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TOPIC 9(1) - UNIT TRUST INDUSTRY - Coggle Diagram
TOPIC 9(1) - UNIT TRUST INDUSTRY
Introduction
Alternative channel
for investor to invest their money
Suitable for the
investo
r: want to generate wealth but
no extensive knowledge
in investment &
not capable to monitor
their investment on daily basis.
What they will do?
: Assign a fund manager to invest on a portfolio basis
Return on investment
dividend
capital gain
Each unit
entitled to earn an
equal amount of income
Nature of activities
The investor buy the units through the management company at the
prevailing selling price
(inclusive service charge)
Unit holders earn money via
Growth
(the value of fund increase)
Distribution income
(Income received by the fund may distributed to the unit holder but is not guarantee)
Types of unit trust
Close-End unit trust funds
Fixed number
of shared offered
The offer through I
nitial Public Offering (IPO)
Listed unit trust have
their unit listed
& traded in the
stock exchange
Open-End unit trust funds
No fixed number
of unit offered
Not listed
on the stock exchange
Categories
Property unit fund
Investment in real estate property
Income:
Rental income
Capital appreciation of property
Islamic fund
(Shariah principles)
Fixed income securities
Excluding, "non-halal" shares & interest bearing money market instruments
Shares
Return:
Profit-sharing
Fixed income fund/Bond fund
Investment in fixed income securities
Bond
subject to interest rate risk (mostly, credit/default risk)
short-term money-market instruments
Offer
fixed regular income
in the form of interest
Equity fund
invest in local:
Listed companies
Non-listed companies
invest in
foreign trading centers
Income:
Dividend
Capital gain
Types of equity unit trusts
Balanced fund
Try achieve 3 objectives
: income, moderate capital appreciation, capital preservation
invested across of
assets categories
(shares, fixed income securities & cash)
Money market fund
Short-term money market instruments
(treasury bills, negotiable certificate of deposits & bankers acceptance, placement in deposits - will mature <90 days)
Aggressive Growth fund
similar as capital growth fund, BUT the investment
promise high return, high risks
Index fund
An investment in a group of shares that tracks a selected stock market index
Provide
reasonable returns & capital growth
from medium to long-term
Capital Growth fund
maximize capital growt
h over long-term period through
higher unit price
Suitable investors:
want high capital gain & risk level but low dividend
Blue chip fund
share of
large & well-established
listed companies
Provide
long-term capital growth
Growth & income fund
High quality bond & low risk stock
Suitable investors
: need regular income at lower risk
Accounting issues
Recognition of costs
Accounting for investment
Recognition of revenues
Dividend income on equity
upon declared basis
Realized gain / loss on equity
when the investment is sold
measured at:
Net disposal proceeds - the average carrying amount of the investment
Undistributable reserve
(unrealized gain / loss that recognize previously)
Interest income on bond
Accrual basis
(after adjusted for amortization of bond discount / premium)
Unrealized gain/loss on equity
upon
changes in fair value o
f the investment (statement of comprehensive income)
Valuation of unit trust fund