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Ballot voting procedure in respect of the Proposed Amalgamation pf the 10X DIVTRAX
ETF with the 10X TOP50 ETF
10X Fund Managers (RF) Proprietary Limited
10X DivTrax ETF
Share code: DIVTRX
ISIN: ZAE000190104
10X Top50 ETF
Share code: CTOP50
ISIN: ZAE000204327
Portfolios in the 10X Exchange Traded Fund Scheme registered as such in terms of the Collective Investment
Schemes Control Act, 45 of 2002 ("CISCA"), managed by 10X Fund Managers (RF) Proprietary Limited
("10X").
BALLOT VOTING PROCEDURE IN RESPECT OF THE PROPOSED AMALGAMATION OF THE 10X DIVTRAX
ETF WITH THE 10X TOP50 ETF
This announcement is important and requires the immediate attention of investors in the 10X S&P SA Dividend
Aristocrats Exchange Traded Fund ("10X DivTrax ETF") and the 10X S&P SA Top50 Exchange Traded Fund
("10X Top50 ETF") portfolios
The purpose of this announcement is to notify and obtain investors' approval through a ballot voting
procedure for the proposed amalgamation of the 10X DivTrax ETF ("Transferring Portfolio") into the 10X
Top50 ETF ("Targeted Portfolio") ("Proposed Amalgamation") and affords investors of the Transferring
Portfolio an opportunity to vote to accept or reject the Proposed Amalgamation.
Investors of the Targeted Portfolio are not required to vote in favour of, or against, the Proposed
Amalgamation, however, Investors are afforded an opportunity to consider their options and exercise their
rights before conclusion of the Proposed Amalgamation.
If investors are in any doubt about what action to take, investors are advised to consult their brokers or
financial advisers.
1. BACKGROUND
The 10X DivTrax ETF was launched in 2014 and was designed to offer investors exposure to South
African shares with a focus on companies with a history of consistent or increasing dividends.
After nearly ten years, despite our best efforts in marketing and investor engagement, the 10X DivTrax
ETF portfolio has struggled to attract sufficient investor interest and resonate with a broad investor
base. The financial markets are dynamic, and investor preferences can shift due to various factors,
including market trends, economic conditions, and competing offerings.
Keeping investment costs low is key to the long-term success of any investment strategy.
Unfortunately, the sub-scale nature of the 10X DivTrax ETF portfolio has led to a disproportionately high
Total Investment Charge (TIC) relative to its size. We have, as the Manager, subsidized portfolio costs
for an extended period of time since the launch of the fund to alleviate the impact of fixed costs in a
sub-scale portfolio.
However, these subsidies were ultimately unsustainable and had to be discontinued.
Our goal at 10X is always to improve investor outcomes. To this end, we believe the best course of
action is to merge the 10X DivTrax ETF with the 10X Top50 ETF via an amalgamation process in terms
of section 99 of CISCA.
Transferring Portfolio Targeted Portfolio
10X DivTrax ETF 10X Top50 ETF
The 10X Top50 ETF provides exposure to the 50 largest companies on the JSE Limited by float -
adjusted market cap and maximises diversification by capping single stock weights at 10% (applied at
the quarterly rebalance). The fund is at scale with over R1.5 billion in assets and has won numerous
SALTA awards for efficient index tracking since its launch in 2015.
2. RATIONALE
The combining of portfolios will ensure that the investment strategy has sufficient scale to continue
delivering long-term outcomes for investors, whilst retaining exposure to the key driver of returns: the
performance of South African listed equities.
We envisage the following benefits from combining portfolios:
• Combined Scale and Efficiency: Merging the funds will increase scale and efficiency, enable
more focused decision-making and execution, and has the potential to generate improved
returns for investors over the long term.
• Cost Savings: Investors will benefit from a 50% reduction in management fees excl. VAT as
fees are reduced from 0.40% in the Transferring Portfolio to 0.20% in the Targeted Portfolio. A
larger fund size can lead to reduced expenses as a percentage of assets under management.
This translates into lower expense ratios for investors, potentially improving the overall net
returns of the amalgamated fund.
• Improved Liquidity: The increased size of the combined fund may enhance liquidity, making it
easier for investors to buy and sell units with minimal friction at a portfolio level.
A comparison of investment policies and characteristics of the Transferring Portfolio and the
Targeted Portfolio is provided in Annexure A of this application letter.
HOW THE PROPOSED AMALGAMATION AFFECTS YOUR INVESTMENT
Section 99 (3) (a) of the Collective Investment Schemes Control 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 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".
In other words, when the portfolios are amalgamated, investors in the Transferring Portfolio will be issued
with replacement participatory interests in the Targeted Portfolio. The replacement participatory interests
will be equal in market/monetary value to the participatory interests held in the Transferring Portfolio before
the Proposed Amalgamation. Although the number of participatory interests held may change. The
conversion ratio will be included in the Finalisation Date announcement indicated in the salient dates below.
The participatory interests of investors in the Targeted Portfolio will remain unchanged and are not impacted
by the Proposed Amalgamation. Any assets received in the Targeted Portfolio from the Transferring Portfolio
will be rebalanced to match the Index of the Targeted Portfolio.
The Targeted Portfolio will retain similar characteristics, such as exposure to the performance of South
African listed equities and ASISA category, which is applied under the Transferring Portfolio. In addition,
clients to benefit from a 50% reduction in the management fee excl. VAT following the Proposed
Amalgamation and from further cost efficiencies resulting from greater scale benefits over the medium term.
Special interim distributions on both portfolios shall take place due to the Proposed Amalgamation. The
special interim distributions will be announced on SENS subsequent to the results of the ballot. It is expected
to be announced simultaneously with the Finalisation Date announcement indicated in the salient dates
below.
YOUR RIGHTS AS AN INVESTOR
The rights of investors are firmly entrenched in the Collective Investment Schemes Control Act and the Deed.
In terms of Section 99 of the Act, the Authority requires that:
• All investors invested in the affected portfolios will be advised, in writing, of the details of the Proposed
Amalgamation of the Collective Investment Scheme portfolios.
• Investors of the Transferring Portfolio are given an opportunity to vote in favour of, or against, the
Proposed Amalgamation.
• An independent auditor will verify the outcome of the ballot.
• If investors of the Transferring Portfolio do not participate in the Proposed Amalgamation ballot
timeously, they will be deemed to have voted in favour of the Proposed Amalgamation.
• Investors of the Targeted Portfolio are not required to submit ballot responses, however, are given an
opportunity to object to the Proposed Amalgamation.
• The Manager may not proceed with the amalgamation should investors holding a majority in value of
participatory interests in the Targeted Portfolio object to the Proposed Amalgamation.
• The Authority will not consent to the Proposed Amalgamation of portfolios unless it is satisfied that
the Proposed Amalgamation will not be detrimental to investors.
• The Proposed Amalgamation will be a capital gains tax (CGT) roll-over event, so no CGT is payable
upon amalgamation.
• Should you not be comfortable with the Proposed Amalgamation proposal, in so far as it relates 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 net asset value price, as defined in the Deed, subject to it
being a discretionary investment. Please note that by electing to redeem your participatory interests, it
will constitute a capital gains tax (CGT) event for which you will be liable to pay CGT at your next income
tax assessment.
• If you choose not to withdraw your investments, the Proposed Amalgamation, as set out in this letter
(to the extent that it is approved by investors) will automatically apply to your investment.
ACTION REQUIRED BY INVESTORS
• Investors in the Transferring Portfolio, through their JSE Brokers/ CSDPs are required to submit the
ballot responses to 10X's Auditors, PricewaterhouseCoopers via e-mail to
za_10x_investments_ballots@pwc.com by no later than Monday, 01 July 2024, as to whether they
approve the Proposed Amalgamation as set out in this announcement or not;
• If you have disposed of your participatory interests in the Transferring Portfolio, no action is required.
• Investors in the Targeted Portfolio are not required to submit ballot responses; however, investors are
given an opportunity to object to the Proposed Amalgamation through their JSE Brokers/ CSDPs,
objections can be submitted to our auditors PricewaterhouseCoopers via e-mail to
za_10x_investments_ballots@pwc.com by no later than Monday, 01 July 2024.
APPROVAL AND COMMENCEMENTS
Subject to the ballot voting procedure being successful and approval by the Authority and the JSE, the
Proposed Amalgamation will take effect from commencement of business on Wednesday, 17 July 2024.
Copies of the existing 10X Top50 ETF Pricing Supplement, in English, may be obtained during normal
business hours from the office of the local manager, 10X Fund Managers (RF) Proprietary Limited, located
at 14th Floor, The Terraces, 34 Bree Street, Cape Town, 8001 and is available on the website:
www.10x.co.za.
Salient dates in respect of the proposed amendments are set out below:
Expected timeline for the implementation of the Proposed 2024
Amalgamation
Record date / investor extract date Friday, 17 May
Declaration SENS announcement of the Proposed Amalgamation Monday, 20 May
Last day for investors, JSE brokers or CSDPs to respond to the ballot Monday, 01 July
request by submitting the ballot form to 10X's Auditors,
PricewaterhouseCoopers indicating their election in respect of the
Proposed Amalgamation.
If the ballot is successful investors and the majority of investors who
respond to the ballot vote to accept the proposed amendments, then:
Finalisation Data SENS announcement by 11:00 Tuesday, 09 July
Last Day to Trade in the 10X DivTrax ETF Tuesday, 16 July
Suspension of trading on the JSE of 10X DivTrax ETF (Share Code: Wednesday, 17 July
DIVTRX; ISIN: ZAE000190104)
Commencement of trading on the JSE in the 10X Top50 ETF (Share Tuesday, 11 April
Wednesday, 17 July
Code: CTOP50; ISIN: ZAE000204327)
Fractional ratio announcement by 11:00 Thursday, 18 July
Record Date Friday, 19 July
Accounts of dematerialised securities holders updated at their CSDPs or Monday, 22 July
brokers
Termination of trading of the 10X DivTrax ETF on JSE Tuesday, 23 July
Note: Any changes to the expected dates above will be announced on SENS.
The trading history of 10X Top50 ETF as the Targeted Portfolio will be retained.
NOTICE AND RESTRICTIONS
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@10x.co.za .
PROPOSED AMAMALGAMATION OF THE ETFS
Annexure A – Comparison of investment policies and characteristics of the amalgamating portfolios
*The differences between portfolios are underlined
TRANSFERRING PORTFOLIO TARGETED PORTFOLIO
Proposed implementation date of amalgamation
– 22 July 2024
10X DivTrax ETF 10X Top50 ETF
INDEX DEFINITION: INDEX DEFINITION:
The "S&P South Africa Dividend Aristocrats The Index means "S&P South Africa Top50
Index" means an index which measures the Index", a price-only return index which measures
performance of constituents within the S&P the performance of the 50 largest companies by
South Africa Composite Index that have float-adjusted market capitalisation and
followed a policy of increasing or maintaining calculated daily by S&P Dow Jones Indices (or
stable dividends for five consecutive years. such other calculation agent that the S&P Dow
Jones Indices may appoint from time to time).
The "S&P South Africa Composite Index"
means a market capitalization weighted index
designed to measure the South African equity
market performance. The Index covers equities
listed on the Johannesburg Stock Exchange
with float-adjusted market values of US$ 100
million or more and annual dollar value traded
of at least US$50 million.
INVESTMENT POLICY: INVESTMENT POLICY:
4.1 The portfolio shall be classified as a 4.1 The portfolio shall be classified as a South
South African Equity General Portfolio. African Equity General Portfolio, or its
The investment objective of the portfolio equivalent as may be amended from time to
is to provide investors with an efficient time. The investment objective of the
and easily accessible means by which to portfolio is to provide investors with an
achieve a return that tracks the price and efficient and easily accessible means by
yield performance of the S&P South which to achieve a return that tracks the
Africa Dividends Aristocrats Index. The price and yield performance of the S&P
portfolio will attempt to place an investor South Africa Top50 Index. The portfolio will
in substantially the same position, from attempt to place an investor in substantially
capital and income perspective, as if they the same position, from capital and income
held the underlying constituents of the perspective, as if they held the underlying
S&P South Africa Dividends Aristocrats constituents of the Index in their correct
Index in their correct weightings. weightings.
4.2 In order to achieve the abovementioned
objective, the portfolio will generally be 4.2 In order to achieve the abovementioned
invested in all of the component objective, the portfolio shall track the Index
securities of the index in proportion to as closely as possible, by buying only
their weighting in the S&P South Africa constituent securities in the same
Dividends Aristocrats Index and will weightings in which they are included in the
under normal circumstances aim to be Index and selling only securities which are
invested in at least 100% of the excluded from the Index from time to time
component securities comprising the as a result of quarterly Index reviews or
S&P South Africa Dividends Aristocrats corporate actions or which are required to
Index. be sold to ensure that the portfolio holds
4.3 In accordance with the S&P South Africa constituent securities in the same weighting
Dividends Aristocrats Index rules (as as they are included in the Index. Under
amended from time to time) companies normal circumstances the portfolio will aim
must have increased or maintained to be invested in at least 100% of the
stable dividends for at least 5 component securities comprising the Index.
consecutive years. All qualifying Assets in liquid form will form a minor part
securities are included but the index has of the portfolio's assets.
a minimum of 20 stocks, if fewer than 20
4.3 The "S&P South Africa 50 Index" means an
securities are eligible, the dividend
index which measures the performance of
growth criterion is relaxed progressively.
the 50 largest companies by float-adjusted
market capitalisation within the S&P South
4.4 The "S&P South Africa Composite Index"
Africa Composite Index. The "S&P South
means a market capitalization weighted
Africa Composite Index" means a market
index designed to measure the South
capitalization weighted index designed to
African equity market performance. The
measure the performance of the South
Index covers equities listed on the
African equity market. The S&P South Africa
Johannesburg Stock Exchange with float-
Composite Index covers equities listed on
adjusted market values of US$ 100
the Johannesburg Stock Exchange with
million or more and annual dollar value
float-adjusted market values of US$ 100
traded of at least US$50 million.
million or more and annual dollar value
traded of at least US$50 million.
4.5 The S&P South Africa Dividends 4.4 The S&P South Africa Top50 Index is a
Aristocrats Index may be adjusted from modified market capitalization weighted
time to time according to the rules of the index, where no single company weighs
S&P South Africa Dividends Aristocrats more than 10% of the index at each
Index. The adjustments may require the rebalancing.
removal of a constituent security from
4.5 For a constituent to be eligible for inclusion
the index and the replacement thereof
in the Index it must first be included in the
with a new constituent security.
S&P South Africa Composite Index. In this
Adjustments to the portfolio will at all
index, eligible entities or companies are
times remain substantially aligned with
ranked by float-adjusted market
the S&P South Africa Dividends
capitalization as of the rebalancing
Aristocrats Index.
reference date. If an entity or company has
4.6 The portfolio's ability to replicate the multiple share classes in the S&P South
performance of the S&P South Africa Africa Composite Index, the market
Dividends Aristocrats Index will be capitalization of each class is aggregated
affected by the costs and expenses for ranking purposes. The 50 largest
incurred. Costs and expenses incurred companies then form the index.
may result in the S&P South Africa
4.6 The Index may be adjusted from time to time
Dividends Aristocrats Index not being
according to its rules. The adjustments may
replicated perfectly by the portfolio.
require the removal of a constituent security
Under normal market conditions the
from the Index and the replacement thereof
tracking error should not exceed 1% (one
with a new constituent security. All index
per centum) on an annual basis.
adjustments and corporate action
4.7 The S&P South Africa Dividends treatments follow the S&P South Africa
Aristocrats Index and the S&P South Composite Index.
African Composite Index is calculated by
4.7 The portfolio's ability to replicate the
S&P Dow Jones Indices. The index rules
performance of the Index will be affected by
and the appointment of calculation agent
the costs and expenses incurred. Costs and
are subject to change from time to time.
expenses incurred may result in the Index
4.8 The portfolio shall pay quarterly not being replicated perfectly by the
distributions at the end of March, June, portfolio. Under normal market conditions
September and December annually. the tracking error should not exceed 1% (one
Accordingly, the S&P South Africa percent) on an annual basis.
Dividends Aristocrats Index will not be
4.8 The Index and the S&P South African
tracked on a Total Return basis.
Composite Index are calculated by S&P Dow
4.9 In no event shall the portfolio be managed Jones Indices. The index rules and the
according to the traditional approach of
active investment management but appointment of calculation agent are
rather a passive approach will be applied. subject to change from time to time.
Accordingly, the portfolio is a tracker fund
4.9 The portfolio shall declare quarterly
which tracks the S&P South Africa
distributions in accordance with the
Dividend Aristocrats Index. Assets in
definitions in the Deed and accordingly the
liquid form will form a minor part of the
S&P South Africa Top50 Index will not be
portfolio's assets.
tracked on a Total Return Basis.
4.10 The Trustee shall ensure that the
4.10 The portfolio shall hold securities purely for
investment policy set out in this
the economic rights and benefits attaching
supplemental deed is carried out.
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.
4.11 The Trustee shall ensure that the investment
policy set out in this supplemental deed is
carried out.
ASISA FUND CLASSIFICATION: ASISA FUND CLASSIFICATION:
South African - Equity – General South African - Equity – General
PORTFOLIO BENCHMARK: PORTFOLIO BENCHMARK:
S&P South Africa Dividend Aristocrats Index S&P South Africa Top50 Index
CHARGES: CHARGES:
Management fee: 0.40% p/a excl. VAT Management fee: 0.20% p/a excl. VAT
Total investment cost (TIC): 0.69% Total investment cost (TIC): 0.30%
DISTRIBUTION FREQUENCY: DISTRIBUTION FREQUENCY:
Quarterly (March, June, September, December) Quarterly (March, June, September, December)
RISK PROFILE: RISK PROFILE:
Moderate to Aggressive Aggressive
20 May 2024
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: FirstRand Bank Limited
Date: 20-05-2024 09:01:00
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The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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