Global Small Cap Fund Update

September Quarter 2008

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Market outlook We are in the midst of a forced de-leveraging process for banks and consumers that is likely to take some time to complete. With U.S. and European savings rates low, debt levels high, and the outlook for the jobs market weak, consumer expenditures are likely to face significant headwinds, increasing the likelihood of recession in these economies. Global growth continues to be in a tug of war between de-leveraging and emerging markets growth, which has slowed, but still remains more robust than the developed world.

Composition may not total 100% due to rounding.

• We believe forward economic and earnings growth estimates are still too high, however it is unclear how far downward they will be re-rated.
• While the near-term environment of write-downs and credit contraction has eased inflationary pressures, longer-term inflation concerns still remain once we move beyond the current downturn, particularly among emerging markets.
• Equity markets are likely to be highly volatile and range-bound until reacceleration in global economic growth can be more confidently anticipated.
• Emerging markets are now trading at a discount in valuation relative to developed markets, a result of recent underperformance of these stocks as investors fled to markets they perceived to have less risk.
• With aggressive central bank intervention and the easing of inflationary pressures, we see the potential for a market bounce in the near-term.
• Overall, our portfolios are somewhat defensively to neutrally positioned, as we believe that balance is risk-appropriate and the future direction of the market cannot be confidently predicted.
• We continue to look for companies that are well positioned in their industries and to study how these stocks have performed during similar environments historically.
• With markets susceptible to vicious rallies and sharp downturns, we believe that the environment will remain challenging and that careful risk management is vital.

• Sector weights shifted somewhat during the quarter consistent with our investment process.
• On a relative basis, we widened our underweight to financials and reduced our weights to consumer staples and energy.
• We added to our healthcare, industrials, materials and information technology exposure and covered some of our underweight to consumer discretionary by adding to select media names.
• Geographically, we are underweight the Pac Rim and Europe, while maintaining an overweight to the U.S.

• Sector allocation was modestly positive during the quarter, while stock selection detracted.
• Underweights to industrials and materials helped boost returns
• Stock selection was mixed across the Fund, as strength within healthcare, information technology, financials, and consumer staples was offset by weaker results within materials, consumer discretionary, energy, and industrials.

• Underweights to financials and consumer discretionary and an overweight to energy detracted.

• Seek investment opportunities that are not readily available or are under-represented in the Australian market.
• Seek the potential for higher long-term capital growth from such international investment opportunities.
• Have a long-term investment horizon and a tolerance for significant volatility in investment returns in the short-term.
• For the hedged version, seek to reduce the impact on A$ returns on those investments that result from currency exposure.