Category: Mutual Fund

The 3-tier structure under mutual funds stands for:

1. The sponsor- the person who thinks to start the mutual fund. Under this the sponsor first approaches the SEBI in order to put his idea into action.
2. The public trust- they does not manage but only keeps an eye to see whether money is being correctly utilized or not and they are seen as the internal regulators of a mutual fund. Sponsor creates the public trust which is managed by the people who are authorized to act on behalf of the Trust known as trustees.
3. Asset Management Company- It manages the money of investors and they functions under the supervision of its Board of Directors, and also under the direction of the Trustees and SEBI. The AMC is approved by the SEBI and has atleast 50% of independent directors. The AMC only which in the name of the Trust, floats new schemes and manage these schemes by buying and selling securities.

A Mutual Fund is a body corporate registered with SEBI. It can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. Mutual funds issue units to the investors.

It is a collective investment scheme that collects money from many investors and invests it in stocks, bonds, short-term money market instruments and other securities. Mutual Funds are managed by a fund manager who invests the money on behalf of the investors by buying / selling stocks, bonds etc.

Benefits of mutual funds

It is easy and beneficial for an investor to invest in mutual funds as it has following advantages:

1. Investing in mutual fund scheme removes the burden of investors because its responsibility is taken by mutual fund agency.
2. Mutual fund agency invests in stocks and shares after due analysis and research which in return remove the burden of investor to research hundreds of stocks.
3. The important benefit of mutual fund is that it offers diversification as investor’s money is invested by the mutual fund in a variety of shares, bonds and other securities thus diversifying the investor’s portfolio across different companies and sectors.
4. This diversification reduces the overall risk of the portfolio.
5. It is less expensive to invest in a mutual fund since the minimum investment amount in mutual fund units is fairly low (Rs. 500 or so).
6. Investors are also given the option of getting dividends, which are declared periodically by the mutual fund, or to participate only in the capital appreciation of the scheme.

Equity Funds or Equity Oriented Mutual Fund are defined as those funds which have at least 65% of their average weekly net assets invested in Indian Equities.

Equity Funds come in various kinds but relatively safer types of Equity Funds include Index Funds and diversified Large Cap Funds, while the riskier varieties are the Sector Funds.

NFO (New Fund Offering) is like an invitation to the investors to put their money into the mutual fund scheme by subscribing to its units. It is similar to an initial public offering as both attempts to raise capital for further operations of business. However, unlike an initial public offering (IPO), the price paid for shares or units is often close to a fair value.

After the placement of 3–tier structure, the AMC launches new schemes after getting approval from the Trustees and SEBI in the name of the Trust, this launching of a new scheme is known as a New Fund Offer (NFO).

With the launching of this scheme the distributors talk to potential investors and collect money from investors by way of cheques purchased on-line through a number of intermediaries who offer on-line purchase / redemption facilities.

(Type of scheme)

KEY INFORMATION MEMORANDUM FOR MUTUAL FUND Scheme

( _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ )

Offer for Units of Rs. — Per Unit for cash during the

New fund Offer Period and at NAV based prices upon re-opening

New Fund Offer Opens on:

New Fund Offer Closes on:

Scheme Re-opens for continuous sale and repurchase on:

This Key Information Memorandum (KIM) sets forth the information, which a prospective investor ought to know before investing. For further details of the scheme/Mutual Fund, due diligence certificate by the AMC, Key Personnel, investors’ rights & services, risk factors, penalties & pending litigations etc. investors should, before investment, refer to the Scheme Information Document and Statement of Additional Information available free of cost at any of the Investor Service Centres or distributors or from the website www. —–.

The Scheme particulars have been prepared in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations 1996, as amended till date, and filed with Securities and Exchange Board of India (SEBI). The units being offered for public subscription have not been approved or disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this KIM.

Investment Objective

Types of Instruments Normal Allocation (% of Net Assets)

Asset Allocation Pattern of the scheme

Risk Profile of the Scheme Mutual Fund Units involve investment risks including the possible loss of principal. Please read the SID carefully for details on risk factors before investment. Scheme specific Risk Factors are summarized below:

Plans and Options

• Applicable NAV (after the scheme opens for repurchase and sale)
• Minimum Application
• Amount/ Number of Units
• Purchase Additional Purchase Repurchase
• Dispatch of Repurchase (Redemption) Request

Within 10 working days of the receipt of the redemption request at the authorized centre of the ——- Fund.

• Benchmark Index
• Dividend Policy
• Name of the Fund Manager
• Name of the Trustee Company
• Name of AMC & MF
• Compounded Annualized Returns Scheme Returns % Benchmark Returns %
  • Returns for the last 1 year
  • Returns for the last 3 years
  • Returns for the last 5 years
  • Returns since inception

Performance of the scheme:

[In case of a new scheme, the statement should be given “This scheme does not have any performance track record”] Or [In case of a scheme in existence, the return figures shall be given for that scheme only, as per the For a scheme which is in existence for more than 1 year, the returns given will be Compounded Annualized Returns and for scheme which is in existence for less than 1 year, the returns would be absolute returns since inception.

Absolute returns for each financial year for the last 5 years shall be represented by means of a bar diagram as per the adjacent format. Absolute Returns for each financial year for the last 5 years

New Fund Offer Period Continuous Offer

• Entry load:
• Exit load:
• CDSC (if any):
• Entry load:
• Exit load:
• CDSC (if any):

Expenses of the Scheme

(i) Load Structure

(ii) Recurring expenses First Rs. 100 crores of the average weekly net assets:

Next Rs. 300 crores of the average weekly net assets:

Next Rs. 300 crores of the average weekly net assets:

Balance:

Actual expenses for the previous financial year: —-

(Not Applicable in case of a new scheme)

Waiver of Load for Direct Applications

The applicable procedure should be given in brief.

Tax treatment for the Investors (Unit holders)

Investor will be advised to refer to the details in the Statement of Additional Information and also independently refer to his tax advisor.

Daily Net Asset Value (NAV) Publication

The NAV will be declared on all ——- days and will be published in 2 newspapers. NAV can also be viewed on www.___ and www.amfiindia.com [You can also telephone us at —— (optional)].

For Investor Grievances please contact

Name and Address of Registrar Name, address, telephone number, fax number, e-mail i.d. —— Unit holders’ Information Give the frequency and the policy of the fund house for the providing the Accounts Statement, Annual Financial results and Half yearly portfolio to the investors.

Date:

N.B. Data and information shall be up-to-date but in no case older than 30 days from the date of KIM

Last 5 financial years return

Scheme returns %

Benchmark returns %