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Ballot Voting Procedure In Respect Of Proposed Amendments To Investment Policy And Name Of Satrix Ilbi Portfolio
Satrix Managers (RF) Pty Ltd
Satrix ILBI Portfolio
Share code: STXILB
ISIN: ZAE000240123
A portfolio in the Satrix Collective Investment Scheme, registered as such
in terms of the Collective Investment Schemes Control Act, 45 of 2002
BALLOT VOTING PROCEDURE IN RESPECT OF PROPOSED AMENDMENTS TO INVESTMENT
POLICY AND NAME OF SATRIX ILBI PORTFOLIO
This announcement is important and requires your immediate attention.
The purpose of this announcement is to inform you of the proposed changes
to the investment policy of the Satrix ILBI Portfolio (Satrix ILBI) and to
provide you with sufficient information in order to vote on this proposal.
Background
The Satrix ILBI tracks the S&P South Africa Sovereign Inflation -Linked Bond
1+Year Index (“ILBI Index”), an index which is designed to reflect South
African rand-denominated inflation-linked securities that are publicly
issued by the South African government for the domestic market.
The Satrix ILBI declares a notional distribution to unitholders semi-annually
and reinvests the value of the notional distribution into constituent
securities of the ILBI 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 ILBI 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 ILBI Index in the
exact proportions as per the ILBI Index.
Rationale for the Change in Distribution Method and Index and impact on
Unitholders
This ballot amending the investment policy and structure is conducted at the
request of Satrix Managers (RF) (Pty) Ltd (Satrix) (FSP no 15658).
The reason for the ballot is that Satrix wishes to convert the Satrix ILBI
Portfolio, 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. We
propose that SATRIX ILBI track the FTSE/JSE Government Inflation-Linked Index
(“IGOV”) as its benchmark.
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
Paragraph 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 monthly 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.
• For personal tax purposes, the automatic reinvestment was a “deemed
distribution”. The distribution declared by the Satrix ILBI, which
is reinvested, accrues tax at the investors’ marginal rate of tax.
Therefore, although a unitholder does not actually receive the
distribution, such investor is still liable to pay tax on such
distribution at their marginal tax rate. A total return fund
therefore places an additional administrative process on a
unitholder as such unitholder is required to adjust the base cost
of his investment in the units of the Satrix ILBI upwards by the
distributions which are reinvested, to avoid paying tax twice on
the same amount.
• The Change in Distribution Method will simplify the tax consequences
for unitholders as they will receive the actual cash distribution
and pay tax on such distribution with no amendments to any base
costs necessary.
• The performance of the fund will be compared to the price return
version of the FTSE/JSE Government Inflation-Linked Index (“IGOV”).
• Following this change, and in line with Treating Customers Fairly
(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 ILBI Portfolio
to
Satrix ILBI 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 the portfolio shall be to track the impact on the investors
S&P South Africa Sovereign FTSE/JSE Government Inflation- within the Satrix ILBI
Inflation-Linked Bond Index Linked Index (“IGOV”) Portfolio.
(ILBI) Index (hereinafter (hereinafter referred to as
referred to as “the Index”) as “the Index”) as closely as
closely as possible, by: possible, by:
Current investment policy New investment policy Impact on Investor
3.1.1 Buying only constituent 3.1.1 Buying only constituent The Change in Distribution
securities in the same securities in the same Method being a change from
weightings in which they are weightings in which they are a reinvesting ETF to a
included in the S&P South Africa included in the FTSE/JSE distributing ETF will have
Sovereign Inflation-Linked Bond Government Inflation-Linked no effect financially on a
Index (ILBI) and selling only Index (“IGOV”) and selling only unitholder as:
securities which are excluded securities which are excluded
from the Index from time to time from the Index from time to time 1. in terms of a
as a result of periodic Index as a result of periodic Index reinvesting fund,
reviews or corporate actions or reviews or corporate actions or tax is paid on a
which are required to be sold which are required to be sold distribution but the
to ensure that the Portfolio to ensure that the Portfolio base cost of an
holds securities in the same holds securities in the same investor’s
weighting as they are included weighting as they are included investment increases
in the Index. in the Index. by the entire
distribution amount.
3.1.2 Reinvesting all available 3.2. The Portfolio shall not buy In the case of a
income received by the or sell securities for the distributing fund,
Portfolio in respect of purpose of making a profit nor the investor will
securities by the purchase of for any purpose other than receive the entire
additional securities in the tracking the Index. distribution (on
same weightings as they are which they must pay
included in the Index. 3.3. It is anticipated that tax) which increases
assets in liquid form will not the return they have
3.2. The Portfolio shall not buy form a substantial part of the generated from their
or sell securities for the Portfolio’s assets, however any investment in the
purpose of making a profit nor liquid assets that the Satrix ILBI.
for any purpose other than Portfolio holds may be invested 2. The Satrix ILBI will
tracking the Index. in short term investments such track the FTSE/JSE
as banker’s acceptances and Government
3.3. It is anticipated certificates of deposit. Inflation-Linked
that assets in liquid form will Index.
not form a substantial part of 3.4. Investors can obtain 3. Physical cash will
the Portfolio’s assets. However participatory interests in the now be received by
any liquid assets that the Portfolio on the secondary unitholders allowing
Portfolio holds may be invested market or by subscribing for new them to re-invest
in short term investments such participatory interest in the such cash in the
as banker’s acceptances and Portfolio on the primary Satrix ILBI, should
certificates of deposit. market. In order to achieve this they elect to do so,
objective the Manager may, in essence
3.4. Investors can obtain subject to the Act and the Deed, maintaining the
participatory interests in the create and issue an unlimited Satrix ILBI as a
Portfolio on the secondary number of participatory reinvesting ETF for
market or by subscribing for new interests in the Portfolio. their purposes.
participatory interest in the
Portfolio on the primary 3.5. The Portfolio will not be
market. In order to achieve this managed according to
objective the Manager may, traditional methods of active
subject to the Act and the Deed, management, which involve the
create and issue an unlimited buying and selling of
number of participatory securities based on the
interests in the Portfolio. economic, financial and market
analysis and investing
3.5. The Portfolio will not be judgement. Instead the
managed according to investment objective and style
traditional methods of active will be full replication of the
management, which involve the Index. As a result the financial
buying and selling of or other condition of any
securities based on the company or entity included from
economic, financial and market time to time in the Index will
analysis and investing not result in the elimination
judgement. Instead the of its securities from the
investment objective and style Portfolio unless the securities
will be full replication of the of such company or entity are
Index. As a result the financial removed from the Index itself.
or other condition of any
company or entity included from 3.6. The Portfolio will acquire
time to time in the Index will and hold a portfolio of
Current investment policy New investment policy Impact on Investor
not result in the elimination securities that substantially
of its securities from the represents all of the component
Portfolio unless the securities securities of the Index in
of such company or entity are substantially the same
removed from the Index itself. weighting as in the Index.
However, the Portfolio shall
3.6. The Portfolio will acquire also be entitled, in its
and hold a portfolio of discretion and only on a
securities that substantially temporary basis, to employ such
represents all of the component other investment techniques and
securities of the Index in instruments as will most
substantially the same effectively give effect to the
weighting as in the Index. object or the investment
However the Portfolio shall policies of the Portfolio.
also be entitled, in its
discretion and only on a 3.7. The composition of the
temporary basis, to employ such Portfolio will be adjusted
other investment techniques and periodically to conform to
instruments as will most changes in the composition and
effectively give effect to the weighting of the securities in
objectives or the investment the Index so as to ensure that
policies of the Portfolio. the composition and weighting
of the Portfolio are a
3.7. The composition of the reflection of the composition
Portfolio will be adjusted and weighting of the securities
periodically to confirm to contained in the Index.
changes in the composition and
weighting of the securities in 3.8. The Portfolio will hold
the Index so as to ensure that securities purely for the
the composition and weighting economic rights and benefits
of the Portfolio are a attaching thereto, and
reflection of the composition accordingly if a takeover bid
and weighting of the securities is made for shares of a company
contained in the Index. included in the Index, the
Portfolio will not tender
3.8. The Portfolio will hold shares in respect thereof.
securities purely for the Securities held by the
economic rights and benefits Portfolio which are subject to
attaching thereto, and a takeover bid will only be
accordingly if a takeover bid surrendered if such surrender
is made for shares of a company is mandatory (and then only to
included in the Index, the the extent of such mandatory
Portfolio will not tender surrender) in terms of
shares in respect thereof. applicable law or under the
Securities held by the rules of a regulatory authority
Portfolio which are subject to or body having jurisdiction. If
a takeover bid will only be a takeover bid results in a
surrendered if such surrender company no longer qualifying
is mandatory (and then only to for the inclusion in the Index,
the extent of such mandatory any shares of the company held
surrender) in terms of by the Portfolio after the
applicable law or under the takeover bid will be disposed
rules of a regulatory authority of by the Portfolio, and the
or body having jurisdiction. If proceeds will be applied in
a takeover bid results in a effecting the appropriate
company no longer qualifying adjustments to the Portfolio.
for the inclusion in the Index,
any shares of the company held 3.9. The Portfolio’s ability to
by the Portfolio after the replicate the price performance
takeover bid will be disposed of the Index will be affected
of by the Portfolio, and the by the costs and expenses
proceeds will be applied in incurred by the Portfolio.
effecting the appropriate
adjustments to the Portfolio.
3.9. The Portfolio’s ability to
replicate the price and yield
performance of the Index will
Current investment policy New investment policy Impact on Investor
be affected by the costs and
expenses incurred by the
Portfolio.
Current fund benchmark New fund benchmark Impact on Investor
S&P South Africa Sovereign FTSE/JSE Government Inflation- Change in distribution
Inflation-Linked Bond Index Linked Index (“IGOV”) (Price methodology i.e change
(ILBI) Index (Total Return) Return) from total return to price
return provides the
investor with the option
to receive the physical
distribution cash or to
reinvest.
Action required from investors
1. Please read this announcement on the proposed change to the portfolio,
your rights as an investor and the impact this will have on your
investment.
2. A Ballot Form enclosed, is available to all investors, brokers and CSDPs
for completion of the ballot vote.
3. The various Brokers/CSDPs will then submit the ballot responses via email
to our external auditors, KPMG, at satrixballotSTXILB@kpmg.co.za on or
before 24 July 2023. Alternatively, the Ballot Form may be emailed directly
to KPMG at satrixballotSTXILB@kpmg.co.za by 24 July 2023.
4. 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.
5. If you are no longer invested in this portfolio, no action is required.
Approval and Commencements
In-principle approval for amendment to the index was granted by the JSE on
08 May 2023.
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 01 September 2023.
Timelines for the implementation of the amendments on Satrix ILBI Portfolio
ballot:
Date ACTION
02 June 2023 Record date / Investor extract date
Declaration SENS announcement of proposed
08 June 2023 amendments
Last day of investors/their JSE brokers/CSDPs
to respond to the Auditors indicating their
24 July 2023 election in respect of the proposed amendments.
Deadline for Auditors to submit their findings
31 July 2023 report to Satrix
Satrix to submit the auditor’s findings report
01 August 2023 to the FSCA
FSCA to advise Satrix to submit signed
supplemental deed for approval / FSCA approval
10 August 2023 of supplemental deed
01 September 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 September 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.
At least 25% in value of investors, 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.
08 June 2023
JSE Sponsor
Vunani Sponsors
Date: 09-06-2023 07:26:00
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