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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

Which statement about a mutual fund scheme's units is correct?

Each unit of a mutual fund scheme represents a proportionate undivided interest in the scheme's assets. Investors cannot instruct the fund manager on security selection, dividends are not guaranteed, and the NAV of a unit changes as the market value of the portfolio changes.

  1. AEach unit represents a proportionate undivided interest in the scheme's assetsCorrect
  2. BUnit holders can direct which securities the fund manager buys
  3. CUnit holders are entitled to a fixed dividend every year
  4. DUnit value never changes during the life of the scheme

Explanation

A unit represents an equal, proportionate share in the scheme's portfolio. Investors do not direct investment decisions, dividends are not fixed or guaranteed, and unit value (NAV) moves with the market value of the portfolio.

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