ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2015

Transcription

1 RMB MidCap Exchange Traded Fund A portfolio in the RMB Collective Investment Scheme ( the portfolio ) registered in terms of the Collective Investment Schemes Control Act, 45 of 2002 (Incorporated in the Republic of South Africa) (Date of incorporation: 26 June 2012) Share Code: RMBMID ISIN: ZAE ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2015 The RMB Collective Investment Scheme ( the Scheme ) was established in accordance with the provisions of the Collective Investment Schemes Control Act ( CISCA ) with effect from 12 April The RMB MidCap Exchange Traded Fund ( the Fund ) was established as a portfolio of the Scheme in accordance with paragraph A of the Deed of the Scheme on 26 June The investment objective of the Fund is to track the price and performance yield of the FTSE/JSE Mid Cap Index ( Mid Cap Index ) on the JSE Limited. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 Assets Restated Restated Listed investments held at fair value through profit or loss Trade and other receivables Cash and cash equivalents Total assets Liabilities Net assets attributable to participatory interest holders Trade and other payables Total liabilities

2 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE Restated Investment income Dividend income Interest income on financial instruments designated at fair value through profit or loss Interest income on bank account Fair value adjustment on financial instruments designated at fair value through profit or loss Other operating income Other income Expenses Management and administrative expenses ( ) ( ) Profit before taxation Taxation - - Profit before amounts attributable to participatory interest holders Distributions to participatory interest holders ( ) ( ) Increase in net assets attributable to participatory interest holders ( ) ( ) Total comprehensive income - -

3 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE Cash flow from operating activities ( ) Cash utilised in operations ( ) ( ) Dividend received Interest income on bank account Interest income on financial instruments designated at fair value through profit or loss Net purchases of listed investments held at fair value through profit or loss - ( ) (32 762) Cash flow from financing activities ( ) Distributions to participatory interest holders ( ) ( Net decrease in cash and cash equivalents ( ) (91 361) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year SUMMARISED ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2015 The preparation of the audited financial results for the year ended 30 June 2015 was supervised by Richard Pampel CA (SA), chief financial officer of Ashburton Investments Holdings Limited. The financial statements incorporate the principal policies set out below, which have been consistently applied to all years presented, unless otherwise stated. During the financial year ended 30 June 2015, the Manager decided to change the classification of the net assets attributable to participatory interest holders. Previously this amount was classified as equity of the Funds. However, given the mandatory nature of the distributions, the Manager believes that classification as a liability provides users of the financial statements of the Funds with more relevant information. The change in presentation brings the presentation of the Funds in line with industry practice. The relevant line items in the annual financial statements have been restated. Statement of compliance The financial statements are prepared in accordance with International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standards Board ( IASB ), and in accordance with the requirements of the trust deed of the Fund ( the Trust Deed ), the JSE Listing Requirements for Exchange Traded Funds and the Collective Investment Schemes Control Act No 45 of 2002.

4 Financial instruments Measurement Financial instruments are recognised when, and only when, the Fund becomes a party to the contractual provisions of that particular instrument. Financial instruments are initially measured at fair value. Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss. For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument. Subsequent to initial recognition, these instruments are measured as set out below. Investments Listed investments are measured at fair value through profit or loss. Fair value is determined with reference to listed closing prices at the end of the reporting period. Trade and other receivables Trade and other receivables originated by the Fund are measured at amortised cost, using the effective interest rate method, less impairments losses. Trade and other receivables are short-term in nature and are not discounted. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. All balances included in cash and cash equivalents have a maturity date of less than three months from the date of acquisition. Financial liabilities Financial liabilities, other than those held at fair value through profit or loss, are measured at amortised cost using the effective interest rate method. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost. Fair value gains and losses on subsequent measurement Gains and losses arising from a change in the fair value on financial instruments are included in net profit or loss in the year in which the change arises. Creations and redemptions Creations and redemptions are recorded on trade date, being the previous day closing index price, using the proceeds less any transaction costs. Offset Financial assets and financial liabilities are offset when the right to set-off is not contingent on a future event and is legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency and bankruptcy then the net amount is reported in the statement of financial position when the Fund has the intention and ability either to settle on a net basis, or to realise the asset and settle the liability simultaneously Derecognition of financial instruments The Fund derecognises financial assets when and only when - The contractual right to the cash flows arising from the financial assets have expired or have been forfeited by the Fund; or It transfers the financial assets including substantially all the risks and rewards of ownership of the assets; or

5 Where the Fund neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, the Fund shall determine whether it has retained control of the financial asset. In this case: o if the Fund has not retained control, it shall derecognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer; or o if the Fund has retained control it shall continue to recognise the financial asset to the extent of its continuing involvement in the financial asset. Financial liabilities are derecognised when and only when the liability is extinguished. This is when the obligation specified in the contract is discharged, cancelled or has expired. The difference between the carrying amount of a financial liability (or part thereof) extinguished or transferred to another party and consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Impairment At each reporting date the Fund assesses all financial assets, other than those at fair value through profit or loss, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired. For amounts due to the Fund, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment. Impairment losses are calculated as the difference between the assets' carrying amount and the present value of estimated future cash flows discounted at the financial assets' original effective interest rate. Impairment losses are recognised in profit or loss. Impairment losses are reversed when an increase in the financial asset's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised. Participatory interests The Fund issues one class of participatory interest which is redeemable at the holder's option. Such participatory interests are classified as financial liabilities. Participatory interests can be put back to the Fund at any dealing date for cash equal to a proportionate share of the Fund's net asset value attributable to the participatory interest holders. The participatory interests are carried at the redemption amount that is payable at the reporting date if the holder exercises the right to put the participatory interests back to the Fund. The participatory interests are issued and redeemed at the holder's option at prices based on the Fund's net asset value per participatory interest at the time of issue or redemption. The Fund's net asset value per participatory interest is calculated by dividing the net assets attributable to the holders of each class of participatory interest by the total number of outstanding participatory interests for each respective class, in accordance with the provisions of the Fund's Trust Deed. Net assets attributable to participatory interest holder evidences a residual interest in the assets of an entity after deducting all of its liabilities. The value of the net assets attributable to participatory interest holders will vary with the changes in the underlying value of the investments net of receivables and payables. The total movement in the statement of comprehensive income is transferred to the net assets attributable to participatory interest holders. In accordance with the Fund s Trust Deed, the Fund distributes its distributable income and any other amounts determined by the Manager of the Fund to participatory interest holders in cash. Distributions payable on redeemable participatory interest are recognised in the statements of comprehensive income as distributions to participatory interest holders. Securities lending The Fund is authorised to engage in securities lending activities up to 50% of the assets under management. Collateral is held by the relevant lending units. Other income Other income comprises income from securities lending activities.

6 Securities lending fee income The fees earned for the administration of securities lending activities are accounted for on an accrual basis in the year in which the services are rendered. Investment income Interest income component on financial instruments is recognised in profit or loss, using the effective interest rate method, taking into account the expected timing and amount of cash flows. The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the average expected life of the financial instruments or portfolios of financial instruments. Dividends and interest in respect of listed securities are recognised when the right to receive payment is established. This is on the last-day-to-trade for listed shares and on the date-ofdeclaration for unlisted shares. Taxation Under the current system of taxation in South Africa, the Fund is exempt from paying taxation on income or capital gains. Both income and capital gains are taxed in the hands of the participatory interest holders. Critical accounting estimates and judgements in applying accounting policies Assumptions and estimates form an integral part of financial reporting and have an impact on the amounts reported. Assumptions are based on historical experience and expectations of future outcomes and anticipated changes in the environment. No significant accounting estimates and judgements have been applied in the financial statements of the Fund. New standards and interpretations adopted in the current financial period The following standard was adopted by the Fund in the current financial period: IFRS 10 Consolidated Financial Statements (Amendments) provide an exemption to the consolidation requirements for entities that meet the definition of an investment entity in terms of IFRS 10. If the exemption is applied, the amendments allow the investment entities to account for investments in subsidiaries at fair value through profit or loss. The amendments are applicable to the Fund as the Fund meets the definition of an investment entity. However, at this point the Fund does not have investments in entities which it controls, therefore the IFRS 10 amendments do not have an effect on the current financial statements but it could have an effect on future financial statements. IAS 32 Financial Instruments Presentation (Amendments) The amendments to IAS 32 Financial Instruments Presentation clarify the existing requirements relating to the offsetting of financial assets and financial liabilities. It specifically clarifies that the right to set-off must not be contingent on a future event and must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency and bankruptcy. The Fund's interpretation of the offsetting requirements has always been in line with this and the adoption of the amended standard did not have any impact on the Fund's annual financial statements. IAS 36 Impairment of Assets (Amendments) Amendments to IAS 36 Impairments of Assets remove the unintended consequences of IFRS 13 Fair Value Measurement on the disclosure required under IAS 36. The amendments reduce the circumstances in which the recoverable amount of the assets or cashgenerating units (CGU) is required to be disclosed. The amendments clarify the disclosures required and introduces an explicit requirement to disclose the discount rate used in determining the impairment or impairment reversals when the recoverable amount is determined using a present value technique. The amendments do not impact the amounts reported in the Fund's annual financial statements. IAS 39 Financial Instruments Recognition and Measurement (Amendments) The amendments to IAS 39 Financial Instruments Recognition and Measurement applies to where the novation of derivatives to central counterparties would result in the discontinuance of hedge accounting. The amendments to this

7 standard provide relief for the discontinuing of hedge accounting when the novation of a derivative designated as a hedge instrument meets certain criteria. The amendments have no impact to the Fund as the Fund has not novated any derivatives used as hedging instruments during the current year or prior periods. Annual Improvements and Cycle As part of its Annual Improvements Project, the IASB made amendments to a number of accounting standards. The annual improvements for the and cycle issued in December 2013 were adopted in the current financial year. These amendments did not have a significant impact on the Fund s results nor have they resulted in the restatement of prior year numbers. IAS 24 Related Party (Amendments) The standard is amended to include, as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity. These amendments did not have a significant impact on the Fund s results nor have they resulted in the restatement of prior year numbers. IFRS 13 Fair Value Measurement (Amendments) The amendment clarifies that the portfolio exception in IFRS 13, which allows an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis, applies to all contracts (including non-financial contracts) within the scope of IAS 39 or IFRS 9. These amendments did not have a significant impact on the Fund s results nor have they resulted in the restatement of prior year numbers. SUMMARISED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 Listed investments held at fair value through profit or loss The following principle methods and assumptions are used to determine the fair value of the financial instruments that are carried at fair value: Listed equities The fair value of listed equities is determined using unadjusted quoted prices. The Fund therefore classifies the fair value measurement of the listed equities in the Level 1 category on the basis that the fair value of the listed equities is determined using unadjusted quoted prices. IFRS 7 Fair value hierarchy 30 June June 2014 Type Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Listed investments held at fair value through profit or loss Trade and other receivables, cash and cash equivalents and trade and other payables No hierarchy disclosure is made for financial assets and liabilities measured at amortised cost where their carrying value approximates fair value.

8 Net assets attributable to participatory interest holders Balance at the beginning of the year Increase in net assets attributable to participatory interest holders Balance at the end of the year Management and administration expenses The Manager is entitled to a management fee for the management of the Scheme, as determined by the Manager from time to time, based on the market value of the investments of the Fund. A management fee of 50 (fifty) basis points of the market value of the investments of the Fund has been applied. Distributions The Fund effects quarterly distributions made out of income received by the Fund cents per participatory interest (2014: 2.57 cents per participatory interest) Declared 26 Sep 2014 and paid 01 Oct 2014 (2014: Declared 27 Sep 2013 and paid 07 Oct 2013) 4.36 cents per participatory interest (2014: 3.58 cents per participatory interest) Declared 24 Dec 2014 and paid 30 Dec 2014 (2013: Declared 03 Jan 2014 and paid 13 Jan 2014) 4.27 cents per participatory interest (2014: 4.45 cents per participatory interest) Declared 30 Mar 2015 and paid 01 Apr 2015 (2014: Declared 28 Mar 2014 and paid 08 Apr 2014) 4.53 cents per participatory interest (2014: 3.21 cents per participatory interest) Declared 26 Jun 2015 and paid 30 Jun 2015 (2014: Declared 27 Jun 2014 and paid 07 Jul 2014) Total distributions Taxation Any taxable income realised during the year, has been distributed to the participatory interest holders of the Fund participatory interests. As a result, both income and capital gains are taxed in the hands of the participatory interest holders.

9 Risk management Exposure to investment, index, credit, secondary trading, market and operational risks arise in the normal course of investment activities in listed securities. The Fund s acceptance of risk is directly attributable to the risks associated with any investment in securities. The objectives for managing the risks associated with financial instruments held for investment purposes, as well as a brief description of the relevant risks and methods adopted to mitigate these risks are outlined in more detail below. The Fund is regulated in terms of the Collective Investment Schemes Control Act ( CISCA / the Act ). In terms of the Act, the Manager must appoint a Trustee. The assets of the portfolio are held under the control of the Trustee. Management monitors compliance in terms of the CISCA requirements and reports are submitted to the Financial Services Board (FSB) on a quarterly basis. Daily pricing of the Fund is publicly available. Management monitors compliance in terms of the CISCA requirements and reports are submitted to the Financial Services Board ( FSB ) on a quarterly basis. Daily pricing of the Fund is publicly available. The Manager s Audit Committee oversees management s compliance with the Fund s risk management framework in relation to the risks faced by the Fund. The investment policy of the Fund is to track the FTSE/JSE Mid Cap Index ( the Index ) as closely as possible, by buying only FTSE/JSE Mid Cap securities in the weighting 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, or which are required to be sold to ensure that the portfolio holds FTSE/JSE Mid Cap securities in the same weighting as they are included in the Index. However, the Fund is also entitled, at its discretion and only on a temporary basis; to employ such other investment techniques and instruments as will most effectively give effect to the object or the investment policies of the Fund. The Fund s portfolio will not be managed according to traditional methods of active management, which involve buying and selling of securities based on economic, financial and market analysis and investing judgement. The Fund will not buy or sell securities for trading purposes or for any purpose other than to track the Index as closely as possible. As a further objective, the securities held by the Fund will be managed to generate income for the benefit of participatory interest holders, for instance, income is generated from scrip lending, which is applied to reduce expenses and the related tracking error. The Fund s portfolio will be adjusted as determined by the stipulations of the JSE s Index calculation methodology to conform to changes in the basket of securities comprising the Fund s portfolio so as to substantially reflect the composition and weighting of the securities comprising the Index at all times. It is recorded that the Fund s ability to replicate the price and yield performance of the Index will be affected by the costs and expenses incurred by the Fund. Costs and expenses may result in the Index not being replicated perfectly by the Fund s portfolio. The Fund is exposed to the following risks from its use of financial instruments: Credit risk; Investment risk; Index risk; Tracking risk; Secondary trading risk; Operational risk; Liquidity risk; and Market risk. The abovementioned risks are addressed below in more detail.

10 Credit risk Credit risk is the risk of loss due to non-performance of a counterparty in respect of any financial or performance obligation. For fair value portfolios the definition of credit risk is expanded to include the risk of losses through fair value changes arising from changes in credit spreads. Credit risk is considered to be low. The bank balance is held at Standard Chartered, which is rated AAA by Standard & Poor. In terms of CISCA, the Manager may, subject to the requirements of section 95, lend or offer to lend assets included in the Fund s portfolio within the limits or on the conditions determined by the Trust Deed. The trustee of the Fund gives authority to the Manager to lend or offer to lend securities with a value not exceeding 50% of the market value of all securities included in the Fund s portfolio. The Manager has proceeded to engage in securities lending in respect of the securities held by the Fund on this basis. In terms of the Trust Deed, the Manager may engage in securities lending under section 85 of CISCA, subject to the following limits and conditions: The securities lending must be beneficial to all participatory interest holders; The Manager may lend or offer to lend securities with a value not exceeding 50 per cent of the market value of all securities included in the Fund s portfolio; The securities that may be lent to one borrower are limited in accordance with the limits determined by the Registrar for the inclusion of the money market instruments in a portfolio; Collateral security for the securities loaned must have an aggregate value that exceeds the market value of the securities loaned by not less than five per cent at all times and may only consist of Cash; or Other securities; or A combination of cash and other securities Securities may not be lent for a period longer than 12 months; and Securities may not be lent unless subject to a right of recall. In terms of the securities lending agreements, it is the duty of the agent to take delivery of the collateral assets, any appropriate instruments of transfer or instrument of title in respect of a service level agreement. Collateral assets and instruments of transfer of title are held on behalf of, and for the benefit of, the principal as represented by the Fund. The portfolio could be exposed to credit risk to the extent that inadequate collateral is held on the underlying assets. If a borrower fails to perform its obligations, the Fund may be unable to recover the loaned securities. However, the Manager only engages in securities lending with A-rated financial institutions. Credit risk is only applicable to the financial assets of the Fund. The credit risk is considered to be low. The carrying amounts of financial assets represent the maximum credit exposure. None of the Fund s financial assets are considered past due or impaired. The Fund s exposure to credit risk could be as a result of a counterparty transaction failing to meet its contractual obligations. This could arise primarily from the fund s investment and securities lending activities. The maximum exposure to credit risk at the reporting date was as follows: Trade and other receivables Cash and cash equivalents

11 Investment risk There can be no assurance that the Fund will achieve its investment objectives of replicating the price and yield performance of the Index. The following factors could impact negatively on the investment performance of the Fund: Certain costs and expenses incurred by the Fund could cause the underlying portfolio to mis-track against the Index; Temporary unavailability of securities in the secondary market or other extraordinary circumstances could cause deviations from the extract weightings of the Index; In circumstances where securities comprising of the Index are suspended from trading or other market disruptions occur, it may be impossible to rebalance the portfolio of securities held by the Fund and this may lead to a tracking error; and Misinterpretation of information on the calculation of the Index could result in mis-tracking of the Index. The investment mandates indicate that the Fund s portfolio is passively managed and as a result the management of the market risk is not possible. Index risk There is no assurance that the Index will continue to be calculated and published on the same or similar basis indefinitely. The Index was created by the JSE Limited as a measure of market performance and not for the purposes of trading fund index securities. The past performance of the Index is not necessarily a guide to its future performance. The Index may be adjusted from time to time as a result of mergers, re-organisations, schemes or arrangement or other corporate activity involving constituent companies. Any adjustments to the Index will be implemented as determined from time to time in terms of the relevant Index stipulations, for example, if a constituent company pays a special dividend. The adjustments may require the removal of a constituent company from the Index and the substitution thereof with a new constituent company while at the same time, if necessary, adjusting the base level. The adjustments to the portfolio will be made in such a way that the portfolio will remain substantially aligned with the Index level at all times. Tracking risk The risk that the Index may not be appropriately tracked is managed in the following manner: Check announcements made on the JSE website for any events that may change the Index and rebalance, if necessary; Check corporate actions schedule for any events that may change the Index and rebalance, if necessary; Check the positions report versus what theoretically should be held with the ETF trading application and rebalance, if necessary; and During daily net asset value ( NAV ) calculation process, check if the RMB MidCap ex-closing price = 1/1000 of the Mid Cap Index closing level, i.e. do a reasonability check.

12 Secondary trading risk There can be no guarantee that the Fund participatory interests will remain listed on the JSE. Any termination of a listing would be subject to the JSE listing requirements. Despite the presence of market makers, the liquidity of the Fund participatory interests cannot be guaranteed. The participatory interests may trade at a discount or premium to their NAV. Operational risk If shares in the underlying companies are suspended or cease trading for any reason, the suspended shares will not be delivered to a participatory interest holder exercising its right to take delivery of the underlying shares until the suspension on the trading in respect of those shares is lifted. If the computer facilities or other facilities of the JSE Limited malfunction, calculation and trading in the Fund participatory interests may be suspended for a period of time. Operational risk arises in rebalancing the underlying portfolio of securities in the Fund to the underlying securities constituting the Index, thereby impacting the value of the Fund's securities and in the determination of the distributions around distribution dates in order to minimise tracking error. The Manager purely executes and administers trades. Daily participatory interest reconciliations are prepared. Weekly reconciliations are prepared between the Fund administrators and the custodian. The Manager reviews all the reconciliations performed with necessary follow ups. A reconciliation is prepared and reviewed monthly by the Manager and is considered the most appropriate control for internal risk management. Assets are held in custody at The Standard Chartered Bank Trades are all in listed equity instruments. Liquidity risk Liquidity risk is the risk that the Fund will not be able to meet its financial obligations towards participatory interest holders when they fall due. The approach to managing liquidity risk is to ensure that the Fund would be able to pay suitable distributions to participatory interest holders on a quarterly basis. All distributions are calculated and approved by the Manager. The Fund could also be exposed to liquidity risk in cases where insufficient funds are available to effect the necessary changes in Index constituents. The need to employ alternative investment techniques would only arise in the event of a liquidity problem, for example, if it is not possible to acquire certain securities comprising the Index due to there being no sellers of such securities. The Fund participatory interests are listed instruments; that are bought and sold on the JSE Limited through a JSE member. The participatory interest holders may exchange participatory interests for the underlying assets which the participatory interests represent. The participatory interest holders may sell their participatory interests on the JSE. Market makers will attempt to maintain a high degree of liquidity through continuously offering to buy and sell the Fund securities at prices around NAV of the Fund securities, thereby ensuring tight buy and sell spreads. Under normal circumstances and conditions, the participatory interest holder will be able to buy or sell the Fund participatory interests from market makers. Market risk Market risk exists where significant changes in security prices will affect the value of the Fund s financial instruments. The investment mandates indicate that the Fund s portfolio is passively managed and as a result the management of the market risk is not possible. There is no guarantee that the Fund s portfolio will achieve its investment objective of perfectly tracking the Index. The value of Fund securities and distributions payable by the Fund s portfolio will rise and fall as the capital values of the underlying securities housed in the Fund and the income flowing there-from fluctuates. Prospective participatory interest holders should be prepared for the possibility that they may sustain a loss. The Fund s portfolio may not be able to perfectly replicate the performance of the Index because - The Fund is liable for certain costs and expenses not taken into account in the calculation of the Index; or Certain Index constituents may become temporarily unavailable; or Other extraordinary circumstances may result in a deviation from precise Index weightings

13 Sensitivity analysis All the Fund s underlying investments are listed on the JSE Limited. The price of the Fund participatory interest is closely correlated to the movements in the Index. Any movement or adjustment in the Index, or the underlying constituents of the Index, will have an impact on the price of the participatory interests. At any point in time, the market value of a Fund participatory interest is expected to reflect 1/1000 th of the Index level, plus an amount which reflects a pro-rata portion of any accrued distribution amount within the Fund s portfolio. Therefore, a 100 point movement in the Index would result in a R0,10 movement in the NAV per participatory interest of the Fund. Actual market values may be affected by supply and demand and other market factors, but the ability of a participatory interest holder to switch out of the Fund participatory interest by redeeming them in specie for one or more baskets of constituent securities, subject to a minimum of 1 million Fund participatory interests being delivered, should operate to substantially avoid or minimise any differential which may otherwise arise between the relevant basket and/or Index level and the value at which the Fund participatory interests trade from time to time. Investment in derivatives The Manager may invest in derivatives from time to time. While an investment in derivatives will only be employed within the investment restrictions stipulated in the Trust Deed and the Act, some risks may be associated with investments in these instruments. No significant investments in derivatives were used for the financial period under review. These financial statements have been audited by the independent auditors, PricewaterhouseCoopers Incorporated, and their unqualified audit opinion is available for inspection at the company s registered head office. A full copy of the financial statements is available on the RMB website 13 November 2015 Sponsor Bridge Capital Advisors Proprietary Limited Trustee Standard Chartered Bank Johannesburg Branch Managers RMB CIS Manco Proprietary Limited Auditors PricewaterhouseCoopers Incorporated