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MASTER TRUST FUNDS
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What is a Unit Trust?
Unit
Trust is a financial vehicle that allows general public
to pool their money in a ‘Trust’ fund managed
by professional Fund Managers who then invest the funds
in a diversity of equities, bonds and other authorised
investments. Top>>
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What does buying a ‘unit’ means?
Investing in unit trusts means buying the ‘units’
of the trust fund. When you own even just one unit of
a trust fund, you become one of the collective owners
of the investments made by the Fund Managers.
Top>>
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Is it safe to invest in a unit trust?
Yes. ‘The Securities Commission Act 1993’
regulates all matters relating to unit trust funds, whilst
the ‘Guidelines on Unit Trust Funds’ governs
the operations and the administration of unit trust funds.
The Guidelines also provides a regulatory environment to
protect the interests of the investing public and facilitate
the orderly development of the unit trust industry. So,
when you invest in a unit trust, you can be sure that your
money is safe from theft. The Securities Commission reads
and approved each unit trust’s prospectus and annual
report, periodically audits unit trusts’ financial
records, and generally makes sure everything with the fund
is in order.
To
safeguard your investment, a trustee is appointed for
the fund. The trustee shall take custody and control of
the assets of the fund and ensure that the fund manager
adheres to the requirements as set out in the trust deed.
Top>>
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What
is a Deed?
A Deed is a set of rules on how the trust
is operated, thus, it shows the rights and obligations
of the Manager, the rights and duties of the Trustee and
the rights of the unit holders. Top>>
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Why should I invest in unit trusts?
Finding the right stocks to invest
takes patience, resources and expertise. The number of listed
companies run into hundreds so it is practically impossible
for most investors to find the time adequately to make research.
By
investing through a unit trust, you can enjoy the benefits
of having experts working on your behalf. Transaction
costs are also reduced through bulk dealing. Finally,
unit trusts are liquid because units can be bought or
sold on any working day without any lock-in period. In
short, the benefits of investing in unit trusts are Diversification,
Professional Management, Liquidity and Ease of Transaction.
Top>>
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What are the pros and cons in each type of investment/savings
vehicles?
Top>>
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If you are just trading stocks, why can’t I do it
myself?
You can do it all by yourself if you have enough
knowledge to analyse the market, sufficient time to monitor
your investment and to do the administrative work and
also a huge sum of money to diversify your investment
into various sectors. Of course, to be more secure it
requires expert knowledge and indeed, frequent company
visits. But if you invest with us, the above mentioned
tasks will be our Fund Manager’s responsibility.
Top>>
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Stock markets are not performing, why should I buy now?
We
believe superior long term investment performance can
be achieved by exploiting inefficiencies in capital markets
through vigorous and intensive research within a disciplined
investment process. Even if stock markets are not performing,
the depressed market presents an opportunity to buy these
companies at relatively bargain price. You should understand
that the fund manager is the one who needs to worry about
tracking economic, political stability and uncertainty.
Besides, when considering investing in a unit trust, anytime
is a good time to invest, as a regular savings plan is
essential to reduce the effect of market fluctuations
on the average investment cost (dollar cost averaging
principle). Top>>
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What is Dollar Cost Averaging?
It is a systematic and regular investment of
a fixed amount of money irrespective of the price level
no matter the market is rising, declining or fluctuating.
This approach works on the averaging cost principle of
investments; investor will get more units when prices
are down and fewer units when prices are up. This method
however does not assure profit nor to protect you against
loss. Please refer to the illustrated example:
As seen from the illustration above, you can
actually capture higher returns if you keep making the
contribution at a regular interval no matter at what the
price level is. It is essential in unit trust to adopt
a discipline saving plan over a long-term period, so that
you do not have to worry much on the market volatility.
Top>>
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What if I prefer to manage my own money?
It is fine to manage some of your money but it
is also a good idea to put some money into unit trusts
for diversification purposes. Your ideal portfolio should
consist of equities, fixed income securities, insurance
and unit trusts in appropriate weightings to suit your
risk appetite. Top>>
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What if I prefer to put my money into fixed deposit, which
is at no risk?
Historically, investment in unit trusts has outperformed
fixed deposits over the long term. The interest earned
from fixed deposits usually is lower that it can erode
capital and depreciate the purchasing power of money in
longer term as the interest may not be enough to cover
the tax and inflation. Though unit trust investment carries
with it a higher risk, the potential for reward should
be more than to compensate for it. Of course you should
not forget about putting aside some money in fixed deposits
for emergencies. Top>>
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Do I need a lot of money to invest?
Investing in unit trust funds is generally affordable
for most people. For example, an initial investment for
our Phillip Master First Ethical Fund starts from RM 500
and its subsequent investment is only from RM 100. You
may refer to our Master Prospectus to find out more on
the initial and subsequent investment for other funds
available. Top>>
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What rate of return can I expect?
The rate of returns depends on the fund’s
performance. If the fund makes little or no profit, it may
not pay out any distribution. Your unit trust investment
return refers to both income and capital growth where:
- Income
return arises from dividends earned on shares and capital
gains realized on the sale of shares. The distributions
(if any) will be declared at the end of each financial
year and will be distributed to investors based on the
total units held at the end of the fund’s financial
year. The distributions will be paid to investors by
cheque or reinvested on the investors' behalf as per the distribution
policy in the prospectus.
- Capital growth arises from an increase in the value of
the shares in the portfolio. Investors who sold the units
at a higher price than the amount purchased will realise
a profit and similarly investors will experience a loss
if the portion of the investment sold is less than the
purchase price.
Please
note that past performance, past earnings or distribution record
of the Fund are neither a guarantee nor an indication
of the Fund’s future performance, earnings or
distributions. Top>>
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What should I consider before investing in a unit trust?
You should always consider four factors i.e.
your investment objectives, risk profile, investment time
horizon and your affordability at any one time. Top>>
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Why some of the funds do not declare distribution?
Different
funds place different emphasis on the investment returns.
Growth funds for instance, place more emphasis on capital
gain while income funds emphasis on distribution. Fund Managers
of growth fund would closely observe the objective of
the fund and invest monies into selective stocks, which
are geared on a long-term growth. Top>>
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Why there is often little or no price appreciation on
unit trust prices compared to its initial offer price
even after a substantial period?
Unit trust management companies tend to make
cash distributions or issue unit split which cause the per
unit price to readjust downward. This is usually done
to keep the price of each unit from looking too expensive
and thus putting off new investors. Top>>
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What are unit splits and how do they benefit investors?
Unit split represents the process of creating additional
units to existing unit holders by lowering unit prices proportionately.
Like
bonus issue of normal stocks, it offers no additional
value to investors. However, it does, illogically, make
most unitholders feel warm, fuzzy and decidedly happy.
Top>>
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Why do unit trust prices drop after a cash distribution?
Income earned by a fund during the financial
year is accrued in its unit’s price until the end
of the distribution period. Upon declaration of an income
distribution, any interest income and realised capital
profits are paid to unitholders. Consequently, the Fund's
NAV, and therefore the offer and bid prices, will tend
to fall by approximately the same amount as the income
distribution. Top>>
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Is income received by unit trust funds taxable?
Dividend income received by the fund is subject
to tax, but interest income and capital gains, in general,
are tax-exempted. Top>>
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Will the fees and charges affect funds’ performance?
Fees
and charges vary from fund to fund. Management companies
are allowed to charge three types of fees i.e. Initial Service
Charge, Repurchase Fee and Management Fee. In addition,
certain other expenses such as trustee fees and brokerage
expenses are borne by the fund.
Usually the two most important fees to
be considered are the Initial Service Charge and the Annual
Management Fee. For both, all else is being equal, the
lower the better. But again, remember to compare apples
with apples. Typically bond funds have lower costs than
equity funds yet they also usually deliver, over the long
term, less spectacular results.
You
should also consider the Management Expense Ratio (MER)
of a fund. MER is the ratio of the total annual management
expenses of the fund to the average value of the Fund.
It is the best indicators on the cost of investing in
a fund and allows investors to compare the cost effectiveness
of the other funds within its categories. The lower the
MER, the more cost effect the fund is. Top>>
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How is the performance of a unit trust fund evaluated?
You should evaluate how a fund performs by looking
at Fund Performance Tables provides by independent rating
companies such as Lipper Fund Table or Standard & Poor’s
Fund Services Fund Table. Performance of the funds are evaluated
based on the prices movement plus the changes brought about
by cash distributions and unit splits within a stipulated
time frame with the assumption that all distributions are
reinvested.
When
doing so, you must make sure that you are comparing apples
with apples and not apples with durians. Make sure your
comparisons are within the same category or sector.
Since
unit trusts are medium-to-long-term investment instruments,
pay more attention to 3-or 5-year performance and compare
it to an appropriate benchmark (example: for equity funds
- KLCI; for bond funds - the average Malaysian FD rate
for the period under consideration) and its peer group
performance. You should also look at the consistency performance
of a fund. Top>>
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Should I invest in unit trust funds that are ranked at
the top of the Performance Tables?
Buying a fund that ranked top over a given period
shall not be used as a sole criterion to invest in any
fund. It is not necessarily the case that this fund will
continue to be the best in future. For international standard,
fund with 3 to 5 years track records can only be used
to gauge the consistency of the performance of the fund.
Top>>
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What is the main difference between unit trusts and unit-linked
funds?
‘Unit Trusts’ are pure investment
vehicles run by unit trust management companies whereby
‘Unit-Linked Funds’ are packaged products
that combine unit trust investment with insurance protection.
Selected insurance companies offer these hybrid products.
Top>>
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There are many unit trust companies in Malaysia, which
one should I choose to manage my money?
Presently,
there are more than 40 unit trust management companies
established in Malaysia. Apart from the fund performance
and the fund manager’s credibility, you should also
look into the reputation and management style of a unit
trust management company before making your investment
choice. Top>>
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Why have unit trusts grown so dramatically in terms of
numbers and scope in the global market?
Investors are becoming more sophisticated and
they recognise their need to diversify their asset allocation
strategy to achieve their specific financial goals. Unit
trust is one of the effective tools to achieve those needs.
In US and UK, there is dramatic growth of unit trust capitalization
due to these countries do not have an Employee Provident
Fund such in Malaysia, thus their employees have to invest
in unit trusts to provide for their retirement and to
satisfy other financial needs. Top>>
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What is Phillip
MASTER Trust Funds?
Phillip MASTER Trust Funds consist of three sub-funds namely:
Phillip
MASTER Money Market Fund
- The
fund invests in money market derivatives i.e. Government
or Government backed securities, bills of exchange, negotiable
certificate of deposits, promissory notes, call deposits
and other short-term Government or bank backed securities
and money market instruments.
- It aims for return higher than Ringgit Malaysia
(RM) savings
deposits while maintaining principal value and high degree
of liquidity.
Phillip MASTER Equity Growth Fund
- The fund invests up to 95% in equity and 5% in liquid assets.
- It is
an excellent vehicle for aggressive investors with
long term investment outlook.
Phillip
MASTER First Ethical Fund
- Phillip Master First Ethical Fund steers towards capital
growth over the medium to long term period through investment
in undervalued stocks based on Ethical Guidelines.
- Derived from Socially Responsible Investment (SRI) approach,
the guidelines refrain from investments in companies involved
in gaming, alcohol, tobacco and armaments. Top>>
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Why invest in Phillip MASTER Trust Funds?
Phillip MASTER Money Market Fund
- Phillip
MASTER Money Market Fund is your first step
towards personal cash management. Generally offers higher
returns than cash deposits.
- There is no initial
sales charge.
- You get a low risk fund with instant liquidity and flexibility.
You are able to withdraw money on the same day
if you redeem before 9.45am or the next day if after
9.45am.
- Low management fee –
0.5% per annum
- Tax-free
returns – interest income from government and private
debt securities are exempted from tax.
Phillip
MASTER Equity Growth Fund
- The fund is truly affordable, the initial investment
is as low as RM500.
- You will
get a fund that gives you up to 95% equity exposure.
- With
active investment policy, the fund strives to maximise
your potential capital growth without having you to
monitor the market yourself.
Phillip
MASTER First Ethical Fund
- The fund strives to deliver competitive return for your
investment over medium to long term through investments
in undervalued stocks based on Socially Responsible Investment
(SRI) approach, the guideline is to generate greater awareness
on the impact of abuses involving tobacco, alcohol, gaming
and armaments on our society. You now have the alternative
to combine your financial objectives with commitment to
social concerns.
- The Investment Committee will conduct a 6 monthly review
of stocks in the portfolio to ensure that the holdings
are consistent with the principles and criteria set (which
you can refer to Phillip Master Trust Funds prospectus
for further details).
- The fund is very affordable, the initial investment is
as low as RM500. Top>>
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Is your investment profiles best suited/compatible with
the funds’ objectives?
Phillip MASTER Money Market Fund
If you:
- seek regular income from your investment
- require capital preservation
- require a safer and more conservative fund
- have a low risk tolerance
- have a
short term investment horizon
- want a money market fund that complements your personal
asset allocation strategy.
Phillip MASTER Equity Growth Fund
If you:
- seek medium to long term growth
- have high tolerance for risk
- want a growth fund that complements your personal asset
allocation strategy.
Phillip
MASTER First Ethical Fund
If you:
- seek maximum medium to long term growth
- have a high tolerance for risk
- want a growth fund that complements your personal asset
allocation strategy, and which at the same time, does
not go against your religious convictions and/or social
concerns. Top>>
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What
is Social Responsibility Investment (SRI)?
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Socially Responsible Investment (SRI) combines
investors’ financial objectives with their commitment
to social concerns such as social justice, economic development,
peace or healthy environment. The objectives of SRI can
be achieved through the following:
- Ethical screening – the inclusion
or exclusion of stocks and shares in unit trusts on
ethical, social or environment grounds. Ethical screening
is usually divided into ‘negative screening’ to exclude
unacceptable shares and ‘positive screening’ to select
companies with superior social or environmental
performance.
- Shareholder influence – seeking
to improve a company’s ethical, social and environmental
behaviour as shareholder through dialogues, pressure or
voting at AGMs.
- Cause-based investing - supporting a particular cause
or activity by financing its investment.
Top>>
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What is the rationale for exclusion (Phillip MASTER First
Ethical Fund)?
Gaming
- Gambling addiction is a cost to the society. An US-based
study concluded that as many as 10-17 people may be the
victims of each compulsive gambler. Spouse, children, parents
and relatives of compulsive gamblers are parties injured
directly. In the work place, gambling problems lower productivity
and cause inefficiency, absenteeism and theft. Two out of
three compulsive gamblers will commit illegal activities
in order to pay gambling related debts and to continue gambling.
One of every compulsive gambler has attempted suicide. Similar
study concluded that the estimated 50,000 adult compulsive
gamblers cost the state USD 1.5 billion through lost work
productivity, monies stolen and embezzled, bad cheques and
unpaid taxes. The figure would increase significantly if
the cost for social services, health care, bankruptcies,
legal and correctional fees were considered.
Tobacco
- Cigarettes are the only freely available consumer goods
that kill. Smoking has been proven to have link to cancer
and other critical diseases. The World Health Organisation
(WHO) estimated that worldwide, smoking kills 11,000 people
everyday. The World Bank conducted a cost analysis,
- weighing the economic benefits of tobacco against the
costs of premature death, medical care and sick leave
worldwide. The study estimated the net loss to be $200
billion per year. The World Bank concluded, “Tobacco
use is globally an economic disaster as well as an enormous
economic problem in individual countries”.
Alcohol
- Regular heavy alcohol consumption is known to be associated
with a wide range of diseases and is a significant cause
of premature death. The Royal College of Physicians report
summarises the impact of alcoholism to include brain damage,
cerebrovascular disease, hallucinations, liver cancer,
obesity, high blood pressure and fetal alcohol syndrome.
Alcoholism is also known to be associated with a wide
range of social problems, from crime to absenteeism and
inefficiency at work.
Military
Production
- While national defence is necessary to maintain sovereignty
and recognised in Article 51 of the United Nations Charter,
it is widely acknowledge that arms proliferation breeds
new cycle of violence and fresh demand for weapons. Defence
expenditures limit social and economic options in many
societies. The money would be better spent on health,
education and human development. Over the past decades,
wars and internal conflicts have claimed 5 million lives,
injured 6 million children and driven 50 million people
from their homes. Top>>
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Will the guidelines/exclusions affect Phillip MASTER First
Ethical Fund’s performance?
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Performance of equivalent funds in other countries
suggests that it is possible to achieve competitive returns
from ethically screened shares compared to their conventional
counterparts. Socially Responsible Index (DSI 400) outperforms
the S&P 500 both during 2002 and on a total returns
basis for 10 years for the period ending 31st December
2002 (Source: Fund Performance Update, Social Investment
Forum, January 29, 2003).
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In Malaysia, certain Syariah funds (a close similar
investment) have been found to outperform conventional
funds. The returns for Syariah based equity funds is 6.24%,
whereby for conventional equity funds, concentrated on
growth and income stated 5.97% returns over the period
of 5 years (23rd March 1998 – 21st March 2003) –
source provided by The Edge-Lipper Fund Performance Table
(31st March – 6th April 2003). On the other hand,
Phillip MASTER First Ethical Fund, which has less stringent guidelines
than a typical Syariah fund, therefore is in a better
position to provide superior performance. Top>>
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Why should I invest with Phillip Mutual?
- Phillip Mutual provides a variety of Funds that will suit
your investment need at different life and economic cycles.
The Phillip Master Funds are tailored to fit in the investment
puzzle of financial planning.
- In Phillip Mutual, our designated Fund Management Team
with a combined experience of more than 20 years in fund
management industry, are looking after your investment
and strive to deliver competitive returns.
- You will also receive the assurance and backing of a
strong and globally successful name in the investment
arena - The PhillipCapital Group, whose main aims is to deliver
maximum returns to you. Top>>
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Who
is the Trustee of the Phillip MASTER Trust Funds?
BHLB
Trustee Berhad. Top>>
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How
do I redeem/repurchase my units?
You may redeem or repurchase all or some
of your units held on any business day by completing the transaction form.
For Phillip MASTER Equity
Growth Fund or Phillip MASTER First Ethical Fund, units
will be redeemed at the Manager Buying Price per unit of
the Fund calculated at the end of the Business Day on
which the request is received by the Manager. You can fax or send the form to us
before 4pm on the day you wish to redeem. We will
process your redemption within 10 business days. You will
receive your payment via mail or bank account (Maybank
account only).
For Phillip MASTER Money Market Fund
payment will be made on the same day if the request is
received before 9.45am and the next day if after
9.45am.
Top>>
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How
do I switch between Funds?
Switching provides you the flexibility
to move "between" funds as often as your
investment situation demands.
The Units of the Fund(s) being switched
(Original Fund) will be valued at the Manager Buying Price
of the Units whilst the units of the fund(s) with which
the Units are switched (Target Fund) will be acquired at
the NAV of those units as calculated in accordance with
the prospectuses and deeds governing them subject to a
switching fee.
If investors switch into a fund with a
lower sales charge, there will be no switching fee
imposed. However, if investors switch into a fund with a
higher sales charge, units switched shall be subject to a
fee equal to the difference between the sales charge
originally imposed and the sales charge of the new fund.
The switching mechanism and the fees
are summarised as follows:-
PMMMF = Phillip MASTER Money Market Fund
PMEGF = Phillip MASTER Equity Growth Fund
PMFEF = Phillip MASTER First Ethical Fund
| Original Fund |
Target Fund |
Pricing |
Switching |
| Units Sell at |
Units Buy at |
| PMMMF |
PMMMF
PMFEF |
Manager’s Buying Price |
NAV + difference between the sales charge originally imposed and the sales
charge of the target fund |
Waived. |
PMEGF
PMFEF |
PMMMF |
Manager’s Buying Price |
NAV |
Waived. Unlimited subsequent
switches at NAV. |
PMEGF
PMFEF |
PMFEF
PMEGF |
Manager’s Buying Price |
NAV |
All switches are subject to the
following conditions:
- Minimum switching value must be
RM1,000;
- Minimum number of units left in an account after
partial switching is 1000. Top>>
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Can
I transfer my units holding to another person?
Yes.
You may transfer fully of partially of your units in the
Fund to another person by completing a Transfer Form. A
transfer will be effected subject to the minimum balance
of 1,000 units in your account. A transfer fee of RM20.00
will be charged for any request to transfer units. Top>>
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