Quarterly Client Update - March 2004 In the first quarter of 2004, the U.S. economy has continued its sustained recovery. We have seen substantial corporate profit growth, remarkable productivity gains, and an unanticipated significant job growth rate increase, resulting in a fifth consecutive quarter of positive returns. Guided by SingerXenos’ investment committee’s research, the SX Confidence Model, and a sense of history, we have continued our trend of investing in Growth funds, especially in Small and Mid Cap Growth. Year to date, the Small and Mid Cap Growth, International, and REIT sectors have outperformed the Large Cap Growth (S&P 500) sector of the market. As a result, your holdings have done noticeably better than the market, since virtually every equity fund in your portfolio has substantially exceeded the performance of the S&P 500, NASDAQ, and DOW. We will be increasing your Mid Cap Growth holdings as the recovery continues. Another area we are watching is the foreign market. After trailing the U.S. stock indexes for much of the last decade, foreign stock returns have outpaced domestic returns recently. We see this shift as a trend that may continue for the following reasons: - Rapid growth in China and India is sparking substantial global demand increases. - Imbalances in trade provide the impetus for a weakening dollar, which in turn boosts the potential total return for U.S. investors in foreign markets. - Foreign markets trade at price-to-cash-flow valuations much below that of the S&P 500. - Leaders in many sizable industries are headquartered in the U.K., Japan, Germany, and elsewhere. In fact, 45% of the world’s market capitalization is outside the U.S. We haven’t made a dramatic shift into foreign stocks just yet. In the past few months, we have taken profits from your Small Cap Growth funds to build a larger position in International funds. For example, in February we sold portions of Pimco Small Value and Goldman Mid Value, and purchased shares of Laudus Rosenberg International Small Growth and Alger Mid Growth. Additionally, in March we sold shares of Ivy Small Cap Growth, and repositioned those funds to the William Blair International fund. We still hold very short-term bonds as a hedge against the eventual rise of interest rates. There will be an opportunity to lock in much higher, long-term yields after interest rates rise. In addition, we continue to hold high yield bonds, which have outperformed their counterparts in this recovery. For our longer-term clients, please review the enclosed graph comparing your 3- and 5-year performance to the S&P 500. A picture is worth a thousand words, thus, this graph depicts the story of how well your portfolios weathered the extreme volatility of the past several years. Many of our clients have asked for a graph to illustrate to their friends their holdings’ positive performance without showing the actual account values. We are very pleased with the continued upward direction of your portfolios, and once again want to thank you for placing your trust in us. As always, please feel free to call with any questions or comments. Marc Singer, MBA, CFP Faith Read Xenos, CFP Jay E. Schechter, JD, CFP F. Scott Wells, CFP Neil Sosler, MBA Angela Min, CFP Albert Chu, CFA Singer Xenos Portfolio Holdings Sorted by Year to date performance All performance figures obtained from Morningstar.com