All mutual fund advertisements carry a message: "Read all scheme documents carefully." What are these documents?
There are 3 main documents: Key Information Memorandum (KIM), Plan Information Document (SID) and Additional Information Statement (SAI).
These are prepared by the asset management company AMC for a specific scheme and submitted to the Securities and Exchange Board of India (SEBI) for approval.
(SID) contains the following information:
- Each and every fundamental characteristic, including the investment objective and policies, the asset allocation structure, the fees, and the liquidity provisions.
- Fund Management Team Details
- All risk factors and risk mitigation mechanisms included in the plan.
- Scheme details like Weights, Schemes & Options, Past Performance, Pattern.
- General Unit Holder Information
- AMC Branches, Investment Service Centre, Official Point of Acceptance.
- All basic features like investment objectives and policies, asset allocation pattern, fees and liquidity provision.
SAI consists of the following information:
- Composition of Mutual Fund - Sponsor, Asset Management Company and Trustee.
- All information relating to key employees of AMC such as Registrar, Custodian, Banker, Auditor and Legal Counsel.
- All financial and legal matters.
The abbreviated version of (SID) is KIM which is attached to the application form. As the name suggests, it contains all the information that an investor needs to know before investing in the scheme. Kim should be provided with each application form.