Short-term share price movements are a better reflection of market sentiment than the success or failure of a long-term investment thesis. Stock selections in North America were the biggest drag on the Orbis Global Equity Fund's returns this year, but were the biggest contributor in 2009. Holdings in US health insurers accounted for 8.6% of the Fund at 30 September. Although healthcare reform has been signed into law, intense political scrutiny and rhetorical attacks on health insurers have continued virtually unabated. Uncertainty and fear of adverse regulatory action remain high, but Orbis' conviction in the long-term fundamentals has not changed. The Orbis Global Equity Fund's holdings in WellPoint and its industry peers have hurt performance this year, but Orbis continues to believe that, at their current share prices and single digit price-to-earnings valuations, the prospect for share appreciation far outweighs the near-term risks.

Aggressive policies were extended during the financial crisis in order to restore liquidity and protect asset prices. As a bottom-up stock picker, Orbis remains focused on the analysis of market forces rather than political forces. Orbis expects its in-depth research and investment process to be particularly beneficial as this highly uncertain climate may present good opportunities to find attractively valued securities. Nevertheless, the Fund has lagged its benchmark for the year-to-date. This poor relative performance has come mainly from equity selection in the US and Asia ex- Japan.

Although Orbis' investment philosophy is inherently 'bottom-up', from time-to-time certain themes do appear within their portfolios. An example of this was their overweight position in memory semi-conductors over the course of 2009 and the current overweight position to US healthcare stocks. Orbis believe that, whilst a bullish view for a certain stock can and does provide research leads on industry peers, any themes that do appear within their portfolios are driven solely by intensive, fundamental stock-by-stock research. The Fund's return for the past 12 months to March 2010 was 59.8% in US dollars versus the return of 55.8% for the benchmark.

The Fund's return for the past 12 months to December 2009 was 42.1% in US dollars versus the return of 34.4% for the benchmark.

An analysis of the Fund's return over the past two years shows how different opportunities can drive performance. The Fund's outperformance over 2008 was entirely driven by currency decisions, with stock selection contributing negatively. The exact opposite was true in 2009, with the outperformance driven by strong stock selection, and currency decisions detracting. While Orbis is far from perfect in the execution of its opportunities, especially in terms of timing, we view the flexibility of the Fund to take advantage of a broad cross section of opportunities as an attractive attribute.

The Fund remains overweight in selected Japanese companies, but underweight Japanese exporters. It continues to remain 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.