Executive Summary At 30 September 2009 Overview Markets The Ftse/jse

EXECUTIVE SUMMARY AT 30 SEPTEMBER 2009 OVERVIEW Markets The FTSE/JSE All Share Index (ALSI) had another good quarter, returning 13.9% in rand. At the same time the rand appreciated slightly against the dollar bringing the US$ return to 17.0% for the quarter, underperforming the FTSE World Index by 1.3%. The ALSI return in this period was mainly driven by Industrials and Financials, with returns of 16.3% and 15.1% respectively, whilst Resources also contributed with a return of 11.2% for the quarter. Currencies The rand was relatively flat against both the dollar and euro strengthening by a mere 2.3% and 1.8%, respectively, for the quarter. For the year to date, the rand has appreciated by 19.5% against the dollar and 16.4% against the euro. Economy The global economic recovery is gaining momentum. Increasingly the new flows are surprising on the upside. The recovery is following a path typical of previous recessions. Normally the year after a severe contraction sees strong growth due to the rebuilding of inventories and favourable base effects. Increasingly the focus of government leaders is being redirected to how to cut back the exceptional monetary and fiscal stimulus instituted after Lehman’s collapse in September last year. Normally the South African economy follows trends elsewhere with a lag and the recent downturn is proving to be no exception. Conditions in South Africa have continued to deteriorate at a time when the rest of the world has been recovering. However leading indicators suggest that the South African economy will now start growing again. One of the most formidable challenges SA faces over the next year is financing a rising public sector borrowing requirement, which will exceed 8% of GDP. Government is crowding out the private sector in the credit markets. In a country with a low savings rate large scale government borrowing can push up interest rates and erode asset prices in general. Global investment flows are being redirected from the dollar into other currencies, and most significantly from South Africa’s perspective, into emerging markets. The rand has strengthened from a R/$ exchange rate of 10.63 in March this year to below 7.40. Extremely weak domestic demand has reduced imports, and in the second quarter the current account deficit was only 3.4% of GDP, a big improvement on the 9% deficit recorded in the third quarter of 2008. Net inward investment has exceeded the deficit, boosting the exchange rate. The stronger rand is suppressing inflationary pressures and the CPI is heading back into its 3-6% target range. ASSET ALLOCATION OF THE DOMESTIC PORTFOLIO The portfolio remains substantially invested in South African equities and aims to earn higher returns than the FTSE/JSE All Share Index. Effective Exposure (%) Local Equities (Including Listed Property) Foreign Inward Listed Interest Bearing Total

30.6.2009 92.4 6.2 1.4 100.0

30.9.2009 90.8 6.2 3.0 100.0

SOUTH AFRICAN INVESTMENTS Equities Outlook The third quarter of 2009 was characterized by rising equity markets around the world, after a volatile 2008 and early 2009. South African share prices as measured by the FTSE/JSE All Share Index (ALSI) followed the same trend as most emerging markets and are up 100% in US$ from the bottom in early March. Global investors continue to see value in emerging markets and have continued to be net buyers of South African shares. Interestingly, South African shares, having fallen by more than those of world markets, rebounded much quicker and are now above their previous relative highs as foreign investors perceived a faster recovery in emerging economies. This performance has led to a sharp re-rating of the ALSI, with the historic PE now well above its long-term average at 14.6x earnings. Although we’ve seen a correction in earnings of the average South African company, there are sectors that continue to be resilient despite the downturn in domestic and global economies over the last 18 months. Market participants also point to a rebound in earnings in the not so distant future. We believe that the PE multiple based on a sustainable level of earnings (normal earnings) is well above the current and long term market rating. Buying the market on a high rating and on high earnings has not produced superior real returns in the past. It is our opinion that it will take some time before companies return to previous levels of profitability, as the world readjusts and does away with the excesses enjoyed in the 2003 – 2007 period.

As a result of our continued concerns, there has been little change in the share composition of our portfolios. We continue to exercise caution when dealing in the market, while at the same time finding selected companies where the relationship between market price and business fundamentals warrants their inclusion in our clients’ portfolios as they offer sufficient margin of safety. In line with our investment philosophy we continue to be underweight cyclical stocks as we are cautious on domestic profits. We find companies with high quality and diversified earnings streams and rand hedges as appropriate for inclusion in our portfolios, and continue to maintain a bias towards companies with below normal earnings. We believe that these companies are relatively more attractive than other domestic asset classes over a four-year investment horizon. Performance Despite a disappointing sell off in June where the ALSI lost 3.1%, the market started the third quarter on a high note with a return of 10.1% in July and ending the quarter with a total return of 13.9%. The portfolio returned 13.2% for the quarter, underperforming the ALSI by 0.7%. rd

3 Quarter 2009 Overweight positions in selected shares namely Remgro Limited, Sappi and Datatec added value relative to the equity benchmark as these shares outperformed for the third quarter. Underweight positions in underperforming shares, namely Anglo American, Impala Platinum and Vodacom also added value versus the equity benchmark for the quarter. Performance relative to the equity benchmark suffered due to the portfolio’s overweight exposure to Dimension Data, Harmony Gold and Anglogold Ashanti, which underperformed for the quarter. The underweight exposure to BHP Billiton, Naspers and Kumba Iron Ore hurt relative performance as these shares outperformed the equity benchmark for the period. Top 10 Local Equity Holdings SABMiller plc Sasol Anglogold Ashanti Remgro Limited MTN Group Limited Sanlam Compagnie Fin Richemont SA Standard Bank Group Limited Harmony Gold Mining Co Ltd Sappi Total

% of Local Equities 12.3 8.7 8.0 7.8 6.6 5.3 4.5 3.7 3.6 3.6 64.1

% of Portfolio 11.1 7.8 7.2 7.0 6.0 4.8 4.1 3.3 3.3 3.2 57.8

The above table excludes British American Tobacco (6.2% of Portfolio) which is classified as a foreign inward listed share.

FOREIGN INVESTMENTS Allan Gray invests international assets on behalf of clients in the Orbis Mutual Funds listed on the Bermuda Stock Exchange. Orbis is our global investment partner which shares the same founder and investment philosophy as Allan Gray. Allan Gray decides on the asset allocation by selecting the appropriate mix of Orbis funds in which to invest. The benchmark for this portfolio is 65% MSCI World Index and 35% JP Morgan Global Government Bond Index plus a hurdle rate pf 1.5% per annum. For the purposes of this commentary, we have excluded British American Tobacco. Commentary Performance In the third quarter, markets around the globe continued the strong performance seen in the second quarter. The FTSE World Index returned 18.2% in US dollars in the third quarter. The yen strengthened against the dollar over the period, helping the TOPIX to return 6.2% in US dollars for the quarter. The foreign portion of the portfolio returned 5.5% in rand terms for the quarter, underperforming the benchmark by 5.6%. The rand performance of the foreign portion of the portfolio was hurt by rand strength versus the dollar and by the weighting to Japanese shares. Portfolio Positioning The portfolio reduced exposure to equities during the quarter, largely due to concerns regarding current valuations of global equities. This reduction has resulted in a larger exposure to the Orbis Optimal (US$) Fund. Nevertheless, the fund remains considerably overweight Japanese equities relative to the benchmark. This overweight position comes mostly in the form of companies that are oriented to the domestic economy at the expense of the big exporters. Furthermore, strong performance in the Asia ex-Japan region has contributed to returns for the year. Orbis continues to find Greater China and Korean shares which offer superior investment opportunity when compared to the valuation and fundamental growth prospects of their global alternatives.

The Orbis Optimal Funds’ strategy involves investing in equities and hedging out stockmarket exposure using futures. This results in a cash return plus any out-performance from Orbis’ stock selections. The returns for the Optimal Funds are thus dependent on cash returns, the higher the rate, the higher Optimal’s returns tend to be. 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, the expectations for Optimal’s return should be lower. In terms of currency exposure, the portfolio remains overweight the yen relative to the benchmark, despite having slightly reduced yen exposure over the month. The portfolio is also overweight Asia ex-Japan currencies relative to the benchmark. The portfolio is underweight the dollar and the euro. Asset Allocation of Orbis Mutual Funds Orbis Equity Funds Orbis Global Equity Fund Orbis Japan Equity (Yen) Fund Orbis Absolute Return Funds Optimal (Euro) Fund Orbis Optimal (US$) Fund Total Geographical Exposure of Orbis Mutual Funds Regions United States Canada Continental Europe United Kingdom Japan Asia ex-Japan South Africa & Other Total

% of Orbis Mutual Funds 64.2 39.5 24.7 64.2 39.5 24.7 100.0 Fund's % Equities 16.2 0.0 5.1 2.0 33.1 7.1 0.8 64.2

% of Portfolio 64.2 39.5 24.7 35.8 17.6 18.2 100.0 Exposure to Currencies 27.7 0.0 18.3 3.6 36.6 11.6 2.2 100.0

Equity exposure assumes that the Absolute Return Funds are fully hedged. On an accounting exposure basis, the foreign equity exposure is 51.4%.

Top 10 Foreign Gross Shares of Orbis Mutual Funds SBI Holdings T&D Holdings Microsoft Nomura Research Institute Samsung Electronics Mitsubishi UFJ Financial Group WellPoint CVS/Caremark Johnson & Johnson Google - A Total

% 4.7 4.2 3.5 3.1 2.5 2.3 2.1 1.7 1.7 1.6 27.4