Mutual Funds Investment Offer Documents

Wherever we see advertisements of mutual funds, whether it is TV, internet or newspaper, it is definitely said as a disclaimer at the end of that mutual fund advertisement –

“Mutual Funds investment are subject to market risks, please read all mutual fund documents carefully before investing”

After all, what does it mean, it is being said in the advertisement, there are two parts in it, let's try to understand both separately.

The first part is – “Mutual Funds investment are subject to market risk, which is quite clear, “Mutual fund investment is related to market risks and mutual fund money is invested in the stock market.

Therefore, the profit or loss on the investment made in mutual funds is related to the profit-loss on the investment made in the stock market.

And the second part is – Please read all mutual fund scheme related offer documents carefully before investing”

Which means - Please read all the documents related to that mutual fund offer before investing in mutual funds.

Now the question is – what are the documents related to that mutual fund, which we should read, and why it is very important to read them.

So in today's topic of the series of Mutual Funds investment, we will talk about this and know what are those documents and we will be asked to read them.

Let us first talk, what are the documents related to Mutual Fund Offer?

Mutual Fund Investment Documents

Scheme related documents in mutual fund offer mainly include the following documents:

• Scheme Information Document (SID)
• Statement of Additional Information (SAI)
• Key Information Memorandum (KIM)
• Fact Sheets

These are the four major documents – which you are asked to read carefully before investing in mutual funds, also called offer documents and OD in short,

Let us talk about these four in some detail.

SCHEME INFORMATION DOCUMENT (SID)

Scheme Information Document (Scheme Information Document) also known as SID for short, is the most prominent document, which is a very long document, and is generally available on the offer page of the mutual fund website.

For example, if you want to see the SID of any mutual fund scheme of SBI, then by going to the SBI website on the link given below, you can get both the SID and KIM by selecting the mutual fund fund type and SCHEME type, which is in PDF format. The download will also be done, and you can read that entire document.

Key things to know in SID

By reading the SID, we get to know all these things, such as –

• Highlights of the Scheme – Purpose of Mutual Fund Offer, Risk Factor.
• Due Diligence Certificate – SEBI recognition of the offer, and other legal information and validity.
• Information about the Scheme – Fund manager and team information and their experience.
• Units and Offer – Unit Information of Mutual Funds.
• On Going Offer Details – Past Performance.
• Fees and Expenses – Fees, different charges of the fund.
• Rights of Unit holders – Information about the rights and limitations of unit holders.
• Penalties – Information about any kind of fines or extra fees.
• Pending Litigation – Information about legal claims and litigation.

Statement of Additional Information (SAI)

These documents can also be obtained from the website of the mutual fund scheme in the manner mentioned above-

Statement of Additional Information, which is also called SAI in short, contains information about Mutual Fund and its constitution and all legal and general information for its creation.

And this is the legal part of SID, which is known as Statement of Additional Information (SAI).

KEY INFORMATION MEMORANDUM (KIM)

Key Information Memorandum, which is called KIM in short, is one of the most important documents for an investor, which he must read before investing in mutual funds.

This document would also be available on the website of Mutual Fund Offer.

Key Highlights of KIM:

• Information Common to all Equity Schemes
• Product Laboring
• Scheme Specific Risk Factors Risk Control
• Investment Strategy & Comparison with the existing schemes
• AUM & FOLIO
• Schemes Portfolio Holding
• General Information and Guidelines (Notes)
• Application Forms
• NRIS Declaration
• Declaration of Ultimate Beneficial Ownership
• SIP Enrollment Form
• One time Debit Mandate Form
• Transaction Slip
• KYC Forms

FACT SHEETS

Fact sheets are a document in which all types of data related to mutual funds, and analysis of the fund, and different information and facts about mutual funds, using easy-to-understand charts and graphs hand-job.

End Note

You must read the documents related to mutual funds before investing, so that they can be useful to you in fulfilling your financial goal.