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Portfolio Mandate

The BullionGold Facility

An investment product of SA Bullion Investor Services (Pty) Limited

Objective

This product has the objective of providing clients with full exposure to title-owned physical gold bullion as a form of hard currency investment and as an alternative to holding cash in the bank denominated in local currency.

Portfolio Specifics

Minimum investment	No limit to lump sums. Minimum of R500 for monthly recurring business.
Maximum transaction size	Maxima are imposed as a result of South African Reserve Bank and Rand Refinery limitations and are subject to change. The SA Bullion group restriction is 4000 ounces per day and an overall limit of 322,000 ounces for 2009.
Pricing	Krugerrands are priced daily using the London PM Fix for 1 oz fine gold and the prevailing US$/Rand exchange rate.
Investment timing	Investment inflows are subject to an 11h00 SA Time cut-off. Bullion is priced using the London PM Fix and closing exchange rate of the previous business day.
The BullionGold Facility upfront charges	1.5%
Gold Dealing Costs	As with all investments, there are dealing costs associated with the acquisition of gold. These dealing costs relate to refining and minting as charged by Rand Refinery and The SA Mint. There are no charges associated with redemption. In total, the transaction costs are approximately the same as for JSE equities. [The purchase and sale of equities involves brokerage, Strate Settlement, Investor Protection Levy, VAT, Securities Tax and the largest cost being market-impact costs (as seen in the buy-sell spread).]
Administration Fee (TER*)	2.0% per annum Fee rate excludes VAT. The annual fee rate is proportionately applied (ann. rate/365) to the daily market value of the client’s holdings. Fees are accrued daily and charged monthly.
Insurance	Client holdings are fully insured. The cost in respect of insurance is included in the Administration Fee.
Termination conditions	No notice period required. Special arrangements can be made in the event that a client wishes to take delivery of physical gold.
Value-Added Tax	The Krugerrand is legal tender in South Africa and therefore VAT is not levied on its acquisition, unlike other forms of gold where VAT at the rate of 14% is levied.
Income Tax	Krugerrands do not generate income except in the instance where traders speculate in bullion. The body of legal precedence in South Africa would indicate that capital profits should be treated by reference to the initial intentions of the investor i.e. whether the investor has a long term objective (“for keeps”) or a short term speculative one. If in doubt speak with your tax advisor.
Included in service	1. dealing 2. administration 3. compliance 4. safe custody 5. insurance cover 6. quarterly SA Bullion Gold Report 7. quarterly financial accounts.

Table of Comparative Fee Rates

FUND	ENTRY COSTS	EXIT COSTS	SERVICE CHARGES (TER*)
Shares on JSE	approx 3%	approx 3%	0.5% p.a.
Purchase of Krugerrands from retailer	15%	15%	1.5% p.a. insurance premium plus  vaulting charges
Instutional Gold Portfolio	4.0%	nil**	1.14% p.a.

* TER is an acronym for Total Expense Ratio. TER is the sum of all charges including investment management fees, custodial fees, trading costs, statutory levies and taxes etc.

** Refer to section on Transaction Costs above.