Fidelity Accumulation Fund - a scam?

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  • AHB2019
    AHB2019 Posts: 8 Forumite
    Thank you murmeltier, that is very helpful.

    Presumably then a FTSE All Share tracking accumulation fund (like this Fidelity Index UK Fund) should outperform the FSTE All Share index (unless the service charges are consistently more than the dividend payments, which they can't be)? But then why is that not the case?
  • Chickereeeee
    Chickereeeee Posts: 1,179
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    edited 11 March 2017 at 10:38AM
    AHB2019 wrote: »
    Another question: the chart shows the fund performance compared to the FTSE all-share index. Surely if it was an accumulation fund it should massively outperform the index, as it is reinvesting rather than providing an income.

    It is often not clear if a chart is showing simple share price or cumulative performance, including dividends. In this case it is the latter. Or to put it more simply. the that chart is showing the Fidelity Index Acc fund compared to the FTSE All_Share Index, with dividends re-invested. Which is the same thing (excluding charges)

    The easiest way to see what you are looking for, is to go to the Trustnet site, select 'tools' and 'charting' from the header, and compare your fund with the FTSE All Share Index.

    You can then select if dividends are shown re-invested or not. In your case, the Accumulation fund will not change between the two (as it is not paying out dividends), but the FTSE Index will.

    C
  • AHB2019
    AHB2019 Posts: 8 Forumite
    Thank you all for your replies; I now understand it much better. If anyone from Fidelity or any other retail investment firm is reading this, there is a huge opportunity to explain to your customers how the accumulation works for them, highlighting in the annual statement how much dividends are received and reinvested, what impact that has on the unit price etc. I am a trained mathematician, who works in banking, and if a customer like me has to resort to the good folk of MoneySavingExpert forums, then Fidelity really does have a problem in the way it communicates with its customers.
  • GDB2222
    GDB2222 Posts: 24,450
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    I am astonished that a mathematician working in banking didn't understand accumulation units before investing in them.
    No reliance should be placed on the above! Absolutely none, do you hear?
  • masonic
    masonic Posts: 23,062
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    AHB2019 wrote: »
    Thank you all for your replies; I now understand it much better. If anyone from Fidelity or any other retail investment firm is reading this, there is a huge opportunity to explain to your customers how the accumulation works for them, highlighting in the annual statement how much dividends are received and reinvested, what impact that has on the unit price etc. I am a trained mathematician, who works in banking, and if a customer like me has to resort to the good folk of MoneySavingExpert forums, then Fidelity really does have a problem in the way it communicates with its customers.
    This information must be provided because it is needed by those who must declare the notional dividends to HMRC and pay tax on the income. You are probably just not looking in the right place.
  • AHB2019
    AHB2019 Posts: 8 Forumite
    well there are many branches of banking, and I understood the principles of accumulation but not the detail (and evidence) of how it works.
  • AHB2019
    AHB2019 Posts: 8 Forumite
    Well I have spent a lot of time looking at a lot of Fidelity documents and seen nothing; there is certainly nothing in my annual statement, In my case, it is in an ISA, so presumably they don't need to provide that information for HMRC purposes.
  • masonic
    masonic Posts: 23,062
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    edited 11 March 2017 at 11:14AM
    AHB2019 wrote: »
    Well I have spent a lot of time looking at a lot of Fidelity documents and seen nothing; there is certainly nothing in my annual statement, In my case, it is in an ISA, so presumably they don't need to provide that information for HMRC purposes.
    It took me no more than a couple of minutes to go to the Fidelity website, look up the fund, click "Important Documents", "Other related documents", and select the Annual Short Report 29/02/2016.

    Skim reading the contents, I saw that Fidelity Index UK Fund is detailed from page 237 (it's not such a short report). On page 239, there is a table showing "Retained distributions on accumulation shares" for Class W Accumulation shares of 3.28p per unit for the previous 12 months.

    Edit: In answer to your other question, for unwrapped accounts, the platform would normally provide a consolidated tax voucher that customers can use to report to HMRC, but this is not needed for ISAs.
  • AHB2019
    AHB2019 Posts: 8 Forumite
    Thank you Masonic. I am not sure that putting something on page 237 of an annual report (presumably aimed at industry professionals) would count as clear communication with retail customers!
  • TrustyOven
    TrustyOven Posts: 746
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    People here are being a bit too harsh on the OP. Cut them some slack please.

    When I first invested, I too understood the basic principle but didn't understand the mechanics of how the dividends were re-invested.

    It was difficult to see whether the price change of a fund was due to normal market fluctuations instead of the dividends being reinvested.

    And I couldn't get my head around how the fund was tracking how much dividend it was to add to my holding as opposed to other people's holding of the same fund (now I can rationalise it in my head, so it's all good now).
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