addition, the Receiving UCITS has lower management fee to the Management Company, the other costs of the two merging funds are similar. The main difference is the investment region of the merging funds: the Russian Federation for the Merging UCITS and the US for the Receiving UCITS. Prior to the merger the investment portfolio of the Merging UCITS will be rearranged by partial of full sale of the financial instruments.  The Management Company estimates that at the moment of merger there will be up to 100% assets of the Merging UCITS held as money assets and bank deposits.Moreover, the fee to the fund manager for the management of investment funds and the total costs of the Merging UCITS are expected to be reduced as a result of the merger.

Considering that both merging funds are established and operate pursuant to legislative enactments of the Republic of Latvia, there exist no circumstances at the time of the merger that would cause any changes in the current taxes or duties applicable to the unit-holders.

In respect of the proposed merger of the investment funds, the unit-holders of the Merging UCITS and of the Receiving UCITS will be entitled:

1. to request the Management Company to repurchase their units of the Merging UCITS free of charge until 24 October this year;
2. the units will be repurchased in accordance with the procedure established by the applicable fund prospectus;
3. to obtain additional information from the Management Company about the proposed merger of the UCITS;
4. to obtain a copy of the opinion of AS “Citadele banka”, custodian of the merging funds, at its premises on address Republikas laukums 2A, Riga, LV-1010, LATVIA concerning:

• the criteria adopted for the valuation of the assets and the liabilities of the Merging and the Receiving UCITS on the date of calculating the exchange ratio of the units of the Merging and the Receiving UCITS;
• amount of cash payment per unit of the Merging UCITS;
• the calculation method of the exchange ratio of the units.

II. material aspects of the ucits merger

According to legislative enactments of the Republic of Latvia, the decision by the Finance and Capital Market Commission (Finanšu un kapitāla tirgus komisija) of the Republic of Latvia to authorise the domestic merger of the UCITS shall become effective on the fortieth calendar day from the date of notification of the decision to the Management Company. Thus the merger of the Merging UCITS and the Receiving UCITS is planned to take place on 1 November this year, and the Merging UCITS will cease to exist after this date.

The following activities will be carried out in order to ensure the merger of the UCITS:

1. unit-holders of the Merging UCITS are clarified;
2. an assessment of the assets of the Merging and the Receiving UCITS share Class R Acc USD shall be made;
3. the Management Company shall perform a calculation of the exchange ratio of units of the Merging UCITS and send the figures to the fund custodian for approval and to the Central Securities Depositary - Nasdaq CSD SE  (referred to hereinafter as the CSD) for co-ordination;
4. the Management Company shall give instructions to its fund custodian to transfer the assets of the Merging UCITS to the Receiving UCITS;
5. the Management Company prepares list of the unit-holders of the Merging UCITS by indicating number of Merging UCITS’s units owned by each investor and their number of the Receiving UCITS’s share Class R Acc USD after the merger;
6. the Management Company provides instructions to the fund custodian to cancel all units of the Merging UCITS in the CSD;
7. the Management Company provides instructions to the fund custodian to issue new units of the Receiving UCITS in the CSD provided by the approved list mentioned above by the subparagraph 5.

In order to ensure a successful merger of the UCITS, repurchase of units of the Merging UCITS will be suspended as of 25 October this year, and no transactions with the units will be possible from this moment, as well as no new investment certificates of all classes of the merging funds be issued.

Unit-holders will be free to use their units of all share classes of the Receiving UCITS starting from 2 November this year.

Key investor information for unit-holders of the Receiving UCITS share Class R Acc USD, which helps understand the characteristics of investing in this fund and this share class and make oneself aware of the risks associated with it, is available at the website of CBL Asset Management IPAS: www.cblam.lv, or can be requested by writing to IPAS “CBL Asset Management” e-mail asset@cbl.lv or by calling to the phone number +371 6 701 0810 during Management Company’s business hours. Familiarising oneself with the fund prospectus is also necessary in order to take an informed decision about making an investment.