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If the fund was in a net redemption position, the manager adjusts the fund's price. The manager would lose if the bid price was fixed above the NAV. He would instead reduce the service charge and lower the bid price to say RM1.28. Assuming the same 5 sen spread, the offer price is set at RM1.33. If Mei Lin happened to redeem at that point, based on a bid price of RM1.28, the return would be only 16.36% despite the fact that the NAV of the Fund has appreciated by 30%. By manipulating the bid price, the manager profited by buying back units from Mei Lin at RM1.28 and sold them at higher price of RM1.30 to the Trustee. Table 2. Summary of Mei Lin's Transaction (bid-to-offer)   Bid Price (RM) Offer Price (RM) NAV (RM) Investment 1.05 1.10 1.00 Redemption 1.28 1.33 1.30 Source : Normandy Research Rate of Return of Fund Y = (NAV2 - NAV1)/ NAV1   = (1.30 - 1.00) / 1.00   = 30.00% Rate of Return for Mei Lin = (Offer price - Bid price) / Bid price   = (1.28 - 1.10) / 1.10   = 16.36% The combination of the fund manager's ability to juggle their pricing policy and NAV coupled with bonus issues and dividends all serves to confuse and frighten off investors. Check the performance of the fund. Go for funds that are transparent and fix their bid prices at NAV. Being transparent gives better indication of a fund's performance. Fund performance tables which are published regularly can be used as a general yardstick to evaluate the performance of unit trust funds. At present, with the implementation of the new regulation for funds to disclose their NAVs, a large number of the unit trust funds have began to fix their bid prices at NAV. The regulation can be seen as a major positive step by the Securities Commision to improve the standards of the unit trust industry. Together with an increasing level of investor awareness and availability of independent performance tables, investors will find unit trusts are are a good alternative to investing directly in the stockmarket. All you need is a little bit of homework.