Acquisition of Morgan Stanley Mutual Fund (MSMF) Schemes by HDFC Mutual Fund

HDFCMF has acquired only the schemes of MSMF and not the asset management company.  

The entire process of transfer of 8 mutual fund schemes of MSMF to HDFC Mutual Fund and corresponding change in the sponsorship, trusteeship, management and administration of the Schemes is known as “Transaction”.  

The Scheme Transfer Agreement was signed on December 23, 2013 between Morgan Stanley Investment Management Pvt. Ltd., Board of Trustees of Morgan Stanley Mutual Fund, HDFC Asset Management Company Ltd. and HDFC Trustee Company Ltd. Further, SEBI confirmed its no objection to the aforesaid Transaction as well as Changes to the Schemes and approved the proposed amendment to the Morgan Stanley Trust Deed vide its letter no. OW/13156/2014 dated May 8, 2014.  

(i) The “Completion Date” is the date when the process of transfer of 8 mutual fund schemes of Morgan Stanley Mutual Fund (MSMF) to HDFC Mutual Fund (HDFC MF) and corresponding change in the sponsorship, trusteeship, management and administration of the Schemes will be completed.
(ii) Morgan Stanley Investment Management Pvt. Ltd. and HDFC Asset Management Company Ltd. will issue public notices informing the investors about the Completion and the coming into effect of the Changes to the Schemes (explained below).
(iii) Upon Completion, the MSMF Schemes will become an integral part of HDFC Mutual Fund and the unit holders of the Schemes will have rights, privileges and obligations under the Schemes as per the amended Scheme Information Documents (SID) and Key Information Memorandum (KIM) issued by HDFC Asset Management Company Ltd. The updated SID and KIM of the Schemes containing the revised provisions shall be made available with the Investor Service Centres of HDFC Mutual Fund and will also be displayed on HDFC Mutual Fund website immediately after the Completion Date.

Yes. Morgan Stanley Mutual Fund has issued a notice detailing the aforesaid proposed changes in May 14, 2014 issue of Business Standard and Navshakti (Marathi newspaper) for the benefit of the unit holders. The same can also be viewed on the Morgan Stanley Mutual Fund website.

The “Changes to the Schemes” are explained below:

Current Names, and Type of the Schemes	Type of Change	New Names/Surviving Schemes, and Type of the Schemes
Morgan Stanley Growth Fund (Open Ended Equity Fund)	Change in Name and Fundamental Attributes	HDFC Large Cap Fund (Open- ended equity scheme)
Morgan Stanley A.C.E Fund  (Open Ended Across Capitalizations Equity Fund)	Change in Name and Fundamental Attributes	HDFC Small and Midcap Fund  (Open-ended equity scheme)
Morgan Stanley Gilt Fund  (Open Ended Gilt Fund)	Change in Name and Fundamental Attributes	HDFC Inflation Indexed Bond Fund  (Open-ended income scheme)
Morgan Stanley Multi Asset Fund (Plan A and Plan B)  (Open Ended Debt Fund)	Change in Name and Fundamental Attributes	HDFC Dynamic PE Ratio Fund of Funds**  (Open-ended fund of funds scheme)
Morgan Stanley Liquid Fund  (Open Ended Liquid Fund)	Merger	HDFC Liquid Fund  (Open- ended liquid income scheme)
Morgan Stanley Ultra Short Term Fund  (Open Ended Debt Fund)	Merger	HDFC Cash Management Fund – Treasury Advantage Plan  (Open-ended income scheme)
Morgan Stanley Active Bond Fund  (Open Ended Debt Fund)	Merger	HDFC High Interest Fund - Dynamic Plan  (Open-ended income scheme)
Morgan Stanley Short Term Bond Fund  (Open Ended Debt Fund)	Merger	HDFC Short Term Plan*  (Open-ended income scheme)

 

* HDFC Short Term Plan will undergo a change in fundamental attributes after the close of business hours on June 20, 2014.

*As part of change in fundamental attributes of Morgan Stanley Multi Asset Fund (Plan A and Plan B), Plan A will be renamed as HDFC Dynamic PE Ratio Fund of Funds and Plan B will be merged into it. To know more details on the Changes to the Schemes, please click here

Yes, except in the following schemes:
(i) Morgan Stanley Short Term Bond Fund - Unit holders under the “Weekly Dividend Option” of this scheme will be allotted units under the “Dividend Option (Monthly frequency)” of HDFC Short Term Plan at the last available applicable NAV on the Completion Date.

(ii) Morgan Stanley Multi Asset Fund (MSMAF) - “Quarterly Dividend Option under Plan A” will be renamed as “Dividend Option”. Unit holders under “Monthly Dividend Option of Plan A” and under the “Monthly & Quarterly Dividend Options of Plan B” of MSMAF shall be allotted units under this “Dividend Option” at the last available applicable NAV of the Dividend Option on the Completion Date. After merger of Plan B with Plan A, the Scheme will be renamed as HDFC Dynamic PE Ratio Fund of Funds.

As per Regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996 (“MF Regulations”), any changes in the fundamental attributes of the Schemes (which includes merger of schemes) can only be carried out after the unit holders of the scheme concerned, have been informed via written communication in order to provide them with the option of exiting the scheme within a period of 30 days without being charged an exit load at the prevailing NAV (Exit Option). In accordance with the said regulation, the “Option Exercise Letter” has been sent to you by Morgan Stanley Mutual Fund.  

Existing unit holders whose valid applications have been received by Morgan Stanley Mutual Fund till the applicable cut-off time on May 14, 2014 (“eligible unitholders”) can only exercise the Exit Option. Hence the Option Exercise Letter has been sent by Morgan Stanley Mutual Fund to only the aforementioned unit holders.  

The period of 30 calendar days from May 22, 2014 to June 20, 2014 (both days inclusive) upto the applicable cut-off time, is the Exit Option Period wherein existing unit holders (i.e. whose valid applications have been received by Morgan Stanley Mutual Fund till the applicable cut-off time on May 14, 2014) can exercise the Exit Option and will not be charged any exit load for exiting from the Scheme.  

No. The Exit Option must be exercised between May 22, 2014 to June 20, 2014 (both days inclusive) (upto the applicable cut-off time) to exit without payment of exit load by those existing unit holders whose valid investment applications have been received by Morgan Stanley Mutual Fund upto the applicable cut-off time on the record date, which is May 14, 2014.  

Yes, existing unit holders whose valid applications have been received by Morgan Stanley Mutual Fund till the applicable cut-off time on May 14, 2014, can redeem their units at applicable Net Asset Value (“NAV”) without payment of any exit load from May 22, 2014 to June 20, 2014 (both days inclusive) (upto the applicable cut-off time) (Exit Option Period). Other unit holders can also redeem before the Completion Date but subject to the payment of applicable exit load, if any. The redemption request needs to be submitted at the nearest Morgan Stanley Mutual Fund Investor Service Centres, the details of which are available on the website.

The redemption proceeds will be paid out to you by Morgan Stanley Mutual Fund within 10 working days from the date of receipt of the redemption request. If you do not receive the same by the 10th working day, you may contact nearest Investor Service Centre of Morgan Stanley Mutual Fund or call on the customer service toll-free number - 1800 425 1313.  

 

Yes. Such requests will be subject to the applicable load in respect of the Schemes.  

No. STT, if any, on all redemption of units exercised during the Exit Option Period, shall be borne by Morgan Stanley Investment Management Pvt. Ltd.  

Yes, you will have the option to exit but only after you procure a release of your pledges/ encumbrances and appropriately communicate the same to Morgan Stanley Mutual Fund prior to applying for redemption and within the aforementioned Exit Option Period.  

Yes, you will have the option to exit but only after the lien is vacated/ revoked prior to applying for redemption and within the aforementioned Exit Option Period.  

No, there is no action required if you are in agreement with the proposed changes.  

Unit holders who do not exercise their exit option on or before applicable cut-off time on June 20, 2014 would be deemed to have consented to the merger/ change in fundamental attributes of Schemes. In case of merger of Schemes, the Transferor Schemes will cease to exist and the unit holders of Transferor Schemes as at the close of business hours on the Completion Date, will be allotted units under the corresponding option of the respective Transferee Schemes at the last available applicable NAV. However, unit holders under the Weekly Dividend Option of Morgan Stanley Short Term Bond Fund will be allotted units under the Dividend Option (Monthly frequency) of HDFC Short Term Plan. In case of change in fundamental attributes of Schemes, there will be no change in the number of units held upon Completion.  
 

Morgan Stanley Mutual Fund (MSMF) has sent the Option Exercise Letter to their existing unit holders, whose valid investment application have been received by them on May 14, 2014 upto 3.00 p.m. If you fall in the said category of unit holders, but have not received the Option Exercise Letter till May 22, 2014, then please note the below contact details to assist you on the same:
(i) Customer service toll-free number - 1800 425 1313
(ii) Karvy Computershare Pvt. Ltd., Karvy Registry House, Unit: Morgan Stanley Mutual Fund, 21, Avenue 4, Street no.1, Banjara Hills, Hyderabad – 500 034.
(iii) For any additional information, you may contact Ms. Sonali Bendke at Morgan Stanley Investment Management Private Limited, 18F /19F, One Indiabulls Centre, Tower 2, Senapati Bapat Marg, Mumbai – 400013, Telephone: +91 22 6118-2900, Fax: +91 22 6118-1027.  

Yes. Further the pledge / lien / other encumbrance shall be marked on the corresponding number of units allotted to you in the respective Transferee Schemes.  

Yes. There can be tax liability due to merger of certain schemes of Morgan Stanley Mutual Fund (Transferor Schemes) with the schemes of HDFC Mutual Fund (Transferee Schemes) OR if you exit from the Schemes before the Completion Date. In case of merger, there may be a change in the number of units held in the Transferor Schemes in comparison to the units in the Transferee Schemes. The same may result in capital gain or loss in the hands of the investors, entailing tax consequences. For more clarifications, we would advise you to consult your tax advisors.  

No. The expenses for, and directly related to, the Transaction will not be charged to the unit holders of the Schemes, in any manner whatsoever.  

The MS Trust Deed will have to be amended to authorize the MS Trustees to transfer the Schemes and hand over the trusteeship of the Schemes to a third party, viz., HDFC Trustee. In terms of the MF Regulations and the Statement of Additional Information (SAI) of Morgan Stanley Mutual Fund, unit holders votes will have to be solicited through postal ballot for approval of the proposed amendment to the MS Trust Deed. Hence, ballot papers are sent to all unit holders of the Schemes upto the applicable cut-off time on May 14, 2014, as per the records of the registrar in respect of the Schemes i.e. Karvy Computershare Private Limited (“Registrar),. These unit holders are entitled to vote in respect of the proposed amendment under reference by mailing the duly signed and filled-up ballot paper (clearly indicating assent or dissent), such that the ballot paper reaches the Registrar not later than June 10, 2014 for the purpose of determining the results of the ballot. The unit holders may use the business reply envelope enclosed with the Option Exercise letter. Please note that the unit holders shall not have to bear the postal charges for mailing the same. The Registrar will conduct and control the exercise of the postal ballot, and all valid ballot papers will be counted by the Registrar.  

If more than 50% of the total valid votes received including the deemed consent (non-receipt of signed and duly filled in ballot paper by the Registrar by close of business hours on June 10, 2014, will be treated as deemed consent of the unit holder for the proposed amendment of the MS Trust Deed), it will stand approved and will be binding on the unit holders of the Schemes. The results of the ballot will be intimated by Morgan Stanley Mutual Fund way of a letter or by way of a notice/advertisement in a newspaper.  

Please confirm the address where I need to despatch the ballot paper.The same should be sent at the below address which is printed on the business reply inland letter enclosed with the Option Exercise Letter.
Karvy Computershare Private Ltd.
Karvy Registry House
Unit: Morgan Stanley Mutual Fund
21, Avenue 4, Street no.1, Banjara Hills,
Hyderabad – 500 034  

I have a Joint Holder (JH) in my Morgan Stanley Mutual Fund folio. Will the JH also have to cast vote? No, only the first-named unit holder shall be entitled to vote.  

Since the Schemes will continue to be managed by Morgan Stanley Investment Management Pvt. Ltd. during the period between the expiry of Exit Option Period and the Completion date, you need to submit transactions at the nearest Morgan Stanley Mutual Fund Investor Service Centres till the Completion Date. For any queries, please contact nearest Morgan Stanley Mutual Fund Investor Service Centres or call on the customer service toll-free number - 1800 425 1313.  

You can submit investments in MSMF Schemes at the nearest Morgan Stanley Mutual Fund Investor Service Centres (the details of which are available on their website,  till the aforementioned Completion Date, as these Schemes will cease to exist thereafter.  

The same is explained as follows:
(i) SIP (Systematic Investment Plan) – Will continue in the respective Scheme / Transferee Scheme (in case of merger) of HDFC Mutual Fund as per the registration period, except in case of Morgan Stanley Liquid Fund (since HDFC Liquid Fund does not offer SIP facility).
(ii) STP (Systematic Transfer Plan) –Will be ceased after the Completion Date.
(iii) SWP (Systematic Withdrawal Plan) – Will be ceased after the Completion Date.  

Prior to the Completion Date, you need to submit SIP cancellation request at the nearest Morgan Stanley Mutual Fund Investor Service Centres atleast 10 days prior to the next instalment date. After the Completion Date, the period of 30 days for SIP cancellation, as per Terms & Conditions of HDFC Mutual Fund, will prevail.  

You need to submit a new registration form at any of the nearest Investor Service Centres of HDFC Mutual Fund after the Completion Date, if you wish to continue the STP/SWP. Please note that all the Terms & Conditions of HDFC Mutual Fund will prevail for the new registration.  

No. The folio number allotted to you for your investments in Morgan Stanley Mutual Fund Schemes will be continued after the Schemes become integral part of HDFC Mutual Fund by close of business hours on the Completion Date.  

Yes, the same is possible after the Completion Date if criteria required for consolidation of folios like same mode of holding etc, are met.  

The units allotted in the Transferee Scheme(s) shall be treated as a fresh subscription. Accordingly, all revised provisions under the Transferee Scheme(s) will apply to such units, except exit load provisions, which shall apply as per the Transferor Scheme(s). Thus, the exit load shall continue to apply as per the Transferor Scheme(s) and the period of holding for the purpose of charging exit load will be computed from the original date of allotment of such units in the Transferor Scheme(s). However, the period of holding for the purpose of taxation will be computed from the Completion Date.

Further, unit holders of Morgan Stanley Multi Asset Fund under Monthly Dividend Option of Plan A and under the Monthly & Quarterly Dividend Options of Plan B shall be allotted units under the Quarterly Dividend Option (changed to “Dividend Option”) at the last available applicable NAV of the “Dividend Option” on the Completion Date. Unit holders under Growth Option of Plan B will be allotted units under the Growth Option of Plan A at the last available applicable NAV of Growth Option of Plan A on the Completion Date. After merger of Plan B with Plan A, the scheme will be renamed as HDFC Dynamic PE Ratio Fund of Funds wherein the units allotted shall be treated as a fresh subscription.

As is the case with investments in securities, the value of the holdings in the Schemes may go up or down depending on the factors and forces affecting the securities markets in the ordinary course of business. However, the value of investments will not be impacted on account of transfer of Schemes (the value of your investments will be calculated as per the last available applicable NAV in Transferor Scheme of Morgan Stanley Mutual Fund. Units will be allotted in the Transferee Schemes of HDFC Mutual Fund with the applicable NAV for the same valuation amount at the close of business hours on the Completion Date. Thus, the value of investments will remain the same (subject to TDS for NRIs) and only the number of units will undergo a change based on the applicable NAV).  

You will receive account statements from HDFC Mutual Fund (HDFC MF) so that you can check the details. Additionally, SMS/ email will also be sent to you by HDFC MF as per the registered mobile number / email ID registered in the existing folio.  

No. You need to mandatorily submit all transactions at the nearest Investor Service Centres of HDFC Mutual Fund after the Completion Date.  

The payout mode for redemption/dividend will be as per your bank details updated in the records on Completion Date and the payout facility offered by HDFC Mutual Fund. You may refer to the account statement sent to you by HDFC Mutual Fund after the Completion Date.  

Before the Completion Date, all such requests / queries should be submitted at / addressed to Morgan Stanley Mutual Fund Investor Service Centres, the details of which are available on the website.  After the Completion Date, you may contact any of the nearest Investor Service Centres of HDFC Mutual Fund.  

You need to submit the request for reissue / revalidation of instruments towards unclaimed redemption / dividend quoting folio number, scheme name and details of payments not received till the Completion Date at the nearest Morgan Stanley Mutual Fund Investor Service Centres, the details of which are available on the website . After the Completion Date, you may reach any of the nearest Investor Service Centres of HDFC Mutual Fund.  

You can switch from existing HDFC Mutual Fund Schemes into the acquired Morgan Stanley Mutual Fund Schemes if the investments are held in the same folio and only after the Completion Date. The applicable load will be charged for the switch.  

Yes, as the units form the Transferor Schemes of Morgan Stanley Mutual Fund will be transferred into the Transferee Schemes of HDFC Mutual Fund. However, for subsequent investments with us, you need to compulsorily submit the required documents for KYC Compliance.  

We request you to check your current KYC status by contacting Morgan Stanley Mutual Fund at the customer services toll-free number - 1800 425 1313. If the status is “verified” then you do not need to submit the KYC documents again. For all other status like invalid, old records etc you need to submit the KYC documents.

No. You need to submit the HDFCMFeServices form at any of the nearest Investor Service Centres of HDFC Mutual Fund after the Completion Date to apply for an HPIN (HDFC Personal Identification Number) which will enable you to transact on the online portal offered by it viz - HDFCMFOnline.

Yes, the change should reflect in your client account with the DP as the DP will be intimated about the changes. An allotment advice will be sent to you after completion date so that you can verify the details.

You need to submit the redemption request to your DP (Depository Participant) upto 3.00 p. m. on June 20, 2014, if you wish to exit from the scheme.  

 

You may contact any of the nearest Morgan Stanley Mutual Fund Investor Service Centres, the details of which are available on the website or you can call on the customer service toll-free number - 1800 425 1313.