I believe that your theory really over simplifies things. Unit trust investment isn't really a one to one trade, it's all based on net asset value of each fund and the exposure of each fund to the equity market(s) that the fund is invested in. If for example the KLCI drops by 10 points, it does not neccessarily mean that your NAV per unit drops by the same margins. Another thing to bare in mind is at which point that a unit trust fund acquired the equity. They may have bought it when the valuations was very low so even a hefty fall of the stock may not fall far enough to cause a loss for the fund.

The scenario that you described also happens if the fund manager invested in each and every single counter on the stock market; which goes against the whole idea of unit trusts.

Unit trusts are supposed to invest in a broad range of securities. However, if the securities are all in a similar type of asset class or market sector then obviously there is potential for a systematic risk that all the shares could be affected by adverse market changes. That may still not give you the losses that you had speculated because if it did happen, there's something wrong with the fund managers of the unit trust company.

So to avoid these potential risks or losses, UTMC's are supposed diversify their funds into different not perfectly correlated asset classes, providing balance and diversification that say a normal retail investor may not have capability to do so. If you invested in Maybank for example at RM10 and the equity valuation drops BY 50%, than yes your equity value is now RM5. Unit trusts in concept/idea is supposed to avoid this by diversifying investments on behalf of the investor.

Not sure if I have clarified things or made it worse for you

no guarantees on the dividend payout as far as i know...