Wrap Text
Second ballot voting procedure in respect of the amendment of CoreShares EWTop40 to CoreShares SciBeta M-FI
CoreShares Index Tracker Managers (RF) Proprietary Limited
CoreShares Equal Weight Top 40 ETF
Share code: CSEW40
ISIN: ZAE000217139
A portfolio in the CoreShares Index Tracker Collective Investment Scheme registered as such in terms
of the Collective Investment Schemes Control Act, 45 of 2002, managed by CoreShares Index Tracker
Managers (RF) Proprietary Limited (“CoreShares”)
RESULT OF BALLOT VOTING PROCEDURE IN RESPECT OF THE AMENDMENT OF THE
CORESHARES EQUAL WEIGHT TOP 40 ETF TO THE CORESHARES SCIENTIFIC BETA MULTI
FACTOR ETF
Investors are referred to the announcements released on SENS on 18 February 2019 regarding the
ballot voting procedure in respect of the amendment of the CoreShares Equal Weight Top 40 ETF to
the CoreShares Scientific Beta Multi Factor ETF and are advised that the audited results of the voting
ballot procedure were as follows:
Summary of Votes
Total Total Total Responses in Responses
responses responses units favor of the against the
received not name and name and
received index index
tracking tracking
change of the change of the
CoreShares CoreShares
Top 40 Top 40
Units per shareholder 346 542 2 259 596 2 605 138 304 114 41 428
register
% of total units 13.26% 86.74% 100%
% of responses 88.01% 11.99%
received
CoreShares is regulated by the Financial Sector Conduct Authority (formerly the Financial Services
Board). In terms of Section 98(2) of the Collective Investment Schemes Control Act of 2002 and clause
67 of the Main Deed of the Scheme, investor consent is required to effect the proposed amendment,
which allow for the following:
• Investors holding no less than 25% in value of the total number of participatory investors in the
Portfolio, excluding CoreShares, must respond to the ballot voting request, for it to be successful
(Clause 67.1 of Main Deed).
• If the majority of those who have responded to the ballot, have voted in favour, then the amendment
will be successful.
• Where less than 25% of investors respond, a second ballot must be conducted where only the
majority result of those who have responded, will determine whether the amendment will be
successful or not i.e. 25% quorum is not required (Clause 67.3 of Main Deed).
Less than 25% of the total number of participatory investors in the portfolio responded to the
first ballot request, therefore the ballot voting procedure was not successful and a second ballot
voting procedure will be conducted as set out below.
SECOND BALLOT VOTING PROCEDURE IN RESPECT OF THE AMENDMENT OF THE
CORESHARES EQUAL WEIGHT TOP 40 ETF TO THE CORESHARES SCIENTIFIC BETA MULTI
FACTOR ETF
1. Background
CoreShares has been managing the CSEW40 portfolio since 2016, following its amalgamation with the
BettaBeta Equally Weighted Top 40 Fund previously managed by Nedbank. The CSEW40 is a single
factor, or weighting methodology, index ETF which equally weights each of the underlying constituents
that make up the FTSE/JSE Equally Weighted Top 40 index.
In the time that has elapsed since taking it over, CoreShares has performed continuous research on
its South African equity offerings and, as a result, we assess our indices for robustness, scalability and
usability. The work we have carried out has led us to the following conclusions:
1.1 Multi-factor strategies demonstrate more consistency and less timing risk than single ‘factor’
or ‘style’ strategies. As such, investors are increasingly seeking to use a multi-factor framework
instead of allocating to single factors.
1.2 Multi-factor strategies provide investors with similar benefits to the Top40 Equal Weighted
Strategy whilst mitigating other risks.
1.3 CoreShares is refining and streamlining its product offering with reference to its South African
equity strategies whereby this offering will consist of a) beta products b) equity income products
and c) multi factor strategies.
A decision has been made, based on the above factors, to seek approval from the underlying investors
in the CSEW40 to amend the investment mandate from its current form of tracking the FTSE/JSE Equal
Weighted Top 40 Index to change to track the Scientific Beta CS South-Africa Multi-Beta Multi-Strategy
Six-Factor EW Index. In addition to this change in index, the name of the CoreShares Top 40 Equal
Weighted ETF (CSEW40) portfolio will also be amended to the CoreShares Scientific Beta Multi Factor
ETF (the “Amendments”).
The impact of the Amendments is that the portfolio will no longer buy and hold constituents of the
FTSE/JSE Equal Weighted Top 40 Index but will now buy and hold constituents of the Scientific Beta
CS South-Africa Multi-Beta Multi-Strategy Six-Factor EW Index. The management fee charged will
increase from 0.30% p.a. to 0.40% p.a. which will only become effective once the regulatory approval
of the Amendments has been obtained. The management of the portfolio, income distributions, risk
profile and ASISA classification will all remain as is and will not be changed.
2. Scientific Beta Background
In 2017, CoreShares partnered with EDHEC Risk Institute Scientific Beta (“ERI Scientific Beta”) to
develop a multi-factor index for the South African equity market. In October 2017, CoreShares
launched the CoreShares Scientific Beta Multi-Factor Index Fund – a traditional CIS unit trust fund
which currently tracks this index.
Taking into consideration the CSEW40 product, CoreShares does not believe the Equal Weighted Top
40 strategy to be as well balanced from a factor perspective as the Scientific Beta index.
ERI Scientific Beta has constructed its index around six main factors, namely, Size, Momentum,
Volatility, Value, Low Investment and High Profitability which are rewarded in the long term.
CoreShares believes this use of multiple factors will ultimately expose investors to greater
diversification benefits, reduction in the levels of risk and increased coverage to the number of
constituents held in a portfolio.
The changes to the Portfolio are summarised as follows:
EXISTING PROPOSED EFFECTIVE DATE
10 July 2019
CORESHARES TOP 40 EQUALLY WEIGHTED CORESHARES SCIENTIFIC BETA MULTI FACTOR
ETF INDEX ETF
INDEX DEFINITION: INDEX DEFINITION:
FTSE/JSE EQUALLY WEIGHTED TOP40 SCIENTIFIC BETA CS SOUTH-AFRICA MULTI-BETA
INDEX MULTI-STRATEGY SIX-FACTOR EW INDEX
The “Index” means the Equally Weighted Top40 The Index means Scientific Beta CS South-Africa Multi-
Index as calculated independently by the Beta Multi-Strategy Six-Factor EW Index, which is a
FTSE/JSE daily; and “constituent securities” price-only return index. The Index is calculated and
means listed shares on the Johannesburg Stock maintained in accordance with the ERI Scientific Beta
Exchange or such other listed instruments Equity Strategy Construction Rules.
which constitute the securities included from
time to time in the Index. The “Extended South Africa Regional Universe” are
those stocks from the ERI Scientific Beta Global,
Extended Developed Europe or Extended USA
Universes, that have a listing (primary or otherwise) in
Johannesburg. Only the most liquid and highest free-
float market capitalisation constituents are selected.
INVESTMENT POLICY: INVESTMENT POLICY:
a) The investment objective of the portfolio is to provide
a) The investment policy of the portfolio shall investors with an efficient and easily accessible
be to track the index as closely as means by which to achieve a return that tracks the
reasonably as possible and price and yield performance of the Scientific Beta
(i) buying only shares in constituent CS South-Africa Multi-Beta Multi-Strategy Six-
companies in the weightings in Factor EW Index. The portfolio will attempt to place
which they have been assigned; an investor in substantially the same position, from
and capital and income perspective, as if they held the
(ii) selling only shares in constituent underlying constituents of the Scientific Beta CS
companies which are excluded from South-Africa Multi-Beta Multi-Strategy Six-
the Index from time to time as a Factor EW Index in their correct weightings.
result of the quarterly Index reviews b) In order to achieve the abovementioned objective,
or corporate action, so as to ensure the portfolio will generally be invested in all of the
that at all times the portfolio holds component securities of the index in proportion to
their weighting in the Scientific Beta CS South-
shares in the Index in the Africa Multi-Beta Multi-Strategy Six-Factor EW
weightings determined. Index and will under normal circumstances aim to
b) The portfolio shall only buy or sell securities be invested in at least 100% of the component
for the purpose of tracking the Index. securities comprising the Scientific Beta CS South-
c) As a secondary objective, securities held by Africa Multi-Beta Multi-Strategy Six-Factor Price
the fund may from time to time be scrip lent Index.
to generate income for the sole benefit of c) The objective of the index namely the Scientific
investors in the fund, provided that such Beta CS South Africa Multi-Beta Multi-Strategy
activities do not conflict with the provisions Six-Factor EW Index is to represent the
of the Act. performance of Johannesburg-listed large and mid-
d) Investors can obtain participatory interests capitalisation companies from the underlying
in the fund on the secondary market or by investment universe, the Extended South Africa
buying and selling participatory interests in Regional Universe, while outperforming the
the fund directly from the manager. In order capitalisation-weighted reference index for this
to achieve this object the manager may, universe. This outperformance relative to the cap-
subject to the Act and the deed, create and weighted benchmark is sought by systematic index
issue, and redeem and cancel an unlimited construction and management processes:
number of participatory interests in the d) Sub-indices correspond to investible and diversified
portfolio. (long-only) proxies for six risk factors that have been
e) The portfolio will not be managed according widely documented in the academic literature and
to the traditional methods of active recognized to be remunerated over the long run.
management, which involves the buying and These indices are tilted towards companies with the
selling of securities based on economic, following market and fundamental characteristics:
financial and market analysis and investing • Mid Capitalisations
judgment. Instead, the investment objective • Value
and style will be full replication of the Index. • Low Volatility
As a result, the financial or other condition of • High Momentum
any company or entity included from time to • High Profitability
time in the Index will not result in the • Low Investment
elimination of its securities from the portfolio The weighting scheme used as diversification
unless such company or entity is removed methodology within each sub-index is the Scientific
from the Index itself. Beta diversified multi-strategy weighting scheme.
f) On receipt of ordinary cash dividends, these Designed to limit model risks in the diversification
will be credited to the Income Account, and process, it is defined as the equally weighted
held in liquid assets until the quarterly combination of five popular diversification schemes:
distribution has been declared, after which it • Maximum Deconcentration
will be treated according to the provisions of
• Maximum Decorrelation
ETF Principal Deed.
• Efficient Minimum Volatility
g) The composition of the portfolio will be
• Efficient Maximum Sharpe Ratio
adjusted periodically to conform to changes
in the composition and weighting of the • Diversified Risk Weighted
securities in the Index so as to ensure that
the composition and weighting of the These diversification techniques may be adjusted
portfolio is representative of the composition from time to time. New techniques may be
and weighting of the securities contained in introduced or existing techniques taken out of the
the Index. methodology.
h) The portfolio will hold securities purely for e) The Scientific Beta CS South-Africa Multi-Beta
the economic rights and benefits attaching Multi-Strategy Six-Factor EW Index may be
thereto, and accordingly if a takeover bid is adjusted from time to time according to the rules of
made for shares of a company included in the Scientific Beta CS South-Africa Multi-Beta
the Index, the portfolio will not tender shares Multi-Strategy Six-Factor EW Index. The
in respect thereof. Securities held by the adjustments may require the removal of a
portfolio which are subject to a takeover bid constituent security from the index and the
will only be surrendered if such surrender is replacement thereof with a new constituent security.
mandatory (and then only to the extent of Adjustments to the portfolio will at all times remain
such mandatory surrender) in terms of substantially aligned with the Scientific Beta CS
applicable law or under the rules of a South-Africa Multi-Beta Multi-Strategy Six-
regulatory authority or body having Factor EW Index.
jurisdiction. If a takeover bid results in a The portfolio’s ability to replicate the performance of
company no longer qualifying for inclusion in the Scientific Beta CS South-Africa Multi-Beta
the index, any shares of the company held Multi-Strategy Six-Factor EW Index will be
by the portfolio after the takeover bid will be affected by the costs and expenses incurred. Costs
disposed of by the portfolio, and the and expenses incurred may result in the Scientific
proceeds will be applied in effecting the Beta CS South-Africa Multi-Beta Multi-Strategy
appropriate adjustments to the portfolio. Six-Factor EW Index not being replicated perfectly
i) To the extent necessary for the purposes of by the portfolio.
achieving its investment policies, the fund f) Under normal market conditions the tracking error
may hold liquid assets. should not exceed 1% (one percent) on an annual
j) The portfolio’s ability to replicate the basis.
performance of the Index will be dependent g) The Scientific Beta CS South-Africa Multi-Beta
on the composition and weighting of the Multi-Strategy Six-Factor EW Index is calculated
portfolio and the net expenses incurred by by ERI Scientific Beta in accordance with ERI
the portfolio. Scientific Beta Equity Strategy Construction Rules.
k) The Trustee shall ensure that the The index construction and calculation rules and the
investment policy set out in this appointment of calculation agent are subject to
supplemental deed is carried out. change from time to time.
h) The portfolio shall hold securities purely for the
economic rights and benefits attaching thereto and,
accordingly, if there is any take-over bid or other
corporate action occurs in relation to any entity or
company whose securities are included in the
portfolio, the Manager shall not surrender any
securities held by the portfolio which may be subject
to such take-over bid or other corporate action,
unless such surrender is mandatory (and then only
to the extent of such mandatory surrender) in terms
of any applicable law or under the rules of a
regulatory authority or body having jurisdiction over
the portfolio and/or the applicable securities.
However, if any such take-over bid or corporate
action results in an entity or company whose
securities were previously included in the Index no
longer qualifying for inclusion in the Index, any such
securities held by the portfolio, shall be disposed of
and the proceeds derived from such disposal shall
be applied in effecting the appropriate adjustments
to the portfolio so as to ensure same tracks the
Index.
i) The portfolio will be passively managed in that the
manager will not buy and sell securities based on
economic, financial and /or market analysis but
rather, will buy and sell securities solely for the
purpose of ensuring that the portfolio tracks the
Index. As such the investment objective and style of
the portfolio will be full replication of the Index.
Accordingly, the financial or other condition of any
company or entity included from time to time in the
Index will not result in the elimination of its securities
from the portfolio, unless the securities of such
company or entity are removed from the Index itself.
j) Assets in liquid form will form a minor part of the
portfolio’s assets.
k) The Trustee shall ensure that the investment policy
set out in this supplemental deed is carried out.
3. Second Ballot voting procedure and Implementation of the Amendments
CoreShares is regulated by the Financial Sector Conduct Authority (formerly the Financial Services
Board). In terms of Section 98(2) of Collective Investment Schemes Control Act of 2002 and clause
67.3 of the Main Deed of the Scheme, which stipulates that if investors holding less than 25% in value
of the total number of participatory interests in a portfolio responded to the first ballot in accordance
with clause with clause 67.1 of the Main Deed (as is the case with the first ballot that was conducted),
then a second ballot must be conducted where only the majority result of those investors who have
responded, will determine whether the amendment will be successful or not i.e. 25% quorum is not
required (Clause 67.3 of Main Deed).
4. Action required by investors
4.1.1 Existing unit holders are requested to notify their JSE Brokers/ CSDPs by no later than
Tuesday, 18 June 2019, as to whether they approve the Amendments as set out in
this announcement or not;
4.1.2 The various Brokers/CSDPs will then submit the ballot responses via ballot form to
CoreShares’ registered Auditors, Deloitte and Touché, before close of business on
Wednesday, 19 June 2019;
4.1.3 If you have disposed of your participatory interests in the portfolio, no action is
required.
5. Approval and Commencements
Approval for the Amendments was granted by the JSE on Monday, 18 February 2019.
Subject to the ballot voting procedure being successful, the Amendments will be with effective from
commencement of business on Wednesday, 10 July 2019. Copies of the CoreShares Scientific Beta
Multi Factor Index ETF Pricing Supplement, in English, may be obtained during normal business hours
from the office of the local manager, CoreShares Index Tracker Managers (RF) Proprietary Limited,
located at Grindrod Tower, 4th Floor, 8a Protea Place, Sandton, 2096 and is available on the website:
www.coreshares.co.za.
Salient dates in respect of the Amendments are set out below:
Expected timeline for the implementation of the Amendments 2019
Declaration and Finalisation Data SENS announcement of approval of Tuesday, 07 May
the Amendments
Last day for investors to respond to their JSE brokers/ CSDPs on Tuesday, 18 June
whether they approve the Amendments as set out in this announcement
or not
Last day for investors/ their JSE brokers/ CSDPs to return respond to Wednesday,19 June
the Auditors on whether they approve the Amendments as set out in this
announcement or not
Deadline for Auditors to submit the findings report to CoreShares Tuesday, 25 June
CoreShares to submit the Auditor’s findings report to FSCA Wednesday, 26 June
FSCA to advise CoreShares to submit signed supplemental deeds for Friday, 28 June
approval
Last Day to Trade in the CoreShares EWTop40 ETF Tuesday, 09 July
Suspension of trading of CoreShares EWTop40 ETF on the JSE Wednesday, 10 July
Commencement of trading in the CoreShares SciBeta M-FI ETF on the Wednesday, 10 July
JSE (New ISIN: ZAE000269502; Share Code: SMART)
Record date Friday, 12 July
Accounts of dematerialised securities holders updated at their CSDPs Monday, 15 July
or brokers
Termination of trading of CoreShares EWTop40 ETF on the JSE Tuesday, 16 July
6. Notices and restrictions
CoreShares Scientific Beta Multi Factor Index participatory interests are not in any way sponsored,
endorsed, sold or promoted by the JSE and it does not make any warranty or representation
whatsoever, expressly or implied, either as to the basis of calculation of, or as to the results to be
obtained from the use of the Scientific Beta CS South-Africa Multi-Beta Multi-Strategy Six-Factor EW
Index (“the Index”) and/or the value at which the said Index stands at any particular time on any
particular day or otherwise. The Index is compiled and calculated on behalf of and on the instructions
of CITM by EDHEC Risk Institute Asia Ltd (“ERIA”). The JSE shall not be liable (whether in negligence
or otherwise) to any person for any error in the Index and the JSE shall not be under any obligation to
advise any person of any error therein.
The securities being issued pursuant to this announcement are not eligible for sale in the United States
or in any other jurisdiction in which trading in the securities would be illegal. The securities have not
been, and will not be, registered under the U.S. Securities Act of 1933, as amended, and the U.S.
Commodity Futures Trading Commission under the U.S. Commodity Exchange Act has not approved
trading in the securities. The securities may not be offered, sold or delivered within the United States or
to U.S. persons, nor may any U.S. person at any time trade or maintain a position in the securities
Should you require any further assistance please send an email to info@coreshares.co.za .
7 May 2019
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: Société Générale
Date: 07/05/2019 02:30:00 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.
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