U.S. Small Cap Equity

Why We're Different

• We've built a large, proprietary research database which we use to analyze fundamental information on 2,300 U.S. small capitalization stocks.
  
  
• Our analysis excels at finding high growth stocks with earnings acceleration and positive change in Wall Street analysts' earnings expectations, which are currently trading below their fair market values.
  
  
• We select the 110 - 130 most attractive stocks predominantly between $75 million and $1 billion in market capitalization.
  
  
• The portfolio remains fully invested and well-diversified, without any large stock or sector concentrations.
  
  
• We have rigorous sell disciplines and innovative trade execution strategies.

Portfolio Characteristics (As of 6/30/2008)*

GlobeFlex U.S. Small Cap Equity    Russell      2000®   Number of stocks            132      1,982   Market Capitalization          $1.0 B    $0.9 B   Superior Growth            Long-term Growth Rate            43%      12%        Short-term Growth Rate            20%      10%   % of Companies with Positive Earnings Surprise            70%      58%   Reasonable Valuation            Current P/E Ratio            13x      14x

Best Performing Sectors for the Second Quarter
Energy, Materials and Industrials.

Status
This product is currently open to new clients, with a $10 million account size.

*All characteristics are medians, except for market cap which is a dollar-weighted median, as of June 30, 2008.  The long-term growth rate is a five-year historical measure of company earnings; the short-term growth rate is current year consensus company earnings; the P/E ratio is share price as of 6/30 divided by earnings based on current year consensus company earnings forecast; positive earnings surprise is reported earnings above analysts' earnings estimates for the most recent quarterly reporting period.