Scheme Information Document
Also written SID · Scheme Information Document (SID)
The offer document setting out everything about a particular scheme that a prospective investor ought to know before investing — prepared in SEBI's format, vetted but not approved by SEBI.
In plain language
"Please read all scheme related documents before investing." Every mutual fund communication carries that line. The documents it means are two: the Scheme Information Document (SID) and the Statement of Additional Information (SAI).
The SID is about one scheme. In the workbook's words, it sets forth the information about the scheme that a prospective investor ought to know before investing. The SAI covers the mutual fund and AMC as a whole; the Key Information Memorandum (KIM) is a summary of both that must accompany every application form.
The SID is not just information — it is part of a contract. The units are offered through the scheme related documents; by signing the application and paying, the investor accepts the offer; by issuing units, the fund completes the contract. That is why the principle of caveat emptor — let the buyer beware — applies. An investor is presumed to have read and understood the documents, and cannot later claim to be unaware of a fact that was disclosed in them.
How it works
Preparation and SEBI's role.
| Rule | Detail |
|---|---|
| Format | Prescribed by SEBI; contents must follow the prescribed sequence; the fund may add any disclosure it considers material |
| Language | Simple, clear, concise and easy to understand |
| SEBI review | SEBI does not approve or disapprove; it gives observations, which must be incorporated — the documents are "vetted", not approved |
| Drafts | Draft SID and SAI are public documents on SEBI's website |
| Final documents | Hosted on AMFI's website two days before the issue opens; every fund lets investors download SIDs of current schemes |
| Legal technicality | The SAI is legally part of the SID, though in practice they are separate documents |
Validity and updating (open-ended and interval schemes):
- An SID remains effective until a material change occurs (other than a change in fundamental attributes); changes are then filed with SEBI and communicated to investors or notified by newspaper advertisement.
- First update within six months from the end of the half-year in which the scheme was launched; thereafter within one month from the end of each half-year, using data as at the end of September and March.
- Change in fundamental attributes: addendum issued and displayed on the AMC website immediately; public notice in an English national daily and a regional-language newspaper; SID revised after the exit option period, not less than 30 days from the notice date.
- Other changes: addendum issued and displayed immediately, circulated to distributors and Investor Service Centres, and attached to all KIMs and SIDs in stock; the latest addendum is part of the KIM and SID.
Where the SID shows up elsewhere: the asset allocation that expresses the scheme's investment policy is disclosed in it; the benchmark is named in it; a first-time investor should check its "Who can invest?" section; and minimum investment amounts appear in the SID and KIM.
A worked example
Neha invests Rs 1,00,000 in a new equity scheme through its NFO. Eight months later she redeems after the NAV falls and is charged an exit load of 1 per cent — Rs 900 on her redemption value of Rs 90,000. She complains that nobody told her. Figures are illustrative.
The exit load structure was disclosed in the SID and summarised in the KIM that accompanied her application form. Under caveat emptor, by signing the form she legally accepted the offer's terms, and she cannot claim at a later date that she was unaware of a disclosed fact. The complaint fails on that ground — though she can still use the grievance redressal process.
Now suppose that four months after launch, the AMC changes the load structure for future investments. It issues an addendum, displays it on its website immediately, and circulates it to distributors so it is attached to every KIM and SID in stock. That is an "other change".
If instead the AMC proposed changing the scheme's investment objective — a fundamental attribute — Neha would receive written communication, a public notice would appear in two newspapers, and she would have at least 30 days to exit at NAV without exit load. Only after that window would the SID itself be revised.
At Rs 90,000, that no-load exit would save her the Rs 900 she paid in the first case.
Why NISM asks about it
Chapter 5 (Scheme Related Information), sections 5.1 and 5.1.1–5.1.5, defines the SID, its relationship with the SAI and KIM, the "vetted not approved" position and the updating rules. Four of Chapter 5's sample questions touch it: which documents "scheme related documents" means (SID and SAI), who prescribes their format (SEBI, asked twice), and what the SID contains (key details of a particular scheme). Expect caveat emptor and the addendum procedure as well.
Common exam traps
- SID = one scheme; SAI = the mutual fund and AMC, common to all schemes.
- "Scheme related documents" = SID and SAI — not the trust deed, the factsheet or the AMC's balance sheet.
- SEBI prescribes the format, not AMFI, and SEBI vets rather than approves.
- Final documents go on AMFI's website two days before the issue opens.
- Legally, the SAI is part of the SID.
- Caveat emptor: the investor cannot later claim ignorance of anything disclosed.
- Fundamental attribute change: exit option of not less than 30 days, then the SID is revised. Other changes: addendum immediately.
- The addendum is part of the scheme related documents and must accompany the KIM.
Where this is taught
- Series V-A · Chapter 5: Scheme Related Informationintroduced here
- Series II-B · Chapter 10: Mutual Fund Productsintroduced here
- Series V-D · Chapter 5: Scheme Related Informationintroduced here
- Series V-B · Chapter 5: Scheme Related Informationintroduced here
Related terms
- Exit loadA charge levied when an investor redeems units, calculated as a percentage of NAV and deducted from it, usually only if the units are sold within a stated holding period.
- Key Information MemorandumThe short summary of the SID and SAI that SEBI requires to accompany every mutual fund application form — the one scheme document an investor is guaranteed to be handed.
- Mutual fundA trust registered with SEBI that pools money from many investors and invests it in securities on their behalf — not a different product from shares and bonds, but a different way of owning them.
- Statement of Additional InformationThe scheme related document carrying statutory information about the mutual fund or AMC offering a scheme — one SAI for all the fund's schemes, updated every year and legally part of the SID.
- BenchmarkThe independently published index a scheme's performance is measured against, chosen to match its investment objective, asset allocation and strategy, and disclosed in the Scheme Information Document.
- Fundamental attributesThe core features of a scheme — its investment objectives, policies and terms — on which investors relied when they invested. Changing them requires notice to every unit-holder and a no-load exit at NAV.
- Official Point of AcceptanceA location a mutual fund has formally designated to receive transaction requests, where the application is time-stamped — and that stamp, not the moment the investor handed the form over, decides which NAV applies.
- Product labellingSEBI's 2013 requirement that every mutual fund scheme carry a label stating its objective, asset class, suitable holding period and risk-o-meter reading, to curb mis-selling.
- Style driftA fund manager departing from the investment style the scheme promised — such as a value fund filling up with fully-valued front-line stocks — so investors carry risks they did not sign up for.
- Risk-BandThe five-level pictorial risk meter used for Specialized Investment Fund strategies, from level 1 (lowest) to level 5 (highest), in place of the six-level risk-o-meter used for mutual fund schemes.
- Fund factsheetThe monthly scheme summary an AMC publishes voluntarily — portfolio, performance, risk measures and investment details in one document. It is an AMFI best practice, not a statutory requirement.
- Execution only platformA SEBI-recognised digital platform that carries out subscription, redemption and switch transactions in direct plans of mutual fund schemes only — registered with AMFI (Category 1) or as a stock broker (Category 2).
- Investment Strategy Information DocumentA Specialized Investment Fund's scheme document, equivalent to a mutual fund's SID, required to include scenario analysis showing the investor's expected loss from market movements.
- Interval fundA scheme that is largely close-ended but opens for subscription and redemption during pre-specified transaction periods, with compulsory stock exchange listing to give an exit in between.
- Standard warningThe mandatory 14-word disclaimer in every mutual fund advertisement — "Mutual Fund investments are subject to market risks, read all scheme related documents carefully." — with no words added or removed.
- AMFIThe Association of Mutual Funds in India — the association of all registered AMCs, which registers distributors through the ARN and sets codes of conduct, but is neither a regulator nor a self-regulatory organisation.
- Multi Cap FundAn open-ended equity scheme investing across large, mid and small caps, with at least 75% of total assets in equity and at least 25% each in large-cap, mid-cap and small-cap companies.
- Credit risk fundAn open-ended debt scheme investing at least 65% of total assets in corporate bonds rated AA or below (excluding AA+) — accepting higher credit risk in pursuit of higher yields.
- Caveat emptorLatin for "let the buyer beware" — the principle that a mutual fund investor is presumed to have read the scheme documents and cannot later claim ignorance of anything fairly disclosed in them.
- Investment policyHow a scheme will achieve its investment objective, disclosed in the SID through exactly two aspects: its asset allocation and its investment style.
- AddendumA notice issued to record an interim change to a scheme's SID, SAI or KIM before those documents are next updated. It is part of the scheme related documents and must accompany the KIM.
- Portfolio disclosureThe published list of the securities a scheme holds, with market values and ISINs — monthly within 10 days for all schemes, and fortnightly within 5 days, with yields, for debt schemes.