Fund Descriptions
Short-Term Bond Fund

“This Fund has a short weighted average maturity (no more than three years), which should reduce the impact of interest rate changes on the Fund’s share price,” portfolio manager Douglas Kern explains.

Mr. Kern ordinarily invests at least 80% of the assets of the Short-Term Bond Fund in bonds that are in the three highest credit categories. The Fund can hold U.S. government securities as well as corporate bonds and other types of debt instruments.

He says this Fund is suitable for those who want an investment that is designed to deliver a higher return than a money market fund, but with fewer ups and downs in share price than a longer-term bond fund.

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

2.55%

Short-term bond 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 two tables show how the Short-Term Bond Fund is diversified and what its top holdings are.

Short-Term Bond Fund Security Diversification
On 06/30/10 Corporate bonds 33.0% Asset-backed securities 22.4% Mortgage-backed securities 16.0% Municipal bonds 13.5% Yankee Bonds 8.4% U.S. Government obligations 4.4% Short-term and other assets 2.3% Total 100%

AVERAGE WEIGHTED MATURITY on 09/01/10

2.80 years

Fund assets on 08/31/10

$297,413,000

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 Corp./Gov. Index.

Short-Term Bond Fund Growth of $10,000

The Short-Term Bond 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 Bond Fund 2010 Earnings Distributions
Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/10 $0.0230 Ordinary Income 02/28/10 $0.0207 Ordinary Income 03/31/10 $0.0224 Ordinary Income 04/30/10 $0.0207 Ordinary Income 05/31/10 $0.0188 Ordinary Income 06/30/10 $0.0199 Ordinary Income 07/31/10 $0.0185 Ordinary Income 08/31/10 $0.0171

 

Short-Term Bond Fund 2009 Earnings Distributions

Distribution Type Declaration Date $/Per Share Ordinary Income 01/31/09 $0.0264 Ordinary Income 02/28/09 $0.0255 Ordinary Income 03/31/09 $0.0284 Ordinary Income 04/30/09 $0.0294 Ordinary Income 05/31/09 $0.0301 Ordinary Income 06/30/09 $0.0299 Ordinary Income 07/31/09 $0.0295 Ordinary Income 08/31/09 $0.0288 Ordinary Income 09/30/09 $0.0277 Ordinary Income 10/31/09 $0.0265 Ordinary Income 11/30/09 $0.0232 Short-Term Capital Gains 12/31/09 $0.0081 Long-Term Capital Gains 12/31/09 $0.0034 Ordinary Income 12/31/09 $0.0240

Share Price History

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

Short-Term Bond Fund Share Price History

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year End $5.09 $5.18 $5.26 $5.30 $5.23 $5.17 $5.13 $5.16 $5.17 $4.72  $5.13 Year High $5.21 $5.18 $5.31 $5.30 $5.31 $5.26 $5.17 $5.18 $5.19 $5.22  $5.15 Year Low $5.09 $5.04 $5.19 $5.22 $5.22 $5.14 $5.12 $5.09 $5.14 $4.67  $4.71