Scheme Related Information and the Legal and Regulatory Framework carry 10 marks each in NISM Series V-A. Together that is a fifth of the paper, and almost all of it is recall.
The three scheme documents
Candidates lose marks here by mixing up which document does what.
| Document | What it is | Key fact |
|---|---|---|
| SID — Scheme Information Document | The full description of one scheme: objective, asset allocation, strategy, risk factors, expenses, terms | The detailed document for that scheme |
| SAI — Statement of Additional Information | Statutory information about the mutual fund itself | Incorporated by reference into the SID |
| KIM — Key Information Memorandum | The abridged summary | Must legally accompany every application form |
The single most tested fact: the KIM is what travels with the form. The SID and SAI hold the full detail and are available on request.
Scheme documents are kept current between full revisions through addenda, issued whenever something material changes — the fund manager, the load structure, the benchmark or a scheme feature.
The riskometer
Introduced as part of SEBI's product labelling in 2013, whose stated purpose was to address mis-selling and give investors an easy way to understand what they are buying and whether it suits them.
The exam point: the riskometer is not fixed at launch. It reflects the risk of the scheme's actual portfolio and is reviewed and disclosed periodically, so it moves as the portfolio does.
Benchmarks
Every scheme must disclose a benchmark, and it must reflect that scheme's own mandate. Comparing a mid-cap scheme with a large-cap index measures the difference between two market segments, not the manager's contribution.
Where dividends matter, the fair comparison is a Total Return Index, which assumes dividends are reinvested — as the fund's own portfolio does.
Practise both chapters free: Scheme Related Information and Legal and Regulatory Framework.
The structure a mutual fund is built on
An Indian mutual fund is a trust, not a company. Three parties:
- The sponsor establishes the fund.
- The trustees hold the scheme's assets in trust for the unit holders and are accountable to them and to SEBI.
- The AMC is appointed to manage the investments.
Plus a custodian, which holds the securities in safe custody and settles trades, and an RTA, which handles investor transactions and records.
The whole point of that separation is that the investors' money is not the sponsor's or the AMC's. Trustees answer to unit holders — a fact the exam asks directly.
Who regulates what
- SEBI makes the regulations and supervises the industry.
- AMFI is the industry body, prescribing a code of conduct for distributors covering full disclosure, suitability and protection of investor interest. It governs the distributor's conduct, not the fund's portfolio.
- KYC and PMLA obligations require customer identification, monitoring for suspicious transactions and record keeping.
Grievances
An investor takes a complaint to the AMC first. If it is not resolved, the escalation route is SEBI's SCORES platform, where SEBI takes it up with the entity and tracks it to closure.
ARN and EUIN
To distribute, you need an ARN from AMFI, which requires this certification plus KYD compliance. Employees of a corporate distributor who interact with investors additionally need an EUIN, which identifies the individual who actually gave the advice — so that if mis-selling is alleged later, the person can be traced even if they have since left.
Practise the regulatory questions free, then take a full-length mock.