CLIENTS STATE THEY STARTED WITH IR OVER TWENTY YEARS AGO. CLIENTS STATE THEY TOLD IR THEY DID NOT WANT ANY LOSSES OR DEPRECIATION OF THEIR INVESTMENTS AND CLIENTS CLAIM IR INFORMED THEM THERE WOULD BE NONE. CLIENTS INDICATE THEY GAVE IR $200,000 TO INVEST AND TODAY IT IS $34,000 SHORT OF THEIR ORIGINAL INVESTMENT. LOSSES EXCEED $5,000.

$34,000.00

IR INDICATED CLIENT'S INVESTMENT GOALS WERE DISCUSSED AND IT APPEARS CLIENT HAD A PRIMARY GOAL OF INCOME. IR STATED IN 1991, CLIENT HAD PROCEEDS COMING AVAILABLE FROM A MATURED MUNICIPAL BOND. HE EXPLAINED TO CLIENT THE INVESTMENT ALTERNATIVES AND CLIENT AGREED TO PURCHASE THE COLONIAL TAX EXEMPT FUND. IR INDICATED HE DID NOT RECALL CLIENT INFORMING HIM HE DID NOT WANT ANY DEPRECIATION OR LOSSES AND, AT NO TIME, DID IR STATE CLIENT WOULD NOT LOSE MONEY. ACCORDING TO IR, HE MAKES IT A PRACTICE WITH ALL HIS CLIENTS TO EXPLAIN THE DOWNSIDE POTENTIAL BEFORE THE MONEY IS INVESTED. OUR RECORDS REFLECT THE KEMPER MUNICIPAL BOND FUND WAS PURCHASED IN 1992 AND CLIENT'S FIRST PURCHSE OF VAN KAMPEN US GOVERNMENT FUND WAS TRANSACTED IN JUNE 1993. HOWEVER, I DID CONTACT VAN KAMPEN FUNDS AND THEY INFORMED ME A PURCHASE OF VAN KAMPEN STRATEGIC MUNICIPAL FUND WAS PURCHASE IN 1987, WHICH WAS PRIOR TO MR. HILGEDICK BECOMING LICENSED. IT IS OUR OPINION IR EXPLAINED THE RISKS ASSOCIATED WITH INVESTING AND THE TRANSACTIONS WERE COMPLETED WITH CLIENT'S AUTHORIZATION. BASED ON MY REVIEW, WE WILL NOT BE MAKING AN ADJUSTMENT TO CLIENT'S ACCOUNT.