U.S. Government
Securities Savings
Fund (UGSXX)
U.S. Treasury
Securities Cash Fund
(USTXX)
The third quarter offered mixed economic results, potentially strengthening the arguments for a soft landing for the economy. Economic momentum had clearly slowed, but falling gasoline prices lifted consumer spending and confi dence. Employment growth is one key area of the economy that did not bounce back in the third quarter. Inflation moderated in the quarter, which relieved pressure on the Fed to continue raising interest rates.
An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or 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. |
Lower Risk/Reward |
Near-Term Tax Free Fund (NEARX)
Tax Free Fund (USUTX)
Short-term municipals experienced solid returns during the third quarter. On a total return basis, the Lehman Brothers Municipal Bond Index returned 3.4 percent for the quarter, with the longend portion of the yield curve outperforming. Municipals rallied in the third quarter as the risk of strong growth and rising inflation faded. Revenue-backed municipals modestly outperformed, driven by education-, transportationand hospital-backed issues.
Morningstar Overall, 3-year, 5-year and 10-year Ratings™. Among 122, 122, 86 and 58 Municipal National Short- Term funds, the Near-Term Tax Free Fund earned 4 stars, 4 stars, 4 stars and 4 stars for the overall, 3-, 5- and 10-year periods ending 9/30/06.
Morningstar 3-year Rating™. Among 234, 234, 187 and 120 Municipal National Intermediate funds, the Tax Free Fund earned 3 stars, 4 stars, 3 stars and 3 stars for the overall, 3-, 5- and 10-year periods ending 9/30/06. |
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MegaTrends Fund (MEGAX)
The drop in oil prices, while likely temporary, is a major positive for stocks. Based on free-cash fl ow yield, stocks today are very inexpensive. Stocks grew cheap as rising oil prices and geopolitical risks aroused fears of both infl ation and defl ation, but falling oil prices are sparking a virtuous circle. Infl ation, excluding oil, is in check and there are no signs of a major economic downturn, so stocks should benefi t. For now, the fund focuses on stocks, especially the great large-cap names with high cash-generating ability.
Morningstar 3-Year Rating™. Among 1393, 1393, 1092 and 415 Large Growth funds, the MegaTrends Fund earned 4 stars, 5 stars, 4 stars and 4 stars for the overall, 3-, 5- and 10-year periods ending 9/30/06. |
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All American Equity Fund (GBTFX)
The S&P 500 improved its performance in the third quarter to fi nish with a return of 5.7 percent. Predictions that the large-cap stocks would fi nally outperform their midand small-cap counterparts has held true year to date. Growth stocks outperformed value stocks due to a rotation into health care and technology names. The worst-performing sector was energy, as crude prices fell from historic highs.
Morningstar 3-year Rating™. Among 1393, 1393, 1092 and 415 Large Growth funds, the All American Equity Fund earned 3 stars, 4 stars, 3 stars and 3 stars for the overall, 3-, 5- and 10-year periods ending 9/30/06. |
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Holmes Growth Fund (ACBGX)
(formerly Bonnel Growth Fund)
The mid-cap market lost 1.4 percent during the third quarter. The best-performing sectors were consumer staples, telecom and utilities. Staples were rewarded in the quarter for their consistent growth in the face of an uncertain economic outlook. Telecom and utilities were favored for their yields, as dividends have been embraced more this year because capital gains have been diffi cult to come by. Energy was the worstperforming sector, as crude oil fell from all-time highs. Natural gas, industrials and materials also finished in negative territory.
Investing in small- and mid-cap stocks may be more risky and more volatile than investing in large-cap stocks. |
Moderate |
Please consider carefully the fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Foreign and emerging market investing involves special risks such as currency fl uctuation and less public disclosure, as well as economic and political risk. Gold funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The price of gold is subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 3% to 5% of your portfolio in gold or gold stocks. Tax-exempt Income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The Lehman Brothers 3-Year Municipal Bond Index is a total return benchmark designed for long-term municipal assets. The index includes bonds with a minimum credit rating BAA3, are issued as part of a deal of at least $50 million, have an amount outstanding of at least $5 million and have a maturity of 8 to 12 years. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Hang Seng Composite Index is a market capitalizationweighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
Ratings are based on risk-adjusted return as of 9/30/06. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)