ANNUAL FINANCIAL STATEMENTS NAME OF RETIREMENT … · 2019-08-12 · Maphuti Lisbeth Mothata [email protected] E 26 November 2010 John Albert Hall [email protected] M

ANNUAL FINANCIAL STATEMENTS

NAME OF RETIREMENT FUND: Municipal Gratuity Fund

FINANCIAL SERVICES BOARDREGISTRATION NUMBER: 12/8/29256/2

FOR THE PERIOD: 1 July 2013 to 30 June 2014

CONTENTS

Schedule Page

A

B

C

D

E

F

G

Regulatory Information *

Statement of responsibility by the Board of Trustees *

Statement of responsibility by the principal officer *

Report of the independent auditors

Report of the Board of Trustees *

Statement of net assets and funds

Statement of changes in net assets and funds

2 - 7

8

9

10 - 11

12 - 24

25

26

HA

HB

I

IA

IB

Notes to the Annual financial statements

Report of the Valuator *

Report of the independent auditors to the Registrar of Pension Funds

Investment schedule pertaining to the annual financial statements *

Assets held in compliance with Regulation 28

Report of the independent auditors on compliance with Regulation 28 to the Registrar of PensionFunds

27 - 45

46

47 - 62

63 - 74

75 - 82

83 - 84

* Not subject to any engagement by an auditor

MUNICIPAL GRATUITY FUND

SCHEDULE AREGULATORY INFORMATIONFOR THE YEAR ENDED 30 JUNE 2014

REGISTERED OFFICE OF THE FUND

Postal address: Private Bag X 1190Bedfordview2008

Physical address: Block 14Bedfordview Office Park3 Riley RoadBedfordview2007

FINANCIAL REPORTING PERIODS

Current year: 1 July 2013 to 30 June 2014Prior year: 1 July 2012 to 30 June 2013

BOARD OF TRUSTEESFull name E-mail Address Capacity* Date appointed Date resignedPieter Johannes Venter [email protected] C

VAM

31 October 201227 July 200104 March 200424 June 1996

21 October 2012

Mirriam MasabataWelheminah Molubi

[email protected] V E & AIE

30 November 201225 November 201119 April 20068 November 2002

19 May 201122 March 2006

Lesiba Johannes Modiga [email protected] M 14 November 200827 July 2011 6 September 2000

Gideon van Zyl [email protected] V 27 July 201130 November 2012 11 February 2004

Edward Charles Alberts [email protected] V 6 September 20009 October 1996

Jan Dirk Grobler Venter [email protected] V 4 March 200412 September 1997 17 November 2006

Johannes HendrikusGrobbelaar

[email protected] M 20 March 20078 November 2002 14 November 2008

Erné Charles Smal [email protected] M 5 May 20104 March 2004

Roja Elvis Ramare [email protected] M 5 May 2010Modise Daniël Mogakabe [email protected] M 26 November 2010Maphuti Lisbeth Mothata [email protected] E 26 November 2010John Albert Hall [email protected] M 23 November 2012Subesh Pillay [email protected] E (SALGA) 14 July 2013

- 'M' denotes member elected- 'E' denotes employer appointed- 'A' denotes Executive Committee Member- 'C' denotes Chairperson- 'V' denotes Vice-chairperson- 'I' denotes independent- ' ' The Chairperson and Vice-chairperson are also members of the Executive Committee

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SCHEDULE AREGULATORY INFORMATION (continued)For the year ended 30 June 2014 Governance note: schedule of meetings* held by the Board of Trustees in terms of the Rules of the FundMeeting date Place of meeting Quorum (yes/no)10 July 2013 Farm Inn, Silver Lakes, Pretoria Yes14 August 2013 Farm Inn, Silver Lakes, Pretoria Yes2 October 2013 Farm Inn, Silver Lakes, Pretoria Yes30 October 2013 Farm Inn, Silver Lakes, Pretoria Yes4 December 2013 Farm Inn, Silver Lakes, Pretoria Yes5 February 2014 Farm Inn, Silver Lakes, Pretoria Yes9 April 2014 Farm Inn, Silver Lakes, Pretoria Yes28 May 2014 Farm Inn, Silver Lakes, Pretoria Yes18 June 2014 Farm Inn, Silver Lakes, Pretoria Yes* Only meetings held by the Board of Fund and does not include meetings held by the sub-committees.

FUND OFFICERS

Principal officer Monitoring personFull Name: Marthinus Jacobus Dewald Jacobsohn Estie Redelinghuys

Postal Address: Private Bag X 1190Bedfordview2008

Private Bag X 14Highveld Park0169

Physical Address: Block 14Bedfordview Office Park3 Riley RoadBedfordview2007

Lords Office EstateBlock 5276 West AvenueCenturion0157

Date of appointment: 01 July 1999 01 August 2011Telephone number: +27 (11) 450 1224/5 +27 (12) 683 3490

Email address: [email protected] [email protected]

PROFESSIONALSERVICE PROVIDERS

Actuary AuditorFull Name: Alexander Forbes Financial Services (Ms.

Gerda Grobler)Deloitte & Touche

Postal Address: PO Box 2435Pretoria0001

Private Bag X 6Gallo Manor2052

Physical Address: 189 Clark StreetBrooklynPretoria0181

Deloitte PlaceBuilding 8The Woodlands20 Woodlands DriveWoodmead2052

Date of appointment: 01 October 2011 01 January 1994Telephone number: +27 (12) 452 7107 +27 (11) 806 5200

Email address: [email protected] [email protected]

Benefit administrator Investment advisorFull Name: Sanlam Life Insurance Ltd Sanlam Multi Manager International (Pty) Ltd

Postal Address: Private Bag X 14Highveld Park0169

Private Bag X8Tygervalley7536

Physical Address: Lords Office EstateBlock 5276 West AvenueCenturion0157

55 Willie van Schoor AvenueBellville7530

Date of appointment: 01 October 2002 17 August 2006Telephone number: +27 (12) 683 3900 +27 (21) 950 2596

FAIS registration number: 24/245 24/435

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SCHEDULE AREGULATORY INFORMATION (continued)For the year ended 30 June 2014

Investment administrator Investment administratorFull Name: ABSA Asset Management (Pty) Ltd ABSA Capital Alternative Asset Management

(Pty) LtdPostal Address: Private Bag X 291509

Melville2109

PO Box 4110Tygervalley7536

Physical Address: Block AGround Floor Parkridge Office Park65 Empire Road2193

163 Hendrik Verwoerd DrivePlattekloof7500

Telephone number: +27 (11) 480 5344 +27 (21) 927 6600FAIS registration number: 522 22877

Investment administrator Investment administratorFull Name: Afena Capital (Pty) Ltd Allan Gray South Africa (Pty) Ltd

Postal Address: PO Box 23883Claremont7735

PO Box 51318V & A Waterfront8002

Physical Address: Mont Clare Place5th FloorCnr Campground & Main RoadsClaremont7708

Granger Bay CourtBeach RoadV & A Waterfront8001

Date of resignation: 31 May 2014Telephone number: +27 (21) 657 6240 +27 (21) 415 2300

FAIS registration number: 25033 27146

Investment administrator Investment administratorFull Name: Argon Asset Management (Pty) Ltd Blue Ink Investments


Private Bag X8Tyger Valley7536

Physical Address: Colinton House1st FloorThe Oval1 Oakdale RoadNewlands7700



Investment administrator Investment administratorFull Name: BNY Mellon (Renasset Africa Fund) Cadiz Asset Management (Pty) Ltd

Postal Address: BNY Mellon Centre160 Queen Victoria StreetLondonUnited KingdomEC4V 4LA0000

PO Box 44547Claremont7735

Physical Address: BNY Mellon Centre160 Queen Victoria StreetLondonUnited KingdomEC4V 4LA0000

The Terraces, 4th Floor25 Protea RoadClaremont7708

Telephone number: +44207 163 3603 +27 (21) 670 4600FAIS registration number: 45073 636

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Investment administrator Investment administratorFull Name: Coronation Fund Managers Ltd Edge Capital (Pty) Ltd


PO Box 4188Tygervalley7536

Physical Address: MontClare Place7th FloorCnr Campground & Main RoadsClaremont7708

Edge House3 Heuwelkruin CloseTyger Valley7536


Investment administrator Investment administratorFull Name: First Avenue Investment Management (Pty) Ltd Foord Asset Management

Postal Address: 21 Fricker RoadGround FloorTurner & Townsend HouseIllovo2196

P O Box 135Howard Place7450

Physical Address: 21 Fricker RoadGround FloorTurner & Townsend HouseIllovo2196

8 Forest MewsForest DriveCnr Lonsdale WayPinelands7450


Investment administrator Investment administratorFull Name: Franklin Templeton Investment Funds (SICAV) Futuregrowth Asset Management (Pty) Ltd

Postal Address: The Adelphi Building1-11 John Adam StreetLondonWC2N 6HT

Private Bag X6Newlands7725

Physical Address: The Adelphi Building1-11 John Adam StreetLondonWC2N 6HT

3rd FloorGreat Westerford240 Main RoadRondebosch7700

Telephone number: 0800305306 +27 (21) 659 5300 FAIS registration number: 44475 520

Investment administrator Investment administratorFull Name: Investec Asset Management (Pty) Ltd Momentum Asset Management (Pty) Ltd

Postal Address: PO Box 1655Cape Town8000

Private Bag 9959Sandton2146

Physical Address: 36 Hans Strijdom AvenueForeshoreCape Town8001

7 Merchant PlaceFredman DriveSandton2196


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Investment administrator Investment administratorFull Name: Nedgroup Investments (IOM) Limited Prudential Investment Managers (SA) (Pty) Ltd

Postal Address: First Floor, Samuel Harris HouseSt George's Street, DouglasIsle of ManBritish Isles IM1 1AJ

PO box 963Saxonwold2132

Physical Address: First Floor, Samuel Harris HouseSt George's Street, DouglasIsle of ManBritish Isles IM1 1AJ

The Zone IILoft Office East2nd Floor31 Tyrwhitt AvenueRosebank2196

Telephone number: +44 (0) 1624 690800 +27 (11) 530 8600FAIS registration number: * 45199

* Nedgroup Investments (IoM) Limited are not required to be registered under FAIS in South Africa and so do not have a FAISregistration number. They are however licensed by the Isle of Man Financial Supervision Commission to carry on investmentbusiness and provide collective investment scheme services.

Investment administrator Investment administratorFull Name: Sanlam Investment Management (Pty) Ltd Sanlam Multi Manager International (Pty) Ltd

Postal Address: Private Bag X8Tygervalley7536

Private Bag X8Tygervalley7536

Physical Address: 55 Willie van Schoor AvenueBellville7530



Investment administratorFull Name: Vanatage Capital Group

Postal Address: PO Box 280ParklandsJohannesburg2121

Physical Address: 3 Melrose Boulevard1st Floor, Unit 9BMelrose ArchJohannesburg2076

Telephone number: +27 (11) 530 9134FAIS registration number: Vantage Capital Fund Managers (Pty) Ltd -

28711Vantage GreenX Fund Advisors (Pty) Ltd -44668

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Risk insurer CustodianFull Name: Camarque Underwriting Managers (Pty) Ltd ABSA Bank Limited

Postal Address: Postnet Suite 250Bedfordview2008

PO Box 61218Marshall Town2107

Physical Address: Eton House1st Floor15 Eton RoadParktownJohannesburg2000

180 Commissioner StreetJohannesburg2000

Date of appointment: 01 December 1998 01 January 1994Date of resignation: 01 December 2013Telephone number: +27 (11) 356 4845 +27 (11) 350 5000

FAIS registration number: 6344 26/10/292

Custodian CustodianFull Name: Allan Gray Nominees (Pty) Ltd Standard Chartered Bank (SCB)

Postal Address: PO Box 51318V & A WaterfrontCape Town8002

5th Floor4 Sandown Valley CrescentSandton2196

Physical Address: Granger Bay CourtBeach RoadV & A WaterfrontCape Town8001

5th Floor4 Sandown Valley CrescentSandton2196

Date of appointment: 01 December 2013Telephone number: +27 (21) 415 2300

FAIS registration number: 24/436

PARTICIPATING EMPLOYERS

The list of participating employers is available for inspection at the Fund's registered office.

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SCHEDULE EREPORT OF THE BOARD OF TRUSTEESAs at 30 June 2014

1. DESCRIPTION OF FUND

1.1. Type of fund

The Fund is a defined contribution pension fund for municipal employees registered in terms of the Pension Funds Act, 1956,under registration number 12/8/29256/2. The Fund is registered with the South African Revenue Services in terms of paragraph(a)(iii) of the definition of "pension fund" in section 1 of the Income Tax Act, 1962, under approval number 18/20/4/40276.

1.2. Benefits

1.2.1. Benefits are as follows:

1.2.1.1. Retirement benefits

Accrue as an annuity, but may be converted up to 100% in a lump sum, equal to the member’s fund credit being the total of themember’s contributions, employer’s contributions towards retirement provision and net investment earnings (positive andnegative).

Retirement age:• Normal retirement age is 65• Early retirement age is 50• Extended retirement age may be anything between 65 and 69; subject to consent by the employer.

1.2.1.2. Resignation benefits

Lump sum equal to the member’s fund credit being the total of the member’s contributions, employer’s contributions towardsretirement provision and net investment earnings (positive and negative).

1.2.1.3. Medical disability

A member who qualifies for a medical disability benefit is entitled to four times annual salary or fund credit whichever is thegreater up to the age of 55 after which the benefit scales down monthly pro rata up to the age of 65 to two times annual salaryor fund credit whichever is the greater; but

A member who has less than five years’ service and qualifies for a medical disability benefit due to an injury, illness orcondition which the member

- knew about, or could reasonably be expected to know about;- was diagnosed with;- was treated for; or- displayed symptoms of

within twelve months preceding the commencement of his membership of the Fund shall onlybe entitled to the greater of two times annual salary or fund credit.

A member joining the Fund after 25 April 2013 after attaining the age of 60 shall only be entitled to the greater of one timeannual salary or fund credit.

A member on extended retirement age, that is exceeding 65 years of age, does not qualify for disability benefits.

The disability benefit accrues as an annuity, but may be converted up to 100% in a lump sum payment.

1.2.1.4. Death benefits

Immediate needs death benefit of R20 000.

A member with less than 5 years’ service:Unnatural causes: Four times annual salary plus fund credit.Natural causes: Two times annual salary plus fund credit.

A Member with more than 5 years’ service:Four times annual salary plus fund credit.

A member joining the Fund after 25 April 2013 after attaining the age of 60 shall only be entitled to one time annual salary plusfund credit.

A member on extended retirement age, that is exceeding 65 years of age, does not qualify for death benefits.

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SCHEDULE EREPORT OF THE BOARD OF TRUSTEES (continued)For the year ended 30 June 2014

1.2.1.5. Family funeral plan

The following family funeral cover is paid to members and their families:

Member and spouse, each R10 000Children 14 years and older R 8 000Children 1 to 13 years R 3 000Children stillborn to 1 year R 1 500

A member on extended retirement age, that is exceeding 65 years of age, does not qualify for the family funeral plan.

1.2.1.6. Termination as a result of reorganisation

The members’ fund credit plus an enhanced benefit payable by the relevant local authority. The enhanced benefit only vestsupon receipt of the additional amount from the local authority.

1.2.2. Unclaimed benefits

Unclaimed benefits are processed in terms of the Pension Funds Act as well as the Income Tax Act. The Pension Funds Actdefines an unclaimed benefit as a benefit not paid within 24 months of the date it became legally due and payable.Accordingly in terms of the Fund Rules a period of two years is allowed to claim any benefits payable where-after theunclaimed monies can be classified as an unclaimed benefit and be transferred to an unclaimed benefit preservation fund. If sotransferred, the member, former member or beneficiary will be paid from such unclaimed benefit fund.Currently the Fund does not exercise the option to transfer the unclaimed benefit to a separate unclaimed benefit fund, but ringfence these benefits in the Fund. In terms of tax legislation the unclaimed benefits are taxed at the rates applicable toresignations according to the tax tables issued by Government from time to time.

1.3. Contributions

Members' contributions

Members contribute to the Fund at a minimum rate of 7.50% of pensionable salary. Members may make additionalvoluntary contributions as per the Rules of the Fund.

Employers' contributions

The standard employer's contribution rate for those members joining before 31 July 2012 is 22% of pensionable salaryand for those members joining from 1 August 2012 the standard employer's contribution rate is 18%. Currently 5% ofpensionable salary is allocated towards the cost of risk benefits (4.45%) and administration (0.55%). The balance ofthe employer contribution is allocated to the member’s fund credit. No cost for risk benefits is recovered frommembers on extended retirement age because such members do not enjoy any risk benefits.

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1.4. Rule Amendments

1.4.1. Amendments

Ruleamendment

No.

Descriptionand

motivation

Date ofboard oftrustees'

resolution

Effectivedate

Date registered bythe

Financial ServicesBoard

MGF02 Section 24(6): To clarify that a member remains amember of the Fund while remaining in the serviceof the same local authority.

Introductory paragraph to section 24(14) andsection 24(14)(a): To substitute the reference to"section 14" and "section 15" with "subsection 14"and "subsection 15".

Section 34(5)(b)(iii): To provide for investmentearnings and surplus amounts as determined by theManagement Committee to be credited to themember’s fund credit.

Sections 33(1)(a) and 35(7): To clarify that therestricted risk benefits to a member joining after 60years of age only be applicable to such membersjoining after 25 April 2013.

Section 34(5)5): To provide for a deferred memberto receive the full deferred benefit at any time afterreaching 55 years of age.

2 October 2013 26 April 2013 6 November 2013

All rule amendments are available for inspection at the fund’s registered office.

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1.5. Fund Accounts in terms of the Rules of the Fund

1.5.1. Share Account

The Share Account shall comprise the total of all the individual members' interests in the Fund. The following transactions shall be recorded in this account:

(a) Credits

(i) An opening balance comprising the member's transfer value as at the commencement date;

(ii) the member’s contributions in terms of section 26;

(iii) a portion of the local authority’s contributions in respect of the member in terms of section 31(1)(b), determined by the committee in consultation with the actuary, towards the provision of retirement benefits;

(iv) transfer values received in respect of a member in terms of section 42: Provided that for purposes of section 34(2)(b), the transfer value as contemplated in section 42 shall not be credited to the share account;

(v) investment earnings transferred from the Processing Account in terms of section 30(2)(b)(ii) from time to time at a rate to be determined by the committee in consultation with the actuary. Such investment earnings shall be based on the investment yield achieved by the Fund on the underlying investment portfolio as contemplated in section 16A in respect of the member concerned during the period for which the said earnings are credited to the Share Account;

(vi) interest on housing loans granted under section 16(2) and payments relating to housing loans; and

(vii) amounts allocated from the Employer Reserve Account in terms of section 30(5)(b)(i) and from the Member Reserve Account in terms of section 30(6)(b)(i).

(b) Debits

(i) Attributable valuation losses as determined by the actuary in terms of section 23(2);

(ii) retirement benefits paid to the member in terms of section 32;

(iii) withdrawal payments in terms of section 34;

(iv) transfers of the members' fund credit in respect of medical disability payments in terms of section 35 and death payments in terms of section 33 to the risk account;

(v) the amount due to the financial institution in respect of a housing loan guarantee where the financial institution calls for settlement of the outstanding amount of the guarantee or a part thereof, or the outstanding amount due to the Fund or a part thereof if the Fund provided the housing loan;

(vi) the amount assigned from a member's pension interest to his non-member spouse in terms of a divorce order as set out in section 37D(1)(d) of the Act and/or the amount payable in terms of a maintenance order, together with tax thereon, if legislation allows for it;

(vii) the amount payable to a member's local authority as compensation for damages caused to the local authority by reason of any theft, dishonesty, fraud or misconduct by the member in terms of section 37D(1)(b)(ii) of the Act;

(viii) any amount which the Fund has paid or will pay by arrangement with, and on behalf of, a member or his beneficiary, as referred to in section 37D(1)(c) of the Act; and

(ix) in respect of each deceased member, the costs incurred in tracing and verifying that member’s beneficiary or establishing the financial dependency of the member’s beneficiary.

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1.5.2 Processing Account

The Processing Account is established to provide for mismatching and timing differences between investments and the allocation of investment returns to members. The following transactions shall be recorded in this account:

(a) Credits

(i) all investment earnings earned by the Fund;

(ii) valuation losses debited to the Share Account in terms of section 30(1)(b)(i);

(iii) interest paid in terms of section 31(2)(a)(i);

(iv) interest paid in terms of section 31(2)(a)(ii); and

(v) amounts allocated from the Employer Reserve Account in terms of section 30(5)(b)(i).

(b) Debits

(i) All costs relating to the management of the assets of the Fund as contemplated in section 19(2);

(ii) investment returns transferred to the Share Account in terms of section 30(1)(a)(v);

(iii) investment returns transferred to the Risk Account in terms of section 30(3)(a)(iii);

(iv) investment returns transferred to the Data and Operational Account in terms of section 30(4)(a)(ii);

(v) investment returns transferred to the Employer Reserve Account in terms of section 30(5)(a)(ii);

(vi) investment returns transferred to the Member Reserve Account in terms of section 30(6)(a)(ii);

(vii) investment returns transferred to the Reverted Unclaimed Benefits Account in terms of section 30(7)(a)(iii); and

(viii) investment returns added to the late payment of benefits, unclaimed benefits and other liabilities due in terms of the Rules.

1.5.3 Risk Account

The Risk Account is established for the funding of the death and disability benefits that are not reinsured in terms of section 33(2) and to absorb the impact of any adverse experience in such risk benefits. The following transactions shall be recorded in this account:

(a) Credits

(i) A portion of the local authority's contributions in respect of the member in terms of section 31(1)(b), determined by the committee in consultation with the actuary, towards the death, disability and funeral benefits: Provided that this will not apply in respect of a member contemplated in section 32 (2) (b). It is specifically provided that these contributions will not be utilised for the purpose of funding any transfers to the Reverted Unclaimed Benefits Account as contemplated in section 30(3)(b)(v);

(ii) transfers of the members' fund credit in respect of medical disability payments in terms of section 35 and death payments in terms of section 33 from the Share Account;

(iii) investment returns transferred from the Processing Account in terms of section 30(2)(b)(iii);

(iv) any reinsurance payments made to the Fund by an insurer in terms of section 33(2)(a);

(v) transfers from the Reverted Unclaimed Benefits Account in terms of section 30(7)(b)(iii); and

(vi) amounts allocated from the Employer Reserve Account in terms of section 30(5)(b)(i).

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(b) Debits

(i) Lump sum death benefits referred to in section 33;

(ii) lump sum disability benefits referred to in section 35(4);

(iii) any reinsurance premiums in respect of death and funeral benefits as contemplated in section 33(2) and 33(4);

(iv) any costs in relation to medical examinations as contemplated in section 35(2); and

(v) transfers to the Reverted Unclaimed Benefits Account in terms of section 30(7)(a)(ii).

1.5.4 Data and Operational Account

The Data and Operational Account is established to provide for data errors and expenses relating to the administration of the Fund and other unforeseen contingencies. The following transactions shall be recorded in this account:

(a) Credits

(i) A portion of the local authority's contributions in respect of the member in terms of section 31(1)(b), determined by the committee in consultation with the actuary, towards the cost of the administration expenses;

(ii) investment returns transferred from the Processing Account in terms of section 30(2)(b)(iv); and

(iii) amounts allocated from the Employer Reserve Account in terms of section 30(5)(b)(i).

(b) Debits

(i) All costs and expenses referred to in section 19(2) relating to the administration of the Fund; and

(ii) any other payments by the Fund not authorised elsewhere in the Rules.

1.5.5 Employer Reserve Account

The Employer Reserve Account is established to provide for the allocation of any valuation profits to the local authorities, by the committee after consultation with the actuary. The following transactions shall be recorded in this account:

(a) Credits

(i) Amounts as defined in the definition of ‘employer surplus account’ in the Act, allocated by the committee for use of the local authorities concerned; and

(ii) investment returns transferred from the Processing Account in terms of section 30(2)(b)(v).

(b) Debits

(i) Amounts allocated to the Share Account or any of the other accounts as determined by the committee;

(ii) amounts required to meet a deficit as provided for in section 15H of the Act;

(iii) amounts applied on the liquidation of the Fund as provided for in section 15I of the Act.

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1.5.6 Member Reserve Account

The Member Reserve Account is established to provide for the allocation of any valuation profits to the members and former members, by the committee after consultation with the actuary. The following transactions shall be recorded in this account:

(a) Credits

(i) Amounts as defined as credits in the definition of 'member surplus account' in the Act, allocated by the committee for the benefit of members or former members; and

(ii) transferred from the Processing Account in terms of section 30(2)(b)(vi).

(b) Debits

(i) Amounts as defined as debits in the definition of ‘member surplus account’ in the Act, utilised for the benefit of members or former members;

(ii) any expenses which would otherwise reduce benefits payable to members;

(iii) amounts allocated to members who cease to be members of the Fund in terms of section 15G of the Act;

(iv) amounts required to meet a deficit as provided for in section 15H of the Act; and

(v) amounts applied on the liquidation of the Fund as provided for in section 15I of the Act.

1.5.7 Reverted Unclaimed Benefits Account

The Reverted Unclaimed Benefits Account is established to provide for the old unclaimed benefits that reverted to the Fund prior to 1 January 2009 in terms of section 41 as it read then. The following transactions shall be recorded in this account:

(a) Credits

(i) Provision for the old unclaimed benefits that reverted to the Fund prior to 1 January 2009, as determined by the committee on recommendation of the Actuary;

(ii) transfers from the Risk Account in the event of an under-provision for these old unclaimed benefits; and

(iii) investment returns transferred from the Processing Account in terms of section 30(2)(b)(vii).

(b) Debits

(i) Payment of the old unclaimed benefits that reverted to the Fund prior to 1 January 2009 in the event that the members concerned or their beneficiaries are traced;

(ii) relevant tracing fees incurred in tracing the members concerned or their beneficiaries; and

(iii) transfers to the Risk Account in the event of an over-provision for these old unclaimed benefits.

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2. INVESTMENTS

2.1 Investment Policy Statement (IPS)

The Management Committee (Board of Trustees), introduced the Investment Policy Statement (IPS) during the 2004/5financial year. The goal of the IPS is to create sufficient returns over 35 contribution years in order that the lump sum payment(fund credit) of a member will be sufficient to enable a member to purchase a monthly pension equal to approximately 75% ofsalary at retirement. This is commonly referred to as income replacement ratio (IRR) of 75%.

The result of the IPS is that the Fund moved away from balanced mandates during the 2004/5 financial year. The investmentmandates to asset managers were instead allocated as specialist mandates in the respective asset classes from August2004.

The IPS is reviewed when any major event occurs that may have an effect on the investment strategy of the Fund, but at leastonce a year. The IPS review for this reporting period was done during September 2013.

2.1.1. Life Stage Model

The three life stage portfolios as contemplated by the initial IPS have been implemented during July 2005 and a forth lifestage was added in 2011. The members’ fund credits, excluding those invested in the Guaranteed Portfolio, were transferredto the four life stage portfolios according to age groupings. The daily values of the investments are electronically importedfrom the investment administrators’ records to the unitisation platform of the benefit administrator. The fund credit of eachmember is accordingly adjusted daily to the daily market value of the units in the three life stage portfolios. The IPS isreviewed at least annually and adjustments are being made if necessary to align the investment strategy with the changinginvestment environment as well as with new legislation.

The four life stage portfolios are currently as follows:

2.1.1.1 Stage One: Aggressive Portfolio (AP): 16 years to <50 years

The Aggressive Portfolio contains a bigger equity component, which entails a higher investment risk but renders anopportunity for greater returns. This portfolio is for younger members who can usually tolerate a higher risk. In the event ofthe risk of under performance materialising, the investment term is usually long enough to recover such losses and to obtainout performance over the long term.

2.1.1.2 Stage Two: Moderate Portfolio (MP): 50 years to <60 years

The Moderate Portfolio contains a smaller component of equities and is aimed at a moderate risk with consequent moderatereturns. The Moderate Portfolio is a transfer phase from the Aggressive Portfolio to the Conservative Portfolio.

2.1.1.3 Stage Three: Conservative Portfolio (CP): 60 years to <63 years

The Conservative Portfolio contains no direct investment in equities (shares) and is aimed more at capital protection than atreal capital growth. The Conservative Portfolio is invested in fixed income investments, cash, structured products, hedgefunds and absolute return products. It should be noted that structured products, hedge funds and absolute return products dohave exposure to equities albeit downside is limited to a certain extent.

2.1.1.4 Stage Four: Protected Portfolio (PP): 63 years to 65 years

A fourth life stage was included from July 2011, called the Protected Portfolio (PP). This is an ultra conservative portfolio formembers from 63 to 65 years. Therefore the age band of the CP has been changed accordingly to 60 years to <63 yearseffective July 2011. The Protected Portfolio is aimed at capital protection rather than a real capital growth and assets areinvested in money market products including corporate bonds. Although the PP is structured to avoid investment risk it is not totally risk free and limited downside over short periods is notexcluded.

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2.1.2. Guaranteed Portfolio (GP)

The GP is being operated separately from the life stage portfolios. The GP is available to all members but they have to notifythe Fund by means of the completion of the applicable form before or on 31 May of every financial year, that they want totransfer to or from the GP. Once members are transferred to the GP they remain in the GP until they notify the Fund in writingbefore or on 31 May of the changes they want. Changes can be made by completing a new option form. Changes can only beimplemented annually during July due to annual fixed financial instruments which are purchased to underwrite the GP.

Fund credits invested in the GP are being awarded an annual guaranteed growth allocated on daily interim growth. Thepossible additional capped growth vesting on 30 June is being allocated as an additional final bonus subsequent to year-end.

The fund credits of members, split between the GP and another portfolio, will not automatically be re-balanced to the originalchosen percentage split between the two portfolios unless specifically requested by submitting a new option form before or on31 May of every financial year.

Members invested in the GP will not be switched to any of the life stage portfolios unless requested by them on the prescribedform.

The underlying investment for the GP is usually purchased in the first week of July and implementation is effectedapproximately the second week of July. This may however vary from year to year.

2.1.3. Exit Portfolio (EP)

An Exit Portfolio, invested in cash, is used to protect the members' fund credits upon termination of membership until paymentof benefits. As soon as an exit form is received for a member, the fund credit of such member is transferred to the ExitPortfolio. This is a low risk portfolio although not totally risk free.

2.1.4. Default and Member Investment Choices

Members are automatically without prior notice, transferred from one life stage to the next as they reach the relevant age. Thistransfer is however not done at once when reaching the relevant age as the investment markets may be very low on such onespecific day with negative results for a member migrating from the more aggressive to the more conservative next phaseportfolio. To prevent such single day event, members are switched from one life stage portfolio to the following in fourquarterly batches starting one year ahead. As alluded to below, a member may always exercise in writing, a choice contrary tothe automatic Life Stage Model default.

Although the fund credits and monthly contributions of members are automatically invested in the relevant life stage portfolioaccording to age, members may, subject to certain conditions, exercise a written choice if they wish to invest contrary to theapplicable life stage (AP, MP, CP or PP) or if they wish to invest in the GP. Investment according to the life stage portfolios isan integrated investment model in accordance with the IPS (Investment Policy Statement). The probability is good to obtainthe targeted return over a long term. Members should therefore be very cautious to chase short-term returns by electingcontrary to the life stage portfolios, with possible disastrous results. Younger members should be careful not to be overconservative and forfeit returns in the long run. Members' fund credits may be split between the five portfolios (AP, CP, MP,PP and GP) to a maximum of two portfolios. Members are therefore not allowed to be invested in more than two investmentportfolios at any one stage. Members who exercised a member investment choice will remain invested accordingly until writtennotification to the Fund otherwise. If a member elects to split her/his investment between two portfolios, the different returns ofeach investment portfolio will cause a drift from the chosen percentages split. Members’ fund credits will not automatically berebalanced to the original chosen percentage split between the two portfolios. A new option form must be submitted when amember wants such rebalance.

Member investment choices may be done at any time in respect of the AP, MP, CP and PP. Member investment choices inrespect of the GP can only be done once a year, usually not later than 31 May of each year. The exact date may changeslightly from year to year. One choice per year is free of charge but subsequent choices require a switching fee.

A member investment choice is usually implemented within three to five business days from receipt, except in the event of theGP as alluded to hereinbefore.

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2.2. Management and performance of investments

The Fund's investments consist of a guaranteed portfolio and specialist managed portfolios with the various investmentadministrators (asset managers) listed below. All investment administrators (asset managers) have fixed mandates as to thecomposition of their share of the portfolio within the limits allowed by the Pension Funds Act in South Africa. The Board ofTrustees meets at least eight times per year to discuss and review investment strategy and to monitor the asset allocation andperformance of the investment administrators (asset managers) against the investment strategy of the Fund.

With the assistance of its investment advisor, the Fund also invests directly in Exchange Traded Funds (ETF's). ETF's areindex tracker funds and apart from an initial fee and brokerage of about 0.25% no management fee is payable. There arevarious indices to choose from.

The majority of investment administrators are remunerated at a fixed fee based on the asset value under management and themajority are paid monthly and some quarterly. A few investment administrators are remunerated on a performance fee basis.

The fair value of the Fund's investment, administered by the investment administrators at the end of the year was:

30 June 2014R

30 June 2013R

ABSA Capital Alternative Asset Management(Pty) Ltd

916,987,658 706,505,981

ABSA Joint Venture (direct property) 37,400,000 37,400,000ABSA Settlement account 240,595,383 263,387,751ABSA Asset Management (Pty) Ltd 592,724,029 609,380,633Afena Capital (Pty) Ltd - 112,572,493Allan Gray South Africa (Pty) Ltd 2,363,772,316 2,423,471,053Argon Asset Management (Pty) Ltd 312,935,553 226,118,912BNY Mellon (RenAsset African Fund) 171,046,867 -Blue Ink Investments 252,437,695 226,374,500Cadiz Asset Management (Pty) Ltd 781,695,309 819,117,288Coronation Fund Managers Ltd 1,776,618,600 1,911,741,996Edge Capital (Pty) Ltd 622,917,882 514,821,557First Avenue Investment Management (Pty) Ltd 296,797,067 -Foord Asset Management 730,303,197 103,545,776Franklin Templeton Investment Funds (SICAV) 670,463,857 510,678,548Futuregrowth Asset Management (Pty) Ltd (Old Mutual) 1,899,976,120 1,678,935,562Internasional cash holding 37,698,174 19,496,499Investec Asset Management (Pty) Ltd 1,878,836,731 1,862,875,385Momentum Asset Management (Pty) Ltd 1,151,107,356 898,475,351Nedgroup Investments (IOM) Limited (Veritas) 342,529,971 -Prudential Investment Managers (SA) (Pty) Ltd 895,419,065 -Sanlam Investment Management (Pty) Ltd 1,770,706,793 1,535,130,190Sanlam Multi Manager International (Pty) Ltd (ETF's) 175,586,711 395,537,686Vanatage Capital Group 191,684,753 -Total value of investments managed 18,110,241,087 14,855,567,161

2.3 Investment guidelines

2.3.1 Asset Management

2.3.1.1 All the assets of the Fund are allocated to external asset managers (except direct properties), but not more than 25% of the total assets of the Fund to one single asset manager.

2.3.1.2 The Fund allocates assets to domestic asset managers to invest according to specialist mandates, for example bonds, structured products, equity, hedge funds and absolute return funds.

2.3.1.3 Offshore investments are allocated either as specialised offshore investment portfolios or as balanced portfolios.

2.3.1.4 The investment mandates are subject to compliance with the limitations of Regulation 28 to the Pension Funds Act, 1956, and any other relevant legislation.

2.3.1.5 Preference is given to fixed fees expressed as a percentage of the asset value under management. In exceptional cases where an asset manager would not accept an investment mandate without a performance-linked fee such performance is measured against a prior agreed benchmark. The manager will then receive a percentage (typical 15% to 20%) of the outperformance of the benchmark as an additional fee.

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2.3.1.6 If an asset manager’s services are terminated during the course of the year and he is remunerated at a performance based fee, his fee will be determined pro rata according to his proportional performance.

2.3.1.7 Asset managers must submit monthly reports about all transactions and performance as well as complete written quarterly reports. In addition they have to make investment presentations to the Fund at least twice per annum.

2.3.1.8 The risk control measures as determined by Regulation 28 and amended from time to time will always be applicable to any mandate given to an asset manager; provided that any restriction laid down by the

Fund which is more restrictive than Regulation 28, will prevail.

2.3.2 Structured Products

2.3.2.1 Structured products are recorded at market value. These products are utilised for the Guaranteed Portfolio, which is one of the members’ investment choices. The products will be held until maturity date unless otherwise decided by the management committee (Board of Trustees) on advice from the investment advisor and are reflected at market value.

2.3.2.2 A structured product renders a capital guarantee plus a fix guaranteed minimum return. This is obtained by investing the bulk of the investment in a fix deposit. The remainder of the investment is then invested in the equity market via derivative instruments which may render an additional return on top of the guaranteed return depending on equity market movement. These equity related returns are not guaranteed and is capped at a certain maximum level.

2.3.2.3 The Cadiz and ABSA Capital structured products are applied as underlying investments to underwrite the benefits of the Guaranteed Portfolio.

2.3.3. Properties

2.3.3.1 The investment in properties is done to generate an income stream from the rental income and are therefore valuated according to the standard commercial practice. This means that the future rental income stream is calculated for a certain period and that such future cash flows are then

discounted back to the present value of money. The rate at which it is discounted, is known as the capitalisation rate. The relevant capitalisation rate is calculated taking into account various market indicators. The lower the capitalisation rate the greater the value. The bricks-and-mortar value is not relevant when an income generating property is valued and the valuation method of a commercial property therefore differs from the method applied to the valuation of a residential property.

2.3.3.2 Due to the implementation of unitisation where daily values of assets are essential, the direct property exposure of the Fund has been decreased. The Fund would rather be invested in listed property where daily values are available and no liquidity constraints exist.

2.3.3.3 The Management Committee (Board of Trustees) of the Fund takes all decisions with regards to the buying and selling of property investments. The external property manager is responsible for the

management of the property portfolio.

2.4 Surplus Apportionment Allocations

The Fund, being a defined contribution fund, allocates all net investment returns to the members on a daily basis and does not accrue any surpluses. Surplus apportionment allocations are therefore not applicable, except in the event of Section 15C of the Act.

2.5 Reserve Accounts

The assets pertaining to all the reserve accounts, are invested in money market or similar low risk investment instruments.

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3. MEMBERSHIP

Activemembers

Unclaimedbenefits

Number at the beginning of year 30,602 152Adjustments - Late entrants to 2013 - Late exits from 2013

(278)31

(309)

4040-

Additions 1,870 23Withdrawals (573) (3)Retirements (706) n/aDeaths (282) n/a

Number at the end of the year 30,633 212

Local at the end of the year 30,633 212

Adjustments:The downward adjustment in the opening balance is due to members who exited in prior years, but the administrator onlyreceived the exit form after the 2013 year end. The increase in the opening balance is new members that joined the employerduring the 2013 financial year, but the administrator received the application forms after the 2013 year end.

4. ACTUARIAL VALUATION

The financial statements summarise the transactions and net assets of the Fund. It does not constitute an investigation to thefinancial condition of the Fund with relation to future liabilities as contemplated by section 16 of the Pension Funds Act, 1956.In accordance with the Rules of the Fund, the actuarial position of the Fund, which does take account of such liabilities, if any,is examined and reported on by the actuary as contemplated by section 16 of the Pension Funds Act at three years intervals.

The previous statutory actuarial valuation was done as at 30 June 2011 reflecting the solvency of the Fund. The Actuary alsoconducts an interim actuarial valuation on an annual basis for the intervening two years. This is done according to the fullscope as for a statutory valuation.

The latest statutory actuarial valuation was completed as at 30 June 2014 and will be considered by the Board of Trustees atits next meeting. Refer to the report of the valuator on page 46.

5. HOUSING LOAN FACILITIES

Direct Housing loans to members have been granted until 31 May 2007 in terms of section 16(3) of the Rules of the Fund andthe provisions of section 19(5) of the Pension Funds Act. Such direct housing loans were financed from members' individualfund credits. Interest is payable on all direct housing loans and such interest minus the loan administration fee, is directlyallocated to a member’s fund credit and does not form part of the growth of the Fund. With effect 28 January 2011 theminimum prescribed interest rate is the repo rate as determined by the South African Reserve Bank from time to time plus5.5% per annum. The repo rate increased from 5% to 5.5% with effect 1 February 2014, resulting in an increase in the total interest rate from 10.5% to 11% on housing loans financed directly from a member’s fund credit.

This direct home loan scheme has been replaced from 1 June 2007 by a pension-backed home loan scheme. Standard Bankand First National Bank (FNB) have been appointed as service providers in this regard. A member may apply for a home loanwith Standard Bank or First National Bank up to a maximum of 50% of the member’s fund credit. The loan is granted againstthe security of the member’s fund credit. Members must comply with all the requirements of the National Credit Act to qualifyfor such loan. Members with existing housing loans granted directly from their fund credits in terms of the previousdispensation may maintain such direct loans or transfer them to Standard Bank or FNB. A member may only have a pension-backed home loan with either Standard Bank or FNB and not with both. Loans may be transferred between Standard Bank orFNB.

The current rates and fees of the said banks are as follows:

Initial fee Monthly admin fee Interest rateStandard Bank R450 R31.50 Prime minus 0.25%FNB Nil R5.70 Prime minus 1.25%

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6. INVESTMENTS IN PARTICIPATING EMPLOYERS

The Fund holds no direct investments in the participating employer.

7. SIGNIFICANT MATTERS

During the current financial year the Fund adopted the new format of financial statements as prescribed by the FinancialServices Board in terms of section 15 of the Pension Funds Act No 24, 1956 as amended.

There are no other significant matters to report in respect of the period under review.

8. SUBSEQUENT EVENTS

The African Bank default and the rescue measures by the South African Reserve Bank (SARB) is common knowledge. Theexposure of the Fund to African Bank through its investment administrators is in shareholding as well as via debt instruments.The investment in the shares was written back to R1 during August 2014. The senior debt instruments were written back by10% to 90% of value due to the rescue measures by the SARB. The sub-ordinate debt instruments were also a total loss. The total loss by the Fund was R41,069,514 which is 0.23% of asset value.

No other matter that is material to the financial affairs of the Fund, has taken place between 30 June 2014 and the date ofapproval of the financial statements.

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SCHEDULE FSTATEMENT OF NET ASSETS AND FUNDSAs at 30 June 2014

Note

30 June 2014R

30 June 2013R

ASSETS

Non-current assets 18,205,196,054 14,984,740,413Plant and equipment 2 210,356 273,418Investments 3 18,110,241,087 14,855,567,161Housing loans 4.1 94,744,611 128,899,834

Current assets 108,760,981 164,222,233Accounts receivable 5 528,402 43,412,088Arrear contributions 10 36,910,916 36,505,342Cash at bank 71,321,663 84,304,803

Total assets 18,313,957,035 15,148,962,646

FUNDS AND LIABILITIES

Members’ funds and surplus account 17,356,351,641 14,320,039,483Members’ individual accounts 17,316,904,852 14,234,943,264Amounts to be allocated 17 39,446,789 85,096,219ReservesReserve accounts 16 294,795,042 245,237,414

Total funds and reserves 17,651,146,683 14,565,276,897

Non-current liabilities 5,838,626 2,682,643Provisions 13 587,100 558,600Unclaimed benefits 8 5,251,526 2,124,043

Current liabilities 656,971,726 581,003,106Benefits payable 7 642,981,098 569,495,740Accounts payable 9 13,990,628 11,507,366

Total funds and liabilities 18,313,957,035 15,148,962,646

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SCHEDULE GSTATEMENT OF CHANGES IN NET ASSETS AND FUNDSFor the year ended 30 June 2014

Members’ individualaccounts & Amounts

to be allocated

Reserve accountsRefer note 16

Total Current year

2014

TotalPrevious year

2013Notes R R R R

Contributions received and accrued 10 1,204,555,841 249,596,585 1,454,152,426 1,343,402,233Net investment income 11 6,245,358 3,081,007,809 3,087,253,167 1,736,599,361Allocated to unclaimed benefits 8 (28,173) (77,384) (105,557) (66,122)Other income - - - 37,990Less:Re-insurance premiums - (5,683,633) (5,683,633) (6,672,396)Administration expenses 12 (233,531) (28,871,728) (29,105,259) (26,972,543)

Net income before transfers andbenefits

1,210,539,495 3,295,971,649 4,506,511,144 3,046,328,522

Transfers and benefitsTransfer from other funds 6 4,043,293 - 4,043,293 3,613,551Benefits 7 (1,054,511,401) (370,173,250) (1,424,684,651) (1,295,532,380)

Net income after transfers and benefits 160,071,387 2,925,798,399 3,085,869,786 1,754,409,693Funds and reservesBalance at the beginning of the year 16 14,320,039,483 245,237,414 14,565,276,897 12,810,867,214Transfers between reserve accounts 2,876,240,771 (2,876,240,771) - -

Balance at the end of the year 17,356,351,641 294,795,042 17,651,146,683 14,565,276,897

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SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTSFor the year ended 30 June 2014

1. PRINCIPAL ACCOUNTING POLICIES

The following are the principle accounting policies used by the Fund. These policies have been applied consistently to all yearspresented, unless otherwise specifically stated.

1.1. PURPOSE AND BASIS OF PREPARATION OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements are prepared in accordance with the Regulatory Reporting Requirements for Retirement Fundsin South Africa, the Rules of the Fund and the provisions of the Pension Funds Act.

The annual financial statements are prepared on the historical cost and going concern bases, except where specificallyindicated otherwise in the accounting policies below:

1.2. PLANT AND EQUIPMENT

All plant and equipment are initially recorded at cost and subsequently stated at historical cost less depreciation. Depreciationis charged to the income statement.

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over theirestimated useful lives as follows:

Electronic equipment 4 yearsFurniture 10 yearsVehicles 5 years

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to itsrecoverable amount. Impairment losses are recognised.

Gains and losses on disposal of plant and equipment are determined by reference to their carrying amount and are taken intoaccount in determining the net surplus or deficit.

Maintenance and repairs, which neither materially add to the value of assets nor appreciably prolong their useful lives, arecharged against income.

1.3. FINANCIAL INSTRUMENTS

Measurement

A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equityinstrument of any other entity. A financial asset or a financial liability is recognised when its contractual arrangements becomebinding and is derecognised when the contractual rights to the cash flows of the instrument expire or when such rights aretransferred in a transaction in which substantially all risks and rewards of ownership of the instrument are transferred.

Financial instruments carried on the statement of net assets and funds, include cash and bank balances, investments, housingloans, receivables and accounts payable.

Financial instruments are recognised on acquisition using trade date accounting, which includes transaction costs. Upon initialrecognition financial instruments are designated at fair value through the statement of changes in net assets and funds as theassets or liabilities are managed, evaluated and reported internally on a fair value basis and/or the designation eliminates orsignificantly reduces an accounting mismatch which would otherwise arise.

Subsequent to initial recognition, these instruments are measured as set out below.

1.3.1. INVESTMENTS

Investments are classified at fair value through the statement of changes in net assets and funds and are measured at fairvalue.

Loans (other than housing loans) – loans and receiv ables

Loans and receivables are non-derivative financial assets with fixed or determined payments that are not quoted in an activemarket other than those that the Fund intends to sell in the short term or that is designated as at fair value through thestatement of changes in net assets and funds. Loans and receivables are measured at fair value.

Debentures

Debentures comprise investments in listed and unlisted debentures.

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SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)For the year ended 30 June 2014

Listed debentures

The fair value of listed debentures traded on active liquid markets is based on regulated exchange quoted ruling closing pricesat the close of business on the last trading day on or before the statements of net assets and funds date.

Unlisted debentures

Unlisted debentures are financial assets with fixed or determinable payments and fixed maturity. Fair value is estimated usingpricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s lengthmarket transactions in respect of the unlisted debenture.

Bills and bonds

Bills and bonds comprise investments in government or provincial administration, local authorities, participating employers,subsidiaries or holding companies and corporate bonds.

Listed bills and bonds

The fair value of listed bills and bonds traded on active liquid markets is based on regulated exchange quoted ruling closingprices at the close of business on the last trading day on or before the statements of net assets and funds date.

Unlisted bills and bonds

A market yield is determined by using appropriate yields of existing bonds and bills that best fit the profile of the instrumentbeing measured and based on the term to maturity of the instrument. Adjusting for credit risk, where appropriate, a discountedcash flow model is then applied, using the determined yield, in order to calculate the fair value.

Investment property

A property held for long-term yields or capital appreciation that is not occupied by the Fund is classified as investment property.Investment properties comprise investments in commercial properties, residual properties, industrial properties and hospitals.Investment properties are carried at fair value.

Investment properties are reflected at valuation on the basis of open-market fair value at the statement of net assets and fundsdate. In the open-market valuation information cannot be reliably determined; the Fund uses alternative valuation method suchas discounted cash flow projections or recent prices on active markets for transactions of similar nature. The fair values are theestimated amounts for which a property could be exchanged on the date of valuation between a willing buyer and a willing sellerin an arm’s length transaction.

The open-market fair value is determined annually by independent professional valuators.

Changes in fair value are recorded by the Fund in the statement of changes in net assets and funds.

Equities

Equity instruments consist of equities with primary listing on the JSE, equities with secondary listing on the JSE, foreign listedequities and unlisted equities.

Equity instruments designated as fair value through the statement of changes in net assets and funds by the Fund are initiallyrecognised at fair value on trade date.

Listed equities

Equity instruments, including Exchange Traded Funds, are subsequently measured at fair value and the fair value adjustmentsare recognised in the statement of changes in net assets and funds. The fair value of equity instruments with standard termsand conditions and traded on active liquid markets is based on regulated exchange quoted ruling closing prices at the close ofbusiness on the last trading day on or before the statements of net assets and funds date.

Unlisted equities

If a quoted closing price is not available i.e. for unlisted instruments, the fair value is estimated using pricing models, or byapplying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s length market transactions inrespect of equity instruments.

- 28 -



Preference shares

Listed preference shares

The fair value of listed preference shares traded on active liquid markets is based on regulated exchanged quoted ruling closingprices at the close of business on the last trading day on or before the statement of net assets and funds date.

Unlisted preference shares

In respect of unlisted preference shares, the fair value is determined by applying appropriate valuation techniques such asdiscounted cash flow analysis or recent arm’s length market transactions in respect of preference shares.

Insurance policies

Non - linked insurance policiesNon - linked insurance policies with insurers are valued on the basis of the policyholder’s retrospective contribution to assets(i.e. accumulation at the actual investment return achieved on gross premiums.)

Linked or market-related policiesIf the policy is unitised, the value is equal to the market value of the underlying units. Other linked or market-related policies arevalued at the market value of the underlying assets for each policy, in line with the insurer’s valuation practices.

Collective investment scheme

Investments in collective investment schemes are valued at fair value which is the quoted unit values, as derived by thecollective investment scheme manager with reference to the rules of each particular collective investment scheme, multiplied bythe number of units.

Derivative Market Instruments

Derivative market instruments consist of options, equity linked instruments, futures/forwards – SAFEX/foreign, currency swapsand interest rate swaps.

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequentlyre-measured at their fair value. Fair values are obtained from regulated exchange quoted market prices in active markets,including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fairvalue is positive and as liabilities when fair value is negative. The fund does not classify any derivatives as hedges in a hedgingrelationship.

The best evidence of the fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of theconsideration given or received) unless the fair value of that instrument is evidence by comparison with other observable currentmarket transactions in the same instrument (i.e. without modification or repackaging) based on a valuation technique whosevariables include only data from observable markets.

Options

Options are valued using option pricing modules.

Futures/forward contracts

The fair value of publicly traded derivatives is based on quoted closing prices for assets held or liabilities issued, and currentoffer prices for assets to be acquired and liabilities held.

Swaps

Swaps are valued by means of discounted cash flow models, using the swap curve from a regulated exchange (BESA) todiscount fixed and variable rate cash flows, as well as to calculate implied forward rates used to determine the floating interestrate amounts. The net present values of the fixed leg and variable leg of the swap are offset to calculate the fair value of theswap.

Investment in participating employers

Investments in participating employer(s) comprise loans, investments in listed and unlisted equities and other investments.Refer to respective policies for basis of accounting.

- 29 -



Hedge funds

Hedge fund investments are designated as fair value through the statement of changes in net assets and funds by the Fund andare initially recognised at fair value on trade date.

Listed hedge funds

Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognised in thestatement of changes in net assets and funds. The fair value of hedge fund investments traded on active liquid markets isbased on regulated exchange quoted ruling closing prices at the close of business on the last trading day on or before thestatement of net assets and funds date.

Unlisted – where investor (fund) has no right to th e underlying instrument - investment partners

Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognised in thestatement of changes in net assets and funds. The value of the financial asset owned by the Fund is measured in relation to thepercentage holdings by each investment partner in the total fair value of the hedge fund. The fair value is estimated usingpricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s lengthmarket transactions in respect of hedge fund instruments.

Unlisted – where investor (fund) has a right to the underlying instrument

Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognised in thestatement of changes in net assets and funds. As the Fund has the right to the underlying instrument, a look through principle isapplied, and the underlying instrument are separately measured and disclosed. The fair value is estimated using pricing modelsor by applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s length markettransactions in respect of the hedge fund instrument.

Structured products

Investments in structured products are valued at the gross total fair value of all the underlying instruments included in thestructure and/or arrangement. If there are instruments within the structured product that require different treatment, these mayneed to be treated separately.

1.3.2. HOUSING LOANS

Housing loans are measured at fair value. Housing loans are derecognised when the right to receive cash flows from themember has expired or been transferred and the fund has also transferred substantially all risks and rewards of ownership.

1.3.3. ACCOUNTS RECEIVABLE

Accounts receivable are financial assets measured initially at fair value and subsequently measured at amortised cost using theeffective interest rate method, less any allowance for impairment.

1.3.4. CASH AND CASH EQUIVALENTS

Cash and equivalents comprise cash in hand, deposits held at call with banks, and other short-term highly liquid investmentswith original maturities of three months or less. Cash and cash equivalents are measured at fair value.

1.3.5. ACCOUNTS PAYABLE

Accounts payable are financial liabilities measured initially at fair value, net of transaction costs that are directly attributable tothe liability and subsequently measured at amortised cost using the effective interest rate method.

1.4. RESERVES

Reserve accounts comprise particular amounts of designated income and expenses as set out in the Rules of the Fund and arerecognised in the year in which such income and expenses accrue to the Fund.

- 30 -



1.5. IMPAIRMENT

Financial assets carried at amortised cost

The Fund assesses at each statement of net assets and funds date whether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses areincurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initialrecognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financialasset or group of financial assets that can be reliably estimated.

The Fund first assesses whether objective evidence of impairment exists individually for financial assets that are individuallysignificant. If the Fund determines that no objective evidence of impairment exist s for an individually assessed financial asset,whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics andcollectively assesses them for impairment.

If there is objective evidence that an impairment loss has been incurred on loans and receivables or held to maturityinvestments carried at amortised cost, the amount of the loss is measured as the difference between the asset’s carryingamount and the present value of the estimated future cash flow (excluding future credit losses that have been incurred)discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount ofthe loss is recognised in the statement of changes in net assets and funds. If a loan has a variable interest rate, the discountrate for measuring any impairment loss is the current effective interest rate determined under contract. As a practical expedient,the Fund may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an eventoccurring after the impairment was recognised (such as improved credit rating), the previously recognised impairment loss isreversed in the statement of changes in net assets and funds.

Impairment of non-financial assets

Assets that have an indefinite useful life, for example land, are not subject to amortization and are tested annually forimpairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’snet carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs tosell and value in use. For this purpose of assessing impairment, assets are grouped at the lowest levels for which there areseparately identifiable cash flows.

Impairment of loans and receivables

A provision for impairment of loans and receivables is established when there is objective evidence that the Fund will not beable to collect all amounts due according to their original terms.

1.6. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions

Provisions are recognised when the Fund has a present legal or constructive obligation as a result of past events, for which it isprobable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate of the amount ofthe obligation can be made. Where the effect of discounting to present value is material, provisions are adjusted to reflect thetime value of money.

Contingent liabilities

A contingent liability is not recognised in the statement of net assets and funds, but disclosed in the notes to the financialstatements, unless the possibility of an outflow of resources embodying economic benefits is remote.

Contingent assets

A contingent asset is not recognised in the statement of net assets and funds, but disclosed in the notes to the financialstatements when an inflow of economic benefits is probable.

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1.7. CONTRIBUTIONS

Contributions are measured at the fair value of the consideration received or receivable.

Contributions are accrued and recognised as income in accordance with the actuarial recommendations and the Rules of theFund. Contributions received are apportioned between retirement funding and funding for risk and other expenses. Theapportionment is governed by the Rules of the Fund and actuarial recommendations.

Voluntary contributions are recognised when they are received from annual payments or accrued where monthly recurringpayments are made.

Any contributions outstanding at the end of the reporting year are recognised as a current asset – contribution receivable. Anycontributions received in advance at the end of the reporting year are recognised as a current liability – accounts payable.

Interest charged on late payment of contributions

Compound interest on late payments or unpaid amounts and values shall be calculated for the year from the first day of themonth following the expiration for the year in respect of which the relevant amounts or values are payable or transferable untilthe date of receipt by the Fund.

1.8. FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for at the ruling rate of exchange on the transaction date. Assets and liabilitiesin foreign currencies are converted at the ruling rate of exchange on the statements of net assets and funds date.

Gains and losses on conversion are dealt with in the statement of changes in net assets and funds.

Income and expenditure relating to foreign investments are converted to South African currency at appropriate weightedaverage exchange rates, for the period.

- 32 -



1.9. INVESTMENT INCOME

Dividends

Dividend income is recognised in the statement of changes in net assets and funds when the right to receive payment isestablished – this is the last date to trade for equity securities. For financial assets designated at fair value through thestatement of changes in net assets and funds, the dividend income forms part of the fair value adjustment.

Interest

Interest income in respect of financial assets held at amortised cost is accounted for in the statement of changes in net assetsand funds using the effective interest rate method.

Rentals

Rental income is accounted for in the statement of changes in net assets and funds on a straight-line basis over the year of therental agreement, unless another systematic basis is more representative of the time pattern in which use benefit derived fromthe leased asset is diminished. Property expenses shall be recognised in the statement of changes in net assets and fundsunder net investment income.

Collective investment schemes’ distribution

Distribution from collective investment schemes are recognised when the right to receive payment is established.

Income from policies with insurance companies

Income from investment policies from insurance companies is included in the adjustment to the movement of the financialasset.

Interest on late payment of contributions, surplus improperly utilised and / or loans and receivables

Interest on late payment of contributions, surplus improperly utilised and / loans and receivables is accounted for in thestatement of changes in net assets and funds using the effective interest rate method.

Adjustment to fair value

Gains or losses arising from changes in the fair value of financial assets at fair value through the statement of changes in netassets and funds are presented in the statement of changes in net assets and funds in the year in which they arise.

Expenses incurred in managing investments

Expenses in respect of the management of investments are recognised as the service is rendered.

1.10. BENEFITS

Benefits payable and pensions are measured in terms of the Rules of the Fund.

Benefit payments and monthly pension payments are recognised as an expense when they are due and payable in terms of theRules of the Fund. Any benefits not paid at the end of the reporting year are recognised as a current liability – benefits payable /due.

1.11. TRANSFERS TO AND FROM THE FUND

Section 14 and 15B transfers to or from the Fund are recognised on the date of approval of the scheme/arrangement of transferof business by the Financial Services Board, as contained in the approval certificate from the Registrar.

Individual transfers (Section 13A(5) transfers) are recognised on the earlier of receipt of the written notice of transfer(Recognition of Transfer) or receipt of the actual transfer value.

All the above transfers are measured at the values as per the section 14 application or the value of the transfer at effective dateof transfer adjusted for investment return or late payment interest as guided by the application.

- 33 -



1.12 ADMINISTRATION EXPENSES

Expenses incurred in the administration of the Fund are recognised in the statement of changes in net assets and funds in thereporting year to which they relate.

In the event that an expense has not been paid at the end of a reporting year the liability will be reflected in the accountspayable note. If the expense was paid in advance or overpayment occurred, the applicable amount will be disclosed under theaccounts receivable note.

1.13. RELATED PARTIES

In considering each possible related-party relationship, attention is directed to the substance of the relationship and not merelythe legal form.

If there have been transactions between related parties, the Fund shall disclose the nature of the related party relationship aswell as the following information for each related party relationship:

The amount of the transactions;The amount of outstanding balances;Their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in thesettlement;Details of guarantees given or received;Provisions for doubtful debts related to the amount of outstanding balances; andThe expense recognised during the year in respect of bad or doubtful debts due from related parties.

1.14. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRO RS

The Fund applies adjustments arising from changes in accounting policies and errors prospectively. The adjustment relating toa change in the accounting policy or error is therefore recognised in the current and future years affected by the change.

2. PROPERTY, PLANT AND EQUIPMENT

2.1. Current year

Gross carrying amount

Furniture andEquipment

R

VehiclesR

Total

RCost at beginning of the year 281,825 398,602 680,427At end of year 281,825 398,602 680,427Accumulated depreciation and impairmentAt beginning of year 256,188 150,821 407,009Other movements 11,797 51,265 63,062At end of year 267,985 202,086 470,071Net carrying amount at end of year 13,840 196,516 210,356

2.2. Prior yearGross carrying amount Furniture and

EquipmentR

VehiclesR

Total

RCost at beginning of period 281,825 280,485 562,310Additions - 256,324 256,324Disposals - (138,207) (138,207)At end of year 281,825 398,602 680,427Accumulated depreciation and impairmentAt beginning of period 244,392 278,114 522,506Depreciation charges 11,796 10,913 22,709Other movements - (138,206) (138,206)At end of year 256,188 150,821 407,009Net carrying amount at end of period 25,637 247,781 273,418

- 34 -



3.

3.1.

INVESTMENTS

Investment summary

Notes Local

R

Foreign

R

Total current`year

R

Total previousyear

R

Fair valuecurrent year

R

Categorised per IAS 39

Cash 2,603,087,627 79,396,442 2,682,484,069 1,239,720,541 2,682,484,069 *Commodities 38,406,335 2,933,975 41,340,310 - 41,340,310 *Debt instruments includingIslamic debt instruments

1,544,919,229 5,861,397 1,550,780,626 3,284,664,316 1,550,780,626 *

Investment properties andOwner occupied properties

37,400,000 - 37,400,000 37,400,000 37,400,000 *

Equities (includingdemutualisation shares)

5,632,200,569 268,925,143 5,901,125,712 5,863,385,183 5,901,125,712 *

Insurance policies 1,068,946,056 - 1,068,946,056 451,040,156 1,068,946,056 *Collective investmentschemes

3,315,978,894 3,520,895,710 6,836,874,604 3,974,813,702 6,836,874,604 *

Hedge funds - 54,710,771 54,710,771 - 54,710,771 *Derivative marketinvestments

(63,421,061) - (63,421,061) - (63,421,061) *

Other - - - 4,543,263 - *

Total 14,177,517,649 3,932,723,438 18,110,241,087 14,855,567,161 18,110,241,087

* At fair value through statement of changes in net assets and funds

- 35 -



3.2. Investment properties and owner occupied investment s

3.2.1. Current yearInstrument Valuation method Date of last valuation At beginning of year

R At end of yearR

Investment PropertiesABSA Square Nelspruit Refer to note below 01/07/2012 37,400,000 37,400,000Total of properties 37,400,000 37,400,000

The investment property held directly by the Fund was revalued based on market research done by an independent registered valuator who specializes in commercial property valuation.The new valuation indicated a market value of R37.4 million which was adopted by the Board of Trustees with effect 1 July 2012.

- 36 -



4. Housing loan facilities

4.1. Housing loans

A B C D E A+B-C+D+/-E At beginning

yearGranted Repaid Interest

capitalisedOther

adjustments At end of year

R R R R R RLoans granted in terms of the rules of the fund and section 19(5) of the PensionFunds Act

128,899,834 - (40,400,581) 5,979,355 266,003 94,744,611

Total 128,899,834 - (40,400,581) 5,979,355 266,003 94,744,611

Housing loans granted to members are secured by cession of a member's fund credit. With effect from 28 January 2011 the minimum prescribed interest rate is the repo rate as determinedby the South African Reserve Bank from time to time plus 5.5% per annum. The repo rate increased from 5% to 5.5% with effect 1 February 2014, resulting in an increase in the totalminimum prescribed interest rate from 10.5% to 11% with effect 1 February 2014.The amount included in other adjustments relates to administration expenses and overpayments received.

4.2. Housing loan guarantees

The Fund has granted guarantees to the following institutions for loans granted to members:

Institutio n Current year Prior yearStandard Bank R775,096,010 R730,297,754FNB R66,968,198 R35,811,646Participating Employers R3,014,790 R5,191,162

The amount of the guarantee, may not exceed 50% of the cash benefit that a member would receive if he or she had to terminate membership with the Fund.The guarantees in respect ofthe participating employers are in the form of endorsements to the members' records for collateral investments made by the participating employers with the financial institutions to supportthe granting of housing loan facilities between the individual member and these institutions. No such endorsements have been made since inception of the final phase of the National CreditAct with an effective date of 1 June 2007.

- 37 -



5. ACCOUNTS RECEIVABLE

30 June 2014R

30 June 2013R

Outstanding late payment interest 528,402 753,843Capital trade timing difference - 22,507,318SEB - investment income (*) - 20,150,927

Total 528,402 43,412,088

* - Investment income was forfeited because of premature portfolio life stage switching due to an error with the automated switching protocol. Although this amount is reflected as accountsreceivable in the 2013 year the full amount was subsequently refunded by SEB in the 2014 year and invested on the relevant members' records.

- 38 -



6. TRANSFERS FROM OTHER FUNDS

A B C D A+B+C-D

Effectivedate

No. ofmembers

At beginning ofthe year

Transfersapproved

Return onTransfers

Assetstransferred At end of year

R R R R RIn terms of section 14

Government Employee PensionFund

01/08/2013 1 - 181,559 - (181,559) -

Government Employee PensionFund

31/01/2014 1 - 286,152 - (286,152) -

Fundsatwork ProvidentPreservation Fund

18/02/2014 1 - 151,545 - (151,545) -

Individual transfers in 13 - 3,424,037 - (3,424,037) -

Total 16 - 4,043,293 - (4,043,293) -

Transfers approved (B) 4,043,293Statement of changes in net assets and funds 4,043,293

Although the Pension Funds Act is clear that any transferor and transferee fund must comply with section 14 of the Act, the GEPF disregards the provisions of the Pension Funds Actbecause it is regulated by its own Government Employees Pension Law, 21 of 1996. The GEPF continues to deposit transfer values into the Fund’s bank account in respect of memberswho transfer from GEPF to MGF, without prior FSB approval. The Fund is taking all possible steps to comply with Section 14 by initiating and completing the FSB approval process on behalfof and without the co-operation of the GEPF. To date the Fund’s administrator was successful to obtain Section 14 approvals for all such transfers, albeit retrospectively. Due to the non-compliance by the GEPF, Section 14 transfer approvals will never be obtained in advance. The only alternative is to return the deposits to the GEPF which is not regarded to be in the bestinterest of the relevant members. The trustees took a decision that the cash deposits received must be invested in the members’ fund credit accounts upon receipt to ensure that themember receives optimum investment growth and not be prejudiced by this irresponsible behaviour of the GEPF.

- 39 -



7. BENEFIT PAYMENTS

7.1. Benefits - current members

A B C D E A+B+C-D-EAt beginning of

yearBenefits for current

periodReturn allocated Payments Transferred to

unclaimed benefitsAt end of year

R R R R R RLump sums on retirements - Full benefit 101,888,788 760,050,559 - (719,499,366) - 142,439,981Lump sums before retirement - Disability benefits 2,573,852 23,818,402 - (24,684,795) - 1,707,459 - Death benefits 465,741,638 322,870,349 23,436,324 (410,375,742) (3,836,580) 397,835,989 - Withdrawal benefits (1,834,458) 294,489,460 - (191,883,104) - 100,771,898OtherReverted Unclaimed Benefits - 19,558 - (19,558) - -

Total ( 7.1) 568,369,820 1,401,248,328 23,436,324 (1,346,462,565) (3,836,580) 642,755,327

Benefits for current year (B) 1,401,248,328Return allocated (C) 23,436,324Statement of changes in net assets and funds 1,424,684,652

7.2. Benefits in terms of surplus apportionment

A B C D E A+B+C+D+EAt beginning of

yearSurplus allocated Return allocated Payments Transferred to

unclaimed benefitsAt end of year

R R R R R REnhancements to former members 1,125,920 - - (900,149) - 225,771

Total Benefits (7.2) 1,125,920 - - (900,149) - 225,771

Surplus allocated (B) -Return allocated (C) -Statement of changes in net assets and funds -

Total ( 7.1 + 7.2) 569,495,740 1,401,248,328 23,436,324 (1,347,362,714) (3,836,580) 642,981,098

- 40 -



8. UNCLAIMED BENEFITS

30 June 2014R

30 June 2013R

Balance at the beginning of the year 2,124,043 1,160,334Transferred from benefits payable 3,836,580 897,587Investment income allocated 105,557 66,122Less:- Benefits paid (814,654) -

Balance at the end of the year 5,251,526 2,124,043

9. ACCOUNTS PAYABLE

30 June 2014R

30 June 2013R

Reinsurance premiums 473,246 472,285Administration costs and loan administration fees 3,443,462 3,404,327Sundry Creditors 143,689 156,410Asset management fees 5,754,151 6,246,959Capital trade timing difference 2,987,850 -Unallocated housing loan refunds from Standard Bank 68,787 78,138Sundry participating employers (contribution overpayments) 1,107,033 1,142,516Refunds due - direct housing loan overpayments 12,410 6,731

Total 13,990,628 11,507,366

10. CONTRIBUTIONS

At beginning ofthe year

Towardsretirement

Towards re-insurance and

expenses

Contributionsreceived

At end of theyear

R R R R RMember contributions received 9,143,001 389,612,508 - (389,527,780) 9,227,729Employer contributions received 27,362,341 812,696,422 249,596,585 (1,061,972,161) 27,683,187Additional voluntary contributions- employer

- 1,277,334 - (1,277,334) -

Additional voluntary contributions- members

- 969,577 - (969,577) -

Total 36,505,342 1,204,555,841 249,596,585 (1,453,746,852) 36,910,916

Towards retirement 1,204,555,841Towards reinsurance and expenses 249,596,585Statement of changes in net assets and funds 1,454,152,426

- 41 -



11. NET INVESTMENT INCOME

30 June 2014R

30 June 2013R

Income from investments 608,914,114 577,097,132Dividends 200,325,931 175,471,037Interest 405,027,568 395,205,296Rentals 3,560,615 6,420,799

Adjustment to fair value 2,548,869,960 1,236,045,871

3,157,784,074 1,813,143,003Less: Expenses incurred in managing investments (70,530,907) (76,543,643)

Total 3,087,253,167 1,736,599,360

12. ADMINISTRATION EXPENSES

30 June 2014R

30 June 2013R

Actuarial fees 403,560 434,340Administration fees 19,598,222 18,562,798Audit fees - Audit services 587,100 558,600Audit fees - internal 163,079 50,160Depreciation 63,061 22,711Other Expenses 1,678,963 1,619,638Communication expenses 836,289 960,479FSB Levy 497,295 463,328Post retirement medical contributions 29,146 26,460Medical assessment costs 316,233 169,371Office expenses 1,381,629 1,341,016Principal officer expenses 1,517,659 1,328,074Staff expenses 2,481,688 2,109,463Board of Trustees expenses 1,230,298 945,744

Total 29,105,259 26,972,544

12.1. Board of Trustees Expenses 30 June 2014

R30 June 2013

RMeeting allowances 804,294 690,198Expenses 426,004 255,546

Total 1,230,298 945,744

13. FINANCIAL LIABILITIES AND PROVISIONS

13.1. Provisions 30 June 2014R

30 June 2013R

Provision for audit fees 587,100 558,600

Total 587,100 558,600

- 42 -



14. RISK MANAGEMENT POLICIES

Risk management framework

The Board of Trustees has overall responsibility for the establishment and oversight of the Fund’s risk management policies.The Board of Trustees has established the Executive Committee, which is responsible for developing and monitoring the Fund’srisk management policies. The committee reports regularly to the Board of Trustees on its activities.

The fund’s risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risklimits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularlyto reflect changes in market conditions and the Fund’s activities.

Solvency risk

Solvency risk is the risk that the investment returns on assets will not be sufficient to meet the funds contractual obligations tomembers.

Continuous monitoring by the Board and the Fctuary takes place to ensure that appropriate assets are held where the fundsobligation to members are dependent upon the performance of specific portfolio assets and that a suitable match of assetsexists for all other liabilities.

Credit risk

Credit risk is the risk that a counter-party to a financial instrument will fail to discharge an obligation, and cause the fund to incura financial loss.

The Board of Trustees determines the restrictions applicable to bond investments, cash investments and to other creditexposure for the Fund and specifies the minimum credit rating and the maximum limit per specific issuer depending on theissuer's credit rating.

Only well established counterparties of an acceptable credit standing are used and the portfolios' investment instruments arewell diversified to limit the impact of a counterparty default.

The restrictions applicable and the permissible investments are included in the mandate of the appointed InvestmentAdministrators and monitored against the approved limits and reported on by the Investment Consultant and the InvestmentAdministrators on a monthly basis.

Legal risk

Legal risk is the risk that the fund will be exposed to contractual obligations which have not been provided for.

Legal representatives of the Fund monitor the drafting of contracts to ensure that rights and obligations of all parties are clearlyset out.

Cash flow risk

Cash flow risk is the risk that future cash flows associated with monetary financial instrument will fluctuate in amount. In thecase of a floating rate debt instrument, for example, such fluctuations result in a change in the effective interest rate of thefinancial instrument, usually without a corresponding change in its fair value.

The Board of Trustees monitors cash flows by using monthly cash flow projections.

Currency risk

Currency risk is the risk that the value of an instrument will fluctuate in Rands owing to changes in foreign exchange rates. Thefund’s exposure to currency risk is mainly in respect of foreign investments made on behalf of members of the fund for thepurpose of seeking desirable international diversification of investments.

The Board of Trustees ensures that the foreign investments of the Fund are monitored and limits these investments to25% of total assets. Where the limit of 25% is exceeded, the Board of Trustees ensures that it is acceptable to the Regulator.

Liquidity risk

Liquidity risk is the risk that the fund will encounter difficulty in raising funds to meet commitments associated with financialinstruments.

The Fund’s liabilities are backed by appropriate assets and it has significant liquid resources.

- 43 -



14. RISK MANAGEMENT POLICIES (Continued)

Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices or marketinterest rates.

Investments in equities are valued at fair value and therefore susceptible to market fluctuations.

Investments are managed with the aim of maximising the Fund's returns while limiting risk to acceptable levels within theframework of statutory requirements.

The Board ensures that continuous monitoring takes place to ensure that appropriate assets are held where the liabilities aredependent upon the performance of specific portfolios of assets and that a suitable match of assets exists for all non-marketrelated liabilities.

Investments

Investments in equities are valued at fair value and therefore susceptible to market fluctuations. Investments are managed withthe aim of maximising the fund’s returns while limiting risk to acceptable levels within the framework of statutory requirements.

Continuous monitoring takes place to ensure that appropriate assets are held where the liabilities are dependent upon theperformance of specific portfolios of assets and that a suitable match of assets exists for all non–market related liabilities.

15. RELATED PARTY TRANSACTIONS

Related party transactions for the period under review are as follows:

15.1. Participating employers

The following transactions between the participating employers and the Fund occurred during the period: The participatingemployers made contributions to the Fund for members' retirement to the value of R812,696,422 (2013: R754,917,792) andtowards the Fund's risk reserve and administration expenses to the value of R249,596,585 (2013: R228,859,042) respectively(refer to note 10 of the financial statements).

15.2. Trustees

During the year under review a total amount of R792,089 was contributed to the Fund on behalf of the member trustees in respectof their individual pension contributions in terms of the provisions of the Fund Rules. This amount consists of contributions by themember trustees as well as their employers. Of the total amount R662,370 was contributed towards the member trustees'retirement provision and R129,720 was contributed towards the Fund's risk benefits and administration expenses. Thesecontributions are the standard member and employer contributions in terms of the Fund Rules made in respect of the trustees intheir capacity as employees and are disclosed merely for transparency reasons. This is not remuneration to the trustees by theFund.

- 44 -



16. SURPLUS AND RESERVES

ReserveAccounts Total

RevertedUnclaimed

Benefit Account

ProcessingAccount

Risk Account Data andOperational

AccountR R R R R

At beginning of year 245,237,414 - 22,790,458 214,877,899 7,569,057Contributions received and accrued 249,596,585 - - 221,978,078 27,618,507

Net investment income 3,081,007,809 65,583 3,061,249,768 19,196,303 496,155Allocated to unclaimed benefits (77,384) - (77,384) - -

Less: (34,555,361) - - (6,016,373) (28,538,988)- Re-insurance premiums (5,683,633) - - (5,683,633) -- Administration costs (28,871,728) - - (332,740) (28,538,988)Net income before transfers and benefits 3,295,971,649 65,583 3,061,172,384 235,158,008 (424,326)Transfers and benefits (370,173,250) (19,557) (15,649,534) (354,504,159) -Transfers from other funds - - - - -Benefits (370,173,250) (19,557) (15,649,534) (354,504,159) -Net income after transfers and benefits 2,925,798,399 46,026 3,045,522,850 (119,346,151) (424,326)Transfer between reserve accounts (2,876,240,771) 300,000 (3,056,366,637) 179,825,866 -Net investment return - - - - -Transfer to Reverted Unclaimed Benefits - 300,000 - (300,000) -Death and Disability 180,125,866 - - 180,125,866 -Investment return allocated to Member Share

Account(3,056,366,637) - (3,056,366,637) - -

At end of year 294,795,042 346,026 11,946,671 275,357,614 7,144,731

17. AMOUNTS TO BE ALLOCATED

30 June 2014R

30 June 2013R

Investment return to be allocated (2,514,087) 23,477,177Contributions allocated to members after year-end 40,758,995 36,505,365Housing loan installments allocated to members after year-end 1,201,881 475,442Capital trade timing difference - 24,638,235

Total amounts to be allocated 39,446,789 85,096,219

- 45 -

REPORT OF THE VALUATOR

Particulars of financial condition of the Municipal Gratuity Fund as at 30 June 2014

1. Net assets available for benefits.

R 17 651 147 000

2. The actuarial value of the net assets available for benefits, for the purposes of comparison with the actuarial present value of promised retirement benefits.

R 17 651 147 000

3. The actuarial present value of promised retirement benefits, split into vested and non-vested benefits.

Share Account (Members’ Fund Credits) R 17 316 905 000 Amounts to be allocated R 39 447 000

R 17 356 352 000

4. Contingency reserve account balances.

Risk Account R 275 357 000 Processing Account R 11 947 000 Data and Operational Account R 7 145 000 Reverted Unclaimed Benefits Account R 346 000 R 294 795 000

5. Details of the valuation method adopted (including that in respect of any contingency reserve) and details of any changes since the previous summary of report.

N/A

6. Details of the actuarial basis adopted (including that in respect of any contingency reserve) and details of any changes since the previous summary of report.

N/A

7. Any other particulars deemed necessary by the valuator for the purposes of this summary.

The investigation into the experience in the Risk Account was not complete by the time this certificate was finalised for the 30 June 2014 financial statements. Our investigations may result in notional adjustments to the balance in the Risk Account and will be reported on separately in the 30 June 2014 statutory actuarial valuation report.

8. A statement as to whether the fund was in a sound financial condition for the purposes of the Pension funds Act, 1956.

The Fund was financially sound as at 30 June 2014.

Prepared by me: GERDA GROBLER VALUATOR

Fellow of the Actuarial Society of South Africa Fellow of the Faculty of Actuaries

In my capacity as the valuator of the fund and as an employee of Alexander Forbes Financial Services

29 October 2014

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229

8,67

6,10

3

Equ

ities

E5,

661,

198,

069

3,35

0,29

3,26

751

7,55

5-

-9,

012,

008,

891

6,10

7,39

8,92

22,

561,

012,

8863

43,5

97,0

832,

904,

609,

969

32.2

39,

012,

008,

891

Der

ivat

ive

Mar

ket

inst

rum

ents

G-

--

(63,

421,

061)

-(6

3,42

1,06

1)(6

3,42

1,06

1)-

--

-(6

3,42

1,06

1)

Oth

er a

sset

s I

-13

,460

,650

(533

,001

)-

-12

,927

,649

4,60

4,96

58,

322,

684

-8,

322,

684

64.3

812

,927

,649

Hed

ge F

unds

J54

,710

,771

633,

915,

012

--

-68

8,62

5,78

363

3,91

5,01

254

,710

,771

-54

,710

,771

7.94

688,

625,

783

Col

lect

ive

Inve

stm

ent

Sch

emes

--

--

1,08

1,83

7,32

31,

081,

837,

323

845,

451,

399

236,

385,

924

-23

6,38

5,92

421

.85

1,08

1,83

7,32

3

Tot

al in

vest

men

ts10

,433

,907

,742

5,75

5,03

7,28

11,

068,

946,

056

(63,

421,

061)

1,08

1,83

7,32

318

,276

,307

,341

14,3

35,2

61,2

383,

597,

320,

074

343,

726,

029

3,94

1,04

6,10

321

.56

18,2

76,3

07,3

41

OT

HE

R IN

FO

RM

AT

ION

The

Fun

d’s

asse

ts m

arke

d as

Non

-com

plia

nt In

sura

nce

Pol

icie

s an

d C

olle

ctiv

e In

vest

men

t Sch

emes

hav

e be

en d

iscl

osed

as

such

bec

ause

the

Fun

d ha

s no

t rec

eive

d an

aud

it ce

rtifi

cate

from

the

inve

stm

ent m

anag

er's

aud

itors

. T

he F

und

ther

efor

e co

uld

not

mak

e us

e of

the

exe

mpt

ion

prov

ided

und

er R

egul

atio

n 28

Sub

-sec

tion

(8)(

b) a

nd h

ad t

o ap

ply

the

look

-thr

ough

prin

cipl

e.

The

Fun

d ha

s ob

tain

ed a

reg

ulat

ion

28 c

ertif

icat

e fr

om t

he i

nves

tmen

t m

anag

ers

and

the

look

thr

ough

to

the

unde

rlyin

gin

vest

men

ts h

as b

een

disc

lose

d in

Sch

edul

e IB

.

- 63

-


SCHEDULE IA - SCHEDULES PERTAINING TO THE ANNUAL FINANCIAL STA TEMENTS (continued)For the year ended 30 June 2014

A CASH

Instrument

Local

Fair Value30 June 2014

RLocal notes, deposits, money market instruments issued by a SouthAfrican Bank, margin accounts, settlement accounts with an exchange andIslamic liquidity management financial instruments

2,674,409,290Notes and coins; any balance or deposit in an account held with a SouthAfrican bank; 1,553,109,908 Total 1,553,109,908A money market instrument issued by a South African bank including anIslamic liquidity management financial instrument 905,613,369 Total 905,613,369Any positive net balance in a margin account with an exchange

(136,883,339) Total (136,883,339)Any positive net balance in a settlement account with an exchange,operated for the buying and selling of assets 352,569,352 Total 352,569,352ForeignForeign balances or deposits, money market instruments issued by aforeign bank including Islamic liquidity management financial instruments

79,396,441Any balance or deposit held with a foreign bank 79,143,625 Total 79,143,625Any balance or deposit held with an African bank 2,913 Total 2,913A money market instrument issued by a foreign bank including an Islamicliquidity management financial instrument

249,903

Total 249,903

Total 2,753,805,731

B COMMODITIES

Instrument Holding%

Fair valueR

LocalGold (including Kruger Rands)Total 0.04 7,246,404

7,246,404OtherPalladium 0.05 8,313,492Platinum 0.14 25,450,920Rhodium - 329,494

34,093,90641,340,310

Total 41,340,310

- 64 -

MU

NIC

IPA

L G

RA

TU

ITY

FU

ND

SC

HE

DU

LE IA

- S

CH

ED

ULE

S P

ER

TA

ININ

G T

O T

HE

AN

NU

AL

FI

NA

NC

IAL

ST

AT

EM

EN

TS

(co

ntin

ued)

For

the

year

end

ed 3

0 Ju

ne 2

014

CD

EB

T IN

ST

RU

ME

NT

S IN

CLU

DIN

G IS

LAM

IC D

EB

T IN

ST

RU

ME

NT

S

Inst

rum

ent

Loca

l or

fore

ign

Sec

ured

/ Uns

ecur

edIs

sued

/G

uara

ntee

dR

edem

ptio

nva

lue

R

Fai

r va

lue

RG

over

nmen

t deb

t:D

ebt i

nstr

umen

ts is

sued

by

an lo

ans

to th

e go

vern

me

nt o

f the

Rep

ublic

and

any

debt

or

loan

gua

rant

eed

by th

e R

epub

licR

epub

lic O

f Sou

th A

fric

aLo

cal

Sec

ured

Gua

rant

eed

535,

753,

095

535,

753,

095

Deb

t ins

trum

ents

issu

ed o

r gu

aran

teed

by

the

gove

rnm

ent o

f a fo

reig

n co

untr

y:U

SA

Gov

t Tre

asur

yF

orei

gnU

nsec

ured

Gua

rant

eed

460,

603

Deu

tsch

land

Gov

ernm

ent

For

eign

Uns

ecur

edG

uara

ntee

d84

,540

Not

a D

o T

esou

ro N

acio

nal

For

eign

Uns

ecur

edG

uara

ntee

d39

,573

Rep

ublic

Of K

enya

For

eign

Uns

ecur

edG

uara

ntee

d8,

769

593,

485

Ban

k de

bt :

Deb

t ins

trum

ents

issu

ed o

r gu

aran

teed

by

a S

outh

Af

rican

Ban

k ag

ains

t its

bal

ance

she

et:-

List

ed o

n an

exc

hang

e w

ith a

n is

suer

mar

ket c

apita

lis

atio

n of

R20

bill

ion

orm

ore,

or

an a

mou

nt o

r co

nditi

ons

as p

resc

ribed

Tot

alN

AN

AN

A35

9,04

3,01

435

9,04

3,01

4

List

ed o

n an

exc

hang

e w

ith a

n is

suer

mar

ket c

apita

lis

atio

n of

bet

wee

n R

2 bi

llion

and

R20

bill

ion,

or

an a

mou

nt o

r co

nditi

ons

as p

res

crib

edT

otal

NA

NA

NA

11,7

48,2

9911

,748

,299

List

ed o

n an

exc

hang

e w

ith a

n is

suer

mar

ket c

apita

lis

atio

n of

less

than

R2

billi

on, o

r an

am

ount

or

cond

ition

s as

pre

scrib

edF

irstr

and

Ban

k Lt

d, In

cl R

MB

For

eign

Uns

ecur

edG

uara

ntee

d4,

021,

188

4,02

1,18

8

Pub

lic d

ebt:

Deb

t ins

trum

ents

issu

ed o

r gu

aran

teed

by

a pu

blic

ent

ity u

nder

the

Pub

licF

inan

ce M

anag

emen

t Act

, 199

9 (A

ct N

o. 1

of 1

999)

as

pre

scrib

ed:-

ES

KO

MLo

cal

Sec

ured

Gua

rant

eed

60,7

65,5

24T

he S

outh

Afr

ican

Nat

iona

l Roa

ds A

genc

y Li

mite

dLo

cal

Sec

ured

Gua

rant

eed

34,2

03,9

3294

,969

,456

- 65

-

MU

NIC

IPA

L G

RA

TU

ITY

FU

ND

SC

HE

DU

LE IA

- S

CH

ED

ULE

S P

ER

TA

ININ

G T

O T

HE

AN

NU

AL

FI

NA

NC

IAL

ST

AT

EM

EN

TS

(co

ntin

ued)

For

the

year

end

ed 3

0 Ju

ne 2

014

Cor

pora

te d

ebt (

excl

udin

g de

bent

ures

):D

ebt i

nstr

umen

ts is

sued

or

guar

ante

ed b

y an

ent

ity

that

has

equ

ity li

sted

on

anex

chan

geLi

sted

on

an e

xcha

nge

Tot

alN

AN

AN

A28

8,16

4,79

228

8,16

4,79

2

Not

list

ed o

n an

exc

hang

eLa

nd a

nd A

gric

ultu

ral D

evel

opm

ent B

ank

of S

ALo

cal

Uns

ecur

edU

nlis

ted

70,9

42,8

34S

anla

m C

apita

l Mar

kets

Ltd

Loca

lU

nsec

ured

Unl

iste

d43

,159

,682

Indu

stria

l Dev

elop

men

t Cor

pora

tion

Loca

lU

nsec

ured

Unl

iste

d7,

103,

965

Inve

stec

Pro

pert

y F

und

Loca

lU

nsec

ured

Unl

iste

d2,

000,

396

123,

206,

877

Oth

erLi

sted

on

an e

xcha

nge:

Tot

alN

AN

AN

A10

8,37

2,25

710

8,37

2,25

7

Not

list

ed o

n an

exc

hang

eJI

KA

Pro

pert

ies

(Pty

) Lt

dLo

cal

Sec

ured

Unl

iste

d12

,902

,854

Om

nia

Gro

up (

Pty

) Lt

dLo

cal

Uns

ecur

edU

nlis

ted

6,10

5,66

1B

lue

Tita

nium

Con

duit

Ltd

Loca

lS

ecur

edU

nlis

ted

5,89

9,64

824

,908

,163

TO

TA

L D

EB

T IN

ST

RU

ME

NT

S IN

CLU

DIN

G IS

LAM

IC D

EB

T IN

ST

RU

ME

NT

S1,

550,

780,

626

- 66

-



D INVESTMENT AND OWNER OCCUPIED PROPERTIES

Instrument

Investment propertiesList issuers/entities which exceeds 5% of total assetsTotal Local 37,400,000

Total 37,400,000

Instrument

Shares and linked units in property companies, or units in a collective investmentscheme in property, listed on an exchange:

Local/ Foreign Fair valueR

Issuer market capitalisation of R10 billion or more , or an amount or conditions asprescribedList issuers/entities which exceeds 5% of total assetsTotal NA 142,421,102

Issuer market capitalisation of between R3 billion and R10 billion, or an amount or conditions as prescribed

List issuers/entities which exceeds 5% of total assetsTotal NA 44,130,310

Issuer market capitalisation of less than R3 billio n, or an amount or conditionsas prescribedList issuers/entities which exceeds 5% of total assetsTotal NA 53,376,212

Total 239,927,624

E EQUITIES

Instrument Fair valueR

Listed equities

Issuer market capitalisation of R20 billion or more , or an amount or conditions as prescribedTotal 4,713,717,910Total 4,713,717,910

Issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions asprescribedTotal 763,370,180Total 763,370,180

Issuer market capitalisation of less than R2 billio n, or an amount or conditions as prescribedTotal 166,324,441Total 166,324,441

Unlisted equitiesTotal 17,785,538Total 17,785,538

TOTAL EQUITIES 5,661,198,069

- 67 -

MU

NIC

IPA

L G

RA

TU

ITY

FU

ND

SC

HE

DU

LE IA

- S

CH

ED

ULE

S P

ER

TA

ININ

G T

O T

HE

AN

NU

AL

FI

NA

NC

IAL

ST

AT

EM

EN

TS

(co

ntin

ued)

For

the

year

end

ed 3

0 Ju

ne 2

014

GD

IRE

CT

DE

RIV

AT

IVE

MA

RK

ET

INS

TR

UM

EN

TS

G1

DE

RIV

AT

IVE

PO

SIT

ION

S W

ITH

OU

T R

ES

IDU

AL

RIS

K

Inst

rum

ent

Loca

l or

For

eign

List

ed o

rU

nlis

ted

Str

ike

pric

eC

ost o

rP

rem

ium

Fai

r va

lue

Effe

ctiv

e E

cono

mic

Exp

osur

eP

oten

tial L

oss

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entia

l Gai

nC

ount

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rty

Exp

iry d

ate

Hol

ding

num

ber

Hol

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R

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ssN

et%

Opt

ions

YH

ZQ

G5

Lo

cal

List

ed91

79/9

777.

1 -

249,

967

(1,1

32,3

82)

(1,1

32,3

82)

Dep

enda

nt o

nre

set a

nd s

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as

wel

l as

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Dep

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nt o

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set a

nd s

trik

ele

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as

wel

l as

mar

ket l

evel

Saf

ex25

/02/

2015

113

-

DT

OX

112C

Loca

lLi

sted

1121

9(1

12,7

37.8

4)(1

,236

,220

)(2

,301

,215

)(2

,301

,215

) (

Spo

t rat

e at

mat

urity

- S

trik

epr

ice)

*Not

iona

l

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al P

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ium

S

afex

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1511

3(0

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MQ

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268.

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nd s

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as

wel

l as

mar

ket l

evel

Saf

ex14

/01/

2014

120

-

DT

OX

105C

Loca

lLi

sted

1058

4(1

13,4

59.6

2)(2

,908

,800

)(4

,798

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)(4

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) (

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trik

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l

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al P

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ium

S

afex

14/0

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0(0

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YH

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4

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lLi

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6.22

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)(1

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) D

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nd s

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Saf

ex27

/11/

2014

122

-

DT

OX

103C

Loca

lLi

sted

1037

0(1

13,1

09.8

6)(2

,662

,040

)(4

,959

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)(4

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) (

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t rat

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- S

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ice)

*Not

iona

l

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al P

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ium

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1/20

1412

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YG

SQ

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114

(1,2

87,9

44)

(1,2

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nt o

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as

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l as

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ket l

evel

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ex15

/10/

2014

113

-

DT

OX

100C

Loca

lLi

sted

1002

1(7

1,69

8.50

)(3

,461

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)(6

,465

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)(6

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) (

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t rat

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l

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ium

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2014

120

-

DT

OX

982C

Loca

lLi

sted

9342

(70,

124.

40)

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00)

(10,

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- 68

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2014

119

-

DT

OX

980C

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(104

,443

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00)

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- 69

-



L CERTIFIED REGULATION 28 COMPLIANT INVESTMENTS

Instrument Local or ForeignFair value

RCollective Investment Schemes – regulation 28(8)(b)( i)

LocalCadiz Money Market Fund Local 186,418,258Prudential Inflation Plus Fund Local 895,419,065Total certified Regulation 28 compliant investments

1,081,837,323

M REGULATION 28 NON COMPLIANT INVESTMENTS

M1 NON-COMPLIANT COLLECTIVE INVESTMENT SCHEMES Instrument

Local

Local or Foreign Holding%

Fair valueR

All Seasons BRIC Enhanced Fund Foreign 241,440,565Allan Gray Orbis Fund Foreign 774,149,324Blue Ink Fixed Interest FoHF Local 252,437,695Coronartion Global Emerging Markets Fund Foreign 583,338,743Foord Equity Fund Local 730,303,197Franklin Mutual Global Discovery Fund Foreign 670,463,857Iconic Torero Institutional Fund Local 381,477,317Investec Global Strategic Income Fund Foreign 178,000,197Investec Triple Alpha Fund Local 890,027,869Ishares MSCI EAFE Foreign 70,804,960Ishares S&P 500 Foreign 104,781,751Nedgroup Global Equity Fund Foreign 342,529,971Renasset Africa X SA Fund Class C Foreign 172,550,215Sanlam S & P Africa Tracker Fund Foreign 171,046,867Vantage Green X Fund (RF) (Pty) Ltd Local 191,684,753

5,755,037,281

Total Non-compliant Collective investment schemes 5,755,037,281

M2 NON- COMPLIANT INSURANCE POLICIES Instrument

Linked PoliciesLocal

Local or Foreign Holding%

Fair valueR

Futuregrowth AA Fund Local 118,309,823Futuregrowth BBB Fund Local 414,066,238Futuregrowth Enhanced MM Fund Local 536,569,464Futuregrowth Flexible Income Fund Local 531

1,068,946,056

Total Linked Policies 1,068,946,056

Total Non-compliant Insurance policies 1,068,946,056

- 70 -



O ENTITY / COUNTERPARTY EXPOSURE Credit / Counter party riskCounter party Direct investment

in counter partyDeposit/liquid

asset withcounter party

Guarantees Total per CounterParty

Exposure tocounter party as a

% of the fairvalue of the

assets of the fundR R R R

Banks 348,838,400 739,091,529 - 1,087,929,929ABSA Bank Ltd 348,838,400 739,091,529 - 1,087,929,929 5.94

Asset managers -local 1,058,823,254 528,150,280 - 1,586,973,534Coronation FundManagers Ltd

27,232,431 - - 27,232,431 0.15

Investec Ltd 281,525,271 271,617,351 - 553,142,622 3.02MMI Holdings Ltd 40,915,393 - - 40,915,393 0.22Nedbank Group Ltd 452,865,163 256,532,929 - 709,398,092 3.87Old Mutual Plc 180,209,176 - - 180,209,176 0.98Sanlam InvestmentManagement (Pty) Ltd

76,075,820 - - 76,075,820 0.42

Asset managers -foreign 3,941,046,103 - - 3,941,046,103All Seasons SpecialistFund

241,440,565 - - 241,440,565 1.32

Allan Gray Orbis 774,149,324 - - 774,149,324 4.23Coronation GlobalEmerging Market

560,790,612 - - 560,790,612 3.06

Coronation Abs ReturnGlobal

224,045,015 - - 224,045,015 1.22

Franklin Mutual GlobalDiscovery Fund

670,463,857 - - 670,463,857 3.66

International Cash 37,698,174 - - 37,698,174 0.21Investec GlobalStrategic Income

184,274,348 - - 184,274,348 1.01

Investec Value Equity 12,387,465 - - 12,387,465 0.07Ishares MSCI EAFE 70,804,960 - - 70,804,960 0.39Ishares S&P 500 104,781,751 - - 104,781,751 0.57Nedgroup Global EquityFund

342,529,971 - - 342,529,971 1.87

Prudential Inflation PlusFund

236,385,924 - - 236,385,924 1.29

RenAsset Africa X SAFund Class C

172,550,215 - - 172,550,215 0.94

Sanlam AbsoluteReturn Global

137,697,055 - - 137,697,055 0.75

Sanlam S & P AfricaTracker Fund

171,046,867 - - 171,046,867 0.93

Other funds - 94,744,611 842,064,208 936,808,819 5.12Housing loans - 94,744,611 842,064,208 936,808,819 5.12

5,348,707,757 1,361,986,420 842,064,208 7,552,758,385 41.24

- 71 -

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- 74

-


SCHEDULE IBASSETS HELD IN COMPLIANCE WITH REGULATION 28FOR THE YEAR ENDED 30 JUNE 2014

Fair valueR

A Total assets (Schedule IA -Total investments) 18,276,307,341

B1 Less: Reg 28 compliant investments(certificate received from issuing entity):-

(1,081,837,323)

B.1.1 Collective Investment Schemes (Reg 28(8)(b)(i)) (1,081,837,323)B.1.2 Linked Policies (Reg 28(8)(b)(ii)) -B.1.3 Non-Linked policies (Reg 28(8)(b)(iii)) -B.1.4 Entity regulated by FSB (Reg 28(8)(b)(iv))) -

B2 Less: Reg 28 excluded investmentsB2.1 Insurance Policies ( Reg 28(3)(c)) -

C Less: Investments not disclosed /data not available for disclosure [Refer to schedule IAN]

-

D TOTAL ASSETS for REGULATION 28 DISCLOSURE 17,194,470,018

Categories of kinds of assets Fair valueR

Fair value%

1 CASH 3,530,168,408 20.53%

1.1 Notes, deposits, money market instruments issued bya South African Bank, margin accounts, settlementaccounts with an exchange and Islamic liquiditymanagement financial instruments

100%

3,049,007,278 17.73%(a) Notes and coins; any balance or deposit in an account

held with a South African bank; 1,572,915,142 9.15% ABSA Bank Ltd 25% 507,181,494 2.95% Investec Bank Ltd 25% 271,617,351 1.58% Firstrand Bank Ltd, Incl RMB 25% 257,709,745 1.50% Nedbank Ltd 25% 253,543,701 1.47% Standard Bank of SA Ltd 25% 253,130,212 1.47% Other 25% 29,732,639 0.17%

(b) A money market instrument issued by a South Africanbank including an Islamic liquidity management financialinstrument

1,234,471,604 7.18%

Nedbank Ltd 25% 319,368,374 1.86% Firstrand Bank Ltd, Incl RMB 25% 299,055,457 1.74% ABSA Bank Ltd 25% 220,757,077 1.28% Standard Bank of SA Ltd 25% 214,596,826 1.25% Investec Bank Ltd 25% 72,137,515 0.42% Other 25% 108,556,355 0.63%

(c) Any positive net balance in a margin account with anexchange (114,031,372) (0.66)% Futuregrowth Policy B 25% 28,501,807 0.17% Other 25% 3,574,903 0.02% Investec Global Strategic Income Fund 25% (6,274,151) (0.04)% SAFEX Margin 25% (139,833,931) (0.81)%

(d) Any positive net balance in a settlement account with anexchange, operated for the buying and selling of assets 355,651,904 2.07% ABSA Bank Ltd 25% 231,910,036 1.35% Firstrand Bank Ltd, Incl RMB 25% 102,578,213 0.60% Standard Bank of SA Ltd 25% 18,138,102 0.11% Nedbank Ltd 25% 2,989,228 0.02% JP Morgan Chase and Co 25% 36,325 -%

1.2 Balances or deposits, money market instrumentsissued by a foreign bank including Islamic liquidit ymanagement financial instruments

SARBmax.limits 481,161,130 2.80%

(a) Any balance or deposit held with a foreign bank 480,782,280 2.80%

Orbis Optimal (US$) Fund [ORBO] 5% 305,772,014 1.78% JP Morgan Chase and Co 5% 75,387,552 0.44% Orbis Optimal (Euro) Fund [OROE] 5% 60,545,051 0.35% Nedgroup Global Equity Fund 5% 25,017,682 0.15%

Carried forward 3,515,729,577 20.46%

- 75 -


SCHEDULE IB - ASSETS HELD IN COMPLIANCE WITH REGULATION 28For the year ended 30 June 2014


Fair value%

Brought forward 3,515,729,577 20.46% Other 5% 14,059,981 0.08%

(b) Any balance or deposit held with an African bank 128,946 -%

JP Morgan Chase and Co 5% 128,946 -%(c) A money market instrument issued by a foreign bank

including an Islamic liquidity management financialinstrument 249,904 -% Nedbank Group Ltd 5% 137,102 -% Standard Bank of SA Ltd 5% 51,442 -% Four A EuXUK A(B)EUR 5% 41,241 -% IShares MSCI Europe 5% 14,123 -% IShares Emerg Mkt Eq 5% 5,996 -%

2 DEBT INSTRUMENTS INCLUDING ISLAMIC DEBTINSTRUMENTS 3,579,399,326 20.82%

2.1 Inside the Republic 100% 3,369,833,301 19.60%(a) Debt instruments issued by, and loans to, the government

of the Republic, and any debt or loan guaranteed by theRepublic 100% 1,082,136,275 6.29% Republic Of South Africa 25% 959,906,974 5.58% Eskom Holdings Ltd 25% 60,765,524 0.35% SA National Roads Agency Ltd 25% 47,762,288 0.28% Rand Water Board 25% 10,287,638 0.06% Futuregrowth Policy A 25% 2,415,360 0.01% Futuregrowth Policy B 25% 998,491 0.01%

(c) Debt instruments issued or by a South African bankagainst its balance sheet 75% 672,905,982 3.91%

c(i) Listed on an exchange with an issue market capitalisationof R20 billion or more, or an amount or conditions asprescribed 75% 589,931,879 3.43% ABSA Bank Ltd 25% 129,287,693 0.75% Standard Bank of SA Ltd 25% 122,591,050 0.71% Firstrand Bank Ltd, Incl RMB 25% 104,709,566 0.61% Nedbank Ltd 25% 88,069,277 0.51% Investec Bank Ltd 25% 69,480,434 0.40% Other 25% 75,793,859 0.44%

c(ii) Listed on an exchange with an issuer market capitalisationof between R2 billion and R20 billion, or an amount orconditions as prescribed 75% 79,703,855 0.46% African Bank Ltd 15% 39,066,023 0.23% Futuregrowth Policy B 15% 35,877,883 0.21% Futuregrowth Policy A 15% 4,759,949 0.03%

c(iv) Not listed on an exchange25%

3,270,248 0.02%

Firstrand Bank Ltd, Incl RMB 5% 4,317,679 0.03% Standard Bank of SA Ltd 5% 158,939 -% ABSA Bank Ltd 5% (1,206,370) (0.01)%

(d) Debt instruments issued or guaranteed by an entity thathas equity listed on an exchange, or debt instrumentsissued or guaranteed by a public entity under the PublicFinance Management Act, 1999 (Act No. 1 of 1999) asprescribed 50% 725,158,161 4.22%

d(i) Listed on an exchange 50% 561,988,901 3.27%

Transnet Ltd 10% 70,064,860 0.41% Development Bank of SA 10% 55,163,851 0.32% Mercedes-Benz South Africa (Pty) Ltd 10% 34,353,703 0.20% Liberty Group Ltd 10% 31,693,033 0.18% Bidvest Group Ltd 10% 28,232,987 0.16% Other 10% 342,480,467 1.99%

d(ii) Not listed on an exchange 25% 163,169,260 0.95%

Land and Agricultural Development Bank of SA 5% 95,426,873 0.55% Sanlam Capital Markets Ltd 5% 43,159,682 0.25%

Carried forward 5,985,786,121 34.80%

- 76 -




Fair value%

Brought forward 5,985,786,121 34.80% Industrial Development Corporation 5% 12,483,146 0.07% Omnia Group (Pty) Ltd 5% 3,595,867 0.02% Futuregrowth Policy B 5% 3,422,163 0.02% Other 5% 5,081,529 0.03%

(e) Other debt instruments:- 25% 889,632,883 5.17%e(i) Listed on an exchange 25% 343,042,627 2.00%

Futuregrowth Policy B 5% 75,132,239 0.44% Nqaba Finance 1 (Pty) Ltd 5% 21,582,993 0.13% Synthesis Funding Ltd 5% 20,782,762 0.12% Thekwini Fund 10 Ltd 5% 20,001,607 0.12% Futuregrowth Policy A 5% 18,683,398 0.11% Other 5% 186,859,628 1.09%

e(ii) Not listed on an exchange 15% 546,590,256 3.18%

Futuregrowth Policy B 5% 246,300,915 1.43% Vantage Green X Fund (RF) (Pty) Ltd 5% 191,684,753 1.11% Futuregrowth Policy A 5% 26,509,979 0.15% JIKA Properties (Pty) Ltd 5% 21,624,609 0.13% Blue Titanium Conduit Ltd 5% 14,316,019 0.08% Other 5% 46,153,981 0.27%

2.2 Foreign

SARBmax.limits

209,566,025 1.22%(b) Debt instruments issued or guaranteed by the government

of a foreign country 131,462,017 0.76% Investec Global Strategic Income Fund 25% 98,730,123 0.57% Orbis Optimal (US$) Fund [ORBO] 25% 26,848,274 0.16% Orbis Optimal (Euro) Fund [OROE] 25% 5,290,135 0.03% USA Govt Treasury 25% 460,603 -% Other 25% 132,882 -%

(c) Debt instruments issued or guaranteed by a South AfricanBank against its balance sheet:- 7,841,394 0.05%

c(i) Listed on an exchange with an issuer market capitalisationof R20 billion or more, or an amount or conditions asprescribed

7,841,394 0.05%

Standard Bank of SA Ltd 25% 3,588,497 0.02% Investec Bank Ltd 25% 3,105,851 0.02% Firstrand Bank Ltd, Incl RMB 25% 1,147,046 0.01%

(d) Debt instruments issued or guaranteed by an entity thathas equity listed on an exchange 4,045,296 0.02%

d(i) Listed on an exchange 4,045,296 0.02%

Old Mutual 10% 2,857,926 0.02% Transnet 10% 807,333 -% Anglo American Plc GBP 10% 220,623 -% KFW 10% 68,435 -% Other 10% 90,979 -%

(e) Other debt instruments 66,217,318 0.39%e(i) Listed on an exchange 66,217,318 0.39%

Investec Global Strategic Income Fund 5% 72,836,096 0.42% Barc 0.686% 220321 5% 870,690 0.01% Other 5% (1,350,006) (0.01)% Long Gilt Fut Sep14 5% (2,599,050) (0.02)% Us 2Yr Note Fut Sep14 5% (3,540,412) (0.02)%

3 EQUITIES 9,012,008,890 52.41%

3.1 Inside the Republic 75% 6,107,398,922 35.52%(a) Preference and ordinary shares in companies, excluding

shares in property companies, listed on an exchange:-75%

6,106,984,388 35.52%a(i) Issuer market capitalisation of R20 billion or more, or an

amount or conditions as prescribed 75% 5,168,577,383 30.06%

Carried forward 7,109,567,734 41.33%

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Fair value%

Brought forward 7,109,567,734 41.33% Sasol Ltd 15% 449,743,195 2.62% BHP Billiton PLC 15% 365,187,565 2.12% Standard Bank Group Ltd 15% 337,935,237 1.97% British American Tobacco PLC 15% 267,826,093 1.56% SABMiller PLC 15% 259,461,608 1.51% Steinhoff International Holdings Ltd 15% 234,631,198 1.36% Anglo American PLC 15% 202,736,524 1.18% Naspers Ltd 15% 193,527,410 1.13% Old Mutual PLC 15% 180,209,176 1.05% Other 15% 2,694,940,505 15.67% Safex Mopex 15% (17,621,128) (0.10)%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed 75% 873,001,031 5.08% Trencor Ltd 10% 71,784,736 0.42% Tongaat Hulett Ltd 10% 50,404,785 0.29% Sun International Ltd 10% 40,974,340 0.24% KAP Industrial Holdings Ltd 10% 36,736,072 0.21% Omnia Holdings Ltd 10% 32,032,045 0.19% Other 10% 641,069,053 3.73%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed 15% 65,405,974 0.38% Mustek Ltd 5% 9,072,000 0.05% Comair Ltd 5% 9,050,760 0.05% Stefanutti Stocks Holdings Ltd 5% 7,495,208 0.04% Nu-World Holdings Ltd 5% 7,192,948 0.04% Argent Industrial Ltd 5% 5,410,381 0.03% Other 5% 27,184,677 0.16%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange 15% 414,534 -% Jika Properties (Pty) Ltd 2.5% 358,314 -% Mobile Industries Ltd 2.5% 56,220 -%

3.2 Foreign 2,904,609,968 16.89%

(a) Preference and ordinary shares in companies, excludingshares in property companies, listed on an exchange:-

SARBmax.limits 2,628,648,288 15.29%

a(i) Issuer market capitalisation of R20 billion or more, or anamount or conditions as prescribed 2,242,205,319 13.04% Franklin Mutual Global Discovery Fund (NC) 15% 670,463,857 3.90% Nedgroup Global Equity Fund 15% 317,512,289 1.85% Orbis Global Equity Fund [ORBG] 15% 277,152,826 1.61% Sanlam S & P Africa Tracker Fund 15% 172,550,215 1.00% Renasset Africa X SA Fund Class C 15% 171,046,867 0.99% Other 15% 633,479,265 3.68%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed 108,717,094 0.63% Cia Hering 10% 19,549,744 0.11% Arcos Dorados Holdings Inc 10% 17,994,133 0.10% Marisa Lojas Sa 10% 17,008,090 0.10% Mitra Adiperkasa 10% 12,387,465 0.07% Eurocash Sa 10% 12,309,117 0.07% Other 10% 29,468,545 0.17%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed 277,725,875 1.62% Ishares S&P 500 5% 104,937,321 0.61% Ishares Msci Eafe 5% 70,920,584 0.41% Viking Funds (Cayman Islands) 5% 14,950,209 0.09% Ishares Msci Europe 5% 14,108,854 0.08% Egerton Capital European Fund 5% 13,044,948 0.08% Other 5% 59,763,959 0.35%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange 275,961,680 1.60% All Seasons Specialist Fund 2.5% 241,440,565 1.40% Orbis Optimal (US$) Fund [ORBO] 2.5% 8,076,310 0.05% Select Offshore Advisors, Llc 2.5% 7,296,015 0.04%

Carried forward 16,102,427,834 93.61%

- 78 -




Fair value%

Brought forward 16,102,427,834 93.61% Orbis Global Equity Fund [ORBG] 2.5% 4,458,145 0.03% Other 2.5% 14,690,645 0.09%

4 IMMOVABLE PROPERTY 298,676,103 1.74%

4.1 Inside the Republic 25% 255,320,477 1.48%(a) Preference shares, ordinary shares and linked units

comprising shares linked to debentures in propertycompanies, or units in a Collective Investment Scheme inProperty, listed on an exchange 25% 217,920,477 1.27%

a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 25% 122,728,682 0.71% Intu Properties Ltd/Capital Shopping Centres Group Plc 15% 57,841,278 0.34% New Europe Property Investment 15% 14,391,523 0.08% Redefine Properties Ltd 15% 10,463,827 0.06% Capital & Counties Properties Plc 15% 10,095,491 0.06% Growthpoint Properties Ltd 15% 8,731,416 0.05% Other 15% 21,205,147 0.12%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 25% 43,019,136 0.25% Fortress Income Fund Ltd - A 10% 16,670,390 0.10% Delta Property Fund Ltd 10% 8,564,691 0.05% SA Corporate Real Estate Fund 10% 6,580,931 0.04% Accelerate Property Fund Ltd 10% 3,915,962 0.02% Rebosis Property Fund Ltd 10% 2,079,497 0.01% Other 10% 5,207,665 0.03%

a(iii) Issuer market capitalisation of less than R3 billion or anamount or conditions as prescribed 25% 52,172,659 0.30% Hospitality Property Fund Ltd 5% 15,952,723 0.09% Arrowhead Properties Ltd - A 5% 8,499,604 0.05% Dipula Income Fund-A 5% 6,253,808 0.04% Ascension Properties Ltd - A Units 5% 5,874,047 0.03% Hospitality Property Fund Ltd 5% 5,435,623 0.03% Other 5% 10,156,854 0.06%

(b) Immovable property, preference and ordinary shares inproperty companies, and linked units comprising shareslinked to debentures in property companies, not listed onan exchange 15% 37,400,000 0.22% ABSA Square Nelspruit 5% 37,400,000 0.22%

4.2 Foreign 43,355,626 0.25%(a) Preference shares, ordinary shares and linked units

comprising shares linked to debentures in propertycompanies, or units in a Collective Investment Scheme inProperty, listed on an exchange

SARBmax.limits 43,355,626 0.25%

a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 41,040,896 0.24% Br Malls Participacoes Sa 15% 6,953,545 0.04% Orbis Optimal (US$) Fund [ORBO] 15% 6,584,739 0.04% Orbis Global Equity Fund [ORBG] 15% 5,407,299 0.03% Fonciere Des Regions 15% 1,567,519 0.01% Other 15% 20,527,794 0.12%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 1,111,175 0.01% Aims Amp Capital Industrial 10% 553,705 -% Norwegian Property 10% 344,525 -% Lippo-Mapletree Indonesia 10% 212,945 -%

a(iii) Issuer market capitalisation of less than R3 billion or anamount or conditions as prescribed 1,203,555 0.01% Japan Residential Investment 5% 838,335 -% Galileo Japan Trust 5% 365,220 -%

5 COMMODITIES 41,340,310 0.24%

5.1 Inside the Republic 10% 38,406,335 0.22%

Carried forward 16,420,252,727 95.45%

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Fair value%

Brought forward 16,420,252,727 95.45%(a) Kruger Rands and other commodities on an exchange,

including exchange traded commodities 10% 38,406,335 0.22%a(i) Gold (including Kruger Rands) 10% 5,288,170 0.03%

New Gold Issuer Ltd 10% 5,288,170 0.03%a(ii) Other commodities 5% 33,118,165 0.19%

New Gold Platinum ETF 5% 25,225,693 0.15% Africa Palladium Debenture 5% 7,892,472 0.05%

5.2 Foreign 10% 2,933,975 0.02%(a) Gold and other commodities on an exchange, including

exchange traded commodities 10% 2,933,975 0.02%a(i) Gold 10% 1,958,234 0.01%

Gold Bullion Securities 5% 1,458,165 0.01% Market Vector Gold Miners 5% 500,069 -%

a(ii) Other commodities 5% 975,741 0.01%

Palladium 5% 421,020 -% Rhodium 5% 329,494 -% Platinum 5% 225,227 -%

7 HOUSING LOANS GRANTED TO MEMBERS INACCORDANCE WITH THE PROVISIONS OF SECTION19(5)

95% 94,744,611 0.55%

8 HEDGE FUNDS, PRIVATE EQUITY FUNDS AND ANYOTHER ASSET NOT REFERRED TO IN THISSCHEDULE 638,132,370 3.71%

8.1 Inside the Republic 15% 575,098,917 3.34%(a) Hedge fund 10% 633,915,012 3.69%a(i) Funds of hedge funds 5% 633,915,012 3.69%

Iconic Torero Institutional Fund 15% 381,477,317 2.22% Blue Ink Fixed Interest FoHF 15% 252,437,695 1.47%

(c) Other assets not referred to in this schedule and excludinga hedge fund or private equity fund 2.5% (58,816,095) (0.34)% R186 Bond Future Aug14 15% 5,137,966 0.03% Other 15% (25,514,235) (0.15)% Jul14 DTOX 9805.73 C 15% (9,286,176) (0.05)% Sep14 DTOX 9342.27 C 15% (10,798,750) (0.06)% Sep 14 DTOP 15% (18,354,900) (0.11)%

8.2 Foreign 15% 63,033,453 0.37%(a) Hedge fund 10% 54,710,771 0.32%a(ii) Hedge funds 2.5% 54,710,771 0.32%

Coronation Redwood Fd Cl Z Usd 10% 30,648,000 0.18% Coronation Eiger Fund Cl Z Usd 10% 24,062,771 0.14%

(c) Other assets not referred to in this schedule and excludinga hedge fund or private equity fund 2.5% 8,322,682 0.05% Investec Global Strategic Income Fund 15% 8,322,682 0.05%

TOTAL ASSETS – REGULATION 28 17,194,470,018 100.00%

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Documents

ANNUAL FINANCIAL STATEMENTS NAME OF RETIREMENT … · 2019-08-12 · Maphuti Lisbeth Mothata [email protected] E 26 November 2010 John Albert Hall [email protected] M