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S. Vaidya Nathan

IN THEIR communications with investors in various forms, mutual funds will have to compare their performance with appropriate benchmark indices. The Securities and Exchange Board of India (SEBI) has made this requirement mandatory, stating that mutual funds will be free to use any index, such as the S&P CNX Nifty, S&P CNX 500 or the BSE Sensitive Index, among others.

A fund that tracks a particular industry or sector can use the appropriate sector-specific indices. Hopefully, these benchmark comparisons will be provided for all periods for which performance is been indicated by the mutual fund.

Quite a few funds, such as Zurich India, Pioneer ITI, Alliance Capital, Franklin Templeton and Sundaram Mutual, to name a few, have been providing such comparison in their reports. SEBI should also ensure that benchmark comparisons are provided for balanced and debt funds to the extent possible.

IL&FS's Fixed Maturity Plans: IL&FS Mutual Fund has launched the IL&FS Fixed Maturity Plan-Yearly Series. This is a close-ended umbrella income scheme. The Initial Public Offer for this offering opens on March 22, and closes on March 28. IL&FS Fixed Maturity Plan's objective is to generate regular income through investments in debt and money market instruments. The minimum subscription in the Plan is Rs 10,00,000 and above, and in multiples of Rs 1,00,000 thereafter. The Final Redemption date is on April 23, 2003. There is no entry load for subscriptions received during the Initial Offer Period. However, an exit load of 1 per cent is applicable for redemptions made within 379 days of the closure of the Initial Offer (redemptions made before April 11, 2003). The fund will invest in debt securities with average residual average maturity of equal or less than 410 days up to 100 per cent and debt instruments of residual average maturity of more than 80 per cent.

SBI Mutual dividends: SBI Mutual has announced a dividend of 8 per cent for the Magnum Gilt Fund (Long Term Plan), 1.75 per cent for Magnum Debt Fund Series (15 months), 10.5 per cent for the Magnum Monthly Income Scheme (Annual Dividend) and 2.5 per cent for the Magnum Monthly Income Plan (Quarterly Option). The record date for the purpose of dividend is March 22.

Alliance Equity dividend: Alliance Capital Mutual Fund has announced a dividend of 10 per cent (Rs 1 per unit) for the Dividend Plan of its open-end growth scheme, Alliance Equity Fund. This is for the period ended March 20 and at the time of announcement of dividend, the NAV was Rs 17.13 per unit. Investors on record as on March 20 are eligible to receive this dividend. These dividends are tax-free in the hands of the investors.

Reliance Liquid dividend: Reliance Capital Mutual Fund has announced a dividend of 20 per cent (Rs 2 per unit) for the Reliance Liquid Fund (Treasury Plan-Weekly Dividend Reinvestment Option) with March 22 being the date for reckoning eligibility for dividend.

Chola dividend: Chola Mutual Fund has announced a dividend of 50 per cent for Chola Freedom Income — Short Term Fund, 4.5 per cent for Chola Freedom Income — Short Term Fund, 20 per cent for Chola Growth Fund and 4 per cent for Chola Triple Ace.

The record date for the purpose is March 26. There is an entry load of 2 per cent in Chola Growth Fund and a 0.25 per cent exit load on others if holdings are redeemed within 30 days.

Grindlays Fixed switches: Standard Chartered Mutual Fund has announced that investors would be permitted to switch between options of the same series/plans of Grindlays Fixed Saving Scheme. The switch can be done at NAV without any load. This is a close-end income scheme of the fund.

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