Understanding Unit Trusts

Unit Trusts are generally medium to long term investments. Income is reflected daily through increased unit prices. Prices are calculated on a net asset value (NAV) basis which is the total value of all assets in a fund including any income accrual and less permissible deductions from the fund.

Fees and charges associated with running the funds, are available as disclosed in the marketing brochures and the Key Facts Sheets uploaded on this website. Unit Trusts are financial products and not investments in insurance policies with an insurer and therefore cooling off periods do not apply. ABC Asset Management does not provide any guarantee either with respect to the capital or the return of a fund.

The investor further acknowledges that they are aware that ABC Unit Trusts are not bank deposit accounts, a constant unit price of K1 (one kwacha) will be maintained although, owing to circumstances, it may be amended to a lower amount, the total return to the investor is made up of interest received and any gain or loss made on any particular instrument, in most cases the return will merely have the effect of increasing or decreasing the daily yield, the yield is calculated using an annualized seven day rolling average and excessive withdrawals may place liquidity pressures and in such circumstances a process of ring fencing of withdrawal instructions and managed pay-outs over time may be followed. The investment return is not guaranteed and is dependent on the performance of the underlying investments.

Taxation: The Unit Trusts are exempt from Income Tax under the Second Schedule of the Income Tax Act. It is entitled to Withholding Tax Exemption upon application to ZRA, the Withholding Tax Certificate exempts the Unit Trusts from taxes on revenue earned from Dividend Income and Interest earned on savings and deposit accounts. However, the Unit Trusts are not exempted from interest earned on Corporate and Government Bonds and Treasury Bills. The Unit Trusts are also not exempt from VAT. However, investors need to note that the returns from the Unit Trusts could be affected by any future changes in the tax treatment or interpretation of the Unit Trusts and or changes in law relating to the taxation of the property transactions.

Note: African Banking Corporation Investments Services Limited T/A ABC Asset Management is a registered Dealer and a full member of the Capital Markets Association of Zambia.