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Ballot voting procedure in respect of the Proposed Amalgamation of the 10X SciBEeta M-
FI ETF with the 10X TOP50 ETF
10X Fund Managers (RF) Proprietary Limited
10X SciBeta M-FI ETF
Share code: SMART
ISIN: ZAE000269502
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 SCIBETA M-
FI ETF WITH THE 10X TOP50 ETF
This announcement is important and requires the immediate attention of investors in the 10X Scientific Beta
Multi Factor Exchange Traded Fund ("10X SciBeta M-FI 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 SciBeta M-FI 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 SciBeta M-FI ETF was launched in 2019 and was designed to offer investors exposure to South
African shares with a focus on harnessing academically grounded risk factors.
After nearly five years, despite our best efforts in marketing and investor engagement, the 10X SciBeta
M-FI 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 SciBeta M-FI 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 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 SciBeta M-FI ETF with the 10X Top50 ETF via an amalgamation process in
terms of section 99 of CISCA.
Transferring Portfolio Targeted Portfolio
10X SciBeta M-FI 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.
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 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, 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 SciBeta M-FI ETF Tuesday, 16 July
Suspension of trading on the JSE of 10X SciBeta M-FI ETF (Share Code: Wednesday, 17 July
SMART; ISIN: ZAE000269502)
Tuesday, 11 April
Commencement of trading on the JSE in the 10X Top50 ETF (Share 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 Monday, 22 July
or brokers
Termination of trading of the 10X SciBeta M-FI 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 AMALGAMATION 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 SCIBETA M-FI ETF 10X Top50 ETF
INDEX DEFINITION: INDEX DEFINITION:
The Index means the Scientific Beta CS South- The Index means "S&P South Africa Top50
Africa Multi-Beta Multi-Strategy Six-Factor Index", a price-only return index which measures
EW Index, which is a price-only return index. the performance of the 50 largest companies by
The Index is calculated and maintained in float-adjusted market capitalisation and
accordance with the ERI Scientific Beta Equity calculated daily by S&P Dow Jones Indices (or
Strategy Construction Rules. such other calculation agent that the S&P Dow
The "Extended South Africa Regional Universe" Jones Indices may appoint from time to time).
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:
4.1 The investment objective of the portfolio 4.1 The portfolio shall be classified as a South
is to provide investors with an efficient African Equity General Portfolio, or its
and easily accessible means by which to equivalent as may be amended from time to
achieve a return that tracks the price and time. The investment objective of the
yield performance of the Scientific Beta portfolio is to provide investors with an
CS South-Africa Multi-Beta Multi-Strategy efficient and easily accessible means by
Six-Factor EW Index. The portfolio will which to achieve a return that tracks the
attempt to place an investor in price and yield performance of the S&P
substantially the same position, from South Africa Top50 Index. The portfolio will
capital and income perspective, as if they attempt to place an investor in substantially
held the underlying constituents of the the same position, from capital and income
Scientific Beta CS South-Africa Multi-Beta perspective, as if they held the underlying
Multi-Strategy Six-Factor EW Index in constituents of the Index in their correct
their correct weightings. weightings.
4.2 In order to achieve the abovementioned 4.2 In order to achieve the abovementioned
objective, the portfolio will generally be objective, the portfolio shall track the Index
invested in all of the component as closely as possible, by buying only
securities of the index in proportion to constituent securities in the same
their weighting in the Scientific Beta CS weightings in which they are included in the
South-Africa Multi-Beta Multi-Strategy Index and selling only securities which are
Six-Factor EW Index and will under excluded from the Index from time to time
normal circumstances aim to be invested as a result of quarterly Index reviews or
in at least 100% of the component corporate actions or which are required to
securities comprising the Scientific Beta be sold to ensure that the portfolio holds
CS South-Africa Multi-Beta Multi-Strategy constituent securities in the same weighting
Six-Factor Price Index. as they are included in the Index. Under
normal circumstances the portfolio will aim
4.3 The objective of the index namely the
to be invested in at least 100% of the
Scientific Beta CS South Africa Multi-Beta
component securities comprising the Index.
Multi-Strategy Six-Factor EW Index is to
Assets in liquid form will form a minor part
represent the performance of
of the portfolio's assets.
Johannesburg-listed large and mid-
capitalisation companies from the 4.3 The "S&P South Africa 50 Index" means an
underlying investment universe, the index which measures the performance of
Extended South Africa Regional Universe, the 50 largest companies by float-adjusted
while outperforming the capitalisation- market capitalisation within the S&P South
weighted reference index for this Africa Composite Index. The "S&P South
universe. This outperformance relative to Africa Composite Index" means a market
the cap-weighted benchmark is sought by capitalization weighted index designed to
systematic index construction and measure the performance of the South
management processes: African equity market. The S&P South Africa
Composite Index covers equities listed on
Sub-indices correspond to investible and the Johannesburg Stock Exchange with
diversified (long-only) proxies for six risk float-adjusted market values of US$ 100
factors that have been widely documented in million or more and annual dollar value
the academic literature and recognized to be traded of at least US$50 million.
remunerated over the long run. These indices
4.4 The S&P South Africa Top50 Index is a
are tilted towards companies with the following
modified market capitalization weighted
market and fundamental characteristics:
index, where no single company weighs
• Mid Capitalisations
more than 10% of the index at each
• Value
rebalancing.
• Low Volatility
• High Momentum 4.5 For a constituent to be eligible for inclusion
• High Profitability in the Index it must first be included in the
• Low Investment S&P South Africa Composite Index. In this
index, eligible entities or companies are
The weighting scheme used as diversification ranked by float-adjusted market
methodology within each sub-index is the capitalization as of the rebalancing
Scientific Beta diversified multi-strategy reference date. If an entity or company has
weighting scheme. Designed to limit model multiple share classes in the S&P South
risks in the diversification process, it is defined Africa Composite Index, the market
as the equally weighted combination of five capitalization of each class is aggregated
popular diversification schemes: for ranking purposes. The 50 largest
companies then form the index.
• Maximum Deconcentration
• Maximum Decorrelation 4.6 The Index may be adjusted from time to time
• Efficient Minimum Volatility according to its rules. The adjustments may
• Efficient Maximum Sharpe Ratio require the removal of a constituent security
• Diversified Risk Weighted from the Index and the replacement thereof
with a new constituent security. All index
These diversification techniques may be adjustments and corporate action
adjusted from time to time. New techniques treatments follow the S&P South Africa
may be introduced or existing techniques taken Composite Index.
out of the methodology.
4.7 The portfolio's ability to replicate the
4.4 The Scientific Beta CS South-Africa Multi- performance of the Index will be affected by
Beta Multi-Strategy Six-Factor EW Index the costs and expenses incurred. Costs and
may be adjusted from time to time expenses incurred may result in the Index
according to the rules of the Scientific not being replicated perfectly by the
Beta CS South-Africa Multi-Beta Multi- portfolio. Under normal market conditions
Strategy Six-Factor EW Index. The the tracking error should not exceed 1% (one
adjustments may require the removal of a percent) on an annual basis.
constituent security from the index and
4.8 The Index and the S&P South African
the replacement thereof with a new
Composite Index are calculated by S&P Dow
constituent security. Adjustments to the
Jones Indices. The index rules and the
portfolio will at all times remain
appointment of calculation agent are
substantially aligned with the Scientific
subject to change from time to time.
Beta CS South-Africa Multi-Beta Multi-
Strategy Six-Factor EW Index.
4.9 The portfolio shall declare quarterly
distributions in accordance with the
4.5 The portfolio's ability to replicate the
definitions in the Deed and accordingly the
performance of the Scientific Beta CS
S&P South Africa Top50 Index will not be
South-Africa Multi-Beta Multi-Strategy
tracked on a Total Return Basis.
Six-Factor EW Index will be affected by
the costs and expenses incurred. Costs 4.10 The portfolio shall hold securities purely for
and expenses incurred may result in the the economic rights and benefits attaching
Scientific Beta CS South-Africa Multi-Beta thereto and, accordingly, if there is any take-
Multi-Strategy Six-Factor EW Index not over bid or other corporate action occurs in
being replicated perfectly by the portfolio. relation to any entity or company whose
securities are included in the portfolio, the
Under normal market conditions the
Manager shall not surrender any securities
tracking error should not exceed 1% (one
held by the portfolio which may be subject to
percent) on an annual basis.
such take-over bid or other corporate action,
unless such surrender is mandatory (and
4.6 The Scientific Beta CS South-Africa Multi-
then only to the extent of such mandatory
Beta Multi-Strategy Six-Factor EW Index
surrender) in terms of any applicable law or
is calculated by ERI Scientific Beta in
under the rules of a regulatory authority or
accordance with ERI Scientific Beta
body having jurisdiction over the portfolio
Equity Strategy Construction Rules. The
and/or the applicable securities. However, if
index construction and calculation rules
any such take-over bid or corporate action
and the appointment of calculation agent
results in an entity or company whose
are subject to change from time to time.
securities were previously included in the
Index no longer qualifying for inclusion in the
4.7 The portfolio shall hold securities purely
Index, any such securities held by the
for the economic rights and benefits
portfolio, shall be disposed of and the
attaching thereto and, accordingly, if
proceeds derived from such disposal shall
there is any take-over bid or other
be applied in effecting the appropriate
corporate action occurs in relation to any
entity or company whose securities are adjustments to the portfolio so as to ensure
included in the portfolio, the Manager same tracks the Index.
shall not surrender any securities held by
4.11 The Trustee shall ensure that the investment
the portfolio which may be subject to
policy set out in this supplemental deed is
such take-over bid or other corporate
carried out.
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.
4.8 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.
4.9 Assets in liquid form will form a minor
part of the portfolio's assets.
4.10 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:
Scientific Beta CS South-Africa Multi-Beta Multi- S&P South Africa Top50 Index
Strategy Six-Factor EW Index
CHARGES: CHARGES:
Management fee: 0.40% p/a excl. VAT Management fee: 0.20% p/a excl. VAT
Total investment cost (TIC): 0.65% Total investment cost (TIC): 0.30%
DISTRIBUTION FREQUENCY: DISTRIBUTION FREQUENCY:
Quarterly (March, June, September, December) Quarterly (March, June, September, December)
RISK PROFILE: RISK PROFILE:
Aggressive Aggressive
20 May 2024
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: FirstRand Bank Limited
Date: 20-05-2024 09:00:00
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