Third Quarter 2003 Allocations and Model Portfolio

Tom Madell, PhD
Publisher, Mutual Fund Trends/Research Newsletter
June 30, 2003. Copyright 2003, 2006

In this brief update, we present some changes to our allocations going forward and to our Model Portfolio, both last modified in our April 2003 Newsletter.

The following are our new allocations for the 3rd Qtr. of 2003:

For Most Investors

Class

Percent of
Portfolio

Stocks

55%

Bonds

40%

Cash

5%

Class	Percent of Portfolio
Stocks	55%
Bonds	40%
Cash	5%

For More Aggressive
Investors

Class

Percent of
Portfolio

Stocks

62.5%

Bonds

35%

Cash

2.5%

Class	Percent of Portfolio
Stocks	62.5%
Bonds	35%
Cash	2.5%

For More Conservative
Investors

Class

Percent of
Portfolio

Stocks

35%

Bonds

45%

Cash

20%

Class	Percent of Portfolio
Stocks	35%
Bonds	45%
Cash	20%

The following shows our updated Model Portfolio for the 3rd Qtr. of 2003

Stocks

Our Recommended Fund	Morningstar Style	Allocation	Updated July 2006: Return on Our Fund 3 Yrs After We Recommended It Compared to 11.2% for S&P 500
Vanguard Emerging Markets Index	Emerging Markets (Mid Cap Blend)	10%	34.1%
Vanguard International Growth	Foreign (Large Blend)	15	22.8
Fidelity Low Priced Stock	Small Blend	20	19.9
Vanguard Windsor	Large Value	25	14.0
T Rowe Price Equity Income	Equity Income (Large Value)	5	13.0
Vanguard Total Stock Market Index	Large Blend	15	12.8
Janus Fund	Large Growth	10	8.8

As of July 1, 2006, 6 out of 7 of our July 2003 choices beat the S&P 500!

Bonds

Our Recommended Fund

Interest Rate
Sensitivity

Allocation

Updated July 2006:
Return on Our Fund
3 Yrs After We Recommended It
Compared to 1.9% for Benchmark

Vanguard High Yield Medium 35% 6.1%
American Century International Bond Medium 15 5.3

Vanguard Inflation Protected Securities

Medium

10

3.6

PIMCO Total Return Instit. Medium 30
2.6

Vanguard Short Term Corporate

Short

10

2.2

Our Recommended Fund	Interest Rate Sensitivity	Allocation	Updated July 2006: Return on Our Fund 3 Yrs After We Recommended It Compared to 1.9% for Benchmark
Vanguard High Yield	Medium	35%	6.1%
American Century International Bond	Medium	15	5.3
Vanguard Inflation Protected Securities	Medium	10	3.6
PIMCO Total Return Instit.	Medium	30	2.6
Vanguard Short Term Corporate	Short	10	2.2

After 3 yrs, all 5 out of 5 of our recommendations were beating their benchmark!

Condensed Model Portfolio

Note: This portfolio has less funds and should approximate the performance of the full model.

Stocks

Fund	Morningstar Style	Allocation
Vanguard Tot. Stk. Mkt. Idx.	Large Blend	50%
Vanguard International Growth	Foreign (Large Blend)	25
Fidelity Low Priced Stock	Small Blend	25

Bonds

Fund

Interest Rate
Sensitivity

Allocation

Janus Flexible Income Medium 50%
Vanguard High Yield Medium 50
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