The Hindu Business Line : SEBI's fiat on initial expenses

The Securities and Exchange Board of India has disallowed open-ended funds from charging initial issue expenses in new fund offers from the NAV. Open-ended schemes now have to meet sales, marketing and other expenses connected with sales and distribution of schemes from the entry load and not through the initial issue expenses. Close-ended schemes will continue to charge initial issue expenses but no entry load. Besides, for an investor exiting a close-ended scheme before the initial issue expenses are amortised, the fund house will redeem the units only after recovering the proportionate balance not amortised.

The new guidelines on dividend distribution require fund houses to issue a public notice within one day of the board approving a dividend and record date. The record date shall be five days from the date of notice. Neither the fund houses nor the distributors will be allowed to indicate the probable date of dividend before issuing the notice. Giving notice will, however, not be mandatory for a scheme or option having a daily or monthly frequency of dividend distribution.

In view of the `indefinite' strike called by the employees of the State Bank of India (SBI), Reliance Mutual Fund, Franklin Templeton India and Prudential ICICI Mutual Fund will not accept purchase transactions of their schemes where the purchase is made through an instrument drawn on the SBI or the clearing is done by the SBI. The above transactions will resume once the strike is called off.

UTI Mutual Fund has come out with a series of dividends. It has declared a maiden dividend of 40 per cent on its UTI Thematic Auto Sector Fund and a 15 per cent dividend under UTI-PSU Fund. Record date for dividend under both the schemes has been fixed as April 20.

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