 Fund Accounting |
The net asset value (NAV) of funds vary to mirror the daily fluctuations of the prices of portfolio securities, and the composition of the portfolio is affected by the investment decisions of the fund manager. Consequently, it is essential that the NAV accurately reflect the current market value of the securities and other components of the trust portfolio.
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Calculation and Classification of NAV |
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A. Calculation of NAV per unit of Contractual-type funds |
The NAV per unit is the price at which beneficial certificates are purchased and sold and represents the total value of the investment trust per unit. The Act and the trust deed stipulate that the manager must calculate and make available to the public the NAV per unit for each of the investment trusts it manages, except for those closed-end investment trusts that are listed on the Korea Exchange. The NAV per unit is calculated by dividing the total value of the assets less liabilities, after accounting for securities and foreign currency translation gains/losses, by the total outstanding number of units in the investment trust. Generally, NAV per unit is expressed as the unit price for 1,000 units and is rounded up to the second decimal place.
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B. Calculation of Taxable NAV per unit of Contractual-type funds |
The NAV per unit for tax purposes is the value used for assessment of withholding tax liability at the time of redemption or maturity of beneficial certificates. It is calculated by first separating taxable income from non-taxable income, and then by deducting the proportionate trust expenses from each type of income. The resulting taxable income amounts shall be added to the principal, and the total divided by the total number of units outstanding is the taxable NAV.
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C. NAV of Corporate-type funds |
| The NAV means the price per share and it is required to be posted at the branch and headquarters of its sales agents and announced publicly by electronic documents, etc. The methods for calculation and valuation of securities in the fund assets are the same as those of contractual-type funds. In the case of corporate type funds, taxable NAV per unit shall not be calculated. |
