Seventeenth Annual General Meeting to be held in the Auditorium, Metropolitan Head Office, Mispel Street, Bellville Friday, 15 June :00

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1 Sewentiende Algemene Jaarvergadering wat gehou sal word in die Ouditorium, Metropolitan Hoofkantoor, Mispelstraat, Bellville Vrydag, 15 Junie :00 Seventeenth Annual General Meeting to be held in the Auditorium, Metropolitan Head Office, Mispel Street, Bellville Friday, 15 June :00

2 C O N T E N T S P. I N H O U D Agenda 1 Agenda Minutes of Sixteenth Annual General Meeting 2 Notule van Sestiende Algemene Jaarvergadering Annexures to Minutes 17 Bylaes tot Notule Report of the Board of Trustees 40 Verslag van die Raad van Trustees Audited Financial Statements 43 Geouditeerde Finansiële State Motions submitted 80 Mosies voorgelê

3 SEVENTEENTH MEETING OF THE GENERAL COMMITTEE Notice is hereby given that the meeting of the General Committee will be held on Friday 15 June 2001 at 09:00 in the AUDITORIUM, METROPOLITAN HEAD OFFICE, MISPEL STREET, BELLVILLE. Registration from 08:00. Belmont Office Park Twist Street BELLVILLE SEWENTIENDE VERGADERING VAN DIE ALGEMENE KOMITEE Neem asseblief kennis dat die vergadering van die Algemene Komitee op Vrydag 15 Junie 2001 om 09:00 in die OUDITORIUM, METROPOLITAN HOOFKANTOOR, MISPELSTRAAT, BELLVILLE gehou word. Registrasie vanaf 08:00. Belmont Office Park Twiststraat BELLVILLE A G E N D A A G E N D A 1. Notice convening the meeting. 2. Confirmation of minutes of the sixteenth meeting. 3. Address by the chairperson. 4. Consideration and adoption of the Balance Sheet and Financial Statements for the year ended 30 June 2000 as well as the report of the Board of Trustees. 5. Presentations: 5.1 Investments - Citadel 5.2 Capital Gains Tax - KPMG 6. Election of Trustees: 6.1 Election of 4 councillor delegates (2 Western Cape, 1 Northern & 1 Eastern Cape) 6.2 Election of 2 member delegates (1 Western Cape & 1 Northern Cape) 7. Notice of motions and/or proposals. Rule 7(9) of the Rules of the Fund reads inter alia as follows: At least ten weeks written notice of intention to move a proposal at the general meeting shall be given to the Principal Officer. 8. Thanks 1. Kennisname van vergadering wat belê is. 2. Bekragtiging van notule van die sestiende vergadering. 3. Voorsittersrede. 4. Oorweging en aanname van die Balansstaat en Finansiële State vir die jaar geëindig 30 Junie 2000 en die verslag van die Raad van Trustees. 5. Aanbiedings: 5.1 Beleggings - Citadel 5.2 Kapitale Wins Belasting - KPMG 6. Verkiesing van Trustees: 6.1 Verkiesing van 4 raadslede afgevaardigdes (2 Wes-Kaap, 1 Noord-Kaap & 1 Oos-Kaap) 6.2 Verkiesing van 2 lede afgevaardigdes (1 Wes-Kaap & 1 Noord-Kaap) 7. Kennisname van mosies en/of voorstelle. Artikel 7(9) van die Statute van die Fonds lees onder andere soos volg: Die Hoofbeampte moet minstens tien weke skriftelike kennisgewing gegee word van voorneme om n mosie by die algemene jaarvergadering in te dien. 8. Dankbetuigings H H HERBST PRINCIPAL OFFICER/HOOFBEAMPTE

4 MINUTES OF THE SIXTEENTH ANNUAL GENERAL MEETING OF THE GENERAL COMMITTEE OF THE CAPE JOINT PENSION FUND HELD IN THE CIVIC CENTRE, McDONALD STREET, GOODWOOD ON FRIDAY 19 MAY PRESENT: GUESTS: OFFICIALS: SASH: Mr S Immelman (Chairman) 8 Members of the Board of Trustees 98 Delegates (3 members tendered their apologies) Mr J Malan (Consultant Actuary) Messrs K van Wyk, A van Heerden and J Strydom (DWM Group) Messrs F Dunlop and G Porter (Abbey National) Messrs C Smit, A Jones-Phillipson and F Bruce (Sterling Asset Management) Messrs E Thomson and W Hugo Ms I de Villiers, B Penny, S Erasmus and M Dorer (Adv C Franken tendered his apology due to the birth of his second son) Messrs L Mollentze and J Swart, Ms R Syer, Y Fourie, O Fransman and C Klaasen. 1. OPENING, WELCOME AND NOTICE OF MEETING 1.1 The meeting was opened with scripture reading and prayer by Mr Edward Thomson. 1.2 The chairman welcomed the Deputy Mayor, Cllr David Vollenhoven, the actuary, Mr Jacques Malan, all the members of the Board of Trustees, the members of the Administration Company and everyone present to the Sixteenth Annual General Meeting of the Fund. 1.3 The chairman tendered apologies on behalf of adv Christi Franken who was unable to attend the meeting due to the birth of his second son. 1.4 The Deputy Mayor of Tygerberg City, Cllr David Vollenhoven, welcomed the chairman, members of the Board of Trustees, staff members and all the delegates to the City of Tygerberg. He congratulated the Fund on its wise decision to re-allocate to Bellville. Furthermore, he expressed the wish that the meeting would be divinely lead in its decision making. He thereupon declared the Annual General Meeting officially opened. The Deputy Mayor left immediately after the chairman thanked him and wished him and his Council everything of the best for the future. 1.5 The notice convening the Sixteenth General Meeting WAS TAKEN AS READ. 2. CONFIRMATION OF MINUTES The minutes of the Annual General Meeting held on 16 July 1999 WERE CONFIRMED.

5 NOTULE VAN DIE SESTIENDE ALGEMENE JAARVERGADERING VAN DIE ALGEMENE KOMITEE VAN DIE KAAPSE GEMEENSKAPLIKE PENSIOENFONDS GEHOU IN DIE BURGERSENTRUM, McDONALDSTRAAT, GOODWOOD OP VRYDAG 19 MEI TEENWOORDIG: GASTE : AMPTENARE: SASH: Mnr S Immelman (Voorsitter) 8 Lede van die Raad van Trustees 98 Afgevaardigdes (3 lede bied verskoning aan) Mnr J Malan (Konsultaktuaris) Mnre K van Wyk, A van Heerden en J Strydom (DWM Groep) Mnre F Dunlop en G Porter (Abbey National) Mnre C Smit, A Jones-Phillipson en F Bruce (Sterling Batebestuur) Mnre E Thomson en W Hugo, Me I de Villiers, B Penny, S Erasmus en M Dorer. (Adv C Franken bied verskoning aan agv die geboorte van sy tweede seun) Mnre L Mollentze en J Swart, Me R Syer, Y Fourie, O Fransman en C Klaasen. 1. OPENING, VERWELKOMING EN KENNISGEWING VAN VERGADERING 1.1 Die vergadering word deur Mnr Edward Thomson met skriflesing en gebed geopen. 1.2 Die voorsitter heet die Onder-Burgemeester, Rdl David Volenhoven, die aktuaris, mnr Jacques Malan, lede van die Raad van Trustees, lede van die Administrasie Maatskappy en almal teenwoordig hartlik welkom by die Sestiende Algemene Jaarvergadering van die Fonds. 1.3 Die voorsitter bied verskoning aan namens Adv Christi Franken wat, as gevolg van die geboorte van sy tweede seun, nie die vergadering kan bywoon nie. 1.4 Die Onder-Burgemeester van Tygerberg Stad, Rdl David Vollenhoven, heet die voorsitter, lede van die Raad van Trustees, personeellede en al die afgevaardigdes hartlik welkom in Tygerberg Stad. Hy wens die Fonds geluk met die wyse besluit om hulle kantore na Bellville te verskuif. Verder spreek hy die wens uit dat die besluitnemingsproses tydens die vergadering deur die hoër hand gelei sal word. Daarna verklaar hy die Algemene Jaarvergadering amptelik oop. Die Onder-Burgemeester verlaat die vergadering onmiddellik nadat die voorsitter hom bedank en hom en sy Raad alles van die beste vir die toekoms toegewens het. 1.5 Die kennisgewing van die Sestiende Algemene Jaarvergadering WORD AS GELESE BESKOU. 2. BEKRAGTIGING VAN NOTULE Die notule van die Algemene Jaarvergadering gehou op 16 Julie 1999 WORD BEKRAGTIG.

6 3. ADDRESS BY THE CHAIRPERSON (Annexure A) The chairman delivered his address. A vote of thanks for his excellent report and faithful services as a trustee over the past 25 years by Mr Pieter Colombo WAS ACCEPTED and NOTED. After discussion his address WAS ACCEPTED. 4. REPORT OF THE BOARD OF TRUSTEES AND FINANCIAL STATEMENTS The report and financial statements WERE ACCEPTED. 5. SUMMARY OF ACTUARIAL REPORT (Annexure B) The report WAS NOTED. 6. PRESENTATION BY ABBEY NATIONAL FROM SCOTLAND Mr Kobus van Wyk gave a brief overview of the DWM Group followed by Mr Gordon Porter who explained the relationship between DWM and Abbey National. Mr Forbes Dunlop gave an in-depth report on Abbey National covering their history, operations, their approach to international investments, their view on the SA Market together with their products and services, which they can render to the Fund. The report WAS NOTED. 7. UPGRADING OF THE RULES OF THE FUND The chairman tabled the Rules that was revised to make it more member-friendly and to comply with the new legislative requirements. The Rules WAS ACCEPTED. 8. PRESENTATION BY STERLING ASSET MANAGEMENT Mr Colin Smit gave an overview of the Sterling Group and the consultative role they will be performing in the benchmarking, monitoring, analysing, tracking and measurement of investment performance of each portfolio manager. He also dealt with performance enhancement activities such as scrip lending, back to back asset trading, facilitating market liquidity and the negotiation of brokerage rates. The report WAS NOTED. 9. COMMENTS ON MOTIONS REFERRED TO THE BOARD OF TRUSTEES FROM THE PREVIOUS ANNUAL GENERAL MEETING (Annexure C) The comments and report back by the Board of Trustees on the motions referred to them from the previous Annual General Meeting WERE ACCEPTED.

7 3. VOORSITTERSREDE (Bylae A) Die voorsitter lewer sy rede. n Mosie van dank deur mnr Pieter Colombo vir sy uitmuntende verslag en pligsgetroue diens as n trustee oor die afgelope 25 jaar WORD AANVAAR en AANGETEKEN. Sy rede word na bespreking met dank AANVAAR. 4. VERSLAG VAN DIE RAAD VAN TRUSTEES EN FINANSIËLE STATE Die verslag en finansiële state WORD AANVAAR. 5. OPSOMMING VAN AKTUARIËLE VERSLAG (Bylae B) Die verslag WORD AANGETEKEN. 6. VOORLEGGING DEUR ABBEY NATIONAL VAN SCOTLAND Mnr Kobus van Wyk gee n kort oorsig van die DWM Groep gevolg deur mnr Gordon Porter wat die verhouding tussen DWM en Abbey National verduidelik. Mnr Forbes Dunlop gee n in-diepte verslag oor Abbey National wat hulle geskiedenis, belange en hul benadering tot internasionale beleggings betref, hul siening oor die Suid-Afrikaanse mark in terme van hul produkte en dienste wat hulle aan die Fonds kan lewer. Die verslag WORD AANGETEKEN. 7. OPGRADERING VAN DIE REËLS VAN DIE FONDS Die Reëls, wat hersien is om dit meer lidvriendelik te maak en om te voldoen aan die nuwe wetlike vereistes, word deur die voorsitter ter tafel gelê. Die Reëls WORD AANVAAR. 8. VOORLEGGING DEUR STERLING BATEBESTUUR Mnr Colin Smit gee n oorsig van die Sterling Groep en die oorlegplegende rol wat hulle ten opsigte van die bepaling van beleggings mikpunte, monitering, analisering en prestasie afmeting ten opsigte van elke portefeuljebestuurder sal speel. Hy behandel ook aktiwiteite wat prestasievlakke sal verhoog soos die uitleen van sekuriteite, rug aan rug bate verhandeling, die fasilitering van mark likiditeit en die onderhandeling van makelaarskoerse. Die verslag WORD AANGETEKEN. 9. KOMMENTAAR OP MOSIES VERWYS NA DIE RAAD VAN TRUSTEES BY DIE VORIGE ALGEMENE JAARVERGADERING (Bylae C) Die kommentaar en terugvoering van die Raad van Trustees op die mosies wat by die vorige Algemene Jaarvergadering na hulle verwys is, WORD AANVAAR.

8 10. MOTIONS 10.1 EAST LONDON TRANSITIONAL LOCAL COUNCIL An annual meeting be convened in the larger Local Authorities for members from Head Office to interact with members and that pensioners be advised of the details of such meetings in the area in which they reside. Motivation Changes of staff, changes to the structuring of local government and continuing changes to the fund rules, need to be explained to capacitate members to exercise their options and to reassure pensioners who now constitute the major percentage of the fund membership. THE MARKETING DEPARTMENT OF THE FUND IS CONDUCTING INFORMATION MEETINGS AT VARIOUS LOCAL AUTHORITIES ON A ROTATIONAL BASIS. THEY WILL INFORM PENSIONERS OF THEIR ITINERARY IN THEIR NEWSLETTERS The Minutes of the AGM be distributed to all members (pensioners and contributors) and that the English language be used to curtail costs. Motivation Members are increasingly concerned with the performance and changes to their fund and are called upon to make choices without having an adequate depth of knowledge of their fund. A FULL TRANSCRIPTION OF THE AGM WILL BE PUBLISHED ON THE FUND S WEBSITE WITHIN A WEEK. HARD COPIES OF THE TRANSLATION WILL BE AVAILABLE ON REQUEST FROM THE FUND S CALL CENTRE. THE MINUTES OF THE AGM WILL BE DISTRIBUTED TO ALL LOCAL AUTHORITIES FOR ALL MEMBERS TO VIEW That protective measure be investigated and implemented where feasible, to guard against any adverse affect on the fund should Employer Bodies not be able to meet their financial commitment to the fund. Motivation The newly demarcated Municipalities will have increased financial burdens to carry and may experience considerable cash flow problems. THE PENSION FUNDS ACT AND THE INCOME TAX ACT DOES OFFER THE MEMBER SOME PROTECTION WHERE LOCAL AUTHORITIES FAILS TO MEET THEIR OBLIGATIONS. MEMBERS CAN ALSO SEEK RECOURSE FROM THE PENSION FUNDS ADJUDICATOR AND THEIR TRADE UNIONS. THE FUND WILL ASSIST WHEREVER POSSIBLE. IT WAS NOTED THAT THE BOARD OF TRUSTEES ARE TAKING LEGAL STEPS AGAINST SOME LOCAL AUTHORITIES WHO ARE OUTSTANDING WITH THEIR PAYMENTS.

9 10. MOSIES 10.1 OOS-LONDEN PLAASLIKE OORGANGSRAAD Dat daar jaarliks by die groter Plaaslike Owerhede n vergadering byeengeroep word sodat daar wisselwerking tussen lede en verteenwoordigers van Hoofkantoor uitgeoefen kan word en sodat gepensioneerdes besonderhede van sulke vergaderings in hul omgewing kan ontvang. Motivering Dit is noodsaaklik om personeelveranderinge, samestellings veranderinge van Plaaslike Owerhede en gedurige veranderinge aan fondsreëls aan lede te verduidelik om hul sodoende in staat te stel om hul opsies uit te oefen en om gepensioneerdes, wat die grootste gedeelte van lidmaatskap uitmaak, gerus te stel. DIE BEMARKINGSAFDELING VAN DIE FONDS HOU INLIGTINGSVERGADERINGS BY VERSKEIE PLAASLIKE OWERHEDE OP N ROTASIE BASIS. PENSIOENARISSE SAL IN HULLE NUUSBRIEWE VAN DIE REISPLAN INGELIG WORD Dat die Notule van die AJV aan alle lede (bydraers en gepensioneerdes) gestuur word en dat dit slegs in Engels geskied om sodoende kostes te beperk. Motivering Daar is groeiende kommer onder lede rakende die werkverrigting van en veranderinge aan hul fonds en daar word van hulle verwag om besluite te neem sonder die nodige indiepte kennis van hul fonds. N VOLLEDIGE TRANSKRIPSIE VAN DIE JAARVERGADERING WORD BINNE N WEEK OP DIE FONDS SE WEBTUISTE GEPUBLISEER. KOPIEË VAN DIE TRANSKRIPSIE SAL OP VERSOEK BY DIE FONDS SE INBELSENTRUM BESKIKBAAR WEES. DIE NOTULE VAN DIE JAARVERGADERING WORD AAN ALLE PLAASLIKE OWERHEDE VERSPREI SODAT ALLE LEDE DAARTOE TOEGANG HET Dat beveiligingsmaatreëls ondersoek en in werking gestel word, waar uitvoerbaar, om beskerming te bied teen enige nadelige effek op die fonds indien die werkgewers nie in staat is om hul finansiële verpligtinge teenoor die fonds na te kom nie. Motivering Die nuwe afbakening van Munisipaliteite sal groter finansiële druk op hul plaas wat tot ernstige kontantvloei probleme mag lei. DIE WET OP PENSIOENFONDSE EN DIE WET OP INKOMSTEBELASTING BIED WEL AAN DIE LID N MATE VAN BESKERMING IN GEVALLE WAAR PLAASLIKE OWERHEDE NIE HULLE VERPLIGTINGE NAKOM NIE. LEDE KAN HULLE OOK TOT DIE BEREGTER VAN PENSIOENFONDSE EN HULLE VAKBONDE WEND. DIE FONDS SAL OOK, WAAR MOONTLIK, HULP VERLEEN. KENNIS WORD GENEEM DAT DIE FONDS REGSSTAPPE NEEM TEEN SEKERE PLAASLIKE OWERHEDE WAT AGTERSTALLIG IS MET HULLE BETALINGS.

10 10.2 GEORGE MUNICIPALITY When the new municipalities come into being on 1 November 2000, reorganisation may result in retrenchments. According to Rule 29 an affected member will receive a pension benefit in terms of Rule 26, in line with the normal retirement benefit. The local authority is responsible for payment of the yearly fee until the member reaches his/her normal retirement age. Gratification due, is partly paid by the fund and partly by the local authority. The relevant local authority can choose to either pay a one-time amount to the Pension Fund or make monthly pension payments (yearly fee) to the employee. Benefits accumulated up to 28 February 1998 by a member of the Pension Fund, was tax free. However, since 1 March 1998 a specific formula is in use to gradually tax these benefits. In terms of the present policy of the Pension Fund, the one-time only amount payable by the local authority may not be done directly to the member, it must be paid to the Fund. The latter will then be responsible for the monthly payments until the member reaches the age of 65. Given the formula for determining tax payable on the amount, the opinion is held that should the member receive the said one-time only amount directly from the local authority, he/she is to gain financially. With the abovementioned in mind, the Trustees are thus requested to: 1. urgently conduct a complete investigation (inclusive of amongst others, the viewpoint of the South African Income Services) regarding the possible tax benefits for retrenched members on receiving the full, one-time only amount from the local authority; 2. to amend the Rules of the Fund to accommodate the direct payment of a one-time only amount by the employer to the member; 3. if necessary, to timely call a Special General Meeting to amend the Rules to accommodate any possible retrenchments as result of the reorganisation when new municipalities are formed. THIS MOTION IS BASICALLY THE SAME AS THE MOTION SUBMITTED BY THE TRUSTEES (SEE MOTION NO 10.3). GEORGE MUNICIPALITY AGREED TO REFER THEIR MOTION TO THE BOARD OF TRUSTEES FOR FURTHER INVESTIGATION IN THE EVENT OF THE REJECTION OF THE TRUSTEES MOTION.

11 10.2 GEORGE MUNISIPALITEIT Wanneer die nuwe munisipaliteite op 1 November 2000 tot stand kom, mag dit om verskeie redes gebeur, dat n pos as gevolg van reorganisasie afgeskaf mag word. Ingevolge Reël 29 sal die lid wat daardeur geraak word n aftreevoordeel ingevolge Reël 26 ontvang wat in lyn is met die normale aftreevoordeel. Die plaaslike owerheid is verantwoordelik om die jaargeld te betaal totdat die lid sy/haar normale pensioen ouderdom bereik. Die gratifikasie betaalbaar word deels deur die fonds en deels deur die plaaslike owerheid betaal. Die betrokke plaaslike owerheid het die keuse om of n eenmalige bedrag aan die Pensioenfonds te betaal of om maandeliks die pensioen (jaargeld) direk aan die betrokke werknemer te betaal. Die voordele wat n lid van die Pensioenfonds tot 28 Februarie 1998 opgehoop het, was nie belasbaar nie, maar word vanaf 1 Maart 1998 volgens n bepaalde formule geleidelik belasbaar. Volgens die huidige beleid van die Pensioenfonds kan die eenmalige bedrag betaalbaar deur n plaaslike owerheid nie direk aan die lid betaal word nie, maar moet dit aan die Pensioenfonds betaal word wat dan die verantwoordelikheid vir die maandelikse betaling van die betrokke plaaslike owerheid oorneem totdat die lid die ouderdom van 65 bereik. Die mening word gehuldig dat, indien die lid die eenmalige bedrag direk van die betrokke plaaslike owerheid sou ontvang, dit gegewe die formule waarvolgens belasting daarop betaal moet word, vir hom/haar voordelig mag wees. Gegewe die voorafgaande word die Trustees versoek om: 1. n volledige ondersoek (wat onder andere die verkryging van die standpunt van die Suid- Afrikaanse Inkomste Diens insluit) baie dringend te doen na die moontlike belastingvoordele vir lede wat as gevolg van reorganisasie uit diens tree en waar die volle betaling deur die plaaslike owerheid eenmalig deur die lid ontvang word; 2. die nodige wysiging aan die Reëls van die Fonds te laat aanbring om vir die direkte betaling van die eenmalige bedrag deur die werkgewer aan die lid voorsiening te maak; 3. indien nodig, n Spesiale Algemene Vergadering te belê vir die wysiging van die Reëls om daarvoor voorsiening te maak en wel betyds om enige gevalle van uitdienstreding as gevolg van reorganisasie wat mag plaasvind as gevolg van die totstandkoming van die nuwe munisipaliteite te kan hanteer. HIERDIE MOSIE IS BASIES DIESELFDE AS DIE MOSIE WAT DEUR DIE TRUSTEES VOORGELÊ IS (SIEN MOSIE NR 10.3). GEORGE MUNISIPALITEIT STEM IN OM HULLE MOSIE NA DIE RAAD VAN TRUSTEES TE VERWYS VIR VERDERE ONDERSOEK INDIEN DIE TRUSTEES SE MOSIE AFGEKEUR WORD.

12 10.3 BOARD OF TRUSTEES PROPOSED RULE AMENDMENT MOTIVATION FOR CHANGE: This RULE has been amended to prevent any unfair labour practices, by bringing the reorganisation benefit in line with the benefits offered by other Retirement Funds. 25. REORGANISATION If the employment of a MEMBER is discontinued by a LOCAL AUTHORITY, due to - (a) (b) (c) (d) a reduction in or reorganisation of staff; the abolition of his office or post; or retrenchment generally; or in order to facilitate improvements in efficiency or organisation and such MEMBER has not been offered alternative employment which, in relation to salary, allowances and other conditions of SERVICE, is not materially different from the employment which has been so discontinued, such MEMBER shall be entitled to receive a retirement benefit calculated in accordance with the provisions of RULE 22, with PENSIONABLE SERVICE being calculated to actual date of reorganisation, at the rate and percentage which would have applied had such MEMBER retired at the PENSION AGE; provided that - (i) (ii) all payments of an ANNUITY made before the MEMBER reaches the PENSION AGE shall be made by the LOCAL AUTHORITY, and the lump sum benefit shall be paid partly by the FUND and partly by the LOCAL AUTHORITY in accordance with tables approved by the TRUSTEES on the recommendation of the ACTUARY. A MEMBER may elect to receive as a lump sum, the amount due by the FUND, which shall be calculated in accordance with tables provided by the ACTUARY. Such lump sum shall not exceed the MEMBER S actuarial reserve at date of reorganisation. A MEMBER may further elect to receive the ANNUITY payable by the LOCAL AUTHORITY in terms of subparagraph (i), as a lump sum, as calculated by the ACTUARY. The ANNUITY payable by the LOCAL AUTHORITY in terms of subparagraph (i) and the LOCAL AUTHORITY S portion of the lump sum in terms of subparagraph (ii) shall only be payable to the MEMBER, by the FUND, once the LOCAL AUTHORITY has paid the required lump sum to the FUND. Provided that for a MEMBER who has reached the OPTIONAL RETIREMENT AGE or who fulfills the provisions of RULE 23.3 (Voluntary Early Retirement), the reorganisation benefit payable by the FUND, shall be equivalent to such amount that would have become payable had such MEMBER retired from the FUND at (Vrywillige Vroeë Aftrede)the date of reorganisation. The reorganisation benefit payable by the LOCAL AUTHORITY for and in respect of a MEMBER who has reached the OPTIONAL RETIREMENT AGE or who fulfills the provisions of RULE 23.3 (Voluntary Early Retirement), shall be equivalent to the value due in terms of subrules (i) and (ii) above, based on the tables provided by the ACTUARY.

13 RAAD VAN TRUSTEES VOORGESTELDE WYSIGING VAN REËL MOTIVERING VIR VERANDERING Hierdie REËL is verander om enige onbillike arbeidspraktyke te voorkom, deur die reorganisasie voordeel in lyn te bring met die voordele wat deur ander Aftreefondse aangebied word. 25. REORGANISATION Indien die diens van n LID deur n PLAASLIKE OWERHEID beïndig sou word as gevolg van - (a) (b) n vermindering van of reorganisasie van personeel; die afskaffing van sy/haar amp of pos; of (c) n personeelinkorting in die algemeen; (d) of ten einde verbeterings ten opsigte van doeltreffendheid of organisasie te fasiliteer, en sodanige LID geen aanbod van alternatiewe indiensneming ontvang het wat, ten opsigte van salaris, toelaes en ander DIENSVOORWAARDES, materieel nie van die diens wat beeïndig is verskil nie, sal die betrokke LID geregtig wees op die ontvangs van n aftreevoordeel wat bereken sal word in ooreenstemming met die bepalings van REËL 22, met die berekening van PENSIOENDRAENDE DIENS tot en met die werklike datum van reorganisasie, en teen die koers en persentasie wat van toepassing sou gewees het indien daardie LID op die normale PENSIOENOUDERDOM afgetree het; op voorwaarde dat - (i) (ii) alle ANNUÏTEITE wat betaalbaar word tot tyd en wyl die LID die normale PENSIOENOUDERDOM bereik, deur die PLAASLIKE OWERHEID betaal sal word, en die bedrag van die eenmalige voordeel gedeeltelik deur die FONDS, en gedeeltelik deur die PLAASLIKE OWERHEID betaal sal word, ooreenkomstig die tabelle wat deur die TRUSTEES op aanbeveling van die AKTUARIS goedgekeur is. n LID het n keuse om die bedrag wat deur die FONDS verskuldig is, in die vorm van n eenmalige uitbetaling te ontvang. Die bedrag sal dan bereken word volgens tabelle wat deur die AKTUARIS voorsien sal word. So n eenmalige bedrag sal nie die LID se aktuariële reserwe op die datum van reorganisasie oorskry nie. n LID het verder n keuse om die ANNUÏTEIT wat in terme van subparagraaf (i) deur die PLAASLIKE OWERHEID betaalbaar is, en soos deur die AKTUARIS bereken is, in die vorm van n eenmalige bedrag te ontvang. Die ANNUÏTEIT wat in terme van subparagraaf (i) deur die PLAASLIKE OWERHEID betaalbaar is, en die PLAASLIKE OWERHEID se gedeelte van die eenmalige bedrag ingevolge subparagraaf (ii), sal slegs deur die FONDS aan die LID betaalbaar wees nadat die PLAASLIKE OWERHEID die vereiste eenmalige bedrag aan die FONDS oorbetaal het. Met dien verstande dat, in die geval van n LID wat die OPSIONELE PENSIOENOUDERDOM bereik het, of wat voldoen aan die vereistes van REËL 23.3 (Vrywillige Vroeë Aftrede), die reorganisasievoordeel wat deur die FONDS betaalbaar is, gelykstaande sal wees aan die bedrag wat betaalbaar sou gewees het indien die LID op die datum van reorganisasie uit die FONDS uitgetree het. Die reorganisasievoordeel wat vir en ten opsigte van n LID wat die OPSIONELE PENSIOENOUDERDOM bereik het, of wat voldoen aan die bepalings van REËL 23.3 (Vrywillige Vroeë Aftrede), deur die PLAASLIKE OWERHEID betaalbaar is, sal gelykstaande wees aan die bedrag wat, in terme van subreëls (i) en (ii) hierbo genoem, aan hom/haar verskuldig is, gebaseer op die tabelle wat deur die AKTUARIS verskaf sal word.

14 A MEMBER may elect to become a DEFERRED MEMBER and will be entitled to benefits on the attainment of his/her PENSION AGE. The retirement benefits payable at PENSION AGE will be equivalent to the value of the lump sum benefit had the member elected to receive both the FUND S portion and the LOCAL AUTHORITY S portion as a lump sum, and will be calculated in accordance with tables approved by the TRUSTEES on the recommendation of the ACTUARY, subject to the following conditions: (a) the deferred benefit shall be increased during the period of deferment by the increases that in terms of RULE 21 would have been granted by the FUND to such an ANNUITY in payment; (b) if the MEMBER dies before receiving his/her retirement benefit, the provisions of RULE 29 shall apply mutatis mutandis, except that the benefits payable to the ELIGIBLE SPOUSE shall be a lump sum benefit and 60% of the ANNUITY that in terms of this RULE would have been payable to the MEMBER on attaining the PENSION AGE; (c) A MEMBER S INSURED RISK BENEFITS will cease on becoming a DEFERRED MEMBER COMPULSORY EARLY RETIREMENT A MEMBER who has attained an age five years less than the PENSION AGE may be required by the LOCAL AUTHORITY to retire an in such an event such MEMBER shall be granted a retirement benefit calculated in accordance with the provisions of RULE 22, with PENSIONABLE SERVICE being calculated to actual date of compulsory early retirement, provided that (a) the rate and percentage to be applied in the calculation of such retirement benefit shall be that, which would have been applicable had such MEMBER attained the PENSION AGE; (b) all payments of an ANNUITY made before the MEMBER has attained the PENSION AGE shall be made by the LOCAL AUTHORITY, and (c) the gratuity shall be paid partly from the moneys of the FUND and partly by the LOCAL AUTHORITY in accordance with tables approved by the TRUSTEES on the recommendation of the ACTUARY. A MEMBER may elect to receive as a lump sum, the amount due by the FUND, which shall be calculated in accordance with tables provided by the ACTUARY. A MEMBER may further elect to receive the ANNUITY payable by the LOCAL AUTHORITY in terms of RULE 23.2(b), as a lump sum, as calculated by the ACTUARY. The ANNUITY payable by the LOCAL AUTHORITY in terms of RULE 23.2(b) and the LOCAL AUTHORITY S portion of the lump sum in terms of RULE 23.2(c) shall only be payable to the MEMBER, by the FUND, once the LOCAL AUTHORITY has paid their portion of the required lump sum to the FUND. Provided that for such MEMBER, the benefit payable by the FUND, shall be equivalent to such amount that would have become payable had such MEMBER retired from the FUND at the date of compulsory early retirement and shall not exceed the MEMBER S actuarial reserve value at the date of compulsory early retirement. The compulsory early retirement benefit payable by the LOCAL AUTHORITY in respect of such MEMBER, shall be equivalent to the value due in terms of RULE 23.2(b) and (c), based on the tables provided by the ACTUARY. THE RULE AMENDMENT WAS ACCEPTED.

15 n LID mag n keuse uitoefen om n UITGESTELDE LID te word en sal dan geregtig wees op voordele wanneer hy/sy PENSIOENOUDERDOM bereik. Die aftreevoordele wat op PENSIOENOUDERDOM betaalbaar is, sal gelykstaande wees aan die eenmalige bedrag wat betaalbaar sou gewees het indien die lid besluit het om die bydraes van beide die FONDS en die PLAASLIKE OWERHEID in die vorm van n eenmalige bedrag te ontvang, en sal bereken word volgens tabelle wat op aanbeveling van die AKTUARIS deur die RAAD van TRUSTEES goedgekeur is, onderworpe aan die volgende voorwaardes: (a) die uitgestelde voordeel sal gedurende die tydperk van uitstel verhoog in ooreenstemming met die verhogings wat ingevolge REËL 21 deur die FONDS aan n dergelike pensioentrekker betaalbaar sou geword het; (b) indien die LID te sterwe sou kom voordat hy/sy sy/haar voordeel ontvang het, sal die bepalings van REËL 29 mutatis mutandis van toepassing wees, behalwe dat die voordele wat aan die GEREGTIGDE EGGENOOT betaalbaar is, uitbetaal sal word in die vorm van n eenmalige bedrag, plus 60% van die ANNUÏTEIT wat ingevolge hierdie REËL aan die LID betaalbaar sou gewees het by bereiking van die PENSIOENOUDERDOM; (c) n LID se VERSEKERDE RISIKOVOORDELE staak wanneer hy/sy n UITGESTELDE LID word VERPLIGTE VROEË AFTREDE n LID wat n ouderdom van vyf jaar minder as die PENSIOENOUDERDOM bereik het, mag deur die PLAASLIKE OWERHEID aangesê word om af te tree, in welke geval so n LID n aftreevoordeel sal ontvang wat bereken sal word ingevolge REËL 22, en PENSIOENDRAENDE DIENS bereken sal word tot op die werklike datum van die verpligte vervroegde aftrede, met dien verstande dat (a) die koers en persentasie wat by die berekening van sodanige aftreevoordeel toegepas sal word, dieselfde sal wees as die wat sou gegeld het indien die betrokke LID die PENSIOENOUDERDOM bereik het; (b) alle betalings ten opsigte van n ANNUÏTEIT wat gemaak word voordat die LID PENSIOENOUDERDOM bereik, deur die PLAASLIKE OWERHEID gemaak sal word, en (c) die gratifikasie gedeeltelik uit die gelde van die FONDS en gedeeltelik deur die PLAASLIKE OWERHEID betaal sal word, volgens die tabelle wat op aanbeveling van die AKTUARIS deur die TRUSTEES goedgekeur is. Die LID het n keuse om die bedrag wat deur die FONDS verskuldig is en wat bereken sal word volgens tabelle wat deur die AKTUARIS verskaf sal word, in die vorm van n eenmalige bedrag te ontvang. n LID het verder n keuse om die ANNUÏTEIT wat ingevolge REËL 23.2(b) deur die PLAASLIKE OWERHEID betaalbaar is en soos deur die AKTUARIS bereken, in die vorm van n eenmalige bedrag te ontvang. Die ANNUÏTEIT wat ingevolge REËL 23.2(b) deur die PLAASLIKE OWERHEID betaalbaar is, en die PLAASLIKE OWERHEID se gedeelte van die eenmalige bedrag betaalbaar ingevolge REËL 23.2(c), sal slegs deur die FONDS aan die LID betaalbaar wees nadat die PLAASLIKE OWERHEID sy deel van die vereiste bedrag aan die FONDS oorbetaal het. Met dien verstande dat, in die geval van so n LID, die voordeel betaalbaar deur die FONDS gelykstaande sal wees aan die bedrag wat betaalbaar sou gewees het indien die LID se lidmaatskap van die FONDS beeïndig is op die datum van sy/haar vroeë aftrede, en nie die lid se aktuariële reserwewaarde op die datum van sy/haar vervroegde aftrede sal oorskry nie. Die voordeel wat ten opsigte van so n LID op grond van verpligte vroeë aftrede deur die PLAASLIKE OWERHEID betaalbaar is, sal gelykstaande wees aan die waarde verskuldig ingevolge REËL 23.2(b) en (c), gebaseer op die tabelle wat deur die AKTUARIS verskaf word. DIE REËLVERANDERING WORD AANVAAR.

16 10.4 HANOVER MUNICIPALITY That subparagraphs (i) and (ii) of Rule 29 of the Rules of the Fund be renumbered as (ii) and (iii) and the following new subparagraph (i) be inserted: the years of service be calculated up to the date on which the member normally would have retired and the insertion of the following new subparagraph (iv): the difference between the annuity and gratuity payable calculated on years of service up to pensionable service and actual service be paid by the Local Authority. Motivation The Transvaal Municipal Pension Fund takes the years of service up to the retirement in consideration for the contribution of gratuity and annuity. THE MOTION WAS REFERRED TO THE BOARD OF TRUSTEES FOR FURTHER INVESTIGATION That the following be added in Rule 23(4)(b) after the word Fund: and that bonus service of the previous fund also be recognised. Motivation At present bonus service is not transferable. BONUS SERVICE IS ENCAPSULATED IN THE CALCULATION OF THE TRANSFER VALUE AND THEREFORE RECOGNITION IS AWARDED FOR SERVICE TRANSFERRED That in Rule 29(1)(i) and (ii) the words from revenue moneys be deleted. Motivation A local authority may argue that it has not got enough revenue to pay the amount. THE MOTION WAS ACCEPTED AS PART OF THE MOTION SUBMITTED BY THE BOARD OF TRUSTEES.

17 10.4 HANOVER MUNISIPALITEIT Dat subparagrawe (i) en (ii) van Artikel 29 van die Statute van die Fonds hernommer word na (ii) en (iii) en die volgende nuwe subparagraaf (i) ingevoeg word: die jare diens bereken word tot op datum waarop die lid normaalweg sou afgetree het en die volgende subparagraaf (iv) ingevoeg word: die verskil tussen jaargeld en gratifikasie wat betaalbaar is indien jare diens tot pensioenleeftyd bereken en bereken volgens werklike jare diens deur die Paaslike Owerheid betaal word. Motivering Die Transvaalse Munisipale Pensioenfonds neem die jare diens tot by aftrede in berekening vir die gratifikasie en jaargeld. DIE MOSIE WORD NA DIE RAAD VAN TRUSTEES VERWYS VIR VERDERE ONDERSOEK Dat by Artikel 23(4)(b) na die woord erken die volgende bygevoeg word: en dat enige bonus diens van die vorige fonds ook erken word. Motivering Bonus diens word tans nie van een fonds na n ander oorgeplaas nie. BONUSDIENS WORD IN AANMERKING GEBRING BY DIE BEREKENING VAN DIE OORDRAGSWAARDE EN WORD DUS ERKEN WANNEER DIENS OORGEPLAAS WORD Dat in Artikel 29(1)(i) en (ii) die woorde uit inkomste gelde geskrap word. Motivering n Plaaslike Owerheid kan aanvoer dat hy nie voldoende inkomste het om die bedrag te betaal nie. DIE MOSIE WORD AANVAAR AS DEEL VAN DIE MOSIE WAT DEUR DIE RAAD VAN TRUSTEES VOORGELÊ IS.

18 11. MOTION OF THANKS by Mr H F Botha 11.1 To the chairman for the able and efficient manner in which he conducted the meeting; 11.2 To the Trustees for their dedication and commitment to the Fund and Trustee meetings; 11.3 To the actuary, Mr Jacques Malan, for his professional input; 11.4 To the acting Chief Executive Officer and his staff for the arrangements for the meeting; 11.5 To Mr Edward Thomson for the special way in which he opened the meeting; 11.6 To the guest speakers: Messrs Forbes Dunlop and Gordon Porter of Abbey National, Mr Kobus van Wyk and his team of DWM and Messrs Colin Smit, Ferdinand Bruce and Andrew Jones-Phillipson of Sterling Asset Management; 11.7 To the City Council of Tygerberg for making the use of the hall and its facilities available; 11.8 To Mr Alan Elston of Infra Rad for the audio system; 11.9 To Mr Herman Potgieter of Trade Glo International and his team for the translation services; To Ms Lida Geldenhuys and her staff for the delicious refreshments; To everyone who attended the meeting. A save home journey is wished to every delegate. The meeting closed on Friday, 19 May 2000 at 13: DATE... CHAIRMAN

19 11. DANKBETUIGINGS deur mnr H F Botha 11.1 Aan die voorsitter vir die besondere bekwame wyse waarop hy die verrigtinge gelei het; 11.2 Aan die Trustees vir hulle toewyding en getroue bywoning van Trusteevergaderings; 11.3 Aan die aktuaris, mnr Jacques Malan, vir sy professionele bystand; 11.4 Aan die wnde Hoof Uitvoerende Beampte en sy personeel vir die reëlings vir die vergadering; 11.5 Aan mnr Edward Thomson vir die besondere manier waarop hy die vergadering geopen het; 11.6 Aan die gassprekers: mnre Forbes Dunlop en Gordon Porter van Abbey National, mnr Kobus van Wyk en sy kollegas van DWM en mnre Colin Smit, Ferdinand Bruce en Andrew Jones-Phillipson van Sterling Batebestuur; 11.7 Aan die Stadsraad van Tygerberg vir die beskikbaarstelling van die saal met al die fasiliteite; 11.8 Aan mnr Alan Elston van Infra Rad vir die klankstelsel; 11.9 Aan mnr Herman Potgieter van Trade Glo International en sy span vir die vertalingsdienste; Aan me Lida Geldenhuys en haar personeel vir die heerlike verversings; Aan elkeen wat die vergadering bygewoon het. n Voorspoedige terugrit word elkeen toegewens. Die vergadering verdaag op Vrydag, 19 Mei 2000 om 13: DATUM... VOORSITTER

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21 VERWELKOMING Hartlik welkom aan u almal by die eerste Jaarvergadering van die Kaapse Gemeenskaplike Pensioenfonds in die nuwe millennium. Ons het beslis n tydvak van knellende onsekerhede en twyfel betree, en baie vrae wat vir u en my hinder, is nog onbeantwoord. Graag deel die Raad van Trustees alles wat hul weet met u en verseker u van hul volgehoue ywer om die beste vir u te bekom. Ek wens u n aangename en interessante vergadering toe. BELEGGINGSOORSIG ALGEMEEN Dit was aand en dit was môre die begin van n nuwe dag, n nuwe jaar, n nuwe eeu en millennium. Van die J2K vrese het niks gekom nie en die lewe het normaal voortgegaan. Die algemene verwagting vir die jaar was bevredigend positief, en n relatiewe goeie groei is in die ekonomie verwag. Die aandelemark het vooruitgesien na goeie winste met belowende prysstygings, gelei deur kommoditeite. Daar was ook nie n skaarsste aan goeie nuus nie. Die jaarlikse Begrotingstoespraak het in Februarie die ekonomiese agenda oorheers. Die meeste nuus was goeie nuus, met die minister wat aangekondig het dat die tekort vir die 1999/2000 fiskale jaar op 2,4% van BBP verwag word heelwat laer as oorspronklike projeksies. Die 2000/01 begroting was relatief stimulerend, met besteding wat voorspel is om groei van 8,1% te genereer en belastingverlagings van R9,9 miljard wat aangekondig is. n Waarskuwing is gerig met betrekking tot kapitaalwinsbelasting, wat vroeg volgende jaar ingestel sal word. Verdere goeie nuus het gekom in die vorm van Standard en Poor se aankondiging van n opgradering van Suid-Afrika se kredietaanslag tot beleggingsgraadstatus. Suid-Afrika word nou beskou as n volle beleggingsgraad-land. Ander positiewe nuus was onder andere: Die prima uitleenkoers is met n verdere 100 basispunte tot 14,5% verlaag. Die versnellende groei in vervaardigingsproduksie en kleinhandelverkope en voertuigverkope bevestig dat die sakesiklus laat in 1999 uitgevlak het en dat daar verwag kan word dat ekonomiese groei van nou af sal versnel. Die stadige ommekeer in kredietverlening aan die privaat sektor dui daarop dat die herstel in huishoudelike verbruiksbesteding op verbeterende besteebare inkomste gebaseer is, eerder as op toenemende skuld, en dat dit dus vir n langer tydperk gehandhaaf sal kan word. Die beter as verwagte surplus op die handelsrekening vir die eerste twee maande van 2000 was n vroeë teken dat die lopende rekening van die betalingsbalans vir n geruime tyd nie ekonomiese groei sal beperk nie. WELCOME A hearty welcome to everybody at the first Annual Meeting of the Cape Joint Pension Fund in the new millennium. We have definitely entered an era of uncertainty and doubt, and many questions bothering you and I are still unanswered. The Board of Trustees would like to share everything they know with you and assure you of their continued diligence in obtaining the best for you. I wish you a pleasurable and interesting meeting. INVESTMENT OVERVIEW GENERAL The evening passed into morning the dawning of a new day, a new year, a new century and millennium. The Y2K fears fizzled out and life went on as normal. The general expectation of the year was satisfactorily positive and a relatively good growth in the economy was expected. The stock exchange looked forward to good profits, with promising price increases led by commodities. Good news definitely was not scarce. The annual Budget speech dominated the economic agenda in February. Most of the news was good, with the minister announcing that the deficit for the 1999/2000 fiscal year was expected to be 2,4% of GDP much lower than original projections. The 2000/01 Budget was relatively stimulatory, with expenditure set to grow by 8,1% and tax cuts worth R9,9 bn announced. A warning was sounded with regards to the capital gains tax to be introduced early next year. More good news came in the form of Standard and Poor s announcement of an upgrade in South Africa s credit rating - to investment grade status. South Africa is now considered a full investment grade country. Other positive news included: The prime lending rate was decreased by a further 100 basis points to 14,5%. The accelerating growth in manufacturing production and retail sales and vehicle sales confirm that the business cycle flattened late in 1999 and that we can expect economic growth to pick up speed from now on. The slow turnaround in the granting of credit to the private sector indicates that the recovery in domestic consumer spending is based on improving disposable income rather than on increasing debt, and that it will therefore be sustainable for a longer period. The better than expected surplus on the trade account for the first two months of 2000 was an early sign that the current account of the balance of payments will not limit economic growth for quite some time.

22 Die finansiële markte het die jaar 2000 op dieselfde uitbundige noot begin as waarop dit 1999 afgesluit het. Dit was veral waar van die aandelemark nadat dit in die vierde kwartaal van 1999 met 24,6% gestyg het (13,1% slegs in Desember 1999), het die Indeks van Alle Aandele van die JA met n verdere 8% geklim om op 17 Januarie 2000 n rekordhoogtepunt van 9 226,5 te bereik. Sedertdien was dit egter n afdraande stryd. Die effektemark het eweneens n styging van 96 basispunte in die opbrengs op die maatstaf R153- staatseffek beleef, vanaf 13,13% op 17 Januarie 2000 tot 14,09% teen die einde van die kwartaal. Die rand het ook n vuurwarm ondervinding teen die VSA-dollar gehad, en het gedurende die eerste kwartaal met 6,3% gedepresieer. Teen die euro het hy egter sy man gestaan die rand/euro-koers het van slegs R6,20/euro tot R6,23/euro beweeg. Die relatiewe onderprestasie van Suid-Afrika vergeleke met opkomende markte was nogal opvallend. Dit is duidelik dat die SA finansiële markte gedurende die eerste kwartaal van 2000 vasgevang is in groot wêreldtendense. Drie tendense verdien spesiale vermelding: Aandelebeleggers wêreldwyd was ten gunste van die sogenaamde nuwe ekonomie -sektore (inligtingstegnologie, telekommunikasie, media en biotegnologie), ten koste van die sogenaamde ou ekonomie -sektore (kommoditeite, vervaardiging, nutsdienste, finansiële dienste en tradisionele kleinhandel). Die Suid-Afrikaanse aandelemark, verteenwoordigend van ons onderliggende ekonomie, is ongelukkig saam met die ou ekonomie oor een kam geskeer. Die VSA-dollar was verrassend sterk teen die agtergrond van n rekordtekort op die lopende rekening van meer as 4% van BBP. Sterk kapitaalvloei na die VSA, veral uit Europa, om voordeel te trek uit die sterk groeiende VSAekonomie, het die dollar ondersteun. Die VSA word beskou as die wêreldleier in die ontwikkeling van die nuwe ekonomie, en selfs Europa sukkel om by te hou. Die drievoudige verhoging in die prys van ruolie sedert laat 1998 het die spook van stygende hoofstroominflasie wêreldwyd opgejaag, en veroorsaak dat sentrale banke n versigtige monetêre beleidshouding ingeneem het. Amptelike rentekoerse is aan die styg, met die VSA Federale Reserwebank sowel as die Europese Sentrale Bank wat in die eerste kwartaal van 2000 hulle belangrikste beleidskoerse met 50 basispunte verhoog het. Die uitwerking van hierdie wêreldtendense is vererger deurdat sentiment oor Suid-Afrika negatief geraak het as gevolg van die verslegtende situasie in Zimbabwe en die openbare gekibbel tussen die SARB en die Departement van Finansies oor inflasieteikens. The financial markets started the year 2000 on the same exuberant note as they ended This was particularly true in the equity market after it had risen by 24,6% in the fourth quarter of 1999 (13,1% in December 1999 alone), the All Share Index of the JSE rose by a further 8% to achieve a record high of 9 226,5 on 17 January Since then, however, it has been declining. The bond market experienced a similar increase of 96 basis points in the return on the benchmark R153 government bond, from 13,13% on 17 January 2000 to 14,09% at the end of the quarter. The rand, too, had an extremely hot experience with the US dollar, and depreciated by 6,3% during the first quarter. Against the euro, however, it held its own the rand/euro rate moved from only R6,20/euro to R6,23/euro. The relative underperformance of South Africa against emerging markets was particularly noticeable. It is clear that the SA financial markets were caught in large global trends during the first quarter of Three trends deserve special mention: Equity investors worldwide were in favour of the so-called new economy sectors (information technology, telecommunication, media and biotechnology), at the expense of the so-called old economy sectors (commodities, manufacturing, utilities, financial services and traditional retail). The South African equity market, representative of our underlying economy, was unfortunately measured by the same yardstick as the old economy. The US dollar was surprisingly strong against the background of a record deficit on the current account of more than 4% of GDP. Strong capital flow to the US, particularly from Europe, to benefit from the strongly growing US economy, supported the dollar. The US is regarded as the world leader in the development of the new economy, and even Europe is struggling to keep up. The triple increase in the price of crude oil since late 1998 raised the ghost of overall inflation worldwide, and is causing central banks to take a cautionary monetary stance. Official interest rates are rising, with the US Federal Reserve and the European Central Bank both increasing their main policy rates by 50 basis points in the first quarter of The effect of these worldwide trends was exacerbated by the fact that sentiment towards South Africa became negative as a result of the deteriorating situation in Zimbabwe and the public altercation between the SARB and the Department of Finance about inflation targets.

23 DIE GEVARE VAN EKSTRAPOLERING n Mens moet egter versigtig wees om nie onlangse gebeure in die toekoms in te ekstrapoleer nie. Daar is reeds tekens van n ommeswaai in bogenoemde drie groot tendense. Aandelebeleggers word toenemend bewus van die feit dat relatiewe markwaardasies vir nuwe ekonomie - aandele teenoor ou ekonomie -aandele onrealisties geword het. Die gevolg is n ommeswaai van die sektorrotasie na die nuwe ekonomie aandele, wat aandelemarkte sedert die derde kwartaal van 1999 oorheers. Vanaf 10 Maart 2000 tot die einde van die eerste kwartaal 2000 het die Dow Jones Nywerheidsindeks n styging van 13% getoon, terwyl die NASDAQ-indeks gedurende dieselfde tydperk met 16,3% geval het. Die besef dat wêreld ekonomiese groei gedurende 2000 sterk sal bly, het ook gelei tot n beskeie ommeswaai in kommoditeitsaandele. OPUL se besluit op 27 Maart 2000 om olieproduksie te herstel tot die vlak van voor die ooreengekome produksieverlagings waarop verlede jaar besluit is, het reeds n 20%-daling in die ru-olieprys tot gevolg gehad. Verdere dalings word verwag namate die noordelike halfrond die somer binnegaan. Dit sal uiters nodige verligting vir wêreldwye inflasiedruk meebring, en in n mate optrede deur sentrale bankiers teenhou. Die derde tendens, dié van sterk kapitaalvloei na die VSA, moet nog omgeswaai word. Daar word egter verwag dat, namate die nuwe ekonomie -lugborrel bars, en die differensiaal in ekonomiese groei tussen die VSA en die res van die wêreld verklein (in besonder Europa), hierdie ommeswaai n werklikheid sal word. Die gevolg sal n einde aan die verskynsel van n sterk dollar wees, en daar word verwag dat die nominale effektiewe waarde van die dollar teen die einde van 2000 met 10% tot 15% sal daal Hoewel ietwat in die duister gestel deur gebeure op die finansiële markte, het SA se fundamentele ekonomiese faktore steeds verbeter. Op die een of ander tyd sal die markte die onderliggende sterkte in die SA ekonomie moet besef. WÊRELDWYE EKONOMIESE VOORUITSIGTE Die G7 ekonomieë kry momentum, met die belangrikste streke waar groei traag was wat toenemende tekens van herstel toon. Hierdie herstel word bevestig deur die stygende belangrikste ekonomiese aanwysers. Die grootste risiko is dié van n harde landing vir die VSekonomie, met die aandelemark wat n bron van potensiële onstuimigheid bly. Die deurlopend lewendige VS ekonomie brand op al sy silinders, en vier nege jaar van ononderbroke groei, tesame met laaggehoude inflasie. Ten spyte van die feit dat werkloosheid op n laagtepunt van 4,1% staan die laagste in n geslag het kernverbruikerspryse in 1999 stadig gegroei teen n geannualiseerde koers van 1,9%. THE DANGERS OF EXTRAPOLATING However, one should be careful not to extrapolate recent events with the future. There are already signs of a change in the above three major trends. Equity investors are becoming increasingly aware of the fact that relative market evaluations for new economy and old economy shares have become unrealistic. The result is a change from the sector rotation to the new economy shares that has prevailed in equity markets since the third quarter of From 10 March 2000 until the end of the first quarter of 2000 the Dow Jones Industrial Index showed an increase of 13%, while the NASDAQ Index declined by 16,3% over the same period. The realisation that global economic growth will remain strong in 2000 has also led to a modest change in commodity shares. OPEC s decision on 27 March 2000 to raise its oil production back to the level it was before the production decreases decided on last year, has already led to a 20% drop in the price of crude oil. Further drops are expected as the northern hemisphere enters its summer season. This will bring necessary relief for worldwide inflation pressure and will to a certain extent prevent action by central bankers. The third trend, that of strong capital flow to the USA, still has to be turned around. However, expectations are that as the new economy bubble bursts, and the differential in economic growth between the USA and the rest of the world shrinks (particularly Europe), this turnaround will become a reality. The result will be an end to the phenomenon of a strong dollar, and the nominal effective value of the dollar by the end of 2000 is expected to decline by 10% to 15%. Although somewhat overshadowed by events in financial markets, SA s economic fundamentals have improved even more. At some stage the markets will have to realise the underlying strength in the SA economy. GLOBAL ECONOMIC OUTLOOK The G7 economies are gaining momentum, with major regions where growth has been lacklustre showing increasing signs of recovery, which is confirmed by rising leading economic indicators. The greatest risk is that of a hard landing in the US economy, with the stock market remaining a source of potential turbulence. The persistently buoyant US economy is firing on all cylinders, celebrating nine years of uninterrupted growth alongside subdued inflation. In spite of the rate of unemployment being at a low of 4,1% - the lowest in a generation - core consumer prices grew niggardly at a 1,9% annualised rate in 1999.