unit trusts more about Investing with Sanlam Collective Investments Investments Sanlam Collective Investments

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1 Investments Sanlam Collective Investments Issue 1 more about unit trusts Congratulations on choosing to invest with us and taking a step towards achieving your financial freedom! Investing with Sanlam Collective Investments We would like to make it as easy as possible for you to invest with us, so we designed this document to tell you more about how a standard unit trust works, how to transact and our business policies. Please read through the brochure carefully to help you avoid delays with your investment and to make sure investing with us is as easy as possible. Please refer to the end of the document for our contact details, and feel free to call us if you have any questions. This brochure is published by Sanlam Collective Investments. Information correct as at May This document is updated twice a year. Please contact us for the latest version, should you need an updated copy. Sanlam is a Licensed Financial Services Provider

2 When you invest in a unit trust (also called a collective investment scheme), your money is pooled with that of many other investors. This pool of money is used to invest in a portfolio of assets, which includes shares, bonds, listed property, etc. The type of assets your unit trust can invest in, is outlined in the mandate of the fund and will depend on what your fund aims to do. We outsource the management of our portfolios to approved financial services providers who have the necessary experience to ensure each fund is managed in accordance with its mandate and the Collective Investment Schemes Control Act (CISCA), which governs the way unit trusts are managed and administered in South Africa. The value of the assets (e.g. shares) in the portfolio changes regularly and is calculated daily. This is called the net asset value (NAV) of the portfolio. The portfolio of assets is divided into units of equal value. Each unit represents part-ownership of the overall portfolio. INVESTORS APPROACHING THE MANAGEMENT COMPANY (E.G. SCI) Buy units in Fund administered by CIS manager/ management company (e.g. SCI) Invest in underlying Financial Instruments ASSET MANAGER ASSET MANAGER ASSET MANAGER SCI - Sanlam Collective Investments SIM - Sanlam Investment Managers CIS - Collective Investment Scheme SCI Management company appoints asset manager (e.g. SIM) Buy units in Fund administered by CIS manager/ management company (e.g.sci) Return increase Fund Value The value of your units goes up and down as the value of the assets in the portfolio changes. The exception is a money market fund, where the unit price remains fixed at R1, and the income increases or decreases. The fixed price may (in highly unlikely circumstances) decrease. We calculate the value of units daily, after which the unit price or NAV per unit is published. This happens at 15:00 for most funds, and at 17:00 for index tracker funds and fund of funds. Because we use a forward pricing system, we only release the price after we have valued the portfolio. This means that you will not know the unit price you will be transacting at until after the transaction has been processed. 2

3 Working out what your investment is worth is easy and this is what makes unit trusts a transparent investment. You simply multiply the unit price (expressed as cents per unit) by the number of units you own to get the Rand amount. Prices are published daily on our website and in most major newspapers. You can also phone the Client Contact Centre or use our online secure services portal at to find out what your investment is worth. Unit trusts are easy to understand and invest in. There isn t a fixed investment term you can sell your units at any time. However, it is important that you give your money, invested in equity funds, enough time to grow (at least three to five years). important It is important that you invest in a fund that matches your specific investment needs and goals. We offer a wide range of funds that cater for different goals and invest in different kinds of assets. Visit for more information. Always remember that there are risks attached to investing in any fund. When a fund is too aggressive, the value of the investment may fluctuate too much in the short term, although it is likely to give higher returns over a longer period. On the other hand, when a fund is too conservative, you are likely to have a more gentle short-term investment experience, but over a longer term the fund is unlikely to grow enough to outpace inflation and achieve the desired investment goal. As unit trusts are generally medium to long-term investments, your financial adviser is the best person to advise you on a suitable fund that meets your specific investment needs. please note We have a right to close a portfolio to new investors in order to manage it more efficiently, in accordance with its mandate. 3

4 How to invest with us You can invest a once-off amount (lump sum), regular monthly amounts, or if you are already an investor, you can make additional investments when it suits you. An investment minimum applies per fund and is available on the minimum disclosure document (also known as a fund fact sheet). These documents are available on our website. We may use our discretion to change these minimums from time to time and decline a transaction that is below the minimum value. We will process your transaction once we have all the correct documents and when the money reflects in the correct bank account. As an accountable institution we need proof, in terms of FICA (Financial Intelligence Centre Act 38 of 2001), of an investor s identity and physical address. If applicable, we also need proof for those acting on their behalf or as authorised signatories. For most investors, this simply means a copy of your ID and a utility bill (not older than 3 months). There is a detailed list of documents we will accept on the application form, as well as more information about what is needed for institutions, trusts and companies. Our aim is to keep your investment safe and we ll therefore only complete a transaction once we ve received all the required documents. Online application form New investors can complete the online application form when they visit Correct forms To ensure that your transaction is not delayed, please ensure that you use the correct form when you want to invest or make changes to your investment. The various forms can be obtained from: Once completed you can scan, or fax these back to us. Transact online Existing investors can also register to transact online via our Secure Services portal: Transaction cut-off times We must receive your completed instruction (including supporting documents) before the transaction cut-off time or your request will only be processed on the next business day. The South African business day (Mondays to Fridays, excluding public holidays) transaction cut-off times for our funds are: 11:00 for Sanlam Alternative Income Funds 13:00 for money market funds and, 15:00 for all other funds. All instructions received after the cut-off time will be processed on the next business day. 4

5 How to invest with us You can invest money via debit order (recurring or once-off); You can deposit funds directly into our bank account at your nearest bank, or via an electronic funds transfer (EFT). 01 Via debit order There are debit order runs on each business day for both once-off and recurring debit orders, except on the 31st of each month. If you select the 31st, we will automatically change the debit order draw date to the 1st day of each month. If the debit order withdrawal date falls on a weekend or public holiday, the deduction will take place on the next business day. We need a signed, written instruction from the account holder or authorised signatory, and proof of bank details. Any changes to bank details must be provided by completing an Investor Details Update form. We need at least 2 3 business days notice to change an existing debit order or start a new debit order. We can automatically increase your monthly debit order each year on the debit order anniversary date. Select any increase percentage between 0% and 99%. Deductions cannot be made from a credit card, a bond account or a bank money market account. South African Reserve Bank (SARB) regulations prohibit a once-off debit order in excess of R Alternatively, larger amounts can be paid via Electronic Fund Transfers (EFT). 02 Via direct deposit Please ensure all deposits are referenced correctly and include a copy of your deposit slip or proof of payment with your documentation. We do not accept cash deposits. Money must be deposited via bank transfers or cheque. Amounts larger than R can be paid via EFT. Only deposits in South African currency (Rand/ZAR) will be accepted for investments into our bank accounts. New investors must use the following bank details for deposits: Bank: Absa Bank Branch code: Account: Reference: Investor s ID / passport number OR entity s name Existing investors must use their unique deposit reference number per fund for any future deposits. Existing investors can use one of the following bank accounts for deposits: Bank: Absa Bank Branch code: Account: Reference: 15-digit deposit reference number OR Bank: First National Bank Branch code: Account: Reference: 15-digit deposit reference number OR Bank: Standard Bank Branch code: Account: Reference: 15-digit deposit reference number 5

6 Each new investor will receive an investor code which must be quoted on all correspondence/enquiries to us. In addition, each existing investor has a unique deposit reference number per fund that must be quoted as a reference number when depositing funds. This number is printed on your statements or alternatively, you can request the number from the Client Contact Centre at Keeping your investments secure We will only release information to and act on instructions from the investor, or someone with Power of Attorney. Those who are acting on behalf of an investor must submit documentation to support this. If you are a Sanlam financial adviser acting on behalf of a client, all requests must be accompanied by FAIS (Financial Advisory and Intermediary Services Act, 2002) documents. No transaction will be processed without the FAIS advice record. It is extremely important that we have your latest contact and bank details on record. Please let us know as soon as any of your details change. We will only pay money into your bank account once we have confirmed that it belongs to you (i.e. once we have verified it). We need a copy of a cancelled cheque or a copy of a bank statement (with a bank stamp, not older than three months) to do so. Those acting on behalf of investors also need to supply proof that they are the signatories on the investment accounts. Delays, incorrect instructions and interest The instructions that we receive must be correct and signed by the authorised individual(s). We cannot carry out an instruction unless all the documentation has been completed correctly and the supporting documents have been submitted. Note the following If an instruction is issued incorrectly, is unclear, incomplete, or if the supporting documents are not submitted or do not meet the prescribed requirements, the transaction will be delayed or suspended. Any loss will be for the investors account. We cannot be held liable for any losses if we do not receive an instruction before the relevant cut-off times, with all the required documentation. Any interest earned on: money deposited for investment in a fund after the specified cut-off time, incorrect deposits or, deposits for applications with outstanding requirements, can not be paid to the client as we are unable to transfer the money into the fund(s) account. 6

7 Switching between funds Investors may switch between funds as their investment needs change. Switching involves selling units in one fund and (with the money raised from that sale) buying units in another fund. You can switch your units at any time. However, each fund has a different investment aim and risk profile, so switching between funds could impact on your ability to reach your original investment goal. For this reason, it is a good idea to consult with your broker/financial adviser and to review your original motivation for investing before you switch. You can then decide if your current investment is still suitable before you submit a switch instruction. There are risks attached to investing in any fund. When the fund is too aggressive, the value of the investment may fluctuate too wildly for your investment purposes in the short term, although a more aggressive fund is likely to give you higher returns over a longer term. When a fund is too conservative, you are likely to have a more placid short-term investment experience (i.e. less fluctuations in value), but over a longer term, the fund is unlikely to outpace inflation and grow sufficiently to achieve your desired investment goal. Keep in mind that a switch triggers Capital Gains Tax (CGT) and you may be liable for taxes. CGT certificates are issued by us at the end of the tax year. Note the following It is advisable to first compare the cost structures between funds before you submit the switch instruction. You may need to pay the difference in costs, especially if a switch is made from a fund with a lower cost structure to one with a higher cost structure. Switches will only be processed on cleared units i.e. if the funds used for investment(s) have been cleared by the bankers. There is a clearance period on switches of 15 calendar days for lump sum investments and once off debit orders and 28 calendar days for recurring debit orders. If an investment is ceded as collateral, standard processing times will not apply. We will only process the switch transaction once we have received all the required documentation from the investor and cessionary. If you have switched the total investment value of a fund, we will credit unpaid distributions to the new fund if you instructed that your income must be reinvested. Switch To switch, please complete the form available at and scan and it to us at: service@sanlaminvestments.com or fax it to Alternatively, you can transact online via our secure services portal: 7

8 Selling your units To withdraw money from your investment, you need to sell your units. We will then pay you the NAV price per unit for the fund (on the day that all the requirements are met) and pay the money into your bank account. You can decide to sell some or all of your units depending on how much money you need. If you want to sell part of your investment and the remaining balance falls below the investment minimum, we will pay out the total value in the fund instead. This is a standard practice where there is no monthly debit order instruction in place. The amount of money you receive from selling your units depends on the price at the time the transaction is processed. You may get back less money than you originally invested, especially if you paid initial fees, if you switched between funds and if your money hasn t had sufficient time to grow. For this reason, unit trusts are considered a medium to long-term investment. Keep in mind that selling units will also trigger Capital Gains Tax (CGT) and you may be liable for taxes. We issue CGT certificates at the end of the tax year. There isn t a restriction on the sale of your units, although waiting periods apply to recent transactions to ensure the funds have cleared through the banking system. These are 15 days for lump sum deposits via EFT and cheque, and 28 days for debit order transactions. To sell your units, complete the Sell instruction form available at scan and it or fax it to us as per the details on the form. Alternatively, you can transact online via our secure services portal: Note the following The money will be paid to your bank account via EFT. When all the requirements are met and your bank account details verified, payments will reflect in your bank account as soon as 2 business days. Funds of funds and morning-priced funds are paid within 3 business days. Payments are only made to the bank account of the registered investor. No third-party payments are allowed. No payments can be made to credit card, money market or bond accounts. We can arrange regular monthly withdrawals between the 1st and 28th of each month. The monthly withdrawal amount required and date of withdrawal must be provided in writing. Remember that the date you provide is the date that the sell instruction is processed. The proceeds will only be available in your bank account 3 to 4 working days after the selected withdrawal date. A debit order will not be cancelled unless we receive a clear instruction (in writing) to do so, even if you sell all your units. If you sell all your units in a fund, any distributions that have been declared but not yet paid, will be deposited into your account separately. We keep relevant documents for a period of 5 years or more as required by the law after the sale of the investment. 8

9 Transfers Units may be transferred from one investor to another. Keep in mind that transferring units may also trigger Capital Gains Tax (CGT) and you could be liable to pay taxes. As mentioned previously, CGT certificates are issued at the end of the tax year. To transfer your units, simply complete the Transfer form that is available at and scan and or fax it to us, as per the details on the form. Note the following Fund minimums apply to transfer requests. Transfers into the same fund is free. The standard switching fees apply if the recipient of the transfer decides to switch into a different fund. In this instance, the recipient of the transfer needs to complete a Switch form. Any distributions that have been declared, but not yet paid, will also be transferred to the recipient of the transfer, unless we receive an instruction not to do so. Unit trusts as security and on death You can pledge your investment as security to a bank. The pledge holder would need to cancel the pledge in writing before you will be able to transact on the investment. It is not possible to nominate a beneficiary on a unit trust investment. Investors need to make their wishes known in their last will and testament. At the investors death, the Executor can transfer the investments to the investors beneficiaries or sell the units. In this case, the CGT certificate is issued as at the date of death. 9

10 How your investment is taxed The income and capital gains from your unit trust investments are taxable and you need to report it on your income tax return. We send investors tax certificates annually at the end of May. If a capital gain or loss is incurred, this is reflected on the IT3(c) tax certificate and the investor may be liable for Capital Gains Tax (CGT). Interest income and dividends are reflected on the IT3(b) tax certificate. Tax on dividends is withheld, while interest income for RSA taxpayers is paid excluding tax. We will withhold Dividends Tax at 15% in line with tax legislation. If you qualify for a reduction in the Dividends Tax rate or an exemption, we will adjust your withholding tax rate once we receive the Declaration of Undertaking form. Please contact us to ensure you complete the correct version of this form. Certain non-sa investors may qualify for an exemption from or a reduced rate for withholding tax on interest or may qualify for a reduced rate in dividends tax. In order to qualify for this, please complete the Withholding Tax on Interest Declaration Form (WTI) and/or the Dividends Tax Form (DTD)(RR), available at www. sanlamunittrusts.co.za Remember to consult your tax practitioner on how to structure your investments optimally. Tax-free unit trusts We offer tax-free unit trusts for individual investors. Make the most of your tax-free allowance with a Sanlam Investments Tax-Free Unit Trust. Enjoy all the flexibility of a unit trust (no lock-in period and quick access to your money) without paying tax on income, capital gains or dividends. Visit to find out more. 10

11 How we deduct fees Fees differ per fund and are disclosed on each of the minimum disclosure documents (also known as fund fact sheets), available on The initial advice fee consists of a manager s fee as well as an advice fee payable to the intermediary (if applicable). Initial advice fees and VAT are deducted from the investment amount before units are allocated. Where a financial adviser provides advice, we will pay the initial adviser fee portion over to the adviser as negotiated with the client. The total fees reflect on your statement. Sanlam also charges an annual management fee. This annual service fee is calculated and deducted from the income of the portfolio on a daily basis. There are also other allowable charges that are levied against the portfolio, e.g. brokerage, auditors fees, performance fees, service fees, applicable taxes, custodian fees, bank charges, trustees fees and trailer fees. These are reported for the preceding quarter (including the annual service fee) as the portfolio s Total Expense Ratio on the minimum disclosure document (also known as a fund fact sheet). In addition, the adviser may negotiate an annual adviser fee for providing on-going advice where the fund does not pay a trailer fee. This advisor fee is paid by selling units from your investment, and reflects as a sales transaction on your statement. This is not part of the normal annual management fee charged by the fund, and it can be cancelled at any time by sending us an Investor Details Update form. Where a trailer fee (or on-going advice fee) is paid from the annual service fee, this is deducted from the income of the portfolio before the unit price is published. What happens if you change adviser? You can appoint a preferred Intermediary (financial adviser or broker) for all your Sanlam unit trust funds by sending us an Investor Details Update form. When we receive and process your instruction to change your intermediary details, all fee and commission payments to previous advisers will stop and your new, preferred intermediary will receive these payments in future. Income earned from investments The nett income earned by the assets in the portfolio is paid as interest and/or dividend income per unit. This income can either be paid into your bank account via EFT or reinvested into your investment account, so that your investment can grow. Please discuss the options with your adviser or broker, before you decide which one is best for you. The fund accrues (builds up) all the nett income earned in the fund, until the declaration date, in the unit price. On the declaration date, we calculate the income earned per unit over the period. When the income is declared, the unit price drops by the amount of the income declaration. This income distribution is then either reinvested or paid out as per your instruction. Exceptions are the Sanlam Money Market Fund and the Sanlam Alternative Income Fund. These funds declare income daily. The income gets paid to investors monthly. There is a delay between when the income is declared and when it is paid. Each fund s income distribution date, frequency and payment date is different and is available on the relevant fund fact sheet. 11

12 Note the following If you do not indicate your income distribution preference on the application form, income will automatically be reinvested. You can change your income instruction by sending us an Investor Details Update form. Your instruction may only apply from the next income declaration. If your banking details are incorrect or have changed, and an electronic transfer of income is not successful, the income will be reinvested and future income will also be reinvested, until new bank details are received and verified. All minimum disclosure documents (also known as fund fact sheets) are available on our website and are updated monthly to reflect i.e. the composition of the portfolio, as well as the performance. Outdated contact details If a posted item is returned undelivered, we will not post any further mail to you until we receive your updated address. If an ed item is returned, we ll reset your communication preference to post until we receive an updated address. Keep track of your investments You can find out at any time what your investment is worth by logging on to our secure services portal. In addition, we will send you information on a regular basis either via post or , whichever you prefer. These include: Investment confirmations via SMS. Annual & quarterly statements, including tax certificates at the end of May. Transaction statements are also available online via our secure services portal: or you can request one from our Client Contact Centre on or via service@sanlaminvestments.com 12

13 : important information More about unit trusts Collective investment schemes (unit trusts) are generally medium to long-term investments. Please note that past performance is not necessarily an accurate indication of future performance, and that the value of investments / units / unit trusts may go down as well as up. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income accrual and less any permissible deductions from the portfolio. Regulation, industry bodies and complaints procedures As a collective investment scheme, Sanlam Collective Investments is regulated by the Financial Services Board (FSB). We are impacted by various legislation and also abide by industry guidelines and standards. CISCA: Managers of collective investment schemes need to comply with the Collective Investment Schemes Control Act (No 45 of 2002), as amended, and transact in line with the Trust Deed of each fund. We reserve the right to cancel any transaction that conflicts with CISCA. FAIS: The Financial Advisory and Intermediary Services Act (No 37 of 2002) regulates how financial advice is given. It requires that advisers are suitably qualified and licensed to provide advice and provides codes of conduct they should adhere to. FICA: One of the requirements of the Financial Intelligence Centre Act (No 38 of 2001) is that we identify and verify the identity and residential address of an investor before processing transactions. Find out more about our supporting document requirements for FICA on our application form at Tax: SA tax legislation requires that we record your SARS tax reference number, your country of residence, confirm if you are exempt from Dividends Tax and if you are liable for Capital Gains Tax (CGT). FATCA: The Foreign Account Tax Compliance Act is a United States federal law that requires all United States taxpayers to report on their investments held outside of the United States. ASISA: Sanlam also abides by the guidelines and codes of the Association for Savings and Investment SA (ASISA). POPI: The Protection of Personal Information Act aims to ensure that your personal information remains secure. We have implemented a Privacy Policy which sets out practices and procedures that are based on best practice and governance principles to ensure the security and privacy of the personal information of our investors, intermediaries, business partners and employees. TCF: Treating Customers Fairly is a policy which is designed to ensure that when we deal with a client, the business best practice and governance principles of fairness, equality, equity and transparency are consistently applied to all business processes, to ensure the fair treatment of all clients and investors. Complaints: We have documented a complaint handling process with clearly set out turnaround times and escalation procedures. This document is available on our website at: or by contacting our Client Contact Centre. 13

14 Get in touch with us. We d love to hear from you. Our business hours are from 07:45 to 16:45 Monday to Friday, excluding public holidays. T F E service@sanlaminvestments.com W Secure services: Sanlam Collective Investments (RF) (Pty) Ltd, Reg no. 1967/002865/07 Physical address: 2 Strand Road, Bellville 7530, South Africa. Postal address: PO Box 30, Sanlamhof, 7532 This brochure is published by Sanlam Collective Investments. Information correct as at May This document is updated twice a year. Please contact us for the latest version, should you need an updated copy. I1430 5/