Wrap Text
Ballot Voting Procedure - Proposed amalgamation of the STXT50 ETF with the Satrix Quality South Africa Portfolio
Satrix Managers (RF) Pty Ltd
Satrix S&P GIVI South Africa Top 50 ETF
Share code: STXT50
ISIN: ZAE000318317
A portfolio in the Satrix Collective Investment Scheme in Securities
2, registered as such in terms of the Collective Investment Schemes
Control Act, 45 of 2002
Ballot Voting Procedure - Proposed amalgamation of the Satrix S&P
GIVI South Africa Top 50 ETF with the Satrix Quality South Africa
Portfolio
This letter is important and requires your immediate attention.
The purpose of this letter is to inform you of the proposed
amalgamation of the Satrix S&P GIVI South Africa Top 50 ETF (source
fund) with the Satrix Quality South Africa Portfolio (target fund),
and to provide you with sufficient information to vote on this proposal
– including your rights as an investor and the impact this will have
on your investment.
In terms of Section 99 of the Collective Investment Schemes Control
Act, 45 of 2002 ("the Act"), the proposed amalgamation will proceed
if the majority of investors vote in favour of the amalgamation by
way of the enclosed ballot. The absence of a response will be regarded
as a vote in favour of the amalgamation.
The amalgamation ballot is conducted at the request of Satrix Managers
(RF) (Pty) Ltd ("Satrix"), FSP 15658, the investment manager of the
Satrix Collective Investment Scheme in Securities and the Satrix
Collective Investment Scheme in Securities 2.
Reason for the proposed amalgamation
The Satrix S&P GIVI South Africa Top 50 ETF tracks the S&P GIVI SA
Top 50 Index (GIVISA). The GIVISA index ("GIVISA", inception date,
June 2008 aims to provide investors with exposure to securities that
exhibit attractive quality and intrinsic value traits. It uses a
combination of value (price to book-value) and profitability (return-
on-equity) measures that are blended with a dividend ratio measure in
constructing the index. Our main concern is that the strategy has
offsetting characteristics by design, as measures of profitability
and value are often negatively correlated. Our research has shown that
the net effect of this is to render the strategy ineffective at
capturing either of value or profitability (capturing instead
volatility and large-size styles). We argue that a more appropriate
means of investing in high-quality companies is to directly target
profitability and balance sheet quality measures directly.
The Satrix Quality South Africa Portfolio (target fund) tracks the
Satrix Quality Index. To this end, we recommend adopting the Satrix
Quality Index methodology as an alternative, which has shown a
consistent ability to pick up high exposure to profitability and
earnings-quality style exposures through time (using MSCI's third-
party data to validate said pickup).
In addition to gaining more direct exposure to measures of quality
directly, the Satrix Quality index also has significantly lower
trading costs associated with it, while relative and absolute risk
are managed appropriately (the former to the Capped SWIX benchmark
index, and the latter through the use of an optimizer). We believe
investors switching from the GIVISA Index to the Satrix Quality Index
will gain stronger exposure to the intended style of interest
(profitability and balance sheet quality) while better-managing risk
directly (both absolute and relative, as our research clearly shows
to be the case), with significantly lower associated trading costs.
Details of the similarities, differences, and the impact on you as an
investor are detailed in the table below:
Satrix S&P GIVI South Africa Top 50 Satrix Quality South Africa Portfolio Changes and impact
ETF
Investment Objective Investment Objective
4.1. The investment policy of the Portfolio shall be 3.1 The investment policy of the Portfolio shall be No change to investment
to: to track the Satrix Quality Index (hereinafter objective
4.1.1. track the S&P GIVI SA Top 50 Index as referred to as "the Index") as closely as possible,
closely as possible by, to the fullest extent by:
possible: Buying only constituent securities in the same
4.1.1.1. buying only securities in the Index in weightings in which they are included in the Index
the weightings in which they are included in the and selling only securities which are excluded from
Index; and the Index from time to time as a result of periodic
4.1.1.2. selling only securities which are excluded Index reviews or corporate actions or which are
from the Index from time to time as a result of the required to be sold to ensure that the Portfolio
monthly Index reviews or corporate actions, so as holds securities in the same weighting as they are
to ensure that at all times the Portfolio holds included in the Index.
securities in the Index in the same weightings in 3.2 The Portfolio shall not buy or sell securities for
which they are included in the Index; and the purpose of making a profit nor for any purpose
other than tracking the Index.
4.1.2. as a further objective, to manage the 3.3 It is anticipated that assets in liquid form will
securities held by the Portfolio to generate income not form a substantial part of the Portfolio's
for the benefit of investors. assets. However, any liquid assets that the
Portfolio holds may be invested in short term
4.2. The Portfolio shall not buy or sell securities investments such as banker's acceptances and
for the purpose of making a profit nor for any certificates of deposit.
purpose other than tracking the Index. 3.4 As a further objective, the securities held by
the portfolio shall be managed to generate income
4.3. The Portfolio will be passively managed in for the benefit of investors.
that the manager will not buy and sell securities 3.5 Investors can obtain participatory interests in
based on economic, financial and/or market the Portfolio on the secondary market or by
analysis but rather, will buy and sell securities subscribing for new participatory interest in the
solely for the purpose of ensuring that the Portfolio on the primary market. In order to
Portfolio tracks the Index. As such the investment achieve this objective the Manager may, subject to
objective and style of the Portfolio will be full the Act and the Deed, create and issue an
replication of the Index. unlimited number of participatory interests in the
Portfolio.
4.4. Investors may obtain participatory interests in 3.6 The Portfolio will not be managed according to
the Portfolio on the secondary market or by traditional methods of active management, which
subscribing for new participatory interests in the involve the buying and selling of securities based
Portfolio on the primary market. In order to on the economic, financial and market analysis
achieve this objective the manager may, subject to and investing judgement. Instead the investment
the Act and the Deed, create and issue an objective and style will be full replication of the
unlimited number of participatory interests in the Index. As a result the financial or other condition
Portfolio. of any company or entity included from time to
4.5. The manager shall further be entitled, in its time in the Index will not result in the elimination
discretion and only on a temporary basis, to of its securities from the Portfolio unless the
employ such other investment techniques and securities of such company or entity are removed
instruments as will most effectively give effect to from the Index itself.
the object or the investment policies of the 3.7 The Portfolio will acquire and hold a portfolio
Portfolio, subject to the provisions of the Deed of securities that substantially represents all of the
and the Act from time to time. component securities of the Index in substantially
the same weighting as in the Index. However the
4.6. The composition of the Portfolio will be Portfolio shall also be entitled, in its discretion and
adjusted periodically to conform to changes in the only on a temporary basis, to employ such other
composition and weightings of the securities in investment techniques and instruments as will
the Index so as to ensure that the composition and most effectively give effect to the object or the
weighting of the Portfolio are a reflection of the investment policies of the Portfolio.
composition and weighting of the securities 3.8 The composition of the Portfolio will be
contained in the Index. adjusted periodically to confirm to changes in the
composition and weighting of the securities in the
Index so as to ensure that the composition and
Satrix S&P GIVI South Africa Top 50 Satrix Quality South Africa Portfolio Changes and impact
ETF
4.7. Assets in liquid form will form a minor part of weighting of the Portfolio are a reflection of the
the Portfolio's assets. composition and weighting of the securities
contained in the Index.
4.8. The Portfolio's ability to replicate the price 3.9 The Portfolio will hold securities purely for the
and yield performance of the Index will be economic rights and benefits attaching thereto,
affected by the costs and expenses incurred by the and accordingly if a takeover bid is made for shares
Portfolio. of a company included in the Index, the Portfolio
will not tender shares in respect thereof.
4.9. Since the manager will not be distributing to Securities held by the Portfolio which are subject
investors any income (including coupons) in the to a takeover bid will only be surrendered if such
Portfolio, the manager will disclose in the Portfolio surrender is mandatory (and then only to the
Supplements that such income will be reinvested extent of such mandatory surrender) in terms of
in the Portfolio. applicable law or under the rules of a regulatory
authority or body having jurisdiction. If a takeover
4.10. Any material change in the investment policy bid results in a company no longer qualifying for
of the Portfolio shall constitute an amendment of the inclusion in the Index, any shares of the
the Deed, and shall be subject to the provisions of company held by the Portfolio after the takeover
clause 59 of the Deed, in which event investors bid will be disposed of by the Portfolio, and the
shall be given reasonable notice to enable them to proceeds will be applied in effecting the
redeem their participatory interest prior to appropriate adjustments to the Portfolio.
implementation of the 3.10 The Portfolio's ability to replicate the price
change. and yield performance of the Index will be affected
by the costs and expenses incurred by the
4.11. The manager shall in managing the assets of Portfolio.
the Portfolio ensure that it is aligned with the
limits as prescribed by Regulation 28 of the
Pension Funds Act, 24 of 1956, to the extend
allowed by the Act.
Portfolio Benchmark Portfolio Benchmark Change due to amalgamation
S&P GIVI SA Top 50 Index Satrix Quality Index
Distributing Methodology Distributing Methodology Change due to amalgamation
Distributing quarterly Distributing quarterly
Total Expense Ratio Total Expense Ratio Clients are given the
35 bps 40 bps opportunity to transfer and
remain invested in an ETF
providing similar investment
style exposure.
Charges, performance, and share pricing
• Investors will not be liable for the payment of any additional
fees, charges, taxes, or brokerage as a result of the
amalgamation.
• Future performance and share pricing will be determined by the
new amalgamated fund, i.e. the Satrix Quality South Africa
Portfolio.
How the amalgamation impacts your investment
Replacement participatory interests
When the source fund, Satrix S&P GIVI South Africa Top 50 ETF is
absorbed into and amalgamated with the target fund, the Satrix Quality
South Africa Portfolio , investors will be issued with replacement
participatory interests (shares) in the new amalgamated fund. The
replacement shares will be equal in market/monetary value to the
shares held prior to the amalgamation, although the number of shares
held may change. The Satrix S&P GIVI South Africa Top 50 ETF (source
fund) will cease to exist.
This is in accordance with Section 99 (3) (a) of the Act, which
stipulates that on the effective date, every investor:
"shall… hold in the new scheme or portfolio, such participatory
interests with an aggregate money value that is not less than the
lower of the net asset value or market value, as may be fair and
reasonable in the circumstances of the participatory interests which
such investor, immediately before the date on which the proposed
transaction becomes effective, held in an original scheme or
portfolio."
BALLOT TIMELINE
Weekday Date Action
Monday 06 November 2023 Receive investor holdings per STRATE
Register (as of 03 Nov)
Tuesday 07 November 2023 Release of announcement on JSE SENS
Wednesday 20 December 2023 Final date of response to ballot letter
(30 business days after distribution)
Friday 26 January 2024 Effective date of amalgamation of
portfolios
Details of the special distribution and amalgamation salient dates
will be announced after FSCA approval.
Special distribution
The Financial Sector Conduct Authority ("FSCA") requires that all
accrued income in funds to be transferred be distributed prior to the
transfer taking place. In line with this requirement, both the source
and target funds will distribute a special income declaration.
Action required
1. Please read this circular on the proposed change to the fund, 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 satrixballotSTXT50@kpmg.co.za on
or before 20 December 2023. If you do not participate in the ballot
in time, you will be deemed to have voted in favour of the change.
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 after the commencement of
the ballot process will be effected.
4. If you are no longer invested in this fund, no action is required.
Effective date of change
The effective date of the proposed amalgamation of the funds will be
26 January 2024, provided that the necessary consent is obtained from
investors and the Financial Sector Conduct Authority ("FSCA").
Your rights as an investor
The rights of investors are firmly entrenched in the Act. In terms
of Section 99 of CISCA, as read with Clause 59 of the Deed of the
Satrix Collective Investment Scheme in Securities 2, the Registrar of
Collective Investment Schemes requires that:
• All investors in the affected portfolios will be informed in
writing on the details of the proposed amalgamations of the
portfolios.
• All investors are given an opportunity to vote in favour of, or
against, the proposed amalgamations.
• An independent auditor will verify the outcome of the ballot.
• All investors will be notified in writing of any proposed
material changes to the collective investment schemes and
portfolios in which they hold units, and
• All investors will be given the opportunity to vote on the
proposed changes.
Please note that, in terms of the Act, the Registrar will not consent
to the changes to the fund unless satisfied that the changes will not
be detrimental to the interests of any investor.
If investors do not respond before the cut-off date, they will be
deemed to have voted in favour of the change.
If the ballot is successful and you do not want your investment to be
included in the amalgamation, you may elect to sell your securities
at any time before the amalgamation effective date and withdraw your
funds at the prevailing market price of the ETF. Please note that this
this transaction may trigger a CGT event and that you may be liable
for CGT at your next income tax assessment as well as brokerage cost.
If you choose not to sell your funds prior to the effective date of
the amalgamation, the amalgamation proposals, as set out in this
letter (if approved by investors), will automatically apply to your
investment.
Should you require further information on the proposed change you can
also email us on info@satrix.co.za.
07 November 2023
JSE Sponsor
Vunani Sponsors
Date: 08-11-2023 08:11:00
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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
