Recent Federal Reserve Board member comments, plus improving economic readings, may mean this period of ultra-low interest rates is nearing an end. Higher oil prices have put a damper on consumer sentiment and should affect spending in the second quarter of 2011. Read more from NIFCU$ Fund Manager, Hillary Elder in this downloadable report. Learn more about the National Investment Fund for Credit Unions (NIFCU$) at http://www.nafcu.org/nifcus

1. First Quarter 2011
Market Commentary
Recent Federal Reserve Board member comments, plus improving economic readings, may mean this
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period of ultra-low interest rates is nearing an end. U.S. fourth quarter GDP was +3.1%, and for all of 2010
g q
was +2.8%. Additionally, inflation concerns are rising and now risk becoming a self-fulfilling prophecy, with
anecdotes of companies hoarding commodities. For the month of February, both the Consumer Price Index
(CPI) (+0.5%) and the Producer Price Index (PPI) (+1.6%) rose more than expected on higher food and fuel
costs. Year-over-year readings also showed an upward trend, with CPI + 2.1%, but PPI firming somewhat
less.
Higher oil prices have put a damper on consumer sentiment and should affect spending in the second
quarter of 2011. Although the devastating Japanese earthquake and tsunami will likely act as a drag on
future global d
f l b l demand, oil prices remain stubbornly above $100 per b
d il i i bb l b barrel.
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The glut of foreclosed properties continues to weigh on the housing sector, as Housing Starts plunged
22.5% in February month-over-month. Existing Home Sales fared no better, as they fell 9.6% from January,
and median prices fell 5.2% from a year before. The best news recently was the 216,000 March gain in non-
farm jobs, and a decline in the jobless rate to 8.8%.
After an initial spate of bi-partisanship, Washington policymakers reverted to type, wrangling over the budget
and trying to repeal the Dodd Frank legislation After two continuing resolutions to fund critical operating
Dodd-Frank legislation.
areas of the U.S. government, a deadline is rapidly approaching to resolve this issue and to increase the
debt ceiling.
Despite improving economic readings, the Federal Reserve continues to implement its much criticized, large
scale asset purchase plan (QEII), but have telegraphed that it will end as scheduled in June. Their
purchases are creating shortages, especially for Treasury securities. Over quarter-end, we again saw
Treasury securities with maturities of less than 3 months trading at zero, as demand outstripped supply and
dealers sharply reduced allocations of collateral available for repurchase agreements Investors were forced
agreements.
to scramble for other investment options.
In addition to the Fed’s effect on supply, market participants continue to be challenged by a general lack of
high-quality investment options. Although a proposal was advanced this quarter to wind down the two
largest GSEs, still in federal conservatorship, it was short on the specific detail needed for implementation.
Regardless, regulatory pressures remain for FNMA/ FHLMC to continue to shrink their loan portfolios. The
Euro-zone debt crisis is ongoing, with Portugal and Spain this quarter’s targets. Ireland saw a change in its
government,
government with the incoming party posturing in an effort to gain better financial terms on the bailout loans
they have received to-date.
Money-market participants continue to be burdened with a low rate environment, driven partly by new FDIC
assessment calculations, upcoming changes to procedures for tri-party repurchase agreement processing,
and other regulatory changes. In our view, until the Federal Reserve begins to unwind QEII and the Treasury
reinstates its Supplementary Finance Program (SFP) Treasury Bill issuance, following resolution of the debt
ceiling drama, there will be no relief from lower yields.
Hillary Elder, Team Leader
NIFCU$  350 California Street, 11th Floor  San Francisco, CA 94104
Toll-Free (800) 634-6521 www.nifcus.com

2. 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 assigned 12/18/97
Fund Analysis*
Period E di
P i d Ending 1Q ’11 1Q ’10 1Q ‘09
Total Net Assets ($Mil) 275.6 269.5 832.0
WAM Range (min to max, in days) 6-22 12-33 15-45
WAM Average (in days) 14 21 31
Effective 30 day yield 0.05 0.07 0.43
Portfolio Composition Portfolio Review*
As of March 31, 2011 Monthly Average Rate
Money Mkt Fund
U.S. Gov't
Sweeps
Jan 2011 0.08%
Agencies
28.20% 9.80%
Feb 2011 0.07%
Municipal VRDNs Mar 2011 0.05%
13.20%
O/N Repurchase
I’m interested in finding out more about NIFCU$
Agreements
12.60%
Certificates f
C tifi t of
Deposit/BA's
18.10%
Eurodollar Time
Deposits
18.10%
National Investment Fund for Credit Unions ("NIFCU$" or the "Fund") is a common trust fund administered by the Union Bank, N.A. and designed
to serve the liquidity needs of the credit union industry. Investments in NIFCU$ shares are not deposits or obligations of and are not endorsed or
guaranteed 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 to
maintain a stable net asset value of $1 per unit, there is no assurance that this will be achieved and it is possible to lose money by investing in
shares.
shares Only eligible credit unions may invest in shares of NIFCU$ State chartered credit unions should check their state's rules for compliance.
NIFCU$. state s compliance
Please request the NIFCU$ Deed of Trust & Plan of Common Trust Funds booklet and review carefully before investing. Past performance is not
an indication of future results. Current yields may differ from those quoted. For more information about NIFCU$, including current rates, please
see www.nifcus.com or call Toll-Free (800) 634-6521.
HighMark Capital Management, Inc. a registered investment adviser and wholly-owned subsidiary of Union Bank, N.A., serves as the Investment
Adviser and manages NIFCU$ 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.