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ANNEXURE “A”
ANNUAL FINANCIAL STATEMENTS (Large/ Private Fund)
NAME OF RETIREMENT FUND: GERMISTON MUNICIPAL RETIREMENT FUND
FINANCIAL SERVICES BOARD
REGISTRATION NUMBER:
12/8/382
SOUTH AFRICAN REVENUE
SERVICES APPROVAL NUMBER:
12/20/4/999999
FOR THE PERIOD: 1 JULY 2014– 30 JUNE 2015
CONTENTS
SCHEDULE PAGE
A Regulatory Information* 2
B Statement of Responsibility by the Board of Fund* 10
C Statement of Responsibility by the Principal Officer* 11
D Report of the Independent Auditors 12
E Report of the Board of Fund* 14
F Statement of Net Assets and Funds 25
G Statement of Changes in Net Assets and Funds 26
HA Notes to the Financial Statements 28
HB Report of the Valuator – Statutory Valuation Report as at 30 June 2013* 47
- Interim Valuation Report as at 30 June 2015* 50
IA Investment Schedule pertaining to Annual Financial Statements* 53
IA Notes to the Investment Schedule IA 54
(* Not subject to Audit)
GERMISTON MUNICIPAL RETIREMENT FUND
2
SCHEDULE A
REGULATORY INFORMATION For the period ended 30 June 2015
1. REGISTERED OFFICE OF THE FUND
Address of Registered Office Postal Address
1st Floor Old Mutual Building
98 President Street
Germiston
1401
PO Box 15753
Lambton
1414
Telephone number: +27 (11) 873 – 0900
Fax number: +27 86 650 6381
2. FINANCIAL REPORTING PERIOD
Current: 1 July 2014 to 30 June 2015
Previous: 1 July 2013 to 30 June 2014
3. BOARD OF FUND
Full Name E-mail address Capacity* Date Appointed
or Re-appointed
Date Resigned
Mr. David A Renke [email protected] M/C November 1996 March 2015
Mr. Andre Muller [email protected] M November 2005
Mr. William Van
Reenen Valentin
[email protected] M May 1996
Mr. Coenraad PH
Mocke
none M November 2006
Mr. Carl L Buhr [email protected] M/C April 2008
Mr. Allan G Smith [email protected] M February 2014
Mrs. Marie du Plessis [email protected] M November 2007 16 July 2014
Mr. Josias N Maloka [email protected] M November 2012 November 2014
Mrs. Regina Heenop None M November 2014
Mrs. Mariana Botha [email protected] M November 2014
Mr. Burger Hoffman [email protected] M May 2015
Clr. Makgoba A Kgopa [email protected] E May 2004
Clr. Robert Mashego [email protected] E November 2014
Clr. Faith Mahloma [email protected] E November 2014
Clr. Mahlomola
Mabote
[email protected] E November 2014
Clr. Chris Swanepoel [email protected] E November 2014
Clr. Alco Ngobese [email protected] E November 2014
* M – Member Elected/E – Employer Appointed/C – Chairperson
GERMISTON MUNICIPAL RETIREMENT FUND
3
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
GOVERNANCE NOTE: SCHEDULE OF MEETINGS HELD BY THE BOARD OF FUND IN TERMS
OF THE RULES OF THE FUND
Meeting Date Place of meeting Quorum (Yes/No)
23 July 2014 Germiston Yes
17 September 2014 Germiston Yes
22 October 2014 Germiston Yes
19 November 2014 Germiston Yes
4 February 2015 Germiston Yes
18 March 2015 Germiston Yes
30 March 2015 Germiston Yes
20 May 2015 Germiston Yes
4. FUND OFFICERS
Details Principal Officer Monitoring Person
Full Name: David Andries Renke David Andries Renke
Date of appointment 1 May 2015 1 May 2015
Postal Address: PO Box 15753
Lambton
1414
PO Box 15753
Lambton
1414
Physical Address: 1st Floor, Old Mutual Building
98 President Street
Germiston, 1401
1st Floor, Old Mutual Building
98 President Street
Germiston, 1401
Telephone Number: +27 (11) 873 - 0900 +27 (11) 873 - 0900
E- mail Address: [email protected] [email protected]
Details Principal Officer Monitoring Person
Full Name: Christoffel Francois Botha Christoffel Francois Botha
Date of Resignation: 30 April 2015 30 April 2015
Postal Address: PO Box 15753
Lambton
1414
PO Box 15753
Lambton
1414
Physical Address: 1st Floor, Old Mutual Building
98 President Street
Germiston, 1401
1st Floor, Old Mutual Building
98 President Street
Germiston, 1401
Telephone Number: +27 (11) 873 - 0900 +27 (11) 873 - 0900
E- mail Address: [email protected] [email protected]
GERMISTON MUNICIPAL RETIREMENT FUND
4
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICE PROVIDERS
Details Actuary Investment Advisors
Full Name: Alexander Forbes Financial Services
Proprietary Limited
ACSIS Limited
Responsible Person: Ms. Denise Higgins Mr. Andrew J Davison
Postal Address: PO Box 2435
Pretoria
0001
PO Box 650140
Benmore Gardens
2010
Physical Address: Alexander Forbes Building 189 Clarke Street, cnr Clarke & Fehrsen
Streets
Brooklyn
Pretoria
2nd Floor Umnotho Building Old Mutual Square
93 Grayston Drive
Sandton
2196
Telephone Number: +27 (12) 452 7335 +27 (11) 217 1118
Registration no.
Or Qualification
Honours B.Com (Actuarial Science) Cum Laude
Fellow of the Actuarial Society of South Africa
Fellow of the Institute of Actuaries
FAIS 588
Details Benefit Administrator Auditors
Full Name: Germiston Municipal Retirement Fund Deloitte & Touche
Postal Address: PO Box 15753
Lambton
1414
Private Bag X6
Gallo Manor
Johannesburg, 2052
Physical Address: 1st Floor Room 12
Old Mutual Building
98 President Street
Germiston
1401
Building 8 Deloitte Place
20 Woodlands Drive
Woodmead
2052
Telephone Number: +27(11) 873 - 0900 +27(11) 806 2000
E – mail Address: [email protected] [email protected]
Registration no.: Self Administered Registered Auditors
GERMISTON MUNICIPAL RETIREMENT FUND
5
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICES PROVIDER (CONTINUED)
Details Investment Administrator Investment Administrator
Full Name: Coronation Fund Managers Investec Asset Management Proprietary
Limited
Postal Address: PO Box 44684
Claremont
7735
PO Box 1655
Cape town
8000
Physical Address: 7th Floor, Montclare Place
Cnr Campground and Main Roads
Claremont
7708
36 Hans Strijdom Ave
Foreshore
Cape Town
8001
Telephone Number: +27(21) 680 2206 or +24(21) 680 2427 +27(21) 416 1933
E – mail Address: [email protected] or
FAIS Registration no.: 548 587
Details Investment Administrator Investment Administrator
Full Name: Prescient Investment Management
Proprietary Limited
Momentum Asset Management
Proprietary Limited
Postal Address: PO Box 31142
Tokai
7966
Private Bag 9959
Sandton
2146
Physical Address: Prescient House, The Terraces
Steenberg Office Park
Steenberg Boulevard
Cape Town
7945
4 Merchant Place
1 Fredman Drive
Sandton
2146
Telephone Number: +27 (21) 700 5381 +27 (11) 505 1274
E – mail Address: [email protected] [email protected]
FAIS Registration no.: 612 623
GERMISTON MUNICIPAL RETIREMENT FUND
6
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICES PROVIDER (CONTINUED)
Details Investment Administrator Investment Administrator
Full Name: Allan Gray Limited Pimco Global Bond Fund
Postal Address: PO Box 51318
V & A Waterfront
Cape Town 8002
Block D, Iveagh Court,
Harcourt Road
Dublin 2 Ireland
Physical Address: Granger Bay Court
Beach Road
V & A Waterfront
Cape Town
8001
Block D, Iveagh Court,
Harcourt Road
Dublin 2
Ireland
Telephone Number: +27 (21) 415 2300 +35 3 1 407 3621
E – mail Address: [email protected] [email protected]
FAIS Registration no.: 6663 42071
Details Investment Administrator Investment Administrator
Full Name: Kagiso Asset Management Proprietary
Limited
Catalyst Fund Managers SA Proprietary
Limited
Postal Address: PO Box 1016
Cape Town
8000
PO Box 44845
CLAREMONT
7735
Physical Address: Fifth Floor MontClare Place
Cnr. Campground and Main Roads
Claremont
7708
4th Floor Protea Place
Protea Rd
Claremont
7708
Telephone Number: +27(21) 673 6307 +27(21) 657 5500
E – mail Address: [email protected] [email protected]
FAIS Registration no.: 784 36009
GERMISTON MUNICIPAL RETIREMENT FUND
7
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICES PROVIDER (CONTINUED)
Details Investment Administrator Investment Administrator
Full Name: Liberty Corporate Old Mutual Life Assurance Company (SA)
Limited
Postal Address: PO Box 2094
Johannesburg 2000
PO Box 2444
Saxonwold 2132
Physical Address: Libridge Building, 9th Floor
25 Ameshoff Street
Braamfontein
2017
Mutual Square
93 Grayston Drive
Sandton
2196
Telephone Number: +27(11) 408 5518 +27(11) 217 1792
E – mail Address: [email protected] [email protected]
Registration no.: FAIS 2409 FSP 26/10/703
Details Investment Administrator
Full Name: Ginsglobal Index Funds (Mauritius)
Limited
Postal Address: PO Box 44487
Claremont
7735
Physical Address: 7 Noreen Ave
Newlands
7700
Telephone Number: +27(21) 671 5091
E – mail Address: [email protected]
Registration no.: Approved in terms of CISCA (Collective
Investment Scheme Control Act, 2002)
GERMISTON MUNICIPAL RETIREMENT FUND
8
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICES PROVIDER (CONTINUED)
Details Custodians Custodians
Full Name: Nedbank Investor Services Standard Bank Nominees (Tvl) Proprietary
Limited
Postal Address: PO Box 1144 Johannesburg
2000
PO Box 2453 Johannesburg
2001
Physical Address: Nedbank Investor Services
2nd Floor
Forum IV
33 Hoofd Street
Braampark
Braamfontein
2nd Floor
25 Sauer Street
Johannesburg
2001
Telephone Number: +27 (11) 667 1374
+27 (11) 667 1309
+27 (11) 636 8647
E – mail Address: [email protected] [email protected]
Registration no.: FSB 9363 FAIS 1949/033444/07
Details Risk Managers Risk Managers
Full Name: Camargue Underwriting Managers Proprietary
Limited
Santam Limited
Postal Address: Postnet Suite 250
Private Bag X4
Bedfordview
2008
PO Box 3881
Tyger Valley
7536
Physical Address: Camargue House
33 Glenhove Rd
Melrose East
Johannesburg
2196
1 Sportica Crescent
Tyger Valley
Bellville
7530
Telephone Number: +27 (11) 778 9140 +27(21) 915 7000
E – mail Address: [email protected] [email protected]
Registration no.: FSP 6344 FSP 3416
GERMISTON MUNICIPAL RETIREMENT FUND
9
SCHEDULE A
REGULATORY INFORMATION (CONTINUED) For the period ended 30 June 2015
5. PROFESSIONAL SERVICES PROVIDER (CONTINUED)
Details Risk Managers
Full Name: Sanlam Life Insurance Limited
Postal Address: PO Box 1
Sanlamhof 7532
Physical Address: Group Risk Administration
2 Strand Street
Bellville
7530
Telephone Number: +27 (21) 947 8464
E – mail Address: [email protected]
Registration no.: FSP 2759
6. PARTICIPATING EMPLOYERS
The list of participating employers is available for inspection at the Fund’s registered offices.
GERMISTON MUNICIPAL RETIREMENT FUND
10
SCHEDULE B
STATEMENT OF RESPONSIBILITY BY THE BOARD OF FUND For the period ended 30 June 2015
Responsibilities
The Board of Fund hereby confirm to the best of their knowledge and belief that, during the period under review, in the execution of their
duties they have complied with the duties imposed by the Pension Funds Act Legislation and the Rules of the Fund, including the following:
• Ensured that proper registers, books and records of the operations of the Fund were kept, inclusive of proper minutes of all
resolutions passed by the Board; and
• Ensured that proper internal control systems were employed by or on behalf of the Fund, and
• 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 Rules of the Fund; and
• Took all reasonable steps to ensure that contributions were paid timeously to the Fund or reported where necessary in
accordance with Section 13A and Regulation 33 of the Pension Funds Act, 1956; and
• Obtained expert advice on matters where they lack sufficient expertise; and
• Ensured that the Rules and the operation and administration of the Fund complied with the Pension Funds Act, 1956, the
Financial Institutions (Protection of Funds) Act, 2000, and all other applicable legislation, and
• The Fund’s Board of Management confirms that, during the period under review, fidelity cover of R20 million was maintained. The
cover was deemed adequate and in compliance with the Rules of the Fund.
• Investments of the Fund are in accordance with the investment strategy and investment decisions in respect of individual
investment choice.
Approval of the Annual Financial Statements
The Annual Financial Statements of the Germiston Municipal Retirement Fund are the responsibility of the Board of Fund. The Board fulfills
this responsibility by ensuring the implementation and maintenance of accounting systems and practices adequately supported by internal
financial controls. These controls, which are implemented and executed by the Fund and/or its administrators, provide reasonable assurance
that:
• The Fund’s assets are safeguarded, and
• Transactions are properly authorized and executed; and
• The financial records are reliable.
The financial statements set out on pages 25 to 46 have been prepared in accordance with:
• The basis of accounting applicable to retirement funds in South Africa as indicated in the original accounting policies contained
in the notes to the financial statements; and
• The Rules of the Fund; and
• The provisions of the Pension Funds Act in South Africa.
These financial statements have been reported on by the independent auditing firm, Deloitte & Touche, which were given unrestricted
access to all financial records and related data, including minutes of all relevant meetings. The Board of Fund believes that all
representations made to the independent auditors during the audit were valid and appropriate. Deloitte & Touche’s audit report is
presented on page 12.
Instances of Non-Compliance
We are not aware of instances of non-compliance with laws and regulations, including the provisions of laws and regulations that determine
the reported amounts and disclosures in the financial statements.
These financial statements:
• Were approved by the Board of Fund on 21 October 2015 and
• Are certified by them to the best of their knowledge to be true; and to
• Fairly represent the net assets of the Fund at 30 June 2015 as well as the results of its activities for the period then ended;
and
• Are signed on behalf of the Board by:
GERMISTON MUNICIPAL RETIREMENT FUND
11
SCHEDULE C
STATEMENT OF RESPONSIBILITY BY THE PRINCIPAL OFFICER For the period ended 30 June 2015
I confirm that for the period under review the Germiston Municipal Retirement Fund has timeously submitted all
regulatory and other returns, statements, documents and any other information as required in terms of the Pension Funds
Act, 1956 and to the best of my knowledge all applicable legislation where adhered to.
12
13
GERMISTON MUNICIPAL RETIREMENT FUND
14
SCHEDULE E
REPORT OF THE BOARD OF FUND For the period 1 July 2014 to 30 June 2015
The Board hereby presents its report for the period ended 30 June 2015.
1. DESCRIPTION OF FUND
1.1 Type of fund
In terms of section 1 of the Income Tax Act, 1962, the Fund is classified as a pension fund. The Fund was
established as a defined benefit pension fund. Since conversion of the Fund in May 1994 the Fund is now a hybrid
that has both defined benefit and defined contribution features.
In terms of regulation 30(2)(t)(ii) of the Regulations to the Pension Funds Act, the Fund operates as a Type B
umbrella fund with effect from 11 January 2012.
1.2 Benefits
1.2.1 Summary in terms of the Rules of the Fund
(a) Normal retirement
- Age 55 – 65 years.
- Full member share as a gratuity payment, or
- Cash portion according to Member discretion, the balance transferred to an annuity
product of the Member’s choice.
- Retain Member share/Retirement benefit in the Fund until income from retirement
funds is required. Stay on as a Deferred Retiree.
(b) Resignation benefits
- Members’ share in cash or a deferred annuity with the Fund or insurer.
(c) Death benefits
Members that entered service before 1 July 2012:
- Annuity: 50% of monthly remuneration as monthly pension to a qualifying spouse.
- Qualifying children: 15 – 25% of member’s monthly remuneration. - Gratuity: 2 x annual remuneration, plus 1 x annual remuneration for every six years
continuous service after 12 years plus if the cost of the pensions purchased to the
qualifying spouse and children is less than the value of the Fund Credit at the date
of death, the balance shall become payable as a lump sum.
Members that entered service after 1 July 2012:
- Gratuity: 2 x annual remuneration, plus 1 x annual remuneration for every six years
continuous service after 12 years.
- Plus the Member’s Fund Credit paid as part of the gratuity amount.
(d) Medical disability
- Due to ill health: Member’s Fund Credit in cash.
- Total and permanently disabled: Monthly pension equal to 75% of monthly salary,
until the member reach the age of 65. At the age of 65, the member will retire
from the Fund, at which time the member’s retirement benefits will be calculated
on the basis of the Member’s Fund Credit in the Fund.
GERMISTON MUNICIPAL RETIREMENT FUND
15
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
1.2 Benefits (continued)
(e) Resignation as a result of re-organization
A lump sum benefit equal to:
(a) The Member’s Fund Credit at the date of leaving Service; plus
(b) An additional amount to be paid by the Employer, which is equal to the lesser of
(i) The value as calculated by the Actuary of the difference between the
Member’s Normal Retirement Date and the member’s age on the
member’s next birthday, multiplied by 8%, multiplied by the Member’s
Fund Credit; and
(ii) 100% of the Member’s Fund Credit.
(f) Death of pensioners
- Annuity: Full pension for the unexpired period of 60 months from the date of
retirement to the eligible spouse. After 60 months 75% of that pension.
- Qualifying children: A pension 15 – 25% of the pensioner’s pension.
(g) Death of pensioner (defined benefit section)
- In terms of the previous rules 25(2)(a), 25 (2)(b) and 16 (12) an annuity and a
gratuity are payable to the eligible spouse under certain specific conditions.
- A qualifying child/children will receive a pension in accordance with Rule 25(2)(b)
and 16(12).
1.2.1 Unclaimed benefits:
1.2.1.1 The Fund maintains a separate record in respect of any benefit due under the Fund which is
not claimed within 24 months as per the Pension Funds Act. If a potential Beneficiary
approaches the Fund at any stage the Fund shall pay to the Beneficiary his benefit, increased by call interest, that as at the date of payment to the Beneficiary is in excess of any costs
incurred by the Fund in the administration of such benefit and any amount referred to in Rule
18.9. If a person to whom an amount is payable cannot be traced, any such amount shall be
dealt with in terms of Rule 11.1.4.
1.2.2 Beneficiary benefits:
On 25 November 2009 the Board of Fund approved an administration agreement with Standard
Executors and Trustees Limited (SET) and the Fund.
Section 37C of the Pension Funds Act confers discretion to the Trustees of a pension fund as to how
and to whom a death benefit may be paid, which discretion includes payment to a pension beneficiary
fund for the benefit of a dependant. SET has registered the Standard Umbrella Beneficiary Fund in
terms of the Pension Funds Act.
GERMISTON MUNICIPAL RETIREMENT FUND
16
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
1.3 Contributions
1.3.1 Members’ contributions in terms of Rule 4.1
Members have an option to select a contribution rate of 7,5% or the default rate of minimum
9,8833% of pensionable salary depending on the age of the member on date of joining the
Fund. Maximum contribution is 12,3833%
Members from the Germiston Provident Fund who joined the Fund on 1 July 1995 as a result
of a merger were allowed a choice to retain their contribution rate that varied between 5%
and 10% before 1 July 1995 or to contribute according to the Fund’s standardized
contribution rate.
Members may also make additional voluntary contributions as per the Rules of the Fund.
1.3.2. Participating employers’ contribution in terms of Rule 4.2
Members that entered service before 1 July 2012:
Participating employers contribute at a rate of 26,7833%.
- 20.0% Retirement benefits
- 5,5833% Risk benefits
- 1,2% Bonus service
Members that entered service after 1 July 2012:
Participating employer contribute at a rate of 18%
- 14.2% Retirement benefits
- 3.8% Risk benefits
1.4 Rules/ Amendments
1.4.1 Rule Amendments
Rule
Amendment
No
Motivation and description of rule
amendment
Date of Board
of Fund’s
resolution
Effective date Date registered
by the Financial
Services Board
Amendment
No 3
(1) To clarify the practice of the Fund with regard to when late payment interest becomes payable and the rate at which late payment interest is paid, (2) To provide that the Chairman and Vice Chairman of the Trustees are elected annually and that accordingly they have a term of office of one year;
1 August 2014 29 September
2014
29 September
2014
* All rule amendments are available for inspection at the Fund’s registered office.
GERMISTON MUNICIPAL RETIREMENT FUND
17
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
1.5 Reserves and specified accounts established in terms of the Rules of the Fund
1.5.1 The reserve accounts comprises of the following accounts:
i. Risk and Expenses Reserve: To provide death and disability benefits to members and to
finance the administration costs of the Fund.
ii. Bonus Service Reserves: To provide for the payment of a bonus to members for both twenty
and twenty five years continuous service, excluding Members who enter the service after 1
July 2012.
iii. Solvency Reserve – Members: To provide a cushion between the total level of assets allocated
to back the liability of bonus service and disability and death.
iv. Processing Error Reserve: To provide protection against mismatches that occur between the
actual investment or disinvestment of monies and when they are deemed to have occurred in
the calculation of benefits
1.5.2 The Fund accounts comprises of the following:
i. Pensions Account: used to meet the liability of the fund in respect of Pensions in payment
from the Fund and Pensions that have been purchased from a Registered Insurer.
ii. Fund Credit Account: comprises each Members actuarial liability in the Fund and includes
contributions made by the Employer and Member as well as any additional voluntary
contributions made by the Member.
iii. Employer Surplus Account: any amounts allocated in terms of Section 15C(1) of the Act
iv. Member Surplus Account: any amounts allocated in terms of Section 15C(1) of the Act
2. INVESTMENT REPORT
2.1 Investment strategy
The Board of Fund has adopted a medium to long-term horizon in formulating the Fund’s Investment
strategy that complies with the requirements of Regulation 28 of the Pension Funds Act.
2.1.1 General
The investment philosophy of the Fund focuses on providing inflation-beating returns over
the medium to long term, as this is key to providing reasonable benefits to members at
retirement.
2.1.2 Individual Member Choice
The Fund’s investment strategy provides Members with a choice between the following
portfolios:
• Market Portfolio (CPI + 5%) – this is a balanced portfolio with a composite
benchmark as well as an inflationary target of CPI + 5% over rolling 5 year periods.
This portfolio is suitable for the majority of members who have a long term
investment horizon and whose primary concern is beating inflation by a reasonable
margin. The portfolio invests predominantly in growth assets, which may be volatile
so losses of capital are possible.
GERMISTON MUNICIPAL RETIREMENT FUND
18
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.1 Investment strategy (continued)
2.1.2 Individual Member Choice (continued)
• Stable Portfolio CPI + 3%) – this is an absolute return portfolio that targets CPI +
3% over rolling 3 year periods. It focuses primarily on capital preservation with
reasonable growth and is suitable for investors with a medium term investment
horizon who aim to limit the volatility of their capital.
• Money Market Portfolio – this portfolio is invested in cash and near cash
instruments. The portfolio is benchmarked against STeFI composite and it has an
inflationary target of CPI + 1% over any 12 month period. This portfolio is suitable
for those members with a very short time horizon who are looking for a high degree
of capital security. It is not suitable for younger members.
The Members of the Fund can select a combination of the Market, Stable and Money Market
Portfolios. For those members that do not make a choice, their assets will be invested in the
default investment strategy.
The default investment strategy is a Life Stage Model. This Model aims to balance the risk
and return objectives of Members as they progress toward the normal retirement age of the
Fund. The Life Stage Model migrates the Member from the Market Portfolio at younger ages
to the Stable Portfolio as they approach retirement, ending up in the Money Market Portfolio
just before retirement. This is illustrated in the graph below.
The Fund’s default Life Stage Model is designed for Members who plan to retire at age 65.
Members who plan to retire at a different age are encouraged to make their own investment
choice to coincide with their planned retirement date.
The Market and Stable portfolios are managed by different asset managers and consists of
different types of investments. This ensures that members’ assets are not all invested in one
place, which could be risky. Spreading risk in this way ensures a more consistent level of
return over time.
Members are allowed to make changes to their investment strategy once per annum on the 1st of June. Members who make their own selection will not be subject to the automatic switches
as per the Life Stage Model.
Members are encouraged to carefully consider their own circumstances and retirement goals
so as to make an investment choice that best suits their needs. The trustees encourage
members to take a long term view when saving for retirement and to remain invested through
the ups and downs, accepting that some volatility is to be expected.
GERMISTON MUNICIPAL RETIREMENT FUND
19
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.1 Investment strategy (continued)
It is important to also keep in mind that a member’s investment time horizon measures beyond
their retirement date. In order to provide for retirement income, members’ monies still need
to be invested in the markets during retirement. This therefore means that a member’s
investment time horizon is relatively long even as they approach retirement and it is important
to allow for the 15 – 25 years that a member might spend in retirement when determining a
member’s time horizon.
The benchmarks and inflationary objectives stated above are targets for each portfolio over
different time periods and performance is not guaranteed.
2.1.3 Unclaimed Benefits
Unclaimed benefits are invested in the call account of the Fund.
2.1.4 Surplus Apportionment Allocations
Surplus payable to Former Members and Employer Surplus are invested in the money market
with Investec.
2.1.5 Reserve Accounts
Reserve accounts are invested in the Market Portfolio of the Fund.
2.1.6 Settlement Income
Settlement income is invested in line with the Investment Strategy.
2.1.7 Derivative Instruments
The Board of Fund utilizes derivative instruments as part of their investment strategy. The
Board of Fund ensures that the following 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 Trustees 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.
2.1.8 Hedge Funds
The Board of Fund utilises hedge funds as part of their investment strategy. The Board of
Fund ensures that the following 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.
GERMISTON MUNICIPAL RETIREMENT FUND
20
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.1 Investment strategy (continued)
2.1.9 Private Equity Funds
The Board of Fund does not utilize private equity funds as part of their investment strategy.
2.1.10 Securities Lending Transactions
The Board of Fund does not utilize securities lending transactions as part of their investment
strategy.
2.2 Management of investments
As at 30 June 2015, the investments under management of the Fund totalled over R2,5 billion as
summarized in the table below:
Market Value
R
Allocation
Market Portfolio 1,922,397,556 75%
Stable Portfolio 267,384,596 10%
Money Market Portfolio 66,078,592 3%
Money Market Portfolio 2 28,086,806 1%
Pensioner Policies 271,108,140 11%
2,555,055,690 100%
The Market Portfolio:
The Market Portfolio has a strategic asset allocation across various asset classes, both local and
international. Within those asset classes, there is diversification across asset managers, each with a
specialist mandate. The pie chart below illustrates the composite benchmark of the Market Portfolio, which
mirrors the strategic allocation.
• SWIX is the Shareholder Weighted Index, and is an index for local equity
• ALBI is the All Bond index, and is an index for local bonds
• CPI is Consumer Price Inflation, where CPI + 3% is the target return for the absolute return
mandates • SAPY is the index for South African Listed Property
• STeFI Composite is the local cash index
• MSCI is the global index for developed market equity
• BCGA is the Barclays Capital Global Aggregate Index for international bonds.
GERMISTON MUNICIPAL RETIREMENT FUND
21
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.2 Management of investments (continued)
The table below shows the performance of the portfolio (net of fees) against the composite benchmark as
well as the inflationary target as at 30 June 2015:
Market Portfolio Composite Benchmark CPI + 5%
3 months 0.4% 0.1% 3.9%
1 year 5.5% 11.5% 9.8%
3 year annualised 18.6% 19.6% 10.8%
5 year annualised 17.0% 18.1% 10.8%
The performance in the 12 months to 30 June 2015 was challenging. None of the domestic equity managers outperformed the target of SWIX +2.5%, with Kagiso delivering a negative return during this period.
This trend continued into the global equity space, with Orbis underperforming its benchmark significantly
and GinsGlobal coming in 0.6% behind its benchmark.
Out of the two domestic absolute return managers, Coronation outperformed the CPI +3% target, while
Prescient detracted from performance during the year.
Amongst the asset classes listed, property was a star performer for the year and Catalyst outperformed
the listed property benchmark by a handsome margin for the 12 months ending 30 June 2015.
The Market Portfolio is the most aggressive of the member investment options and has the highest allocation to growth assets like listed property and equity. Although these asset classes have provided
strong returns in the medium to long run, it might be prudent for members to revise their performance
expectations downwards going forward.
The Stable Portfolio:
This portfolio consists of two managers, Coronation and Prescient. Both of these managers have absolute
return mandates, which mean they aim to deliver positive returns in all market conditions. It is important to
note that this is an aim and there may be times where the portfolio could sustain losses.
The two managers each construct and manage their portfolios differently. Coronation has a low risk global
balanced portfolio that targets positive real returns consistently over time with an overriding focus on
limiting losses. Prescient actively manages the asset allocation and uses derivatives to actively protect
against severe market falls in order to benefit from upside performance while also protecting against severe downside risk.
Although there is underperformance of the inflationary benchmark in the 12 months to 30 June 2015, the
Stable Portfolio has delivered solid performance in the medium to long term. The table below illustrates
the performance of the Stable Portfolio for various periods to 30 June 2015:
Stable Portfolio CPI + 3%
3 moths 0.1% 3.4%
1 year 6.1% 7.7%
3 year annualized 10.2% 8.7%
5 year annualized 8.9% 8.7%
The Money Market Portfolio:
The assets are invested in the Investec Money Market Fund, with performance benchmarked against the
STeFI Composite as well as an inflationary objective of CPI + 1%. The table below shows the performance
of the portfolio against its benchmark as well as the inflationary target as at 30 June 2015.
GERMISTON MUNICIPAL RETIREMENT FUND
22
SCHEDULE E
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.2 Management of investments (continued)
Money Market
Portfolio
STeFI Composite CPI + 1%
3 months 1.7% 1.6% 2.9%
1 year 6.4% 6.3% 5.6%
3 year annualised 6.4% 5.7% 6.6%
5 year annualised 6.7% 5.7% 6.6%
The portfolio is conservatively managed to provide the high degree of liquidity that is required. While
performance against the benchmark has been good, the portfolio has underperformed against the
inflationary objective in the short to medium term.
2.3 Management and performance of investments
The Board of Fund receives Quarterly Performance Reports on the performance of all the
investment managers from the Fund’s Investments Advisors Acsis, which are discussed with
the Investment Advisors in the Board of Fund meetings. Investment managers are called to
present to the Board of Fund on their performance, their current strategy and their
positioning in the market to achieve outperformance of the benchmark in the short to
medium term.
Total Value of Investments Held
2015 2014
Standard Bank R 22,4 million R 19,5 million
Coronation (Equity) R 305,0 million R 334,0 million
Kagiso Asset Managers R 308,1 million R 319,2 million
Momentum Asset Management Propriety Limited R 102,2 million R 102,8 million
Prescient Management Company (Equity) R 104,2 million R 103,0 million
Allan Gray (Equity) R 309,0 million R 309,1 million
Coronation Inflation Plus R 133,9 million R 152,1 million
Investec Money Market R 198,4 million R 192,5 million
Orbis Global Equity Fund R 284,8 million R 298,2 million
PIMCO Global Bond Fund R 82,1 million R 76,5 million
Catalyst R 98,9 million R 93,3 million
Coronation Absolute Returns R 108,6 million R 111,2 million
Prescient Positive Return R 133,5 million R 74,6 million
Ginsglobal R 92,9 million R 80,4 million
Old Mutual (Pensioners Policy) R 9,9 million R 9,8 million
Liberty (Pensioner’s group policy) R 261,1 million R 268,3 million
R 2,555,0 million R 2,544,5 million
GERMISTON MUNICIPAL RETIREMENT FUND
23
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
2.3 Management and performance of investments (continued)
The nature of investments is dynamic. This coupled with the uncertain economic environment globally
means that there is no guarantee that the markets will continue with the stellar performance that
we have experienced in the past two years.
During periods of uncertainty, it is common for investors to try and time the market in an attempt
to avoid losses or to make super-normal profits. We would like to remind members that investing for
retirement is a long term exercise and we encourage members to remain focused on their long term
goals.
3. MEMBERSHIP Active
Members
Deferred
Pensioners/
Retirees
Pensioners
Beneficiaries
Unclaimed
Benefits
At 30 June 2014 1,661 10 56 224 43 Adjustments * (8)
Adjustments ** 5 ***15
Additions 119 3 26 1
Transfers in
Transfers out (1)
Withdrawals (86)
Retirements (33) N/A N/A
Retrenchments N/A N/A
Deaths (14) (9) (5) N/A
Transfers (from)/to pensioners (21) Deferred pensioners/retirees (2) 2
Unclaimed Benefits paid (2)
At 30 June 2015 1,644 12 55 216 57
Number at end of period
(South African citizen)
1,644 12 55 216 57
* Adjustments: Pensions ceased/suspended due to outstanding proof of existence/letters of school
** Adjustments: Pensions reinstated on receipt of proof of study or certificate existence
*** Adjustments: Benefits that were transferred to unclaimed in 2014/2015 which were not included in the
previous year Membership data
4. ACTUARIAL VALUATION
The financial statements summarize the transactions and net assets of the Fund. They do not take account of
liabilities to pay pensions and other benefits in the future. In accordance with the Rules of the Fund, the
actuarial position of the Fund, which does take account of such liabilities, is examined and reported on by the
actuary at intervals not exceeding three years. The last statutory valuation was performed on 30 June 2013 and
the Fund was found to be in a sound financial position. The summary of the actuarial report is contained on page
47 to 49. Subsequent to the statutory valuation above, an interim valuation of the Fund as at 30 June 2014 was
done by the Fund Actuary. The summary of the interim actuarial valuation report as at 30 June 2014 is attached
on page 50 to 52.
5. SURPLUS APPORTIONMENT
A Surplus Apportionment exercise was performed at 30 June 2004. A Nil Scheme was noted by the Financial
Services Board on 27 June 2006.
GERMISTON MUNICIPAL RETIREMENT FUND
24
REPORT OF THE BOARD OF FUND (CONTINUED) For the period 1 July 2014 to 30 June 2015
6. HOUSING FACILITIES
The Fund’s Rules provide for the granting of housing loan guarantees.
Guarantees to members were granted in terms of Rule 14.3.2 and the provisions of Section 19(5) of the Pension
Funds Act, 1956, and are secured by Members’ withdrawal benefits. The loan is limited to 33.33% of the
respective member’s fund credit.
7. INVESTMENT IN PARTICIPATING EMPLOYERS
The Fund holds no direct investments in the participating employers.
8. SIGNIFICANT MATTERS
Included in receivables is an amount of R127,894,322.00 (R70,681,753 Capital, R55,438,700.14 Interest and
R1,773,869.34 legal fees) awarded to the Fund by the North Gauteng High Court in the case 36600/2011
pertaining to the claims in terms of Rule 10.8.1 against the Employer for the 2008/2009 financial years. The
capital amount of the original claim of R78,138,124.00 has been reduced with an amount of R7,456,371.00 by the
Court in respect of that portion of the claim pertaining to the pensioners outsourced to Liberty Life and Old
Mutual in the name of the Fund.
9. ADDITIONAL DISCLOSURE
David Andries Renke was appointed as the Principal Officer with effect of 1 May 2015 after the retirement of
Mr. CF Botha as Principal Officer with effect of 30 April 2014. The appointment of Mr. DA Renke as Principal
Officer was recorded by the Registrar of Pension Funds.
10. SUBSEQUENT EVENTS
The Employer (Ekurhuleni Metropolitan Municipality) applied for leave to appeal against the judgement in terms of Rule 10.8.1 against it in the North Gauteng High Court, Case 36600/2011, which application was dismissed by
the Court with costs on 30 July 2015. The Employer however, filed a plea for leave to appeal directly at the
Master of the Supreme Court in Bloemfontein on 24 August 2015. The outcome of this plea is not yet known.
GERMISTON MUNICIPAL RETIREMENT FUND
25
SCHEDULE F
STATEMENT OF NET ASSETS AND FUNDS As at 30 June 2015
Notes Current period Previous period
2015 2014
R R
ASSETS
Non-Current Assets 2,555,433,671 2,544,531,685
Furniture and Equipment H1 377,981 50,677
Investments H2 2,555,055,690 2,544,481,008
Current Assets 130,294,885 78,422,307
Accounts Receivable H4 129,216,508 78,370,168
Cash at Bank 1,075,338 45,187
Contributions Receivable H12 3,039 6,952
Total Assets 2,685,728,556 2,622,953,992
Members and Pensioners 2,443,279,863 2,403,510,217
Members Individual Accounts 2,046,058,881 1,986,200,404
Pensioners Accumulated Funds 279,800,560 287,530,812
Members Surplus Account - 54,672,916
Amounts to be allocated H23 117,420,422 75,106,085
Reserves H21 202,153,073 176,528,349
Risk reserve 62,589,362 48,006,612
Solvency Reserve 5,924,556 5,583,743Bonus Service Reserve 129,839,584 123,660,315
Processing Error Reserve 3,799,571 (722,321)
Total Reserves 2,645,432,936 2,580,038,566
Non-Current Liabilities 9,694,155 9,865,608
Employer Surplus Account H21 8,822,750 8,299,616
Unclaimed Benefits H9 871,405 1,565,992
Current Liabilities 30,601,465 33,049,818
Transfers Payable H7 - 599,121
Benefits Payable H8 29,989,541 31,918,899
Accounts Payable H10 611,924 531,798
2,685,728,556 2,622,953,992
GERMISTON MUNICIPAL RETIREMENT FUND
26
SCHEDULE G
STATEMENT OF CHANGES IN NET ASSETS AND FUNDS For the period ended 30 June 2015
A B A + B
Notes
Member’s Individual
Accounts & Amounts
to be allocated/
Reserves
Refer Notes 6 and 21
Total
Current period
2015
Total
Previous period
2014
R R R R
Contributions Received and Accrued H12 100,137,484 21,966,512 122,103,996 116,225,202
Net Investment Income H13 56,699,694 131,644,799 188,344,493 486,870,735
Less: Allocated to Unclaimed Benefits H9 - (55,989) (55,989) (118,559)
Other Income H13.1 - 1,938,206 1,938,206 59,408
Plus: Insurance Proceeds - 5,656,512 5,656,512 2,467,176
Less: Administration Expenses H14 (146,385) (4,917,953) (5,064,338) (3,795,013)
Less: Insurance Premiums - (3,789,598) (3,789,598) (3,821,941)
Net Income Before Transfers and Benefits 156,690,793 152,442,489 309,133,282 597,887,008
Transfers and Benefits (219,253,332) (23,962,445) (243,215,777) (191,264,230)
Transfers to Other Funds H7 - (63,050) (63,050) (124,702)
Benefits H8 (219,253,332) (23,899,395) (243,152,727) (191,139,528)
Net Income After Transfers and Benefits (62,562,539) 128,480,044 65,917,505 406,622,778
Funds and Reserves 2,403,510,185 176,528,380 2,580,038,565 2,181,715,403
Balance at Beginning of Period 2,403,510,216 176,528,349 2,580,038,565 2,181,715,403
Prior period adjustments H15 (31) 31
Transfers Between Accounts H21 (12,986,827) 12,986,827 - -
GERMISTON MUNICIPAL RETIREMENT FUND
27
SCHEDULE G
STATEMENT OF CHANGES IN NET ASSETS AND FUNDS (continued) For the period ended 30 June 2015
A B A + B
Notes
Member’s Individual
Accounts & Amounts
to be allocated/
Reserves
Refer Notes 6 and 21
Total
Current period
2015
Total
Previous period
2014
R R R R
Investment Return Allocated 115,319,044 (115,842,178) (523,134) -
Current Members 112,321,623 (112,321,623) - -
Former Members 2,516,452 (2,516,452) - -
Employer Surplus - (523,134) (523,134) -
Member Surplus H21 480,969 (480,969) - -
Transfer between Reserve Accounts
Employer Surplus Account - - (8,299,616)
Balance at End of Period 2,443,279,863 202,153,073 2,645,432,936 2,580,038,565
GERMISTON MUNICIPAL RETIREMENT FUND
28
SCHEDULE HA
NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2015 PRINCIPAL ACCOUNTING POLICIES
The following are the principal accounting policies used by the Fund. These policies have been applied consistently to all years
presented except for the revised prescribed format for annual financial statements published in the Government Gazette
No 37844 dated 18 July 2014.
Purpose and basis of preparation of financial statements The financial statements are prepared in accordance with the Regulatory Reporting Requirements for Retirement Funds in
South Africa, the Rules of the Fund and the provisions of the Pension Funds Act.
The financial statements are prepared on the historical cost and going concern bases, except where specifically indicated
otherwise in the accounting policies below:
Office equipment
• All equipment is stated at historical cost less depreciation.
• Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other decreases are charged to the income statement. Each period the difference between depreciation based on the
revalued carrying amount of the assets (the depreciation charged to the Statement of Changes in Net Assets and
Fund) and depreciation based on the asset’s original cost is transferred from the revaluation reserve to
accumulated funds.
• Depreciation is calculated on the straight line method to write off the cost of each asset, or the re-valued
amounts, to their residual values over their estimated useful life as follows:
Computer equipment and software 2 – 5 years
Office equipment 3 – 8 years Furniture and fittings 10 years
• Gains and losses on disposal of office equipment are determined by reference to their carrying amount and are
taken into 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, are charged against income.
Financial instruments
� Measurement
� Financial instruments include cash and bank balances, investments, receivables, accounts payable, leases
and borrowings.
� Financial instruments are initially measured at cost as of trade date, which includes transaction costs.
Subsequent to initial recognition, these instruments are measured as set out below.
� Investments
Investments are classified as investments at fair value through Statement of Changes in Net Assets and Funds and
are measured at fair value. Gains or losses arising from changes in the fair value are presented in the Statement of
Changes in Net Assets and Funds in the period in which they arise.
GERMISTON MUNICIPAL RETIREMENT FUND
29
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED For the period ended 30 June 2015 PRINCIPAL ACCOUNTING POLICIES - CONTINUED
� Collective investment schemes
Investments in collective investment schemes are subsequently measured at fair value, which is the quoted net
asset value price, as derived by the collective investment scheme administrator, multiplied by the number of units
held.
� Insurance policies
Linked policies Insurance policies linked to listed investments are valued at fair value and are therefore equivalent to market value
of the underlying assets as certified by the Investment Insurers concerned.
Pensioner annuity policies Pensioner annuity policies purchased in the name of the Fund are disclosed as an asset of the Fund and included
under investments. The corresponding pensioner liability is included under funds and reserves. These policies are
valued, equivalent to the financial soundness valuation as certified by the insurer.
� Derivatives
Derivative contracts are entered into mainly to hedge exposure to equities. The parameters are defined in terms
of the investment policy statement approved by the Board of Fund.
� Commodities
Commodities are valued at fair value and includes food, metal, or other fixed physical investments that investors
buy or sell.
� Debt Instruments
Debt instruments are valued at fair value and is a financial instrument requiring fixed rand payments, such as a
government or corporate bond.
� Equities
Listed equities
Equity instruments are subsequently measured at fair value and the fair value adjustments are recognized in the
Statement of Changes in Net Assets and Funds. The fair value of equity instruments with standard terms and
conditions and traded on active liquid markets is based on regulated exchange quoted ruling closing prices at the close of business on the last trading day on or before the date of the Statement of Net Assets and Fund.
Preference Shares: Listed
The fair value of listed preference shares traded on active liquid markets is based on regulated exchange quoted
ruling closing prices at the close of business on the last trading day on or before the date of the Statement of Net
Assets and Funds.
Bills and Bonds
Bills and bonds comprise investments in government or provincial administration, local authorities, participating employers, subsidiaries or holding companies and corporate bonds.
GERMISTON MUNICIPAL RETIREMENT FUND
30
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED For the period ended 30 June 2015
PRINCIPAL ACCOUNTING POLICIES - CONTINUED
� Equities (continued)
Listed bills and bonds
The fair value of listed bills and bonds traded on active liquid markets is based on regulated exchange quoted ruling
closing prices at the close of business on the last trading day on or before the date of the Statement of Net
Assets and Funds.
� Hedge Funds
Hedge funds are valued at fair value.
Accounts receivable and payable
� Accounts receivable are stated at amortized cost less provision for doubtful debts.
� Accounts payable are recognized at amortized cost, namely original debt less principal payments and amortizations.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value.
Provisions
Provisions are recognized when the fund has a present legal or constructive obligation as a result of past events, for which it
is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. Where the effect of discounting to present value is material, provisions are adjusted
to reflect the time value of money.
Reserves
Reserve accounts are accounted for in terms of the Rules of the Fund.
Contributions
Contributions received and accrued
Contributions are measured at the fair value of the consideration received or receivable and are accrued and recognized as
income in accordance with the Rules of the Fund. Contributions received are apportioned between retirement funding and
funding for risk expenses. The apportionment is governed by the Rules of the Fund. Any contributions outstanding at the end
of the reporting period are recognized as a current asset – contributions receivable. Any contributions received in advance
at the end of the reporting period are recognized as a current liability – contributions payable.
Contributions received and accrued only include cash payments from the member and employer.
Voluntary contributions
Voluntary contributions are recognized when they are received for annual payments or accrued where monthly recurring
payments are made. Any contributions outstanding at the end of the reporting period are recognized as a current asset –
contributions receivable. Any contributions received in advance at the end of the reporting period are recognized as a
current liability – contributions payable.
GERMISTON MUNICIPAL RETIREMENT FUND
31
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED For the period ended 30 June 2015
PRINCIPAL ACCOUNTING POLICIES - CONTINUED
Contingent assets
The Fund discloses a contingent asset where, as a result of past event, it is virtually certain that economic benefits will flow
to it, but this will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events which are
not wholly within the Fund’s control.
Dividend income, insurance policy income and interest
• Interest is recognized on a time proportion basis, taking account of the principal outstanding and the effective
rate over the period to maturity, when it is determined that such income will accrue to the fund.
• Insurance policy income are recognized when entitlement to revenue is established.
• Gains and losses on subsequent measurement to fair value of investments and of all other financial instruments are
recognized in the net investment income (after investment expenses) during the period in which the change arises.
Transfers to and from the Fund
Section 14 and 15B transfers to and from the fund are recognized on approval being granted by the Financial Services Board.
Individual transfers are recognized when the individual member’s transfer is received or paid.
Comparatives
Where necessary, the comparative figures have been reclassified to conform to changes in presentation in the current
period.
Benefits
Benefits payable are measured in terms of the Rules of the Fund. Benefit payments are recognized as an expense when they
are due and payable in terms of the Rules of the Fund. Any benefits not paid at the end of the reporting period are
recognized as a current liability – Benefits payable.
Pensioner annuities in the name of the Fund (the asset is addressed as part of investments)
The payment of pensions constitutes the payment of a benefit under benefits awarded. The note disclosure for benefits
awarded requires the payment of pensions to be shown under pensions paid.
The Pensioner Liabilities have been insured with Liberty Life and Old Mutual.
Reserves and Fund Accounts
Reserves and fund accounts are accounted for in terms of the Rules of the Fund and the Pension Funds Act.
Administration Expenses
Expenses incurred in the administration of the Fund are recognized in the Statement of Changes in Net Assets and Funds in
the reporting period in which it occurred. An expense is recognized if it is probable that any future economic benefit
associated with the item will flow from the Fund and the cost can be reliably measured. In the event that an expense has not
yet been paid at the end of the reporting period the liability will be reflected in the accounts payable note. If an expense
has been paid in advance or has been overpaid, the asset will be disclosed in the accounts receivable note.
GERMISTON MUNICIPAL RETIREMENT FUND
32
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the period ended 30 June 2015
H1 FURNITURE AND EQUIPMENT
Current Period Previous Period
2015 2014
Computer Equipment
and Furniture
Computer Equipment
and Furniture
Gross Carrying Amount
At Beginning of Period 98,665 128,236
Additions 403,213 21,390
Assets Written Off (24,487) (50,961)
At End of Period 477,391 98,665
Accumulated Depreciation and Impairment
At Beginning of Period (47,988) (73,207)
Depreciation Charges (75,909) (25,742)
Accumulated Depreciation on Disposals 24,487 50,961
Net Carrying Amount at End of Period 377,981 50,677
GERMISTON MUNICIPAL RETIREMENT FUND
33
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the period ended 30 June 2015
H2 INVESTMENTS
2.1 INVESTMENT SUMMARY
A B A+B
Notes
Local Foreign Total
Current period
Total
Previous period
Fair value Current
period
R R R R R
Cash and Deposits 43,541,478 - 43,541,478 40,232,727 43,541,478
Commodities 24,288,390 - 24,288,390 30,393,450 24,288,390
Debt Instruments including Islamic debt instruments 157,660,286 792,958 158,453,244 145,542,376 158,453,244
Property Equities 159,436,378 - 159,436,378 122,513,116 159,436,378
Equities (including demutualization shares) 584,229,777 584,229,777 633,163,216 584,229,777
Insurance policies 269,126,817 1,981,323 271,108,140 1,415,771,178 271,108,140
Collective investment schemes 807,613,853 506,384,430 1,313,998,283 156,864,945 1,313,998,283
Total investments 2,045,896,979 509,158,711 2,555,055,690 2,544,481,008 2,555,055,690
GERMISTON MUNICIPAL RETIREMENT FUND
34
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the period ended 30 June 2015
H3 HOUSING LOAN GUARANTEES
• The Fund has granted guarantees to Standard Bank for loans granted to members of the Fund. The Fund
utilized R38,462,101
• The amount of the guarantee may not exceed 33.33% of the cash benefit that a member would receive in
terms of the Rules of the Fund and Section 19(5) of the Pension funds Act if he or she terminates
membership to the Fund voluntarily. (Includes amount currently utilized on guarantees)
• The total housing loan guarantee facility available to the Fund is R50 000 000 and is reviewed annually during February or when fully utilized.
H4 ACCOUNTS RECEIVABLE
Current Period Previous Period
2015 2014
Investment Income Accrued 115,054 74,055
Debtors: Pensions 22,565 32,730
Debtors: Members 5,323 154
Debtors: Other 1,042 -
Expenses Paid in Advance 110,000 120,295
Deposit Rent: Penta Place 4,810 4,810
Ekurhuleni Metropolitan Municipality: 2007/2008 and 2008/2009 127,894,322 78,138,124
Insurance Proceeds: Sanlam 1,063,392 -
129,216,508 78,370,168
GERMISTON MUNICIPAL RETIREMENT FUND
35
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H7 TRANSFERS TO OTHER FUNDS/ TRANSFERS PAYABLE
A B C D A+B+C-D
Effective
Date
No. of
Members
Applied for
Not yet
Approved
(contingency)
At
Beginning
Of
Period
Transfers
Approved
Return
On
Transfers
Total
Assets
Transferred
At end
Of
Period
R R R R R R
Total transfers in terms of Section 14 599,121 599,121 - 63,050 662,171 -
SALA Provident Fund 1 Jun 98 3 599,121 599,121 63,050 662,171 -
Total 599,121 599,121 - 63,050 662,171 -
Transfer Approved -
Return on Transfers 63,050
Statement of Changes in Net Assets 63,050
GERMISTON MUNICIPAL RETIREMENT FUND
36
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H8 BENEFITS
8.1 BENEFITS – CURRENT MEMBERS AND PENSIONERS
A B C D E A+B+C-D-E
At Beginning Benefits Returns Payments Transferred At end
Of For Allocated To unclaimed Of
Period Current Period Benefits Period
R R R R R R
Monthly Pensions 2,053,701 23,505,686 79,569 24,633,298 - 1,005,658
Lump Sums on Retirement 5,972,975 82,952,661 336,481 85,994,760 9,053 3,258,304
- Full Benefit 5,972,975 82,952,661 336,481 85,994,760 9,053 3,258,304
Lump Sum Before Retirement 23,417,136 118,009,486 1,697,568 123,067,967 - 20,056,223
- Death Benefits 1,170,695 22,362,902 373,152 14,707,509 - 9,199,240
- Withdrawal Benefits 22,246,441 95,646,584 1,324,416 108,360,458 - 10,856,983
Divorce payments - 7,012,355 - 7,012,355 - -
Total 8.1 31,443,812 231,480,188 2,113,618 240,708,380 9,053 24,320,185
Benefits for Current Period (B) 231,480,188
Return Allocated (C) 2,113,618
Statement of Changes in Net Assets and
Funds 233,593,806
8.2 BENEFITS IN TERMS OF FUTURE SURPLUS
A B C D E A+B+C-D-E
At Beginning Surplus Returns Payments Transferred At end
Of Allocated Allocated To unclaimed Of
Period Benefits Period
R R R R R R
Enhancement to Members 475,087 9,156,087 402,834 4,364,652 - 5,669,356
Total 8.2 475,087 9,156,087 402,834 4,364,652 - 5,669,356
Surplus Allocated (B) 9,156,087
Return Allocated (C) 402,834
Statement of Changes in Net Assets and
Funds 9,558,921
Total Benefits (8.1 + 8.2) 31,918,899 243,152,727 2,516,452 245,073,032 9,053 29,989,541
GERMISTON MUNICIPAL RETIREMENT FUND
37
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H9 UNCLAIMED BENEFITS
H10 ACCOUNTS PAYABLE
Current period Previous period
2015 2014
Attorneys: Len Dekker & Associates - 17,999
Ekurhuleni Metropolitan Contributions 8,346 4,454
Unclaimed Monies 6,345 6,345
Acsis Investment Advisors 56,886 34,200
Alexander Forbes: Actuary 266,307 153,733
Sanlam 266,927 313,669
Other* 7,113 1,398
611,924 531,798
*Other
Lexis Nexis 620
Sharp 406
Telkom ADSL 847
Telmark 5,240
7,113
H11 RETIREMENT FUND TAXATION – NOT APPLICABLE
Current period Previous period
2015 2014
R R
At Beginning of Period 1,565,992 83,052
Transferred from benefits payable 9,053 1,364,381
Investment income allocated 55,989 118,559
Less: Benefits paid (759,629) -
Balance at end of period 871,405 1,565,992
GERMISTON MUNICIPAL RETIREMENT FUND
38
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H12 CONTRIBUTIONS
A B C D A+B+C-D
At Beginning Towards Towards Contributions At end
Of Period
Retirement
Re-Insurance
and expenses
Received
Of Period
R R R R R
Member Contributions – Received and Accrued 2,056 65,995,377 - 34,028,440 -
Employer Contributions – Received and Accrued 4,896 34,026,384 18,359,857 84,357,091 3,039
Additional Voluntary Contributions Members - 115,723 - 115,723 -
Other* - 3,606,655 - 3,606,655 -
Total Contributions Received 6,952 103,744,139 18,359,857 122,107,909 3,039
Towards Retirement 103,744,139
Towards Risk 18,359,857
Statement of Changes In Net Assets and Funds 122,103,996
* Employer contributions for Bonus Service
H13 NET INCOME FROM INVESTMENTS
Investment Income
Current period Previous period
2015 2014
R R
Income from Investments 126,600,835 95,154,379
Dividends 23,539,321 22,689,311
Interest * 71,009,484 15,626,625
Collective Investment Scheme Distribution 18,229,579 15,544,518
Income From Insurance Policies 13,822,451 41,293,925
Adjustment To Fair Value (246,987,735) 246,944,210
Profits Realized On Assets 336,884,193 168,849,629
Losses Realized On Assets (16,422,408) (14,599,637)
Income Before Investment Expenses 200,074,885 496,348,581
Less: Expenses Incurred In Managing Investments 13.1 (11,730,392) (9,477,846)
Net Investment Income 188,344,493 486,870,735
* INTEREST
Reduction of Claim 2007/2008 and 2008/2009 As Per Judgement (7,456,371)
Interest Awarded on Claim 2007/2008 and 2008/2009 55,438,700
Interest Earned on Investments 23,027,155
71,009,484
GERMISTON MUNICIPAL RETIREMENT FUND
39
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H13 NET INCOME FROM INVESTMENTS (CONTINUED)
13.1 INVESTMENT EXPENSES
Current period Previous period
2015 2014
Dividend Withholding Tax - 25,508
Asset Managers Fees 11,261,852 9,026,548
Investment Consultants 468,540 425,790
Total Investment Expenses 11,730,392 9,477,846
13.2 OTHER INCOME
Current period Previous period
2015 2014
SDL Grants Received 3,926 5,454
Investment Switches 500 500
Administration Fees: Former Members 1,731 -
Refund Old Mutual: Upgrade Sishi 158,180 -
Legal Fees: Ekurhuleni 1,773,869 -
Recovery Cost Death Investigations - 53,454
1,938,206 59,408
H14 ADMINISTRATION EXPENSES
Current period Previous period
2015 2014
Actuarial Fees 260,101 305,080
Administration Fees 146,386 148,166
Audit Fees
Audit Service 254,220 241,680
Audit Expenses 6,840 5,700
Depreciation: At Cost 75,910 25,741
Fidelity Insurance 120,000 120,000
Penalties - 989
Levies and Membership Fees 53,873 40,247
Other 14.1 1,015,417 199,023
Office Expenses 350,034 385,712
Principal Officer Expenses 14.4 814,796 712,572
Staff Expenses 14.3 1,803,060 1,469,338
Trustees Expenses 14.2 163,701 140,765
5,064,338 3,795,013
GERMISTON MUNICIPAL RETIREMENT FUND
40
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H14 ADMINISTRATION EXPENSES (CONTINUED)
14.1 OTHER
Current period
2015
Previous period
2014
Medical Examination: Ill Health 11,637 -
Special Meetings 3,883 3,360
General Expenses 16,643 14,156
Incity Security 4,171 3,891
Inseta Claims 1,653 1,368
Refreshments 23,741 16,444
Tracing of Dependants 2,309 53,453
Legal Fees: Court Case Against Employer 951,380 106,351
1,015,417 199,023
14.2 PRINCIPAL OFFICER EXPENSES
Current period
2015
Previous period
2014
Remuneration 775,106 680,120
Allowances 19,956 18,516 Subsistence Allowance 850 950
Conference Travel 10,737 4,523
Conference Fees 5,130 5,472
Accommodation 3,017 2,991
814,796 712,572
14.3 STAFF EXPENSES Current period
2015
Previous period
2014
Remuneration 1,787,843 1,465,220
Training 15,217 4,118
1,803,060 1,469,338
14.4 TRUSTEE EXPENSES Current period
2015
Previous period
2014
Meeting allowances 79,741 26,400
Expenses 13,536 37,790
Training 4,104 6,216
Conference Expenses 50,972 43,776
Accommodation 8,026 18,983
Subsistence Allowance 7,322 7,600
163,701 140,765
GERMISTON MUNICIPAL RETIREMENT FUND
41
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H15 PRIOR PERIOD ADJUSTMENTS
Opening Balance
Current Period
2015
Transfer
2015
Closing Balance
Previous Period
2014
Risk Reserve 45,718,108 (2,288,504) 48,006,612
Bonus Service Reserve 121,732,778 (1,927,537) 123,660,315
Processing Error Reserve 3,585,269 4,307,590 (722,321) Solvency Reserve 5,492,225 (91,518) 5,583,743
31 Pensions Account 9,433,583 (31) 9,433,614
185,961,963 - 185,961,963
During the 2012,2013 and 2014 Financial Years’ Investment Returns Allocation were incorrectly calculated and allocated on the
balances for these Reserves and Pensions Account. These balances included Debtor (Amounts not invested) which should have been
excluded from investment returns.
H16 CONTINGENT ASSET: CONTRIBUTION CLAIM INSTITUTED AGAINST EKURHULENI METROPOLITAN
MUNICIPALITY
A claim has been instituted against the Ekurhuleni Metropolitan Municipality for the contribution required to achieve the required
investment return of 5,5% as stipulated in Rule 14.2.1 of the Fund’s Rules, for the years ended 30 June 2008 and 30 June 2009.
The outcome of these claims is uncertain at this stage. The interest is estimated at R49,607,005.
H17 RISK MANAGEMENT POLICIES
The Board of Fund has overall responsibility for the establishment and oversight of the Fund’s risk management policies. The
Fund’s risk management policies are established to identify and analyze the risks faced by the Fund, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Fund’s activities.
Solvency risk
Solvency risk is the risk that the investment returns on asset will not be sufficient to meet the fund’s contractual obligations to
members.
Continuous monitoring by the Board of Fund and the Fund’s actuary takes place to ensure that appropriate assets are held where
the Fund’s obligation to members are dependent upon the performance of specific portfolio assets and that a suitable match of
assets exists for all other liabilities.
Legal risk
Legal risk is the risk that the Fund will be exposed to a contractual obligation for which provision has not been made. Legal
representatives of the fund monitor the drafting of contracts to ensure that rights and obligations of all parties are clearly set
out.
Currency risk
Currency risk is the risk that the value of an instrument will fluctuate in Rands owing to changes in foreign exchange rates. The Fund’s exposure to currency risk is mainly in respect of foreign investments made on behalf of members of the Fund for the
purpose of seeking desirable international diversification of investments.
The Board of Trustees monitors this aspect of the Fund’s investments and limits it to SARB limits of total assets.
GERMISTON MUNICIPAL RETIREMENT FUND
42
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H17 RISK MANAGEMENT POLICIES (CONTINUED)
Liquidity risk
Liquidity risk is the risk that the Fund will encounter difficulty in raising funds to meet commitments associated with financial
instruments. The Fund’s liabilities are backed by appropriate assets and it has sufficient liquid resources.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation, and cause the Fund to incur
a financial loss.
The Board of Fund monitors receivable balances on an ongoing basis with the result that the Fund’s exposure to bad debts is not
significant. An appropriate level of provision is maintained.
Cash flow risk
Cash flow risk is the risk that future cash flows associated with monetary financial instruments will fluctuate in amount. The Fund
is exposed to cash flow risk in respect of variable rate debt instruments into which it is invested.
The Board of Fund monitors cash flows by using monthly cash flow projections.
Market risk
The key components of market risk are: price risk, interest rate risk and undiversifiable (systematic) risk.
Price risk
Price risk is the risk that the value and/or future cash flows of a financial instrument will fluctuate as a result of changes 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 of changes
in interest rates.
Investments
Investments in equities are valued at fair value and therefore susceptible to market fluctuations. Investments are managed with
the aim of maximizing the Fund’s returns while limiting risk to acceptable levels within the framework of statutory requirements.
Continuous monitoring takes place to ensure that appropriate assets are held where the liabilities are dependent upon the
performance of specific portfolios of assets, and that a suitable match of assets exists for all non-market related liabilities.
H18 PROMISED RETIREMENT BENEFITS
The actuarial present value of promised retirement benefits, distinguishing between vested benefits and non-vested benefits is
set out in the report of the valuator.
GERMISTON MUNICIPAL RETIREMENT FUND
43
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H19 RELATED PARTY TRANSACTIONS
Related Party Relationship Description Amount
CF Botha Principal Officer Salary and Expenses 814,796
Board of Fund Trustees Allowances and Expenses 163,701
Ekurhuleni Metropolitan Municipality Participating Employer Risk Contributions 18,196,469
Ekurhuleni Metropolitan Municipality Participating Employer Contributions Bonus Service 3,571,538 Ekurhuleni Metropolitan Municipality Participating Employer Contributions Towards Retirement 65,410,101
Lesedi Municipality Participating Employer Risk Contributions 10,086
Lesedi Municipality Participating Employer Contributions Bonus Service 2,168
Lesedi Municipality Participating Employer Contributions Towards Retirement 36,130
Midvaal Municipality Participating Employer Risk Contributions 86,790
Midvaal Municipality Participating Employer Contributions Bonus Service 18,654
Midvaal Municipality Participating Employer Contributions Towards Retirement 310,891
Tshwane Metropolitan Municipality Participating Employer Risk Contributions 66,512
Tshwane Metropolitan Municipality Participating Employer Contributions Bonus Service 14,295
Tshwane Metropolitan Municipality Participating Employer Contributions Towards Retirement 238,255
88,940,386
H20 OPERATION LEASE COMMITMENTS
Not applicable
GERMISTON MUNICIPAL RETIREMENT FUND
44
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H21 RESERVE ACCOUNTS
A C D E
Member/
Pensioner
Surplus
Account
Employer
Surplus
Account
Reserve
Accounts Processing
Error
Reserve
Risk
Reserve
Solvency
Reserve
Members
Bonus
Service
Reserve
R R R R R R R
At Beginning of Period 54,672,916 8,299,616 176,528,349 (722,321) 48,006,612 5,583,743 123,660,315
Member Surplus Apportionment - - - - - - -
Employer Surplus Apportionment - - - - - - -
Benefit Enhancement Current Members (45,997,798) - - - - - -
Contributions Received and Accrued - - 21,966,512 - 18,359,857 - 3,606,655
Contributions Transferred From Reserve Accounts - - - - - - -Surplus Improperly Utilized - - - - - - -
Reinsurance Proceeds - - 5,656,512 - 5,656,512 - -
Net Investment Income - - 131,644,799 116,175,519 5,672,098 432,331 9,364,851
Less: Allocated to Unclaimed Benefits - - (55,989) (55,989) - - -
Other Income - - 1,938,206 - 1,938,206 - -
Less: - - (8,707,551) - (8,707,551) - -
Administration Expenses - - (4,917,953) - (4,917,953) - -
Insurance Premiums - - (3,789,598) - (3,789,598) - -
Net Income Before Transfers and Benefits 8,675,118 8,299,616 328,970,838 115,397,209 70,925,734 6,016,074 136,631,821
Transfers and Benefits (9,156,087) - (23,962,445) (63,050) (23,899,395) - -
Benefits (9,156,087) - (23,962,445) (63,050) (23,899,395) - -
Net Income After Transfers and Benefits (480,969) 8,299,616 305,008,393 115,334,159 47,026,339 6,016,074 136,631,821
PRIOR PERIOD ADJUSTMENT H15 31 4,307,590 (2,288,504) (91,518) (1,927,537)
Investment Return Allocated 480,969 523,134 (115,842,178) (115,842,178) - - -
Current Members (112,321,623) (112,321,623)
Former Members (2,516,452) (2,516,452)
Employer Surplus 523,134 (523,134) (523,134)
Member Surplus 480,969 (480,969) (480,969)
GERMISTON MUNICIPAL RETIREMENT FUND
45
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the period ended 30 June 2015
H21 RESERVE ACCOUNTS
Transfer Between Accounts - - 12,986,827 - 17,851,527 - (4,864,700)
Long Service Bonus Active Members - - (4,864,700) - - - (4,864,700)
Member Share To Risk: Deceased Members - - 17,851,527 - 17,851,527 - -
At End Of Period - 8,822,750 202,153,073 3,799,571 62,589,362 5,924,556 129,839,584
GERMISTON MUNICIPAL RETIREMENT FUND
46
NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2015 H23 AMOUNTS TO BE ALLOCATED
Current Period Previous
2015 2014
Opening Balance 75,106,085 74,928,518
Investments returns 190,125 177,567
Less reduction as per judgement (8,113,619) -
Interest as per judgement 50,237,831
Closing Balance 117,420,422 75,106,085
Details of amounts not allocated to Members and Pensioners individual accounts
Rule 14.2.1 stipulates that:
“If the rate of interest earned on the total moneys (including any uninvested moneys) of the Fund during any
financial year should be lower than five and one-half per cent (5,5%) the Council shall contribute to the fund such a
sum as would increase, on being added to the interest actually earned, the rate of interest to five and one-half per
cent (5,5%) during such financial year.”
47
48
49
50
51
52
GERMISTON MUNICIPAL RETIREMENT FUND
53
SCHEDULE IA – INVESTMENT SCHEDULE
For the period ended 30 June 2015 Investments1
A+B+C+D+E Y
W+X
Note Note
M1 M2
R R R R R R R R R R % R R R
Cash (including cash at bank) A 44 616 816 16 519 748 7 185 820 68 322 384 51 647 408 16 674 976 16 674 976 0.65% 193 695 737 262 018 121
Commodities B 24 288 390 24 288 390 24 288 390 - - 0.00% 9 645 467 33 933 857
Housing Loans - - 0.00% -
Debt instruments including Islamic debt
InstrumentsC 158 453 244 68 422 108 162 987 451 389 862 803 320 603 543 69 259 260 69 259 260 2.71% 18 513 707 408 376 510
Investment and owner occupied properties D 159 436 378 2 327 281 4 137 320 165 900 979 163 554 688 2 346 291 2 346 291 0.09% 31 450 770 197 351 749
Equities E 584 229 777 371 691 858 95 640 274 1 051 561 909 678 107 160 373 454 749 373 454 749 14.61% 330 893 351 1 382 455 260
Investments in participating employer(s) H - - 0.00% -
Other assets I 887 391 1 157 275 2 044 666 1 157 275 887 391 887 391 0.03% -1 157 275 887 391
Hedge Funds J - - - 0.00% -
Private Equity Funds K - - 0.00% -
Derivative Market instruments G - - 0.00% -
Insurance Policies - - - 0.00% -
- Linked Policies - - 0.00% -
- Non-Linked Policies - - - 0.00% 271 108 140 271 108 140
- Insurance Policies ito Reg 28(3)(c)3 - - 0.00% -
Entities regulated to Reg 28 (8 ) b (iv) - - - 0.00% -
Investments - no information available/ provided
by entityN - - - - 0.00% -
Collective Investments 854 149 897 854 149 897 806 707 360 47 442 537 -854 149 897 -
TOTAL INVESTMENTS 971 024 605 459 848 386 271 108 140 - 854 149 897 2 556 131 028 2 046 065 824 510 065 204 - 462 622 667.00 18.10% - 854 149 897 2 556 131 028
Tot
al
Note
G2
TOTAL
as p
er
Reg
ulat
ion
28
(sch
edule
IB)
Tot
al p
erce
ntag
e
fore
ign
expo
sure
Der
ivat
ive
pos
itions
with
Rec
oncilin
g ite
ms
bet
wee
n Sch
edule
IB a
nd
Sch
edule
IA
Note G1
For
eign
(ex
clud
ing
Afr
ica)
For
eign
Afr
ica
Tot
al F
oreign
Z V+W+X+Y+Z
Not
es2
Direc
t
Inve
stmen
ts
Non
-co
mpliant
Collect
ive
inve
stmen
t
sche
mes
Non
- c
ompliant
Insu
ranc
e po
lices
Der
ivative
position
s witho
ut
residu
al r
isk
Com
pliant
Inve
stmen
ts
Loca
l
E V W X W+XDA B C
GERMISTON MUNICIPAL RETIREMENT FUND
54
NOTES TO THE INVESTMENT SCHEDULE For the period ended 30 June 2015
A CASH
Fair value
R
Local 44 616 816.00
Notes, deposits, money market instruments issued by a South
African Bank, margin accounts, settlement accounts with an
exchange and Islamic liquidity management financial instruments
Notes and coins, any balance or deposit in an account held with a
South African bank
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets 18 790 932.00
A money market instrument issued by a South African bank
including an Islamic liquidity management financial instrument
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets 30 105 531.00
Any positive net balance in a margin account with an exchange
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets 2 501 114.00
Any positive net balance in a settlement account with an
exchange, operated for the buying and selling of assets
Issuers/entities which exceeds 5% of total assets
Total of Issuers entities with assets less than 5% of total assets -6 780 761.00
Foreign -
Balances or deposits, money market instruments issued by a
foreign bank including Islamic liquidity management financial
instruments
Any balance or deposit held with a foreign bank
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets
Any balance or deposit held with an African bank
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets
A money market instrument issued by a foreign bank including an
Islamic liquidity management financial instrument
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total assets
-
Total Cash 44 616 816.00
Instrument
GERMISTON MUNICIPAL RETIREMENT FUND
55
NOTES TO THE INVESTMENT SCHEDULE For the period ended 30 June 2015
B COMMODITIES
Fair value
R
Gold (including Kruger Rands)
Issuers/entities which exceeds 5% of total assets -
Total of Issuers entities with assets less than 5% of total
assets -
Other (provide details)
Issuers/entities which exceeds 5% of total assets - -
Issuers entities with assets less than 5% of total assets
New Palladium ETF 3 883 659 47 846 0.05% 3 883 659
Africa Palladium DEBEN 4 824 006 59 314 0.12% 4 824 006
New Gold Platinum EFT 15 580 725 119 732 0.13% 15 580 725
Total Commodities 24 288 390 - 24 288 390
Instrument Local Holding number % HoldingForeign
GERMISTON MUNICIPAL RETIREMENT FUND
56
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
C DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRUMENTS
Fair value
Foreign
R
Government debt:
Debt instruments issued by an loans to the government of the
Republic and any debt or loan guaranteed by the Republic
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total assets 83 153 571 83 153 571
Debt instruments issued or guaranteed by the government
of a foreign country:
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total assets -
Bank 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 or more, or an amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total assets 37 430 667 792 958 38 223 625
Listed on an exchange with an issuer market capitalisation of
between R2 billion and R20 billion, or an amount or conditions as
prescribed
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total assets 1 622 691 1 622 691
Not listed on an exchange
ABSA Bank Ltd 1 461 637 - Unsecured NA 1 461 637 1 461 637
Deutshce Bank RSA Branch -76 656 - Unsecured NA -76 656 -76 656
First Rand Bank Ltd -87 190 - Unsecured NA -87 190 -87 190
Nedbank Ltd 15 334 - Unsecured NA 15 334 15 334
Public debt:
Debt instruments issued or guaranteed by a public entity under the
Public Finance Management Act, 1999 (Act No. 1 of 1999) as
prescribed:-
Airports Company of South Africa Limited (ACSA) 1 747 649 1 747 649
City of Cape town 116 347 116 347
City of Johannesburg Metropolitan 738 309 738 309
Development Bank of South Africa 3 667 206 3 667 206
Ekurhuleni Metropolitan Municipality 125 797 125 797
ESKOM 17 102 17 102
Industrial Development Corporation of South Africa 1 082 098 1 082 098
Thekwini 964 159 964 159
Transnet Limited 4 825 948 4 825 948
The South African National Roads Agency Limited 504 171 504 171
Umgeni Water 247 238 247 238
Redemption
valueInstrument Local
Secured/
Unsecured
Issued/
Guaran
teed
GERMISTON MUNICIPAL RETIREMENT FUND
57
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
C DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRUMENTS - CONTINUED
Corporate debt (excluding debentures):
Debt instruments issued or guaranteed by an entity that has equity
listed on an exchange -
Listed on an exchange
Issuers/entities which exceeds 5% of total assets -
Total of issuers/entities with assets less than 5% of total assets 9 679 966 9 679 966
Not listed on an exchange
Land and agricultural Development Bank of SA 699 619 - NA 699 619
The South African National Roads Agency Limited -61 569 NA -61 569
Debentures:
Listed on an exchange
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total assets - -
Not listed on an exchange
- -
Other
Listed on an exchange
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total assets 9 786 192 9 786 192
Not listed on an exchange
-
TOTAL DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT
INSTRUMENTS 157 660 286 792 958 158 453 244
GERMISTON MUNICIPAL RETIREMENT FUND
58
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
D INVESTMENT AND OWNER OCCUPIED PROPERTIES
Ordinary/ Fair value
ForeignPreference
shares
R
Shares and linked units in property companies, or units
in a collective investment scheme in property, listed on
an exchange:
Issuer market capitalisation of R10 billion or more, or an
amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total
assets 139 521 898 - 139 521 898
Issuer market capitalisation of between R3 billion and R10
billion, or an amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total
assets 14 651 692 - 14 651 692
Issuer market capitalisation of less than R3 billion, or an
amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - -
Total of issuers/entities with assets less than 5% of total
assets 5 262 788 - 5 262 788
Shares in property companies and linked units in
property companies, not listed on an exchange:
Provide details
TOTAL 159 436 378 - 159 436 378
Fair value
R
Participating mortgage bonds
Issuers/entities which exceeds 5% of total assets 0 0 0
Total of issuers/entities with assets less than 5% of total
assets0 0 0
TOTAL 0 0 0
Fair value
R
TOTAL OF INVESTMENT AND OWNER OCCUPIED
PROPERTY 159 436 378 - 159 436 378
% Holding
Instrument Local Secured by Interest rateForeign
Instrument Local Issued sharesHolding
number
GERMISTON MUNICIPAL RETIREMENT FUND
59
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
E EQUITIES
Holding in issuer/
entityFair value
%
R
Listed equities
Issuer market capitalisation of R20 billion or more, or an
amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total assets 435 711 946 435 711 946
Issuer market capitalisation of between R2 billion and R20
billion, or an amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total assets 140 418 922 140 418 922
Issuer market capitalisation of less than R2 billion, or an
amount or conditions as prescribed
Issuers/entities which exceeds 5% of total assets - - -
Total of issuers/entities with assets less than 5% of total assets 8 098 750 8 098 750
Unlisted equities
Bryant Technologies 159 159
TOTAL EQUITIES 584 229 777 - 584 229 777
FOREIGNInstrument LOCAL Issued
shares
Ordinary/
Preference
shares
Holding
number
H INVESTMENTS IN PARTICIPATING EMPLOYER/S
Issued/ Fair valve
Guaranteed
R
Cash -
Commodities -
Housing Loans -
Debt instruments
Total of issuers/entities with assets less than 5% of total 125 797.00
SUBTOTAL - 125 797.00
Secured byListed/not
listedHolding number % Holding Interest rateInstrument Note 1 Local
L CERTIFIED REGULATION 28 COMPLIANT INVESTMENTS
Collective Investments
Investec 190 080 936 8 355 807 198 436 743
Coronation 203 486 894 39 075 494 242 562 388
Allan Gray 308 980 776 - 308 980 776
Prescient 104 158 754 11 236 104 169 990
Total certified Regulation 28 compliant investments 806 707 360 47 442 537 854 149 897
Fair valueInstrument Local Foreign
GERMISTON MUNICIPAL RETIREMENT FUND
60
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
M REGULATION 28 NON COMPLIANT INVESTMENTS
M1 NON COMPLIANT COLLECTIVE INVESTMENT SCHEMES
Allan Gray Orbis 284 798 063 284 798 063
Pimco 82 159 174 82 159 174
Ginsglobal 92 891 149 92 891 149
Total Non 28 compliant Collective investments - 459 848 386 459 848 386
Instrument Local Foreign Fair value
M2 NON-COMPLIANT INSURANCE POLICIES
Linked Policies -
Old Mutual Annuity Policy 8 020 847 1 964 547 9 985 394
Liberty Annuity Policy 261 105 970 16 776 261 122 746
Total non-compliant Insurance Policies 269 126 817 1 981 323 271 108 140
Instrument Local Foreign Fair value
MARKET RISK
EQUITY HOLDINGS
Fair value at end
of period
Open financial
instruments
marked to market
value
Total fair value
equity holdings
and open
instruments
Market movement
by
R R 5%
R
Orbis INSt Global Equtiy Fund 276 634 209 276 634 209 10.82%
Ginsglobal Equity Fund 92 474 935 92 474 935 3.62%
Naspers LTD 72 376 790 72 376 790 2.83%
Standard Bank Group ltd 54 522 602 54 522 602 2.13%
Sasol ltd 52 758 610 52 758 610 2.06%
British American Tobacco PLC (BTI) 35 642 597 35 642 597 1.39%
MTN group 35 297 470 35 297 470 1.38%
Anglo American PLC 32 575 009 32 575 009 1.27%
SAB Miller PLC 32 544 233 32 544 233 1.27%
British American Tobacco PLC (BTIU) 30 064 194 30 064 194 1.18%
714 890 649 714 890 649
Total movement as % of non-current assets plus bank 27.96%
Investment
GERMISTON MUNICIPAL RETIREMENT FUND
61
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
OTHER FINANCIAL INSTRUMENTS
List the 10 largest Rand-values other financial instruments
Fair value at end
of period
Market movement
by 5%
R R
South African Republic 77 035 791 0.03
Pimco Global Bonds 66 548 931 0.03
Standard Bank of SA ltd 63 063 846 0.02
Firstrand 46 037 988 0.02
Nedbank Group LTD 37 612 106 0.01
Growthpoint properties ltd 31 150 549 0.01
Standard Bank Group ltd 27 749 670 0.01
Firstrand 27 726 516 0.01
Standard Bank of SA ltd 24 035 798 0.01
Nedbank Group LTD 23 537 034 0.01
Total value of 10 largest other instruments 424 498 229.00
Total movement as % of non-current assets plus bank 16.60%
Instrument Holding
GERMISTON MUNICIPAL RETIREMENT FUND
62
NOTES TO THE INVESTMENT SCHEDULE - CONTINUED For the period ended 30 June 2015
P RECONCILIATION BETWEEN THE INVESTMENTS IN SCHEDULE H2 AND SCHEDULE IA
Fair v
alue c
urr
ent
period (as
per
Sche
dule
H2.1
)
Amort
ised c
ost
curr
ent
period
Cas
h a
t ban
k
Pro
pert
y s
plit
(Schedule I
AD)
Non-compliant
CIS
Non-complian
t Insu
rance P
olicies
Compliant
inve
stments
Deriva
tive
s with r
esidual risk
Inve
stments
no inf
orm
ation (Schedu
le I
AN)
Oth
er
Note
1
Tota
l
Cash 43 541 478 1 075 338 16 519 748 7 185 820 68 322 384
Commodities 24 288 390 24 288 390
Housing Loans - Debt instruments including Islamic debt
instruments 158 453 244 68 422 108 162 987 451 389 862 803
Investment properties and owner occupied
properties 159 436 378 2 327 281 4 137 320 165 900 979
Equities 584 229 777 371 691 858 95 640 274 1 051 561 909
Investments in participating employers -
Hedge Funds -
Private Equity Funds -
Derivative market instruments -
Collective Investment Schemes 1 313 998 283 -459 848 386 854 149 897
Insurance Policies 271 108 140 -271 108 140 -
Entities regulated ito Reg 28(8)(b)(iv) - Investments not disclosed /data not available
for disclosure by entities -
Other assets 887 391 1 157 275 2 044 666 TOTAL INVESTMENTS 2 555 055 690 - 1 075 338 - - - - - - - 2 556 131 028
GERMISTON MUNICIPAL RETIREMENT FUND
63