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Ballot Voting Procedure in respect of proposed amendments to investment policy and name of CoreShares Preftrax ETF
CoreShares Index Tracker Managers (RF) Proprietary Limited
CoreShares Preftrax ETF
Share code: PREFTX
ISIN: ZAE000185658
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” / the “Manager”).
BALLOT VOTING PROCEDURE IN RESPECT OF THE PROPOSED AMENDMENTS TO THE
INVESTMENT POLICY AND THE NAME OF THE CORESHARES PREFERENCE SHARE EXCHANGE
TRADED FUND (THE “CORESHARES PREFTRAX ETF” / THE “ETF” / THE “PORTFOLIO”)
This announcement is important and requires the immediate attention of investors in the CoreShares
Preftrax ETF.
The purpose of this announcement is to notify and obtain investors’ approval through a ballot voting procedure
for the proposed amendments to the investment policy and the name of the CoreShares Preftrax ETF due to
the restructure in the South African preference share market as outlined in detail in the SENS announcement
and letter issued to investors on 05 September 2022, “Notification in respect of suspension provisions of the
deed establishing the CoreShares Preftrax ETF” which is available on the CoreShares website at,
https://coreshares.co.za/fund/coreshares-preftrax/ and affords investors an opportunity to vote to accept or
reject the proposed amendments.
If investors are any doubt about what action to take, investors are advised to consult their brokers or financial
advisers.
1. BACKGROUND
CoreShares Index Tracker Managers (RF) (Pty) Ltd is an approved Manager of collective investments
schemes and has two schemes in securities namely, the Coreshares Index Tracker Collective Investment
Scheme and Coreshares Collective Investment Scheme.
The CoreShares Preftrax ETF is a portfolio established under the Coreshares Index Tracker Collective
Investment Scheme with an objective to provide to provide investors with an efficient and easily
accessible means by to achieve a return that tracks the price and yield performance the FTSE/JSE
Preference Share Index (“the J251 / the Index”).
The South African preference share market has recently seen a steady reduction in bank issued
preference shares listed on the JSE with several preference share issuances having already redeemed,
mainly due to the change in Tier 1 capital classification introduced in the Basel III regulatory framework,
and as a result, making it inappropriate for the portfolio to invest in the remaining constituent preference
shares with the cash received as further large preference share constituents redeem as this will lead to
both large single preference share exposures and liquidity risks for the CoreShares PrefTrax ETF.
2. MOTIVATION FOR THE PROPOSED AMENDMENTS TO THE CORESHARES PREFTRAX ETF
The above-mentioned changes have led CoreShares to reassess the ETF’s robustness, scalability, and
usability as an asset allocation tool for investors.
Our research and analysis have led to a decision to propose a change the investment policy of the ETF
from tracking the price and yield performance of the J251 Index to tracking the price and yield
performance of the South African Yield Selected Bond Index. The proposed change delivers on
investor outcomes and provides similar benefits such as an attractive yield and quarterly distributions.
The South African Yield Selected Bond Index consists of a fixed number of South African nominal
bonds with the investment objective of providing improved income relative to the standard South African
Government issued nominal bond indices s by selected the eight South African Government issued
nominal bonds with the highest yield and weighting the portfolio by yield. The investment objective of the
ETF is providing income and capital growth to investors over the long term and places an investor in
substantially the same position as if they held the underlying constituents of the South African Yield
Selected Bond Index in their correct weightings. The Index Is calculated by S&P Dow Jones Indices.
Accordingly, the name of the ETF will also change to CoreShares Yield Selected Bond ETF.
The proposed amendments will affect the ETF and investors as follows:
• The ETF will lose its track record (performance history).
• The management fee will be reduced from 0.45% to 0.25% (ex VAT)
3. BALLOT VOTING PROCEDURE AND IMPLEMENTATION OF THE PROPOSED AMENDMENTS
CoreShares is regulated by the Financial Sector Conduct Authority (the “Authority”). In terms of Section
98(2) of Collective Investment Schemes Control Act of 2002, read together with clause 67 of the Main
Deed of the Coreshares Index Tracker Collective Investment Scheme, the consent of investors is
required to implement the proposed amendments, and further require that:
• All investors are given an opportunity to vote in favour of or against the proposed amendments to
the investment policy and name of the ETF.
• Investors holding no less than 25% in value of the total number of participatory interests in the
ETF, excluding CoreShares, must respond to the ballot request, for it to be successful.
• if the majority (more than 50%) of investors who respond to the ballot vote to accept the proposed
amendments, then the ballot will be successful, and the proposed amendments will be
implemented on the proposed effective date once approved by the Authority.
• Should an investor not be comfortable with the proposed amendments, the investor may sell their
participatory interests at any time at the net asset value, as defined in the Deed. An election to
redeem participatory interests will constitute a Capital Gains Tax (CGT) event for which the
investor will be liable to pay CGT at their next income tax assessment.
• If an investor chooses not to cast a vote, and the ballot receives investor approval, the proposed
amendments will automatically apply to their participatory interests in the ETF.
• Where less than 25% of investors respond to the ballot request, a second ballot under updated
timelines will be conducted and communicated to all investors.
• If the majority of the investors in the second ballot vote to accept the proposed amendments, then
the ballot will be successful, and the proposed amendments will be implemented on the updated
proposed effective date once approved by the Authority and the JSE.
• Where the majority of the investors in the second ballot vote to reject the proposed amendments,
then the ballot will be unsuccessful, the proposed amendments will not be implemented, and the
Manager will apply to the FSCA to wind-up the Coreshares Preference Share ETF.
3.1 Action required by investors
3.1.1 A Ballot Form will be made available to all investors, brokers and CSDPs for completion of
the ballot vote.
3.1.2 Existing unit holders are requested to notify their respective JSE brokers or CSDPs of their
desired action in respect of the proposed amendments by no later than Monday, 20 March
2023.
3.1.3 The various Brokers/CSDPs will then submit the ballot responses via the Ballot Form to
CoreShares’ registered Auditors, BDO South Africa Incorporated (“BDO”) at 6th Floor, 123
Hertzog Boulevard, Foreshore Cape Town, 7925 before close of business on Wednesday,
22 March 2023. Alternatively, the Ballot Form may be emailed to ballots@bdo.co.za.
3.1.4 If a person has disposed of their participatory interests in the CoreShares Preference Share
ETF, then no action is required.
3.2 Approval and Commencements
Subject to the ballot voting procedure being successful and approval by the Authority and the JSE,
the proposed amendments will be effective from commencement of business on Wednesday, 19
April 2023. Copies of the CoreShares Yield Selected Bond 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, 2146 and is available on the website: www.coreshares.co.za .
Salient dates in respect of the proposed amendments are set out below:
Expected timeline for the implementation of the proposed 2023
amendments
Record date / investor extract date Monday, 30 January
Declaration SENS announcement of the proposed Friday, 03 February
amendments
Last day for investors to respond to the ballot request by Wednesday, 22 March
submitting the ballot form to their respective JSE brokers or
CSDPs indicating their election in respect of the proposed
amendments.
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
Tuesday, 11 April
Last Day to Trade in the CoreShares Preftrax ETF Tuesday, 18 April
Termination of trading of CoreShares Preftrax ETF on the JSE Wednesday, 19 April
(Share Code: PREFTX; ISIN: ZAE000185658)
Commencement of trading in the CoreShares Yield Selected Wednesday, 19 April
Bond ETF on the JSE (Share Code: CSYSB; ISIN:
ZAE000318614)
Record Date Friday, 21 April
Accounts of dematerialised securities holders updated at their Monday, 24 April
CSDPs or brokers
Note: Any changes to the expected dates above will be announced on SENS
4. Notices and restrictions
CoreShares Yield Selected Bond ETF 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
South African Yield Selected Nominal Bond 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 CoreShares by S&P Dow Jones Indices. The S&P Dow Jones Indices
shall not be liable (whether in negligence or otherwise) to any person for any error in the Index and the
S&P Dow Jones Indices shall not be under any obligation to advise any person of any error therein.
The securities being issued pursuant to this supplement 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.
5. PROPOSED AMENDMENTS TO THE ETF
The proposed amendments to the ETF are summarised as follows:
EXISTING PROPOSED
Effective Date: 19 April 2023
CORESHARES PREFERENCE SHARE ETF CORESHARES YIELD SELECTED BOND ETF
INDEX DEFINITION: INDEX DEFINITION:
The “J251 Index” means the FTSE / JSE The “Index” means the South African Yield Selected
preference share index, an index consisting of Nominal Bond Index which is designed to select the
preference shares issued by constituent bonds with the highest yield from the South African
companies traded on the JSE and calculated Nominal Bond Universe.
daily by the JSE (or such other independent
calculation agent by the JSE from time to time).
INVESTMENT POLICY: INVESTMENT POLICY:
4.1 The portfolio shall be classified as a South 4.1 The portfolio shall be classified as a South
African Equity Unclassified portfolio (as African - Interest Bearing - Variable Term
amended from time to time). portfolio (as amended from time to time).
4.2 The investment objective of the portfolio is 4.2 The investment objective of the portfolio aims
to provide investors with an efficient and to provide investors with a return that tracks
easily accessible means by which to the price and yield performance of the Index.
achieve a return that tracks the price and The portfolio will attempt to place an investor
yield performance of the J251 Index. The in substantially the same position, from a
portfolio will attempt to place an investor in capital and income perspective, as if they held
substantially the same position, from the underlying constituents of the Index and in
capital and income perspective, as if they their correct weightings.
held the underlying constituents of the
J251 Index in their correct weightings. 4.3 In order to achieve the abovementioned
objective, the portfolio shall track the Index as
4.3 The “J251 Index” means the FTSE / JSE
closely as possible, by buying only constituent
preference share index, an index
securities in the same weightings in which they
consisting of preference shares issued by
are included in the Index and selling only
constituent companies traded on the JSE
securities which are excluded from the Index
and calculated daily by the JSE (or such
from time to time as a result of monthly Index
other independent calculation agent by the
reviews. Under normal circumstances the
JSE from time to time).
portfolio will aim to be invested in at least 100%
of the component securities comprising the
4.4 The J251 index may be adjusted from time
Index.
to time according to the rules of the J251
Index. The adjustments may require the
4.4 The portfolio’s ability to replicate the
removal of a constituent security from the
performance of the Index will be affected by
index and replacement thereof with a new
the costs and expenses incurred. Costs and
constituent security. Adjustments to the
expenses incurred may result in the Index not
portfolio will at all times remain
being replicated perfectly by the portfolio.
substantially aligned with the J251 Index.
Under normal market conditions the tracking
error should not exceed 1% (one percent) on
4.5 The portfolio’s ability to replicate the price
an annual basis.
performance of the J251 Index will be
affected by the costs and expenses
4.5 The portfolio may utilize sampling techniques
incurred. Costs and expenses incurred
wherein most but not all of the securities within
may result in the J251 Index not being
the Index are held as such that sufficient
replicated perfectly by the portfolio. Under
exposure to that Index is achieved without full
normal market conditions the tracking error
replication.
should not exceed 1% (one percent) on an 4.6 The portfolio will distribute income on a
annual basis. quarterly basis.
4.6 The aim of the portfolio is to provide, as far 4.7 For the purpose of this portfolio, the Manager
as possible, returns linked to the shall reserve the right to close the portfolio to
performance of the J251 Index in terms of new investors on a date determined by the
both price performance as well as income Manager. This will be done in order to be able
from the component securities of the J251 to manage the portfolio in accordance with its
Index. mandate. The Manager may, once a portfolio
has been closed, open that portfolio again to
4.7 In order to achieve the above-mentioned
new investors on a date determined by the
objective, the portfolio will generally be
Manager.
invested in all the component securities of
the index in proportion to the weighting in 4.8 The Trustee shall ensure that the investment
the J251 Index and will under normal policy set out in this supplemental deed is
circumstances aim to be invested in at carried out.
least 100% of the preference shares
comprising of the J251 Index.
4.8 In no event will the portfolio be managed
according to the traditional approach of
active investment management; rather a
passive approach will be applied.
4.9 Assets in liquid form will form a minor part
of the portfolio’s assets.
4.10 The portfolio aims to hold component
securities in the J251 Index so that the
weighting of each security it holds does
not diverge substantially from the
weighting of that component in the J251
Index.
4.11 The Trustee shall ensure that the
investment policy set out in this
supplemental deed is carried out.
03 February 2023
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: Nedbank Limited
Date: 03-02-2023 09:15:00
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