June 15, 2006

Dear Client:

As you know, equity markets have experienced large declines over the past five weeks. From May 9, 2006 through June 13, 2006 the S&P 500 declined 7%. Other equity markets experienced even larger losses:

Negative returns are a necessary component of equity investing. The recent decline is large but not extraordinary. Looking at monthly total returns* of U.S. large cap stocks we find that returns were negative in 36% of the months going back to 1990**.

Of the months that had negative returns, one out of every five months had declines larger than 5%.

The returns of foreign equities yield similar results. The returns of the EAFE (Europe, Australia and the Far East) Index were negative the same proportion of months as the S&P 500 Index, but large declines were more frequent: almost one of every three negative months resulted in losses of more than 5%.

This trend continues for small-cap and emerging markets stocks: the frequency of negative returns is about the same, but the declines are steeper.

Fortunately, assets that have large negative returns normally generate even larger positive returns.

All of this is NOT to say that losing value isn’t painful; it is for all of us. But it is important to stay focused on the long-term objective: generating returns that will outpace inflation and taxes and enable you to fund your lifetime objectives.

The recent decline does provide us with an opportunity to reassess your risk tolerance. If portfolio losses are making you anxious, we should discuss whether your current asset allocation should be more conservative.

Please keep in mind that investment returns are inherently volatile and unpredictable in the short-term. The best time to invest is when investors are most worried.

Please feel free to call or email me at any time. I am happy to talk with you about specific or general concerns, or anything that is on your mind.

Audrey Grubman, CFP^®
President

*monthly total return includes reinvested dividends
**since January 1, 1990
***monthly returns from January 31, 1990 through May 31, 2006. June 1, 2006 through June 13 2006 is treated as the final month.