PERFORMANCE ANNOUNCEMENT

As Of: July 17, 2002

CHART TELLS STORY

One Picture Can Erase Confusion

    While market reporters stretch for every conceivable reason to explain the daily action of the stock market, a simple chart of the Standard & Poor's 500 Index displays simple reality. The market has been oscillating in a downward sloping channel, with the limit of the lower side of the channel defined most notably by the sell-off after September 11^th of last year.

The downtrend is about to meet support from more than a decade ago.

During the week of June 17^th, the Index failed to hold the uptrend that had been in place for the prior nine months (since 9/11), and the market has now broken to new lows, erasing approximately five years of previous gains.

    The current downtrend will meet significant support at approximately 820 for the S&P 500 Index. Although it looks like we will continue to dive straight down, the most recent intra-day reversals make me believe we are ready for another bounce from a short term oversold condition. While there is certainly enough pessimism to push the S&P 500 down another 60 or 80 points, market action suggests that it is time to clean out the short sellers and start a sideways move characterized by some significant rallies that then disintegrate, but build higher lows and higher highs, preventing the short sellers from adding to their profits.

    If indeed a bottom will be found in the next three to six months, it will most likely be characterized by significant internal sector rotation. There are already signs that money is cautiously moving back into some of the tech and telecom stocks. The next significant jolt to the market will probably be when money moves out of the retailers, restaurants, consumer credit, homebuilding, and related stocks. While it will probably be difficult to make money in any of the major stock market indexes over the next few months, there will be significant opportunity in individual stocks as money rotates internally through the market.