CUTE Tutorial As at Dec 2018

CUTE Tutorial (ENG)
For Internal Circulation & Training Purposes Only Ver

Ver1.1
1.1@@Dec
Dec2018
2018
Disclaimer
• This presentation including any other materials in connection therewith (“Presentation”) are
meant to be used internally by CIMB-Principal Asset Management Berhad (“Company”) to assist
participants to better understand the subject matter presented.
• The information contained in the Presentation are collated from various sources including but not
limited to the public domain. Furthermore, the information contained in the Presentation
including but not limited to opinions, analysis, forecasts, projections and expectations ( collectively
known as “Opinions”) are merely an expression of belief.
• Although care has been taken to collate and compile the information and/ or Opinion contained in
this Presentation, no warranty and/ or representation, be it expressed or implied, is made that the
information used is accurate, complete, fact-checked, suitable, true, valid and/ or free of errors.
Information and Opinions contained herein are published for participants reference and
illustration only.
• The Company further disclaims any responsibility and/ or liability for any direct or indirect losses
and/ or damages the participants may suffer and/ or incur as a results of and/ or in connection
with this Presentation including but not limited to the information, Opinion and the delivery of the
same.
• This Presentation is not to be used, either directly or indirectly, for soliciting business, services
and/or facilitating any other form of communications with external parties whatsoever. This
Presentation is also not to be construed, at any time, as a sales material.
• This Presentation is meant only for internal circulation and must not be disseminated to any
members of the public.
• Price of units and distributions payable, if any, may go down as well up. Last performance of fund
should not be taken as indicative of future performance.
For Internal Circulation & Training Purposes Only Ver 1.1 @ Dec 2018 2
VISION:
Recognized Wealth Solutions
To be a
Provider delivering Superior Customer
Experience.
MISSION:
ToAdd Value to Customers by providing
Financial Planning Services through our
Competent and Professional Business
Partner.
3
For Internal Circulation & Training Purposes Only Ver 1.1 @ Dec 2018
Learning Objectives
At the end of the program, participant will be:

1. Able to acquire a basic knowledge and understanding of unit
trust in preparation for CUTE.
2. Able to understand of unit trust industry including the

regulatory environment within industry.
3. Able to understand the principles and mechanisms of UTS

together with benefits and risk of investing.
4. Able to emphasise the need for prospective UTC to be

professional by practising ethical practices in order to build
long-term relationship between UTMC and clients.
Source: Dealing in Unit Trust, FiMM textbook
CONTENTS
Section 1 Understanding Unit Trusts
Section 2 Regulation of the Unit Trust Industry
Section 3 Servicing Clients & Marketing Unit Trusts
Section 4 Industry Code of Ethics & Standards of Professional Conduct
Section 5 Personal Financial Planning
Section 6 Operations of Syariah based UTS
SECTION 1
UNDERSTANDING UNIT TRUSTS
BASIC FEATURES OF UTS
What Are UTS?
 UTS are a form of (non-incorporated) "collective investment"

that allows investors with similar investment objectives to pool
their savings which are then invested in a portfolio of securities
or other assets managed by investment professional.
 A professional fund manager then invests the pooled funds in a

portfolio which may include the asset classes listed below:
 Cash
 Bonds & Deposits
 Shares
 Properties
 Government Securities
Source: Dealing in Unit Trust, FiMM textbook, pg 1-2
BENEFITS AND DISADVANTAGES OF UTS
BENEFITS DISADVANTAGES
 DIVERSIFICATION
 RISK
 LIQUIDITY
 PROFESSIONAL FUND  LOSS OF CONTROL
MANAGEMENT
 INVESTMENT EXPOSURE  FEES AND CHARGES
 WHOLESALE INVESTMENT
COSTS
 OPPORTUNITY COST
The disadvantages here are more for the interest of transparency i.e. not to mislead as though
UTS does not have risks. These “disadvantages” are also apparent in other investments. For
example, buying a house will incur bank charges and lawyer fees.
METHODS OF INVESTING
Many ways to invest
REINVESTMENT OF
LUMP SUM PURCHASE
INCOME
(Most common)
(Depending on UTS)
METHODS
BORROWING TO INVEST REGULAR SAVING

(Systematic method to apply
(LAST RESORT)
Dollar-cost Averaging)
Source: Dealing in Unit Trust, FiMM textbook, pg 1-5, 1-6
BORROWING TO INVEST
Considerations
INTEREST RATE DEFAULT IN
UTMC/UTC not FLUCTUATIONS REPAYMENT
encouraged by SC on sale RISKS
of units through loans
PREMATURE MARGIN
REPAYMENT CALL
BORROWING
TO INVEST
Up to 67 % Margin of Investor must sign a Unit

Finance Trust Loan Financing Risk
Disclosure Statement
BORROWING TO INVEST
Sample Loan Financing Risk Disclosure Statement
Investing in a unit trust fund with borrowed money is riskier than investing with your own savings.
You should assess if loan financing is suitable for you in light of your objectives, attitude to risk and financial circumstances. You
should be aware of the risks, which would include the following:
1. The higher the margin of the finance (that is, the amount of money you borrow for every Ringgit of your own money
that you put in as a deposit of down payment), the greater the potential for losses as well as gains.
2. You should assess whether you have the ability to service the repayments on the proposed loan. If interest rates rise,
your total repayment amount will also increase.
3. If unit prices fall beyond a certain level, you may be asked to provide additional acceptable collateral or pay additional
amounts on top of your normal instalments. If you fail to comply within the time prescribed, your units may be sold to
settle your loan.
4. Returns on unit trusts are not guaranteed and may not be earned evenly over time. This means that there may be
some years where returns are high and other years where losses are experienced instead. Whether you eventually
realise a gain or loss may be affected by the timing of the sale of your units. The value of units may fall just when you
want your money back, even though the investment may have done well in the past.
This brief statement cannot disclose all the risks and other aspects of loan financing. You should, therefore, carefully study the
terms and conditions before you decide to take the loan. If you are in doubt in respect of any aspect of this Risk Disclosure
Statement, or the terms of the loan financing, you should consult the institution offering the loan.
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENT
I acknowledge that I have received a copy of this Unit Trust Loan Financing Risk Disclosure Statement and understand its
contents.
Signature :
Full Name :
Date :
UTMC/UTC is not encouraged by SC on sale of units through loans
BORROWING TO INVEST
Example:
Client wishes to make an investment of RM200,000 into CPAM
Growth Fund, via cash and borrowings.
 Investment Amount = RM200,000
 Maximum borrowings = RM200,000 x 67%

= RM134,000
 Client’s own cash = RM200,000 – RM134,000

= RM66,000
UTMC/UTC not encouraged by SC on sale of units through loans

STRUCTURE OF UTS
Mode of operations governed by the "Deed"
Unitholders /
Investors
Possible Capital Money Pooled

Gain & Income from Investors
Unit Trust
Trustee UTS Management
Company (UTMC)
Safeguards the Assets of Administers the Operations

the UTS, i.e. the custodian of UTS. Prepares all public
Possible Capital documentation.
Invests
Gain & Income
Authorized
Investments
Shares, Bonds, Cash,
Property, etc.
THE DEED
PARTIES TO THE DEED CONTENTS OF THE DEED
RIGHTS &
OBLIGATIONS OF
UTMC
THE THREE PARTIES
AUTHORISED
INVESTMENTS
TRUSTEE DEED
DETERMINE VALUE
AND PRICE OF
UNITS
UNITHOLDERS
MAXIMUM FEES
PARTIES TO THE DEED
Shows the rights and obligations of UTMC, Trustee, and Unitholders
• makes reports to the trustee regarding the purchase, sale and

UTMC
management of the investments of UTS.
• Ensures UTMC acts in accordance with the Deed

TRUSTEE • responsible to unitholders for safeguarding UTS assets and
ensuring that they are invested in accordance with the terms of
the deed.
• the most significant since they supply the capital to be invested

by UTMC on their behalf.
UNITHOLDERS
• responsible for the fees earned by UTMC (and hence salaries
and commission payments of UTC) and the trustee.
TYPES OF UTS
Listed and Unlisted
Basic types of UTS
Listed UTS Unlisted UTS

(closed-end) (open-end)
 Units quoted and traded on stock

exchange.  Units not quoted on stock
 Purchased from stockbrokers exchange.
 Prices fluctuate based on demand  Purchased from UTMC
& supply  Prices determined by UTMC
 Most Listed UTS are property unit  UTMC ready to buy from investors
trusts (REITS)
We would normally be dealing with “Unlisted UTS”, as we are UTC, not stockbrokers
CLASSIFICATION OF UTS
Most common UTS in Malaysia.

Equity
Primarily investing in shares of listed companies.
A mix of equity and fixed income instruments,

Balanced giving access to various asset classes in a single
fund.
Primarily investing in fixed income instruments

Fixed
such as corporate bonds and Malaysian
Income
Government Securities.
Invest in low risk and short-term money market

Money
instruments such as deposits, Banker’s
Market
Acceptances and REPO.
CLASSIFICATION OF UTS
REITs invest in real property (e.g. commercial property)

REIT and are the most common listed UTS.
An Exchange Traded Fund is like a listed index UTS which

ETF will usually mirror a particular index, which can either be
an equity or bond index.
Syariah UTS provide investment options for those

Syariah sensitive to Syariah principles.
Government-sponsored UTS represent the bulk of UTS

GSU (by value) in Malaysia. They generally invest on a
balanced basis.
A BRIEF HISTORY OF UTS
The Early Funds
 The Foreign and Colonial  Amanah Saham Pahang Berhad

Government Trust  The first state-owned UTMC
 The world’s first unit trust, (1974)
established in London (1868)
 First Malayan Fund  Amanah Saham Nasional

 The first unit trust fund in  First national Bumiputra UTS
Malaysia (1959) launched by (1981) by Permodalan Nasional
Malayan Unit Trust Limited Berhad (PNB)
 Malayan Investment Fund  Amanah Saham Wawasan 2020

 The first totally Malaysian Trust  First national “for all” UTS (1996)
Fund (1966) launched by Asia by PNB
Unit Trusts Berhad
UTS PROSPECTUS
Purpose of a UTS prospectus is to

provide investors with all the
necessary information to make an
informed decision to invest in that
UTS.
Must be approved by SC before

the marketing or distribution of
the UTS.
Must be used when marketing and

distributing UTS
Must be renewed once a year
PORTFOLIO TURNOVER RATIO (PTR)
Definition and calculation
 PTR is required to be shown in the
prospectus.
 The PTR provides an investor with an

indication of the approach of UTMC to
investment of the UTS portfolio.
 When comparing two or more UTS which

have the same classification (example if
there are two equity funds with the same
objective and strategy), the UTS with the
higher PTR is regarded to be more
actively managed.
PTR = ½ x [total investment acquisitions + total investment disposals]

average fund size
PORTFOLIO TURNOVER RATIO (PTR)
Example
During the year ended 20 December 2012, the fund managers of CPAM
Growth Fund sold investments with gross proceeds of RM1,200,000 and
purchased additional investments at a gross cost of RM900,000. The average
fund size during the year was RM3,200,000.
PTR = ½ x [total investment acquisitions + total investment disposals]

average fund size
= ½ x [RM900,000 + RM1,200,000]
RM3,200,000
= ½ x RM2,100,000
RM3,200,00
= 0.328125 or 33%
FORWARD PRICING
Example
Monday Tuesday Wednesday
9.00 am Client 1 makes an
(Trading day starts) investment into CPAM
Growth Fund at 9.30am
2.00 pm Client 2 makes a
(Application cut-off withdrawal from CPAM
time) Growth Fund at 2.30pm
4.00 pm Client 3 makes an
(UTMC valuation point) investment into CPAM
Growth Fund at 4.30pm
NAVperUnit @ valuation CPAM Growth Fund = CPAM Growth Fund = CPAM Growth Fund =
point RM0.40 per unit RM0.39 per unit RM0.41 per unit
 Client 1 would have locked in the NAVperUnit @ RM0.40 as the investment was made before
the cut-off time.
 Client 2 missed the cut-off time on Monday, and would therefore have only locked in the
NAVperUnit @ RM0.39 i.e. on Tuesday
 Client 3 missed the cut-off time on Tuesday, and would therefore have only locked in the
NAVperUnit @ RM0.41 i.e. on Wednesday
FEES & CHARGES
Types
Direct Non-Discretionary
(Borne by investor) (Deducted from UTS)
• Sales Charge
• Exit Fee (Repurchase Charge) • Management Fees
• Transfer Fees • Trustee Fees
• Switching Fees
BASED ON EACH TRANSACTION BASED ON DAILY FUND SIZE
Fees paid for the cost of operations (auditor’s fee, company expenses, etc.) of the UTS
by the UTMC and fees to the Trustee as a custodian of the UTS
FEES & CHARGES
Example – Management & Trustee Fees
 Management Fee : 1.80% p.a. of the Fund’s NAV
 Trustee Fee : 0.08%p.a. of the Fund’s NAV
 NAV : RM150,000,000
 Management Fee for the day = NAV x Management Fee rate

365 days
= RM150,000,000 x 1.80%
365 days
= RM7,397.26
 Trustee Fee for the day = NAV x Trustee Fee rate

365 days
= RM150,000,000 x 0.08%
365 days
= RM328.77
MANAGEMENT EXPENSE RATIO (MER)
Definition and calculation
Measures the efficiency or cost effectiveness of
a fund that is being managed.
MER = [fees + recovered expenses] x 100

average fund size
When comparing two or more UTS which have

the same classification (example if there are two
equity funds with the same objective and
strategy), the UTS with the lower MER is
regarded to be managed more efficiently.
MANAGEMENT EXPENSE RATIO (MER)
Example
For the year ended 20 December 2012, the financial
statements of CPAM Growth Fund show that the
following expenses were incurred:
Management Fee RM 32,000

Trustee fee RM 6,100
Auditors Fee RM 1,100
Bank Charges & Other Expenses RM 2,500
Total RM 41,700
The average Fund Size for CPAM Growth Fund for the year is RM3,200,000.
MER = [fees + recovered expenses] x 100 = RM41,700 x 100 = 1.30%

average fund size RM3,200,000
MEASURING PERFORMANCE OF UTS
Methods
Difficult to
Total return over
Raw Return holding period
compare over
different periods
Compounded Average return

More
Annual p.a. over holding
standardised
period
Return
Raw Return
2013 2018
RM100,000 RM175,000
Raw Return = Profit X 100%

Cost
= (RM175,000 – RM100,000) x 100%

RM100,000
= 75%
29
Compounded Annual Return
2013 2018
RM100,000 RM175,000
FV = PV(1+i)^n
RM175,000 = RM100,000 (1+ i)^5
RM175,000 = (1+i)^5
RM100,000
5√1.75 = 1+i
1.1182 = 1 + i
i = 0.1182
= 11.82%
30
PERFORMANCE TABLES
Commonly used in Malaysia
Returns over
various time
periods
Risk Rankings &

Measures Quartiles
Funds Under
Benchmarks
Management
Source: Dealing in Unit Trust, FiMM textbook, pg 1-35-36

PERFORMANCE TABLES
Example of a Lipper Table
Period Ending 31 December 2012
Funds
Launch 1M 3M 6M 1Y 3Y 5YRisk Under
Name Benchmark
Date Measures Management
(%) Qtl (%) Qtl (%) Qtl (%) Qtl (%) Qtl (%) Qtl (RM million)
CIMB Islamic Al-Azzam Equity 1 Aug 12 4.97 1 2.16 3 79.08 FTSE Bursa Malaysia Emas Shariah
CIMB Islamic Asia Pacific Equity 2 Jun 06 2.73 3 5.12 2 10.15 1 14.23 2 -8.64 4 14.80 36.37 Dow Jones Islamic Markets APac ex Japan
CIMB Islamic DALI Equity Growth 7 May 98 4.93 1 1.94 3 5.70 3 13.32 2 52.63 1 42.41 1 9.90 2,955.81 FTSE Bursa Malaysia Emas Shariah
CIMB Islamic DALI Equity Theme 28 Feb 08 4.98 1 2.14 3 6.87 2 9.95 3 38.14 2 10.86 539.10 FTSE Bursa Malaysia Emas Shariah
CIMB Islamic Equity Aggressive 15 Jun 95 4.87 1 1.86 3 4.72 3 8.45 4 32.65 2 9.82 3 12.56 117.47 FTSE Bursa Malaysia Emas Shariah
CIMB Islamic Global Emerging Mkts Equity 2 Jul 08 3.76 2 3.11 2 7.35 2 9.47 3 -2.02 3 14.49 11.91 Dow Jones Islamic Markets Emerging Markets
CIMB Islamic Global Equity 8 Jan 08 1.20 4 -0.93 4 0.81 4 5.79 4 0.41 3 12.80 14.63 Dow Jones Islamic Market World
CIMB Islamic Greater China Equity 2 Jun 09 2.73 3 6.00 1 9.31 2 17.86 1 -4.83 3 13.18 11.46 Dow Jones Islamic Mkts China Hong Kong Titans
CIMB Islamic Small Cap 30 Apr 03 2.38 4 0.68 4 1.00 4 15.51 2 44.78 2 27.97 2 15.07 150.38 FTSE Bursa Malaysia Small Cap
CIMB-Principal ASEAN Equity 12 Sep 07 2.15 4 0.38 4 5.38 3 12.15 3 10.81 3 1.75 4 12.60 22.59 FTSE ASEAN 40
CIMB-Principal Asian Equity 1 Mar 06 3.13 3 6.58 1 11.89 1 16.47 1 -15.56 4 14.54 34.97 MSCI AC Asia Pacific ex Japan
CIMB-Principal Australian Equity 20 Mar 10 3.55 3 5.29 1 14.25 1 16.84 1 51.23 S&P/ASX 200
CIMB-Principal Equity 1 Aug 95 3.85 2 2.98 2 6.79 2 11.71 3 50.17 1 52.59 1 9.96 503.35 FTSE Bursa Malaysia Top 100
CIMB-Principal Equity Aggressive 3 12 Mar 98 3.84 2 2.76 2 4.62 3 7.40 4 34.38 2 15.26 3 10.71 95.68 FTSE Bursa Malaysia Top 100
CIMB-Principal Greater China Equity 12 Jun 07 4.26 2 7.65 1 10.97 1 14.92 2 -7.31 4 -17.11 4 14.93 234.92 MSCI Golden Dragon
CIMB-Principal Small Cap 20 Apr 04 2.40 4 0.69 4 4.33 4 23.42 1 46.12 1 20.16 2 14.83 95.16 FTSE Bursa Malaysia Small Cap
NET ASSET VALUE (NAV)
Also known as "Fund Size"
NAV
Investments Cash for Liquidity Purposes

(Can be up to 98% of the NAV) (Usually 2% min of the NAV)
 Bonds & Deposits  Banker’s Acceptance

 Shares  REPO
 Properties  Bank deposits
 Government Securities  Money Market Instruments
NAVperUnit = NAV of UTS

Units in Circulation
NET ASSET VALUE (NAV)
Example
 Fund Size for CPAM Growth Fund : RM3,200,000
 Units in circulation for CPAM Growth Fund : 8,000,000 units
 NAVperUnit = Net Asset Value

Units in Circulation
= RM3,200,000
8,000,000
= RM 0.4000
UTMC is required to publish the NAVperUnit in at least one English

National Newspaper and Malay National Newspaper
UNIT SPLITS
Division of a single unit in UTS into two or more units
Illustration:
Initial Units
1,200,000
Split Ratio 1:3
Units in circulation i.e. ONE extra Units AFTER split
1,200,000 units unit for every 1,600,000 units
THREE units
Additional Units
1,200,000
3
NOTE: Fund Size remains unchanged after a split exercise

UNIT SPLITS
Example
 NAV of CPAM Growth Fund : RM 3,200,000
 Units in circulation : 8,000,000 units
 NAVperUnit : RM0.4000
 Split Ratio : 1:4
 Additional Units from Split = 8,000,000 units

4
= 2,000,000 units
 Total Units after Split = Initial units + Additional units

= 10,000,000 units
 NAVperUnit after Split = RM3,200,000

10,000,000
= RM0.3200
NOTE: Fund Size remains unchanged after a split exercise
DISTRIBUTIONS
A form of Income derived from the returns of the UTS
 There any many instruments that provide income to the investor. Each instrument
has its own definition for income. For example:
 Shares > "dividends"
 Bank Deposits > "interest"
 Bonds > "coupons"
For UTS, the income is referred to as "Distributions"
Distributions, if any, are usually paid to the investor in the form of cash. Some UTS will
provide the option to have the distributions reinvested into the UTS, in which case
units (equal to the distribution amount) will be added to the unitholder’s account.
When a distribution is declared, the NAVperUnit will fall by the DistributionperUnit.

Distributions are a common feature of Fixed Income and Money Market UTS.
 Basic terms:
 Cum-Distribution refers to the point just before a distribution is declared
 Ex-Distribution refers to the point just after a distribution is declared
DISTRIBUTIONS
Example:
 NAVperUnit Cum-Distribution : RM1.05
 DistributionperUnit : 2 sen
 Units held by investor : 500,000 units
 Distribution Amount Paid = 500,000 x RM0.02

= RM10,000
 NAVperUnit Ex-Distribution = RM1.05 – RM0.02

= RM1.03
If the Distributions were reinvested, the investor would receive additional

units based on the NAVperUnit Ex-Distribution, in which case:
 Additional Units = RM10,000 / RM1.03

= 9,708.74 units
 Total Units Ex-Distribution = 500,000 + 9,708.74

= 509,708.74 units
SECTION 1
PRACTICE QUESTIONS
PRACTICE 1
 A UTS is defined as a "collective investment", where

investors pool their money together and invest in a
fund.
 The following are examples of “collective investments”

EXCEPT
a) Unit Trust Funds
b) Investment-Linked Funds
c) A Piece of Land
d) Amanah Saham Bumiputra
SECTION 2
REGULATION OF THE UNIT TRUST INDUSTRY
REGULATORY STRUCTURE
Objective of regulations must be to protect the interests of prospective
investors and existing unitholders.
SECURITIES COMMISSION
Regulator of the Unit Trust Industry OTHER GOVERNMENT REGULATORS
[under the Securities Commission Act, Companies Commission of Malaysia
1993 and Capital Markets and Services Act Bank Negara Malaysia
2007]
ROLE OF FIMM
provide self-regulation for the unit trust LAWS AND REGULATIONS
industry through the formulation of Securities Commission Act, 1993
"sound and ethical business practices to SC Guidelines
promote the interest of the unit trust FIMM Guidelines
industry and provide investor protection."
REGULATION OF THE UTMC
Key requirements
 Observe high standards of integrity

and fair dealing in managing a UTS
"to the best and exclusive interest of
unitholders."
 Act with due care, skill and diligence

in managing a UTS, and employ the
resources and procedures necessary
for the proper performance of the
UTS.
REGULATION OF THE UTMC
Other Duties
 Appoint an Investment
Committee
 Appoint Syariah Adviser (for

Syariah UTS)
 Appoint Compliance and

Internal Audit Units
 Maintain a register of
Unitholders
Source: Dealing in Unit Trust, FiMM textbook, pg 2-10, pg 2-11
APPROVAL OF UTMC AND UTS
UTMC UTS
 be an entity incorporated  must be approved by SC

in Malaysia  must have a prospectus
 be a license holder under and approved by SC
CMSA
 Investments must be
 comply with Bumiputra
and foreign ownership approved by SC
requirements  advertising of UTS cannot
 satisfied a minimum mislead investors
shareholders' funds at all
times as prescribed by the
Act
REGULATION OF THE TRUSTEE
Major roles:
 Act as a custodian of the assets of the UTS
 Be aware of investment policies and transactions
 Ensure that calculation of units is in accordance with the Deed
 Keep a copy of the accounting records of the UTS
 Include a report in the UTMCs report to Unitholders
 Report to the SC if there are any irregularities in the operations of

the UTS
REQUIREMENTS TO MARKET/DISTRIBUTE UTS
For an Authorized Person who is an Individual
 at least 21 years of age

 at least Grade 3 SPM (or its
equivalent as determined by Only a card issued by the FIMM
the FIMM) is recognised for the purposes of
 a pass result in the Unit Trust marketing and distributing units
Examination for Unit Trust
Consultants conducted by
the FIMM
 'be honest, of good character
and good repute' and 'display
efficiency, reliability and a
high level of integrity'.(In this
respect, a person must sign a
statutory declaration.)
AGENCY STRUCTURE
Standard Agency Structure (a.k.a 'Unit')
 Rules are also imposed for Agencies with regards to the distribution of
UTS.
 There are limits, imposed by SC, on the size and structure of agencies
organised by UTMC, to ensure that proper supervision is applied to the
activities of each agent.
 An Agent is not allowed to recruit other agents.
Group Agency Manager
Agency Manager
Max 4 Tiers
Agency Supervisor
Agents (50 max)
SECTION 2
PRACTICE QUESTIONS
PRACTICE 1
 There are strict guidelines in the marketing and
distribution of UTS.
 The following are examples of what needs to be

observed, EXCEPT:
a) Present an authorization card from UTMC
b) Promote UTS with a Prospectus
c) UTMC and UTS must be approved by the Securities
Commission
d) UTMC must produce at least two reports a year
PRACTICE 1
 There are several parties or persons within the

structure and framework of a UTS.
 Which of the following parties or persons are

responsible for the custody of the UTS assets?
a) Unit Trust Management Company (UTMC)
b) Unit Trust Consultant (UTC)
c) Trustee
d) Securities Commission (SC)
e) Bank Negara Malaysia (BNM)
SECTION 3
SERVICING CLIENTS AND MARKETING UNIT
TRUSTS
COOLING-OFF RIGHT
Roles of each party

 An investor is given a "Cooling-off" period of 6 business days
 When exercising this right, the investor is entitled to receive back

all the money invested – including sales charges paid.
 Conditions for the "Cooling-off" period

 First-time investor only
 Not applicable to corporations/institutions
 Not applicable to staff of UTMC
 Not applicable to UTC
REPURCHASE OF UNITS
 UTMC is OBLIGATED to repurchase

units from the investor if a request is
made by the investor
 UTMC must therefore ensure there is

sufficient liquidity to meet
repurchase/redemption needs.
UTMC is required pay the repurchase

proceeds to the unitholder 'as soon as
possible' and within 10 calendar days
of receiving the repurchase request.

REPORTING TO UNITHOLDERS
Publish at least two reports in a

year – Annual report & Interim
report – for the Unitholders
ANNUAL
REPORT
 Key Performance Data

 Manager's Report
 Trustee's Report
 Financial Statements of
UTS and Auditor's Report
Investor to be sent a copy of each report within 2 months after the end of
the financial period.
Source: Dealing in Unit Trust, FiMM textbook, pg 3-9 & pg 3-10
REPORTING TO UNITHOLDERS
Publish at least two reports in a

year – Annual report & Interim
report – for the Unitholders
INTERIM
REPORT
 Manager's Report
 Trustee's Report
 Financial Statements
Investor to be sent a copy of each report within 2 months after the end of
the financial period.
Source: Dealing in Unit Trust, FiMM textbook, pg 3-9 & pg 3-10
CLIENT QUERIES AND COMPLAINTS
 Common issues
 delays in the issue of statements confirming investment
 delays in receipt of distribution payments
 dissatisfaction with the investment performance
 general discontent with the 'after sales service'
 UTC who use unsubstantiated performance figures to 'hard

sell‘
These areas of complaint need to be kept in mind when servicing

clients. If UTC & UTMC are able to improve the level of client
service, the entire unit trust industry will benefit.
EPF TRANSFER
Withdrawing from EPF Account 1 to invest in UTS
 General Terms and Conditions for an EPF withdrawal
 the balance in Account 1 is not less than the amount of Basic Savings as prescribed
by the EPF
 the member is less than 55 years old
 an account in the approved UTS has been opened into which the transfer can be
processed
 no transfer has been made in the previous 3 months from the EPF Members'
Investment Scheme
 the amount eligible for transfer is not less than RM1,000, and
 the amount to be transferred is not more than 30% of the excess savings in
Account 1 after deducting the amount of Basic Savings as prescribed by the EPF
(subject to a minimum of RM1,000)
 completed and prepared all relevant documents
EPF TRANSFERS
Account 1 Basic Savings Table
Source: Dealing
in Unit Trust,
FiMM textbook,
pg 3-18
EPF TRANSFERS
Example:
 Member’s Age : 31 years (as at last birthday)
 Balance in Account 1 : RM60,000
Eligible Amount = Excess of Basic Savings x 30%
= (Actual Savings – Required Basic Savings) x 30%
= (RM60,000 – RM33,000) x 30%
= RM27,000 x 30%
= RM8,100
DOLLAR COST AVERAGING
 An approach where an amount of money is invested,

on a regular basis, usually monthly, into an existing
investment.
 This approach can reduce the effects of volatility,

especially for Equity UTS.
Average Cost Per Unit = Total Investments

Total Units
DOLLAR COST AVERAGING
Example:
 Client 1 invests RM1,200 ONE time in January
 Client 2 invests RM200 per month for 6 months
Price Client 1 (No Regular Investment) Client 2 (Dollar Cost Averaging)
Total Total Average Cost Total Total Average Cost
Month NAVPer Unit Investment Units Investment Units
Units Investment Per Unit Units Investment Per Unit
Jan RM 1.00 RM 1,200 1,200.00 1,200.00 RM 1,200 RM 1.0000 RM 200.00 200.00 200.00 RM 200 RM 1.0000
Feb RM 0.75 - - 1,200.00 RM 1,200 RM 1.0000 RM 200.00 266.67 466.67 RM 400 RM 0.8571
Mar RM 0.60 - - 1,200.00 RM 1,200 RM 1.0000 RM 200.00 333.33 800.00 RM 600 RM 0.7500
Apr RM 0.65 - - 1,200.00 RM 1,200 RM 1.0000 RM 200.00 307.69 1,107.69 RM 800 RM 0.7222
May RM 0.80 - - 1,200.00 RM 1,200 RM 1.0000 RM 200.00 250.00 1,357.69 RM 1,000 RM 0.7365
Jun RM 0.95 - - 1,200.00 RM 1,200 RM 1.0000 RM 200.00 210.53 1,568.22 RM 1,200 RM 0.7652
Higher than Lower than

Market Price market price
market price
RM0.95 (sell at profit)
(sell at loss)
Client 2 has MORE units

63
SECTION 3
PRACTICE QUESTIONS
PRACTICE 1
A client recently made a purchase into a UTS for the first

time. The client has decided to exercise his right in
receiving all monies and charges paid for the UTS.
 This “right” is commonly referred to as the:

a) Redemption Right
b) Withdrawal Right
c) Cooling-off Right
d) Exercise Right
PRACTICE 2
EPF Members can make EPF transfers for the purpose

of investment into a UTS. There are certain conditions
that must be met before this can be done.
 Which of the following is incorrect regarding the

conditions that have been set for EPF transfers?
a. Transfers can only be made once every three months
b. Members can invest into more than one UTMC from a
single transfer
c. Members can invest into more than one UTS under the
same UTMC from a single transfer
d. The minimum transfer is RM1,000
SECTION 4
INDUSTRY CODE OF ETHICS AND STANDARDS
OF PROFESSIONAL CONDUCT
COMPLIANCE AND ETHICS
 The purpose of compliance is to prevent any undesirable
outcomes, by enforcing rules and regulations.
 Ethics refers to moral principles i.e. UTC should act in the

best interest of the unitholder, and not for personal benefit.
 This will ensure that all obligations to the

investors/unitholders are met.
 Benefits of compliance and ethical behavior:

 a reduction in client complaints
 a reduced risk of litigation by client
 an enhanced reputation
 the assurance of a continuing career
THE FIMM CODE
The FIMM Code covers "any person registered with the FIMM."
Code of Conduct for Ordinary Members of

PART A
FIMM - UTMCs.
Code of Conduct for organisations registered as

PART B
Institutional Unit Trust Agents (IUTA).
Code of Conduct for persons registered to deal

PART C
in unit trusts as Unit Trust Consultants (UTC).
The parts are divided into 2 sections: 1) Code of Ethics

2) Standards of Professional Conduct
THE UTMC AND IUTA CODE OF CONDUCT
Part A and Part B of the FIMM Code
DIGNITY INTEGRITY CONFIDENTIALITY
CONFLICT OF
CODE OF ETHICS PROFESSIONALISM INTEREST
(AVOID OR SOLVE)
STANDARDS OF COMPLIANCE WITH LAWS

PROFESSIONAL
CONDUCT
BREACH OF LAWS
(REPORT TO SC)
Source: Dealing in Unit Trust, FiMM textbook, pg 4-5, 4-6, 4-7, 4-8
THE UTC CODE OF CONDUCT
Part C of the FIMM Code
Honesty,
Act in good
Integrity & Fair Dealing Competence
faith
dignity
CODE OF ETHICS Provide prompt,

Act with due
efficient and
Confidentiality Professionalism care, skill and
continuous
diligence
service
Use of Use of Use of a

Provide
Compliance authorization appropriate prospectus
adequate
STANDARDS OF with Laws card (FIMM designation when marketing
explanation
PROFESSIONAL card) and title UTS
CONDUCT
Face disciplinary
Use of approved Appointment Duty of care to
Keeping abreast action if in
promotional of qualified supervise and
with UT industry breach of the
materials persons monitor
code
Source: Dealing in Unit Trust, FiMM textbook, pg 4-5, 4-6, 4-7, 4-8
CODE OF ETHICS AND STANDARDS OF PROFESSIONAL
CONDUCT FOR THE UT INDUSTRY
The "Code of Ethics and

Standards of Professional
Conduct for the Unit Trust
Industry" by FIMM explains
the code and disciplinary
matters in detail.
SECTION 4
PRACTICE QUESTIONS
PRACTICE 1
 When promoting UTS to clients, the UTC is expected to

act with due care and in the best interests of the
client.
 Which of the following are best examples of this?

a) Promise guaranteed returns
b) Promote UTS with the highest sales charges
c) Recommend UTS based on the client’s needs
d) Let the client choose the UTS
PRACTICE 2
 There are several parts to the "Code of Ethics and Standards of

Professional Conduct for the Unit Trust Industry" by the
Federation of Investment Managers Malaysia.
 Which of the following parts of the FIMM Code of Ethics relate to

the Unit Trust Consultant?
a) Part A of the Code
b) Part B of the Code
c) Part C of the Code
d) Part D of the Code
SECTION 5
PERSONAL FINANCIAL PLANNING
PERSONAL FINANCIAL PLANNING
Purpose
give 'peace of mind'
protect a client's
with regard to the
assets from the
effects of inflation
$$$ client's financial
situation.
provide a roadmap
of a client's
$$$ objectives for the
medium and long
$$$
term
ensure an adequate improve or maintain

income, when it is
needed
$$$ present - as well as
future – lifestyle
Source: Dealing in Unit Trust FiMM Textbook, pg 5-2
AREAS IN FINANCIAL PLANNING
CASH
MANAGEMENT
RISK
RETIREMENT
MANAGEMENT
AND ESTATE
& INSURANCE
PLANNING
PLANNING
INVESTMENT
TAX PLANNING
PLANNING
STEPS IN FINANCIAL PLANNING
UNDERSTAND THE CLIENT
DATA GATHERING
ANALYSE THE DATA
PREPARE A PLAN
IMPLEMENT THE PLAN
REVIEW THE PLAN
CLIENT TYPES
Understand the average investor’s lifecycle
Stage 1 Stage 2 Stage 3 Stage 4
21 – 30 Years 31 – 44 Years 45 – 60 Years 61 Years & above
Over 30 years to Possibly earning Approaching Already retired,
retirement. higher income. retirement, risk priority will be to
Plenty of time to Generally still tolerance may be maintain income,
accumulate plenty of time to dropping. as salary is no
wealth. retirement. longer received.
Focus should be on Maintain equity Can consider fixed Consider fixed
equity funds to funds, but can also income funds to income funds for
work towards consider balanced receive regular regular payments.
long-term growth. funds to diversify income, and start Equity funds may
preserving capital, not be suitable as
while balanced short-term returns
funds can still are uncertain.
provide some
growth.
THE IMPACT OF TAXATION AND INFLATION
 UTC need to be aware of the how Taxation and

Inflation will effect an investment.
 Returns from UTS (Nominal Yield) would not have

taken the above into account.
 UTC must know how to determine the Effective Yield

i.e. the returns AFTER the effects of Tax and Inflation
1. Returns After Tax = Nominal Yield x (1 – Marginal Tax Rate)

2. Effective Yield = Returns After Tax – Inflation Rate
THE IMPACT OF TAXATION AND INFLATION
Example:
 Nominal Yield : 20%
 Marginal Tax Rate : 10%
 Inflation Rate : 5%
1. Returns After Tax = Nominal Yield x (1 – Marginal Tax Rate)

= 0.20 x (1 – 0.10)
= 0.20 x (0.90)
= 0.18 = 18%
2. Effective Yield = Returns After Tax – Inflation Rate

= 18% - 5%
= 13%
RULE OF 72
 Provides an estimate on the number of years it takes to:
 DOUBLE an amount of money with a given rate of return
 HALVE the value of money with a given rate of inflation
Number of years to double (or halve) = 72

r
Where r = rate of return (or inflation)
RULE OF 72
Example:
 Investment : RM50,000
 Rate of Return : 6% p.a.
 Years to Double = 72/6

= 12 years
RM100,000
RM50,000
Years
Years to Double = 12 years
RULE OF 72
Example
 Investment : RM200,000
 Rate of Inflation: 8% p.a.
 Years to Halve = 72/8

= 9 Years
RM200,000
RM100,000
Years
Years to Halve = 9 years
SECTION 5
PRACTICE QUESTIONS
PRACTICE 1
 The following data has been obtained on an investment:

 Nominal Yield : 30%
 Marginal Tax Rate : 10%
 Inflation Rate : 5%
 What is the difference between the Nominal Yield and Effective

Yield?
a) 27%
b) 22%
c) 8%
d) 5%
PRACTICE 2
 A client wishes to have RM1,000,000 upon reaching the age of

50. The average rate of return on all investments is 6%.
 At what age must the client already have RM500,000 to achieve

RM1,000,000 at the age of 50 years?
a) 48 years
b) 45 years
c) 38 years
d) 32 years
SECTION 6
OPERATIONS OF SYARIAH BASED UTS
SYARIAH-BASED UTS
Differences from a Conventional UTS
 Objectives of the fund
achieve both capital and income growth within the scope of Syariah principles
 Investment strategy
aligned according to Syariah principles
 Operations and management of the fund

Syariah-based instruments & relationships
 Documentation (Prospectus, etc.)

will include the Syariah Committee/Syariah Adviser's report
 Investment avenues and activities

avoiding non-Syariah securities (e.g. Gaming, Financial)
 Accounts and reporting

words and terminologies (the use of "interest" is prohibited)
 Syariah non-compliance/Syariah specific Risks

investments and practices against Syariah principles
STRUCTURE OF SYARIAH UTS
Generally the same with any UTS, with the exception of additional Syariah parties
AT THE SC: AT THE UTMC:

SYARIAH ADVISORY
Unitholders / SYARIAH COMMITTEE/
COUNCIL Investors SYARIAH ADVISER
Possible Capital Money Pooled Ensures activities

Gain & Income from Investors comply with Syariah
requirements
Trustee SYARIAH UTS UTMC
Safeguards the Assets of Administers the

the UTS, i.e. the Possible Capital Operations of UTS.
custodian Invests Prepares all public
Gain & Income
documentation.
Syariah-
compliant
investments
Shares, Bonds, Cash,
Property, etc.
SYARIAH-APPROVED INVESTMENTS
Syariah non-compliance risk/Syariah specific risk
Investments found to be Syariah non-compliant must be disposed within a
month, and any gains from those investments must be channeled to
charitable bodies
• Must comply with Syariah • Liquid assets or excess cash

requirements must be placed in Syariah-
• Approved by Syariah Advisers based instruments
• Approved by Syariah Council • e.g. Islamic bank accounts
Syariah-
compliant
investments
APPLIED SYARIAH RELATIONSHIPS
Unitholders /
Investors
(among unitholders)
Musyarakah
Unitholders /
Investors
WadiahYad-Dhamanah;
Wakalah; UTMC
Bai
Unitholders /
Investors
WadiahYad-Dhamanah;
Trustee Wakalah;
Trustee No relationship UTMC

(no direct link)
SECTION 6
PRACTICE QUESTIONS
PRACTICE 1
 Although Syariah UTS and Conventional UTS share

similar features, Syariah UTS have their own set of
characteristics and specific requirements.
 The following are true regarding Syariah UTS, EXCEPT:

a) to cater investors sensitive to Syariah practices
b) Investors need to pay fees to the Syariah Advisers
c) Syariah UTS has its risks
d) A Syariah Adviser must by appointed by UTMC
PRACTICE 2
 Syariah UTS need to comply with Syariah Principles,

including the relationships between the various
parties within the UTS Structure.
 Which of the following Syariah relationships are

applied between Unitholders?
a) WadiahYad-Dhamanah
b) Musyarakah
c) Wakalah
d) Bai
END OF TRAINING MODULE
GENERAL INFORMATION
EXAM PREPARATION:
1. Hours: 2 Hours 1. Identification Card

2. Venue: Depending on region 2. Exam slip (if any)
3. Passing Rate: 70% pass 3. Arrive 30 minutes early
4. Language: BM/English
4. Calculator
5. Calculation: 10-15 questions
5. Examination No.
6. Video Presentation: 5 mins
7. Format Question: 60 question 6. Father’s Full Name
(Multiple Choice) 7. Stationery (If any)
CUTE NAVIGATION GUIDE
For the system to correctly identify a

candidate, it is necessary for the candidate
to input the examination no. and
identification no. After doing so, candidates
must click on the “Sign In” button to
proceed to the next screen. Should
candidates have any difficulty logging into
the system, please seek assistance from
the Examination Site Coordinator.
To correctly confirm a candidate’s

identity, the candidate must input
specific verification details. This is
done by entering his or her father’s
name in the space provided on the
screen. Once this is completed,
click on ‘Verify’ button to have your
verification details validated.
Upon successful verification, the

candidate will be prompted by the
language selection screen. Candidates
must select the preferred examination
language at this stage. Please note that
the examination language cannot be
changed after completing the selection
process. Click on the ‘Start’ button to
proceed to the next page/screen
Candidates will find the date and

time of the registered
examination. Candidates must
read the instructions on the
screen before commencing the
examination. Failure to abide by
the instructions may result in
immediate disqualification from
the examination.
When the ‘Begin’ button is clicked, a message will appear prompting the
candidate to confirm the start of the examination. Click “OK” when you are ready
to begin the examination.
F. Finish
A. Question Navigational
Section
E. Help
B. Examination
Status Section
D. Temporary Log off
C. Examination
Question Section
A. Question Navigation. It allows candidates to navigate from one question

to another in a non-sequential order. Also displayed information about
exam session (date, time & centre) and the finish button.
B. The Examination Status. It highlights various status of the examination

in progress. For example, the status of a particular question, the level of
completion for current examination, remaining time available for this
examination, temporary log off, finishing the examination and help (for
quick online assistance).
C. The Examination Question. It displays the question that a candidate is

currently attempting. Candidates must remember to click on the “Save &
Next” button to ensure that attempted questions are recorded by the
system. Clicking on the “Previous” button will take the candidate to the
previous question without registering any attempt made by the candidate.
Temporary Log Off
D. Temporary Log Off

The “temporary logoff” facility is
to be used by candidates who
wish to leave the examination
room temporarily. Candidates
must remember to get the
permission from the
Examination Site Coordinator
should they wish to leave the
examination room. Candidates
are advised that the
examination time will not be
suspended for the duration of
the temporary log off.
E. Help
Explanation on the various navigation buttons within the examination pages. Upon
completion of the examination questions, the candidate must click on “Finish“ button to end
the examination session. Candidates will be asked to confirm if he or she has finished the
examination by clicking on the “OK” button.
F. Finish
A confirmation screen will be displayed as a final line before the candidate completes the
examination. If the candidate is certain that he/she has completed the examination, he or
she should click on “Yes! Finish the examination and process the results now”.
Candidates will now be able to

view their result slip immediately.
Candidates who have passed the
examination will have their FiMM
Number printed on the result slip.
1. Click & print the result
2. Click & close after printing.
Once completed the examination,

candidates will be able to view their results
immediately. Candidates must remember
to print the result slip and collect it from the
Examination Site Coordinator. Candidates
are reminded to sign on the Candidate List
as acknowledgement of receiving the result
slip.
Please be reminded that the results are

subject to finalization by the FiMM. The
final examination result will be made
available on the 3rd working day after each
examination session.

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CUTE Tutorial (ENG)

For Internal Circulation & Training Purposes Only Ver

At the end of the program, participant will be:

2. Able to understand of unit trust industry including the

3. Able to understand the principles and mechanisms of UTS

4. Able to emphasise the need for prospective UTC to be

Source: Dealing in Unit Trust, FiMM textbook

Section 1 Understanding Unit Trusts

Section 2 Regulation of the Unit Trust Industry

Section 3 Servicing Clients & Marketing Unit Trusts

Section 4 Industry Code of Ethics & Standards of Professional Conduct

Section 5 Personal Financial Planning

Section 6 Operations of Syariah based UTS

 UTS are a form of (non-incorporated) "collective investment"

 A professional fund manager then invests the pooled funds in a

Source: Dealing in Unit Trust, FiMM textbook, pg 1-3

BORROWING TO INVEST REGULAR SAVING

Source: Dealing in Unit Trust, FiMM textbook, pg 1-5, 1-6

Up to 67 % Margin of Investor must sign a Unit

Source: Dealing in Unit Trust, FiMM textbook, pg 1-5, 1-6

ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENT

UTMC/UTC is not encouraged by SC on sale of units through loans

 Investment Amount = RM200,000

 Maximum borrowings = RM200,000 x 67%

 Client’s own cash = RM200,000 – RM134,000

UTMC/UTC not encouraged by SC on sale of units through loans

Possible Capital Money Pooled

Safeguards the Assets of Administers the Operations

PARTIES TO THE DEED CONTENTS OF THE DEED

Source: Dealing in Unit Trust, FiMM textbook, pg 1-10, 1-11

• makes reports to the trustee regarding the purchase, sale and

• Ensures UTMC acts in accordance with the Deed

• the most significant since they supply the capital to be invested

Source: Dealing in Unit Trust, FiMM textbook, pg 1-10

Basic types of UTS

Listed UTS Unlisted UTS

 Units quoted and traded on stock

Most common UTS in Malaysia.

A mix of equity and fixed income instruments,

Primarily investing in fixed income instruments

Invest in low risk and short-term money market

Source: Dealing in Unit Trust, FiMM textbook, pg 1-13, 1-14

REITs invest in real property (e.g. commercial property)

An Exchange Traded Fund is like a listed index UTS which

Syariah UTS provide investment options for those

Government-sponsored UTS represent the bulk of UTS

Source: Dealing in Unit Trust, FiMM textbook, pg 1-15

 The Foreign and Colonial  Amanah Saham Pahang Berhad

 First Malayan Fund  Amanah Saham Nasional

 Malayan Investment Fund  Amanah Saham Wawasan 2020

Source: Dealing in Unit Trust, FiMM textbook, pg 1-18

Purpose of a UTS prospectus is to

Must be approved by SC before

Must be used when marketing and

Must be renewed once a year

Source: Dealing in Unit Trust, FiMM textbook, pg 1-24

 The PTR provides an investor with an

 When comparing two or more UTS which

PTR = ½ x [total investment acquisitions + total investment disposals]

Source: Dealing in Unit Trust, FiMM textbook, pg 1-24

PTR = ½ x [total investment acquisitions + total investment disposals]

Source: Dealing in Unit Trust, FiMM textbook, pg 1-27

BASED ON EACH TRANSACTION BASED ON DAILY FUND SIZE