In this bear market, September will be noted for its wild swings - the biggest oneday percentage drop in the Dow Jones Industrial Average, and the biggest-ever one-day drops and rises in gold and oil prices. The global credit damage continued to drive headlines and take casualties. After avoiding several, the Fund took significant losses in US insurer AIG and German commercial lender Hypo Real Estate. We expect there may well be more casualties to come before this storm subsides and we are doing our best to avoid them while retaining the upside potential in the portfolio. We are also methodically looking for new and better opportunities created by the market turmoil.

In what has been one of the worst months for many stockmarkets since the Great Depression, your Fund experienced its third-worst monthly decline in its 18-year history, losing 11.1%. Worse still, Global underperformed its benchmark enough to bring the year-to-date performance for the Fund lower than that of the World Index. A significant contributor to this poor relative performance was Global's underweighting in the energy and commodity groups, which continue to be whitehot despite the equity market downturn and increased risk of global recession. Long-term members would not be surprised to see the Fund having rotated out of such shares we believe to be fully valued, only to see them continue to outperform. Oil was clearly the driver for global stockmarkets in June, with each rise in its price prompting another drop in the markets. How long this relationship lasts and what the medium and long terms holds for oil from here is tough to predict. However, from recent experience, we would not be surprised to see the Fund negatively impacted in the near term by a further rise in oil price.

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. What has surprised us is the similarity between the performance of major regions when measured in the same currency; in particular the Japanese market is down 13.4% since October when measured in US dollars while the US market is down 14.6% since October. The weakening of the US dollar has spurred buying interest in the shares of large US exporters with the opposite taking place in Japan where the strenghtening yen has begun to hurt the share prices of Japanese exporters. Orbis are very underweight in Japanese exporters.

Over the last year the Fund has returned 12.2% in Dollars versus the 11.4% return of its benchmark. The Fund remains overweight Asia and Japan, where it continues to find attractive investment opportunities. The Fund's overweight exposure to Japan and the Yen, which had contributed to short-term underperformance of its benchmark earlier in the year, was a positive contributor to relative performance in recent months. We continue to believe that these holdings provide attractive investment opportunities. The Fund continues to have exposure to selected large capitalisation high quality companies in the United States where we believe that markets are uncharacteristically too pessimistic on their growth prospects.