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ENGLISH Sept 2014

Computerized Unit Trust Exam

NAME :

BRANCH :

DATE :

This booklet includes:

6 in 1 slides
Formula
Questions (Set 1-4)
Working calculations (Set 4)

1
Formula ENGLISH

FORMULA

Chapter 1

1. Loan Financing

Assume: The total investment is RM350,000.

Maximum loan-to-valuation =67% (67% x RM350, 000 = RM234, 500)


Balance from own pocket money =33% (33% x RM350, 000 = RM115, 500)

2. Portfolio Turnover Ratio (PTR)

PTR = x [ total investment acquisitions + total investment disposal ]


average fund size

During the year ended 31 December 200x, the fund managers XYZ Balanced Fund sold investments with
gross proceeds of RM1,267,350 and purchased additional investments at a gross of RM 832,543. The
average fund size during the year was RM 4,150,365.

PTR = x [ 832,543 + 1,267,350 ]


4,150,365

= 0.25 times (or 25%)

Note: On average, the portfolio of the fund will be completely turned over (replaced) about once in every
4 years (1/0.25 = 4 years). The number of trading incurred by fund e.g. 25% of the fund used for
trading purpose.

3. MER (Management Expense Ratio)

MER = [fees + recovered expenses ] x 100


Average fund size

Given that:
Management Fees = RM 1,967,876
Trustee Fee = RM 650,655
Auditors Fee = RM 570,345
Bank Charges &Other Expenses = RM 488,888
Syariah Fee = RM 500,000 * For MER exclude Syariah Fee because it is
Total = RM 3,677,764 borne by the Management.
The average fund size is RM 234,675,853

MER fund of the year;


MER = RM3,677,764 x 100
RM 234,675,853
= 1.57%

The fund carries an expense of RM15.70 for every RM 1,000 of the average value of the fund during that
financial year end.

2
Formula ENGLISH

4. Raw Return

Investment return that measures the total return achieved over a particular period.

E.g.

RM 0.50 (profit)

2000 2005
(bought at RM1) (sold at RM1.50)

RM 0.50 x 100% = 50% of Raw Return


RM 1.00

5. Compounded Annual Return

E.g.; UTS K that produced 75% total annual return over 5 years produced compounded annual return
Assume: lump sum RM 100,000 capital;
capital = RM 100,000
profit (75%) = RM 75,000
where FV = Future Value, RM 175,000
PV = Present Value, RM100,00
i = rate of return
n = period, 5 years
FV = PV ( 1 + i )n
RM 175,000 = RM 100,000 (1 + i)5
1.75 = (1 + i) 5
5
1.75 = (1 + i)
1.1184 =1+i
0.1184 =i
11.84% =i

Note: For the past 5 years, UTS K has been compounding at the rate of 11.84% per annum.

6. Creation and Cancellation Prices

The creation price = NAV + TCF


The cancellation price = NAV TCF

7. Distribution

NAV of the fund will decrease due to portion of the fund distributed to unitholders.
Units in circulation unchanged.

3
Formula ENGLISH

Example : NAV/unit cum-distribution = RM1.00 and RM0.08 distribution of income.

Cum-Distribution (Cum-D) Ex-Distribution (Ex-D)

NAV/unit RM1.00 RM1.00 - RM0.08nett = RM0.92


Alternative
Remark : Net Asset Value = RM90,000 and units in circulation = 100,000, distribution = RM0.10

NAV/unit (cum distribution) = RM90,000 / 100,000


= RM0.90

NAV/unit (ex distribution) = RM0.90 - RM0.10


= RM0.80

8. Unit Split

NAV of the fund unchanged.


Units in circulation increase.

Unit split of 1 : 4

NAV before the unit split RM100,000,000


Units in circulation 100,000,000 units
NAV per unit before unit split RM1.00
NAV after the unit split RM100,000,000
Units in circulation 125,000,000 units
(100,000,000 X 5/4)
NAV per unit after the unit split RM0.80

Alternative
Example : NAV/unit pre-unit split is RM1.00 and unit split of 1:4 distributed.

Pre-unit split Post-unit split


NAV/unit RM1.00 RM1.00 x (4/5) = RM0.80

Remark : With unit split of 1: 4

unit price (post unit split) = (4/5) x NAV/unit before unit split

no. of units (post unit split) = (5/4) x no of units in circulation before unit split.

4
Formula ENGLISH

Chapter 3

1. Distribution Warrant

E.g. Trustee Company Bhd.


Trustee of ABC Balanced Fund
Distribution Warrant

Warrant No No of Units Year Ended Distribution No Payment Date


47638 1,000.00 31 May 200X 67 7 July 200X

TAXABLE TAX NON NON DISTRIBUTION NET


INCOME MALAYSIAN FOREIGN ALLOWABLE TAXABLE EQUALISATION PAYABLE
EXPENSES
50.00 14.00 - 60.00 450.00 2.50 428.50

Net payable = Taxable Income - Malaysian tax - Non Allowable Expenses + Non Taxable +
Distribution Equalisation (if any)

2. Distribution Equalisation

Distribution Equalisation = Undistributed Income

Net Asset Value of Fund

e.g. Undistributed Income = RM100,000


NAV = RM40,000,000

Distribution Equalisation = RM100,000

RM40,000,000

= RM0.0025 sen/unit

Thus, for every unit sold, RM0.0025 will be set aside to equalize the earlier unitholders distribution
income. Distribution Equalisation is calculated as follows:

RM0.0025 /unit x 1,000.00 units = RM2.50

3. Conditions for withdrawal from EPF to approved UTS

Calculations: (Savings in Account 1-Basic Savings) x 20%

Minimum withdrawal is RM1, 000.00

5
Formula ENGLISH

Example:

EPF Member Age Savings A/C 1 Basic Savings Calculation Eligibility


A 22 RM4,000 RM5,000 - Not eligible
(Savings in A/C 1
less than basic
savings)
B 22 RM8,000 RM5,000 (RM8,000-RM5,000) X 20% Not Eligible (less
= RM600.00 than RM1,000)
C 45 RM100,000 RM64,000 (RM100,000-RM64,000)X 20% Eligible (can
= RM7,200 withdraw
RM7,200)

Chapter 5

1) Impact of taxation and inflation on income returns


Assume: tax rate is 20%, investment return is 10% and the inflation rate is 4.8%.
What is the effective rate of return?
Return after tax = Investment return (investment return x tax rate)
= 10% - (10% x 20%)
= 10% - 2%
= 8%
Effective rate of return after tax and inflation = Return after tax inflation rate
= 8% - 4.8%
= 3.2%

2) Impact of inflation on investment objectives

With an inflation rate of 5%, how much will the education fees of RM50,000 costs in 8 years time?

Compounding factor for a sum of money


= (1 + i)n
Where i = inflation rate
n = period

Compounding factor = (1 + i)n


= (1 + 5%)8
= (1 + 0.05)8
= 1.4775

Cost for education after 8 years = RM50,000 x 1.4775


= RM73,875

3) Rule of 72

The rule of 72 help to provide a client with an estimate of, for example:
The loss in real value of a given amount of funds with a particular inflation rate
How long it will take to double a given sum of money invested at a given rate of return.

The formula is: 72

given rate of inflation of return

A client has RM500,000 and wants to know when he can become a millionaire with the interest of

6
Formula ENGLISH

10%?

72
= 7.2 years
10

In 20 years, the value of a sum of RM40,000 has dropped to RM20,000, what is the inflation rate for
this 20 years?

72
= 3.6%
20 years

4) The effects of charges on investment returns

UTS 1 has an initial service cost of 5% with an MER of 1.5% pa


UTS 2 has an initial service cost of 6.5% with an MER of 1.5% pa

What is the different between these 2 UTS if an investor invests RM150,000 for 5 years time and the
investment return is 10%?

UTS 1 UTS 2
RM RM
Investment amount 150,000 150,000
Working money (investment amount/(1+service charge) 142,857.14 140,845.07
Value end of year 5 214,808.09 (i) 211,782.63(ii)

(i) Value end of year 5 for UTS 1 = Working money x (1 + i)n


= RM142,857.14 x (1 + [10%-1.5%])5
= RM142,857.14 x (1 + 8.5%)5
= RM142,857.14 x (1 + 0.085)5
= RM142,857.14 x (1.085)5
= RM 214,808.09

(ii) Value end of year 5 for UTS 2 = Working money x (1 + i)n


= RM140,845.07 x (1 + [10%-1.5%])5
= RM140,845.07 x (1 + 8.5%)5
= RM140,845.07 x (1 + 0.085)5
= RM140,845.07 x (1.085)5
= RM 211,782.63

Thus, the different between 2 UTS in 5 years time (taking into account the effect of charges and fees)
= RM214,808.09 RM211,782.63
= RM 3025.46

7
Set 1 ENGLISH Questions

Set 1 A. Without the UTS prospectus a registered person is not allowed to


1) An investor can obtain loan from a financial institution for the market or distribute unit trust.
purpose of investing in UT. Mr. B wants to invest RM 80,000 in B. Persons registered with the UTMC and upon receiving the
Equity UTS. Assuming he has borrowed up to the maximum authorization card by the UTMC, are allowed to start selling the
margin of financing, what would be the amount he needs to invest unit trust fund.
on his own? C. The registered persons must bring along together with them the
A. 27,400 C. RM28,400 authorization card when they go to see their prospect.
B. 26,400 D. RM29,400 D. Persons who wish to market and / or distribute units must be at
least 21 years of age.
2) The following are the roles of UTC, except;
5) To further reduce risks to investors in UTS, the Securities
A. Inform the investor about the structure of UTS and what their Commission specifies the maximum exposure of a UTSs portfolio
rights as unitholders are. to specific investments. The limit can be in form of exposure to a
B. To be responsible to the customers request with honesty and single issuer, class of securities or group of companies. Investment
dignity. restriction on the maximum exposure in a single company is to;
C. Force sell to the customer in order to get benefit from their
investment. A. Specify the maximum amount that the fund is allowed to invest in
D. Fine- tune their product knowledge. any one group of companies.
B. Maximize the pool of Malaysian resources that is invested in
3) Which of the following can be used to measure UTS in Malaysia? Malaysia.
C. Limit the downside of investing in any one single stock.
I. Benchmarks D. Restrict all the amounts of the fund to be invested in overseas
II. Total Return over Various Time Periods market.
III. Performance tables
IV. Asset allocation 6) The following are the characteristics of Syariah UTS except;
A. I and II
B. I, II and III A. The main objective of Syariah UTS (or Islamic UTS) is to provide
C. I, III and IV an alternative investment options for investors who is sensitive to
D. All of the above Syariah Principle.
B. The returns of Syariah UTS will also avoid the incidence of riba or
4) All those entering the unit trust industry with the intention of usury interest.
marketing and distributing unit trust are required to meet the C. The stocks of Syariah UTS will exclude companies involved in
requirement by FMUTM. Based on the Guidelines on Marketing activities, products or services related to conventional banking,
and Distribution of Unit Trust Funds, which of the following insurance, financial services, gambling, alcoholic beverage and
statement is not valid? non-halal food products.
D. The Syariah fee is borne by the investor themselves in investing in
Syariah UTS.

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Set 1 ENGLISH Questions

7) Leveraging into an investment means


A. 0.26 times C. 0.34 times
A. Borrowing funds to invest to gain maximum exposure, expecting B. 0.33 times D. 0.25 times
that the rate of return on investment will exceed the borrowing cost,
thus giving rise to additional profit. 11) UTMC is entitled under the deed of UTS to receive an annual
B. Lowering the risk of investing especially in unit trust. management fee. What is an annual management fee?
C. Using the dollar cost averaging method to lower down the cost per
unit.
A. A fee based on the Selling Price of the Fund paid by the unit holder
D. Lending money to investors who wish to gain maximum exposure
to the unit trust manager for ongoing management of the unit trust
to make sure the growth of the assets.
fund.
B. A fee based on the Gross Net Asset Value of the fund paid by the
8) The statements below are about Management Expense Ratio (MER)
unit holder to the trustee for ongoing management.
of a particular fund in UTS except
C. A fee based on the Gross Net Asset Value of the Fund paid by the
unit holder to the unit trust manager for ongoing management of
A. In calculating MER, auditor fee is considered as one of the
the unit trust fund.
expenses of the fund.
D. A fee based on the Net Asset Value of the Fund paid by the unit
B. MER shows the fees and expenses that the fund incurred in the
holder to the trust manager for ongoing management of the unit
year.
trust fund.
C. Formula of MER = (fees + recovered expenses) X 100%
Average Fund Size
Question 12 and 13
D. The lower the MER, the lower the return that the investor will get
from that fund.
12) Net Asset Value is RM250,000 while units in circulation is
1,000,000 units for fund ABC. Calculate the NAV per unit for
9) Compounded annual return is an annual compound rate of return
Fund ABC.
achieved by an investment over its holding period. Assuming an
investor has put in lump sum of RM 250,000 capital to invest in
A. RM0.25 C. RM0.24
UTS X that produced 80% total return over 10 years. Calculate
B. RM0.27 D. RM0.23
what is compounding rate p.a. for UTS X for the past 10 years?

13) Assume that Mr. Z wants to invest RM32,000 into Fund ABC.
A. 6.05 % C. 9.05%
Calculate the number of units he will get from the
B. 7.02% D. 8.02%
investment.(Service charge paid separately).
A. 118,518.52 units
10) During the year-end of Fund S, the fund managers sold
B. 128,000.00 units
investments with gross proceeds of RM 2,653,843 and purchased
C. 133,333.33 units
additional investments at a gross cost of RM 946,632. The average
D. 139,130.43 units
fund size during the year was RM 5,244,789. Calculate the PTR
for the year-end ended 31 December 200X.

9
Set 1 ENGLISH Questions

14) Compute the Trustee fee from the MER calculation of Fund A. liquid assets; with at least 50% of assets to be invested in real
estate or single-purpose companies and the remaining 25% of
Auditors fee RM 200 assets invested in other real estate-related assets, non-real estate-
Management fee RM15, 000 related assets or asset-backed securities
Printing annual report RM 500 Which of the following UTS best suit to the illustration above?
Printing interim report RM 500
Other expenses RM 5,000 A. Managed Funds C. Islamic Funds
Trustee fee ? B. Listed REIT D. Equity Funds

Average fund size is RM 1,500,000 and the MER is 1.47%. 19) What are the eligibility requirements for an authorized person who
is an individual?
A. RM 800 C. RM700
B. RM850 D. RM750 I at least 21 years of age
II has attained at least Grade 3 in SPM (or its equivalent as
15) A UTMC declared a unit split of 1:10. The NAV pre unit split is determined by a body approved by the SC or a recognized self-
RM 500,000,000. Units in the circulation pre unit split are regulatory organization))
250,000,000 units. What is the NAV per unit after the split? III obtain a pass on a qualifying examination conducted by a body
approved by the SC or a recognized self-regulatory organization.
A. RM 1.71 C. RM1.80 IV must not be an insurance agent or life insurance agent
B. RM 1.70 D. RM1.82
A. I,II,III C. I and III
16) __________ is a fee charged by a UTMC to an investor in UTS B. I,II,IV D. All of the above
who sells his or her units in the UTS.
20) UTC Y knows that providing superior service to his clients is of
A. Exit Fee C. Initial service charge paramount importance. The success of his relationship can be
B. Initial offer price D. Annual management fee measured in qualitative terms which are reflected by the actions
listed below except:
17) The NAV is RM380,000 while units in circulation is 1,400,000
units for Fund XYZ. Assume that Mr. B wants to sell his units, A. The high quality of on going reporting and customer care
calculate the amount that he will receive if he sells 15,000 units. B. Not responding to requests and complaints made by investor
(Use 3 decimal points for calculation) C. The ease with which transactions can be made
D. The depth of knowledge of customer service staff of UTMC,
A. RM3,750 C. RM3,600 IUTA, and UTC
B. RM4,065 D. RM3,450
21) Unitholder F is a first-time investor and has purchased UTS XYZ
18) This UTS is having at least 75% exposure in the investment of from UTC B, on Tuesday, 2 May 2006. After returning home, he
real estate, single-purpose companies, real estate-related assets or met some friends who have experiences in UTS investment. Prior

10
Set 1 ENGLISH Questions

to his discussion with his friends, he started to feel that he did not C. Realised capital gains from the sale of investments.
fully understand the purchase and he also felt that UTC B has D. All of the above
misled him by focusing more on past performance of UTS XYZ.
What is your advice to Unitholder F? Question 24 and 25

A. Unitholder F cannot do anything at all as the purchase has been 24) Before 1 January 2007, Azmi has RM189,345 in A/C 1.
made. RM94,672.50 in A/C 2, and RM31,557.50 in A/C 3. After 1
B. Unitholder F should wait for the right time to repurchase all his January 2007, each sub-account has:
units
C. Unitholder F can exercise his cooling-off right which is an A. Account 1 : 220,902.50 ; Account 2 : 94,672.50
opportunity to reconsider his purchase. B. Account 1 : 284,017.50 ; Account 2 : 31,557.50
D. Unitholder F should terminate UTC Bs services immediately. C. Account 1 : 189,345.00 ; Account 2 : 126,230.00
D. Account 1 : 157,787.50 ; Account 2 : 157,787.50
22) Unitholder Z received an Annual Report on the performance of
UTS B which he invested in. Listed below are the major contents 25) Azmi has been approached by UTC F from UTMC Z to transfer
of the Annual Report which he will come across except: his savings from EPF to UTS C managed by UTMC Z on 3
February 2008. He is 28 years old and the basic savings for him is
I. Average Annual Return over one, three and five years, and since RM14,000. However, the savings he has in account 1 is RM20,000.
launch. How much is the maximum amount can he invest from EPF?
II. UTS Bs investment objectives and policies.
III. Auditors Report A. RM6,000.00 C. RM14,000.00
IV. Risk Disclosure Statement. B. RM1,200.00 D. RM20,000.00
V. Cooling-Off Right.
26) Upon agreeing to transfer his amount from Account 1 balance to
A. II and IV only UTS C, what are the documents which Azmi has to provide UTMC
B. I, II, III only Z?
C. III, IV, V only
D. IV and V only I. the completed EPF application form [Form KWSP 9F (AHL)].
II. one certified true copy of the clients identity card (IC)
23) The UTMC will determine (with trustees approval), the total photocopied on A4-sized paper, with both the front and reverse of
amount of income of UTS to be distributed. The amount available the IC photocopied on the same face of the paper.
for distribution from UTS may include only realised income/gains III. the client right and left thumbprints affixed on the above
and after deducting expenses and taxation. Which of the following photocopy.
is realised income/gains? IV. completed application form from UTMC Z for UTS C.
V. Risk Disclosure Statement signed by investor.
A. Dividend and interest income received.
B. Other income received.

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Set 1 ENGLISH Questions

A. I, II, IV only A. I, II, III only


B. I, II, III only B. I, II, III, IV only
C. I, II, III, IV only C. II, III, IV, V only
D. All of the above D. All of the above

27) After a few years of investment, Azmi wishes to sell his units in 29) An investment in UTS can be used to meet longer term needs
UTS C. Which of the following is false? except

A. The repurchase proceeds paid by UTMC Z will be directly credited A. For home purchase.
into members Account 1. B. To meet childrens future education costs.
B. Proceeds from the disposal of units will be repaid to investor. C. Can make fortune overnight as in direct share investment.
C. Investor holding units in UTS acquired with EPF-source D. To build up a retirement fund.
application money is able to sell units at any time and in the
normal manner, without the completion of EPF Form KWSP 9F(3). 30) As required by SC, the content of the annual report of UTS should
D. Any distributions accruing to unitholders from EPF-source include the following except;
application money are automatically reinvested.
A. Financial Statements of UTS C. Unitholders right
28) As an investor, Lily is aware of other investment opportunities that B. Managers Report D. Auditors Report
exist besides UT investment and as a UTC, your role is to advise
Lily on the features of each investment. Choose the correct 31) If a customer is unsatisfied with UTC s marketing ethics, a
statement which describe them. customer can direct their complaints through these channels except;

I. Cash and Fixed Deposits not suitable for medium to long-term A. UTMC C. Ministry of Finance
investment and usually offer lower relative returns due to lower B. FMUTM D. Securities Commission
risk.
II. Direct Share Investment requires sound financial knowledge and 32) As a registered UTC, Charles is aware of the importance in
time in order to gain profit. complying to regulations, procedures and rules, and compliance is
III. Direct Investment in Property small investor having difficulty to the responsibility of everyone in the organization. He benefits in
gain exposure to it as large amounts of capital are required. many ways from compliance except
IV. International investments investment is affected by tax and other
regulations, costs of managing and accounting for currency A. An enhanced reputation and easier to attract clients and increase
exposure. business.
V. Financial Derivative Products an avenue to earn potentially very B. A reduced risk of litigation by clients.
high returns (or losses) without large capital outlays but small C. The opportunity for UTC to update their knowledge of legal and
investor is not really equipped to analyze derivative products as other relevant obligations.
sound knowledge and understanding is needed. D. An increase in client complaints.

12
Set 1 ENGLISH Questions

33) As a UTC, Shirley has to adhere to the UTC Code of Ethics which
outlined by the followings except: A. I, II, & III
I. Honesty, Dignity and Integrity B. IV only
II. Appropriate Designation or Title C. I, II & III
III. Advertisements and Promotional Materials D. None of the above
IV. Appointment of qualified persons
V. Fair Dealing 37) Which of the following are the benefits of an effective financial
planning?
A. I, II, III only
B. II, III, IV only I. Protect an individuals assets from the effects of inflation
C. III, IV, V only II. Ensure an adequate income, when it is needed
D. All of the above III. It gives an individual peace of mind in regard to financial
situation
34) A complaint may be referred by the FMUTMs Executive Director IV. It guarantees higher return for an individual in the future.
to the FMUTM Council. The Council may within __________
refer the complaint to an appointed Investigating Committee to A. I, II, III C. I, III, IV
ascertain if the complaint is valid or has any substance. B. I, II, IV D. II, III, IV

A. 14 business days 38) UTC plays an important role in investment planning for the clients.
B. 6 business days Thus, what SHOULD NOT be the UTCs role in order to reduce
C. 14 calendar days clients confusion and concern about investment decisions?
D. 6 calendar days
A. Educating clients that investment decisions are preceded and based
35) Why is compliance an advantage to UTC? on investment strategies that are established to meet financial goals
within a certain time frame
A. Enable them to update their knowledge as well as further enhanced B. Advising clients to invest by loan financing if they have no money
their reputation C. Advising clients on the investment strategies such as dollar-cost
B. So that UTS investment will perform better averaging to build up their investment
C. Enable them to be promoted D. Discussing and recommending investment classes or specific
D. In order for them to pass the exam investments

36) Below are the parties registered with FMUTM except; 39) Identify the key elements in relation to the concept of personal
financial planning
I. UTMC
II. UTC I. It is a process
III. IUTA II. Is comprehensive
IV. Investor III. Seeks maximum utility

13
Set 1 ENGLISH Questions

IV. Recognises the individual


V. Maximising the returns for agents A. 4.8% C. 4.5%
VI. Acknowledges the cycles of life B. 4.3% D. 4.6%

A. I, III, IV, V, VI C. I, II, IV, V, VI 44) What is the difference between the value of RM135,500 in 4 years
B. I, II, III, IV, VI D. II, III, IV, V, VI and 5 years time with an inflation of 4.5% pa.?

For question 40 and 41, A. RM7,374.85 C. RM7,438.78


B. RM7,271.38 D. RM7,598.59
Tax rate : 20%
Inflation rate : 4.5% For questions 45 and 46,
Rate of return : 11%
Lump sum investment : RM120,000.00
40) What is the effective rate of return after tax and inflation? Initial entry cost : 6%
On-going management fee : 1.4%
A. 4.5% C. 4.3% Rate of return : 12%
B. 4% D. 4.2%
45) What is the value of the investment after 5 years?
41) Assume that the inflation rate raise up to 4.8%, what is the
effective rate of return? A. RM187,348.85 C. RM183,544.34
B. RM186,674.39 D. RM185,647.93
A. 4.5% C. 4.3%
B. 4% D. 4.2% 46) Assumed that the on-going management fee is 1.5% instead of
1.4%, what is the value of investment after 5 years?
42) Based on questions 42 and 43, what is/are the conclusion(s) that
can be made? A. RM185,831.99 C. RM185,342.77
B. RM186,831.89 D. RM186,503.41
I. Inflation rate will erode the effective rate of return
II. Tax rate will not erode the effective rate of return 47) Which are the strategies undertaken to develop the Islamic capital
III. In order to have a positive effective rate of return, one has to market?
ensure that the rate of return after tax is greater than inflation rate
I. Creating a viable market for the effective mobilization of Islamic
A. I, III C. I, II funds
B. III only D. I, IV II. Enhancing the value recognition of the Malaysian Islamic capital
market internationally
43) A house costs RM 150,000 in year 1990 but increased to RM
300,000 in year 2006. What is the inflation rate after these 15 years?

14
Set 1 ENGLISH Questions

III. Facilitating the development of a wide range of innovative and C. Musyarakah contract exists between the unitholders to deal with
competitive products and services related to the Islamic capital specified investments, with the view that the profit derived would
market be shared among them according to capital contribution or any
IV. Increasing the pool of Islamic capital market expertise other agreed profit-sharing ratio.
D. Wadiah Yad-Dhamanah (after the units are created) contract exists
A. I, II, III C. I, III, IV between unitholders and trustee and it takes place once the UTMC
B. II, III, IV D. All of the above receives payment from unitholders.

48) Which of the following statement, regarding a Syariah-based UTS, 50) Which of the following statement regarding Syariah-non
is false? compliance risk is valid?

A. UTMC is required to appoint Syariah Committees to ensure that A. This risk occurs when the UTMC accidentally invests in Syariah-
the Syariah-based UTS is administered accordance with Syariah non compliant securities.
requirements. B. This risk occurs when the Syariah-compliance security reclassified
B. Syariah Committees are registered with the SC and renewable as Syariah-non compliant security
every 3 years. C. This risk occurs when the UTMC do not invest according to the
C. Every report of the Syariah-based UTS needs to include Syariah Syariah requirements
committees /Syariah Advisers report. D. This risk occurs when the conventional UTS invests in Syariah-
D. Terminologies used in conventional deed and prospectus which are compliant securities
not in line with Syariah such as interest-based instruments and
interest income must be avoided in Syariah-based funds deed and 51) Which is/are the risk(s) that will impact only for Syariah-based
prospectus. UTS rather than conventional UTS?

I. Risk of non compliance


49) Which of the following statement, regarding Syariah-based UTS, is II. Market risk
false? III. Country risk
IV. Default risk
A. Wakalah (agency) contract exists between Unitholders and Trustee,
it states that trustee is acting for and on behalf of the unitholders to A. I only C. I, III
be the custodian of the trust funds and to safeguard the interests of B. III, IV D. IV only
unitholders.
B. Wadiah Yad-Dhamanah (guaranteed custody) contract exists 52) Which of the following statement is false?
between Unitholders and UTMC, it states that the owners of the
units are the Unitholders; the custodian is the UTMC and the A. The appointment of the member of the Syariah Committee/Syariah
contract will take place when UTMC receives payment for the Adviser must be approved by SC
investment.

15
Set 1 ENGLISH Questions

B. Members of Syariah Committees must possess the necessary C. It is a contract for fund manager to deal with specified investment
qualifications, expertise and experience, particularly in fiqh at the agreed profit-sharing ratio
muamalah and Islamic jurisprudence D. It is a contract for trustee to deal with specified investment at the
C. All of the members of Syariah Committees must be employed as agreed profit-sharing ratio
full-time officers to be responsible for Syariah matters relating to
the funds
D. Syariah Committee Members/Adviser must consists at least three
members who are individuals and independent of the management 56) What is the major duty of Syariah Committee/ Adviser?
company
A. Syariah committee are allowed to act on funds manager behalf
53) Which of the following statement regarding Syariah Compliance and to decide which investment that the UTS should invest in
Review is false? B. Syariah committee need to report to SC regularly every 3 months
C. Syariah committee need to ensure that the fund is managed and
A. The SC will gather the information from annual financial reports, administered in accordance with Syariah Principle
survey forms, and through inquiries made to the respective D. Syariah committee should handle any complaint raised by the
companys management before determining the companys status unitholders
from the Syariah perspective
B. The SC will revised every three months on the classification of 57) Which of the following items is not the responsibility for Syariah
compliance securities and non-compliance securities Committee / Syariah Adviser in order to ensure that the
C. The companies which their core activities involved in conventional management of the Syariah-based UTS complies with Syariah
insurance will classified as non-compliant securities requirement?
D. Subject to certain conditions, companies whose activities are not
contrary to Syariah principles will be classified as compliant A. Annual and interim report
securities. B. Deed
C. Prospectus
54) When was the first Islamic bond launched in Malaysia? D. Unitholders information

A. 1990 C. 1988 58) What is the Syariah contract BAI means in relation to unitholders
B. 1989 D. 1992 and UTMC?

55) What is the meaning of Musyarakah in Syariah contracts?


A. Contract of sale and purchase executed between Trustee and
A. It is a contract between investor (unitholders) and fund manager to Unitholders
deal with specified investment at the agreed profit-sharing ratio B. Contract of sale and purchase executed between UTMC and
B. It is a contract among investors (unitholders) to deal with specified Unitholders
investment at the agreed profit-sharing ratio C. Contract of sale and purchase executed between Trustee and
UTMC

16
Set 1 ENGLISH Questions

D. None of the above

Ms. Alyssa received a Distribution Warrant as following:

Trustee Company Bhd.


Trustee of DEF Balanced Fund
Distribution Warrant

Warrant No No of Units Year Ended Distribution No Payment Date


765432 12,000.00 30 August 200X 78 6 October 200X
TAXABLE TAX NON NON DISTRIBUTION NET PAYABLE
INCOME MALAYSIAN FOREIGN ALLOWABLE TAXABLE EQUALISATION
EXPENSES
32.00 8.96 - 17.00 305.75 (a) (b)

Calculate the Distribution Equalisation (a) amount if Undistributed Income


for DEF Balanced Fund is RM175,000 and NAV of the Fund is
RM70,000,000.

A. RM30.00 C. RM3,000.00
B. RM300.00 D. RM30,000.00

59) Calculate the Net Payable (b) which will be received by Ms.
Alyssa.

A. RM341.79 C. RM3,311.79
B. RM611.79 D. RM30,311.79

17
Set 1 ENGLISH Questions

Set 1 - ANSWER 8) Answer D


The low MER indicates that the UTMC may be managing its
1) Answer B operating costs efficiently for its fund size. (Chapter 1, page 1-32)
Maximum loan to valuation = 67%
Balance from own pocket money = 33%
33% x RM 80,000 = RM 26,400 9) Answer A
Capital = RM 250,000
2) Answer C Profit (80%) = RM200, 000
UTC should not do force selling in order to get the investor to invest Where FV = Future Value, RM 450,000
with them and benefited from the investors investment PV = Present Value, RM 250,000
i = rate of return
3) Answer B n =period, 10 years
Asset allocation is not one of the ways to measure performance of FV = PV ( 1+i) n
UTS in Malaysia. It is the practice of spreading a portfolio of RM 450,000 = RM250,000 ( 1 + i ) 10
investments across a range of investment assets, to reduce the level 1.8 = (1 + i) 10
of risk to match the risk tolerance of investor. 101.8 = ( 1 + i)
1.0605 =1 + i
4) Answer B i = 6.05%
UTC must be registered with FMUTM and upon receiving the
authorization card by FMUTM only they are allowed to start selling.
10) Answer C
5) Answer C PTR = x [total investment acquisitions + total investment disposal]
In limiting exposure, the portfolio of the UTS is inadvertently Average Fund Size
diversified over a wide spread of investments. (Chapter 2, page 2-11) PTR = x [946,632 + 2,653,843]
5,244,789
6) Answer D = 0.34 times (34%)
Syariah fee is not borne by the investor but it is borne by the
Management. 11) Answer C
UTMC are usually entitled under the deed of UTS to receive an
7) Answer A annual management fee calculation on the Gross NAV of UTS. The
To maximize potential investment returns, some investors investing fee is paid out of UTS assets and is therefore borne by investors on
in UTS borrow the application money to invest, expecting the rate of the basis of the number of units each hold.(Chap1, page 1-30)
return from investing in UTS will exceed the borrowing cost, thus
giving rise to additional profit. This is known as leveraging
investment in UTS. (Chapter 1, page 1-6)

18
Set 1 ENGLISH Questions

Question 12 and 13 17) Answer B


NAV/unit = RM380,000/1,400,000
12) Answer A = RM0.271 (3 decimal points)
NAV/unit = RM250,000/1,000,000 Repurchase amount = units repurchased x NAV/unit
= RM0.25 = 15,000 units x RM0.271
= RM4,065.00
13) Answer B
No. of units held upon investment = Investment Amount 18) Answer B
NAV/unit Listed REIT (Real estate investment trust) is the UTS that best suit to
= RM32,000 the illustration of the paragraph. (Chapter 2, 2-13)
RM0.25
= 128,000.00 units. 19) Answer A
A UTC can be an insurance agent and it is not the requirement from
14) Answer B the Federation. (Chapter 2, page 2-22)
MER = [fees + recovered expenses] x 100
Average Fund Size 20) Answer B
1.47% = [RM 200 + 15,000 + 500+500+5,000+ Trustee fee] It should be the responsiveness to requests and complaints made
RM 1,500,000 by investor (Chapter 1, page 1-37)
1.47% = [RM 21,200 + Trustee fee]
RM1, 500,000 21) Answer C
22,050 = 21,200 + Trustee Fee As a safeguard to an investor who may have purchased units without
Trustee Fee = 22,050 21,200 fully understanding the UTS purchased, or who may have been
Trustee Fee = RM 850 misled by UTC, SC has imposed upon UTMC an obligation to
provide an investor with an opportunity to reconsider his/her
15) Answer D purchase (cooling off right) (Chapter 3, page 3-6)
NAV before the split RM 500,000,000
Units in circulation before the split 250,000,000 units 22) Answer D
NAV per unit RM 2.00 Risk Disclosure Statement is signed by a client as to prove that he is
NAV after the split RM 500,000,000 fully explained and understood the risks involved in leveraging his
Units in circulation after the split 275,000,000 units investment. UTC are required to attach the original Risk Disclosure
(250,000,000 + 25,000,000) Statement signed by the investor to the application of units, after
NAV per unit RM 1.82 which it is to be filed by UTMC for record and inspection purposes,
and to forward a copy to the investor. (Chapter 3, page 3-10, 3-21 &
16) Answer A 3-22) Cooling-Off Right are not included in Annual Report, instead
must be disclosed in the prospectus of UTS. (Chapter 3, page 3-6)

19
Set 1 ENGLISH Questions

23) Answer D
Realised income or gains comprises of dividend income received 30) Answer C
(derived from investment in quoted and unquoted shares of Not required in Annual Report
company), interest income received (derived from investments in
quoted and unquoted fixed income securities, money market 31) Answer C
instruments and placement), other income received and realized
capital gains from the sale of investments. (Chapter 3, page 3-11) 32) Answer D
It should be a reduction in client complaints.
Question 24 and 25
33) Answer B
24) Answer C Appropriate Designation or Title, Advertisements and promotional
Account 1: 189,345; Account 2: 94,672.50 + 31,557.50 = 126,230 materials, appointment of qualified persons are the Standards of
Professional Conduct for UTC. (Chapter 4, page 4-9 & 4-10)
25) Answer B
Account 1 balance : RM20,000 34) Answer A
Baisc Savings : RM14,000 The FMUTM Council may within 14 business days refer the
Eligible amount : RM6,000 complaint to an appointed Investigating Committee. (Chap4,page 4-
Maximum amount to be transferred to UTS 10)
(20% of eligible amount) : RM1,200
35) Answer A
26) Answer C (Chapter 4, page 4-2)
Investor has to provide the documents as stated in I, II, III, IV. Risk
Disclosure Statement is not needed as investor is investing through 36) Answer B
the EPF Investment Scheme and not loan financing. Investor is not registered with FMUTM. (Chapter 4, page 4-5)

27) Answer B 37) Answer A


Proceeds from the disposal of units cannot be repaid to investor as it IV. Financial planning cant guarantee higher return for an individual.
is paid directly to the EPF to be re-credited to members Account 1. (Chapter 5, page 5-2)

28) Answer D 38) Answer B


All of the alternative investment tools and their features are correctly UTC cant directly or indirectly encourage clients to invest with loan
explained. (Chapter 3, page 3-25 to 3-27) financing, and should educate clients about the risk of loan
financing.(Chapter 1, page 1-6)
29) Answer C
Longer term needs including home purchase, meeting childrens 39) Answer B
future education costs and building up a retirement fund. Making Refer to page 5-2 for features of personal financial planning.
fortune overnight is not a longer term need. (Chapter 3, page 3-30) (Chapter 5, page 5-2)

20
Set 1 ENGLISH Questions

For question 40 and 41 45) Answer A


Tax rate : 20% Using the formula FV = PV (1 + i)n
Inflation rate : 4.5% PV, Working money = RM120,000/(1+6%)
Rate of return : 11% = RM113,207.55
i, Effective rate of return = 12% - 1.4%
40) Answer C = 10.6%
Return after tax = 11% - (11% x 20%) n, no, of years = 5
= 11% - 2.2% FV = PV (1 + i)n
= 8.8% = RM113,207.55(1 + 10.6%)5
Effective rate of return after tax and inflation = RM113,207.55(1 + 0.106)5
= 8.8% - 4.5% = 4.3% = RM187,348.85

41) Answer B Value of the investment after 5 years is RM187,348.85


Return after tax = 11% - (11% x 20%)
= 11% - 2.2% 46) Answer D
= 8.8% Using the formula FV = PV (1 + i)n
Effective rate of return after tax and inflation PV, Working money = RM120,000/(1+6%)
= 8.8% - 4.8% = 4% = RM113,207.55
i, Effective rate of return = 12% - 1.5%
42) Answer A = 10.5%
Tax and inflation will erode the effective rate of return, to have a n, no. of years = 5
positive effective rate of return, have to ensure that the return after FV = PV (1 + i)n
tax is greater than the inflation rate. (Chapter 5, page 5-12) = RM113,207.55(1 + 10.5%)5
= RM113,207.55(1 + 0.105)5
43) Answer A = RM186,503.41
72 = 4.8%
1 Value of the investment after 5 years is RM186,503.41

44) Answer B 47) Answer D


(Chapter 6, page 6-2)
For questions 45 and 46,
48) Answer C
Lump sum investment : RM120,000.00 Not every report needs to include Syariah Advisers report, only
Initial entry cost : 6% Interim and Annual report need to include such report. (Chapter 6,
On-going management fee : 1.4% page 6-5)
Rate of return : 12%

21
Set 1 ENGLISH Questions

49) Answer D 56) Answer C


Wadiah Yad-Dhamanah (after the units are created) contract Syariah Committee needs to ensure that the fund is managed and
between unitholders and trustee exists once the unitholders administered in accordance with Syariah Principles. (Chapter 6,
purchase the units and the depositing of investment by the UTMC page 6- 12)
with the trustee.(Chapter 6, page 6-7)
57) Answer D
50) Answer B Unitholders information are not the item which Syariah Committee is
Syariah-non compliance risk specifically occurs when a responsible for checking. (Chapter 6, page 6-12)
Syariahcompliant security is reclassified as a Syariah-non compliant
security. (Chapter 6, page 6-8) 58) Answer B
BAI simply means the contract of sale and purchase executed
51) Answer A between the unitholders and the UTMC, which is usually on cash
This risk will only impact Syariah-based UTS, and it occurs when a payment basis (Chapter, page 6-7)
Syariah complaint security is reclassified as a Syariah-non compliant
security. (Chapter 6, page 6-8) 59) Answer A
Distribution Equalization = Undistributed Income
52) Answer C NAV
A minimum of one Syariah committee must employed as full time = RM175,000
officer in order to responsible for Syariah matters relating to the RM70,000,000
Syariah-based UTS. (Chapter 6, page 6-11) = RM0.0025/unit

53) Answer B (For every unit sold, RM0.0025 will be set aside to equalize the
The SC will revise every six months ( last Friday of April and October earlier unit holders distribution)
every year). (Chapter 6, page 6-13)
Thus, RM0.0025/unit x 12,000 units = RM30.00
54) Answer A
It was first launched by Shell MDS Sdn Bhd in the year 1990. 60) Answer A
(Chapter 6, page 6-3) Taxable Income 32.00
(Malaysian tax) (8.96)
55) Answer B (Non Allowable Expenses) (17.00)
Musyarakah contract exist between the investors (unitholders) to Non Taxable 305.75
deal with specified investment, with the view that the profit derived Distribution Equalisation (if any) 30.00
would be shared among them according to capital contribution or any 341.79
other agreed profit-sharing ratio (Chapter 6, page 6-7)

22
Set 2 ENGLISH Questions
Set 2 B. Hedge Fund D. Balanced Fund

1. Arrange accordingly from the highest risk fund to the lowest risk fund. 6. Capital Market Masterplan introduced a host of recommendations to
further spur the Islamic capital market. Parts of the efforts were to
i. Equity Fund enhance awareness of the Malaysian Islamic capital market to domestic
ii. Money Market Fund and international levels. Which recommendation does this belong to?
iii. Balanced Fund
iv. Hedge Fund A. Recommendation 77
B. Recommendation 66
A. i, ii, iii, iv C. iii, iv, ii, i C. Recommendation 65
B. iv, i, iii, ii D. i, iv, iii, ii D. Recommendation 73

2. The unit trust funds that are available in the market could be designed to 7. Kumpulan Guthrie Bhd launched its first international corporate bond in
meet the following investors requirement:
A. 2000 C. 1997
A. Long term savings C. Retirement Fund B. 1999 D. 2002
B. Childrens Education D. All of the above.
8. Which of the following best describes a close ended fund?
For question 3 & 4, please refer to the data given below.
A. Units are not quoted in an exchange.
Month NAV/unit B. Prices are determined by the market forces of demand and
April RM0.50 supply in Bursa Malaysia.
May RM0.60 C. Prices remain unchanged throughout trading day.
D. Forward pricing is practiced.
June RM0.70
9. Which of the following propositions a UTC should not practice?
3. Mr. Dave invested regularly for the past 3 months. His total investment
is RM4, 500. What is the average price of his investment? A. The market is going up, you should come in now, capital
appreciation is assured.
A. RM0.60 C. RM0.43 B. If you cant invest it doesnt matter, you can always loan from
B. RM0.59 D. RM0.56 the bank.
C. Invest in equity fund now, you stand a chance to win a free
4. How many units Mr. Dave had by the end of May? welcome gift.
A. 5,500 C. 4,500 D. All of the above
B. 7,643 D. 4,000
10. Which of the following has the highest volatility of price?
5. A 20 year old employee, who belongs to Stage 1 of the client type, has
very little savings but possesses low commitments and is very skeptical A. Bond Fund
in investing unit trust. However he has high toleration for risk. Which of B. Aggressive Growth Fund
the following should he invest in? C. Money Market Fund
D. Income Fund
A. Growth Fund C. Income Fund

23
Set 2 ENGLISH Questions
11. Rahim and Kajai invested RM64,000. Rahim received returns of 8.5%
per annum. As the years went by, both doubled their investment. Kajai A. 3% C. 10%
received his returns faster by 1.27 years. What is Kajais rate of return? B. 5% D. 20%

A. 8.5% C. 10% 17. When comparing the performance of a fund over a period of time, a
B. 12% D. 17% decreasing MER will indicate?

12. What do you understand about 1:2 unit split? A. The UTMC is not managing the total fees and expenses well.
B. The UTMC is managing the total fees and expenses well.
A. The units in circulation will be doubled C. The NAV of the fund is rising.
B. The price will be doubled D. The NAV of the fund is falling.
C. The prices will proportionally decreased
D. All of the answers are incorrect 18. One of your friends tells you, By the time I retire in year 2020, I
believe KLCI will be many times what it is today. I am happy with that.
13. Which statement is correct? Give me a fund that can best deliver the same result. What would you
recommend to him?
Fund X Fund Y
80% Equity 20% Equity A. Buy a growth fund because it can give him a return better than
20% Fixed Income 80% Fixed Income KLCI by year 2020.
B. Buy a balanced fund because its investment return are less
A. If the market falls, X will be more negatively affected than Y. volatile than the KLCI.
B. If the market rises, both X & Y will be negatively affected. C. Buy an index trading fund using KLCI as benchmark.
C. If the market falls, X will be more positively affected than Y. D. For such a long investment horizon, dont worry buy any fund.
D. None of the above is correct.
19. What is the meaning of liquid advantage offered by unit trust scheme?
14. Mr. A wants to invest RM150,000. What is the maximum amount can A. As liquid as cash.
he borrow from the financial institution? B. Able to purchase or redeem on any business day.
C. Buys more unit trust on rising and less on falling market.
A. RM200,000 C. RM100,500 D. None of the above.
B. RM66,000 D. RM120,000
20. Dollar cost average is:
15. The unit holders rights in UTS include the following except:
A. Buy low sell high
A. To receive UTS annual and interim reports. B. Buy high sell low
B. To call meetings for unit holders. C. Regular investment at a fixed amount of money
C. To receive distribution from UTS. D. Buy fixed unit every time
D. To change the investment portfolio.

16. Tax rate = 20% 21. Mr. Ahmad made his first investment at the price of RM0.20. He puts in
Inflation rate = 5% more money on the second investment and got 10,000 units. He made
Rate of return = 10% redemption a month after that and receives RM15,000 for RM0.25 per
Please calculate the effective rate of return after tax and inflation. unit. How much did he invest at his first investment?
24
Set 2 ENGLISH Questions
27. This fund invests mostly in stocks in listed companies, which
A. RM15,000 C. RM5,000 emphasizes more in capital growth than fixed income and distributions.
B. RM10,000 D. RM20,000
A. Equity Fund
22. What is the purpose of UT performance table? B. Balanced Fund
C. Bond Fund
A. For SC to regulate the funds. D. Money Market Fund
B. For FMUTM to regulate the funds.
C. Segregation of funds into different categories according to the Question 28, 29 & 30
fund size.
D. To provide investors with the same means to monitor and Lump sum investment : RM100,000
evaluate the performance of the fund. Initial entry cost : 6.5%
On-going management fee : 1.4%
23. Islamic UT invest only in halal counters such as: Rate of Return : 11%

A. Conventional banking 28. What is the return of the investment after 10 years?
B. Telecommunications
C. Gambling A. RM233,839.11 C. RM233,547.23
D. Alcohol B. RM234,831.27 D. RM234,098.95

24. Which of the below describes open ended funds? 29. Assume that the initial entry cost decreased to 6%, what is the value of
the investment after 10 years?
A. The price fluctuates within the day.
B. The fund manager has to buy back from the investor. A. RM233,839.11 C. RM235,938.96
C. Transactions are through stock broker. B. RM235,089.59 D. RM234,098.95
D. They are property trust.
30. How long does it take to increase the investment amount to RM200,000
Question 25 & 26 are to be answered based on the following with the effective rate of returns from question 28?

NAV cum-distribution of Fund A is RM150,000,000. Unit in circulation A. 4.8 years C. 7.5 years
is 100,000,000. The fund declared distribution RM0.10 per unit, and the B. 6.3 years D. 7.2 years
fund manager is charging 5% for service charge.
31. The published NAV in newspaper today is RM0.65. The price at the end
25. What is the NAV per unit of Fund A ex-distribution? of the day is RM0.66. If Mr. Eddie invested RM10,000 today, how
many units is he getting if forward pricing is applied. (Assume the 5%
A. RM1.50 C. RM1.40 of service charge is applied)
B. RM1.45 D. RM1.38
A. 14,430.02 units C. 15384.62 units
26. What is the NAV per unit of Fund A cum-D? B. 16,666.67 units D. 15,151.52 units

A. RM1.50 C. RM1.40 32. In Annual Report of ABC Millennium Fund, expenses incurred by the
B. RM1.45 D. RM1.38 fund during the financial year:-
Annual Management Fee : RM3,528,673
25
Set 2 ENGLISH Questions
Trustee : RM150,326 36. Besides the daily prices, the investors need to consider the distribution
Auditors Remuneration : RM16,300 being declared by the fund manager when they evaluate the performance
Administration expenses : RM28,418 of the fund. How does this affect the NAV?
Average Fund Size : RM235,300,528
What is the MER of this fund? A. The NAV of the fund is adjusted downward.
B. The NAV of the units of the particular fund remains unchanged.
A. 1.50% C. 0.07% C. The NAV per units has gone up.
B. 1.58% D. 0.01% D. The tax rate will decrease when distribution is declared.

33. Mr. Abraham invested RM5000 into ABC Growth Fund managed by 37. A gradually decreasing MER over a period of several years indicates
ABC Unit Trust Management Bhd. Mr. Abraham now owns that
A. RM5000 worth of units of entitlement in the ABC Growth
Fund A. The Fund Manager is reducing the annual management fee.
B. RM5000 worth of shares in ABC Unit Trust Management Bhd B. The Management Company may be managing its operating
C. RM5000 worth at direct ownership of investment portfolio held costs efficiently for its fund size.
by ABC Growth Fund C. The performance of the fund is getting better than previously.
D. RM5000 paid up capital of ABC Unit Trust Management Bhd D. The performance of the fund is getting worse than before.

34. How many times would an investor receive report/reports in a financial Question 38 & 39
year?
38. A distribution of RM0.04 per unit has been distributed for Fund XYZ,
A. 1 time the NAV cum distribution was RM1,500,000 while units in circulation
B. 2 times was 1,000,000 units. Calculate the NAV per unit ex distribution.
C. 3 times
D. 4 times A. RM1.49 C. RM1.50
B. RM1.46 D. RM1.40
35. Mr. A chooses Real Estate Investment Trust (REIT) that invests in real
property which provides him with an opportunity to participate in 39. Assume that Mr. Z wants to repurchase 20,000 units of his investment in
property market in a way which is normally impossible for an individual Fund XYZ after distribution. Calculate the amount that he will get from
investor like him as he only has RM 1,000. The statements below are the repurchase.
valid about REIT except:
A. RM29,800.00 C. RM30,000.00
A. All REITs are open-end fund, and the units are not listed in the B. RM28,000.00 D. RM29,200.00
stock market.
B. Returns from property comprise net rental income, plus or 40. For investor who is unable or unwilling to do research and analyzes
minus any change in the value of the property over the period. investment market on his or her own, UTS is an ideal way of investing.
C. Units in the listed REIT can be bought and sold through There are numbers of other significant benefits of investing that should
stockbrokers, and UTC would not normally arrange to buy or be noted such as:
sell units for an investor.
D. The prices at which units in REIT trade on Bursa Saham will I. Professional Management
reflect the returns. II. Ready access to funds
III. Opportunity cost
IV. Investment exposure
26
Set 2 ENGLISH Questions
V. Diversification
A. With fixed amount of money, investor can acquire more units
A. I, II, III only in a rising market over a short term period.
B. I, II, III and IV only B. With fixed amount of money, investor can
C. I, II, IV and V only acquire lesser units in a fluctuating market over long term
D. All of the above period.
C. With fixed amount of money, investor can
41. The major function of the Securities Commission includes acquire more units at lower price and fewer units at higher
price which can reduce the average cost over long term period.
I. To regulate all matters relating to unit D. With fixed amount of money, investor can acquire regular
trust industry. amount of units at lower price which can reduce the average
II. To ensure that the provisions of securities laws are cost over long term period.
complied with.
III. To license and supervise all licensed persons as may 45. What is the real value for a single storey house costing RM75,000 today
be provided for under any securities law. in 6 years time with an inflation rate of 4%pa.?
IV. To act as a custodian of assets of a UTS.
A. RM95,874.93 C. RM98,695.93
A. I, II, III C. II, III, IV B. RM93,000.93 D. RM94,898.93
B. I, II, IV D. IV only
46. Which of the below must you NOT say to a potential investor?
42. At age 25, Unitholder C, an aggressive investor is willing to take high
risk in investing in UTS B that is aggressive UTS. A few years later, A. Unit trust is as safe as fixed deposits.
Unitholder C is married with young children and he feels his personal B. The market value of your capital may be lower than initially
circumstances has changed and that he prefers to invest in medium to invested.
low risk type of UTS. What is the best exercise for Unitholder C to do C. Return in unit trust is not fixed.
as a result of his changing personal circumstances? D. You should diversify your portfolio and have some fixed
deposits.
A. Repurchase Units
B. Suspension 47. Which of the following best describes the equity fund?
C. Switch
D. Cooling-Off Right A. Mainly invest in the equity market
B. Mainly invest in bond and equity market
43. Technique A operates in a way which the period of ownership prior to C. Mainly invest in money markets
the ex-D date is irrelevant. It is therefore possible to buy a distribution D. Mainly invest in property markets
entitlement for the full period by acquiring units just before the ex-D
date. Technique A is known as 48. To meet challenges posed by sophisticated customer, UTC must strive
A. Automatic Reinvestment to do the following EXCEPT:
B. Suspension
C. Spread A. Maintain high ethical standard
D. Buying a distribution B. Hard sell
C. Acquire professional qualification
44. Dollar cost Averaging (DCA) can affect the average cost of investment. D. Good product knowledge
Which statement clearly explains the DCA effect?
27
Set 2 ENGLISH Questions
49. When was FMUTM formed? 54. Miss Amelia spent RM25,000 last year and this year she spent
RM26,125 with the same purchasing power. How much does Miss
A. July 1992 C. Aug 1993 Amelia has to spend if she wants to maintain it for the next year?
B. Aug 1992 D. Aug 1994
A. RM27,301 C. RM27,250
50. UTMC uses forward pricing method when computing the selling and B. RM28,001 D. RM30,350
repurchase prices. Assuming at 9.30am today, the NAV of the fund was
RM180,000,000.00 and units in circulation was 200,000,000. At the end 55. If an investor secures maximum loan financing for unit trust investment,
of the day the NAV has increased to RM190, 000,000.00 and units in and the amount of investment on his own is RM40, 000, what will be his
circulation unchanged. If a customer wants to redeem today, how much total investment?
is the repurchase price per unit if no repurchase fee is charged and the
repurchase price is at NAV per unit. A. RM19, 701 C. RM81, 212
B. RM59, 701 D. RM121, 212
A. RM0.95 C. RM1.11
B. RM1.05 D. RM0.90 56. __________ introduces new licensing framework allows capital market
intermediaries to hold one license to carry on any one or more regulated
51. Which of the following charges is the fee levied by managers on activities.
investment to cover the cost of distributing the unit trust?
A. Capital Market and Services Act
A. Management Fee C. Trustee Fee B. Securities Commission Act
B. Initial Service Charge D.Repurchase Fee C. Guidelines on Unit Trust Funds
D. Securities Industry Act
52. Mr Hadi holds 5,000 units of Fund XYZ before unit split of 1:2 with an
investment value of RM10, 000.00. After the unit split issue, his fund 57. A UTS intends to increase the level of its management fees. Who must
XYZ account will have approve this change?

A. 2,500 units at investment value of RM10, 000 A. The schemes officers


B. 5,000 units at investment value of RM15, 000 B. The schemes management company
C. 7,500 units at investment value of RM15, 000 C. The schemes custodian
D. 7,500 units at investment value of RM10, 000 D. The schemes unit holders

53. Investment benchmark is 58. Azita just bought 5,000 units of ABC Growth Fund from her UTC, Miss
Anne. Who paid the initial sales charge?
A. Fund management objective that selects securities based on a
specified Stock Exchange Composite Index. A. Azita
B. A standard measurement for comparing investment B. Anne
performance. C. The fund manager of the ABC Growth Fund
C. Shifting investment portfolio from stocks to fixed-income D. The ABC Growth Fund
securities.
D. A strategy that entails buying low and selling high.

28
Set 2 ENGLISH Questions
59. Under whose name the assets and investments of the unit trust scheme
would be held under?

A. Trustee C. Investor
B. UTMC D. Stock broking house

60. NAV per unit of Fund C is RM0.89, assuming there are 5% service
charge and no redemption charge, how much Mr. Kumar is going to get
if he redeem 5,000 units of his investment in Fund C?

A. RM4,450 C. RM4,672.50
B. RM4,227.50 D. RM4,500

29
Set 2 ENGLISH Questions
Set 2 - ANSWER 6. Answer D
(Chapter 6, page 6-3)
1. Answer B
Hedge Fund is the most risky, followed by Equity Fund, Balanced Fund 7. Answer D
(which has equity exposure) and Money Market Fund. (Chapter 6, page 6-4)

2. Answer D 8. Answer B
Unit trust is a medium to long term investment tool to meet investors long The price of any listed securities is determined by buyers and sellers in
term objectives. the market. (Chapter 1, page 1-12)

For question 3 & 4, please refer to the data given below. 9. Answer D

Month NAV/unit 10. Answer B


April RM0.50 Equity UTS labeled aggressive growth generally invest in companies
May RM0.60 with higher capital growth potential, but with associated higher risk.
June RM0.70 (Chapter 1, page 1-13)

3. Answer B 11. Answer C


Total investment= RM4,500 Use Rule of 72
Total units = (RM1,500/RM0.50) + (RM1,500/RM0.60) + Rahim received his returns in 8.47 years (72/8.5)
(RM1,500/RM0.70) Kajai = 8.47 years 1.27 years = 7.2 years
= 3000 + 2500 + 2142.88 Kajais returns = 72/7.2 = 10%
= 7642.88
Average price of his investment 12. Answer D
= Total investment/Total units
= RM4,500/7642.88 13. Answer A
= RM0.59 The performance of most equities is closely linked to the market
performance. A rising share market will normally result in an increase in
4. Answer A the value of units in equity UTS, and vice versa. (Chapter 1, page 1-13)
Total units for 2 months (April and May)
= (RM1,500/RM0.50) + (RM1,500/RM0.60) 14. Answer C
= 3000 units + 2500 units Maximum amount = RM150,000 x 67% = RM100,500
= 5500 units
15. Answer D
5. Answer A Unit holders do not have rights to decide on the investment portfolio - loss
He or she can start building a small nest egg by investing into growth of control. (Chapter 1, page 1-5). Unitholders right. (Chapter 1, page 1-27)
oriented UTS. Perhaps some additional risk can be taken by investing in
more specialized and aggressive UTS. He or she may be able to tolerate
higher volatility in investment returns over the short-term, as the focus will
be on returns over the long periods. (Chapter 5, page 5-7)

30
Set 2 ENGLISH Questions
16. Answer A 23. Answer B
Return after tax (Chapter 6, page 6-13)
Rate of return (Rate of Return x Tax Rate)
= 10% - (10% x 20%) 24. Answer B
= 10% - 2% Investors sales and repurchases of units in an open ended fund are
= 8% transacted daily within UTMC, often with the assistance of UTC. (Chapter
Effective rate of return 1, page 1-12)
Return after tax inflation rate
= 8% - 5% 25. Answer C
= 3% NAV/unit cum-D =NAV/units in circulation
=RM150,000,000/100,000,000
17. Answer B =RM1.50
A gradually decreasing MER over a period of several years indicates that NAV per unit ex-D =NAV/unit cum-D-distribuiton
a UTMC may be managing its operating costs efficiently for its fund size. =RM1.50-RM0.10
(Chapter 1, page 1-32) =RM1.40

18. Answer C 26. Answer A


NAV/unit cum-D =NAV/units in circulation
19. Answer B =RM150,000,000/100,000,000
One of the benefits of UTS is ready access to funds, the investment can =RM1.50
easily be sold within a short period time. UTS provide this benefit, as units
can be bought and sold readily through UTMC, IUTA and UTC. 27. Answer A
The major portion of equity UTS portfolios are shares of listed
20. Answer C companies. (Chapter 1, page 1-13)
The concept refers to the systematic and regular investment of a fixed
amount of money, irrespective of the price level of the investment at the Question 28, 29 & 30
time the investment is made. (Chapter 3, page 3- 30) Lump sum investment : RM100,000
Initial entry cost : 6.5%
21. Answer B On-going management fee : 1.4%
Number of units held during redemption: Rate of Return : 11%
RM15,000/RM0.25 = 60,000 units
Second investment = 10,000 units
First investment = 60,000 units 10,000 units
= 50,000 units 28. Answer B
Amount invested = 50,000 units x RM0.20 Working capital = RM100,000/(1+6.5%)
= RM10,000 = RM100,000/(1.065)
= RM93,896.71
22. Answer D Effective Rate of Return = 11%-1.4%
UTS performance tables published by research houses endorsed by = 9.6%
FMUTM can be a useful tool for monitoring investment performance. With the formula FV = PV ( 1 + i )n
(Chapter 1, page 1-37) = RM93,896.71 (1+9.6%)10
= RM93,896.71 (1.096) 10
= RM234,831.27
31
Set 2 ENGLISH Questions
35. Answer A
29. Answer C Property, as an asset class, is most suitable for a listed and closed end
Working capital = RM100,000/1+6% structure since the unit holders can only sell units to other investors and,
= RM100,000/1.06 following the initial public offering, UTMC can be certain of having raised
= RM94,339.62 sufficient application money to purchase the nominated real property.
Effective Rate of Return = 11%-1.4% (Chapter 1, page 1-12)
= 9.6%
With the formula FV = PV ( 1 + i )n 36. Answer A
= RM94,339.62(1+9.6%)10 After receiving distribution, the NAV of the fund falls by the amount of the
= RM94,339.62 (1.096) 10 distribution. (Chapter 1, page 1-46)
= RM235,938.96
37. Answer B
30. Answer C A gradually decreasing MER indicates a UTMC may be managing its
Rule of 72 = 72/9.6 operating costs efficiently for its fund size as MER is a summary of the
= 7.5 years ongoing expenses incurred by the UTS. (Chapter 1, page 1-32)

31. Answer A Question 38 & 39


Amount invested = RM10, 000
Wokring Money = RM10,000/(1+5%) 38. Answer B
= RM9523.81 NAV/unit cum distribution = RM1,500,000
Total units = RM9523.81/RM0.66 1,000,000 units
= 14,430.02 units = RM1.50
NAV/unit ex distribution = RM1.50RM0.04
32. Answer B = RM1.46
MER = (Fees + Recovered Expenses) X 100
Average Fund size
= RM3,723,717 X 100 39. Answer D
235,300,528 Repurchase Amount = 20,000 units x RM1.46
= 1.58% = RM29,200.00

33. Answer A 40. Answer C


Investors in UTS do not purchase the securities in the portfolio security. Opportunity cost is a disadvantage for UTS. As with any decision, an
Ownership of the portfolio is divided into units of entitlement and each investor who invests in UTS may have produced better returns by
investor is known as a unit holder. (Chapter 1, page 1-2) investing in other investment. This represents the opportunity cost of
investing in UTS. (Chapter 1, page 1-3 to 1-5)
34. Answer B
The Guidelines on Unit Trust Fund require each UTS to publish at least 2 41. Answer A
reports for each financial year an interim and annual report. Each unit It is the trustees responsibility to safeguard the UTS assets and ensure
holder is to be sent a copy of each report within 2 months after the end of that they are invested in accordance with the terms of the deed. (Chapter
the financial period. (Chapter 3, page 3-9) 2, page 2-2)

32
Set 2 ENGLISH Questions
42. Answer C (Chapter 4, page 4-27)
Switch is a repurchase of units in a UTS (e.g. aggressive UTS) by a
UTMC at the request of a unit holder and the immediate reinvestment of 49. Answer C
the repurchase proceeds as application money into a different UTS (e.g. The FMUTM was formed on 7 August 1993 as a company limited by
medium to low risk UTS) managed by the same UTMC. (Chapter 3, page guarantee and not having a share capital. (Page viii)
3-8)
50. Answer A
43. Answer D NAV/unit end of day
Buying a distribution entitlement for the full period means acquiring units = Total NAV/Number of units
just before the ex Distribution date. However, the decision to buy = RM190,000,000.00/200,000,000
immediately prior to the ex Distribution date has reduced the investors = RM0.95
capital, since the UTS prices will fall on the following day by the amount of
the distribution. The investor has, in effect, turned his capital into income 51. Answer B
and is no better off. (Chapter 3, page 3-12) Initial service charge is the cost to an investor of investing in, or entering,
UTS and it is levied primarily to cover the UTMC costs of marketing and
44. Answer C distributing units, and the cost of opening an account in the unit register
By using DCA concept, investor can turn fluctuating prices to their for a unit holder. (Chapter 1, page 1-29)
advantage; especially if prices are moving down; they can purchase more
units and reduce the average cost of their investment portfolio. (Chapter 3, 52. Answer D
page 3-30 to 3-32) Number of units after unit split issue
= 5, 000 X 3
45. Answer D 2
Compounding factor = (1 + i)n = 7,500 units
= (1 + 4%
= (1 + 0.04) 6 The effect of splitting units in UTS does not affect the NAV of that UTS,
= 1.265319 nor does it affect the value of a unit holders investment. (Chapter 1, page
Value of the house after six years 1-44)
= RM75, 000 x 1.265319
= RM94,898.93
53. Answer B
46. Answer A Performance of a relevant benchmark such as the KLCI, interest rate, and
UTS, in the long run, can produce returns superior to those from sometimes the inflation rate and EPF returns are one of the methods to
traditional savings account and fixed deposits. The cost of these measure performance. (Chapter 1, page 1-35)
potentially higher returns is, of course, the risk that accompanies the
investment. (Chapter 1, page 1-3) 54. Answer A
With the formula FV= PV ( 1 + i )n
47. Answer A 26125 = 25000 ( 1 + i )
The major portion of equity UTS portfolios are shares of listed companies. 1.45 = ( 1 + i )
(Chapter 1, page 1-13) 0.45 = i
i = 4.5%
48. Answer B FV = 25000 ( 1 + 4.5% )2
UTC should practice fair dealing (code of ethics) whereby aggressive and = 25000 (1.045) 2
offensive sales practices should be avoided. = 27,301
33
Set 2 ENGLISH Questions
55. Answer D
Own pocket money= 33%
33% = RM40, 000
33 X Amount = RM40,000
100
Amount = RM40, 000 X 100
33
= RM121, 212

56. Answer A

57. Answer D

58. Answer A
Initial sales charge is the cost for an investor who invests in UTS.
(Chapter 1, page 1-29)

59. Answer A
All assets of a UTS are held in the trustees name for safekeeping.
(Chapter 2, page 2-15)

60. Answer A
Repurchase amount
= 5000 units x RM0.89 = RM4,450

34
Set 3 ENGLISH Questions

Set 3
Fund X Fund Y
1. Which of the following benchmark below cannot be used as a fund Equity 90%
performance benchmark? Equity 10%
Money Market 90% Money Market 10%
A. KL Inter-Bank Rate C. Current account as a percentage of
GDP 5. Which statement is/are true?
B. KLCI D. 5 year bond rate
I. If interest rate rises, it will give an adverse effect on Fund Y.
Question 2 & 3 II. If interest rate rises, it will give a positive effect on Fund X.
III. If stock market performed well, it will give a positive effect on
2. The price of the fund in Year 1 is RM0.80 per unit. In Year 2, Mr. K Fund X.
bought another 20,000 units at the same price. He repurchased the IV. If stock market performed well, it will give an adverse effect
investment in Year 3 at RM0.90 per unit with a total amount of on Fund Y.
RM93,375. What is the total investment amount for Mr. K in Year 1?
A. I, II C. II, III, IV
A. RM99,719 C. RM67,000 B. III, IV D. I, II, III, IV
B. RM96,719 D. RM63,000
6. Prices of listed close-ended trusts are determined in the following
3. What are the total units received for Year 1? manner:

A. 73,750 units C. 83,750 units A. The total value of the assets is divided by the number of units in
B. 80,750 units D. 90,750 units circulations
B. Prices are determined by the demand and supply in the market
4. In a hurry to close a sale, Unit Trust Consultants are prone to give such as Bursa Malaysia where the trust is listed
information that is not supposed to be said. Under the Code of Ethics C. The UTMC computes the daily price upon close of business day
for UTC: Honesty, Dignity & Integrity, a UTC should not say the D. The investment committee sets the daily prices
following EXCEPT:
7. Which of the following best defines collective scheme?
A. This investment is guaranteed to make profit in middle to long
term. A. A pool of investment that can be raised by anyone, something like
B. The fund managers will at their best ability provide the possible a charitable donation.
return for middle to long term investment. B. Large amount of money invested in an instrument to churn more
C. Unit trust is as safe as fixed deposits. proceeds.
D. This fund will always yield at 10%. C. In other words something like a trust fund.
D. Pool of cash that is later used to invest in a variety of investment
instruments to multiply the initial figure.

35
Set 3 ENGLISH Questions

8. What choices does an investor have when a distribution is handed out? A. When interest rate decreases, bond value will increase.
B. When interest rate decreases, bond value will decrease.
I. Reinvest by purchasing more units in the same fund. C. There is no relationship between interest rate and stock market.
II. Take the money and spend it on oneself. D. There is not relationship between interest rate and bonds.
III. Reinvest by purchasing shares of the UTMCs counter in
Bursa Saham. Question 13 and 14

A. All of the above C. I and III 13. Initial investment: RM80, 000
B. I and II D. None of the above Term of investment: 3 years
Expected Investment Return before Fees & Expenses: 10% p.a.
9. Which of the following statement a UTC should not say to an investor? On-going management fee: 1.5% p.a.
Initial service charge: 5%
A. Unit Trust investment has no risk.
B. Dont worry because the returns are guaranteed. What is the expected value of the investment after 3 years?
C. Its ok not to have money to invest because you can always apply
for a loan. A. RM97,317 C. RM102,183
D. All the statements above. B. RM101,156 D. RM106,480
10. What do usually financiers do when assessing a loan application for an
investor? 14. How long does it take approximately take for the expected value of the
initial investment to reach RM160, 000?
A. The types of credit card that an investor has.
B. The amount that needs to be top up when an investment falls under A. 7.2 years C. 14.4 years
the security level. B. 8.5 years D. 20.6 years
C. The credit worthiness of an applicant.
D. The investment that the investor has made before. 15. Assuming that the on-going management fee is 1.0% instead 1.5%,
what is the expected value of the investment at the end of third year?
11. Generally, a unit trust that has 80% of its assets invested in growth
stocks would be most appropriate type of investment for the A. RM98,669 C. RM103,602
preparation of: B. RM101,156 D. RM106,480

A. A college fund for an 18 year old 16. Maximum Initial Service Charge is disclosed in:-
B. An individual retirement fund for a 52 year old
C. An income producing savings for an 86 year old A. Deed C. Marketing Materials
D. None of the optional answer is correct B. Prospectus D. All of the above

12. Which of the following is correct?

36
Set 3 ENGLISH Questions

Question 17 & 18 20. If the distribution declared is 3.5 cents per unit, how much is the selling
price per ex-distribution?
An investor had invested a lump sum of money in a unit trust fund at
RM0.80 per unit in the first year and subsequent purchase another A. RM0.49 C. RM1.86
20,000 units in second year. At the end of third year he decided to B. RM0.52 D. RM1.96
redeem all his investment at Buying Price of RM0.90 per unit and total
proceed was RM79, 200. 21. Based on the above answer and assume that a client invested RM10,
000 ex-distribution, how many units will she get for her investment?
17. How many units was he entitled for the investment he made in the first
year? A. 20,408.16 units C. 5,120.33 units
B. 19, 436.34 units D. 5,102.04 units
A. 68,000 units C. 88,000 units
B. 79,200 units D. None of the above 22. If the initial service charge is reduced from 5% to 3% and based on the
selling price ex-distribution, how much savings can the client get, given
18. How much did he invest in the first year? (Assume no initial sales the same investment amount in previous question?
charge applied)
A. RM326.53 C. RM327.95
A. RM16,000 C. RM70,400 B. RM184.93 D. RM200.00
B. RM54,400 D. None of the above
23. Daily NAV of UTS are available through
19. What is your understanding of Call Margin?
A. UT pricing tables published in the major newspapers
A. It is the amount an investor might have to pay his/her financier B. Call UTMC
if the credit exposure of unit trust loan falls beneath a certain C. Visit UTMC and branches
level. D. All of the above
B. It is a type of processing fee imposed by financier to finance
unit trust investment. 24. In year 1995, En. Jamal put RM50,000 in an investment that earned
C. It is a financiers marked up margin imposed on top of base him 9% per annum. Supposing the investment is able to deliver the
lending rate applicable. above yearly return for the past as well as the coming year, when will
D. It is charges imposed on future contracts. his money double?

Question 20, 21 & 22 A. Year 2000 C. Year 2005


B. Year 2003 D. Year 2007
NAV cum-distribution for a unit trust fund is RM200million. Unit in
circulation is 380million units and the fund manager is charging a 5%
initial service charge. (Please use 3 decimals for calculation purpose)

37
Set 3 ENGLISH Questions

Question 25 & 26 A. This sentence is true as this is the nature of investment.


B. This sentence is wrong as borrowing is not allowed in UTS.
Number of units held before unit split: 18,000 units C. This sentence is true because borrowing and invest, in order to
Total value of investment before unit split : RM6,000 generate.
Unit split ratio : 1 : 3 D. None of the above is correct.

25. How many units will the investor hold after the unit split exercise? 29. After discussing to a potential investor, the UTC finds out that the
investor can accept high risk, is looking for long-term capital gain and
A. 24,000 units C. 16,000 units short term income. Which of the fund stated below is suitable for this
B. 18,000 units D. 6,000 units investor?

26. What is her total investment value after the unit split exercise? A. Growth Fund C. Income Fund
B. Balanced Fund D. Bond Fund
A. RM2,000 C. RM8,000
B. RM6,000 D. None of the above 30. Sheila wants to be a millionaire. If she has RM500,000,.00 and can
earn 8% per annum, how long would it take to achieve her goal?
27. Based on the latest performance table, Mei Ling enthusiastically tells
you Look! The OMG Small Cap Fund was up to 36% last month, I A. 8 years
think this fund may be best for me to invest. Knowing that choosing a B. 9 years
fund merely based on best record in the previous month is not in her C. 10 years
best interest, what other aspect would you advise her to look into D. 11 years
before investing in the fund?
31. What forms of return do investors get through unit trust investments?
I. Consistency of the funds performance in medium and long term.
II. Her own financial goal and decide how much risks she can afford A. Distribution and Capital Growth
to take. B. Distributions
III. Suitability of fund investment objectives and risks with her own C. Capital Growth
investment goal and risk profile. D. Interest
IV. Total fees and charges imposed by the fund and service level
provided. 32. Which of the following type of fund is most risky?

A. I and II C. I, II and III A. Capital Growth Fund


B. II and III D. All of the above B. Capital Protected Fund
C. Money Market Fund
28. In order to increase the return of a fund investment, the fund is to D. Fixed Income Fund
borrow and invest in another stock.

38
Set 3 ENGLISH Questions

33. What is an index tracking fund?


37. Which one of the following stated below is the most likely benefit you
A. A fund invested in companies with higher capital growth potential. will get with a diversified portfolio that includes stocks, bonds and
B. A fund invested in range of companies that closely match money market funds?
companies comprising a particular index.
C. A fund that invest in companies that are expected to pay significant A. Higher returns that you get with a portfolio that is not
dividends. diversified
D. A fund invested in overseas share markets. B. The ability to balance both risk and return in achieving your
financial goals.
34. What are the primary objectives of FMUTM? C. A guarantee that your portfolio will not suffer if the stock
market falls.
i. Improve the regulatory, fiscal and legal environment of unit trust. D. All of the above.
ii. Improve sound and ethical business practices.
iii. Provide information, assistance and other services to its members. 38. Which of the following affects the effective rate of return?
iv. Promote public awareness of the benefits and risk of investing in
unit trust. A. Gearing
B. Taxation
A. i, ii and iii C. i, iii and iv C. Inflation
B. ii, iii and iv D. All of the above D. All of the above

35. Raw return is: 39. Fixed interest investments have a high negative correlation with
equities meaning:
A. The best measure of unit trust returns
B. A form of measure which is superior to the annualized return A. When the equity market is down, the fixed interest
investment market will be up.
C. A measure that shows the total return achieved by holding the B. When the equity market is up, the return from fixed
investment over the entire period between buying and selling interest
D. The only return measure that accounts for the value of time investment will supersede the return from equity market.
C. The risk element of fixed-income fund is higher than
36. When a distribution is declared, the: equities.
D. The returns from equities are always greater than fixed
A. Investment value of the unitholder is not affected interest investments regardless of the market situation.
B. Investment value of the unitholder falls relative to the
distribution paid 40. What is NAV per unit?
C. Distribution must be reinvested
D. Investment value of the unitholder increases relative to the A. Total value of the investment after deducting service charge.
distribution paid B. Ratio of the investment in fixed-income securities.

39
Set 3 ENGLISH Questions

C. NAV of the investment divided by the number of units in issue. 45. Assume Mr. D has 8,500 units before unit split declaration. Calculate
D. Total units held by the scheme multiplied with the repurchase his total units after the declaration.
price.
A. 7,727.27units C. 9,350 units
41. An investor buys or disposes the units in UTS based on the unit price B. 8,500 units D. 85,000 units
quoted by UTMC which is determined at the close of business day. The
above statement is referring to the practice of 46. Azmi, Bakar and Charles invested one full financial year in Fund XYZ
which financial period ended 31 July, and they will be entitled for full
A. Forward Pricing distribution amount e.g. 5 sen/unit. David, Eva, Farid and George came
B. Historic Pricing in the middle of the financial year in Fund XYZ, and they are still
C. Todays Pricing entitled for the same full distribution amount. When there are many
D. Future Pricing new investors, the distribution amount will be reduced and this is unfair
to earlier investor. What is the practice to ensure a more equitable
42. Which will increase the overall risk? income distribution to all investors?

A. Shifting from bonds to stocks A. Buying a distribution.


B. Shifting from stocks to bonds B. Distribution Equalisation.
C. Shifting from stocks to money market C. Split.
D. Shifting from stocks to FD D. Distribution.

Question 43, 44 and 45 47. Institutional Unit Trust Advisors (IUTA) and Corporate Unit Trust
Advisors (CUTA) must ensure that a minimum of ___ Unit Trust
NAV pre unit split: RM100,000,000 Consultant(s) (UTC) are stationed at each Distribution Point at all times.
Units in circulation pre unit split: 250,000,000 units
Unit split: 1:10 A. One C. Three
B. Two D. Four
43. Calculate the NAV per unit for pre unit split.
48. Customer A invests in a one off investment of RM10,000. Customer B
A. RM0.33 C. RM0.35 invests RM300 every month. The above ways of investment are called:
B. RM0.40 D. RM0.39
A. Lump sum investment
44. Calculate the NAV per unit for post unit split. B. One stop investment
C. Regular Savings
A. RM0.31 C. RM0.32 D. Lump sum and regular savings investment
B. RM0.36 D. RM0.05

40
Set 3 ENGLISH Questions

49. What are the characteristics of high returns funds? 52. What is the total amount of money he had invested in the first and
second year?
A. Potentially high risk
B. The higher the return, the lower the risk A. RM7,500 C. RM12,700
C. Generally suitable for empty nesters B. RM5,200 D. None of the above is correct
D. Do not invest in equities
53. Upon redemption in the 3rd year, calculate the raw return of the
50. Ms. Rafidah had invested a lump sum of money into a UTS and she investment that he made in the 1st year. (Assume no distribution was
wishes to minimize her intial service charge exposure. As a PDUT, paid during the period).
what is the best recommendation to her?
A. 15%
A. Recommend Ms. Rafidah to invest in growth fund that B. 18%
seeks for higher potential erturn which would cover her C. 20%
initial service charge. D. 100%
B. Advise Ms. Rafidah to invest her money as regular as
possible to lower down her cost. Question 54, 55, 56 & 57
C. Advise Ms. Rafidah to apply buy & hold strategy as
seeking for a long term investment goal. The NAV cum-distribution of Fund B is RM292,500,000 and units in
D. Invest in Islamic fund which comply with Syariah circulation is 195,000,000. The fund declared distribution of 15 cents per
principles. unit, and the manager is charging 5% service charge.

Questions 51, 52 & 53 54. What is the NAV per unit cum-distribution?

An investor had invested a single amount of money in a unit trust fund A. RM1.50 C. RM1.45
at RM0.50 per unit in the first year and subsequently purchased another B. RM1.35 D. RM1.60
10,000 units at RM0.52 per unit in second year. At the end of third year,
he decided to redeem his investment at buying price RM0.60 per unit 55. What is the NAV per unit ex-distribution?
and the total proceeds was RM15,000.
A. RM1.50 C. RM1.45
51. How many units was he entitled for the investment he made in the first B. RM1.35 D. RM1.60
year?
56. What is the investment value of Mr. Samuel before the declaration of
A. 15,000 units distribution, if he is holding 60,000 units?
B. 25,000 units
C. 35,000 units A. RM93,000 C. RM90,000
D. None of the above is correct B. RM92,000 D. RM91,500

41
Set 3 ENGLISH Questions

57. Assuming no tax, what is the investment value of Mr. Samuel after the
declaration of distribution, if he is holding 60,000 units and the
distribution is to reinvest the NAV per unit?

A. RM93,000 C. RM90,000
B. RM92,000 D. RM91,500

58. NAV of equity trust fund

A. Will fluctuate in respect to changes in the prices of equity


index component stocks
B. Will fluctuate in respect to changes in interest rate only
C. Will not change at all to the ups and downs of the stock
market
D. None is correct

59. A listed company is known as:

A. Open-Ended trust
B. Universal Trust
C. Closed-Ended Trust
D. Regional Trust

60. Computation of NAV:

A. Value of equity invested in the unit trust scheme


B. Trustee Fee
C. Auditor Fee
D. All of the above

42
Set 3 ENGLISH Questions

Set 3 - ANSWER 5. Answer A


1. Answer C When the interest rate rises, money market instruments will be in
The gross domestic product (GDP) is one of the measures of demand. Therefore the fund that has higher money market exposure
national income and output for a given country's economy. GDP is will gain (Fund X). For the fund that has higher exposure in equity
defined as the total market value of all final goods and services (Fund Y) will have negative impact.
produced within the country in a given period of time (usually a
calendar year). 6. Answer B

Question 2 & 3 7. Answer D


2. Answer C Collective scheme allows investors with similar objectives to pool
Total number of units in Year 3 their savings, which are then invested in a portfolio of securities or
= RM93, 375/RM0.90 other assets managed by investment professionals. (Chapter 1, page
= 103,750 units 1-2)
Total number of units in Year 1
= 103,750 units 20,000 units 8. Answer B
= 83,750 units The investor has a choice to reinvest or spend the money. The
Investment Amount investor is however not allowed to reinvest and buy shares, unless
= 83, 750 units X RM0.80 he/she chooses to redeem the investment and use the proceeds to
= RM67, 000 buy shares.

3. Answer C 9. Answer D
Total number of units in Year 3
= RM93, 375/RM0.90 10. Answer C
= 103,750 units
Total number of units in Year 1 11. Answer D
= 103,750 units 20,000 units
= 83,750 units 12. Answer A
Generally, bond prices move in the opposite direction of interest
4. Answer B rates.
Fund X Fund Y
Equity 10% Equity 90% Question 13 and 14
Money Market 90% Money Market 10%
Initial investment: RM80, 000
Term of investment: 3 years
Expected Investment Return before Fees & Expenses: 10% p.a.
On-going management fee: 1.5% p.a.
Initial service charge: 5%

43
Set 3 ENGLISH Questions

Question 17 & 18
13. Answer A
Working money = RM80, 000/ (1+5%) An investor had invested a lump sum of money in a unit trust fund at
= RM80, 000/(1.05) RM0.80 per unit in the first year and subsequent purchase another
= RM76, 190.48 20,000 units in second year. At the end of third year he decided to
Effective return = 10% - 1.5% redeem all his investment at Buying Price of RM0.90 per unit and
= 8.5% total precede was RM79, 200.
Investment return after 3 years
FV = PV (1 + i )n 17. Answer A
= RM76, 190.48 (1+8.5%) 3 Total number of units in Year 3
= RM76, 190.48 (1.085) 3 = RM79, 200/RM0.90
= RM97, 317.27 = 88,000 units
Total number of units in Year 1
14. Answer B = 88, 000 units 20, 000 units
Use Rule of 72 = 68, 000 units
72/8.5 = 8.5 years
18. Answer B
15. Answer A Amount invested in Year 1
Working money = RM80, 000/(1+5%) = 68, 000 units X RM0.80
= RM80, 000/(1.05) = RM54,400
= RM76, 190.48
Effective return = 10% - 1.0% 19. Answer A
= 9.0% Lenders may find that the value of the units in UTS that are held as
Investment return after 3 years security for the loan provides them with insufficient margin over the
FV = PV (1 + i )n amount of the outstanding loan. The lender will then ask that the
= RM76, 190.48 (1+9.0%) 3 borrower top up the level of security - a margin call will be made on
= RM76, 190.48 (1.09) 3 the borrower. (Chapter 1, page 1-8)
= RM98, 668.88
Question 20, 21 & 22
16. Answer D NAV cum-distribution for a unit trust fund is RM200million. Unit in
SC requires all UTMCs to publish service charges in the prospectus circulation is 380million units and the fund manager is charging a 5%
and marketing materials for public awareness. As for the deed, is it initial service charge. (Please use 3 decimals for calculation purpose)
the legal agreement between 3 main parties UTMC, Trustee and
unit holders. The agreement must state the service charges as well.

44
Set 3 ENGLISH Questions

20. Answer A
NAV per unit cum-Distribution 25. Answer A
= RM200million/380million units Number of units after unit split
= RM0.526 18, 000 x (4/3) = 24, 000 units
NAV per unit ex-Distribution
= RM0.526 RM0.035 26. Answer B
= RM0.491 NAV per unit before unit split
21. Answer B = RM6, 000/18, 000units
Amount invested = RM0.33
= RM10,000/(1+5%) NAV per unit after unit split
= RM10,000/(1.05) = RM0.33 x (3/4)
= RM9523.810 = RM0.25
Number of units ex-distribution Total Investment Value
= Amount invested/NAV per unit ex-Distribution = RM0.25 x 24,000 units
= RM9523.810/0.49 = RM6, 000
= 19,436.35 units
27. Answer D
22. Answer B
Difference between: 28. Answer B
Working money (with 5% service charge) and Working money (with
3% service charge) 29. Answer A
= [RM10,000/(1+5%)] [RM10,000/(1+3%)] The expectation of both UTMC and investors is that these UTS could
= RM9523.810 RM9708.738 produce high returns based on increase in the price of shares held in
= RM184.93 the portfolio, rather than from dividend income received by UTS.
(Chapter 1, page 1-13)
23. Answer D
30. Answer B
24. Answer B Rule of 72 = 72/8 = 9 years
Use Rule of 72
72/9 = 8 years 31. Answer A
1995 + 8 years = 2003 The return on investment for unit holders in UTS is usually a
combination of a regular income payment and capital appreciation.
Question 25 & 26 (Chapter 1, page 1-3)

Number of units held before unit split: 18,000 units 32. Answer A
Total value of investment before unit split: RM6,000 33. Answer B
Unit split ratio: 1 : 3 (Chapter 1, page 1-13)

45
Set 3 ENGLISH Questions

34. Answer D Question 43, 44 and 45

35. Answer C NAV pre unit split: RM100,000,000


Units in circulation pre unit split: 250,000,000 units
Unit split: 1:10
36. Answer B
A unit holder in UTS, after receiving a distribution, would find that the 43. Answer B
NAV of his or her investment falls by the amount of that distribution. NAV per unit pre unit split
(Chapter 1, page 1-46) = NAV/units in circulation
= RM100,000,000/250,000,000
37. Answer B = RM0.40
Balanced UTS exhibit lower volatility than most single asset class
UTS but offer some prospect of returns higher than those available 44. Answer B
from money market UTS, savings accounts and fixed deposits. NAV per unit pre unit split = RM0.40
(Chapter 1, page 1-15) RM0.40 x 10 = RM0.36
11
38. Answer D
Tax and inflation are two factors that can impact investment returns. 45. Answer C
Gearing is an added risk for the investor who borrows to take part in After unit split
the investment. (Chapter 1, page 1-6, Chapter 5, page 5-11) 8500 X 11 = 9,350 units
10
39. Answer A
46. Answer B
40. Answer C Distribution Equalisation is a portion of money set aside from
Its the total NAV of the fund divided with the number of units in investments to equalise unitholders distribution income. (Chapter 3,
circulation. (Chapter 1, page 1-10) page 3-14)

41. Answer A 47. Answer B


The above statement reflects the practice of forward pricing. An IUTA and CUTA must ensure that a minimum of two UTC are
(Chapter 1, page 1-43) stationed at each Distribution Point at all times. (Chapter 2, page 2-
18).
42. Answer A
48. Answer D (Chapter 1, page 1-5 & 1-6)

49. Answer A
High return funds are always associated with high risk. (Chapter 1,
page 1-12)

46
Set 3 ENGLISH Questions

50. Answer C 55. Answer B


NAV per unit ex-distribution
Questions 51, 52 & 53 = NAV per unit cum-distribution distribution
An investor had invested a single amount of money in a unit trust = RM1.50 RM0.15
fund at RM0.50 per unit in the first year and subsequently purchased = RM1.35
another 10,000 units at RM0.52 per unit in second year. At the end
of third year, he decided to redeem his investment at buying price 56. Answer C
RM0.60 per unit and the total proceeds was RM15,000. Investment value cum-distribution
= NAV per unit cum-distribution X number of units
51. Answer A = RM1.50 X 60,000
Number of units 3rd year = RM15,000/RM0.60 = 25,000 units = RM90,000
Number of units 1st year = 25,000 units 10,000 units = 15,000
units 57. Answer C
Investment value ex-distribution
52. Answer C = NAV per unit ex-distribution X number of units
1st year investment = 15,000 units x RM0.50 = RM7,500 = RM1.35 X 60,000 units
2nd year investment = 10,000 units x RM0.52 = RM5,200 = RM81,000
Total = RM7500 + RM5,200 = RM12,700
Amount reinvested
53. Answer C = Distribution X Number of units
1st year investment = RM7,500 = RM0.15 X 60,000
Redemption of 1st year investment = RM9,000
= 15,000 units x RM0.60 = RM9,000
Raw return Total amount
= (RM9,000-RM7,500)/RM7,500 = 20% = RM81,000 + RM9,000
= RM90,000
Question 54, 55, 56 & 57
The NAV cum-distribution of Fund B is RM292,500,000 and units in 58. Answer A
circulation is 195,000,000. The fund declared distribution of 15 cents
per unit, and the manager is charging 5% service charge. 59. Answer C

54. Answer A 60. Answer D


NAV per unit cum-Distribution
= NAV/Number of units
= RM292,500,000/195,000,000
= RM1.50

47
Set 4 ENGLISH Questions

Set 4 5. What type of investment would you most expect to find in


an aggressive growth fund?
1. It is important for the UT industry to be regulated in order to
protect clients investments. Which of the following is not an A. Investment in capital guaranteed life insurance products
authority involved in UTS regulation? B. Cash
C. Investment in properties with regular income
A. Ministry of Finance C. Institut Bank-Bank Malaysia D. Shares of technology-company recently listed on the stock
B. Bank Negara Malaysia D. Securities Commission exchange

2. ________ is a sales charge or entry fee levied by a UTMC 6. If NAV of a fund is RM1.00, the fund manager declared a
on the initial purchase of UTS. The charge is sometimes distribution of RM0.12, how much would an investor receive if he redeems
called a load, front end load, or sales or entry charge. The 10,000 units after distribution?
charge can be expressed either as a fixed amount or
calculated as a percentage of the NAV of a unit. A. RM10,500.00 C. RM9,800.00
B. RM 8,800.00 D. RM10,800.00
A. Initial Load Charge C. Initial Service Charge
B. Initial Sales Charge D. Initial Interest Charge 7. Assume that the investment return is 10%, tax rate is 20%
and the inflation rate is 5%, what is the effective rate of
3. Fixed-income funds are generally said to have lower risks return?
than equity funds. Hence, what can be expected from the
returns of these funds? A. 5% B. 4% C. 3% D. 2%

A. Usually higher than equity funds 8. The best way to help investors go through the prospectus is
B. Usually lower than equity funds to begin with:
C. Consistently higher than equity funds A. Members of the Investment Committee
D. None of the optional answers are correct B. Fees & Charges
C. Key Data Section
4. What is the name of the regulatory body for UTS in D. Profile of the Board of Directors and Key Management
Malaysia? Staff.
9. The main objective of the Acts that regulate the unit trust
A. Bank Negara Malaysia C. FMUTM industry is to safeguard the benefits of the:
B. Registrar of Companies D. Securities Commission
A. Unitholder C. Trustee
B. UTMC D. Securities Commission

48
Set 4 ENGLISH Questions

10. An index UTS: I. UTMC


II. Trustee
A. Invest primarily in all of the securities or a representative III. Investment Manager
sample of the securities that are included in a selected IV. Unitholder
market index.
B. Invest primarily in overseas share markets. A. I and II C. I, II and IV
C. Invest in real property, usually prominent commercial B. I, II and III D. All of the above
properties.
16. Which are the key requirements of a trustee?
D. Invest in a range of companies that closely match
companies comprising a particular index. I. Must be a trust company registered under The Trust Company Act,
1949
11. In general, which of the following category of unit trust is II. Must be independent of the UTMC and UTS
likely to depreciate most when the overall stock market III. Must be registered with the SC
falls? IV. Act as a custodian by holding all the assets belonging to a UTS

A. Property trust C. Equity trust A. I and II C. IV only


B. Fixed-income trust D. Money market trust B. III only D. All of the above

12. Generally prospectus of a unit must be renewed ________ 17. Assume an investor has invested a lump sum of RM 25,
000.00. 2 years later the total returns were RM27,300.00.
A. Every two years C. Every month Calculate the compounded return from this investment.
B. Every six months D. Every year
A. 5.5% B. 4.5% C. 6.5% D. 7.5%
13. The maximum margin on unit trust financing is fixed at:
18. Arrange the sequence of the category of funds from the
A. 85% B. 67% C. 50% D. 79% highest to the lowest risk.

14. Mr. X wants to invest RM 200,000.00 in a unit trust fund. I. Money Market Fund
What is the maximum amount can he borrow from a II. Balanced Fund
financial institution for the investment? III. Bond Fund
IV. Equity Fund
A. RM134,000.00 C.RM120,000.00
B. RM66,000.00 D. RM80,000.00 A. I, II, III and IV C. IV, II, III and I
B. IV, III, II and I D. IV, I, III and II
15. Which are the parties involved in the unit trust industry?

49
Set 4 ENGLISH Questions

19. Which of the below are parts of the prospectus? A. 2000 B. 2001 C. 2002 D. 2004

I. Investment Objectives 23. Which of the following is/are the risk(s) of borrowing to
II. Authorized investments invest in UTS?
III. Fees & charges
IV. Trust expenses I. Interest rate fluctuations
A. I, II, III C. I and III II. Default in repayment of loan
B. IV only D. All of the above III. Premature repayment of loan
IV. Margin call
20. What will be received by the investors generally after they have
invested in UTS? A. I and II C. II and III
B. I and III D. All of the above
I. Confirmation that the investors application amount has been
received. 24. Which of the below is/are NOT part of the Code of Ethics?
II. Confirmation of the number of units acquired in the UTS, and the
NAV of a unit on the date of allotment of units. I. Fair dealing
III. Confirmation on the rate of initial service charge imposed both in II. Competence
percentage form and actual value as well as the net amount III. Use of authorisation card
invested net of service charge IV. Acting with due care, skill and diligence
IV. Confirmation of the rate of exit fee imposed both in percentage V. Compliance with law
form and actual value as well as the total amount repurchased
V. A certificate for the number of units issued A. III and V C. III only
B. I, II, IV D. None of the above
A. I, II, and III C. I, II, III, and V
B. I only D. I, II, III, and IV 25. Dollar cost averaging is:

21. What is the platform for UTMC to discuss issues relating to A. A strategy whereby investors buy more units when prices are high
the unit trust industry? B. A strategy whereby investors buy less units when prices are low
C. A systematic and regular investment of a fixed amount of money
A. Ministry of Finance D. A strategy for customers to invest all their capital at one time
B. Institut Bank-Bank Malaysia rather than on a regular basis.
C. Securities Commission
D. FMUTM

22. When did RHB Unit Trust Management Berhad introduced


the first Islamic bond fund?

50
Set 4 ENGLISH Questions

26. What is unit trust scheme? A. By reducing the tax rate


B. Investors need to preserve the purchasing power of the
A. Form of collective investments that allow investors with original investment
similar objectives to pool their savings C. Hope to earn a return that is less than the inflation rate
B. An investment portfolio which only contains one type of D. None of the optional answers are correct
asset
C. Form of collective investments whereby the unitholders are 30. What is the term used if Mrs. Z wants to reinvest her
the shareholders of the company they have invested in distribution in UTS?
D. An investment portfolio whereby the investors of the
particular UTS will purchase the securities in the portfolio A. Distribution Reinvestment C. Suspension
directly B. Buying Distribution D.Distribution Equalization
27. For the Financial Year Ended 30 Dec 200X, the financial
statement of ABC Fund shows that the following expenses 31. How many reports must be issued during the period in
were incurred: which units in UTS are held?

Management Fees - RM1, 340,999 A. At least 1 report C. At least 3 reports


Trustee Fees - RM 730, 173 B. At least 2 reports . At least 4 reports
Auditors Fee - RM 172, 641
Bank charges & other expenses - RM 361, 594 For Questions 32 & 33

The average Fund Size for ABC fund during the year was 32. Initial investment = RM80,000.00
RM 250, 492, 853. Calculate the MER of the fund for they Rate of return = 10%
year ended 30 Dec 200X. On going management fee = 1.5%
Service charge = 5%
A. 1.07% B. 1.03% C. 1.08% D. 1.04%
What is the return of the investment after 3 years? (Use 4 decimal points for
28. What does a gradually decreasing MER over a period of your calculation)
several years indicate?
A. RM97074.80 C. RM97,074.80
A. UTMC is not managing its operating cost well B. RM97,318.10 D. RM101,156.00
B. UTMC is managing its operating cost efficiently for its fund
size 33. Assume that the ongoing management fee is 1% instead of
C. That all newly launched UTS will have MER 1.5%, what is the value of investment after 3 years? (Use 4
D. UTMC is managing its operating cost efficiently decimal points for your calculation)

29. How do investors overcome the impact of inflation? A. RM98,666.67 C. RM90,516.00


B. RM98,420.00 D. RM95,280.00

51
Set 4 ENGLISH Questions

34. Which of the following is NOT true about the agency A. The fees & services for the particular fund
structure? B. The possible risk involved
C. To go through the prospectus
A. The standard structure comprises a Group Agency Manager, D. All of the above is correct
an Agency Manager, and Agency Supervisor and an Agent.
B. There must be more than 4 tiers. 39. A buyer is not sure if should invest in UTS. An agent
C. The unit must not exceed 50 persons in total at all times. should:
D. An agent is not allowed to recruit other agents. A. Advise the buyer to contact the agent once has made
decision
B. To go through the prospectus together and leave the
35. What is the most important element an investor should prospectus with the buyer to decide
have before deciding to invest in UTS? C. Should ignore the buyer as this is a waste of time for the
agent
A. Confidence C. Intelligence D. Show the buyer some brochures and to take it back after that
B. Risk D. Professionalism to be used for the next appointment with a different prospect

36. What do you understand about unit split? 40. A UTC should not say:

A. It affects the NAV of the UTS A. Investing in UTS has no risk


B. It affects the value of a unitholders investment B. If do not have enough money to invest, investors should
C. It does not affect the NAV of the UTS or the value of a apply for a loan
unitholders investment. C. Returns are guaranteed when investing in UTS
D. None of the optional answers are correct D. All of the above

37. Investor A & Investor B started investing with RM64, 41. A complaint can be referred to:
000.00 with the rate of return of 8.5% p.a for Investor A.
A few years later, both of them received RM128, 000.00 each. However A. UTC C. FMUTM & SC
Investor B received the returns faster by 1.27 years. When B. UTMC D. All of the above
did Investor B receive his/her return?
42. For a Syariah based UTS, where can the excess cash or
A. 8.47 years B. 7.20 years C. 6.41 years D. 5.94 years liquid assets be kept/invested?

38. Mr A says, Oh! XYZ fund is really good. I shall invest in t A. Investment accounts
this fund to get a high return in 3 years time! Upon B. Current accounts
hearing this, A UTC should advise Mr A which of the C. Syariah-based instruments
following? D. None of the above

52
Set 4 ENGLISH Questions

43. Below are the list of a unitholders rights and liabilities. B. Liquidity risk defined as the ease with which a security
Which of the following is not part of the list? can be sold at or near its fair value depending on the market
C. Inflation risk the risk of high inflation will affect the real
A. To call for meetings of unitholders return from investment
B. To receive UTS annual and interim reports D. Risk of non-compliance risk that specifically occurs when
C. To receive a distribution from UTS a Syariah compliant security is reclassified as a Syariah-non compliant
D. To choose which type of shares to be included in their Sekuriti.
investment portfolio
47. Investor X has decided to change from high risk to a low
risk category of investment. Which of the following is an
option for investor X?
44.
NAV Amount Invested A. Bond Fund to Equity Fund
0.50 RM1500.00 B. Equity Fund to Bond Fund
0.60 RM1500.00 C. Money Market Fund to Balanced Fund
0.70 RM1500.00 D. Bond Fund to Balanced Fund

Calculate the average unit cost for the above investment. 48. What does liquidity means in the context of UTS?

A. RM0.59 B. RM0.95 C. RM0.78 D. RM0.64 A. Units can be bought easily


B. Average cost of investment acquired to below the average
45. Which is not true about management fee? price
C. Investors can sell their investments at any time
A. The annual management fee is calculated on the Gross NAV D. Payment of income to unitholders
of UTS
B. The average annual management fee is 1.5% 49. One of the advantage of investing in UTS is that the funds
C. The management fee is to cover the cost of managing UTS are managed by professional management. Why is this so?
D. The fee is an optional requirement to be included in the
prospectus A. They have experience investing more than RM500million
B. They have years of knowledge and experience in the unit
46. There are many potential risks that are related to investing trust industry
in UTS. Listed below are a few types of risk. Which of the C. They ensure the funds are structured according to their own
following has an incorrect description? principles
D. None of the above is correct
A. Market risk stock value does not fluctuate in response to
the activities of individual companies and general market or
economic conditions

53
Set 4 ENGLISH Questions

50. Net Asset Value = RM250,000.00 55.


Units in circulation = 300,000.00 X Y
Distribution of income = 3.5 70% Equity 20% Equity
Unit split = 1:5 30% Money Market 80% Money Market

Calculate the NAV per unit ex distribution. (3 decimal points for calculation) Which of the following is true?

A. RM0.73 B. RM0.80 C. RM0.70 D. RM0.76


A. If the market falls, Y will be more negatively affected than
51. Calculate the NAV per unit ex distribution assuming post unit split. (use X
3 decimal points for calculation) B. If the market falls, X will be more negatively affected than
Y
A. RM0.63 B. RM0.60 C. RM0.67 D. RM0.69 C. If the market rises, both X and Y will be negatively affected
52. Given that the NAV per unit at the beginning of the day is D. None of the above is correct
RM0.65, and the NAV per unit at the end of the day is
RM0.66. Investor Z decides to redeem 10,000 units. Based 56. How do we calculate redemption price?
on Forward Pricing, how much will it cost?
A. NAV plus Transaction Cost Factor
A.RM6,500.00 C. RM6,600.00 B. NAV less Transaction Cost Factor
B. RM6,000.00 D. RM10,000.00 C. NAV plus an exit fee
D. NAV less an exit fee
53. Which is not true regarding the role of FMUTM?
57. What does a register contain?
A. To provide self-regulation for the UT industry
B. Appointed by the SC to conduct unit trust examinations for A. The category of funds each investor has invested in
Persons wishing to become UTC B. The total of investments each investor has in each fund
C. To advise the Minister of Finance category
D. To work closely with the SC in the development and growth C. Personal data relating to each investor
of the unit trust industry D. None of the above

54. Which is not true about a UTC? 58. Which of the parties below has been established to
investigate any complaints from customers?
A. UTC should introduce himself as a unit trust agent
B. UTC does a need analysis for his client A. Appealing Committee
C. UTC needs an IA and UTC license B. Investigating Committee
D. UTC recommends a unit trust product C. Disciplinary Committee
D. Investment Committee

54
Set 4 ENGLISH Questions

59. Given an inflation rate of 5%, how much will education


fees of RM80,000.00 cost in 10 years time? (Use 4 decimal
points for your calculation)

A. RM146,601.00
B. RM130,000.00
C. RM130,312.00
D. RM114,023.00

60. Islamic finance in Malaysia began to develop with the


establishment of:

A. Shell MDS Sdn Bhd


B. The Islamic Capital Market Unit
C. Bank Islam Malaysia Berhad
D. Malaysia Capital Market Masterplan

55
ENGLISH Set 5

Set 4 Answers 8. Answer C


This section provides the executive summary of the prospectus. It
1. Answer C allows investors and UTC to make a quick comparison of the
different UTS issued by the UTMC.
2. Answer C
9. Answer A
3. Answer B The main objective of all regulations of the unit trust industry must be
Fixed income securities are usually more secure, especially if held to to protect the interest of prospective investors and existing unit
maturity. It is therefore expected that the returns offered by fixed holders.
income UTS will be lower than equity UTS over the long term.
10. Answer D
4. Answer D
The regulation of the unit trust industry has been entrusted to the SC 11. Answer C
under the Securities Commission Act, 1993 as amended. The risk profile for an equity trust is aggressive in comparison with
property, fixed income and money market trust. Therefore if the
5. Answer D overall stock market falls, the equity trust will depreciate the most.
Aggressive growth UTS invest in blue chips (large and well-
capitalized companies whose shares are listed on a stock exchange) 12. Answer D
The UTS prospectuses are very important documents. It must be
6. Answer B updated at least once every 12 months.
NAV/unit ex-D = RM1.00 RM0.12 = RM0.88
Redemption amount = number of units x NAV/unit ex-D 13. Answer B
= 10,000 x RM0.88
= RM8,800.00 14. Answer A
Maximum loan to valuation = 67% x RM200,000.00
7. Answer C = RM134,000.00
Return after tax
= Investment return - (Investment return x Tax rate) 15. Answer D
= 10% - (10% x 20%) All of them are involved in the unit trust industry. However, the
= 10% - 2% investment managers are not parties to the deed.
= 8%
Effective rate of return 16. Answer D
= return after tax - inflation rate
= 8% - 5%
= 3%

56
ENGLISH Set 5

17. Answer B 27. Answer D


Present value = RM 25,000.00 MER = [fees + recovered expenses] x 100
n = 2, Average fund size
Future Value = RM27,300.00 = RM 2,605, 407 x 100
Calculate the compounding rate p.a. 250,492,853
FV = PV ( 1+ i )2 = 1.04%
RM27,300 = RM25,000.00 ( 1 + i )2
RM27, 300 / RM25, 000 = (1+i)2 28. Answer B
1.0920 = (1+i)2 The fund size is an important factor for MER. UTS with a larger fund
21.0920 = (1+i) size should generally have a lower MER than smaller UTS.
1.045 = ( 1 + i )
1.045 = 1 + i 29. Answer B
0.045 = i To overcome the impact of inflation the investors need to preserve
4.5% = i the purchasing power of the original investment and be earning a
rate of return that beats the inflation rate. In periods of high inflation,
18. Answer C the purchasing power of financial assets decreases.
19. Answer D
20. Answer C 30. Answer A
21. Answer D
22. Answer A There are at least 2 reports which are the Annual Report and the
23. Answer D InterimReport.

24. Answer A For Questions 32 & 33


III and V are part of the Standards of Professional Conduct.
32. Answer B
25. Answer C Initial investment = RM80,000.00
DCA is a systematic and regular investment of a fixed amount of Working money = RM80,000/(1+5%)
money, irrespective of the price level of the investment at the time = RM76,190.48
the investment is made. This can reduce the average cost of the
investments acquired to below the average price of those Value end of year 3 = working money x ( 1 + i )n
investments during the period. = RM76,190.48 x ( 1 + [ 10% - 1.5% ] )3
= RM76,190.48 x ( 1 + 0.085 )3
26. Answer A = RM76,190.48 x ( 1.085 )3
The pools of savings are then invested in a portfolio of securities or = RM76,190.48 x 1.2773
other assets managed by investment professionals. = RM97,318.10

57
ENGLISH Set 5

33. Answer A 39. Answer B


Value end of year 3 = working money x ( 1 + i )n UTC should provide all their prospects with an in depth-explanation
= RM76,190.48 x ( 1 + [ 10% - 1% ] )3 of theprospectus before an application is made.
= RM76,190.48 x (1.09)3
= RM76,190.48 x 1.2950 40. Answer D
= RM98,666.67
41. Answer D
34. Answer B
The structure should not exceed 4 tiers. The SC encourages UTMC 42. Answer C
to have agencies with fewer tiers to ensure that proper supervision is Any excess cash and/or liquid assets are to be kept/invested in
applied to each agent. Syariah based instruments e.g. Islamic current account or
investment account.
35. Answer B
All investors should understand that investing in the UTS has its own 43. Answer D
risk. One of the disadvantage of investing in UTS is investors lose their
rights to direct how their savings are invested.
36. Answer C
A unit split is the division of a single unit in UTS into two or more 44. Answer A
units.The effect of unit split does not affect NAV of UTS nor the value Total amount invested = RM4500.00
of a unitholders investment. The objective of unit split is to attract Total units invested = (1500/0.50) + (1500/0.60) + (1500.00/0.70)
new investors by lowering the unit price. = 3000 + 2500 + 2142.86
= 7642.86
37. Answer B Average unit cost = RM4500.00/7642.86
Investor A: = RM0.5887
= RM0.59
72 = 72 = 8.47 years
Given rate of return 8.5 45. Answer D
The annual management fee must be included in the prospectus.
Investor B = 8.47 1.27= 7.20 years
46. Answer A
38. Answer D The stock value does fluctuate in response to the activities of
UTC must ensure that (1) investors understand that the services individual companies, general market or economic conditions.
provided by UTMC are not without cost, (2) investors are given
explanation of risk when investing in UTS and (3) investors read 47. Answer B
through and understand the prospectus of the particular fund The Equity Fund has a higher risk then Bond Fund.

58
ENGLISH Set 5

48. Answer C 58. Answer B


Investment can easily be bought and sold readily through UTMC, This committee has been established to investigate complaints and
IUTA and UTC. also look into disciplinary action that will be taken against any UTC
who breach the FMUTM Code of Ethics.
49. Answer B
59. Answer C
50. Answer B Compounding factor = (1 + i )n
NAV/unit cum-D = RM250,000.00/300,000.00 = RM0.833 = ( 1 + 5%)10
NAV/unit Ex-D = RM0.833 RM0.035 = ( 1 + 0.05)10
= RM0.798 = 1.6289
= RM0.80 Cost for education after 10 years = 1.6289 x RM80,000.00
= RM130,312.00.
51. Answer C
NAV/unit post unit split = RM0.80 x 5/6 60. Answer C
= RM0.67 Bank Islam Malaysia Berhad was established in 1983.

52. Answer C
Number of units x NAV/unit end of day
= 10,000.00 x RM0.66
= RM6,600.00

53. Answer C
To advise the Minister of Finance is one of the SCs role

54. Answer C
A UTC does not need an IA license

55. Answer B
Portfolio X is at a higher risk than Y.

56. Answer D

57. Answer C
The Register contains a large amount of personal data of each
investor.Clients can update their data from time to time such as
hange of address,new IC number and change of name.

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ENGLISH Set 5

1. The Malaysian Unit Trust Funds Performance Table is a useful tool C. A collection of investments which cannot be sold without
because it: permission of the owners
D. Another term used to describe a unit trust scheme
A. Allows performance to be tabled at meetings held by the Securities
Commission 5. What would you not normally expect to find in the annual report of a
B. Taps into the fund managers credibility unit trust scheme?
C. Summarizes investment performance for the industry and allows
for easy comparison A. Statement of assets and liabilities of the unit trust scheme
D. Enables the public to understand the fees and charges charged by B. Auditors report
unit trust management companies in Malaysia C. Fund composition and statement of asset allocation
D. Unit prices of competitors products
2. Which statement regarding the EPF Members Withdrawal Investment
Scheme is correct? 6. When was the first unit trust management company set up in Malaysia?

A. The maximum age for the qualified member is 60 A. 1949


B. Members can withdraw funds from the EPF once in every two B. 1950
months C. 1959
C. Investment can be made with any unit trust scheme D. 1960
D. Balance in Account 2 is not eligible for this scheme
7. Investors who invested in unit trusts with borrowed money:
3. Which of the following statement is correct?
A. Will only make profit if returns from their investment are higher
A. The income of real estate investment trusts (REITs) is mainly than the cost of their borrowing
derived from the rental income and capital appreciation of the B. Will not be affected by changes in the base lending rate set by their
property held by the trust end-financiers
B. The portfolio of a real estate investment trust (REIT) can be C. Are guaranteed to make profit in longer term
switched to equities easily as the assets are highly liquid D. Need to keep on investing until the loan is fully settled
C. Real estate investment trusts (REITs) are not allowed to be listed
D. Unlisted unit trusts are not allowed to invest in real estate 8. An investor wants to gain exposure to the commercial property market
investment trusts (REITs) in Kuala Lumpur but with only a small amount of money
(approximately RM5,000), she was not able to invest at all. Which is a
4. A collective investment scheme is: good investment alternative for her?

A. A type of fund that allows anyone to collect money from others, A. Invest in equity index fund
much like people collect money for charity B. Invest in fixed income fund
B. An investment fund which invests only in a specific collection of C. Invest in any open-ended funds
shares D. Invest in real estate property trusts

60
ENGLISH Set 5

9. Puan Rose decided to withdraw some of her savings to invest in unit A. Let the potential investor have a prospectus and go through with
trusts. She would like to invest all of her money in a fund at one time her
and let it grow irrespective of the market condition. Whereas for Puan B. Comfort her by letting her know that unit trust is an investment
Sarina, she has very little savings but every month she is willing to cut with no risk
some of her expenses and invests in unit trusts. Name the respective C. Show her the marketing brochure and take them back as you need
ways that can be used by them to invest in unit trusts. to show the brochure to another investor
D. Show her the excellent performance record of the unit trust fund
A. Spot and Installment Plans and tell her that the performance will repeat in the future
B. Lump Sum Investment and Regular Savings Plan
C. Lump Sum Investment and Contractual Plans 13. Unit trusts offer an effective way to pursue lifetime financial goals with
D. Fixed Investment and Installment Plans advantages that would be difficult to achieve by lay persons who invest
on their own. The advantages include:
10. Generally, what are the possible forms of return on investment can an
investor expect from investing in unit trusts? I.On-going professional fund management
II.Diversification of assets with reduced risks
I. Distribution III.Can be bought and sold easily
II. Capital appreciation IV. More favorable transaction costs for unit trusts due to large
III. Interest investment amount
V. Flexibility to switch between different type of funds (applicable
A. I & II to certain unit trusts)
B. I & III
C. II & III A. I, II & III
D. All of the optional answers are correct B. I, II, III & IV
C. I, II, III, & V
11. In marketing unit trust scheme, providing quality services includes: D. All of the optional answers are correct

A. Being responsive to customers requests, queries and complaints 14. Market risks is a type of risks involved in investing in equity unit
B. Providing clear and precise reporting trusts and it means:
C. Providing convenient choices in handling investors cash and
payments A. Stock values underlying the Net Asset Value (NAV) of the unit
D. All of the optional answers are correct trust scheme fluctuates in response to the activities of individual
companies and general market or economic conditions. Such
12. Which of the following is the most appropriate thing to do if you meet a movements will cause the NAV or prices of units to fall as well as
person who has never invested in unit trusts and does not feel rise.
comfortable to invest in unit trusts? B. Poor Management of the scheme will jeopardize the investment of
unit holders through the lost of their capital invested in the scheme

61
ENGLISH Set 5

C. Unit holders might be forced to provide additional funds to restore 18. Amongst others, the calculation of Net Asset Value (NAV) of a unit
their loan margin when the value of the unit trusts scheme dropped trust scheme involves:
drastically
D. None of the optional answer is correct I. The value of the equity investments
II. Costs and charges involved in various transactions of the scheme
15. One of the major benefits of investing in unit trusts is to gain access to III. The value of money market instruments (if applicable)
the experience of a professional fund manager. Which term best IV. Accrued gross distribution and interest income after deduction of
describes a professional fund manager? relevant fees and expenses such as annual management fees and
administrative expenses
A. Someone who has bought and sold many investment in his lifetime
B. A friend who always recommends the best stocks to buy A. I & II C. I, III & IV
C. Someone who always manages in excess of RM500 million B. I, II & III D. All the optional answers are correct
D. Someone who has been professionally trained in the field of fund
management 19. In order to enhance professionalism in marketing of unit trusts:

16. Unit Trust Management Company (UTCM) must issue a prospectus for A. It is irrelevant what promises are made to clients with respect to
each of its unit trust schemes. The UTMC is required to: investment returns
B. It is important to provide superior service to clients and attend to
A. Issue a prospectus at least once a year their needs
B. Provide complete information C. It is important to observe as many marketing leads as possible
C. Send a copy to any potential investor who request a copy D. It is important to recommend to potential clients the best
D. All of the optional answers are correct performing unit trusts regardless of the suitability of her risk
profile to the fund
17. Risk/return characteristics can vary significantly between two funds.
Which of the following statement is not correct comparison of the 20. What is the risk of an investor directly investing in a small number of
risk/return trade-off between investing in a Capital Growth Fund (G) shares?
and a Capital Protected Fund (P)?
A. The investor is exposed to the risk of either making or losing large
A. Gs return are potentially higher than Ps because G is less risky portion of her investments
B. G needs to adopt a riskier investment strategy to achieve B. The investor benefits from diversification of portfolio
potentially higher returns C. The investor is able to consistently reap high returns of investment
C. Ps losses are potentially less because it takes less risk D. It is easy for investor to select good company
D. Expect a lower return from P because the fund takes less risk

62
ENGLISH Set 5

21. A unit split in effect does not add value to the unit trust investors A. I & II
investment holding, but________. B. I & III
C. II & III
A. Makes sure that the fund managers are able to earn their fees D. All of the optional answers are correct
B. Is used by unit trust management company to lower the NAV per
unit, thus enabling new investors to invest in the fund 25. Which of the following best describes Aggressive Growth Fund?
C. Is used to enlarge the fund size in Ringgit term
D. Is used to re-classify the fund to Penny-Stocks fund A. The fund will invest primarily in stocks which earn significant
dividend income
22. Dollar-Cost Averaging is: B. The fund will normally generate returns which closely resemble
the performance of a stock market index, both in terms of risk and
A. A strategy that entails buying low and selling high return
B. A way to purchase unit trust funds and minimize the service charge C. Generally the fund will be invested in stocks with higher growth
C. A systematic way of regular investment with fixed amount of potential and with higher risk characteristic
money D. The fund mainly invests corporate bonds, government securities
D. A way to sell unit trust funds and to minimize the capital gains and liquid assets

23. How can an investor hedge against inflation? 26. Which of the following is not the right of unit holders?

I. Cut down all the unnecessary expenses and keep the money at A. To obtain information about the unit trust scheme and its
home performance
II. Lower the tax rate of the investment B. To receive profile of board of directors
III. Invest the money in an instrument that can generate a higher C. To redeem units
return than the inflation rate D. To select shares for the unit trust schemes portfolio
IV. Maximize the benefits of effective financial planning
27. Which of the following statement is not valid?
A. I & III C. I, III & IV
B. III & IV D. I, II, III & IV A. Investors are entitled to receive unit trust certificate or statement
for his investment
24. Please identify features of an open-ended unit trust. B. Unit trusts are professionally managed by the unit trust
management company
I. It is a collective investment scheme that provides an opportunity C. Unit holders directly purchase the securities in the investment
for small investors to participate in stock market investment portfolio of the unit trust
II. Ownership of the fund is divided into units of entitlement D. Value of a unit will fluctuate in line with the changes in the net
III. If the market condition is not encouraging, the unit holders will asset value of the unit trust
not be able to liquidate their investment as other investors are
not keen to purchase

63
ENGLISH Set 5

28. The best way for investors to minimize the impact of the initial service Fund X is most appropriate to be classified as:
charge on unit trust investments is to:
A. Equity Fund C. Property Fund
A. Buy and sell units as much as they can B. Fixed Income Fund D. Money Market Fund
B. Invest as regular as possible and avoid lump-sum investments
C. Adhere to a long-term buy and hold strategy; making sure that the 32. Which statement is correct
units purchases match their long-term investment objectives
D. Only purchase aggressive growth fund I. Interest rate decreased, value fund Y will be more adversely
affected
29. What is one of the functions of FMUTM? II. Interest rate decreased, value fund Y will be more positively
affected
A. Reviews all materials prior to release to the public III. Value fund X will be more positively affected when the stock
B. Generates all the guidelines that unit trust companies comply to market is increasing
and to report to the Compliance Authority if non-compliance is
found A. I only C. II & III
C. Provides a common platform for unit trust companies to discuss B. I & III D. All correct
issues in the industry
D. A governing body which regulates the investment made by the unit 33. Which of the following is (are) true about a bond fund?
trust management company
I. It is best to buy when interest rates are peaking and bond
30. The fund manager of unit trust scheme is allowed to charge a yields are high
management fee, the fee is II. Managers fees and charges are generally lower compared
to the equity fund
A. Mainly used to cover the management expenses incurred by the III. Fund prices will fall when interest rate rise
manager in managing the scheme IV. No matter when you redeem your investment, you will get
B. Also known as a fee charged by the trustee back at least your principal amount or capital you have
C. Levied by the fund manager on the investment made by investors invested
to cover the commission paid to agents
D. Used for the purpose of registering the unit holders with the trustee A. II only
B. I & III
Question 31 & 32 C. I,II & III
D. All of the optional answers are correct
31. Assume that the asset allocation of fund X and fund Y are as
follows:
Fund X Fund Y
Equity Market 70% 0%
Money Market 10% 85%

64
ENGLISH Set 5

34. Which of the following is NOT TRUE? A. I, II and III


B. I, III and IV
A. Generally, the portfolio of unit trust investment is determined C. II, III and IV
by fund manager D. All of the optional answers are correct
B. A unit trust is an investment mechanism which allows investor
who shared similar investment objectives to pool their money 38. Capital Growth Fund (G) Capital Protected Fund (P)
C. The portfolio of investments is allowed to include only one
asset class Which of the following statement is NOT TRUE?
D. Unit holders do not directly purchase the securities and the
ownership of the fund is divided into units A. G has better returns than P because of less risk
B. P has less loss because of less risk
35. Net Asset Value of the fund does not change with UNIT SPLIT. C. P has less return because of less risk
Why does the UTMC take the options to split? D. G has an ggressive risk strategy to get better potential returns

A. Gain Management Fees 39.


B. Increase fund size in term of ringgit
C. Lower unit NAV so that new investors can purchase A B
D. Increase unit NAV to benefit existing unitholder. RM1,000 RM1,000
NAV RM0.27 RM0.80
36. NAV calculation includes: MER 1.5% 0
Exit Fees 0 RM2
I. Equity market III. Transaction cost of UTS
II. Money market (if applicable) IV. MER Mr. Yee has investments in Fund A and Fund B with RM1000 each
for 5 years. Assume that Fund A has a MER charge of 1.5% per
A. I and II annum, fund B has an exit fee of 2% and both funds have the same
B. I, II and III returns. Mr. Yee will gain more from Fund B. Is this statement true?
C. I, II and IV
D. All of the optional answers are correct A. True
B. False because Fund A and Fund B have the same returns
37. Trustee C. False because of the different fees imposed on both funds
D. None of the answers are correct
I. Regulatory body to control investment decision by UTMC
II. Common platform for UTMC to discuss issues
III. Guideline & report to regulatory body for non-compliance on
investment
IV. Safeguard the assets of the fund

65
ENGLISH Set 5

40. FMUTM Kindly use the following information to answer the questions

I. Common platform for UTMC to discuss issues Cik Zarina and Encik Hamzah took part in a millionaire contest and won
II. To agree on standards of practice for the protection of the interests RM64000 cash respectively. Both of them decided to invest their cash
of unit holders. prizes at the same time as follows:
III. To improve regulations, tax and other rules affecting sales of unit
trust. Zarina Hamzah
i. Investment A RM64000 0
A. I and II ii. Investment B 0 RM64000
B. II and III
C. I and III 43. Suppose that investment A provides an average annual return of 8.5%
D. All of the optional answers are correct and the value of Encik Hamzah investment is approximately 1.27 years
earlier than those Cik Zarina. What is the average annual return of
41. Which of the following best describes the disadvantages of financing Investment B?
investments of a unit trust fund through borrowing?
A. Approximately 10.00%
A. In a falling share market, the value of investment in unit trust may B. Approximately 9.77%
be decreasing whilst the loan liability remain constant or C. None of the optional answer is correct
increasing. The effect of this may result in the need to increase the D. Approximately 7.39%
collateral to the financial institution
B. The value of the investment in unit trust fund does not fluctuate 44. Suppose that the amount of the cash won by them is RM128000 each
with share market prices, but the loan financing does and all else being unchanged, what is the average annual return of
C. None of the optional answer is correct investment B?
D. In a rising market, the value of the investment in unit trust fund
and the loan borrowed rises A. Approximately 20.00%
B. Approximately 19.54%
42. Prices of listed close-ended trusts are determined in the following C. None of the optional answer is correct
manner: D. Approximately 14.78%

A. The Unit Trust Management Company computes the daily prices


upon close of business day
B. Prices are determined by the demand and supply in the market
such as Bursa Malaysia where the trust is listed
C. The investment committee sets the daily prices
D. The total value of the assets is divided by the number of units in
circulation

66
ENGLISH Set 5

45. What is (are) the basic quality (ies) of a professional Persons Dealing in 49. In a haste to close sales, you may inadvertently say the wrong things.
Unit Trusts (PDUTs)? Which of the following is (are) not the right proposition(s) to use?

A. Provide on-going advisory and services A. Youll get free insurance or gifts and I can add on some additional
B. Keep abreast on the latest development in the unit trust industry units for you
C. All of the potential answers are correct B. No money is not a problem because you can apply for loan
D. Give timely and accurate information C. All of the optional answers are not the right propositions
D. Its safe to invest now. The market is going up and you will
46. The Unit Trust Scheme (UTS) can only invest in securities that: definitely make profits

A. Have small market capitalization with great potential for capital 50. Pointing to the latest performance table, Mei Ling enthusiastically tells
appreciation in the long run you Look! OMG Small-Cap Fund was up 36% last month; I think this fund
B. Have been authorized in the Deed of the UTS may be best for me to invest. Knowing that choosing a fund merely based
C. Are well diversified in the global markets on best record in the previous month is not in her best interest; what other
D. Guarantee the highest returns with minimum risks aspects would you advise her to look into before investing in the fund?

A family spent RM25000 on goods and services last year and RM26125 i. Consistency of the funds performance in medium and long term
this year. Assume that the pattern, value of consumption and the inflation ii. Her own financial goal and decide how much risks she can afford
rate remain unchanged to take
iii. Suitability of the funds investment objectives and riskiness with
47. How much money will the family need next year to maintain the same her own investment goal and risks profile
living standard as this year? iv. Total fees and charges imposed by the fund and the service level
provided
A. RM26125
B. RM27250 A. i, ii & iii
C. None of the optional answer is correct B. ii & iii
D. RM27301 C. All of the optional answers are correct
D. i & ii
48. Based on the above inflation rate, if an investor earns a 5% return for his
investment, his marginal tax is 20%, what is his effective return after tax
and inflation?

A. -0.5%
B. -15%
C. -0.3%
D. 15%

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ENGLISH Set 5

51. If NAV of a fund is RM1.0000, the initial charge is 1.5% and no exit fee 55. What type of investment would you most expect to find in an aggressive
is imposed, how much would an investor receive if he redeems 10000 units? growth?

A. RM10150 A. Shares of technology companies recently listed on the stock


B. RM10000 exchange
C. None of the optional answer is correct B. Cash
D. RM9850 C. Investments in capital guaranteed life insurance products
D. Investments in properties with regular income
52. Which of the following is a function of Federation of Malaysian Unit
Trust Managers (FMUTM)? 56. What do you understand by the term Call Margin in relation to
financing of unit trust investment?
A. Provides a common platform for unit trust management companies
to discuss issues in the industry A. It is the financiers marked-up margin imposed on top of the based
B. Develops all the guidelines that assets management companies lending rate applicable
comply to and to report to the Compliance Authority if non- B. It is type of processing fees imposed by the financier in relation to
compliance is found financing of unit trust investment
C. A governing body which regulates the investment made by the unit C. It is type of charges imposed on future contracts
trust management company D. It is the amount an investor might have to pay his/her financier if
D. Reviews all promotional materials prior to release to the public the credit exposure of a unit trust increases to the next level.

53. Generally, a unit trust that has 80% of its assets invested in growth 57. Which of the following offer(s) the choice(s) of what an investor can do
stocks would be the most appropriate type of investment for the preparation for distribution paid by unit trust funds?
of:
i. Reinvest in the unit trust fund, which means the distribution buys
A. An income-producing savings for an 86-year-old more units
B. An individual retirement fund for a 52-year-old ii. Take the money out and spend it
C. None of the optional answer is correct iii. Buy more shares of the Unit Trust Management Company
D. A college fund for an 18-year-old
A. i & ii
54. Which of the following is (are) investment alternative(s) to unit trusts? B. i & iii
C. None of the optional answer is correct
A. Property D. i, ii & iii
B. Direct shares investment
C. All of the optional answers are correct
D. Fixed deposits

68
ENGLISH Set 5

58. Dollar cost averaging is:

A. A strategy whereby investors buy more units when prices are high
B. A strategy whereby investors buy less units when prices are low
C. A systematic and regular investment of a fixed amount of money
D. A strategy for customers to invest all their capital at one time
rather than on a regular basis.

59. Which of the following best describes the equity fund?

A. Mainly invest in the equity market


B. Mainly invest in bond and equity market
C. Mainly invest in money markets
D. Mainly invest in property markets

60. The unit trust funds that are available in the market could be designed to
meet the following investors requirement:

A. Long term savings C. Retirement Fund


B. Childrens Education D. All of the above.

69
ENGLISH Set 5

Set 5 ENGLISH Answers 7. Answer A


To maximize potential investment returns, some investors investing in UTS
1. Answer C Performance tables are extremely useful in that they borrow the application money to invest, expecting that the rate of return
summarize the performance of the whole unit trust industry in a single table from investing in UTS will exceed the borrowing costs, thus giving rise to
over standardized periods, and on a consistent and objective measurement additional profit. (Chapter 1, page 1-6)
basis. (Chapter 1, page 1-34)
8. Answer D
2. Answer D By acquiring units in a listed REIT, it is possible to invest small amounts to
Since 1996, a member has, subject to certain conditions, become entitled to gain exposure to the property market. (Chapter 1, page 1-14)
make transfers from his or her Account 1 balance to an approved UTS.
(Chapter 3, page 3-18) 9. Answer B

3. Answer A 10. Answer A


Returns from property comprise net rental income plus or minus any change The return on investment for unit holders in UTS is usually a combination
in the value of the property over the period. The price at which units in of a regular income payment and capital appreciation.
REIT trade on Bursa Malaysia will reflect these returns.(Chapter 1, page 1- Derived from a pool of investments held within that UTS. (Chapter 1,page
15) 1-3)

4. Answer D 11. Answer D


UTS is a form of collective investment that allows investors with similar
investment objectives to pool their savings, which are then invested in a 12. Answer A
portfolio of securities or other assets managed by investment professionals. UTC must ensure that an investor is given a current prospectus and should
(Chapter 1, page 1-2) provide him or her with an in-depth explanation of the prospectus before an
application is made. (Chapter 1, page 1-24)
5. Answer D
An annual reports major contents are key performance data, managers 13. Answer D
report, trustees report, financial statements and auditors report.(Chapter 3, Chapter 1, page 1-3 to 1-4. Chapter 3, page 3-8.
page 3-10)
14. Answer A
6. Answer C Master Prospectus, page 32. Market risk: The purchase of equities
Malayan Unit Trust Limited was the first UTMC to be formed in 1959. represents a risk since the prices of stocks underlying the NAV of the fund
(Chapter 1, page 1-18) fluctuate in response to many factors. Therefore, stock values fluctuate in
response to the activities of individual companies, and general market or
economic conditions. Such movements in the underlying values of the
shares of the investment portfolio will cause NAV or prices of units fall as
well as rise, and income produced by the fund may also fluctuate.

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ENGLISH Set 5

15. Answer D
24. Answer A
16. Answer D UTS is a form of collective investment that allows investors with similar
The prospectus must be updated at least once every 12 months. It is a legal investment objectives to pool their savings, which are then invested in a
document containing legal, accounting and investment terms. The purpose portfolio of securities or other assets managed by investment professionals.
is to provide investors with all the necessary information to make an Ownership of the portfolio is divided into units of entitlement and each
informed decision to invest in that UTS. (Chapter 1, page 1-24) investor is known as a unit holder.(Chapter 1, page 1-2) UTS provide the
benefits of liquidity whereby units can be bought and sold readily through
17. Answer A UTMC, IUTA and UTC. (Chapter 1, page 1-4)

18. Answer D (Chapter 1, page 1-38 & 1-39) 25. Answer C


Equity UTS labeled aggressive growth generally invest in companies with
19. Answer B higher capital growth potential, but with associated higher risk. (Chapter 1,
page 1-13)
20. Answer A
Holding a limited number of share investments does not provide the benefit 26. Answer D
of diversification, therefore, exposed to the risk of losing all his or her One of the disadvantages of UTS is loss of control. Investors in UTS lose
capital. (Chapter 3, page 3-26) the right to direct how their savings are invested. (Chapter 1, page1-5)

21. Answer B 27. Answer C


By splitting units, a high priced unit becomes lower-priced unit and new Investors in UTS do not purchase the securities in the portfolio
investors may be more inclined to purchase units especially in comparison directly.Ownership of the portfolio is divided into units of
with competitor UTS that may have high-priced units. (Chapter 1, page 1- entitlement.(Chapter1, page 1-2)
44)
28. Answer C
22. Answer C Investment in most UTS should not be for the short term, as the cost of
The DCA concept refers to the systematic and regular investment of a fixed investing is reasonably high. When spread over a longer time frame, these
amount of money, irrespective of the price level of the investments acquired costs become less significant. Rapid purchase and sale of units in UTS can,
to below the average price of those investments during the period. (Chapter because of the cost of investing, become significant drain on an investors
3, page 3-30) capital. (Chapter 1, page 1-29)

23. Answer B 29. Answer C


Investors need to preserve the purchasing power of their original The FMUTM provides a common platform for UTMC to discuss issues
investments, and be earning a rate of return from those investments that relating to the unit trust industry.
beats the inflation rate. (Chapter 5, page 5-11) Most individuals need to
plan. An effective personal financial plan will help protect a clients assets
from the effects of inflation. (Chapter 5, page 5-2)

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ENGLISH Set 5

30. Answer A G would have a higher potential return because it is at a higher risk
Annual management fees that average around 1.5% per annum are levied by exposure compared to P.
UTMC to cover the costs of managing UTS. (Chapter 1, page1-30)
39. Answer A
Question 31 & 32 Yes, Mr. Yee will gain more from Fund B because MER charges are yearly
charges however an exit fee is only charged when an investor makes
31. Answer A redemption.
The major portion of equity UTS portfolios are shares of listed companies.
(Chapter 1, page 1-13) 40. Answer D
Page viii
32. Answer B 41. Answer A
When the interest rate increases, the value of money market instruments 42. Answer B
will increase accordingly, vice versa (fund Y). When the stock market is 43. Answer A
increasing, the equity portion will move positively. (fund X). 44. Answer C
45. Answer C
33. Answer A 46. Answer B
47. Answer D
34. Answer C 48. Answer A
The investment of some UTS may also be diversified across asset classes. 49. Answer C
In addition to shares, a UTS may invest in fixed income securities, property 50. Answer C
and cash, These investments will provide an element of stability in a 51. Answer B
declining stock market, and may provide some liquidity when meeting the 52. Answer A
repurchases of unit holders in UTS. (Chapter 3, page 3-28) 53. Answer C
54. Answer C
35. Answer C 55. Answer A
By splitting units, a high priced unit becomes lower-priced unit and new 56. Answer D
investors may be more inclined to purchase units especially in comparison 57. Answer D
with competitor UTS that may have high-priced units. (Chapter 1, page 1- 58. Answer C
44) 59. Answer A
60. Answer D
36. Answer D

37. Answer B
The trustees role is in Chapter 2, page 2-14

38. Answer A

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