4th Quarter 2002 Newsletter
Many of us will not be sorry to say goodbye to 2002.  Equity markets were pummeled throughout the first three-quarters of the year, as
investor confidence was eroded by corporate scandals, heightening international tensions and tepid economic results.  Happily, the
fourth quarter brought welcome relief to downtrodden equity markets as major indices rallied off October lows, with the S&P 500 Index
surging 8.4% and the Dow Jones Industrial Average rising 9.8% in the Fourth Quarter of 2002. Value generally out-performed growth,
with tech and telecomm stocks leading the market’s recovery. Amid the equity market rally, fixed income portfolios posted modest
positive returns for the quarter.

Despite the quarter’s recovery, all major equity indices finished the year in the red, with the S&P 500 Index off -22.1% and the DJIA down
-16.8% for the year 2002 – marking the first time in more than 60 years equity markets have lost value in three consecutive years. In
contrast to the preceding year, equity markets declined across all major sectors and styles in 2002 – with the best performing market
index, the
Russell Mid Cap Value Index, down -9.6% for the year1.

Conversely, Fixed Income markets profited from the continued flight to quality and bested equity markets for the third year in a row, with
the Lehman Aggregate Bond Index up 10.3% for the year.



















* See footnote 2                                                                                                                   Source: Security APL


Looking forward, 2003 is ripe with opportunity, though not without potential risks. With global equity markets fairly valued, interest rates
at 40 year lows and a possible tax relief package on the horizon, moderate positive equity returns are predicted by many market
analysts for 2003.
3  While there are many potential risks to consider, including economic uncertainty and possible military action,
investing is often most attractive and most profitable when the news is bad and fear is high. Although common sense tells us it is more
profitable to buy when the market is cheap rather than expensive, this kind of contrarian sentiment is uncomfortable for many investors.
Our instincts are often wrong, particularly at market inflection points. It is precisely for this reason that we must adhere to a disciplined,
long-term investment strategy to prevent ourselves from making emotional, instinctual reactions that are based upon our recent
experiences rather than rational expectations.

Investing in this increasingly uncertain world is a difficult business, and we are comforted by the line up of world class investment
partners that shepherd our investments through difficult times, ever seeking opportunity to both protect and create wealth for our clients.

Best wishes for health and happiness in the new year.



Regards,



Robert Valentine



Endnotes:

1Breen Financial Corporation Quarterly Commentary, January 2003.

2The Lehman Brothers Aggregate Index is comprised of a variety of taxable bonds, and is used as a measure, or benchmark, of the US
bond market. The Solomon Smith Barney Non-US Gov’t Bond index is a measure of government bonds issued outside the United States.
Wilshire REIT Index is a market capitalization-weighted index comprised of publicly traded real estate investment trusts and real estate
operating companies.
The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCIEAFE Index) is a widely recognized benchmark of
non-US stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20
European and Pacific Basin countries and includes reinvestment of all dividends. The Lehman Brothers High Yield Index is a measure of
high yield bonds. The Russell 1000 Growth Index is an unmanaged index generally representative of the US Market for large
capitalization stocks. It contains securities that growth managers typically select from the Russell 1000 Index.
The Russell 2000 Index is an unmanaged index generally representative of the US market for small capitalization stocks. The S&P 500
is an unmanaged group of securities considered to be representative of the stock market in general.
The Russell 1000 Value Index is an unmanaged index generally representative of the US market for large capitalization stocks. It
contains securities that value managers typically select from the Russell 1000 Index. The Dow Jones Industrial Average (DJIA) is a price
weighted index of 30 of the largest, most widely held stocks traded on the New York Stock Exchange. The NASDAQ Composite Index is
an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers
Automated Quotation System. An investment cannot be made directly into an index. Past performance is not a guarantee of future
results.

3Including PanAgora Asset Management, Morgan Stanley Asset Management, Litman Gregory Asset Management, Standard & Poor’s,
and Meridian Investment Management.  
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