NATIONAL FUND FOR MUNICIPAL WORKERS

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1 NATIONAL FUND FOR MUNICIPAL WORKERS Monthly Report as at 31 August 2018

2 Table of Contents Page Economic Commentary.... Total Fund a) Total Fund Information b) Manager and Product Information Aggressive Growth a) Summary b) Risk Metrics c) Asset Allocation.... Capital Growth a) Summary b) Risk Metrics c) Asset Allocation.... Stable Growth a) Summary b) Risk Metrics c) Asset Allocation.... Capital Protector a) Summary b) Risk Metrics c) Asset Allocation.... Shariah a) Summary b) Risk Metrics c) Asset Allocation.... Annexure......

3 Economic Commentary Despite the trade war rhetoric turning markedly more hostile in August, global markets rallied further on the back of solid corporate performance across developed nations. The MSCI AC World Index gained 0.8%, again driven by strong returns from the US. The S&P500 - more akin to a technology index than an industrial one these days - gained another 3.3% as technology companies rerated as a result of record high profits. Emerging market equities fell 2.7% as investors continued to pull capital from developing countries in the wake of the recent crisis in Turkey and uncertainty around Argentina s IMF bailout package. The US 10 year bond yield drifted below 2.9% in August as investors were unsure about the sustainability of the longest economic recovery on record. Global property stocks gained 1.6% as investors priced in lower interest rates for longer. In the US, President Trump added further tariffs on Chinese goods and expressed his immense displeasure with the EU s trade policies which threatened the negotiated ceasefire over the proposed 25% tariff on EU imports. Investors again largely dismissed the political posturing and instead focused on the soaring corporate earnings as 80% of US companies reported earnings above expectations in Q2 while 72% reported a positive sales surprise. The growth rate for the market came in at an 8 year high of 25% year-on-year, higher than the 20% growth rate expected in June While technology companies had the biggest effect on the market, it was the energy sector that experienced the biggest year-on-year earnings growth (125%) as the increase in oil prices from extremely low levels a year ago ignited the bottom line. While analysts have cut earnings estimates for Q3, these adjustments have been lower than expected and earnings growth of 20% is expected for the remainder of While corporate profits continue rising, the US economy is starting to send mixed signals. There appears to be a bit of a slowdown in the housing market with both new construction and sales falling. Exports have fallen and imports have risen, apparently because of worsening terms of trade, most likely due to the stronger dollar. Most recently, manufacturers have drawn down inventories, and there is a fall in orders and shipments for durable goods as well as regional manufacturing activity. There are no dramatic drops, but it all adds up to a potential gradual economic slowdown on the horizon. That being said, GDP is still expected to print at 4.1% for Q3 but is then expected to slow going into The European economy appears to be robust as the ECB prepares to wind down its quantitative easing program but there are some concerns over the susceptibility of the manufacturing sector to a trade-led slowdown. Meanwhile, Brexit discussions have picked up steam with Theresa May hoping to reach a deal with the EU that will give the UK continued access to the single European market without onerous bureaucratic requirements. Economic activity data from China highlighted a notable slowdown in July, vindicating the government s policy shift towards easing and measures to boost infrastructure spending, which has been the source of much of the economic weakness. Industrial growth slowed notably and fixed asset investment and retail sales growth was weaker than expected. Exports slowed marginally as the first round of US tariffs were implemented. South African economic growth remained lacklustre with retail sales and manufacturing slowing to 0.7% year-on-year. Inflation edged up to 5.1% as the weaker rand feeds through into general price levels. The trade balance deteriorated as imports exceeded exports by R4.6bn another effect of the volatile currency. Local markets bore the brunt of the Turkey-led emerging market contagion as the country s liquid financial markets are better able to facilitate large currency outflows. Foreigners continued selling local assets as there was little clarity on the extent and practicalities of land expropriation without compensation. The All Share Index however gained 2.3% driven by a 5.6% gain in resources and gains in selected dual-listed industrials and offshore REITs. Local bonds fell 1.9% as yields spiked to 9% on the back of large outflows as a result of increased risk aversion. The rand shed more than 10% against the dollar, weakening to R14.69 at month end as foreign investors sold local assets amid the emerging market rout.

4 National Fund for Municipal Workers 31 August 2018 Total Fund Information R 16,017,785,782 Total Fund Market Value at 30 June 2018 Cash flow for current financial year Total Return current financial year net of fees Total Current Market Value Shari'ah Cash Capital Protector Stable Growth Capital Growth 15,485,083, ,284, ,417, ,017,785, Aggressive Total Growth SA Equity and Protected Equity , , , Allan Gray Equity , , Coronation HW Equity , , SIM Unconstrained Equity Mazi Equity Benguela First Avenue SA Bonds Coronation Bonds Futuregrowth IBF SA Property Catalyst Property Metope Property Direct Property Direct Property SA Alternatives , , OMIGSA Ideas , Investec Credit Income Futuregrowth DEF SA Cash , Ashburton Cash SIM Active Income Securitised Debt Investec Securities International Equity , , Allan Gray Orbis Global Equity Morgan Stanley Global Brands Nedgroup Global Equity Investec Global Franchise Vulcan Value Equity International Bonds Rubrics Global Credit International Property Catalyst Global Real Estate International Emerging Markets Coronation Global Emerging Markets Fund Africa Novare Africa Property Fund SA Balanced / TAA , Kagiso Islamic Balanced Fund Prescient TAA s , Total , , , ,017.79

5 Manager and Product Information R 16,017,785,782 Market Value Manager / Product % of Since Inception Product BM Last 36 months Product BM Last 12 months Product BM SA Equity and Protected Equity R 6,392,802, % Allan Gray Equity 2, % 12.7% 12.6% 9.1% 7.0% 7.5% 4.1% Coronation HW Equity 2, % 13.1% 13.9% 4.0% 7.0% -0.4% 4.1% SIM Unconstrained Equity % -0.7% 7.2% 0.1% 7.0% 0.6% 4.1% Mazi Equity % 3.2% 6.0% n/a n/a 1.3% 4.1% Benguela % 2.9% 2.7% n/a n/a n/a n/a First Avenue % -0.7% 1.2% n/a n/a n/a n/a SA Bonds R 813,449, % Coronation Bonds % 9.5% 8.7% 8.5% 7.5% 9.5% 8.0% Futuregrowth IBF % 10.0% 8.4% 8.7% 7.5% 9.3% 8.0% SA Property R 645,848, % Catalyst Property % 14.1% 12.9% 2.4% -0.3% -9.2% -12.4% Metope Property % -5.8% -2.8% n/a n/a -18.3% -12.4% Direct Property % 0.1% n/a 0.2% n/a -1.9% n/a Direct Property % -0.8% n/a n/a n/a -2.0% n/a. SA Alternatives R 1,677,678, % OMIGSA Ideas 1, % 14.0% 12.7% 13.0% 12.7% 17.0% 12.9% Investec Credit Income % 8.2% 6.7% 9.5% 7.3% 10.0% 7.3% Futuregrowth DEF % 4.2% 15.5% n/a n/a 7.8% 16.0% SA Cash R 1,653,448, % Ashburton Cash % 7.4% 6.5% 8.5% 7.3% 8.4% 7.3% SIM Active Income % 8.1% 8.2% n/a n/a 7.5% 8.4% Securitised Debt % 6.8% n/a 7.7% n/a 7.6% n/a Investec Securities % 3.0% n/a 6.3% n/a 6.2% n/a 7% 40% 5% 4% 10% 10% 77% SA Balanced / TAA SA Equity SA Bonds 23% SA Property SA Alternatives SA Cash Local Offshore

6 Manager and Product Information R 16,017,785,782 Manager / Product Market Value % of Since Inception Product BM Last 36 months Product BM Last 12 months Product BM International Equity R 2,691,781, % Allan Gray Orbis Global Equity % 16.6% 16.4% 17.9% 13.5% 19.2% 25.3% Morgan Stanley Global Brands % 22.4% 19.7% 18.0% 13.5% 29.1% 25.3% Nedgroup Global Equity % 17.9% 15.7% 14.8% 13.5% 21.4% 25.3% Investec Global Franchise % 13.4% 13.5% n/a n/a 28.0% 25.3% Vulcan Value Equity % 22.8% 17.9% n/a n/a n/a n/a International Bonds R 59,466, % Rubrics Global Credit % 13.3% 8.6% 13.2% 5.6% 30.7% 11.3% International Property R 153,284, % Catalyst Global Real Estate % 13.9% 10.6% 10.6% 8.6% 21.9% 18.0% International Emerging Markets R 640,691, % Coronation Global Emerging Marke % 11.0% 10.4% 14.8% 12.6% 1.3% 9.6% Africa R 213,096, % Novare Africa Property Fund % 15.1% 10.1% n/a n/a 16.5% 24.2% SA Balanced / TAA R 1,076,240, % Kagiso Islamic Balanced Fund % 7.2% 7.7% 8.9% 6.1% 9.3% 6.8% Prescient SG TAA % 15.7% 8.6% n/a n/a 10.8% 8.4% Prescient CG TAA % 27.3% 9.4% n/a n/a 1.0% 9.2% Prescient AG TAA % 27.0% 10.7% n/a n/a 0.2% 10.5% 18% 6% 72% 2%4% 17% 4% Africa International Bonds International Emerging Markets International Equity International Property 1% International Emerging Markets Africa

7 Aggressive Growth - Summary 10,272,346, Investment Objective To maximise capital growth over a long-term investment horizon. Members should acknowledge that this strategy could deliver volatile and negative returns over the short-term. This strategy is suitable for members with more than 10 years to retirement. Total Market Value at 30 June ,906.0 Cash flow for current financial year 33.6 Total Return current financial year net of fees Total Current Market Value 10,272.3 Return Objective Return % To achieve a return of CPI % pa (net of fees) over rolling 3-year Financial year return - net of asset management fees 3.34% periods at least 50% of the time. Financial year return - declared rate to members* 3.26% CPI % 2.08% *Monthly expense allowance 0.04% Risk Objective Return % To produce positive returns over rolling 12 month periods at least 65% Percentage positive monthly returns since inception* of the time. Percentage positive monthly returns last 5 years 580% 480% 380% 280% 180% 80% Performance (net of fees) Aggressive Growth Declared Return Aggressive Growth Objective Returns - Various Periods Asset Allocation Since Inception * 11.16% 11.63% 14.27% Last 10 years 9.69% 10.42% 11.50% Last 5 years 10.58% 10.30% 10.90% Last 3 years 9.35% 10.38% 8.29% 1 year 7.93% 10.51% 8.37% Last 3 months 6.26% 2.86% 6.09% Last month 3.08% 0.85% 3.29% (net) Investment Objective Strategic Benchmark African Assets International RSA Cash RSA Alternatives RSA Property RSA Bonds RSA Equity 2.5% 2.5% 5.0% 5.0% 20.0% 15.0% 50.0% Balanced / TAA 0.0% Strategic Allocation Actual Allocation

8 Capital Growth - Summary 4,026,181, Investment Objective To target capital growth over a medium to long-term investment horizon. Members should acknowledge that this strategy could deliver volatile and negative returns over the short-term. This strategy is suitable for members with 5 to 10 years to retirement. Total Market Value at 30 June ,937.9 Cash flow for current financial year Total Return current financial year net of fees Total Current Market Value 4,026.2 Return Objective Return % To achieve a return of Inflation % p.a. (net of fees) over rolling 3- Financial year return - net of asset management fees 2.80% year periods at least 50% of the time. Financial year return - declared rate to members* 2.72% CPI % 1.88% *Monthly expense allowance 0.04% Risk Objective Return % To produce positive returns over rolling 12-month periods at least 75% Percentage positive monthly returns since inception* of the time. Percentage positive monthly returns last 5 years 430% 380% 330% 280% 230% 180% 130% 80% Performance (net of fees) Capital Growth Declared Return Capital Growth Objective Returns - Various Periods Asset Allocation Since Inception * 10.19% 10.08% 13.63% Last 10 years 9.46% 9.09% 11.08% Last 5 years 10.20% 8.99% 10.39% Last 3 years 9.50% 9.07% 8.36% 1 year 7.89% 9.19% 8.22% Last 3 months 5.26% 2.55% 5.33% Last month 2.30% 0.75% 2.78% (net) Investment Objective Strategic Benchmark African Assets International RSA Cash RSA Alternatives RSA Property RSA Bonds RSA Equity 2.5% 5.0% 5.0% 17.5% 15.0% 12.5% 42.5% Balanced / TAA 0.0% Strategic Allocation Actual Allocation

9 Stable Growth - Summary 1,089,527, Investment Objective To target stable returns over a medium-term investment horizon with low volatility and a low probability of negative returns. This strategy is suitable for members with 1 to 5 years to retirement. Total Market Value at 30 June ,030.1 Cash flow for current financial year 45.0 Total Return current financial year net of fees 14.4 Total Current Market Value 1,089.5 Return Objective Return % To achieve a return of Inflation % p.a. (net of fees) over rolling 3- Financial year return - net of asset management fees 1.35% year periods at least 50% of the time. Financial year return - declared rate to members* 1.27% CPI % 1.76% *Monthly expense allowance 0.04% Risk Objective Return % To produce positive returns over rolling 12-month periods at least 85% Percentage positive monthly returns since inception* of the time. Percentage positive monthly returns last 5 years *July % 220% 200% 180% 160% 140% 120% 100% 80% Performance (net of fees) Stable Growth Declared Return Stable Growth Objective Returns - Various Periods Asset Allocation (net) Investment Objective Strategic Benchmark Since Inception * 8.22% 8.26% 9.07% Last 10 years n/a n/a n/a Last 5 years 8.12% 8.20% 8.48% Last 3 years 7.97% 8.28% 7.40% 1 year 6.00% 8.41% 5.95% Last 3 months 1.53% 2.37% 1.43% Last month 0.06% 0.69% 0.14% RSA Cash RSA Alternatives RSA Property RSA Bonds RSA Equity 5.0% 15.0% 20.0% 30.0% 30.0% *July 2008 Balanced / TAA 0.0% Strategic Allocation Actual Allocation

10 Capital Protector - Summary 592,958, Investment Objective To provide capital security with very low volatility and an extremely low probability of negative returns. This strategy is suitable for members with less than 1 year to retirement where capital protection is absolutely necessary. Total Market Value at 30 June Cash flow for current financial year 10.5 Total Return current financial year net of fees 7.2 Total Current Market Value Return Objective Return % To achieve a return of Inflation + 1.0% p.a. (net of fees) over rolling 1- Financial year return - net of asset management fees 1.25% year period at least 50% of the time. Financial year return - declared rate to members* 1.17% CPI % 1.47% *Monthly expense allowance 0.04% Risk Objective Return % To produce positive returns over all rolling 12-month periods. Percentage positive monthly returns since inception* Percentage positive monthly returns last 5 years 280% Performance (net of fees) 230% 180% 130% 80% Capital Protector Declared Return Capital Protector Objective Since Inception * 7.20% 6.50% 7.34% Last 10 years 6.79% 6.23% 6.86% Last 5 years 7.05% 6.50% 6.77% Last 3 years 8.02% 6.45% 7.32% 1 year 7.33% 6.57% 7.29% Last 3 months 1.66% 1.93% 1.76% Last month 0.53% 0.54% 0.59% Returns - Various Periods (net) Investment Objective Strategic Benchmark RSA Cash Asset Allocation 100.0% 100.0% Strategic Allocation Actual Allocation

Shari'ah - Summary 17,878,587.81 Investment Objective This portfolio is suitable for Muslim investors requiring a Shariacompliant investment portfolio.

11 Shari'ah - Summary 17,878, Investment Objective This portfolio is suitable for Muslim investors requiring a Shariacompliant investment portfolio. The portfolio will be invested in a variety of domestic and international asset classes. The underlying investments will comply with Shari'ah requirements as prescribed by the Auditing Organisation for Islamic Financial Institutions. The portfolio targets capital growth over the long-term while limiting short term market fluctuations. Total Market Value at 30 June Cash flow for current financial year - Total Return current financial year net of fees 0.7 Total Current Market Value 17.9 Return % Financial year return - net of asset management fees 4.16% Financial year return - declared rate to members* 4.08% *Monthly expense allowance 0.04% Risk Objective Return % Medium risk profile - members should expect some negative monthly Percentage positive monthly returns since inception* returns and short term volatility. Percentage positive monthly returns last 5 years *September % 150% 140% 130% 120% 110% 100% 90% 80% Performance (net of fees) Shari'ah Declared Return Since Inception * 7.21% n/a 9.76% Last 10 years n/a n/a n/a Last 5 years n/a n/a n/a Last 3 years 8.48% n/a 6.07% 1 year 8.74% n/a 6.83% Last 3 months 6.00% n/a 5.97% Last month 3.53% n/a 3.79% *September 2012 Returns - Various Periods (net) Investment Objective Strategic Benchmark Balanced / TAA Asset Allocation 100.0% 100.0% Strategic Allocation Actual Allocation

GRAYSWAN SCORECARDS 01 DECEMBER 2017

GRAYSWAN SCORECARDS 01 DECEMBER 2017 Gray Swan Financial Services (Pty) Ltd (Reg No: 2010/009813/07) is an authorised Financial Services Provider (FSP No: 42290). we keep the score, you secure the win