Merger of Head Nordic Select Dividend Fund

15.12.2016

Evli Fund Management Company Ltd. has decided to merge the Head Nordic Select Dividend Fund (merging fund) with the Evli Nordic Fund (acquiring fund). The Financial Supervisory Authority granted permission to conduct the merger on November 21, 2016.

The merger will take place on January 20, 2017, at which time the merging fund will be dissolved and its assets and liabilities will be transferred to the acquiring fund. There will be no liquidation proceedings. No separate actions are required from unit holders to accept the merger and receive the fund units of the Evli Nordic fund offered as merger consideration. Trading with units of the Head Nordic Select Dividend fund will cease no later than at 12.00 noon (Finnish time) on January 19, 2017.

Reasons for the merger

Head Nordic Select Dividend invests in publicly quoted Nordic companies. The fund’s investments have been focused in Finland (approx. 40%). The investment style of the fund has weighted undervalued shares with a high dividend yield.

Evli Nordic also invests in Nordic shares. The fund focuses on underpriced companies that generate cash flow and have strong debt coverage. The fund does not have any index, industry or country restrictions within the Nordic countries. Swedish companies (approx. 60%) have the largest weight in the portfolio.

Evli Fund Management Company became the management company of Head Nordic Select Dividend Fund as a result of a corporate acquisition that took place on April 1, 2016. When the management company manages two funds that invest in the same region and partly in the same companies, it is justified to combine them into a single, larger fund. 

The funds have the same risk level (risk category 6), but their fee structures differ. The ongoing charges of the B1 units’ of Head Nordic Select Dividend are 1.70% p.a. and of the B2 units’ 1.20% p.a., in addition to which the B2 units may charge a performance-based management fee. During November 30, 2015 –November 30, 2016, the performance-based fee was approximately 0.18% and the total fee for the B2 unit series was approximately 1.38% p.a. The ongoing charges of the Evli Nordic fund are 1.60% p.a.

Information on the funds involved in the merger on November 30, 2016

Fund Return 12 mo (%) Return 3 yrs (% p.a.) Return 5 yrs (% p.a.) Ongoing charges (% p.a.) Capital (EUR million) Risk category (1–7)
Head Nordic Select Dividend B1 -1.02 3.32 - 1.70

13.3

(B1+B2)

6

(B1, B2)

Head Nordic Select Dividend B2 -0.75 3.64 - 1.38
Evli Nordic 2.24 15.2 16.9 1.60 54.9 6

For more detailed information, please read the attached key investor information document of the Evli Nordic Fund.

Consequences of the merger

Unit holders in the Head Nordic Select Dividend fund

Under to the Act on Common Funds, a unit holder of the merging fund will become a unit holder of the acquiring fund on the merger date, unless the unit holder redeems his/her fund units or switches them to units of another fund managed by Evli Fund Management Company Ltd. before execution of the merger.

On the merger date, Evli Fund Management Company Ltd. will convert the holdings of those unit holders of the merging fund who accept the merger into corresponding holdings in the acquiring fund according to their monetary value. Unit holders will receive units of the Evli Nordic B unit series (accumulation unit) as merger consideration irrespective of whether they own B1 or B2 units in the merging fund at the moment. The unit holders’ rights in the acquiring fund will enter into force when the units received as merger consideration have been entered in the unit register maintained by the management company. Technical registration of the fund units received as merger consideration will be carried out by January 24, 2017, using the fund NAV’s confirmed for the merger date.

The management company can convert the assets of the merging fund into cash immediately before the merger date to ensure an uninterrupted merger. Any accrued income of the merging fund, such as sale price receivables for sold securities or accumulated interest, will be taken into consideration as assets of the merging fund and will be transferred to the acquiring fund in conjunction with the merger.

The management company will not charge redemption or switch fees from those unit holders who wish to redeem or switch their fund units before the execution of the merger. The deadline for placing redemption or switch orders is January 19, 2017, at 12.00 noon (Finnish time). Orders received after this will not be processed until after the merger. For redemption requests submitted by the deadline, redemption proceeds will be paid in cash to the unit holder’s bank account known to the management company by January 24, 2017.

Evli Nordic unit holders

The merger is not expected to have a substantial impact on the unit holders of the fund nor does the merger affect their rights. The rules of the acquiring fund or the composition of its investment portfolio will not change substantially but its assets will increase by the amount of assets transferred in the merger. The assets of the merging fund will be transferred either as cash, securities or a combination thereof and the acquiring fund will continue to manage these assets in accordance with its investment strategy.

Taxation

If a unit holder resident for tax purposes in Finland accepts the merger consideration offered in the form of fund units, there will be no tax consequences, since this is a question of universal succession referred to in Finnish tax legislation. However, redemption or switch transactions executed before the merger are subject to taxation in the same way as any other sale of property, i.e. normal tax treatment will be accorded to any such transfer of fund units. Correspondingly, any sale of the new units received as merger consideration will be taxed normally after the merger. However, the acquisition cost of the new units will be considered to be equal to the acquisition cost of the old units held in the merging fund.

EVLI FUND MANAGEMENT COMPANY LTD.

Additional information:
Investor Service, tel. +358 9 4766 9701, Monday to Friday from 9.30 am to 4.30 pm (Finnish time).