Page 74 - Profiles's Unit Trusts & Collective Investments - September 2024

CHAPTER 3

treated as free from deductions for purposes of reinvestment of income when calculating
performance figures, the actual reinvestment of a distribution for an investor occurs net of DWT
(ie, after the fund manager has deducted the withholding tax).

Tricks and Tips
When looking at published performance
figures – and especially when comparing
performance stats from different sources (eg,
fund fact sheets from the fund managers and
independent figures in a newspaper) and/or
offshore funds – always double check to see how
each of the following factors has been treated.
Have costs been taken into account? If
so, exactly which costs are excluded
and which are included in the
calculation? Most performance figures
are net of annual management fees but
don’t take into account initial charges,
broker commissions, trailer fees and
exit fees.
Are the different figures calculated over the same period? A fact sheet might quote a
three-year return to the end of the last quarter while a daily paper or website might show a
three-year return up to the most recent trading day.
Are you looking at absolute returns or annual returns (ie, average percentage per year)? If the
returns are average annual returns, are they compounded annual returns? The difference
between a simple annual average and annual compound returns can be significant (see The
Power of Compounding on page 35).
Does the calculation include reinvestment of distributions? Are dividends reinvested, for
calculation purposes, at the ex-div price, or at the price ruling on the distribution payment
date?
In the event of large discrepancies in reported performance figures for a fund, check for
unusual stats, such as inflation-adjusted performance (sometimes called “real returns”), or
performance relative to a benchmark, or rolling period calculations.

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