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TMI BlogOverseas Investments by Mutual FundsX X X X Extracts X X X X X X X X Extracts X X X X ..... /07 dated May 14, 2007 pertaining to investment in ADRs/ GDRs/ foreign securities and overseas ETFs by mutual funds, it has now been decided as under: 1. Applicable Limits a) The aggregate ceiling for overseas investments as per para 2 below is US $ 5 billion. b) Within the overall limit of US $ 5 billion, mutual funds can make overseas investments subject to a maximum of US $300 million per mutual fund. 2. Permissible investments Mutual Funds can invest in i. ADRs/ GDRs issued by Indian or foreign companies ii. Equity of overseas companies listed on recognized stock exchanges overseas iii. Initial and follow on public offerings for listing at recognized stock exchanges overseas iv. Foreign debt securities in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng overseas investments by the mutual fund schemes: a. Appointment of a Dedicated Fund Manager The Mutual Fund shall appoint a Dedicated Fund Manager for making overseas investments stipulated under para 2 (i) (ix) above. b. Due Diligence Boards of Asset Management Companies (AMCs) and Trustees shall exercise due diligence in making investment decisions. They shall make a detailed analysis of risks and returns of overseas investment and how these investments would be in the interest of investors. Investment must be made in liquid actively traded securities/instruments. Boards of AMCs and Trustees may prescribe detailed parameters for making such investments which may include identification of countries, country rating, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assets of the scheme they would invest in foreign securities/ ETFs. iv. Such investments shall be disclosed while disclosing half-yearly portfolios in the prescribed format by making a separate heading Foreign Securities/overseas ETFs. Scheme-wise percentage of investments made in such securities shall be disclosed while publishing half-yearly results in the prescribed format, as a footnote. d. Investment by Existing Schemes: Existing schemes of mutual funds where the offer document provides for investment in foreign securities and attendant risk factors but which have not yet invested, may invest in foreign securities, consistent with the investment objectives of the schemes, provided that for making overseas investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf-yearly reports filed with SEBI. h. Prudential Investment Norms Unless otherwise stated in the instant circular, the investment restrictions specified in the Seventh Schedule to SEBI (Mutual Funds) Regulations, 1996 shall be applicable regarding overseas investments stipulated under para 2(i)-(ix) above. It is clarified that Clause 4 of Seventh Schedule to SEBI (Mutual Funds) Regulations, 1996 which restricts investments in mutual fund units upto 5% of net assets and prohibits charging of fees, shall not be applicable to investments in mutual funds in foreign countries made in accordance with guidelines as per aforesaid circular. However, please note that the management fees and other expenses charged by the mutual fund(s) in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs faithfully, R. K. Nair Encl: a/a ANNEXURE PROPOSAL FOR INVESTMENTS IN ADRs/GDRs/ FOREIGN SECURITIES / OVERSEAS ETFs Name of the Mutual Fund: SEBI Registration No.: Amount Proposed to be Invested in ADRs /GDRs /Foreign Securities / Overseas ETFs (in US $) Schemes of the Mutual Fund through which investment is proposed: Name and Type of scheme(s) Whether the investment is consistent with the Investment Objectives of the Scheme (s); Whether the offer document(s) provides for Overseas Investments and disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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