We are pleased to enclose your statements for the quarter ending June 30, 2001. The value of diversification in your portfolios has again proven to be very beneficial. Over the last 12 to 18 months, our asset allocation decisions have produced respectable returns and reduced the risk of market volatility, in comparison with the average market returns.

Market Outlook
* Last year at exactly this time, the Federal Reserve had tightened interest rates with six consecutive rate hikes. In contrast, we have just had our sixth consecutive rate cut, a total reduction of 275 basis points this year.
* While an easing by the Federal Reserve is positive for equities, the bond market is beginning to experience discord. This means while short-term rates decline, longer-term rates are increasing, producing a sharply steepened yield curve. There is fear that by easing monetary policy too far, we will see a risk of inflation returning. In contrast, our view is that inflation will remain modest over the next 6 to 12 months. The good news is excess inventories are disappearing and retail sales are resurging, both signs that no further rate cuts should be necessary.
* We have recently developed our Singer Xenos Consumer Confidence Model which focuses on factors such as: GDP Growth, Unit Labor Costs, Unemployment Rates, Orders Backlog and Producer Price Index, as well as other data. This information allows us to see the direction of economic indicators necessary to reflect a trend in real growth. It also addresses the growth versus value question in our equities allocation within your portfolios. Due to the data in our Confidence Model, we continue to have a strong bias towards value-oriented equities, especially in the small and mid cap value sectors. As noticed, we have made recent shifts in your portfolios to reflect this preference. Please note how well our core value holdings, such as Isabelle Small Cap Value, have performed year to date. 
* By easing monetary policy, the flood of liquidity into the money supply will benefit a struggling economy. The fact that money market funds are approximately 40% of the total dollars invested in mutual funds ($1.7 trillion) shows that a lot of investors are sitting on the sidelines waiting to get back into the market. The key point to remember is that financial markets are always forward-looking. One should not wait for all the good news to be in place before investing. By then it is too late and prices reflect the economic trends.
* Washington has passed the first meaningful tax cut ($1.34 trillion) in 15 years, which will increase growth in the market. Under separate cover, we will provide an easy-to-follow tax chart regarding the tax relief Reconciliation Act of 2001. Capital gains tax reform is also brewing in Congress, which would help stimulate the U.S. economy.

In summary, the market has rallied strongly and broadly. There are always pockets of over and under-valuations. Our strategy has always been to uncover these strengths and weaknesses and capitalize on them in your portfolios. We remain optimistic about the slow but steady upward recovery of the equities market for the remainder of the year.   

Equity Returns
Singer Xenos Update - We have recently published several articles on the pending Federal Bankruptcy legislation and will forward you a reprint shortly. It will be advisable to meet with you over the next 6 months to determine if you will be impacted by this law. Please visit our website www.singerxenos.com for updates and articles pertaining to this very important issue.

Our firm continues to grow!  Naivi Martinez is our new receptionist, with Maria Lopez being promoted to handle client servicing.

In conclusion, we understand the responsibility you have placed in us managing your money. We remain dedicated to you and appreciate your patience and trust. We expect to take full advantage of the recovery, and put this correction behind us.