Dear Investor:

We welcome you to FXCNewsletter.com. Our Newsletter emphasizes Aggressive, Conservative-Income, and Growth and Income situations.

Our guidelines, if followed, have resulted in above average success.

Our service adheres to the concept of diversification of risk. Please follow our Guidelines in the FXCNewsletter.com. If there is a material change in our opinion or in reference to any of our recommended situations, you will be notified in our Hotline or Newsletter.

Our Recommended Guidelines Are As Follows:

Speculate With A Small Portion Of Your Funds:

• Preferably 30% in our aggressive situations.

• Invest a little to make a lot, and not a lot to make a little.

  Buy all of our Situations:
  

• Purchasing all of our situations not only will spread your risk, but will result in younot missing a possible big winner. $1,000 in ten situations (total $10,000) rather than $10,000 in one situation. If one stock appreciates over 1,000%, that one stock would be worth more than the other nine (your entire portfolio), despite the fact that the other nine stocks may have been market lagers.

• Purchasing an aggressive stock may result in a complete wipe-out occasionally. A smallcompany's attributes can turn negative in one day's notice and without advance warning or early detection.

• Albeit, a small position in an aggressive situation may also result in an unexpected andexplosive accrual of substantial wealth. Our recommendation emphasizes accumulation of all of our aggressive, conservative and growth & income stocks lessening your risk and enhancing your total profit potential. Our record clearly emphasizes this concept.

  Do Not Buy On Margin:
  

• All securities involve risk. Some of the most prestigious and highest rated "A" securities have had temporary devastating plunges. (Sears Roebuck from $61 to $15,Con Edison from $18 to $3, GM, Ford and Citicorp A rated bonds from $1,000 to $490, etc.). If a stock drops 50%, given time it may come back and may trade over your original cost.

• There are times when additional purchases are warranted at lower quotes (averaging down). If you purchase 100 shares of stock at $10 a share, ($1,000) and it falls to $5 a share, an additional purchase of 100 shares will now cost you $500. Total purchase of 200 shares, $1,500. If the stock then rebounds to $7.50 a share (200 shrs. x $7.50 = $1,500), you are now even. If it trades back to $10 a share (200 shrs. x $10. = $2,000), you would now have a net profit of $500 or a 33% gain. If on margin (credit), a 50% drop in the price of the stock may result in a 100% loss, a complete wipe-out. Chances are you may be forced to sell when, indeed, you should have been a buyer at lower levels. In addition, if you are on margin and unexpectedly the Company goes bust, you will find yourself in a position of owing your broker additional monies which may be unavailable, thus causing you to dip into savings or sell a potential favorable security to cover your loss.

Most of our conservative income situations were recommended when they were out of favor. In anticipation of adverse news, we have awaited the dissemination of such, foreseeing lower stock quotes prior to recommending the stock. This concept, coupled with our in-depth research and timely buy recommendations have resulted in an 80% success ratio. Eight of ten stocks you purchased listed on our conservative income recommendation list would show gains if our Guidelines were used. If our Guidelines were ignored, you may have purchased the two out of ten that show losses. To reiterate, "Diversity of Risk" is extremely important. Most of our recommendations are made when others are advocating the sale of the security.

THE BIG FOUR
A term that refers to the four largest accounting firms in the country. These accounting firms audit about 90% of the companies listed on the New York Stock Exchange (NYSE). Their clients account for most of all sales in the U.S. and approximately 90% of corporate income taxes.

The Four Largest Accounting Firms:

• Deloitte & Touche
• Ernst & Young
• KPMG Peat Marwick
• Price Waterhouse/Coopers

FINANCIAL STATEMENTS
There are over 10,000 public corporations trading on the various stock exchanges and in the over-the-counter markets. One of the leading reasons why investors lose money, is due to financial statements that are not prepared in accordance with Federal regulations (Section 13 or 15 (d) of the Securities Act of 1934).If the figures are incorrect, your investment in the stock is subjected to substantial or complete loss. We suggest our subscribers confine their investments in companies audited by one of the big four. There is no assurance that your investment will increase because of the competent auditors. But if the company's accountant is one of the big five, in most cases, your investment decision will be based on the accurate financial presentation in the company's Annual Report, Quarterly (10Q) and Annual (10K) reports filed with the Federal and State regulatory agencies as required.The Securities and Exchange Commission (SEC) requires all public companies to furnish their shareholders with an annual report and to file a "10K" (expanded annual report) and a "10Q" (quarterly report) with the commission. The SEC will send you the "10K" and "10Q" of any company for a small fee. Always read these reports, studying carefully the figures presented on the Balance Sheet and on the Income Statement. These figures tell the real story. A company will always laud optimistic views regarding their prospects; brokers and friends will often tout their favorite stock. Protect yourself by requesting the latest "10K" and "10Q". Incidentally, most companies will furnish a complimentary copy of their reports upon written request or through the internet.

PORTFOLIO RISK
F.X.C.'s goal is to reduce risk through diversification and asset allocation. There are two types of risk associated with common stock investments. Every investment entails risk and our goal is to invest in situations given minimum downside risk versus upside potential.

Systematic Risk: The variation in a portfolio's total return that is directly attributed to the general fluctuation in the stock market. If the stock market declines or advances sharply, most stocks will decline or advance. The general movement in interest rates will result in variations in the Bond and Utility sectors. Large Capitalized equities (stocks) usually entail systematic risk.

Systematic risk may be eliminated if one can accurately forecast market turns, economic cycles, inflationary or deflationary trends and interest rate trends. This kind of forecasting on a consistent basis is virtually impossible.

Unsystematic Risk: The variation in each individual stock not attributable to general market fluctuations. The risk regarding each stock may be weak financial position or less than anticipated earnings. Small capitalized equities usually entail a high degree of unsystematic risk.

Unsystematic risk is reduced substantially if the portfolio is diversified into different sectors and balanced by holding bonds and stocks. As more positions are added, the unsystematic risk decreases and visa versa.

Large capitalized companies entwined in the macroeconomic environment entail systematic risk. Small capitalized companies, which are not macroeconomic sensitive but micro economic or niche plays, entail unsystematic risk. A balanced portfolio usually results in less overall unsystematic and systematic risk.

SIGNIFICANCE OF STANDARD & POOR'S (S&P) STOCK RATINGS
The Fund Managers of institutional monies pay close attention to the S&P ratings. A+ (highest) to C (lowest) rating. Most institutions follow guidelines when investing monies. For example, if a stock is rated B-, chances are only $100 million in total available funds is allowed to be invested in B- situations. A rating increase to B will entail a possible $1 billion of investible funds applied to the B category stocks. B+ rating: $50 billion. A- rating: $100 billion, A or A+ rating, $300 billion.

In other words, if a fund manager invests $10 million in a B- stock and it collapses, he may very well risk his job. If the $10 million was invested in a B+ or higher rated stock and it collapsed, his investment would be justified.

In conclsuion, increases in S&P ratings ultimately result in higher quotes due to additional monies available for investment in these stocks. Decrease in S&P ratings usually result in lower stock quotes. Rating changes referencing our recommended situations are reported in our updates.

WINDOW - DRESSING
The institutional funds represent approximately 80% of all monies in the market. The managers of these 100's of billions of dollars must answer to their shareholders and superiors. All of the mutual and pension funds are required to issue quarterly reports to their respective shareholders. Near the end of the quarter, stocks which were down or close to their yearly lows, are usually sold by the institutions, causing even lower stock quotes. And stocks near their highs are purchased, thus enforcing higher quotes.

Institutions do not have to reveal the per share price they paid for a security. You may receive a quarterly report from a mutual fund stating they own 100,000 shares of Con Edison and Milton Bradley. In reality, the fund may have purchased Con Edison and Milton Bradley at their recent highs. The quarterly report would not reveal they sold MCI at $8 a share, down from $28 or they sold Coleco at $15 a share, down from $65.

If you choose to purchase a stock because it is low, wait until after the end of the quarter. Chances are, it will be trading lower. Of course, there is no guarantee the stock will not trade even lower in the upcoming quarter. If you are going to bottom-fish, be patient. Or, if you want to sell a stock that is trading near its high, chances are it will be higher just before the quarter ends.

When making an investment decision, fundamental analysis is the most important criteria. Current Ratio, P/E Ratio, Book Value, Yield, Long Term Debt etc. But window-dressing by the institutions may result in additional gains or less losses for the individual investor. IOMEGA at $15, down from $27, was purchased by thousands of investors. Yet, if they had waited for the institutional managers to cover-up, you could have purchased it at $3.

As an individual investor you only have to answer to yourself. Use the institutional politics to your advantage.

F.X.C. SITUATIONS ARE CATEGORIZED AS FOLLOWS:

A ASSET PLAYS: A company whose assets are not reflected in the price of the stock. Example: real estate holdings, patents, copyrights, natural resource leaseholdings, in-ground reserves of oil, gas, precious metals, tax loss carry forwards, market price less than book value, etc. (many takeover candidates are in this category). Moderate Risk - High Reward.

G GROWTH STOCK: A company that has a consistent record of sales per share earnings growth. High Risk - High Reward.

H HIGH-TECH SITUATIONS: A company that shows prospects of earnings growth due to its technological expertise in its respective field. Very Risky - High Reward. These include Internet, Computer Sofware and Technology Stocks.

I INCOME SITUATIONS: Suitable for Individual Retirement Accounts (IRA). Utility, preferred stocks and bonds. For IRA's, they represent compounding of tax-free dividends and interest. (The least speculative and most conservative of our categories).

S SPECIAL SITUATIONS: A company whose assets and stock price may increase significantly as a result of a favorable litigation settlement, takeover, extraordinary profit, large contract or a technical breakthrough. Usually speculative but near term explosive price appreciation possible.

T TURNAROUND SITUATION: A company that may report significant per share earnings versus a prior year's loss or poor earnings performance. Moderately speculative. Usually the current stock price is low, reflecting the company's past poor erformance.

Stop-Loss orders are used to:

• Limit the downside risk after purchasing a stock.
• Lock in a profit or gain on a stock that was purchased at a lower price.

If subscribers purchased National Corporation at $29 a share, the stop-loss would be insurance against taking a large loss.

As the stock advances, the price of the stop-loss may be changed (usually higher) to try to maximize the gain.

Stop-loss orders cannot be used for all stocks. Thinly traded and speculative issues may vary 20%-30% in a week's time. If stopped out (sold out), two weeks later the stock may be trading at substantially higher quotes. Also, a stop-loss order given to a broker at $24-1/2 automatically becomes a "sell at market" order when the stock trades at the stop-loss price.

EXAMPLE:Price Computer was selling at $40 a share. You instructed your broker to place a stop-loss order at $32 a share (sell the stock if it dropped to $32 a share). When Price Computer plunged from $33 to $22 in one day's time, chances are you were sold out at $22 a share not at $32 a share, your stop-loss order. Why? Because your stop-loss order automatically became a market order when the stock traded at $32 a share.

You cannot have thousands of investors looking to be stopped out at the same price in the same day, especially in a stock that has poor liquidity (few shares and low volume). Our predicted 1,000 point crash, culminating the week of October 14-19, 1987, was an example of huge losses incurred by investors who utilized the stop-loss technique. F.X.C. will use stop-loss limits where we deem it appropriate. Utilizing stop-loss orders across the board on every security we recommend may have the effect of causing unnecessary large wide spread losses. Subscribers may call us for additional information.

CASH FLOW
Cash flow is an accounting term that has become extremely popular on Wall Street. Cash Flow is the amount of cash that actually flows into a corporation. It is net income plus depreciation and amortization. Depreciation and amortization are expenses deducted fromincome which "do not" result in an outflow of cash.

Example: American Company

Year Ended December 31, 1998
Revenues $6,123,985,000
Expenses 4,974,912,000
Depreciation & Amortization (Book Entry) 429,404,000
Net Income $719,669,000
Net Income Per Share $3.00
Add: Depreciation and Amortization (Book Entry) 429,404,000
Cash Flow: $1,149,073,000
Cash Flow Per Share $4.79

TOTAL RETURN
Total Return is important when considering conservative stocks. Total Return is price appreciation plus dividend or interest income. Dividend income is obtained from stock payouts, usually distributed quarterly. Interest income is obtained from bond payouts,usually semi-annually.

Example: Electric Company of America (ECA)

Price Purchased - May 1990 @ $8-1/2
Price Sold - Aug. 1998 @ $27-1/2
Price Appreciation Percentage Gain + 224%
Total Return + 358%

Utility stocks and high yielding industrial stocks that have secure financial balance sheets and are attractive situations for conservative investors especially in view of the fact that these companies consistently raise their annual dividends. Dividend increases also result in higher stock quotes.

YIELD TO MATURITY BONDS
The current yield on the Treasury bond maturing in 2009 was 8.7% when it was issued at par or $1,000 per bond. The bond in July 1982 was selling at $520 and new bondholders would still receive $87.00 per year in interest income. The current yield being 16.4%.

The bond will mature in 2009 and bondholders will receive the par value that is $1,000 per bond. But built into the purchase is a hidden yield. Besides receiving the current yield (16.4%), bondholders purchasing at $520 per bond would receive $480 more when the bond matures. From 1982 through 2009, bondholders would receive an additional $17 per year or a total of $480 over their purchase price. The $17 per year translated into yield and would add an additional 3.3% a year if the bond was held to maturity.

The yield to maturity is: The current yield 16.4% plus the hidden yield of 3.3% or 19.7%.

Deep discount bonds - Bonds purchased well below their par value are usually recommended for conservative investors and for Individual Retirement Accounts (IRA's) (provided the bond is of a financially secure company).

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