The volatility in the stock markets throughout 2007 was a reflection of five

years of lax credit practices by many of our large lending institutions that

now face higher than expected defaults and delinquencies.  The uncertainty
stems from the opacity of the derivatives utilized in structured finance
transactions related to the credit markets.  For the most part, our returns in
2007 indicate successful avoidance of these problem plagued areas and our
emphasis on sectors whose fundamentals were more stable.

For the long term, we believe that the ongoing correction in the credit
markets is a healthy re-pricing and normalization of risk.  We do not,
however, fear a collapse in the market system.  The central question facing
the markets as the New Year begins, therefore, is whether the disruption in
the financial/credit markets will result in a general economic slowdown.  
Recent economic indicators suggest the probability of a recession in 2008
has risen substantially.  Moreover, certain sectors (e.g., residential
construction; residential real estate; mortgage finance) will require
additional time before recovery.   

Outside of those areas directly or indirectly affected by the availability of
credit, however, fundamentals remain quite sound.  Our long-term
investment themes remain consistent:  a) global infrastructure build out; b)
global demand for commodities, especially agriculture; c) strong
fundamentals for Energy; d) slowing economic growth in the US; e) solid
growth in the Rest of the World, particularly Asia; f) alternative sources of
energy; and g) traditional hedges for inflation and a weak US $.  From a
contrarian standpoint, we acknowledge that the Dollar, in particular, could
be the first to experience substantial recovery as central banks coordinate
injections of liquidity to re-stimulate the credit markets.

Our outlook for next year anticipates that the economy will continue to grow,
although at a much more moderate pace.  Given the balance sheet repair
and lack of confidence among the banks, recovery in the credit markets will
likely require additional policy stimulus.  We acknowledge attractive
valuations for certain Financials, but we intend to exercise patience and
selectivity in that sector.  We also believe the markets are vulnerable to an
upside surprise in inflation, and election year rhetoric will likely exacerbate
already elevated levels of market volatility.

Additionally, you will find enclosed Patten and Patten's Client Privacy
Statement.

Thank you for the opportunity to serve as your investment manager.  Best
wishes for a happy, healthy, and prosperous New Year!