1st Quarter

April 15, 2003

As we come to the end of the first quarter of 2003, the bear market in equities continues unabated. Unlike the past, this quarter we find ourselves writing to you during some of the most uncertain times in the history of our country. The geopolitical uncertainties surrounding us have put the markets on the path to experiencing a fourth straight year of negative returns, which if it does materialize it would only be the second time within the last one hundred years.

As your investment advisor, we strive to keep an optimistic outlook about the future prospects of the market. Nevertheless, we are also aware that we have a fiduciary duty towards our clients to paint a realistic picture of the future, even at the expense of sounding morose. Unfortunately, whichever way you look at it, the near term outlook for the stock market does not paint a pretty picture. Added to the woes of falling equity prices, the economy too seems to have taken a turn for the worse within the last few months. However, many analysts and commentators argue that there really is nothing fundamentally wrong with the economy. Instead they point to the bruised psyche of the American public, due to the constant threat of terrorism and the uncertainties surrounding the Gulf War, as the foremost cause for the extended bear market. We are inclined to agree with that assessment.

As you know, there are two important aspects of investing that need reiterating and whose importance cannot be underestimated – namely, the need for both stocks and bonds in ones portfolio and sidestepping the temptation to time the market. Regardless of age, there is always a place for equities in an investor’s portfolio. While the optimal level of equities one should have is open to debate, the need for equities is unquestionable. Similarly, the need to be invested at all times cannot be stressed more vigorously. As we have reiterated in our previous letters, it is a proven fact that missing even a handful of the up days in the stock market can have a significant, and often catastrophic influence on the performance of your portfolio.

While we recognize that these are truly challenging times we are also aware that these are exactly the kind of times that test the character and resolve of investors. As we wade through these perilous waters, we assure you that we are trying our utmost to help get you through this bear market, if not unscathed, at least with a minimum amount of pain. We are yet hopeful that this winter of our discontent will give way to a glorious summer just around the corner.

Enclosed, you will find your Portfolio Performance Summaries, Portfolio Holdings Statement as of March 31, a quarterly Account Management Fee Statement, and a Notice Regarding Treatment of Confidential Information. Please call us should you desire the most recent copy of our Form ADV, Part II. In addition, do not forget to notify us should your investment objectives or personal financial situation change.