The Art and Science of Multi Manager Shamindra

The Art and Science of Multi Manager Shamindra Perera CFA, Managing Director, Russell Investments 27 November 2007

Manager selection can seriously harm your wealth Dispersion of manager returns – S&P Offshore Universes – 1 year to 30/9/07 40 Manager excess return v index 30 26. 1 20 10 10. 6 6. 1 11. 3 9. 0 14. 1 0 -10. 1 -9. 5 -8. 3 -10. 4 -20 -22. 7 -30 US Eq ($) Pan Eur Eq (€) Jap Eq (¥) -21. 7 Pac Basin Eq ($) Emerging ($) World Equity ($) Source: Bank of New York – Mellon Corporation and Morningstar, Offshore & International universe, showing 5 – 95 percentiles. Past performance is not necessarily a guide to future performance. All figures are in base currency. Benchmark relative performance figures quoted are net of institutional fees, on an offer to offer basis, assuming dividends reinvested. Please refer to disclaimer at end of presentation. Benchmarks: Russell 1000 net 30%, MSCI Europe Index, TOPIX DIV INCL, MSCI AC Asia Pac ex Japan, MSCI Emerging Markets, MSCI World.

Russell Multi Manager: Winning by not loosing US Equity manager return dispersion – 1 year to 30/9/07 § Aim of manager research is to avoid the managers at the bottom 15. 0 Manager excess return v index 12. 0 10. 6 9. 0 7. 2 6. 0 Russell US Equity Fund: +3. 7% 3. 0 0. 0 -1. 3 -3. 0 -6. 0 -9. 0 -12. 0 § Unfortunately this is easier said than done! -10. 1 -15. 0 Manager Universe § Aim of multi manager portfolios is to harness returns while reducing risk (avoid the extremes) Managers in Russell US Equity Fund Source: Bank of New York – Mellon Corporation, Russell, and Morningstar, Offshore & International universe, showing 5 – 95 percentiles. Past performance is not necessarily a guide to future performance. All figures are in base currency. Benchmark relative performance figures quoted are net of institutional fees, on an offer to offer basis, assuming dividends reinvested. Please refer to disclaimer at end of presentation. Benchmark: Russell 1000 net 30.

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Our Investment Process 1 Manager Research Find best-in-class mangers 2 Portfolio Construction Maximise alpha, minimise risk 3 Implementation Save every basis point § § On-site, forward-looking research Combination of qualitative and quantitative analysis Over 2, 500 meetings per year 100+ Analysts in six locations across the globe § § Combining the best managers that have different processes Strong sell disciplines Continuous enhancements to manager line-up 90+ Portfolio Managers/Analysts § § Equitisation, commission recapture, securities lending World-class transition-management team Daily monitoring of manager positions State-of-the-art analytical systems

We combine managers insightfully Russell Japan Equity Fund 6 Source: Russell Investments | Data correct as at 30 June 2007

We manage the managers Russell Japan Equity Fund Invest Asia 15 15 Alliance 15 15 T&D 10 Barclays 12 20 22. 5 25 Martin Currie 27. 5 Scudder 22. 5 SGAM 33. 3 27. 5 22. 5 25 25 30 33. 3 37. 5 27. 5 JP Morgan 30 33. 3 35 27. 5 Yamaichi 40 20 23 27. 5 Jardine Fleming 12 22. 5 17 17 33. 3 1995 1996 1997 1998 Old Manager's weight (%) Current Manager's Weight (%) Source: Russell Investments | Data correct as at 30 June 2007 1999 2000 21 21 22. 5 2001 2002 2003 2004 2005 2006 2007 Current

Russell Investments Limited Disclaimer This material does not constitute an offer or invitation: to anyone in any jurisdiction to invest in any Russell product or use any Russell services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so; or to anyone to whom it is unlawful to make such offer or invitation, and has not been prepared in connection with any such offer or invitation. This material is not intended for distribution to retail clients. Unless otherwise specified, Russell is the source of all data. Unless otherwise specified, all information contained in this material is current at the time of issue and to the best of our knowledge all information presented is accurate, however this cannot be guaranteed. Any opinions expressed are those of Russell Investments Limited and not a statement of fact and they do not constitute investment advice and are subject to change. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. There is no guarantee that any target or projected figures will be met and this information is for illustrative purposes only. Any simulated figures and estimated figures are for illustrative purposes only. Any past performance figures are not necessarily a guide to future performance. Any reference to returns linked to currencies may increase or decrease as a result of currency fluctuations. Any references to tax treatments depend on the circumstances of the individual client and may be subject to change in the future. Copyright © 2007 Russell Investments Limited Issued by Russell Investments Limited. Company No. 02086230. Registered in England Wales with registered office at: Rex House, 10 Regent Street, London SW 1 Y 4 PE. Telephone 020 7024 6000. Authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E 14 5 HS. 8

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