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The unit trust fund that aims to maximize capital returns over medium to long-term by investing mainly in equities listed on the Bursa Malaysia is:
If an investor has invested RM200,000 in a unit trust fund and obtained the maximum margin of financing, how much was his loan amount?
A unit trust with 80% of its assets invested in growth stocks would be most appropriate for:
After a unit-split exercise, how many units will the investor hold if the initial number of units was 18,000 and the total value of the investment before the split was RM6,000 with a unit split ratio of 1 for 3?
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A registered Unit Trust Consultant (UTC) must not misrepresent or recklessly represent:
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The committee required by the Securities Commission for a Unit Trust Management Company (UTMC) to manage Islamic Funds is:
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All persons involved in the marketing and distribution of unit trusts should be registered with and authorized by:
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Which investment plans are suitable for Puan Rose and Puan Sarina based on their preferences described?
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How can unit holders obtain daily Net Asset Values of unit trust schemes?
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What are the rights of unit holders?
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What are Registered Unit Trust Consultants (UTC) allowed to do?
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What aspect should Mei Ling consider apart from the fund's recent performance before investing?
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Which responsibility is NOT typically held by a Unit Trust Management Company?
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Calculate the Management Expenses Ratio (MER) given the provided details.
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What does the term 'Cooling-Off Period' refer to in the unit trust context?
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What type of investments are typically found in an aggressive growth fund?
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Which EPF account balance may be used to purchase unit trusts?
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What happens to an investor's holding after a 1:2 unit split?
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What is Dollar Cost Averaging?
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How can an investor hedge against inflation?
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Market risk is a type of risk associated with investing in equity-based funds.
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How would you describe an Equity Growth Fund?
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Which investment type is best suited for a conservative investor like Encik Ali in a decreasing interest rate environment?
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An investor wants to gain exposure to the commercial property market in Kuala Lumpur with a small amount of money. _ is a good investment alternative for her.
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Under whose name would the assets and investments of a unit trust scheme be registered?
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Which of the following form(s) part of the responsibilities and obligations of Unit Trust Management Companies?
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Unit trust distributions (payment to unit holders) can be made up of the following:
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Which of the following is a function of Federation of Investment Managers Malaysia (FIMM)?
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Which of the following is (are) TRUE for a Deed?
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How many units was the investor entitled to from the investment made in the first year, given the scenario provided?
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Amongst others, the calculation of Net Asset Value (NAV) of a unit trust scheme involves:
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What is meant by switching of fund?
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What must you not say to a potential investor?
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It is important that all long term investment strategies should be constructed so as to:
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John receives RM500 cash as his birthday gift. If he puts the money in his Kid’s Savings Account, which offers him 5.0% average yearly return, how long would it take to double the value of his money?
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The main purpose of a prospectus is:
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What do you understand by the term ‘Diversification’ in the context of investments?
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When a cash distribution is declared:
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Which of the following are the investment costs to an investor who invests in unit trusts with borrowed money?
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Select the statements which are correctly matched:
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In promoting unit trusts to prospective investors, it is important for Unit Trust Consultant (UTC) to explain which of the following?
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What does the term financial statement stand for?
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Study Notes
Unit Trusts
- A unit trust scheme's assets and investments are registered under the trustee's name.
- Unit Trust Management Companies (UTMCs) are responsible for:
- Processing applications for investment in unit trust schemes
- Maintaining unit holders' registers
- Custodianship of assets of the unit trust scheme
- Unit trust distributions can be made up of:
- Interest earned
- Capital gains
- Dividends
- The Federation of Investment Managers Malaysia (FIMM) provides a common platform for unit trust companies to discuss issues in the industry.
Deed
- A Deed stipulates the rights and obligations of the manager, rights and duties of the trustees, and the rights of the unit holders.
- A Deed must be registered with the Securities Commission.
- The life span of a Deed is not limited to 10 years.
Net Asset Value (NAV)
- NAV involves the calculation of:
- The value of equity investments
- The value of money market instruments (if applicable)
- Accrued gross distribution and interest income after deduction of relevant fees and expenses
- NAV is used to determine the unit price of a unit trust scheme.
Switching of Funds
- Switching of funds occurs when a unit holder sells units in one unit trust fund and purchases units in another unit trust fund operated by the same fund manager.
Investment Costs
- Investment costs to an investor who invests in unit trusts with borrowed money include:
- Initial service charge
- Annual management fees
- Switching fee (applicable to certain unit trust schemes)
- Interest expense
Benefits of Unit Trusts
- Benefits of unit trusts include:
- Spread of risk
- Liquidity
- Professional management
- Ease of purchase
- Diversification reduces the overall risk of an investment portfolio.
Unit Trust Consultants
- Unit Trust Consultants (UTCs) should explain the following to prospective investors:
- Investment objectives of the unit trust scheme
- Potential risks and returns
- Fees and charges
Trustee
- A trustee is a company that:
- Is registered under the Trust Companies Act 1949
- Is independent of the unit trust management company (except for in the case of a related-party trustee)
- Is independent of the unit trust scheme
- Has beneficial ownership of all assets of a unit trust scheme
Shariah-Compliant Funds
- Shariah-compliant funds do not invest in companies involved in:
- Conventional banking
- Gambling
- Alcoholic beverages
Investment Strategies
- Dollar Cost Averaging is a systematic way of regular investment with a fixed amount of money.
- Inflation can be hedged against by investing in an instrument that can generate a higher return than the inflation rate.
Unit Trust Management Company
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The Unit Trust Management Company is responsible for:
- Acting as the custodian for the assets of the unit trusts
- Maintaining proper accounting records of the unit trusts
- Issuing unit certificates or statements to unit holders
- Processing sales and repurchases of units### Investment Alternatives
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For a conservative investor seeking current income and moderate capital growth, a Bond Fund or a Money Market Fund may be a suitable investment alternative.
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When interest rates are decreasing, a Bond Fund may be a good investment option.
Unit Trust Consultants' (UTCs') Standards of Professional Conduct
- UTCs must maintain knowledge of and comply with all applicable laws, rules, and regulations governing the unit trust industry.
- UTCs must not market any unit trusts without a relevant prospectus.
- UTCs must ensure that the unit trust scheme proposed is suitable to the needs and not beyond the resources of the prospective investor.
- UTCs must not omit any material facts nor make misleading statements regarding future events.
Overcoming the Adverse Impact of Inflation
- Investors need to preserve the purchasing power of their original investments and earn a rate of return in excess of the inflation rate.
Types of Funds
- Equity Growth Fund: Invests mainly in equities.
- Fixed Income Fund: Invests mainly in bonds.
- Money Market Fund: Invests in cash and short-term instruments.
- Property Fund: Invests in real estate property trusts.
Unit Split
- A unit split does not add value to the unit trust investors' investment holdings.
- A unit split is used to lower the Net Asset Value (NAV) per unit, making it easier for new investors to invest in the fund.
Calculating Investment Amount
- To calculate the initial investment amount, use the formula: Initial Investment = Total Proceeds / (New Price / Old Price)
Syariah-compliant Funds
- A Syariah-compliant fund is managed in accordance with Syariah principles and aims to maximize capital returns over the medium to long term by investing mainly in equities listed on the Bursa Malaysia.
Margin of Financing
- The maximum margin of financing for a unit trust investment is typically 66.6% of the investment amount.
Investment Objectives
- A unit trust with 80% of its assets invested in growth stocks is suitable for an 18-year-old's college fund or a 52-year-old's individual retirement fund.
Unit Split Calculation
- To calculate the number of units held after a unit split, use the formula: New Number of Units = Old Number of Units x Split Ratio
Unit Trust Consultants' (UTCs') Ethical Conduct
- UTCs must not misrepresent or recklessly represent the products and/or its characteristics offered by the management company they represent.
- UTCs must not misrepresent or recklessly represent their qualifications or that of the management company they represent.
Syariah Committee
- The Syariah Committee is a committee established by the Unit Trust Management Company (UTMC) to ensure that Islamic principles are adhered to in the management of Islamic Funds.
Regulation of Unit Trust Marketing and Distribution
- The Securities Commission requires that all persons involved in the marketing and distribution of unit trusts be registered with and authorized by the Commission.
Investment Options
- Lump Sum Investment Plan: A single investment of a lump sum amount.
- Regular Savings Plan: A regular investment of a fixed amount over a period of time.
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Description
Assess your knowledge of unit trust schemes, management companies, and investment regulations with this CUTE exam 2022 quiz. Test your understanding of assets, investments, and responsibilities of UTMC.
