Scheme Related Information

Scheme Related Information (Part 1)

• Mandatory Documents: These are the primary documents that provide information about a mutual fund scheme, including:
  • Scheme Information Document (SID): Provides details about the scheme, such as investment objectives, asset allocation, and risk factors.
  • Statement of Additional Information (SAI): Contains statutory information about the mutual fund or Asset Management Company (AMC) offering the scheme.
  • Key Information Memorandum (KIM): A concise document that provides essential information about the scheme.
• Non-Mandatory Documents: These are additional documents that may be provided by the mutual fund, but are not required by regulatory authorities.
• Importance of Scheme Related Documents: These documents help investors make informed decisions about investing in a mutual fund scheme, and are considered a contractual agreement between the investor and the mutual fund.
• Objective of Scheme Related Documents: The primary objective of these documents is to provide investors with accurate and timely information about the scheme, enabling them to make informed investment decisions.
• Key Components of Scheme Information Document (SID): The SID typically includes:
  • Table of Contents
  • Highlights
  • Introduction
  • Risk Factors: Standard and scheme-specific risks associated with the investment.
  • Investment Objectives and Policies
  • Asset Allocation Pattern
  • Investment Strategy
  • Fundamental Attributes
  • Benchmark
  • Managers of the Scheme
  • Investment Restrictions
  • Performance Track Record
  • Units and Offer
  • Fees & Expenses
  • Rights of Unit-holders
  • General Unit-holder Information
  • Penalties, Litigation, etc.

Scheme Related Information (Part 2)

• Scheme Information Document (SID): Provides information on the scheme, including the offer period, applicable NAV, and details on how to apply for units.
• Types of Schemes:
  • Open-Ended Scheme: Units can be bought and sold at applicable NAV.
  • Close-Ended Scheme: Units can only be bought during the NFO period.
  • Interval Scheme: Units can be bought directly from the mutual fund during the NFO and specified transaction periods.
• Statement of Additional Information (SAI):
  • Definition: A document that provides statutory information about the mutual fund or AMC.
  • Content: Includes details on the constituents of the mutual fund, how to apply, rights of unit-holders, investment valuation norms, tax, legal, and general information, and investor grievance redressal.
• Key Information Memorandum (KIM):
  • Definition: A summary of the SID and SAI that contains key points essential for investors to know.
  • Content: Includes the name of the AMC, mutual fund, trustee, fund manager, and scheme, dates of issue opening and closing, investment objective, asset allocation pattern, and risk profile of the scheme.
• Investment Details:
  • Minimum and Maximum Investment: The minimum and maximum amount an investor can invest in a scheme.
  • Plans and Options: Different plans and options available under a scheme, such as regular and direct plans, dividend reinvestment, and growth options.
  • Modes of Transaction: Various ways to transact with a mutual fund, including online, offline, and through distributors.
• Fees and Expenses:
  • Load Structures: The impact of loads on the redemption price of units.
  • Transaction Charges: Fees paid by investors for transactions, such as purchase and redemption of units.
• Liquidity and Redemption:
  • Redemption Price: The price at which units can be redeemed.
  • Cut-off Time: The time by which redemption requests must be submitted.
  • Modes of Payment: The ways in which redemption proceeds can be paid to investors.
• Tax Implications:
  • Tax Laws: The prevalent tax laws applicable to investing in mutual funds.
  • Tax Implications for Investors: The tax implications for investors, including tax on dividends and capital gains.
• Fundamental Attributes:
  • Type of Scheme: The type of scheme, such as open-ended, close-ended, or interval scheme.
  • Investment Objective: The main objective of the scheme, such as growth, income, or both.
  • Terms of Issue: The terms and conditions of the scheme, including liquidity provisions and fees and expenses.

Scheme Related Information (Part 3)

• Scheme Information Documents: These documents provide mandatory information to help prospective investors make informed decisions.
• Key Components:
  • Plans and Options
  • Benchmark Index: A reference index used to measure the scheme's performance.
  • Dividend Policy: The policy governing the distribution of dividends to investors.
  • Performance of the scheme and benchmark over various time periods (1 year, 3 years, 5 years, and since inception).
  • Expenses of the scheme
  • Information regarding registration of investor grievances

Addendum

• Definition: An addendum is an update to the scheme information documents, issued to reflect interim changes.
• Purpose: The addendum is considered part of the scheme-related documents and must accompany the Key Information Memorandum (KIM).

Updation of Scheme Documents

• SID (Scheme Information Document) Update:
  • Updated within six months from the end of the 1st half or 2nd half of the financial year.
  • Subsequently, updated within one month from the end of the half-year.
• SAI (Statement of Additional Information) Update:
  • Regular updates are done by the end of 3 months of every financial year.
  • Material changes are updated on an ongoing basis and uploaded on the mutual fund and AMFI websites.
• KIM (Key Information Memorandum) Update:
  • Updated at least once in half-year, within one month from the end of the respective half-year.

Other Mandatory Information/Disclosure

• Current Value of Investments: Calculated by multiplying the number of units in an investor's account by the current Net Asset Value (NAV).
• Disclosure of Daily NAV: Each scheme's NAV is disclosed at the end of each business day on the AMC website and AMFI's website.
• Disclosure of Total Expense Ratio (TER): The TER is disclosed on a daily basis, scheme-wise, and date-wise, on the AMC website and AMFI website.
• Scheme Performance Dashboard: Published on the AMC website, highlighting the performance of various schemes over different holding periods.

Risk-o-meter

• Definition: A pictorial representation of the risk to the principal invested in a mutual fund product.
• Risk Levels: Six levels of risk, categorized as:
  • Low risk
  • Low to Moderate risk
  • Moderate risk
  • Moderately High risk
  • High risk
  • Very High risk
• Color Scheme: Each risk level is associated with a specific color.
• Evaluation: The risk value of each scheme is calculated based on provided parameters and depicted on the risk-o-meter.
• Disclosure: The risk-o-meter is disclosed along with the performance of the scheme vis-à-vis the benchmark.

Scheme Related Information (Part 4)

• Investment Decision: The risk profile of a scheme is not the only factor for taking an investment decision. Investors should do careful research or consider taking help from a mutual fund distributor or a registered investment adviser.
• Risk-Band for SIFs: The Risk-Band is a pictorial risk meter with five levels of risks for investment strategies in SIFs, ranging from Risk band level 1 (Lowest risk) to Risk band level 5 (Highest risk).
• Portfolio Disclosure: Mutual Funds/AMCs must disclose their portfolio, including ISIN and market value, on their website and on the website of AMFI within 10 days from the close of each month/half-year.
• Financial Results: Mutual funds must display unaudited financial results on their website and publish an advertisement in a newspaper within one month from the close of each half-year.
• Annual Reports: Annual reports or abridged summaries must be hosted on the AMC's website and on the website of AMFI, and sent to investors via email or physical copy.
• Disclosure of Change in Control: The mutual fund must disclose changes in control of the AMC, including filing a draft letter/email to unitholders and publishing an advertisement in a newspaper.
• Non-Mandatory Disclosures: Fund factsheets are not a regulatory requirement but are a market practice followed by fund houses, containing basic information about each scheme, such as inception date, corpus size, and benchmark.
• Fund Factsheet: The fund factsheet provides information on the scheme's performance, portfolio allocation, and risk measures, and is used by investors, fund distributors, and research analysts to access information about the mutual fund's schemes.