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Ballot procedure in respect of amendment of CoreShares PropTrax 10 and amalgamation of CoreShares PropTrax SAPY ETF
CoreShares Index Tracker Managers (RF) Proprietary Limited
CoreShares PropTrax 10 ETF
Share code: PTXTEN
ISIN: ZAE000155362
CoreShares PropTrax SAPY ETF
Share code: PTXSPY
ISIN: ZAE000101911
Portfolios 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”).
BALLOT PROCEDURES IN RESPECT OF (1) THE AMENDMENT OF THE INVESTMENT POLICY
OF THE CORESHARES PROPERTY TOP TEN EXCHANGE TRADED FUND (“PTXTEN”); AND (2)
AMALGAMATING THE CORESHARES PROPERTY SAPY EXCHANGE TRADED FUND WITH
CORESHARES PROPERTY TOP TEN EXCHANGE TRADED FUND.
THIS LETTER IS IMPORTANT AND REQUIRES YOUR ATTENTION
CoreShares Index Tracker Managers (RF) (Pty) Ltd, a Manager appointed in terms of the Collective
Investment Schemes Control Act, No. 45 of 2002 (“the Act”), hereby effects ballot voting procedures in
terms of Section 67 of the Deed and Section 99 of the Act in order to obtain approval for:
1. Amendment of the investment policy of the CoreShares Property Top Ten Exchange Traded
Fund (“PTXTEN”) to track a new index, the South African Property Income Index.
PLEASE NOTE: ONLY INVESTORS OF THE PTXTEN ARE REQUIRED TO VOTE
ON THIS AMENDMENT.
Notification of the amendment to the name of the CoreShares Property Top Ten Exchange
Traded Fund (“PTXTEN”) to CoreShares South African Property Income Exchange
Traded Fund (“CSPROP”).
2. Amalgamation of the CoreShares Property SAPY Exchange Traded Fund (“PTXSPY”) into
the CoreShares Property Top Ten Exchange Traded Fund (“PTXTEN”).
PLEASE NOTE: INVESTORS OF BOTH THE CORESHARES PROPERTY SAPY
EXCHANGE TRADED FUND (“PTXSPY”) AND CORESHARES
PROPERTY TOP TEN EXCHANGE TRADED FUND (“PTXTEN”)
ARE REQUIRED TO VOTE ON THIS AMALGAMATION.
Action required
1. Please complete the enclosed Ballot Form as it relates to you and return it to our registered Auditors;
Deloitte and Touche before close of business on 28 June 2019. You may email to
zadurcoreshares@deloitte.co.za.
2. If you have disposed of your participatory interests in the portfolio, no action is required.
BACKGROUND
1. Introduction
Listed property (Real Estate Investment Trusts (REITS) and other Property Companies)
fulfil a useful function within a balanced portfolio. This is because the asset class is somewhat
of a hybrid between equity and fixed income with characteristics of both. Property securities
provide for a growing income stream through time. Accordingly, from a diversification and
correlation perspective they provide for a useful allocation within client portfolios.
South Africa has a growing and sophisticated listed property sector both in terms of the size of
the market but also in terms of the number of funds offering exposure to this segment.
CoreShares has two index funds (ETFs); the CoreShares Property Top Ten Exchange Traded
Fund (“PTXTEN”) and Coreshares Property SAPY Exchange Traded Fund (“PTXSPY”) within
this asset class. It is our intention to amalgamate these funds and restructure the index which
the remaining single fund will track. The reasons for this are two-fold:
I. CoreShares manages two ETFs which, by index fund standards, are sub scale
(R170mln & R275mln). By combining these funds, we are able to run a larger product
and provide better economies of scale. This will allow us to reduce the management
fee of the remaining product. Furthermore, the local listed property sector (whilst at a
decent size) does not warrant two ETF products within the asset class.
II. The new index (South African Property Income Index) (referred to in paragraph 1
above) has been constructed with the ‘use case’ or ‘outcome’ of listed property front of
mind - chiefly to achieve a high, reliable, growing income stream without taking on
undue risks as opposed to more simplistic market cap or equal weighted indexes.
A property ETF that is focused on a yield outcome should resonate well with investors who
widely use the asset class for this very purpose. This creates a more investor centric
proposition.
2. A summary of our existing property offerings and impact of proposed changes
Below we provide an overview of our two existing property ETFs, the CoreShares Property Top
Ten Exchange Traded Fund (“PTXTEN”) and CoreShares Property SAPY Exchange Traded
Fund (“PTXSPY”) and also highlight the impact of the proposed changes on the current
investment policies of the ETFs under the heading “List of Similarities and Differences”.
I. CoreShares Property Top Ten Exchange Traded Fund (R275m AUM)
Initially launched in 2011, “the investment policy of the portfolio is to track the
FTSE/JSE SA Listed Property Top 10 Equal Index (a custom index calculated
independently by FTSE/JSE) as closely as possible, by buying only constituent
securities in the same weightings 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...”.
This index consists of the top ten companies, as measured by investable market
capitalisation in the FTSE/JSE SAPY Index and are held in equal weightings of 10.0%
each (as at each quarterly rebalance date).
The product provides simple exposure to the largest primary listed property shares on
the JSE. While it has a beta/size focus, its exposure/objective is more closely defined
as an equally-weighted factor. The challenge with single factor strategies is their
susceptibility to lumpy performance outcomes, giving investors a volatile experience of
the risk asset class.
Accordingly, a yield focused property ETF which has been aligned to the client need
should be more suitable than a simple equal weighted proposition.
We are therefore embarking on this process to obtain your approval to change the
investment policy of the PTXTEN to track the South African Property Income Index. In
the event that this ballot is approved/successful the name of the CoreShares Property
Top Ten Exchange Traded Fund (“PTXTEN”) will be changed to CoreShares South
African Property Income Exchange Traded Fund (“CSPROP”) in order to reflect the
new index it will be tracking.
We will also reduce the management fee from 0.425% p.a. to 0.35% p.a.
List of Similarities and Differences
EXISTING PROPOSED
(Proposed effective date: 31 July 2019)
FUND NAME: FUND NAME:
CORESHARES PROPERTY TOP TEN CORESHARES SOUTH AFRICAN PROPERTY
EXCHANGE TRADED FUND (“PTXTEN”) INCOME EXCHANGE TRADED FUND (“……”)
PORTFOLIO BENCHMARK: PORTFOLIO BENCHMARK:
FTSE/JSE SA LISTED PROPERTY TOP TEN SOUTH AFRICAN
EQUAL WEIGHTED INDEX PROPERTY INCOME INDEX
INVESTMENT POLICY: INVESTMENT POLICY:
The investment policy of the portfolio shall be to track the The investment policy of the portfolio shall be to track the
Index as closely as reasonably possible by, to the fullest South African Property Income Index as closely as possible,
extent possible, by buying only securities include in the Index by buying only constituent securities in the same weightings
in the weightings in which they have been included in the in which they are included in the Index and selling only
Index; and selling only securities which are excluded from the securities which are excluded from the Index from time to
Index from time to time as a result of the quarterly Index time as a result of Index reviews or corporate actions, so as
reviews or corporate actions, so as to ensure that at all times to ensure that at all times the portfolio holds securities
the portfolio holds securities included in the Index in the same included in the Index in the same weightings as they are
weightings as they are included in the Index; and included in the Index; and
As a further objective, to manage the securities held by the As a further objective, to manage the securities held by the
portfolio to generate income for the benefit of investors. portfolio to generate income for the benefit of investors.
The portfolio shall not buy or sell securities for the purpose of The portfolio shall not buy or sell securities for the purpose of
making a profit nor for any purpose other than tracking the making a profit nor for any purpose other than tracking the
Index. Index.
Investors may obtain participatory interests in the portfolio on Investors may obtain participatory interests in the portfolio on
the secondary market or by subscribing for new participatory the secondary market or by subscribing for new participatory
interests in the portfolio on the primary market. In order to interests in the portfolio on the primary market. In order to
achieve this object, the manager may, subject to the Act and achieve this object, the manager may, subject to the Act and
the Deed, create and issue an unlimited number of the Deed, create and issue an unlimited number of
participatory interests in the portfolio. participatory interests in the portfolio.
The portfolio will be passively managed in that the manager The portfolio will be passively managed in that the manager
will not buy and sell securities based on economic, financial will not buy and sell securities based on economic, financial
and /or market analysis but rather, will buy and sell securities and /or market analysis but rather, will buy and sell securities
solely for the purpose of ensuring that the portfolio tracks the solely for the purpose of ensuring that the portfolio tracks the
Index. As such the investment objective and style of the Index. As such the investment objective and style of the
portfolio will be full replication of the Index. Accordingly, the portfolio will be full replication of the Index. Accordingly, the
financial or other condition of any company or entity included financial or other condition of any company or entity included
from time to time in the Index will not result in the elimination from time to time in the Index will not result in the elimination
of its securities from the portfolio, unless the securities of such of its securities from the portfolio, unless the securities of such
company or entity are removed from the Index itself. company or entity are removed from the Index itself.
The composition of the portfolio will be adjusted quarterly to The composition of the portfolio will be adjusted semi-
conform with changes in the composition of the Index. annually to conform with changes in the composition of the
Index.
The portfolio shall hold securities purely for the economic
rights and benefits attaching thereto and, accordingly, if there The portfolio shall hold securities purely for the economic
is any takeover bid other corporate action occurs in relation rights and benefits attaching thereto and, accordingly, if there
to any entity the securities of which are included in the is any takeover bid other corporate action occurs in relation
portfolio, the portfolio shall not surrender any securities held to any entity the securities of which are included in the
by the portfolio which may be subject to such takeover bid or portfolio, the portfolio shall not surrender any securities held
other corporate action, unless such surrender is mandatory by the portfolio which may be subject to such takeover bid or
(and then only to the extent of such mandatory surrender) in other corporate action, unless such surrender is mandatory
terms of any applicable law or under the rules of a regulatory (and then only to the extent of such mandatory surrender) in
authority or body having jurisdiction over the portfolio and / or terms of any applicable law or under the rules of a regulatory
the applicable securities. However, if any such takeover bid authority or body having jurisdiction over the portfolio and / or
or corporate action results in an entity previously included in the applicable securities. However, if any such takeover bid
the Index no longer qualifying for inclusion in the Index, any or corporate action results in an entity previously included in
securities in such entity held by the portfolio, shall be the Index no longer qualifying for inclusion in the Index, any
disposed of by the portfolio and the proceeds derived from securities in such entity held by the portfolio, shall be
such disposal shall be in applied in effecting the appropriate disposed of by the portfolio and the proceeds derived from
adjustments to the portfolio so as to ensure same tracks the such disposal shall be in applied in effecting the appropriate
Index. adjustments to the portfolio so as to ensure same tracks the
Index.
Assets in liquid form will form a minor part of the portfolio’s
assets. Assets in liquid form will form a minor part of the portfolio’s
assets.
The portfolio’s ability to replicate the price and yield
performance of the Index shall be affected by the costs and The portfolio’s ability to replicate the price and yield
expenses incurred by the portfolio. performance of the Index shall be affected by the costs and
expenses incurred by the portfolio.
CHARGES: CHARGES:
Management fee: 0.425% p.a. Management fee: 0.35% p.a.
DISTRIBUTION: DISTRIBUTION:
March, June, September, December March, June, September, December
REBALANCING: REBALANCING:
Quarterly Semi-annually
II. CoreShares Property SAPY Exchange Traded Fund (R170m AUM)
Initially launched in 2007, the “investment policy of the portfolio is to track the
FTSE/JSE SAPY Index as closely as possible, by buying only constituent securities in
the same weightings 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...”.
This product simple vanilla index exposure to the listed property market in South Africa,
with an average of 20 shares listed by their market capitalisation. The index it tracks is
limited to the 20 largest property counters that have a primary listing on the JSE. As
the market has grown, the parameters of this index have become more onerous with
time. For instance, the South African property market has become more global in the
last decade, but the FTSE/JSE SAPY index has not fully benefited from this
development. Additionally, the limitation to the 20 largest counters opens itself to a
scenario where the index becomes less representative of the market as more counters
are listed in our market (and as these listings begin to gain increasing market share).
For these primary reasons, CoreShares has embarked on a search for an alternative
index that would better serve the market.
3. Amalgamating our property fund offerings
As explained above, we wish to amalgamate the two existing property funds in our range
(CoreShares Property SAPY Exchange Traded Fund (“PTXSPY” and CoreShares Property
Top Ten Exchange Traded Fund (“PTXTEN”) to meet the outcomes-based element of our
product development framework.
The “new” amalgamated portfolio will be tracking the South Africa Property Income Index, which
is designed to measure the performance of large South African listed property companies with
an emphasis towards companies with sustainable higher yields. The objective of this approach
is to provide South African investors with property exposure that has a greater income tilt than
what is currently available in the market.
The table below summarises the key characteristics of the two existing property indices which
are tracked by the CoreShares Property SAPY Exchange Traded Fund (“PTXSPY”) and
CoreShares Property Top Ten Exchange Traded Fund (“PTXTEN”) the (FTSE/JSE SAPY
Index and FTSE/JSE SA Listed Property Top 10 Equal Index) respectively. These are
compared alongside the new South Africa Property Income Index.
Index Old New
characteristic FTSE/JSE SAPY FTSE/JSE Prop10 SA Property Income
Index provider FTSE/JSE FTSE/JSE S&P DJI
Index review Quarterly Quarterly Semi-annually
MCap, Liquidity &
Inclusion criteria MCap + Liquidity MCap + Liquidity
Yield
Index includes JSE listed
Primary listing Index includes only Index includes only JSE
property stocks with
requirement JSE listed property listed property stocks with
either a primary or
stocks with a primary a primary listing on the secondary listing on the
listing on the JSE JSE JSE (i.e. The index
methodology does not
have an exclusionary
criteria for JSE listed
property stocks in as far
as their primary and/or
secondary listings are
concerned).
Market Cap (25%) +
Weighting method Market Cap Market Cap
Average Yield (75%)
1.5x cap on median index
Stock capping None 1/(Number of shares)
yield
Typical # of shares ~20 10 ~>25
Asset class Domestic Property Domestic Property Domestic Property
SA Real Estate
ASISA Category SA Real Estate General SA Real Estate General
General
Management fee 0.425% 0.425% 0.35%
The key takeaways are as follows:
I. The new portfolio has a more defined outcome and more closely meets a need in the
market for property allocations that have both a growth and income component.
II. The fee structure, asset class and ASISA categories are similar across all three indices,
therefore placing the investor on the same footing on these features.
III. The new index is structurally more diversified. This is because it considers both local
and global primary listings on the JSE. Additionally, its stock count is typically higher.
IV. The management fee will decrease to 0.35%.
4. Objectives of the “new” amended portfolio (CoreShares South African Property Income
Exchange Traded Fund).
• The investment objective of the portfolio aims to provide investors with a return that
tracks the price and yield performance of the South Africa Property Income Index.
• The index is rebalanced semi-annually, with all securities having a minimum market
cap of R2 billion at the time of inclusion.
• Where there is point-in-time illiquidity for particular shares, the portfolio will endeavour
to track the index as closely as possible, using sampling techniques where necessary.
Where sampling is used, this will be implemented through physical replication.
5. Key characteristics of the “new” amended portfolio (CoreShares South African Property
Income Exchange Traded Fund).
• The investment policy of the portfolio shall be to track the South Africa Property Income
Index as closely as possible, by buying only constituent securities in the same
weightings 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 Index reviews or corporate
actions. As a further objective, the policy shall also be to manage the securities held
by the portfolio to generate income for the benefit of investors.
• Constrained within South African listed property shares. The index has minimum
market cap and liquidity criterion (for invest-ability) and the shares are ranked by both
yield (income) and market capitalisation (size).
• Quarterly distribution in March, June, September and December.
• The fund will sit in the (ASISA) South African Real Estate General category.
In terms of section 99 of the Act, the ballot will be valid if the majority of investors, excluding the
manager, vote in favour of the amalgamation. Absence of a response will be regarded as a vote in
favour of the amalgamation.
Section 99 (3)(a) of the Act 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 that 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”. In other words, when the
portfolios are amalgamated, investors will be issued with replacement participatory interests in the new
portfolio. The replacement participatory interests will be equal in market/monetary value to the
participatory interests held pre-amalgamation.
A special interim distribution on both portfolios shall take place due to the amalgamation.
The name of the amalgamated portfolio will also be amended to the CoreShares South African
Property Income Exchange Traded Fund, should the ballot be successful.
The changes to the Portfolio are summarised as follows:
The impact of list of similarities and differences
EXISTING PROPOSED
(Proposed effective date:
31 July 2019)
CORESHARES PROPERTY CORESHARES PROPERTY TOP CORESHARES SOUTH AFRICAN
SAPY EXCHANGE TRADED TEN EXCHANGE TRADED FUND PROPERTY INCOME EXCHANGE
FUND TRADED FUND
PORTFOLIO BENCHMARK: PORTFOLIO BENCHMARK: PORTFOLIO BENCHMARK:
FTSE/JSE SA LISTED FTSE/JSE SA LISTED SOUTH AFRICAN
PROPERTY INDEX (SAPY) PROPERTY TOP TEN EQUAL PROPERTY INCOME INDEX
WEIGHTED INDEX
INVESTMENT POLICY: INVESTMENT POLICY: INVESTMENT POLICY:
The investment policy of the portfolio shall The investment policy of the portfolio shall be The investment policy of the portfolio shall be to
be to track the Index as closely as possible, to-Track the Index as closely as reasonably track the South African Property Income Index as
by buying only constituent securities in the possible by, to the fullest extent possible – closely as possible, by buying only constituent
same weightings in which they are included buying only securities include in the Index in securities in the same weightings in which they
in the Index; and selling only securities the weightings in which they have been are included in the Index and selling only
which are excluded from the Index from time included in the Index; and selling only securities which are excluded from the Index from
to time as a result of the quarterly Index securities which are excluded from the Index time to time as a result of Index reviews or
reviews or corporate actions or which are from time to time as a result of the quarterly corporate actions, so as to ensure that at all times
required to be sold to ensure that the Index reviews or corporate actions, so as to the portfolio holds securities included in the Index
portfolio holds constituent securities in the ensure that at all times the portfolio holds in the same weightings as they are included in the
same weighting as they are included in the securities included in the Index in the same Index; and
Index. weightings as they are included in the Index;
and As a further objective, the policy shall also be to
The portfolio shall not buy or sell constituent manage the securities held by the portfolio to
securities or any other securities for the As a further objective, to manage the generate income for the benefit of investors.
purpose of making a profit or influencing the securities held by the portfolio to generate
outcome of any proposed corporate action, income for the benefit of investors. The portfolio shall not buy or sell securities for the
nor for any purpose other than tracking the purpose of making a profit nor for any purpose
Index. The portfolio shall not buy or sell securities other than tracking the Index.
for the purpose of making a profit nor for any
As a further objective, the securities held by purpose other than tracking the Index. Investors may obtain participatory interests in the
the portfolio shall be managed to generate portfolio on the secondary market or by subscribing
income for the benefit of investors, but only Investors may obtain participatory interests in for new participatory interests in the portfolio on the
in line with income generated by the the portfolio on the secondary market or by primary market. In order to achieve this object the
constituent securities and not through any subscribing for new participatory interests in manager may, subject to the Act and the Deed,
method of active management. the portfolio on the primary market. In order create and issue an unlimited number of
to achieve this object the manager may, participatory interests in the portfolio.
Investors can obtain participatory interests subject to the Act and the Deed, create and
in the portfolio on the secondary market or
by subscribing for new participatory issue an unlimited number of participatory
interests in the portfolio on the primary interests in the portfolio. The portfolio will be passively managed in that the
market. In order to achieve this object the manager will not buy and sell securities based on
manager may, subject to the Act and the economic, financial and /or market analysis but
Deed create and issue an unlimited number rather, will buy and sell securities solely for the
of participatory interests in the portfolio. The portfolio will be passively managed in purpose of ensuring that the portfolio tracks the
that the manager will not buy and sell Index. As such the investment objective and style
The portfolio will not be managed according securities based on economic, financial and of the portfolio will be full replication of the Index.
to traditional methods of active management /or market analysis but rather, will buy and Accordingly the financial or other condition of any
which involve the buying and selling of sell securities solely for the purpose of company or entity included from time to time in the
securities based on based on economic, ensuring that the portfolio tracks the Index. Index will not result in the elimination of its
financial and market analysis and investing As such the investment objective and style of securities from the portfolio, unless the securities of
management. Instead the investment the portfolio will be full replication of the such company or entity are removed from the Index
objective and style will be full replication of Index. Accordingly the financial or other itself.
the Index. As a result the financial or other condition of any company or entity included
condition of any company or entity included from time to time in the Index will not result in The composition of the portfolio will be adjusted
from time to time in the Index will not result the elimination of its securities from the quarterly to conform with changes in the
in the elimination of its securities from the portfolio, unless the securities of such composition of the Index.
portfolio unless the securities of such company or entity are removed from the
company or entity are removed from the Index itself. The portfolio shall hold securities purely for the
Index itself. economic rights and benefits attaching thereto and,
The composition of the portfolio will be accordingly, if there is any takeover bid other
The portfolio will acquire and hold a portfolio adjusted quarterly to conform with changes in corporate action occurs in relation to any entity the
of securities that substantially represents all the composition of the Index. securities of which are included in the portfolio, the
of the component securities in the Index in portfolio shall not surrender any securities held by
substantially the same weighting as in the The portfolio shall hold securities purely for the portfolio which may be subject to such takeover
Index. However the portfolio shall also be the economic rights and benefits attaching bid or other corporate action, unless such
entitled, in its discretion and only on a thereto and, accordingly, if there is any surrender is mandatory (and then only to the extent
temporary basis, to employ such other takeover bid other corporate action occurs in of such mandatory surrender) in terms of any
investment techniques and instruments as relation to any entity the securities of which applicable law or under the rules of a regulatory
will most effective give effect to the object or are included in the portfolio, the portfolio shall authority or body having jurisdiction over the
the investment policies of the portfolio. not surrender any securities held by the portfolio and / or the applicable securities.
portfolio which may be subject to such However, if any such takeover bid or corporate
The composition of the portfolio will be takeover bid or other corporate action, unless action results in an entity previously included in the
adjusted periodically to conform to changes such surrender is mandatory (and then only Index no longer qualifying for inclusion in the Index,
in the composition and weighting of the to the extent of such mandatory surrender) in any securities in such entity held by the portfolio,
securities in the Index so as to ensure that terms of any applicable law or under the rules shall be disposed of by the portfolio and the
the composition and weighting of the of a regulatory authority or body having proceeds derived from such disposal shall be in
securities in the portfolio are a reflection of jurisdiction over the portfolio and / or the applied in effecting the appropriate adjustments to
the composition and weighting of the applicable securities. However, if any such the portfolio so as to ensure same tracks the Index.
securities contained in the Index. takeover bid or corporate action results in an
entity previously included in the Index no Assets in liquid form will form a minor part of the
The portfolio will hold securities purely for longer qualifying for inclusion in the Index, portfolio’s assets.
the economic rights and benefits attaching any securities in such entity held by the
thereto and accordingly, the voting rights in portfolio, shall be disposed of by the portfolio The portfolio’s ability to replicate the price and yield
respect of the constituent securities will not and the proceeds derived from such disposal performance of the Index shall be affected by the
be exercised, including, without limitation, shall be in applied in effecting the appropriate costs and expenses incurred by the portfolio.
the exercise thereof in regard to corporate adjustments to the portfolio so as to ensure
actions and the exercise thereof in the event same tracks the Index.
of a takeover bid being made for any
company the securities of which are Assets in liquid form will form a minor part of
included in the Index. In the event of such a the portfolio’s assets.
takeover bid, the portfolio will not tender
shares in respect thereof and securities held The portfolio’s ability to replicate the price
by the portfolio which are subject to a and yield performance of the Index shll be
takeover bid will only be surrendered if such affected by the costs and expenses incurred
surrender is mandatory (and then only to the by the portfolio.
extent o0f such mandatory surrender) in
terms of any applicable law or under the
rules of a regulatory authority or body having
jurisdiction. If a takeover bid results in a
company no longer qualifying for inclusion in
the Index, any shares of the company held
by the portfolio after the takeover bid will be
disposed of by the portfolio, and the
proceeds will be applied in effecting the
appropriate adjustments to the portfolio.
Assets in liquid form will form a minor part of
the portfolio’s assets.
The portfolio’s ability to replicate the price
and yield performance of the Index will be
affected by the costs and expenses incurred
by the portfolio and by the liquidity of the
constituent Securities from time to time.
CHARGES: CHARGES: CHARGES:
Management Fee: 0.425% p.a. Management fee: 0.35% p.a.
Management fee: 0.425% p.a.
DISTRIBUTION: DISTRIBUTION: DISTRIBUTION:
March, June, September, December March, June, September, December March, June, September, December
REBALANCING: REBALANCING: REBALANCING:
Quarterly Quarterly semi-annually
6. Scenarios for the impact of different outcomes of the two ballot procedures:
BALLOT OUTCOME 1: CONSENT FOR BOTH THE AMENDMENT OF THE
INVESTMENT POLICY OF THE PTXTEN AND
AMALGAMATION OF PTXSPY AND PTXTEN OBTAINED
FROM INVESTORS
The proposed amendment to the investment policy of the PTXTEN and the amalgamation of
the PTXSPY and PTXTEN are expected to become effective simultaneously should the
affected investors of both ballot procedures provide consent for the proposed changes.
The name of the CoreShares Property Top Ten Exchange Traded Fund (“PTXTEN”) will also
change to CoreShares South African Property Income Exchange Traded Fund (“CSPROP”)
should investors provide consent for both the proposed amendment to the investment policy of
the PTXTEN and the amalgamation of the PTXSPY and PTXTEN in the ballot procedures.
BALLOT OUTCOME 2: CONSENT FOR ONLY THE AMENDMENT OF THE PTXTEN
OBTAINED FROM INVESTORS
Should investors of the PTXTEN provide consent for the amendment of the portfolio to track a
new index and investors of both the PTXSPY and PTXTEN do not provide consent for the
amalgamation of the two portfolios, then the amendment to the investment policy and name of
the PTXTEN will NOT be implemented on the proposed effective date.
BALLOT OUTCOME 3: CONSENT FOR ONLY THE AMALGAMATION OF THE
PTXSPY AND PTXTEN OBTAINED FROM INVESTORS
Should investors of both the PTXSAPY and PTXTEN provide consent for the amalgamation of
the two portfolios and investors of the PTXTEN do not provide consent for the amendment of
the portfolio to track a new index, then the amalgamation of the PTXSPY and PTXTEN will NOT
be implemented on the proposed effective date and the name of the PTXTEN will remain
unchanged.
IMPORTANT TO NOTE:
Consent from investors of each of the portfolios in both ballot procedures must be obtained
for either of the changes to be implemented on the proposed effective date.
If consent is obtained for only one of the ballot procedures, then the other will also not
proceed.
In the event that quorum is not achieved specifically in the ballot for amendment of the
investment policy of the PTXTEN (i.e. less than less than 25% of investors respond to the
ballot), then a second ballot will be conducted thus causing delays, please note that the
result of the ballot for the amalgamation of the PTXSPY and PTXTEN will not be impacted
by this delay (i.e. result will remain unchanged pending the result of the second ballot for
amendment of the investment policy of the PTXTEN).
How does the proposed amalgamation impact your investment?
Please reference the table of comparisons above (“Index characteristics”) for a comprehensive list of
similarities and differences.
In summary, the new fund would track a property index that takes both market cap as well as quality
and stable income into account when determining the weightings of the stocks that make up the
portfolio. Additionally, there is no limit to the number of shares that the new index can invest in (although
there are minimum market cap and liquidity requirements for risk and investability controls). The index
is expected to be more diversified and generate a higher level of income.
There shall be no tax impact or change in investment value for investors as a result of the amalgamation.
Your rights as an Investor:
The rights of investors are firmly entrenched in the Collective Investment Schemes Control Act and the
Main Deed of the Scheme:
**** HOLDERS OF PTXTEN
In relation to the change in investment policy of the PTXTEN ETF Section 98(2) of Collective Investment
Schemes Control Act of 2002 and clause 67 of the Main Deed of the Scheme indicate:
(a) Regulations state that 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
request, for it to be successful.
(b) If the majority of those who have responded to the ballot, have voted in favour, then the
amendment will be successful.
(c) Where less than 25% of investors respond, a second ballot will 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).
**** HOLDERS OF PTXTEN AND PTXSPY
(d) All investors in the portfolios are given an opportunity to vote in favour of, or against, the
proposed amalgamation in terms of clause 99 of the Act.
(e) An independent auditor will verify the outcome of the ballot.
(f) If investors do not participate in the amalgamation ballot timeously, they will be deemed to have
voted in favour of the amalgamation.
(g) The amalgamation will be a Capital Gains Tax (CGT) roll-over event, so no CGT will be payable
upon amalgamation.
(h) Should you not be comfortable with the proposal in so far as they relate to the portfolio in which
you hold participatory interests, you may elect to redeem your participatory interests at any time
and withdraw your money at the prevailing price in the market, as defined in the Main Deed,
subject to that it is a discretionary investment. By electing to redeem or sell your participatory
interests, it will constitute a CGT event for which you will be liable to pay CGT at your next
income tax assessment.
(i) If you choose not to withdraw your investments, the proposals as set out in this letter (to the
extent that they are approved by investors) will automatically apply to your investment.
7. Action required by investors
7.1 Existing unit holders are requested to notify their JSE Brokers/ CSDPs by no later than
Friday, 28 June 2019, as to whether they approve the Amendments as set out in this
announcement or not;
7.2 The various Brokers/CSDPs will then submit the ballot responses to CoreShares’
registered Auditors, Deloitte and Touché, before close of business on Monday, 1 July
2019;
7.3 If you have disposed of your participatory interests in the portfolio, no action is required.
8. Approval and Commencements
Approval for the amalgamation and amendments was granted by the JSE on Friday, 17 May
2019.
Subject to the ballot voting procedure being successful and approval by the Registrar of
Collective Investment Schemes, the amalgamation and amendments will be with effective from
commencement of business on 31 July 2019. Copies of the CoreShares South African Property
Income 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 the Friday, 17 May
Amendments
Last day of investors to return respond to their JSE brokers/ CSDPs on whether Friday, 28 June
they approve the Amendments as set out in this supplement or not
Last day of investors/ their JSE brokers/ CSDPs to return respond to the Auditors Tuesday, 28 June
on whether they approve the Amendments as set out in this supplement or not
Deadline for Auditors to submit the findings report to Coreshares Friday, 05 July
CoreShares to submit the Auditor’s findings report to FSCA Monday, 09 July
FSCA to advise CoreShares to submit signed supplemental deeds for approval Monday, 15 July
Last Day to Trade in the CoreShares PropTrax Ten and CoreShares PropTrax Tuesday, 30 July
SAPY ETFs
Suspension of trading of CoreShares PropTrax Ten and CoreShares PropTrax Wednesday, 31 July
SAPY ETFs on the JSE
Commencement of trading in the CoreShares SAProp Income ETF on the JSE Wednesday, 31 July
(New ISIN: ZAE000273165; Share Code:CSPROP)
Record date Friday, 02 August
Accounts of dematerialised securities holders updated at their CSDPs or brokers Monday, 05 August
Termination of trading of CoreShares PropTrax Ten and CoreShares PropTrax Tuesday, 06 August
SAPY ETFs on the JSE
Note: Any changes to the expected dates above will be announced on SENS.
9. Notice and restrictions
CoreShares South African Property Income ETF participatory interests are not in any way
sponsored, endorsed, sold or promoted by the JSE or S&P Dow Jones Indices (“S&P”) and
none of these parties makes 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
South Africa Property Income 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 S&P. However, S&P shall not be liable (whether
in negligence or otherwise) to any person for any error in the index and S&P 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
17 May 2019
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: Société Générale
Date: 17/05/2019 03:00:00 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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