Dear Sir

I refer to "Why unit trust levies performance fees" (Straits Times, 31 Aug 04).

2   Fund managers typically impose fees to reflect the amount of active attention required for the investment strategy adopted for the fund.  Performance-based fees are used by many fund managers around the world as incentives for better investment performance. The level of fund management and performance -based fees are business decisions by fund managers. 

3   MAS does not influence the fees that a fund manager charges.  However we require these fees to be disclosed so that investors can make informed investment decisions.  Performance-based fees should be fair to both the fund manager and the investors. We will evaluate the need for guidelines for calculating performance-based fees in consultation with the industry.

Angelina Fernandez
Director (Communications)