June 10, 2004

Dear Client;

This important information is for the clients of A1 Locy Financial Services, PLEASE READ

I am writing this newsletter to give you a better understanding of your accounts. This letter is being householded in other words if there is more then one account in a household you will receive only one letter.

Your accounts, unless requested differently are made up of mostly Preferred Stocks. As you already know these Preferred Stocks react with the bond market, and are sensitive to interest rate changes therefore any hint of an interest rate change by Mr. Greenspan will cause a blip in this sector. In 2003 there was talk of raising interest rates and this sector declined consequently your accounts went down but in a couple of months they were back to their previous values. The recent talk of raising interest rates have caused your accounts to dip especially seen on your May 1 statement, this was in anticipation of Greenspan raising interest rates, therefore it is already built in the market. In checking accounts today they are almost back to what they were prior to the May 1 statements.

An example of how a preferred stock reacts to the market, lets say you have Aetna Inc paying 8.5% annually on a quarterly basis, this 8.5% never changes you always receive that percentage in your account. Most preferreds are initially sold at $25.00 but on the secondary market we may pay the going price of $26.00 each, this is the value of each share. If this value rises to $27.00 per share it will be reflected as a gain in your account, also if they slip to $26.50 per share it will show a decline in your account. Therefore when there is a decline in your account it is due to a valuation adjustment, again the percentage does not change.

I constantly monitor all investment, for all accounts.

If you have any questions concerning your account(s) please do not hesitate to call me.

Sincerely,

A1 Locy
Accounts Manager

 Click the image to print this page.