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Statement of Additional Information (SAI) - What is SAI in Mutual Fund?

When a decision is made on behalf of someone, both parties need to communicate the risks and rewards. Hence in the case of mutual funds, since the fund house invests the money on behalf of the investor, clear communication is crucial. The Securities Exchange Board Of India (SEBI) regulates mutual fund companies in India. It has made it mandatory for Asset Management Companies (AMCs) to have all information laid out in offer documents and get them vetted by it.

SAI is one of these documents and has additional information. It is referred to as Part B of the fund’s registration documents and must be made available to investors for free upon request.

What Is a Statement of Additional Information (SAI)?

SAI's full form in Mutual fund is Statement of Additional Information and as the name itself suggests, it is a document of all additional information of the mutual fund. The information in the document helps an investor understand the fund's operations and detailed financials along with other disclosures. The information includes details about the AMC, its constitution, directors & other related authorities, and financial and legal information.

Details covered in the Statement of Additional Information

The main contents of the SAI in a mutual fund are:

1. Information about Sponsor, AMC and Trustee Company

Constitution

In this section, the constitution of the mutual fund is detailed. Mutual funds have a sponsor and trustees and are registered under the Indian Trusts Act 1882. This information along with the date of SEBI registration, is mentioned here.

Sponsor

This is the information of the sponsor, which equates to the promoter of a company. The sponsor gives a certain amount as an initial contribution to the Trustees. The financial performance of the sponsor over the last three years will also be detailed here.

Trustee

The details of the trustee like name and the board of directors will be mentioned here along with responsibilities and duties. They are responsible for ensuring that the mutual fund transactions are in the best interest of unitholders and in accordance with SEBI regulations.

AMC

AMC is the company that is responsible for the daily management of the fund. They work under the trustees and their own board of directors, following SEBI regulations. They are responsible for ensuring the investment strategies are adhered to. They must comply with the risk management guidelines as per SEBI and AMFI. They need to provide timely disclosures to unitholders concerning the fund. The details of the AMC and all the key personnel is detailed here. The AMC can add to the list of key personnel suggested by the SEBI.

Service Providers

This section specifies all details like name, address, and SEBI registration number of the custodians, transfer agents, statutory auditors, legal counsel, fund accountants and collecting bankers.

Condensed Financial Information

This section will detail financial information like NAV, Dividends, annualised returns and the ratio of recurring expenses to net assets for all mutual fund schemes under the AMC during the last three fiscal years.

Additional Read: What is Dividend?

2. How to apply

Here the mutual fund company must specify how an investor can purchase the units of the scheme specified in the Scheme Information Document. The details must emphasise the procedures to be followed and provide the details of KYC requirements for unit holders.

3. Rights of Unitholders

A detailed list of all the various rights of the unitholders will be covered in this section like unit holders have proportionate rights in the ownership of the assets of the scheme, timelines for dispatch of dividend and redemption proceeds, termination of AMC by 75% of unit holders of the scheme, the circumstances under which pre-approval of unit holders is required by the Trustees and so on.

4. Investment Valuation Norms

This section shall detail the valuation of assets and properties of the scheme in accordance with the governing regulations. For example, the valuation norms for real estate will vary from gold.

5. Tax, Legal & General Information

All information related to taxation of the mutual fund schemes, KYC requirements, the Prevention of Money Laundering Act requirements, the procedure for winding up and general information on the Underwriting, Securities Lending and Borrowing by mutual funds etc is included here.

6. Others

Inter Scheme transfer of investments
Associate transactions - Details of the associate transactions in the past three years that affect the transactions of the scheme
A list of documents available for inspection at the office of the mutual fund
Investor grievance redressal mechanism

Conclusion

The information given in mutual fund SAI is to help the investor understand if their financial objectives align with that of the mutual fund. It also assists them in taking the right financial decisions. The information about the constitution, sponsor, trustees, financial information, rights, investment valuations, legal, and tax information provides an overall insight to the investor.

Additional Read: How to read Mutual Fund Statement?



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Disclaimer:
This is an investor education and awareness initiative by Nippon India Mutual Fund.
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit www.scores.gov.in . For more info on KYC, change in various details & redressal of complaints, visit mf.nipponindiaim.com/investoreducation/what-to-know-when-investing This is an investor education and awareness initiative by Nippon India Mutual Fund.

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document. Language Disclaimer:
While utmost care has been taken in translating the article into respective regional language(s), in case of any confusion or difference of opinion, article available in English language should be deemed as final. The article provided herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional advice for the readers. The document has been prepared on the basis of publicly available data/ information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of loss of profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this article. "ABOVE ILLUSTRATIONS ARE ONLY FOR UNDERSTANDING, IT IS NOT DIRECTLY OR INDIRECTLY RELATED TO THE PERFORMANCE OF ANY SCHEME OF NIMF. THE VIEWS EXPRESSED HEREIN CONSTITUTE ONLY THE OPINIONS AND DO NOT CONSTITUTE ANY GUIDELINES OR RECOMMENDATION ON ANY COURSE OF ACTION TO BE FOLLOWED BY THE READER. THIS INFORMATION IS MEANT FOR GENERAL READING PURPOSES ONLY AND IS NOT MEANT TO SERVE AS A PROFESSIONAL GUIDE FOR THE READERS."

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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