Podcast
Questions and Answers
What is the primary role of the trustee in managing a UITF?
What is the primary role of the trustee in managing a UITF?
Under what circumstances can a trustee be held liable for losses in a UITF?
Under what circumstances can a trustee be held liable for losses in a UITF?
What is the 'mark-to-market' method used for valuing UITFs?
What is the 'mark-to-market' method used for valuing UITFs?
Which of the following are participants in a UITF entitled to receive upon request?
Which of the following are participants in a UITF entitled to receive upon request?
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What is the role of the Client Suitability Assessment (CSA) in UITF investments?
What is the role of the Client Suitability Assessment (CSA) in UITF investments?
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Which of the following is NOT a factor considered in classifying clients for suitability assessment in a UITF?
Which of the following is NOT a factor considered in classifying clients for suitability assessment in a UITF?
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Which fees are typically associated with UITFs?
Which fees are typically associated with UITFs?
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What is the purpose of the Client Suitability Assessment Form?
What is the purpose of the Client Suitability Assessment Form?
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What is a Declaration of Trust in the context of UITFs?
What is a Declaration of Trust in the context of UITFs?
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What distinguishes UITFs from deposit products?
What distinguishes UITFs from deposit products?
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Which of the following statements is TRUE about the training requirements for UITF sales personnel?
Which of the following statements is TRUE about the training requirements for UITF sales personnel?
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Which statement is NOT accurate regarding UITF marketing collateral?
Which statement is NOT accurate regarding UITF marketing collateral?
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When must clients be notified of changes to UITF plan rules?
When must clients be notified of changes to UITF plan rules?
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What is the role of an independent external auditor in relation to UITFs?
What is the role of an independent external auditor in relation to UITFs?
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Who is responsible for approving amendments to the plan rules of a UITF?
Who is responsible for approving amendments to the plan rules of a UITF?
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Which of the following is a 'Do' in UITF marketing practices?
Which of the following is a 'Do' in UITF marketing practices?
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Flashcards
External Audit
External Audit
Annual audit of the UITF by an independent auditor approved by the SEC.
Amendments and Termination
Amendments and Termination
Changes to plan rules or fund termination must be approved by the trustee's board and notified to participants.
Taxation of UITFs
Taxation of UITFs
UITFs are subject to current laws and regulations regarding taxes.
Client Classifications
Client Classifications
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Client Factors (SHOE)
Client Factors (SHOE)
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Declaration of Trust
Declaration of Trust
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Marketing Collateral
Marketing Collateral
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Marketing Do's and Don'ts
Marketing Do's and Don'ts
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UITF Training Requirements
UITF Training Requirements
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Client Suitability Assessment (CSA)
Client Suitability Assessment (CSA)
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Transparency in UITFs
Transparency in UITFs
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Limited Guarantee
Limited Guarantee
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Trustee Responsibilities
Trustee Responsibilities
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Mark-to-Market Valuation
Mark-to-Market Valuation
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Fee Structure
Fee Structure
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Participant Rights
Participant Rights
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Study Notes
Unit Investment Trust Funds (UITFs)
- All sales personnel selling UITFs must complete standardized training per SEC Circular 447, subsection UX 410.7, led by trust entities adhering to TOAP minimum training guidelines.
- Clients must complete a Client Suitability Assessment (CSA) before investing in a UITF, assessing investment goals, risk tolerance, knowledge, and experience.
- Transparent communication is essential, including UITF investment objectives, structure (e.g., bond, equity funds), risk profile, and strategy.
- UITFs are not deposit products, offering no guaranteed returns or fixed rates; they are not covered by the PDIC.
- Trustees exclusively manage and control UITF investments, adhering to stated objectives and policies.
- Investment objectives and policies defining the fund's strategy must be disclosed to clients.
- UITFs use the mark-to-market valuation method; values fluctuate with the market, potentially resulting in losses on redemption even if underlying investments haven't been sold. Clients must understand this.
- Fees include administration, feeder/fund-of-funds (potentially higher), custody, and external audit fees.
- Trustees are not liable for losses unless due to fraud, bad faith, or gross negligence.
- UITF participants can request plan rules, lists of existing/prospective investments, and risk profiles..
- UITFs are annually audited by SEC-approved independent external auditors; results are available to participants.
- Amendments and fund terminations need trustee board approval; participants receive 30 days' notice to withdraw before changes, unless otherwise stated in plan rules.
- Taxation follows current Philippine tax laws.
- Clients are categorized as conservative, moderate, or progressive based on risk appetite and investment objectives.
Matching Clients with Suitable UITFs
- CLIENT FACTORS (SHOE):
- S (Size): Client's investment capacity.
- H (Horizon): Client's investment timeframe.
- O (Objective): Client's investment goal (e.g., capital appreciation, preservation).
- E (Experience): Client's investment history, risk tolerance, and profile.
- A Client Suitability Assessment Form, completed by clients before investing, helps sales personnel recommend suitable investments; the form should be updated regularly.
Declaration of Trust and Marketing Collateral
- The Declaration of Trust, outlining plan rules and approved by the trustee board, is submitted to the SEC for approval and publicly available at the trustee's office.
- Marketing materials for UITFs should include:
- Fund name and classification
- Investment objectives and policies
- Risk disclosure
- Administrative and marketing details (e.g., pricing, deadlines, fees)
- Disclaimer that the investment is not a deposit and is not insured by the PDIC
- Balanced evaluation of potential gains and losses.
- Advice to conduct personal assessment and seek professional guidance.
Marketing Do's and Don'ts
- Do:
- Thoroughly explain UITF details to clients.
- Explicitly discuss potential risks.
- Accurately profile clients for suitable fund selection.
- Encourage clients to seek expert advice.
- Don't:
- Represent the UITF as a deposit product.
- Guarantee returns or profits.
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Description
This quiz covers the essential aspects of Unit Investment Trust Funds (UITFs), including training requirements for sales personnel, mandatory Client Suitability Assessments, and the importance of transparency in communication. Additionally, it highlights the nature of UITFs and their distinction from deposit products. Enhance your understanding of UITFs and their regulations.
