Page 250 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 12: Mutual Fund

(b) Dhanaraksha, These offer some or all of the following benefits: Notes
Dhansahyog,
Dhanavriddhi

Schemes of LIC Mutual i. Life Insurance cover
Fund
ii. Accident Insurance cover
iii. Reinvestment of annual dividends or reasonable
dividend
iv. Safety of capital
v. Reasonable capital appreciation
vi. Liquidity: repurchase facility after initial lock-in period
of three years
vii. Units are not transferable, but bank loan facility is
available
viii. Tax exemption on dividends under Section 80L and tax
benefits under long-term capital gains are available

Other Categories
Sector Specific Schemes: These are the funds/schemes that invest in the securities of only those
sectors or industries as specified in the offer documents e.g. pharmaceuticals, software, fast
moving consumer goods (FMCG), petroleum stocks, etc.
Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of
the Income-tax Act, 1961 as the government offers tax incentives for investment in specified
avenues e.g. Equity Linked Savings Schemes (ELSS).
Off-shore Funds: These funds will have non-residential investors and are regulated by the provision
of the foreign countries where these are registered. Further, these funds are governed by the
rules and procedures laid down for the purpose of approving and monitoring their performance
by the Department of Economic Affairs, Ministry of Finance and the directions of RBI.
Asset Management Mutual Funds: These are also called Asset Management Companies (AMCs).
These have special characteristics of dealing with assets other than securities. These funds can
acquire various assets and give them on lease basis to needy lessees.

Self Assessment

Fill in the blanks:
9. The concept of mutual funds in India dates back to the year ..........................................

10. .......................................... are also called asset management companies (AMCs).

12.5 Net Asset Value

NAV is calculated as follows:
NAV =

Fair market value of Scheme's Investments + Receivables + Accrued income + Other assets
– Accrued expenses – Payables – Other liabilities
Number of units outstanding

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