If you opt for the cash distribution then you get back the cash.
But if you opt for reinvest, then no effect at all.
Basically, your UT holding value is still the same for reinvesting, so no effect.
For cash distribution means you exit or lock in profit part of your investment.

At least for Malaysia case, no much different, while in US, realised capital gain is taxable, so there is some differences in it.

The most important in UT is to see the NAV keep on increasing over long term period. Distribution is giving out from its incremental of NAV aka profit from the fund.
So the main profit is come from the incremental of NAV <- when the fund portfolio makes profit, NAV increase daily or over the time.

Whether the fund got distribution or not, generally don't need to care much, the most important is too see its NAV incremental. As you said, the dividend/distribution is come from its NAV.

But due to people will comparing their invested UT with FD, generally fund managers will give out distribution so that UT holders knows there is profit made from their investment but in actual sense, the fund already making money.

My explaination quite rough, hope can undertand what I am saying.

Cheers.

01-11-2007: Public Mutual declares up to 10 sen distribution for 4 funds
by Lee Yu Tang
Email us your feedback at fd@bizedge.com

KUALA LUMPUR: Public Mutual Bhd has declared gross distributions of up to 10 sen per unit for four of its unit trust funds for the financial year ended Oct 31, 2007.

The Public Industry Fund had the highest distribution of 10 sen per unit, followed by the Public Equity Fund, Public Islamic Bond Fund and Public Asia Ittikal Fund with distributions of six sen, four sen and two sen, respectively.

Its chairman Tan Sri Teh Hong Piow said the Public Equity Fund and Public Industry Fund had achieved one-year returns of 48.58% and 55.52% respectively as at Oct 12, 2007 on the back of strong performance of the local market.

"As for Public Asia Ittikal Fund, it generated a one-year return of 39.56% for the period ended Oct 12, 2007," he said in a statement yesterday.

Teh said the Public Islamic Bond Fund generated a one-year return of 4.93% for the period ended Oct 12, 2007, according to The Edge-Lipper Fund Table dated Oct 22, 2007. The fund outperformed its benchmark of 3.69% during the period.

Public Mutual, the largest private unit trust company in Malaysia and currently manages 51 funds for over 1.35 million account holders, managed funds with net asset value totalling RM25.6 billion as at Oct 22, 2007.

The least they could do is update their own damn website .....

Public Mutual declares distributions for 8 funds

Public Bank's wholly-owned subsidiary, Public Mutual declares distributions for eight of its funds. The gross distributions declared are for financial year / period ended 30 November 2007:

Public Ittikal Fund                              - Gross distribution of 10.00 sen per unit
Public Dividend Select Fund                - Gross distribution of 5.50 sen per unit
Public Islamic Equity Fund                - Gross distribution of 5.00 sen per unit
Public Far-East Select Fund              - Gross distribution of 4.00 sen per unit
Public Regional Sector Fund              - Gross distribution of 3.50 sen per unit
Public Far-East Dividend Fund            - Gross distribution of 2.00 sen per unit
Public Balanced Fund                      - Gross distribution of 10.00 sen per unit
Public Islamic Balanced Fund            - Gross distribution of 2.25 sen per unit

Public Mutual's Chairman Tan Sri Dato' Sri Dr. Teh Hong Piow said Public Ittikal Fund, Public Dividend Select Fund and Public Islamic Equity Fund have generated a one-year return of 37.43%, 36.63% and 40.04% respectively for the period ended 16 November 2007, according to The Edge-Lipper Fund Table dated 26 November 2007.

As for Public Far-East Select Fund and Public Regional Sector Fund, both funds have generated a one-year return of 43.19% and 35.42% respectively for the period ended 16 November 2007. Both funds have outperformed their benchmarks of 33.10% and 29.53% respectively for the same period.

Public Far-East Dividend Fund which was launched in November 2006, has generated a six-month return of 11.69% for the period ended 16 November 2007.

Public Balanced Fund, on the other hand has also outperformed its benchmark of 21.11%, with a one-year return of 31.71% for the same period. Meanwhile, Public Islamic Balanced Fund has registered a one-year return of 23.46% for the period ended 16 November 2007.

Public Mutual is the largest private unit trust company in Malaysia and it currently manages 54 funds for more than 1,350,000 accountholders. As at 31 October 2007, the total net asset value of the funds managed by the company was RM26.7 billion.

URL: http://www.publicmutual.com.my/article.aspx?id=6401

Basically, total value of a particular fund before distribution and after distribution
is same. So, I don't see any gain in the invesment. Thus, nothing to celebrate
except it makes the fund look cheaper rite?

If you reinvest your distribution, your avearge unit cost will be lowered down.

It depends, if at the time of reinvest, the NAV is higher than your initial purchased price then you average up rather than average down.

you get 3.75% only?

They want to give out distribution each time they can, although basically to normal investors has nothing beneficiary, but to the fund house, they can use the distribution history to lure new investors. They probbaly will say to future potential investors: look our fund giving out 10 cents last year, which yield better than FD. A lot of newbie and non-investment savy person will be tempted in it, just by looking the past or the history.

ya, sorry for the previous post, forget there is no cash involved, my mistake.

Apart from being taxed, the fund also got trade yesterday. It's a combined effect of NAV adjustment after distribution and trading day performance (as of 3 December 2007 which I assumed to be UP).

Correct me if I'm wrong.

I understand Unit Split has totally no meaning to investors. For me, I don't need cash income every year from distribution. And distribution will be taxed. So, for me, I prefer fund manager to do unit split compared to distribution. This is in my case only.

Unit Split and distribution is used to lower the fund price to make the fund price looked like more attractive. This is the marketing strategies by fund managers.

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Added on December 5, 2007, 11:43 am
I don't think PDSF gross distribution is 5.5%. We can see the adjustment is around 3.5% only including the increase of fund price that day, as most of the funds increase that day.

From the memo that I receive, the gross distribution of PDSF is 3.75% only. This is different from the Public Mutual website announcement...

Guess that they have corrected the article.

Previously when I quoted the article, it was at 5.5 cents per unit.

I need some opinion guys. it might sound silly but please give me your 2 cent. i plan to topup in P Ittikal but i got it at a relatively low price at around 0.6. if i were to top up now it will increase my average cost right? so is it advisable? or i did i get the whole idea wrong