Who's afraid of the fiscal cliff? by Ashburton Investments

October 2012

Perspective WELCOME

| OUTLOOK

| FOCUS 1

| THE US

| FOCUS 2

Summer highs

Global economy

Oil supply

Political influence

Investment services Latest news

Our latest performance figures

Global investment expertise with the personal touch.

As at 30 September 2012.

Ashburton’s MD, Central bank Peter Bourne, looks announcements back on summer and their impact. successes.

The energy issues The US election facing South Africa. and likelihood of fiscal tightening.

Who’s afraid of the fiscal cliff ? Not me, cried the wolf!

www.ashburton.com A member of the FirstRand Group

| NEWS

Skydives, bird hides, and tries.

| PERFORMANCE

Contributors Tristan Hanson

Contents Welcome Ashburton’s Managing Director, Peter Bourne, looks back on the highlights of the summer months.

Tom Zambon

Global Outlook Central Banks to the rescue By Tristan Hanson

We consider what impact the latest announcements are likely to have on the world economy and markets.

Focus 1 Pressure at the pump By Richard Robinson and Alan Le Maistre

The US

Our economic consultant explains why a drastic fiscal tightening will not happen, whoever wins the US election.

A 21st century approach to investment which retains old fashioned levels of services.

News Ashburton shows support to a local charity, the National Trust Coastline Campaign and Jersey rugby talent.

10 11

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

Alan is an Assistant Investment Manager within Ashburton’s European Equities team. Alan joined Ashburton in 2007 having graduated from Cardiff University. He holds the Investment Management Certificate (IMC) and is currently studying towards the Chartered Market Technician (CMT) qualification and passed Level I of the CFA examination in 2012.

Anatole Kaletsky

Performance Our latest fund performance figures as at 30 September 2012.

Richard is Ashburton’s Investment Manager with responsibility for the European Equity Fund. He joined Ashburton in 2000 and has 14 years experience in the investment industry. Richard is a Member of the Securities Institute and holds the Investment Management Certificate (IMC) and Securities Institute Diploma.

Alan Le Maistre

Focus 2 Ashburton Personalised Investments By Tom Zambon

Tom is Ashburton’s Regional Sales Manager for the offshore islands, with responsibility for business development and building relationships with intermediaries who use Ashburton’s investment solutions for their clients. Tom joined Ashburton in 2004 after gaining 20 years offshore financial experience as an Independent Financial Adviser and is FPC qualified.

Richard Robinson

Why the world needs to discover new oil regions outside of the Middle East and how Africa is leading the way in this.

Who’s afraid of the fiscal cliff ? By Anatole Kaletsky

Tristan is Ashburton’s Head of Asset Allocation, with responsibility for Ashburton’s Multi Asset Strategies 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.

Anatole is an economic commentator and award winning columnist. He joined Reuters earlier this year, following 22 years at The Times. Anatole is a Partner in GaveKal Research - a Hong Kong consultancy providing economic and political analysis to institutions around the world. A regular attendee at Davos for the annual meeting of the great on the world economic scene, Anatole has been Economic Consultant to Ashburton since 1997.

| 2 | 3 |

Welcome

Summer Highs Even the markets and policymakers seemed to get into the mood; while the economic news flow remained largely disappointing over the quarter, the commitment of European and US central bankers to what appears to be unlimited

“Our fully invested equity funds have done well in this latest rally, with performance into double figures for the year.”

monetary support provided a midsummer boost to equity prices. I haven’t mentioned the Ryder Cup yet. It was both a great triumph for Europe against all the

remains a key focus for us, even more so in the current low yield and low return environment.

odds, and a horrible collapse on the part of the

We remain vigilant to retain a measured risk

USA. It was hugely enjoyable for those of us on

reward profile in the funds. As you can see from

this side of the Atlantic of course.

the performance table in this publication, this is

Interestingly, this may be the only competition where Europe is represented by a single team, and arguably not only just in sporting terms. Proponents of European unity may see this

The sun is finally beginning to set on what has been a remarkable celebration of sport this year (we’ll conveniently forget the T20 cricket for now). Starting with The Tour de France, the Olympics and the Paralympics followed, to deliver some remarkable and enjoyable stories of individual and team achievement and frailty. London and the UK were transformed and energised by the feel-good factor generated by the success of the Games.

our multi asset services, capital preservation

reflected in the steady progress in performance for the year to date. Equally, our fully invested equity funds have done well in this latest rally, with performance into double figures for the year.

victory as auspicious; in reality, the intra-team

We welcome back Anatole Kaletsky, long-time

dynamics of its member states remain complex

consultant to Ashburton and now columnist

and the future highly uncertain.

for Reuters, as a guest writer for this issue of Perspective. Ahead of the US elections in

“The commitment of European and US central bankers to what appears to be unlimited monetary support provided a midsummer boost to equity prices.”

November, Anatole considers the economic and political management of issues confronting the candidates and, in particular, how the so-called fiscal cliff will be dealt with. He joins regular contributor Tristan Hanson, Head of Asset Allocation, who provides our outlook for markets around the world, and Alan le Maistre and Richard Robinson of our European team, who

The summer fun cannot go on forever and as I

share their perspective on African energy issues.

write the light is already drawing in here in the

We conclude with Tom Zambon, our sales

northern hemisphere. Market talk remains of

manager for the Channel Islands, highlighting the

risk-on and risk-off trades and, while the mood is

various portfolio services offered by our team.

certainly better, it seems to me that there is also appetite for disappointment. We wrote last quarter of marathons not sprints,

I am sure you will enjoy what they have to say. Regards

and of pacing ourselves to cope with challenging market conditions. The Ashburton team continues

Peter Bourne

to manage our funds within this context. Within

Managing Director

Global Outlook Central Banks to the rescue

Within 12 days in September, the central banks of each of the world’s three largest developed economies (the euro area, US and Japan) announced plans to increase government bond purchases, potentially in significant size. Investors salivated in anticipation of a flood of liquidity, giddy with the thought of unlimited ECB bond purchases and coining terms such as “QE Infinity” to describe the US Federal Reserve’s new, open-ended asset purchase scheme. Spain & Italy 2 Year Bond Yields - (%) 8.0

Italy 2yr yield Spain 2yr yield

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0 Jun 10

Aug 10

Oct 10

Dec 10

Feb 11

Apr 11

Jun 11

Italy 2yr yield

Aug 11

Oct 11

Dec 11

Feb 12

Spain 2yr yieldSource:

Apr 12

Jun 12

Aug 12

Bloomberg as at 02/10/12.

Written by Tristan Hanson Head of Asset Allocation

It is now nearly four years since the Fed embarked on large scale asset purchases or ‘quantitative easing’ (QE) and over ten years since the BoJ first tried it. The former continues to suffer painfully high unemployment, while the latter remains mired in deflation. So what should we make of these latest announcements and are they likely to have any lasting impact on the world economy and markets? In our view, the most significant policy announcement in recent months has come from the European Central Bank (ECB). As we wrote in the last edition of Perspective, resolving the European sovereign debt and banking crisis was likely to involve some form of debt mutualisation or monetisation (or more precisely, bond purchases by the ECB, sterilised or not). The ECB’s policy u-turn in recent months is an important step in terms of the latter. On the grounds that the ECB’s monetary policy has become fragmented across member countries due to “unfounded fears” of the “reversibility” of the euro, the ECB announced that it stands ready, on a conditional basis, to purchase the short-dated government bonds of countries in trouble with no pre-determined limit. Governments must first

| 4 | 5 |

request help from the bailout funds (EFSF/ESM)1 and then adhere to the required conditionality in terms of structural reform and fiscal targets. This is a major step towards removing the risk of a disorderly unravelling of the euro area. Our previous concerns that the EFSF/ESM bailout funds had insufficient firepower are allayed by this decision since the ECB is the only institution with sufficient ammunition to tackle the crisis with any credibility. Nonetheless, it is not all plain sailing in Europe. First, governments have to request an EFSF/ ESM bailout and with Italian and Spanish bond yields lower post the announcement, they may choose to stall in hope of avoiding such embarrassment. Second, once in a program, governments have to deliver on their promises. In tough economic times, implementing socially unpopular reforms, spending cuts and tax hikes will remain very difficult as we have witnessed in Greece and Spain. Third, markets may become disappointed by the scale of ECB bond purchases once a program is underway (excitement over ‘unlimited’ purchases is very much overdone – they are, if nothing else, limited by the amount of eligible short-term debt). Fourth, the euro zone economy is stuck in recession with little prospect of much nearterm improvement despite the ECB’s policy change. Fifth, Greece remains a risk, in need of a further debt relief, which might ultimately be followed by euro exit. Next in terms of significance is the Fed’s QE3 program which, unlike previous instalments, has no fixed expiry or target size. For the time being, the Fed will purchase an additional $40bn of mortgage-backed securities (MBS) each month, in addition to its Operation Twist program of purchasing long-dated (and selling short-dated) US Treasuries. In our view, this policy makes sense in that it gives the Fed increased flexibility to react to changes in the economic outlook, while targeting MBS may be marginally helpful in reducing mortgage rates. Alongside this decision, the Fed pushed out its expectation of prolonged low rates into late 2015. A distant third comes the BoJ with its policy of purchasing a further Y10trn ($128bn) of short-dated Japanese government bonds (JGBs), which anyway yield only 0.1%. Such action may provide modest help in preventing currency appreciation and finances the government’s large ongoing deficits, but JGB purchases have done little to alleviate deflation or boost Japanese economic growth. These types of central bank policy are most effective in times of financial stress. Therefore the ECB’s decision is the most likely to make a difference. Indeed, without even purchasing a single bond, yields on short-dated Italian

...markets don’t move in a straight line and the coming months will likely throw up plenty of news, noise and opportunity for tactical asset allocation. In the meantime, we emphasise diversification and capital preservation in our Multi Asset Funds in the pursuit of steady, positive growth. Global outlook

and Spanish debt have since collapsed. But further QE in the US or Japan is likely to suffer from diminishing returns, having little direct, immediate economic impact. It cannot drive government bond yields much lower. As we have argued, QE is transmitted through its success in weakening the currency, buoying sentiment and boosting asset prices. If stock prices continue to rise on the back of QE, then the Fed will consider the policy a success, as this should stimulate further spending in the private sector.

Accordingly, we expect a difficult global economic backdrop to persist. The issue of the fiscal cliff will hang over the US economy, creating uncertainty for a few months more; while we expect Europe to emerge from recession only very gradually. On a more positive note, in our view, cyclical concerns over Chinese growth are likely to ease somewhat over the coming months, along with brighter prospects in other emerging markets. We expect the global economy to register modestly higher growth in 2013 than in 2012.

Central banks in the developed world are fighting hard to combat the powerful forces of deleveraging and depressed “animal spirits”.

In this context, financial markets are likely to remain volatile and subject to political influence and shifts in sentiment. Over the medium term, we continue to see the best prospects in equities, corporate bonds and select emerging market bonds and currencies. However, markets don’t move in a straight line and the coming months will likely throw up plenty of news, noise and opportunity for tactical asset allocation. In the meantime, we emphasise diversification and capital preservation in our Multi Asset Funds in the pursuit of steady, positive growth. This is because there will always be surprises. As one wise man put it, “to be ignorant of one’s ignorance is the malady of the ignorant.” 2

Nevertheless, central banks in the developed world are fighting hard to combat the powerful forces of deleveraging and depressed “animal spirits”. The global economy would be in a deeper hole were they not to do so. But they cannot magic a return to the boom years on their own, at least not under the currently accepted limits to their mandates.

1 European Financial Stability Facility and European Stability Bronson Alcott (1799-1888) Mechanism 2 Amos

Central Bank Balance Sheets - (Jan 2007=100) 550 500

ECB

JAP

450 400 350 300 250 200 150 100 50 Jan 07

Jan 08 UK

Jan 09

Jan 10 US

Jan 11 ECB

Jan 12 JAP as at 02/10/12. Source: Bloomberg

Pressure at the pump Written by Richard Robinson and Alan Le Maistre Ashburtonâ&#x20AC;&#x2122;s European team

The development growth of deepwater drilling in East and West Africa is forecast to soar a staggering 135% by 2016.

On 4th September, South Africa experienced its largest petrol price increase on record of 93cents/litre, (diesel went up by 69 cents/litre). The increase partly reflected higher costs of servicing fuel stations but more importantly the manifestation of an upward trend in crude oil prices. In particular, it also reflected a reduction in availability from one of their largest suppliers, Iran (who, as at March 2012, provided almost 40% of their oil). As oil prices rise, security of supply will become paramount and dependence on a few high risk partners for importing nations will become intolerable.

| 6 | 7 |

The African continent is fast becoming the world’s leading region for new oil discoveries (particularly offshore).

South Africa is an example of a fast growing economy with limited conventional oil and natural gas resources. Due largely to apartheid driven sanctions, South Africa (and in particular Sasol and PetroSA) developed a heavy reliance on synthetic oil; converting domestically supplied coal and natural gas to oil. This industry now supplies approximately 36% of the country’s refined liquid fuel requirements. However, synthetic oil production is expensive, energy intensive and highly polluting. South Africa is today the world’s most coal dependent nation, with coal accounting for 75% of its energy needs versus a global average of less than 30%. Consequently, the country has become one of the world’s top greenhouse gas polluters per capita. The synthetic fuel industry is working at full capacity but struggling to reduce the country’s oil deficit. Expansion of the industry will be delayed, and possibly restricted, by growing environmental concerns. Even if approved, long lead times and the complexity of construction mean material capacity cannot be added until 2020. Around 95% of the crude oil required to supplement ‘synthetics’ is imported. Worryingly, South Africa has a heavy reliance on one of the world’s riskiest regions; the Middle East (85% of supply), a region synonymous with geopolitical instability. South Africa is one of the least diversified and highest risk dependencies in the world; by comparison the US is reliant on the Middle East for only 22% of its imports. South Africa ranks within the top six economies in the world which are most sensitive to oil price swings (the ‘Roubini oil sensitivity index’ - ROSI). It’s not just the political risks of their heavy dependence on Middle Eastern supply that should concern countries reliant on Middle East oil. There is a pattern that befits many countries who discover oil: as they find it, they use it!

Between 2000 and 2010 Saudi Arabia increased its consumption of oil (by 1.2 million barrels per day), more than any other country (bar China). Saudi now has the highest primary energy consumption per capita in the world (ahead of the US). Heavy fuel subsidies (OPEC countries accounted for €121bn of the €192bn in global oil subsidies) have led to significant energy profligacy, 65% of Saudi’s energy actually comes from burning crude oil! Residential use makes up 50% of demand, with over two thirds of that coming from air-conditioning.

It is appropriate, and indeed imperative, that not only countries like South Africa, but the world, shift away from their reliance on Middle East oil. The Saudis consume 250 litres per head of water per day (the world’s third highest and growing at 9% annually). A significant portion of this is from energy hungry desalination plants, much of which is consumed by the oil industry; water is an integral part of oil extraction when wells become depleted. So a vicious circle ensues... As well depletion increases, more desalinated water is needed, bumping up the amount of energy (and cost) required to extract it! Saudi Arabia already consumes all of the gas it produces and a quarter of its 11.1m barrels a day of crude output; some market commentators even speculate that by 2030 the country could be an oil importer! This prospect should send a shiver down the spine of any oil importing nation.

The recent Arab spring has sent shockwaves throughout Saudi’s ruling elite and they have been forced to spend heavily in order to appease a disgruntled, rapidly growing, largely unemployed and youthful populace. Consequently public spending, including; increasing public sector wages, job creation and housing, increased by 24% in 2011 - the highest jump in a decade. This pressure to spend more in order to ‘placate the people’, is not limited to Saudi Arabia which now requires $94 per barrel (/B) of oil to balance its budgets; fiscal break even prices for 2012 vary from $53/B for Qatar to $127/B for Iran. It is appropriate, and indeed imperative, that not only countries like South Africa, but the world, shift away from their reliance on Middle East oil. We do, however, see evidence that this is happening and nowhere can we see this more evidently than in Africa itself. The African continent is fast becoming the world’s leading region for new oil discoveries (particularly offshore). It is not only occurring exclusively in the typical areas of Nigeria, Algeria or Angola, but also across to the East, in offshore, Tanzania, Mozambique and up towards Kenya. The development growth of deepwater drilling in East and West Africa is forecast to soar a staggering 135% by 2016. The growth in offshore African drilling even surpasses the much vaunted Brazilian offshore drilling expansion (which is expected to grow by 100% by 2016). This need to explore and develop one’s own national prospects is not, however, limited exclusively to Africa, but is being reflected in the development of offshore prospects around the world. By 2016, the offshore oil service industry is set to see a significant ramp-up in activity; mid-water drilling is set to double, with deepwater and ultra-deepwater drilling set to climb by over 200%. This is why the Ashburton European Fund is focusing on this sector and views it as their most exciting structural growth prospect for the foreseeable future.

Who’s afraid of the fiscal cliff ? Written by Anatole Kaletsky, Ashburton consultant and Reuters columnist

As if investors did not have enough to worry about, the end of the year brings the US election and then the huge automatic tax hikes and public spending cuts that Ben Bernanke has dubbed the “fiscal cliff ”. These cutbacks will happen on 31st December unless Congress passes new legislation – and will tighten US fiscal policy by some four per cent of GDP, comparable to the austerity programs in Italy and Spain. Given what fiscal austerity has done to Europe, market worries are understandable, but everyone should calm down. A drastic fiscal tightening will not happen, whoever wins the US election. Politics, economics and markets in Europe and America interact in very different ways. Let’s start with economic policy. The Federal Reserve Board is telling politicians not to cut spending, raise taxes or do anything else to try to reduce deficits next year at least. Moreover, the Fed is now putting its money where its mouth is. By promising to keep buying government bonds and to keep short-term interest rates at zero until 2015, the Fed is effectively offering to finance whatever deficit the US government chooses to run at almost zero cost.

Before the election, Republicans see economic damage as a price worth paying to unseat President Obama.

Because of this newfound Fed support, the bond market vigilantes who used to terrify profligate governments have been put out of business and the rating agencies that threaten to downgrade the US government’s credit have become a laughing stock. Which brings us to politics. Why shouldn’t the Congress and President simply postpone all the tax increases and spending cuts due on 31st December, as they repeatedly have in the past? The answer is, of course, political polarisation. But how likely is an all-out political confrontation between the election and 31st December? In the unlikely event that Mitt Romney wins, it is inconceivable that a defeated President Obama will blatantly sabotage the economy, defying the Fed’s explicit warnings and a newly-elected president’s appeal to delay decisions until the new government is in power. Even if Obama did attempt this affront to democracy, it would have no impact, since investors would know that any fiscal tightening would be instantly reversed after the new president’s inauguration. But what if Obama is re-elected, while Republicans continue to dominate Congress, which is the most probable outcome? Simply extrapolating the effects of the previous “gridlock” in Washington implies fiscal paralysis, not a fiscal cliff - around midnight on 31st December,

the President and Congress would agree to postpone any major decisions for three, six or twelve months. For the politicians in Washington to push the economy over a fiscal cliff would require them to break this habit of procrastination. That is unlikely, because the costs-benefit analysis of procrastination will become even more attractive after 6th November. Before the election, the main costs of procrastination were political embarrassment and the risk of rising interest rates. The main benefit was avoiding an economic slowdown. The Fed has removed any risk of higher interest rates, while the retiring Congressmen sitting between 7th November and 31st December, would be acting democratically by leaving responsibility for major fiscal decisions to their duly elected successors. Meanwhile, the benefits of avoiding an economic slowdown have increased. Before the election, Republicans see economic damage as a price worth paying to unseat President Obama. After the election, this motivation disappears. Instead, both parties will face the inevitable prospect of living together for four more years and they will be held responsible by voters and business funders. Neither side will dare to start this long period of unavoidable cohabitation by pushing the economy over a fiscal cliff.

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Investment solutions Written by Tom Zambon, Regional Sales Manager

tailored to your needs

Ashburton has a long and successful track record in delivering investment services that combine a meaningful return with a high level of personal service. Over the years, this approach has often led to strong personal relationships being forged between the investor, their advisor and ourselves. Our 30 year history in international markets enables us to offer an investor the full depth of our global investment expertise and the opportunity to benefit from a 21st century approach to investment facilitated by good, old-fashioned levels of service. Our investment strategies draw from the tried and tested asset allocation process that drives the consistent performance of the Ashburton Multi Asset strategies and our personalised service adds an enhanced level of reporting that is so important to many of our clients. The client also has direct access to our portfolio managers with whom they can discuss how our views of the financial world are affecting the way in which we invest their money. Ashburton’s services have been carefully designed to marry the performance requirement and risk appetite of the individual investor. A robust investment process lies at the heart of what we do, with the insight of a vastly experienced investment management team seeking out the individual assets that can make a real difference to the performance of an entire portfolio. One of the cornerstones of Ashburton’s success over the last 30 years has been the way in which we will actively diversify a client’s portfolio with a view to delivering superior risk-adjusted returns. This is achieved by using different and often uncorrelated asset classes, strategies and themes, seeking out under-priced individual assets in order to populate a portfolio. Access to equities, bonds, commodities, and real estate, either through exchange traded funds or directly, combined with an active asset allocation overlay, gives a progressive approach to diversification, which is so important in testing times. These are all closely monitored in order to deliver on agreed mandates.

Ashburton’s services have been carefully designed to marry the performance requirement and risk appetite of the individual investor. As a consequence of the success we have experienced over the years, we have now developed a range of services that will suit most clients who are able to commit funds with a view to achieving meaningful returns over the medium to long term. The starting point to discovering more information would be a discussion with your investment advisor or with us.

The Portfolio management team in Jersey is spearheaded by both Nick Lee and Nick Skiming who have over 55 years investment experience between them.

Nick Lee joined Ashburton in 1988 and the breadth and depth of his experience with us has now culminated in his primary focus on our private client portfolio management services. Nick also retains a shared responsibility for Ashburton’s limited core multi-asset strategy and is a senior member of the Ashburton Asset Allocation Committee.

Nick Skiming joined Ashburton in 2002 and, before recently joining the Portfolio Team as a senior manager, Nick was Ashburton’s Americas Equity Specialist, for which he gained recognition and a number of accolades over ten years.

News Ben Holt jumps for John

Watching the birds

A group of Ashburton volunteers rolled up their sleeves at the beginning of October in support of the National Trust for Jersey’s Coastline Campaign.

One of our Jersey colleagues bravely decided to jump out of a plane for local charity ‘Jump for John’ in August. Ben Holt agreed to the skydive by default after his girlfriend, who had signed up for it herself, fell pregnant. Not wanting to let the cause

down, Ben stepped up for his first ever tandem skydive, falling at 120mph over St Aubin’s Bay in Jersey! The dive, and the nervous build up, was captured on film by another colleague, Luke Gale, so Ben can relive it - although he has said once was enough! Ben’s fund raising efforts totalled over £700 for the worthy charity.

Rugby season kicks off We had a busy build up to the start of rugby season in Jersey, with much hype around the Jersey RFC’s 1st XV promotion to the UK 2nd division. Ashburton sponsored a pre-season friendly match against the Leicester Tigers, who travelled to Jersey to take on our local team. The rugby ground was packed with a record

number of supporters. Jersey were beaten, but commended by the visiting team. The same ground was filled with youngsters a few weeks later, when Ashburton sponsored the Leicester Tigers Camps - a week of training sessions in both Guernsey and Jersey, giving budding young rugby players the opportunity to learn new skills from the Leicester Tiger’s coaches.

As part of our ongoing CSR programme to raise awareness of our local environment, Ashburton took on the task of building a National Trust bird viewing screen at Les Mielles in Jersey. This involved cutting and gathering willow into bundles to fill a wooden frame, as well as painting two of the bird hides; giving people the opportunity to discover and enjoy the rich bird life to be found at St Ouen’s Pond and Les Mielles with minimal disturbance to the wildlife.

Performance % Growth

| 10 | 11 |

as at 30 September 2012

YTD

1 year

3 year

5 year

10 year

Since Launch

Launch Date

Yield (%)

Sterling Asset Management - Accumulating*

5.03

7.34

16.04

13.97

68.46

252.71

04/02/92

n/a

Sector Average

6.22

9.13

17.86

11.67

76.91

302.84

Sterling Asset Management - Distributing*

4.80

6.74

16.75

14.53

67.34

278.49

01/01/92

0.71

Sector Average

6.22

9.13

17.86

11.67

76.91

309.77

Dollar Asset Management - Accumulating*

5.02

6.83

13.87

5.51

67.13

211.62

04/02/92

n/a

Sector Average

7.98

11.38

14.64

2.43

77.42

185.27

Euro Asset Management - Accumulating*

5.43

8.31

19.99

10.88

52.74

25/04/03

n/a

Sector Average

6.75

9.37

8.71

-5.03

34.97

Multi Asset Cautious Fund GBP

2.82

3.83

11.78

6.88

17.09

19/06/06

0.50

Sector Average

6.00

8.89

17.40

12.43

20.46

Multi Asset Balanced Fund GBP

2.55

4.27

14.14

7.65

20.10

19/06/06

0.17

Sector Average

6.22

9.13

17.86

11.67

22.24

Multi Asset Balanced Fund USD

3.20

4.68

12.72

1.63

21.06

19/06/06

0.38

Sector Average

7.98

11.38

14.64

2.43

23.00

Multi Asset Balanced Fund EUR

3.06

5.65

16.70

3.41

18/02/08

0.09

Sector Average

6.75

9.37

8.71

0.73

Multi Asset Aggressive Fund GBP

4.38

6.25

13.03

-0.07

10.51

19/06/06

0.15

Sector Average

7.71

11.74

17.06

8.96

22.98

Global Sterling International Equity Fund PC

7.44

13.16

12.75

-12.51

56.48

293.59

01/01/92

nil

MSCI World TR GBP

9.29

18.01

25.02

16.53

122.46

347.73

Global Dollar International Equity Fund PC

12.59

17.18

12.80

-23.73

72.17

2.71

06/04/00

nil

MSCI World TR USD

13.56

22.32

26.23

-7.64

128.43

22.65

Chindia Equity Fund

11.34

1.85

-6.86

-34.77

-7.43

01/12/06

nil

Chindia Benchmark

19.76

13.88

9.50

-11.80

30.15

European Equity Fund PC

15.76

24.81

26.37

-17.39

134.14

234.71

06/01/97

nil

MSCI Europe TR USD

13.04

23.20

22.95

-14.94

87.88

141.05

Multi Asset Funds

Equity Funds

Feeder Funds Chindia Equity Fund - £ Feeder PC

5.08

-2.73

-8.34

-19.74

10.36

01/12/06

nil

European Equity Fund - £ Feeder PC

9.80

14.21

9.86

-7.01

20.86

01/12/06

nil

32.19

25/10/02

0.25

17.06

25/10/02

0.01

18.29

25/10/02

0.01

Money Market Funds Sterling Money Market Fund Dollar Money Market Fund Euro Money Market Fund

0.57

0.64

1.68

8.85

-0.03

-0.01

0.10

3.70

0.29

0.43

1.17

6.85

These Funds were closed on 05/09/2012: Euro Asset Management Distributing, Americas Equity PC & Feeder, Japan Equity PC & Feeder, Sterling & Dollar Total Return Bond Funds. NB: 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

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 UKâ&#x20AC;&#x2122;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.