1. MUTUAL FUND – REGULATORY FRAMEWORK
MSOP
ICSI - CCGRT

2. MUTUAL FUND – REGULATORY FRAMEWORK
How Does Mutual
Fund Work
MUTUAL FUND – REGULATORY FRAMEWORK

3. Structure of Mutual Fund

4. Types of Mutual Fund
Money Market
ELSS
Equity
Balanced

5. Board of Directors
No AMC Director can be a Director of Trustee Company.
50% of AMC Directors – Independent.
Minimum number of Trustee Directors – Four
No Trustee Director can be Trustee of any other Mutual Fund
2/3rd of Trustee Directors – Independent
Appoint Independent Dir in place of the resigning Dir within 3 months.
An associate director can be appointed as independent dir after cooling period of 3 yrs
Meetings
Trustee Meetings – Once in every two calendar months.

6. Key Reports before Board of Directors
Securities transactions through brokers more than 5%
Networth of the AMC.
Investment by the schemes in a Company who has invested more than 5% in MF.
Dealing in Securities of Associate Companies
Inv in Unlisted and Privately placed Securities, Unrated Debt Securities, NPAs
Justifications for investment in the Bank Deposits
Holding/ minimum number of investors in the Schemes/ Plans of PMF.
Temporary breakdown in the time stamping machines
Inter Scheme Transfers
Status of Redressal of Investor Complains

7. Offer Document
It is known as Scheme Information Document & Statement of Additional Information and the format is prescribed by SEBI.
Similar like Prospectus prepared under Listing Requirements.
Key Contents of Offer Document:
Asset Allocation of the Scheme (Where will scheme invest)
Risk Factors
Offer Details
Benchmark
Fund Manager
Investment Restrictions
Penalties / Litigations
Due Diligence Certificate
Filed with SEBI for approval. Once approved valid for 6 months

8. Dividend
Trustee have to approve quantum & record for periodical div ( like quarterly, half-yearly, yearly or interim dividends).
Within 1 calendar day of trustee approval Dividend Notice in Newspapers
The record date should be 5 calendar days from the issue of notice.
Notice ad in 10 size font and it is mandatory:
a. To mention NAV of the scheme would fall to the extent of payout and stat levy
b. That Proposed dividend be declared only in units i.e Rs. 4/- p.u and not 40% div.
Div Ad.pdf

9. Employee Dealing Regulations
Pre-clearance for access persons
Reporting in the specified format within 7 days from the date of transaction;
Minimum Holding Period of 30 days;
Fund should not have transacted during last 15 calendar days and
Trustee Directors have to report transaction above Rs. 1 lacs on Quarterly Basis.
AMC Directors have to report all transaction on quarterly basis.
Derivative Deals not allowed.
No front running or self dealing. No phones in dealing area / calls to be reviewed.
Any exceptions to be reported to Trustee & to SEBI. e-dealing.pdf

10. INVESTMENT RESTRICTIONS
Sr.
Limit Description 1
A scheme shall not invest more than 15% of the NAV in rated debt instrument issued by a single issuer. The limit can be extended to 20% subject to prior approval of the Board of AMC and Trustee. The limit shall not be applicable for investment in government securities and money market instruments. 2
A scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and total investments shall not exceed 25% of the NAV. Investments shall be made with the prior approval of the Board of AMC and Trustees. 3
No mutual fund under all its schemes should own more than ten per cent of any company's paid up capital carrying voting rights. 4.
No Investment in; (a) any unlisted security of an associate or group company of the sponsor; or (b) any security issued by way of private placement by an associate or group company of the sponsor; or (c) the listed securities of group companies of the sponsor which is in excess of 25% of the net assets.

11. INVESTMENT RESTRICTIONS
Sr.
Limit Description 5
A scheme shall not invest more than 15% of the NAV in rated debt instrument issued by a single issuer. The limit can be extended to 20% subject to prior approval of the Board of AMC and Trustee. The limit shall not be applicable for investment in government securities and money market instruments. MFUND.pdf 6
No mutual fund scheme shall invest more than 10% of its NAV in the equity shares or equity related instruments of any company. This limits is not applicable for Index Funds or sector or industry specific scheme. 7
A mutual fund scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended scheme and 10% of its NAV in case of close ended scheme. 8
Investment in overseas securities shall not exceed USD 300 million across all schemes. SEBI has enhanced the aggregate ceiling for overseas investment to USD 7 Billion.

12. SALES MATERIALS & ADVERTISEMENTS
All advertisements displaying returns/yields must disclose, immediately after the returns/yields and in the same font, that ‘Past performance may or may not be sustained in future’.
Only compounded annualised yield can be advertised if the scheme > 1 year.
Annualised yields when used must be shown for last 1, 3 , 5 years and since launch of the scheme.
All performance advertisements shall also mention the returns on the benchmark indices, during the same time periods and should contain risk factors.
Hoarding & Posters : Carry only the following statement “Mutual Fund investments are subject to market risks, read the offer document carefully before investing”. PLCF
To displayed in black letters of at least 8 inches height or covering 10% of the display area, on white background
No Celebrities shall form part of the Advertisement sachin - aviva1.jpg rahul - bob. jpg

13. SALES MATERIALS & ADVERTISEMENTS
Audio-Visual Media: The statement “Mutual Fund investments are subject to market risks, read all scheme related documents carefully”. shall be displayed on the screen for at least five seconds.W
USE OF RANKINGS:
All advertisements containing a ranking must disclose in the main body of the advertisement that ‘Past performance is no guarantee of future results’ P
In the advertisement containing a ranking also disclose:
Name of category (equity /debt),
No. of Mutual Funds in the category
Length of the period and the ending date.
Criteria of Ranking.
If any fees / expenses have been waived to affect the ranking.
The publisher of ranking date.
If a symbol is used (say ) then meaning of the symbol ( indicates fund is in top 30% of MF schemes)

14. Presentation by
Ashutosh Naik
Company Secretary
Principal Pnb Asset Mngt Co. Pvt. Ltd.
M: PH: