12. A mutual fund raised 150 lakhs on April 1, 2018 by issue of 15 lakh units at 10 per unit. The fund invested in several capital market…

CA Final · Advanced Financial Management · RTP · September 2025
12. A mutual fund raised 150 lakhs on April 1, 2018 by issue of 15 lakh units at 10 per unit. The fund invested in several capital market instruments to build a portfolio of 140 lakhs, Initial expenses amounted to 8 lakhs. During the month of April, the fund sold certain instruments costing - 44.75 lakhs for 47 lakhs and used the proceeds to purchase certain other securities for 41.60 lakhs. The fund management expenses for the month amounted to 6 lakhs of which - 50,000 was in arrears. The fund earned dividends amounting to 1.5 lakhs and it distributed 80% of the realized earnings. The market value of the portfolio on 30th April, 2018 was - 147.85 lakhs. An investor subscribed to 1000 units on April 1, 2018 and disposed it off at closing NAV on 30th April, 2018. Determine his annual rate of earnings.

Suggested Answer and Working Notes:

12. Amount in lakhs Amount in ₹ lakhs Amount in ₹ lakhs Opening Bank Balance (150 - 140 - 8) 2.00 Add: Proceeds from sale of securities 47.00 Add: Dividend received 1.50 50.50 Deduct: Cost of securities purchased 41.60 Fund management expenses paid 5.50 Capital gains distributed = 80% of (47 – 44.75) 1.80 Dividend distributed =80% of 1.50 1.20 50.10 Closing Bank 0.40 Closing market value of portfolio 147.85 148.25 Less: Arrears of expenses 0.50 Closing Net Assets 147.75 Number of units (Lakhs) 15 Closing NAV per unit (147.75/15) 9.85 Rate of Earning (Per Unit) Amount Income received (1.20 lakh + 1.80 lakh)/15 lakh 0.20 Less: Loss if units are disposed (150lakh -147.75)/15 lakh 0.15 Net earning 0.05 Initial investment 10.00 Rate of earning (monthly) 0.50% Rate of earning (Annual) 6.00%

Topics: Mutual Fund

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