NISM-Series-V-A Mutual Fund Distributors Certification Examination

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

NISM-Series-V-A

Mutual Fund Distributors Certification Examination

Test Objectives

Unit 1: Concept and Role of a Mutual Fund


1.1. Describe concept and advantages of a mutual fund
Define a mutual fund and list the functions of a mutual fund
Explain what investment objectives are and illustrate how different mutual fund
products serve different investment objectives
Explain the concept of marking to market as a feature of mutual funds and
Illustrate how the investment value changes with changes in market value
Define and distinguish the terms unit capital, assets under management, fund
running expenses and net asset value
List the advantages and limitations of a mutual fund
1.2. Describe in brief the history of mutual funds in India
Explain the factors impacting the growth of the industry at various stages of its
development
Know the key milestones
1.3. Understand and differentiate between various types of funds
Compare and contrast closed end funds and open ended funds
Differentiate various fund types in terms of their investment objective
Differentiate various fund types in terms of their investing horizon
Differentiate various funds in terms of their risk
Explain the features and types of debt funds
Explain the features and types of equity funds
Explain the features and types of hybrid funds
Explain the features and types of International funds, and other funds that a
mutual fund distributor in India encounters
Compare and Contrast Fund of Funds, ETFs and regular MF schemes

Unit 2: Fund Structure and Constituents


2.1. Understand the legal structure of mutual funds in India
Describe the structure of mutual funds in India
Explain with illustrations the role of the sponsor, trustee and Asset Management
Company (AMC)
Explain the regulatory provisions with respect to sponsor, trustee and AMC

NISM‐Series‐V‐A: Mutual Fund Distributors Certification Examination Page 1 of 5


NATIONAL INSTITUTE OF SECURITIES MARKETS
Established by the Securities and Exchange Board of India

2.2. List other Fund Constituents


Name the constituents involved in the structure of a mutual fund
Identify the functions of each mutual fund constituent
Explain the regulatory provisions with respect to other mutual fund constituents

Unit 3: Legal and Regulatory Environment


3.1. Describe role of regulators in India
Define the role of SEBI in regulating mutual funds
Name the regulatory authority for each category of fund constituents
Understand the concept of a self regulator
List the functions of AMFI
Understand the AMFI Code of Ethics
3.2. Know investment restrictions and related regulation
Describe the relationship between investment policy and investment objective
Indicate the SEBI norms on portfolio diversification pertaining to investment
management
3.3. Understand Investors rights and obligations
Identify the rights of investors in a mutual fund
Indicate the service standards mandated for a mutual fund towards its investors

Unit 4: Offer Document


4.1. Understand regulatory aspects of an offer document
Define an NFO and list the marketing steps involved in an NFO
Define the role of an offer document and the objectives of information disclosure
in an offer document
Compare and contrast the objectives and contents of the Statement of Additional
Information (SAI) and Scheme Information Document (SID)
Explain the regulatory requirements that govern the contents and format of the
SID and SAI
4.2. Understand regulatory aspects of a Key Information Memorandum (KIM)
Define the KIM and contrast it with the SID, SAI
List the contents of the KIM
Explain the regulatory provisions governing the KIM

Unit 5: Fund Distribution and Sales Practices


5.1. Understand who can invest and types of investors
List investors who can invest and those that cannot invest in mutual funds in
India
Indicate the source of information on eligibility of investors to invest in a scheme
of a mutual fund
Differentiate between institutional and individual investors

NISM‐Series‐V‐A: Mutual Fund Distributors Certification Examination Page 2 of 5


NATIONAL INSTITUTE OF SECURITIES MARKETS
Established by the Securities and Exchange Board of India

5.2. Describe various distribution channels for mutual funds


Classify traditional distribution channels into individual and institutional channels
Discuss internet & stock exchange brokers as newer channels
Describe the pre-requisites to be fulfilled to become a distributor of a mutual fund
Describe the key elements covered in an agreement between a distributor and a
mutual fund
5.3. Detail existing sales practices and commission structure
Describe the arrangement for payment of commissions between the distributor
and the mutual fund
Identify the regulatory requirements governing payment of commissions to
distributors
Classify commissions into initial or upfront and trail commissions
Define the basis of charging trail commissions
Describe AMFI Code of Conduct and SEBI guidelines governing sales practices
applicable to mutual funds

Unit 6: Accounting, Valuation and Taxation


6.1. Understand accounting and expenses
Compute net assets and NAV and describe the requirements pertaining to
calculation and announcement of NAV
Explain the factors affecting the NAV of a mutual fund scheme
Explain the basis of pricing of transactions in a mutual fund
Explain the time-stamping requirement for mutual fund transactions
Describe the requirements relating to charging of expenses to a mutual fund
scheme
Identify expenses that can be charged to a scheme and those that cannot be
charged and the limits thereto
Describe key accounting and reporting requirements applicable to mutual funds
6.2. Explain in brief the valuation process carried out by mutual funds.
6.3. Understand applicability of various taxes and know related regulations
Explain the tax provisions applicable to a mutual fund
Define the tax provisions applicable to distribution of dividend by a mutual fund
Explain the taxability of dividends and capital gains in the hands of a mutual fund
investor
Determine the applicability of Securities Transactions Tax based on type of
transaction and scheme
Basics of Setting off gains and losses under Income Tax Act

NISM‐Series‐V‐A: Mutual Fund Distributors Certification Examination Page 3 of 5


NATIONAL INSTITUTE OF SECURITIES MARKETS
Established by the Securities and Exchange Board of India

Unit 7: Investor Services


7.1. Describe purchase and redemption transactions in a mutual fund
Explain KYC requirements & Demat Account concept
Explain the process for fresh and additional purchase in a mutual fund
Describe the additional documentation requirements applicable to institutional
investors.
Describe the requirements pertaining to payment instruments accompanying an
application form
Explain the processes relating to redemptions by investors
Describe the contents and periodicity of Statement of account to the investor
Explain the process for Nomination and Pledge
7.2. Describe investment plans and services
Differentiate the features of a dividend, growth and dividend re-investment
options in a mutual fund.
Explain the processes relating to of systematic investment plans
Explain the processing relating to systematic withdrawals and transfers
Describe other investor services and facilities offered by mutual funds.

Unit 8: Risk, return and performance of funds


8.1. Understand the concept of return on investment
Calculate the various kinds of returns, such as simple, annualized and
compounded returns. (Including MS Excel Functions)
Explain why different types of returns may be used to evaluate different types of
funds
Outline the SEBI norms regarding return representation of mutual funds in India
Identify and define the factors that may affect mutual fund performance
8.2. Explain risks in fund Investing with a focus on investors
Evaluate the risks in different type of mutual funds
Identify the sources of risk in an equity fund
Identify the sources of risk in a debt fund
Classify mutual funds based on their risk
8.3. Define and describe benchmarking of performance
Explain the concept of benchmarking performance
Identify the basis of choosing an appropriate performance benchmark
Describe the use of market benchmarks to evaluate equity fund performance
Describe the use of market benchmarks to evaluate debt fund performance
Describe benchmarking relative to other investment products
Explain the concepts related to fund manager performance

NISM‐Series‐V‐A: Mutual Fund Distributors Certification Examination Page 4 of 5


NATIONAL INSTITUTE OF SECURITIES MARKETS
Established by the Securities and Exchange Board of India

Unit 9: Scheme Selection


9.1. Understand how to select mutual fund schemes
List the steps in selecting equity funds and classify funds based on portfolio
characteristics and investment strategy
List the steps in selecting debt funds and Identify debt funds that meet the
investment objective of the investor
List the steps in evaluating a money market fund and identify factors impacting
their performance
List the steps in evaluating balanced mutual funds and evaluate factors impacting
their performance
9.2. Identify the sources of data to track mutual fund performance

Unit 10: Selecting the Right Investment products for Investors


10.1. Identify financial and physical assets
Classify assets into physical and financial assets
Identify the features of physical assets such as gold and real estate and the
needs of the investor that they fulfill
List the financial assets available for investment by an investor and their key
features

Unit 11: Helping Investors with Financial Planning


11.1. Understand basics of financial planning
Define financial planning
Relate financial planning to financial goals and the time horizon for their
achievement
Explain the objective of financial planning
List the benefits and identify the need for financial planning to the investor
11.2. Define and describe life cycle and wealth cycle in financial planning
Explain the need for tools to categorize investors’ needs
Link the financial planning needs to the life cycle stage of the investor
Describe the stages in the wealth cycle model of investor
Identify the features of each stage and link them to investment needs

Unit 12: Recommending Model Portfolios and Financial Plans


12.1. Define and describe risk profiling
12.2. Understand asset allocation
Why asset allocation is done
Fixed & Flexible Asset Allocation
Strategic & Tactical Asset Allocation
12.3. Describe the steps in developing a model portfolio

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