How did the Fund perform during the reporting period? 

The Fund rose by 0.97% for the six months ending June 30, 2025. The Bloomberg 1-3 Months U.S. Treasury Bill index, the Fund’s primary benchmark gained 2.13% for the same period.

Strategy

The OnTrack Core Fund seeks total return while keeping the Fund’s volatility and downside risk below that of major equity market indices. The portfolio managers use a flexible approach that emphasizes capital preservation but allows them to adopt a less conservative posture and to increase emphasis on capital appreciation when they believe additional risk is warranted by favorable market conditions.

Techniques

Treasury yields declined early in the year as investors anticipated Federal Reserve rate cuts beginning in March. However, inflation eased more slowly than expected, prompting the Fed to temper expectations for an early cut. Bond yields moved higher, small-cap equities weakened, high-yield bond momentum slowed, and the S&P 500 Index briefly paused.

Elevated interest rates slowed the economy more than expected in the first quarter of 2024. Entering April, the Fund was fully invested and leveraged in bond and income funds, preferred stock funds, and a limited equity exposure. Trade policy uncertainty and tariff concerns pressured both stocks and bonds in April, prompting position reductions in line with our risk-managed approach.

The S&P 500 rebounded in May to reach new highs, while the Russell 2000 recovered most April losses but fell short of new highs. As markets improved, the Fund returned to fully invested, leveraged positions in low-volatility bond and income funds. However, concerns over the inflationary impact of tariffs kept the Fed in a “higher-for-longer” stance, sustaining volatility.

In June, market breadth narrowed, reflected in the divergence between the capitalization-weighted and equal-weight S&P 500 Indexes. Unemployment edged higher, weekly jobless claims reached their highest since August, and inflation ticked lower. Geopolitical tensions—including wars in Ukraine and Gaza, and U.S./Israeli air strikes in Iran—added to uncertainty.

Despite volatility, anticipation of the Fed’s first rate cut should support bonds, particularly Treasuries, municipal bonds, and investment-grade corporates. The Fund remains fully invested and leveraged in bond and income mutual funds and preferred stock funds, with readiness to reduce exposure if conditions warrant.

The second half of 2025 will be driven by Fed policy, inflation trends, and economic resilience. Rate cuts could favor select bond groups. Geopolitical risks and trade tensions remain headwinds. We will emphasize flexibility, maintaining core income holdings while adjusting allocations as market conditions evolve.

Asset Weighting (% of total investments)

Security Type Weighting (% of total (including notional) exposure)

Material Fund Changes

No material changes occurred during the period ended June 30, 2025. 

How did the Fund perform during the reporting period? 

The Fund rose by 1.06% for the six months ending June 30, 2025. The Bloomberg 1-3 Months U.S. Treasury Bill index, the Fund’s primary benchmark gained 2.13% for the same period.

Strategy

The OnTrack Core Fund seeks total return while keeping the Fund’s volatility and downside risk below that of major equity market indices. The portfolio managers use a flexible approach that emphasizes capital preservation but allows them to adopt a less conservative posture and to increase emphasis on capital appreciation when they believe additional risk is warranted by favorable market conditions.

Techniques

Treasury yields declined early in the year as investors anticipated Federal Reserve rate cuts beginning in March. However, inflation eased more slowly than expected, prompting the Fed to temper expectations for an early cut. Bond yields moved higher, small-cap equities weakened, high-yield bond momentum slowed, and the S&P 500 Index briefly paused.

Elevated interest rates slowed the economy more than expected in the first quarter of 2024. Entering April, the Fund was fully invested and leveraged in bond and income funds, preferred stock funds, and a limited equity exposure. Trade policy uncertainty and tariff concerns pressured both stocks and bonds in April, prompting position reductions in line with our risk-managed approach.

The S&P 500 rebounded in May to reach new highs, while the Russell 2000 recovered most April losses but fell short of new highs. As markets improved, the Fund returned to fully invested, leveraged positions in low-volatility bond and income funds. However, concerns over the inflationary impact of tariffs kept the Fed in a “higher-for-longer” stance, sustaining volatility.

In June, market breadth narrowed, reflected in the divergence between the capitalization-weighted and equal-weight S&P 500 Indexes. Unemployment edged higher, weekly jobless claims reached their highest since August, and inflation ticked lower. Geopolitical tensions—including wars in Ukraine and Gaza, and U.S./Israeli air strikes in Iran—added to uncertainty.

Despite volatility, anticipation of the Fed’s first rate cut should support bonds, particularly Treasuries, municipal bonds, and investment-grade corporates. The Fund remains fully invested and leveraged in bond and income mutual funds and preferred stock funds, with readiness to reduce exposure if conditions warrant.

The second half of 2025 will be driven by Fed policy, inflation trends, and economic resilience. Rate cuts could favor select bond groups. Geopolitical risks and trade tensions remain headwinds. We will emphasize flexibility, maintaining core income holdings while adjusting allocations as market conditions evolve.

Asset Weighting (% of total investments)

Security Type Weighting (% of total (including notional) exposure)

Material Fund Changes

No material changes occurred during the period ended June 30, 2025.