gvi_productassessment 2008 hempton departure

Global Value Investors' (GVI) Global Industrial Share Fund (GISF) offers a relatively unique, benchmark unaware andconcentrated (40-60 stocks) exposure to the international equities sector. Due to its value orientation and industrialsfocus the GISF is ideal for those investors seeking a high component and relative stability of dividend income withoutthe high volatility often associated with growth managers and the resources sector. Since its inception in March 2005,GVI's performance has been impressive, managing to outperform its benchmark as well as its peers with relatively lowvolatility. Zenith has a sufficient degree of confidence in GVI's ability to continue to meet its objectives over time.

The GVI business was established in November 2004 as a joint initiative between ASX listed, Treasury Group Limited(33% ownership) and Investors Mutual Limited (67% ownership). An employee option scheme with deferred vestingperiods has now been established. The scheme will eventually see 25% of the business being owned by keyinvestment staff (currently 13.3% as at April 2008) and acts as an essential retention mechanism for key staff. InZenith's opinion, the existence of the options aligns the investment team's interests with those of investors and alsoprovides a compelling incentive for staff to remain with the firm.

GVI has a small investment team, consisting of 5 investment professionals. The investment team is headed by RoyChen who is well regarded by Zenith, with over 20 years industry experience, which included portfolio managementroles at the CEF Group in Taiwan and Primasia in Hong Kong. Chen is a very knowledgeable investor with a deeplyconservative, value-orientated investment philosophy, which is ideally aligned with the investment profile of this fund.The other senior member of the team is Matthew Saddington who is equally impressive, providing strong support toChen. While we believe the GVI investment team lacks the extensive team resources depth of some of theircompetitors in international equities, we acknowledge that GVI's concentrated investment universe reduces the needfor a large team. Overall, the key members of the team are well regarded by Zenith and we consider the level of overallresourcing to be adequate.

There are 3 components to the GVI investment process: Investment Universe Screening; Fundamental Research; andPortfolio Construction. The GVI investment philosophy and process is appealing in that the manager seeks to provideinvestors with attractive long-term returns from an absolute return approach which focuses on investing in industrialcompanies with attractive dividend yields. In Zenith's experience, GVI's investment approach and process is uniqueamongst the international equities funds available to retail investors. The focus is centred on identifying attractivelyvalued industrial companies paying high dividends with strong balance sheets, conservative debt levels, consistentgrowing earnings and sound management. In addition, the fund is to be substantially hedged (80-90%) back to theAustralian Dollar which is aimed at reducing volatility of returns and ensuring that it is the manager's underlyingsecurity selection that drives the returns to investors. In Zenith's opinion it is refreshing to see an investment processthat has been specifically designed for the personal investor and invests on an absolute return basis which isconsistent with the philosophy of most personal investors.

In conclusion, GVI has exceeded its objectives since inception and there is no doubt that the investment approach andobjectives of the fund are appealing. Overall we believe the GVI Global Industrial Share Fund is an attractive offeringand as such we have assigned it a RECOMMENDED rating.

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GVI Global Industrial Share Fund 30 Jun 2008

Please refer to the disclaimer relating to the provisionof this research at the end of the document.

www.zenithpartners.com.auZENITH INVESTMENT PARTNERS PTY LTD

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Key Features Description

APIR Code TGP0004AU

Asset Class International Shares

Sub-Asset Class Global (Hedged)

Investment Style Value

Benchmark MSCI World ex AustHedged $A

Recommended InvestmentTimeframe

5 + years

Head of International Equities Roy Chen

Investment Team Size 6

Performance Analysis

The objective of the fund is to outperform the MSCI Worldex-Aust Index (hedged) over rolling 3 year periods. Since theinception of the fund in March 2005 GVI has delivered on thisobjective, demonstrating robust absolute returns andmanaging to outperform relative to its benchmark and othervalue-orientated fund managers.

Given the manager's benchmark un-aware approach, trackingerror is not targeted and is expected to be above that of themedian manager. Performance of the fund to date has beenconsistent with this expectation over the 3 year period.

Consistency Analysis

Over time, Zenith expects GVI to deliver its strongest excessreturns in periods of falling markets, in line with itsvalue-orientated investment style.

This performance characteristic is driven by the fact that valuemanagers often buy defensive, higher dividend paying stocks.These stocks tend to outperform the broader market when a"flight to quality" occurs in a falling market.

Risk / Return Analysis

Volatility of this fund must be considered at 2 levels, absolutevolatility (i.e. standard deviation) and relative volatility (i.e.tracking error). GVI's standard deviation is expected to be

below that of the index and median manager as a result of thedefensive, high dividend paying stocks that populate theportfolio. Tracking error on the other hand is expected to besignificantly higher than the median manager driven by the factthat GVI constructs its portfolio without regard for the stock,industry and country weights of the index.

Zenith is comfortable with GVI's benchmark un-awareapproach, however, it is important that investors understandthat this may lead to a performance profile that is significantlydifferent to the benchmark over short to medium-term periods.

Investment Personnel

GVI has a small investment team, consisting of 5 investmentprofessionals. While we consider a 5-member investment teamto be small for the management of an international equitiesportfolio, we acknowledge that GVI has a relatively uniqueinvestment approach that focuses on a concentratedinvestment universe. For this reason we believe resourcingwithin the GVI investment team is adequate, however, webelieve that over time additional staff will be required tomitigate key person risk and assist with coverage of stockswithin the investment universe. This fact has beenacknowledged by GVI and while they aren't actively seekingnew team members they are always open to new talent andcan foresee a need for additional recruits.

In early 2008 the GVI Executive Committee was established toassume the management role of the company. This committeeabolished the former position of Chief Executive Officerperformed by Tim Hyett since December 2005. According toGVI it was simply a formalization of the structure that wasalready in place. The committee includes Roy Chen (Managing

of 6Please refer to the disclaimer relating to the provisionof this research at the end of the document.


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Performance Statistics 3 Yrs(% p.a.)

2 Yrs(% p.a.)

1 Yr(% p.a.)

Performance - Fund 10.14 5.94 -7.99

Performance - Benchmark 7.84 3.35 -13.68

Performance - MedianManager

7.68 2.93 -14.27

Consistency Statistics 3 Yrs 2 Yrs 1 Yr

History of Monthly ExcessReturn (%)

52.78 54.17 66.67

History of Monthly ExcessReturn (Rising Mkts %)

48.00 46.67 60.00

History of Monthly ExcessReturn (Falling Mkts %)

63.64 66.67 71.43

Risk / Return Statistics 3 Yrs 2 Yrs 1 Yr

Information Ratio - Fund 0.55 0.76 1.46

Information Ratio - MedianManager

-0.52 -0.51 -0.46

Sharpe Ratio - Fund 0.36 -0.09 -1.14

Sharpe Ratio - MedianManager

0.10 -0.34 -1.50

Standard Deviation (%p.a.) - Fund

9.98 10.97 13.52

Standard Deviation (%p.a.) - Median Manager

11.51 12.18 14.30

Tracking Error (% p.a.) -Fund

4.18 3.40 3.90

Tracking Error (% p.a.) -Median Manager

2.82 3.36 3.99

Name Title Timewith

Manager

Roy Chen Head of InternationalEquities

3 Yr(s)

Matthew Saddington Portfolio Manager /Equities Analyst

3 Yr(s)

Matthew Hegarty Equities Analyst 3 Yr(s)

Daniel Fitzgerald Equities Analyst 1 Yr(s)

Scott Gilchrist Equities Analyst 5 Mth(s)

Director, Head of Investments), William Tomac (AssociateDirector - distribution and marketing) and Conor Byrne (ChiefOperating Officer). Hyett has continued to work closely withGVI offering consulting advice to the executive committee. Inaddition, William Tomac holds the role of Business Managerand is responsible for managing the business, marketing andhigh level administration tasks for GVI. Zenith believes thischange is logical and results in a superior decision making andmanagement structure.

In addition, Zenith considers the existence of the executivecommittee and the Business Manager role to be sensible,helping the investment team to focus on selecting stocks andmanaging the portfolio although there is some risk in Chen'stime being stretched through his new position on the executivecommittee.

The investment team is headed by Roy Chen who is wellregarded by Zenith, with over 20 years industry experience,which included portfolio management roles at the CEF Groupin Taiwan and Primasia in Hong Kong. Chen is a veryknowledgeable investor with a deeply conservative,value-orientated investment philosophy, which is ideallyaligned with the investment profile of this fund.

The other senior member of the team, Matthew Saddington, isalso impressive, providing strong support to Chen. Saddingtonhas over 10 years financial services industry experience andprior to joining GVI he held positions as an equities analystrole at Boston Company Asset Management and a ResearchAssociate role at Sceptre Investment Counsel Ltd.

Over the last few years there have been a number of changesto the team. There have actually been four team departuressince inception (Charles Price, Melinda White, David Faulderand John Hempton). Daniel Fitzgerald joined the investmentteam in July 2007 following the departure of portfolio managerCharles Price due to ill health. Fitzgerald is responsible for thecoverage of stocks in the Utilities, Healthcare, Materials andEnergy sectors and has a total 7 years investment experience.His most recent role was at Investors Group Internationalwhere he was a Senior Equity Analyst and responsible for thecoverage of European Materials (Chemicals, Pulp & Paper,Mining and Steel), Energy (Oil & Gas) and the Utilities sectors.In March 2008, GVI restored its investment team to 5 membersthrough the hiring of Scott Gilchrist. Gilchrist has 6 years ofinvestment experience all of which was spent at PlatinumAsset Management where he covered healthcare, consumerproducts, capital equipment and resource industries. His newrole will involve research analysis of 3 sectors, those beingIndustrials, Materials and Energy. Assisting the investmentteam is Ayush Srivastava, who joined GVI as a ResearchAssistant after previously spending 2 years in InvestorsMutual's administration area.

Importantly, no senior staff have departed GVI and under thesenior staff's guidance, the team has been able to operate in aprofessional manner, keeping the investment processconsistent despite the staff changes. The employee optionscheme, which has come into place following GVI reaching its3 year growth hurdle, should help to mitigate future staffturnover, with the options being vested over the next 3 years.Zenith would eventually like to see GVI increase their staffnumbers towards the 8 member team that has previously beenstated as a goal while maintaining staff stability.

Research responsibilities are allocated broadly along GlobalIndustry Classification Standard (GICS) sector lines, however,

each analyst can potentially draw their stock ideas from theentire investment universe. Primary responsibility for eachsector is divided across the 2 senior team members, Chen andSaddington. It is the responsibility of the team leader tocoordinate research for the sector and ensure adequatecoverage is undertaken. Chen has primary responsibility forUtilities, Telecom Services, Industrials, Materials and Energy.Saddington has primary responsibility for Consumer Staples,Healthcare and Information Technology and ConsumerDiscretionary. Matt Hegarty has responsibility for the Financialssector and along with Daniel Fitzgerald is heavily involved inidea generation and research across a number of sectors.

The frequency of GVI's international research trip schedulehas been increased since our previous review, with eachanalyst expected to undertake 2-3 international trips per year,each of 1-3 weeks duration. It also appears that GVI has beensuccessful in obtaining access to company management,which was an initial concern of Zenith's given GVI's low profileinternationally and low levels of funds under management.Zenith will continue to monitor GVI's company visitationschedule and access to company management going forward.

While we believe the GVI investment team lacks the resourcesof some of its competitors in international equities, weacknowledge that GVI's concentrated investment universereduces the need for a large team. Overall, the key membersof the team are well regarded by Zenith and we consider thelevel of overall resourcing to be adequate.

Investment ProcessThe GVI investment philosophy is based on the premise thatinvestment markets are inefficient over the short-medium term,however, over the long-term a company's share price willreflect its underlying inherent value. Accordingly, theinvestment team adopt a long-term outlook in the assessmentand fundamental valuation of a company.

GVI conducts its own company research in order to determinewhich stocks are appropriate for inclusion in the portfolios. Theaim of the process is to take long term positions in thesecompanies that the investment team identifies as high qualityand representing attractive value.

GVI also believes that dividends are an important long-termcomponent of the total return to investors. Dividends provide astable component of investment return in flat and fallingmarkets. As a result, GVI has a preference for establishedglobal industrial companies that currently pay or have thecapacity to pay attractive dividends in the future. In addition,GVI adopts an absolute return objective to its investmentapproach. While this investment approach is becoming morepopular in the management of Australian equities, Zenithbelieves GVI's adoption of this approach to the management ofinternational equities is appealing. From this perspective GVI is"benchmark unaware" and therefore does not consider acompany's weighting in the index when selecting a stock forthe portfolio.

Security SelectionThere are essentially 2 components to the GVI securityselection process:

1. Investment Universe Screening

GVI applies a number of screens in order to reduce thenumber of securities the investment team focus their research



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efforts on. Zenith views this as an essential element of theinvestment process given the small nature of GVI's investmentteam. From the global universe of around 40,000 stocks themanager removes stocks in emerging markets which excludesaround 15,000-20,000 stocks and is designed to limit thevolatility of the fund's returns. They then apply marketcapitalisation and liquidity filters removing those stocks with amarket capitalisation of < US$1 billion (which excludesapproximately 20,000 companies) before applying their initialquality filters and valuation filters. Using the quality andvaluation filters, stocks are excluded if they have: negativeearnings; interest cover < 3 times; a dividend yield < 2.5%; aprice earnings ratio of > 20 times; or a price to book ratio of > 2times (for banks).

The quality and valuation filters reduce the stock universe by afurther 3,000 stocks (approximately) leaving an investmentuniverse of approximately 600-700 stocks. However, thisnumber can fluctuate depending on market conditions and atthe time of review this list had grown to over 1000 stocks. Thislist is then classified along GICS sector lines. In order to applythese filters, GVI subscribes to FactSet and Bloombergfinancial market databases which provide both historical andconsensus company financial numbers. The ResearchAssistant is primarily responsible for running these filters.These filters are applied at least monthly with the resultantuniverse of stocks reviewed by all members of the investmentteam at a formal monthly meeting.

In previous reviews Zenith was concerned that stocks outsideof this universe were still being considered in exceptionalcircumstances. This concern appears to have now beenrectified. We believe this enhances the usefulness of thescreening process and removes an element of subjectivityupon which stocks outside of these criteria may be included. Inaddition, with a small team of 5 people, we believe the teamneeds to remain disciplined in their adherence to this processas it promotes greater focus and efficiency in the stockuniverse to be considered further.

2. Fundamental Research

The investment universe is then subjected to peer groupassessment which involves ranking the stocks within eachGICS sector based on Price/Earnings ratio. Additionalvaluation measures such as dividend yield, price/cash flow andprice/book value are also used if deemed more appropriate fora particular sector. Some sectors may also be further brokendown to the GICS sub-sector level before a meaningfulcomparison can be made. The analysts also consider anumber of key company qualities in this company peer reviewprocess including: resilient and recurring earnings; strongbalance sheet; a competitive advantage; and the ability togrow earnings and dividends over time.

This company peer review process then results in each teammember selecting the best prospective stock candidates fromeach sector. This process determines the Focus List of around150 stocks that represent value within each sector and warrantfurther research. These stocks are then subjected to stockspecific analysis and assessment which includes:

Each analyst uses a valuation method or combination ofmethods that they regard as most suitable for that particularcompany. The more commonly used valuation methodology'sinclude: Price/Earnings ratio; Price/Cashflow; Price/TangibleBook Value (excludes goodwill); Free Cash Flow Yield;Dividend Yield; Enterprise Value (EV) / Earnings BeforeInterest Taxation Depreciation and Amortisation (EBITDA); NetPresent Value (NPV); Discounted Cash Flow (DCF); and Sumof the parts analysis.

While Zenith recognises the different nature of companyearnings and business structures from industry to industry, wewould ideally like to see more consistency in the valuationmethodology used throughout GVI's process as we believe thiswould facilitate greater consistency of valuation comparisonsof companies from sector to sector. We do acknowledgehowever, that GVI has valuation methodology guidelines foreach sector, which should facilitate an element of consistency.

Once the company valuation has been derived this iscompared to the current price of the stock to determine thedegree of under or over valuation. A standard companyresearch template is then prepared on each company forpresentation and discussion with the rest of the team. Thispromotes consistency in the stock selection process.

Portfolio ConstructionIt is important to note that as GVI is an absolute returnmanager, index weightings of companies, industry sectors orcountries are not considered as part of their portfolioconstruction approach. In Zenith's view, this is a refreshingapproach to the management of an international equitiesportfolio and is consistent with GVI's whole investmentphilosophy.

GVI's portfolio construction process is driven by the securityresearch and selection process. That is, once an analyst hasidentified a company they believe represents attractive value,they present the company to the rest of the investment team ina standard company report template. This template ensuresconsistency of presentation and that all key areas are coveredwhen presenting the opportunity to the team. This templateincludes an executive summary providing key details of thecompany and includes a valuation and recommendationincluding a position size for the portfolio based on the degreeof undervaluation. This operates on a tier structure as follows:

If Chen agrees with the analyst's recommendation, the stock isthen added to the portfolio using the tiered valuation approachto determine its maximum initial weighting. It is usual that the



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● detailed divisional analysis and modelling of thecompany's divisions/businesses;

● a strengths, weaknesses, opportunities and threats(SWOT) analysis of the company. Importantly, theidentification of opportunities also focuses on identifying

particular catalysts for an upward revaluation of thecompany's share price;

● contact with the company's management where possibleor the company's investor relations representative;

● analysis of the company's peers/competitors in theindustry; and

● establishing a valuation and therefore target share pricefor the company.

● Tier 1: over 25% undervalued = 5% maximum stockweight;

● Tier 2: between 15% - 25% undervalued = 3% maximumstock weight;

● Tier 3: between 5% - 15% undervalued = 2% maximumstock weight; and

● Tier 4: less than 5% undervalued = Not bought. Existingholdings monitored with a view to reducing exposure.

stock is bought up to its maximum weight gradually rather thanall at once. However, in practice it's unlikely that a stock willever be allocated its maximum weighting. Chen andSaddington are responsible for execution of the portfolio'strades with Chen ultimately responsible for the management ofthe portfolio.

Zenith believes the valuation tier structure of GVI's portfolioconstruction approach is sound and adds a necessarydiscipline to the determination of stock weightings within theportfolio. In addition, the process ensures that the mostattractive opportunities as identified by the analyst andendorsed by the investment team occupy the largestweightings within the portfolio.

As the security valuation process involves determining avaluation for each company in the portfolio, the portfolio selldiscipline is also driven by the tiered portfolio constructionapproach. That is, as the stock price comes within 5% of thecalculated price target, the analyst will review the valuation todecide if there are any reasons why the price target should beadjusted. If not, the stock weighting within the portfolio will bereduced as it exceeds its calculated fair value and removedfrom the portfolio if this overvaluation remains. Other reasonsfor a stock to be sold from the portfolio include: stock price fallssignificantly; fundamental changes to the company's businessmodel or competitive landscape; or a portfolio stock isexcluded from the GVI investment universe screen.

The portfolio is concentrated (for an international equity fund)consisting of 40-60 stocks with a bias towards 60 stocks.However, in the future the number of stocks is likely toincrease to 60-70 stocks. Portfolio turnover is expected to below averaging around 30.0% p.a. which is consistent with themanager's expected average holding period of around 3 yearsfor companies in the portfolio.

The fund is substantially hedged (target 90% hedged) backinto Australian dollars (AUD). This is monitored on a daily basisbut adjusted on a twice weekly basis. The reason for this isthat the manager wants to ensure that the returns provided toinvestors are as a direct result of their stock selection skill andare not affected by movements in the AUD against othercurrencies.

Overall, Zenith believes GVI has designed a portfolioconstruction approach that is consistent with the objectives ofthe fund. The tiered stock weighting size based on thecalculated target price versus current trading price ofcompanies provides an excellent discipline for managing thesecurity weights within the portfolio and determining whenstocks should be sold.

Risk Management

Within the GVI investment process, risk management ishandled at a number of levels. Firstly, the management of riskfrom a stock specific perspective is a function of the manager'ssecurity selection screening and research and the portfolioweighting restrictions for each stock. That is, GVI's stockscreening process aims to eliminate companies that do nothave strong balance sheets, consistent, recurring earnings,conservative debt levels and attractive dividends. Once thesecompanies have been screened out it is only those companiesthat are assessed as meeting these criteria and beingundervalued that are included in the portfolio. While thisprocess does not eliminate stock specific risk, it is a relativelyconservative investment approach that avoids investment inspeculative companies with little or no track record.

At the portfolio level, the number of stocks is maintainedbetween 40-60. However, this is not a hard limit and actuallymore likely to be closer to 70. The maximum exposure to anyone company is primarily determined by the tiered valuationapproach and then by the stock drifts limits. The stock driftlimits permit the portfolio's maximum weighting to any onestock to drift from a maximum of 5% on purchase to 7.5%through price appreciation. This is a relatively high absoluteweighting to a single stock but is necessary given themanager's concentrated portfolio.

While GVI's portfolio construction approach has no regard forthe MSCI Index weightings, in an effort to ensure the portfoliois properly diversified at all times the manager has establishedsector (industry) and country weight guidelines. Exposure to a



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Portfolio Constraints Description

Tracking error (% p.a.) No limit, is an ouputof the investmentprocess

Weight - Country Rel. Index (%) Country weight isrestricted to 30%plus drift of 50% ofthis (i.e. 15%) givingmaximum of 45%

Weight - GICS Rel. Index (%) Sector weight isrestricted to 25%plus drift of 50% (i.e.12.5%) givingmaximum of 37.5%.

Weight - Security Rel. Index (%) Maximum weight to asingle security is5.0% on purchaseand 7.5% allowingfor priceappreciation.

Portfolio Turnover (% p.a.) max: 30% p.a.This is the expectedlevel of turnover andwill vary marginallyover time.

Cash (%) 0% to 20%

Hedging AUD (%) max: 100%

Market capitalisation ($) US$1 Billion

Security Numbers 40 to 60

single sector is restricted to 25% plus 12.5% drift meaning theportfolio can be up to 37.5% invested in any one sector.Country exposure is limited to 30% plus 15% drift which couldresult in 45% of the portfolio being invested in any one country.As a point of interest, this is still well below the MSCI Index'scurrent weighting to the USA, which is in excess of 50%.

The cash weighting of the fund is restricted to a maximum of20% which is higher than the majority of international equitiesmanagers Zenith has reviewed which averages 10%. Ingeneral Zenith prefers managers to be fully invested as thisassists in providing greater predictability in overall portfolioasset allocation when combining funds within a portfolio. WhileGVI states that the potential cash allocation should be higherin market conditions where no value can be found, it is hard toenvisage this occurring simultaneously in all of the globalequities markets and sectors GVI invests in. As a result, wewould prefer this maximum cash weighting to be reduced to10%.

The fund's risk management constraints are materially differentto the majority of international equity funds currently availableto investors, however this reflects the non benchmark awareapproach used by GVI. In summary, the risk managementconstraints in place help to ensure that the portfolio will be welldiversified at all times and in Zenith's opinion are appropriate.

Risks of the FundAs is the case with all global equities based products, thebiggest risk to this fund is a sustained downturn across globalequities markets, which could lead to negative performance.This risk can be significantly reduced by investors adopting amedium to long-term (5+ years) investment time frame wheninvesting in this fund.

Due to the industrials focus of the fund it's also important tonote that any sustained outperformance of the resourcessector may result in the fund's relative underperformance.

Tracking error risk is another risk relevant to this fund, as GVIis expected to have a tracking error significantly above that ofthe median manager. This high tracking error is driven byGVI's absolute return investment approach, which is likely toprovide very different returns to that of its performancebenchmark (the MSCI World Index $A - Hedged) and itscompetitors. In Zenith's opinion, this is not necessarily a badthing as the fund may well outperform the benchmark andcompetitors over time but investors need to be aware that itmay also underperform from time to time. The structure of thefund's risk management constraints are likely to result in anunderweight bias in US stocks which may be a largecontributor to the relative performance of the fund.

The other major risk of investing in the fund at this early stageis that the investment team responsible for managing the fundis still new and therefore while we believe the makeup of theteam is solid, they are still unproven as an internationalequities team. Furthermore, Chen's involvement in theexecutive committee means he longer has a sole focus oninvestment decisions.

We believe the risks of investing in the fund are partlymitigated by the nature of the companies that the fund willinvest in. That is, higher dividend paying companies tend toprovide strong defensive qualities in periods of marketcorrection with the dividend providing a "buffer" which acts tosupport the stock price to a larger extent than non dividendpaying companies.

Applications of the Fund

This fund represents a refreshing new entrant to theinternational equities sector. Zenith is strongly attracted to thestructure and objectives of the fund from an investor'sperspective. The absolute return approach coupled with afocus on strong dividend paying companies with strongbalance sheets, conservative debt levels and soundmanagement and business models is logical and appealing.As a result, the fund is versatile in terms of its application aseither a "satellite" holding around some more establishedinternational equities funds or forming the core component dueto the funds higher dividend focus and conservative approach.

Based on the investment process of the manager, we believethe fund will provide higher levels of income than mostinternational equities funds and will perform best in flat tomoderately rising markets. It should also provide soliddefensive qualities in falling market conditions and is likely tounderperform in over exuberant "bull" market conditions wherecompany valuations become excessive. Due to these qualitiesideally the fund should be blended with a resource focused orgrowth style fund.

Author: Steven TangInvestment AnalystEmail: [email protected]: (03)9642 3320Fax: (03)9642 3319

DISCLAIMER: This report is prepared exclusively for clients of ZenithInvestment Partners (Zenith). The report contains recommendationsand advice of a general nature and does not have regard to theparticular circumstances or needs of any specific person who mayread it. Each client should assess either personally or with theassistance of a licensed financial adviser whether the Zenithrecommendation or advice is appropriate to their situation beforemaking an investment decision. The information contained in thereport is believed to be reliable, but its completeness and accuracy isnot guaranteed. Opinions expressed may change without notice.Zenith accepts no liability, whether direct or indirect arising from theuse of information contained in this report. No part of this document isto be construed as a solicitation to buy or sell any investment. Theperformance of the investment in this report is not a representation asto future performance or likely return. The material contained in thisreport is subject to copyright and may not be reproduced without theconsent of the copyright owner. Zenith usually receives a fee forassessing the fund manager and product(s) described in thisdocument against accepted criteria considered comprehensive andobjective.



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3 years Excess Correlation Table

Fund Name ExcessCorrelation

Barclays Hedged International Share Fund -0.24

Credit Suisse Fully Hedged International ShareFund

0.02

Goldman Sachs JBWere Hedged InternationalWS Fund

0.00

INVESCO Wholesale Global Matrix Fund -Hedged

0.09

MFS Fully Hedged Global Equity Trust 0.42

gvi_productassessment 2008 hempton departure

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