How do investors know the balance of units they hold and the value of their investments? A statement of account (SOA) helps you to verify this. Over the next couple of columns we attempt to take you through the account statement and its contents to facilitate the reading and better understanding of the document.

What is a statement of account?

A ‘Statement of Account' is a proof of your investment with the mutual fund. It can be compared to a bank statement or a passbook, which lists all the entries made by you in the form of deposits or withdrawals. In typical mutual fund transactions, two distinct types of transactions are made by any investor: One is the deposit of money which, in MF parlance, is known as subscription or purchase, and the other is the withdrawal; which is the redemption of the money invested. In other words, there are the units that you bought and units that you sold. These are displayed in the SOA to help you know the balance in your account at any given point in time.

What are the differences between the bank statement and the SOA?

The bank statement shows the balance in rupees — after deposits or withdrawals. The SOA shows the balance in units. At any given point in time, the unit balance is what remains static after subscriptions and redemptions.

For example, you may have been allotted 1,000 units for an investment of Rs 10,000 (Rs 10 per unit) on January 1, 2009. Two years later, you may have drawn Rs 5000 and your current unit balance may be 750.321. How come it is not 500?

This is because: the value of the investment has gone up (i.e per unit value has gone up above Rs 10) and so less units have been redeemed from the account. So, on March 10, 2011, the balance in your MF account is 750.321 units.

What is the value of this in rupee terms?

At any given time the value of the units in rupee terms is arrived at by multiplying the number of units by the net asset value (units * NAV). This will be shown in the summary of the SOA, which will be displayed as “market value as on date of SOA generation”.

What can you see in the SOA?

The left side of the SOA shows your name, the second and third holder if any; and the address given by you for correspondence. The telephone number appears below the address.

This is to help the fund contact you through the postal authorities/courier in case it is unable to find your address.

You will also find the folio number, which is similar to the account number in the bank.

Some Registrars also allot a Customer Identification Folio (CIF) and this is common across different folios. This is different from the folio number; in other words; you could have one CIF and multiple folio numbers.

We will see more of what appears in the SOA in our next column.

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