STATUTORY & OTHER DISCLOSURES AND COMMUNICATION OF GENERAL POLICIES TO MUTUAL FUND AND EQUITY CLIENTS OF THIS FIRM
All mutual fund distributors have to pass an examination conducted by the National Institute of Securities Markets (NISM). Thereafter, they have to register with the Association of Mutual Funds in India (AMFI) and obtain an AMFI Registration Number (ARN). I fulfill both these requirements. My AMFI distributor code is ARN-29043. When investing in mutual funds, you have two options. You can invest directly with the mutual fund or proceed through a distributor. Investing directly with mutual funds is less expensive. However, you will receive neither advice nor services from me if you choose the direct option.
2. AMFI Code of Conduct for Distributors of Mutual Funds:
I am bound by a code of conduct prescribed by AMFI which is displayed on the notice board of my office. You are entitled to demand photocopies of this code of conduct or ask for the code of conduct to be emailed to you absolutely free of charge. This code of conduct can also be accessed on the AMFI website (www.amfiindia.com) and the websites of individual mutual funds. You are strongly urged to familiarise yourself with the said code of conduct and form an opinion about whether I am adhering to the same. If you have the slightest reason to believe that I am deviating from the said code, I would be grateful if you bring this to my notice immediately. If in your opinion remedial action is not taken by me within a reasonable time, or you are not satisfied with such remedial action, it is in your own interest to change distributors or go direct.
3. Important documentation pertaining to mutual fund investment plans advised by us for you, or chosen by you:
Comprehensive documentation about specific mutual fund investment plans is freely available at my office as well as on the websites of all mutual funds. The most comprehensive document is the Scheme Information Document (SID). Next is the Statement of Additional Information (SAI). The SID mainly contains information about mutual fund schemes. The SAI primarily contains information about the mutual fund, its asset management company, its trustees, sponsors, etc. The SID should be read together with the SAI and not in isolation, because the SAI is part of the SID. The Key Information Memorandum (KIM) is essentially a summary of the SID and SAI. As per SEBI regulations, every application form is to be accompanied by the KIM. I reiterate that the SID, SAI and KIM of all mutual fund investment plans that I distribute are available at my office and on the websites of mutual funds free of cost. Furthermore, these are amended from time to time and addendums pertaining thereto are also available on the websites of the mutual funds and through my office. I strongly recommend that all mutual fund investors make the effort to go through these important documents and other useful publications such as reports and fund fact sheets published by all mutual funds regularly.
4. Risk, Risk Management, Past Performance and Investor Education:
All investments, including mutual fund investments, are fraught with risk. This is the first and most important point that you as a mutual fund investor must understand and accept.
Second, risk is of two types – risk that cannot be managed (for example betting, gambling and games of pure chance) and risk that can be managed. The risk in equity and mutual fund investments can very definitely be managed. This is achieved by employing excellent risk management tools which can control and significantly reduce risk. Some of these risk management tools are diversification, asset allocation, the setting of investment time horizons, systematic investment and regular reviews.
Third, past performance of any mutual fund investment plan is neither a predictor nor a guarantor of future returns. No one can predict future returns. By investing wisely however, you can increase the probability that you will obtain optimum returns and manage risk. Investment author Frank L Netti points out that “poor investors seek the highest possible returns, while great investors seek the highest probability of good returns”.
Fourth, educating yourself about investment is important. You can demand free copies of my basic papers on personal finance and investment. I have four such papers. The first gives you a brief overview of personal investment. The second is a guide to personal financial planning. The third suggests a few good investment strategies for mutual fund investments. The fourth is a guide to equity investment. Whether in the physical or electronic forms, the latest versions of these papers are available to you free of cost.
Finally, I also urge you to take steps to increase your own knowledge of personal investment and personal finance. To get you started, you can ask me for my basic papers on investment and my PowerPoint presentation on personal financial planning. This presentation is available only by email. I also have a list of recommended reading, which contains the world’s best books and literature on investment. All these can be obtained by you free of charge.
5. Disclosure about commissions earned by us on your investments:
I do not charge advisory fees or transaction fees to any of my investors for mutual fund investments. I do receive commissions from mutual funds on investments routed through me. Comprehensive details about such commissions are contained in “brokerage structure” documents supplied to me at regular intervals by mutual funds with whom I am associated. Printouts of these brokerage reports are displayed in full on the notice board of my office and also on my company’s website www.simplus.co.in
Since all brokerage reports of mutual funds with which I am associated are displayed, you can be aware of commissions in the form of trail and other commissions received by me for the different schemes of various mutual funds from which schemes recommended to you are chosen. You are also entitled to obtain printouts/photocopies of these reports or have them emailed to you free of charge. I also make it clear that under no circumstances will I rebate or pass back commissions to investors.
6. Complaints and investor grievance redressal:
If you have any grievances against my company, please address the same to me either in person or by telephone or in writing, including by email. My address and contact details appear at the head of this disclosure document. I inform you that while you can contact any of our staff for formalities, documentation, procedures and routine work, investor grievances must be brought straightaway to the personal attention of the top management. You may therefore direct your complaints about mutual fund and equity investments to any one of the following:
Mr. Deepak K Rao, Founder Director
Ms. Padmashree, Director
We try our best to redress grievances within two working days. Do not hesitate to revert to me if any grievance is not redressed within a week. Apart from grievances, your suggestions and feedback are also always welcome.
You have my assurance that any feedback or complaints from you will not affect relations between us in any way, even if it is found subsequently that there was no fault on my part or on the part of my staff.
I do not accept any costly gifts from mutual funds or other financial institutions. I also do not participate in business augmentation contests which such organizations come out with from time to time. If I recommend an investment plan or mutual fund, it is solely because I believe it addresses a financial need of the investor to whom it is recommended.
For SIMPLUS FINANCIAL CONSULTANCY PRIVATE LIMITED.,
Deepak K Rao