A managed fund, as an unit trust, is required to distribute all realised income to unitholders by the end of each FY, by virtue of it being tax transparent. The distribution not only consists of dividend income, but also all realised capital gains (both long term discounted capital gains and short term capital gains). If OP has received a 4% distribution, then that means the fund has REALISED a 4% gain for the year in terms of realised capital gains & dividends (and potentially more unrealised capital gains). That 4% distribution is made to all investors, without consideration for when that investor make his/her investment, as every single trust unit is treated equally (i.e. every unit of that managed fund has the same distribution component attached, a bit like shares having the same dividend entitlement).
In an extreme example, imagine a fund with a starting unit price of $1, which has made a 100% return for the FY (so the unit price is now $2), however it sells out of all its positions prior to the FY end, which means it MUST make a distribution of $1 (and ending up with a unit price of $1 again) to all issued units. An investor that invests right before FY end will receive that taxable $1 distribution despite not having made any capital gains, and therefore potentially lose 25% of his capital in 1 day. If that fund does not sell out of any positions before FY end, the unit price will remain at $2, and there will be no distributions made (as long as no dividends are received).
As for the tax situation you are referring to, there are 2 ways that an investor can be taxed on a managed fund - tax on managed fund distribution, and a tax on capital gain on unit price. The first investor to leave can avoid the tax on the managed fund distribution, but not the tax on the increase of unit price (which has the distribution component added back in). However, since the fund will have to sell assets (potentially at a capital gain) to fund that withdrawal, that means that the capital gains will be distributed equally to all investors. Check out fund distributions during the GFC for instance, and you will see that all of them have vastly increased taxable distributions, despite decreasing unit values.
This bizarre and inequitable tax treatment of managed funds IS the reason why the ATO created the new attribution managed investment trust structure, where tax liabilities are streamed/isolated to each investor. However, as mentioned previously, most managed funds have not elected to adopt it. Moreover, AMIT rules, and managed fund taxation can be quite complex, so you should seek specific advice as to how your investments are treated tax wise.
