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IS A UNIT TRUST THE RIGHT PRODUCT FOR YOU?
Collective Investment Schemes (commonly known as unit trusts) are “funds” where the money from many investors are pooled together and invested in assets like shares, bonds, property and cash. This means that investors do not have to manage individual investments themselves, but rely on the skills of appointed investment professionals to manage the fund. Investors hold equally priced units where the price of the unit is based on the value of the underlying investments held in the fund.
Some funds invest in the shares of companies, which means that part of their profits will be paid out periodically in the form of dividends. Other investments – like government bonds, corporate bonds and money market – make periodic interest payments. You can choose to receive these distributions, or use the money to buy more units and grow your investment.

WHAT ABOUT TAX?
There is no tax paid within a unit trust vehicle. You must declare to the South African Revenue Services (SARS) and will be taxed on the capital gain made from a unit trust when you sell it. Interest income received, must be declared annually to SARS and will be taxed along with other interest that you have earned. Unit trusts will deduct dividend withholding tax from investors, as legally required, before dividends are paid to the investor. You will receive a statement every year that clearly states the interest, dividends and capital gain that you have received (if you have sold all or part of the investment).