I dont understand this?

here is an article i found on HDFC mutual fund


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How do I redeem Mutual Fund units over the Phone or Net?

Only Mutual Funds that are bought (purchased) through the Investment Services Account can be redeemed through this service.

On NetBanking:
The customer has to mention the Investment Services Account Number, the scheme name and the number of units or value that he wishes to redeem. The customer can choose to redeem fully OR partially by specifying the number of units and amount.

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Question : can you please tell what are "the number of units" means ?

does it have any relation to NAV ?

does it mean, at the end of the year, i shall get the units . and i have to encash/redeem the units ?

suppose, i have got 100 units after one year ....how much money shall i get ?


how Mutual Fund's are encashed ?

can you please explain with an example ?

thnaks

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I dont understand this concept of "units".

can anybody please explain a bit with an example ?

does it applicable to all Mutual Fund ?

Let's do this by example. HDFC growth fund has a net asset value of 26.4770 and a sale price of 27.0730. The sale price is greater than the asset price because the fund has a front end load. A unit is 1 share having a value of 26.4770. When you cash in the shares at the end of a year or whenever, you receive the net asset value 26.4770. 100 shares today whould have a cash in value of 2647.70. But because of the front end load would cost you 2707.30.

The number of units does have a relation to the net asset value. So let us suppose that you wish to invest 5000 in the growth fund. You would today receieve 5000/27.0730=184.6858 units. The net asset value of your investment today would be 184.6858 x 26.4770 = 4889.93.

You have the option of either, when you wish to redeem your shares of either redeeming a set amount as 1000.00 or a number of units as say 20 or 30, etc.

Normally, a mutual fund pays a distribution at the end of a year if they have made a capital gain. You have the option of taking the capital gain as either a cash distribuition or as more shares of the fund.

I can not tell you what the value of this fund will be a year from now. That depends on how well the market performs.
I can tell you how much an investment a year ago would be worth today.

On April 29, 2005 the purchase price was 16.797.

On April 28, 2006 the net asset value was 26.447.

So if you had purchase 5000 worth of the growth fund on April 29, 2005 you would have received 297.67 units.

On April 28, 2006 those units would be worth 7872.54.

If you purchase directly from HDFC, you can redeem your units directly from them. If you purchase through a broker, you redeem through the broker.

You do not need to redeem your units after one year.

Some companies like ICICI Bank offers you online services where you can directly Buy or Redeem Mutual Fund Units with the click of a Button. No need to fill in forms of the Fund Company. But in that case you donot get certificate directly from the fund house, but you get monthly statements from the banks to give you details of your holdings.

Click the below Link to get all your doubts abt Mutual Funds cleared.

Happy Investing