Page 74 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 3

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 out dividends, some unit trusts pay out 5 or 10 days
after declaration, but many pay on the next business day. Different management companies have
different policies when it comes to the frequency of income declaration. Many pay twice a year,
some only pay once a year, and a few (mostly Short Term funds) pay quarterly. Money market
funds pay monthly.

Performance and Reporting
Fund Reports
In terms of notices published under CISCA, every collective investment scheme must submit
regular reports both to the registrar and to investors.
In addition to quarterly fact sheets (MDDs),
CIS managers must also report to investors at
Performance Tables least once a year (within three months after the
Trailing Returns financial year end). The report must contain at
Performance figures measured least the following information:
over different periods up to the same end date, Disclosure of any material circumstances
like the ones used in this handbook, are which affected the portfolio, especially details
usually called trailing returns. Also sometimes of any deviations from the investment policy
called trailing twelve month (TTM) returns or objectives of the fund
because the periods covered are usually Abridged income statement and balance
year-multiples. In the newspaper, performance
figures are usually in this category: 1 year up to sheet for the portfolio
yesterday, 2 years up to yesterday, and so on. Details of any qualification made by the
Newspaper trailing returns therefore answer auditor in his report on the financial
the question, “If I’d invested exactly three years statements of the manager and the portfolio
ago, what would my investment be worth Dates and amounts of each distribution by
now?” In fund fact sheets trailing returns are the portfolio
usually up to the last month or quarter end.
Performance figures for the current and
Discrete Returns
previous years, based on NAV to NAV
Performance figures calculated over set
periods to different end dates are usually pricing, compared, where relevant, to a
called discrete returns. Often these are returns market index
for the last few calendar years, each year Details of all charges levied by the manager,
shown separately, but discrete returns can including any charge levied on the repurchase
also be shown monthly or quarterly. Discrete of participatory interests and any change in
returns highlight fund performance in a range such charges or how they are calculated
of separate non-overlapping periods. The composition of the assets of the portfolio
Compared to trailing returns, they often reveal classified by appropriate category or industry
the ups and down in a fund’s performance.
sector
Rolling Returns
A statement that copies of the audited annual
Like discrete returns, rolling returns financial statements of the manager and of
typically use set periods, but unlike discrete the scheme managed by it are available, free
returns the end points overlap. For example,
three year rolling returns calculated monthly of charge, on request by an investor
denote performance figures for three year For marketing reasons, many CISs report to
overlapping cycles – three years to the end of investors quarterly or half-yearly.
last month, three years to the end of the While on the subject of fund reporting, note
month before, and so on, as far back as that certain mandatory disclosures are also
desired. A scatter plot or an average of rolling required on any marketing material prepared by a
returns often gives a better general CIS manager. These form part of the investor
impression of a fund’s performance over time
than discrete or trailing returns. protection policies underlying CISCA, in terms of

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