N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-08035
AFBA 5Star Fund, Inc.
(Exact name of registrant as specified in charter)
909 N. Washington Street Alexandria, VA					22314
(Address of principal executive offices)					(Zip code)
Michael E. Houchins 909 N. Washington Street Alexandria, VA  22314
(Name and address of agent for service)
Registrant’s telephone number, including area code:				703-706-5942
Date of fiscal year end:	March 31
Date of reporting period:		March 31, 2008

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

ANNUAL REPORT - MARCH 31, 2008

This report has been prepared for the general information of AFBA 5Star Fund shareholders. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current prospectus. Class I shares are offered primarily for institutional investors as well as to members, persons eligible to be members and employees of AFBA, and its affiliated entities. Shares of AFBA 5Star Fund, Inc. are distributed by PFPC Distributors, Inc., King of Prussia, Pennsylvania.

MESSAGE

TO OUR SHAREHOLDERS

Dear Fellow Shareholder:

We are pleased to provide you with the Annual Report for the AFBA 5Star Funds for the twelve months ended March 31, 2008. Included in this report you will find key financial information and commentaries on the performance of the Funds.

Over the past twelve months, several significant changes were made to the AFBA 5Star Funds. As was discussed in our Semi-Annual Report to Shareholders, your Board of Directors approved the interim appointment of a slate of new sub-advisors effective in July of 2007. In addition, several other recommendations were made to enhance the Funds' overall operations and reduce the on-going expenses of the Funds. It is my pleasure to report that you, our shareholders, overwhelmingly approved all recommendations including the appointment of our new sub-advisors.

AFBA 5Star Investment Management Company, the Advisor to the Funds, is committed to providing a comprehensive family of mutual funds for our shareholders. Each of our seven Funds is designed to meet the specific needs of our shareholders and is managed within a set of very well defined and consistent strategies. We seek to provide attractive long-term returns and to do so with an eye toward risk management. In carrying out that task, AFBA has engaged the services of several highly regarded and experienced firms to serve as sub-advisors to the funds. These firms have been selected based on their experience in managing portfolios with similar investment objectives to those of the AFBA 5Star Funds. We are delighted to have these new sub-advisors work on behalf of the Funds and are confident that they will serve our shareholders well.

The past year has presented a significant challenge for investors. Equity market volatility fueled by continued credit related issues, a distressed housing market and rising commodity prices have created a great deal of investor uncertainty. Further, previously untested investment instruments have demonstrated the inherent weakness that can accompany the securitization of traditional debt. That being said, the Federal Reserve's aggressive rate cuts coupled with the announced economic stimulus package seem to have brought some level of stability to the equity markets.

At AFBA, we encourage our shareholders to embrace a long-term investment perspective regardless of market conditions. We are believers in the potential for positive results available through sustained long-term investment in the financial markets. Although markets can be volatile over short time periods, it is the overall time in the market that determines financial success. History has shown that a properly diversified investment portfolio invested over a long time horizon can produce favorable results. In fact, periods of economic uncertainty and down markets often provide long-term investors with the ability to take advantage of attractive buying opportunities.

I would encourage you to visit our website at www.afbafunds.com where we have made available to you a variety of new and improved financial tools. Also, feel free to call us at 1-888-578-2733 to discuss any of the AFBA Funds.

We appreciate your confidence and thank you for investing in the AFBA 5Star Funds.

Robert E. Morrison, Jr.
President and Chief Investment Officer

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MANAGEMENT REVIEW

Investment Review and Commentary

AFBA 5Star Balanced Fund
(AFBAX, AFSAX, AFSBX, AFSCX)

Sub-advised by  The London Company (Equities)
Financial Counselors, Inc.
(Fixed income)

Objective and Strategy:

The Fund seeks to provide current income and long-term growth of capital and income by investing in stocks, bonds, and other fixed-income securities. It is designed to provide broad market exposure and low volatility versus the S&P 500 Index. It employs a balance approach which largely focuses on a portfolio of dividend-paying stocks and fixed-income securities.

Performance:

The Fund added to its strong long-term track record during the past year, outpacing both its broad-market benchmark and its style-specific, peer-based benchmark. For the year ended March 31, 2008, the Balanced Fund returned a favorable 4.75% versus the S & P 500 which returned -5.08%. The Lipper Balanced Fund Index, which is a measure of peer performance returned -0.63% for the same period. The AFBA 5Star Balanced Fund outperformed the S & P 500 Index for the 1, 3, 5 and 10 year periods ended March 31, 2008.

Investment Review and Portfolio Strategy:

Shareholders who made an investment in the Fund at the beginning of the year made money, while the benchmark posted negative returns over the same period. We find this recent performance particularly noteworthy, as the Fund is designed to provide a cushion to shareholders during volatile, downward moving markets.

Among the Fund's equity holdings, Merck, Microsoft, and Intel detracted from results on a relative basis. That being said, we still have confidence in the long term thesis on these companies. On a positive note, performance was helped by United Dominion Realty Trust, IBM, and Cedar Fair. IBM is a good example of a company taking steps to optimize its capital structure to increase shareholder value. Since last year, it has taken on a modest amount of additional debt and used the proceeds to buy back its stock, thus lowering its cost of capital. We believe this is good financial stewardship and that IBM's management is acting in shareholder's interest.

In the fixed income portion of the Fund's portfolio, duration and asset allocation positioning detracted from performance during the period. Market rates dropped sharply during the period and Treasury obligations produced a superior return compared to other fixed income sectors. The mix of individual securities contained within the portfolio and their yield curve placement added value to the overall performance of the fund.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star Large Cap Fund
(AFBEX, AFEAX, AFEBX, AFECX)

Sub-advised by  Marvin & Palmer Associates

Objective and Strategy:

The Fund invests primarily in the domestic common stock of companies with large market capitalizations. The investment approach focuses on sector and industry analysis, followed by fundamentals research of individual companies. Stock selection emphasizes high-quality growth companies that offer the opportunity for compelling long-term capital appreciation.

Performance:

The AFBA 5Star Large Cap Fund performed very well on a relative basis for the year ended March 31, 2008 returning a positive 4.05% compared to -5.08% and -0.76% for the S & P 500 and the Russell 1000 Growth Indexes respectively. The absolute return of the Fund was also noteworthy, as it produced a positive return unlike most equity funds. Significant advances

2

were made in the portfolio from July to the end of the year 2007 due primarily to effective stock selection.

Stock selection was particularly strong in the materials sectors driven by holdings in the agricultural related areas such as Monsanto and Mosaic. Underweighting of financials and the consumer related sectors helped as well.

A sector rotation and absolute uncertainty in the markets negatively impacted performance in January. Sectors and issues that produced performance earlier in the period, failed to produce attractive returns. Additionally, sectors that had been out of favor experienced a short-term rebound in early January resulting in trailing relative performance. A rebound in performance in February and March 2008 eliminated a good amount of underperformance resulting in a return to attractive 1, 3 and 5 year performance.

Investment Climate and Outlook:

Equity markets were extremely volatile during this period. From the peak in early October 2007, the S&P 500 Index dropped over 15% through the end of March 2008. This volatility was caused by the continuation of the crisis in the U.S. financial system. January was a particularly treacherous month around the world for leading stocks. The global market decline featured a wholesale liquidation of the 2007 leaders and a rush towards the groups that had been severely punished last year.

Going forward, we believe that we are nearing the end of the ongoing credit crisis and its impact on equities, as authorities in the United States and Europe have stepped forward to contain the problem. Various actions by the Federal Reserve such as cutting interest rates, opening the discount window and the recent intervention at Bear Stearns have been helpful. The recent offering of preferred stock at Lehman Brothers has been taken very positively. Lehman is high on the list of companies investors have been concerned about and the fact that they have been able to shore up their balance sheet is a good sign. While the economic news coming out of the U.S. has been negative, the combination of increased liquidity and continued growth in the international markets should be positive for equities.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star Total Return Bond Fund
(formerly AFBA 5Star High
Yield Bond Fund)
(AFHYX, AFHAX, AFHBX, AFHCX)

Sub-advised by  Financial Counselors, Inc.

Objective and Strategy:

The Fund seeks current income with capital growth as a secondary objective. To pursue its investment objectives, the Fund, under normal circumstances, invests at least 80% of its net assets in fixed-income securities.

Performance:

The Fund performed well given interest rate volatility for the year ended March 31, 2008, returning 4.78% as of March 31, 2008. For the same period, the Lehman Brothers Government/Corporate Bond Index returned 8.35%.

Investment Review and Portfolio Strategy:

Market rates plunged over the last nine months of the Fund's fiscal year as a brewing credit crisis and an excessive amount of leverage manifest themselves into a stampede to own U.S. Treasuries. High Yield, Investment Grade Corporate, Agency and Mortgage related bonds lagged the returns generated by Treasury securities. A rapid and persistent move by fixed income investors to shed any form of credit risk created one of the most lopsided return histories within major fixed income categories that we have seen in the last twenty five years.

The Fund's fixed income investment process attempts to add value compared to a static index by making tactical decisions regarding duration management, yield curve placement, asset allocation and security selection. Over a typical business cycle, the Fund will tend to overweight the non-Treasury fixed income

3

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MANAGEMENT REVIEW (continued)

sectors attempting to produce a yield profile that exceeds the yield level of the index.

The Fund's portfolio duration and asset allocation positioning detracted from performance during the period. Market rates dropped sharply during the period and Treasury obligations produced a superior return compared to other fixed income sectors. The mix of individual securities contained within the portfolio and their yield curve placement added value to the overall performance of the Fund except for one security. The Boston Private Bank Holdings preferred shares were a drag on the Fund's performance as this holding declined during the period due to credit concerns at this regional bank. The higher yield embedded in the portfolio holdings was not enough to offset the better price performance from a large Treasury component contained within the index (41%).

Investment Climate and Outlook:

Looking forward, we anticipate that the economy will grow at a trend below potential and maintain an inflationary bias that may be difficult to contain. The Fund is defensively positioned for the prospect of higher market rates and will be selectively increasing its exposure to investment grade corporate bonds. We expect that the large amount of fiscal and monetary stimulus already underway will help revive the economy during the second half of 2008 and that the non-Treasury fixed income sectors will outperform the highest quality U.S. government debt obligations.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star USA Global Fund
(AFGLX, AFUAX, AFUBX, AFUCX)

Sub-advised by  Marvin & Palmer Associates

Objective and Strategy:

The Fund invests primarily in the common stock of U.S.-based multinational companies. The investment approach focuses on sector and industry analysis, followed by fundamental research of individual companies. Stock selection emphasizes high-quality growth companies that offer the opportunity for compelling capital appreciation.

Performance:

The Fund posted a positive return for the year ended March 31, 2008 while many equity indices lost value posting a return of 3.78% for the period versus a return of -5.08% and -0.76% for the S&P 500 and Russell 1000 Growth indexes, respectively.

Stock selection was particularly strong in the materials sectors driven by holdings in the agricultural related areas such as Monsanto and Mosaic. Underweighting of financials and the consumer related sectors helped as well.

A sector rotation and absolute uncertainty in the markets negatively impacted performance in January. Sectors and issues that produced performance earlier in the period, failed to produce attractive returns. Additionally, sectors that had been out of favor experienced a short-term rebound in early January resulting in trailing relative performance. A rebound in performance in February and March 2008 eliminated a good amount of underperformance resulting in a return to attractive 1, 3 and 5 year performance.

Investment Climate and Outlook:

We remain positive on our outlook for the U.S. market. A substantial portion of the Fund's holdings generate much of their earnings growth in overseas markets. Based on extensive research and experience in foreign markets, confidence is high that growth in those countries and sectors will continue. As such, North America's leading large capitalization companies should continue to take advantage of that growth.

We believe that the ongoing credit crisis and its impact on equities is nearing an end, as authorities in the United States and Europe have stepped forward to contain the problem. Various actions by the Federal Reserve such as cutting interest rates, opening the discount window and the recent intervention at Bear

4

Stearns have been helpful. The recent offering of preferred stock at Lehman Brothers has been taken very positively. Lehman is high on the list of companies investors have been concerned about and the fact that they have been able to shore up their balance sheet is a good sign. While the economic news coming out of the U.S. has been negative, the combination of increased liquidity and continued growth in the international markets should be positive for equities.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star Science & Technology Fund
(AFITX, AFATX, AFBTX, AFCTX)

Sub-advised by  Trendstar Advisors, LLC

Objective and Strategy:

The Fund seeks the best opportunities for long-term growth by investing in the common stock of companies of any market capitalization in the science and technology sectors. It utilizes proprietary trend analysis to identify reasonably-priced stocks that are poised to benefit from scientific and technological advances. The investment approach focuses on industry analysis, with stock selection based on extensive fundamental research.

Performance:

The Science and Technology fund returned -7.36% for the year ended March 31, 2008 versus the S & P 500 and Lipper Science and Technology Fund Indexes which returned -5.08% and -2.93%, respectively, for the period. Performance during the period was helped by the sub-advisor's asset allocation decision to overweight a certain type of technology company: that subset of technology companies that focus their sales efforts largely within the healthcare industry.

Investment Review and Portfolio Strategy:

Certain Fund holdings which were involved in merger and acquisition activity within the technology sector also positively impacted performance versus its benchmark. The Fund's position in the semi-conductor industry was a drag on relative performance.

Technology companies with a focus on healthcare were among the most positive contributors to the performance of the Fund. For example, Illumina, a company that makes products used in genetic research, was added to the portfolio during November of 2007 and has made a very positive impact to overall returns. Sigma Aldrich, a company that makes and sells a broad range of organic chemicals and diagnostic reagents used in drug development, research, and high-tech manufacturing processes, was also a strong performer. The Fund also benefited from acquisitions of certain holdings during the first quarter of 2008. Of note were LifeCell and BEA Systems. LifeCell is a healthcare company that makes products used in tissue regeneration, typically used for burn treatment and reconstructive surgery, and was bought by Kinetic Concepts, a company focused on wound healing systems. BEA Systems makes software used in e-commerce and was bought by the software gi ant Oracle.

Holdings within the semiconductor industry detracted from performance. Sandisk, a maker of semiconductor storage chips for products such as digital cameras, was particularly weak due to a very competitive pricing environment for memory chips. Several other semiconductor-related holdings performed poorly, including FormFactor and Varian Semiconductor Equipment. Both are suppliers to semiconductor manufacturers such as Sandisk.

Investment Climate and Outlook:

The importance of consumer demand to the technology sector seems to be greater today than at any point in the past. Discretionary consumer dollars have been shifted to many new technology products over the past several years. Personal computers, cell phones, music players and digital video, to name a few, have replaced many prior forms of non-tech entertainment for consumers. For example, one of the Fund's holdings, the network equipment company Cisco Systems, has

5

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MANAGEMENT REVIEW (continued)

predicted that consumer Internet traffic will exceed business Internet traffic for the first time in 2008, with the bulk of this demand being driven by video over the internet. As bandwidth capability has improved, video quality has improved dramatically.

While the threat of recession and the weakened state of the consumer has resulted in earnings risk and generally lower prices for technology stocks, the Fund's sub-advisor believes that the current volatile market condition is temporary and is creating many new attractive investment opportunities for technology investors.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star Small Cap Fund
(AFCIX, AFCAX, AFCBX, AFCCX)

Sub-advised by  Trendstar Advisors, LLC
The London Company
Bjurman Barry and Associates

Objective and Strategy:

The Fund invests primarily in the domestic common stock of companies with small market capitalizations. It utilizes a multi-manager approach to offer enhanced diversification and return potential within the small cap growth asset class. Each investment manager within the Fund employs a distinct investment style. The combination of the various styles is designed to reduce overall volatility and provide greater potential return.

Performance:

The Fund did not perform well on a relative basis to its stated benchmarks returning -19.70% for the year ended March 31, 2008 versus -10.60% and -8.94% for the S & P 600 Small Cap Index and Russell 2000 Growth Indexes, respectively.

Investment Review and Portfolio Strategy:

The Fund, which has three style-specific sub-advisors, is designed to provide shareholders with broad access to the various sub-sectors within the small cap universe. This feature, which we believe to be a long-term value to shareholders, in fact hurt the Fund's short term performance for the year ended March 31, 2008. One of the small cap sub-sectors that the Fund provides shareholders access to is micro-cap stocks, the smallest of the small cap stocks. We believe the Fund's micro-cap exposure sets it apart from many other small cap offerings in the market. Unfortunately, the Fund's exposure to micro-cap growth stocks was a detriment to recent performance.

Investment Climate and Outlook:

We continue to believe that a diversified set of style specific managers presents an attractive investment opportunity for investors. The Fund seeks to take advantage of several well defined strategies with each on looking to add alpha versus the benchmark. AFBA 5Star Investment Management Company has assigned each of the three sub-advisors a defined sleeve of securities within the Fund.

The Fund has a current allocation of approximately 30% in micro-cap stocks. These companies tend to be the smallest but potentially fastest growing names within the small cap growth universe. The Fund's allocation to micro-cap stocks should position the Fund to benefit from any potential rebound of the smallest and fastest growing companies within the sector. We believe that this sector will benefit from any short-term market rebound and therefore will maintain our current allocation to that space.

The portion of the Fund invested in more core small cap companies continues to provide stability to the Fund. This portion of the portfolio seeks to identify those smaller companies with very strong balance sheets. Companies with very little debt and substantial free cash flow should continue to perform well given the current pressure on the market. Also, due to their financial strength, these companies tend to make excellent acquisition targets which we believe will result in favorable performance. We would expect to see continued stock repurchase activity for these companies which we believe provides good downside protection.

6

Finally, the remainder of the Fund which is invested in small growth companies maintains an emphasis on growth-at-a-reasonable price. We continue to believe that this strategy will provide our investors the opportunity to participate in a broad re-bound of small cap growth stocks while ensuring that valuations are in line with our expectations versus those of momentum managers. The net result should be lower volatility in the portfolio without giving up upside potential.

We believe that the Fund is appropriately positioned for a broad market rally. As has been evidenced historically, smaller capitalization companies tend to lead in times of economic recovery. The allocation of Fund assets within three specific strategies should enable us to provide shareholder value.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

AFBA 5Star Mid Cap Value Fund
(AFMIX, AFMAX, AFMBX, AFMCX)

Sub-advised by  Dreman Value Management LLC

Objective and Strategy:

The Fund invests in the domestic common stock of companies with small to mid market capitalizations. It seeks to identify high quality companies that are currently out-of-favor and are undervalued versus their peers. Based on extensive fundamental research and an emphasis on stocks that have low price/earnings ratios, the Fund selects stocks that offer above-average potential for long-term earnings growth.

Performance:

The AFBA 5Star Mid Cap Value Fund performed well versus its stated benchmark for the year ending March 31, 2008. The Fund returned -9.16% versus the Russell 2500 Value Index which returned -17.06%. The fund underperformed the S & P 400 Mid Cap Index which is made up of both value and growth and returned -6.97% for the same period.

Investment Review and Portfolio Strategy:

Certain sector allocations within the Fund both helped and hurt performance. The sectors that enhanced the Fund's performance include consumer discretionary, financials, information technology, and utilities. On the down side, many of the Fund's holdings in the health care, industrials, energy, and consumer staples sectors hurt performance.

From a stock standpoint, the Fund's best performers include Walter Industries, Cimarex Energy, Petrohawk Energy, Ruddick Corp., and Atwood Oceanics. Walter Industries owns and operates several coal mines and continued to re-price its contracts at more favorable terms. Cimarex Energy, Petrohawk, and Atwood Oceanics, have all benefited from the continued rise in oil prices. Ruddick Corp. which operates a regional chain of super markets, has posted over 10% top line growth and improved profitability significantly over the last few quarters, adding fuel to the stock's strong performance.

The Fund's worst performers include Idearc, Inc., Arris Group, UCBH, Boston Private Financial, and CIT Group. Idearc, Inc. a provider of yellow pages, has struggled as advertising revenue has been hurt by the slowing economy. The Fund's sub-advisor sold the stock as it feared the fundamentals would continue to deteriorate. Arris Group, a provider of communication technology to Regional Bell Operating Companies and cable companies, struggled as the management team tried to integrate an acquisition. With the integration of the acquisition behind them, we look for this stock to be a strong performer for the Fund. CIT Group, a third party financer, was hurt as investors worried about its loan book. With the stock trading at 0.4x book value, we believe the worst is over and continue to hold the company stock in the Fund's portfolio.

Please see Schedule of Investments for more information regarding specific portfolio holdings.

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MANAGEMENT REVIEW (continued)

Investment Results — Annual Total Return as of 3/31/08 (unaudited)

AFBA 5Star Fund	Inception Date	One Year Ended 3/31/08			Three Years Ended 3/31/08*			Five Years Ended 3/31/08*			Since Inception*			Life of Fund Cumulative*
Balanced
Class I	6/3/97		4.75	%		8.84	%		13.15	%		7.09	%		109.98	%
Class A	9/24/01		(1.27	%)		6.54	%		11.61	%		8.91	%		74.35	%
Class B	9/24/01		(0.36	%)		6.85	%		11.75	%		8.92	%		74.46	%
Class C	9/24/01		2.76	%		7.73	%		12.01	%		8.94	%		74.74	%
Class R	2/17/04		4.22	%		8.37	%		N/A			8.48	%		39.82	%
Large Cap
Class I	6/3/97		4.05	%		8.07	%		12.48	%		5.05	%		70.51	%
Class A	9/24/01		(1.98	%)		5.79	%		10.93	%		5.55	%		42.19	%
Class B	9/24/01		(0.98	%)		6.02	%		11.06	%		5.60	%		42.61	%
Class C	9/24/01		2.17	%		7.00	%		11.35	%		5.67	%		43.22	%
Class R	2/17/04		3.46	%		7.52	%		N/A			4.80	%		21.28	%
Total Return Bond
Class I	6/3/97		4.78	%		5.79	%		7.78	%		5.95	%		86.90	%
Class A	9/24/01		0.54	%		4.19	%		6.70	%		6.46	%		50.38	%
Class B	9/24/01		(0.10	%)		3.86	%		6.39	%		6.18	%		47.82	%
Class C	9/24/01		2.81	%		4.75	%		6.72	%		6.30	%		48.86	%
Class R	2/17/04		4.28	%		5.25	%		N/A			4.47	%		19.71	%
USA Global
Class I	6/3/97		3.78	%		9.38	%		13.86	%		6.23	%		92.32	%
Class A	9/24/01		(2.21	%)		7.08	%		12.29	%		6.78	%		53.36	%
Class B	9/24/01		(1.05	%)		7.37	%		12.44	%		6.85	%		54.00	%
Class C	9/24/01		1.93	%		8.28	%		12.72	%		6.91	%		54.50	%
Class R	2/17/04		3.25	%		8.81	%		N/A			5.13	%		22.89	%
Science & Technology
Class I	10/12/01		(7.36	%)		6.95	%		16.29	%		5.77	%		43.74	%
Class A	10/12/01		(12.67	%)		4.69	%		14.70	%		4.61	%		33.80	%
Class B	10/12/01		(12.20	%)		4.96	%		14.88	%		4.69	%		34.46	%
Class C	10/12/01		(9.11	%)		5.91	%		15.14	%		4.74	%		34.95	%
Class R	2/17/04		(7.78	%)		6.42	%		N/A			3.16	%		13.65	%
Small Cap
Class I	10/15/01		(19.70	%)		0.29	%		13.89	%		7.43	%		58.88	%
Class A	10/15/01		(24.38	%)		(1.84	%)		12.31	%		6.22	%		47.61	%
Class B	10/15/01		(23.02	%)		(1.42	%)		12.48	%		6.31	%		48.46	%
Class C	10/15/01		(21.04	%)		(0.69	%)		12.78	%		6.38	%		49.06	%
Class R	2/17/04		(20.13	%)		(0.21	%)		N/A			1.16	%		4.85	%
Mid Cap Value
Class I	5/1/02		(9.16	%)		4.80	%		14.17	%		7.18	%		50.71	%
Class A	5/1/02		(14.36	%)		2.56	%		12.61	%		5.90	%		40.35	%
Class B	5/1/02		(12.76	%)		3.04	%		12.77	%		5.97	%		40.88	%
Class C	5/1/02		(10.61	%)		3.77	%		13.06	%		6.12	%		42.09	%
Class R	2/17/04		(9.66	%)		4.26	%		N/A			4.37	%		19.26	%

*  Three year, five year and since inception returns are annualized for periods greater than one year, cumulative return is not annualized.

Performance quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. Returns current to the most recent month-end are available at www.afbafunds.com. Performance reflects fee waivers in effect. In the absence of fee waivers performance would have been lower. The performance tables and graphs do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. All indexes are unmanaged and not available for direct investment. Unlike a mutual fund, the performance of an index assumes no taxes, transaction costs, management fees or other expenses.

Performance information is restated to reflect the current maximum front-end sales charge (in the case of Class A Shares) or the maximum deferred sales charge (in the case of Class B and C Shares), and assumes the reinvestment of dividends and distributions. The maximum front-end sales charges for Class A Shares as follows: AFBA 5Star Balanced Fund, AFBA 5Star Large Cap Fund, AFBA 5Star USA Global Fund, AFBA 5Star Science & Technology Fund, AFBA 5Star Small Cap Fund and AFBA 5Star Mid Cap Value Fund - 5.50%: AFBA 5Star Total Return Bond Fund - 3.75%. The maximum contingent deferred sales charge for Class B Shares are as follows: AFBA 5Star Balanced Fund, AFBA 5Star Large Cap Fund, AFBA 5Star USA Global Fund, AFBA 5Star Science & Technology Fund , AFBA 5Star Small Cap Fund and AFBA 5Star Mid Cap Value - 4.75%: AFBA 5Star Total Return Bond Fund - 4.00%. The maximum contingent deferred sales charge for Class C Shares all the portfoli os is 1.00%.

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AFBA 5Star Balanced Fund – Class I Shares versus
S&P 500 Index⁽¹⁾ and Lipper Balanced Fund Index⁽²⁾

*inception

AFBA 5Star Total Return Bond Fund – Class I Shares versus Merrill Lynch High Yield Bond Index⁽⁴⁾, Lipper High Yield Fund Index⁽⁵⁾, and Lehman Brothers Government/Corporate Bond Index⁽¹³⁾

*inception

AFBA 5Star Large Cap Fund – Class I Shares versus S&P 500 Index⁽¹⁾ and Russell 1000 Growth Index⁽³⁾

*inception

AFBA 5Star USA Global Fund – Class I Shares versus S&P 500 Index⁽¹⁾ and Russell 1000 Growth Index⁽³⁾

*inception

9

PORTFOLIO

MANAGEMENT REVIEW (continued)

AFBA 5Star Science & Technology Fund – Class I Shares versus S&P 500 Index⁽¹⁾ and Lipper Science & Technology Fund Index⁽⁶⁾

*inception

AFBA 5Star Mid Cap Value Fund – Class I Shares versus S&P 400 Mid Cap Index⁽¹⁰⁾, Lipper Mid Cap Fund Index⁽¹¹⁾ and Russell 2500 Value Index⁽¹²⁾

*inception

AFBA 5Star Small Cap Fund – Class I Shares versus S&P 600 Small Cap Index⁽⁷⁾, Lipper Small Cap Fund Index⁽⁸⁾ and Russell 2000 Growth Index⁽⁹⁾

*inception

10

BENCHMARK INFORMATION

¹  The S&P 500 Index is a capitalization-weighted index of 500 large capitalization stocks which is designed to measure broad domestic securities markets. The performance of the S&P 500 Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment managementfees. It is not possible to invest directly in an index.

²  The Lipper Balanced Fund Index is an unmanaged index and includes the 30 largest mutual funds whose primary objective is to conserve principal by maintaining at all times a balanced portfolio of both stocks and bonds. Typically the stock/bond ratio of funds in the index ranges around 60%/40%. It is not possible to invest directly in an index.

³  The Russell 1000 Growth Index measures the performance of companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index measures the performance of the 1,000 largest U.S. companies in the Russell 3000 Index based on market capitalization. The performance of the Russell 1000 Growth Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index. The Manager believes this benchmark index more appropriately reflects the types of securities held in the portfolio and provides the best comparative performance information.

⁴  The Merrill Lynch High Yield Cash Bond Index is an unmanaged index comprised of over 1,200 high yield bonds representative of the high yield bond market as a whole. The index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of management fees. It is not possible to invest directly in an index.

⁵  The Lipper High Yield Fund Index is a widely recognized index of mutual funds that invest primarily in high yield bonds. It is not possible to invest directly in an index. In light of the change in the AFBA 5Star Total Return Bond Fund's investment objective and strategies, this index will not be considered the Fund's primary benchmark. The Lehman Brothers Government/Corporate Bond Index will be the primary index going forward.

⁶  The Lipper Science & Technology Fund Index is an unmanaged, equally-weighted performance index of the largest qualifying mutual funds (based on net assets) in the Lipper Science and Technology classification. There are currently 30 funds represented in this index. The index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index.

⁷  The S&P 600 Small Cap Index is a market value weighted index consisting of 600 domestic stocks chosen for market size, liquidity, and industry group representation. The performance of the S&P 600 Small Cap Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index.

⁸  The Lipper Small Cap Fund Index is comprised of the top 25-30 managed mutual funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalization (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. It is not possible to invest directly in an index.

⁹  The Russell 2000 Growth Index is comprised of securities in the Russell 2000 Index with higher than average price-to-book ratios and forecasted growth values. The Russell 2000 Index is an unmanaged index comprised of the 2,000 smallest of the 3,000 largest U.S. companies based on market capitalization. The performance of the Russell 2000 Growth Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index. The Manager believes this benchmark index more appropriately reflects the types of securities held in the portfolio and provides the best comparative performance information.

¹⁰  The S&P 400 Mid Cap Index is an unmanaged, market capitalization-weighted index of 400 medium-capitalization stocks designed to measure the mid-size company segment of the U.S. markets. The performance of the S&P 400 Mid Cap Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index.

¹¹  The Lipper Mid Cap Fund Index is comprised of mutual funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalization (on a three-year weighted basis) of less than 300% of the dollar-weighted median market capitalization of the S&P Mid Cap 400 Index. These funds have latitude with respect to the valuations (price-to-earnings, price-to-book, and three-year earnings growth) of the securities in their portfolios and may alter their portfolios' style over time. It is not possible to invest directly in an index.

¹²  The Russell 2500 Value Index measures the performance of companies in the Russell 2500 Index with lower price-to-book ratios and lower forecasted growth values. The performance of the Russell 2500 Value Index reflects the reinvestment of dividends and capital gains, but does not reflect the deduction of any investment management fees. It is not possible to invest directly in an index. The Manager believes this benchmark index more appropriately reflects the types of securities held in the portfolio and provides the best comparative performance information.

¹³  The Lehman Brothers Government/Corporate Bond Index includes securities in the Government and Corporate Indices. Specifically, the Government Index includes treasuries (i.e., public obligations of the U.S. Treasury that have remaining maturities of more than one year) and agencies (i.e., publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government). The Corporate Index includes publicly issued U.S. corporate and Yankee debentures and secured notes that meet specified maturity, liquidity, and quality requirements. The Manager believes this benchmark index more appropriately reflects the types of securities held in the portfolio and provides the best comparative performance information.

11

AFBA 5STAR FUND

SUMMARY OF PORTFOLIO HOLDINGS (unaudited)
  AS OF 03/31/08

BALANCED FUND

Sectors1
Stocks
Consumer Staples	10.46	%
Energy	8.18	%
Entertainment	2.20	%
Financials	6.60	%
Health Care	8.67	%
Industrials	3.08	%
Information Technology	9.99	%
Insurance	4.15	%
REITS	4.39	%
Telecommunications	2.13	%
Transportation	1.84	%
Utilities	2.74	%
Agency Obligations	13.12	%
U.S. Treasury Obligations	4.75	%
Corporate Bonds
Consumer Discretionary	1.45	%
Consumer Staples	1.90	%
Financials	4.28	%
Health Care	1.24	%
Retail	0.40	%
Telecommunications	0.63	%
Preferred Stocks
Financials	2.77	%
Insurance	1.22	%
Convertible Corporate Bonds
Consumer Discretionary	2.50	%
Money Market Account	1.29	%
Rights	0.02	%
TOTAL	100.00	%

LARGE CAP FUND

Sectors1
Stocks
Capital Goods	12.86	%
Consumer Durables & Apparel	1.46	%
Consumer Services	3.11	%
Diversified Financials	5.53	%
Energy	15.18	%
Food, Beverages & Tobacco	4.50	%
Health Care Equipment & Services	2.72	%
Household & Personal Products	1.41	%
Materials	14.37	%
Medical Equipment & Supplies	1.45	%
Pharmaceuticals, Biotechnology & Life Sciences	6.84	%
Retailing	9.10	%
Software & Services	2.90	%
Technology Hardware & Equipment	8.91	%
Telecommunication Services	2.67	%
Transportation & Services	2.39	%
Utilities	1.47	%
Money Market Account	3.13	%
TOTAL	100.00	%

TOTAL RETURN BOND FUND

Sectors1
Agency Obligations	43.46	%
Corporate Bonds
Consumer Discretionary	10.19	%
Consumer Staples	3.19	%
Financials	9.77	%
Healthcare	1.76	%
Industrials	0.16	%
Retail	1.91	%
Telecommunication Services	3.30	%
U.S. Treasury Obligations	21.79	%
Common Stock	0.93	%
Convertible Corporate Bond	2.14	%
Convertible Preferred Stocks	1.40	%
TOTAL	100.00	%

USA GLOBAL FUND

Sectors1
Stocks
Capital Goods	14.73	%
Consumer Durables	3.35	%
Consumer Services	6.07	%
Diversified Financials	4.47	%
Energy	12.34	%
Food, Beverages & Tobacco	5.67	%
Health Care Equipment & Services	1.91	%
Household & Personal Products	2.74	%
Materials	13.72	%
Medical Equipment & Supplies	2.36	%
Pharmaceutical, Biotechnology & Life Sciences	7.97	%
Retailing	4.43	%
Software & Services	1.54	%
Technology Hardware & Equipment	9.93	%
Telecommunication Services	2.70	%
Transportation Services	0.88	%
Money Market Account	5.19	%
TOTAL	100.00	%

SCIENCE & TECHNOLOGY FUND

Sectors1
Stocks
Consumer Discretionary	3.14	%
Health Care	31.59	%
Industrials	0.99	%
Information Technology	56.42	%
Materials	2.75	%
Money Market Account	5.11	%
TOTAL	100.00	%

¹As a percentage to total holdings as of March 31, 2008. Holdings are subject to change.

12

SMALL CAP FUND

Sectors1
Stocks
Auto & Transportation	0.43	%
Basic Materials	2.72	%
Capital Goods	2.80	%
Commercial/Industrial Services	1.46	%
Consumer Discretionary	8.57	%
Consumer Durables	0.66	%
Consumer Services	0.58	%
Consumer Staples	3.28	%
Electronic Technology	15.56	%
Energy	4.52	%
Financials	9.83	%
Health Care	18.61	%
Industrials	3.36	%
Information Technology	14.61	%
Materials	0.99	%
Other	1.11	%
Producer Manufacturing	2.93	%
Retail Trade	2.04	%
Services	0.16	%
Transportation	1.74	%
Utilities	0.77	%
Money Market Account	3.27	%
TOTAL	100.00	%

MID CAP VALUE FUND

Sectors1
Stocks
Capital Goods	15.28	%
Consumer Discretionary	1.59	%
Consumer Durables & Apparel	3.54	%
Consumer Staples	11.69	%
Energy	16.55	%
Financials	4.07	%
Health Care	9.14	%
Information Technology	10.03	%
Insurance	13.95	%
Materials	3.63	%
Retail	0.93	%
Money Market Account	9.60	%
TOTAL	100.00	%

¹As a percentage to total holdings as of March 31, 2008. Holdings are subject to change.

13

AFBA 5STAR FUND

EXPENSE TABLES (unaudited)

  AS OF 03/31/08

Expense Tables

As a Shareholder of the Fund, you incur two types of costs: (1) transaction cost, including front and back end sales charges (loads) or redemption fees, where applicable; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees, where applicable; and other Fund expenses. This Example is intended to help you understand your ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing cost of investing in other mutual funds.

The Example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (10/01/07-03/31/08).

The information under "Actual Performance," together with the amount you invested, allows you to estimate actual expenses incurred over the reporting period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60) and multiply the cost show for your share class, in the row entitled "Expenses Incurred During Period" to estimate the expenses paid on your account during this period.

The information under "Hypothetical Performance," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expense you incurred for the period. You may use this information to compare the ongoing costs of investing in the Fund and other Funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses show in the table are meant to highlight your ongoing costs only and do not reflect any transactional cost, such as front and back end sales charges (loads) or redemption fees, where applicable. Therefore, the hypothetical information is useful in comparing ongoing cost only, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional cost were included, your cost would have been higher.

Disclosure of Fund Expenses  For the period October 1, 2007 to March 31, 2008

AFBA 5Star Balanced Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	968.20	$	966.20	$	962.60	$	962.60	$	965.30	$	1,019.53	$	1,018.27	$	1,014.47	$	1,014.47	$	1,017.00
Expenses Paid During Period	$	5.31	$	6.54	$	10.21	$	10.21	$	7.76	$	5.47	$	6.73	$	10.53	$	10.53	$	8.00

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.08%, 1.33%, 2.08%, 2.08% and 1.58% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

AFBA 5Star Large Cap Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	870.80	$	869.70	$	866.40	$	866.50	$	868.40	$	1,018.52	$	1,017.25	$	1,013.46	$	1,013.46	$	1,015.99
Expenses Paid During Period	$	5.99	$	7.15	$	10.64	$	10.64	$	8.31	$	6.48	$	7.75	$	11.54	$	11.54	$	9.01

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.28%, 1.53%, 2.28%, 2.28% and 1.78% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

AFBA 5Star Total Return Bond Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	1,036.30	$	1,034.70	$	1,031.30	$	1,030.80	$	1,033.30	$	1,019.53	$	1,018.27	$	1,014.47	$	1,014.47	$	1,017.00
Expenses Paid During Period	$	5.50	$	6.77	$	10.56	$	10.56	$	8.03	$	5.47	$	6.73	$	10.53	$	10.53	$	8.00

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.08%, 1.33%, 2.08%, 2.08% and 1.58% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

AFBA 5Star USA Global Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	869.00	$	867.60	$	864.60	$	864.60	$	866.90	$	1,018.52	$	1,017.25	$	1,013.46	$	1,013.46	$	1,015.99
Expenses Paid During Period	$	5.98	$	7.14	$	10.63	$	10.63	$	8.31	$	6.48	$	7.75	$	11.54	$	11.54	$	9.01

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.28%, 1.53%, 2.28%, 2.28% and 1.78% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

14

AFBA 5Star Science & Technology Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	815.80	$	814.40	$	811.80	$	811.80	$	813.90	$	1,017.81	$	1,016.55	$	1,012.75	$	1,012.75	$	1,015.28
Expenses Paid During Period	$	6.49	$	7.62	$	11.01	$	11.01	$	8.75	$	7.19	$	8.45	$	12.25	$	12.25	$	9.72

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.42%, 1.67%, 2.42%, 2.42% and 1.92% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

AFBA 5Star Small Cap Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	753.80	$	753.20	$	750.20	$	750.40	$	751.80	$	1,018.52	$	1,017.25	$	1,013.46	$	1,013.46	$	1,015.99
Expenses Paid During Period	$	5.61	$	6.71	$	9.98	$	9.98	$	7.80	$	6.48	$	7.75	$	11.54	$	11.54	$	9.01

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.28%, 1.53%, 2.28%, 2.28% and 1.78% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

AFBA 5Star Mid Cap Value Fund
	Actual Performance										Hypothetical Performance (5% return before expenses)
	I Shares		A shares		B Shares		C Shares		R Shares		I Shares		A Shares		B Shares		C Shares		R Shares
Beginning Account Value 10/01/07	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00	$	1,000.00
Ending Account Value 03/31/08	$	860.70	$	858.90	$	856.20	$	856.40	$	857.50	$	1,018.52	$	1,017.25	$	1,013.46	$	1,013.46	$	1,015.99
Expenses Paid During Period	$	5.95	$	7.11	$	10.58	$	10.58	$	8.27	$	6.48	$	7.75	$	11.54	$	11.54	$	9.01

For each class of Fund, expenses are equal to the Fund's annualized expense ratio of 1.28%, 1.53%, 2.28%, 2.28% and 1.78% for Classes I, A, B, C and R, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

15

AFBA 5STAR

BALANCED FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 63.96%
CONSUMER STAPLES — 10.38%
	30,200	Altria Group, Inc.	$	670,440
	20,400	British American Tobacco PLC ADR		1,545,300
	30,200	Philip Morris International, Inc.*		1,527,516
	40,000	The Coca-Cola Co.		2,434,800
	41,000	UST, Inc.		2,235,320
				8,413,376
ENERGY — 8.12%
	23,400	Chevron Corp.		1,997,424
	35,000	ConocoPhillips		2,667,350
	35,000	Kinder Morgan Energy Partners LP		1,914,150
				6,578,924
ENTERTAINMENT — 2.18%
	75,986	Cedar Fair LP		1,766,674
FINANCIALS — 6.55%
	30,000	Bank of America Corp.		1,137,300
	13,600	Federal National Mortgage Association		327,080
	95,000	MCG Capital Corp.		863,550
	36,000	Wachovia Corp.		972,000
	69,000	Wells Fargo & Co.		2,007,900
				5,307,830
HEALTH CARE — 8.61%
	22,000	Bristol-Myers Squibb Co.		468,600
	36,100	Johnson & Johnson		2,341,807
	37,000	Merck & Co., Inc.		1,404,150
	20,000	Novartis AG ADR		1,024,600
	83,000	Pfizer, Inc.		1,737,190
				6,976,347
INDUSTRIALS — 3.06%
	67,000	General Electric Co.		2,479,670
INFORMATION TECHNOLOGY — 9.92%
	100,000	Intel Corp.		2,118,000
	26,000	International Business Machines Corp.		2,993,640
	103,000	Microsoft Corp.		2,923,140
				8,034,780
INSURANCE — 4.12%
	570	Berkshire Hathaway, Inc. Class B*		2,549,553
	32,000	ING Groep, N.V.		785,920
				3,335,473
REITS — 4.36%
	55,000	First Industrial Realty Trust, Inc. REIT		1,152,250
	97,000	UDR, Inc. REIT		2,378,440
				3,530,690
TELECOMMUNICATIONS — 2.11%
	47,000	Verizon Communications, Inc.		1,713,150
TRANSPORTATION — 1.83%
	16,000	FedEx Corp.		1,482,720
UTILITIES — 2.72%
	54,000	Dominion Resources, Inc.		2,205,360
TOTAL COMMON STOCKS				51,824,994
(COST $51,299,855)

See Accompanying Notes to Financial Statements.
16

FACE AMOUNT		COMPANY	MARKET VALUE
AGENCY OBLIGATIONS — 13.02%
$	700,000	Federal Home Loan Bank, 5.75% due 05/15/12	$	773,179
	390,000	Federal Home Loan Bank, 3.375% due 02/27/13		391,860
	770,000	Federal Home Loan Mortgage Corporation, 4.125% due 07/12/10		799,875
	1,600,000	Federal Home Loan Mortgage Corporation, 5.125% due 08/23/10		1,700,543
	1,307,657	Federal Home Loan Mortgage Corporation, 5.50% due 04/01/37		1,322,258
	1,084,189	Federal National Mortgage Association, 4.50% due 08/01/20		1,080,775
	2,000,000	Federal National Mortgage Association, 4.75% due 03/12/10		2,093,862
	1,150,000	Federal National Mortgage Association, 5.00% due 09/15/08		1,165,429
	1,194,090	Federal National Mortgage Association, 6.00% due 10/01/37		1,224,499
TOTAL AGENCY OBLIGATIONS				10,552,280
(COST $10,168,202)
U.S. TREASURY OBLIGATIONS — 4.72%
	1,250,000	U.S. Treasury Note, 4.50% due 05/15/10		1,326,759
	475,000	U.S. Treasury Note, 4.00% due 02/15/14		512,369
	1,160,000	U.S. Treasury Note, 4.75% due 08/15/17		1,283,794
	625,000	U.S. Treasury Note, 5.00% due 05/15/37		699,366
TOTAL U.S. TREASURY OBLIGATIONS				3,822,288
(COST $3,610,716)
CORPORATE BONDS — 9.84%
CONSUMER DISCRETIONARY — 1.44%
	1,000,000	Mandalay Resort Group, 7.625% due 07/15/13		927,500
	222,000	Metlife, Inc., 6.125% due 12/01/11		238,398
				1,165,898
CONSUMER STAPLES — 1.89%
	1,200,000	Pilgrim's Pride Corp., 8.375% due 05/01/17		1,062,000
	450,000	The Coca-Cola Co., 5.35% due 11/15/17		470,444
				1,532,444
FINANCIALS — 4.25%
	275,000	American Express Travel Related Services, 5.25% due 11/21/11 (b)		275,875
	250,000	Bank of America Corp., 5.375% due 09/11/12		260,320
	300,000	Citigroup, Inc., 6.00% due 02/21/12		306,536
	250,000	General Electric Capital Corp., 5.50% due 06/04/14		260,822
	125,000	Goldman Sachs Group, Inc. (The), 6.60% due 01/15/12		132,274
	750,000	Marshall & IIsley Corp., 5.626% due 08/17/09		750,800
	125,000	Merrill Lynch & Co., Inc., 5.77% due 07/25/11		126,713
	250,000	Morgan Stanley, 5.05% due 01/21/11		250,963
	375,000	Suntrust Banks, Inc., 5.25% due 11/05/12		369,837
	300,000	Wachovia Corp., 5.25% due 08/01/14		296,714
	400,000	Wells Fargo & Co., 5.25% due 10/23/12		415,248
				3,446,102
HEALTH CARE — 1.23%
	1,000,000	Psychiatric Solutions, Inc., 7.75% due 07/15/15		1,000,000
RETAIL — 0.40%
	325,000	Home Depot, Inc., 3.75% due 09/15/09		321,868
TELECOMMUNICATIONS — 0.63%
	225,000	AT&T, Inc., 4.95% due 01/15/13		226,001
	275,000	Vodafone Group PLC, 5.35% due 02/27/12		278,717
				504,718
TOTAL CORPORATE BONDS				7,971,030
(COST $8,122,286)

See Accompanying Notes to Financial Statements.
17

AFBA 5STAR

BALANCED FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES OR FACE AMOUNT		COMPANY	MARKET VALUE
PREFERRED STOCKS — 3.96%
FINANCIALS — 2.75%
	9,400	Capital One Capital II	$	185,180
	52,000	First Industrial Realty Trust, Inc. REIT		1,606,280
	20,000	Public Storage		435,000
				2,226,460
INSURANCE — 1.21%
	40,000	Markel Corp.		984,000
TOTAL PREFERRED STOCKS				3,210,460
(COST $3,764,450)
CONVERTIBLE CORPORATE BONDS — 2.48%
CONSUMER DISCRETIONARY — 2.48%
$	1,000,000	Lions Gate Entertainment Corp., 2.9375% due 10/15/24		1,046,250
	1,000,000	Lions Gate Entertainment Corp., 3.625% due 03/15/25 (c)		966,250
TOTAL CONVERTIBLE CORPORATE BONDS				2,012,500
(COST $1,896,362)
MONEY MARKET ACCOUNT — 1.28%
	1,039,452	PNC Bank Money Market (a)		1,039,452
TOTAL MONEY MARKET ACCOUNT				1,039,452
(COST $1,039,452)
RIGHTS — 0.02%
	13,571	MCG Capital Corp.* (expiration 4/18/08)		14,521
TOTAL RIGHTS				14,521
(COST $0)
TOTAL INVESTMENTS — 99.28%				80,447,525
(COST $79,901,323)#
Other assets in excess of liabilities — 0.72%				581,778
TOTAL NET ASSETS — 100.00%			$	81,029,303

ADR — American Depository Receipt

LP — Limited Partnership

PLC — Public Liability Company

REIT — Real Estate Investment Trust

  (a)  The interest rate on March 31, 2008 was 2.57%

  (b)  Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

  (c)  Stepped coupon bond — the rate shown is the rate in effect on March 31, 2008.

  *  Non-income producing security

  #  Federal Income Tax Information: Net unrealized appreciation of investments is comprised of gross appreciation of $5,966,065 and gross depreciation of $5,419,863 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $79,901,323).

See Accompanying Notes to Financial Statements.
18

AFBA 5STAR

LARGE CAP FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 95.80%
CAPITAL GOODS — 12.72%
	9,300	Caterpillar, Inc.	$	728,097
	8,800	Deere & Co.		707,872
	5,500	Emerson Electric Co.		283,030
	2,700	Fluor Corp.		381,132
	5,000	General Dynamics Corp.		416,850
	4,200	Jacobs Engineering Group, Inc.*		309,078
	5,800	Philip Morris International, Inc.*		293,364
				3,119,423
CONSUMER DURABLES & APPAREL — 1.44%
	5,200	NIKE, Inc. Class B		353,600
CONSUMER SERVICES — 3.07%
	10,200	Avon Products, Inc.		403,308
	9,400	YUM! Brands		349,774
				753,082
DIVERSIFIED FINANCIALS — 5.47%
	4,400	Northern Trust Corp.		292,468
	9,600	State Street Corp.		758,400
	9,000	US Bancorp		291,240
				1,342,108
ENERGY — 15.02%
	4,600	Apache Corp.		555,772
	6,400	Consol Energy, Inc.		442,816
	3,500	Devon Energy Corp.		365,155
	4,100	Exxon Mobil Corp.		346,778
	4,600	Ultra Petroleum Corp.*		356,500
	10,000	Weatherford International Ltd.*		724,700
	14,400	XTO Energy, Inc.		890,784
				3,682,505
FOOD, BEVERAGES & TOBACCO — 4.45%
	5,800	Altria Group, Inc.		128,760
	15,800	The Coca-Cola Co.		961,746
				1,090,506
HEALTH CARE EQUIPMENT & SERVICES — 2.69%
	6,000	Medco Health Solutions, Inc.*		262,740
	7,000	Thermo Fisher Scientific, Inc.*		397,880
				660,620
HOUSEHOLD & PERSONAL PRODUCTS — 1.40%
	4,400	Colgate-Palmolive Co.		342,804
MATERIALS — 14.21%
	2,200	Freeport-McMoRan Copper & Gold, Inc.		211,684
	8,500	Monsanto Co.		947,750
	11,200	Newmont Mining Corp.		507,360
	6,800	Nucor Corp.		460,632
	8,400	The Mosaic Corp.*		861,840
	3,900	United States Steel Corp.		494,793
				3,484,059
MEDICAL EQUIPMENT & SUPPLIES — 1.43%
	4,100	Becton Dickinson & Co.		351,985

See Accompanying Notes to Financial Statements.
19

AFBA 5STAR

LARGE CAP FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES — 6.77%
	8,300	Genzyme Corp.*	$	618,682
	20,200	Gilead Sciences, Inc.*		1,040,906
				1,659,588
RETAILING — 9.00%
	4,200	Amazon.com, Inc.*		299,460
	12,000	Staples, Inc.		265,320
	5,500	Urban Outfitters, Inc.*		172,425
	20,300	Wal-Mart Stores, Inc.		1,069,404
	12,100	TJX Cos., Inc.		400,147
				2,206,756
SOFTWARE & SERVICES — 2.86%
	400	Google, Inc. Class A*		176,188
	9,100	salesforce.com, Inc.*		526,617
				702,805
TECHNOLOGY HARDWARE & EQUIPMENT — 8.81%
	3,800	Apple, Inc.*		545,300
	21,400	Cisco Systems, Inc.*		515,526
	9,200	Hewlett-Packard Co.		420,072
	5,900	International Business Machines Corp.		679,326
				2,160,224
TELECOMMUNICATION SERVICES — 2.64%
	2,800	L-3 Communications Holdings, Inc.		306,152
	8,300	Qualcomm, Inc.		340,300
				646,452
TRANSPORTATION & SERVICES — 2.36%
	5,200	CSX Corp.		291,564
	2,300	Union Pacific Corp.		288,374
				579,938
UTILITIES — 1.46%
	4,400	Exelon Corp.		357,588
TOTAL COMMON STOCKS				23,494,043
(COST $22,309,528)
MONEY MARKET ACCOUNT — 3.10%
	759,382	PNC Bank Money Market (a)		759,382
TOTAL MONEY MARKET ACCOUNT				759,382
(COST $759,382)
TOTAL INVESTMENTS — 98.90%				24,253,425
(COST $23,068,910)#
Other assets in excess of liabilities — 1.10%				270,365
TOTAL NET ASSETS — 100.00%			$	24,523,790

  (a)  The interest rate on March 31, 2008 was 2.57%

  *  Non-Income Producing

  #  Federal Income Tax Information: Net unrealized appreciation of investments is comprised of gross appreciation of $1,882,157 and gross depreciation of $752,874 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $23,124,142.

See Accompanying Notes to Financial Statements.
20

AFBA 5STAR

TOTAL RETURN BOND FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

FACE AMOUNT		COMPANY	MARKET VALUE
AGENCY OBLIGATIONS — 43.06%
$	2,040,000	Federal Home Loan Bank, 5.75% due 05/15/12	$	2,253,266
	1,000,000	Federal Home Loan Mortgage Corporation, 5.00% due 06/11/09		1,032,305
	2,300,000	Federal Home Loan Mortgage Corporation, 5.125% due 08/23/10		2,444,530
	1,494,465	Federal Home Loan Mortgage Corporation, 5.50% due 04/01/37		1,511,152
	1,355,724	Federal National Mortgage Association, 4.50% due 08/01/20		1,351,455
	1,000,000	Federal National Mortgage Association, 4.75% due 03/12/10		1,046,931
	500,000	Federal National Mortgage Association, 5.00% due 09/15/08		506,708
	1,492,612	Federal National Mortgage Association, 6.00% due 10/01/37		1,530,624
TOTAL AGENCY OBLIGATIONS				11,676,971
(COST $11,202,118)
CORPORATE BONDS — 30.01%
CONSUMER DISCRETIONARY — 10.10%
	140,000	American Express Travel Related Services Co., Inc., 5.25% due 11/21/11 (a)		140,445
	25,000	Ford Motor Credit Co., 5.80% due 1/12/09		23,821
	575,000	Ford Motor Credit Co., 7.375% due 10/28/09		524,087
	235,000	GameStop Corp., 8.00% due 10/01/12		249,688
	281,000	General Electric Capital Corp., 5.00% due 04/10/12		288,588
	300,000	International Lease Finance Corp., 4.875% due 09/01/10		297,906
	340,000	Mandalay Resort Group, 7.625% due 07/15/13		315,350
	100,000	Penske Auto Group Inc., 7.75% due 12/15/16 (a)		87,000
	325,000	Phillips Van-Heusen, 7.75% due 11/15/23		321,883
	575,000	Royal Caribbean Cruises, Ltd., 7.50% due 10/15/27		490,706
				2,739,474
CONSUMER STAPLES — 3.16%
	250,000	Diego Capital PLC, 5.20% due 01/30/13		258,912
	320,000	Pilgrim's Pride Corp., 8.375% due 05/01/17		283,200
	300,000	The Coca-Cola Co., 5.35% due 11/15/17		313,629
				855,741
FINANCIALS — 9.68%
	175,000	Bank of America Corp., 5.375% due 09/11/12		182,224
	125,000	General Motors Acceptance Corp., 6.875% due 08/28/12		95,075
	150,000	Goldman Sachs Group, Inc. (The), 6.60% due 01/15/12		158,729
	235,000	JPMorgan Chase & Co., 5.375% due 10/01/12		244,251
	500,000	Marshall & Ilsley Corp., 5.626% due 08/17/09		500,534
	150,000	Merrill Lynch & Co., Inc., 5.77% due 07/25/11		152,056
	400,000	Morgan Stanley, 5.05% due 01/12/11		401,541
	215,000	Suntrust Banks, Inc., 5.25% due 11/05/12		212,040
	166,000	Union Planters Corp., 4.375% due 12/01/10		169,121
	200,000	Wachovia Corp., 5.25% due 08/01/14		197,810
	300,000	Wells Fargo & Co., 5.25% due 10/23/12		311,436
				2,624,817
HEALTH CARE — 1.75%
	445,000	Abbott Laboratories, 5.60% due 05/15/11		472,784
INDUSTRIALS — 0.16%
	50,000	American Railcar Industries Inc., 7.50% due 03/01/14		44,250
RETAIL — 1.89%
	200,000	Home Depot, Inc., 3.75% due 09/15/09		198,072
	300,000	Lowe's Companies, Inc., 5.60% due 09/15/12		314,573
				512,645

See Accompanying Notes to Financial Statements.
21

AFBA 5STAR

TOTAL RETURN BOND FUND
  (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES OR FACE AMOUNT		COMPANY	MARKET VALUE
CORPORATE BONDS (continued)
TELECOMMUNICATION SERVICES — 3.27%
$	280,000	Rodgers Wireless, Inc., 7.50% due 03/15/15	$	294,568
	360,000	SBC Communications, 5.875% due 08/15/12		376,891
	212,000	Vodafone Group PLC, 5.50% due 06/15/11		215,752
				887,211
TOTAL CORPORATE BONDS				8,136,922
(COST $8,146,373)
U.S. TREASURY OBLIGATIONS — 21.60%
	910,000	U.S. Treasury Note, 4.00% due 02/15/14		981,591
	830,000	U.S. Treasury Note, 4.50% due 05/15/10		880,968
	2,150,000	U.S. Treasury Note, 4.75% due 08/15/17		2,379,446
	525,000	U.S. Treasury Note, 4.875% due 06/30/12		578,690
	925,000	U.S. Treasury Note, 5.00% due 05/15/37		1,035,061
TOTAL U.S. TREASURY OBLIGATIONS				5,855,756
(COST $5,492,627)
CONVERTIBLE CORPORATE BOND — 2.12%
CONSUMER DISCRETIONARY — 2.12%
	550,000	Lions Gate Entertainment Corp., 2.9375% due 10/15/24		575,436
TOTAL CONVERTIBLE CORPORATE BOND				575,436
(COST $550,026)
CONVERTIBLE PREFERRED STOCK — 1.39%
FINANCIALS — 1.39%
	13,350	Boston Private Financial Corp., 4.875%, 10/1/34		375,469
TOTAL CONVERTIBLE PREFERRED STOCK				375,469
(COST $638,782)
COMMON STOCK — 0.92%
FINANCIAL SERVICES — 0.92%
	10,400	Federal National Mortgage Association		250,120
TOTAL COMMON STOCKS				250,120
(COST $260,000)
TOTAL INVESTMENTS — 99.10%				26,870,674
(COST $26,289,926)#
Other assets in excess of liabilities — 0.90%				245,093
TOTAL NET ASSETS — 100.00%			$	27,115,767

PLC — Public Liability Company

  (a)  Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

  #  Federal Income Tax Information: Net unrealized appreciation of investments is comprised of gross appreciation of $1,006,670 and gross depreciation of $426,233 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $26,290,237.

See Accompanying Notes to Financial Statements.
22

AFBA 5STAR

USA GLOBAL FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 97.37%
CAPITAL GOODS — 15.13%
	12,700	Caterpillar, Inc.	$	994,283
	3,500	Deere & Co.		281,540
	14,500	Emerson Electric Co.		746,170
	4,900	Fluor Corp.		691,684
	3,100	General Dynamics Corp.		258,447
	7,500	Jacobs Engineering Group, Inc.*		551,925
	13,100	Philip Morris International, Inc.*		662,598
				4,186,647
CONSUMER DURABLES & APPAREL — 3.44%
	14,000	NIKE, Inc. Class B		952,000
CONSUMER SERVICES — 6.24%
	25,300	Avon Products, Inc.		1,000,362
	19,500	YUM! Brands		725,595
				1,725,957
DIVERSIFIED FINANCIALS — 4.59%
	5,400	Northern Trust Corp.		358,938
	6,000	State Street Corp.		474,000
	13,500	US Bancorp		436,860
				1,269,798
ENERGY — 12.68%
	7,600	Apache Corp.		918,232
	3,900	Consol Energy, Inc.		269,841
	1,900	Exelon Corp.		154,413
	8,300	Exxon Mobil Corp.		702,014
	2,000	Ultra Petroleum Corp.*		155,000
	15,500	Weatherford International Ltd.*		1,123,285
	3,000	XTO Energy, Inc.		185,580
				3,508,365
FOOD, BEVERAGES & TOBACCO — 5.82%
	13,100	Altria Group, Inc.		290,820
	21,700	The Coca-Cola Co.		1,320,879
				1,611,699
HEALTH CARE EQUIPMENT & SERVICES — 1.97%
	3,600	Medco Health Solutions, Inc.*		157,644
	6,800	Thermo Fisher Scientific, Inc.*		386,512
				544,156
HOUSEHOLD & PERSONAL PRODUCTS — 2.81%
	10,000	Colgate-Palmolive Co.		779,100
MATERIALS — 14.09%
	3,800	Freeport-McMoRan Copper & Gold, Inc.		365,636
	9,900	Monsanto Co.		1,103,850
	18,000	Newmont Mining Corp.		815,400
	1,900	Nucor Corp.		128,706
	12,000	The Mosaic Corp.*		1,231,200
	2,000	United States Steel Corp.		253,740
				3,898,532
MEDICAL EQUIPMENT & SUPPLIES — 2.42%
	7,800	Becton Dickinson & Co.		669,630

See Accompanying Notes to Financial Statements.
23

AFBA 5STAR

USA GLOBAL FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES — 8.18%
	12,000	Genzyme Corp.*	$	894,480
	26,600	Gilead Sciences, Inc.*		1,370,698
				2,265,178
RETAILING — 4.55%
	11,100	Amazon.com, Inc.*		791,430
	7,000	TJX Cos, Inc.		231,490
	4,500	Wal-Mart Stores, Inc.		237,060
				1,259,980
SOFTWARE & SERVICES — 1.58%
	600	Google, Inc. Class A*		264,282
	3,000	salesforce.com*		173,610
				437,892
TECHNOLOGY HARDWARE & EQUIPMENT — 10.20%
	1,500	Apple, Inc.*		215,250
	25,000	Cisco Systems, Inc.*		602,250
	22,000	Hewlett-Packard Co.		1,004,520
	8,700	International Business Machines Corp.		1,001,718
				2,823,738
TELECOMMUNICATION SERVICES — 2.77%
	18,700	Qualcomm, Inc.		766,700
TRANSPORTATION SERVICES — 0.90%
	2,000	CSX Corp.		112,140
	1,100	Union Pacific Corp.		137,918
				250,058
TOTAL COMMON STOCKS				26,949,430
(COST $25,776,807)
MONEY MARKET ACCOUNT — 5.33%
	1,475,375	PNC Bank Money Market (a)		1,475,375
TOTAL MONEY MARKET ACCOUNT				1,475,375
(COST $1,475,375)
TOTAL INVESTMENTS — 102.70%				28,424,805
(COST $27,252,182)#
Liabilities in excess of other assets — (2.70%)				(748,374	)
TOTAL NET ASSETS — 100.00%			$	27,676,431

  (a)  The interest rate on March 31, 2008 was 2.57%

  *  Non-Income Producing

  #  Federal Income Tax Information: Net unrealized appreciation of investments is comprised of gross appreciation of $2,040,628 and gross depreciation of $922,013 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $27,306,190.

See Accompanying Notes to Financial Statements.
24

AFBA 5STAR

SCIENCE & TECHNOLOGY FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 96.01%
CONSUMER DISCRETIONARY — 3.18%
Media — 3.18%
	4,200	Arbitron, Inc.	$	181,272
	4,900	Dolby Laboratories, Inc. Class A*		177,674
				358,946
HEALTH CARE — 31.96%
Biotechnology — 10.73%
	4,300	Amgen, Inc*		179,654
	3,700	Charles River Laboratories*		218,078
	5,400	Gilead Sciences, Inc*		278,262
	6,000	LifeCell Corp.*		252,180
	13,700	Qiagen N.V.*		284,960
				1,213,134
Health Care Equipment & Supplies — 6.72%
	3,500	CR Bard, Inc.		337,400
	14,400	ev3, Inc.*		117,216
	6,500	Varian Medical Systems, Inc.*		304,460
				759,076
Health Care Providers & Services — 5.96%
	2,000	Covance, Inc.*		165,940
	17,400	Dialysis Corp of America*		126,846
	12,500	Nighthawk Radiology Holdings, Inc.*		117,000
	6,300	Pharmaceutical Product Development, Inc.		263,970
				673,756
Laboratory Analytical Instruments — 1.88%
	2,800	Illumina, Inc.*		212,520
Pharmaceuticals — 6.67%
	7,500	Schering-Plough Corp.		108,075
	3,100	Shire PLC ADR		179,676
	4,500	Teva Pharmaceutical Industries, Ltd. ADR		207,855
	6,200	Wyeth		258,912
				754,518
				3,613,004
INDUSTRIALS — 1.01%
Construction & Engineering — 1.01%
	3,800	Energy Conversion Devices, Inc.*		113,620
INFORMATION TECHNOLOGY — 57.08%
Communications Equipment — 5.66%
	5,300	Black Box Corp.		163,505
	8,375	Cisco Systems, Inc.*		201,754
	11,400	Corning, Inc.		274,056
				639,315

See Accompanying Notes to Financial Statements.
25

AFBA 5STAR

SCIENCE & TECHNOLOGY FUND

  (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
INFORMATION TECHNOLOGY — 57.08% (continued)
Computer Integrated Systems Design — 7.44%
	8,900	eBay, Inc.*	$	265,576
	5,900	Evergreen Solar, Inc.*		54,693
	500	First Solar, Inc.*		115,570
	150	Google, Inc.* Class A		66,070
	900	Sunpower Corp.* Class A		67,059
	9,400	Yahoo! Inc.*		271,942
				840,910
Computer Storage Devices — 2.82%
	13,100	EMC Corp.*		187,854
	5,800	SanDisk Corp.*		130,906
				318,760
Electronic Equipment & Instruments — 3.19%
	7,100	Jabil Circuit, Inc.		67,166
	9,100	National Instruments Corp.		237,874
	1,000	Waters Corp.*		55,700
				360,740
Electronic Lighting & Wiring Equipment — 2.04%
	12,900	Daktronics, Inc.		231,039
Internet Software & Services — 1.92%
	5,000	Akamai Technologies, Inc.*		140,800
	4,200	F5 Networks, Inc.*		76,314
				217,114
Materials — 2.42%
	8,500	Cabot Microelectronics Corp.*		273,275
Semiconductor Equipment — 7.58%
	16,800	Applied Materials, Inc.		327,768
	4,900	Lam Research Corp.*		187,278
	5,800	MKS Instruments, Inc.*		124,120
	4,200	Novellus Systems, Inc.*		88,410
	4,600	Varian Semiconductor Equipment Associates, Inc.*		129,490
				857,066
Semiconductors — 12.10%
	9,300	Altera Corp.		171,399
	5,200	Atheros Communications*		108,368
	5,100	Broadcom Corp. Class A*		98,277
	11,700	Cree, Inc.*		327,132
	5,300	Formfactor, Inc.*		101,230
	8,925	Intel Corp.		189,032
	15,000	IXYS Corp.*		102,450
	7,450	Maxim Integrated Products		151,905
	3,600	Microchip Technology, Inc.		117,828
				1,367,621

See Accompanying Notes to Financial Statements.
26

SHARES COMPANY MARKET VALUE

COMMON STOCKS (continued)
INFORMATION TECHNOLOGY — 57.08% (continued)
Software — 11.91%
	15,500	BEA Systems, Inc.*	$	296,825
	8,200	Cadence Design Systems, Inc.*		87,576
	8,400	Citrix Systems, Inc.*		246,372
	5,000	Manhattan Associates, Inc.*		114,650
	10,900	Microsoft Corp.		309,342
	11,100	Oracle Corp.*		217,116
	4,500	Symantec Corp.*		74,790
				1,346,671
				6,452,511
MATERIALS — 2.78%
Chemicals — 2.78%
	4,300	Sigma-Aldrich Corp.		256,495
	2,200	Zoltek Companies, Inc.*		58,344
				314,839
TOTAL COMMON STOCKS				10,852,920
(COST $10,665,273)
MONEY MARKET ACCOUNT — 5.17%
	584,281	PNC Bank Money Market (a)		584,281
TOTAL MONEY MARKET ACCOUNT				584,281
(COST $584,281)
TOTAL INVESTMENTS — 101.18%				11,437,201
(COST $11,249,554)#
Liabilities in excess of other assets — (1.18%)				(133,745	)
TOTAL NET ASSETS — 100.00%			$	11,303,456

ADR — American Depository Receipt

PLC — Public Liability Company

  (a)  The interest rate on March 31, 2008 was 2.57%

  *  Non-income producing security.

  #  Federal Income Tax Information: Net unrealized appreciation of investments is comprised of gross appreciation of $1,622,463 and gross depreciation of $1,537,935 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $11,352,673.

See Accompanying Notes to Financial Statements.
27

AFBA 5STAR

SMALL CAP FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 97.17%
AUTO & TRANSPORTATION — 0.44%
Airlines — 0.44%
	34,900	JetBlue Airways Corp.*	$	202,420
BASIC MATERIALS — 2.73%
Chemicals — 0.70%
	21,700	Calgon Carbon Corp.*		326,585
Industrial Conglomerates — 0.59%
	15,200	Tredegar Corp.		276,792
Miscellanous Basic Materials — 0.58%
	24,200	Buckeye Technologies, Inc.*		270,072
Specialty Chemicals — 0.86%
	2,300	Albemarle Corp.		83,996
	1,650	NewMarket Corp.		124,492
	3,500	OM Group, Inc.*		190,890
				399,378
				1,272,827
CAPITAL GOODS — 2.81%
Automotive Retail — 0.62%
	15,000	Carmax, Inc.*		291,300
Construction Materials — 0.70%
	1,400	Martin Marietta Materials, Inc.		148,638
	3,000	Texas Industries, Inc.		180,330
				328,968
Hypermarkets & Supercenters — 0.49%
	8,200	Pricesmart, Inc.		227,222
Leisure Facilities — 0.76%
	15,200	Cedar Fair LP		353,400
Restaurants — 0.24%
	4,000	Burger King Holdings, Inc.		110,640
				1,311,530
COMMERCIAL/INDUSTRIAL SERVICES — 1.47%
Consulting Services — 0.64%
	11,300	Forrester Research, Inc.*		300,354
Engineering/Construction — 0.32%
	5,400	Team, Inc.*		147,420
Office Furniture — 0.34%
	13,700	Knoll, Inc.		158,098
Printing/Forms/Financial Publications — 0.17%
	9,800	TheStreet.com, Inc.		79,184
				685,056
CONSUMER DISCRETIONARY — 8.61%
Automobiles — 0.41%
	20,100	Monaco Coach Corp.		190,548

See Accompanying Notes to Financial Statements.
28

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
CONSUMER DISCRETIONARY — 8.61% (continued)
Commercial Services & Supplies — 1.06%
	15,340	CRA International, Inc.*	$	493,028
Hotels, Restaurants & Leisure — 1.36%
	19,300	Steiner Leisure, Ltd.*		636,900
Household Durables — 0.90%
	12,700	Ethan Allen Interiors, Inc.		361,061
	17,200	WCI Communities, Inc.*		57,620
				418,681
Leisure Equipment & Products — 0.41%
	35,600	Shuffle Master, Inc.*		190,460
Media — 1.77%
	14,900	Arbitron, Inc.		643,084
	4,982	Dolby Laboratories, Inc. Class A*		180,647
				823,731
Services - Child Day Care Services — 0.22%
	2,400	Bright Horizons Family Solutions, Inc.*		103,296
Specialty Retail — 2.48%
	12,400	Barnes & Noble, Inc.		380,060
	21,996	InVentive Health, Inc.*		633,705
	17,307	Sturm, Ruger & Co., Inc.*		142,610
				1,156,375
				4,013,019
CONSUMER DURABLES — 0.66%
Recreational Products/Toys — 0.66%
	10,600	Shanda Interactive Entertainment, Ltd., ADR*		308,460
CONSUMER SERVICES — 0.58%
Media — 0.58%
	14,500	World Wrestling Entertainment, Inc.		269,845
CONSUMER STAPLES — 3.30%
Household Products — 1.15%
	5,900	Energizer Holdings, Inc.*		533,832
Packaged Foods & Meats — 0.42%
	10,000	Lance, Inc.		196,000
Personal Care — 0.70%
	11,800	Alberto-Culver Co.		323,438
Specialized Consumer Services — 0.33%
	15,300	Service Corp International		155,142
Tobacco — 0.70%
	6,000	UST, Inc.		327,120
				1,535,532

See Accompanying Notes to Financial Statements.
29

AFBA 5STAR

SMALL CAP FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
ELECTRONIC TECHNOLOGY — 15.63%
Aerospace/Defense/Precision — 2.38%
	8,522	Astronics Corp.*	$	164,645
	5,000	Axsys Technologies, Inc.*		249,400
	5,600	Ladish Co., Inc.*		201,600
	8,600	Stanley, Inc.*		253,356
	6,500	TransDigm Group, Inc.*		240,825
				1,109,826
Electronic Components — 3.64%
	13,400	Comtech Group, Inc.*		144,586
	20,900	Methode Electronics, Inc.		244,321
	34,600	Omnivision Technologies, Inc.*		581,972
	25,900	Plexus Corp.*		726,495
				1,697,374
Internet Services — 1.26%
	20,900	Interwoven, Inc.*		223,212
	26,000	S1 Corp.*		184,860
	18,000	Website Pros, Inc.*		176,940
				585,012
Miscellaneous Electronic Technology — 2.19%
	23,900	BluePhoenix Solutions, Ltd.*		199,565
	38,700	Digital Ally, Inc.*		267,417
	20,900	Neustar, Inc. Class A*		553,432
				1,020,414
Networking — 2.97%
	16,100	Blue Coat Systems, Inc.*		354,844
	20,000	FalconStor Software, Inc.*		152,200
	91,500	Network Equipment Technologies, Inc.*		601,155
	12,900	Silicom, Ltd.*		178,923
	13,400	Soapstone Networks, Inc.		95,944
				1,383,066
Semiconductors — 1.08%
	51,600	Microtune, Inc.*		188,856
	11,600	Pericom Semiconductor Corp.*		170,288
	20,000	Skyworks Solutions, Inc.*		145,600
				504,744
Telecommunications Equipment —- 2.11%
	15,800	EMS Technologies, Inc.*		428,812
	73,000	Harmonic, Inc.*		554,800
				983,612
				7,284,048
ENERGY — 4.54%
Energy-Oil Field Services — 1.41%
	34,500	ICO, Inc.*		239,430
	11,200	Mitcham Industries, Inc.*		198,912
	26,100	T.G.C. Industries, Inc.*		220,284
				658,626
Oil & Gas Drilling — 1.90%
	4,300	Atwood Oceanics, Inc.*		394,396
	15,000	Petroquest Energy, Inc.*		260,100
	4,400	Stone Energy Corp.*		230,164
				884,660

See Accompanying Notes to Financial Statements.
30

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
ENERGY — 4.54% (continued)
Oil & Gas Storage — 1.23%
	6,800	Buckeye Partners LP	$	313,480
	9,257	Inergy LP		258,363
				571,843
				2,115,129
FINANCIALS — 9.88%
Asset Management & Custody Banking — 0.10%
	4,960	MCG Capital Corp.		45,087
Capital Markets — 1.60%
	23,200	Waddell & Reed Financial, Inc. Class A		745,416
Commercial Banks — 1.08%
	50,000	BankAtlantic Bancorp, Inc. Class A		195,500
	29,094	Boston Private Financial Holdings, Inc.		308,105
				503,605
Diversified Financial Services — 1.35%
	25,500	Jack Henry & Associates, Inc.		629,085
Industrial REITs — 0.81%
	12,300	First Industrial Realty Trust, Inc.		379,947
Property & Casualty Insurance — 2.82%
	1,020	Alleghany Corp.*		348,330
	3,500	Investors Title Co.		171,500
	845	Markel Corp.*		371,775
	880	White Mountain Insurance Group, Inc.		422,400
				1,314,005
Reinsurance — 0.81%
	23,500	Montpelier Re Holdings, Ltd.		377,175
Residential REITs — 1.13%
	21,400	UDR, Inc.		524,728
Specialized Finance — 0.18%
	2,000	Portfolio Recovery Associates, Inc.		85,780
				4,604,828
HEALTH CARE — 18.69%
Biotechnology — 0.89%
	15,000	Bruker Corp.*		230,850
	6,000	Martek Biosciences Corp.*		183,420
				414,270
Health Care Distributors — 0.58%
	6,800	Owens & Minor, Inc.		267,512
Health Care Equipment & Supplies — 4.98%
	17,900	Affymetrix, Inc.*		311,639
	6,400	Analogic Corp.		425,856
	25,535	Bio-Reference Labs, Inc.*		674,890
	18,730	ICU Medical, Inc.*		538,862
	9,950	PSS World Medical, Inc.*		165,767
	4,800	Resmed, Inc.*		202,464
				2,319,478

See Accompanying Notes to Financial Statements.
31

AFBA 5STAR

SMALL CAP FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
HEALTH CARE — 18.69% (continued)
Health Care Providers & Services — 3.59%
	18,000	AMERIGROUP Corp.*	$	491,940
	26,534	AmSurg Corp.*		628,325
	32,442	Centene Corp.*		452,242
	5,200	Eclipsys Corp.*		101,972
				1,674,479
Health Industry Services — 1.38%
	13,000	eResearchTechnology, Inc.*		161,460
	11,000	HMS Holdings, Inc.*		314,050
	6,400	PAREXEL International Corp.*		167,040
				642,550
Health Care Technology — 0.68%
	15,000	IMS Health, Inc.		315,150
Home Health Care Services — 1.00%
	21,500	Gentiva Health Services, Inc.*		467,840
Laboratory Analytical Instruments — 1.27%
	7,800	Illumina, Inc.*		592,020
Medical/Dental Distributors — 0.58%
	7,200	Chindex International, Inc.*		271,728
Medical Equipment & Supplies — 2.67%
	6,400	Exactech, Inc.*		161,216
	6,200	Kensey Nash Corp.*		179,490
	7,700	Meridian Bioscience, Inc.		257,411
	6,800	Neogen Corp.*		170,680
	24,400	Synovis Life Technologies, Inc.*		382,592
	28,500	Thermage, Inc.*		94,050
				1,245,439
Pharmaceuticals — 1.07%
	7,700	Icon PLC, ADR*		499,653
				8,710,119
INDUSTRIALS — 3.37%
Engineering & Construction — 0.31%
	4,900	Energy Conversion Devices, Inc.*		146,510
Miscellaneous — 0.72%
	5,000	The Brink's Co.		335,900
Transportation Infrastructure — 2.34%
	18,500	Forward Air Corp.		655,640
	21,700	UTi Worldwide, Inc.		435,736
				1,091,376
				1,573,786
INFORMATION TECHNOLOGY — 14.67%
Aerospace & Defense — 0.62%
	51,173	Mercury Computer Systems, Inc.*		287,592

See Accompanying Notes to Financial Statements.
32

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
INFORMATION TECHNOLOGY — 14.67% (continued)
Communications Equipment — 1.18%
	17,800	Black Box Corp.	$	549,130
Computer Integrated Systems Design — 0.30%
	15,200	Evergreen Solar, Inc.*		140,904
Electronic Equipment & Instruments — 1.49%
	19,800	Benchmark Electronics, Inc.*		355,410
	12,900	National Instruments Corp.		337,206
				692,616
Electronic Lighting & Wiring Equipment — 1.57%
	40,900	Daktronics, Inc.		732,519
IT Services — 2.35%
	16,900	CACI International, Inc. Class A*		769,795
	37,800	Gevity HR, Inc.		327,348
				1,097,143
Materials — 1.35%
	19,608	Cabot Microelectronics Corp.*		630,397
Semiconductor Equipment — 2.03%
	31,600	Photronics, Inc.*		301,780
	22,800	Varian Semiconductor Equipment Associates, Inc.*		641,820
				943,600
Semiconductors — 3.78%
	36,402	Cree, Inc.*		1,017,800
	21,100	DSP Group, Inc.*		268,814
	69,845	IXYS Corp.*		477,041
				1,763,655
				6,837,556
MATERIALS — 1.00%
Mining & Quarrying of Nonmetallic Minerals — 1.00%
	9,200	Cameco Corp.*		303,048
	43,300	USEC, Inc.*		160,210
				463,258
OTHER — 1.12%
Human Resources & Employment — 0.28%
	4,700	Corrections Corp. of America*		129,344
Real Estate Management & Development — 0.84%
	10,500	Tejon Ranch Co.*		391,860
				521,204
PRODUCER MANUFACTURING — 2.95%
Construction/Agriculture Equipment — 0.48%
	19,500	Portec Rail Products, Inc.		223,470
Building/Electrical Products — 0.82%
	9,000	EnerSys*		215,280
	14,000	Solarfun Power Holdings Co., Ltd., ADR*		168,840
				384,120

See Accompanying Notes to Financial Statements.
33

AFBA 5STAR

SMALL CAP FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
PRODUCER MANUFACTURING — 2.95% (continued)
Industrial Machinery/Components — 0.91%
	14,000	Flow International Corp.*	$	130,060
	10,000	Sun Hydraulics Corp.		292,700
				422,760
Metal Fabrication — 0.74%
	7,600	Olympic Steel, Inc.		342,760
				1,373,110
RETAIL TRADE — 2.05%
Specialty Chains — 2.05%
	55,800	PC Connection, Inc.*		441,936
	30,806	PC Mall, Inc.*		327,468
	22,400	Zones, Inc.*		183,904
				953,308
SERVICES — 0.16%
Human Resources & Employment — 0.16%
	4,400	Korn/Ferry International*		74,360
TRANSPORTATION — 1.74%
Marine — 1.74%
	10,300	Alexander & Baldwin, Inc.		443,724
	7,000	Diana Shipping, Inc.		184,240
	19,900	Navios Maritime Holdings, Inc.		184,672
				812,636
UTILITIES — 0.77%
Telecommunications Services — 0.77%
	21,500	Syniverse Holdings, Inc.*		358,190
TOTAL COMMON STOCKS				45,280,221
(COST $52,608,812)
MONEY MARKET ACCOUNT — 3.28%
	1,529,144	PNC Bank Money Market (a)		1,529,144
TOTAL MONEY MARKET ACCOUNT				1,529,144
(COST $1,529,144)
RIGHTS — 0.00%
Asset Management & Custody Banking — 0.00%
	709	MCG Capital Corp.* (expiration 4/18/08)		758
TOTAL RIGHTS				758
(COST $0)
TOTAL INVESTMENTS — 100.45%				46,810,123
(COST $54,137,956)#
Liabilities in excess of other assets — (0.45%)				(209,696	)
TOTAL NET ASSETS — 100.00%			$	46,600,427

ADR — American Depository Receipt

LP — Limited Partnership

PLC — Public Liability Company

  (a)  The interest rate on March 31, 2008 was 2.57%

  *  Non-income producing security.

  #  Federal Income Tax Information: Net unrealized depreciation of investments is comprised of gross appreciation of $1,834,733 and gross depreciation of $9,553,785 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $54,529,175.

See Accompanying Notes to Financial Statements.
34

AFBA 5STAR

MID CAP VALUE FUND

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS — 95.45%
CAPITAL GOODS — 16.13%
	2,850	Alliant Techsystems, Inc.*	$	295,061
	11,500	Barnes Group, Inc.		263,925
	2,050	CF Industries Holdings, Inc.		212,421
	7,800	Curtiss-Wright Corp.		323,544
	7,000	DRS Technologies, Inc.		407,960
	6,350	HNI Corp.		170,751
	8,700	Kennametal, Inc.		256,041
	26,450	Mueller Water Products, Inc. Class B		208,426
	7,550	Regal-Beloit Corp.		276,556
	9,100	Tenneco, Inc.*		254,254
	4,600	URS Corp.*		150,374
				2,819,313
CONSUMER DISCRETIONARY — 1.68%
	14,300	Kelly Services, Inc. Class A		294,008
				294,008
CONSUMER DURABLES & APPAREL — 3.74%
	12,550	Hanesbrands, Inc.*		366,460
	10,450	Regis Corp.		287,270
				653,730
CONSUMER STAPLES — 12.35%
	31,350	Del Monte Foods Co.		298,766
	6,350	Hormel Foods Co.		264,541
	9,950	Pilgrim's Pride Co.		201,288
	4,250	Ralcorp Holdings, Inc.*		247,138
	7,750	Ruddick Corp.		285,665
	8,150	Sanderson Farms, Inc.		309,781
	13,387	Vector Group, Ltd.		235,477
	9,150	Weis Markets, Inc.		315,400
				2,158,056
ENERGY — 17.47%
	7,850	Allete, Inc.		303,167
	2,300	Atwood Oceanics, Inc.*		210,956
	4,000	Cimarex Energy Co.		218,960
	8,300	Hercules Offshore, Inc.*		208,496
	7,400	Idacorp, Inc.		237,614
	7,550	Integrys Energy Group, Inc.		352,132
	17,800	Key Energy Services, Inc.*		238,876
	13,600	PetroHawk Energy Corp.*		274,312
	5,900	St. Mary Land & Exploration Co.		227,150
	5,700	Superior Energy Services, Inc.*		225,834
	8,900	Walter Industries, Inc.		557,407
				3,054,904
FINANCIALS — 4.30%
	11,200	Boston Private Financial Holdings, Inc.		118,608
	7,900	CIT Group, Inc.		93,615
	7,750	MB Financial, Inc.		238,545
	8,700	Sterling Financial Corp.		135,807
	21,300	UCBH Holdings, Inc.		165,288
				751,863

See Accompanying Notes to Financial Statements.
35

AFBA 5STAR

MID CAP VALUE FUND (continued)

SCHEDULE OF INVESTMENTS

March 31, 2008

SHARES		COMPANY	MARKET VALUE
COMMON STOCKS (continued)
HEALTH CARE — 9.65%
	10,050	Amedisys, Inc.*	$	395,367
	8,750	AmSurg Corp.*		207,200
	2,850	Beckman Coulter, Inc.		183,968
	11,650	Healthspring, Inc.*		164,032
	6,300	Hillenbrand Industries, Inc.*		301,140
	6,050	Lifepoint Hospitals, Inc.*		166,194
	9,550	Lincare Holdings, Inc.*		268,450
				1,686,351
INFORMATION TECHNOLOGY — 10.59%
	4,600	Anixter International, Inc.*		294,584
	21,900	Arris Group, Inc.*		127,458
	7,050	Arrow Electronics, Inc.*		237,233
	6,600	CommScope, Inc.*		229,878
	4,900	General Cable Corp.*		289,443
	14,600	Jack Henry & Associates, Inc.		360,182
	26,200	Windstream Corp.		313,090
				1,851,868
INSURANCE — 14.73%
	3,200	Arch Capital Group, Ltd.*		219,744
	7,935	Argo Group International Holdings, Ltd.		281,851
	9,600	Endurance Specialty Holdings		351,360
	4,950	Hanover Insurance Group, Inc.		203,643
	9,900	HCC Insurance Holdings, Inc.		224,631
	6,600	Hilb Rogal & Hobbs Co.		207,702
	7,300	Hubbell, Inc. Class B		318,937
	8,150	IPC Holdings, Ltd.		228,200
	6,350	Platinum Underwriters Holdings, Ltd.		206,121
	8,200	Protective Life Corp.		332,592
				2,574,781
MATERIALS — 3.83%
	15,100	Hercules, Inc.		276,179
	26,300	IAMGOLD Corp.		192,779
	4,450	RTI International Metals, Inc.*		201,185
				670,143
RETAIL — 0.98%
	7,350	The Men's Wearhouse, Inc.		171,035
				171,035
TOTAL COMMON STOCKS				16,686,052
(COST $20,279,679)

See Accompanying Notes to Financial Statements.
36

SHARES		COMPANY	MARKET VALUE
MONEY MARKET ACCOUNT — 10.13%
	1,771,228	PNC Bank Money Market (a)	$	1,771,228
TOTAL MONEY MARKET ACCOUNT				1,771,228
(COST $1,771,228)
TOTAL INVESTMENTS — 105.58%				18,457,280
(COST $22,050,907)#
Liabilities in excess of other assets — (5.58%)				(976,066	)
TOTAL NET ASSETS — 100.00%			$	17,481,214

  (a)  The interest rate on March 31, 2008 was 2.57%

  *  Non-Income producing

  #  Federal Income Tax Information: Net unrealized depreciation of investments is comprised of gross appreciation of $602,047 and gross depreciation of $4,305,960 of federal income tax purpose. At March 31, 2008, the aggregate cost of securities for federal income tax pupose was $22,161,193.

See Accompanying Notes to Financial Statements.
37

STATEMENTS OF ASSETS
AND LIABILITIES

March 31, 2008

	BALANCED FUND		LARGE CAP FUND			TOTAL RETURN BOND FUND
ASSETS:
Investments at value	$	80,447,525	$	24,253,425		$	26,870,674
Receivables:
Investment securities sold		—		784,353			—
Dividends		213,872		36,279			8,135
Interest		254,653		1,216			310,013
Capital shares sold		311,991		1,462			1,066
From advisor		—		—			2,178
Prepaid expenses and other assets		17,178		14,975			17,030
Total assets		81,245,219		25,091,710			27,209,096
LIABILITIES:
Payables:
Cash overdraft		—		—			22,877
Investment securities purchased		—		489,105			—
Capital shares redeemed		118,861		43,528			31,382
Dividend distributions		227		—			—
Administrative fees		20,076		5,895			6,607
Professional fees		18,500		16,500			18,500
Custody fees		3,200		3,140			2,400
To advisor		11,376		87			—
Other accrued expenses and liabilities		43,676		9,665			11,563
Total liabilities		215,916		567,920			93,329
NET ASSETS	$	81,029,303	$	24,523,790		$	27,115,767
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital)	$	79,238,921	$	24,466,785		$	26,643,146
Accumulated undistributed net investment income		83,125		—			22,309
Accumulated undistributed net realized gain (loss) from investment transactions		1,161,055		(1,127,510	)		(130,436	)
Net unrealized appreciation from investment transactions		546,202		1,184,515			580,748
NET ASSETS APPLICABLE TO OUTSTANDING SHARES	$	81,029,303	$	24,523,790		$	27,115,767
Investments at cost	$	79,901,323	$	23,068,910		$	26,289,926

See Accompanying Notes to Financial Statements.
38

	BALANCED FUND		LARGE CAP FUND		TOTAL RETURN BOND FUND
Class I Shares
Net Assets	$	41,205,899	$	22,702,893	$	21,952,756
Shares of Capital Stock Outstanding		3,507,805		1,715,973		2,576,327
Net Asset Value Per Share	$	11.75	$	13.23	$	8.52
Class A Shares
Net Assets	$	21,699,822	$	1,233,567	$	2,030,482
Shares of Capital Stock Outstanding		1,768,679		94,637		221,569
Net Asset Value Per Share	$	12.27	$	13.03	$	9.16
Class B Shares
Net Assets	$	1,672,901	$	76,630	$	1,657,407
Shares of Capital Stock Outstanding		138,721		6,244		183,448
Net Asset Value Per Share	$	12.06	$	12.27	$	9.03
Class C Shares
Net Assets	$	16,436,700	$	495,350	$	1,463,155
Shares of Capital Stock Outstanding		1,362,446		40,345		164,654
Net Asset Value Per Share	$	12.06	$	12.28	$	8.89
Class R Shares
Net Assets	$	13,981	$	15,350	$	11,967
Shares of Capital Stock Outstanding		1,211		1,216		1,432
Net Asset Value Per Share	$	11.55	$	12.62	$	8.36

See Accompanying Notes to Financial Statements.
39

STATEMENTS OF ASSETS
AND LIABILITIES (continued)

March 31, 2008

	USA GLOBAL FUND			SCIENCE & TECHNOLOGY FUND
ASSETS:
Investments at value	$	28,424,805		$	11,437,201
Receivables:
Investment securities sold		919,225			—
Dividends		37,321			1,340
Interest		1,792			892
Capital shares sold		5,776			2,672
From advisor		—			1,513
Prepaid expenses and other assets		14,585			17,469
Total assets		29,403,504			11,461,087
LIABILITIES:
Payables:
Investment securities purchased		1,653,600			—
Capital shares redeemed		34,062			127,661
Administrative fees		6,733			2,753
Professional fees		16,500			16,500
Custody fees		2,800			2,500
To advisor		913			—
Other accrued expenses		12,465			8,217
Total liabilities		1,727,073			157,631
NET ASSETS	$	27,676,431		$	11,303,456
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital)	$	28,124,287		$	11,346,770
Accumulated undistributed net investment income		—			—
Accumulated net realized loss from investment transactions		(1,620,479	)		(230,961	)
Net unrealized appreciation from investment transactions		1,172,623			187,647
NET ASSETS APPLICABLE TO OUTSTANDING SHARES	$	27,676,431		$	11,303,456
Investments at cost	$	27,252,182		$	11,249,554

See Accompanying Notes to Financial Statements.
40

	USA GLOBAL FUND		SCIENCE & TECHNOLOGY FUND
Class I Shares
Net Assets	$	23,771,459	$	7,965,966
Shares of Capital Stock Outstanding		1,666,001		666,192
Net Asset Value Per Share	$	14.27	$	11.96
Class A Shares
Net Assets	$	2,665,141	$	1,617,456
Shares of Capital Stock Outstanding		190,039		137,640
Net Asset Value Per Share	$	14.02	$	11.75
Class B Shares
Net Assets	$	267,263	$	108,267
Shares of Capital Stock Outstanding		20,225		9,749
Net Asset Value Per Share	$	13.21	$	11.11
Class C Shares
Net Assets	$	960,277	$	1,598,564
Shares of Capital Stock Outstanding		72,679		143,933
Net Asset Value Per Share	$	13.21	$	11.11
Class R Shares
Net Assets	$	12,291	$	13,203
Shares of Capital Stock Outstanding		899		1,140
Net Asset Value Per Share	$	13.67	$	11.58

See Accompanying Notes to Financial Statements.
41

STATEMENTS OF ASSETS
AND LIABILITIES (continued)

March 31, 2008

	SMALL CAP FUND			MID CAP VALUE FUND
ASSETS:
Investments at value	$	46,810,123		$	18,457,280
Receivables:
Investment securities sold		752,352			—
Dividends		18,966			18,405
Interest		3,024			2,727
Capital shares sold		65,370			272
From advisor		4,785			—
Prepaid expenses and other assets		17,746			13,393
Total assets		47,672,366			18,492,077
LIABILITIES:
Payables:
Investment securities purchased		629,103			935,127
Capital shares redeemed		293,815			37,742
Bank overdraft		60,731			—
Administrative fees		12,744			4,237
Professional fees		16,500			16,531
Custody fees		6,307			2,400
To advisor		—			2,346
Other accrued expenses		52,739			12,480
Total liabilities		1,071,939			1,010,863
NET ASSETS	$	46,600,427		$	17,481,214
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital)	$	60,562,460		$	21,942,677
Accumulated undistributed net investment income		—			—
Accumulated net realized loss from investment transactions		(6,634,200	)		(867,836	)
Net unrealized depreciation from investment transactions		(7,327,833	)		(3,593,627	)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES	$	46,600,427		$	17,481,214
Investments at cost	$	54,137,956		$	22,050,907

See Accompanying Notes to Financial Statements.
42

	SMALL CAP FUND		MID CAP VALUE FUND
Class I Shares
Net Assets	$	10,130,208	$	12,153,343
Shares of Capital Stock Outstanding		951,479		1,258,635
Net Asset Value Per Share	$	10.65	$	9.66
Class A Shares
Net Assets	$	27,585,114	$	2,827,733
Shares of Capital Stock Outstanding		2,653,771		299,116
Net Asset Value Per Share	$	10.39	$	9.45
Class B Shares
Net Assets	$	1,836,922	$	209,246
Shares of Capital Stock Outstanding		189,628		23,720
Net Asset Value Per Share	$	9.69	$	8.82
Class C Shares
Net Assets	$	7,021,167	$	2,278,488
Shares of Capital Stock Outstanding		724,116		258,136
Net Asset Value Per Share	$	9.70	$	8.83
Class R Shares
Net Assets	$	27,016	$	12,404
Shares of Capital Stock Outstanding		2,641		1,336
Net Asset Value Per Share	$	10.23	$	9.28

See Accompanying Notes to Financial Statements.
43

STATEMENTS
OF OPERATIONS

Year Ended March 31, 2008

	BALANCED FUND			LARGE CAP FUND			TOTAL RETURN BOND FUND			USA GLOBAL FUND
INVESTMENT INCOME:
Dividends	$	1,916,795		$	215,062		$	39,094		$	225,403
Interest		1,608,000			43,846			1,179,123			46,303
Foreign taxes withheld		(279	)		(5,478	)		—			—
		3,524,516			253,430			1,218,217			271,706
EXPENSES:
Advisor fees		696,495			215,548			174,006			234,682
Administration fees		187,576			57,902			47,515			63,202
12b-1 fees		134,469			4,352			26,339			8,801
Shareholder service fees		99,627			3,807			15,968			7,957
Transfer Agent fees		108,592			36,790			34,173			55,667
Registration fees		53,516			50,931			53,530			51,638
Legal fees		35,018			35,339			35,490			35,297
Audit fees		17,129			15,129			17,129			15,129
Custodian fees		22,383			17,553			14,001			16,343
Printing fees		31,696			9,527			7,592			10,766
Director fees		10,857			10,857			10,857			10,857
Insurance fees		5,037			5,078			5,034			5,034
Advisor fee recoupment		—			—			—			—
Miscellaneous fees		57,187			23,330			23,923			24,881
Total expenses before reimbursement and waivers		1,459,582			486,143			465,557			540,254
Less: expense reimbursement and waivers		(285,218	)		(133,106	)		(188,342	)		(148,205	)
Net expenses		1,174,364			353,037			277,215			392,049
Net investment income (loss)		2,350,152			(99,607	)		941,002			(120,343	)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions		15,074,776			5,130,828			712,472			7,432,015
In-Kind Redemptions (Note 8)		—			—			—			—
Net change in unrealized appreciation (depreciation) on investments		(13,179,382	)		(4,157,585	)		(680,840	)		(6,596,036	)
		1,895,394			973,243			31,632			835,979
Net increase (decrease) in net assets resulting from operations	$	4,245,546		$	873,636		$	972,634		$	715,636

See Accompanying Notes to Financial Statements.
44

	SCIENCE & TECHNOLOGY FUND			SMALL CAP FUND			MID CAP VALUE FUND
INVESTMENT INCOME:
Dividends	$	65,432		$	651,801		$	269,597
Interest		18,105			267,726			39,389
Foreign taxes withheld		(1,569	)		(50	)		(395	)
		81,968			919,477			308,591
EXPENSES:
Advisor fees		111,276			1,055,061			207,766
Administration fees		29,407			246,566			52,205
12b-1 fees		16,148			135,930			33,224
Shareholder service fees		11,446			295,589			29,583
Transfer Agent fees		29,394			199,495			40,970
Registration fees		50,051			55,948			51,323
Legal fees		35,018			49,593			35,746
Audit fees		15,129			15,129			15,128
Custodian fees		16,573			47,613			23,232
Printing fees		5,017			56,347			10,043
Director fees		10,857			10,857			10,857
Insurance fees		5,034			5,035			5,035
Advisor fee recoupment		—			102,072			—
Miscellaneous fees		17,835			109,635			26,427
Total expenses before reimbursement and waivers		353,185			2,384,870			541,539
Less: expense reimbursement and waivers		(127,511	)		(265,253	)		(146,307	)
Net expenses		225,674			2,119,617			395,232
Net investment income (loss)		(143,706	)		(1,200,140	)		(86,641	)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions		953,343			29,194,469			7,780,565
In-Kind Redemptions (Note 8)		—			24,696,367			—
Net change in unrealized appreciation (depreciation) on investments		(1,721,563	)		(53,733,755	)		(8,869,886	)
		(768,220	)		157,081			(1,089,321	)
Net increase (decrease) in net assets resulting from operations	$	(911,926	)	$	(1,043,059	)	$	(1,175,962	)

See Accompanying Notes to Financial Statements.
45

STATEMENTS OF CHANGES IN NET ASSETS

	BALANCED FUND						LARGE CAP FUND
	YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007			YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007
OPERATIONS:
Net investment income (loss)	$	2,350,152		$	2,146,440		$	(99,607	)	$	(39,347	)
Net realized gain from investment transactions		15,074,776			5,149,720			5,130,828			28,962
Net change in unrealized appreciation (depreciation) on investments		(13,179,382	)		1,717,082			(4,157,585	)		2,360,912
Net increase in net assets resulting from operations		4,245,546			9,013,242			873,636			2,350,527
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class I		(1,378,829	)		(1,431,453	)		—			—
Class A		(557,976	)		(466,222	)		—			—
Class B		(32,442	)		(27,181	)		—			—
Class C		(300,828	)		(220,066	)		—			—
Class R		(348	)		(541	)		—			—
Net realized gain from investment transactions
Class I		(8,653,160	)		(607,009	)		(4,872,339	)		—
Class A		(3,503,091	)		(243,583	)		(177,950	)		—
Class B		(307,413	)		(21,469	)		(14,712	)		—
Class C		(2,825,100	)		(154,893	)		(99,456	)		—
Class R		(2,568	)		(153	)		(2,613	)		—
Total distributions to shareholders		(17,561,755	)		(3,172,570	)		(5,167,070	)		—
CAPITAL SHARE TRANSACTIONS:*
Shares sold		16,674,701			19,669,912			3,506,948			972,877
Reinvested distributions		9,115,581			1,301,081			4,700,421			—
Shares repurchased		(19,863,931	)		(15,125,981	)		(3,750,490	)		(1,284,898	)
Redemption fess received		8,183			3,025			1,622			343
Net increase (decrease) from capital share transactions		5,934,534			5,848,037			4,458,501			(311,678	)
Net increase (decrease) in net assets		(7,381,675	)		11,688,709			165,067			2,038,849
NET ASSETS:
Beginning of year		88,410,978			76,722,269			24,358,723			22,319,874
End of year	$	81,029,303		$	88,410,978		$	24,523,790		$	24,358,723
Accumulated undistributed net investment income (loss) at end of year	$	83,125		$	3,396		$	—		$	—
*Fund share transactions:
Shares issued		1,212,886			1,397,676			231,379			67,809
Reinvested distributions		706,767			92,087			304,246			—
Shares redeemed		(1,379,152	)		(1,083,515	)		(259,014	)		(90,416	)
Net increase (decrease) in fund shares		540,501			406,248			276,611			(22,607	)

See Accompanying Notes to Financial Statements.
46

	TOTAL RETURN BOND FUND
	YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007
OPERATIONS:
Net investment income (loss)	$	941,002		$	1,171,887
Net realized gain from investment transactions		712,472			900,701
Net change in unrealized appreciation (depreciation) on investments		(680,840	)		(833,657	)
Net increase in net assets resulting from operations		972,634			1,238,931
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class I		(694,061	)		(694,314	)
Class A		(118,254	)		(249,894	)
Class B		(63,572	)		(95,056	)
Class C		(57,377	)		(123,612	)
Class R		(508	)		(540	)
Net realized gain from investment transactions
Class I		(824,782	)		(149,121	)
Class A		(160,251	)		(45,140	)
Class B		(108,470	)		(22,391	)
Class C		(98,894	)		(24,730	)
Class R		(765	)		(124	)
Total distributions to shareholders		(2,126,934	)		(1,404,922	)
CAPITAL SHARE TRANSACTIONS:*
Shares sold		10,456,645			1,900,091
Reinvested distributions		1,341,518			657,863
Shares repurchased		(5,069,990	)		(6,813,124	)
Redemption fess received		731			624
Net increase (decrease) from capital share transactions		6,728,904			(4,254,546	)
Net increase (decrease) in net assets		5,574,604			(4,420,537	)
NET ASSETS:
Beginning of year		21,541,163			25,961,700
End of year	$	27,115,767		$	21,541,163
Accumulated undistributed net investment income (loss) at end of year	$	22,309		$	14,090
*Fund share transactions:
Shares issued		1,225,452			206,844
Reinvested distributions		152,615			70,447
Shares redeemed		(548,921	)		(717,597	)
Net increase (decrease) in fund shares		829,146			(440,306	)

See Accompanying Notes to Financial Statements.
47

STATEMENTS OF CHANGES IN NET ASSETS (continued)

	USA GLOBAL FUND						SCIENCE & TECHNOLOGY FUND
	YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007			YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007
OPERATIONS:
Net investment income (loss)	$	(120,343	)	$	(9,312	)	$	(143,706	)	$	(90,328	)
Net realized gain from investment transactions		7,432,015			1,073,116			953,343			323,548
In-Kind Redemptions (Note 8)		—			—			—			—
Net unrealized appreciation (depreciation) on investments		(6,596,036	)		1,237,659			(1,721,563	)		264,327
Net increase (decrease) in net assets resulting from operations		715,636			2,301,463			(911,926	)		497,547
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain from investment transactions
Class I		(6,271,479	)		—			(748,487	)		(386,961	)
Class A		(382,180	)		—			(197,375	)		(106,651	)
Class B		(24,396	)		—			(13,801	)		(5,962	)
Class C		(245,363	)		—			(170,354	)		(83,204	)
Class R		(3,246	)		—			(1,404	)		(796	)
Total distributions to shareholders		(6,926,664	)		—			(1,131,421	)		(583,574	)
CAPITAL SHARE TRANSACTIONS:*
Shares sold		4,520,409			928,046			1,690,388			6,536,427
Reinvested distributions		6,137,468			—			501,464			303,859
Shares repurchased		(3,641,344	)		(22,349,312	)		(2,297,136	)		(1,662,330	)
Redemption fees received		463			1,711			131			3,056
Net increase (decrease) from capital share transactions		7,016,996			(21,419,555	)		(105,153	)		5,181,012
Net increase (decrease) in net assets		805,968			(19,118,092	)		(2,148,500	)		5,094,985
NET ASSETS:
Beginning of year		26,870,463			45,988,555			13,451,956			8,356,971
End of year	$	27,676,431		$	26,870,463		$	11,303,456		$	13,451,956
Accumulated undistributed net investment income at end of year	$	—		$	—		$	—		$	—
*Fund share transactions:
Shares issured		275,489			57,656			118,325			485,533
Reinvested distributions		363,736			—			37,887			23,804
Shares redeemed		(227,373	)		(1,445,603	)		(168,569	)		(126,889	)
Net increase (decrease) in fund shares.		411,852			(1,387,947	)		(12,357	)		382,448

See Accompanying Notes to Financial Statements.
48

	SMALL CAP FUND						MID CAP VALUE FUND
	YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007			YEAR ENDED MARCH 31, 2008			YEAR ENDED MARCH 31, 2007
OPERATIONS:
Net investment income (loss)	$	(1,200,140	)	$	(1,952,425	)	$	(86,641	)	$	(254,731	)
Net realized gain from investment transactions		29,194,469			8,020,504			7,780,565			668,501
In-Kind Redemptions (Note 8)		24,696,367			—			—			—
Net unrealized appreciation (depreciation) on investments		(53,733,755	)		5,456,811			(8,869,886	)		779,975
Net increase (decrease) in net assets resulting from operations		(1,043,059	)		11,524,890			(1,175,962	)		1,193,745
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain from investment transactions
Class I		(4,844,689	)		(278,802	)		(5,385,580	)		(97,765	)
Class A		(26,531,658	)		(4,151,697	)		(1,780,007	)		(124,073	)
Class B		(997,857	)		(68,006	)		(125,117	)		(3,073	)
Class C		(5,571,264	)		(440,543	)		(1,438,312	)		(50,941	)
Class R		(11,311	)		(456	)		(5,429	)		(117	)
Total distributions to shareholders		(37,956,779	)		(4,939,504	)		(8,734,445	)		(275,969	)
CAPITAL SHARE TRANSACTIONS:*
Shares sold		10,245,991			77,928,340			1,851,741			15,194,738
Reinvested distributions		35,521,239			4,588,874			7,584,289			187,899
Shares repurchased		(216,940,783	)		(47,751,757	)		(15,437,469	)		(6,556,260	)
Redemption fees received		12,626			3,284			1,413			2,602
Net increase (decrease) from capital share transactions		(171,160,927	)		34,768,741			(6,000,026	)		8,828,979
Net increase (decrease) in net assets		(210,160,765	)		41,354,127			(15,910,433	)		9,746,755
NET ASSETS:
Beginning of year		256,761,192			215,407,065			33,391,647			23,644,892
End of year	$	46,600,427		$	256,761,192		$	17,481,214		$	33,391,647
Accumulated undistributed net investment income at end of year	$	—		$	—		$	—		$	—
*Fund share transactions:
Shares issured		618,405			4,392,966			135,635			1,009,467
Reinvested distributions		2,371,249			258,190			649,705			12,444
Shares redeemed		(12,085,017	)		(2,723,494	)		(1,029,199	)		(432,252	)
Net increase (decrease) in fund shares.		(9,095,363	)		1,927,662			(243,859	)		589,659

See Accompanying Notes to Financial Statements.
49

FINANCIAL HIGHLIGHTS

BALANCED FUND

	CLASS I															CLASS A
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	13.98		$	13.04		$	12.19		$	11.37		$	9.14		$	14.48		$	13.48		$	12.58		$	11.69		$	9.30
Income from investment operations:
Net investment income		0.42			0.38			0.39			0.41			0.45			0.39			0.36			0.37			0.35			0.32
Net gain (loss) on securities (both realized and unrealized)		0.33			1.10			0.86			0.82			2.23			0.34			1.13			0.89			0.89			2.39
Total from investment operations		0.75			1.48			1.25			1.23			2.68			0.73			1.49			1.26			1.24			2.71
Less distributions:
Dividends from net investment income		(0.41	)		(0.38	)		(0.40	)		(0.41	)		(0.45	)		(0.37	)		(0.33	)		(0.36	)		(0.35	)		(0.32	)
Distributions from capital gains		(2.57	)		(0.16	)		—			—			—			(2.57	)		(0.16	)		—			—			—
Total distributions		(2.98	)		(0.54	)		(0.40	)		(0.41	)		(0.45	)		(2.94	)		(0.49	)		(0.36	)		(0.35	)		(0.32	)
Net asset value, end of period	$	11.75		$	13.98		$	13.04		$	12.19		$	11.37		$	12.27		$	14.48		$	13.48		$	12.58		$	11.69
Total return		4.75	%		11.47	%		10.42	%		10.97	%		29.61	%		4.45	%		11.19	%		10.18	%		10.72	%		29.32	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	41		$	47		$	52		$	47		$	42		$	22		$	24		$	13		$	7		$	3
Ratio of expenses to average net assets		1.08	%		1.08	%		1.08	%		1.08	%		1.08	%		1.33	%		1.33	%		1.33	%		1.33	%		1.33	%
Ratio of net investment income to average net assets		3.00	%		2.76	%		3.06	%		3.49	%		4.18	%		2.75	%		2.52	%		2.82	%		3.15	%		3.97	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.41	%		1.25	%		1.45	%		1.87	%		2.22	%		1.66	%		1.51	%		1.69	%		2.25	%		2.46	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers		2.67	%		2.59	%		2.69	%		2.70	%		3.04	%		2.42	%		2.34	%		2.46	%		2.23	%		2.84	%
Portfolio turnover rate		110	%		28	%		18	%		27	%		43	%		110	%		28	%		18	%		27	%		43	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
50

	CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	14.28		$	13.30		$	12.42		$	11.56		$	9.23
Income from investment operations:
Net investment income		0.28			0.25			0.26			0.27			0.28
Net gain (loss) on securities (both realized and unrealized)		0.33			1.12			0.90			0.86			2.33
Total from investment operations		0.61			1.37			1.16			1.13			2.61
Less distributions:
Dividends from net investment income		(0.26	)		(0.23	)		(0.28	)		(0.27	)		(0.28	)
Distributions from capital gains		(2.57	)		(0.16	)		—			—			—
Total distributions		(2.83	)		(0.39	)		(0.28	)		(0.27	)		(0.28	)
Net asset value, end of period	$	12.06		$	14.28		$	13.30		$	12.42		$	11.56
Total return		3.65	%		10.38	%		9.40	%		9.83	%		28.40	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	2		$	2		$	1		$	0.81		$	0.34
Ratio of expenses to average net assets		2.08	%		2.08	%		2.08	%		2.08	%		2.08	%
Ratio of net investment income to average net assets		2.00	%		1.77	%		2.06	%		2.40	%		3.19	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.41	%		2.26	%		2.44	%		2.98	%		3.20	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers		1.67	%		1.59	%		1.70	%		1.50	%		2.07	%
Portfolio turnover rate		110	%		28	%		18	%		27	%		43	%

See Accompanying Notes to Financial Statements.
51

FINANCIAL HIGHLIGHTS

BALANCED FUND (continued)

	CLASS C															CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	14.29		$	13.32		$	12.44		$	11.57		$	9.23		$	13.79		$	12.92		$	12.08		$	11.25		$	11.36
Income from investment operations:
Net investment income		0.28			0.25			0.26			0.27			0.26			0.34			0.30			0.32			0.33			0.05
Net gain (loss) on securities (both realized and unrealized)		0.33			1.12			0.89			0.87			2.34			0.33			1.13			0.86			0.84			(0.11	)
Total from investment operations		0.61			1.37			1.15			1.14			2.60			0.67			1.43			1.18			1.17			(0.06	)
Less distributions:
Dividends from net investment income		(0.27	)		(0.24	)		(0.27	)		(0.27	)		(0.26	)		(0.34	)		(0.40	)		(0.34	)		(0.34	)		(0.05	)
Distributions from capital gains		(2.57	)		(0.16	)		—			—			—			(2.57	)		(0.16	)		—			—			—
Total distributions		(2.84	)		(0.40	)		(0.27	)		(0.27	)		(0.26	)		(2.91	)		(0.56	)		(0.34	)		(0.34	)		(0.05	)
Net asset value, end of period	$	12.06		$	14.29		$	13.32		$	12.44		$	11.57		$	11.55		$	13.79		$	12.92		$	12.08		$	11.25
Total return*		3.60	%		10.37	%		9.36	%		9.89	%		28.31	%		4.22	%		11.15	%		9.87	%		10.49	%		(0.57	%)
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	16		$	15		$	10		$	7		$	2		$	0.01		$	0.01		$	0.02		$	0.01		$	0.01
Ratio of expenses to average net assets**		2.08	%		2.08	%		2.08	%		2.08	%		2.08	%		1.58	%		1.58	%		1.58	%		1.58	%		1.58	%
Ratio of net investment income to average net assets**		2.01	%		1.77	%		2.07	%		2.36	%		3.23	%		2.52	%		2.27	%		2.58	%		2.96	%		3.82	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.42	%		2.26	%		2.45	%		3.06	%		3.20	%		1.92	%		1.76	%		1.95	%		2.09	%		2.50	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers**		1.67	%		1.59	%		1.70	%		1.38	%		2.11	%		2.18	%		2.09	%		2.21	%		2.45	%		2.89	%
Portfolio turnover rate		110	%		28	%		18	%		27	%		43	%		110	%		28	%		18	%		27	%		43	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
52

FINANCIAL HIGHLIGHTS

LARGE CAP FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	15.42		$	13.92		$	12.72		$	12.55		$	8.94
Income from investment operations:
Net investment income (loss)		(0.05	)		(0.02	)		(0.01	)		0.02			(0.03	)
Net gain (loss) on securities (both realized and unrealized)		1.10			1.52			1.22			0.16			3.66
Total from investment operations		1.05			1.50			1.21			0.18			3.63
Less distributions:
Dividends from net investment income		—			—			(0.01	)		(0.01	)		(0.02	)
Dividends from capital gains		(3.24	)		—			—			—			—
Total distributions		(3.24	)		—			(0.01	)		(0.01	)		(0.02	)
Net asset value, end of period	$	13.23		$	15.42		$	13.92		$	12.72		$	12.55
Total return		4.05	%		10.78	%		9.50	%		1.45	%		40.60	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	23		$	23		$	22		$	20		$	22
Ratio of expenses to average net assets		1.28	%		1.28	%		1.28	%		1.28	%		1.08	%
Ratio of net investment income (loss) to average net assets		(0.34	%)		(0.15	%)		(0.07	%)		0.16	%		(0.08	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.77	%		1.68	%		2.24	%		3.22	%		3.29	%
Ratio of net investment income (loss) to average net assets before contractual expense reimbursement and waivers		(0.83	%)		(0.55	%)		(1.03	%)		(1.78	%)		(2.29	%)
Portfolio turnover rate		253	%		23	%		40	%		24	%		45	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
53

FINANCIAL HIGHLIGHTS

LARGE CAP FUND (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	15.27		$	13.82		$	12.64		$	12.50		$	8.91		$	14.63		$	13.35		$	12.31		$	12.26		$	8.80
Income from investment operations:
Net investment loss		(0.09	)		(0.05	)		(0.04	)		(0.01	)		(0.03	)		(0.19	)		(0.15	)		(0.13	)		(0.09	)		(0.05	)
Net gain (loss) on securities (both realized and unrealized)		1.09			1.50			1.22			0.15			3.62			1.07			1.43			1.17			0.14			3.51
Total from investment operations		1.00			1.45			1.18			0.14			3.59			0.88			1.28			1.04			0.05			3.46
Less distributions:
Dividends from capital gains		(3.24	)		—			—			—			—			(3.24	)		—			—			—			—
Total distributions		(3.24	)		—			—			—			—			(3.24	)		—			—			—			—
Net asset value, end of period	$	13.03		$	15.27		$	13.82		$	12.64		$	12.50		$	12.27		$	14.63		$	13.35		$	12.31		$	12.26
Total return		3.73	%		10.49	%		9.34	%		1.12	%		40.29	%		3.01	%		9.59	%		8.45	%		0.41	%		39.32	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	1		$	0.70		$	0.43		$	0.41		$	0.37		$	0.08		$	0.07		$	0.09		$	0.12		$	0.06
Ratio of expenses to average net assets		1.53	%		1.53	%		1.53	%		1.53	%		1.33	%		2.28	%		2.28	%		2.28	%		2.28	%		2.08	%
Ratio of net investment loss to average net assets		(0.59	%)		(0.38	%)		(0.30	%)		(0.07	%)		(0.36	%)		(1.33	%)		(1.14	%)		(1.06	%)		(0.81	%)		(1.07	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.04	%		1.92	%		2.45	%		3.59	%		3.52	%		2.78	%		2.68	%		3.30	%		4.41	%		4.29	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers		(1.10	%)		(0.77	%)		(1.22	%)		(2.13	%)		(2.55	%)		(1.83	%)		(1.54	%)		(2.08	%)		(2.94	%)		(3.28	%)
Portfolio turnover rate		253	%		23	%		40	%		24	%		45	%		253	%		23	%		40	%		24	%		45	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
54

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	14.64		$	13.35		$	12.31		$	12.26		$	8.81
Income from investment operations:
Net investment loss		(0.19	)		(0.16	)		(0.13	)		(0.10	)		—
Net gain (loss) on securities (both realized and unrealized)		1.07			1.45			1.17			0.15			3.45
Total from investment operations		0.88			1.29			1.04			0.05			3.45
Less distributions:
Dividends from capital gains		(3.24	)		—			—			—			—
Total distributions		(3.24	)		—			—			—			—
Net asset value, end of period	$	12.28		$	14.64		$	13.35		$	12.31		$	12.26
Total return		3.01	%		9.66	%		8.45	%		0.41	%		39.16	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.50		$	0.44		$	0.26		$	0.23		$	0.18
Ratio of expenses to average net assets		2.28	%		2.28	%		2.28	%		2.28	%		2.09	%
Ratio of net investment loss to average net assets		(1.33	%)		(1.15	%)		(1.07	%)		(0.79	%)		(1.11	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.78	%		2.68	%		3.24	%		4.27	%		4.27	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers		(1.83	%)		(1.55	%)		(2.03	%)		(2.78	%)		(3.29	%)
Portfolio turnover rate		253	%		23	%		40	%		24	%		45	%

See Accompanying Notes to Financial Statements.
55

FINANCIAL HIGHLIGHTS

LARGE CAP FUND (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			MARCH 31, 2004#
Net asset value, beginning of period	$	14.91		$	13.53		$	12.41		$	12.30		$	12.72
Income from investment operations:
Net investment loss		(0.12	)		(0.09	)		(0.07	)		(0.04	)		—
Net gain (loss) on securities (both realized and unrealized)		1.07			1.47			1.19			0.15			(0.42	)
Total from investment operations		0.95			1.38			1.12			0.11			(0.42	)
Less distributions:
Dividends from capital gains		(3.24	)		—			—			—			—
Total distributions		(3.24	)		—			—			—			—
Net asset value, end of period	$	12.62		$	14.91		$	13.53		$	12.41		$	12.30
Total return*		3.46	%		10.20	%		9.03	%		(0.90	%)		(3.30	%)
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.02		$	0.01		$	0.01		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.78	%		1.78	%		1.78	%		1.78	%		1.61	%
Ratio of net investment loss to average net assets**		(0.83	%)		(0.65	%)		(0.57	%)		(0.33	%)		(0.28	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.28	%		2.19	%		2.74	%		3.88	%		3.22	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers**		(1.33	%)		(1.06	%)		(1.53	%)		(2.43	%)		(1.90	%)
Portfolio turnover rate		253	%		23	%		40	%		24	%		45	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
56

FINANCIAL HIGHLIGHTS

TOTAL RETURN BOND FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	9.10		$	9.15		$	9.13		$	9.23		$	8.04
Income from investment operations:
Net investment income		0.39			0.49			0.45			0.29			0.37
Net gain (loss) on securities (both realized unrealized)		0.03			0.05			0.12			(0.06	)		1.20
Total from investment operations		0.42			0.54			0.57			0.23			1.57
Less distributions:
Dividends from net investment income		(0.42	)		(0.49	)		(0.45	)		(0.29	)		(0.38	)
Distributions from capital gains		(0.58	)		(0.10	)		(0.10	)		(0.04	)		—
Total distributions		(1.00	)		(0.59	)		(0.55	)		(0.33	)		(0.38	)
Net asset value, end of period	$	8.52		$	9.10		$	9.15		$	9.13		$	9.23
Total return		4.78	%		6.11	%		6.47	%		2.54	%		19.80	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	22		$	13		$	13		$	12		$	12
Ratio of expenses to average net assets		1.08	%		1.08	%		1.08	%		1.08	%		1.08	%
Ratio of net investment income to average net assets		4.46	%		5.44	%		4.95	%		3.18	%		4.20	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.94	%		1.72	%		1.79	%		2.09	%		2.82	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers		3.60	%		4.80	%		4.24	%		2.17	%		2.46	%
Portfolio turnover rate		102	%		10	%		28	%		47	%		44	%

(a) Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
57

FINANCIAL HIGHLIGHTS

TOTAL RETURN BOND FUND (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	9.71		$	9.77		$	9.76		$	9.86		$	8.57		$	9.59		$	9.64		$	9.61		$	9.71		$	8.44
Income from investment operations:
Net investment income		0.42			0.50			0.43			0.28			0.37			0.34			0.42			0.37			0.21			0.28
Net gain (loss) on securities (both realized unrealized)		—			0.05			0.16			(0.06	)		1.28			—			0.05			0.14			(0.06	)		1.27
Total from investment operations		0.42			0.55			0.59			0.22			1.65			0.34			0.47			0.51			0.15			1.55
Less distributions:
Dividends from net investment income		(0.39	)		(0.51	)		(0.48	)		(0.28	)		(0.36	)		(0.32	)		(0.42	)		(0.38	)		(0.21	)		(0.28	)
Distributions from capital gains		(0.58	)		(0.10	)		(0.10	)		(0.04	)		—			(0.58	)		(0.10	)		(0.10	)		(0.04	)		—
Total distributions		(0.97	)		(0.61	)		(0.58	)		(0.32	)		(0.36	)		(0.90	)		(0.52	)		(0.48	)		(0.25	)		(0.28	)
Net asset value, end of period	$	9.16		$	9.71		$	9.77		$	9.76		$	9.86		$	9.03		$	9.59		$	9.64		$	9.61		$	9.71
Total return		4.48	%		5.87	%		6.22	%		2.27	%		19.54	%		3.67	%		5.05	%		5.46	%		1.54	%		18.61	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	2		$	4		$	8		$	22		$	9		$	2		$	2		$	2		$	2		$	2
Ratio of expenses to average net assets		1.33	%		1.33	%		1.33	%		1.33	%		1.33	%		2.08	%		2.08	%		2.08	%		2.08	%		2.08	%
Ratio of net investment income to average net assets		4.40	%		5.18	%		4.41	%		2.90	%		3.90	%		3.60	%		4.44	%		3.93	%		2.18	%		3.10	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.19	%		1.97	%		2.09	%		2.32	%		3.06	%		2.95	%		2.72	%		2.79	%		3.11	%		3.83	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers		3.54	%		4.54	%		3.65	%		1.91	%		2.17	%		2.73	%		3.80	%		3.22	%		1.15	%		1.35	%
Portfolio turnover rate		102	%		10	%		28	%		47	%		44	%		102	%		10	%		28	%		47	%		44	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
58

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	9.44		$	9.50		$	9.49		$	9.60		$	8.34
Income from investment operations:
Net investment income		0.33			0.41			0.35			0.21			0.28
Net gain (loss) on securities (both realized unrealized)		0.01			0.05			0.15			(0.07	)		1.26
Total from investment operations		0.34			0.46			0.50			0.14			1.54
Less distributions:
Dividends from net investment income		(0.31	)		(0.42	)		(0.39	)		(0.21	)		(0.28	)
Distributions from capital gains		(0.58	)		(0.10	)		(0.10	)		(0.04	)		—
Total distributions		(0.89	)		(0.52	)		(0.49	)		(0.25	)		(0.28	)
Net asset value, end of period	$	8.89		$	9.44		$	9.50		$	9.49		$	9.60
Total return		3.75	%		5.06	%		5.46	%		1.44	%		18.73	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	1		$	2		$	4		$	9		$	8
Ratio of expenses to average net assets		2.08	%		2.08	%		2.08	%		2.08	%		2.08	%
Ratio of net investment income to average net assets		3.63	%		4.42	%		3.76	%		2.18	%		3.14	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.95	%		2.72	%		2.84	%		3.10	%		3.82	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers		2.76	%		3.78	%		3.00	%		1.16	%		1.40	%
Portfolio turnover rate		102	%		10	%		28	%		47	%		44	%

See Accompanying Notes to Financial Statements.
59

FINANCIAL HIGHLIGHTS

TOTAL RETURN BOND FUND (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	8.95		$	9.00		$	8.99		$	9.09		$	9.06
Income from investment operations:
Net investment income		0.35			0.44			0.39			0.24			0.04
Net gain (loss) on securities (both realized and unrealized)		0.02			0.05			0.12			(0.06	)		0.02
Total from investment operations		0.37			0.49			0.51			0.18			0.06
Less distributions:
Dividends from net investment income		(0.38	)		(0.44	)		(0.40	)		(0.24	)		(0.03	)
Distributions from capital gains		(0.58	)		(0.10	)		(0.10	)		(0.04	)		—
Total distributions		(0.96	)		(0.54	)		(0.50	)		(0.28	)		(0.03	)
Net asset value, end of period	$	8.36		$	8.95		$	9.00		$	8.99		$	9.09
Total return*		4.28	%		5.60	%		5.89	%		2.00	%		0.65	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.58	%		1.58	%		1.58	%		1.58	%		1.58	%
Ratio of net investment income to average net assets**		4.05	%		4.94	%		4.45	%		2.68	%		3.41	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.46	%		2.22	%		2.28	%		2.61	%		3.15	%
Ratio of net investment income to average net assets before contractual expense reimbursement and waivers**		3.17	%		4.30	%		3.75	%		1.65	%		1.85	%
Portfolio turnover rate		102	%		10	%		28	%		47	%		44	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
60

FINANCIAL HIGHLIGHTS

USA GLOBAL FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	17.52		$	15.74		$	13.90		$	14.17		$	9.54
Income from investment operations:
Net investment income (loss)		(0.06	)		—			0.01			0.05			—
Net gain (loss) on securties (both realized and unrealized)		1.32			1.78			1.84			(0.27	)		4.63
Total from investment operations		1.26			1.78			1.85			(0.22	)		4.63
Less distributions:
Dividends from net investment income		—			—			(0.01	)		(0.05	)		—
Dividends from capital gains		(4.51	)		—			—			—			—
Total distributions		(4.51	)		—			(0.01	)		(0.05	)		—
Net asset value, end of period	$	14.27		$	17.52		$	15.74		$	13.90		$	14.17
Total return		3.78	%		11.31	%		13.28	%		(1.55	%)		48.53	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	24		$	24		$	43		$	40		$	42
Ratio of expenses to average net assets		1.28	%		1.28	%		1.28	%		1.28	%		1.08	%
Ratio of net investment income (loss) to average net assets		(0.36	%)		0.01	%		0.04	%		0.37	%		0.04	%
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.78	%		1.58	%		1.67	%		2.12	%		2.32	%
Ratio of net investment income (loss) to average net assets before contractual expense reimbursement and waivers		(0.86	%)		(0.29	%)		(0.35	%)		(0.47	%)		(1.20	%)
Portfolio turnover rate		254	%		13	%		16	%		37	%		23	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
61

FINANCIAL HIGHLIGHTS

USA GLOBAL FUND (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	17.32		$	15.59		$	13.80		$	14.08		$	9.51		$	16.65		$	15.10		$	13.47		$	13.82		$	9.40
Income from investment operations:
Net investment income (loss)		(0.09	)		(0.04	)		(0.03	)		0.03			(0.01	)		(0.19	)		(0.15	)		(0.14	)		(0.07	)		(0.04	)
Net gain (loss) on securties (both realized and unrealized)		1.30			1.77			1.82			(0.28	)		4.58			1.26			1.70			1.77			(0.28	)		4.46
Total from investment operations		1.21			1.73			1.79			(0.25	)		4.57			1.07			1.55			1.63			(0.35	)		4.42
Less distributions:
Dividends from net investment income		—			—			—			(0.03	)		—			—			—			—			—			—
Dividends from capital gains		(4.51	)		—			—			—			—			(4.51	)		—			—			—			—
Total distributions		(4.51	)		—			—			(0.03	)		—			(4.51	)		—			—			—			—
Net asset value, end of period	$	14.02		$	17.32		$	15.59		$	13.80		$	14.08		$	13.21		$	16.65		$	15.10		$	13.47		$	13.82
Total return		3.50	%		11.10	%		12.97	%		(1.81	%)		48.05	%		2.72	%		10.27	%		12.10	%		(2.53	%)		47.02	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	3		$	1		$	2		$	1		$	0.57		$	0.27		$	0.07		$	0.05		$	0.05		$	0.05
Ratio of expenses to average net assets		1.53	%		1.53	%		1.53	%		1.53	%		1.34	%		2.28	%		2.28	%		2.28	%		2.28	%		2.09	%
Ratio of net investment loss to average net assets		(0.57	%)		(0.23	%)		(0.21	%)		0.22	%		(0.12	%)		(1.28	%)		(0.97	%)		(0.98	%)		(0.57	%)		(0.88	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.06	%		1.85	%		1.90	%		2.48	%		2.53	%		2.84	%		2.61	%		2.68	%		3.17	%		3.32	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers		(1.10	%)		(0.54	%)		(0.58	%)		(0.73	%)		(1.31	%)		(1.84	%)		(1.30	%)		(1.38	%)		(1.46	%)		(2.12	%)
Portfolio turnover rate		254	%		13	%		16	%		37	%		23	%		254	%		13	%		16	%		37	%		23	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
62

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	16.65		$	15.11		$	13.47		$	13.82		$	9.40
Income from investment operations:
Net investment income (loss)		(0.22	)		(0.15	)		(0.14	)		(0.01	)		(0.05	)
Net gain (loss) on securties (both realized and unrealized)		1.29			1.69			1.78			(0.34	)		4.47
Total from investment operations		1.07			1.54			1.64			(0.35	)		4.42
Less distributions:
Dividends from net investment income		—			—			—			—			—
Dividends from capital gains		(4.51	)		—			—			—			—
Total distributions		(4.51	)		—			—			—			—
Net asset value, end of period	$	13.21		$	16.65		$	15.11		$	13.47		$	13.82
Total return		2.72	%		10.19	%		12.18	%		(2.53	%)		47.02	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	1		$	2		$	1		$	2		$	0.43
Ratio of expenses to average net assets		2.28	%		2.28	%		2.28	%		2.28	%		2.09	%
Ratio of net investment loss to average net assets		(1.34	%)		(0.97	%)		(0.97	%)		(0.50	%)		(0.90	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.78	%		2.61	%		2.72	%		3.23	%		3.31	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers		(1.84	%)		(1.29	%)		(1.41	%)		(1.45	%)		(2.12	%)
Portfolio turnover rate		254	%		13	%		16	%		37	%		23	%

See Accompanying Notes to Financial Statements.
63

FINANCIAL HIGHLIGHTS

USA GLOBAL FUND (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	17.02		$	15.37		$	13.64		$	13.93		$	14.30
Income from investment operations:
Net investment loss		(0.14	)		(0.07	)		(0.07	)		(0.02	)		(0.37	)
Net gain (loss) on securties (both realized and unrealized)		1.30			1.72			1.80			(0.27	)		—
Total from investment operations		1.16			1.65			1.73			(0.29	)		(0.37	)
Less distributions:
Dividends from net investment income		—			—			—			—			—
Dividends from capital gains.		(4.51	)		—			—			—			—
Total distributions		(4.51	)		—			—			—			—
Net asset value, end of period	$	13.67		$	17.02		$	15.37		$	13.64		$	13.93
Total return*		3.25	%		10.74	%		12.68	%		(2.08	%)		(2.59	%)
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.78	%		1.78	%		1.78	%		1.78	%		1.61	%
Ratio of net investment loss to average net assets**		(0.86	%)		(0.47	%)		(0.46	%)		(0.12	%)		(0.27	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.28	%		2.11	%		2.17	%		2.65	%		2.51	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers**		(1.36	%)		(0.80	%)		(0.85	%)		(0.99	%)		(1.17	%)
Portfolio turnover rate		254	%		13	%		16	%		37	%		23	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
64

FINANCIAL HIGHLIGHTS

SCIENCE & TECHNOLOGY FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	14.01		$	14.34		$	11.73		$	12.49		$	6.76
Income from investment operations:
Net investment loss		(0.12	)		(0.09	)		(0.09	)		(0.09	)		(0.08	)
Net gain (loss) on securities (both realized and unrealized)		(0.78	)		0.53			3.23			(0.65	)		5.81
Total from investment operations		(0.90	)		0.44			3.14			(0.74	)		5.73
Less distributions:
Distributions from capital gains		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Total distributions		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Net asset value, end of period	$	11.96		$	14.01		$	14.34		$	11.73		$	12.49
Total return		(7.36	%)		3.56	%		27.52	%		(5.93	%)		84.76	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	8		$	9		$	5		$	4		$	5
Ratio of expenses to average net assets		1.42	%		1.28	%		1.28	%		1.28	%		1.23	%
Ratio of net investment loss to average net assets		(0.84	%)		(0.63	%)		(0.66	%)		(0.65	%)		(0.78	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.34	%		2.35	%		4.91	%		8.38	%		10.53	%
Ratio of net investment loss to average net assets before contractual expense reimbursement and waivers		(1.76	%)		(1.70	%)		(4.29	%)		(7.75	%)		(10.08	%)
Portfolio turnover rate		57	%		39	%		44	%		48	%		44	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
65

FINANCIAL HIGHLIGHTS

SCIENCE & TECHNOLOGY FUND

  (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	13.82		$	14.18		$	11.64		$	12.42		$	6.74		$	13.21		$	13.70		$	11.34		$	12.19		$	6.67
Income from investment operations:
Net investment loss		(0.15	)		(0.12	)		(0.12	)		(0.07	)		(0.05	)		(0.25	)		(0.21	)		(0.21	)		(0.14	)		(0.10	)
Net gain (loss) on securities (both realized and unrealized)		(0.77	)		0.53			3.19			(0.69	)		5.73			(0.70	)		0.49			3.10			(0.69	)		5.62
Total from investment operations		(0.92	)		0.41			3.07			(0.76	)		5.68			(0.95	)		0.28			2.89			(0.83	)		5.52
Less distributions:
Distributions from capital gains		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—			(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Total distributions		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—			(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Net asset value, end of period	$	11.75		$	13.82		$	14.18		$	11.64		$	12.42		$	11.11		$	13.21		$	13.70		$	11.34		$	12.19
Total return		(7.61	%)		3.38	%		27.13	%		(6.13	%)		84.27	%		(8.20	%)		2.53	%		26.24	%		(6.82	%)		82.76	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	2		$	2		$	2		$	0.95		$	0.26		$	0.11		$	0.09		$	0.14		$	0.35		$	0.09
Ratio of expenses to average net assets		1.67	%		1.53	%		1.53	%		1.53	%		1.50	%		2.42	%		2.28	%		2.28	%		2.28	%		2.26	%
Ratio of net investment loss to average net assets		(1.08	%)		(0.88	%)		(0.91	%)		(0.86	%)		(1.00	%)		(1.85	%)		(1.63	%)		(1.67	%)		(1.63	%)		(1.77	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.57	%		2.59	%		5.01	%		11.70	%		10.45	%		3.38	%		3.28	%		6.18	%		11.76	%		11.17	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(1.98	%)		(1.94	%)		(4.39	%)		(11.03	%)		(9.96	%)		(2.81	%)		(2.63	%)		(5.57	%)		(11.11	%)		(10.68	%)
Portfolio turnover rate		57	%		39	%		44	%		48	%		44	%		57	%		39	%		44	%		48	%		44	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
66

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	13.22		$	13.71		$	11.34		$	12.19		$	6.67
Income from investment operations:
Net investment loss		(0.25	)		(0.21	)		(0.21	)		(0.16	)		(0.04	)
Net gain (loss) on securities (both realized and unrealized)		(0.71	)		0.49			3.11			(0.67	)		5.56
Total from investment operations		(0.96	)		0.28			2.90			(0.83	)		5.52
Less distributions:
Distributions from capital gains		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Total distributions		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Net asset value, end of period	$	11.11		$	13.22		$	13.71		$	11.34		$	12.19
Total return		(8.27	%)		2.53	%		26.33	%		(6.82	%)		82.76	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	2		$	2		$	1		$	0.54		$	0.45
Ratio of expenses to average net assets		2.42	%		2.28	%		2.28	%		2.28	%		2.27	%
Ratio of net investment loss to average net assets		(1.84	%)		(1.63	%)		(1.66	%)		(1.65	%)		(1.69	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		3.34	%		3.34	%		5.69	%		10.91	%		10.83	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(2.76	%)		(2.69	%)		(5.07	%)		(10.28	%)		(10.25	%)
Portfolio turnover rate		57	%		39	%		44	%		48	%		44	%

See Accompanying Notes to Financial Statements.
67

FINANCIAL HIGHLIGHTS

SCIENCE & TECHNOLOGY FUND

  (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	13.66		$	14.08		$	11.58		$	12.39		$	12.30
Income from investment operations:
Net investment loss		(0.19	)		(0.15	)		(0.15	)		(0.14	)		(0.02	)
Net gain (loss) on securities (both realized and unrealized)		(0.74	)		0.50			3.18			(0.65	)		0.11
Total from investment operations		(0.93	)		0.35			3.03			(0.79	)		0.09
Less distributions:
Distributions from capital gains		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Total distributions		(1.15	)		(0.77	)		(0.53	)		(0.02	)		—
Net asset value, end of period	$	11.58		$	13.66		$	14.08		$	11.58		$	12.39
Total return*		(7.78	%)		2.97	%		26.92	%		(6.39	%)		0.73	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.92	%		1.78	%		1.78	%		1.78	%		1.78	%
Ratio of net investment loss to average net assets**		(1.35	%)		(1.13	%)		(1.16	%)		(1.14	%)		(1.12	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.85	%		2.85	%		5.44	%		9.56	%		6.74	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers**		(2.28	%)		(2.20	%)		(4.82	%)		(8.92	%)		(6.08	%)
Portfolio turnover rate		57	%		39	%		44	%		48	%		44	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
68

FINANCIAL HIGHLIGHTS

SMALL CAP FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	19.19		$	18.70		$	15.68		$	15.18		$	8.29
Income from investment operations:
Net investment loss		(0.09	)		(0.09	)		(0.10	)		(0.09	)		(0.09	)
Net gain (loss) on securities (both realized and unrealized)		(2.17	)		0.95			3.22			0.60			7.03
Total from investment operations		(2.26	)		0.86			3.12			0.51			6.94
Less distributions:
Distributions from capital gains		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Total distributions		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Net asset value, end of period	$	10.65		$	19.19		$	18.70		$	15.68		$	15.18
Total return		(19.70	%)		4.74	%		19.96	%		3.36	%		83.80	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	10		$	16		$	9		$	7		$	7
Ratio of expenses to average net assets		1.28	%		1.28	%		1.28	%		1.28	%		1.23	%
Ratio of net investment loss to average net assets		(0.54	%)		(0.52	%)		(0.62	%)		(0.55	%)		(0.80	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.62	%		1.28	%		1.32	%		1.61	%		4.31	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(0.88	%)		(0.52	%)		(0.66	%)		(0.88	%)		(3.88	%)
Portfolio turnover rate		148	%		18	%		24	%		26	%		23	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
69

FINANCIAL HIGHLIGHTS

SMALL CAP FUND (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	18.92		$	18.49		$	15.54		$	15.08		$	8.26		$	18.14		$	17.89		$	15.15		$	14.82		$	8.17
Income from investment operations:
Net investment loss		(0.14	)		(0.14	)		(0.14	)		(0.07	)		(0.05	)		(0.23	)		(0.26	)		(0.26	)		(0.15	)		(0.15	)
Net gain (loss) on securities (both realized and unrealized)		(2.11	)		0.94			3.19			0.54			6.92			(1.94	)		0.88			3.10			0.49			6.85
Total from investment operations		(2.25	)		0.80			3.05			0.47			6.87			(2.17	)		0.62			2.84			0.34			6.70
Less distributions:
Distributions from capital gains		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Total distributions		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Net asset value, end of period	$	10.39		$	18.92		$	18.49		$	15.54		$	15.08		$	9.69		$	18.14		$	17.89		$	15.15		$	14.82
Total return		(19.98	%)		4.47	%		19.69	%		3.11	%		83.26	%		(20.48	%)		3.61	%		18.80	%		2.29	%		82.09	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	28		$	216		$	181		$	121		$	21		$	2		$	3		$	4		$	3		$	0.74
Ratio of expenses to average net assets		1.53	%		1.53	%		1.53	%		1.53	%		1.51	%		2.28	%		2.28	%		2.28	%		2.28	%		2.25	%
Ratio of net investment loss to average net assets		(0.83	%)		(0.78	%)		(0.87	%)		(0.87	%)		(1.07	%)		(1.54	%)		(1.54	%)		(1.62	%)		(1.62	%)		(1.81	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.70	%		1.53	%		1.57	%		1.96	%		4.24	%		2.61	%		2.28	%		2.32	%		2.65	%		5.11	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(1.00	%)		(0.78	%)		(0.91	%)		(1.30	%)		(3.80	%)		(1.87	%)		(1.54	%)		(1.66	%)		(1.99	%)		(4.67	%)
Portfolio turnover rate		148	%		18	%		24	%		26	%		23	%		148	%		18	%		24	%		26	%		23	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
70

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	18.16		$	17.89		$	15.15		$	14.82		$	8.17
Income from investment operations:
Net investment loss		(0.24	)		(0.26	)		(0.26	)		(0.15	)		(0.13	)
Net gain (loss) on securities (both realized and unrealized)		(1.94	)		0.90			3.10			0.49			6.83
Total from investment operations		(2.18	)		0.64			2.84			0.34			6.70
Less distributions:
Distributions from capital gains		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Total distributions		(6.28	)		(0.37	)		(0.10	)		(0.01	)		(0.05	)
Net asset value, end of period	$	9.70		$	18.16		$	17.89		$	15.15		$	14.82
Total return		(20.51	%)		3.72	%		18.80	%		2.29	%		82.09	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	7		$	22		$	22		$	17		$	5
Ratio of expenses to average net assets		2.28	%		2.28	%		2.28	%		2.28	%		2.26	%
Ratio of net investment loss to average net assets		(1.54	%)		(1.53	%)		(1.62	%)		(1.62	%)		(1.83	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.55	%		2.28	%		2.32	%		2.67	%		4.95	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(1.81	%)		(1.53	%)		(1.66	%)		(2.01	%)		(4.52	%)
Portfolio turnover rate		148	%		18	%		24	%		26	%		23	%

See Accompanying Notes to Financial Statements.
71

FINANCIAL HIGHLIGHTS

SMALL CAP FUND (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	18.75		$	18.37		$	15.48		$	15.06		$	14.68
Income from investment operations:
Net investment loss		(0.16	)		(0.18	)		(0.18	)		(0.16	)		(0.02	)
Net gain (loss) on securities (both realized and unrealized)		(2.08	)		0.93			3.17			0.59			0.40
Total from investment operations		(2.24	)		0.75			2.99			0.43			0.38
Less distributions:
Distributions from capital gains		(6.28	)		(0.37	)		(0.10	)		(0.01	)		—
Total distributions		(6.28	)		(0.37	)		(0.10	)		(0.01	)		—
Net asset value, end of period	$	10.23		$	18.75		$	18.37		$	15.48		$	15.06
Total return*		(20.13	%)		4.23	%		19.37	%		2.85	%		2.59	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.03		$	0.03		$	0.02		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.78	%		1.78	%		1.78	%		1.78	%		1.78	%
Ratio of net investment loss to average net assets**		(1.03	%)		(1.02	%)		(1.12	%)		(1.06	%)		(1.40	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.15	%		1.78	%		1.82	%		2.10	%		3.13	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers**		(1.40	%)		(1.02	%)		(1.16	%)		(1.38	%)		(2.75	%)
Portfolio turnover rate		148	%		18	%		24	%		26	%		23	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
72

FINANCIAL HIGHLIGHTS

MID CAP VALUE FUND

	CLASS I
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	16.24		$	16.07		$	12.96		$	12.80		$	7.77
Income from investment operations:
Net investment loss		—			(0.09	)		(0.07	)		(0.09	)		(0.07	)
Net gain (loss) on securities (both realized and unrealized)		(0.70	)		0.40			3.21			0.39			5.10
Total from investment operations		(0.70	)		0.31			3.14			0.30			5.03
Less distributions:
Distributions from capital gains		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Total distributions		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Net asset value, end of period	$	9.66		$	16.24		$	16.07		$	12.96		$	12.80
Total return		(9.16	%)		1.96	%		24.26	%		2.31	%		64.74	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	12		$	14		$	4		$	3		$	3
Ratio of expenses to average net assets		1.28	%		1.28	%		1.28	%		1.28	%		1.23	%
Ratio of net investment income (loss) to average net assets		0.01	%		(0.56	%)		(0.46	%)		(0.66	%)		(0.74	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.91	%		1.60	%		2.78	%		6.66	%		17.78	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(0.62	%)		(0.88	%)		(1.96	%)		(6.04	%)		(17.29	%)
Portfolio turnover rate		138	%		22	%		19	%		18	%		22	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
73

FINANCIAL HIGHLIGHTS

MID CAP VALUE FUND (continued)

	CLASS A															CLASS B
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,															YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004			2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	16.04		$	15.92		$	12.87		$	12.74		$	7.75		$	15.44		$	15.44		$	12.58		$	12.55		$	7.69
Income from investment operations:
Net investment loss		(0.08	)		(0.12	)		(0.10	)		(0.06	)		(0.04	)		(0.13	)		(0.23	)		(0.20	)		(0.15	)		(0.11	)
Net gain (loss) on securities (both realized and unrealized)		(0.63	)		0.38			3.18			0.33			5.03			(0.61	)		0.37			3.09			0.32			4.97
Total from investment operations		(0.71	)		0.26			3.08			0.27			4.99			(0.74	)		0.14			2.89			0.17			4.86
Less distributions:
Distributions from capital gains		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—			(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Total distributions		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—			(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Net asset value, end of period	$	9.45		$	16.04		$	15.92		$	12.87		$	12.74		$	8.82		$	15.44		$	15.44		$	12.58		$	12.55
Total return		(9.40	%)		1.66	%		23.96	%		2.08	%		64.39	%		(10.05	%)		0.93	%		23.00	%		1.31	%		63.20	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	3		$	13		$	13		$	4		$	1		$	0.21		$	0.34		$	0.31		$	0.09		$	0.05
Ratio of expenses to average net assets		1.53	%		1.53	%		1.53	%		1.53	%		1.51	%		2.28	%		2.28	%		2.28	%		2.28	%		2.26	%
Ratio of net investment loss to average net assets		(0.52	%)		(0.80	%)		(0.69	%)		(0.88	%)		(1.02	%)		(1.04	%)		(1.55	%)		(1.43	%)		(1.65	%)		(1.77	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		1.98	%		1.86	%		2.88	%		8.69	%		16.36	%		2.88	%		2.62	%		3.59	%		8.61	%		17.78	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(0.97	%)		(1.13	%)		(2.04	%)		(8.04	%)		(15.87	%)		(1.64	%)		(1.89	%)		2.74	%		(7.98	%)		(17.29	%)
Portfolio turnover rate		138	%		22	%		19	%		18	%		22	%		138	%		22	%		19	%		18	%		22	%

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
74

	CLASS C
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004
Net asset value, beginning of period	$	15.45		$	15.45		$	12.58		$	12.55		$	7.69
Income from investment operations:
Net investment loss		(0.15	)		(0.23	)		(0.20	)		(0.08	)		(0.05	)
Net gain (loss) on securities (both realized and unrealized)		(0.59	)		0.37			3.10			0.25			4.91
Total from investment operations		(0.74	)		0.14			2.90			0.17			4.86
Less distributions:
Distributions from capital gains		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Total distributions		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Net asset value, end of period	$	8.83		$	15.45		$	15.45		$	12.58		$	12.55
Total return		(10.04	%)		0.93	%		23.08	%		1.31	%		63.20	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	2		$	5		$	6		$	4		$	0.51
Ratio of expenses to average net assets		2.28	%		2.28	%		2.28	%		2.28	%		2.27	%
Ratio of net investment loss to average net assets		(1.12	%)		(1.55	%)		(1.45	%)		(1.62	%)		(1.77	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers		2.83	%		2.62	%		3.76	%		11.14	%		16.60	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers		(1.67	%)		(1.89	%)		(2.93	%)		(10.48	%)		(16.10	%)
Portfolio turnover rate		138	%		22	%		19	%		18	%		22	%

See Accompanying Notes to Financial Statements.
75

FINANCIAL HIGHLIGHTS

MID CAP VALUE FUND (continued)

	CLASS R
Condensed data for a share of capital stock	YEARS ENDED MARCH 31,												FOR THE PERIOD ENDED MARCH 31,
outstanding throughout the period	2008 (a)			2007 (a)			2006 (a)			2005			2004#
Net asset value, beginning of period	$	15.89		$	15.81		$	12.81		$	12.72		$	12.30
Income from investment operations:
Net investment loss		(0.06	)		(0.16	)		(0.13	)		(0.14	)		(0.02	)
Net gain (loss) on securities (both realized and unrealized)		(0.67	)		0.38			3.16			0.37			0.44
Total from investment operations		(0.73	)		0.22			3.03			0.23			0.42
Less distributions:
Distributions from capital gains		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Total distributions		(5.88	)		(0.14	)		(0.03	)		(0.14	)		—
Net asset value, end of period	$	9.28		$	15.89		$	15.81		$	12.81		$	12.72
Total return*		(9.66	%)		1.42	%		23.68	%		1.77	%		3.42	%
Ratios/Supplemental Data
Net assets, end of period (in millions)	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01
Ratio of expenses to average net assets**		1.78	%		1.78	%		1.78	%		1.78	%		1.78	%
Ratio of net investment loss to average net assets**		(0.49	%)		(1.06	%)		(0.96	%)		(1.15	%)		(1.25	%)
Ratio of expenses to average net assets before contractual expense reimbursement and waivers**		2.41	%		2.11	%		3.31	%		7.26	%		8.07	%
Ratio of net investment loss to average net assets contractual expense reimbursement and waivers**		(1.12	%)		(1.39	%)		(2.49	%)		(6.63	%)		(7.54	%)
Portfolio turnover rate		138	%		22	%		19	%		18	%		22	%

*  Total return not annualized for periods less than one full year.

**  Annualized for periods less than one full year.

#  Sales of Class R Shares began February 17, 2004.

(a)  Per share amount calculated using average shares outstanding method.

See Accompanying Notes to Financial Statements.
76

NOTES TO FINANCIAL STATEMENTS

1. Organization:

The AFBA 5Star Fund, Inc. (the Company), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as an open-end investment management company with the following series: AFBA 5Star Balanced Fund, AFBA 5Star Large Cap Fund, AFBA 5Star Total Return Bond Fund (formerly, AFBA 5Star High Yield Fund), AFBA 5Star USA Global Fund, AFBA 5Star Science & Technology Fund, AFBA 5Star Small Cap Fund and AFBA 5Star Mid Cap Value Fund (formerly, AFBA 5Star Mid Cap Fund). Each series, in effect, represents a separate fund, and is referred to herein as a "Fund" or collectively as the "Funds". Each Fund offers five classes of shares, Class A, Class B, Class C, Class I and Class R. Shares of all classes of a Fund represent equal pro-rata interests in the Fund, except that each class will bear different expenses which will reflect the difference in the range of services provided to them. When purchasing Class A Shares, a sa les charge will be incurred at the time of purchase (a "front-end load") based on the dollar amount of the purchase. The maximum initial sales charge is 5.50% (3.75% for the Total Return Bond Fund). All the AFBA 5Star Funds are diversified with the exception of the Science & Technology Fund, which is a non-diversified fund.

The maximum contingent deferred sales charge ("CDSC") for Class B Shares are as follows: AFBA 5Star Balanced Fund, AFBA 5Star Large Cap Fund, AFBA 5Star USA Global Fund, AFBA 5Star Science & Technology Fund, AFBA 5Star Small Cap Fund and AFBA 5Star Mid Cap Value - 4.75%: AFBA 5Star Total Return Bond Fund - 4.00%. The maximum contingent deferred sales charge for Class C Shares for all of the portfolios is 1.00%. Class A generally is not subject to a CDSC fee. Classes I and R have no associated CDSC fees.

2. Significant Accounting Policies:

The following is a summary of significant accounting policies followed by the Company in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Investment Valuation – Equity securities owned by a Fund are valued using the official closing price or the last sale price on the Exchange or in the principal over-the-counter market where they are traded. Where the security is listed on more than one Exchange, the Fund will use the price of that Exchange which it generally considers to be the principal Exchange on which the security is traded. If the last sale price is unavailable, the security is valued at the mean between the last bid and asked prices. Debt securities held by a Fund for which market quotations are readily available are valued at the mean between the last bid and asked prices. Short-term debt investments having maturities of 60 days or less are amortized to maturity based on their cost. If market quotations are not readily available, or the price is not considered representative of mark et value, any security or other asset is valued at its fair value determined in good faith by the Company's Valuation Committee under procedures adopted by the Company's Board of Directors.

B. Federal and State Taxes – It is the Funds' policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute timely all of their net investment company taxable income and net capital gains to shareholders. Therefore, no Federal income tax provision is required.

C. Options – In order to produce incremental earnings and protect gains, the Funds may write covered call options on portfolio securities. When a Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. If an option which a Fund has written either expires on its stipulated expiration date or if a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the F und realizes a capital gain or loss from the sale of the underlying security and the proceeds from such sale are increased by the premium originally received. The primary risks associated with the use of options are an imperfect correlation between the change in market value of the securities held by the Fund and the price of the option, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. There were no outstanding covered call options or transactions in call options written as of and during the year ended March 31, 2008.

D. Expenses – The Company accounts separately for the assets, liabilities and operations of each Fund. Direct expenses of a Fund or class are charged to that Fund or class. Legal, Audit and Director expenses are allocated equally among the Funds, all other expenses are allocated among the Company's respective series based on relative net assets.

The investment income and expenses of a Fund (other than class specific expenses) and realized and unrealized gains and losses on investments of a Fund are allocated to each class of shares based upon their relative share value on the date income is earned or expenses and realized and unrealized gains and losses are incurred.

E. Investment Transactions and Investment Income – Security transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Interest income, including the accretion of market discount and amortization of premium on debt securities, is recognized on the accrual basis. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are reported on the identified cost basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Withholding taxes on foreign dividends have been provided for, in accordance with, the Funds' understanding of the applicable country's tax rules and rates.

F. Dividends and Distribution to Shareholders – Dividends from the Balanced Fund's net investment income, if any, are declared and paid quarterly. Dividends from the Total Return Bond Fund's net investment income, if any, are declared and paid monthly. Dividends from the Large Cap, USA Global, Science & Technology, Small Cap and Mid Cap Value Funds' net investment income, if any, are declared and paid semi-annually. Net realized gains on portfolio securities, if any, are distributed at least annually by each Fund. However, to the extent net realized gains can be offset by capital loss carryovers, such gains will not be distributed. Distributions are recorded by the Funds on the ex-dividend date. Distributions of net investment income are determined on a class level and realized gains are determined on a Fund level.

G. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

77

NOTES TO FINANCIAL STATEMENTS (continued)

H. Indemnification Arrangements – In the normal course of business, the Company enters into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Company in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.

I. New Accounting Standards – On September 20, 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the implications of FAS 157. At this time, its impact on the Funds' financial statements has not been determined.

Effective September 28, 2007, the Funds' adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes", a clarification of FASB Statement No. 109, "Accounting for Income Taxes". FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. FIN 48 was applied to all open tax years as of the effective date. The adoption of FIN 48 had no impact on the Funds' net assets or results of operations.

As of and during the year ended March 31, 2008, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the year, the Funds did not incur any interest or penalties. The Funds are not subject to examination by U.S. federal tax authorities for tax years before 2004.

3. Capital Share Transactions:

The Balanced, Large Cap, Total Return Bond, USA Global and Mid Cap Value Funds are authorized to issue 10,000,000 shares per class with a Par Value of $1.00. Science & Technology and Small Cap Funds, excluding Class A for Small Cap, are authorized to issue 5,000,000 shares per class with a Par Value of $1.00. Small Cap Class A is authorized to issue 15,000,000 shares with a Par Value of $1.00.

With limited exceptions, a 2% fee is assessed on redemptions of Fund shares held less than 60 days to deter short-term trading and protect the interest of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of Fund shares. The fees are paid to the Fund, and have the primary effect of increasing paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share.

Transactions in the capital shares of the Funds were as follows:

	Balanced Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		111,856		$	1,523,301			145,694		$	1,974,788
Shares reinvested		160,371			2,052,639			23,319			321,648
Shares redeemed		(153,949	)		(2,210,309	)		(748,531	)		(10,390,792	)
Net increase (decrease)		118,278		$	1,365,631			(579,518	)	$	(8,094,356	)
	Balanced Fund (continued)
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class A:	Shares			Amount			Shares			Amount
Shares issued		720,655		$	9,918,357			814,319		$	11,569,310
Shares reinvested		285,123			3,721,870			41,196			589,639
Shares redeemed		(912,652	)		(13,293,984	)		(175,282	)		(2,494,460	)
Net increase		93,126		$	346,243			680,233		$	9,664,489
Class B:	Shares			Amount			Shares			Amount
Shares issued		6,311		$	85,043			53,701		$	741,405
Shares reinvested		24,100			308,246			3,070			43,460
Shares redeemed		(23,260	)		(335,710	)		(6,581	)		(92,383	)
Net increase		7,151		$	57,579			50,190		$	692,482
Class C:	Shares			Amount			Shares			Amount
Shares issued		374,064		$	5,156,182			383,295		$	5,378,510
Shares reinvested		236,935			3,029,910			24,451			345,640
Shares redeemed		(289,291	)		(4,023,928	)		(151,628	)		(2,127,147	)
Net increase		321,708		$	4,162,164			256,118		$	3,597,003
Class R:	Shares			Amount			Shares			Amount
Shares issued		—		$	1			667		$	8,924
Shares Reinvested		238			2,916			51			694
Shares redeemed		—			—			(1,493	)		(21,199	)
Net increase (decrease)		238		$	2,917			(775	)	$	(11,581	)
	Large Cap Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		116,812		$	1,854,638			23,837		$	342,149
Shares reinvested		287,609			4,452,784			—			—
Shares redeemed		(189,332	)		(2,796,305	)		(69,438	)		(994,084	)
Net increase (decrease)		215,089		$	3,511,117			(45,601	)	$	(651,935	)
Class A:	Shares			Amount			Shares			Amount
Shares issued		104,057		$	1,500,654			31,293		$	455,071
Shares reinvested		8,565			130,856			—			—
Shares redeemed		(63,744	)		(869,827	)		(16,390	)		(226,988	)
Net increase		48,878		$	761,683			14,903		$	228,083
Class B:	Shares			Amount			Shares			Amount
Shares issued		765		$	10,148			—			—
Shares reinvested		1,018			14,712			—			—
Shares redeemed		(4	)		(58	)		(2,569	)	$	(35,265	)
Net increase (decrease)		1,779		$	24,802			(2,569	)	$	(35,265	)
Class C:	Shares			Amount			Shares			Amount
Shares issued		9,347		$	136,928			12,679		$	176,000
Shares reinvested		6,878			99,456			—			—
Shares redeemed		(5,790	)		(82,256	)		(2,019	)		(28,561	)
Net increase		10,435		$	154,128			10,660		$	147,439

78

	Large Cap Fund (continued)
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class R:	Shares			Amount			Shares			Amount
Shares issued		398		$	6,202			—			—
Shares reinvested		176			2,613			—			—
Shares redeemed		(144	)		(2,044	)		—			—
Net increase		430		$	6,771			—			—
	Total Return Bond Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		1,156,791		$	9,814,736			162,413		$	1,476,077
Shares reinvested		102,728			880,602			26,660			240,579
Shares redeemed		(137,037	)		(1,197,141	)		(119,090	)		(1,078,123	)
Net increase		1,122,482		$	9,498,197			69,983		$	638,533
Class A:	Shares			Amount			Shares			Amount
Shares issued		49,080		$	462,599			19,385		$	186,568
Shares reinvested		24,241			226,818			24,012			231,144
Shares redeemed		(264,774	)		(2,504,368	)		(404,463	)		(3,907,038	)
Net decrease		(191,453	)	$	(1,814,951	)		(361,066	)	$	(3,489,326	)
Class B:	Shares			Amount			Shares			Amount
Shares issued		1,024		$	10,038			18,901		$	180,108
Shares reinvested		11,928			109,720			6,890			65,539
Shares redeemed		(55,409	)		(520,737	)		(26,946	)		(255,440	)
Net decrease		(42,457	)	$	(400,979	)		(1,155	)	$	(9,793	)
Class C:	Shares			Amount			Shares			Amount
Shares issued		18,557		$	170,003			6,145		$	57,962
Shares reinvested		13,569			123,105			12,810			119,937
Shares redeemed		(91,701	)		(847,744	)		(167,098	)		(1,572,523	)
Net decrease		(59,575	)	$	(554,636	)		(148,143	)	$	(1,394,624	)
Class R:	Shares			Amount			Shares			Amount
Shares reinvested		149		$	1,273			75		$	664
Net increase		149		$	1,273			75		$	664
	USA Global Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		94,903		$	1,595,350			28,906		$	465,292
Shares reinvested		328,140			5,560,134			—			—
Shares redeemed		(144,059	)		(2,344,854	)		(1,374,249	)		(21,228,770	)
Net increase (decrease)		278,984		$	4,810,630			(1,345,343	)	$	(20,763,478	)
Class A:	Shares			Amount			Shares			Amount
Shares issued		140,012		$	2,297,317			18,138		$	300,736
Shares reinvested		18,666			310,478			—			—
Shares redeemed		(54,761	)		(844,267	)		(51,066	)		(807,409	)
Net increase (decrease)		103,917		$	1,763,528			(32,928	)	$	(506,673	)
	USA Global Fund (continued)
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class B:	Shares			Amount			Shares			Amount
Shares issued		14,852		$	230,111			594		$	9,159
Shares reinvested		1,556			24,397			—			—
Shares redeemed		(364	)		(6,258	)		(68	)		(1,034	)
Net increase		16,044		$	248,250			526		$	8,125
Class C:	Shares			Amount			Shares			Amount
Shares issued		25,722		$	398,094			10,018		$	154,570
Shares reinvested		15,174			239,213			—			—
Shares redeemed		(28,189	)		(445,965	)		(20,220	)		(312,099	)
Net increase (decrease)		12,707		$	191,342			(10,202	)	$	(157,529	)
Class R:	Shares			Amount			Shares			Amount
Shares reinvested		200		$	3,246			—			—
Net increase		200		$	3,246			—			—
	Science & Technology Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		52,198		$	741,315			344,688		$	4,651,173
Shares reinvested		12,193			165,995			9,578			123,899
Shares redeemed		(41,824	)		(595,463	)		(71,100	)		(921,968	)
Net increase		22,567		$	311,847			283,166		$	3,853,104
Class A:	Shares			Amount			Shares			Amount
Shares issued		39,273		$	573,150			82,953		$	1,123,713
Shares reinvested		12,611			169,288			7,958			102,432
Shares redeemed		(94,537	)		(1,304,355	)		(36,993	)		(501,050	)
Net increase (decrease)		(42,653	)	$	(561,917	)		53,918		$	725,095
Class B:	Shares			Amount			Shares			Amount
Shares issued		5,821		$	84,078			3,020		$	38,328
Shares reinvested		1,094			13,802			429			5,288
Shares redeemed		(4,045	)		(45,132	)		(6,989	)		(83,037	)
Net increase (decrease)		2,870		$	52,748			(3,540	)	$	(39,421	)
Class C:	Shares			Amount			Shares			Amount
Shares issued		20,885		$	289,762			54,836		$	725,769
Shares reinvested		11,883			150,975			5,776			71,444
Shares redeemed		(27,966	)		(349,898	)		(11,806	)		(156,263	)
Net increase		4,802		$	90,839			48,806		$	640,950
Class R:	Shares			Amount			Shares			Amount
Shares issued		148		$	2,214			36		$	500
Shares reinvested		106			1,404			63			796
Shares redeemed		(197	)		(2,288	)		(1	)		(12	)
Net increase		57		$	1,330			98		$	1,284

79

NOTES TO FINANCIAL STATEMENTS (continued)

	Small Cap Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		109,015		$	1,578,823			372,394		$	6,458,247
Shares reinvested		293,024			4,306,445			7,477			135,437
Shares redeemed		(260,766	)		(4,236,765	)		(66,242	)		(1,133,873	)
Net increase		141,273		$	1,648,503			313,629		$	5,459,811
Class A:	Shares			Amount			Shares			Amount
Shares issued		472,893		$	8,105,359			3,678,650		$	65,569,043
Shares reinvested		1,629,309			25,026,277			222,579			3,971,160
Shares redeemed		(10,862,635	)		(198,282,674	)		(2,275,133	)		(40,215,784	)
Net increase (decrease)		(8,760,433	)	$	(165,151,038	)		1,626,096		$	29,324,419
Class B:	Shares			Amount			Shares			Amount
Shares issued		2,568		$	45,111			13,021		$	223,588
Shares reinvested		70,593			963,560			3,836			65,715
Shares redeemed		(57,809	)		(870,289	)		(41,184	)		(696,682	)
Net increase (decrease)		15,352		$	138,382			(24,327	)	$	(407,379	)
Class C:	Shares			Amount			Shares			Amount
Shares issued		32,977		$	516,512			328,254		$	5,669,323
Shares reinvested		377,531			5,213,646			24,272			416,107
Shares redeemed		(903,236	)		(13,543,736	)		(340,839	)		(5,703,683	)
Net increase (decrease)		(492,728	)	$	(7,813,578	)		11,687		$	381,747
Class R:	Shares			Amount			Shares			Amount
Shares issued		952		$	12,812			647		$	11,423
Shares reinvested		792			11,311			26			455
Shares redeemed		(571	)		(7,319	)		(96	)		(1,735	)
Net increase		1,173		$	16,804			577		$	10,143
	Mid Cap Value Fund
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class I:	Shares			Amount			Shares			Amount
Shares issued		44,136		$	608,918			670,512		$	10,059,318
Shares reinvested		379,233			4,522,715			1,207			18,567
Shares redeemed		(37,975	)		(548,252	)		(44,038	)		(644,336	)
Net increase		385,394		$	4,583,381			627,681		$	9,433,549
Class A:	Shares			Amount			Shares			Amount
Shares issued		68,503		$	880,091			260,596		$	3,988,360
Shares reinvested		134,729			1,579,808			7,730			117,778
Shares redeemed		(739,165	)		(11,503,839	)		(275,147	)		(4,241,461	)
Net decrease		(535,933	)	$	(9,043,940	)		(6,821	)	$	(135,323	)
Class B:	Shares			Amount			Shares			Amount
Shares issued		543		$	5,655			4,561		$	69,839
Shares reinvested		9,065			98,579			162			2,384
Shares redeemed		(7,842	)		(86,928	)		(3,147	)		(45,680	)
Net increase		1,766		$	17,306			1,576		$	26,543
	Mid Cap Value Fund (continued)
	Year Ended March 31, 2008						Year Ended March 31, 2007
Class C:	Shares			Amount			Shares			Amount
Shares issued		22,395		$	357,813			73,776		$	1,079,487
Shares reinvested		126,201			1,377,758			3,337			49,053
Shares redeemed		(244,154	)		(3,297,782	)		(109,900	)		(1,624,467	)
Net decrease		(95,558	)	$	(1,562,211	)		(32,787	)	$	(495,927	)
Class R:	Shares			Amount			Shares			Amount
Shares issued		58		$	677			22		$	336
Shares reinvested		477			5,429			8			117
Shares redeemed		(63	)		(668	)		(20	)		(316	)
Net increase		472		$	5,438			10		$	137

4. Agreements and other Transactions with Affiliates:

Management fees are paid to AFBA 5Star Investment Management Company ("AFBA") at the rate of 0.80% per annum of the average daily net asset values of the Funds and are reflected on the Statement of Operations. Prior to July 15, 2007, AFBA employed at its own expense Kornitzer Capital Management, Inc. ("KCM") as sub-advisor to manage the assets of the Funds on a day-to-day basis. AFBA paid KCM a fee of one third of one percent (0.33%) for this service. For the period April 1, 2007 through July 15, 2007, KCM received $86,782, $24,664, $19,913, $26,643, $13,725, $248,026 and $33,449 for the Balanced, Large Cap, Total Return Bond, USA Global, Science & Technology, Small Cap and Mid Cap Value Funds, respectively.

Effective July 16, 2007 AFBA began employing Bjurman, Barry & Associates, Dreman Value Management, LLC, Financial Counselors, Inc., Marvin & Palmer Associates, Inc., The London Company and TrendStar Advisors, LLC as sub-advisors to manage the assets of the Funds on a day-to-day basis. AFBA pays each sub-advisor 0.33% of the assets they manage, with the exception of Financial Counselors, Inc. which receives 0.27% of the assets it manages. For the period July 16, 2007 through March 31, 2008, each sub-advisor received the following fees paid:

Bjurman, Barry & Associates Small Cap Fund	$	77,461
Dreman Value Management, LLC Mid Cap Value Fund	$	52,291
Financial Counselors, Inc. Balanced Fund	$	49,080
Total Return Bond Fund	$	42,439
Marvin & Palmer Associates, Inc. Large Cap Fund	$	64,247
USA Global Fund	$	70,161
The London Company Balanced Fund	$	140,525
Small Cap Fund	$	28,766
TrendStar Advisors, LLC Science & Technology Fund	$	32,178
Small Cap Fund	$	82,754

80

During the year ended March 31, 2008, AFBA had contractually agreed to pay, for all classes, certain expenses of the Balanced and Total Return Bond Funds such that the total annual operating expenses of a Fund would not exceed 1.08% (excluding 12b-1 distribution and shareholding services fees and extraordinary expenses) of their average daily net assets. This agreement continues through July 31, 2009 and may terminate thereafter. Effective August 1, 2003, AFBA had contractually agreed to pay certain expenses of the Small Cap and Mid Cap Value Funds such that the total annual operating expenses would not exceed 1.28% (excluding 12b-1 distribution and shareholding services fees and extraordinary expenses) of their average daily net assets. This agreement continues through July 31, 2009 and may terminate thereafter. Effective August 1, 2003, AFBA had contractually agreed to pay certain expenses of the Science & Technology Fund such that the total annual operating expenses would not exceed 1.28% (excluding 12b-1 distribution and shareholding services fees and extraordinary expenses) of their average daily net assets. This agreement expired on July 31, 2007. Effective August 1, 2007, AFBA has contractually agreed to pay certain expenses of the Science & Technology Fund such that the total annual operating expense would not exceed 1.50% (excluding 12b-1 distribution and shareholding services fees and extraordinary expenses) of their average daily net assets. This agreement continues through July 31, 2009 and may terminate thereafter. Effective March 27, 2004, AFBA has contractually agreed to pay certain expenses of the Large Cap and USA Global Funds such that the total annual operating expenses will not exceed 1.28% (excluding 12b-1 distribution and shareholding services fees and extraordinary expenses) of either Fund's average daily net assets. This agreement continues through July 31, 2009 and may terminate thereafter.

When a Fund's assets grow to a point where fee waivers and/or expense reimbursements are no longer necessary to meet the expense limitation target, AFBA may seek to recoup amounts it waived or expenses that it paid. AFBA will only seek to recoup such amounts if total fund operating expenses plus the amounts recouped do not exceed the expense limitation target. AFBA shall only be entitled to recoup such amounts for a period of three years from the date such amount was waived or paid. The table below indicates the total amount of fees waived and/or expenses borne by AFBA during the last three years ended March 31, 2008 and is therefore currently eligible for recoupment by AFBA assuming that the total fund operating expenses are low enough so that when added to total recoupment amounts they do not exceed the expense limitation target:

Balanced Fund	$	612,412
Large Cap Fund		349,341
Total Return Bond Fund		522,969
USA Global Fund		335,099
Science & Technology Fund		269,534
Small Cap Fund		266,272
Mid Cap Value Fund		374,322

The table below indicates the amount of advisory fees waived for the year ended March 31, 2008:

Balanced Fund	$	285,218
Large Cap Fund		133,106
Total Return Bond Fund		174,006
USA Global Fund		148,205
Science & Technology Fund		111,276
Small Cap Fund		265,253
Mid Cap Value Fund		146,307

In addition, for the year ended March 31, 2008, AFBA has reimbursed the Total Return Bond Fund and the Science & Technology Fund for expenses in the amounts of $14,336 and $16,235, respectively.

PFPC Inc. ("PFPC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., provides the Funds with administrative services pursuant to an administration agreement. The services include the day-to-day administration of matters related to the corporate existence of the Company, maintenance of its records, preparation of reports, supervision of the Company's arrangements with its custodian and assistance in the preparation of the Company's registration statements under federal and state laws. From time to time, PFPC may waive all or a portion of its fees. For the year ended March 31, 2008, no fees were waived.

PFPC also serves as transfer agent for the Funds and receives reimbursement of certain expenses plus a fee for related services pursuant to a transfer agency agreement with the Company. From time to time, PFPC may waive all or a portion of its fees. For the year ended March 31, 2008, no fees were waived.

PFPC Trust Company serves as the custody agent for the Funds and receives reimbursement of certain expenses plus a fee for related services pursuant to a custodian agreement.

At March 31, 2008, Armed Forces Benefit Association, the parent company of AFBA, held the following percentage of ownership in the Funds.

Fund	Percentage of Ownership
Balanced		40.26	%
Large Cap		67.17	%
Total Return Bond		69.69	%
USA Global		59.94	%
Science & Technology		53.35	%
Small Cap		13.30	%
Mid Cap Value		57.32	%

The Funds have adopted a Shareholder Service Plan and Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the 1940 Act. The Plans authorize payments by the Funds in connection with the distribution of their shares at an annual rate, as determined from time to time by the Board of Directors, of up to 0.25% of each Fund's average daily net assets for Class A shares, up to 1.00% of each Fund's average daily net assets for Class B and C shares and up to 0.50% of each Fund's average daily net assets for Class R shares.

The table below indicates these expenses by specific classes for the year ended March 31, 2008:

	12b-1 Fees
Fund	Class B		Class C		Class R
Balanced	$	13,691	$	120,728	$	50
Large Cap		558		3,745		49
Total Return Bond		13,786		12,513		40
USA Global		994		7,761		46
Science & Technology		1,048		15,040		60
Small Cap		20,224		115,603		103
Mid Cap Value		2,310		30,865		49

Certain officers and directors of AFBA and its parent are also officers and directors of the Company.

81

NOTES TO FINANCIAL STATEMENTS (continued)

	Shareholder Service Fees
Fund	Class A		Class B		Class C		Class R
Balanced	$	54,798	$	4,564	$	40,243	$	22
Large Cap		2,352		186		1,248		21
Total Return Bond		7,184		4,595		4,171		18
USA Global		5,020		331		2,587		19
Science & Technology		6,058		349		5,014		25
Small Cap		250,270		6,741		38,534		44
Mid Cap Value		18,504		770		10,288		21

5. Investment Transactions:

Investment transactions for the year ended March 31, 2008 (excluding maturities of short-term commercial notes, repurchase agreements, and U.S. government securities) were as follows:

Balanced Fund
Purchases	$	79,671,045
Proceeds from sales		83,619,716
Large Cap Fund
Purchases	$	65,620,124
Proceeds from sales		66,580,405
Total Return Bond Fund
Purchases	$	19,164,399
Proceeds from sales		17,038,046
USA Global Fund
Purchases	$	72,095,026
Proceeds from sales		72,262,000
Science & Technology Fund
Purchases	$	7,578,743
Proceeds from sales		8,761,237
Small Cap Fund
Purchases	$	189,274,437
Proceeds from sales		383,385,863
Mid Cap Value Fund
Purchases	$	34,789,603
Proceeds from sales		50,425,787

Investment transactions for the year ended March 31, 2008, purchases and sales of U.S. government securities were as follows:

Balanced Fund
Purchases	$	11,665,984
Proceeds from sales		8,307,975
Total Return Bond Fund
Purchases	$	10,069,568
Proceeds from sales		4,701,334

6. Federal Income Tax Information:

No provision for Federal income taxes is required since each Fund intends to continue to qualify as a regulated investment company and distribute to shareholders all of its taxable income and capital gains. Because Federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

Distributions during the year ended March 31, 2008 were characterized as follows for tax purposes:

Fund	Ordinary Income		Long Term Capital Gain
Balanced	$	4,279,003	$	13,282,752
Large Cap		—		5,167,070
Total Return Bond		933,772		1,193,162
USA Global		—		6,926,664
Science & Technology		55,679		1,075,742
Small Cap		2,073,256		35,883,523
Mid Cap Value		1,640,531		7,093,914

The tax character of net assets at March 31, 2008 were as follows:

Fund	Unrealized Appreciation			Unrealized Depreciation			Undistributed Ordinary Income (Loss)
Balanced	$	5,966,065		$	(5,419,863	)	$	749,959
Large Cap		1,882,157			(752,874	)		—
Total Return Bond		1,006,670			(426,233	)		24,003
USA Global		2,040,628			(922,013	)		—
Science & Technology		1,622,463			(1,537,935	)		—
Small Cap		1,834,733			(9,553,785	)		—
Mid Cap Value		602,047			(4,305,960	)		7,072
Fund	Undistributed/ Accumulated Capital Gain (Loss)*			Paid-In Capital			Net Assets
Balanced	$	494,221		$	79,238,921		$	81,029,303
Large Cap		(1,072,278	)		24,466,785			24,523,790
Total Return Bond		(131,819	)		26,643,146			27,115,767
USA Global		(1,566,471	)		28,124,287			27,676,431
Science & Technology		(127,842	)		11,346,770			11,303,456
Small Cap		(6,242,981	)		60,562,460			46,600,427
Mid Cap Value		(764,622	)		21,942,677			17,481,214

* Excludes the effect of post-October capital loss deferral listed below.

Under the current tax law, capital and currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For fiscal year ended March 31, 2008, the following Funds deferred capital losses:

Fund	Post October Capital Loss
Large Cap	$	1,072,278
Total Return Bond		131,819
USA Global		1,566,478
Science & Technology		127,845
Small Cap		6,244,802
Mid Cap Value		764,685

82

Further, the Funds intend to retain realized capital gains that may be offset against available capital loss carryforwards for Federal income tax purposes. For Federal income tax purposes, the Funds had no capital loss carryovers at March 31, 2008.

For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended March 31, 2008, the Funds recorded the following permanent reclassifications, with offsetting adjustments made to paid-in-capital and net realized gain/loss on investments. Results of operation and net assets were not affected by these reclassifications:

Fund	Undistributed Net Investment Income (Loss)		Net Realized Gain (Loss) on Investments			Paid in Capital
Large Cap	$	99,607	$	175		$	(99,782	)
Total Return Bond		989		(989	)		—
USA Global		120,343		—			(120,343	)
Science & Technology		143,706		(29,280	)		(114,426	)
Small Cap		1,200,140		(24,696,367	)		23,496,227
Mid Cap Value		86,641		(86,641	)		—

At March 31, 2008, the cost of securities for Federal income tax purposes were as follows:

Fund	Tax Cost
Balanced	$	79,901,323
Large Cap		23,124,142
Total Return Bond		26,290,237
USA Global		27,306,190
Science & Technology		11,352,673
Small Cap		54,529,175
Mid Cap Value		22,161,193

The difference between book basis and tax basis is attributable to the tax deferral of losses on wash sales.

7. Concentration of Ownership:

At any time, the Funds may have concentrations of shareholders holding a significant percentage of shares outstanding in their respective share classes. Investment activities of these shareholders could have a material impact on the class.

At March 31, 2008, each share class had the following number of shareholders who held in the aggregate the following percent of shares:

Share Class	Number of Shareholders		% of Outstanding Shares
Balanced Fund Class I		1		79
Balanced Fund Class R		1		100
Large Cap Fund Class I		1		73
Large Cap Fund Class B		3		56
Large Cap Fund Class R		2		100
Total Return Bond Fund Class I		1		86
Total Return Bond Fund Class R		1		100
USA Global Fund Class I		1		70
USA Global Fund Class A		1		37
USA Global Fund Class B		4		60
USA Global Fund Class R		1		100
Share Class	Number of Shareholders		% of Outstanding Shares
Science & Technology Fund Class I		1		76
Science & Technology Fund Class B		1		29
Science & Technology Fund Class R		2		100
Small Cap Fund Class I		2		73
Small Cap Fund Class A		1		41
Small Cap Fund Class R		3		100
Mid Cap Value Fund Class I		1		83
Mid Cap Value Fund Class B		1		12
Mid Cap Value Fund Class R		1		96

8. In-Kind Redemption:

During the year ended March 31, 2008, the Small Cap Fund distributed securities in lieu of cash for shareholder redemptions. The value of the redemptions was $76,832,666 which resulted in a realized gain of $24,696,367 to the Fund.

9. Change of Independent Registered Public Accounting Firm

The Board has selected Cohen Fund Audit Services, Ltd. ("Cohen") to serve as AFBA 5Star Funds (the "Registrant") independent registered public accounting firm for the Registrant's fiscal year ended March 31, 2008. The decision to select Cohen was recommended by the Audit Committee and was approved by the Board on December 12, 2007. During the Registrant's fiscal years ended March 31, 2007 and March 31, 2006, and through December 12, 2007, neither the Registrant, nor anyone on their behalf has consulted with Cohen on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Registrant's financial statements; or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(iv) of said Item 304).

The decision to dismiss PricewaterhouseCoopers LLP ("PwC"), the Registrant's previous independent registered public accounting firm, was recommended by the Registrant's Audit Committee and approved by the Funds' Board of Directors. PwC's report on the Registrant's financial statements for the fiscal years ended March 31, 2007 and March 31, 2006, contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the Registrant's fiscal years ended March 31, 2007 and March 31, 2006, and through December 12, 2007, (i) there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Registrant 's financial statements for such years, and (ii) there were no reportable events of the kind described in Item 302(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

The Registrant has requested that PwC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated May 29, 2008, is filed as an Exhibit with the Registrant's Form N-SAR for the period ended March 31, 2008.

83

NOTES TO FINANCIAL STATEMENTS (continued)

10. Subsequent Event:

Effective April 1, 2008, the Funds' Class R Shares closed to new investment, including additional purchases by current shareholders. All shares of the Class R Shares outstanding at the close of business on April 1, 2008 were automatically converted into A Shares of the same Fund (the "Transaction"), with an aggregate net asset value equal to the aggregate net asset value of the Class R Shares so converted. Any applicable sales charge attributable to the Class A Shares were waived for those shares acquired in connection with the Transaction.

84

REPORT OF INDEPENDENT
REGISTERED PUBLIC
  ACCOUNTING FIRM

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of AFBA 5Star Fund, Inc., comprising the AFBA 5Star Balanced Fund, AFBA 5Star Large Cap Fund, AFBA 5Star Total Return Bond Fund, AFBA 5Star USA Global Fund, AFBA 5Star Science & Technology Fund, AFBA 5Star Small Cap Fund, and AFBA 5Star Mid Cap Value Fund (the "Funds") as of March 31, 2008, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of Fund management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets and the financial highlights for the periods indicated prior to March 31, 2008 were audited by another independent accounting firm who expressed unqualified opi nions on those statements and highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 2008, by correspondence with the Funds' custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting AFBA 5Star Fund, Inc., as of March 31, 2008, the results of their operations, the changes in their net assets, and their financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Cohen Fund Audit Services, Ltd.
Westlake, Ohio
May 27, 2008

85

AFBA 5STAR

ADDITIONAL INFORMATION FOR
  SHAREHOLDERS (unaudited)

Proxy Voting Policy and Voting Record

A description of the Funds' proxy voting policies and procedures is available without charge by request by calling 1-800-243-9865 or on the SEC's website at www.sec.gov.

In addition, each Fund's complete proxy voting record for the twelve month period ended June 30, 2007 is available without charge by request by calling 1-800-243-9865 or on the SEC's website at www.sec.gov.

Quarterly Portfolio Disclosure

The Funds file their complete schedule of portfolio holdings with the SEC four times each fiscal year at quarter-ends. The Funds file the schedule of portfolio holding with the SEC on Form N-CSR (first and third calendar quarter) and on Form N-Q within 60 days of the end of the fiscal quarter. The Funds' Form N-Q is available on the SEC's website at www.sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the Public Reference Room may be obtained by calling 1-800-SEC-0330. In addition, the Funds' Form N-Q and Form N-CSR are available, without charge, upon request, by calling toll free 1-800-243-9865.

Qualified Dividend Income (unaudited):

Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act"), the following percentages of ordinary dividends paid during the fiscal year ended March 31, 2008 are designed as "qualified dividend income", as defined in the Act, and are subject to reduced tax rates in 2007.

Fund	Qualified Dividend Percentage
Balanced		37	%
Large Cap		0	%
Total Return Bond		1	%
USA Global		0	%
Science & Technology		80	%
Small Cap		45	%
Mid Cap Value		16	%

Dividends Received Deduction (unaudited)

The following percentage of ordinary dividends paid during the fiscal year ended March 31, 2008 which qualify for the corporate dividends received deduction is as follows:

Fund	Dividend Receivable Deduction
Balanced		34	%
Large Cap		0	%
Total Return Bond		1	%
USA Global		0	%
Science & Technology		72	%
Small Cap		45	%
Mid Cap Value		16	%

Long-Term Capital Gain Distributions:

For the Funds, distribution to shareholders from long-term capital gains, subject to the 15% rate gains, are as follows:

	Long-Term Capital Fund Gains Distribution
Balanced	$	13,282,752
Large Cap		5,167,070
Total Return Bond		1,193,162
USA Global		6,926,664
Science & Technology		1,075,742
Small Cap		35,883,523
Mid Cap Value		7,093,914

86

MANAGEMENT OF AFBA
5STAR FUND, INC.

Directors and Officers. The Funds are managed by AFBA 5Star Investment Management Company (the "Manager") subject to the supervision and control of the Board. The Board meets regularly to review the activities of the officers, who are responsible for day-to-day operations of the Company. The following table lists the officers and Directors of the Company, their birth dates, position, term of office and principal occupation. The address of each person listed below is 909 North Washington Street, Alexandria, Virginia 22314.

Name, Birthdate	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Funds in Fund Complex Overseen by Director		Other Trusteeships/ Directorships Held by Director
INDEPENDENT DIRECTORS
General Monroe W. Hatch, Jr., USAF (Ret.) (11/20/33)	Director	Director since January 1997. Shall serve as Director until his resignation, or until terminated or until his successor is elected and qualified.	Consultant to Industry on National Security, June 1990-present.		7	Trustee, ANSER Corporation (non-profit research institute); Trustee, Vaughn College of Aeronautics; Trustee, Flacon Foundation (private non-profit scholarship foundation).
General Louis C. Wagner, Jr., USA (Ret.) (01/24/32)	Director	Director since January 1997. Shall serve as Director until his resignation, or until terminated or until his successor is elected and qualified.	Private Consultant to industry and defense agencies, January 1990-present.		7	Senior Fellow, Association of U.S. Army; Board of Advisors, Army Retirement Residence Foundation – Potomac (non-profit foundation); Board of Regents, National Eagle Scouts Association; Board of Advisors, Jewish Institute for National Security Affairs; President's Advisory Board, Advanced Technology Institute (non-profit research institute).
Lieutenant General John S. Fairfield, USAF (Ret.) (05/02/41)	Director	Director since May 2002. Shall serve as Director until his resignation, or until terminated or until his successor is elected and qualified.	Partner and Director, Strategic Business Relationships Team, IBM, Public Sector, March 2003-present.		7	Member, Board of Directors, Skybuilt Power (Solar Power Company) June 2003-present; Member, Board of Trustees, Wakefield School (Private Educational Institution), June 2004-present; Trustee, US Air Force Academy Falcon Foundation, 2000-present; and Member, Juniper Networks Federal Advisory Board, 2005-present.
Brigadier General Henry J. Sechler, USAF (Ret.) (07/23/32)	Director	Director since January 1997. Shall serve as Director until his resignation, or until terminated or until his successor is elected and qualified.	Retired since 2000. Formerly, Consultant and Vice President, General Dynamics Corp (defense contractor).		7	None.

87

MANAGEMENT OF AFBA
5STAR FUND, INC. (continued)

Name, Birthdate	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Funds in Fund Complex Overseen by Director		Other Trusteeships/ Directorships Held by Director
INTERESTED DIRECTORS
General Ralph E. Eberhart USAF (Ret.)* (12/26/46)	Chairman and Director	Chairman and Director since December 2004. Shall serve as Chairman and Director, until his resignation or termination or until his successor is elected and qualified.	President, Armed Forces Benefit Association, December 2004-present; Director and Chairman, 5Star Life Insurance Company, December 2004-present; Director and Chairman, 5Star Bank, December 2004-present; Director and Chairman, AFBA 5Star Investment Management Company, December 2004-present; Manager, 5Star Financial, LLC, December 2004-present; Former Commander, NORAD/USNORTHCOM (U.S. Air Force); Former Commander NORAD/USSPACE/AFSPACE (U.S. Air Force).		7	Advisory Board Member, ManTech International (government technology contractor); Advisory Board Member, The Spectrum Group (consulting services); Advisory Board Member, ICX Technologies (security products); Director, Standard Aero (service provider to global aerospace, defense and energy industries); Director, ObjectVideo (surveillance products); Director, EIDPassport (security products); Director, TERMA North America, Inc. (high-tech solution applications).
Robert E. Morrison, Jr.1 (03/07/57)	Director and President	Director since October 2007 and President since August 2006. Shall serve as Director and President at the pleasure of the Board or until his resignation or termination or until his successor is elected or qualified.	President and Director of AFBA 5Star Investment Management Company; Former Principal of Morrison Consulting; and Former President and Chief Executive Officer of Sky Trust and Sky Wealth Management.		7	None.
Charles A. Gabriel2 (03/22/55)	Director	Director since October 2007. Shall serve as Director at the pleasure of the Board or until his resignation or termination or until his successor is elected or qualified.	Managing Director, Capital Alpha Partners; and Former Senior V. P., Head of Washington Research Prudential Securities, Inc., 1995-2007.		7	None.

88

Name, Birthdate	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Funds in Fund Complex Overseen by Director	Other Trusteeships/ Directorships Held by Director
OFFICER(S) WHO ARE NOT DIRECTORS
Andrew J. Welle (10/28/66)	Senior Vice President and Secretary	Senior Vice President since February 2005 and Secretary since July 2003. Shall serve as Senior Vice President and Secretary at the pleasure of the Board or until his resignation or termination or until his successor is elected or qualified.	President of AFBA 5Star Securities Company; Senior Vice President and Chief Operating Officer of AFBA 5Star Investment Management Company.	N/A	N/A
Michael E. Houchins (07/30/69)	Chief Financial Officer and Treasurer	Chief Financial Officer and Treasurer since February 2006. Shall serve as Chief Financial Officer and Treasurer until his resignation or termination or until his successor is elected and qualified.	Chief Financial Officer and Treasurer of AFBA 5Star Investment Management Company. Formerly Vice-President of the Armed Forces Benefit Association.	N/A	N/A
Salvatore Faia, Esq., CPA (12/25/62)	Chief Compliance Officer	Chief Compliance Officer since August 2004. Shall service as Chief Compliance Officer until his resignation, or until terminated or until his successor is elected and qualified.	President, Vigilant Compliance Services 2004 to present; Senior Legal Counsel, PFPC Inc. 2002 to 2004; Chief Legal Counsel, Corviant Corporation (Investment Adviser, Broker-Dealer and Service Provider to Investment Advisers and Separate Account Providers) 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) 1997 to 2001.	N/A	N/A

  *  General Ralph E. Eberhart, USAF (Ret.) is considered an interested person of the Company under the federal securities laws due to his positions as an officer and/or chairman of AFBA 5Star Investment Management Company, the Manager of the Funds and other AFBA 5Star entities.

  ¹  Mr. Morrison is considered an interested person of the Company under the federal securities laws due to his position as President of AFBA 5Star Investment Management Company.

  ²  Mr. Gabriel is an interested person of the Company under the federal securities laws due to his former position as a Director of AFBA 5Star Investment Management Company.

89

SHAREHOLDER VOTING RESULTS (unaudited)

October 26, 2007 Special Meeting of Shareholders

A Special Meeting of Shareholders (the "Meeting") of the Funds was held on October 26, 2007 and the votes cast at the Meeting were as follows:

With respect to the approval of the election of the following Directors:

Balanced Fund

	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		5,869,839		6,372		0.000
General Louis C. Wagner, Jr. USA (Ret.)		5,873,260		2,950		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		5,869,839		6,372		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		5,873,260		2,950		0.000
General Ralph E. Eberhart, USAF (Ret.)		5,869,839		6,372		0.000
Charles A. Gabriel		5,869,839		6,372		0.000
Robert E. Morrison, Jr.		5,867,504		8,707		0.000

Total Return Bond Fund

	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		1,983,976		8,105		0.000
General Louis C. Wagner, Jr. USA (Ret.)		1,983,976		5,032		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		1,983,976		8,105		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		1,983,976		5,032		0.000
General Ralph E. Eberhart, USAF (Ret.)		1,983,976		8,105		0.000
Charles A. Gabriel		1,983,976		8,105		0.000
Robert E. Morrison, Jr.		1,987,049		5,032		0.000

Large Cap Fund

	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		1,302,395		4,542		0.000
General Louis C. Wagner, Jr. USA (Ret.)		1,305,245		1,692		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		1,302,395		4,542		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		1,305,245		1,692		0.000
General Ralph E. Eberhart, USAF (Ret.)		1,302,395		4,542		0.000
Charles A. Gabriel		1,302,731		4,206		0.000
Robert E. Morrison, Jr.		1,305,581		1,356		0.000

Mid Cap Value Fund

Name of Director	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		1,660,897		389		0.000
General Louis C. Wagner, Jr. USA (Ret.)		1,660,897		389		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		1,660,897		389		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		1,660,897		389		0.000
General Ralph E. Eberhart, USAF (Ret.)		1,660,897		389		0.000
Charles A. Gabriel		1,660,897		389		0.000
Robert E. Morrison, Jr.		1,659,967		1,319		0.000

Science & Technology Fund

Name of Director	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		914,229		1,018		0.000
General Louis C. Wagner, Jr. USA (Ret.)		914,229		1,018		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		914,229		1,018		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		914,229		1,018		0.000
General Ralph E. Eberhart, USAF (Ret.)		914,229		1,018		0.000
Charles A. Gabriel		914,768		479		0.000
Robert E. Morrison, Jr.		914,577		670		0.000

Small Cap Fund

Name of Director	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		5,776,699		11,876		0.000
General Louis C. Wagner, Jr. USA (Ret.)		5,776,699		11,876		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		5,776,699		11,876		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		5,776,699		11,876		0.000
General Ralph E. Eberhart, USAF (Ret.)		5,776,699		11,876		0.000
Charles A. Gabriel		5,776,699		11,876		0.000
Robert E. Morrison, Jr.		5,776,598		11,977		0.000

USA Global Fund

Name of Director	For		Against		Abstain
General Monroe W. Hatch, Jr. USAF (Ret.)		1,239,749		15,913		0.000
General Louis C. Wagner, Jr. USA (Ret.)		1,241,241		14,421		0.000
Lieutenant General John S. Fairfield, USAF (Ret.)		1,239,749		15,913		0.000
Brigadier General Henry J. Sechler, USAF (Ret.)		1,240,905		14,757		0.000
General Ralph E. Eberhart, USAF (Ret.)		1,239,749		15,913		0.000
Charles A. Gabriel		1,240,359		15,303		0.000
Robert E. Morrison, Jr.		1,241,516		14,146		0.000

90

With respect to the approval of an agreement and plan of reorganization, pursuant to which the Company would be reorganized as a Delaware statutory trust:

Fund	For		Against		Abstain
Balanced Fund		3,159,161		3,548		9,534
Total Return Bond Fund		1,311,306		2,659		1,780
Large Cap Fund		1,166,758		1,874		2,155
Mid Cap Value Fund		918,853		0		121
Science & Technology		668,876		1,014		2,745
Small Cap Fund		1,060,267		12,483		4,611
USA Global Fund		1,076,014		2,171		2,202

With respect to the approval of new sub-investment advisory agreement(s) for each Fund:

Fund	For		Against		Abstain
Balanced Fund
Agreement with The London Company of Virginia		3,160,403		3,377		8,464
Agreement with Financial Counselors, Inc.		3,159,544		4,236		8,464
Total Return Bond Fund		1,312,752		2,659		334
Large Cap Fund		1,168,913		1,874		0.000
Mid Cap Value Fund		915,551		3,301		121
Science &Technology Fund		669,415		2,557		663
Small Cap Fund Agreement with Bjurman, Barry & Associates		980,595		11,844		4,197
Agreement with TrendStar Advisors, LLC		979,956		12,483		4,197
Agreement with The London Company of Virginia		979,956		12,483		4,197
USA Global Fund		1,076,854		1,005		2,527

With respect to the approval of a "manager of managers" structure for each Fund:

Fund	For		Against		Abstain
Balanced Fund		3,161,664		3,057		7,523
Total Return Bond Fund		1,311,358		4,057		330
Large Cap Fund		1,168,937		1,649		201
Mid Cap Value Fund		915,551		3,301		121
Science &Technology Fund		669,045		3,096		494
Small Cap Fund		1,059,759		12,436		5,169
USA Global Fund		1,076,388		2,475		1,523

With respect to the approval of a modification of certain fundamental investment restrictions regarding:

Balanced Fund

	For		Against		Abstain
Borrowing		3,156,664		10,995		4,585
Issuing senior securities		3,159,843		7,573		4,829
Underwriting		3,156,421		7,038		8,786
Investments in real estate		3,156,421		10,995		4,829
Investments in commodities		3,156,421		10,995		4,829
Lending		3,161,112		6,305		4,829
Industry concentration		3,155,886		11,530		4,829

Total Return Bond Fund

	For		Against		Abstain
Borrowing		1,311,671		4,057		17
Issuing senior securities		1,310,228		5,500		17
Underwriting		1,311,282		4,115		348
Investments in real estate		1,311,341		4,057		348
Investments in commodities		1,311,271		4,126		348
Lending		1,310,287		5,111		348
Industry concentration		1,311,341		4,057		348

Large Cap Fund

	For		Against		Abstain
Borrowing		1,168,809		1,978		0
Issuing senior securities		1,168,913		1,850		24
Underwriting		1,168,913		1,649		225
Investments in real estate		1,169,029		1,556		201
Investments in commodities		1,168,608		1,556		622
Lending		1,168,913		1,673		201
Industry concentration		1,168,913		1,673		201

Mid Cap Value Fund

	For		Against		Abstain
Borrowing		915,551		3,301		121
Issuing senior securities		913,051		5,801		121
Underwriting		915,551		3,301		121
Investments in real estate		913,051		5,801		121
Investments in commodities		915,551		3,301		121
Lending		918,853		0		121
Industry concentration		913,051		2,499		3,422

Science & Technology Fund

	For		Against		Abstain
Borrowing		668,457		3,615		663
Issuing senior securities		668,457		3,615		663
Underwriting		667,918		4,154		663
Investments in real estate		668,457		3,615		663
Investments in commodities		668,457		3,615		663
Lending		668,457		3,615		663
Industry concentration		667,918		2,072		2,745

Small Cap Fund

	For		Against		Abstain
Borrowing		1,039,763		22,703		14,676
Issuing senior securities		1,049,597		16,826		11,019
Underwriting		1,048,458		16,643		12,342
Investments in real estate		1,051,200		20,170		6,522
Investments in commodities		1,052,616		18,755		6,522
Lending		1,043,121		28,249		6,522
Industry concentration		1,043,959		24,729		9,204

91

SHAREHOLDER VOTING RESULTS (unaudited)

USA Global Fund

	For		Against		Abstain
Borrowing		1,076,359		2,028		1,999
Issuing senior securities		1,076,986		1,401		1,999
Underwriting		1,077,478		909		1,999
Investments in real estate		1,071,098		6,676		2,613
Investments in commodities		1,070,880		7,507		1,999
Lending		1,075,913		2,474		1,999
Industry concentration		1,076,865		909		2,613

With respect to the approval of a modification of the fundamental investment restrictions of the Balanced, Total Return Bond, Large Cap and USA Global Funds regarding the diversification of investments:

Fund	For		Against		Abstain
Balanced Fund		3,155,883		11,776		4,585
Total Return Bond Fund		1,311,355		4,057		334
Large Cap Fund		1,169,114		1,673		0
USA Global Fund		1,070,237		7,536		2,613

With respect to the approval of a reclassification of the Funds' investment objectives from fundamental to non-fundamental:

Fund	For		Against		Abstain
Balanced Fund		3,155,515		8,022		8,708
Total Return Bond Fund		1,310,287		5,111		348
Large Cap Fund		1,168,515		2,070		201
Mid Cap Value Fund		918,853		0		121
Science & Technology		668,626		3,615		494
Small Cap		932,452		138,936		6,093
USA Global Fund		1,068,624		7,951		3,811

With respect to the approval of a reclassification of the Balanced, Total Return Bond, Large Cap and USA Global Funds' investment policies from fundamental to non-fundamental:

Fund	For		Against		Abstain
Balanced Fund		3,156,461		7,318		8,464
Total Return Bond Fund		1,311,671.257		4,057		17
Large Cap Fund		1,169,114		1,673		0
USA Global Fund		1,069,412		7,163		3,811

With respect to the approval of the elimination of the Balanced, Total Return Bond, Large Cap and USA Global Funds' Fundamental investment restrictions regarding:

Balanced Fund

	For		Against		Abstain
Dealings with management		3,155,245		12,492		4,507
Loans with management		3,154,464		12,388		5,393
Investing for the purposes of exercising control		3,155,238		11,613		5,393
Purchasing securities on margin and engaging in short sales		3,152,538		14,556		5,149
Investment in other investment companies		3,156,045		10,806		5,393
Investing in companies with less than three years of continuous operations		3,155,024		12,071		5,149
Liability for the indebtedness of others		3,146,527		20,405		5,311
Investing in non-assessable securities		3,151,962		14,889		5,393

Total Return Bond Fund

	For		Against		Abstain
Dealings with management		1,311,341		4,387		17
Loans with management		1,311,271		4,126		348
Investing for the purposes of exercising control		1,310,287		5,111		348
Purchasing securities on margin and engaging in short sales		1,310,287		5,441		17
Investment in other investment companies		1,311,341		4,057		348
Investing in companies with less than three years of continuous operations		1,310,287		5,441		17
Liability for the indebtedness of others		1,305,434		10,294		17
Investing in non-assessable securities		1,310,287		5,111		348

Large Cap Fund

	For		Against		Abstain
Dealings with management		1,168,087		2,700		0
Loans with management		1,167,597		2,988		201
Investing for the purposes of exercising control		1,168,018		2,567		201
Purchasing securities on margin and engaging in short sales		1,161,176		9,189		421
Investment in other investment companies		1,168,053		2,532		201
Investing in companies with less than three years of continuous operations		1,167,679		3,107		0
Liability for the indebtedness of others		1,156,218		14,568		0
Investing in non-assessable securities		1,161,223		9,362		201

USA Global Fund

	For		Against		Abstain
Dealings with management		1,069,462		8,887		2,038
Loans with management		1,073,041		5,573		1,772
Investing for the purposes of exercising control		1,073,413		4,960		2,013
Purchasing securities on margin and engaging in short sales		1,070,792		6,968		2,626
Investment in other investment companies		1,075,295		3,198		1,894
Investing in companies with less than three years of continuous operations		1,074,132		4,386		1,868
Liability for the indebtedness of others		1,069,191		9,350		1,990
Investing in non-assessable securities		1,071,170		7,468		1,894

92

March 31, 2008 Special Meeting of Shareholders

A Special Meeting of Shareholders of the Small Cap Fund (the "Meeting") was held on March 31, 2008, and the votes cast at the Meeting were as follows:

With respect to the approval of new sub-investment advisory agreements with the following sub-advisors:

	For		Against		Abstain
Bjurman, Barry & Associates		2,449,649		72,300		100,506
TrendStar Advisors, LLC		2,448,585		70,865		103,006
The London Company of Virginia		2,447,873		73,051		101,532

With respect to the approval of an agreement and plan of reorganization, pursuant to which the Company would be reorganized as a Delaware statutory trust:

For		Against		Abstain
	2,447,886		70,153		104,419

With respect to the approval of a "manager of managers" structure for the Small Cap Fund:

For		Against		Abstain
	2,384,777		134,690		102,987

With respect to the reclassification of the Small Cap Fund's investment objectives from fundamental to non-fundamental:

For		Against		Abstain
	2,209,129		309,619		103,704

With respect to the approval of the payment of interim sub-advisory fees to the Small Cap Fund's sub-advisors:

For		Against		Abstain
	2,412,224		107,977		102,257

93

BOARD APPROVAL OF ADVISORY AGREEMENT

At a meeting held on January 31, 2008, the Board of Directors, including a majority of the Directors who are not "interested persons" as defined in the Investment Company Act of 1940 (the "Independent Directors"), approved the continuation of the investment advisory agreement (the "Investment Advisory Agreement") between AFBA 5Star Investment Management Company (the "IMCO") and AFBA 5Star Funds, Inc. (each a "Fund" and collectively, the "Funds"), for each Fund for an additional one-year period.

The Board considered the information furnished and discussed throughout the year at regularly scheduled Board meetings and reviewed and considered the information provided specifically in relation to the annual consideration of the approval of the Investment Advisory Agreement.

In considering the continuation of the Investment Advisory Agreement, the Board considered the nature and quality of the services provided by IMCO, the proposed fee structures, the level of fee waivers, each Fund's past and anticipated expense ratios, possible economies of scale resulting from increases in the size of the Funds and other possible benefits IMCO derived from their relationships with the Funds. The Board carefully analyzed the information provided to it by IMCO and independent third parties, focusing particularly on the level of advisory fees and expenses of each Fund with information for comparable funds, and the performance of each Fund to funds with comparable investment objectives. The Board also considered other information that it had received from IMCO at other meetings throughout the year.

In examining the nature, extent and quality of the services to be provided by IMCO, the Board considered the portfolio management, administrative and supervisory services provided by IMCO. The Board acknowledged the value of IMCO's historical performance of services for the Funds, including managing the recent change in sub-advisers. The Board noted IMCO's commitment to servicing the Funds as its only client; IMCO's efforts during the past year to reduce Fund expenses; and the nature of the non-investment advisory services provided to the Funds, such as the supervision of the Funds' other third-party service providers, by IMCO.

Based on the totality of the information considered, the Board concluded that the Funds were likely to benefit from the nature, extent and quality of IMCO's services, as applicable, and that the Manager has the ability to continue to provide these services based on its experience, operations and resources.

With respect to the Funds' investment performance, the Board reviewed each Fund's performance compared to both its peer group and relative benchmark indices over one-year, three-year, five-year and since inception periods, as applicable. The Board also considered the fees payable under the Investment Advisory Agreement. The Board reviewed the information compiled from Morningstar comparing each Fund's contractual management fee rate. The Board reviewed both the overall expenses on a Fund-by-Fund basis as well as the advisory fee charged to each Fund. The foregoing comparisons assisted the Board in determining to approve the Investment Advisory Agreement by providing them with a basis for evaluating each Fund's advisory fee and expense ratio on a relative basis.

With respect to the costs of the services to be provided and profits to be realized by IMCO from its relationship with the Funds, the Board considered the fact that IMCO had agreed to continue to waive its advisory fees to the extent necessary to limit the annualized expenses of each Fund to their assigned expenses ratio caps for an additional year. The Board also considered that IMCO may be able to recoup some of the waived fees in the future. The Board noted that IMCO continued to operate at a loss due to its substantial subsidization of Fund expenses and that economies of scale had not yet been realized due to the relatively small size of the Funds. The Board also took into consideration the IMCO's willingness to consider adding breakpoints to its advisory fee in the future if the Funds' assets increase to the extent that economies of scale are realized. The Board did not consider the relationship between IMCO's advisory fees compared to other accounts that IMCO advises because IMCO has no other advisory accounts.

The Board considered whether there are any "fall out" or ancillary benefits that may accrue to IMCO as a result of their relationship with the Funds. Based on the information provided prior to, and at, the Meeting, the Board noted that there did not appear to be any significant benefits in this regard.

After evaluation of the comparative performance, fee and expense information and the profitability, ancillary benefits and other considerations as described above, and in light of the nature, extent and quality of services to be provided by IMCO, the Board concluded that the level of fees to be paid to IMCO is reasonable.

The Independent Directors met in executive session with their independent counsel to discuss their fiduciary duties and the relevant factors that they should considering during their evaluation.

In voting to approve the Investment Advisory Agreement, the Board considered all relevant factors. The Board did not identify any single factor as being of paramount importance and each Director gave varying weights to each factor according to his own judgment. The Directors determined that they had received adequate information and were able to conclude that the approval of the Investment Advisory Agreement would be in the best interests of each Fund and its shareholders.

94

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AFBA 5STAR FUND, INC

AFBA 5STAR BALANCED FUND

AFBA 5STAR LARGE CAP FUND

AFBA 5STAR TOTAL RETURN BOND FUND

AFBA 5STAR USA GLOBAL FUND

AFBA 5STAR SCIENCE & TECHNOLOGY FUND

AFBA 5STAR SMALL CAP FUND

AFBA 5STAR MID CAP VALUE FUND

AFBA 5STAR INVESTMENT MANAGEMENT COMPANY

909 N. WASHINGTON STREET
ALEXANDRIA, VA 22314
1-800-243-9865
WWW.AFBAFUNDS.COM

SHAREHOLDER INQUIRIES 1-888-578-2733

Item 2. Code of Ethics.

(a)The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

(c)There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description set forth in paragraph (b) of this item’s instructions.

(d)The registrant has not granted any waivers, including an implicit waiver, during the period covered by this report from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

Item 3. Audit Committee Financial Expert.

The registrant’s board of directors has determined that Brigadier General Henry, J. Sechler, USAF (ret.) is qualified to serve as an audit committee financial expert. General Sechler serves on the audit committee of the registrant’s Board and he is “independent” under the standards set forth in Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Audit Fees

(a)The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that were normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $84,500 for the fiscal year ended March 31, 2008 and $114,000 for the fiscal year ended March 31, 2007.

Audit-Related Fees

(b)The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended March 31, 2008 and $0 for the fiscal year ended March 31, 2007.

Tax Fees

(c)The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $17,500 for the fiscal year ended March 31, 2008 and $33,000 for the fiscal year ended March 31, 2007.  The nature of the services comprising the fees disclosed was the dividend calculation review and the review of tax returns.

All Other Fees

(d)The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended March 31, 2008 and $0 for the fiscal year ended March 31, 2007.

  (e)(1)Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

The Audit Committee has not established pre-approval policies and procedures. The Audit Committee Charter provides that the Audit Committee shall approve, prior to appointment, the engagement of the independent auditor to audit and provide their opinion on the registrant’s financial statements, and to provide other audit services to the registrant or non-audit services to the registrant, its investment adviser, its sub-adviser or any entity controlling, controlled by, or under common control with the investment adviser or sub-adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant and review and approve the fees proposed to be charged to the registrant by the independent auditors for each audit and non-audit service. The Audit Committee has the power to establish, if deemed necessary or appropriate as an alternative to Audit Committee pre-approval of services to be provided by the independent auditor as required, policies and procedures to permit such services to be pre-approved by other means, such as by action of a designated member or members of the Audit Committee, subject to subsequent Audit Committee review and oversight.

  (e)(2)The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:

(b)  N/A

(c)  100%

(d)  N/A

(f)The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work

performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

(g)The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for the fiscal year ended March 31, 2008 and $0 for the fiscal year ended March 31, 2007.

(h)The registrant’s audit committee has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee of Listed registrants.

Not applicable because the registrant is not listed.

Item 6. Investments.

(a)Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

(b)Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable because the registrant is an open-end investment company.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable because the registrant is an open-end investment company.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable because the registrant is an open-end investment company.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

(a)The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2, included as Exhibit (a)(1) of the registrant’s Form N-CSR filed on June 7, 2007 (Accession No. 0001135428-07-000196), is hereby incorporated by reference.

(a)(2)Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3)Not applicable because the registrant is an open-end investment company.

(b)Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(registrant)		AFBA 5Star Fund, Inc.
By (Signature and Title)		/s/ Robert E. Morrison, Jr.
		Robert E. Morrison, Jr., President
		(principal executive officer)
Date	June 3, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)		/s/ Robert E. Morrison, Jr.
		Robert E. Morrison, Jr., President
		(principal executive officer)
Date	June 3, 2008
By (Signature and Title)		/s/ Michael E. Houchins
		Michael E. Houchins, Chief Financial Officer
		(principal financial officer)
Date	June 3, 2008

EX-99.CERT

Exhibit 99.CERT

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act

I, Robert E. Morrison, Jr., certify that:

1.I have reviewed this report on Form N-CSR of AFBA 5Star Fund, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this

report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	June 3, 2008	/s/ Robert E. Morrison, Jr.
		Robert E. Morrison, Jr., President
		(principal executive officer)

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act

I, Michael E. Houchins, certify that:

1.I have reviewed this report on Form N-CSR of AFBA 5Star Fund, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	June 3, 2008	/s/ Michael E. Houchins
		Michael E. Houchins, Chief Financial Officer
		(principal financial officer)

EX-99.906CERT

Exhibit 99.906CERT

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act

I, Robert E. Morrison, Jr., President of AFBA 5Star Fund, Inc. (the “Registrant”), certify that:

1.The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	June 3, 2008	/s/ Robert E. Morrison, Jr.
		Robert E. Morrison, Jr., President
		(principal executive officer)

I, Michael E. Houchins, Chief Financial Officer of AFBA 5Star Fund, Inc. (the “Registrant”), certify that:

1.The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	June 3, 2008	/s/ Michael E. Houchins
		Michael E. Houchins, Chief Financial
		Officer
		(principal financial officer)