Scheme Related Information: formula sheet

Key formulas

SID

SID = scheme-specific offer document

Covers objective, asset allocation, strategy, risks, load, expenses, NAV and transaction rules for one scheme.

SAI

SAI = fund-level (mutual fund) information

Covers sponsor, trustees, AMC, custodian, registrar, legal and tax matters. Common to all schemes of the fund.

KIM

KIM = short summary of SID + SAI

Given with the application form. A summary, not a substitute for the SID and SAI.

Quick memory rule

Scheme details → SID; Fund details → SAI; Summary → KIM

Use it to sort any exam option in seconds.

Offer document set

Offer document = SID + SAI + KIM

SID is scheme-specific. SAI is about the fund house. KIM is a summary that goes with the application form.

Where each fact lives

Objective, asset allocation, strategy, risk factors, loads → SID | Sponsor, trustee, AMC details → SAI | Summary → KIM | Current portfolio, TER, returns → Fact sheet

Exam questions often ask which document holds an item. Remember that the fixed promise is in the SID and the current position is in the fact sheet.

Fact sheet frequency

Fact sheet = monthly disclosure

It gives the latest picture of the scheme, not the launch terms.

Riskometer

Riskometer = pictorial scale from low risk to very high risk

Assigned by the prescribed SEBI method and reviewed regularly. It can change over time.

Performance comparison

Scheme return vs benchmark return over the same period

Compare like with like: same period and same return basis (e.g. Regular vs Direct).

NFO unit price

Units allotted = Amount invested ÷ ₹10

Applies when the NFO is at the usual face value of ₹10. Example: ₹25,000 ÷ 10 = 2,500 units.

Maximum offer period

NFO open for not more than 15 days

The scheme cannot keep the subscription open longer than this.

Allotment / refund timeline

Within 5 business days of NFO closure

If the AMC delays the refund beyond this, it must pay interest to investors (15% a year as per the NISM workbook).

Reopening of open-ended scheme

Continuous sale and repurchase begins within 5 business days of allotment

Applies to open-ended schemes only.

Listing of closed-ended scheme

Units listed on a stock exchange within 10 business days of allotment

Interval schemes are the exception. Confirm the exact days in the current workbook.

NFO expenses

Initial issue expenses are borne by the AMC, not charged to the scheme

Entry load is also not allowed since 2009.

Market cap classification

Large cap: rank 1–100 | Mid cap: rank 101–250 | Small cap: rank 251 onwards

Ranked by the average of six months' full market capitalisation. AMFI publishes the list half-yearly, as of end-June and end-December.

Large cap fund

Minimum 80% of total assets in large cap stocks

Equity and equity-related instruments of large cap companies.

Mid cap fund

Minimum 65% of total assets in mid cap stocks

Small cap fund has the same 65% minimum, in small cap stocks.

Large and mid cap fund

Minimum 35% in large cap AND minimum 35% in mid cap stocks

Both limbs must be met.

Multi cap fund

Minimum 75% in equity, with at least 25% each in large, mid and small cap

Flexi cap needs only 65% in equity, with no split across caps.

One scheme per category

Generally one scheme per category per AMC, with exceptions

Exceptions include index funds/ETFs on different indices, fund of funds investing overseas or in different underlying schemes, sectoral/thematic funds in different sectors or themes, and close-ended schemes such as FMPs. The list is not exhaustive. An AMC can offer only one of value fund, contra fund or dividend yield fund. A value or contra fund is permitted only if no dividend yield fund is offered, and vice versa.

Fundamental attributes (heads)

Type of scheme + Investment objective and pattern + Terms of issue (liquidity, aggregate fees and expenses) + Safety net or guarantee

Learn the heads. Terms of issue covers liquidity (listing, repurchase, redemption) and the aggregate fees and expenses charged to the scheme.

Conditions to change a fundamental attribute

Trustee approval + Written notice to unitholders + Exit option at prevailing NAV without exit load

All conditions must be met together. Notice is also published in newspapers.

Exit option price

Exit price = prevailing NAV (no exit load)

The exit option is an exit at NAV. Do not confuse it with an exit load charged during normal redemption.

Winding up of a scheme

Trigger event → notice to SEBI and two daily newspapers → stop dealings → sell assets → pay unitholders

Remember the order. Liabilities are met before unitholders are paid.

Quick revision

• SID holds the full scheme details; SAI holds details about the mutual fund as a whole; KIM is a short summary given with the application form.
• SEBI groups schemes into five groups: Equity, Debt, Hybrid, Solution Oriented and Other.
• Each of the Equity, Debt and Hybrid groups has several categories. Solution Oriented has 2 (Retirement and Children's) and Other has 2 (Index/ETF and Fund of Funds). Confirm the exact count for each group in your current NISM workbook.
• An AMC can generally offer only one scheme per category, with exceptions such as index funds, fund of funds and sectoral or thematic schemes.
• The classification is based on the AMFI list of companies ranked by average market capitalisation over six months: the top 100 are large cap, the 101st to 250th are mid cap, and the 251st onwards are small cap.
• A large cap fund must invest at least 80% of assets in large cap stocks.
• ELSS must invest at least 80% in equity and equity-related instruments, with a 3-year lock-in under tax law.
• Fundamental attribute changes need written notice to unitholders and an exit option at prevailing NAV with no exit load.
• The exit option must be available to unitholders for at least 30 days. Notice is given by a written communication to each unitholder and by newspaper advertisement.
• Mergers and consolidations that modify fundamental attributes or adversely affect unitholders' interest require notice and an exit option at NAV without exit load.
• The fact sheet is a periodic summary of portfolio, performance and expenses, not a legal offer document.
• V-A has 100 questions, 2 hours, 50% pass mark and no negative marking.

Common mistakes

• Saying the SAI is specific to each scheme. Fix: Remember SAI is about the fund as a whole and is common to all its schemes. SID is the scheme-specific one.
• Treating the KIM as a replacement for the SID. Fix: The KIM is only a summary. The SID and SAI are the full documents and prevail for details.
• Placing sponsor and trustee details in the SID. Fix: SID is scheme-specific. SAI covers the mutual fund as a whole, including sponsor, trustees and AMC.
• Treating the fact sheet as a launch document. Fix: The fact sheet is a periodic monthly update. It reports the current position, not the original terms.
• Thinking an NFO at ₹10 is cheaper than an existing scheme at a higher NAV. Fix: Units are only a share of the portfolio. The same amount buys the same value of assets. A lower unit price gives more units, not more value.
• Counting calendar days instead of business days for allotment. Fix: The rule is business days. Exclude weekends and holidays when you count.
• Stating 80% as the minimum for mid cap and small cap funds. Fix: Only large cap is 80%. Mid cap and small cap are 65%.
• Confusing multi cap with flexi cap. Fix: Multi cap must hold at least 25% each in large, mid and small caps. Flexi cap has no fixed split across caps.
• Thinking an exit load applies when unitholders use the exit option after a fundamental change. Fix: Remember that the exit option is at prevailing NAV with no exit load.
• Treating every change in the scheme as a fundamental attribute change. Fix: Only changes to type of scheme, investment objective and pattern, terms of issue (including fees and expenses) and any safety net or guarantee are fundamental. Routine administrative changes are not.

Exam tips

• Sort every option as scheme, fund or summary before you look at the answer choices in detail.
• Be wary of options saying the KIM replaces the SID or SAI. They are traps.
• Remember that SAI is common to all schemes of a fund, while SID is for one scheme.
• Expect application-style questions: which document does a distributor use to explain risk factors or load? Answer SID.
• Do not guess if you are unsure. Negative marking is not applied in NISM-Series-V-A, so always attempt every question.
• Sort every item into one of four buckets: SID, SAI, KIM or fact sheet.
• Watch for options that swap SID and SAI. Scheme-specific means SID, fund house means SAI.
• Remember the riskometer is a pictorial scale from low to very high risk and it is reviewed over time.