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What Is a Statement of Additional Information?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 03 September 2016
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Statement of additional information is a term that is used in reference to mutual fund disclosure requirements in the sense that it provides some extra information to interested parties regarding certain components of the mutual fund.Strictly speaking, the information provided by statements of additional information is not in any way vital to the parties who may request them due to the fact that the information is already covered in the prospectus of the mutual fund in question. For legal reasons of additional disclosure to people like potential investors who may want to see such a document, the law requires that the statement of additional information must be given to them at no cost. Typically, the contents of the statement of additional information include a section describing the asset management company, with information relating to the employees and whatever human capital they might possess. Other information includes financial data, the sponsor of the mutual fund, a section detailing the rights that are due to the unit holders of the mutual fund, and details regarding legalities, the trustees and tax.

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Such facts on the statement of additional information is mainly for the benefit of the potential investor and also for the benefit of existing investors who may wish to evaluate the investment opportunities in the particular mutual fund under consideration. The inclusion of information regarding the sponsor identifies the mutual fund sponsor as well as further information regarding him or her in the form of a condensed summary. Usually, a sponsor will appoint trustees for the mutual fund, and they may be individual trustees who will constitute a Board of Trustees or they will be a trustee company engaged to manage the fund. In the case of the individual trustees that make up the Board of Trustees, information regarding each member will be included in the statement of additional information, such as their names, professional qualifications and a brief summary regarding the members.

The statement will also list the responsibilities and other duties of an identified asset management company. One of the legal duties is that of due diligence, which requires the asset management company to apply the utmost care in the management of the mutual fund assets. Another inclusion will be the fees by such an asset management company, including the information about the key employees of the asset management company.

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