2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare

FIMM Combined Examination FCE

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1 Introduction: The FIMM Combined Examination (FCE)

0.1 FCE Exam Facts, Registration Rules and How to Use This Guide

2 Chapter 1: Understanding Collective Investment Schemes in Malaysia

1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators

3 Chapter 2: Introduction to UTS and PRS

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council

4 Chapter 3: Regulatory Framework

3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions

4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds

6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service

4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS

7 Chapter 5: Code of Ethics

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct

8 Chapter 6: Personal Financial Planning

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle

9 Chapter 7A: Features and Operations of UTS

7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing

10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework

7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

11 Chapter 7B (Part 2): PRS Operations

7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare

Key Takeaways Explain This Topic AI

Investors in a UTS or PRS are beneficiaries under a trust, not shareholders of the companies the fund invests in, and the Trustee is the legal owner of the scheme's assets.

Each unit represents a proportionate share of the pool, so the unit price moves up or down with the value of the portfolio.

In the study guide's example, RM50,000 paid with a 5.5% charge gives an investment amount of RM47,393.36, which buys 30,456.50 units at RM1.5561.

UTS and PRS both provide diversification, have a Trustee, pool investors' savings and encourage long-term investing.

PRS runs under a separate set of rules from UTS, including the SC-approved Private Pension Administrator (PPA) that centralises PRS administration.

Last updated: October 2026

Why UTS Exist

The study guide says a UTS "bridges the gap" between low-risk investments such as bank deposits and investments that offer better returns at an acceptable risk. It gives investors with small capital (and high-net-worth investors too) access to a wide range of investments at reasonable cost, and helps them build wealth and beat inflation over the medium to long term .

The trade-off is certainty. In the short run, returns are far less certain than fixed-deposit returns; over the medium to long term (for example more than five years ) many UTS can deliver much better returns for an acceptable level of risk.

The Mechanics of Investing in a Scheme

Pooling – investors with similar objectives pool their savings in a portfolio managed by professionals.

Units – ownership is divided into units . Each unit is a proportionate share of the pool, so the unit price rises and falls with the portfolio.

Beneficiaries, not shareholders – investors are not shareholders of the companies the fund holds. They are beneficiaries under a trust set up by the Scheme Provider (UTMC or PRS Provider).

Trustee as legal owner – under the deed, the Trustee is the legal owner of all scheme assets and owes a fiduciary duty to act in the unit holders' best interests.

No control over management – investors have a beneficial interest but cannot direct day-to-day operations or portfolio decisions.

Segregation – assets stay under the Trustee's control whatever form they take (cash, shares, cash again). If the Scheme Provider becomes insolvent, the assets are safe because they are segregated from the provider's own assets.

Evidence of ownership – investors subscribe after reading the prospectus or disclosure document and completing an application form, and receive a confirmation statement . Some early investors still hold unit certificates.

Working the Study Guide's Calculations

The study guide's confirmation-statement example uses three formulas.

1. Investment amount when the charge is included in the amount paid Investment Amount = Amount Received 1 + Charges = RM 50,000 1.055 = RM 47,393.36 \text{Investment Amount} = \frac{\text{Amount Received}}{1 + \text{Charges}} = \frac{\text{RM}50{,}000}{1.055} = \text{RM}47{,}393.36 Investment Amount = 1 + Charges Amount Received = 1.055 RM 50 , 000 = RM 47 , 393.36

The investor handed over RM50,000; the 5.5% charge is RM2,606.64, and RM47,393.36 is invested.

2. Units purchased Units = Investment Amount Unit Price = RM 47,393.36 RM 1.5561 = 30,456.50 units \text{Units} = \frac{\text{Investment Amount}}{\text{Unit Price}} = \frac{\text{RM}47{,}393.36}{\text{RM}1.5561} = 30{,}456.50 \text{ units} Units = Unit Price Investment Amount = RM 1.5561 RM 47 , 393.36 = 30 , 456.50 units

3. Redemption proceeds Proceeds = Units Redeemed × Unit Price = 18,124.70 × RM 1.6552 = RM 30,000 \text{Proceeds} = \text{Units Redeemed} \times \text{Unit Price} = 18{,}124.70 \times \text{RM}1.6552 = \text{RM}30{,}000 Proceeds = Units Redeemed × Unit Price = 18 , 124.70 × RM 1.6552 = RM 30 , 000

Tip

Read the question carefully. If the charge is on top of the investment (investor pays investment plus charge), divide the total by 1 + charge 1 + \text{charge} 1 + charge . If a question states the net amount invested, divide that straight by the unit price.

Where the Return Comes From

Returns are a mix of:

income distributions declared by the Scheme Provider; and

capital appreciation (or depreciation) reflected in the unit price.

Each unit is entitled to an equal share of both. Schemes range from income funds and capital-growth funds to equity, real estate, fixed income and Shariah-compliant funds.

Investors in schemes are typically people with modest sums who have neither the time nor the inclination to manage a portfolio of shares directly.

UTS vs PRS: Similarities

Both UTS and PRS:

Shared feature Why it matters
Provide diversification of assets Spreads risk across many holdings
Have a Trustee looking after investors' interests Independent safeguard over assets and the manager

Pool savings invested according to each fund's objective and guidelines Professional management at reasonable cost

Encourage long-term saving and investment decisions Both are built for medium- to long-term goals

FIMM's practice question asks you to pick all four statements as shared characteristics.

UTS vs PRS: Differences

The mechanics of investing in PRS are generally similar to UTS and the underlying products (funds) are the same, but PRS is governed by a completely different set of rules . One example is the Private Pension Administrator (PPA) , approved by the SC to provide efficient administration, industry advocacy and development for PRS.

Point of difference UTS PRS
Purpose General investment for any goal Retirement savings (third pillar)
Central administrator None PPA keeps a lifetime PRS account for each member

Access to money Repurchase at any time Sub-account A locked until retirement age (55) except death, permanent departure or disablement; sub-account B withdrawals limited and usually taxed

Loan financing Allowed (with safeguards) Not allowed
Default option None; investor must choose a fund Age-based core funds if no fund is chosen
Tax relief for individuals None Up to RM3,000 a year (Chapter 7B)
Distributions Cash or reinvestment Paid in units, withdrawable only under PRS rules

Chapters 7A and 7B cover these operating features in detail.