Islamic Unit Trust Case Study

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8.0 WHAT IS THE PRICING MECHANISM.
The flow of pricing mechanism in Islamic Unit Trust The Fund : Apex Dana Al- Faiz- I

Unit holder (Mr. Aiman) go to the Maybank (Trustee) and give a capital in order to buy a unit of Islamic Unit Trust. For example Mr. Aiman have money amount RM10 000, he give Rm10 000 to the Maybank as a trustee. Maybank will pool the money that also comes from other unit holders and give to the Apex Investment Services Berhad and professional manager will manage and invest the fund in Shariah Compliance Investment. This fund is call Apex Dana Al-Faiz-I. From the investment of this fund, the Mr. Aiman will get the dividend.

The pricing mechanism of the unit trust fund is based on performance of the assets
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EPF saving which is using EPF Member’s Investment Scheme. The EPF will process a request to transfer an amount from member’s account 1 to approved unit trust fund and it is depend on term and conditions. For example the account 1 balance is not less than the required basic savings, the member is less than 55 years old, an account in the Islamic Unit Trust Scheme has been opened into which the transfer can be processed, and the amount eligible for transfer is not less than RM 1,000. (FIMM)

The pricing mechanism also depends on the types of unit trust funds. Differences types of unit trust funds, there are difference of price of units. There are five types of unit trust fund which are equity fund, fixed income fund, money market funds, and balanced fund and index funds.
i. Equity fund is assets invested in shares of listed and unlisted companies. ii. Fixed income fund is asset invested in government and corporate debt instruments iii. Money market funds is asset invested in short term money market instruments like treasury bills and commercial papers. iv. Balanced fund is asset invested in hybrid of equity and fixed income fund for example invest in both share and sukuk
v. Index fund is asset invested in shares in order to replicate the performance of a given index.

9.0 IS THERE ANY SECONDARY
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It is more specific on Shariah requirements such as Shariah principles, guidelines and practice and also Shariah governance.
i. Appointment of Shariah Committee / Advisory board ii. Appoint of 2 Muslim Investment Committee Member iii. Appoint of designated compliance officer for Islamic Unit trust iv. Enhance disclosure in offering documents
v. Report by SC/ AB / Advisor in annual reports to unitholders.

14.0 WHO ARE THE REGULATING AGENCIES
1. Securities Commission.
The SC regulated the establishment and operation of unit trust in Malaysia under the Capital Market and Services Act 2007 (CMSA), Securities Commission Act 1993 and the SC Guidelines . This requires, among other things, that unit trust fund manager and the trustee create a deed and register it with the SC. A copy of the deed may be inspected at the unit trust fund manager’s office. (Farhanah, Maisarah and Azmidah, 2012)

In addition, the SC has placed severe requirements in an appointment of the unit trust manager, the trustee, the unit trust manager’s director, chief executive officer, investment committee and committee members / Shariah advisors. The appointment of all these parties must be approved by the SC. (Farhanah, Maisarah and Azmidah,

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