National Investment Fund for Credit Unions (NIFCU$) 2nd Quarter 2011 Market Commentary

Second Quarter 2011Market CommentaryIt appears the U.S. economic recovery hit a soft patch this past quarter. First quarter 2011 GDP declined to+1 9% from the +3 1% posted for the last quarter of 2010 There remain concerns about rising inflationary 1.9% 3.1% 2010.pressures, although not in the area of wages, given the still anemic job market. Gasoline prices havesoftened a bit, as crude oil futures have come off their recent high of $114.71 per barrel at the end of April, tojust over $95 per barrel at quarter-end. This is a small bit of good news for consumers as housing, anotherkey drag on the recovery, is still struggling under the weight of an upswing in foreclosures, sizable inventoryof unsold property, and tighter mortgage credit guidelines.Federal Reserve interest rate policy remains unchanged since December 2008 at the peak of the creditcrisis, with short-term benchmark rates effectively at zero. Although the Fed’s most recent stimulus program(QEII) ended as scheduled on June 30th, it remains to be seen if their absence as the largest buyer in theU.S. Treasury and Agency securities markets will result in higher rates to attract buyers to fill the void.The lack of a resolution to the debate over increasing the U.S. debt ceiling and the implications for the 2012budget and beyond means there has not been any increase in short-term U.S. Treasury bill supply. With therecent involvement of President Obama we expect a deal to be reached on this issue before the critical Obama,early August deadline.The continued turmoil surrounding the EU/IMF led bailout of Greece and speculation as to the fiscal healthof other countries in the region, have investors reluctant to have any exposure to Euro-Zone credits. Money-market participants continue to struggle in this low interest rate environment, challenged by a general lack ofhigh-quality investment options. Although banks have largely adjusted to the April 1st implementation of thenew FDIC assessment calculations risk avoidance is still driving up demand for U S Treasury and Agency calculations, U.S.securities.The portfolio has maintained its average maturity on the shorter-end of the spectrum this past quarter, asextension opportunities are few and largely do not compensate for the risk of an unexpected rise in yields.We remain vigilant as to our credit exposures. Although we now expect the Fed to hold interest rates atcurrent levels through the end of 2011, we look for normalization of U.S. Treasury bill supply late in the thirdquarter and a gradual uptick in short term yields short-term yields. Hillary Elder, Team Leader NIFCU$  350 California Street, 11th Floor  San Francisco, CA 94104 Toll-Free (800) 634-6521 www.nifcus.com

Fund Profile Adviser: HighMark® Capital Management, Inc. State Domicile: California Custodian: Union Bank, N.A. Shareholder Base: Credit Unions Trustee: Union Bank N.A. Bank, N A Inception: September 25, 1975 25 Auditor: Deloitte & Touche Rating: Moody’s Investor Services Sponsor: NAFCU Services Corporation Aaa-mf assigned 12/18/97 Fund Analysis* Period E di P i d Ending 2Q ’11 2Q ’10 2Q ‘09 Total Net Assets ($Mil) 187.7 275.8 570.2 WAM Range (min to max, in days) 13-24 12-35 15-49 WAM Average (in days) 18 23 30 Effective 30 day yield 0.01 0.16 0.25 Portfolio Composition Portfolio Review* As of June 30, 2011 Monthly Average Rate Municipal VRDNs 19.05% Apr 2011 0.04% May 2011 y 0.04% Jun 2011 0.02% O/N Repurchase Agreements 7.47% U.S. Govt Eurodollar Time Agencies 52.18% I’m interested in finding out more about NIFCU$ Deposits 7.99% Certificates of Deposit/BAs 13.31%National Investment Fund for Credit Unions ("NIFCU$" or the "Fund") is a common trust fund administered by the Union Bank, N.A. and designedto serve the liquidity needs of the credit union industry. Investments in NIFCU$ shares are not deposits or obligations of and are not endorsed orguaranteed by the Union Bank, N.A., or any of its affiliates.Investments in NIFCU$ shares are not insured or guaranteed by the FDIC, the government, or any other agency. Although the Fund strives tomaintain a stable net asset value of $1 per unit, there is no assurance that this will be achieved and it is possible to lose money by investing inshares.shares Only eligible credit unions may invest in shares of NIFCU$ State chartered credit unions should check their states rules for compliance. NIFCU$. state s compliancePlease request the NIFCU$ Deed of Trust & Plan of Common Trust Funds booklet and review carefully before investing. Past performance is notan indication of future results. Current yields may differ from those quoted. For more information about NIFCU$, including current rates, pleasesee www.nifcus.com or call Toll-Free (800) 634-6521.HighMark Capital Management, Inc. a registered investment adviser and wholly-owned subsidiary of Union Bank, N.A., serves as the InvestmentAdviser and manages NIFCU$ assets. Union Bank, N.A. is the Investment Manager, Trustee and Custodian of NIFCU$.This publication is for general information only and is not intended to provide specific investment advice to any individual.

National Investment Fund for Credit Unions (NIFCU$) 2nd Quarter 2011 Market Commentary

by NAFCU Services Corporation

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National Investment Fund for Credit Unions (NIFCU$) 2nd Quarter 2011 Market Commentary Document Transcript