In the portion of the Fund invested in the Orbis Global Equity Fund, stock selections in North America were the biggest drag on returns this year, but were the biggest contributor in 2009. Holdings in US health insurers accounted for 8.6% of the Global Equity Fund at 30 September. Uncertainty and fear of adverse regulatory action remain high, but Orbis' conviction in the long-term fundamentals of the health insurers has not changed. The portion invested in the Orbis Japan Equity Fund had a 10.4% exposure to two Japanese life insurers, Dai-ichi Mutual Life and T&D Holdings at 30 September. Both companies currently trade at a steep discount to Orbis' estimate of their intrinsic value.

The portion invested in the Orbis Asia ex-Japan Fund stood at just over 5% at 30 September. Shares of two Korean stock brokers - Kiwoom and Korea Investment Holdings (KIH) - represented 8% of the Orbis Asia ex-Japan Fund at 30 September. Both Kiwoom and KIH should benefit from a growing local shareholder culture in Korea, and Orbis considers the management teams of both firms to be well above average.

The Orbis Optimal SA funds - which account for 49% of the Fund's assets - seeks to offer returns in excess of long-term inflation, uncorrelated with traditional asset classes. It offers an alternative to cash and bonds for investors wishing to avoid the volatility of equity markets. Orbis believes that the risk/reward profile of major bond markets is unattractive and the Optimal SA funds is currently well-positioned to produce returns in excess of what are likely to be mediocre cash and bond returns going forward.

The portion of the Fund invested in the Orbis Optimal (SA) funds has experienced negative performance for the year-to-date, caused primarily by poor stock selection in the US and Asia ex-Japan. Nevertheless, Orbis continues to identify undervalued, highconviction investment ideas that may benefit the Fund over the longer term.

The portion of the Fund invested in the Orbis Japan Equity Fund also experienced poor relative performance during June 2010. Although Japanese stock markets started the year well, political instability in Japan and concerns regarding the European economy erased these early gains. Orbis remains impressed by family-controlled and managed businesses in Japan, as they are often better managed and more shareholder friendly. An example is PARK24, Japan's largest parking lot operator, which has delivered impressive long-term growth in revenues and operating profits.

The Fund's exposure to the yen is at the benchmark weight, whilst we remain overweight the US dollar and Asia-ex Japan currencies and underweight the euro relative to the benchmark.

Orbis believes that government bonds are currently fairly unattractive. The reasons for this are twofold. Firstly, fixed income securities have performed much better than equities over the past decade and secondly, there has been a flight of capital into these funds in the search for 'safe' investments. As a result, they believe that the Orbis Optimal (SA) funds provide an attractive alternative to investing in cash and bonds.

The Fund remains substantially overweight Japanese shares relative to the benchmark. Japanese shares have rebounded over the year thus far and Orbis continues to identify attractive investment opportunities in the country. A good example is Rakuten, an online shopping mall. Rakuten has a strong business model, a popular customer loyalty programme and approximately 30% market share. Orbis believes they are well positioned to generate good earnings growth and free cash flow in the years ahead.

The Fund's exposure to the Japanese yen remains at the benchmark weight, whilst we are overweight the US dollar and Asia-ex Japan currencies and underweight the euro relative to the benchmark.

The Fund's return for the past 12 months to March 2010 was 35.1% in US dollars versus the return of 34.0% for the benchmark.

The Fund continued to reduce its equity exposure in the fourth quarter of 2009 in favour of the Orbis Optimal SA (US$) Fund due to concerns regarding the current valuations of global equities.

The Fund remains overweight in selected Japanese companies, but underweight Japanese exporters. It remains overweight in the Asia ex-Japan region as it continues to identify equities in these markets, especially domestic Chinese companies, which have underperformed the region and are geared to the strong growth of the country's middle class. The Fund's overweight position in the Asia ex- Japan region has contributed positively to performance as this region continues to lead the market and economic recovery.

The outperformance of Orbis' stock selections against their local markets and the Optimal SA Funds' net long exposure to Asia ex-Japan equities benefited the Optimal SA Funds' performance in 2009. Due to the nature of the Optimal SA Funds, they continue to represent an appropriate, uncorrelated option for a diversified foreign portfolio. The Optimal SA Funds' returns are somewhat dependent on cash returns due to the hedging employed. In the past 10 years, the US Dollar Bank Deposit rate has been as high as 6.7%; it now sits very close to zero. In this environment of low interest rates, the expectations for the Optimal SA Funds' return should be lower.

The Fund increased its exposure to the US dollar over the quarter resulting in an overweight position relative to the benchmark. The Fund reduced the overweight yen position and continues to be overweight Asian currencies and underweight the euro.