The following is the process to be followed for categorization and rationalization of schemes:

· Only one scheme per category would be permitted, except:

o Index Funds/ ETFs replicating/ tracking different indices;

o Fund of Funds having different underlying schemes; and

o Sectoral/ thematic funds investing in different sectors/ themes

· Mutual Funds would be required to analyze each of their existing schemes in light of the list of categories stated herein and submit their proposals to SEBI after obtaining due approvals from their Trustees as early as possible but not later than 2 months from the date of this circular.

· The aforesaid proposals of the Mutual Funds would also include the proposed course of action (viz., winding up, merger, fundamental attribute change etc.) in respect of the existing similar schemes as well as those that are not in alignment to the categories stated herein.

· Subsequent to the observations issued by SEBI on the proposals, Mutual Funds would have to carry out the necessary changes in all respects within a maximum period of 3 months from the date of such observation.

· Where there is a merger of schemes/change of fundamental attribute(s) of a scheme, the AMCs would be required to comply with Regulation 18 (15A) of SEBI (Mutual Funds Regulation, 1996).

· Mutual Funds are advised to strictly adhere to the scheme characteristics stated herein as well as to the spirit of this circular. Mutual Funds must ensure that the schemes so devised should not result in duplication/minor modifications of other schemes offered by them. The decision of SEBI in this regard shall be binding on all the mutual funds.

When and under what circumstances will this circular apply to funds

· All existing open ended schemes of all Mutual Funds

· All such open ended schemes where SEBI has issued final observations but have not yet been launched.

· All open ended schemes in respect of which draft scheme documents have been filed with SEBI as on date

· All open ended schemes for which a mutual fund would file draft scheme document.