TaxTMI 
TaxTMI 
Investment in ADRs/GDRs/Foreign Securities and overseas ETFs by Mutual Funds
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....07/5573/04 dated March 19, 2004 and SEBI/IMD/CIR No.3/50241/05 dated September 26, 2005 pertaining to investment by mutual funds in ADRs/GDRs/foreign securities. 2. The aggregate ceiling for the mutual fund industry to invest in ADRs/GDRs issued by Indian companies, equity of overseas companies listed on recognized stock exchanges overseas and rated debt securities (subsequently referred to as "foreign securities") has been raised from US $ 1 billion to US $ 2 billion in the Finance Bill 2006 - 07. 3. Conditions for investments in ADRs/GDRs/Foreign Securities a. The mutual funds can make investments in i. ADRs/GDRs issued by Indian companies ii. equity of overseas companies listed on recognized stock exchanges overseas iii....
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....egarding the nature of experience shall be made in the offer document. b. Limits: The mutual funds can invest in overseas ETFs within overall limit of US$ 1 bn. with a sub-ceiling for individual mutual fund which should not exceed 10% of the net assets managed by them as on March 31 of each relevant year, subject to a maximum of US $50 mn. per mutual fund. 5. Other Conditions: Apart from applicability of SEBI (Mutual Funds) Regulations, 1996 and guidelines issued from time to time, the mutual funds shall adhere to the following specific guidelines for making investments in ADRs/GDRs/Foreign Securities and overseas ETFs by the Mutual Fund schemes: a. Appointment of dedicated Fund Manager The Mutual Fund shall appoint a dedicat....
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....red necessary. All investment decisions shall be recorded in accordance with SEBI circular dated July 27, 2000. c. Disclosure Requirements The following disclosure requirements shall be mandatory for mutual fund schemes proposing to invest in foreign securities. i. Intention to invest in foreign securities/ ETFs shall be disclosed in the offer documents of the schemes. The attendant risk factors and returns ensuing from such investments shall be explained clearly in offer documents. The mutual funds shall also disclose as to how such investments will help in the furtherance of the investment objectives of the schemes. Such disclosures shall be in a language comprehensible to an average investor in mutual funds. ii....
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....he scheme, if it so desires, may make such investments in accordance with these guidelines, provided that: prior to investment in ADRs/GDRs /foreign securities and overseas ETFs for the first time, the AMC shall ensure that a written communication about the proposed investment is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated. The communication to unitholders shall also disclose the risk factors associated with such investments. e. Reporting to Trustees : The AMCs shall send detailed periodical reports to the trustees which shall include the following....
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....e total limits on expenses as prescribed under Regulation 52(6). Where the scheme is investing only a part of the net assets in the foreign mutual fund(s), the same principle shall be applicable for that part of investment. The details of calculation for charging such expenses shall be reported to the Boards of AMC and trustees and shall also be disclosed in the Annual Report of the scheme. 6. SEBI Circulars MFD/CIR No. 4/052/99 dated September 1, 1999, MFD/CIR No. 5/062/99 dated September 30, 1999, MFD/CIR/17/419/02 dated March 30, 2002, MFD/CIR/18/21826/2002 dated November 7, 2002, SEBI/MFD/CIR No.02/6855/03 dated April 4, 2003, SEBI/MFD/CIR No.07/5573/04 dated March 19, 2004 and SEBI/IMD/CIR No.3/50241/05 dated September 26, 2005 pert....