3.7 Regulation and Duties of the Scheme Trustee

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

3.7 Regulation and Duties of the Scheme Trustee

Key Takeaways Explain This Topic AI

A Scheme Trustee must be a trust company registered under the Trust Companies Act 1949 or incorporated under the Public Trust Corporation Act 1995 or the Labuan Trusts Act 1996, and must be registered with the SC.

Only one Trustee may be appointed for each scheme, and it must be independent of the Scheme Provider unless the strict related-party trustee conditions are met.

A related-party Trustee must appoint an auditor registered with the Audit Oversight Board to assess its internal controls once every two years.

Scheme Providers must publish a semi-annual and an annual report for each financial year and send them within two months of the end of the period.

The Trustee may refuse to create or cancel units if doing so would breach the deed, securities laws or guidelines, or would not be in investors' best interests.

Last updated: October 2026

Who Can Be a Trustee

Requirement Detail

Legal form A trust company registered under the Trust Companies Act 1949 , or incorporated under the Public Trust Corporation Act 1995 or the Labuan Trusts Act 1996 ; a foreign Trustee must be a public company under the Companies Act 2016 or foreign law

Registration Registered with the SC under the Guidelines on the Registration and Conduct of Capital Market Services Providers (Registration Guidelines); the SC may impose conditions and revoke registration for breaches

Number Only one Trustee per scheme
Independence Must be independent of the Scheme Provider

When registering a Trustee the SC looks at structure (governance, accountability, segregation of duties), competence (controls and processes that protect investors) and resource capabilities (qualified and experienced staff).

Related-party trustees

The SC allows related-party Trustees in some cases, but they must:

appoint an external auditor registered with the Audit Oversight Board to independently assess their internal controls, processes and systems once every two years ;

submit the scope of that assessment to the SC for approval before it starts; and

submit the assessment report to the SC one month before the anniversary date .

General Duties

The Registration Guidelines require a Trustee to:

act honestly and in investors' best interests;
safeguard investors' rights and interests;
take reasonable steps to ensure fair treatment of investors;
not gain an advantage for itself or others, nor cause detriment to investors;
comply with duties in the deed that are consistent with securities laws; and

carry out any other duties the SC specifies.

The Trustee's Oversight in Practice
Custody of assets

All scheme assets are held in the Trustee's name . The Scheme Provider cannot sell or transfer them without the Trustee's express permission.

Assets are kept separate from the Trustee's own assets and from other schemes.

A sub-custodian may be appointed with SC approval , but the Trustee remains responsible for it.

The Trustee ensures the scheme receives its income and entitlements , that net income is properly distributed, and that the fees paid to the Scheme Provider are reasonable and match the deed and prospectus.

Investment policies and transactions

The Trustee must know the scheme's investment policies, check they match the prospectus or disclosure document, and be satisfied they are sound. It then acquires and disposes of investments on the Scheme Provider's instructions ; the provider should submit daily investment reports . Investments must never further the interests of the Scheme Provider or related parties at investors' expense.

Dealing in units

The Trustee creates and cancels units at the Scheme Provider's request under the UTF and PRS Guidelines:

units are created only for cash , paid to the Trustee within 7 business days , at a price set by the deed and Guidelines;

the Trustee checks that valuation and unit pricing follow the deed; and

it may refuse to create or cancel units (or the number requested) if that would breach the deed, securities laws or guidelines, or (for cancellations) would not be in investors' best interests.

Accounts and audit

The Trustee keeps, and ensures the Scheme Provider keeps, proper accounting records.

Scheme accounts are audited every financial year by an approved auditor appointed by the Trustee . If the SC considers the auditor unsuitable or none has been appointed, it can direct the Trustee to replace or appoint one.

The Trustee may remove the auditor and appoint another, and unit holders may, by ordinary resolution , ask the Trustee to replace the auditor.

Reports to Investors

Scheme Providers must publish at least two reports each financial year : a semi-annual and an annual report. Each must be sent out within two months of the end of the period and include the financial statements (with the auditor's report and Shariah adviser's report where applicable). Annual financial statements must be audited by an approved, independent auditor appointed by the Trustee.

The annual report includes the Trustee's Report , stating whether in its opinion:

the Scheme Provider managed the fund within the limits on its investment powers in the deed, the Guidelines and other laws;

valuation and pricing followed the deed and regulatory requirements; and

creation and cancellation of units followed the deed and regulatory requirements.

If not, the Trustee must disclose the shortcomings that could affect investors' decisions and the steps taken to fix them and prevent recurrence.

Reporting to the SC

The Trustee must report to the SC if it believes the Scheme Provider has not acted in investors' interests or has breached the deed, the guidelines or SC requirements. To do this it keeps policies and procedures for actively monitoring the provider, including regular compliance reviews of investment limits and processes.

Exam Pointers

Question cue Answer
Main role of the Trustee Safeguard the scheme's assets and investors' interests (FIMM practice question)
Who appoints the fund's auditor The Trustee
How unit holders can seek a new auditor Ordinary resolution asking the Trustee
Deadline for semi-annual and annual reports Within two months after the period end
Who holds title to the assets The Trustee (or a custodian to its order)