COLUMBUS, Ohio (July 20, 2002) Dear Investors, As we have since our inception in 1992, we are working hard on your behalf to minimize risk and produce solid returns. After 2 consecutive down years, the US equity markets continue to experience extremely difficult times. Although Prospero has not been immune to the recent sharp declines in the markets, we are fortunate that 2 of our 3 funds (Beaumont and Curan) offer protection (hedges) against market declines. In fact, our market neutral product, Curan Fund, has produced a positive 4.1% return in 2002 (more than 7% annualized) versus declines in the S&P of (26.2)% and in the NASDAQ of (32.4)%. In addition to significant outperformance this year, our investors have performed significantly better than the broader markets and have made money during the last several years as evidenced by the table below: Cumulative Total Returns (through 7/19/02):       Prospero Funds          S&P 500      2001 (3.47)% (34.98)% 2000 6.13% (40.89)% 1999 25.06% (28.45)% 1998 52.31% (8.01)% 1997 93.85% 22.69%    Annualized Returns 1997 – 7/19/2002 12.8% 3.79% While 2002 has been a horrible year for the US equity markets, Prospero believes that equity prices will soon stabilize for the following 2 reasons: 1) For the first time in 8 quarters, companies are beating expectations with their 2Q earnings releases (albeit significantly lowered expectations). Since the market had already repriced equities in accordance with these reduced expectations, equity prices will stabilize as disappointments become more rare. That being said, there will still be individual sharp declines in the equities of companies that have accounting or other credibility problems. 2) Many pensions, foreign investors, and individuals (through Mutual Funds) have already redeemed (i.e. sold). Many individuals have "thrown in the towel", historically a significant indicator of reaching the bottom of a cycle. However, we believe there will be another wave of selling on Monday, July 22, and then again during Aug 5-16th, as investors receive their July statements, highlighting the negative impact of the S&P's 14% decline this month (through the Friday, July 19 close). Beginning in the middle to end of August, we expect a rally in US equity prices, followed by a stable period for at least 2 quarters. Equity trends beyond that will depend on the results companies achieve during the next 2 quarters. As is typically the case in a volatile market, this is a stockpickers market. At Prospero, we carefully strive to avoid sectors and individual equities that we feel are under pressure and we will raise cash or increase our hedges when conditions warrant such action. Curan's positive year-to-date returns are a sign of our stockpicking success relative to the underlying markets. Please contact me directly to discuss your investment or the markets and rest assured that we will continue to fight hard on your behalf through the remainder of 2002 and beyond. While we have significantly outperformed the US equity markets during the last five years, I believe we will emerge from these current market conditions as better investors and poised for the future. In closing, we will be opening each of the funds to new investors in early August, so please contact us if you would like to change your allocation or invest additional funds. Best Regards, Ben J. Bornstein