Reflects performance of the broad U.S. bond market.
The U.S. Bond Fund invests in intermediate-term bonds that mirror the Barclays Capital Aggregate Bond Index, a widely-recognized benchmark of U.S. intermediate-term bond performance. Although the fund seeks to mirror the index, its results will be somewhat lower due to investment and administrative expenses.
Because of the passive style of this fund, the manager does not make decisions as to which bonds are likely to perform better or worse than others. Rather, the fund is broadly representative of the U.S. bond market, holding bonds issued by the U.S. Treasury, U.S. corporations and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than 1 year. The fund invests by “sampling” the index, meaning that it holds a broadly-diversified collection of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics.
All of the fund’s investments will be selected through the sampling process, and at least 80% of the fund’s assets will be invested in bonds held in the index. The fund maintains a dollar-weighted average maturity consistent with that of the index, generally in the five- to ten-year range. The net return will be the result of general intermediate fixed-income market performance, less investment and administration expenses.
The U. S. Bond Fund is one of the less volatile choices along MMBB’s spectrum of investment options. Over time it is expected to produce somewhat higher returns than the MMBB Money Market Fund and Stable Value Fund while exhibiting far less volatility than any of the equity market funds.
This fund should experience attractive investment returns in a declining interest rate environment.
All securities investments risk the loss of capital. An investment in the fund could lose money over short or even long periods.
One of the main risks with this fund is interest rate risk, the chance that bond prices overall will decline because of rising interest rates. Because this fund is a passively managed index fund returns will reflect the returns of the broad bond market. When the bond market rises, this fund will rise in tandem. Likewise, when the bond market declines (due to rising interest rates or other factors) this fund will decline as well. Investors can expect to receive returns of the general bond market, less applicable expenses. Although the bond market is perceived by many to be a more conservative type of investment—and historically, it has been less volatile—that does not mean that one cannot lose value in this fund.
Although all bonds in this fund are considered to be “investment grade,” this fund does carry credit risk—the chance that a bond issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
In addition, this fund carries some “call” risk. This refers to the chance that during periods of falling interest rates, issuers of callable bonds may call (repay) securities with higher interest rates before their maturity dates. The fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund’s income. For mortgage-backed securities, this risk is known as “prepayment risk.” Call/prepayment risk should be low for the fund because it invests mainly in securities that are not callable.
Because this fund is an index fund, it has index sampling risk, which is the chance that the securities selected for the fund, in the aggregate, will not provide investment performance matching that of the fund’s target index. Index sampling risk for the fund should be low.
*If you are uncomfortable with the risks associated with the U.S. Bond Fund, you may want to consider another MMBB investment option.*
|1 Month||YTD||1 Year||3 Years||5 Years||8 Years||10 Years|
|Investment Management Fees||0.04%|
|MMBB Administrative Charge||0.50%|
|Sales Charge (Load) on Purchases||None|
|Deferred Sales Charge (Load)||None|
|Short-term or Other Redemption Fee||None|
|Distribution, or 12b-1, Fee||None|
|Dealer Commission (percent of offering price)||None|
|Low Balance Account Service Fee||None|
|Total Annual Operating Expenses||0.66%|