Fund Objective

To provide long-term capital growth.The Fund is aimed at globally diversified investors willing to accept the higher risk of investing in small US companies to benefit from higher long-term growth potential.

View on Past Performance

US equity markets were mixed for the third quarter as problems originating in the subprime mortgage market spread to other sectors of the credit markets.During the quarter, the fund generated positive returns and outperformed its benchmark. Strong stock selection in the technology and consumer discretionary sectors aided relative performance the most. Amongst the portfolio holdings which enjoyed strong returns were Oceaneering International and Myriad Genetics.Oceaneering, which provides services to the oil and gas industry, advanced as its secondquarter profit increased by over 55% year-over-year. Biotechnology company Myriad Genetics rose after its fourth-quarter revenue rose 42% year-on-year. Among the detractors was Liquidity Services, which operates an online auction marketplace.The company lowered its fourthquarter guidance to reflect the loss of a pilot customer and heavier-thanexpected seasonality.

Future Expectations

The key question is whether the recent strength seen in US equity markets will prove to be sustainable. It is our opinion that it will, but it depends heavily on improvement in the balance of financial market and economic risks.On the former, the Federal Reserve's stance seems to have instilled a much-needed dose of confidence to market participants. While economic risks remain our chief concern, given inflation is currently contained and the Fed is ready to act as needed, we are given a degree of comfort that the current cycle need not end in recession.With valuations at reasonable levels, this should ultimately be a positive for US equities, notwithstanding the potential for volatility in the interim.

Fund Details