Having fallen sharply, then having recovered, markets have been stable since the beginning of this year, fostering a sense of contentment compared to previous negative results.

Our performance statistics demonstrate the recent narrow trading range of just over 10,000 on The Dow. For the six months ended June 30, the composite result for complete portfolios, including both stocks and fixed income securities, was 3.66 % (not annualized), compared to 2.60 % for the S&P 500 Index. The composite result of stocks, taken in isolation from total portfolios, was 5.41 %, again not annualized.

Looking back over the period ending 2002, a year and a half, the numbers are 17.01 % for total portfolios, 20.07 % for stocks in isolation, compared to 18.95 % for the S&P. These numbers are annualized.

For both periods, we are ahead of the S&P, which is unusual. Normally, we exceed the S&P in down markets, and run slightly behind in up markets. To fully understand our results and philosophies, readers should review all reports in this series, which are quarterly since 1997.

A major portion of our work is not included in the performance numbers. Portfolios invested primarily in tax exempt bonds and other fixed-income instruments are not included in the composites because the investment objectives are different. Persons seeking details about our fixed-income programs should contact us.

During the quarter, we commenced discussions toward adding a new partner.

---jwg