Over the past two years, market participants have gradually come to recognize the painful realities of the slowing U.S. economy, a fragile banking system, and a scared consumer - and even worse problems in some other countries - and the global markets were severely shaken. The S&P declined over 54% from its highs of October 2007 to the lows of early March 2009, before the recent rally.

During its 18-month history, the Core Fund has largely sidestepped the unprecedented volatility and harsh drops of the worldwide markets. January and February were hugely painful months for investors who have "traditional" portfolios - meaning a substantial allocation to stocks and equity mutual funds plus a buy-and-hold approach. After a dismal year in 2008, the S&P and the Dow were down another 25% in the first ten weeks of the year - while the Core Fund declined only 3.2%.

Strong global rallies began in March and continued into early June. Our timetested "Buy" disciplines moved us into a relatively fully-invested position in March, and the equity-fund allocations within the Core Fund participated quite fully in those uptrends. Although the markets stagnated for the past several weeks, resulting in our changing some portfolio positions, the Core Fund is impressively positive year to date, for the latest 12 months, and from inception.

Certainly the U.S. economy as well as the rest of the world continues to confront major and complex problems. In a situation like this, history tell us that there is a good probability that what occurred this spring could prove to be just a typical Bear Market rally, and the stock market may suffer more strong downward cycles over the coming year or two. In that event, our very diversified Asset Allocation and the "Sell" disciplines that we have applied over the past 22 years are designed to again limit the impact on the Core Fund.

NOTE: Holdings can change at any time without notice.