When an investor purchases mutual funds, he or she can hold the mutual funds in physical or in demand format. Now, in this lecture, we look at what the investor needs to do when he holds the mutual funds in physical format. When the mutual funds are held in physical format, the investor gets a Statement of Account or so, we will look at the nuances and the implications of this in this lecture. The important thing to note is that, even when the mutual funds are held by the investor in a physical format, all operations regarding dealing with the mutual funds account is done electronically. When mutual funds are held in the physical format investor gets a Statement of Account. Now, the investor needs to keep the statement of accounts very safely.

However, the MCs they issue a statement of account every year. This is mandatory by the GL So every year they are the MCs are supposed to provide a fresh Statement of Account. Also, the MCs provide a fair Statement of Account whenever any transaction takes place in the mutual fund account. Transactions can include buying or selling of mutual funds or declaration of dividend and payment of dividends, etc. In India statement of accounts generally sent by email as a PDF file. Very rarely do we find that the statement of accounts are sent in a physical format No.

However, the annual statement of accounts will be sent by a physical format which can be preserved by the investor. The important things to note in our statement of accounts are as follows. The first thing the investor should note is the folio number. Ideally, an investor should have one folio number with one AMC for all the mutual funds all different mutual funds what the investor may own in that particular AMC. So this is a variable Number these should be quoted whenever doing any transaction. And this is especially very important when when you are dealing in physical form format documents or mutual funds.

The next important aspect is the fund details. Now every fund will have a code and every fund name etc should be checked very carefully. Further, we should be very careful in checking the option we have selected and whether it's a growth option or a dividend option in a dividend option whether it's a reinvestment option or a payout option. All these details should be checked very carefully on all of these is mentioned in the statement of accounts. The third important aspect is the details of the holdings. Now, there are so a very clearly states all the transactions that have taken place with regards to the holdings of this particular mutual fund.

In fact, I saw estates these Transaction Details are all the different mutual funds under that folio. Now, apart from the transaction, the Another import significantly important thing is the total number of units held by the investor in a mutual fund. So, for instance a soy for all the different mutual funds under that folio number, it tells what is the balance is the number of units that the investor holds these needs to be checked very carefully. Another very important aspect in the So, is the bank mandate. Now, even though the mutual fund may be held in a physical format, all redemption requests etc go directly to the bank account, they the investor will not get a check or anything like that. So, the bank details have to be accurate, so, that the all the credits can be given to the investor directly in the bank account in the current bank account.

Another important aspect for the investor to note in the soI is the compliances. Now, every government stipulates that the investors comply with certain documents will be provided at the time of purchase or holding mutual funds like in India it is mandatory to provide the pan the permanent account number for income tax when you're holding any mutual funds. Similarly, it is mandatory to also provide the Aadhaar number which is the unique identification number in India for when you're holding any mutual funds. Now, the Statement of Account very clearly says what are the compliances required and whether they have been provided or not. So, if any of the compliance is now is not provided by the investor, he or she should make arrangements So, that they are provided the compliance statement states that it is complied there is one major disadvantage of holding mutual funds in the physical format that is in the case of the death of the investor.

Now for transferring the mutual funds to the legal iron, one has to apply to every single AMC where the investor had invested in mutual funds individually. Not too easy enough. Let's talk to each MC the investor has to provide the death certificate the will etc to so that the funds are transferred to the legalize account. This can be very cumbersome and time consuming. If the investor wants to deal with liquid funds and wants to do daily transactions, this is only possible through physical format of mutual funds. This is because what is possible is that the investor may purchase mutual funds before 2pm on a particular day, in that case the previous day's nav would be applicable and then the investor can decide to sell before 5pm on the same day, in this case, though, the nav of the next day would apply, the investor can make money from the difference in the due nav.

Now, since, in the stock market there is a settlement period of two plus two that is the transaction date plus two days deleted. debt settlement is not possible in stock market. Hence, the daily transactions and liquid fund is only possible if the mutual fund is held in the physical format.