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Second ballot voting procedure to amend the investment policy of PTXTEN and the amalgamation of PTXSPY with PTXTEN
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
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”).
RESULTS OF BALLOT VOTING PROCEDURES IN RESPECT OF (1) THE AMENDMENT OF THE INVESTMENT POLICY OF THE
CORESHARES PROPERTY TOP TEN EXCHANGE TRADED FUND (“PTXTEN”) AND (2) THE AMALGAMATION OF THE CORESHARES
PROPERTY SAPY EXCHANGE TRADED FUND (“PTXSPY”) WITH THE CORESHARES PROPERTY TOP TEN EXCHANGE
TRADED FUND(“PTXTEN”)
Investors are referred to the announcements released on SENS on 17 May 2019 regarding the ballot
voting procedures in respect of the amendment of the investment policy of the PTXTEN and the
amalgamation of the PTXSPY AND PTXTEN are advised that the audited results of the voting ballot
procedures were as follows:
1. Summary of Votes: Amendment to investment policy of PTXTEN
Total Total Responses in Responses
responses received favour of the against the
not amendment to amendment to
Total units received Investment policy Investment policy
of PTXTEN of PTXTEN
Units per 16 739 868 14 233 250 2 506 618 2 384 729 121 889
shareholder
register (#)
% of total 100% 85.03% 14.97%
units
% of 95.14% 4.86%
responses
received
CoreShares is regulated by the Financial Sector Conduct Authority (formerly the Financial Services
Board). In terms of Section 98(2) of the Collective Investment Schemes Control Act of 2002 and clause
67 of the Main Deed of the Scheme, investor consent is required to effect the proposed amendment,
which allow for the following:
• 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 voting request, for it to be successful
(Clause 67.1 of Main Deed).
• If the majority of those who have responded to the ballot, have voted in favour, then the amendment
will be successful.
• Where less than 25% of investors respond, a second ballot must 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 (Clause 67.3 of Main Deed).
Less than 25% of the total number of participatory investors in the portfolio responded to the
first ballot request, therefore the ballot voting procedure was not successful and a second ballot
voting procedure will be conducted as set out in Page 4 below.
2. Summary of Votes: Amalgamation - PTXTEN Ballot
Total Total Responses in Responses
responses received favour of the against the
not amalgamation of amalgamation of
Total units received the CoreShares the CoreShares
Property SAPY Property SAPY
Exchange Traded Exchange Traded
Fund (“PTXSPY”) Fund (“PTXSPY”)
into the into the
CoreShares CoreShares
Property Top Ten Property Top Ten
Exchange Traded Exchange Traded
Fund (“PTXTEN”) Fund (“PTXTEN”)
Units per 16 739 868 13 898 876 2 840 992 2 725 771 115 221
shareholder
register (#)
% of total 100% 83.03% 16.97%
units
% of 95.94% 4.06%
responses
received
3. Summary of Votes: Amalgamation - PTXTSPY Ballot
Total Total Responses in Responses
responses received favour of the against the
not amalgamation of amalgamation of
Total units received the CoreShares the CoreShares
Property SAPY Property SAPY
Exchange Traded Exchange Traded
Fund (“PTXSPY”) Fund (“PTXSPY”)
into the into the
CoreShares CoreShares
Property Top Ten Property Top Ten
Exchange Traded Exchange Traded
Fund (“PTXTEN”) Fund (“PTXTEN”)
Units per 3 027 799 2 868 016 159 783 148 441 11 342
shareholder
register (#)
% of total 100% 94.72% 5.28%
units
% of 92.90% 7.10%
responses
received
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.
4. Summary of overall results
Investors PTXSPY and PTXTEN have provided consent for the amalgamation of the two portfolios
however, investors holding less than 25% in value of the total number of participatory investors in
PTXTEN responded to the ballot to amend the investment policy of PTXTEN which then requires
a second ballot to 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 (Clause
67.3 of Main Deed) as stated in Paragraph 1 above.
Please note that although the ballot for the amalgamation of the PTXSPY and PTXTEN succeeded,
the amalgamation will only will only be effective in the event that the second ballot to amend the
investment policy of PTXTEN is successful and regulatory approval obtained from the FSCA.
SECOND BALLOT VOTING PROCEDURE IN RESPECT OF THE AMENDMENT OF THE CORESHARES PROPERTY TOP TEN
EXCHANGE TRADED FUND (“PTXTEN”)
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 25 September 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
(R160mln & R266mln). 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 (R266m 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.
II. CoreShares Property SAPY Exchange Traded Fund (R160m 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 proposed 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.
Old Proposed New
Index
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
property stocks with
either a primary or
secondary listing on the
JSE (i.e. The index
Index includes only Index includes only JSE methodology does not
Primary listing JSE listed property listed property stocks with have an exclusionary
requirement stocks with a primary a primary listing on the criteria for JSE listed
listing on the JSE JSE 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 ~ more than 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 proposed 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 proposed 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.
The changes to the Portfolios are summarised as follows:
The impact of list of similarities and differences
EXISTING PROPOSED
(Proposed effective date:
30 October 2019)
CORESHARES PROPERTY TOP TEN EXCHANGE CORESHARES SOUTH AFRICAN PROPERTY
TRADED FUND 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 Index as The investment policy of the portfolio shall be to track the South
closely as reasonably possible by, to the fullest extent possible – African Property Income Index as closely as possible, by buying
only constituent securities in the same weightings in which they are
buying only securities include in the Index in the weightings in which included in the Index and selling only securities which are excluded
they have been included in the Index; and selling only securities from the Index from time to time as a result of Index reviews or
which are excluded from the Index from time to time as a result of corporate actions, so as to ensure that at all times the portfolio
the quarterly Index reviews or corporate actions, so as to ensure holds securities included in the Index in the same weightings as
that at all times the portfolio holds securities included in the Index in they are included in the Index; and
the same weightings as they are included in the Index; and
As a further objective, to manage the securities held by the portfolio As a further objective, the policy shall also be to manage the
to generate income for the benefit of investors. securities held by the portfolio to generate income for the benefit of
investors.
The portfolio shall not buy or sell securities for the purpose of
making a profit nor for any purpose other than tracking the Index. The portfolio shall not buy or sell securities for the purpose of making
a profit nor for any purpose other than tracking the Index.
Investors may obtain participatory interests in the portfolio on the
secondary market or by subscribing for new participatory interests Investors may obtain participatory interests in the portfolio on the
in the portfolio on the primary market. In order to achieve this object secondary market or by subscribing for new participatory interests
the manager may, subject to the Act and the Deed, create and issue in the portfolio on the primary market. In order to achieve this object
an unlimited number of participatory interests in the portfolio. the manager may, subject to the Act and the Deed, create and issue
an unlimited number of participatory interests in the portfolio.
The portfolio will be passively managed in that the manager will not The portfolio will be passively managed in that the manager will not
buy and sell securities based on economic, financial and /or market buy and sell securities based on economic, financial and /or market
analysis but rather, will buy and sell securities solely for the purpose analysis but rather, will buy and sell securities solely for the purpose
of ensuring that the portfolio tracks the Index. As such the of ensuring that the portfolio tracks the Index. As such the
investment objective and style of the portfolio will be full replication investment objective and style of the portfolio will be full replication
of the Index. Accordingly the financial or other condition of any of the Index. Accordingly the financial or other condition of any
company or entity included from time to time in the Index will not 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 result in the elimination of its securities from the portfolio, unless the
securities of such company or entity are removed from the Index securities of such company or entity are removed from the Index
itself. itself.
The composition of the portfolio will be adjusted quarterly to conform The composition of the portfolio will be adjusted quarterly to conform
with changes in the composition of the Index. with changes in the composition of the Index.
The portfolio shall hold securities purely for the economic rights and The portfolio shall hold securities purely for the economic rights and
benefits attaching thereto and, accordingly, if there is any takeover benefits attaching thereto and, accordingly, if there is any takeover
bid other corporate action occurs in relation to any entity the bid other corporate action occurs in relation to any entity the
securities of which are included in the portfolio, the portfolio shall securities of which are included in the portfolio, the portfolio shall not
not surrender any securities held by the portfolio which may be surrender any securities held by the portfolio which may be subject
subject to such takeover bid or other corporate action, unless such to such takeover bid or other corporate action, unless such
surrender is mandatory (and then only to the extent of such surrender is mandatory (and then only to the extent of such
mandatory surrender) in terms of any applicable law or under the mandatory surrender) in terms of any applicable law or under the
rules of a regulatory authority or body having jurisdiction over the rules of a regulatory authority or body having jurisdiction over the
portfolio and / or the applicable securities. However, if any such portfolio and / or the applicable securities. However, if any such
takeover bid or corporate action results in an entity previously takeover bid or corporate action results in an entity previously
included in the Index no longer qualifying for inclusion in the Index, included in the Index no longer qualifying for inclusion in the Index,
any securities in such entity held by the portfolio, shall be disposed any securities in such entity held by the portfolio, shall be disposed
of by the portfolio and the proceeds derived from such disposal shall of by the portfolio and the proceeds derived from such disposal shall
be in applied in effecting the appropriate adjustments to the portfolio be in applied in effecting the appropriate adjustments to the portfolio
so as to ensure same tracks the Index. 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 portfolio’s ability to replicate the price and yield performance of
the Index shll be affected by the costs and expenses incurred by the the Index shall be affected by the costs and expenses incurred by
portfolio. 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
6. Second Ballot voting procedure and Implementation of the Amendments:
CoreShares is regulated by the Financial Sector Conduct Authority. In terms of Section 98(2)
of Collective Investment Schemes Control Act of 2002 and clause 67.3 of the Main Deed of the
Scheme, which stipulates that if investors holding less than 25% in value of the total number of
participatory interests in a portfolio responded to the first ballot in accordance with clause with
clause 67.1 of the Main Deed (as is the case with the first ballot that was conducted), then a
second ballot must be conducted where only the majority result of those investors who have
responded, will determine whether the amendment will be successful or not i.e. 25% quorum is
not required (Clause 67.3 of Main Deed).
7. Action required by investors
7.1 Existing unit holders are requested to notify their JSE Brokers/ CSDPs in writing by no
later than Monday, 23 September 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 Wednesday, 25
September 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 amendments was granted by the JSE on 17 May 2019.
Subject to the ballot voting procedure being successful and approval by the Authority, the
amendments will be with effective from commencement of business on 30 October 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 date announcement of approval of the Amendments Monday, 12 August
Last day of investors to respond to their JSE brokers/ CSDPs on Monday, 23 September
whether they approve the Amendments as set out in this supplement
or not
Last day of investors/ their JSE brokers/ CSDPs to return/respond to Wednesday, 25 September
the Auditors on whether they approve the Amendments as set out in
this supplement or not
Deadline for Auditors to submit the findings report to Coreshares Wednesday, 02 October
CoreShares to submit the Auditor’s findings report to FSCA Wednesday, 09 October
Results of second ballot and finalisation data announcement Thursday, 10 October
FSCA to advise CoreShares to submit signed supplemental deeds Wednesday, 16 October
for approval
Last Day to Trade in the CoreShares PropTrax Ten and CoreShares Tuesday, 29 October
PropTrax SAPY ETFs
Suspension of trading of CoreShares PropTrax Ten and CoreShares Wednesday, 30 October
PropTrax SAPY ETFs on the JSE
Commencement of trading in the CoreShares SAProp Income ETF Wednesday, 30 October
on the JSE (New ISIN: ZAE000273165; Share Code:CSPROP)
Record date Friday, 1 November
Accounts of dematerialised securities holders updated at their Monday, 4 November
CSDPs or brokers
Termination of trading of CoreShares PropTrax Ten and CoreShares Tuesday, 5 November
PropTrax 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
12 August 2019
Corporate advisor and sponsor: Grindrod Bank Limited
Trustee: Société Générale
Date: 12/08/2019 11:00:00
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