ECONOMIC & BOND MARKET QUARTERLY UPDATEFourth Quarter 2007


Inside This IssueFourth Quarter 2007

> 2007 Review

In 2007, we were concerned that the economy was out of balance and vulnerable to exogenous shocks.

> Credit Crunch Deepens—Fixed Income Sector Review

The fourth quarter was reminiscent of the third quarter in the corporate bond market. Corporates underperformed duration-matched Treasuries by 262 basis points, a showing slightly worse than the third quarter, which itself had been the worst quarterly excess return performance for the corporate market in the last five years.

>2008 Outlook

The extraordinary events in the credit markets last year will likely impart lingering ramifications for the U.S. economy through at least the first half of this year.

> Dwight News

Peter Vutz joins Dwight as Portfolio Manager; Laurance Ring joins Dwight as Credit Analyst.

Investment Results as of 12/31/07 [login required]

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