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7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units

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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.4 Forward and Historical Pricing, and the UTMC's Holding of Units

Key Takeaways Explain This Topic AI

Under historical pricing, an investor deals at the NAV determined at the close of the previous business day.

Under forward pricing, units are bought and sold at the NAV calculated at the next valuation point after the request is received.

The UTF Guidelines permit forward or historical pricing, but the SC's guidance says funds should adopt forward pricing to reduce arbitrage, with historical pricing possible for certain money market funds.

A fund using historical pricing must add a mid-day valuation point and re-price units if the price differs by more than 5% from the last valuation point.

A UTMC may hold units only to facilitate sales and repurchases and reduce creations and cancellations, within maximum holdings set by the SC.

Last updated: October 2026

Historical Pricing

Under historical pricing , an investor buying or selling today deals at the NAV determined at the close of the previous business day . Investors and Consultants know the price in advance and can tell exactly how many units an application will buy.

The problem: suppose Bursa Malaysia rises strongly today. Investors who apply today still get yesterday's lower NAV ; tomorrow's NAV will reflect the rise, so they gain at the expense of existing unit holders. The same works in reverse when markets fall and investors redeem at yesterday's higher price. This arbitrage dilutes the value of existing holdings.

Forward Pricing

Under forward pricing , units are allotted (or redeemed) at the NAV calculated at the next valuation point after the request is received, usually the close of business on the day of receipt. Everyone deals at fair value, and the UTMC creates or cancels units with the Trustee at the same valuation point.

Study guide example 1: overnight market moves

Event Under forward pricing

Fund A's published NAV on 20 March is RM1.00. Overnight, overseas markets plunge. Unit holder X redeems on 21 March X receives the 21 March NAV of RM0.98 . Paying RM1.00 would give X RM0.02 per unit at others' expense

Overseas markets rally instead. Unit holder Q buys on 21 March Q pays the 21 March NAV of RM1.03 . Buying at RM1.00 would let Q profit at others' expense

Study guide example 2: the valuation point decides

UTS AAA values at 4.00 pm each business day. NAV was RM1.00 on 23 January and RM1.20 on 24 January .

  • Request Price used
  • Mr A applies on 23 January at 12 noon 23 January NAV (RM1.00) , which is only published the following day
  • Mr X applies on 23 January at 5.00 pm After the valuation point, so the 24 January NAV (RM1.20)

Under forward pricing the price depends on the next valuation point , and valuation points differ between UTMCs. FIMM's practice question: a fund values at 4.00 pm; Ali applies on 18 August at 2.00 pm, so he receives the 18 August NAV .

Quick drill (forward pricing, 4.00 pm valuation point, business days Monday to Friday)

  • Request received NAV used
  • Tuesday 10.00 am Tuesday's 4.00 pm NAV
  • Tuesday 3.59 pm Tuesday's 4.00 pm NAV
  • Tuesday 4.15 pm Wednesday's 4.00 pm NAV
  • Friday 6.00 pm Monday's 4.00 pm NAV (next business day)
  • What the Rules Say
  • Rule Source
  • Dealing must be at either a forward price or a historical price UTF Guidelines paragraph 8.39

With historical pricing, an extra mid-day valuation point , re-pricing if the price differs by more than 5% from the last valuation point UTF Guidelines paragraph 8.40 (the study guide words it as "5% or more")

Funds should adopt forward pricing to match international practice and cut arbitrage; historical pricing may be considered for certain money market funds , given their low volatility SC Guidance to the UTF Guidelines

The prospectus must state the pricing policy Prospectus Guidelines (section 4.1)

Note

Historical pricing has not been abolished; it remains permitted. But forward pricing is the expected norm for most funds.

Comparing the Two

  • Feature Historical pricing Forward pricing
  • Price known when applying? Yes No
  • Fairness to existing investors Exposed to arbitrage and dilution Fair: everyone deals at the next NAV
  • Typical use Some money market funds Most funds
  • Extra safeguard Mid-day re-pricing if the move exceeds 5% Not needed
  • Holding of Units by the UTMC

A UTMC may hold units only to facilitate sales and repurchases and to reduce the number of creations and cancellations with the Trustee. Its stock rises and falls with NAV, so it can make a profit or loss on it. The SC sets maximum holdings to limit the UTMC's exposure. Where a UTMC or related company holds units in a fund it manages, it must have policies, procedures and controls to manage conflicts of interest .

Applying It

A Consultant tells a client at 3.30 pm: "Today's price is RM1.25, so your RM10,000 buys exactly 8,000 units." If the fund uses forward pricing with a 4.00 pm valuation point, the client will pay today's 4.00 pm NAV , which is not yet known, so the number of units cannot be promised. The Consultant should explain forward pricing instead of quoting yesterday's price as if it were final.