Axis mutual Fund has the following assets in scheme Axis blue chips at the close business on 31st

marc

Market Price Per

Company No. of Shares
Share(₹)
NTPC 25000 20
Power grid 35000 300
SBI 29000 380
Cargo Ltd 40000 500

The total number of units of scheme Axis blue chips are 10 Lacks. The Scheme has accrued expenses o
 e close business on 31st march,2014.

heme has accrued expenses of Rs 2,50,000 and other Liabilities of Rs 2,00,000. Calculate the NAV per unit of the scheme Axis blue chips
he scheme Axis blue chips
2.a

2.b
A mutual fund had a net asset value (NAV) of ₹50 at the beginning of the ye
During the year a sum of ₹.4 was distributed as income (dividend) besides ₹
as capital gains distribution. At the end of the year NAV was ₹.55, calculate
total return for the year
Suppose further the aforesaid Mutual Fund in the next year gives a dividend
₹5 as income distribution and no capital gains distribution and NAV at the e
of second year is ₹.50. What is the return for the second year.
 An investor bought units of a mutual fund for ₹.20.425. At the end of the year, the worth
of his holding was ₹.21.85 and he had received a dividend of 17.5%. Using the simple
3.a total return method, compute his return.
 A has invested in three Mutual Fund Schemes as per details below:
3.b

A B C
Date of Investment 01.12.2019 01.01.2020 01.03.2020
Amount of investment ₹.50,000 ₹.1,00,000 ₹.50,000
Net Asset Value (NAV) at entry date ₹ 10.50 ₹ 10.00 ₹ 10.00
Dividend received up to 31.03.2020 ₹ 950.00 ₹.1,500 ₹. Nil
NAV as at 31.03.2020 ₹.10.40 ₹.10.10 ₹.9.80

Required: What is the effective yield on schemes to Mr. A up to 31.03.20?

Particular A B C
Amt of investment 50000 100000 50000
NAV(BOP) 10.5 10 10
No. of units purchased(BOP) 4761.90476 10000 5000
Dividend Received 950 1500 0
Dividend per units 0.1995 0.15 0
NAV(EOP) 10.4 10.1 9.8
% return 0.9476% 2.5000% -2.0000%
Period in months 4 3 1
Annualise return% 2.84% 10.00% -24.00%
Mr. Abdul has invested in three Mutual fund schemes as per de

Scheme X Scheme Y
Date of Investment 01.12.2018 01.01.2019
Amount of Investment Rs.500000 Rs.100000
NAV at Entry date Rs.10.50 Rs.10.00
Dividend Received upto
31.3.2019 Rs.9,500 Rs.1,500
NAV as at 31.3. 2019 Rs.10.40 Rs.10.10

You are required to calculate the effective yield as per annum b

chemes as per details below:

Scheme Z
01.03.2019
Rs.50000
Rs.10.00

NIL
Rs.9.80

d as per annum basis in respect of each of the three schemes to Mr. Abdul upto 31.03.2009
ul upto 31.03.2009
 A Mutual Fund having 300 units have shown its NAV of ₹.8.75 and
₹.9.45 at the beginning and at the end of the year respectively. The
Mutual Fund has given two options:
(i) Pay ₹.0.75 per unit as dividend and ₹.0.60 per unit as a capital gain.
5.1 (ii) These distributions are to be reinvested at an average NAV of ₹.
8.65 per unit.
(iii) What difference it would make in terms of return available and
which option is preferable?

Anil purchased 200 units of Birla Mutual Fund at ₹45 per unit on
31.12.2009. In 2010, he received ₹1 as dividend per unit and a capital
gains distribution of ₹2 per unit.
(i) Calculate the return for the period of one year assuming that the
NAV as on 31.12.2010 was ₹48 per unit.
(ii) Calculate the return for the period of one year assuming that the
NAV as on 31.12.2010 was ₹48 per unit and all dividends and capital
gains distributions have been reinvested at an average price of ₹46 per
5.2 unit
Solution 5.1 (i) % return 23.43% (ii) When dividend & CG are re-invested @8.65
Total amount receive 405
Additional units purc 46.82081 units
Total no. of units at the EOP 347
Closing value of investment 3277.457
Opening Investment 2625

% return (CV-OV)/OV 24.86%

Option 2 is better because holding period return is more in

Solution 5.2 (i) % Return 13.33%

(ii) Total dividend & Gain 600
No. of units purchased by invest
NAV(bop) 48
Total no of 213.0435
Closing val 10226.09
Opening va 9000

% return 13.62%
Option 2 is better because holding period return
ested @8.65

ng period return is more in option 2

13.04348

cause holding period return is more in option 2

 The following information is extracted from Thomas Mutual Fund’s Scheme: Assets
Value at the beginning of the month ₹.65.78 Annualised Return 15% Distribution made
in the nature of Income and Capital Gain (Per Unit) ₹0.50 and ₹.0.32 You are required
6.1 to:
(a) Calculate the month end NAV of the mutual fund scheme.
(b) Provide a brief comment on the month end NAV

Mr A on 1.7.2012, during the initial offer of some Mutual Fund invested in 10,000 units
having face value of ₹.10 for each unit. On 31.3.2013 the dividend operated by the MF
6.2 was 10% and Mr A found that his holding period return was 115%. On 31.03.2014, 20%
dividend was given. On 31.3.2015 Mr A redeemed all his balance of 11,296.11 units
when his holding period return was 202.17%. What are the NAV as on 31.3.2013,
31.03.2014 and 31.3.2015?
6.1 NAVo 65.78
NAV1 X
return P.a 15% monthly 0.0125

0.0125= (X+0.50+0.32-65.78)/65.78
0.82225 X-64.96
x=65.78

6.2 For the year 2012-13

Investment date 1.7.12
Amount invested 100000
NAV 1.7.12 10
Dividend received 10% 10000
HPR 115%
115%=(CV+10000-100000)/100000
CV=205000
NAV 31.3.2013 20.5
If dividend is reinvested (31.3.2013)
additional units purch 487.8049
Total no of units 10488

2013-14
Dividend as on 31.3.2 20%
Dividend amt 20976
No of units sold( 31.3. 11296.11
During 2013-14 by re-investing dividend
Units purchsed during 808
Therefore,NAV as on 31.3.14 Amount of dividend/no.of units
NAV(31.3.2014) 25.95

for 2014-15
HPR 202.17%
Value of invt (1.7.2012 100000
Value of invt(31.3.201 X
 202.17% (CV-100000)/100000
Cv 100000*202.17%=CV-100000
CV 302170
NAV 26.75
7.1

7.2

7.3
You can earn a return of 14% by investing in equity shares on your own. You are
considering a recently announced equity mutual fund scheme where the initial
issue expenses are 6%. You believe that the mutual fund scheme will earn 16.5%.
At what recurring expenses (in percentage terms) will you be indifferent between
investing on your Own and investing through the mutual fund?

7.1

Mr. A can earn a return of 16% by investing in equity shares on his own. Now he is
considering a recently announced equity based mutual fund scheme in which initial
expenses are 5.5% and annual recurring expenses are 1.5%. How much should the
mutual fund earn to provide Mr. A return of 16%

Mr. X earns 10% on his investments in equity shares. He is considering a recently

floated scheme of a Mutual Fund where the initial expenses are 6% and annual
recurring expensed are expected to be 2%. How much the Mutual Fund scheme
should earn to provide a return of 10% to Mr. X?

7.2

7.3
10=(X-2)*(1-0.06)
X=12.64%
 Investor may invest directly in own equity 14%
Investor invst in MF scheme 16.50%
Intitial exp 6%
Recurring exp X
The investor wants to be indifferent
between MF and own investment
Return from own invt=effective return provided by MF

14%=(return from MF-Recurring exp)*(1-issue exp)

14%=(16.5%-X)*(1-0.06)
16.5-X=14/.94

X=1.6064%
If MF earn 16.5% then its effective return will be 14% after issue and RE

16=(X-1.5)*(1-0.055)
X=18.43% Effective return =(18.43%-1.5(*(1-0.55)=16%

10=(X-2)*(1-0.06)
Effective return=(12.64%-2)*(1-0.06)=10%
 The NAV of ABC Fund on January 6, 2002 was ₹25.8750. If the fund
charged 1.75% as entry load and 0.50% as exit load, what are the
sale and repurchase prices to the investor?
8.1

The NAV of MF is Rs.15. The entry load is 2.25%. What amount of

8.2 investment is required to purchase 100 units?

The NAV of an equity fund was 38.1250. The fund charged 2.25% as
entry load and 0.25% as exit load. If an investor wants to invest Rs.
8.3 64000 into this fund, what is the number of units he will get?
8.1 NAV 25.875
Entry load 1.75%

Exit load 0.50%

Purchase price per unit to investor=NAV on the date of purchase+(Entry fees*NAV 26.32781

Sale price per unit=NAV as on date of sale-(Exit Load%*NAV) 25.74563

8.2 NAV 15
Entry load 2.25%
Purchase per 15.3375
No of units purc 100
Total amount of i 1533.75

8.3 NAV 38.125

Entry load 2.25%
Exit load 0.25%
PP/Unit 38.98281
Total Inve 64000
No of unit 1642
Sale price/ 38.02969
 You are considering investing in one of following 2 NFOs of 2
Mutual Funds, issue price per unit = ₹10.
A: Entry load 2.25%. No exit load
B: Entry load 0.90%, Exit load as per the following table:
# Redemption on before the expiry of 1 year 0.50%
# Redemption after expiry of 1 year but before the expiry of 2
years 0.40%
#Redemption on or after expiry of 2 years but before the expiry
of 3 years 0.30%
9 #Redemption on or after expiry of 3 years but before the expiry
of 4 years 0.20%
# Redemption on or after expiry of 4 years 0.10%
In which mutual fund will you invest if your time horizon of the
investment is 1 year, 4 years? Assume the rate of ROI of the
mutual fund will be 12% p.a. (Net of expenses)
Time horiz 1 year Time horizon is 4 year
A MF NAV 10
Entry load 2.25%
PP/unit 10.225
Return of 12%
NAV at the 11.2 10*(1.12)^4
Exit load 0%
Sale price/ 11.2
Annual ret (Sale price-PP)/pp
(11.2-10.225)10.225
9.54%
B MF NAV 10
Entry load 0.90%

PP 10.09
Return to 12%
NAV at the 11.2
Exit load 0.50%

Sales price 11.144

AR 10.45%
10.1 A mutual fund holds a 91 day treasury bill, issued at Rs.95.25. Redeeming at Rs.100. If there are 34 days
10.2 A mutual fund holds a 90 days commercial paper. issued at Rs. 92.72, redeeming at Rs.100. 45 days later
at Rs.100. If there are 34 days to maturity, what is the value of the instrument on its books? 10.1 value of T-bill=Issue price+Ac
eming at Rs.100. 45 days later. What is the value of the instrument on its books? Issue price
Reedeemab
Interest
Value of investment(t-bill) (a
Accrued in

Value of T-B

10.2
value of T-bill=Issue price+Accrued interest
95.25
100
4.75
Value of investment(t-bill) (after 57 days of issue or before 34 days of maturity)
2.975275

98.22527
A mutual fund scheme has 1 m units outstanding. As on 31.03.2007, its assets and
liabilities regarding the scheme are as follows:
(a) Market value of listed and traded shares and debentures ₹50m
(b) Unlisted shares: 10000 equity shares of ₹10 each of ABC Ltd. EPS of ABC is ₹10. PE
ratio of a similar listed and traded company (say XYZ) is 12.
(c) Listed but not traded debentures: 1000 9% debentures of ABC Co Ltd, face value
₹1000, YTM of similar listed and traded debenture (say XYZ) is 9.5%
(d) Cash and cash equivalent ₹3m
(e) Outstanding expenses ₹0.10m
solution Value of listed and traded share and debenture 50
Valuation of unlisted shares
EPS (ABC)*PE of similar company=10*12=120 1200000
Value of non-traded debenture
YTM of listed and traded debenture=9.5%
Redemption period of debenture is not given, so we asume contant interest for indefinite p
MV of Debenture=Int/ytm
Interest value=9%*1000=90
947.368421052632 per denture value

MV of 1000 debenture=1000*947.37 947370

Value of all assets and Invt Rs million

Listed share 50
Unlisted share 1.2
MV of debenture 0.94737
Cash 3
Total Assets 55.14737
LESS:-Liabilities 0.1

Net Assets Value(NAV) 55.04737

No of units 1

NAV per unit 55.04737

ntant interest for indefinite period
Based on the following data, estimate the net assets value (NPV) on per unit basis of a Regu

Listing Equity shares at cost (ex-dividend)

Cash in hand
Bond & Debentures at cost
of these, Bond not listed & Not quoted

Other fixed interest securities at cost

Dividend accrued
Amount payable on shares
Expenditure accrued

Current realizable value of fixed income securities of the face value of ₹ 100
is ₹ 96.50.
Number of units (₹10 face value each) : 275000
All the listed equity shares were purchased at a time when market portfolio
index was 12,500. On NAV date, the market portfolio index is 19,975. There
has been a diminution of 15% in unlisted bonds and debenture valuation.
Listed bonds and debentures carry a market value of ₹ 7.5 lakhs, on NAV
date. Operating expenses paid during the year amounted to ₹ 2.24 lakhs.
n per unit basis of a Regular Income Scheme of a Mutual Fund:

₹(in lakhs)
40
2.76
8.96
2.5

9.75
1.95
13.54
1.76

Value of equity share

cost*todays index/index on the date of purchase 63.92
Cash 2.76
Unlisted bond 2.5*(1-0.15) 2.125
Bond and Debenture listed (MV) 7.5
Dividend accrued 1.95
Other fixed income securities=9.75*96.50/100 9.40875
Total assets 87.66375
Less:- Liabilities
Amount payable on share 13.54
Expenditure 1.76
TL 15.3
NAV 72.36375
NAVper unit 26.31409
Based on the following information, determine the NAV of a regular income scheme on per un

Listed shares at cost (ex-dividend)

Cash in hand
Bonds and debentures at cost
Of these, bonds not listed and quoted
Other fixed interest securities at cost
Dividend accrued
Amount payable in shares
Expenditure accrued
Number of units (Rs.10 face value)
Current realizable value of fixed income securities of face value of Rs.100
The listed shares were purchased when index was
Present index is
Value of listed bonds and debentures at NAV date

There has been a diminution of 20% in unlisted bonds and debentures. Other fixed interest se
ular income scheme on per unit basis:

₹ Crores
20 Value of listed share
1.23 Cash in hand
4.3 Bonds and Deb. Not listed
1 Bond and Debenture listed
4.5 Other fixed income securities
0.8 Dividend accrued
6.32 Total assets
0.75 Less:-Accounts payable
20 lacs Expenditure accrued
106.5 Total liabilities
1000 NAV (crore)
2300 No of units (in crores)
8 NAV per unit

ntures. Other fixed interest securities are at cost.

46 46
1.23
0.8 0.8
8
4.5
0.8
61.33
6.32
0.75
7.07
54.26
0.2
271.3
Calculate the NAV of a mutual fund from the following information. 1.4.2009 outstanding units
1 crore of Rs.10 each Rs.10 crores [NAV Rs.16 crores]
Other information
(i) 20 lakhs units were sold during the year at Rs.24 per unit
(ii) No additional investments were made during the year and as at the year end 50% of the
investments held at the beginning of the year were quoted at 80% of book value.
(iii) 10% of the investments have declined permanently 10% below cost.
(iv) At the year end 31.03.2010 outstanding liabilities were Rs.1 Crore.
(v) Remaining investment were quoted at Rs.13 crores.
No. of units O/S as on 1.4.2009 1 cr
Face value per unit 10
Total NAV (1.4.2009) 16 cr
NAV per unit(1.4.2009) 16
2009-10
No of units issued during 2009-10 20 lacs 0.2 cr
Issue price per unit 24
Value of invt(.2 cr) in crores 4.8
(ii) 50% invest@ 80% 6.4
(iii) 10% of invt 1.44
(iv) 40% of invt traded at 13 Cr 13
O/s Liabilities 1
NAV 24.64
Total No of units o/s 1.2
NAV per unit 20.53333
The investment portfolio for a mutual fund schemes includes 10000 shares of A Ltd and
8000 shares of B Ltd acquired on 30th october 2016.The cost of A Ltd shares is ₹ 20 and
B Ltd is ₹ 30.The market value of these shares at the end of 2016-17 were ₹19 and ₹32
respectively.Show accounting entries in the books of the fund in the accounting year
2016-17.

suppose that shares of both of the companies were disposed off on 31.5.2017 realizing
₹18.50 per A shares and 33.50 per B Ltd share
Date
31.10.2016 Invest in A Ltd Dr 200000
Invest in B Ltd DR 240000
To Cash 440000
31.317 P& La/c Dr 10000 10000
To provision for dep in ivt
31-Mar Invt in B share 16000
To Unrealised reserve(B) 16000

1.4.17 Unrealised reserve 16000

To Invest in B 16000
(Being 8000 shares of B
ltd,appreciated @₹ 2 each per
share on the closing date has
been reversed at the beginning of
the next year)

Cash 185000
Loss on disposal 15000
To invt in A 200000
31.5.2017
( ₹200000 of A ltd shares sold for
₹ 185000 and loss incurred
₹15000)

Provision for Dep Dr 10000

P& La/c Dr 5000
To loss on disposal of investment 15000

(Earlier provision for dep in invt.

Provided being reversed on
disposal to total share of A ltd.
And the balance amount debited
to P& L a/c'
S.no Particular
1 Mutual Fund

How Mutual Funds work for

2
you

3 NAV

3.1 Return of Units of Mutual Fund

Calculation of Net Asset Value

4
of Units of Mutual Fund

5 Calculation of Return from MF

Calculation of return from MF

6
if Income is reinvested

Calculation of NAV on the basis

7
of Return

8 Costs incurred by Mutual Fund

 Calculation of Issue Exp,
8.1
Recurring Exp, Actual return of
MF

9 Entry fees and Exit fees in MF

Calculation of Return from

10 units of MF in case of Entry or
Exit Fees

Calculation of NAV after

11 calculating Value of Assets of
MF

12 Open Ended Scheme

13 Close ended scheme

14
Dividend income earned

15

Disposal of Investment
Summary
A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. A mutual fund is t
the cautious investor as it offers an opportunity to invest in a diversified professionally managed basket of securities at a relati
1.The money collected from the investors is invested by a fund manager in different types of securities.
2. These could range from shares and debentures to money market instruments depending upon the scheme’s stated objectiv
3. The income earned through these investments and capital appreciation realized by the scheme are shared by its unit holder
owned by them.
4. Mutual Fund could be the best avenue for risk averse

1.This is the value per unit of a scheme on a particular day called the valuation day.
2.It is the value of net assets of the fund.
3. The investors' subscription is treated as the capital in the balance sheet of the fund and the investments on their behalf are
4. The NAV is calculated for every scheme of the MF individually.

There are three important points which need to be remember:-

1. It is the net value of all assets less liabilities. NAV represents the market value of total assets of
the Fund less total liabilities attributable to those assets.
2. NAV changes daily. The value of assets and liabilities changes daily.
3. NAV is computed as a value per unit of holding.
1. NAV per unit = (Net assets of the scheme)/ Number of units outstanding
2. NAV per unit = (MV of all Investment + other assets of the scheme - Liabilities of the scheme)/Number of units outstanding
3.Net assets of the scheme = Market value of traded investments + Estimated value of non traded listed securities + Estimated
Receivables + Accrued Income + Other Assets - Accrued Expenses - Payables - Other liabilities

There are three types of income from owning mutual fund units
1.Cash Dividend
2Capital Gains distribution
3.Changes in NAV per unit [Unrealised capital gain]
4. % Return on units of MF = (Closing NAV + Income distributed + Capital Gain Distributed –Opening NAV)/NAVOpening
1. NAV must be given or calculated as of the date of reinvestment of dividend
2.No of Units to be purchased from reinvestment = Dividend Received/NAV as on date of reinvestment
3. In this case Initial no of units and closing no of units will be different
4.% Return on units of MF = (Closing Investment – Opening Investment)/Opening Investment
5. Closing Investment = No of units at Closing*NAV at Closing

If opening NAV and Return is given, then

Closing NAV = Return*opening NAV/100 + opening NAV – Dividend – Capital Gain

There are 2 type of expenses incurred by Mutual Fund

1. Initial Expenses attributable to establishing a scheme under a Fund known as issue exp
2. Ongoing recurring expenses (Management Expense Ratio) which is made up of
(a) Cost of employing technically sound investment analysts
(b) Administrative Costs
(c) Advertisement Costs involving promotion and maintenance of Scheme funds.
For Calculating Issue Exp or Recurring Exp, Following equation would be used.
- Indifferent Point between Own Investment and Investment by MF
- Return from own investment by Investor = Effective return provided by MF to Investor
- Effective return provided by MF to Investor = (Return earned by Mutual Fund – Recurring Exp p.a.)*(1-Issue Cost)

1.Entry Fees is charged to investor at the time of Purchase of Units of MF by investor

2. Exist fees is charged to investor at the time of sale of units of MF by investor
3. Purchase Price of units of MF for Investor = NAV as on date of purchase + Entry Fees
4.Sale Price of units of MF for Investor = NAV as on date of purchase - Exit Fees

Return = (Sale – Purchase)/Purchase

Asset Values : Valuation Rule

1.Liquid Assets e.g. cash held:- As per books
2.All listed and traded securities (other than those held as not for sale):- Last closing price quoted in a stock exchange immedia
3.In case security is traded in more than one exchange, the price quoted in a exchange where the security is mostly traded.
4.Debentures and Bonds - Closing traded price or we can calculate Value of Debenture or BOND on YTM basis
5.Valuation of Unlisted Equity Shares:- EPS of Company whose value is to be calculated*PE ratio of Comparable Company afte
6.Fixed Income Securities [Debenture, Bond]:-Issue price + Intt Accrued for the period from date of issue to date of valuation

Open Ended Scheme do not have maturity period. These schemes are available for subscription and repurchase on a continuo
conveniently buy and sell unit. The price is calculated and declared on daily basis. The calculated price is termed as NAV. The k
liquidity.
Close ended scheme has a stipulated maturity period normally 5 to 10 years. The scheme is open for subscription only during
of launce of the scheme. Investor can invest of at the time of initial issue and there after they can buy or sell from stock excha
To provide an exit rout some close ended schemes give an option of selling bank (repurchase) on the basis of NAV. The NAV is
basis.

Dividend income earned by a scheme should be recognised not on the date of the dividend is declared but on the date the sha
basis.For investment which are not quoted on the stock exchange dividend income must be recognized on the date of declara

1.P& L arising from disposal investment is difference between selling price and cost.
2.The profit or loss arising on disposal of investment is recognised fully in P & L a/c. in the same year in which they are purcha
3.If an investment is sold in any year subsequent to year of purchase,loss on disposal is charged first against provision for depr
available and the balance of loss if any should be charged directly to P& L a/c