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Ed Hyman, who has been rated as Institutional Investor’s #1 Wall Street economist
for the past 21 years and is chairman and founder of International Strategy and
Investment Group, says there is some evidence that we are in the middle of a mixed
blessing. As the cover of The Shareholder Report this quarter indicates, the S&P 500
is moving up more slowly than in the past four post-recessionary recoveries.
ISI makes the observation that interest rates or the cost of money is going to get cheaper to help turn the economy around. Summer of false starts, frustrations and fears History suggests that it is just a matter of time before falling interest rates turn the economy and the stock markets around. It may be that investors are dwelling on the bad news and losing sight of the positives. Federal Reserve Chairman Alan Greenspan will no doubt push an additional interest rate cut or two if the markets continue to ignore the positives for much longer. Mutual fund issues There are two kinds of fund expenses — fixed and variable. Fixed expenses, like transfer agency fees, typically average more than $25 per account per year. Industry analysis indicates that one of the biggest contributing factors to a fund’s expense ratio can be the impact fixed expenses have in relation to small accounts. For example, if the average account for XYZ growth fund is $1,000, then a fixed cost of the fund, like $25-per-account transfer agency fees, would be 250 basis points or 2.5% of the fund, excluding other variable costs like management fees and 12b-1 fees. When you compare this to another fund, for example, the ABC growth fund, where the average account size is $25,000, then the fixed costs of $25 per account only represent 10 basis points of the fund. An industry-wide concern is that large accounts are subsidizing small inactive accounts. Further, small accounts increase the expense ratio, which in turn, can hurt relative long-term fund performance. As a result, we are restructuring our fund maintenance fees and expense caps to better reflect those costs that we do not control while striving to lower fund expense ratios and still provide the multitude of services that you, our shareholders, expect of us. Please know that we are working to address these sensitive but important issues. I have always maintained that periods of market corrections such as we are currently experiencing are excellent opportunities to add investments to your portfolio at reasonable prices — think of these times as store sales that rarely come around. I encourage small account-holders to actively dollar cost-average through our ABC Investment Plan®.* A better way to pay bills We recognize the pressures you are under every day, because we have those same obligations to work, family, community and self. Bobby Duncan, our COO/CFO, went on a personal quest for a timesaving, efficient, reliable online bill paying system and came back with Paytrust®. He was so impressed that he wanted to share his experience with you. The result — you can now use your U.S. Treasury Securities Cash Fund account and Paytrust to manage and pay as many or as few of your bills as meets your needs, as the insert and article on page 9 attest. Free money opportunity You are in for a treat the next time you visit www.usfunds.com. We hope you will have as much fun entering our Ride the IRA Wave Sweepstakes as we had putting it together for you. Its design is geared toward younger members of the workforce who may not even realize they are the perfect age to begin investing. I challenge you to do the millionaire math, and you won’t even need a calculator. Simply visit our website to view what the power of compounding can do for you at age 25 versus age 45. The bottom line The bottom line here is that those who fail to plan for and implement savings and investing goals are gambling with their future, and their family’s financial fate. Worry solves nothing. Thoughtful action now can lead to a legacy of long-lasting solutions, whether that legacy to one’s family involves higher education, a home, a secure retirement or another purpose. I encourage you to use your energy and talents to create your own legacy and enjoy every minute of every day, knowing that you are working toward your goal. Sincerely, 
Frank Holmes Chairman, CEO & Shareholder |
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An investment in the U.S. Treasury Securities Cash
Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or by any other
government agency. Although the fund seeks to preserve
the value of your investment at $1.00 per
share, it is possible to lose money by investing in the
fund.
*A program of regular investing doesn’t assure a profit or protect against loss in a declining market. You should evaluate your ability to continue in such a program in view of the possibility that you may have to redeem fund shares in periods of declining share prices as well as in periods of rising prices. |
