Quarterly Client Update - September 2000 We are pleased to enclose your quarterly statements for the quarter ending September 30, 2000.  As always, September is a difficult month for the market and it was true to form this year.  The main reason is that earnings announcements are released in October. Companies such as Kodak, Apple Computer and Intel announced they will not meet their targets for profits and found their shares falling as much as 50% in one day. What does this mean?  It suggests Wall Street is obsessed with corporate earnings for stocks, which are priced at extremely high multiples. We are in a slowing U.S. economy and investors expectations of 20% annual corporate profits must be revised to more realistic levels.  We see a significant deceleration in future corporate earnings. Market Outlook How do these situations affect your managed portfolio? Fortunately, we have been out of the Large Cap S&P 500 sector type stocks for most of this year. Less than 5% of our equity assets are invested in this sector.  We have always felt companies with strong economic fundamentals that reinvest in their own business make the most sense. In August, the market rewarded sound investments and punished those selections in September with no “real earnings” capacity.  This was very tough on the “uneducated investor” who was simply chasing returns on overpriced stocks.  * Small to Mid-Cap stocks both in the value and growth sector have long been a core holding in our portfolios. The reason for this is that there are so many under-followed companies that haven’t been discovered. Here is where careful, diligent research can really pay off. Recently, a study showed almost two-thirds of Small Cap Value money managers beat their index over the previous three-year period.  This is quite impressive.  It doesn’t take a lot of money inflow to drive Small-Cap prices.  We made a decision in early February 2000, to increase this allocation.  It was a good choice and going forward, we think even better because, as you know, money follows performance. Remember, the Small Cap universe of stocks, is defined as under 1.5 billion in market cap, incorporating almost 90% of the investable names, but less than 10% of the total market cap. (Source:  The Royce Funds). * International outlook is very strong, especially in Europe. We believe that the volatility and fall in the Euro currency of over 15% has created significant opportunity. Many experts at the Schwab Conference this month seemed to support our research. They have made money on stocks purchased, but since the investments are not currency-hedged, they are showing a loss.  The U.S. and others have recently purchased significant amounts of Euro currency in an attempt to bring support levels higher.  We remain very bullish on Europe fundamentally. However, we did cut back our exposure earlier this year due to our tremendous 80%+ returns in 1999.  Our feeling was all good things must return to reasonable levels at some point. * Economic Outlook - with the U.S. economy showing signs of coming into better balance, the outlook for U.S. financial assets has improved. Mr. Greenspan and the Federal Reserve Board will meet again on Tuesday, October 3rd.  Some experts feel the “soft landing” has not been quite as easy as expected. There are far-reaching results of interest rate hikes that are felt much later. We would expect no further hikes this year but certainly not until the 4th quarter if necessary. What is the concern remaining?  We still have a lot of inflationary pressures, due to very tight labor markets.  Business spending on equipment - mainly labor saving technology - is still very strong at a rate of 20% annually. The U.S. also still has a wide external trade imbalance. This gap should close as our trading partners economics become stronger. Oil and natural gas prices also play a key role in many areas of the economy. But on an overall present value basis oil is relatively unchanged in price over the last decade. The government has approved the use of some of our reserves in the short term. We will have to see how this plays out in the future.  Lastly, no matter which candidate wins the Presidential elections, there will be tax cuts and more incentives for savings.This benefits the market overall. Singer Xenos Update Recently we attended the Annual Investment Conference held by Charles Schwab in Denver. We had the opportunity to see many of our money managers as well as additional noteworthy guest speakers including:             Senator John McCain of Arizona             Guy Kawasaki -CEO of Garage.com/Forbes Magazine             Robert Reich - Former Secretary of Labor             Peter Schwartz - Global Business Network Economist             “Magic” Johnson - on reinventing yourself We will be implementing a lot of innovative concepts from this meeting in the coming year. OF NOTE:  Barrons and Value Line recently published their list of top 10 Mutual Fund Managers. In the top ten were Artisan Mid Cap, Thornburg Value, and Artisan International, three of our core positions. Please mark your calendars for our Client Appreciation Gala Dinner, Thursday, November 2nd 6:30 p.m. Our special guest will be Bill Fries, manager of Thornburg Value Fund.  Please look for your personal invitation in the mail.