November 7, 2002

All Mutual Funds Registered with SEBI Unit Trust of India Association of Mutual Funds in India

Dear Sirs,

Investment in Foreign Securities.

 Please refer to SEBI Circular No. MFD/CIR/17/419/02 dated March 30, 2002 on the captioned subject.

It has now been decided to raise the investment limit on foreign securities as outlined in the above Circular to 10% of net assets of each mutual fund as on March 31, 2002. However, a minimum of US$ 5 million and maximum of US$ 50 million is permissible to each mutual fund irrespective of size of assets.

The mutual funds which have already received the approvals from the Exchange Control Department of RBI may approach them once again for enhancement of the limits. Other mutual funds who desire to invest in such foreign securities or mutual funds in foreign countries shall forward their applications to SEBI in line with SEBI Circular dated March 30, 2002.

It is clarified that Clause 4 of Seventh Schedule of the 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 foreign countries along with the management fee and recurring expenses charged to the domestic mutual fund scheme shall not exceed the 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.

This circular is issued under Regulation 77 of SEBI (Mutual Funds) Regulations, 1996.

Yours faithfully,


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