SCHEME
INFORMATION DOCUMENT
DBS Chola Mutual
Fund
World
Trade Centre, Centre 1, 27th Floor, Unit 1, Cuffe Parade, Mumbai 400
005
DBS Chola Fixed Maturity
Plan – Series 10
A Close Ended Income
Scheme
Initial issue of units at Rs.10/-
per unit
|
New
Fund Offer opens on : |
|
|
New
Fund Offer closes on : |
|
SPONSOR
Cholamandalam DBS Finance
Ltd.
‘Dare House’, No. 2,
INVESTMENT
MANAGER
DBS Cholamandalam Asset Management
Ltd.
Registered Office: ‘Dare House’, No. 2,
Head Office: World Trade Centre, Centre 1, 27th Floor,
Unit 1,
Cuffe
Parade, Mumbai 400 005
TRUSTEE
DBS Cholamandalam Trustees
Ltd.
‘Dare House’, No. 2,
The particulars of the Scheme have
been prepared in accordance with the Securities and Exchange Board of
The Scheme Information Document sets
forth concisely the information about the scheme that a prospective investor
ought to know before investing. Before investing, investors should also
ascertain about any further changes to this Scheme Information Document after
the date of this Document from the Mutual Fund / Investor Service Centres /
Website / Distributors or Brokers.
The investors
are advised to refer to the Statement of Additional Information (SAI) for
details of DBS Chola Mutual Fund, Tax and Legal issues and general information
on http://www.dbscholamutualfund.com/
SAI is incorporated by
reference (is legally a part of the Scheme Information Document). For a free
copy of the current SAI, please contact your nearest Investor Service Centre or
log on to our website.
The Scheme Information
Document should be read in conjunction with the SAI and not in
isolation.
This Scheme Information Document is
dated ________.
TABLE
OF CONTENTS
|
Sr. No.
|
Particulars
|
Page
No. |
|
|
HIGHLIGHT
/SUMMARY OF THE SCHEME |
3 |
|
|
RISK
FACTORS
|
4-6 |
|
|
DEFINATION |
6-7 |
|
|
DUE
DILIGENCE CERTIFICATE
|
8 |
|
|
INFORMATION ABOUT THE
SCHEME |
|
|
|
TYPE
OF SCHEME AND INVESTMENT
OBJECTIVE |
9 |
|
|
ASSET
ALLOCATION |
9 |
|
|
WHERE
WILL THE SCHEME INVEST?
|
9-10 |
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|
WHAT
ARE THE INVESTMENT
STRATEGIES AND RISK CONTROL? |
10-11 |
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|
FUNDAMENTAL
ATTRIBUTES |
12-15 |
|
|
HOW WILL THE SCHEME BENCHMARK
ITS PERFORMANCE? |
15 |
|
|
WHO WILL
MANAGE THE SCHEME? |
15 |
|
|
WHAT ARE THE INVESTMENT
RESTRICTION? |
15-16 |
|
|
UNITS AND
OFFER |
16-17 |
|
|
WHO CAN INVEST?
|
18 |
|
|
HOW TO
APPLY? |
18-19 |
|
|
ONGOING
OFFER DETAILS |
21-22 |
|
|
PERIODIC
DISCLOSURES |
23 |
|
|
COMPUTATION
OF NAV |
25 |
|
|
ANNUAL
SCHEME RECURRING EXPENSES |
25-26 |
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|
LOAD
STRUCTURE |
26 |
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|
PENALTIES, PENDING
LITIGATIONS |
27-28 |
HIGHLIGHT
/SUMMARY OF
THE SCHEME
DBS Chola
Fixed Maturity Plan - Series 10
|
Name the Scheme |
DBS Chola
Fixed Maturity Plan – Series 10 |
|
Nature of the Scheme |
A Close Ended Income
Scheme. |
|
Investment
Objective |
The Scheme seeks to
generate regular returns and capital appreciation by investing in debt,
government and money market securities normally maturing in line with the
time profile of the respective Plans. |
|
Investment
Plans |
91 days (Quarterly Plan I, II,
III & IV) The Trustees reserves the
right to launch all or any of the plan/plans specified above together or
on different dates. |
|
Options
|
There
are two options available under the Plans:
*If no option is
specified at the time of application, the default option is Cumulative
Option. |
|
Investment
Pattern |
Money Market Instruments,
Corporate Bonds, Debt and Govt. Securities : 0 – 100% |
|
Entry/ Exit
Load |
Entry Load :
Nil Exit Load:
0.50% if redeemed before
maturity for Quarterly Plan I, II, III & IV (91 days
plan) |
|
Issue
Price |
Rs.10 per
unit |
|
Initial issue
expenses |
To be borne by
AMC |
|
Minimum Application
Amount |
Dividend Payout Option: Rs.
5000/- and in multiples of Re.1/- thereafter. Cumulative Option: Rs.5000/-
and in multiples of Re.1/- thereafter. |
|
Portfolio |
Each
Plan will maintain a separate portfolio. |
|
Cut Off
Timing |
3.00 p.m. for redemptions of
units of DBS Chola Fixed Maturity Plan – Series
10 |
|
NAV |
Declaration of NAV on all
business days. |
Liquidity |
Commencing
not later than 30 (Thirty) days from the closure of the New Fund Offer
Period, the Scheme will offer Redemption at prices related to Applicable
NAV on each Working Day. |
|
Redemption
of Units |
‘Each Plan will have a fixed
maturity date. On the maturity date, the Unitholders will have to redeem
their Unitholdings at the applicable NAV without any exit load.’ |
|
Disclosure |
Semi-annual disclosure of
entire portfolio |
|
Repatriation
Facility |
Non-resident Indians (NRIs),
persons of Indian origin residing abroad, registered FIIs can invest in
the Scheme on a repatriation basis. |
|
Benchmark index
|
CRISIL Liquid Fund
Index. |
|
Custodian |
HDFC Bank
Ltd. |
|
Registrar |
Computer Age Management
Services Pvt. Ltd. |
|
Minimum
Mobilization |
Rs. 1,00,000/- under each
plan |
|
Banker
|
HDFC Bank
Ltd. |
|
Fund
Manager |
Mr. Ankur
Parekh |
|
Recurring Expenses
|
Expected to be incurred on an
on-going basis not exceeding 2.25% of the weekly average net assets upto
Rs. 100 Crore, subject to SEBI
regulations. |
I.
Introduction
RISK FACTORS
A. Standard Risk
Factors
·
Mutual Funds and securities
investments are subject to market risks and there is no assurance that the
objectives of the scheme will be achieved.
·
As with any investment in stocks,
shares, bonds, debentures or any securities in the capital markets, the NAV of
the units issued under the Scheme can go up or down, depending on the factors
and forces affecting the capital markets. The NAV of the scheme may be affected
by changes in the general level of interest rates and trading
volumes.
·
DBS Chola Fixed Maturity Plan -
Series 10 is only the name of the scheme and do not in any manner indicate
either the quality of the scheme, its future prospects or
returns.
·
The past performance of the AMC,
Mutual Fund, the Sponsor or their Group affiliation is not indicative of the
future performance of the scheme.
·
The Sponsor is neither responsible
nor liable for any loss resulting from the operation of the Scheme beyond the
initial contribution of Rs. 1 Lakh made by them towards setting up of the Mutual
Fund.
·
The present scheme is not a
guaranteed or assured return scheme.
Scheme Specific
Risk:
1.
Returns: Investors in the scheme
are not being offered any guaranteed returns.
2.
Performance Risk: Scheme’s performance can
decrease or increase, depending on a variety of factors, which may affect the
values and income generated by a Scheme’s portfolio of securities. The returns
of a Scheme’s investments are based on the current yields of the securities,
which may be affected generally by factors affecting capital markets such as
price and volume, volatility in the stock markets, interest rates, currency
exchange rates, foreign investment, changes in government and Reserve Bank of
India policy, taxation, political, economic or other developments and closure of
the stock exchanges. Investors should understand that the investment pattern
indicated for the Scheme, inline with prevailing market conditions, is only a
hypothetical example as all investments involve risk and there can be no
assurance that the Scheme’s investment objective will be attained nor will the
Scheme be in a position to maintain the model percentage of investment
pattern/composition particularly under exceptional circumstances so that the
interest of the unitholders are protected. A change in the prevailing rates of
interest is likely to affect the value of the Scheme’s investments and thus the
value of the Scheme’s Units. The value of money market instruments held by the
Scheme generally will vary inversely with the changes in prevailing interest
rates. The fund, while investing in fixed-income instruments like debt, etc.,
shall consider and evaluate the risk of an issuer’s ability to meet principal
and interest payments (credit risk) and also the price volatility due to such
factors as interest sensitivity, market perception or the creditworthiness of
the issuer and general market liquidity (market risk).
3.
Liquidity &
Settlement Risk: Investors may note that AMC/Fund
Manager’s investment decisions may not be always profitable. The Scheme will
invest in debt securities and money market instruments. Trading volumes,
settlement periods and transfer procedures may restrict the liquidity of these
investments. Different segments of the Indian financial markets have different
settlement periods and such periods may be extended significantly by unforeseen
circumstances. The inability of the Scheme to make intended securities purchases
due to settlement problems could cause the Scheme to miss certain investment
opportunities. By the same rationale, the inability to sell securities held in
the Scheme’s portfolio due to the absence of a well developed and liquid
secondary market would result, at times, in potential losses to the Scheme, in
case of a subsequent decline in the value of securities held in the Scheme’s
portfolio.
4.
As the scheme may to a lesser extent
also invest in debt and money market instruments it may also have the following
risk:
(i)
Interest rate Risk: As interest rates
increase or decline, the prices of individual securities will decrease or
increase thus affecting the NAV. Interest rate movements in the Indian debt
markets can be volatile leading to price movements resulting into consequential
movements in NAV.
(ii)
Reinvestment Risk: This risk refers to the
interest rate levels at which coupons or maturity proceeds from securities can
be reinvested. If interest rates fall these cash flows may be reinvested at
lower rates.
(iii)
Different types of securities in
which the scheme would invest as given in the Offer Document carry different
levels and types of risk. Accordingly, the scheme’s risk may increase or
decrease depending upon its investment pattern e.g. corporate bonds carries
higher level of risk than Government securities. Further, even among corporate
bonds, bonds which are AAA rated are comparatively less risky than bonds which
are AA rated.
.
6. Political Risk: Whereas the Indian market
was formerly restrictive, a process of deregulation has been taking place over
recent years. This process has involved the removal of trade barriers and other
protectionist measures, which could adversely affect the value of investments.
It is possible that future changes in the Indian political situation, including
political, social, or economic instability, diplomatic developments and changes
in laws or regulations could have an effect on the value of investments.
Expropriation, confiscatory taxation, or other relevant developments could also
affect the value of investments.
7.
Risk
Associated with Derivatives Transaction: S. O. 5
Derivative products are leveraged
instruments and can provide disproportionate gains as well as disproportionate
losses to the investor. Execution of such strategies depends upon the ability of
the fund manager to identify such opportunities. Identification and execution of
the strategies to be pursued by the fund manager involve uncertainty and
decision of fund manager may not always be profitable. No assurance can be given
that the fund manager will be able to identify or execute such
strategies”.
The risks associated with the use of
derivatives are different from or possibly greater than, the risks associated
with investing directly in securities and other traditional
investments
As and when he Scheme trades in the
derivatives market there are risk factors and issues concerning the use of
derivatives that Investors should understand. Derivative products are specialized
instruments that require investment techniques and risk analyses different from
those associated with stocks. The
use of a derivative requires an understanding not only of the underlying
instrument but of the derivative itself.
Derivatives require the maintenance of adequate controls to monitor the
transactions entered into, the ability to assess the risk that a derivative adds
to the portfolio and the ability to forecast price or interest rate movements
correctly. There is the possibility
that a loss may be sustained by the portfolio as a result of the failure of
another party (usually referred to as the “counter party”) to comply with the
terms of the derivatives contract. Other risks in using derivatives include the
risk of mis-pricing or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates and
indices.
B.
REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME
The Scheme(s) and individual Plan(s)
under the Scheme(s) shall have a minimum of 20 investors and no single investor
shall account for more than 25% of the corpus of the Scheme(s)/Plan(s). These
conditions will be complied with immediately after the close of the NFO itself
i.e. at the time of allotment. In case of non-fulfillment with the condition of
minimum 20 investors, the Scheme(s)/Plan(s) shall be wound up in accordance with
Regulation 39 (2) (c) of SEBI (MF) Regulations automatically without any
reference from SEBI. In case of non-fulfillment with the condition of 25%
holding by a single investor on the date of allotment, the application to the
extent of exposure in excess of the stipulated 25% limit would be liable to be
rejected and the allotment would be effective only to the extent of 25% of the
corpus collected. Consequently, such exposure over 25% limits will lead to
refund within 6 weeks of the date of closure of the New Fund Offer.
However in respect of Fixed Maturity
Plans (FMPs) and Close ended schemes, the above conditions are required to be
complied immediately after the close of the IPO itself i.e. at the time of
allotment and therefore the time period of three months to balance will not be
available, failing which the provisions of Regulation 39 (2) (c) of SEBI (Mutual
Funds) Regulations, 1996 would become applicable automatically without any
reference from SEBI. Accordingly, schemes /plans shall be wound up by following
the guidelines laid down by SEBI.
C. SPECIAL
CONSIDERATIONS, if any
All the above factors not only affect the prices of securities but may also affect the time taken by the Fund for redemption of Units, which could be significant in the event of receipt of a very large number of redemption requests or very large value of redemption requests. The liquidity of the assets may be affected by other factors such as general market conditions, political events, bank holidays and civil strife. In view of this, the Trustee has the right in its sole discretion to li