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How to merge multiple unit trusts into one new unit trust?

Lex Wilson

I have 3 funds A B and C with the same fund manager R. The 3 funds have been merged together into a fund called R Group. The units and unit values issued in R Group are not equal to the sum of A B and C. How do I create R Group with no cash in the transaction, ie. what 'Action" and how should I terminate A B and C? I hope this makes sense.

Comments

SusanR

Hi Lex,

I have replicated your set up and I beleive that I have a solution for you.

I created three Brokerage accounts called A, B and C. Each of these accounts had multiple holdings and a zero cash balance.

I then created another account called R with no holdings.

Next step was to use the Enter Transaction feature in Account A and select Shares Transferred Between Accounts. The from Account is A, and the Transfer Account is R. Select Transfer All Securities.

Repeat for Accounts B and C.

Then go to the Account List and select Manage Accounts. Under Investing Accounts, place a tick in the box to remove Accounts A, B and C from the Account Bar.

Finally review Account R. The correct share holdings and amounts are now in Account R and Account R also has a zero balance.

I hope this helps.

Sue

Lex Wilson

Sue, thank you for your prompt response, I can follow your logic but I have a couple of concerns. 1. Let's assume A has 100 units, B has 50 units and C 75 units. Total 250. What 'action' do I use to get a new total of 262. (The new holding is different to the total of the others), 'Adjust'? 2. The new fund was set up on 12 December. I have been getting some payments from A B C in Jan and Feb which have to go to the individual funds for tax purposes. The old funds need to be kept after the consolidation with a zero balance as they have had distributions over the past financial year. I guess I put in the opening unit price after the transfers with no problem. I'm thinking after writing this the only problem is the income rec'd in Jan and Feb, these payments are now finished. Maybe I have to put them before transferring? I hope this makes sense to you? Regards

SusanR

Hi Lex,

Why should/does the new account have a different amount of holdings? This might be that the company may have done a stock split. Do you have any documentation from the company and can you isolate the difference in holdiings?

The transaction types that I would be looking at first most would be 'Add - Shares Added', 'Adjust Share Balance' or 'Stock Split'.

In my earlier post I mentioned removing the original accounts from the Account Bar. That is just housekeeping and they can still be accessed from the Account List (Ctrl + A).

It doesn't really matter the order that you enter the transactions as long as you use the exact transaction date for each transaction.

I hope this also helps - let me know how you go.

Thanks, Sue

Lex Wilson

Sue, I think we are at cross purposes. It is probably my terminology causing the problem coupled with my ignorance of Reckon. I said three funds, by that I mean 3 'unit trusts' ie 3 securities. These 3 securities are managed by the same fund manager, who merged the funds prior to listing it on the exchange. So what I want to do is merge 3 securities into a new Security. Your solution merges accounts. Now that I've tried it I realise that I can't make it work. I'm thinking what I can do is Create a new security called R Group with the new number units and zero price and after insert a unit price. Then "adjust' the no of units in the 3 A B C to zero. However, I think this will cause Recon will insert some of its own transactions which I don't want. The reason the new no. of units is not a total of the old Securities is that there were new valuations so the new Security has a different unit price giving approx. the same market value as the total of the old Securities. There were some distrubitions the make up differences. My apologies for misleading you. Lex P.S. How can I keep this conversation up front when I log in. I have been scrolling through all the questions which are not dated?

John G

Hi Lex,

You can get to your conversation in a few clicks.

Just click on your sign-in name in the top right of this screen and select Profile.

You should see a list of conversations. By default this will be conversations you are following in all communities.

The top line "Show topics" allows you to choose "I created".

Then just click the conversation from the list.

Hope this makes it easier for you.

regards,
John

Lex Wilson

Thanks John, I can find it much more easily now.

I presume Sue will reply to the situation in the email.

Cheers

Lex

John G

Hi Lex,

Yes, Sue is the master on this topic and will get back to you soon.

cheers,
John

SusanR

Hi Lex,

Thanks for the clarification.

Navigate to your Security List and add the new security. Do not add any shares.
In the Brokerage account (that holds all the shares), click Enter Transactions and choose Corporate Acquisition (stock for stock).
Enter the details:

Company acquired: <old security name>
Acquiring company: <new stock name>
New shares issued <1> per held share
Price per share for acquiring company: <new unit cost> (after completion of acquisition)

This moves the quantities over correctly and also the new unit cost. Just remember that some transactions enter more than one line in the Transaction List, so if you need to edit your change, I find it best practice to delete each of the lines and begin again.

I hope this helps.

Sue

Lex Wilson

Sue I think we are now on the same tram. This looks like it will solve my problem. However, when I put in the first transaction transferring 6735 units to the new security Reckon put in 5 transactions. The first moved 6735 units Off the old security, the second put 46 million units in the new security with a unit price to x decimal places but for the right value. the 3 more transactions in the hundreds of thousands of units. I tried several times with the same result. What have I done? Regards Lex

SusanR

Hi Lex,

When you entered the new share price (the 4th bullet point), did you enter the number 1 in the new shares issued per held share (3rd bullet point)? This should stop the software trying to do a calculation because you have the exact same amount of shares.

This transaction should not have 5 split transactions. From memory, I believe it should only be 4. The fifth line could be where the software is trying to backward calculate the new value to the total shares.

Let me know how you go.

Kind Regards, Sue

Lex Wilson

Sue, after following your instructions correctly I have successfully transferred 3 into 1.Thank you.

Now, to get the correct unit holding without affecting cost do I 'remove ' or 'adjust' unit holding.

Regadrs

Lex

SusanR

Hi Lex,

Yay!

Can you please clarify what you mean by correct unit holding?

Thanks, Sue

Lex Wilson

You will remember that the units issued in the new security do not equal the sum of the units of the 3 securities that merged. There were distributions.

I now have to reduce the number of units and put in a higher unit value.

Regards

Lex

SusanR

Hi Lex I believe that your solution from this point is a two transaction process. Firstly Remove - shares removed. This will give you the correct amount of units. Followed by Adjust share balance. This will give you the correct total value. Kind Regards, Sue

Lex Wilson

Sue I still have a problem. If I 'remove shares' the cost is reduced. I need to adjust the unit holding down without changing the cost. After the merger the unit price was increased so thet the lesser number of shares gave the new market value as adjusted by the distributions. The new entity has now been listed so I can adjust the unit price from the stock exchange. If I 'adjust' shares Reckon puts in its own transactions which I don't want. I just need to reduce the number of shares without affecting the cost. Regards Lex