Market Commentary & Outlook

by Chris Brown, Chief Investment Officer, as of December 31, 2009

The fourth quarter marked the continuation of a powerful market rally both here and abroad which began in early March and continued right through the end of the year. It was a welcome respite from the 2008 and early 2009 market declines. Government stimulus, low market valuations and increasing confidence in the markets set the stage for this powerful rally. We believe a global recovery is underway, but how strong or sustainable the recovery will be is still being debated.

We feel we are in a period of tepid growth, especially towards the latter half of 2010, when the impact of the stimulus funds will abate and interest rates could potentially start to rise. For 2010, we don’t believe we will see the equity returns of last year, but we do feel the market could potentially provide some moderate upside, especially during the first half of the year. However, with the global economy as weak as it is, we anticipate the volatility in the markets to continue as the recovery slowly works its way around the globe.

On a positive note, we believe that volatility creates opportunity. As active managers, we look forward to whatever investment opportunities may present themselves in the coming year. My colleagues and I continue to find exciting opportunities in late cyclical companies, healthcare stocks, corporate bonds, water infrastructure, renewable energy and the emerging markets.

Information in this report regarding market or economic trends or the factors influencing historical or future performance reflects the opinions of management as of the date of this report. These statements should not be relied upon for any other purpose. Past performance is no guarantee of future results, and there is no guarantee that the market forecasts discussed will be realized.

Past performance does not guarantee future results.

PAX000646 (4/10)