Have you ever noticed in the newspaper nowadays that the unit trust prices only states the net asset value (NAV) per unit? The newspapers used to quote selling and buying prices, NAV per unit and sales charges but information on unit prices and sales charges have now been omitted.

If you are wondering why this is so, the answer is the implementation of a “single pricing regime” by the Securities Commission.

What is the Single Pricing Regime (SPR)?

Effective from 1st July 2007, all Unit Trust Management Companies have adopted a single pricing for units of all their unit trust funds. Unit prices are now traded at NAV per unit and no longer at dual prices, i.e. selling and buying prices. As opposed to dual pricing where selling prices are calculated based on NAV per unit plus sales charge, you now buy units of a unit trust fund at NAV per unit while charges are quoted and charged separately.

SPR is easier to understand and allows for enhanced transparency and proper disclosure of transaction charges (i.e. sales or redemption charges) imposed on. You will be well aware of the actual value of a fund when they decide to invest and the actual rate of sales charges imposed on them, which do not form part of their investments.

As charges are no longer imputed in the unit price, charges may differ between unit trust distributors and could be imposed based on the level of service provided to an investor. For example, an individual agent may impose a charge that commensurate with the personalised service they offer to an investor, while a bank or a 3 rd party distributor may offer lower charges to walk in investors.

As a recap, below are the changes under this regime:

• As all buying and selling of units will be at one price i.e the NAV per unit, hence only the NAV per unit will be quoted in the newspapers.

• The rates of sales charges are disclosed separately in the prospectus. An investor will also know the actual rate charged to them via the transaction statement.

Benefits to investors

The implementation of SPR benefits investors in terms of:

• Ease of Understanding

As unit prices are the NAV per unit of the fund and sales charges are imposed and calculated separately from the unit price, it is easier for investors to understand and determine the amount that is actually invested into the fund (and thus providing returns to investors), and the amount paid as charges to the unit trust distributor.