annual financial statements name of the ......19 april 2006 25 november 2011 30 november 2012 22...

ANNUAL FINANCIAL STATEMENTS

NAME OF THE RETIREMENT FUND: Municipal Gratuity Fund

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

SOUTH AFRICAN REVENUE SERVICESAPPROVAL NUMBER: 18/20/4/40276

FOR THE PERIOD: 1 July 2012 to 30 June 2013

CONTENTS

Schedule Page Schedule Page

A Regulatory information* 2 - 8 G Statement of changes in net assetsand funds

27

B Statement of responsibility by theBoard of Trustees*

9 HA Notes to the annual financialstatements

28 - 45

C Statement of responsibility by thePrincipal Officer*

10 HB Report of the Valuator* 46

D Report of the Independent Auditors 11 I Report of the Independent Auditorsto the Registrar of Pension Fundson factual findings

47 - 54

E Report of the Board of Trustees 12 - 25 IA Schedules pertaining to the annualfinancial statements

55 - 65

F Statement of net assets and funds 26 IB Assets held in compliance withRegulation 28Assurance report of theIndependent Auditors to theRegistrar of Pension Funds

65 - 71

72 - 73

* (Not subject to audit)

MUNICIPAL GRATUITY FUND

SCHEDULE AREGULATORY INFORMATIONfor the period ended 30 June 2013

REGISTERED OFFICE

Postal address Private Bag X 1190Bedfordview2008

Physical address Block 14Bedfordview Office Park3 Riley RoadBedfordview2007

FINANCIAL REPORTING INFORMATION

Financial reporting periods

Current 1 July 2012 to 30 June 2013

Previous 1 July 2011 to 30 June 2012

BOARD OF TRUSTEES Full name Capacity Date appointed Date resignedBolton Gerald Fourie M

VC

24 June 19964 March 200416 November 2007

17 October 201216 November 200717 October 2012

Pieter Johannes Venter MAVC

24 June 19964 March 200427 July 201131 October 2012

31 October 2012

Lesiba Johannes Modiga MA

14 November 200827 July 2011

Mirriam Masabata Welheminah Molubi EIE & AV

8 November 200219 April 200625 November 201130 November 2012

22 March 200619 May 2011

Edward Charles Alberts EI

9 October 19966 September 2000

6 September 2000

Jan Dirk Grobler Venter MI

12 September 19974 March 2004

11 February 2004

Johannes Hendrikus Grobbelaar MM

8 November 200220 March 2007

17 November 2006

Speed Katishi Mashilo E (SALGA)E (SALGA)

1 October 200313 October 2009

30 June 200930 June 2013

Roja Elvis Ramare M 5 May 2010Erné Charles Smal M

M4 March 20045 May 2010

14 November 2008

Dan Mogakabe M 26 November 2010Gideon van Zyl I

A27 July 201130 November 2012

Lisbeth Mothata E 25 November 2011John Hall M 30 November 2012

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


SCHEDULE AREGULATORY INFORMATION (continued)For the period ended 30 June 2013

FUND OFFICERS

Principal Officer Monitoring person*Full Name: Marthinus Jacobus Dewald Jacobsohn Estie Redelinghuys

Postal Address: Private Bag X 1190Bedfordview2008

Private Bag X 14Highveld Park0169

Physical Address: Block 14Bedfordview Office Park3 Riley RoadBedfordview, 2007

Lords Office Estate, Office Block 8276 West AvenueCenturion0157

Date of appointment: 01 July 1999 01 August 2011

Telephone number: +27 (11) 450 1224/5 +27 (12) 683 3490

Email address: [email protected] [email protected]

*(In terms of Section 13A of the Pension Funds Act in South Africa)

PROFESSIONAL SERVICE PROVIDERS

Actuary/Valuator AuditorsFull Name: Alexander Forbes Financial Services (Ms.

Gerda Grobler)Deloitte & Touche

Postal Address: PO Box 2435Pretoria0001

Private Bag X 6Gallo Manor2052

Physical Address: 189 Clark StreetBrooklynPretoria0181

Deloitte Place, Building 8The Woodlands20 Woodlands DriveWoodmead, 2052

Telephone number: +27 (12) 452 7107 +27 (11) 806 5200

Qualifications: B.Comm Hons, FASSA, FFA Registered Auditors

Benefit Administrator

Full Name: Sanlam Employee Benefits

Postal Address: Private Bag X 14Highveld Park0169

Physical Address: Lords Office Estate, Block 5276 West AvenueCenturion0157

Telephone number: +27 (12) 683 3900

Benefit administrator's registration no. in terms ofsection 13: 24/245

Investment AdvisorsFull name: Sanlam Multi Manager International (Pty) Ltd

Postal Address: Private Bag X8Tygervalley7536

Physical Address: 55 Willie van Schoor AvenueBellville7530


Investment advisor's FAIS application number: 24/435



Investment AdministratorsFull name: Coronation Fund Managers Limited

Postal Address: PO Box 44684Claremont7735

Physical Address: MontClare Place, 7th FloorCnr Campground & Main RoadsClaremont7708


Investment administrator's registration no. in terms ofsection 13B: 24/31

Full name: Cadiz Asset Management (Pty) Ltd


Physical Address: The Terraces, 4th Floor25 Protea RoadClaremont7708



Full name: Brait South Africa Limited

Postal Address: Postnet Suite 80Private Bag X1005Claremont7735

Physical Address: The Terraces, 2nd Floor25 Protea RoadClaremont7708



Full name: ABSA Capital Alternative Asset Management(Pty) Ltd

Postal Address: PO Box 4110Tygervalley7536

Physical Address: 163 Hendrik Verwoerd DrivePlattekloof7500



Full name: Investec Asset Management (Pty) Ltd

Postal Address: PO Box 1655Cape Town8000

Physical Address: 36 Hans Strijdom AvenueForeshoreCape Town8001





Full name: Sanlam Investment Management (Pty) Ltd





Full name: Allan Gray South Africa (Pty) Ltd

Postal Address: PO Box 51318V & A Waterfront8002

Physical Address: Granger Bay CourtBeach RoadV & A Waterfront8001



Full name: Old Mutual Investment Group South Africa(Pty) Ltd

Postal Address: PO Box 878Cape Town8000

Physical Address: West Campus building, Entrance 1Jan Smuts Drive, Mutual parkPinelands7405


Investment administrator's registration no. in terms ofsection 13B: 24/126 *

Full name: Edge Capital (Pty) Ltd

Postal Address: PO Box 4188Tygervalley7536

Physical Address: 3 Heuwelkruin CloseDurbanville7550



Full name Afena Capital (Pty) Ltd


Physical Address: Mont Clare Place, 5th FloorCnr Campground & Main RoadsClaremont7708


Investment administrator's registration no. in terms ofsection 13B:

24/422



Full name Argon Asset Management (Pty) Ltd


Physical Address: Colinton House, 1st FloorThe Oval, 1 Oakdale RoadNewlands7700



Full name Foord Asset Management

Postal Address: P O Box 135Howard Place7450

Physical Address: 8 Forest Mews, Forest DriveCnr Lonsdale WayPinelands7450



Full name Franklin Templeton Investment Funds(SICAV)

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

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

Telephone number: 0800305306

Investment administrator's registration no. in terms ofsection 13B: **

Full name Futuregrowth Asset Management (Pty) Ltd

Postal Address: Private Bag X6Newlands7725

Physical Address: 3rd Floor, Great Westerford240 Main RoadRondebosch7700



Full name Sanlam Multi Manager International (Pty) Ltd




Investment administrator's registration no. in terms ofsection 13B:

24/435



Full name Absa Asset Management (Pty) Ltd

Postal Address: Private Bag X 291509Melville2109

Physical Address: Block A Ground FloorParkridge Office Park65 Empire Road2193



Full name Momentum Asset Management (Pty) Ltd

Postal Address: Private Bag 9959Sandton2146

Physical Address: 7 Merchant PlaceFredman DriveSandton2196



Full name Blue Ink Investments

Postal Address: Private Bag X8Tyger Valley7536




Risk insurers

Full name: Camarque Underwriting Managers (Pty) Ltd

Postal Address: Postnet Suite 250Private Bag X4Bedfordview2008

Physical Address: Eton House, 1st Floor15 Eton RoadParktown, Johannesburg2000


FSB approval no.: 6344

Custodian NomineeFull name: ABSA Bank Limited Allan Gray Nominees (Pty) Ltd

Postal Address: PO Box 61218Marshall Town2107

PO Box 51318V & A WaterfrontCape Town8002

Physical Address: 180 Commissioner StreetJohannesburg2000

Granger Bay CourtBeach RoadV & A WaterfrontCape Town, 8001

Telephone number: +27 (11) 350 5000 +27 (21) 415 2300

FSB approval no.: 26/10/292 24/436



NOTES

* - Old Mutual Investment Group.

The equity mandate with Old Mutual was terminated with effect 31 January 2012, but the cash mandate continues. The cashportfolio is however managed by Futuregrowth Asset Management, a member of OMIGSA Group.

** - Franklin Templeton Investment Funds (FTIF):

The MGF is invested in the Franklin Templeton Investment Funds (FTIF). FTIF is a SICAV (Société d'Investissement CapitalVariable), incorporated in Luxembourg under the laws of the Grand Duchy of Luxembourg to be a collective investment scheme inLuxembourg. A SICAV is an open-ended investment company with an authorized share capital that is structured in such a mannerthat it provides for the issuing of different classes of shares to investors, each class representing a separate portfolio (a sub-fund)with a distinct investment policy, as defined in the Collective Investment Schemes Control Act 24 of 2002 (CISCA).

FTIF is not part of the Franklin Templeton Investments company group. As is required under the statute governing a SICAV, FTIFis an independent company with an independent board of directors. Although FTIF has a board of directors and is a self managedSICAV, it does not employ any staff or have and physical business premises in South Africa or elsewhere.

A collective investment scheme in general, including a SICAV, and including in particular FTIF, is not set up to have thewherewithal to be an administrator as contemplated in Section 13B(1), and is not in a position to comply with the requirements setout in Section 13B(B).

PARTICIPATING EMPLOYERS

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


SCHEDULE EREPORT OF THE BOARD OF TRUSTEESFor the period ended 30 June 2013

1. DESCRIPTION OF FUND

1.1 Type of Fund

The Municipal Gratuity Fund is a defined contribution 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 African RevenueServices in terms of paragraph (a)(iii) of the definition of “pension fund” in section 1 of the Income Tax Act, 1962, underapproval number 18/20/4/40276.

1.2 Benefits

1.2.1 Summary in terms of the Rules of the Fund

Benefits are as follows:

1.2.1.1. Retirement benefits

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

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

1.2.1.2. Resignation benefits

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

1.2.1.3. Medical disability

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

up to the age of 65 to two times annual 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 or condition 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 greater of two times annual salary or fund credit.

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

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

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

1.2.1.4. Death benefits

• Immediate needs death benefit of R20 000.

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

• A Member with more than 5 years’ service:


SCHEDULE EREPORT OF THE BOARD OF TRUSTEES (continued)For the period ended 30 June 2013

Four times annual salary plus fund credit.

• A member joining the Fund after 25 April 2013 after attaining the age of 60 shall only be entitled to onetime annual salary plus fund credit.

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

1.2.1.5. Family funeral plan

• The following family funeral cover is paid to members and their families: Member and spouse, each R10 000

Children – 14 years and older R 8 000Children – 1 to 13 years R 3 000Children – stillborn to 1 year R 1 500

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

1.2.1.6. Termination as a result of reorganisation

The member’s fund credit, plus an amount payable by the relevant local authority.Payment of this benefit is subject to prior receipt of the additional employer’s contribution.

1.2.2 Unclaimed benefits

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

1.3 Contributions

1.3.1 Members' contributions

Members contribute to the Fund at a minimum rate of 7.50% of pensionable salary.

1.3.2 Employers' contributions

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



1.4 Rule AmendmentsRule

amendmentNo.

Descriptionand

motivation

Date of board oftrustees

resolution

Effectivedate

Date registered bythe

Financial ServicesBoard

CON Consolidation of Rules 03/10/2012 03/10/2012 22/02/2013MGF01 Refer to various amendments

below05/12/2012 26/04/2013 26/04/2013

MGF01 - Description of and motivation for various r ule amendments:

•Definition of INTEREST: To specify that it is daily compound interest.

•Paragraph (d) of the definition of SERVICE: To clearly state that service whilst being a member of the Joint Municipal Pension Fund, the Municipal Employees PensionFund or the Munpen Retirement Fund will not be taken into account for purposes of death, funeral and disability benefits.

•Sections 5(2)(a), 5(3) and 5(6)(a): To delete the references to 30 June 2001,30 June 2003 and 30 June 2006 due to it referring to historical dates and to providefor the terms of office of members of the General Committee to be extended from two to four years after 30 June 2014.

•Section 5(2)(b): To provide for the Employer’s representative in the case of an UAC.

•Sections 5(10) and (11)(a): To provide for the election of Employee’s Representatives and Alternates where there are more than 500 Members at a LocalAuthority.

•Section 8: To delete historical provisions and to provide for an Executive Committee.

•Section 9(1): To correct the references to the subsections of section 8 and to delete subsection (d), following the changes to section 8.

•Section 10(1): To provide that an office-bearer’s office will no longer be terminated if he is no longer an Employee – or EmployerRepresentative and to more clearly provide for the termination of office of an office-bearer who is an independent person.

•Sections 10(2)(c) and (d), sections 10(7) and (8) and section 19(2): To correct the references to the subsections of section 8, following the changes to section 8.

•Section 12(5): To provide that the chairman determines the procedure, order and turns to speak at meetings of the Committee and generalCommittee.

•Section 13(1): To provide for the number and composition of a quorum.

•Section 16: To set out the provisions with regards to housing loans.

•Sections 27(1) and (2)(a) and 31(1): To provide for the repayment of a housing loan granted to a Member by the Fund.

•Section 27(2)(b): To set out the methods of giving notice of default and to allow the Committee to extend the period after which risk benefits willcease.

•Section 29: To provide for the seventh account referred to in section 30.

•Section 30(1)(a)(vi): To substitute the reference to “section 16(3)” with “section 16(2)”.



•Section 30(1)(b)(viii): To substitute the reference to “DEPENDANT” with “BENEFICIARY”.

•Section 30(3)(a)(i): To exclude risk premiums for members over the normal retirement age.

•Section 30(3)(b)(iii): To substitute the reference to “section 33(2) and 33(4)” with “sections 33(2) and (4)””.

•Section 30(7)(a)(i): To substitute the reference to “Fund” with “FUND”.

•Section 31(1): To provide for housing loan instalment details to be included in the contribution statement to be provided by the LocalAuthority.

•Section 31(2)(a)(i): To exclude housing loan repayments from late payment interest.

•Sections 32(2) and (4): To provide for late retirement.

•Section 33(1): To limit the death benefit of a Member who joined the Fund after age 60 to his Fund Credit plus one times his pensionablesalary, and that of a Member who has already reached the Normal Retirement Date to his Fund Credit.

•Introductory paragraph of section 35(4): Substitute the reference to “subsections (5) and (6)” with “subsections (5), (6), (7) and (8)”.

•Introductory paragraph of section 35(5): To clarify that the date when the Fund receives the application for a medical disability benefit will be used to determine if themember has less than 5 years’ service.

•Section 35(7): To limit the disability benefit of a Member who joined the Fund after age 60 to a benefit equal to the greater of his Fund Creditor one times his pensionable salary.

•Section 35(8): To limit the disability benefit of a Member who has already reached the Normal Retirement Date to his Fund Credit.



1.5 Fund Accounts

1.5.1 Share Account

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

(a) Credits

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

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

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

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

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

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

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

(b) Debits

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

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

(iii) withdrawal payments in terms of section 34;

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

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

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

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

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

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



1.5.2 Processing Account

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

(a) Credits

(i) all investment earnings earned by the Fund;

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

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

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

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

(b) Debits

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

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

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

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

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

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

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

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

1.5.3 Risk Account

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

(a) Credits

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

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

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

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



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

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

(b) Debits

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

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

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

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

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

1.5.4 Data and Operational Account

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

(a) Credits

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

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

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

(b) Debits

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

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

1.5.5 Employer Reserve Account

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

(a) Credits

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

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

(b) Debits

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

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

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



1.5.6 Member Reserve Account

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

(a) Credits

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

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

(b) Debits

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

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

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

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

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

1.5.7 Reverted Unclaimed Benefits Account

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

recorded in this account:

(a) Credits

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

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

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

(b) Debits

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

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

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

.



2. INVESTMENTS

2.1 Investment Policy Statement (IPS)

The Management Committee (Board of Trustees), introduced the Investment Policy Statement (IPS) during the 2004/5financial year. The goal of the IPS is to create sufficient returns over 35 contribution years in order that the lump 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. The investmentmandates to asset managers were instead allocated as specialist mandates in the respective asset classes from August2004.

The IPS is reviewed when any major event occurs that may have an effect on the investment strategy of the Fund, but atleast once a year. The IPS review for this reporting period was done during August 2012.

2.1.1 Life Stage Model

The three life stage portfolios as contemplated by the initial IPS have been implemented during July 2005 with an additional category added in 2011. The members’ fund credits, excluding those invested in the GuaranteedPortfolio, were transferred to the four life stage portfolios according to age groupings. The daily values of theinvestments are electronically imported from the investment administrators’ records to the unitisation platform ofthe benefit administrator. The fund credit of each member is accordingly adjusted daily to the daily market valueof the units in the three life stage portfolios. The IPS is reviewed at least annually and adjustments are being made if necessary to align the investment strategy with the changing investment environment as well as with new legislation.

The four life stage portfolios are currently as follows:

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

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

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

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

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

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

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

A fourth life stage was included from July 2011, called the Protected Portfolio (PP). This is an ultra conservative portfolio for members from 63 to 65 years. Therefore the age band of the CP has been changed accordingly to 60 years to <63 years effective July 2011. The Protected Portfolio is aimed at capital protection rather than a realcapital growth and assets are invested in cash products.



2.1.2 Guaranteed Portfolio (GP)

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

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

The fund credits of members, split between the GP and another portfolio, will not automatically be re-balanced tothe original chosen percentage split between the two portfolios unless specifically requested by submitting a newoption form before or on 31 May of every financial year.

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

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

2.1.3 Exit Portfolio (EP )

An Exit Portfolio, invested in cash, is used to protect the members' fund credits upon termination of membership until payment of benefits. As soon as an exit form is received for a member, the fund credit of such member is transferred to the Exit Portfolio.

2.1.4 Default and Member Investment Choices

Members are automatically without prior notice, transferred from one life stage to the next as they reach the relevant age. This transfer is however not done at once when reaching the relevant age as the investment markets may be very low on such one specific day with negative results for a member migrating from the more aggressive to the more conservative next phase portfolio. To prevent such single day event, members are switched from one life stage portfolio 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 of members are automatically invested in the relevant life stage portfolio according to age, members may, subject to certain conditions, exercise a written choice if they wish to invest contrary to the applicable life stage (AP, MP, CP or PP) or if they wish to invest in the GP. Investment according to the life stage portfolios is an integrated investment model in accordance with the IPS (Investment Policy Statement). The probability is good to obtain the targeted return over a long term. Members should therefore be very cautious to chase short-term returns by electing contrary to the life stage portfolios, with possible disastrous results. Younger members should be careful not to be over conservative and forfeit returns in the long run. Members' fund credits may be split between the five portfolios (AP, CP, MP, PP and GP) to a maximum of two portfolios. Members are therefore not allowed to be invested in more than two investment portfolios at any one stage. Members who exercised a member investment choice will remain invested accordingly until written notification to the Fund otherwise. If a member elects to split her/his investment between two portfolios, the different returns of each investment portfolio will cause a drift from the chosen percentages split. Members’ fund credits will not automatically be rebalanced to the original chosen percentage split between the two portfolios. A new option form must be submitted when a member wants such rebalance.

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

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



2.2 Investment guidelines

2.2.1 Asset Management

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

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

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

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

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

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

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

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

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

2.2.2 Structured Products

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

2.2.2.2 The structured products are used to obtain capital protection by virtue of total or partial capital guarantees and even a fixed but limited guaranteed return above the capital invested and also possible further returns capped at a certain level by means of equity exposure through derivative instruments. The latter is not guaranteed and depends on the equity returns.

2.2.2.3 The CADIZ and ASP structured products are applied as underlying investments to underwrite the benefits of the Guaranteed Portfolio.

2.2.3. Properties

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

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

2.2.3.2 The Fund is mainly a long-term investor in property. However the possibility to acquire and sell properties over shorter periods are investigated regularly to ensure an active asset management.

However, due to the implementation of unitisation where daily values of assets are essential, the direct property exposure of the Fund has been decreased.



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

management of the property portfolio.

2.3 Surplus Apportionment Allocations

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

2.3 Reserve Accounts

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

2.5 Management and Performance of Investments

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

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

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

The fair value of the Fund's investment, administered by the investment administrators and the Fund at the end of the periodwas as follows:

2013R

2012R

ABSA Asset Management (Pty) Ltd 609,380,633 608,949,872ABSA Capital Alternative Asset Management (Pty) Ltd 706,505,981 622,060,938ABSA Joint Venture (Direct Property) 37,400,000 40,000,000ABSA Settlement Account 263,387,751 478,745,093Afena Capital (Pty) Ltd 112,572,493 104,390,802Allan Gray South Africa (Pty) Ltd 2,423,471,053 1,984,593,762Argon Asset Management (Pty) Ltd 226,118,912 106,156,368Blue Ink Investments 226,374,500 -Brait South Africa Limited - 253,275,561Cadiz Asset Management (Pty) Ltd 819,117,288 994,060,207Coronation Fund Managers Limited 1,911,741,996 1,205,826,053Edge Capital (Pty) Ltd 514,821,557 421,412,292Foord Asset Management 103,545,776 -Franklin Templeton Investment Funds (SICAV) 510,678,548 347,485,503Futuregrowth Asset Management (Pty) Ltd 880,741,191 355,551,369International Cash Holdings 19,496,499 8,627,441Investec Asset Management (Pty) Ltd 1,862,875,385 1,917,295,273Momentum Asset Management (Pty) Ltd 898,475,351 730,425,516Old Mutual Investment Group South Africa (Pty) Ltd 798,194,371 1,100,299,944Sanlam Investment Management (Pty) Ltd 1,535,130,190 1,285,897,944Sanlam Multi Manager International (Pty) Ltd (ETF's) 395,537,686 276,086,673

Total value of investments managed 14,855,567,161 12,841,140,611



3. MEMBERSHIPActive

membersUnclaimed

benefitsNumber at the beginning of period 30,455 145 Adjustments - Late exits from 2012 - Late entrants to 2012

(288)(306)

18

7-7

Additions 1,981 - Withdrawals (618) Retirements (602) Deaths (326)

Number at the end of the period 30,602 152

The downward adjustment in the opening balance is due to members who exited in prior years, but the administrator onlyreceived the exit form after the date the member's fund credit was extracted to provide for exits. The increase in the openingbalance is new members that joined the employer during the 2012 financial year, but the administrator received theapplication forms after the 2012 year end.

4. ACTUARIAL VALUATION

The financial statements summarise the transactions and net assets of the Fund. It does not constitute an investigation tothe financial condition of the Fund with relation to future liabilities as contemplated by section 16 of the Pension Funds Act,1956. In accordance with the Rules of the Fund, the actuarial position of the Fund, which does take account of suchliabilities, if any, is examined and reported on by the actuary as contemplated by section 16 of the Pension Funds Act at threeyears intervals. The last such statutory actuarial valuation was done as at 30 June 2011 reflecting the solvency of the Fund. The Actuaryalso conducts an interim actuarial valuation on an annual basis for the intervening two years. This is done according to thefull scope as for a statutory valuation, the last being done for the current reporting period ending 30 June 2013. The nextstatutory actuarial valuation will be done as at 30 June 2014.

Refer to the report of the valuator on page 46.



5. HOUSING LOAN FACILITIES

5.1 Direct Housing loans to members have been granted until 31 May 2007 in terms of section 16(3) of the Rulesof the Fund and the 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 administration fee, is directly allocated to a member’s fund credit and does not form part of the growth of the Fund. With effect 28 January 2011 the minimum prescribed interest rate is the repo rate as determined by the South African Reserve Bank from time to time plus 5.5% per annum. The repo rate during thereporting period was 5% resulting in a total interest rate of 10.5% on housing loans financed directly from a member’s fund credit.

5.2 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 may apply for a home loan with Standard Bank or First National Bank up to a maximum of 50% of the member’s fund credit. The loan is granted against the security of the member’s fund credit. Members must comply with all the requirements of the National Credit Act to qualify for such loan. Members with existing housing loans granted directly from their fund credits in terms of the previous dispensation may maintain such direct loans or transfer them to Standard Bank or FNB. A member may only have a pension-backed home loan with either Standard Bank or FNB and not with both. Loans may be transferred between Standard Bank or FNB. The current rates and fees of the said banks are as follows:

Initial fee Monthly admin fee Interest rate Standard Bank R450 R27.50 Prime minus 0.25%FNB Nil R5.70 Prime minus 1.25%

6. INVESTMENTS IN PARTICIPATING EMPLOYERS

The Fund does not invest in any of the participating employers.

7. SUBSEQUENT EVENTS

During the previous reporting period it was reported that a potential fraudulent benefit payment was investigated. In thecurrent year a complaint was submitted to the Pension Fund Adjudicator and the matter is currently with the Adjudicator foradjudication. Further action will depend on the outcome in this regard.

No other matter that is material to the financial affairs of the Fund, has taken place between 30 June 2013 and the date of approval of the financial statements.


SCHEDULE FSTATEMENT OF NET ASSETS AND FUNDSAs at 30 June 2013

30 June 30 June2013 2012

Notes R R

ASSETS

Non-current assets 14,984,740,413 13,004,629,950Property, plant and equipment 2 273,418 39,804Investments 3 14,855,567,161 12,841,140,610Housing loan facilities 4 128,899,834 163,449,536

Current assets 164,222,233 197,033,565Accounts receivable 5 43,412,088 25,165,027Contributions receivable 10 36,505,342 32,680,207Cash at bank 84,304,803 139,188,331

Total assets 15,148,962,646 13,201,663,515

FUNDS AND LIABILITIES

Members' fundsMembers' individual accounts 14,234,943,264 12,460,385,094Amounts to be allocated 16 85,096,219 76,676,309

14,320,039,483 12,537,061,403

ReservesReserve accounts 15 245,237,414 273,805,780

Total funds and reserves 14,565,276,897 12,810,867,183

Non-current liabilities 2,682,643 1,673,333Provisions: Audit fees 558,600 513,000Unclaimed benefits 8 2,124,043 1,160,333

Current liabilities 581,003,106 389,122,999Benefits payable 7 569,495,740 380,285,755Accounts payable 9 11,507,366 8,837,244

Total funds and liabilities 15,148,962,646 13,201,663,515


SCHEDULE GSTATEMENT OF CHANGES IN NET ASSETS AND FUNDSFor the period ended 30 June 2013

NotesA

Members' individualaccounts & amounts

to be allocated

BReserve accounts

Refer note 15

A+BTotal

Current PeriodTotal

Previous Period

R R R R

Contributions received and accrued 10 1,114,543,190 228,859,042 1,343,402,232 1,251,508,003Net investment income 11 15,410,898 1,721,188,463 1,736,599,361 1,032,821,095Allocated to unclaimed benefits 8 - (66,122) (66,122) -Other income - 37,990 37,990 -Less: (365,406) (33,279,533) (33,644,939) (31,798,919)Re-insurance premiums - (6,672,396) (6,672,396) (6,954,081)Administration expenses 12 (365,406) (26,607,137) (26,972,543) (24,844,838)Net income before transfers and

benefits1,129,588,682 1,916,739,840 3,046,328,522 2,252,530,179

Transfers and benefits (877,569,047) (414,349,782) (1,291,918,829) (897,941,361)Transfer from other funds 6 3,613,551 - 3,613,551 43,829,556Benefits 7 (881,182,598) (414,349,782) (1,295,532,380) (941,770,917)

Net income after transfers and benefits 252,019,635 1,502,390,058 1,754,409,693 1,354,588,818

Funds and reservesBalance at beginning of period 12,537,061,424 273,805,780 12,810,867,204 11,456,278,365

Transfer between reserve accounts 15 1,530,958,424 (1,530,958,424) - -

Balance at end of period 14,320,039,483 245,237,414 14,565,276,897 12,810,867,183


SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTSFor the period ended 30 June 2013

1. PRINCIPAL ACCOUNTING POLICIES

The following accounting principles, which are consistent with those of the previous period, are used by the Fund:

1.1 PURPOSE AND BASIS OF PREPARATION OF ANNUAL FINANCIAL STATEMENTS

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

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

1.2 FINANCIAL INSTRUMENTS

MEASUREMENT

A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability orequity instrument of any other entity. A financial asset or a financial liability is recognised when its contractualarrangements become binding and is derecognised when the contractual rights to the cash flows of the instrumentexpire or when such rights are transferred in a transaction in which substantially all risks and rewards of ownershipof the instrument are transferred.

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.Upon initial recognition financial instruments are designated at fair value through the statement of changes in netassets and funds as the assets or liabilities are managed, evaluated and reported internally on a fair value basisand/or the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise.

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

1.2.1 INVESTMENTS

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

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

Loans and receivables are non-derivative financial assets with fixed or determined payments that are not quoted inan active market other than those that the Fund intends to sell in the short term or that is designated as at fair valuethrough the 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.

Listed debentures

The fair value of listed debentures 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 fundsdate.

Unlisted debentures

Unlisted debentures are financial assets with fixed or determinable payments and fixed maturity dates or the optionby the investor to exit with prior notice. Fair value is estimated using pricing models or by applying appropriatevaluation techniques such as discounted cash flow analysis or recent arm’s length market transactions in respect ofthe unlisted debenture.


SCHEDULE HANOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)For the period ended 30 June 2013

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 fundsdate.

Unlisted bills and bonds

A market yield is determined by using appropriate yields of existing bonds and bills that best fit the profile of theinstrument being measured and based on the term to maturity of the instrument. Adjusting for credit risk, whereappropriate, a discounted cash flow model is then applied, using the determined yield, in order to calculate the fairvalue.

Investment property

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

Investment properties are reflected at valuation on the basis of open-market fair value at the statement of net assetsand funds date. In the open-market valuation information cannot be reliably determined; the Fund uses alternativevaluation method such as discounted cash flow projections or recent prices on active markets for transactions ofsimilar nature. The fair values are the estimated amounts for which a property could be exchanged on the date ofvaluation between a willing buyer 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 JSE, equities with secondary listing on the JSE,foreign listed equities and unlisted equities.

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

Listed equities

Equity instruments 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 equity instruments with standard terms andconditions and traded on active liquid markets is based on regulated exchange quoted ruling closing prices at theclose of business on the last trading day on or before the statements of net assets and funds date.

Unlisted equities

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

Preference shares

Listed preference shares

The fair value of listed preference shares traded on active liquid markets is based on regulated exchanged quotedruling closing prices at the close of business on the last trading day on or before the statement of net assets andfunds date.



Unlisted preference shares

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

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

Linked or market-related policiesIf the policy is unitised, the value is equal to the market value of the underlying units. Other linked or market-relatedpolicies are valued at the market value of the underlying assets for each policy, in line with the insurer’s valuationpractices.

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

Derivative Market Instruments Derivative market instruments consist of options, equity linked instruments, futures/forwards – SAFEX/foreign,currency swaps 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 marketprices in active markets, including discounted cash flow models and option pricing models, as appropriate. Allderivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. The Funddoes not classify any derivatives 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 ofthe consideration given or received) unless the fair value of that instrument is evidence by comparison with otherobservable current market transactions in the same instrument (i.e. without modification or repackaging) based on avaluation technique whose variables include only data from observable markets.

OptionsOptions are valued using option pricing modules.

Futures/forwardsThe 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.

Investment in participating employers

Investments in participating employer(s) comprise loans, investments in listed and unlisted equities and otherinvestments. 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 bythe fund and 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 inthe statement of changes in net assets and funds. The fair value of hedge fund investments traded on active liquidmarkets is based on regulated exchange quoted ruling closing prices at the close of business on the last trading dayon or before the statement 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 inthe statement of changes in net assets and funds. The value of the financial asset owned by the Fund is measuredin relation to the percentage holdings by each investment partner in the total fair value of the hedge fund. The fairvalue is estimated using pricing models or by applying appropriate valuation techniques such as discounted cashflow analysis or recent arm’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 inthe statement of changes in net assets and funds. As the Fund has the right to the underlying instrument, a lookthrough principle is applied, and the underlying instrument are separately measured and disclosed. The fair value isestimated using pricing models or by applying appropriate valuation techniques such as discounted cash flowanalysis or recent arm’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 includedin the structure and/or arrangement. If there are instruments within the structured product that require differenttreatment, these may need to be treated separately.

1.2.2 HOUSING LOANS

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

1.2.3 ACCOUNTS RECEIVABLE

Accounts receivable are financial assets measured initially at fair value and subsequently measured at amortisedcost using the effective interest rate method, less any allowance for impairment.

1.2.4 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.

1.2.5 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.



1.2.6 PROPERTY, PLANT AND EQUIPMENT

All property, plant and equipment are initially recorded at cost and subsequently stated at historical cost lessdepreciation. Depreciation is charged to the income statement.

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

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amountand 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 usefullives, are charged against income.

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values overtheir estimated useful life as follows:Electronic equipment 4 yearsFurniture 10 yearsVehicles 5 years

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

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amountand 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 usefullives, are charged against income.



1.3 RESERVES

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

1.4 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions

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

Contingent liabilities

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

Contingent assets

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

1.5 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 Rules of the Fund. Contributionsreceived are apportioned between retirement funding and funding for risk and other expenses. The apportionment isgoverned by the Rules of the Fund and actuarial recommendations.

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

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

Interest charged on late payment of contributions

Compound interest on late payments or unpaid amounts and values shall be calculated for the year from the first dayof the 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.

1.6 FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for at the ruling rate of exchange on the transaction date. Assetsand liabilities in foreign currencies are converted at the ruling rate of exchange on the statements of net assets andfunds 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 appropriateweighted average exchange rates, for the period.



1.7 INVESTMENT INCOME

Dividends

Dividend income is recognised in the statement of changes in net assets and funds when the right to receivepayment is established – this is the last date to trade for equity securities. For financial assets designated at fairvalue through the statement of changes in net assets and funds, the dividend income forms part of the fair valueadjustment.

Interest

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

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 thefinancial asset.

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 inthe statement 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 ofchanges in net assets and funds are presented in the statement of changes in net assets and funds in the year inwhich they arise.

Expenses incurred in managing investments

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

1.8 BENEFITS

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

Benefit payments are recognised 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 year are recognised as a current liability.

1.9 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/arrangementof transfer of business by the Financial Services Board, as contained in the approval certificate from the Registrar.

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

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



1.10 ADMINISTRATION EXPENSES

Expenses incurred in the administration of retirement funds are recognised in the statement of changes in net assetsand funds in the 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 theaccounts payable note. If the expense was paid in advance or overpayment occurred, the applicable amount will bedisclosed under the accounts receivable note.

1.11 RELATED PARTIES

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

If there have been transactions between related parties, the Fund shall disclose the nature of the related partyrelationship as 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 inthe 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.

1.12 ACCOUNTING POLICIES, CHANGING 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 affectedby the change.



2. PROPERTY, PLANT AND EQUIPMENT

2.1 Current period

Gross carrying amount

Furniture andequipment

R

VehiclesR

Total

RCost at beginning of period 281,825 280,485 562,310Additions - 256,324 256,324Disposals - (138,207) (138,207)At end of period 281,825 398,602 680,427

Accumulated depreciation and impairmentAt beginning of period (244,392) (278,114) (522,506)Depreciation charges (11,796) (10,913) (22,709)Accumulated depreciation on disposals - 138,206 138,206At end of period (256,188) (150,821) (407,009)

Net carrying amount at end of period 25,637 247,781 273,418

2.2 Prior period

Gross carrying amount

Furniture andequipment

R

VehiclesR

Total

RAt beginning of period 251,544 280,485 532,029Additions 30,281 - 30,281At end of period 281,825 280,485 562,310

Accumulated depreciation and impairmentAt beginning of period (235,118) (249,658) (484,776)Depreciation charges (9,274) (28,456) (37,730)At end of period (244,392) (278,114) (522,506)Net carrying amount at end of period 37,433 2,371 39,804



3. INVESTMENTS

3.1 Investment summaryA B A+B

Notes Local

R

Foreign

R

Total currentperiod

R

Total previousperiod

R

Fair valuecurrent period

RCash and deposits 1,184,932,029 54,788,512 1,239,720,541 2,726,303,325 1,239,720,541Debentures - - - 502,494,000 -Bills, bonds and securities 3,248,944,369 35,719,947 3,284,664,316 1,189,339,238 3,284,664,316Investment Properties 3.2 37,400,000 - 37,400,000 40,000,000 37,400,000

5,628,097,636 229,686,864 5,857,784,500 4,878,954,022 5,857,784,500- Equities with primary listing

on JSE3,647,383,834 - 3,647,383,834 3,399,703,200 3,647,383,834

- Equities with secondarylisting on JSE

1,965,056,805 - 1,965,056,805 1,432,402,470 1,965,056,805

- Foreign listed equity - 229,686,864 229,686,864 - 229,686,864- Equity index-linked

instruments12,914,422 - 12,914,422 - 12,914,422

- Unlisted equity 2,742,575 - 2,742,575 46,848,352 2,742,575Preference shares 5,600,683 - 5,600,683 85,176,897 5,600,683

Insurance policies 451,040,156 - 451,040,156 768,221,924 451,040,156- Market related insurance

policies451,040,156 - 451,040,156 768,221,924 451,040,156

Collective investment scheme 1,522,011,389 2,452,802,313 3,974,813,702 2,651,407,210 3,974,813,702Derivative market investments - - - (756,006) -Other 3,516,520 1,026,743 4,543,263 - 4,543,263

12,081,542,782 2,774,024,379 14,855,567,161 12,841,140,610 14,855,567,161

3.2 Investment properties

Description

At beginning ofperiod

R

Additions

R

Disposals

R

Fair valueadjustments

R

Transfer to/fromowner occupied

propertiesR

Other

R

At end of period

RAbsa Square Nelspuit 40,000,000 - - (2,600,000) - - 37,400,000

40,000,000 - - (2,600,000) - - 37,400,000

The investment property held directly by the Fund was revalued based on market research done by an independent registered valuator who specializes in commercial property valuation. Thenew valuation indicated a market value of R37.4 million which was adopted by the Board of Trustees with effect 1 July 2012. The previous valuation was done during 2011.



4. HOUSING LOAN FACILITIES


Repaid Interest capitalised Otheradjustments

At end of period

R R R R RLoans granted in terms of the

Rules of the Fund andsection 19(5) of thePension Funds Act, 1956

163,449,536 (49,960,600) 15,043,148 367,750 128,899,834

163,449,536 (49,960,600) 15,043,148 367,750 128,899,834

Housing loans granted to members are secured by cession of a member's fund credit. With effect from 28 January 2011 the minimum prescribed interest rate is the repo rate asdetermined by the South African Reserve Bank from time to time (currently 5%) plus 5.5% per annum, currently 10.5% in total. The amount included in other adjustments relates to administration expenses and overpayments received.

Housing loan guarantees

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

Institution

Fair valuecurrent period

R

Fair value prior period

RStandard Bank 730,297,754 665,878,879FNB 35,811,646 10,819,678Participating Employers 5,191,162 5,508,213

771,300,562 682,206,770

The total pension backed lending facility with Standard Bank amounts to R950,000,000 and with FNB amounts to R150 000 000. The renewal dates for the Standard Bank facilityand the FNB facility are 30 June 2014 and 30 April 2014 respectively.

The guarantees in respect of the participating employers are in the form of endorsements to the members' records for collateral investments made by the participating employerswith the financial institutions to support the granting of housing loan facilities between the individual member and these institutions. No such endorsements have been made sinceinception of the final phase of the National Credit Act with an effective date of 1 June 2007.

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.



5. ACCOUNTS RECEIVABLE

2013 2012R R

SEB - overpayment of PAYE to SARS - 42Outstanding penalty interest 753,843 468,557Capital trade timing difference 22,507,318 24,638,190Overpayment of expense, refund received after year-end - 58,238SEB - investment income (*) 20,150,927 -

43,412,088 25,165,027

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



6. TRANSFERS FROM OTHER FUNDS

A B C D A+B+C-D

Effectivedate

No. ofmembers

Applied for notyet approved(contingent)

At beginning ofthe period

Transfersapproved

Return onTransfers

Assetstransferred

At end of period

R R R R R RIn terms of section 14Botshelo Water Provident Fund 15/11/2012 2 - - 327,676 - (327,676) -Government Employees Pension Fund 31/10/2012 1 - - 216,484 - (216,484) -Government Employees Pension Fund 30/11/2012 1 - - 209,561 - (209,561) -Jouberton Town Council Provident Fund 04/02/2004 83 - - 501,364 - (501,364) -Individual transfers 5 - - 2,358,466 - (2,358,466) -Total 92 - - 3,613,551 - (3,613,551) -

Transfers approved (B) 3,613,551Return on transfers (C) -Statement of changes in net assets and funds 3,613,551

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



7. BENEFIT PAYMENTS

7.1 Benefits - current membersA B C D E A+B+C-D-E


Benefits for currentperiod

Return allocated Payments Transferred tounclaimed benefits

At end of period

R R R R R RLump sums on retirements - Full benefit 84,579,832 614,559,067 - (597,250,111) - 101,888,788Lump sums before retirement - Disability benefits 1,694,678 24,386,351 - (23,507,177) - 2,573,852 - Death benefits 257,414,576 375,030,355 14,228,624 (180,034,330) (897,587) 465,741,638 - Withdrawal benefits 36,596,669 265,307,651 - (303,738,778) - (1,834,458)Other - Reverted Unclaimed Benefits - 700,832 - (700,832) - -

380,285,755 1,279,984,256 14,228,624 (1,105,231,228) (897,587) 568,369,820

Benefits for current period (B) 1,279,984,256Return allocated (C) 14,228,624Statement of changes in net assets and funds 1,294,212,880

7.2 Benefits in terms of surplus apportionment

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

periodSurplus allocated Return allocated Payments Transferre d to

unclaimed benefitsAt end of period

R R R R R REnhancements to former members - 1,319,500 - (193,580) - 1,125,920Total Benefits (7.2) - 1,319,500 - (193,580) - 1,125,920

Surplus allocated (B) 1,319,500Return allocated (C) -Statement of changes in net assets and funds 1,319,500

Total benefits (7.1+7.2) 380,285,755 1,281,303,756 14,228,624 (1,105,424,808) (897,587) 569,495,740



8. UNCLAIMED BENEFITS

2013 2012R R

At beginning of the period 1,160,334 1,154,057Transferred from benefits payable 897,587 -Investment income allocated 66,122 -- Interest provision and other adjustments - 21,437- Benefits paid - 15,161Balance at the end of the period 2,124,043 1,160,333

9. ACCOUNTS PAYABLE

2013 2012R R

Reinsurance premiums 472,285 578,864Administration costs and loan administration fees 3,404,328 3,096,264Sundry Creditors 156,409 -Asset management fees 6,246,959 4,174,476Unallocated housing loan refunds from Standard Bank 78,138 78,135Sundry participating employers (contribution overpayments) 1,142,516 909,505Refunds due - direct housing loan overpayments 6,731 -

11,507,366 8,837,244

10. CONTRIBUTIONSA B C D A+B+C-D

At beginning ofthe period

Towardsretirement

Towards re-insurance and

expenses

Contributionsreceived

At end of theperiod

R R R R RMember contributions -received and accrued 8,349,977 358,875,136 - (358,082,112) 9,143,001Employer contributions -received and accrued 24,330,230 754,489,663 228,859,042 (980,316,594) 27,362,341Additional voluntarycontributions - employer - 428,129 - (428,129) -Additional voluntarycontributions - members - 750,262 - (750,262) -

32,680,207 1,114,543,190 228,859,042 (1,339,577,097) 36,505,342

Towards retirement 1,114,543,190Towards reinsurance and expenses 228,859,042Statement of changes in net assets and funds 1,343,402,232

11. NET INVESTMENT INCOME

2013 2012R R

Income from investments 577,097,132 564,445,880�� Dividends 175,471,037 198,978,743�� Interest 395,205,296 354,836,422�� Rentals 6,420,799 10,630,715Adjustment to fair value 1,236,045,872 531,577,829

1,813,143,004 1,096,023,709Less: Expenses incurred in managing investments (76,543,643) (63,202,614)

1,736,599,361 1,032,821,095



12. ADMINISTRATION EXPENSES

2013R

2012R

Actuarial fees 434,340 365,940Administration fees 18,562,798 17,129,315Audit fees 608,760 566,637- Audit fees - Audit services 558,600 513,000- Audit fees - Trustee training - 17,100- Audit fees - Overrun on prior year audit 36,480 33,687- Audit fees - Internal audit fees 13,680 2,850Depreciation 22,711 37,729Other expenses 1,619,638 1,696,414Communication expenses 960,479 890,441FSB Levy 463,328 403,831Post retirement medical contributions 26,460 25,113Medical assessment costs 169,371 377,029Office expenses 1,341,016 1,283,744Principal officer expenses 1,328,074 1,179,235Staff expenses 2,109,462 1,805,339Trustees' expenses 12.1 945,744 780,485

26,972,543 24,844,838

12.1 Trustees' expenses

2013R

2012R

Trustees' fees - Subsistance and travel allowances forattendance of meetings

690,198 623,079

Trustees' fees - Subsistance and travel allowances andincidental costs for training

255,546 157,406

945,744 780,485

13. RISK MANAGEMENT POLICIES

Solvency riskSolvency 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 Trustees and the Fund's actuary takes place to ensure that appropriate assetsare held where the Fund's obligation to members are dependant 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 Trustees determines the restrictions applicable to bond investments, cash investments and to othercredit exposure for the Fund and specifies the minimum credit rating and the maximum limit per specific issuerdepending on 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.

The Board of Trustees ensures that legal representatives of the Fund monitor the drafting of contracts to ensure thatrights and obligations of all parties 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 the case 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 Trustees ensures that cash flows are monitored 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 the Fund for thepurpose of seeking desirable international diversification of investments.

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

Liquidity risk

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

The Board of Trustees ensures that the Fund's liabilities are backed by appropriate assets and it has significant liquidresources.

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

Investments

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



14. RELATED PARTIES

The following transactions between the participating employers and the Fund occurred during the period:

The participating employers made contributions to the Fund for members' retirement to the value of R754,917,792(2012: R704,928,946) and towards the Fund's risk reserve and administration expenses to the value of R228,859,042(2012: R212,247,544) respectively (refer to note 10 of the financial statements).

During the year under review a total amount of R694,070 was contributed to the Fund on behalf of the membertrustees in respect of their individual pension contributions in terms of the provisions of the Fund Rules. This amountconsists of contributions by the member trustees as well as their employers. Of the total amount R586,215 wascontributed towards the member trustees' retirement provision and R107,855 was contributed towards the Fund's riskbenefits and administration expenses. These contributions are the standard member and employer contributions interms of the Fund Rules made in respect of the trustees in their capacity as employees and are disclosed merely fortransparency reasons. This is not remuneration to the trustees by the Fund.`

15. SURPLUS AND RESERVESReserve Accounts Processing

AccountRisk Account Data and

OperationalAccount

R R R RAt beginning of period 273,805,780 - 265,574,477 8,231,303Contributions received andaccrued

228,859,042 - 203,596,489 25,262,553

Net investment income 1,721,188,463 1,701,282,745 19,435,825 469,893Allocated to unclaimed benefits (66,122) (66,122) - -Other income (specify) 37,990 - - 37,990- Profit on sale of fixed assets 37,990 - - 37,990Less: (33,279,533) - (6,846,851) (26,432,682)- Reinsurance premiums (6,672,396) - (6,672,396) -- Administration expenses (26,607,137) - (174,455) (26,432,682)Net income before transfers and benefits 2,190,545,620 1,701,216,623 481,759,940 7,569,057Transfers and benefits (414,349,782) (8,616,002) (405,733,780) -Benefits (414,349,782) (8,616,002) (405,733,780) -Net income after transfers andbenefits

1,776,195,838 1,692,600,621 76,026,160 7,569,057

Transfer between reserveaccounts

(1,456,420,830) (1,669,810,163) 213,389,333 -

Surplus distribution (74,537,594) - (74,537,594) -At end of period 245,237,414 22,790,458 214,877,899 7,569,057

16. AMOUNTS TO BE ALLOCATED

2013R

2012R

Investment return to be allocated 23,477,177 10,697,622Contributions allocated to members after year-end 36,505,365 35,832,449Housing loan installments allocated to members after year-end 475,442 -Capital trade timing difference 24,638,235 -Excess balance in bank - 30,146,238Total amounts to be allocated 85,096,219 76,676,309

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Pag

e 55

MUNICIPAL GRATUITY FUNDSCHEDULE IA - SCHEDULES PERTAINING TO THE ANNUAL FINANCIAL STA TEMENTSFor the period ended 30 June 2013

A DIRECT CASH AND DEPOSITS

Fair valueR

ABSA Bank - Current account 84,304,803ABSA Bank Ltd 548,148,015CITI Bank 27,467Deutsche Bank - JHB Branch 21Firstrand Bank Ltd, Incl RMB 8,538,651HSBC Bank Ltd - RSA Branch 1,479,660Investec Bank Ltd 379,220JP Morgan Chase Bank 38,977,114Nedbank Ltd 989,813SAFEX Margin 8,156,110Standard Bank of SA Ltd 8,896,926ABSA Capital Structured Product 609,380,633Bank of New York 1,389,141Bank Windhoek Ltd 10,423,476Investec Bank Limited 1,392,027Other offshore holdings 1,542,267Total 1,324,025,344

B DIRECT LOANS

Secured by Fair value

R

Housing loans Members' pension fund credits 128,899,834Total 128,899,834

C DIRECT BONDS AND DEBENTURES

C1 Bills, bonds and securities

Secured Fair valueDIRECT HOLDINGS by/unsecured RLocal authorities Government 577,580,426Corporate bonds 2,671,363,943Foreign Bonds (Government and Corporate Bonds) Government 35,719,947Total bills, bonds and securities 3,284,664,316


D DIRECT PROPERTIES

Fair valueDIRECT HOLDING RCommercial properties 37,400,000Total properties 37,400,000

List properties

Investment properties Valuation method Date of lastvaluation

Fair Value

R

% of non-currentassets

includingbank

Absa Square Nelspuit Market research including cashflow projections

01/07/2012 37,400,000 0.25%

E DIRECT EQUITIES

TotalR

E1 Primary listing on JSE 3,647,383,834E2 Secondary listing on JSE 1,965,056,805E3 Foreign listed equities 229,686,864E4 Equity linked instruments 12,914,422E5 Unlisted Equities 2,742,575Total equities 5,857,784,500


E1 Primary listing on JSE

Direct Holdings Issued shares Holding number Holding F air value

% RA E C I Ltd 14,683,610,530 171,348 - 19,619,346ABSA Bank Ltd 111,322,556,665 800,244 - 124,037,882Acucap Properties Ltd 8,771,829,767 77,514 - 3,705,187Adcock Ingram Holdings Ltd 11,385,221,120 338,569 - 22,006,985Adcorp Holdings Ltd 2,719,464,805 879,452 0.03 26,049,359Advtech Ltd 2,948,976,954 503,473 0.02 3,524,308Afgri Ltd 1,558,339,857 1,803,157 0.12 7,483,102African Bank Investments Ltd 13,314,044,284 455,746 - 7,437,775African Oxygen Ltd 7,199,911,110 6,027 - 126,567African Rainbow Minerals Ltd 32,291,995,807 156,026 - 23,366,454Alexander Forbes Preference Share InvLtd

3,550,736,115 713,452 0.02 10,701,780

Allied Electronics Corporation Ltd 2,166,217,186 1,277,663 0.06 26,192,099Allied Technologies Ltd 4,844,731,592 237,345 - 10,827,656Anglo American Platinum Ltd 79,556,156,370 291,923 - 86,117,285Anglogold Ashanti Ltd 53,719,822,803 853,791 - 119,513,664Arcelormittal South Africa Ltd 14,264,068,224 787,492 0.01 25,199,744Argent Industrial Ltd 540,347,388 1,402,531 0.26 7,854,173Arrowhead Properties Ltd - A 1,486,049,400 218,939 0.01 1,576,364Arrowhead Properties Ltd - B 1,444,770,250 61,868 - 433,077Ascension Properties Ltd - A Units 1,077,411,124 51,571 - 245,992Aspen Pharmacare Holdings Ltd 103,484,605,910 165,369 - 37,550,339Astral Foods Ltd 3,786,655,828 85,778 - 7,706,329Astrapak Ltd 932,405,625 303,511 0.03 2,094,223Aveng Ltd 11,656,159,100 1,854,388 0.02 55,446,201AVI Ltd 20,448,014,232 213,195 - 12,674,443B&W Instrumentation & Electrical Ltd 74,259,136 186,139 0.25 65,149Barloworld Ltd 18,835,159,946 169,229 - 13,792,164Basil Read Holdings Ltd 1,048,286,477 386,268 0.04 3,074,690Bidvest Ltd 80,278,670,859 184,806 - 45,268,230Blue Label Telecoms Ltd 5,294,895,980 1,301,302 0.02 10,215,220Bowler Metcalf Ltd 689,738,915 97,938 0.01 763,916Brimstone Investment Corp Ltd 3,673,238,580 5,911 - 81,272Business Connexion Group Ltd 2,024,862,340 966,117 0.05 4,830,585Capevin Holdings Ltd 5,896,691,876 2,309,486 0.04 15,473,556Capital & Counties Properties Plc 36,943,583,877 187,602 - 9,188,746Capital Property Fund 17,098,334,009 1,201,156 0.01 12,780,300Cashbuild Ltd 3,350,244,863 1,054 - 140,170Caxton CTP Publishers & Printers Ltd 8,336,895,140 413,400 - 7,379,190Cipla Medpro South Africa Ltd 4,161,023,594 1,505,176 0.04 14,028,241City Lodge Hotels Ltd 5,174,718,360 2,961 - 355,268Clover Industries Ltd 3,017,282,181 174,554 0.01 2,906,329Comair Ltd 1,296,317,648 5,283,297 0.41 14,000,737Combined Motor Holdings Ltd 1,428,862,824 9,504 - 124,506Consolidated Infrastructure Group Ltd 2,472,893,558 4,443 - 83,977Coronation Fund Managers Ltd 21,949,893,651 409,194 - 25,676,924Country Bird Holdings Ltd 769,286,888 40,422 0.01 153,602Datacentrix Holdings Ltd 800,536,164 963,218 0.12 3,756,550Datacraft Asia 240,911,210 38,227 0.02 187,312Datatec Ltd 10,826,946,999 326,004 - 17,959,560Dawn Ltd 1,839,794,928 502,439 0.03 3,828,585Delta Property Fund Ltd 3,081,541,444 1,255,827 0.04 10,925,691Delta Property Fund Ltd 3,081,541,444 361,176 0.01 3,142,231Digicore Holdings Ltd 475,525,002 871,158 0.18 1,672,623Dipula Income Fund-A 1,621,823,268 759,000 0.05 8,576,696Dipula Income Fund-B 1,392,184,575 85,013 0.01 824,626Discovery Ltd 49,752,793,103 443,673 - 37,295,174Distell Group Ltd 24,790,194,824 1,762 - 214,901DRDGold Ltd 2,034,826,290 1,093,293 0.05 5,772,587Ellies Holdings Ltd 2,291,467,967 13,795 - 104,154


Emira Property Fund 7,439,606,250 378,157 0.01 5,657,224EOH Holdings Ltd 5,621,447,093 7,391 - 391,781Eqstra Holdings Ltd 2,497,003,402 1,399,835 0.06 8,496,996Esorfranki Ltd 553,259,602 4,429,235 0.80 6,200,929Evraz Highveld Steel & Vanadium Ltd 1,685,551,666 2,007 - 34,119Exxaro Resources Ltd 52,126,550,224 228,104 - 33,207,345Fairvest Property Holdings Ltd 503,667,230 1,814,000 0.36 2,539,600Famous Brands Ltd 9,394,267,351 1,760 - 167,141Firstrand Ltd 163,105,653,092 3,615,692 - 104,601,982Fortress Income Fund Ltd - A 4,657,430,709 563,622 0.01 8,285,247Fountainhead Property Trust 9,301,677,984 166,568 - 1,332,540Gold Fields Ltd 37,560,083,333 1,251,882 - 63,558,049Grand Parade Investments Ltd 1,658,447,644 42,542 - 153,151Grindrod Ltd 12,697,971,594 284,062 - 5,965,302Group Five Ltd 4,079,187,017 212,426 0.01 7,796,048Growthpoint Properties Ltd 49,918,224,276 812,003 - 21,428,749Harmony Gold Mining Company Ltd 15,561,613,568 326,964 - 11,688,963Holdsport Ltd 1,889,548,134 3,426 - 150,004Hosken Consolidated Investments Ltd 15,875,685,935 9,942 - 1,242,253Hospitality Property Fund Ltd - A 2,305,590,504 1,365,608 0.06 22,942,220Hospitality Property Fund Ltd - B 713,635,156 1,269,301 0.18 6,600,366Howden Africa Holdings Ltd 2,366,247,924 43,100 - 1,551,600Hudaco Industries Ltd 3,090,894,556 174,324 0.01 15,776,336Hulamin Ltd 1,340,670,135 1,162,947 0.09 4,884,377Hyprop Investments Ltd 18,962,827,182 92,680 - 7,229,061Iliad Africa Ltd 572,221,667 617,041 0.11 2,554,550Illovo Sugar Ltd 14,642,229,133 613,324 - 19,503,703Impala Platinum Holdings Ltd 58,795,927,668 737,382 - 68,576,526Imperial Holdings Ltd 43,825,843,430 97,996 - 20,565,441Intu Properties Ltd/Capital ShoppingCentres Group

46,135,315,038 760,748 - 36,295,287

Investec Ltd 18,104,980,511 262,767 - 16,814,460Investec Property Fund Ltd 4,993,042,800 48,266 - 759,704Italtile Ltd 6,199,996,932 2,813,362 0.05 16,880,172JD Group Ltd 7,109,487,982 410,642 0.01 12,729,902JSE Ltd 6,168,309,600 7,387 - 524,459Kagiso Media Ltd 3,285,705,731 8,684 - 212,757KAP Industrial Holdings Ltd 7,718,958,158 10,265,386 0.13 33,773,120Kelly Group Ltd 178,000,000 7,800 - 13,884Kumba Iron Ore Ltd 148,352,799,624 33,016 - 15,207,170Lewis Group Ltd 6,177,651,417 216,824 - 13,659,912Liberty Holdings Ltd 34,327,112,618 255,433 - 30,636,634Life Healthcare Group Holdings Ltd 39,082,865,625 8,970 - 336,375Master Drilling Group Ltd 1,260,256,674 138,184 0.01 1,174,564Mediclinic International Ltd 56,778,889,935 786,132 - 53,975,823Merafe Resources Ltd 1,770,187,187 9,311,424 0.53 6,611,111Metair Investments Ltd 5,430,134,750 7,203 - 256,432Metmar Ltd 347,498,518 228,637 0.07 297,228MMI Holdings Ltd 34,802,548,029 1,660,082 - 36,804,018Mobile Industries Ltd 10,680,397 5,622,025 52.64 56,220Mondi Ltd 14,823,432,638 97,900 - 12,265,952Mpact Ltd 3,811,312,785 198,822 0.01 4,632,553Mr Price Group Ltd 33,834,466,885 56,504 - 7,611,089MTN Group Ltd 346,274,132,656 933,718 - 171,804,112Murray & Roberts Holdings Ltd 11,176,218,645 938,605 0.01 23,587,144Mustek Ltd 601,804,066 1,260,000 0.21 6,993,000Mvelaserve Ltd 1,189,118,053 9,502 - 79,815Nampak Ltd 22,912,341,188 953,118 - 31,309,926Naspers Ltd 303,344,389,070 281,815 - 205,724,843Nedbank Group Ltd 89,556,174,295 281,833 - 49,470,232Net 1 UEPS Technologies Inc 4,204,770,840 5,268 - 379,296Netcare Ltd 33,845,256,783 3,609,808 0.01 83,169,976New Europe Property Investments Plc 10,670,019,085 13,759 - 921,720New Gold Issuer Ltd 16,458,266,039 390,612 - 45,517,972Northam Platinum Ltd 12,242,754,880 297,925 - 9,533,600Nu-World Holdings Ltd 362,796,369 413,108 0.11 6,617,990


Octodec Investments Ltd 2,235,926,785 5,047 - 104,271Omnia Holdings Ltd 12,332,272,909 93,595 - 17,163,451Peregrine Holdings Ltd 2,429,792,922 840,952 0.03 9,881,186Petmin Ltd 1,188,430,867 52,628 - 108,414Pick N Pay Holdings Ltd 9,516,845,930 734,524 0.01 13,258,158Pick N Pay Stores Ltd 19,033,341,858 189,554 - 7,510,129Pinnacle Technology Holdings Ltd 4,064,692,455 6,051 - 144,617Pioneer Food Group Ltd 18,531,610,073 228,436 - 18,331,989PPC Ltd 18,034,259,714 164,763 - 4,908,290Premium Properties Ltd 2,821,915,962 11,545 - 207,803Prescient Ltd 1,655,163,544 35,950 - 37,748PSG Group Ltd 14,371,415,893 70,674 - 4,892,780Rainbow Chicken Ltd 9,694,222,366 892 - 13,826Rand Merchant Insurance HoldingsLtd/RMI Holdings

37,439,346,319 837,691 - 21,109,813

Randgold & Exploration Company Ltd 149,170,130 135,631 0.09 271,262Raubex Group Ltd 4,052,624,011 181,293 - 3,952,195Rebosis Property Fund Ltd 3,686,201,004 238,947 0.01 2,867,366Redefine Properties Ltd 30,794,216,052 2,319,499 0.01 24,331,544Redefine Property International Ltd 4,182,079,532 63,874 - 421,569Remgro Ltd 91,386,154,982 956,920 - 181,766,954Resilient Property Income Fund Ltd 15,560,098,322 83,857 - 4,506,491Reunert Ltd 13,874,967,465 200,464 - 13,832,016RMB Holdings Ltd 55,621,106,789 321,575 - 12,670,055Royal Bafokeng Platinum Ltd 7,307,627,492 71 - 3,124SA Corporate Real Estate Fund 7,801,566,475 1,498,306 0.02 5,903,327Sanlam Ltd 96,600,000,000 1,876,682 - 86,327,372Santam Ltd 22,801,132,968 7,550 - 1,442,428Sappi Ltd 13,211,287,841 2,710,255 0.02 66,130,222Sasfin Holdings Ltd 1,078,868,129 1,575 - 52,589Sentula Mining Ltd 568,962,406 3,411,344 0.60 3,309,004Shoprite Holdings Ltd 105,842,489,830 96,177 - 17,840,834Sibanye Gold Ltd 5,208,585,177 3,299,948 0.06 23,429,632South Ocean Holdings Ltd 197,037,280 243,994 0.12 307,432Spur Corporation Ltd 2,674,163,296 202,455 0.01 5,545,235Standard Bank Group Ltd 180,365,499,643 2,146,692 - 239,313,189Stefanutti Stocks Holdings Ltd 1,713,415,596 968,226 0.06 8,820,543Steinhoff International Holdings Ltd 45,022,500,886 5,761,563 0.01 141,273,525Sun International Ltd 10,911,917,193 557,999 0.01 53,350,284Super Group Ltd 7,299,983,975 588,095 0.01 13,614,397Sycom Property Fund 7,744,870,760 103,068 - 2,834,371Synergy Income Fund Ltd - A 532,238,762 93,200 0.02 1,047,568Synergy Income Fund Ltd - B 728,515,790 62,000 0.01 424,700Telkom SA Ltd 8,645,012,707 265,414 - 4,405,872The Foschini Group Ltd 22,564,201,299 395,602 - 39,065,709The Spar Group Ltd 20,732,557,463 120,245 - 14,428,198Tiger Brands Ltd 56,672,977,781 88,306 - 26,129,746Times Media Group Ltd 2,414,462,316 404,220 0.02 7,680,182Tongaat Hulett Ltd 13,635,286,350 262,878 - 32,991,190Transaction Capital Ltd 3,797,557,846 1,359,993 0.04 8,853,554Trencor Ltd 11,952,090,743 967,499 0.01 65,306,213Truworths International Ltd 40,248,221,592 159,940 - 13,906,783Tsogo Sun Holdings Ltd 31,201,366,763 799,502 - 21,090,870Vividend Income Fund Ltd 1,378,539,676 1,677,154 0.12 8,637,344Vodacom Group Ltd 156,264,929,080 86,537 - 9,088,093Vukile Property Fund Ltd 7,648,057,662 235,906 - 3,960,859Vunani Property Investment Fund Ltd 1,212,211,704 484,100 0.04 4,865,205Wilson Bayly Holmes-Ovcon Ltd 10,163,340,000 73,773 - 11,360,304Woolworths Holdings Ltd 54,274,669,445 473,818 - 30,518,616York Timber Holdings Ltd 1,192,466,149 652,101 0.05 2,347,564Zeder Investments Ltd 3,724,715,658 2,785,300 0.07 10,584,138Zurich Insurance Company SA Ltd 3,105,772,500 51,168 - 13,047,840Total 3,647,383,834


E2 Secondary listing on JSE

Direct Holdings Issued shares Holding number Holding F air value

% RAnglo American Plc 269,637,970,265 1,005,610 - 192,926,368Aquarius Platinum Ltd 2,884,393,150 1,002,021 0.03 6,112,328BHP Billiton Plc 543,061,066,116 987,274 - 250,984,796Brait SA Ltd 21,119,065,166 261,171 - 10,812,494British American Tobacco Plc 1,039,333,451,865 562,591 - 288,569,709Compagnie Financiere Richemont SA 459,516,600,000 1,083,545 - 95,384,460Investec Plc 38,378,852,727 1,597,476 - 100,688,902Lonmin Plc 21,968,938,616 1,572,686 0.01 60,768,587Mondi Plc 45,383,618,682 315,975 - 39,048,178Old Mutual Plc 134,894,626,810 5,937,915 - 163,589,558Pan African Resources Plc 3,481,613,442 4,516,966 0.13 8,627,405Reinet Investments S.C.A 36,974,120,668 7,254,428 0.02 136,891,056SABMiller Plc 801,585,020,640 446,259 - 214,204,502Sasol Group Plc 279,954,893,035 918,683 - 396,448,462Total 1,965,056,805

E3 Foreign listed equities

Direct Holdings Fair valueR

Contrarius Global Equity Fund 12,281,042Egerton Capital European Fund 13,797,058Ishares MSCI Europe 13,546,028Viking Funds (Cayman Islands) 16,478,248Vulcan Value Partners Fund 10,731,602Other 162,852,886Total 229,686,864

E4 Equity linked instruments


Anglo American Warrant 32,553,502Safex Mopex (19,639,080)Total 12,914,422

E5 Unlisted equities


Martprop Property Fund 2,742,575Total 2,742,575


F DIRECT PREFERENCE SHARES


Allied Electronics Corp Ltd Preference Shares 1,936,483RECM and Calibre Ltd 3,664,200Total 5,600,683

G DIRECT COLLECTIVE INVESTMENT SCHEMES

Fair valueR

PropertyNone -Bills, bonds & securitiesInvestec International Bonds 179,556,972Investec Triple Alpha 630,640,306Other collective investment schemesAllan Gray Orbis Fund 692,165,793All Seasons Specialist Fund 194,115,913Cadiz MM 207,486,011Coronation Global Emerging Markets 431,750,388Coronation Eiger Fund 40,897,350Coronation Redwood USD Fund 41,358,813Foord Equity Fund 103,545,776Franklin Mutual Global Discovery Fund 510,678,548IShares MSCI EAFE 166,248,775IShares S&P 500 229,288,912Fund of hedge funds -Blue Ink 226,374,500Iconic Torero Institutional Fund 320,705,644Total 3,974,813,701


I DIRECT OTHER PORTFOLIO ASSETS

DIRECTHOLDINGS

Description Fair valueR

Local Platinum 3,516,520Foreign Palladium 521,564

Rhodium 505,179

1,026,743Total other portfolio assets 4,543,263

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Market riskInvestment Fair value at end of

period

R

Total fair value equityholdings and open

instrumentsR

Market movement by5%

RSasol Group Plc 396,448,462 792,896,924 39,644,846British American Tobacco Plc 288,569,709 577,139,418 28,856,971BHP Billiton Plc 250,984,796 501,969,592 25,098,480Standard Bank Group Ltd 239,313,189 478,626,378 23,931,319SABMiller Plc 214,204,502 428,409,004 21,420,450Naspers Ltd 205,724,843 411,449,686 20,572,484Anglo American Plc 192,926,366 385,852,732 19,292,637Remgro Ltd 181,766,954 363,533,908 18,176,695MTN Group Ltd 171,804,112 343,608,224 17,180,411Old Mutual Plc 163,589,558 327,179,116 16,358,956Total value of 10 largest equity holdings 2,305,332,491 4,610,664,982 230,533,249Total movement as % of non-current assets plus bank 1.53%

Instrument Fair value at end ofperiod

R

Market movement by5%R

ABSA Ltd 1,241,833,452 62,091,673Allan Gray Orbis 692,165,793 34,608,290Investec Triple Alpha 630,640,306 31,532,015Franklin Mutual Global Discovery Fund 510,678,548 25,533,927Coronartion Global Emerging Market 431,750,388 21,587,519Iconic Torero Institutional Fund 320,705,644 16,035,282Ishares S&P 500 229,288,912 11,464,446Blue Ink Fixed Interest FOHF 226,374,500 11,318,725Cadiz MM 207,486,011 10,374,301All Seasons Specialist Fund 194,115,913 9,705,796Total value of 10 largest other instruments 4,685,039,467 234,251,974

Total movement as % of non-current assets plus bank 1.55%

Foreign currency exposure

Foreign instruments Fair value at end ofperiod

R

Market movement by5%R

Investec Ltd 810,197,278 40,509,864Allan Gray Orbis 692,165,793 34,608,290Franklin Mutual Global Discovery Fund 510,678,548 25,533,927Coronation International Absolute Return Fund 431,750,388 21,587,519IShares S&P 500 229,288,912 11,464,446All Seasons Specialist G Fund 194,115,913 9,705,796IShares MSCI EAFE 166,248,775 8,312,439International Cash Holding 54,788,512 2,739,426Coronation Redwood USD Fund 41,358,813 2,067,941Coronation Eiger Fund 40,897,350 2,044,868Total value of 10 largest other instruments 3,171,490,282 158,574,516

Total movement as % of non-current assets plus bank 1.05%

MUNICIPAL GRATUITY FUNDSCHEDULE IB - ASSETS HELD IN COMPLIANCE WITH REGULATION 28For the period ended 30 June 2013

R R

A Total assets of the fund as per Statement of Net Assets and Funds 15,148,962,646

B Less: Non-investment items of Statement of Net Assets and Funds: (80,190,848)B.1 Property Plant and Equipment (273,418)B.2 Current assets (excluding cash at bank) (79,917,430)

C Value of corresponding assets per Statement of funds and net assets 15,068,771,798

Categories of kinds of assets Limit % Fair valueR

Fair value%

1 CASH 3,289,701,879 21.8%

1.1 Local notes, deposits, money market instruments issuedby a South African Bank, margin accounts, settlementaccounts with an exchange and Islamic liquiditymanagement financial instruments

100%

2,892,550,018 19.2%(a) Notes and coins; any balance or deposit in an account

held with a South African bank; 1,209,317,432 8.0% ABSA Bank Ltd 25% 698,561,340 4.6% Other 25% 510,756,092 3.4%

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

1,646,115,674 10.9%

ABSA Bank Ltd 25% 323,605,867 2.1% Other 25% 1,322,509,807 8.8%

(c) Any positive net balance in a margin account with anexchange 12,801,137 0.1% SAFEX Margin Account - Current Accounts 25% 8,156,110 0.1% Other 25% 4,645,027 -%

(d) Any positive net balance in a settlement account with anexchange, operated for the buying and selling of assets 24,315,775 0.2% ABSA Ltd 25% 54,038,413 0.4% Other 25% (29,722,638) (0.2)%

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

SARBmax.limits 397,151,861 2.6%

(a) Any balance or deposit held with a foreign bank 5% 396,772,610 2.6%(b) Any balance or deposit held with an African bank 5% 379,251 -%

2 DEBT INSTRUMENTS INCLUDING ISLAMIC DEBTINSTRUMENTS 3,169,393,586 21.0%

2.1 Inside the Republic 100% 2,954,118,022 19.6%(a) Debt instruments issued by, and loans to, the government

of the Republic, and any debt or loan guaranteed by theRepublic 100% 931,737,582 6.2% Republic Of South Africa 25% 797,609,804 5.3% Other 25% 134,127,778 0.9%

(b) Debt instruments issued or guaranteed by the governmentof a foreign country 10% 32,960,559 0.2% Orbis Optimal (US$) Fund 25% 27,390,360 0.2% Other 25% 5,570,199 -%

(c) Debt instruments issued or by a South African bankagainst its balance sheet 75% 935,705,105 6.2%

c(i) Listed on an exchange with an issue market capitalisationof R20 billion or more, or an amount or conditions asprescribed 75% 737,509,736 4.9% Standard Bank of SA Ltd 25% 181,063,597 1.2% Other 25% 556,446,139 3.7%

Carried forward 4,991,909,756 33.1%



Fair value%

Brought forward 4,991,909,756 33.1%c(ii) Listed on an exchange with an issuer market capitalisation

of between R2 billion and R20 billion, or an amount orconditions as prescribed 75% 25,680,396 0.2% African Bank Ltd 15% 25,680,396 0.2%

c(iii) Listed on an exchange with an issuer market capitalisationof less than R2 billion, or an amount or conditions asprescribed 75% 23,896,594 0.2% Futuregrowth Policy B 10% 16,408,663 0.1% Other 10% 7,487,931 -%

c(iv) Not listed on an exchange 25% 148,618,379 1.0%

Firstrand Bank Ltd, Incl RMB 5% 43,363,181 0.3% Other 5% 105,255,198 0.7%

(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% 505,708,132 3.4%

d(i) Listed on an exchange 50% 397,228,097 2.6%

Transnet Ltd 10% 56,499,316 0.4% Other 10% 340,728,781 2.3%

d(ii) Not listed on an exchange 25% 108,480,035 0.7%

Sanlam Capital Markets Ltd 5% 45,435,522 0.3% Other 5% 63,044,513 0.4%

(e) Other debt instruments:- 25% 548,006,644 3.6%e(i) Listed on an exchange 25% 364,146,786 2.4%

Futuregrowth Policy B 5% 69,971,239 0.5% Other 5% 294,175,547 2.0%

e(ii) Not listed on an exchange 15% 183,859,858 1.2%

Futuregrowth Policy B 5% 144,052,068 1.0% Other 5% 39,807,790 0.3%

2.2 Outside the Republic


(a) Debt instruments issued by, and loans to, the governmentof the Republic, and any debt or loan guaranteed by theRepublic

2,469,045 -%

Govjapan 25% 882,652 -% Other 25% 1,586,393 -%

(b) Debt instruments issued or guaranteed by the governmentof a foreign country (124,203) -% UK Govt Treasury Bill 25% (124,203) -%

(c) Debt instruments issued or guaranteed by a South AfricanBank against its balance sheet:- 22,233,483 0.1%

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

22,233,483 0.1%

Investec Bank Ltd 25% 12,622,210 0.1% Other 25% 9,611,273 0.1%

(d) Debt instruments issued or guaranteed by an entity thathas equity listed on an exchange 9,529,331 0.1%

d(i) Listed on an exchange 9,464,180 0.1%

Old Mutual 10% 7,462,278 -% Other 10% 2,001,902 -%

Carried forward 6,277,862,406 41.8%



Fair value%

Brought forward 6,277,862,406 41.8%d(ii) Not listed on an exchange 65,151 -%

Bancobil 5% 22,529 -% Other 5% 42,622 -%

(e) Other debt instruments 181,167,908 1.2%e(i) Listed on an exchange 1,431,062 -%

Us Long Bnd Jun 13 5% 11,631,061 0.1% Can10Ybond Fu Jun13 5% (8,582,139) (0.1)% Long Gilt Fut Jun13 5% (5,369,224) -% Other 5% 3,751,364 -%

e(ii) Not listed on an exchange 179,736,846 1.2%

Os3 Global Bond A Net Inc 5% 179,555,618 1.2% Other 5% 181,228 -%

3 EQUITIES 7,297,907,278 48.4%

3.1 Inside the Republic 75% 5,490,379,735 36.4%(a) Preference and ordinary shares in companies, excluding

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

5,489,933,101 36.4%a(i) Issuer market capitalisation of R20 billion or more, or an

amount or conditions as prescribed 75% 4,417,011,709 29.3% Sasol Ltd 15% 396,448,462 2.6% British American Tobacco Plc 15% 291,735,502 1.9% BHP Billiton Plc 15% 250,984,796 1.7% Standard Bank Group Ltd 15% 239,313,189 1.6% Naspers Ltd 15% 229,207,997 1.5% SABMiller Plc 15% 216,358,226 1.4% Anglo American Plc 15% 192,926,366 1.3% Remgro Ltd 15% 181,766,954 1.2% MTN Group Ltd 15% 171,804,112 1.1% Other 15% 2,246,466,105 14.9%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed 75% 970,949,846 6.4% Sappi Ltd 10% 66,130,222 0.4% Other 10% 904,819,624 6.0%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed 15% 101,971,546 0.7% Comair Ltd 5% 14,000,737 0.1% Other 5% 87,970,809 0.6%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange 15% 446,634 -% Futuregrowth Policy B 2.5% 446,634 -%

3.2 Outside the Republic 1,807,527,543 12.0%

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

SARBmax.limits 1,783,456,207 11.8%

a(i) Issuer market capitalisation of R20 billion or more, or anamount or conditions as prescribed 1,220,794,969 8.1% Franklin Mutual Global Discovery Fund 15% 510,678,548 3.4% Other 15% 710,116,421 4.7%

a(ii) Issuer market capitalisation of between R2 billion and R20billion, or an amount or conditions as prescribed 60,564,445 0.4% Daphne International Holdings Ltd 10% 14,413,447 0.1% Other 10% 46,150,998 0.3%

a(iii) Issuer market capitalisation of less than R2 billion, or anamount or conditions as prescribed 502,096,793 3.3% Ishares S&P 500 Ind 5% 229,439,686 1.5%

Carried forward 13,460,274,300 89.3%



Fair value%

Brought forward 13,460,274,300 89.3% Other 5% 272,657,107 1.8%

(b) Preference and ordinary shares in companies, excludingshares in property companies, not listed on an exchange 24,071,336 0.2% Sands Capital Growth Fund 2.5% 9,718,210 0.1% Other 2.5% 14,353,126 0.1%

4 IMMOVABLE PROPERTY 309,355,763 2.1%

4.1 Inside the Republic 25% 265,645,731 1.8%(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% 228,245,731 1.5%

a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 25% 116,682,008 0.8% Intu Properties Ltd/Capital Shopping Centres Group Plc 15% 36,295,287 0.2% Other 15% 80,386,721 0.5%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 25% 49,395,661 0.3% Delta Property Fund Ltd 10% 10,925,691 0.1% Other 10% 38,469,970 0.3%

a(iii) Issuer market capitalisation of less than R3 billion or anamount or conditions as prescribed 25% 62,168,062 0.4% Hospitality Property Fund Ltd 5% 22,942,220 0.2% Other 5% 39,225,842 0.3%

(b) Immovable property, preference and ordinary shares inproperty companies, and linked units comprising shareslinked to debentures in property companies, not listed onan exchange 15% 37,400,000 0.2% ABSA Square Nelspruit 5% 37,400,000 0.2%

4.2 Outside the Republic 43,710,032 0.3%(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


a(i) Issuer market capitalisation of R10 billion or more, or anamount or conditions as prescribed 28,229,812 0.2% Cromwell 15% 3,318,889 -% Other 15% 24,910,923 0.2%

a(ii) Issuer market capitalisation of between R3 billion and R10billion, or an amount or conditions as prescribed 4,478,260 -% Growthpoint Properties Australia 10% 2,525,017 -% Other 10% 1,953,243 -%

a(iii) Issuer market capitalisation of less than R3 billion or anamount or conditions as prescribed 11,001,960 0.1% Snl Glb Propty C 5% 9,843,375 0.1% Other 5% 1,158,585 -%

5 COMMODITIES 50,061,238 0.3%

5.1 Inside the Republic 10% 49,034,492 0.3%(a) Kruger Rands and other commodities on an exchange,

including exchange traded commodities 10% 49,034,492 0.3%a(i) Gold (including Kruger Rands) 10% 45,517,972 0.3%

New Gold Issuer Ltd 15% 45,517,972 0.3%a(ii) Other commodities 5% 3,516,520 -%

Platinum - 3,516,520 -%

Carried forward 14,115,392,998 93.7%



Fair value%

Brought forward 14,115,392,998 93.7%

5.2 Outside the Republic 10% 1,026,746 -%(a) Gold and other commodities on an exchange, including

exchange traded commodities 10% 1,026,746 -%a(ii) Other commodities 10% 1,026,746 -%

Palladium - 521,567 -% Other - 505,179 -%

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

95% 128,899,834 0.9%

8 HEDGE FUNDS, PRIVATE EQUITY FUNDS AND ANYOTHER ASSET NOT REFERRED TO IN THISSCHEDULE 823,452,220 5.5%

8.1 Inside the Republic 15% 547,080,144 3.6%(a) Hedge fund 10% 547,080,144 3.6%a(i) Funds of hedge funds 5% 547,080,144 3.6%

Iconic Torero Institutional Fund 320,705,644 2.1% Blue Ink Fixed Interest FoHF 226,374,500 1.5%

8.2 Outside the Republic 15% 276,372,076 1.8%(a) Hedge fund 10% 276,372,076 1.8%a(i) Funds of hedge funds 5% 82,256,163 0.5%

Coronation Redwood Fd Cl Z Usd 41,358,813 0.3% Other 40,897,350 0.3%

a(ii) Hedge funds 2.5% 194,115,913 1.3% All Seasons Bric Enhanced Fund 194,115,913 1.3%

TOTAL (equal to the fair value of assets) 15,068,771,798 100.0%

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annual financial statements name of the ......19 april 2006 25 november 2011 30 november 2012 22...

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