Ch 5: Scheme Related Documents (MCQ)

1. What is the primary purpose of the Scheme Information Document (SID)?

a) To outline the regulatory requirements for mutual funds

b) To provide detailed information about the mutual fund scheme for prospective investors

c) To provide the names of all the fund managers

d) To list the portfolio of securities held by the scheme

Answer: b) To provide detailed information about the mutual fund scheme for prospective investors

2. What does the "Risk-o-meter" in the Scheme Information Document (SID) represent?

a) The potential returns from the scheme

b) A pictorial representation of the risk level associated with the scheme

c) The amount of risk mitigated by the fund manager

d) The regulatory compliance status of the scheme

Answer: b) A pictorial representation of the risk level associated with the scheme

3. Which of the following statements about the Scheme Information Document (SID) is true?

a) SEBI approves the contents of the SID before it is published

b) The SID must be filed with SEBI, but SEBI only observes and does not approve it

c) Mutual funds are not required to file the SID with SEBI

d) The SID can be modified by the mutual fund company without SEBI’s input

Answer: b) The SID must be filed with SEBI, but SEBI only observes and does not approve it

4. Where can an investor find the details about the "New Fund Offer" (NFO) and ongoing offer of
the scheme?

a) In the Key Information Memorandum (KIM)

b) In the Statement of Additional Information (SAI)

c) In the Scheme Information Document (SID)

d) In the Mutual Fund Prospectus

Answer: c) In the Scheme Information Document (SID)

5. Which document provides statutory information about the mutual fund or the AMC offering the
scheme?

a) Scheme Information Document (SID)

b) Statement of Additional Information (SAI)

c) Key Information Memorandum (KIM)

 d) Mutual Fund Contract Document

Answer: b) Statement of Additional Information (SAI)

6. What does the "Type of Scheme" section in the SID describe?

a) The risk level of the scheme

b) The assets held in the scheme

c) The nature and structure of the scheme (open-ended, closed-ended, equity, debt, etc.)

d) The fund manager's investment strategy

Answer: c) The nature and structure of the scheme (open-ended, closed-ended, equity, debt, etc.)

7. What is the primary purpose of the Statement of Additional Information (SAI)?

a) To provide detailed information about the scheme's performance

b) To provide statutory and general information about the AMC and the mutual fund

c) To outline the financial statements of the mutual fund

d) To display the risk level associated with the scheme

Answer: b) To provide statutory and general information about the AMC and the mutual fund

8. Which of the following is NOT typically found in the Scheme Information Document (SID)?

a) The minimum investment amount

b) The investment strategy followed by the fund

c) The performance of the mutual fund scheme

d) The types of instruments the scheme will invest in

Answer: c) The performance of the mutual fund scheme

9. What information is provided in the "Risk Factors" section of the SID?

a) Details of the fund manager's qualifications

b) Past performance of the scheme

c) Specific and general risks associated with the scheme

d) The tax implications of investing in the scheme

Answer: c) Specific and general risks associated with the scheme

10. Where can investors find details about the periodic disclosures made by the mutual fund?

a) In the Key Information Memorandum (KIM)

 b) In the Statement of Additional Information (SAI)

c) In the Scheme Information Document (SID)

d) On the mutual fund's website

Answer: b) In the Statement of Additional Information (SAI)

11. What does the "Investment Objective" section in the SID help an investor with?

a) Determining the risk profile of the scheme

b) Understanding the fund manager's track record

c) Matching the investor’s financial goals with the scheme's investment purpose

d) Deciding whether to invest in the scheme

Answer: c) Matching the investor’s financial goals with the scheme's investment purpose

12. What is the "NAV" (Net Asset Value) in the context of a mutual fund?

a) The total value of the mutual fund's investments

b) The price at which units of the scheme can be bought or sold

c) The amount of taxes paid by the fund

d) The management fees paid to the AMC

Answer: b) The price at which units of the scheme can be bought or sold

13. What does the "Load Structure" section of the SID explain?

a) The process for investing in the scheme

b) The performance of the scheme relative to benchmarks

c) The impact of entry and exit loads on the returns of investors

d) The tax treatment of the scheme's returns

Answer: c) The impact of entry and exit loads on the returns of investors

14. What does the Statement of Additional Information (SAI) provide?

a) Only the asset allocation of a scheme

b) Statutory information about the mutual fund and its schemes

c) A summary of the Key Information Memorandum (KIM)

d) Historical performance data of schemes

Answer: b) Statutory information about the mutual fund and its schemes
15. How can an investor obtain the Statement of Additional Information (SAI)?

a) Only by visiting the AMC office

b) By asking for a printed copy from the mutual fund

c) By downloading it from the AMC or AMFI website

d) Only by visiting the AMFI office

Answer: c) By downloading it from the AMC or AMFI website

16. The Key Information Memorandum (KIM) is designed to:

a) Be a comprehensive investment guide for all schemes

b) Summarize the SID and SAI for easier distribution

c) Provide historical performance of the fund

d) Disclose detailed financial statements of the AMC

Answer: b) Summarize the SID and SAI for easier distribution

17. Which of the following is included in the KIM?

a) Detailed balance sheet of the AMC

b) Performance of the scheme and benchmark

c) Latest news on the mutual fund industry

d) Historical net asset value (NAV) data for 10 years

Answer: b) Performance of the scheme and benchmark

18. What is the main purpose of the Addendum in mutual fund documentation?

a) To update the fund manager’s profile

b) To communicate interim changes to the scheme documents

c) To announce the launch of a new scheme

d) To provide the fund’s audited financial results

Answer: b) To communicate interim changes to the scheme documents

19. How often should the Scheme Information Document (SID) be updated for open-ended and
interval schemes?

a) Once a year

b) Once every two years

c) Every 6 months

d) Within 1 months from the end of Half Yearly

Answer: d) Within 1 months from the end of Half Yearly

20. In the case of changes to the fundamental attributes of a scheme, how does the AMC notify
investors?

a) Through email and SMS

b) By updating the AMC’s social media page

c) By issuing an addendum and publishing a public notice, with option to exit without exit load

d) By calling every investor

Answer: c) By issuing an addendum and publishing a public notice with option to exit without exit
load

21. How frequently should the Statement of Additional Information (SAI) be updated?

a) Every year

b) End of 3 months of every Financial Year

c) Every 6 months

d) Whenever there are material changes

Answer: b) End of 3 months of every Financial Year

22. What is the Total Expense Ratio (TER)?

a) The total value of a scheme’s portfolio

b) The cost an investor incurs for managing the mutual fund

c) The total return of the scheme for the last 3 years

d) The amount invested by the fund manager in the scheme

Answer: b) The cost an investor incurs for managing the mutual fund

23. How is the NAV (Net Asset Value) of a mutual fund scheme disclosed?

a) Quarterly

b) Weekly

c) Daily

d) Monthly

Answer: c) Daily

24. What must be disclosed on the mutual fund’s website regarding the Total Expense Ratio (TER)?

a) The performance of the scheme

b) Only the TER of equity schemes

c) The TER for each scheme, updated daily

d) The NAV of the scheme

Answer: c) The TER for each scheme, updated daily

25. Which of the following disclosures must be sent to investors if there is a change in the TER?

a) Only an email notification

b) Only an SMS notification

c) Both email and SMS notifications

d) Only an advertisement in newspapers

Answer: c) Both email and SMS notifications

26. What is included in the Mutual Fund’s portfolio disclosure?

a) Only the NAV

b) The list of securities in which the scheme is invested

c) The fund’s annual financial statement

d) The future investment strategy of the scheme

Answer: b) The list of securities in which the scheme is invested

27. When must the scheme’s portfolio be disclosed for debt schemes?

a) Every quarter

b) Every month

c) Every fortnight

d) Every year

Answer: c) Every fortnight

28. What is the purpose of the "Risk-o-meter" in mutual fund disclosures?

a) To assess the fund’s past performance

b) To indicate the level of risk associated with the scheme

c) To show the tax implications of investing in the scheme

d) To predict future market conditions

Answer: b) To indicate the level of risk associated with the scheme

29. Which of the following is a non-mandatory disclosure for mutual funds?

a) Statement of Additional Information (SAI)

b) Key Information Memorandum (KIM)

c) Fund Factsheet

d) Portfolio Disclosure

Answer: c) Fund Factsheet

30. What does the Fund Factsheet typically include?

a) Complete balance sheet of the AMC

b) The fund’s current NAV, performance vs. benchmark, and sector allocation

c) Detailed investment strategy of the fund

d) All of the above

Answer: b) The fund’s current NAV, performance vs. benchmark, and sector allocation

31. What type of mutual fund information is usually shared in the Fund Factsheet?

a) Top 10 holdings of the scheme

b) The scheme’s risk profile

c) The scheme’s Total Expense Ratio (TER)

d) Both a and b

Answer: d) Both a and b

32. Which of the following is mandatory for mutual funds to disclose on their website?

a) Daily NAV and Total Expense Ratio (TER)

b) Fund manager’s bio

c) Market trends

d) Mutual fund industry news

Answer: a) Daily NAV and Total Expense Ratio (TER)

33. How is the risk profile of a scheme usually presented in the KIM?

a) As a snapshot of potential risks, suitable investment horizon, and asset types

b) As detailed risk models for each asset class

c) By listing the past market volatility

d) By providing an industry risk rating

Answer: a) As a snapshot of potential risks, suitable investment horizon, and asset types

34. Which document contains the asset allocation pattern of the scheme?

a) SID

b) KIM

c) Addendum

d) Portfolio Disclosure

Answer: b) KIM

35. How can investors track the progress of their mutual fund investments?

a) By checking the scheme’s daily NAV

b) By reviewing the fund manager’s performance

c) By reading the mutual fund’s annual report

d) All of the above

Answer: d) All of the above