ANNUAL REPORT 2004/05 9 SEPTEMBER 2005 Presentation to Portfolio Committee on Finance

2 Contents 1.Highlights of the year: 2004/05 2. Progress on Corporatisation 3.Addressing Concerns Raised by AG in Past Financial Years 4.Total assets under management 5. PIC Clients 6. Performance

3 Highlights of the year: 2004/05 Positioning the Corporation to become a modern asset management Company Growth of assets under management from R377 billion to R461 billion Upgrading of IT infrastructure Increased pace in BEE funding Upgrading of retail properties at a cost of R157 million Increased impetus on shareholder activism

4 Progress on Corporatisation Corporation launched on 1 April 2005 Memorandum and Articles of Association signed by shareholder Registered in terms of Companies Act Completing registration as a Financial Service Provider in terms of FAIS Act Interim Board appointed All former National Treasury employees transferred to the Corporation

5 Addressing Concerns Raised By The AG In Past Financial Statements Emphasis of MatterRemedial Steps taken Non-compliance with GAAP and valuation of properties i.t.o. AC 135 not performed Systems put in place to ensure GAAP compliance as well as AC133 and AC 135 compliance No Internal Audit functionInternal Audit Manager appointed and Internal Audit section established No Compliance functionCompliance Officer has been appointed Non-compliance with PFMAAll issues have been addressed. Frequent monitoring by Internal Audit Division

6 Addressing Concerns Raised By The AG In Past Financial Statements Emphasis of matterRemedial Steps Taken Risk Management Framework had not been implemented Framework has been developed Continuous monitoring. Issues relating to ownership of properties All the matters have been resolved

7 Total PIC Assets Under Management EXPOSURE R billion ASSET CLASS31/03/200431/03/200530/06/2005 BONDS EQUITIES CASH ISIBAYA SIPS PROPERTIES Grand Total

8 Total PIC Assets Under Management (Weights) ASSET CLASS31/03/200431/03/200530/06/2005 BONDS51.37%47.39%47.99% EQUITIES34.48%38.15%39.41% CASH8.30%9.81%9.00% ISIBAYA1.57%3.57%2.57% PROPERTIES0.85%0.79%0.76% SIPS3.43%0.28%0.27% OPTIONS0.00% Grand Total100.00%

9 PORTFOLIO NAME31/03/0431/03/0530/06/05%AUM 1 GEPF (Government Employees Pension Fund) % 2 Associated Institution Pension Fund % 3 Unemployment Insurance Fund % 4 Compensation Commissioner : Pension Fund % 5 Compensation Commissioner : Compensation Fund % 6 Guardian Funds % 7 Department of Labour: NSF- Levies % 8 RDP Funds % 9 Period Loans: University Redemption Funds % 10 Temporary Employees Pension Fund % TOTAL PIC Clients: Top 10 Funds

10 Consolidated Fund Performance ReturnRisk Risk/Return Ratio Capital Market14.1%2.9%4.9 Equities33.9%11.5%3.0 Properties15.7%10.1%1.6 Money Markets7.8%0.1%64.3 Structured Investment Products10.7%5.6%2.0 Total Fund20.6%5.2%4.0

11 GEPF Performance ReturnRisk Risk/Return Ratio Capital Market14.1%4.5%3.1 Equities33.9%11.5%3.0 Properties15.7%10.1%1.5 Money Markets7.7%0.3%25.8 Structured Investment Products10.7%5.3%2.0 Total Fund21.6%6.3%3.4

12 GEPF Cumulative Returns: Total Fund & Asset Classes

13 Equities Returns vs. Benchmark 01/04/04 – 31/03/05 12 Months GEPF Equities Benchmark Returns Excess Returns Returns33.87%32.03%1.85% Total Risk11.98%12.21%TE: 1.02%

14 Bonds vs. Benchmark 80% ALBI + 20% Inflation Linked Bonds 01/04/ /03/05 24 MonthsCapital MarketBenchmark Returns Excess Returns Annualised returns12.55%12.21%0.35% Volatility4.13%4.43%TE: 0.70% 01/04/ /03/05 12 MonthsCapital MarketBenchmark Returns Excess Returns Annualised returns14.12%14.00%0.12% Volatility4.75%5.41%TE: 0.78%

15 Money Markets vs Benchmark Benchmark Is the Alexander Forbes STEFI 3 Months, 6 Months and 12 Months. 0-3 Months3-9 Months9-12 Months PIC BMK65%20%15% This reflects the average PIC exposures over time. 01/04/03 – 31/03/05 24 Months Cash & Money Benchmark Returns Excess Returns Returns9.73%9.13%0.60% Total Risk2.05%0.63%TE: 2.06% 01/04/04 – 31/03/05 12 Months Cash & Money Benchmark Returns Excess Returns Returns7.75%7.59%0.16% Total Risk0.31%0.11%TE: 0.35%

16 Property Investments Returns R’MillionPerformance (%) Current Holdings Direct Property Investments 1, Pareto (40%)1, Listed Property Investments TOTAL3,

17 Isibaya Fund Investments

18 Return40.89% Volatility23.13% Isibaya Fund Performance

19 Structured Investment Products Performance Period : 01/04/ /03/05 SIPSCPI + 6% TOTAL18.38%15.99% Volatility5.51% Performance Period:01/04/ /03/04 TOTAL6.94%6.41% Volatility5.66% Performance Period:01/04/ /03/05 (Unaudited) TOTAL10.70%9.00% Volatility5.57% SIPS have outperformed Cash albeit at higher risk, and CPI + 6%

20 WAY FORWARD Client Focus -Continue provide exceptional service to our clients Consolidation of the Corporatisation process -Refinement of investment processes -Continue recruitment of suitably qualified and skilled staff -Refinement of IT systems Champion transformation in the asset management industry -Champion SRI, sound corporate governance, charters and applicable Nedlac agreements, Positioning of PIC in asset management industry -Consolidate the establishment of the PIC’s as the leading asset management company in SA

21 THANK YOU