Funds generate income when the underlying investments (for example, stocks and shares) pay income or dividends. As an investor in the fund you can choose to have that income paid directly to your nominated bank account (income shares) or opt to have the income automatically invested into the fund (accumulation shares). Please note that funds may not always offer both income and accumulation shares.
Accumulation shares (Acc)
Funds with Accumulation shares are shown with Accumulation after the fund name. With accumulation shares the income is reinvested automatically thereby increasing the price of the fund.
Accumulation shares, although not paying income, may still generate a tax voucher as the income generated is treated as income for tax purposes. This is with the exception of funds held within an ISA or Junior ISA, where no further tax is payable.
Income shares (Inc)
Please be aware that if you are changing your income preference sometimes, due to timing, your next income payment may be paid before the conversion to your preferred share class is completed.
Funds with income shares are shown with Income after the fund name. With income shares the income could be paid monthly, quarterly, six monthly or annually depending on the fund. Income is always paid into your nominated bank account. Any payments made are treated as income for tax purposes. This is with the exception of funds held within an ISA, where no further tax is payable. Please note that income shares cannot be held within the Junior ISA.