FAQ's - Consolidation Of Scheme

1. What is merger of scheme?

The merger refers to closing down of one scheme called "Source scheme" and moving its investors along with their systematic transactions (eg: SIP CSIP etc) and its at-tached benefits (eg: insurance in CSIP etc) to the chosen scheme called "Target scheme".

2. Why is BSLAMC effecting a merger

The key role of Mutual Funds is to help investors who find it challenging to choose from thousands of listed stocks. But now with thousands of funds to choose from, investors are confused all over again! Duplication of similar products only adds to the investors' dilemma.

Moreover, such duplications consume additional resources for managing comparable portfolios in two similar schemes. To make things easier for investors, BSLAMC is sim-plifying its product basket by having only differentiated products.

3. What are the benefits of this merger?

Cost efficiency
Streamlining the management of schemes
Undivided attention of Fund Managers, which will enhance focus on investments
More flexibility and larger investment universe

4. What is the rationale behind selecting Source and Target schemes?

We have identified schemes that have similar investment objectives/mandates and merged them into one. This will provide more flexibility to the fund manager in terms of investment mandate and has larger investment universe.

5. What are the different systematic transactions that we refer to?

These systematic transactions are various add-on facilities provided under various schemes by AMC. These may be Systematic Investment Plan (SIP), Systematic Trans-fer Plan (STP), Birla Sun Life Century SIP (CSIP), Monthly systematic transfer for CSIP (CSTP), Systematic Withdrawal Plan(SWP) and Sweep Facility under Dividend Plan.

6. What are investors suppose to do on receiving the intimation?

Investors who are agreeable to the merger need not act on the intimation. Their invest-ments will automatically be switched to the Target Scheme on the date of merger. How-ever, investors who do not want their investment to merge may choose to do the follow-ing within 30 days exit period from the date of intimation:

When only investment corpus is involved – Investors are required to send a written request for switch/redemption of investment corpus
When investment corpus and systematic transactions are involved – Investors are required to send one of the following as a written request:

Switch/redemption of corpus as well as discontinuation of systematic transaction
Switch/redemption of investment corpus only (systematic transac-tion will continue in switched scheme or the target scheme)
Discontinuation of systematic transaction only (investment corpus of source scheme will be switched in target scheme)

7. What is exit period and what will happen during the exit period

Investors are given 30 days from the date of intimation, to switch or redeem their in-vestments without paying any exit load. This 30-day period is called exit period.

There will be no fresh issue of units during the exit period. Existing investments of the Source Scheme will continue to grow with the market in the Source Scheme itself. "No fresh issue of units" will lead to skip of systematic transactions like SIP CSIP and CSTP (In) falling between exit period. However, quarterly SIP falling during exit period will not be skipped but triggered in the Target Scheme after the merger.
For E.g.: Exit period is 1st Oct 2010 to 30th Oct 2010 then

SIP falling on 1st Oct 2010 will be skipped and therefore, total count of SIP for calendar year 2010 will be 11 instead of 12.
Quarterly SIP falling on 1st Oct 2010 will trigger on 1st Nov 2010 (post merger) in the Target Scheme and therefore total count of Quarterly SIP for calendar year 2010 will remain 4.

8. Will skip of systematic transaction be considered as default of installment?

No, it will not be considered as default. Therefore, all benefits related to CSIP/CSTP will continue in the Target Scheme.

9. In case of any dividend/s declared during the exit period, what will happen to fresh units created in dividend re-investment option?

Investors in the 'dividend reinvestment' option in the source schemes will be converted to 'dividend payout' at the start date of the exit period. Any dividend accrued during the exit period will be paid out instead of getting reinvested.

10. What will happen if no communication is received from the investor during this exit period?

In such a case, the investments will automatically be switched from the Source Scheme to the Target Scheme.

11. How will the switch to target scheme be treated post merger?

Post merger, investors of the Source Scheme will be allotted fresh units in the Target Scheme. These units shall be issued at the prevailing NAV on the date of switch of the Target Scheme. A fresh account statement reflecting the units allotted shall also be is-sued to unit holders post merger.

12. What is the treatment for outstanding units in case an Investor gives redemp-tion/switch request for partial amount/units?

The switch/redemption will take place for partial amount/units in the scheme as re-quested by the investor. Any outstanding unit balance in the Source Scheme on the date of merger will be switched to the Target Scheme. However, if the outstanding unit bal-ance does not comply with the minimum application amount rules of the Target Scheme; units will be redeemed on the merger date.

13. Will the switch take place in the same option in the target scheme?

Yes, the investor will get the same option that he had. For instance, if the investor was in the growth option in the Source Scheme, the investment will be transferred to the growth option in the Target Scheme.

14. What if the same option/sub-option is not available in the Target Scheme?

The options, which are not available in the Source Scheme, will be merged into options of the Target Scheme specified in the Notice-cum-addendum issued by BSLAMC. These chosen options in the Target Schemes are the closest match to the options of Source Scheme. For instance, if your current scheme has a quarterly dividend option, but the Target Scheme has only a weekly or monthly option, you will be transferred to the monthly dividend option.

15. The investor is already holding units in the source as well as the target scheme; what would be the treatment in such a case?

In a scenario where options and/or sub options are same in the Source and Target Schemes, outstanding units of the Source Scheme would be switched to the Target Scheme on the date of merger. However, when the option and/or sub-option are different in both schemes, the treatment would be as follows:

Different option (i.e. Dividend v/s Growth) - If the existing option in the Source Scheme is different from the existing option in the Target Scheme, then a new scheme account will be created in the Target Scheme and the investments of the Source Scheme will be switched to the new scheme account. Eg: If an investor is holding units in Scheme A-Growth (Source Scheme) and Scheme –B Dividend (Target Scheme), the units of Scheme A-Growth would be switched into Scheme B – Growth option.
Same option but different sub option (Reinvestment or Payout under the same Dividend option) – If the option in the source scheme is same as that of the target scheme but the sub options are different, then the sub option of the Target Scheme will prevail and units would be switched as per the target scheme sub option. E.g.: If an investor is holding Scheme A-Dividend Payout (Source Scheme) and Scheme B-Dividend Reinvest (Target Scheme), units would be switched into Scheme – B Dividend Reinvest sub-option.

16. What will happen to units which are marked under lien for all possible reasons or at-tached by the way of IT or CBI order?

All such units will be switched to the Target Scheme and the units allotted in the Target Scheme will be marked under lien post merger.

17. What will happen to my existing systematic registrations (SIP / CSIP / STP / CSTP / SWP / Dividend Sweep) within the Source Scheme at the time of merger?

Systematic registrations (SIP / CSIP / STP / CSTP / SWP/ Dividend Sweep) in the Source Scheme will continue in the Target Scheme along with benefits attached with the systematic registrations i.e. Insurance cover for CSIP would be continued by virtue of continuation in the Target Scheme (unless an investor sends a written request to discontinue the same within the exit period or the investor redeems his investments pertaining to CSIP). However in the following scenarios, the treatment will be different:

Systematic Registration	Scenario	Action	Example
STPs / CSTPs / Dividend Sweep	Where Switch Out is happening from the source schemes and Switch In is happen-ing in the corresponding target scheme and vice versa	The instructions will cease to exist. The insurance cover for CSTPs would therefore cease.
STPs / CSTPs / Dividend Sweep	Where the Switch In or Switch Out is happening from one merging source scheme to other merging source scheme	The Switch In or Switch Out will happen from one target scheme to other target scheme	For instance, A & B are source schemes and merging to tar-get schemes G & F respectively, Then STP/CSTP/Dividend sweep between A & B or B & A will continue between G & F or F & G post mer-ger.

18. How will investors be apprised of the merger details?

A detailed account statement would be imparted to all the investors once the merger is complete.

19. What are the tax deductions of merger?

With the merger, following taxes would be entailed:

Securities Transaction Tax (STT) – The redemption/switch of units from the scheme would be liable to STT. However, STT will not be borne by unit holders for merger or redemption during exit period. We would strongly advise you to consult your Tax Advisor..
Short-term capital gain tax (STCG) – This tax will be borne by investors where investment age is less than 1 year.
Dividend distribution tax (DDT)
TDS for NRIs would be deducted wherever applicable

20. Would the switch to Target Scheme or any scheme necessitate fresh exit load in the Target Scheme?

Investors of the Source Scheme will be subject to exit load of the Target Scheme or any scheme from the date of switch.

FAQ's - Consolidation Of Scheme

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