Applications to buy can be made in writing, over the telephone or on the internet. Telephone and internet deals are as binding as deals in writing.
Applications to buy made in writing or in response to newspaper advertisements usually require simultaneous payment. Purchases orders made by telephone or the internet usually require payment when the investor receives the contract note.
The fund managers despatch a contract note which contains the details of the transaction. In the case of OEICs, the initial charge and the dilution levy will be stated explicitly.
Unit trust and OEIC share certificates need not be issued. The modern practice is to issue non-certificated (paperless) units and shares, where the contract note is proof of purchase.
Fund managers are required to issue a cancellation notice simultaneously with the contract note, giving investors the right to cancel their applications within 14 days of receipt of the notice (the cooling-off period). The cancellation rules are intended to protect investors against high-pressure salesmen.
In the event that there has been a fall in the unit or share price, the fund managers will only refund the ruling offer price and not the price originally paid. If payment has not yet been made, the investor must pay the fund managers for any shortfall.
If the unit or share price has risen during the cooling-off period then the investor will only receive the original offer price back and will not benefit from the price rise.
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Building Automated Trading Systems: With an Introduction to Visual C++.NET 2005
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