Chapter 10

Question 1

Open-Ended Trust

Answer 1

Most common structre for a mutual fund and allows a fund itself to avoid taxation. Any income that has flowed through to the unit holder is taxed in the hands of the unit holder (interest, dividends, capital gains income, net of the fund’s fees, expenses and capital losses)

Question 2

Who is ultimately responsible for the activities of a mutual fund trust?

Answer 2

Trustee

Question 3

The Fund Manager

Answer 3

• Provides day to day supervision of the fund’s portfolio
• Ensures that the portfolio manager of the fund observes a number of guidelines, prohibitions and restrictions as specified in the funds trust deed

Question 4

Independent Review Comittee

Answer 4

Required under National Instrument 81-107 to have an IRC which is required to approve or consider conflicts of interest that are identified by the FUND MANAGER

Question 5

Mutual Fund Distribution

Answer 5

Distribution through channels by DEALING REPRESENTATIVES

Question 6

The Custodian

Answer 6

When a mutual fund is established a trust company is appointed a CUSTODIAN

• Receives and holds the fund’s money obtained from all sources
• Serves as the fund’s Register and Transfer Agent by maintaining records of who owns the fund’s units/shares

Question 7

National Instrument 81-101

Answer 7

Deals with mutual fund prospects disclosure

Question 8

National Instrument 81-102

Answer 8

Contains requirements and guidelines for the distribution and advertising of mutual funds

Question 9

Declaration of Trust sets out…

Answer 9

• The fund’s principal policy
• It’s investment policy
• Any restrictions on the fund’s investments
• Who the fund’s trustee, manager and custodian will be
• How many classes or series of units the fund will or may have

Question 10

Annual Information Form sets out…

Answer 10

• Significant holdings in other issuers
• The tax status of the issuer
• Directors, officers and trustees of the fund and their indebtedness and remuneration
• Associated persons, the principal holders or securities, the interest of management and other in material transacrions
• The particulars of any material contracts entered into by the issuer

Question 11

How long does an investor have to cancel a mutual fund purchase?

Answer 11

Within 48 hours after receiving confirmation of the purchase