The popularity of various mutual funds and management companies is growing. A share, unlike stocks and bonds, has no par value. The estimated value of a share is determined by law depending on the value of the assets that make up a particular mutual fund.
Instructions
Step 1
A share is a registered security that gives its owner (investor) the right to a certain share of the property of a mutual fund. Owning a share gives each investor the same amount of rights, including the right to repay his share at its current value, i.e. receive a sum of money corresponding to the share.
Step 2
The estimated value of an investment unit is determined by the following formula: RSP = NAV / Q, where: NAV is the net asset value of the investment fund; Q is the total number of investment units.
Step 3
The net asset value of a mutual fund is determined depending on its type. For an open type fund, this value is calculated at the end of the working day, for an interval type fund - at the date of the interval closing.
Step 4
The net asset value of a fund is the difference between the value of its assets and the amount of liabilities that must be settled at the expense of these assets. The difference is considered at the time the net asset value is determined, i.e. at the end of the day or interval, by the fund's management company.
Step 5
A share is not a physical security; the name and details of the shareholder are entered in a special Investor Register. Based on this system of records, the number of shares issued is calculated at the time the estimated value was determined. The register is managed by a special registrar organization that provides data to the management company.
Step 6
The method for determining the estimated value of a share does not depend on the number of newly arriving and leaving shareholders. When issuing and redeeming a share, the estimated value is changed by the amount of the markup and cost discount, respectively. The surcharge for the purchase of a share cannot exceed 1.5% of the estimated cost, and the discount - no more than 3%.
Step 7
The surcharge to the estimated value is the amount of compensation that the management company receives to cover the costs of issuing shares to investors. A discount on the estimated value is provided to the management company to reimburse the costs of the share redemption procedure.
