Why you must read KIM, SAI & SID

Be careful: These documents are not for light reading. They are packed with legal jargon, complicated sentences, and boilerplate information to fulfill SEBI’s disclosure requirements as well as to protect fund houses from legal liabilities. These documents are key information memorandum (KIM), scheme information document (SID), and statement of additional information (SAI). Most of the investors do not take the pain of going through these important documents that are related to mutual funds.   

These are prepared by the asset management companies (AMC) about a particular scheme and are submitted to the Securities & Exchange Board of India (SEBI) for approval. They contain all the required information about the mutual fund scheme.   

SID: This document contains all the fundamental information related to the fund including all fundamental attributes like investment objective & policies, asset allocation pattern, fees, liquidity provisions, etc. It also contains information such as fund management team details along with the risks factor of the scheme and the ways to mitigate these risks as well as scheme details like load, plans & options, past performance, and benchmark. SID also contains general details relating to AMC branches, investor service centre, etc.   

SAI: This document mainly contains information about the fund house as in how the mutual fund is constituted along with information related to its sponsor, asset management company and trustee. It also consists of information related to key personnel of the AMC and associates such as registrars, custodians, bankers, auditors, and legal counsel.    

KIM: The concise version of SID is the KIM, which is attached to the application form. As the name suggests, it contains all the key information that an investor must know before investing in the scheme. KIM is made available with every application form.  

Therefore, if you’re thinking about investing in a fund, read at least KIM as it is a significant document. Reading it would help you to understand a fund’s investment policy, the amount of investment flexibility that it has, what it owns, who runs it, and how it has performed till now. However, it derives further significance due to the fact that it contains the six core points that you must know about a fund before you decide to buy its shares in the first place. The six key areas include investment objective, strategy, risks, expenses, past performance, and management.