Statement of Additional Information
Also written SAI · Statement of Additional Information (SAI)
The 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.
In plain language
The Scheme Information Document tells an investor about one scheme. But a lot of what an investor ought to know is not about the scheme at all — it is about the institution running it: who the sponsor and trustees are, which custodian and registrar it uses, how securities are valued, what rights unit-holders have, how to complain.
That information sits in the Statement of Additional Information (SAI). It carries statutory information about the mutual fund or AMC that is offering the scheme. Since that is the same for every scheme the fund offers, a single SAI is relevant for all the schemes of a mutual fund.
In practice the SID and SAI are two separate documents; legally, the SAI is part of the SID. Together they are the scheme related documents every investor is told to read, the primary source of information for existing and prospective investors, and the basis of the contract between investor and fund.
Every mutual fund makes its SAI downloadable from its website, the AMFI website carries the SAIs of all mutual funds, and investors have a right to ask for a printed copy.
How it works
What the SAI contains, per the workbook's table:
| Section | Content |
|---|---|
| Constituents of the mutual fund | Sponsors, AMC and trustee company; service providers — custodian, RTA, statutory auditor, fund accountant (if outsourced), collecting bankers; their experience, key personnel, rights and obligations, and condensed financial information for schemes launched in the last 3 financial years |
| How to apply | Guidance on applying |
| Rights of unit-holders | Rights to beneficial ownership of scheme assets, servicing timelines, information and disclosures, the option to exit when the scheme changes |
| Investment valuation norms | How different securities in the portfolio are valued — rules standardised by SEBI |
| Tax, legal and general information | Nominations, transfer and transmission of units, investment by minors, pledge or lien on units, taxation |
| Investor grievance | How to register a grievance |
The rules it shares with the SID: prepared in the SEBI format, in simple language; submitted to SEBI, which vets rather than approves; draft published on SEBI's website; final hosted on AMFI's website two days before the issue opens.
Updating is on a different clock from the SID:
| Document | Regular update |
|---|---|
| SAI | By the end of 3 months of every financial year; material changes updated on an ongoing basis on the fund's and AMFI's websites |
| SID (open-ended, interval) | Within one month from the end of each half-year |
| KIM | At least once a half-year, within one month from the end of the half-year |
The Key Information Memorandum summarises both the SID and SAI and must accompany every application form.
A worked example
Farida is choosing between two debt schemes from different fund houses, each Rs 5,00,000. Their SIDs look similar, so she opens each fund's SAI. Scheme details are illustrative.
| Question she has | Where the SAI answers it |
|---|---|
| Who are the sponsor and trustees, and how experienced? | Constituents of the mutual fund |
| Which registrar will service her folio? | Service providers — RTA |
| How will unlisted bonds in the portfolio be valued? | Investment valuation norms |
| Can she pledge units for a loan? | Tax, legal and general — pledge/lien |
| What happens to units if she dies? | Tax, legal and general — nomination and transmission |
| How has a scheme launched two years ago done financially? | Condensed financial information (last 3 financial years) |
| Whom does she complain to? | Investor grievance |
She notices both fund houses publish one SAI covering all their schemes — so the SAI she reads for this debt scheme is the same one she would read before investing in their equity funds.
Her distributor hands her a KIM with the application form. It summarises the SID and SAI in a few pages. If she wants the full SAI on paper, she has a right to ask for a printed copy.
If the fund house appoints a new custodian mid-year, that is a material change, updated in the SAI on an ongoing basis — she will not have to wait for the annual update, which is due by the end of June for that financial year.
Why NISM asks about it
Chapter 5 (Scheme Related Information), sections 5.1, 5.1.2 and 5.1.5, defines the SAI, gives its contents table and its update rule; Chapter 5's sample questions ask what "scheme related documents" are, who prescribes the SID/SAI format, and what the SID (as opposed to the SAI) contains. Expect a question distinguishing SAI from SID content — statutory information about the fund versus details of a scheme — and recall of the annual update deadline.
Common exam traps
- SAI = the mutual fund / AMC; SID = the scheme. "Statutory details of the mutual fund and AMC" is the SAI option, not the SID option.
- One SAI serves all schemes of a mutual fund.
- Legally the SAI is part of the SID, though published separately.
- Annual update by the end of 3 months of the financial year; material changes updated on an ongoing basis.
- Format prescribed by SEBI; documents vetted, not approved.
- Condensed financial information covers schemes launched in the last 3 financial years.
- Investors can ask for a printed copy, even though the SAI is downloadable.
- Valuation norms are in the SAI, standardised by SEBI.
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
- CustodianThe SEBI-registered entity that holds a fund's securities in accounts of its own and settles its trades, so the assets sit somewhere other than with the manager who decides what to buy.
- 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.
- Registrar and Transfer AgentThe SEBI-registered agency that keeps the investor records of a mutual fund — processing purchases and redemptions, updating folios and unit capital, and issuing account statements.
- Scheme Information DocumentThe 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.
- SponsorThe person or firm that sets up the mutual fund — applies to SEBI for registration, executes the trust deed in favour of the trustees, and puts up the capital of the AMC.
- Transmission of unitsThe transfer of mutual fund units after a unit holder dies — to the surviving joint holder, the registered nominee or a legal heir — with documents that depend on who claims and how much is at stake.
- 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.
- 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.
- 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.