NISM Series V-A MFD Certification Exam - Aug 2023 Re (101-105)
NISM Series V-A MFD Certification Exam - Aug 2023 Re (101-105)
NISM Series V-A MFD Certification Exam - Aug 2023 Re (101-105)
1 Fundamental Attributes
According to 18(15A) of SEBI (Mutual Funds) Regulations, 1996, the Trustees are
required to ensure that no change in the fundamental attributes of the Scheme(s)
or the trust or fee and expenses payable or any other change which would modify
the scheme shall be carried out unless:
• The Unitholders are given an option for a period of 30 days to exit at the
prevailing Net Asset Value without any exit load.
In addition, conditions specified under Regulation 18 (15A) for bringing change in the
fundamental attributes of any scheme, it has been decided that trustees shall take comments
of the Board before bringing such change.
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5.1.2 Statement of Additional Information
Statement of Additional Information (SAI), has statutory information about the mutual fund
or AMC, that is offering the scheme. Therefore, a single SAI is relevant for all the schemes
offered by a mutual fund.
Every mutual fund, on its website, provides for download of its SAI. However, investors have
a right to ask for a printed copy of the SAI. Through the AMFI website (www.amfiindia.com),
investors can access the SAI of all the mutual funds. The prescribed SAI format is in Appendix
5. Refer to this appendix or download SAI from the website of any mutual fund and go through
the sections discussed below for a better understanding of how these documents can be used
to understand the features of a mutual fund scheme.
Constituents of the mutual fund Section I of the SAI gives complete details of the
constituents of the mutual fund--Sponsors, AMC and
Trustee Company, of service providers {Custodian,
Registrar & Transfer Agent, Statutory Auditor, Fund
Accountant (if outsourced) and Collecting Bankers}.
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Content of SAI Description of Content
Investment Valuation Norms Section IV of the SAI provides the details of the
regulatory specifications on how different securities in
the portfolio will be valued. The rules for valuation are
standardized by the regulator, SEBI.
Tax, Legal & General Information Section V of the SAI provides information on legal
aspects of the investment that deal with nominations,
transfer and transmission of units, investment by
minors, pledge/lien on units and others. Also, this
section provides details regarding taxation and other
general information.
While an investor is expected to read all the scheme related documents, circulation of the
same along with the application forms is too difficult and costly, especially if the printed forms
are to be distributed. In order to ensure the investor gets access to sufficient information in
spite of such a constraint, a Key Information Memorandum (KIM) is mandatorily circulated
along with the application form.
KIM is essentially a summary of the SID and SAI. It contains the key points of these documents
that are essential for the investor to know to make a decision on the suitability of the
investment for their needs. It is more easily and widely distributed in the market. As per SEBI
regulations, every application form is to be accompanied by the KIM.
The prescribed KIM format is provided in Appendix 6. Refer to this appendix or download KIM
from the website of any mutual fund and go through the sections discussed below for a better
understanding of how these documents can be used to understand the features of a mutual
fund scheme.
• Name of the AMC, mutual fund, Trustee, Fund Manager and scheme
• Dates of Issue Opening, Issue Closing and Re-opening for Sale and Re-purchase
• Investment Objective
• Asset allocation pattern of the scheme
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• The risk profile of the scheme i.e., a snapshot of the risk to the principal invested, the
suitable investment horizon for investment and the type of securities that the scheme
will invest in.
• Plans and Options
• Benchmark Index
• Dividend Policy
• Performance of scheme and benchmark over last 1 year, 3 years, 5 years and since
inception.
• Expenses of the scheme
• Information regarding registration of investor grievances
5.1.4 Addendum
While the SID, SAI and KIM need to be updated periodically, the interim changes are updated
through the issuance of such addendum. The addendum is considered to be a part of the
scheme related documents and must accompany the KIM.
Updation of SID36
For the open ended and interval schemes, the SID shall be updated within next six months
from the end of the 1st half or 2nd half of the financial year in which schemes were launched,
based on the relevant data and information as at the end of previous month. Subsequently,
SID shall be updated within one month from the end of the half-year, based on the relevant
data and information as at the end of September and March respectively.
The procedure to be followed in case of changes to the open ended and interval scheme shall
be as under:
i. An addendum to the existing SID shall be issued and displayed on AMC website
immediately.
ii. SID shall be revised and updated immediately after completion of duration of the
exit option (not less than 30 days from the notice date).
iii. A public notice shall be given in respect of such changes in one English daily
newspaper having nationwide circulation as well as in a newspaper published in the
language of region where the Head Office of the Mutual Fund is situated.
i. The AMC shall be required to issue an addendum and display the same on its website
immediately.
ii. The addendum shall be circulated to all the distributors/brokers/Investor Service
Centre (ISC) so that the same can be attached to all KIM and SID already in stock till it
is updated.
iii. Latest applicable addendum shall be a part of KIM and SID. (E.g. in case of changes in
load structure the addendum carrying the latest applicable load structure shall be
attached to all KIM and SID already in stock till it is updated).
iv. Further, the account statements shall continue to include applicable load structure.
Updation of SAI
• Regular update has to be done by the end of 3 months of every financial year. Material
changes have to be updated on an ongoing basis and uploaded on the websites of the
mutual fund and AMFI.
Updation of KIM
• KIM shall be updated at least once in half-year, within one month from the end of the
respective half-year, based on the relevant data and information as at the end of
September and March and shall be filed with SEBI forthwith through electronic mode
only.
While the scheme information documents provide mandatory information that help a
prospective investor to make informed investment decision, the existing investors in a mutual
fund scheme also need to track the progress of their investments.
There are two key disclosures that an investor should receive for that purpose, viz., the
current value of one’s investments, and information about where the scheme has invested.
The current value of investments is a function of the number of units in an investor’s account
and the NAV per unit. In order to get the current value of the investments, one has to multiply
the number of units with the NAV.
Current value of investments = Unit balance in the investor’s account X current NAV
This means that an investor should be able to regularly know the NAV. The unit balance can
be seen from the latest account statement that one would have got. Chapter 9 has a detailed
discussion on when and how an investor gets the account statement.
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