The Minister of Justice and Constitutional Development has under section 81 (2) of the Attorneys Act, 1979 (Act No. 53 of 1979), with the concurrence of the Chief Justice of South Africa and after consultation with the presidents of the various law societies, made the regulations in the Schedule.
bankers' acceptances, commercial paper, debentures, bank deposits, Land Bank bills, National housing bills, negotiable certificates of deposit, parastatal bills, promissory notes, and treasury bills capable of being converted into cash within seven days; and participatory interests in a money market portfolio of a collective investment scheme; "asset portfolio" in relation to the fund, means the portfolio of underlying assets comprising the fund; "bank" means a bank as defined in the Banks Act, 1990 (Act No. 94 of 1990), and a mutual bank as defined in the Mutual Banks Act, 1993 (Act No. 124 of 1993), registered otherwise than provisionally; "banker's acceptance" means a bill as defined in the Bills of Exchange Act, 1964 (Act No. 34 of 1964), drawn on and accepted by a bank; "bill of exchange" means a short-term negotiable debt instrument; "call option" means a derivative instrument that allows the holder the right, but not an obligation, to buy a pre-determined quantity of an underlying asset at a predetermined price, on or before a predetermined date; "call warrant" means an instrument that gives the holder the right to buy shares from the issuer; "Code of Practice" means the Code of Practice Relating to Fund Classification for South African Regulated Collective Investment Portfolios, as issued by the Association of Collective Investments South Africa, which Code of Practice became effective on 16 September 2008; "Collective Investment Schemes Control Act" means the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002); "collective investment scheme" means a scheme as defined in the Collective Investment Schemes Control Act; "commercial paper" means any negotiable acknowledgement of short-term debt issued by a company; "contract size" or "multiplier", in relation to a financial instrument, means the factor by which the price of an underlying asset is multiplied to arrive at the value of one contract as specified in either a) the rules of the relevant exchange on which the financial instrument is listed; or the terms and conditions as defined in the offering document of the relevant financial instrument; "convertible debenture" means a debenture in terms of which the debenture holder has the option to return the debenture to the issuer in exchange for a specified number of equity shares of that issuer within a specified time period; "core liabilities" refers to the liabilities of the fund as determined by section 38(2) of the Act; "credit default swap agreement" means an agreement between two parties to transfer the credit exposure of fixed income assets according to a prearranged formula which is specified at the time the agreement is entered into; "debenture" means a debenture as defined in the Companies Act, 1973 (Act No. 61 of 1973}; "delta" or "delta factor" in relation to a financial instrument, means the requirement for an exposure calculation for financial instruments as determined in accordance with a) a method prescribed by the relevant exchange for the specific financial instrument; or the terms and conditions as defined in the offering document of the relevant financial instrument; "deposit" means a deposit as defined in the Banks Act, 1990 (Act No.
a forward rate agreement; and a credit default swap agreement: Provided such instrument is fully covered, is priced on a mark-to-market basis daily and complies with all limits applicable to it as determined by the exchange on which it is listed; "forward rate agreement" means an agreement between two parties to borrow or lend a specified amount at a specified future date at an interest rate that is fixed at the time the agreement is entered into; "futures contract" means a derivative instrument that obligates the holder to buy a predetermined quantity of an underlying asset at a predetermined price, on or before a predetermined date; "index futures contract" means a future on an index; "index tracking certificate" means a certificate representing all the companies within a specified index according to their index weighting on an exchange; "Land Bank bill" means a bill or note as defined in the Bills of Exchange Act, 1964 (Act No. 34 of 1964), drawn, accepted or issued by the Land and Agricultural Development Bank of South Africa, established in terms of the Land and Agricultural Development Bank Act, 2002 (Act No.
Domestic Fixed Interest portfolios by the Code of Practice; "parastatal bill" means a bill or note as defined in the Bills of Exchange Act, 1964 (Act No. 34 of 1964), drawn, accepted or issued by a parastatal institution; "parastatal institution" means a government-owned company or enterprise; "portfolio" means a portfolio of a collective investment scheme as defined by the Collective Schemes Control Act, 2002 (Act No. 45 of 2002); "promissory note" means a promissory note as defined in the Bills of Exchange Act, 1964 (Act No.
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an index as determined by an exchange; or a group of securities which is the subject matter of the financial instrument, whether such group of securities is represented by an index or not; or in the case of a warrant, option contract or futures contract, any underlying asset referred to in paragraphs (a), (b) or (c) of this definition; and "warrant" means an instrument that allows the holder the right to purchase a predetermined quantity of shares from the issuer at a pre-determined price on or before a predetermined date.
stock of any local authority in the Republic authorised by law to levy property rates; and loans against security of a first mortgage bond on urban immovable property, subject to the relevant investment limits as prescribed in regulation 98.
The fund may not invest in a securities issued by a company to an amount in excess of 5%, or in the case of a company with a market capitalisation of R2 billion or more, 10%, of the market value of all the assets comprising the fund; and securities of any one class issued by a company to an amount in excess of 5%, or in the case of a company with a market capitalisation of R2 billion or more, 10%, or in the case of securities in any listed investment company, 10%, of the aggregate amount of the securities of any one class issued by such company.
The total investment exposure of the fund to any single issuer may not exceed the percentage applicable to the short term institutional rating assigned to that issuer in the corresponding rating band; and all issuers with ratings in rating band 3 may not exceed 20% of the market value of the fund.
If, after the date on which the fund invested in a money market instrument, that money market instrument is rated lower than its rating at the date of investment, the board of control must rectify the position within 30 days of such lower rating: Provided that if the board of control is satisfied that such rectification would be to the detriment of the fund, the board of control must, within 14 days of the date of becoming aware of the lower rating, submit a plan for approval to the Minister setting out measures to rectify the position.
Such amount of money as may be available for investment in terms of section 38(3) of the Act, may be invested by the board of control as prescribed in regulations 9A, 98, 10A, 108, 10C, 100, 10E, 10F, 10G and 10H.
10A. (1) The fund is supject to the relevant conditions and investment limits as prescribed in regulations 9A and 98.
The fund may invest in equities to a maximum aggregate amount of 60% of the market value of all the assets of the fund.
The fund may invest in property to a maximum aggregate amount of 1 0% of the market value of all the assets of the fund.
The fund may not invest in non-equity securities issued by a company to an amount in excess of 20% of the market value of all the assets comprising the fund.
The fund may invest in the participatory interest of a collective investment scheme that is defined by the Code of Practice as equity portfolios.
The investment limits prescribed in these Regulations may be exceeded only if such excess is due to the appreciation or depreciation of the value of the instruments comprising the fund.
The fund may not, for as long as the excess contemplated in subregulation (6) continues, purchase any further instruments of the class in respect of which the excess occurs.
sells or buys multiple options or multiple warrants based on the same underlying assets and requires the nominal exposure to liquid instruments prescribed in paragraph (c), the fund may maintain assets in liquid form as needed for only one such option or warrant transaction; and sells or buys multiple options or multiple warrants based on the same underlying assets the fund requires the nominal exposure to underlying assets contemplated in paragraph (a) or (b).
1OC. The fund may sell financial instruments only which have been bought by it.
The sum of the nominal exposures to assets in liquid form as a result of the inclusion of financial instruments in the fund, together with the market value of all the physical underlying securities in the fund, may not exceed 100% of the market value of the fund.
The nominal exposure to financial instruments on any specific underlying asset, which is not an index or group of securities, together with the market value of any direct holding of that specific underlying security, may not exceed the limitations laid down in regulation 98(1).
For the purposes of this regulation, the provisions of regulation 98(1)(a) and (b) in respect of excesses, which are due to appreciations or depreciations of the market value of the relevant securities shall apply.
The net effective exposure of financial instruments to equity securities is the sum of all effective exposures to all financial instruments calculated in accordance with subregulation (1).
1OF. (1) The nominal exposure to assets in liquid form of any financial instrument required in accordance with regulation 1OD must be calculated as the nominal exposure of any financial instrument calculated in accordance with regulation 10E(1).
The nominal exposure to assets in liquid form for the fund must be calculated as the sum of the nominal exposures of all the assets in liquid form calculated for all financial instruments in the fund in accordance with subregulation (1).
10G. (1) Exposure created through the inclusion of financial instruments must be fully covered by assets in liquid form or, in order of priority, by the same, similar or appropriate underlying assets.
Cover for the exposure of financial instruments to equity securities with positive effective exposure as calculated in accordance with regulation 10E(2), must be in the form of assets in liquid form of at least equivalent in value to such exposure.
Cover for the exposure of financial instruments to equity securities with a negative effective exposure as calculated in accordance with regulation 1 OE(2), must be in the form of underlying assets of at least equivalent in market value to such exposure.
The sum of effective exposure as calculated in regulation 10E(2) must be matched by an equivalent value of assets in liquid form: Provided that the assets in liquid form, together with the market value of all the physical underlying assets in the portfolio, may not exceed 100% of the market value of the fund.
The value of assets in liquid form that must be held as cover in terms of this regulation may be reduced by the amount held in a margin account with an exchange.
1OH. After the fund has invested in financial instruments, and while a financial instrument remains in the fund, the fund must furnish the Minister and the board of control within 30 days after the last business day of each calendar quarter with an auditor's report substantially conforming to Annexure D.
The above table refers to the domestic or national rating scales.
In the instance of an instrument, entity or concern being assigned a rating by two or more rating agencies, the lowest rating applies.
Where the short-term rating of an instrument or issuer spans more than one rating band, reference must be made to the long-term issuer rating to determine the applicable rating band for inclusion limit purpose.
We have audited the system of internal control maintained by the Attorneys Fidelity Fund in relation to its asset portfolio.
Compliance with regulations 9, 9A, 98, 10, 10A, 108, 10C, 100, 10E, 10F, 10G and 10H of the Regulations made in terms of the Attorneys Act, 1979 (Act No. 53 of 1979), and the maintenance of an effective system of internal control is the responsibility of the board of control of the fund.
Because of inherent limitations in any system of internal control, errors or irregularities may occur and not be detected. Also, projections of any evaluation of the internal controls with respect to future periods are subject to the risk that the system of internal control may become inadequate because of changes in conditions, or that the required degree of compliance with the provisions of regulations 9, 9A, 98, 10, 10A, 108, 10C, 100, 1OE, 1OF, 1OG and 1 OH of the Regulations may not be observed.
We conducted our audit in accordance with generally accepted auditing standards. These standards require that we adopt procedures to obtain an understanding of the system of internal control designed to ensure compliance with regulations 9, 9A, 98, 10, 1OA, 108, 1OC, 100, 1OE, 1OF, 1OG and 1OH of the Regulations, to evaluate the adequacy of the controls and to test the operating effectiveness of those controls.· We consider that our auditing procedures were sufficiently appropriate in the circumstances to enable us to express our opinion particularised below.
In our opinion a the system of internal control over compliance with regulations 9 and 10 of the Regulations was suitably designed to provide reasonable assurance that if controls had operated as designed, they would have prevented or detected noncompliance with regulations 9, 9A, 98, 10, 10A.
the system of internal control designed to ensure compliance with regulations 9, 9A, 98, 10, 1OA, 108, 1 OC, 100, 1OE, 1OF, 1OG and 1 OH of the Regulations in fact, operated as designed throughout the quarter ended.
Without qualifying our opinion above, we draw attention to the following instances of non-compliance with regulations 9, 9A, 98, 10, 10A, 108, 10C, 100, 10E, 10F, 10G and 1OH of the Regulations which were/were not subsequently corrected:.