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Questions and Answers
Which authority is responsible for regulating the unit trust industry in Malaysia?
Which authority is responsible for regulating the unit trust industry in Malaysia?
- Ministry of Finance
- Registrar of Companies
- Securities Commission (correct)
- Bank Negara Malaysia
What is the primary purpose of regulating the UT industry?
What is the primary purpose of regulating the UT industry?
- To manage UT portfolios
- To increase profits for UTMCs
- To promote UT products
- To protect clients' investments (correct)
What type of charge is levied by a UTMC on the initial purchase of UTS?
What type of charge is levied by a UTMC on the initial purchase of UTS?
- Repurchase charge
- Initial Load Charge (correct)
- Management fee
- Exit fee
In which type of fund would you most expect to find investments in shares of technology companies recently listed on the stock exchange?
In which type of fund would you most expect to find investments in shares of technology companies recently listed on the stock exchange?
Which of the following is NOT an authority involved in UT regulation?
Which of the following is NOT an authority involved in UT regulation?
What is the purpose of the Securities Commission Act, 1993?
What is the purpose of the Securities Commission Act, 1993?
What is the characteristic of an initial load charge?
What is the characteristic of an initial load charge?
Which of the following is an example of an investment you would expect to find in an aggressive growth fund?
Which of the following is an example of an investment you would expect to find in an aggressive growth fund?
What is the main objective of the Acts that regulate the unit trust industry?
What is the main objective of the Acts that regulate the unit trust industry?
How often must the prospectus of a unit trust be renewed?
How often must the prospectus of a unit trust be renewed?
What is the risk profile of an equity trust compared to other trusts?
What is the risk profile of an equity trust compared to other trusts?
What is the maximum margin on unit trust financing fixed at?
What is the maximum margin on unit trust financing fixed at?
What is the purpose of the executive summary of the prospectus?
What is the purpose of the executive summary of the prospectus?
What happens if the overall stock market falls?
What happens if the overall stock market falls?
What is the role of the trustee in the unit trust industry?
What is the role of the trustee in the unit trust industry?
What is the purpose of the unit trust prospectus?
What is the purpose of the unit trust prospectus?
What is the primary objective of dollar cost averaging?
What is the primary objective of dollar cost averaging?
What is the characteristic of dollar cost averaging that helps reduce the average cost of investments?
What is the characteristic of dollar cost averaging that helps reduce the average cost of investments?
What does a deliberately decreasing investment amount indicate about an investor's strategy?
What does a deliberately decreasing investment amount indicate about an investor's strategy?
What is a benefit of dollar cost averaging in a volatile market?
What is a benefit of dollar cost averaging in a volatile market?
What is a unit trust scheme?
What is a unit trust scheme?
What does a gradually decreasing MER over a period of several years indicate?
What does a gradually decreasing MER over a period of several years indicate?
What is the formula to calculate the MER?
What is the formula to calculate the MER?
What is the result of the formula: MER = [fees + recovered expenses] x 100 / Average fund size?
What is the result of the formula: MER = [fees + recovered expenses] x 100 / Average fund size?
What is the primary effect of high inflation on financial assets?
What is the primary effect of high inflation on financial assets?
What is the term used if Mrs. Z wants to reinvest her distribution in UTS?
What is the term used if Mrs. Z wants to reinvest her distribution in UTS?
If the ongoing management fee is 1% instead of 1.5%, what is the value of the investment after 3 years?
If the ongoing management fee is 1% instead of 1.5%, what is the value of the investment after 3 years?
How many reports must be issued during the period in which units in UTS are held?
How many reports must be issued during the period in which units in UTS are held?
What is the formula to calculate the future value of the investment?
What is the formula to calculate the future value of the investment?
What is the effect of a 1% management fee on the investment value?
What is the effect of a 1% management fee on the investment value?
What is the purpose of the Annual Report and the Interim Report?
What is the purpose of the Annual Report and the Interim Report?
What is the relationship between the purchasing power and the inflation rate?
What is the relationship between the purchasing power and the inflation rate?
What will be the cost to Investor Z if they decide to redeem 10,000 units based on Forward Pricing?
What will be the cost to Investor Z if they decide to redeem 10,000 units based on Forward Pricing?
Which of the following statements is true regarding the impact of the market on X and Y?
Which of the following statements is true regarding the impact of the market on X and Y?
Which of the following is not a role of FIMM (formerly FMUTM)?
Which of the following is not a role of FIMM (formerly FMUTM)?
What is the correct formula for calculating the redemption price?
What is the correct formula for calculating the redemption price?
Which of the following is a characteristic of Portfolio X?
Which of the following is a characteristic of Portfolio X?
What information does a registrar contain?
What information does a registrar contain?
Which of the following is not a role of the Securities Commission?
Which of the following is not a role of the Securities Commission?
Which of the following is a characteristic of a UTC?
Which of the following is a characteristic of a UTC?
Study Notes
Unit Trust Regulation
- The unit trust industry is regulated to protect clients' investments.
- The Securities Commission (SC) is entrusted with the regulation of the unit trust industry under the Securities Commission Act, 1993 as amended.
Unit Trust Charges
- Initial Load Charge is a sales charge or entry fee levied by a Unit Trust Management Company (UTMC) on the initial purchase of units.
- The charge can be expressed as a fixed amount or a percentage of the Net Asset Value (NAV) of a unit.
Prospectus
- The prospectus provides an executive summary, allowing investors and UTMC to make a quick comparison of different unit trusts.
- The prospectus must be renewed at least once every 12 months.
Unit Trust Financing
- The maximum margin on unit trust financing is fixed at 67%.
Investment Strategies
- Dollar Cost Averaging (DCA) is a systematic and regular investment of a fixed amount of money, regardless of the price level.
- DCA can reduce the average cost of investments acquired.
Unit Trust Scheme
- A unit trust scheme is a form of collective investment that allows investors with similar objectives to pool their savings.
Management Expense Ratio (MER)
- MER is calculated as [fees + recovered expenses] x 100 / Average fund size.
- A gradually decreasing MER over a period of several years indicates that the UTMC is managing its operating cost efficiently.
Distribution Reinvestment
- Distribution Reinvestment is the term used when investors reinvest their distribution in units.
Reporting
- At least 2 reports, the Annual Report and the Interim Report, must be issued during the period in which units are held.
Forward Pricing
- Forward Pricing is used to calculate the redemption price of units.
- The redemption price is calculated as the number of units x NAV/unit at the end of the day.
Role of FIMM (Old term: FMUTM)
- FIMM (Old term: FMUTM) provides self-regulation for the unit trust industry.
- FIMM (Old term: FMUTM) is appointed by the SC to conduct unit trust examinations for persons wishing to become UTC.
Redemption Price
- The redemption price is calculated as NAV less an exit fee.
- The registrar contains information about the category of funds each investor has invested in.
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Description
This quiz covers the regulation of the unit trust industry and the various charges associated with unit trust investments, including the initial load charge and its calculation.
