Master Circular For Mutual Funds

Securities and Exchange Board of India
MASTER CIRCULAR

CIR/IMD/DF/18/2014 October 1, 2014

All Mutual Funds, Asset Management Companies (AMCs)
and Association of Mutual Funds in India (AMFI)

Dear Sir/ Madam,

Sub: Master Circular for Mutual Funds

For effective regulation of the Mutual Fund Industry, Securities and !change
"oard of India (S"I) has #een issuing various circulars from time to time$ In
order to ena#le the industry and other users to have an access to all the
applica#le circulars at one place, Master Circular for Mutual Funds has #een
prepared$

%his Master Circular is a compilation of all the circulars issued #y S"I on the
a#ove su#&ect, 'hich are operational as on date of this circular

%his Master Circular shall supersede the previous Master Circular
S"I/IMD/DF/()/*+(, dated Septem#er ((, *+(,$

-ours faithfully,

Rajesh Gujjar
Deputy General Manager
rajeshg@sebi.gov.in

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2 Master Circular for Mutual Funds

MS!"R C#RC$%R F&R M$!$% F$'DS

"-

SC./I%IS A0D 1C2A03 "4A/D 4F I0DIA

($ %his Master Circular includes circulars issued upto Septem#er ,+, *+()$

*$ In case of any inconsistency #et'een the master circular and the
applica#le circulars, the contents of the relevant circular shall prevail$

,$ Master Circular is a compilation of all the e!isting/applica#le circulars
issued #y Investment Management Department of S"I to Mutual Funds$
fforts have #een made to incorporate certain applica#le provisions of
e!isting circulars (as on date ) issued #y other Departments/Divisions of
S"I relevant to Mutual Funds$



#'D"(

))R"*#!#&'S ............................................................................. +

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&FF"R D&C$M"'! F&R SC,"M"S ................................................ /

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F4/MA%S 5555555555555555555555555555555555555555555 /efer the attachment
A001./S 555555555555555555555555555555555555555 /efer the attachment



))R"*#!#&'S

American Depository /eceipt AD/
Asset Management Company AMC
Asset under Management A.M
Association of Mutual Funds in India AMFI
Authori6ed Dealer AD
"om#ay Stoc7 !change "S
Central "oard of Direct %a!es C"D%
Compliance %est /eports C%/(s)
Common Account Statement CAS
Contingent Deferred Sales Charge CDSC
Compound Annual 3ro'th /ate CA3/
Depository 8articipant D8
!ternal Commercial "orro'ings C"
Financial Action %as7 Force FA%F
Foreign !change Management Act FMA
Foreign Institutional Investor FII
Fi!ed Maturity 8lans FM8(s)
3lo#al Depository /eceipt 3D/
3old !change %raded Fund 3%F
2indu .ndivided Family 2.F
International 4rgani6ation of Securities Commission I4SC4
Investor Service Center ISC
9ey Information Memorandum 9IM
9no' -our Client 9-C
Monthly Cumulative /eport MC/
Monthly Average Assets .nder Management MAA.M
Multilateral Memorandum of .nderstanding MM4.
0ational Stoc7 !change 0S
0et Asset :alue 0A:
0e' Fund 4ffer 0F4


0on 8erforming Assets 08A(s)
8ermanent Account 0um#er 8A0
8revention of Money ;aundering Act 8M;A
<ualified Foreign Investor <FI
/egulation /eg$
/a&iv 3andhi =uity Savings Scheme /3SS
S"I (Mutual Funds) /egulations (>>? /egulations
Securities and !change "oard of India the "oard
Scheme Information Document SID 4ffer
Statement of Additional Information SAI Document
Systematic Investment 8lan SI8
Systematic %ransfer 8lan S%8
Systematic @ithdra'al 8lan S@8
%rustee(s) "oard of %rustee(s)/
%rustee Company
.niform Client Code .CC
.nit Confirmation /eceipt .C/



C,-!"R .
&FF"R D&C$M"'! F&R SC,"M"S
1.1 Filing of Offer Document with the Board
1

($($( %he 4ffer Document shall have t'o parts i$e$ Scheme Information
Document (SID) and Statement of Additional Information (SAI)$ SID
shall incorporate all information pertaining to a particular scheme$
SAI shall incorporate all statutory information on Mutual Fund$
($($* %he Mutual Funds shall prepare SID and SAI in the prescri#ed
formats
*
$ Contents of SID and SAI shall follo' the same se=uence
as prescri#ed in the format$ %he "oard of the AMC and the
%rustee(s) shall e!ercise necessary due diligence, ensuring that the
SID/SAI and the fees paid
,
are in conformity 'ith the Mutual
Funds /egulations
)
$
($($, All offer documents (4Ds) of Mutual Fund schemes shall #e filed
'ith S"I in terms of the /egulations
A
$
($($,$( Filing of Draft SIDB
a$ Draft SID of schemes of Mutual Funds filed 'ith the "oard
shall also #e availa#le on S"ICs 'e#site D '''$se#i$gov$in for
*( 'or7ing days from the date of filing$
#$ AMC shall su#mit a soft copy of draft SID to the "oard in
2%M; or 8DF format$ For this purpose, AMC shall #e fully

(
S"I Circular 0o$ S"I/IMD/CI/ 0o$A/ (*?+>?/+E dated May *,,*++E and S"I Circular
0o D S"I/IMD/CI/ 0o$(+/(FE(*>/+> dated Septem#er *>,*++>
G , ,
*
For format of SID H SAI, please refer to the section on Formats
,
%he filing fees 'as revised via ga6ette notification 0o$ ;AD50/4/30/*+()5(A/+,/(+E>on
S"I (8ayment of Fees) (Amendment) /egulations, *+() dated *, May, *+(), applica#le from
May *,, *+()$
)
S"I Circular 0o$ IIMA/8/MF/CI//+(/)*E/>F dated Fe#ruary *E, (>>F$
A
/egulation *E (() of S"I (Mutual Funds) /egulation (>>?


responsi#le for the contents of soft copies of the SID$ AMC
shall also su#mit an underta7ing to the "oard 'hile filing the
soft copy of draft SID certifying that the information contained
in the soft copy matches e!actly 'ith the contents of the hard
copy filed 'ith the "oard$
c$ In case of any inaccurate filing, the SID 'ill #e returned and
refiling 'ill #e re=uired$ *( 'or7ing days
?
shall #e calculated
from the date of refilingI
F

d$ If any changes to the SID are made after filing, the *( 'or7ing
day(s) period 'ill recommence from the date of su#mission of
the last additional statement(s)
E

($($,$* Filing of SAI
a$ A single SAI (common for all the schemes) can #e filed 'ith
"oard along 'ith first draft of SID or can #e filed separately$
After incorporating the comments/o#servations, if any, from
the "oard, AMC shall file a soft copy of SAI 'ith the "oard in
8DF format along'ith printed copy of the same
>
, upload the
SAI on its 'e#site and on AMFI 'e#site$

($($,$, Filing of Final SID
a$ Final SID (after incorporating comments of the "oard) must
reach the "oard #efore it is issued for circulation$ Soft copy
of the final SID in 8DF format along 'ith a printed copy
should #e filed 'ith "oard t'o 'or7ing days prior to the
launch of the scheme$ AMC shall also su#mit an
underta7ing to the "oard 'hile filing the soft copy that

?
/egulation *>(,) of S"I (Mutual Funds) /egulation (>>?
,,,,
F
S"I Circular 0o$ IIMA/8/MF/CI//+(/)*E/>F dated Fe#ruary *E, (>>F$
, , , ,
E
S"I Circular 0o$ IIMA/8/MF/CI//+(/)*E/>F dated Fe#ruary *E, (>>F, S"I Circular 0o$
IIMA/8/MF/CI//+F/E))/>F dated May A, (>>F$
>
S"I Circular 0o D S"I/IMD/CI/ 0o$(+/(FE(*>/+> dated Septem#er *>,*++>


information contained in the soft copy of SID to #e uploaded
on S"I 'e#site is current and relevant and matches e!actly
'ith the contents of the hard copy and that the AMC is fully
responsi#le for the contents of the soft copy of SID$ %he soft
copy of SID should also #e uploaded on AMFI 'e#site t'o
'or7ing days prior to launch of the scheme
(+
$ Failure to
su#mit the printed SID to the "oard #efore it is issued for
circulation shall invite penalties under the Mutual Funds
/egulations
((
$
#$ In case of any difference, in nature of material alteration of
the suggestions made #y the "oard
(*
#et'een the printed
SID and the SID filed 'ith the "oard, immediate 'ithdra'al
of the SID from circulation 'ill #e ordered and such
'ithdra'al shall #e pu#lici6ed #y the "oard
(,
$
1.2 Updation of SID & SAI
($*$( .pdation of SID
($*$($( For the schemes launched in the first half of a financial
year, the SID shall #e updated 'ithin , months from the
end of the financial year$ 2o'ever, for the schemes
launched in the second half of a financial year, SID shall
#e updated 'ithin , months of the end of the
su#se=uent financial year$ (For example, for a scheme
launched in May, 2008 the SID shall be updated by June
0, 200! and for a scheme launched in December 2008,

(+
((
S"I Circular 0o$ IIMA/8/MF/CI//+F/E))/>F dated May A, (>>F$
,
(*
/egulation *>(*) of the S"I (Mutual Funds) /egulations, (>>?

(,
%he e!isting schemes shall adopt the SID and 9IM format as soon as possi#le #ut not later
than (* months from the date of issuance of the circular5 S"I/IMD/CI/ 0o$ A/(*?+>?/+E
dated May *,, *++E$ A confirmation in this regard shall #e given in the half yearly trustee
report$



the SID shall be updated by June 0, 20"0# %hereafter,
the SID shall #e updated once every year$
($*$($* %he procedure to #e follo'ed in case of changes to the
scheme shall #e as underB
a$ In case of change in fundamental attri#utes in terms of
/egulation
()
, SID shall #e revised and updated
immediately after completion of duration of the e!it
option$
#$ In case of other changesB
($ %he AMC shall #e re=uired to issue an addendum and
display it on its 'e#site$
*$ %he addendum shall #e circulated to the entire
distri#utors/#ro7ers/Investor Service Centre (ISC) so
that the same can #e attached to copies of SID already
in stoc7, till the SID is updated$
,$ In case any information in SID is amended more than
once, the latest applica#le addendum shall #e a part of
SID$ (For example, in case of chan$es in load structure
the addendum carryin$ the latest applicable load
structure shall be attached to all %IM and SID already
in stoc& till it is updated#'
)$ A pu#lic notice shall #e given in respect of such
changes in one nglish daily ne'spaper having
nation'ide circulation as 'ell as in a ne'spaper
pu#lished in the language of region 'here the 2ead
4ffice of the Mutual Fund is situated$
($*$($, A copy of all changes made to the scheme shall #e filed
'ith "oard 'ithin F days of the change$ A soft copy of
updated SID shall #e filed 'ith "oard in 8DF Format
along 'ith printed copy of the same$ AMC shall also

()
/egulation (E ((AA) of S"I (Mutual Funds) /egulation, (>>?


su#mit an underta7ing to the "oard 'hile filing the soft
copy that information contained in the soft copy of SID to
#e uploaded on S"I 'e#site is current and relevant and
matches e!actly 'ith the contents of the hard copy and
that the AMC is fully responsi#le for the contents of the
soft copy of the SID
(A
$
($*$* .pdation of SAI
($*$*$( A printed copy of SAI shall #e made availa#le to the
investor(s) on re=uest$ SAI shall #e updated 'ithin ,
months from end of financial year and filed 'ith S"I$
($*$*$* Any material changes in the SAI shall #e made on an
ongoing #asis #y 'ay of updation on the Mutual Fund
and AMFI 'e#site$ S"I shall #e intimated of the
changes made in the SAI 'ithin F days$ %he effective
date for such changes shall #e mentioned in the updated
SAI$
($*$*$, A soft copy of updated SAI shall #e filed 'ith S"I in
8DF format along 'ith printed copy of the same$ AMC
shall also su#mit an underta7ing to S"I 'hile filing the
soft copy that information contained in the soft copy of
SAI to #e uploaded on S"I 'e#site is current and
relevant and matches e!actly 'ith the contents of the
hard copy and that the AMC shall #e fully responsi#le for
the contents of soft copy of SAI
(?
$

1.3 alidit! of S"BI O#$er%ation$ on SID
($,$( %he AMCs shall file their replies to the modifications suggested #y
S"I on SID as re=uired under /egulation *> (*), if any, 'ithin

(A
(?


si! months from the date of the letter$ In case of lapse of si!5
month period, the AMC shall #e re=uired to refile the SID
along'ith filing fees$
($,$* %he scheme shall #e launched 'ithin si! months from the date of
the issuance of final o#servations from S"I$ If the AMC intends
to launch the scheme at a date later than si! months, it shall
refile the SID 'ith S"I under /egulation *E (() along 'ith filing
fees$
1.& Underta'ing from (ru$tee$ for new Scheme
1)

($)$( In the certificate su#mitted #y %rustees 'ith regard to
compliance of AMC 'ith /egulations,
(E
the %rustees are re=uired
to certify as follo'sB
()he )rustees ha*e ensured that the (name of the scheme+Fund#
appro*ed by them is a ne, product offered by (name of the Mutual
Fund# and is not a minor modification of any existin$
scheme+fund+product'-
($)$* %his certification shall #e disclosed in the SID along 'ith the date
of approval of the scheme #y the %rustees$
($)$, %his certification is not applica#le to close ended schemes e!cept
for those close ended schemes 'hich have the option of
conversion into open ended schemes on maturity$

(F
S"I Cir 0o IMD/CI/ 0o$A/F+AA>/+? dated June ,+,*++?
(E
/egulation (E ()) of S"I ( Mutual Funds) /egulations, (>>?$


1.* Standard O#$er%ation$
($A$( Standard 4#servations have #een prescri#ed to ensure minimum
level of disclosures in the SID and SAI
(>
$
($A$* S"I may revise the Standard 4#servations from time to time
and in that case the date of revision shall also #e mentioned$
($A$, @hile filing the SID and SAI, AMC shall highlight and clearly
mention the page num#er of the SAI and SID on 'hich each
standard o#servation has #een incorporated$
1.+ ,I-
($?$( Application forms for schemes of mutual funds shall #e
accompanied #y the 9IM in terms of /egulation *> ())$ 9IM shall
#e printed at least in F point font si6e 'ith proper spacing for
easy reada#ility$
($?$* Format of 9IM
($?$*$( Mutual Funds shall prepare 9IM in the prescri#ed format
*+
$
%he contents of 9IM shall follo' the same se=uence as
prescri#ed in the format$
($?$, Fre=uency of updation
($?$,$( 9IM shall #e updated at least once a year and shall #e filed
'ith S"I$
($?$,$* In case of changes in the SID other than changes in
fundamental attri#ute in terms of /eg (E ((AA), the
addendum circulated to all the distri#utors/#ro7ers/investor

(>
For Standard 4#servations, please refer to the section on Formats
*+
For format of 9IM please refer to the section on Formats


Service Centre (ISC) shall #e attached to 9IM till the 9IM is
updated$
($?$,$, In case any information in SID is amended more than once,
the latest applica#le addendum shall #e a part of 9IM (For
e!ample, in case of changes in load structure the addendum
carrying the latest applica#le load structure shall #e
attached to all 9IM and SID already in stoc7 till it is
updated)$
1.) "a$! A%aila#ilit! of Offer Document
($F$( %rustees and AMCs shall ensure that the SID of the schemes and
SAI are readily availa#le 'ith all the distri#utors/ISCs and
confirm the same to S"I in the half yearly trustee report$
1.. Selection of Benchmar'$
*(

($E$( In case of e=uity oriented schemes, mutual funds may
appropriately select any of the indices availa#le, (e$g$ "S
(Sensitive) Inde!, SH8 C01 0ifty, "S (++, "S *++ or SH8 C01
A++ etc$) as a #enchmar7 inde! depending on the investment
o#&ective and portfolio$
($E$* "enchmar7s for de#t oriented and #alanced fund schemes
**

developed #y research and rating agencies recommended #y the
AMFI on a regular #asis shall #e used #y the Mutual Funds$
($E$, In case of sector or industry specific schemes, Mutual Funds may
select any sectoral indices as pu#lished #y the Stoc7 !changes
and other reputed agencies$

*(
S"I Circular 0o$ MFD/CI//)/A(/*+++ dated June A, *+++, S"I Circular 0o$
MFD/CI//(?/)++/+* dated March *?, *++*, S"I Circular 0o$ MFD/CI//+(/+F(/+*
April (A, *++*$
**
S"I Circular 0o$ MFD/CI//+(/+F(/+* dated April (A, *++*$
,


($E$) %hese #enchmar7 indices may #e decided #y the AMC(s) and
%rustees$ Any change at a later date in the #enchmar7 inde!
shall #e recorded and reasona#ly &ustified
*,
$
($E$A !amples of #enchmar7s are illustrated #elo'
*)
B
($E$A$( 3ro'th funds maintaining minimum ?AK of their
investments in e=uities shall al'ays #e compared against
%he "om#ay Stoc7 !change ;td$ ("S) Sense! or %he
0ational Stoc7 !change ;td$ (0S) 0ifty or "S (++ or
C/ISI; A++ or similar standard indices$
($E$A$* Income funds maintaining ?AK or more of investments in
de#t instruments shall #e compared 'ith a suita#le inde!
that is a representative of the fundCs portfolio$
($E$A$, "alanced funds 'ith e=uity investments of )+K5?+K shall #e
compared 'ith a tailored inde! having A+K of its 'eight
selected from any e=uity inde! as a#ove and the other A+K
from an appropriate #ond return inde!$
($E$A$) Money Mar7et funds or li=uid plans can #e compared
against a suita#le Money Mar7et Instrument or a
com#ination of such instruments$

*,
S"I Circular 0o$ MFD/CI//(?/)++/+* dated March *?, *++*$ Also please note that for
revie' of scheme performance 'ith #enchmar7 indices please refer to section on
governance norms$
*)
S"I Circular 0o$ MFD/CI//)/A(/*+++ dated June A, *+++



1./ 0ew Fund Offer 10FO2 3eriod
2*

($>$( In case of open ended and close ended schemes (e!cept ;SS
schemes), the 0F4 should #e open for (A days (from ,+ days in
case of 4pen ended schemes and )A days of close ended scheme)$
($>$* %he 0F4 period in case of ;SS schemes shall continue to #e
governed #y guidelines issued #y 3overnment of India$
($>$, %he ma!imum period for 'hich initial offering of Mutual Fund
scheme eligi#le under /3SS shall #e open for su#scription shall
#e thirty days
*?
$
($>$) Mutual Funds/AMCs shall ma7e investment out of the 0F4
proceeds only on or after the closure of the 0F4 period$
($>$A %he mutual fund should allot units/refund of money and
dispatch statements of accounts 'ithin five #usiness days from
the closure of the 0F4 and all the schemes (e!cept ;SS,
/3SS) shall #e availa#le for ongoing repurchase/sale/trading
'ithin five #usiness days of allotmentL$ 2o'ever, for Mutual
Fund scheme eligi#le under /3SS, the period 'ithin 'hich
Mutual Fund/ AMC should allocate the units, refund money and
issue statements of accounts, shall #e fifteen days from the
closure of the initial su#scription
*F
$

*A
S"I Circular no MFD/Cir$0o >/(*+/*+++ dated 0ovem#er *), *+++$ S"I Circular 0o$
S"I/IMD/CI/ 0o (E / (>E?)F /*+(+ dated March (A, *+(+$ %he provisions mentioned shall
#e applica#le for all 0F4s launched on or after July +(, *+(+
*?
S"I Circular 0o$ CI//IMD/DF/+*/*+(, dated Fe#ruary ?, *+(,
*F
S"I Circular 0o$ CI//IMD/DF/+*/*+(, dated Fe#ruary ?, *+(,


1.14 Di$continuation of the nomenclature 5 67i8uid 3lu$
Scheme1$29
2.

($(+$( %he nomenclature M;i=uid 8lus Scheme(s)L has #een discontinued
from January *++> since it gives a 'rong impression of added
li=uidity$
1.11 Fundamental Attri#ute$
*>

($(($( %he 'ords Nfundamental attri#utesN
,+
are ela#orated #elo'B
($(($($( %ype of a scheme

a$ 4pen ended/Close ended/Interval scheme
#$ Sectoral Fund/=uity Fund/"alance Fund/Income
Fund/De#t Fund/Inde! Fund/Any other type of Fund
($(($($* Investment 4#&ective(s)
a$ Main 4#&ective 5 3ro'th/Income/"oth$
#$ Investment pattern 5 %he tentative =uity/De#t/Money
Mar7et portfolio #rea75up 'ith minimum and ma!imum asset
allocation, 'hile retaining the option to alter the asset
allocation for a short term period on defensive considerations$
($(($($, %erms of Issue
a$ ;i=uidity provisions such as listing, repurchase, redemption$
#$ Aggregate fees and e!penses charged to the scheme$
c$ Any safety net or guarantee provided$

*E
S"I/IMD/CI/ 0o$(,/(A+>FA / +> dated January (>, *++>
*>
S"I Circular 0o5 IIMA/8/MF/CI//+(/*>)/>E dated Fe#ruary ), (>>E
,+
Clause (d) of su#5regulation ((A) of /egulation (E of S"I (Mutual Funds) /egulations,
(>>?


C,-!"R 0
C&'*"RS#&' 'D C&'S&%#D!#&' &F SC,"M"S 'D
%$'C, &F DD#!#&'% -%'

-R! # < C&'*"RS#&' &F SC,"M"S
2.1 :on%er$ion of :lo$e "nded Scheme1$2 to Open "nded
Scheme1$2
2.

*$($( Although the procedure for conversion of close ended scheme(s)
to open ended scheme(s) has #een clearly enumerated in the
Mutual Funds /egulations
,*
, follo'ing re=uirements are
clarified againB

*$($($( Since the scheme(s) 'ould reopen for fresh su#scriptions,
disclosures contained in the SID shall #e revised and updated$
A copy of the draft SID shall #e filed 'ith the "oard as re=uired
under /egulation *E(() of the Mutual Funds /egulations along
'ith filing fees prescri#ed under /egulation *E(*) of the Mutual
Funds /egulations$ Instructions issued #y the "oard
,,
for filing
of the SID shall also #e follo'ed$

*$($($* A draft of the communication to #e sent to unit holders shall
#e su#mitted to the "oard 'hich shall include the follo'ingB
a$ ;atest portfolio of the scheme(s) in the prescri#ed format
,)

#$ Details of the financial performance of the scheme(s) since
inception in the format prescri#ed in SID
,A
along 'ith
comparisons 'ith appropriate #enchmar7(s)
,?
$

,(
S"I Circular 0o$ MFD/CI/ 0o$**/*,((/+, dated January ,+, *++,$
, ,
,*
/egulation ,,(,) of the S"I (Mutual Funds), /egulations, (>>?$
, ,
,,
S"I Circular 0o$ S"I/IMD/Cir 0o A/(*?+>?/+E dated May *,, *++E
,)
/efer to format of half yearly portfolio disclosure under section on formats$
,
,A
8lease refer to format of SID under section on Formats$
,?
For e!amples of "enchmar7s, refer to chapter on SID


c$ %he addendum to the SID detailing the modifications (if any)
made to the scheme(s)$

*$($($, %he letter to unit holders and revised SID (if any) shall #e
issued only after the final o#servations as communicated #y
the "oard in terms of /egulation *>(,) of the Mutual Funds
/egulations have #een incorporated therein and final copies of
the same have #een filed 'ith the "oard$

*$($($) .nit holders shall #e given at least ,+ days to e!ercise e!it
option$ During this period, the unit holders 'ho opt to redeem
their holdings in part or in full shall #e allo'ed to e!it at the
0A: applica#le for the day on 'hich the re=uest is received,
'ithout charging e!it load$



G,
-R! ## = C&'S&%#D!#&' &F SC,"M"S
0.0 :on$olidation of Scheme$
2/

*$*$( Any consolidation or merger of Mutual Fund schemes 'ill #e
treated as a change in the fundamental attri#utes of the related
schemes and Mutual Funds shall #e re=uired to comply 'ith
the Mutual Funds /egulations in this regard
,E
$
*$*$* Further, in order to ensure that all important disclosures are
made to the investors of the schemes sought to #e consolidated
or merged and their interests are protectedI Mutual Funds shall
ta7e the follo'ing stepsB
*$*$*$( Approval #y the "oard of the AMC and %rustee(s)B

a$ %he proposal and modalities of the consolidation or merger
shall #e approved #y the "oard of the AMC and %rustee(s),
after they ensure that the interest of unit holders under all the
concerned schemes have #een protected in the said proposal$

*$*$*$* DisclosuresB

a$ Su#se=uent to approval from the "oard of the AMC and
%rustee(s), Mutual Funds shall file the proposal 'ith the
"oard, along 'ith the draft SID, re=uisite fees (if a ne'
scheme emerges after such consolidation or merger) and draft
of the letter to #e issued to the unit holders of all the
concerned schemes$

#$ %he letter addressed to the unit holders, giving them the
option to e!it at prevailing 0A: 'ithout charging e!it load,

,F
S"I Circular 0o$ S"I/MFD/CI/ 0o$A/(*+,(/+, dated June *,, *++,$
,
,E
/egulation (E((AA) of the Mutual Funds /egulations$



shall disclose all relevant information ena#ling them to ta7e
'ell informed decisions$ %his information 'ill include, inter
alia.

($ ;atest portfolio of the concerned schemes
,>
$
*$ Details of the financial performance of the concerned schemes
since inception in the format prescri#ed in SID
)+
along 'ith
comparisons 'ith appropriate #enchmar7s$
,$ Information on the investment o#&ective, asset allocation and
the main features of the ne' consolidated scheme$
)$ "asis of allocation of ne' units #y 'ay of a numerical
illustration
A$ 8ercentage of total 08As and percentage of total illi=uid assets
to net assets of each individual scheme(s) as 'ell the
consolidated scheme$
?$ %a! impact of the consolidation on the unit holders$
F$ Any other disclosure as specified #y the %rustees$
E$ Any other disclosure as directed #y the "oard$

*$*$*$, .pdation of SID shall #e as per the re=uirements for change in
fundamental attri#ute of the scheme
)(
$

*$*$*$) Maintenance of /ecordsB

a$ AMC(s) shall maintain records of dispatch of the letters to the
unit holders and the responses received from them$ A report
giving information on total num#er of unit holders in the
schemes and their net assets, num#er of unit holders 'ho
opted to e!it and net assets held #y them and num#er of unit
holders and net assets in the consolidated scheme shall #e

,>
/efer format of half yearly portfolio disclosure under section on Formats
G
)+
8lease refer to SID Format under section on Formats
)(
8lease refer to SID chapter for further details


filed 'ith the "oard 'ithin *( days from the date of closure of
the e!it option
)*
$

*$*$*$A Merger or consolidation shall not #e seen as change in
fundamental attri#ute of the surviving scheme if the follo'ing
conditions are met
),
B

a$ Fundamental attri#utes
))
of the surviving scheme do not
change$ %he Osurviving schemeC means the scheme 'hich
remains in e!istence after the merger$
#$ Mutual Funds are a#le to demonstrate that the circumstances
merit merger or consolidation of schemes and the interest of
the unitholders of surviving scheme is not adversely affected$
c$ After approval #y the "oards of AMCs and %rustees, the
mutual funds shall file such proposal 'ith S"I$ S"I 'ould
communicate its o#servations on the proposal 'ithin the time
period prescri#ed
)A
$
d$ %he letter to unitholders shall #e issued only after the final
o#servations communicated #y S"I have #een incorporated
and final copies of the same have #een filed 'ith S"I$

)*
S"I Circular 0o5 S"I / IMD / CI/ 0o () / (EF(FA/ *++> dated Decem#er (A,*++>
),
S"I Circular 0o5 Cir / IMD / DF / (A/ *+(+ dated 4cto#er **, *+(+
))
S"I Circular 0o5IIMA/8/MF/CI//+(/*>)/>E dated Fe#ruary ), (>>E
)A
/egulation *>(,) of S"I (Mutual Funds) /egulations, (>>?


-R! ### = %$'C, &F DD#!#&'% -%'S
48

2.3 7aunch of Additional 3lan$
*$,$( Additional plans sought to #e launched under e!isting open
ended schemes 'hich differ su#stantially from that scheme in
terms of portfolio or other characteristics shall #e launched as
separate schemes in accordance 'ith the regulatory provisions$
*$,$* 2o'ever, plan(s) 'hich are consistent 'ith the characteristics
of the scheme may #e launched as additional plans as part of
e!isting schemes #y issuing an addendum$ Such proposal
should #e approved #y the "oard(s) of AMC and %rustees$ In
this regard please note thatB

*$,$*$( %he addendum shall contain information pertaining to salient
features li7e applica#le entry/e!it loads, e!penses or such
other details 'hich in the opinion of the AMC/ %rustees is
material$ %he addendum shall #e filed 'ith S"I *( days in
advance of opening of plan(s)$

*$,$*$* AMC(s) shall pu#lish an advertisement or issue a press release
at the time of launch of such additional plan(s)$

2.& Single 3lan
4/

*$)$( Mutual funds/AMCs shall launch schemes under a single plan
and ensure that all ne' investors are su#&ect to single e!pense
structure$

)?
S"I Circular 0o$ S"I / IMD / CI/ 0o () / (EF(FA/ *++> dated Decem#er (A, *++>
)F
S"I Circular 0o$ CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(*


*$)$* !isting schemes 'ith multiple plans #ased on the amount of
investment (i$e$ retail, institutional, super5institutional, etc)
shall accept fresh su#scriptions only under one plan$
*$)$, 4ther plans 'ill continue till the e!isting investors remain
invested in the plan$
2.* Direct 3lan
)E

*$A$( Mutual funds/AMCs shall provide a separate plan for direct
investments, i$e$, investments not routed through a
distri#utor, in e!isting as 'ell as ne' schemes$
*$A$* Such separate plan shall have a lo'er e!pense ratio
e!cluding distri#ution e!penses, commission, etc$, and no
commission shall #e paid from such plans$ %he plan shall also
have a separate 0A:$

)E


C,-!"R 2
'"3 -R&D$C!S
3.1 Fund of Fund$ Scheme
)>

,$($( %he SID and the advertisements pertaining to Fund of Funds
Scheme
A+
shall disclose that the investors are #earing the
recurring e!penses of the scheme, in addition to the e!penses of
other schemes in 'hich the Fund of Funds Scheme ma7es
investments$
,$($* AMCs shall not enter into any revenue sharing arrangement
'ith the underlying funds in any manner and shall not receive
any revenue #y 'hatever means/head from the underlying
fund$ Any commission or #ro7erage received from the
underlying fund shall #e credited into concerned schemeCs
account
A(
$
,$($, Fund of funds mutual fund schemes shall adopt the total
e!pense structures laid out in /egulations
A*
, 'hich Asset
Management Companies shall clearly indicate in the SIDs$

3.2 ;old "<change (raded Fund Scheme
A,

,$*$( A 3old !change %raded Fund (3%F) Scheme
A)
shall invest
primarily inB

)>
S"I Circular 0o$ MFD/CI/$ 0o$+)/(()EE/*++, dated June (*, *++,$
A+
/egulation *(ma) of the Mutual Funds /egulations introduced vide 3a6ette 0otification 0o$
S$4 ?,*() dated May *>, *++,$
A(
S"I Circular 0o$ S"I/IMD/CI/ 0o (E / (>E?)F /*+(+ dated March (A, *+(+
A*
/egulation A*(?)(a) of S"I (Mutual Funds) /egulations, (>>?
A,
S"I Circular 0o$ S"I/IMD/CI/$ 0o$)/AE)**/+? dated January *), *++?, S"I Circular
0o$ S"I/IMD/CI/ 0o$*/?A,)E/+? dated April *(, *++?, S"I Circular 0o$ S"I/IMD/CI/
0o$()/E)*),/+F dated January (A, *++F$
A)
/egulation *(m#) of the S"I (Mutual Funds) /egulations, (>>? introduced vide 3a6ette
0otification 0o$ S$4$ ,E() dated January (*, *++?$


,$*$($( 3old and
,$*$($* 3old related instruments
AA
$ 2o'ever investments in gold
related instruments shall #e done only after such instruments
are specified #y the "oard
A?

,$*$($, 3old Deposit Scheme (3DS)
AF
of #an7s have #een designated
as one such gold related instrument$ Investment in 3DS of
#an7s #y 3old %Fs of mutual funds 'ill #e su#&ect to
follo'ing conditionsB
a$ %he total Investment in 3DS 'ill not e!ceed *+K of total
asset under management of such schemes$
#$ "efore investing in 3DS of #an7s, mutual funds shall put
in place a 'ritten policy 'ith regard to investment in 3DS
'ith due approval from the "oard of the Asset Management
Company and the %rustees$ %he policy should have
provision to ma7e it necessary for the mutual funds to o#tain
prior approval of their trustees for each investment proposal
in 3DS of any "an7$ %he policy shall #e revie'ed #y mutual
funds, at least once a year$
c$ 3old certificates issued #y "an7s in respect of investments
made #y 3old %Fs in 3DS can #e held #y the mutual funds
in demateriali6ed or physical form
AE
$

AA
/egulations *(mc) of the Mutual Funds /egulations introduced vide 3a6ette 0otification
0o$ S$4$ ,E() dated January (*, *++?$

A?
S"I Circular 0o$ S"I/IMD/CI/ 0o$ )/AE)**/+? dated January *), *++?$
AF
S"I Circular 0o$CI//IMD/DF/+)/*+(, dated Fe#ruary (A, *+(,
AE
S"I Circular 0o$ CI//IMD/DF/(?/*+(, dated 4cto#er (E, *+(,


,$*$* :aluationB
,$*$*$( 3old shall #e valued #ased on the methodology provided in
Clause ,A of, Schedule ight of the Mutual Funds
/egulations
A>
$
,$*$, Determination of 0et Asset :alue
?+

,$*$,$( %he 0A: of units under the 3%F Scheme shall #e calculated
up to four decimal points as sho'n #elo'B

Mar7et or Fair :alue of SchemePs investments Q Current
Assets < Current ;ia#ilities and 8rovision
0A: (in /s. terms) R SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS
0um#er of .nits outstanding under Scheme on the
:aluation Date

A>
S"I Circular 0o$ S"I/IMD/CI/ 0o$()/E)*),/+F dated January (A, *++F read 'ith
3a6ette 0otification F$ 0o$ S"I/;AD/Do8/E*A,)/*++? dated Decem#er *+, *++?$
?+
S"I Circular 0o$ S"I/IMD/CI/ 0o$*/?A,)E/+? dated April *(, *++?$


,$*$) /ecurring !penses
?(

,$*$)$( %he recurring e!penses limits applica#le to e=uity schemes
?*

shall #e applica#le to 3%F Scheme(s)$
,$*$A "enchmar7s for 3%F Scheme
?,

,$*$A$( 3%F Scheme(s) shall #e #enchmar7ed against the price of
gold$
,$*$? 2alf yearly report #y %rustees
?)

,$*$?$( 8hysical verification of gold underlying the 3old %F units
shall #e carried out #y statutory auditors of mutual fund
schemes and reported to trustees on half yearly #asis$
,$*$?$* %he confirmation on physical verification of gold as a#ove shall
also form part of half yearly report
?A
#y trustees to S"I$
3.3 :apital 3rotection Oriented Scheme
??

,$,$( %he SID, 9IM and advertisements pertaining to Capital
8rotection 4riented Scheme
?F
shall disclose that the scheme is
Moriented to'ards protection of capitalL and not M'ith
guaranteed returns$L It shall also #e indicated that the
orientation to'ards protection of capital originates from the
portfolio structure of the scheme and not from any #an7
guarantee, insurance cover etc$

?(
?*
/egulation A*(?) of the S"I (Mutual Funds) /egulations, (>>?$
?,
?)
S"I Circular 0o$ Cir/IMD/DF/*+/*+(+ dated Decem#er +?, *+(+
?A
8lease refer to the section on Formats for the disclosures in the 2alf -early %rustee /eport
'$r$t physical verification of 3old$ %his 'ill #e effective from the half yearly report ending
April *+(( #y %rustees to S"I$
??
S"I Circular 0o$ S"I/IMD/CI/ 0o$>/F),?)/+? dated August (), *++?$

?F
/egulation *(ea), ,,(*A) and ,EA of the Mutual Funds /egulations introduced vide 3a6ette
0otification 0o$ S$4$ (*A)() dated August ,, *++?$



,$,$* %he proposed portfolio structure indicated in the SID and 9IM
shall #e rated #y a Credit /ating Agency registered 'ith the
"oard from the vie' point of assessing the degree of certainty
for achieving the o#&ective of capital protection and the rating
shall #e revie'ed on a =uarterly #asis$
,$,$, %he %rustees shall continuously monitor the portfolio structure
of the scheme and report the same in the 2alf -early %rustee
/eports
?E
to the "oard$ %he AMC(s) shall also report on the
same in its #imonthly (C%/(s)
?>
to the "oard$
,$,$) It shall also #e ensured that the de#t component of the portfolio
structure has the highest investment grade rating$
3.& =eal "$tate -utual Fund$
)4
>
,$)$( A real estate mutual fund scheme
F(
can invest in real estate
assets in the cities mentioned inB

,$)$($( ;ist of Million 8lus .r#an Agglomerations/CitiesI or
,$)$($* ;ist of Million 8lus Cities
,$)$* Such list appears in Census Statistics of India (*++() at
'''$censusindia$gov$in$ A printout of cities 'hich appear in
the foresaid categories ta7en from the said 'e#site is attached
for ready reference at Anne!ure )$
3.* =a?i% ;andhi "8uit! Sa%ing$ Scheme
)2
@ 2412
,$A$( As announced in the .nion "udget *+(*5(,, the Finance
Act *+(* has introduced a ne' section E+CC3 on

?E
For format of 2alf -early %rustee /eport please refer section on Formats
G
?>
For format of #imonthly C%/ please refer section on Formats
F+
S"I Circular 0o 5 S"I/IMD/CI/ 0o$)/(*))FF/+E May *,*++E
F(
/egulation )> A(a)(i) of S"I (Mutual Fund) /egulations, (>>?
F*
S"I Circular 0o$ CI//M/D/D8/,*/*+(* dated Decem#er ?, *+(*


ODeduction in respect of investment made under an e=uity
savings schemeC to give ta! #enefits to ne' investors 'ho
invest up to /s$ A+,+++ and 'hose gross total annual income
is less than or e=ual to /s$ (+ la7hs$ %he o#&ective of the
scheme is to encourage flo' of savings in the financial
instruments and improve the depth of the domestic capital
mar7et$
,$A$* :ide notification A(/*+(* dated 0ovem#er *,, *+(*, the
scheme has #een notified #y the Department of /evenue,
Ministry of Finance (MoF)$ %he notification is availa#le on the
'e#site of Income %a! Department under section
M0otificationsL$
,$A$, AMCs / %rustees shall ensure that /3SS eligi#le !change
%raded Funds (%Fs) and Mutual Funds (MFs) schemes are
in compliance 'ith the aforementioned notification$
,$A$) @ith regard to implementation of the MoF notification, the
follo'ing is clarifiedB
a$ For /3SS eligi#le close5ended Mutual Funds schemes,
advice given #y AMCs to the depository for e!tinguishment of
units of close5ended schemes considered as settled through
depository mechanism and therefore /3SS compliant$
#$ AMCs shall disclose that the concerned /3SS eligi#le
!change %raded Funds and Mutual Fund schemes is in
compliance 'ith the provisions of /3SS guidelines notified
#y Ministry of Finance vide notification no$ A(/*+(* F$ 0o$
()*/,A/*+(*5%8; dated 0ovem#er *,, *+(*, in Scheme
Information Document (SID), in case of ne' fund offer, or
#y 'ay of addendum, in case of e!isting /3SS eligi#le
!change %raded Funds and Mutual Fund schemes$


c. 8ara ?(c) of the notification states that the eligi#le
securities #rought into the demat account 'ill automatically #e
su#&ect to loc75in during the first year, unless the ne' investor
specifies other'ise and for such specifications, the ne'
retail investors shall su#mit a declaration indicating that
such securities are not to #e included 'ithin the a#ove
limit of investment$ It is clarified that such declaration shall
#e su#mitted #y an investor to its Depository 8articipant
'ithin a period of one month from the date of transaction$
d. For transactions underta7en #y investors through their
/3SS designated demat account, Depositories may see7
necessary transactional details from stoc7 e!changes vi6$
Actual %rade value, %rading date, Settlement num#er, etc,
for the purpose of enforcing loc75in and for generating
reports mandated vide MoF notification on /3SS$ 4n receipt
of such re=uest from depositories, stoc7 e!changes shall
provide the details to depositories on an immediate #asis$ It
shall also #e ensured that a uniform file structure is used #y
stoc7 e!changes and depositories for such intimation of
transaction details$
e$ @ith regard to the securities held in the /3SS designated
account, treatment of the corporate actions shall #e given in the
prescri#ed format
F,
$
,$A$A Mutual Funds / AMCs shall communicate list of /3SS eligi#le
MF schemes / %Fs to the stoc7 e!changes$
,$A$? Mutual Funds / AMCs are directed to create 'ide pu#licity of
the scheme among the investors, including displaying details on
their 'e#site$

F,
8lease refer to section on Formats for re=uisite formats


3.+ Infra$tructure De#t Scheme$
)&

,$?$( 8lacement MemorandumB
,$?$($( 8rivate 8lacement to less than A+ investors has #een permitted
as an alternative to 0e' Fund 4ffer to the pu#lic, in case of
Infrastructure De#t Funds (IDF)$ In case of private placement,
the mutual funds 'ould have to file a 8lacement Memorandum
'ith S"I instead of a Scheme Information Document and a
9ey Information Memorandum$ 2o'ever, all the other
conditions applica#le to IDFs offered through the 0F4 route
li7e 7ind of investments, investment restrictions, etc$ 'ould #e
applica#le to IDFs offered through private placement$
,$?$($* In terms of regulation )>54A of the S"I (Mutual Funds)
/egulations, (>>?, the 8lacement Memorandum shall #e filed
'ith S"I as per the prescri#ed format
FA
$
,$?$* %he Asset Management Companies shall ensure that the
8lacement Memorandum is uploaded on their respective
'e#sites after allotment of units, and on the 'e#site of such
recogni6ed Stoc7 !change, 'here it is proposed to #e listed, at
the time of listing of the scheme$
,$?$, F##s >hich are long ter? investors
,$?$,$( %he universe of strategic investors in the IDF has #een
e!panded to include, inter alia, FIIs registered 'ith S"I 'hich
are long term investors su#&ect to their e!isting investment
limits$ @ith reference to regulation )>; of the S"I (Mutual
Funds) /egulations, (>>? the follo'ing categories of FIIs are
designated as long term investors only for the purpose of IDFB
a$ Foreign Central "an7s
#$ 3overnmental Agencies

F)
S"I Circular 0o$ CI//IMD/DF/F/*+(, dated April *,, *+(,
FA
8lease refer to section on Formats for re=uisite Formats


c$ Sovereign @ealth Funds
d$ International/Multilateral 4rgani6ations/ Agencies
e$ Insurance Funds
f$ 8ension Funds
g$ Foreign feeder funds, having at all times, at least *+K of their
assets under management held #y investors #elonging to
one of more of the a#ove categories of FIIs
F?

,$?$) #nvest?ents by the #DF sche?e
,$?$)$( @ith reference to regulation )>8 (() of the S"I (Mutual
Funds) /egulations, (>>?, the investments in #an7 loans shall
#e made only through the securiti6ation mode$

F?
S"I Circular 0o$ CI//IMD/DF/*+/*+(, dated 0ovem#er *>, *+(,



C,-!"R 4

R#S5 M'G"M"'! S6S!"M
//

)$( An 4perating Manual
FE
for /is7 Management has #een developed to
ensure minimum standards of due diligence and /is7 Management
Systems for all the Mutual Funds in various operational areas (for e$g$
Fund Management, 4perations, Customer Service, Mar7eting and
Distri#ution, Disaster /ecovery and "usiness Contingency, etc$) and is
enclosed here'ith as Anne!ure *$
)$* !he Ris@ Manage?ent practices covered in the &perating Manual are
under three categories as detailed belo>B
)$*$( !isting Industry 8ractices.
)$*$($( .nder each head of ris7, the Manual covers the e!emplary practices
follo'ed #y some / most of Mutual Funds in India$ 2o'ever, the
e!tent and degree of o#servance of these practices differs among
the Mutual Funds$ Mutual Funds shall accordingly develop their
systems and follo' these practices$
)$*$* 8ractices to #e follo'ed on Mandatory "asisB
)$*$*$( Mutual Funds shall follo' the practices 'hich have #een indicated
as mandatory in the operating manual$ %hese are /is7 Management
function that shall #e assigned to Compliance 4fficer or Internal
/is7 Management Committee or to an e!ternal agency
a$ Disaster /ecovery and "usiness Contingency plans, and

FF
S"I Circular 0o$ MFD/CI//(A/(>(,,/*++* dated Septem#er ,+, *++*$

FE
%he Manual has #een developed #y AMFI in association 'ith 8rice'aterhouse Coopers as a
part of Indo5.S Financial Institutions /eforms and !pansion 8ro&ect$



#$ Insurance cover against certain ris7s$
)$*$, "est 8ractices to #e follo'ed #y Mutual FundsB

)$*$,$( Mutual Funds shall adopt these practices as a part of their due
diligence e!ercise after considering the si6e of their operations$
&.3 Implementation of the =i$' -anagement S!$tem
)$,$( Mutual Funds shall adopt the follo'ing approach to implement the
/is7 Management SystemB
)$,$* Identification of o#servance of each recommendationB

)$,$*$( Mutual Funds shall identify areas of current adherence as 'ell as
non5adherence of various /is7 Management practices under each of
the three categories$ %hey shall e!amine the areas 'here
development or improvement of systems is re=uired$

)$,$*$* After identifying the same, Mutual Funds shall revie' the progress
made on implementation of the systems on a monthly #asis and
place the progress report in periodical meetings of the "oard of the
AMC and %rustees$

)$,$, /evie' of 8rogress of implementation #y "oard of AMC and %rustee(s).
)$,$,$( %he "oard of the AMC and %rustee(s) shall revie' the progress
made #y the Mutual Funds 'ith regard to /is7 Management
practices and the same shall #e reported to the "oard at the time of
sending C%/(s) and 2alf -early %rustee /eports$
)$,$) /evie' #y Internal AuditorsB
)$,$)$( %he revie' of /is7 Management Systems shall #e a part of internal
audit and the auditors shall chec7 their ade=uacy on a continuing
#asis$ %heir reports shall #e placed #efore the "oard of the AMC


and %rustee(s) 'ho shall comment on the ade=uacy of systems in
the C%/s and 2alf -early /eports filed 'ith the "oard$



C,-!"R +
D#SC%&S$R"S 7 R"-&R!#'G '&RMS

-R! # = D#SC%&S$R"S
*.1 -onthl! 3ortfolio Di$clo$ure$
)/

A$($( Mutual funds/AMCs shall disclose portfolio (along 'ith ISI0) as on
the last day of the month for all their schemes on their respective
'e#site on or #efore the tenth day of the succeeding month in a
user5friendly and do'nloada#le format (prefera#ly in a
spreadsheet)$
A$($* %he format for monthly portfolio disclosure
E+
shall #e same as that
of half yearly portfolio disclosures$
A$($, Mutual funds/AMCs may disclose additional information (such as
ratios, etc$) su#&ect to compliance 'ith the Advertisement Code$

*.2 Aalf Bearl! di$clo$ure of 3ortfolio$
.1

A$*$( Mutual Funds shall send a complete statement of Scheme 8ortfolio
to the unit holders #efore the e!piry of one month from the closure
of each 2alf -ear (i$e$ March ,( and Septem#er ,+), if such
statement is not pu#lished #y 'ay of advertisement
E*
$
A$*$* %he Scheme 8ortfolio(s)
E,
shall also #e disclosed on the Mutual
FundsC 'e# sites #efore the e!piry of one month from the closure of
each 2alf -ear (i$e$ March ,( and Septem#er ,+) and a copy of the

F>
S"I Cirular 0o$ CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(*
E+
8lease refer to section on Formats for re=uisite Formats
E(
S"I Circular 0o$ MFD/CI/ 0o$+(+/+*)/++ dated January (F, *+++, S"I Circular 0o$
MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++, S"I Circular 0o$ MFD/CI/
0o$(+/,(+/+( dated Septem#er *A, *++(, S"I Circular 0o$ MFD/CI//()/(E,,F/*++*
dated Septem#er (>, *++*, S"I Circular 0o$ IMD/CI/ E/(,*>?E/*++E dated July *),
*++E
E*
/egulation A>A of the Mutual Funds /egulations H S"I Circular 0o$ MFD/CI/
0o$+(+/+*)/++ dated January (F, *+++
E,
For format of half yearly portfolio, please refer to the section on formats


same shall #e filed 'ith the "oard along 'ith the 2alf -early
/esults
E)
$
A$*$, Disclosure of derivatives in 2alf -early 8ortfolios
EA

A$*$,$( A format
E?
for the purpose of uniform disclosure of
investments in derivative instruments #y Mutual Funds in
half yearly portfolio disclosure, annual report or in any other
disclosures is prescri#ed$

A$*$,$* Further, 'hile listing net assets, the margin amounts paid
should #e reported separately under cash or #an7 #alances$
*.3 Unaudited Aalf Bearl! Financial$
.)

A$,$( %he pu#lication of the unaudited half5yearly results shall #e made
in line 'ith provisions of the /egulations
EE
, in the format
prescri#ed in %'elfth Schedule.
A$,$* %he half yearly disclosures
E>
of the unaudited financial results
on respective 'e#site should #e made in a user5friendly and
do'nloada#le format (prefera#ly in a spreadsheet)$
*.& -ailing of Schemewi$e Annual =eport or A#ridged
Summar!
!0

A$)$( Mailing of Scheme'ise Annual /eports
>(
or a#ridged summary
thereof shall #e su#&ect to the follo'ingB

A$)$($( In case of unitholders 'hose email addresses are availa#le
'ith the Mutual Fund, the AMCs shall communicate to them

E)
S"I Circular 0o$ MFD/CI/ 0o$(+/,(+/+( dated Septem#er *A, *++(
EA
S"I Circular Cir/ IMD/ DF/ ((/ *+(+ dated August (E, *+(+
E?
For formats on disclosure of derivatives, please refer to the section on Formats
EF
S"I Circular MFD/CI//(/*++/*++( dated April *+, *++( H S"I Circular 0o$ IMD/CI/
0o$E/(,*>?E/*++E dated July *), *++E
EE
/egulation A> of S"I (Mutual Funds) /egulations, (>>?
E>
>+
S"I Circular 0o$ IMD/CI/ 0o$E/(,*>?E/*++E dated July *), *++E and Circular
0o$Cir/IMD/DF/(?/*+(( dated Septem#er E, *+((
>(
For format of a#ridged scheme'ise report, please refer the section on formats


stating that henceforth, the scheme annual reports or
a#ridged summary 'ould only #e sent #y email$

A$)$($* In case of unitholders 'hose email addresses are not availa#le
'ith the Mutual Fund, the AMCs shall communicate to the
unitholders to o#tain their email addresses for registration of
the same in their data#ase$

A$)$($, %he communication in #oth the a#ove cases shall clearly
mention that the scheme annual accounts or a#ridged
summary 'ould henceforth #e sent to these email addresses
and not as physical copies and the communication shall also
have an option for the investors stating that those 'ho still
'ish to receive the reports as physical copies may indicate as
such$

A$)$($) In case of any re=uest from these unitholders as detailed
a#ove for physical copies not'ithstanding their registration of
email addresses, AMCs shall provide the same 'ithout demur$

A$)$($A For the rest of the investors, i$e$ 'hose email addresses are
not availa#le 'ith the mutual fund, the AMCs shall continue
to send physical copies of scheme annual reports or a#ridged
summary$

A$)$($? %he AMCs shall display the lin7 of the scheme annual reports
or a#ridged summary prominently on their 'e#sites and
ma7e the physical copies availa#le to the investors at their
registered offices at all times$ %hese 'e#sites should also #e
lin7ed 'ith AMFI 'e#site so that the investors and analyst(s)
can access the annual reports of all mutual funds at one


place
>*
$ 2o'ever, as per the /egulations
>,
, a copy of Scheme
'ise Annual /eport shall #e also made availa#le to
unitholder(s) on payment of nominal fees$
*.* Di$clo$ure of large unit holding$
>)

A$A$( %he num#er of investors holding over *A K of the 0A:
>A
in a
scheme and their total holdings in percentage terms shall #e
disclosed in the Statement of Accounts issued after the 0F4 and
also in the 2alf -early and Annual /esults
>?
$
*.+ A$$et Under -anagement 1AU-2 di$clo$ure
/)

A$?$( @herever the Mutual Funds discloses the A.M figures for the
fund, disclosure on #ifurcation of the A.M into de#t/e=uity/
#alanced etc, and percentage of A.M #y geography (i$e$ top A
cities, ne!t (+ cities, ne!t *+ cities, ne!t FA cities and others) shall
#e made$ %he Mutual Funds shall disclose the aforesaid data on
their respective 'e#sites H to AMFI and AMFI shall disclose
industry 'ide figures on its 'e#site$
A$?$* Mutual Funds shall disclose the follo'ing on monthly #asis on
their 'e#site and also share the same 'ith Association of
Mutual Funds in India (AMFI)
>E
B
a$ Monthly AA.M
99
from different categories of schemes such as
e=uity schemes, de#t schemes, etc$
#$ Contri#ution to Monthly AA.M from "5(A cities (i$e$ other than
top (A cities as identified #y AMFI) and %5(A cities (%op (A cities)$

>*
S"I Cir 0o D MFD/CI//(A/+)(/*++* dated March (),*++*
>,
/egulation A?(() H A?(,) of S"I (Mutual Funds) /egulations, (>>?
>)
S"I Circular 0o$ MFD/CI/ 0o$,/*((/*++( dated April ,+, *++($
,
>A
For further details, refer Section II D Scheme 3overnance in the Chapter on 3overnance
0orms
,
>?
8lease refer the section on Formats for re=uisite formats
>F
S"I Circular 0o$Cir/IMD/DF/(,/*+(( dated August **, *+((
>E
S"I Circular 0o$ CI//IMD/DF/+A/*+() dated March *), *+()
>>
S"I Circular 0o$ CI//IMD/DF/+F/*+() dated April *, *+()



c$ Contri#ution to Monthly AA.M from sponsor and its associates$
d$ Contri#ution to Monthly AA.M from entities other than sponsor
and its associates$
e$ Contri#ution to Monthly AA.M from investors type (retail,
corporate, etc$) in different scheme type (e=uity, de#t, %F, etc$)$
f$ Monthly AA.M garnered through sponsor group/ non5sponsor
group distri#utors$
g$ State5'ise/.nion %erritory5'ise contri#ution to MAA.M$
A$?$, In order to have a holistic picture, Mutual Fund 'ise and
consolidated data on the a#ove parameters shall also #e disclosed
on AMFI 'e#site$ %he a#ove shall #e disclosed as per the
format
(++
$
A$?$) AMCs shall disclose the a#ove on their 'e#site (in
spreadsheet format) and for'ard to AMFI 'ithin F 'or7ing days
from the end of the month$ AMFI in turn shall disclose the
consolidated data in this regard on its 'e#site (in spreadsheet
format)$
*.) :ommi$$ion di$clo$ure
141

A$F$( Mutual Funds / AMCs shall disclose on their respective 'e#sites
the total commission and e!penses paid to distri#utors 'ho satisfy
one or more of the follo'ing conditions 'ith respect to non5
institutional (retail and 20I) investorsB5

A$F$($( Multiple point of presence (More than *+ locations)

(++
For formats, please refer to chapter on Formats
(+(


A$F$($* A.M raised over /s$(++ crore across industry in the non
institutional category #ut including high net'orth individuals
(20Is)$
A$F$($, Commission received of over /s$( crore p$a$ across industry
A$F$($) Commission received of over /s$A+ la7h from a single Mutual
Fund/AMC$
A$F$* Mutual Fund / AMCs shall, in addition to the total commission
and e!penses paid to distri#utors, ma7e additional disclosures
(+*

regarding distri#utor5'ise gross inflo's (indicating 'hether the
distri#utor is an associate or group company of the sponsor(s) of
the mutual fund), net inflo's, average assets under management
and ratio of A.M to gross inflo's on their respective 'e#site
on an yearly #asis$
In case the data mentioned a#ove suggests that a distri#utor has
an e!cessive portfolio turnover ratio, i$e$ more than t'o times the
industry average, AMCs shall conduct additional due5diligence of
such distri#utors$
A$F$, Mutual Funds / AMCs shall also su#mit the data mentioned
in A$F$( and A$F$* to AMFI and the consolidated data in this regard
shall #e disclosed on AMFI 'e#site$
*.. Annual report of the A-:
143

A$E$( Annual report containing accounts of the asset management
companies should #e displayed on the 'e#site of the mutual
funds$ It should also #e mentioned in the annual report of the
mutual fund schemes that the unitholders, if they so desire, may
re=uest for a copy of the annual report of the asset management
company$

(+*
S"I Circular 0o$ CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(*$
(+,
MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++


*./ Su#mi$$ion of #io data of 'e! per$onnel
"0/

A$>$( AMCs are re=uired to su#mit the #io data of all 7ey personnel to
%rustees and the "oard$ For this purpose, O7ey personnelC 'ould #e
the Chief !ecutive 4fficer (C4), fund manager(s), dealer(s) H
heads of other departments of the AMC
(+A
$
*.14 Di$clo$ure of in%e$tor complaint$ with re$pect to
-utual Fund$
(+?

A$(+$( Mutual Funds shall disclose
(+F
on their 'e#sites, on the AMFI
'e#site as 'ell as in their Annual /eports, details of investor
complaints received #y them from all sources$ %he said details
should #e vetted and signed off #y the %rustees of the concerned
Mutual Fund$
A$(+$* %he Mutual Funds are advised toB
A$(+$*$( .pload the report for the financial year 'ithin * months of the
close of the financial year$
A$(+$*$* Include the report in their annual reports, as part of the /eport
of the %rustees$
*.11 Bro'erage and commi$$ion paid to a$$ociate$
(+E

A$(($( /egulations
(+>
govern payment of #ro7erage or commission if any,
to the sponsor or any of its associates, employees or their relatives$
A$(($* Disclosures on #ro7erage and commission paid to
associates/related parties/group companies of sponsor/Asset
Management Company in the unaudited half yearly financial

(+)
IIMA/8/CI/ /+E/E)A/>F dated May F,(>>F,IIMA/8/MF/CI//+A/FEE/>F date April *E,(>>F
(+A
For format of #io5data of 7ey personnel, please refer the section on Formats
(+?
S"I Circular 0o$ Cir /IMD/DF/*/*+(+ dated May (,, *+(+
(+F
For disclosure format please refer to section on Formats$
(+E
S"I Circular 0o$ S"I/IMD/CI/ 0o (E/(>E?)F/*+(+ dated March (A, *+(+
(+>
/egulation *A (E) of S"I (Mutual Funds) /egulations, (>>?


results, the a#ridged scheme 'ise annual report and the SAI, shall
#e made in the format as prescri#ed
((+
$

((+
8lease refer to the section on Formats


-R! ## = R"-&R!S

*.12 -onthl! :umulati%e =eport 1-:=2
(((

A$(*$( Date and Mode of Su#missionB
A$(*$($( MC/
((*
shall #e su#mitted to the "oard #y ,
rd
of each month #y
'ay of an email$ 2ard copy should also #e sent #y hand
delivery/courier$

A$(*$* 4ther 3uidelinesB
A$(*$*$( Details of the ne' schemes launched shall #e reported in the
MC/ for the month in 'hich the allotment is done$ For
e!ample, if an 0F4 closes in the month of July and the
allotment is done in the month of August, then, the details of
the ne' scheme shall #e reported in the MC/ for the month of
August that 'ill reach S"I #y ,
rd
of Septem#er$
A$(*$*$* Further, additional report on overseas investment
((,
#y Mutual
Funds in AD/s/3D/s, foreign securities and overseas e!change
traded funds (%Fs) shall also #e provided as per the prescri#ed
format$ For format please refer to the section on formats$
A$(*$*$, Compliance officers of all the Mutual Funds are advised to ta7e
due care 'hile for'arding the MC/ data to S"I$ Compliance
4fficers shall confirm that the data for'arded is correct and
does not re=uire any revision$

(((
S"I circular MFD/CI//+F/*+?/*++( dated July (>, *++(, S"I circular 0o IMD/Cir
0o$(A/EF+)A/*++F dated Fe#ruary **, *++F, S"I circular S"I/IMD/CI/ 0o
,/(*))))/+E dated April ,+, *++E$
((*
For format of MC/ please refer to section on Formats$
((,
S"I Circular 0o$ S"I/IMD/CI/ 04 (A/EF+)A/+F dated Fe#ruary **,*++F


*.13 0ew Scheme =eport 10S=2
11&

A$(,$( All Mutual Funds shall su#mit the 0S/ to S"I complete in all
respects 'ithin (+ 'or7ing days from the date of allotment in the
prescri#ed format
((A
$
*.1& Bi5monthl! :ompliance (e$t =eport$
11+

A$()$( AMCsC shall do e!ception reporting on a #i5monthly #asis$ %he
details sought in the anne!ures of the C%/ shall #e furnished to
the "oard in case of non5compliance only along 'ith e!ception
report$ %his e!ception report shall also #e placed #efore the
%rustee(s)$

A$()$* %he C%/s
((F
should #e su#mitted #y the AMC to the "oard once in
every t'o months so as to reach 'ithin *( days of completion of
the t'o months period$ As a compliance of S"I /egulations is a
continuous process, AMCs are advised to incorporate the
modifications/additions under the relevant sections of the format,
#ased on amendments to the /egulations/guidelines issued in the
future from time to time$

(()
S"I Circular 0o$ S"I/IMD/CI/ 04 (,/((EE>>/+E dated Fe#ruary *>, *++E, S"I
Circular 0o MFD/CI//(*/(?AEE/+* dated August *E, *++* H S"I Circular 0o
IIMA/8/MF/CI//+A/FEE/>F dated April *E, (>>F, S"I Circular 0o$ IIMA/8/(+FF*/>, dated
July (),(>>,,
((A
For details on format of 0S/ please refer the section on Formats$
((?
S"I Circular 0o$ S"I/IMD/CI/ 04 ?/>E+AF/+F dated July A, *++F, S"I Circular 0o
MFD/CI//((/,?***/*++A dated March (?,*++A, S"I Circular 0o
IIMA/8/MF/CI//(+/(+F?/>F dated June +A,(>>F H S"I Circular 0o$MFD/CI//A/,?+/*+++
dated July ), *+++,
((F
For C%/ format, please refer the section on Formats$



*.1* Annual Stati$tical =eport 1AS=2
11.

A$(A$( AMC should su#mit the annual statistical report to S"I in the
prescri#ed format #y ,+th of April each year
((>
$
*.1+ Dail! (ran$action =eport
124

A$(?$( All Mutual Funds shall su#mit details of transactions in secondary
mar7et on daily #asis in the prescri#ed format
(*(
$ Accordingly,
Mutual Funds are advised to ma7e necessary arrangements 'ith
their custodians for the su#mission of reports on a daily #asis$ %he
report is to #e su#mitted to the "oard in #oth hard as 'ell as soft
copy$

A$(?$* It must #e ensured #y the compliance officers of the custodians as
'ell as that of Mutual Funds that the information su#mitted is
correct and reaches the "oard #y ,$++ p$m$ on the follo'ing
'or7ing day (%Q()$

*.1) =e$pon$i#ilitie$ of A-:1$2 and (ru$tee$
122

A$(F$( All information and documents relating to the compliance process
shall #e authenticated and/or adopted #y the "oard of the AMC(s)
to strengthen the compliance mechanism$

((E
IIMA/8/CI/ /+E/E)A/>F DA%D May F,(>>F, MFD/CI//+*/((+/+* dated April *?,*++*,
S"I Cir 0o5 IMD/CI/ 0o ?/F**)A/+? dated July *+,*++?,
((>
For format of AS/ refer the section on Formats
<uarterly Movement of 0et Assets5 S"I CI/ D IIMA/8/MF/CI//+A/FEE/>F dated April *E,
(>>F re=uired mutual funds to su#mit the statement for =uarterly movement of net assets$
2o'ever, S"I circular MFD/CI//(*/(?AEE/+* dated August *E,*++* stated that such
Statement of movement of net assets /portfolios are no more to #e su#mitted
(*+
S"I Circular 0o$MFD/CI//+F/,E)/>> dated Decem#er (F, (>>> and
MFD/CI//+E/*,+*?/>> dated Decem#er *,, (>>>
(*(
For format of daily transaction report, please refer the section on formats
(**
S"I Circular 0o$ MFD/CI//+>/+()/*+++ dated January A, *+++, S"I Circular 0o$
S"I/MFD/CI//(+/+,>/*++( dated Fe#ruary >, *++($



A$(F$* %he %rustee(s) shall also revie' all information and documents
received from the AMC(s) as re=uired under the compliance
process$

A$(F$, AMC(s) shall develop a suita#le Management Information System
for reporting to the %rustees$ %he report shall contain specific
comments on all issues related to the operation of the Mutual
Fund as underta7en #y the AMC including those provided in the
format for reporting #y AMC to %rustees
(*,
$

A$(F$) %he half5yearly report on the activities of the mutual fund to #e
su#mitted #y the trustees to the "oard under the Mutual Funds
/egulations
(*)
shall cover all issues mentioned in the prescri#ed
format as 'ell as any other issue relevant to the operation of the
Mutual Fund
(*A
$ %he %rustees may mention in their report, if they
so desire, that they have relied on the reports o#tained from the
independent auditor or internal/ statutory auditors or the
Compliance 4fficer as the case may #e$ %he report shall mention
that the %rustees have satisfied themselves a#out the ade=uacy of
compliance systems in the Mutual Fund$

A$(F$A AMC(s) and the %rustees shall update the reporting formats
including relevant provisions of amendments made to the Mutual
Funds /egulations and/or guidelines and/or circulars issued #y
the "oard and shall specifically comment on their compliance$

(*,
8lease refer the formats section for format for reporting #y AMC to %rustees
(*)
/egulation (E(*,)(a) of S"I (MF) /egulations, (>>?
(*A
For format of %rustee /eport, please refer to the formats section$
GG


*.1. Filing of Annual Information =eturn #! -utual
Fund$
12+

A$(E$( Mutual Funds are re=uired to su#mit the Annual Information
/eturn under section *EA "A in the Income5ta! Act$ As per this
re=uirement, %rustees of Mutual Funds or such other person
managing the affairs of the Mutual Funds (as may #e duly
authori6ed #y the trustees in this #ehalf) have to report specified
financial transactions in electronic media to Income %a!
Department giving 8A0 of the transacting parties in an Annual
Information /eturn (AI/)$
A$(E$* Some common errors in these returns have #een pointed out #y
the Directorate of Income %a! (Systems) asB
A$(E$*$( 0ot mentioning 8A0 or mentioning invalid 8A0$
A$(E$*$* ntering incomprehensi#le/ incomplete names of transacting
parties, e$g$ names of * or , letters$
A$(E$*$, ntering incomprehensi#le/ incomplete addresses of
transacting parties, e$g$ O0ilC, O0/AC, OSC, in all address fields,
incomplete postal addresses, names of #uildings split into
separate fields, names of t'o cities in address fields, 'rong 8I0
codes, etc$
A$(E$*$) Incorrect district and state codes$
A$(E$*$A Incorrect transaction codes$

(*?
S"I cir no IMD/CI/ 0o$E/F,AE+/+? dated August ),*++?
It may #e noted that Annual Information /eturns (AI/s) constitute an important source of
information to Income %a! Department and, as such, it is imperative that the data furnished to
them is complete and accurate in all respects$ It is therefore advised that to re5chec7 the
accuracy of the data furnished #y your office for the Financial -ear *++)5+A and ensure that all
the columns are correctly filled5in and su#mit a OSupplementary Information /eportC, if need #e,
to the Income %a! Department$
%he AI/s for the financial year *++A5*++? are re=uired to #e filed #efore August ,(, *++?$



A$(E$*$? @rongly sho'ing transaction as of O3ovt$C party$
A$(E$, In this regard, AI/s are re=uired to #e filed only #y the Mutual
Fund and no separate AI/ has to #e furnished for each scheme of
the Mutual Fund$



C,-!"R 8
G&*"R''C" '&RMS

-R! # < F$'D G&*"R''C"
?$( Formation of Audit and aluation :ommittee$ #! the
(ru$tee$ andCor A-:
12)

?$($( udit Co??ittee
?$($($( %rustees shall constitute an audit committee, comprising of the
%rustees and chaired #y an Independent %rustee to revie' the
internal audit systems and recommendations of the internal and
statutory audit reports and ensure that the rectifications as
suggested #y internal and e!ternal auditors are acted upon$

?$($* *aluation Co??ittee
?$($*$( %he AMC shall constitute an in5house valuation committee
consisting of senior e!ecutives including personnel from
accounts, fund management and compliance departments$ %his
committee shall, on a regular #asis revie' the systems and
practices of valuation of securities$

(*F
S"I Circular 0o$ MFD/CI/ 0o$+(+/+*)/*+++ dated January (F, *+++$
G


?$* =e%iew and =eporting of (ran$action$
(*E

?$*$( Reporting of transactions
?$*$($( %ransaction(s) #y directors of the AMC

a$ Directors of the AMC shall file 'ith the trustees on a =uarterly
#asis details of transactions in securities e!ceeding Rs.( lac
(*>
$

?$*$($* %rustee(s) Directors

a$ %rustees are re=uired to report to Mutual Funds only those
transactions in securities that e!ceed Rs.( lac in value
(,+
$
?$*$* Revie> of transactions

?$*$*$( %rustees shall revie' all transactions of the Mutual Fund 'ith
the associates as defined #elo' on a regular #asis and ensure
that /egulations are complied 'ith
(,(
$

?$, =ole of Independent Director on the Board of the A-:
and Independent (ru$tee$
132

?$,$( An Independent %rustee shall not #e associated in any manner
'ith the Sponsor(s)
(,,
$ %he independent directors on the "oard of

(*E
S"I Circular 0o$ MFD/CI//+>/+()/*+++ dated January A, *+++, S"I Circular 0o$
MFD/CI/ 0o$+(+/+*)/*+++ dated January (F, *+++, S"I Circular 0o$
S"I/MFD/CI//(+/+,>/*++( dated Fe#ruary >, *++($

(*>
S"I Circular 0o$ S"I/MFD/CI//(+/+,>/*++( dated Fe#ruary >, *++($

(,+
/egulation (E((() of S"I (MF) /egulations, (>>? and S"I Circular 0o$
MFD/CI//+>/+()/*+++ dated January A, *+++$

(,(
/egulations (E(?) and (E(F) of S"I (Mutual Funds), /egulations, (>>? and S"I Circular
0o$ MFD/CI/ 0o$+(+/+*)/*+++ dated January (F, *+++$
, ,
(,*
S"I Circular 0o$ MFD/CI//((/,A)/*++( dated Decem#er *+, *++(, S"I Circular 0o$
MFD/CI//(,/(?F>>/*++* dated August *>, *++*, S"I Circular 0o$
MFD/CI//(F/*((+A/*++* dated 4cto#er *E, *++*$
(,,
/egulation (?(A) of the S"I (Mutual Funds) /egulations, (>>?$


the AMC shall not #e associate of, or associated in any manner
'ith, the sponsor or any of its su#sidiaries or the trustees
(,)
$
?$,$* An OassociateC shall #e defined asB
?$,$*$( /elatives
(,A
of Sponsor(s) or directors of the Sponsor Company or
relatives of Associate Directors of the AMC(s) and %rustee$
?$,$*$* 8ersons providing any type of professional service to the Mutual
Funds, the AMC and the %rustees and the Sponsor(s)$ Also,
persons having a material pecuniary relationship 'ith the a#ove
mentioned entities that may, in the &udgment of the %rustees,
affect their independence$
?$,$*$, 0ominees of the companies 'ho are sta7eholders in the Sponsor
company or AMC(s) (even if they are not deemed sponsors #y virtue
of holding less than )+K of net 'orth of AMC(s))$
?$,$, Cooling off 8eriod
?$,$) An MAssociateL
(,?
as defined a#ove cannot #e appointed as
Independent Director even after he ceases to #e an MAssociateL
unless a cooling off period of three years has elapsed from the
date of his disassociation$
?$,$A Mutual Funds are re=uired to have a minimum of A+ per cent$
and t'o5third independent directors on the "oard of the AMC(s)
and %rustees respectively
(,F
$ In case the composition of the
directors does not meet these re=uirements, Mutual Funds are
re=uired to inform the "oard along 'ith the steps proposed to
ensure compliance$

(,)
/egulation *((d) of the S"I (Mutual Funds) /egulations, (>>?
(,A
As defined under Section ? of the Companies Act (>A?
(,?
/egulation *(c) of the S"I (Mutual Funds) /egulations, (>>?
G
(,F
/egulation *((d) and /egulation (?(A) of the S"I (Mutual Funds) /egulations, (>>?



?$,$? AMC(s) or %rustees shall appoint Independent Directors in place of
the resigning director(s) 'ithin a period of , months from the date
of resignation$ @here Mutual Funds are una#le to meet this time
limit, they shall report to the "oard e!plaining the reasons for non
compliance$ Mutual Funds may maintain a panel of eligi#le
persons 'ho can #e appointed as Independent Directors
(,E
as and
'hen re=uired$ %hey may also consider appointing more than the
re=uired minimum num#er of Independent Directors to enhance
the standards of corporate governance and also to meet the
regulatory re=uirements in case of resignation of an independent
director$
?$,$F 4n appointment of ne' directors of the AMC or %rustee, their #io5
data
(,>
shall #e filed 'ith the "oard for information or approval
respectively$
?$) In%e$tment andCor for C (rading in Securitie$ #! the
emplo!ee$ of the A-:1$2 and (ru$tee1$2
1&4

?$)$( %he "oard of the AMC and %rustees shall ensure compliance 'ith
these 3uidelines on a continuous #asis and shall report any
violations and remedial action ta7en #y them in the periodical
reports su#mitted to the "oard
()(
$
?$)$* %he guidelines enumerated #elo' specify the minimum
re=uirements that have to #e follo'ed$ %he AMC(s) and %rustees
are free to set more stringent norms for investment and/or trading
in securities #y their employees$

(,E
For #iodata of directors (AMC and %rustee), please refer to section on Formats
(,>
For #iodata of directors (AMC and %rustee), please refer to section on Formats
()+
S"I Circular 0o$ MFD/CI/ 0o$)/*(?/*++( dated May E, *++(, S"I Circular 0o$
S"I/IMD/CI/ 0o$F/(,,>(/+, dated July ((, *++,$
()(
/egulation *A(>) H *,(#) of S"I (MF) /egulations, (>>?


?$)$, 3uidelines for Investment and/or %rading in Securities #y
mployees of AMC(s) and %rusteesB
?$)$,$( Applica#ility
a$ %hese 3uidelines shall #e applica#le to all employees of
AMC(s) and %rustees and shall form a part of the Code of
Conduct for employees adopted #y the AMC(s) and/or
%rustees$ 0e' employees shall #e #ound #y these 3uidelines
from the date of &oining the AMC(s) and/or %rustees$
#$ %hese 3uidelines shall cover transactions for sale or
purchase of securities made in the employeesC name, either
individually or &ointly, and in the name of the employeesC
spouse and/or dependent children and transactions as a
mem#er of 2.F$
?$)$,$* %he o#&ectives and principles of these 3uidelines areB

a$ %o ensure that all securities transactions made #y
employees in their personal capacity are conducted in
consonance 'ith these 3uidelines and in such manner as to
avoid any actual or potential conflict of interest or any a#use
of an individualCs position of trust and responsi#ility$
#$ %he employees of AMC(s) and %rustees especially Access
8ersons shall not ta7e undue advantage of any price
sensitive information that they may have a#out any
company$ Access 8erson for the purpose of these 3uidelines
shall mean the 2ead of the AMC (designated as
C4/Managing Director/8resident or #y any other name),
the Fund Managers, Dealers, /esearch Analysts, all
employees in the Fund 4perations Department, Compliance
4fficer and 2eads of all divisions and/or departments or


any other employee as decided #y the AMC(s) and/or
%rustees$
c$ %o guide employees of AMC(s) and %rustees in maintaining a
high standard of pro#ity that one 'ould e!pect from an
employee in a position of responsi#ility$
?$)$) 3eneral
?$)$)$( Investments CoveredB
a$ %hese 3uidelines cover transactions for purchase or sale of
any securities such as shares, de#entures, #onds,
'arrants, derivatives and units of Mutual Fund schemes$
#$ %hese 3uidelines do not apply to the follo'ing investments
#y the employeesB

($ Investments in Fi!ed Deposits 'ith #an7s and/or
Financial Institutions and/or companies, ;ife
Insurance 8olicies, 8rovident Funds (including 8u#lic
8rovident Fund) or investment in savings schemes
such as 0ational Savings Certificates, 0ational
Savings Schemes, 9isan :i7as 8atra, or any other
similar investment$

*$ Investments of a non5financial nature such as gold
etc$,
()*
'here there is no li7ely conflict #et'een the
Mutual FundCs interest and the employeesC interest$

()*
/eal state has #een deleted pursuant to the amendment to the Mutual Funds /egulations
launching the /eal state Mutual Funds Schemes 'herein guidelines have #een prescri#ed
for employee investment in /eal state$


,$ Investments in government securities, Money Mar7et
instruments, Money Mar7et Mutual Fund schemes
and li=uid schemes
(),
$
?$)$)$* 0o employee shall pass on information to any#ody inducing him
to #uy/sell securities 'hich are #eing #ought and/or sold #y
the Mutual Fund of 'hich the AMC is the investment manager$
?$)$)$, 8rior approval of personal investment transactionsB
a$ All access persons e!cept Compliance 4fficer shall apply in
the form prescri#ed #y the AMC(s) and/or %rustees to the
Compliance 4fficer for prior approval of transactions for
sale or purchase of securities other than those e!pressly
stated to #e e!empt under these guidelines$ %he
Compliance 4fficer shall apply to the 2ead of the AMC(s)$
%he decision of the Compliance 4fficer shall #e final and
#inding on the employee$
#$ In these 3uidelines, in the case of the Compliance 4fficerCs
o'n transactions for purchase or sale of securities or
disclosure or any other related matter, the term
NCompliance 4fficerN 'herever it appears, shall #e read as
N2ead of the AMC$N
c$ %he Compliance 4fficer may coordinate 'ith the Fund
Management Department of the Mutual Fund, 'herever
necessary, to clear re=uests of investment and/or trading
in securities #y the employees$
d$ %he approval of Compliance 4fficer for carrying out a
transaction of sale or purchase of a security #y the access

(),
S"I/IMD/DF/(+/*+() dated May **, *+()


person shall not #e valid for more than seven calendar days
from the date of approval
())
$
e$ If a transaction approved #y Compliance 4fficer has not
#een effected 'ithin seven
()A
calendar days from the date
of its approval, the access person shall #e re=uired to
o#tain approval once again from Compliance 4fficer prior
to effecting the transaction$
f$ All employees shall refrain from profiting from the purchase
and sale or sale and purchase of any security 'ithin a
period of ,+ calendar days from the date of their personal
transaction
()?
$ 2o'ever, in cases 'here it is done, the
employee shall provide a suita#le e!planation to the
Compliance 4fficer, 'hich shall #e reported to the "oard of
the AMC and the %rustees at the time of revie'$
?$)$A Investments in Shares and/or De#entures and/or "onds and/or
@arrants and/or Derivatives
Investments in securities shall #roadly #e classified into investments
through (a) primary mar7ets and (#) secondary mar7ets$
?$)$A$( Investments through the primary mar7etsB
a$ An employee including access person is permitted to apply to
a pu#lic issue of shares and/or de#entures and/or #onds
and/or 'arrants of any company, as long as the application
is made in the normal course of the pu#lic issue$ Such an
application may #e made 'ithout see7ing the clearance from
the Compliance 4fficer$ mployees of AMC(s) and %rustees
are prohi#ited from applying in any reserved =uota such as

())
S"I Circular 0o$ S"I/IMD/CI/ 0o$F/(,,>(/+, dated July ((, *++,$
()A
S"I Circular 0o$ S"I / IMD / CI/ 0o () / (EF(FA/ *++> dated Decem#er (A,*++>
()?
S"I Circular 0o$ S"I/IMD/CI/ 0o$F/(,,>(/+, dated July ((, *++,$


promotersC =uota, employeesC =uota etc$ mployees shall not
participate in any private placement of e=uity #y any
company$
#$ 0ot'ithstanding anything stated in (a) a#ove, an employee of
an AMC(s) and/or %rustees may apply for shares and/or
de#entures and/or #onds and/or 'arrants in a preferential
offer, in cases 'here such a preferential offer is #eing made
#y a company that #elongs to the same industrial group as
the company in 'hich the employee already has an
investment, provided that such a preferential offer is made to
all shareholders and/or de#enture holders of such
companies$ Details of such applications made shall #e
intimated to the Compliance 4fficer$
c$ %he employees of the AMC(s) and/or %rustees including
access person may apply for any rights offer of any company
in 'hich they are already shareholders$ Applications for
additional rights (over and a#ove the normal rights
entitlement) shares may #e made #y the employees including
access person 'ithout getting the clearance from the
Compliance 4fficer$ An employee including access person
may also sell and/or renounce his rights entitlement 'ithout
getting the clearance from the Compliance 4fficer$ 2o'ever, if
an access person 'ishes to purchase the M/ights
renunciationsL he shall get the clearance of the Compliance
4fficer for the same$ Such purchases shall #e done only at
mar7et prices$ Details of any applications made in any rights
issue, 'hether in the normal course, or through purchase of
rights renunciations, shall #e intimated to the Compliance
4fficer$


?$)$A$* Investments through the secondary mar7etsB
a$ An access person 'ho 'ishes to ma7e a secondary mar7et
transaction shall su#mit a 'ritten application to that effect to
the Compliance 4fficer$ Such an application shall specify the
name of the company 'hose securities the employee 'ishes
to #uy and/or sell, type of security, and the num#er of shares
and/or de#entures and/or #onds and/or 'arrants and/or
derivatives that the access person 'ishes to #uy/sell$
#$ %he Compliance 4fficer shall clear these re=uests if the
follo'ing conditions are metB
($ If the shares and/or de#entures and/or #onds and/or
'arrants of the company or derivatives specified #y the
access person are not held #y any scheme of the
Mutual Fund of 'hich the AMC is the investment
managerI
*$ If such shares and/or de#entures and/or #onds and/or
'arrants of the company or derivatives specified #y the
employee are held #y any scheme of the Mutual Fund
of 'hich the AMC is the investment manager, there
should #e a Mcooling offL period of (A calendar days$
%he Compliance 4fficer shall ensure that the last
transaction in that particular security 'as done #y the
Mutual Fund at least (A calendar days prior to the date
of the 'ritten application #y the access person$ In other
'ords, an application for a purchase /sale transaction
on a personal #asis 'ould #e cleared only if the Mutual
Fund has not transacted in that particular security for
at least (A calendar days$



c$ %he Compliance 4fficer shall 7eep a trac7 of the transactions of the
employees and transactions of the Mutual Fund to ensure that
there is no conflict of interest #et'een them i$e$ the Compliance
4fficer should trac7 'hether the Mutual Fund has transacted in
the same securities either #efore or after the employeeCs
transaction(s)$
d$ %he Compliance 4fficer shall maintain a record of all re=uests for
pre clearance regarding the purchase or sale of a security, including
the date of the re=uest, the name of the access person, the details
of the proposed transaction and 'hether the re=uest 'as approved
or denied and 'aivers given, if any, and its reasons$
e$ 0o employee shall purchase any security (including derivatives) on
a MCarry For'ardL #asis or indulge in MShort SaleL of any security
(including derivatives) i$e$ employees 'ho effect any purchase
transaction(s) shall ensure that they ta7e delivery of the securities
purchased, #efore selling them$
f$ Any transaction of Front /unning #y any employee directly or
indirectly is strictly prohi#ited$ For this purpose, MFront /unningL
means any transaction of purchase and/or sale of a security carried
#y any employee 'hether for self or for any other person, 7no'ing
fully 'ell that the AMC also intends to purchase and/or sell the
same security for its Mutual Fund operations$ %o ascertain that the
employee had no prior 7no'ledge of the Mutual FundPs intended
transactions, the Compliance 4fficer may ta7e a declaration in this
regard from the employee$ Such declaration may #e included in the
application form itself$
g$ Any transaction of self dealing #y any employee either directly or
indirectly, 'hether alone or in concert 'ith another person is
prohi#ited$ For this purpose, MSelf DealingC means trading in the


securities #ased on price sensitive information to 'hich the
employee has access #y virtue of his office$ Declaration to this effect
may #e ta7en from the employee 'hile clearing the proposals for
investment$
h$ %he employees shall not insist or suggest to the concerned #ro7ers
to charge reduced #ro7erage, or accept any contract 'ith a clause
on reduced #ro7erage charge$
?$)$? Investments in units of Mutual Fund Schemes
?$)$?$( Access persons as 'ell as other employees do not re=uire prior
permission of the Compliance 4fficer for purchase or sale of units
of Mutual Fund schemes$ 2o'ever, details of each such
transaction, e!cluding transactions in Money Mar7et Mutual
Fund schemes and li=uid schemes
()F
shall #e reported #y them to
the Compliance 4fficer 'ithin F calendar days from the date of
transaction$
?$)$?$* In case of investments in SI8 of any Mutual Fund scheme, the
employees may report only at the time of ma7ing the first
installment of the SI8$
?$)$?$, 0ot'ithstanding anything mentioned earlier, in the follo'ing
cases employees of AMC H %rustees shall not purchase or sell /or
repurchase or redeem units of any scheme, including Money
Mar7et Mutual Fund scheme and li=uid scheme
()E
of their Mutual
FundB

a$ %here is a li7elihood of a change in the investment o#&ectives
of the concerned Mutual Fund Scheme(s) and this has not
#een communicated to the investorsI

()F
()E


#$ %here is a li7elihood of a rights and/or #onus issue in the
concerned Mutual Fund Scheme(s) and this has not #een
communicated to the investorsI
c$ %he concerned Mutual Fund Scheme is contemplating to
issue dividend to the unit holders and this has not #een
communicated to the investorsI
d$ %here is a li7elihood of a change in the accounting policy, or
a significant change in the valuation of any asset, or class of
assets and the same has not #een communicated to the
investorsI
e$ %here is a li7elihood of conversion of a close ended scheme
to an open ended scheme and vice versa and this has not
#een communicated to the investors$
?$)$F 8eriodic Disclosures

?$)$F$( All access persons shall su#mit, in the form prescri#ed #y the
Mutual Fund of 'hich the AMC is the investment manager, details
of their personal transactions of purchase or sale of securities to
the Compliance 4fficer$ %he details to #e su#mitted are as follo'sB

a$ Details of transactions effected for purchase and/or sale of
securities including transactions in rights entitlements
through the secondary mar7et 'ithin F calendar days from
the date of transactionI

#$ Details of allotment received against application for pu#lic
and rights issues 'ithin F calendar days from the date of
receipt of the allotment adviceI



c$ A statement of holding in securities as on March ,( 'ithin
,+ calendar days from the end of every financial year ending
March ,($

?$)$F$* All employees other than access persons shall su#mit, in the form
prescri#ed #y the Mutual Fund, to the Compliance 4fficerB
a$ Details of each of their transactions for purchase or sale
of securities including allotment in pu#lic and rights
issues 'ithin F calendar days in tandem 'ith S"I
(Insider %rading) /egulations$

#$ A statement of holding in securities as on March ,(
'ithin ,+ calendar days (in tandem 'ith S"I (Insider
%rading) /egulations) from the end of every financial
year ending March ,($

c$ A declaration shall also #e included in the reporting
form on the lines of clause ?$)$A$*$ (f) and ?$)$A$*$ (g)
regarding Front /unning and Self Dealing$

?$)$E /evie' #y the "oard of Directors of AMC and the %rustee(s)
?$)$E$( %he "oard of the AMC and the %rustees shall revie' the
compliance of these 3uidelines in their periodic meetings$ %hey
shall revie' the e!isting procedures and recommend changes in
procedures #ased on the AMCs e!perience, industry practices
and/or developments in applica#le la's and regulations$ %hey
shall report compliance and any violations and remedial action
ta7en #y them in their reports su#mitted to the "oard$



?$A =e$pon$i#ilitie$ of A-: & (ru$tee$
"/!

?$A$( For effective discharge of their responsi#ilities under the Mutual
Funds /egulations, the AMC(s) shall provide infrastructure and
administrative support to the %rustees$ %he Mutual Fund may
decide to appoint independent auditors and/or may have separate
full fledged administrative set up for the %rustees$ 2o'ever, the
e!penditure incurred in this regard shall #e 'ithin the limits as
specified in /egulation A*(?) of the Mutual Funds /egulations$
AMC(s) shall place correspondence and reports su#mitted to S"I
#efore the %rustees$

?$? Applica#ilit! of In$ider (rading =egulation$
1*4

?$?$( Securities and !change "oard of India (Insider %rading)
(Amendment) /egulations, *++* shall #e follo'ed strictly #y the
trustee companies, asset management companies and their
employees and directors$

()>
MFD/CI//+>/+()/*+++ dated January A, *+++
(A+
S"I Cir MFD/CI//+A/),*/*++* June *+, *++*


-R! ## <SC,"M" G&*"R''C"
?$F -inimum 0um#er of in%e$tor$
(A(

?$F$( Applica#ility for an open5ended scheme
?$F$($( %he Scheme/8lan shall haveB

a$ a minimum of *+ investors and
#$ no single investor shall account for more than *AK of
the corpus of the Scheme/8lan(s)$
?$F$($* If either/#oth of such limit(s) is #reached during the 0F4 of
the Scheme, it shall #e ensured that 'ithin a period of three
months or the end of the succeeding calendar =uarter from
the close of the 0F4 of the Scheme, 'hichever is earlier, the
Scheme complies 'ith these t'o conditions$
?$F$($, In case the Scheme / 8lan(s) does not have a minimum of *+
investors in the stipulated period, the provisions of
/egulation
(A*
'ould #ecome applica#le automatically 'ithout
any reference from S"I and accordingly the Scheme / 8lan(s)
shall #e 'ound up and the units 'ould #e redeemed at
applica#le 0A:$
?$F$($) If there is a #reach of the *AK limit #y any investor over the
=uarter, a re#alancing period of one month 'ould #e allo'ed

(A(
S"I Circular 0o$ S"I/IMD/CI/ 0o$(+/**F+(/+, dated Decem#er (*, *++,, S"I
Circular 0o$ S"I/IMD/CI/ 0o$(/)*A*>/+A dated June (), *++A$
G G ,
(A*
/egulation ,>(*)(c) of the S"I (MF) /egulations, (>>?


and thereafter the investor 'ho is in #reach of the rule shall
#e given (A days notice to redeem his e!posure over the *A K
limit$ Failure on the part of the said investor to redeem his
e!posure over the *A K limit 'ithin the aforesaid (A days
'ould lead to automatic redemption #y the Mutual Fund on
the applica#le 0et Asset :alue on the (Ath day of the notice
period$
?$F$($A %he t'o conditions mentioned a#ove shall also #e complied
'ithin each su#se=uent calendar =uarter thereafter, on an
average #asis, as specified #y S"I$
?$F$($? %he Fund shall adhere to the re=uirements prescri#ed #y S"I
from time to time in this regard$
?$F$* Applica#ility for a Close ended scheme/Interval scheme
?$F$*$( %he Scheme(s) and individual 8lan(s) under the Scheme(s)
shall haveB
a$ A minimum of *+ investors and
#$ 0o single investor shall account for more than *AK of
the corpus of the Scheme(s)/8lan(s)$
?$F$*$* %hese conditions 'ill #e complied 'ith immediately after the
close of the 0F4 itself i$e$ at the time of allotment$
?$F$*$, In case of non5fulfillment 'ith the condition of minimum *+
investors, the Scheme(s)/8lan(s) shall #e 'ound up in
accordance 'ith /egulation
(A,
automatically 'ithout any
reference from S"I$
?$F$*$) In case of non5fulfillment 'ith the condition of *AK holding #y
a single investor on the date of allotment, the application to

(A,
/eg$ ,> (*) (c) of S"I (MF) /egulations, (>>?


the e!tent of e!posure in e!cess of the stipulated *AK limit
'ould #e lia#le to #e re&ected and the allotment 'ould #e
effective only to the e!tent of *AK of the corpus collected$
Conse=uently, such e!posure over *AK limits 'ill lead to
refund 'ithin ? 'ee7s of the date of closure of the 0e' Fund
4ffer$
?$F$*$A For interval scheme the aforesaid provision 'ill #e applica#le
at the end of 0F4 and specified transaction period$
?$F$*$? /e=uisite disclosure in this regard shall #e made in the SID$
?$F$, Determination of #reachB
?$F$,$( %he average shall #e calculated, at the end of each =uarter, on
the #asis of num#er of investors at the end of the #usiness
hours of the scheme on a daily #asis$
?$F$,$* %o determine #reach of *AK holding limit #y an investor, net
assets under the scheme shall #e calculated daily and the
daily holding limit shall #e determined accordingly$ At the end
of the =uarter, average daily holding #y each investor shall #e
calculated and any #reach of the *AK holding limit 'ill #e
accordingly determined$
?$F$) Applica#ility
?$F$)$( %hese 3uidelines are applica#le at the 8ortfolio level$
?$F$)$* %hese 3uidelines are not applica#le to !change %raded
Funds (%Fs)$



?$F$A /edemptions
?$F$A$( /edemptions effected pursuant to these 3uidelines shall #e
completed 'ithin (+ days from the day of 'inding up of the
scheme(s) and/or plan(s)$

?$F$? /eporting to the "oard
?$F$?$( Compliance 'ith these 3uidelines shall #e reported in
Compliance %est /eports (C%/s) and 2alf -early %rustee
/eports$
?$E -inimum A$$et$ under -anagement 1AU-2 of De#t
Oriented Scheme$
?$E$( It has #een o#served that many de#t oriented schemes are
operating 'ith a very lo' A.M$ In the interest of investors,
it is important that de#t oriented schemes have an ade=uate
corpus to ensure adherence to the investment o#&ectives as
stated in Scheme Information Document and compliance 'ith
investment restrictions specified under S"I (Mutual Funds)
/egulations, (>>?$
?$E$* In this regard, it has #een decided thatB
a) %he minimum su#scription amount of de#t oriented and
#alanced schemes at the time of ne' fund offer shall #e at least
*+ crore and that of other schemes shall #e at least (+ crore$

#) An average A.M of *+ crore on half yearly rolling #asis
shall #e maintained for open ended de#t oriented schemes$

c) %he e!isting open ended de#t oriented schemes shall comply
'ith point (#) stated a#ove 'ithin one year from the date of
issue of this circular$



d) In case of #reach of points (#) and (c) a#ove, the AMC shall scale
up the A.M of such scheme 'ithin a period of si! months
so as to comply 'ith point (#) stated a#ove, failing 'hich the
provisions of /egulation ,> (*) (c) of S"I (Mutual Funds)
/egulations, (>>? 'ould #ecome applica#le$

e) %he confirmation on compliance of the a#ove shall #e
reported to S"I in the 2alf -early %rustee /eports$

?$> Scheme 3erformance =e%iew
?$>$( AMCs and %rustees shall revie' the performance of their schemes
on periodic #asis
(A)
$ Such revie' can ta7e place #y comparing the
performance of the schemes 'ith #enchmar7 indices as 'ell as in
light of the performance of the entire Mutual Funds industry #y
relying on data pu#lished from time to time #y independent
research agencies and financial ne'spapers and &ournals$
Corrective action if re=uired may #e ta7en in case of
unsatisfactory performance$ Its compliance should #e reported in
the #imonthly C%/s of AMCs and half5yearly reports of the
%rustees to S"I ('hile reporting compliance of /egulation *A(*)
on e!ercise of due diligence in investment decisions)$

(A)
S"I Circular 0o$ dated July *F, *+++ H S"I Cir (?/)++/+* dated March *?, *++*$



-R! ### <S6S!"MS $D#! &F M$!$% F$'DS
.++

?$(+ Mutual funds shall have a systems audit conducted #y an
independent CISA/CISM =ualified or e=uivalent auditor$
?$(( %he systems audit should #e comprehensive encompassing audit of
systems and processes inter alia related to e!amination of
integration of front office system 'ith the #ac7 office system, fund
accounting system for calculation of net asset values, financial
accounting and reporting system for the AMC, .nit5holder
administration and servicing systems for customer service, funds
flo' process, system processes for meeting regulatory re=uirements,
prudential investment limits and access rights to systems interface$
?$(* Mutual Funds/ AMCs should get the a#ove systems audit conducted
once in t'o years$
?$(, %he Systems Audit /eport and compliance status should #e placed
#efore the %rustees of the mutual fund$
?$() %he systems audit report/findings along 'ith trustee comments
should #e communicated to S"I$
?$(A For the financial years April *++E D March *+(+, the systems audit
should #e completed #y Septem#er ,+, *+(+$

(AA
S"I Circular 0o S"I/IMD/CI/ 0o$ >/(F?>EE/*++> dated Septem#er (?, *++>


-R! #* = R&%" &F M$!$% F$'DS #' C&R-&R!"
G&*"R''C" &F -$)%#C %#S!"D C&M-'#"S
.+8

?$(? MFs should play an active role in ensuring #etter corporate
governance of listed companies$
?$(F AMCs shall disclose their general policies and procedures for
e!ercising the voting rights in respect of shares held #y them on the
'e#site of the respective AMC as 'ell as in the annual report
distri#uted to the unit holders from the financial year *+(+5(($
?$(E AMCs are re=uired to disclose on the 'e#site of the respective AMC
as 'ell as in the annual report distri#uted to the unit holders from
the financial year *+(+5((, the actual e!ercise of their pro!y votes in
the A3Ms/3Ms of the investee companies in respect of the
follo'ing matters$
?$(E$( Corporate governance matters, including changes in the state of
incorporation, merger and other corporate restructuring, and anti
ta7eover provisions
?$(E$* Changes to capital structure, including increases and decreases of
capital and preferred stoc7 issuances$
?$(E$, Stoc7 option plans and other management compensation issuesI
?$(E$) Social and corporate responsi#ility issues$
?$(E$A Appointment and /emoval of Directors$
?$(E$? Any other issue that may affect the interest of the shareholders in
general and interest of the unit5holders in particular$
?$(> AMCs shall #e re=uired to record and disclose specific
rationale supporting their voting decision (for, against or
a#stain) 'ith respect to each vote proposal
(AF
$

(A?


?$*+ AMCs shall additionally #e re=uired to pu#lish summary of the
votes cast across all its investee company and its #rea75up in
terms of total num#er of votes cast in favor, against or a#stained
from$
?$*( AMCs shall #e re=uired to ma7e disclosure of votes cast on their
'e#site (in spreadsheet format) on a =uarterly #asis, 'ithin (+
'or7ing days from the end of the =uarter$ Further, AMCs shall
continue disclosing voting details in their annual report$ %he votes
cast #y the Mutual Funds may #e given in the revised format
(AE
for
disclosure of vote cast in respect of resolutions passed in general
meetings of the investee companies and in the format
(A>
for
presenting summary of votes cast$
?$** Further, on an annual #asis, AMCs shall #e re=uired to
o#tain AuditorPs certification on the voting reports #eing disclosed
#y them$ Such auditorPs certification shall #e su#mitted to
trustees and also disclosed in the relevant portion of the Mutual
FundsP annual report H 'e#site$
?$*, "oard of AMCs and %rustees of Mutual Funds shall #e re=uired to
revie' and ensure that AMCs have voted on important decisions
that may affect the interest of investors and the rationale
recorded for vote decision is prudent and ade=uate$ %he
confirmation to the same, along 'ith any adverse comments
made #y auditors, shall have to #e reported to S"I in the half
yearly trustee reports$
?$*) %he format
(?+
for disclosure of voting #y mutual funds in general
meetings of listed companies is provided$

(AF
(AE
(A>

(?+
For disclosure of voting #y mutual funds in general meetings of listed companies, please
refer to the section on formats


C,-!"R /
S"C&'DR6 MR5"! #SS$"S

).1 0on Applica#ilit! of 7i$ting Depo$it
(?(

F$($( %he re=uirement of collecting listing deposit as specified under
Circular ;etter 0o$ S/(*>,? dated April ?, (>>* shall not #e
applica#le to Mutual Fund schemes see7ing listing on the Stoc7
!changes$

).2 3a!ment of -argin$
(?*

F$*$( %he applica#le margins shall #e paid as per the guidelines issued #y
S"I and as directed #y stoc7 e!changes from time to time$

).3 Uni8ue :lient :ode$
(?,

F$,$( Mutual Funds are not permitted to operate in the securities mar7et
'ithout furnishing a valid .ni=ue Client Code (.CC)$
(?)
Mutual
Funds are re=uired to o#tain .CC from the "om#ay Stoc7 !change
;td$ ("S) or %he 0ational Stoc7 !change ;td$ (0S) 'henever a
ne' scheme(s) or plan(s) ('herever the portfolio of the plans is
different) is launched
(?A
$ Such .CC should #e o#tained #efore

(?(
S"I Circular 0o$ SMD5II(0)/*((,/>) dated April (*, (>>)$ Further, in this regard,
circulars issued #y S"I from time to time may #e considered$
G
(?*
S"I Circular 0o$ MFD/CI//>/*,+/*++( dated August (), *++(
(?,
S"I Circular 0o$ MFD/CI/ 0o$E/*>+/+( dated July ,+, *++(, S"I Circular 0o$
S"I/SMD/S/((/*++,/,(/+, dated March ,(, *++,, S"I Circular 0o$
S"I/IMD/CI/ 0o$+(/(FA?/+) dated January *F, *++), S"I Circular 0o$
M/D/Do8/S/Cir5,A/*++) dated 4cto#er *?, *++), S"I Circular 0o$ S"I/IMD/CI/
0o$*/)??+,/+A dated August (+, *++A$ Further, in this regard, circulars issued #y S"I
from time to time may #e considered

(?)
S"I Circular 0o$ SMD/8/8olicy/Cir5,>/*++( dated July (E, *++($
(?A
S"I Circular 0o$ S"I/IMD/CI/ 0o$+(/(FA?/+) dated January *F, *++)$


commencing the trading on #ehalf of the scheme(s)/plan(s)$ At the
time of entering an order, the .CC pertaining to the parent Mutual
Fund shall #e provided and the allocation to individual schemes
shall #e done in the post closing session$
(??
%he .CC can #e shared
'ith the unit holders to facilitate ta! #enefits lin7ed to payment of
Securities %ransaction %a! (S%%)$

).& (rading in "<change (raded Deri%ati%e$ :ontract$
1+)

F$)$( For trading in !change %raded Derivatives Contracts, follo'ing
should #e o#servedB
F$)$($( Mutual Fund schemes can participate in derivatives mar7et as per
the guidelines issued #y S"I in this regard from time to time$
(?E

F$)$($* %he Mutual Funds shall #e treated at par 'ith a registered FII in
respect of position limits in inde! futures, inde! options, stoc7
options and stoc7 futures contracts$ %he Mutual Funds 'ill #e
considered as trading mem#ers li7e registered FIIs and the
schemes of Mutual Funds 'ill #e treated as clients li7e su#5
accounts of FIIs$
F$)$($, Appropriate disclosures shall #e made in the offer document
regarding the e!tent and manner of participation of the schemes
of the Mutual Funds in derivatives and the ris7 factors, 'hich
should #e e!plained #y suita#le numerical e!amples$

(??
S"I Circular 0o$ M/D/Do8/S/Cir5,A/*++) dated 4cto#er *?, *++)$
(?F
S"I Circular 0o$ D08D/Cir5*>/*++A dated Septem#er (), *++AI S"I Circular 0o$
D08D/Cir5,+/*++? dated January *+, *++?, S"I Circular 0o$ S"I/D08D/Cir5,(/*++?
dated Septem#er **, *++?$
(?E
S"I Circular 0o$ D08D/Cir5*>/*++A dated Septem#er (), *++A$



F$)$($) %he participation of e!isting schemes of the Mutual Funds in the
derivatives mar7et shall #e su#&ect to the follo'ing conditionsB
a$ %he e!tent and the manner of the proposed participation in
derivatives shall #e disclosed to the unit holders$
#$ %he ris7s associated 'ith such participation shall #e
disclosed and e!plained #y suita#le numerical e!amples$
c$ 8ositive consent shall #e o#tained from ma&ority of the unit
holders$
d$ An e!it option shall #e provided to the dissenting unit
holders$ Such option shall #e 7ept open for a period of one
month prior to the scheme commencing trading in
derivatives$
e$ 0o e!it load shall #e charged to the unit holders e!ercising
such e!it options$
F$)$($A 8ositions limits as specified #y S"I for Mutual Funds and its
schemes from time to time shall #e applica#le
(?>
$

).* (rading in Intere$t =ate Deri%ati%e$
1)4

F$A$( Mutual Fund schemes are permitted to underta7e transactions in
For'ard /ate Agreements and Interest /ate S'aps 'ith #an7s, 8Ds
H FIs as per applica#le /"I 3uidelines
(F(
, mutual funds can also
trade in interest rate derivatives through the Stoc7 !changes
su#&ect to re=uisite disclosures in the SID
(F*
$

(?>
8lease refer S"I Circular 0o D08D/Cir D *>/*++A Dated Septem#er (), *++A for position
limits and su#se=uent circulars issued in this regard from time to time$
(F+
S"I Circular 0o$ S"I/MFD/CI/ 0o$+,/(AE/+, dated June (+, *++,$

(F(
/"I Circular dated 0ovem#er (, (>>>$
(F*
S"I Circular 0o$ S"I/MFD/CI/ 0o$+,/(AE/+, dated June (+, *++,$


F$A$* %he follo'ing position limits
(F,
in I/F shall #e applica#le for Mutual
Fund level and scheme levelB
a$ Mutual Funds shall have position limits as applica#le to trading
mem#ers presently$
#$ Schemes of Mutual Funds shall have position limits as applica#le
to clients presently$

).+ (ran$action$ of mutual fund$ in ;o%ernment Securitie$
in demateriali$ed form
1)&

F$?$( According to /egulation
(FA
, the Mutual Funds having an aggregate of
securities 'orth Rs.(+ crore or more are re=uired to settle their
transactions only through dematerialised securities$ All Mutual
Funds should enter into transactions relating to government
securities only in dematerialised form$

(F,
S"I Circular 0o$ CI//M/D/D/M08/*?/*+() dated Septem#er (A, *+()
(F)
S"I Circular 0o$ MFD/CI//+A/),*/*++* dated June *+, *++*
(FA
/egulation ))((A) of S"I (Mutual Funds) /egulations, (>>?


C,-!"R 1
'"! SS"! *%$"
./8

..1 Di$clo$ure of 0et A$$et alue
(FF

E$($( %he 0A: of schemes shall #e pu#lished on a daily #asis #y the
Mutual Funds at least in t'o daily ne'spapers
"08
'
E$($* 0A: and sale/repurchase price of all Mutual Fund schemes e!cept
for Fund of Fund Schemes shall #e updated on AMFICs 'e#site and
the Mutual FundsC 'e#sites #y > p$m$ of the same day
(F>
$
E$($, Fund of Fund Schemes shall have an e!tended time up to (+ a$m$
the follo'ing #usiness day in this regard
(E+
and the 0A:s shall #e
pu#lished in ne'spapers 'ith an asteris7 to indicate the one day
time lag/or the actual time lag$
E$($) Delay #eyond (+ a$m$ of the follo'ing #usiness day in case of Fund
of Fund schemes and > p$m$ on the same day for all other schemes
shall #e e!plained in 'riting to AMFI and the "oard and shall also
#e reported in the C%/(s)
(E(
in terms of num#er of days of non
adherence of time limit for uploading 0A: on AMFICs 'e#site and the
reasons for the same$ Corrective steps ta7en #y AMC to reduce the
num#er of occurrences shall also #e disclosed
(E*
$

(F?
/egulation )E(() of S"I (Mutual Funds) /egulations, (>>?
(FF
S"I Circular 0o$ IIMA/8/MF/CI//+F/E))/>F dated May A, (>>F, S"I Circular 0o$
MFD/CI/ 0o$((/(F(/+( dated Fe#ruary >, *++(, S"I Circular 0o$
MFD/CI//(,/+EF/*++( dated March *E, *++(I S"I Circular 0o$ S"I/IMD/CI/
0o$A/?,F()/+? dated March *>, *++?, S"I Circular 0o$ S"I/IMD/CI/
0o$A/>?AF?/*++F dated June *A, *++F, S"I Cir 0o$ S"I/IMD/Cir 0o$(*/()F(,*/+E
dated Decem#er ((,*++E
G
(FE
/egulation )E(*) of S"I (Mutual Funds) /egulations, (>>?
(F>
S"I Circular 0o$ S"I/IMD/CI/ 0o$A/?,F()/+? dated March *>, *++?$
(E+
S"I Circular 0o$ S"I/IMD/CI/ 0o$A/>?AF?/*++F dated June *A, *++F$
(E(
For format of C%/, please refer to section on formats
, , ,
(E*
, ,


E$($A In case the 0A:s are not availa#le #efore the commencement of
#usiness hours on the follo'ing day due to any reason, Mutual
Funds shall issue a press release giving reasons for the delay and
e!plain 'hen they 'ould #e a#le to pu#lish the 0A:s
(E,
$
..2 =ounding off 0A$
(E)

E$*$( %o ensure uniformity, Mutual Funds shall round off 0A: up to four
decimal places for inde! funds and all types of de#t H li=uid/money
mar7et schemes$
E$*$* For all e=uity oriented and #alanced fund schemes, Mutual Funds
shall round off 0A:s up to t'o decimal places$ 2o'ever, Mutual
Funds can round off the 0A:s up to more than t'o decimal places
in case of e=uity oriented and #alanced fund schemes also, if they so
desire
(EA
$ /elevant disclosure in this regard shall #e made in the
SID/SAI
(E?
$
..3 Uniform :ut off (iming$ for applica#ilit! of 0et A$$et
alue of -utual Fund $cheme1$2 andC or plan1$2
(EF

E$,$( Mutual Funds should follo' the 3uidelines enumerated #elo' 'ith
respect to uniform Cut 5off %imingsB
E$,$* DefinitionsB
E$,$*$( In these 3uidelines, unless the conte!t other'ise re=uiresB
a$ OCut5off %imingC, in relation to an investor ma7ing an application
to a Mutual Fund for purchase or sale of units, shall mean, the

(E,
,
(E)
S"I Circular 0o$ MFD/CI//+E/A()/*++* dated July **, *++*, S"I Circular 0o$
MFD/CI//((/(?(A>/*++* dated August **, *++*$
, ,
(EA
S"I Circular 0o$ MFD/CI//((/(?(A>/*++* dated August **, *++*$
,
(E?
S"I Circular 0o$ MFD/CI//+E/A()/*++* dated July **, *++*$
(EF
S"I Circular 0o$ S"I/IMD/CI/ 0o$ ((/FE)A+/+? dated 4cto#er ((, *++?$
,


outer limit of timing 'ithin a particular day 'hich is relevant for
determination of the 0A: applica#le for his transactionI
#$ OInternational schemeC means a Mutual Fund scheme having
su#stantial investments in foreign securities valued as per time
6ones other than Indian Standard %ime 6oneI
c$ O;i=uid fund schemes and plansC shall mean the schemes and
plans of a Mutual Fund as specified in the guidelines
(EE
issued #y
S"I in this regard
(E>
$
E$,$, Applica#ility
E$,$,$( %he 3uidelines on Cut off %imings for applica#ility of 0et Asset
:alue of Mutual Fund scheme(s) and/ or plan(s) shall #e
applica#le to all schemes and plans of Mutual Funds e!ceptB
a$ International schemes and
#$ %ransactions in Mutual Fund units underta7en on a recogni6ed
Stoc7 !change$

E$,$) Fi!ation of uniform Cut5off %imings
E$,$)$( Mutual Funds shall rec7on the Cut5off %imings for their schemes
and plans in compliance 'ith these 3uidelines and the same shall
#e uniformly implemented for all investors$
E$,$)$* Mutual Funds shall ensure that each payment instrument for
su#scription or purchase of units is deposited in a #an7
e!peditiously #y utili6ation of the appropriate #an7ing facility, so
as to comply 'ith the re=uirement in Clause E$,$)$( a#ove$

(EE
8lease refer to the Section on li=uid schemes
(E>
S"I Circular 0o$S"I/IMD/CI/ 0o$(,/(A+>FA/+> dated January (>, *++>


E$,$)$, AMCs shall compensate any loss occasioned to any investor or to
the scheme and/or plan on account of non compliance 'ith
Clause E$,$)$* a#ove$
E$,$A Cut5off %imings for li=uid fund schemes and plans

For determining the applica#le 0A:
(>+
B

E$,$A$( %he follo'ing cut5off timings shall #e o#served #y a mutual fund
in respect of purchase of units in li=uid fund schemes and their
plans, and the follo'ing 0A:s shall #e applied for such purchaseB
a$ 'here the application is received upto *$++ p$m$ on a day and
funds are availa#le for utili6ation #efore the cut5off time 'ithout
availing any credit facility, 'hether, intra5day or other'ise D the
closing 0A: of the day immediately preceding the day of receipt of
applicationI
#$ 'here the application is received after *$++ p$m$ on a day and
funds are availa#le for utili6ation on the same day 'ithout
closing 0A: of the day immediately preceding the ne!t #usiness
day I and
c$ irrespective of the time of receipt of application, 'here the funds
are not availa#le for utili6ation #efore the cut5off time 'ithout
closing 0A: of the day immediately preceding the day on 'hich
the funds are availa#le for utili6ation$
E$,$A$* For allotment of units in respect of purchase in li=uid schemes, it
shall #e ensured thatB
a$ Application is received #efore the applica#le cut5off time$

(>+
S"I Circular 0o S"I/IMD/DF/(A/*+(+ dated 0ovem#er *?, *+(+


#$ Funds for the entire amount of su#scription/purchase as per the
application are credited to the #an7 account of the respective
li=uid schemes #efore the cut5off time$
c$ %he funds are availa#le for utili6ation #efore the cut5off time
'ithout availing any credit facility 'hether intra5day or other'ise,
#y the respective li=uid schemes$
E$,$A$, For allotment of units in respect of s'itch5in to li=uid schemes
from other schemes, it shall #e ensured thatB
a$ Application for s'itch5in is received #efore the applica#le cut5off
time$
#$ Funds for the entire amount of su#scription/purchase as per the
s'itch5in re=uest are credited to the #an7 account of the
respective s'itch5in li=uid schemes #efore the cut5off time$
c$ %he funds are availa#le for utili6ation #efore the cut5off time
'ithout availing any credit facility 'hether intra5day or other'ise,
#y the respective s'itch5in schemes$
E$,$A$) %he follo'ing Cut5off %imings shall #e o#served #y Mutual Funds
'ith respect to repurchase of units in li=uid fund schemes and
plans and the follo'ing 0A:s shall #e applied for such
repurchaseB
a$ @here the application is received up to ,$++ pm D the closing 0A:
of day immediately preceding the ne!t #usiness dayI and
#$ @here the application is received after ,$++ pm D the closing 0A:
of the ne!t #usiness day$


E$,$A$A Mutual Funds shall calculate 0A: for each calendar day for their
li=uid fund schemes and plans$
a$ 1xplanation. M"usiness DayL does not include a day on 'hich the
Money Mar7ets are closed or other'ise not accessi#le$
E$,$? Cut5off %imings for schemes and plans other than li=uid fund
schemes and plans
E$,$?$( A Mutual Fund shall rec7on only prospective 0A:, in accordance
'ith this clause, in respect of all their schemes and plans i$e$ for
other than li=uid fund schemes and plans
E$,$?$* %he follo'ing Cut5off %imings shall #e o#served #y Mutual Funds
in respect of purchase of units in other schemes and plans and
follo'ing 0A:s shall #e applied for such purchaseB
E$,$?$*$( @here the application is received up to ,$++ pm 'ith a local
che=ue or demand draft paya#le at par at the place 'here it
is received D closing 0A: of the day on 'hich the application
is receivedI
E$,$?$*$* @here the application is received after ,$++ pm 'ith a local
che=ue or demand draft paya#le at par at the place 'here it
is received D closing 0A: of the ne!t #usiness dayI and
E$,$?$*$, @here the application is received 'ith an outstation che=ue
or demand draft 'hich is not paya#le on par at the place
'here it is received D closing 0A: of day on 'hich the che=ue
or demand draft is credited$
In respect of purchase of units of mutual fund schemes
(other than li=uid schemes), the closing 0A: of the day on
'hich the funds are availa#le for utili6ation shall #e applica#le


for application amount e=ual to or more than /s$ * la7h,
irrespective of the time of receipt of such application
(>(
$
E$,$?$, For allotment of units in respect of purchase in income/de#t
oriented mutual fund schemes/plans other than li=uid schemes,
it shall #e ensured that
(>*
B
E$,$?$,$( Application is received #efore the applica#le cut5off time (,
pm)$
E$,$?$,$* Funds for the entire amount of su#scription/purchase as per
the application are credited to the #an7 account of the
respective schemes #efore the cut5off time (, pm)$
E$,$?$,$, %he funds are availa#le for utili6ation #efore the cut5off time
(, pm) 'ithout availing any credit facility 'hether intra5day
or other'ise, #y the respective scheme$
E$,$?$) For allotment of units in respect of s'itch5in to income/de#t
oriented mutual fund schemes/plans other than li=uid schemes
from other schemes, it shall #e ensured thatB
E$,$?$)$( Application for s'itch5in is received #efore the applica#le cut5
off time$
E$,$?$)$* Funds for the entire amount of su#scription/purchase as per
the s'itch5in re=uest are credited to the #an7 account of the
respective s'itch5in income/de#t oriented mutual fund
schemes/plans #efore the cut5off time$
E$,$?$)$, %he funds are availa#le for utili6ation #efore the cut5off time
'ithout availing any credit facility 'hether intra5day or

(>(
(>*


other'ise, #y the respective s'itch5in income/de#t oriented
mutual fund schemes/plans$
E$,$?$A %he follo'ing Cut5off %imings shall #e o#served #y Mutual Funds
in respect of repurchase of units in its other schemes and their
plans, and the follo'ing 0A:s shall #e applied for such
repurchaseB
E$,$?$A$( @here the application is received up to ,$++ pm D closing
0A: of the day on 'hich the application is receivedI and
E$,$?$A$* An application received after ,$++ pm D closing 0A: of the
ne!t #usiness day$
E$,$F S'itch and S'eep %ransactions

E$,$F$( 8aragraphs E$,$A and E$,$? shall apply to Os'itch inC transactions
as if they 'ere purchase transactions and to Os'itch outC
transactions as if they 'ere repurchase transactions$

E$,$F$* 8aragraphs E$,$A and E$,$? shall apply to Os'eepC transactions as if
they 'ere purchase transactions and to Oreverse s'eepC
transactions as if they 'ere repurchase transactions$

E$,$F$, In case of Os'itchC transactions from one scheme to another, the
allocation shall #e in line 'ith redemption payouts$

E$,$E %ime Stamping

E$,$E$( Application from investors shall #e received #y Mutual Funds only
at official points of acceptance, addresses of 'hich shall #e
disclosed in the SID and on Mutual FundsC 'e#sites$



E$,$E$* Cut off timings as prescri#ed under 8aragraphs E$,$A and E$,$?
shall apply 'ith reference to the point of time at 'hich the
applications are received at such official points of acceptance$

E$,$E$, %ime stamping machines at all official points of acceptance shall
#e in compliance 'ith the re=uirements mentioned in Section E$)$
E$,$> Compliance /eporting

E$,$>$( Status of compliance 'ith these 3uidelines shall #e reported to
the "oard in the C%/(s)
(>,
of the AMC(s) and the 2alf -early
%rustee /eports
(>)
$

E$,$>$* %he 2alf -early %rustee /eports shall contain a declaration on
'hether the %rustees are satisfied 'ith the systems and
procedures of the Mutual Fund designed for the purpose of
compliance 'ith these 3uidelines$

E$,$>$, Further, the su#stance of these 3uidelines shall #e disclosed to
investors in the SID or in any addendum thereto$
E$,$>$) "ncu?brance of the sche?e property
.9+

/egulations
196
provides that the AMC shall not ac=uire any of the
assets out of the scheme property 'hich involves the assumption
of any lia#ility 'hich is unlimited or 'hich may result in
encum#rance of the scheme property in any 'ay$ AMCCs are
advised to strictly adhere to the said provision$

(>,
for C%/ format, please refer to the section on formats
, , , , ,
(>)
For %rustee report, please refer to the section on formats
,

(>A
(>?
Fourth Schedule of Securities and !change "oard of India (Mutual Funds) /egulations, (>>?


..& =e8uirement$ with re$pect to time $tamping machine$
Dpur$uant to :lau$e .132E
E$)$( For every machine, running serial num#er shall #e stamped from
the first num#er to the last num#er as per its capacity #efore
repetition of the cycle$

E$)$* very application for purchase shall #e stamped on the face and
the corresponding payment instrument shall #e stamped on the
#ac7 indicating the date and time of receipt and running serial
num#er$ %he application and the payment instrument shall
contain the same serial num#er$

E$)$, very application for redemption shall #e stamped on the face
thereof and on the investorCs ac7no'ledgment copy (or t'ice on
the application if no ac7no'ledgment is issued) indicating the
date and time of receipt and running serial num#er$

E$)$) Different applications shall not #e #unched together 'ith the
same serial num#er$

E$)$A "lan7 papers shall not #e time stamped$ 3enuine errors, if any,
shall #e recorded 'ith reasons and the corresponding applications
re=uests shall also #e preserved$

E$)$? %he time stamping machine shall have a tamper proof seal and the
a#ility to open the seal for maintenance or repairs must #e limited to
vendors or nominated persons of the mutual fund, to #e entered in a
proper record$

E$)$F "rea7age of seal and/or #rea7do'n of the time stamping process
shall #e duly recorded and reported to the %rustees$

E$)$E very effort should #e made to ensure uninterrupted functioning of
the time stamping machine$ In case of #rea7do'n, the Mutual


Funds shall ta7e prompt action to rectify the situation$ During the
#rea7do'n period, Mutual Funds shall adopt an alternative time
stamping method that has already #een approved #y the "oard of
the AMC and the %rustee(s)$ An audit trail shall #e availa#le to
chec7 and ensure the accuracy of the time stamping process during
the said period$

E$)$> Any alternate mode of application that does not have any physical or
electronic trail shall #e converted into a physical piece of information
and time stamped in accordance 'ith these 3uidelines$

E$)$(+ Mutual Funds shall maintain and preserve all applications/
re=uests, duly time stamped as aforesaid, at least for a period of
eight years
(>F
to #e a#le to produce them as and 'hen re=uired #y
the "oard or auditors appointed #y the "oard$

..* Uniformit! in calculation of $ale and repurcha$e price
1/.

E$A$( %he follo'ing method is #eing prescri#ed

E$A$($( %o streamline the calculation of sale and repurchase price of
mutual fund units
(>>
,

E$A$($* %o avoid variation in the amounts paya#le to investors and/or
num#er of units allotted to them, and

E$A$($, %o ma7e the calculations more comprehensi#le to the investors$

(>F
/egulation A+(*) of S"I (Mutual Funds) /egulations, (>>?
(>E
S"I Circular 0o$ MFD/CI//+E/A()/*++* dated July **, *++* H S"I Circular 0o$
S"I/IMD/CI/ 0o$ )/ (?E*,+/+> dated June ,+, *++>
, ,
(>>
/egulation )>(,) of the S"I (Mutual Funds) /egulations, (>>?$


E$A$* !it loads shall #e charged as a percentage of the 0A: i$e$ applica#le
load as a percentage of 0A: 'ill #e su#tracted from the 0A: to
calculate the repurchase price$

E$A$, %he formula for the same is as follo'sB

E$A$,$( Sale 8rice R Applica#le 0A:

E$A$,$* /epurchase 8rice R Applica#le 0A: T(( D !it ;oad, if any)



C,-!"R 9
*%$!#&'
/.1 Definition$
244

>$($( 0on %raded Securities
*+(

>$($($( @hen a security (other than 3overnment Securities) is not traded
on any Stoc7 !change for a period of thirty days prior to the
valuation date, the scrip shall #e treated as a non traded security$

>$($* %hinly %raded Securities

>$($*$( %hinly traded e=uity/ e=uity related securitiesB
202

a$ @hen trading in an e=uity and/or e=uity related security
(such as converti#le de#entures, e=uity 'arrants etc$) in a
month is #oth less than Rs.A lacs and the total volume is
less than A+,+++ shares, the security shall #e considered as
thinly traded security and valued accordingly$

#$ In order to determine 'hether a security is thinly traded or
not, the volumes traded in all recogni6ed Stoc7 !changes in
India may #e ta7en into account$

c$ For e!ample, if the volume of trade is (,++,+++ and value is
/s$),++,+++, the shares do not =ualify as thinly traded$ Also
if the volume traded is )+,+++, #ut the value of trades is
/s$?, ++,+++, the shares do not =ualify as thinly traded$

*++
S"I Circular 0o$ MFD/CI//E/>*/*+++ dated Septem#er (E, *+++, S"I Circular 0o$
MFD/CI//()/+EE/*++( dated March *E, *++( and S"I Circular 0o$
MFD/CI//()/))*/*++* dated Fe#ruary *+, *++*$
G ,
*+(
S"I Circular 0o$ MFD/CI//E/>*/*+++ dated Septem#er (E, *+++$
,
*+*
S"I Circular 0o$ MFD/CI//()/+EE/*++( dated March *E, *++($


d$ @here a Stoc7 !change identifies the thinly traded
securities #y applying the a#ove parameters for the
preceding calendar month and pu#lishes or provides the
re=uired information along 'ith the daily =uotations, the
same can #e used #y the Mutual Funds$

e$ If the shares are not listed on the Stoc7 !changes 'hich
provide such information, then Mutual Funds shall ma7e
their o'n analysis in line 'ith the a#ove criteria to chec7
'hether such securities are thinly traded or not and then
value them accordingly$

>$($, %hinly traded De#t Securities
20

>$($,$( A de#t security (other than 3overnment Securities) shall #e
considered as a thinly traded security if, on the valuation date,
there are no individual trades in that security in mar7eta#le lots
(currently applica#le) on the principal Stoc7 !change or any
other Stoc7 !change$

/.2 aluation of Securitie$
>$*$( %raded SecuritiesB
20/

>$*$($( @hen a security (other than de#t securities) is not traded on any
Stoc7 !change on a particular valuation day, the value at 'hich
it 'as traded on the selected Stoc7 !change, as the case may #e,
on the earliest previous day may #e used provided such date is
not more than thirty days prior to valuation date$

>$*$($* @hen a de#t security (other than 3overnment Securities) is not
traded on any Stoc7 !change on any particular valuation day,

*+,
S"I Circular 0o$ MFD/CI//()/))*/*++* dated Fe#ruary *+, *++*$
,
*+)



the value at 'hich it 'as traded on the principal Stoc7 !change
or any other Stoc7 !change, as the case may #e, on the earliest
previous day may #e used provided such date is not more than
fifteen days prior to valuation date$ @hen a de#t security (other
than 3overnment Securities) is purchased #y 'ay of private
placement, the value at 'hich it 'as #ought may #e used for a
period of fifteen days #eginning from the date of purchase$

>$*$* 0on5%raded /and/or %hinly %raded SecuritiesB
202

>$*$*$( AMCs shall value non traded and/or thinly traded securities Min
good faithL #ased on the :aluation norms prescri#ed #elo'B

>$*$, 0on5traded/ and/or thinly traded e=uity securitiesB

>$*$,$( "ased on the latest availa#le "alance Sheet, 0et @orth shall #e
calculated as follo'sB

a$ 0et @orth per share R UShare CapitalQ /eserves (e!cluding
/evaluation /eserves) D Miscellaneous e!penditure and De#it
"alance in 8rofit and ;oss AccountV / 0um#er of 8aid up
Shares$

#$ Average Capitali6ation rate (8/ ratio) for the industry #ased
upon either "S or 0S data ('hich shall #e follo'ed
consistently and changes, if any, noted 'ith proper
&ustification thereof) shall #e ta7en and discounted #y FA per
cent i$e$ only *A per cent$ 4f the industry average 8/ shall #e
ta7en as Capitali6ation rate (8/ ratio)$ arnings per share
(8S) of the latest audited annual accounts shall #e considered
for this purpose$

*+A


c$ %he value as per the 0et @orth value per share and the capital
earning value calculated as a#ove shall #e averaged and
further discounted #y (+ per cent$ for illi=uidity so as to arrive
at the fair value per share$

d$ In case the 8S is negative, 8S value for that year shall #e
ta7en as 6ero for arriving at capitalised earning$

e$ In case 'here the latest "alance Sheet of the company is not
availa#le 'ithin nine months from the close of the year, unless
the accounting year is changed, the shares of such companies
shall #e valued at 6ero$

f$ In case an individual security accounts for more than A per
cent$ of the total assets of the scheme, an independent valuer
shall #e appointed for the valuation of the said security$ %o
determine if a security accounts for more than A per cent$ of
the total assets of the scheme, it shall #e valued #y the
procedure a#ove and the proportion 'hich it #ears to the total
net assets of the scheme to 'hich it #elongs 'ill #e compared
on the date of valuation
*+?
$

g$ In case trading in an e=uity security is suspended up to thirty
days, then the last traded price shall #e considered for
valuation of that security$ If an e=uity security is suspended for
more than thirty days, then the AMC(s) or %rustees shall decide
the valuation norms to #e follo'ed and such norms shall #e
documented and recorded$

*+?
S"I Circular 0o$ MFD/CI//()/+EE/*++( dated March *E, *++(


>$*$) 0on traded/thinly %raded De#t security
>$*$)$( A thinly traded de#t security as defined a#ove shall #e valued as
per the norms for non traded de#t security$

a$ :aluation
*+F
of money mar7et and de#t securities 'ith residual
maturity of upto ?+
*+E
daysB

($ All money mar7et and de#t securities, including floating rate
securities, 'ith residual maturity of upto ?+ days shall #e
valued at the 'eighted average price at 'hich they are traded
on the particular valuation day$ @hen such securities are not
traded on a particular valuation day they shall #e valued on
amorti6ation #asis$ It is further clarified that in case of
floating rate securities 'ith floor and caps on coupon rate
and residual maturity of upto ?+ days then those shall #e
valued on amorti6ation #asis ta7ing the coupon rate as floor$

#$ :aluation of money mar7et and de#t securities 'ith residual
maturity of over ?+
*+>
daysB

($ All money mar7et and de#t securities, including floating rate
securities, 'ith residual maturity of over ?+ days shall #e
valued at 'eighted average price at 'hich they are traded on
the particular valuation day$ @hen such securities are not
traded on a particular valuation day they shall #e valued at
#enchmar7 yield/ matri! of spread over ris7 free #enchmar7
yield o#tained from agency(ies) entrusted for the said purpose
#y AMFI$

*+F
S"I Circular 0o$ S"I/IMD/CI/ 0o$(?/ (>,,EE/*+(+ dated Fe#ruary +*, *+(+
*+E
S"I Circular 0o$Cir/IMD/DF/?/*+(* dated Fe#ruary *E, *+(*
*+>



*$ %he approach in valuation of non traded de#t securities is
#ased on the concept of using spreads over the #enchmar7
rate to arrive at the yields for pricing the non traded security$

,$ %he -ields for pricing the non traded de#t security 'ould #e
arrived at using the process as defined #elo'$

Step (B A /is7 Free "enchmar7 -ield is #uilt using the
government securities as the #ase$ 3overnment securities are
used as the #enchmar7s as they are traded regularlyI free of
credit ris7I and traded across different maturity spectrums
every 'ee7$

Step *B A Matri! of spreads (#ased on the credit ris7) are #uilt
for mar7ing up the #enchmar7 yields$ %he matri! is #uilt
#ased on traded corporate paper on the 'holesale de#t
segment of an appropriate stoc7 e!change and the primary
mar7et issuances$ %he matri! is restricted only to investment
grade corporate paper$

Step ,B %he yields as calculated a#ove are Mar7ed5
up/Mar7ed5do'n for ill5li=uidity ris7

Step )B %he -ields so arrived are used to price the portfolio$

/.3 -ethodolog!>
>$,$( Construction of /is7 Free "enchmar7
2"0

>$,$($( .sing 3overnment of India dated securitiesI the "enchmar7 shall
#e constructed as #elo'B

a$ 3overnment of India dated securities 'ill #e grouped into various
duration #uc7ets such as +$(?)5+$*A yrs
*((
, +$*A5 +$A yrs
*(*
, +$A5

*(+
, ,


( year, (5* years, *5, years, )5A years, A5? years and ? years and
the volume 'eighted yield 'ould #e computed for each #uc7et$
%hese duration #uc7ets may #e changed to reflect the mar7et
value more closely #y any agency suggested #y AMFI giving
#enchmar7 yield/ matri! of spreads over #enchmar7 yield$

#$ %he #enchmar7 as calculated a#ove 'ill #e set at least 'ee7ly,
and in the event of any significant movement in prices of
3overnment Securities on account of any event impacting interest
rated on any day such as a change in the /eserve "an7 of India
(/"I) policies, the #enchmar7 'ill #e reset to reflect any change
in the mar7et conditions$
>$,$* "uilding a Matri! of Spreads for Mar7ing5up the "enchmar7 -ield
*(,

>$,$*$( Mar7 up for credit ris7 over the ris7 free #enchmar7 -%M as
calculated in >$,$( a#ove, 'ill #e determined using the trades of
corporate de#entures/#onds of different ratings$ All trades on
appropriate stoc7 e!change during the fortnight prior to the
#enchmar7 date 'ill #e used in #uilding the corporate -%M and
spread matrices$ Initially these matrices 'ill #e #uilt only for
corporate securities of investment grade$ %he matrices are
dynamic and the spreads 'ill #e computed every 'ee7$ %he matri!
'ill #e #uilt for all duration #uc7ets for 'hich the #enchmar7 34I
matri! is #uilt to effectively lin7 the corporate matri! 'ith the 34I
securities matri!$ AccordinglyB
a$ All traded paper ('ith minimum traded value of Rs.( crore) 'ill #e
classified #y their ratings and grouped into F duration #uc7etsI for
rated securities, the most conservative pu#licly availa#le rating 'ill
#e usedI

*((
*(*
S"I/IMD/CI/ 0o$(?/ (>,,EE/*+(+ dated Fe#ruary +*, *+(+
*(,



#$ For each rating category, average volume 'eighted yield 'ill #e
o#tained #oth from trades on the appropriate stoc7 e!change and
from the primary mar7et issuances
c$ @here there are no secondary trades on the appropriate stoc7
e!change in a particular rating category and no primary mar7et
issuances during the fortnight under consideration, then trades on
appropriate stoc7 e!change during the ,+ day period prior to the
#enchmar7 date 'ill #e considered for computing the average -%M
for such rating categoryI
d$ If the matri! cannot #e populated using any or all of the a#ove
steps, then credit spreads from trades on appropriate stoc7
e!change of the relevant rating category over the AAA trades 'ill #e
used to populate the matri!I
e$ In each rating category, all outliers 'ill #e removed for smoothening
the -%M matri!I
f$ Spreads 'ill #e o#tained #y deducting the -%M in each duration
category from the respective -%M of the 34I securitiesI
g$ In the event of lac7 of trades in the secondary mar7et and the
primary mar7et the gaps in the matri! 'ould #e filled #y
e!trapolation$ If the spreads cannot #e e!trapolated for the reason
of practicality, the gaps in the matri! 'ill #e filled #y carrying the
spreads from the last matri!$
h$ Accordingly, all Mutual Funds shall provide transaction details of
various types of de#t securities li7e 0CDs, Mi#or lin7ed floaters
and C8s on daily #asis in the prescri#ed format enclosed at
Anne!ure , to the agency recommended #y AMFI$ Su#mission of
data 'ould help in daily matri! generation, 'ould improve
uniformity and accuracy of valuation in the Mutual Funds
industry
*()
$

*()
S"I Circular 0o$ MFD/CI/$0o *, / +?? /*++, dated March F,*++,


>$,$, Mar75up/Mar75do'n -ield

>$,$,$( %he -ields calculated 'ould #e mar7ed5up/mar7ed5do'n to
account for the illi=uidity ris7, promoter #ac7ground, finance
company ris7 and the issuer class ris7$ As the level of illi=uidity
ris7 'ould #e higher for non rated securities the mar7ing process
for rated and non rated securities 'ould #e differentiated as
follo'sB

a$ Ad&ustments for Securities rated #y e!ternal rating agencies
*(A

Category Discretionary ?ar@
upA?ar@ do>n
Q 5
/ated instruments 'ith
duration upto * years
(++ #ps A+ #ps
/ated instruments 'ith
duration over * years
FA #ps *A #ps

($ %he rationale for the a#ove discount structure is to ta7e
cogni6ance of the differential interest rate ris7 of the securities$
%his structure 'ill #e revie'ed periodically$

#$ Ad&ustments for Internally /ated Securities
*(?

($ %o value an un5rated security, the fund manager shall assign
an internal credit rating, 'hich 'ill #e used for valuation$
Since un5rated instruments tend to #e more illi=uid than rated
securities, the yields 'ould #e mar7ed up #y adding
discretionary discount as underB

*(A
*(?
, , , , ,
Category Discretionary discount
.nrated instruments Discretionary discount of upto


*$ %he #enchmar7 yield/ matri! of spreads over ris7 free
#enchmar7 yield o#tained from any agency suggested #y
AMFI, must #e applied for valuation of securities on the day of
release of such #ench mar7 yield/ matri! of spreads #y the
aforesaid agency$
*(F

>$,$,$* Chief !ecutive 4fficer ('hatever his designation may #e) of the
AMC shall give prior approval to the use of discretionary mar7 up
or do'n limit$

/.& aluation of $ecuritie$ with 3utC:all Option$>
21.

>$)$( %he option em#edded securities 'ould #e valued as follo'sB

>$)$($( Securities 'ith call option

a$ %he securities 'ith call option shall #e valued at the lo'er of the
value as o#tained #y valuing the security to final maturity and
valuing the security to call option$ In case there are multiple call
options, the lo'est value o#tained #y valuing to the various call
dates and valuing to the maturity date is to #e ta7en as the value
of the instrument$

*(F
,
*(E
'ith duration upto *
years
QA+ #ps over and a#ove
mandatory discount of QA+ #ps
.nrated instruments
'ith duration over *
years
Discretionary discount of upto
QA+ #ps over and a#ove
mandatory discount of Q*A #ps


>$)$($* Securities 'ith 8ut option

a$ %he securities 'ith put option shall #e valued at the higher of the
value as o#tained #y valuing the security to final maturity and
valuing the security to put option$ In case there are multiple put
options, the highest value o#tained #y valuing to the various put
dates and valuing to the maturity date is to #e ta7en as the value
of the instruments$

>$)$($, Securities 'ith #oth 8ut and Call option on the same day

a$ %he securities 'ith #oth 8ut and Call option on the same day
'ould #e deemed to mature on the 8ut/Call day and 'ould #e
valued accordingly$

/.* aluation of ;o%ernment Securitie$

>$A$( 3overnment securities 'ill #e valued at prices for government
securities released #y an agency suggested #y AMFI to ensure
uniformity in calculation of 0A:s
*(>
$
/.+ Illi8uid Securitie$
220

*(>
G , ,
**+
($ 8rovided that in case any scheme has illi=uid securities in e!cess of (AK of total
assets as on Septem#er ,+, *+++ then such a scheme shall 'ithin a period of t'o
years #ring do'n the ratio of illi=uid securities 'ithin the prescri#ed limit of (A
per cent$ in the follo'ing time frameB
a$ All the illi=uid securities a#ove *+ per cent$ of total assets of the scheme shall
#e assigned 6ero value on Septem#er ,+, *++($
#$ All the illi=uid securities a#ove (A per cent$ of total assets of the scheme shall
#e assigned 6ero value on Septem#er ,+, *++*$
*$ In respect of closed ended funds, for the purposes of valuation of illi=uid
securities, the limits of (A per cent$ and *+ per cent$ applica#le to open ended
funds should #e increased to *+ per cent$ and *A per cent$ respectively$
,$ @here a scheme has illi=uid securities as at Septem#er ,+, *++( not e!ceeding
(AK in the case of an open5ended fund and *+K in the case of closed fund, the
concessions of giving time period for reducing the illi=uid security to the
prescri#ed limits 'ould not #e applica#le and at all time the e!cess over (AK or
*+K shall #e assigned nil value


>$?$( Aggregate value of Milli=uid securitiesL under a scheme, 'hich are
defined as non5traded, thinly traded and unlisted e=uity shares,
shall not e!ceed (A per cent of the total assets of the scheme and
any illi=uid securities held a#ove (A per cent$ of the total assets
shall #e assigned 6ero value$

>$?$* All Mutual Funds shall disclose as on March ,( and Septem#er ,+
the scheme 'ise total illi=uid securities in value and percentage of
the net assets 'hile disclosing 2alf -early 8ortfolios to the unit
holders$ In the list of investments, an asteris7 mar7 shall #e given
against all such investments 'hich are recognised as illi=uid
securities$

>$?$, Mutual Funds shall not #e allo'ed to transfer illi=uid securities
among their schemes$



/.) ;uideline$ for Identification and 3ro%i$ioning for 0on
3erforming A$$et$ 1De#t Securitie$)
221

>$F$( Definition of a 0on 8erforming Asset (08A)
>$F$($( An OassetC shall #e classified as 08A if the interest and/or
principal amount have not #een received or remained outstanding
for one =uarter from the day such income and/or installment 'as
due$
>$F$* ffective date for classification and provisioning of 08As
>$F$*$( %he definition of 08A may #e applied after a =uarter past due date
of the interest$ For e$g$ if the due date for interest is ,+$+?$*+++, it
'ill #e classified as 08A from +($(+$*+++$
>$F$, %reatment of income accrued on the 08A and further accruals

>$F$,$( After the e!piry of the (
st
=uarter from the date the income has
fallen due, there 'ill #e no further interest accrual on the asset
i$e$ if the due date for interest falls on ,+$+?$*+++ and if the
interest is not received, accrual 'ill continue till ,+$+>$*+++ after
'hich there 'ill #e no further accrual of income$ In short, ta7ing
the a#ove e!ample, from the #eginning of the *
nd
=uarter there 'ill
#e no further accrual on income$

>$F$,$* 4n classification of the asset as 08A from a =uarter past due date
of interest, all interest accrued and recogni6ed in the #oo7s of
accounts of the Mutual Fund till the date shall #e provided for$
For e$g$ if interest income falls due on ,+$+?$*+++, accrual of
interest 'ill continue till ,+$+>$*+++ even if the income as on
,+$+?$*+++ has not #een received$ Further, no accrual 'ill ta7e

**(



place from +($(+$*+++ on'ards$ Full provision 'ill #e made for
interest accrued and outstanding as on ,+$+?$*+++$
>$F$) 8rovision for 08As D De#t Securities

>$F$)$( "oth secured and unsecured investments, once they are
recogni6ed as 08As, call for provisioning in the same manner
and 'here these are related to close ended schemes, the phasing
'ould #e such that to ensure full provisioning prior to the closure
of the scheme or the scheduled phasing 'hich ever is earlier$

>$F$)$* %he value of the asset shall #e provided in the follo'ing manner or
earlier at the discretion of the Mutual Fund$ Mutual Funds 'ill
not have discretion to e!tend the period of provisioning$ %he
provisioning against the principal amount or installments shall #e
made at the follo'ing rates irrespective of 'hether the principal is
due for repayment or not$

a$ (+ percent of the #oo7 value of the asset shall #e provided for
after ? months past due date of interest i$e$ , months form the
date of classification of the asset as 08A$
#$ *+ percent of the #oo7 value of the asset should #e provided for
after > months past due date of interest i$e$ ? months from the
date of classification of the asset as 08A$
c$ Another *+ percent of the #oo7 value of the assets shall #e
provided for after (* months past due date of interest i$e$ >
months from the date of classification of the asset as 08A$
d$ Another *A percent of the #oo7 value of the assets shall #e
provided for after (A months past due date of interest i$e$ (*
months from the date of classification of the asset as 08A$
e$ %he #alance *A percent of the #oo7 value of the asset shall #e
provided for after (E months past due date of the interest i$e$ (A
months from the date of classification of the assets as 08A$


>$F$)$, "oo7 value for the purpose of provisioning for 08As shall #e ta7en
as a value determined as per the prescri#ed valuation method$
>$F$)$) %his can #e e!plained #y an illustrationB
a$ ;et us consider that interest income is due on a half yearly #asis
and the due date falls on ,+$+?$*+++ and the interest is not
received till (
st
=uarter after due date i$e$ ,+$+>$*+++$ %he
provisioning 'ill #e done in the follo'ing phased mannerB

#$ %hus, one and half years past the due date of income or one year
and three months from the date of classification of the OassetC as
an 08A, the OassetC 'ill #e fully provided for$ If any installment is
fallen due, during the period of interest default, the amount of
provision shall #e the installment amount or a#ove provision
amount, 'hichever is higher$
>$F$A /eclassification of assets
>$F$A$( .pon reclassification of assets as Operforming assetsCB
a$ In case a company has fully cleared all the arrears of interest, the
interest provisions can #e 'ritten #ac7 in full$
#$ %he asset 'ill #e reclassified as performing on clearance of all
interest arrears and if the de#t is regularly serviced over the ne!t
t'o =uarters$
(+K provision +($+($*++( ? months past due date of
interest i$e$ , months from the
date of classification of asset
as 08A (+($(+$*+++)
*+K provision +($+)$*++(
*+K provision +($+F$*++(
*AK provision +($(+$*++(
*AK provision +($+($*++*


c$ In case the company has fully cleared all the arrears of interest,
the interest not credited on accrual #asis shall #e credited at the
time of receipt$
d$ %he provision made for the principal amount can #e 'ritten #ac7
in the follo'ing manner
($ (++K of the asset provided for in the #oo7s 'ill #e 'ritten
#ac7 at the end of the *
nd
=uarter 'here the provision of
principal 'as made due to the interest defaults only$
*$ A+K of the asset provided for in the #oo7s 'ill #e 'ritten
#ac7 at the end of the *
nd
=uarter and *AK after every
su#se=uent =uarter 'here #oth installments and interest
payment 'ere in default earlier$
,$ 1xplanation. %he 'ords M*
nd
=uarterL 'herever appear, shall
mean *
nd
calendar =uarter$
***

e$ An asset is reclassified as Pstandard assetP only 'hen #oth, the
overdue interest and overdue installments are paid in full and
there is satisfactory performance for a su#se=uent period of ?
months$
>$F$? /eceipt of past duesB
>$F$?$( @hen the Mutual Fund has received income/ principal amount
after their classifications as 08AsB
a$ For the ne!t * =uarters, income shall #e recogni6ed on cash #asis
and thereafter on accrual #asis$ %he asset 'ill #e continued to #e
classified as 08A for these t'o =uarters$
#$ During this period of t'o =uarters although the asset is classified
as 08A no provision needs to #e made for the principal if the same
is not due and outstanding$

***
S"I Circular 0o$ MFD/CI//()/+EE/*++( dated March *E, *++($



c$ If part payment is received to'ards principal, the asset continues
to #e classified as 08A and provisions are continued as per the
norms set at >$F$) a#ove any e!cess provision 'ill #e 'ritten
#ac7$
>$F$F Classification of Deep Discount "onds as 08As
>$F$F$( Investments in Deep Discount "onds can #e classified as 08As, if
any t'o of the follo'ing conditions are satisfiedB
a$ If the rating of the "ond comes do'n to 3rade O""C (or its
e=uivalent) or #elo'
#$ If the company is defaulting in their commitments in respect of
other assets, if availa#le$
c$ Full 0et 'orth erosion$
>$F$F$* 8rovision should #e made as per the norms set at >$F$) a#ove as
soon as the asset is classified as 08A$
>$F$F$, Full provision can #e made if the rating comes do'n to 3rade ODC
(or its e=uivalent)$
>$F$E /eschedulement of an asset
>$F$E$( In case a company defaults in payment of either interest or
principal amount and the Mutual Fund has accepted a
rescheduling of the schedule of payments, then the follo'ing
practice shall #e adhered toB
a$ In case it is a first reschedulement and only payment of interest
is in default, the classification of the asset as 08A shall #e
continued and e!isting provisions shall not #e 'ritten #ac7$ %his
practice shall #e continued for t'o =uarters of regular servicing of
the de#t$ %hereafter, this #e classified as Operforming assetC and
the interest provided can #e 'ritten #ac7$


#$ If the reschedulement is done due to default in interest and
principal amount, the asset shall continue as 08A for a period of
) =uarters, even though the asset is continued to #e serviced
during these ) =uarters regularly$ %hereafter, the asset can #e
classified as Operforming assetC and all the interest provided till
such date shall #e 'ritten #ac7$
c$ If the reschedulement is done for a second/ third time or
thereafter, the characteristics of 08A should #e continued for
eight =uarters of regular servicing of the de#t$ %he provision shall
#e 'ritten #ac7 only after the asset is reclassified as Operforming
assetC$
>$F$> Disclosure in the 2alf -early 8ortfolio /eports
>$F$>$( Mutual Funds shall ma7e scrip 'ise disclosures of 08As on 2alf
-early #asis along 'ith the 2alf -early 8ortfolio Disclosure in the
format prescri#ed
**,
$
>$F$>$* %he total amount of provisions made against the 08As shall #e
disclosed in addition to the total =uantum of 08As and their
proportion to the assets of the Mutual Fund scheme$ In the list of
investments and asteris7 mar7 shall #e given against such
investments 'hich are recogni6ed as 08As$ @here the date of
redemption of an investment has lapsed, the amount not
redeemed shall #e sho'n as OSundry De#torsC and not investment,
provided, that 'here an investment is redeema#le #y installments,
that 'ill #e sho'n as an investment until all installments have
#ecome overdue$

**,
For formats of 2alf yearly disclosure, please refer to the section on Formats


/.. In%e$tment in Unli$ted "8uit! Share$
22&

>$E$( %o ensure uniformity in calculation of 0A: the follo'ing guidelines
are issuedB
>$E$($( Methodology for :aluation < unlisted e=uity shares of a company
shall #e valued Nin good faithN as #elo'B
a$ "ased on the latest availa#le audited #alance sheet, 0et @orth
shall #e calculated as the lo'er of item (() and (*) #elo'B
($ 0et @orth per share R UShare Capital Q Free /eserves
(e!cluding revaluation reserves) 5 Miscellaneous e!penditure
not 'ritten off or deferred revenue e!penditure, intangi#le
assets and accumulated lossesV / 0um#er of 8aid up Shares$
*$ After ta7ing into account the outstanding 'arrants and
options, 0et @orth per share shall again #e calculated and
shall #e R UShare Capital Q consideration on e!ercise of 4ption
and/or @arrants received/receiva#le #y the Company Q Free
/eserves (e!cluding /evaluation /eserves) 5 Miscellaneous
e!penditure not 'ritten off or deferred revenue e!penditure,
intangi#le assets and accumulated lossesV / 0um#er of 8aid
up Shares plus 0um#er of Shares that 'ould #e o#tained on
conversion and/or e!ercise of 4utstanding @arrants and
4ptions$
,$ %he lo'er of (() and (*) a#ove shall #e used for calculation of
0et @orth per share and for further calculation in (c) #elo'$
#$ Average capitalisation rate (8/ ratio) for the industry #ased upon
either "S or 0S data ('hich shall #e follo'ed consistently and

**)
S"I Circular 0o$ MFD/CI//+,/A*?/*++* dated May >, *++*$



changes, if any, noted 'ith proper &ustification thereof) shall #e
ta7en and discounted #y FA per cent$ i$e$ only *A per cent of the
industry average 8/ shall #e ta7en as capitalisation rate (8/
ratio)$ arnings per share (8S) of the latest audited annual
accounts 'ill #e considered for this purpose$
c$ %he value as per the 0et @orth value per share and the capital
earning value calculated as a#ove shall #e averaged and further
discounted #y (A per cent for illi=uidity so as to arrive at the fair
value per share$
>$E$($* %he a#ove valuation methodology shall #e su#&ect to the follo'ing
conditionsB
a$ All calculations shall #e #ased on audited accounts$
#$ If the latest "alance Sheet of the company is not availa#le 'ithin
nine months from the close of the year, unless the accounting
year is changed, the shares of such companies shall #e valued at
6ero$
c$ If the 0et @orth of the company is negative, the share 'ould #e
mar7ed do'n to 6ero$
d$ In case the 8S is negative, 8S value for that year shall #e ta7en
as 6ero for arriving at capitalised earning$
e$ In case an individual security accounts for more than A per cent
of the total assets of the scheme, an independent valuer shall #e
appointed for the valuation of the said security$ %o determine if a
security accounts for more than A per cent of the total assets of
the scheme, it shall #e valued in accordance 'ith the procedure
as mentioned a#ove on the date of valuation$



>$E$* At the discretion of the AMCs and 'ith the approval of the %rustees,
unlisted e=uity shares may #e valued at a price lo'er than the value
derived using the aforesaid methodology$

>$E$, Due Diligence
>$E$,$( Mutual Funds shall not ma7e Investment in unlisted e=uity
shares at a price higher than the price o#tained #y using the
aforesaid methodology$ 2o'ever, this restriction is not applica#le
for investment made in the Initial 8u#lic 4ffers (I84s) of the
companies or firm allotment in pu#lic issues 'here all the
regulatory re=uirements and formalities pertaining to pu#lic
issues have #een complied 'ith #y the companies and 'here the
Mutual Funds are re=uired to pay &ust #efore the date of pu#lic
issue$
>$E$,$* %he "oard of the AMC and "oard of %rustees shall lay do'n the
parameters for investing in unlisted e=uity shares$ %hey shall pay
specific attention as to 'hether due diligence 'as e!ercised 'hile
ma7ing such investments and shall revie' the performance of
such investments in their periodical meetings
**A
$

>$E$) /eporting of Compliance
>$E$)$( Comments on compliance of these 3uidelines shall #e indicated
#y the AMCs and %rustees in their C%/s
**?
and 2alf -early
/eports
**F
filed 'ith the "oard$

**A
S"I Circular 0o$ MFD/CI//?/F,/*+++ dated July *F, *+++$
**?
For C%/ format please refer to the section on formats
**F
For 2alf -early /eports, please refer to the section on formats


/./ aluation of $ecuritie$ not co%ered under the current
%aluation polic!
22.
.
>$>$( In case of securities purchased #y mutual funds do not fall 'ithin
the current frame'or7 of the valuation of securities then such
mutual fund shall report immediately to AMFI regarding the same$
Further, at the time of investment AMCs shall ensure that the total
e!posure in such securities does not e!ceed AK of the total A.M of
the scheme$
>$>$* AMFI has #een advised that the valuation agencies should ensure
that the valuation of such securities gets covered in the valuation
frame'or7 'ithin si! 'ee7s from the date of receipt of such
intimation from mutual fund$
>$>$, In the interim period, till AMFI ma7es provisions to cover such
securities in the valuation of securities frame'or7, the mutual funds
shall value such securities using their proprietary model 'hich has
#een approved #y their independent trustees and the statutory
auditors$
/.14 Di$$emination of information>
>$(+$( All mutual funds shall provide transaction details, including inter
scheme transfers, of money mar7et and de#t securities on daily
#asis to the agency entrusted for providing the #enchmar7 yield/
matri! of spread over ris7 free #enchmar7 yield$ Su#mission of
data
**>
'ould help in daily matri! generation and 'ould improve
uniformity and accuracy of valuation in the mutual funds industry$

**E
S"I/IMD/CI/ 0o$(?/(>,,EE/*+(+ dated Fe#ruary +*, *+(+ and Cir/IMD/DF/)/*+(+
dated June *(, *+(+
**>
S"I Circular 0o$MFD/CI//*, /+?? / *++, dated March F, *++,$ For disclosure of
transaction details, please refer to the section on Formats


>$(+$* %he AMCs shall also disclose all details of de#t and money mar7et
securities transacted (including inter scheme transfers) in its
schemes portfolio on its 'e#site and the same shall #e for'arded to
AMFI for consolidation and dissemination as per format
*,+
$ %hese
disclosures shall #e made settlement date 'ise on daily #asis 'ith a
time lag of ,+ days
*,(
$

/.11 :on$i$tenc!
>$(($( All AMCCs shall ensure that similar securities held under its various
schemes shall #e valued consistently$

*,+
For format please refer to the section on formats
*,(



C,-!"R .:
%&DS; F""S; C,RG"S 'D "(-"'S"S
14.1 7imit$ on fee$ and e<pen$e$ charged to $cheme$
232

(+$($( Mutual Funds may charge certain e!penses to a scheme, as
specified under /egulations$
*,,
Apart from the these e!penses, any
other e!pense as may #e approved #y S"I under clause (!iii) of
Su# /egulation A*()) can also #e charged to the Mutual Fund
schemes$ 4ther e!penses directly attri#uta#le to a scheme may #e
charged 'ith the approval of trustees 'ithin the overall limits as
provided in the /egulation A*(?)$
*,)

(+$($* Additional %/
*,A
can #e charged up to ,+ #asis points on daily net
assets of the scheme as per /egulation A*
*,?
, if the ne' inflo's
from #eyond top (A cities are at least (a) ,+K of gross ne' inflo's
in the scheme or (#) (AK of the average assets under management
(year to date) of the scheme, 'hichever is higher$
In case inflo's from #eyond top (A cities is less than the higher
of (a) or (#) a#ove, additional %/ on daily net assets of the scheme
shall #e charged as follo'sB
Daily net assets 1 ,+ #asis points 1 0e' inflo's from #eyond top (A cities
365* X Higher of (a) or (b) above

T ,??, 'herever applica#le$

*,*
S"I Circular 0o$ IIMA/8/MF/CI//+(/)*E/>F dated Fe#ruary *E, (>>F, S"I Circular
0o$ IIMA/8/MF/CI//+F/E*?/>E dated April (A, (>>E, S"I Circular 0o$
MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++$
*,,
/egulation A*()) of the Mutual Funds /egulations,(>>?
*,)
S"I Circular 0o$ MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++$
*,A
*,?
/egulation A* of the Mutual Funds /egulations,(>>?


%he top (A cities shall mean top (A cities #ased on
Association of Mutual Funds in India (AMFI) data on OA.M #y
3eography D Consolidated Data for Mutual Fund IndustryC as at
the end of the previous financial year$
(+$($, %he additional %/ on account of inflo's from #eyond top (A cities
so charged shall #e cla'ed #ac7 in case the same is redeemed
'ithin a period of ( year from the date of investment$

(+$($) Mutual funds/AMCs shall ma7e complete disclosures in the half
yearly report of %rustees to S"I regarding the efforts
underta7en #y them to increase geographical penetration of
mutual funds and the details of opening of ne' #ranches,
especially at locations #eyond top (A cities$

(+$($A "ro7erage and transaction cost
*,F
incurred for the purpose of
e!ecution of trade may #e capitali6ed to the e!tent of (*#ps
and A#ps for cash mar7et transactions and derivatives
transactions respectively$ Any payment to'ards #ro7erage and
transaction cost, over and a#ove the said (* #ps and A#ps for
cash mar7et transactions and derivatives transactions respectively
may #e charged to the scheme 'ithin the ma!imum limit of %otal
!pense /atio (%/) as prescri#ed under regulation A*
*,E
$ Any
e!penditure in e!cess of the said prescri#ed limit (including
#ro7erage and transaction cost, if any) shall #e #orne #y the AMC
or #y the trustee or sponsors$

*,F
S"I Circular 0o$ CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(* H S"I Circular 0o$
CI//IMD/DF/*)/*+(* dated 0ovem#er (>, *+(*$
*,E
/egulation A* of the S"I (Mutual Funds) /egulations, (>>?


(+$($? Investor ducation and A'areness
*,>
B

(+$($?$( Mutual Funds/AMCs shall annually set apart at least * #asis
points on daily net assets 'ithin the ma!imum limit of %/ as
per regulation A* of the /egulations for investor education and
a'areness initiatives$ Mutual Funds shall ma7e complete
disclosures in the half yearly trustee report to S"I
regarding the investor education and a'areness initiatives
underta7en$
(+$($F %he follo'ing e!penses cannot #e charged to the schemes of Mutual
FundsB

(+$($F$( 8enalties and fines for infraction of la's$

(+$($F$* Interest on delayed payment to the unit holders$

(+$($F$, ;egal, mar7eting, pu#lication and other general e!penses not
attri#uta#le to any scheme(s)$

(+$($F$) Fund Accounting Fees$

(+$($F$A !penses on investment management/general management$

(+$($F$? !penses on general administration, corporate advertising and
infrastructure costs$

(+$($F$F Depreciation on fi!ed assets and soft'are development
e!penses$

(+$($F$E Such other costs as may #e prohi#ited #y the "oard$
(+$($E %he e!penditure and/or fee paya#le #y Mutual Funds to the
Depositories may either #e capitali6ed or included as part of

*,>


recurring e!penditure 'ithin the limits prescri#ed under /egulation
A*(?) of the Mutual Funds /egulations
*)+
$
(+$($> Further, each item of e!penditure accounting for more than (+K of
total e!penditure shall #e disclosed in the accounts or the notes
thereto of the schemes
*)(
$
(+$($(+ 8rovision of charging of additional management fees #y the Asset
Management Companies in case of schemes launched on no load
#asis
*)*
$
(+$($(+$( AMC shall not collect any additional management fees referred
to in /egulation
*),
$
(+$($(+$* Mutual Fund Schemes to #e launched including those for 'hich
o#servation letter have #een issued under /egulation
*))
'ould
#e re=uired to carry out the changes in SID and file the same
'ith S"I #efore the launch$

14.2 =e$triction on pa!ing #ro'erage or commi$$ion
2&*

(+$*$( In case of investments made #y the Sponsor(s), no #ro7erage or
commission shall #e paid$
14.3 =e$triction on charging Ser%ice (a<
2&+

(+$,$( AMC(s) can charge Service %a!, as per applica#le %a!ation ;a's, to
the scheme(s) 'ithin the limits prescri#ed under /egulations
*)F

*)+
S"I Circular 0o$ IIMA/8/MF/CI//+F/E*?/>E dated April (A, (>>E$
, , ,
*)(
*)*
*),
/egulation A*(,) of S"I Mutual Funds /egulation, (>>? and S"I Circular 0o$
S"I/IMD/CI/ 0o$ )/ (?E*,+/+> dated June ,+, *++>
*))
/egulation *> of S"I (Mutual Funds) /egulations, (>>?
*)A
S"I Circular 0o$ MFD/CI/ 0o$,/*((/*++( dated April ,+, *++(, S"I Circular 0o$
MFD/CI/ 0o$A/(A,/*++( dated May *), *++($
*)?
S"I Circular 0o$ MFD/CI//+)/),+/*++* dated June (>, *++*, S"I Circular 0o$
CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(*$
*)F
/eg$A*(?) of the S"I (Mutual Funds) /egulations, (>>?$


(+$,$* Mutual funds /AMCs may charge service ta! on investment and
advisory fees to the scheme in addition to the ma!imum limit
of %/ as prescri#ed in /egulation A*
*)E
$
(+$,$, Service ta! on other than investment and advisory fees, if any, shall
#e #orne #y the scheme 'ithin the ma!imum limit of %/ as per
/egulation A*
*)>
$
(+$,$) Service ta! on e!it load, if any, shall #e paid out of the e!it load
proceeds and e!it load net of service ta!, if any, shall #e credited to
the scheme$
(+$,$A Service ta! on #ro7erage and transaction cost
*A+
paid for e!ecution
of trade, if any, shall #e 'ithin the limit prescri#ed under regulation
A* of the /egulations$
14.& "mpowering in%e$tor$ through tran$parenc! in pa!ment
of commi$$ion and load $tructure
22"

(+$)$( In order to empo'er investors in deciding the commission paid to
distri#utors in accordance 'ith the level of service received, it has
#een mandated thatB
(+$)$($( %here shall #e no entry load
*A*
for all Mutual Fund schemes$
(+$)$($* %he scheme application forms shall carry a suita#le disclosure to
the effect that the upfront commission to distri#utors 'ill #e paid
#y the investor directly to the distri#utor, #ased on his

*)E
/egulation A* of S"I (Mutual Funds) /egulations, (>>?
*)>
/egulation A* of S"I (Mutual Funds) /egulations, (>>?
*A+
S"I Circular 0o$ CI// IMD/ DF/ *)/*+(* dated 0ovem#er (>, *+(*
*A(,

*(>
S"I Circular 0o S"I/IMD/CI/ 0o$ )/ (?E*,+/+> dated June ,+, *++>
*A*
@aiver of load for direct applications 5 :ide S"I Circular 0o$ S"I/IMD/CI/
0o$(+/((*(A,/+F dated Decem#er ,(, *++F,S"I mandated '$e$f January ),*++> no entry
load shall #e charged for applications received directly #y the AMC(s) through internet or
su#mitted directly to the AMC(s) or Collection Center/Investor Service Centre and not routed
through any distri#utor or agent or #ro7er$ %his 'aiver 'as applica#le to #oth additional
purchases under the same folio and Os'itch inC to a scheme from other schemes also done
directly #y the investor$ AMCs shall follo' the provisions pertaining to informing the
unitholders upon a change in load structure as per clause ,(d) of standard o#servations$


assessment of various factors including the service rendered #y
the distri#utor$
(+$)$($, %he load #alances are maintained as Olia#ilitiesC in the #oo7s of
the scheme and are not included in the net asset value (0A:)$
%he usage
*A,
of the load account shall #e su#&ect to the follo'ingB
a$ %he load #alance shall #e segregated into t'o accounts in
the #oo7s of accounts of the scheme 5 one to reflect the
#alance as on July ,(, *++> and the other to reflect
accretions since August +(, *++>$
#$ 2o'ever, not more than one5 third of load #alance as on
July ,(, *++> shall #e used in any financial year$ It is
clarified though the unutili6ed #alances can #e carried
for'ard, yet in no financial year the total spending can
#e more than one third of the load #alances on July ,(,
*++>$
%he accretions after July ,(, *++> can #e used #y mutual
funds for mar7eting and selling e!penses including
distri#utorCs/agentPs commissions 'ithout any restrictions
mentioned in 8ara (#) a#ove$
(+$)$($) %he e!it load charged
*A)
, if any, after the commencement of
S"I (Mutual Funds) (Second Amendment) /egulations, *+(*,
shall #e credited to the scheme$

(+$)$($A %he distri#utors should disclose all the commissions (in the form
of trail commission or any other mode) paya#le to them for the
different competing schemes of various Mutual Funds from

*A,
S"I Circular 0o$CI//IMD/DF/)/*+(( dated March >, *+((
*A)
/egulation A(A of S"I (Mutual Funds) /egulations, (>>?$


amongst 'hich the scheme is #eing recommended to the
investor$
(+$)$* %he a#ove guidelines #ecame applica#le forB
(+$)$*$( Investments in mutual fund schemes (including additional
purchases and s'itch5in to a scheme from other schemes) '$e$f
August (, *++>
(+$)$*$* /edemptions from mutual fund schemes (including s'itch5out
from other schemes) '$e$f August (, *++>
(+$)$*$, 0e' mutual fund schemes launched on or after August (, *++>
(+$)$*$) Systematic Investment 8lans (SI8) registered on or after August
(, *++>
*AA
$
(+$)$, %he AMCs are re=uired to #ring the contents of these guidelines to
the notice of their distri#utors and monitor compliance$
14.* (ran$action :harge$
2*+

(+$A$( A transaction charge per su#scription of /s$(+,+++/5 and a#ove
#e allo'ed to #e paid to the distri#utors of the Mutual Fund
products$ 2o'ever, there shall #e no transaction charges on direct
investments$ %he transaction charge shall #e su#&ect to the
follo'ingB
(+$A$($( For e!isting investors in a Mutual Fund, the distri#utor may
#e paid /s$(++/5 as transaction charge per su#scription of
/s$(+,+++/5 and a#ove$
(+$A$($* As an incentive to attract ne' investors, the distri#utor may
#e paid /s$(A+/5 as transaction charge for a first time investor
in Mutual Funds$

*AA
S"I Circular 0o$MFD/CI//+)/),+/*++* dated June (>, *++*, S"I Circular 0o$
CI//IMD/df/*(/*+(* dated Septem#er (,, *+(*
*A?
S"I Circular no$ CI//IMD/DF/(,/*+(( dated August **, *+((


(+$A$($, %he terms and conditions relating to transaction charge shall
#e part of the application form in #old print$
(+$A$($) %he transaction charge, if any, shall #e deducted #y the
AMC from the su#scription amount and paid to the
distri#utorI and the #alance shall #e invested$
(+$A$($A %he statement of account shall clearly state that the net
investment as gross su#scription less transaction charge and
give the num#er of units allotted against the net investment$
(+$A$($? Distri#utors shall #e a#le to choose to opt out of charging the
transaction charge$ 2o'ever, the Oopt5outC shall #e at
distri#utor level and not investor level i$e$ a distri#utor shall
not charge one investor and choose not to charge another
investor$ Further, Distri#utors shall have also the option to
either opt in or opt out of levying transaction charge #ased on
type of the product
*AF
$
(+$A$($F %he AMCs shall #e responsi#le for any malpractice/mis5selling
#y the distri#utor 'hile charging transaction costs$
(+$A$($E %here shall #e no transaction charge on su#scription #elo'
Rs.(+,+++/5
(+$A$($> In case of SI8s, the transaction charge shall #e applica#le
only if the total commitment through SI8s amounts to
Rs.(+,+++/5 and a#ove$ In such cases the transaction charge
shall #e recovered in ,5) installments$
(+$A$($(+ %here shall #e no transaction charge on transactions other
than purchases/ su#scriptions relating to ne' inflo's$

*AF
S"I Circurlar 0o$ CI//IMD/DF/*(/*+(* dated Septem#er (,, *+(*


(+$A$* Mutual Funds shall institute systems to detect if a distri#utor is
splitting investments in order to enhance the amount of
transaction charges and ta7e stringent action including
recommendations to AMFI to ta7e appropriate action$
(+$A$, Mutual Funds/AMCs shall carry out an e!ercise of de5duplication
of folios across all Mutual Funds 'ithin a period of ? months from
August **, *+(($
14.+ 0o 7oad on Bonu$ Unit$ and Unit$ allotted on
=ein%e$tment of Di%idend
2*.

(+$?$( AMC(s) shall not charge entry and/or e!it load on #onus units and
units allotted on reinvestment of dividend$ 0ecessary disclosures
in this regard shall #e made in the SID filed 'ith the "oard
*A>

14.) Filing fee$
230

(+$F$( /evised filing fee
*?(
as per the S"I (8ayment of Fees) Amendment
/egulations *+() 'ould #e applica#le to those scheme(s) 'hose
SID has #een filed 'ith S"I on or after May *,, *+()$

14.. "<it load parit!
(+$E$( @hile charging e!it loads, no distinction among unit holders
should #e made #ased on the amount of su#scription
*?*
$

@hile
complying 'ith the same, Mutual Funds should ensure that Many

*AE
S"I Circular 0o$ S"I/IMD/CI/ 0o$ ()/(*+FE)/+E dated March (E, *++E
*A>
S"I Circular 0o$ CI// IMD/DF/*)/*+(* dated 0ovem#er (>, *+(*
*?+
S"I Cir 0o$ S"I / IMD / CI/ 0o$ A / (?>+,+ / *++> dated July E, *++>
*?(
3a6ettee 0otification 0o$ ;AD50/4/30/*++()5(A/+,/(+E> on S"I (8ayment of Fees)
(Amendment) /egulations, *+() dated *, May, *+()
*?*
S"I Circular 0o$ S"I / IMD / CI/ 0o$ ? /(F*))A/ *++> dated August F,*++> All
Mutual Funds shall ensure compliance 'ith this circular on or #efore August *), *++>


imposition or enhancement in the load shall #e applica#le on
prospective investments only$
*?,

(+$E$* Further, the parity among all classes of unit holders in terms of
charging e!it load shall #e made applica#le at the portfolio level$
*?)

*?,

S"I Circular 0o 5 S"I / IMD / CI/ 0o$ F /(F,?A+ / *++> dated August (F,*++> and
S"I circular 0o$ S"I/IMD/CI/ 0o$ A/(*?+>?/+E dated May *,, *++E (clause (? of the
standard o#servations)
*?)
S"I Circular 0o 5 S"I / IMD / CI/ 0o$ F /(F,?A+ / *++> dated August (F,*++>


C,-!"R ..

D#*#D"'D D#S!R#)$!#&' -R&C"D$R"
08+;

088

11.1 /egulations230 permit Mutual Funds to distri#ute returns including
dividend$ %o introduce uniform practices in dividend distri#ution, the
follo'ing guidelines should #e follo'edB

11.2 %hese guidelines are applica#le to all Mutual Fund schemes/plans 'hich
intend to declare the dividend irrespective of their dates of launch$
*?E

(($*$( .nlisted Scheme(s)/ 8lan(s)
(($*$($( %he %rustees shall decide the =uantum of dividend and the
record date in their meeting
*?>
$ Dividend so decided, shall #e
paid, su#&ect to availa#ility of distri#uta#le surplus$
(($*$($* /ecord date shall #e the date 'hich 'ill #e considered for the
purpose of determining the eligi#ility of investors 'hose names
appear on the register of unit holders for receiving dividends$
%he 0A: shall #e ad&usted to the e!tent of dividend distri#ution
and statutory levy, if applica#le, at the close of #usiness hours
on record date$
(($*$($, @ithin one calender day of the decision of the %rustees 'ith
respect to the dividend to #e distri#uted, the AMC(s) shall issue
a notice to the pu#lic communicating the decision including the
record date$ %he record date shall #e five calendar days from the
issue of pu#lic notice$

*?A
S"I Circular 0o$ S"I/IMD/CI/ 0o$(/?)+AF/+? dated April ), *++?$
*??
For details on advertisement on dividend please refer to Chapter on OAdvertisementsC
*?F
/egulation A,(a) of the S"I (Mutual Funds) /egulations, (>>?
*?E
S"I Circular 0o S"I/IMD/CI/ 0o$ ,/?A,F+/+? dated April *(,*++?
*?>
Clause *+ of %hird Schedule of S"I (Mutual Funds) /egulations, (>>?


(($*$($) "efore the issue of such notice, no communication 'hatsoever
indicating the pro#a#le date of dividend declaration shall #e
issued #y any Mutual Fund or its distri#utors of its products$
(($*$($A Such notice shall #e given in at least one nglish daily
ne'spaper having nation'ide circulation as 'ell as in a
ne'spaper pu#lished in the language of the region 'here the
head office of the Mutual Fund is situated$
(($*$($? %he notice shall, in font si6e (+, #old, categorically state that
pursuant to dividend distri#ution, 0A: of the scheme 'ould fall
to the e!tent of payout and statutory levy (if applica#le)$
(($*$* ;i=uid / De#t Schemes 'ith fre=uent dividend distri#ution
(($*$*$( %he re=uirement of giving notice is not mandatory for scheme(s)/
plan(s)/ option(s) 'ith dividend distri#ution fre=uency ranging
from daily up to monthly distri#ution if re=uisite disclosures in
this regard are made in the SID$
(($*$, ;isted Schemes/8lans
(($*$,$( ;isted scheme(s)/ plan(s) shall follo' the re=uirements stipulated
in the ;isting Agreement for dividend declaration and
distri#ution$



11.3 0on a%aila#ilit! of Unit 3remium =e$er%e for di%idend
di$tri#ution
2)4

(($,$( /egulations
*F(
provide the accounting policies to #e follo'ed for
determining distri#uta#le surplus and accounting the sale and
repurchase of units in the #oo7s of the Mutual Fund$ %he format
for Scheme "alance Sheet (including A#ridged) provides for
disclosure of .nit 8remium /eserve$
(($,$* .nit 8remium /eserve, 'hich is part of the sales price of units that
is not attri#uta#le to reali6ed gains, cannot #e used to pay
dividend$ %hereforeB
(($,$*$( @hen units of an open5ended scheme are sold, and sale price is
higher than face value of the unit, part of sale proceeds that
represents unrealised gains shall #e credited to a separate
account (.nit 8remium /eserve) and shall #e treated at par 'ith
unit capital and the same shall not #e utili6ed for the
determination of distri#uta#le surplus$
(($,$*$* @hen units of an open5ended scheme are sold, and sale price is
less than face value of the unit, the difference #et'een the sale
price and face value shall #e de#ited to distri#uta#le reserves
and the dividend can #e declared only 'hen distri#uta#le
reserves #ecome positive after ad&usting the amount de#ited to
reserves as per /egulations
*F*
$

*F+
S"I circular 0o$ S"I/IMD/CI/ 0o (E / (>E?)F /*+(+ dated March (A, *+(+
*F(
0inth and leventh Schedule of S"I (Mutual Funds) /egulations, (>>?
*F*
8aragraph *(a) (i!) of leventh Schedule of S"I (Mutual Funds) /egulations, (>>?


.0
C,-!"R .0
#'*"S!M"'! )6 SC,"M"S
0/2

12.1 In%e$tment$ #! Inde< Fund$>
*F)

(*$($( Investments #y inde! funds shall #e in accordance 'ith the
'eightage of the scrips in the specific inde! as disclosed in the
SID
*FA
In case of sector or industry specific scheme, the upper
ceiling on investments may #e in accordance 'ith the 'eightage of
the scrips in the representative sectoral inde! or su# inde! as
disclosed in the SID or (+K of the 0A: of the scheme, 'hichever is
higher$
12.2 In%e$tment$ #! 7i8uid Scheme$ and plan$
203

(*$*$( %he Oli=uid fund schemes and plansC shall ma7e investment in
/purchase de#t and money mar7et securities 'ith maturity of upto >(
days only
*FF
$ %his shall also #e applica#le in case of inter scheme
transfer of securities
*FE

(*$*$($( !planationB

*F,
Investments in Money Mar7et instruments (MMIs)
In case of the e!isting schemes ( i$e$ e!isting on date of issue of S"I Circular 0o 5 S"I /
IMD / CI/ 0o$, / (??,E? / *++> dated June (A, *++>) 'here the investments in money
mar7et instruments of an issuer are not in compliance 'ith the 3a6ette 0otification 0o$ ;AD
D 0/4/30/*++>5(+/+F/(?A)+) dated June A, *++>, AMC shall ensure compliance 'ithin a
period of , months from the date of notification$
GG
*F)
S"I Circular 0o 5 MFD/CI//+>/+()/*+++ dated January A, *+++
*FA
See Clause (+, Seventh Schedule of Mutual Funds /egulations$
G
*F?
S"I Circular 0o 5 S"I/IMD/CI/ 0o$(,/(A+>FA / +> dated January (>, *++>
*FF
@ith effect from Fe#ruary +(, *++> ma7e investment in /purchase de#t and money
mar7et securities 'ith maturity of upto(E* days only$
*FE
%ransition provisionB
Inter5scheme transfers of securities having maturity upto ,?A days and held in other schemes as
on Fe#ruary +(, *++> shall #e permitted till 4cto#er ,(, *++>$ @ith effect from 0ovem#er (,
*++> the re=uirements stated at paragraph (*$*$( a#ove shall apply to such inter5se scheme
transfers also$
G


a$ In case of securities 'here the principal is to #e repaid in a single
payout the maturity of the securities shall mean residual maturity$
In case the principal is to #e repaid in more than one payout then
the maturity of the securities shall #e calculated on the #asis of
'eighted average maturity of security$
#$ In case of securities 'ith put and call options (daily or other'ise) the
residual maturity of the securities shall not #e greater than >(
days
*F>

c$ In case the maturity of the security falls on a non5#usiness day then
settlement of securities 'ill ta7e place on the ne!t #usiness day$
(*$*$* %he a#ove re=uirements shall #e disclosed in the SID and shall
form part of the investment allocation pattern$ Any deviation from
these re=uirements shall #e vie'ed as violation of investment
restrictions$
12.3 In%e$tment$ #! clo$e ended de#t $cheme$>
(*$,$(Close ended de#t schemes shall invest only in such securities
'hich mature on or #efore the date of the maturity of the
scheme
*E+

12.& 3rudential limit$ and di$clo$ure$ on portfolio
concentration ri$' in de#t oriented mutual fund
$cheme$
2.1

(*$)$(Mutual Funds/AMCs shall ensure that total e!posure of de#t
schemes of mutual funds in a particular sector (e!cluding
investments in "an7 CDs, C";4, 35Secs, %5"ills and AAA rated
securities issued #y 8u#lic Financial Institutions and 8u#lic

*F>
'$e$f May +(, *++>$


Sector "an7s), short term deposits of scheduled commercial
#an7s
*E*
) shall not e!ceed ,+K of the net assets of the schemeI
8rovided that an additional e!posure to financial services sector
(over and a#ove the limit of ,+K) not e!ceeding (+K of the net
assets of the scheme shall #e allo'ed #y 'ay of increase in
e!posure to 2ousing Finance Companies (2FCs) onlyI
8rovided further that the additional e!posure to such securities
issued #y 2FCs are rated AA and a#ove and these 2FCs are
registered 'ith 0ational 2ousing "an7 (02") and the total
investment/ e!posure in 2FCs shall not e!ceed ,+K of the net
assets of the scheme$N
(*$)$* Appropriate disclosures shall #e made in Scheme Information
Document (SID) and 9ey Information Memorandum (9IM) of de#t
schemes$
12.* Stoc' 7ending Scheme
2.3

(*$A$( %he follo'ing guidelines are issued to facilitate lending of securities
#y Mutual Funds through intermediaries approved #y the "oard in
accordance 'ith the Stoc7 ;ending H "orro'ing Scheme$
*E)

(*$A$* Disclosure /e=uirements
(*$A$*$( %he follo'ing information shall #e disclosed in the SID to ena#le
the investors and unit holders to ta7e an informed decisionB
a$ Intention to lend securities #elonging to a particular
Mutual Fund scheme in accordance 'ith the guidelines on

*E+
S"I Circular 0o IMD/CI/ 0o (*/()F(,*/+E dated Decem#er ((, *++E$
*E(
S"I Circular 0o$CI//IMD/ DF/ *(/ *+(* dated Septem#er (,, *+(* and S"I Circular 0o$
CI//IMD/DF/*)/*+(* dated 0ovem#er (>, *+(*
*E*
*E,
S"I Circular 0o MFD/CI//+(/+)F/>> dated Fe#ruary (+, (>>>$
,
*E)
/egulation ))()) of the S"I (Mutual Funds) /egulations, (>>?$


securities lending and #orro'ing scheme issued #y S"I
from time to time$
*EA

#$ !posure limit 'ith regard to securities lending, #oth for
the scheme as 'ell as for a single intermediary$
c$ /is7s factors such as loss, #an7ruptcy etc$ associated 'ith
such transactions$
(*$A$, /eporting /e=uirement
(*$A$,$( %he AMC(s) shall report to the %rustees on a =uarterly #asis
a#out the level of lending, in terms of value, volume and
intermediaries and also earnings and/or losses, value of
collateral security etc$
(*$A$,$* %he %rustees shall periodically revie' the securities lending
contract and ta7e reasona#le steps to ensure that the same is
not, in any 'ay, detrimental to the interests of the unit holders of
the scheme$
(*$A$,$, %he %rustees shall offer their comments on the a#ove aspects in
the 2alf -early %rustee /eport filed 'ith the "oard$
*E?

(*$A$) !isting schemes
(*$A$)$( In case an e!isting SID does not provide for lending of securities,
Mutual Funds may still lend securities #elonging to the scheme,
in accordance 'ith the S"I 3uidelines, provided approval is
o#tained from the %rustees and the intention to lend securities is
conveyed to the unit holders$

*EA
S"I Circular 0o 5 S"I / IMD / CI/ 0o () / (EF(FA/ *++> dated Decem#er (A,*++>
*E?
/egulation (E(*,)(a) of the Mutual Funds /egulations$ Further, for format of 2alf -early
%rustee /eport please refer to section on Formats$


12.+ Appro%al for In%e$tment in Unrated De#t In$trument$
*EF

(*$?$( Mutual Funds may, for the purpose of operational fle!i#ility,
constitute committees to approve investment proposals in unrated
instruments$ 2o'ever, detailed parameters for investment in
unrated de#t instruments have to #e approved #y the "oard of the
AMC and %rustees$ Details of such investments shall #e
communicated #y the AMCs to the %rustees in their periodical
reports, along 'ith clear indication as to ho' the parameters set
for investments have #een complied 'ith$ 8rior approval of the
"oard of the AMC and %rustees shall #e re=uired in case
investment is sought to #e made in an unrated security falling
outside the prescri#ed parameters$
12.) In%e$tment$ in Unit$ of enture :apital Fund$
2..

(*$F$( Mutual Fund schemes can invest in listed or unlisted securities or
units of :enture Capital Funds 'ithin the prescri#ed investment
limits as applica#le$
*E>

12.. In%e$tment limit$ for ;o%ernment guaranteed de#t
$ecuritie$
2/4

(*$E$( 8rudential investment norms as per /egulations stipulating limits
for investments in de#t securities
*>(
issued #y a single issuer are
applica#le to all de#t securities issued #y pu#lic #odies or
institutions such as electricity #oards, municipal corporations,
state transport corporations etc$ guaranteed #y either State /
Central 3overnment$ 3overnment securities issued #y Central

*EF
*EE
S"I Circular 0o$ MFD/CI//>/*,+/*++( dated August (), *++($
, , ,
*E>
Clauses (+ and ((, Seventh Schedule of S"I (Mutual Funds), /egulations, (>>?$
, ,
*>+
S"I Circular 0o$ S"I/IMD/CI/ 0o$E/(E>))/+, dated 4cto#er ?, *++,$
,
*>(
Clauses ( and (A, Seventh Schedule of S"I (Mutual Funds), /egulations, (>>?$
, ,


and/or State 3overnment or on its #ehalf, #y the /"I are ho'ever
e!empt from these limits$
12./ In%e$tment =e$triction$ for Securiti$ed De#t
*>*

(*$>$( For investments made in Securitised De#t (mortgage #ac7ed
securities and asset #ac7ed securities), restrictions as per Clause (
of Seventh Schedule*>, shall not apply at the originator level$
12.14 In%e$tment$ in Short (erm Depo$it$ of Scheduled
:ommercial Ban'$
*>)

(*$(+$( %he guidelines for deployment of funds in short term deposits of
commercial #an7s for schemes are as underB
(*$(+$($( MShort %ermL for par7ing of funds #y Mutual Funds shall #e
treated as a period not e!ceeding >( days$
*>A

(*$(+$($* Such deposits shall #e held in the name of the concerned
scheme$
(*$(+$($, 0o mutual fund scheme shall par7 more than (AK of their net
assets in short term deposits of all scheduled commercial #an7s
put together$ %his limit ho'ever may #e raised to *+K 'ith
prior approval of the %rustees$ Also, par7ing of funds in short
term deposits of associate and sponsor scheduled commercial
#an7s together shall not e!ceed *+K of the total deployment #y
the Mutual Fund in short term deposits$

*>*
S"I Circular 0o$ S"I/IMD/CI/ 0o$?/?,F(A/+? dated March *>, *++?$
*>,
Clause I of Schedule :II of S"I (Mutual Fund), /egulations, (>>?
*>)
S"I Circulars 0o$ S"I/IMD/CI/ 0o$>/*+,+?/+, dated 0ovem#er (*, *++,, S"I
Circular 0o$ S"I/IMD/Cir 0o$(/>((F(/+F dated April (?, *++F, S"I and Clause E of
Seventh Schedule of Mutual Funds /egulations, (>>?$
, , ,
*>A
S"I Circular 0o$ S"I/IMD/Cir 0o$(/>((F(/+F dated April (?, *++F$



(*$(+$($) 0o mutual fund scheme shall par7 more than (+K of the net
assets in short term deposits 'ith any one scheduled
commercial #an7 including its su#sidiaries$
(*$(+$($A %rustees shall ensure that funds of a particular scheme are not
par7ed in short term deposit of a #an7 'hich has invested in
that scheme$
(*$(+$($? In case of li=uid and de#t oriented schemes, AMC(s) shall not
charge any investment management and advisory fees for
par7ing of funds in short term deposits of scheduled
commercial #an7s$
(*$(+$($F 2alf -early portfolio statements shall disclose all funds par7ed
in short term deposit(s) under a separate heading$ Details shall
also include name of the #an7, amount of funds par7ed,
percentage of 0A:$
(*$(+$($E %rustees shall, in the 2alf -early %rustee /eports certify that
provisions of the Mutual Funds /egulations pertaining to
par7ing of funds in short term deposits pending deployment are
complied 'ith at all points of time$ %he AMC(s) shall also certify
the same in its C%/(s)$
(*$(+$($> Investments made in short term deposits pending deployment of
funds
*>?
shall #e recorded
*>F
and reported to the %rustees
including the reasons for the investment especially comparisons
'ith interest rates offered #y other scheduled commercial
#an7s$
*>E

(*$(+$($(+ !cept for clause ((*$>$($F) the a#ove guidelines shall not apply
to term deposits placed as margins for trading in cash and

*>?
Clause E, Schedule Seven, S"I (Mutual Funds), /egulations, (>>?$
, , , , , ,
*>F
, ,
*>E
S"I Circular 0o$ S"I/IMD/CI/ 0o$>/*+,+?/+, dated 0ovem#er (*, *++,$
,


derivatives mar7et
*>>
$ 2o'ever, duration of such term deposits
shall #e disclosed in the 2alf -early 8ortfolio
,++
$
12.11 =econciliation 3rocedure for In%e$tment in ;o%ernment
Securitie$
341

(*$(($( According to the /"I guidelines
,+*
issued to all S3; account
holders, to ma7e transactions in government securities
transparent, a monthly reconciliation system has #een introduced
#et'een /"I and Mutual Funds maintaining S3;/CS3; accounts
'ith respect to 3overnment Securities on an ongoing #asis$
(*$(($* Mutual Funds shall reconcile the #alances reported in the monthly
statements furnished #y /"I 'ith the transactions underta7en #y
them$
(*$(($, %he reconciliation procedure shall #e made part of internal audit
and the auditors shall on a continuous #asis, chec7 the status of
reconciliation and su#mit a report to the Audit Committee$ %hese
reports shall #e placed in the meetings of the "oard of the AMC and
%rustees$ Mutual Funds shall su#mit, on a =uarterly #asis to the
/"I, a certificate confirming compliance 'ith these re=uirements
and any other guidelines issued #y the /"I from time to time in this
regard$ Compliance shall also #e reported to the "oard in the C%/s
of AMC(s) and 2alf -early %rustee /eports$

*>>
S"I Circular 0o$ S"I/IMD/Cir 0o$F/(*>A>*/+E dated June *,, *++E$
,++
S"I Circular 0o$ S"I/IMD/Cir 0o$F/(*>A>*/+E dated June *,, *++E
,+(
S"I Circular 0o$ MFD/CI//(>/**)F)/*++* dated 0ovem#er *+, *++*$
, ,
,+*
/"I Circular 0o$8$D$4$S3;$CI///(>)A/*++*5*++, dated 0ovem#er (, *++*$


12.12 3articipation of mutual fund$ in repo in corporate de#t
$ecuritie$
343

(*$(*$( Mutual funds can participate in repos in corporate de#t securities
as per the guidelines issued #y /"I from time to time, su#&ect to the
follo'ing conditionsB
(*$(*$($( %he gross e!posure of any mutual fund scheme to repo
transactions in corporate de#t securities shall not #e more
than (+ K of the net assets of the concerned scheme$
(*$(*$($* %he cumulative gross e!posure through repo transactions in
corporate de#t securities along 'ith e=uity, de#t and derivatives
shall not e!ceed (++K of the net assets of the concerned
scheme$
(*$(*$($, Mutual funds shall participate in repo transactions only in
AA
,+)
and a#ove rated corporate de#t securities$
(*$(*$($) In terms of /egulation )) (*) of the Securities and !change
"oard of India (Mutual Funds) /egulations, (>>?, mutual
funds shall #orro' through repo transactions only if the
tenor of the transaction does not e!ceed a period of si! months$
(*$(*$($A %he %rustees and the Asset Management Companies shall frame
guidelines a#out, inter alia, , the follo'ing in conte!t of these
transactions 7eeping in mind the interest of investors in their
schemesB
a$ Category of counterparty
#$ Credit rating of counterparty

,+,
S"I Circular 0o$ CI//IMD/DF/(>/*+(( dated 0ovem#er ((, *+((
,+)
S"I Circular 0o$ CI//IMD/DF/*,/*+(* dated 0ovem#er (A, *+(*


c$ %enor of collateral
d$ Applica#le haircuts
(*$(*$($? Mutual funds shall ensure compliance 'ith the Seventh
Schedule of the Mutual Funds /egulations a#out
restrictions on investments, 'herever applica#le, 'ith
respect to repo transactions in corporate de#t securities$
(*$(*$($F %he details of repo transactions of the schemes in corporate de#t
securities, including details of counterparties, amount
involved and percentage of 0A: shall #e disclosed to investors in
the half yearly portfolio statements and to S"I in the half
yearly trustee report$
(*$(*$($E %o ena#le the investors in the mutual fund schemes to ta7e
an informed decision, the concerned Scheme Information
Document shall disclose the follo'ingB
a$ %he intention to participate in repo transactions in
corporate de#t securities in accordance 'ith directions
issued #y /"I and S"I from time to timeI
#$ %he e!posure limit for the schemeI and
c$ %he ris7 factors associated 'ith repo transactions in
corporate #onds



12.13 O%er$ea$ In%e$tment
34*

(*$(,$( Applica#le limitsB
(*$(,$($( Aggregate ceiling for overseas investments is .S W F #illion
,+?

and 'ithin this overall limit, Mutual Funds can ma7e overseas
investments su#&ect to a ma!imum of .S W ,++ million per
Mutual Fund$
(*$(,$($* Aggregate ceiling for investment #y Mutual Funds in overseas
!change %raded Fund (%F(s)) that invest in securities is .S W
( #illion su#&ect to a ma!imum of .S W A+ million per Mutual
Fund$
(*$(,$* 8ermissi#le investmentsB
(*$(,$*$( AD/(s) and/or 3D/(s) issued #y Indian or foreign companies$
(*$(,$*$* =uity of overseas companies listed on recogni6ed Stoc7
!changes overseas$
(*$(,$*$, Initial and Follo' on 8u#lic 4fferings for listing at recogni6ed
Stoc7 !changes overseas$
(*$(,$*$) Foreign de#t securities in the countries 'ith fully converti#le
currencies, short term as 'ell as long term de#t instruments
'ith rating not #elo' investment grade #y accredited/
registered credit rating agencies$
(*$(,$*$A Money Mar7et Instruments rated not #elo' investment grade$

,+A
S"I Circular 0o$ S"I/IMD/CI/ 0o$F/(+)FA,/+F dated Septem#er *?, *++F H S"I
Circular 0o$ S"I/IMD/CI/ 0o$*/(**AFF/+E dated April E, *++E$
,+?
S"I Circular 0o$ S"I/IMD/CI/ 0o$*/(**AFF/+E dated April E, *++E$


(*$(,$*$? /epos in form of investment, 'here the counterparty is rated
not #elo' investment gradeI repo shall not ho'ever involve any
#orro'ing of funds #y Mutual Funds$
(*$(,$*$F 3overnment securities 'here the countries are rated not #elo'
investment grade$

(*$(,$*$E Derivatives traded on recogni6ed stoc7 e!changes overseas only
for hedging and portfolio #alancing 'ith underlying as
securities$
(*$(,$*$> Short term deposits 'ith #an7s overseas 'here the issuer is
rated not #elo' investment grade$
(*$(,$*$(+ .nits / securities issued #y overseas Mutual Funds or unit
trusts registered 'ith overseas regulators and investing in
a$ Aforesaid Securities
#$ /eal state Investment %rusts listed on recogni6ed Stoc7
!changes overseas or
c$ .nlisted overseas securities, not e!ceeding (+K of their net
assets
(*$(,$, 4ther ConditionsB Funds /egulations and guidelines issued from
time to time, Mutual Funds shall adhere to the follo'ing specific
guidelines 'hile ma7ing overseas investmentsB
(*$(,$,$( Appointment of a Dedicated Fund Manager.
a$ A dedicated fund manager shall #e appointed for ma7ing the
a#ove overseas investments stipulated under clause (*$(,$*$(
to (*$(,$*$(+$


(*$(,$,$* Due DiligenceB
a$ %he "oard of the AMC and %rustees shall e!ercise due diligence
in ma7ing investment decisions and record the same$
,+F
%hey
shall ma7e a detailed analysis of ris7s and returns of overseas
investment and ho' these investments 'ould #e in the interest
of investors$ Investment shall #e made in li=uid actively traded
securities /instruments$
#$ %he "oard of the AMC and %rustees may prescri#e detailed
parameters for ma7ing such investments 'hich may include
identification of countries, country rating, country limits etc$
%hey shall satisfy themselves that the AMC has e!perienced 7ey
personnel, research facilities and infrastructure for ma7ing
such investments$ 4ther speciali6ed agencies and service
providers associated 'ith such investments e$g$ custodian,
#an7, advisors etc$ shall also have ade=uate e!pertise and
infrastructure facilities$ %heir past trac7 record of performance
and regulatory compliance record, if they are registered 'ith
foreign regulators, should also #e considered$ 0ecessary
agreements may #e entered into 'ith them as re=uired$
(*$(,$,$, Mandatory Disclosure /e=uirements for Mutual Fund schemes
proposing overseas investmentsB
a$ Intention to invest in foreign securities and/or %F(s) shall #e
disclosed in the SID$ %he attendant ris7 factors and returns
ensuing from such investments shall #e e!plained clearly in the
SID$ Mutual Funds shall also disclose as to ho' such
investments 'ill help in the furtherance of the investment
o#&ectives of the scheme(s)$ Such disclosures shall #e in a
language comprehensi#le to an average investor

,+F


#$ Mutual Funds shall disclose the name of the Dedicated Fund
Manager for ma7ing overseas investments as stipulated under
paragraph (*$(,$,$*$a$
c$ Mutual Funds shall disclose e!posure limits i$e$ the percentage
of assets of the scheme they 'ould invest in foreign securities /
%F(s)$
d$ Such investments shall #e disclosed 'hile disclosing 2alf -early
portfolios in the prescri#ed format under a separate heading
NForeign Securities and/or overseas %F(s)$N Scheme 'ise
percentage of investments made in such securities shall #e
disclosed 'hile pu#lishing 2alf -early /esults in the prescri#ed
format
,+E
as a footnote$
(*$(,$,$) Investment #y !isting Schemes.
a$ !isting schemes of Mutual Funds 'here the SID provides for
investment in foreign securities and attendant ris7 factors #ut
'hich have not yet invested, may invest in foreign securities,
consistent 'ith the investment o#&ectives of the schemes,
provided a Dedicated Fund Manager has #een appointed as
stipulated in paragraph (*$(,$,$*$ Additional disclosures
specified a#ove shall #e included #y 'ay of addendum and unit
holders 'ill #e informed accordingly$
#$ In case the SID of an e!isting scheme does not provide for
overseas investment, the scheme, if it so desires, may ma7e
such investments in accordance 'ith these 3uidelines, provided
that prior to the overseas investments for the first time, the
AMC shall ensure that a 'ritten communication a#out the
proposed investment is sent to each unit holder and an
advertisement is given in one nglish daily ne'spaper having

,+E
For 2alf -early /esults, please refer to the section on Formats


nation'ide circulation as 'ell as in a ne'spaper pu#lished in
the language of the region 'here the 2ead 4ffice of the Mutual
Fund is situated$ %he communication to unit holders shall also
disclose the ris7 factors associated 'ith such investments$
(*$(,$,$A Detailed periodic reporting to %rustees #y AMC(s) shall include.
a$ 8erformance of overseas investments
#$ Amount invested in various schemes and any #reach of the
e!posure limit laid do'n in the SID$

(*$(,$,$? /evie' of 8erformance.
a$ %he "oard of the AMC and %rustees shall revie' the
performance of schemes ma7ing overseas investments 'ith
appropriate #enchmar7(s) as disclosed in the SID$
(*$(,$,$F /eporting to the "oardB
a$ %he %rustees shall offer their comments on the compliance of
these guidelines in the 2alf -early /eports filed 'ith the "oard$
(*$(,$,$E 8rudential Investment 0orms.
a$ Investment restrictions specified in Schedule Seven of the
Mutual Funds /egulations are applica#le to overseas
investments stipulated under paragraph (*$(,$*$(5 (*$(,$*$(+
#$ 2o'ever, Clause ) of the Seventh Schedule of the Mutual
Funds /egulations that restricts investments in Mutual Fund
units up to AK of net assets and prohi#its charging of fees,
shall not #e applica#le to investments in Mutual Funds in
foreign countries made in accordance 'ith these 3uidelines$


c$ Management fees and other e!penses charged #y the Mutual
Funds in foreign countries along 'ith the management fee and
recurring e!penses charged to the domestic Mutual Fund
scheme shall not e!ceed the total limits on e!penses as
prescri#ed under /egulation A*(?) of the Mutual Funds
/egulations$ @here the scheme is investing only a part of the
net assets in overseas Mutual Funds, the same principle shall
#e applica#le for that part of investment$ Details of calculation
for charging such e!penses shall #e reported to the "oard of the
AMC and the %rustees and shall also #e disclosed in the Annual
/eport of the scheme
d$ %he application
,+>
for see7ing approval for investing in foreign
securities, AD//3D//overseas %F(s) shall #e made in advance
of ma7ing investments$ 4n receipt of approval from the "oard,
intimation may #e sent #y the AMC(s) to 4verseas Investment
Division, Foreign !change Department, /"I$
12.1& In%e$tment$ in Indian Depo$itor! =eceipt$ 1ID=$2
"0

(*$)$(Mutual funds can invest in Indian Depository /eceipts
,((
UIndian
Depository /eceipts as defined in Companies (Issue of Indian
Depository /eceipts) /ules, *++)V su#&ect to compliance 'ith S"I
(Mutual Funds) /egulations (>>? and guidelines issued there
under, specifically investment restrictions as specified in the
Seventh Schedule of the /egulations$P

,+>
8lease refer the section on formats for format of proposal for investments in foreign securities
and %Fs
,(+
S"I Circular 0o$ IMD/CI/$ 0o$(/(?A>,A/*++> dated June +>, *++>
,((
/egulation ),(() of S"I (Mutual Funds) /egulations, (>>?


12.1* In%e$tment =e$triction$
312

(*$(A$( All investment restrictions as contained in the /egulations
,(,
shall
#e applica#le at the time of ma7ing investment$
12.1+ =ecording of In%e$tment Deci$ion$
,()

(*$(?$( AMC(s) shall e!ercise due diligence and care in all investment
decisions as 'ould #e e!ercised #y other persons engaged in the
same #usiness$
,(A
Further AMC(s) shall maintain records in
support of each investment decision 'hich 'ill indicate data, facts
and opinion leading to that decision$ @hile #road parameters for
investments can #e prescri#ed #y the "oard of Directors of the
AMC, the #asis for ta7ing individual scrip 'ise investment
decision in e=uity and de#t securities shall #e recorded$ A detailed
research report analy6ing various factors for each investment
decision ta7en for the first time shall #e maintained and the
reasons for su#se=uent purchase and sales in the same scrip
shall also #e recorded$ %he contents of the research reports may
#e decided #y the AMC(s) and the %rustees$
(*$(?$* %he "oard of the AMC shall develop a mechanism to verify that
due diligence is #eing e!ercised 'hile ma7ing investment
decisions especially in cases of investment in unlisted and
privately placed securities, unrated de#t securities, 08As,
transactions 'here associates are involved and instances 'here
the performance of the scheme(s) is poor$
(*$(?$, AMC(s) shall report compliance 'ith these re=uirements in their
periodical reports to the %rustees and the %rustees shall report

,(*
S"I Circular 0o$ MFD/CI//+>/+()/*+++ dated January A, *+++$
,(,
Seventh Schedule of S"I (Mutual Funds) /egulations, (>>?$
,()

,(A
/egulation *A(*) of the S"I (Mutual Funds) /egulations, (>>?$



the same to the "oard in the 2alf -early %rustee /eports
,(?
$
%rustees shall also chec7 compliance 'ith these 3uidelines
through independent auditors or internal and/or statutory
auditors or other systems developed #y them$
12.1) 0orm$ for in%e$tment and di$clo$ure #! -utual Fund$ in
deri%ati%e$
,(F

(*$(F$( !posure ;imits
(*$(F$($( %he cumulative gross e!posure through e=uity, de#t and
derivative positions should not e!ceed (++K of the net assets of
the scheme$
(*$(F$($* Mutual Funds shall not 'rite options or purchase instruments
'ith em#edded 'ritten options$
(*$(F$($, %he total e!posure related to option premium paid must not
e!ceed *+K of the net assets of the scheme$
(*$(F$($) Cash or cash e=uivalents 'ith residual maturity of less than >(
days may #e treated as not creating any e!posure$
(*$(F$($A !posure due to hedging positions may not #e included in the
a#ove mentioned limits su#&ect to the follo'ingB
a$ 2edging positions are the derivative positions that reduce
possi#le losses on an e!isting position in securities and till the
e!isting position remains$
#$ 2edging positions cannot #e ta7en for e!isting derivative
positions$ !posure due to such positions shall have to #e
added and treated under limits mentioned in 8oint (*$(?$($($

,(?
For 2alf -early %rustee /eport please refer to the section on Formats
,(F
S"I Circular 0o$ Cir/ IMD/ DF/ ((/ *+(+ dated August (E, *+(+


c$ Any derivative instrument used to hedge has the same
underlying security as the e!isting position #eing hedged$
d$ %he =uantity of underlying associated 'ith the derivative
position ta7en for hedging purposes does not e!ceed the
=uantity of the e!isting position against 'hich hedge has #een
ta7en$
(*$(F$($? Mutual Funds may enter into plain vanilla interest rate s'aps
for hedging purposes$ %he counter party in such transactions
has to #e an entity recogni6ed as a mar7et ma7er #y /"I$
Further, the value of the notional principal in such cases must
not e!ceed the value of respective e!isting assets #eing hedged
#y the scheme$ !posure to a single counterparty in such
transactions should not e!ceed (+K of the net assets of the
scheme$
(*$(F$($F !posure due to derivative positions ta7en for hedging purposes
in e!cess of the underlying position against 'hich the hedging
position has #een ta7en, shall #e treated under the limits
mentioned in point (*$(?$($($

Definition of "Bposure in case of Derivative -ositions
(*$(F$($E ach position ta7en in derivatives shall have an associated
e!posure as defined under$ !posure is the ma!imum possi#le
loss that may occur on a position$ 2o'ever, certain derivative
positions may theoretically have unlimited possi#le loss$
!posure in derivative positions shall #e computed as follo'sB
8osition !posure
;ong Future Futures 8rice T ;ot Si6e T 0um#er of
Contracts
Short Future Futures 8rice T ;ot Si6e T 0um#er of
Contracts
4ption #ought 4ption 8remium 8aid T ;ot Si6e T 0um#er
of Contracts$


12.1).1./ %he provisions shall #e applica#le for all ne' schemes launched
post the issue of the aforementioned guidelines$ For all e!isting
schemes, compliance 'ith the guidelines shall #e effective from
4cto#er +(, *+(+$
12.1. Inter%al Scheme$C3lan$
,(E

(*$(E$( Certain SIDs provide that the su#scription to the scheme can #e
made during a specific period (7no'n as specified transaction
period) and the repurchase of units is permitted on all #usiness
days su#&ect to applica#le loads (e!cept for redemption during
specified transaction period 'hen no load is charged)$ %hese
schemes are generally referred to as Ointerval schemesC$
(*$(E$* For all interval schemes/plans
,(>
B
(*$(E$*$( %he units shall #e mandatorily listed$
(*$(E$*$* 0o redemption/repurchase of units shall #e allo'ed e!cept
during the specified transaction period (the period during
'hich #oth su#scription and redemption may #e made to and
from the scheme)$ %he specified transaction period shall #e of
minimum * 'or7ing days$
(*$(E$*$, Minimum duration of an interval period in an interval
scheme/plan shall #e (A days$
(*$(E$*$) Investments shall #e permitted only in such securities 'hich
mature on or #efore the opening of the immediately follo'ing
specified transaction period$

,(E
S"I Circular 0o$ CI//IMD/DF /(>/*+(+ dated 0ovem#er *?, *+(+
,(>
Applica#ilityB
%he AMC shall ensure compliance 'ith the re=uirements mentioned in Clause (*$(?$* from
the date of ne!t specified transaction period or April (, *+(( 'hichever is later$ Schemes for
'hich o#servations (final) under /egulation *> of S"I (Mutual Funds) /egulations, (>>?
have #een issued #ut are yet to #e launched 'ould #e re=uired to carry out the changes in
Scheme Information Document and file the same 'ith S"I #efore the launch$


!planationB
In case of securities 'ith put and call options the residual time for
e!ercising the put option of the securities shall not #e #eyond the
opening of the immediately follo'ing transaction period$

12.1/ :DS 5 mutual fund$ a$ u$er$ 1protection #u!er$2
324

(*$(>$( Mutual funds have #een permitted to participate in CDS
mar7et, as per the guidelines issued #y /"I from time to time ,
su#&ect to the follo'ing conditionsB
a$ Mutual funds shall participate in CDS transactions only as
users (protection #uyer)$ %hus, mutual funds are permitted
to #uy credit protection only to hedge their credit ris7 on
corporate #onds they hold$ %hey shall not #e allo'ed to
sell protection and hence not permitted to enter into short
positions in the CDS contracts$ 2o'ever, they shall #e
permitted to e!it their #ought CDS positions, su#&ect to
para (d) #elo'$
#$ Mutual funds can participate as users in CDS for the
eligi#le securities as reference o#ligations, constituting
from 'ithin the portfolio of only Fi!ed Maturity 8lans (FM8)
schemes having tenor e!ceeding one year$
c$ Mutual funds shall #uy CDS only from a mar7et ma7er
approved #y the /"I and enter into Master Agreement 'ith
the counterparty as stipulated under /"I 3uidelines$
!posure to a single counterparty in CDS transactions
shall not e!ceed (+K of the net assets of the scheme$

,*+
S"I Circular 0o$ CI//IMD/DF/*,/*+(* dated 0ovem#er (A, *+(*$


d$ %he cumulative gross e!posure through credit default s'ap
in corporate #onds along 'ith e=uity, de#t and derivative
positions shall not e!ceed (++K of the net assets of the
scheme$
e$ %he total e!posure related to premium paid for all
derivative positions, including CDS, shall not e!ceed *+K
of the net assets of the scheme$
f$ "efore underta7ing CDS transactions, mutual funds shall
put in place a 'ritten policy on participation in CDS
approved #y the "oard of the Asset Management Company
and the %rustees as per the guidelines specified #y /"I and
Securities and !change "oard of India (S"I)$ %he policy
shall #e revie'ed #y mutual funds, at least once a year$
g$ %o ena#le the investors in the mutual funds schemes to
ta7e an informed decision, the concerned Scheme
Information Document (SID) shall disclose the intention to
participate in CDS transaction in corporate de#t securities
in accordance 'ith directions issued #y /"I and S"I from
time to time, and related information as appropriate in this
regard$
h$ Mutual funds shall also disclose the details of CDS
transactions of the scheme in corporate de#t securities in
the monthly portfolio statements as 'ell as in the half
yearly trustee report, as per the format
,*(
$ Further, mutual
funds shall disclose the scheme 'ise details of CDS
transactions in the notes to the accounts of annual report
of the mutual fund as per the format
,**
$

,*(
,**



(*$(>$* Mutual funds participating in CDS transactions, as users, shall
#e re=uired to comply 'ith the guidelines issued #y /"I, vide
notification no IDMD$8CD$0o$A+A,/()$+,$+)/*+(+5(( dated
May *,, *+(( and su#se=uent guidelines issued #y /"I and
S"I from time to time$



C,-!"R .2
D*"R!#S"M"'!S
202

(,$( Advertisement shall #e in terms of Si!th Schedule
,*)
$
(,$* In addition to the provisions of the Si!th Schedule, mutual funds
shall comply 'ith the follo'ingB
,*A

(,$*$( @hile advertising pay out of dividends, all advertisements shall
disclose the dividends declared or paid in rupees per unit along
'ith the face value of each unit of that scheme and the prevailing
0A: at the time of declaration of the dividend$
(,$*$* Impact of Distri#ution %a!esB @hile advertising returns #y
assuming reinvestment of dividends, if distri#ution ta!es are
e!cluded 'hile calculating the returns, this fact shall also #e
disclosed$
(,$*$, 8ay out of Dividend/ "onusB @hile advertising pay outs, all
advertisements shall disclose, immediately #elo' the pay out
figure (in percentage or in a#solute terms) that the 0A: of the
scheme, pursuant to pay out 'ould fall to the e!tent of payout
and statutory levy (if applica#le)$
(,$, !ransparency of #nfor?ation
23

(,$,$( @hen the scheme has #een in e!istence for more than three yearsB

,*,
S"I Circular 0o$Cir/IMD/DF/(,/*+(( dated August **, *+(( and S"I Circular
0o$Cir/IMD/DF/?/*+(* dated Fe#ruary *E, *+(*
,*)
Si!th Schedule of S"I (Mutual Funds) /egulations, (>>? as amended via ga6ette
notification 0o$ ;AD50/4/30/*+((5(*/,E/)*>+ dated Fe#ruary *(, *+(*
,*A
,*?


(,$,$($( 8oint5to5point returns on a standard investment of Rs.(+,+++/5
shall also #e sho'n in addition to CA3/ for a scheme in order to
provide ease of understanding to retail investors$
(,$,$($* 8erformance advertisement shall #e provided since inception and
for as many t'elve month periods as possi#le for the last ,
years, such periods #eing counted from the last day of the
calendar =uarter preceding the date of advertisement, along 'ith
#enchmar7 inde! performance for the same periods$
(,$,$* @here scheme has #een in e!istence for more than one year #ut
less than three years, performance advertisement of scheme(s) shall
#e provided for as many as t'elve month periods as possi#le, such
periods #eing counted from the last day of the calendar =uarter
preceding the date of advertisement, along'ith #enchmar7 inde!
performance for the same periods$

(,$,$, @here the scheme has #een in e!istence for less than one year,
past performance shall not #e provided$
(,$,$) In case of Money Mar7et schemes or cash and li=uid schemes
,*F
,
'herein investors have very short investment hori6on, the
performance can #e advertised #y simple annualisation of yields if a
performance figure is availa#le for at least F days, (A days and ,+
days provided it does not reflect an unrealistic or misleading picture
of the performance or future performance of the scheme$
(,$,$A For the sa7e of standardi6ation, a similar return in I0/ and #y 'ay
of CA3/ must #e sho'n for the follo'ing apart from the scheme
#enchmar7sB

,*F


Scheme %ype "enchmar7
=uity Scheme Sense! or 0ifty
;ong term de#t scheme (+ year dated 34I
security
Short term de#t fund ( year %5#ill
%hese disclosures shall form a part of the Statement of Additional
Information and all advertisements of Mutual Funds$
(,$,$? Any disclosure regarding =uarterly/ half yearly/ yearly performance
shall pertain to respective calendar =uarterly/ half yearly/ yearly
only$
(,$,$F @hen the performance of a particular Mutual Fund scheme is
advertised, the advertisement shall also include the
performance data of all the other schemes managed #y the fund
manager of that particular scheme$
In case the num#er of schemes managed #y a fund manager is
more than si!, then the AMC may disclose the total num#er of
schemes managed #y that fund manager along 'ith the
performance data of top , and #ottom , schemes (in addition to the
performance data of the scheme for 'hich the advertisement is
#eing made) managed #y that fund manager in all performance
related advertisement$ 2o'ever, in such cases AMCs shall ensure
that true and fair vie' of the performance of the fund manager is
communicated #y providing additional disclosures, if re=uired$

"'/ Indicati%e portfolio$ and !ield$ in mutual fund$
$cheme$
28

(,$)$( Mutual Funds shall not offer any indicative portfolio and indicative
yield$ 0o communication regarding the same in any manner

,*E
S"I Circular 0o$ IMD/CI/ 0o$ ()/(A(+/*++> dated January (>, *++>


'hatsoever shall #e issued #y any Mutual Fund or distri#utors of
its products$ %he compliance of the same shall #e monitored #y the
AMC and %rustees and reported in their respective reports to S"I$
13.&.2 Indicati%e portfolio or !ield in clo$e ended de#t
oriented mutual fund $cheme$
32/

Mutual Funds (MFs) / AMCs may ma7e follo'ing additional
disclosures in the SID/SAI and 9IM 'ithout indicating the
portfolio or yield, directly or indirectlyB
(,$)$*$( MFs/AMCs shall disclose their credit evaluation policy for the
investments in de#t securities$
(,$)$*$* MFs/AMCs shall also disclose the list of sectors they 'ould not
#e investing$
(,$)$*$, MFs shall disclose the type of instruments 'hich the schemes
propose to invest vi6$ C8s, CDs, %reasury #ills etc
(,$)$*$) MFs shall disclose the floors and ceilings 'ithin a range of AK
of the intended allocation (in K) against each su# asset
class/credit rating$ For e!ample, it may #e disclosed that !5y K
'ould #e in AAA rated #an7 CD as per the sample matri! #elo'B

,*>
S"I Circular 0o$ CI//IMD/DF/(*/*+(( dated August +(,*+((


(,$)$*$A After the closure of 0F4, the AMCs 'ill report in the
ne!t meeting of AMCs and %rustees the pu#lici6ed
percentage allocation and the final portfolio$ :ariations #et'een
indicative portfolio allocation and final portfolio 'ill not #e
permissi#le.



C,-!"R .4
#'*"S!&R R#G,!S 7 &)%#G!#&'S
-R! # = #'*"S!&R R#G,!S
1&.1 3a!ment of intere$t for dela! in di$patch of
redemption andCor repurcha$e proceed$ andCor
di%idend
334

()$($( In the event of failure to dispatchB
a$ /edemption or repurchase proceeds 'ithin (+ 'or7ing days
from the date of receipt of such re=uests and/ or
#$ Dividend 'ithin the stipulated ,+ day period
,,(
,

()$($* %he AMC(s) shall #e lia#le to pay interest X (A per cent per
annum to the unit holders$
,,*
AMC(s) must ensure that the
interest amount due for the period of delay in dispatch of
repurchase or redemption and/or dividend is added to the
proceeds 'hen such payments are made to the investors$ Such
interest shall #e #orne #y the AMC(s)$

()$($, Details of such payments shall #e sent to the "oard along 'ith the
C%/(s)$
,,,
Investors shall also #e informed a#out the rate and
amount of interest paid to them$ 0on compliance 'ith these
directions may invite action under the Mutual Funds /egulations$

,,+
S"I Circular 0o$ S"I/MFD/CI//*/*??/*+++ dated May (>, *+++$
,
,,(
S"I Circular 0o$ S"I / IMD / CI/ 0o () / (EF(FA/ *++> dated Decem#er (A,*++>
,
,,*
/egulation A,(c) of the S"I (Mutual Fund) /egulations, (>>?$
,,,
For C%/ format please refer to section on Formats


1&.2 Unclaimed =edemption Amount
/

()$*$( .nclaimed redemption and dividend amounts may #e deployed #y
Mutual Funds in Call Money Mar7et or Money Mar7et
instruments, as may #e permitted #y /"I from time to time$
()$*$* Investors claiming these amounts 'ithin three years from the due
date shall #e paid at the prevailing 0A:$ At the end of three years,
the amount can #e transferred to a pool account and investors
can claim the amount at the 0A: prevailing at the end of the third
year$
()$*$, Income earned on such funds can #e used for the purpose of
investor education$
()$*$) %he AMC shall ma7e a continuous effort to remind the investors
through letters to ta7e their unclaimed amounts$
()$*$A %he investment management and advisory fee charged #y the
AMC for managing unclaimed amounts shall not e!ceed A+ #asis
points$
()$*$? Disclosures on a#ove provisions shall #e made in the SAI /SID$
Disclosure on the unclaimed amounts and the num#er of such
investors for each scheme shall #e made in the Annual /eport
also$
,,A

,,)
S"I Circular 0o$ MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++
,,A
8lease refer to Schedule 1I of S"I (Mutual Funds) /egulations, (>>?


1&.3 Di$patch of Statement of Account$
,,?

()$,$( AMCs shall allot the units to the applicant 'hose application has
#een accepted and also send confirmation specifying the num#er
of units allotted to the applicant #y 'ay of email and/or SMSCs to
the applicantCs registered email address and/or mo#ile num#er as
soon as possi#le #ut not later than five 'or7ing days from the
date of closure of the initial su#scription list and/or from the date
of receipt of the re=uest from the unitholders$
()$,$* Consolidated Account Statement
,,F

()$,$*$( As per regulation
,,E
, AMCs shall issue consolidated account
statement for each calendar month to the investors in 'hose
folios transaction(s) has/have ta7en place during that month$
()$,$, Systematic Investment 8lan (SI8) or Systematic %ransfer 8lan
(S%8) or Systematic @ithdra'al 8lan (S@8)
,,>

a$ Mutual Funds may dispatch the Statement of Accounts to the
unit holders under SI8 or S%8 or S@8, once every =uarter
ending March, June, Septem#er and Decem#er 'ithin (+
'or7ing days of the end of the respective =uarter$ %he first
Statement of Accounts shall ho'ever #e issued 'ithin (+
'or7ing days of the initial transaction$
#$ Mutual funds shall also provide Statement of Accounts to unit
holders 'ithin A 'or7ing days, 'ithout any charges, if specific
re=uests are received from the investors$ Further, if so

,,?
S"I Circular 0o$ MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++, S"I Circular 0o$
IMD/CI//(*/E++E,/*++? dated 0ovem#er *+, *++? and S"I Circular
0o$Cir/IMD/DF/(?/*+(( dated Septem#er +E, *+((
,,F
S"I Circular 0o$Cir/IMD/DF/(?/*+(( dated Septem#er +E, *+((
,,E
/egulation ,?()) of S"I (Mutual Funds) /egulations, (>>?
,,>
S"I Circular 0o$ IMD/CI//(*/E++E,/*++? dated 0ovem#er *+, *++?


mandated, a soft copy of the Statement of Accounts shall #e e5
mailed to the unit holders on a monthly #asis$
()$,$) Dormant Accountholders
a$ Mutual Funds shall also provide Statement of Accounts to
those unit holders 'ho have not transacted during the last si!
months prior to the date of generation of the Statement of
Accounts$ In such cases, the Statement of Accounts may #e
issued along 'ith the schemeCs 8ortfolio Statement or Annual
/eport and should reflect the last closing #alance and value of
the units prior to the date of generation of the Statement of
Accounts$ Further, if so mandated, a soft copy of the Statement
of Accounts shall #e e5mailed to the unit holders instead of a
physical statement$
1&.& A-:9$ Annual =eport$ for unitholder$
24:

()$)$( %he annual report containing accounts of the AMCs should #e
displayed on the 'e#site of Mutual Fund$ It should also #e
mentioned in the Annual /eport of Mutual Funds schemes that
the unitholders, if they so desire may re=uest for the Annual
/eport of the AMC$
1&.* Di$tri#ution of 3roceed$ realiFed from illi8uid
$ecuritie$C 03A$
3&1

Some of the investments made #y Mutual Funds may #ecome non5
performing assets (08As) or illi=uid at the time of maturity/'inding
up of the scheme(s)$ In due course of time i$e$ after the maturity/
'inding up of the scheme(s), these 08As and illi=uid securities may
#e reali6ed #y the Mutual Funds$ Mutual Funds shall distri#ute

,)+
S"I Circular 0o$ MFD/CI//>/(*+/*+++ dated 0ovem#er *), *+++
,)(
S"I Circular 0o$ MFD/CI//+A/),*/*++* dated June *+, *++*$
,


such amounts to the old investors if such amounts are su#stantial
and reali6ed 'ithin t'o years$ If the amounts reali6ed are not
su#stantial or are reali6ed after t'o years, the same may #e
transferred to the Investor ducation Fund maintained #y each
Mutual Fund$ %he decision as to the determination of su#stantial
amount shall #e ta7en #y the trustees of mutual funds after
considering the relevant factors$
1&.+ :hange of -utual Fund Di$tri#utor
()$?$( Incase an investor 'ishes to change his distri#utor or 'ishes to go
direct, Mutual Funds/AMCCs shall ensure compliance 'ith the
instruction of the investor informing his desire to change his
distri#utor and / or go direct, 'ithout compelling that investor to
o#tain a O0o 4#&ection CertificateC from the e!isting distri#utor$
,)*

1&.) Additional mode of pa!ment through Application$
Supported #! Bloc'ed Amount 1hereinafter referred to
a$ GASBAH2 in -utual Fund$
3&3

()$F$( AS"A facility 'hich investors have #een en&oying for su#scription
to pu#lic issue of e=uity capital of companies has #een e!tended to
the investors su#scri#ing to 0e' Fund 4ffers (0F4s) of mutual
fund schemes$ It shall co5e!ist 'ith the current process, 'herein
che=ues/ demand drafts are used as a mode of payment$
()$F$* %he #an7s 'hich are in S"ICs list shall e!tend the same facility in
case of 0F4s of mutual fund schemes to all eligi#le investors in
Mutual Fund units$

,)*
S"I Circular 0o 5S"I/IMD/CI/ 0o$/ (,/(EF+A* /*++> Decem#er ((, *++>
,),


()$F$, Mutual Funds shall ensure that ade=uate arrangements are made
#y /egistrar and %ransfer Agents for the implementation of AS"A$
Mutual Funds/AMCs shall ma7e all relevant disclosures in this
regard in the SAI$

()$F$) S"I circulars
,))
related to AS"A shall #e follo'ed to the e!tent
applica#le$
()$F$A %he Mutual Funds/AMCs have to compulsorily provide AS"A
facility to the investors for all 0F4s launched on or after 4cto#er (,
*+(+$

,))
S"I Circular 0o$ S"I/CFD/DI;/DI8/,(/*++E/,+/F dated July ,+, *++E,
S"I/CFD/DI;/*++E/*A/+>dated Septem#er *A, *++E, S"I/CFD/DI;/M"/IS/A/*++>/+A/+E
dated August A, *++> and S"I/CFD/DI;/AS"A/(/*++>/,+/(* dated Decem#er ,+, *++> and
CI//CFD/DI;/F/*+(+ dated July (,, *+(+


-R! ## = #'*"S!&RCS &)%#G!#&'S
1&.. -andator! mentioning of 3A0 0um#er
3&*

()$E$( For, the re=uirement of mentioning 8A0 0um#er #y investors of
mutual fund schemes, the applica#le S"I guidelines may #e
referred
,)?

1&./ -andator! mentioning of Ban' Account #!
In%e$tor$
3&)

()$>$( It shall #e mandatory for the investors of the Mutual Funds
schemes to mention their #an7 account num#ers in their
applications/re=uest for redemption$ For this purposes Mutual
Funds shall provide space in applications and redemption re=uest
forms$

,)A
S"I Circular 0o$ M/D/Do8/Cir5+A/*++F dated April *F, *++F, S"I Circular 0o$
M/D/Do8/Cir5+E/*++F dated June *A, *++F, S"I Circular 0o$ M/D/Do8/MF/Cir5
+E/*++E dated April ,, *++E
, , ,
,)?
S"I Circular 0o$ M/D/Do8/MF/Cir5+E/*++E dated April ,, *++E
G ,
,)F
S"I Circular 0o$ IIMA/8/MF/CI//+F/E*?/>E dated April (A, (>>E



-R! ###= #'*"S!&R "D$C!#&'

1&.14 S"BI In%e$tor$ "ducation 3rogramme 5 In%e$tment$
in -utual Fund$
/8

()$(+$( "oard has prepared a #rochure in =uestion5ans'er format
e!plaining the fundamental issues pertaining to mutual funds$ %he
same is enclosed at Anne!ure A$ %he same is also availa#le at our
'e#site '''$se#i$gov$in under the NMutual FundsN section$
()$(+$* AMCs are advised to circulate copies of the #rochure among their
distri#utors and agents (including #ro7ers, #an7s, post offices) and
the investors$
()$(+$, AMCs may pu#lish the same as small #oo7lets$ In such a case,
'hile the #oo7lets must #ear S"I name and logo, AMC may give
their name as pu#lisher$ %his may also #e displayed prominently
on their 'e# sites
()$(+$) AMFI may consider including the #rochure as a part of study
material for their training programmes for investors and for their
certification programme conducted for agents and distri#utors$
()$(+$A "oard may #e 7ept informed a#out the steps ta7en #y the AMCs
in this regard from time to time$

,)E
S"I Cir 0o$ MFD/CI/ 04 5(,/,F+/+* dated January (?,*++*


1&.11 Financial Inclu$ion>
()$(($( In conte!t of Mutual Funds, financial inclusion implies that the
concept of Mutual Fund products is understood #y all and are
accessi#le to anyone 'ho 'ishes to ma7e an investment in them$
Also, investors should #e capa#le of figuring out 'hich Mutual
Fund scheme is appropriate for their financial o#&ectives$ %o'ards
this, it has #een decided thatB
a$ Mutual Funds shall mandatorily also ma7e availa#le printed
literature on mutual funds in regional languages for investor
a'areness and education$
#$ Mutual Funds to introduce Investor a'areness campaign in
regional languages #oth in print and electronic media



C,-!"R .+
C"R!#F#C!#&' 'D R"G#S!R!#&' &F #'!"RM"D#R#"S
349,

350

(A$( 0o Mutual Fund shall deal 'ith any intermediary (i$e$ distri#utors, agents,
#ro7ers, su# #ro7ers or called #y any other name, 'hether individuals or
#elonging to any other organi6ation structure) in relation to selling and
mar7eting of Mutual Fund units unless they have cleared the certification
e!amination$
(A$* 0o Mutual Fund shall engage/employ employee(s) interacting 'ith
investors (i$e$ those 'or7ing in investors relations, call centers, employees
engaged in sales and mar7eting etc) unless they have cleared the
certification e!amination$
(A$, Further, such intermediaries and employees shall also adhere to the
3uidelines specified #y the "oard and AMFI$
,A(

1*.& Di$tri#utor$ of -utual Fund product$
3*2

(A$)$( %he AMCs shall regulate the distri#utors #y putting in place a due
diligence process as follo'sB
(A$)$($( %he due diligence of distri#utors is solely the responsi#ility of
mutual funds/AMCs$ %his responsi#ility shall not #e delegated to
any agency$ 2o'ever, mutual funds/AMCs may ta7e assistance of

,)>
S"I Circular 0o$ MFD/CI/ 0o$(+/,(+/+( dated Septem#er *A, *++(, S"I Circular 0o$
MFD/CI//*+/*,*,+/*++* dated 0ovem#er *E, *++*, S"I Circular 0o$ S"I/MFD/CI/
0o$+(/??>,/+, dated April ,, *++,, S"I Circular 0o$ S"I/IMD/CI/ 0o$*/*A)/+)
dated Fe#ruary ), *++), S"I Circular 0o$ MFD/CI//+?/*(+/*++* dated June *?, *++*$
G
,A+
!emption for Senior Citi6ensB Senior citi6ens 'ith e!perience in distri#uting Mutual
Funds units are e!empt from the mandatory certification e!amination if they have
completed A+ years of age and have e!perience of at least A years as on Septem#er ,+,
*++,$,A+ %hey are also re=uired to follo' the guidelines prescri#ed #y the "oard and
AMFI$ %hey had to attend a mutual fund training programme and a certificate to that
effect endorsed #y a mutual fund should #e su#mitted to AMFI$
G G

,A(
S"I Circular 0o$ MFD/CI/ 0o$(+/,(+/+( dated Septem#er *A, *++(, S"I Circular 0o$
MFD/CI//*+/*,*,+/*++* dated 0ovem#er *E, *++*$
,A*
S"I Circular 0o$ CI//IMD/DF/(,/*+(( dated August **, *+(($


an agency of repute 'hile carrying out due diligence process of
distri#utors$
,A,

(A$)$($* %he due diligence process shall #e initially applica#le for
distri#utors satisfying one or more of the follo'ing criteriaB
a$ Multiple point presence (More than *+ locations)
#$ A.M raised over Rs.(++ Crore across industry in the
non institutional category #ut including high net'orth
individuals (20Is)
c$ Commission received of over Rs.( Crore p$a$ across industry
d$ Commission received of over Rs.A+ ;a7h from a single
Mutual Fund
(A$)$($, At the time of empanelling distri#utors and during the period i$e$
revie' process, Mutual Funds/AMCs shall underta7e a due
diligence process to satisfy Ofit and properC criteria that incorporate,
amongst others, the follo'ing factorsB
a$ "usiness model, e!perience and proficiency in the
#usiness$
#$ /ecord of regulatory / statutory levies, fines and
penalties, legal suits, customer compensations madeI
causes for these and resultant corrective actions ta7en$
c$ /evie' of associates and su#sidiaries on a#ove factors$
d$ 4rgani6ational controls to ensure that the follo'ing
processes are delin7ed from sales and relationship
management processes and personnelB

,A,
S"I Circular 0o$ Cir/IMD/DF/F/*+(* dated Fe#ruary *E, *+(*


($ Customer ris7 / investment o#&ective evaluation$
*$ MF scheme evaluation and defining its
appropriateness to various customer ris7
categories$
(A$)$($) In this respect, customer relationship and transactions shall #e
categori6ed asB

a$ Advisory 5 'here a distri#utor represents to offer advice
'hile distri#uting the product, it 'ill #e su#&ect to the
principle of OappropriatenessC of products to that customer
category$ Appropriateness is defined as selling only that
product categori6ation that is identified as #est suited for
investors 'ithin a defined upper ceiling of ris7 appetite$
0o e!ception shall #e made$

#$ !ecution 4nly 5 in case of transactions that are not
#oo7ed as OadvisoryC, it shall still re=uireB
i$ %he distri#utor has information to #elieve that the
transaction is not appropriate for the customer, a 'ritten
communication #e made to the investor regarding the
unsuita#ility of the product$ %he communication shall
have to #e duly ac7no'ledged and accepted #y investor$
ii$ A customer confirmation to the effect that the transaction is
Oe!ecution only not'ithstanding the advice of in5
appropriateness from that distri#utor #e o#tained prior to
the e!ecution of the transaction$

iii$ %hat on all such Oe!ecution onlyC transactions, the
customer is not re=uired to pay the distri#utor anything
other than the standard flat transaction charge$


c$ %here shall #e no third categori6ation of customer relationship /
transaction$

d$ @hile selling Mutual Fund products of the
distri#utorsC group/affiliate/associates, the distri#utor shall
ma7e disclosure to the customer regarding the conflict of
interest arising from the distri#utor selling of such products$
(A$)$($A Compliance and ris7 management functions of the distri#utor
shall include revie' of defined management processes forB
a$ %he criteria to #e used in revie' of products and the
periodicity of such revie'$
#$ %he factors to #e included in determining the ris7 appetite of
the customer and the investment categori6ation and
periodicity of such revie'$
c$ /evie' of transactions, e!ceptions identification, escalation and
resolution process #y internal audit$
d$ /ecruitment, training, certification and performance revie' of
all personnel engaged in this #usiness$
e$ Customer on #oarding and relationship management process,
servicing standards, en=uiry / grievance handling mechanism$
f$ Internal/ e!ternal audit processes, their comments /
o#servations as it relates to MF distri#ution #usiness$
g. Findings of ongoing revie' from sample survey of investors$
(A$)$($? Mutual Funds/AMCs may implement additional measures as
deemed appropriate to help achieve greater investor protection$
1*.* :ode of :onduct>
1*.*.1 Mutual Funds are re=uired to monitor the activities of their distri#utors,
agents, #ro7ers to ensure that they do not indulge in any malpractice or


unethical practice 'hile selling or mar7eting Mutual Funds units$ Any
non compliance 'ith the Mutual Funds /egulations and 3uidelines
pertaining to Mutual Funds especially guidelines on advertisements and/
or sales literature and/or Code of Conduct shall #e reported in the
periodic meetings of the "oard of the AMC and the %rustee(s) and shall
also #e reported to the "oard #y the AMC(s) in their C%/(s) and #y the
%rustees in their 2alf -early /eports$
"2'2'* AMFI has prescri#ed a Code of Conduct for Mutual Fund intermediaries
enclosed here'ith as Anne!ure (
,A)
$ All intermediaries shall follo' the
Code of Conduct strictly and not indulge in any practice contravening it
directly or indirectly$
(A$A$, 0on compliance 'ith the Code of Conduct shall #e reported #y the
Mutual Funds to the "oard and AMFI$ Further, no Mutual Fund shall
deal 'ith intermediaries contravening the prescri#ed Code of Conduct$
1*.+ "mpanelment of Intermediarie$ #! -utual Fund$

(A$?$( mpanelment of intermediaries #y Mutual Funds, payment of
commissions, #ro7erage and/or su#5#ro7erage etc$ shall #e in
accordance 'ith parameters and guidelines specified #y the "oard and
AMFI from time to time$ Mutual Funds shall monitor the compliance of
these guidelines and Code of Conduct #y their intermediaries in terms of
#usiness done across all Mutual Funds$ In case of non5compliance,
Mutual Funds shall suspend further #usiness and payment of
commissions, etc$ until full compliance #y the empanelled intermediary$

,A)
/efer Anne!ure and /eports for details on Code of Conduct


1*.) :ertification 3rogramme for $ale andC or di$tri#ution of
mutual fund product$
,AA

(A$F$( @ith effect from June +(, *+(+, the certification e!amination for
distri#utors, agents or any other persons employed or engaged or to #e
employed or engaged in the sale and/or distri#ution of mutual fund
products, 'ould #e conducted #y the 0ational Institute of Securities
Mar7ets (0ISM)
,A?
$
(A$F$* .nder the e!isting instructions, the agent/ distri#utor 'as e!empted
from the AMFI certification e!amination if he had completed fifty years of
age and had at least five years of e!perience in distri#ution of mutual
fund units$ As per regulation )(,) of the Certification /egulations,
persons 'ho have attained the age of fifty years or 'ho have at least ten
years e!perience in the securities mar7ets in the sale and/ or
distri#ution of mutual fund products as on May ,(, *+(+, 'ill #e given
the option of o#taining the certification either #y passing the 0ISM
certification e!amination or =ualifying for Continuing 8rofessional
ducation (C8) #y o#taining such classroom credits as may #e specified
#y 0ISM from time to time$(A$F$, %he Certification /egulations re=uire
the persons referred to in paragraph (A$F$( a#ove to comply 'ith the
re=uirements for C8 as specified #y 0ISM 'ithin the validity period of
the certificate o#tained #y passing the certification e!amination$
2o'ever, to facilitate the transition process from AMFI to 0ISM, it has
#een decided that a person holding a valid AMFI certification 'hose
validity e!pires #et'een June +(, *+(+ and Decem#er ,(, *+(+, 'ould
#e re=uired to comply 'ith the C8 re=uirements as laid do'n #y 0ISM
under the relevant clauses of the Certification /egulations, #y Decem#er
,(, *+(+$

,AA
S"I Circular 0o$ Cir/IMD/DF/A/*+(+ dated June *), *+(+
,A?
For 0otification under regulation , of the Securities and !change "oard of India
(Certification of Associated 8ersons in the Securities Mar7ets) /egulations, *++F please refer
to section on Anne!ures


(A$F$) An associated person holding a valid AMFI/0ISM certification 'hose
validity e!pires anytime after Decem#er ,(, *+(+, 'ould #e re=uired to
comply 'ith the C8 re=uirements as laid do'n #y 0ISM under the
relevant clauses of the Certification /egulations, prior to the e!piry of the
validity of the certification$
(A$F$A %he re=uirement of o#taining registration from AMFI after o#taining
certification, as per the Circular dated 0ovem#er *E, *++*, 'ould
continue$
1*.. 0ew cadre of di$tri#utor$
,AF

(A$E$( A ne' cadre of distri#utors, such as postal agents, retired
government and semi5government officials (class III and a#ove or
e=uivalent) 'ith a service of at least (+ years, retired teachers 'ith a
service of at least (+ years, retired #an7 officers 'ith a service of
at least (+ years, and other similar persons (such as "an7
correspondents) as may #e notified #y AMFI/AMC from time to time,
shall #e allo'ed to sell units of simple and performing mutual fund
schemes$
(A$E$* Simple and performing mutual fund schemes shall comprise of
diversified e=uity schemes, fi!ed maturity plans (FM8s) and inde!
schemes and should have returns e=ual to or #etter than their
scheme #enchmar7 returns during each of the last three years$
(A$E$, %hese ne' cadre of distri#utors 'ould re=uire a simplified form of
0ISM certification and AMFI /egistration$

1*./ De%eloping alternati%e di$tri#ution channel$
3*.

(A$>$( In order to increase penetration of Mutual Fund products and to
energise the distri#ution net'or7 'hile protecting the interest of

,AF
,AE


investors, S"I had permitted additional e!pense ratio of ,+ #ps for
garnering funds from "5(A cities$ %his development 'ould lead to
setting up of distri#ution infrastructure #y AMCs$ 2o'ever, in order
to achieve participation from all parts of the country in Mutual Funds
there is greater need for developing additional distri#ution
channels$ %herefore, it has #een decided thatB
a$ Distri#ution through 8S. #an7sB 8S. #an7s 'hich have 'ide
#an7 #ranches net'or7 and have distri#ution reach in the
noo7 and corner of the country, could play a 7ey role in Mutual
Funds distri#ution$ In order to leverage the 8S. #an7s
infrastructure, Mutual Funds/ AMCs need to develop a
system for active support to 8S. #an7s to distri#ute Mutual
Fund products through them$ Such active support 'ould also
encourage 8S. #an7s to distri#ute products of all Mutual Funds$
#$ 4nline distri#utionB 4nline distri#ution not only increases
customer convenience, #ut also significantly improves distri#utor
economics$ %he online phenomenon is increasing rapidly and it is
o#served that more and more people especially younger
generation prefers online transactions$ %herefore, it has #een
decided that all Mutual Funds should enhance the online
investment facility and tap the internet savvy users to invest
in Mutual Funds #y providing an online investment facility on
their 'e#sites$ Mutual Funds also need to tap the #urgeoning
mo#ile5only internet users for direct distri#ution of Mutual Fund
products$
1*.14 Uni8ue Identit! 0um#er
(A$(+$( AMFI shall create a uni=ue identity num#er of the employee/
relationship manager/ sales person of the distri#utor interacting


'ith the investor for the sale of mutual fund products, in
addition to the AMFI /egistration 0um#er (A/0) of the distri#utor$
(A$(+$* %he application form for mutual fund schemes shall have
provision for disclosing the uni=ue identity num#er of such sales
personnel along 'ith the A/0 of distri#utor$

C,-!"R .8

!R'SC!#&' #' M$!$% F$'DS $'#!S



1+.1 -aintenance of document$
3*/

(?$($( As per the re=uirements specified #y "oard in respect of MAnti
Money ;aundering (AM;) Standards/Com#ating Financing of
%errorism (CF%) / 4#ligations of Securities Mar7et Intermediaries
under 8revention of Money ;aundering Act, *++* and /ules
framed there5underL
,?+
, maintenance of all documentation
pertaining to the unitholders/ investors is the responsi#ility of the
AMC$
(?$($*$ Accordingly, vide S"I Circular 0o 5 S"I/IMD/CI/ 0o$(*
/(E?E?E /*++> dated Decem#er ((, *++>, AMCs 'ere advised to
confirm 'hether all the investor related documents 'ere
maintained/ availa#le 'ith the AMC$ If not, and to the e!tent of
and relating to such investor accounts/folios 'here investor
related documentation 'as incomplete/inade=uate/not availa#le
or 'as stated to #e maintained #y the distri#utors, then the
%rustees 'ere advised to ensure the follo'ingB
(?$($*$( 0o further payment of any commissions, fees and / or payments
in any other mode should #e made to such distri#utors till full
compliance/ completion of the steps enumerated herein$
(?$($*$* %a7e immediate steps to o#tain all investor/ unit holders
documents in terms of the AM;/ CF%, including 9-C
documents/ 8oA as applica#le$

(?$($*$, %a7e immediate steps to o#tain all supporting documents in
respect of the past transactions$
(?$($*$) 4n a one time #asis, send statement of holdings and all
transactions since inception of that folio in duplicate to the

,A>
S"I Circular 0o 5 S"I/IMD/CI/ 0o$(* /(E?E?E /*++> dated Decem#er ((,*++>
,?+
S"I Circular 0o ISD/AM;/CI/5(/*++E dated Decem#er (>, *++E


investor and see7 confirmation from the unit holders on the
duplicate copy$
(?$($*$A Set up a separate customer services mechanism to handle/
address =ueries and grievance of the a#ove mentioned
unitholders$(?$($, 8ending completion of documentation, e!ercise
great care and #e satisfied of investor #onafides #efore authori6ing
any transaction, including redemption, on such accounts/ folios$
(?$($) %he %rustees 'ere re=uired forth'ith to confirm to "oard that the
steps had #een ta7en to address the a#ove and also send a status
to the "oard as and 'hen process 'as completed to their
satisfaction$
(?$($A All mutual funds/ AMCs are directed that
,?(
B
(?$($A$( All ne' folios/ accounts shall #e opened only after ensuring
that all investor related documents including account opening
documents, 8A0, 9-C, 8oA (if applica#le), specimen signature
are availa#le 'ith AMCs//%As and not &ust 'ith the distri#utor$
(?$($A$* For e!isting folios, AMCs shall #e responsi#le for updation of the
investor related documents including account opening
documents, 8A0, 9-C, 8oA (if applica#le), specimen signature
#y 0ovem#er (A, *+(+$
(?$($A$, %he trustees shall su#mit a confirmation after they receive
certification from an Independent auditor on completion of the
said process latest #y 0ovem#er **, *+(+$

1+.2 Facilitating tran$action$ in -utual Fund $cheme$ through
the Stoc' "<change infra$tructure
3+2

(?$*$( Stoc7 !change terminals can #e used for facilitating transactions
in mutual fund schemes$ %he Stoc7 !change mechanism 'ould

,?(
S"I Circular 0o Cir /IMD/DF/> / *+(+ dated August (*, *+(+


also e!tend the present convenience availa#le to secondary mar7et
investors to mutual fund investors$
(?$*$* .nits of mutual fund schemes may #e permitted to #e transacted
through registered stoc7 #ro7ers of recogni6ed stoc7 e!changes
and such stoc7 #ro7ers 'ill #e eligi#le to #e considered as official
points of acceptance
,?,
$
(?$*$, %he respective stoc7 e!change 'ould provide detailed operating
guidelines to facilitate the same$
(?$*$)In this regard, Mutual Funds/AMC are advised thatB
(?$*$)$(mpanelment and monitoring of Code of Conduct for #ro7ers
acting as mutual fund intermediaries5
a$ %he stoc7 #ro7ers intending to e!tend the transaction in
Mutual Funds through stoc7 e!change mechanism shall #e
re=uired to comply 'ith the re=uirements of passing the AMFI
certification e!amination
,?)
$All such stoc7 #ro7ers 'ould then
#e considered as empanelled distri#utors 'ith mutual
fund/AMC$
#$ %hese stoc7 #ro7ers shall also comply 'ith Code of Conduct
,?A

for intermediaries of Mutual Funds, and applica#le S"I
guidelines
,??
, applica#le to intermediaries engaged in selling
and mar7eting of mutual fund units$
c$ It is clarified that, stoc7 e!changes shall monitor the
compliance of the code of conduct specified regarding
empanelment of intermediaries #y mutual funds
,?F
$

,?*
S"I Circular 0o 5 S"I /IMD / CI/ 0o$((/(E,*+)/ *++> dated 0ovem#er (,,*++>
,?,
S"I Circular 0o$ S"I/IMD/CI/ 0o$((/FE)A+/+? dated 4cto#er ((, *++?
,?)
8lease refer Chapter (A on Certification and /egistration of Mutual Funds intermediaries
,?A
For Code of Conduct, please refer to Anne!ure I
,??
8lease refer Chapter (A on Certification and /egiatration of Mutual Funds intermediaries
,?F
8lease refer Chapter (A on Certification and /egistration of Mutual Funds intermediaries
,,


(?$*$)$* %ime stamping
a$ %ime stamping as evidenced #y confirmation slip given #y stoc7
e!change mechanism to #e considered sufficient compliance
'ith clause for cutDoff timing for li=uid scheme and plans,
cut5off timing for other schemes and plans and time stamping
provisions mandated #y "oard
,?E
$
(?$*$)$, Statement of Account
a$ @here investor desires to hold units in dematerialised form,
demat statement given #y depository participant 'ould #e
deemed to #e ade=uate compliance 'ith re=uirements for
account statement prescri#ed #y S"I ,?>$
(?$*$)$) Investor grievance mechanism
a$ Stoc7 e!changes shall provide for investor grievance handling
mechanism to the e!tent they relate to disputes #et'een
#ro7ers and their client$
(?$*$)$A Demateriali6ation of e!isting units held #y investors
a$ In case investors desire to convert their e!isting physical units
(represented #y statement of account) into demateriali6ed form,
mutual funds / AMCs shall ta7e such steps in coordination
'ith /egistrar and %ransfer Agents, Depositories and
Depository participants (D8s) to facilitate the same$

,?E
8lease refer to Chapter E D 0et Asset :alue for details on cut off timing provisions
,?>
For details on dispatch of statement of accounts$ refer to Chapter ()5 Investor /ights and
services


(?$*$)$? 4ption to hold units in demat form
,F+

a$ Mutual Funds/AMCs are advised to invaria#ly provide an
option to the investors to mention demat account details in the
su#scription form, in case they desire to hold units in demat
form 'hile su#scri#ing to any scheme (open ended/close
ended/Interval)$
#$ Mutual Funds/AMCs shall ensure that a#ove mentioned option
is provided to the investors in all their schemes (e!isting and
ne')$
c$ Mutual Funds/AMCs are advised to o#tain ISI0 for each option
of the scheme and =uote the respective ISI0 along 'ith the
name of the scheme, in all Statement of Account/Common
Account Statement (CAS) issued to the investors$
(?$*$)$F 9no' your client (9-C)
a$ @here investor desires to hold units in dematerialised form, the
9-C performed #y D8 in terms of S"I re=uirements
,F(
'ould
#e considered compliance 'ith applica#le re=uirements
specified in this regard
,F*
#y Mutual Funds/AMCs$
#$ %he Mutual Funds/AMC shall ta7e necessary steps to do 9-C
re=uirements of all investors as per the prescri#ed
guidelines
,F,
$

,F+
S"I circular no$CI//IMD/DF/>/*+((, dated May (>, *+((
,F(
S"I Circular 0o 5 M/D/Do8/Dep/Cir5*>/*++) dated August *), *++)
,F*
S"I Circular 0o 5 ISD/AM;/CI/5(/*++E dated Decem#er (>, *++E
,F,
S"I Circular 0o$ MI/SD/S/Cir5*(/*+((, dated 4cto#er A, *+((, S"I Circular 0o$
MI/SD/Cir5*,/*+(( dated Decem#er *, *+(( and S"I Circular 0o$MI/SD/Cir5 *? /*+((
dated Decem#er *,, *+((


(?$*$)$E Stoc7 e!changes and mutual funds/AMCs, #ased on the
e!perience gained may improve the mechanism in the interest
of investors$
(?$*$)$> In addition to the e!isting facilities of purchasing and
redeeming directly 'ith the Mutual Funds and Stoc7 "ro7ers,
the follo'ing #e noted
,F)
B
a$ .nits of mutual funds schemes may #e permitted to #e
transacted through clearing mem#ers of the registered
Stoc7 !changes$
#$ 8ermit Depository participants of registered Depositories to
process only redemption re=uest of units held in demat
form.
(?$*$)$(+ %he follo'ing #e noted 'ith respect to investors having demat
account and purchasing and redeeming mutual funds units
through stoc7 #ro7ers and clearing mem#ersB

a$ Investors shall receive redemption amount (if units are
redeemed) and units (if units are purchased) through
#ro7er/clearing mem#erCs pool account$ Mutual
Funds(MF)/ Asset management Companies(AMC) 'ould pay
proceeds to the #ro7er/clearing mem#er (in case of
redemption) and #ro7er/clearing mem#er in turn to the
respective investor and similarly units shall #e credited #y
MF/AMC into #ro7er/clearing mem#erCs pool account (in
case of purchase) and #ro7er/clearing mem#er in turn to
the respective investor$

,F)
S"I Circular 0o CI//IMD/DF/(F/*+(+ dated 0ovem#er >, *+(+


#$ 8ayment of redemption proceeds to the #ro7er/clearing
mem#ers #y MF/AMC shall discharge MF/AMC of its
o#ligation of payment to individual investor$ Similarly, in
case of purchase of units, crediting units into
#ro7er/clearing mem#er pool account shall discharge
MF/AMC of its o#ligation to allot units to individual
investor$
(?$*$)$(( %he follo'ing may #e noted in this regardB
a$ Clearing mem#ers and Depository participants 'ill #e eligi#le
to #e considered as official points of acceptance
,FA
and
conditions stipulated
,F?
:i6$ AMFI /0ISM certification, code
of conduct prescri#ed #y S"I for Intermediaries of Mutual
Fund, shall #e applica#le for such Clearing mem#ers and
Depository participants as 'ell$
#$ Stoc7 e!changes and Depositories shall provide investor
grievance handling mechanism to the e!tent they relate to
disputes #et'een their respective regulated entity and their
client and shall also monitor the compliance of code of
conduct specified
,FF
regarding empanelment and code of
conduct for intermediaries of Mutual Funds$

,FA
S"I Circular 0o$ S"I/IMD/CI/ 0o$((/FE)A+/+? dated 4cto#er ((, *++?
,F?
S"I Circular dated 0ovem#er (,, *++> for stoc7 #ro7ers
,FF
S"I Circulars MFD/CI//*+/*,*,+/+* dated 0ovem#er *E, *++* and
S"I/IMD/+E/(F)?)E/*++> dated August *F, *++>


(?$*$)$(* %he respective stoc7 e!changes and Depositories 'ould
provide detailed operating guidelines to facilitate the a#ove and
ensure that timelines prescri#ed
,FE
shall #e adhered to 'ith
regard to allotment of units and receipt of redemption proceeds
at the investorCs level$
(?$*$)$(, %ransfera#ility of Mutual Fund units
,F>

a$ /egulations
,E+
states that Ma unit unless other'ise
restricted or prohi#ited under the scheme, shall #e
freely transfera#le #y act of parties or #y operation of
la'$L %he spirit and intention of this regulation is not to
prohi#it transfera#ility of units as a general rule or
practice$
#$ All AMCs shall clarify #y 'ay of an addendum that units
of all mutual fund schemes held in demat form shall #e
freely transfera#le from the date of the issue of said
addendum 'hich shall #e not later than 4cto#er (,
*+(+$ 2o'ever, restrictions on transfer of units of ;SS
schemes during the loc75in period shall continue to #e
applica#le as per the ;SS 3uidelines$

(?$*$A Stoc7 e!changes and mutual funds/AMCs, #ased on the e!perience
gained may further improve the mechanism in the interest of
investors$ 0ecessary clarifications, if any, 'ould #e issued at
appropriate time #y S"I in this regard$

,FE
S"I (Mutual Funds) /egulations, (>>?
,F>
S"I Circular 0o 5 CI//IMD/DF/(+/*+(+ dated August (E, *+(+
,E+
/egulation ,F(() of S"I (Mutual Fund) /egulations, (>>?


1+.3 :a$h In%e$tment$ in mutual fund$
3.1

(?$,$( In order to help enhance the reach of mutual fund products
amongst small investors, 'ho may not #e ta! payers and may
not have 8A0/#an7 accounts, such as farmers, small
traders/#usinessmen/'or7ers, cash transactions in mutual funds
to the e!tent of A+,+++/5
,E*
per investor, per mutual fund, per
financial year shall #e allo'ed su#&ect to (i) compliance 'ith
8revention of Money ;aundering Act, *++* and /ules framed
there underI the S"I Circular(s) on Anti Money ;aundering
(AM;) and other applica#le AM; rules, regulations and
guidelines and (ii) sufficient systems and procedures in place$
(?$,$* /epayment in the form of redemptions, dividend, etc$ 'ith respect
to aforementioned investments shall #e paid only through #an7ing
channel$

,E(
,E*
S"I Circular 0o$ CI//IMD/DF/(+/*+() dated May **, *+()


C,-!"R ./
M#SC"%%'"&$S
1).1 In%e$tment #! Foreign In%e$tor$ in -utual Fund
Scheme$
3.3
.
(F$($( Foreign investors (termed as <ualified Foreign Investors/ <FIs)
'ho meet 9-C re=uirement may invest in e=uity and de#t
schemes of Mutual Funds (MF) through the follo'ing t'o routesB

(F$($($( Direct route 5 2olding MF units in demat account through a
S"I registered depository participant (D8)$

(F$($($* Indirect route5 2olding MF units via .nit Confirmation /eceipt
(.C/)$
(F$($* %he investment through the a#ove mentioned routes shall #e
su#&ect to the follo'ing conditionsB
(F$($*$( <ualified Foreign Investor (<FI) shall mean a person resident
in a country that is compliant 'ith Financial Action %as7 Force
(FA%F) standards and that is a signatory to International
4rgani6ation of Securities CommissionPs (I4SC4Cs) Multilateral
Memorandum of .nderstanding,
8rovided that such person is not resident in India,
8rovided further that such person is not registered 'ith S"I as
Foreign Institutional Investor or Su#5account$

,E,
S"I Circular 0o$CI//IMD/DF/()/*+(( dated August >, *+((


!planation5 For the purposes of this clauseB
(() the term N8ersonN shall carry the same meaning under Section
*(,() of the Income %a! Act, (>?(
(*) the phrase Mresident in IndiaL shall carry the same meaning as
in the Income %a! Act, (>?(
(,) MresidentL in a country, other than India, shall mean resident as
per the direct ta! la's of that country$

(F$($*$* MF shall ensure that only <FIs 'ho comply 'ith para (F$($*$(
are allo'ed to invest under these routes$

(F$($*$, MF shall ensure that <FIs meet the 9-C re=uirements as per
the FA%F standards, 8revention of Money ;aundering Act,
*++* (8M;A) rules and regulations made thereunder, and S"I
circulars issued in this regard #efore accepting su#scriptions
from <FIs$

(F$($*$) %he aggregate investments #y <FIs under #oth the routes
shall #e su#&ect to a total overall ceiling of .S W(+ #illion for
e=uity schemes$

(F$($*$A In addition to the a#ove, the aggregate investments #y <FIs
under #oth the routes for de#t schemes 'hich invest in
infrastructure (MInfrastructureL as defined under the e!tant
C" guidelines issued #y /"I) de#t of minimum
residual maturity of A years, shall #e su#&ect to a total overall
ceiling of .S W, #illion 'ithin the e!isting ceiling of .S W*A
#illion for FII investment in corporate #onds issued #y
infrastructure companies$



(F$($*$? MF can accept su#scriptions from <FIs till such time the
investments #y <FIs under #oth the routes reaches .S WE
#illion in e=uity schemes and .S W*$A #illion in de#t schemes
and the remaining limit of .S W* #illion in e=uity schemes and
.S W+$A #illion in de#t schemes shall #e auctioned #y S"I
through #idding process$

(F$($*$F MF shall file 'ith S"I a report a#out the total su#scription
and redemption #y <FIs on a daily #asis as per the format$ MF
shall prepare such report on actual receipt and payment #asis$
S"I 'ill disseminate on an aggregate #asis the total amount of
investments #y <FIs in e=uity and de#t schemes of the MF on
S"ICs 'e#site$ @hen the total investment reaches .S WE #illion
in e=uity schemes or .S W*$A #illion in de#t schemes, MF shall
stop accepting fresh investment from <FIs unless they get
allotment of limits out of the remaining limit of .S W* #illion in
e=uity schemes or .S W+$A #illion in de#t schemes respectively
in the auction process referred in para (F$($*$?$

(F$($*$E MF/ D8 shall ensure that the units held #y <FIs #y 'ay of
.C//demat holding are non transfera#le and non trada#le$

(F$($*$> MF/ D8 shall capture the #an7 account details of the
<FIs designated overseas #an7 account and shall ensure that
all su#scriptions are received from that overseas account and
redemption proceeds are also transferred into the same
overseas account$ MF/ D8 shall also ensure that the overseas
#an7 account 'hich <FIs has designated for the purpose is
#ased in countries 'hich are compliant 'ith FA%F standards
and are signatory to MM4. of I4SC4$

(F$($*$(+ In case of su#scription, MF shall allot units #ased on the 0A:
of the day on 'hich funds are reali6ed in the MFCs scheme #an7


account in India and in case of redemption, units shall #e
redeemed on the day on 'hich transaction slip/instruction is
received and time stamped #y MF, as per the applica#le cut off
time$ %he Scheme information documents of the MF shall clearly
mention the applica#le cut off time for <FIs and the other
re=uirements / applica#le guidelines for <FIs$

(F$($*$(( MF shall ensure that Systematic Investments/ transfer/
'ithdra'als and s'itches are not availa#le to the <FIs$ <FIs can
only su#scri#e or redeem$

(F$($*$(* MF/ D8 shall ensure that units/ .C/s held #y <FIs are
free from all encum#rances i$e$ pledge or lien cannot #e created
for such units$

(F$($*$(, MF shall comply 'ith all the re=uirements as per the 8M;A, FA%F
standards and S"I circulars issued in this regard on an ongoing
#asis$

(F$($*$() MF shall ensure that all the investor related documents/ records
of the <FIs are availa#le 'ith them$
(F$($*$(A MF shall ensure compliance 'ith la's (rules and
regulations) of the &urisdictions 'here the <FIs are #ased and
also ensure that the interest of e!isting unit holders of the MF
schemes are not adversely affected due to the issuance of .C/s/
demat units to the <FIs$
(F$($*$(? In case of any penalty, pending litigations or proceedings,
findings of Inspections or investigations for 'hich action may have
#een ta7en or is in the process of #eing ta7en #y an overseas
regulator against MF/ AMC, it shall #ring such information to
the attention of S"I and unitholders of the concerned
scheme$



(F$($*$(F MF shall #e responsi#le for the deduction of applica#le ta! at
source out of the redemption proceeds #efore ma7ing redemption
payments to <FIs$

(F$($*$(E MF/D8 shall re=uire <FIs to su#mit necessary information for the
purpose of o#taining 8A0$ MF/D8 may use the com#ined 8A0 cum
9-C form to #e notified #y C"D% for <FIs$ MF/ D8 may ta7e any
additional information/ documents from the <FIs other than those
mentioned in the common 8A0 cum 9-C from to ensure
compliance 'ith 8ara (F$($*$, a#ove$
(F$($, 4ther conditions for direct route (demat account)$
(F$($,$( %here shall #e , parties under this route 5 <FIs, =ualified D8 and
MF$

(F$($,$* A <FIs can open only one demat account 'ith any one of the
=ualified D8s and shall su#scri#e and redeem through that D8
only$ MF along'ith the D8 shall have ade=uate systems to ensure
the compliance of the same$

(F$($,$, %o #ecome a =ualified D8, a S"I registered D8 shall fulfill the
follo'ingB
a$ D8 shall have paid up capital of Rs.A+ Crore or more,
#$ D8 shall #e either a clearing #an7 or clearing mem#er of
any of the clearing corporations$
c$ D8 shall have appropriate arrangements for receipt and
remittance of money 'ith a designated Authorised Dealer
(AD) Category 5 I #an7
d$ D8 shall demonstrate that it has systems and procedures
to comply 'ith the FA%F Standards, 8M;A and S"I
circulars issued from time to time$


e$ D8 shall o#tain prior approval of S"I #efore commencing
the
activities relating to accepting MF su#scription from <FIs$

(F$($,$) %he =ualified D8 shall open a demat account for the <FIs after
ensuring all the re=uirements as per the 8M;A, FA%F standards
and S"I circulars issued in this regard$

(F$($,$A For the purpose of account opening, MF can rely on the 9-C done
#y D8s$ Further, MF shall o#tain the relevant records of 9-C/
other documents from the D8 and ensure compliance 'ith para
($(($,$()$ 2o'ever, MF shall comply 'ith 8M;A, FA%F standards
and S"I circulars issued in this regard from time to time on an
ongoing #asis$

(F$($,$? %he =ualified D8 shall open a separate single rupee pool #an7
account 'ith a designated AD Category 5I #an7, e!clusively for
the purpose of investments #y <FIs in India$

(F$($,$F 8rocess Flo'
Subscription
a$ %he <FIs shall place a purchase/ su#scription order
mentioning the name of the scheme/MF 'ith its D8 and
remit foreign in'ard remittances through normal #an7ing
channel in any permitted currency (freely converti#le)
directly to the single rupee pool #an7 account of the
D8 maintained 'ith a designated AD category 5 I #an7$
#$ D8 in turn shall for'ard the purchase order to the
concerned MF and remits the money to the MFCs scheme
account on the same day as the receipt of funds from <FIs$


In case of receipt of money after #usiness hours, D8 shall
remit the funds to MF scheme account #y ne!t #usiness day$
c$ If for any reasons, the D8 is not a#le to remit the money to
the MF scheme account 'ithin the stipulated timeframe as
mentioned in para5#, the D8 shall immediately return the
money to the designated overseas #an7 account of the
<FIs$
d$ MF shall process the order and credit units into the demat
account of the <FIs$
e$ If for any reasons the units are not allotted, MF / D8 shall
ensure that the money is remitted #ac7 to the <FICs
designated overseas #an7 account 'ithin , 'or7ing days
from the date of receipt of su#scription of money in the
single rupee pool #an7 account of the D8 maintained
'ith a designated AD category I #an7$
Rede?ption
f$ <FIs can redeem, either through Delivery Instruction
(physical/ electronic) or any another mode prescri#ed #y
the Depositories$ 4n receipt of instruction from <FIs,
D8 shall process the same and for'ard the redemption
instructions to the MF$ .pon receipt of instruction from D8,
MF shall process the same and shall credit the single rupee
pool #an7 account of the D8 'ith the redemption proceeds$
g$ %he D8 can ma7e fresh purchase of units of e=uity and de#t
schemes of MF (if so instructed #y the <FIs) out of the
redemption proceeds received provided that payment is made
to'ards such purchase is made 'ithin t'o 'or7ing days of
receipt of money from MF in the pooled #an7 account$ In


case no purchase is made 'ithin said period, the money
shall #e remitted #y the D8s to the designated #an7 overseas
account of the <FIs 'ithin t'o 'or7ing days from the date of
receipt of money from the MF in the pooled #an7 account$
Dividend
h$ In case of dividend payout, the MF shall credit the single
rupee pool #an7 account of the D8 'ith the dividend
amount$ %he D8 in turn shall remit the same to the
designated #an7 overseas account of the <FIs 'ithin t'o
'or7ing days from the date of receipt of money from the MF
in the D8Cs rupee pooled #an7 account$

./...4 4ther conditions for Indirect route (.nit Confirmation /eceipts)

(F$($)$( %here shall #e four parties involved 5 <FIs, .C/ issuer (#ased
overseas), S"I registered Custodian (#ased in India) and MF$

(F$($)$* <FIs can su#scri#e / redeem only through the .C/ Issuer$

(F$($)$, MF shall appoint one or more .C/ issuing agent overseas and one
S"I registered custodian in India$

(F$($)$) .C/ issuer appointed #y MF shall act as agent of the MF$

(F$($)$A MF can appoint entities fulfilling the follo'ing conditions as .C/
issuerB
a$ %he entity is a#le to demonstrate that it has proven trac7 record,
e!pertise and technology in the #usiness of issuance of glo#al
depository receipts/glo#al custody agency
#$ %he entity is registered 'ith an overseas securities mar7et/
#an7ing regulator$


(F$($)$? MF shall see7 no o#&ection from S"I #efore appointing any .C/
issuer and furnish the details and information sought #y S"I
a#out the .C/ issuer$ S"I reserves the right to see7 additional
information / clarification and direct action, including non
appointment/ revocation of appointment of that .C/ Issuing
Agent$

(F$($)$F MF shall comply 'ith all the re=uirements as per the 8M;A, FA%F
standards and S"I circulars issued in this regard on an ongoing
#asis$

(F$($)$E Custodians appointed #y the MF shall comply 'ith the S"I
(Custodian of Securities) /egulations, (>>?, circulars and
guidelines issued #y S"I$

(F$($)$> %he rupee denominated units of the MF 'ould #e held as
underlying #y the custodian in India in demat mode against 'hich
the .C/ issuer 'ould issue .C/ to #e held #y <FIs$

(F$($)$(+ MF shall ensure that for every .C/ issued #y .C/ issuer,
Custodian in India shall hold corresponding num#er of units
against it i$e$, there shall #e one unit of MF scheme for every unit
of .C/$

(F$($)$(( MF shall receive money from .C/ issuer either in foreign country
#y opening #an7 account overseas (in accordance 'ith the
relevant e!tant FMA regulations) or in Indian rupees in the
respective MF scheme account held in India$



(F$($)$(* MF shall mandate the .C/ issuer regarding the re=uirements
for 9-C, Customer due diligence process and documents
and information to #e collected from the <FIs in terms of the
re=uirements mentioned in para (F$($*$(, a#ove$

(F$($)$(, MF shall o#tain the relevant records of 9-C/ other documents
from the .C/ issuer in order to comply 'ith FA%F standards, 8M;A
and S"I circulars issued in this regard and ensure compliance
'ith para (F$($*$()$

(F$($)$() .nits purchased and redeemed through .C/ issuer shall #e
settled on gross #asis and under no circumstances shall #e netted
against other investors of .C/ issuer

(F$($)$(A 8rocess flo'B
a$ %he <FIs places a purchase/ su#scription order through the .C/
issuer$
#n case of MF opening ban@ account overseas Din accordance
>ith the relevant eBtant F"M regulationsE
#$ .C/ issuer shall for'ard the order of <FIs to the MF/Custodian$
.pon receipt and transfer of funds to IndiaI the MF shall issue units
to the custodian and custodian in turn confirm to the .C/ Issuer to
issue .C/ to the <FIs$
c$ In case of redemption, .C/ issuer shall confirm receipt of
redemption re=uest to the MF and Custodian$ .pon receipt of
instruction, MF shall process the same and shall transfer the
redemption proceeds to the MF overseas #an7 account for ma7ing
payment to the designated overseas #an7 account of the <FIs$


d$ In case of dividend payout, the MF shall transfer the dividend
amounts to the MF overseas #an7 account for ma7ing payment to
the designated overseas #an7 account of the <FIs$
#n case MF receives ?oney in #ndia fro? $CR issuer.
e$ .C/ issuer shall for'ard the purchase order to MF and Custodian,
and remit the funds into MF scheme account (in rupee terms)$ .pon
receipt of fundsI the MF shall issue units to the custodian and
custodian shall in turn confirm to the .C/ Issuer to issue .C/ to
the <FIs$
f$ In case of redemption, .C/ issuer shall confirm receipt of
redemption re=uest to the MF H Custodian$ .pon receipt of
instruction, MF shall process and remit redemption proceeds to the
.C/ issuer 'hich in turn shall remit redemption proceeds to the
designated #an7 account of the <FIs$
g$ In case of dividend payout, the MF shall remit the dividend
amount proceeds to the .C/ issuer 'hich in turn shall remit the
dividend amount to the designated #an7 account of the <FIs$
(F$($A %he investment #y the <FIs in MF e=uity and de#t schemes under
this scheme shall also #e su#&ect to the relevant and e!tant FMA
regulations and guidelines issued #y the /eserve "an7 of India under
FMA, (>>> from time to time$


1).2 :larification
3.&
to =egulation 2&
3.*

(F$*$( %he amended /egulation mandates that AMCs shall appoint
separate fund manager for each separate fund managed #y it
unless the investment o#&ectives and assets allocations are the
same and the portfolio is replicated across all the funds managed
#y the fund manager$
(F$*$* %he replication of minimum F+K of portfolio value shall #e
considered as ade=uate for the purpose of said compliance,
provided that AMC has in place a 'ritten policy for trade allocation
and it ensures at all points of time that the fund manager shall not
ta7e directionally opposite positions in the schemes managed #y
him$
(F$*$, @herein a fund manager is common across mutual fund schemes
and schemes/products under other permissi#le activities of AMC,
then the AMC shallB
(F$*$,$( disclose on their 'e#sites, the returns provided #y the said
manager for all the schemes (mutual fund, pension funds,
offshore funds etc) on a monthly #asis$
(F$*$,$* in case of any performance advertisement is issued #y the AMC
for any scheme, then the details of returns of all the schemes
(mutual fund, pension funds, offshore funds etc) managed #y
that fund manager shall #e provided$
(F$*$,$, in case the difference #et'een the annual returns provided #y
the schemes managed #y the same fund manager is more than
(+K then the same shall #e reported to the trustee and

,E)
S"I Circular 0o$Cir/IMD/DF/F/*+(* dated Fe#ruary *E, *+(*
,EA
4f S"I (Mutual Funds) /egulations, (>>?


e!planation for the same shall #e disclosed on the 'e#site of
the AMC$
1).3 3roduct 7a#eling in -utual Fund$
3.+

(F$,$( All the mutual funds shall O;a#elC their schemes on the
parameters as mentioned underB
a$ 0ature of scheme such as to create 'ealth or provide regular
income in an indicative time hori6on (short/ medium/ long term)$
#$ A #rief a#out the investment o#&ective (in a single line sentence)
follo'ed #y 7ind of product in 'hich investor is investing
(=uity/De#t)$c$ ;evel of ris7, depicted #y colour code #o!es as
underB
Y "lue D principal at lo' ris7$
Y -ello' D principal at medium ris7$
Y "ro'n D principal at high ris7$
%he colour codes shall also #e descri#ed in te!t #eside the colour
code #o!$
d$ A disclaimer that investors should consult their financial advisers
if they are not clear a#out the suita#ility of the product$
(F$,$* 8roduct la#el shall #e disclosed inB
a$ Front page of initial offering application forms, 9ey Information
Memorandum (9IM) and Scheme Information Documents (SIDs)$
#$ Common application form D along 'ith the information a#out the
scheme$

,E?
S"I Circular 0o$ CI//IMD/DF/A/*+(, dated March (E, *+(,


%he product la#el 'ith respect to (a) H (#) shall #e placed in pro!imity to
the caption of the scheme and shall #e prominently visi#le$
c$ Scheme advetisements5placed in manner so as to #e prominently
visi#le to investors$

Master Circular For Mutual Funds

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Master Circular For Mutual Funds

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Securities and Exchange Board of India

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