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Provisions Of The Collective Investment Schemes Control Act - STXNAM
Ballot Voting Procedure in respect of proposed changes to the
Distribution Methodology of the Satrix S&P Namibia Bond ETF
SATRIX COLLECTIVE INVESTMENT SCHEME 2
SATRIX S&P NAMIBIA BOND ETF
JSE Code: STXNAM
NSX code: SXNNAM
ISIN: ZAE000318275
("Satrixnam or Satrixnnam")
A portfolio in the Satrix Collective Investment Scheme, registered as
such in terms of the Collective Investment Schemes Control Act, 45 of
2002
This letter is important and requires your immediate attention.
This letter is important and requires your immediate attention.
The purpose of this letter is to inform you of the proposed change to
the distribution methodology of the Satrix S&P Namibia Bond ETF and
to provide you with sufficient information to vote on this proposal.
Provisions Of The Collective Investment Schemes Control Act
The Satrix S&P Namibia Bond ETF is a collective investment scheme
("portfolio") which is regulated in terms of the Collective Investment
Scheme Control Act, 2002 ("CISCA").
The reason for the ballot is that Satrix wishes to convert the Satrix
S&P Namibia Bond ETF, from a reinvesting to a distributing ETF. In
this regard where this ETF currently reinvests income distributions
received from underlying securities automatically into those
underlying securities on behalf of the portfolio, Satrix will convert
this fund to a distributing ETF and as such, distributions will be
declared and paid out to investors periodically.
The reasons for the change are as follows:
• Unitholders are referred to Communication 25 of 2020 issued by
the Financial Sector Conduct Authority on 19 May 2020 which
detailed, amongst other items, the publication of the final
conduct standard on the Net Asset Valuation Calculation and
Pricing for Collective Investment Scheme Portfolios ("NAV
Conduct Standard"). Paragraph 10.1 of the NAV Conduct Standard
states:
"All income received and accrued by a portfolio or class after
deducting permissible costs must be distributed to investors so
that it is taxed in the hands of the investor and that the nature
of the income is preserved in the process."
• From the NAV Conduct Standard perspective, by converting the
fund from a total return to distributing fund, Satrix will comply
with Para 10 (1) whereby all income will be distributed to the
investor.
• As a result of the Conduct Standard Distribution Methodology,
distributions declared by the portfolio shall be distributed to
Unitholders on a quarterly basis and not reinvested in the
Portfolio.
• Irrespective of the distribution methodology of the fund i.e.
whether a total return or distributing fund, the investor will
be in the same position post the change from a personal tax
perspective as well as from an investor performance perspective.
• For personal tax purposes, the automatic reinvestment was a
"deemed distribution". The distribution declared by the Satrix
S&P Namibia Bond ETF, which is reinvested, accrues tax at the
investors' marginal rate of tax. Therefore, although a
Unitholder does not actually receive the distribution, such
investor is still liable to pay tax on such distribution at their
marginal tax rate. A total return fund therefore places an
additional administrative process on a Unitholder as such
Unitholder is required to adjust the base cost of his investment
in the units of the Satrix S&P Namibia upwards by the
distributions which are reinvested, to avoid paying tax twice
on the same amount.
• The Change in Distribution Method will simplify the tax
consequences for Unitholders as they will receive the actual
cash distribution and pay tax on such distribution with no
amendments to any base costs necessary.
• Following this change, and in line with TCF outcomes, the client
is neither advantaged nor disadvantaged and will remain in the
same position. Furthermore, the client will now have the option
to receive the physical cash or reinvest.
The table below lists the proposed changes to the Distribution
Methodology:
Current New Distribution Impact on Investor
Distribution Methodology
Methodology
Reinvesting Distributing There is no negative impact on the
(Quarterly) (Quarterly) investors within the Satrix S&P
Namibia Bond ETF.
The Change in Distribution Method
being a change from a reinvesting ETF
to a distributing ETF will have no
effect financially on a Unitholder as
in terms of a reinvesting fund, tax is
paid on a distribution, but the base
cost of an investor's investment
increases by the entire distribution
amount. In the case of a distributing
fund, the investor will receive the
entire distribution (on which he must
pay tax on) which increases the return
he has generated from his investment
in the Satrix S&P Namibia Bond ETF.
Action required from investors
1. Please read this circular on the proposed change to the portfolio, your
rights as an investor and the impact this will have on your investment.
2. A Ballot Form enclosed, is available to all investors, brokers and CSDPs
for completion of the ballot vote.
3. The various Brokers/CSDPs will then submit the ballot responses via email
to our external auditors, KPMG, at satrixballotSTXNAM@kpmg.co.za on or
before 28 August 2024. Alternatively, the Ballot Form may be emailed
directly to KPMG at satrixballotSTXNAM@kpmg.co.za by 28 August 2024.
4. Please do not include any other instructions regarding your holdings with
your ballot form, e.g. requests for purchases, switching instructions,
etc. Your ballot form will go directly to our auditors and, should such
instructions be sent to the auditors, we cannot guarantee that any
instruction subsequent to the commencement of the ballot process will be
effected.
5. If you are no longer invested in this portfolio, no action is required.
Approval and Commencements
Subject to the ballot voting procedure being successful and approval by the
Financial Sector Conduct Authority ("the Authority") of Collective Investment
Schemes, the change in distribution methodology will effective from
commencement of business on 01 October 2024.
Timelines for the implementation of the amendments on Satrix S&P Namibia
Bond ETF ballot:
Date ACTION
16 July 2024 Release of announcement on JSE SENS
Final date of response to ballot letter (30 business
28 August 2024 days after distribution)
01 October 2024 Effective date of change of distribution methodology
The effect on you as investor
The proposed changes to this fund will not change the nature of the
underlying strategy.
Effective date of change
The effective date of the proposed changes to the distribution
methodology will be 01 October 2024, provided that the necessary
consent is obtained from investors and the Financial Sector Conduct
Authority ("FSCA").
Charges, performance and unit pricing
Investors will not be liable for the payment of any additional fees,
charges, taxes, or brokerage as a result of the distribution
methodology change.
Special distribution
No special distributions will be effected nor applicable.
Your rights as an investor
The rights of investors are firmly entrenched in the Act. In terms
of Section 98 of CISCA, as read with Clause 59 of the Deed of the
Satrix Collective Investment Scheme in Securities, the Registrar of
Collective Investment Schemes requires that:
• All investors are notified in writing of any proposed material
changes to the collective investment schemes and portfolios in
which they hold units.
• All investors are balloted in order for them to vote on the
proposed changes.
Please note that, in terms of the Act, the Registrar will not consent
to the changes to the portfolio unless satisfied that the changes will
not be detrimental to the interests of any investor.
At least 25% in value of investors, excluding the manager must respond
in writing of which the majority must agree to the amendment.
If you choose not to switch or sell your funds prior to the effective
date of the change to the distribution methodology as set out in this
letter (if approved by investors), the amended distribution
methodology will automatically apply to your investment.
Should you require further information on the proposed change or wish
to exercise your right to switch or sell any of your investments,
please contact Satrix Managers on 0860 111401, or email
info@satrix.co.za.
16 July 2024
JSE Sponsor
Vunani Sponsors
Date: 16-07-2024 05:06:00
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