Fund Descriptions
Short-Term Government Securities Fund

“I manage this Fund to earn a competitive level of interest income, consistent with a very low level of share-price volatility,” portfolio manager Douglas Kern explains. “While the Fund’s share price will not move as much in response to changes in interest rates as that of a longer-term bond fund, there will be some fluctuation—both up and down.”

The Fund’s name tells its primary holdings: securities whose principal and interest payments are guaranteed by the U.S. government, such as U.S. Treasury bills and notes. Government-guaranteed issues pose no risk of default—if the issuer were unable to make payments, the government would. But the Fund's yield and share price will fluctuate, reflecting changes in interest rates. The Fund’s portfolio consists principally of shorter-term securities that will mature in three years or less.

This Fund is suitable for those who want an investment that is designed to deliver a potentially higher return than a money market fund, but with fewer ups and downs in share price than a longer-term bond fund or stock fund would typically experience.

Performance

The tables below show the Fund’s average annual and year-to-date total returns for various holding periods and the Fund’s current yield. The bar chart shows the Fund's annual return in each of the last 10 years or for each year since the Fund's inception. This indicates how widely performance has varied year-by-year.

Annualized 30-day SEC yield on 09/01/10

0.72%

SHORT-TERM GOVERNMENT SECURITIES FUND Historical Annual Total Returns

The total returns shown above represent past performance which does not guarantee future results. Investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted.

Portfolio Composition

The following table shows how the Short-Term Government Securities Fund is diversified and what its top holdings are.

Short-Term Government Securities Fund security Diversification
On 06/3010 Government-guaranteed agencies 46.6% U.S. Treasuries 18.9% Corporate bonds 17.6% Mortgage-backed securities 6.5% Municipal bonds 5.1% Asset-backed securities 3.8% Short-term and other assets 1.5% Total 100%

Average weighted maturity on 09/01/10

2.29 years

Fund assets on 08/31/10

$73,404,000

Comparison of Growth

This line graph is a comparison of the change in value of a $10,000 investment in the Fund and the BofA Merrill Lynch 1-5 Year U.S. Treasury Index.

Short-Term Government Securities Fund Growth of $10,000

The Short-Term Government Securities Fund’s average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares.

Distributions

If this Fund has declared income or capital gains distributions in the current year, they will be listed in the table below. See Track Earnings Distributions for the Fund's distribution schedule. Distributions for the prior calendar year are also shown below.

Short-Term Government Securities Fund 2010 Earnings Distributions
Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/10 $0.0117 Ordinary Income 02/28/10 $0.0113 Ordinary Income 03/31/10 $0.0123 Ordinary Income 04/30/10 $0.0111 Ordinary Income 05/31/10 $0.0111 Ordinary Income 06/30/10 $0.0107 Ordinary Income 07/31/10 $0.0105 Ordinary Income 08/31/10 $0.0094

 

Short-Term Government Securities Fund 2009 Earnings Distributions

Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/09 $0.0112 Ordinary Income 02/28/09 $0.0113 Ordinary Income 03/31/09 $0.0127 Ordinary Income 04/30/09 $0.0125 Ordinary Income 05/31/09 $0.0121 Ordinary Income 06/30/09 $0.0116 Ordinary Income 07/31/09 $0.0116 Ordinary Income 08/31/09 $0.0127 Ordinary Income 09/30/09 $0.0127 Ordinary Income 10/31/09 $0.0118 Ordinary Income 11/30/09 $0.0121 Short-Term Capital Gains 12/31/09 $0.0135 Long-Term Capital Gains 12/31/09 $0.0003 Ordinary Income 12/31/09 $0.0121

Share Price History

This table shows how widely the Fund’s share price has fluctuated over time.

Short-Term Government Securities Fund Share Price History

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year End $5.00 $5.08 $5.14 $5.22 $5.16 $5.11 $5.06 $5.10 $5.17 $5.26  $5.25 Year High $5.09 $5.09 $5.20 $5.22 $5.23 $5.18 $5.13 $5.12 $5.18 $5.29  $5.31 Year Low $5.00 $4.96 $5.09 $5.10 $5.15 $5.11 $5.05 $5.03 $5.09 $5.13  $5.22