June 16, 2003

The markets have reacted favorably to the part of the Bush economic program that has been implemented. We believe that the long-term outlook for the U.S. economy, in terms of real GDP growth and stock market performance, is a bullish one. However, the path to the long run outlook and the speed of adjustment is being regulated by congress. Insofar as the Bush program is being "phased-in", uncertainty will increase and the expansion will be slower and smaller than it would otherwise be. The higher uncertainty and regulation will tilt the investment choices to the smaller value-oriented issues. Once the uncertainty is reduced/eliminated, the larger capitalization stocks and cash flow intensive stocks should do the best.

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