Wealth Sets You Free. Particulars of Modification Name of scheme Investment Objective

Transcription

1 CIN : L65910MH1995PLC Registered Office: Reliance Centre, 7th Floor South Wing, Off Western Express Highway, Santacruz (East), Mumbai April 09, 2018 Dear Investor, Re.: Change in the fundamental attribute of Reliance Liquid Fund Treasury Plan At the outset we thank you for your investment in Reliance Mutual Fund and the confidence reposed in us. Further, we wish to inform you that, in accordance with SEBI Circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 and SEBI/HO/IMD/DF3/CIR/P/2017/126 dated October 6, 2017 and December 4, 2017 respectively for Categorization and Rationalization of Mutual Fund Schemes, Reliance Capital Trustee Co. Ltd ( RCTC ), has approved the change in fundamental attribute Reliance Liquid Fund Treasury Plan, with effect from May 19, 2018 ( Effective Date ). Securities and Exchange Board of India (SEBI), vide its letter no. IMD/DF3/OW/P/2018/7407/1 dated March 09, 2018 has taken note for the said proposal. Particulars of Modification Name of scheme Investment Objective How will the scheme allocate its assets? Existing Reliance Liquid Fund Treasury Plan The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Instruments Call Money/ Cash/ repo and Reverse Repo Money Market Instruments (Mibor linked instruments, CPs, T-Bills, CDs, and/or other short term papers) Indicative asset allocation (% of total assets) Minimum Maximum Risk Profile High/ Medium/ Low 0% 50% Low 0% 100% Low to Medium Investment in Overnight interest rate reset linked debt instruments (with maturity or put/call greater than one day) shall not exceed 50% of the corpus of the scheme. The scheme will not invest in securitized debt, short selling and securities lending. Derivatives may be used up to 50% of Scheme s net assets to hedge, in order to protect the interests of the Unit Holders under the Scheme. The investment in Foreign Securities may be made upto 25 % of the scheme corpus and shall be in accordance with the prescribed Regulations from time to time. The above is indicative and is subject to change keeping in view the market conditions and opportunities, applicable Regulations and political economic factors. The investment manager in line with the investment objective may alter the above pattern for short term and on defensive consideration. Proposed Reliance Liquid Fund The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity by investing in debt and money market instruments. Instruments Money market & Debt instruments (including CBLO/ Repo/ Reverse Repo (including Corporate Bond Repo)) with maturity up to 91 days Indicative asset allocation (% of total assets) Minimum Maximum 0% 100% Risk Profile High/ Medium/ Low Low to Medium Debt instruments include securitized debts and liquid schemes launched by SEBI registered Mutual Fund or schemes that invest predominantly in money market instruments/ securities. Investment in liquid schemes or schemes that invest predominantly in money market instruments/ securities will be made for funds pending deployment. Investment in securitized debts shall not exceed 50% of the net assets of the Scheme. Money market instruments include CBLO/ Repo/ Reverse Repo (including corporate bond Repo), certificate of deposit, commercial papers, commercial bills, treasury bills, Government securities issued by Central & State Government/ corporate bonds having an unexpired maturity up to one year, call or notice money, Term Deposits, usance bills (BRDS) and any other similar instruments as specified by the RBI/SEBI from time to time. Short-term fixed deposits shall be held in the name of the Scheme and the duration of such fixed deposit shall not exceed 91 days from the date of deposit.

2 Where will the scheme invest? The AMC reserves the right to change the above asset allocation pattern in the interest of the investors depending on the market conditions for a short term period of defensive consideration. In case any deviation from the asset allocation, the fund manager will carry out rebalancing within 30 days. Where the portfolio is not re-balanced within 30 Days, justification for the same shall be placed before the Investment Committee and reasons for the same shall be recorded in writing. The Investment Committee shall then decide on the course of action. However, at all times the portfolio will adhere to the overall investment objectives of the Scheme. Reliance Liquid Fund is a Liquid Scheme with a low to medium risk profile. Considering this, funds would normally be invested in corporate debt, preference shares, treasury bills, government securities, call money, commercial papers, usance bills, trade / commercial bills accepted / co-accepted by banks, certificates of deposit, deposits in banks and other instruments that may be allowed for investments by Mutual Funds by RBI and SEBI from time to time. The Fund may employ derivatives as and when permitted by concerned regulatory authorities. Pursuant to SEBI circular No SEBI/IMD/CIR No. 13/150975/09 dated January 19, 2009, the Scheme shall make investments only in debt and money market instruments with maturity of up to 91 days only. This shall also be applicable in case of inter scheme transfer of securities. Explanation: i) In case of securities where the principal is to be repaid in a single payout, the maturity of the securities shall mean residual maturity. ii) In case the principal is to be repaid in more than one payout then the maturity of the securities shall be calculated on the basis of weighted average maturity of the security. iii) In case of securities with put and call options (daily or otherwise) the residual maturity of the securities shall not be greater than 91 days. iv) In case the maturity of the security falls on a Non Business Day, then settlement of securities will take place on the next Business Day. The scheme may invest in derivatives up to a maximum of 50% of its net assets. The cumulative gross exposure through debt and derivative positions should not exceed 100% of the net assets of the scheme. Liquidity in the scheme may be provided through borrowing to meet redemptions in accordance with the SEBI Regulations. The investment in Foreign Securities may be made up to 25% of the scheme corpus and shall be in accordance with the prescribed Regulations from time to time. The Fund may also enter into Repo, Short Selling or such other transactions as may be allowed to Mutual Funds from time to time. The above is indicative and is subject to change keeping in view the market conditions and opportunities, applicable Regulations and politico-economic factors. The investment manager in line with the investment objective may alter the above pattern for short term on defensive consideration. The AMC reserves the right to change the above asset allocation pattern in the interest of the investors depending on the market conditions for a short term period of defensive consideration. Defensive considerations for this Scheme include maintaining an adequate float to meet anticipated levels of redemptions, expenses, and other liquidity needs. In case any deviation from the asset allocation, the fund manager will carry out rebalancing within 30 days. Where the portfolio is not re-balanced within 30 days, justification for the same shall be placed before the Investment Committee and reasons for the same shall be recorded in writing. The Investment Committee shall then decide on the course of action. However, at all times the portfolio will adhere to the overall investment objectives of the Scheme. Subject to the SEBI Regulations, the Scheme may invest in various types of instruments including, but not limited to, any of the following: a) Commercial Paper (CP), Certificate of Deposits (CD), Treasury Bills, Bills Rediscounting, CBLO, Repo/Reverse Repo (including repo in corporate bonds). b) Corporate Bonds include all debt instruments (including securitized debt) issued by entities such as Banks, Public Sector Undertakings, Government Agencies and other Statutory Bodies, 2

3 Short term debt considerations for this open end Scheme including maintaining an adequate float to meet the anticipated levels of redemptions, expenses and other liquidity needs. A portion of funds may also be kept in cash or cash equivalents. Investments may be in listed or unlisted debt instruments, as permitted under SEBI Regulations. These would cover secondary market purchases, initial public offers (IPOs), other public offers, private placements, rights offers, negotiated deals etc. Investments in debentures and bonds will usually be in instruments which have been assigned investment grade ratings by an approved rating agency. The instruments may be rated / unrated or listed / unlisted. Investments in unrated securities will be made with the approval of the Investment Committee of RNLAM, within the parameters laid down by the Board of Directors of the AMC & Trustee. Investment policies of the Fund shall reflect restrictions for Mutual Fund investments established by SEBI. It will be the endeavour of the Fund Managers to invest the maximum corpus in money market instruments under the Treasury Plan and in call money/ repo under the Cash Plan. However, investment in mibor linked instruments with daily put/call option will be explored depending upon the longevity of investments. The Fund may also enter into Repo, Stock Lending, hedging or such other transactions as may be allowed to Mutual Funds from time to time. Securitised Debt can be a part of the debt securities, and the Fund will normally endeavour to keep it upto 40 percent of corpus of the Scheme. The Fund may also enter into Repo (Repos including repo in corporate bonds), hedging or such other transactions as may be allowed to Mutual Funds from time to time. In line with SEBI circular dated November 11, 2011 investments in corporate bond repo shall be made basis the policy approved by the Board of RNLAM and RCTC. The significant features are as follows: i. As specified in the SEBI Circular dated November 15, 2012, the base of eligible securities for mutual funds to participate in repo in corporate debt securities, is from AAA rated to AA and above rated corporate debt securities. ii. iii. iv. Category of counterparty & Credit rating of counterparty RMF schemes shall enter in lending via Repo only with Investment Grade counterparties (as required by SEBI Regulations) which are part of the approved debt universe (i.e. on which we have limits). Restriction pertaining to tenor of Collateral For FMPs, the tenor of the collateral should expire before the maturity of the scheme. For other schemes, the collateral should comply with the maturity restrictions placed, if any, for those schemes in the Debt Investment Policy. The Gross exposure of the scheme to repo transactions in corporate debt securities shall not be more than 10% of the net asset scheme. All investment restrictions stated above shall be applicable at the time of making investment Municipal Corporations, body corporate, companies, trusts/ Special Purpose Vehicles etc and would exclude investments in Government Securities issued by Central and State Government. c) Investment in Government securities issued by Central and/ or State Government to the extent of SEBI prescribed limits. Such securities may be: (i) Supported by the ability to borrow from the Treasury or (ii) Supported by Sovereign guarantee or the State Government or (iii) Supported by Government of India/ State Government in some other way. d) Securities issued by any government agencies, quasigovernment or statutory bodies, Public Sector Undertakings, which may or may not be guaranteed or supported by the Central Government or any state government (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills). e) Non-convertible securities as well as nonconvertible portion of convertible securities, such as debentures, coupon bearing bonds, zero coupon bonds, deep discount bonds, Mibor-linked or other floating rate instruments, premium notes and other debt securities or obligations of public sector undertakings, banks, financial institutions, corporations, companies and other bodies corporate as may be permitted by SEBI/ RBI from time to time. f) Securitized debt, pass through obligations, various types of securitization issuances including but not limited to Asset Backed Securitization, Mortgage Backed Securitization, single loan securitization and other domestic securitization instruments, as may be permitted by SEBI/ RBI from time to time. g) Derivatives like Interest rate swaps, Forward Rate agreements and other such instruments as permitted by RBI/ SEBI. h) Fund may use Interest Rate Futures (IRF) to create an imperfect hedge/ proper hedge from time to time. i) Deposits with banks and other bodies corporate as may be permitted by SEBI from time to time. j) Any other debt and money market instruments that may be available from time to time. k) The scheme may invest in the liquid schemes launched by SEBI registered Mutual Fund or schemes that invest predominantly in money market instruments. l) All investments in overseas securities will be governed by SEBI guidelines issued from time to time. The Scheme may invest in various types of Foreign Securities including, but not limited to, any of the following: (i) Foreign debt securities (non-convertible) in the countries with fully convertible currencies. (ii) Overseas short term as well as long term debt instruments with rating not below investment grade by accredited/ registered credit rating agencies. (iii) Overseas Money market instruments rated not below investment grade. 3

4 v. Applicable haircut RBI in its circular dated November 09, 2010 had indicated the haircut to be applied for such transactions as follows: S.No. Rating Minimum Haircut 1 AAA 10% 2 AA+ 12% 3 AA 15% The above haircuts are minimum stipulated haircuts where the repo period is overnight or where the remargining frequency (in case of longer tenor repos) is daily. The RBI had earlier recommended a haircut of 25%. It is proposed that we maintain a minimum haircut of 15% for all repo contract of less than 3 months, and 25% for other contracts, unless a lower haircut is approved by the Investment Committee. The Fund Manager may refer to the rating-haircut matrix published by FIMMDA, to determine the appropriate haircut. Investment in overseas securities shall be made in accordance with the requirements & limits stipulated by SEBI and RBI from time to time. Further the scheme shall always adhere to the guidelines on portfolio of Liquid Scheme as mandated by SEBI Circular No. SEBI/IMD/CIR No. 13/150975/09 dated January 19, m) The Fund may also enter into Repo (Repos including repo in corporate bonds), hedging or such other transactions as may be allowed to Mutual Funds from time to time. In line with SEBI circular dated November 11, 2011 investments in corporate bond repo shall be made basis the policy approved by the Board of RNAM and RCTC. The significant features are as follows: (i) As specified in the SEBI Circular dated November 15, 2012, the base of eligible securities for mutual funds to participate in repo in corporate debt securities is from AAA rated to AA and above rated corporate debt securities. (ii) Category of counterparty & Credit rating of counterparty RMF schemes shall enter in lending via Repo only with Investment Grade counterparties (as required by SEBI Regulations) which are part of the approved debt universe (i.e. on which we have limits). (iii) Restriction pertaining to tenor of Collateral for FMPs, the tenor of the collateral should expire before the maturity of the scheme. For other schemes, the collateral should comply with the maturity restrictions placed, if any, for those schemes in the Debt Investment Policy. (iv) Applicable haircut RBI in its circular dated November 09, 2010 had indicated the haircut to be applied for such transactions as follows: S.No. Rating Minimum Haircut 1 AAA 10% 2 AA+ 12% 3 AA 15% The above haircuts are minimum stipulated haircuts where the repo period is overnight or where the remargining frequency (in case of longer tenor repos) is daily. The RBI had earlier recommended a haircut of 25%. It is proposed that we maintain a minimum haircut of 15% for all repo contracts of less than 3 months, and 25% for other contracts, unless a lower haircut is approved by the Investment Committee. The Fund Manager may refer to the rating-haircut matrix published by FIMMDA, to determine the appropriate haircut. n) The schemes may also enter into repurchase and reverse repurchase obligations in all securities (including Repos in corporate bonds) held by them as per the guidelines and regulations applicable to such transactions. It is the intention of the scheme to trade in the derivatives market as per the Regulations. The scheme may also invest into tri-party Repo as per the prescribed guidelines of RBI. o) Overseas derivatives traded on recognized stock exchanges overseas (currently permitted only for hedging and portfolio balancing with underlying as securities). p) Short term deposits with banks overseas where the issuer is rated not below investment grade. q) Units/securities issued by overseas mutual funds or unit trusts registered with overseas regulators and investing in permitted Foreign Securities listed in recognized stock exchanges overseas or unlisted overseas securities (not exceeding 10% of their net assets). 4

5 r) Any other permitted overseas securities/ instruments that may be available from time to time. The scheme shall not invest in foreign securitized debts. Investment in Foreign Securities shall be in accordance with the guidelines issued by SEBI from time to time. The securities mentioned above could be listed, unlisted, publicly offered, privately placed, secured, unsecured, rated or unrated and of varying maturity. The securities may be acquired through public offerings (IPOs), secondary market operations, private placement, rights offers or negotiated deals. The above changes will be applicable to all the relevant sections of SID and KIM and the respective sections shall stand modified accordingly. All other terms and conditions as mentioned in the SID / KIM of Scheme shall remain unchanged. The above proposal is change in the Fundamental Attributes of the scheme as per Regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996 and pursuant to provision of SEBI Circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 and SEBI/HO/IMD/DF3/CIR/P/2017/126 dated October 6, 2017 and December 4, 2017 respectively. Regulatory Position Pursuant to Regulation 18 (15A) of the SEBI (Mutual Funds) Regulations, 1996 ( Mutual Funds Regulations ) and pursuant to provisions of aforementioned circulars a change in the fundamental attribute in the scheme requires: (i) a written communication about the proposed change, to be sent to each unitholder and an advertisement to be released in 1 (One) English daily newspaper having nation-wide circulation and in a newspaper published in the language of the region where the head office of the mutual fund (in this case, Reliance Mutual Fund) is situated; and (ii) the unitholders to be given an option to exit at the prevailing net asset value ( NAV ), without any exit load, for a period of 30 (thirty days). Exit Option for Unit Holders: This letter serves as a communication to the unitholders of the Scheme for the change in the fundamental attributes of the Scheme. As required under Regulation 18 (15A) of the SEBI (Mutual Funds) Regulations, 1996 each unitholder of the Scheme is hereby being provided an option to exit his/her/its investment in the Scheme at the applicable NAV without exit load, subject to the terms and conditions set out below: Considering the aforementioned facts/information, and keeping in view the change in the fundamental attributes: (a) should you desire to discontinue holding the units in the Scheme, an option is being hereby provided to you to exit from the Scheme which includes redemption / switch out (wherefore you have made an investment) at the applicable NAV without any exit load at any of our Investor service Centre; (b) you may exercise the above option, without any exit load anytime during a period of 31 (Thirty One) days, commencing from April 18, 2018 till May 18, 2018 up to 3.00 p.m. (both days inclusive); [Note- It may however be noted that all such requests for exit option received after cut-off time on May 18, 2018, shall be subject to the applicable exit load, in terms of the relevant details, as specified in the SID / KIM of the Scheme]. (c) The redemption proceeds will be mailed/credited within 10 (Ten) working days from the date of receipt of the redemption request. (d) Unit holders should ensure that any change in address or pay-out bank details required by them, are updated in the Fund s records before exercising the exit option in line with the timelines as mentioned in the Statement of Additional Information / SID/ KIM. (e) the unit holders who have pledged or encumbered their units will not have the option to exit unless they procure an effective release of their pledges / encumbrances prior to the submission of redemption / switch- out requests. (f) Tax Impact on change in fundamental attributes of the Scheme is as follows: Unit holders who wish to continue: No Impact Unit holders who wish to exercise exit option: Normal tax impact in the case of redemption of Scheme/Plans as have been set forth in the SID / KIM of the Scheme. Impact of Tax deduction at Source- For Resident Investor: No Tax shall be deducted at source in respect of any income credited or paid to unit holder on exercise the exit option. For Non-resident Investor (Other Than FII): Appropriate tax would need to be deducted at source u/s 195 of The Income tax Act 1961, in respect of any income credited or paid to unit holder on exercise of the exit option. Unit holders are requested to consult their Financial and Tax Professional advisors. 5

6 You may further take note that: (a) in case you do not have any objection for the change in the fundamental attributes of the Scheme, no action is required to be taken at your end; (b) in case you have not exercised the exit option in the manner and within the time frame specified above, you shall be deemed to have consented to the change in the fundamental attributes of the Scheme; and (c) the impact of securities transaction tax, if any, arising out of the exit option exercised during the exit option period hereunder, shall be borne by Reliance Nippon Life Asset Management Limited (RNAM). However, any other tax consequences, arising out of exercise of exit option during the exit option period hereunder, shall be borne by the investor in line with the relevant provisions, as have been set forth in the SID / KIM of the Scheme. (d) Unit holders who are not opting for exit option, their investment shall continue in the same plan/option. (e) On change in Fundamental attributes of the scheme, the ongoing SIPs, SWPs, STPs etc will continue in the existing manner for all future transactions. Yours truly, For Sd/- Sundeep Sikka Executive Director & Chief Executive Officer Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 6

7 THIS PAGE IS INTENTIONALLY KEPT BLANK 7

8 THIS PAGE IS INTENTIONALLY KEPT BLANK 8