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Second Ballot - Proposed change in the Investment Policy and Name of the Satrix RAFI 40 Index ETF Portfolio
Satrix Managers (RF) Pty Ltd
Satrix RAFI 40 Index ETF Portfolio
Share code: STXRAF
ISIN: ZAE000126033
A portfolio in the Satrix Collective Investment Scheme, registered as such
in terms of the Collective Investment Schemes Control Act, 45 of 2002
Second Ballot - Proposed change in the Investment Policy and Name of the
Satrix RAFI 40 Index ETF Portfolio registered under the Satrix Collective
Investment Scheme
This announcement is important and requires your immediate attention.
The first ballot completed on 14 April 2023 was unsuccessful and therefore
a second ballot is required.
The purpose of this announcement is to inform you of the proposed changes
to the investment policy of the Satrix RAFI 40 Index ETF Portfolio(Satrix
RAFI 40 ETF) and to provide you with sufficient information in order to
vote on this proposal.
Provisions of the Collective Investment Schemes Control Act
The Satrix RAFI 40 Index ETF Portfolio is a collective investment scheme
(“portfolio”) which is regulated in terms of the Collective Investment Scheme
Control Act, 2002 (“CISCA”).
Background
Satrix established the Satrix RAFI 40 ETF in 2008 under the Satrix Collective
Investment Scheme. The Investment policy of the portfolio is to track the
FTSE/JSE RAFI 40 Index (Rafi 40 Index) as amended by the JSE from time to
time. The Satrix Rafi 40 ETF tracks the FTSE/JSE RAFI 40 Total Return Index,
an index which is designed to reflect the top 40 companies from the All Share
Index, ranked and weighted by fundamentals, with constituents having a weight
larger than 10% in the index being capped at such amount.
The Satrix Rafi 40 ETF declares a notional distribution to Unitholders
monthly and reinvests the value of the notional distribution into constituent
securities of the Rafi 40 Index. Such distributions do not incur dividends
tax as it is not considered a dividend however Unitholders will be liable
for income tax at their marginal rate of tax on the distributions declared
and deemed to have been received.
The Satrix Rafi 40 ETF is considered to be a reinvesting portfolio as all
net income is deemed to be distributed to Unitholders and then reinvested by
Satrix on behalf of Unitholders into constituent securities of the Rafi 40
Index in the exact proportions as per the Rafi 40 Index.
Rationale for the Change in the Investment Policy, Distribution Method and
impact on Unitholders
The ballot amending the investment policy is conducted at the request of
Satrix Managers (RF) (Pty) Ltd (Satrix) (FSP no 15658).
The fund will track the FTSE/JSE RAFI 40 Index (Price return version).
The reason for the ballot is that Satrix wishes to convert the Satrix RAFI
40 ETF, from a reinvesting to a distributing ETF. In this regard where this
ETF currently reinvests income distributions received from underlying
securities automatically into those underlying securities on behalf of the
portfolio, Satrix will convert this fund to a distributing ETF and as such,
distributions will be declared and paid out to investors periodically.
The reasons for the amendment are as follows:
• Unitholders are referred to Communication 25 of 2020 issued by the
Financial Sector Conduct Authority on 19 May 2020 which detailed,
amongst other items, the publication of the final conduct standard
on the Net Asset Valuation Calculation and Pricing for Collective
Investment Scheme Portfolios (“NAV Conduct Standard”). Paragraph
10.1 of the NAV Conduct Standard states:
“All income received and accrued by a portfolio or class after
deducting permissible costs must be distributed to investors so that
it is taxed in the hands of the investor and that the nature of the
income is preserved in the process.”
• From the NAV Conduct Standard perspective, by converting the fund
from a total return to distributing fund, Satrix will comply with
Para 10 (1) whereby all income will be distributed to the investor.
• As a result of the Conduct Standard Distribution Methodology,
distributions declared by the portfolio shall be distributed to
Unitholders on a quarterly basis and not reinvested in the
Portfolio.
• Irrespective of the distribution methodology of the fund i.e.
whether a total return or distributing fund, the investor will be
in the same position post the change from a personal tax perspective
as well as from an investor performance perspective.
• The performance of the fund will be compared to the price return
version of the FTSE/JSE RAFI 40 Index.
• Following this change, and in line with TCF outcomes, the client
is neither advantaged nor disadvantaged and will remain in the
same position. Furthermore, the client will now have the option to
receive the physical cash or reinvest.
The name of the portfolio will also change from:
Satrix RAFI 40 Index ETF Portfolio
to
Satrix RAFI 40 ETF
The name change announcement will be released after the ballot process has
been passed.
The table below lists the current investment policy, as well as the proposed
changes to the new investment policy which have been underlined for easy
reference.
Current investment policy New investment policy Impact on Investor
The investment policy of the The investment policy of the There is no negative
portfolio shall be to track portfolio shall be to track impact on the investors
the RAFI 40 Index as closely the RAFI 40 Index as closely within the Satrix RAFI
as possible, by as possible, by 40 ETF.
4.1.1 buying only securities 4.1.1 buying only securities
in the same weightings in in the same weightings in
which they are included in which they are included in The Change in
the RAFI 40 Index and the RAFI 40 Index and Distribution Method
selling only securities selling only securities being a change from a
which are removed from the which are removed from the reinvesting ETF to a
RAFI 40 Index from time to RAFI 40 Index from time to distributing ETF will
Current investment policy New investment policy Impact on Investor
time as a result of annual time as a result of annual have no effect
Index reviews or corporate Index reviews or corporate financially on a
actions or which are actions or which are Unitholder as:
required to be sold to required to be sold to
ensure that the portfolio ensure that the portfolio 1. in terms of a
holds securities in the same holds securities in the same reinvesting fund,
weighting as they are weighting as they are tax is paid on a
included in the RAFI 40 included in the RAFI 40 distribution but
Index; and Index; the base cost of an
4.1.2 re-investing all investor’s
available income received by 4.2 The portfolio shall not investment
the portfolio in respect of buy or sell securities for increases by the
securities by the purchase the purpose of making a entire
of additional securities in profit nor for any purpose distribution
the same weightings as they other than tracking the RAFI amount. In the
are included in the RAFI 40 40 Index. case of a
Index. distributing fund,
4.3 It is anticipated that the investor will
4.2 The portfolio shall not assets in liquid form will receive the entire
buy or sell securities for not form a substantial part distribution (on
the purpose of making a of the portfolio’s assets. which he must pay
profit nor for any purpose However any liquid assets tax on) which
other than tracking the RAFI that the portfolio holds may increases the
40 Index. be invested in short-term return he has
investments such as banker’s generated from his
4.3 It is anticipated that acceptances and certificates investment in the
assets in liquid form will of deposit. Satrix Rafi 40
not form a substantial part ETF.
of the portfolio's assets. 4.4 The portfolio will 2. The Satrix Rafi 40
However any liquid assets acquire and hold a portfolio ETF will track the
that the portfolio holds may of securities that price return
be invested in short-term substantially represents all version of the
investments such as banker's of the securities of the FTSE/JSE Rafi 40
acceptances and certificates RAFI 40 Index in Index.
of deposit. substantially the same 3. Physical cash will
weighting as in the RAFI 40 now be received by
4.4 The portfolio will Index. However, the Unitholders
acquire and hold a portfolio portfolio shall also be allowing them to
of securities that entitled, in its discretion re-invest such
substantially represents all and only on a temporary cash in the Satrix
of the securities of the basis, to invest in Rafi 40 ETF,
RAFI 40 Index in derivatives as will most should they elect
substantially the same effectively give effect to to do so, in
weighting as in the RAFI 40 the object or the investment essence
Index. However, the policies of the portfolio. maintaining the
portfolio shall also be Satrix Rafi 40 ETF
entitled, in its discretion 4.5 The portfolio will hold as a reinvesting
and only on a temporary securities purely for the ETF for their
basis, to invest in economic rights and benefits purposes.
derivatives as will most attaching thereto, and
effectively give effect to accordingly if a takeover
the object or the investment bid is made for shares of a
policies of the portfolio. company included in
the RAFI 40 Index, the
4.5 The portfolio will hold portfolio will not tender
securities purely for the shares in respect thereof.
economic rights and benefits Securities
attaching thereto, and held by the portfolio which
accordingly if a takeover are subject to a takeover
bid is made for shares of a bid will only be surrendered
company included in if such surrender is
Current investment policy New investment policy Impact on Investor
the RAFI 40 Index, the mandatory (and then only to
portfolio will not tender the extent of such mandatory
shares in respect thereof. surrender) in terms of
Securities applicable law or under the
held by the portfolio which rules of a regulatory
are subject to a takeover authority or body having
bid will only be surrendered jurisdiction, If a takeover
if such surrender is bid results in a company no
mandatory (and then only to longer qualifying for
the extent of such mandatory inclusion in the RAFI 40
surrender) in terms of Index, any shares of the
applicable law or under the company held by the
rules of a regulatory portfolio after the takeover
authority or body having bid will be disposed of by
jurisdiction, If a takeover the portfolio, and the
bid results in a company no proceeds will be applied in
longer qualifying for effecting the appropriate
inclusion in the RAFI 40 adjustments to the
Index, any shares of the portfolio.
company held by the
portfolio after the takeover 4.6 The portfolio’s ability
bid will be disposed of by to replicate the price
the portfolio, and the performance of the RAFI 40
proceeds will be applied in Index will be affected by,
effecting the appropriate amongst others, the costs
adjustments to the and expenses incurred by the
portfolio. portfolio and the exposure
to assets in liquid form.
4.6 It is recorded that the
portfolio’s ability to 4.7 Any material change in
replicate the performance of the investment policy of the
the RAFI 40 Index will be portfolio shall constitute
affected by the costs and an amendment of this
expenses incurred by the Supplemental Deed, and shall
portfolio. be subject to the provisions
of clause 59 of the Deed.
4.7 Any material change in
the investment policy of the
portfolio shall constitute
an amendment of this
Supplemental Deed, and shall
be subject to the provisions
of clause 59 of the Deed.
Current fund benchmark New fund benchmark Impact on Investor
FTSE/JSE RAFI 40 Index FTSE/JSE RAFI 40 Index Change in distribution
(Total return version) (Price return version) methodology i.e change
from total return to
price return provides
the investor the option
to receive the physical
distribution cash or
reinvest.
Action required
1. Please read this circular on the proposed change to the portfolio, your
rights as an investor and the impact this will have on your investment.
2. Please complete the enclosed ballot form and email it directly to our
external auditors, KPMG, at satrixballotSTXRAF1@kpmg.co.za on or before
23 August 2023.
3. Please do not include any other instructions regarding your holdings
with your ballot form, e.g. requests for purchases, switching
instructions, etc. Your ballot form will go directly to our auditors
and, should such instructions be sent to the auditors, we cannot
guarantee that any instruction subsequent to the commencement of the
ballot process will be effected.
If you are no longer invested in this portfolio, no action is required
Approval and Commencements
Subject to the ballot voting procedure being successful and approval by the
Financial Sector Conduct Authority (“the Authority”) of Collective
Investment Schemes, the investment policy amendment will be with effective
from commencement of business on 02 October 2023.
Timelines for the implementation of the amendments on Satrix RAFI 40 Index
ETF ballot:
Date ACTION
07 July 2023 Record date / Investor extract date
11 July 2023 Declaration SENS announcement of proposed amendments
Last day of investors/their JSE brokers/CSDPs to
respond to the Auditors indicating their election in
23 August 2023 respect of the proposed amendments.
Deadline for Auditors to submit their findings
30 August 2023 report to Satrix
Satrix to submit the auditor’s findings report to
31 August 2023 the FSCA
14 September 2023 FSCA approval of supplemental deed
02 October 2023 Effective date of change
The effect on you as investor
The proposed changes to this fund will not change the nature of the underlying
strategy.
Effective date of change
The effective date of the proposed changes in the investment policy and the
name of the portfolio will be 01 October 2023, provided that the necessary
consent is obtained from investors and the Financial Sector Conduct Authority
(“FSCA”).
Charges, performance and unit pricing
Investors will not be liable for the payment of any additional fees, charges,
taxes or brokerage as a result of the investment policy and name change.
Special distribution
No special distributions will be effected nor applicable.
Your rights as an investor
The rights of investors are firmly entrenched in the Act. In terms of Section
98 of CISCA, as read with Clause 59 of the Deed of the Satrix Collective
Investment Scheme in Securities, the Registrar of Collective Investment
Schemes requires that:
• All investors are notified in writing of any proposed material changes
to the collective investment schemes and portfolios in which they hold
units.
• All investors are balloted in order for them to vote on the proposed
changes.
Please note that, in terms of the Act, the Registrar will not consent to the
changes to the portfolio unless satisfied that the changes will not be
detrimental to the interests of any investor.
Due to the re-ballot of the Satrix RAFI 40 ETF, there is no required value
of investors which must respond, however, those that have responded excluding
the manager must respond in writing of which the majority must agree to the
amendment.
If you choose not to switch or sell your funds prior to the effective date
of the change of investment structure as set out in this letter (if approved
by investors), the amended investment policy will automatically apply to
your investment.
Should you require further information on the proposed change or should you
wish to exercise your right to switch or sell any of your investments, please
contact Satrix Managers on 0860 111401, or send an email to
info@satrix.co.za.
11 July 2023
JSE Sponsor
Vunani Sponsors
Date: 11-07-2023 02:22:00
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