NISM Series-V-B: Mutual Fund Foundation Practice Exam

NISM Series-V-B: Mutual Fund Foundation Practice Exam

The NISM Series-V-B: Mutual Fund Foundation exam aims to establish a standardized level of fundamental knowledge for a new category of mutual fund distributors, in accordance with SEBI circular CIR/IMD/DF/21/2012 dated September 13, 2012. This category includes individuals engaged in the sale and distribution of straightforward and high-performing mutual fund schemes, such as:

• Postal agents
• Retired government and semi-government officials (grade III and above or equivalent) with a minimum service tenure of 10 years
• Retired educators with a minimum service tenure of 10 years
• Retired bank officers with a minimum service tenure of 10 years, and other similar individuals (such as Bank correspondents) as may be notified by AMFI/AMC periodically.

The certification aims to elevate the standards of sales, distribution, and associated support services within the mutual fund industry.

Who should take the exam?

The NISM Series-V-B: Mutual Fund Foundation exam targets a specific group of individuals who want to sell and distribute simple and performing mutual fund schemes. This includes:

• Retired professionals
• Postal agents
• Others designated by AMFI/AMC

Exam Objectives

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

• Understand the fundamentals of mutual funds, including their roles, structures, various types of schemes, and their characteristics.
• Understand how mutual funds are distributed in the market, how specific schemes are assessed, and how suitable schemes can be recommended to potential investors by this group of distributors.
• Understand the regulations and guidelines pertaining to the distribution of specific products.
• Grasp the basics of financial planning as an approach to investing in mutual funds.

Exam Details

• Exam Name: NISM Series-V-B: Mutual Fund Foundation
• Exam Languages: English
• Exam Questions: 50 Questions
• Time: 120 minutes
• Passing Score: 50

Course Outline 

The Exam covers the given topics  - 

I. Investment Landscape

1. Saving or Investments?
2. Different Asset Classes
3. Four broad financial needs
4. Different types of financial goals
5. Role of mutual funds in achieving different financial goals

II. Concept and Role of a Mutual Fund

1. Concept of a Mutual fund
2. Classification of Mutual Funds
3. Growth of the mutual fund industry in India

III. Legal Structure of Mutual Funds in India

1. Structure of Mutual Funds in India
2. Key Constituents of a Mutual Fund
3. Organization Structure of Asset Management Company
4. Role and Support function of Service Providers
5. Role and Function of AMFI

IV. Mutual Fund Products for the New Cadre of Distributors

1. Introduction to Mutual Fund Products for New Cadre of Distributors
2. Liquid Schemes / Money Market Schemes
3. Index Funds
4. Diversified Equity Schemes
5. Retirement Benefit Schemes
6. Fixed Maturity Plans (FMPs)

V. Scheme Related Information

1. Mandatory Documents
2. Non-Mandatory Disclosures

VI. Fund Distribution and Channel Management Practices

1. The role and importance of mutual fund distributors
2. Different kinds of mutual fund distributors
3. Modes of distribution
4. Pre-requisites to become Distributor of a Mutual Fund
5. Revenue for a mutual fund distributor
6. Commission Disclosure mandated by SEBI
7. Due Diligence Process by AMCs for Distributors of Mutual Funds
8. Difference between distributors and Investment Advisors
9. Nomination facilities to Agents/Distributors and Payment of Commission to Nominee
10. Change of distributor

VII. Performance of Mutual Funds

1. Calculation of returns of mutual fund schemes
2. Concept of loads and application of exit load in calculating transaction price
3. Concept of risk in a mutual fund investment
4. Concept of risk-adjusted return
5. Scheme Benchmarks for mutual fund schemes

VIII. Taxation

1. Applicability of taxes in respect of mutual funds
2. Capital Gains
3. Dividend income (IDCW option)
4. Stamp Duty on Mutual Fund Units
5. Setting off of Capital Gains and Losses under Income Tax Act
6. Securities Transaction Tax
7. Tax benefit under Section 80C of the Income Tax Act
8. Tax Deducted at Source
9. Applicability of GST

IX. Investor Services

1. The NFO process
2. New Fund Offer Price/On-going Offer Price for subscription
3. Investment Plans and Services
4. Allotment of Units to the Investor
5. Account statements for investments
6. Mutual Fund Investors
7. Filling the Application Form for Mutual Funds
8. Financial Transactions with Mutual Funds
9. Cut-off Time and Time Stamping
10. KYC Requirements for Mutual Fund Investors
11. Systematic Transactions
12. Operational aspects of Systematic Transactions
13. Non-Financial Transactions in Mutual Funds
14. Change in Status of Special Investor Categories
15. Investor transactions – turnaround times

X. Legal and Regulatory Environment

1. Role of Securities and Exchange Board of India
2. Investor Grievance Redressal
3. AMFI Code of Conduct for Intermediaries
4. AMFI Code of Ethics
5. AMFI’s Code of Conduct for Intermediaries of Mutual Funds