Unit Trust Specifics Flashcards
1
Q
What is the role of a Unit Trust Trustee
A
- Ensure the investors’ interests are protected by:
- checking managers actions are in line with regs, trust deed and scheme particulars
- ensure manager invests inline with objectives of fund
- Holding or controlling holding of the assets
2
Q
What are the responsibilities of a Unit Trust Trustee
A
- Arranging audit of Trust and issuing FS
- monitoring calc. of unit prices
- arranging meetings of unit holders
- setting up register of unit holders + issuing certificates
- distributing income
3
Q
What are the duties of a Unit Trust Manager
A
- be authorised person
- have adequate financial resources
- manage the assets in accordance with regs, trust deed and scheme particulars
- supply info to Trustee when needed
- maintain record of units
- notify Trustee/FCA if breached rules
4
Q
How often do Unit trusts issue reports
A
- Yearly and half yearly
- Can be short form if full accounts available on request
5
Q
Who are unit holder rights protected by ?
A
- Trustees
- regulatory organisations setup under FSMA (Financial Services and Markets Act 2000)
- by the complaints and arbitration procedures - ombudsman
6
Q
How are Unit Trusts Taxed?
A
- Interest and Dividends - 20%
- Distributed interest deducted as expense before tax
- Mgmt Charges deducted as expense
- No CGT in fund
7
Q
Explain Equalisation Payments
A
- When purchase unit, the price includes income accrued up to that point.
- Equalisation payment pays that income to the holder - return of part of the purchase price paid.
8
Q
When are dividends and when is interest paid from a Unit Trust
A
- Dividends paid if 60% assets in equities
- Interest paid if 60% assets in FI
9
Q
Explain Tax Treatment of Investor
A
- Dividends - Normal Dividend rates after div allowance
- Interest - Normal Income rate after allowances (PSA)
- Both still taxed even if reinvested
10
Q
Explain bed and breakfasting rules
A
- If sold and repurchased units within 30 days
- Sale treated as if it never happened
11
Q
Explain what a Tax Elected Fund (TEF) is
A
- An authorised investment Fund that receives savings and dividend income
- elects to divide income into 2 parts
- Both parts taxed in normal ways for investor
- Must be approved by HMRC
12
Q
explain what Ex-Dividend (xd) period is
A
- The period after the accounting date (up to 4 months)
- The price of units drops to show income paid out
- Purchases of units in xd period don’t receive the income, the previous holder does
13
Q
Via what methods can you buy and ell unit trusts
A
- Phone
- Online
- Application form
- Authorised financial adviser
14
Q
What happens on sale
A
- Contract note issued by manager
- IF certificated - Seller signs renunciation form on back
- If non-certificated - Separate form
- Manager pays withing 4 business days after receipt
15
Q
Explain what a share exchange is
A
- Exchange share in public companies for holding of units
