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7/27/2019 mutual funds offer document
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7/27/2019 mutual funds offer document
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Section 1Offer Document
Section 2Content of Offer Document
Section 3Key information memorandum
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What is an offer document?
sponsor
AMC
MutualFund
scheme
Announcing the schemInviting
investors
newHave
to form
and
before
andto
Launches Detail ofscheme
Register with SEBI
subscribe
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Mutual
Fund
scheme
new Is
called
Document
details
Are
AMC Sponsor
What is an offer
document?
Launching
New
fund
offer
prepared by
Of new fund offer
7/27/2019 mutual funds offer document
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US
in Is
called
invites
and
investor
Offer documentOffer
document
New fund
offer
Prospectus
gives
information
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Primary market
Is issuedIn
repurchased
Are
not
because
from
Offer document
Close end
Fundprospectus
Once at the time
Of issue
investor
units
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Open end
Mutualfund
repurchasedcan
and Any timecontinuously
at
Offer
document
the
Every 2 years
From time of
launch
valid till
Has to
be
revised
as
Offer document
Stated by SEBI
amendment
issued
http://localhost/var/www/apps/conversion/tmp/scratch_7/reliancegold.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/reliancegold.pdf7/27/2019 mutual funds offer document
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Importance for investors
informationIs of
Prospectiveinvestor
to
Scheme
details
and
And
gives
to
regarding
Which
helps
Offerdocument
Important
source
Subscribing to
New issues
Make
decisions
Valid
information
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Fundamental attributes are the
essence of the scheme and
includesscheme
objectivesSuch
as
andcontains
Can be
From
investors
With
approval
Offer
document
tobuying
What he
is
Must
study
Key
information
changed
investor
understand
terms
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Funds obligation to investor
Disclosure in
Offer
document
Must
provide
regards Prospective
investor
to
Investment
vehicles
has
To
Ask for
To
make
Mutual
fundinformation
Investment
decisions right
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Funds obligation to investor
Must and With
documents
throughInvestor
advisorread
Acquaint
himself
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conclusion
trustees
vet before
because
Not
approved
Offer
document
issuing
Offer
Document
Contains statements
SEBI
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Content of offer document
Offer
documentMutual
fundSEBI
issued
by
requires
To include
Sponsor & AMC
details
Scheme description
Investment objective
Terms of
issue
Investors rights
&
services
Historical
statistics
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Content of offer document
Offer
document
Is usually
distributed
with
Application
form
Along withAbridged version
Of
Offer document
Known
as
Key
Information
memorandum
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conclusion
SEBI Lays
downformat StandardizedOffer
document
Key
Information
memorandum
&
Otherdisclosures
Considered
material
trustees
includes
That are
by
Investors
point
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SEBI guidelines include
SEBI
guidelines
V lidit f ff d t f
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Validity of offer document for new
scheme
Offer
documentNew schemeLaunched
for6 months
validfor
Within
6 months
Not
Launched
AMC
To file fresh
Offer
document
request
Fro the date of
receipt by AMC
of the letter
containing
observation
from SEBI
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information on material
changes
Offer
documentSEBI
Launching
New
scheme
Essential/ detail
Information of scheme
3
contains 4
Valid till
validremains
Filed
with1
before
2
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conclusion
Offer
document
needs To be
renewed
Material changesOccur over a period
Of time
when
Eg.
Reconstituting
Of AMC
Imposing key personals
Of he existing
schemes
Change in
management
Adjudication proceed
Referred by
SEBI Against
sponsors
Fresh litigation
cases
Periodic revision Required in
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Periodic revision Required in
Offer document
Offer
document
Key
Information
memorandum
&
Has tobe
Fullyrevised 1 yearAtleast
Periodic revision Required in
http://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdfhttp://localhost/var/www/apps/conversion/tmp/scratch_7/KIM.pdf7/27/2019 mutual funds offer document
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Periodic revision Required in
Offer document
Open end
scheme 1 yearHas
completed
thenOffer
document
KIM
Should
include
Condensed financial
Information of
The scheme
ofSubsequent
years
Have to be
In form ofAddendum to
Offer document
Distribution of revised
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Distribution of reviseddocument specified
Offerdocument
&
Has to
beattached addendum
with
Key
Information
memorandum
Offer document
Is revised
And reprinted
Distribution of revised
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Distribution of reviseddocument specified
addendum Circulated to
Attach to
Offer
document
Abridged
Offer
Document
AlreadyIn
stock
Existing
Unit holders
Has to
be
brokers distributors
So they or
send
Distribution of revised
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Distribution of revised
document specified
Offer
document
Date of revisionOf offer
document
Should
contain
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Distribution of revised
document specified
Mutual
fundDisplay
modificationsOffer
documents
Has
to
in Notice in all
Investor service
centers
Through
a
&
brokers
distributors
advertisement
Press
release
Website ofMutual fund
* All changes have to be filed with SEBI
Were to obtain the updates
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Were to obtain the updatesof offer document
Offer
document
gives comprehensive
Authentic
information
about scheme
investor
Were to obtain the updates
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Were to obtain the updatesof offer document
investor
Legal
right
Detail
Offer
documentcarefully
Copy of
Offer
documentstudy
AMC
Fund office
has To
ask
Has toobtain
distributor
from
and
Were to obtain the updates
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Were to obtain the updatesof offer document
KIMOffer
document
obtained
investors Distribution
pointslike
Consise
version of
Can be
by
from
banks
distributors
broker
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Contents of offer document
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Contents of offer document
(As per the format specified by SEBI)
Constitutionof Mutual
funds
Aglossary
ofdefinedterms
)
Investmentobjectives
andpolicies
Financialinformation
Risk
factors
Legal and
regulatoryCompliance
Management
of the fund
Offerdocument
relatedinformation
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1. Summary information (cover page)
Front pageof the offerdocuments
Provides Information about
Scheme at glance
Date of itspublication
Name andtype of the
Fund
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Summary information (cover page)
Name and type of the Fund
Name ofmutual fund
Name of the
scheme Type of scheme
Name of
AMC
Classes of unitsoffered for sale
Price of units Name of guarantor in case ofassured return scheme
Opening ,closing and earliest
closing date for the offer
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Summary information (cover page)
Statement To the effect
Prospectiveinvestor
What it
should
be
Retained forfuture
reference
And
Documentscontains
information
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Summary information (cover page)
Statement To the effect Documentis prepared As per SEBI
regulation
Filedwith
SEBI
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Summary information (cover page)
Scheme Has not been Approved/Disapproved
SEBI
By
Accuracy andadequacyof offer
documentHas certified
Disclaimerclause by SEBI
This is
nor
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Summary information (cover page)
Just asin Primary shares
IssueProspectus
It is the InvestorWho Judge
Whether document
gives all theinformation
Investment risk
& Investor
takes
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Summary information (cover page)
It is AMC Legal responsibility
Of the statementof offer
document.
That Takes
For the
accuracy
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Summary information (cover page)
CONCLUSION
This sectionInvestors
perspective
Provides at a
glance
From the
Fundamentalattributes
Other keyElements
of thescheme
and
Back
2 Gl f d fi d
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2 Glossary of defined term.
Glossary ofdefined term Define The terms
Offerdocument
Commonly
used in
Gl f d fi d
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Glossary of defined term.
Offer documentMust make
aware
Risk factor faced
by the fund
Therefore
by the
Investor
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Glossary of defined term
Risk factors can be
Standard risk factorScheme specific risk
factor
S d d i k f
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Standard risk factor
Standard risk
factor Are marketdriven & Common to allschemes
Regular investor
Would be
conversantwith
Back
To theNovice
investor
S h ifi i k f t
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Scheme specific risk factor
Scheme specific risk
factorHave direct
bearingOn investors
choice
By theinvestor
Therefore
need to beevaluated
Back
3 Risk factor
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3 Risk factor
Disclosure of risk factor must include the following
Standard risk factor
Specific standard riskfactor
St d d i k f t
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Standard risk factor
investmentsAre subject
to
Marketrisk
Absence ofliquidity inmarkets
Fluctuation in
market pricesbeyond the
control of themanagers
or
Resulting in
Investment objective of theScheme not being achieved
Standard risk factor
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Standard risk factor
NAV Can moveup or
down
On the basis of
Capital marketmovements
Pastperformance
Sponsor/AMC/Mutual fund
of
Is not
indicative
of
Futureperformance
Of thescheme.
Standard risk factor
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Standard risk factor
Name of the
scheme
Do not indicate Its quality andprospects
Risk
associatedwith
The use of
Derivative
instrument
If the fundplans
As permittedby SEBI
Specific standard risk factors
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Specific standard risk factors
Specificstandard risk
factors
Schemesinvestment
objectives/strategy
And
Proposedasset
allocation
Arising fromNon
diversification ifany
Investing in aclosed-end
schemes
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Specific standard risk factors
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Specific standard risk factors
If AMC has noprevious experience In managing a fund
Disclosure tothat effect must
be made
Back
4 Legal and regulatory compliance
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4 Legal and regulatory compliance
Responsible
officer of AMC
Stands
guarantee For the information
Contained in thedocument
Certifies
thefulfillment
of
AND
Funds legal andprocedural obligation.
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Legal and regulatory compliance
AMC Must confirm
Due diligence
certificate
Signed by
Complianceofficer Executive
of the AMCCEO/
Managing director/Whole time director
Been submitted to SEBI
Legal and regulatory compliance
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Legal and regulatory compliance
Certificate has to confirm
Certificatehas
to confirm
ThatDraft offer
document
Forwarded
to
SEBISEBIS Regulation
Legal and regulatory compliance
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Legal and regulatory compliance
Certificate has to confirm
Certificate
has
to confirm
That All legal
requirements
Connected
withlaunching
The scheme
have been
complied with
Legal and regulatory compliance
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Legal and regulatory compliance
Certificate has to confirm
Certificatehas
to confirm That
Disclosuremade in the
Offer documentTrue and
fair
are
and
Adequate toenable the investor
Well informed
Decision regarding investment in
proposed scheme.
To make
That
Intermediaries named
in the offer document
With SEBI
Are registered
back
5 Financial information
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Expenses
Offerdocument Must contain on
Expensesestimated
Thescheme
To beincurred by
Adversevariationbetween
Estimates forthe scheme on
offer
Actuals for thescheme
Must be explained
5 Financial information
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5 Financial information
Specifically following items must be included
Sales loadcontingent
deferred charges
Redemption load &Switchover/exchange
fee
All this as a % of NAV
Details of Initialissue expenses
for the scheme
For other schemelaunched during thelast one fiscal year
By
AMC
5 Financial information
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5 Financial information
Specifically following items must be included
Estimatedannualrecurringexpenses
As a Percentage of Average weeklyNet asset
Incase ofFOF
The offer documentmust disclose that
The investor willhave to bear the
recurring expensesof the scheme
In addition to the
expenses of
Otherscheme
in which
FOFschememakes
investment.
Fundof
funds
5 Financial information
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5 Financial information
Conclusion
This information is valuable for the investor
To decideCost
associatedwith his
investment
Whether fundis load fund ora no load fund
To Compare withother AMCs
expenses ratios
Whether expensesforeseen will still
give him anacceptable returnon the scheme on
offer
Back
6 Constitution of mutual fund
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6 Constitution of mutual fund
This isimportant
because detailsabout
Sponsor
Trustees
Other
constituents
Can offer
Usefulpointers
towards a fundpotential
Fundmanagersstrengths
Is Usefulinformation
for
Selection offund family
by theinvestor
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6 Constitution of mutual fund
The following information should be included in this
sectionBrief
description
Objectivesof fund
Activitiesof the
sponsor
Functions andresponsibilities
of
Of the
constituents
sponsor
AMC
Trustees
custodian
And its Financialperformance
6 Constitution of mutual fund
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6 Constitution of mutual fund
The following information should be included in thissection
Names andaddresses
of Board of trustees
Details of principaloccupations and
current directorship
of
Separatedisclosure
IncaseThey areassociate
Of the sponsor
AMC
ORDuringthe last3 fiscal
year
6 Constitution of mutual fund
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The following information should be included in thissection
Summary oftrust deedprovision
Whichmay be of
Materialinterest to
unit holders
Trustship fees
Back
7 Investment objectives and policies
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7 Investment objectives and policies
It is
important forthe investor
To ensure that Funds investmentobjectives
Are in line With his
(investor )objectives
Reviewing thefund
objectives
is an importantstep
In selectionof an
appropriatefund
7 Investment objectives and policies
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7 Investment objectives and policies.
The major disclosures under this head are
Short descriptionof the types of
securities willinvest principally
Asset
allocationpattern
Policy ofdiversification
I t t bj ti d li i
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7 Investment objectives and policies.
If the Schemes
name Implies that It will invest
primarily
in a particular type of
security or in certainindustry/industries
Policy shouldbe
Atleast 65%of the valueof its asset
ThenIts
To invest
In the Indicated type ofsecurity/industry
7 Investment objectives and policies.
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For open-endscheme Illiquidasset
10% of netassets
if Are likely
to be more
than
Than policy With respect to
such assetMust be
disclosed
For assured
return schemes
Justificationof net worthof guarantor
Must be
provided
Meeting shortfalls in
these scheme
With respect to
7 Investment objectives and policies.
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7 j p
Information on
Portfolioturnover
policy
Investmentlimitation
Assetallocation
diversification
Essential forthe investor To assess
The likely risk
level to whichfund will beexposed to
Back
8 Management of the fund
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8 Management of the fund
Offer document must disclose
Name and
address of fund
manager(s) andkey personnel
Investor
relationsofficer
AMC and
itsdirectors
custodian
Registrar,
transferagent & the
statutory
auditor
With services
provided and
compensation
Back
Offer related informationOffer
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Offer related information
Contain all
practical
information
Investor &
distributor
Investment in
proposed
scheme.
Needed
by
Tomake
DetermineInvestors right
& obligation
Major
disclosures
Required
by SEBI
document
Offer related information
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Maximum
targeted
amount
As per SEBI
regulationAND
assured return
1
Minimum
Amount
Circumstances
for refund AND
Period within
refund must
carried out
2
Offer related information
Offer related information
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Calendar indicating
3
Offer related information
Opening, closing
allotment
& dispatch Of certificate
account statement
Offer related information
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Policy
regarding
Re-issue of
repurchase
units
Including
maximum
extent
Re-issue &
Entity
Involved
4
5
Option
To
convert
Closedend
Scheme
into
Open-end
scheme
Offer related information
Offer related information
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Restriction
on
Right to freely
retain or
Dispose of units
6
Offer related information
Offer related information
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Maturity
period
and Circumstances
under
Duration may
extended.
8
Procedure
fortransfer
Transmission of
unitand
9
Offer related information
Offer related information
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Gives
information concerning
Operationsof schemes.
To asses
the fund
Detail
required by
investor
10 Offer related information
A. Investment Procedure
7/27/2019 mutual funds offer document
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Investor
Should
described
Following
should
include
Name and aaddress of
collection bank &
Investorservicing
centre
Specialpurchase plan
Accumulation
plan, Dividend
reinvestment
plan
Minimum initial
investment
Detail who
can invest,
sales price fixation
Nomination
Facilities
B. Schemes Policy On
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y
Trustee
decide to
distribute
surplus
1) DIVIDENDS AND DISTRIBUTION
Dividend
Realizedprofit
interest
Expenses
and taxes
To
Unit Holders
1) DIVIDENDS AND DISTRIBUTION
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Trustee'sdecision
Regard
to
Availability and
adequacy Rate
Timing and
frequencyOf distribution
shall be final
1) DIVIDENDS AND DISTRIBUTION
1) DIVIDENDS AND DISTRIBUTION
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Unit Holders
have the
optionReceiving
the dividend
Reinvesting
the sameor
will
reinvested
at the Applicable
NAV
immediately
following
Business Day
1) DIVIDENDS AND DISTRIBUTION
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AMC
dispatchDividend
warrants
within 30 days of
date of
declaration
Dividend
distributionprocedure
shall be Accordance
with theRegulations
1) DIVIDENDS AND DISTRIBUTION
B. Schemes Policy On
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2) INTER-SCHEME TRANSFERS
Transfer of
Investments
from /to
Scheme
to/fromAnother
schemes
done
only if
Such
transfers
are onspot basis and
Prevailing
market price
y
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Non-
performing
assets
of otherschemes
will not
acquired
by theScheme
2) INTER-SCHEME TRANSFERS
C. Associates/group
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companies transaction
For the interest
Of investors
SEBI
restricts
Mutual Fund
Investment
In companiesforming part of
Same group
as AMC
required
to make
disclosure
s
Historical information
for last 3fiscal years
Impact on the
performance of
scheme.
Underwriting obligation
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Disclosure
include
Underwriting obligation
Disclosure of units toassociate companies
Detail of sponsors their
affiliates & associates.
Policy for investing in associate
companies of sponsor including
aggregate market value ofinvestment & % of aggregate NAV
If scheme has invested more than 25%
of its net assets in associates companies.
D. Borrowing Policy
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g y
Fund is
allowedto borrow
Meettemporary
liquidity needs
for the
purpose
Repurchase,Redemption
of units
Paymentof
interest
Dividendto The
unit
Holders
D. Borrowing Policy
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as per
Regulations
The Fund shall not borrow
More than 20%
of the net assets
of the Scheme
duration
of such
borrowing
shall not exceed
a period of six
months.
g y
E. NAV and Valuation
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Calculation of NAV =
(Market or fair value of the scheme's investments +
receivables + accrued income + other assets) -
(accrued expenses + payables + other liabilities and
provisions)
No. of Units outstanding under the
Scheme
E. NAV and Valuation
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NAV
Calculated
and
announced
within a
period
of 30 days
After the closeof the NFO
Period
Announced on allBusiness Days.
E. NAV and Valuation
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Security
not
traded
on stock
exchange
for 30
days
Prior to the
Valuation Day
such Securityis treated as
non-traded Security
E. NAV and Valuation
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valuation norms of Non-traded securities
Fund
invested
Non-
traded
securities
valuation
norms
Becomes
important
in calculation
of NAV
F. Procedure for
redemption and re purchase
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redemption and re-purchase
Minimum
amount
for
Redemptio
n shall be
Rs 5,000
Minimum
number of
Units
after
Redemptio
n shall be
Rs 5,000
In case the
balance
fallsBelow
all remaining
units will be
automatically
redeemed
F. Procedure for
redemption and re-purchase
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Investor
Has purchased
Units
on more than
one Business Day
Units will be
redeemed
on a first-in-
first-out
basis
redemption and re-purchase
F. Procedure for
redemption and re-purchase
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How to redeem
A transaction
slip
used by the
Unit Holderto request a
Redemption
requisite
details
entered in the
transaction slip
submitted at
an ISC.
redemption and re-purchase
F. Procedure for
redemption and re-purchase
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Redemptio
n proceeds
Paid by cheques,
Marked
"A/c Payee only"
drawn in the name
of sole holder
redemption and re-purchase
F. Procedure for
redemption and re-purchase
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dispatch the
Redemptionproceeds
within 3
BusinessDays from
acceptance
ofRedemption
request
but not beyond
10 BusinessDays
interest
@15% p.a.
otherwise
Paid to
Unit Holder
Interest shall
Borne
by AMC.
redemption and re purchase
G. Descriptions of accounting
policies NAV and valuation
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policies NAV and valuation
Describe
Accounting
policies
that it follows
Should be
in accordance
with
SEBI (MF)
Regulation
1996
Maintain
Proper Books of
Accounts,Records
H. Tax Treatment of investment
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Tax
Treatment
of investment
Describe
Tax
Element
Applicable
to
Investors
also tell
Who invest
in fund
H. Tax Treatment of investment
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Tax
Treatment
of investment
Is very
important if
Fund
income
Is subjectedto
Tax ininvestors
hand
In thehand of
mutual fund
Or
Tax
H. Tax Treatment of investment
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Tax
information
In offer
document
General in
Nature
Objective
not offer
tax advice
H. Tax Treatment of investment
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Income-tax rates indicated below are as per the Finance Bill, 2007,
For Unit Holders
sale ofunits
of an equity
oriented fund
to
MutualFund
UnitHolder
required to
pay a STT of
0.25 per cent
on the value of
the sale
TDS Rates under the Act
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Residents FIIs NRIs / Other foreign entities
(excluding FIIs)
Short-termcapital gains
Non-equityoriented fund
NIL NIL 30 per cent for foreign non-corporates
40 per cent for foreign corporate
entities
Equity
oriented Fund
NIL NIL 10 per cent
Long-term
capital gains
Non-equity
oriented fund
NIL NIL 10 per cent for specified
overseas financial organisations
20 per cent for other foreign
entities
Equity
oriented Fund
NIL NIL NIL
Business
income
Non-equity
and equity
oriented
mutual fund
NIL 30 per cent for
non-corporate
FIIs
40 per cent for
corporate FIIs
30 per cent for foreign non-
corporates
40 per cent for foreign corporate
entities
I. Investors right & services
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Investors
Must develop
awareness
right &services
They Expectfrom
Mutual fund
I. Investors right & services
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e.g.
Investors Right to
Review
Document &
obtain offerdocument
beforeInvest in
Mutual fund
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I. Investors right & services
I. Investors right & services
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SEBI
Require
Detailing ofDocuments
available
For Inspection
Such as
Trust deedInvestment
management
Custodian
agreement
Memorandum
& articles of
association
SEBI
Regulation,
1996
Trust Act,
1882
RegistrarsTransfer
agents
Can access the
informationI. Investors right & services
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on
NAV
Computation
andUnit Price
Include
detailsDetails of contact
Of person
Who take care
of their queries
and complaints
investor
Friendly
service
J. Investor Grievances
And Redressal Mechanism
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Investors
can enquireabout
NAVs,
unit holdings,valuation,
dividends,
lodge any
service
request
or
Service
representatives
Handle
transactions
efficiently
andResolve Investor
Grievances
promptly
J. Investor Grievances
And Redressal Mechanism
J. Investor Grievances
And Redressal Mechanism
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Investor
complaints
received
byMutual
Fund
are redressed by the
investor relationsofficer
ofAMC and
Registrar
K. Penalties, Pending Litigation
or Proceedings
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or Proceedings
Pending
casesShould
alertInvestors
Assess the
risk of
loss
toMutual
fund
Key Information Memorandum
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Offer
documents
provide Not only
about
scheme
but Also provide
Key
information
Mutual
fund
history
Key Information Memorandum
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investorsOffer
documents
Provideinformation
and
Available
on request
Expensesinvolved
Dislike tostudy details
of
Key Information Memorandum
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Offerdocuments
Include
KIM
But in
precise
form
Investor
To developdepth
prospective
Refer Mutual
fund
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Key Information Memorandum
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Investment objective
Assets allocation pattern
Plans and policy
Benchmark index & dividend policy
Key Information Memorandum
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Performance of schemes over 1,3,5 years
Sources for obtaining daily NAV
Investor Grievance Contact
Expenses of the schemes
Names of fund manager & trustee company
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