Aileen receives 4% per annum as automatic income from a unit-linked bond. This means she:

• A. encashing 4% per annum of her unit holding.
• B. is getting 4% per annum income return on her investment.
• C. has invested in a bond fund which is growing by at least 4% per annum.
• D. has invested in a high yielding equity fund.

Answer: (A)

Automatic income from a unit‑linked investment is typically a withdrawal of a fixed percentage of the units you hold each year, not a fixed percentage of the fund’s value. So taking 4% per year means she surrenders 0.04 of her units annually. The actual cash received is 0.04 times the number of units times the current unit price, meaning the amount can vary with market movements and the remaining unit balance. This differs from a guaranteed 4% income on the investment value or assumptions about fund growth or fund type. Therefore, encashing 4% per annum of her unit holding best describes how this income stream works.