STATEMENT OF PORTFOLIO CONDITION

Volatility in the financial markets has been the headline news since last weekend. Like many of you, we are concerned with the implications for the ongoing financial health of our country. Closer to home, all of us are concerned about our family's financial future and the security of the institutions in which we invest. We want each of you to know that we have been meeting almost daily with our portfolio manager, AQS Asset Management, to monitor our investment portfolio and more importantly, the impact of events not yet reported by the rating agencies and the media.

Our investment philosophy is to subscribe to a policy of broad portfolio diversification. As of September 23, 2008, our investment in any single US corporation is less than 1.2%. Most are well under 1% . Our exposure to agency debt (recently reaffirmed at Aaa/AAA) is less than 1%. Our portfolio holds fixed income securities from 129 unique issuers. We hold no common stock and only .5% our portfolio is preferred stock. Overall, our portfolio quality is Aa3, the 4th highest rating category at Moodys (Aaa, Aa1, Aa2...).

All these safeguards have been conscientiously developed over time; some from our own experience, some from the expertise of others. Still others simply because they make sense:

"It's not the return on principal but also the return of principle." - Will Rogers

The downside to broad diversification is that we will have small investments in literally hundreds of companies, which could increase the possibility that we will realize some losses. This is where our surplus comes in. Our surplus as of August 31, 2008 was in excess of $3.3 million. Surplus allows our company to weather financial upheaval. Mandated by regulators and calculated monthly in our financial statement, our surplus speaks to our ability to make good on the policies you hold. They are the promises we keep.