This chapter describes the administrative functions associated with managing a mutual fund, separated under four headings:
- Investment portfolio – maintenance and records of the assets of the fund.
- Valuation, pricing and dealing – dealing in the shares or units of the fund with investors.
- Investors or participants – administration and records for the share- or unit holders, including settlement, maintenance of the register and the allocation of income.
- Communicating with investors – statements, fund reports and accounts tell investors how the fund is progressing. Meetings give investors the opportunity to talk to the fund managers.
7.1 INVESTMENT PORTFOLIO
The investment portfolio comprises the investments held by the mutual fund. Most funds will have between 50 and 100 different holdings, and some will have in excess of 100 holdings. It is essential, therefore, that precise and up-to-date details are maintained and readily available, both of transactions and the resulting portfolio, and of the rights attaching to individual holdings, especially in relation to income, whether dividends or interest.
Purchases and sales
Each time the investment manager buys or sells an investment there are key details to be recorded about the transaction:
- date and time;
- description of the investment, name of company, type of share or stock;
- price paid or received;
- amount, number of shares or amount of stock;
- consideration or proceeds;
- rate and amount of commission and other ...