58. Collective investment schemes (investment funds) in Ukraine.:

In Ukraine, first investment funds were created relatively not long ago – in 1994 and became an important mechanism of the mass privatization process start-up in , although these funds were not ready for the classic collective investment. The classic investment funds, from the viewpoint of their nature and functions, were created in Ukraine in 2003, after the adoption of the Law “On Collective Investment Institutions” (Unit and Corporate Investment Funds)” by the Parliament of Ukraine in 2001.

National collective investment market has been demonstrating positive growth dynamics for over five recent years of its development. It has ensured a sufficiently high rate of investment return, which exceeded the rate of interest on bank deposits. Therefore, Ukrainian investors have obtained a new opportunity to invest and increase their savings

Collective investment institutions (CII) give a new opportunity for Ukrainian investors to invest and increase their savings. They are investment funds that accumulate investors’ money in order to generate profits from investments in other issuers’ securities, corporate rights and property.

In Ukraine, CII include unit and corporate investment funds.

UIF embrace the assets that belong to investors by the right of collective partial ownership, and are managed by an asset management company (AMC), and are accounted for separately from the AMC’s performance results.UIF:

-is not a legal entity, and is established by an AMC by means of placing fund’s investment certificates which are issued by the AMC for the investors;

-signing contracts on purchase or sale of the fund’s assets, the AMC acts on its own behalf;

-AMC performs accounting of the fund’s operations separately from its own performance and other CII’s operations;

-the min. asset volume of the UIF is 1 250 minimum wages.

Corporate investment funds (CIF) are legal entities established in the form of an open joint stock company and conduct only collective investment activity.

-statutory capital of the fund is made from cash, government securities and other issuers’ securities allowed to be traded in a stock exchange or an information system, properties, statutory capital may be increased by monetary sources only;

-not less than 70 percent of the average annual value of its assets should be invested in securities;

-may issue and place shares (be an issuer), involve loans, the volume of which does not exceed 10 percent of the fund’s asset value, in order to buy back shares placed by the fund;

-management of the fund is performed by the AMC on a contractual basis, the fund’s management bodies Gen. Shareholders’ Meeting and a Superv. Board.

Open-end – the fund’s securities are sold and purchased at any time.

Interval – the fund’s securities may be sold to an investor at any time, but their buyback is performed at the investor’s request during the period specified

Close-end – the fund’s securities are placed during the time period specified in the securities issue prospectus and are freely circulated in the securities market.

A limited in time CII is created for a certain period of time .An unlimited in time CII is created for an unspecified period of time. A close-end CII may only be limited in time.

CII are also divided into two types:Diversified CIIs, Non-diversified CIIs There are also venture investment funds – corporate or unit non-diversified investment funds, which may contain over 50 percent of assets invested in corporate rights and securities, which are not listed on stock exchanges.