Global Technology

2nd Quarter 2008

Four Embarcadero Center, San Francisco, CA 94111 T:(415) 954-5400

RCM Homepage

Overview

RCM’s global technology investment strategy seeks long-term capital appreciation by investing in both domestic and international companies that use technology in an innovative way to gain a competitive edge.

Portfolio Construction

• Portfolio management team selects stocks by identifying major growth trends with technology; especially discontinuities offering order-of-magnitude of improvements
• Companies possessing superior management, strong balance sheets, differentiated products or services, substantial unit growth, strong commitments to research and development, and a steady stream of new products or services
• Country and sector/industry selection, as well as capitalization range decisions, are primarily the result of identifying superior securities, although benchmark allocations are monitored to ensure maintenance of an appropriately diversified portfolio

The RCM Advantage

• Proprietary Grassroots^SM Research* network with 50,000 industry contacts and approximately 300 independent reporters and field force investigators
• Experienced investment team
• Consultative client relationships

Performance**

Representative Account Characteristics^† - Supplemental Information

Beta 1.1x P/E (Next 12 Mo. EPS) 19.8x Earnings Growth (Next 3-5 yrs) 24.8% P/E (Next 12 Mo.) to Growth (Next 3-5 yrs) 0.8x Wgtd Avg Market Cap US$73.2 billion Number of Holdings 50

Top Ten Holdings Apple Inc 7.4% Google Inc 5.6% Salesforce.com Inc 5.3% Cisco Systems Inc 5.1% International Business Machines Corp 4.1% Cognizant Technology Solutions Corp Class A 3.9% Research In Motion Ltd 3.6% Hewlett-Packard Co 3.3% Microsoft Corp 3.1% QUALCOMM Inc 2.9%

Industry Composition (% of Portfolio and Benchmark)^† - Supplemental Information

Performance Composite Statistics

Period	Composite Gross Return %	Composite Net Return %	S&P GSTI Composite Index Return %	Number of Accounts	Composite Dispersion	Period-End Total Assets (US$ M)	Total Firm Assets (US$ M)
2007	29.82	28.95	16.94	14	2.0	3,318	168,131
2006	6.80	6.00	8.98	19	1.9	2,567	164,876
2005	10.66	9.77	2.02	20	1.0	2,440	147,527
2004	19.99	19.04	2.92	6	2.4	1,049	128,432
2003	71.68	70.06	54.18	5	3.4	681	123,142
2002	-39.04	-39.61	-40.27	7	1.9	290	111,780
2001	-38.52	-39.07	-28.58	8	0.9	712	141,056
2000	-15.67	-16.44	-37.84	7	NA♦	1,181	82,483
1999	180.71	178.35	88.87	2	N/A♦	363	84,715
1998	59.76	58.18	69.16	1	N/A♦	18	64,825

*Grassroots^SM Research is a division of RCM.  Research data, used by Grassroots^SM Research to generate recommendations, are received from reporters and field force investigators who work as independent contractors for broker-dealers. These broker-dealers supply research to RCM and certain of its affiliates in connection with brokerage services that is paid for by commissions generated by orders executed on behalf of RCM's clients.

 

** Past performance is no guarantee of future results. Individual performance will vary. Gross returns were calculated on a total return basis, including all dividends and interest, accrued income, realized and unrealized gains or losses, are net of all brokerage commissions and execution costs, and do not give effect to investment advisory fees which would reduce such returns. Net returns were calculated on a total return basis, including all dividends and interest, accrued income, realized and unrealized gains or losses, and are net of all brokerage commissions, execution cost, and investment advisory fees. Unless otherwise noted, index returns are presented as total returns, which reflect both price performance and income from dividend payments, if any, but do not reflect fees, brokerage commissions or other expenses of investing. The S&P GSTI Composite Index, which is not covered by the report of the independent accountants, is a modified capitalization-weighted index of selected technology and Internet-related stocks. For all periods commencing on or after September 1, 1996, the index returns are presented as total returns, reflecting both price performance and income from dividend payments. For periods prior to September 1, 1996 the index returns are presented on a price return basis. It is not possible to invest directly in an index.

 

^†   The Representative Account information is for illustrative purposes only and reflects one account within the composite.  Rounding may cause figures to vary from 100%.  Portfolio holdings and sector composition are subject to change without notice and should not be considered a recommendation of any particular securities or investment strategy. The representative account characteristics and sector composition data are supplemental to the composite returns in the GIPS compliant presentation shown above and are not covered by the report of the independent accountant.

 

♦ Standard deviation is not considered statistically meaningful when there are fewer than five accounts in the composite during the period.

 

RCM’s investment approach emphasizes high quality securities of growth companies and occasionally cyclical and semi-cyclical companies with above-average long-term growth potential.

 

The investment approach seeks to generate superior returns over a full market cycle by investing in companies which possess superior management, strong balance sheets, differentiated products or services, substantial unit growth, strong commitment to research and development, and a steady stream of new products or services.

 

RCM (the “Firm”) is a global investment advisory organization, consisting of separate affiliated firms, which operates under the brand name RCM. The affiliated firms that comprise the Firm include, among others, RCM Capital Management LLC (“RCM Capital”), an investment advisory firm registered with the Securities and Exchange Commission, which has been in operation since 1970, either directly or through its predecessors. RCM Capital presents the Global Technology strategy in the United States. RCM has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). To obtain a list and description of all of the Firm’s composites, please call 415-954-5400 or write to RCM, Four Embarcadero Center, Suite 3000, San Francisco, CA 94111. For the periods ended December 31, 1998, 1999 and 2000, the composite presentation does not comply fully with GIPS, because RCM has not been able to confirm the total firm assets for those periods.

 

Stock markets performed exceptionally well in 1998, 1999 and 2003, and RCM’s Global Technology returns benefited from that performance.

 

This composite was created in December 2000 and includes all actual fee-paying, discretionary Global Technology portfolios. Some of our composites may contain single asset segments that are carved out of multiple-asset portfolios. Multiple asset portfolio cash flows are allocated to the carve-out segments pro-rata. Portfolio managers regularly use derivative instruments in the portfolios in this composite in an attempt to enhance the portfolios' investment returns, to hedge against market and other risks in the portfolios and/or to obtain market exposure with reduced transactions costs. In particular, the portfolio management team regularly purchases and sells combinations of put and call options (including naked options) in an attempt to take advantage of stock price movements. The portfolio managers may also employ additional strategies involving call and put options, futures and forward contracts, short sales, swap agreements and other derivative instruments with respect to securities, indices and other assets. The extent and frequency of use of derivative instruments may vary from period to period depending upon market conditions. Performance results and valuations presented are in U.S. dollars. Composite performance is net of any applicable withholding taxes on dividends, interests and capital gains. The dispersion of annual returns is measured by the standard deviation across equal-weighted account returns represented within the composite for the full year. Additional information regarding policies for calculating and reporting returns and a complete list and description of all of the firm’s composites are available upon request. Our standard fee for this product is as follows: 1.00% on the first $25 million, 1.00% on the next $50 million, 1.00% on the next $100 million, 0.75% on the next $250 million. Actual fees may vary depending on, among other things, the type of client and the amounts of assets under management. Advisory fees are described in Part II of our Form ADV.

 

 

All data as of June 30, 2008, unless otherwise noted.