What are SAI and KIM in Mutual Funds

The Statement of Additional Information, or SAI, is a thorough document that is prepared and shared by the AMC. It basically serves as an extension to the SID, providing further information about the fund and how it operates. The SAI's main goal is to give investors in-depth information that goes above and beyond, what is contained in the Scheme Information Document. An SAI consists of the following:

• Information about the Asset Management Company or AMC of the scheme, promoter of the AMC and trustee of the scheme
• Detailed information about the AMC’s key personnel, key banking associates, custodians, auditors and legal counsels.

Although the structure can differ from mutual fund to mutual fund, the following is a list of the common components and content you can anticipate to see in a SAI format:

• Constitution of the Mutual Fund
• Sponsor Details
• Trustee Details (with details of the directors)
• AMC Details (with details of AMC directors and Key Personnel)
• Service Provider Details (Custodian, transfer agent, legal counsel, fund accountant, collecting bankers and statutory auditor)
• Summarized Financial Information (with historical per unit statistic details excluding any data related to any liquid scheme whatsoever)
• Procedure for applying to the scheme
• KYC requirement of the scheme
• Rights of the unitholders of the said scheme
• Valuation of Assets and properties of the scheme
• Tax, Legal and General Information
  • about taxation on investing in mutual funds
  • about nomination facility, KYC requirements, transfer and transmission of scheme, duration of the scheme, etc.
  • information about underwriting, inter-scheme transfers of investments, securities lending and borrowing by the Mutual Funds.

Another important document offered by mutual fund companies is the Key Information Memorandum or KIM. It is a concise and uniform document that compiles key facts about the mutual fund. The KIM's reader-friendly layout makes it simple for investors to understand crucial information quickly. Simply speaking, KIM gives a bird’s eye view of the scheme to the investors, especially if they haven’t gone through the detailed Scheme Information Document (SID).

Investors must be familiar with the structure of a Key Information Memorandum (KIM) in a mutual fund, to use it successfully. There are basic components you may find in a KIM, even if the format may vary slightly between different fund companies.

Here is a breakdown of a standard KIM format used by AMCs at large:

• Investment Objective
• Scheme’s Asset Allocation Pattern and Risk Profile
• Plans and Options in the scheme
• Applicable NAV (Net Asset Value) after the units are made available for sale/purchase
• Minimum application amount or minimum number of units
• Benchmark index
• Name of the fund manager
• Name of the Trustee
• Performance of the scheme in past
• Expenses of the scheme (loan structure and recurring expenses)
• Taxation (for unit-holders)
• Daily NAV publication (when, where and how it will be published)
• Contact details for Investor Grievances
• And more.

• Brief overview: KIM is a short reference guide that investors may use to learn the basics of a mutual fund without having to read through extensive documentation. It does it in a way that makes important information plain and simple to understand.
• Information about the mutual fund: KIM gives basic details about the mutual fund, such as its name, kind and the asset management firm in charge of managing the fund. Investors can now easily find the fund they are interested in, thanks to this.
• Investing objectives: KIM describes the main objective and investing objectives of the fund. The objectives of the fund might be compared to the investors' personal investing objectives.
• Risk assessment: A ‘Risk-O-Meter’ or other similar graphical representation that rates the fund's level of risk on a scale is frequently included in KIM. This gives investors an easier way to compare the risk of the fund to that of other investment possibilities.
• Expense ratio: The annual cost of operating the fund expressed as a percentage of its assets is what KIM calls the expense ratio. Investors can evaluate the fund's cost-effectiveness in comparison to other funds immediately.
• Performance snapshot: KIM generally contains a brief summary of the fund's historical performance, however, it is less thorough than the performance information contained in the prospectus or annual reports. Investors can get a basic picture of the fund's past performance from this.
• Minimum investment: KIM frequently states the minimum investment needed to invest in a fund. Investors can use this information to ascertain whether they satisfy the requirements of the fund.
• Load charges: KIM will make note of any front-end or back-end load charges (fees assessed when purchasing or selling fund shares). These fees might be disclosed upfront to investors.
• Dividend distribution details: Information on the fund's dividend distribution policy, such as the frequency and mode of dividend payouts, may be provided by KIM. For investors looking for income, this is helpful.
• Fund category and type: KIM classifies a fund as either equities, debt, hybrid or thematic depending on its investing aim. Additionally, it indicates whether the fund is closed-ended or open-ended.