diff --git a/docs/charts.md b/docs/charts.md
index 0414136ce..37e7fe038 100644
--- a/docs/charts.md
+++ b/docs/charts.md
@@ -848,8 +848,10 @@ considerations in mind:
 - The `Chart.yaml` will be overwritten by the generator.
 - Users will expect to modify such a chart's contents, so documentation
   should indicate how users can do so.
-- All occurrences of `<CHARTNAME>` will be replaced with the specified chart
-  name so that starter charts can be used as templates.
+- All occurrences of `<CHARTNAME>` in files within the `templates` directory
+  will be replaced with the specified chart name so that starter charts can be
+  used as templates. Additionally, occurrences of `<CHARTNAME>` in
+  `values.yaml` will also be replaced.
 
 Currently the only way to add a chart to `$HELM_HOME/starters` is to manually
 copy it there. In your chart's documentation, you may want to explain that