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RMB CIS MANCO (PTY) LIMITED - Abridged Audited Results for the year ended 30 June 2014 - RMBT40

Release Date: 18/12/2014 11:15
Code(s): RMBT40     PDF:  
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Abridged Audited Results for the year ended 30 June 2014 - RMBT40

RMB Top 40 Exchange Traded Fund
A portfolio in the RMB Collective Investment Scheme (“the portfolio”) registered in terms of the Collective
Investment Schemes Control Act, 45 of 2002
(Incorporated in the Republic of South Africa)
(Date of incorporation: 15 October 2008)
Share Code: RMBT40
ISIN: ZAE000164521


ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014


The RMB Collective Investment Scheme (“the Scheme”) was established in accordance with the provisions of
the Collective Investment Schemes Control Act (“CISCA”) with effect from 12 April 2008. The RMB Top 40
Exchange Traded Fund (“the Fund”) was established as a portfolio of the Scheme in accordance with paragraph
A of the Deed of the Scheme on 12 April 2008.

The investment objective of the Fund is to track the price and performance yield of the FTSE/JSE Top 40
Companies Index (“Top 40 Index”) on the JSE Limited.

STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014

                                                                             2014                      2013
                                                                             Rand                      Rand
  Assets

  Non-current assets
  Listed investments held at fair value through profit or
                                                                           842 813 244              639 148 542
  loss

  Current assets                                                              5 521 008               11 067 939
  Trade and other receivables                                                   255 731                7 073 993
  Cash and cash equivalents                                                   5 265 277                3 993 946


  Total assets                                                             848 334 252              650 216 481




  Equity and liabilities

  Equity
  Net assets attributable to participatory interest
                                                                           843 051 248              639 192 484
  holders

  Current liabilities
  Trade and other payables                                                    5 283 004               11 023 997


  Total equity and liabilities                                             848 334 252              650 216 481


INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2014

                                                        2014          2013
                                                        Rand          Rand



 Investment income                                      22 917 239    18 336 225

 Dividend income                                        22 617 167    17 913 741
 Interest income on financial instruments designated
                                                          204 408       343 519
 at fair value through profit or loss
 Interest income on bank account                           95 664        78 965

 Other operating income                                203 154 346    95 660 918
 Fair value adjustment on financial instruments
                                                       203 017 287    95 807 362
 designated at fair value through profit or loss
 Other income                                             137 059      (146 444)

 Expenses
 Management and administrative expenses                (1 401 822)   (1 238 104)


 Profit before taxation                                224 669 763   112 759 039


 Taxation                                                        -             -


 Profit for the year                                   224 669 763   112 759 039




STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014

                                                        2014          2013
                                                        Rand          Rand


Profit for the year                                    224 669 763   112 759 039

Other comprehensive income for the year                          -             -

Total comprehensive income for the year                224 669 763   112 759 039



STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO INVESTORS
FOR THE YEAR ENDED 30 JUNE 2014
                                                                           Net assets
                                                                         attributable to
                                                                          participatory
                                                                        interest holders
                                                                              Rand

Balance as at 1 July 2012                                                   543 385 123

Comprehensive income for the year                                           112 759 039

Distributions to participatory interest
                                                                            (16 951 678)
holders


Balance as at 30 June 2013                                                  639 192 484

Comprehensive income for the year                                           224 669 763

Distributions to participatory interest
                                                                            (20 810 999)
holders


Balance as at 30 June 2014                                                  843 051 248



STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014

                                                          2014                 2013
                                                          Rand                 Rand

Cash flow from operating activities                       22 082 330           17 472 670

Cash utilised in operations                                (187 494)            (907 498)
Dividend received                                         22 617 167           17 913 741
Interest income on bank account                               95 664               78 965
Interest income on financial instruments designated at
fair value through profit or loss                            204 408              343 519
Net (purchases) / sales of listed investments held at
fair value through profit or loss                          (647 415)               43 943


Cash flow from financing activities                      (20 810 999)        (16 951 678)

Distributions to participatory interest holders          (20 810 999)        (16 951 678)


Net increase in cash and cash equivalents                  1 271 331              520 992


Cash and cash equivalents at the beginning of the year     3 993 946            3 472 954

Cash and cash equivalents at the end of the year           5 265 277            3 993 946


SUMMARISED ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2014

The preparation of the audited financial results for the year ended 30 June 2014 was supervised by Richard
Pampel CA (SA), a chief financial officer of Ashburton Investments Holdings Limited.

The financial statements incorporate the principal policies set out below, which have been consistently applied
to all years presented, unless otherwise stated.

Statement of compliance

The financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”)
issued by the International Accounting Standards Board (“IASB”), and in accordance with the requirements of
the trust deed of the Fund (“the Trust Deed”), the JSE Listing Requirements for Exchange Traded Funds and
the Collective Investment Schemes Control Act No 45 of 2002.

Financial instruments

Measurement
Financial instruments are recognised when, and only when, the Fund becomes a party to the contractual
provisions of that particular instrument. Financial instruments are initially measured at fair value, and for
instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to
initial recognition, these instruments are measured as set out below.

Investments
Listed investments are measured at fair value through profit or loss. Fair value is determined with reference to
listed bid prices at the end of the reporting period.

Trade and other receivables
Trade and other receivables originated by the Fund are measured at amortised cost, using the effective interest
rate method, less impairments losses. Trade and other receivables are short-term in nature and are not
discounted.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value. All balances included in cash and cash equivalents have a maturity date of less than three
months from the date of acquisition

Financial liabilities
Financial liabilities, other than those held at fair value through profit or loss, are measured at amortised cost
using the effective interest rate method.

Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost. Net
assets attributable to participatory interest holders evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Other payables are initially measured at fair value, and are subsequently measured
at amortised cost.

Fair value gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value on financial instruments are included in net profit or loss
in the year in which the change arises.
Creations and redemptions
Creations and redemptions are recorded on trade date, being the previous day closing index price, using the
proceeds less any transaction costs.

Offset
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial
position when the Fund has a legally enforceable right to set off the recognised amounts, and intends either to
settle on a net basis, or to realise the asset and settle the liability simultaneously.

Derecognition of financial instruments
The Fund derecognises financial assets when and only when -
-    The contractual right to the cash flows arising from the financial assets have expired or have been forfeited
     by the Fund; or
-    It transfers the financial assets including substantially all the risks and rewards of ownership of the assets;
     or
-    It transfers the financial assets, neither retaining nor transferring substantially all the risks and reward of
     ownership of the asset, but no longer retains control of the assets.

Financial liabilities are derecognised when and only when the liability is extinguished. This is when the
obligation specified in the contract is discharged, cancelled or has expired. The difference between the carrying
amount of a financial liability (or part thereof) extinguished or transferred to another party and consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Impairment
At each reporting date the Fund assesses all financial assets, other than those at fair value through profit or
loss, to determine whether there is objective evidence that a financial asset or group of financial assets has
been impaired. For amounts due to the Fund, significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy and default of payments are all considered indicators of impairment. Impairment
losses are calculated as the difference between the assets' carrying amount and the present value of estimated
future cash flows discounted at the financial assets' original effective interest rate. Impairment losses are
recognised in profit or loss. Impairment losses are reversed when an increase in the financial asset's
recoverable amount can be related objectively to an event occurring after the impairment was recognised,
subject to the restriction that the carrying amount of the financial asset at the date that the impairment is
reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Securities lending

The Fund is authorised to engage in securities lending activities up to 50% of the assets under management.
Collateral is held by the relevant lending units.

Other income

Other income comprises income from securities lending activities.

Securities lending fee income
The fees earned for the administration of securities lending activities are accounted for on an accrual basis in
the year in which the services are rendered.
Investment income

Interest income on financial instruments is recognised in profit or loss, using the effective interest rate method,
taking into account the expected timing and amount of cash flows. The effective interest rate method is a
method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest
income or interest expense over the average expected life of the financial instruments or portfolios of financial
instruments. Dividends and interest in respect of listed securities are recognised when the right to receive
payment is established. This is on the “last-day-to-trade” for listed shares and on the “date-of-declaration” for
unlisted shares.

Taxation

Under the current system of taxation in South Africa, the Fund is exempt from paying taxation on income or
capital gains. Both income and capital gains are taxed in the hands of the participatory interest holders.

Distributions

In accordance with the Fund’s Trust Deed, the Fund distributes its distributable income and any other amounts
determined by the Manager of the Fund to security holders in cash.

Distributions payable on redeemable participatory interests are recognised in the statement of changes in
assets attributable to participatory interest holders as distributions to participatory interest holders.

Redeemable securities

The Fund issues a single class of redeemable security, which is the most subordinated class of instruments.
There are no other instruments that substantially restrict or fix the returns earned by the participatory interest
holders, and have cash flows based substantially on profit or loss; the change in recognised net assets; or the
change in the fair value of the entity over the instrument's life. All redeemable securities issued by the Fund
provide participatory interest holders with the right to require redemption for the cash or in specie at the value
proportionate to the participatory interest holder's share. Such instruments give rise to equity instruments for the
net asset value of the redemption amount in the statement of financial position. In accordance with the Trust
Deed of the Fund and the Collective Investment Schemes Control Act, the Fund is contractually obliged to
redeem securities at the net asset value.

Critical accounting estimates and judgements in applying accounting policies

Assumptions and estimates form an integral part of financial reporting and have an impact on the amounts
reported. Assumptions are based on historical experience and expectations of future outcomes and anticipated
changes in the environment. No significant accounting estimates and judgements have been applied in the
financial statements of the Fund.
New standards and interpretations adopted in the current financial period

The following standard was adopted by the Fund in the current financial period:
   - IFRS 10 Consolidated Financial Statements establishes one approach for determining consolidation of
         all entities based on concepts of power, variability of returns and their linkage. The application of control
         will be applied irrespective of the nature of the investee. The Fund has control over an investee when
         the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
         the ability to affect those returns through its power over the investee. The consolidation principles have
         remained unchanged and are now incorporated as part of IFRS10. IFRS 10 supersedes a portion of IAS
         27 and SIC 12 Consolidation – Special Purpose Entities. The implementation of IFRS 10 will impact the
         Fund’s future assessments of which entities it controls. The requirements of IFRS 10 will not be
         applicable to the Fund.
   - IFRS 12 Disclosure of Interests in Other Entities aims to provide consistent disclosure requirements for
         all forms of interests in other entities, including joint arrangements, associates, and consolidated or
         unconsolidated structured entities. IFRS 12 requires disclosure of information that will enable users to
         evaluate the nature of the risks associated with the interest and the effect of the interest on the financial
         position, performance and cash flows of the reporting entity. The requirements of IFRS 12 will not be
         applicable to the Fund.
   - IFRS 13 Fair Value Measurement was issued in order to eliminate inconsistencies in the guidance on
         how to measure fair value and disclosure requirements that exist under the different IFRSs that require
         or permit fair value measurement. The revised measurement requirements did not have a significant
         impact on the net asset value of the Fund for the current financial year. The revised disclosure
         requirements of IFRS 13 have been incorporated in the notes to the annual financial statements for the
         year ended 30 June 2014. The requirements of IFRS 13 are applicable on a prospective basis and in
         terms of the transitional provisions no comparatives are required for the new disclosures. As such no
         prior year amounts have been restated as a result of the adoption of IFRS 13 and comparative
         information has not been provided for certain disclosures.
   - IFRS 7 Amendments Financial Instruments: Disclosures The amendments to IFRS 7 Financial
         Instruments: Disclosure require entities to provide additional disclosures relating to recognised financial
         assets and financial liabilities that are set-off in accordance with paragraph 42 of IAS 32 Financial
         Instruments: Presentation. The additional disclosures include information about the gross amounts
         subject to rights of set-off, amounts set-off in accordance with the accounting standards, and the related
         net credit exposure as well as information about the rights under enforceable master netting and similar
         arrangements. This amendment addresses disclosure in the annual financial statements only and does
         not affect the amount of any offsetting applied to financial assets and financial liabilities in the
         company’s statement of financial position, where applicable. The above requirements of IFRS 7 will not
         be applicable to the Fund.


SUMMARISED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014

Listed investments held at fair-value-through-profit-or-loss

The following principle methods and assumptions are used to determine the fair value of the financial
instruments that are carried at fair value:

Listed equities
The fair value of listed equities is determined using unadjusted quoted prices. The Fund therefore classifies the
fair value measurement of the listed equities in the Level 1 category on the basis that the fair value of the listed
equities is determined using unadjusted quoted prices.
IFRS 7 Fair value hierarchy

                                                30 June 2014                                 30 June 2013
                Type                  Level 1          Level 2         Level 3     Level 1       Level 2       Level 3
       Listed investments
       held at fair-value-
       through-profit-or-loss      842 813 244            -               -      639 148 542        -             -



Trade and other receivables, cash and cash equivalents and trade and other payables
No hierarchy disclosure is made for financial assets and liabilities measured at amortised cost where their
carrying value approximates fair value.

Creation and cancellation of RMB Top 40 participatory interests

A total of Nil (2013: Nil) Fund participatory interests were issued during the year at a value of RNil (2013: RNil).
A total of Nil (2013: Nil) Fund participatory interests were cancelled during the year at a value of RNil
(2013: RNil). As at 30 June 2014, an aggregate of 18 334 067 (2013: 18 334 067) Fund participatory interests
were issued by the Fund, with net assets attributable to the participatory interest holders in an amount of
R843 051 248 (2013: R642 680 198).

Management and administration expenses

The Manager is entitled to a management fee for the management of the Scheme, as determined by the
Manager from time to time, based on the market value of the investments of the Fund. A service fee of 10 (ten)
basis points of the market value of the investments of the Fund has been applied.

Distributions

The Fund effects quarterly distributions made out of income received by the Fund.

                                                                                   2014                    2013
                                                                                   Rand                    Rand
       41.53 cents per participatory interest (2013: 35.74 cents per
       participatory interest)
       Declared 27 Sep 2013 and paid 07 Oct 2013
                                                                                    7 614 138              6 552 596
       (2013: Declared 28 Sep 2012 and paid 05 Oct 2012)

       14.87 cents per participatory interest (2013: 12.89 cents per
       participatory interest)
       Declared 03 Jan 2014 and paid 13 Jan 2014
                                                                                    2 726 276              2 363 261
       (2013: Declared 19 Dec 2012 and paid 07 Jan 2013)

       30.30 cents per participatory interest (2013: 23.02 cents per
       participatory interest)
       Declared 28 Mar 2014 and paid 08 Apr 2014
                                                                                    5 555 222              4 220 502
       (2013: Declared 27 Mar 2013 and paid 09 Apr 2013)

       26.81 cents per participatory interest (2013: 20.81 cents per
       participatory interest)
       Declared 27 Jun 2014 and paid 07 Jul 2014
                                                                                    4 915 363              3 815 319
       (2013: Declared 21 Jun 2013 and paid 02 Jul 2013)


       Total distributions                                                         20 810 999           16 951 678
Taxation

Any taxable income realised during the year, has been distributed to the participatory interest holders of the
Fund participatory interests. As a result, both income and capital gains are taxed in the hands of the
participatory interest holders.

Risk management

Exposure to investment, index, credit, secondary trading, market and operational risks arise in the normal
course of investment activities in listed securities. The Fund’s acceptance of risk is directly attributable to the
risks associated with any investment in securities.

The objectives for managing the risks associated with financial instruments held for investment purposes, as
well as a brief description of the relevant risks and methods adopted to mitigate these risks are outlined in more
detail below. The Fund is regulated in terms of the Collective Investment Schemes Control Act (“CISCA”/”the
Act”). In terms of the Act, the Manager must appoint a Trustee. The assets of the portfolio are held under the
control of the Trustee.

Management monitors compliance in terms of the CISCA requirements and reports are submitted to the
Financial Services Board (“FSB”) on a quarterly basis. Daily pricing of the Fund is publicly available.

The Manager’s Audit Committee oversees management’s compliance with the Fund’s risk management
framework in relation to the risks faced by the Fund.

The investment policy of the Fund is to track the FTSE/JSE Top40 Index (“the Index”) as closely as possible, by
buying only FTSE/JSE Top40 securities in the weighting in which they are included in the Index, and selling only
securities which are excluded from the Index from time to time as a result of quarterly Index reviews or
corporate actions, or which are required to be sold to ensure that the portfolio holds FTSE/JSE Top40 securities
in the same weighting as they are included in the Index. However, the Fund is also entitled, at its discretion and
only on a temporary basis; to employ such other investment techniques and instruments as will most effectively
give effect to the object or the investment policies of the Fund. The Fund’s portfolio will not be managed
according to traditional methods of active management, which involve buying and selling of securities based on
economic, financial and market analysis and investing judgement. The Fund will not buy or sell securities for
trading purposes or for any purpose other than to track the Index as closely as possible. As a further objective,
the securities held by the Fund will be managed to generate income for the benefit of participatory interest
holders, for instance, income is generated from scrip lending, which is applied to reduce expenses and the
related tracking error.

The Fund’s portfolio will be adjusted as determined by the stipulations of the JSE’s Index calculation
methodology to conform to changes in the basket of securities comprising the Fund’s portfolio so as to
substantially reflect the composition and weighting of the securities comprising the Index at all times.

It is recorded that the Fund’s ability to replicate the price and yield performance of the Index will be affected by
the costs and expenses incurred by the Fund. Costs and expenses may result in the Index not being replicated
perfectly by the Fund’s portfolio.
The Fund is exposed to the following risks from its use of financial instruments:
-    Credit risk;
-    Investment risk;
-    Index risk;
-    Tracking risk;
-    Secondary trading risk;
-    Operational risk;
-    Liquidity risk; and
-    Market risk.
The abovementioned risks are addressed below in more detail.

Credit risk

Credit risk is the risk of loss due to non-performance of a counterparty in respect of any financial or performance
obligation. For fair value portfolios the definition of credit risk is expanded to include the risk of losses through
fair value changes arising from changes in credit spreads.

Credit risk is considered to be low. The bank balance is held at Standard Chartered, which is rated AAA by
Standard & Poor.

In terms of CISCA, the Manager may, subject to the requirements of section 95, lend or offer to lend assets
included in the Fund’s portfolio within the limits or on the conditions determined by the Trust Deed. The trustee
of the Fund gives authority to the Manager to lend or offer to lend securities with a value not exceeding 50% of
the market value of all securities included in the Fund’s portfolio. The Manager has proceeded to engage in
securities lending in respect of the securities held by the Fund on this basis.
In terms of the Trust Deed, the Manager may engage in securities lending under section 85 of CISCA, subject to
the following limits and conditions:
-      The securities lending must be beneficial to all participatory interest holders;
-      The Manager may lend or offer to lend securities with a value not exceeding 50 per cent of the market
        value of all securities included in the Fund’s portfolio;
-      The securities that may be lent to one borrower are limited in accordance with the limits determined by the
        Registrar for the inclusion of the money market instruments in a portfolio;

-     Collateral security for the securities loaned must have an aggregate value that exceeds the market value
      of the securities loaned by not less than five per cent at all times and may only consist of –
      -    Cash; or
      -    Other securities; or
      -    A combination of cash and other securities
           -    Securities may not be lent for a period longer than 12 months; and
           -    Securities may not be lent unless subject to a right of recall.

In terms of the securities lending agreements, it is the duty of the agent to take delivery of the collateral assets,
any appropriate instruments of transfer or instrument of title in respect of a service level agreement. Collateral
assets and instruments of transfer of title are held on behalf of, and for the benefit of, the principal as
represented by the Fund.

The portfolio could be exposed to credit risk to the extent that inadequate collateral is held on the underlying
assets. If a borrower fails to perform its obligations, the Fund may be unable to recover the loaned securities.
However, the Manager only engages in securities lending with A-rated financial institutions.
Credit risk is only applicable to the financial assets of the Fund. The credit risk is considered to be low. The
carrying amounts of financial assets represent the maximum credit exposure. None of the Fund’s financial
assets are considered past due or impaired.
The maximum exposure to credit risk at the reporting date was as follows:

                                                                                   2014                  2013
                                                                                  Rand                   Rand
       Trade and other receivables                                                 255 731               7 073 993
       Cash and cash equivalents                                                   5 265 277             3 993 946

Investment risk

There can be no assurance that the Fund will achieve its investment objectives of replicating the price and yield
performance of the Index.
The following factors could impact negatively on the investment performance of the Fund:
 -    Certain costs and expenses incurred by the Fund could cause the underlying portfolio to mis-track against
      the Index;
 -    Temporary unavailability of securities in the secondary market or other extraordinary circumstances could
      cause deviations from the extract weightings of the Index;
 -    In circumstances where securities comprising of the Index are suspended from trading or other market
      disruptions occur, it may be impossible to rebalance the portfolio of securities held by the Fund and this
      may lead to a tracking error; and
 -   Misinterpretation of information on the calculation of the Index could result in mis-tracking of the Index.

Index risk

There is no assurance that the Index will continue to be calculated and published on the same or similar basis
indefinitely. The Index was created by the JSE Limited as a measure of market performance and not for the
purposes of trading fund index securities. The past performance of the Index is not necessarily a guide to its
future performance.

The Index may be adjusted from time to time as a result of mergers, re-organisations, schemes or arrangement
or other corporate activity involving constituent companies. Any adjustments to the Index will be implemented
as determined from time to time in terms of the relevant Index stipulations, for example, if a constituent
company pays a special dividend.

The adjustments may require the removal of a constituent company from the Index and the substitution thereof
with a new constituent company while at the same time, if necessary, adjusting the base level. The adjustments
to the portfolio will be made in such a way that the portfolio will remain substantially aligned with the Index level
at all times.

Tracking risk

The risk that the Index may not be appropriately tracked is managed in the following manner:
 -     Check announcements made on the JSE website for any events that may change the Index and
       rebalance, if necessary;
 -     Check corporate actions schedule for any events that may change the Index and rebalance, if necessary;
 -     Check the positions report versus what theoretically should be held with the ETF trading application and
       rebalance, if necessary; and
 -     During daily net asset value (“NAV”) calculation process, check if the RMB Top 40 ex-closing price =
       1/1000 of the Top40 Index closing level, i.e. do a reasonability check.
Secondary trading risk

There can be no guarantee that the Fund participatory interests will remain listed on the JSE Limited. Despite
the presence of market makers, the liquidity of the Fund securities cannot be guaranteed.

The participatory interests may trade at a discount or premium to their NAV.

Any termination of a listing would be subject to the JSE listing requirements.

Operational risk

If shares in the underlying companies are suspended or cease trading for any reason, the suspended shares
will not be delivered to a participatory interest holder exercising its right to take delivery of the underlying shares
until the suspension on the trading in respect of those shares is lifted. If the computer facilities or other facilities
of the JSE Limited malfunction, calculation and trading in the Fund participatory interests may be suspended for
a period of time. Issuers, redemptions and adjustments to rebalance the underlying portfolio of securities in the
Fund could affect the value of the underlying securities constituting the Index and thereby also impact on the
value of the Fund participatory interests.

Liquidity risk

Liquidity risk is the risk that the Fund will not be able to meet its financial obligations towards participatory
interest holders when they fall due. The approach to managing liquidity risk is to ensure that the Fund would be
able to pay suitable distributions to participatory interest holders on a quarterly basis. All distributions are
calculated and approved by the Manager. The Fund could also be exposed to liquidity risk in cases where
insufficient funds are available to effect the necessary changes in Index constituents. The need to employ
alternative investment techniques would only arise in the event of a liquidity problem, for example, if it is not
possible to acquire certain securities comprising the Index due to there being no sellers of such securities. The
Fund participatory interests are listed instruments; that are bought and sold on the JSE Limited through a JSE
member. The participatory interest holders may exchange participatory interests for the underlying assets
which the participatory interests represent. The participatory interest holders may sell their participatory interests
on the JSE. Market makers will attempt to maintain a high degree of liquidity through continuously offering to
buy and sell the Fund securities at prices around NAV of the Fund securities, thereby ensuring tight buy and sell
spreads. Under normal circumstances and conditions, the participatory interest holder will be able to buy or sell
the Fund participatory interests from market makers.

Market risk

Market risk exists where significant changes in equity prices will affect the value of the Fund’s financial
instruments. The investment mandates indicate that the Fund’s portfolio is passively managed and as a result
the management of the market risk is not possible. There is no guarantee that the Fund’s portfolio will achieve
its investment objective of perfectly tracking the Index.
The value of Fund securities and distributions payable by the Fund’s portfolio will rise and fall as the capital
values of the underlying securities housed in the Fund and the income flowing there-from fluctuates.
Prospective investors should be prepared for the possibility that they may sustain a loss.
The Fund’s portfolio may not be able to perfectly replicate the performance of the Index because -
  -     The Fund is liable for certain costs and expenses not taken into account in the calculation of the Index; or
  -     Certain Index constituents may become temporarily unavailable; or
  -     Other extraordinary circumstances may result in a deviation from precise Index weightings
Sensitivity analysis

All the Fund’s underlying investments are listed on the JSE Limited. The price of the Fund participatory
interests is closely correlated to the movements in the Index. Any movement or adjustment in the Index, or the
underlying constituents of the Index, will have an impact on the price of the participatory interests.

                                                                                                       th
At any point in time, the market value of a Fund participatory interest is expected to reflect 1/1000 of the Index
level, plus an amount which reflects a pro-rata portion of any accrued distribution amount within the Fund’s
portfolio. Therefore, a 100 point movement in the Index would result in a R0,10 movement in the NAV per
participatory interest of the Fund. Actual market values may be affected by supply and demand and other
market factors, but the ability of a participatory interest holder to switch out of the Fund participatory interest by
redeeming them in specie for one or more baskets of constituent securities, subject to a minimum of 1 million
Fund participatory interests being delivered, should operate to substantially avoid or minimise any differential
which may otherwise arise between the relevant basket and/or Index level and the value at which the Fund
securities trade from time to time.

Investment in derivatives
The Manager may invest in derivatives from time to time. While an investment in derivatives will only be
employed within the investment restrictions stipulated in the Trust Deed and the Act, some risks may be
associated with investments in these instruments. No significant investments in derivatives were used for the
financial period under review.


These financial statements have been audited by the independent auditors, PricewaterhouseCoopers
Incorporated, and their unqualified audit opinion is available for inspection at the company’s registered head
office.

A full copy of the financial statements is available on the RMB website http://www.rmb.co.za/ourFundsETFs.asp


18 December 2014

Sponsor
Bridge Capital Advisors Proprietary Limited

Trustee
Standard Chartered Bank Johannesburg Branch

Managers
RMB CIS Manco Proprietary Limited

Auditors
PricewaterhouseCoopers Incorporated

Date: 18/12/2014 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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 information disseminated through SENS.

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