A composite magnetic core formed of a high permeability material and a lower permeability, high saturation flux density material prevents core saturation without an air gap and reduces eddy current losses and loss of inductance. The composite core is configured such that the low permeability, high saturation material is located where the flux accumulates from the high permeability sections. The presence of magnetic material having a relatively high permeability keeps the flux confined within the core thereby preventing fringing flux from spilling out into the winding arrangement. This composite core configuration balances the requirements of preventing core saturation and minimizing eddy current losses without increasing either the height or width of the core or the number of windings.