Your Mutual Fund Records: Every Field and What It Does

A transaction statement is dated to one event. The statement reports the instruction the holder gave, the units that moved and the balance standing afterwards in one scheme, and says nothing about every other field held against the account: the bank instruction, the contact details, the named holders and the setting deciding who may instruct. Each field carries one operation, and a wrong field stops that operation alone.

What is a transaction statement, and when does one appear?

Start with the document that lands in front of a holder most often. A transaction statementA document reporting one movement in one account in one scheme, produced after that movement has been processed. is the report of one movement, in one account, in one scheme, and it appears once that movement has been processed rather than at the moment the instruction was given. The statement carries three things and no more: the instruction that was given, what that instruction moved, and the balance standing afterwards. A transaction statement is dated to an event. Being dated to an event is what makes it complete about one thing and silent about everything else held against the account.

Consider the receipt a grocer hands over. The receipt states exactly what left the shop and what it cost, and it is entirely reliable on that. Nothing on it says whether there is oil left at home, whether the gas cylinder is due, or whether the address written on the delivery book is still current. A receipt was never trying to. A receipt is an event document, and an event document reports the event.

The same shape applies here. One account in the Girnar Large Cap Equity Fund receives Rs 1,00,000. The statement produced for that one event names the scheme, names the account, states the instruction, states the units allotted and states the unit balanceThe number of units standing in an account after a movement has been recorded. standing after the allotment. Look at what it did not touch. The bank instruction sitting on that account was not used, so it does not appear. The contact details were not tested, so they do not appear. Whether anybody else is named on the account, and whether that person may instruct alone, are settings the purchase never consulted, so they are not on the document either.

The silence is not a shortcoming of the document. The silence is the design. An event document that started reporting the whole state of an account every time a hundred rupees moved would stop being an event document. A transaction statement proves one thing happened and says nothing whatsoever about the fields that thing did not use. Girnar Asset Management Limited, an invented asset manager, runs the Girnar Large Cap Equity Fund, and the account and the statement extract drawn below were built for this lesson.

Why does a drawer full of transaction statements still not show a position?

Two documents reach a holder and they answer two different questions. Each side has to be clear on its own before the two can be set against each other. Define both first.

A transaction statement, as above, answers the question what happened when I did something. A transaction statement is anchored to a movement, and that movement decides its content. A periodic statementA document reporting what was held across a stretch of time rather than what moved on one occasion. answers a different question: what did I hold across a stretch of time. A periodic statement is anchored to a period rather than to an instruction, and reports a position rather than a movement. Both are ordinary and both are useful. Neither is a better version of the other.

Now the trap. A holder who has kept every transaction statement received over several years has a complete history of movements and still does not have a position. Working a position out means starting from an opening balance and applying every movement in order without missing one. If a single document is missing the arithmetic is wrong, and nothing in the pile reveals that a document is missing. A pile of events is not a balance. An event document and a period document exist side by side for that reason, rather than one replacing the other.

The household version is familiar. Every receipt from the grocer is accurate, and a year of them stacked on a shelf still does not say what is in the kitchen tonight. Finding out takes opening the cupboard and looking. A period document does the same thing: it reports the state, not the journey.

Bank Mandate: what stands between units and money?

A bank mandateThe standing instruction on an account naming the bank account money is taken from and paid back into. is the instruction standing on the account that names which bank account money is taken from and which bank account money is returned to. The mandate is one fieldA single item of information held against an account, such as an address, a bank instruction or a setting. among several, and it looks like an administrative detail right up to the moment it is the only thing that matters.

Ask the useful question first: why hold it as a recorded field at all, rather than asking for the bank account each time money is to be paid out? Because money leaving a scheme has to arrive somewhere that has been checked as belonging to the person entitled to it, and that check is work. Doing it once and recording the result means it does not have to be done again on every payment. Recording the result once is the whole reason the field exists, and it is a good reason.

The field also carries a cost, and the cost is worth saying plainly. A field that is checked once is a field nobody revisits, so the bank instruction is the field most likely to be quietly out of date at the exact moment it is needed. Bank accounts get closed. A salary account changes when work changes. None of that reaches the record on its own.

Now put the chain in order. Units are redeemed. A rupee amount is worked out from those units at the value per unit. The bank instruction on the account decides where that amount is sent. The money arrives, or it does not. The bank instruction is the only field standing between a holding and cash in a person's hands. No field matters more on the day a household actually needs the money, and none is thought about less until then.

How a bank instruction is verified, what evidence changes it, whether anything on the account is restricted while a change is being processed and how a change is confirmed back to the holder are set by the Securities and Exchange Board of India (SEBI) at sebi.gov.in, and each asset manager publishes its own route on top of that. Arrangements of that kind move, so the current rule belongs with SEBI and the current route with the manager holding the account.

Contact Update: what travels along the contact details, and what stops?

The contact detailsThe postal address, electronic address and telephone number recorded against an account, along which documents and confirmations travel. on an account are the postal address, the electronic address and the telephone number recorded against it. Those three fields look like the least interesting in the record, and they are in fact the road that everything else travels on.

Work out what actually moves along them. Every document the scheme sends travels this way. Every confirmation of a movement travels this way. Every request asking a holder to confirm something travels this way, and so does every notice about the account. The contact fields do not carry any money and do not hold any units, yet if they stop working, every message that would have told a holder something stops arriving and nothing announces that it has stopped.

Here is the drift, and it deserves to be described exactly as it happens. A person moves house. Work changes, so the telephone number changes with it. An electronic address that belonged to an old workplace is closed by that workplace. The record keeps pointing at the old ones because a record only knows what it was told, and the account quietly stops reaching anybody. Nothing was done wrong at any point in that sequence. No form was skipped, no rule was broken, and nobody was ever told that this particular field was the one carrying every future message. Moving house is not an oversight.

The list of what does not happen matters as much. The units are untouched. The value per unit is untouched. The holding is exactly as it was, and a movement instructed today would be processed exactly as it should be. Only the road out has gone quiet. The separation is the whole idea: one field failing takes down one operation, and leaves every other operation working.

Proof of a change of contact details, confirmation of that change, and the handling of documents in the meantime all belong to SEBI at sebi.gov.in and to the asset manager itself.

Joint Holding: who is named, and who may actually give an instruction?

A joint holdingOne account with more than one person named on it as a holder. is one account with more than one person named on it. More than one name on an account is familiar. Less familiar is the second half of it: being named is one recorded setting, and being able to give an instruction is a second, separate one.

The second setting has a name: the mode of operationThe recorded setting on an account deciding who among the named holders may give an instruction. recorded on the account. The mode of operation decides who among the named holders may instruct, and it is a field in its own right, sitting beside the list of names rather than following from it. Being named on an account and being able to operate it are two different fields, and a person can be one without being the other.

The everyday version. Two people in one household open one account together, and both names appear on it. Whether either of them, acting alone, may instruct a redemption is not settled by both names being there. A setting recorded when the account was opened settles it, and the two of them may well never have discussed that setting. Two names on a doorbell say who lives there. The doorbell does not say who has a key.

The names of the settings, the effect each one carries in law, the position of an account when one of several named holders is no longer there, and the route for adding or removing a holder are all set by SEBI at sebi.gov.in, and all revised from time to time. Where a person entitled to a holding needs to approach a scheme after a death, the route runs through the asset manager and the party keeping the register, and what may be asked for is SEBI's to set.

Which fields sit on the account, and which sit somewhere central?

Fields do not all live in the same place, and this is the hinge that the whole business of updating a record turns on.

Some fields sit on the account itself, with one asset manager. The bank instruction is of that kind. So is the mode of operation, and so is the nomination. Those three fields belong to that account with that manager. A second account with a different manager carries its own separate versions of the same three, and they may say something completely different.

Other fields sit on a verification record held centrally and are read by every asset manager a holder approaches. The identification and verification record, known as know your customer (KYC), is of that kind, and it is kept by a KYC registration agency rather than by any one manager. The permanent account number issued by the tax authority, spelled PAN, is the key that identifies the person across all of it. The tax residence declaration made under the Foreign Account Tax Compliance Act (FATCA) sits in the same central territory. Each of those records, and the job it does, is set out in full under identification and verification records.

Where a field lives decides where a change to it is made and how far that change travels, and a change made in the wrong place looks completely successful and reaches nothing. That is the sentence to carry out of this block. Telling one asset manager about a new bank account tells one asset manager. The bank field sits with each manager rather than centrally. An account with a second manager still points where it always did, and nothing carried the news across.

The household version is immediate. Telling the milk vendor about a move does not tell the electricity board. Both were told something true, one of them was told the wrong thing to change, and the letters keep going to the old address until somebody tells the right office. The record keeperWhoever holds and updates a scheme's list of holders, and works through the changes made to it. for one scheme can only change what it holds; it cannot reach into a record it does not keep.

What does one movement of Rs 1,00,000 leave behind in the record?

One account in the Girnar Large Cap Equity Fund, worked from end to end, shows which fields move and which do not. The value per unit is Rs 35.00 exactly. Rs 35.00 follows from the scheme's net assets and its units outstanding, worked out under net asset value, and is carried here as given rather than worked again.

Rs 1,00,000 goes in. 1,00,000 divided by 35 does not come out even. Divide by Rs 35.00 and the exact quotient is 2,857.142857 and so on without ending. Units are recorded to three decimals, so the allotment is 2,857.143 units. Note the direction: the third decimal was rounded up, so the account receives very slightly more units than the exact division produced, not fewer.

Now do the check that most workings skip. Multiply back: 2,857.143 units times Rs 35.00 is Rs 1,00,000.005. Rs 1,00,000.005 does not equal the Rs 1,00,000 paid. The difference is half a paisa, and half a paisa sits exactly halfway between one paisa and none, so the figure has no single honest reading in whole paise: a rule has to be picked, and picking one quietly is exactly how a residue vanishes from a working. So the residue is written down as a row of its own. The residue is tiny and it is real, and nothing approximate is set out as though it were an equality.

Here is the whole movement as rows, so the arithmetic can be checked line by line rather than taken on trust.

Two things in that table are worth pausing on. A round number of units at a round value per unit divides cleanly, so the redemption of 1,000.000 units at Rs 35.00 is Rs 35,000/- exactly, with no residue at all. The balance of 1,857.143 units is worth Rs 65,000.005, carrying the same half paisa forward. The residue was created at allotment, and an exact redemption does not disturb it.

Now set two fields against each other. The unit balance moved and it is completely correct: 1,857.143 units stand in the account and nothing about them is in doubt. The bank instruction on the same account, however, points at a bank account that was closed. Two different fields were doing two different jobs and only one of them failed, so the redemption succeeded and the payment did not. The units did not go missing. The money is not lost. A payment has nowhere to land, and the route to fixing it runs through the bank instruction rather than through the units.

Keep the scale of this account in proportion. The scheme has 120.00 crore units outstanding across 3,80,000 accounts. Divide 120.00 crore by 3,80,000 and the average account holds about 3,157.895 units, worth about Rs 1,10,526/- at Rs 35.00. The worked account here holds 2,857.143 units. The worked account is an ordinary one rather than an unusual one, and everything set out above is about accounts of exactly this size.

One subtraction is available here, and nothing can be read into it. The average account holds about 300.75 units more than the worked one. An average across 3,80,000 accounts says nothing about how account sizes are spread, so the difference is arithmetically fine and analytically empty. The record carries a total and a count and no distribution behind them, so whether this account sits near the middle of the pack or far from it is not computable. A gap from an average is not a rank.

One more thing can be added to the same account without changing a single figure: a second holder named on it. The unit balance does not move, the bank instruction does not move, and the value per unit does not move. A name has been added, and beside that name sits the separate setting deciding whether the second holder may instruct alone. The settings themselves, and the effect each one carries, are SEBI's to state at sebi.gov.in.

Why does a record need both kinds of document at all?

Neither document is a better version of the other, and treating one as an upgrade of the other ends in keeping the wrong one.

An event document proves that a specific instruction was carried out. A holder needs exactly that when something is disputed: a movement that was not expected, an amount that does not look right, a purchase somebody says was never made. The proof has to be anchored to the instruction, and only a document dated to that event can be.

A period document shows a position. A holder needs a position when nothing is disputed at all and the question is simply where things stand. A position is a state rather than an act, so the document reporting one has to be anchored to a stretch of time.

The two exist because they answer different questions, not because one is an improved version of the other, and a record that produced only one of them would leave a real question with no document behind it. A dispute needs an act. A review needs a state. No single document is both.

What do none of these documents tell a holder?

No routine document a holder receives reports what is missing from the record.

Follow it through. A transaction statement confirms a movement, and it confirms it accurately. A periodic statement shows a position, and it shows it accurately. Neither of them says that the bank instruction points at an account that was closed. Neither says that no nomination stands. Neither says that the contact details stopped reaching anybody after a change of address two years ago. Each of those is an absence, and an absence has no line to appear on.

Now notice why the misreading that follows is entirely reasonable. A document that confirms something looks exactly like a document that would have mentioned a problem. If the statement was accurate about the purchase, and accurate about the balance, why would it be silent about a field that has quietly stopped working? Nothing on the document tells the holder that its scope is one movement. A holder cannot be expected to notice an absence that nothing they receive ever mentions, and the only way to see the state of the fields is to ask for it.

The asset manager and the party keeping its register can report back the state of the fields on an account. Requests of that kind, and how the answer is confirmed, are set by SEBI at sebi.gov.in, and the route differs between managers.

Where are the rules behind each of these fields set?

Every question handed across belongs to the same place, and collecting them shows exactly where each one is settled.

Required content, evidence lists, periods and timings are revised from time to time, so a requirement that was correct last year can be wrong this year rather than merely old. The body that sets a requirement outlasts the requirement itself.

Girnar Asset Management Limited, the Girnar Large Cap Equity Fund and Sohail Merchant are invented.
Educational material. Not advice on any investment, tax, budget or market position.