Unit trusts and OEICs

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4. The people behind a unit trust

1. The Trustee

   The trustee is usually an independent financial institution like a clearing bank or insurance company, authorised by the FSA.

   It is the legal owner of the trust property - meaning all the assets that the trust has acquired with investors' money plus any uninvested monies less any liabilities on the trust. Its duties are:

   • To protect the interests of unitholders by ensuring that the fund is run in accordance with the FSA regulations, the trust deed, and the scheme particulars.
   • To act as custodian for the trust's assets, or to delegate this function to a trusted third party. The trust's assets are registered in the name of the trustees who also hold the trust income.
   • To create and maintain the register of unitholders or to delegate this function to the managers.
   • To replace the managers if they are deemed not to be acting in investors' interests, go insolvent or if the majority of investors vote to remove them.
   • To report any significant irregularities to the Regulator.
2. The Unit Trust Manager

   The unit trust manager is responsible for the day to day running of the unit trust, including fund management, marketing and administration. These functions can be delegated to third parties.

   The manager is authorised by the FSA and is paid by the annual management charge on the fund.

3. The Beneficiaries

   The beneficiaries of the trust are the investors whose names appear on the register of unitholders. The register provides the evidence of an investor's ownership of units.

1. What is a unit trust? 2. What is a unit? 3. The trust deed and scheme particulars 4. The people behind a unit trust 5. Charging structure of unit trusts 6. Pricing of units - FSA rules on maximum offer price 7. Pricing of units - FSA rules on minimum bid price 8. Pricing of units - in practice 9. Pricing of units - historic and forward pricing 10. OEICs - Open Ended Investment Companies 11. Shares in OEICs 12. OEICs - pricing 13. OEICs - charges 14. Taxation of unit trusts and OEICs - Introduction 15. Tax treatment of dividends from equity funds 16. Tax treatment of coupons from non-equity funds 17. Capital Gains Tax 18. Tax shelters 19. Investment powers of fund managers: 'eligible investments' 20. Diversification 21. Fund classification: risk gradings 22. Selecting a fund: Defining your objectives 23. Selecting a fund: Active vs passive 24. Selecting a fund: lump sum vs regular savings 25. Selecting a fund: Past performance 26. Where to buy unit trusts and OEICs 27. Buy with or without advice? 28. The mechanics of buying 29. The mechanics of selling 30. Share exchanges and fund switches 31. Investor protection 32. Conclusion

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