The MMBB New Horizons Fund seeks to 1) provide "one-stop shopping" for members who seek long-term growth of capital, 2) to keep pace with or exceed the rate of inflation over time, 3) expand investment opportunities to potentially higher-returning alternative investments, 4) provide attractive rates of return in a pattern that is generally less volatile than equity market returns alone, 5) provide a risk and return profile that is distinctive among the MMBB investment options, and 6) mirror the investments of the Annuity Fund so that there will be a smooth transition into the retirement phase of an MMBB member's experience. There is no guarantee that these objectives will be met.

The New Horizons Fund blends U.S. and international stocks with some bond market exposure. A portion is includes a tactical asset allocation as well as an allocation to alternative investments. Alternative investments include, but are not limited to, investments such as real estate, timber, infrastructure (roads and bridges), distressed credit, and commodities.

• Click herefor more on our equity (stock) investments
• Click here for more on our bond investments
• Click here for more on our tactical investments
• Click here for more on our alternative investments

These various investments do not always rise and fall at the same time and to the same degree. By combining them in a single portfolio over an extended period of time, the investor is more likely to experience an acceptable rate of return with reasonable volatility. The net return of an investment in the New Horizons Fund equals the result of these markets' performance, plus or minus the fund managers' active performance, minus investment and administration expenses.

The New Horizons Fund is intended to give the investor as diverse an exposure as possible to the asset classes and investment styles that exist in the other MMBB investment portfolios.

Because bonds (fixed income) usually have return patterns that are very often opposite to stocks, the bond component tends to have a stabilizing affect on the portfolio. This can be particularly valuable when the stock market declines.

The New Horizons Fund includes alternative investments of various types. These may include, but not be limited to, real estate, timber, infrastructure (e.g., roads and bridges), distressed credit, and commodities. Many of these investments are illiquid, meaning that they cannot be readily bought or sold. As compensation for such illiquidity, these investments often provide long-term returns that are substantially higher than other asset classes.

The New Horizons Fund generally mirrors the investments of the Annuity Fund, the asset pool from which annuity payments are made to retirees. Since the Annuity Fund has a very long time horizon, it can afford to tie up assets in alternative investments for many years. For members who want to place their assets in a diversified investment option for multi-year periods and do not intend to periodically switch to other investment options, the New Horizons Fund may be an opportunity to access higher returns than some other investment options without extremely high volatility.

Risks

All investments risk the loss of capital. Although the combination of a variety of asset classes creates a very well diversified fund that should cushion shocks in any one of those areas, the return of this fund could still be negative.

That portion of the New Horizons Fund that is allocated to stocks (equities) will be as subject to equity market forces as any of the MMBB equity-only investment options.

When you use the click-through link above, you will find that part of the equity (stock market) exposure is gained through the use of long/short equity funds of hedge funds. Hedge funds are generally less regulated than other types of investment vehicles. They may leverage investment positions. This can magnify returns, both positive and negative. Although MMBB engages managers that they believe to be both prudent and reputable, it is possible for complex hedging strategies to go awry and harm that portion of the portfolio.

That portion of the New Horizons Fund that is allocated to bonds (fixed income) will be as subject to risks of the bond market, primarily losses from rising interest rates, as is the MMBB U.S. Bond Fund. Investments proving uncreditworthy can also create losses.

This fund allocates a portion of its assets to a tactical asset allocation strategy. This strategy is designated to have the flexibility to shift among equities, bonds or other asset classes. In the aggregate, then, this portion of the overall portfolio can increase the fund's exposure to equities and bonds beyond that indicated above.

Part of the way that this fund invests in equities is via hedge funds. Hedge funds are generally less regulated than other types of investment vehicles. They may leverage investment positions to magnify investment returns, both positive and negative. Although MMBB engages managers believed capable and responsible, it is still possible for hedge funds to lose value and harm that portion of the portfolio.

Alternative investments carry special risks, many of them related to illiquidity:

• An alternative investment program is typically built over a series of years. In the early years the alternative segment of the New Horizons fund could experience negative returns as management expenses are paid. The investment may not turn positive until later-year returns begin to outweigh new allocations.
• When an alternative investment is made, it is impossible to predict the market conditions that will exist in the year that fund managers expect to sell the investment. If market conditions are adverse, it could delay realization of the investment and lower the annualized return.
• As with any investment, the strategy may not work out as expected and may earn less, or even lose, money.
• Some alternatives, such as commodities, can experience dramatic losses from time to time.
• Most alternative investments are not regulated and so are unprotected by agencies such as the Securities and Exchange Commission that oversee publicly-traded instruments.

Values for certain investments are not available on a daily basis and/or available only on a lagged basis. This has two implications for a person who is buying or selling units of the New Horizons Fund on any given day. If the non-daily valued investments have declined in value since they were last valued, a person purchasing units of the New Horizons Fund could be purchasing them at a slightly higher price than if the actual value were known at the end of each business day. Conversely, if the non-daily valued investments have increased since they were last valued, a person selling units might redeem units at a lower price--and thus realize less profit--than if the actual value were known at the end of each business day.

If you are uncomfortable with the risks associated with the New Horizons Fund, you may want toconsider another MMBB investment option.

Fund Performance

To offer historical perspective on the long-term risk and return of this investment option in comparison to MMBB's other investment options, see the diagram below. It summarizes risk and return for more than ten years, and encompasses both rising and falling stock market periods as well as both economic expansions and recessions.

• The horizontal placement of the fund indicates the volatilityof the investment option, one measure of risk. Volatility of returns can be mathematically measured and attracts a lot of attention among investors because the higher the volatility the more the value of your investment tends to rise and fall. If you decide to exit the investment when it is declining, the value of your investment may be less than you expected. The further to the right, the more the value of the fund is likely to fluctuate; the further to the left, the more stable, or reliable, the return of the option, historically.
• The vertical placement of the fund indicates the average return the investment option generated over the last 10+ years. The higher up on the diagram, the greater the return, the lower down, the more modest the return, on average, per year.

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In reading this graph, please note the following:

• The data in the chart is periodically updated. As a result, the plot points may change.
• Past experience is no guarantee of future returns. This chart is just one tool to assist you in comparing one option to another.
• Returns can be negative as well as positive, especially in the short term.
• The New Horizons Fund has been offered to MMBB members only since 2006. Because the New Horizons Fund shares investments with MMBB's Annuity Fund, we have linked the New Horizons experience to the Annuity Fund's earlier years' experience to provide representative data.

			TOTAL RETURN AS OF SEPTEMBER 9, 2010
FUND	Price		1 Day	Year to Date	1 Year	3 Years	5 Years	Since Inception
New Horizons Fund*	$11.05		0.05%	2.66%	8.31%	-0.94%	3.18%	6.20%
			*The inception date for the New Horizons Fund was July 1, 2006. Because the New Horizons Fund shares investments with the Annuity Fund, the returns of the Annuity Fund are used to estimate returns of the New Horizons Fund prior to its inception date.

While it is valuable to view investment performance over long-term time horizons, looking at shorter time periods can give one insight as to how returns may fluctuate from over shorter time periods. The table below displays calendar year returns.

From time to time MMBB contracts with one or more external managers to execute the investment strategy for the New Horizons Fund. Recently the roster of managers included:

ABS
Alinda Capital Partners
American Century Investment Management
Artisan
Barlow Partners
Blackstone
Capital International
Clifton Group
Dodge & Cox
Dreyfus
Federal Street Partners
Fisher, Francis, Trees and Watts
GMO, LLC
J.P. Morgan
LSV
Mellon Capital Management
Mondrian Investment Group
Morgan Stanley
OFI
Oak Hill
Omega
Trust Company of the West
Vanguard
Varde
Wellington
Western Asset Management
Westfield

For the year 2010 total expenses are estimated at 1.11%. Returns shown are net of all expenses.

**The inception date for the New Horizons Fund was June 30, 2006. Because the New Horizons Fund shares investments with the Annuity Fund, the returns of the Annuity Fund are used to estimate returns of the New Horizons Fund prior to its inception date.