Page 49 - Profile's Unit Trusts & Collective Investments - September 2025

Basic concepts Chapter 2

In addition to reporting requirements under CISCA, Financial Services Board (FSB) Notice 92
of 2014 deals with advertising, marketing and information disclosure requirements for collective
investment schemes. The Financial Sector Conduct Authority (FSCA) is currently reworking this
notice as a conduct standard under the Financial Sector Regulation Act.
Currently, the Notice defines and standardises the performance statistics which must be
published by fund managers on their quarterly minimum disclosure documents (MDDs).
This includes:
R The fund’s investment objectives
R The risk/reward profile
R The fund’s benchmark
R Fees and charges
R The fund’s size and sector
R Distributions
R Fund performance
Transparency
Unit trusts have always been more “transparent” than investment vehicles like endowment
policies, and the level of disclosure required from managers increased with the promulgation
of CISCA.
The managers and their agents must disclose:
R All the charges that may be levied by the manager, the method of calculation, and the amount
(as a percent or value) of the charges.
R When the charges will be levied.
R Exactly how the manager will repurchase participatory interests.
R Particulars of the historical yield, calculated as prescribed by the deed, for the last 12 months,
and a statement of any facts that may influence future yields.
R Details of any profits that were distributed during the previous financial year, expressed
as a percentage of the aggregate market value of all assets held on behalf of investors in
that portfolio.
More recently, the FSCA issued a Conduct Standard under the Financial Sector Regulation Act
that sets out principles and rules on how CIS managers and fund administrators should value assets
and price units or participatory interests in portfolios registered under CISCA.
The Conduct Standard requires CIS managers to develop policies and procedures governing the
way in which they value portfolio assets. These policies and procedures must be consistent with
generally accepted accounting standards or accounting practices as determined by the FSCA.
The standard holds the CIS manager responsible for ensuring the calculation of the NAV is
accurate, fair, consistent, transparent and free of conflicts. Any materical errors must be reported to
the FSCA within five days of these being detected, and within 20 business days the FSCA must be
informed about the correction of the error.
Affordability
Investors can choose to invest in unit trust funds in two ways, monthly by debit order or with a
lump sum. A dozen funds allow minimum lump sum contributions of R500, but most funds stipulate
minimums of R1 000 or more. In the case of monthly debit orders, a handful of managers allow
minimum contributions of R100 per month, but the majority (about two-thirds of retail funds) are in
the R200 to R500 per month range.
Minimum lump sums for retail hedge funds start at R50 000. For qualified investor hedge funds,
minimum investments amounts are R1m.

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