There is a confusing array of different classes of Equity issued by Companies. Equity is the “Share” of Ownership in a Company. There are Ordinary Shares; various classes of Preference Shares and Debentures (Loans). The vast majority of Stock Exchange traded financial instruments are Ordinary shares. Other forms of investments available in many Markets include traded Options and Futures (together known as Market Derivatives) and Warrants. These are however, generally very speculative and carry risk, and only to be recommended for knowledgeable expert investors. The final major form of Market instrument is Bonds (known as “Government Stock” in South Africa). Bonds are usually interest bearing, fixed term loans issued by the State, Public Utilities and Municipal Governments, for example. Because of the vast number of listed investments available, covering over 400 Companies in South Africa and nearly 1000 assorted securities in total (plus about 450 Unit Trusts), it is wise to obtain expert advice and management when deciding on Stock Exchange or Unit Trust investments. It is not advisable to heed rumour and ‘bar talk’ or “share tips” from your Aunt Mildred’s neighbour’s gardener. Burleigh Investment Management has over 25 years of experience in this field, and will provide Clients with sound, conservative advice and investment management, in keeping with their assessed personal financial requirements.

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It is very important that considerable thought and proper planning be given to your future retirement, and also to the structure of your Estate. Your future capital and income requirements need to be assessed and defined. Your Estate position needs to be established. Are your assets and investments best positioned to maximise your wealth, growth and income? Is your financial position arranged to minimise tax and future Estate Duty? Do you require a Trust? Is your Will properly made out and current to your personal circumstances and to the needs of your heirs? These are all very important considerations and attention to these matters must be made now, and then reviewed from time to time. Please contact Burleigh Investment Management for professional advice and assistance in this regard.

South Africa has a limited Exchange Control system for Residents. Offshore funds may be imported and exported by Non-Residents without hindrance, subject only to exchange rate fluctuations. Residents however, may draw an annual Travel Allowance of R160,000 p.a. for adults and R50,000 p.a. for children. There is a once off R750,000 “FOREIGN CAPITAL ALLOWANCE” (FCA) for individuals, who are in good standing with local revenue authorities. This may be held or invested offshore, and any income may be retained offshore, although it must be declared for tax. Emigrants may apply for a “settling-in” allowance of up to R1.5 million, per family (R750,000 per single), with an additional value of R1 million for household and personal and other effects. The R750,000 FCA is included in these allowances. There are also further allowances for Study, Gifts, Maintenance, Directors Fees, and so on.

In an effort to protect the investing public, this Act was introduced to ensure that all who dispense Financial Advice and Services to the public, must be registered with the FINANCIAL SERVICES BOARD (FSB), in terms of the Act. The Act provides for certain minimum levels of qualification in terms of education, experience, administration, compliance, etc. A Licence is then granted to approved “FINANCIAL SERVICE PROVIDERS” (FSP) by the FSB. All Banking Institutions, Stockbrokers**, Financial Advisors and Brokers, Portfolio Managers, Insurance Companies, Insurance Brokers (Life and Short Term), Funeral Policy Providers; Medical Aid Brokers, etc – whether they act as Individuals or Companies – must be a Registered “FSP”. Indeed, ALL who deal with the Public in any form of Financial Transaction (under the Act) whether this includes investing the funds of the Public, or merely the giving of financial advice, must be properly registered, as a FSP. **The FAIS Act provides exemption for Stockbrokers, who must comply with similar regulations under the Stock Exchanges Control Act, No.1 of 1985 and the Securities Services Act, No.36 of 2004, amongst others.
Burleigh Investment Management has been approved by the Financial Services Board as a Financial Services Provider (Category I - Advisory; and Category II - Discretionary). Licence Number : 10158

This Act requires that all Financial Institutions must VERIFY the personal details of their Clients, Account Holders, Customers, etc. There are detailed and complex requirements under the Act which must be supplied to Financial Institutions by ALL LEGAL BODIES. That is, by Companies, Trusts, Individuals, etc. As far as INDIVIDUALS are concerned, the requirements include that full details be supplied of: Proof of Identity; Proof of Bank Account; Proof of Residential Address; Proof of Tax Registration and Proof of Source of Funds, amongst others. Without supplying these details, you may be unable to transact business. The background to this Act is that it seeks to eliminate “Money Laundering”, fraudulently acquired funds and other illegal financial transactions. In other words, “Know your Client”.

The Johannesburg Stock Exchange was founded in 1887 – one year after Gold was first discovered on the Witwatersrand. The JSE is now housed in its sixth building since then – in Gwen Lane, Sandown. After operating on an “Open Outcry” share trading floor until the late 1990s, trading is now fully electronic, and the JSE has one of the most modern trading systems in the world. Actual trading is done through the JSE “SETS” electronic trading system. This new system has also seen changes in how shares are “owned” and paid for. Where there were once physical share certificates, this is no longer the case. All persons who held share certificates should, by now, have “dematted” them. That is, submitted them to the Share Transfer Secretaries for dematerialisation – from a paper certificate into an electronic form of ownership. Shares are now held through a Central Securities Depository Participant (CSDP) via (usually) the Nominee Company of a Stockbroking firm. The settlement system operated by the JSE is called “STRATE” (Share Transactions Totally Electronic) and all transactions are now handled quickly and efficiently through this system. Generally, it is expected that purchases must be paid for within three working days and that sales will be paid within five working days. All share transactions carry Brokerage, which is unregulated, as well as certain statutory charges payable both to the JSE and to the State. Full details are obtainable on request from us. For more detailed JSE information and guidance, please see the JSE website.

(Administration advice for Share Owners)
In this Sub-Section, we advise Clients and other Readers of the proper manner of record keeping as far as it concerns their J.S.E. and other Investments.

"TAX BROCHURE for SHARE OWNERS" - is a very useful 31 page document prepared and published by the Law Administration Department of S.A.R.S. This valuable and detailed publication covers all aspects of Tax insofar as it concerns share ownership, correct as at 1 February 2006, and covers, inter alia the following :

• Ownership of Shares as Trading Stock as compared with holding Shares as Capital Assets;
• How to distinguish between Share profits of a capital or of a revenue nature;
• How to determine a Taxpayer's liability for Capital Gains Tax (C.G.T.);
• How Corporate Actions impact on the determination of Tax Liability

KEEPING a PROPER RECORD of your INVESTMENTS :

J.S.E. SHARE OWNERSHIP :
It is suggested that Clients use (if they do not already do so) a Lever Arch File, with file separators, marked into sections as detailed below:

Most Clients will be receiving THREE TYPES of paperwork concerning their share portfolios :
(A) Whenever a share transaction (ie. a Purchase or a Sale) is completed, the Client will receive a CONTRACT NOTE (also known as a Broker's Note). This will detail the Quantity of Shares Traded; the Name of the Company bought or sold; the Price (or prices) that the transaction was settled at; the Transaction Date; the Transaction Settlement Date; the Transaction reference number; the Principal Amount; the Charges, and finally, the Net Amount Due to or by you. The
note details all the charges for the Transaction: ie: Brokerage; VAT; JSE and other Statutory Charges, etc For filing in your Lever Arch File, open two sections: (i) for PURCHASES and (ii) for SALES.
(B) At the end of each month (and, for JSE purposes, the "Month End" is ALWAYS the LAST working FRIDAY of each month) every Client will receive a STATEMENT of ACCOUNT. This Statement of Account is the OFFICIAL record of your account, and you should always check it for accuracy. It will contain two sections: (i) A Statement of your SCRIP HOLDING. This shows the Opening and Closing balances of the QUANTITIES of shares you own in each company,
showing the movements (either adding - for purchases, or deducting for sales) which occurred during the month in question. This Statement of Scrip Holding shows the Shares OWNED BY YOU through your CSDP (Central Securities Depository Participant) in STRATE (Share Transactions Totally Electronic) - the JSE's Electronic Share Settlement and Recording System. As most Clients should now be aware, there are no longer any paper share certificates.
All shares held*¹ by you are recorded electronically through STRATE. (ii) The second part of the Statement is the FINANCIAL RECORD for the month in question. The Statement shows the Client's cash position - in summary - at the top of the page, and details where the cash is held - either in JSE Trustees or in a Money Market account - both of which bear similar rates of interest (as a daily call account) - so that any cash you hold does not lie idle - it DOES earn good interest. The account then details the financial transactions during the month - shown in two sections - a Capital Account (which covers your actual share purchases and sales) and an Income Account - which details (usually) for example, dividends received and interest received, and sometimes any charges made to your account (for example, Management Fees). The combined credit balances (and you should ALWAYS be in credit *² ) will be the total cash held on your
account. Quite often, there is an additional page to the Financial Record page(s). This will be provided when, for example, there has been a change to the account, but which does not involve either a direct purchase or sale. These are known as "Corporate Actions" and include: B.E.E. Transactions; Share Splits or Consolidations; Name Changes; Mergers; Take-overs; Rights Issues; "Unbundlings" and other similar changes which usually involve a change in the quantity of shares owned by the Client, or sometimes a change of company name. ( *³ ) These STATEMENTS of ACCOUNT may be filed, MONTHLY in one section of your file, called Statements of Account, or even in two sections, one for the Scrip Holdings and another for the actual Financial Record.
Notes:
*¹ Share ownership: Despite the fact that your shares are held electronically through a DSDP, and cash through JSE Trustees or a Money Market Account, it must be remembered that your shares and cash are always held in YOUR name - as the beneficial owner. Neither the CSDP nor Burleigh Investment Management ever hold any assets of Clients. ALL Investments are always conducted in the name of the Client as the beneficial owner.
*² Accounts in credit: Normally Stockbrokers DO NOT permit Client accounts to be in debit at any time. The exception would be if a purchase was made a day or two before the month end and where payment (settlement) was only required AFTER the month end. The account would then be in debit for a couple of days only. Remember, it is normal, that if there is insufficient cash on an account to cover current purchases, then the Stockbroker will require full payment of the purchase(s) within three working days. If payment for purchases or for Manangement Fees is not made within the required time, or the Client defaults on any payment, then either Burleigh or the Stockbroker is entitled to sell sufficient shares of the Client in order to recover the funds in debit.
*³ Corporate Actions: Remember that if you are on the mailing list of a company in which you own shares - ie to receive Annual Reports and other shareholder information, then you will receive (for most large companies, anyway) quite a few "Important Documents" through the year. These are usually white in colour, and marked as "Important - consult your Stockbroker or other Investment Advisor". These documents are most often details of some or other Corporate Action
(as detailed previously, above). If you are a Client of Burleigh Investment Management then you will have a MANAGED ACCOUNT, and all such corporate actions are attended to, on your behalf, by Burleigh Investment Management. Most Clients will receive these "Corporate Action" booklets, for information, and then discard them. (C) The third and final set of documents you would normally receive - if your account warrants it by size (usually), is the MONTHLY PORTFOLIO VALUATION. Again, open another section in your file for the Monthly Portfolio Valuations. This valuation (called a "PVAL" for short) will detail all your shares held (and it should agree with the quantities shown in the Scrip Holding statement), the names of the companies held; the cost price; the current market value; the annual dividends;
the total portfolio costs and total current market values and total annual income (historical) earned.
The PVAL also contains other useful and interesting historic information. These PVALS should all be filed.

NOW, with each of these three sets of documents neatly filed EACH MONTH, you should have a FULL RECORD of all your share transactions, which, if kept from March of a year to February of the next year, will be ALL the information necessary for you or your accountant to complete your income tax return for the period (insofar as your JSE share transactions are concerned, of course). It will generally not be necessary for the ordinary individual to keep additional written records, although, of course, many people do so.

OTHER INVESTMENT RECORDS :

Many Clients will, in addition to their JSE Investments, hold other forms of Investments - for example, local or offshore Mutual Funds / Unit Trusts; Pension or Provident Fund investments; Retirement Annuities, etc. If space permits, the records and statements of these investments could be kept in the Level Arch File, or in a second (and similar) file, if required.

Not only does it make your life more simple when having to look up information for yourself, or for income tax purposes, but in the event of your death, it is very useful for the Executor of your Estate to have all your records neatly filed in one place.

RETENTION OF RECORDS :
How long should you keep this information? See the sub-section : Retention of Records and Documents, elswhere on this "Investment Info" page.

OTHER LISTED INVESTMENTS :
Some Clients have either inherited or acquired shares, which they still hold, but which are not included in their formal share portfolios. For example, shares inherited from an Estate; or shares purchased through a public offer, or acquired through being a client or customer of a company which "went public". Good examples of such commonly held shares include ABSA; Sasol; MNET; Telkom; Old Mutual and Sanlam. In many cases, Clients hold these shares through a CSDP via the Transfer Secretary of the Company, and these holdings do not form part of the Client's formal share portfolio. It is a good idea (for the reasons mentioned earlier) to have these shares TRANSFERRED into your formal share portfolio - thereby retaining everything neatly together and in one place. A good idea for orderly record keeping. The less sources your
Executor has to check, or search, the easier will be his job once you pass on. Burleigh Investment Management will gladly assist to arrange for the transfer of these shares to your portfolio, if necessary. Please ask for assistance if you require it.

It is sincerely hoped that the above ideas and information will be of assistance to Clients, particularly the book on Tax Information. Should there be any further enquiries or detail required, on any matter, please contact BURLEIGH Investment Management.

The most important thing to note about the prices in newspapers is that they are yesterday’s prices (if in the Natal Mercury / Business Report, for example) - in other words, how the share prices CLOSED at the end of business on the previous trading day. COLUMN HEADINGS: These are, most commonly:
B = The price buyers were offering to the sellers for the share ("bid" price) in cents per share.
S = The price that sellers were asking from the buyers to sell the shares for ("offered" price)
LS or LAST = The last price or last sale at which the share actually TRADED for, or changed hands for. This LAST price may be higher or lower than what the present buy and sell price is, and may even have been on a previous day, when the share last traded, as there may have been no actual sales for a day or three. In highly traded, popular shares (eg: Rembrandt, Anglos) this is almost never the case, however. A typical example may be:
Buyers: 9520c Sellers: 9560c Last sale: 9540c.
VOLUME: Could be expressed as either : Vol. or DV (day's volume) or WV (week's volume)
and is, obviously the actual number of shares which traded that particular day or week. The other figures quoted in the newspaper may be DY; EY; P/E which have been covered elsewhere in this section. Sometimes the DIVIDEND is quoted: “Div.” – also in cents per share. Then of course, some papers also give HI and LO (for the day's - or week's - HIGH and LOW prices at which the share traded in that period). The closing price (“Last “ price) may be lower than the day's high for example. It may even be at the "low" price for the day. Or somewhere in between, naturally. Sometimes the DAY’S MOVE (DM) or WEEK’S MOVE (WM) is given either as a “+” (up) or “-“ (down) and either in cents per share or even as a percentage (%).

This is the ideal investment instrument for those who are planning to change employment, or if you have been retrenched, or for any reason decide to leave or withdraw from your existing Pension or Provident Fund. Rather than taking all or part of your Pension or Provident Fund as cash, particularly if you do not yet plan to retire (and thereby also be subjected to the payment of tax, at that stage), it would be most beneficial to re-invest the Fund proceeds into a CONTINUATION FUND, until you finally require it, in other words, upon your final retirement, or at the age of 55 years. The transfer from your Pension or Provident Fund into a Continuation Fund is done free of tax. Together with Burleigh Investment Management, you can have a say in how your Fund is invested and managed, subject to certain rules. Your Continuation Fund is not combined with the investments of other members, and is a fund which is personal to you and is set up and managed with your investments only, by Burleigh Investment Management, according to your initial investment guidelines and choices, within the applicable Fund rules.

Many individuals believe, incorrectly, that because their knowledge of the Stock Exchange and of Shares and Unit Trusts (Mutual Funds), including Offshore Investments, may be so small that these investments are not for them. So they simply place their money and hard-earned savings in non-performing bank deposits. It is important to know that the vast majority of the world’s WEALTH is made, held and generated through the Stock Exchanges, and to a lesser extent through Unit Trusts. One does NOT NEED to be knowledgeable about the Stock Exchange, to invest successfully. What IS required, is the acceptance that this is the MAIN form of INVESTMENT, world wide. There are few other reliable forms of growth investments available. Through Burleigh Investment Management (BIM) your investment needs and personal financial position will be properly assessed, and then professionally conducted for you through a MANAGED PORTFOLIO. It is not necessary to have an in-depth knowledge of the Stock Exchange. BIM has the professional knowledge and ability to successfully conduct and manage these investments for you, leaving you free to concentrate on other important aspects and areas your life, such as business, family, health, hobbies, travel, leisure, etc.

These vary between Trusts, Companies and Individuals. But generally, as a guide to you (as an individual), the following would be applicable:
Any records to do with your Income Tax returns, including your Stockbroking records: FIVE years (after the date of each assessment). Paid Cheques : SIX years. Bank Statements, Invoices, Purchase and Sales records, etc : FIVE years. Investors should keep all Notes, Statements, Portfolio Valuations and similar documents connected with their Investments neatly filed, both for easy future reference, and for proper Taxation records.

SHARE dividends in South Africa, as income to an individual, are presently Tax Free.
INTEREST income is TAXABLE, although the first R22,000 of interest income (for the 2006 tax year) will be tax free, for persons over the age of 65 years. (The first R15,000 if you are under 65 years of age).
INCOME TAX rates on Individuals (for 2005/6) start at 18% of taxable income up to R74,000, going up, on a five-step scale, to the top rates of R78,070 on earnings of R270,000 plus a “marginal rate” of 40% of income in excess of R270,001. Generally, Companies are taxed at 29% and Trusts at 40%. CAPITAL GAINS Tax exists in South Africa from 1 October 2001. The formula is complicated (refer our “link” to the Revenue website, elsewhere on this Site), but, generally, for individuals, the maximum effective rate is 10%, and 20% for Trusts. DONATIONS Tax is levied at a rate of 20%. ESTATE Duty is rated at 20% with the first R1.5 million being exempt. In the case of the ADMINISTRATION of Estates, the Executor’s remuneration tariff is 3.5% of assets.

These are “Collective Investment Schemes”. They are excellent investment choices for those individuals who wish to save and invest a REGULAR AMOUNT EACH MONTH (for example as an addition to, or even in place of, a Pension, Provident or Retirement Annuity Fund investment), or for those who have a LUMP SUM available for investment, where the amount is not large enough (and therefore unsuitable) for a good, well diversified Stock Exchange Portfolio. Unit Trust portfolios are managed to give an interest in a well spread, quality portfolio of Stock Exchange investments, generally with an investment outlook of from three to five years and longer. Wide selections of Unit Trusts are available, and it is possible to begin with a monthly investment of from as little as R100 to R500 per month, or with Lump Sum investments beginning from as low as R1000. OFFSHORE MUTUAL FUNDS can be purchased with amounts starting from US$2,500 or £1,500 and these are an excellent manner for diversifying one’s investments offshore. Again, a wide range of general equity funds to specialist sector, industry and country funds are available.