Chapter 5: Scheme Documents (Also Known as “Offer Documents”)
Mandatory Documents:
“Mutual fund investments are subject to market risk. Please read all scheme related documents before
investing.” These lines are mentioned in all mutual fund related communications. So, what are the
scheme related documents?
The legal documents that provide the information that the investor requires is available in the scheme
related documents (Scheme Information Document, Statement of Additional Information) and the Key
Information Memorandum.
1. Offer/Scheme documents are prepared by AMC (Asset Management Company).
2. Offer/Scheme documents are approved by Trustees and Board of Directors of the AMC.
3. Offer/Scheme documents observed, supervised, control and regulated by SEBI.
4. SAI is a part of SID.
5. AMC prepares only 1 SAI document i.e., common for all schemes.
6. SID is not common for all; it is prepared for all schemes.
7. KIM is essentially a summary of the SID and SAI. As per SEBI regulations, every application form
is to be accompanied by the KIM.
Contents of SID Contents of SAI Contents of KIM
Scheme Types: Open-ended / Close-ended
Information about: Name of the AMC, Mutual fund,
/ Interval
Trustee, Fund Manager and Scheme
Category: Equity / Debt / Liquid / Hybrid Sponsors,
Table of Contents AMC, Dates of Issue Opening, Issue Closing &
Highlights of the scheme Trustees, Re-opening for Sale and Re-purchase
Introduction about scheme Directors, Plans and Options under the scheme
Risk Factors Custodian, Risk Profile of Scheme
a. Standard risk in scheme RTA, Auditor, Price at which Units
b. Scheme-specific risk Fund Accountant Benchmark
Provisions regarding minimum number
of investor
Financial information Dividend Policy
Any other special considerations
Performance of scheme and benchmark
Definitions of scheme
Due Diligence Certificate (issued by
How to apply over last 1 year, 3 years, 5 years and
since inception.
AMC)
Information about the scheme
Units and Offer
Investment Loads and expenses
Valuation Norms
Fees & Expenses Contact information of Registrar for
Rights of Unit-holders Tax, Legal & General taking up investor
Penalties, Litigation etc. Information grievances/RTA/Customer service
Update of Scheme Documents
SID (Scheme Information
SAI (Statement of Additional Information) KIM (Key information Memorandum)
Documents)
Regular update is to be done by the end of KIM is to be updated at least once in
SID is to be updated every year.
3 months of every financial year. half-year.
Other Mandatory information/disclosure
1. Disclosure of Daily NAV - Each scheme’s NAV is required to be disclosed at the end of
each business day. The same is published on the website of the AMC. The Mutual Fund
declares the Net Asset Value of the scheme on every business day on AMFI’s website
www.amfiindia.com (as per the time limit for uploading NAV defined in the applicable
guidelines) and also on their website.
2. Disclosure of Total Expense Ratio - . SEBI has mandated that the Asset Management
Companies (AMCs) should prominently disclose on a daily basis, the Total expense ratio
(scheme-wise, date-wise) of all schemes under a separate head – “Total Expense Ratio
of Mutual Fund Schemes” on their website. The same must also be published on AMFI
website. The AMCs are also required to send the update to the investors through email
whenever there is a change in the expense ratio. Further, the notice of change in base
TER should be updated on the AMC website at least 3 working days prior to effecting
such change. A decrease in TER should be immediately communicated to investors of
the scheme through email or SMS and uploaded on the website.
3. *Portfolio disclosure - Unitholders, whose email address is registered with the fund, in
those cases, the AMCs shall send half yearly portfolio via email within 10 days from the
end of each half year.
4. Financial results - The mutual fund shall before the expiry of one month from the close
of each half year, (Mar 31st and Sep 30th) shall display the unaudited financial results
on AMC website.
5. Annual reports and related disclosures - Annual report or abridged summary is required
to be hosted on AMCs website and on the website of AMFI. This is sent by email to the
investors who have registered their email id with the fund, no later than four months
from the date of closure of the relevant financial year i.e. March 31 each year. Investors
who have not registered their email-id have an option of receiving a physical copy of the
Annual report or abridged summary thereof.
Addendum
The addendum is considered to be a part of the scheme related documents and must accompany the
KIM.
Question 1: Which of the following statement(s) is/are TRUE?
i) Addendum is a part of scheme related documents
ii) When the addendum is issued, it must not be accompanied by the KIM.
a) i and ii
b) ii only
c) i only
Question 2: Key information memorandum (KIM) is an abridged version of the
a) Half yearly portfolio statement of the fund
b) Half yearly statement of the fund
c) Annual accounts of the fund
d) Scheme related documents
Non-Mandatory Disclosures:
Fund Factsheet
➢ One of the most popular document from the mutual fund is the
monthly Fund Factsheet.
➢ This document is extensively used by investors, fund distributors,
fund rating agencies, research analysts, media and others to
access information about the various schemes of the mutual fund.
➢ While it is not a regulatory requirement to publish the monthly
fact sheet, it is a market practice followed by all the fund houses,
on a voluntary basis.
➢ Since the fund factsheet is a marketing and information
document, various SEBI regulations pertaining to information
disclosure are applicable to it.
Chapter 5: Sample Questions
1. “Please read the scheme related documents carefully” – which documents does this line refer
to?
a. Scheme Information Document and audited balance sheet of the Asset Management Company
b. Trust deed and Key Information Memorandum
c. Statement of Additional Information and fund fact sheet
d. Scheme Information Document and Statement of Additional Information
2. Which of the following statements is ‘TRUE’ with respect to the Scheme Information Document
(SID) and Statement of Additional Information (SAI)?
a. These two documents are prepared in the format prescribed by Association of Mutual Funds in
India as part of AMFI’s Code of Conduct
b. These two documents are prepared in the format prescribed by Association of Mutual Funds in
India as part of AMFI’s Best Practices Circular
c. These two documents are prepared in the format prescribed by Securities and Exchange Board
of India
d. Each Asset Management Company is free to prepare these documents in the format they desire
3. How often should the Key Information Memorandum (KIM) be updated?
a. At least once a month
b. At least once every six months
c. At least once a year
d. It need not be updated after it is issued once
4. As per the SEBI guidelines, how often should the mutual fund scheme’s portfolio be published?
a. Monthly
b. Half-yearly
c. Annually
d. Never
5. Which among the following is not a statutory document?
a. Fund factsheet
b. Statement of Additional Information
c. Scheme Information Document
d. Key Information Memorandum
6. Key information memorandum (KIM) is an abridged version of the
a. Half yearly portfolio statement of the fund
b. Half yearly statement of the fund
c. Annual accounts of the fund
d. Scheme related documents
