Institute of

Accounts
Business and
Finance

COURSE CODE: COURSE DESCRIPTION: LECTURE No.:

CAP MRK CAPITAL MARKET
 One-time fee and charged only to every new
investment that you place to your fund.
 Also, refers to the amount you pay to the mutual fund
upon making an investment.
 This is the money every investor (big or small) of the
fund pays to investment companies every year for
doing its job of managing the investment.
 The management fee is the percentage of the fund's
total assets that is paid annually to the fund
managers.
 It is not an out-of-pocket expense for the investor but
is part of the expenses of the mutual fund. Hence, it
affects the fund's performance.
 Fee charged when you redeem shares placed within 6
months.
 Mr. X is preparing for his future and wished to invest in
mutual funds.
 He started investing 5,000 pesos in a fund that
charges 2% Entry Fee.
 The NAVPS upon purchase was P4.7271.
 The current NAVPS is P4.9276.
Questions:
1. How many shares did Mr. X purchased in his 5,000
investment?
2. What’s the current value of his investment?
3. How much did he earn?
 It is the value of one share of a mutual fund.
 It fluctuates with the value of its underlying
investments.

NAVPS=(Market Value of All Securities Held by Fund +

Cash and Cash Equivalents Holdings – Fund
Liabilities)/Total Fund Shares Outstanding
 Example:
◦ Close of trading yesterday, the mutual fund
held P10,500,000 worth of securities and
P1,000,000 of cash. The fund incurred
liabilities amounting to P500,000. If the fund
had 1,000,ooo shares outstanding
yesterday, then NAVPS was?
1. If an investor purchases shares in a fund for P36,
receives cash distributions of P1.27 and sells the
shares after one year for P41.29, what is the
percentage return on the investment?
2. What is the net asset value of an investment
company with P10,000000 in assets, P600,000 in
current liabilities, and 1,200,000 shares outstanding?
3. Twelve months ago, you purchased the shares of a
no-load mutual fund for P22.50 per share. The fund
distributed cash dividends of P0.75 and capital gains
of P1.25 per share. If the NAV of the fund is currently
P24.45, what was your annual return on the
investment?