4^th Quarter 2003 Client Letter

December 31, 2003

Here is your year-end investment report. The investment results are located on page one. The numbers reflect the reemergence of growth in the U.S. and global economy.

It is a broad based recovery supported by low interest rates and a strong liquid international banking system. Corporate profits are expected to increase 15% or more this year as the world’s economies continue to expand.

It is not problem free. Issues like Iraq, the budget deficit, and a declining dollar in the international currency market are ever present. After reviewing these and other concerns the important conclusion we draw is that none of these items either singularly or in combination should derail the global recovery that is in place and gaining momentum. We will continue to monitor these events and position your portfolio to take advantage of investment opportunities.

We expect the positive investment environment to continue into 2004 and beyond and we have your portfolio fully invested. Only one company was added in the fourth quarter, Hibbett Sporting Goods Inc. It is a specialty retailer with a small store format designed for smaller communities. It is a unique and successful concept with an excellent growth record and prospects.

Interest rates experienced a transition in 2003. The 10-year U.S. Treasury Note, our proxy for the general direction of interest rates, began the year at 3.81% and declined much of the first half of the year, hitting a low point of 3.07% on June 13^th 2003. This decline in rates spurred an already robust housing sector. With the economy and equity markets advancing sharply, interest rates reversed course at midyear. The 10- year U.S. Treasury Note finished 2003 at 4.25%.

In 2004 we will likely see a continuation of gradually rising interest rates.

Investors are always confronted with conflicting opinions and positive and negative observations to support each view. The challenge is to maintain perspective and to identify and then stay focused on the primary trends. Election year rhetoric does not make the process any easier. Our focus is on a growing international economy generating accelerating corporate profits. That gives us considerable confidence as we move forward into 2004.

As always, we invite your questions and comments, and look forward to talking with you.