annual financial statements name of ......cape town 7735 riverside two sir john rogerson’s quay...

ANNUAL FINANCIAL STATEMENTS

NAME OF RETIREMENT FUND: MUNICIPAL GRATUITY FUND

FINANCIAL SECTOR CONDUCT AUTHORITYREGISTRATION NUMBER: 12/8/29256/2

FOR THE PERIOD: 1 JULY 2018 to 30 JUNE 2019

CONTENTS

Schedule Page

A

B

C

D

E

F

G

Regulatory Information *

Statement of responsibility by the Board of Fund *

Statement of responsibility by the Principal Officer *

Report of the Independent Auditors

Report of the Board of Fund *

Statement of net assets and funds

Statement of changes in net assets and funds

2 - 9

10 - 11

12

13 - 15

16 - 28

29

30

HA

HB

I

IA

IB

Notes to the Annual Financial Statements

Report of the Valuator *

Report of the Independant Auditor of the Municipal Gratuity Fund of factual findings to the Board ofFund and the Authority

Investment schedule pertaining to the Annual Financial Statements *

Assets held in compliance with Regulation 28

Independent Auditor's report on assets held in compliance with Regulation 28 to the Board of Fund

31 - 50

51 - 51

52 - 65

66 - 79

80 - 88

89 - 91

* Not subject to any engagement by an auditor

MUNICIPAL GRATUITY FUND

SCHEDULE AREGULATORY INFORMATIONFOR THE YEAR ENDED 30 JUNE 2019

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 2018 to 30 June 2019Prior year: 1 July 2017 to 30 June 2018

BOARD OF FUND

Full name E-mail Address Capacity Date appointed /elected

Date resigned /expired

Pieter Johannes Venter [email protected] MAVC

24 June 199610 March 200427 July 201131 October 2012

31 October 2012

Lesiba Johannes Modiga [email protected] MAV

14 November 200827 July 201121 September 2016

Edward Charles Alberts [email protected] EIAVC

9 October 19967 July 19997 July 19997 July 199923 August 2002

7 July 1999

16 November 200723 August 200216 November 2007

Jan Dirk Grobler Venter [email protected] MAVIA

12 September 199920 October 20004 September 20024 March 200412 October 2016

28 February 200428 February 200428 February 2004

Johannes Hendrikus Grobbelaar [email protected] MMIA

8 November 200220 March 200729 March 201710 May 2017

17 February 200631 December 2016

Roja Elvis Ramare [email protected] M 5 May 2010Modise Daniël Mogakabe [email protected] M 26 November 2010Andries van den Berg [email protected] M 25 November 2015Aaron Ngubeni [email protected] E 25 November 2016Neville Rudman [email protected] M 25 November 2016Linda Jennifer Spyder [email protected] M 29 March 2017Nkhensani Harmony Pretty Ndaba [email protected] E 18 April 2018

- '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


SCHEDULE AREGULATORY INFORMATION (continued)FOR THE YEAR ENDED 30 JUNE 2019 Governance note: schedule of meetings* held by the Board of Fund in terms of the rules of the FundMeeting date Place of meeting Quorum

(yes/no)8 August 2018 Farm Inn Hotel, Silverlakes Road, Tshwane Yes19 September 2018 Farm Inn Hotel, Silverlakes Road, Tshwane Yes24 October 2018 Farm Inn Hotel, Silverlakes Road, Tshwane Yes5 December 2018 Farm Inn Hotel, Silverlakes Road, Tshwane Yes6 February 2019 Farm Inn Hotel, Silverlakes Road, Tshwane Yes20 March 2019 Farm Inn Hotel, Silverlakes Road, Tshwane Yes24 April 2019 Farm Inn Hotel, Silverlakes Road, Tshwane Yes19 June 2019 Farm Inn Hotel, Silverlakes Road, Tshwane Yes* Only meetings held by the Board of Fund and does not include meetings held by the sub-committees.

FUND OFFICERSPrincipal Officer Monitoring Person*

Full name: Marthinus Jacobus Dewald Jacobsohn Christine Seierlein Postal address: Private Bag X 1190

Bedfordview2008

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 July 2016Telephone number: +27 (11) 450 1224/5 +27 12 683 3823

Email address: [email protected] [email protected]*(In terms of Section 13A of the Pension Funds Act)

PROFESSIONAL SERVICE PROVIDERSActuary Auditor

Full name: Alexander Forbes Financial Services (Ms. GerdaGrobler)

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

Registration no. in termsof Section 13B: 24/85

FAIS registration no.: 845


SCHEDULE AREGULATORY INFORMATION (continued)FOR THE YEAR ENDED 30 JUNE 2019 PROFESSIONAL SERVICE PROVIDERS (continued)

Investment administrator Investment administratorFull name: ABSA Asset Management (Pty) Ltd Allan Gray South Africa (Pty) Ltd

Postal address: Private Bag X 291509Melville2109

PO Box 51318V & A Waterfront8002

Physical address: Sandton South Campus, 2nd Floor15 Alice LaneSandton2196

1 Silo SquareV & A WaterfrontCape Town8001

Date of appointment: 01 February 2012 01 March 2001Telephone number: +27 (11) 480 5344 +27 (21) 415 2300

FAIS registration no.: 522 27146

Investment administrator Investment administratorFull name: Aluwani Capital Partners (Pty) Ltd Argon Asset Management (Pty) Ltd

Postal address: EPPF Office Park24 Georgian Crescent EastBryanston EastJohannesburg2152

PO Box 23254Claremont7735

Physical address: EPPF Office Park24 Georgian Crescent EastBryanston EastJohannesburg2152

1 Oakdale Road, The Oval1st Floor, Colinton HouseNewlandsCape Town7700

Date of appointment: 01 June 2004 01 August 2009Telephone number: +27 (11) 505 1555 +27 (21) 670 6570


Investment administrator Investment administratorFull name: Abax Investments Brandywine Global Investment Management, LLC

Postal address: PO Box 23851ClaremontCape Town7735

Riverside TwoSir John Rogerson’s Quay Grand Canal Dock Dublin 2Ireland

Physical address: 1 Oakdale Road, The Oval2nd Floor, Colinton HouseNewlandsCape Town7700

Riverside TwoSir John Rogerson’s Quay Grand Canal Dock Dublin 2Ireland

Date of appointment: 12 August 2016 01 August 2015Telephone number: +27 (21) 670 8960 1-800-822-5544

FAIS registration no.: 856 Not applicable, compliant, see note 1

Note 1: The Fund is invested in a product managed by Brandywine Global Investment Management LLC. It is administered by BNYMellon Investment Servicing (International) Ltd and BNY Mellon Trust & Depositary (Ireland) Limited is the appointed Custodian.

Investment administrator Investment administratorFull name: Cadiz Asset Management (Pty) Ltd Coronation Fund Managers Ltd

Postal address: PO Box 44547Claremont7735

PO Box 44684Claremont7735

Physical address: The Terraces, 4th Floor25 Protea RoadClaremont7708

MontClare Place, 7th FloorCnr Campground & Main RoadsClaremont7708

Date of appointment: 01 September 2015 01 August 2005Date of resignation: 31 August 2018Telephone number: +27 (21) 657 8300 +27 (21) 680 2000




Investment administrator Investment administratorFull name: Coronation GEM Drakens Capital Fund Managers (Previously

Renasset Africa Fund)Postal address: JP Morgan House

International Financial Services CentreDublin 1, Ireland

191 Jan Smuts AvenueParktown NorthJohannesburg2193

Physical address: JP Morgan HouseInternational Financial Services CentreDublin 1, Ireland

191 Jan Smuts AvenueParktown NorthJohannesburg2193

Date of appointment: 01 August 2014 01 June 2014Telephone number: +353 1 612 4200 +27 (10) 140 6600

FAIS registration no.: Not applicable, compliant, see note 2 45511 - see note 3

Note 2: The Fund is invested in a product managed by Coronation Global Opportunities Fund through the Coronation GlobalEmerging Markets Fund registered as an open-ended umbrella unit trust established in Ireland and authorised by the Central Bankof Ireland as a UCITS pursuant to the UCITS regulations. It is administered by J.P. Morgan Hedge Fund Services (Ireland) Limitedand J.P. Morgan Bank (Ireland) plc is the appointed Custodian.

Note 3: Following the MGF’s investment with RenAsset Management in June 2014, Renaissance Asset Managers was sold. InJanuary 2016, the business was acquired by Sven Richter and the name changed to Drakens Capital Pty Ltd. Drakens Capital islicensed by the South African Financial Sector Conduct Authority (FSCA) as a discretionary fund manager and has authority fromthe Irish Central Bank to manage European domiciled funds.

Investment administrator Investment administratorFull name: Edge Capital (Pty) Ltd Fairtree Capital (Pty) Ltd

Postal address: PO Box 4188Tygervalley7536

PO Box 4124Tygervalley7536

Physical address: Edge House3 Heuwelkruin CloseTyger Valley7536

Willowbridge PlaceCnr Carl Cronje Drive & Old Oak RoadBellville7530

Date of appointment: 01 October 2007 05 January 2017Telephone number: +27 (21) 976 1012 +27 (21) 943 3760


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

Date of appointment: 01 January 2014 01 May 2013Date of resignation: 30 October 2018Telephone number: +27 (11) 772 2480 +27 (21) 532 6988




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

Postal address: PostNet Suite #12Private Bag X1005Claremont7735

Private Bag X6Newlands7725

Physical address: 1 Oakdale Road, The Oval1st Floor, Kildare HouseNewlandsCape Town7700

3rd FloorGreat Westerford240 Main RoadRondebosch7700

Date of appointment: 01 October 2004 01 March 2011Telephone number: +27 (21) 831 7400 +27 (21) 659 5300


Investment administrator Investment administratorFull name: Hosking & Co. Limited Investec Asset Management (Pty) Ltd

Postal address: 7 St James’s TerraceMalahideDublin 2, Ireland

PO Box 1655Cape Town8000

Physical address: 7 St James’s TerraceMalahideDublin 2, Ireland

36 Hans Strijdom AvenueForeshoreCape Town8001

Date of appointment: 01 August 2014 01 April 1994Telephone number: +353 1 845 8160 +27 (21) 416 2000

FAIS registration no.: 45612 - see note 4 587

Note 4: Hosking Global Fund Plc. Operates under UCITS (Undertakings for Collective Investment in Transferable Securities inEurope). The investment is administered by Hosking & Co Ltd., the appointed Custodian is Phoenix Financial Services Ltd.

Investment administrator Investment administratorFull name: Morgan Stanley Investment Management Prudential Investment Managers (SA) (Pty) Ltd

Postal address: 25 Cabot SquareCanary Wharf, Floor 06LondonE14 4QA

P O Box 44813Claremont7735

Physical address: 25 Cabot SquareCanary Wharf, Floor 06LondonE14 4QA

7th Floor, Protea Place40 Dreyer StreetClaremont 7708

Date of appointment: 01 August 2017 01 December 2013Telephone number: +44 20 7425-3943 +27 (21) 670 5100




Investment administrator Investment administratorFull name: Resolution Capital NIF Global Property (Nedgroup

Investments Plc)Sanlam Investment Management (Pty) Ltd

Postal address: Sydney addressLevel 38, Australia SquareSydney NSW 2000


Physical address: GPO Box 553Sydney NSW 2001


Date of appointment: 01 March 2019 01 October 2001Telephone number: +61 2 8258 9188 +27 (21) 950 2500

FAIS registration no.: Resolution Capital Limited is authorised andregulated by the Australian Securities andInvestment Commission (ASIC). FAIS Registrationnot applicable, compliant, see note 5

579

Note 5: The Fund is invested in a product managed by Veritas Asset Management LLP through Nedgroup Investments Plc (the Fundwas re-demociled from the Isle of Man to Ireland on 14 May 2014 and converted to a European Union approved “undertakings forCollective Investment in Transferable Securities” or “UCITS” vehicle also approved by the FSCA). It is administered by NedgroupInvestments Fund Plc (NIF) and Citibank, N.A. is the appointed Custodian.

Investment administrator Investment administratorFull name: Sanlam Asset Management Ireland Sanlam Multi Manager International (Pty) Ltd

Postal address: Beech House, Beech Hill Office CampusBeech Hill RoadClonskeaghDublin 4Ireland


Physical address: Beech House, Beech Hill Office CampusBeech Hill RoadClonskeaghDublin 4Ireland


Date of appointment: 01 October 2015 01 February 2012Telephone number: +353 1 2053 526 +27 (21) 950 2596

FAIS registration no.: 42837 - see note 6 845

Note 6: Sanlam Asset Management (Ireland) Limited is authorised and regulated by the Central Bank of Ireland as a UCITS IVManagement Company and as an Alternative Investment Fund Manager, and is licensed as a Financial Service Provider in terms ofSection 8 of the South African FAIS Act of 2002.

Investment administrator Investment administratorFull name: Sesfikile Capital (Pty) Ltd Vantage Capital Group

Postal address: Postnet Suite 334Private Bag X1 Melrose Arch2076

PO Box 280ParklandsJohannesburg2121

Physical address: 1st Floor30 Melrose Boulevard Melrose Arch Johannesburg2076

3 Melrose Boulevard1st Floor, Unit 9BMelrose ArchJohannesburg2076

Date of appointment: 01 April 2015 01 December 2013Telephone number: +27 (11) 684 2679 +27 (11) 530 9134

FAIS registration no.: 39946 Vantage Capital Fund Managers (Pty) Ltd - 28711Vantage GreenX Fund Advisors (Pty) Ltd - 44668



Investment administrator Risk insurerFull name: Veritas Asset Management LLP (Nedgroup

Investments Plc)Camarque Underwriting Managers (Pty) Ltd

Postal address: Citibank Europe Plc1 North Wall QuayDublin 1

Postnet Suite 250Bedfordview2008

Physical address: Citibank Europe Plc1 North Wall QuayDublin 1

Camargue House33 Glenhove RoadMelrose EstateJohannesburg2196

Date of appointment: 01 December 2013 01 December 1998Telephone number: +44 1624 645150 +27 (11) 778 9140

FAIS registration no.: Not applicable, compliant, see note 7FSP approval no.: 6344

Note 7: The Fund is invested in a product managed by Veritas Asset Management LLP through Nedgroup Investments Plc (the Fundwas re-demociled from the Isle of Man to Ireland on 14 May 2014 and converted to a European Union approved “undertakings forCollective Investment in Transferable Securities” or “UCITS” vehicle also approved by the FSCA). It is administered by NedgroupInvestments Fund Plc (NIF) and Citibank, N.A. is the appointed Custodian.



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

Postal address: PO Box 782080Sandton2146

PO Box 51318V & A WaterfrontCape Town8002

Physical address: 5th Floor4 Sandown Valley CrescentSandton2196

No 1 SiloSilo SquareV & A Waterfront8001

Date of appointment: 01 December 2013 01 March 2001Telephone number: +27 (11) 217 6600 +27 (21) 415 2300

FSP approval no.: 9101 24/436

PARTICIPATING EMPLOYERS

The list of participating employers is available upon request from the Fund's registered office.



SCHEDULE BSTATEMENT OF RESPONSIBILITY BY THE BOARD OF FUNDFOR THE YEAR ENDED 30 JUNE 2019

Responsibilities

The Board of Fund hereby confirm to the best of their knowledge and belief that, during the year under review, in the execution oftheir duties they have complied with the duties imposed by Pension Funds Act legislation and the rules of the Fund, including thefollowing:

� ensured that proper registers, books and records of the operations of the fund were kept, inclusive of proper minutes of allresolutions passed by the Board of Fund;

� ensured that proper internal control systems were employed by or on behalf of the Fund;� ensured that adequate and appropriate information was communicated to the members of the Fund, informing them of their

rights, benefits and duties in terms of the Fund Rules;� took all reasonable steps to ensure that contributions, where applicable, were paid timeously to the Fund or reported where

necessary, in accordance with section 13A and regulation 33 of the Pension Funds Act in South Africa;� obtained expert advice on matters where they lacked sufficient expertise;� ensured that the rules and the operation and administration of the fund complied with the Pension Funds Act and applicable

legislation;� ensured that fidelity cover was maintained and that this cover was deemed adequate and in compliance with the Fund

Rules; and� ensured that investments of the Fund were implemented and maintained in accordance with the Fund's investment strategy.

Approval of the annual financial statements

The annual financial statements of Municipal Gratuity Fund are the responsibility of the Board of Fund. The Board of Fund fulfilsthis responsibility by ensuring the implementation and maintenance of accounting systems and practices adequately supportedby internal financial controls. These controls, which are implemented and executed by the fund and/or its benefit administrators,provide reasonable assurance that:� the Fund's assets are safeguarded;� transactions are properly authorised and executed; and � the financial records are reliable.

The annual financial statements set out on pages 16 to 50 have been prepared for regulatory purposes in accordance with theRegulatory Reporting Requirements for Retirement Funds in South Africa, the Fund Rules and the Pension Funds Act. Otherthan the instances reported below, the Board of Fund is not aware of any instances of non-compliance during the financial yearnor during the year up until the signature of these financial statements.

These annual financial statements have been reported on by the independent auditors, Deloitte & Touche, who was givenunrestricted access to all financial records and related data, including minutes of all relevant meetings. The Board of Fundbelieves that all representations made to the independent auditors in the management representation letter during their auditwere valid and appropriate. The report of the independent auditors is presented on page 13 - 15.

Page 10


SCHEDULE EREPORT OF THE BOARD OF FUNDFOR THE YEAR ENDED 30 JUNE 2019

1. DESCRIPTION OF FUND

1.1. Type of fund in terms of the Income Tax Act, 1962

The Fund is a defined contribution multi-employer pension fund for municipal employees registered in terms of thePension Funds Act, 1956, under registration number 12/8/29256/2. The Fund is registered with the South AfricanRevenue 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

Retirement benefits accrue as an annuity, but may be converted up to 100% in a lump sum, equal to the member’sfund credit being the total of the member’s and employer’s contributions towards retirement provision and the netinvestment earnings (positive and negative).

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

1.2.1.2. Resignation benefits

Resignation benefits are lump sums equal to the member’s fund credit being the total of the member’s and employer’scontributions towards retirement provision and the 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 member's fund creditwhichever is the greater up to the age of 60 after which the benefit scales down monthly pro rata up to the age of 65 totwo times annual salary or 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 only be entitled to the greaterof two times annual salary or member's 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 onetime annual salary or member's fund credit.

A member on late retirement, that is exceeding 65 years of age, is entitled only to the member's fund credit.

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

A member with less than 5 years’ service:Unnatural causes: Fund credit plus risk benefit calculated at four times annual salary.Natural causes: Fund credit plus risk benefit calculated at two times annual salary.

A member with more than 5 years’ service:Fund credit plus risk benefit calculated at four times annual salary.

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

A member on late retirement, that is exceeding 65 years of age, is entitled only to the member's fund credit.


SCHEDULE EREPORT OF THE BOARD OF FUND (continued)FOR THE YEAR ENDED 30 JUNE 2019

1.2.1.5. Family funeral plan

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

Details Until June 2018 From July 2018Member R 30 000 R 40 000 Spouse R 20 000 R 30 000 Children 14 years and older R 16 000 R 20 000 Children 1 to 13 years R 6 000 R 10 000 Children stillborn or under 1 year R 3 000 R 5 000

All active contributing members qualify for the family funeral plan irrespective of age. Non-contributing members do notqualify for the 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 onlyvests upon receipt of the additional amount from the local authority.

1.2.2. Unclaimed benefits

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

Unclaimed benefits are processed in terms of the Pension Funds Act as well as the Income Tax Act. The PensionFunds Act defines an unclaimed benefit as a benefit not paid within 24 months of the date it became legally due andpayable.

Accordingly in terms of the Fund Rules a period of two years is allowed to claim any benefits payable where-after theunclaimed money is classified as an unclaimed benefit and can be transferred to an unclaimed benefit preservationfund. If so transferred, the member, former member or beneficiary will be paid from such unclaimed benefitpreservation fund. Unclaimed death benefits are not currently classified as unclaimed benefits.

Currently the Fund does not exercise the option to transfer unclaimed benefits to a separate unclaimed benefitpreservation fund, but ring fence these benefits in the Fund.

1.2.3. Beneficiary benefits

Death benefits payable to minor beneficiaries of deceased members are paid to a registered beneficiary fund if andwhen deemed in the best interest of the minor beneficiaries. Such benefits are invested and monthly payments aremade to the guardians for the maintenance of the minor beneficiaries.

1.3. Contributions

Members' contributions

Members contribute to the Fund at a minimum rate of 7.5% of pensionable salary. Members may make additionalvoluntary contributions as per the Fund Rules.

Employers' contributions

The standard employer's contribution rate for those members joining until 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 4% (4.25% up to 28 February 2019) of pensionable salary is allocated towards the cost of risk benefits andadministration. 3.45% (3.65% up to 28 February 2019) of pensionable salary is allocated to fund the risk benefits and0.55% (0.6% up to 28 February 2019) of salary is applied to administrative expenses. The balance of the employercontribution is allocated to the member’s fund credit.

No cost for risk benefits is recovered from members on late retirement (exceeding 65) because such members do notenjoy death and disability benefits.



1.4. Rule Amendments

Ruleamendment

No.Description and motivation

Date ofBoard of Fund

resolution

Effectivedate

Date registered bythe Financial

Sector ConductAuthority

MGF10 See paragraph 1.4.1 below 20 March 2019 1 March 2019 2 May 2019Consolidated

Rules1 March 2019 26 July 2019

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

1.4.1. Rule Amendment No 10

Reason for Amendments:Substitution of “section” with “rule”: To align with the terminology used in the Pension Funds Act.Definitions of ACT, APPROVED MUNICIPAL RETIREMENT FUND, INSURER, PREVIOUS EMPLOYER and UAC andRules 8(1)(b), 10(6), 10(7), 10(8), 16(1)(d), (e) and (f) and 16(1)(f) (ii) : To delete the references to the numbers ofActs and to simplify the wording of these definitions.Definition of APPROVED PENSION FUND, APPROVED PROVIDENT FUND and APPROVED PRESERVATIONFUND: To delete the references to approval by the Commissioner and rather refer to these funds as defined in theIncome Tax Act.Definitions of AUTHORITY and REGISTRAR: To comply with the provisions of the recently promulgated FinancialSector Regulation Act, which amended the Pension Funds Act.Substitutions of “COMMITTEE” and “OFFICE-BEARER” with “BOARD” and “BOARD MEMBER” respectively: To alignwith the terminology used in the Pension Funds Act.Substitution of “GENERAL COMMITTEE” with “MANAGEMENT COMMITTEE”: To align with the terminology used inthe Pension Funds Act Guidance Notice No. 4 of 2018.Substitution of “DEFERRED MEMBER” with “PAID-UP MEMBER”: To align with the terminology used in the DefaultRegulations.Definition of INCOME TAX ACT: To define this term, which is used frequently throughout the Rules.Paragraph (a)(v) of the definition of SERVICE: To delete the incorrect reference to Rule 42. Paragraph (b) of the definition of SERVICE: To substitute the reference to “section 42(3)(b)” with “Rule 42(1)(b)”,following the amendment to Rule 42. Definition of TRANSFER VALUE: To expand this definition to include an Approved Preservation Fund, and to refer toa group of Members or an individual Member.Introductory sentence to Rule 25: To substitute the reference to “section 42(3)(a)” with “Rule 42(1)(c)”, following theamendment to Rule 42.Rule 11(2): To delete paragraph (c), and to provide for the election of an Employees’ Representative or Alternate,where there is a vacancy, in the manner determined in Rules 5 (6), (7) and (8).Rule 24(8): To delete the words “of the Rule” as it is superfluous.Rule 24(13)(b): To substitute the reference to “subsection (a)” with “paragraph (a)” and the reference to “paragraph (a)above” with “that paragraph” to read better.Rule 24(13)(d): To substitute the reference to “subsection (c)” with “paragraph (c)”.Rule 24(14): To simplify the wording in order to read better.Rule 24(14)(b): To substitute the reference to “subsection (a)” with “paragraph (a)”.Rule 27(2)(c): To provide that it be deemed that a Member has absconded if no contributions have been received for 6months.Rule 32(6): To provide for the transfer of a retirement benefit.Rule 31(1)(e): To substitute the reference to “if any, and” with ” if any; and”.Proviso to Rule 24(5) and Rules 30(3)(a)(i), 30(3)(b)(iii), 32(2)(b), 33(3)(e) and 33(4): To delete the references tofuneral benefits, since these benefits are no longer provided by the Fund.Introduction to Rule 30(3) and Rules 30(3)(a)(i) and 30(3)(b)(iv): To provide for SEPARATELY INSURED BENEFITS.Rule 34(5): To align the provisions regarding paid-up benefits with the Default Regulations.Rule 41(2): To delete the words “of these Rules” as it is superfluous.Rule 42(1): To distinguish between the different transfers out and a transfer in.



1.5. Fund Accounts in terms of Section 30 of the Fund Rules

1.5.1. Share Account

The Share Account comprises the total of all the individual members' interests in the Fund. The following transactionsare 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 Rule 26;

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

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

(v) investment earnings transferred from the Processing Account in terms of Rule 30(2)(b)(ii) from time to timeat a rate to be determined by the Board 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 contemplatedin Rule 16A in respect of the member concerned during the period for which the said earnings are creditedto the Share Account;

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

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

(b) Debits

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

(ii) the portion of the local authority's contributions contemplated in Rule 30(3)(a)(i) deducted from the member'sfund credit for the period of the default referred to in Rule 27(2)(b);

(iii) retirement benefits paid to the member in terms of Rule 32;

(iv) withdrawal payments in terms of Rule 34;

(v) transfers of the members' fund credit in respect of medical disability payments in terms of Rule 35 and deathpayments in terms of Rule 33 to the risk account;

(vi) transfers of the members’ unclaimed benefits after two years to an unclaimed benefits preservation fund established in terms of the Act to receive such unclaimed benefit, together with the interest referred to in Rule30(1)(vii) thereon, in the event of the committee directing that the unclaimed benefits be so transferred in termsof Rule 41.

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

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

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

(x) 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 Rule 37D(1)(c) of the Act.

(xi) such asset management costs in terms of Rule 30(2)(b)(i) and administration costs and expenses in terms ofRule 30(4)(b)(i) as determined by the Board in consultation with the ACTUARY, in respect of deferred

members and members in respect of whom no contributions are received;



1.5.2

1.5.3

(xii) in respect of each deceased member, the costs incurred in tracing and verifying that member’s beneficiary orestablishing the financial dependency of the member’s beneficiary; and

(xiii) any expenses not elsewhere provided for, determined by the Board in consultation with the Actuary

The balance of the Share Account as at year-end 2019 isR 23,927,211,151 (2018: R 22,578,395,832)

Processing Account

The Processing Account is established to provide for mismatching and timing differences between investments and theallocation of investment returns to members. The balance in the Processing Account shall be maintained at a leveldeemed prudent by the Board in consultation with the Actuary. The balance in the Processing Account will be creditedor debited from time to time with such amounts as may be determined by the Board, in consultation with the actuary.The following additional 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 Rule 30(1)(b)(i);

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

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

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

(b) Debits

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

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

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

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

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

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

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

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

The balance of the Processing Account as at year-end 2019 is R 12,951,585 (2018: R 7,351,500) .

Risk Account

The Risk Account is established for the funding of the death and disability benefits that are not reinsured in terms ofRule 33(2) and to absorb the impact of any adverse experience in such risk benefits. The balance in the Risk Accountshall be maintained at a level deemed prudent by the Board in consultation with the Actuary. The balance in the RiskAccount will be credited or debited from time to time with such amounts as may be determined by the Board, inconsultation with the Actuary. The following additional 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 Rule 31(1)(b), determinedby the Board in consultation with the Actuary, towards the death, disability and separately insured benefits. It isspecifically provided that these contributions will not be utilised for the purpose of funding any transfers to theReverted Unclaimed Benefits Account as contemplated in Rule 30(3)(b)(v);

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

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



1.5.4

1.5.5

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

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

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

(b) Debits

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

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

(iii) any reinsurance premiums in respect of death as contemplated in Rule 33(2) ;

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

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

The balance of the Risk Account as at year-end 2019 is R 301,892,459 (2018: R 299,240,247) .

Data and Operational Account

The Data and Operational Account is established to provide for data errors and expenses relating to the administrationof the Fund and other unforeseen contingencies. The balance in the Data and Operational Account shall bemaintained at a level deemed prudent by the Board in consultation with the actuary. The balance in the Data andOperational Account will be credited or debited from time to time with such amounts as may be determined by theBoard, in consultation with the Actuary. The following additional 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 Rule 31(1)(b), determined by the Board in consultation with the Actuary, towards the cost of the administration expenses;

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

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

(b) Debits

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

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

The balance of the Data and Operational Account as at year-end 2019 is R 20,038,421 (2018: R 18,734,283) .

Employer Reserve Account

The Employer Reserve Account is established to provide for the allocation of any valuation profits to the localauthorities, by the Board after consultation with the Actuary. The following transactions are recorded in this account:

(a) Credits

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

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

(b) Debits

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

(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.

The account has not been utilised and the balance of the Employer Reserve Account as at year-end 2019 is nil.



1.5.6

1.5.7

Member Reserve Account

The Member Reserve Account is established to provide for the allocation of any valuation profits to the members andformer members, by the Board after consultation with the Actuary. The following transactions are recorded in thisaccount:

(a) Credits

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

(ii) transferred from the Processing Account in terms of Rule 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 ofmembers 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.

The balance of the Member Reserve Account as at year-end 2019 is nil.

Reverted Unclaimed Benefits Account

The Reverted Unclaimed Benefits Account is established to provide for the old unclaimed benefits that reverted to theFund prior to 1 January 2009 in terms of Rule 41 as it read then. The following transactions are recorded in thisaccount:

(a) Credits

(i) Provision for the old unclaimed benefits that reverted to the Fund prior to 1 January 2009, as determined bythe Board 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 Rule 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 themembers 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.

The balance of the Reverted Unclaimed Benefit Account as at year-end 2019 is R 1 671 (2018: R 111,428) .

2. INVESTMENTS

2.1 Investment Policy Statement (IPS)

The Management Committee (Board of Fund), 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 sumpayment (fund credit) of a member will be sufficient to enable a member to purchase a monthly pension equal toapproximately 75% of salary 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. Theinvestment mandates to asset managers were instead allocated as specialist mandates in the respective asset classesfrom August 2004.

The IPS is reviewed when any major events occurs that may have an effect on the investment strategy of the Fund, butat least once a year. The IPS review for this reporting period was done during July 2018.

2.2 Life Stage Model (LSM)

Three life stage portfolios as contemplated by the initial IPS were implemented during July 2005 and a fourth life stagewas added in 2011. At the time the members’ fund credits, excluding those invested in the Guaranteed Portfolio, weretransferred to the four life stage portfolios according to age groupings. The daily values of the investments are electronically imported from the investment administrators’ records to theunitisation platform of the benefit administrator. The fund credit of each member is accordingly adjusted daily to thedaily market value of the units in the four life stage portfolios. The IPS is reviewed at least annually and adjustments are being made if necessary to align the investment strategywith the changing investment environment as well as with new legislation. During the 2015 IPS review, theadjustments included a change in the age brackets of the life stage portfolios whereby the members’ fund credits arekept longer in the more aggressive end of the scale, mainly to enhance the potential to create sufficient wealth to reachthe overall goal of the LSM to render a 75% salary replacement ratio.

The four life stage portfolios are as follows:

2.2.1 Stage One: Aggressive Portfolio (AP): 16 years to 54 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 theevent of the risk of under- performance materialising, the investment term is usually long enough to recover suchlosses and to obtain out performance of the long term Investment objective.

2.2.2 Stage Two: Moderate Portfolio (MP): 55 years to 60 years

The Moderate Portfolio contains a smaller component of equities and is aimed at a moderate risk with consequentmoderate returns. The Moderate Portfolio is a transfer phase from the Aggressive Portfolio to the ConservativePortfolio.

2.2.3 Stage Three: Conservative Portfolio (CP): 61 years to 63 years

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

2.2.4 Stage Four: Protected Portfolio (PP): 64 years and older

The Protected Portfolio is aimed at capital protection rather than at real capital growth and assets are invested inmoney market products including corporate bonds. Although the PP is structured to avoid investment risk it is nottotally risk free and limited downside over short periods is not excluded.

2.3 Exit Portfolio (EP)

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

2.4 Default and Member Investment Choices

Members are automatically without prior notice, transferred from one life stage to the next as they reach the relevantage. This transfer is however not done at once when reaching the relevant age as the investment markets may be verylow on such one specific day with negative results for a member migrating from the more aggressive to the moreconservative next phase portfolio. To prevent such single day event, members are switched from one life stageportfolio to the following in four quarterly batches starting one year ahead.

As alluded to below, a member may always exercise in writing, a choice contrary to the automatic Life Stage Modeldefault. Although the fund credits and monthly contributions of members are automatically invested in the relevant lifestage portfolio according to age, members may, subject to certain conditions, exercise a written choice if they wish toinvest contrary to the applicable life stage (AP, MP, CP or PP). Investment according to the life stage portfolios is



however an integrated investment model in accordance with the IPS (Investment Policy Statement). The probability isgood to obtain the targeted return over a long term. Members should therefore be very cautious to chase short termreturns by electing contrary to the life stage portfolios, with possible disastrous results. Younger members should becareful not to be over conservative and forfeit returns in the long run.

A member may exercise a member investment choice whereby the fund credit is split between various investmentportfolios. Until 19 September 2017 such split was limited to two portfolios at any given time. This restriction waslifted with effect from 20 September 2017 and unrestricted member investment choices across the four investmentportfolios are allowed, in respect of the fund credit as well as the contributions subject to the following conditions:

(i) The contributions shall follow the investment choice in respect of the fund credit unless a specific choice is exercised that the contributions be invested in a specific investment portfolio in which event 100% of the monthly contribution shall be invested in that specific chosen investment portfolio, in other words a contribution member investment choice may not be split over various investment portfolios.

(ii) Once a member investment choice is exercised, be it in respect of the fund credit or the contributions or both, it shall at all times be maintained and shall not automatically revert to the default position when reaching the default age bracket or for any other reason whatsoever and the only manner to get back to the default arrangement is to make a written selection accordingly on the prescribed form.

Members who exercised a member investment choice will remain invested accordingly until written notification issubmitted to the Fund otherwise. If a member elects to split her/his investment between portfolios, the different returnsof each investment portfolio will cause a drift from the chosen percentages split. Members’ fund credits will notautomatically be rebalanced to the original chosen percentage split between the portfolios. A new option form must besubmitted when a member wants such rebalance.

Member investment choices may be done at any time in respect of the AP, MP, CP and PP. One choice per a rolling 12months is free of charge but subsequent choices within such 12 month period require a switching fee. A memberinvestment choice is usually implemented within three to five business days from receipt of the switch instruction form.

2.5 Derivative Instruments

The Board of Fund utilises derivative instruments as part of their investment strategy. The Board of Fund ensures thatthe following have been complied with:

• The exposure of the asset class does not exceed the maximum percentages as prescribed to the underlying assetas set out in Regulation 28 of the Pension Fund Act.

• The investment mandate is in place and reviewed by the Board of Fund on a regular basis to ensure compliance with the requirements as prescribed by Regulation 28 and the relevant Notice.

• The investments are monitored for compliance with the provisions of Regulation 28 and adherence to the investment mandate.

2.6 Hedge funds

The Board of Fund utilises hedge funds as part of their investment strategy. The Board of Fund ensures that thefollowing have been complied with:

• The exposure of the asset class does not exceed the maximum percentages as prescribed to the underlying assetas set out in Regulation 28.

• The investment mandate is in place and reviewed by the Board of Fund on a regular basis to ensure compliancewith the requirements as prescribed by Regulation 28 and the relevant Notice.

• The investments are monitored for compliance with the provisions of Regulation 28 and adherence to the investment mandate.

2.7 Private Equity Funds

The Board of Fund utilises private equity funds as part of their investment strategy. The Board of Fund ensures that thefollowing have been complied with:

• The exposure of the asset class does not exceed the maximum percentages as prescribed to the underlying asset as set out in Regulation 28.

• The investment mandate is in place and reviewed by the Board of Fund on a regular basis to ensure compliance with the requirements as prescribed by Regulation 28 and the relevant Notice.

• The investments are monitored for compliance with the provisions of Regulation 28 and adherence to the



investment mandate.

2.8 Management of investments

The Fund's investments consist of specialist managed portfolios with the various investment administrators (assetmanagers) listed below. All investment administrators (asset managers) have fixed mandates as to the composition oftheir share of the portfolio within the limits allowed by the Pension Funds Act in South Africa. The Board of Fund,together with Sanlam Multi Manager International (Pty) Ltd, the Fund's investment advisor, meet at least eight timesper year to discuss and review investment strategy and to monitor the asset allocation and performance of theinvestment administrators (asset managers) against the investment strategy of the Fund.

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

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

30 June 2019R

30 June 2018R

Abax Investments 544,523,139 498,789,856ABSA Asset Management (Pty) Ltd (Note 1) 374,702,415 1,266,414,807ABSA Joint Venture (direct property) 38,700,000 45,000,000Allan Gray Orbis Investment Management Limited 886,945,720 920,335,380Allan Gray South Africa (Pty) Ltd 1,392,039,054 1,441,842,462Aluwani Capital Partners (Pty) Ltd 1,136,476,401 1,082,745,726Argon Asset Management (Pty) Ltd 1,079,353,565 1,033,203,491Brandywine Global Investment Management, LLC 372,334,067 174,321,798Cadiz Asset Management (Pty) Ltd (Note 2) - 3,819,857Coronation Fund Managers Ltd 1,309,529,594 1,307,228,388Drakens Capital Fund Managers (Previously Renasset Africa Fund) 239,754,643 262,656,176Edge Capital (Pty) Ltd 703,148,024 685,855,534Fairtree Capital (Pty) Ltd 724,411,391 525,267,201First Avenue Investment Management (Pty) Ltd 733,062,282 885,618,118Foord Asset Management (Note 2) - 1,013,706,376Franklin Templeton Investment Funds 533,018,520 634,252,455Futuregrowth Asset Management (Pty) Ltd 4,362,460,323 3,769,267,813Hosking & Co. Limited 882,064,830 862,573,450Investec Asset Management (Pty) Ltd 1,628,824,856 1,609,686,917Morgan Stanley Investment Management 298,906,488 277,097,800Prudential Investment Managers (SA) (Pty) Ltd 892,639,488 954,074,158Resolution Capital NIF Global Property (Nedgroup Investments Plc) 126,611,736 -Sanlam Investment Management (Pty) Ltd (Note 3) 4,679,791,391 2,585,179,660Sesfikile Capital (Pty) Ltd 375,762,980 354,545,929Vantage Capital Group 835,264,680 515,856,892Veritas Asset Management LLP (Nedgroup Investments Plc) 932,110,284 823,793,385

Total value of investments managed 25,082,435,871 23,533,133,629

Note 1 : The decrease in the investments managed by ABSA Asset Management (Pty)Ltd is due to termination of theEquity Portfolio.

Note 2: The mandates with Cadiz Asset Management (Pty)Ltd and Foord Asset Management were terminated duringthe currectnt financial year.

Note 3: The increase in the investments managed by Sanlam Investment Management (Pty)Ltd is due to investment inmore cost-effective Passive Tracker Funds.



3. MEMBERSHIP

Activemembers

Paid-upmembers

Unclaimedbenefits

Number at the beginning of year 30,289 - 202Adjustments- Late entrants to 2018- Late exits from 2018- Reclassification

(101)40

(136)(5)

5--5

---

Additions 951 - 1Withdrawals (304) - -Retirements (552) (1) -Deaths (203) - -

Disability (24) - -Unclaimed benefits paid - - (3)

Number at the end of the year 30,056 4 200

Number at end of year(South African citizen)

30,052 4 200

Number at end of year(non-South African citizen)

4 - -

Adjustments:The adjustment includes a re-classification of active members as paid-up members.

The downward adjustment in the opening balance of active members is due to members who exited in prior years, butthe administrator only received the exit form after the 2018 year-end. The increase in the opening balance of activemembers is new members that joined the employer during the 2018 financial year, but the administrator received theapplication forms after the 2018 year-end.

4. ACTUARIAL VALUATION

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

The previous statutory actuarial valuation was done as at 30 June 2017 reflecting that the Fund was financially sound. The statutory valuation was submitted to the FSCA on 15 February 2018 and was approved on 10 September 2019.The Actuary also conducts an interim actuarial valuation on an annual basis for the intervening two years. This is doneaccording to the full scope as for a statutory valuation.

The latest interim statutory actuarial valuation was completed as at 30 June 2019 and will be considered by the Boardof Fund upon release of the valuation report by the actuary.

Refer to Schedule HB for the report of the valuator which reflects the financial condition of the Fund as at 30 June2019, to be sound.

5. SURPLUS APPORTIONMENT OR NIL SCHEME

Nil schemeThe surplus apportionment date of the Fund was 30 June 2002. The Fund has submitted a nil return as there was nosurplus to be distributed. The nil return was submitted to the Authority (formally known as Registrar of Pension Funds)on 26 July 2005 and noted on 22 December 2006.

Future surplusThe Fund, being a defined contribution fund, allocates all net investment returns to the members on a daily basis anddoes not accrue any surpluses. Surplus apportionment allocations are therefore not applicable, except in the event ofSection 15C of the Act.In terms of Section 15C of the Act subsequent surpluses were determined after surplus apportionment date by theFund’s actuary, as per the relevant actuarial valuations. These surpluses were due to excess in the Risk Accounteminating from contributions in respect of risk benefits. The following surplus distributions were made to qualifyingmembers:30 June 2012 R 75,000,000



30 June 2014 R 60,000,00030 June 2015 R 150,000,00030 June 2016 R 69,895,24430 June 2017 R 150,000,00030 June 2018 R 100,000,000

6. HOUSING LOAN FACILITIES

Direct housing loans to members have been granted until 31 May 2007 in terms of section 16(3) of the Fund Rules andthe provisions of section 19(5) of the Pension Funds Act. Such direct housing loans were financed from members'individual fund credits. Interest is payable on all direct housing loans and such interest minus the loan administrationfee, is directly allocated to a member’s fund credit and does not form part of the growth of the Fund. With effect from28 January 2011 the minimum prescribed interest rate is the repo rate as determined by the South African ReserveBank from time to time plus 5.5% per annum. During the current financial year the repo rate increased from 6.5% to6.75% (11.50% to 12% interest rate on housing loans) with effect from 22 November 2018.

This direct home loan scheme has been replaced from 1 June 2007 by a pension-backed home loan scheme.Standard Bank and First National Bank (FNB) have been appointed as service providers in this regard. A member mayapply for a home loan with Standard Bank or First National Bank up to a maximum of 50% of the member’s fundcredit. The loan is granted against the security of the member’s fund credit. Members must comply with all therequirements of the National Credit Act to qualify for such loan. Members with existing housing loans granted directlyfrom their fund credits in terms of the previous dispensation may maintain such direct loans or transfer them toStandard Bank or FNB. A member may only have a pension-backed home loan with either Standard Bank or FNB andnot with both. Loans may be transferred between Standard Bank or FNB.

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

Standard Bank charges an application fee of R536.79, a monthly admin fee of R35.23 and interest at prime minus 1% .

FNB charges no application fee, a monthly admin fee of R23.00 and interest at prime minus 1.25%.

7. INVESTMENTS IN PARTICIPATING EMPLOYERS

Investments in terms of section19 (4A) of the Pension Funds Act.

Details of investments held in participating employers are provided in Schedule IA to the financial statements. Therewere no investments held in participating employers as at the end of the current reporting period.

8. RISK MANAGEMENT

In compliance with Circular PF130, the Fund implemented a risk management policy whereby the Board of Fundidentified the risk areas of the Fund. The risk areas are recorded in a risk register, together with the cause(s),consequence(s) and mitigating control(s) relating to each risk. The impact and likelihood of each risk is considered inorder to arrive at a risk rating for each risk area.

The Board of Fund reviews the risk management policy and the risk register on an annual basis. The highest riskareas are monitored by the Board of Fund on a monthly basis. The Board of Fund also considers the key findings frominternal and external audit reports.

The additional proposals included in the recently released King IV report, are expected to be tailor made by the office ofthe Authority for application by retirement funds and be included in a revised Circular PF130. In the interim the Fundoperates in accordance with the 17 principles of King IV in respect of the ethical corporate requirements, performanceand reporting requirements, governance structure and shareholder relationships.



9. SIGNIFICANT MATTERS

During the current financial year, the investment property held directly by the Fund was valued based on marketresearch done by Spectrum Valuations, an independent registered valuator, who specializes in commercialproperty valuation. That valuation indicated a market value of R38.7 million which was adopted by the Board of Fundwith effect from 1 May 2019. The reason for the decreased value is that the rentals for commercial use decreased dueto the declining economy as well as a shift of commercial activities and demand from the central business district tothe prestigious Riverside Park CID to the north of Nelspruit.

The so called Default Regulations were promulgated by Government on 25 August 2017. These regulations 37, 38 and39 to the Pension Funds Act deal with the requirements of a default investment portfolio, default preservation andportability and an annuity strategy. Funds were given until 28 February 2019 to comply with these regulations. TheFund already complied with the requirements. The Fund resolved on 19 June 2019 that the annuity strategy of theFund, contemplated in Rule 32(5) of the Fund Rules be expanded to include a default opt-in option for a guaranteed lifeannuity with a 5% escalation per annum with an option of a nil, 5year or a 10 year certain term as well as an option ofa 50% or 75% spouse pension, to the choice of the retiree.

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

10. SUBSEQUENT EVENTS

No subsequent events that is material to the financial affairs of the Fund, has taken place between 30 June 2019 andthe date of approval of the financial statements.


SCHEDULE FSTATEMENT OF NET ASSETS AND FUNDSAS AT 30 JUNE 2019

Note30 June 2019

R30 June 2018

R

ASSETS

Non-current assets 25,108,005,519 23,567,333,317Plant and equipment 2 437,508 308,567Investments 3 25,082,435,871 23,533,133,629Housing loans 4 25,132,140 33,891,121

Current assets 222,541,955 170,811,871Accounts receivable 5 26,687,632 1,772,686Arrear contributions 10 39,164,929 53,376,653Cash and cash equivalents 156,689,394 115,662,532

Total assets 25,330,547,474 23,738,145,188

FUNDS AND LIABILITIES

Members’ funds and surplus account 24,130,625,455 22,656,571,167Members’ individual accounts 23,930,113,821 22,578,395,832Amounts to be allocated 16 200,511,634 78,175,335

Reserves 335,663,135 325,437,458Reserve accounts 15 335,663,135 325,437,458

Total funds and reserves 24,466,288,590 22,982,008,625

Non-current liabilities 6,609,866 6,503,339Unclaimed benefits 8 6,609,866 6,503,339

Current liabilities 857,649,018 749,633,224Benefits payable 7 841,340,818 736,434,107Accounts payable 9 16,308,200 13,199,117

Total funds and liabilities 25,330,547,474 23,738,145,188


SCHEDULE GSTATEMENT OF CHANGES IN NET ASSETS AND FUNDSFOR THE YEAR ENDED 30 JUNE 2019

Members’ individualaccounts & Amounts

to be allocated

Reserve accountsRefer note 15

Current year2019

Previous year2018

Note R R R R

Contributions received and accrued 10 1,746,805,476 300,609,999 2,047,415,475 1,908,803,130Net investment income 11 (499,018) 1,212,485,983 1,211,986,965 1,992,123,652Allocated to unclaimed benefits 8 (46,060) (144,553) (190,613) (557,288)

Less: (113,526) (54,588,430) (54,701,956) (49,164,469)Re-insurance premiums - (15,088,478) (15,088,478) (10,863,193)Administration expenses 12 (113,526) (39,499,952) (39,613,478) (38,301,276)

Net income before transfers and benefits 1,746,146,872 1,458,362,999 3,204,509,871 3,851,205,025

Transfers and benefits (1,293,648,722) (426,581,184) (1,720,229,906) (1,781,663,770)Transfer from other funds 6 15,519,787 - 15,519,787 1,180,914Benefits 7 (1,309,168,509) (426,581,184) (1,735,749,693) (1,782,844,684)

Net income after transfers and benefits 452,498,150 1,031,781,815 1,484,279,965 2,069,541,255

Funds and reservesBalance at the beginning of the year 15 22,656,571,167 325,437,458 22,982,008,625 20,912,467,370Transfers between reserve accounts 15 (229,937,010) 229,937,010 - -Investment return allocated Current members 1,152,220,408 (1,152,220,408) - -Member Reserve Distribution 15 99,272,740 (99,272,740) - -

Balance at the end of the year 24,130,625,455 335,663,135 24,466,288,590 22,982,008,625


SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2019

1. PRINCIPLE ACCOUNTING POLICIES

The following are the principle accounting policies used by the Fund. These policies have been applied consistently to allyears presented, 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 RetirementFunds in South Africa, the Fund Rules 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.Depreciation is 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 yearsVehicles 5 yearsFurniture 10 years

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

Gains and losses on disposal of plant and equipment are determined by reference to their carrying amount and are takeninto account 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

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 arrangementsbecome binding and is derecognised when the contractual rights to the cash flows of the instrument expire or when suchrights are transferred in a transaction in which substantially all risks and rewards of ownership of the instrument aretransferred.

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

Financial instruments are recognised on acquisition using trade date accounting, which includes transaction costs. Uponinitial recognition financial instruments are designated at fair value through the statement of changes in net assets andfunds as the assets or liabilities are managed, evaluated and reported internally on a fair value basis and/or thedesignation eliminates or significantly 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 receivables

Loans and receivables are non-derivative financial assets with fixed or determined payments that are not quoted in anactive market other than those that the fund intends to sell in the short term or that is designated as at fair value throughthe statement of changes in net assets and funds. Loans and receivables are measured at fair value.

Debentures

Debentures comprise investments in listed and unlisted debentures.


SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)FOR THE YEAR ENDED 30 JUNE 2019

1.3.1. Investments (continued)

Listed debentures

The fair value of listed debentures 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 debentures

Unlisted debentures are financial assets with fixed or determinable payments and fixed maturity. Fair value is estimatedusing pricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recentarm’s length market transactions in respect of the unlisted debenture.

Bills and bonds

Bills and bonds comprise investments in government or provincial administration, local authorities, participatingemployers, 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 rulingclosing prices 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, adiscounted cash 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 investmentproperty. Investment properties comprise investments in commercial properties. Investment properties are carried at fairvalue.

Investment properties are reflected at valuation on the basis of open-market fair value at the statement of net assets andfunds date. In the open-market valuation information cannot be reliably determined; the fund uses alternative valuationmethod such as discounted cash flow projections or recent prices on active markets for transactions of similar nature. Thefair values are the estimated amounts for which a property could be exchanged on the date of valuation between a willingbuyer and a willing seller in 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 Johannesburg Stock Exchange, equities with secondarylisting on the Johannesburg Stock Exchange, foreign listed equities and unlisted equities.

Equity instruments designated as fair value through the statement of changes in net assets and funds by the fund areinitially recognised at fair value on trade date.

Listed equitiesEquity instruments are subsequently measured at fair value and the fair value adjustments are recognised in the statementof changes in net assets and funds. The fair value of equity instruments with standard terms and conditions and traded onactive liquid markets is based on regulated exchange quoted ruling closing prices at the close of business on the lasttrading day on or before the statements of net assets and funds date.

Unlisted equitiesIf 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 markettransactions in respect of equity instruments.

Preference shares

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




Unlisted preference sharesIn 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 toassets (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-relatedpolicies are valued at the market value of the underlying assets for each policy, in line with the insurer’s valuationpractices.

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 by the number of units.

Derivative Market Instruments

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

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

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 observablecurrent market transactions in the same instrument (i.e. without modification or repackaging) based on a valuationtechnique whose variables include only data from observable markets.

OptionsOptions are valued using option pricing modules.

Futures/forward contractsThe fair value of publicly traded derivatives is based on quoted closing prices for assets held or liabilities issued, andcurrent offer prices for assets to be acquired and liabilities held.

SwapsSwaps 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 floatinginterest rate amounts. The net present values of the fixed leg and variable leg of the swap are offset to calculate the fairvalue of the swap.

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.

Hedge funds

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

Listed hedge fundsHedge 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 the underlying instrument - investment partnersHedge 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 relationto the percentage holdings by each investment partner in the total fair value of the hedge fund. The fair value is estimatedusing pricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recentarm’s length market transactions in respect of hedge fund instruments.

Unlisted – where investor (fund) has a right to the underlying instrumentHedge 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 throughprinciple is applied, and the underlying instrument are separately measured and disclosed. The fair value is estimatedusing pricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recentarm’s length market transactions 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, thesemay need 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 costusing the effective 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 liquidinvestments with 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 directlyattributable to the 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 Fund Rules and arerecognised in the year in which such income and expenses accrue to the Fund.



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 financialasset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairmentlosses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurredafter the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flowsof the financial asset 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 areindividually significant. If the fund determines that no objective evidence of impairment exist s for an individually assessedfinancial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit riskcharacteristics and collectively 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 theamount of the loss is recognised in the statement of changes in net assets and funds. If a loan has a variable interest rate,the discount rate for measuring any impairment loss is the current effective interest rate determined under contract. As apractical expedient, the fund may measure impairment on the basis of an instrument’s fair value using an observablemarket price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to anevent occurring after the impairment was recognised (such as improved credit rating), the previously recognisedimpairment loss is reversed 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 incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amountby which the asset’s net carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use. For this purpose of assessing impairment, assets are grouped at thelowest levels for which there are separately 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 notbe able to collect all amounts due according to their original terms.

1.6. 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 FundRules. Contributions received are apportioned between retirement funding and funding for risk and other expenses. Theapportionment is governed by the Fund Rules 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.Any contributions received in advance at the end of the reporting year are recognised as a current liability – accountspayable.

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 ofthe month following the expiration for the year in respect of which the relevant amounts or values are payable ortransferable until the date of receipt by the Fund.



1.7. FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for at the ruling rate of exchange on the transaction date. Assets andliabilities in 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.

1.8. INVESTMENT INCOME

Investment income comprises of the following:

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 netassets and 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 yearof the rental agreement, unless another systematic basis is more representative of the time pattern in which use benefitderived from the leased asset is diminished. Property expenses shall be recognised in the statement of changes in netassets and funds under 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 innet assets 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.

1.9. BENEFITS

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

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



1.10. 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 oftransfer of business by the Financial Services Board, as contained in the approval certificate from the Authority.

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 effectivedate of transfer adjusted for investment return or late payment interest as guided by the application.

1.11. ADMINISTRATION EXPENSES

Expenses incurred in the administration of the Fund are recognised in the statement of changes in net assets and funds inthe reporting 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 underthe accounts receivable note.

1.12. RELATED PARTIES

In considering each possible related-party relationship, attention is directed to the substance of the relationship and notmerely the legal form.

If there have been transactions between related parties, the Fund shall disclose the nature of the related party relationshipas well 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

the settlement;• details of guarantees given or received;• provisions for doubtful debts related to the amount of outstanding balances; and• the expense recognised during the year in respect of bad or doubtful debts due from related parties.

1.13. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS

The Fund applies adjustments arising from changes in accounting policies and errors prospectively. The adjustmentrelating to a change in the accounting policy or error is therefore recognised in the current and future years affected by thechange.



2. PLANT AND EQUIPMENT

2.1. Current year

Gross carrying amount

Furniture andEquipment

R

VehiclesR

Total

RCost at beginning of year 353,925 552,754 906,679Additions - 225,000 225,000Disposals (82,004) (256,333) (338,337)

At end of year 271,921 521,421 793,342Accumulated depreciation and impairmentAt beginning of year (292,372) (305,740) (598,112)Depreciation charges (18,025) (78,034) (96,059)Other movements 82,004 256,333 338,337

At end of year (228,393) (127,441) (355,834)

Net carrying amount at end of year 43,528 393,980 437,508

The trade-in value of vehicle disposals were netted-off against the cost price of vehicle additions.

2.2. Prior yearGross carrying amount Furniture and

EquipmentR

VehiclesR

Total

RCost at beginning of period 281,825 398,602 680,427Additions 72,100 296,420 368,520Disposals - (142,268) (142,268)

At end of year 353,925 552,754 906,679Accumulated depreciation and impairmentAt beginning of period (281,807) (355,885) (637,692)Depreciation charges (10,565) (92,123) (102,688)Accumulated depreciation on disposals - 142,268 142,268

At end of year (292,372) (305,740) (598,112)

Net carrying amount at end of period 61,553 247,014 308,567



3.

3.1.

INVESTMENTS

Investment summary

Note Local

R

Foreign

R

Total currentyear

R

Total previousyear

R

Fair valuecurrent year

RCash 2,919,318,278 17,235,383 2,936,553,661 2,446,659,321 2,936,553,661Commodities 30,350,695 1,252,098 31,602,793 25,129,243 31,602,793Debt instruments including Islamic debt instruments 3,426,778,477 33,315,047 3,460,093,524 2,575,482,028 3,460,093,524Investment properties and Owner occupied properties 3.2. 38,700,000 - 38,700,000 45,000,000 38,700,000Equities 8,015,771,589 146,538,724 8,162,310,313 6,973,677,416 8,162,310,313Insurance policies 826,246,661 234,585,657 1,060,832,318 968,304,926 1,060,832,318Collective investment schemes 2,771,128,334 5,519,111,920 8,290,240,254 9,451,743,579 8,290,240,254Hedge funds 909,279,567 - 909,279,567 856,261,700 909,279,567Private equity funds 72,524,991 142,328,896 214,853,887 199,688,814 214,853,887Derivative market investments (22,030,446) - (22,030,446) (20,698,065) (22,030,446)Other - - - 11,884,667 -

Total 18,988,068,146 6,094,367,725 25,082,435,871 23,533,133,629 25,082,435,871



3.2. Investment properties and owner occupied investments

3.2.1. Current yearInstrument Valuation

methodDate of lastvaluation

At beginningof year

R

RevaluationReserve

R

At end ofyear

RInvestment PropertiesABSA Square Mbombela 45,000,000 (6,300,000) 38,700,000

Total of properties 45,000,000 (6,300,000) 38,700,000

During the current financial year, the investment property held directly by the Fund was valued based on market research done by Spectrum Valuations, an independent registeredvaluator, who specializes in commercialproperty valuation. That valuation indicated a market value of R38.7 million which was adopted by the Board of Fund with effect from 1 May 2019.

The reason for the decreased value is that the rentals for commercial use decreased due to the declining economy as well as a shift of commercial activities and demand from the centralbusiness district to the prestigious Riverside Park CID to the north of Nelspruit.



4. HOUSING LOAN FACILITIES

4.1. Housing loans

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

yearGranted Repaid Interest

capitalisedOther

adjustmentsAt 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

33,891,121 - (11,213,448) 2,454,467 - 25,132,140

Total 33,891,121 - (11,213,448) 2,454,467 - 25,132,140

Direct housing loans to members have been granted until 31 May 2007 in terms of section 16(3) of the Fund Rules and the provisions of section 19(5) of the Pension Funds Act. Suchdirect housing loans were financed from members' individual fund credits. With effect from 28 January 2011 the minimum prescribed interest rate is the repo rate as determined by theSouth African Reserve Bank from time to time plus 5.5% per annum. During the current financial year the repo rate increased from 6.5% to 6.75% (11.50% to 12% interest rate on housingloans) with effect from 22 November 2018. 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:

Institution Current year Prior yearStandard Bank R659,808,843 R678,565,910 FNB R125,813,469 R120,721,318 Participating Employers R 1,546,785 R 1,890,269

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 NationalCredit Act with effect from 1 June 2007.



5. ACCOUNTS RECEIVABLE

30 June 2019R

30 June 2018R

Prepaid expenses 27,953 27,953Sundry debtors - 42,351Capital trade timing difference - cleared after year-end 24,436,607 -Refund for member risk overpayment 779,000 -Outstanding late payment interest 1,444,072 1,702,382

Total 26,687,632 1,772,686



6. TRANSFERS FROM OTHER FUNDS

A B C D A+B+C-DEffective

dateNo. of

membersAt beginning of

yearTransfersapproved

Return onTransfers

Assetstransferred

At end ofyear

R R R R RIn terms of Section 14Magalies Water Retirement Fund 13/06/2018 13 - 117,831 391 (118,222) -FundsAtWork Umbrella Provident Fund 01/08/2018 30 - 14,649,776 45,356 (14,695,132) -Erwat Provident Fund 01/07/2013 1 - 447,048 - (447,048) -Individual transfers in 31/07/2018 1 - 258,942 443 (259,385) -

Total 45 - 15,473,597 46,190 (15,519,787) -

Transfers approved (B) 15,473,597Return on transfers (C) 46,190

Statement of changes in net assets and funds 15,519,787

On 23 December 2014 the Authority approved the section 14 transfer of 275 members from the ERWAT Provident Fund to The MunicipalGratuity Fund ("The MGF") with effect from 1 July 2013. ERWAT Provident Fund transferred cash to The Municipal Gratuity Fund ("TheMGF") on 26 June 2015 which represented transfer values for 265 members. The transfer values of the remaining 10 members were paidby ERWAT Provident Fund to the members and not to The MGF since these members exited prior to 26 June 2015. During July 2015, thetransferred values were invested for 245 members who were active at the time in The MGF and an amount of R64,384,079 wasrecognised as transfers from other funds in the June 2015 annual financial statements.

At the time of investment, 20 members already exited MGF and became entitled to follow up benefits. During the 2019 financial yearfollow up benefits were paid to former members to the value of R447 048 for 1 member (2018: R487,393 for 3 members) (2017:R183,853: 4 members); (2016: R2,037,904: 10 members) and these values are recognised as transfers from other funds in the currentfinancial year.

As at 30 June 2019, 2 follow up benefits to the value of R398,919 still have to be paid to former members (refer to note 9 AccountsPayable) which were sent to Greystone for tracing.



7. BENEFITS

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 113,317,215 1,004,354,157 174,556 (1,021,501,343) - 96,344,585Lump sums before retirement - Disability benefits 16,200,407 39,884,491 9,083 (55,930,834) - 163,147 - Death benefits 566,052,776 354,585,605 31,431,055 (214,765,319) - 737,304,117 - Withdrawal benefits 39,517,809 243,054,828 273,001 (275,965,712) (6,421) 6,873,505 - Divorce payments 161,556 61,196,706 - (61,358,262) - -OtherReverted Unclaimed Benefits - 130,747 - (130,747) - -

Total 735,249,763 1,703,206,534 31,887,695 (1,629,652,217) (6,421) 840,685,354

Benefits for current year (B) 1,703,206,534Return allocated (C) 31,887,695

Statement of changes in net assets and funds 1,735,094,229

7.2. Benefits in terms of surplus distribution

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 1,184,344 655,464 - (1,184,344) - 655,464

Total Benefits 1,184,344 655,464 - (1,184,344) - 655,464

Surplus allocated (B) 655,464Return allocated (C) -

Statement of changes in net assets and funds 655,464

Total benefits (7.1 + 7.2) 736,434,107 1,703,861,998 31,887,695 (1,630,836,561) (6,421) 841,340,818



8. UNCLAIMED BENEFITS

30 June 2019R

30 June 2018R

Balance at the beginning of the year 6,503,339 6,720,581Transferred from benefits payable 6,421 24,163Investment income allocated 190,613 557,288Less:• Benefits paid (90,507) (798,693)

Balance at the end of the year 6,609,866 6,503,339

9. ACCOUNTS PAYABLE

30 June 2019R

30 June 2018R

Accrual for audit fees 747,500 707,250Reinsurance premiums 1,249,073 901,708Administration fees 5,191,910 2,126,028Sundry Creditors 233,218 530,685Asset management fees 6,219,403 6,548,574Sundry participating employers (contribution overpayments) 667,149 665,029Refunds due - direct housing loan overpayments 189,962 106,187Profit on benefit trades to be invested 32,197 767,690Refunds due -Standard Bank housing loan overpayments 1,378,869 -Follow up benefits payable (ERWAT transfer) 398,919 845,966

Total 16,308,200 13,199,117

10. CONTRIBUTIONS

At beginning ofyear

Towardsretirement

Towards re-insurance and

expenses

Contributionsreceived

At end ofyear

R R R R RMember contributions received andaccrued

13,358,669 559,323,836 - (562,891,272) 9,791,233

Employer contributions received andaccrued

40,017,984 1,185,463,704 300,609,999 (1,496,717,991) 29,373,696

Additional voluntary contributions -employer

- 5,756 - (5,756) -

Additional voluntary contributions -members

- 2,012,180 - (2,012,180) -

Total 53,376,653 1,746,805,476 300,609,999 (2,061,627,199) 39,164,929

Towards retirement 1,746,805,476Towards reinsurance and expenses 300,609,999

Statement of changes in net assets and funds 2,047,415,475



11. NET INVESTMENT INCOME

30 June 2019R

30 June 2018R

Income from investments 1,005,878,099 927,094,026• Dividends 352,038,179 241,295,275• Interest 454,997,797 456,989,940• Rentals 6,503,300 3,537,800• Collective investment schemes distribution 91,835,928 133,318,647• Income from insurance policies 100,502,895 91,952,364Interest on late payment of contributions 1,131,912 1,032,094Adjustment to fair value 287,829,569 1,163,791,736

1,294,839,580 2,091,917,856Less: Expenses incurred in managing investments (82,852,615) (99,794,204)

Total 1,211,986,965 1,992,123,652

Included in Adjustment to fair value are indicative management fees of R36 940 080 .

12. ADMINISTRATION EXPENSES

30 June 2019R

30 June 2018R

Actuarial fees 672,091 614,115Administration fees 26,589,449 25,656,248Audit fees 1,151,772 1,085,837Audit fees - Audit services 747,500 724,350Audit fees - Internal 404,272 361,487Depreciation 96,059 102,689Other Expenses 2,030,642 1,981,274Communication expenses 1,161,836 1,077,821FSCA Levy 634,068 578,110Post retirement medical contributions 48,850 44,114Medical assessment cost 185,888 281,229Office expenses 1,816,571 1,735,522Board of Fund expenses 12.1 1,686,057 1,728,148Staff expenses 3,469,827 3,475,403Principal Officer expenses 2,101,010 1,922,040

Total 39,613,478 38,301,276

12.1. Board of Fund expenses30 June 2019

R30 June 2018

RMeeting allowances 964,867 964,166Training expenses 721,190 763,982

Total 1,686,057 1,728,148



13. RISK MANAGEMENT POLICIES

Risk management framework

The Board of Fund has overall responsibility for the establishment and oversight of the Fund’s risk management policies.

The Board of Fund 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 Fund on its activities.

The Fund’s risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriaterisk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewedregularly to 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 contractualobligations to members.

Continuous monitoring by the Board of Fund and the Fund's Actuary takes place to ensure that appropriate assets areheld where the Fund's obligation to members are dependent upon the performance of specific portfolio assets andthat a suitable match of assets exists 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 thefund to incur a financial loss.

The Board of Fund 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 dependingon the issuer's credit rating.

Only well established counterparties of an acceptable credit standing are used and the portfolios' investmentinstruments are well 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 theInvestment Administrators 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 Board of Fund monitor the drafting of contracts to ensure that rights and obligations of allparties are clearly set 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 interestrate of the financial instrument, usually without a corresponding change in its fair value.

The Board of Fund 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 exchangerates. The Fund’s exposure to currency risk is mainly in respect of foreign investments made on behalf of members ofthe fund for the purpose of seeking desirable international diversification of investments.

The Board of Fund ensures that the foreign investments of the Fund are monitored and limits these investments to30% of total assets. Where the limit of 30% is exceeded, the Board of Fund ensures that it is acceptable to theAuthority.

• Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in raising funds to meet commitments associated withfinancial instruments.

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



13. 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 ormarket interest 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 withinthe framework of statutory requirements.

The Board of Fund ensures that continuous monitoring takes place to ensure that appropriate assets are held wherethe liabilities are dependent upon the performance of specific portfolios of assets and that a suitable match of assetsexists for all non-market related liabilities.

• Investment risk

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

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

• Price risk

Price risk is the risk that the value and/ or future cash flows of a financial instrument will fluctuate as a result ofchanges in market prices.

• Interest rate risk

Interest rate risk is the risk that the value and /or future cash flows of financial instruments will fluctuate as a result ofchanges in interest rates.

The Board of Fund monitors exposures to interest rate risk by using monthly cash flow projections.

• Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Fund'sactivities and from external factors other than credit, market and liquidity risks, such as those arising from legal andregulatory requirements and generally accepted standards of corporate behaviour.The Fund ensures that for all significant contractual obligations, as provided for in terms of the Rules, provisions havebeen raised in the financial statements and complies with all legislation, regulations and contracts. The responsibilitylies with the Board of Fund predominantly as well as with the Fund's service providers where agreed to.

Details of the Fund's Risk Management Policy are available for inspection at the registered office of the Fund.

• Inflationary risk

Inflationary risk is the uncertainty over the future real value (after inflation) of investments. The risk that the returnfrom an investment will be eroded by the negative impact of inflation on the value of investments. It is one of themajor risks in fixed income securities.

The Board of Fund continuously monitors the performance of investments against investment return benchmarks asper the Fund's investment strategy.



14. RELATED PARTY TRANSACTIONS

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

14.1. Participating employers

The following transactions between the participating employers and the Fund occurred during the period: Theparticipating employers made contributions to the Fund for members' retirement to the value of R1,185,463,704 (2018:R1,054,272,843) and towards the Fund's risk reserve and administration expenses to the value of R300,609,999 (2018:R332,723,936) respectively (refer to note 10 of the financial statements).

14.2. Board of Fund

During the year under review a total amount of R1,207,199 (2018: R1,152,776) was contributed to the Fund on behalf ofthe member elected Board of Fund in respect of their individual pension contributions in terms of the provisions of theFund Rules. This amount consists of contributions by the member elected Board of Fund as well as their employers. Ofthe total amount R1,063,209 (2018: R990,144) was contributed towards the member elected Board of Funds' retirementprovision and R143,990 (2018: R162,632) was contributed towards the Fund's risk benefits and administration expenses.These contributions are the standard member and employer contributions in terms of the Fund Rules made in respect ofthe Board of Fund in their capacity as employees and are disclosed merely for transparency reasons. This is notremuneration to the Board by the Fund.



15. SURPLUS AND RESERVE ACCOUNTS

ReserveAccounts Total

MemberReserveAccount

RevertedUnclaimed

Benefit Account

ProcessingAccount

Risk Account Data andOperational

AccountR R R R R R

At beginning of year 325,437,458 - 111,428 7,351,500 299,240,247 18,734,283Contributions received and accrued 300,609,999 - - - 262,226,776 38,383,223Net investment income 1,212,485,983 - 3,843 1,183,229,801 27,752,678 1,499,661Allocated to unclaimed benefits (144,553) - - (144,553) - -Less: (54,588,430) (727,260) (4,639) - (15,277,785) (38,578,746)- Re-insurance premiums (15,088,478) - - - (15,088,478) -- Administration costs (39,499,952) (727,260) (4,639) - (189,307) (38,578,746)Net income before transfers and benefits 1,783,800,457 (727,260) 110,632 1,190,436,748 573,941,916 20,038,421Transfers and benefits (426,581,184) - (130,747) (25,264,755) (401,185,682) -Transfers from other funds - - - - - -Benefits (426,581,184) - (130,747) (25,264,755) (401,185,682) -Net income after transfers and benefits 1,357,219,273 (727,260) (20,115) 1,165,171,993 172,756,234 20,038,421Transfer between reserve accounts - - 21,786 - (21,786) -Death and Disability 229,937,010 - - - 229,937,010 -Transfer from Risk Account - 100,000,000 - - (100,000,000) -Distribution to Members (99,272,740) (99,272,740) - - - -Investment Return Allocated to Member Share Account (1,152,220,408) - - (1,152,220,408) - -

At end of year 335,663,135 - 1,671 12,951,585 302,671,458 20,038,421

16. AMOUNTS TO BE ALLOCATED

30 June 2019R

30 June 2018R

Investment return allocated after year-end 65,988,873 (50,475,475)Contributions allocated to members after year-end 134,739,403 127,553,692Housing loan installments allocated to members after year-end (216,642) 1,097,118

Total amounts to be allocated 200,511,634 78,175,335


REPORT OF THE VALUATORFOR THE YEAR ENDED 30 JUNE 2019

REPORT OF THE VALUATOR

Particulars of the preliminary financial condition of the Municipal Gratuity Fundas at 30 June 2019

1. Net assets available for benefits.

R 24 466 289 000

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 24 466 289 000

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

6KDUH�$FFRXQW��0HPEHUV¶�)XQG�&UHGLWV� R 23 930 114 000Amounts to be allocated R 200 512 000

R 24 130 626 000

4. Contingency reserve account balances.

Risk Account R 302 671 000Processing Account R 12 952 000Data and Operational Account R 20 038 000Reverted Unclaimed Benefits Account R 2 000Member Reserve Account R -

R 335 663 000

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.

Based on our preliminary valuation results, the adjusted balance in the Risk Reserve (after taking into account the estimated incurred but not reported death claims at the valuation date, a margin for over allocated investment returns as well as a provision in respect catastrophe cover) amounted to R 252.3 million. This represents 3.0 times the recommended balance in terms of PF Circular 117.

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 2019.

Prepared by me:

GERDA GROBLERVALUATOR

Fellow of the Actuarial Society of South AfricaFellow of the Faculty of ActuariesIn my capacity as the valuator of the fund and as an employee of Alexander Forbes Financial Services

14 October 2019


SCHEDULE IA - SCHEDULES PERTAINING TO THE ANNUAL FINANCIAL STATEMENTSAT 30 JUNE 2019

INVESTMENTSNotes Direct

InvestmentsNon-compliant

CollectiveinvestmentschemesNote M1

Non-compliantInsurance

policesNote M2

Derivativepositionswithout

residual riskNote G1

CompliantInvestments

Note L

Total Local Foreign Foreign Africa Total Foreign Total % offoreign

exposure

TOTAL as perRegulation 28(Schedule IB)

R R R R R R R R R R % RCash (including cash at bank) A 3,093,243,057 87,936,761 171,888,114 - - 3,353,067,932 2,994,810,458 335,800,016 22,457,458 358,257,474 10.68 3,353,067,932Commodities B 31,602,793 44,613,370 - - - 76,216,163 30,350,696 45,865,467 - 45,865,467 60.18 76,216,163Housing loans 25,132,140 - - - - 25,132,140 25,132,140 - - - - 25,132,140Debt instruments including Islamicdebt Instruments

C 3,460,093,523 2,034,323,747 863,380,545 - - 6,357,797,815 5,816,616,052 541,181,763 - 541,181,763 8.51 6,357,797,815

Investment and owner occupiedproperties

D 955,131,186 138,157,046 - - - 1,093,288,232 951,380,844 141,907,388 - 141,907,388 12.98 1,093,288,232

Equities E 7,245,879,127 5,092,569,842 28,267,811 - - 12,366,716,780 7,734,914,637 4,183,219,829 448,582,314 4,631,802,143 37.45 12,366,716,780Other assets - - (2,704,153) (22,030,446) - (24,734,599) (24,734,599) - - - - (24,734,599)Hedge Funds J 909,279,567 - - - - 909,279,567 909,279,567 - - - - 909,279,567Private Equity Funds K 214,853,887 - - - - 214,853,887 72,524,991 142,328,896 - 142,328,896 66.24 214,853,887Collective Investment Schemes - - - - 892,639,488 892,639,488 658,053,831 234,585,657 - 234,585,657 26.28 892,639,488Entities regulated ito Reg28(8)(b)(ii)

- - - - - - - - - - - -

Total investments15,935,215,280 7,397,600,766 1,060,832,317 (22,030,446) 892,639,488 25,264,257,405 19,168,328,617 5,624,889,016 471,039,772 6,095,928,788 24.13 25,264,257,405


SCHEDULE IA - SCHEDULES PERTAINING TO THE ANNUAL FINANCIAL STATEMENTS (continued)AT 30 JUNE 2019

A CASH

Instrument

LocalFair Value

RLocal notes, deposits, money market instruments issued by a South African Bank, margin accounts,settlement accounts with an exchange and Islamic liquidity management financial instrumentsList issuers/ entities which exceeds 5% of total assets

3,074,446,610

Notes and coins, any balance or deposit in an account held with a South African bank - exceeding 5% oftotal assets

462,323,340

Total of issuers exceeding 5% -

A money market instrument issued by a South African bank including an Islamic liquidity managementfinancial instrument - exceeding 5% of total assets

2,548,439,396

Any positive net balance in a margin account with an exchange - exceeding 5% of total assets (29,084,460)Any positive net balance in a settlement account with an exchange, operated for the buying and selling ofassets - exceeding 5% of total assets

92,768,334

ForeignForeign balances or deposits, money market instruments issued by a foreign bank including Islamicliquidity management financial instrumentsList issuers/entities which exceeds 5% of total assets

18,796,447

Any balance or deposit held with a foreign bank - exceeding 5% of total assets 18,702,522A money market instrument issued by a foreign bank including an Islamic liquidity management financialinstrument - exceeding 5% of total assets

93,925

Total 3,093,243,057

B COMMODITIES

Instrument Holding number Holding%

Fair valueR

LocalGold (including Kruger Rands)Gold - Local - 0.03 8,284,366Gold - Foreign - - 1,167,709

9,452,075

Other Holding%

Palladium - foreign - - 84,389Platinum - local - 0.09 22,066,329

22,150,718

31,602,793

Total 31,602,793



C DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRUMENTS

Instrument Local or foreign Secured/ Unsecured Issued/Guaranteed

Redemptionvalue

R

Fair value

RGovernment debt:Debt instruments issued by an loans to the government of the Republic and anydebt or loan guaranteed by the RepublicRepublic Of South Africa Local Secured Guaranteed 1,019,665,656

Total 1,019,665,656

Debt instruments issued or guaranteed by the government of a foreign country:Local Secured Issued 11,325,249

Total 11,325,249Bank debt :Debt instruments issued or guaranteed by a South African Bank against its balance sheet:-Listed on an exchange with an issuer market capitalisation of R20 billion ormore, or an amount or conditions as prescribed

680,580,606

Total 680,580,606Not listed on an exchange

217,785,913

Total 217,785,913

Public debt:Debt instruments issued or guaranteed by a public entity under the PublicFinance Management Act, 1999 (Act No. 1 of 1999) as prescribed:-Airports Company of South Africa Limited (ACSA) Local Secured Guaranteed 1,510,964Development Bank of South Africa Local Secured Guaranteed 53,190,550Eskom Holdings Ltd Local Secured Guaranteed 52,718,537Industrial Development Corporation of South Africa Local Secured Guaranteed 25,434,358Land and Agricultural Development Bank of South Africa Local Secured Guaranteed 67,848,092Transnet Limited Local Secured Guaranteed 47,522,787The South African National Roads Agency Limited Local Secured Guaranteed 40,335,956Rand Water Local Secured Guaranteed 1,484,334

Total 290,045,578Corporate debt (excluding debentures):Debt instruments issued or guaranteed by an entity that has equity listed on anexchangeListed on an exchange

233,022,857

Total 233,022,857Not listed on an exchange

102,583,369



Corporate debt (excluding debentures) - continued:

Total 102,583,369

OtherListed on an exchange:

243,782,168

Total 243,782,168Not listed on an exchangeGreen X Renewable Energy Fund I Local Secured Issued 307,699,272Green X Renewable Energy Fund II Local Secured Issued 312,711,523Blend Securitisation Snr Class B Local Secured Issued 6,207,604Clover Ltd Local Secured Issued 10,486,221SA Taxi Finance Solutions (Pty) Ltd Local Secured Issued 24,197,507

Total 661,302,127Total debt instruments including Islamic debt instruments

3,460,093,523



D INVESTMENT AND OWNER OCCUPIED PROPERTIES

Instrument

Shares and linked units in property companies, or units in acollective investment scheme in property, listed on an exchange:

Local/ Foreign Issued shares Holding number Ordinary/Preference

shares

Holding%

Fair valueR

Issuer market capitalisation of R10 billion or more, or an amount orconditions as prescribed

- - Ordinary 782,517,663

Total of issuers exceeding 5% 782,517,663

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

- - Ordinary 111,146,917


Issuer market capitalisation of less than R3 billion, or an amount orconditions as prescribed

- - Ordinary 22,684,133


Total 916,348,713

Local - - 38,782,473

Total 38,782,473

Total of Investment and Owner Occupied Property 955,131,186



E EQUITIES

Instrument Fair valueR

Listed equities

Issuer market capitalisation of R20 billion or more, or an amount or conditions as prescribed6,691,567,205

Total 6,691,567,205

Issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed510,048,948

Total 510,048,948

Issuer market capitalisation of less than R2 billion, or an amount or conditions as prescribed36,606,632

Total 36,606,632

Unlisted equities7,656,342

Total 7,656,342

Total equities 7,245,879,127



G DIRECT DERIVATIVE MARKET INSTRUMENTS

G1 DERIVATIVE POSITIONS WITHOUT RESIDUAL RISK

Instrument Local orForeign

Listed orUnlisted

Fair value Effective Economic Exposure Counterparty Expiry date

R Gross NetOptions

Futures/Forwards/SAFEX

Mar 20 DTOP Listed 11,007,560 11,007,560 11,007,560 Safex 19/03/2020Jun 20 DTOP Listed 9,595,320 9,595,320 9,595,320 Safex 18/06/2020Jun 20 DTOP 10000 P Listed 5,611,957 5,611,957 5,611,957 Safex 18/06/2020Jun 20 DTOP 10870 P Listed (8,893,910) (8,893,910) (8,893,910) Safex 18/06/2020Jun 20 DTOP 12850 C Listed (6,434,600) (6,434,600) (6,434,600) Safex 18/06/2020Mar 20 DTOP 10130 P Listed 5,779,064 5,779,064 5,779,064 Safex 19/03/2020Mar 20 DTOP 11030 P Listed (10,060,669) (10,060,669) (10,060,669) Safex 19/03/2020Mar 20 DTOP 12820 C Listed (3,032,402) (3,032,402) (3,032,402) Safex 19/03/2020Mar 20 DTOP 12870 C Listed (4,674,709) (4,674,709) (4,674,709) Safex 19/03/2020Mar 20 DTOP 6440 P Listed 99,740 99,740 99,740 Safex 19/03/2020Mar 20 DTOP 9120 P Listed (1,680,156) (1,680,156) (1,680,156) Safex 19/03/2020Oct 19 DTOX 10610 P Listed (5,959,483) (6,742,764) (6,742,764) Safex 17/10/2019Oct 19 DTOX 11 830 C Listed (1,518,113) (5,055,697) (5,055,697) Safex 17/10/2019Oct 19 DTOX 9740 P Listed 859,564 2,563,715 2,563,715 Safex 17/10/2019Sep 19 XS48 2736 P Listed (972,641) (1,174,526) (1,174,526) Safex 19/09/2019Sep 19 XS49 2487 P Listed (519,950) (831,920) (831,920) Safex 19/09/2019Jan 20 XC42 6351 C Listed (4,090,089) (4,090,089) (4,090,089) Safex 24/01/2020Jan 20 XC43 5587 P Listed (1,218,859) (1,218,859) (1,218,859) Safex 24/01/2020Jan 20 XC44 5131 P Listed 492,529 492,529 492,529 Safex 24/01/2020Mar 20 XC53 5382 P Listed (6,420,599) (3,290,031) (3,290,031) Safex 31/03/2020

Currency swaps

Interest rate swaps

Total (22,030,446)



J HEDGE FUNDS

Instrument Period intocontract

Total value ofcommitment

Current valueof

commitmentR R

Hedge FundsCoronation Granite Plus Hedge Fund 01 October

20184,457,196 4,457,197

Coronation Presidio Hedge Fund 01 December2017

8,211,859 8,211,859

Funds of Hedge fundsBlue Ink Fixed Interest FoHF 01 February

2013384,125,610 384,125,610

Edge RCIS Absolute Return RHF Class D 01 December2017

298,130,966 298,130,966

Edge RCIS Matador RHF Class E 01 December2017

214,353,935 214,353,935

Total Hedge funds commitment 909,279,566 909,279,567



K PRIVATE EQUITY FUNDS

Instrument Local orForeign

Structure Category 2approval

Holding Term ofcontract

Total value ofcommitment

Current valueof

commitment% R R

Private Equity FundVantage Mezzanine III Southern African Sub Fund Local Partnership Yes %0.29 10 years 175,000,000 72,524,991Vantage Mezzanine III Pan African Sub Fund Foreign Partnership Yes %0.56 10 years 214,438,560 142,328,896

Total Private Equity Funds commitment 389,438,560 214,853,887



L CERTIFIED REGULATION 28 COMPLIANT INVESTMENTS

Instrument Fair valueR

Collective Investment Schemes – regulation 28(8)(b)(i)LocalPrudential Inflation Plus Fund 892,639,488


Total 892,639,488

Total certified Regulation 28 compliant investments 892,639,488

M REGULATION 28 NON-COMPLIANT INVESTMENTS

M1 NON-COMPLIANT COLLECTIVE INVESTMENT SCHEMESInstrument

Local

Holding%

Fair valueR

ABAX Equity Fund 2.16 544,523,139Investec Triple Alpha Fund 4.93 1,246,319,253

1,790,842,392

ForeignAll Seasons Specialist Fund 0.75 190,663,123Allan Gray Orbis Funds 3.51 886,945,720Brandywine Global Investment Management Fund 1.47 372,334,067Coronation Global Emerging Markets Fund 2.10 530,558,236Franklin Mutual Global Discovery Fund 2.11 533,018,520Hosking Global Fund 3.49 882,064,830Investec Global Franchise I 1.51 382,505,602Morgan Stanley Global Opportunity Fund 1.18 298,906,488Veritas Asset Management LLP 3.69 932,110,284Resolution Capital NIF Global Property 0.50 126,611,732Drakens Africa EX UCITS Fund USD 0.95 239,754,643Sanlam Africa Frontiers Fund 0.92 231,285,129

5,606,758,374

Total Non-compliant collective investment schemes 7,397,600,766

M2 NON- COMPLIANT INSURANCE POLICIESInstrument

Linked policiesLocal

Holding%

Fair valueR

Futuregrowth Pooled Enhanced Stefi Fund 1.05 266,100,594Futuregrowth Pooled High Yield Money Market Fund 3.15 794,731,723

1,060,832,317

Total linked policies 1,060,832,317

Total certified Regulation 28 non-compliant investments 8,458,433,083

The classification of “non-compliant” does not suggest that the Fund is contravening any requirements of Regulation28 of thePension Funds Act. The Fund has obtained the look-through information to the underlying investments and that is reported assuch in Schedule IB. These investments do not exceed the limits allowed in terms of Regulation 28.



O ENTITY / COUNTERPARTY EXPOSURE

Credit / Counterparty riskCounterparty Direct investment

in counterparty

R

Deposit/liquidasset with

counterparty

R

Any otherinstrument

R

Total percounterparty

R

Exposure tocounterparty

as a % of the fair value of the

assets of thefund

Banks

ABSA Bank Ltd 123,888,246 155,128,329 250,814,169 529,830,744 2.10%

Asset managers - localABAX Investments (Pty) Ltd - - 544,523,139 544,523,139 2.16%Allan Gray Life Ltd - - 1,392,039,054 1,392,039,054 5.51%Aluwani Capital Partners - - 1,136,476,401 1,136,476,401 4.50%Argon Asset Mangement (Pty) Ltd - - 1,079,353,565 1,079,353,565 4.27%Blue Ink Fixed Interest FoHF - - 384,125,610 384,125,610 1.52%Coronation Fund Managers 14,296,790 - 764,674,568 778,971,358 3.08%Edge Capital (Pty) Ltd - - 512,484,901 512,484,901 2.03%Fairtree Capital (Pty) Ltd - - 724,411,391 724,411,391 2.87%First Avenue Investment Managers - - 733,062,282 733,062,282 2.90%Futuregrowth Asset Management (Pty) Ltd - - 1,060,832,318 1,060,832,318 4.20%Investec Ltd 185,092,717 - 1,061,226,536 1,246,319,253 4.93%Old Mutual Plc 158,553,210 - 3,143,074,796 3,301,628,006 13.07%Princess Properties - - 38,700,000 38,700,000 0.15%Prudential Portfolio Managers Unit Trusts Ltd - - 892,639,488 892,639,488 3.53%Sanlam Investment Management (Pty) Ltd 120,910,134 - 3,943,470,518 4,064,380,652 16.09%Sesfikile Capital (Pty) Ltd - - 375,762,980 375,762,980 1.49%Vantage Green X Renewable Energy Fund - - 620,410,795 620,410,795 2.46%Vantage Mezzanine III Southern African Sub Fund - - 72,524,991 72,524,991 0.29%



Asset managers - foreignAll Seasons Specialist Fund - - 190,663,123 190,663,123 0.75%Allan Gray Orbis Funds - - 886,945,720 886,945,720 3.51%Brandywine Global Investment Management Fund - - 372,334,067 372,334,067 1.47%Coronation Global Emerging Markets Fund - - 530,558,236 530,558,236 2.10%Franklin Mutual Global Discovery Fund - - 533,018,520 533,018,520 2.11%Hosking Global Fund - - 882,064,830 882,064,830 3.49%Investec Global Franchise I - - 382,505,602 382,505,602 1.51%JP Morgan Chase - 1,561,065 - 1,561,065 0.01%Morgan Stanley Global Opportunity Fund - - 298,906,488 298,906,488 1.18%Veritas Asset Management LLP - - 932,110,284 932,110,284 3.69%Resolution Capital NIF Global Property - - 126,611,732 126,611,732 0.50%MGF Drakens Africa EX UCITS FUND USD - - 239,754,643 239,754,643 0.95%Sanlam Africa Frontiers Fund - - 231,285,129 231,285,129 0.92%Vantage Mezzanine III Pan African Sub Fund - - 142,328,896 142,328,896 0.56%

Other fundsHousing loans - 25,132,140 - 25,132,140 0.10%

602,741,097 181,821,534 24,479,694,772 25,264,257,403 %100.00

Definition of 'Counterparty Risk':The risk to each party of a contract that the counterparty will not live up to its contractual obligations. Counterparty risk is a risk to both parties and should be considered when evaluating acontract. In most financial contracts, counterparty risk is also known as "default risk".



Market risk

EQUITY HOLDINGS

Investment

Fair value at end ofyear

R

Total fair valueequity holdings andopen instruments

R

Market movementby 5%

RNaspers Ltd 1,067,702,376 1,067,702,376 53,385,119BHP Billiton Plc 397,512,710 397,512,710 19,875,636Compagnie Financière Richemont SA 371,579,293 371,579,293 18,578,965Standard Bank Group Ltd 356,600,545 356,600,545 17,830,027Anglo American Plc 314,290,417 314,290,417 15,714,521Sasol Ltd 279,717,591 279,717,591 13,985,880British American Tobacco Plc 260,662,502 260,662,502 13,033,125FirstRand Ltd 252,511,882 252,511,882 12,625,594Old Mutual Ltd 158,553,210 158,553,210 7,927,661Growthpoint Properties Ltd 153,198,973 153,198,973 7,659,949

Total value of 10 largest equity holdings 3,612,329,499 3,612,329,499 180,616,477

Total movement as % of non-current assets plus bank %0.71

OTHER FINANCIAL INSTRUMENTS

Instrument

Holding

R


R


RInvestec Triple Alpha 1,244,992,748 1,244,992,748 62,249,637Republic Of South Africa - Government Bonds 1,019,665,656 1,019,665,656 50,983,283Futuregrowth Pooled High Yield MM Fund 794,731,723 794,731,723 39,736,586ABSA Bank Ltd 664,764,144 664,764,144 33,238,207Standard Bank of SA Ltd 659,755,729 659,755,729 32,987,786Prudential Inflation Plus Fund 658,053,831 658,053,831 32,902,692Nedbank Ltd 583,322,018 583,322,018 29,166,101ABAX Equity Fund 544,523,139 544,523,139 27,226,157Firstrand Bank Ltd, Incl RMB 523,163,515 523,163,515 26,158,176Edge Funds 512,484,901 512,484,901 25,624,245

Total value of 10 largest other instruments 7,205,457,404 7,205,457,404 360,272,870


Foreign currency exposure

Foreign instruments


R


RNedgroup Investments Funds Global Equity 932,110,284 46,605,514Allan Gray Orbis (NC) 886,945,720 44,347,286Hoskings Global Fund 859,477,282 42,973,864Franklin Mutual Global Discovery Fund (NC) 533,018,520 26,650,926



Coronation Global Emerging Market (GEMS)(NC) 468,042,399 23,402,120Investec Global Franchise I 382,505,602 19,125,280

Brandywine Global Investment Management Fund 372,334,067 18,616,703Morgan Stanley Global Opportunity Fund 298,906,488 14,945,324Drakens Africa EX UCITS Fund USD 239,754,643 11,987,732Prudential Inflation Plus Fund 234,585,657 11,729,283Sanlam Africa Frontiers Fund 231,285,129 11,564,256All Seasons Specialist Fund (NC) 186,793,549 9,339,677Vantage Mezzanine III Pan African Sub Fund 142,328,896 7,116,445Nedgroup Investments Funds Global Property Fund 126,611,732 6,330,587Other 201,228,821 10,061,441

Total value of 10 largest foreign instruments 6,095,928,789 304,796,438


P RECONCILIATION BETWEEN THE INVESTMENTS IN SCHEDULE HA AND SCHEDULE IA

Fair valuecurrent period

(as perSchedule HA

3.1)

Cash at bank Property split(Schedule IAD)

Non-compliantCIS

Non-compliantInsurancePolicies

Derivativeswith residual

risk

Other Total

R R R R R R R RCash 2,936,553,661 156,689,394 - 87,936,762 171,888,115 - - 3,353,067,932Commodities 31,602,793 - - 44,613,370 - - - 76,216,163Housing loans - - - - - - 25,132,140 25,132,140Debt instruments including Islamic debt instruments 3,460,093,524 - - 2,034,323,746 863,380,545 - - 6,357,797,815Investment properties and Owner occupied

properties38,700,000 - 916,431,186 138,157,046 - - - 1,093,288,232

Equities 8,162,310,313 - (916,431,186) 5,092,569,842 28,267,811 - - 12,366,716,780Hedge funds 909,279,567 - - - - - - 909,279,567Private equity funds 214,853,887 - - - - - - 214,853,887Derivative market investments (22,030,446) - - - - 22,030,446 - -Collective investment schemes 8,290,240,254 - - (7,397,600,766) - - - 892,639,488Insurance policies 1,060,832,318 - - - (1,060,832,318) - - -Other assets - - - - (2,704,153) (22,030,446) - (24,734,599)

Total investments 25,082,435,871 156,689,394 - - - - 25,132,140 25,264,257,405


SCHEDULE IB - ASSETS HELD IN COMPLIANCE WITH REGULATION 28AS AT 30 JUNE 2019

Fair valueR

A Total assets (Schedule IA -Total investments) 25,264,257,405

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

(892,639,488)

B.1.1 Collective Investment Schemes (Reg 28(8)(b)(i)) (892,639,488)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 FSCA (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 24,371,617,917

Categories of kinds of assets Fair valueR

Fair value%

1 CASH 3,353,067,932 13.76%

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

100%

2,994,810,459 12.29%(a) Notes and coins; any balance or deposit in an account

held with a South African bank; 501,144,763 2.06%ABSA Bank Ltd 25% 304,059,945 1.25%Standard Chartered Bank 25% 158,076,692 0.65%Nedbank Ltd 25% 17,877,856 0.07%Firstrand Bank Ltd, Incl RMB 25% 11,215,990 0.05%Investec Bank Ltd 25% 7,278,853 0.03%Other 25% 2,635,427 0.01%

(b) A money market instrument issued by a South Africanbank including an Islamic liquidity management financialinstrument 2,702,655,976 11.09%ABSA Bank Ltd 25% 708,212,575 2.91%Standard Bank of SA Ltd 25% 688,830,107 2.83%Nedbank Ltd 25% 610,620,477 2.51%Firstrand Bank Ltd, Incl RMB 25% 555,374,139 2.28%Investec Bank Ltd 25% 103,923,829 0.43%Other 25% 35,694,849 0.15%

(c) Any positive net balance in a margin account with anexchange (15,580,047) (0.06)%Yield X Exchange 25% 13,930,073 0.06%SAFEX Margin 25% (29,510,120) (0.12)%

(d) Any positive net balance in a settlement account with anexchange, operated for the buying and selling of assets (193,410,233) (0.79)%Standard Chartered Bank 25% 80,984,191 0.33%ABSA Bank Ltd 25% 11,363,637 0.05%Standard Bank of SA Ltd 25% 5,703,793 0.02%Nedbank Ltd 25% (84,521,393) (0.35)%Firstrand Bank Ltd, Incl RMB 25% (206,793,642) (0.85)%JP Morgan Chase and Co 25% (146,819) 0.00%

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

SARBmax.limits 358,257,473 1.47%

(a) Any balance or deposit held with a foreign bank 358,165,021 1.47%Orbis SICAV Global Balanced Fund, Core RRF ShareClass M-14

5% 181,823,873 0.75%

Hosking Global Funds 5% 28,063,701 0.12%Investec Global Franchise I 5% 26,966,853 0.11%Franklin Mutual Global Discovery Fund 5% 22,333,476 0.09%Morgan Stanley Global Opportunity Fund 5% 18,053,952 0.07%

Carried forward 3,272,052,314 13.45%




Fair value%

Brought forward 3,272,052,314 13.45%Other 5% 80,923,166 0.33%

(b) Any balance or deposit held with an African bank (1,473) 0.00%All Seasons Specialist Fund 5% (1,473) 0.00%

(c) A money market instrument issued by a foreign bankincluding an Islamic liquidity management financialinstrument 93,925 0.00%Ishares Exchange Traded Funds 5% 93,925 0.00%

2 DEBT INSTRUMENTS INCLUDING ISLAMIC DEBTINSTRUMENTS 6,357,797,815 26.09%

2.1 Inside the Republic 100% 5,816,616,052 23.87%(a) Debt instruments issued by, and loans to, the government

of the Republic, and any debt or loan guaranteed by theRepublic 100% 1,973,705,724 8.10%Republic Of South Africa - Government Bonds 100% 1,973,705,724 8.10%

(b) Debt instruments issued or guaranteed by the governmentof a foreign country 75% - 0.00%

(c) Debt instruments issued or by a South African bankagainst its balance sheet 75% 1,304,462,874 5.35%

c(i) Listed on an exchange with an issue market capitalisationof R20 billion or more, or an amount or conditions asprescribed 75% 1,079,828,699 4.43%Standard Bank of SA Ltd 25% 314,302,430 1.29%Firstrand Bank Ltd, Incl RMB 25% 269,092,548 1.10%Nedbank Ltd 25% 236,033,456 0.97%ABSA Bank Ltd 25% 203,863,319 0.84%Investec Bank Ltd 25% 43,255,689 0.18%Other 25% 13,281,257 0.05%

c(ii) Listed on an exchange with an issuer market capitalisationof between R2 billion and R20 billion, or an amount orconditions as prescribed 75% - 0.00%

c(iii) Listed on an exchange with an issuer market capitalisationof less than R2 billion, or an amount or conditions asprescribed 75% 7,084,971 0.03%African Bank Ltd 10% 7,084,971 0.03%

c(iv) Not listed on an exchange 25% 217,549,204 0.89%Nedbank Ltd 5% 103,984,024 0.43%Standard Bank of SA Ltd 5% 99,715,343 0.41%Firstrand Bank Ltd, Incl RMB 5% 13,899,180 0.06%Citi Group Inc 5% (686) 0.00%ABSA Bank Ltd 5% (48,657) 0.00%

(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% 1,001,636,521 4.11%

d(i) Listed on an exchange 50% 877,085,220 3.60%Eskom Ltd 10% 172,364,373 0.71%Mercedes-Benz South Africa (Pty) Ltd 10% 86,208,910 0.35%Development Bank of SA 10% 76,018,018 0.31%Land & Agricultural Bank of SA 10% 74,920,319 0.31%Transnet Ltd 10% 69,356,824 0.28%Other 10% 398,216,776 1.63%

d(ii) Not listed on an exchange 25% 124,551,301 0.51%Land and Agricultural Development Bank of SA 5% 97,364,792 0.40%Transnet Ltd 5% 16,179,066 0.07%Industrial Development Corporation 5% 8,185,179 0.03%Redefine Properties Ltd 5% 2,822,264 0.01%

(e) Other debt instruments:- 25% 1,536,810,933 6.31%e(i) Listed on an exchange 25% 320,012,735 1.31%

Toyota Financial Services (SA) Ltd 5% 52,248,995 0.21%Amber House Fund 3 (RF) Ltd 5% 40,714,119 0.17%SuperDrive Investments (Pty) Ltd 5% 24,523,681 0.10%Growthpoint Properties Ltd 5% 21,616,681 0.09%

Carried forward 7,771,976,527 31.91%




Fair value%

Brought forward 7,771,976,527 31.91%Thekwini Fund 15 Ltd 5% 21,233,515 0.09%Other 5% 159,675,744 0.66%

e(ii) Not listed on an exchange 15% 1,216,798,198 4.99%Green X Renewable Energy Fund II 5% 312,711,523 1.28%Green X Renewable Energy Fund I 5% 307,699,272 1.26%SA Taxi Finance Solutions (Pty) Ltd 5% 45,726,738 0.19%Trust for Urban Housing Finance (Pty) Ltd 5% 34,983,635 0.14%Melrose Arch Investment Holdings 5% 33,110,368 0.14%Other 5% 482,566,662 1.98%

2.2 Foreign

SARBmax.limits

541,181,763 2.22%(a) Debt instruments issued by, and loans to, the government

of the Republic, and any debt or loan guaranteed by theRepublic

SARBmax.limits

- 0.00%

(b) Debt instruments issued or guaranteed by the governmentof a foreign country

SARBmax.limits

30,394,582 0.12%

Orbis SICAV Global Balanced Fund, Core RRF ShareClass M-14

10% 19,069,333 0.08%

Government of Namibia 10% 11,832,477 0.05%Largest issuer: US Government 10% 2,392,334 0.01%Other 10% (2,899,562) (0.01)%

(c) Debt instruments issued or guaranteed by a South AfricanBank against its balance sheet:-

SARBmax.limits

952,206 0.00%

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

SARBmax.limits 952,206 0.00%

Investec Plc 25% 465,209 0.00%Standard Bank of SA Ltd 25% 408,240 0.00%Firstrand Bank Ltd 25% 78,757 0.00%

c(ii) Listed on an exchange with an issuer market capitalisationof between R2 billion and R20 billion, or an amount orconditions as prescribed

SARBmax.limits - 0.00%

c(iii) Listed on an exchange with an issuer market capitalisationof less than R2 billion, or an amount or conditions asprescribed

SARBmax.limits

- 0.00%

c(iv) Not listed on an exchange - 0.00%(d) Debt instruments issued or guaranteed by an entity that

has equity listed on an exchangeSARBmax.limits

19,494,521 0.08%

d(i) Listed on an exchange SARBmax.limits

18,168,016 0.07%

Largest Issuer: ABSA Group Ltd 10% 3,563,773 0.01%Growthpoint Properties International (Pty) Ltd 10% 2,659,005 0.01%MTN Mauritius Investment Ltd 10% 2,400,599 0.01%Other 10% 9,544,639 0.04%

d(ii) Not listed on an exchange 25% 1,326,505 0.01%Standard Bank Group Ltd 5% 1,326,505 0.01%

(e) Other debt instruments 25% 490,340,454 2.01%e(i) Listed on an exchange 25% 490,340,454 2.01%

Legg Mason Brandywine Global Fixed Income AbsoluteReturn Fund

5% 361,350,212 1.48%


5% 116,899,446 0.48%

Franklin Mutual Global Discovery Fund 5% 9,221,220 0.04%Sasol Financing Usa Llc 5% 2,861,909 0.01%Largest issuer: International Reconstruction andDevelopment Plc

5% 7,667 0.00%

e(ii) Not listed on an exchange 15% - 0.00%

Carried forward 9,710,865,747 39.87%




Fair value%

Brought forward 9,710,865,747 39.87%3 EQUITIES 12,366,716,780 50.74%

3.1 Inside the Republic 75% 7,734,914,637 31.74%(a) Preference and ordinary shares in companies, excluding

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

7,706,073,422 31.62%a(i) Issuer market capitalisation of R20 billion or more, or an

amount or conditions as prescribed 75% 7,155,060,180 29.36%Naspers Ltd 15% 1,171,448,461 4.81%BHP Billiton Plc 15% 426,128,428 1.75%Standard Bank Group Ltd 15% 392,719,466 1.61%Compagnie Financière Richemont SA 15% 387,674,181 1.59%Anglo American Plc 15% 344,502,711 1.41%Other 15% 4,432,586,933 18.19%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed 75% 521,603,694 2.14%Super Group Ltd 10% 60,924,708 0.25%KAP Industrial Holdings Ltd 10% 38,685,718 0.16%AECI Ltd 10% 36,553,496 0.15%Tsogo Sun Holdings Ltd 10% 27,767,848 0.11%Motus Holdings Ltd3 10% 26,272,001 0.11%Other 10% 331,399,923 1.36%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed 15% 29,409,548 0.12%Sep 19 ALSI 5% 11,535,040 0.05%Comair Ltd 5% 4,796,600 0.02%RECM & Calibre Ltd 5% 3,337,066 0.01%Hulamin Ltd 5% 2,361,364 0.01%Zarclear Holdings Ltd 5% 1,506,320 0.01%Other 5% 5,873,158 0.02%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange 15% 28,841,215 0.12%SA Taxi B Preference Shares 2.5% 27,856,284 0.11%Zambezi Platinum RF Ltd 2.5% 573,403 0.00%Q400 Leasing Facility 2.5% 411,527 0.00%Ardor SA Ltd 2.5% 1 0.00%

3.2 Foreign 4,631,802,143 19.00%

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

SARBmax.limits 4,622,856,618 18.97%

a(i) Issuer market capitalisation of R20 billion or more, or anamount or conditions as prescribed

SARBmax.limits

4,126,194,396 16.93%

Nedgroup Investments Funds Global Equity 15% 916,836,036 3.76%Hosking Global Funds 15% 831,413,581 3.41%Orbis SICAV Global Balanced Fund, Core RRF ShareClass M-14

15% 509,993,789 2.09%

Franklin Mutual Global Discovery Fund 15% 501,463,824 2.06%Coronation Global Emerging Markets 15% 464,846,516 1.91%Other 15% 901,640,650 3.70%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed

SARBmax.limits

39,156,415 0.16%

All Seasons Specialist Fund 10% 19,447,340 0.08%Other 10% 11,211,548 0.05%Largest Issuer: Contrarius Global Equity Fund 10% 5,549,657 0.02%Coronation Global Emerging Markets 10% 2,386,547 0.01%Largest Issuer: GCP Infrastructure Investments 10% 561,323 0.00%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed

SARBmax.limits

457,505,807 1.88%

Drakens Africa ex SA UCITS Fund 5% 232,562,004 0.95%Sanlam Africa Frontiers Fund 5% 216,020,310 0.89%Largest issuer: Ishares Exchange Traded Funds 5% 5,684,050 0.02%All Seasons Specialist Fund 5% 1,651,594 0.01%

Carried forward 22,067,049,153 90.56%




Fair value%

Brought forward 22,067,049,153 90.56%Other 5% 1,587,849 0.01%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange

10%8,945,525 0.04%

Largest Issuer: Coronation Global Equity Select Fund 2.5% 3,535,414 0.01%Orbis SICAV Global Balanced Fund, Core RRF ShareClass M-14

2.5% 1,862,586 0.01%

Largest Issuer: Ishares Exchange Traded Funds 2.5% 1,574,212 0.01%Other 2.5% 1,973,313 0.01%

4 IMMOVABLE PROPERTY 1,093,288,232 4.49%

4.1 Inside the Republic 25% 951,380,844 3.90%(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% 912,680,844 3.74%

a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 25% 779,334,062 3.20%Growthpoint Properties Ltd 15% 159,252,621 0.65%NEPI Rockcastle Plc 15% 108,945,887 0.45%Redefine Properties Ltd 15% 74,301,180 0.30%Resilient REIT Ltd 15% 66,525,652 0.27%Vukile Property Fund Ltd 15% 56,778,706 0.23%Other 15% 313,530,016 1.29%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 25% 110,743,092 0.45%Lighthouse Capital Ltd 10% 30,621,656 0.13%Attacq Ltd 10% 15,375,331 0.06%Accelerate Property Fund Ltd 10% 11,662,939 0.05%Redefine International REIT Plc 10% 9,790,924 0.04%Emira Property Fund Ltd 10% 8,436,353 0.03%Other 10% 34,855,889 0.14%

a(iii) Issuer market capitalisation of less than R3 billion or anamount or conditions as prescribed 25% 22,603,690 0.09%Dipula Income Fund Ltd - A 5% 8,241,000 0.03%Fairvest Property Holdings Ltd 5% 4,158,830 0.02%Rebosis Property Fund Ltd - A 5% 2,651,982 0.01%Texton Property Fund Ltd 5% 2,049,353 0.01%Tower Property Fund Ltd 5% 1,896,000 0.01%Other 5% 3,606,525 0.01%

(b) Immovable property, preference and ordinary shares inproperty companies, and linked units comprising shareslinked to debentures in property companies, not listed onan exchange 15% 38,700,000 0.16%Princess Properties 5% 38,700,000 0.16%

4.2 Foreign 25% 141,907,388 0.58%(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% 141,824,915 0.58%

a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 25% 21,940,836 0.09%Orbis SICAV Global Balanced Fund, Core RRF ShareClass M-14

15% 12,683,324 0.05%

Largest Issuer: Unibail Rodanco Plc 15% 679,183 0.00%Largest Issuer: Unibail Rodanco Plc 15% 289,085 0.00%Other 15% 8,289,244 0.03%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 25% 403,825 0.00%Largest Issuer: Empiric Student Property Plc 10% 250,732 0.00%Largest Issuer: Sakura Sogo Reit Investment Corporation 10% 89,411 0.00%Other 10% 63,682 0.00%

Carried forward 23,051,308,032 94.58%




Fair value%

Brought forward 23,051,308,032 94.58%a(iii) Issuer market capitalisation of less than R3 billion or an

amount or conditions as prescribed25%

119,480,254 0.49%Nedgroup Investments Funds Global Property 5% 119,399,810 0.49%Largest Issuer: Aspen Group 5% 80,444 0.00%

(b) Immovable property, preference and ordinary shares inproperty companies, and linked units comprising shareslinked to debentures in property companies, not listed onan exchange 15% 82,473 0.00%Largest Issuer: Merlin Properties Socimi SA 5% 41,924 0.00%Other 5% 40,549 0.00%

5 COMMODITIES 76,216,163 0.31%

5.1 Inside the Republic 10% 30,350,695 0.12%(a) Kruger Rands and other commodities on an exchange,

including exchange traded commodities 10% 30,350,695 0.12%a(i) Gold (including Kruger Rands) 10% 8,284,366 0.03%

New Gold Issuer Ltd 10% 8,284,366 0.03%a(ii) Other commodities 5% 22,066,329 0.09%

New Gold Platinum ETF 5% 15,440,315 0.06%Africa Platinum Debenture 5% 6,626,014 0.03%

5.2 Foreign 10% 45,865,468 0.19%(a) Gold and other commodities on an exchange, including

exchange traded commodities 10% 45,865,468 0.19%a(i) Gold 10% 1,167,709 0.00%

Gold Bullion Securities 5% 1,167,709 0.00%a(ii) Other commodities 5% 44,697,759 0.18%


5% 44,613,370 0.18%

Ishares Exchange Traded Funds 5% 84,389 0.00%

6 INVESTMENTS IN THE BUSINESS OF APARTICIPATING EMPLOYER INSIDE THE REPUBLICIN TERMS OF:- - 0.00%

(a) Section 19(4) of the Pension Funds Act - 0.00%

(b) To the extent it has been allowed by an exemption interms of section 19(4A) of the Pension Funds Act - 0.00%

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

95% 25,132,140 0.10%

8 HEDGE FUNDS, PRIVATE EQUITY FUNDS AND ANYOTHER ASSET NOT REFERRED TO IN THISSCHEDULE 1,099,398,855 4.51%

8.1 Inside the Republic 15% 957,069,959 3.93%(a) Hedge fund 10% 909,279,567 3.73%a(i) Funds of hedge funds 10% 896,610,512 3.68%

Blue Ink Fixed Interest FoHF 5% 384,125,611 1.58%Edge RCIS Absolute Return RHF Class D 5% 298,130,966 1.22%Edge RCIS Matador RHF Class E 5% 214,353,935 0.88%

a(ii) Hedge funds 10% 12,669,055 0.05%Coronation Presidio Hedge Fund 2.5% 8,211,859 0.03%Coronation Granite Plus Hedge Fund 2.5% 4,457,196 0.02%

(b) Private equity funds 10% 72,524,991 0.30%b(i) Funds of private equity funds 10% - 0.00%b(ii) Private equity funds 10% 72,524,991 0.30%

Vantage Mezzanine III Southern African Sub Fund 2.5% 72,524,991 0.30%(c) Other assets not referred to in this schedule and excluding

a hedge fund or private equity fund 2.5% (24,734,599) (0.10)%Mar 20 DTOP 2.5% 11,007,560 0.05%Jun 20 DTOP 2.5% 9,595,320 0.04%

Carried forward 24,274,626,500 99.59%




Fair value%

Brought forward 24,274,626,500 99.59%Mar 20 DTOP 10130 P 2.5% 5,779,064 0.02%Jun 20 DTOP 10000 P 2.5% 5,611,957 0.02%Oct 19 DTOX 9740 P 2.5% 859,564 0.00%Other 2.5% (57,588,064) (0.24)%

8.2 Foreign 15% 142,328,896 0.58%(a) Hedge fund 10% - 0.00%a(i) Funds of hedge funds 10% - 0.00%a(ii) Hedge funds 10% - 0.00%(b) Private equity funds 10% 142,328,896 0.58%b(i) Funds of private equity funds 10% - 0.00%b(ii) Private equity funds 10.0% 142,328,896 0.58%

Vantage Mezzanine III Pan African Sub Fund 2.5% 142,328,896 0.58%(c) Other assets not referred to in this schedule and excluding

a hedge fund or private equity fund 2.5% - 0.00%

TOTAL ASSETS – REGULATION 28 24,371,617,917 100.00%



INVESTMENT SUMMARY (Regulation 28)Local Fair value Foreign

(Excluding Africa)Fair value Africa Fair value Total

R % R % R % R1 Balances or deposits, money market instruments

issued by a bank including Islamic liquiditymanagement financial instruments 2,994,810,459 11.85 335,800,015 1.33 22,457,458 0.09 3,353,067,932

2 Debt instruments including Islamic debt instruments 5,816,616,052 23.02 541,181,763 2.14 - - 6,357,797,8153 Equities 7,734,914,637 30.62 4,183,219,829 16.56 448,582,314 1.78 12,366,716,7804 Immovable property 951,380,844 3.77 141,907,388 0.56 - - 1,093,288,2325 Commodities 30,350,695 0.12 45,865,468 0.18 - - 76,216,1637 Housing loans granted to members - section 19(5) 25,132,140 0.10 - - - - 25,132,1408 Hedge Funds, private equity funds and any other

assets not referred to in this schedule 957,069,959 3.79 142,328,896 0.56 - - 1,099,398,8559 Fair value of assets to be excluded

in terms of sub-regulation (8)(b) of Regulation 28 658,053,831 2.60 234,585,657 0.93 - - 892,639,488

TOTAL 19,168,328,617 75.87 5,624,889,016 22.26 471,039,772 1.86 25,264,257,405



BREACHES IN TERMS OF SUB REGULATION 3 OF REGULATION 28

Table 1items

Asset Limits in terms of sub regulation 3(f) Total (Inside &Foreign)

R

Percentage ofFair value

%

Regulation 28limits

2.1(e)(ii) Other debt instruments not listed 1,216,798,198 4.82 3.1(b) Equities not listed 37,786,740 0.15 4.1(b) Immovable properties not listed 38,782,473 0.15 8 Hedge funds , Private Equity funds and other assets 1,099,398,855 4.35

TOTAL 2,392,766,266 9.47 35

Table 1items

Asset Limits in terms of sub regulation 3(g) Fair valueR

Fair value%

Regulation 28limits

3.1(b) Equities not listed 37,786,740 0.15 8.1(b) Private Equity funds 214,853,887 0.85

TOTAL 252,640,627 1.00 15

Table 1items

Asset Limits in terms of sub regulation 3(h) Fair valueR

Fair value%

Regulation 28limits

1.1 Item 1.1 Cash and deposits with a South African Bank 2,994,810,456 11.85 2.1(c) Item 2.1(c) Debt instruments guaranteed by a South

African Bank 203,814,662 0.81

TOTAL 3,198,625,118 12.66 25

The Fund had no breaches in terms of Regulation 28.

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