US Gov Securities Savings Fund
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July 2010

Strengths

  • The fund was overweight both of the best-performing sectors, industrials (up 10.3 percent) and materials (up 12.2 percent).
  • The best contributions for the fund came from Grupo Aeroportuario del Sureste SAB de CV(up 16 percent), Zhuzhou CSR Times (up 26 percent) and Westshore Terminals (up 11 percent).

Weaknesses

  • The fund underperformed its benchmark, the S&P Global Infrastructure Index, as well as the S&P 500 Index during July.
  • China Gas Holdings (down 9.6 percent) had the most detrimental impact on performance.

Opportunities

  • We continue to search for quality companies with exposure to the infrastructure theme, which we view as a long-term secular trend.
  • The infrastructure theme is a global phenomenon both in developed and emerging economies. Our research trips support this view.

Threats

  • While the infrastructure theme has strong support from governments worldwide, a change in policy in some jurisdictions can’t be ruled out in the tighter credit environment.
  • A delay in the implementation of some major projects would be reflected in weaker than expected growth for companies in the space and is likely to weigh on share prices.

Past performance does not guarantee future results.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.  The S&P Global Infrastructure Index provides liquid and tradable exposure to 75 companies from around the world that represent the listed infrastructure universe.  To create diversified exposure across the global listed infrastructure market, the index has balanced weights across three distinct infrastructure clusters:  Utilities, Transportation and Energy.  Holdings in the Global MegaTrends Fund as a percentage of net assets as of 6/30/10: Grupo Aeroportuario del Sureste SAB de CV 4.65%, Zhuzhou CSR Times 2.16%, Westshore Terminals 3.73%, China Gas Holdings 2.29%.


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