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DistributionsAt certain times in a year (usually on a quarterly basis), as an investor in a managed investment you may receive a distribution of income. Income is the money each fund makes through its investments. Income can include dividends from shares, interest payments from fixed interest investments as well as profits from the sale of investments in the funds. For various reasons not all BT funds distribute 1. BT Investment
Funds (Australian dollar unit trust) Keeping an eye on unit prices - before and after distributions An important
thing to note about the structure of managed investments is the
relationship between unit prices and distributions.
As an investor
you may notice that the unit price of your fund falls just after
a distribution.
Profits and
income received by a fund are included in a fund's unit price and
accrue until the end of the quarter. When a distribution occurs,
the accrued profits and income are paid to investors. Consequently,
the unit price will tend to fall by approximately the same amount
as the distribution. This means that if you were to invest at the
end of a quarter immediately prior to a distribution some of your
investment capital may be immediately converted into a distribution
of income.
You will see in the chart that the unit price of the fund fell directly after the end of the quarter, and then continued to grow. All figures
for funds under the BT Investment Funds are in Australian dollars.
Exchange rate fluctuations between the Australian dollar and the
New Zealand dollar affect the New Zealand dollar value of the return
for New Zealand investors. You can choose to have your distribution paid to your bank account, paid by cheque, or reinvested. If you choose to reinvest your distribution, generally no fees are applied. Reinvesting your distribution can make a significant difference to the return of your investment due to the effect of compounding. |