SEBI cuts subscription period

S. Vaidya Nathan

THE Securities and Exchange Board of India (SEBI) has cut the duration for which mutual funds can keep their schemes open in the initial offering period.

At present, a scheme can be kept open for 45 days. This has been cut to 30 days. The other changes notified by SEBI are:

Mutual funds have to offer the units for sale and repurchase on an ongoing basis within 30 days. At present, this limit is 42 days, and some schemes have a specifically extended period.

Mutual funds were permitted to start mailing statements of accounts and the minimum subscription amount before the close of the offer. Now, they must issue the unit certificates or statement of accounts within 42 days from the date of the closure of the initial subscription period. These changes are based on the recommendations of the advisory committee on mutual funds set up by SEBI.

Some of the other recommendations of the committee are:

The unclaimed redemption amount accumulated by the mutual funds should be transferred to a poor account after three years, and interest on it used for investor education.

Investors would be free to claim their funds any time.

The company also prescribed a format for half-yearly disclosure of portfolio to give investors an insight on the way the funds are deployed by the asset management company (AMC).

SEBI should, in consultation with the Association of Mutual Funds of India, decide on a common day for publication of NAVs by mutual funds.

Mutual funds should have a code of conduct for trading by employees.

Mutual funds can charge expenses (for some of which SEBI approval is now needed) that are directly attributable to the scheme with the approval of the board of trustees.

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AMFI update: The Association of Mutual Funds of India has reported that mutual fund sales in September were Rs 780.60 crore and redemptions Rs 858.40 crore. The UTI had net collections of Rs 838 crore, and private sector funds Rs 592 crore. Bank- and institution-sponsored funds saw outflows of Rs 217.70 crore. The assets under management of all funds at end September was Rs 97,462 crore. The UTI had Rs 64,521 crore, private sector funds Rs 2,610 crore and bank/institution-sponsored funds, Rs 3,819 crore.

Prima Plus dividend: Kothari Pioneer Mutual Fund declared a dividend of 30 per cent (Rs 3 per unit on face value of Rs 10) for its open-end equity fund, Prima Plus. The record date for the purpose of the dividend was October 13. On the ex-dividend date, October 16, the scheme re-opened for fresh purchases and redemption. Kothari Pioneer has an investor base of 6.6 lakh unitholders and assets under management of around Rs 2,500 crore.

DSP Merrill Lynch dividend: DSP Merrill Lynch Investment managers approved a dividend of 4 per cent dividend (Rs 0.40 per unit of Rs 10) for the DSP Merrill Lynch Bond Fund (Dividend Option) for the period April 1 to September 29, 2000. The board of trustees also declared a dividend of 2 per cent for the DSP Merrill Lynch Government Securities Fund (Plan a) _ Dividend Option and three per cent for the DSP Merrill Lynch Government Securities Fund (Plan B) _ Dividend Option.

The dividend for all schemes is tax-free for the investors as the fund would bear the dividend/distribution of 22 per cent. But this money would essentially flow out of the funds that belong to investors in any case.

UTI GSF-Software: The Unit Trust of India has declared an income distribution of 22 per cent, or Rs 2.20 per unit, for the UTI Growth Sectors Fund Software, and 15 per cent for Masterplus-1991. The book closure for UTI Software Fund is between November 13-18. For Masterplus, the book closure is November 6-11. For UTI Software, a 20 per cent dividend was declared in February.

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Jardine Fleming Bond: Jardine Fleming Mutual Fund has announced a dividend of ** per cent for the Jardine Fleming Bond Fund. The record date for the purpose of dividend is October 31. The unitholders of the of fund (Income Plan) will be eligible for dividend. The NAV will be ex-dividend from November 1.

Canbank seeks partner: Canara Bank has started the process of finding a joint venture partner for its mutual fund subsidiary Canbank Investment Management Services. The bank expects to find a partner within three months. It had earlier tried and failed to rope in American Insurance Group (AIG) as a partner. The fund has net assets of Rs 1,694 crore at the end March, with a corpus of Rs 1,160 crore.

Defer valuation norms: The Association of Mutual Funds in India (AMFI) has asked SEBI to defer the implementation of the new norms on valuation of securities to October 16 as funds would take time to implement the new norms.

HDFC mobilisation: HDFC Mutual Fund has mobilised Rs 654 crore under its three schemes in the initial offering period which closed on August 10, 2000. The income scheme had Rs 397 crore, the growth scheme Rs 136 crore and the balanced scheme, Rs 121 crore. The schemes are now available for sale and repurchase on an ongoing basis.

US-64: From September 1, the UTI will issue membership advice in place of unit certificates to facilitate issuance of duplicate in case of loss/theft, etc., for its flagship fund US-64. Unitholders will continue to enjoy all benefits as hitherto. Investors who want to pledge/assign or sell their holdings through a stock exchange may approach the UTI for the issue of unit certificates in place of the membership advice.

Delisting of US-95: The UTI has delisted Unit Scheme-95 (US-95) from the from NSE (Wholesale Debt Segment) with effect from August 1.

US-64 prices: The Unit Trust of India has fixed the sale price and repurchase price for US-64 at Rs 13.90 per unit and Rs 13.60 per unit respectively for October. These prices represent a 15 paise rise over the September prices.