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What are my rights as a mutual fund unit holder?

If you’re like many investors, reading the fine print in a simplified prospectus is often put aside. Yet your rights as a mutual fund investors are outlined in the prospectus, so it’s well worth a closer look.

Right of redemption Most mutual fund units may be redeemed, or sold, at any time simply by calling your investment executive or mutual fund representative and placing a sell order. Some companies require redemption instructions in writing, either by letter or an order form. Once you have requested a redemption, most fund companies will sell the shares that day or on the following business day, depending on when the order is received. The fund’s net asset value per share (NAVPS) is calculated at the end of the business day. If the fund is valued monthly, your request for redemption may have to be sent as many as 10 days before the NAVPS is calculated. Whatever, the valuation schedule, you must receive payment from the sold units within five business days after the NAVPS is calculated. The value of mutual fund units fluctuate along with market swings, so you may, or may not, receive more than what you initially paid for the units. Changing your mind As a mutual fund investor, you may cancel your agreement to buy a fund in certain circumstances. If you have invested a lump sum, you have two business days after receiving the purchase confirmation, or two business days after getting the fund prospectus, to cancel the transaction. If you are investing a certain amount each month or every quarter through a purchase plan, you have 60 days after receiving the prospectus or confirmation to cancel your purchase.