Page 70 - Profiles's Unit Trusts & Collective Investments - September 2024

CHAPTER 3

Most unit trusts define very specific days for income declaration. This is usually the last day of a
month end, quarter end or year end (eg, 31 March or 30 June). Most funds pay dividends within
three or four business days after declaration.
The income declaration date is akin to the cum div date for a share. An investor buying a
participatory interest on the income declaration date (eg, 30 June) buys “cum div”, meaning he or
she qualifies for the dividend to be declared at close of trade that day. An investor buying the
following day buys “ex div”, meaning he or she does not qualify for the dividend.
The income declaration date is important because the unit price, all things being equal, will
drop by the value of the distribution between the cum div and ex div date.
As we saw under pricing, income accruals are for the benefit of investors and are incorporated
into the unit price. When income is declared, the income to be distributed is removed from the
portfolio. It follows that if there was no change in the market value of the underlying assets, the
unit price would fall by exactly the amount of the dividend to be paid.
The gap between income declaration and
payment varies from one management company
to another. Some ETFs take over a month to pay Performance Tables
out dividends, some unit trusts pay out 5 or 10 Trailing Returns
days after declaration, but many pay on the next Performance figures measured
business day. Different management companies over different periods up to the same end date,
have different policies when it comes to the like the ones used in this handbook, are
frequency of income declaration. Many pay twice usually called trailing returns. Also sometimes
a year, some only pay once a year, and a few called trailing twelve month (TTM) returns
(mostly Short Term Interest Bearing funds) pay because the periods covered are usually
quarterly. Money market funds pay monthly. year-multiples. In the newspaper, performance
figures are usually in this category: 1 year up to
Performance and yesterday, 2 years up to yesterday, and so on.
Reporting Newspaper trailing returns therefore answer
the question, “If I’d invested exactly three years
Fund Reports ago, what would my investment be worth
now?” In fund fact sheets trailing returns are
In terms of notices published under CISCA, usually up to the last month or quarter end.
every collective investment scheme must submit Discrete Returns
regular reports both to the registrar and to Performance figures calculated over set
investors.
periods to different end dates are usually
In addition to quarterly fact sheets (MDDs), called discrete returns. Often these are returns
CIS managers must also report to investors at for the last few calendar years, each year
least once a year (within three months after the shown separately, but discrete returns can
financial year end). The report must contain at also be shown monthly or quarterly. Discrete
least the following information: returns highlight fund performance in a range
of separate non-overlapping periods.
Disclosure of any material circumstances Compared to trailing returns, they often reveal
which affected the portfolio, especially the ups and down in a fund’s performance.
details of any deviations from the Rolling Returns
investment policy or objectives of the fund
Like discrete returns, rolling returns
Abridged income statement and balance typically use set periods, but unlike discrete
sheet for the portfolio returns the end points overlap. For example,
Details of any qualification made by the three-year rolling returns calculated monthly
auditor in its report on the financial denote performance figures for three-year
statements of the manager and the portfolio overlapping cycles – three years to the end of
Dates and amounts of each distribution last month, three years to the end of the
by the portfolio month before, and so on, as far back as
desired. A scatter plot or an average of rolling
Performance figures for the current and returns often gives a better general
previous years, based on NAV to NAV impression of a fund’s performance over time
pricing, compared, where relevant, to a than discrete or trailing returns.
market index

68 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts