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March 20, 2009Dear Fellow Investors:This report marks the two year anniversary of Mooring Intrepid Opportunity Fund. Attached is theFebruary 28, 2009 month end report for the Fund, which shows a net gain for the month of 6.7%, for ayear to date gain of 21.7%. In the two years since inception the Fund had a net gain of 222.8%. Forthe same two year period the Tremont CFSB Hedge Fund Index showed a net loss of (9.6)%, and theS&P 500 Index scored a net loss of (45.5)%.The equities markets have rallied about 17% in the last two weeks. As we’ve experienced with ralliesseveral times in the last year, good news is good news and bad news is good news. This week housingstart statistics were released, with the number increasing significantly over last month. The marketrallied strongly, as though this indicated the start of a recovery. What a false hope! It’s actually badnews, in that it is adding to an already huge oversupply of housing units. A sharp decline in housingstarts would be reason to cheer. And the news that Citigroup is “profitable” rallied the markets – moreon that below.Many analysts are declaring that we’ve seen the bottom - again. We don’t see it that way. Thisopinion is not based on valuations, which may or may not be reasonable. It is based primarily on ourexpectations of the current recession continuing through this year and well into next year. The markethas never turned around a year or more before an economic recovery, so we believe this is a bearmarket rally.The Fed has once again broken new ground. The plan to buy Treasury bonds of various maturities isintended to bring down intermediate and long term interest rates, and to increase the money supply. Isthis the last arrow left in the quiver? Don’t bet on it. I have no doubt that even more extrememeasures will be taken if the economy fails to recover soon. This is another indication that the Fedknows just how severe the economic problems are. They are running scared, and with good reason.In my opinion this severity is the reason they won’t close down insolvent banks. This is unfortunatebecause it’s the only way to repair the banking system. We need more than cheerleading. Citigrouplet it be known that the bank was profitable in January and February. Of course it is. Withoutrecognizing any more losses or reserves from its huge inventory of bad loans, it’s easy to show aprofit. But earnings from operations are not nearly sufficient to allow the banks to climb out of theirhuge insolvency hole. As I expressed last month, the Fed has been hoping that a combination of 1)0% interest rates and 2) a recovering economy, could allow the banks to earn their way out. Well, theFed has provided the first part of this equation, but can’t provide the all important second part, arecovering economy, any time soon. I believe the best way to recapitalize the banks is to close downthe insolvent ones and sell their assets to the highest bidder. At the same time capital should beprovided to the strongest (or least weak) banks to get this problem behind us.