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March 2004 performance review

April 16, 2004

Our recent spring cleaning seemed to help the Conservative portfolio. For the month it was up .29%, which may not sound like much, but given the stock market’s decline and our shorter duration bond holdings we’ll take it with a smile. 

The worst performing fund was the formerly red-hot foreign small cap fund Forward International Small Cap (PISRX), which slipped 1.84%. This didn’t hurt the portfolio much as we cut the fund’s allocation in half at the end of February.  

The Vanguard Dividend Growth fund also posted negative numbers in March, down 1.30%. Virtually all larger-cap U.S. stock funds slipped in March.

Newly added Bridgeway Balanced fund rose .90%, our best performer. The bonds in the fund did quite well, and covered calls (which the fund owns) generally do well with stock price declines. The fund was also helped recently by a general lowering of option premiums, which lowers the market price of options. Written options are a liability for the fund, and if their market price falls the funds NAV generally goes up.

The new funds added for March helped the Aggressive Growth portfolio for the most part. For the month the portfolio gained 1.58%, outpacing the stock market as a whole. 

The portfolio had a great month considering how most stock funds preformed. The only declines were in Gabelli Global Telecom, down 2.64%, and the just-added Bridgeway Blue-Chip, down 2% (large cap stocks generally fell the most in March).

The big gainer was the T. Rowe Price Japan fund – up a whopping 16.18% in March. The Japanese comeback is convincing more and more investors. This move to near three year highs for the market in Japan was particularly noteworthy as other international markets were flat.

We threw in the towel a little early in higher risk debt. Both the Fidelity New Markets Income fund and Northeast Investors climbed, although the later did no better then our recently added Vanguard Total Bond Index. Emerging market bonds were particularly strong even with a recovering U.S. dollar, Fidelity New Markets was up near 2.5%.

In contrast to the very similar Forward International Small Cap (PISRX), which slipped 1.84%, Artisan International Small Cap rose .84%.

Emerging markets remained a top area, lifting the SSgA Emerging Markets Fund 1.25%, bringing our total return since added in April 2002 to almost 75%.