EPF Investment Scheme
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Questions and Answers

Which statement is valid about unit holders in a unit trust?

  • Unit holders can only invest in lump sums.
  • Unit holders receive regular statements for their investment. (correct)
  • Unit holders are not entitled to receive unit trust certificates.
  • Unit holders directly manage the investment portfolio.

    • What type of investment is most suitable for an 86-year-old individual?

  • Equity investments
  • Income-providing savings (correct)
  • Aggressive growth funds
  • Growth stocks

    • What is the primary benefit of a long-term buy-and-hold strategy in unit trust investment?

  • Minimizing service charges
  • Matching investment objectives with unit purchases (correct)
  • Maximizing returns through frequent buying and selling
  • Ensuring regular income

    • Which of the following is not included in the computation of Net Asset Value?

    <p>Bank charges</p> Signup and view all the answers

    What is a key benefit of regular investing in a unit trust?

    <p>Minimizing the impact of market volatility</p> Signup and view all the answers

    What is the primary role of the UTMC in a unit trust?

    <p>Professionally managing the unit trust</p> Signup and view all the answers

    What is a limitation for qualified members in a particular scheme?

    <p>The maximum age for the qualified member is 60</p> Signup and view all the answers

    What is the function of FMUTM in the context of unit trusts?

    <p>Regulating unit trust management companies</p> Signup and view all the answers

    What is the main source of income for Real Estate Investment Trusts (REITs)?

    <p>Rental income and capital appreciation of the property</p> Signup and view all the answers

    Why is it important for investors to understand the investment objectives of a unit trust?

    <p>To match their investment goals with the unit trust's objectives</p> Signup and view all the answers

    What is a characteristic of a collective investment scheme?

    <p>It is another term used to describe a unit trust scheme</p> Signup and view all the answers

    What would you not typically find in the annual report of a unit trust scheme?

    <p>Information about the fund manager's background</p> Signup and view all the answers

    How often must a prospectus of a unit trust fund be renewed?

    <p>Every year</p> Signup and view all the answers

    What is a restriction on withdrawing funds from the EPF?

    <p>Members can withdraw funds once every 2 months</p> Signup and view all the answers

    What is a characteristic of listed Real Estate Investment Trusts (REITs)?

    <p>They are subject to strict regulatory requirements</p> Signup and view all the answers

    When was the first unit trust management company set up in Malaysia?

    <p>1960s</p> Signup and view all the answers

    If the investor had invested RM64,000 in the first year, how many units would he have purchased at RM0.80 per unit?

    <p>80,000 units</p> Signup and view all the answers

    What is the effective return after tax and inflation if the investment return is 12% per annum and the marginal tax rate is 25%?

    <p>6.5%</p> Signup and view all the answers

    If the expected value of investment at the end of the third year is RM103,602, what is the approximate return on investment?

    <p>10.5%</p> Signup and view all the answers

    Which of the following is not a suitable investment benchmark for assessing investment performance?

    <p>The current account situation as a percentage of GDP</p> Signup and view all the answers

    What is the total number of units the investor had at the end of the second year?

    <p>88,000 units</p> Signup and view all the answers

    What is the maximum initial service charge disclosed in?

    <p>Both A and B</p> Signup and view all the answers

    If the effective return after tax and inflation is 3%, what is the approximate pre-tax return?

    <p>7%</p> Signup and view all the answers

    What is the approximate return on investment if the expected value of investment at the end of the third year is RM106,480?

    <p>12.5%</p> Signup and view all the answers

    What is the maximum margin on unit trust financing fixed at?

    <p>85%</p> Signup and view all the answers

    If Mr. X wants to invest RM200,000.00, what is the maximum amount he can borrow from a financial institution for the investment?

    <p>RM134,000.00</p> Signup and view all the answers

    Which of the following parties are involved in the unit trust?

    <p>All of the above</p> Signup and view all the answers

    Which of the following can be found in the prospectus of a unit trust fund?

    <p>All of the above</p> Signup and view all the answers

    What is the term used if Mrs. Z wants to reinvest her distribution in UTS?

    <p>Distribution Reinvestment</p> Signup and view all the answers

    What is the risk associated with borrowing to invest in UTS, if the value of the investment falls below the borrowed amount?

    <p>Margin call</p> Signup and view all the answers

    If Investor A and Investor B have the same investment amount and achieve the same returns, but Investor B doubles their investment earlier, what can be concluded about their investment strategies?

    <p>Investor B has a more aggressive investment strategy</p> Signup and view all the answers

    What is the implication of the average annual return for Fund A being 8.5%?

    <p>Fund A has a higher expected return</p> Signup and view all the answers

    What is the average annual return for Fund B?

    <p>8.75%</p> Signup and view all the answers

    What should a PDUT advise Mr.A when he says he wants to invest in XYZ Fund to get high returns in 3 years?

    <p>All of the above is correct</p> Signup and view all the answers

    What is the average unit cost for the investment if the NAV is 0.50, 0.60, and 0.70, and the amount invested is RM 1,500.00 each time?

    <p>RM0.59</p> Signup and view all the answers

    Which organization provides a common platform for UTMC to discuss issues in relating to the unit trust industries?

    <p>Federation of Malaysian Unit Trust Managers (FMUTM)</p> Signup and view all the answers

    What is the main purpose of a management fee charged by the fund manager of a unit trust scheme?

    <p>To cover the management expenses incurred by the manager in managing the scheme</p> Signup and view all the answers

    What type of fund is Fund X most likely to be classified as based on its asset allocation?

    <p>Equity fund</p> Signup and view all the answers

    What is the main purpose of the Securities Commission (SC) in relation to unit trusts?

    <p>To regulate the unit trust industry</p> Signup and view all the answers

    What is the primary role of the UTMC in a unit trust?

    <p>To act as a trustee for the unit trust scheme</p> Signup and view all the answers

    Study Notes

    Unit Trust Schemes

    • Maximum age for a qualified member is 60.
    • Members cannot withdraw funds from the EPF once every 2 months.
    • Investment cannot be made with any unit trust scheme.
    • Balance in Account 2 is not eligible for this scheme.

    Real Estate Investment Trusts (REITs)

    • Income of REITs is mainly derived from rental income and capital appreciation of the property held by the trust.
    • Portfolio of REITs cannot be switched to equities easily as the assets are not highly liquid.
    • REITs are allowed to be listed.

    Collective Investment Schemes

    • A collective investment scheme is an investment fund that invests in a specific collection of shares.
    • It is another term used to describe a unit trust scheme.

    Unit Trust Schemes

    • Annual report of a unit trust scheme typically includes:
      • Statement of assets and liabilities of the unit trust scheme
      • Auditor's report
      • Fund composition and statement of asset allocation
    • Prospectus of a unit trust fund must be renewed every 2 years.
    • Unit holders are entitled to receive a unit trust certificate or statement for their investment.
    • Unit trusts are professionally managed by the UTMC.
    • Value of a unit will fluctuate in line with the changes in the net asset value of the unit trust.

    Investment Strategies

    • A unit trust that has 80% of its assets invested in growth stocks is most appropriate for an 18-year-old's college fund.
    • To minimize the impact of the initial service charge, investors should invest as regularly as possible and avoid lump sum investments.
    • Adhering to a long-term buy-and-hold strategy, making sure that the units purchased match their long-term investment objectives, is the best way to minimize the impact of the initial service charge.

    Net Asset Value (NAV)

    • NAV includes the value of equity investments in the unit trust scheme, trustee fees, and auditor's fees.

    FMUTM

    • FMUTM (Federation of Malaysian Unit Trust Managers) is an organization that provides a common platform for UTMC to discuss issues related to the unit trust industry.

    Investment Risks

    • Risks of borrowing to invest in unit trusts include:
      • Interest rate fluctuations
      • Default in repayment of loans
      • Premature repayment of loan
      • Margin call
    • Inflation rate affects the effective return after tax.

    Unit Trust Benchmarking

    • KLIBOR (Kuala Lumpur Inter-bank Offer Rate) and KLCI (Kuala Lumpur Composite Index) can be used as benchmarks when assessing investment performance.
    • The current account situation as a percentage of GDP cannot be used as an investment benchmark.

    Unit Trust Financing

    • The maximum margin on unit trust financing is fixed at 79%.
    • The maximum amount that can be borrowed from a financial institution for investment is 79% of the investment amount.

    Unit Trust Parties

    • Parties involved in the unit trust industry include:
      • UTMC (Unit Trust Management Company)
      • Trustee
      • Investment Manager
      • Unit holder

    Prospectus

    • The prospectus of a unit trust fund typically includes:
      • Investment objectives
      • Authorized investments
      • Fees and charges
      • Trust expenses

    Distribution Reinvestment

    • Distribution reinvestment refers to the process of reinvesting distributions in a unit trust.

    Average Unit Cost

    • The average unit cost for an investment can be calculated by summing the amount invested and dividing it by the total number of units purchased.

    Unit Trust Classification

    • A unit trust fund with 70% of its assets invested in equity is classified as an equity fund.
    • A unit trust fund with 85% of its assets invested in money market instruments is classified as a money market fund.

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    Related Documents

    FIMM SET 3 Past Paper PDF

    Description

    This quiz assesses knowledge of the rules and regulations related to investment schemes, particularly the EPF. It covers topics such as age limits, withdrawal rules, and eligible investments.

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