SECURITIES AND EXCHANGE BOARD OF INDIA

MUTUAL FUND DEPARTMENT
Mittal Court, B Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

IIMARP/MF/CIR/01/294/98 4^th February, 1998

To,

The Managing Director/President/Chief Executive Officer
All Mutual Funds registered with SEBI
Unit Trust of India/AMFI

Dear Sir,

(1) The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, have been amended and notified on 12^th January, 1998, a copy of which is enclosed.

(2) Further, the following clarifications are being issued under regulation 77 of the SEBI (Mutual Funds) Regulations, 1996 :

(a) The words "fundamental attributes" as mentioned in clause (d) of sub-regulation (15) of regulation 18 are being elaborated as below :

•  
  • Open ended/Close ended/Interval scheme
  • Sectoral Fund/Equity Fund/Balance Fund/Income Fund/Index Fund/Any other type of Fund
(i) Type of a scheme
 

(ii) Investment Objective

•  
  • Main Objective - Growth/Income/Both.
  • Investment pattern - The tentative Equity/Debt/Money Market portfolio break-up with minimum and maximum asset allocation, while retaining the option to alter the asset allocation for a short term period on defensive considerations.

(iii) Terms of Issue

•  
  • Liquidity provisions such as listing, repurchase, redemption.
  • Aggregate fees and expenses charged to the scheme.
  • Any safety net or guarantee provided.

(b) To comply with the requirement of sub-regulation (16) of regulation 18 of the SEBI (Mutual Funds) Regulations, 1996, the trustees shall call for the details of transactions in securities by the key personnel of the asset management company in their own name or on behalf of the AMC on a six monthly basis.

(c) Regarding disclosure of risk factors in the advertisements by the mutual funds as mentioned in clauses 10, 13 and 14 of the Advertisement Code of the Regulations, it is clarified that :

(i)all advertisements announcing the launch of a scheme and those which solicit subscription to the scheme shall disclose all the risk factors as required by the advertisement code.

(ii) all advertisements containing performance information, advertising yield/return etc. shall also disclose all the risk factors.\\

(iii) any advertisement which discloses only the latest NAV, sale and/or repurchase price without any reference to the corresponding past figures may not disclose all the risk factors. However, it shall include a statement that ‘investors are advised to read the offer document before investing in the scheme’.

 You are advised to strictly follow the Regulations as amended and the above guidelines.

 Yours faithfully,
 
 

P.K. NAGPAL
DIVISION CHIEF

c.c.: AMFI - For information

Encl. : a/a