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1NVEST ETFs LIMITED - ETF SWIX 40-Voting in Amendments in Investment Policy

Release Date: 25/05/2022 09:32
Code(s): ETFSWX     PDF:  
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ETF SWIX 40-Voting in Amendments in Investment Policy

STANLIB Collective Investments (RF) (Pty) Limited
1nvest Swix 40 ETF
JSE code: ETFSWX
ISIN: ZAE000279220

25 May 2022

Portfolios in the STANLIB ETF Collective Investment Scheme registered as such in terms of the
Collective Investment Schemes Control Act, 45 of 2002, managed by STANLIB Collective
Investments (RF) (Pty) Limited (“STANLIB”).

BALLOT PROCEDURES IN RESPECT OF THE AMENDMENT OF THE INVESTMENT POLICY
OF THE 1NVEST SWIX 40 ETF

THIS LETTER IS IMPORTANT AND REQUIRES YOUR ATTENTION

STANLIB Collective Investments (RF) (Pty) Limited, a Manager appointed in terms of the
Collective Investment Schemes Control Act, No. 45 of 2002 (“the Act”), hereby effects ballot voting
procedures in terms of Clause 59 of the Deed in order to obtain approval for:

   I.      Amendment of the investment policy of the 1nvest Swix 40 ETF to track a new index,
           the FTSE/JSE Capped Shareholder Weighted 40.
PLEASE NOTE: ONLY INVESTORS OF THE 1nvest Swix 40 ETF ARE REQUIRED TO VOTE ON
THIS AMENDMENT.

BACKGROUND

   1. Introduction


        STANLIB Collective Investments (RF) (Pty) Ltd (“STANLIB”) has accepted strategic
        proposals to amend certain of the Scheme’s portfolios for the benefit of investors. To this
        end, STANLIB wishes to accept the proposals to effect certain investment policy
        amendments with the aim of streamlining the Scheme’s portfolio range.
   1nvest Fund managers (Pty) Ltd (“1nvest”) is an Index Product Provider within the Standard
   Bank Group. 1nvest implements all strategies using fixed methodologies (index tracking) and
   without utilising discretion when it comes to implementation of strategies. As much as the
   process around implementation is unemotional, at the core of the business is a strong risk
   management function. The overarching reason for move from the FTSE/JSE Shareholder
   Weighted Top 40 Index to the FTSE/JSE Capped Shareholder Weighted 40 is concentration
   risk mitigation.


   To mitigate concentration risk, a number of alternative indexes where reviewed and the
   results indicate that the FTSE/JSE Capped Shareholder Weighted 40 Index is the most
   suitable alternative to the FTSE/JSE Shareholder Weighted Top 40 Index, given that it
   provides exposure to the same securities and follows the same index methodology, with the
   exception that all securities are capped at 10% at each index rebalancing, therefore reducing
   the concentration risk prevalent in the uncapped index. By changing the benchmark to the
   FTSE/JSE Capped Shareholder Weighted 40 Index investors will have exposures to the
   same securities as they currently have and will ensure that investors are not exposed to
   increased risk in any particular security, s that could be weighted over 10% of the index in
   the future, the proposal is not a short term fix to current problem, but we believe it to be an
   appropriate solution for the future.


   It is proposed that the investment policy of the 1nvest Swix 40 ETF be amended to allow for
   greater risk management and limiting single stock exposure, which should reduce
   concentration risk prevalent and help ensure competitiveness by amending the benchmark
   in accordance with the ASISA Category South Africa - Equity – Large Cap. This would
   allow for more diversification and improved risk-adjusted returns.




2. A summary of our existing offering and impact of proposed changes


   The 1nvest Swix 40 ETF was initially launched in 2010, “the investment policy of the portfolio
   shall be to replicate the FTSE/JSE SWIX Top 40 Index as closely as possible, apart from
   holding assets in a liquid form -
             -   Buying only securities included in the Index, in the weightings in which they
                 have been Included in the Index; and
                -   Selling only securities which are excluded from the Index from time to time as
                    a result of corporate actions or quarterly Index reviews, so as to ensure that at
                    all times the portfolio holds securities included in the Index in the same
                    weightings as they are included in the Index; or

                -   Trading in derivative instruments, as permissible in terms of the Act, to replicate
                    the Index”

   The sole purpose of buying and selling securities in the portfolio is to ensure Index tracking
   and not a profit motive. Therefore, the manager does not buy or sell securities based on
   economic, financial, investment judgement or any market analysis. The objective of the
   portfolio is solely full Index replication.

   Impact of proposed changes


   Proposed investment policy amendment


   A summary of the proposed amendment in investment policy can be found in Annexure I.
   Annexure I provides detailed information on the potential impact the proposed amendments
   in investment policy may have on the terms of your current investment, as well as details of
   the investment policies of the portfolio under the STANLIB ETF Collective Investment
   Scheme.


   Portfolio management


   1nvest will remain responsible for the investment management of the above-mentioned
   portfolio.


3. The impact of outcomes of the ballot procedures
   Ballot outcome: Consent for the amendment of the investment policy of the 1nvest Swix 40
   ETF

   The proposed amendment to the investment policy of the 1nvest Swix 40 ETF is expected
   to become effective should the affected investors of ballot procedures provide consent for
   the proposed changes
How will the proposed investment policy amendment affect your investment?


Value of investment
There will be no effect on the value of your investment as a result of the proposed investment policy
amendment. For example, if you have R1000 worth of participatory interests in your current portfolio
prior to the proposed change, you will hold R1000 worth of participatory interests after the proposed
change.


   A. Taxation implications
       Capital Gains Tax (CGT) implications
       There will be no capital gains implications as a result of the proposed investment policy
       amendment. However, should you elect to sell or switch any or all of your participatory
       interests, it will be viewed as a normal transaction and Capital Gains Tax may apply in that
       instance.


       Dividend Withholding Tax (DWT) implications
       There will be no Dividend Withholding Tax implications as a result of the investment policy
       amendments.


   B. Charges
   No additional fees, charges, taxes or brokerage will be borne by either investors or the portfolio
   as a result of the proposed investment policy amendment. STANLIB will carry all costs relating
   to the proposed amendment.

   C. Distributions and special distribution
   The distribution frequency will remain unchanged save as for any amendments detailed in
   Annexure I.


   D. Changes in policies and conditions of investment
   All the differences in respect of the proposed investment policy amendment of the 1nvest Swix
   40 ETF Fund are outlined in Annexure – I.


Your rights as an investor and the ballot process
In terms of Section 98 of the Collective Investment Schemes Control Act 45 of 2002 (“the Act”),
STANLIB may only amend the deed of the Scheme with respect to a portfolio, if the consent of
investors holding a majority in value in the respective portfolio has been obtained as prescribed in
terms of Clause 59 of the deed of the Scheme.


   -  Investors holding no less than 25% in value of the total number of participatory interests then
       issued in the respective portfolio, must respond in writing.
   -   Each proposed investment policy amendment must be given consent by investors holding a
       majority in value of the participatory interests held by the investors who have responded.
   -   If investors holding less than 25% in value of the total number of participatory interests then
       issued have responded, a second ballot will be conducted. In the event of a second ballot,
       investors holding a majority in value of the participatory interests held by the investors who
       have responded must consent to the amendment.


The Trustees of the Scheme, ABSA Bank Limited, have considered and consented to the
proposed investment policy amendment.


Should you not agree with any of the proposed investment policy amendment, you may elect at any
time to switch your holdings to another portfolio, or to dispose of your holdings and withdraw your
funds at the net asset value (NAV) price, as defined in the deed. Should you elect to sell, switch
any or all your participatory interests, it will be viewed as a normal transaction and Capital
Gains Tax may apply in that instance.


If you choose not to withdraw your funds prior to 18 May 2022, the relevant investment
policy amendment as set out in this letter will automatically apply to your investment,
should it be consented to in terms of the ballot process.


   4. Action required from investors


       4.1.   Please vote by completing the enclosed ballot form and return it to the auditors in
              the enclosed self-addressed envelope or scan and e-mail the form directly to the
              auditors at Ballot@za.pwc.com by 06 July 2022.
       4.2.   Please do not include any other instructions regarding your holdings with your ballot
              form – e.g. requests for repurchases, switching instructions, etc. will not be possible
               to implement with this ballot because ballot forms are addressed directly to the
               auditors who will not act on any transaction requests that may be included. (Please
               refer to our website: www.stanlib.com for applicable forms for transactions.)
       4.3.    If you have disposed of your investment before 18 May 2022, no action is required
               to vote


   5. Approval and Commencements


       In-principle approval for amendment to the index was granted by the JSE on 14 March
       2022.


       Subject to the ballot voting procedure being successful and approval by the Financial Sector
       Conduct Authority (“the Authority”) of Collective Investment Schemes, the investment policy
       amendment will be with effective from commencement of business on [10 December 2020].
       Copies of the 1nvest Swix 40 ETF Pricing Supplement, in English, may be obtained during
       normal business hours from the office of the local manager, STANLIB Collective Investments
       (RF) Proprietary Limited, located at 17 Melrose Boulevard, Melrose Arch, 2196 and is
       available on the website: www.stanlib.com


Timelines for the implementation of the amendments on 1nvest Swix 40 ETF ballot:


       Activity                                                 Date


       1. Declaration and Finalisation Data SENS                25 May 2022
           announcement of approval of the Amendments
       2. Last day of investors/ their JSE brokers/ CSDPs to
           return respond to the Auditors on whether they       06 July 2022
           approve the Amendments as set out in this
           supplement or not
       3. Deadline for Auditors to submit the findings report   20 July 2022
           to STANLIB
       4. STANLIB to submit the Auditor’s findings report to    20 July 2022
           FSCA
       5. FSCA to advise STANLIB to submit signed               03 August 2022
           supplemental deeds for approval
                                                          15 August 2022
       6. Effective date:


Should you require any further assistance please send an email to


Corporate advisor and sponsor: Standard Bank South Africa Limited


Trustee: ABSA Bank Limited
Annexure - I

Existing Portfolio                                                                     Proposed Amended Portfolio

1nvest Swix 40 ETF                                                                     1nvest Swix 40 ETF


INVESTMENT POLICY                                                                      INVESTMENT POLICY

                                                                                       The investment policy of the portfolio shall be to replicate the FTSE/JSE
The investment policy of the portfolio shall be to replicate the FTSE/JSE SWIX
                                                                                       Capped Shareholder Weighted 40 Index as closely as possible by, apart
Top 40 Index as closely as possible by, apart from holding assets in a liquid form:
                                                                                       from holding assets in a liquid form:
Buying only securities included in the Index, in the weightings in which they
                                                                                       Buying only securities included in the Index, in the weightings in which
have been Included in the Index; and
                                                                                       they have been Included in the Index; and
Selling only securities which are excluded from the Index from time to time
                                                                                       Selling only securities which are excluded from the Index from time to
as a result of corporate actions or quarterly Index reviews, so as to ensure
                                                                                       time as a result of corporate actions or quarterly Index reviews, so as to
that at all times the portfolio holds securities included in the Index in the
                                                                                       ensure that at all times the portfolio holds securities included in the Index
same weightings as they are included in the Index; or
                                                                                       in the same weightings as they are included in the Index; or
Trading in derivative instruments, as permissible in terms of the Act, to
                                                                                       Trading in derivative instruments, as permissible in terms of the Act, to
replicate the Index.
                                                                                       replicate the Index.
The sole purpose of buying and selling securities in the portfolio is to ensure
                                                                                       The sole purpose of buying and selling securities in the portfolio is to
Index tracking and not a profit motive. The manager will therefore not buy or
                                                                                       ensure Index tracking and not a profit motive. The manager will therefore
sell securities based on economic, financial, investment judgement or any
                                                                                       not buy or sell securities based on economic, financial, investment
market analysis. The objective of the portfolio is solely full Index replication.      judgement or any market analysis. The objective of the portfolio is solely
                                                                                       full Index replication.
The composition of the portfolio will be adjusted quarterly or at any other time
                                                                                       The composition of the portfolio will be adjusted quarterly or at any other
that the Index provider, FTSE/JSE affect changes to the Index.
                                                                                       time that the Index provider, FTSE/JSE affect changes to the Index.

The portfolio shall hold securities purely for the economic rights and benefits        The portfolio shall hold securities purely for the economic rights and
attaching thereto and, accordingly, if there is a takeover bid or other corporate      benefits attaching thereto and, accordingly, if there is a takeover bid or

actions occurs in relation to any entity the securities of which are included in the   other corporate actions occurs in relation to any entity the securities of

portfolio, the portfolio shall not surrender any securities held by the portfolio      which are included in the portfolio, the portfolio shall not surrender any
                                                                                       securities held by the portfolio which may be subject to such takeover bid
which may be subject to such takeover bid or other corporate action, unless
                                                                                       or other corporate action, unless such surrender is mandatory in terms of
such surrender is mandatory in terms of any applicable law or under the rules of
                                                                                       any applicable law or under the rules of a regulatory authority or body
a regulatory authority or body having jurisdiction over the portfolio and/or the
                                                                                       having jurisdiction over the portfolio and/or the applicable securities.
applicable securities. However, if any takeover or corporate action results in an
                                                                                       However, if any takeover or corporate action results in an entity
entity previously included in the Index no longer qualifying for inclusion in the
                                                                                       previously included in the Index no longer qualifying for inclusion in the
Index, any securities in such entity held by the portfolio, shall be disposed of by
                                                                                       Index, any securities in such entity held by the portfolio, shall be disposed
the portfolio and the proceeds derived from such disposal shall be applied in
                                                                                       of by the portfolio and the proceeds derived from such disposal shall be
effecting the appropriate adjustments to the portfolio so as to ensure same            applied in effecting the appropriate adjustments to the portfolio so as to
tracks the Index.                                                                      ensure same tracks the Index.

                                                                                       The portfolio's ability to replicate the price and income performance will
The portfolio's ability to replicate the price and income performance will be
                                                                                       be affected by the cost and expenses incurred by the portfolio.
affected by the cost and expenses incurred by the portfolio.
                                                                                       Any material change in the investment policy of the portfolio constitutes
Any material change in the investment policy of the portfolio constitutes an           an amendment of the deed and shall be subject to the provisions of

amendment of the deed and shall be subject to the provisions of clause 59 of           clause 59 of the deed, in which event investors shall be given reasonable

the deed, in which event investors shall be given reasonable notice to enable
them to redeem their participatory interest prior to implementation of the       notice to enable them to redeem their participatory interest prior to
change.                                                                          implementation of the change.


Portfolio Benchmark:
                                                                                 Portfolio Benchmark:


The current benchmark is the FTSE/JSE Shareholder Weighted Top 40 Index.
                                                                                 The current benchmark will change to the FTSE/JSE Capped Shareholder
                                                                                 Weighted 40.




Classes of participatory interests and fees:
There will be no change in classes of participatory interests and fees.


Distribution:
There will be no change in the frequency of distributions.


Valuation times:
There will no change to valuation times.


Trading closing time:
There will be no change in the trading closing time.


Trustee:
The trustee will remain Standard Chartered Bank.


ASISA Classification:
The current ASISA classification is South African - Equity - General category.
There will be no change in the ASISA classification.

Date: 25-05-2022 09:32:00
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