Merger of Evli Sweden Select Fund

30.11.2018

Evli Fund Management Company Ltd has decided to merge the Evli Sweden Select Fund (merging fund) with the Evli Swedish Small Cap Fund (acquiring fund). The Financial Supervisory Authority granted permission to conduct the merger on November 13, 2018.

Merging fund: Evli Sweden Select B (FI4000058813)
Acquiring fund: Evli Swedish Small Cap B (FI0008813142)

The merger will take place on January 9, 2019, 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 Swedish Small Cap Fund offered as merger consideration. Trading with units of the Evli Sweden Select Fund will cease no later than at 12.00 noon (Finnish time) on January 8, 2019.

Reasons for the merger

The mutual funds participating in the merger invest their assets in Swedish equities. The acquiring mutual fund focuses on small and medium-sized listed companies, whereas the merging mutual fund does not have a specific focus associated with target company size and can invest in companies of all sizes. The funds observe similar active portfolio management philosophies and share the same portfolio manage-ment team. The funds have identical risk levels, which correspond to the typical risk rating of funds investing in Nordic equities.

The assets of the merging mutual fund have been low throughout its operating period (5.5 years) and have further decreased in the past year. The number of unit holders has also been small and in decline.

When the Management Company manages two funds that invest in the same region and in similar instruments, it is justified to combine them into a single, larger fund. The acquiring mutual fund may continue to manage the assets transferred in the merger.

The fixed management fee (1.40% p.a.) of the merging fund is lower than that of the acquiring fund (1.60% p.a.) and consequently the management fee for clients accepting the merger consideration will increase 0.20 percentage points per year.

Information on the funds involved in the merger on October 31, 2018.

Fund Return
12 mo
(%)
Return
3 yrs
(% p.a.)
Return
5 yrs
(% p.a.)
Ongoing
charges
(% p.a.)
Capital
(EUR million)
Risk rating
(1-7)
Evli Sweden Select B -7,65 3,34 9,21 1,40 7,6 5
Evli Swedish Small Cap B 4,74 6,89 14,74 1,60 52,5 5

For more detailed information, please read the key investor information document of the Evli Swedish Small Cap Fund B.

Consequences of the merger

Unit holders of Evli Sweden Select 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.

The holdings of unit holders who accept the merger will be converted by the Management Company to holdings in the acquiring fund of corresponding cash value on the basis of the values of the fund units calculated on the merger date. Holders of accumulation units will receive SEK-denominated units of the Evli Swedish Small Cap B unit series (acc. unit) as merger consideration.

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 11, 2019, using the fund unit values 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 fund, such as sale price receivables for sold securities or accrued interest, will be taken into consideration as assets of the merging fund and will be transferred to the acquiring fund in 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 8, 2019, at 12.00 noon (Finnish time). Any orders received after this time will be executed after the completion of 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 11, 2019.

Unit holders of Evli Swedish Small Cap Fund

The merger is not expected to have a significant impact on the unit holders of the fund and it does not affect their rights. The rules and composition of the investment portfolio of the acquiring fund will not change significantly but its assets will grow by the amount of the capital transferred in the merger. The assets of the merging fund will be transferred either as cash or as securities or a combination thereof and the acquiring fund will continue to manage them in accordance with its investment strategy.

Taxation

If a unit holder resident in Finland for purposes of taxation accepts the merger consideration offered in the form of fund units, there will be no tax consequences since this constitutes universal succession as referred to in Finnish tax legislation. However, redemption of fund units or switches to another mutual fund executed before the merger are subject to taxation in the same way as any other sale (or exchange) 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. How-ever, 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


For more information, please contact:
Investor Service, tel. +358 (0)9 4766 9701 or by e-mail at info@evli.com (on weekdays from 9.30 am to 4.30 pm Finnish time).