NISM Series-V-A: Mutual Fund Distributors Practice Exam

NISM Series-V-A: Mutual Fund Distributors Practice Exam

The NISM Series-V-A: Mutual Fund Distributors examination aims to establish a standardized minimum knowledge level for individuals involved in the sales and distribution of mutual funds, including:

• Individual Mutual Fund Distributors
• Employees of organizations engaged in the sales and distribution of Mutual Funds
• Employees of Asset Management Companies, particularly those involved in the sales and distribution of Mutual Funds

This certification initiative seeks to elevate the quality of sales, distribution, and associated support services within the mutual fund industry.

Who should take the exam?

The NISM Series-V-A: Mutual Fund Distributors exam is mandatory for anyone in India who wants to sell or distribute mutual fund products. The primary audience includes:

• Individual Mutual Fund Distributors (MFDs)
• Employees of organizations engaged in sales and distribution of Mutual Funds
• Employees of Asset Management Companies (AMCs) involved in sales and distribution
• Anyone interested in a career in mutual fund sales or distribution

Examination Learning Objectives:

Upon successful completion of the Mutual Fund Distributors examination, candidates should:

• Have a fundamental understanding of mutual funds, including their role, structure, various types of schemes, and their characteristics.
  
• Understand the mechanisms of mutual fund distribution in the marketplace, evaluate schemes, and offer appropriate recommendations of products and services to investors and potential investors.
• Gain familiarity with the legal, accounting, valuation, and taxation aspects relevant to mutual funds and their distribution.
• Acquire an understanding of financial planning as an approach to investing in mutual funds, serving as a tool for mutual fund distributors to cultivate enduring relationships with their clients.

Exam Details

• Exam Name: NISM-Series-V-A: Mutual Fund Distributors
• Exam Languages: English
• Exam Questions: 100 Questions
• Time: 120 minutes
• Passing Score: 50%

Exam Course Outline 

The NISM-Series-V-A: Mutual Fund Distributors Exam covers the given topics  - 

Topic 1: OVERVIEW OF INVESTMENT LANDSCAPE

• Investors and their Financial Goals
• Savings or Investments?
• Different Asset Classes
• Investment Risks
• Risk Measures and Management Strategies
• Behavioral Biases in Investment Decision Making
• Risk Profiling
• Understanding Asset Allocation
• Do-it-yourself versus Taking Professional Help

Topic 2: UNDERSTAND THE CONCEPT AND ROLE OF A MUTUAL FUND

• Concept of a Mutual fund
• Classification of Mutual Funds
• Growth of the mutual fund industry in India

Topic 3: LEARN THE LEGAL STRUCTURE OF MUTUAL FUNDS IN INDIA

• Structure of Mutual Funds in India
• Key Constituents of a Mutual Fund
• Organization Structure of Asset Management Company
• Role and Support function of Service Providers
• Role and Function of AMFI

Topic 4: UNDERSTAND LEGAL AND REGULATORY FRAMEWORK

• Role of Regulators in India
• Role of Securities and Exchange Board of India
• Due Diligence Process by AMCs for Distributors of Mutual Funds
• Investor Grievance Redress Mechanism
• AMFI Code of Conduct for Intermediaries

Topic 5: UNDERSTAND SCHEME RELATED INFORMATION

• Mandatory Documents
• Non-Mandatory Disclosures

Topic 6: FUND DISTRIBUTION AND CHANNEL MANAGEMENT PRACTICES

• The role and importance of mutual fund distributors
• Different kinds of mutual fund distributors
• Modes of distribution
• Pre-requisites to become Distributor of a Mutual Fund
• Revenue for a mutual fund distributor
• Commission Disclosure mandated by SEBI
• Due Diligence Process by AMCs for Distributors of Mutual Funds
• Difference between distributors and Investment Advisors
• Nomination facilities to Agents/Distributors and Payment of Commission to Nominee
• Change of distributor

Topic 7: OVERVIEW OF NET ASSET VALUE, TOTAL EXPENSE RATIO AND PRICING OF UNITS

• Computation of Net Assets of Mutual Fund Scheme and NAV
• Concept of Entry and Exit Load and its impact on NAV
• NAV, Total expense ratio and pricing of units for the Segregated Portfolio

Topic 8: UNDERSTAND TAXATION

• Applicability of taxes in respect of mutual funds
• Capital Gains
• Dividend income
• Stamp Duty on Mutual Fund Units
• Setting off of Capital Gains and Losses under Income Tax Act
• Securities Transaction Tax
• Tax benefit under Section 80C of the Income Tax Act
• Tax Deducted at Source
• Applicability of GST

Topic 9: EXPLORE INVESTOR SERVICES

• The NFO process
• New Fund Offer Price/On-going Offer Price for subscription
• Investment Plans and Services
• Allotment of Units to the Investor
• Account statements for investments
• Mutual Fund Investors
• Filling the Application Form for Mutual Funds
• Financial Transactions with Mutual Funds
• Cut-off Time and Time Stamping
• KYC Requirements for Mutual Fund Investors
• Systematic Transactions
• Operational aspects of Systematic Transactions
• Non-Financial Transactions in Mutual Funds
• Change in Status of Special Investor Categories
• Investor transactions – turnaround times

Topic 10: LEARN ABOUT RISK, RETURN AND PERFORMANCE OF FUNDS

• General and Specific Risk Factors
• Factors that affect mutual fund performance
• Drivers of Returns and Risk in a Scheme
• Measures of Returns
• SEBI Norms regarding Representation of Returns by Mutual Funds in India
• Risks in fund investing with a focus on investors
• Measures of Risk
• Certain Provisions with respect to Credit risk

Topic 11: MUTUAL FUND SCHEME PERFORMANCE

• Benchmarks and Performance
• Price Return Index or Total Return Index
• Basis of Choosing an appropriate performance benchmark
• Benchmarks for equity schemes
• Benchmarks for Debt Schemes
• Benchmarks for Other Schemes
• Quantitative Measures of Fund Manager Performance
• Tracking Error
• Scheme Performance Disclosure

Topic 12: UNDERSTAND MUTUAL FUND SCHEME SELECTION

• Scheme Selection based on Investor needs, preference and risk-profile
• Risk levels in mutual fund schemes
• Scheme Selection based on investment strategy of mutual funds
• Selection of Mutual Fund scheme offered by different AMCs or within the scheme category
• Selecting options in mutual fund schemes
• Do’s and Don’ts while selecting mutual fund schemes

APPENDIX:

• Appendix 1: Fifth Schedule of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 [Regulations 18(22), 25(16), 68(h)]
• Appendix 2: AMFI Code of Ethics
• Appendix 3: AMFI’s Code of Conduct for Intermediaries of Mutual Funds
• Appendix 4: Format of Scheme Information Document (SID)
• Appendix 5: Format of Statement of Additional Information (SAI)
• Appendix 6: Format of Key Information Memorandum
• Appendix 7: KYC Form for Individual
• Appendix 8: KYC Form for Non-Individuals
• Appendix 9: KYC Details Change Form for Individuals
• Appendix 10: KYC Details Change Form for Non-Individuals
• Appendix 11: Process for Aadhaar e-KYC of investors (resident) in the securities markets
• Appendix 12: Procedure for Transmission of Units on Death of a Unitholder
• Appendix 13 – Easy guide for New Distributors
• Appendix 14 – Indian and Global mutual fund industry.
• Appendix 15 – Additional knowledge resources