The MMBB U.S. Bond Fund seeks to reflect the performance of a broad, market-weighted U.S. bond index. There is no guarantee that these objectives will be met.

The U.S. Bond Fund invests in intermediate bonds that mirror the Barclays Capital U.S. Aggregate Index, a widely-recognized benchmark of U.S. intermediate bond performance. Although the fund seeks to mirror the index, its results will be somewhat lower due to investment and administration expenses.

Because of the passive style of this fund, the manager does not make decisions as to which bonds are likely to perform better or worse than others. Rather, the fund is broadly representative of the U.S. bond market, holding bonds issued by the U.S. Treasury, U.S. corporations and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities--all with maturities of more than 1 year. The fund invests by "sampling" the index, meaning that it holds a broadly-diversified collection of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. All of the fund's investments will be selected through the sampling process, and at least 80% of the fund's assets will be invested in bonds held in the index. The fund maintains a dollar-weighted average maturity consistent with that of the index, generally in the five to ten year range. The net return will be the result of general intermediate fixed income market performance, less investment and administration expenses.

Opportunities

The U. S. Bond Fund is one of the more conservative choices along MMBB's spectrum of investment options. Over time it is expected to produce somewhat higher returns than the MMBB Money Market Fund and to exhibit far less volatility than any of the equity market funds.

This fund should experience enhanced investment returns in a declining interest rate environment.

Risks

All securities investments risk the loss of capital. An investment in the fund could lose money over short or even long periods.

One of the main risks with this fund is interest rate risk, the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the fund because it invests mainly in short- and intermediate-term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds. In a falling interest rate environment, the income component of the fund's total return will likely decline as well.

Although all bonds in this fund are considered to be "investment grade," this fund does carry credit risk, which is the chance that a bond issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

In addition, this fund carries some call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (repay) securities with higher coupons or interest rates before their maturity dates. The fund would then lose any price appreciation above the bond's call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund's income. For mortgage-backed securities, this risk is known as "prepayment risk." Call/prepayment risk should be low for the fund because it invests mainly in securities that are not callable.

Because this fund is an index fund, it has index sampling risk, which is the chance that the securities selected for the fund, in the aggregate, will not provide investment performance matching that of the fund's target index. Index sampling risk for the fund should be low.

If you are uncomfortable with the risks associated with the U.S. Bond Fund, you may want to consider 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 volatility of 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.

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.

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.

			TOTAL RETURN AS OF SEPTEMBER 3, 2010
FUND	Price		1 Day	Year to Date	1 Year	3 Years	5 Years	Since Inception*
US Bond Fund	$19.17		-0.27%	6.71%	7.61%	7.16%	5.49%	6.33%
			*The inception date is February 1, 2000.

From time to time MMBB contracts with one or more external managers to execute the stated strategy for this investment option. Recently the roster for this investment option included:

Vanguard

For the year 2010 total expenses are estimated at 0.58%. Returns shown are net of all expenses.

* “Lehman Brothers” is a registered trademark of Lehman Brothers, Inc.