Client Update – September 22, 2008

In the past several weeks we have had many questions about market conditions and the safety of the money market accounts at the custodians we use. In order to update you, we have enclosed a market update and a report from the custodian for your assets detailing the protection afforded their accounts and money market funds.

To further protect the assets placed under our care, we have substantially all of our clients’ cash in U.S. Treasury money market funds which are the safest available. In contrast, Certificates of Deposit (CDs), that in the past have seemed so safe, are now causing investors much worry as they contemplate the fact that not only may their interest be at risk, their principal might also be in jeopardy if the issuing institution declares bankruptcy.

During the late 1980s and early 1990s almost 1,500 banks across the country went bankrupt. So far this year, only a few dozen banks have followed suit. We expect many more to follow, especially the small to mid-size banks. However, the banking industry will continue to play a vital part in the economic well-being of our country. Many banks are in very good condition, and the banking sector will offer some great investment opportunities going forward. This was confirmed by this morning’s news that Goldman Sachs and Morgan Stanley have applied to the government to become bank holding companies.

In summary, the custodians we use for your accounts are among the very safest in the world (safer than banks, savings & loans, and credit unions). Additionally, the money market funds we use are safer than other financial institutions, their CDs, or savings accounts. By design, we chose to place your funds only with custodians of the highest caliber in preparation for the remote possibility of the events we’ve all seen in recent weeks.

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