Review for Quarter Ended 9/30/08 Performance Review Massive global de-leveraging affecting every asset class turned into a full-fledged credit market freeze during the month of September. As investor confidence unraveled, several financial behemoths faced a quick demise, government takeover/conservatorship, merger, or a distressed sale. This rout proved to be the fourth worst month for equity markets since the creation of the MSCI global indexes in 1970. Since that time, only the stock market crash of 1987, the Russia/Long Term Capital Management crisis of 1998, and the Organization of the Petroleum Exporting Countries-initiated fuel crisis of 1973 delivered worse performance. Nearly every equity market in the developed and emerging world delivered double-digit negative returns this quarter. Volatility, measured by VIX (the Chicago Board Options Exchange Volatility Index), soared to an astounding intra-day level of 48 vs a norm of 8 in January 2007. Although the US is the epicenter of the subprime issuance and ensuing collateral distress, US equities outperformed their foreign peers in September, losing approximately 9%. Bond spreads (the added yield that bonds pay over Treasury debt of similar maturity) grew dramatically during the period. LIBOR (the overnight rate at which banks lend to each other) spiked to over 600 basis points, reflecting banks’ unwillingness to lend to each other over concerns about which bank could fail next. Due to superior stock selection, the Composite modestly outperformed the MSCI EAFE® Index during this tumultuous quarter. Currencies also demonstrated significant moves during the quarter, with the US dollar appreciating versus every major currency except the Japanese yen. This amplified the negative returns on foreign equities for dollar-based investors. Every industry group produced negative returns this quarter. Recognized for its economic cyclicality, the materials sector collapsed and gave back its market leadership of the 12 months to June 2008. Other economically cyclical sectors also performed poorly, including industrials, technology, and energy. Portfolio holdings in insurance, capital goods, technology hardware & equipment, and banks contributed positively to relative performance, while holdings in consumer durables & apparel, energy, transporation and automobiles & components detracted from relative performance.