Suitable for Investors who are seeking* capital appreciation over long-term investment in equity and equity-related instruments high risk

Transcription

1 Combined Scheme Information Document Suitable for Investors who are seeking* Religare Invesco Tax Plan (Open - ended Equity Linked Savings Scheme with a lock-in period of 3 years) Religare Invesco Growth Fund (Open - ended Diversified Equity Scheme) Religare Invesco Equity Fund (Open - ended Equity Scheme) Religare Invesco Contra Fund (Open - ended Equity Scheme) Religare Invesco AGILE Fund (Alpha Generated from Industry Leaders Fund) (Open - ended Equity Scheme) Religare Invesco Banking Fund (Open - ended Banking Sector Scheme) Religare Invesco Business Leaders Fund (Open - ended Equity Scheme) Religare Invesco PSU Equity Fund (Open - ended Equity Scheme) Religare Invesco Arbitrage Fund (Open - ended Equity Scheme) Religare Invesco Mid Cap Fund (Open - ended Equity Scheme) Religare Invesco Mid N Small Cap Fund (Open - ended Equity Scheme) Religare Invesco Infrastructure Fund (Open - ended Equity Scheme) capital appreciation over long-term investment in equity and equity-related instruments high risk - (BROWN) capital appreciation over long-term investment in diversified portfolio of equity and equity-related instruments high risk - (BROWN) capital appreciation over long-term investment in focused portfolio of equity and equity-related instruments high risk - (BROWN) capital appreciation over long-term investment in equity and equity-related instruments through means of contrarian investing high risk - (BROWN) capital appreciation over long-term investment in a passive portfolio of equity instruments selected from the industry leaders on the basis of a mathematical model high risk - (BROWN) capital appreciation over long-term investment predominantly in equity and equity-related instruments of companies engaged in the business of banking and financial services high risk - (BROWN) capital appreciation over long-term investment in equity and equity-related instruments including equity derivatives of companies which in our opinion are leaders in their respective industry or industry segment high risk - (BROWN) capital appreciation over long-term investment in equity and equity-related instruments of Government companies (PSU s) high risk - (BROWN) income over medium-term income through opportunities emerging out of mis-pricing between cash and derivatives markets and through deployment of surplus cash in fixed income instruments low risk - (BLUE) capital appreciation over long-term investment predominantly in equity and equity-related instruments of Mid Cap companies high risk - (BROWN) capital appreciation over long-term investment predominantly in equity and equity-related instruments of Mid and Small Cap companies high risk - (BROWN) capital appreciation over long-term investment in equity and equity-related instruments of infrastructure companies high risk - (BROWN) Continuous Offer for Units at NAV based prices. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk is represented as: (BLUE) Investors understand that their principal will be at low risk (YELLOW) Investors understand that their principal will be at medium risk (BROWN) Investors understand that their principal will be at high risk The particulars of the Scheme(s) have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, (herein after referred to as SEBI (MF) Regulations) as amended till date and filed with SEBI, along with a Due Diligence Certificate from the AMC. The units being offered for public subscription have not been approved or recommended by SEBI nor has SEBI certified the accuracy or adequacy of the Scheme Information Document. The Scheme particulars of Religare Invesco Tax Plan are also in accordance with Equity Linked Savings Scheme, 2005 (vide notification No. 226/2005 dated , as amended) issued by Department of Economic Affairs, Ministry of Finance, Government of India. The Scheme Information Document sets forth concisely the information about the Scheme(s) 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 Religare Invesco Mutual Fund, Tax and Legal issues and general information on 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 July 30, SPONSORS Religare Securities Limited D3, P3 B, District Centre, Saket, New Delhi Invesco Hong Kong Limited 41/F, Citi Bank Tower, 3 Garden Road, Central, Hong Kong. INVESTMENT MANAGER Religare Invesco Asset Management Company Private Limited 3rd Floor, GYS Infinity, Paranjpe B Scheme, Subhash Road, Vile Parle (E), Mumbai TRUSTEE Religare Invesco Trustee Company Private Limited 3rd Floor, GYS Infinity, Paranjpe B Scheme, Subhash Road, Vile Parle (E), Mumbai MUTUAL FUND Religare Invesco Mutual Fund 3rd Floor, GYS Infinity, Paranjpe B Scheme, Subhash Road, Vile Parle (E), Mumbai

2 SR. NO. I II III IV TABLE OF CONTENTS PARTICULARS PAGE. NO. HIGHLIGHTS/SUMMARY OF THE SCHEME(S) 2 INTRODUCTION A. Risk Factors 10 B. Requirement of Minimum Investors in the Scheme(s) 15 C. Special Considerations 16 D. Disclaimers of IISL 17 E. Compliance with Foreign Account Tax Compliance Act 18 F. Definitions 18 G. Due Diligence by the AMC 23 INFORMATION ABOUT THE SCHEME(S) A. Type of Scheme(s) 24 B. Investment Objective 24 C. Asset Allocation Pattern 25 D. Where will the Scheme(s) Invest? 31 - Securities Lending 35 E. Investment Strategy 39 - Risk Control 46 - Investment in derivatives 46 - Portfolio Turnover 51 F. Fundamental Attributes 52 G. Benchmark Index 53 H. Fund Manager(s) 55 I. Investment Restrictions 57 J. How have the Scheme(s) performed? 61 UNITS AND OFFER A. New Fund Offer 64 B. Ongoing Offer 71 - Ongoing Offer Period 71 - Ongoing price for subscription / switch-in 72 - Ongoing price for redemption / switch outs 72 - Cut off timing for subscriptions/ redemptions/ switches 72 - Where can the applications for purchase/redemption switches be 74 submitted? - Minimum amount for purchase/ redemption/ switches 74 - Special Products 75 - Account Statements 87 - Redemption 88 - Delay in payment of redemption / repurchase proceeds 91 C. Periodic Disclosure - Net Asset Value 91 - Half yearly Disclosures: Portfolio / Financial Results 92 - Half Yearly Results 92 - Annual Report 92 - Taxation 92 - Investor services 99 D. Computation of NAV 100 FEES AND EXPENSES A. New Fund Offer Expenses 101 B. Annual Scheme Recurring Expenses 101 C. Load Structure 103 D. Waiver of Load for Direct Applications 106 V RIGHT OF UNIT HOLDERS 106 VI PENALTIES, PENDING LITIGATION OR PROCEEDINGS 107 LIST OF COLLECTION CENTRES 1

3 Name of the Scheme Type of the Scheme Suitable for investors who are seeking * HIGHLIGHTS/SUMMARY OF THE SCHEME(S) Religare Invesco Religare Invesco Religare Invesco Tax Plan (RITP)# Growth Fund Equity Fund (RIGF) (RIEF) An Open ended An Open ended An Open ended equity linked savings diversified equity equity scheme scheme with a lock-in scheme period of 3 years*. a) capital a) capital a) capital appreciation over appreciation appreciation long term over long term over long term b) investment in b) investment in b) investment in equity and equity diversified focused related portfolio of portfolio of instruments equity and equity and c) high risk equity related (BROWN) equity related instruments c) high risk. (BROWN) instruments. c) high risk (BROWN) Religare Invesco Contra Fund (RICF) An Open ended equity scheme a) capital appreciation over long term b) investment in equity and equity related instruments through means of investing c) high risk (BROWN) contrarian *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Investment Objective Note - Risk is represented as: (BLUE) investors understand that their principal will be at low risk. (YELLOW) investors understand that their principal will be at medium risk. (BROWN) investors understand that their principal will be at high risk. To generate longterm To generate long- capital growth term capital growth from a diversified from a focused To generate long term capital growth from a diversified portfolio of predominantly equity and equity-related securities. portfolio of predominantly equity and equityrelated securities. portfolio of predominantly equity and equityrelated securities. To generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation through means of contrarian investing. Benchmark S&P BSE 100 S&P BSE 500 Plans / Options The Scheme(s) offer a separate Plan for investments directly with the Fund (i.e. application not routed through Distributor). Thus, the Scheme(s) offers two plans as follows: Religare Invesco Tax Plan Religare Invesco Tax Plan - Direct Plan Religare Invesco Growth Fund Religare Invesco Growth Fund - Direct Plan Religare Invesco Equity Fund Religare Invesco Equity Fund - Direct Plan Religare Invesco Contra Fund Religare Invesco Contra Fund - Direct Plan 2

4 Name of the Scheme Religare Invesco Religare Invesco Religare Invesco Tax Plan (RITP)# Growth Fund Equity Fund (RIGF) (RIEF) Each of the above Plans under the Scheme(s) offer following options: Religare Contra (RICF) Invesco Fund Growth option Dividend option Payout facility Reinvestment facility Direct Plan will have a lower expense ratio excluding distribution expenses, commission for distribution of Units etc. Direct Plan is only for investors who purchase /subscribe Units directly with the Fund (i.e. application not routed through Distributor). Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund (except Stock Exchange Platform(s) and all other Platform(s) where investors applications for subscription of units are routed through Distributors). The portfolio of Direct Plan will form part of portfolio of the Scheme and there will be no separate portfolio for Direct Plan. Further, both the options i.e. Growth and Dividend will have common portfolio under the Scheme. Default Plan / Option / Facility Applicable for RIGF, RIEF & RICF: If dividend payable under Dividend Payout option is equal to or less than Rs. 500/-, then the dividend would be compulsorily reinvested in the option of the Scheme(s). Investors subscribing Units under Direct Plan of a Scheme should indicate Direct Plan against the Scheme name in the application form. Investors should also mention Direct in the ARN column of the application form. However, in case Distributor code is mentioned in the application form but Direct Plan is mentioned against the Scheme name, then the Distributor code will be ignored and the application will be processed under Direct Plan. Further, where application is received without mentioning Distributor code or where Direct is mentioned in the ARN Column, then the application will be processed under Direct Plan. If the investor does not mention Direct against the Scheme name and the Distributor code is also not provided, then the application will be processed under Direct Plan. The investors should indicate option for which subscription is made by indicating the choice in the appropriate box provided for this purpose in the application form. In case of valid application received without any choice of option, the following default option will be considered; Name of the Option^ Default - RITP Default - RIGF, RIEF & RICF Growth / Dividend Growth Growth Reinvestment/Payout Payout Reinvestment ^ The above details of default option are also applicable to Direct Plan offered under the Scheme(s). #The Scheme does not assure or guarantee any returns. The Scheme has been prepared in accordance with the notification dated November 3, 2005 as amended, issued by the Department of Economic Affairs, Ministry of Finance, Government of India, notified under section 80C (2) of the Income-tax Act, As per section 80C of the Income-tax Act, 1961 and subject to provisions, eligible investors (i.e. Individual, HUF, Specified AOP/BOI) are entitled to a deduction from gross total income upto Rs. 1,00,000/-^ (along with other prescribed investments) for amount invested in Religare Invesco Tax Plan. *Units purchased cannot be assigned/transferred/pledged/switched-out/ redeemed until completion of 3 years from the date of allotment of respective units. ^The Finance Bill (No.2) 2014 presented in the parliament on July 10, 2014 proposes to increase the limit to Rs. 1,50,000/-. The Finance Bill (No.2) 2014 is yet to be notified. 3

5 HIGHLIGHTS/SUMMARY OF THE SCHEME(S) (CONTD.) Name of Religare Invesco Religare Invesco the Scheme AGILE Fund (Alpha Generated from Industry Leaders Fund) (RIAGILE)) Banking Fund (RIBF) Type of the An Open ended equity An Open ended banking Scheme scheme sector scheme Religare Invesco Business Leaders Fund (RIBLF) An Open ended equity scheme Religare Invesco PSU Equity Fund (RIPSUF) An Open ended equity scheme Suitable for investors who are seeking * a) capital appreciation over long term b) investment in a passive portfolio of equity instruments selected from the industry leaders on the basis of a mathematical model c) high risk. (BROWN) a) capital appreciation over long term b) investment predominantly in equity and equity related instruments of companies engaged in the business of banking and financial services c) high risk. (BROWN) a) capital appreciation over long term b) investment in equity and equity related instruments including equity derivatives of companies which in our opinion are leaders in their respective industry or industry segment c) high risk. (BROWN) a) capital appreciation over long term b) investment in equity and equity related instruments of Government companies (PSU's) c) high risk. (BROWN) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note - Risk is represented as: (BLUE) investors understand that their principal will be at low risk. (YELLOW) investors understand that their principal will be at medium risk. Investment Objective (BROWN) investors understand that their principal will be at high risk. To generate capital To generate long-term To generate long term appreciation through capital growth from a capital appreciation by investment in equity and portfolio of equity and investing in equity and equity related equity-related securities equity related instruments instruments. The Scheme of companies engaged in including equity will seek to generate the business of banking derivatives of companies capital appreciation by and financial services. which in our opinion are investing in a passive leaders in their respective portfolio of stocks industry or industry selected from the segment. Industry Leaders on the basis of a mathematical model. To generate capital appreciation by investing in Equity and Equity Related Instruments of companies where the Central / State Government(s) has majority shareholding or management control or has powers to appoint majority of directors. Benchmark CNX Nifty CNX Bank Index CNX Nifty S&P BSE PSU Index Plans / The Scheme(s) offers a separate Plan for investments directly with the Fund (i.e. application not routed Options through Distributor). Thus, the Scheme(s) offers two plans as follows: Religare Invesco Religare Invesco AGILE Fund Banking Fund Religare Invesco Religare Invesco AGILE Fund - Banking Fund - Direct Direct Plan Plan Religare Invesco Business Leaders Fund Religare Invesco Business Leaders Fund - Direct Plan Religare Invesco PSU Equity Fund Religare Invesco PSU Equity Fund - Direct Plan 4

6 Name of the Scheme Religare Invesco AGILE Fund (Alpha Generated from Industry Leaders Fund) (RIAGILE)) Religare Invesco Banking Fund (RIBF) Each of the above Plans under the Scheme(s) offer following options: Growth option Dividend option Payout facility Reinvestment facility Religare Invesco Business Leaders Fund (RIBLF) Religare Invesco PSU Equity Fund (RIPSUF) Direct Plan will have a lower expense ratio excluding distribution expenses, commission for distribution of Units etc. Direct Plan is only for investors who purchase /subscribe Units directly with the Fund (i.e. application not routed through Distributor). Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund (except Stock Exchange Platform(s) and all other Platform(s) where investors applications for subscription of units are routed through Distributors). The portfolio of Direct Plan will form part of portfolio of the Scheme and there will be no separate portfolio for Direct Plan. Further, both the options i.e. Growth and Dividend will have common portfolio under the Scheme. Default Plan / Option / Facility If dividend payable under Dividend Payout option is equal to or less than Rs. 500/-, then the dividend would be compulsorily reinvested in the option of the Scheme(s). Investors subscribing Units under Direct Plan of a Scheme should indicate Direct Plan against the Scheme name in the application form. Investors should also mention Direct in the ARN column of the application form. However, in case Distributor code is mentioned in the application form but Direct Plan is mentioned against the Scheme name, then the Distributor code will be ignored and the application will be processed under Direct Plan. Further, where application is received without mentioning Distributor code or where Direct is mentioned in the ARN Column, then the application will be processed under Direct Plan. If the investor does not mention Direct against the Scheme name and the Distributor code is also not provided, then the application will be processed under Direct Plan.The investors should indicate option for which subscription is made by indicating the choice in the appropriate box provided for this purpose in the application form. In case of valid application received without any choice of option, the following default option will be considered; Name of the Option^ Growth / Dividend Reinvestment/Payout Growth Reinvestment Default ^ The above details of default option are also applicable to Direct Plan offered under the Scheme(s). 5

7 HIGHLIGHTS/SUMMARY OF THE SCHEME(S) (CONTD.) Name of Religare Invesco Religare Invesco Mid Religare Invesco Mid the Scheme Arbitrage Fund (RIAF) Cap Fund (RIMCF) N Small Cap Fund (RIMSCF) Type of the An Open ended equity An Open ended equity An Open ended equity Scheme scheme scheme scheme Suitable a) capital a) capital appreciation for appreciation over long over long term investors term b) investment who are seeking * a) income over medium term b) income through opportunities emerging out of mispricing between cash and derivative markets and through deployment of surplus cash in fixed income instruments c) low risk. (BLUE) b) investment predominantly in equity and equity related instruments of Mid Cap companies c) high risk. (BROWN) predominantly in equity and equity related instruments of mid and small cap companies c) high risk. (BROWN) Religare Invesco Infrastructure Fund (RIIF) An Open ended equity scheme a) capital appreciation over long term b) investment in equity and equity related instruments of infrastructure companies c) high risk. (BROWN) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note - Risk is represented as: (BLUE) investors understand that their principal will be at low risk. (YELLOW) investors understand that their principal will be at medium risk. (BROWN) investors understand that their principal will be at high risk. Investment Objective Benchmark Plans / Options To generate income To provide long term To provide long term To provide long term through arbitrage capital appreciation by capital appreciation by capital appreciation by opportunities investing in a portfolio investing in a portfolio investing in a portfolio emerging out of mispricing between the that is predominantly that is predominantly that is predominantly constituted of Equity constituted of equity constituted of equity cash market and the and Equity related and equity related and equity related derivatives market and Instruments of Mid instruments of mid instruments of through deployment of Cap Companies. and small cap infrastructure surplus cash in fixed income instruments. companies. companies. CRISIL Liquid Fund CNX Midcap Index CNX Infrastructure Index Index The Scheme(s) offers a separate Plan for investments directly with the Fund (i.e. application not routed through Distributor). Thus, the Scheme(s) offers two plans as follows: Religare Invesco Arbitrage Fund Religare Invesco Arbitrage Fund - Direct Plan Religare Invesco Mid Cap Fund Religare Invesco Mid Cap Fund - Direct Plan Religare Invesco Mid N Small Cap Fund Religare Invesco Mid N Small Cap Fund - Direct Plan Religare Invesco Infrastructure Fund Religare Invesco Infrastructure Fund - Direct Plan 6

8 Name of the Scheme Religare Invesco Arbitrage Fund (RIAF) Religare Invesco Mid Cap Fund (RIMCF) Religare Invesco Mid N Small Cap Fund (RIMSCF) Each of the above Plans under the Scheme(s) offer following options: Growth option Dividend option Payout facility Reinvestment facility Bonus option (Applicable only to RIAF) Bonus option Annual Bonus option Religare Invesco Infrastructure Fund (RIIF) Direct Plan will have a lower expense ratio excluding distribution expenses, commission for distribution of Units etc. Direct Plan is only for investors who purchase /subscribe Units directly with the Fund (i.e. application not routed through Distributor). Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund (except Stock Exchange Platform(s) and all other Platform(s) where investors applications for subscription of units are routed through Distributors). The portfolio of Direct Plan will form part of portfolio of the Scheme and there will be no separate portfolio for Direct Plan. Further, the options i.e. Growth, Bonus and Dividend will have common portfolio under the Scheme. If dividend payable under Dividend Payout option is equal to or less than Rs. 500/-, then the dividend would be compulsorily reinvested in the option of the Scheme(s). Default Plan / Option / Facility Investors subscribing Units under Direct Plan of a Scheme should indicate Direct Plan against the Scheme name in the application form. Investors should also mention Direct in the ARN column of the application form. However, in case Distributor code is mentioned in the application form but Direct Plan is mentioned against the Scheme name, then the Distributor code will be ignored and the application will be processed under Direct Plan. Further, where application is received without mentioning Distributor code or where Direct is mentioned in the ARN Column, then the application will be processed under Direct Plan. If the investor does not mention Direct against the Scheme name and the Distributor code is also not provided, then the application will be processed under Direct Plan. The investors should indicate option for which subscription is made by indicating the choice in the appropriate box provided for this purpose in the application form. In case of valid application received without any choice of option, the following default option will be considered; Name of the Option^ Growth / Dividend / Bonus* Reinvestment / Payout Bonus / Annual Bonus Default Growth Reinvestment Annual Bonus ^ The above details of default option are also applicable to Direct Plan offered under the Scheme(s). *Bonus option is applicable to RIAF only. 7

9 HIGHLIGHTS/SUMMARY OF THE SCHEME(S) (CONTD.) OTHER FEATURES: Liquidity The Scheme(s) offer Units for Subscription and Redemption (subject to completion of lock in period, if any) at NAV based prices on all Business Days on an ongoing basis. Dematerializati on of Units Minimum Application Amount Additional Application Amount Minimum Amount/Units for Redemption Load The Mutual Fund will dispatch redemption proceeds within 10 Business Days from the date of acceptance of redemption requests at the Official Points of Acceptance. The Scheme(s) offer option to subscribe units in electronic (demat) mode. Accordingly, the units of the Scheme(s) will be available in dematerialized (electronic) form. The applicant intending to hold Units in dematerialized form will be required to have a beneficiary account with a Depository Participant (DP) of NSDL/CDSL and will be required to mention in the application form DP Name, DP ID and Beneficiary Account Number with the DP at the time of subscribing the Units of the Scheme(s). In case Unit holders do not provide their demat account details or the demat details provided in the application form are incomplete / incorrect or do not match with the details with the Depository Records, the Units will be allotted in Non-demat mode provided the application is otherwise complete in all respect. Further, if the units can not be allotted in demat mode due to reason that KYC details including IPV is not updated with DP, the Units will be allotted in nondemat mode subject to compliance with necessary KYC provisions and the application is otherwise complete in all respect. Applicable to all Schemes except RITP: Rs. 5,000/- per application and in multiples of Re.1/- thereafter. RITP: Rs. 500/- per application and in multiples of Rs.500/- thereafter. Applicable to all Schemes except RITP: Rs. 1,000/- per application and in multiples of Re.1/- thereafter. RITP: Rs. 500/- per application and in multiples of Rs.500/- thereafter. Applicable to all Schemes except RITP: Rs. 1,000/- or 100 Units or account balance whichever is lower. RITP: Rs. 500/- or 50 units or account balance whichever is lower. Entry Load: Nil In terms of SEBI Circular No. SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009, no entry load will be charged on purchase / additional purchase / switch-in. The upfront commission, if any, on investment made by the investor shall be paid by the investor directly to the Distributor, based on his assessment of various factors including the service rendered by the Distributor. Exit Load^: RITP & RIAF: Nil RIGF, RIEF, RICF, RIAGILE, RIBF, RIBLF, RIPSUF, RIMCF, RIMSCF & RIIF: In respect of each purchase/switch-in of units, an exit load of 1% is payable if units are redeemed/ switched-out on or before 1 year from the date of allotment. In respect of each purchase/switch-in of units, no exit load is payable if units are redeemed/ switched-out after 1 year from the date of allotment. Switch between the Plans under the Scheme: For Switch to Direct Plan: o Transaction not routed through Distributor: Nil o Transaction routed through Distributor: Applicable exit load For Switch from Direct Plan: Nil* *It should be noted that if the Unit holder redeems /switches-out such switched units from existing plan before completing specified exit load period from the date of original purchase, applicable exit load will be charged. ^Exit Load charged, if any, will be credited back to the scheme, net of service tax. For more details on Load Structure, refer to the section Load Structure on Page

10 NAV Disclosure / Transparency The Direct Plans under the Scheme(s) will have a separate NAV. The AMC will calculate the NAVs on daily basis. The NAVs of the Scheme(s) shall be published at least in two daily newspapers having circulation all over India in accordance with the Regulations. The AMC shall update the NAVs on the website of the Fund ( and of the Association of Mutual Funds in India - AMFI ( before 9.00 p.m. on every Business Day. If the NAVs are not available before the commencement of business hours on the following day due to any reason, the Mutual Fund shall issue a press release giving reasons and explaining when the Mutual Fund would be able to publish the NAVs. The Mutual Fund shall publish a complete statement of the Scheme(s) portfolio, within one month from the close of each half year (i.e. 31 st March and 30 th September), by way of an advertisement at least, in one national English daily and one regional newspaper in the language of the region where the head office of the Mutual Fund is located. The Mutual Fund may opt to send the portfolio to all Unit holders in lieu of the advertisement (if applicable). The half yearly portfolio statement will also be displayed on the website of the Mutual Fund and AMFI. Further the Mutual Fund/AMC shall disclose portfolio of the Scheme (along with ISIN) as on the last day of the month on website of Mutual Fund ( on or before the tenth day of the succeeding month in a user-friendly and downloadable format (preferably in a spreadsheet). The AMC will make available the Annual Report of the Scheme(s) within four months of the end of the financial year. 9

11 I. INTRODUCTION A. RISK FACTORS Standard Risk Factors: Investment in Mutual Fund Units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal. As the price / value / interest rates of the securities in which the Scheme(s) invests fluctuate, the value of your investment in the Scheme(s) may go up or down depending on various factors and forces affecting the capital markets. Past performance of the Sponsors /AMC/Mutual Fund does not guarantee future performance of the Scheme(s). The name(s) of the Scheme(s) do not in any manner indicate either the quality of the Scheme(s) or their future prospects and returns. The Sponsors are not responsible or liable for any loss resulting from the operation of the Scheme(s) beyond the initial contribution of Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand Only) made by them towards setting up the Mutual Fund. The present Scheme(s) are not a guaranteed or assured return scheme(s). Scheme Specific Risk Factors / Risk Mitigation Measures: (i) Religare Invesco Tax Plan Risk Factors: By virtue of requirements under the ELSS, Units issued under the Scheme cannot be assigned/transferred/pledged/ switched-out/redeemed until the completion of three years from the date of their allotment. The ability of an investor to realise returns on investments in the Scheme is consequently restricted for the first three years. Redemption will be made prior to the expiry of the aforesaid three year period only in the event of the death of a Unit holder, subject to the Units having been held for a period of one year from the date of their allotment. Risk Mitigation Measures: In the long term, equities typically tend to outperform other asset classes and the said lock in period of 3 years is useful to realize the potential of equities. (ii) Religare Invesco Contra Fund Risk Factors: Since the Scheme has a contrarian style of investment, it might underperform the markets in scenarios of strong upward or downward cycles. The Scheme seeks to generate returns out of identifying themes and market segments that are likely to outperform in the future. This may or may not happen. Risk Mitigation Measures: Religare Invesco Contra Fund invests in companies that are fundamentally sound, but generally are undervalued at the time of investment due to lack of investor interest. Our aim is to have a first mover advantage by investing early into out of favour sectors/stocks. Over time, we believe that such early identification of opportunities will enable the fund to outperform. (iii) Religare Invesco AGILE Fund Risk Factors: As the Scheme invests a higher percentage of its assets in a smaller number of securities it carries concentration risk. The decline in the value of one equity share could have a greater negative effect on the Scheme. The model used by the Scheme relies extensively on past data which may not necessarily be the best indicator of the future. The turnover ratio of stocks in the Scheme may be higher than diversified equity mutual funds. Risk Mitigation Measures: The Scheme is driven by a model with no human intervention. The concentrated nature of the Scheme is a source of upside and downside risk and is for investors who are comfortable with the same. 10

12 (iv) Religare Invesco Banking Fund Risk Factors: The Scheme being sector specific will be affected by the risks associated with the Banking and finance sector. Risk Mitigation Measures: The Scheme will participate in both the upside risk and downside risk from the performance of the sector. Our stock selection process can improve the performance of the Scheme. (v) Religare Invesco PSU Equity Fund Risk Factors: In line with the investment objective, the Scheme will invest only in Equity and Equity Related Instruments of PSU companies and hence the Scheme will be affected by the policy of the government with respect to PSU companies. Risk Mitigation Measures: The Scheme will participate in both the upside risk and downside risk from the performance of PSU companies. Our stock selection process can improve the performance of the Scheme. (vi) Religare Invesco Arbitrage Fund Risk Factors: The primary objective of the Scheme is to identify investment opportunities and to exploit price discrepancies in various markets. Identification and exploitation of the strategies to be pursued by the fund manager involve uncertainty. No assurance can be given that fund manager will be able to locate investment opportunities or to correctly exploit price discrepancies in the capital markets. Reduction in mis-pricing opportunities between the cash market and future and options market may lead to lower level of activity affecting the returns. As the Scheme proposes to execute arbitrage transactions in various markets simultaneously, this may result in high portfolio turnover and consequently high transaction cost. Risk Mitigation Measures: This investment strategy attempts to profit from the Cost of Carry between the cash markets and futures market. The Cost of Carry tracks short term interest rates and therefore, while the rate of return will vary, we expect that there will always be opportunities that can be exploited. (vii) Religare Invesco Mid Cap Fund Risk Factors: The mid cap stocks carry higher liquidity risk as they are less extensively researched compared to large cap stocks. This may lead to abnormal illiquidity and consequent higher impact cost. Risk Mitigation Measures: Our investment process involves extensive in-house research on companies and we believe this mitigates the risk posed by lower liquidity of mid cap companies. (viii) Religare Invesco Mid N Small Cap Fund Risk Factors: The mid and small cap stocks carry higher liquidity risk as they are less extensively researched compared to large cap stocks. This may lead to abnormal illiquidity and consequent higher impact cost. Risk Mitigation Measures: Our investment process involves extensive in-house research on companies and we believe this mitigates the risk posed by lower liquidity of mid and small cap companies. (ix) Religare Invesco Infrastructure Fund Risk Factors: The investments under the Scheme are oriented towards equity/equity related securities of companies belonging to the infrastructure industries and hence will be affected by risks associated with the infrastructure industries. The performance of the companies which 11

13 form the investment universe of this Scheme would be affected by the growth and performance of the infrastructure sector in the country. Risk Mitigation Measures: The Scheme will participate in both the upside risk and downside risk from the performance of the sector. Our stock selection process can improve the performance of the fund. Related to all Schemes Risk associated with Equity and Equity Related Instruments: Equity and Equity Related Instruments by nature are volatile and prone to price fluctuations on a daily basis due to macro and micro economic factors. The value of Equity and Equity Related Instruments may fluctuate due to factors affecting the securities markets such as volume and volatility in the capital markets, interest rates, currency exchange rates, changes in law/policies of the Government, taxation laws, political, economic or other developments, general decline in the Indian markets, which may have an adverse impact on individual securities, a specific sector or all sectors. Consequently, the NAVs of the Units issued under the Scheme(s) may be adversely affected. Further, the Equity and Equity Related Instruments are risk capital and are subordinate in the right of payment to other securities, including debt securities. Equity and Equity Related Instruments listed on the stock exchange carry lower liquidity risk; however the Scheme s ability to sell these investments is limited by the overall trading volume on the stock exchanges. In certain cases, settlement periods may be extended significantly by unforeseen circumstances. The inability of the Scheme(s) to make intended securities purchases due to settlement problems could cause the Scheme(s) to miss certain investment opportunities. Similarly, the inability to sell securities held in the Scheme's portfolio may result, at times, in potential losses to the Scheme(s), should there be a subsequent decline in the value of securities held in the Scheme's portfolio. Further, the volatility of medium / small - capitalization stocks may be higher in comparison to liquid large capitalisation stocks. The Scheme(s) may invest in securities which are not listed on the stock exchanges. These securities may be illiquid in nature and carry a higher amount of liquidity risk, in comparison to securities that are listed on the stock exchanges or offer other exit options to the investor. The liquidity and valuation of the Scheme's investments due to its holdings of unlisted securities may be affected if they have to be sold prior to the target date of disinvestment. Risk Mitigation Measures (Applicable to all the Schemes) Type of Risk Volatility Concentration Liquidity Risk Mitigation Measures By monitoring sector / company exposure at portfolio level. By diversifying across stocks / sectors, concentration risk can be reduced. The fund manager will endeavor to build well diversified portfolios within the overall fund specific investment strategy, which will help in controlling concentration risk. The above is not applicable in case of Religare Invesco AGILE Fund and Religare Invesco Banking Fund. The fund manager will control the liquidity at portfolio construction level. Risk associated with Fixed Income and Money Market Instruments: Interest - Rate Risk Fixed Income and Money Market Instruments run interest-rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rate falls, the prices 12

14 increase. In the case of floating rate instruments, an additional risk could arise because of the changes in the spreads of floating rate instruments. With the increase in the spread of floating rate instruments, the price can fall and with decrease in spread of floating rate instruments, the prices can rise. Credit Risk Credit risk or default risk refers to the risk that the issuer of a fixed income security may default on interest payment or even in paying back the principal amount on maturity. In case of Government Securities, there is minimal credit risk to that extent. Lower rated or unrated securities are more likely to react to developments affecting the market and credit risk than the highly rated securities which react primarily to movements in the general level of interest rates. Lower rated or unrated securities also tend to be more sensitive to economic conditions than higher rated securities. Liquidity or Marketability Risk The ability of the Scheme(s) to execute sale/purchase order is dependent on the liquidity or marketability. The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. The securities that are listed on the stock exchange carry lower liquidity risk, but the ability to sell these securities is limited by the overall trading volumes. Further, different segments of Indian financial markets have different settlement cycles and may be extended significantly by unforeseen circumstances. Re-investment Risk This refers to the interest rate risk at which the intermediate cash flows received from the securities in the Scheme(s) including maturity proceeds are reinvested. Investments in fixed income securities may carry re-investment risk as interest rates prevailing on the interest or maturity due dates may differ from the original coupon of the debt security. Consequently, the proceeds may get invested at a lower rate. Risks associated with investing in Securitized Debt (applicable to all Schemes except Religare Invesco Tax Plan) The Scheme may invest in securitized debt such as asset backed securities (ABS) or mortgage backed securities (MBS). ABS are backed by other assets such as credit card, automobile or consumer loan receivables, retail loan installment or participations in pools of leases. Credit support for these securities may be based on the underlying assets and/or provided through credit enhancements by a third party. The values of these securities are sensitive to changes in the credit quality of the underlying collateral, the credit strength of the credit enhancement, changes in interest rates and at times the financial condition of the issuer. MBS is an asset backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. In the case of mortgage backed securities, these loans are usually first mortgages on residential properties. With asset backed securities, the loans might be credit card receivables, auto loans and leases or home equity loans. As the underlying loans are paid off by the borrowers, the investors in MBS/ABS receive payments of interest and principal over time. MBS, particularly home loan transactions, are subject to interest-rate risk and prepayment risk. A change in interest rates can affect the pace of payments on the underlying loans, which in turn, affects total return on the securities. ABS also carries credit or default risks. If many borrowers on the underlying loans default, losses could exceed the credit enhancement level and result in losses to investors in an ABS transaction. ABS has structure risk due to a unique characteristic known as early amortization or early payout risk. MBS carry interest rate risk. Maturity is a moving target with these securities. Depending on what happens to interest rates after issuing the MBS, the maturity of the bond could shorten or lengthen dramatically. This is because homeowners are allowed to refinance their mortgages, as decline in interest rates encourages many homeowners to refinance their mortgages. Whereas rise in interest rates causes homeowners to hold on to their mortgages longer. This will extend the originally estimated maturity dates of MBS. 13

15 ABS and MBS are also subject to prepayment risk. When purchasing an MBS, investors usually calculate some degree of prepayment into their pricing. However, if prepayment happens unexpectedly or faster than predicted, it may result in reduced actual duration as compared to the expected duration of the paper at the time of purchase, which may adversely impact the portfolio yield. The yield-to-maturity of such securities cannot be known for certain at the time of purchase since the cash flows are not known. When principal is returned early, future interest payments will not be paid on that part of the principal. If the bond was purchased at a premium, the bond s yield will be less than what was estimated at the time of purchase. The credit enhancement stipulated represents a limited loss cover to the investors. These certificates represent an undivided beneficial interest in the underlying receivables and do not represent an obligation of either the issuer or the seller or the originator, or the parent or any affiliate of the seller, issuer and originator. No financial recourse is available to the certificate holders against the investors representative. Delinquencies and credit losses may cause depletion of the amount available under the credit enhancement and thereby the investor payouts to the certificate holders may get affected if the amount available in the credit enhancement facility is not enough to cover the shortfall. On persistent default of an obligor to repay his obligation, the servicer may repossess and sell the asset. However many factors may affect, delay or prevent the repossession of such asset or the length of time required to realise the sale proceeds on such sales. In addition, the price at which such asset may be sold may be lower than the amount due from that obligor. These securities also carry risk associated with the collection agent. With respect to the certificates, the servicer will deposit all payments received from the obligors into the collection account. However, there could be a time gap between collection by a servicer and depositing the same into the collection account especially considering that some of the collections may be in the form of cash. In this interim period, collections from the loan agreements may not be segregated from other funds of originator. If originator in its capacity as servicer fails to remit such funds due to investors, the investors may be exposed to a potential loss. Risks associated with investing in ADR/GDR and Foreign Securities (applicable to Religare Invesco Business Leaders Fund and Religare Invesco PSU Equity Fund) Subject to necessary approvals, the Schemes may also invest in ADRs/ GDRs/ overseas financial assets as permitted under the applicable regulations. The value of an investment in foreign securities may depend on general global economic factors or specific economic and political factors relating to the country or countries in which the foreign issuer operates. To the extent the assets of the Schemes are invested in overseas financial asset, there may be risk associated with fluctuation in foreign exchange rates, restriction on repatriation of capital and earnings under the exchange control regulations and transaction procedure in overseas market. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls, political circumstances, bi-lateral conflicts or prevalent tax laws. Investment in foreign securities carries currency risk. Currency risk is a form of risk that arises from the change in price of one currency against other. The exchange risk associated with a foreign denominated instrument is a key element in foreign investment. This risk flows from differential monetary policy and growth in real productivity, which results in differential inflation rates. The risk arises because currencies may move in relation to each other. Risks associated with investing in Derivatives 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 14

16 traditional investments. The use of a derivative requires an understanding not only of the underlying instrument but also 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. Other risks include risk of mispricing or improper valuation and the inability of the derivative to correlate perfectly with underlying assets, rates and indices, illiquidity risk whereby the Scheme may not be able to sell or purchase derivative quickly enough at a fair price. Risks associated with Securities Lending For Equity Instruments: As with other modes of extensions of credit, there are risks inherent to securities lending. During the period the security is lent, the Scheme(s) may not be able to sell such security and in turn can not protect from the falling market price of the said security. Under the current securities lending and borrowing mechanism, the Scheme can call back the securities lent anytime before the maturity date of securities lending contract. However this will be again the function of liquidity in the market and if there are no lenders in the specified security, the Scheme(s) may not be able to call back the security and in the process, the Scheme(s) will be exposed to price volatility. Moreover, the fees paid for calling back the security may be more than the lending fees earned by Scheme at the time of lending the said security and this could result in loss to the Scheme(s). Also, during the period the security is lent, the Fund will not be able to exercise the voting rights attached to the security as the security will not be registered in the name of the Scheme(s) in the records of the Depository/issuer. For Debt Instruments: As with other modes of extensions of credit, there are risks inherent to securities lending, including the risk of failure of the other party, in this case the approved intermediary, to comply with the terms of the agreement entered into between the lender of securities i.e. the Scheme and the approved intermediary. Such failure can result in the possible loss of rights to the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary. The Fund may not be able to sell such lent securities and this can lead to temporary illiquidity. Risks associated with Short Selling The Scheme(s) may enter into short selling transactions, subject to SEBI and RBI Regulations. Short positions carry the risk of losing money and these losses may grow unlimited theoretically if the price of the stock increases without any limit. This may result in major loss to the Scheme(s). At times, the participants may not be able to cover their short positions, if the price increases substantially. If numbers of short sellers try to cover their position simultaneously, it may lead to disorderly trading in the stock and thereby can briskly escalate the price even further making it difficult or impossible to liquidate short position quickly at reasonable prices. In additions, short selling also carries the risk of inability to borrow the security by the participants thereby requiring the participants to purchase the securities sold short to cover the position even at unreasonable prices. B. REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME(S) 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). In case the Scheme(s) do not have a minimum of 20 investors in the stipulated period, the provisions of Regulation 39(2)(c) of the SEBI (MF) Regulations would become applicable automatically without any reference from SEBI and accordingly the Scheme(s) shall be wound up and the units would be redeemed at applicable NAV. The two conditions mentioned above shall be complied with in each calendar quarter, on an average basis, as specified by SEBI. If there is a breach of the 25% limit by any investor over the quarter, a rebalancing period of one month would be allowed and thereafter the investor who is in breach of the rule shall be given 15 days notice to redeem his exposure over the 25 % limit. 15