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Orbis Global Equity Fund Orbis Investment Management Limited Orbis Global Equity Fund News Orbis Global Equity quarterly comment - Dec 09 Tuesday, 23 March 2010 Fund Manager Comment This time last year, "risky" businesses such as those that are highly cyclical, heavily indebted, or whose continued existence is otherwise perceived as uncertain, were unusually highly discounted by the market. When the worst didn't happen, the share prices recovered strongly, to the point where we now find those opportunities fail to match the upside of higher quality businesses, especially when adjusted for risk of loss. For example, Micron Technology suffered greatly along with the rest of the semiconductor manufacturers, as industry capacity building was followed by a severe global recession. As a survivor, Micron's share price has risen more than 300% from its bottom and now reflects expectations of industry recovery. Your Fund recently sold its Micron holdings and invested the capital in higher quality businesses such as semiconductor stalwart Intel. Intel remained profitable and debtless throughout the recession, and sells at 11 times 2010 earnings.   Orbis Global Equity quarterly comment - Sep 09 Monday, 14 December 2009 Fund Manager Comment Your Fund matched the benchmark World Index with a gain of 4.4% for the month. This brings the Fund's year-to-date performance to 38.6% compared to a 28.6% gain in the World Index. Strong absolute and relative performance thus far this year has been driven in no small part by the Fund's significant overweighting in the Asia ex-Japan region. The region's market performance has led all others, owing in part to having experienced a more severe bear market and in part by faring better economically, both versus other regions and versus expectations, during the recession. Despite the strong recent performance, we continue to maintain the portfolio's exposure to the region at just over three times the benchmark weighting. From a fundamental stock-by-stock research standpoint, we continue to find many Greater China and Korean shares that offer superior investment opportunity when compared to the valuation and fundamental growth prospects of their global alternatives   Orbis Global Equity quarterly comment - Jun 09 Wednesday, 23 September 2009 Fund Manager Comment June saw the positive run for your Fund that began in March extended by a further 2.2%, while the World Index pulled back a modest 0.5%. This brings their half-year returns to 19.4% and 8.7% respectively. Global's absolute and relative performance continues to benefit from having nearly 40% of the portfolio, more than twice the benchmark, invested in Asian shares. Despite the strong outperformance of Asian shares thus far this year, our fundamental research process continues to find excellent opportunities that compare favourably to western counterparts. For example, we believe that shares of faster growing companies exposed to domestic consumers, such as Japanese online broker SBI Holdings and Chinese on-line lifestyle companies Shanda and NetEase, continue to offer attractive upside despite strong recent performance as valuations still fail to match what we believe will be robust growth rates relative to their respective markets.   Orbis Global Equity quarterly comment - Mar 09 Wednesday, 10 June 2009 Fund Manager Comment Keen observers of the Global Fund will have noticed a significant drop of late in the portfolio's weighting in Japanese equities. After peaking at nearly 31 % of the portfolio at year end, the Japan weighting in Global ends the first quarter at 22 %. This reduction comes not from some new sense of bearishness, but from the emergence of a number of excellent investment opportunities outside of Japan. This has come about in part from the Japanese stock market's outperformance versus the World Index over the past five months and in part from individual stocks outside of Japan becoming acutely attractive in a market that has been prone to irrational behaviour and unduly punishing shares. Although tempered by its significant strength over the past year, we continue to view the yen favourably. We believe it remains the best store of value among the world's major currencies. We remain enthusiastic about the long-term prospects for Japanese shares and the yen as is evidenced by our continued double weighting for both in the Fund versus the benchmark World Index.   Orbis Global Equity quarterly comment - Dec 08 Monday, 9 March 2009 Fund Manager Comment After several tough months, the positive performance of global stockmarkets in December seems like a significant achievement, but completes the worst year ever for the benchmark FTSE World Index. While significant drops are painful regardless, your Fund has fared better than the benchmark, returning 7.4% for the month and finishing 2008 with a 35.9% loss. Global's recent strong relative performance has been driven by its significant overweighting in the strengthening yen and by the overweighting in and outperformance of the Japanese stock positions in the Fund. We continue to look for well-managed, excellent businesses at attractive valuations, and find many such opportunities in Japan today. As was indicated by the reopening of the Japan Fund in late October to new investors, we are very enthusiastic about the prospects for Japanese shares. For a more detailed review of the rationale for our enthusiasm for Japanese shares, please see the 28 October Japan Fund reopening announcement on the website.   Orbis Global Equity quarterly comment - Mar 08 Thursday, 22 May 2008 Fund Manager Comment In March, the sell off of equities globally that began in the fourth quarter reached the 20% drop generally accepted as marking a bear market. While your Fund has performed well in relative terms these past several months, outperforming the World Index by 4.3 percentage points since the end of October, it has still produced a loss of 9.4% during that period, not an unexpected result for a fully invested fund, but still not as good as we would have liked. What has surprised us has been the similarity in performance of major regions when measured in the same currency; in particular, the Japan market is down 13.4% when measured in US dollars while the US market is down 14.6% since October. While one would have thought that with the US at the centre of the issues triggering the global declines it would have produced greater losses, the weakening of the dollar has spurred buying interest in the shares of the large US exporters, and the opposite has taken place in Japan, where appreciation of the yen has begun to batter the shares of exporters.   Orbis Global Equity quarterly comment - Dec 07 Monday, 25 February 2008 Fund Manager Comment The performance of the Fund tracked the benchmark World Index for December, resulting in a modest outperformance for the year as a whole. The Fund's Japanese shares were the biggest contributor to performance in December. This is noteworthy in that the Japanese stockmarket, as represented by the TOPIX index, was the weakest performer of the developed global markets during the month. This result was mirrored over the fourth quarter, with the Fund's Japanese shares producing significant positive return, while the TOPIX dropped 8.6%, more than four times the decline in the World Index. Despite this strong performance, our national as well as global industry research teams continue to find certain Japanese shares particularly attractive. The focus continues to be on shares geared to Japanese economic activity, where we find low expectations, and away from shares more dependent upon global economic activity. This has been accompanied by an increase in the Fund's weighting in Japan during the year from 15% to 20%.   Orbis Global Equity quarterly comment - Sep 07 Tuesday, 30 October 2007 Fund Manager Comment Although absolute returns remain healthy, the Fund's relative performance took a turn for the worse after the US Federal Reserve and authorities globally acted aggressively in support of the areas of the market that were suffering from a reduced risk appetite. Since the Fed's action, share prices in the world's most economically sensitive sectors and regions have rebounded strongly, particularly consumer cyclicals, basic materials, and the speculators' darling, China. With its significant exposure to areas with lesser sensitivity to financial system liquidity, the Fund has therefore been out of sync with market movements in the last 6 weeks, and its year-to-date outperformance has been eliminated. While the fact that the Fed had to respond so strongly validates the Fund's less aggressive stance, we must all remember that market excesses can extend much further, both in magnitude and duration, than one would expect and subject Members to a severe test of their convictions in the Fund and its approach.   Orbis Global Equity quarterly comment - Jun 07 Tuesday, 25 September 2007 Fund Manager Comment Energy markets globally are facing a growing problem: increasingly the most plentiful reserves are located further and further from ultimate consumers. Cheniere, we believe a far-sighted company in this regard and a new Fund holding, is capitalising on this opportunity to create a new business. As higher energy prices have made the process of liquefYing natural gas for long-distance transportation by ship more cost effective, Cheniere has been developing re-gasification plants in the Gulf of Mexico to bring liquefied natural gas from overseas into the US. It has leveraged its first mover advantage to secure the best sites, and its first terminal will commence operations in 2008. Long-term contracts for 50% of the terminal's capacity support the costs of construction. Upside from successfully marketing the remaining capacity, and Cheniere's undeveloped sites, will largely determine its intrinsic value. Although nothing is certain, our exhaustive bottom-up analysis suggests that the Fund is paying a very low price for this long-term potential in Cheniere.   Orbis Global Equity quarterly comment - Sep 06 Tuesday, 19 December 2006 Fund Manager Comment The Fund's exposure to companies listed in the US has steadily risen from 27% to 42% over the past year, funded by reductions in Japan (27% to 15%) and South Africa (7% to 2%). The shift is driven by our bottom-up stock-by-stock decisions, rather than top-down macroeconomic analysis of specific countries. The decisions to buy Cisco in the US and sell Sasol in South Africa exemplify this dynamic. Sasol had been a large and very profitable holding in the Fund for a long time. While the stock is still not expensive by any means, the share price has become increasingly reliant upon continued high energy prices. The less attractive valuation and higher risk mean Sasol has now been pushed out of the Fund by more attractive new ideas like Cisco. Cisco is typical of the large-cap growth stocks the Fund has been buying, where Cisco's market average valuation belies its outstanding management, historical operating performance and future prospects.   Orbis Global Equity quarterly comment - Jun 06 Monday, 28 August 2006 Fund Manager Comment The volatility in world equity markets continued in June, with large price swings seemingly now the norm. Times like these are healthy reminders that the stocks in the Fund often fall as much as, if not more than, the overall market in broad, sharp, sentiment-driven declines. Such short-term movements are not something we can manage or minimise. Instead, we see them as opportunities to increase the Fund's investment in companies in which we have a high degree of conviction at cheaper share prices. The 27% drop in the share price of Japanese broker Nikko Cordial presented just such an opportunity. We believe the shift of individual Japanese investors' assets from deposits into riskier assets has a long way to go and will substantially benefit well-managed Nikko Cordial. The company also carries 'hidden value', mainly in the form of its asset management operations which are soon to be listed. Moreover, one-third of the company's equity is held in cash, which management intends to invest, and we think they will do so appropriately.   Orbis Global Equity quarterly comment - Sep 05 Monday, 21 November 2005 Fund Manager Comment The fund's performance last quarter was strong, both in absolute terms and relative to the World Index. While positive relative returns were posted in all major regions, in particular the fund benefited from very strong performances from its heavy overweightings in Japanese and Korean equities. While we believe recognition of these markets' attractiveness was long overdue and we were pleased with the impact they had on the fund's performance, the magnitude of these markets' short-term surges was extraordinary and the markets are vulnerable to some correction. The fund's September return relative to the World Index of 4.4% ranks that month in the top decile of the fund's monthly relative returns since inception. While these spurts of superior performance are never unwelcome, it is important to keep them in perspective. Monthly superior performance of 4% or greater is infrequent and furthermore the fund is not immune from months of significant underperformance. The point is that, while every month counts, the fund's short-term relative returns are highly variable and it is therefore important not to put too much emphasis on them. Also noteworthy is that these infrequent performance spikes have outsized impacts on overall relative performance, with the monthly relative returns of the top and bottom decile months contributing 104% and -79% of the fund's total relative performance, respectively. Considering these magnitudes, investing for a short time period substantially increases the risk of experiencing an abnormally high proportion of outsized negative relative returns and achieving a poor investment experience, hence our frequent reminders of the importance of thinking and investing with a long-term perspective. The discussion above on the large variability of the fund's relative returns should not be misinterpreted as meaning that the fund is more risky than the World Index. Although the fund's short-term relative returns have been highly variable, the fund's medium-term absolute returns have been much more stable, its loss experience significantly lower and its short-term absolute returns only slightly more variable than the World Index. So, while we would like to avoid the short-term "pain" of returns that at times stray significantly from those of the Benchmark and average fund, we accept it as unavoidable in order to enjoy the "gain" of more consistent and superior longer-term absolute performance.   Orbis Global Equity comment - Sep 05 Monday, 21 November 2005 Fund Manager Comment Orbis Global, up 7.4% for the month of September, has produced both strong total returns and significant outperformance versus the benchmark FTSE World Index in recent months. The fund's Asian holdings, which represent 46% of the portfolio and are emphasised largely at the expense of the US, have performed particularly well during this period. While these spurts of short-term outperformance happen infrequently, they are not unusual. In fact, these types of short-term runs have generated a large portion of the fund's historic outperformance (and are of course interspersed with periods of short-term underperformance). We see this irregular profile of short-term relative returns as neither a particular strength nor weakness, especially when seen in the context of the relatively steady long-term absolute return profile of the fund. This dynamic of our investing approach should be well understood by members and is at the heart of why we so steadfastly preach taking a long-term view when investing in the fund. Click here for original article   Orbis Global Equity comment - Jul 05 Wednesday, 14 September 2005 Fund Manager Comment Orbis Global was up 2.9% for the month of July, bringing the year-to-date return to 6.8% versus 3.9% for the benchmark FTSE World Index. Drawn by the combination of lower fundamental valuations and either stronger balance sheets or higher future growth prospects, the Fund continues to grow its holdings in Asia. Most of the Fund's recent investments in the region have been in China. When added to the already significant exposures in Japan and Korea, the Fund's total equity exposure to Asia now tops 42%. This compares with just over 12% for the World Index. As always, this large aggregate position has been built stock-by-stock through our bottom-up fundamental research, both in absolute terms and in comparison with opportunities in other stockmarkets. In that regard, it is interesting to note that Korea, China and Japan are three of the very few investable stockmarkets selling for less than 2 times their net asset value, with the economies of Korea and China also among the fastest growing.   Orbis Global Equity comment - Aug 05 Wednesday, 14 September 2005 Fund Manager Comment Orbis Global was up 3.0% for the month of August. This brings the year-to- date return to 10.0% versus 4.6% for the benchmark FTSE World Index. We rarely miss an opportunity to caution investors against focusing too much, and basing investment decisions, on short-term performance or prospects. This is because the Fund is often very different from the benchmark and both the Fund's and the benchmark's near-term performance is unpredictable. Our focus is not on near-term performance but on continually rebuilding the Fund with a mix of stocks that maximises long-term risk-adjusted return potential. This cautionary message is quite appropriate now with 44% of the Fund invested in stocks in Japan, Korea, and China, which in total represent 12% of the benchmark. While we believe these exposures are appropriate given the investment opportunities we find in selected Asian stocks, particularly relative to western equities, we should all be aware that they will likely lead to short-term performance that could otherwise be seen to be surprising, either to the upside or downside.   Orbis Global Equity comment - Jun 05 Tuesday, 16 August 2005 Fund Manager Comment In June, Orbis Global was up 2.7% bringing the year-to-date return to 3.8%, with the benchmark FTSE World Index up 0.2%. With the compression in the valuation discrepancy among equities, we are continuing to build positions in companies that may not offer obvious value when assessed using straight valuation metrics, but are very compelling when their underlying business quality and expected growth rates are added to the evaluation mix. Liberty Global, one of the largest non-US broadband providers in the world, is a good example. On the surface, Liberty's valuation of 9 times EBITDA, while not demanding, is not going to grab any headlines. But as they say, don't judge a book by its cover. When you combine this valuation with Liberty Global's 15- 20% underlying growth rate and competitive positioning as a consolidator in the highly fragmented and under-developed European and Japanese cable markets, we believe Liberty Global offers compelling value justifying a significant holding in the Fund.   Orbis Global Equity quarterly comment - Jun 05 Tuesday, 16 August 2005 Fund Manager Comment Given the Fund's policy of remaining fully invested in equities at all times, we have been pleasantly surprised by the consistency in the Fund's absolute returns over its 15.5 year life. We believe the Fund's focus on holding the most attractively priced shares, no matter where they are found around the globe, has played a significant part in producing that result. How the Fund's exposure to shares in Japan has changed over time is a good case study of this point. The Fund's relative emphasis on Japanese equities has varied considerably over time. Global's relative weighting has ranged from (i) extremely underweighted in early 1990 when Japanese stocks were the darlings of global investors, to (ii) very significantly overweighted for much of the second half of that decade when investors' overreaction to disappointment sent them fleeing indiscriminately, laying bare many attractively valued shares, to (iii) equalweight at the US stockmarket bubble peak where our high conviction in a select few incredibly attractive US shares temporarily dragged the Fund's relative weighting in Japan back to neutral. Importantly, these movements over time did not come as a result of any top-down macroeconomic or market call, but rather as a result of our fundamentals-driven, competitive stock-by-stock selection process In 1990, Japan was clearly the stockmarket held dear by investors. At a price-to-book ratio (P/B) of nearly 5 times and a price-to-earnings ratio (P/E) of 56, it had an extremely demanding valuation nearly twice that of the other major markets and its historical valuation. Today, with conditions dramatically different and Japanese stocks selling for an undemanding valuation, Global's current weighting in Japanese equities should come as no surprise.   Orbis Global Equity comment - May 05 Tuesday, 7 June 2005 Fund Manager Comment In what was nearly a complete reversal of the negative performance in April, Orbis Global rose by 3.3% in May. For the year-to-date, the fund is up 1.1% with the benchmark FTSE World Index down 0.9%. The fund's strong absolute and relative performance in May was underpinned by takeover speculation in Bayerische Hypo-und Vereinsbank (HVB), one of the Fund's largest positions, and the Fund's energy and resource names. Confirmation that Italian-based banking conglomerate UniCredito Italiano is in merger talks with HVB underscores the intrinsic value we had observed in HVB, which is based on our expectations of cyclical and structural improvements in German banking and, through its Bank Austria subsidiary, of growth in banking assets in the economies of central and eastern Europe. NRG Energy, Reliant Energy, Harmony Gold Mining and Sasol, which make up the bulk of the Fund's energy and resource positions, were all strong performers as they rebounded nicely from the significant correction experienced by energy and resource stocks in April.   Orbis Global Equity comment - Apr 05 Tuesday, 7 June 2005 Fund Manager Comment With stockmarkets weak, Orbis Global was down 4.4% in April. For the year-to-date, the Fund is down 2.1% with the benchmark FTSE World Index down 3.0%. Stockmarkets experienced a sharp, broad-based decline mid-month, seemingly in response to investors reducing their expectations for economic growth. Our carefully selected stocks fared even worse as they underperformed their local markets, which themselves underperformed global equity markets overall. The most notable of the price declines came in the Fund's emerging market and Japanese holdings, despite these being our most favoured positions from a fundamental perspective. One advantage the Fund derives from such stockmarket declines is that they lead to a build-up of cash in the Orbis Optimal Funds. These cash balances can then be deployed into the Global Fund on an opportunistic basis, adding to our ability to cost-effectively improve the quality of the portfolio in response to price weakness in our favoured holdings.   Orbis Global Equity quarterly comment - Mar 05 Tuesday, 26 April 2005 General Market Analysis We have never found the popular distinction between value and growth investing particularly useful when defining our investment philosophy. Simplistically, this popular distinction asserts that companies with higher growth prospects, which justifiably should be priced at higher valuations, are not potential candidates for a value investor. The danger is that, if taken too literally, such a distinction eliminates the opportunity for a value investor to invest in companies of superior growth and quality even if they are available at only average valuation multiples. On the other hand, defining potential opportunities as those companies whose share price is well below their intrinsic value, as we always have, leaves us open to owning almost any type of company as long as the price is right. If executed effectively, this approach causes the portfolio to shift focus away from owning lower quality companies towards owning higher quality companies when the valuation premium for quality companies is unjustifiably low. As in the mid 1990s, when the Fund's portfolio last had a meaningful growth component, we believe that situation is beginning to show itself in global equity markets today. The past five years in global equity markets have provided stark evidence of the benefit of paying close attention to price when making an investment. Broadly speaking, "global value" stocks have outperformed "global growth" stocks by more than 70% in the past five years. Hardly surprisingly, it is now fashionable to pay very close attention to price when selecting equity investments. Investors have once again learnt through the school of hard knocks that correctly identifying above average companies is very difficult, let alone deciding how much of a premium valuation is justifiable. Naturally, this intense collective focus on purchasing shares with below average valuations has resulted in a noticeable reduction in the number of shares in such a position, leaving traditional value managers frustrated by a lack of obvious opportunities. While the Fund is not immune from the impact of a significantly reduced number of deep value opportunities, the narrowing in the valuation gap between companies brings with it fresh opportunity. We believe the current market's fixation on simplistic valuation multiples is enabling us to find an increasing number of opportunities to invest in significantly superior companies at relatively attractive valuations. According to our proprietary quantitative screening system, which evaluates opportunities based on valuation, growth, and quality measures, the current gap between the expected four-year annual rate of return on the most attractive 20% of our universe of investable companies and the universe average is slightly above normal historic levels. Admittedly while this quantitative screen is only an approximation of our opportunity to add value, it does indicate that although the opportunity to add value has closed from peak levels of 2002 through 2003, it is still at robust levels. So, while we are now seeing far fewer attractive traditional "value" stocks, the data indicates that their numbers are being largely replaced with attractively priced, superior-growth and quality companies that were unavailable to us five years ago.   Orbis Global Equity comment - Mar 05 Thursday, 14 April 2005 Fund Manager Comment In March, the fund was down 1.3%, bringing the year-to-date performance to 2.4%. This compares well with the benchmark World Index's 0.9% year-to- date decline. We focus the fund's investments on the shares of companies that we believe are being significantly undervalued by the stockmarket. Even when we are right, we may have to be very patient in waiting for the market to adjust the stock prices accordingly. This necessarily means we have little focus on, or control of, Orbis Global's short-term performance and volatility. Conversely, we believe that our patience and disciplined, logical focus on undervalued opportunities makes the long-term performance more predictable and less volatile. Over the quarter, this patient approach has begun to pay off in two of the fund's Japanese positions, Fuji TV and Toyota Industries. Other investors have begun to see the under-appreciated value inherent in the shares of these companies and to recognise the likelihood that such potential might soon be unlocked.   Orbis Global Equity comment - Dec 04 Wednesday, 23 March 2005 Fund Manager Comment The fund was up 5.2% in December, bringing the total return in 2004 to 16.6%. The benchmark FTSE World Index was up 16.1% in 2004. Members may be pleased with the return of the fund in the last few months and in calendar year 2004 overall. We take little credit for those returns however. The fund's return over those periods was largely attributable to a general move in the global equity and currency markets, rather than to the value added from the fund's specific stock selection. While the fund is far from an "index-hugging" investor closely shadowing the benchmark, we are mindful that a rising tide does tend to lift all boats and the fund has benefited accordingly.   Orbis Global Equity comment - Nov 04 Wednesday, 8 December 2004 Fund Manager Comment The fund rose 5.2% in November, taking its total return in the year so far to 10.8%. In comparison, the benchmark FTSE World Index is up 11.7% so far in 2004. Stockmarkets worldwide were strong in November, on the back of a clear US presidential election result and a pull-back in the price of oil. Yet it is important to note that the positive return, when measured in US dollars, has been boosted by a weakening dollar. Only 51% of the benchmark and 41% of the fund is exposed to the US dollar. The exposure to non-US dollar currencies has contributed about 40% of the US dollar return of the fund and of the benchmark in November and in 2004 to date.   Orbis Global Equity comment - Oct 04 Friday, 19 November 2004 Fund Manager Comment The fund was up 1.2% in October, taking its return for 2004 so far to 5.3%. The benchmark FTSE World Index, in comparison, is up 5.9% so far in 2004. Equity markets and the fund continue to produce lacklustre returns in the year-to-date. It is at times like this that we have to remind ourselves that the fund's short-term results most often do not fairly reflect the changes in the intrinsic value of the underlying portfolio. They certainly don't reflect the effort and resources that are being put into building the portfolio. In that regard, the fund is currently accumulating four new positions that we recently identified, at prices which are well below their intrinsic value and at least 40% below where they were trading only a few months before.   Orbis Global Equity quarterly comment - Sep 04 Tuesday, 9 November 2004 General Market Analysis Consistent application of the Fund's investment philosophy will lead its portfolio to emphasise different types of companies over time as the opportunities presented by the market shift. Such a shift has taken place over the past few years. Most notable is the extent to which the disparities in valuations within the market in March 2000 have narrowed. Between 2000 and today, the valuation of the most expensive companies has fallen considerably, driving a significant shrinking of the range of valuation within the market. For example, while the most highly valued 20% of companies in the World Index had a price/net book value of over 10.6 in March 2000, that number has subsequently shrunk to 8.8 while that measure for the median and cheapest 20% of companies has not changed significantly. A similar result can be seen in the shift in price to earnings ratios. The extent of valuation disparities in the market in early 2000 caused the Fund to be highly concentrated in the shares of cheap out-of-favour companies resulting in a portfolio with a very different composition from the World Index. Given the subsequent shift in relative valuations, one would expect a portfolio invested in the most attractive value, wherever it may present itself, to have shifted its composition and become more balanced versus the Index. In fact, as shown below, the portfolio's weighted average price/net book value and price/last year's earnings ratios have both risen noticeably since March 2000 and the portfolio's historical earnings growth rate has risen from being below to more in line with that of the Index. Despite the shrinking valuation gap between the Fund and the Index, the Fund's portfolio remains valued at a significant discount to the Index while having experienced a similar historical growth rate in business fundamentals. This supports our view that the Fund has increased its exposure to quality companies with superior fundamentals that are selling on average at a discount to the Index. While the Fund's portfolio is still more attractively valued than the average equity, it is not as attractively valued in absolute terms as it was in March 2000. Despite that, continued cash offers for some of the companies in the portfolio are a sign that they are still attractively valued relative to cash. In fact, the 2% cash position shown opposite is the result of one of the Fund's holdings, RMC Group, being sold after a cash offer was made for the company.   Orbis Global Equity comment - Sep 04 Thursday, 21 October 2004 Fund Manager Comment In September the fund rose 1.0%. For 2004 to date, the fund is up 4.1% while the benchmark FTSE World Index is up 3.4%. The most notable feature of global equity markets recently has been the lack of change. Share prices are moving less rapidly and their valuations are more uniform, as the experience of the stockmarket bubble has encouraged investors not to pay much, if anything, for the expectation that the future will be much different from the norm. Just as we believed investors over-estimated and over-valued the potential for change during the bubble years, we believe they are now under-estimating and under-valuing it. The fund's portfolio is now much more exposed to companies that we expect will have well above-average growth in value in coming years in relation to the price we have to pay today.   Orbis Global Equity comment - Aug 04 Monday, 27 September 2004 Fund Manager Comment In August the fund was up 0.9%. In 2004 so far, the fund is up 3.0% while the benchmark World Index is up 1.3%. The fund's holdings in Japan and the emerging markets contributed most of its return in August. The fund's bottom-up investment approach and the flexibility to invest globally naturally lead it to shift its equity exposure towards those areas where our investment research can identify the best opportunities. Orbis's research has recently identified more attractive opportunities in the emerging markets and Japan relative to the developed western markets. The fund's 43% exposure to shares listed in those regions is a consequence of that.   Orbis Global Equity quarterly comment - June 04 Thursday, 23 September 2004 General Market Analysis The largest contributor to the Fund's underperformance last quarter was Bayerische Hypo-und Vereinsbank (HVB). We wrote about HVB in last quarter's report as an example of how even the Fund's successful purchases often decline before going up and how the Fund manages that by changing the size of a holding over time in response to significant share price movements. Lo and behold, after the Fund had added significantly to its position late in the first quarter, HVB fell 18% the following quarter. Although the market clearly didn't share our enthusiasm for the shares of HVB, and we may be wrong in our judgement, our ongoing research has not caused us to meaningfully adjust our assessment of HVB's intrinsic value. The largest positive contributor to the Fund's performance last quarter was its holding in Berkeley Group, which, like HVB, has been in the Fund for about 18 months. The Fund's investment experience with Berkeley is a good illustration of the strength of our willingness to invest for the long term in shares priced at a significant discount to their intrinsic value, even while agreeing with a negative consensus outlook for the industry or lacking an identifiable catalyst for a rise in the share price. Berkeley is a UK-based house builder focusing on high-end, luxury flats in city-centre locations. As such, the company is heavily influenced by macroeconomic developments, especially the property cycle. We agreed with the market consensus that the south-eastern UK residential property market was over-extended, and a decline in the cycle would be negative for Berkeley. We were however attracted by the valuation of Berkeley's shares which, when your Fund began purchasing them 18 months ago, were priced at only about 75% of their book value which was recorded at historical cost. Further intensive bottom-up research led us to believe that the true realisable value of those assets was significantly higher, even taking into account a potentially unfavourable property cycle. We concluded that if a property downturn occurred the Fund stood little risk of losing money at its average acquisition cost of about £6.50 per share, while if the company managed through this cycle as successfully as it did the last one, the Fund would capture at least the company's stated net asset value of £9.46 per share. As it happens, management decided to take proactive measures to preserve and enhance shareholder value in light of the late stage of the UK property cycle. Shortly before the end of the quarter, the company announced that it would return capital to shareholders. The plan is to distribute about £12 per share in cash to shareholders, with £5 coming within the next year and the rest over the following 5 years. The value of the company that will remain is somewhat opaque but may well be not far from the Fund's original cost. Berkeley's share price reacted immediately to the announcement and rose some 30% from about £9 to its current level of £12.   Orbis Global Equity comment - Jul 04 Monday, 20 September 2004 Fund Manager Comment The fund was down 4.2% in July, taking the year-to-date return to 2.2%. In comparison, the benchmark World Index is up 0.6% in 2004 so far. The most notable feature of the 29% price decline in the World Index, measured in local currencies, over the past four years has been how, in general, the prices of what were seen as "good" companies have declined while those of what were seen as "bad" companies have not. What had been an extraordinarily wide valuation gap between the "good" and the "bad" companies within a given stockmarket has now normalised. The fund manager's are finding that there are now opportunities to pay only a slightly above-average price, if that, for a well above-average company. Examples of this in each region within the fund's top ten holdings would be Samsung Electronics, First Data, Berkeley, Sasol and Mitsubishi Tokyo Financial, only one of which the fund held four years ago.   Orbis Global Equity comment - Jun 04 Tuesday, 14 September 2004 Fund Manager Comment The Fund's net asset value per share rose by 2.9% in June. For the first six months of 2004, it is up 6.7% while the benchmark World Index is up 3.9%. One of the Fund's most rewarding holdings in June was Berkeley Group, a UK residential property development company. Last week the share price rose by 30% from GBP9 in response to the company's announced plan to address preserving and creating shareholder value in light of the late stage of the UK property cycle. Berkeley plans to distribute GBP5 in cash to shareholders next year and a further GBP 6.67 over the following 5 years. The Fund's experience with Berkeley illustrates the benefits of identifying and investing in shares priced at a discount to their fair value even if one agrees with a negative consensus industry outlook and cannot necessarily identify a specific catalyst for the company to realise the value in its shares.   Orbis Global Equity comment - Mar 04 Friday, 2 April 2004 Fund Manager Comment The fund rose 2.6% in March, taking its return so far in 2004 to 9.8%, versus 3.3% for the benchmark FTSE World Index. The fund has had a significant holding in Japanese equities for some time now. Having previously constrained this holding to about 25% of the portfolio, we allowed it to rise to 29% by the end of the month as Japanese equities rose strongly. Despite western stockmarket indices still being lower than their March 2000 levels, we are finding it more difficult to identify attractive investment ideas in those markets, largely because the stock valuation disparity within those markets has narrowed. At the same time, we continue to find attractive investment opportunities in the shares of globally competitive companies that happen to be listed outside of the western developed markets, like Samsung Electronics, Toyota, Pioneer, Takeda Chemical and the South African gold producers. It is this dynamic that has caused 45% of the fund's portfolio to be invested outside of North America and Europe, as shown in the table below.   Orbis Global Equity comment - Dec 03 Friday, 27 February 2004 Fund Manager Comment The fund appreciated 6.7% in December, bringing its total return in 2003 to 45.7% compared to 33.9% for the benchmark FTSE World index. Following three years of decline, world stock markets rebounded strongly in 2003. This rebound was accompanied by a noticeable shift in the types of companies whose shares performed relatively well. Predicting these shifts in advance with confidence is difficult and not something the fund manager's attempt to do. Instead, the fund manager's rely on the consistent, disciplined application of the fund's investment approach to naturally reposition the portfolio towards those areas of the market that offer the best risk-return prospects. This approach of continuously focusing on stocks selling at the biggest discount to their intrinsic value allowed the fund to adapt to shifts in market conditions and participate in the recent stock market recovery while having limited losses during the preceding stock market declines.   Orbis Global Equity comment - Sep 03 Friday, 3 October 2003 Fund Manager Comment The fund declined 0.5% in September, bringing its return for the year-to-date to 25.4%, versus a 17.2% gain in the benchmark World index. The World index managed to eke out a small rise in September thanks to the weakness of the US dollar. In local currency terms, the World index actually fell by 1.5%. Among the major stock markets, only Japan managed to rise, and even then by only 2.0%. The fund manager's would not be surprised to see these trends continue. The fund's performance for the month was dampened by a retreat in the prices of its Korean holdings. These shares are now some of the fund's most attractive investments and the fund manager's believe their recent declines will prove to be a pause that refreshes.   Orbis Global Equity comment - Aug 03 Friday, 3 October 2003 Fund Manager Comment The fund rose 5.1% in August, bringing its year-to-date return to 26.0% compared to a 16.5% gain in the World index. Led by the strength in Japan, Orbis Global's investment emphasis on equities in markets outside the US contributed positively to the outperformance in August, after being a drag on performance early in the year. Orbis's research on individual companies leads the fund manager's to believe that the relative strength of Japan is likely to be a wind in the fund's sails for some time to come. The research also suggests that investors in other major stock markets outside Japan will have to focus more on stock picking than on general stock market trends to achieve attractive returns. Stock picking has been the key driver of the fund's superior performance historically and so far this year, and will continue to remain the fund manager's focus.   Orbis Global Equity comment - Jul 03 Monday, 25 August 2003 Fund Manager Comment The fund rose 4.2% in July bringing its year-to-date return to 19.8% compared with a 13.9% gain in the benchmark World index in the year-to-date. While the funds positions in all the major markets have made noticeable contributions to the funds performance this year, the funds UK positions have been particularly profitable. Earlier this year, the prices of some UK companies that are particularly sensitive to the level of the stockmarket and the associated downturn in the fortunes of the City of London were severely depressed. The fund took advantage of this and bought an interest in companies like Royal & Sun Alliance and Berkeley. The subsequent recovery in price has been dramatic. Yet the recovery was off such a low base that these shares, the fund manager's believe, are still attractive versus their intrinsic value.   Orbis Global Equity quarterly report - Jun 03 Wednesday, 30 July 2003 General Market Analysis Thefund appreciated strongly in the second quarter and more than recovered the underperformance experienced in the first quarter. Many investors believe lower share prices are bad. They feel gloomy as they see the value of their investments fall and their wealth eroded. It is difficult not to be emotionally affected by the daily ups and downs of share prices, as such movements are continuously reported in the press and on television. Yet, when viewed rationally, falling share prices are not necessarily bad for investors. For a long-term investor who has invested wisely and who does not need to dispose of his investments, falling share prices are at worst harmless and more likely positive. Sometimes, falling share prices do reflect permanent erosion in wealth if the fall is the result of bankruptcy, fraud or deteriorating fundamentals. But if the company fundamentals have not changed, and the intrinsic value of the share remains the same, then a lower current share price does not affect the future cash proceeds one expects to receive from the investment. Those proceeds are driven by the intrinsic value of the business, not by the price other people choose to pay for it today. The total return to a long-term investor in the share therefore remains the same if the share is held and not sold during the fall. In fact, for a long-term investor with excess capital to invest, a lower share price means a bigger divergence between the intrinsic value and the price, which presents an opportunity to buy more shares at even cheaper prices. As the average cost becomes lower, the eventual total return on the capital becomes higher. So falling share prices can actually be positive. The fund's experience in the first half of the year was a great example of this. Some of the holdings in the fund fell significantly in the first quarter even though Orbis believed the intrinsic value of those companies remained largely unchanged. Meanwhile, the fund received cash inflows from its biggest investor, Orbis Optimal, as Orbis Optimal's profits from portfolio hedging in a falling market were invested into the fund. This allowed the fund to buy some more of those falling shares at a substantial discount to their intrinsic value and upgrade the quality of the portfolio. The subsequent rebound in the share prices in the second quarter benefited the fund. The sharp decline in the fund's share price in the first quarter and subsequent recovery illustrates that long-term investors have found it rewarding to resist the temptation to be despondent in the face of adverse short-term results. For some, the falling fund's price may even present a buying opportunity.   Orbis Global Equity comment - Jun 03 Friday, 25 July 2003 Fund Manager Comment The fund rose 5.2% in June bringing its year-to-date return to a gain of 15.0% compared with an 11.5% gain in the benchmark World index in the year-to-date. Governments' determination to avoid - and in Japan's case end - deflation has resulted in massive stimulus being injected into economies, particularly those of the US and Japan. Increased globalisation means this liquidity stimulus is quickly transmitted worldwide. Global equity markets have consequently thrived. The fund manager's have no way of predicting how enduring this move will be and they are concerned that the weakness in global bond markets over the past three weeks may signal an end to the rally in western stock markets. Irrespective of future market movements, the fund manager's convinced that the funds portfolio offers attractive long-term fundamental value relative to the World index.   Orbis Global Equity comment - May 03 Monday, 23 June 2003 Fund Manager Comment The fund rose 12.2% in May bringing its year-to-date return to a gain of 9.3%, coincidentally matching the benchmark World index year-to-date return of 9.3%. May was marked by continued weakness in the US dollar, contributing to strong US dollar returns being posted by most global stockmarkets. Although the fund manager's primary focus in managing the fund is on individual equity selection, changes in currency values can significantly impact the fund's return. The fund manager's therefore manage the fund's currency exposure independently of its equity selections, intentionally taking on only relatively small currency positions when they believe it is in the fund's best interests. The fund's longstanding, overweight euro position was recently halved as the strength in the euro brought the currency close to fair value.   Orbis Global Equity comment - Apr 03 Thursday, 19 June 2003 Fund Manager Comment The fund appreciated 12.5% in April bringing its year-to-date return to a loss of 2.6% while the benchmark World index appreciated 8.9% in April bringing its year-to-date gain to 3.3%. Last month, following a particularly difficult quarter, the fund manager's commented that the largest contributors to the fund's poor performance were some of the fund's more recent purchases whose share prices had continued to fall, taking them to levels well below the fund's average purchase price. The benefit of the fund manager's focus on long-term fundamental value is that it allowed them to maintain their conviction such that these same positions were the largest contributors to the fund's strong performance in April.   Orbis Global Equity comment - Mar 03 Wednesday, 9 April 2003 Fund Manager Comment The fund declined 3.1% in March and finished the first quarter down 13.4%. This compares unfavorably with the returns provided by the fund's benchmark, the FTSE World index, which was down 5.1% for the first quarter. While the fund manager's are undoubtedly dissatisfied with the extent of the negative relative and absolute returns in Orbis Global for the first quarter of 2003, the long-term approach to managing global equities has at times in the past had the consequence of short-term underperformance. The largest contributors to underperformance in the first quarter were some of the fund manager's more recent additions to the portfolio where negative momentum has depressed the shares much more than they anticipated. Despite the fund's returns this year-to-date, a critical reexamination of the funds holdings leaves the fund manager's confident that the fund continues to offer the potential for higher returns and lower risk of loss than a simple passive global benchmark.   Orbis Global Equity comment - Feb 03 Wednesday, 12 March 2003 Fund Manager Comment The fund declined 5.9% in February, bringing its year-to-date decline to 10.7%. The fund manager's are disappointed in the fund's February and year-to-date performance; however, it is the longer term focus that drives the success of the fund. The key reason that Orbis Global has been able to provide Members with significant out-performance over the long term is that they have been able to maintain the funds focus on exactly that, the long term. Stock prices in the short term are primarily a function of investors' emotions and perceptions regarding the future prospects for a particular market or company. Often these short-term emotions result in attractive stocks becoming significantly more attractive, as the fund manager's believe is now the case in the fund. The fund manager's believe the fund's portfolio of selected global equities, including an increasing number of those in the UK and German markets, offers significantly better fundamental value than the benchmark World index.   Orbis Global Equity comment - Jan 03 Thursday, 13 February 2003 Fund Manager Comment The fund declined 5.0% in January. The year 2002 saw US equity mutual funds experience net redemptions for the first time since the year following the crash of October 1987. Investor sentiment is also severely damaged outside of the US where stockmarkets have generally fallen even harder. Reduced investor enthusiasm has been particularly pronounced when it comes to the share prices of the darlings of the last bull market - companies with above average growth rates. By a number of measures, higher growth companies are now priced at historically low premiums to their lower growth counterparts. The fund manager's research supports this in that they are now finding equally as many attractively valued shares in companies with above average growth rates compared to those with lower growth rates.   Orbis Global Equity comment - Dec 02 Thursday, 13 February 2003 Fund Manager Comment The fund fell 6.5% in December, bringing its year-to-date decline to 10.3% compared to a loss of 19.1% by the benchmark FTSE World index in 2002. Orbis Global was not able to avoid a loss in 2002 as the global equity bear market spread to almost every sector of the market. The fund's losses remained relatively contained however as it ended the year 17.5% off its monthly peak and up 15.4% since 31 March 2000 while the World index stood 40.3% off its March 2000 peak. While investor expectations have not been lowered sufficiently to cause global equities to decline to levels presenting pervasive fundamental value, the fund manager's continue to find interesting stock-specific investment opportunities. The fund manager's believe the focus on fundamentally driven active management will continue to allow the fund to participate in bull markets and yet contain losses in periods of below average stockmarket returns.   Orbis Global Equity comment - Nov 02 Thursday, 19 December 2002 Fund Manager Comment The fund rose by 9.0% in November, bringing its year-to date decline to 4.1%. The table diagonally opposite puts this in a longer-term context and in comparison with the benchmark FTSE World index Equity markets advanced strongly last month. Particularly sharp appreciation was seen by companies whose shares had been subject to extremely negative investor sentiment, such as those in the technology, media or telecommunication sectors, or those with high inherent levels of operational or financial gearing. The fund's North American holdings, which had previously been a drag on its performance, contributed strongly as did some recent purchases in the European insurance and banking industries.   Orbis Global Equity comment - Oct 02 Tuesday, 12 November 2002 Fund Manager Comment The fund appreciated by 5.3% in Oct 2002, bringing its year-todate decline to 11.9%. World stockmarkets rebounded from their oversold condition at the end of Sep 2002, led by rises in the western stockmarkets. Share prices continue to be volatile, at both the company and index level. The already heavily indebted US consumer continues to support economic growth through spending but markets are clearly questioning how much longer this can continue. The fund managers do not know the answer to that question but are using the resulting volatility to invest opportunistically in companies at prices that they believe will result in a reasonable return on investment as we look through the next cycle.   Orbis Global Equity awarded AAA by S&P Wednesday, 23 October 2002 Official Announcement Standard & Poor's has awarded its highest fund management rating (AAA) to the Orbis Global Equity Fund. Only four other fund managers in S&P's Offshore Territories Global Equity sector, comprising 656 funds, have received this coveted rating. Standard & Poor's Fund Management Ratings are based on an evaluation of quantitative (historic performance, volatility, and portfolio construction) and qualitative (management, corporate status and investment process) factors that contribute to long-term performance. In S&P's opinion, funds that adhere to disciplined processes and exhibit strong management, are more likely, over the long run, to provide consistent, above-average volatility adjusted returns relative to funds in the same sector. The differentiation in the rating categories is based on quantitative factors and S&P's qualitative assessment of the investment process and management. A Fund rated AAA, such as Orbis Global, demonstrates the highest standards of quality in its sector based on its investment process and management's consistency of performance as compared to funds with similar objectives.   Orbis Global Equity comment - Sep 02 Thursday, 3 October 2002 Fund Manager Comment The Orbis Global Equity fund fell 8.3% in September while the World index declined 11.1%. Year-to-date, the fund has declined 16.4% versus a 25.0% decline in the World Index. The fund manager's entered the third quarter commenting that they were finding it increasingly difficult to identify attractive value, suggesting the fund may have a reduced ability to protect against loss. As it happened, the fund's emphasis on Japan and the emerging markets helped but was not sufficient to escape a pervasive decline in equity prices. Western markets are presenting an increasing number of attractive investment opportunities but in the fund manager's opinion the potential for substantial declines remains. In that event, superior stock selection and a significant overweight position in Japan may not be sufficient for the fund to avoid further losses.   Orbis Global Equity Managers' Report - Jun 2002 Thursday, 26 September 2002 General Market Analysis Despite the recent sharp decline of western stockmarkets, the fund manager's are finding only narrow areas of opportunity in them. While this may seem surprising, one should remember that they have experienced only 27 months of a relatively orderly decline since the end of one of the greatest bull markets of all time. Historically, it takes many years or a more dramatic decline before stockmarkets begin showing sustainable recoveries following bull markets of such magnitude. The Japanese stockmarket is now down approximately two-thirds from its peak reached over 12 years ago. The fund manager's are not surprised to be finding broader range of attractive investment opportunities in that market. The fund's geographic diversification shown opposite, especially in relation to the World index, is the result of the individual equity opportunities the fund manager's see in each market. Despite the fund manager's concerted efforts, they are unable to find a sufficient number of attractive equities in the US to invest anywhere close to the 54% weighting that market has in the benchmark. Conversely, the fund manager's research has uncovered enough attractively priced stocks in Japan to very comfortably deploy 23% of the fund in that market. It is this bottom-up company-by-company dynamic rather than a top-down market overview that has led to the fund's underweighting in western markets and overweighting in Japan and emerging markets A basic premise of successful investing is to own more when prices are low and less when prices are high. After a prolonged bear market, Japanese equities now represent 8% of the World index, well below their 17-year average weighting of 25%. The opposite is true for US equities, whose current 54% weighting is well above their 17-year average of 42%. While the fund's current Japanese and US holdings vary significantly from their benchmark weightings, they more closely approximate their long-term averages. If, as the fund manager's expect, the benchmark weightings will trend toward their means over time, now is a good time to be more invested in Japan and less in the US. The fund manager's believe that the fund's current positioning in Japan and the US reduces its risk of loss and raises its probability of long-term outperformance. The fund manager's feel that members are better served by the fund striving for these goals despite its increased risk of short-term underperformance.   Orbis Global Equity comment - Aug 02 Tuesday, 17 September 2002 Fund Manager Comment The fund's price ended August essentially unchanged from that of the prior month, bringing its year-to-date return to a loss of 8.8%. Year-to-date, the World index and the Average Global Equity Fund have declined 15.7% and 16.3%, respectively. Despite little net-change in global equity markets for August, there was significant interim volatility. The fund manager's work on individual companies and their share prices leads the fund manager's to believe that low overall returns combined with significant interim volatility may well be what we see when we look back on stockmarket returns in years to come. Ongoing intelligent active management with an eye on capital preservation is important in such an investment environment. The fund manager's are focused on delivering just that, as they have since the fund's inception over twelve years ago.   Orbis Global Equity comment - Jul 02 Wednesday, 28 August 2002 Fund Manager Comment The fund fell 9.8% in July, bringing its year to date return to a loss of 8.5%. July's experience amply illustrates that the fund is not immune to losses, particularly in periods of dramatic stockmarket declines. The fund manager's always find losses hard to swallow, but recognise that the fund's short-term returns are determined more by general stockmarket movements and investor psychology than by any value the fund manager's may add through stock picking. Equity prices are still high but the fund's recent decline has improved its future prospects and the market volatility has presented the fund manager's with an increased number of opportunities.   Orbis Global Equity comment - Jun 02 Monday, 29 July 2002 Fund Manager Comment The Fund declined 4.2% in June bringing its year to date return to 17.9%. The Fund continues to have a significant position in retail stocks. These stocks are trading on attractive multiples on depressed but now improving earnings. The Fund also has a significant overweight position in media stocks with a weighting of 9.8%. Many of these stocks are now trading well below their intrinsic values. Naspers is one such stock. It, together with its subsidiary MIH Holdings, constitute 6.1% of the Fund. Naspers has significant holdings in traditional print media, pay television platforms and South Africa's dominant Internet service provider. At the current price of 1890cps Naspers is trading at half our estimate of its underlying intrinsic value.   Orbis Global Equity wins S&P awards Monday, 24 June 2002 Media Comment In March 2002, Orbis Global won all of Standard & Poor's 2002 Fund Awards in the Offshore Global Equity Sector, placing first for each of the past 10, 5 and 1 year periods to 31 December 2001   Orbis Global Equity Managers' Report - March 2002 Monday, 24 June 2002 General Market Analysis Returns are largely meaningless without understanding how they were generated, especially when forming judgments about the future. In that regard, 88% of the Fund's superior performance since inception comes from individual equity selection within local markets. The Fund Manager's view a share as a fractional ownership interest in a business and the fund Manager's therefore assess its value with reference to the intrinsic value of the business itself. The Fund Manager's prefer to invest in businesses whose value grows over time. The price of an equity however merely reflects the price at which stockmarket participants are willing to buy or sell that share at that point in time. Central to this approach is the recognition that share prices may take years to return to intrinsic value, often falling further before doing so. The fund's approach of focusing on and investing for the long term is therefore a key competitive advantage. An examination of the pattern of Orbis Global's returns over time shows that they accord with what one would expect from a consistent application of this investment philosophy. The fund has earned a significantly superior long-term return: 7.9% points per annum above that of the World Index since inception over more than twelve years ago and after all fees and expenses. At the same time Orbis Global has had a noticeably lower loss experience as illustrated by both a lower peak-to-trough decline (19% versus 33% for the World Index) and a substantially faster average loss recovery period (1.5 quarters versus 4.2 quarters for the World Index). To an outside observer, our investment philosophy might not sound much different from that presented by most other investment managers. Comparing Orbis Global's portfolio and its characteristics to that of the Average Global Equity Fund would however suggest that is not the case. While it might at first be unsettling, investors should therefore not be taken aback to see the fund positioned very differently from the World Index and the Average Global Equity Fund. At times, the Fund may hold shares that are unpopular. That is after all likely to be an important reason why they are priced well below their intrinsic value. The Fund's willingness to be different sometimes causes others to characterise it as risky. Those who have this opinion define risk as being different from the crowd. If, however, one views risk as being the risk of losing money, as the Fund Manager's do, the opposite has proven to be the case.   Orbis Global Equity comment - May 02 Tuesday, 18 June 2002 Fund Manager Comment The fund returned 2.3% in May 2002, bringing its year to date return to 8.7%. Orbis take a 'bottom-up' approach when constructing their portfolios. Thus, the fund's weighting to geographic regions is driven primarily by whether Orbis fund managers are able to find attractive opportunities in those regions. The fund managers have generally found more attractive ideas outside the US. The shares of cyclical companies in Japan and the Emerging Markets and non-cyclical companies in the UK have featured prominently in the portfolio. The Fund's recent positive relative performance has been helped by its underweight exposure to US equities and the US dollar.   Orbis Global Equity comment - April 02 Thursday, 16 May 2002 Fund Manager Comment The Orbis Global Equity Fund returned 1.9% in April 2002, bringing the year-to-date return to 6.3%. The valuations of equities in many western stockmarkets are increasingly being questioned. Share prices, particularly in the US, are under pressure as investors appear to be querying how much companies' past profitability and growth have been driven by innovative accounting and financial engineering, rather than by economic realities. The fund manager believes the questioning and the pressure on valuations will continue and think that careful stock selection is crucial in such an environment. The relative lack of financial engineering and aggressive accounting practices in Japan and emerging markets adds to the attraction the fund manager has for selected holdings and the amount the fund holds of them in these regions. These holdings have benefited the fund's performance so far this year.   Orbis Global Equity comment - March 02 Thursday, 16 May 2002 Fund Manager Comment In March 2002, the Orbis Global Equity Fund returned 6.3%. For the first quarter, the fund was up 4.3% while the World index rose 0.6% and the Average Global Equity Fund was flat. Individual equity selection has been the fund's focus and by far the biggest contributor to the fund's superior performance since inception. The fund has benefited from its ability to seek out the most attractive equities on a global basis. Its performance in March 2002, and for the year to date, has been a good example of this with the fund's success being most noticeable amongst the globally competitive but less widely followed companies in South Korea, South Africa and Continental Europe. The fund has, of course, also had its share of failures over the period, the most prominent of which have been the fund's telecommunications holdings which have performed poorly.

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