mutual funds offer document

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


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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.pdf


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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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Offer document

Offer

document

Key

Information

memorandum

&

Has tobe

Fullyrevised 1 yearAtleast

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.pdf


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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



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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



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document specified

Offer

document

Date of revisionOf offer

document

Should

contain


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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



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investor

Legal

right

Detail

Offer

documentcarefully

Copy of

Offer

documentstudy

AMC

Fund office

has To

ask

Has toobtain

distributor

from

and



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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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Statement To the effect

Prospectiveinvestor

What it

should

be

Retained forfuture

reference

And

Documentscontains

information


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Statement To the effect Documentis prepared As per SEBI

regulation

Filedwith

SEBI


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Scheme Has not been Approved/Disapproved

SEBI

By

Accuracy andadequacyof offer

documentHas certified

Disclaimerclause by SEBI

This is

nor


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Just asin Primary shares

IssueProspectus

It is the InvestorWho Judge

Whether document

gives all theinformation

Investment risk

& Investor

takes


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It is AMC Legal responsibility

Of the statementof offer

document.

That Takes

For the

accuracy


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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


Specific standard riskfactor

St d d i k f t


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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



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NAV Can moveup or

down

On the basis of

Capital marketmovements

Pastperformance

Sponsor/AMC/Mutual fund

of

Is not

indicative

of

Futureperformance

Of thescheme.



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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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Specificstandard risk

factors

Schemesinvestment

objectives/strategy

And

Proposedasset

allocation

Arising fromNon

diversification ifany

Investing in aclosed-end

schemes


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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



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Certificate has to confirm

Certificatehas

to confirm

ThatDraft offer

document

Forwarded

to

SEBISEBIS Regulation



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Certificate

has

to confirm

That All legal

requirements

Connected

withlaunching

The scheme

have been

complied with



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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



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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



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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



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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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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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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



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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



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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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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



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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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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



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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



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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



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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




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Calendar indicating

3


Opening, closing

allotment

& dispatch Of certificate

account statement



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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




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Restriction

on

Right to freely

retain or

Dispose of units

6




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Maturity

period

and Circumstances

under

Duration may

extended.

8

Procedure

fortransfer

Transmission of

unitand

9




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Gives

information concerning

Operationsof schemes.

To asses

the fund

Detail

required by

investor

10 Offer related information

A. Investment Procedure


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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



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Trustee'sdecision

Regard

to

Availability and

adequacy Rate

Timing and

frequencyOf distribution

shall be final




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Unit Holders

have the

optionReceiving

the dividend

Reinvesting

the sameor

will

reinvested

at the Applicable

NAV

immediately

following

Business Day



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AMC

dispatchDividend

warrants

within 30 days of

date of

declaration

Dividend

distributionprocedure

shall be Accordance

with theRegulations


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


84/118

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



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NAV

Calculated

and

announced

within a

period

of 30 days

After the closeof the NFO

Period

Announced on allBusiness Days.



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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



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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



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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


F. Procedure for



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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.


F. Procedure for



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Redemptio

n proceeds

Paid by cheques,

Marked

"A/c Payee only"

drawn in the name

of sole holder


F. Procedure for



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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


98/118

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



100/118

Tax

Treatment

of investment

Is very

important if

Fund

income

Is subjectedto

Tax ininvestors

hand

In thehand of

mutual fund

Or

Tax



101/118

Tax

information

In offer

document

General in

Nature

Objective

not offer

tax advice



102/118

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


103/118

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


104/118

Investors

Must develop

awareness

right &services

They Expectfrom

Mutual fund



105/118

e.g.

Investors Right to

Review

Document &

obtain offerdocument

beforeInvest in

Mutual fund


106/118




107/118

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


108/118

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


109/118

Investors

can enquireabout

NAVs,

unit holdings,valuation,

dividends,

lodge any

service

request

or

Service

representatives

Handle

transactions

efficiently

andResolve Investor

Grievances

promptly






110/118

Investor

complaints

received

byMutual

Fund

are redressed by the

investor relationsofficer

ofAMC and

Registrar

K. Penalties, Pending Litigation

or Proceedings


111/118

or Proceedings

Pending

casesShould

alertInvestors

Assess the

risk of

loss

toMutual

fund

Key Information Memorandum


112/118

Offer

documents

provide Not only

about

scheme

but Also provide

Key

information

Mutual

fund

history



113/118

investorsOffer

documents

Provideinformation

and

Available

on request

Expensesinvolved

Dislike tostudy details

of



114/118

Offerdocuments

Include

KIM

But in

precise

form

Investor

To developdepth

prospective

Refer Mutual

fund


115/118



116/118

Investment objective

Assets allocation pattern

Plans and policy

Benchmark index & dividend policy



117/118

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


118/118