Net Asset Value is the market value of the securities held by the scheme. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date.

The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. Monthly performance of schemes is published in the national newspaper as the Mutual Fund Regulation, 2010.  On the basis of performance of the mutual funds, the investors should decide when to go into or go out from a mutual fund scheme.

The price applicant is charged while applying in an open-ended scheme is called sales price. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unit holders.

Units of Laxmi Value Fund I (LVF1) is openly traded at NEPSE. Investors can purchase units of Laxmi Value Fund I from secondary market in NEPSE.

Under close-ended schemes, applicants are provided with the unit certificates after certain period of allotment of units as per securities allotment guidelines. Under open-ended schemes, unit certificates are issued by Laxmi Capital Limited (Fund Manager) after certain period of receiving the application but the units are allotted immediately. A detail regarding the sales and repurchase and certificate issue is mentioned in the offer document (Bibaran Pustika) of the schemes.

Securities Board of Nepal (SEBON) has prescribed minimum disclosures in the offer document (Bibaran Pustika). An applicant, prior to investing in a scheme, should carefully read the offer document (Bibaran Pustika) including features of the scheme, risk factors, initial issue expenses and recurring expenses to be charged to the scheme, entry or exit loads fees, (Laxmi Bank) sponsor’s track record, educational qualification and work experience of key personnel including fund managers etc.

Investors should choose the scheme with higher NAV rather than scheme with lower NAV.

As per the Mutual Fund Regulation, 2010, fund managers can invest in following areas:

• Securities that are registered with the SEBON,
• Securities called for IPOs,
• Securities that are listed at NEPSE,
• Debenture, Treasury bill and other instruments of money market issued by Government of Nepal or government agencies receiving full guarantee or protection of Government of Nepal or Nepal Rastra Bank,
• Bank deposits,
• Market instruments,
• Other area as prescribed by the Board.

Maximum up to twenty five percent of total asset of any scheme may be invested in the foreign capital market. Investments may be done only at that foreign capital market with whom the Board has entered into MOU for investment by obtained approval from Government of Nepal.

As per the Mutual Fund Regulation, 2010, fund managers have certain    limitations on Investment of funds.

• 10% of fund in general shares of a single body corporate company
• 20% on right share or debentures issued by an individual company
• Securities issued by a company, not greater than 10% of total asset of the scheme,
• 20% under other mutual fund schemes
• 10% on bank deposits
• 10% on market instruments
• One shall not invest in securities of other schemes under the same Mutual Fund
• Restriction on investment on securities issued by the sponsor or Depository

In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unit holders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

•       Dematfacility was introduced on August 17, 2015 by CDS & Clearing Limited(Depository) with the objective of creating a healthy and an efficientinvestment environment.

•       ABeneficial Owner (BO) is the person who has opened the demat account with CDSCthrough a registered DP.

The purpose of opening a demat account are as mentioned below:

•       Todeposit and transfer the NEPSE listed securities in  dematerialized form

•       Toreceive the statement of the securities held in a demat account

•       Torematerialize the securities held in a Demat account.

Rematerialization is the process of converting securities held in a demat account in electronic form back in physical certificate form.

A depository facilitates the holding and/or transacting securities in book entry form. In other words, a depository takes the ownership guarantee of the shareholders by holding those securities and other market instruments which are listed in the secondary market, distributed or allotted and can be deposited into the electronic form. The investor has to open a demat account to avail the services of depository. Additionally, the depository maintains the record in the account of the investors. CDS and Clearing Ltd. is the sole depository in Nepal.

CDS and Clearing Ltd. is the sole depository in Nepal established in 2067 B.S. under Company Act 2063 with an objective to render service of dematerialization of securities. It is wholly owned subsidiary company of Nepal Stock Exchange Ltd. (NEPSE).

A Depository Participant is an agent of the depository who has received the registration certificate from the Security Board of Nepal and the membership license from CDSC. Laxmi capital Market Limited is a DP License holder institution from CDS and Clearing Limited.

A Beneficial Owner is the person who have opened the demat account with CDSC through a registered DP in order to deposit their securities or instruments which are capable of being deposited in demat form.

DP provides the following services to the investors:

• To open the demat account
• Dematerialization of securities
• Rematerialization of securities
• To maintain record of securities in the electronic form
• Settlement trades by transferring/receiving the securities from/in BO accounts,
• Settlement of off-market trades that is occurred between BOs outside NEPSE,
• To provide electronic credit of securities allotted by issuers during IPOs,
• To deposit the non financial corporate benefits (such as: bonus, right shares, etc.) issued by issuers in the demat account of BOs,

To facilitate in pledging of dematerialized securities.

An investor, already having demat account with CDSC, can open another demat account.

As mentioned in the Securities’ Central Depository Services Regulation, 2067, the issuers have to admit their securities with the depository and the BOs have to dematerialize their holdings for transacting in the capital market. Hence, dematerialization is mandatory.

BOs can enjoy the instant transfer of ownership if they have holdings in demat form. It minimizes the risk associated with the physical certificates. All listed companies in NEPSE must admit their securities with CDSC as well and the settlement of such securities are done in demat form. Hence, BOs must open a demat account for transacting in the capital market.

Any securities that are held in an individual’s ownership can only be converted in electronic form. Besides, those securities should be compulsorily registered for dematerialization with CDSC.

A demat account has become a necessity for all categories of investors due to numerous following benefits:

• Eliminates risk associated with physical certificates:

In demat system, the ownership of securities are held in electronic form. Hence, the risk associated with physical certificates such as loss during carrying of certificates from one place to another, worn out, theft, cost incurred while making the duplication of certificates, etc. are eliminated.

• Immediate transfer of securities

When an investor buys securities from the market, the securities are immediately credited into his/her account along with the ownership. The securities do not have to be sent to RTA for transfer of ownership in demat system. Moreover, the investors do not have to wait for a long time period to get registered in the book of RTA as the legal owner of the securities.

• Immediate settlement cycle

The transactions of securities are settled within T+3 settlement cycle in electronic form. At the last day of the settlement cycle, the securities are credited into the demat account of the buyer resulting the immediate settlement cycle.

• Immediate distribution of shares allotted in IPO:

The shares allotted in IPO can be easily and immediately credited in the demat account of investor held with CDSC. Hence, the investor does not have to wait to receive the share certificate from the issuers. This aids to list the securities immediately in the stock market.

• Easy in portfolio management:

Investors receive the statement of their account periodically which helps them in managing portfolio and receiving the detail information about their investment.

• Solve the problem of address change

Investors do not have to inform their individual issuers about the change of address through correspondence separately. Investors can register the change through their DP only. DP updates and informs the change to all issuers of the securities held by an investor through the depository system.

• Easy in pledge of securities:

In case, the dematerialized securities are pledged, such account can be locked in. While ledging the securities, the securities do not need to get transferred from the pledgor’s account to pledgee’s account.

The process of opening a demat account is very simple and easy. It is similar to opening a bank account. The process of opening a demat account is as follows

Yes. Any number of securities admitted with CDSC can be dematerialized and held in a single account in case securities are owned by a single investor.

Different securities, even of the same issuer, are provided a distinct ISIN number as an identification of the securities and each ISIN is maintained and accounted separately within an account. Therefore, there is no question of mix up of securities held in one demat account.