Letter from our President: Investing Practices and Principles

Since there are so many different investment philosophies engaged by investment companies, how do you know who to trust? What method is best? In this edition of our quarterly newsletter, we want to share the basics behind most of FM Financial's investment-related decisions.

Three overarching principles govern our approach to investing and allow rationality in the midst of uncertainty:

• Patience - investors must maintain a quiet endurance under stress in order to achieve long-term goals; reactionary decisions tend to derail a long-term plan.

• Discipline - orderly conduct and methodical decision-making must govern investor behavior; decisions based solely on the "news of the day" or investor emotions seldom lead to success.

• Faith in the Future - throughout history, the ingenuity of human beings created in God's image has created tremendous innovation and progress, and it will continue to do so; optimism is the only conclusion supported by the facts.

There are also three principles that govern our investment practices:

• Asset Allocation - the primary goal of asset allocation is to create an asset mix that seeks to provide the optimal balance between expected risk and return for a long-term investment horizon.

• Diversification - a diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt to limit exposure to any single asset or risk.

• Rebalancing - the rebalancing process systematically returns the values of a portfolio's asset allocations to the levels defined by an investment plan.

There will always be investors that try to time the market or try other speculative investment methods. FM Financial believes the principles stated above have been proven time and time again. We continue to rely on them to steward the assets you have entrusted to our care in the most responsible way.

Mark S. Olson

President & CEO