We expect the bull market, now over four years in duration, to continue. We
believe the performance of the equity markets will narrow with less support
coming from private equity initiatives and more from greater emphasis on
cash flow growth.  We anticipate continued interest rate increases from
foreign central banks while the Federal Reserve remains on hold.    This will
likely cause the Dollar to experience continued weakness against the Euro
and the Pound.  The relationship between the Dollar and the Yen is more
problematic with extremely low interest rates in Japan and technical
pressures that result from the "Yen carry trade."  We would view pronounced
short-term strength in the Yen versus other currencies as a negative for the
financial markets.

The excess liquidity that has characterized the global economy for the past
several years is being absorbed, in part by strong global economic growth
and, in part, by tighter lending standards.  One outgrowth of this excess
liquidity has been reckless lending in the "sub-prime" mortgage market in
the U.S.  Fall out from this has caused fixed income investors to demand
stricter protective covenants in new financings.  This, in turn, has reduced
liquidity available for private equity initiatives as well as for other high risk
lending.

Currently, the U.S. inflation outlook is mixed, and the financial markets are
finding Federal Reserve Chairman Ben Bernanke much more difficult to read
than his predecessor, Alan Greenspan.  The financial markets crave a rate
cut, and Mr. Bernanke has and will continue to take a longer-term view on
his policy initiatives.  No U.S. rate cut is in near-term prospect.

Geo-political developments over the balance of 2007 could provide a market
positive as voices of moderation are gaining sway in the Administration
where the Secretaries of State, Defense, and Treasury and the White House
Chief of Staff are directing initiatives as President Bush becomes increasing
concerned about his legacy.  Further, the transition from Tony Blair to
Gordon Brown in Great Britain is another move of moderation while
President Nicolas Sarkozy of France provides stronger and more market
oriented leadership.

In summary, the financial markets are becoming much more global.  For
equity investing, we will place ongoing emphasis on high investment quality
with a focus in the areas of energy, infrastructure, and climate change.  In
fixed income investing, yields are insufficiently high at present to cause us to

aggressively invest longer term.  This view will change if ten year Treasury
yields approach 6%.

We appreciate the opportunity to provide investment management guidance
to you.