Unit Trust Regulation and Charges

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Questions and Answers

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?

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?

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?

Growth fund Signup and view all the answers

Which of the following is NOT an authority involved in UT regulation?

Institute Bank-Bank Malaysia Signup and view all the answers

What is the purpose of the Securities Commission Act, 1993?

To regulate the unit trust industry Signup and view all the answers

What is the characteristic of an initial load charge?

Both A and B Signup and view all the answers

Which of the following is an example of an investment you would expect to find in an aggressive growth fund?

Shares of technology companies recently listed on the stock exchange Signup and view all the answers

What is the main objective of the Acts that regulate the unit trust industry?

To safeguard the benefits of the Unitholder Signup and view all the answers

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

Every year Signup and view all the answers

What is the risk profile of an equity trust compared to other trusts?

Aggressive Signup and view all the answers

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

79% Signup and view all the answers

What is the purpose of the executive summary of the prospectus?

To allow investors and UTC to make a quick comparison of the different UTS issued by the UTMC Signup and view all the answers

What happens if the overall stock market falls?

The equity trust will depreciate the most Signup and view all the answers

What is the role of the trustee in the unit trust industry?

To safeguard the benefits of the unitholders Signup and view all the answers

What is the purpose of the unit trust prospectus?

To provide detailed information about the unit trust Signup and view all the answers

What is the primary objective of dollar cost averaging?

To reduce the average cost of investments acquired Signup and view all the answers

What is the characteristic of dollar cost averaging that helps reduce the average cost of investments?

Investing a fixed amount of money at regular intervals Signup and view all the answers

What does a deliberately decreasing investment amount indicate about an investor's strategy?

The investor is reducing their investment amount due to market volatility Signup and view all the answers

What is a benefit of dollar cost averaging in a volatile market?

It reduces the impact of market volatility Signup and view all the answers

What is a unit trust scheme?

A form of collective investment that allows investors with similar objectives to pool their savings Signup and view all the answers

What does a gradually decreasing MER over a period of several years indicate?

The UTMC is managing its operating cost efficiently for its fund size Signup and view all the answers

What is the formula to calculate the MER?

MER = (fees + recovered expenses) x 100 Signup and view all the answers

What is the result of the formula: MER = [fees + recovered expenses] x 100 / Average fund size?

1.04% Signup and view all the answers

What is the primary effect of high inflation on financial assets?

Decreases the purchasing power Signup and view all the answers

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

Distribution Reinvestment Signup and view all the answers

If the ongoing management fee is 1% instead of 1.5%, what is the value of the investment after 3 years?

RM98,666.67 Signup and view all the answers

How many reports must be issued during the period in which units in UTS are held?

At least 2 reports Signup and view all the answers

What is the formula to calculate the future value of the investment?

FV = PV x (1 + i)^n Signup and view all the answers

What is the effect of a 1% management fee on the investment value?

Decreases the investment value by 1% Signup and view all the answers

What is the purpose of the Annual Report and the Interim Report?

To provide regular updates on the investment performance Signup and view all the answers

What is the relationship between the purchasing power and the inflation rate?

The purchasing power decreases with the inflation rate Signup and view all the answers

What will be the cost to Investor Z if they decide to redeem 10,000 units based on Forward Pricing?

RM6,600.00 Signup and view all the answers

Which of the following statements is true regarding the impact of the market on X and Y?

If the market falls, Y will be more negatively affected than X Signup and view all the answers

Which of the following is not a role of FIMM (formerly FMUTM)?

To advise the Minister of Finance Signup and view all the answers

What is the correct formula for calculating the redemption price?

NAV less an exit fee Signup and view all the answers

Which of the following is a characteristic of Portfolio X?

It is at a higher risk than Y Signup and view all the answers

What information does a registrar contain?

The category of funds each investor has invested in Signup and view all the answers

Which of the following is not a role of the Securities Commission?

To provide self-regulation for the UT industry Signup and view all the answers

Which of the following is a characteristic of a UTC?

They are appointed by the Securities Commission Signup and view all the answers

Study Notes