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August 2002 Trade Alert!

August 5, 2002

We are making the following change to our Conservative portfolio on September 1st, 2002: 


<ul><li><font color="red"><b>SELL</b></font> 100% holding of SSgA Yield Plus fund (SSYPX) 


<li><font color="red"><b>BUY</b></font> Vanguard Utilities Income fund (VGSUX) with proceeds of above sale. </ul>We are shifting some of our money market allocations into utilities stocks. Specifically, we are selling the 10% allocation in the SSgA Yield Plus fund (SSYPX), a higher yielding money market alternative and purchasing the beaten down Vanguard Utilities Income fund (VGSUX).

We feel the current yield on beaten down utilities stocks of just under 5% is too tempting to pass up. Since money market funds yield less than 2% across the board, often closer to 1%, this should benefit the portfolios over the long term.

In the short term, utility stocks are far more volatile than a money market fund, but we are confident over the next 3 years, as long as these companies do not cut dividends in droves, investors will be rewarded for the increased risk. We expect some price appreciation in addition to the dividend yield.

We are not making this move in the Income #1 portfolio, as the heightened risk of moving from cash to stocks is not acceptable at this time for our most conservative portfolio.

<b>NOTE:</b> while the SSgA utilities income fund is available for NTF on most brokerage networks, the Vanguard fund, with its ultra low fees is not. Consider purchasing the fund through the family directly (you can purchase online at Vanguard.com), or paying the fee to purchase the fund at your discount broker if you are buying more than $5,000 AND YOU DO NOT HAVE YOUR MONEY AT SCHWAB. Schwab's fees are exorbitant for buying funds off the NTF (no transaction fee) platform (.7% of the trade size, or $70 on a $10,000 trade, or $350 on a $50,000 trade.