7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices

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

7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices

Key Takeaways Explain This Topic AI

The Trustee creates units only for cash, which must be paid to it within seven business days, and creates and cancels units on the UTMC's requisition.

FIMM's IMS 1 sets the dealing cut-off time for same-day pricing no later than 4.00 pm each business day; applications received later use the next day's price.

Since 1 July 2007, UTS have operated a single pricing regime in which investors buy and sell units at the NAV per unit.

Creation price equals NAV plus the transaction cost factor, and cancellation price equals NAV minus the transaction cost factor.

Where incorrect valuation or pricing is at or above 0.5% of the NAV per unit, rectification must extend to reimbursing money between the UTMC, the fund and affected unit holders.

Last updated: October 2026

Dealing in Units

The UTMC must issue and repurchase units on a unit holder's formal request.

The Trustee creates and cancels units when the UTMC raises a requisition, under the UTF Guidelines.

Units are created only for cash , which must be paid to the Trustee within 7 business days , at a price set by the deed and Guidelines.

The Trustee ensures valuation and unit pricing follow the deed and Guidelines.

"Dealing in unit trusts"

Anyone involved in marketing and distributing units is dealing in unit trusts and must be a registered UTS Consultant . The definition: whether as principal or agent, making or offering to make an agreement with any person, or inducing or attempting to induce any person to enter into one:

to acquire, dispose of, subscribe for or underwrite any interest in unit trust funds; or

whose purpose is to secure a profit from the yield of, or price movements in, any interest in unit trust funds.

UTMCs, IUTAs and CUTAs must ensure everyone who deals in unit trusts is registered with and authorised by FIMM .

The dealing cut-off time

FIMM's IMS 1 – Dealing Cut-Off Time for Unit Purchases and Redemptions standardises the cut-off: applications must be received no later than 4.00 pm on a business day to use that day's end-of-day price. Later applications are processed at the next day's price.

Valuation

Concept Meaning
Market value Usually from an external pricing service using actual trades on a market such as Bursa Malaysia

Assessed value A fair value set by a skilled specialist (a real estate valuer, a fixed income dealer or, less often, the auditor)

Valuation process Fair, accurate, consistently applied, verifiable and objective ; the Trustee is notified immediately after each valuation

Valuation point The time the NAV is determined from market prices; at least once every business day , except funds with limited repurchase arrangements or illiquid assets (such as real estate), which must disclose their valuation points and value at least monthly

How Units Are Priced

Listed or closed UTS – units trade between investors (on Bursa, or from holder to holder for a closed unlisted fund); ownership changes when the register is updated.

Open-ended unlisted UTS – the UTMC sells units to investors and buys them back, acting as principal . It holds a stock of units , replenishing it by creating units through the Trustee or reducing it by cancelling units. So there are two sets of prices:

the NAV per unit , at which the UTMC deals with investors; and

creation and cancellation prices , at which the UTMC deals with the Trustee.

Single pricing

Since 1 July 2007 the industry uses single pricing : all buying and selling is at one price, the NAV per unit . Under the old dual pricing, separate buying and repurchase prices built in the initial and exit charges. A miscalculated NAV would let new investors dilute existing ones, so accurate NAV is vital.

Some UTS have a fixed price of RM1.00 , at which all transactions with investors and the Trustee take place.

Calculating NAV

NAV = investments at market value + liquidity . Liquidity changes with:

creations less cancellations (cash for creations is paid to the Trustee, and cash for cancellations paid out, within 7 days of the UTMC's instruction);

sales less purchases of investments;
investment income less fees, charges and taxes (including Malaysian tax and foreign withholding tax); and

other assets less liabilities (income receivable, accrued expenses, unsettled trades, tax provisions).

Valuations follow the UTF Guidelines' Schedule C bases and must be objective and independently verifiable.

Transaction Cost Factor (Dilution Adjustment)

Buying and selling investments costs money (for example broker's commission). Without an allowance, investors who are not dealing would bear the cost of those who are. A transaction cost factor (TCF) may therefore be added to NAV on creation and deducted on cancellation : Creation price = NAV + TCF Cancellation price = NAV − TCF \text{Creation price} = \text{NAV} + \text{TCF} \qquad \text{Cancellation price} = \text{NAV} - \text{TCF} Creation price = NAV + TCF Cancellation price = NAV − TCF

If costs are immaterial, no adjustment is made; in Malaysia a TCF is usually applied only to the creation price . The UTMC must tell the Trustee of any dilution adjustment and must not use it to make a profit or avoid a loss . During a launch period (usually no more than 21 days ) the creation price equals NAV.

Selling and Repurchase Prices

These are the prices investors see. Under single pricing both equal the NAV per unit .

Study guide example: ABC Growth Trust, NAV RM45,626,788, 65,500,000 units in circulation, no TCF. NAV per unit = RM 45,626,788 65,500,000 = RM 0.6966 \text{NAV per unit} = \frac{\text{RM}45{,}626{,}788}{65{,}500{,}000} = \text{RM}0.6966 NAV per unit = 65 , 500 , 000 RM 45 , 626 , 788 = RM 0.6966

RM0.6966 is both the selling and the repurchase price that day. The UTMC must publish the price at least once every dealing day .

Incorrect Pricing

The UTMC must take immediate remedial action . Where the error is at or above 0.5% of the NAV per unit , rectification must extend to reimbursing money : by the UTMC to the fund, from the fund to the UTMC, or by the UTMC to unit holders and former unit holders. The UTMC must also notify the Trustee and, unless the Trustee considers the error minimal, the SC.