Citadele Eastern European Fixed Income Funds FUND RULES

Transcription

1 2A Republikas laukums, Riga, LV-1010, Latvia Open-end Investment Fund FUND RULES The Fund is registered in the Republic of Latvia Registered with the Financial and Capital Market Commission: The Fund was registered on: Registration number of the Fund: /50 Amendments of the Fund Rules: Registered on , in effect from Registered on , in effect from Registered on , in effect from Registered on , in effect from Registered on , in effect from Registered on , in effect from Registered on , in effect from Custodian: JSC Citadele banka Sworn Auditor: KPMG Baltics Ltd. The Prospectus of the Fund, Rules of the Fund, Key Investor Information, annual and semi-annual reports of the Fund, information on the Fund Value and sales and redemption price of investment certificates as well as other information on the Fund and the Company is available free of charge at the office of the IMJSC Citadele Asset Management at the following address: 2A Republikas laukums, Riga, LV-1010, Latvia, on business days from 08:30 to 17:30 as well as on the homepage: Distributor of the Investment Certificates: in Latvia: JSC "Citadele banka" 2A Republikas laukums, Riga, LV-1010, Latvia, as well as branches and customer service centres of JSC Citadele banka as well as branches and customer service centres of JSC Citadele banka.

2 TABLE OF CONTENTS 1. General Information Information about the Fund Information about the Company Managing the Fund Information about the Custodian General Principles and Procedures for Fund Management Procedure for Making Investment Decisions Investment Restrictions Procedure for Servicing Investors Procedure for Issue, Redemption and Repurchase of Investment Certificates Calculation of the Sub-fund Value Information on Distribution of the Fund Income Procedure for Liquidation of the Sub-fund Procedure for Transfer of Rights to Manage the Fund and Property of the Fund to the Custodian or Other Persons Co-operation of the Company and Custodian in Managing of the Fund Fees Charged to the Sub-fund Procedure for Making Public Statements and Distribution of Publicly Available Information Procedure for Amendment of the Fund Rules FUND RULES 2

3 1. General Information Prior to investing in the Fund, in order to make a grounded decision on investing into the Fund and the potential risk inherent to such investment, an Investor shall read the information stated in this Fund Rules, Prospectus, Key Investor Information and legal acts of the RL applicable to the Fund and Company. The Fund Rules stipulate the procedure for management of the Fund. 2. Information about the Fund Name of the Fund: Names of the Sub-funds: 3. Information about the Company Managing the Fund Name of the Company: Open-end investment fund Citadele Eastern European Fixed Income Funds Citadele Eastern European Fixed Income Fund - USD Citadele Eastern European Fixed Income Fund - EUR IMJSC Citadele Asset Management Legal address: 2A Republikas laukums, Riga, LV-1010, Latvia Tel. (+371) , fax (+371) The location of the executive body of the Company is the same as its registered address. Founded on: 11 January 2002 Unified registration number: Licences: 4. Information about the Custodian Name of the Custodian: Licence for Investment Management Services No /285 Licence for Management of State Funded Pension Scheme Assets No /284 Joint Stock Company Citadele banka Legal address: 2A Republikas laukums, Riga, LV-1010, Latvia Tel. (+371) , fax (+371) The location of the executive body of the Custodian is the same as its registered address. Founded on: 30 June 2010 Unified registration number: Licences: Licence for Credit Institution Activities No / General Principles and Procedures for Fund Management The investment fund founded by IMJSC Citadele Asset Management is a set of assets consisting of investments made against investment certificates, as well as of assets acquired from transactions with the property of the investment fund and rights arising thereof. The Sub-funds of the investment fund are a segregated part of the property of the investment fund formed by investments made in return for investment certificates as well as assets obtained in transactions with that property and on the basis of the rights to that property., in accordance with the Law on Investment Management Companies of the Republic of Latvia, is an open-end investment fund, and it operates in accordance with the Directive 85/611/EEC, Directive 2009/65/EC as well as other binding legal acts of the European Union. The terms used in the Rules correspond to the terms used in the Prospectus of the Fund. The Company, on its own behalf, at the expense of Investors of the Sub-funds of the Fund, solely in the interests of the Investors of the Sub-funds of the Fund, shall manage the property of the Fund and rights arising thereof in accordance with the Law on Investment Management Companies of the RL, other legal acts of the RL, its Articles of Association, the Prospectus, and Fund Rules. FUND RULES 3

4 The Company does not need the consent of Investors of the Fund for activities related to the Fund management, nor for the use of the voting rights attached to equity shares belonging to the property of the Fund. Investment objects are selected in accordance with the investment policy of the Fund and investment restrictions described in the Prospectus and in accordance with procedure prescribed the Fund Rules. The Company does not have the right to invest its funds into the fixed capital of other investment management companies as well as to purchase investment certificates of the Sub-funds of the Fund managed by the Company. The Company bears responsibility for losses inflicted upon Investors or third parties by officers or authorised persons of the Company as a result of violation of provisions of the Law, Prospectus and Fund Rules, using the powers granted to them with ill intentions or fulfilling their duties negligently. The Company is responsible for accounting of the Sub-funds of the Fund and preparation of the annual and semi-annual financial reports. The Company is entitled to delegate accounting of the Sub-funds of the Fund to an authorised entity, but the Company shall bear responsibility for activities of such person. The Company keeps accounting of the Sub-funds of the Fund separate from the accounting of the property of the Company and other funds managed by the Company. 6. Procedure for Making Investment Decisions Decisions on disposal of the property of the Sub-funds of the Fund is made by the Investment Committee appointed by the Executive Board of the Company that performs functions of the Fund Manager observing terms of the Prospectus, investment policy of the Sub-funds and procedure stipulated by the effective legal acts of the RL and Fund Rules. The Investment Committee is responsible for compliance with the investment policy of the Subfunds. The Investment Committee shall review issues concerning the investment strategy and tactics of the Sub-funds and pass decisions thereof in the meetings of the Investment Committee which are held when necessary. The Investment Committee is empowered to pass decisions if more than half of the members participate in the meeting. A decision is passed if at least a half of all members of the Investment Committee vote for it. Decisions are prepared in writing and signed by all members of the Investment Committee that are present. If any of the present members of the Investment Committee vote against a decision, he/she shall not be held responsible for it. On the basis of decisions passed by the Investment Committee, any member of the Investment Committee on his/her own shall be entitled to sign orders for transactions with the property of the Sub-funds. In the absence of a decision of the Investment Committee, orders for transactions with the property of the Sub-fund to the Custodian shall be signed by at least half of the members of the Investment Committee. Any transaction with the property of the Sub-funds shall be based on an order to the Custodian from a member of the Investment Committee with acceptance from a person duly authorised by the Custodian. Where the order contradicts the Law, legal acts of the Commission, the Prospectus, Fund Rules or Custody Agreement, the Custodian shall not execute such order. If an agreement with a third party (e.g., placement of term deposits with credit institutions) shall be concluded for execution of a transaction with the property of the Sub-fund on the grounds of the decision made by the Investment Committee, such agreement shall be signed by the Executive Board of the Company observing the Articles of association of the Company. The Executive Board of the Company has the right of veto with regard to decisions of the Investment Committee on conclusion of transactions with third parties and the right to request the Investment Committee to provide a detailed explanation with regard to any such decision. 7. Investment Restrictions 7.1. General Investment Restrictions The Sub-funds investments, excluding the Sub-funds investments referred to in subparagraph 2 of paragraph 3.1 of the Prospectus, in transferable securities or money FUND RULES 4

5 market instruments of a single issuer may not exceed 5 percent of the Sub-fund assets. The limit referred to may be raised to 10 percent of the Sub-fund assets but in such case the total value of investments exceeding five percent may not exceed 40 percent of the Sub-fund assets. The Sub-fund investments in transferable securities of a single issuer can be increased up to 25 percent of the Sub-fund assets if they are debt securities issued by a credit institution registered in a Member State and if the terms of such debt securities provide that acquired funds will be invested in assets that during the entire duration of the debt security fully secure the liabilities arising out of such debt security, and such liabilities have priority fulfilment if the issuer becomes insolvent. The Sub-fund investments in transferable securities or money market securities of a single issuer can be increased up to 35 percent of the Sub-fund assets if the transferable securities or money market securities are issued or guaranteed by a Member State, a Foreign State, local government of a Member State or an international institution if one or several Member States are members thereof. If the value of debt securities of a single issuer mentioned in sub-paragraph 2 of paragraph 3.1 of the Prospectus exceeds 5 percent of the Sub-fund assets, the total value of the Sub-fund investments that exceeds five percent cannot exceed 80 percent of the Sub-fund assets. The Sub-fund investments in one credit institution cannot exceed 20 percent of assets of the Sub-fund. Such restriction does not apply to on-demand claims against the Custodian. Investments of the Sub-fund assets in investment certificates of one open-end investment fund may not exceed 10 percent of the Sub-fund assets. The total risk arising from transactions in derivatives, including in the derivatives included in transferable securities or money market instruments may not exceed the Sub-fund net asset value. In calculating the total risk, the value of the underlying assets of the derivative, the counterparty risk, future changes in the market and the time required to close the relevant position shall be taken into account. The Company applies the commitment approach to valuation of the total risk of the Sub-fund. Risk position in transactions in over-the-counter derivatives with each counterparty may not exceed: 1) ten percent of the Sub-fund assets if the counterparty is a credit institution that has obtained a licence for credit institution operations in a Member State or OECD member state that is included in the Group of Ten; 2) five percent of the Sub-fund assets if the counterparty is an investment brokerage company the amount of capital and reserves of which amounts to 10 million Euro or equivalent amount in another currency according to the exchange rate published by the European Central Bank or exceeds this amount, which is registered in a Member State or OECD member state that is included in the Group of Ten, and the operation of which is supervised of a body supervising financial services. Taking into account the fact that transactions with derivatives may be concluded at the expense of the Sub-fund to gain profit, the underlying asset of a derivative is subject to restrictions stipulated in paragraph 3.1 of the Prospectus. Disregarding the investment limits separately specified in sub-paragraphs 1, 5, 7 and 8 of paragraph 3.1 of the Prospectus, the total Sub-fund investments in transferable securities and money market instruments, Sub-fund deposits and transactions with derivatives, the issuer or guarantor, investment attractor or transaction counterparty of which is one and the same person may not exceed 20 percent of the Sub-fund assets. In applying the investment restriction stipulated in paragraph 3.1 of the Prospectus, commercial companies belonging to one group shall be considered as one person. The investment restrictions separately specified in sub-paragraphs 1, 2, 4, 5, 7 and 8 of paragraph 3.1 of the Prospectus may not be combined and thus the total investments of the Fund in transferable securities and money market instruments, Fund deposits and FUND RULES 5

6 transactions with derivative financial instruments the issuer or guarantor, investment attractor or transaction counterparty of which is one and the same person may not exceed 35 percent of the Fund assets Investment Restrictions Related to One Issuer Investments of the Sub-funds in separate investment objects may not exceed the following criteria: 1) 10% of the total amount of debt securities issued by one issuer; 2) 10% of the total value of money market instruments issued by one issuer; 3) 25 percent of the number of investment certificates of one open-end investment fund or collective investment undertaking. The Sub-funds assets may not be given out in loans or invested in real estate, precious metals and derivatives, the underlying asset of which are precious metals or commodities Loans at the Expense of the Sub-funds To accommodate requests to redeem Investment Certificates or to meet other liabilities of the Sub-fund, including settling such expenses of the Sub-fund that, if not paid on time, may cause losses to the Sub-fund, the Company can borrow on the Sub-fund's account in total up to 10 percent of the Sub-fund net asset value, but only for a short-term up to three months. The decision about borrowing on the Sub-fund's account shall be taken by the Investment Committee of the Fund in accordance with the Prospectus and Fund Rules Exceeding of Investment Restrictions Exceeding the investment restriction shall be admissible if it has been caused by exercising of the right to subscribe which arises from transferable securities or money market instruments belonging to the Sub-fund property or other circumstances which the Company was unable to predict. To correct exceeding the restrictions the Company has to sell securities in accordance with the risk reduction principle and interests of Investors. The investment restrictions referred to in sub-paragraph 1 of paragraph 3.2 of the Prospectus can be exceeded at the moment of investing if at that moment it was not possible to determine or calculate the value or quantity of issued securities with inherent liabilities or the value or quantity of investment certificates in circulation. The Company shall immediately inform the Commission about exceeding the investment restrictions and the corrective measures to be taken. 8. Procedure for Servicing Investors 8.1. Availability of the Prospectus and Key Investor Information of the Fund The Prospectus becomes effective as of the day when it is registered with the Commission. If amendments to the Prospectus are made, the Company shall, after their registration with the Commission, immediately ensure that Investors of the Fund have access to the full Prospectus with amendments and reference to the day they became effective. The Key Investor Information is updated not less than once a year. Investors may read and receive free of charge the Prospectus and Key Investor Information of the Fund in the office of the IMJSC Citadele Asset Management (address: 2A Republikas laukums, Riga, LV-1010, Latvia) on business days from till or on the website of the Company: Procedure for Provision of Information on Distribution of the Fund Income Investors may read the information on changes in distribution of income received from transactions with the property of the Fund, having effect upon operations of the Fund, as well as information on other events related to the property of the Fund on the website of the Company: The Company has the right to change the procedure for distribution of the income from the property of the Fund only upon registration of the respective amendments of the Prospectus of the Fund with the Commission. FUND RULES 6

7 If amendments to the Prospectus are made, the Company shall, after their registration with the Commission, immediately ensure that Investors have access to the full Prospectus with amendments and reference to the day they became effective. 9. Procedure for Issue, Redemption and Repurchase of Investment Certificates 9.1. Issue of Investment Certificates Issue of Investment Certificates is carried out in accordance with the procedure stipulated by the Law on Financial Instruments Market, the Law as well as legal acts issued by the Commission. Investment Certificates are issued in the non-material form. The number of and time period for issue of Investment Certificates are not limited. Investment Certificates of the Sub-funds are considered securities in public circulation also in case if they are not included in the regulated market. To apply for Investment Certificates of the Sub-fund, an Investor of the Sub-fund shall fill in and submit an application for purchase of Investment Certificates of the Sub-fund to the Company or Distributor. An application for purchase of Investment Certificates is irrevocable. An Investor shall state the following information in the application for purchase of Investment Certificates: 1) Investor s name, surname, identity code (or date of birth if identity code has not been granted) for natural persons, Investor s name and registration number for legal persons; 2) Investor's address, phone and/or fax number; 3) The number of the financial instruments account of an Investor in the country where Investment Certificates are distributed, to which the purchased Investment Certificates shall be transferred; 4) Number of an Investor s settlement account; 5) Name of the Sub-fund of the Fund and the ISIN code of Investment Certificates of the Sub-fund; 6) The number of Investment Certificates to be subscribed for or the amount of money to be invested. The Company and/or Distributer has the right to request an Investor to certify correctness of the information rendered by him/her. The person who accepted an application for purchase of Investment Certificates (the Company, Distributor or other intermediary, respectively) is responsible for identification of the applicant. Upon receipt of the application for purchase of investment certificates of the Sub-fund of the Fund, the Company or the Distributor respectively shall identify an Investor in accordance with the Customer Identification Procedure of the Company or the Distributor respectively and in accordance with the legal acts effective in the Republic of Latvia and/or the Foreign State in which Investment Certificates of the Sub-fund of the Fund are sold. The Company registers applications for purchase of Investment Certificates in a separate book in the order they are received. Applications may be submitted in person or through facsimile. Distributors may determine a different procedure for submission of applications, e.g., via online banking. An application shall be considered submitted and registered when it has been is signed by a representative of the Company or Distributor. The Company or Distributor shall not be held responsible for losses incurred by any Investor due to unauthorised person acting in bad faith using Investor's name and account number, except where otherwise provided by legal acts of the country in which Investment Certificates of the Sub-funds of the Fund are distributed. The Company and Distributor shall accept application by fax only where customer identification has been carried out. If an application for purchase, redemption or repurchase of Investment Certificates of the Sub-fund of the Fund is submitted by a third party that acts in its own name, but in favour of its clients, and such person has the right to hold financial instruments in favour of other persons, it is considered that having submitted an application this person confirms that it has FUND RULES 7

8 performed identification of an Investor in accordance with its client identification procedures, effective legal acts of the Republic of Latvia or the corresponding Foreign State, in which Investment Certificates of the Sub-fund of the Fund are sold Certification of Ownership Rights on Investment Certificates Investment Certificates are accounted on a financial instruments account of each owner of Investment Certificates or on a Nominal account on which the investment certificates of the Sub-Funds of the Fund held under custody by the Company are accounted in accordance with the conditions of the Prospectus. An Investor's ownership right to Investment Certificates arises when the corresponding entry in his/her financial instruments account is made. A statement of the financial instruments account of the Investor of the Fund or of the Nominal account is the certification of ownership rights on Investment Certificates; this statement is issued by the bank or the brokerage company or the Company which respectively holds under custody the investment certificates of the Investor of the Fund. Relations between the Investor and his/her investment certificates account holder are regulated by the Agreement on Servicing of Financial Instruments Account concluded between the Investor and his/her financial instruments account holder. All expenses related to servicing of these accounts shall be borne by the Investor of the Fund Redemption and Repurchase of Investment Certificates An Investor or his/her authorised person shall submit to the Company an application for redemption of Investment Certificates of the Sub-fund of the Fund to enable the Company to perform redemption of Investment Certificates owned by the Investor of the Fund. An application for redemption of Investment Certificates of the Sub-fund of the Fund is irrevocable. A Fund Investor shall state the following information in the application for redemption of Investment Certificates: 1) Investor s name, surname, identity code (or date of birth if identity code has not been granted) for natural persons, Investor s name and registration number for legal persons; 2) Investor's address, phone and/or fax number; 3) Number of an Investor s settlement account; 4) Name of the Sub-fund of the Fund and the ISIN code of Investment Certificates; 5) The number of Investment Certificates to be redeemed or the amount of money to be received for redemption of Investment Certificates. Information about the redemption price for Investment Certificates of the Sub-fund is available at places and in accordance with the procedure stated in Chapter 11 of the Prospectus of the Fund. The Company registers applications for redemption of Investment Certificates in a separate book in the order they are received. Applications may be submitted in person or through facsimile. An application shall be considered submitted and registered when it has been is signed by a representative of the Company or Distributor. Where an application has been submitted in person, an authorised representative of the Company or Distributor shall sign it and return one copy of the application to the Investor. The Company or Distributor shall not be held responsible for losses incurred by any Investor due to unauthorised person acting in bad faith using Investor's name and account number, except where otherwise provided by legal acts of the country in which Investment Certificates of the Sub-funds of the Fund are distributed. The Company and Distributor shall accept application by fax only where customer identification has been carried out. The Company shall be obliged to execute only accurately filled in and prepared applications for redemption of Investment Certificates where the number of Investment Certificates stated is fully covered by securities. FUND RULES 8

9 The amount for the redeemed Investment Certificates is transferred to the Investor s settlement account after submission of application for redemption of the investment Certificates of the Sub-fund of the Fund, not later than within six business days after receipt of the Investment Certificates in the issue account of the Sub-fund with the LCD. Where an Investor or Investors within 3 business days submit applications for redemption of Investment Certificates of the open-end investment fund that on aggregate exceed 10% of the Sub-fund net asset value and their execution may substantially affect the interests of other Investors of the Sub-fund, the settlement period for redemption may be prolonged to ten business days. Derogation from the above terms is possible only on exceptional basis under conditions described in paragraph 11.5 of the Prospectus of the Fund which are related to exceptional circumstances when the redemption of investment certificates of the Sub-fund is suspended. The Company shall repurchase Investment Certificates if the Company is held responsible for losses incurred by Investors due to errors or omissions in information stated in the Prospectus. Repurchase of Investment Certificates shall be carried out in accordance with the Law and paragraph 11.4 of the Prospectus. The Custodian shall ensure that Investment Certificates are issued, sold, and redeemed on behalf of the Company and in accordance with the Law, the Prospectus and Fund Rules. 10. Calculation of the Sub-fund Value The Sub-fund Value (also referred to as the Sub-fund net asset value) is the value of assets of the Sub-fund less the value of liabilities of the Fund. The Sub-fund share value is the net asset value of the Sub-fund divided by the number of Investment Certificates of the Sub-fund in circulation. The number of Investment Certificates of the Sub-fund in circulation is the number of Investment Certificates issued less the number of Investment Certificates redeemed upon an Investor's request. The Company determines the Sub-fund share value on every business day after Information on Distribution of the Fund Income An Investor of the Sub-fund participates in distribution of income derived from transactions with the property of the Sub-fund in proportion to the number of Investment Certificates owned. Income received from the property of the Sub-fund is reinvested in the Sub-fund. The income of an Investor is reflected in the increase or decrease of value of Investment Certificates. An Investor can obtain the income from shares of the Sub-fund only by requesting the Company to redeem Investment Certificates of the Sub-fund or by selling these Investment Certificates. 12. Procedure for Liquidation of the Sub-fund The liquidation of the Sub-fund shall be conducted in accordance with the Law. The Sub-fund shall be liquidated by the liquidator. The liquidator may be the Company itself, the Custodian, or a person appointed by the Commission. The Company shall liquidate the Sub-funds if: on the next day after expiry of the Custody Agreement a new Custody Agreement has not taken effect; within a year after the foundation of the Fund no Investment Certificate of the Sub-fund has been issued in circulation; all Investors of the Sub-fund(-s) have exercised the right to request the redemption of Investment Certificates, and the Company resolves to liquidate the Sub-fund(-s); the Commission has made a decision of commencement of liquidation of the Fund. The liquidator shall immediately inform the Commission about the initiation of liquidation of the Sub-fund and shall publish a respective announcement to that effect in the official periodical 'Latvijas Vēstnesis' and/or shall make an announcement in accordance with requirements of legal acts of the country where the Investment Certificates of the Sub-fund of the Fund are sold. If the Company or Custodian does not initiate the liquidation of the Sub-fund within a month from the day when the liquidation should have been initiated, the Commission shall appoint the liquidator of the Sub-fund. Such liquidator shall have all the same rights as the Company if it was FUND RULES 9

10 performing the liquidation. The liquidator shall have the right to take only those actions that are related to the liquidation of the Sub-fund. During the liquidation it is prohibited to issue and to redeem Investment Certificates, and to distribute to the Investors the Sub-fund income referred to in the Prospectus. The liquidator shall act in the interests of creditors and Investors of the Sub-fund. The liquidator is fully liable to Investors and third parties for losses caused during the liquidation, if the liquidator deliberately or inadvertently breaks the law or the Fund Rules, or negligently performs his duties. Upon initiation of the liquidation of the Sub-fund, the liquidator shall organise and perform the sale of the property of the Sub-fund, except for the cash in the Sub-fund. The Custodian or liquidator shall distribute the proceeds derived from the sale of property of the Sub-fund in liquidation as well as the cash in the Sub-fund (liquidation proceeds) in the following order: claims of the secured creditors; claims of creditors who lodged their claims within the term prescribed in the liquidation announcement; claims of creditors who lodged their claims after the term prescribed in the liquidation announcement but prior to distribution of the liquidation proceeds. If liquidation proceeds are insufficient to satisfy the above claims, unsatisfied claims shall be satisfied from the property of the Company, except for the claims incurred after the expiry of the management rights of the Company. The remaining liquidation proceeds shall be distributed among the Investors of the Sub-fund in proportion to the number of Investment Certificates held. All payments to creditors and Investors of the Sub-fund shall be made in cash. The liquidator has the right to cover liquidation expenses from liquidation proceeds during liquidation. Liquidation expenses shall not exceed two percent of liquidation proceeds. 13. Procedure for Transfer of Rights to Manage the Fund and Property of the Fund to the Custodian or Other Persons Expiry of the Fund Management Rights of the Company The rights of the Company to manage the Fund expire: with transfer of the Fund management rights to other company; with licence revocation; with completion of the liquidation of the Fund carried out by the Company; as of the moment the Commission has appointed the liquidator of the Fund in accordance with provisions of the Law Transfer of Fund Management Rights and Property to the Custodian If the rights of the Company to manage the Fund expire, the rights to manage the Fund shall be transferred to the Custodian, except where such rights are assigned to another company. The Custodian to which the rights to manage the Fund have been transferred enjoys all rights of the Company, except for the rights of issue andr redemption of Investment Certificates of the Fund. Within three months from the date of assumption of the Fund management rights the Custodian shall transfer Fund management rights to another investment company. The Commission may extend this period to six months from such date. The transfer of the Fund management rights is always subject to permission of the Commission. If the Custodian does not transfer the rights to manage the Fund to another investment company within the prescribed term, the Custodian shall liquidate the Fund Transfer of Rights to Manage the Fund and Property of the Fund to Other Persons On contractual basis the Company may transfer the Fund management rights to another investment company. The transfer of the Fund management rights is subject to permission of the Commission. After the Commission has granted permission, the Company shall submit for publication in the official periodical 'Latvijas Vēstnesis' and in one daily newspaper an announcement about FUND RULES 10

11 the transfer of the Fund management rights to another company, stating the name, registration number, registered address and location of the Executive Board of the new company. The Contract to transfer the Fund management rights to another Company shall become effective no sooner than after a month from the day when the announcement about the transfer of the Fund management rights to another company has been published in the periodical 'Latvijas Vēstnesis'. As the contract becomes effective, all rights and obligations related to the Fund are transferred to the new company. 14. Co-operation of the Company and Custodian in Managing of the Fund The Company shall enter into transactions with the property of the Fund with the intermediation of the Custodian. To manage the property of the Sub-funds of the Fund, the Company shall conclude a contract with the Custodian under which the Custodian undertakes to keep the property of the Sub-funds of the Fund, to effect transactions with the property of the Sub-funds of the Fund, to service accounts of the Sub-funds of the Fund, and to perform other activities in accordance with the Law, concluded Custody Agreement, and instructions of the Company. The Custodian, while performing the duties prescribed by the Law, shall operate independently from the Company and only in the interests of Investors of the Fund, provided that such interests are not contrary to legal acts of the RL, the Commission regulations, the Prospectus and Fund Rules. The Custodian shall make payments from the account of the Sub-fund of the Fund only upon instructions from the Company. The Custodian shall also be obliged to follow upon other instructions of the Company provided such instructions are not contrary to legal acts of the RL, the Prospectus, Fund Rules, and Custody Agreement. 15. Fees Charged to the Sub-fund The Company shall receive a fee for management of the Sub-funds of the Fund that is calculated and paid out from the property of the Sub-funds in accordance with conditions of paragraph 15 of the Prospectus. For custody of the property of the Sub-funds of the Fund and other Custodian duties the Custodian shall receive a fee that is calculated and paid out from the property of the Fund in accordance with conditions of paragraph 16 of the Prospectus. The Fee to the Sworn Auditor shall be paid from the property of the Sub-funds of the Fund, and such is accumulated and paid out from the property of the Sub-funds in accordance with conditions of paragraphs 7 and 8 of the Prospectus. Payments to third parties shall be made in accordance with the source documents or the actual costs. The payments referred to in paragraph 7.3 of the Prospectus shall be included in other payments. A charge for processing of a transaction is determined in accordance with the effective pricelist of the Custodian. 16. Procedure for Making Public Statements and Distribution of Publicly Available Information Any person can freely access information about the Fund and its Sub-funds: the Prospectus and Key Investor Information of the Fund; the Fund Rules; annual and semi-annual reports of the Sub-funds; description of the previous activities of the Sub-Funds; time and places of distribution of Investment Certificates; the Sub-funds Value and Sub-funds share value; sale price and redemption price for Investment Certificates; Information about the Company; Information about the Custodian; Other necessary information. FUND RULES 11

12 In the office of IMJSC Citadele Asset Management: 2A Republikas laukums, Riga, LV-1010, Latvia, tel. (+371) , fax (+371) , on business days from till or on the website of the Company: or in the office of the Distributor: in Latvia: JSC Citadele banka 2A Republikas laukums, Riga, LV-1010, Latvia Tel.(+371) Fax (+371) Information about the sale and redemption prices for Investment Certificates of the Sub-funds of the Fund as well as other information is published in accordance with the requirements of legal acts of a Foreign State in which Investment Certificates of the Fund are distributed. 17. Procedure for Amendment of the Fund Rules The Executive Board of the Company shall take the decision on approval of amendments to the Fund Rules. Within a week from making such amendments the Company shall inform in writing the Commission on any amendments or additions to the documents and information submitted to the Commission. The Commission considers the submitted amendments of the Fund Rules and registers them within 15 business days, if the amendments comply with requirements of the Law and are not in contradiction with legal interests of Investors. The amendments of the Fund Rules become effective not earlier than in 10 days after their registration with the Commission or on other such term determined by the Commission which shall not be longer than three months after registration of such amendments, and such term is determined observing the content of amendments of the Fund Rules and Investors' interests. If the Company wants to change information about the firm name of the Company, its registration number, legal address and licence number, the Company make the corresponding amendments in the Fund Rules, without their prior registration with the Commission, but submitting the full text of the Fund Rules in accordance with requirements of the Law. Such amendments of the Fund Rules come into effect upon their approval by the Executive Board of the Company. U.Upenieks IMJSC Citadele Asset Management Chairman of the Executive Board Z.Vaikulis IMJSC Citadele Asset Management Member of the Executive Board FUND RULES 12