Securities of Investment Funds

The securities of an investment fund confirm the title of their owner to the part of assets of a corporate investment fund, or a unit investment fund.

Corporate investment fund (CIF) issues common registered shares. Shares of the CIF, in addition to the proprietary right, confirm their owner’s right to participate in the management of the fund (CIF are founded in the form of an open joint stock company).

Unit investment fund (UIF) is not a legal entity, and is founded by an asset management company (AMC) in order to attract monetary resources for conducting collective investment activity. Therefore, an issuer of the securities that confirm the title to the part in the unit investment fund’s assets is the AMC of this fund, and such securities are called investment certificates.

Shares and certificates of investment funds have nominal value. There are no restrictions as to the number of the fund’s securities that could be held by one participant. Owners of shares (investment certificates) are exposed to the risks dependent on the changes of the asset value of a corporate (unit) investment fund.

The securities of open-end and interval investment funds are subject to selling/redemption by their issuers according to the peculiarities of particular CII type.

Investor of the open-end fund may purchase or sell fund’s securities on any working day.

In an interval investment fund, investors can purchase or sell the fund’s securities belonging to them only during certain time periods – when periodic redemption offers are made by the fund (at least once per year). The dates of opening and closing such offers are fixed, they are set forth in the fund’s Securities Issue Prospectus, and its Regulation.

Close-end investment funds (or their AMC) are obliged to buy back their securities on the expiration of the time period for which such funds have been created.

Securities:

• of open-end investment funds – are not are subject to unrestricted circulation in the secondary securities market (both organized and non-organized). Dividends on such securities are neither accrued nor paid.
• of interval investment funds – are subject to free circulation in the secondary securities market only during the periods of “closed” position of the funds that issued them. Dividends on such securities are neither accrued nor paid.
• of close-end investment funds – are subject to free circulation in the secondary securities market. Dividends on such securities are accrued provided that this is envisaged by their Issue Prospectus.