 |
More units when a bonus is declared but no increase in value as each unit is now
worth less. In other words, all you get from a bonus issue is more paper to fill
up your drawer.
|
Table 1. Summary of Transaction 1 (Based on bid
price)
|
|
Date
(1)
|
Action
(2)
|
No of units
(3)
|
Total Units
(4)
|
Bid price (RM) (5)
|
Value (RM)
(4X5)
|
NAV
(RM)
|
| Jan 1 96 |
Buy
|
1,000
|
1,000
|
1.00
|
1,000
|
1.00
|
| June 30 |
|
|
1,000
|
1.20 cd
|
1,200
|
1.20
|
| July 1 |
* Dividend
|
90.91
|
1,090.91
|
1.10 xd
|
1,200
|
1.10
|
| Dec 31 |
|
|
1,090.91
|
1.30 cbi
|
1,418
|
1.30
|
| Jan 1 97 |
* Bonus
|
109.09
|
1,200
|
1.18 xbi
|
1,416
|
1.18
|
cd- cum dividend, cbi - cum bonus issue
xd - ex dividend, xbi - ex bonus issue
* Assume dividend units are reinvested |
Normandy Research
|
Table 2. Summary of Calculation
|
|
| (i) Dividend adjustment |
=
|
1,000 units x 10 sen/unit = RM100.00 |
| Reinvested |
=
|
RM100/RM1.10 = 90.91 units |
| Total units |
=
|
1,000 + 90.91 |
| |
=
|
1,091.91 |
| (ii) Bonus adjustment |
=
|
1,090.91 x 10% |
| |
=
|
109.09 bonus units |
| Total units |
=
|
1,090.91 + 109.90 |
| |
=
|
1,200 |
| (iii) Rate of return |
=
|
( Value as at Jan 1, 1996 - Value as at Jan 1, 1997)
------------------------------------------------------------- x 100%
Value as at Jan 1, 1996 |
| |
=
|
1,416 - 1,000/1,000 = 41.6% |
|
Normandy Research
The one-year return which included the dividends and bonus units based on the bid
price for Encik Saidiís investment is 41.6% as per table 2. The fact is without the
dividends and bonus issues, Encik Saidi would still be able to get the same return.
The return of 41.6% is the pure performance of the fund and it does not include fees,
charges and expenses in which the details can be normally found in the prospectus
of the fund. Thus in this case, Encik Saidi will get less than the calculated return
if those costs were to be included.
|
