Understanding Unit Trust

I saw the Q4 NAV/Units is reduced from Q3 what does this mean ?
This could mean a few things:-
i) There has been a lot of Repurchase done in Q4
ii) There has been a lot of Switching done in Q4 to Bonds due to the profit taking

Units & NAV will differ on a daily basis due to the above.

2. What is exactly KL composite Index?
KLCI or Kuala Lumpur Composite Index is a performance benchmark for the Malaysian Equity Market.

Index Components
Objectives of The KLCI
a. To provide a performance benchmark for the Malaysian equity market;
b. To reflect performance of listed companies that are representative of the major sectors as in
the Malaysian economy;
c. To reflect the growth and development in Malaysian corporate and economic sector.
KLCI Index Rules
a. Companies whose market capitalisation fall within the first two quartiles of the Main Board
companies' market capitalisation will be considered for inclusion;
b. Companies whose annual volume fall within the first three quartiles of the Main Board
companies' volume will be considered for inclusion;
c. Companies which are more than 50% owned by any KLCI constituent and which in fact are
defined as subsidiaries by Malaysian Companies Act are excluded;
d. The market capitalisation weighting of each sector within the KLCI shall not exceed 125% of
the Main Board's sectoral weight to avoid over-representation of a particular sector;
e. Affected companies pursuant to PN4, PN10, PN16 or PN17 are not eligible for inclusion. Index
constituents so designated will be excluded;
f. Index constituents with two consecutive years of losses will be excluded even though they
meet other index rules;
g. Index constituents suspended for more than 3 calendar months will be excluded and are only
eligible for inclusion after 6 calendar months from the date of suspension uplifted;
h. Newly-listed companies will only be considered for inclusion after a minimum period of three
(3) months from the date of listing. Newly listed companies in new industries may be
considered for inclusion after a minimum period of one (1) month from the date of listing;
i. In the event where the market capitalisation of companies to be included or excluded exceed
5% of the market capitalisation of the KLCI, the proposed index constituent changes will be
carried out on a staggered basis. If a single constituent's market capitalisation exceeds the 5%
rule, only that constituent will be included or excluded at any one effective date.

Kuala Lumpur Composite Index (KLCI) [as at 26 February 2007]

Base year
1977
Calculation mode
Weighted by market capitalisation
Index
Current aggregate Market Capitalisation x 100 Base Aggregate Market Capitalisation

To see the list of companies, click:-
http://www.klse.com.my/website/bm/market_information/index_components.html


3. What is projected analysis for xyz Fund? How much is it going to make in next 5 years?
In Unit Trust we do not have any projected analysis and we will not be able to predict what is the result of the future. However we use the past performance as the basis. Basically we can make benchmark using some other funds.

4. Is it compulsory a Divident is paid out to every investor.. i know that it is Incidental and it depends on the fund manager to declare dividen every end of financial year ?
It depends on the fund objective. Most of the Dividend Funds will declare dividend at the end of the financial year. When it’s said Incidental, it’s up to the Fund manager to declare. So in Unit Trust, it’s up to the Fund Objective and if incidental up to the fund manager to declare the dividend.

5. After 5 years and investor is making money, is it possible for the investor to withdraw partial of the profits they are making.
Investor can take out any amount of money at any point of time whether they’re making profits or a loss.

6. What is Distribution yields ?
Distribution Yield is actually the percentage of distributions declared. The formula is as follows:-

Distribution Sen / Average Selling Price#

#Average Selling Price = sum of all the selling prices in the financial year / no of trading days.

Distribution Yield is not a good tool for measurement due to the above formula. The prices fluctuate on a daily basis, thus it does not give the accurate picture when we use this to compare with FD or EPF Dividend Yields.

7. Some investment guarantees the capital that is invested with them, does this same approach undertaken by other Unit Trust company as well ? Is the investor's capital is guaranteed after certain years of investment..
Basically, none of our funds guarantee the Capital. Lately some of the local and International Fund Managers have come up with this sort of funds. However we have to see the fine print in order to understand the concept of capital guaranteed. These Capital Guaranteed funds will require you to invest for a minimum of 5 years, where you are not allowed to withdraw any amount during this period. There will be an exit fees charged if withdrawn prematurely (before 5 years). The exit fees, normally will be reducing in nature as the years invested are increases, e.g. 1st year – 5%, 2nd Year – 4%, 3rd Year – 3% etc.

It is all depends on marketings technic to sell their product.