1. For debt securities, a scheme has to keep accruing interest income on a daily basis, including Sundays and holidays, irrespective of their interest-paying schedules.
2. For equity securities, it has to recognize dividend income on the day shares become ex-dividend.
3. For capital gains and losses, it has to keep accounting them on mark-to-market (MTM) basis.
4. If the market goes down, it has to consider it as a loss and reduce its NAV, and if the market goes up, it has to consider it as a gain and increase its NAV.
5. While gains or losses are realized only when the scheme sells these investments, MTM valuation ensures that NAV always reflects realizable value of investments.
6. For expenses incurred on management fees, registrar and transfer agent fees, custodian fees, audit fees, marketing and distribution expenses, etc., expense ratio is accrued proportionately daily when the NAV is calculated.
7. Mutual funds cannot distribute unrealized gains as dividends to its unit holders, which is restricted to amounts lying in realized profits and equalization reserve.
8. Each scheme and its individual plans should have a minimum of 20 investors, each not accounting for more than 25% of the scheme's corpus.
9. Investment in equity shares or equity-related securities of a single company must not exceed 10% of net assets of the scheme, and for open-ended funds, investment in unlisted securities should not exceed 5% of net assets.
10. Investment in rated investment grade debt instruments issued by a single issuer must not exceed 15% of scheme's net assets, or 20% with prior approval of Board of Trustees.
11. For unrated debt instruments, schemes are permitted to invest upto 10% of its net assets in schemes of a single issuer.
12. A mutual fund, all its schemes taken together, cannot own more than 10% of any company’s paid-up capital carrying voting rights.
13. Mutual funds must buy or sell securities only for delivery, and short-selling or carrying forward transactions are not permitted.
14. They cannot advance any loans, but can lend securities as per Sebi’s stock lending scheme, and can hold cash only in scheduled banks.
15. They are also prohibited from investing in unlisted securities or private placement by an associate or a group company of the sponsor, with imvestments restricted upto 25% of net assets in case of listed securities of group companies of the sponsor.
2. For equity securities, it has to recognize dividend income on the day shares become ex-dividend.
3. For capital gains and losses, it has to keep accounting them on mark-to-market (MTM) basis.
4. If the market goes down, it has to consider it as a loss and reduce its NAV, and if the market goes up, it has to consider it as a gain and increase its NAV.
5. While gains or losses are realized only when the scheme sells these investments, MTM valuation ensures that NAV always reflects realizable value of investments.
6. For expenses incurred on management fees, registrar and transfer agent fees, custodian fees, audit fees, marketing and distribution expenses, etc., expense ratio is accrued proportionately daily when the NAV is calculated.
7. Mutual funds cannot distribute unrealized gains as dividends to its unit holders, which is restricted to amounts lying in realized profits and equalization reserve.
8. Each scheme and its individual plans should have a minimum of 20 investors, each not accounting for more than 25% of the scheme's corpus.
9. Investment in equity shares or equity-related securities of a single company must not exceed 10% of net assets of the scheme, and for open-ended funds, investment in unlisted securities should not exceed 5% of net assets.
10. Investment in rated investment grade debt instruments issued by a single issuer must not exceed 15% of scheme's net assets, or 20% with prior approval of Board of Trustees.
11. For unrated debt instruments, schemes are permitted to invest upto 10% of its net assets in schemes of a single issuer.
12. A mutual fund, all its schemes taken together, cannot own more than 10% of any company’s paid-up capital carrying voting rights.
13. Mutual funds must buy or sell securities only for delivery, and short-selling or carrying forward transactions are not permitted.
14. They cannot advance any loans, but can lend securities as per Sebi’s stock lending scheme, and can hold cash only in scheduled banks.
15. They are also prohibited from investing in unlisted securities or private placement by an associate or a group company of the sponsor, with imvestments restricted upto 25% of net assets in case of listed securities of group companies of the sponsor.