Ch.5 · Scheme Related Information

SID, SAI and KIM Documents

50 practice questions on this topic

Under what circumstances can a mutual fund scheme be wound up as per SEBI regulations?

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EXPLANATION

A scheme can be wound up under three circumstances: (1) When 75% of unit holders by value (not by number) pass a resolution for winding up; (2) When the trustees, in their discretion, determine it is in the interest of unit holders; or (3) When SEBI directs winding up for regulatory reasons.

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What is the 'repo transaction' that debt mutual fund schemes are permitted to undertake?

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EXPLANATION

A repo (repurchase agreement) is a short-term borrowing mechanism where a scheme sells securities and simultaneously agrees to repurchase them at a slightly higher price after a specified period. Repos allow debt schemes to manage short-term liquidity needs. Reverse repos (lending cash against securities) are also used to deploy surplus cash overnight.

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What is the difference between a 'scheme' and a 'plan' in mutual fund terminology?

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EXPLANATION

A 'scheme' refers to a specific fund with its own investment mandate and portfolio (e.g., HDFC Large Cap Fund). A 'plan' is a variant within the scheme — Regular Plan vs Direct Plan (cost structure) or Growth option vs IDCW option (payout structure). All plans within a scheme invest in the same underlying portfolio.

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What is the SEBI guideline on the maximum number of schemes an AMC can have in the equity category?

A.Maximum 5 equity schemes per AMC

B.One scheme per SEBI-defined equity category, with exceptions for ETFs and index funds

C.Maximum 10 equity schemes per AMC

D.No limit on the number of equity schemes an AMC can have

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What is the Macaulay duration range for a 'short duration fund' as per SEBI categorisation?

A.1 to 3 months

B.3 to 6 months

C.6 months to 1 year

D.1 to 3 years

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What is 'scheme merger' in mutual funds and when does it occur?

A.When two AMCs combine their operations into one entity

B.When one mutual fund scheme is merged into another scheme (typically of the same AMC) for operational or regulatory reasons

C.When a scheme's equity and debt portfolios are combined into one hybrid scheme

D.When AMFI merges the ARNs of two distributors

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How is the SAI made available to investors?

A.It is sent by post to all registered investors monthly

B.It is available free of cost on the AMC's website and at AMC/RTA offices; printed copy provided on request

C.It is only available to institutional investors

D.It is available only through the distributor

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As per SEBI's 2017 categorisation, how is a 'large and mid cap fund' defined?

A.A fund investing 100% in large and mid cap companies in equal proportion

B.A fund investing minimum 35% in large cap stocks and minimum 35% in mid cap stocks

C.A fund investing at least 65% in large cap and up to 35% in mid cap

D.A fund investing at least 80% in large and mid cap companies combined

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When was the Riskometer for mutual funds mandated by SEBI?

A.2009, when entry loads were banned

B.2013, when Direct Plans were introduced

C.2015, and enhanced to 6 levels in 2021

D.2017, along with the categorisation circular

Q10

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What information about the AMC's sponsor must be disclosed in the SAI?

A.The sponsor's personal investment in mutual fund schemes

B.Sponsor's name, background, track record, financial position, and percentage contribution to AMC net worth

C.Sponsor's future plans for the AMC

D.The sponsor's other business interests unrelated to financial services

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