FAQ

Satrix Securities: Listed, tradable securities that track the major indices of the JSE.

1.    What are Satrix Securities?
2.    How do they work?
3.    What is the price of a Satrix Security?
4.    How do I buy Satrix Securities?
5.    What will it cost to buy Satrix through the Investment Plan?
6.    Do I receive dividends?
7.    Why is the price of a Satrix Security not always 1/1000th of the Index Level?
8.    Why does the Dividend Yield of a Satrix Security differ to that of the Index?
9.    How does my investment grow?
10. What if I want to sell my Satrix investment?
11. What about taxes?
12. Why is Satrix a Collective Investment Scheme?
13. Is there an expiry or maturity date on Satrix securities?
14. Can I exchange Satrix securities for the underlying shares?
15. If the index changes does the constitution of the shares being tracked by the Satrix Security change?
16. What are some of the benefits of investing in Satrix Securities?
17. What are the risks?
18. Who are the parties involved with Satrix?

What are Satrix Securities?
Satrix securities are listed securities that replicate the dividend and price performance of a particular index. They provide the same returns as would be received had the investor directly purchased shares in each company in the relevant JSE index. The JSE, in collaboration with FTSE, determine a number of indices which are used as barometers of the market (or sectors thereof). The most popular of these are: TOP40 (Top 40 listed companies index) INDI25 (Top 25 listed industrial companies index) FINI15 (Top 15 listed financial companies index) RESI20 (Top 20 listed resource companies index)
How do they work?
Satrix securities are issued by Satrix Managers (Pty) Ltd, which is registered by the Financial Services Board, as an administrator of a Collective Investment Scheme (CIS). They are listed on the JSE and traded like any other JSE listed share. The underlying shares of the constituent companies in the relevant index are held by a CIS Trust under a contractual relationship with the issuing company. Holding the underlying basket of shares at all times enables the Satrix Trust to replicate the index performance (price and dividends).
What is the Price of a Satrix Security?
The value of a Satrix security will rise and fall in line with the relevant Index. The price of the Satrix security on the JSE will approximately reflect the index level divided by 1000. For example, if the Top 40 Index is at a level of 25,000 then the Satrix 40 security will be trading at approximately R25.00 or 2500 cents. The price of each Satrix product will be quoted throughout the JSE trading day and will be published daily in the newspapers under the Exchange Traded Funds sector of the JSE prices.
How do I buy Satrix securities?
Each Satrix product will have its own Initial Public Offering (IPO). Satrix 40's IPO took place in November 2000 and Satrix INDI and Satrix FINI had IPO's in February 2002. An investor can subscribe for one of these offerings by contacting the lead arrangers, a stockbroker, financial adviser, or the Satrix Helpline. Alternatively, an investor may purchase Satrix securities in the secondary market once they have been listed on the JSE. This can be done through a stockbroker or via the Satrix Investment Plan.
What will it cost to buy SATRIX directly through the Investment Plan?
Transaction Fees
Debit order fee: R3.50
Stock brokerage fees: 0.10%
Nominal Strate and Investor Protection levies will also be charged.
All fees quoted are exclusive of VAT. VAT will be levied where applicable.

Investment Plan Administration Fees (for both lump sum and debit order investments)

Annual administration fee: (calculated daily and deducted quarterly)

Total Investment Per Fund

Fee

R0 to R100 000 0,80%

R100 000 to R250 000 0,75%

R250 000 to R1 000 000 0,70%

R1 000 000 to R3 000 000 0,50%

R3 000 000 or more

0,45%

Transaction Fees
Debit order fee: R3.50
Stock brokerage fees: 0.10% (buying and selling)
Nominal Strate and Investor Protection levies will also be charged.
Where a financial adviser is used, commissions will be charged (as scheduled in Section 8).
All fees quoted are exclusive of VAT. VAT will be levied where applicable
Do I receive dividends?
Yes. Quarterly distributions are made to all holders of Satrix securities. The amount used for distribution will be all the dividends and interest which has accrued within the Trust (which holds the underlying shares) less the costs incurred in managing the Trust's assets. Investors can expect to receive quarterly distributions that closely approximates the dividends paid by the Index companies, less expenses incurred in managing the Trust.
Why is the price of a Satrix security not always 1/1000th of the Index level?
Satrix securities represent an underlying basket of shares held by a Trust managed by Satrix Managers. This means that dividends on those shares accrue to the Trust and those dividends may ultimately be distributed to owners of Satrix securities. Satrix Managers arranges dividend distributions (together with interest thereon less operating costs) quarterly in March, June, September and December. This means that dividends paid into the Trust will accrue during the quarter - thereby inflating the net asset value of the Trust. This will be reflected in the price of a Satrix security, which will usually be at a slight premium to 1/1000th of the index level.
Why does the Dividend Yield of a Satrix security differ to that of the Index?
Because dividends are only paid quarterly from the Trust, the dividend yield will not always match that of the underlying index (which adjusts its Dividend Yield daily based on dividends paid by its composite counters).
How does my investment grow?
Any increase in the value of an index will result in capital growth for the Satrix security based on that index. In addition to this, dividend and interest income will be paid to investors on a quarterly basis.
What if I want to sell my Satrix investment?
Satrix securities are listed on the JSE and as such can be bought and sold through JSE stockbrokers during normal trading hours. The presence of market makers ensures that there should always be a price in the market at which to buy and sell your securities. If you own Satrix securities through the Satrix Investment Plan, simply call the Satrix helpline 0861 100 670.
What about taxes?
Satrix securities have the same taxation profile as any other share in terms of selling or trading the instrument. The quarterly distributions will be made up primarily of actual dividends which are not taxable, plus a small portion, possibly comprising other income, which will be taxed as normal income. Holders of Satrix securities will incur a Capital Gains Tax (CGT) liability on any capital gain realised at the time of sale.
Why is Satrix a Collective Investment Scheme?
In August 2004, Satrix registered with the Financial Services Board as a Collective Investment Scheme. This means that all Satrix securities are treated like Unit Trusts in terms of taxation, compliance, investment exposures and reporting. The fact that Satrix is both a Collective Investment Scheme as well as publically listed securities means that it adheres to the regulations and legislation of both the Financial Services Board as well as the JSE.
Is there an expiry or maturity date on Satrix securities?
No. As with equities, Satrix securities can be held in perpetuity.
Can I exchange Satrix securities for the underlying shares?
Yes. An investor can exchange 1 million Satrix securities for a proportional number of shares in the companies comprising the relevant index (the index composition is displayed on the Satrix website every day). This is a critical feature of Satrix products because it means that arbitrage should always keep the price of a Satrix security equal to the Net Asset Value (NAV) of the underlying basket of shares. For this reason, Satrix will never trade at a discount to NAV.
If the index changes does the constitution of the shares being tracked by the Satrix security change?
Yes. The constituent shares of the indices are reviewed on a quarterly basis. Any changes to the index will trigger a change to the underlying assets of the Satrix security in order to ensure continual alignment with the index composition. Also, if corporate events or capital awards change the components or weightings of an index, Satrix will immediately adjust its portfolio. This ensures exact tracking of the relevant index for Satrix security holders.
What are some of the benefits of investing in Satrix securities?
Satrix securities allow an investor to invest in all the constituent stocks of a particular index through a single trade. Satrix securities are a cost efficient way of tracking an index. It is possible to buy and sell Satrix securities at any time that the JSE is open for trade. It is easy to invest your money and simple to realise your investment. You can calculate the value of your investment at any time. You are making an investment that has a history of beating inflation over the medium to long term.
What are the risks?
As with any investment on the JSE, the return received is subject to fluctuations associated with market conditions. Investing in one share can be very risky. Spreading an investment portfolio over several shares can reduce this risk. Satrix securities offer investors this diversification without the associated additional costs of buying shares in several companies.

Who are the parties involved with Satrix?

Central Securities Depository Participant (CSDP)	Institution established to hold securities and to effect transfer between accounts, typically by book-entry.
Computershare	Transfer secretaries of Satrix securities.
Deutsche Securities (Pty) Ltd	Shareholders in Satrix Managers. Market maker in Satrix products.
Sanlam Capital Markets Limited	Shareholders in Satrix Managers.
Sanlam Securities (Pty) Ltd	Market maker in Satrix products.
AOSL Contact Centre	Call centre operators for all Satrix Investment Plan related queries.
Sanlam Investment Management (SIM)	Asset manager responsible for tracking the underlying index.
Satrix Managers (Pty) Ltd	Management company for all Satrix trusts.
STRATE	Electronic settlement system for transactions which take place on the JSE and off-market trades.
AOSL	Automated Outsourcing Services Limited.
ABSA Trustees	Trustee of Satrix Trust.