Glacier Annual Report 2013

Glacier Management Company (RF) (Pty) Ltd and Glacier Financial Solutions (Pty) Ltd are both wholly-owned subsidiaries of Glacier Financial Holdings (Pty) Ltd.

The Glacier Junior Series is part of the Sanlam Group’s proud history of amateur golf sponsorship, and its fourth year was another successful one. The Series gives junior golfers countrywide the opportunity to compete in an 18-hole stroke play tournament. Twenty-five events were hosted nationally in 2013, giving approximately 2 400 young players the chance to display their skills.

The Glacier Junior Series was launched in 2010 and has evolved into one of the most popular initiatives on the junior golf circuit. The Series is supported by top professionals and golf industry leaders such as Ernie Els, the Schwartzel family, Branden Grace, Louis Oosthuizen and George Coetzee.

All the Glacier Junior Golf events include participation by CANSA, and four of the young golfers who participate in the Junior Series are afforded the opportunity to play in the Sanlam CANSA final. The prize for the overall winner of the junior series is a trip to compete against the top international junior golfers in the prestigious Orange Bowl Junior Invitational in Florida.

Theunis Bezuidenhout, winner of the 2013 series, returned from the Junior Orange Bowl Championship in December 2013 with a valuable perspective on what it takes to become a top international golfer.

Glacier’s community support was broadened during 2013 with a variety of initiatives.

The support to the Belhar Children’s Home (previously known as Umephi) continued during the year. We also supported Place of Hope, a pre-school in Nyanga which cares for orphans and serves as a soup kitchen.

Collections were made internally to provide blankets to a home for the elderly, clothing to Shiloh Synergy, a non-governmental organisation uplifting and educating under-privileged people in the Western Cape, and a monetary contribution to Jerseys4Jozi, a winter jersey campaign and skills development programme in Johannesburg.

We also donated funds to the Animal Anti-Cruelty League, Muscular Dystrophy Foundation, Compass, which is a social services organisation, and the Teddy Bear Clinic, a non-profit organisation dedicated to the protection and rehabilitation of abused children.

Glacier collaborated with a variety of charitable organisations and participated in the “Kos vir Skole” project, and the “Helpende hand” project which aims to alleviate poverty and provide education.

During 2013, Glacier also partnered with the organisers of the Storms River Traverse, a mountain biking event held annually in the Tsitsikamma. A particular appeal to Glacier was the community involvement that is an integral part of the Traverse: local schools get involved in cleaning up parts of the Storms River village prior to the event, training in the hospitality industry is provided to unemployed individuals, and the organisers of the event, Dryland Event Management, always ensure that they give something back to the environment where their events are hosted.

Sponsorships Corporate Social Investment

South African equity markets again produced excellent returns last year – outperforming many analysts’ expectations. These results were achieved despite continued labour unrest and downgrades by international rating agencies earlier in the year. SA equities, with a return of 21.43%, was the top performing asset class in 2013. This was largely due to the performance of industrial and financial stocks. SA listed property delivered a muted 8.78%, while cash returned 5.18% and bonds 0.64%.

Bonds were significantly impacted by foreign sell-off when talk of the US’ tapering programme arose. This fear saw a R13 billion sell-off in May and June. Over the course of the year there were net inflows of R1.033 billion into our bond market, significantly lower than the 2012 figure. November saw record outflows of R15 billion from foreigners exiting our bond market. This was due to emerging market risk aversion, concerns around our twin deficits (current and budget accounts) as well as the currency weakness. During 2013 net equity inflows from foreign investors totalled just R136 million.

The Glacier International Multi-Currency Fund was successfully converted into a feeder fund on 17 December 2013. The new name of the fund is the Glacier Global Strategic Liquidity Feeder Fund. This fund invests and feeds into the Sanlam Strategic Cash Fund, managed by Sanlam Private Investments UK. Unlike the Multi-Currency Fund, it is only USD denominated, however, it can invest in USD-denominated instruments across the globe which provides other currency exposure as well. The fund provides diversification against potential rand depreciation. It returned a respectable 18.35% (in rand terms)

for the year, largely due to the weakening of the rand which was one of the worst-performing currencies in 2013.

The Glacier Money Market Fund returned 5.28% for the year. The SA Reserve Bank kept interest rates unchanged at 5% over the course of 2013, the lowest rate SA has seen in over 30 years. This kept the performance of the Glacier Money Market Fund steady, however, anticipated rate hikes in 2014 and 2015 will increase the performance of this fund. Inflation for 2013 was recorded at 5.4% as consumers continued to feel the effects of increases in electricity, food and fuel costs.

The year ahead promises to be an interesting one as South Africans go to the polls for a general election. There’s no doubt that we’re in a much better position than we were 20 years ago, but with much still to be implemented and achieved. 2013 Marked the passing of Nelson Mandela, an icon in many respects. He achieved so much, and yet his ability to forgive and focus on the future served us all. My wish is for all South Africans to continue to act in this spirit and take individual actions in changing the country for the better.

I wish our investors a successful 2014 and assure you of our commitment to world-class service at all times.

Statement to investors

ANTON RAATHCHIEF EXECUTIVE

Report of the trustee for the Glacier Collective Investments Scheme

We, the Standard Bank of South Africa Limited, in our capacity as Trustee of the Glacier Collective Investments Scheme (“the Scheme”) have prepared a report in terms of Section 70(1)(f) of the Collective Investment Schemes Control Act, 45 of 2002, as amended (“the Act”), for the financial year ended 31 December 2013.

In support of our report we have adopted certain processes and procedures that allow us to form a reasonable conclusion on whether the Manager has administered the Scheme in accordance with the Act and the Scheme Deed.

As Trustees of the Scheme we are also obliged in terms of Section 70(3) of the Act to satisfy ourselves that every statement of comprehensive income, statement of financial position or other return prepared by the Manager of the Scheme as required by Section 90 of the Act fairly represents the assets and liabilities, as well as the income and distribution of income, of every portfolio of the Scheme.

The Manager is responsible for maintaining the accounting records and preparing the annual financial statements of the Scheme in conformity with International Financial Reporting Standards. This responsibility also includes appointing an external auditor to the Scheme to ensure that the financial statements are properly drawn up so as to fairly represent the

financial position of every portfolio of its collective investment scheme in accordance with International Financial Reporting Standards and in the manner required by the Act.

Our enquiry into the administration of the Scheme by the Manager does not cover a review of the annual financial statements and hence we do not provide an opinion thereon.

Based on our records, internal processes and procedures we report that nothing has come to our attention that causes us to believe that the accompanying financial statements do not fairly represent the assets and liabilities, as well as the income and distribution of income, of every portfolio of the Scheme administered by the Manager.

We confirm that according to the records available to us, no losses were suffered in the portfolios and no investor was prejudiced as a result thereof.

We conclude our report by stating that we reasonably believe that the Manager has administered the Scheme in accordance with:

(i) The limitations imposed on the investment and borrowing powers of the manager by this Act; and

(ii) The provisions of this Act and the deed.

MELINDA MOSTERTHEAD: TRUSTEE SERVICESSTANDARD BANK OF SOUTH AFRICA LIMITED6 MARCH 2014

SEGGIE MOODLEYHEAD: RISK AND LEGAL (TRUSTEE SERVICES)STANDARD BANK OF SOUTH AFRICA LIMITED6 MARCH 2014

The accompanying summary financial statements, which comprise the summary Statements of Financial Position as at 31 December 2013 and the summary Statements of Comprehensive Income for the year then ended are derived from the audited financial statements of the Glacier Money Market Fund and the Glacier Global Strategic Liquidity Feeder Fund for the year ended 31 December 2013.

We expressed an unmodified audit opinion on those financial statements in our report dated 18 March 2014. Those financial statements, and the summary financial statements, do not reflect the effects of events that occurred subsequent to the date of our report on those financial statements.

The summary financial statements do not contain all the disclosures required by International Financial Reporting Standards and the Collective Investment Schemes Control Act, 2002. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of the Glacier Money Market Fund and the Glacier Global Strategic Liquidity Feeder Fund.

Management’s Responsibility for the Summary Financial Statements

Management is responsible for the preparation of a summary of the audited financial statements in accordance with the basis of accounting accepted by these entities.

Auditors’ Responsibility

Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810, “Engagements to Report on Summary Financial Statements.”

Opinion

In our opinion, the summary financial statements derived from the audited financial statements of the Glacier Money Market Fund and the Glacier Global Strategic Liquidity Feeder Fund for the year ended 31 December 2013 are consistent, in all material respects, with those financial statements, in accordance with the basis of accounting accepted by these entities.

Report of the independent auditors to the participatory interest holders of the Glacier Money Market Fund and the Glacier Global Strategic Liquidity Feeder Fund

ERNST & YOUNG INC.DIRECTOR – VINCENZO FRANCESCO PAINOREGISTERED AUDITORCHARTERED ACCOUNTANT (SA)ERNST & YOUNG35 LOWER LONG STREETCAPE TOWN28 MARCH 2014

Glacier Money Market Fund

Statement of Financial Position at 31 December 2013

2013R’000

2012R’000

ASSETSInvestmentsMoney market instruments

Cash and cash equivalentsAccrued income and debtors

2 861 701 2 861 701

8 79533 176

2 831 6862 831 686

28 71732 183

Total assets 2 903 672 2 892 586

LIABILITIES (excluding net assets attributable to unit holders)Trade and other payablesRelated parties payableDistribution payable

14 526274

2 18012 072

13 904243

2 26311 398

Net assets attributable to unit holders 2 889 146 2 878 682

2013R’000

2012R’000

IncomeInterest incomeNet fair value (losses)/ gains on financial instruments

158 993159 031

(38)

180 902180 902

-

Operating ExpensesService feesAudit feesCustodian, trustee and bank charges

(26 060)(25 769)

(32)(259)

(29 398)(29 189)

(32)(177)

Net profit for the yearDistribution to unit holders

132 933(132 962)

151 504(152 229)

Net assets attributable to unit holders (29) (725)

Statement of Comprehensive Income for the year ended 31 December 2013

Fund Distribution Per Fee Class

Monthly distributions Cents per unit

Month Class A Class B Class C Class D

JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember

0.420.400.410.410.430.410.420.450.400.440.430.43

0.430.390.440.430.430.420.430.450.430.440.430.46

0.300.270.300.290.300.290.310.310.310.320.310.32

0.450.400.450.430.450.430.450.460.450.460.450.46

Fees (for all classes)

*All-in fee class.

Portfolio breakdown: Glacier Money Market A, B, C and D classes

2012/12/31 2013/12/31

Overnight 0 – 3 Months3 – 6 Months6 – 9 Months9 – 12 Months

0.99%57.16%19.36%11.01%11.48%

0.30%60.55%18.10%9.43%11.62%

Class A Class B Class C Class D

Initial fees (VAT incl.) Annual fees (VAT incl.)

0.000.57

0.000.45

0.001.99*

0.000.28

Portfolio Manager’s comment

Portfolio details as at year end:

0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0% 10.9% 10.1% 18.0% 60.2%0.8%0.0%

3.68%

43.38% 52.94%

Bank

Corporate

State-ownedenterprises

Portfolio Exposure

Duration (WAD* = 79.51)

FIXED FLOATING RATE

Fixed vs Floating

Bank Exposure Corporate Exposure

Maturity (WAM** = 104.99)

36+ m33 - 36 m 30 - 33 m27 - 30 m24 - 27 m21 - 24 m18 - 21 m15 - 18 m12 - 15 m9 - 12 m6 - 9 m3 - 6 m0 - 3 m

CashCall

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0% 7.7% 7.6% 4.5% 79.4%0.8%0.0%

36+ m33 - 36 m 30 - 33 m27 - 30 m24 - 27 m21 - 24 m18 - 21 m15 - 18 m12 - 15 m9 - 12 m6 - 9 m3 - 6 m0 - 3 m

CashCall

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0% 7.7% 7.6% 4.5% 79.4%0.8%0.0%

*Weighted average duration.

**Weighted average maturity.

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

ABSA

BAN

K LI

MIT

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ANK

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GRIN

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CAN

BANK

LTD

13.09% 12.60%

9.94%

2.06% 1.99% 1.95% 1.41% 0.90% 0.79%

7.39%

0.83%

5.00%4.50%4.00%3.50%3.00%2.50%2.00%1.50% 1.00%0.50%0.00%

SANL

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EQST

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4

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2.

87%

2.6

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2.4

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2.4

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2

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1.9

8%

1.

98%

1.97

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1.

96%

1

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1.5

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1.

34%

1.30

%

1.2

8%

1.2

1%

1.1

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1.11

%

1.0

4%

0.9

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0.9

9%

0.91

%

0

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0.6

9%

0.

62%

0.62

%

0.5

1%

0.4

8%

0.3

5%

54.0%

53.0%

52.0%

51.0%

50.0%

49.0%

48.0%

47.0%

46.0%

45.0%

44.0%

42.0%

47.1%

52.9%

Market review

The Monetary Policy Committee (MPC) of the South African Reserve Bank kept the repo rate unchanged at 5.00% for the whole of 2013. External factors, especially the economic policy of the USA, saw the rand weakening towards year-end, with a corresponding steepening of the long end of the yield curve. All these activities caused uncertainty in the inflation outlook, with a corresponding upward pressure on money market rates.

The first 2014 meeting of the MPC took place on the 29th of January 2014, where the Governor unexpectedly increased the repo rate from 5% to 5.5%. The next meeting will be held on the 27th of March 2014 and although the market is split 50:50 on whether the repo will stay at 5.5% or be raised then, the upward cycle has started.

Inflation was range bound in 2013 between 5.3% and 6.4%, but decreased from 6.4% to 5.3% during the last quarter to end within the Reserve Bank’s target range. Risks to inflation outlook remain high as imported inflation via energy, food and transport is expected to keep the value hovering around the upper limit of 6%. This inflation risk is also the reason for the present upward trends in the interest rate cycle.

The money market curve steepened during the year, with the three-month rate increasing by 0.14% from 5.08% to 5.22%, while the twelve-month rate increased with 0.56% from 5.47% to close at 6.025%. The floating rate spreads of the banks experienced a low in the middle of the year but started to increase towards year-end. This upward pressure on funding costs moved into credit spreads as well. Here we saw small but clear upward movements in credit spreads. We expect this upward trend to continue into 2014, which should enhance the portfolio performance relative to cash.

What Sanlam Investment Management (SIM) did

Available cash was optimised in that all maturing instruments and other cash inflows were invested timeously across the money market yield curve. Quality corporate credit, which traded above the three months money market rates, was added to the portfolio. We implemented a combination of floating rate notes (FRNs) together with some fixed rate negotiable certificates of deposits (NCDs) in the portfolio. The combination of corporate credit, negotiable certificates of deposits and floating rate notes enhanced portfolio returns.

SIM strategy

Our preferred investments would be a combination of fixed- rate notes, floating-rate notes and quality corporate credit to enhance returns in the portfolio. We expect the repo rate to continue to increase during 2014 and we will utilise the steep curve in combination with the full universe of investable money-market instruments to obtain optimal performance.

6.03

30-Sep-13 31-Dec-135.995.83

5.75

5.64

5.55

5.22

5.13

5.10

5.08

4.79

4.75

overnight

Months

1 3 6 9 12

6.1

5.9

5.7

5.5

5.3

5.1

4.9

4.7

4.5

Glacier International Multi-Currency Fund - now named Glacier Global Strategic Liquidity Feeder Fund

The conversion of the Glacier International Multi-Currency Fund into the Glacier Global Strategic Liquidity Feeder Fund

The Glacier International Multi-Currency Fund was mandated to invest in foreign low duration fixed income assets and bank deposits. The fund invested in dollar, pound, euro, yen and rand assets. However, due to the size of the fund, it was not able to access all available investment opportunities.

An alternative structure was required to provide investors with a cost-effective, actively managed portfolio with greater potential to provide above-benchmark returns. The existing fund was therefore converted into a feeder fund on 17 December 2013, and the Sanlam Strategic Cash Fund was chosen as the underlying investment option.

The Sanlam Strategic Cash Fund is managed by Sanlam Private Investments (UK). It is a dollar-denominated fund that invests in instruments similar to the instruments available to the Glacier International Multi-Currency Fund. The fund can invest in US dollar-denominated instruments across the globe, providing exposure to other currencies as well.

The fund was named The Glacier Global Strategic Liquidity Feeder Fund to reflect the new investment policy, structure and underlying investment option.

The fund has a lower management fee than the Glacier International Multi-Currency Fund: While the Glacier International Multi-Currency Fund charged 1% (ex VAT), the Glacier Global Strategic Liquidity Feeder Fund charges an annual management fee of 0.6% (ex VAT), resulting in an expected total expense ratio (TER) of approximately 0.9% (ex VAT).

Statement of Financial Position at 31 December 2013

2013R’000

2012R’000

ASSETSCash and cash equivalentsAccrued income and debtors

40 3014

74 5919

Total assets 40 305 74 600

LIABILITIES (excluding net assets attributable to unit holders)Trade and other payablesRelated parties payableDistribution payable

1 011157

7847

2 42913853

2 238

Net assets attributable to unit holders 39 294 72 171

Statement of Comprehensive Income for the year ended 31 December 2013

2013R’000

2012R’000

IncomeInterest income Other gains

10 136185

9 951

7 375233

7 142

Operating ExpensesServices feesAudit feesCustodian, trustee and bank charges

(358)(266)

(19)(73)

(642)(556)(20)(66)

Net profit for the yearDistribution to unit holders

9 778(11 574)

6 733(2 406)

(Decrease)/Increase in net assets attributable to unit holders (1 796) 4 327

Fees and Fund Distribution

Portfolio breakdown:

2012/12/31 2013/12/31

USDEURGBPJPYZAR

49.11%27.96%11.00%10.05%

1.88%

89.37%0.00%0.00%0.00%10.63%

DistributionsPayment date Local interest

(cents per unit)Declaration date

2013/03/312013/06/302013/09/302013/12/31

2013/04/03 2013/07/02 2013/10/02 2014/01/02

21.63115.24

168.9821.17

Initial fees (VAT incl.) Annual fees (VAT incl.)

0.285%1.140%

0.4%1.31%

31/12/2011 31/12/2012 31/12/2013 % Change year

USD/ZAREUR/ZARGBP/ZARZAR/JPY

8.068410.4349

12.5119.5054

8.397811.063613.611610.261

10.350014.423717.346910.0260

23.2%30.4%24.3%-2.3%

The rand depreciated significantly against major currencies over 2013. This was as a result of South Africa’s large twin deficits in conjunction with a lack of foreign inflows into the South African bond market. This was following record inflows in 2012 which kept the rand from blowing out significantly during that year. The rand depreciated against the US dollar by 23.2%, the euro by 30.4%, the UK pound by 24.3% but only 2.3% against the Japanese yen which also depreciated against other major currencies due to the stimulus currently taking place in Japan.

Portfolio Manager’s comment

The above graph shows that the rand has depreciated past Purchasing Power Parity (PPP) as well as past the 10% standard deviation band within which the rand tends to trade.

PPP Upper 10% BandActual

PPP: Rand / USD

0

2

4

6

8

10

12

14

Mar

73

Aug

74

Jan

76

Jun

77

Nov

78

Apr 8

0

Sep

81

Feb

83

Jul 8

4

Dec

85

May

87

Oct

88

Mar

90

Aug

91

Jan

93

Jun

94

Nov

95

Apr 9

7

Sep

98

Feb

00

Jul 0

1

Dec

02

May

04

Oct

05

Mar

07

Aug

08

Jan

10

Jun

11

Nov

12

Lower 10% Band

The Glacier International Multi-Currency Fund predominately invested in fixed deposits in four different currencies: USD, EUR, GBP and JPY. The maturities of these fixed deposits seldom exceeded three months. Investments in the money market assets are made with highly rated international banks while avoiding asset backed securities. This fund remains a conservative

USD, GBP and EUR

The US Federal Reserve continued to keep rates artificially low throughout 2013 and provided forward guidance that this would be the case until significant job creation opportunities could be created and maintained. In December, the US Federal Reserve announced that it would begin tapering its quantitative easing

(QE) stimulus, but not increasing its interest rates. Similarly the UK kept rates on hold throughout 2013 at 0.5%, while in Europe the European Central Bank decreased rates twice during the year (May and November) to 0.25%. This was because Europe struggled to achieve traction in its economy.

investment option, providing unit holders with an ideal hedge against rand depreciation and access to a well-diversifiedportfolio of developed-market currencies.

During December, the fund changed to a USD feeder fund which only invests in US dollars.

USA US$ DEPOSIT RATE - 3 MONTH [Close] (0.25) (EUDP3M [CL]) (-0.03)(GPDP3M [CL]) (0.51)

USA US$ DEPOSIT RATE - 3 MONTH [Close]. EUROPE EURO DEPOSIT RATE - 3 MONTH [Close]UK STERLING DEPOSIT RATE - 3 MONTH [Close] (Weekly 09/07/2006 - 06/01/2013)

-0.1

1.0

2.0

3.0

4.0

5.0

6.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2006 2007 2008 2009 2010 2011 2012 142013

Glacier Fund Performance and TER Report

Fund Performance 1 year performance Benchmark*

Glacier Money Market – Class A (CMF) Glacier Money Market – Class B Glacier Money Market – Class C (Fusion)Glacier Money Market – Class D Glacier Global Strategic Liquidity Feeder Fund – Class B1Glacier Global Strategic Liquidity Feeder Fund – Class B3

4.96%5.07%

3.25%**5.47%

17.57%18.35%

5.18%5.18%5.18%5.18%

21.50%21.50%

NAV to NAV – local currencyfrom 31/12/2012 to 31/12/2013

*Benchmark The benchmark for the Glacier Money Market Funds is the Stefi – 3 months.The benchmark for the Glacier Global Strategic Liquidity Feeder Fund is: 3 months USD LIBOR.

**All-in fee classCollective Investment Schemes and Securities (unit trusts) are generally medium- to long-terminvestments. The value of participatory investments (units) may go down as well as up and past performance is not necessarily a guide to the future. Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from the company/scheme.

Glacier Money Market – Class A (CMF) Glacier Money Market – Class B Glacier Money Market – Class C (Fusion) Glacier Money Market – Class D

Glacier Global Strategic Liquidity Feeder Fund – Class B1 Glacier Global Strategic Liquidity Feeder Fund – Class B3

0.58%0.46%2.01%

0.00%

1.44%0.22%

Total Expense Ratio (TER)*from 31/12/2012 to 31/12/2013

*The TER percentage of the average Net Asset Value of the portfolio was incurred as charges, levies and fees related to the management of the portfolio.  The ratio does not include transaction costs.  A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER can not be regarded as an indication of future TERs. TERs did not form part of the annual external audit.

Collective Investment Schemes and Securities (unit trusts) are generally medium- to long-term investments. The value of participatory investments (units) may go down as well as up and past performance is not necessarily a guide to the future. Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from the company/scheme.

Contact details

Private Bag X5 Tyger Valley 7536Tel +27 21 917 9002Fax +27 21 947 9210Web www.glacier.co.zaE-mail client.services@glacier.co.za

GLACIER FINANCIAL SOLUTIONS (PTY) LTD IS A LICENSED FINANCIAL SERVICES PROVIDER