May 14, 2002

Dear Investor:

This letter will give you an idea of our current economic and investment thoughts.

Where Do We Stand Now?

We are proud that we have maintained our diligent approach in our job as investment managers. We are thankful we maintained our contrarian visions during times of an unprecedented investment bubble. We used diligent research to draw a conclusion of severe overvaluation. We were critical of accounting policies and valuations of many companies. We were critical and wary of Wall Street analysis that didn’t seem to ever be able to discuss complex and unusual financial situations. We were repeatedly documented in discussing the use of aggressive accounting techniques by many companies before they ultimately crashed. Several of these companies included Lucent (pre 2001), CIENA, Cisco, Tyco and Global Crossing.

We continue to be suspect of certain accounting presentations. We have been and continue to be critical and analytical with the aggressive use of accounting as it relates to the following:

a. Revenue recognition principles.

b. The lack of understanding in valuations and looking at company fundamentals, in regard to stock option compensation based expenses not being reported on the income statement.

c. The statement of cash flows being distorted by various stock option compensation expense tax benefits.

d. Aggressive usage of pension assumptions, which can give a boost to earnings per share.

e. Aggressive balance sheets via the use of intangible assets, inventories and accounts receivable.

f. The lack of understanding on how options, share repurchases and issuance of shares does materially affect the valuation of a company.

Where Do We Go From Here?

1. We continue to maintain balanced portfolios. We continue to emphasize credit quality in our fixed income portfolios. We continue to blend our fixed income strategies with various hedges and diversification. We attempt to diversify by buying global bonds as a complement to our U.S. Holdings. We continue to profit via our weak dollar hedge. We continue to carry precious metals in our portfolios.

2. We believe the risk of interest rate hikes in the future are great. We don’t like to time the market, hence we ask that our clients understand that quality fixed income portfolio performance will decrease from the short to midterm if interest rates do rise. We have short to midterm laddered portfolios and we believe that over the long term we can compensate for most short to midterm declines in fixed income values.

3. We most certainly believe that the economy is in a terribly difficult state. We think that much of the difficulty is merely a hangover of the liquidity bubble we were fed from the late 1990s to about a year ago. We see many technology leaders’ revenues being down in excess of 70% from their peak levels.

4. We would not be surprised to see the Dow Jones Industrials experience similar declines that the NASDAQ has experienced over the last two years.

The key to our investing has always been to search for values that are not always apparent. Generally, these values will be bought by our firm, when no one wants them and vise versa, being sold by our firm, when the whole world wants to invest in them.

We expect that the massive buying opportunity will occur after typical investors finally throw up their hands in surrender. Most of our clients are already invested for this type of scenario. We are holding large fixed income positions, which theoretically can be converted to cash for us to purchase these potential bargains. The scenario of the masses selling stock at any price is called capitulation. I have always looked forward to the days of capitulation. Hopefully, we will be the ones buying up all the shares that are being dumped by the masses.

We will wind down this letter with various thoughts and a few previous discussions we have recently had with our clients:

1. Here is an excerpt from a client discussion from January 2002:

Client asked me if I thought we were in a great buying opportunity. I mentioned that I still sense that the investment climate is in severe overvalued territory. I mentioned that in my view, the time to buy stocks will be when the masses are telling us not to touch stocks. I mentioned that I felt that companies like IBM (122.20) and Microsoft (MSFT) (69.58) were probably still way overvalued. I mentioned that I do not follow MSFT closely, but I am guessing that the mass is investing in them because they are a well-known defensive type name. Client mentioned that she was hoping I was more bullish. I indicated that one day we hope to have a much greater equity allocation, but not until I see valuations at more appropriate levels. We discussed Lucent (7.01). I mentioned that I most certainly felt that Lucent could be a 3.00 stock, but that it is a core holding in all of our portfolios. I mentioned that my fear would be in not owning Lucent.

2. Excerpts from an e-mail on March 10, 2002.

“I was researching several areas for investment based on your good idea. I looked at water utilities, beverage companies and alcoholic beverage companies. Although it is a sector we would like to invest in, I just do not see paying the current prices to invest in these companies. They do not seem to have run up in this water scare, it’s just that I think the market is still pricey. Perhaps the reason for their recent strength is that people have been buying these companies for defensive investment posturing. Companies that sell necessities (food, water, alcohol and tobacco) generally do well in times of recession. I think this time it is a bit different since ultimate value and bargains don’t seem to exist as I research these industries. I even looked at the Supermarket industry, where we have had our eye on one company called AHOLD (one of the worlds largest supermarkets and 5th largest in USA). Anyway, that is something I have been watching for several years now. I haven’t bought it yet, but we are getting close to making a decision on it. Our concern with that company has been the tremendous amount of debt they have incurred in an acquisition frenzy over the last 3 years.”

“We still remain quite defensive in our investment posturing, as I am concerned with the economy, the levels of debt, the use of derivatives by our major corporations, the Enron situations, etc. Historically, the time to buy has been when these types of economic events are occurring. Yet, I still think the market has to flush out the weak hands. The NASDAQ and the S&P 500 have totally deteriorated these last 2 years, whereas, the NYSE has stayed relatively unharmed. Even if my analysis is incorrect, we still stay protected via our current positions. We are constantly researching to try to find new investment ideas. It’s more frustrating than ever for me, as I look for possible investments, I see a lot of potential overvaluation remaining. I don’t want to deploy clients’ money just for the sake of deploying, so I think that patience is the key right now.

I have to say that over the years, your common sense views have been very thought provoking, informative and intuitive. If you have any comments or ideas, they would be very much appreciated.”

Thank you for reading this long letter. Please call if you would like a copy of our model portfolio, or if you would like to discuss your portfolio with us. If you are not one of our investment management clients, feel free to contact us for a complimentary review of your current portfolio.

Lastly, we greatly value the continued and growing support and confidence our clients have placed in our investment management practice.

Very truly yours,

REDFIELD, BLONSKY & CO., LLC

Disclaimer

Information herein is believed to be reliable, but its accuracy and completeness cannot be guaranteed. Opinions, estimates, and projections constitute our judgment and are subject to change without notice. This publication is provided to you for information purposes only and is not intended as an offer or solicitation. Redfield, Blonsky & Co. LLC and Ronald R Redfield, CPA, PFS, may hold a position or act as an advisor on any investments mentioned in a report or discussion.