Wednesday, January 2, 2008

The Role Of The Trustee

Whatever may happen to their performance over time, unit trust managers have a reputation for the stability of their funds that is second to none. Much of this is due the legal framework in which they operate. The government lays down strict rules that unit trusts have to follow and the machinery for ensuring that this is done.
Every individual fund has its own independent trustee, although for administrative simplicity, it is not unusual for unit trust management companies to engage one trustee for all funds. The trustee can be the Public Trustee of Malaysia or any independent trustee of Malaysia or any independent trustee companies.
The trustee's primary role is to see that the terms of the fund's deed are adhered to. The deed is a set of rules under which the trust is run, setting out such things as the investment scope of the fund.
The funds' assets are always in the custody of the trustee. Although the manager makes the decisions about the management of those assets, when to buy and sell, he cannot get his hands on them directly. This system ensures that the funds will not be used for fraudulent purposes. The manager has to deal via the trustee who will ensure that the day-to-day work of running the trust, the funds' accounts, valuations and calculations of unit prices are carried out properly and in accordance with both the deed and the rules laid down by the SC.
The trustee is also responsible for seeing that all the relevant paperwork is carried out. The trustee takes responsibility for overseeing the creation and cancellation (release) of units in the fund. The Guidelines also stipulate that unit trust managers have to produce semi annual and annual reports to its unitholders.