WorksheetsCUTE Tutorial
Total questions: 26
Worksheet time: 15mins
Which of the following is the most appropriate thing to do if you meet a person who has never invested in unit trusts and does not feel comfortable to invest in unit trusts?
Let the potential investor have a prospectus and go through with her
Comfort her by letting her know that unit trust is an investment with no risk
Show her the marketing brochure and take them back as you need to show the brochure to another investor
Show her the excellent performance record of the unit trust fund and tell her that the performance will repeat in the future
Which of the below are parts of the prospectus?
(You may choose more than 1 answer)
Investment objectives
Authorized investments
Fees & charges
Trust expenses
One of the major benefits of investing in unit trusts is to gain access to the experience of a professional fund manager. Which term best describes a professional fund manager?
Someone who has bought and sold many investment in his lifetime
A friend who always recommends the best stocks to buy
Someone who always manages in excess of RM500 million
Someone who has been professionally trained in the field of fund management
The UTMC will determine (with trustee’s approval), the total amount of income of UTS to be distributed. The amount available for distribution from UTS may include only realised income/gains and after deducting expenses and taxation. Which of the following is realised income/gains?
Dividend & interest income received
Other income received
Realised capital gains from the sale of investments
All the optional answers are correct
Amongst others, the calculation of Net Asset Value (NAV) of a unit trust scheme involves:
(You may choose more than 1 answer)
The value of the equity investments
Costs and charges involved in various transactions of the scheme
The value of money market instruments (if applicable)
Accrued gross distribution and interest income after deduction of relevant fees and expenses such as annual management fees and administrative expenses
Ms. Rafidah had invested a lump sum of money into a UTS and she wishes to minimize her initial service charge exposure. As a UTC, what is the best recommendation to her?
Recommend Ms. Rafidah to invest in growth fund that seeks for higher potential return which would cover her initial service charge.
Advise Ms. Rafidah to invest her money as regular as possible to lower down her cost.
Advise Ms. Rafidah to apply “buy & hold” strategy as seeking for a long term investment goal.
Invest in Islamic fund which comply with Syariah principles
Generally, what are the possible forms of return on investment can an investor expect from investing in unit trusts?
(You may choose more than 1 answer)
Distribution
Capital appreciation
Interest
What is the meaning of liquidity advantage offered by unit trust scheme?
As liquid as cash
Able to purchase or redeem on any business day
Buys more unit trust on rising and less on falling market
None of the above
Unit trust offers an effective way to pursue lifetime financial goals with advantages that would be difficult to achieve by lay persons who invest on their own. The advantages include:
(You may choose more than 1 answer)
On-going professional fund management
Diversification of assets with reduced risks
Can be bought and sold easily
More favourable transaction costs for unit trusts due
to large investment amount
Flexibility to switch between different type of funds
(applicable to certain unit trusts)
Which statement regarding the EPF Members Withdrawal Investment Scheme is correct?
The maximum age for the qualified member is 60
Members can withdraw funds from the EPF once in every two months
Investment can be made with any unit trust scheme
Balance in Account 2 is not eligible for this scheme
Investors who invested in unit trusts with borrowed money:
Will only make profit if returns from their investment are higher than the cost of their borrowing
Will not be affected by changes in the base lending rate set by their end-financiers
Are guaranteed to make profit in longer term
Need to keep on investing until the loan is fully settled
Unitholder F is a first-time investor and has purchased UTS XYZ from UTC B, on Tuesday, 2 May 2006. After returning home, he met some friends who have experiences in UTS investment. Prior to his discussion with his friends, he started to feel that he did not fully understand the purchase and he also felt that UTC B has misled him by focusing more on past performance of UTS XYZ. What is your advice to Unitholder F?
Unitholder F cannot do anything at all as the purchase has been made
Unitholder F should wait for the right time to repurchase all his units
Unitholder F can exercise his “cooling-off” right which is an opportunity to reconsider his purchase
Unitholder F should terminate UTC B’s services immediately
What are the primary objectives of FIMM? (You may choose more than 1 answer)
Improve the regulatory, fiscal and legal environment of unit trust
Improve sound and ethical business practices
Provide information, assistance and other services to its members
Promote public awareness of the benefits and risk of investing in unit trust
Which are the parties involved in the unit trust industry? (You may choose more than 1 answer)
UTMC
Trustee
Investment Manager (Fund Manager)
Unitholder
Under whose name the assets and investments of the unit trust scheme would be held under?
Trustee
UTMC
Investor
Stock broking house
What would you not normally expect to find in the annual report of a unit trust scheme?
Statement of assets and liabilities of the unit trust scheme
Auditor’s report
Fund composition and statement of asset allocation
Unit prices of competitors’ products
Unit holder Z received an Annual Report on the performance of UTS B which he invested in. Listed below are the major contents of the Annual Report which he will come across except:
(You may choose more than 1 answer)
Average Annual Return over one, three and five years, and since launch
UTS B’s investment objectives and policies
Auditor’s Report
Risk Disclosure Statement
Cooling-Off Right
Which of the below describes open end funds?
The price fluctuates within the day
The fund manager has to buy back from the investor
Transactions are through stock broker
They are property trust
NAV of equity trust fund
will fluctuate in respect to changes in the prices of equity index component stocks
will fluctuate in respect to changes in interest rate only
will not change at all to the ups and downs of the stock market
None is correct
An index UTS:
Invest primarily in all of the securities or a representative sample of the securities that are included in a selected market index
Invest primarily in overseas share markets
Invest in real property, usually prominent commercial properties
Invest in a range of companies that closely match companies comprising a particular index
Fixed-income funds are generally said to have lower risks than equity funds. Hence, what can be expected from the returns of these funds?
Usually higher than equity funds
Usually lower than equity funds
Consistently higher than equity funds
None of the optional answers are correct
A trustee is a company that:
(You may choose more than 1 answer)
is registered under the Trust Companies Act 1949
is independent of the unit trust management company (except for in the case of related-party trustee)
is independent of the unit trust scheme
has beneficial ownership of all assets of a unit trust scheme
What is meant by switching of fund?
A switching occurs when a unit holder sells units in one unit trust and purchase units in another unit trust fund operated by a different fund manager.
None of the optional answer is correct.
A switching occurs when a unit holder sells units in one unit trust fund and purchase units in another unit trust fund operated by the same fund manager.
A switch occurs when a unit holder swaps units that he/she currently has with another unit holder.
Choose the correct statements regarding aggressive growth funds.
Generally, these funds invest in common stocks with a high potential for rapid growth and capital appreciation.
These funds seek to provide maximum capital growth with less emphasis on distribution or interest income.
These funds generally incur higher risks in an effort to secure more pronounced growth.
Investors who must conserve their principal or who must maximize current income are most suitable to invest in these funds.
Raw return is:
The best measure of unit trust returns
A form of measure which is superior to the annualized return
A measure that shows the total return achieved by holding the investment over the entire period between buying and selling
The only return measure that accounts for the value of time
The statements below are about Management Expense Ratio (MER) of a particular fund in UTS except
In calculating MER, auditor fee is considered as one of the expenses of the fund
MER shows the fees and expenses that the fund incurred in the year
Formula of MER =Average Fund Size(Fees +Recovered expenses) ×100
The lower the MER, the lower the return that the investor will get from that fund
