A simple problems on mutual funds, like NAV calulation and returns

1. SIMPLE PROBLEMS ON
MUTUAL FUNDS:
SOURCE: CAFINALRAJESH RITOLIA, FCASFM
MUTUALFUND

2. a) A mutual fund had a net asset value (NAV) of Rs.50 at
the beginning of the year. During the year a sum of
Rs.4 was distributed as income (dividend) besides Rs.3
as capital gains distribution. At the end of the year
NAV was Rs.55, calculate total return for the year.

3. • NAV0 = Rs.50; NAV1 = Rs.55; D1 = Rs.4; Capital Gain1 =
Rs.3
• First year Return from Units =
• (NAV1 + Dividend distribution + capital gain distribution –
NAV0)/NAV0
• = [(55 + 4 + 3 – 50)*100]/50 = 12*100/50 = 24% or 0.24

4. • Suppose further the aforesaid Mutual Fund in the next
year gives a dividend of Rs.5 as income distribution and
no capital gains distribution and NAV at the end of second
year is Rs.50. What is the return for the second year.

5. • (b) Next Year
• NAV0 = Rs.55; NAV1 = Rs.50; D1 = Rs.5; Capital Gain1 =
Rs.0
• % return during 2nd year = (50 + 5 + nil – 55)*100)/55 =
0%

6. • On 1st April 2009 Fair Return Mutual Fund has the
• following assets and prices at 4.00 p.m.
• Shares No. of Shares Market Price Per Share (Rs.)
• A Ltd. 10000 19.70
• B Ltd. 50000 482.60
• C Ltd. 10000 264.40
• D Ltd. 100000 674.90
• E Ltd. 30000 25.90
• No of Units fund = 800000
calculate: NAV of the Fund.

7. solution