MONEY MARKET FUND COMMENTARY

Portfolio Manager Commentary EnvironmentThe Federal Reserve Board reduced interest rates three times during the first quarter of 2008, dropping the Fed Funds rate to 2.25%. The Fed's first move on January 22nd was a surprise inter-meeting cut of 75 basis points in response to a number of troubling economic factors which had afflicted the market. These included the weak economic outlook, the downside risks to growth, the tightening credit conditions, the deepening housing contraction, and the softening in labor markets.

At the Fed's January 30th and March 18th meetings, further downward moves took place, 50 basis points and 75 basis points, respectively. Furthermore, the problems in the sub-prime mortgage sector and subsequent fallout are still on-going. As a result, and in conjunction with recent economic data, the Fed believes that "financial markets remain under stress" and that the weakness in the economy is likely to remain for "the next few quarters". Nevertheless, the Fed remains confident that the three consecutive large rate cuts this quarter should lead to moderate growth over time and reduce the downside risks to the economy.

With regard to inflation, the Fed acknowledged that not only does inflation remain an ongoing issue, but in fact, the uncertainty about the future outlook has increased. As for future interest rate reductions, the majority of market participants believe that the Fed will cut rates either by 25 or 50 basis points at their next meeting on April 30th. In fact, with the belief that the U.S. economy is either in or very close to a recession, it is expected that the Fed will continue with their easing cycle for the foreseeable future. At the beginning of this period of financial market turbulence, the Trust froze all purchases of Asset-Backed Commercial Paper (ABCP).

Other commercial paper maturities were shortened. These policies continue to be in effect. The holdings in the Trust were made up of federal agency paper (57%), corporate paper names (19%), and Treasury Bills (24%). The average term to maturity at the beginning of January was 25 days, while at the end of March it had remained relatively static, at 24 days.

OutlookWith the financial markets still in a state of uncertainty, the Trust will continue to avoid buying Asset-Backed Commercial Paper until further notice and will keep other corporate maturities fairly short. While the Trust remains slightly shorter than neutral, it has taken opportunities to extend term on market weakness and conversely, to take profits on market strength, primarily through Treasury bill trading.

MM fund avg return over 10 years 3.2% HUH it beat the SPX???