OPERATIONS & RETURNS & TAXES

Operations

Mutual funds invest money collected from the investors as agreed in the Offering Document. Professional fund manager decides which assets to invest in based on the fund's investment objective.

When you invest in a mutual fund, you buy "units" of the fund based on the current value of the assets in the fund, which is called the Net Asset Value or NAV.

The total amount of money in the fund is called the Assets Under Management or AUM. It increases as new investments come in and decreases as existing investors redeem their units.

The value of each unit of the fund changes daily based on the current market price of the assets held by the fund. If the value of the assets in the fund increases, the value of your investment increases too.

The fund may make money for investors through dividends or interest payments on the assets it holds. If the value of the assets in the fund goes up, the value of your investment goes up too. And, if the overall value of the fund goes up, the value of your investment goes up as well.

Returns

Mutual funds can make money for investors in three main ways:

Dividend or Interest Payments: When the mutual fund earns income from the assets it holds, such as stocks or bonds, it may distribute that income to its investors in the form of dividends or interest payments.

Capital Gains: If the value of the assets in the mutual fund goes up over time, and the fund manager sells those assets for a profit, the mutual fund realizes a capital gain. At the end of the financial year, the mutual fund may distribute those capital gains to its investors.

Increased Net Asset Value (NAV): The value of a mutual fund is calculated based on the current market price of the assets it holds, minus any expenses and liabilities. If the value of those assets goes up over time, and the expenses and liabilities remain the same, the mutual fund's Net Asset Value (NAV) increases. This means that the value of each unit of the mutual fund also increases, potentially leading to a higher return for investors.

Overall, mutual funds provide an easy way for people to invest in a diversified portfolio of assets managed by a professional, potentially making money over time.