SEBI's tough line on MF staff

S. Vaidya Nathan

THE Securities and Exchange Board of India (SEBI) has proposed to allow mutual funds investing abroad to charge investors more. The B. G. Deshmukh Committee on Mutual Funds has decided to allow funds to charge investors up to three per cent of average daily net assets.

The present limit is 2.5 per cent. The Committee has also proposed restrictions on investments in shares by employees of mutual funds. The following are the significant areas of proposed action:

*Access persons or individuals with access to investment decision of mutual funds should take approval 15 days prior to making any investment.

*Access persons will be prohibited from selling the securities within 60 days of buying them.

*The board of the Asset Management Company and trustee companies will also review procedures concerning personal investments by employees and any violations requiring remedial action. Any violation and action would have to be reported to SEBI.

*The directors of AMCs shall be required to file details of their purchase and sale transactions in securities on a quarterly basis (but only transactions in excess of Rs 1 lakh).

*A simplified format of the half-yearly unaudited results has been approved. This would be to disclosed within one month from the close of the half-year. Funds would be required to publish the half-yearly results in seven point font with proper spacing in order to facilitate readability.

*Offer documents of open-end funds should be revised and updated at least once in two years. Till the time an offer document is revised and reprinted, an addendum giving details of the changes must be attached to the offer documents and abridged offer documents issued by a fund.

No-load offers: Franklin Templeton has announced a no-load offer for the Templeton India Income Fund. The offer is valid till January 31. The usual exit load of 0.50 of amount redeemed if redemption is made within six months of investment has been waived.

Click here for Table

DSP Merrill Lynch Mutual Fund has temporarily waived the contingent deferred sales charge on investments in the DSP Merrill Lynch Bond Fund for investments made from January 10. At present, a charge of 0.50 per cent is applicable if the amount (in excess of is redeemed within three months of the investment). The fund had an asset base of Rs 753.08 crore as of December 31, 2000.

Birla Mutual Fund has announced a `no load' on Birla Income Plus and Birla Gilt Plus from January 8. The offer will be open till February 15. During this period, there will no exit load or entry load. The fund has an asset base of over Rs 1,800 crore.

Kotak Mahindra Mutual Fund has decided to do away with exit loads on its Investment plan of K-Gilt Unit Scheme 1998 and the

Deposit and Wholesale plans of K-Gilt Unit Scheme 1999 from January 1. The mutual fund also announced a Re 0.0157 dividend for each unit with a face value of Rs 10 under the Dividend option of its K-Liquid fund.

Burden on BOI: Bank of India Mutual Fund has suffered a deficit of Rs 65 crore due to the difference between the redemption price and NAV of its BOI Double Square Plus scheme. The fund was launched in 1990 as a 10-year growth scheme and had a corpus of Rs 480 crore. The NAV available for redemption was Rs 377.09 per unit and less than the assured redemption price of Rs 400 per unit. The shortfall was met by its sponsor, Bank of India.

Online MF plaza: Icicidirect.com, an Internet broking site, has launched its mutual fund plaza to enable online investment in mutual funds. The plaza would initially offer schemes from the Prudential ICICI Mutual Fund stable and later enlarge coverage to other funds.

DSP Liquid Option: DSP Merrill Lynch Investment Managers have announced a weekly dividend option for the DSP Merrill Lynch Liquidity Fund. This is a dividend reinvest option under which the fund will declare weekly dividends. The minimum investment is Rs 25,000. The dividend will be compulsorily re-invested by allotting additional units.

Sun Value Fund: The board of trustees of Sun F&C Mutual Fund has declared a dividend of 35 per cent (Rs 35 per unit) on a face value of Rs 10 for the Sun F & C Value Fund - Dividend Plan. The dividend will be paid to those unitholders as of December 18. The dividend will be paid within 42 days of the Record Date. The Dividend Plan of the Value Plan is ex-dividend from December 19.

Click here for Table

Magnum Gilt Fund: SBI Mutual Fund extended the initial offer period of its Magnum Gilt Fund scheme by a day. The scheme closed for subscription on December 22.

MIP from SBI Mutual: SBI Mutual Fund is planning to launch an open-ended monthly income plan by end of this fiscal. It has filed for SEBI approval.

US-64 prices: The Unit Trust of India has fixed the sale price and repurchase price for US-64 at Rs 14.10 per unit and Rs 13.80 per unit respectively for January. These prices represent a 10-paise rise over the December prices.

Approved securities: Seven open-end equity and debt schemes of SBI Mutual Fund were declared approved securities by the Government of Maharashtra. Charitable and other trusts, which usually invest only in government-approved securities, can now invest in MagnumInsta Cash Fund, Magnum LiquiBond, Magnum TaxGain, Magnum Multiplier, Magnum Equity Fund and funds under the Magnum Sector Funds Umbrella.

HDFC Tax Fund: HDFC Mutual Fund is launching a tax savings scheme, HDFC Tax Plan 2000, structured as an equity-linked tax saving scheme. After an initial public offering of two days on December 26 and 27, the scheme is available on an ongoing basis from January 2 at NAV-based prices. There is no load till March 31. A minimum lock-in period of three years is applicable. The fund will invest 80 per cent of its assets in equities and the rest in debt instruments.

Jardine Fleming Dividend: Jardine Fleming India Fund has Declared income distribution of $1.4772 per share from long-term capital gains. The distribution is payable on January 12, 2001 to shareholders on record as of December 28, 2000. The Fund is a closed-end, non-diversified management investment company seeking long-term capital appreciation through investments primarily in listed equity securities of Indian companies. The Fund's investment manager is Jardine Fleming International Management.

India Growth Fund: The India Growth Fund, Inc. has declared income distribution of $0.4668 per share from long-term capital gains. The distribution is payable on January 12 to shareholders on record as of December 28, 2000. The Fund is a non-diversified, closed-end management investment company that seeks long-term capital appreciation through investments primarily in equity securities of Indian companies. The Fund's investment adviser is Unit Trust of India Investment Advisory Services Limited.