1st Quarter

April 15, 2004

“We plan to be more sensitive to valuations in market downturns than we have in the past – but without tampering with our basic growth-investing disciplines, of course.” These are the words of Robert Turner, Chairman and chief investment officer of Turner Investment Partners in his first quarter 2004 newsletter. The irony of this statement is that it is from the leader of one of the largest self-described “growth” shops in the mutual fund marketplace. It is this renewed sensitivity to stock valuations of both growth and value disciplines that we believe will be the dominant theme in the foreseeable future.

According to investment analyst Byron Wien, there is a mixed picture regarding the current stock market valuation. “On a price-to-dividend basis the market appears clearly expensive at more than 50 times, but it has been that way for some time. On price-to-book, price-to-cash flow, and price-to-earnings, the market does not look so expensive. The current price-to-book is about three, but it was more than five at the peak of the bubble.” He expresses later that “the current price-to-earnings ratio of 20 is a long way from 32 at the top.” In our view, this is one more reason to continue to emphasize value stocks, companies with low price-to-earnings ratios. These stocks tend to hold their value better during market downturns.

Over the past quarter, foreign stocks outperformed domestic stocks. Many analysts believe there is more value to be found overseas than the domestic equity market. Small-cap stocks also did well again in the first quarter of 2004. However, many of these small-cap names have cooled down compared to their substantial run-up in 2003. Interest rates have continued to stay low, but many analysts believe it will be very difficult for the Federal Reserve to continue to hold rates down through the end of 2004.

We have taken all of the above points into account when deciding how to allocate each of your portfolios. We continue to strive for a diversified portfolio that will meet your financial objectives. 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.

Sincerely,