Understanding Unit Trust: CUTE Tutorial

UNDERSTANDING
UNIT TRUST
CUTE Tutorial
For Internal Circulation and Training Purposes Only

We operate as John Hancock in the United States, and Manulife in other parts of the world.
Source: FiMM Study Guide – Dealing in Unit Trusts
General Information About the Examination
Duration Two (2) Hours

Format Sixty (60) Multiple Choice Questions
Languages English, Bahasa Malaysia & Mandarin
Number of Re-sit No limit to the number of exam re-sits.
Candidate required to bring along: You should have the following readily
 Sufficient 2B pencils available before taking the examination:
 Soft eraser  Examination No.
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calculator is not allowed)
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after the exam started.
~ ~CUTE Navigational Guide ~ ~

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session.
8
UNIT TRUST EXAM
for Unit Trust Consultants (UTC)

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Objectives
 That the delegates shall:
 Understand the basic concepts and in the Unit Trust
industry.
 Understand how to do the necessary calculations.

 Be aware of the format of the exam questions.
 Be able to answer the past years’ sample questions.

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PROGRAMME OUTLINE
Chapter 1 Understanding Unit Trust
Chapter 2 Regulation of The Unit Trust Industry
Chapter 3 Servicing Clients and Marketing Unit Trusts
Chapter 4 Industry Code of Ethics and Standards of Professional Conduct
Chapter 5 Personal Financial Planning
Chapter 6 Operations of Syariah-Based UTS
Chapter 7 Glossary

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Common pitfalls
In answering CUTE examination questions, the following
are common mistakes made by participants:
1. Not understanding what the question wants. Pay

close attention to words/phrases like “EXCEPT”,
“Which are false”, “NOT” and etc. Questions may not
always ask you for the right answers!
2. Choosing a few right options from a list of

options given eg. Choose the right answer
A. I, II and III, B II and IV etc.

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CHAPTER 1
Understanding Unit Trust

13
Structure of UTS
Unit holders
Possible Distribution Capital Appreciation /

Depreciation
Money pooled from investor
UTMC Trustee
Administers the UTS
UTS Safeguards the Assets
operations of the UTS of the UTS
Possible Capital Invest

Gain/ Income
Authorized Investments
e.g Shares(equity), Fixed Income (bond), Real
Estate, etc

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Structure of UTS
What is Unit Trust Scheme (UTS) ?

A collective investment from the investors with similar objectives to pool
their savings which allowed the investment professionals to invest in a
UTS
UTS
portfolio of securities or other assets.
Unit holders
Unit holders
• Supply $$ to invest in UTMC
• Purchase & hold units in circulation
• Not the shareholder but beneficiary
Unit Trust Management Company (UTMC) / The Manager

• Keep accounting record of UTS
• Promote, distribute & buy back units UTMC
• Calculate NAV & amount of distributions Administers the
• Maintain unit holders account operations of the UTS
• Report to trustee regarding UTS investments

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Structure of UTS
Trustee
• Maintain custody/safeguard of UTS asset
• Ensure fund invested in follow with the Trust Deed
Trustee • Ensure UTMC follow the objectives & interest of unit holders
Safeguards the Assets are protected
of the UTS
• Remove whoever fails to follow accordance with the Deed
• Approves, monitors all financial transaction & collect all
income entitlement
The DEED
• A legal agreement governing UT operations - between
the UTMC, Trustee & Unit holders
• Spells out:
• UTMC rights & duties
• where UTS can be invested
• valuations of units & circulations of prices
• collection & distribution of income
• changes – must get unit holders’ approval (usually via voting)
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Why Invest in UT ?
Benefits of UT
Ready Access to Funds / Liquidity
Within 10 days of receiving the repurchase request
Equity
Diversification
Bond
Balanced
Trust
Real
Estate
Islamic
Trust
Risk i via Portfolio Effect

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Why Invest in UT ?
Benefits of UT
Investment Exposure
various type of asset classes
Professional Management
by experienced Fund Managers
Lower Investment Cost

economy of scale apply via UTMC

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Disadvantages of UT
Risk
Any investment involves risk.
UTS risk is reduced through diversification
Loss of Control
Cannot direct how the savings are invested
Fees & Charges

Impact on unit holders’ returns
Opportunity Cost
Chances to get a better return If investing directly in the
share markets

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Types of UT
Criteria LISTED (Close-ended) UNLISTED (Open-ended)
Listed & Traded Listed on stock exchange Not listed
Unit Prices Demand & supply NAV of the fund
Fluctuate throughout the day & from time to

Price change Unchanged within the same trading day
time
No limit (open ended)
No. of units to
Limited (closed ended) up to the max. approved fund size
sell
can apply to increase with SC
Transaction Via stockbroker after initial public offering Via UTMC & usually through UTC
Fund size Remain unchanged till next public issue Creation of units ;cancellation of units
Redemption When there is demand Anytime
Determined by buyers & sellers, usually trade

Selling Price Stated clearly in prospectus
‘at a discount’.
Example REITs, ETF Manulife Funds

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Classifications of UTS
Syariah UTS
RETURN Government-sponsored UTS
Real Estate Investment Trusts
Equity UTS
Exchange Traded Funds
Fixed Income UTS
Money Market UTS`
Balanced UTS
RISK
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1
Money Market UTS
• Operate similar to a bank account

• Invest in low risk instrument e.g. short-term deposit (loan) to banks & financial
institutions / short-term government securities
• No sales charge /exit fee
• High liquidity & ideal for ‘parking place’
• Regular income distributions
2
Fixed Income UTS
• Mainly invest in Malaysia Government Securities (MGS), corporate bonds & money
market instrument
• Provides a regular income, less emphasis on capital growth
• Generally lower risk & return compare to equity UTS

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3
Balanced UTS
• Mixed portfolio – Equities + Fixed Income + Cash & Property (e.g. listed REIT)
• Objective – preserve capital with regular income
• Its return is higher than money market UTS, saving accounts & fixed deposits
+ + +
4
• Like a listed index – objective to achieve the same return of a market index
• Transaction via stockbroker

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5
Equity UTS
• Invest into shares eg Maybank Share
• Performance are closely linked to the performance of Bursa Malaysia
• Generally, rising share market will result in an increase in value of units, and vice versa
• Types of equity UTS:
i) Aggressive growth UTS
ii) Index or Tracker UTS
iii) Income Objective Equity UTS
iv) International Equity UTS
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• Invests in Retail and Commercial office property eg Axis REIT
• Return - rental income + value of the property over the period
• Performance - property market trends
• Valuation includes rental and vacancy rates, management expenses, location and physical
attributes of the property
• Illiquid, indivisible, majority closed-end & listed on a stock exchange
• Transaction via stockbrokers

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7
Syariah UTS
• Syariah compliance / halal investment

• Exclude gambling, alcoholic beverages, financial, non-halal food products etc
• Avoid ‘riba’ (interest)
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Government-sponsored UTS
• Represent the bulk of UTS (by value) managed by the unit trust industry in Malaysia
• Generally invest on a balanced portfolio
• Mobilize the savings of Bumiputra and to invest in Malaysian companies under the New
Economic Policy
• E.g Skim Amanah Saham Nasional (ASN) by Permodalan Nasional Berhad (PNB)

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Method of Investing
Lump Sum Purchase
 One time investment.
 Time horizon – capital gains – the longer, the better chances to reap greater return
Reinvestment of Income
 Compounding effect
Regular Savings (Dollar Cost Averaging)
Investment amount Unit price Unit hold

Average cost:
RM 1,000 RM 1.00 1,000
RM 5,000 / 6,492 units = RM0.77
RM 1,000 RM 0.75 1,333
RM 1,000 RM 0.50 2,000
Current value :
RM 1,000 RM 0.80 1,250 6,492 units x RM1.10 = RM7141.20
RM 1,000 RM 1.10 909
* Assuming the current NAV is RM1.10
Mthly / Quarterly Units affected by $ (>or <), Ideal in

same $ Volatile mkt – avg risk

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Method of Investing
Borrowing to invest
 Borrow from Financial institution
 Leveraging / gearing – ensure return higher exceed than borrowing cost
 Transaction between unitholder and financial institution
 Eligible age: 18 to < 55 years
 Max. loan-to-valuation ratio / margin = 67%. Balance – own $$.
 No projection of returns
 Risk Disclosure Statement – investor must sign
 Risks
 Interest rate fluctuation
 Default in repayment
 Premature Repayment of loan
 Margin call
Calculate Loan-to-valuation ratio

Total investment RM100,000
Max. loan-to-valuation = 67%
( 67% X RM100,000 = RM67,000 )
Balance from own pocket money = 33%
( 33% X RM100k = RM33,000 ) Not encouraging

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Measuring Return
Raw Return
• Total return achieved by holding an investment over a particular period
• Show the % difference between buying and selling price
Year 1990 Bought RM2 RM3

Year 1998 Sold RM5
Raw Return = 150% ( RM3 / RM2 ) x 100
• Problem: No TIME dimension. E.g. 150% return over 5 years is better than over 8 years
Annualized Return
• The average annual return achieved by the investment holding period
Raw Return = 150% over 8 years
Annualized Return = 150/8 = 18.75% per annum
Performance Table
• Total return over a time frame
• Ranking & Quartile
• Benchmark
• Risk Measures
• E.g Lipper, Standard & Poor / Morning Star
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Effective Rate of Return & Compounding Factor
The effect of charges on investment returns:
Assume an investor invested RM100,000 in a UTS that has initial entry cost of 7% with an
MER of 2% for 5 years and 12% of return every year.
“Working Money” : RM100K
1+7%
: RM100K
1+0.07
: RM100K
1.07
: RM93,457.94
MER : 2% p.a.
Rate of Return : 12% p.a.
Effective Rate of Return = 12% - 2% = 10%
Compounding Factor For Lump Sum Investment :
Formula FV = PV (1+i)n
Where i = rate of return
n = no. of years
Compounding Factor FV = RM93,457.94 ( 1+10%)5
= RM93,457.94 (1+0.1)5
= RM93,457.94 (1.1) 5
= RM93,457.94(1.6105)
= RM93,457.94 x 1.6105 = RM150,514.01
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What is NAV ?
•Net Asset Value (NAV) – Buy / Sell
•True price of the fund
Expenses, Fees & Costs
•Calculated every Business Day
•Single-pricing regime, starting 1st July 2007
•Published daily in at least 1 national BM & English newspaper
respectively
Transaction Cost Factor (TCF)
• Fund investment bought / sold will incur TCF e.g. brokers’
commissions
• To be added to NAV to determine the unit prices
Forward / Historical Pricing
• Forward Pricing – transaction done based on the price which will be
determined at the end of the business day
• Historical Pricing – transaction done based on the price which was
determined yesterday Yesterday Today
$ Forward
$
Historical
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Calculate NAV
Fund NAV
NAV per unit =
Units in circulation
Example - NAV of ABC Growth Fund = RM24,000,000 with 12,000,000 units in

circulation.
Assuming no transaction cost factor applies as it is not material.
RM24mil
NAV per unit =
12mil
= RM2.00

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Income Distribution

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Income Distribution
 NAV fall by exactly NAV of UTS fall by exactly the same amount as the distribution paid
 Payment of a distribution is not a ‘bonus
Example Distribute: 8 cent
NAV Fund Size cd = RM8,000,000

Before
Units in circulation = 10,000,000 units
Distribute
NAV cd (before distribution) = RM0.80
Income Distribution = RM0.08

NAV xd (after distribution) = RM0.72 After
NAV Fund Size xd = RM0.72 x 10,000,000 units Distribute
= RM7,200,000
Income
Income Received = RM0.08 x 10,000,000 units
Received
= RM800,000
NAV Fund Size xd = RM7,200,000 + RM800,000 Value of the
= RM8,000,000 fund
With distributions reinvested If Market h , Value of Fund h

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Unit Split Distribution

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Unit Split Distribution
• Single unit in UTS  two or more units e.g. Unit split of 1:5 – 1 additional unit for every 5 units
• Sometime mistakenly referred as ‘bonus’ issue of units
• Does not add value to the unitholding
• Why split? To lower unit $ and attract new investors
NAV Fund Size = RM8,000,000

Before
Units in circulation = 10,000,000 units
Split
NAV cb(before unit split) = RM0.80
Unit Split Distribution = 1:5

Total units entitled = 6 1:5
X 10,000,000 units
5 Effect
= 12,000,000 units
NAV Fund Size xb(after unit split) = RM8,000,000

12,000,000units After
Split
NAV xb = RM0.67
NAV i , Units h If Market h , Value of Fund h

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Distributions & Unit Splits
Distribution Unit Split
NAV Drop Same

Unit in Circulation Same Increase
NAV per unit Drop Drop

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Prospectus
A legal & financial document for potential / existing investors with all necessary
information to make informed investment decision
Knowing the Prospectus
• Cover page
• Key Data Section (max. rate of initial service fee &
exit fee to be disclosed)
• UTMC, Fund Manager & Trustee Details
• Risks
• Sales & Purchase of Units
• Portfolio Turnover Ratio (PTR)
• Account’s Report
• Etc…
• A summary of Trust Deed
• Must be approved by SC
• No sale of units can be made without a prospectus / expired
prospectus
• Must update / renew every 12 mths
Supplementary Prospectus

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Calculate PTR
Portfolio Turnover Ratio (PTR)
• How frequently the fund managers buy and sell the assets.
½
½ xxx(((Total
½ TotalInvestment
Total InvestmentAcquisitions
Investment Acquisitions+++Total
Acquisitions TotalInvestment
Total InvestmentDisposals
Investment Disposals)))
Disposals
PTR
PTR ===
PTR
Average
Average Fund
Average Fund Size
Fund Size
Size
• Example:
ABC Growth Fund sold investments with gross proceeds of RM1,159,206 &
purchased additional investments as a gross cost of RM921,458. Average fund size
is RM3,122,250
½ x ( RM921,458 + RM1,159,206 )
PTR = = 0.33 times / 33%
RM3,122,250
On average, the portfolio of the fund will be completely turnover/replaced about once in
every 3 years
PTR h = Portfolio bought & sold fast / investment activities h
PTR n = Portfolio completely turned over
PTR i = More conservative managed (buy & hold)

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Cost & Charges
Initial Service Charge
• Front-end load fund / Sales Charges
• To cover the cost of marketing, advertising & distribution
Annual Management Fee

• To cover the management expenses incurred by the Manager (maintenance of unitholder’s
register, proper records)
Annual Trustee Fee

• To cover the custodial management & admin. Of Fund’s assets ( transaction settlement,
custody)
Management Expense Ratio (MER)

• Measure of various operating costs
Total Expenses of Fund

MER = X 100%
Average Fund Size
* Total Expenses of Fund = Fees + Recovered Expenses
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Calculate MER
Fees & Charges Amount (RM)
Management Fee 31,764
Trustee Fee 6,078
Auditor’s Fee 1,200
Bank Charges & others 2,482
Total Expenses 41,524
Average Fund Size RM3,122,250
41,524
MER = X 100
3,122,250
= 1.33%
i MER = h efficiency of the Fund Manger

Refer to fees to be borne by the unit holders or fund

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History of UTS
Year Fund Fund Name UTMC
1959 First Unit Trust First Malayan Fund Malayan Unit Trust Limited
First totally Malaysia unit

1966 trust fund
Malaysia Investment Fund Asia Unit Trust Bhd
1967 First Bumiputra fund First Mara Bumiputra fund Amanah Saham Mara Bhd
1974 First stated-owned fund Amanah Saham Pahang Amanah Saham Pahang Bhd
First National Bumiputra unit

1981 trust fund
Amanah Saham Nasional PNB
Second national Bumiputra Amanah Saham

1990 fund Bumiputra
PNB
1996 EPF Scheme approved as investment in UT
2000 First Islamic Bond Fund RHB Islamic Bond Fund RHB
The Malaysia Capital Market Masterplan is announced by the SC, highlighting significant
2001 opportunities for growth in the unit trust industry over the next 10 years
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Question 1:
NAV AMOUNT INVESTED

0.50 RM1500.00
0.60 RM1500.00
0.70 RM1500.00
Calculate the average unit cost for the above investment.

A. RM0.59 B. RM0.95 C. RM0.78 D. RM0.64

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Question 2:
Initial investment = RM80,000.00

Rate of return = 10%
Ongoing management fee = 1.5%
Service charge = 5%
2a) What is the return of the investment after 3 years? (Use 4 decimal points for your
calculation)
A. RM97,074.80 C. RM97,174.80
B. RM97,318.10 D. RM101,156.00
2b) Assume that the ongoing management fee is 1% instead of 1.5%, what is the value
of investment after 3 years? (Use 4 decimal points for your calculation)
A. RM98,666.67 C. RM90,516.00
B. RM98,420.00 D. RM95,280.00

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Question 3:
NAV cum-distribution for a unit trust fund is RM200million. Unit in circulation is

380million units and the fund manager is charging a 5% initial service charge.
(Please use 3 decimals for calculation purpose)
a) If the distribution declared is 3.5 cents per unit, how much is the NAV price per
unit ex-distribution?
A. RM0.49 C. RM1.86
B. RM0.52 D. RM1.96

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Question 3:
b) Based on the above answer and assume that a client invested RM10,000 ex-
distribution, how many units will she get for her investment?
A. 20,408.16 units C. 5,120.33 units

B. 19,436.34 units D. 5,102.04 units
c) If the initial service charge is reduced from 5% to 3% and based on the

selling price ex-distribution, how much savings can the client get, given the
same investment amount in previous question?
A. RM326.53 C. RM327.95
B. RM184.93 D. RM200.00

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Question 4:
Number of units held before unit split: 18,000 units

Total value of investment before unit split : RM6,000.
Unit split ratio: 1 : 3
4a) How many units will the investor hold after the unit split exercise?
A. 24,000 units C. 16,000 units

B. 18,000 units D. 6,000 units
4b) What is her total investment value after the unit split exercise?
A. RM2,000 C. RM8,000
B. RM6,000 D. None of the above

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Question 5:
For the Financial Year Ended 30 Dec 200X, the financial statement of ABC Fund
shows that the following expenses were incurred:
Management Fees - RM1,340,999

Trustee Fees - RM 730, 173
Auditors Fee - RM 172, 641
Bank charges & other expenses - RM 361, 594
The average Fund Size for ABC fund during the year was RM 250, 492, 853.
Calculate the MER of the fund for the year ended 30 Dec 200X.
A. 1.07% B. 1.03% C. 1.08% D. 1.04%

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Answer:
1) A
Total amount invested = RM4500.00
Total units invested

= (1500/0.50) + (1500/0.60) + (1500.00/0.70)
= 3000 + 2500 + 2142.86
= 7642.86 units
Average unit cost

= RM4500.00/7642.86
= RM0.5887
= RM0.59

48
Answer:
2a) B
Initial investment = RM80,000.00
Working money = RM80,000/(1+5%)

= RM76,190.48
Value end of year 3 = working money x ( 1 + i )n

= RM76,190.48 x ( 1 + [ 10% - 1.5% ] )3
= RM76,190.48 x ( 1 + 0.085 )3
= RM76,190.48 x ( 1.085 )3
= RM76,190.48 x 1.2773
= RM97,318.10

49
Answer:
2b) A
Value end of year 3 = working money x ( 1 + i )n

= RM76,190.48 x ( 1 + [ 10% - 1% ] )3
= RM76,190.48 x (1.09)3
= RM76,190.48 x 1.2950
= RM98,666.67

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Answer:
3a) A
NAV per unit cum-Distribution = RM200million/380million units

= RM0.526
NAV per unit ex-Distribution = RM0.526 – RM0.035

= RM0.491
3b) B
Amount invested
= RM10,000/(1+5%)
= RM10,000/(1.05)
= RM9523.810
Number of units ex-distribution
= Amount invested/NAV per unit ex-Distribution
= RM9523.810/0.49
= 19,436.35 units
51
Answer:
3c) B
Difference between:
Working money (with 5% service charge) and Working money (with 3% service charge)
= [RM10,000/(1+5%)] – [RM10,000/(1+3%)]
= RM9523.810 – RM9708.738
= RM184.93
4a) A
Pre US Post US
3 4
18000 units 4/3 x 18000 units = 24000 units
4b) B

52
Answer:
5) Answer D
MER = Total Expenses X 100

Average fund size
= RM 2,605, 407 X 100

250,492,853
= 1.04%

53
CHAPTER 2
Regulation of the Unit Trust Industry

54
Regulations of the Unit Trust Industry
Why regulatory?
• proper disclosure to investor
• control over market participants (restriction
on person involved)
• prevent improper market practices
Main Objective:
Protect the interest of prospective investors
Unit holders & existing unit holders
or
Prospective SC: Securities Commissions
Investors UTMC: Unit Trust Management Company
Other Government Regulators:

MoF: Minister of Finance
BMB: Bursa Malaysia Bhd
BMSM: Bursa Malaysia Securities Bhd

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The Securities Commission
• Securities Commission Act, 1993

• Capital Markets and Services Act (CMSA) 2007 (‘the Act’)
• the Act empowers SC to regulate the UT industry
• Mission:
• Promote & maintain fair, efficient, secure & transparent securities & futures markets
• Facilitate the orderly development of an innovative & competitive capital markets

56
The Securities Commission
SC functions:
• Advise the Minister of Finance on matters relating to the securities & futures industries
• Regulate all matters relating to UT industry & securities & futures contracts
• Ensure that the provisions of the securities laws are complied with
• Encourage & promote self-regulation
• Licensing & supervising all licensed persons & registered persons.
• Ensuring proper conduct of market institutions, licensed persons & registered persons
• Supervising exchange, clearing house & central depository
• Regulate take-overs & mergers of companies
• Approving authority for corporate bond issues & equity issues
Role of FiMM
• Approved by SC as a registering body for all UT distributors & management companies
• Promotes self-regulation for the UT industry
• Formulates sound & ethical business practices

57
Laws & Regulations
• Guidelines on UT Funds
• Prospectus Guidelines for Collective Investment Schemes
• Guidelines on Marketing & Distribution of UT Funds
• Guideline on UT Fund Advertisement & Promotional Materials
• Guidelines on Prevention of Money Laundering & Terrorism Financing for
Capital Market Intermediaries
• Guidelines for Registration of Institutional Advisers for the Marketing &
Distribution of UT (IUTA)
• Guidelines for Registration of Corporate Unit Trust Advisers for the
Marketing & Distribution of UT (CUTA)

58
Regulations of the UTMC
Overview:
• Requirements & responsibilities of UTMC
• Approval of UTS
• Prospectus of UTS
• Advertising of UTS
• General Characteristics of UTS investment
Requirements of UTMC
• be a license holder under CMSA
• appoint an Investment Committee / Syariah Committee to
oversee the prudent and efficient investment of each UTS
• Board of Directors (at least 2 independent members), CEO must
be full time
• Appointed Shareholders & Directors & CEO must not have been:
 Subjected to bankruptcy, inquiry/investigation by
government/statutory authority
 Convicted for fraud or dishonesty or punishable with imprisonment
of one year or more
• Have adequate resources & system
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Responsibilities of UTMC
• Safeguard unit holders’ interest

• Manage & administer in accordance with deed & laws
• Ensure assets of UTS are clearly identified & properly segregated
• Keep proper records of a UTS
• Ensure information acquired is not improperly used
• Provide UTS reports – Interim & Annual
• Call for unit holders meeting
• Keep the registration of unit holders

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Approval of UTS
• Establishment of new UTS must be approved by SC
• Registration for the appointment of UTMC’s directors,
key personnel, members of UTS investment
committee, syariah committee & panel of advisers
• Registration of deed
• Post vetting & registration of prospectus
• Increase in fund size
• Investment in foreign markets

61
Prospectus of UTS
• Important legal document & must be authorized by the directors of UTMC
• Contains information that is reasonable expected / require by
investors/advisers
• Must not contain false/misleading information/material omission
• Must be registered with SC
• No sales can be made - without prospectus / expired prospectus
• Supplementary / Replacement Prospectus – significant changes, material
information is misleading or false, material omission of information
Advertising of UTS
• Advertisement must be accurate & honest
• Reference to risk involved in investing in UTS
• Display warning statement
• A & P must be approved by UTMC & registered with SC

62
Regulations of the Trustee
• Appointment approved / registered by SC

• Independent of UTMC & UTS
• Responsibilities by Trustee:
 Act honestly in accordance with deed & law
 Safeguard the interest of unit holders
 Acts as Custodian of assets in UTS
 Holds assets for physical safekeeping
 Ensure UTMC properly manages & administers the UTS
 Notify SC of any irregularity
 Ensure all provisions of the deed is followed
 Call for unit holders meeting
 Investment policies are sound and in the interest of unit
holders
63
Regulations of Marketing & Distribution of UT
Designated Distributors
• UTMC - Staff / Agents
• IUTA
IUTA staff / banker (min. 2 UTCs)
CUTA – 3rd party distributor (min. 2 FPR licensed Financial Planning Representative)
Dealing in UT
UTMC, IUTA & CUTA are responsible for ensuring that all persons involved in
the marketing & distribution of UT are UTC registered with FiMM. UTC must
be:
 At least 21 years old
 Min academic qualification: SPM
 PASS – UT Exam
 Honest & good personalities

64
Regulations of Marketing & Distribution of UT
Authorisation Card
• UTC must show the card issued by FiMM when meeting up with prospective
investor
• UTC must ensure the card is Valid & Renewed before it expires
Agency Structure
• Agency tier:
1) Group Agency Manager
2) Agency Manager
3) Agency Supervisor
4) Agent
• Must be no more than 4 tiers
• A unit must not exceed 50 persons
• Agent not allowed to recruit agent

65
Question 1:
What is one of the functions of FiMM (FMUTM)?
A. Reviews all materials prior to release to the public

B. Generates all the guidelines that unit trust companies comply to and to report to
the Compliance Authority if non-compliance is found
C. Provides a common platform for unit trust companies to discuss issues in the
industry
D. A governing body which regulates the investment made by the unit trust
management Company

66
Question 2:
Below are the minimum requirements for registration of UTC as outlined by

FiMM (FMUTM), except:
A. Had not been convicted with a criminal offence

B. Must posses at least Grade 3 in Sijil Pelajaran Malaysia (SPM) (or its
equivalent as determined by FiMM)
C. Must be at least 18 years old at the point of registration to become the UTC.
D. Must not be found by a court to have acted fraudulently or dishonestly.

67
Question 3:
Which is not true regarding the role of FiMM (FMUTM)?
A. To provide self-regulation for the UT industry

B. Appointed by the SC to conduct unit trust examinations for persons wishing to
become UTC
C. To advise the Minister of Finance
D. To work closely with the SC in the development and growth of the unit trust
industry

68
Question 4:
It is important for the UT industry to be regulated in order to protect clients’

investments. Which of the following is not an authority involved in UTS regulation?
A. Ministry of Finance
B. Bank Negara Malaysia
C. Institute Bank-Bank Malaysia
D. Securities Commission

69
Answer:
1) C
2) C
3) C
4) C

70
CHAPTER 3
Servicing Clients & Marketing UTS

71
Buy, Switch & Sell*
* Sell = Repurchase
Unit holders’ execution SWITCH

BUY SELL*
Cooling-off right ? Queries & Complaints
Buy notice Disposal of units 10 calendar days

Statement and reinvest to Income Distribution to liquidate
Interim (half year) & another UTS
No. of units, Total Annual Report (1 $
under same Sell notice Statement
Amount, Sales year) UTMC
Charge & etc Change Market &
No. of units, Total
Interim and annual Amount, balance,
Portfolio
reports should Sales Charge exit fee & etc
have receive Switching Fee
within 2 mths after
the end of financial UTMC’s execution
period
UTMC : Coordinating & controlling various stages in the process, account maintenance.
Trustee : Supervise the purchase & sales of units = watchdog, ensure process in accordance to the deed &
regulatory requirements
Bank : Maintain the trust bank a/c, receives funds & honor cheques
Fund Manager : Keep an eye on cash flow in and out of the fund, ensure funds is fully invested as regulations &
prudent investment policy dictates
72
Cooling-off Rights
• Safeguard for investor who may have purchase units without fully understanding.
• Exercise within 6 business day with FULL Refund in:
- NAV/unit for the purchase day
- Service charge/unit imposed for the purchased day
• Only applicable for First Time investing with the respective UTMC
• Not applicable to:
- Corporate / Institutional investors
- Staff of UTMC
- Unit Trust Consultant (UTC) of UTMC

73
Cooling-off Period
Exercises:
Mr. A invested RM1,000 in ABC Fund on Monday (1 June
XX). Assuming that the Manager observes the minimum
cooling-off period as stipulated in the Guidelines, when is the
last day for him to exercise his cooling off rights? ____
How much will Mr. A get back? ____

74
Cooling-off Period
Based on the question given:
Mr. A’s last day of exercising his cooling-off right is on 8 June
XX,
2. ABC Fund on 1 June XX:
NAV per unit = RM 0.95,
Purchase Price = RM 1.00,
Service Charge = RM0.05,
Total unit credited = RM1,000/RM1.00
= 1,000 units

75
Cooling-off Period
Hence, The amount to be refunded
= ( NAV per unit on 1 June XX +
Service charge on 1 June XX) x units
credited on 1 June XX
= (RM 0.95 + RM 0.05) x 1,000 units
= RM1,000

76
Cooling-off Period
Quick Quiz:
Assume that the Manager observes the minimum cooling-off
period as stipulated in the Guidelines.
Mr. Z invested RM1,000 in DEF Fund on 11 July YYYY,
Tuesday
Q: Can Mr. Z exercise his cooling-off rights? How much is he
going to get back?
NAV NAV+ISC ISC Answer
11 July YYYY 0.95 1.00 0.05
i) 14 July YYYY 0.96 1.01 0.05 Yes, RM1,000
ii) 18 July YYYY 0.94 0.99 0.05 Yes, RM1,000
iii) 19 July YYYY 0.94 0.99 0.05 No, RM940
iv) 29 July YYYY 0.97 1.02 0.05 No, RM970
77
EPF Transfers
Effective 1 January 2007, Account 3 no longer exist.
Account 2
30%
Medical/ Housing/ Account 1
Mortgage/ 70%
Repayments/ relating Retirement /
to housing loan/ Investment
Education /
A/C 2 + 3 = A/C 2 now
Pre-retirement
Conditions Effective 1st Feb. 2008

Min. amount in A/C 1 Min. mandatory retained amount in A/C 1
Min. investable amount RM1,000
Max. investable amount 20% after deducted min. mandatory retained amount in A/C 1
Period 3 months from disbursement date
Step 1 : EPF A/C 1 balance

Step 2 : Investor Age – refer to Min. mandatory retained amount = Y
Step 3 : Y x 20% = Investable amount

78
Withdrawal Conditions from EPF

79
Withdrawal Conditions from EPF
A/C 1 Min. mandatory Computation:
Member Age Balance retained amount Member’s Eligibility
in A/C 1 (b) (a – b) x 20%
(a)
Not Qualified
A 22 4,000 7,000 - Saving < min.
mandatory amount
Not Qualified
(8,000 – 7,000) x 20%
B 22 8,000 7,000 Min. investable amount
= RM200
= RM1,000
(20,000 – 7,000) x 20%

C 22 20,000 7,000 Qualified
= RM2600
Documents required
• KWSP Form 9N (AHL)
• Certified True Copy of photocopy I/C
• Left and right thumbprint affixed on the above photocopy

80
Distribution Equalization
Distribution Equalization
A portion of money set aside from investments to equalize unit holders’ distribution income
Distribution equalization = Undistributed income

Net Asset Value of Fund
Eg. Undistributed income = RM100,000

NAV = RM40,000,000
Distribution equalization = RM100,000
RM40,000,000
= RM0.0025 sen/unit
Note: For every unit sold, RM0.0025 will be set aside to equalize the earlier unit holders’
distribution income.
Assuming there’s 1,000 units,
Distribution Equalization = 1,000units x RM0.0025 = RM2.50
81
Distribution Warrant
Warrant no. No. of units Year ended Distribution No. Payment date
47638 1,000 31 May 200X 67 7 July 200X
Non
Taxable Tax Tax Non Distribution
allowable Net payable
income Malaysian Foreign taxable equalization
expenses
50.00 14.00 - 60.00 450.00 2.50 428.50
Net payable = Taxable income – Malaysian tax – Non allowable expenses + Non Taxable +
Distribution equalization
= 50 – 14 – 60 + 450 + 2.50
= 428.50

82
Basic Principles of Marketing UTS – Why fail?
 Product Awareness
 “Not for me”
 UTS performance
 Risk elements
 Previous bad experience
 Other investment alternatives (substitute)
- Cash & FD
- Direct Shares Investment
- Direct Investment in Property
- Offshore investment
- Other financial derivative products

83
Question 1:
Which is the term used for an investor who opts receive their income distribution in
the form of units instead of cash?
A. Repurchase Price
B. Distribution Reinvestment
C. Distribution
D. Cash Distribution

84
Question 2:
UTMC must publish at least how many reports in one financial year?
A. One
B. Two
C. Three
D. Four

85
Question 3:
Which of the following is (are) investment alternative(s) to unit trusts?
A. All of the optional answers are correct

B. Fixed deposits
C. Property
D. Direct shares investment

86
Question 4:
The alternative investments besides unit trust are:
I. Cash & Fixed Deposits

II. Direct Share investments
III. Direct property investments
IV. Financial derivatives products
V. Offshore investments
A. None of the above

B. All of the above
C. I, II, III, IV
D. I,II,III

87
Answer:
1) B
2) B
3) A
4) B

88
CHAPTER 4
Industry Code of Ethics & Standards of
Professional Conduct

89
Basic Principles of Compliance
 UT Industry mobilize the saving the savings of average, small
investor by funneling these savings into areas where capital is
required
 In all investment-related industries, investor need to have

confidence in the product.
What is Compliance?
 Discipline of ensuring the laws, regulations, codes of conduct,
internal procedures & rules within an organization, its officers &
UTC operate are complied with
 Regulators (e.g. SC) promoting the value of compliance in order

to protect investors in the capital market.

90
How UTC benefit from Compliance?
 Reduction in client complaints & cost of restitution

 Reduced risk of litigation by clients
 Enhanced reputation
 The assurance of a continuing career in the fast-growing unit
trust industry

91
What is ‘Ethics’?
 Government regulators are developing some of their regulatory
responsibility to industry participants.
 A principle or process known as ‘Self-regulations’.
 Represent a system of moral principles by which the action of UTC may
be judged good or bad; right or wrong.
The FiMM Code

 Part A - For ordinary members of FiMM = UTMC
 Part B - For IUTA
 Part C - For UTC
• UTC should familiar with Part A & B so that can appreciate the importance of
the internal rules imposed.
• There are similarities & different requirement under Part A & B, which are:
• A Code of Ethic
• Standard of Professional Conduct
92
Code of Ethics & Standard of Prof. Conduct
UTMC & IUTA - Code of Ethics
1. Professionalism – knowledge in all areas and aspects of UT industry
2. Integrity – honest, “with the best interest of investor in mind
3. Confidentiality – disclosure of client details
4. Dignity – damage the reputation of other competitors
5. Conflict of Interest – personal dealing & investment & gift or benefit from clients
UTMC & IUTA - Standards of Professional Conduct

1. Compliance with laws
2. Breach of laws

93
Code of Ethics & Standard of Prof. Conduct
UTC - Code of Ethics
 Honesty, Dignity & Integrity  Confidentiality
 Professionalism
 Fair Dealing
 Acting with due care, skill and diligence
 Good Faith  Prompt, efficient and continuous service
 Competence
UTC - Standards of Professional Conduct

 Compliance with laws
 Use of authorization card
 Appropriate designation or title
 Marketing and distribution with prospectus
 Adequate explanation of the nature and characteristics of a UTS
 Advertisement and promotional materials
 Appointment of qualified persons
 Duty to supervise and monitor
 Keeping abreast with the unit trust industry
 Disciplinary proceedings

94
FiMM Disciplinary Proceedings
COMPLAINTS
•handled by UTMC or IUTA, can go to FiMM
•Written form.
FiMM Exe. Director  Council Member (14biz days)
Investigating Committee
Valid Invalid
Disciplinary Dismiss
Committee
Appeal
Appeal
Committee
UTMC/IUTA
Punishment
decide by SC Suspended /
Terminated Refer to the manual page from 4-36 to 4-38 for details
95
Question 1:
An investor bought unit trust from an agent who provided incorrect information
about the fund. With whom can the investor lodge a complaint?
I. Federation of Malaysian Unit Trust Managers (FMUTM)

II. Securities Commission
III. Unit Trust Management Company concerned
IV. Ministry of Finance
A. I, II & III B. II only C. II & IV D. I & II

96
Question 2:
Which of the following forms the minimum standards of conduct expected of

registered Persons Dealing in Unit Trusts (PDUT) and are intended to be a guide to
ascertain whether a registered PDUT is acting in a manner which continue to satisfy
the Minimum Standards for Registration?
A. None of the optional answer is correct

B. Code of Ethics and Professionalism
C. Code of Ethics and Standards of Professional Conduct for Multi-level Marketing
D. Code of Ethics and Standards of Professional Conduct

97
Question 3:
In order to enhance professionalism in marketing of unit trusts:
A. It is important to recommend to potential clients the best performing unit

trusts regardless of the suitability of her risk profile to the fund
B. It is irrelevant what promises are made to clients with respect to investment
returns
C. It is important to observe as many marketing leads as possible
D. It is important to provide superior service to clients and attend to their needs

98
Question 4:
UTC must not misrepresent:
A. Product past performance

B. Company he/she represented
C. His qualification
D. All of the above

99
Answer:
1) A
2) D
3) D
4) D

100
CHAPTER 5
Personal Financial Planning

101
What is ‘Personal Financial Planning’？
 Analyze individual current financial situation
 Identify actions to be taken to achieve their needs & objectives as well as future goals
Analyze Action to be taken
Present Future
Areas in Financial Planning:

• Cash Management
• Risk Management & Insurance Planning
• Investment Planning
• Tax Planning
• Retirement & Estate Planning

102
Why Financial Planning?
 Help fight inflation

 Ensure an adequate income when it is needed
 Provide a roadmap of a client’s objectives for the medium and long term
 Improve present and future lifestyles
 Peace of mind with regard to financial situation

103
Taxation & Inflation
How does it impact Income Return?
 Impact of Tax & Inflation on EFFECTIVE RATE OF RETURNS (ERR)
Tax Rate(t): 20% Returns(r) : 10% Inflation Rate(i) : 5%
ERR = r – i – (r x t)
ERR = 10% - 5% - (10% x 20%)

= 0.10 – 0.05 – (0.10 x 0.20)
= 0.10 – 0.05 – 0.02
= 0.03 or 3%
 Returns from Investment eroded by inflation & tax

 Ensure the returns from Investment is greater than the inflation rate

104
The Rule of 72
Used for 2 main purposes
 Determining how long it would take to HALVE the value of a given amount of funds at a specific
inflation rate
 To establish how long it would take to DOUBLE a given sum of money at a given interest rate
72
Number of years =
given interest / inflation rate
Example:
How long would it take to halve the value of RM 100,000 at 5% inflation rate?
72
= 14.4 years for the value to become RM50,000
5

105
Personal Financial Planning
Skill Required – Financial Planner
 Technical Skills, understand people skills, read body language skills
 Build Trust, clients ‘clues’ on their thoughts & fears.
UTC’s Role in Investment Planning

 To meet goals within a certain time frame
 Explain on strategies & benefits
 Discuss on different investment classes or specific investments
 Develop the client’s investment profile
 Explain the risk & return characteristic on the investment
 Get agreement & document
 Ongoing service & regular updates
Difference between UTC & Financial Planner

UTC Financial Planner
UT License UT & IA License
Does basic investment planning Does comprehensive financial planning

106
Client Types
Stage Status Saving Risk Remarks
Capacity Tolerance
Stage 1 Single or newly Focuses on returns over

Low High
Age 21 – 30 married 20-25 years
Stage 2 Married with Invests in high-risk

Average High
Age 31 – 44 young children funds over the long term
More conservative
Stage 3 Children are High – investing funds, e.g.: Income
Moderate
Age 45 – 60 schooling for retirement fund/ Balanced fund
Stage 4
Children grown Income stream Income fund - protect
Age 61 and Low
up / retirement decreased income stream
above

107
Question 1:
A family spent RM 25,000 on goods and services last year and RM 26,125 this
year. Assume that the pattern, value of consumption and the inflation rate
remain unchanged.
1a) How much money will the family need next year to maintain the same living
standard as this year?
(A) None of the optional answer is correct
(B) RM 27,301
(C) RM 26,125
(D) RM 27,250
1b) Based on the above inflation rate, if an investor earns a 5% return for his
investment, his marginal tax is 20%, what is his effective return after tax and
inflation?
(A) -0.3% (B) 15% (C) -0.5% (D) -15%

108
Question 2:
2a) Investor A & Investor B started investing with RM64,000 with the rate of
return of 8.5% p.a for investor A. A few year later, both of them received
RM128,000 each. However investor B received the returns faster by 1.27years.
When did investor B receive her/his return?
A. 8.47 years
B. 9.77 years
C. 7.20 years
D. 10.0 years
2b) If both investor A & investor B invested RM64,000 and take same number of
years as investor B to double their money. What is the rate of return p.a for both
investors?
A. 8.47%
B.10%
C.12%
D. None of the above option is correct
109
Question 3:
3) In year 1995, En. Jamal put RM50,000 in an investment that earned him 9%
per annum. Supposing the investment is able to deliver the above yearly return
for the past as well as the coming year, when will his money double?
A. Year 2000 C. Year 2005

B. Year 2003 D. Year 2007

110
Question 4:
Generally, a unit trust that has 80% of its assets invested in growth stocks
would be the most appropriate type of investment for the preparation of:
A. None of the optional answer is correct

B. A college fund for an 18-year-old
C. An income-producing savings for an 86-year-old
D. An individual retirement fund for a 52-year-old

111
Answer:
1a) B
Present value = RM 25,000.00, Future Value = RM26,125.00
Calculate the compounding rate p.a.

FV = PV ( 1+ i ) 1
RM26,125 = RM25,000 ( 1 + i ) 1
1.045 = 1 + i
0.045 = i
4.5% = i
Money needed next year = RM26,125 + 4.5%

= RM27,300.63
1b) C
Effective rate of return = return - inflation rate – (return x tax rate)

= 5% - 4.5% - (5% x 20%) = 0.5% - 1% = -0.5%

112
Answer:
2a) C
Investor A:
No of years = 72/ Given rate of return= 72/8.5 = 8.47 years
Investor B = 8.47 – 1.27 = 7.20 years
2b) B
No of years = 72______
Given rate of return
7.2 years = 72
i
i = 10%
3) B
4) A

113
CHAPTER 6
Operations of Syariah-based UTS

114
What is Syariah-based UTS?
 Similar to the conventional UTS, pools the saving of investors with similar objectives in
a special fund managed by professional fund managers.
 Similar with above except that all the above activities must comply with Syariah
requirements
 The main difference between conventional & syariah would be:
- Objective of the fund
- Investment strategy
- Operations & management of the fund
- Documentation
- Investment avenues and activities
- Accounts and reporting

115
What is Syariah-based UTS?
 Syariah non-compliant securities:
Riba (interest) Conventional Stockbrocking or share

Gambling
Insurance trading in Syariah non-
compliant securities
Non-halal Products / Manufacturing related
Tobacco Based Entertainment

Activities

116
Relationship between Parties
Syariah Contracts reflects the type of obligation & responsibilities of the parties
Parties Syariah Contacts Remarks
Among Unit Musyarakah Profit will be shared among / profit-sharing ratio
holders
Unit holders & Wakalah (agency) - UTMC is managing the UTS on behalf
UTMC Bai - Contact of sale & purchase executed. Usually on cash
payment basis.
Wadiah Yad-Dhamanah - Prior to the creation of units.
(guaranteed custody) - Owner = unitholder ; Custodian = UTMC
- Contract exists once UTMC receives payment for investment
Unitholder & Wakalah (agency) -Trustee safeguard the interest of unit holders
Trustee Wadiah Yad-Dhamanah -After the units are created
- Owner = unitholder ; Custodian = Trustee.
-Units are all the assets of the fund in the form of monies & other
forms of investments.
-Contact exists once the unit holders purchase the units &
depositing of investment by UTMC with the Trustee
UTMC & No Contract exist -No direct relationship.
Trustee -Both are agents of the unit holders

117
Potential Risks
 Similar to conventional UTS in terms of the risks involved:
Returns are not Manager’s / Management Financing / loan/ borrowing

guaranteed risk risk
Currency risk Country risk Market risk
Liquidity risk Credit / default risk Inflation risk
Interest rate risk
Except:
Non-compliance risk / Syariah Specific Risk
• Syariah-compliant security is reclassified as a Syariah non-compliant security.
• Affect the performance of the fund & fund manager has to ‘cleanse &/or purify’ the
fund by disposing all such investment.
• The fund may make a lower return or a loss in the process of ‘cleansing / purifying’
and eventually affect the total NAV.

118
Appointment of the Syariah Committee/Syariah Adviser
The Syariah Committee Members / Adviser must:
 Consist of at least 3 members who are individuals

 Be independent of the management company
 Be registered with the SC
Roles, Powers & Duties

 Ensure the fund is managed & administered in accordance with Syariah principles
with guidance in deed, prospectus, structure, investment process and operations
 Consult SC if there is any uncertainty
 Act with due care, skill & diligence
 Scrutinizing the fund’s compliance report from the compliance officer
 Investment transaction reports approved by trustee to ensure the fund’s investment
are in line with Syariah principles.
 Must prepare a report to be included in the fund’s interim & annual report certify it has
been managed & administered in accordance with Syariah principles for the period
concerned

119
Disposal of Syariah Non-compliant Securities
“Compliant Securities” to “Non-Compliant Securities”
• To liquidate when value of securities exceeds original investment cost

• Capital gain at the time of announcement – can be kept by the investors
• Capital gain after announcement day should be channeled to charitable
bodies
• Investors are allowed to hold investments if Market Price < Investment cost
until dividends received and market value equals original cost
Capital : RM1000
1）Market Price > RM1000  Liquidate
2）Gain on announcement date – gain can be kept
3）Gain after announcement date – to charitable bodies
４）Market Price < RM1000 －reserve till capital +
distribution ＝RM1000

120
Question 1:
“Halal” stocks do not invest in companies involved in activities, products or

services related to the following:
I. Conventional banking
II. Telecommunication
III. Gambling
IV. Alcoholic beverages
A. I, II, III & IV B. II only C. I, III & IV D. III & IV

121
Question 2:
Which of the following NOT the Syariah contracts that are used in Syariah-based
funds?
A. Wahabah B. Musyarakah C. Bai D. Wadiah Yad-Dhamanah

122
Question 3:
Which of the following fund is best described by this statement?
“The unit trust fund is managed in accordance with Syariah Principles and aims to
maximise capital returns over medium to long-term by investing mainly in equities
listed on the Bursa Malaysia”
A. Fixed-Income Fund C. Balanced Fund

B. Property Fund D. Islamic Fund

123
Question 4:
Islamic fund CANNOT invest in the followings:-
I. Conventional banking stock

II. Gambling stock
III. Alcohol stock
IV. IT stock
A. I, II, III, IV
B. II, III
C. II,III,IV
D. I, II, III

124
Answer:
1) C
2) A
3) D
4) D

125
Key Points

126
Chapter 1a: Understanding Unit Trust
Unit holders
Possible Distribution Capital Appreciation /

Depreciation
Money pooled from investor
UTMC Trustee
Administers the UTS
UTS Safeguards the Assets
operations of the UTS of the UTS
Possible Capital Invest

Gain/ Income
Authorized Investments
e.g Shares(equity), Fixed Income (bond), Real
Estate, etc

127
Chapter 1b: Understanding Unit Trust (Classifications of UTS)
Syariah UTS
RETURN Government-sponsored UTS
Equity UTS
Fixed Income UTS
Money Market UTS`
Balanced UTS
RISK
128
Chapter 1c: Understanding Unit Trust (Calculation)
1) Dollar Cost Averaging Principle
Average = Total cost / Total Investment Amount
unit cost Total No. of units
2) Effective Rate of Return & Compounding Factor

i. Working money = Initial investment
1+ Sales Charge
ii. Effective Rate of Return (ERR)
ii. FV = PV (1+i)n
3) Calculate NAV
NAV per unit = Fund NAV
Units in circulation
4) Income Distribution (Refer Slide 32)
5) Unit Split Distribution (Refer Slide 32)
6) Management Expenses Ratio (MER)

MER = Total Expenses of fund X 100
Average fund size

129
Chapter 2: Regulation of The Unit Trust Industry
UT Industry
FiMM
Marketing and
Distribution Regulation Trustee
UTMC

130
Chapter 3: Servicing Clients and Marketing Unit Trusts
Cooling off right
Type of report: Interim & Annual
Barriers of Marketing UT
Investment Alternatives

131
Chapter 4: Industry Code of Ethics and Standards of
Professional Conduct
FiMM
Code
Standard of
Code of Ethic Professional
Conduct

132
Chapter 5: Personal Financial Planning
Client
Types
Taxation & Inflation

ERR = r – i – (r x t)
The Rules of 72
No of Years = 72
Interest or Inflation rate

133
Chapter 6: Operations of Syariah-Based UTS
Syariah Based UTS
Type of The The

Investment Principle Contracts

134
You have successfully
completed the CUTE tutorial !

135
One week before the exam!
 Confirm venue and date with Adviser Service
On exam day!
 Have a light meal
 Arrive 30 minutes earlier
 Bring Email Notice from UT Support
 Bring a calculator (No Financial or Scientific calculator)
 Bring I.C. / Driving License

136
Thank you

Understanding Unit Trust: CUTE Tutorial

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Understanding Unit Trust: CUTE Tutorial

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Understanding Unit Trust: CUTE Tutorial

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UNDERSTANDING

For Internal Circulation and Training Purposes Only

Duration Two (2) Hours

~ ~CUTE Navigational Guide ~ ~

For Internal Circulation and Training Purposes Only

Upon successful verification, the candidate will

For Internal Circulation and Training Purposes Only

For Internal Circulation and Training Purposes Only

D. Temporary Log Off

The “temporary logoff” facility is to be used by

For Internal Circulation and Training Purposes Only

For Internal Circulation and Training Purposes Only

Once completed the examination, candidates

For Internal Circulation and Training Purposes Only

 Understand how to do the necessary calculations.

For Internal Circulation and Training Purposes Only

Chapter 1 Understanding Unit Trust

Chapter 2 Regulation of The Unit Trust Industry

Chapter 3 Servicing Clients and Marketing Unit Trusts

Chapter 4 Industry Code of Ethics and Standards of Professional Conduct

Chapter 5 Personal Financial Planning

Chapter 6 Operations of Syariah-Based UTS

For Internal Circulation and Training Purposes Only

1. Not understanding what the question wants. Pay

2. Choosing a few right options from a list of

For Internal Circulation and Training Purposes Only

For Internal Circulation and Training Purposes Only

Possible Distribution Capital Appreciation /

Possible Capital Invest

For Internal Circulation and Training Purposes Only

What is Unit Trust Scheme (UTS) ?

Unit Trust Management Company (UTMC) / The Manager

For Internal Circulation and Training Purposes Only

Risk i via Portfolio Effect

For Internal Circulation and Training Purposes Only

Lower Investment Cost

For Internal Circulation and Training Purposes Only

Fees & Charges

For Internal Circulation and Training Purposes Only

Unit Prices Demand & supply NAV of the fund

Fluctuate throughout the day & from time to

Redemption When there is demand Anytime

Determined by buyers & sellers, usually trade

Example REITs, ETF Manulife Funds

For Internal Circulation and Training Purposes Only

• Operate similar to a bank account

For Internal Circulation and Training Purposes Only

For Internal Circulation and Training Purposes Only

For Internal Circulation and Training Purposes Only

• Syariah compliance / halal investment

For Internal Circulation and Training Purposes Only

Regular Savings (Dollar Cost Averaging)

Investment amount Unit price Unit hold

Mthly / Quarterly Units affected by $ (>or <), Ideal in

For Internal Circulation and Training Purposes Only

Calculate Loan-to-valuation ratio

For Internal Circulation and Training Purposes Only