The mutual fund has filed the draft offer document with the Securities and Exchange Board of India (Sebi). According to a top marketing source at the fund, it is waiting for the Sebi clearance and is `tightlipped' on the new development.

The latest move from the asset management company (AMC) to make the petrochemical fund open-end could be aimed at attracting new investment. Says a Delhi-based fund analyst, ``There was always an exit route for investors at the prevailing NAVs. But the fund was probably not attracting enough fresh money. Therefore, by making JM Basic an open-end scheme, new investment can be attracted.''

The open-end growth scheme, which may declare dividend, has a minimum investment of Rs 1 crore and in multiple of Re 1 thereafter. Offer price for each unit with a face value of Rs 10 will be determined based on prevailing NAV. The fund will remain stay invested predominantly in equity and equity related instruments of petrochemical sector. The scheme proposes to adopt the S&P CNX Petrochemical Index of India Index Services & Products Ltd (a joint venture of CRISIL and NSE).

The fund proposes to charge an entry-load of 2.5 per cent and has no exit load. Since almost the entire corpus of the scheme is invested in petro and petrochem companies, the fund does not have a diversified portfolio and hence, low portfolio turnover. As the scheme now expected to go open-end, there would be a number of sale and repurchase transactions daily. This may lead to a relatively higher portfolio turnover.

JM Basic Fund was initially launched as a fifteen-year closed-end scheme in 1997 and the fund had mobilised Rs 426 crore. The scheme is listed on the National Stock Exchange.

With an investor base of around 600, the scheme provided an option of repurchase to unitholders at NAV during the month of July every year after expiry of three years since launch. However, the repurchase did not materialise and the scheme is now being made open-end.

Except for the year 1999, the scheme has been performing well since launch. From an initial net asset value (NAV) of Rs 10.63 as on June 2, 1997, it rose to Rs 12.84 as on March 31, 1999. However, in the following year, NAV fell sharply to Rs 10.45. As on March 2000, NAV rocketed to Rs 22.65 and as on August 31, 2000, NAV further rose to Rs 24.25. The scheme gives a cumulative annualised yield since launch of 43.86 per cent. Nevertheless, although JM Basic was conceived as a growth scheme, no dividend was declared since inception and income of the scheme was reinvested. As on July 31, 2000, total outstanding units were around 42.03 crore.

As on August 31, 2000, Reliance Industries dominated JM Basic's portfolio. The fund is holding 2.79 crore units of Reliance. Other holdings are Indo Rama (54.45 lakh units), Chennai Petrochem Corp (16.12 lakh), Sanghi Poly (6.55 lakh), IPCL (4.68 lakh), DCL Poly (3.98 lakh), HPCL (1.76 lakh), Gail (58,049), ONGC (64,00).