Multiple choice

If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should

  1. accept the application without wasting time

  2. reject the application outright

  3. refer to the offer document

  4. accept the application as a direct application
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Charitable trusts have specific investment restrictions under tax laws and may require special documentation. The distributor must refer to the offer document to verify whether the scheme accepts investments from charitable trusts and what additional documentation is required. Blindly accepting (Option A) or rejecting (Option B) would be improper. Treating it as a direct application (Option D) ignores the special compliance requirements.

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