New to Investing? Here’s How to Understand a Fund Fact Sheet (MDD)

The 2025 Sanlam Financial Confidence Index shows that 55% of South Africans now set aside money for personal growth or investing. Gen Z leads with 70%, Millennials follow at 59%, and both Gen Xers and Baby Boomers are at 48%. But even though more young people are investing, complicated terms can make it tough to know how to begin.

To make confident investment decisions in exchange traded funds (ETFs) or unit trusts, start by reading the fund’s minimum disclosure document (MDD), also known as a fund fact sheet.

An MDD is a fact sheet that gives you the main details you need to understand a unit trust or ETF, says Duma Mxenge, Head of Business and Market Development at Satrix. “Satrix MDDs outline fund objectives, known as the investment mandate, and key characteristics,” he says.

You can get MDDs from the fund manager’s website. “For Satrix, you’ll find them under the Our Funds tab. Each fund summary page also has a button to download the MDD,” says Mxenge. “This document is important because it has the latest details about the fund. It shows what you’re investing in, the risks, and, while past performance doesn’t guarantee future results, what you might expect from your investment.”

It’s easy to understand the information in an MDD, if you know what you’re looking at. Here’s a quick look at what’s contained in a typical MDD.

Investment Mandate

Start at the top corner of the document, where you’ll see the investment mandate. This is like the fund’s job description.

Benchmark Index

The Fund Information section lists the fund’s benchmark index. “This is a standard used for comparison,” says Mxenge. “For example, the FTSE/JSE Top 40 Index is the benchmark for the Satrix Top 40 ETF. Knowing the benchmark index helps you understand what kind of returns the fund aims for.”

Distribution

In the Fund Information section, you’ll also see the fund’s distribution. “This is the payment made to you, the investor, in the form of a dividend or interest payment,” says Mxenge. “These payments are often made at regular intervals (monthly, quarterly or annually) depending on the fund. Some funds are non-distributing, which means the dividends are automatically reinvested for you.”

Risk Profile

The fund’s risk profile – low (cautious), medium (moderate), or high (aggressive) – is determined by its investments. “Riskier funds often can deliver greater return in the long run, but you should consider remaining invested for longer periods to ‘smooth’ performance when there are market downturns. The lower risk funds will likely deliver lower returns but will be less volatile,” says Mxenge.

Costs

An MDD also includes the costs associated with investments in ETFs and unit trusts. These include the Total Expense Ratio (TER), Transaction Cost (TC), and Management Fee. Each has an asterisk leading to more information, but the basics are simple. “TER is the measure of the total costs or expenses in running a fund. These are typically charged inside the fund. So they are not deducted from your account, but are incurred at a fund level,” says Mxenge. For example, a 0.10% TER on a R100 investment means you’ll pay an annual fee of 10 cents in TER fees.

The TC (also incurred at the fund level) covers charges for buying and selling the fund's underlying holdings, while the management fee (included in the TER) compensates the investment manager for their time, resources, custodial services, and more.

Holdings

Across the page, you’ll see the fund’s Top 10 holdings, which are the assets that a fund is invested in. “For an ETF, it would be the funds in the index that the ETF tracks – for instance, the FTSE/JSE Top 40 Index. This section of the MDD changes regularly, so looking at it helps you to understand where your money is invested,” says Mxenge. Sector Allocation is also important. It shows which economic sectors (technology, real estate, financials, etc.) the fund invests in.

Performance

The MDD shows how the fund has performed over different time frames, like one, three, or five years. This helps you see how returns change over time. The key number to look at is the annualised return, which shows the average yearly growth for each period. Use this number to judge how well the fund has done.

“For example, an annualised return of 20% over three years means the fund would have earned 20% each year for those three years,” says Mxenge. If you started with R100, a 20% return would give you R120. This is after fees are taken out and assumes you reinvested any dividends or interest back into the fund.

“It’s important to remember that your own investment returns might not be the same as the fund’s results in the MDD,” says Mxenge. “This can happen because of when you started investing, or if you made withdrawals or several small investments. Even if you reinvest later, your return will not match the fund’s exactly.”

Mxenge concludes by saying that investors should always understand what they’re investing in and the costs involved. “A qualified financial adviser can be invaluable in helping you understand the MDD and in making sure you’re investing in the correct fund or funds for your needs,” he says.

Disclaimer

_{Satrix consists of the following authorised Financial Services Providers: Satrix Managers (RF) (Pty) Ltd and Satrix Investments (Pty) Ltd. The information does not constitute financial advice. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.}

_{Collective investment schemes are generally medium- to long-term investments. With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document.}  

_{For more information, visit https://satrix.co.za/products.}