7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

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

7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

Key Takeaways Explain This Topic AI

Apart from an initial offer period of no more than 21 days, all PRS dealing is at the NAV per unit at the next valuation point after the request, which is forward pricing.

Where PPA authorisation is needed for a repurchase, the transaction uses the NAV at the next valuation point after the provider receives the PPA's authorisation.

A PRS fund's NAV must be published daily on the PRS Provider's website and the PPA's website.

Average total return equals the change in NAV per unit plus dividends, divided by the opening NAV per unit; Fund A in the study guide returns 7% and Fund B 6%.

A PRS Provider may switch to electronic delivery of reports and statements if members are told at account opening, or if it first sends members a posted notice allowing them to opt out.

Last updated: October 2026

Creating and Cancelling Units

The Scheme Trustee creates and cancels units on the PRS Provider's advice when members buy or redeem.

During an initial offer period of no more than 21 days , the unit price is fixed .

After that, all dealings are at the NAV per unit at the next valuation point (usually the close of the business day) after the request: forward pricing .

Where the PPA's prior authorisation is needed (for example a withdrawal after death), the price is the NAV at the next valuation point after the provider receives the PPA's authorisation .

FIMM's IMS 1 sets the 4.00 pm dealing cut-off time for same-day pricing; later applications use the next day's price.

Forward Pricing Examples

Case Outcome

Fund A's NAV was RM1.00 on 20 March; markets fall overnight; Member XYZ redeems on 21 March Paid at the 21 March NAV (RM0.98) , not RM1.00

Markets rally overnight; Member QRS buys on 21 March Pays the 21 March NAV (RM1.03)

Provider A values at 4.00 pm; NAV RM1.00 on 23 January and RM1.20 on 24 January; Member ABC applies at 12 noon on 23 January 23 January NAV (RM1.00) , published the next day

Member XYZ applies at 5.00 pm on 23 January 24 January NAV (RM1.20)

Valuation points differ between providers, so the next valuation point decides the price.

Valuation and Incorrect Pricing

Rule Detail

Valuation Fair and accurate valuation of all assets and liabilities at each valuation point; consistent, verifiable and objective; the Trustee is notified immediately

Publication NAV published daily on the provider's and the PPA's websites

Frequency At least once every business day ; illiquid funds (such as real estate) may disclose less frequent valuation points, but at least monthly

Incorrect pricing The provider must rectify. Under the current PRS Guidelines (R7-2024, paragraph 10.35), where the error is at or above 0.5% of NAV per unit , rectification extends to reimbursing money . (The FCE study guide still describes the threshold as undefined "significant" errors, which the current guidelines have replaced.)

Holding of Units by the Provider

A PRS Provider may hold units only to facilitate sales and repurchases and reduce creations and cancellations. It can gain or lose on them, so the SC sets maximum holdings . If the provider or a related company holds units, it needs policies and controls for conflicts of interest.

Unit Splits and Distributions

Unit split: lowers NAV per unit but not the value of holdings. Example: Member ABC holds 1 unit at RM2.10 ; after a 2-for-1 split she holds 2 units at RM1.05 . Statements must explain what a split is, why it was done and its effect, and confirm that the investment's value is the same before and after and future gains are unaffected.

Distributions: paid in units , they reduce NAV per unit because more units share the same pool. Example: Member QQQ holds 800 units at RM2.00 ; a RM0.40 dividend paid in units leaves him with 1,000 units at RM1.60 , still worth RM1,600. If no distribution is declared, the NAV per unit grows instead.

Measuring Performance

Performance figures appear in the disclosure document and fund reports .

Average total return Average total return = ( NAV end − NAV begin ) + Dividends NAV begin \text{Average total return} = \frac{(\text{NAV}_{\text{end}} - \text{NAV}_{\text{begin}}) + \text{Dividends}}{\text{NAV}_{\text{begin}}} Average total return = NAV begin ( NAV end − NAV begin ) + Dividends

Fund NAV 1 Jan NAV 31 Dec Dividends Average total return
Fund A RM1.00 RM1.02 RM0.05 (0.02 + 0.05) ÷ 1.00 = 7%
Fund B RM1.00 RM1.04 RM0.02 (0.04 + 0.02) ÷ 1.00 = 6%
Compounded annual return (CAR)

CAR standardises returns over different periods. RM1,000 growing to RM1,300 in 5 years is 5.39% a year; RM1,000 growing to RM1,700 in 10 years is 5.45% a year.

Drawbacks: it assumes the same return every year, ignores risk (volatility), and needs context. A fund with 9.50% CAR over 15 years (many market cycles) is not necessarily inferior to one with 10% over two years.

Exam Pointers

PRS dealing is at the next valuation point (forward pricing); the initial offer period is at most 21 days .

After a death, the price is the NAV at the next valuation point after the PPA's authorisation reaches the provider.

NAV is published daily on the provider's and the PPA's websites.

Unit splits and distributions paid in units lower NAV per unit without changing the member's total value.

Average total return includes dividends; CAR annualises returns over different periods but ignores risk.

Electronic Communication

A PRS Provider may send reports, statements and notices electronically if:

members were told of the method when they opened their account ; or

before making electronic delivery the default, it posts a notice to all members that they will be enrolled automatically unless they opt out .