2nd Quarter

July 10, 2002

Over the past six months we have seen both optimism and pessimism in the market. We would like to interject with a new belief—patience. If we allow ourselves to be overrun with fear and impatience, we will lose out on opportunity and opportunity is what has made our country great.

Take for instance a study by the Hartford Financial Services Group. According to the study, you would have averaged a 13.9 percent annual return if you had been invested all year, every year in an S&P 500 portfolio between Jan. 1, 1970 and Dec. 31, 2000. Whereas if you had missed the best 10 days of the market during that period, your average return would drop to 12 percent. But if you missed the best 60 days out of that 31 year period, you would have earned less than half the return, or only 6.3 percent a year.

Furthermore, in order to keep up with inflation and maximize returns, it is important that investors have some equities. For example, note that on the chart shown below a 100 percent bond portfolio actually contains the same amount of risk as a 50 percent stock and 50 percent bond portfolio. In fact, during the period 1970-2001, the 50/50 portfolio beat the 100 percent bond portfolio by more than two percentage points per year. However, the proper allocation of stocks to bonds depends on each client’s circumstances. Recent economic data suggest that the economy has begun to recover from the recession of 2001

Unfortunately, this recovery has not been reflected in the stock market for which corporate malfeasance has to take the lion’s share of the blame. Nevertheless, when the dust settles on all of the corporate shenanigans and investor confidence in corporate America starts to rebound, you will be well positioned to take advantage of this opportunity.

Enclosed you will find your Portfolio Performance Summaries, Portfolio Holdings Statement and a quarterly Account Management Fee Statement. If you desire Morningstar reports or the most recent copy of our Form ADV, Part II, please call us. Also, if your investment objective or personal financial situation has changed, please notify us so we can re-evaluate your portfolio.

Sincerely yours