Ashburton's Perspective July 2012

July 2012

Perspective WELCOME

| OUTLOOK

| THE US

| FOCUS

| NEWS

| PERFORMANCE

Rings of fate

Still challenging

So far, so good

China

Latest news

Ashburton’s MD, Peter Bourne, relates to the Olympics.

As the crisis continues, we remain cautious.

The case (and caveats) for investing in the US.

Opportunities in trade, infrastructure and hydro-power.

Sponsored summer events and team developments.

Our latest performance figures as at 29 June 2012.

Recovering from the crisis: a marathon not a sprint

As market conditions continue to challenge, we pace ourselves for the journey ahead.

www.ashburton.com A member of the FirstRand Group

Contents Contributors

Welcome Ashburton’s Managing Director, Peter Bourne, considers the key qualities needed to be an Olympic winner and how strategic changes are being made to back our winners and enhance performance.

03

Tristan Hanson

With nothing to suggest that the crisis will be resolved any time soon, we consider the tactical and medium-term opportunities.

Tristan is Ashburton’s Head of Asset Allocation, with responsibility for Ashburton’s Multi Asset Funds, Total Return Bond Funds and related research. He holds a Masters in Public Administration in International Development (MPA/ID) from Harvard University’s Kennedy School of Government and the Securities and Investments Diploma.

The US Equity Market

Jonathan Schiessl

Global Outlook Dark clouds with some bright spots

By Tristan Hanson

Safe haven or heading for a cliff ?

By Veronika Pechlaner

04

06

So far this year has been positive for US equities, but continuation relies on domestic politics and the fortune of other investment regions.

Regional Focus Yunnan Province, China: the gateway to South-East Asia

By Jonathan Schiessl

08

There are reasons to be optimistic about China, if the province of Yunnan is anything to go by, as our lead Asian equities manager discovers.

News Ashburton sponsors sunset concerts and golf competition.

Plus, changing faces in the portfolio services team.

10

Performance Our latest fund performance figures as at 29 June 2012.

11

Contacts Details for our contact offices in Jersey, South Africa and the UK.

12

Jonathan Schiessl is Ashburton’s Investment Manager responsible for the Japan and Chindia Equity Funds. He joined Ashburton in 2000 and has 16 years experience in the investment industry. He obtained a Social Science honours degree, specialising in Economics, at the University of Hertfordshire.

Veronika Pechlaner Veronika Pechlaner is an Investment Manager in the Global Equities team with direct responsibility for Ashburton’s global equity funds. She also works closely with Investment director Nick Lee on the Global Equity Portfolio offering. Veronika has been a CFA charterholder since 2005. She holds a Master degree in Finance and International Management from the University of Innsbruck (Austria, E.U.).

WELCOME | OUTLOOK | THE US | FOCUS | NEWS | PERFORMANCE

| 2 | 3 |

Welcome

Rings of Fate The legend of Marathon has it that a runner

there is enormous anticipation here. Did you

ran 26 miles to Athens to deliver a message of

know that Finland is the most successful country

victory over the Persians, only to expire from

ever, based on total medals per population?

exhaustion immediately afterwards. European

But in absolute terms, the USA is easily the

and global policymakers must be hoping for a

most successful; it has won more than triple the

different outcome in Greece this time around,

number of gold medals and more than twice the

although the journey will be no less arduous and

number of total medals than its nearest rival. So

take considerably longer than the feat of our

it seemed appropriate to ask Veronika Pechlaner,

hero back in 490 BC. Ashburton’s Head of Asset

Ashburton’s Global Equity Manager, whether the

Allocation, Tristan Hanson, neatly captures the

US will also continue to dominate headlines in

challenges presented by this particular marathon

market terms during the rest of 2012.

course in his Global Outlook article.

Here at Ashburton, we are undertaking a number of strategic changes to ensure we are positioned

Our theme this quarter was always going to be the Olympics; how could we resist? As I write, London 2012 is just 16 days away and Jersey is beginning to be caught up in the excitement. The Olympic torch arrives here this week as part of its 70 day journey around the United Kingdom and Channel Islands and will be a wonderful taste of what lies ahead. The motto of the Games is “Faster, Higher, Stronger”; we can all relate to the simplicity and appeal of this robust combination of adverbs. And for a few weeks at least, we have an opportunity to take time away from the markets to enjoy the highs and lows of sporting success and failure that lie ahead.

The world has become a global market place and the links between West and East have grown by as much, and as fast as, the gap between developed and emerging world has shrunk.

for growth and delivering the performance our clients expect. Our emphasis remains firmly on developing our core and proven multi asset solutions, and focusing our equity range to reflect our emerging market heritage and growing client demand for global equity product. The first phase of these changes, of which shareholders have been advised, involves the closure of a limited number of smaller funds and will be completed

Just as symbolic for markets today are the five

in early September. Our next priority is to ensure

interlinked and coloured rings, symbolising the

that the remaining funds are efficiently structured

continents represented in the Games. The world

and mandated to compete in this challenging

has become a global market place and the links

environment. This aspect of our strategy is in the

between West and East have grown by as much,

planning phase and I look forward to being able

and as fast as, the gap between developed and

to share more on this in the coming months.

emerging world has shrunk. Turning the tables somewhat and ahead of the expected influx

In summary, our strategy entails backing our

of international visitors to London, Jonathan

winners and making sure they are running in the

Schiessl, Head of our Asian Equities team,

right races. It promises to be exciting.

shares his experiences of a recent trip to a tourist destination within China.

“Citius, Altius, Fortius”

The medal tally is almost a bigger story than

Regards

individual success, particularly as the Games progress. Great Britain has set ambitious targets;

Peter Bourne Managing Director

WELCOME | OUTLOOK

THE US | FOCUS | NEWS | PERFORMANCE

Global Outlook

Dark clouds with some bright spots

Written by Tristan Hanson Head of Asset Allocation

The correction witnessed since March has been especially severe among commodities and emerging market equities, reflecting increased concern over Chinese growth as well as the headline-grabbing crisis in Europe.

Meanwhile, despite low yields, global bonds have continued to deliver positive returns, with corporate and emerging market bonds outperforming. Accordingly, yields on global government bonds have plumbed new lows in recent months.

While the first few months of the year have produced some wild swings in markets, little has been resolved in terms of the major issues worrying investors as we entered the year.

The European sovereign debt and banking crisis remains far from over; concerns over the Chinese growth outlook have grown rather than receded and the sustainability of US growth remains under question following recent data disappointments and the looming fiscal cliff at the end of the year. Economist expectations for growth in global GDP and corporate profits have been lowered over the course of the year so far.

As we anticipated in January’s edition of Perspective, the first six months of 2012 have seen a continuation of the volatile market conditions experienced in recent times. Overall, global equities have delivered a total return of 6.2%, but with strong gains in the first quarter followed by weakness in the second.

At the European Summit at the end of June, measures were announced that have given markets some early cheer (in particular, moves towards a banking union and the direct recapitalisation of banks, as well as possible bond market intervention under easier terms).

However, there is nothing to suggest that the crisis will end anytime soon, something we have argued consistently. We wrote last October that “in the absence of an unlimited ECB commitment to purchase sovereign debt (which we are repeatedly told is not on the cards) or fiscal union (which is years away, if ever), there is no magic solution to this crisis�.

The same applies today. For a resolution to this crisis that does not end with a break-up

| 4 | 5 |

of the euro-area, it is likely to require debt monetisation or mutualisation. In the meantime, the muddle-through cycle of panic followed by short-term policy response continues until the next flare-up.

Concerns over China – and emerging markets (EM) more widely – increased over the second quarter, as investors continue to be frustrated as they await a recovery in growth. More broadly, there is a growing realisation that the growth/inflation trade-off in countries such as China and India is less bright than was hoped for a few years ago: 10% non-inflationary growth is likely in the past. Nevertheless, policy is being eased in China and we expect this to contribute to a cyclical recovery in growth during the second half of this year. Lower commodity prices and a drop in inflation provide room for further policy support.

As was the case last year, sentiment to the US economy picked up early in the year but a recent string of weaker-than-expected data and the prospect of the approaching fiscal cliff (automatic tax hikes and government spending cuts in 2013 under current law) have

renewed concerns over the durability of US growth. How this problem is addressed will likely depend on the outcome of US elections in November, with the Presidential election at this stage too close to call. Notwithstanding the fiscal cliff, the immediate risks to the US economy are less than in Europe given a stronger financial system, a nascent recovery in housing and modest improvements in credit and labour markets. Should the growth outlook deteriorate materially, or the European crisis spiral out of control, further quantitative easing is likely from the Federal Reserve.

All this suggests that dark clouds will continue to hang over the global economy. However, there are some possible bright spots. First, expectations for China are now much more realistic and if the government’s easing measures are successful, growth should rebound before long. Second, the oil price has fallen considerably, which provides a significant boost to the US consumer and other oilimporting countries. Third, monetary policy is likely to be eased further on a global basis, unless global growth starts to turn around.

Consensus Economic Forecasts GDP Growth (%)

World (PPP)

Inflation (%)

2011

2012

2013

2011

2012

2013

3.7

3.2

3.6

4.4

3.5

3.6

Developed Markets

1.3

1.3

1.5

2.7

1.8

1.6

Emerging Markets

6.3

5.2

5.7

6.3

5.2

5.5

US

1.7

2.2

2.1

3.1

1.9

1.8

Euro area

1.5

-0.5

0.4

2.7

2.2

1.6

China

9.2

8.0

8.3

5.4

3.4

4.1

Japan

-0.7

2.8

1.4

-0.3

0.1

0.0

Germany

3.1

0.8

1.3

2.5

2.1

1.6

UK

0.7

0.0

1.7

4.5

2.7

2.0

PPP weights used for aggregated regions.

Source: Ashburton

Consensus Earnings Growth and P/E valuations Earnings Growth (%) 2012

2013

P/E ratio 2011

2012

2013

World

9.9

12.8

13.1

11.9

10.6

US

8.8

12.9

14.1

12.9

11.4

Europe

2.8

11.9

10.5

10.2

9.1

Japan

78.9

15.9

20.6

11.5

10.0

Emerging Markets

11.7

11.8

11.2

10.0

9.0

China (IBES)

21.7

17.2

13.8

11.2

9.6

India (IBES)

15.8

15.3

13.6

11.5

9.9

Brazil (IBES)

5.6

15.4

12.5

11.8

10.2

Source: Deutsche Bank, IBES, Datastream, MSCI indices unless stated otherwise.

Notwithstanding the fiscal cliff, the immediate risks to the US economy are less than in Europe given a stronger financial system, a nascent recovery in housing and modest improvements in credit and labour markets.

We, therefore, expect market conditions to remain challenging. Equities are priced attractively relatively to bonds and cash and are likely to deliver superior returns over the medium-term. But in an environment of worsening macro momentum which is subject to considerable risks – including geopolitics – equities also face downside risks in the short-term. Within fixed income markets, we view yields in the perceived ‘safe-haven’ government bond markets (US, Germany, Japan and UK) as unattractive, even if we expect overnight interest rates to remain extremely low for some time. We do, however, see better value in corporate bonds and select emerging markets, where bond markets are benefiting from declining inflation. In terms of currency markets, we currently have a preference for the US dollar over the British pound or euro; while we also think several emerging market currencies are attractive such as the Mexican peso, Malaysian ringgit and Korean won.

Given our macro views, we maintain a cautious stance at present in our Asset Management and Multi Asset Funds. We will continue to seek out both tactical and medium-term opportunities to generate returns for our clients, while at the same time managing downside risk. In difficult conditions over recent years we have generated positive returns with below-average volatility and we will strive to do the same going forwards.

WELCOME | OUTLOOK | THE US | FOCUS | NEWS | PERFORMANCE

The US equity market: safe haven or heading for a cliff ?

Written by Veronika Pechlaner, Written by Jonathan Schiessl Investment Manager, Global Equities

The US as safe haven: so far so good…

US equity markets have markedly outperformed Asia and the troubled European markets in recent years, helped by its “safe haven” status, with the US being seen by many benchmark-oriented global investors as the default region in which to invest.

Not only do investors consider the US more isolated from slower Chinese growth and European contagion, with “only” around a third of the companies’ revenues included in the S&P coming from outside North America.

Also, US investors had reason to cheer about encouraging domestic news late last year and early this year as US employment and housing data showed good improvement, although arguably flattered by one of the warmest winters on record. Together with the potential for a “feel-good” factor in the run up to the US presidential elections in November and continued hope pinned on the Federal Reserve to come to the rescue with further monetary easing in case of an economic deterioration, this made for an easy choice - so far.

Valuation attractive, but acceleration in earnings growth optimistic However, things could become less straightforward in future. After the last three years of recovery US industrial activity and corporate margins are back to pre-crisis levels, while employment is still far away from previous highs. With a strengthening US dollar as headwind to future corporate earnings and further labour and capital investment needed

Doom and gloom has been building in financial markets recently as the European debt crisis and fears of a steeper than anticipated Chinese slowdown grab the news headlines. Meanwhile, the US equity market has been remarkably robust. The S&P 500 Index is up in the mid single digits year-to-date, outperforming most other geographies as the US market seems the default place to be during volatile times. However, those who are hoping for a strong economic acceleration into next year, possibly helped by positive sentiment ahead of the US presidential election, could be expecting too much.

Recent demand indicators point to increasing topline risks, even in the US economy.

| 6 | 7 |

US ghosts of politics past: fiscal cliff and long-term debt sustainability

to support potential growth, it could be a tough ask to increase margins even further. Equally, recent demand indicators point to increasing topline risks, even in the US economy, with consumer confidence hitting a five month low in June and unemployment remaining stubbornly high at above eight percent.

The fiscal stimulus potentially removed could amount to up to 5% of US GDP in a worst case scenario and risks to provide a significant headwind to US GDP growth in 2013.

This could spell trouble ahead as the market, until very recently, widely assumed an acceleration of earnings growth going into next year. In the absence of such an acceleration, even relatively attractive forward valuation multiples would provide little support, especially as the US remains one of the markets where investors seem to pay up for future earnings growth as indicated in a relatively high PEG (Price/Earnings to growth) ratio outlined in the chart below.

Consensus earnings growth and PEG ratio for different equity indexes

16%

1.2

Source: Factset, Bloomberg compiled by Ashburton

14%

1.0

12% 0.8

10%

0.6

8% 6%

0.4

4% 0.2

2%

0.0

0% S&P 500

EuroStoxx 50

2012E

FTSE All-Share

2013E

MSCI Asia ex Japan

forward PEG ratio

Government debt levels as % of GDP: Japan and US above the Eurozone 180

%GDP Japan US UK Euro area Germany

140 120 100 80 60 40

IMF forecast

20 0 80

84

After the elections US politicians sometime in early 2013 will have to return to the questions of the socalled “fiscal cliff ”...

Beyond the issue of the near-term fiscal deficit, which will have to be handled carefully to avoid a disastrous impact on an economy still growing below par, US politicians will also need to address longer term debt sustainability. After all, the US Debt/ GDP ratio remains even above that of the Eurozone. This will require major structural decisions on both the tax system and social entitlements on which the two major US parties fundamentally disagree at present. A decisive victory for any of the parties in the upcoming elections could alleviate a deadlock and provide increased visibility, however until businesses have more certainty the potential damage on confidence and thus the economy remains a risk hard to quantify.

It’s all relative - to the rest of the world

160 Source: IMF World Economic Outlook, Barclays Research

Worryingly, the potential for further political procrastination with regards to US indebtedness as we approach 2013 could hit confidence and hold back employment and capital spending even further. After the elections US politicians sometime in early 2013 will have to return to the questions of the so-called “fiscal cliff” which is commonly referred to as the prospect of fiscal stimulus measures being reversed next year. The fiscal stimulus potentially removed could amount to up to 5% of US GDP in a worst case scenario and risks to provide a significant headwind to US GDP growth in 2013.

88

92

96

00

04

08

12

16

Investors that are overweight the US market should be aware of the above risks involved, with the forthcoming results season providing a welcome reality check on the scarce visibility available. With all of the major regions facing issues, albeit of a different nature as the US and Europe have to address their debt issues while China is trying to rebalance its economy towards the consumer, the reward for US equity investors will not only depend on domestic politics but also on the fortune of the other regions. After all there is more reward, arguably at higher risk, attached to equities in emerging markets, but clearly it will take an improvement in the global outlook for growth to tempt investors away from what they know and love at present.

WELCOME | OUTLOOK | THE US | FOCUS | NEWS | PERFORMANCE

Regional Focus Yunnan Province, China: gateway to South-East Asia One of the more important aspects of being an investment manager is the need to regularly get out from behind the computer screen and go to “kick the tyres”. As a manager with responsibility for equities in Asia, this sounds a rather enticing prospect. I can, however, advise that for the most part, this side of the job is highly unglamorous - most time is spent in meeting rooms and the inside of taxis. Pollution, traffic jams and the squash of humanity generally overwhelm the traveller to most large Asian cities, so it was with some excitement that I recently visited a province in China that I had never been before - Yunnan province in the far south-west of the country.

Written by Jonathan Schiessl, Investment Manager, Asian Equities

There are several reasons to visit Yunnan, most of them unrelated to investment purposes.

The province is known within China as the gateway to south-east Asia, owing to the fact it borders Burma, Laos and Vietnam (as well as Tibet to the north). It has a population of 46 million. It is regarded as a backward province, with its mountainous topography and thick jungle cover hindering extensive infrastructural development and therefore industrialisation.

Agriculture/biology, mining, tobacco and tourism are the mainstays of the economy, and it is China’s most bio-diverse province. Low pollution (thankfully most power is generated from hydro-electric projects) and a significant number of tourist attractions (including the much fabled Shangri-La) make this a tourist mecca within China.

China Yunnan Province

Fig 1. Yunnan Province position

Investment opportunities in Yunnan So, aside from actually being able to breathe the air freely, why on earth did I choose Yunnan as an investment destination? There are three main reasons to visit this province: 1) to review its strategic location, 2) to see if China’s much discussed push from the coast to inland Provinces is actually happening and 3) to see if there were signs on the ground of an easing in government policy in response to the slowdown in China.

Strategically, Yunnan is one of the most important provinces in China. Recent events in Burma make this even more so. Whilst we are in the very earliest days of Burma re-entering the global economy, and much could still go wrong, there is no doubt that of the country’s near neighbours, it will likely be China that will garner the lion’s share of economic benefit. But Yunnan is not just about Burma. Trade with

| 8 | 9 |

Laos and Vietnam has been growing fast, but perhaps of more significance is the booming trade with Thailand.

I visited a number of traders in Kunming, Yunnan’s capital, who specialised in trade with Yunnan’s neighbours. The most profitable trade route was with Thailand, due to its higher per-capita income. Most exports were manufactured goods and agricultural products, whilst imports were predominantly tropical fruits and timber. Interestingly, trade to Burma was still relatively small, focused on steel products and cement, with timber and Jade back into China. The main hindrance to increasing trade in the short-term was finance: none of the traders we met offered credit - all deals were cash based. However, most were optimistic as to the future.

Turning to the role of the central government in aiding local businesses, again most traders were actually reasonably happy with the efforts of the central government. There has been a real push over the last 3 or 4 years to develop Yunnan’s infrastructure. The focus is on three main areas: transport infrastructure, hydro-power and tourism. Unlike other parts of China, there has been no let-up in infrastructure spending here (fixed asset investment was up 27.4% in 2011). There are ambitious plans to construct new rail routes to Vietnam, Laos and Burma, along with new highways linking Bangkok to Kunming.

The central government has also helped the funding of a huge new airport complex just outside Kunming (and in the process closing down the old historical Wujiaba airport). It will eventually open links to Asia, Europe and the Americas, and is anticipated to be the fourth largest hub in China.

The challenges facing Yunnan So the final question is how has Yunnan been doing in the recent Chinese slowdown that we have all been worrying so much about?

On the surface, any visitor here would be right to respond ‘what slowdown?’ Booming trade and tourism together with heavy investment in critical infrastructure has meant the Province has been registering fast GDP growth (up 13.7% in 2011). However, problems do exist and are beginning to get rather serious.

Perhaps the greatest issue Yunnan faces relates to local government financing and real estate, an issue across all of China today.

Whilst many infrastructure projects that are currently underway are financed or approved by the central government, there are also many that were started and financed locally.

For example, Kunming (population 9m) started building a massive urban rail network as part of the 2009 recovery package. Whilst no-one can doubt the need for this project, work has virtually come to a standstill as banks that lent to the project had been told to stop lending to local governments as part of last year’s policy tightening measures. This policy has yet to loosen.

Huge land investment by property developers over the last two years has meant a build up of projects that will hit the market next year.

So with no access to financing from banks, the other main source of taxes is from land sales.

The news on this front is not helpful either. After strong land sales over the last couple of years, the market has come to a standstill as the central government attempts to clamp down on the property sector. Huge land investment Fig 2. Kunming’s new international airport

by property developers over the last two years

In addition, the province has huge potential for hydro-power, with six major rivers running through it. It already has the highest ratio of hydro electric power production in China and, with a number of new projects underway will (politics aside), provide the Province and its neighbours with cheap, green energy.

the market next year. And with cash flows

has meant a build up of projects that will hit being hit by falling sales, property companies are not buying new landbank. So unless local governments can revive land sales, or are given new access to capital it is reasonable to expect some infrastructure spending will slow, perhaps quite abruptly, into 2013.

Of course the market has been focused on a slow-down in China for some time, just look at the performance of Chinese stocks for evidence. Before my trip I was fairly confident that China would achieve a softlanding, with data starting to improve later this year. After seeing the issues faced by Yunnan province, which has been one of the best performing provinces in China, I have become more convinced that aggressive policy action is needed. A dramatic slow-down in local government funded infrastructure and construction expenditure will render growth targets meaningless, and that is without considering the impact from the European crisis.

Reasons for optimism The good news is that the central government appears to be responding to the situation on the ground. Since returning from China, policy has been further loosened and data should hopefully start showing a recovery (but nothing as dramatic as 2009). Unlike most Western governments, China still has plenty of policy options.

China is here, and it’s here to stay. The growth model has to change, and growth will certainly slow going forward. But the overall evidence from one medium sized province in south-west China fills me with optimism that the China story is not finished. Yunnan is beautiful and brimming with opportunity, and I shall certainly be going back.

WELCOME | OUTLOOK | THE US | FOCUS | NEWS | PERFORMANCE

News The sun sets on another year of National Trust concerts

Ashburton sporting successes

In what has become an annual event, the last weekend in June saw the National Trust Sunset Concerts take place in St. Ouen, Jersey, drawing over 4200 people over two nights.

On 9th June, Ashburton sponsored the men’s AM/AM competition at La Moye Golf Club, Jersey. 96 golfers took part in what some called “the best day’s golf they have had at La Moye”!

Sponsored by Ashburton, this year’s acts were local blues and harmonica artist Giles Robson & the Dirty Aces and Skatronics Jamaica, who brought a blend of ska, jazz and reggae music to the enthusiastic crowd. Donations and parking charges were collected for the National Trust Birds on the Edge project, which is part of their Coastline Campaign, raising £7738.55.

Succession for the portfolio services team Nick Lee has assumed overall responsibility for Ashburton’s portfolio services, taking over the reins from Dennis Phillips, who retires from Ashburton in July. Nick joined Ashburton in 1988 and has 32 years’ experience in the investment industry.

The competitive element was incentivised by fantastic prizes, with one client getting a hole in one and winning a four day trip for two to a top golfing destination in Portugal.

Cricket champions

Peter Bourne said: “The transfer of two of our most senior investment professionals to the portfolio management division clearly demonstrates the depth of Ashburton’s investment team capabilities and our commitment to the continuity of service for our clients.”

Photo: JEP

Nick Lee is joined by Nick Skiming, who also moves across to bolster the team and to support the exciting plans for Ashburton’s portfolio services. Nick Skiming brings a great deal of experience in global equity markets. In returning to portfolio management, Nick will be able to leverage the 14 years’ private client portfolio management experience he gained before joining Ashburton.

The Ashburton cricket team won the Jersey Evening Post KO Cup for the first time in their 25 year history this month, beating Mavericks by 60 runs in the final.

Well done team!

From left: Nick Lee, Nick Skiming.

WELCOME | OUTLOOK | THE US | FOCUS | NEWS | PERFORMANCE

Performance % Growth

YTD

| 10 | 11 |

as at 29 June 2012

1 year

3 year

5 year

10 year

Since Launch

Launch Date

Yield (%)

n/a

Multi Asset Funds Sterling Asset Management - Accumulating*

3.05

0.81

21.74

16.93

60.67

246.07

04/02/92

Sector Average

2.30

-1.66

28.59

6.43

55.90

287.97

-

-

Sterling Asset Management - Distributing*

2.66

0.12

22.19

17.25

60.14

270.77

01/01/92

0.87

Sector Average

2.30

-1.66

28.59

6.43

55.90

294.64

-

-

Dollar Asset Management - Accumulating*

2.28

-0.50

18.17

8.62

57.18

203.50

04/02/92

n/a

Sector Average

2.68

-5.13

20.76

0.65

55.19

171.20

-

-

Euro Asset Management - Accumulating*

3.20

3.20

24.03

11.35

-

49.52

25/04/03

n/a

Sector Average

2.71

-2.00

11.94

-9.73

-

29.86

-

-

Euro Asset Management - Distributing* †

2.84

2.18

24.30

10.34

-

38.05

03/12/01

1.23

Sector Average

2.71

-2.00

11.94

-9.73

-

11.31

-

-

Multi Asset Cautious Fund GBP

1.23

-0.49

16.79

7.73

-

15.28

19/06/06

0.85

Sector Average

2.76

1.91

26.88

9.14

-

16.78

-

-

Multi Asset Balanced Fund GBP

0.17

-3.41

21.68

7.34

-

17.31

19/06/06

0.29

2.30

-1.66

28.59

6.43

-

17.73

-

-

-0.11

-4.16

18.48

1.40

-

18.13

19/06/06

0.64

Sector Average Multi Asset Balanced Fund USD Sector Average

2.68

-5.13

20.76

0.65

-

17.14

-

-

Multi Asset Balanced Fund EUR

0.60

-1.00

23.06

-

-

0.94

18/02/08

0.19

Sector Average

2.71

-2.00

11.94

-

-

-3.08

-

-

Multi Asset Aggressive Fund GBP

1.60

-5.91

23.31

0.47

-

7.57

19/06/06

0.25

Sector Average

2.90

-3.66

27.86

3.74

-

17.48

-

-

Global Sterling International Equity Fund PC

2.79

-10.07

23.75

-13.65

26.04

276.54

01/01/92

nil

MSCI World TR GBP

5.32

-2.16

45.85

13.30

69.78

331.47

-

-

Global Dollar International Equity Fund PC

3.94

-12.91

15.39

-26.41

36.93

-5.18

06/04/00

nil

MSCI World TR USD

6.29

-4.41

38.91

-11.43

74.69

14.81

-

-

Americas Equity Fund PC †

3.88

-7.06

41.68

-10.08

41.97

87.59

06/01/97

nil

MSCI North America TR USD

8.43

3.00

55.23

1.41

76.08

149.04

-

-

Japan Equity Fund PC †

1.99

-10.45

-

-

-

7.98

01/12/09

nil

MSCI Japan TR USD

3.23

-7.07

-

-

-

3.19

-

-

Chindia Equity Fund

0.04

-30.21

-2.20

-32.48

-

-16.82

01/12/06

nil

Chindia Benchmark

6.92

-19.44

14.05

-3.59

-

16.19

-

-

European Equity Fund PC

2.64

-7.60

32.50

-24.96

67.44

196.78

06/01/97

nil

MSCI Europe TR USD

5.36

-3.91

28.70

-25.36

22.96

95.78

-

-

Americas Equity Fund - £ Feeder PC †

2.05

-5.22

49.44

11.66

-

21.52

01/12/06

nil

Japan Equity Fund - £ Feeder PC †

0.58

-8.34

-

-

-

13.94

01/12/09

nil

Chindia Equity Fund - £ Feeder PC

-1.28

-28.30

4.00

-14.26

-

3.69

01/12/06

nil

European Equity Fund - £ Feeder PC

-1.37

-18.05

25.09

-11.04

-

8.57

01/12/06

nil

Sterling Total Return Bond Fund PC †

2.68

5.50

-

-

-

6.94

23/09/10

2.18

JP Morgan Global GBI Hedged GBP TR

2.31

7.63

-

-

-

6.98

-

-

Dollar Total Return Bond Fund PC †

2.03

4.69

-

-

-

5.77

23/09/10

1.84

JP Morgan Global GBI Hedged USD TR

2.08

7.12

-

-

-

6.24

-

-

Equity Funds

Feeder Funds

Fixed Income Funds

Money Market Funds Sterling Money Market Fund

0.27

0.38

1.53

9.81

-

31.80

25/10/02

0.25

Dollar Money Market Fund

0.02

-0.01

0.20

4.54

-

17.11

25/10/02

0.01

Euro Money Market Fund

0.12

0.58

1.17

7.45

-

18.09

25/10/02

0.14

† These funds are under review for closure in September 2012.

Source: Morningstar Direct as at 29/06/2012.

NB: As from January 2011, all Ashburton Fund benchmark performance is calculated using a Total Return (TR) rather than a Capital Return (CR) basis, bringing it into line with industry standards.

FOR PROFESSIONAL ADVISERS ONLY. Issued by Ashburton (Jersey) Limited. Registered Office 17 Hilary Street, St Helier, Jersey JE4 8SJ, Channel Islands. Regulated by the Jersey Financial Services Commission.

Figures are calculated on a bid to bid price basis, ignoring initial charge, with gross income reinvested. The value of investments, and the income from them, can go down as well as up, is not guaranteed, and you could receive back less than you invested. This could also happen as a result of changes in the rate of currency exchange, particularly where overseas securities are held. Past performance is not necessarily a guide to future performance. If you undertake investment business with a non-UK firm, you will be excluded from the benefit of the rules and regulations made under the UK’s Financial Services and Markets Act 2000, including the UK Financial Services Compensation Scheme. Approved for issue in the UK by FirstRand Bank Limited (London Branch) whose Registered office is at 20 Gracechurch Street, London EC3V 0BG and which is authorised and regulated by the UK Financial Services Authority.

Global Contacts JERSEY

SOUTH AFRICA

Ashburton (Jersey) Limited PO Box 239 17 Hilary Street St Helier Jersey JE4 8SJ

Johannesburg Ground Floor 5 Merchant Place 9 Fredman Drive Sandton 2146 South Africa

Durban Block C Torino Court 4 Crooked Lane Hillcrest 3610 South Africa

David Christie Direct dial: +27 (0)11 282 4435 Email: david.christie@ashburton.co.za

Debbie Miskin Direct dial: +27 (0)31 560 7860 Email: debbie.miskin@ashburton.co.za

Gavin Fraser Direct dial: +44 (0)1534 512234 Email: gavin.fraser@ashburton.com Tom Zambon Direct dial: +44 (0)1534 512010 Email: tom.zambon@ashburton.com Kellie Christian Direct dial: +44 (0)1534 512118 Email: kellie.christian@ashburton.com

UK

Claire Davies Direct dial: +27 (0)11 282 4592 Email: claire.davies@ashburton.co.za Eloise Trewin Direct dial: +27 (0)11 245 5040 Email: eloise.trewin@ashburton.co.za

London 5th floor 20 Gracechurch Street London EC3V 0BG United Kingdom

Cape Town The Pavilion 155 Campground Road Newlands 7700 South Africa

Terry James Direct dial: +44 (0)207 939 1803 Email: terry.james@ashburton.com

Adam Benzimra Direct dial: +27 (0)21 673 3502 Email: adam.benzimra@ashburton.co.za

Issued by Ashburton (Jersey) Limited. Registered Office 17 Hilary Street, St Helier, Jersey JE4 8SJ, Channel Islands. The views expressed in this document represent the collective views of the Ashburton investment team and its external advisers, which will change with altering market conditions and may not necessarily be reflected in the composition of portfolios managed by Ashburton. The value of investments, and the income from them, can go down as well as up, is not guaranteed, and you could receive back less than you invested. This could also happen as a result of changes in the rate of currency exchange, particularly where overseas securities are held. Past performance is not necessarily a guide to future performance.

Ashburton (Jersey) Limited and Ashburton Fund Managers Limited are regulated by the Jersey Financial Services Commission. Ashburton (Jersey) Limited is also registered as a Foreign Investment Services Provider in South Africa in accordance with Section 8 of the Financial Advisory & Intermediary Services Act 2002. If you undertake investment business with a non-UK firm, you will be excluded from the benefit of the rules and regulations made under the UK’s Financial Services and Markets Act 2000, including the UK Financial Services Compensation Scheme. Approved for issue in the UK by FirstRand Bank Limited (London Branch) whose Registered office is at 20 Gracechurch Street, London EC3V 0BG and which is authorised and regulated by the UK Financial Services Authority.