Invalda INVL - Other information

„INVL Emerging Europe Bond Fund“, a subfund of INVL Asset Management, a subsidiary of Invalda INVL, will be managed from Luxembourg

 

The management company INVL Asset Management, a subsidiary of Invalda INVL, hereby gives notification regarding amendments to the operational documents of the harmonised investment fund INVL Umbrella Fund (hereinafter – the Fund), the subfunds of which are the INVL Emerging Europe Bond Subfund, the INVL Russia TOP20 Subfund and the INVL Emerging Global Market Bond Subfund. The Bank of Lithuania approved the amendments to the Rules of the Fund on 26 April 2021. The amended Rules of the Fund and the accordingly amended Prospectus will enter into force on 30 June 2021.

KEY CHANGES AND AMENDMENTS:

The INVL Emerging Europe Bond Subfund is becoming a feeder fund

The INVL Emerging Europe Bond Subfund (hereinafter – BEO), a subfund of the Fund, is becoming a feeder undertaking and will invest in the investment units of the INVL Emerging Europe Bond Fund (hereinafter – LUX) which is a subfund of the INVL Fund, an umbrella fund newly established together with partners in the Grand Duchy of Luxembourg.

BEO will invest at least 85 per cent of its net assets in LUX Unit Class I which is intended for institutional investors. Thus, BEO will act as a feeder collective investment undertaking and LUX as a master collective investment undertaking. The remaining portion of the net assets of BEO may be invested only in liquid assets conforming to the investment strategy, in compliance with the restrictions laid down in the Rules of BEO and the applicable legislation. The Management Company envisages that almost all BEO net assets will be invested in the LUX subfund and only a small portion will be held in cash in a bank account to be used to cover BEO’s current expenses and to execute requests by investors to redeem investment units.

LUX investment decisions will be made by the team of fund managers at the management company INVL Asset Management. Therefore, the LUX investment strategy will correspond with the current investment strategy of BEO in terms of its principal direction. LUX will invest up to 100 per cent of its assets in sovereign and corporate debt securities in Emerging Europe. LUX will invest at least 51 per cent of its bond portion in sovereign and corporate debt securities in Central and Eastern Europe (Czech Republic, Estonia, Croatia, Latvia, Poland, Lithuania, Slovakia, Slovenia, Hungary, Belarus, Russian Federation, Ukraine, Armenia, Azerbaijan, Georgia, Turkey, Malta, Albania, Bulgaria, Bosnia and Herzegovina, Greece, Montenegro, Cyprus, Macedonia, Moldova, Romania, Serbia and Kosovo).

The BEO management fee is being reduced from 1 per cent to 0.45 per cent. As the LUX management fee is 0.55 per cent, thus the total size of fees for investment management will remain unchanged for BEO investors.

Although no contribution or redemption fees may be applied to BEO investments in the LUX subfund, it is envisaged that due to BEO’s operating expenses, BEO’s total costs will be similar to their current size.

Due to the close relationship between BEO and LUX, the definition of a BEO business day is changing: a business day of BEO will be deemed to be any calendar day except public holidays and rest days in Lithuania, the Grand Duchy of Luxembourg and the State of Hessen, Germany. This change is relevant to investors who switch BEO investment units into or from units of another subfund of the INVL Umbrella Fund, as the switch will be carried out only on a business day of both subfunds. All non-business days of BEO in 2021 are available on the website www.invl.com.

INVL Russia TOP20 Subfund: changes to the investment strategy, performance fee and name

Taking due account of clients’ needs, the management company INVL Asset Management made the decision to adjust the investment strategy of the INVL Russia TOP20 Subfund (hereinafter – RTS), a subfund of the INVL Umbrella Fund.

The new description of the investment strategy defines that RTS assets may be invested only in financial instruments of companies operating in the Russian Federation and other CIS countries (including former CIS countries), excluding state-controlled companies. State control shall be deemed to mean a holding of more than 20 per cent of the shares of a company. This means that, upon the entry into force of the amended Rules of the Fund, RTS will no longer be able to invest in state-owned enterprises.

This amendment is aimed at ensuring that investments are made in enterprises that are not owned by the state and are managed in a more effective and transparent manner and, therefore, are more attractive in the long-term. The new strategy will also make it possible to increase investments in new economy (information and financial technologies, e-trade, etc.) companies, the weight and the value of which in the economy are rapidly growing. Based on the assessment of the Management Company, the growth potential of private companies should be higher and the RTS portfolio should be more stable in the long-term.

Due to the aforementioned changes, the name of RTS is being changed to INVL Russia ex-Government Equity Subfund.

The rate and the principle of calculation of the RTS performance fee is also changing. Upon the entry into force of the new wording, the performance fee will be 20 per cent (currently it is 15 per cent) of the increase in the RTS net asset value exceeding the 8 per cent hurdle rate over the last 3 years. The current 15 per cent performance fee is calculated on the basis of a simple increase in value. For three years from the entry into force of the new wording of the Rules, the 8 per cent hurdle rate criterion will be applied only from the entry into force of the new wording of the Rules, i.e. the hurdle rate will not be applied retroactively. In the opinion of the Management Company, the adjusted formula for calculation of the performance fee, which introduces additional criteria, will ensure that the performance fee is applied to clients only when the RTS subfund steadily generates a high return over the medium term.

As until now, the increase in the net asset value will be calculated according to the high watermark principle. The highest peak in value reached since the entry into force of the new wording of the Rules will not be recalculated, i.e. the historical highest peak will continue to be used.

Cut-off time for applications to purchase, switch and sell is changed

The cut-off time for applications to purchase, switch and sell investment units of all the subfunds constituting the Fund is being changed from 24:00 hrs to 11:00 hrs. This means that applications received before 11:00 hrs and paid by 23:59 hrs on the same day will be carried out on the basis of the value as of the date of submission of the application, and applications received after 11:00 hrs and paid by 23:59 hrs on the same day will be subject to the value as of the nearest business day. In the event of a difference between the date of receipt of the application and the payment date, the value effective as of the payment date will be applied. Further information on the rules for submission and carrying out of applications is provided in the Prospectus of the Subfunds which is available on the website: www.invl.com.

Supplement to the list of other expenses

The expenses to be covered from the assets of the respective Subfund are being supplemented with the fees to the Supervisory Authority for the supervision of financial market participants and to providers of financial indexes used in the benchmark indexes of the subfunds for the information and historical data on index compositions. These new fees are being added to other expenses to be covered from the assets of the respective subfund, the maximum rate of which is not changing and stands at 1 per cent of the subfund’s average annual net asset value. The list of terms and cases in which legal expenses would be covered from the assets of the respective Subfund is being revised as well.

Other amendments
At the same time, other smaller amendments are being made in the operational documents of the Fund.

Additional information:
Investors have the right to request redemption of the investment units held by them in the respective subfund until 29 June 2021 (inclusive). As until now, no redemption fee will be applied.
The documents of the Fund which are being amended (the Rules and the Prospectus) are available on the website: www.invl.com, at the registered office of the Management Company at Gynėjų g. 14, 01109 Vilnius, or by e-mail: info@invl.com.

Contact person for further information:
Vaidotas Rūkas, Head of the Investment Management Division at INVL Asset Management
E-mail vaidotas.rukas@invl.com