| OUTLOOK |
| "Bullish on High Yield Bonds" |
| 8/2/2007 |
| We believe the Merrill Lynch High Yield Index, representative of high yield bonds, will rally to 840 or more from its close of 825.31 on 8/1/07. |
| Given the massive flight to quality into treasuries and out of high yield bonds, we believe this is a good opportunity to go against crowd and go long on high yield bonds. The perfect storm of extreme negative sentiment and favorable valuation relative to treasuries is in place and ready to uncoil. Based on our Bullish outlook on high yield bonds, we have taken long positions to profit from a rally in the sector. |
| Mark Yuan, CFA |