NISM Scheme Related Information Questions & Answers

Q: Which systematic plan allows investors to regularly transfer a fixed amount from one mutual fund scheme to another within the same fund house?

Systematic Transfer Plan (STP). A Systematic Transfer Plan (STP) allows an investor to periodically transfer a fixed amount from one scheme to another within the same mutual fund house, often used to move funds from a debt scheme to an equity scheme gradually

Q: What is the highest level of risk indicated by the 'Risk-o-meter' introduced by SEBI for mutual fund schemes?

Very High. The Risk-o-meter has six levels of risk: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. 'Very High' represents the highest risk level. (NISM V-A, Chapter 5, Section 5.3.1, Risk Factors)

Q: A unitholder of a mutual fund scheme has the right to receive which of the following documents at least annually?

Annual Report of the Mutual Fund.. As per SEBI regulations, unitholders have the right to receive a copy of the annual report of the mutual fund (or a summarized version thereof) at least once a year. This report provides details of the fund's financial performance, operations, and other statutory disclosures for the financial year

Q: Which of the following documents provides a summary of the key features of a mutual fund scheme, including its investment objective, asset allocation, and expense ratio, in a concise format?

Key Information Memorandum (KIM). The Key Information Memorandum (KIM) is a concise document that summarizes the most important information about a mutual fund scheme, derived from the SID and SAI, to help investors make informed decisions quickly. It is essentially an abridged version of the SID

Q: As per SEBI's categorization and rationalization of mutual fund schemes, a scheme that invests predominantly in debt instruments across different maturities and credit profiles without any specific duration or credit bias would typically fall under which category?

Dynamic Bond Fund. A Dynamic Bond Fund is defined as a scheme that invests across duration, i.e., it dynamically manages the portfolio's maturity based on interest rate views. This category allows for flexible investment across different maturities and credit profiles without a specific bias, fitting the description

Q: For performance comparison, SEBI mandates that mutual fund schemes must benchmark their performance against which type of index?

Total Return Index (TRI). SEBI mandates that all mutual fund schemes must benchmark their performance against a Total Return Index (TRI). A TRI considers both capital appreciation and dividend income, providing a more comprehensive measure of returns compared to a Price Return Index (PRI) which only accounts for price changes

Q: As per SEBI (Mutual Funds) Regulations, 1996, what is the maximum lock-in period allowed for an ELSS (Equity Linked Savings Scheme) from the date of investment?

3 years. Equity Linked Savings Schemes (ELSS) come with a mandatory lock-in period of 3 years from the date of investment for each unit/SIP instalment. This lock-in period is a condition for availing tax benefits under Section 80C of the Income Tax Act

Chapter 5 — All 200 Questions

Q1EasySystematic Transactions

Which systematic plan allows investors to regularly transfer a fixed amount from one mutual fund scheme to another within the same fund house?

ASystematic Investment Plan (SIP)

BSystematic Withdrawal Plan (SWP)

✓Systematic Transfer Plan (STP)

DValue Averaging Investment Plan (VAIP)

💡 A Systematic Transfer Plan (STP) allows an investor to periodically transfer a fixed amount from one scheme to another within the same mutual fund house, often used to move funds from a debt scheme to an equity scheme gradually.

Q2MediumRisk-o-meter

What is the highest level of risk indicated by the 'Risk-o-meter' introduced by SEBI for mutual fund schemes?

AModerately High

✓Very High

CExtremely High

DHigh

💡 The Risk-o-meter has six levels of risk: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. 'Very High' represents the highest risk level. (NISM V-A, Chapter 5, Section 5.3.1, Risk Factors)

Q3EasyRights of Unitholders

A unitholder of a mutual fund scheme has the right to receive which of the following documents at least annually?

AScheme Information Document (SID)

BKey Information Memorandum (KIM)

✓Annual Report of the Mutual Fund.

DFund Fact Sheet.

💡 As per SEBI regulations, unitholders have the right to receive a copy of the annual report of the mutual fund (or a summarized version thereof) at least once a year. This report provides details of the fund's financial performance, operations, and other statutory disclosures for the financial year.

Q4EasyKey Information Memorandum (KIM)

Which of the following documents provides a summary of the key features of a mutual fund scheme, including its investment objective, asset allocation, and expense ratio, in a concise format?

AScheme Information Document (SID)

BStatement of Additional Information (SAI)

✓Key Information Memorandum (KIM)

DAnnual Report

💡 The Key Information Memorandum (KIM) is a concise document that summarizes the most important information about a mutual fund scheme, derived from the SID and SAI, to help investors make informed decisions quickly. It is essentially an abridged version of the SID.

Q5MediumDistributor Commissions & Disclosure

According to SEBI regulations, which of the following information regarding distributor commissions must be disclosed to an investor *at the time of investment*?

AThe specific commission paid to their distributor for that transaction.

BThe aggregate commission paid by the AMC to all distributors in the previous financial year.

CThe exact percentage of commission paid to their specific distributor.

✓That commissions are paid out of the Total Expense Ratio (TER) of the scheme.

💡 SEBI mandates that mutual funds disclose to investors, typically in the Key Information Memorandum (KIM) and application form, that commissions are paid out of the Total Expense Ratio (TER) of the scheme. Specific individual commission details for a transaction are generally not disclosed to the investor.

Q6MediumScheme Classification (SEBI categorization)

As per SEBI's categorization and rationalization of mutual fund schemes, a scheme that invests predominantly in debt instruments across different maturities and credit profiles without any specific duration or credit bias would typically fall under which category?

AGilt Fund

BBanking & PSU Fund

✓Dynamic Bond Fund

DCorporate Bond Fund

💡 A Dynamic Bond Fund is defined as a scheme that invests across duration, i.e., it dynamically manages the portfolio's maturity based on interest rate views. This category allows for flexible investment across different maturities and credit profiles without a specific bias, fitting the description.

Q7HardInvestor Rights & Obligations / Material Changes

If there is a 'material change' in a mutual fund scheme, such as a change in the fundamental attributes (e.g., investment objective or asset allocation), what is generally required by SEBI regulations?

AThe AMC must inform SEBI, but no specific disclosure to existing investors is mandated.

✓The AMC must send a written communication to all unitholders and provide an exit option without exit load for a specified period.

CThe change can be implemented immediately after an internal board resolution, without any prior notice.

DOnly an update in the Scheme Information Document (SID) on the AMC's website is considered sufficient.

💡 As per SEBI (Mutual Funds) Regulations, 1996, any material change in the fundamental attributes of a scheme requires a written communication to all unitholders. Investors must be given an option to exit the scheme at the prevailing Net Asset Value (NAV) without any exit load for a specified period (typically 30 days) from the date of the communication. This is a critical investor protection measure. (SEBI (Mutual Funds) Regulations, 1996, Chapter on Fundamental Attributes)

Q8MediumBenchmark

For performance comparison, SEBI mandates that mutual fund schemes must benchmark their performance against which type of index?

APrice Return Index (PRI)

✓Total Return Index (TRI)

CCapital Gains Index (CGI)

DDividend Yield Index (DYI)

💡 SEBI mandates that all mutual fund schemes must benchmark their performance against a Total Return Index (TRI). A TRI considers both capital appreciation and dividend income, providing a more comprehensive measure of returns compared to a Price Return Index (PRI) which only accounts for price changes.

Q9HardELSS Lock-in Period

As per SEBI (Mutual Funds) Regulations, 1996, what is the maximum lock-in period allowed for an ELSS (Equity Linked Savings Scheme) from the date of investment?

A1 year

✓3 years

C5 years

D7 years

💡 Equity Linked Savings Schemes (ELSS) come with a mandatory lock-in period of 3 years from the date of investment for each unit/SIP instalment. This lock-in period is a condition for availing tax benefits under Section 80C of the Income Tax Act.

Q10HardScheme Expenses (TER Components)

When calculating the Total Expense Ratio (TER) for an equity-oriented mutual fund scheme, which of the following expenses is NOT typically included within the TER limits but might be borne by the scheme?

AInvestment management and advisory fees.

BRegistrar and Transfer Agent (RTA) fees.

✓Brokerage and transaction costs incurred for buying/selling securities.

DCustodian fees.

💡 As per SEBI (Mutual Funds) Regulations, brokerage and transaction costs incurred for the purpose of executing trades are allowed to be charged to the scheme *over and above* the prescribed TER limits, subject to certain caps (e.g., 0.12% for cash market transactions and 0.05% for derivatives transactions). Other expenses like investment management fees, RTA fees, and custodian fees are typically included within the TER.

Q11EasyRole of Trustees

Who is primarily responsible for approving the launch of a new mutual fund scheme, ensuring it aligns with unitholder interests and complies with SEBI Mutual Fund Regulations?

ASEBI (Securities and Exchange Board of India)

BThe Board of Directors of the Asset Management Company (AMC)

✓The Board of Trustees of the Mutual Fund

DThe Registrar and Transfer Agent (RTA)

💡 As per SEBI (Mutual Funds) Regulations, 1996, the Trustees are mandated to protect the interests of the unitholders. Therefore, they are primarily responsible for approving all new schemes and ensuring their compliance with regulations and alignment with unitholder interests before launch by the AMC.

Q12MediumStatement of Additional Information (SAI)

Which of the following information is primarily found in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AScheme's investment objective and asset allocation.

✓Details of the trustees, AMC, and their respective roles.

CRisk factors associated with the scheme.

DApplication procedure and cut-off timings.

💡 The Statement of Additional Information (SAI) contains statutory and detailed information about the mutual fund as a whole, including the constitution of the mutual fund, details of the AMC, trustees, auditors, etc., which are not typically elaborated in the SID. (NISM V-A, Chapter 5, Section 5.1.3)

Q13EasyFund Fact Sheet

Which document is generally published monthly by the Asset Management Company (AMC) and provides updated performance data, portfolio holdings, and other key scheme metrics?

AScheme Information Document (SID)

BStatement of Additional Information (SAI)

CKey Information Memorandum (KIM)

✓Fund Fact Sheet

💡 The Fund Fact Sheet is a monthly publication by Asset Management Companies (AMCs) that provides current and updated information about a scheme's performance, portfolio holdings, expense ratio, fund manager details, and other relevant data. SID, SAI, and KIM are statutory documents that are updated less frequently or upon specific events.

Q14MediumTypes of Debt Schemes (Floater Fund)

As per SEBI categorization, a mutual fund scheme predominantly investing in floating rate instruments and aiming to benefit from changes in interest rates would most likely be classified as a:

AGilt Fund

BCorporate Bond Fund

✓Floater Fund

DCredit Risk Fund

💡 A Floater Fund is a debt scheme that invests predominantly (at least 65% of its total assets) in floating rate instruments, aiming to reduce interest rate risk and benefit from changing interest rate scenarios. (NISM V-A, Chapter 5, Section 5.4.2)

Q15HardComponents of Total Expense Ratio (TER)

Which of the following costs is explicitly *excluded* from the Total Expense Ratio (TER) of a mutual fund scheme as per SEBI regulations, provided they are within prescribed limits?

AInvestment management and advisory fees.

BRegistrar and transfer agent fees.

CMarketing and selling expenses.

✓Brokerage and transaction costs (including STT) incurred for the purpose of executing trades.

💡 SEBI regulations state that brokerage and transaction costs incurred for the purpose of executing trades, including STT (Securities Transaction Tax), are not included in the Total Expense Ratio (TER). These costs can be charged to the scheme in addition to the TER, subject to certain limits (e.g., up to 0.12% for cash market transactions and 0.05% for derivatives transactions). All other options listed are components of the TER.

Q16MediumRisk-o-meter

How frequently must the Risk-o-meter for a mutual fund scheme be reviewed and updated by the Asset Management Company (AMC)?

AAnnually

BHalf-yearly

✓Monthly

DQuarterly

💡 As per SEBI circulars (e.g., SEBI/HO/IMD/DF3/CIR/P/2020/197 dated October 5, 2020), the Risk-o-meter for a mutual fund scheme must be reviewed and updated on a monthly basis based on the risk profile of the scheme's underlying investments. The updated Risk-o-meter must be disclosed on the AMC's website and AMFI's website within 5 working days from the end of each month.

Q17EasyRiskometer

A scheme categorized as 'Very High' on the Riskometer indicates what level of risk for investors?

ALow risk

BModerately low risk

CModerate risk

✓Very high risk

💡 The Riskometer is a visual tool mandated by SEBI to depict the risk level of a mutual fund scheme. 'Very High' on the Riskometer directly indicates that the scheme involves very high risk for investors.

Q18HardOffer Documents (SID, SAI, KIM)

Which of the following information is primarily detailed in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AInvestment objective and policies of the scheme.

BAsset allocation pattern and investment strategy.

✓General information about the AMC, Trustee, and their responsibilities.

DRisk factors specific to the scheme.

💡 The Statement of Additional Information (SAI) provides general legal and statutory information, including details about the Asset Management Company (AMC), Trustee, Custodian, Registrar and Transfer Agent (RTA), and their roles and responsibilities. Scheme-specific details like investment objective, asset allocation, and risk factors are primarily covered in the Scheme Information Document (SID).

Q19MediumTransaction Charges

As per SEBI regulations, for an investment of INR 10,000 or more in a mutual fund scheme by a new investor (first time investor across any mutual fund) through a distributor, what is the maximum transaction charge that can be deducted?

AINR 100

✓INR 150

CINR 200

DINR 250

💡 SEBI permits Asset Management Companies (AMCs) to deduct a transaction charge of INR 150 for investments of INR 10,000 or more made by a new investor (one who is investing in any mutual fund scheme for the first time) through a distributor. For existing investors, the charge is INR 100.

Q20EasyKey Information Memorandum (KIM)

Which of the following pieces of information is mandatorily included in the Key Information Memorandum (KIM) of a mutual fund scheme?

ADetailed legal history of the AMC.

BFull un-audited financial results of the AMC for the last three years.

✓Risk-o-meter for the scheme.

DComplete list of all past and present fund managers of the scheme since inception.

💡 The Key Information Memorandum (KIM) is a concise document that summarizes essential information about a scheme. It is mandatory to include the scheme's Risk-o-meter, investment objective, asset allocation, expenses, past performance, and contact details, among other key aspects.

Q21HardFundamental Attributes and Investor Rights

When a Mutual Fund proposes a change in the fundamental attributes of a scheme, dissenting unitholders are provided an exit option. What is a key characteristic of this exit option, as per SEBI Mutual Fund Regulations?

AIt is available only for a period of 15 calendar days from the date of the notice.

✓It must be provided without any exit load.

CIt is offered at the prevailing NAV, irrespective of market conditions, for all unitholders.

DIt is only applicable if the unitholder has held the units for more than one year.

💡 As per SEBI (Mutual Funds) Regulations, 1996, and subsequent circulars, if an AMC proposes a change in the fundamental attributes of a scheme, dissenting unitholders must be given an option to exit the scheme at the prevailing Net Asset Value (NAV) without any exit load, for a specified period (usually 30 days).

Q22HardNew Fund Offer (NFO) Regulations

According to SEBI (Mutual Funds) Regulations, 1996, what is the maximum permissible duration for a New Fund Offer (NFO) for an open-ended scheme?

✓15 days from the date of initial offer.

B30 days from the date of initial offer.

C45 days from the date of initial offer.

D90 days from the date of initial offer.

💡 As per SEBI (Mutual Funds) Regulations, the initial offer period for an open-ended scheme (NFO) cannot exceed 15 days. (NISM V-A, Chapter 5, Section 5.5, and SEBI MF Regulations)

Q23MediumNew Fund Offer (NFO)

What is the typical Net Asset Value (NAV) at which units of a New Fund Offer (NFO) are issued to investors during the offer period?

✓Rs. 10 per unit

BMarket-determined NAV based on similar schemes

CNAV based on the scheme's first-day closing

DNAV as per the last scheme launched by the same AMC

💡 New Fund Offers (NFOs) are typically launched at a face value of Rs. 10 per unit. This is the initial price at which investors can subscribe to the units before the scheme starts its regular operations and its NAV begins to fluctuate based on market performance.

Q24EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in the context of mutual funds?

✓To provide a concise summary of the Scheme Information Document (SID) and essential scheme details.

BTo serve as the legal document detailing the constitution of the Asset Management Company (AMC) and Board of Trustees.

CTo present the detailed financial statements and audit reports of the mutual fund scheme.

DTo act as the application form for investing in a New Fund Offer (NFO).

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID) and contains all critical information an investor needs to make an informed decision, including investment objective, expense ratio, and risk factors. It is mandatory to be provided with the application form. (SEBI (Mutual Funds) Regulations, 1996, Fifth Schedule, Part A)

Q25EasyNew Fund Offer (NFO)

For a New Fund Offer (NFO) of an open-ended scheme, what is the typical period for allotment of units after the closure of the NFO?

AWithin 5 business days from the date of the application.

✓Within 10 business days from the date of closure of the NFO.

CWithin 30 calendar days from the date of closure of the NFO.

DWithin 15 calendar days from the date of receipt of funds.

💡 As per SEBI regulations, units in an NFO for an open-ended scheme must be allotted within 10 business days from the date of closure of the NFO. This ensures timely processing for investors.

Q26EasyTransaction Charges

What is the maximum transaction charge that an AMC can deduct from an investment of Rs. 10,000 or more, if the investor is a first-time mutual fund investor?

ARs. 100

✓Rs. 150

CRs. 200

DRs. 250

💡 SEBI allows AMCs to deduct a transaction charge of Rs. 150 for a first-time mutual fund investor and Rs. 100 for an existing investor, for subscriptions of Rs. 10,000 and above, which is paid to the distributor.

Q27EasyScheme Performance (Benchmark)

What is the main purpose of a benchmark index for a mutual fund scheme?

ATo guarantee a minimum return to investors.

✓To serve as a standard against which the scheme's performance can be measured.

CTo determine the Net Asset Value (NAV) of the scheme.

DTo dictate the asset allocation strategy of the fund manager.

💡 A benchmark index is a standard against which the performance of a mutual fund scheme is compared. It helps investors assess whether the fund manager has been successful in outperforming a relevant market segment or investment style.

Q28MediumKey Information Memorandum (KIM)

While both are offer documents, the Key Information Memorandum (KIM) is primarily designed to provide which of the following to investors?

AExhaustive legal details of the Asset Management Company (AMC)

BA complete list of all past scheme portfolios

✓Essential information about the scheme in a concise format

DDetails about the fund management team's personal investments

💡 The Key Information Memorandum (KIM) is an abridged version of the Scheme Information Document (SID), designed to provide essential information about the scheme to investors in a concise and easily understandable format, facilitating quick decision-making.

Q29EasyMandatory Disclaimers

What is the mandatory disclaimer that must be prominently displayed in all mutual fund advertisements and offer documents?

✓Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

BPast performance is not indicative of future results.

CInvestment in this scheme is guaranteed by the Asset Management Company.

DThis scheme ensures capital protection for investors.

💡 As per SEBI regulations, it is mandatory for all mutual fund advertisements and offer documents to carry the disclaimer: 'Mutual Fund investments are subject to market risks, read all scheme related documents carefully.' This ensures investors are aware of the inherent risks.

Q30MediumScheme Features (IDCW Option)

Which of the following statements is TRUE regarding the Income Distribution cum Capital Withdrawal (IDCW) option in a mutual fund scheme?

AIt guarantees a fixed return to investors at regular intervals.

BThe payout under IDCW option is always from the capital gains generated by the scheme.

✓It allows investors to receive distributions from distributable surplus, which may include capital gains and/or accumulated income.

DInvestors opting for IDCW reinvestment receive additional units at a fixed discount to the prevailing NAV.

💡 The Income Distribution cum Capital Withdrawal (IDCW) option (formerly dividend option) allows investors to receive payouts from the scheme's distributable surplus. This surplus can originate from realized capital gains, accumulated income (like interest and dividends received by the fund), or a combination of both. It does not guarantee a fixed return and payouts are not solely from capital gains.

Q31EasyTotal Expense Ratio (TER)

Which of the following is typically included in the Total Expense Ratio (TER) of a mutual fund scheme?

ABrokerage paid by the investor for purchasing units.

BSecurities transaction tax (STT) on underlying portfolio trades.

✓Fund management fees.

DIncome tax payable by the investor on capital gains.

💡 The Total Expense Ratio (TER) of a mutual fund scheme includes various expenses incurred by the scheme, such as fund management fees, registrar and transfer agent fees, marketing and distribution expenses, and audit fees. Securities Transaction Tax (STT) on portfolio trades, brokerage paid by the investor, and income tax payable by the investor are not part of the TER.

Q32MediumTotal Expense Ratio (TER) Slabs

As per SEBI regulations, what is the maximum permissible annual Total Expense Ratio (TER) for a *debt-oriented* mutual fund scheme with an AUM of ₹500 crores?

A2.25%

✓2.00%

C1.75%

D1.50%

💡 According to SEBI circulars on TER slabs, for schemes other than equity-oriented schemes, the maximum permissible TER for the first ₹500 crores of average weekly net assets is 2.00%.

Q33EasyKey Scheme Features - Riskometer

Which of the following typically displays the 'Riskometer' for a mutual fund scheme?

AAnnual Report

✓Key Information Memorandum (KIM)

CTrust Deed

DOffer Document Part I (General Information)

💡 The Riskometer, which graphically depicts the level of risk associated with a mutual fund scheme, is prominently displayed in the Key Information Memorandum (KIM) and on the fund house's website. It helps investors understand the risk profile of the scheme at a glance.

Q34EasyRedemption Suspension

Under which of the following circumstances can a mutual fund temporarily suspend redemptions?

AWhen the fund manager decides to take a vacation.

✓During periods of extreme market volatility and liquidity crunch.

CIf the scheme's Assets Under Management (AUM) fall below a certain threshold.

DTo prevent large withdrawals by a few institutional investors.

💡 Mutual funds can temporarily suspend redemptions only under exceptional circumstances, such as a breakdown of the normal functioning of the securities market, a severe liquidity crisis, or other situations where it is not in the best interest of the unitholders to allow redemptions. This typically requires prior approval from the Trustees and intimation to SEBI.

Q35MediumUnclaimed Dividends/Redemption Proceeds

According to SEBI regulations, how should unclaimed redemption and dividend amounts of mutual fund schemes be invested by the AMCs?

AIn separate bank accounts earning savings interest.

BIn a call money market or overnight funds.

✓In a specific liquid scheme and held separately for a maximum of three years.

DIn any scheme of the AMC, provided it's disclosed to investors.

💡 SEBI Circular CIR/IMD/DF/21/2012 dated September 13, 2012 (and subsequent updates) mandates that unclaimed redemption and dividend amounts must be invested by AMCs in a specific liquid scheme (or money market scheme) and held separately for a maximum period of three years. After three years, these amounts must be transferred to the investor along with the income earned, or remain invested in the liquid scheme till claimed.

Q36HardChanges in Fundamental Attributes

If a mutual fund proposes to change the fundamental attributes of a scheme, what is the minimum notice period that must be given to unitholders, allowing them an exit option without exit load?

A15 days

B21 days

✓30 days

D45 days

💡 As per SEBI (Mutual Funds) Regulations, 1996, Regulation 18(15A), if a mutual fund proposes to change the fundamental attributes of a scheme, unitholders must be given a written communication about the proposed change and a minimum of 30 days to exercise an exit option without exit load. This protects investors from changes they did not consent to.

Q37MediumConsolidated Account Statement (CAS)

Which of the following instruments are typically included in a Consolidated Account Statement (CAS) provided by depositories or AMCs to an investor?

AOnly mutual fund investments.

BOnly equity shares held in demat form.

✓Mutual fund investments and securities held in demat form (e.g., shares, corporate bonds).

DMutual fund investments, equity shares, and real estate holdings.

💡 The Consolidated Account Statement (CAS) provides a single, unified view of an investor's holdings across mutual funds and securities held in dematerialized form (such as shares, corporate bonds, government securities, etc.) with depositories. It does not include physical assets like real estate.

Q38MediumStatement of Additional Information (SAI)

The Statement of Additional Information (SAI) typically contains information not found in the Scheme Information Document (SID) or Key Information Memorandum (KIM). Which of the following is most likely to be exclusively detailed in the SAI?

AThe scheme's investment objective and asset allocation.

BThe current Net Asset Value (NAV) of the scheme.

✓Information regarding the capital history and major shareholders of the Asset Management Company (AMC).

DThe scheme's past performance against its benchmark.

💡 The SAI provides statutory and general information about the AMC, Trustee, and the mutual fund itself. This includes details like the capital history of the AMC, its major shareholders, legal proceedings against the AMC/Trustee, and detailed procedures for unit valuation and investor rights, which are typically not in SID or KIM.

Q39HardRiskometer

How frequently must the risk level of a mutual fund scheme, as depicted by the Riskometer, be evaluated and updated by the Asset Management Company (AMC)?

✓Monthly

BQuarterly

CHalf-yearly

DAnnually

💡 As per SEBI Circular SEBI/HO/IMD/DF3/CIR/P/2020/197 dated October 05, 2020, AMCs are mandated to evaluate and update the risk level of their mutual fund schemes (Riskometer) on a monthly basis based on the scheme's portfolio and disclose it on their websites and AMFI's website.

Q40HardScheme Information Document (SID) vs. Statement of Additional Information (SAI)

What information is typically NOT found in the Scheme Information Document (SID) but is available in the Statement of Additional Information (SAI)?

ADetails of the fund manager and their experience.

BInvestment objective and asset allocation pattern of the scheme.

✓Legal and penal actions taken against the AMC, its sponsors, or any of their officers.

DRisk factors specific to the scheme.

💡 The Scheme Information Document (SID) focuses on scheme-specific details. Legal and penal actions taken against the AMC, its sponsors, or any of their officers are general information about the AMC and are typically disclosed in the Statement of Additional Information (SAI), which provides statutory and general information about the AMC and its operations.

Q41HardExpenses and TER

As per SEBI regulations, which of the following expenses is explicitly allowed to be charged to the scheme over and above the Total Expense Ratio (TER) limits, subject to specific caps?

AExpenses for investor education and awareness initiatives (IAP).

BCost of audit and legal expenses.

✓Brokerage and transaction costs incurred for the purpose of executing trades.

DExpenses for marketing and sales promotions.

💡 SEBI permits mutual funds to charge brokerage and transaction costs incurred for the purpose of executing trades, over and above the specified TER limits. However, these are subject to a maximum of 0.12% for cash market transactions and 0.05% for derivative transactions. Expenses for IAP are also allowed over TER but have a different cap (0.02% of daily net assets). Costs of audit, legal, marketing, and sales promotions are generally within TER.

Q42EasyCut-off Timings

What is the standard cut-off time for receiving purchase and redemption applications for equity-oriented mutual fund schemes on a business day?

A1:00 PM

B2:00 PM

✓3:00 PM

D4:00 PM

💡 For equity-oriented mutual fund schemes, the standard cut-off time for receiving both purchase and redemption applications on a business day is 3:00 PM.

Q43MediumFund Fact Sheet - Portfolio Turnover Ratio

A high portfolio turnover ratio (PTR) for an equity mutual fund scheme generally indicates which of the following?

AThe fund manager is adopting a buy-and-hold strategy.

BThe fund's portfolio is relatively stable with infrequent changes.

✓The fund manager is frequently buying and selling securities in the portfolio.

DThe scheme is primarily investing in debt instruments.

💡 Portfolio Turnover Ratio (PTR) measures how frequently assets within a fund are bought and sold by the fund manager. A high PTR indicates frequent trading, often associated with an active management style, while a low PTR suggests a more passive, buy-and-hold approach. This information is typically found in the Fund Fact Sheet.

Q44HardNew Fund Offer (NFO) Period

What is the maximum permissible period for which a New Fund Offer (NFO) for an open-ended mutual fund scheme can remain open for subscription?

A7 days

✓15 days

C30 days

D45 days

💡 As per SEBI (Mutual Funds) Regulations, 1996, and subsequent circulars, a New Fund Offer (NFO) for an open-ended scheme can remain open for a maximum of 15 days. For close-ended schemes, the NFO period can be up to 30 days.

Q45EasyOffer Documents (SID, SAI, KIM)

Which of the following documents is a concise and abridged version of the Scheme Information Document (SID) and contains key information about the mutual fund scheme in a simple format?

AStatement of Additional Information (SAI)

✓Key Information Memorandum (KIM)

CTrust Deed

DAnnual Report

💡 The Key Information Memorandum (KIM) is a concise and abridged version of the Scheme Information Document (SID) and contains all key information about the mutual fund scheme, making it easier for investors to quickly grasp essential details. It must be provided with every application form.

Q46EasyOffer Document - Key Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in the context of mutual fund investments?

ATo provide a detailed financial statement of the mutual fund's performance over the last 10 years.

✓To offer a concise summary of the Scheme Information Document (SID) to investors.

CTo serve as a legal agreement between the investor and the Asset Management Company (AMC).

DTo list all the distributors associated with the mutual fund house.

💡 The Key Information Memorandum (KIM) is designed to provide investors with a concise summary of the Scheme Information Document (SID). It contains essential information about the scheme in a simplified format, making it easier for investors to quickly grasp key aspects before making an investment decision.

Q47MediumFundamental Attributes

Which of the following is *not* considered a fundamental attribute of a mutual fund scheme, changes to which would typically require unitholder approval and an exit option without load?

AInvestment objective of the scheme.

BType of scheme (e.g., open-ended, close-ended).

CInvestment pattern/asset allocation proposed.

✓The fund manager managing the scheme.

💡 The investment objective, type of scheme, and broad investment pattern/asset allocation are considered fundamental attributes. A change in these requires unitholder approval and an exit option for dissenting unitholders. A change in the fund manager, while important, is an operational change and does not fall under the purview of fundamental attributes requiring unitholder approval and an exit option under SEBI regulations.

Q48EasyCut-off Timings

What is the typical cut-off time for receiving applications for Equity Linked Savings Schemes (ELSS) on a business day to be eligible for the same day's Net Asset Value (NAV)?

A1:00 PM

B2:00 PM

✓3:00 PM

D4:00 PM

💡 For Equity Linked Savings Schemes (ELSS), which are equity-oriented, the cut-off time for receiving applications to be eligible for the same day's NAV is typically 3:00 PM on a business day, provided the funds are available for utilization. (NISM V-A, Chapter 5, Section 5.3.8, Cut-off Timings)

Q49EasyKey Information Memorandum (KIM)

Which of the following best describes the primary objective of the Key Information Memorandum (KIM)?

ATo provide a comprehensive legal document detailing all aspects of the mutual fund and its operations.

✓To serve as a concise summary of the Scheme Information Document (SID) for investors.

CTo disclose the detailed investment philosophy and risk management strategies of the AMC.

DTo list all past performance data of the scheme and its fund managers.

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID) and Statement of Additional Information (SAI), providing essential information to investors in a simplified format. (NISM V-A, Chapter 5, Section 5.1.1)

Q50MediumNew Fund Offer (NFO)

Which of the following is a key characteristic that distinguishes a New Fund Offer (NFO) period from the ongoing offer period of an existing mutual fund scheme?

ANFOs always have lower expense ratios than existing schemes.

✓Units during an NFO are typically offered at a fixed price, usually Rs. 10 per unit.

CNFOs are generally open for subscription for a longer duration than ongoing scheme offers.

DInvestors can redeem units from an NFO during its offer period without exit loads.

💡 During an NFO, units are offered at a fixed price, typically Rs. 10 per unit (the face value). After the NFO closes, the scheme re-opens for continuous subscription and redemption at the prevailing Net Asset Value (NAV), which fluctuates daily.

Q51MediumFund Fact Sheet

Which of the following investor-specific details is *not* typically found in a standard monthly Fund Fact Sheet?

AScheme's Assets Under Management (AUM).

BFund Manager's name.

CScheme's portfolio allocation.

✓Investor's personal investment value.

💡 A Fund Fact Sheet provides generic, scheme-level information such as the scheme's AUM, fund manager details, portfolio allocation, performance, expense ratio, etc., relevant to all potential and existing investors. It does not contain personal investment details specific to any particular investor.

Q52MediumFundamental Attributes & Changes

A mutual fund scheme proposes to change its 'fundamental attributes', such as its investment objective. Which of the following actions is mandatory for the Asset Management Company (AMC) in such a scenario?

AObtain approval from SEBI only.

BSeek consent from 75% of unitholders by value and provide an exit option without exit load.

CInform unitholders via newspaper advertisement and allow them to exit within 15 days without exit load.

✓Obtain approval from 75% of unitholders by value OR provide an exit option without exit load.

💡 As per SEBI (Mutual Fund) Regulations, 1996, any change in the fundamental attributes of a scheme requires either the consent of at least 75% of the unitholders by value OR the provision of an exit option to the unitholders, without any exit load, for a period of at least 30 days. The 'or' clause is crucial.

Q53HardTotal Expense Ratio (TER) and Additional Expenses

Under what circumstances is a mutual fund scheme permitted to charge an additional expense ratio of up to 0.30% of daily net assets?

ATo cover the costs of celebrity endorsements and extensive advertising campaigns.

✓For distribution expenses incurred for investments from cities beyond the top 30 cities (B30 cities).

CTo compensate the fund manager for outperforming the scheme's benchmark significantly.

DTo offset higher operational costs associated with managing a very small AUM.

💡 SEBI regulations permit mutual funds to charge an additional expense ratio of up to 0.30% of daily net assets, provided that new inflows from retail investors beyond the Top 30 cities (B30 cities) are at least 30% of gross new inflows in the scheme or 15% of the average assets under management (AUM) of the scheme, whichever is higher. This incentive is aimed at promoting financial inclusion and penetration of mutual funds in smaller towns and cities.

Q54MediumAddendum to Offer Documents

When would a mutual fund be required to issue an Addendum to the Scheme Information Document (SID)?

AOnly during the launch of a new scheme (NFO).

✓When there is a material change in the scheme's fundamental attributes or any other significant information that affects investors.

CAnnually, as a mandatory update, regardless of any changes.

DOnly if the scheme's Net Asset Value (NAV) falls below Rs. 10.

💡 An Addendum is issued to the Scheme Information Document (SID) when there is a material change in the scheme's fundamental attributes, investment objective, fund management team, or any other significant information that could impact investors. This ensures that investors are promptly informed of crucial updates without waiting for the full SID to be re-issued.

Q55HardOffer Document (SAI vs SID)

Which of the following information is typically found in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AInvestment objective and asset allocation of the specific scheme.

✓Details of the trustees, AMC, and other service providers.

CRisk factors specific to the scheme.

DExit load structure for the specific scheme.

💡 The Statement of Additional Information (SAI) provides statutory and detailed information about the mutual fund house (AMC), its sponsors, trustees, auditors, and other service providers, which is common to all schemes managed by the AMC. The Scheme Information Document (SID) focuses on scheme-specific details like investment objectives, asset allocation, risk factors, and load structure.

Q56EasyPast Performance

Which of the following disclaimers is mandatorily associated with any disclosure of a mutual fund scheme's past performance?

A"Past performance is guaranteed to be sustained in the future."

✓"Past performance may or may not be sustained in the future."

C"Past performance is indicative of future returns."

D"Past performance is irrelevant for future investment decisions."

💡 SEBI regulations mandate that any disclosure of past performance of a mutual fund scheme must prominently carry the disclaimer: "Past performance may or may not be sustained in the future." This is to ensure investors understand that historical returns are not a guarantee of future results.

Q57EasyRiskometer

What is the primary function of the 'Riskometer' displayed in mutual fund scheme documents?

ATo indicate the fund manager's years of experience in managing similar schemes.

✓To graphically represent the level of risk associated with the principal invested in the scheme.

CTo show the potential returns an investor can expect from the scheme over different time horizons.

DTo compare the scheme's expense ratio with that of its peers in the same category.

💡 The Riskometer is a visual tool mandated by SEBI to indicate the level of risk associated with the principal invested in a mutual fund scheme. It uses categories like 'Low', 'Low to Moderate', 'Moderate', 'Moderately High', 'High', and 'Very High' to help investors understand the risk profile.

Q58EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) for a mutual fund scheme?

ATo provide comprehensive legal details of the fund house

✓To serve as a concise summary of the Scheme Information Document (SID)

CTo detail the rights and obligations of the Asset Management Company

DTo disclose the full portfolio of the scheme monthly

💡 The Key Information Memorandum (KIM) is designed to be a brief and concise summary of the more detailed Scheme Information Document (SID), providing essential information in an easily digestible format for investors.

Q59EasyValuation of Securities

To ensure accurate calculation of a scheme's Net Asset Value (NAV), how frequently are the securities held in a mutual fund scheme's portfolio typically valued?

AWeekly, at the end of the last business day.

BMonthly, on the last working day.

✓Daily, on all business days.

DQuarterly, along with financial reporting.

💡 To ensure the Net Asset Value (NAV) accurately reflects the current market value of the scheme's assets, securities held in a mutual fund portfolio are typically valued daily, on every business day. This allows for daily NAV declaration.

Q60HardTotal Expense Ratio (TER) Calculation

The Total Expense Ratio (TER) of a mutual fund scheme is calculated and charged to the scheme on which of the following bases?

AMonthly average net assets.

BAnnual average net assets.

✓Daily net assets.

DQuarterly net assets.

💡 The Total Expense Ratio (TER) is charged to the mutual fund scheme on a daily basis, calculated on the scheme's daily net assets. This ensures that the expenses are accrued and reflected accurately in the daily NAV. (SEBI Circular SEBI/HO/IMD/DF2/CIR/P/2018/137 and subsequent updates)

Q61MediumNew Fund Offer (NFO) Process

For a New Fund Offer (NFO), what is the maximum duration for which units can be allotted and dispatch of Statement of Account/refunds completed from the date of closure of the NFO?

A15 calendar days.

✓5 business days.

C10 calendar days.

D30 calendar days.

💡 As per SEBI (Mutual Funds) Regulations, units under an NFO must be allotted and the Statement of Account/refunds dispatched within 5 business days from the date of closure of the NFO.

Q62EasyExpense Ratio Limits

What is the maximum permissible Total Expense Ratio (TER) for an equity-oriented mutual fund scheme for the portion of its Average Assets Under Management (AAUM) exceeding ₹2,000 crores but not exceeding ₹5,000 crores?

A2.25%

B1.75%

✓1.60%

D1.50%

💡 As per SEBI regulations (SEBI/HO/IMD/DF2/CIR/P/2018/137), the maximum TER slabs for equity-oriented schemes are tiered. The specific slab applicable for the portion of AUM between ₹2,000 crores (₹500cr + ₹250cr + ₹1,250cr) and ₹5,000 crores (₹2,000cr + ₹3,000cr) is 1.60%.

Q63EasyScheme Categorization

As per SEBI's categorization norms for mutual funds, what is the minimum equity and equity-related instruments exposure for an 'Equity Fund'?

AAt least 50% of total assets.

✓At least 65% of total assets.

CAt least 80% of total assets.

DAt least 90% of total assets.

💡 According to SEBI's classification and rationalization of mutual fund schemes, an 'Equity Fund' (or any sub-category of equity funds like Large Cap, Mid Cap, Small Cap, Multi Cap, etc.) must invest a minimum of 65% of its total assets in equity and equity-related instruments.

Q64EasyScheme Information Document (SID)

Which of the following is considered the primary statutory offer document for a mutual fund scheme, containing comprehensive details?

AKey Information Memorandum (KIM)

✓Scheme Information Document (SID)

CStatement of Additional Information (SAI)

DFund Fact Sheet

💡 The Scheme Information Document (SID) is the primary statutory offer document that provides comprehensive and detailed information about a mutual fund scheme, its investment objective, asset allocation, risks, and other legal disclosures. KIM is an abridged version, and SAI provides additional generic information.

Q65EasyAddendums/Corrigendums

An Addendum or Corrigendum to the Scheme Information Document (SID) is issued by an AMC primarily to:

AProvide a summary of the SID.

✓Inform investors about material changes or updates to the SID.

CDetail the legal and general information about the AMC and Trustee.

DServe as an application form for the scheme.

💡 Addendums or Corrigendums are issued by an Asset Management Company (AMC) to update or correct information in the existing offer documents (SID, SAI, KIM) due to material changes in regulations, scheme features, or other relevant information that needs to be communicated to investors.

Q66MediumPortfolio Disclosure

Mutual funds are mandated to disclose their full portfolio (holding of all schemes) on their website and AMFI website within how many days from the end of each month?

A5 days

✓10 days

C15 days

D30 days

💡 SEBI mandates mutual funds to disclose their full portfolio holdings for all schemes on their website and the AMFI website within 10 days from the end of each month.

Q67EasyOffer Document (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in mutual funds?

ATo provide a comprehensive legal document for investors.

✓To serve as a summary of the Scheme Information Document (SID).

CTo detail the investment policies and risk management strategies.

DTo list all past performance data of the scheme since inception.

💡 As per SEBI (Mutual Funds) Regulations, the Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID), designed to provide investors with essential information about a scheme in an easily understandable format.

Q68MediumAbridged Annual Report vs. Full Annual Report

An investor receives an 'Abridged Annual Report' from a mutual fund. Which of the following components would *not* typically be found in this abridged version but in the full annual report?

AChairman's letter to unitholders.

✓Audited financial statements of the scheme.

CPortfolio turnover ratio.

DDetails of the expense ratio.

💡 The Abridged Annual Report provides a summary of the full annual report, including key financial highlights, Chairman's letter, and fund manager's report. However, the complete and detailed 'Audited Financial Statements' (including balance sheet, income statement, and cash flow statement) are typically found in the full annual report, not the abridged version.

Q69EasyCommon Application Form

Which of the following details is mandatory to provide in a mutual fund application form for KYC compliance for Indian residents?

AProfession

BIncome range

✓Permanent Account Number (PAN)

DEducational qualification

💡 As per SEBI regulations, providing a Permanent Account Number (PAN) is mandatory for all investors, including Indian residents, for KYC compliance and for making investments in mutual funds.

Q70EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM)?

ATo provide comprehensive legal details about the AMC and trustee.

✓To act as a concise summary of the Scheme Information Document (SID).

CTo detail the scheme's full portfolio holdings.

DTo serve as the application form for investing in a mutual fund scheme.

💡 The KIM is a summary of the Scheme Information Document (SID), designed to provide investors with essential information about a mutual fund scheme in a concise and easy-to-understand format. It always accompanies the application form.

Q71EasyFund Fact Sheet

Which of the following documents is primarily designed to help investors understand a mutual fund scheme's performance, portfolio holdings, and key ratios on a monthly basis?

AScheme Information Document (SID)

BStatement of Additional Information (SAI)

✓Fund Fact Sheet

DAbridged Annual Report

💡 The Fund Fact Sheet is a monthly publication by AMCs that provides up-to-date information on a scheme's performance, portfolio composition, expense ratio, fund manager details, and other key metrics, making it a crucial tool for investors to monitor their investments.

Q72EasyStatement of Additional Information (SAI)

Which of the following information is primarily detailed in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AThe scheme's investment objective and asset allocation pattern.

BThe names and experience of the fund management team.

✓Details regarding the constitution of the Asset Management Company (AMC) and its board of directors.

DThe past performance of the scheme and its benchmark.

💡 The Statement of Additional Information (SAI) contains generic information about the mutual fund, its constitution, legal aspects, taxation, and details about the AMC's board of directors, trustees, and auditors. The SID, on the other hand, focuses specifically on the scheme's investment objective, strategy, risks, and performance.

Q73EasyScheme Types and Categories - Solution-oriented Schemes

Which of the following is NOT typically considered a 'Solution-oriented Scheme' as per SEBI's categorization?

ARetirement Fund

BChildren's Fund

✓Equity Savings Fund

DAll of the above are solution-oriented schemes.

💡 SEBI has categorized 'Retirement Funds' and 'Children's Funds' as 'Solution-oriented Schemes' with a mandatory lock-in period. 'Equity Savings Fund' is categorized under Hybrid Schemes, not Solution-oriented.

Q74MediumCut-off Timings and NAV Applicability

An investor submits an application for subscription in an equity-oriented mutual fund scheme at 2:40 PM on a Monday. The funds are realized by the AMC's designated bank account on Tuesday morning. What NAV will be applicable for this transaction?

AMonday's closing NAV

✓Tuesday's closing NAV

CWednesday's closing NAV

DThe NAV of the day the application was submitted, irrespective of fund realization.

💡 For equity-oriented schemes, if the application is received before the cut-off time (3:00 PM) but the funds are realized on a subsequent business day, the NAV of the day the funds are realized will be applicable. Since the funds are realized on Tuesday, Tuesday's closing NAV will be applied. (SEBI Circular CIR/IMD/DF/21/2012 dated September 13, 2012, and subsequent amendments).

Q75MediumKey Information Memorandum (KIM) Contents

Which of the following information is typically *not* found in the Key Information Memorandum (KIM)?

AContact details of the Registrar and Transfer Agent (RTA).

BMinimum application amount for the scheme.

✓Detailed historical performance data of the fund manager's other schemes.

DCurrent expense ratio of the scheme.

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID). While it contains essential details like RTA contact, minimum investment, and expense ratio, it generally does not include detailed historical performance data of the fund manager's *other* schemes. Such detailed information, if relevant, might be in the SID or a separate fact sheet, but not typically in the KIM which focuses on the specific scheme.

Q76EasyOffer Document Hierarchy and Disclosures

Which of the following documents is mandatory to be provided to an investor at the time of purchasing units of a mutual fund scheme?

AScheme Information Document (SID)

BStatement of Additional Information (SAI)

✓Key Information Memorandum (KIM)

DAnnual Report of the mutual fund

💡 The Key Information Memorandum (KIM) is mandatory to be provided to an investor along with the application form at the time of purchase of mutual fund units. The SID and SAI are available upon request or on the AMC's website. (SEBI Circular CIR/IMD/DF/21/2012, para 1.1)

Q77MediumKey Information Memorandum (KIM)

The Key Information Memorandum (KIM) for a mutual fund scheme must be updated at least:

AAnnually

BQuarterly

✓Half-yearly

DMonthly

💡 As per SEBI regulations, the Key Information Memorandum (KIM) must be updated at least half-yearly. It is also updated whenever there is a material change in the SID.

Q78HardPerformance Disclosure - Rolling Returns

In the context of mutual fund performance reporting, what is the key advantage of using 'rolling returns' over 'point-to-point' returns?

ARolling returns are always easier to calculate for investors.

BRolling returns represent returns over a single, fixed period only.

✓Rolling returns eliminate the impact of specific start and end dates, providing a more consistent view of performance.

DRolling returns are always higher than point-to-point returns.

💡 Rolling returns provide a more comprehensive and less biased view of a fund's performance by calculating returns over multiple overlapping periods. This method averages out the impact of selecting arbitrary start and end dates, which can significantly skew point-to-point returns.

Q79MediumScheme Categorization and Rationalization

As per SEBI's categorization and rationalization guidelines for mutual fund schemes, which of the following falls under the 'Solution-Oriented Schemes' category?

ALarge Cap Fund

BMulti-Cap Fund

✓Retirement Fund

DSectoral/Thematic Fund

💡 SEBI's categorization guidelines include 'Solution-Oriented Schemes' which are specifically designed to meet certain life-stage financial goals. Examples include Retirement Funds and Children's Funds. Large Cap, Multi-Cap, and Sectoral/Thematic funds fall under Equity Schemes.

Q80EasyKey Information Memorandum (KIM)

What is the validity period for the Key Information Memorandum (KIM) of an open-ended mutual fund scheme?

A6 months

✓12 months

C3 months

DNo fixed validity, but updated periodically.

💡 SEBI regulations mandate that the Key Information Memorandum (KIM) for an open-ended scheme must be updated at least annually, and thus, its effective validity is generally considered 12 months from its date of publication, or until a new KIM is issued, whichever is earlier.

Q81MediumScheme Information Document (SID) Updates

How frequently must the Scheme Information Document (SID) of an open-ended mutual fund scheme be updated?

AOnly at the time of a New Fund Offer (NFO).

BAnnually, within six months of the financial year-end, irrespective of any changes.

✓Within nine months of the close of each financial year, or whenever there is a material change requiring an update.

DOnly when the fund manager of the scheme is changed.

💡 As per SEBI regulations, the Scheme Information Document (SID) for an open-ended scheme must be updated whenever there is a material change that impacts the scheme or its investors. Additionally, it must be updated within nine months of the close of each financial year, incorporating all material changes that have occurred during the period.

Q82EasyPast Performance Disclosure

When disclosing past performance, mutual funds are generally required to show performance for which of the following periods, if available?

ALast 1, 3, and 5 financial years.

BLast 6 months, 1 year, and 3 years.

✓Last 1, 3, and 5 years, and since inception.

DLast 2, 4, and 6 calendar years.

💡 As per SEBI guidelines, mutual funds are required to disclose past performance for 1, 3, and 5 years, and since inception of the scheme, if the scheme has been in existence for such periods. This provides a comprehensive view of the scheme's long-term and short-term performance. (SEBI Circular CIR/IMD/DF/21/2012, para 3.3.1)

Q83EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in mutual funds?

ATo provide comprehensive legal details of the AMC and its board of directors.

✓To offer a concise summary of the Scheme Information Document (SID) for quick reference by investors.

CTo list all past performance data for the last 10 years, including comparative benchmarks.

DTo detail the specific investment strategy exclusively for institutional investors.

💡 The Key Information Memorandum (KIM) is a concise abridged summary of the Scheme Information Document (SID) that provides essential information to investors in a simplified and readily accessible format before they make an investment decision. (SEBI (Mutual Funds) Regulations, 1996)

Q84MediumScheme Types and Categories - Debt Schemes

Which of the following is a key feature that distinguishes a 'Money Market Fund' from an 'Overnight Fund' as per SEBI's debt scheme categorization?

AMoney Market Funds invest in instruments with maturity up to 91 days, while Overnight Funds invest in instruments with maturity of 1 day.

✓Money Market Funds invest in instruments with maturity up to 1 year, while Overnight Funds invest in instruments with maturity of 1 day.

CMoney Market Funds invest in corporate bonds, while Overnight Funds invest in government securities.

DMoney Market Funds have higher credit risk than Overnight Funds.

💡 As per SEBI's categorization, an 'Overnight Fund' invests in overnight securities having a maturity of 1 day. A 'Money Market Fund' invests in money market instruments having a maturity of up to 1 year.

Q85HardFundamental Attributes of a Scheme

Which of the following statements regarding the 'Fundamental Attributes' of a mutual fund scheme, as outlined in the Scheme Information Document (SID), is INCORRECT?

AThey define the investment objective of the scheme.

BChanges to them require unitholder approval or an exit option.

CThey include the asset allocation pattern of the scheme.

✓They can be unilaterally changed by the AMC with prior intimation to SEBI.

💡 Fundamental attributes of a scheme cannot be changed unilaterally by the AMC. As per SEBI (Mutual Funds) Regulations, 1996, any change in these attributes requires either the approval of a majority of unitholders or the provision of an exit option without any exit load to dissenting unitholders.

Q86HardTotal Expense Ratio (TER) and Expenses

As per SEBI regulations, what is the maximum permissible additional expense that can be charged to a mutual fund scheme for expenses incurred towards increasing investor penetration in B30 cities?

A0.10% of daily net assets

B0.20% of daily net assets

✓0.30% of daily net assets

D0.50% of daily net assets

💡 SEBI permits an additional expense of up to 0.30% of the daily net assets of the scheme for expenses incurred towards increasing investor penetration in B30 (Beyond Top 30) cities, over and above the normal Total Expense Ratio (TER) limits.

Q87MediumFundamental Attributes of a Scheme

Any change in the fundamental attributes of a mutual fund scheme, such as its investment objective or fundamental investment policy, requires the approval of which entity?

ASEBI

BBoard of Trustees

✓Majority of the unitholders

DAMFI

💡 As per SEBI (Mutual Funds) Regulations, any change in the fundamental attributes of a scheme requires the approval of the majority of the unitholders. Unitholders must also be given an exit option without any exit load during a specified period.

Q88EasyBenchmark Index

What is the primary objective of a benchmark index mentioned in a Scheme Information Document (SID)?

ATo guarantee a minimum return for the investors.

✓To serve as a standard against which the scheme's performance can be measured.

CTo dictate the exact portfolio composition of the scheme.

DTo provide a fixed interest rate for the scheme's investments.

💡 A benchmark index (e.g., Nifty 50, BSE Sensex) is chosen by the AMC and disclosed in the SID to provide a comparative standard. It allows investors to assess how well the mutual fund scheme has performed relative to a relevant market index, thus indicating the fund manager's effectiveness.

Q89EasyContents of SID (Asset Allocation)

What does the 'Asset Allocation' section in a Scheme Information Document (SID) primarily describe?

AThe historical performance of the scheme's underlying assets.

✓The target allocation of the scheme's investments across different asset classes and investment instruments.

CThe total expense ratio (TER) breakdown for the scheme.

DThe educational qualification and experience of the fund manager.

💡 The Asset Allocation section in the SID clearly defines how the scheme intends to invest its assets across various asset classes (e.g., equity, debt, gold, real estate), sectors, and types of instruments, along with the permissible ranges for each. It outlines the investment strategy regarding asset distribution.

Q90EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in the context of mutual funds?

ATo provide a detailed legal document outlining the rights and obligations of the AMC.

✓To act as a condensed summary of the Scheme Information Document (SID) for easy reference by investors.

CTo disclose the complete audited financial statements of the mutual fund scheme.

DTo serve as the official application form for investing in the scheme.

💡 The Key Information Memorandum (KIM) is a concise document that provides essential information about a mutual fund scheme in a simplified manner. It is mandated by SEBI to be dispatched along with the application form and serves as an abridged version of the Scheme Information Document (SID), highlighting key features for investors' quick understanding.

Q91EasyKey Information Memorandum (KIM)

Which of the following documents is a concise summary of the Scheme Information Document (SID) and is mandatory to be provided along with every application form?

AStatement of Additional Information (SAI)

✓Key Information Memorandum (KIM)

CAnnual Report

DFund Fact Sheet

💡 The Key Information Memorandum (KIM) is a summary of the Scheme Information Document (SID) and is mandated by SEBI (Mutual Fund) Regulations, 1996, to accompany every application form for mutual fund schemes. It provides essential information in a crisp format.

Q92MediumDistinguishing SID and SAI

Which of the following details is typically found in the Statement of Additional Information (SAI) but is *not* a core component of the Scheme Information Document (SID)?

AInvestment objective and asset allocation of the scheme.

✓Details regarding the constitution of the mutual fund, including the Trustee and Asset Management Company's (AMC) board of directors.

CRisk factors associated with investing in the scheme.

DPast performance data of the scheme and its benchmark.

💡 The Statement of Additional Information (SAI) provides comprehensive legal, statutory, and financial information about the mutual fund and the AMC, including details about the constitution of the mutual fund, the AMC's board, auditors, and general information about the AMC. The SID focuses on scheme-specific details like investment objectives, asset allocation, and risk factors.

Q93EasyDividend Options

In a mutual fund scheme, what happens under the 'Dividend Reinvestment' option?

ADividends are automatically paid out to the investor's bank account.

✓Dividends are reinvested to purchase additional units at the prevailing NAV.

CDividends are accumulated and paid out annually.

DDividends are used to reduce the investor's outstanding loan against units.

💡 The 'Dividend Reinvestment' option allows the investor to automatically reinvest the declared dividend back into the same scheme, purchasing additional units at the prevailing ex-dividend Net Asset Value (NAV).

Q94HardNew Fund Offer (NFO)

For a New Fund Offer (NFO), the total duration for which units can be allotted and listed on the stock exchange after the NFO closure date should not exceed how many business days?

A3 business days

✓5 business days

C7 business days

D10 business days

💡 As per SEBI regulations, for a New Fund Offer (NFO), the units must be allotted and listed on the stock exchange within 5 business days from the date of NFO closure. This ensures timely processing for investors.

Q95HardTotal Expense Ratio (TER) and B30 Incentives

According to SEBI regulations, what is the maximum permissible additional expense that can be charged over and above the base Total Expense Ratio (TER) for schemes investing in debt and money market instruments in cities beyond the top 30 (B30) cities?

A0.15% of daily net assets.

B0.20% of daily net assets.

✓0.30% of daily net assets.

D0.50% of daily net assets.

💡 SEBI allows mutual funds to charge an additional expense of up to 0.30% of daily net assets for schemes investing in debt and money market instruments, provided new inflows from beyond top 30 (B30) cities are at least 30% of gross new inflows or 15% of the average assets under management (whichever is higher). This incentive is for increasing penetration in smaller cities. For equity schemes, it's 0.30% as well.

Q96EasyKey Information Memorandum (KIM)

The Key Information Memorandum (KIM) is an abridged version of which other mutual fund document?

✓Scheme Information Document (SID)

BStatement of Additional Information (SAI)

CAnnual Report

DFund Fact Sheet

💡 The Key Information Memorandum (KIM) is mandated by SEBI (Mutual Funds) Regulations, 1996, to be an abridged version of the Scheme Information Document (SID). It provides key information about the scheme in a concise format to investors.

Q97MediumFundamental Attributes and Changes

If a mutual fund proposes to change the fundamental attributes of a scheme, what option must be compulsorily provided to the unitholders who do not agree with the proposed change?

AAn option to switch to another scheme of the same AMC without any charge.

✓An option to redeem their units at the prevailing Net Asset Value (NAV) without any exit load.

CAn option to transfer their units to another investor free of cost.

DAn option to convert their units into physical certificates.

💡 As per SEBI (Mutual Funds) Regulations, if a change in fundamental attributes is proposed, unitholders must be given a specific period (at least 30 days) to exit the scheme at the prevailing NAV without any exit load. This protects investors who do not wish to continue with the scheme under its new fundamental attributes.

Q98EasyOffer Documents

Which of the following documents is primarily a summary document provided to investors, containing key information from the Scheme Information Document (SID)?

AStatement of Additional Information (SAI).

BScheme Information Document (SID).

✓Key Information Memorandum (KIM).

DFund Fact Sheet.

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID), designed to provide investors with essential details in an easy-to-understand format. The SID is the main offer document, and the SAI provides additional statutory and legal information.

Q99HardSEBI Categorization and Rationalization of Mutual Fund Schemes

As per SEBI's categorization, a Multi-Cap Fund is mandated to invest in equity and equity-related instruments across large cap, mid cap, and small cap companies. What is the *minimum* allocation requirement for each of these three market capitalization segments?

AAt least 10% in each.

BAt least 20% in each.

✓At least 25% in each.

DAt least 30% in each.

💡 SEBI regulations for Multi-Cap Funds mandate a minimum investment of 25% each in equity and equity-related instruments of large cap, mid cap, and small cap companies, totaling at least 75% of its total assets in equity.

Q100EasyExit Loads

As per SEBI regulations, any exit load charged by a mutual fund scheme is credited to:

AThe Asset Management Company (AMC) as revenue.

BThe distributors who sold the units.

✓The scheme itself, enhancing its Net Asset Value (NAV).

DThe Trustee company for oversight functions.

💡 SEBI regulations mandate that all exit loads, if any, charged by a mutual fund scheme must be credited back to the scheme itself. This practice ensures that the interests of the remaining unitholders are protected by mitigating the impact of redemptions on the scheme's assets.

Q101MediumFund Fact Sheet

What is the mandatory frequency for publishing the Fund Fact Sheet by an Asset Management Company (AMC)?

AAnnually

BQuarterly

✓Monthly

DBi-annually

💡 AMCs are mandated to publish the Fund Fact Sheet on a monthly basis. This document provides updated information on the scheme's performance, portfolio holdings, expense ratio, and other key details to investors.

Q102HardExpenses and TER (Specific Limits)

What is the maximum additional expense that an AMC can charge to a scheme for brokerage and transaction costs incurred for executing trades in the cash market, over and above the TER limits?

A0.05% of the value of trades.

B0.10% of the value of trades.

✓0.12% of the value of trades.

D0.20% of the value of trades.

💡 SEBI permits mutual funds to charge brokerage and transaction costs over and above the specified TER limits, subject to a maximum of 0.12% of the value of trades for cash market transactions and 0.05% for derivative transactions.

Q103MediumTypes of Schemes - Hybrid Funds

A mutual fund scheme that invests at least 65% of its total assets in equity and equity-related instruments, but also invests a significant portion in debt instruments, would most likely be classified as a:

APure Equity Fund

BLiquid Fund

✓Hybrid Fund (specifically, an Aggressive Hybrid Fund or Equity Hybrid Fund)

DGilt Fund

💡 As per SEBI's scheme categorization, a scheme investing a minimum of 65% of its total assets in equity and equity-related instruments, along with debt, falls under the category of Hybrid Funds, specifically an Aggressive Hybrid Fund or Equity Hybrid Fund, combining growth potential with relative stability. (SEBI (Mutual Funds) Regulations, 1996 - Scheme Categorization)

Q104MediumScheme Features - Cut-off Timings

For investments in non-liquid schemes (e.g., equity, hybrid, debt funds excluding liquid/overnight) where the application and funds are received before the cut-off time of 3:00 PM on a business day, what NAV is typically applicable?

AThe NAV of the previous business day.

BThe NAV of the next business day.

✓The NAV of the same business day.

DThe NAV declared two business days later.

💡 As per SEBI guidelines, for non-liquid schemes, applications for purchase of units where funds are received and available for utilization before the cut-off time (typically 3:00 PM) on a business day are allotted units at the NAV of the same business day. (AMFI/SEBI guidelines on cut-off timings)

Q105EasyTransaction Charges

As per SEBI regulations, what is the maximum transaction charge that can be deducted from a new investor investing Rs. 10,000 or more in a mutual fund scheme through a distributor?

ARs. 50

BRs. 100

✓Rs. 150

DRs. 200

💡 As per SEBI regulations, for investments of Rs. 10,000 or more, a distributor can deduct a transaction charge of Rs. 150 from a new investor (first-time mutual fund investor) and Rs. 100 from an existing investor.

Q106MediumScheme Information Document (SID) - Contents

Which specific section within the Scheme Information Document (SID) would an investor refer to understand the potential adverse events or market conditions that could negatively impact the scheme's performance?

AInvestment Objective and Policies

BAsset Allocation Pattern

✓Risk Factors

DFund Management Team Information

💡 The 'Risk Factors' section of the Scheme Information Document (SID) is specifically designed to inform investors about the various risks associated with investing in the scheme, such as market risk, credit risk, liquidity risk, etc. This is crucial for making informed investment decisions.

Q107HardNew Fund Offer (NFO) Regulations

What is the SEBI stipulated minimum subscription requirement for an open-ended equity scheme launched through a New Fund Offer (NFO)?

✓Rs. 10 crore

BRs. 20 crore

CRs. 50 crore

DNo minimum subscription is mandated for NFOs.

💡 As per SEBI (Mutual Funds) Regulations, 1996, for an open-ended equity-oriented scheme, the minimum subscription amount to be collected during the NFO period is Rs. 10 crore. If the NFO fails to collect this amount, the scheme must be wound up, and application money refunded.

Q108MediumApplicable NAV

For a purchase application in a mutual fund scheme involving an amount of Rs. 2 lakhs or more, which NAV will be applicable if the application is received before the cut-off time on a business day?

ANAV of the previous business day

BNAV of the day the application is received

CNAV of the next business day

✓NAV based on the day funds are realized by the fund house

💡 For purchase applications of Rs. 2 lakhs or more, the NAV applicable is based on the day the funds are realized by the fund house, irrespective of the application receipt time. This rule is in place to prevent arbitrage opportunities.

Q109MediumRiskometer

The 'Riskometer' for a mutual fund scheme must be evaluated and updated at least:

AAnnually, based on the scheme's portfolio.

BQuarterly, based on the scheme's portfolio.

✓Monthly, based on the scheme's portfolio.

DHalf-yearly, based on the scheme's portfolio.

💡 SEBI mandates that the Riskometer for a mutual fund scheme must be evaluated and updated on a monthly basis based on the scheme's portfolio. This updated Riskometer must then be disclosed on the AMC's website and AMFI's website within 5 working days from the end of each month.

Q110MediumStatement of Additional Information (SAI)

The Statement of Additional Information (SAI) primarily contains information regarding:

ADay-to-day portfolio holdings of the scheme

BScheme-specific investment objectives and asset allocation

✓Legal and taxation aspects of investing in mutual funds, and constitution of the AMC

DPerformance data of the scheme over various periods

💡 The Statement of Additional Information (SAI) provides generic information about the mutual fund, its constitution, legal aspects, general taxation provisions applicable to mutual fund investments, and other statutory details that are common across all schemes of an AMC. Scheme-specific details are in the SID.

Q111MediumRiskometer - Interpretation

A mutual fund scheme's Riskometer, which depicts the level of risk, is updated monthly based on the scheme's portfolio. If a scheme's Riskometer moves from 'Moderately High' to 'High,' what is the most likely reason for this change?

AThe scheme has generated significantly higher returns than its benchmark.

BThe scheme's Total Expense Ratio (TER) has increased.

✓The scheme's underlying portfolio has increased its exposure to higher-risk securities or sectors.

DThe fund manager responsible for the scheme has been replaced.

💡 The Riskometer reflects the risk profile of a mutual fund scheme based on its underlying portfolio. A movement from 'Moderately High' to 'High' indicates that the scheme's portfolio has, over the assessment period, taken on a higher level of market risk, possibly by increasing exposure to more volatile assets, sectors, or market capitalizations.

Q112MediumTransaction Charges

What is the maximum transaction charge that a mutual fund distributor can levy on a new investor making an investment of Rs. 10,000 or more in a mutual fund scheme?

ARs. 50

BRs. 100

✓Rs. 150

DRs. 200

💡 SEBI permits AMCs to deduct a transaction charge for applications routed through distributors. For a new investor, the transaction charge is Rs. 150 for an investment of Rs. 10,000 or more. For existing investors, it is Rs. 100.

Q113HardScheme Features - Expense Ratio (TER)

If a mutual fund scheme's Total Expense Ratio (TER) is consistently higher than its peer group average, what could be a potential implication for investors, assuming similar gross returns?

AIt guarantees higher returns due to better fund management and research.

BIt indicates lower risk due to conservative investment strategies employed by the fund.

✓It could lead to lower net returns for investors, as a larger portion of assets is used for expenses.

DIt suggests the fund is likely to outperform its benchmark significantly due to aggressive marketing.

💡 A higher Total Expense Ratio (TER) means a larger percentage of the scheme's assets is deducted annually to cover operating expenses. This reduces the amount available for investment, and consequently, can lead to lower net returns for investors, even if the scheme generates comparable gross returns to its peers. (NISM V-A, Chapter on Expenses and Loads)

Q114HardValuation of Securities

As per SEBI (Mutual Funds) Regulations, how frequently must unlisted equity shares held by a mutual fund scheme be valued?

ADaily

BWeekly

✓Fortnightly

DMonthly

💡 As per SEBI (Mutual Funds) Regulations, unlisted equity shares must be valued at least once a fortnight. (NISM V-A, Chapter 5, Section 5.3.6, Valuation)

Q115MediumScheme Types and Categories - Equity Schemes

According to SEBI's categorization of equity schemes, a 'Focused Fund' is mandated to invest in a maximum of how many stocks?

A20 stocks

B25 stocks

✓30 stocks

D35 stocks

💡 As per SEBI's categorization, a 'Focused Fund' is an equity scheme that invests in a maximum of 30 stocks. It can invest across large cap, mid cap, and small cap stocks.

Q116EasyKey Information Memorandum (KIM) - Purpose

The Key Information Memorandum (KIM) is a concise document designed for investor convenience. What is its primary function in the mutual fund application process?

ATo replace the full Scheme Information Document (SID) entirely for all legal purposes.

BTo provide a detailed legal framework for the mutual fund's operations.

✓To serve as a summary of the SID, containing essential information along with the application form.

DTo exclusively publish the monthly portfolio holdings of the scheme.

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID) and Statement of Additional Information (SAI). Its primary function is to provide essential information to investors in a brief, easy-to-understand format, and it always accompanies the application form to facilitate quick decision-making and submission.

Q117EasyNAV Applicability & Cut-off Timings

For investments in Liquid and Overnight Funds, what is the general cut-off time for an application to be eligible for the same business day's Net Asset Value (NAV), provided the funds are available for utilization by the AMC?

✓1:30 PM

B2:00 PM

C3:00 PM

D5:00 PM

💡 For Liquid and Overnight Funds, applications received before 1:30 PM on a business day, and where funds are available for utilization by the AMC, are allotted units at the NAV of the same business day. For applications received after 1:30 PM, the NAV of the next business day is applicable.

Q118MediumCut-off Timings for NAV Applicability

For purchase applications in equity-oriented or debt-oriented schemes (excluding liquid funds), what is the cut-off time for the NAV of the same business day to be applicable, assuming funds are available for utilization?

A1:30 PM

B2:30 PM

✓3:00 PM

D5:00 PM

💡 For purchase applications in non-liquid schemes (equity or debt funds), if the application is received before 3:00 PM on a business day and funds are available for utilization by the AMC, the closing NAV of the same business day is applicable. If received after 3:00 PM, the NAV of the next business day applies. This is a standard SEBI regulation for NAV applicability.

Q119EasyLoads and Expenses

What is the current maximum entry load that a mutual fund scheme can charge to an investor at the time of subscription?

A0.50%

B1.00%

C2.25%

✓0% (Nil)

💡 SEBI abolished entry loads for all mutual fund schemes with effect from August 1, 2009. Therefore, mutual funds cannot charge any entry load to investors.

Q120EasyScheme Information Document (SID) Content

Which section of the Scheme Information Document (SID) primarily details the investment objective, asset allocation pattern, and investment strategy of a mutual fund scheme?

ALegal and Statutory Information

BKey Information Memorandum

✓Scheme Information

DGeneral Information

💡 The 'Scheme Information' section within the Scheme Information Document (SID) is dedicated to providing comprehensive details about the scheme's investment objective, asset allocation pattern, investment strategy, risk factors, and other scheme-specific features to prospective investors.

Q121MediumOffer Document - Statement of Additional Information (SAI)

Which of the following documents provides comprehensive details about the constitution of the Asset Management Company (AMC), its board of directors, auditors, legal counsel, and general information about the mutual fund's operations, rather than specific scheme details?

AScheme Information Document (SID)

BKey Information Memorandum (KIM)

✓Statement of Additional Information (SAI)

DFact Sheet

💡 The Statement of Additional Information (SAI) contains statutory and general information about the mutual fund, its constitution, trustees, AMC, auditors, legal counsel, taxation, and other details not specific to any single scheme, but applicable to all schemes under the fund. The SID focuses on specific scheme details, and KIM is a summary of the SID.

Q122MediumRisk Factors (Scheme-Specific)

A mutual fund scheme investing predominantly in small-cap companies is exposed to higher levels of which specific risk compared to a large-cap fund?

AInterest Rate Risk

BCredit Risk

✓Liquidity Risk

DReinvestment Risk

💡 Small-cap stocks generally have lower trading volumes and smaller market depth compared to large-cap stocks. This makes them more susceptible to liquidity risk, meaning it can be difficult to buy or sell large quantities of these stocks quickly without significantly impacting their market price.

Q123EasyFund Fact Sheet - Frequency

How frequently is a mutual fund's 'Fact Sheet' typically updated and made available to investors, providing a snapshot of the scheme's performance and portfolio?

AAnnually

BQuarterly

✓Monthly

DBi-annually

💡 Mutual fund fact sheets are typically updated and published on a monthly basis. They provide investors with a current snapshot of the scheme's performance, portfolio composition, fund manager details, and other key information.

Q124HardNew Fund Offer (NFO) - Minimum Subscription

For an open-ended mutual fund scheme launched through a New Fund Offer (NFO), what is the minimum subscription amount that must be collected to ensure the NFO is successful, as per SEBI regulations?

AAt least 10% of the target amount specified in the SID.

✓At least 25% of the target amount specified in the SID.

CA minimum of Rs. 1 crore, regardless of the target amount.

DThere is no minimum subscription requirement for open-ended NFOs.

💡 As per SEBI (Mutual Funds) Regulations, for an open-ended scheme, if the NFO fails to collect the minimum subscription of 25% of the target amount mentioned in the SID, all application money must be refunded to the investors. This ensures that the scheme has a viable corpus to operate efficiently. (Note: For close-ended schemes, it is 75% of the target amount).

Q125HardExpenses and Total Expense Ratio (TER)

Beyond the Total Expense Ratio (TER), what additional expense is a mutual fund scheme permitted to charge to unitholders, subject to specific SEBI limits?

ABrokerage and transaction costs for direct plan investments.

✓Expenses for investor awareness programs in B-30 cities, capped at 0.30% of daily net assets.

CCosts associated with the fund manager's research and analytical tools.

DMarketing and selling expenses of the scheme, if not covered by TER.

💡 SEBI regulations permit mutual funds to charge additional expenses for promoting investor awareness and distribution in B-30 cities, capped at 0.30% of daily net assets, over and above the prescribed TER limits. Brokerage and transaction costs for direct plans are generally not passed on, and other expenses like research tools or general marketing are typically covered within TER.

Q126EasyFund Fact Sheet

What is the primary purpose of a Fund Fact Sheet issued by an Asset Management Company (AMC)?

ATo serve as a legal offer document for new investors, replacing the SID and KIM.

✓To provide a monthly snapshot of a scheme's key features, performance, and portfolio holdings.

CTo detail the complete legal and statutory information of the AMC, including its annual financial statements.

DTo exclusively disclose the fund manager's biography and qualifications for all schemes managed.

💡 A Fund Fact Sheet is a monthly publication that provides a concise, updated overview of a scheme's performance, portfolio allocation, expenses, fund manager details, and other key information for existing and prospective investors. It is not a legal offer document. (NISM V-A, Chapter on Scheme Related Information)

Q127MediumValuation Principles for Unlisted Securities

As per SEBI regulations, how are unlisted equity shares held by a mutual fund scheme generally valued for NAV calculation?

AAt cost price, until they are listed.

BAt a discount to the book value, determined by the AMC.

CBased on the latest available audited financial statements of the company.

✓At the fair value as determined by the AMC based on transparent and objective parameters.

💡 SEBI (Mutual Funds) Regulations, Schedule Eight, mandate that unlisted equity shares should be valued at fair value determined by the AMC based on transparent and objective parameters, in consultation with the Board of Trustees. Valuation at cost is not permitted for ongoing NAV calculation.

Q128MediumFundamental Attributes of a Scheme

Which of the following changes in a mutual fund scheme would be considered a change in its 'fundamental attributes' and would typically necessitate unitholder approval?

AA change in the fund manager responsible for the scheme.

BA change in the scheme's benchmark index.

✓A change in the scheme's investment objective.

DA change in the Registrar and Transfer Agent (RTA) for the scheme.

💡 As per SEBI (Mutual Funds) Regulations, 1996, any change in the fundamental attributes of a scheme, such as its investment objective, type of scheme, or terms of issue, requires prior approval of the unitholders. Other changes like fund manager, benchmark, or RTA are operational or tactical and generally do not require unitholder approval.

Q129HardAdditional Expense Ratio (B30 Inflows)

Under which specific condition can an Asset Management Company (AMC) charge an additional expense ratio of up to 0.30% over the prescribed limits for a mutual fund scheme?

ATo cover higher administrative costs incurred due to increased regulatory compliance.

BIf the scheme's assets under management (AUM) grow by more than 20% in a financial year.

✓If new inflows from beyond the top 30 cities (B30 cities) are at least 30% of gross new inflows in the scheme.

DTo compensate for exceptional market volatility causing higher portfolio rebalancing costs.

💡 SEBI allows AMCs to charge an additional Total Expense Ratio (TER) of up to 0.30% (30 basis points) for inflows from beyond the top 30 cities (B30 cities), provided that the new inflows from B30 cities are at least 30% of gross new inflows in the scheme or 15% of the average AUM (year to date) of the scheme, whichever is higher. This is an incentive to promote mutual fund penetration in smaller cities. (SEBI Circular SEBI/HO/IMD/DF2/CIR/P/2018/137 dated October 16, 2018).

Q130HardFundamental Attributes of the Scheme and Change in Fundamental Attributes

If a mutual fund proposes to change the fundamental attributes of a scheme, and unitholders are provided with an option to exit the scheme without any exit load, what is the minimum percentage of unitholders by value who must provide consent for the change to proceed, if the option to exit is not exercised?

A50%

B75%

✓No specific consent percentage is required if an exit option is provided.

D25%

💡 As per SEBI (Mutual Funds) Regulations, 1996, and subsequent circulars, if fundamental attributes of a scheme are to be changed, unitholders must be given an option to exit the scheme at the prevailing Net Asset Value (NAV) without any exit load, for a period of at least 30 days. If this exit option is provided, specific unitholder consent through a vote or ballot is generally not required for the change to proceed. The exit option itself serves as the unitholder's mechanism to express disagreement.

Q131EasyTypes of Schemes (Solution-Oriented)

Which of the following categories of mutual fund schemes is specifically designed to help investors save for long-term goals like retirement or children's education?

AEquity Linked Savings Schemes (ELSS)

BSectoral/Thematic Funds

✓Solution-Oriented Schemes

DIndex Funds

💡 Solution-Oriented Schemes, such as Retirement Funds and Children's Funds, are explicitly designed to address specific long-term financial goals of investors, often incorporating a mandatory lock-in period to encourage disciplined saving.

Q132MediumCut-off Timings & NAV Applicability (Liquid/Overnight Funds)

For subscriptions in Liquid and Overnight Funds, if an application along with funds is received before the cut-off time of 1:30 PM on a business day, what NAV is generally applicable?

✓The NAV of the previous business day.

BThe NAV of the same business day.

CThe NAV of the next business day.

DThe NAV applicable for equity funds.

💡 For Liquid and Overnight Funds, if the application and funds are received before 1:30 PM on a business day, the NAV of the previous business day is applicable. If received after 1:30 PM, the NAV of the same business day is applicable. This is a specific rule for these fund categories due to their short-term nature.

Q133MediumStamp Duty

As per current regulations, stamp duty is applicable on which of the following mutual fund transactions?

ARedemption of mutual fund units.

BSwitch-out transactions.

✓Fresh purchase and switch-in transactions.

DSystematic Withdrawal Plan (SWP) installments.

💡 Stamp duty is applicable on fresh purchases and switch-in transactions of mutual fund units, as per the Indian Stamp Act, 1899, as amended by the Finance Act 2019, effective from July 1, 2020. Redemptions and switch-outs are generally not subject to stamp duty.

Q134HardUnclaimed Dividends and Redemption Proceeds

According to SEBI regulations, if redemption proceeds or dividend payments remain unclaimed by investors for a period exceeding three years, what is the mandatory course of action for the Asset Management Company (AMC)?

AThe funds must be transferred to the Investor Education and Protection Fund (IEPF) directly.

✓The funds must be invested in a separate scheme specifically designed for unclaimed funds, typically a money market or liquid scheme.

CThe funds can be forfeited by the AMC and transferred to its reserves.

DThe AMC must initiate legal proceedings to trace the investor and disburse the funds.

💡 As per SEBI (Mutual Funds) Regulations, unclaimed redemption and dividend amounts, if not claimed for more than three years, must be invested by the AMC in a separate scheme (e.g., Money Market Mutual Fund or Liquid Fund) for unclaimed amounts. The income earned on such funds also accrues to the investors. Only after a specified period (e.g., seven years as per some rules related to companies act, but for MFs it's typically kept in the separate scheme until claimed or specific rules for transfer to IEF are invoked after a longer duration) and if specific conditions are met, might they be transferred to the Investor Education and Protection Fund (IEPF) or similar investor protection funds, but the immediate mandatory action after three years is investment in a separate scheme.

Q135MediumScheme Features (Direct Plan)

Which of the following is a key characteristic of a 'Direct Plan' in a mutual fund scheme?

AIt involves higher expense ratios due to distributor commissions.

BIt is only available for institutional investors.

✓It allows investors to invest directly with the AMC without routing through a distributor.

DIt offers a guaranteed return on investment.

💡 A Direct Plan allows investors to invest directly with the Asset Management Company (AMC) without the involvement of a distributor. This typically results in a lower expense ratio for the investor because distributor commissions are not paid from the scheme's assets.

Q136EasyRole of Registrar and Transfer Agent (RTA)

What is the primary role of a Registrar and Transfer Agent (RTA) in the mutual fund industry?

ATo manage the investment portfolio of mutual fund schemes.

BTo act as the custodian for the scheme's assets.

✓To maintain investor records and process transactions like subscriptions, redemptions, and transfers.

DTo provide investment advice to mutual fund investors.

💡 Registrar and Transfer Agents (RTAs) are responsible for maintaining investor records, processing transactions (subscriptions, redemptions, switches, transfers), updating unit holdings, and handling investor communication on behalf of the Asset Management Company (AMC).

Q137MediumStatement of Additional Information (SAI)

Which mutual fund document provides comprehensive, statutory, and legal information about the constitution of the Mutual Fund, including details of the Asset Management Company (AMC), Trustee, Custodian, and Registrar & Transfer Agent (RTA)?

AKey Information Memorandum (KIM)

BScheme Information Document (SID)

✓Statement of Additional Information (SAI)

DFund Fact Sheet

💡 The Statement of Additional Information (SAI) contains comprehensive statutory, legal, and general information that is not found in the Scheme Information Document (SID) but is crucial for an investor to make an informed decision. This includes detailed information about the AMC, Trustees, Custodian, and RTA.

Q138MediumStatement of Additional Information (SAI)

The Statement of Additional Information (SAI) typically contains detailed information about:

AOnly the specific investment strategy and portfolio allocation of a particular scheme.

BThe personal investment portfolios and net worth of the fund managers.

✓The general information about the mutual fund, its constitution, trustees, and statutory details.

DDaily NAV movements and market commentary for the past five years.

💡 The SAI provides comprehensive statutory information about the mutual fund, its constitution (Trust Deed), the Asset Management Company (AMC), Trustees, auditors, legal proceedings, and general disclosures not covered in the Scheme Information Document (SID). It forms part of the offer document. (SEBI (Mutual Funds) Regulations, 1996)

Q139MediumAddenda

If a mutual fund scheme makes a material change to its fundamental attributes, such as a change in its investment objective or a significant alteration in its asset allocation pattern, how is this change officially communicated to investors and documented?

ABy launching an entirely new scheme through a Fresh New Fund Offer (NFO).

✓By issuing an Addendum to the existing Offer Document (SID and SAI).

CThrough a direct email to all unitholders, without any public disclosure.

DOnly by updating the scheme's monthly fact sheet.

💡 Material changes to a scheme's fundamental attributes, such as investment objective or asset allocation, must be communicated to investors and the public by issuing an Addendum to the existing Offer Document (SID and SAI). Investors are also usually given an exit option without exit load for such changes.

Q140HardOther Disclosures (Portfolio Disclosure)

As per SEBI regulations, a mutual fund is required to disclose its full portfolio (along with ISINs) on its website and that of AMFI within how many days from the end of each month?

A5 days

✓10 days

C15 days

D30 days

💡 SEBI Circular SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016, and subsequent updates, mandates mutual funds to disclose their full portfolio (along with ISINs) on their website and AMFI's website within 10 days from the end of each month.

Q141MediumNew Fund Offer (NFO) Pricing

For an open-ended mutual fund scheme, what is the standard issue price per unit during its New Fund Offer (NFO) period?

AIt is determined by market demand and supply during the NFO period.

BIt is typically offered at a premium to its expected Net Asset Value (NAV).

✓It is offered at a par value of Rs. 10 per unit.

DIt is offered at a discount to its expected Net Asset Value (NAV) to attract investors.

💡 During a New Fund Offer (NFO) for an open-ended mutual fund scheme, units are typically offered at a par value of Rs. 10 per unit. This is because the scheme is new and does not have an established Net Asset Value (NAV) yet. The first NAV is calculated after the NFO closes and investments are made.

Q142MediumOffer Documents (SID, SAI, KIM)

The 'Statement of Additional Information (SAI)' primarily contains details about:

AThe specific investment objective and asset allocation of a scheme.

✓Operational aspects of the AMC, legal and regulatory compliances, and details of key personnel.

CThe daily Net Asset Value (NAV) of the scheme.

DA summary of the scheme's performance over various periods.

💡 The Statement of Additional Information (SAI) provides more detailed and statutory information about the Asset Management Company (AMC), its sponsors, trustee, key personnel, legal and regulatory compliances, and general information about the mutual fund structure, which are not typically found in the SID.

Q143MediumCut-off Timings

For a purchase application in a Debt or Liquid fund, if the application is received before the cut-off time of 2:00 PM on a business day, and the funds are realized by the AMC, what NAV will typically be applicable for allotment of units?

AThe NAV of the next business day.

BThe NAV of the previous business day.

✓The NAV of the same business day.

DThe NAV of two business days prior.

💡 As per SEBI regulations, for Debt and Liquid funds, if a valid application (with funds realized) is received before the cut-off time (2:00 PM for debt funds, 1:30 PM for liquid funds) on a business day, the Net Asset Value (NAV) of the same business day is applicable for allotment of units.

Q144MediumScheme Information Document (SID) and Statement of Additional Information (SAI)

Which of the following information is typically found in the Statement of Additional Information (SAI) but is generally excluded from the Scheme Information Document (SID)?

AInvestment objective and policies of the scheme.

✓Details of the constitution of the Mutual Fund, including the Sponsor, AMC, and Trustee.

CRisk factors associated with the scheme.

DPerformance data of the scheme.

💡 The Statement of Additional Information (SAI) provides more generic, statutory, and detailed information about the mutual fund as a whole, including the constitution of the Mutual Fund (Sponsor, AMC, Trustee, Custodian, RTA, Auditors, etc.), legal and regulatory compliance, and general provisions. The Scheme Information Document (SID) focuses on scheme-specific details like investment objective, asset allocation, risk factors, and expenses.

Q145MediumScheme Types and Categories - Hybrid Schemes

What is the primary characteristic of an 'Arbitrage Fund' within the hybrid scheme category?

AIt invests predominantly in equity and equity-related instruments, with a small allocation to debt.

BIt invests in a balanced mix of equity and debt, with dynamic rebalancing based on market conditions.

✓It aims to generate returns by exploiting price differentials in the cash and derivatives segments of the equity market.

DIt invests in a mix of equity, debt, and gold or other commodities.

💡 An 'Arbitrage Fund' is a hybrid scheme that aims to generate returns by exploiting price differentials (arbitrage opportunities) between the cash and derivatives segments of the equity market. It is typically considered a low-risk equity-oriented fund due to its hedging strategy.

Q146EasyNew Fund Offer (NFO)

During a New Fund Offer (NFO), units are typically offered to investors at what price?

AAt a premium to face value.

BAt a discount to face value.

✓At face value (e.g., ₹10 per unit).

DAt the prevailing market NAV.

💡 During a New Fund Offer (NFO), units are typically offered at their face value, which is commonly ₹10 per unit. After the NFO period, the units are available for purchase and redemption at their prevailing Net Asset Value (NAV).

Q147MediumExit Load Calculation

An investor redeems 500 units from an equity fund with a current NAV of ₹40.00. The fund levies an exit load of 0.75% if units are redeemed within 270 days. If the investor redeems these units after 150 days, what is the net redemption value received by the investor?

A₹20,000.00

✓₹19,850.00

C₹19,925.00

D₹19,700.00

💡 Total value of units = 500 units * ₹40.00/unit = ₹20,000.00. Since redemption occurs within 270 days (150 days), the exit load is applicable. Exit load amount = 0.75% of ₹20,000.00 = ₹150.00. Net redemption value = ₹20,000.00 - ₹150.00 = ₹19,850.00.

Q148EasyFundamental Attributes of a Scheme

Any change in the fundamental attributes of a mutual fund scheme requires:

AApproval only from the AMC's board of directors.

BApproval only from SEBI.

✓Consent from unit holders through a written communication or advertisement, with an exit option.

DApproval from the Trustee only.

💡 As per SEBI (Mutual Funds) Regulations, any change in the fundamental attributes of a scheme (such as its investment objective, asset allocation pattern, or type of scheme) requires prior communication to unit holders, offering them an option to exit the scheme at the prevailing NAV without any exit load.

Q149EasyFATCA/CRS

What is the core objective behind the implementation of FATCA and CRS requirements for mutual fund investors in India?

ATo provide investors with a comprehensive consolidated account statement across all their financial holdings.

✓To facilitate the exchange of financial information between tax authorities of different countries to combat tax evasion.

CTo standardize the process of Know Your Customer (KYC) across all financial products in India.

DTo encourage foreign direct investment (FDI) into the Indian mutual fund industry.

💡 The Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) are international regulations aimed at combating tax evasion by enabling the automatic exchange of financial account information between participating countries' tax authorities. Mutual funds, as financial institutions, are required to collect and report specific information about their account holders to comply with these regulations.

Q150EasyRiskometer and Risk Profiling

What is the primary purpose of the 'Riskometer' that is mandated to be displayed in mutual fund scheme documents and advertisements?

ATo provide a guarantee of minimum returns based on the scheme's risk profile.

BTo compare the scheme's performance against its benchmark index.

✓To visually represent the level of risk associated with investing in the scheme.

DTo indicate the fund manager's experience and track record.

💡 The Riskometer is a visual tool mandated by SEBI to indicate the level of risk associated with a mutual fund scheme, ranging from 'Low' to 'Very High' (or 'Very High' to 'High'). It helps investors understand the risk profile of the scheme. (SEBI Circular SEBI/HO/IMD/DF2/CIR/P/2018/137)

Q151HardFundamental Attributes and Changes

As per SEBI (Mutual Funds) Regulations, 1996, a change in the fundamental attributes of a mutual fund scheme requires unitholder approval. Which of the following conditions must be met for such a change to be implemented?

AApproval by a simple majority of unitholders present and voting.

BApproval by unitholders holding at least 75% of the total units outstanding.

✓Approval by unitholders through a postal ballot or e-voting, and a communication of the proposed change along with an option to exit at the prevailing NAV without exit load.

DApproval by the Board of Trustees and intimation to SEBI.

💡 SEBI (Mutual Funds) Regulations mandate that any change in fundamental attributes of a scheme requires unitholder approval through postal ballot or e-voting. Unitholders must also be given an option to exit the scheme at the prevailing NAV without any exit load for a specified period (at least 30 days).

Q152MediumScheme Benchmark

What is the primary purpose of disclosing the 'Scheme Benchmark' in the Scheme Information Document (SID)?

ATo define the scheme's asset allocation strategy.

BTo indicate the minimum return guaranteed by the scheme.

✓To provide a standard for performance comparison.

DTo set the maximum expense ratio for the scheme.

💡 A scheme benchmark serves as a reference point or a standard against which the performance of the mutual fund scheme is compared to evaluate its effectiveness and efficiency.

Q153EasyScheme Information Document (SID) and Expenses

Which document provides the most detailed information regarding the Total Expense Ratio (TER) of a mutual fund scheme, including its various components?

AKey Information Memorandum (KIM)

BFund Fact Sheet

✓Scheme Information Document (SID)

DStatement of Additional Information (SAI)

💡 The Scheme Information Document (SID) provides comprehensive details about the scheme, including its investment objectives, asset allocation, expenses, and a detailed breakdown of the Total Expense Ratio (TER). While KIM and Fact Sheet summarize, SID provides the full detail. (NISM V-A, Chapter 5, Section 5.1.2 & 5.3.5)

Q154EasyFund Fact Sheet

How frequently are mutual fund schemes mandated to publish their Fund Fact Sheets?

AAnnually

BHalf-yearly

CQuarterly

✓Monthly

💡 Fund Fact Sheets are typically updated and published on a monthly basis to provide investors with the latest information on scheme performance, portfolio, and other key details. (NISM V-A, Chapter 5, Section 5.2)

Q155HardStatement of Additional Information (SAI)

Which of the following information is primarily found in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AThe investment objective and policies of the scheme

✓Details of the Asset Management Company (AMC), Trustees, and the Custodian

CThe scheme's risk factors and asset allocation pattern

DThe total expense ratio (TER) and exit load structure of the scheme

💡 The Statement of Additional Information (SAI) provides statutory information about the constitution of the mutual fund, the Asset Management Company (AMC), Trustees, Custodian, and other general information. The Scheme Information Document (SID) focuses on the specific scheme's objectives, policies, risk factors, and expense details.

Q156HardScheme Specific Risks (Interest Rate Risk)

A debt fund manager expects interest rates to fall in the near future. Which of the following strategies would generally be most beneficial for the fund's portfolio in such a scenario?

AIncreasing the portfolio's allocation to short-duration instruments.

✓Increasing the portfolio's allocation to long-duration instruments.

CMaintaining a neutral duration strategy, irrespective of interest rate expectations.

DInvesting heavily in floating-rate bonds.

💡 When interest rates are expected to fall, bond prices tend to rise. Bonds with longer durations are more sensitive to changes in interest rates, meaning their prices will increase more significantly than short-duration bonds when rates fall. Therefore, increasing allocation to long-duration instruments would position the fund to benefit most from falling interest rates.

Q157HardStatement of Additional Information (SAI)

Which of the following details is typically found in the Statement of Additional Information (SAI) but not primarily in the Scheme Information Document (SID) or Key Information Memorandum (KIM)?

AThe fund manager's investment philosophy for the scheme.

✓The constitution of the Asset Management Company (AMC) and the trustee company.

CThe scheme's past performance over various periods.

DThe maximum expense ratio (TER) chargeable to the scheme.

💡 The SAI provides detailed and statutory information about the AMC, the Trustee, and the legal framework, including their constitution, roles, and responsibilities, which are typically not covered in detail in the scheme-specific SID or its summary, KIM. SID focuses on scheme-specific details, while KIM is a concise summary.

Q158HardRights of Unitholders (Scheme Liquidation)

In the event of a mutual fund scheme's liquidation, what is the priority for distributing the proceeds after statutory dues and expenses?

ATo the Asset Management Company (AMC) for management fees.

✓To the unitholders based on their proportionate holdings.

CTo the Trustees for their supervisory fees.

DTo the Custodian for safekeeping charges.

💡 As per SEBI (Mutual Funds) Regulations, 1996, in the event of winding up of a scheme, after meeting all liabilities, statutory dues, and expenses, the residual assets are required to be distributed to the unitholders in proportion to their unit holdings. Unitholders are the ultimate beneficiaries.

Q159MediumRiskometer

A mutual fund scheme's riskometer displays 'Very High'. What does this generally imply about the potential for loss and volatility for the principal invested?

ALow potential for loss, moderate volatility.

BModerate potential for loss, high volatility.

CHigh potential for loss, very low volatility.

✓High potential for loss, very high volatility.

💡 As per SEBI guidelines for the riskometer, 'Very High' risk signifies that the principal invested will be at very high risk, indicating both a high potential for capital loss and very high volatility in the scheme's returns.

Q160MediumStatement of Additional Information (SAI) Content

Which of the following information is typically found in the Statement of Additional Information (SAI) but not in the Scheme Information Document (SID) or Key Information Memorandum (KIM)?

AInvestment objective of the scheme.

✓Details of the Asset Management Company (AMC), Trustee, and their responsibilities.

CAsset allocation pattern of the scheme.

DRisk factors associated with the scheme.

💡 The Statement of Additional Information (SAI) provides elaborate legal, regulatory, and institutional information, including detailed information about the AMC, Trustee, their boards, auditors, legal counsel, and general provisions. The investment objective, asset allocation, and risk factors are primarily covered in the SID and summarized in KIM.

Q161EasyExpenses and Loads

As per current SEBI regulations, which of the following charges is explicitly prohibited for mutual fund schemes?

AExit Load

BTransaction Charge

✓Entry Load

DManagement Fees

💡 SEBI banned entry loads on all mutual fund schemes with effect from August 1, 2009, to make mutual fund investments more attractive and transparent for investors.

Q162MediumTypes of Hybrid Schemes (Multi-Asset Allocation Fund)

What is a mandatory characteristic for a Multi-Asset Allocation Fund as per SEBI categorization?

AIt must invest at least 80% of its assets in equity and equity-related instruments.

✓It must invest in at least three different asset classes with a minimum allocation of 10% in each asset class.

CIt must have a dynamic asset allocation strategy, rebalancing monthly.

DIt must primarily invest in international equities and debt.

💡 A Multi-Asset Allocation Fund is a hybrid scheme that must invest in at least three different asset classes, with a minimum allocation of 10% in each of the asset classes. (NISM V-A, Chapter 5, Section 5.4.3, Hybrid Schemes)

Q163EasyEntry Load - Current Status

What is the current regulatory status regarding the charging of 'entry load' for mutual fund schemes in India for retail investors?

AIt is mandatory for all equity schemes to charge an entry load.

BIt is permissible only for New Fund Offers (NFOs).

✓It is prohibited for all mutual fund schemes.

DIt is charged at the discretion of the Asset Management Company (AMC).

💡 SEBI prohibited the charging of entry load for all mutual fund schemes, including NFOs, for retail investors effective August 1, 2009. Distributors can charge transaction charges, but entry load from the scheme itself is not permitted.

Q164HardScheme Types and Categories - Debt Schemes

What is the primary purpose of a 'Gilt Fund with 10 year constant duration' as categorized by SEBI?

ATo invest in corporate bonds with a residual maturity of exactly 10 years.

BTo invest exclusively in PSU bonds maturing in 10 years.

✓To invest in Government securities (G-Secs) such that the Macaulay duration of the portfolio is constant at 10 years.

DTo invest in a mix of G-Secs and corporate bonds with an average maturity of 10 years.

💡 A 'Gilt Fund with 10 year constant duration' is an open-ended debt scheme investing in Government securities such that the Macaulay duration of the portfolio is maintained constant at 10 years. This offers investors exposure to G-Secs with a specific duration profile.

Q165MediumCut-off Timings - Liquid & Overnight Funds

For subscription applications in Liquid and Overnight mutual fund schemes, to receive the Net Asset Value (NAV) of the immediately preceding business day, what is the usual cut-off time for receiving the application and funds?

✓1:30 PM

B3:00 PM

C5:00 PM

D11:00 AM

💡 For Liquid and Overnight Funds, applications (including funds) received before 1:30 PM on a business day are typically allotted units based on the NAV of the immediately preceding business day. Applications received after 1:30 PM typically receive the NAV of the same business day.

Q166EasyPricing of Units - NAV Calculation

How often is the Net Asset Value (NAV) of an open-ended mutual fund scheme typically computed and published?

AWeekly

BMonthly

✓Daily

DQuarterly

💡 As per SEBI regulations, the Net Asset Value (NAV) of all open-ended mutual fund schemes must be computed and published on every business day. This ensures transparency and provides up-to-date pricing information to investors.

Q167MediumScheme Suitability

When an investor is considering the 'suitability' of a mutual fund scheme, which of the following factors is *most* crucial to align with their investment goals?

AThe fund manager's tenure with the AMC.

✓The scheme's investment objective and risk profile.

CThe total assets under management (AUM) of the scheme.

DThe frequency of NAV declaration.

💡 Scheme suitability primarily depends on aligning the investor's financial goals, risk tolerance, and investment horizon with the scheme's stated investment objective and its inherent risk profile. A scheme's objective and risk profile are fundamental details provided in the Scheme Information Document (SID).

Q168MediumScheme Information Document (SID) Updates

Under what circumstances is an Asset Management Company (AMC) required to file a fresh Scheme Information Document (SID) with SEBI?

AOnly when there is a change in the fund manager.

BOnly when the scheme's AUM crosses a certain threshold.

✓When there is a material change in the fundamental attributes of the scheme.

DAnnually, irrespective of any changes.

💡 An AMC is required to file a fresh SID with SEBI when there are material changes in the fundamental attributes of the scheme (which often require unitholder approval), or when the statutory validity period of the existing SID (typically 12 months from the date of filing) is expiring. Changes in fund manager or AUM crossing a threshold might require addendums but not necessarily a fresh SID unless fundamental attributes are altered.

Q169EasyFund Fact Sheet

Which document is specifically designed to provide investors with a concise, updated summary of a mutual fund scheme's key features, performance, and portfolio every month?

AScheme Information Document (SID)

BStatement of Additional Information (SAI)

CKey Information Memorandum (KIM)

✓Fund Fact Sheet

💡 The Fund Fact Sheet is a monthly publication by the Asset Management Company (AMC) that provides a summary of the scheme's performance, portfolio, expenses, risk measures, and other key details for investor review.

Q170MediumPledge/Lien on Units

Which of the following statements is TRUE regarding pledging of mutual fund units?

AOnly physical units can be pledged, not dematerialized units.

BUnits can only be pledged to banks, not to Non-Banking Financial Companies (NBFCs).

✓A pledge on mutual fund units can be created only if the units are fully paid-up.

DThe fund house must approve the pledge request before it can be registered.

💡 Mutual fund units can be pledged as collateral for loans, provided the units are fully paid-up. Both physical and dematerialized units can be pledged, and they can be pledged to various financial institutions including banks and NBFCs. The pledge is registered with the RTA/depository participant, and while the fund house is notified, their approval for the pledge itself is not typically a prerequisite.

Q171MediumStatement of Additional Information (SAI)

Which of the following information is typically found in the Statement of Additional Information (SAI) rather than the Scheme Information Document (SID)?

AInvestment objective and principal investment strategies of the scheme.

BRisk factors specific to the mutual fund scheme.

✓Constitution of the Asset Management Company (AMC), Board of Trustees, and other legal disclosures.

DDetails of the fund manager, their experience, and past performance of the scheme.

💡 The Statement of Additional Information (SAI) provides more general and legal information about the mutual fund, its constitution, trustees, AMC, auditors, and legal counsel, which are not typically covered in detail in the Scheme Information Document (SID). The SID focuses on scheme-specific details. (SEBI (Mutual Funds) Regulations, 1996, Fourth Schedule, Part A, General Conditions)

Q172EasyBenchmark of a Scheme

What is the primary role of a 'benchmark' in the context of a mutual fund scheme?

ATo determine the scheme's daily Net Asset Value (NAV).

BTo set the maximum permissible expense ratio for the scheme.

✓To measure the relative performance of the fund manager against a relevant market index.

DTo define the minimum investment amount required for the scheme.

💡 A benchmark is a standard against which the performance of a mutual fund scheme and its fund manager can be measured. It provides a relevant comparison point, usually a market index (e.g., Nifty 50, BSE Sensex), that aligns with the scheme's investment objective and asset allocation.

Q173EasyTypes of Schemes - Liquid Funds

Which of the following is typically the foremost investment objective for a Liquid Fund?

AMaximizing long-term capital appreciation through equity investments.

BProviding high income through regular dividend payouts from corporate bonds.

✓Preserving capital and providing high liquidity by investing in very short-term money market instruments.

DInvesting predominantly in equity-related instruments of large-cap companies.

💡 Liquid funds primarily aim for capital preservation and high liquidity. They invest in very short-term money market instruments and debt securities with maturities up to 91 days, making them suitable for parking surplus funds for a short duration. (SEBI Scheme Categorization and NISM V-A Syllabus)

Q174EasyNAV Calculation and Disclosure

The Net Asset Value (NAV) of a mutual fund scheme is required to be calculated and disclosed at least:

AWeekly for all schemes.

BDaily for all schemes, except Fund of Funds (FoFs).

CDaily for all schemes, including Liquid Funds which are calculated on all calendar days.

✓Daily for all schemes open for subscription and repurchase, on all business days.

💡 As per SEBI (Mutual Funds) Regulations, 1996, the NAV of a scheme that is open for subscription and repurchase must be calculated and disclosed on every business day. For liquid funds and overnight funds, NAV is calculated on all calendar days.

Q175MediumChange in Fundamental Attributes (or significant changes requiring unitholder protection)

If an Asset Management Company (AMC) wishes to change the name of a mutual fund scheme, what is the general regulatory requirement regarding unitholder consent?

ANo unitholder consent is required for a name change; it's an operational decision by the AMC.

BUnitholder consent through a majority vote is required, similar to changing fundamental attributes.

✓Unitholders must be given an option to exit the scheme at the prevailing NAV without any exit load for a specified period.

DOnly trustee approval is sufficient; unitholder consent is not applicable.

💡 As per SEBI regulations, a change in the name of a scheme is considered a significant change. While it may not always be categorized as a change in 'fundamental attributes,' SEBI mandates that unitholders must be given an option to exit the scheme at the prevailing Net Asset Value (NAV) without any exit load for a specified period (e.g., 30 days) when such a change occurs. This allows dissenting unitholders to exit the scheme if they do not agree with the change.

Q176MediumCut-off Timings for Transactions

For transactions in non-liquid mutual fund schemes (other than liquid and overnight funds), what is the standard cut-off time on a business day for an application to be processed at the same day's NAV?

A1:00 PM

✓3:00 PM

C5:00 PM

D6:00 PM

💡 As per SEBI regulations, for mutual fund schemes other than liquid and overnight funds, the cut-off time for receiving applications (for purchase, redemption, or switch) to be processed at the same day's NAV is 3:00 PM on a business day. (SEBI Circular CIR/IMD/DF/21/2012, Annexure A, para 2.1)

Q177MediumFundamental Attributes of a Scheme

If a mutual fund scheme proposes to change its fundamental attributes, such as its investment objective or asset allocation pattern, what is the mandatory regulatory requirement?

AOnly Board approval of the AMC is sufficient.

BApproval from SEBI only is required.

✓Approval from a majority of unitholders, or providing an exit option without exit load to dissenting unitholders.

DApproval from the Trustee only is sufficient.

💡 As per SEBI (Mutual Funds) Regulations, 1996, any change in the fundamental attributes of a scheme requires either the approval of a majority of unitholders (by value) or the provision of an exit option to dissenting unitholders without any exit load.

Q178EasyScheme Information Document (SID)

The Scheme Information Document (SID) provides details about the fund management team. Which of the following information about the fund manager(s) is typically included in the SID?

AThe fund manager's personal net worth.

BDetails of all investments made by the fund manager in other mutual funds.

✓The date of joining the AMC and the total work experience, along with other schemes managed.

DThe fund manager's residential address and contact number.

💡 The SID includes relevant professional information about the fund manager(s), such as their date of joining the AMC, total work experience (especially in the financial sector), and a list of other schemes currently managed by them. Personal financial details or contact information are not disclosed.

Q179MediumScheme Information Document (SID) content

Where would an investor typically find detailed information about the fund manager's experience, qualifications, and other schemes they manage for a specific scheme?

AOnly in the annual report of the Asset Management Company (AMC).

✓In the Key Information Memorandum (KIM) and more comprehensively in the Scheme Information Document (SID).

CExclusively on the daily NAV declaration sheet published by the AMC.

DMainly on the fund manager's personal social media profile or professional networking sites.

💡 The Key Information Memorandum (KIM) provides a brief overview of the fund manager. For more detailed information, including their experience, qualifications, and other schemes managed, investors should refer to the Scheme Information Document (SID) of the respective scheme. (NISM V-A, Chapter on Scheme Related Information)

Q180MediumNew Fund Offer (NFO)

What is the maximum duration for which a New Fund Offer (NFO) for an open-ended mutual fund scheme can remain open for subscription, as per SEBI regulations?

A3 days

B5 days

C10 days

✓15 days

💡 As per SEBI regulations, a New Fund Offer (NFO) for an open-ended scheme cannot remain open for more than 15 days. For close-ended schemes, the NFO period can be longer.

Q181MediumScheme Types and Categories - Debt Schemes

Which of the following debt schemes, as per SEBI's categorization, is mandated to invest in debt instruments such that the Macaulay duration of the portfolio is between 1 year and 3 years?

AUltra Short Duration Fund

BLow Duration Fund

✓Short Duration Fund

DMedium Duration Fund

💡 As per SEBI's scheme categorization, a 'Short Duration Fund' is an open-ended debt scheme investing in debt and money market instruments such that the Macaulay duration of the portfolio is between 1 year and 3 years.

Q182MediumFundamental Attributes of a Scheme

If a mutual fund scheme intends to change its 'fundamental attributes', what is the mandatory procedure as per SEBI regulations?

AThe AMC's board of directors can approve the change without external consultation.

BThe Trustee board must approve the change, and then intimate SEBI.

CSEBI's prior approval is sufficient, and investors are informed thereafter.

✓Unitholders must be given an option to exit the scheme at the prevailing NAV without any exit load, along with their consent for the change.

💡 As per SEBI regulations, any change in the fundamental attributes of a mutual fund scheme (e.g., investment objective, asset allocation, type of scheme) requires the consent of the unitholders. If unitholders do not agree to the change, they must be provided with an option to exit the scheme at the prevailing Net Asset Value (NAV) without any exit load, during a specified window.

Q183MediumRights and Obligations of Unitholders

Which of the following is a right of a mutual fund unitholder?

ATo directly manage the fund's portfolio

BTo demand a specific return on investment

✓To receive a copy of the abridged annual report free of cost upon request

DTo appoint and remove the AMC's CEO

💡 Unitholders have the right to receive a copy of the abridged annual report free of cost upon request. They do not have the right to directly manage the portfolio, demand specific returns, or appoint/remove AMC personnel.

Q184EasyRole of Registrar and Transfer Agent (RTA)

What is a primary function of the Registrar and Transfer Agent (RTA) for a mutual fund?

AManaging the investment portfolio of the scheme.

BHolding the securities and assets of the scheme in custody.

✓Processing investor applications, redemptions, and maintaining unitholder records.

DAuditing the financial statements of the mutual fund.

💡 The core function of a Registrar and Transfer Agent (RTA) in a mutual fund is to process all investor transactions (applications, redemptions, switches), maintain an accurate record of unitholders, and handle dividend/redemption payouts. They are the primary interface for investors regarding transactional services.

Q185EasyKey Information Memorandum (KIM)

Which of the following information is typically NOT included in the Key Information Memorandum (KIM) of a mutual fund scheme?

AThe current Net Asset Value (NAV) of the scheme.

BThe name of the fund manager(s).

✓A detailed list of all past schemes managed by the fund manager(s).

DThe investment objective of the scheme.

💡 The Key Information Memorandum (KIM) provides essential information about a scheme in a concise format. While it includes the current NAV, fund manager's name, and investment objective, a detailed historical list of all schemes managed by the fund manager is typically found in the Statement of Additional Information (SAI) or the Scheme Information Document (SID), not in the summary KIM.

Q186MediumConsolidated Account Statement (CAS)

How frequently must a Consolidated Account Statement (CAS) be sent to a mutual fund investor who has made a financial transaction (purchase, redemption, switch, SIP, STP, SWP registration, etc.) during the month?

AQuarterly

BHalf-yearly

CAnnually

✓Monthly

💡 As per SEBI circulars (e.g., CIR/MRD/DP/31/2014, CIR/MRD/DP/32/2014), a Consolidated Account Statement (CAS) must be issued monthly to investors who have undertaken any financial transaction (purchase, redemption, switch, dividend payout, SIP/STP/SWP registration, etc.) in any of their mutual fund folios or demat accounts during that month. If no transaction, it is issued half-yearly.

Q187MediumScheme Information Document (SID) Content

Which of the following details is generally *not* found in the Scheme Information Document (SID) of a mutual fund?

AInvestment objective and principal investment strategies of the scheme.

✓Detailed financial statements and audit reports of the Asset Management Company (AMC).

CApplicable entry and exit loads, if any.

DRisk factors associated with the scheme.

💡 The Scheme Information Document (SID) primarily focuses on scheme-specific details like investment objective, strategies, risk factors, fund manager details, and load structure. Detailed financial statements and audit reports of the AMC are typically found in the Statement of Additional Information (SAI) or the AMC's annual report, not the SID. (SEBI (Mutual Funds) Regulations, 1996, Fourth Schedule, Part A, General Conditions)

Q188EasyStatement of Additional Information (SAI)

Which document contains detailed statutory and general information about the constitution of the mutual fund, the AMC, the Trustee, and regulatory compliance aspects?

AScheme Information Document (SID)

BKey Information Memorandum (KIM)

✓Statement of Additional Information (SAI)

DFund Fact Sheet

💡 The Statement of Additional Information (SAI) provides statutory and general information that is not covered in the Scheme Information Document (SID), such as details about the AMC, Trustee, unitholder rights, and taxation.

Q189HardTotal Expense Ratio (TER) - Components

Which of the following expenses, while related to mutual fund transactions, is generally NOT included in the calculation of the Total Expense Ratio (TER) charged to the scheme's assets?

AInvestment management fees

BTrustee fees

CBrokerage and transaction costs related to portfolio churning

✓Securities Transaction Tax (STT)

💡 Securities Transaction Tax (STT) is levied directly on the investor at the time of redemption or switch transactions for equity-oriented schemes, not as an expense within the Total Expense Ratio (TER) of the scheme. Investment management fees, trustee fees, and brokerage/transaction costs (within SEBI limits) are all components of the TER.

Q190EasyFund Fact Sheet

What is the minimum frequency for publishing a Fund Fact Sheet for a mutual fund scheme?

✓Monthly

BQuarterly

CHalf-yearly

DAnnually

💡 As per AMFI guidelines and best practices, mutual funds are required to publish a Fund Fact Sheet on a monthly basis, providing updated information about the scheme's performance, portfolio, and other key details.

Q191EasyDirect Plan vs. Regular Plan

What is the primary characteristic of a 'Direct Plan' option offered by mutual fund schemes?

AIt allows investors to receive physical unit certificates instead of dematerialized units.

✓It involves investments made directly with the Asset Management Company (AMC) without routing through a distributor, hence incurring no distributor commission.

CIt guarantees a fixed return on investment over a specific period.

DIt is exclusively available for institutional investors, not retail investors.

💡 A 'Direct Plan' allows investors to invest directly with the Asset Management Company (AMC) without any intermediary like a distributor. As a result, no distributor commission or trail fee is paid out of the scheme's assets, leading to a lower expense ratio and potentially higher returns compared to a Regular Plan.

Q192HardStatement of Additional Information (SAI) - Contents

The Statement of Additional Information (SAI) provides comprehensive statutory and legal information about the mutual fund. Which of the following details is LEAST likely to be found in the SAI, as it is primarily covered in the Scheme Information Document (SID)?

ACapital history of the Asset Management Company (AMC)

BGeneral information about the AMC and Trustee

✓Specific investment objective of a particular scheme

DConstitutional documents of the Mutual Fund

💡 The specific investment objective of a particular scheme is a core detail found in the Scheme Information Document (SID). The SAI generally contains more generic, statutory, and legal information applicable to the mutual fund as a whole, such as the capital history of the AMC, general information about the AMC and Trustee, and constitutional documents like the Trust Deed and Investment Management Agreement.

Q193EasyExit Loads

If a mutual fund scheme has an exit load of 1% for redemptions made within 1 year of investment, and an investor redeems units worth Rs. 50,000 after 6 months, how much will be deducted as exit load?

ARs. 0

BRs. 250

✓Rs. 500

DRs. 1,000

💡 The exit load is calculated as a percentage of the redemption amount. In this scenario, 1% of Rs. 50,000 is (1/100) * 50,000 = Rs. 500. Since the redemption is made after 6 months (which is less than the 1-year period for which the exit load applies), the full exit load of Rs. 500 will be deducted.

Q194EasyKey Information Memorandum (KIM)

What is the primary purpose of the Key Information Memorandum (KIM) in the context of mutual funds?

ATo provide a comprehensive legal history of the Asset Management Company (AMC).

BTo serve as a detailed annual report containing audited financial statements of the scheme.

✓To act as a summary of the Scheme Information Document (SID) and incorporate the application form.

DTo outline the detailed investment strategy and portfolio holdings of the scheme.

💡 The Key Information Memorandum (KIM) is a concise summary of the Scheme Information Document (SID) and also serves as the application form for investing in a mutual fund scheme. Its primary purpose is to provide essential information to investors in a simplified manner, along with the means to apply for units.

Q195MediumNew Fund Offer (NFO) and Minimum Subscription

As per SEBI regulations, what is the minimum subscription amount that an NFO for an open-ended mutual fund scheme must collect to proceed with allotment?

A₹1 crore

B₹50 lakh

✓₹20 crore

D₹10 crore

💡 As per SEBI (Mutual Funds) Regulations, 1996, Fourth Schedule, Part A, General Conditions, point 11, an open-ended scheme must collect a minimum subscription of ₹20 crore during its New Fund Offer (NFO) period. For close-ended schemes, the minimum subscription is ₹10 crore.

Q196EasyTypes of Schemes - Open-ended vs. Close-ended

Which characteristic primarily defines an 'open-ended' mutual fund scheme?

AIt has a fixed maturity period, after which the scheme is wound up.

✓Units can be purchased and redeemed directly with the mutual fund on an ongoing basis at the prevailing NAV.

CIts units are exclusively traded on stock exchanges, and prices are determined by demand and supply.

DIt invests only in government securities and public sector undertakings.

💡 Open-ended mutual fund schemes allow investors to buy and sell units directly with the mutual fund at the prevailing Net Asset Value (NAV) on any business day. They do not have a fixed maturity period, offering continuous liquidity to investors. (NISM V-A, Chapter on Types of Schemes)

Q197EasyTypes of Schemes - Interval Funds

What is the primary characteristic that distinguishes an 'Interval Fund' from an Open-ended or Close-ended mutual fund scheme?

AIt invests exclusively in government securities.

BIt has a fixed maturity date, after which it is compulsorily redeemed.

✓It allows subscription and redemption of units only during pre-specified transaction periods.

DIts units are compulsorily listed and traded on stock exchanges.

💡 Interval funds are unique in that they combine features of both open-ended and close-ended schemes. They are open for subscription and redemption only during specific, pre-determined transaction periods (intervals), unlike open-ended funds which are continuously open, or close-ended funds which typically open only during NFO and at maturity.

Q198MediumValuation Principles (NAV Calculation)

What is the primary principle for valuing securities held by a mutual fund scheme for NAV calculation?

ACost price or market price, whichever is lower.

✓Market value on the valuation date.

CAverage cost price since acquisition.

DIntrinsic value as determined by the fund manager.

💡 As per SEBI (Mutual Funds) Regulations, for the purpose of calculating Net Asset Value (NAV), investments of a scheme are to be valued at their current market value as on the date of valuation. If market prices are not available, fair valuation methods are used.

Q199EasyTaxation (STT)

Securities Transaction Tax (STT) is applicable on which of the following mutual fund transactions?

APurchase of equity mutual fund units.

BRedemption of debt mutual fund units.

✓Redemption of equity-oriented mutual fund units.

DSwitching from an equity fund to a debt fund.

💡 Securities Transaction Tax (STT) is levied on the sale or redemption of equity shares and equity-oriented mutual fund units. It is specifically applicable on the redemption of equity-oriented mutual fund units.

Q200HardExpenses and Loads

As per AMFI guidelines, what is the maximum transaction charge that an ARN holder can levy on a purchase application of ₹10,000 or more, for a first-time mutual fund investor and for an existing investor respectively?

A₹100 for first-time, ₹50 for existing.

✓₹150 for first-time, ₹100 for existing.

C₹150 for first-time, ₹50 for existing.

D₹200 for first-time, ₹150 for existing.

💡 AMFI permits distributors to levy a transaction charge of ₹150 for first-time mutual fund investors and ₹100 for existing investors, for purchase applications of ₹10,000 and above. This charge is deducted from the investment amount.

Take the Full NISM Mock Test

Timed test with score tracking, chapter analysis & performance report.

Start Full Mock Test →