Fund Valuations continued

Detail	GBP
Mid market value of the securities in the fund (100 different shareholdings valued independently) These are known as the underlying assets	50.000.000
Cash	400.000
Total Net Asset Value of the Fund	50.400.000
Number of units / shares in issue	25.200.000
Therefore NAV per unit	= £ 2

Some fund management companies also charge a promotion charge accruing to the Management Company (not the fund) which can be as high as say 6% of the sum invested in the fund - this may be added when investi· Some fund management companies also charge a promotion charge accruing to the Management Company (not the fund) which can be as high as say 6% of the sum invested in the fund - this may be added when investing or deducted when selling the shares back to the Management Company - management companies use this income as a means of rewarding introducers of business and paying for other promotion expenses

 

· It follows from the method of valuation (valuing the underlying securities) and the fact that shares in the fund are created or cancelled according to demand from investors that the value of fund shares depends entirely on the value of the underlying securities and not on demand for and supply of the fund shares (unlike the underlying securities themselves whose prices depend on the usual market forces of demand against a fixed supply of shares i.e. stock market prices)

 

· Open-end funds come in a variety of legal forms depending on the territory under whose law they are organised or the perceived tax situation of the targeted investors - mostly companies but sometimes trusts or other structures - however the basic investment principles are always the same Types of o/e funds