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Second Quarter 2013 NIFCU$ Market Commentary (Article)

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The U.S. economy continues to improve, albeit at a moderate pace. Monetary stimulus appears to be prevailing over the fiscal drag from higher tax rates that took effect in March 2013. Although the final revision to 1Q growth showed a disappointing 1.8% gain in GDP, employment gains averaged 196 thousand per month for the second quarter; with the unemployment rate holding steady at 7.6%. Learn more at: www.nafcu,org/nifcus

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Second Quarter 2013 NIFCU$ Market Commentary (Article)

  1. 1. The U.S. economy continues to improve, albeit at a moderate pace. Monetary stimulus appears to be prevailing over the fiscal drag from higher tax rates that took effect in March 2013. Although the final revision to 1Q growth showed a disappointing 1.8% gain in GDP, employment gains averaged 196 thousand per month for the second quarter; with the unemployment rate holding steady at 7.6%. A somewhat disturbing development in the June report was that temporary employment rose to a 13 year high. This may or may not be related to the Obama administration’s recent decision to delay until January 2015 the implementation of the health care mandate for companies with 50 or more employees. The housing market continues to strengthen, with rising prices in many regions boosting property tax receipts for municipalities. Mortgage rates have also been moving up slightly, perhaps motivating some potential buyers to make a commitment sooner rather than later. Consumer pent up demand continues to drive sales, both durables and non-durables. One example of this strength was the June report for vehicle sales showing an increase to a 6 year high of 15.9m. However, signs are that 2Q GDP could be slightly weaker than the first three months of 2013. Market yields for Treasury bonds in the two to thirty year area of the curve rose in the quarter past, due to hints from the Federal Reserve Chairman that the $85 billion monthly purchases of U.S. Treasury and mortgage securities could be scaled back later in the year. Despite subsequent attempts at damage control by several Federal Reserve Governors, market psychology has turned. Short-term yields remain low; a situation we do not anticipate changing materially this year. Toward the end of the quarter U.S. Treasury issues and overnight repurchase agreements traded at or near zero. New rules that govern the investment operations of short term investment funds (such as NIFCU$), which are regulated by the Office of the Comptroller of the Currency (OCC), took effect July 1, 2013. Materially these changes have the impact of conforming this regulation more closely to that currently in effect for SEC regulated (Rule 2a-7 of the Investment Company Act of 1940) money market funds. As NIFCU$ is already in compliance, this will require no significant change to our strategy for managing the Fund. Hillary Elder Team Leader NIFCU$  350 California Street, 6th Floor  San Francisco, CA 94104 Toll-Free (800) 634-6521 www.nifcus.com Market Commentary Second Quarter 2013
  2. 2. I’m interested in finding out more about NIFCU$ Fund Analysis* Portfolio Composition As of June 30, 2013 Period Ending 2Q ’13 2Q ’12 2Q ‘11 Total Net Assets ($Mil) 58.6 122.7 187.7 WAM Range (min to max, in days) 6-19 5-16 13-24 WAM Average (in days) 12 11 18 Effective 30 day yield 0.01 0.03 0.01 Portfolio Review* Monthly Average Rate Apr 2013 0.01% May 2013 0.01% Jun 2013 0.01% *Figures based on unaudited data. Past performance is not an indication of future results. National Investment Fund for Credit Unions (NIFCU$© ) is a collective investment fund designed to serve the liquidity needs of the credit union industry. Union Bank is the Investment Manager, Trustee, and Custodian of NIFCU$. Investments in NIFCU$ units are not deposits or obligations of and are not endorsed or guaranteed by Union Bank® , N.A. (Union Bank), or any of its affiliates. Investments are not bank guaranteed, not FDIC insured, and may lose value. Please request and read the NIFCU$ Deed of Trust and Plan of Common Trust Funds booklet, which contains plan documents describing the Fund in detail, before executing any document or investing. Current yields may differ from those quoted. For more information about NIFCU$, including current rates, please see www.nifcus.com or call Toll Free (800) 634-6521. This publication is for general information only and is not intended to provide specific investment advice to any individual. ©2013 Union Bank, N.A. All rights reserved. Fund Profile Sponsor: Union Bank, N.A. Trustee & Investment Adviser: Union Bank, N.A. Sub-Adviser: HighMark® Capital Management, Inc. Custodian: Union Bank, N.A. Auditor: Deloitte & Touche Co-Sponsor: NAFCU Services Corporation State Domicile: California Unit Holder Base: Credit Unions Inception: September 25, 1975 Rating: Moody’s Investors Service Aaa-mf assigned 12/18/97 Certificates of deposit/BA's 22.17% Municipal VRDNs 10.08% Cash/Payables/ Receivables for securities sold (net) -0.01% O/N Repurchase Agreements 67.76%

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