In general, greater returns are associated with greater risks.
The Short-Term Government Fund's net asset value and yield are not guaranteed by the U.S. Government or by its agencies, instrumentalities or sponsored enterprises.
Fund Statistics:
Inception Date
12/12/94
Ticker Symbol
CFSTX
Cusip
200626109
Minimum Initial Investment
$1,000
Commentary as of 3/31/2009
Economic problems persisted throughout the quarter as the Federal Reserve (the “Fed”) and treasury scrambled to stabilize the debt markets. A number of programs to stimulate the credit markets were introduced by the U.S. government to get the economy back on track. While unemployment numbers worsened, new and existing home sales started to show some promise. Efforts to spark a housing-market recovery pushed mortgage rates to record lows and helped induce a wave of refinancing. By the end of March, the tone of the investment markets began to slightly improve.
Interest rates moved higher for the first half of the first quarter and then trended sideways for the second half, ending up 10-20 basis points at the short end of the yield curve. Upward pressure on treasury yields was largely due to concerns that there will be insufficient demand to soak up the coming surge in government bond issuance. The Fed Funds rate was left unchanged at 0.00% - 0.25% after both of its meetings in the quarter. They commented that inflation is expected to remain subdued.
The Short-Term Government Fund’s return for the first quarter exceeded the Citigroup 1-5 Year Treasury/Government Sponsored Index. An underweight in treasuries relative to the benchmark contributed positively to performance. Also, the Fund’s strategic overweight of mortgage-backed securities and agencies helped the Fund outperform. Only the portfolio’s maturity structure hindered performance.
The government’s assortment of policy initiatives are gradually helping the economy regains its footing. We believe low mortgage rates should continue to benefit the housing market and contribute to the recovery.
Footnotes: 1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares.
2. Duration is the method determining a bond's price sensitivity, given changes in interest rates.
3. The composition of the portfolio is subject to change in the future.
Portfolio Holdings
Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. When interest rates rise, the prices of bonds and therefore the value of fixed income mutual fund shares can decrease and an investor can lose principal value. The guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund's shares. Mortgage-backed securities are subject to prepayment risks. These risks may result in greater share price volatility.
Holdings and allocations shown are unaudited, and may not be representative of current or future investments. Holdings and allocations may not include the Fund's entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
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