Allan Gray Equity Fund: Benchmark

Allan Gray Equity Fund
Fund managers: Inception date: Class: Fund description
Ian Liddle, Duncan Artus, Andrew Lapping, Simon Raubenheimer 1 October 1998 A
Fund information on 31 March 2013 Fund size: Fund price : Number of share holdings: Income distributions for the last 12 months To the extent that income earned in the form of dividends and interest exceeds expenses in the Fund, the Fund will distribute any surplus biannually. Cents per unit Performance net of all fees and expenses Value of R10 invested at inception with all distributions reinvested
335 225 175
R34 259m R254.17 99
The Fund invests in shares listed on the Johannesburg Stock Exchange (JSE). The Fund is typically fully invested in shares. Returns are likely to be volatile, especially over short- and medium-term periods. ASISA unit trust category: Fund objective and benchmark The Fund aims to outperform the South African equity market over the long term, without taking on greater risk. The Funds benchmark is the FTSE/JSE All Share Index including income. How we aim to achieve the Funds objective South African - Equity - General
30 Jun 2012
31 Dec 2012
183.8525
69.1269
Allan Gray Equity Fund Benchmark1
R332.86
Rand (log scale)
135 95
We seek to buy shares offering the best relative value while maintaining a diversied portfolio. We thoroughly research companies to assess their intrinsic value from a long-term perspective. This long-term perspective enables us to buy shares which are shunned by the stock market because of their unexciting or poor short-term prospects, but which are relatively attractively priced if one looks to the long term. We invest in a selection of shares across all sectors of the JSE, and across the range of large, mid and smaller cap shares. Suitable for those investors who
R119.48
55 35
20
10 9 99 00 01 02 03 04 05 06 07 08 09 10 11 12
% Returns Seek exposure to JSE-listed equities to provide long-term capital growth Are comfortable with stock market uctuation, i.e. short- to mediumterm volatility Are prepared to take on the risk of capital loss Typically have an investment horizon of more than ve years Wish to use the Fund as an equity building block in a diversied multiasset class portfolio Minimum investment amounts Minimum lump sum per investor account: Additional lump sum: Minimum debit order*:
*Only available to South African residents.
Fund
Benchmark1 1094.8 18.6 21.4 9.3 14.9 14.7 22.5 2.5 -45.4 60.3 18.5
CPI inflation2 118.8 5.6 5.3 6.0 5.2 6.0 5.9 1.3 n/a n/a n/a
R20 000 R500 R500
Unannualised: Since inception 3228.6 Annualised: Since inception 27.3 22.6 Latest 10 years 11.5 Latest 5 years 16.3 Latest 3 years 16.1 Latest 2 years 21.2 Latest 1 year Year-to-date (unannualised) 7.2 Risk measures (since inception) -31.3 Maximum drawdown3 Percentage positive months4 67.2 Annualised monthly volatility5 16.6
Annual management fee The annual management fee rate is dependent on the return of the Fund relative to its benchmark, the FTSE/JSE All Share Index including income (adjusted for Fund expenses and cash ows), over a rolling two-year period. The fee hurdle (above which a fee greater than the minimum fee of 0% is charged) is performance equal to the benchmark minus 15%. For performance equal to the benchmark a fee of 1.5% (excl.VAT) per annum is payable. The managers sharing rate is 10% of the out- and underperformance of the benchmark over a rolling two-year period and a maximum fee of 3% (excl.VAT) applies.
1. FTSE/JSE All Share Index including income (Source: I-Net Bridge), performance as calculated by Allan Gray as at 31 March 2013. 2. This is based on the latest numbers published by I-Net Bridge as at 28 February 2013. 3. Maximum percentage decline over any period. The maximum drawdown occurred from 20 May 2008 to 27 October 2008 and maximum benchmark drawdown occurred from 22 May 2008 to 20 November 2008. Drawdown is calculated on the total return of the Fund/benchmark (i.e. including income). 4. The percentage of calendar months in which the Fund produced a positive monthly return since inception. 5. The standard deviation of the Funds monthly return. This is a measure of how much an investments return varies from its average over time.
Total expense ratio (TER) The TER for the year ending 31 December 2012 is 2.56% and included in this is a performance fee of 0.78% and trading costs of 0.05%. The annual management fee rate for the three months ending 31 March 2013 was 2.64% (annualised). These figures are inclusive of VAT, where applicable. Fund returns are quoted after deduction of costs incurred within the Fund so the TER should not be deducted from Fund returns (refer to page 2 for further information).
ALLAN GRAY EQUITY FUND 1 of 2
Allan Gray Equity Fund

Fund manager quarterly commentary as at 31 March 2013 Most South African mining stocks extended their underperformance into Q1 of 2013. The severity of the sell-off indicates the extent to which the market has lost/is losing condence in South African mining companies capacity to pay future dividends to shareholders to justify their share prices. The knee-jerk response of a self-described contrarian investor is to buy the oversold mining stocks on the simple thesis that the news cant be this bad forever. But there is a risk that the poor fundamentals may persist for a long time or at least for longer than many investors can stomach. This risk is exacerbated by what we perceive, up to now, to have been complacency and a reluctance to change amongst many leaders in mining companies, unions and government. Managers of mining companies generally rate their own performance as good, but this is at odds with their share prices. For example, the managers of one large mining company recently scored more than 100% on their own internal performance measure, but 0% on a total shareholder return measure used to calculate their long-term incentives. Union leaders seem content to see their membership base dwindle as real wage increases and disruptive strikes force the closure of marginal shafts. Regulators appear to be aiming to extract as much as they can from the mining sector, which contrasts with their support for other less labour-intensive industries. There is little sign of enthusiasm for implementing reforms to our labour regulations to make South Africa more competitive. There are some glimmers of hope. The penny seems to have dropped with the mine managers that shareholders are more interested in sustainable free cash ows and dividends than in fanciful production growth targets. Some managers also appear to be stiffening their resolve to deal rmly and fairly with illegal strikes and indiscipline. National Treasury is keenly aware of the very important role still played by the mining sector in our economy. The dilemma is that when one carefully studies the performance of mining companies over the last 10 to 15 years, a disturbing picture emerges for many (but not all) companies: an increase in share count, increased debt levels, stay-in-business capital expenditure masquerading as growth capital expenditure, disappointing production and cost performance and surprisingly low generation of free cash for the payment of dividends to shareholders. These poor fundamentals have persisted for so long, that it could be argued that they are normal for the industry. It is very hard to predict whether conditions will change for the better over the next decade; there is a signicant probability that they will not. Therefore, the Fund continues to hold substantial positions in high-quality globally diversied companies such as British American Tobacco and SABMiller. The Funds 8% exposure to South African gold and platinum miners (including indirectly via Anglo American) reects our assessment of the current risk-reward balance in these stocks. Tel 0860 000 654 or +27 (0)21 415 2301 Fax 0860 000 655 or +27 (0)21 415 2492 info@allangray.co.za www.allangray.co.za
Disclaimer The Fund may be closed to new investments at any time in order to be managed in accordance with its mandate. Permissible deductions may include management fees, brokerage, STT, auditors fees, bank charges and trustee fees. Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending. The Fund may borrow up to 10% of the market value of the portfolio to bridge insufcient liquidity. The FTSE/JSE All Share Index is calculated by FTSE International Limited (FTSE) in conjunction with the JSE Limited (JSE) in accordance with standard criteria. The FTSE/ JSE Africa Series is the proprietary information of FTSE and the JSE. All copyright subsisting in the FTSE/JSE All Share Index values and constituent lists vests in FTSE and the JSE jointly. All their rights are reserved. Allan Gray Unit Trust Management (RF) Proprietary Limited (the Company) is a member of the Association for Savings & Investment SA (ASISA). Allan Gray Proprietary Limited, an authorised nancial services provider, is the appointed investment manager of the Company. The Company is incorporated and registered under the laws of South Africa and is supervised by the Financial Services Board. The Company has been approved by the Regulatory Authority of Botswana to market its unit trusts in Botswana, however it is not supervised or licensed in Botswana. Unit price Unit trust prices are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any permissible deductions from the portfolio divided by the number of units in issue. Forward pricing is used and Fund valuations take place at approximately 16:00 each business day. Purchase and redemption requests must be received by the manager by 14:00 each business day to receive that days price. Fees A schedule of fees, charges and maximum commissions is available on request from the manager. Commission and incentives may be paid and if so, would be included in the overall costs. TER *TERs are shown for class A units only The Total Expense Ratio (TER) is the percentage of the funds average assets under management that has been used to pay the funds operating expenses over the past year. The TER includes the annual management fees that have been charged (both the fee at benchmark and any performance component charged), trading costs (including brokerage, STT, STRATE and insider trading levy), VAT and other expenses. Since unit trust expenses vary, the current TER cannot be used as an indication of future TERs. All Allan Gray performance gures are quoted after the deduction of costs incurred within the Fund so the TER is not a new cost. A higher TER ratio does not necessarily imply a poor return, nor does a low TER imply a good return. Instead, when investing, the investment objective of the Fund should be aligned with the investors objective and compared against the performance of the Fund. TERs should then be used to evaluate whether the Fund performance offers value for money. Performance Collective Investment Schemes in Securities (unit trusts) are generally medium- to long-term investments. The value of units may go down as well as up and past performance is not necessarily a guide to the future. Performance gures are from Allan Gray Proprietary Limited and are for lump sum investments with income distributions reinvested.
Top 10 share holdings on 31 March 2013 (updated quarterly) Company British American Tobacco Sasol SABMiller Remgro Standard Bank Anglo American6 Sanlam Reinet Investments BHP Billiton Old Mutual Total
6. Including Anglo American Stub Certificates.
% of portfolio 10.8 10.6 9.2 7.1 4.7 4.4 4.1 3.8 2.7 2.7 60.0
Sector allocation on 31 March 2013 (updated quarterly) Sector Oil & gas Basic materials Industrials Consumer goods Healthcare Consumer services Telecommunications Financials Technology Other Money Market and Bank Deposits Total % of portfolio 10.7 18.9 12.2 24.2 2.9 3.3 0.7 22.5 1.2 0.7 2.7 100.0 % of ALSI 4.4 27.3 6.9 20.1 3.3 10.8 6.2 20.5 0.3 0.1 0.0 100.0
Note: There may be slight discrepancies in the totals due to rounding.
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Allan Gray Equity Fund: Benchmark

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Allan Gray Equity Fund

Fund managers: Inception date: Class: Fund description

R34 259m R254.17 99

Allan Gray Equity Fund Benchmark1

Rand (log scale)

R20 000 R500 R500

ALLAN GRAY EQUITY FUND 1 of 2

Allan Gray Equity Fund

Note: There may be slight discrepancies in the totals due to rounding.

ALLAN GRAY EQUITY FUND 2 of 2

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