January 1998

"China is going to be the biggest economic investment opportunity our planet ever sees."

George Russell
Chairman, Frank Russell Company

These words from one of America's most distinguished investors launched my two-week business trip to China recently with leaders of the forty largest pension funds and money management firms in the United States representing over $1.5 trillion in investable assets.

This fascinating journey included meetings in Beijing with Vice Premier Zhu and Qin Xiao, President of China International Trust & Investment Company, as well as site visits to manufacturing plants in Wuhan and Chongqing and the massive Three Gorges Dam hydroelectric project on the Yantgze River.

Conversations with Tung Chee Hwa, the new chief executive of Hong Kong, Yin Jieyan, Vice Governor of the People Central Bank of China, Victor Fung, Chairman of Prudential Asia, Philip Tose, Chairman of Peregrine, and numerous key leaders focused on the pivotal economic and social changes for the 1.3 billion people of China.

China has pronounced advantages and challenges forming vital future issues for global business people:

Advantages

• Large Trade Surpluses
• Foreign Reserves of $120 billion
• Creating a middle class which can save (How would you like to be able to sell mutual funds in China!)
• Huge markets

Challenges

• Restructuring 118,000 state-owned enterprises, half of which are unprofitable
• An insolvent banking system
• Developing a system of laws, rules, and human rights
• Competitiveness in computing and other critical technologies; improving productivity

Future Issues

• Social stability
• Taiwan
• Major environmental pollution and related health problems
• China as a military threat
• Etc....

In short, the transformation of China from a command to a free-market economy accompanied by peaceful coexistence with the rest of the world is perhaps the defining context for planet Earth in our remaining lifetime!

InterSolve Group completed in 1997 our ninth consecutive record year of executing the business agenda of chief executive officers by leading high-performing teams of "Just-in-Time Talent"^TM and conducting virtual enterprise.

We salute the many Best Performances in 1997 by our clients, including the following compelling results in which InterSolve Group played an important role:

• The Chief Executive Officer who has increased the market capitalization of his company from zero to $1.3 billion in less than ten years with continuing innovation in product, service, and partnering alliances;
• The Chief Executive Officer with whom InterSolve Group more than tripled the remanufacturing units of production output from 2,500 to 8,000 per month;
• The Chief Executive Officer of a major service company with whom InterSolve Group captured in excess of $50 million of profit improvement;
• The Chief Executive Officer with whom InterSolve Group developed an innovative approach to capital markets;

Other Highlights of 1997:

Addressing M.B.A. students about InterSolve Group at the invitation of Columbia University School of Business... Traveling in Argentina with Sally, my wife of 28 years, and our son Edward during his semester abroad in Buenos Aires... standing in the pouring rain seeing our daughter Beth complete the New York Marathon... supporting excellence in academicsand preserving amateur athletics at Williams College, Williamstown, Massachusetts, the top-ranked liberal arts college in the United States which has also been awarded the Sears Cup (Division III) the past two years, where "the game is for the players," yet included a trip to the Final Four in basketball and another remarkable last-second win over Amherst in the 112th "Biggest Little Football Game in America."

And so excellence comes in many forms --- with leadership, the best available talent, good execution, and speed from InterSolve Group exceptional results become routine for competing effectively in today's business world!

Edward R. McPherson, President and Chief Executive Officer InterSolve Group